EXHIBIT 2.2
SUBORDINATED REVOLVING CREDIT AGREEMENT
THIS SUBORDINATED REVOLVING CREDIT AGREEMENT (this "AGREEMENT") is
entered into as of October 3, 2001, by and between MADISON OIL COMPANY, a
Delaware corporation ("BORROWER"), and TOREADOR RESOURCES CORPORATION, a
Delaware corporation ("LENDER").
WITNESSETH:
1. In connection with the negotiation of the Merger Agreement
(hereinafter defined), Borrower has requested that Lender provide Borrower with
a revolving credit loan facility to fund certain corporate needs set forth
herein.
2. Lender is willing to provide such a facility to Borrower upon the
terms and subject to the conditions hereinafter set forth.
NOW, THEREFORE, in consideration of the mutual promises herein
contained and for other valuable consideration, the receipt and sufficiency of
which are hereby acknowledged, the parties hereto agree as follows:
SECTION 1
DEFINITION OF TERMS
1.1 DEFINITIONS. As used in this Agreement, all exhibits and schedules
hereto and in any note, certificate, report, or other Loan Documents made or
delivered pursuant to this Agreement, the following terms shall have the
respective meanings assigned to them in this SECTION 1 or in the SECTION or
recital referred to below:
"ADVANCE" is defined in the Note.
"AGREEMENT" means this Subordinated Revolving Credit Agreement as the
same may be modified, amended, renewed, extended, or restated from time to time.
"BUSINESS DAY" means (a) for all purposes, any day other than a
Saturday, Sunday, or day on which national banks are authorized to be closed
under the laws of the State of Texas.
"CASH AVAILABILITY" means as of any date of determination, an amount
equal to the cash actually held by Lender, less, Lender's then existing current
liabilities and commitments.
"DEBTOR LAWS" means all applicable liquidation, conservatorship,
bankruptcy, moratorium, arrangement, receivership, insolvency, reorganization,
or similar laws from time to time in effect affecting the rights of creditors
generally.
"EVENT OF DEFAULT" shall have the meaning set forth in SECTION 8.1.
"FINANCE PARTIES" is defined in the Senior Credit Agreement.
REVOLVING CREDIT AGREEMENT
"GAAP" means those generally accepted accounting principles and
practices, applied on a consistent basis, which are recognized as such by the
American Institute of Certified Public Accountants acting through its Accounting
Principles Board and the Financial Accounting Standards Board and/or their
respective successors and which are applicable in the circumstances as of the
date in question.
"GOVERNMENTAL AUTHORITY" means, with respect to any Person, any
government (or any political subdivision or jurisdiction thereof), court,
bureau, agency, or other governmental authority having jurisdiction over such
Person or any of its business, operations, or properties.
"INDEBTEDNESS" means, for any Person, all Liabilities of such Person,
excluding accounts payable, deferred taxes, deferred Liabilities, and accrued
expenses in each case incurred in the ordinary course of business and the
payment of which is not more than thirty (30) days past-due (unless payment is
being contested in good faith by appropriate proceedings diligently conducted
and for which adequate reserves are maintained in accordance with GAAP).
"LEGAL REQUIREMENT" means any federal, state, local, municipal,
foreign, international, multi-national, or other administrative order,
constitution, law, ordinance, principle of common law, regulation, statute, or
treaty as in effect on the date in question.
"LIABILITIES" means (without duplication), with respect to any Person,
all indebtedness, obligations, and liabilities of such Person, including without
limitation (a) all "liabilities" which would be reflected on a balance sheet of
such Person, (b) all obligations of such Person in respect of any Guaranty,
letter of credit, or bankers' acceptance, (c) all obligations of such Person in
respect of any lease capitalized in accordance with GAAP, (d) all obligations,
indebtedness, and liabilities secured by any lien or any security interest on
any property or assets of such Person, and (e) any obligation to redeem or
repurchase any of such Person's stock.
"LOAN" means the revolving credit loan made or to be made hereunder to
Borrower by Lender pursuant to SECTION 2.1.
"LOAN DOCUMENTS" means this Agreement, the Note, and any agreements,
documents (and with respect to this Agreement, and such other agreements and
documents, any renewals, extensions, amendments, or supplements thereto), or
certificates at any time executed or delivered pursuant to the terms of this
Agreement.
"MATERIAL ADVERSE EFFECT" means any material adverse changes in, or
effect upon, (a) the validity, performance, or enforceability of any Loan
Documents, (b) the financial condition or business operations of Borrower, or
(c) the ability of Borrower or any Guarantor to fulfill its obligations under
the Loan Documents.
"MAXIMUM RATE" means the highest nonusurious rate of interest (if any)
permitted from day to day by applicable law. Lender hereby notifies and
discloses to Borrower that, for purposes of Texas Finance Code Section 303.001),
as it may from time to time be amended, the "applicable rate ceiling" shall be
the "weekly" ceiling from time to time in effect as limited by Texas Finance
Code Section 303.009; provided, however, that to the extent permitted by
applicable law, Lender reserves the right to change the "applicable rate
ceiling" from time to time by further notice and disclosure to Borrower.
