EXHIBIT 10.1
AMENDED AND RESTATED NOTE PURCHASE AGREEMENT
THIS AMENDED AND RESTATED NOTE PURCHASE AGREEMENT dated as of May
21, 1997 among TEXOIL COMPANY, a Tennessee corporation (the "COMPANY"), TEXOIL,
INC., a Nevada corporation ("PARENT"), and RIMCO PARTNERS, L.P., a Delaware
limited partnership, RIMCO PARTNERS, X.X. XX, a Delaware limited partnership,
RIMCO PARTNERS, L.P. III, a Delaware limited partnership, and RIMCO PARTNERS,
X.X. XX, a Delaware limited partnership.
A. The Parent, the Company and the Noteholders entered into that
certain Note Purchase Agreement dated September 6, 1996 (the "ORIGINAL NOTE
PURCHASE AGREEMENT").
B. The Parent, the Company and the holders desire to amend and
restate the Original Note Purchase Agreement in its entirety as set forth
herein.
In consideration of the mutual covenants herein contained, the
Company, the Parent and the Noteholders agree to amend and restate the Original
Note Purchase Agreement as follows:
ARTICLE I
DEFINITIONS, ETC.
SECTION 1.01. CERTAIN DEFINED TERMS. Capitalized terms used in this
Agreement and not otherwise defined herein shall have the respective meanings
set forth in ANNEX A attached hereto (such meanings to be equally applicable to
both singular and plural forms of the terms defined).
SECTION 1.02. COVENANT CONSTRUCTION. Each covenant contained herein
shall be construed (absent express provision to the contrary) as being
independent of each other covenant contained herein, so that compliance with any
one covenant shall not (absent such an express contrary provision) be deemed to
excuse compliance with any other covenant. Where any provision herein refers to
action to be taken by any Person, or which such Person is prohibited from
taking, such provision shall be applicable whether such action is taken directly
or indirectly by such Person.
SECTION 1.03. OTHER RULES OF CONSTRUCTION. The words "hereof,"
"herein" and "hereunder" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement. All references herein to articles, sections, annexes, exhibits
and schedules shall, unless the context requires a different construction, be
deemed to be references to the articles and sections of this Agreement and the
annexes, exhibits and schedules attached hereto and made a part hereof. In this
Agreement, unless a clear contrary intention appears, the word "including" (and
with correlative meaning "include") means including, without limiting the
generality of any description preceding such term. The headings of the various
Exhibit 10.1 - Page 1
articles and sections of this Agreement are for convenience only and shall not
affect the meaning of the terms and conditions of this Agreement. No provision
of this Agreement shall be interpreted or construed against any party solely
because that party or its legal representative drafted such provision.
ARTICLE II
COMMITMENTS AND NOTES
SECTION 2.01. TRANCHE A NOTES. (a) Subject to the terms and
conditions of this Agreement, each Tranche A Noteholder severally agrees to make
advances to the Company (each a "TRANCHE A ADVANCE") during the period from the
date hereof through September 1, 1997 (the "TRANCHE A COMMITMENT PERIOD") in an
aggregate amount not exceeding the principal amount specified opposite such
Tranche A Noteholder's name in SCHEDULE A (such amount, as it may be reduced or
terminated pursuant to this Agreement, is herein referred to as such Tranche A
Noteholder's "TRANCHE A COMMITMENT"). Each funding of Tranche A Advances shall
be made on the same date ratably by the Tranche A Noteholders. The Tranche A
Advances made by each Tranche A Noteholder shall be evidenced by the Tranche A
Note issued to such Noteholder. Tranche A Advances, once repaid, may not be
reborrowed.
(b) Pursuant to the Original Note Purchase Agreement, the Company
has authorized the issue and sale of $3,000,000 aggregate principal amount of
its 10% Senior Secured Exchangeable General Obligation Notes (the "TRANCHE A
NOTES"). Pursuant to the Original Note Purchase Agreement, the Company has
issued to each Tranche A Noteholder a Tranche A Note in the principal amount of
such Tranche A Noteholder's Tranche A Commitment. The Tranche A Notes are in the
form set out in EXHIBIT 2.01, with such changes therefrom, if any, as may be
approved by the Tranche A Noteholders and the Company. Each Tranche A Noteholder
will note on its internal records, to the extent applicable, the date and amount
of each Tranche A Advance made by such Tranche A Noteholder to the Company
hereunder, and the amount of each payment in respect thereof and will prior to
any transfer of any of its Tranche A Note endorse on the reverse side thereof
the outstanding principal amount of Tranche A Advances evidenced thereby.
Failure to make any such notation shall not affect the Company's obligations in
respect of such Tranche A Advance. Absent manifest error, any Tranche A
Noteholder's records or notations on its Tranche A Note as to the outstanding
principal amount of its Tranche A Advances shall be rebuttably presumed to be
correct.
SECTION 2.02. TRANCHE B NOTES. (a) Subject to the terms and
conditions of this Agreement, each Tranche B Noteholder severally agrees to make
advances to the Company (each a "TRANCHE B ADVANCE") during the period from the
date hereof through September 1, 1999 (the "TRANCHE B COMMITMENT PERIOD") in an
aggregate amount not exceeding the principal amount specified opposite such
Tranche B Noteholder's name in SCHEDULE A (such amount, as it may be reduced or
terminated pursuant to this Agreement, is herein referred to as such Tranche B
Noteholder's "TRANCHE B COMMITMENT"). Each funding of Tranche B Advances shall
be made on the same date ratably by the Tranche B Noteholders. The Tranche B
Advances made by each
Exhibit 10.1 - Page 2
Tranche B Noteholder shall be evidenced by the Tranche B Note issued to such
Noteholder. Subject to the limits set forth herein and the other terms and
conditions of this Agreement, the Company may borrow, repay and reborrow Tranche
B Advances under this SECTION 2.02.
(b) Pursuant to the Original Note Purchase Agreement, the Company
has authorized the issue and sale of $5,000,000 aggregate principal amount of
its 10% Senior Secured General Obligation Notes (the "TRANCHE B NOTES").
Pursuant to the Original Note Purchase Agreement, the Company has issued to each
Tranche B Noteholder a Tranche B Note in the principal amount of such Tranche B
Noteholder's Tranche B Commitment. The Tranche B Notes are in the form set out
in EXHIBIT 2.02, with such changes therefrom, if any, as may be approved by the
Tranche B Noteholders and the Company. Each Tranche B Noteholder will note on
its internal records, to the extent applicable, the date and amount of each
Tranche B Advance made by such Tranche B Noteholder to the Company hereunder,
and the amount of each payment in respect thereof and will prior to any transfer
of any of its Tranche B Note endorse on the reverse side thereof the outstanding
principal amount of Tranche B Advances evidenced thereby. Failure to make any
such notation shall not affect the Company's obligations in respect of such
Tranche B Advance. Absent manifest error, any Tranche B Noteholder's records or
notations on its Tranche B Note as to the outstanding principal amount of its
Tranche B Advances shall be rebuttably presumed to be correct.
SECTION 2.03. TRANCHE C NOTES. (a) Subject to the terms and
conditions of this Agreement, each Tranche C Noteholder severally agrees to make
advances to the Company (each a "TRANCHE C ADVANCE") during the period from the
date hereof through November 20, 1997 (the "TRANCHE C COMMITMENT PERIOD") in an
aggregate amount not exceeding the principal amount specified opposite such
Tranche C Noteholder's name in SCHEDULE A (such amount, as it may be reduced or
terminated pursuant to this Agreement, is herein referred to as such Tranche C
Noteholder's "TRANCHE C COMMITMENT"). Each funding of Tranche C Advances shall
be made on the same date ratably by the Tranche C Noteholders. The Tranche C
Advances made by each Tranche C Noteholder shall be evidenced by the Tranche C
Note issued to such Noteholder. Tranche C Advances, once repaid, may not be
reborrowed.
(b) The Company will authorize the issue and sale of $1,500,000
aggregate principal amount of its 10% Senior Secured Exchangeable General
Obligation Notes (the "TRANCHE C NOTES" and, together with the Tranche A Notes
and the Tranche B Notes, the "NOTES"). Subject to the terms and conditions of
this Agreement, at the Closing provided for in ARTICLE III, the Company will
issue to each Tranche C Noteholder a Tranche C Note in the principal amount of
such Tranche C Noteholder's Tranche C Commitment. The Tranche C Notes shall be
substantially in the form set out in EXHIBIT 2.03, with such changes therefrom,
if any, as may be approved by the Tranche C Noteholders and the Company. Each
Tranche C Noteholder will note on its internal records, to the extent
applicable, the date and amount of each Tranche C Advance made by such Tranche C
Noteholder to the Company hereunder, and the amount of each payment in respect
thereof and will prior to any transfer of any of its Tranche C Note endorse on
the reverse side thereof the outstanding principal amount of Tranche C Advances
evidenced thereby. Failure to make any such notation shall not affect the
Company's obligations in respect of such Tranche C Advance. Absent
Exhibit 10.1 - Page 3
manifest error, any Tranche C Noteholder's records or notations on its Tranche C
Note as to the outstanding principal amount of its Tranche C Advances shall be
rebuttably presumed to be correct.
SECTION 2.04. PROCEDURES FOR TRANCHE A ADVANCES. (a) Whenever the
Company desires to obtain a funding of Tranche A Advances, it shall, no less
than 5 Business Days prior to the proposed funding date for such Tranche A
Advances, transmit by telecopy to the Tranche A Noteholders a written request
(each an "ADVANCE REQUEST") setting forth (i) the total amount of the Tranche A
Advances requested, (ii) the proposed date such Tranche A Advances are to be
made, (iii) wire transfer instructions for such Tranche A Advances, and (iv) a
description in reasonable detail of the proposed use of proceeds of such Tranche
A Advances.
(b) Upon satisfaction of all conditions to any Tranche A Advance,
the Tranche A Noteholders will make their respective Tranche A Advances
available to the Company by delivery to the Company or its order of immediately
available funds in the amount stated in the Advance Request by wire transfer for
the account of the Company to the bank account stated in the Advance Request.
(c) The Tranche A Noteholders have previously made Tranche A
Advances of $1,882,655, which Tranche A Advances remain outstanding as of the
date hereof.
SECTION 2.05. PROCEDURES FOR TRANCHE B ADVANCES. (a) Whenever the
Company desires to obtain a funding of Tranche B Advances, it shall, no less
than 5 Business Days prior to the proposed funding date for such Tranche B
Advances, transmit by telecopy to the Tranche B Noteholders an Advance Request
setting forth (i) the total amount of the Tranche B Advances requested, (ii) the
proposed date such Tranche B Advances are to be made, (iii) wire transfer
instructions for such Tranche B Advances and (iv) a description in reasonable
detail of the proposed use of proceeds of such Tranche B Advances.
(b) Upon satisfaction of all conditions to any Tranche B Advance,
the Tranche B Noteholders will make their respective Tranche B Advances
available to the Company by delivery to the Company or its order of immediately
available funds in the amount stated in the Advance Request by wire transfer for
the account of the Company to the bank account stated in the Advance Request.
SECTION 2.06. PROCEDURES FOR TRANCHE C ADVANCES. (a) Whenever the
Company desires to obtain a funding of Tranche C Advances, it shall, no less
than 5 Business Days prior to the proposed funding date for such Tranche C
Advances, transmit by telecopy to the Tranche C Noteholders a written request
(each an "ADVANCE REQUEST") setting forth (i) the total amount of the Tranche C
Advances requested, (ii) the proposed date such Tranche C Advances are to be
made, (iii) wire transfer instructions for such Tranche C Advances, and (iv) a
description in reasonable detail of the proposed use of proceeds of such Tranche
C Advances.
Exhibit 10.1 - Page 4
(b) Upon satisfaction of all conditions to any Tranche C Advance,
the Tranche C Noteholders will make their respective Tranche C Advances
available to the Company by delivery to the Company or its order of immediately
available funds in the amount stated in the Advance Request by wire transfer for
the account of the Company to the bank account stated in the Advance Request.
SECTION 2.07. GUARANTY AND EXCHANGE AGREEMENT. (a) At the Closing
provided for in ARTICLE III, Parent and the Company will enter into an Amended
and Restated Guaranty and Exchange Agreement (as same may be amended from time
to time, the "GUARANTY AND EXCHANGE AGREEMENT") pursuant to which Parent will
(a) guarantee payment of the Notes, (b) agree that the Tranche A Notes may be
exchanged for shares of the common stock of Parent in accordance with the terms
thereof and (c) agree that the Tranche C Notes may be exchanged for shares of
the common stock of Parent in accordance with the terms thereof. The Guaranty
and Exchange Agreement shall be substantially in the form set out in EXHIBIT
2.07, with such changes therefrom, if any, as may be approved by the
Noteholders, the Company and Parent.
(b) Upon the exchange of all or a portion of the outstanding
principal amount of a Tranche A Note for common stock of Parent in accordance
with the Guaranty and Exchange Agreement, the amount of the outstanding
principal of such Tranche A Note and the Tranche A Commitment of the holder of
such Tranche A Note shall each be automatically reduced by the principal amount
of such Tranche A Note so exchanged without further notice or action by any
Person; provided, however, that the holder of such Tranche A Note will note on
its internal records such reduction in the principal amount of such Tranche A
Note and will, prior to any transfer of such Tranche A Note, endorse on the
reverse side thereof the outstanding principal amount of such Tranche A Note
taking any such reductions into account. Failure to make any such notation shall
not affect the Company's obligations in respect of such Tranche A Note. Absent
manifest error, any Tranche A Noteholder's records or notations on its Tranche A
Note as to the outstanding principal amount of its Tranche A Note shall be
rebuttably presumed to be correct. Upon the exchange of all of the principal
amount of a Tranche A Note (or so much thereof as shall have been advanced prior
to the expiration of the Tranche A Commitment Period) for common stock of Parent
in accordance with the Guaranty and Exchange Agreement, the holder of such
Tranche A Note shall, reasonably promptly after written request by the Company,
surrender such Tranche A Note for cancellation to the Company at the Company's
principal executive office.
