Exhibit 10.6
TERM LOAN AGREEMENT
Dated as of October 19, 1998
between
SABAL CORP., as Borrower
and
EXCAL ENERGY CORPORATION, as Lender
TERM LOAN AGREEMENT
TERM LOAN AGREEMENT ("Agreement"), dated as of October 30, 1998
(the "Effective Date"), between SABAL CORP. a Nevada corporation (the
"Borrower"), and EXCAL ENERGY CORPORATION, a Michigan corporation (the
"Lender").
RECITALS
WHEREAS, the Borrower and the Lender desire to set forth their
agreements regarding a variety of matters, including a loan by the Lender to
the Borrower in the initial principal amount of up to $500,000 (the "Loan");
NOW, THEREFORE, in consideration of the premises and the agreements
herein, the Lender and the Borrower hereby agree as follows:
ARTICLE I
DEFINITIONS; CERTAIN TERMS
SECTION I.1 DEFINITIONS. As used in this Agreement, the
following terms shall have the respective meanings indicated below, such
meanings to be applicable equally to both the singular and plural forms of
such terms:
"AFFILIATE" means, as to any Person, (i) any other Person that
directly, or indirectly through one or more intermediaries, controls, is
controlled by, or is under common control with, such Person, or (ii) any
trade or business (whether or not incorporated) which is a member of a group
of which such Person is a member and which is under common control within the
meaning of Section 414 of the Internal Revenue Code and the rules and
regulations promulgated thereunder from time to time.
"AMI" means the Area of Mutual Interest in Lapeer and Genessee
Counties, Michigan set forth on Exhibit A hereto.
"XXXX OF SALE" means the Xxxx of Sale, Quit Claim, and Assignment of
Interest dated of even date herewith from Lender, as Assignor, to Borrower,
as Assignee, in the form attached hereto as Exhibit B.
"BORROWER" has the meaning specified therefor in the preamble hereto.
"BUSINESS DAY" means any day not a Saturday, Sunday or legal holiday
on which banks in the State of West Virginia are not required or authorized
to close.
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"COLLATERAL" means all of the property of the Borrower purported to
be subject to the lien or security interest purported to be created by any
security agreement, pledge agreement, assignment or other security document
heretofore or hereafter executed by the Borrower in favor of the Lender as
security for all or any part of the Obligations, including, without
limitation, any asset purchased, in whole or in part, with proceeds of the
Loan, subject to the limitation set forth in Section 6.01(j) hereof.
"DEFAULT" means any event that, with the giving of notice or the
passage of time or both, would result in an Event of Default.
"ENVIRONMENTAL LAW" means the Comprehensive Environmental Response,
Compensation, and Liability Act (42 U.S.C. Section 9601, et Section 4.), the
Hazardous Materials Transportation Act (49 U.S.C. Section 1801, et M.), the
Resource Conservation and Recovery Act (42 U.S.C. Section 6901, et .), the
Federal Water Pollution Control Act (33 U.S.C. Section 1251 et Section eq.),
the Clean Air Act (42 U. S.C. Section 7401 et 54.), the Toxic Substances
Control Act (1 5 U.S.C. Section 2601 et seq.), the Occupational Safety and
Health Act (29 U.S.C. Section 6451 et .), and the Medical Waste Tracking Act
of 1988, Pub. L. No. 100-582, 102 Stat. 2950 (1988), as such laws have been
amended or supplemented from time to time, and any similar present or future
Federal, state or local statute, ordinance, rule or regulation.
"EVENT OF DEFAULT" means any of the events set forth in Section 7.01
hereof.
"FLEUR-XXXXX" means Fleur-Xxxxx Corporation, (formerly a subsidiary
of CABEC Energy Corporation) from which Borrower acquired certain interests
in the Otter-Lake oil field, and certain drilling equipment located in the
Cross S Ranch Subdivision, Xxxxxx County, Texas.
"FUNDING DATE" means the first date on which Lender disburses any
proceeds of the Term Loan.
"GAAP" means generally accepted accounting principles as in effect
from time-to-time in the United States, consistently applied.
"GOVERNMENTAL AUTHORITY" means any nation or government, any federal,
state, city, town, municipality, county, local or other political subdivision
thereof or thereto and any department, commission, board, bureau,
instrumentality, agency or other entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining to
government and having jurisdiction over the Parties to the Loan Documents.
"HAZARDOUS MATERIALS" means, without limit, any pollutant, waste,
flammable explosives, radioactive materials, hazardous materials, hazardous
wastes, hazardous or toxic substances, or other materials defined in or
regulated under any Environmental Law.
"INDEBTEDNESS" means (i) all indebtedness or other obligations of the
Borrower for borrowed money or for the deferred purchase price of property or
services, (ii) all obligations of the
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Borrower under direct or indirect guaranties, contingent or other obligations
of the Borrower to purchase or otherwise acquire or assure a creditor against
loss in respect thereof,
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended from time to time.
"LENDER" has the meaning specified therefor in the preamble hereto.
"LIEN" means any security interest, mortgage, pledge, hypothecation,
assignment, deposit arrangement, encumbrance, lien (statutory or otherwise),
charge against or interest in property to secure payment of a debt or
performance of an obligation or other priority or preferential arrangement of
any kind or nature whatsoever.
"LOAN DOCUMENTS" means this Agreement, any Notice of Borrowing, the
Note, the Security Agreement, the Financing Statements, the Production
Payment and all schedules and exhibits hereto or thereto.
"MATURITY DATE" means the second anniversary of the Funding Date, or
such earlier date on which the Loan shall become due and payable by
acceleration.
"MORTGAGE" means the mortgage made by Borrower and delivered to
Lender in accordance herewith in the form attached hereto as Exhibit C.
"NOTE" means the Term Note made by Borrower and delivered to Lender
in accordance herewith in the form attached hereto as Exhibit D.
