EXHIBIT 4.71
FIRST AMENDED AND RESTATED CREDIT AGREEMENT
Among
TIPPERARY CORPORATION,
as Borrower,
TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD, (ACN 077 536 871)
as Guarantor,
TIPPERARY OIL & GAS CORPORATION,
TCW DEBT & ROYALTY FUND VI, L.P.
and
the other
LENDERS
party hereto,
and
TCW ASSET MANAGEMENT COMPANY,
in the capacities described herein
$17,000,000
Dated as of
February 2, 2001
TABLE OF CONTENTS
Page
----
Article 1 DEFINITIONS AND ACCOUNTING MATTERS............................... 1
Section 1.1 Defined Terms........................................... 1
Section 1.2 Accounting Terms and Determinations..................... 22
Section 1.3 Interpretation.......................................... 22
Article 2 LOANS............................................................ 23
Section 2.1 Loan Advances........................................... 23
Section 2.2 The Notes............................................... 23
Section 2.3 Request for Advances.................................... 23
Section 2.4 Use of Proceeds......................................... 23
Section 2.5 Coupon Interest......................................... 24
Section 2.6 Accrual and Payment of Coupon Interest.................. 24
Section 2.7 Computation of Interest................................. 24
Section 2.8 Payment of Principal; Quarterly Payments................ 25
Section 2.9 Prepayment.............................................. 26
Section 2.10 General Payment Provision............................... 27
Section 2.11 Yield Adjustment Payment................................ 28
Section 2.12 Collateral Accounts..................................... 28
Article 3 CONDITIONS PRECEDENT TO LENDING.................................. 30
Section 3.1 Conditions Precedent to Initial Loan Advance............ 30
Section 3.2 Conditions Precedent to Any Advance..................... 33
Section 3.3 Special Conditions Precedent for an Additional Loan
Advance................................................. 34
Section 3.4 Special Condition to Any Advance........................ 35
Article 4 REPRESENTATIONS AND WARRANTIES................................... 35
Section 4.1 Representations and Warranties of Borrower, TOGC
and TOGA................................................ 35
Section 4.2 Representations of the Lenders, the Collateral
Agent and the Agent..................................... 41
Article 5 COVENANTS OF BORROWER, TOGC and TOGA............................. 43
Section 5.1 Affirmative Covenants................................... 43
Section 5.2 Negative Covenants...................................... 54
Section 5.3 Coverage Ratio.......................................... 57
Article 6 SECURITY......................................................... 57
Section 6.1 The Security............................................ 57
Section 6.2 Agreement to Deliver Security Documents................. 58
Section 6.3 Perfection and Protection of Security Interests and
Liens................................................... 58
Section 6.4 Appointment of Agent and Collateral Agent............... 58
Article 7 EVENTS OF DEFAULT AND REMEDIES................................... 61
i
Section 7.1 Events of Default................................... 61
Section 7.2 Remedies............................................ 65
Section 7.3 Indemnity........................................... 65
Article 8 MISCELLANEOUS.... 66
Section 8.1 Waivers and Amendments; Acknowledgment.............. 66
Section 8.2 Survival of Agreements; Cumulative Nature........... 67
Section 8.3 Notices............................................. 68
Section 8.4 Parties in Interest................................. 70
Section 8.5 Governing Law; Submission to Process................ 70
Section 8.6 Limitation on Interest.............................. 70
Section 8.7 Survival............................................ 71
Section 8.8 Severability........................................ 71
Section 8.9 Counterparts........................................ 71
Section 8.10 Waiver of Jury Trial, Punitive Damages, Etc......... 72
Section 8.11 Exhibits and Schedules; Additional Definitions...... 72
Section 8.12 Confidentiality of Holders.......................... 72
Section 8.13 Transfer of Notes................................... 73
Section 8.14 Reproduction of Documents........................... 73
Section 8.15 Currency in Which Payments Shall Be Made............ 74
Section 8.16 Judgments in Other Than Dollars..................... 74
Section 8.17 Ratification of Credit Agreement and Loan Documents. 74
ii
Exhibits:
---------
Exhibit A - Form of Australian Charge
Exhibit B-1 - Form of Restricted Account Agreement
Exhibit B-2 - Form of Bankers Deed of Covenant
Exhibit C-1 - Form of Guarantee Agreement
Exhibit C-2 - Form of Guarantee and Indemnity
Exhibit D - Form of TC Pledge and Security Agreement
Exhibit D-1 - Form of First Amendment to TC Pledge and
Security Agreement
Exhibit E - Form of Royalty Agreement
Exhibit F - Form of TOGA Security Agreement
Exhibit G-1 - Form of Equity Letter of Credit
Exhibit G-2 - Form of Tri-Star Litigation Indemnity Letter of
Credit
Exhibit H - Form of Subordination Agreement
Exhibit I - Form of TOGA-Borrower Management Agreement
Exhibit J-1 - Form of First Amended and Restated TOGC Pledge
and Security Agreement
Exhibit K - Form of Senior Secured Promissory Note
Exhibit L - Form of Request for Initial Loan Advance
Exhibit M - Form of Request for Additional Loan Advance
Exhibit N - [Deleted]
Exhibit O - Form of Letter Directing Payment to Collateral
Account
Exhibit P - Form of Omnibus Certificate of Secretary
Exhibit Q - Form of Compliance Certificate
Exhibit R-1 - Form of Opinion of Australian counsel
Exhibit R-2 - Form of Opinion of New York counsel
Exhibit R-3 - Form of Opinion of Texas counsel
Exhibit S - Form of Collateral Properties
Exhibit T - Form of Supplement to Royalty Agreement
Schedules:
----------
Schedule 1 - Disclosure Schedule
Schedule 2 - List of Lenders
Schedule 3 - Holders' Individual Note Amounts/Pro Rata Shares
Schedule 4 - Security Schedule
Schedule 5 - Payment Accounts
Schedule 6 - Insurance
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FIRST AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDED AND RESTATED CREDIT AGREEMENT ("Agreement") is entered
into as of February 2, 2001 and amends and restates in its entirety that certain
Credit Agreement dated as of April 28, 2000, by and between:
TIPPERARY CORPORATION, a Texas corporation ("Borrower");
TIPPERARY OIL & GAS (AUSTRALIA) PTY. LTD (▇▇▇ ▇▇▇ ▇▇▇ ▇▇▇), ▇ ▇▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇▇ corporation ("TOGA");
TIPPERARY OIL & GAS CORPORATION, a Texas corporation ("TOGC");
LENDERS (as defined below) that are party hereto;
TCW ASSET MANAGEMENT COMPANY, a California corporation ("TAMCO"), as Agent
(as defined below); and
TAMCO, as Collateral Agent (as defined below).
RECITALS:
A. Borrower owns all of the outstanding stock of TOGC, which in turn owns
ninety percent (90%) of the outstanding stock of TOGA. The remaining ten percent
(10%) of the outstanding stock of TOGA is owned by Slough Estates USA Inc.
B. Borrower seeks to provide funds to TOGA to assist TOGA in (i)
refinancing certain existing debt, (ii) continuing the development of Comet
Ridge Project (as defined below) and (iii) obtaining additional working capital.
C. Borrower desires to obtain loans from Lenders in the aggregate
principal amount of up to Seventeen Million and 00/100 Dollars ($17,000,000) for
the purpose of financing the activities described in Recital B above and herein
and other related activities.
D. Lenders are willing to make such loans to Borrower on the terms herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
ARTICLE 1
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.1 Defined Terms. As used with capital letters in this Agreement,
each of the following terms has the meaning given in this Section 1.1 or in the
Sections referred to below:
1
"Additional Advance Funding Date" means the date on which the Lenders fund
any Additional Loan Advance pursuant to the provisions in Section 2.1(b).
"Additional Loan Advance" has the meaning given in Section 2.1.
"Adjusted Investment" means the sum, at the time in question, of:
(i) the outstanding principal Obligations under the Notes; plus
(ii) any past due payments owing for fifteen (15) days or more
under this Agreement (including interest and un-reimbursed professional
fees and other advances, expenses and costs payable by a Related Person
hereunder) and under any Royalty Agreements; plus
(iii) all lessor royalties or similar burdens on the Collateral
which remain unpaid for thirty (30) days beyond the terms contained in the
applicable leases (other than disputed royalties for which designated cash
reserves have been set aside); plus
(iv) the absolute value of TOGA's Working Capital, but only in
the event the Working Capital is negative.
"Advance" means an Initial Loan Advance or an Additional Loan Advance.
"Affiliate" of a specified Person means:
(i) any other Person directly or indirectly owning, controlling
or holding with power to vote 10% or more of the outstanding voting
securities of the specified Person;
(ii) any other Person 10% or more of whose outstanding voting
securities are directly or indirectly owned, controlled or held with power
to vote by the specified Person;
(iii) any other Person directly or indirectly controlling,
controlled by or under common control with the specified Person; or
(iv) any officer, director, partner or sanguineous or affined
kin of the specified Person or of any other Person described in clause
(iii) above.
As used herein the term `control' means possession, directly or indirectly,
of the power to direct or cause the direction of the management and policies of
a Person whether through the direct or indirect ownership of partnership
interests, voting securities or other equity interests, or otherwise.
The preceding sentence notwithstanding, for purposes of the Loan Documents,
Trustco, TAMCO and the Lenders shall be deemed not to be "Affiliates" of
Borrower.
2
"Affiliate Payments" means any payments or transfers of any kind directly
or indirectly made to any of Borrower's Affiliates, whether as (i)
distributions, (ii) purchases or redemptions of equity interests in Borrower,
(iii) repayments of any loans from Affiliates, (iv) loans, investments or
advances made from or to Affiliates, or (v) purchases of properties, goods or
services from Affiliates, including without limitation, the payment of
Management Fees by TOGA to either TOGC or Borrower.
"Agent" has the meaning given in Section 6.4(a).
"Agreement" has the meaning given in the preamble hereto.
"ANCF" (or "Adjusted Net Cash Flow") means, with respect to a period, the
sum of:
(1) the positive difference of:
(i) Project Gross Cash Revenues during any Calculation Period
(or other period of calculation, if applicable),
less
(ii) Actual payments by either Borrower or TOGA during such
Calculation Period (or other period of calculation, if applicable), of
(A) Lessor royalties and other burdens on production existing as of
the Closing Date with respect to the Project Properties and
Royalties;
(B) Direct Taxes with respect to the Project Properties;
(C) Coupon Interest on the Notes and payment of other Obligations
under the Loan Documents (other than Principal Payments or
payments of Late Payment Interest); and
(D) Approved ▇▇▇, Approved G&A Costs, Approved Capital Expenditures
and Approved Third Party Costs incurred in connection with the
Project to the extent and only to the extent such amounts exceed
(and are not funded directly or indirectly by) the proceeds of
Advances and/or the proceeds of any draw upon a Letter of Credit.
plus
(2) Net TOGA Non-Project Cash Flow.
"ANZ Bank" means Australia and New Zealand Banking Group Limited (ACN 005
357 522) of ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇.
"AP Replacement Date" has the meaning set forth in Section 5.1(q).
"Approved" means approved in writing by the Agent.
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"Approved Capital Expenditures" means, for any period, Capital Expenditures
made or to be made by or on behalf of TOGA which (i) are included in the
Approved Plan of Development or (ii) otherwise Approved specifically as
"Approved Capital Expenditures" by Agent in its sole and absolute discretion.
"Approved G&A Costs" means G&A Costs Approved specifically as Approved
G&A Costs (rather than Permitted G&A Costs) by Agent in its sole and absolute
discretion. The Approved G&A Costs will be $0 per annum until otherwise approved
by the Agent.
"Approved Plan of Development" means TOGA's plan of development for the
Subject Properties that describes, among other things: (i) the expenditures and
improvements necessary to develop the Project Properties, (ii) the timetable for
such development, and (iii) the sources of capital (including but not limited to
the Advances) to be used for such development, all as revised and Approved
annually by December 1 of each year.
"Australian Charge Document" means that Fixed and Floating Charge to be
entered into between TOGA and Collateral Agent in substantially the form
attached hereto as Exhibit A.
"Australian Withholding Taxes" means Australian withholding tax on amounts
paid pursuant to this Agreement, the other Loan Documents or the Project
Documents under applicable Australian Governmental Rules.
"Bank Debt" means the Debt owed by Borrower to U.S. Bank N.A. under the
Revolving Credit Agreement between Central Bank National Association, TOGA,
Borrower and Tipperary Petroleum Company dated March 30, 1992, as amended as of
the date thereof.
"Borrower" has the meaning given in the preamble hereto.
"Borrower/TOGC Collateral Account" means that certain lockbox account
established with a bank Approved by Agent in its sole discretion pursuant to the
Borrower/TOGC Collateral Account Agreement, or any other lockbox account
established pursuant to a replacement Collateral Account Agreement.
"Borrower/TOGC Collateral Account Agreement" means that certain Restricted
Collateral Account Agreement substantially in the form of Exhibit B-1 among
Borrower, TOGA, the Lenders and a bank Approved by Agent in its sole discretion,
as amended from time to time or as replaced by any other Collateral Account
Agreement from time to time.
"Business Day" means a day, other than a Saturday, Sunday or legal holiday
on which commercial banks are authorized or obligated by law or executive order
to close in either the City of New York, State of New York, U.S.A. or the City
of ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇.
"Calculation Period" means a three month period consisting of any December
through February, any March through May, any June through August, and any
September through November.
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"Calendar Month" means any of January, February, March, April, May, June,
July, August, September, October, November or December.
"Calendar Quarter" means a three Calendar Month period ending on March 31,
June 30, September 30 or December 31 of any year.
"Calendar Year" means a twelve Calendar Month period ending on December 31
of any year.
"Capital Expenditures" shall mean, for any period, expenditures made or to
be made for the drilling and completion of any ▇▇▇▇▇ on the properties in the
Collateral, including new drilling, completion, production facilities, lifting
equipment, gathering systems, workovers, redrilling recompletions and
stimulation or other similar types of oil and gas field operations.
"Cash Collateral Account" means the TOGA Dollar Collateral Account and the
TOGA Australian Collateral Account.
"Change in Control" means with respect to TOGA, Borrower no longer owns,
directly or indirectly, at least seventy percent (70%) of the issued and
outstanding voting equity interests, on a fully diluted basis of TOGA and at
least (70%) of the issued and outstanding non-voting equity interests, on a
fully diluted basis of TOGA.
"Closing" or "Closing Date" means April 28, 2000.
"Collateral" means all Property of any kind which is subject to a Lien in
favor of Holders or Collateral Agent or which, under the terms of any Security
Document, is purported or intended to be subject to such a Lien.
"Collateral Accounts" means the Borrower/TOGC Collateral Account, the TOGA
Dollar Collateral Account and the TOGA Australian Collateral Account.
"Collateral Account Agreements" means the Borrower/TOGC Collateral Account
Agreement, the TOGA Dollar Collateral Account Agreement and the TOGA Australian
Collateral Account Agreement each as may be modified in the sole and absolute
discretion of the Agent.
"Collateral Agent" has the meaning given in Section 6.4(b).
"Collateral Properties" has the meaning given in Section 4.1(t).
"Comet Ridge Project" means the exploration and development for the
recovery of, and production of Hydrocarbons from lands originally covered by
Authority To Prospect Number 526P, including but not limited to all Property,
leases and other interests in connection with such land whether acquired by
assignment or by operation of the Project JOA due to non-participation of
certain parties thereto.
"Commission" means the United States Securities and Exchange Commission.
5
"Commitment Period" means the period from and including the date hereof
until the Funding Expiry Date.
"Coupon Interest" has the meaning given in Section 2.5.
"Coverage Default" means that the Coverage Ratio is less than 125%.
"Coverage Deficiency" means that the Coverage Ratio is less than 150%.
"Coverage Ratio" has the meaning given in Section 5.3.
"Debt" means, as to any Person at any date, all or any, indebtedness,
liabilities and obligations of such Person, whether matured or unmatured,
liquidated or unliquidated, primary or secondary, direct or indirect, absolute,
fixed or contingent, and whether or not required to be considered pursuant to
GAAP and includes indebtedness, liabilities or obligations guaranteed by such
Person.
"Dedication Rate" means 80%, provided that the Dedication Rate will
automatically increase to 100% whenever (a) an Event of Default exists, or (b) a
Coverage Deficiency occurs and Borrower does not cure such Coverage Deficiency
within one month thereafter.
"Default" means any Coverage Default, any Event of Default, and any
default, event or condition which would, with the giving of any requisite
notices and the passage of any requisite periods of time, constitute an Event of
Default without regard to whether such required notices have been given or such
required grace periods have expired.
"Direct Taxes" means production, severance, ad valorem, excise or other
taxes or governmental charges or assessments on (i) the Eligible Proved
Properties, (ii) the production therefrom or (iii) the proceeds of such
production, but excluding any income or franchise taxes.
"Disclosure Schedule" means (i) Schedule 1 and (ii) any documents listed on
such schedule and expressly incorporated therein by reference, so long as
Borrower or TOGA has heretofore delivered true and correct copies of such
documents to the Lenders. Insofar as any representations and warranties made
herein are incorporated by reference or otherwise remade in Loan Documents
delivered as of a date after the date hereof, the term "Disclosure Schedule"
shall in such representations and warranties be deemed to refer as well to all
other documents which Borrower or TOGA has at the time in question delivered to
the Lenders in the manner prescribed for the delivery of notices in Section 8.3
if and only if Borrower or TOGA shall have delivered to the Lenders a written
notice expressly stating that the same shall be added to and become a part of
the "Disclosure Schedule."
"Dollars" or "$" means the lawful and official currency of the United
States of America.
"Eligible Proved Property" means an oil and gas property which at the
particular time in question (i) is either owned by TOGA or a Comet Ridge
Participant and subject to the enforceable contract or other rights of TOGA or a
Comet Ridge Participant under the Project
6
JOA which entitle it to its proportional share of Hydrocarbon production
therefrom; (ii) is subject to registered Australian Charge Documents and filed
Security Documents in each case which create perfected first security interests
in such property or rights in favor of Collateral Agent; (iii) is not subject to
forfeiture under the Project JOA or any other Project Documents; (iv) is not
subject to any Prohibited Liens; and (v) is the subject of favorable title
opinions or other assurance to Lenders from legal counsel acceptable to Agent,
(A) based upon abstract or record examinations to dates acceptable to Agent, (B)
stating or advising that TOGA or a Comet Ridge Participant, as the case may be,
or the source of title of TOGA or a Comet Ridge Participant, has good and
marketable title to such property and that it is subject to no Prohibited Liens,
and (C) covering such other matters as Agent may reasonably request.