(c) Upon the exchange of all or a portion of the outstanding
principal amount of a Tranche C Note for common stock of Parent in accordance
with the Guaranty and Exchange Agreement, the amount of the outstanding
principal of such Tranche C Note and the Tranche C Commitment of the holder of
such Tranche C Note shall each be automatically reduced by the principal amount
of such Tranche C Note so exchanged without further notice or action by any
Person; provided, however, that the holder of such Tranche C Note will note on
its internal records such reduction in the principal amount of such Tranche C
Note and will, prior to any transfer of such Tranche C Note, endorse on the
reverse side thereof the outstanding principal amount of such Tranche C Note
taking any such reductions into account. Failure to make any such notation shall
not
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affect the Company's obligations in respect of such Tranche C Note. Absent
manifest error, any Tranche C Noteholder's records or notations on its Tranche C
Note as to the outstanding principal amount of its Tranche C Note shall be
rebuttably presumed to be correct. Upon the exchange of all of the principal
amount of a Tranche C Note (or so much thereof as shall have been advanced prior
to the expiration of the Tranche C Commitment Period) for common stock of Parent
in accordance with the Guaranty and Exchange Agreement, the holder of such
Tranche C Note shall, reasonably promptly after written request by the Company,
surrender such Tranche C Note for cancellation to the Company at the Company's
principal executive office.
SECTION 2.08. TERMINATION OF COMMITMENTS. Upon written notice to the
Noteholders and the full and final payment of all outstanding Indebtedness under
the Notes and the other Transaction Documents, the Company may terminate all
(but not less than all) of the Commitments.
ARTICLE III
CLOSING
The sale and purchase of the Notes to be purchased by the
Noteholders shall occur at the offices of Xxxxxxx & Xxxxx L.L.P., 000 Xxxxxx,
Xxxxxxx, Xxxxx 00000, at 10:00 a.m., Houston time, at a closing (the "CLOSING")
on May 21, 1997. At the Closing the Company will deliver to each Tranche C
Noteholder the Tranche C Note to be purchased by such Noteholder, registered in
such Tranche C Noteholder's name. If at the Closing the Company shall fail to
tender such Tranche C Notes to the Noteholders as provided above in this ARTICLE
III, or any of the conditions specified below shall not have been fulfilled to
the Noteholders' reasonable satisfaction or waived in writing by the
Noteholders, the Noteholders shall, at the Noteholders' election, be relieved of
all further obligations under this Agreement, without thereby waiving any rights
the Noteholders may have by reason of such failure or such nonfulfillment.
The effectiveness of this Agreement is subject to the fulfillment to
the Noteholders' reasonable satisfaction, prior to or at the Closing, of the
following conditions:
SECTION 3.01. EXECUTION OF DOCUMENTS. The Noteholders shall have
received the following agreements (together with this Agreement and any
documents delivered pursuant to SECTIONS 9.06 AND 9.07, collectively, the
"TRANSACTION DOCUMENTS"), in such number of counterparts as the Noteholders may
reasonably request, each dated the date of the Closing and duly executed by the
Persons indicated below:
(a) the Tranche C Notes duly executed by the Company;
(b) an amendment and supplement to the Initial Mortgage duly
executed and acknowledged by the Company reflecting this Agreement and
covering all of the Company's Oil and Gas Properties in LaFourche Parish,
Louisiana;
Exhibit 10.1 - Page 6
(c) the Guaranty and Exchange Agreement duly executed by Parent and
the Company;
(d) an amendment to the Registration Rights Agreement duly executed
by Parent and the Company reflecting this Agreement;
(e) an amendment to the Pledge Agreement duly executed by Parent
reflecting this Agreement;
(f) the New Mortgage duly executed and acknowledged by the Company;
(g) amendments to the Subordination Agreements duly executed by the
holders of the Bridge Shareholder Debt and the New Shareholder Debt
reflecting this Agreement;
(h) UCC-1 financing statements pertaining to the New Mortgage; and
(i) UCC-3 amendments to financing statements pertaining to the
Initial Mortgage.
SECTION 3.02. CERTIFICATES. The Company shall have delivered to the
Noteholders:
(a) Officer's Certificates from the Company and Parent, dated the
date of the Closing, certifying that the conditions specified in SECTION
3.04 and SECTION 3.05 have been fulfilled; and
(b) certificates of the Company and Parent certifying as to the
resolutions attached thereto and other corporate proceedings relating to
the authorization, execution and delivery of the Notes and the other
Transaction Documents.
SECTION 3.03. OPINION OF COUNSEL. The Noteholders shall have
received opinions in form and substance satisfactory to the Noteholders, dated
the date of the Closing from Xxxxxx & Xxxxxx, L.L.P., counsel for the Company
and Parent, covering the matters set forth in EXHIBIT 3.03 and covering such
other matters incident to the transactions contemplated hereby as the
Noteholders or the Noteholders' counsel may reasonably request (and the Company
and Parent hereby instruct their counsel to deliver such opinion to the
Noteholders).
SECTION 3.04. REPRESENTATIONS AND WARRANTIES. The representations
and warranties of the Company and Parent in this Agreement and the other
Transaction Documents shall be correct when made and at the time of the Closing.
Exhibit 10.1 - Page 7
SECTION 3.05. PERFORMANCE; NO DEFAULT. The Company and Parent shall
have performed and complied with all agreements and conditions contained in this
Agreement or the other Transaction Documents required to be performed or
complied with by each of them prior to or at the Closing and after giving effect
to the issue and sale of the Notes no Default or Event of Default shall have
occurred and be continuing.
SECTION 3.06. TITLE INFORMATION. The Noteholders shall have received
title opinions or other title information concerning the Company's Oil and Gas
Properties covered by the New Mortgages in form, scope and substance reasonably
satisfactory to the Noteholders.
SECTION 3.07. PAYMENT OF SPECIAL COUNSEL FEES. Without limiting the
provisions of SECTION 14.01, the Company shall have paid on or before the
Closing the reasonable fees, charges and disbursements of the Noteholders'
special counsel to the extent reflected in a statement of such counsel rendered
to the Company at least one Business Day prior to the Closing.
SECTION 3.08. PROCEEDINGS AND DOCUMENTS. All corporate and other
proceedings in connection with the transactions contemplated by this Agreement
and all documents and instruments incident to such transactions shall be
satisfactory to the Noteholders and the Noteholders' special counsel, and the
Noteholders and the Noteholders' special counsel shall have received all such
counterpart originals or certified or other copies of such documents as the
Noteholders or they may reasonably request.
ARTICLE IV
CONDITIONS TO ADVANCES
SECTION 4.01. CONDITIONS TO ALL ADVANCES. (a) Each Noteholder's
obligation to fund any Advance is subject to the condition that on the date of
such Advance the following statements shall be true, and the Company, by virtue
of its delivery of an Advance Request, shall be deemed to have certified to the
Noteholders as of such date that (i) the representations and warranties of the
Company and Parent in this Agreement and the other Transaction Documents shall
be correct when made and at the time of such Advance, (ii) the Company and
Parent shall have performed and complied with all covenants and agreements
contained in this Agreement and the other Transaction Documents required to be
performed or complied with by each of them prior to such Advance, and after
giving effect to such Advance (and the application of the proceeds thereof as
contemplated by SECTION 5.13) no Default or Event of Default shall have occurred
and be continuing, and (iii) no event shall have occurred since the date of this
Agreement that could reasonably be expected to have a Material Adverse Effect on
the Company or Parent.
(b) Each Noteholder's obligation to fund any Advance to be used to
pay for the Company's share of drilling and/or completion costs for any well is
subject to the condition that on the date of such Advance the Company shall have
(i) obtained valid oil and gas leases (or valid assignments thereof) covering
its interests in such well and (ii) executed, acknowledged and
Exhibit 10.1 - Page 8
delivered to the Noteholders Security Documents in form and substance
satisfactory to the Noteholders granting a first priority lien on the Company's
interest in the Oil and Gas Properties and other related assets pertaining to
such well.
SECTION 4.02. CONDITIONS TO TRANCHE B ADVANCES. Each Tranche B
Noteholder's obligation to fund any Tranche B Advance is subject to the
following further conditions:
(a) an aggregate amount of at least $3,000,000 shall have been
advanced by the Tranche A Noteholders under the Tranche A Notes;
(b) the Borrowing Base shall exceed 130% of the outstanding
principal balance of the Notes after giving effect to the Tranche B
Advances requested by the Company in the most recent Advance Request
delivered to the Tranche B Noteholders; and
(c) if the proceeds of such Tranche B Advance are to be used for any
purpose other than to pay for Initial Prospect Development Costs or the
Company's share of costs to drill, test, complete, equip, deepen, side
track and/or recomplete the first well to be drilled on the Raceland
Prospect, the Tranche B Noteholders shall have consented in writing to
such use of proceeds, in their sole absolute discretion.
SECTION 4.03. CONDITIONS TO TRANCHE C ADVANCES. Each Tranche C
Noteholder's obligation to fund any Tranche C Advance is subject to the further
condition that an aggregate amount of at least $3,000,000 shall have been
advanced by the Tranche A Noteholders under the Tranche A Notes.
ARTICLE V
REPRESENTATIONS AND WARRANTIES OF THE COMPANY
The Company represents and warrants to the Noteholders that:
SECTION 5.01. ORGANIZATION; POWER AND AUTHORITY. The Company is a
corporation duly organized, validly existing and in good standing under the laws
of the State of Tennessee, and is duly qualified as a foreign corporation and is
in good standing in each jurisdiction in which such qualification is required by
law, other than those jurisdictions as to which the failure to be so qualified
or in good standing would not, individually or in the aggregate, reasonably be
expected to have a Material Adverse Effect on the Company. The Company has the
corporate power and authority to own or hold under lease the properties it
purports to own or hold under lease, to transact the business it transacts and
proposes to transact, to execute and deliver this Agreement and the other
Transaction Documents to which it is a party and to perform the provisions
hereof and thereof.
Exhibit 10.1 - Page 9
SECTION 5.02. AUTHORIZATION, ETC. This Agreement and the other
Transaction Documents to which it is a party have been duly authorized by all
necessary corporate action on the part of the Company, and this Agreement
constitutes, and upon execution and delivery thereof each other Transaction
Document to which it is a party will constitute, a legal, valid and binding
obligation of the Company enforceable against the Company in accordance with its
terms, except as such enforceability may be limited by (a) applicable
bankruptcy, insolvency, reorganization, moratorium or other similar laws
affecting the enforcement of creditors' rights generally and (b) general
principles of equity (regardless of whether such enforceability is considered in
a proceeding in equity or at law).
SECTION 5.03. COMPLIANCE WITH LAWS, OTHER INSTRUMENTS, ETC. The
execution, delivery and performance by the Company of this Agreement and the
other Transaction Documents to which it is a party will not (a) contravene,
result in any breach of, or constitute a default under, or result in the
creation of any Lien in respect of any property of the Company under, any
indenture, mortgage, deed of trust, loan, purchase or credit agreement, lease,
corporate charter or by-laws, or any other agreement or instrument to which the
Company is bound or by which the Company or any of its properties may be bound
or affected (except for Liens created under the Transaction Documents) the
consequence of which would have a Material Adverse Effect on the Company, (b)
conflict with or result in a breach of any of the terms, conditions or
provisions of any order, judgment, decree, or ruling of any court, arbitrator or
Governmental Authority in respect of a proceeding to which the Company is a
party or (c) to the knowledge of the Company violate any provision of any
statute or other rule or regulation of any Governmental Authority applicable to
the Company.
SECTION 5.04. GOVERNMENTAL AUTHORIZATIONS, ETC. No consent, approval
or authorization of, or registration, filing or declaration with, any
Governmental Authority is required in connection with the execution, delivery or
performance by the Company of this Agreement or the other Transaction Documents
to which it is a party that has not been obtained.
SECTION 5.05. SUBSIDIARIES. The Company has no Subsidiaries.
SECTION 5.06. DISCLOSURE. This Agreement, the documents,
certificates or other writings delivered to the Noteholders by or on behalf of
the Company in connection with the transactions contemplated hereby, taken as a
whole, do not contain any untrue statement of a material fact or omit to state
any material fact necessary to make the statements therein not misleading. There
is no fact known to the Company that would reasonably be expected to have a
Material Adverse Effect on the Company that has not been set forth herein or in
the other documents, certificates and other writings delivered to the
Noteholders by or on behalf of the Company specifically for use in connection
with the transactions contemplated hereby.
Exhibit 10.1 - Page 10
SECTION 5.07. LITIGATION. Except as disclosed in SCHEDULE 5.07,
there are no actions, suits or proceedings pending of which the Company has
received notice, or, to the knowledge of the Company, threatened against or
affecting the Company or any property of the Company in any court or before any
arbitrator of any kind or before or by any Governmental Authority that,
individually or in the aggregate, could reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 5.08. OBSERVANCE OF AGREEMENTS, STATUTES AND ORDERS. The
Company is not in default under any term of any agreement or instrument to which
it is a party or by which it is bound, or any order, judgment, decree or ruling
of any court, arbitrator or Governmental Authority arising out of any proceeding
to which it is a party or of which it has notice or in violation of any
applicable law, ordinance, rule or regulation (including without limitation
Environmental Laws) of any Governmental Authority, which default or violation,
individually or in the aggregate, would reasonably be expected to have a
Material Adverse Effect on the Company.