"NOTICE OF BORROWING" has the meaning specified in Section 2.02
hereof.
"OBLIGATIONS" means (i) the obligation of Borrower to pay, as and
when due and payable (by scheduled maturity or otherwise), all amounts from
time to time owing by it in respect of any Loan Document, whether for
principal, interest, (including interest accruing on or after the filing of
any petition in bankruptcy or for reorganization relating to the Borrower
whether or not a claim for post-filing interest is allowed pursuant to 11
U.S.C. Section 506, or otherwise in such cases), fees or otherwise and (ii)
the obligation of Borrower to perform or observe all of its other obligations
from time to time existing under any Loan Document.
"PAYMENT OFFICE" means ExCal Energy Corporation, c/o MTR Gaming
Group, Inc., Xxxxx Xxxxx 0, Xxxxx, Xxxxxxx, Xxxx Xxxxxxxx 00000, Attention:
Xx. Xxxxx X. Xxxxxxxx, President.
"PERSON" means an individual, corporation, partnership, association,
joint-stock company, trust, unincorporated organization, joint venture or
governmental authority.
"POST-DEFAULT RATE" means a rate per annum equal to the highest rate
allowed by law, not to exceed in any event 22%.
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"PRODUCTION PAYMENT" has the meaning given such term in the
Assignment of Production Payment dated of even date herewith in the form of
Exhibit E hereto.
"PROPERTY" means the buildings, equipment, personalty and other
property used in connection with the operation of the gas plant and oil and
gas drilling and exploration business either previously acquired or to be
acquired by Borrower from Fleur-Xxxxx Corporation, and Tessenderlo Xxxxxx,
Inc., the successor by merger to Xxxxxx, Inc. as more fully described in
Schedule I hereto.
"SECURITY AGREEMENT" means the General Security Agreement, dated of
even date herewith, made by the Borrower in favor of the Lender in the form
attached hereto as Exhibit F.
"TKI AGREEMENT" means the Agreement to be entered by and between
Tessenderlo Xxxxxx, Inc. and Fleur-Xxxxx, and assigned by Fleur-Xxxxx to
Borrower, substantially in the form attached hereto as Exhibit G providing
for (i) the conveyance to Borrower of certain securities, real property,
improvements thereon, and furniture, fixtures and equipment included
therewith; (ii) the release of all liens held by and security interests
granted in favor of Tessenderlo Xxxxxx, Inc. with respect to any property of
the Borrower; and (iii) the termination of any further obligations of
Fleur-Xxxxx to Tessenderlo Xxxxxx, Inc. created by the Purchase and Sales
Agreement dated July 6, 1992, as subsequently amended, by and among Xxxxxx,
Inc., Xxxxxx XX Inc., and Fleur-Xxxxx as well as any obligations created by
any documents or agreements delivered or entered by Fleur-Xxxxx in connection
with said Purchase and Sales Agreement (the "Xxxxxx Purchase and Sales
Agreement").
"TERM LOAN" means the loans made by the Lender to the Borrower
pursuant to Article II hereof.
"TERMINATION DATE" means the earlier to occur of (a) the Maturity
Date and (b) the date on which all of the Obligations have been fully
performed.
SECTION I.2 ACCOUNTING AND OTHER TERMS. Unless otherwise
expressly stated herein, all accounting determinations hereunder shall be
made, all accounting terms used herein shall be interpreted, and all
financial statements required to be delivered hereunder shall be prepared in
accordance with GAAP. All terms used in this Agreement which are defined in
Article 9 of the Uniform Commercial Code in effect in the State of Texas on
the date hereof and which are not otherwise defined herein shall have the
same meanings herein as set forth therein.
ARTICLE II
AMOUNT AND TERMS OF THE TERM LOAN
SECTION II.1 TERM COMMITMENT. The Lender agrees, on the terms and
conditions hereinafter set forth, to make the Term Loan to the Borrower in a
principal amount not to exceed $500,000. Any principal amount of the Term
Loan which is repaid or prepaid by the Borrower may not be reborrowed.
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SECTION II.2 MAKING THE TERM LOAN. (a) Upon fulfillment of the
applicable conditions set forth in Article IV hereof, the Lender will make
available the initial advances of the Term Loan to the Borrower in an amount
not to exceed $217,259.99 by delivering the proceeds thereof to Borrower's
creditors and vendors in immediately available funds (either in the form of a
certified bank check or wire transfer). At the Closing, Lender will deliver
funds payable to (A) Tessenderlo Xxxxxx, Inc. in the amount of $100,000 (or
such lesser amount as Tessenderlo Xxxxxx, Inc. may accept in satisfaction of
Borrower's obligations under the TKI Agreement); (B) Xxxxx X. Xxxxxxxx in the
amount of $9,172.10; (C) Xxxxx Xxxxxxxx in the amount of $17,857.89; (D)
Xxxxxxx Xxxxxx L.L.P. in an amount not to exceed $25,000; (E) Xxxxx Xxxxxx in
the amount of $14,000; (F) Metropolitan Title in the amount of $3,730.00; and
(G) Sabal Corp. in the amount of $47,500.00.
(b) After the Closing, the Lender will make available the
remainder of the Term Loan in accordance with the provisions of Section
5.01(m) of this Agreement by wire transfer to Borrower's account at
International Bank of Commerce on the fifth Business Day following
presentation by Borrower of a Notice of Borrowing indicating the use of
proceeds or other writing directing application of proceeds signed by
Borrower and consented to by Lender in its sole discretion and providing the
invoices or other documents supporting such payment in a form and substance
reasonably acceptable to Lender (such acceptance to be presumed if Lender has
not indicated otherwise in writing within five (5) Business Days after
receipt) and agrees to advance such funds unless (i) the indicated use is not
reasonably within the permitted use of proceeds provided for in Section
5.01(m) of this Agreement; or (ii) an Event of Default has occurred which has
not been cured or waived.