"Engineering Report" means (i) the Initial Engineering Report and (ii) any
engineering report to be delivered to the Lenders pursuant to Section
5.1(b)(vii).
"Environmental Laws" means any and all federal, state, local and foreign
statutes, laws, regulations, ordinances, rules, judgments, orders, decrees,
permits, concessions, grants, franchises, licenses, agreements or other
Governmental Rules relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
including ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
"Environmental Report" means an environmental report that satisfies the
same terms and conditions as the Initial Environmental Report.
"Equity Letter of Credit" means the letter of credit delivered pursuant to
Section 3.1(a)(xvi), together with any renewal or replacement thereof.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, together with all rules and regulations promulgated
with respect thereto.
"ERISA Plan" means any pension benefit plan subject to Title IV of ERISA
maintained by any Related Person or any Affiliate thereof with respect to which
Borrower has any fixed or contingent liability.
"Event of Default" has the meaning given in Section 7.1.
"Excess ANCF" means, with respect to a period, the positive difference
of (i) ANCF for that period, less (ii) the Principal Payment for such period.
"Funded Amount" means, as of any date of calculation thereof the
aggregate original principal amount of all Advances made as of such date.
"Funding Expiry Date" means the earliest to occur of:
(i) the date on which an Event of Default occurs;
7
(ii) December 31, 2001; or
(iii) the date on which a Coverage Deficiency occurs.
"GAAP" means, with respect to Borrower and TOGA and any Related Person
domiciled in the United States, those generally accepted accounting principles
and practices which are recognized as such by the Financial Accounting Standards
Board (or any generally recognized successor) in the United States.
"G&A Costs" means all overhead and administrative costs paid by or on
behalf of TOGA.
"Governmental Approval" means any authorization, consent, decree, permit,
privilege, approval, certificate, license, lease, ruling, permit, waiver,
exemption, filing, registration or notice by or with any Governmental Person
necessary for the maintenance and operation of the Project, the ongoing
operation of the Borrower or TOGA and the execution of and performance of the
Borrower's and TOGA's obligations under the Loan Documents.
"Governmental Person" means for any country, such country and its
government and any international, national (Federal or foreign), state or local
government, any political subdivision or any governmental, quasi-governmental,
judicial, public or statutory instrumentality, authority, corporation or
commission, court, agency, body or entity under the direct or indirect control
of such country.
"Governmental Rule" means:
(i) any statute, constitutional provision, law, rule,
regulation, ordinance, order, code, judgment, decree, directive, guideline,
permit or policy by a Governmental Person; or
(ii) any similar form of decision, interpretation or
administration by a Governmental Person having the force of law of the
foregoing in clause (i) above, whether in effect as the date of this
Agreement or thereafter and in each case as amended (including without
limitation, all Environmental Laws and any of the foregoing pertaining to
land use or zoning restrictions).
"Gross Proceeds" shall have the meaning ascribed thereto in the Royalty
Agreement.
"Guarantee Agreement" means collectively or individually as the context may
so require (i) that certain Guarantee Agreement in substantially the same form
as Exhibit C-1 among TOGA, Agent and Collateral Agent and (ii) that certain
Guarantee and Indemnity in substantially the same form as Exhibit C-2 among
TOGA, Agent and Collateral Agent.
"Hazardous Materials" means any substances which are regulated or could
lead to liability under any Environmental Law, whether as pollutants,
contaminants, or chemicals, or as industrial, toxic or hazardous substances or
wastes, or otherwise.
8
"Highest Lawful Rate" means the maximum non-usurious rate of interest that
the Lenders or Holders are permitted under applicable law to contract for, take,
charge, or receive with respect to the Obligation in question.
"Holders" means the holders of the Notes from time to time.
"Hydrocarbons" shall have the meaning ascribed thereto in the Royalty
Agreement.
"Indemnitors" means, collectively, Borrower, TOGC, TOGA and all
subsidiaries of TOGA, if any.
"Indemnitees" has the meaning given in Section 7.3.
"Independent Engineering Report" means any Engineering Report prepared by
an Independent Engineer.
"Independent Engineers" means ▇. ▇. ▇▇▇▇▇▇▇▇ & Associates or other
independent petroleum reserve engineers acceptable to both Borrower and Agent.
"Initial Amortization Date" means the first Quarterly Payment Date to occur
after Closing.
"Initial Engineering Report" means the engineering report dated October 29,
1999 prepared by ▇.▇. ▇▇▇▇▇▇▇▇ & Associates evaluating the Subject Properties.
"Initial Environmental Report" has the meaning given thereto in Section
3.1(xi).
"Initial Financial Statements" means the unaudited financial statements of
Borrower and TOGA dated as of March 31, 2000, including the notes thereto.
"Initial Funding Date" means the date on which the Lenders fund the Initial
Loan Advance pursuant to the provisions of Section 2.1.
"Initial Loan Advance" has the meaning given in Section 2.1.
"Inter-company Debt" means any Debt i) owed by TOGA to Borrower, ii) owed
by TOGA to TOGC or iii) owed by TOGC to Borrower in each case whether or not
such Debt is evidenced by a promissory note.
"JOA Property" means the Authority to Prospect 526P issued under the
▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ (▇▇▇) and any tenement or other land to which the Project JOA
applies.
"Lands" has the meaning given in Section 5.1(m).
"Late Payment Rate" means, at the time in question, the lesser of (i)
fourteen percent (14%) per annum or (ii) the Highest Lawful Rate.
9
"Late Payment Rate Interest" means any interest accrued at the Late Payment
Rate.
"Lenders" means the entities set forth on Schedule 2 attached hereto which
have executed a counterpart hereof.
"Letters of Credit" means collectively the Tri-Star Indemnity Letter of
Credit and the Equity Letter of Credit.
"Lien" means, with respect to any Property, any right or interest therein
of a creditor to secure Debt owed to him or any other arrangement with such
creditor which provides for the payment of such Debt out of such Property or
which allows him to have such Debt satisfied out of such Property prior to the
general creditors of any owner thereof, including any lien, mortgage, security
interest, pledge, deposit, production payment, rights of a vendor under any
title retention or conditional sale agreement or lease substantially equivalent
thereto, right of recoupment under a gas balancing agreement, tax lien,
mechanic's or materialman's lien, or any other charge or encumbrance for
security purposes, whether arising by law or agreement or otherwise, but
excluding any right of offset which arises without agreement in the ordinary
course of business. "Lien" also means any filed financing statement, any
registration of a pledge (such as with an issuer of unregistered securities), or
any other arrangement or action which would serve to perfect a Lien described in
the preceding sentence, regardless of whether such financing statement is filed,
such registration is made, or such arrangement or action is undertaken before or
after such Lien exists.
"Loans" means the loans contemplated hereby.
"Loan Documents" means this Agreement, the Notes, the Security Documents,
the Royalty Agreement, the Guarantee Agreement and all other agreements,
certificates, documents, instruments and writings at any time delivered in
connection with the Loans (exclusive of the term sheets, commitment letters,
correspondence and similar documents used in the negotiation hereof, except to
the extent the same contain information about Borrower or its Affiliates or
their properties, business or prospects and such information is the subject of a
written representation or certificate upon which the Lenders shall rely).
"▇▇▇" means leasehold operating expenses and other field level or lease
level charges for operations on the properties of TOGA included within the
Collateral including overhead charges of a third party operator under the
Project JOA.
"Management Fees" shall mean management fees payable pursuant to the
TOGA-Borrower Management Agreement.
"Material Adverse Effect" shall mean a material adverse effect on any of
the following (determined, with respect to any event, occurrence, circumstance
or condition by reference to the situation which would have been in effect
without the occurrence of such event, occurrence, circumstance or condition):
(a) the Property, the Project, the business, operations,
condition (financial or otherwise), liabilities or capitalization of
Borrower or any Related Persons
10
taken as a whole, which adversely affects the ability of Borrower or the
Related Persons to perform in a timely manner its and their material
obligations under any Loan Document and any Project Document;
(b) the validity or enforceability of any of the Loan Documents
and Project Documents;
(c) the availability of any material Governmental Approval (in
whole or in material part) as shall then or thereafter be necessary to be
obtained under applicable Governmental Rules in connection with the
development, financing, construction, operation, expansion and ownership of
the Project which adversely affects the ability of Borrower and the Related
Persons to perform its and their material obligations under any Loan
Document or any Project Document;
(d) the validity or enforceability of any of the material
rights, remedies, powers and privileges of any Lender, Holder, Agent or
Collateral Agent under the Loan Documents; or
(e) the validity or enforceability of the Liens on any material
item of Collateral under any of the Security Documents.
"Maturity Date" means March 30, 2006.
"Modified NPV10" means the sum of:
(i) with respect to any Proved Developed Producing Reserves
attributable to the Eligible Proved Properties, NPV10 of a percentage
between 90% and 100% of such Reserves, as such percentage is chosen by
Agent in its sole and absolute discretion; plus
(ii) with respect to any Proved Developed Non-Producing Reserves
attributable to the Eligible Proved Properties, NPV10 of a percentage
between 70% and 90% of such Reserves, as such percentage is chosen by Agent
in its sole and absolute discretion; plus
(iii) with respect to any Proved Undeveloped Reserves
attributable to the Eligible Proved Properties, NPV10 of a percentage
between 70% and 90% of such Reserves, as such percentage is chosen by Agent
in its sole and absolute discretion;
provided, however, that the Modified NPV10 for any particular Proved
Developed Non-Producing Reserves or Proved Undeveloped Reserves shall be
zero (0) unless capital expenditures for the development of such Reserves,
in at least the amounts required pursuant to the most recent Engineering
Report, have been scheduled and such capital is reasonably expected to be
available from Advances or as a deduction from ANCF as Approved Capital
Expenditures.
"Net TOGA Non-Project Cash Flow" means the positive difference of:
11
(i) Non-Project TOGA Gross Cash Revenues during any Calculation
Period (or other period of calculation, if applicable),
less
(ii) Actual payments by TOGA during such Calculation Period (or
other period of calculation, if applicable), of
(A) Lessor royalties and other burdens on production payable to
parties other than Affiliates of Borrower with respect to the Non-
Project Properties and Royalties;
(B) Direct Taxes with respect to the Non-Project Properties;
(C) Permitted ▇▇▇, Permitted G&A Costs (excluding any Management
Fees), Permitted Capital Expenditures and Permitted Third Party
Costs, in each case, incurred in connection with the Non-Project
Properties to the extent, and only to the extent, not funded by
either capital contributions or advances of Inter-company Debt to
TOGA.
"Non-Project Properties" means all Properties of TOGA that are not Project
Properties.
"Non-Project TOGA Gross Cash Revenues" means all cash and non-monetary
revenues and receipts (excluding accounts receivable and other accruals)
received by or on behalf of TOGA (without duplication) from or in any way
relating to the Non-Project Properties or by or on behalf of TOGA from any other
source, including without limitation interest or other earnings received in
respect of all invested funds and insurance proceeds but excluding cash receipts
from (a) sales of any portion of the Collateral approved by Agent which are used
to make a mandatory prepayment of principal pursuant to Section 2.9, (b) an
Approved refinancing of the Loans which are used to make a mandatory prepayment
of principal pursuant to Section 2.9(b)(ii), and (c) insurance proceeds
necessary and used to replace or repair Non-Project assets.
"Notes" has the meaning given in Section 2.2.
"NPV10" means with respect to any Proved Reserves expected to be produced
from the Eligible Proved Properties, the net present value of the future net
revenues expected to accrue to TOGA's interests in such Reserves during the
remaining expected economic lives of such Reserves, discounted at 10% per annum.
Each calculation of such expected future net revenues shall be made as of the
date when requested in accordance with the then existing standards of the
Society of Petroleum Engineers, provided that in any event:
(i) appropriate deductions shall be made for (A) Direct Taxes
and existing burdens that are Permitted Liens (excluding, however, the
Royalty), (B) ▇▇▇, (C) Third Party Costs, and (D) Capital Expenditures
(including plugging and abandonment costs), all consistent with the most
recent Engineering Report; and
12
(ii) the pricing assumptions used in determining NPV10 for any
particular Proved Reserves shall be:
(A) the contract price, if any, during the term of any
written oil and gas sales contract with respect to such Proved
Reserves between Borrower or TOGA and unrelated Persons; or
(B) if no sales contract exists:
(I) for volumes of oil and gas swapped or hedged with
investment grade counter parties, the hedged price
net of any costs, expenses or deductions relating
thereto; and
(II) for "naked" or long unhedged volumes, the lower of
the last twelve (12)-month average of prices
actually received or the last six (6)-month
average of prices actually received.
"Obligations" means the sum of all Debt from time to time owing by Related
Persons to the Holders, the Lenders, Collateral Agent or Agent under or pursuant
to any of the Loan Documents. "Obligation" means any part of the Obligations.
"Owned Properties" means TOGA's interest in Authorities to Prospect 655P
and 675P issued under the ▇▇▇▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇ (▇▇▇) and any other interest which
TOGA has in and which is intended to be used for the purpose of exploration or
extraction of Hydrocarbons.
"Permitted Borrower Payments" means any payment made by TOGA to Borrower or
TOGC whether as a distribution, as a payment of Approved Management Fees or
otherwise, which shall be used by Borrower for the payment of the Obligations,
provided, however, that no payment shall be a Permitted Borrower Payment if it
shall have the effect of reducing the outstanding Inter-company Debt of TOGA to
an amount less than an amount Approved by the Agent.
"Permitted Capital Expenditures" means, for any period, Approved Capital
Expenditures and Capital Expenditures made or to be made by or on behalf of TOGA
which are funded by either capital contributions or advances of Inter-company
Debt to TOGA from Borrower or TOGC including such contributions or advances by
Borrower using proceeds of any Advance.
"Permitted Debt" means, without duplication:
(i) Obligations owing to the Lenders, Holders, Agent or
Collateral Agent created pursuant to the Loan Documents;
(ii) liabilities for taxes, assessments, governmental charges or
levies which are being contested in good faith with cash reserves
established pursuant to GAAP;
13
(iii) tax liabilities of TOGA, if any, arising as a result of
the filing of TOGA's tax return;
(iv) Inter-company Debt which is (a) pledged to the Collateral
Agent pursuant to the Pledge and Security Agreement and (b) subordinated to
the Obligations in a manner acceptable to Agent; and
(v) Currency hedging contracts relating to the net cash flows
from TOGA's oil and gas operations at any time not to exceed the projected
production revenues over the immediately following twelve (12) month
period; and
(vi) obligations of TOGA under the Contract of Sale dated as of
November 15, 2000, with Soilmec (H.K.) Limited and Soilmec, S.p.A (the
"Soilmec Sale Contract") and the agreement dated January 18, 2001 between
TOGA and Slough with respect to the Soilmec Sale Contract.
"Permitted G&A Costs" means G&A Costs which (i) are Approved Management
Fees, or (ii) shall not exceed such amounts set forth in an Approved operating
budget of TOGA or (iii) shall be Approved by Agent in its sole and absolute
discretion.
"Permitted Investments" means investments:
(i) in open market commercial paper, maturing within 270 days
after acquisition thereof, which at the time of investment has the highest
or second highest credit rating given by either Standard & Poor's
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.;
(ii) in marketable obligations, maturing within twelve (12)
months after acquisition thereof, issued or unconditionally guaranteed by
the United States of America or an instrumentality or agency thereof and
entitled to the full faith and credit of the United States of America;
(iii) in demand deposits, time deposits or other "money market
instruments" (including certificates of deposit) maturing within twelve
(12) months from the date of deposit thereof, with any office of a domestic
office of any national or state bank or trust company which is organized
under the laws of the United States of America or any state therein, which
has capital, surplus and undivided profits of at least $500,000,000, and
whose certificates of deposit have at least the third highest credit rating
given by either Standard & Poor's Corporation or ▇▇▇▇▇'▇ Investors Service,
Inc.; or
(iv) in repurchase agreements entered into with any bank or
trust company organized under the laws of the United States of America or
any State thereof and having capital and surplus in an aggregate amount not
less than $500,000,000 relating to United States of America government
obligations.
14
"Permitted Liens" means:
(i) deposits or pledges (but not other Liens) to secure the
payment of worker's compensation, unemployment insurance or other social
security benefits or obligations, or public or statutory obligations of a
like general nature incurred in the ordinary course of business;
(ii) Liens securing surety or appeal bonds, bid or performance
bonds or other obligations of a like general nature incurred in the
ordinary course of business if such Liens (A) are either approved by Agent
or reasonably necessary to obtain the bonds, (B) secure obligations in an
aggregate amount not to exceed $500,000 at any time, and (C) do not
constitute Liens on any of Borrower's interests in the Project;
(iii) zoning restrictions, easements, licenses, or restrictions
on the use of real property which do not materially impair the use of such
property in the operation of the business of Borrower, or the value of such
property;
(iv) inchoate liens arising under applicable Governmental Rules
to secure current service pension liabilities as they are incurred under
the provisions of employee benefits plans from time to time in effect;
(v) state and municipal liens for personal property taxes
where no enforcement or execution proceedings have been taken in respect
thereof, and provided same do not exceed $100,000 in the aggregate at any
time;
(vi) the rights of any lessors under any leases capitalized in
accordance with GAAP which constitute Permitted Debt;
(vii) Liens arising by operation of any Governmental Rule in
connection with trade debt constituting Permitted Debt so long as the same
are junior and subordinate to the Lien of the Security Documents; or
(viii) Liens arising under the Project JOA.
"Permitted ▇▇▇" means ▇▇▇ relating to Non-Project Properties to the extent,
and only to the extent, funded from Non-Project TOGA Gross Cash Revenues or
capital contributions or advances of Inter-company Debt.
"Permitted Management Fees" means the Management Fees paid by TOGA to
Borrower pursuant to the TOGA-Borrower Management Agreement all as Approved by
Agent.