SECTION 5.09. TAXES. The Company has filed all tax returns that are
required to have been filed in any jurisdiction, and has paid all taxes shown to
be due and payable on such returns and all other taxes and assessments levied
upon it or its properties, assets, income or franchises, to the extent such
taxes and assessments have become due and payable and before they have become
delinquent, except for any taxes and assessments (i) the amount of which is not
individually or in the aggregate Material or (ii) the amount, applicability or
validity of which is currently being contested in good faith by appropriate
proceedings and with respect to which the Company has established adequate
reserves in accordance with GAAP. The Company knows of no basis for any other
tax or assessment that, if imposed, would reasonably be expected to have a
Material Adverse Effect on the Company. The charges, accruals and reserves on
the books of the Company in respect of Federal, state or other taxes for all
fiscal periods are adequate in all material respects.
SECTION 5.10. TITLE TO PROPERTY. The Company has good and defensible
title to all of its assets, free and clear of all Liens except Permitted Liens.
After giving full effect to the Permitted Liens, the Company owns the net
interests in production attributable to its Oil and Gas Properties reflected in
the Initial Reserve Report and the ownership of such Oil and Gas Properties does
not obligate the Company to bear the costs and expenses relating to the
development and operations of each such Oil and Gas Property in an amount in
excess of the working interest of each Oil and Gas Property reflected in the
Initial Reserve Report. Further upon delivery of each Annual Reserve Report and
Supplemental Reserve Report, the statements made in the preceding sentence shall
be true with respect to such Annual Reserve Report or Supplemental Reserve
Report, as the case may be.
SECTION 5.11. LICENSES, PERMITS, ETC. The Company owns or possesses
all licenses, permits, franchises, authorizations, patents, copyrights, service
marks, trademarks and trade names, or rights thereto, that individually or in
the aggregate are Material, without known conflict with the rights of others. To
the best knowledge of the Company, (a) no product of the Company infringes in
any material respect any license, permit, franchise, authorization, patent,
copyright, service xxxx,
Exhibit 10.1 - Page 11
trademark, trade name or other right owned by any other Person; and (b) there is
no Material violation by any Person of any right of the Company with respect to
any patent, copyright, service xxxx, trademark, trade name or other right owned
or used by the Company.
SECTION 5.12. COMPLIANCE WITH ERISA.
(a) The Company and each ERISA Affiliate have operated and
administered each Plan, if any, in compliance with all applicable laws except
for such instances of noncompliance as have not resulted in and would not
reasonably be expected to result in a Material Adverse Effect on the Company.
Neither the Company nor any ERISA Affiliate has incurred any liability pursuant
to Title I or IV or ERISA or the penalty or excise tax provisions of the Code
relating to employee benefit plans (as defined in Section 3 of ERISA), and no
event, transaction or condition has occurred or exists that could reasonably be
expected to result in the incurrence of any such liability by the Company or any
ERISA Affiliate, or in the imposition of any Lien on any of the rights,
properties or assets of the Company or any ERISA Affiliate, in either case
pursuant to Title I or IV of ERISA or to such penalty or excise tax provisions
or to Section 401(a)(29) or 412 of the Code, other than such liabilities or
Liens as would not be individually or in the aggregate Material.
(b) The present value of the aggregate benefit liabilities under
each of the Plans (other than Multiemployer Plans), determined as of the end of
such Plan's most recently ended plan year on the basis of the actuarial
assumptions specified for funding purposes in such Plan's most recent actuarial
valuation report, did not exceed the aggregate current value of the assets of
such Plan allocable to such benefit liabilities. The term "BENEFIT LIABILITIES"
has the meaning specified in section 4001 of ERISA and the terms "CURRENT VALUE"
and "PRESENT VALUE" have the meaning specified in section 3 of ERISA.
(c) The Company and its ERISA Affiliates have not incurred
withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate are Material.
(d) The expected post-retirement benefit obligation (determined as
of the last day of the Company's most recently ended fiscal year in accordance
with Financial Accounting Standards Board Statement No. 106, without regard to
liabilities attributable to continuation coverage mandated by section 4980B of
the Code) of the Company is not Material.
SECTION 5.13. USE OF PROCEEDS; MARGIN REGULATIONS. (a) The Company
will apply or has applied the proceeds of the Tranche A Advances to pay for (i)
the Company's share of future 3-D seismic acquisition costs for the Raceland
Prospect, (ii) the Company's share of leasehold acquisition costs for the
Raceland Prospect, the Green's Lake Prospect and the Xxxxxx Xxxxx Prospect,
(iii) the Company's share of drilling and completion costs for the initial well
to be drilled on each of the Raceland Prospect and the Green's Lake Prospect,
(iv) $200,000 of Indebtedness owing by Parent to Xxx X. Xxxxxxxxxx, Xx.,
Trustee, and (iv) general corporate purposes.
Exhibit 10.1 - Page 12
(b) The Company will apply the proceeds of the Tranche B Advances to
pay for (i) Initial Prospect Development Costs, (ii) the Company's share of
costs to drill, test, complete, equip, deepen, side track and/or recomplete the
first well to be drilled on the Raceland Prospect, and (iii) to the extent
consented to in writing by the Tranche B Noteholders, leasehold and 3-D seismic
acquisition costs and development costs for oil and gas prospects other than the
Initial Prospects.
(c) The Company will apply the proceeds of the Tranche C Advances to
pay for (i) with respect to the first $1,000,000 of Tranche C Advances, the
Company's share of drilling and completion costs for the initial well to be
drilled on each of Raceland Prospect and the Green's Lake Prospect and (ii) with
respect to the Tranche C Advances in excess of $1,000,000, the Company's share
of completion costs for the initial xxxxx to be drilled on each of the Raceland
Prospect and the Green's Lake Prospect, or for such other purpose as may be
consented to in writing by the Tranche C Noteholders.
(d) No part of the proceeds of any Advance will be used, directly or
indirectly, for the purpose of buying or carrying any margin stock within the
meaning of Regulation G of the Board of Governors of the Federal Reserve System
(12 C.F.R. 207), or for the purpose of buying or carrying or trading in any
securities under such circumstances as to involve the Company in a violation of
Regulation X of said Board (12 C.F.R. 224) or to involve any broker or dealer in
a violation of Regulation T of said Board (12 C.F.R. 220).
SECTION 5.14. STATUS UNDER CERTAIN STATUTES. The Company is not
subject to regulation under the Investment Company Act of 1940, as amended, the
Public Utility Holding Company Act of 1935, as amended, the Interstate Commerce
Act, as amended, or the Federal Power Act, as amended.
SECTION 5.15. SECURITIES MATTERS. Other than offers to Accredited
Investors, neither the Company nor anyone acting on its behalf has directly or
indirectly offered the Notes or any part thereof or any similar securities for
sale to, or solicited any offer to buy any of the same from, or otherwise
approached or negotiated in respect thereof with, anyone other than the
Noteholders named in SCHEDULE A. Neither the Company nor anyone acting on its
behalf has taken or will take any action which would subject the issuance and
sale of the Notes to the registration and prospectus delivery provisions of the
Securities Act.
SECTION 5.16. ENVIRONMENTAL MATTERS. The Company has no knowledge of
any claim and has not received any notice of any claim, and no proceeding has
been instituted of which the Company has notice raising any claim against the
Company or any of its real properties now or formerly owned, leased or operated
by the Company or other assets, alleging any damage to the environment or
violation of any Environmental Laws, except, in each case, such as would not
reasonably be expected to result in a Material Adverse Effect on the Company.
Except as otherwise disclosed to the Noteholders in writing, (a) the Company has
no knowledge of any facts which would give rise to any claim, public or private,
of violation of Environmental Laws or damage to the environment emanating from,
occurring on or in any way related to real properties now or formerly
Exhibit 10.1 - Page 13
owned, leased or operated by the Company or to other assets or their use,
except, in each case, such as would not reasonably be expected to result in a
Material Adverse Effect on the Company; (b) Company has not stored any Hazardous
Materials on real properties now or formerly owned, leased or operated by the
Company and has not disposed of any Hazardous Materials in a manner contrary to
any Environmental Laws in each case in any manner that would reasonably be
expected to result in a Material Adverse Effect on the Company; and (c) all
buildings on all real properties now owned, leased or operated by the Company
are in compliance with applicable Environmental Laws, except where failure to
comply would not reasonably be expected to result in a Material Adverse Effect
on the Company.
ARTICLE VI
REPRESENTATIONS OF THE PURCHASER
SECTION 6.01. PURCHASE FOR INVESTMENT. Each Noteholder represents
that it is acquiring its Note(s) for its own account or for one of its separate
accounts (or for the account of trusts for which it is trustee) for investment
with no intention of presently distributing or reselling the same, subject,
nevertheless, to its right to dispose of, in compliance with all applicable
securities laws, its respective Note(s), or any part of any thereof held by it,
if at some future time in its sole discretion it deems it advisable so to do.
Each Noteholder hereby agrees that it will not sell, transfer or otherwise
dispose of its Note(s) in violation of the Securities Act.
SECTION 6.02. STATUS; NO REGISTRATION. Each Noteholder represents
that it is an Accredited Investor. Each Noteholder acknowledges that the Notes
have not been registered under the Securities Act, and that such Notes must be
held indefinitely unless they are subsequently registered under the Securities
Act or an exemption from such registration is available.
ARTICLE VII
PAYMENT OF THE NOTES
SECTION 7.01. PLACE OF PAYMENT. The Company will pay all sums
becoming due to any Noteholder under any Transaction Document by the method and
at the address specified for such purpose below such Noteholder's name in
SCHEDULE A, or by such other method or at such other address as such Noteholder
shall have from time to time specified to the Company in writing for such
purpose, without the presentation or surrender of such Note or the making of any
notation thereon, except that upon written request of the Company made
concurrently with or reasonably promptly after payment or prepayment in full of
any Note, the holder of such Note shall surrender such Note for cancellation,
reasonably promptly after any such request, to the Company at its principal
executive office.
Exhibit 10.1 - Page 14
SECTION 7.02. PAYMENTS DUE ON NON-BUSINESS DAYS. Anything in this
Agreement or the Notes to the contrary notwithstanding, any payment of principal
of or interest on any Note that is due on a date other than a Business Day shall
be made on the next succeeding Business Day without including the additional
days elapsed in the computation of the interest payable on such next succeeding
Business Day.
SECTION 7.03. NO OPTIONAL PREPAYMENTS OF TRANCHE A NOTES OR TRANCHE
C NOTES. The Company shall not have the right to prepay the Tranche A Notes or
the Tranche C Notes, in whole or in part, prior to maturity.
SECTION 7.04. MANDATORY PREPAYMENTS OF TRANCHE B NOTES. Prepayments
on the Tranche B Notes shall be due and payable as follows:
(a) on each Monthly Payment Date when the Borrowing Base equals or
exceeds 120% of the outstanding principal amount of the Notes, a payment equal
to 75% of the Net Revenues for the second preceding month from such date (or, if
less, the entire unpaid principal of and accrued interest on the Tranche B
Notes) shall be due and payable; and
(b) on each Monthly Payment Date when the Borrowing Base is less
than 120% of the outstanding principal amount of the Notes, a payment equal to
100% of the Net Revenues for the second preceding month from such date (or, if
less, the entire unpaid principal of and accrued interest on the Tranche B
Notes) shall be due and payable.
All payments on the Tranche B Notes shall be applied pro rata, in accordance
with the principal amounts outstanding on the Tranche B Notes, first to accrued
but unpaid interest on the Tranche B Notes and the remainder, if any, to the
principal amount outstanding on the Tranche B Notes.
SECTION 7.05. OPTIONAL PREPAYMENT OF TRANCHE B NOTES. The Company
may, at its option, without notice, penalty, premium or fee, prepay at any time
all, or from time to time any part of, the Tranche B Notes at 100% of the
principal amount so prepaid, plus accrued and unpaid interest on such principal
amount. In the case of each partial prepayment of the Tranche B Notes, the
principal amount of the Tranche B Notes to be prepaid shall be allocated among
all of the Tranche B Notes at the time outstanding in proportion, as nearly as
practicable, to the respective unpaid principal amounts thereof not theretofore
called for prepayment.
SECTION 7.06. PURCHASE OF NOTES. The Company will not, and will not
permit any Affiliate to, purchase, redeem, prepay or otherwise acquire, directly
or indirectly, any of the outstanding Notes except upon the full and final
payment or exchange of the Notes in accordance with the terms of the Transaction
Documents. The Company will promptly cancel, or cause to be canceled, all Notes
acquired by it or any Affiliate by virtue of any payment or exchange of the
Notes pursuant to any provision of the Transaction Documents and no Notes may be
issued in substitution or exchange for any such Notes.
Exhibit 10.1 - Page 15
ARTICLE VIII
INFORMATION AS TO COMPANY
SECTION 8.01. FINANCIAL AND BUSINESS INFORMATION. The Company shall
deliver to each of the Noteholders:
(a) Within 45 days after the end of each quarterly fiscal period in
each fiscal year of the Company, copies of (i) a consolidated balance sheet of
the Company as at the end of such quarter, and (ii) consolidated statements of
income, changes in shareholders' equity and cash flows of the Company, for such
quarter and for the portion of the fiscal year ending with such quarter, setting
forth in each case in comparative form the figures for the corresponding periods
in the previous fiscal year, all in reasonable detail, prepared in accordance
with GAAP applicable to quarterly financial statements generally, and certified
by a Senior Financial Officer of the Company as fairly presenting, in all
material respects, the financial position of the companies being reported on and
their results of operations and cash flows, subject to changes resulting from
year-end adjustments.
(b) Within 90 days after the end of each fiscal year of the Company,
copies of (i) a consolidated balance sheet of the Company, as at the end of such
year, and (ii) consolidated statements of income, changes in shareholders'
equity and cash flows of the Company, for such year, setting forth in each case
in comparative form the figures for the previous fiscal year, all in reasonable
detail, prepared in accordance with GAAP, and accompanied by (A) an opinion
thereon of independent certified public accountants of recognized national
standing, which opinion shall state that such financial statements present
fairly, in all material respects, the financial position of the companies being
reported upon and their results of operations and cash flows and have been
prepared in conformity with GAAP, and that the examination of such accountants
in connection with such financial statements has been made in accordance with
generally accepted auditing standards, and that such audit provides a reasonable
basis for such opinion in the circumstances, and (B) a certificate of such
accountants stating that they have reviewed this Agreement and stating further
whether, in making their audit, they have become aware of any condition or event
that then constitutes a Default or an Event of Default, and, if they are aware
that any such condition or event then exists, specifying the nature and period
of the existence thereof.