"MERGER AGREEMENT" means that certain Agreement and Plan of Merger
dated October 3, 2001, by and between Borrower, MOC Acquisition Corporation, a
Delaware corporation, and Lender.
-2-
REVOLVING CREDIT AGREEMENT
"NOTE" means the Subordinated Revolving Credit Note executed by
Borrower and delivered pursuant to the terms of this Agreement, together with
any renewals, extensions, or modifications thereof.
"NOTICE OF BORROWING" means a notice in the form of EXHIBIT A attached
to the Note.
"OBLIGATION" means all present and future Indebtedness, obligations,
and Liabilities and all renewals and extensions thereof, or any part thereof,
now or hereafter owed to Lender by Borrower, whether arising pursuant to any of
the Loan Documents, or otherwise, and all renewals and extensions thereof,
together with all interest accruing thereon and costs, expenses, and attorneys'
fees incurred in the enforcement or collection thereof.
"PERSON" shall include an individual, corporation, joint venture,
general or limited partnership, limited liability company, trust, unincorporated
organization, or government, or any agency or political subdivision thereof.
"POTENTIAL DEFAULT" means the occurrence of any event which with
passage of time or giving of notice or both could become an Event of Default.
"PRINCIPAL DEBT" means, as of any date, the sum of the outstanding
principal balance of all outstanding Advances under the Note and this Agreement
as of such date.
"REVOLVING CREDIT COMMITMENT" means $5,000,000, as the same may be
terminated by Lender pursuant to SECTION 8.2.
"SENIOR CREDIT AGREEMENT" means the Agreement dated March 30, 2001,
Revolving Credit Facility for Madison Oil Company Europe, Madison Oil France
S.A. and Madison Chart Energy SCS, arranged by Barclays Capital.
"SENIOR DEBT" means all present and future obligations and liabilities
(whether actual or contingent) of Borrower under the Finance Documents (as
defined in the Senior Credit Agreement).
"SUBSIDIARY" of any Person means (a) any entity of which an aggregate
of more than 50% (in number of votes) of the stock is owned of record or
beneficially, directly or indirectly, by such Person, or (b) any partnership
(limited or general) of which such Person shall at any time be the general
partner or own 50% or more of the issued and outstanding partnership interests,
or (c) any limited liability company of which such Person shall at any time own
of record or beneficially an aggregate of more than 50% of the membership
interests.
"TERMINATION DATE" means the earliest of (a) the date Lender's
commitment to fund Advances under the Note and under this Agreement is
terminated pursuant to SECTION 8.2, (c) the termination of the Merger Agreement
for any reason or any breach of the Voting Agreement occurs, and (c) February
28, 2002.
"UNUSED COMMITMENT" means, as of any date, (a) the Revolving Credit
Commitment, minus (b) the Principal Debt.
"VOTING AGREEMENT" means the Voting Agreement dated as of October 3,
2001 among the shareholders of Borrower and Lender.
-3-
REVOLVING CREDIT AGREEMENT
1.2 ACCOUNTING TERMS. As used in this Agreement, and in the Note, and
in any certificate, report or other document made or delivered pursuant to this
Agreement, accounting terms not defined in SECTION 1.1, and accounting terms
partly defined in SECTION 1.1 to the extent not defined, shall have, as of any
date, the respective meanings given to them under GAAP and all references to
balance sheets or other financial statements means such statements, prepared in
accordance with GAAP as of such date.
1.3 RULES OF CONSTRUCTION. When used in this Agreement: (a) "or" is not
exclusive; (b) a reference to a law includes any amendment or modification to
such law; (c) a reference to a Person includes its permitted successors and
permitted assigns; (d) except as provided otherwise, all references to the
singular shall include the plural and vice versa; (e) except as provided in this
Agreement, a reference to an agreement, instrument or document shall include
such agreement, instrument, or document as the same may be amended, modified or
supplemented from time to time in accordance with its terms and as permitted by
the Loan Documents; (f) all references to SECTIONS, SCHEDULES, or EXHIBITS shall
be to Sections, Schedules, or Exhibits of this Agreement, unless otherwise
indicated; (g) all EXHIBITS to this Agreement shall be incorporated into this
Agreement; (h) the words "include," "includes," and "including" shall be deemed
to be followed by the phrase "without limitation;" and (i) except as otherwise
provided herein, in the computation of time from a specified date to a later
specified date, the word "from" means "from and including" and words "to" and
"until" each mean "to but excluding."
SECTION 2
THE REVOLVING CREDIT LOAN
2.1 THE REVOLVING CREDIT COMMITMENT.
(a) AVAILABILITY. Subject to the terms and conditions of this
Agreement, and further subject to Lender's Cash Availability, Lender agrees to
extend to Borrower, from the date hereof through the Termination Date, a
revolving line of credit which shall not exceed at any one time outstanding
$5,000,000. Within the limits of this SECTION 2.1, during such period, Borrower
may borrow, repay, and reborrow the Unused Commitment in accordance with this
Agreement.