(c) The Borrower shall execute and deliver to the Lender,
at the Closing, a Term Note payable to the order of the Lender to evidence
the Term Loan in the original principal amount of the Loan. The Term Loan
amount may be increased by Lender to provide for the funding and payment of
the Lender's costs incurred in connection herewith, which Borrower has not
paid as of the Termination Date and which accrue thereafter, including but
not limited to the fees of Lender's counsel not to exceed $25,000. The books
and records of the Lender shall be presumptive evidence of the amount of
Obligations under the Term Loan outstanding from time to time, absent
manifest error.
SECTION II.3 TERM LOAN INTEREST.
(a) LOAN. The Term Loan shall bear interest on the
principal amount thereof from time to time outstanding until such principal
amount becomes due at an interest rate per annum of fifteen percent (15%).
(b) INTEREST PAYMENT. Interest on the Term Loan shall be
payable monthly, in arrears, on the last day of each month, commencing on the
last day of the calendar month following the Funding Date and on the
Termination Date (whether by demand, acceleration or otherwise). Interest at
the Post-Default Rate shall be payable on demand.
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SECTION II.4. REPAYMENT. The Term Loan shall be payable as to
principal in eighteen (18) equal monthly installments commencing on the last
day of the seventh calendar month following the Funding Date and on the last
day of each succeeding calendar month until the Maturity Date. Any principal
outstanding on the Maturity Date, together with all such other amounts as may
be necessary to repay in full all unpaid Obligations to the Lender shall be
due and payable on the Maturity Date.
SECTION II.5 OPTIONAL PREPAYMENT OF THE TERM LOAN. Borrower may
prepay without cost or penalty, the outstanding amount of the Term Loan in
whole or in part with accrued interest to the date of such prepayment on the
amount prepaid.
ARTICLE III
PAYMENTS, DEFAULT INTEREST AND OTHER COMPENSATION
SECTION III.1 PAYMENTS AND COMPUTATIONS. The Borrower will make
each payment under the Loan Documents to which it is a party not later than
2:30 P.M. (West Virginia time) on the day when due, in lawful money of the
United States of America and in immediately available funds, to the Lender at
the Payment Office, or at such other place or to such account as the Lender
may designate by notice to the Borrower. All payments shall be made by the
Borrower without reduction for any defense, set-off or counterclaim to the
Lender. Subject to Section 7.01 below, all interest, fees, costs and
expenses for which the Borrower is obligated under any Loan Document shall,
if not timely paid by the Borrower, be added to the principal amount of the
Loan and the Borrower hereby authorizes the Lender to, and the Lender may,
from time to time, increase the principal amount of the Loan by any such
amounts due under any Loan Document to which the Borrower is a party. The
Borrower confirms that any addition to principal which the Lender so makes to
the Loan as herein provided will be made as an accommodation to the Borrower
and solely at the Lender's discretion. Whenever any payment to be made under
any such Loan Document shall be stated to be due on a day other than a
Business Day, such payment shall be made on the next succeeding Business Day
and such extension of time shall in such case be included in the computation
of interest. In no event shall prior recourse to any Collateral be a
prerequisite to the Lender's right to demand payment of any Obligation. The
Lender's records kept in the ordinary course of its business shall be
presumed to be correct and shall constitute prima facie evidence of the
amount owing or paid with respect to any Obligation, absent manifest error.
SECTION III.2 DEFAULT INTEREST. Any Obligation hereunder, which is
not paid when due (after any applicable grace period therefor set forth in
Section 7 hereto), whether upon demand, by acceleration or otherwise, and all
amounts payable after the occurrence and during the continuance of an Event
of Default, shall bear interest from the day when due until such amount is
paid in full at a rate per annum equal to the Post-Default Rate. In the
event that any amount of principal of, or interest on, a Loan is not paid
within thirty (30) days of the due date thereof (whether by demand,
acceleration or otherwise) when due, the borrower shall, upon demand, pay an
additional fee equal to 5% of the amount of such principle (or interest not
timely paid).
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ARTICLE IV
CONDITIONS TO EFFECTIVENESS AND LENDING
SECTION IV.1. CONDITIONS TO FUNDING OF THE TERM LOAN. The Lender
shall have no obligation to make the initial funding of the Loan pursuant to
Section 2.02 until the date on which each of the following conditions
precedent shall have been satisfied:
(a) REPRESENTATIONS AND WARRANTIES; NO EVENT OF DEFAULT.
The representations and warranties contained in Section 5 of this Agreement
and in each other Loan Document and certificate or other writing delivered to
the Lender pursuant hereto on or prior to the Funding Date shall be correct
on and as of the Funding Date as though made on and as of such date; and no
Event of Default, or event which with the giving of notice or the lapse of
time or both would constitute an Event of Default, shall have occurred and be
continuing on the Funding Date or would result from the making of the Loan.