(c) Within 20 days after the end of each calendar month, copies of
(i) a consolidated balance sheet of the Company as at the end of such month, and
(ii) consolidated statements of income, changes in shareholders' equity and cash
flows of the Company, for such month and for the portion of the fiscal year
ending with such month, setting forth in each case in comparative form the
figures for the corresponding periods in the previous fiscal year, all in
reasonable detail, prepared in accordance with GAAP applicable to monthly
financial statements generally, and certified by a Senior Financial Officer of
the Company as fairly presenting, in all material respects, the financial
position of the companies being reported on and their results of operations and
cash flows, subject to changes resulting from year-end adjustments.
Exhibit 10.1 - Page 16
(d) Within 60 days after the end of each calendar year, beginning
December 31, 1996, a reserve report (each an "ANNUAL RESERVE REPORT") in form
and substance satisfactory to the Noteholders, prepared by an independent
petroleum engineering firm satisfactory to the Noteholders setting forth as of
December 31 of such year the Future Net Revenue for the Company's Oil and Gas
Properties.
(e) On or before the 20th day of each month, commencing October 20,
1996, a reserve report prepared by the Company setting forth in reasonable
detail, the production from, and Gross Proceeds and Deductible Costs
attributable to, the Company's Oil and Gas Properties for the immediately
preceding month and such other information as the Noteholders may reasonably
request (each a "MONTHLY PRODUCTION REPORT").
(f) Promptly, and in any event within five Business Days after a
Responsible Officer of the Company becoming aware of the existence of any
Default or Event of Default or that any Person has given any notice or taken any
action with respect to a claimed default hereunder or that any Person has given
any notice or taken any action with respect to a claimed default of the type
referred to in SECTION 11.01, a written notice specifying the nature and period
of existence thereof and what action the Company is taking or proposes to take
with respect thereto.
(g) Promptly, and in any event within five Business Days after a
Responsible Officer of the Company becoming aware of any of the following, a
written notice setting forth the nature thereof and the action, if any, that the
Company or an ERISA Affiliate proposes to take with respect thereto: (i) with
respect to any Plan, any reportable event, as defined in section 4043(b) of
ERISA and the regulations thereunder, for which notice thereof has not been
waived pursuant to such regulations as in effect on the date hereof; or (ii) the
taking by the PBGC of steps to institute, or the threatening by the PBGC of the
institution of, proceedings under section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any Plan, or the receipt by the
Company or any ERISA Affiliate of a notice from a Multiemployer Plan that such
action has been taken by the PBGC with respect to such Multiemployer Plan; or
(iii) any event, transaction or condition that could result in the incurrence of
any liability by the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or the penalty or excise tax provisions of the Code relating to employee
benefit plans, or in the imposition of any Lien on any of the rights, properties
or assets of the Company or any ERISA Affiliate pursuant to Title I or IV of
ERISA or such penalty or excise tax provisions, if such liability or Lien, taken
together with any other such liabilities or Liens then existing, would
reasonably be expected to be Material as to the Company.
(h) Promptly, and in any event within five Business Days of receipt
thereof, copies of any notice to the Company from any Federal or state
Governmental Authority relating to any order, ruling, statute or other law or
regulation that would reasonably be expected to have a Material Adverse Effect
on the Company.
Exhibit 10.1 - Page 17
(i) Promptly, and in any event within five Business Days after a
Responsible Officer of the Company becoming aware thereof, any event which could
reasonably be expected to have a Material Adverse Effect on the Company.
(j) With reasonable promptness, such other data and information
relating to the business, operations, affairs, financial condition, assets or
properties of the Company or any of its Subsidiaries or relating to the ability
of the Company to perform its obligations hereunder and under the Notes as from
time to time may be reasonably requested by any Noteholder.
SECTION 8.02. OFFICER'S CERTIFICATE. Each set of financial
statements delivered to the Noteholders pursuant to SECTION 8.01(A), SECTION
8.01(B) or SECTION 8.01(C) shall be accompanied by a certificate of a Senior
Financial Officer of the Company stating that such officer has reviewed the
relevant terms hereof and has made, or caused to be made, under his or her
supervision, a review of the transactions and conditions of the Company from the
beginning of the monthly, quarterly or annual period covered by the statements
then being furnished to the date of the certificate and that such review shall
not have disclosed the existence during such period of any condition or event
that constitutes a Default or an Event of Default or, if any such condition or
event existed or exists (including, without limitation, any such event or
condition resulting from the failure of the Company to comply with any
Environmental Law), specifying the nature and period of existence thereof and
what action the Company shall have taken or proposes to take with respect
thereto.
SECTION 8.03. INSPECTION. The Company shall permit the
representatives of each Noteholder, at the expense of the Company, upon
reasonable prior notice to the Company and during normal business hours, to
visit and inspect any of the offices or properties of the Company, to examine
all its books of account, records, reports and other papers, to make copies and
extracts therefrom, and to discuss the Company's affairs, finances and accounts
with its officers and independent public accountants (and by this provision the
Company authorizes said accountants to discuss the affairs, finances and
accounts of the Company), all at such times and as often as may be requested.
ARTICLE IX
AFFIRMATIVE COVENANTS
The Company covenants that so long as any of the Commitments remain
in effect or any of the Notes are outstanding:
SECTION 9.01. COMPLIANCE WITH LAW; CONTRACTS. The Company will
comply with all laws, ordinances or governmental rules or regulations to which
it is subject, including, without limitation, Environmental Laws, and will
obtain and maintain in effect all licenses, certificates, permits, franchises
and other governmental authorizations necessary to the ownership of its
properties or to the conduct of its businesses, in each case to the extent
necessary to ensure that non-
Exhibit 10.1 - Page 18
compliance with such laws, ordinances or governmental rules or regulations or
failures to obtain or maintain in effect such licenses, certificates, permits,
franchises and other governmental authorizations would individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company. The Company will comply with, and perform its obligations under, each
contract or agreement to which it is a party, unless, in the good faith judgment
of the Company, the failure to so comply or perform would not reasonably be
expected to have a Material Adverse Effect on the Company.
SECTION 9.02. INSURANCE. (a) The Company will maintain, with
financially sound and reputable insurers, insurance with respect to its
properties (including its Oil and Gas Properties) against such casualties and
contingencies, of such types, on such terms and in such amounts as is customary
in the case of entities of established reputations engaged in the same or a
similar business and similarly situated, including the insurance set forth in
SCHEDULE 9.02. In addition, each such policy shall (i) be maintained with
financially sound and responsible insurance carriers authorized to do business
in the States of Texas and Louisiana, (ii) name the Company as a named insured
and the Noteholders as additional insureds or loss payees, as applicable,
thereunder (without any representation or warranty by or obligation upon the
Noteholders), (iii) provide that at least 30 days' prior written notice of
reduction, cancellation or lapse and at least 10 days' prior written notice of
non-payment of premium shall be given to the Noteholders by the insurer and (iv)
provide that the Noteholders may (but shall not be obligated to) cure any lapse
or breach by the Company during such 30-day period (or 10-day period, in the
case of non-payment).
(b) The Company shall, if so requested by the Noteholders, deliver
to the Noteholders duplicate policies of insurance, or if duplicate policies are
not readily available, cover notes or equivalent documentation satisfactory to
the Noteholders. In addition, annually or more frequently as may be reasonably
requested by the Noteholders, the Company shall furnish the Noteholders with
approved certification of all required insurance.
SECTION 9.03. MAINTENANCE OF PROPERTIES. The Company will maintain
and keep, or cause to be maintained and kept, its properties in good repair,
working order and condition (other than ordinary wear and tear), so that the
business carried on in connection therewith may be properly conducted at all
times.
SECTION 9.04. PAYMENT OF TAXES AND CLAIMS. The Company will file all
tax returns required to be filed in any jurisdiction and to pay and discharge
all taxes shown to be due and payable on such returns and all other taxes,
assessments, governmental charges, or levies imposed on them or any of their
properties, assets, income or franchises, to the extent such taxes and
assessments have become due and payable and before they have become delinquent
and all claims for which sums have become due and payable that have or might
become a Lien on properties or assets of the Company, provided that the Company
need not pay any such tax or assessment or claims if (i) the amount,
applicability or validity thereof is contested by the Company on a timely basis
in good faith and in appropriate proceedings, and the Company has established
adequate reserves therefor in accordance with GAAP on the books of the Company
or (ii) the nonpayment of
Exhibit 10.1 - Page 19
all such taxes and assessments in the aggregate would not reasonably be expected
to have a Material Adverse Effect on the Company.
SECTION 9.05. CORPORATE EXISTENCE, ETC. The Company will at all
times preserve and keep in full force and effect its corporate existence. The
Company will at all times preserve and keep in full force and effect all rights
and franchises of the Company unless, in the good faith judgment of the Company,
the termination of or failure to preserve and keep in full force and effect such
corporate existence, right or franchise would not, individually or in the
aggregate, reasonably be expected to have a Material Adverse Effect on the
Company.
SECTION 9.06. LIEN ON ADDITIONAL OIL AND GAS PROPERTIES. Promptly
after acquiring any additional Oil and Gas Properties not covered by the Initial
Mortgage, the Company shall execute, acknowledge and deliver to the Noteholders
Security Documents in form and substance satisfactory to the Noteholders
granting a first priority Lien on such Oil and Gas Properties and related assets
acquired by the Company.
SECTION 9.07. OVERRIDING ROYALTY INTERESTS. Prior to commencing
drilling operations on any well to be drilled and/or completed with proceeds of
Tranche B Advances, the Company shall execute, acknowledge and deliver to the
Tranche B Noteholders an assignment of overriding royalty interest in a form
reasonably satisfactory to the Tranche B Noteholders conveying to the Tranche B
Noteholders an overriding royalty interest in and to the Oil and Gas Properties
attributable to such well equal to 1% of 8/8ths of the Hydrocarbons produced and
saved from such well, reduced in the same proportion as the Company's undivided
working interest in such well bears to 100%. If (a) proceeds of any Tranche B
Advances are to be used for purposes other than Initial Prospect Development
Costs, (b) the Tranche B Noteholders have consented to such use of proceeds in
accordance with SECTIONS 4.02(C) AND 5.13(B), and (c) such consent by the
Tranche B Noteholders is subject to the assignment to the Tranche B Noteholders
of an overriding royalty interest mutually agreed to by the Company and the
Tranche B Noteholders in the Oil and Gas Properties to be acquired and/or
developed with the proceeds of such Tranche B Advances, the Company shall
execute, acknowledge and deliver to the Tranche B Noteholders an assignment of
such mutually agreed to overriding royalty interest.
ARTICLE X
NEGATIVE COVENANTS
The Company covenants that so long as any of the Commitments remain
in effect or any of the Notes are outstanding:
SECTION 10.01. RESTRICTIONS ON INDEBTEDNESS. The Company will not
create, incur, assume, Guaranty or permit to exist any Indebtedness, except the
Notes.
Exhibit 10.1 - Page 20
SECTION 10.02. RESTRICTIONS ON LIENS. The Company will not create,
incur, assume, or permit to exist any Lien with respect to any asset now owned
or hereafter acquired, except:
(a) Liens in favor of the Noteholders;
(b) encumbrances consisting of easements of ingress or egress over
real property, where the same do not materially detract from the use or
enjoyment of such property by, or the value of such property to, the
Company;
(c) Liens for taxes or assessments or governmental charges or
levies, if payment shall not at the time be required to be made in
accordance with the provisions of SECTION 9.04;
(d) statutory liens of landlords and liens of carriers,
warehousemen, mechanics, laborers and materialmen incurred in the ordinary
course of business for sums not yet due or being contested in good faith;
(e) Liens (other than liens created by section 4068 of ERISA)
incurred on pledges or deposits made in the ordinary course of business in
connection with workmen's compensation, unemployment insurance, social
security laws or similar legislation;
(f) all contracts, agreements and instruments, and all defects and
irregularities and other matters affecting the Company's Oil and Gas
Properties which were in existence at the time such Oil and Gas Properties
were originally acquired by the Company and all routine operational
agreements entered into in the ordinary course of business, which
contracts, agreements, instruments, defects, irregularities and other
matters and routine operational agreements do not reduce the Company's net
interest in production in its Oil and Gas Properties below the interests
reflected in each Annual or Supplemental Reserve Report or the interests
warranted under this Agreement and do not interfere Materially with the
operation, value or use of the Company's Oil and Gas Properties; and
(g) royalties, overriding royalties, reversionary interests,
production payments and similar burdens granted by the Company with
respect to its Oil and Gas Properties to the extent such burdens do not
reduce the Company's net interests in production in its Oil and Gas
Properties below the interests reflected in each Annual or Supplemental
Reserve Report or the interests warranted under this Agreement and do not
operate to deprive the Company of any Material rights in respect of its
Oil and Gas Properties.
SECTION 10.03. FINANCIAL COVENANTS. The Company will not permit:
(a) its Current Assets, at any time, to be less than the sum of (i)
its Current Liabilities MINUS (ii) any portion of such Current Liabilities
consisting of amounts owing on the Notes; and
Exhibit 10.1 - Page 21
(b) the ratio of (i) the Borrowing Base to (ii) the outstanding
principal of and accrued, but unpaid, interest on the Notes to be less
than 1.15 to 1.0 at any time on or after April 1, 1998.