(b) ADVANCES TO PAY SENIOR DEBT. Notwithstanding the foregoing,
Advances, the proceeds of which will be used to repay the Senior Debt, shall
only be available in accordance with the following schedule:
a. US$300,000 on October 1, 2001;
b. US$300,000 on November 1, 2001;
c. US$400,000 on December 2, 2001; and
d. US$300,000 on the first day of each month thereafter, but the
outstanding Advances hereunder may at no time exceed the Revolving Credit
Commitment.
In the event that as of the first day of any month, Lender's Cash
Availability is insufficient to permit Lender to make an Advance hereunder,
Lender shall have no obligation to make such Advance, and the amount of the
Advance not made shall be aggregated with the amount scheduled for the
succeeding month.
-4-
REVOLVING CREDIT AGREEMENT
(c) OTHER ADVANCES. Lender, subject to Cash Availability, agrees to
make additional Advances hereunder, the proceeds of which will be used for the
following purposes:
a. To pay general and administrative costs of Borrower (other than any
amounts now or hereafter due to Xxxxx & Xxxxx);
b. To pay development and exploration costs and expenses of Borrower
and its Subsidiaries in Trinidad; and
c. To pay development and exploration costs and expenses of Borrower
and its Subsidiaries in France and Turkey.
In no event shall the outstanding Advances hereunder at any time exceed
the Revolving Credit Commitment.
2.2 USE OF PROCEEDS. Borrower may only use the proceeds of Advances for
one of the purposes described in SECTION 2.1 above.
2.3 NOTE. The Loan made under SECTION 2.1 by Lender to Borrower shall
be evidenced by the Note in form and substance satisfactory to Lender executed
by Borrower, which Note shall be (a) dated the date hereof, (b) in the amount of
$5,000,000, and (c) payable to the order of Lender.
2.4 INTEREST AND PAYMENTS.
a. PRINCIPAL. The unpaid Principal Debt shall bear interest as provided
in the Note.
b. INTEREST. The unpaid Principal Debt and accrued interest thereon
shall be due and payable as provided in the Note.
SECTION 3
SUBORDINATION
3.1 SUBORDINATION.
a. AGREEMENT TO SUBORDINATE. Borrower and Lender agree that the
Obligation shall be subordinated in right of payment, to the extent and in the
manner provided in this SECTION 3, to the prior payment in full of all Senior
Debt, whether outstanding on the date hereof or hereafter incurred.
b. PAYMENTS. Except with the consent of the holders of the Senior Debt,
Lender shall not receive or accept any payment from Borrower with respect to the
Obligation until the Senior Debt is paid in full. In the event Lender receives
any payment on the Obligation in violation of the foregoing, Lender will hold
any such payment in trust for Finance Parties and forthwith turn it over to
Finance Parties, in precisely the form received (except for the endorsement or
assignment by Lender where necessary), for application on the Senior Debt,
whether then due or not due. In the event of failure of Lender to make any such
endorsement or assignment, Finance Parties, and each of its officers and
employees are hereby irrevocably authorized to make the same.
-5-
REVOLVING CREDIT AGREEMENT
c. LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any distribution to
creditors of Borrower in a liquidation or dissolution of Borrower or in a
bankruptcy, reorganization, insolvency, receivership, or similar proceeding
relating to Borrower or its property, an assignment for the benefit of creditors
or any marshaling of Borrower's assets and liabilities:
(i) the Finance Parties will be entitled to receive payment in
full of the Senior Debt (including interest after the commencement of
any such proceeding at the rate specified in the applicable Senior
Debt, whether or not such interest is in an allowed claim under
applicable law) before Lender will be entitled to receive any payment
with respect to the Obligation; and
(ii) until all obligations with respect to Senior Debt are
paid in full, any distribution to which Lender would be entitled shall
be made to the Finance Parties.
d. SUBROGATION. After all Senior Debt is paid in full and until the
Obligation is paid in full, Lender shall be subrogated to the rights of holders
of Senior Debt to receive distributions applicable to Senior Debt to the extent
that distributions otherwise payable to Lender have been applied to the payment
of Senior Debt. A distribution made under this SECTION 3 to holders of Senior
Debt that otherwise would have been made to Lender is not, as between Borrower
and Lender, a payment by Borrower on the Obligation.
e. Relative Rights. Nothing in this SECTION 3 shall:
(i) impair, as between Borrower and Lender, the obligation of
Borrower to pay principal on the Note and the other parts of the
Obligation in accordance with their terms;
(ii) affect the relative rights of Lender and creditors of
Borrower other than their rights in relation to holders of Senior Debt;
or
(iii) prevent Lender from exercising its available remedies
upon an Event of Default, subject to the rights of holders and owners
of Senior Debt to receive distributions and payments otherwise payable
to Lender.
SECTION 4
CONDITIONS PRECEDENT
4.1 INITIAL ADVANCE. The obligation of Lender to make its initial
Advance under the Note and this Agreement is subject to the conditions precedent
that, on or before the date of such Advance, (a) Lender shall have received duly
executed copies of each of the documents listed on EXHIBIT A, each dated as of
the date of such Advance, and each in form and substance satisfactory to Lender
and (b) all of the terms and conditions of Article VIII of the Merger Agreement
shall have been satisfied.