(c) DELIVERY OF DOCUMENTS. The Lender shall have
received on or before the Funding Date the following, each in form and
substance satisfactory to the Lender and, unless indicated otherwise, dated
the Funding Date:
(i) the Term Note representing the Term Loan,
duly executed by the Borrower;
(ii) the Security Agreement, duly executed by the
Borrower;
(iii) evidence satisfactory to the Lender and its
counsel that, upon payment to Tessenderlo Xxxxxx, Inc. as set forth in the
TKI Agreement, all obligations of the Borrower and/or Fleur-Xxxxx arising in
connection with the Xxxxxx Purchase and Sales Agreement will have been
satisfied in full and have been released of record
(iv) acknowledgment copies of appropriate
financing statements on Form UCC-1 and the Mortgage, duly executed by the
Borrower and duly filed in such office of offices as may be necessary or, in
the opinion of the Lender, desirable to perfect the security interests
purported to be created by the Security Agreement and the Mortgage;
(v) duly executed UCC termination statements with
respect to UCC filings by Tessenderlo Xxxxxx, Inc. or its predecessors in
interest in connection with any of the Collateral;
(vi) a copy of the resolutions adopted by the
Board of Directors of Borrower, certified as of the Funding Date by an
authorized officer thereof, authorizing (A) the borrowings hereunder and the
transactions contemplated by the Loan Documents to which Borrower is or will
be a party, and (B) the execution, delivery and performance by Borrower of
each Loan
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Document to which it is or will be a party and the execution and delivery of
the other documents to be delivered in connection herewith;
(vii) a certificate of an authorized officer of
Borrower certifying the names and true signatures of the officers authorized
to sign each Loan Document to which Borrower is or will be a party and the
other documents to be executed and delivered by Borrower in connection
herewith, together with evidence of the incumbency of such authorized
officers;
(viii) a certificate, dated as of a date not more
than ten (10) Business Days prior to the Funding Date, of the appropriate
officials of the States of Nevada and Michigan, certifying as to the
subsistence in good standing of, and the payment of taxes by, Borrower in
such jurisdictions and listing all charter documents of Borrower on file with
such official(s);
(ix) a copy of the charter of Borrower, certified
as of a date not more than 30 days prior to the Funding Date by the
appropriate official(s) of the State of Nevada and as of the Funding Date by
an authorized officer of Borrower;
(x) a copy of the by-laws of Borrower, certified
as of the Funding Date by an authorized officer of Borrower;
(xi) the Inter-Creditor Agreement in the form
attached hereto as Exhibit H;
(xii) a certificate of insurance evidencing
insurance on all property of the Borrower as is required by Section 6.01 (f)
hereof, naming the Lender as additional insured as its interests may appear
for all insurance maintained by the Borrower;
(xiii) evidence reasonably satisfactory to the
Lender and its counsel that Borrower has acquired all of the interest of
Fleur-Xxxxx and Tessenderlo Kerly, Inc. in the Collateral, such evidence to
be attached hereto as Exhibit I;
(xiv) evidence reasonably satisfactory to the
Lender and its counsel that any indebtedness of Borrower to Fleur-Xxxxx or
interest of Fleur-Xxxxx in the AMI has been subordinated to Lender, such
evidence to be attached hereto as Exhibit J;
(xv) such other agreements, instruments,
approvals, opinions and other documents as the Lender may reasonably request;
(xvi) an opinion of Xxxxxxx Xxxxxx L.L.P. in the
form attached hereto as Exhibit K.
ARTICLE V
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REPRESENTATIONS AND WARRANTIES
SECTION V.1 REPRESENTATIONS AND WARRANTIES OF THE BORROWER. The
Borrower represents and warrants as follows:
(a) ORGANIZATION, GOOD STANDING, ETC. Borrower (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the State of Nevada, (ii) has all requisite power and authority to
conduct its business as now conducted and as presently contemplated to make
the borrowings hereunder and to consummate the transactions contemplated
hereby and by each of the Loan Documents to which it is a party, and (iii) is
duly qualified to do business and is in good standing in the State of
Michigan. One Hundred percent (100%) of the voting stock of the Borrower is
owned by Xxxxx Xxxxxxxx.
(b) AUTHORIZATION, ETC. The execution, delivery and
performance by Borrower of each Loan Document (i) have been duly authorized
by all necessary corporate action, (ii) do not and will not contravene the
charter or by-laws, law or any contractual restriction binding on or
otherwise affecting it or any of its properties, (iii) do not and will not
result in or require the creation of any lien, security interest or other
charge or encumbrance (other than contemplated by the Loan Documents) upon or
with respect to any of its property, and (iv) do not and will not result in
any suspension, revocation, impairment, forfeiture or nonrenewal of any
permit, license, authorization or approval applicable to its operations or
Property.
(c) GOVERNMENTAL APPROVALS. No authorization or approval
or other action by, and no notice to or filing with, any Governmental
Authority or other regulatory body is required in connection with the due
execution, delivery and performance by the Borrower of any Loan Document to
which Borrower is or will be a party.
(d) ENFORCEABILITY OF LOAN DOCUMENTS. This Agreement is,
and each other Loan Document to which the Borrower is or will be a party,
when delivered hereunder, will be a legal, valid and binding obligation of
Borrower, enforceable against Borrower in accordance with its terms.
(e) LITIGATION. There is no pending or threatened
action, suit or proceeding affecting the Borrower before any court or
Governmental Authority or any arbitrator except as set forth in that certain
Notice of Non-Compliance dated July 22, 1998, issued by the Michigan
Department of Environmental Quality to Fleur-Xxxxx. There is no pending or
threatened action, suit or proceeding affecting the Borrower before any court
or other Governmental Authority or any arbitrator which may materially
adversely affect the operations or condition, financial or otherwise, of
Borrower or the ability of Borrower to perform its obligations under any Loan
document to which Borrower is or will be a party.
(f) COMPLIANCE WITH LAW, ETC. The Borrower is not in
violation of its charter or by-laws, any law or any material terms of any
agreement or instrument binding on or otherwise affecting it or any of its
properties.
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(g) ADVERSE AGREEMENTS, ETC. The Borrower is not a party
to any agreement or instrument, or subject to any charter or other corporate
restriction or any judgment, order, regulation, ruling or other requirement
of a court or other Governmental authority or regulatory body, which
materially adversely affects, or, to the best knowledge of the Borrower, in
the future is reasonably likely to materially adversely affect, the condition
or operations, financial or otherwise, of the Borrower or the ability of the
Borrower to perform its obligations under any Loan Document to which the
Borrower is or will be a party.
(h) PERMITS, ETC. The Borrower has all permits,
licenses, authorizations and approvals required for it to lawfully own and
operate its businesses.