"Permitted Third Party Costs" means Third Party Costs to the extent, and
only to the extent, funded from Non-Project TOGA Gross Cash Revenues or capital
contributions or advances of Inter-company Debt.
"Person" means an individual, corporation, partnership, association, joint
stock company, trust or trustee thereof, estate or executor thereof,
unincorporated organization or joint
15
venture, court or governmental unit or any agency or subdivision thereof, or any
other legally recognizable entity.
"Pledge and Security Agreement" means that certain Pledge and Security
Agreement substantially in the form of Exhibit D between Borrower and Collateral
Agent as amended by that certain First Amendment to TC Pledge and Security
Agreement substantially in the form of Exhibit D-1, as may be further amended
from time to time.
"Principal Payment" shall have the meaning given thereto in Section 2.8.
"Prohibited Lien" means any Lien not expressly allowed under Section
5.2(b).
"Project" means the Comet Ridge Project and all related assets and
facilities whether now in existence or hereinafter acquired, including any other
properties funded directly or indirectly with the proceeds of any Advances.
"Project Documents" shall mean each agreement or document necessary for the
development, financing, construction operation and ownership of the Project and
shall in any event include without limitation the Project JOA, Government
Approvals, the leases, contracts, or other documents establishing or evidencing
the Collateral or Subject Properties and the insurance policies required under
Section 3.2(h) of the Loan Agreement.
"Project Gross Cash Revenues" means all cash and non-monetary revenues and
receipts (excluding accounts receivable and other accruals) received by or on
behalf of TOGA, TOGC or Borrower (without duplication) from or in any way
relating to the Project, including without limitation interest or other earnings
received in respect of all invested funds and insurance proceeds but excluding
cash receipts from (a) sales of any portion of the Collateral approved by Agent
which are used to make a mandatory prepayment of principal pursuant to Section
2.9, (b) an Approved refinancing of the Loans which are used to make a mandatory
prepayment of principal pursuant to Section 2.9(b)(ii), (c) insurance proceeds
necessary and used to replace or repair Project assets, (d) Advances, and (e)
Inter-company Debt payments.
"Project Properties" means the Eligible Proved Properties within the
Project.
"Project JOA" means that certain Operating Agreement between Tri-Star,
TOGA, and the other parties thereto dated May 15, 1992, as amended from time to
time.
"Property" means any interest in any kind of property or asset, whether
real, personal or mixed.
"Pro Rata Share" means, with respect to each Holder, the percentage set
forth opposite such Holder's name on Schedule 3; provided, however, that upon
any transfer, change or re-issuance of Notes, the Pro Rata Share for each Holder
will be recalculated at the time of such transfer, change or re-issuance based
upon the outstanding principal amounts of the Notes held by such Holder.
"Proved Developed Non-Producing Reserves" are Proved Reserves that are
Shut-in and Behind-pipe Reserves. "Shut-in Reserves" are those expected to be
recovered from
16
completion intervals open at the time of the estimate, but which had not started
producing, or were shut in for market conditions or pipeline connections, or
were not capable of production for mechanical reasons (including the requirement
for installation or restaging of compression), and the time when sales will
start is uncertain. "Behind-pipe Reserves" are those expected to be recovered
from zones behind casing in existing ▇▇▇▇▇, which will require additional
completion work or a future completion prior to the start of production.
"Proved Developed Producing Reserves" means Proved Reserves that are
expected to be recovered from completion intervals open and producing at the
time of the estimate.
"Proved Developed Reserves" means Proved Developed Producing Reserves and
Proved Developed Non-Producing Reserves.
"Proved Reserves" means those Reserves which are "proved oil and gas
reserves" within the meaning of Rule 4-10 of Regulation S-X, 17 C.F.R. (S)
210.4-10 of the Commission.
"Proved Undeveloped Reserves" means Proved Reserves that are assigned to
undrilled locations which satisfy the following conditions: (i) the locations
are direct offsets to ▇▇▇▇▇ which have indicated commercial production in the
objective formation, (ii) it is reasonably certain that the locations are within
the known proved productive limits of the objective formation, (iii) the
locations conform to existing well spacing regulations, if any, and (iv) it is
reasonably certain that the locations will be developed. Reserves for other
undrilled locations are classified as Proved Undeveloped Reserves only in those
cases where interpretations of data from ▇▇▇▇▇ indicate that the objective
formation is laterally continuous and contains commercially recoverable
hydrocarbons at locations beyond direct offsets.
"Quarterly Payment Date" means the penultimate Business Day of each
Calendar Quarter.
"Related Person" means Borrower, TOGA, TOGC, any Indemnitor, and any
Subsidiary of Borrower or TOGA.
"Repayment Date" means the date the Obligations, other than Royalties, are
repaid in full.
"Request for Advance" means a written or telephonic request, or a written
confirmation, made by Borrower which meets the requirements of Section 2.3.
"Reserves" means estimated volumes of crude oil, condensate, natural gas,
natural gas liquids, and associated substances anticipated to be commercially
recoverable from known accumulations from a given date forward, under then
existing economic conditions, by established operating practices, and under
current government regulations. Reserve estimates are based on interpretation of
geologic or engineering data available at the time of the estimate. Reserves do
not include volumes of crude oil, condensate, natural gas (including storage
gas), or natural gas liquids being held in inventory. If required for financial
reporting, reserve estimates or other purposes, Reserves may be reduced for on-
site or processing losses.
17
"Restricted Debt" of any Person means Debt in any of the following
categories:
(i) Debt for borrowed money;
(ii) Debt constituting an obligation to pay the deferred
purchase price of property or services;
(iii) Debt evidenced by a bond, debenture, note or similar
instrument;
(iv) Debt which would under GAAP or, with respect to TOGA, GAAP
or Australian generally accepted accounting principles be shown on such
Person's balance sheet as a liability;
(vi) Debt constituting principal under leases capitalized in
accordance with GAAP;
(vii) Debt arising under conditional sales or other title
retention agreements;
(viii) Debt owing under direct or indirect guaranties of Debt of
any other Person or constituting obligations to purchase or acquire or to
otherwise protect or insure a creditor against loss in respect of Debt of
any other Person (such as obligations under working capital maintenance
agreements, agreements to keep-well, or agreements to purchase Debt,
assets, goods, securities or services), but excluding endorsements in the
ordinary course of business of negotiable instruments in the course of
collection;
(ix) Debt with respect to letters of credit or applications or
reimbursement agreements therefor; or
(x) Debt with respect to other obligations to deliver goods or
services in consideration of advance payments therefor;
provided, however, that the term "Restricted Debt" of any Person shall not
include Debt that was incurred on ordinary trade terms and is owed by the Person
incurring the same to vendors, suppliers, or other Persons providing goods and
services for use by such Person in the ordinary course of its business which
relate to items included in or constituting Permitted Capital Expenditures,
Permitted ▇▇▇, Permitted Third Party Cost or Permitted G&A Costs unless such is
more than ninety (90) days past due.
"Royalty" means any overriding royalty granted or agreed to be paid
pursuant to any Royalty Agreement.
"Royalty Agreement" shall mean that certain Overriding Royalty Agreement
dated as of even date herewith in substantially the same form attached hereto as
Exhibit E, as the same may be amended or supplemented from time to time.
18
"Royalty Agreements" means the Royalty Agreement and any Supplement to
Royalty Agreement and any Royalty Conveyance (as defined in the Royalty
Agreement), collectively, or individually as the context may so require.
"Royalty Determination Date" means (i) if Agent or Lenders shall
exercise the right under Section 3.4 hereof to refuse to fund any Advance or to
terminate or cancel the obligation to make future Advances, the later of (a) the
date of disbursement of the last Advance to be funded or (b) the date of
completion of the last work comprising Approved Capital Expenditures deducted in
the calculation of ANCF, or (ii) in all other events, the Repayment Date.
"Royalty Payee" means the Payee as defined in the Royalty Agreements.
"Security Agreement" means the Security Agreement substantially in the
form of Exhibit F between TOGA and Collateral Agent, as may be amended or
replaced from time to time.
"Security Documents" means the Guarantee Agreement, the Security
Agreement, the Australian Charge Document, the Pledge and Security Agreement,
the TOGC Security Agreement, the Subordination Agreement, the financing
statements, any other instruments listed in the Security Schedule, and all other
security agreements, deeds of trust, mortgages, chattel mortgages, pledges,
guaranties, financing statements, continuation statements, extension agreements
and other agreements or instruments now, heretofore, or hereafter delivered by
any Related Person to Lenders, Holders or Collateral Agent in connection with
this Agreement or any transaction contemplated hereby to secure or guarantee the
payment of any part of the obligations or the performance of any Related
Person's other duties and obligations under the Loan Documents.
"Security Schedule" means Schedule 4.
"Scheduled Minimum Principal Payment" shall have the meaning given
hereto in Section 2.8(c)(ii).
"Slough" means Slough Estates USA Inc.
"Spot Rate" means in relation to the conversion of any amount in a
currency other than Dollars to the noon date spot rate of exchange announced by
the Federal Reserve Bank of New York on the Business Day immediately prior to
the date that the calculation or currency is to be made for the conversion of
the currency in question. Each determination of the Spot Rate shall be made by
the Agent and shall be conclusive absent manifest error.
"Subject Hydrocarbons" has the meaning given in the Royalty Agreement.
"Subject Properties" means, collectively, the oil and gas leases, oil,
gas and mineral leases, mineral leases, licenses, concessions, authorities to
prospect and other mineral interests and properties and the lands covered
thereby described in Exhibit A to the Royalty Agreement and by reference to any
Royalty Conveyance (as defined in the Royalty Agreement).
19
"Subordination Agreement" means the Subordination Agreement among Borrower,
TOGC and TAMCO substantially in the form attached hereto as Exhibit H.
"Subsidiary" of a specified Person means any corporation, association,
partnership, joint venture, or other business or corporate entity, enterprise or
organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by the specified
Person, provided that associations, joint ventures or other relationships (i)
which are established pursuant to a standard form operating agreement or similar
agreement or which are partnerships for purposes of federal income taxation
only, (ii) which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state law, and (iii) whose businesses are
limited to the exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships, shall not be deemed to be "Subsidiaries" of the
specified Person.
"Supplement to Royalty Agreement" has the meaning given in Section 5.1(m).
"Taxes" shall have the meaning given thereto in Section 5.1(h).
"TCW Governing Documents" shall have the meaning given thereto in Section
6.4(d).
"Termination Event" means:
(i) the occurrence with respect to any ERISA Plan of (A) a
reportable event described in Sections 4043(b)(5) or (6) of ERISA or (B)
any other reportable event described in Section 4043(b) of ERISA other than
a reportable event not subject to the provision for 30-day notice to the
Pension Benefit Guarantee Corporation pursuant to a waiver by such
corporation under Section 4043(a) of ERISA;
(ii) the withdrawal of any Related Person or of any Affiliate of
any Related Person from an ERISA Plan during a plan year in which it was a
"substantial employer" as defined in Section 4001(a)(2) of ERISA;
(iii) the filing of a notice of intent to terminate any ERISA
Plan or the treatment of any ERISA Plan amendment as a termination under
Section 4041 of ERISA;
(iv) the institution of proceedings to terminate any ERISA Plan
by the Pension Benefit Guarantee Corporation under Section 4042 of ERISA;
or
(v) any other event or condition which might constitute grounds
under Section 4042 of ERISA for the termination of, or the appointment of a
trustee to administer, any ERISA Plan.
"Third Party Costs" means any costs paid to persons other than Affiliates
of Borrower for the transportation, processing, treating and marketing of
Subject Hydrocarbons.
"TOGA Australian Collateral Account" means that certain lockbox account
established with the Brisbane office of ANZ Bank pursuant to the TOGA Australian
Collateral
20
Account Agreement, or any other lockbox account established pursuant to a
replacement Collateral Account Agreement.
"TOGA Australian Collateral Account Agreement" means that certain Bankers
Deed of Covenant substantially in the form of Exhibit B-2 between Borrower,
TOGA, the Lenders and ANZ Bank, as amended from time to time or as replaced by
any other Bankers Deed of Covenant from time to time.
"TOGA-Borrower Management Agreement" means that certain Services Agreement
to be entered into between TOGA and Borrower in substantially the form attached
hereto as Exhibit I.
"TOGA Dollar Collateral Account" means that certain lockbox account
established with the Brisbane office of ANZ Bank pursuant to the TOGA Dollar
Collateral Account Agreement, or any other lockbox account established pursuant
to a replacement Collateral Account Agreement.
"TOGA Dollar Collateral Account Agreement" means that certain Bankers Deed
of Covenant substantially in the form of Exhibit B-2 between Borrower, TOGA, the
Lenders and ANZ Bank, as amended from time to time or as replaced by any Bankers
Deed of Covenant from time to time.
"TOGC Security Agreement" means that certain First Amended and Restated
Pledge and Security Agreement between TOGC and Collateral Agent in substantially
the form attached hereto as Exhibit J, as may be further amended or replaced
from time to time.
"Total Modified NPV10" means the sum of the Modified NPV10's for all Proved
Developed Producing Reserves, Proved Developed Non-Producing Reserves and Proved
Un-Developed Reserves.
"Tri-Star" has the meaning given in Section 4.1(t).
"Tri-Star Litigation" means that certain litigation captioned Tipperary v.
Tri-Star, Case No. CV-42, 256 before the District Court of Midland County,
Texas, 238th Judicial District.
"Tri-Star Litigation Indemnity" has the meaning given in Section 7.3.
"Tri-Star Litigation Indemnity Letter of Credit" means the letter of
credit delivered pursuant to Section 3.1(a)(xvii), together with any renewal or
replacement thereof.
"Trustco" means Trust Company of the West, a California trust company.
"Working Capital" has the meaning given in Section 5.2(k).
"Yield Adjustment Payment" has the meaning given in Section 2.11.
21
Section 1.2 Accounting Terms and Determinations.
(a) Except as otherwise expressly provided in this Agreement, all
accounting terms used in this Agreement (including the term "Working Capital")
shall be interpreted, and all financial statements and certificates and reports
as to financial matters required to be delivered to the Lenders, Holders, Agent
or Collateral Agent under this Agreement shall (unless otherwise disclosed to
the Lenders, Holders, Agent or Collateral Agent in writing at the time of
delivery in the manner described in subsection (b) below) be prepared in
accordance with GAAP applied on a basis consistent with those used in the
preparation of the latest financial statements furnished to the Lenders,
Holders, Agent or Collateral Agent under this Agreement (which, prior to the
delivery of the first audited financial statements under Section 5.1(b)(i),
shall mean the Initial Financial Statements). Except as otherwise expressly
provided in this Agreement, all calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided in this Agreement) be made by application of GAAP applied on a basis
consistent with those used in the preparation of the latest annual or quarterly
financial statements furnished to the Lenders, Holders, Agent or Collateral
Agent pursuant to Section 5.1(b)(i) or (ii).
(b) To enable the ready and consistent determination of compliance with
the covenants set forth in this Section 1.2 and Section 5.1, Borrower will not
change the last day of its fiscal year from September 30 of each year, or the
last days of the first three fiscal quarters in each of its fiscal years from
December 31, March 31 and June 30 of each year, respectively, except with
Agent's reasonable consent.
Section 1.3 Interpretation. In this Agreement, unless otherwise
indicated, the singular includes the plural and conversely; words importing one
gender include the others and neuter includes all genders; references to
statutes or regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the statute or
regulation referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible form; the
word "or" shall not be exclusive (i.e., shall be deemed to include "and/or");
the words "hereof," "herein" and "hereunder" and words of similar import refer
to this Agreement as a whole and not to any particular provision of this
Agreement; the Table of Contents and article and section headings and other
captions are for the purpose of reference only and do not limit or effect the
meaning of the terms and provisions hereof; the words "including," "includes"
and "include" shall be deemed a reference to such agreement and/or instrument
and shall be followed by the words "without limitation"; references to articles,
sections (or subdivisions of sections), exhibits, annexes or schedules are to
such parts of this Agreement; references to agreements and other contractual
instruments shall be deemed a reference to such agreement and/or instrument and
shall include all subsequent amendments, extensions and other modifications to
such instruments (without, however, limiting any prohibition on any such
amendments, extensions and other modifications by the terms of this Agreement);
and references to Persons include their respective permitted successors and
assigns and, in the case of Governmental Persons, Persons succeeding to their
respective functions and capacities.
22
ARTICLE 2
LOANS
Section 2.1 Loan Advances.
(a) Subject to the terms and conditions hereof, the Lenders agree on
behalf of the Holders to make an initial advance to Borrower (the "Initial Loan
Advance") on the Initial Funding Date in the aggregate amount of Seven Million
Five Hundred and 00/100 Dollars ($7,500,000).
(b) Subject to the terms and conditions precedent hereof, including
Section 3.3, the Lenders agree on behalf of the Holders to make additional
advances to Borrower (the "Additional Loan Advances") from time to time during
the Commitment Period so long as the aggregate amount of the Additional Loan
Advances does not exceed Nine Million Five Hundred and 00/100 Dollars
($9,500,000) and the aggregate amount of all Advances does not exceed Seventeen
Million and 00/100 Dollars ($17,000,000).
Section 2.2 The Notes. Borrower's obligation to repay to the Lenders the
aggregate amount of the Advances, together with interest accruing in connection
therewith, shall be evidenced by senior secured promissory notes (the "Notes")
made by Borrower in the form of Exhibit K with appropriate insertions, each
payable to the order of the Holders in the stated principal amounts set forth on
Schedule 3 (as the same may be revised, from time to time). All Advances will be
made under the Notes in proportion to their relative stated principal amounts.
The amount of principal owing on each Note at any given time shall be such
proportionate share of the aggregate amount of the Advances theretofore made
minus such proportionate share of all payments of principal theretofore received
by the Holders on such Notes. Interest on the Notes shall accrue and be due and
payable as provided herein and therein. Amounts borrowed and repaid on the Notes
may not be re-borrowed hereunder.
Section 2.3 Request for Advances.