4.2 ALL ADVANCES. The obligation of Lender to make any Advance under
the Note and this Agreement (including the initial Advance) shall be subject to
the conditions precedent that, as of the date of such Advance and after giving
effect thereto: (a) there exists no Potential Default or Event of Default; (b)
Lender shall have received from Borrower a Notice of Borrowing dated as of the
date of such Advance and all of the statements contained in such Notice of
Borrowing shall be true and correct; and (c) the representations and warranties
contained in each of the Loan Documents shall be true in all material respects
as though made on the date of such Advance.
-6-
REVOLVING CREDIT AGREEMENT
SECTION 5
REPRESENTATIONS AND WARRANTIES
To induce Lender to make the Loan hereunder, Borrower represents and
warrants to Lender that:
5.1 ORGANIZATION AND GOOD STANDING. Borrower and each of its
Subsidiaries is duly organized and in good standing under the laws of the state
of its incorporation, organization, or formation, as the case may be, is duly
qualified and in good standing in all jurisdictions in which it is doing
business, has the power and authority to own its properties and assets and to
transact the business in which it is engaged in each jurisdiction in which it
operates, and is or will be qualified in those states wherein it proposes to
transact business in the future, except where the failure to so qualify would
not cause a Material Adverse Effect.
5.2 AUTHORIZATION AND POWER. Borrower has full power and authority to
execute, deliver, and perform the Loan Documents to be executed by Borrower, all
of which have been duly authorized by all proper and necessary action.
5.3 NO CONFLICTS OR CONSENTS. Neither the execution and delivery of the
Loan Documents, nor the consummation of any of the transactions therein
contemplated, nor compliance with the terms and provisions thereof, will
contravene or materially conflict with any Legal Requirement to which Borrower
is subject, any governmental authorization applicable to Borrower , any
indenture, loan agreement, mortgage, deed of trust, or other agreement or
instrument binding on Borrower or the certificate of incorporation or bylaws of
Borrower. No consent, approval, authorization, or order of any court,
Governmental Authority, stockholder, or third party is required in connection
with the execution, delivery, or performance by Borrower of any of the Loan
Documents.
5.4 ENFORCEABLE OBLIGATIONS. The Loan Documents have been duly executed
and delivered by Borrower, and are the legal and binding obligations of
Borrower, enforceable in accordance with their respective terms, except as
limited by Debtor Laws.
5.5 MATERIAL AGREEMENTS. Borrower is not in default in any material
respect under any contract or agreement to which it is a party or by which any
of its properties may be bound.
5.6 NO POTENTIAL DEFAULT. No event has occurred and is continuing which
constitutes a Potential Default or an Event of Default.
5.7 USE OF PROCEEDS; MARGIN STOCK. The proceeds of the Loan will be
used by Borrower solely for the purposes specified in the preamble.
5.8 COMPLIANCE WITH LAW. Borrower and its Subsidiaries are in
compliance with all laws, rules, regulations, orders and decrees (including all
Environmental Laws) which are applicable to Borrower, or its properties.
5.9 SUBSIDIARIES. Set forth on EXHIBIT A hereto is a complete and
accurate list of all Subsidiaries as of the date hereof, showing as of such date
(as to each such Subsidiary) the jurisdiction of its incorporation.
5.10 LICENSES, PERMITS, ETC. Borrower and each of its Subsidiaries has
the legal right to use such valid intellectual property rights, franchises,
certificates of convenience and necessity, operating rights, licenses,
-7-
REVOLVING CREDIT AGREEMENT
permits, consents, authorizations, exemptions and orders of tribunals or
otherwise as are necessary or appropriate to carry on its business as now being
or currently proposed to be conducted.
5.11 REPRESENTATIONS AND WARRANTIES. Each Notice of Borrowing shall
constitute, without the necessity of specifically containing a written
statement, a representation and warranty by Borrower that no Potential Default
or Event of Default exists and that all representations and warranties contained
in this SECTION 5 or in any other Loan Document are true and correct on and as
of the date the requested Advance is to be made.
5.12 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All representations
and warranties by Borrower herein shall survive delivery of the Note and the
making of the Loan, and any investigation at any time made by or on behalf of
Lender shall not diminish Lender's right to rely thereon.
SECTION 6
AFFIRMATIVE COVENANTS
So long as Lender has any commitment to make Advances under the Note
and under this Agreement, and until payment in full of the Obligation, Borrower
agrees that (unless Lender shall otherwise consent in writing):
6.1 INFORMATION. Borrower shall provide to Lender such information
concerning the business, properties or financial condition of Borrower and each
Subsidiary as Lender shall reasonably request including financial statements,
audit reports, registration statements, or other reports or notices provided to
shareholders of Borrower or filed with the Canadian Securities Regulatory
Authorities.