(i) TITLE TO PROPERTIES. The Borrower has, or will have
after the entry of the TKI Agreement, good and marketable title to all of its
properties and assets, free and clear of all liens, security interests and
other charges and encumbrances and other types of preferential arrangements,
except such as are permitted by Section 6.02(a) hereof. All of Borrower's
properties are titled in Borrower's legal name. Borrower has not used, or
filed a financing statement (or other evidence of a lien, charge or Security
Interest) under, any other name in any United States jurisdiction or
territory outside the United States for at least the last five (5) years.
(j) FULL DISCLOSURE. No Loan Document or schedule or
exhibit thereto and no certificate, report, statement or other document or
information furnished to the Lender in connection herewith or with the
consummation of the transactions contemplated hereby, contains any
misstatement of material fact or omits to state a material fact or any fact
necessary to make the statements contained herein or therein not misleading
There is no contingent liability or other material fact of which the Borrower
is aware after reasonable inquiry that may adversely affect the condition or
operations, financial or otherwise, or the business or prospects of the
Borrower.
(k) INDEBTEDNESS. The Borrower has no Indebtedness other
than Indebtedness set forth on Schedule II hereto.
(l) ENVIRONMENTAL MATTERS. The Borrower is in compliance
with all applicable Environmental laws, and none of the operations of the
Borrower is the subject of any Federal, state or local investigation to
determine whether any remedial action is needed to address the presence,
disposal, release or threatened release of any Hazardous Material into the
environment which may have a material adverse effect on the business,
operations, property, assets or financial or other condition of the Borrower,
and the Borrower does not have any contingent liability in connection with
any release of any Hazardous Material into the environment which may have a
material adverse effect on its business, operations, property, assets or
financial or other condition.
(m) USE OF PROCEEDS. The proceeds of the Loans shall be
used (i) up to $100,000 as consideration for the TKI Agreement; (ii) up to
$25,000 in the aggregate to satisfy indebtedness of Borrower to Xxxxx X.
Xxxxxxxx and Xxxxx Xxxxxxxx; (iii) up to $150,000 to purchase producing oil
and gas properties within the AMI; (iv) up to $50,000 to pay outside
professionals for
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fees and expenses incurred in connection with the TKI Agreement and the
transactions contemplated by the Loan Documents; and (v) up to $200,000 for
expenses to be incurred after the Funding Date in connection with the
acquisition and development of leases now held or to be acquired by Borrower
within the AMI, the reworking or drilling of xxxxx thereon, the costs of
maintaining, insuring and operating such leases and xxxxx and the costs
related to environmental compliance related thereto (including but not
limited to management fees of Xxxxx Xxxxxxxx in an amount not to exceed
$50,000 per year).
(n.) INSURANCE. Borrower keeps its insurable properties
adequately insured and against such risks, including fire, as is customary
with companies in the same or similar business.
SECTION V.2 REPRESENTATIONS AND WARRANTIES OF LENDER. The Lender
represents and warrants to Borrower as follows:
(a) ORGANIZATION, GOOD STANDING, ETC. Lender (i) is a
corporation duly organized, validly existing and in good standing under the
laws of the state of Michigan and(ii) has all requisite power and authority
to conduct its businesses now conducted and as presently contemplated to make
the loans hereunder and to consummate the transactions contemplated hereby
and by each of the Loan Documents to which it is a party, and (iii) is duly
qualified to do business and is in good standing in the state of Michigan.
(b) AUTHORIZATION, ETC. The execution, delivery and
performance by Lender of each Loan Document (i) have been duly authorized by
all necessary corporate action, (ii) do not and will not contravene the
charter or by-laws, law or any contractual restriction binding on or
otherwise effecting it or any of its properties, (iii) do not and will not
result in or require the creation of any lien, security interest or other
charge or encumbrance (other than contemplated by the Loan Documents) upon or
with respect to any of its Property, and (iv) do not and will not result in
any suspension, revocation, impairment, forfeiture or non-renewal of any
permit, license, authorization or approval applicable to its operations or
property.
No authorization or approval or other action by, and
no notice to or filing with, any Governmental Authority or other regulatory
body is required in connection with the due execution, delivery and
performance by the Lender of any loan Document to which Lender is or will be
a party.
ARTICLE VI
COVENANTS OF THE BORROWER
SECTION VI.1 AFFIRMATIVE COVENANTS. So long as any principal of
or interest on the Loan shall remain unpaid or the Lender shall have any
commitment to make a Loan hereunder, the Borrower will, unless the Lender
shall otherwise consent in writing:
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(a) REPORTING REQUIREMENTS. Furnish to the Lender:
(i) as soon as available and in any event within
45 days after the end of each fiscal quarter of the Borrower, an interim (A)
balance sheet of the Borrower as at the end of such quarter, (B) statement of
income of the Borrower as at the end of such quarter and for the period
commencing at the end of the immediately preceding fiscal year and ending
with the end of such quarter, and (C) statement of cash flow of the Borrower
for such quarter and for the period commencing at the end of the immediately
preceding fiscal year and ending with the end of such quarter, all in
reasonable detail and prepared in accordance with generally accepted
accounting principles consistently applied;
(ii) as soon as available and in any event within
90 days after the end of each fiscal year of the Borrower, a (A) balance
sheet of the Borrower as at the end of such fiscal year, (B) statement of
income of the Borrower as at the end of such fiscal year, and (C) statement
of cash flow of the Borrower for such fiscal year, all in reasonable detail
and prepared in accordance with generally accepted accounting principles
consistently applied; and
(iii) promptly after the commencement thereof but
in any event not later than five (5) Business Days after service of process
with respect thereto on, or the obtaining of knowledge thereof by, the
Borrower, notice of each action, suit or proceeding before any court or other
Governmental Authority or other regulatory body or any arbitrator which may
materially adversely affect the condition or operations, financial or
otherwise, of the Borrower.