SECTION 10.04. RESTRICTED DISBURSEMENTS. The Company will not make
or commit to make any Restricted Disbursements except:
(a) Permitted Investments;
(b) Capital Expenditures made in connection with the exploration and
development of the Initial Prospects and such other Capital Expenditures
as may be agreed to in writing by the Noteholders;
(c) advances or extension of credit on terms customary in the oil
and gas industry in the form of accounts receivable made in the ordinary
course of business; and
(d) so long as no Default or Event of Default has occurred and is
continuing, dividends to Parent that are used by Parent to make Permitted
Shareholder Debt Payments and Permitted Preferred Stock Dividends.
SECTION 10.05. MERGER, CONSOLIDATION, ETC. The Company shall not
consolidate with or merge with any other Person or convey, transfer or lease all
or substantially all of its assets in a single transaction or series of
transactions to any Person.
SECTION 10.06. RESTRICTIONS ON ASSET SALES. Without the Noteholders'
prior written consent, the Company will not sell, transfer, assign, convey or
otherwise dispose of an interest in any Oil and Gas Properties or other asset
now owned or hereafter acquired, except for the sale of Hydrocarbon production
in the ordinary course of business.
SECTION 10.07. TRANSACTIONS WITH AFFILIATES. The Company will not
enter into directly or indirectly any Material transaction or Material group of
related transactions (including without limitation the purchase, lease, sale or
exchange of properties of any kind or the rendering of any service) with any
Affiliate, except in the ordinary course and pursuant to the reasonable
requirements of the Company's business and upon fair and reasonable terms no
less favorable to the Company than would be obtainable in a comparable
arm's-length transaction with a Person not an Affiliate.
SECTION 10.08. CHANGE IN BUSINESS. The Company will not directly or
indirectly engage to a Material extent in any business other than the
Hydrocarbon exploration and production business, or discontinue such business or
substantially alter its method of doing business.
Exhibit 10.1 - Page 22
SECTION 10.09. SHAREHOLDER DEBT. Except for permitted dividend
payments to Parent under SECTION 10.04(D), the Company will not directly or
indirectly make any payment of principal or interest on the Bridge Shareholder
Debt or the New Shareholder Debt.
ARTICLE XI
DEFAULT AND REMEDIES
SECTION 11.01. EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist
if any of the following conditions or events shall occur and be continuing:
(a) the Company defaults in the payment of any principal or interest
on any Note when the same becomes due and payable, whether at maturity, by
declaration or otherwise; or
(b) the Company defaults in the performance of or compliance with
any term contained in ARTICLE X hereof or Parent defaults in the
performance or compliance with any term of ARTICLE VII of the Guaranty and
Exchange Agreement; or
(c) the Company, Parent, or the holders of the Bridge Shareholder
Debt or the New Shareholder Debt default in the performance of or
compliance with any term contained in the Transaction Documents to which
they are a party (other than those referred to in paragraphs (a) and (b)
of this SECTION 11.01) and such default is not remedied within 30 days
after the earlier of (i) a Responsible Officer obtains actual knowledge of
such default or (ii) the Company receives written notice of such default
from any holder of a Note; or
(d) any representation or warranty made in writing by or on behalf
of the Company or Parent or by any officer of the Company or Parent in
this Agreement or the other Transaction Documents or in any writing
furnished in connection with the transactions contemplated hereby or
thereby proves to have been false or incorrect in any Material respect on
the date as of which made; or
(e) (i) Parent, the Company or any other Subsidiary of Parent is in
default (as principal or as guarantor or other surety) in the payment of
any principal of or premium or interest on any Indebtedness that is
outstanding in an aggregate principal amount of at least $100,000 beyond
any period of grace provided with respect thereto, or (ii) Parent, the
Company or any other Subsidiary of Parent is in default in the performance
of or compliance with any term of any evidence of any Indebtedness in an
aggregate outstanding principal amount of at least $100,000 or of any
mortgage, indenture or other agreement relating thereto or any other
condition exists, and as a consequence of such default or condition such
Indebtedness has become, or has been declared (or one or more Persons are
entitled to declare such Indebtedness to be), due and payable before its
stated maturity or before its regularly scheduled dates of payment, or
(iii) as a consequence of the occurrence or
Exhibit 10.1 - Page 23
continuation of any event or condition (other than the passage of time or
the right of the holder of Indebtedness to convert such Indebtedness into
equity interests), (x) Parent, the Company or any other Subsidiary of
Parent has become obligated to purchase or repay Indebtedness before its
regular maturity or before its regularly scheduled dates of payment, in an
aggregate outstanding principal amount of at least $100,000 or (y) one or
more Persons have the right to require Parent, the Company or any other
Subsidiary of Parent to purchase or repay such Indebtedness; or
(f) Parent, the Company or any other Subsidiary of Parent (i) is
generally not paying, or admits in writing its inability to pay, its debts
as they become due, (ii) files, or consents by answer or otherwise to the
filing against it of, a petition for relief or reorganization or
arrangement or any other petition in bankruptcy, for liquidation or to
take advantage of any bankruptcy, insolvency, reorganization, moratorium
or other similar law of any jurisdiction, (iii) makes an assignment for
the benefit of its creditors, (iv) consents to the appointment of a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, (v)
is adjudicated as insolvent or to be liquidated, or (vi) takes corporate
action for the purpose of any of the foregoing; or
(g) a Governmental Authority enters an order appointing, without
consent by Parent, the Company or any other Subsidiary of Parent, a
custodian, receiver, trustee or other officer with similar powers with
respect to it or with respect to any substantial part of its property, or
constituting an order for relief or approving a petition for relief or
reorganization or any other petition in bankruptcy or for liquidation or
to take advantage of any bankruptcy or insolvency law of any jurisdiction,
or ordering the dissolution, winding-up or liquidation of Parent, the
Company or any other Subsidiary of Parent or any such petition shall be
filed against Parent, the Company or any other Subsidiary of Parent and
such petition shall not be dismissed within 60 days; or
(h) a final judgment or judgments for the payment of money
aggregating in excess of $250,000 are rendered against Parent, the Company
or any other Subsidiary of Parent and such judgments are not, within 60
days after entry thereof, bonded, discharged or stayed pending appeal, or
are not discharged within 60 days after the expiration of such stay; or
(i) if (i) any Plan shall fail to satisfy the minimum funding
standards of ERISA or the Code for any plan year or part thereof or a
waiver of such standards or extension of any amortization period is sought
or granted under section 412 of the Code, (ii) a notice of intent to
terminate any Plan shall have been or is reasonably expected to be filed
with the PBGC or the PBGC shall have instituted proceedings under ERISA
section 4042 to terminate or appoint a trustee to administer any Plan or
the PBGC shall have notified Parent, the Company or any other Subsidiary
of Parent or any ERISA Affiliate that a Plan may become subject to any
such proceedings (iii) the aggregate "amount of unfunded benefit
liabilities"
Exhibit 10.1 - Page 24
(within the meaning of section 4001(a)(18) of ERISA) under all Plans,
determined in accordance with Title IV of ERISA, shall exceed $25,000,
(iv) Parent, the Company or any other Subsidiary of Parent or any ERISA
Affiliate shall have incurred or is reasonably expected to incur any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans, (v) Parent, the
Company or any other Subsidiary of Parent or any ERISA Affiliate withdraws
from any Multiemployer Plan, (vi) Parent, the Company or any other
Subsidiary of Parent or any ERISA Affiliate fails to make any contribution
due, or payment to, any employee benefit plan, or (vii) Parent, the
Company or any other Subsidiary of Parent establishes or amends any
employee welfare benefit plan that provides post-employment welfare
benefits in a manner that would increase the liability of Parent, the
Company or any ERISA Affiliate thereunder, and any such event or events
described in clauses (i) through (vii) above, either individually or
together with any other such event or events, could reasonably be expected
to have a Material Adverse Effect. As used in this Section 11.01(i), the
terms "EMPLOYEE BENEFIT PLAN" and "EMPLOYEE WELFARE BENEFIT PLAN" shall
have the respective meanings assigned to such terms in Section 3 of ERISA;
or
(j) Parent fails to own (both beneficially and of record) 100% of
the common stock and other equity securities of the Company.
SECTION 11.02. ACCELERATION.
(a) If an Event of Default with respect to the Company described in
paragraph (f) or (g) of SECTION 11.01 (other than an Event of Default described
in clause (i) of paragraph (f) or described in clause (vi) of paragraph (f) by
virtue of the fact that such clause encompasses clause (i) of paragraph (f)) has
occurred, (i) all unfunded Commitments shall automatically terminate and (ii)
all amounts then outstanding under the Notes shall automatically become
immediately due and payable.
(b) If any other Event of Default has occurred and is continuing,
the Required Holders at any time at its or their option, by notice or notices to
the Company, may (i) terminate all unfunded Commitments and (ii) declare all
amounts then outstanding under the Notes to be immediately due and payable.
Upon any Notes becoming due and payable under this SECTION 11.02,
whether automatically or by declaration, such Notes will forthwith mature and
the entire unpaid principal amount of such Notes, plus all accrued and unpaid
interest thereon, shall all be immediately due and payable, in each and every
case without presentment, demand, notice of default, notice of intent to
accelerate, notice of acceleration, protest or further notice, all of which are
hereby waived.
Exhibit 10.1 - Page 25
SECTION 11.03. OTHER REMEDIES. If any Default or Event of Default
has occurred and is continuing, and irrespective of whether any Notes have
become or have been declared immediately due and payable under SECTION 11.02,
the Required Holders may proceed to protect and enforce the rights of the
Noteholders by an action at law, suit in equity or other appropriate proceeding,
whether for the specific performance of any agreement contained herein or in any
Note, or for an injunction against a violation of any of the terms hereof or
thereof, or in aid of the exercise of any power granted hereby or thereby or by
law or otherwise.
SECTION 11.04. NO WAIVERS OR ELECTION OF REMEDIES, EXPENSES, ETC. No
course of dealing and no delay on the part of any holder of any Note in
exercising any right, power or remedy shall operate as a waiver thereof or
otherwise prejudice such holder's rights, powers or remedies. No right, power or
remedy conferred by this Agreement or by any Note upon any holder thereof shall
be exclusive of any other right, power or remedy referred to herein or therein
or now or hereafter available at law, in equity, by statute or otherwise.
Without limiting the obligations of the Company under SECTION 14.01, the Company
will pay to the holder of each Note on demand such further amount as shall be
sufficient to cover all reasonable costs and expenses of such holder incurred in
any enforcement or collection under this ARTICLE XI, including, without
limitation, reasonable attorneys' fees, expenses and disbursements, together
with interest on such amounts at the Default Rate accruing from the date of
demand.
ARTICLE XII
BORROWING BASE
SECTION 12.01. INITIAL BORROWING BASE. At all times prior to April
1, 1998, the borrowing base (as redetermined from time to time under this
Article XII, the "BORROWING BASE") shall equal or exceed $1,400,000.
SECTION 12.02. ANNUAL DETERMINATION OF BORROWING BASE. The Borrowing
Base shall be redetermined as of April 1 of each year commencing April 1, 1998
and shall equal the Future Net Revenue for the Company's Oil and Gas Properties
as set forth in the most recent Annual Reserve Report delivered to the
Noteholders under SECTION 8.01(D) as adjusted for production and pricing changes
for the period from the date of such Annual Reserve Report to the date of such
redetermination; provided, however, that if the Future Net Revenue set forth in
the Annual Reserve Report (as adjusted) exceeds 110% of the Future Net Revenue
as determined in good faith by the Noteholders' reserve engineer and the
Noteholders deliver written notice to the Company within fifteen (15) Business
Days after receipt of such Annual Reserve Report that such a difference exists,
then the independent engineering firm that prepared the Annual Reserve Report
and the Noteholders' reserve engineer shall jointly select another independent
petroleum engineering firm to determine the Future Net Revenue and the Borrowing
Base shall equal the average of the two lowest Future Net Revenue
determinations.
Exhibit 10.1 - Page 26
SECTION 12.03. UNSCHEDULED DETERMINATIONS OF BORROWING BASE. In
addition, at any time after Closing, the Company or the Required Holders may
initiate a redetermination of the Borrowing Base as they so elect (each an
"UNSCHEDULED BORROWING BASE REDETERMINATION") by giving notice to the
Noteholders or the Company, as applicable; provided that the Required Holders
and the Company may initiate only one such Unscheduled Borrowing Base
Redetermination during any consecutive six month period. Within 30 days after
the Company gives or receives notice of an Unscheduled Borrowing Base
Redetermination under this SECTION 12.03, the Company shall furnish the
Noteholders a reserve report (each a "SUPPLEMENTAL RESERVE REPORT") in form and
substance satisfactory to the Noteholders, prepared by an independent petroleum
engineering firm satisfactory to the Noteholders setting forth as of the date of
the notice of such Unscheduled Borrowing Base Redetermination, the Future Net
Revenue for the Company's Oil and Gas Properties. The Borrowing Base shall be
redetermined as of the 30th day following the Noteholders' receipt of the
Supplemental Reserve Report and shall equal the Future Net Revenue for the
Company's Oil and Gas Properties as set forth in such Supplemental Reserve
Report as adjusted for production and pricing changes for the period from the
date of such Supplemental Reserve Report to the date of such redetermination;
provided, however, that if the Future Net Revenue set forth in such Supplemental
Reserve Report (as adjusted) exceeds 110% of the Future Net Revenue as
determined in good faith by the Noteholders' reserve engineer and the
Noteholders deliver written notice to the Company within fifteen (15) Business
Days after receipt of such Supplemental Reserve Report that such a difference
exists, then the independent engineering firm that prepared such Supplemental
Reserve Report and the Noteholders' reserve engineer shall jointly select
another independent petroleum engineering firm to determine the Future Net
Revenue and the Borrowing Base shall equal the average of the two lowest Future
Net Revenue determinations.