6.2 MAINTENANCE OF EXISTENCE AND RIGHTS; CONDUCT OF BUSINESS. Borrower
shall preserve and maintain its corporate existence and all of its rights,
privileges, and franchises necessary or desirable in the normal conduct of its
business, and conduct its business in an orderly and efficient manner consistent
with good business practices and in accordance with all Legal Requirements of
any Governmental Authority, a breach of which could reasonably be expected to
have a Material Adverse Effect.
6.3 NOTICE OF DEFAULT. Borrower shall furnish to Lender, within five
(5) Business Days after becoming aware of the existence of any condition or
event which constitutes a Potential Default or an Event of Default, written
notice specifying the nature and period of existence thereof and the action
which Borrower is taking or proposes to take with respect thereto.
6.4 OTHER NOTICES. Borrower shall, within five (5) Business Days after
the occurrence thereof, notify Lender of (a) any material adverse change in its
financial condition or its business, (b) any default under any material
agreement, contract, or other instrument to which it is a party or by which any
of its properties are bound, or any acceleration of the maturity of any
Liabilities owing by Borrower, (c) any material adverse claim against or
affecting Borrower or any Subsidiary or any of its or their properties, and (d)
the commencement of, and any material adverse determination in, any material
litigation with any third party or any proceeding before any Governmental
Authority affecting Borrower or any Subsidiary.
6.5 PAYMENT OF TAXES AND OTHER INDEBTEDNESS. Borrower shall and shall
cause each Subsidiary to pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it or upon
-8-
REVOLVING CREDIT AGREEMENT
its income or profits, or upon any property belonging to it, before delinquent,
(b) all lawful claims (including claims for labor, materials and supplies),
which, if unpaid, might give rise to a lien upon any of its property, and (c)
all of its other Indebtedness as it becomes due, except as prohibited under the
Loan Documents; provided, however, that Borrower and each of its Subsidiaries
shall not be required to pay any such tax, assessment, charge or levy if and so
long as the amount, applicability or validity thereof shall currently be
contested in good faith by appropriate proceedings and appropriate accruals and
cash reserves therefor have been established in accordance with GAAP.
6.8 OPERATIONS AND PROPERTIES. Borrower shall and shall cause each
Subsidiary to (a) act prudently and in accordance with customary industry
standards in managing and operating its assets and properties and (b) keep in
good working order and condition, ordinary wear and tear excepted, all of its
assets and properties which are necessary to the conduct of its business.
6.9 BOOKS AND RECORDS; ACCESS. Borrower shall give any representative
of Lender access during all business hours to, and permit such representative to
examine, copy or make excerpts from, any and all books, records and documents in
the possession of Borrower and relating to its affairs, and to inspect any of
the properties of Borrower and its Subsidiaries. Borrower shall and shall cause
each Subsidiary to maintain complete and accurate books and records of its
transactions in accordance with good accounting practices.
6.10 COMPLIANCE WITH LAW. Borrower shall and shall cause each
Subsidiary to comply with all applicable laws, rules, regulations, and all
orders of any Governmental Authority, a breach of which could have a Material
Adverse Effect.
6.11 INSURANCE. Borrower shall and shall cause each Subsidiary to keep
all insurable property, real and personal, adequately insured at all times in
such amounts and against such risks as are customary for Persons in similar
businesses operating in the same vicinity, specifically to include a policy of
hazard, casualty, fire and extended coverage insurance covering all assets,
business interruption insurance (where feasible), liability insurance and
worker's compensation insurance, in every case under a policy with a financially
sound and reputable insurance company and with only such deductibles as are
customary, and all to contain a mortgagee or loss payee clause naming Lender as
its interest may appear.
6.12 AUTHORIZATIONS AND APPROVALS. Borrower shall and shall cause each
Subsidiary to promptly obtain, from time to time at its own expense, all such
governmental licenses, authorizations, consents, permits and approvals as may be
required to enable it to comply with its obligations hereunder and under the
other Loan Documents.
6.13 FURTHER ASSURANCES. Borrower shall make, execute, and deliver or
file or cause the same to be done, all such notices, additional agreements, or
other assurances, and take any and all such other action, as Lender may, from
time to time, deem reasonably necessary or proper in connection with any of the
Loan Documents.