(iv) promptly after obtaining knowledge thereof
but in any event not later than five (5) days after the occurrence of an
Event of Default, or an event which, with the giving of notice or the lapse
of time or both, would constitute an Event of Default, or a material adverse
change in the condition or operations, financial or otherwise, of the
Borrower, the written statement of the chief executive officer or the chief
financial officer of the Borrower, setting forth the details of such Event of
Default, event or material adverse change and the action which the Borrower
proposes to take with respect thereto;
(v) promptly upon request, such other information
concerning the condition or operations, financial or otherwise, of the
Borrower as the Lender from time to time may reasonably request.
(b) COMPLIANCE WITH LAWS, ETC. Comply in all material
respects with all applicable laws, rules, regulations and orders, if the
failure to so comply would have a material adverse effect on the Collateral
or Borrower's ability to pay the Obligations as and when due.
(c) PRESERVATION OF EXISTENCE, ETC. Maintain and
preserve its existence, rights and privileges, and become or remain duly
qualified and in good standing in the States of Nevada and Michigan.
Maintain all licenses necessary to conduct the business of the Borrower.
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(d) KEEPING OF RECORDS AND BOOKS OF ACCOUNT. Keep
adequate records and books of account, with complete entries made in
accordance with GAAP.
(i) INSPECTION RIGHTS. Permit the Lender or any
agent or representative thereof at any reasonable time and from time to time
to examine and make copies of and abstracts from its records and books of
account, to visit and inspect the Property, to conduct audits or
examinations, and to discuss its affairs, finances and accounts with any of
the directors, officers, employees, independent accountants or other
representatives thereof
(e) MAINTENANCE OF INSURANCE. Maintain insurance with
responsible and reputable insurance companies or associations (including,
without limitation, comprehensive general liability, personal liability and
hazard insurance) with respect to its properties and business, in such
amounts and covering such risks, as is required by any Governmental Authority
or other regulatory body having jurisdiction with respect thereto or as is
carried generally in accordance with sound business practice by companies in
similar businesses similarly situated.
(g) MAINTENANCE OF PROPERTIES, ETC. Maintain and
preserve all of its properties which are necessary or useful in the proper
conduct of its business in good working order and condition, ordinary wear
and tear excepted, and comply at all times with the provisions of all leases
which are necessary or useful in the proper conduct of its business to which
the Borrower is a party as lessee or under which the Borrower occupies
property, which are necessary or useful in the proper conduct of its business
so as to prevent any loss or forfeiture thereof or thereunder.
(h) ENVIRONMENTAL LAWS. Comply with the requirements of
all applicable Environmental Laws if the failure to so comply would have a
material adverse effect on the Collateral or Borrower's ability to pay the
Obligations as and when due.
(i) FURTHER ASSURANCES. Borrower shall execute,
acknowledge and deliver all such further deeds, conveyances, mortgages,
assignments, estoppel certificates, financing statements, notices of
assignment, transfers and assurances as the Lender may reasonably require
from time to time in order to better assure, convey, grant, assign, transfer
and confirm unto the Lender the rights now or hereafter intended to be
granted to the Lender under this Agreement, any Loan Document or any other
instrument under which Borrower may be or may hereafter become bound to
convey, mortgage or assign to the Lender to effect the intention or
facilitate the performance of the terms of the Agreement.
(j) ADDITIONAL SECURITY. The Borrower shall, within 10
days of a request by the Lender, execute and deliver all documents requested
by Lender's counsel necessary or desirable, in the opinion of such counsel,
to perfect a first priority security interest in favor of the Lender in any
asset purchased by the Borrower with the proceeds of the Loan, in whole or in
part; provided, however, that with respect to any asset that is partially
funded by a purchase money mortgage or purchase money security interest in
accordance with subsection 6.02(a)(iv) hereof, the Lender's security interest
may be subject to such purchase money mortgage or security interest.
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SECTION VI.2 NEGATIVE COVENANTS. So long as any principal of or
interest on the Loan, or any Obligation, shall remain unpaid, the Borrower
will not, without the prior written consent of the Lender:
(a) LIENS, ETC. Create or suffer to exist any Lien upon
or with respect to any of the Collateral, other than:
(i) Liens created pursuant to the Loan Documents;
(ii) Liens for taxes, assessments or governmental
charges or levies to the extent contested in good faith by proper proceedings
which stay the imposition of any penalty, fine or lien resulting from the
non-payment thereof and with respect to which adequate reserves have been set
aside for the payment thereof;
(iii) Liens created by operation of law, such as
materialmen's liens, mechanics' liens and other similar liens, arising in the
ordinary course of business and securing claims which are being contested in
good faith by proper proceedings which stay the imposition of any penalty,
fine or lien resulting from the non-payment thereof and with respect to which
adequate reserves have been set aside for the payment thereof;
(iv) (A) purchase money liens on or purchase money
security interests in Collateral acquired or held by the Borrower in the
ordinary course of its business to secure the purchase price of such
Collateral, or (B) liens or security interests existing on such Collateral at
the time of its acquisition, PROVIDED, that (1) no such lien or security
interests shall extend to cover any other Collateral of the Borrower, and (2)
the principal amount of the Indebtedness secured by any such lien or security
interest shall not exceed 100% of the lesser of the fair market value or the
cost of the Collateral so held or acquired;
(v) any Lien subordinate to the Liens in favor of
the Lender; and
(vi) any other Lien in favor of the Lender.