(a) Borrower must give the Lenders at least fifteen (15) days prior
written notice (or telephonic notice promptly confirmed in writing by the
Lenders) of any requested Additional Loan Advance. Each such written notice (or
confirmation) must be made (i) if the Initial Loan Advance, in the form and
substance of the "Request for Initial Advance" in Exhibit L duly completed; and
(ii) if an Additional Loan Advance, in the form and substance of the "Request
for Additional Advance" in Exhibit M. Each such telephonic request shall be
deemed a representation, warranty, acknowledgment and agreement by Borrower as
to the matters which are to be set out in the written confirmation.
(b) If all conditions precedent to such Advance have been met, the Lenders
will, on the funding date specified in the Borrower's Request for Advance or on
the date such conditions precedent have been met, make such Advance available to
Borrower in immediately available funds.
Section 2.4 Use of Proceeds.
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(a) Borrower shall use the proceeds from the Initial Loan Advance for the
sole purpose of capitalizing TOGA by means of either Approved capital
contributions or Approved advances of Inter-company Debt in order for TOGA to:
(i) Refinance approximately $4,800,000 of existing Debt owed by TOGA
to Slough; and
(ii) Use up to $1,200,000 for Approved Working Capital purposes; and
(iii) Use up to $1,500,000 for Approved Capital Expenditures.
(b) Borrower shall use approximately $9,500,000 of the proceeds from the
Additional Loan Advances, which funds may be drawn upon as set forth in this
Section 2.4 and in Article 3, for the sole purpose of capitalizing TOGA for the
continued development of TOGA's interests in the Project in accordance with the
Approved Plan of Development.
(c) [Deleted]
(d) In no event shall the funds from any Advance be used directly or
indirectly by any Person for personal, family, household or agricultural
purposes or for the purpose, whether immediate, incidental or ultimate, of
purchasing, acquiring or carrying any "margin stock" or any "margin securities"
(as such terms are defined respectively in Regulations U, G and X promulgated by
the Board of Governors of the Federal Reserve System) or to extend credit to
others directly or indirectly for the purpose of purchasing or carrying any such
margin stock or margin securities. Borrower represents and warrants to the
Lenders, Holders, Agent and Collateral Agent that Borrower is not engaged
principally, or as one of Borrower's important activities, in the business of
extending credit to others for the purpose of purchasing or carrying such margin
stock or margin securities.
Section 2.5 Coupon Interest. Subject to modification pursuant to Section
2.7, the Notes shall bear interest ("Coupon Interest") from and including the
dates of the Advances on the unpaid principal amount from time to time
outstanding at the rate of ten percent (10%) per annum.
Section 2.6 Accrual and Payment of Coupon Interest. Coupon Interest shall
accrue on the Notes from and including the Initial Funding Date until their
repayment in full. For each Calendar Quarter (or part thereof) commencing on or
after the Initial Funding Date and ending on or before the Maturity Date, Coupon
Interest on the Notes shall be calculated for the entire such Calendar Quarter
in the manner provided in Section 2.7, but shall be due and payable on the
Quarterly Payment Date of such Calendar Quarter.
Section 2.7 Computation of Interest.
(a) Coupon Interest shall be computed on the Notes on the basis of a 360-
day year and on the actual number of days elapsed in any period including the
date of Advance but excluding the date by which the Holders are deemed, pursuant
to Section 2.10(a), to have
24
received payment. Coupon Interest on the Notes for each Calendar Quarter (or
part thereof) ending on or before the Maturity Date shall be computed as the sum
of the daily interest for the Calendar Quarter (or part thereof), taking into
account the outstanding principal balance of the Notes on each day of the period
(where such balance on any given day shall reflect any payment of principal
credited on such date pursuant to Section 2.10 hereof). For purposes of clarity,
for purposes of computing the Coupon Interest due and payable on the Quarterly
Payment Date of such Calendar Quarter, the daily interest for the period from
and including the Quarterly Payment Date through the end of the Calendar Quarter
shall be based on the outstanding principal balance after crediting all payments
of principal through the Quarterly Payment Date.
(b) Any principal or Coupon Interest payment due on the Notes or any other
monetary Obligation which is not paid when due, whether at stated maturity, by
notice of acceleration or otherwise, shall bear interest (calculated in the
manner set forth above) at the Late Payment Rate.
Section 2.8 Payment of Principal; Quarterly Payments.
(a) Borrower shall not be required to make payments of principal on the
Notes during the period commencing on the Initial Funding Date and ending on the
day before the Initial Amortization Date.
(b) The outstanding principal balance of the Notes shall be due and
payable in full on the Maturity Date.
(c) Commencing upon the first Quarterly Payment Date after the Initial
Amortization Date, and on every Quarterly Payment Date thereafter until the
Maturity Date, Borrower shall make a principal payment to Lenders on account of
the outstanding principal balance of the Notes (each, a "Principal Payment") in
an amount equal to the greater of:
(i) The sum of the Dedication Rate multiplied by the ANCF for the
preceding Calculation Period; or
(ii) The "Scheduled Minimum Principal Payment" applicable on such
Quarterly Payment Date, defined as the product of (A) the unpaid principal
balance on the Notes as of December 31, 2002 and (B) the percentage set
forth below for the month and year in which such Quarterly Payment Date
occurs, rounded to the next higher $1,000:
Percentages for Computation of
Scheduled Minimum Principal Payments
Year March June September December Total
-------------------------------------------------------------------------------------------------
2000 0% 0% 0% 0%
2001 0% 0% 0% 0%
2002 0% 0% 0% 0%
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Year March June September December Total
-------------------------------------------------------------------------------------------------
2003 5% 5% 5% 5% 20%
2004 9% 9% 9% 9% 36%
2005 10% 10% 10% 10% 40%
2006 Remainder 4%
-------------------------------------------------------------------------------------------------
Total 100%
-------------------------------------------------------------------------------------------------
(d) All payments of principal made by Borrower hereunder shall be applied
to the Notes to which such payments relate ratably among the Holders of such
Notes proportionately to their respective Pro Rata Shares. All prepayments of
principal made pursuant to Section 2.9 shall apply to principal payments
thereafter required in inverse order of their maturity.
Section 2.9 Prepayment.
(a) Optional Prepayments. In addition to the payments required under
Sections 2.6 and 2.8, Borrower may, from time to time, on or after October 1,
2000 through March 1, 2002, and upon ten (10) Business Days' prior written
notice to Lenders, prepay the Notes, in whole but not in part, so long as such
prepayment is accompanied by the payment of, and there shall be due and payable
upon any prepayment in full of principal during such period whether by optional
prepayment or mandatory prepayment pursuant to Section 2.9(b), a prepayment
premium (the "Prepayment Premium") equal to the product of the applicable
"Prepayment Premium Percentage" set forth below opposite the time period in
which the date of prepayment occurs multiplied by the principal amount prepaid:
-----------------------------------------------------------------------------------------------------------
Date of Prepayment Prepayment Premium Percentage
-----------------------------------------------------------------------------------------------------------
Prior to March 31, 2001 12.5%
-----------------------------------------------------------------------------------------------------------
April 1, 2001 to June 30, 2001 10%
-----------------------------------------------------------------------------------------------------------
July 1, 2001 to September 30, 2001 7.5%
-----------------------------------------------------------------------------------------------------------
October 1, 2001 to December 31, 2001 5%
-----------------------------------------------------------------------------------------------------------
January 1, 2002 to February 28, 2002 2.5%
-----------------------------------------------------------------------------------------------------------
In addition to the payments required under Sections 2.6 and 2.8, Borrower
may, on or after March 1, 2002, from time to time and upon ten (10) Business
Days' prior written notice to Lenders, prepay the Notes, in whole or in part, so
long as each partial prepayment of principal on the Notes is greater than or
equal to $250,000. Each partial prepayment of principal shall be applied to the
Minimum Principal Payments due under the Notes in the inverse order of their
maturities.
Each prepayment of principal under this Section 2.9 shall be accompanied by
all interest then accrued and unpaid on the principal so prepaid. Any principal
prepaid pursuant to this
26
Section 2.9 shall be in addition to, and not in lieu of, all payments otherwise
required to be paid under the Loan Documents at the time of such prepayment.
(b) Mandatory Prepayments.
(i) If the Agent Approves any request by TOGA to sell all or any
portion of the Eligible Proved Properties (which approval shall be in
Agent's sole and absolute discretion as to any Collateral comprising a
portion of the Project but which approval shall not be withheld
unreasonably as to any Collateral not comprising a portion of the Project),
notwithstanding any other provision hereof, all sales proceeds must be
applied to the prepayment of the Notes unless otherwise approved in writing
by the Agent, which approval the Agent may withhold in its sole and
absolute discretion.
(ii) If Borrower refinances all or any portion of the Loans, which
prior to October 1, 2000 shall be subject to receipt of Approval of the
Agent which may be withheld in Lenders' sole and absolute discretion,
notwithstanding any other provision hereof, all refinancing proceeds shall
be applied to prepayment of the Scheduled Principal Payments in inverse
order of their maturities.
(iii) Borrower shall apply any Excess ANCF not used for additional
development expenditures pursuant to the Approved Plan of Development
within nine months after receipt to the prepayment of the Scheduled
Principal Payment in inverse order of their maturities.
Any mandatory prepayments made pursuant to this Section 2.9(b) shall be
free from prepayment penalties.
(c) Effect on Royalty. Under no circumstances shall the Royalty be
released in connection with any prepayment pursuant to subsection (a) or (b)
above.
Section 2.10 General Payment Provision.
(a) Borrower shall make each payment which Borrower owes under any of the
Loan Documents not later than 11:00 a.m., Los Angeles, California time, on the
date such payment becomes due and payable, in lawful money of the United States
of America, without set-off, deduction or counterclaim, and in immediately
available funds sent by wire transfer to the payment accounts set forth on
Schedule 5 (or to such other bank and accounts and pursuant to such other
directions as Holders may from time to time specify). Any payment received by
Holders after such time shall be deemed to have been made on the next following
Business Day. Should any such payment become due and payable on a day other than
a Business Day, the maturity of such payment shall be the preceding Business
Day. Each payment under a Loan Document shall be due and payable at the place
provided therein and, if no specific place of payment is provided, shall be due
and payable at the place of payment of the Notes. When the Holders collect or
receive money on account of the Obligations which is insufficient to pay all
27
Obligations then due and payable, the Holders may apply such money as they elect
to the various Obligations which are then due and payable.
(b) Any amount received by the Agent or Collateral Agent, or any Holder,
whether as a Coupon Interest payment or principal payment from or on behalf of
Borrower, shall be applied as follows in descending order of priority (provided
that after the occurrence of the Event of Default such amounts may be applied as
determined by Agent, Holders, or Collateral Agent in their sole discretion):
(i) to all costs and expenses (including reasonable attorneys' fees
and costs; costs of maintaining, preserving or disposing of any Collateral;
and costs of settlement) incurred by the Lenders, Holders, Agent or
Collateral Agent either pursuant to Section 5.1(j) or in enforcing any
Obligations of, or in collecting any payments from, any obligor hereunder
or under the other Loan Documents;
(ii) to Obligations (other than principal or interest) then due and
owing the Lenders, Holders, Agent or Collateral Agent under any of the Loan
Documents;
(iii) to Late Payment Rate Interest which has accrued on past due
payments hereunder pursuant to Section 2.7(b);
(iv) to Coupon Interest that is currently due and payable on the
Notes pursuant to Sections 2.6 and 2.7(a);
(v) to the payment of past due principal on the Notes;
(vi) to payment of principal on the Notes currently due and payable
pursuant to Section 2.8; and
(vii) to the prepayment of principal under the Notes, which
prepayment shall be applied to future Scheduled Minimum Principal Payments
in inverse order of their maturities.
Section 2.11 Yield Adjustment Payment. Concurrently with the funding of
the Initial Loan Advance, Borrower shall pay in immediately available funds to
Lenders a yield adjustment payment (the "Yield Adjustment Payment") in an amount
equal to One Hundred Twenty Thousand Dollars ($120,000).
Section 2.12 Collateral Accounts.
(a) Establishment of Collateral Accounts; Rules.
(i) Borrower shall establish and maintain at its expense the
Borrower/TOGC Collateral Account pursuant to the Borrower/TOGC Collateral
Account Agreement and TOGA shall establish and maintain at its expense the
TOGA Dollar Collateral Account pursuant to the TOGA Dollar Collateral
28
Account Agreement and the TOGA Australian Collateral Account pursuant to
the TOGA Australian Collateral Account Agreement.
(ii) TOGA, and to the extent applicable Borrower, shall deposit into
the TOGA Dollar Collateral Account or the TOGA Australian Collateral
Account all Project Gross Cash Revenues and Net TOGA Non-Project Cash Flow
from and after the Initial Funding Date through the Repayment Date.
(iii) TOGA may make monthly withdrawals from the TOGA Dollar
Collateral Account or the TOGA Australian Collateral Account on the last
day of each Calendar Month to pay Approved ▇▇▇, Approved Third Party Costs,
Approved Capital Expenditures and Direct Taxes provided that all
Obligations then due and payable have been paid in full and no Default
shall then exist or be outstanding.
(iv) From and after the Initial Funding Date through the Repayment
Date, Borrower, TOGA and TOGC shall deposit into the Borrower/TOGC
Collateral Account all Permitted Borrower Payments, and all payments of
Inter-company Debt of TOGC with respect to or in any way relating to the
Advances or TOGA.
(v) Collateral Agent may instruct the administrator of the
Collateral Accounts to transfer or disburse amounts from it to Agent only
to the extent such amounts are due and payable under the Notes, this
Agreement or any other Loan Document.
(vi) After the occurrence of an Event of Default under any Loan
Document or Borrower's or TOGA's failure to comply with the terms of this
Section 2.12, Collateral Agent may, at its option, apply all sums in the
Collateral Accounts to the reduction of outstanding principal of, and
interest and other sums owed by Borrower on, the Notes.
(vii) Upon the satisfaction in full of all amounts owed by Borrower
under the Loan Documents, Collateral Agent shall have all amounts remaining
in the Borrower/TOGC Collateral Account disbursed to Borrower and all
amounts remaining in the TOGA Dollar Collateral Account and the TOGA
Australian Collateral Account disbursed to TOGA.
(b) Notice. Not later than one (1) Business Day preceding the Initial
Funding Date or 15 Business Days after the execution of any new or future gas
sales contract, TOGA shall send a notice, substantially in the form of Exhibit
O, to all existing and/or new Hydrocarbon purchasers, including without
limitation, Energex Retail Pty Ltd, directing them to forward all amounts
payable to TOGA directly to the TOGA Dollar Collateral Account at the mailing
address of the depositary bank for deposit into the TOGA Dollar Collateral
Account. The failure of such Hydrocarbon purchasers to comply with any such
notice shall not constitute a Default hereunder by any Related Person, provided
that (i) such Hydrocarbon purchasers' failure to comply with such notice is not
done at the request of Borrower or TOGA and (ii) Borrower
29
and TOGA shall forward all amounts received from such Hydrocarbon purchasers to
the TOGA Dollar Collateral Account within one (1) Business Day of Borrower's or
TOGA's receipt thereof.
(c) Acknowledgments. Each of Borrower, TOGC and TOGA hereby acknowledge
that:
(i) It has granted and assigned to Collateral Agent a first
priority, perfected security interest in the Collateral Accounts, all funds
therein and all proceeds thereof pursuant to the Security Agreement, the
Pledge and Security Agreement, the TOGC Pledge and Security Agreement and
the Collateral account Agreements; and
(ii) None of Borrower, TOGC or TOGA shall be permitted to withdraw,
transfer or disburse any funds from the Collateral Accounts except in
accordance with the terms hereof and each other Loan Document.
(d) Attorney-in-fact. Each of Borrower, TOGC and TOGA hereby appoint
Collateral Agent its attorney-in-fact, with full power of substitution, to
execute and file on behalf of Borrower, TOGC or TOGA, respectively, any
financing statement, continuation statement or instrument of further assurance
to more effectively perfect, continue or confirm (i) the provisions of this
Section 2.12 and of any agreement entered into by Borrower, TOGC ,TOGA,
Collateral Agent and the depositary bank administering the Collateral Accounts
and (ii) the security interest granted in the Collateral Accounts. This power,
being coupled with an interest, shall be irrevocable until all amounts due in
connection with the Notes have been paid in full.