6.14 INDEMNITY BY BORROWER. Borrower shall indemnify, defend, and hold
harmless Lender and its directors, officers, agents, attorneys, and employees
(individually, an "INDEMNITEE" and collectively, the "INDEMNITEES") from and
against any and all loss, liability, obligation, damage, penalty, judgment,
claim, deficiency, and expense (including interest, penalties, attorneys' fees,
and amounts paid in settlement) to which the Indemnitees may become subject
arising out of this Agreement and the other Loan Documents other than those
which arise by reason of the gross negligence or willful misconduct of Lender,
BUT SPECIFICALLY INCLUDING ANY LOSS, LIABILITY, OBLIGATION, DAMAGE, PENALTY,
JUDGMENT,
-9-
REVOLVING CREDIT AGREEMENT
CLAIM, DEFICIENCY, OR EXPENSE ARISING OUT OF THE SOLE OR CONCURRENT NEGLIGENCE
OF LENDER OTHER THAN THOSE ARISING BY REASON OF GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT. Borrower shall also indemnify, protect, and hold each Indemnitee
harmless from and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, claims, proceedings, costs, expenses
(including without limitation all reasonable attorneys' fees and legal expenses
whether or not suit is brought), and disbursements of any kind or nature
whatsoever which may at any time be imposed on, incurred by, or asserted against
such Indemnitee, with respect to or as a direct or indirect result of the
violation by Borrower of any Environmental Law; or with respect to or as a
direct or indirect result of Borrower's use, generation, manufacture,
production, storage, release, threatened release, discharge, disposal, or
presence of a hazardous material on, under, from, or about real property. The
provisions of and undertakings and indemnifications set forth in this SECTION
6.6 shall survive the satisfaction and payment of the Obligation and termination
of this Agreement.
SECTION 7
NEGATIVE COVENANTS
So long as Lender has any commitment to make Advances hereunder, and
until payment in full of the Obligation, Borrower agrees that (unless Lender
shall otherwise consent in writing):
7.1 LIMITATION ON SALE OF PROPERTIES. Borrower shall not sell, assign,
exchange, lease, or otherwise dispose of all or substantially all of its
properties, rights, assets, or business.
7.2 LIQUIDATION, MERGERS, CONSOLIDATIONS AND DISPOSITIONS OF
SUBSTANTIAL ASSETS. Borrower shall not dissolve or liquidate, or become a party
to any merger or consolidation, except the merger contemplated by the Merger
Agreement.
7.3 COVENANT INCORPORATION BY REFERENCE. Effective from the date hereof
until the Obligation is fully and finally paid, the covenants set forth in
Article VI of the Merger Agreement are incorporated herein by reference. Such
covenants shall remain in full force and effect notwithstanding the consummation
of the merger contemplated thereby or the termination of the Merger Agreement.
SECTION 8
EVENTS OF DEFAULT
8.1 EVENTS OF DEFAULT. An "EVENT OF DEFAULT" shall exist if any one or
more of the following events (herein collectively called "EVENTS OF DEFAULT")
shall occur and be continuing:
a. Borrower shall fail to pay when due the Obligation or any part
thereof; or
b. any representation or warranty made under this Agreement, or any of
the other Loan Documents, shall prove to be untrue or inaccurate in any material
respect as of the date on which such representation or warranty is made or
deemed to have been made; or
c. default shall occur in the performance of any of the covenants or
agreements of Borrower or any Guarantor contained herein or in any of the other
Loan Documents; or
-10-
REVOLVING CREDIT AGREEMENT
d. default shall occur in the payment of any material Liabilities
(other than the Obligation) of Borrower or any Subsidiary or default shall occur
in respect of any note or credit agreement relating to any such Liabilities the
effect of which has been to cause the acceleration of the principal outstanding
under such note or credit agreement; or
e. any of the Loan Documents shall cease to be legal, valid, and
binding agreements enforceable against Borrower in accordance with its terms,
shall be terminated, become or be declared ineffective or inoperative; or
Borrower shall deny that Borrower has any further Liability or obligation under
any of the Loan Documents; or
f. Borrower or any Subsidiary shall (i) apply for or consent to the
appointment of a receiver, trustee, custodian, intervenor, or liquidator of
itself or of all or a substantial part of such Person's assets, (ii) file a
voluntary petition in bankruptcy, admit in writing that such Person is unable to
pay such Person's debts as they become due, or generally not pay such Person's
debts as they become due, (iii) make a general assignment for the benefit of
creditors, (iv) file a petition or answer seeking reorganization of an
arrangement with creditors or to take advantage of any bankruptcy or insolvency
laws, (v) file an answer admitting the material allegations of, or consent to,
or default in answering, a petition filed against such Person in any bankruptcy,
reorganization, or insolvency proceeding, or (vi) take corporate action for the
purpose of effecting any of the foregoing; or
g. an involuntary proceeding shall be commenced against Borrower or any
Subsidiary seeking bankruptcy or reorganization of such Person or the
appointment of a receiver, custodian, trustee, liquidator, or other similar
official of such Person, or all or substantially all of such Person's assets,
and such proceeding shall not have been dismissed within sixty (60) days of the
filing thereof; or an order, order for relief, judgment, or decree shall be
entered by any court of competent jurisdiction or other competent authority
approving a petition or complaint seeking reorganization of Borrower or any
Guarantor or appointing a receiver, custodian, trustee, liquidator, or other
similar official of such Person, or of all or substantially all of such Person's
assets; or
h. any final judgment(s) for the payment of money in excess of the sum
of $250,000 in the aggregate shall be rendered against Borrower or any Guarantor
and such judgment(s) shall not be satisfied or discharged at least ten (10) days
prior to the date on which any of such Person's assets could be lawfully sold to
satisfy such judgment; or
i. the Merger Agreement shall be terminated or any breach of the Voting
Agreement shall occur.