SECTION 12.04. BORROWING BASE REMAINS IN EFFECT. The Borrowing Base
as determined and redetermined from time to time under this ARTICLE XII shall
remain in effect until redetermined hereunder.
ARTICLE XIII
REGISTRATION; EXCHANGE; SUBSTITUTION OF NOTES
SECTION 13.01. REGISTRATION OF NOTES. The Company shall keep at its
principal executive office a register for the registration and registration of
transfers of Notes. The name and address of each holder of one or more Notes,
each transfer thereof and the name and address of each transferee of one or more
Notes shall be registered in such register. Prior to due presentment for
registration of transfer, the Person in whose name any Note shall be registered
shall be deemed and treated as the owner and holder thereof for all purposes
hereof, and the Company shall not be affected by any notice or knowledge to the
contrary. The Company shall give to any holder of a Note promptly upon request
therefor, a complete and correct copy of the names and addresses of all
registered holders of Notes.
Exhibit 10.1 - Page 27
SECTION 13.02. TRANSFER AND EXCHANGE OF NOTES. Subject to compliance
with all applicable securities laws, upon surrender of any Note at the principal
executive office of the Company for registration of transfer or exchange (and in
the case of a surrender for registration of transfer, duly endorsed or
accompanied by a written instrument of transfer duly executed by the registered
holder of such Note or his attorney duly authorized in writing and accompanied
by the address for notices of each transferee of such Note or part thereof), the
Company shall execute and deliver, at the Company's expense, one or more new
Notes (as requested by the holder thereof) in exchange therefor, in an aggregate
principal amount equal to the unpaid principal amount of the surrendered Note.
Each such new Note shall be payable to such Person as such holder may request
and shall be substantially in the form specified herein. Each such new Note
shall be dated and bear interest from the date to which interest shall have been
paid on the surrendered Note or dated the date of the surrendered Note if no
interest shall have been paid thereon.
SECTION 13.03. REPLACEMENT OF NOTES. Upon receipt by the Company of
evidence reasonably satisfactory to it of the ownership of and the loss, theft,
destruction or mutilation of any Note, and (a) in the case of loss, theft or
destruction, of indemnity reasonably satisfactory to it (provided that if the
holder of such Note is, or is a nominee for, an original Noteholder, such
Person's own unsecured agreement of indemnity shall be deemed to be
satisfactory), or (b) in the case of mutilation, upon surrender and cancellation
thereof, the Company at its own expense shall execute and deliver, in lieu
thereof, a new Note, dated and bearing interest from the date to which interest
shall have been paid on such lost, stolen, destroyed or mutilated Note or dated
the date of such lost, stolen, destroyed or mutilated Note if no interest shall
have been paid thereon.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.01. TRANSACTION EXPENSES. Whether or not the transactions
contemplated hereby are consummated, the Company will pay all reasonable costs
and expenses (including reasonable attorneys' fees of a special counsel and any
local or other counsel) incurred by the Noteholders or holder of a Note in
connection with such transactions and in connection with any amendments, waivers
or consents under or in respect of this Agreement or the other Transaction
Documents (whether or not such amendment, waiver or consent becomes effective),
including, without limitation: (a) the reasonable costs and expenses incurred in
enforcing or defending (or determining whether or how to enforce or defend) any
rights under this Agreement or the other Transaction Documents or in responding
to any subpoena or other legal process or informal investigative demand issued
in connection with this Agreement or the other Transaction Documents, or by
reason of being a holder of any Note, (b) the reasonable costs and expenses of
negotiation, preparation and execution of this Agreement and the other
Transaction Documents, and (c) the reasonable costs and expenses, including
reasonable financial advisors' fees, incurred in connection with the insolvency
or bankruptcy of the Company or in connection with any proposed or finalized
work-out or restructuring of the transactions contemplated hereby and by the
Notes. The Company will pay, and will save the Noteholders and each other holder
of a Note harmless from, all claims
Exhibit 10.1 - Page 28
in respect of any fees, costs or expenses, if any, of brokers and finders (other
than those retained by the Noteholders). The obligations of the Company under
this SECTION 14.01 will survive the payment or transfer of any Note, the
enforcement, amendment or waiver of any provision of this Agreement or the other
Transaction Documents, and the termination of this Agreement.
SECTION 14.02. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties contained herein shall survive the execution and
delivery of this Agreement and the Notes, the purchase or transfer by the
Noteholders of any Note or portion thereof or interest therein and the payment
of any Note, and may be relied upon by any subsequent holder of a Note,
regardless of any investigation made at any time by or on behalf of the
Noteholders or any other holder of a Note. All statements contained in any
certificate or other instrument delivered by or on behalf of the Company
pursuant to this Agreement shall be deemed representations and warranties of the
Company under this Agreement.
SECTION 14.03. AMENDMENT AND WAIVER. This Agreement and the Notes
may be amended, and the observance of any term hereof or of the Notes may be
waived (either retroactively or prospectively), with (and only with) the written
consent of the Company and the Required Holders, except that (a) no amendment or
waiver of any of the provisions of ARTICLES II, III, IV OR V, or any defined
term (as it is used therein), will be effective as to the Noteholders unless
consented to by all of the Noteholders in writing, and (b) no such amendment or
waiver may, without the written consent of the holder of each Note at the time
outstanding affected thereby, (i) subject to the provisions of ARTICLE XI
relating to acceleration or rescission, change the amount or time of any payment
of principal of, or reduce the rate or change the time of payment or method of
computation of interest on, the Notes, or (ii) change the percentage of the
principal amount of the Notes the holders of which are required to consent to
any such amendment or waiver. Any amendment or waiver consented to as provided
in this SECTION 14.03 applies equally to all holders of the Notes and is binding
upon them and upon each future holder of any Note and upon the Company and
Parent without regard to whether such Note has been marked to indicate such
amendment or waiver. No such amendment or waiver will extend to or affect any
obligation, covenant, agreement, Default or Event of Default not expressly
amended or waived or impair any right consequent thereon. No course of dealing
between the Company or Parent and the holder of any Note nor any delay in
exercising any rights hereunder or under any Note shall operate as a waiver of
any rights of any holder of such Note.
SECTION 14.04. NOTICES. All notices and communications provided for
hereunder shall be in writing and sent (a) by telecopy if the sender on the same
day sends a confirming copy of such notice by a recognized overnight delivery
service (charges prepaid), or (b) by registered or certified mail with return
receipt requested (postage prepaid), or (c) by a recognized overnight delivery
service (with charges prepaid). Any such notice must be sent: if to a
Noteholder, to its address specified for such communications in SCHEDULE A, or
at such other address as it shall have specified to the Company in writing, if
to the Company, to the Company at 0000 Xxxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000, Telecopy No. 713-652-9601, or at such other address as the Company
Exhibit 10.1 - Page 29
shall have specified to the holder of each Note in writing. Notices under this
SECTION 14.04 will be deemed given only when actually received.
SECTION 14.05. LIMITATION ON INTEREST. Each provision in this
Agreement and each other Transaction Document is expressly limited so that in no
event whatsoever shall the amount paid, or otherwise agreed to be paid, by the
Company for the use, forbearance or detention of the money to be loaned under
this Agreement or any other Transaction Document or otherwise (including any
sums paid as required by any covenant or obligation contained herein or in any
other Transaction Document which is for the use, forbearance or detention of
such money), exceed that amount of money which would cause the effective rate of
interest thereon to exceed the Highest Lawful Rate, and all amounts owed under
this Agreement and each other Transaction Document shall be held to be subject
to reduction to the effect that such amounts so paid or agreed to be paid which
are for the use, forbearance or detention of money under this Agreement or such
Transaction Document shall in no event exceed that amount of money which would
cause the effective rate of interest thereon to exceed the Highest Lawful Rate.
Notwithstanding the provisions of SECTION 14.13, to the extent that the Highest
Lawful Rate applicable to a Noteholder is at any time determined by Texas law,
such rate shall be the "indicated rate ceiling" described in Section (a)(1) of
Article 1.04 of Chapter 1, Title 79, of the Revised Civil Statutes of Texas,
1925, as amended; PROVIDED, HOWEVER, to the extent permitted by such Article,
the Noteholders from time to time by notice to Company may revise the aforesaid
election of such interest rate ceiling as such ceiling affects the then-current
or future balances of the loans outstanding under the Notes. Notwithstanding any
provision in this Agreement or any other Transaction Document to the contrary,
if the maturity of the Notes or the obligations in respect of the other
Transaction Documents are accelerated for any reason, or in the event of
prepayment of all or any portion of the Notes or the obligations in respect of
the other Transaction Documents by the Company or in any other event, earned
interest on the Notes and such other obligations of the Company may never exceed
the maximum amount permitted by applicable law, and any unearned interest
otherwise payable under the Notes or the obligations in respect of the other
Transaction Documents that is in excess of the maximum amount permitted by
applicable law shall be canceled automatically as of the date of such
acceleration or prepayment or other such event and, if theretofore paid, shall
be credited on the principal of the Notes or, if the principal of the Notes has
been paid in full, refunded to the Company. In determining whether or not the
interest paid or payable, under any specific contingency, exceeds the Highest
Lawful Rate, the Company and the Noteholders shall, to the maximum extent
permitted by applicable law, amortize, prorate, allocate and spread, in equal
parts during the period of the actual term of this Agreement, all interest at
any time contracted for, charged, received or reserved in connection with the
Transaction Documents.
SECTION 14.06. INDEMNIFICATION. The Company agrees to indemnify,
defend and hold each Noteholder, their partners and their respective officers,
employees, agents, directors, partners, affiliates and shareholders
(collectively, "INDEMNIFIED PERSONS") harmless from and against any and all
loss, liability, damage, judgment, claim, deficiency or reasonable expense
(including interest, penalties, reasonable attorneys' fees and amounts paid in
settlement) incurred by or asserted against any Indemnified Person arising out
of, in any way connected with, or as a
Exhibit 10.1 - Page 30
result of (a) the execution and delivery of this Agreement and the other
documents contemplated hereby, the performance by the parties hereto and thereto
of their respective obligations hereunder and thereunder and the consummation of
the transactions contemplated hereby and thereby, (b) the actual or proposed use
of the proceeds of the loans contemplated hereby, (c) any violation by the
Company or any of its Subsidiaries of any requirement of law, including but not
limited to Environmental Laws, (d) any Noteholder being deemed an operator of
any real or personal property of the Company in circumstances in which no
Noteholder is generally operating or generally exercising control over such
property, to the extent such losses, liabilities, damages, judgments, claims,
deficiencies or expenses arise out of or result from any Hazardous Materials
located in, on or under such property or (e) any claim, litigation,
investigation or proceeding relating to any of the foregoing, whether or not any
Indemnified Person is a party thereto; PROVIDED that such indemnity shall not
apply to any such losses, claims, damages, liabilities or related expenses that
are determined by a court of competent jurisdiction by final and nonappealable
judgment to have resulted from the gross negligence or willful misconduct of, or
willful violation of the Transaction Documents by, such Indemnified Person.
WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR ANY OF THE OTHER TRANSACTION
DOCUMENTS, IT IS THE EXPRESS INTENTION OF THE PARTIES THAT EACH INDEMNIFIED
PERSON SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DEFICIENCIES, JUDGMENTS AND REASONABLE EXPENSES ARISING OUT
OF OR RESULTING FROM THE ORDINARY NEGLIGENCE (WHETHER SOLE OR CONTRIBUTORY) OF
SUCH INDEMNIFIED PERSON. Each Indemnified Person will attempt to consult with
the Company prior to entering into any settlement of any lawsuit or proceeding
that could give rise to a claim for indemnity under this SECTION 14.06, although
nothing herein shall give the Company the right to direct, or control any such
settlement negotiations or any related lawsuit or proceeding on behalf of such
Indemnified Party. The obligations of the Company under this SECTION 14.06 shall
survive the termination of this Agreement and repayment of the Notes.
SECTION 14.07. SUCCESSORS AND ASSIGNS. All covenants and other
agreements contained in this Agreement by or on behalf of any of the parties
hereto bind and inure to the benefit of their respective successors and assigns
(including, without limitation, any subsequent holder of a Note) whether so
expressed or not.
SECTION 14.08. SEVERABILITY. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall (to the full extent permitted by law)
not invalidate or render unenforceable such provision in any other jurisdiction.
Exhibit 10.1 - Page 31
SECTION 14.09. COUNTERPARTS. This Agreement may be executed in any
number of counterparts, each of which shall be an original but all of which
together shall constitute one instrument. Each counterpart may consist of a
number of copies hereof, each signed by less than all, but together signed by
all, of the parties hereto.
SECTION 14.10. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT AND
THE OTHER TRANSACTION DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
SECTION 14.11. JURY WAIVER. THE COMPANY, PARENT AND THE NOTEHOLDERS
HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 14.12. CHOICE OF FORUM. THE COMPANY, PARENT AND THE
NOTEHOLDERS AGREE THAT ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE BROUGHT IN THE
FEDERAL AND STATE COURTS OF XXXXXX COUNTY, TEXAS, OTHER THAN LEGAL PROCEEDINGS
INSTITUTED BY THE NOTEHOLDERS WITH RESPECT TO THEIR RIGHTS AND REMEDIES UNDER
THE SECURITY DOCUMENTS, WHICH PROCEEDINGS MAY BE BROUGHT IN THE FEDERAL OR STATE
COURTS OF XXXXXX COUNTY, TEXAS OR THE COURTS OF ANY OTHER JURISDICTION DEEMED
APPROPRIATE BY THE NOTEHOLDERS TO ENFORCE THEIR RIGHTS AND REMEDIES UNDER THE
SECURITY DOCUMENTS.
SECTION 14.13. GOVERNING LAW. This Agreement and the Notes shall be
construed and enforced in accordance with, and the rights of the parties shall
be governed by, the law of the State of New York excluding choice-of-law
principles of the law of such State that would require the application of the
laws of a jurisdiction other than such State.