ARTICLE 3
CONDITIONS PRECEDENT TO LENDING
Section 3.1 Conditions Precedent to Initial Loan Advance. The Lenders have
no obligation to make the Initial Loan Advance unless all of the following
conditions precedent have been satisfied in which event the Initial Loan Advance
shall be made:
(a) The Lenders shall have received all of the following at Agent's office
in Los Angeles, California, duly executed and delivered and in form,
substance and date satisfactory to the Lenders:
(i) The Notes;
(ii) Each Security Document listed in the Security Schedule;
(iii) An "Omnibus Certificate" substantially in the form of Exhibit P
of the Secretary or the Board of Directors of each of Borrower, TOGC and
TOGA which shall contain the names and signatures of its officers
authorized to execute the Loan Documents to which it is a party and which
shall certify to the truth, correctness and completeness of the following
exhibits attached to the certificate: (i) a copy of resolutions of
Borrower's, TOGC's and TOGA's, respectively, board of directors in full
force and effect at the time this Agreement
30
is entered into, authorizing the execution of the Loan Documents delivered
or to be delivered by Borrower, TOGC or TOGA in connection herewith and the
consummation of the transactions contemplated in the Loan Documents; (ii) a
copy of Borrower's and TOGC's Articles of Incorporation and all amendments
thereto, certified by the Secretary of the State of Texas; or (iii) a copy
of the necessary authorization authorizing observers to the board of
directors of Borrower and TOGA as provided under Section 5.1(c)(v); and
(iv) a copy of the appointment of all legal representatives and attorneys
in fact of Borrower, TOGC and TOGA duly registered;
(iv) A "Compliance Certificate," substantially in the form of
Exhibit Q, of the President of Borrower, TOGC and TOGA of even date with
such Advance, in which such persons certify to the satisfaction of the
conditions set out in clauses (i) through (ii) above;
(v) Opinions of ▇▇▇▇▇, ▇▇▇▇▇ & ▇▇▇▇▇▇▇, Australian counsel for the
Related Persons, covering the items set forth in Exhibit R-1, and such
other matters requested by Agent and otherwise in form acceptable to Agent
and its counsel;
(vi) An opinion of ▇▇▇▇▇▇▇ & ▇▇▇▇, or other New York counsel
acceptable to Agent for the Related Persons, substantially in the form of
Exhibit R-2, and such other matters requested by Agent and otherwise in
form acceptable to Agent and its counsel;
(vii) An opinion of Glast, ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, P.C., or other Texas
counsel acceptable to Agent for the Related Persons, substantially in the
form of Exhibit R-3, and such other matters requested by Agent and
otherwise in form acceptable to Agent and its counsel;
(viii) An opinion of counsel to the Lenders, or other assurance
satisfactory to the Lenders in their sole discretion, that the Loans are
permitted investments by the Lenders under the terms of all governing
documents relating to the Lenders and as to such other matters as the
Lenders may reasonably request;
(ix) The Initial Financial Statements;
(x) The Initial Engineering Report;
(xi) An environmental report (the "Initial Environmental Report")
relating to all Properties of TOGA included in the Project prepared by an
environmental engineering consultant reasonably approved by Agent which is
satisfactory to Agent and its counsel in form and substance, including the
satisfactory compliance with all applicable environmental laws and
regulations;
(xii) Certificates from the Comptroller of the State of Texas as to
the existence, good standing and due qualification to do business of
Borrower;
31
(xiii) A certified copy of the Certificates of Incorporation of TOGA
issued by the Australia Securities & Investment Commission;
(xiv) Title opinions and other title information concerning the
Project in form, substance and authorship satisfactory to Agent;
(xv) Evidence that the board of directors and any required equity
owners of the Borrower, TOGC and of TOGA have approved the transactions
contemplated hereby and any other required governmental or regulatory
approval or consent;
(xvi) An irrevocable standby letter of credit in the form of Exhibit
G-1 in favor of Collateral Agent issued by a bank Approved by Agent in its
sole and absolute discretion pursuant to which Collateral Agent shall be
authorized to draw Three Million Five Hundred Thousand Dollars
($3,500,000);
(xvii) An irrevocable standby letter of credit in the form of Exhibit
G-2 in favor of Collateral Agent issued by a bank Approved by Agent in its
sole and absolute discretion pursuant to which Collateral Agent shall be
authorized to draw Five Hundred Thousand Dollars ($500,000) with respect to
unpaid amounts payable under the Tri-Star Litigation Indemnity.
(xviii) An agreement executed by Slough as the account party with
respect to the Letters of Credit and the Borrower with respect to the
consequences of a draw upon the Letters of Credit, in form and substance
acceptable to Agent in its sole and absolute discretion together with a
subordination agreement in form and substance acceptable to Agent in its
sole and absolute discretion in favor of Lenders with respect to any
obligation of Borrower, TOGC or TOGA to Slough arising from such a draw
upon a Letter of Credit.
(xix) A shareholder approval executed by Slough, as shareholder in
TOGA, in form Approved by Agent in its sole discretion, approving (a) the
terms of the issuance of shares of TOGA to TOGC or Borrower in
consideration of the contribution to TOGA of the proceeds of any Advance
or, in the alternative, the terms of the Inter-company Debt reflecting the
advance to TOGA of the proceeds of any Advance, (b) the termination by
Slough of any future obligation of TOGA to pay to Slough any overriding
royalty or other contractual payment in consideration of the transfer to
TOGA of interests under the Project JOA heretofore acquired by Borrower or
TOGC, (c) the Management Fees and TOGA -Borrower Management Agreement, and
(d) the execution and delivery by TOGA of the Guarantee Agreement and other
Loan Documents executed by TOGA.
(xx) The Borrower should have prepared a drilling program proposal
consisting of at least twenty (20) ▇▇▇▇▇ pursuant to the terms of the
Project JOA covering the Project, the time periods for consent and non-
consent by all parties thereto shall have expired and Agent shall have
received copies of all
32
communications relating to such proposals and evidence satisfactory to the
Agent in its sole and absolute discretion that such drilling programs will
be undertaken on a schedule acceptable to Agent (including copies of the
drilling contract executed with respect thereto) and that adequate funding
will be available to finance the same;
(xxi) Evidence that the Bank Debt has been paid in full and all
liens, claims and other security interests have been released;
(xxii) Evidence that the debt described in subsection 2.4(a)(i) shall
be paid in full and all liens, claims and other security interests securing
the same have been released and all obligations of TOGA to pay any
overriding royalty, Contractual Payments (as defined in Section 3 of the
Promissory Note dated December 22, 1998 in the original principal amount of
$6,000,000 executed by TOGA to Slough) or other amounts thereunder shall be
terminated and released concurrent with the Initial Loan Advance; and
(xxiii) Such other information as the Lenders may reasonably require,
including evidence satisfactory to the Lenders that all conditions
precedent to Initial Funding Date set forth in this Article and to any
disbursement to be made at Initial Funding Date have been satisfied.
(b) Borrower, TOGC and TOGA shall have established the Collateral
Accounts.
(c) The notices required pursuant to Section 2.12(b) shall have been
delivered.
(d) Borrower shall have transferred to TOGA, either directly or indirectly
through TOGC, all rights and interests in the Project heretofore acquired by
Borrower or TOGC from parties to the Project JOA pursuant to documentation in
form and substance satisfactory to Agent.
Section 3.2 Conditions Precedent to Any Advance. The Lenders have no
obligation to make any Advance (including the Initial Loan Advance) unless all
of the following conditions precedent have been satisfied, to the Agent's
satisfaction and in its sole discretion (in which event the Advance shall be
made):
(a) All representations and warranties made by Borrower and by TOGA and
any other Related Person in any Loan Document shall be true in all material
respects on and as of the date of such Advance (except to the extent that the
facts upon which such representations are based (i) have been changed by the
extension of credit hereunder and (ii) are true and correct in all material
respects only when taken together with all other representations and warranties
thereof in any Loan Document previously delivered) as if such representations
and warranties had been made as of the date of such Advance.
(b) No Default shall exist at the date of such Advance.
33
(c) No Material Adverse Effect shall have occurred to Borrower's, TOGC's
or to TOGA's financial condition or businesses since the date of this Agreement.
(d) Each of Borrower, TOGC and TOGA shall have performed and complied in
all material respects with all agreements and conditions required in the Loan
Documents to be performed or complied with by it on or prior to the date of such
Advance.
(e) The making of such Advance shall not be prohibited by any law or any
regulation or order of any court or governmental agency or authority and shall
not subject the Lenders, Holders, Collateral Agent or Agent to any penalty or
other onerous condition which would impose on any Lender a material additional
cost in making a funding under or pursuant to any such law, regulation or order.
(f) Lenders shall have received or shall have been authorized and
instructed to withhold from the Initial Loan Advance the Yield Adjustment
Payment.
(g) Lenders shall have (i) reviewed Borrower's, TOGC's and TOGA's
financial condition, and (ii) found the same to be satisfactory.
(h) Each of Borrower, TOGC and TOGA shall have procured and maintained the
insurance required under Schedule 6 hereto.
Section 3.3 Special Conditions Precedent for an Additional Loan Advance.
After the Initial Loan Advance, the Lenders shall be obligated to make an
Additional Loan Advance only:
(i) before the Funding Expiry Date;
(ii) in the amount requested by Borrower in Borrower's Request for
Advance, not to exceed $9,500,000 in the aggregate for all Additional Loan
Advances;
(iii) upon Lenders' receipt of a timely Request for Advance and all
documents and instruments which the Lenders have then requested, in
addition to those described in Sections 3.1 and 3.2 (including opinions of
legal counsel, corporate documents and records, documents evidencing
Governmental Approvals and exemptions, and certificates of Governmental
Persons and of officers and representatives of Borrower, TOGA and other
Persons), as to (i) the accuracy and validity of or compliance with, in all
material respects, all representations, warranties and covenants made in
the Loan Documents, (ii) the satisfaction of all conditions contained
therein, and (iii) all other matters pertaining thereto. All such
additional documents and instruments shall be satisfactory to the Lenders
in form, substance and date;
(iv) upon Lender's satisfactory review of the Engineering Report for
the Comet Ridge Project as set forth in the Approved Plan of Development;
34
(v) if the Additional Advance is being used to develop properties
not covered by the Initial Environmental Report ("Additional Properties"),
upon receipt of an Environmental Report covering the Additional Properties;
and
(vi) upon receipt by Agent of (i) evidence that all stamp and other
taxes due with respect to all prior Advances and the requested Additional
Advance in connection with the Australian Charge Document have been duly
and properly paid and filed and (ii) evidence that no lien, charge,
security interest or other interest has been granted to or has arisen in
favor of any party other than Collateral Agent in any Collateral other than
Permitted Liens.
Section 3.4 Special Condition to Any Advance. Notwithstanding anything in
this Agreement or any other Loan Document to the contrary, the parties expressly
acknowledge and agree that uncertainties exist with respect to the Tri-Star
Litigation and Agent and Lenders reserve the right, in their sole and absolute
discretion, to refuse to fund any Advance and/or terminate or cancel any
obligation to make future Advances if Agent or Lenders determine, in their sole
and absolute discretion, that the operating relationship between TOGA and the
operator of the Project is unacceptable to Agent or Lenders. It is further
acknowledged and agreed that the Lenders and Agent shall have the right to
consider, and approve or disapprove the status of such operating relations prior
to each Advance and the making of any Advance shall not estop, limit or restrict
Agent's or Lenders' rights under the preceding sentence with respect to
subsequent Advances. Borrower, TOGC and TOGA hereby waive and release any and
all claims or causes of action against Agent, Lenders and any Indemnitees (as
defined in Section 7.3 below) arising from the exercise by Agent or Lenders of
the rights set forth in this Section 3.4.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 Representations and Warranties of Borrower, TOGC and TOGA. To
confirm the Lenders' understanding concerning Borrower, TOGC and TOGA and
Borrower's, TOGC's and TOGA's business, Properties and obligations and to induce
the Lenders, the Holders, Collateral Agent and Agent to enter into this
Agreement and to make the Loans, each of Borrower, TOGC and TOGA represents and
warrants to the Holders, Agents and Collateral Agent as of the date hereof and
as of the Initial Funding Date that:
(a) No Default. None of Borrower, TOGC or TOGA is in default in the
performance of any of the material covenants and agreements contained herein. No
event has occurred and is continuing which, with the passage of time or giving
of notice, would constitute a Default.
(b) Organization and Good Standing. Each of Borrower, TOGC and TOGA is
duly organized and validly existing and in good standing under the laws of its
jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby and
by the Loan Documents to which it is a party. Each of Borrower, TOGC and TOGA is
duly qualified, in good standing and authorized to do
35
business in all other jurisdictions wherein the character of the properties
owned or held by it or the nature of the business transacted by it makes such
qualification necessary.
(c) Authorization and Validity. Each of Borrower, TOGC and TOGA has duly
taken all requisite corporate action necessary to authorize the execution and
delivery by it of the Loan Documents to which it is a party and to authorize the
consummation of the transactions contemplated thereby and the performance of its
obligations thereunder. Borrower is duly authorized to borrow funds hereunder.
(d) Compliance with Laws and Contracts. The execution and delivery by each
of Borrower, TOGC and TOGA of the Loan Documents to which it is a party, the
performance by it of its obligations under such Loan Documents, and the
consummation by it of the transactions contemplated by the various Loan
Documents to which it is a party, do not and will not (i) breach, violate or
conflict with any provision of (A) any Governmental Rule, (B) the articles or
certificate of incorporation, bylaws, charter, or partnership agreement or
certificate of Borrower, TOGC or TOGA, as applicable, or (C) any agreement,
judgment, license, order or permit applicable to or binding upon Borrower, TOGC
or TOGA; (ii) result in the acceleration of any Debt owed by Borrower, TOGC or
TOGA; (iii) require any Governmental Approval other than those already obtained
by Borrower, TOGC or TOGA or not yet required to be obtained by Borrower, TOGC
or TOGA; or (iv) result in or require the creation of any Lien upon any assets
or properties of Borrower, TOGC or TOGA except as expressly contemplated in the
Loan Documents. Except as expressly contemplated in the Loan Documents, no
consent, approval, authorization or order of, and no notice to or filing with,
any court or governmental authority or third party is required in connection
with the execution, delivery or performance by Borrower, TOGC or TOGA of any
Loan Documents to which it is a party or to consummate any transactions
contemplated by the Loan Documents to which it is a party. Each of Borrower,
TOGC and TOGA is fully aware of and has complied with all regulations
promulgated in connection with the U.S. Foreign Corrupt Practices Act of 1974,
as amended and chapter 4 of Division 70 of the Criminal Code Act of 1995 (Cth)
of Australia.
(e) Enforceable Obligations. This Agreement is, and the other Loan
Documents to which Borrower, TOGC or TOGA is a party will be, when duly executed
and delivered, legal, valid and binding obligations of Borrower, TOGC or TOGA,
as applicable, enforceable against Borrower, TOGC and TOGA in accordance with
their respective terms except as such enforcement may be limited by bankruptcy,
insolvency or similar laws of general application relating to the enforcement of
creditors' rights and general principles of equity.
(f) Initial Financial Statements. The Initial Financial Statements were
prepared in accordance with GAAP and fairly presented Borrower's consolidated,
TOGC's and TOGA's financial position at the statements' date and the results of
Borrower's consolidated, TOGC's and TOGA's operations and Borrower's
consolidated, TOGC's and TOGA's cash flows for the statements' periods. Since
the statements' date, no Material Adverse Effect has occurred with respect to
Borrower's, TOGC's or TOGA's financial condition or businesses.
(g) Other Obligations and Restrictions. Neither Borrower, TOGC nor TOGA
has any outstanding Debt of any kind (including contingent obligations, tax
assessments, and unusual forward or long-term commitments) which is, in the
aggregate, (i) material to
36
Borrower, TOGC or TOGA or material with respect to Borrower's, TOGC's or TOGA's
financial condition and (ii) not (A) shown in the Initial Financial Statements
or (B) disclosed in the Disclosure Schedule. Except as shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule, no Related Person
is subject to or restricted by any franchise, contract, deed, charter
restriction, or other instrument or restriction which is materially likely in
the foreseeable future to materially and adversely affect the businesses,
properties, prospects, operations, or financial condition of Borrower, TOGC or
TOGA.
(h) Full Disclosure. No certificate, written statement or other written
information delivered herewith or heretofore by any Related Person to the
Lenders in connection with the negotiation of this Agreement or the other Loan
Documents or in connection with any transaction contemplated hereby contains any
untrue statement of a material fact or omits to state any material fact known to
Borrower, TOGC or TOGA (other than industry-wide risks normally associated with
the types of businesses conducted by Borrower, TOGC or TOGA, respectively)
necessary to make the statements contained herein or therein not misleading as
of the date made or deemed made. There is no fact known to Borrower, TOGC or
TOGA (other than industry-wide risks normally associated with the types of
businesses conducted by Borrower, TOGC or TOGA, respectively) that has not been
disclosed to the Lenders in writing that might reasonably be expected to cause a
Material Adverse Effect upon Borrower's, TOGC's, TOGA's or any of TOGA's
Subsidiaries' properties, businesses, prospects or condition (financial or
otherwise). Borrower has heretofore delivered to the Lenders true, correct and
complete copies of the Initial Financial Statements and the Initial Engineering
Report.
(i) Litigation. Except as disclosed in the Initial Financial Statements or
in the Disclosure Schedule: (i) there are no actions, suits or legal, equitable,
arbitrative or administrative proceedings pending, or to the knowledge of
Borrower, TOGC or TOGA threatened, against any Related Person before any
Governmental Person which could reasonably be expected to have a Material
Adverse Effect on Borrower, TOGC or TOGA, or the right or ability of Borrower,
TOGC or TOGA to enter into the Loan Documents to which it is a party or to
consummate the transactions contemplated thereby or to perform its obligations
thereunder and (ii) there are no outstanding judgments, injunctions, writs,
rulings or orders by any such Governmental Person against any Related Person
which have a material probability of causing a Material Adverse Effect on such
Related Person.
(j) ERISA Liabilities. There are no currently existing ERISA Plans or
similar plans in Australia. No Related Person is required to contribute to, or
has any other absolute or contingent liability in respect of, any "multiemployer
plan" as defined in Section 4001 of ERISA or any other Australian law which has
a comparable effect to ERISA.
(k) Environmental and Other Laws. Except as disclosed in the Disclosure
Schedule:
(i) each of Borrower, TOGC and TOGA is conducting its businesses in
material compliance with all applicable Governmental Rules, including
applicable Environmental Laws, and has been and is in compliance in all
material respects with all Governmental Approvals required under such
Governmental Rules, including applicable Environmental Laws;
37
(ii) to the best of Borrower's, TOGC's and TOGA's knowledge, none of
the operations or properties of any Related Person is the subject of any
applicable Governmental Person's investigation evaluating any release of
any Hazardous Materials into the environment or the improper storage or
disposal (including storage or disposal at offsite locations) of any
Hazardous Materials;
(iii) no Related Person (and to the best knowledge of Borrower, TOGC
and TOGA, no other Person) has filed any notice under any Governmental Rule
indicating that any Related Person is responsible for the release into the
environment, or the improper storage or disposal, of any material amount of
any Hazardous Materials or that any Hazardous Materials have been released,
or are improperly stored or disposed of, upon any Property of any Related
Person;
(iv) no Related Person has transported or arranged for the
transportation of any Hazardous Material to any location (A) in
contravention of any Environmental Law or (B) is the subject of any
applicable Governmental Person's enforcement actions or, to the best of
Borrower's, TOGC's and TOGA's knowledge, other Governmental Person's
investigations which may lead to claims against any Related Person for
clean-up costs, remedial work, damages to natural resources or for personal
injury claims (whether under Environmental Laws or otherwise), in each
case, where such action could reasonably be expected to have a Material
Adverse Effect; and
(v) no Related Person otherwise has any known material contingent
liability under any Environmental Laws or in connection with the release
into the environment, or the storage or disposal, of any Hazardous
Materials.