8.2 REMEDIES UPON EVENT OF DEFAULT. If any Event of Default shall occur
and be continuing, then Lender may, without notice, exercise any one or more of
the following rights and remedies, and any other remedies provided in any of the
Loan Documents, as Lender in its sole discretion may deem necessary or
appropriate: (a) terminate Lender's commitment to lend hereunder, (b) declare
the Obligation or any part thereof to be forthwith due and payable, whereupon
the same shall forthwith become due and payable without presentment, demand,
protest, notice of default, notice of acceleration or of intention to
accelerate, or other notice of any kind, all of which Borrower hereby expressly
waives, anything contained herein or in the Note to the contrary
notwithstanding, (c) reduce any claim to judgment, or (d) without notice of
default or demand, pursue and enforce any of Lender's rights and remedies under
the Loan Documents, or otherwise provided under or pursuant to any applicable
law or agreement; provided, however, if any Event of Default specified in
SECTIONS 8.1(f) or (g) shall occur, then the Obligation shall thereupon become
due and payable concurrently therewith, and Lender's obligation to lend shall
immediately terminate hereunder, without any further action
-11-
REVOLVING CREDIT AGREEMENT
by Lender and without presentment, demand, protest, notice of default, notice of
acceleration or of intention to accelerate, or other notice of any kind, all of
which Borrower hereby expressly waives.
8.3 PERFORMANCE BY LENDER. If Borrower fails to perform any covenant,
duty, or agreement contained in any of the Loan Documents, then Lender may
perform or attempt to perform such covenant, duty, or agreement on behalf of
Borrower. In such event, Borrower shall, at the request of Lender, promptly pay
any amount expended by Lender in such performance or attempted performance to
Lender at its principal office in Dallas, Texas together with interest thereon
at the Maximum Rate from the date of such expenditure until paid.
Notwithstanding the foregoing, it is expressly understood that Lender shall not
assume any Liability or responsibility for the performance of any duties of
Borrower hereunder or under any of the Loan Documents and none of the covenants
or other provisions contained in this Agreement shall, or shall be deemed to,
give Lender the right or power to exercise control over the management and
affairs of Borrower.
SECTION 9
MISCELLANEOUS
9.1 ACCOUNTING REPORTS. All financial reports or projections furnished
by any Person to Lender pursuant to this Agreement shall be prepared in such
form and such detail as shall be reasonably satisfactory to Lender, shall be
prepared on the same basis as those prepared by such Person in prior years, and,
where applicable, shall be the same financial reports and projections as those
furnished to such Person's officers and directors.
9.2 WAIVER. No failure to exercise, and no delay in exercising, on the
part of Lender, any right hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right. The rights of Lender under the Loan
Documents shall be in addition to all other rights provided by law. No
modification or waiver of any provision of any Loan Document, nor consent to
departure therefrom, shall be effective unless in writing and no such consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in any case shall constitute a waiver of the right to take other
action in the same, similar, or other instances without such notice or demand.
9.3 PAYMENT OF EXPENSES. Borrower agrees to pay Lender on demand all
costs and expenses of Lender (including, without limitation, the reasonable
attorneys' fees of Lender's counsel) incurred in connection with the
preservation and enforcement of Lender's rights under the Loan Documents, and
all reasonable costs and expenses of Lender (including without limitation the
reasonable fees and expenses of Lender's counsel) in connection with the
negotiation, preparation, execution, delivery, and administration of the Loan
Documents.
9.4 NOTICES. Any communications required or permitted to be given by
any of the Loan Documents must be (a) in writing and personally delivered or
mailed by prepaid certified or registered mail or by overnight delivery, or (b)
made by facsimile transmission delivered or transmitted, to the party to whom
such notice of communication is directed, to the address of such party shown
opposite its name on the signature pages hereof. Any such communication shall be
deemed to have been given (whether actually received or not) on the day it is
personally delivered or, if transmitted by facsimile transmission, on the day
that such communication is transmitted as aforesaid subject to telephone
confirmation of receipt. Any party may change its address for purposes of this
Agreement by giving notice of such change to the other parties pursuant to this
SECTION 9.4.
-12-
REVOLVING CREDIT AGREEMENT
9.5 GOVERNING LAW. This Agreement has been prepared, is being executed
and delivered, and is intended to be performed in the State of Texas and the
substantive laws of such state and the applicable federal laws of the United
States of America shall govern the validity, construction, enforcement, and
interpretation of this Agreement and all of the other Loan Documents.
9.6 INVALID PROVISIONS. Any provision of any Loan Document held by a
court of competent jurisdiction to be illegal, invalid or unenforceable shall
not invalidate the remaining provisions of such Loan Document which shall remain
in full force and the effect thereof shall be confined to the provision held
invalid or illegal.