Exhibit 10.1 - Page 32
IN WITNESS WHEREOF, the Company, Parent and the Noteholders have
caused this Agreement to be executed by their respective representatives
thereunto duly authorized effective as of the date first above written.
TEXOIL COMPANY
By: _______________________
Name: Xxxxx Xxxxxxx
Title:President
TEXOIL, INC.
By: _______________________
Name: Xxxxx Xxxxxxx
Title:President
Exhibit 10.1 - Page 33
RIMCO PARTNERS, L.P.
RIMCO PARTNERS, X.X. XX,
RIMCO PARTNERS, L.P. III, AND
RIMCO PARTNERS, X.X. XX
By: RESOURCE INVESTORS MANAGEMENT COMPANY
LIMITED PARTNERSHIP, THEIR GENERAL PARTNER
By: RIMCO ASSOCIATES, INC.,
ITS GENERAL PARTNER
By: _______________________
Name: Xxxx Xxxxxxx
Title:Vice President
Exhibit 10.1 - Page 34
SCHEDULE A
INFORMATION RELATING TO NOTEHOLDERS
NAME AND ADDRESS OF NOTEHOLDER COMMITMENT AMOUNT
------------------------------ -----------------
TRANCHE A NOTES
---------------
RIMCO PARTNERS, L.P. $ 840,000
RIMCO PARTNERS, X.X. XX 840,000
RIMCO PARTNERS, L.P. III 360,000
RIMCO PARTNERS, X.X. XX 960,000
----------
$3,000,000
==========
TRANCHE B NOTES
---------------
RIMCO PARTNERS, X.X. XX $2,000,000
RIMCO PARTNERS, L.P. III 850,000
RIMCO PARTNERS, X.X. XX 2,150,000
----------
$5,000,000
==========
TRANCHE C NOTES
---------------
RIMCO PARTNERS, L.P. $ 420,000
RIMCO PARTNERS, X.X. XX 420,000
RIMCO PARTNERS, L.P. III 180,000
RIMCO PARTNERS, X.X. XX 480,000
----------
$1,500,000
==========
(1) All payments by wire transfer
of immediately available
funds to:
Fleet Bank, N.Y.
ABA No. 000000000
Account Name: Texoil Company
Automatic Clearing Account
Account No. 939 066 5251
with sufficient information to identify the source and application of such
funds.
Exhibit 10.1 - Page 35
(2) All notices of payments and
written confirmations of such
wire transfers:
Resource Investors Management Company
00 Xxxxxxxxxx Xxxx
Xxxx, Xxxxxxxxxxx 00000
Attn: Xxxx Xxxxxxx
Telecopy No.:000-000-0000
(3) All other communications:
Resource Investors Management Company
Suite 6875
000 Xxxxxx Xxxxxx
Xxxxxxx, Xxxxx 00000
Attn: Xxxx Xxxxxxx
Telecopy No.: 000-000-0000
with a copy to
Resource Investors Management Company
00 Xxxxxxxxxx Xxxx
Xxxx, Xxxxxxxxxxx 00000
Attn: Xxxx XxXxxxxx
Telecopy No.:000-000-0000
Exhibit 10.1 - Page 36
SCHEDULE 5.07
None.
Exhibit 10.1 - Page 37
ANNEX A
DEFINED TERMS
"ACCREDITED INVESTOR" means an "accredited investor" as such term is
defined in Regulation D, Rule 501, promulgated by the Securities and Exchange
Commission.
"ADVANCE" means any Tranche A Advance, Tranche B Advance or Tranche
C Advance.
"ADVANCE REQUEST" is defined in SECTION 2.03(A).
"AFFILIATE" means, at any time, and with respect to any Person, (a)
any other Person that at such time directly or indirectly through one or more
intermediaries Controls, or is Controlled by, or is under common Control with,
such first Person, and (b) any Person beneficially owning or holding, directly
or indirectly, 10% or more of any class of voting or equity interests of the
Company or any Subsidiary or any corporation of which the Company and its
Subsidiaries beneficially own or hold, in the aggregate, directly or indirectly,
10% or more of any class of voting or equity interests. As used in this
definition, "CONTROL" means the possession, directly or indirectly, of the power
to direct or cause the direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an "Affiliate"
is a reference to an Affiliate of the Company.
"AGREEMENT" means this Amended and Restated Note Purchase Agreement,
as amended, modified or restated from time to time.
"ANNUAL RESERVE REPORT" is defined in SECTION 8.01(D).
"BORROWING BASE" is defined in SECTION 12.01.
"BRIDGE SHAREHOLDER DEBT" means Indebtedness of Parent in the amount
of $1,050,000 evidenced by: (a) that certain Promissory Note dated September 1,
1996, executed by Parent and made payable to the order of X.X. Xxxxx, Xx. and
Xxxxx Xxx Xxxxx Revocable Trust in the original principal amount of $1,000,000,
and (b) that certain Promissory Note dated September 1, 1996, executed by Parent
and made payable to the order of Opal Air, Inc. in the original principal amount
of $50,000.
"BUSINESS DAY" means any day other than a Saturday, a Sunday or a
day on which commercial banks in Houston, Texas or New York, New York are
required or authorized to be closed.
"CAPITAL EXPENDITURES" means as to any Person, the expenditures and
costs made by such Person that, in accordance with GAAP, are reflected as
capital expenditures on the consolidated balance sheet of such Person.
Exhibit 10.1 - Page 38
"CAPITAL LEASE" means, at any time, a lease with respect to which
the lessee is required concurrently to recognize the acquisition of an asset and
the incurrence of a liability in accordance with GAAP.
"CLOSING" is defined in ARTICLE III.
"CODE" means the Internal Revenue Code of 1986, as amended from time
to time, and the rules and regulations promulgated thereunder from time to time.
"COMMITMENT" means any Tranche A Commitment, Tranche B Commitment or
Tranche C Commitment.
"COMPANY" is defined in the introduction to this Agreement.
"CURRENT ASSETS" means as to any Person, as of any date, all assets
of such Person that would be reflected as current assets on a consolidated
balance sheet of such Person prepared on such date in accordance with GAAP
consistently applied.
"CURRENT LIABILITIES" means as to any Person, as of any date, all
liabilities of such Person that would be reflected as current liabilities on a
consolidated balance sheet of such Person prepared on such date in accordance
with GAAP consistently applied.
"DEDUCTIBLE COSTS" means, for any month, the sum of the following
amounts, to the extent such amounts were not deducted in calculating Gross
Proceeds, and without duplication, (a) Lease Operating Expenses for such month,
(b) severance and production taxes attributable to Gross Proceeds for such
month, and (c) royalties, overriding royalties and other similar burdens payable
out of production that are valid and existing and of record in the applicable
public records as of the date of this Agreement and overriding royalties granted
to the Noteholders under this Agreement, to the extent such royalties,
overriding royalties and other similar burdens are payable out of Gross Proceeds
for such month.
"DEFAULT" means an event or condition the occurrence or existence of
which would, with the lapse of time or the giving of notice or both, become an
Event of Default.
"DEFAULT RATE" means fifteen percent (15%) per annum, but in no
event to exceed the Highest Lawful Rate.
"ENVIRONMENTAL LAWS" means any and all Federal, state, local, and
foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or
governmental restrictions relating to pollution and the protection of the
environment or the release of any materials into the environment, including but
not limited to those related to hazardous substances or wastes, air emissions
and discharges to waste or public systems.
Exhibit 10.1 - Page 39
"ERISA" means the Employee Retirement Income Security Act of 1974,
as amended from time to time, and the rules and regulations promulgated
thereunder from time to time in effect.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that is treated as a single employer together with the Company
and/or Parent under section 414 of the Code.
"EVENT OF DEFAULT" is defined in SECTION 11.01.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"FUTURE NET REVENUE" means the aggregate of the estimated future net
revenues for each of the Company's Oil and Gas Properties, discounted at 10%,
attributable to the proved developed producing Hydrocarbon reserves for each
such Oil and Gas Property using average product prices and Lease Operating
Expenses for the six-month period preceding the date of determination of such
future net revenues. The product prices and Lease Operating Expenses for each
such Oil and Gas Property shall not be escalated over the life of such Oil and
Gas Property. Each determination of Future Net Revenue under the terms of this
Agreement shall also take into account cumulative production from the Oil and
Gas Properties since the last determination and such other criteria that are
required by sound petroleum engineering practice.
"GAAP" means generally accepted accounting principles as in effect
from time to time in the United States of America.
"GOVERNMENTAL AUTHORITY" means (a) the government of (i) the United
States of America or any State or other political subdivision thereof, or (ii)
any jurisdiction in which the Company or Parent conducts all or any part of its
business, or which asserts jurisdiction over any properties of the Company or
Parent, or (b) any entity exercising executive, legislative, judicial,
regulatory or administrative functions of, or pertaining to, any such
government.
"GREEN'S LAKE PROSPECT" means the lands situated in Galveston
County, Texas described as the "Greens Lake Area" in that certain Greens Lake
3-D Exploration Agreement dated October 16, 1996 between the Company and
Meridian Oil Inc.
"GROSS PROCEEDS" means, for any month, the gross proceeds accruing
from the sale of Hydrocarbons produced from the Company's Oil and Gas Properties
during such month.
"GUARANTY" means, with respect to any Person, any obligation (except
the endorsement in the ordinary course of business of negotiable instruments for
deposit or collection) of such Person guaranteeing or in effect guaranteeing any
indebtedness, dividend or other obligation of any other Person in any manner,
whether directly or indirectly, including (without limitation) obligations
incurred through an agreement, contingent or otherwise, by such Person: (a) to
purchase such indebtedness or obligation or any property constituting security
therefor; (b) to advance or
Exhibit 10.1 - Page 40
supply funds (i) for the purchase or payment of such indebtedness or obligation,
or (ii) to maintain any working capital or other balance sheet condition or any
income statement condition of any other Person or otherwise to advance or make
available funds for the purchase or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or services primarily for the
purpose of assuring the owner of such indebtedness or obligation of the ability
of any other Person to make payment of the indebtedness or obligation; or (d)
otherwise to assure the owner of such indebtedness or obligation against loss in
respect thereof. In any computation of the indebtedness or other liabilities of
the obligor under any Guaranty, the indebtedness or other obligations that are
the subject of such Guaranty shall be assumed to be direct obligations of such
obligor.
"GUARANTY AND EXCHANGE AGREEMENT" is defined in SECTION 2.07.
"HAZARDOUS MATERIAL" means any and all pollutants, toxic or
hazardous wastes or any other substances that might pose a hazard to health or
safety, the removal of which may be required or the generation, manufacture,
refining, production, processing, treatment, storage, handling, transportation,
transfer, use, disposal, release, discharge, spillage, seepage, or filtration of
which is or shall be restricted, prohibited or penalized by any applicable law
(including, without limitation, asbestos, urea formaldehyde foam insulation and
polycholorinated biphenyls).
"HIGHEST LAWFUL RATE" means with respect to any indebtedness owed to
any Noteholder under any Transaction Document, the maximum nonusurious interest
rate, if any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received by such Noteholder with respect to such
indebtedness under law applicable to such Noteholder.
"HOLDER" means, with respect to any Note, the Person in whose name
such Note is registered in the register maintained by the Company pursuant to
SECTION 13.01.
"HYDROCARBONS" means oil, natural gas, condensate and all other
liquid or gaseous hydrocarbons and all products produced or separated therefrom.
"INDEBTEDNESS" with respect to any Person means, at any time,
without duplication, (a) its liabilities for borrowed money and its redemption
obligations in respect of mandatorily redeemable Preferred Stock; (b) its
liabilities for the deferred purchase price of property acquired by such Person
(excluding accounts payable arising in the ordinary course of business but
including all liabilities created or arising under any conditional sale or other
title retention agreement with respect to any such property); (c) all
liabilities appearing on its balance sheet in accordance with GAAP in respect of
Capital Leases; (d) all liabilities for borrowed money secured by any Lien with
respect to any property owned by such Person (whether or not it has assumed or
otherwise become liable for such liabilities); (e) all its liabilities in
respect of letters of credit or instruments serving a similar function issued or
accepted for its account by banks and other financial institutions (whether or
not representing obligations for borrowed money); (f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to liabilities of a type described
in any of clauses (a) through
Exhibit 10.1 - Page 41
(f) hereof. Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is deemed to be extinguished under GAAP.
"INDEMNIFIED PERSON" is defined in SECTION 14.06.
"INITIAL MORTGAGE" means that certain Mortgage, Assignment of
Production, Security Agreement and Financing Statement dated September 6, 1996
from the Company to the Noteholders granting a first priority lien in favor of
the Noteholders on certain of the Company's existing Oil and Gas Properties
located in the State of Louisiana or adjacent state waters and other related
assets, as same may be amended, supplemented or restated from time to time.
"INITIAL PROSPECT DEVELOPMENT COSTS" means the Company's share of
costs to drill, test, complete, equip, deepen, sidetrack and/or recomplete any
well located on the Initial Prospects other than the first well to be drilled by
or on behalf of the Company on each of the Green's Lake Prospect and the
Raceland Prospect.
"INITIAL PROSPECTS" means, collectively, the Green's Lake Prospect,
the Xxxxxx Xxxxx Prospect and the Raceland Prospect.
"INITIAL RESERVE REPORT" means that certain reserve report, dated as
of January 1, 1996, prepared by Gruy Engineering Corp., a TESI company, covering
the Company's existing Oil and Gas Properties.
"INVESTMENT" means, with respect to any Person, any direct or
indirect purchase or other acquisition by such Person of stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, and any other item
which would be classified as an "investment" on a balance sheet of such Person
prepared in accordance with GAAP.
"XXXXXX XXXXX PROSPECT" means the lands situated in LaFourche
Parish, Louisiana described as the "Xxxxxx Xxxxx Area" in that certain Xxxxxx
Xxxxx 3-D Exploration Agreement dated May 1, 1996 between the Company and
Xxxxxxxx Petroleum Company.