(l) Names and Places of Business. Except as disclosed in the Disclosure
Schedule, neither Borrower, TOGC nor TOGA has, had, been known by, or used any
other partnership, trade, or fictitious name, except as disclosed in the
Disclosure Schedule. The chief executive office and principal place of business
of Borrower, TOGC and TOGA are located at the address for Borrower, TOGC and
TOGA, respectively, set out in Section 8.3. Neither the Borrower, TOGC, nor any
Subsidiary of either has done business in, has investments or operations in,
oil, gas or energy related activities in Australia other than through TOGA or in
connection with interests which have been transferred to TOGA.
(m) No Subsidiaries. Except as disclosed in the Disclosure Schedule,
Borrower, TOGC and TOGA have no Subsidiaries, own no stock in any other Person,
and is not a member of any general or limited partnership, joint venture or
association of any kind.
(n) Regulations G, U and X. None of Borrower, TOGC or TOGA is engaged
principally, or as one of its important activities, in the business of extending
credit for the purpose of purchasing or carrying "margin stock" (as defined in
Regulations G, U and X of the Board of Governors of the Federal Reserve System)
or any Australian law of comparable effect.
38
(o) Commissions. Except as set forth in the Disclosure Schedule, none of
Borrower, TOGC or TOGA, nor any other Related Person, has entered into any
agreement or incurred any obligation which might result in the obligation to pay
a brokerage commission or finder's fee (other than fees to one or more Lenders)
with respect to the Loans.
(p) Certain Regulations. None of Borrower, TOGC or TOGA (i) is an
"investment company," or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940 or any other Australian
law which has a comparable effect; (ii) is a "holding company," an "affiliate"
of a "holding company" or a "subsidiary company" of a "holding company," within
the meaning of the Public Utility Holding Company Act of 1935 or any other
Australian law which has a comparable effect; or (iii) is subject to any other
Governmental Rule restricting its ability to incur debt or to grant Liens.
(q) Ownership of TOGC and TOGA. Borrower owns one hundred percent (100%)
of the outstanding stock of TOGC. TOGC owns ninety percent (90%) of the
outstanding stock of TOGA which is evidenced by the certificates described in
Exhibit A to the TOGC Security Agreement. Except for the rights created under
the Loan Documents, no other Person has a Lien on or any right to acquire any
stock, equity interest or other interest whatsoever in TOGC or TOGA.
(r) Governmental Approvals; Governmental Rules. To the best of TOGA's,
TOGC's and Borrower's knowledge and belief, Tri-Star as record holder of the
Project Properties and as operator under the Project JOA holds all Governmental
Approvals necessary under Governmental Rules for the ownership and operation of
the Project in the ordinary course as well as the consummation of the
transactions contemplated in the Loan Documents, except for those Governmental
Approvals which are not currently required. TOGA has no reasonable basis to
believe that any Governmental Approvals which have not been obtained by Tri-Star
as of the date of this Agreement, but which will be required in the future, will
not be obtained in due course on or prior to the commencement of the appropriate
stage of the expansion of the Project or that they will not be free from any
condition or requirements, compliance with which could reasonably be expected to
have a Material Adverse Effect on TOGA. The Project, if constructed in
accordance with the Approved Plan of Development and otherwise developed,
constructed, operated and maintained as contemplated by the Loan Documents, is
expected to conform to and comply with all covenants, conditions, restrictions
and reservations in the Governmental Approvals applicable thereto and all
Governmental Rules, except to the extent any such noncompliance could not
reasonably be expected to have a Material Adverse Effect on TOGA.
(s) Nature of Business. TOGA has not engaged in any business other than:
(i) its participation in the Project and (ii) other energy related activities in
Australia including ownership and development of authorities to prospect.
Neither the business nor any Property of TOGA are or have been affected by any
fire, explosion, accident, strike, lockout or other labor dispute, drought,
storm, hail, earthquake, embargo, act of God or of the public enemy or other
casualty (whether or not covered by insurance), that individually or in the
aggregate has had or could reasonably be expected to result in a Material
Adverse Effect on Borrower, TOGC, TOGA or any Related Person.
39
(t) Title; Security Documents; Interests Company Collateral. Subject to
this paragraph, each of Borrower, TOGC and TOGA own and have good, legal and
marketable title (with respect to personalty) and good, legal and indefeasible
title (with respect to real property) to the Collateral purported to be so owned
and covered by the Security Documents to which it is a party free and clear of
all Liens other than Permitted Liens. Lender and Agent specifically acknowledge
that as of the date of this Agreement, TOGA's interest in the Project is a valid
and enforceable contractual or equitable interest only under the Project JOA.
TOGA has brought proceedings in the Courts of the State of Texas against Tri-
Star Petroleum Company ("Tri-Star") to remove Tri-Star as the operator of the
Project and to require Tri-Star to transfer to TOGA and the other working group
interest owners who are parties to the Project JOA their proportionate interests
in the Authority to Prospect 526P and other property held in connection with the
Project Properties. TOGA's proportionate interest in the Project Properties is
not encumbered by any Liens other than Permitted Liens. TOGA's ownership of the
interest in Eligible Proved Properties has not been forfeited and there is no
basis for a claim of forfeiture under the Project JOA and other Project
Documents and it is entitled to receive (net of all Permitted Liens) the share
of the oil, gas and other minerals produced from or allocated to the ▇▇▇▇▇,
leases and lands listed or described in Exhibit S hereto or in any Security
Document (the "Collateral Properties") specified as fractional, percentage or
decimal interests in such Exhibit S hereto or Security Document under the
heading "NRI". Such shares of production which TOGA is entitled to receive (and
TOGA's share of expenses relating to the Collateral Properties with respect to
each lease and lands affected thereby and also specified in Exhibit S or
Security Document under the heading "WI") are not subject to change except, and
only to the extent that, such changes are reflected in Exhibit S; and such
shares of production and the oil and gas interests to which some of them relate
are (and, unless and until released by Collateral Agent, shall remain)
encumbered by the Security Documents. There is no financing statement, mortgage
or similar document covering any Collateral Property on file in any public
office naming any party other than Collateral Agent as mortgagee or secured
party other than financing statements, mortgage or similar documents which have
heretofore expired or been terminated.
(u) Status of Leases, etc. With respect to the Owned Properties and the
JOA Properties, the leases and other contracts and agreements, permits and
approvals forming a part of the Eligible Proved Properties, which are material
to the operation or value of any Properties, when taken as a whole, are in full
force and effect. All rents, royalties and other payments due and payable under
such leases and other contracts and agreements, forming a part of the Eligible
Proved Properties, or under the Permitted Liens, have been properly and timely
paid in accordance with prudent industry practices, but in no event later than
ninety (90) days past due. TOGA in respect of the Owned Properties and, to the
best of TOGA's knowledge and belief, the operator under the Project JOA in
respect of JOA Properties, is not in default with respect to its obligations
other than to Comet Ridge Participants (and is not aware of any default by any
third party with respect to such third party's obligations where such default
could adversely affect the ownership or operation of the Eligible Proved
Properties) under such leases and other contracts or agreements, or under
Permitted Liens, or otherwise attendant to the ownership or operation of the
Eligible Proved Properties, where such default could have a Material Adverse
Effect.
(v) Production Sales, etc. Except as set forth in the Disclosure Schedule,
with respect to the Owned Properties and the JOA Properties (to the best of
TOGA's, TOGC's and the Borrower's knowledge and belief), neither TOGA, TOGC or
Borrower nor to the best of
40
TOGA's, TOGC's and the Borrower's knowledge and belief, Tri-Star as operator
under the Project JOA (in respect of the JOA Properties) or TOGA's predecessors-
in-title (in respect of the Owned Properties) have received prepayments
(including, but not limited to, payments for gas not taken pursuant to "take or
pay" arrangements) for any oil or gas to be produced from the Eligible Proved
Properties after the Closing, no Eligible Proved Property is subject to any
contractual or other arrangement whereby payment for production from such
Eligible Proved Property is to be deferred for a substantial period after the
end of the calendar month in which such production is delivered in the case of
oil, not in excess of thirty (30) days, and in the case of gas, not in excess of
sixty (60) days. Except as heretofore disclosed, in writing by Borrower, TOGC or
TOGA to Agent, no Eligible Proved Property is subject to any contractual or
other arrangement for the sale of hydrocarbons which cannot be canceled on
ninety (90) days' or less notice. No Eligible Proved Property is subject at the
present time to any regulation refund obligation, and to the best of TOGA's,
TOGC's and Borrower's knowledge and belief, no situation exists where the same
might be imposed. Except as heretofore disclosed in writing by Borrower to
Agent, no Eligible Proved Property is subject to a gas balancing arrangement
under which an imbalance exists, with respect to which imbalance TOGA is in an
overproducing status and is required to (i) permit one or more third parties to
take a portion of the production attributable to such Collateral Property
without payment (or without full payment) therefor and/or (ii) make payment in
cash, in order to correct such imbalance.
(w) Operation of Collateral Properties. Borrower has disclosed to Agent
and Lenders that Borrower and TOGA have asserted certain claims in the Tri-Star
Litigation that, among other things, the Project Properties are not being
operated in a good and workmanlike manner in compliance with the Project JOA and
applicable laws, rules and regulations. Notwithstanding such alleged breaches of
the Project JOA and applicable laws, rules and regulations by Tri-Star, none of
Borrower, TOGC or TOGA is aware of any fact or condition that would cause a
material risk that (1) the Project Properties will not continue to produce
Hydrocarbons as projected in the Initial Engineering Report, (2) either the
Hydrocarbons produced from the Project Properties will not be sold or TOGA's
share of sales proceeds will not be remitted at its direction, in each case as
consistent with prior practice, and (3) once proposed pursuant to the Project
JOA and funded as contemplated hereby, the Approved Plan of Development will not
be conducted as contemplated therein.
(x) Tax Filings. Except as set forth in the Disclosure Schedule, each of
Borrower, TOGC and TOGA has filed all required tax returns and paid all taxes
and governmental charges or levies (which taxes, charges or levies are material
in the aggregate to Borrower, TOGC or TOGA) imposed upon its income, properties
or profits, before the same became in default, including, but not limited, to
all ad valorem taxes assessed under the Collateral Properties or any part
thereof and all occupational taxes and all production, severance, windfall
profit, excise and other taxes assessed against, or measured by, the production
of (or the value of, proceeds or the production of) oil, gas, or other minerals
accruing to the Collateral Properties.
(y) Use of Proceeds. The proceeds of each Advance will be used solely in
accordance with, and solely for the purposes contemplated by, Section 2.4
hereof. No part of the proceeds of any extension of credit hereunder will be
used for the purpose, whether immediate,
41
incidental or ultimate, of buying or carrying any margin stock within the
meaning of Regulations U and X or to extend credit to others for such purpose.
Section 4.2 Representations of the Lenders, the Collateral Agent and the
Agent. To confirm the Borrower's and TOGA's understanding concerning the
Lenders, the Collateral Agent and the Agent and to induce the Borrower and TOGA
to enter into this Agreement, each of the Lenders, the Collateral Agent and the
Agent severally and not jointly represents and warrants to TOGA and Borrower as
of the date hereof and as of the Initial Funding Date and any Additional Advance
Funding Date that:
(a) Organization and Good Standing. Each of the Lenders, the Collateral
Agent and the Agent is duly organized and validly existing and in good standing
under the laws of its jurisdiction of organization, having all powers required
to carry on its business and enter into and carry out the transactions
contemplated hereby and by the Loan Documents to which it is a party. Each of
the Lenders, the Collateral Agent and the Agent is duly qualified, in good
standing and authorized to do business in all other jurisdictions wherein the
character of the properties owned or held by it or the nature of the business
transacted by it makes such qualification necessary.
(b) Authorization and Validity. Each of the Lenders, the Collateral Agent
and the Agent has duly taken all requisite corporate action necessary to
authorize the execution and delivery by it of the Loan Documents to which it is
a party and to authorize the consummation of the transactions contemplated
thereby and the performance of its obligations thereunder.
(c) Enforceable Obligations. This Agreement is, and the other Loan
Documents to which the each Lender, the Collateral Agent and the Agent is a
party will be, when duly executed and delivered, legal, valid and binding
obligations of the Lenders, the Collateral Agent and the Agent, as applicable,
enforceable against the Lenders, the Collateral Agent and the Agent in
accordance with their respective terms except as such enforcement may be limited
by bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights and general principles of equity.
(d) Investment. Each Lender represents to Borrower and TOGA, as of the
dates set forth above:
(i) it is an "accredited investor" as such term is defined in
Regulation D adopted under the Securities Act; and
(ii) it is making the Initial Advance as well as any subsequent
Advances and purchasing the Notes for investment purposes and not with a
view towards sale or distribution in violation of applicable laws.
42
(iii) it understands that the Notes have not been registered under the
Securities Act and may be resold only if registered pursuant to the
provisions of the Securities Act or if an exemption from registration is
available, except under circumstances where neither such registration nor
such an exemption is required by law, and that the Borrower is not required
to register the Notes.
ARTICLE 5
COVENANTS OF BORROWER, TOGC and toga
Section 5.1 Affirmative Covenants. To conform with the terms and
conditions under which the Lenders and the Holders are willing to have credit
outstanding to Borrower, and to induce the Lenders and the Holders to enter into
this Agreement and make the Loans, each of Borrower, TOGC and TOGA warrants,
covenants and agrees that until the full and final payment of the Obligations
and the termination of this Agreement, unless the Agent previously agrees
otherwise:
(a) Payment and Performance. Borrower will pay all amounts due under the
Loan Documents in accordance with the terms thereof and each of Borrower, TOGC
and TOGA will observe, perform and comply in all material respects with every
covenant, term and condition expressed in the Loan Documents to which it is a
party.
(b) Books, Financial Statements and Reports. Each of Borrower and TOGA
will at all times maintain full and accurate books of account and records and a
standard system of accounting and will furnish the following statements and
reports to the Agent at Borrower's expense:
(i) (A) By the date hereof in the case of the 1999 fiscal year ended
September 30, 1999 and (B) promptly after becoming available, and in any
event not later than ninety (90) days after the close of each fiscal year
beginning with the 2000 fiscal year, the audited Consolidated and
consolidating balance sheets of Borrower and of TOGA as of the end of the
Borrower's fiscal year and the audited Consolidated and consolidating
statements of profit and loss of Borrower and of TOGA for such fiscal year,
all such financial statements prepared without regard to whether Borrower's
or TOGA's financial results would otherwise be shown on consolidated
financial statements of another Person and setting forth in each case in
comparative form the corresponding figures for the preceding fiscal year,
all in reasonable detail and all prepared in conformity with GAAP or
Australian GAAP, as applicable, certified in a manner by such independent
certified public accountants.
(ii) Promptly after becoming available, and in any event not later
than forty-five (45) days after the end of each fiscal quarter beginning
with the 2000 fiscal year, the unaudited Consolidated balance sheets of
Borrower and of TOGA as of the end of said fiscal quarter, and the
Consolidated statements of profits and loss of Borrower and of TOGA for
such quarter and for the period from the beginning of the fiscal year to
the end of such quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding
43
period of the preceding fiscal year, all prepared in reasonable detail and
in accordance with GAAP or Australian GAAP, as applicable.
(iii) A certificate signed by Borrower's or TOGA's chief financial
officer, to be furnished with each set of financial statements under
paragraph (i) and (ii) above. The certificate shall state that, to the
officer's knowledge based upon his or her due diligence review, under his
or her supervision, of Borrower's or TOGA's affairs, respectively, (A) all
of the representations and warranties made herein continue to be true and
correct as of the date of the certificate (or, if any representation or
warranty is not true or correct as of such date, the certificate shall
state the nature of the representation or warranty no longer valid and the
actions which Borrower or TOGA is taking or proposes to take with respect
thereto) and (B) such financial statements are accurate and complete in all
material respects. In the case of a certificate accompanying the financial
statements in paragraph (ii), the certificate shall also state that the
officer reviewed the Loan Documents containing calculations showing
compliance (or non-compliance) at the end of the applicable fiscal quarter
with the requirements of Sections 5.2(a), (e), (f), (g), (j) and (k), and
determined that no Default or Coverage Deficiency existed at the end of
such Fiscal Quarter or at the time of such certificate (or, if the officer
determines otherwise, the certificate shall specify the nature and period
of existence of the Default or Coverage Deficiency).
(iv) Promptly after becoming available, copies of all financial
statements, reports, notices and proxy statements sent by Borrower or TOGA
to its stockholders and all registration statements, periodic reports on
Forms 8-K, 10-K or 10-Q and other statements and schedules filed by
Borrower or TOGA with any securities exchange, the Commission or any
similar Governmental Person.
(v) Promptly upon receipt thereof, each other report submitted to
Borrower or TOGA by an independent certified public accountant in
connection with any annual, quarterly, interim or special audit made by
such accountant of the books or records of Borrower or TOGA.
(vi) On each Quarterly Payment Date, to the extent such information
is made available to TOGA from the operator of the Project (and Borrower
and TOGA shall exercise all rights and remedies as requested by Agent to
obtain such information), a consolidated report in detail acceptable to
Agent with respect to the Eligible Proved Properties during the Calendar
Quarter immediately prior thereto containing the following information:
(A) a description of cash flows for such period with a detailed
breakdown of all relevant sources and uses of cash for the applicable
quarter;
(B) a description by well and field of the gross quantities of
Hydrocarbons and water produced from or injected into the Eligible
Proved Properties during such period;
44
(C) a description by well and field of the net quantities of
Hydrocarbons sold during such period out of production from the
Eligible Proved Properties and calculating the average sales prices of
such oil, gas, and natural gas liquids;
(D) a detailed calculation of ANCF and Excess ANCF for such
period including a detailed aging of TOGA's accounts receivable and
payable;
(E) regardless of whether the same are included in such
calculation of ANCF, a detailed calculation of any ▇▇▇, G&A Costs,
Third Party Costs, Capital Expenditures, and other direct charges or
overhead costs with respect to the Eligible Proved Properties
specifying any material differences from those Approved and those
actually incurred;
(F) a summary of ▇▇▇▇▇ drilled, completed or worked over during
the reporting period showing the total depth drilled or tested, the
depth at which production casing was set, and the existing or
anticipated perforated interval and upon request copies of any well
logs across the pay sectors;
(G) a discussion of any current operating problems with any
▇▇▇▇▇ and any proposed solutions;
(H) any technical studies conducted during the reporting period
of performance; and
(I) a projection of Capital Expenditures for the next Calendar
Quarter and if any of such Capital Expenditures are not Approved
Capital Expenditures the sources of capital for the payment thereof,
together with accompanying authority for expenditures if requested by
Agent or Lenders.