9.7 MAXIMUM INTEREST RATE. Regardless of any provision contained in any
of the Loan Documents, Lender shall never be entitled to receive, collect, or
apply as interest (whether termed interest herein or deemed to be interest by
operation of law or judicial determination) on the Note any amount in excess of
interest calculated at the Maximum Rate, and, in the event that any Lender ever
receives, collects, or applies as interest any such excess, then the amount
which would be excessive interest shall be deemed to be a partial prepayment of
principal and treated hereunder as such; and, if the principal amount of the
Obligation is paid in full, then any remaining excess shall forthwith be paid to
Borrower. In determining whether or not the interest paid or payable under any
specific contingency exceeds interest calculated at the Maximum Rate, Borrower
and Lender shall, to the maximum extent permitted under applicable law: (a)
characterize any non-principal payment as an expense, fee, or premium rather
than as interest; (b) exclude voluntary prepayments and the effects thereof; and
(c) amortize, prorate, allocate, and spread, in equal parts, the total amount of
interest throughout the entire contemplated term of the Note; provided that, if
the Note is paid and performed in full prior to the end of the full contemplated
term thereof, and if the interest received for the actual period of existence
thereof exceeds interest calculated at the Maximum Rate, then Lender shall
refund to Borrower the amount of such excess or credit the amount of such excess
against the principal amount of the Note and, in such event, Lender shall not be
subject to any penalties provided by any laws for contracting for, charging,
taking, reserving, or receiving interest in excess of interest calculated at the
Maximum Rate.
9.8 OFFSET. Borrower hereby grants to Lender the right of offset, to
secure repayment of the Obligation, upon any and all moneys, securities, or
other property of Borrower and the proceeds therefrom, now or hereafter held or
received by or in transit to Lender or its agents, from or for the account of
Borrower, whether for safe keeping, custody, pledge, transmission, collection,
or otherwise, and also upon any and all deposits (general or special) and
credits of Borrower, and any and all claims of Borrower against Lender at any
time existing.
9.9 SUCCESSORS AND ASSIGNS. The Loan Documents shall be binding upon
and inure to the benefit of Borrower and Lender and their respective successors,
assigns, and legal representatives; provided, however, that Borrower may not,
without the prior written consent of Lender, assign any rights, powers, duties,
or obligations thereunder. Following termination of the Merger Agreement, Lender
reserves the right to sell all or a portion of its interest in the Loan and
Lender shall have the right to disclose any information in its possession
regarding Borrower, any Guarantor, or any assets pledged to Lender in connection
herewith to any potential transferee of the Loan or any part thereof.
9.10 CHAPTER 346. Borrower and Lender hereby agree that the provisions
of Chapter 346 of the Texas Finance Code, as amended (regulating certain
revolving credit loans and revolving tri-party accounts), shall not apply to the
Loan Documents.
-13-
REVOLVING CREDIT AGREEMENT
9.11 HEADINGS. SECTION headings are for convenience of reference only
and shall in no way affect the interpretation of this Agreement.
9.12 SURVIVAL. All representations and warranties made by Borrower
herein shall survive delivery of the Note and the making of the Loan.
9.13 NO THIRD PARTY BENEFICIARY. The parties do not intend the benefits
of this Agreement to inure to any third party, nor shall any Loan Document or
any course of conduct by any party hereto be construed to make or render Lender
or any of its officers, directors, agents, or employees liable (a) to any
materialman, supplier, contractor, subcontractor, purchaser, or lessee of any
property owned by Borrower, or (b) for debts or claims accruing to any such
Persons against Borrower.
9.14 ENTIRETY. THIS AGREEMENT, THE NOTE, AND THE OTHER LOAN DOCUMENTS
REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF
AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO. THE PROVISIONS OF THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS TO WHICH BORROWER IS A PARTY MAY BE AMENDED OR WAIVED
ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES HERETO.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK; SIGNATURE PAGES TO FOLLOW]
-14-
REVOLVING CREDIT AGREEMENT
IN WITNESS WHEREOF, the undersigned have executed this Agreement as of
the day and year first above written.
Address for Notice: BORROWER:
MADISON OIL COMPANY, a Delaware
corporation
0000 Xxxxx Xxxxxxx Xxxxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxx 00000
Attn: Xxxxxxx X. Xxxxxxx By: /s/ XXXXXXX X. XXXXXX
----------------------------------------------
Facsimile: (000) 000-0000 Name: Xxxxxxx X. Xxxxxx
-----------------------------------------
Title: Chairman and CEO
----------------------------------------
Address for Notice: LENDER:
TOREADOR RESOURCES CORPORATION, a Delaware corporation
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attn: G. Xxxxxx Xxxxxx III By: /s/ G. XXXXXX XXXXXX III
----------------------------------------------
Facsimile: (000) 000-0000 Name: G. Xxxxxx Xxxxxx III
-----------------------------------------
Title: President and CEO
----------------------------------------
-15-
REVOLVING CREDIT AGREEMENT
EXHIBIT A
CLOSING DOCUMENTS
1. Credit Agreement.
2. Note.
3. Secretary Certificate of Borrower, including Certificate of
Incorporation, bylaws and incumbency.
4. Certificates of good standing of Borrower in Delaware and
Texas.
5. Consent of Bank of
Texas.
6. Consent of Barclays Bank plc.
-16-
REVOLVING CREDIT AGREEMENT