(b) INDEBTEDNESS. Create, incur or suffer to exist any
Indebtedness, other than:
(i) Indebtedness to the Lender;
(ii) Indebtedness created hereunder or under the
Notes;
(iii) Indebtedness existing on the date hereof, as
set forth in Schedule II hereto, and any extension of maturity, refinancing
or other modification of the terms thereof, PROVIDED, HOWEVER, that such
extension, refinancing or modification (A) is pursuant to terms that are not
less favorable to the Borrower than the terms of the Indebtedness being
extended, refinanced or modified, and (B) after giving effect of the
extension, refinancing or modification of
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such Indebtedness, the amount of such Indebtedness outstanding is not greater
than the amount of such Indebtedness outstanding immediately prior to such
extension, refinancing or modification;
(iv) Indebtedness represented by accounts payable
incurred in the ordinary course of business;
(v) Indebtedness secured by liens or security
interests permitted by subsection (a) of this Section 6.02;
(c) INVESTMENTS, ETC. Make any loan, advance or
contribution to any Person or purchase or otherwise acquire any capital
stock, properties, assets or obligations of, or any interest in, any Person,
other than (i) investments made in accordance with the Use of Proceeds set
forth in Section 5.01 (m) hereof; (ii) investments existing on the date
hereof, as set forth in Schedule III hereto.
(d) TRANSACTIONS WITH AFFILIATES. The Borrower shall not
enter into or be a party to any transaction with any of its Affiliates,
except in the ordinary course of business for fair consideration and on terms
no less favorable to the Borrower as are available from unaffiliated third
parties.
SECTION 6.03 SPECIAL COVENANT OF THE BORROWER. At the earliest
practicable time, Borrower shall sell in a commercially reasonable manner the
oil and gas equipment acquired from Fleur-Xxxxx and located in Xxxxxx County,
Texas (identified on Exhibit D to Schedule J hereto) and use the proceeds
thereof to prepay the Term Loan, subject to the Inter-Creditor Agreement.
ARTICLE VII
EVENTS OF DEFAULT
SECTION VII.1 EVENTS OF DEFAULT. If any of the following Events of
Default shall occur and be continuing:
(a) the Borrower shall fail to pay any principal on any
Loan within five (5) Business Days of the date when due (whether by scheduled
maturity, required prepayment, acceleration, demand or otherwise);
(b) the Borrower shall fail to pay any interest on any
Loan or any fee or other amount (whether by scheduled payment, acceleration,
demand or otherwise) within five (5) Business Days of the date when due;
(c) any representation or warranty made by the Borrower
or any officer of the Borrower under or in connection with any Loan Document
shall have been incorrect in any material respect when made and such could,
at the date of its discovery by Lender, reasonably be
16
anticipated to have a material adverse effect on the Collateral or the rights
of the Lender to enforce its Liens on the Collateral or Borrower's ability to
pay the Obligations as and when due;
(d) the Borrower shall fail to perform or observe any of
the covenants contained in Sections 6.01 or 6.02 hereof and such failure
shall continue for 30 days after notice thereof to the Borrower by the Lender;
(e) the Borrower shall fail to perform or observe any
other term, covenant or agreement contained in any Loan Document and to be
performed or observed and such failure shall continue for 30 days after
notice thereof to the Borrower by the Lender;
(f) Borrower (i) shall institute any proceeding or
voluntary case seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief or composition of it or its debts under any
law relating to bankruptcy, insolvency, reorganization or relief of debtors,
or seeking the entry of an order for relief or the appointment of a receiver,
trustee, custodian or other similar official for such Person or for any
substantial part of its property, (ii) shall admit in writing its inability
to pay its debts generally, or (iii) shall make a general assignment for the
benefit of creditors;
(g) any proceeding shall be instituted against the
Borrower seeking to adjudicate it a bankrupt or insolvent, or seeking
dissolution, liquidation, winding up, reorganization, arrangement,
adjustment, protection, relief of debtors, or seeking the entry of an order
for relief or the appointment of a receiver, trustee, custodian or other
similar official for such Person or for any substantial part of its property,
and either such proceeding shall remain undismissed or unstayed for a period
of 60 days or any of the actions sought in such proceeding (including,
without limitation, the entry of an order for relief against it or the
appointment of a receiver, trustee, custodian or other similar official for
it or for any substantial part of its property) shall occur;
(h) the Security Agreement, or any other security
document, after delivery thereof pursuant hereto, shall for any reason fail
or cease to create a valid and perfected and, to the extent provided for by
the terms hereof or thereof, first or second priority lien on or security
interest in any Collateral purported to be covered thereby and Borrower fails
to comply with the provisions of Section 6.01(i) hereof, or such efforts fail
to restore Lender to its security interest in the Collateral;
then, and in any such event, the Lender may, by notice to the Borrower,
declare the Loans, all interest thereon and all other amounts payable under
this Agreement to be forthwith due and payable, whereupon the Loans, all such
interest and all such amounts shall become and be forthwith due and payable,
without presentment, demand, protest or further notice of any kind, all of
which are hereby expressly waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
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SECTION VIII.1 NOTICES, ETC. All notices and other communications
provided for hereunder shall be in writing and shall be mailed, telecopied, with
a copy sent promptly thereafter by U.S. mail, return receipt requested or
delivered, if to the Borrower, at the following address:
SABAL Corp.
5830 XxXxxxx
Xx. 00 Xxxxxxxxxx, Xxxxx 000
Xxxxxx Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to:
Xxxxxxx Xxxxxx L.L.P.
000 Xxxxxxxx Xxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attention: Xxxx Xxxxxx
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
and if to the Lender, to it at the following address:
ExCal Energy Corporation
c/o MTR Gaming Group, Inc.
Xxxxx 0 Xxxxx
Xxxxxxx, Xxxx Xxxxxxxx 00000
Attention: Xx. Xxxxx Xxxxxxxx, President
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
with copies to:
Xxxxx & Xxxxxxx, LLP
0000 X Xxxxxx, XX, Xxxxx 000
Xxxxxxxxxx, XX 00000
Attention: Xxxxxx Xxxxx, Esq.