(vii) An annual Engineering Report, to be effective as of October 1 of
each year and to be delivered to Agent prior to December 1 of that year
(or, in the case of 1999, by the date hereof). Each Engineering Report
shall:
(A) be prepared by ▇.▇. ▇▇▇▇▇▇▇▇ & Associates or such other
nationally or regionally recognized independent petroleum engineers,
which may be chosen by TOGA if acceptable to Agent in its sole and
absolute discretion, concerning all of the oil and gas properties of
TOGA including without limitation the Eligible Proved Properties,
prepared at Borrower's expense;
(B) separately report on Proved Developed Producing Reserves,
Proved Developed Non-Producing Reserves and Proved Undeveloped
Reserves of the Eligible Proved Properties and Subject
45
Properties, and separately calculate the NPV10 and Modified NPV10 of
each such category of Reserves;
(C) use pricing specified in the definition of NPV10;
(D) address the various factors to be taken into account in
calculating ANCF so that projected ANCF can be readily calculated from
the report;
(E) take into account TOGA's actual experiences with ▇▇▇ and
other costs in determining projected ▇▇▇ and other costs;
(F) take into account any "over-produced" status under gas
balancing arrangements;
(G) contain information and analysis comparable in scope to
that contained in the Initial Engineering Report;
(H) set forth all monetary sums in Dollars using the Spot Rate
as of the effective date of such report for the purposes of converting
any amounts payable in any currency other than Dollars to Dollars; and
(I) otherwise be in form and substance satisfactory to Agent.
In the event that Borrower or TOGA and Agent disagree over whether or not any
workovers or other remedial Capital Expenditures should be included in the ▇▇▇
of an Engineering Report for the purposes of calculating NPV10, the engineers
preparing the report shall resolve such disagreement by determining whether such
expenditures are likely to be required in accordance with prudent industry
practice and shall include or exclude such expenditures based upon such
determination.
(viii) Interim engineering reports shall be prepared with an effective
date of April 1 and delivered no later than May 1 of each year if requested
by Agent. Such interim engineering reports shall include, but not be
limited to, calculations of NPV10 on the Eligible Proved Properties, and
shall use prices supplied by Lenders except as modified by prices actually
received as of April 1 by TOGA pursuant to oil and gas sales contracts
between TOGA (as seller) and third parties (as buyers).
(ix) Within ten (10) days after submission to any Governmental
Person, a copy of any and all reports required to be furnished pursuant to
any Governmental Rule pertaining to the Eligible Proved Properties.
(x) An Independent Engineering Report shall be prepared as of and
delivered within thirty (30) days after the Repayment Date covering all
properties held by TOGA and all subsidiaries of TOGA, if any.
(c) Other Information and Inspections.
46
(i) Borrower and TOGA will furnish to the Lenders at Borrower's or
TOGA's, respectively, reasonable expense any information which the Agent
may from time to time reasonably request concerning any covenant, provision
or condition of the Loan Documents or any matter in connection with
Borrower's or TOGA's businesses and operations. Borrower and TOGA will
permit representatives appointed by Lenders (including independent
accountants, engineers, agents, attorneys, appraisers and any other
Persons) upon reasonable notice to visit and inspect any of Borrower's or
TOGA's property, including books of account, other books and records, and
any facilities or other business assets, and to make extra copies therefrom
and photocopies and photographs thereof, and to record any information such
representatives obtain, and shall further permit Lenders or its
representatives to investigate and verify the accuracy of the information
furnished to Lenders in connection with the Loan Documents and to discuss
all such matters with its officers, employees and representatives.
(ii) On a Monthly basis or in any event no less than once each
Quarter, TOGA will review with Agent (an "Operations Review") all
operational activities on the Subject Properties in sufficient detail so as
to give a full account and reconciliation of operational and financial
progress from the Closing and from any preceding Operations Review, to the
extent that such information has been provided by the operator to the
Project, and Such Operations Reviews will include, but not be limited to,
progress as of such date on the Approved Plan of Development, any
substitutions or changes to the Approved Plan of Development requested by
Lenders, and changes to the Approved Plan of Development due to cost or
expense overruns, under-runs, unanticipated mechanical problems or
differences in reserve or production estimates. Such Operations Reviews
shall include, to the extent permitted by the operator of the particular
Property, on-site inspections at the Project either by two of Lenders'
representatives once per Calendar Year or by one of Lenders'
representatives twice per Calendar Year, which inspections shall be at
Borrower's expense.
(iii) Each of the Lenders, Holders, Agents and Collateral Agent agrees
that it will take all reasonable steps to keep confidential any proprietary
information given to it by Borrower or TOGA; provided, however, that this
restriction shall not apply to information which has at the time in
question entered the public domain; provided further that any such party
may disclose any such information to the limited extent that such
information (i) is required to be disclosed by law or by any order, rule or
regulation (whether valid or invalid) of any court or governmental agency,
or any regulatory authority (whether or not governmental); (ii) is
disclosed to the Affiliates, auditors, attorneys, or agents of the Lenders,
provided that such Persons agree to keep any such information confidential
to the same extent as any such party is required to; (iii) is furnished to
any purchaser or prospective purchaser of participations or other interests
in the Loans or the Notes, provided that such Persons agree to keep any
such information confidential to the same extent as such party is required
to; or (iv) is disclosed by such party in the course of collecting the
obligations or enforcing its
47
rights under the Loan Documents following the occurrence of an Event of
Default without violating such party's confidentiality obligations to
Borrower or TOGA.
(iv) Borrower, TOGC and TOGA will furnish to the Lenders at
Borrower's, TOGC's or TOGA's, respectively, expense, copies of all
pleadings, motions and other filings made in the Tri-Star Litigation within
ten (10) days of any such filing or its service upon Borrower, TOGC or
TOGA.
(v) The Lenders shall be entitled to have observers to the
Borrower's and TOGA's Board of Directors ("Board") who shall have the right
to attend and receive all materials distributed for or at all meetings
(telephonic and otherwise) of directors and shall be entitled to the same
rights expense reimbursement rights as directors of the Borrower and TOGA,
except that such observers shall not be entitled to vote on matters
presented to or discussed by the Board nor participate in attorney-client
privileged discussions or receive or review any documents subject to an
attorney-client or attorney work product privilege. Lenders will be
notified of all meetings of and all proposed actions by the Board as if a
representative of each Lender were a member of the Board. Such observers
will receive no compensation for their services as observers, but shall be
entitled to be reimbursed by the Borrower or TOGA, respectively, for all
reasonable costs and expenses incurred in connection with their
participation in meetings or other activities of the Board.
(d) Notice of Material Events and Change of Address. Each of Borrower and
TOGA will notify the Lenders of any of the following events promptly, and in any
event within ten (10) Business Days, after learning of the event's occurrence:
(i) a Material Adverse Effect;
(ii) a Default;
(iii) (A) the acceleration of the maturity of any Debt owed by any
Related Person or (B) a default by any Related Person under any indenture,
mortgage, agreement, contract or other instrument to which such Related
Person is a party or by which it or any of its properties is bound, if such
acceleration or default would reasonably be expected to have a Material
Adverse Effect upon Borrower's or TOGA's financial condition or a Material
Adverse Effect on the value of the Collateral;
(iv) a claim of $250,000 or more, any claim or notice of potential
liability under any Environmental Laws, or any other material adverse claim
asserted against Borrower or TOGA or with respect to its properties;
(v) the filing of any suit or proceeding against any Related Person
in which an adverse decision would have a material probability of causing a
Material Adverse Effect;
48
(vi) a written notice, claim, allegation or assertion that Borrower,
TOGA or the Project is in violation or noncompliance of any Governmental
Rule of any Governmental Person having jurisdiction over Borrower, TOGA or
the Project, which violation or noncompliance would reasonably be expected
to have a Material Adverse Effect on Borrower, TOGA or any other Related
Person; and
(vii) if a Change in Control has occurred with respect to Borrower or
TOGA.
Upon the occurrence of any of the foregoing, Borrower and TOGA will take all
necessary or appropriate steps to remedy promptly any such Default under (ii)
above, Material Adverse Effect or acceleration; to protect against any such
adverse claim; to defend any such suit or proceeding; and to resolve all
controversies on account of any of the foregoing. Borrower or TOGA will also
notify Agent in writing at least twenty (20) Business Days prior to the date
that Borrower, TOGA or any of TOGA's Subsidiaries changes its name or the
location of its chief executive office or principal place of business or the
place where it keeps its books and records concerning the Collateral, furnishing
with such notice any necessary financing statement amendments or requesting
Agent and its counsel to prepare the same.
(e) Maintenance and Development of Properties; Maintenance of Agreements.
Each of Borrower and TOGA will or will cause the operator of the Project to the
extent of Borrower's and TOGA's abilities under the Project JOA, as applicable
to:
(i) maintain, preserve, protect and keep all Eligible Proved
Properties and all other Collateral used or useful in the conduct of its
business in good condition (normal wear and tear excepted) and in
compliance in all material respects with all applicable laws, rules and
regulations, except where (A) the necessity of compliance therewith is
contested in good faith by appropriate proceedings or (B) non-compliance
therewith would not have a Material Adverse Effect;
(ii) develop the Project in accordance with the Approved Plan of
Development;
(iii) from time to time make all repairs, renewals and replacements
needed to enable the Project and operations carried on in connection
therewith to be conducted at all times consistent with prudent industry
practices;
(iv) maintain bonding and insurance coverages, as set forth in
Schedule 6 hereto or as Approved by the Agent; and
(v) keep and perform all of the terms, covenants, and conditions of
the Loan Documents to which it is a party.
(f) Maintenance of Existence And Qualifications. Each of Borrower and TOGA
will:
49
(i) maintain and preserve its existence as a corporation under Texas
or Australian law, respectively, and its rights in full force and effect;
and
(ii) qualify to do business as a foreign corporation in every state
or jurisdiction where required to do so by applicable law, except in any
jurisdiction where no Collateral is located and the failure to qualify will
have no Material Adverse Effect.
(g) Payment of Trade Debt, etc. Each of Borrower and TOGA will:
(i) pay, within ninety (90) days after the date of invoice, any Debt
owed by it on ordinary trade terms to vendors, suppliers or other Persons
providing goods and services used by it in the ordinary course of its
business;
(ii) pay and discharge when due all other Debt, royalties and
encumbrances now or hereafter owed by it unless the same is being contested
in good faith by appropriate means and for which adequate cash reserves
have been established; and
(iii) maintain appropriate accruals and reserves for all of the
foregoing Debt in accordance with GAAP and Australian GAAP, as applicable.
Borrower or TOGA may, however, delay paying or discharging any such Debt so
long as it is in good faith contesting the validity thereof by appropriate
proceedings and has set aside on its books adequate reserves therefor.
(h) Payment of Taxes, etc. Each of Borrower and TOGA will:
(i) timely file all required tax returns;
(ii) timely pay all Taxes, assessments, and other governmental
charges or levies properly imposed upon it or upon its income, profits or
property; and
(iii) maintain appropriate accruals and reserves for all of the
foregoing Taxes in accordance with GAAP.
Borrower or TOGA may, however, delay paying or discharging any such Taxes
described in clauses (i) through (iii) above so long as it is in good faith
contesting the validity thereof by appropriate proceedings and has set aside
adequate cash reserves therefor.
(iv) Each of Borrower and TOGA agrees to pay or to cause to be paid
all governmental assessments, charges, taxes, levies, imposts or other
liabilities imposed by any Australian Governmental Person (including
Australian Withholding Taxes) including any interest or penalties thereon
and any stamp or documentary or other excise or property taxes, at any time
payable by it or ruled to be payable by it, by reason of any Australian
Governmental Person or
50
Australian Governmental Rule (collectively, "Taxes"), and to indemnify and
hold the Holders and Collateral Agent harmless against liability fees or
additional expense with respect to or in connection with any such Taxes.
Each of Borrower and TOGA hereby further agrees as follows:
(A) Any and all payments made by Borrower and TOGA hereunder
and under any of the other Loan Documents, whether of principal,
Coupon Interest, Royalty, expenses or otherwise shall be free and
clear of and without deduction or withholding for any and all Taxes
and all liabilities with respect thereto including Australian
Withholding Taxes. If TOGA shall be required by law to deduct or
withhold any Taxes (including Australian Withholding Taxes) from or in
respect of any sum payable to the Collateral Agent or any Holder
hereunder or under any of the other Loan Documents, the sums payable
under the Notes or the Loan Documents shall be increased as may be
necessary so that after making all required deductions and
withholdings (including deductions or withholdings applicable to
additional sums payable under this paragraph) the Holders or
Collateral Agent receives an amount equal to the sum it would have
received had no such deductions or withholdings been made. TOGA shall
make such deductions or withholdings and Borrower and TOGA shall pay
the full amount deducted or withheld to the relevant Australian or
other foreign taxation authority or other Australian or other foreign
authority in accordance with applicable law.
(B) Indemnitors shall indemnify the Holders and Collateral
Agent for the full amount of Taxes paid by the Holders and Collateral
Agent and any liability (including penalties, interest and expenses)
arising therefrom or with respect thereto, whether or not such Taxes
were correctly or legally asserted, provided, that any refunds for any
Taxes incorrectly paid shall be remitted to Borrower promptly upon
receipt by Collateral Agent or any Holder, to the extent such refunds
are received by Collateral Agent, or any Holder and are not otherwise
necessary to pay any Obligations then due and payable. Payments under
this indemnification shall be made within thirty (30) days from the
date the Holders, or Collateral Agent makes written demand therefor
after payment of such Taxes. A certificate as to the amount of such
Taxes and the calculation thereof (if determinable), submitted to
Borrower by the Holders or Collateral Agent shall be conclusive and
binding for all purposes, absent manifest error. With respect to any
payment request made by any Person pursuant to the tax indemnity set
forth in this clause (B), if the Borrower shall request, such Person
shall in good faith at Borrower's expense contest the imposition of or
the amount of any such request amount, keep the Borrower reasonably
informed in respect thereof, consult in good faith with the counsel to
Borrower regarding such contest, and shall not compromise or otherwise
settle such contest without the consent of Borrower.
51
(v) Upon the reasonable request of Holder, TOGA and Borrower shall
furnish to the Holder copies of the presented forms filed in connection
therewith and the original or a certified copy of a receipt or certificate
evidencing payment thereof. Without prejudice to the survival of any other
agreement of Borrower or TOGA hereunder, the agreements and obligations of
Borrower and TOGA contained in this Section 5.1 shall survive for a period
of ten (10) years after the date of termination hereof.
(i) Payment of Expenses. Whether or not the transactions contemplated by
this Agreement are consummated, Borrower will promptly (and in any event, within
fifteen (15) days after any invoice or other statement or notice) pay all
reasonable costs and expenses incurred by or on behalf of the Lenders, Holders,
Agent or Collateral Agent (including reasonable attorneys' fees) in connection
with (A) the negotiation, preparation, execution and delivery of the Loan
Documents, and any and all amendments, consents, waivers or other documents or
instruments relating thereto, (B) the filing, recording, refiling and re-
recording of any Loan Documents and any other documents or instruments or
further assurances required to be filed or recorded or refiled or re-recorded by
the terms of any Loan Document, (C) the borrowings hereunder and other action
reasonably required in the course of administration of the various Loan
Documents (except for allocations of indirect overhead costs of the Lenders or
its affiliates), (D) the defense or enforcement of the Loan Documents or the
Lenders', Holders' Agent's or Collateral Agent's exercise of their rights
thereunder, and (E) Borrower's or TOGA's performance of its obligations and the
Lenders', Holders', Agent's or Collateral Agent's exercise of their or its
rights under Sections 5.1(c)(i) and (ii).
Notwithstanding anything to the contrary herein, on the Initial Funding
Date and the date of each Advance thereafter, and in any event no later than
fifteen (15) days after receipt of invoices for the following, Borrower shall
pay to the Lenders the reasonable fees, office charges and expenses of Milbank,
Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP and MinterEllison, counsel to Agent, Collateral Agent
and the Lenders. Notwithstanding anything to the contrary herein, on or before
the Initial Funding Date, Borrower shall pay to the Lenders:
(A) the Yield Adjustment Payment;
(B) $30,000 for payment of out-of-pocket costs and expenses
incurred by or on behalf of the Lenders, Holders, Agent, Collateral
Agent as of the Initial Funding Date which has been paid prior to the
execution of this Agreement; and
(C) the reasonable fees, office charges and expenses of
Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP and MinterEllison, counsel to
Agent, Collateral Agent and the Lenders.
Borrower's obligations under this subsection shall survive the payment of the
Notes.
(j) Performance on Borrower's Behalf. If Borrower or TOGA fails to pay any
taxes, insurance premiums, expenses, attorneys' fees or other amounts it is
required to pay under any Loan Document, Holders, Agent or Collateral Agent may
pay the same after giving
52
ten (10) Business Days' prior notice to Borrower or TOGA, respectively, of the
intended payment (except in cases of exigent circumstances, such as the imminent
termination of insurance coverage, where such notice shall not be required).
Borrower or TOGA, respectively, shall immediately reimburse Holders, Agent or
Collateral Agent for any such payments and each amount paid by Holders, Agent or
Collateral Agent shall constitute an Obligation owed under this Agreement which
is due and payable on the date such amount is paid by Holders, Agent or
Collateral Agent and shall accrue interest from such date at the Late Payment
Rate.
(k) Compliance with Agreements and Law. Each of Borrower and TOGA will
perform all material obligations it is required to perform under the terms of
each indenture, mortgage, deed of trust, security agreement, lease, franchise,
agreement, contract or other instrument or obligation to which it is a party or
by which it or any of its properties is bound. Each of Borrower and TOGA will
conduct its business and affairs in compliance in all material respects with all
laws, regulations, and orders applicable thereto, including applicable
Environmental Laws, and, within two (2) years of the Initial Funding Date,
except where (i) the necessity of compliance therewith is contested in good
faith by appropriate proceedings (with bonds, cash reserves or other assurance
of compliance reasonably satisfactory to the Lenders) or (ii) non-compliance
therewith would not have a Material Adverse Effect.