"LEASE OPERATING EXPENSES" means, for any month, direct
out-of-pocket costs and expenses incurred during such month by the Company to
operate and maintain the xxxxx located on the Company's Oil and Gas Properties,
including fixed overhead costs payable under applicable operating agreements.
Without limiting the foregoing, Lease Operating Expenses shall not include any
land and legal fees incurred by the Company, leasehold, seismic or other
property acquisition costs, or costs to drill, test, complete, equip, deepen,
sidetrack, recomplete or plug and abandon any well or internal overhead costs.
Exhibit 10.1 - Page 42
"LIEN" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance of any kind (whether
voluntary or involuntary), or any interest or title of any vendor, lessor,
lender or other secured party to or of such Person under any conditional sale or
other title retention agreement or Capital Lease, upon or with respect to any
property or asset of such Person (including in the case of stock, stockholder
agreements, voting trust agreements and all similar arrangements).
"MATERIAL" means, as to any Person, material in relation to the
business, operations, affairs, financial condition, assets, properties, or
prospects of such Person taken as a whole.
"MATERIAL ADVERSE EFFECT" means, as to any Person, a material
adverse effect on (a) the business, operations, affairs, financial condition,
assets or properties of such Person taken as a whole, or (b) the ability of such
Person to perform its obligations under this Agreement and the other Transaction
Documents, or (c) the validity or enforceability of this Agreement or the other
Transaction Documents.
"MONTHLY PAYMENT DATE" means the first day of each month.
"MONTHLY PRODUCTION REPORT" is defined in SECTION 8.01(E).
"MULTIEMPLOYER PLAN" means any Plan that is a "multiemployer plan"
(as such term is defined in section 4001(a)(3) of ERISA).
"NET REVENUE" means, for any month, an amount equal to the excess,
if any, of Gross Proceeds for such month over Deductible Costs for such month.
"NEW MORTGAGE" means that certain Mortgage, Deed of Trust,
Assignment of Production, Security Agreement and Financing Statement of even
date herewith from the Company to Xxxx Xxxxxxx, as trustee, and the Noteholders
granting a first priority lien in favor of Xxxx Xxxxxxx, as trustee, and the
Noteholders on certain of the Company's existing Oil and Gas Properties located
in the State of Texas or adjacent state waters and other related assets, as same
may be amended, supplemented or restated from time to time.
"NEW SHAREHOLDER DEBT" means Indebtedness of Parent evidenced by
those three Replacement 12% Convertible Promissory Notes each dated as of
September 6, 1996, in the aggregate original principal amount of $900,000,
issued by the Parent to, respectively, X.X. Xxxxx, Xx., X.X. Xxxxx, III and
Xxxxxxx X. Xxxxxx, in various amounts and which may be converted into shares of
the Common Stock of Parent at an initial conversion price of $0.80 per share.
"NOTEHOLDERS" means, collectively, the Tranche A Noteholders, the
Tranche B Noteholders and the Tranche C Noteholders.
"NOTES" is defined in SECTION 2.03(B).
Exhibit 10.1 - Page 43
"OFFICER'S CERTIFICATE" means a certificate of a Senior Financial
Officer or of any other officer of the Company or Parent whose responsibilities
extend to the subject matter of such certificate.
"OIL AND GAS PROPERTIES" means oil and gas leasehold interests,
overriding royalty interests, mineral interests, royalty interests, net profits
interests, oil payments, production payments, carried interests, operating
rights and other similar properties or interests, including contractual rights
to any of the foregoing, together with all xxxxx and units located on, or
attributable to, such properties or interests.
"PARENT" is defined in the introduction to this Agreement.
"PARENT PREFERRED STOCK" means 23,000 shares of issued and
outstanding $.01 par Series A Preferred Stock of Parent.
"PBGC" means the Pension Benefit Guaranty Corporation referred to
and defined in ERISA or any successor thereto.
"PERMITTED INVESTMENTS" means any of the following Investments: (a)
securities issued or directly and fully guaranteed or insured by the United
States or any agency or instrumentality thereof (PROVIDED that the full faith
and credit of the United States of America is pledged in support thereof) having
a maturity not exceeding thirty (30) days from the date of acquisition; (b) time
deposits and certificates of deposit of any commercial bank of recognized
standing having capital and surplus in excess of $500,000,000, PROVIDED that the
long-term senior unsecured debt of such bank is rated at least A+ or the
equivalent thereof by Standard & Poor's Rating Group (a division of McGraw Hill)
("S&P") or at least A1 or the equivalent thereof by Xxxxx'x Investor Services,
Inc. ("Moody's"), having a maturity not exceeding thirty (30) days from the date
of acquisition; and (c) commercial paper issued by the parent corporation of any
commercial bank or by any domestic corporation, PROVIDED that such commercial
paper is rated at least A-1 or the equivalent thereof by S&P or at least P-1 or
the equivalent thereof by Moody's, having a maturity not exceeding thirty (30)
days from the date of acquisition.
"PERMITTED LIENS" means Liens permitted under SECTION 10.02.
"PERMITTED PREFERRED STOCK DIVIDENDS" means scheduled quarterly
dividends on the Parent Preferred Stock equal to $69,000 per quarter to the
extent such dividends are paid (a) after Xxxxx 0, 0000, (x) when the Borrowing
Base equals or exceeds 150% of the outstanding principal amount of the Notes,
and (c) when no Default or Event of Default has occurred and is continuing.
"PERMITTED SHAREHOLDER DEBT PAYMENTS" means (a) monthly payments of
accrued interest on the Bridge Shareholder Debt and the New Shareholder Debt to
the extent such interest payments are made when no Default or Event of Default
has occurred and is continuing, and (b) quarterly principal payments of the
Bridge Shareholder Debt in the amounts specified in Section 2
Exhibit 10.1 - Page 44
of each of the promissory notes evidencing the Bridge Shareholder Debt to the
extent such principal payments are made (i) when no Default or Event of Default
has occurred and is continuing, (ii) after the later of April 10, 1997 or the
tenth day of the first January, April, July or October after which the aggregate
amount of Tranche A Advances made under the Tranche A Notes equals or exceeds
$2,800,000, and (iii) when, after giving effect to such scheduled principal
payments, the Company has a cash balance of at least $150,000.
"PERSON" means an individual, partnership, corporation, limited
liability company, association, trust, unincorporated organization, or a
government or agency or political subdivision thereof.
"PLAN" means an "employee benefit plan" (as defined in section 3(3)
of ERISA) that is or, within the preceding five years, has been established or
maintained, or to which contributions are or, within the preceding five years,
have been made or required to be made, by the Company or any ERISA Affiliate or
with respect to which the Company or any ERISA Affiliate may have any liability.
"PLEDGE AGREEMENT" means that certain Pledge Agreement dated
September 6, 1996 executed by Parent in favor of the Noteholders pledging all of
the common stock of the Company as security for all Parent's obligations under
the Guaranty and Exchange Agreement, as amended from time to time.
"PREFERRED STOCK" means any class of capital stock of a corporation
that is preferred over any other class of capital stock of such corporation as
to the payment of dividends or the payment of any amount upon liquidation or
dissolution of such corporation.
"RACELAND PROSPECT" means the lands situated in LaFourche Parish,
Louisiana described as the "Raceland Area" in that certain Raceland 3-D
Exploration Agreement dated December 6, 1995 among the Company and Pogo
Producing Company, et al.
"REGISTRATION RIGHTS AGREEMENT" means that certain Stock Ownership
and Registration Rights Agreement dated September 6, 1996 among Parent, the
Company and the Noteholders, as same may be amended from time to time.
"REQUIRED HOLDERS" means, at any time, the holder or holders of at
least 51% of the then outstanding principal amount of the Notes (exclusive of
Notes then owned by Parent, the Company or any of their Affiliates).
"RESPONSIBLE OFFICER" means any Senior Financial Officer and any
other officer of the Company, or Parent, as the case may be, with responsibility
for the administration of the relevant portion of this Agreement.
Exhibit 10.1 - Page 45
"RESTRICTED DISBURSEMENTS" means, as to any Person, any: (a) loan or
advance to or investment in any other Person, or any commitment to make such a
loan, advance or investment in any other Person; (b) acquisition by such Person
of or investments by such Person in the debt of or equity of, and any capital
contribution (including capital contributions by transfer of assets or services)
by such Person to, another Person; (c) purchase, redemption or exchange of any
shares of any class of capital stock of such Person or any options, rights or
warrants to purchase any such stock or setting aside funds for any such purpose;
(d) declaration or payment of any dividends on shares of any class of capital
stock of such Person; (e) sinking fund or other payment or distribution made to
or for the benefit of any holders of the capital stock of such Person with
respect to such capital stock (other than distributions payable in capital
stock, or rights to acquire capital stock, of such Person) or setting aside
funds for any such purpose; (f) payment, purchase or redemption by such Person
of Indebtedness owing by such Person to any of its Affiliates; and (g) Capital
Expenditures made or funded by or on behalf of such Person.
"SECURITIES ACT" means the Securities Act of 1933, as amended from
time to time.
"SECURITY DOCUMENTS" means the Initial Mortgage, the Pledge
Agreement , the New Mortgage and such other security agreements, guaranties,
pledges, instruments, financing statements or other documents which may be
executed to secure the obligations of the Company and Parent with respect to the
Notes and this Agreement and the other Transaction Documents.
"SENIOR FINANCIAL OFFICER" means any of the chief financial officer,
principal accounting officer, treasurer or comptroller of the Company or Parent,
as the case may be.
"SHAREHOLDER DEBT RESTRUCTURE DOCUMENTS" means, collectively, (a)
the promissory notes evidencing the Bridge Shareholder Debt, (b) the promissory
notes evidencing the New Shareholder Debt and those three Amended and Restated
Agreements of Purchase and Sale dated as of September 6, 1996 between Parent
and, respectively, X.X. Xxxxx, Xx., X.X. Xxxxx, III and Xxxxxxx X. Xxxxxx, (c)
that certain Cancellation of Guaranty, Warrants and Registration Rights
Agreement, dated as of September 6, 1996 among Parent, the Company, the holders
of the New Shareholder Debt and Xxx X. Xxxxxxxxxx, Xx., Trustee, U/D/T 5-17-91,
and (d) that certain Registration Rights Agreement, dated as of September 6,
1996, among Parent and the holders of the New Shareholder Debt.
"SUBORDINATION AGREEMENTS" means those certain Subordination
Agreements dated September 6, 1996 executed by the holders of the Bridge
Shareholder Debt and the New Shareholder Debt, in form and substance
satisfactory to the Noteholders, whereby the Bridge Shareholder Debt and the New
Shareholder Debt is subordinated to the Indebtedness under the Notes, as amended
from time to time.
"SUBSIDIARY" means, as to any Person, any corporation, association
or other business entity in which such Person or one or more of its Subsidiaries
or such Person and one or more of its Subsidiaries owns sufficient equity or
voting interests to enable it or them (as a group) ordinarily,
Exhibit 10.1 - Page 46
in the absence of contingencies, to elect a majority of the directors (or
Persons performing similar functions) of such entity, and any partnership or
joint venture if more than a 50% interest in the profits or capital thereof is
owned by such Person or one or more of its Subsidiaries or such Person and one
or more of its Subsidiaries (unless such partnership can and does ordinarily
take major business actions without the prior approval of such Person or one or
more of its Subsidiaries).
"SUPPLEMENTAL RESERVE REPORT" is defined in SECTION 12.03.
"SWAPS" means, with respect to any Person, foreign exchange
transactions and commodity, currency and interest rate swaps, floors, caps,
collars, forward sales, options, other similar transactions and combinations of
the foregoing.
"TRANCHE A ADVANCE" is defined in SECTION 2.01(A).
"TRANCHE A COMMITMENT" is defined in SECTION 2.01(A).
"TRANCHE A COMMITMENT PERIOD" is defined in SECTION 2.01(A).
"TRANCHE A NOTES" is defined in SECTION 2.01(B).
"TRANCHE A NOTEHOLDERS" means, collectively, RIMCO Partners, L.P.,
RIMCO Partners, X.X. XX, RIMCO Partners, L.P. III, RIMCO Partners, X.X. XX, and
each such Person's assignees or transferees who becomes a holder of any of the
Tranche A Notes.
"TRANCHE B ADVANCE" is defined in SECTION 2.02(A).
"TRANCHE B COMMITMENT" is defined in SECTION 2.02(A).
"TRANCHE B COMMITMENT PERIOD" is defined in SECTION 2.02(A).
"TRANCHE B NOTES" is defined in SECTION 2.02(B).
"TRANCHE B NOTEHOLDERS" means, collectively, RIMCO Partners, X.X.
XX, RIMCO Partners, L.P. III, RIMCO Partners, X.X. XX, and each such Person's
assignees or transferees who becomes a holder of any of the Tranche B Notes.
"TRANCHE C ADVANCE" is defined in SECTION 2.03(A).
"TRANCHE C COMMITMENT" is defined in SECTION 2.03(A).
"TRANCHE C COMMITMENT PERIOD" is defined in SECTION 2.03(A).
"TRANCHE C NOTES" is defined in SECTION 2.03(B).
Exhibit 10.1 - Page 47
"TRANCHE C NOTEHOLDERS" means, collectively, RIMCO PARTNERS, L.P.,
RIMCO PARTNERS, X.X. XX, RIMCO PARTNERS, L.P. III, RIMCO PARTNERS, X.X. XX, and
each such Person's assignees or transferees who becomes a holder of any of the
Tranche C Notes.
"TRANSACTION DOCUMENTS" is defined in SECTION 3.01.
"UNSCHEDULED BORROWING BASE REDETERMINATION" is defined in SECTION
12.03.
Exhibit 10.1 - Page 48