Telephone No.: (000) 000-0000
Telecopy No.: (000) 000-0000
or, as to each party, at such other address as shall be designated by such
party in a written notice to the other party complying as to delivery with
the terms of this Section 8.01. All such notices and other communications
shall be effective (i) if mailed, when received or three days after mailing,
whichever first occurs, (ii) if telecopied, when transmitted, provided same
is on a Business Day and,
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if not, on the next Business Day, or (iii) if delivered, upon delivery,
provided same is on a Business Day and, if not, on the next Business Day,
except that notices to the Lender pursuant to Article II hereof shall not be
effective until received by the Lender.
SECTION VIII.2 AMENDMENTS, ETC. No amendment of any provision of
this Agreement, any Note or any other Loan Document shall be effective unless
it is in writing and signed by the Borrower and the Lender, and no waiver of
any provision of this Agreement, any Note or any other Loan Document, nor
consent to any departure by the Borrower therefrom, shall be effective unless
it is in writing and signed by the Lender, and then such waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which given.
SECTION VIII.3 NO WAIVER; REMEDIES, ETC. No failure on the part of
the Lender to exercise, and no delay in exercising, any right hereunder or
under any other Loan Document shall operate as a waiver thereof, nor shall
any single or partial exercise of any right under any Loan Document preclude
any other or further exercise thereof or the exercise of any other right.
The rights and remedies of the Lender provided herein and in the other Loan
Documents are cumulative and are in addition to, and not exclusive of, any
right or remedy provided by law. The rights of the Lender under any Loan
Document against any party thereto are not conditional or contingent on any
attempt by the Lender to exercise any of its rights under any other Loan
Document against such party or against any other Person.
SECTION VIII.4 SEVERABILITY. Any provision of this Agreement, or of
any other Loan Document to which the Borrower is a party, which 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 portions hereof or thereof or affecting the
validity or enforceability of such provision in any other jurisdiction.
SECTION VIII.5 SUCCESSORS AND ASSIGNS; DUE ON SALE. This Agreement
shall be binding upon and inure to the benefit of the Borrower and the Lender
and their respective successors and assigns, except that the Borrower may not
assign its rights hereunder or any interest herein without the prior written
consent of the Lender. In the event Borrower, without the prior written
consent of Lender, merges or consolidates with any Person or sells, assigns,
leases, engages in sale leaseback transactions or otherwise transfers or
disposes of, whether in one transaction or in a series of related
transactions, any substantial portion of its properties, rights or other
assets (whether now owned or hereafter acquired) to any Person, then in that
event the Loan and any accrued interest then outstanding shall immediately
become due and payable.
SECTION VIII.6 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate
counterparts, each of which shall be deemed to be an original, but all of
which taken together shall constitute one and the same agreement.
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SECTION VIII.7 HEADINGS. Section headings herein are included for
convenience of reference only and shall not constitute a part of this
Agreement for any other purpose.
SECTION VIII.8 GOVERNING LAW. This Agreement, the Note, and the
other Loan Documents shall be governed by, and construed in accordance with,
the law of the State of Texas applicable to contracts made and to be
performed in such State without regard to conflicts of law principles.
SECTION 8.09 INDEMNIFICATION. In addition to all of their other
Obligations under this Agreement, the Borrower agrees to defend, protect,
indemnify and hold harmless the Lender and any assignee of the Lender's
rights hereunder, and all of their respective officers, directors, employees,
attorneys, consultants and agents ( including, without limitation, those
retained in connection with the satisfaction or attempted satisfaction of any
of the conditions set forth in this Agreement) (collectively called the
"Indemnitees") from and against any and all losses, damages, liabilities,
obligations, penalties, fees, costs and expenses (including without
limitation, attorneys' fees, costs and expenses) incurred by such Indemnitees
after the Effective Date, whether direct, indirect or consequential, as a
result of or arising from or relating to any suit, investigation, action or
proceeding by any Person, whether threatened or initiated, asserting a claim
for any legal or equitable remedy against any Person under any statute or
regulation, including, without limitation, any Federal or state securities or
labor laws, or under any Federal, state or local environmental, health or
safety laws, regulations or, common law principles, arising from or in
connection with the operations of the Borrower, arising from or in connection
with any of the following: (i) the negotiation, preparation, execution or
performance of this Agreement or of any document executed in connection with
the transactions contemplated by this Agreement, (ii) the Lender's furnishing
of funds to the Borrower under this Agreement, (iii) any matter relating to
the financing transactions contemplated by this Agreement or by any document
executed in connection with the transactions contemplated by this Agreement,
(collectively, the "Indemnified Matters"); PROVIDED, HOWEVER, that the
Borrower shall have no obligation to any Indemnitee hereunder for any
Indemnified Matter caused by or resulting from the gross negligence or
willful misconduct of such Indemnitee, as determined by a final judgment of a
court of competent jurisdiction. Such indemnification for all of the
foregoing losses, damages, fees, costs and expenses of the Lender shall be
part of the Obligations in respect of the Term Loan (the "Term Obligations"),
secured by the Collateral and added to the principal amount of the Term Loan.
To the extent that the undertaking to indemnify, pay and hold harmless set
forth in this Section 8.09 may be unenforceable because it is violative of
any law or public policy, the Borrower shall contribute the maximum portion
which it is permitted to pay and satisfy under applicable law, to the payment
and satisfaction of all Indemnified Matters incurred by the Indemnitees. The
provisions of this Section 8.09 shall survive termination of this Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be executed by their respective officers thereunto duly authorized, as of the
date first above written.
SABAL CORP.
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By: /s/ Xxxxx Xxxxxxxx
---------------------------------------
Name: Xxxxx Xxxxxxxx
Title: President
EXCAL ENERGY CORPORATION
By: /s/ Xxxxxx X. Xxxxx
---------------------------------------
Name: Xxxxxx X. Xxxxx
Title: Attorney-in-fact
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