(l) Evidence of Compliance. Each of Borrower and TOGA will furnish to
Holders, Agent or Collateral Agent at Borrower's expense all evidence which
Holders, Agent or Collateral Agent from time to time reasonably request as to
the accuracy and validity of, or compliance in all material respects with, all
representations, warranties and covenants made by Borrower or TOGA in the Loan
Documents, the satisfaction of all conditions contained therein, and all other
matters pertaining thereto.
(m) Execution of Supplements to Royalty Agreement; Assignment of Royalties
from Comet Ridge Participants. Borrower shall execute and deliver to Royalty
Payee from time to time, upon request of Royalty Payee, Supplements to the
Royalty Agreement agreeing to pay, and Borrower hereby agrees to pay, overriding
royalties in the form of Exhibit T (collectively, the "Supplement to Royalty
Agreement") with respect to all properties, authorities to prospect, licenses,
leases, ▇▇▇▇▇ and other interests (determined in as broad a manner as
practicable with reference to lands covered by any of the foregoing and not just
with respect to ▇▇▇▇▇, spacing units or well bores) (collectively, "Lands")
beneficially owned or in which interests are owned or held by TOGA or any
Subsidiary of TOGA, whether now or hereafter acquired, at any time after the
Closing Date through and including the Royalty Determination Date which Lands
are (1) categorized or include or have attributed to them reserves which are
categorized as Proved Reserves in any Engineering Report, including without
limitation the Engineering Report to be delivered pursuant to Section 5.1(b)(x),
upon either (i) the request of the Royalty Payee or (ii) the Royalty
Determination Date and (2) either comprise a portion of the Project or
constitute Non-Project Properties which have been developed by Capital
Expenditures which were either (i) funded directly or indirectly with the
proceeds of any Advance or (ii) Approved Capital Expenditures deducted in the
calculation of ANCF.
(n) Withdrawal as Operator. If at any time TOGA or any Affiliate thereof
assumes operations of the Project and an Event of Default occurs which is not
cured within one hundred twenty (120) days, TOGA will, or will cause its
Affiliate to, withdraw as operator of all
53
or a portion of the Project at the request of Lenders. TOGA will support
Lenders' designee as replacement operator.
(o) Execution of Other Instruments; Additional Acts. Each of Borrower and
TOGA shall do, execute, acknowledge and deliver, or cause to be done, executed,
acknowledged and delivered, such further instruments and documents in form and
substance reasonably satisfactory to Holders, Agent or Collateral Agent as such
Person may reasonably request from time to time in order to carry out the intent
and purpose of this Agreement and the other Loan Documents.
(p) Waiver of Litigation Payments. In the event that any action or lawsuit
is initiated by or on behalf of any of the Lenders, Holders, Agent, Collateral
Agent or their successors, transferees or assignees (such entity being referred
to in this Section 5.1 as "Plaintiff") in Australia or elsewhere against
Borrower or TOGA, each of Borrower and TOGA irrevocably waives its right to
have, and agrees not to request, plead or claim that, Plaintiff post, pay or
offer any "cautio judicatum solve" bond or "excepcion de arraigo" due to its
status as a foreign entity, and each of Borrower and TOGA further waives any
objection that it may now or hereafter have to a Plaintiff's claim that such
Plaintiff should be exempt or immune from posting, paying, making or offering
any such "cautio judicatum solvi" bond or "excepcion de arraigo" due to its
status as a foreign entity.
(q) Letters of Credit. The Borrower shall cause each of the Letters of
Credit to expire no earlier than one year after its issuance and to be reissued
or extended for subsequent periods of at least a one-year duration by a bank
Approved by Agent in its sole and absolute discretion. The final maturity of the
Letters of Credit shall fall on the ninetieth (90) day following the Maturity
Date. Borrower's failure to obtain the renewal of the Letters of Credit as
provided in the preceding sentence at least sixty (60) days prior to the
maturity date thereof shall entitle the Collateral Agent to fully draw the
entire face amount of such Letters of Credit. The Collateral Agent shall be
entitled to draw upon the Equity Letter of Credit at any time either (a)
Collateral Agent decides the funds are needed by Borrower, TOGC or TOGA to pay
any amounts due hereunder or under any other Loan Document or any Permitted
Capital Expenditure or ▇▇▇, (b) there shall exist an Event of Default or (c)
after the Loan Advances exceed $12,000,000 in the aggregate. The Collateral
Agent shall be entitled to draw upon the Tri-Star Litigation Indemnity Letter of
Credit at any time Borrower, TOGC or TOGA shall fail to pay any amount due under
the Tri-Star Litigation Indemnity for any reason whatsoever. In the event Slough
ceases to be the sole account party with respect to either Letter of Credit then
(1) Borrower shall give notice thereof to Agent within ten (10) Business Days
after the date (the "AP Replacement Date") any other party becomes an account
party with respect to a Letter of Credit and (2) no later than thirty (30) days
after the AP Replacement Date Borrower shall cause any other account party with
respect to a Letter of Credit to execute and deliver an agreement and
subordination agreement in substance equivalent to the agreement and
subordination agreement executed and delivered by Slough and described in
Section 3.1(a)(xviii).
Section 5.2 Negative Covenants. To conform with the terms and conditions
under which the Lenders are willing to have credit outstanding to Borrower, and
to induce the Lenders to enter into this Agreement and make the Loans, each of
Borrower and TOGA
54
warrants, covenants and agrees that until the full and final payment of the
Obligations and the termination of this Agreement, unless the Lenders have
previously agreed otherwise:
(a) Restricted Debt. TOGA will not in any manner owe or be liable for
Restricted Debt, except for Permitted Debt.
(b) Limitation on Liens. TOGA will not create, assume or permit to exist
any Lien upon any of the properties or assets relating to the Project which TOGA
now owns or hereafter acquires, except Permitted Liens. Borrower will not
create, assume or permit to exist any Lien upon (i) any of the capital stock of
TOGC or (ii) any of the Collateral which Borrower or any subsidiary of Borrower
now owns or hereafter acquires.
(c) No Mergers. Without Agent's prior written consent, neither Borrower
nor TOGA will merge or consolidate with or into any other business entity,
create any additional Subsidiaries of TOGA other than those in existence on the
date hereof or enter into any contracts (including contracts to borrow money)
with any Subsidiaries of TOGA.
(d) Limitation on Sales of Property. TOGA will not sell, transfer, lease,
exchange, discount, assign, abandon, surrender, alienate or dispose of any
interest in the Project or any material interest therein, including without
limitation the Collateral, without the express written consent of Agent except
for any equipment or other tangible personal property which is replaced by
comparable equipment or other tangible personal property of equal or greater
mutability or value. Borrower will not sell, transfer, lease, exchange,
discount, assign, abandon, surrender, alienate or dispose of (i) any capital
stock or other equity of TOGC or any debt Obligation owed by TOGC to Borrower or
(ii) any part of the Collateral or any material interest therein without the
express written consent of Agent.
(e) Limitation on Affiliate Payments. TOGA shall not make any
distributions or Affiliate Payments except for Permitted Borrower Payments.
(f) Limitation on Investments and New Business. TOGA will not:
(i) make any expenditure or commitment or incur any obligation or
enter into or engage in any transaction except in the ordinary course of
business;
(ii) engage directly or indirectly in any business or conduct any
operations except in connection with or incidental to its present business;
or
(iii) without prior approval of the Agent, form or acquire any or make
any other acquisitions of or capital contributions to or investments in any
Person, other than Permitted Investments and as contemplated in Section
2.4(c).
(g) Limitation on Credit Extensions. Except for Permitted Investments or
the extension of trade credit in the ordinary course of business as operator of
oil and gas properties, TOGA will not extend credit, make advances or make
loans.
55
(h) Transactions with Affiliates. Except for investments otherwise
expressly permitted under this Agreement, TOGA will not engage, without Agent's
prior written approval, in any material transaction with any other Related
Person or any Affiliate thereof.
(i) Certain Contracts: Amendments; Multiemployer ERISA Plans. TOGA will
not:
(i) enter into any "take-or-pay" contract or other contract or
arrangement for the purchase of goods or services which obligates TOGA to
pay for such goods or service regardless of whether they are delivered or
furnished to it;
(ii) incur any obligation to contribute to any "multiemployer plan"
as defined in Section 4001 of ERISA;
(iii) amend or permit any change to any material terms of any Project
Document (except, in each case, with the approval of Agent, which approval
shall not be unreasonably withheld or delayed);
(iv) waive any default under, or breach of, any Project Document or
waive, fail to enforce, forgive, compromise, settle, adjust or release any
right, interest or entitlement, howsoever arising, under, or in respect of
any Project Document;
(v) exercise any right to initiate an arbitration proceeding under
any Project Documents (except, in each case, with the approval of Agent
which approval shall not be unreasonably withheld or delayed);
(vi) petition, request or take any other legal or administrative
action that seeks, or may reasonably be expected, to cancel, suspend, void,
or terminate any Project Document; or
(vii) amend or permit any change to any contract or lease which
releases, qualifies, limits, makes contingent or otherwise detrimentally
affects the rights and benefits of Holders, Agent or Collateral Agent under
or acquired pursuant to any Security Documents.
Furthermore, TOGA will insure that no other Related Person makes or permits any
amendment described in clause (vii) above.
(j) Limitation on TOGA's G&A Costs. TOGA shall not incur or expend any G&A
Costs other than Permitted G&A Costs.
(k) Minimum Working Capital. TOGA and its Subsidiaries, if any, will
maintain consolidated working capital ("Working Capital") of at least $1,000,000
(excluding, so long as no default exists, the maturities on the Notes) at all
times. For the purpose of calculating working capital, the following accounts
receivable shall be excluded: (i) those owing by shareholders, Affiliates,
directors or employees, (ii) those payable greater than sixty (60) days
56
after the end of the related production month and (iii) those outstanding
greater than one hundred twenty (120) days after the end of the related
production month.
(l) Press Releases; Public Announcements. Neither Borrower nor TOGA will
make or permit any public announcement or press release respecting the
transactions contemplated herein or any agreements related hereto without the
Agent's prior Approval unless required by law to comply with disclosure
requirements.
(m) Discretionary Spending. To the extent not advanced or reimbursed by a
Related Party as Inter-company Debt or a Capital Contribution to TOGA, TOGA will
not, in the aggregate, expend amounts exceeding $100,000 per year other than
those amounts specifically contemplated in the Approved Plan of Development,
excluding any amounts funded by Borrower as a capital contribution to TOGA.
(n) Limitation on Issuance of Capital Stock. TOGA will not issue any
voting or non-voting capital stock to any Person unless such Person concurrently
with the issuance thereof pledges such stock to Collateral Agent to secure the
Obligations by a perfected first priority Lien pursuant to a pledge agreement in
form substantially equivalent to the TOGC Pledge and Security Agreement.
Borrower will not permit any issuance of capital stock by TOGC to any party
other than Borrower.
Section 5.3 Coverage Ratio.
From and after the Closing Date, Borrower and TOGA in the aggregate shall
maintain a Coverage Ratio (as defined below) of at least 150% at all times while
any of the Obligations under the Loan Documents remain outstanding. If any
Coverage Deficiency exists, Borrower and TOGA shall as soon as reasonably
commercially practicable after obtaining knowledge thereof cure such Coverage
Deficiency, either by furnishing and mortgaging additional engineered producing
oil and gas ▇▇▇▇▇ satisfactory to Lenders in order to increase Modified NPV10 or
by making payments (or identifying and segregating cash in the TOGA Dollar
Collateral Account) in order to reduce the Adjusted Investment. If any Coverage
Default exists, Borrower and TOGA shall within thirty (30) days after obtaining
knowledge thereof cure such Coverage Default, either by furnishing and
mortgaging additional engineered producing oil and gas ▇▇▇▇▇ satisfactory to
Lenders in order to increase Modified NPV10 or by making payments (or
identifying and segregating cash in the TOGA Dollar Collateral Account) in order
to reduce the Adjusted Investment. As used in this Section 5.3, "Coverage Ratio"
means at any time in question the quotient obtained by dividing:
(i) The sum of (A) the Total Modified NPV10 as determined from the
Engineering Report most recently prepared as of such time (which report
shall adjust the projected cash flow and volumes of oil and gas reserves
produced since the last report and engineering of new ▇▇▇▇▇ all in a manner
satisfactory to Lenders) and (B) the Working Capital (if positive);
by
(ii) the Adjusted Investment at such time.
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ARTICLE 6
SECURITY
Section 6.1 The Security. The Obligations will be secured by perfected
first-priority liens (subject only to Liens permitted under Section 5.2(b) if
expressly permitted to be senior to the Liens securing the Obligations) in the
Collateral and all other assets under the Security Documents listed in the
Security Schedule, and by the liens and security interests (including security
interests in the shares of TOGA) granted in any additional Security Documents
hereafter delivered by any Related Person and accepted by Agent or Collateral
Agent.
Section 6.2 Agreement to Deliver Security Documents. Borrower agrees to
deliver or cause to be delivered, to further secure the Obligations whenever
requested by Agent or Collateral Agent in its sole and absolute discretion,
deeds of trust, mortgages, chattel mortgages, security agreements, financing
statements and other Security Documents in form and substance satisfactory to
Collateral Agent for the purpose of granting, confirming, and perfecting first
and prior liens or security interests in any real or personal property of
Borrower or TOGA. Without limitation of the foregoing, Borrower hereby agrees
(i) to give Collateral Agent notice of any change in the nature of the interest
of TOGA in the Petroleum Leases and Authorities to Prospect in the Project
Properties and Non-Project Properties from such interests as of April 28, 2000
(including without limitation TOGA acquiring a registered interest in any such
lease or ATP or an interest in any of the lands covered thereby) not later than
ten (10) Business Days after the date upon which such change occurs and (ii) to
deliver or cause to be delivered such charge documents or amendments to charge
documents and Governmental Approvals (including any required under the Petroleum
Act of Queensland) as requested by Agent or Collateral Agent in its sole and
absolute discretion to grant, confirm and/or perfect a first and prior lien,
security interest or charge on, in or over such interests.
Section 6.3 Perfection and Protection of Security Interests and Liens.
Each of Borrower, TOGC and TOGA will from time to time deliver to Collateral
Agent any financing statements, continuation statements, extension agreements
and other documents properly completed and executed (and acknowledged when
required) by the Related Persons in form and substance satisfactory to
Collateral Agent, which Agent or Collateral Agent requests for the purpose of
perfecting, confirming, or protecting any Liens or other rights in Collateral
securing any Obligations.
Section 6.4 Appointment of Agent and Collateral Agent.
(a) Agent. Each Lender, for itself in the capacity in which it is acting
herein, and each other Holder hereby appoints TAMCO as agent (together with its
successors in such capacity herein called "Agent") to act for and on behalf of
the Lenders and each other Holder under or pursuant to this Agreement and the
other Loan Documents, and TAMCO hereby accepts such appointment. Agent is
authorized to act on behalf of the Lenders and each other Holder in (i)
exercising rights and remedies with respect to Collateral (which may be
delegated to Collateral Agent) or with respect to any other matter under any of
the Loan Documents, (ii) giving notices or instructions to Borrower and TOGA,
(iii) receiving information from or notices by Borrower and TOGA, and (iv)
communicating to Borrower and TOGA determinations
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required or permitted to be made under this Agreement or any other Loan
Document. Agent may, on behalf of any Lender and any other Holder, take any
other action which such Lender or such Holder is entitled to take hereunder or
under any of the Loan Documents. Such appointment of TAMCO as Agent shall not,
however, impair or modify any rights, obligations or duties which TAMCO or any
Affiliate of TAMCO otherwise has with respect to any Lender or any other Holder.
In its administration of this Agreement and the other Loan Documents, except to
the extent to which another standard applies to TAMCO by reason of any other
document between TAMCO and the Lenders or other Holder, Agent will exercise the
same care that it exercises in the administration or handling of transactions
for its own account, subject, however, to subsection (h) below.
(b) Collateral Agent. Each Lender, for itself in each capacity in which it
is acting herein, and each other Holder hereby appoints TAMCO as Collateral
Agent (herein, together with its successors and assigns in such capacity,
"Collateral Agent") under the Loan Documents, to exercise such powers under the
Loan Documents as are delegated to Collateral Agent by the terms thereof,
together with all such powers as are reasonably incidental thereto, including
taking, holding and disposing of the Collateral. TAMCO hereby accepts such
appointment. Collateral Agent shall act for and on behalf of the Lenders and the
Holders in connection with all Collateral and Security Documents. In its
administration of this Agreement and the other Loan Documents, except to the
extent to which another standard applies to TAMCO by reason of any other
document between TAMCO and the Lenders and any other Holder, Collateral Agent
will exercise the same care that it exercises in the administration or handling
of transactions for its own account, subject, however, to subsection (h) below.
(c) Requisite Holders. Except with respect to any matters expressly
provided for by this Agreement, the Notes, the Security Documents, any other
Loan Documents or the TCW Governing Documents (as defined in subsection (d)(iii)
below), each Holder agrees that neither Agent nor Collateral Agent shall be
required to exercise any discretion or take any action, but shall be required to
act or to refrain from acting (and each Holder agrees that Agent and Collateral
Agent shall be fully protected in so acting or refraining from acting) upon the
written instructions of the Requisite Holders. For the purpose hereof, the
"Requisite Holders" shall mean, at any time, the Holders holding at least sixty-
six and two-thirds percent (66 2/3%) of the outstanding principal amount of all
Notes. The Requisite Holders may, in their reasonable discretion, remove TAMCO
from its respective appointments as Agent and Collateral Agent and then select a
new party to fulfill, in accordance with the terms hereof, such positions. All
powers of Agent and Collateral Agent shall be exercised for the benefit of all
Holders and in accordance with the directions of the Requisite Holders. Agent
and Collateral Agent shall take every reasonable action to implement the
Requisite Holders' directions. If any Note is ever held by any Person other than
the original Holders in accordance herewith, Agent and Collateral Agent may
insist on the execution of any agency agreement among all holders of Notes, in
form satisfactory to Agent and Collateral Agent and providing for satisfactory
indemnification, before carrying out any further actions under the Loan
Documents. Until any such agency agreement is executed: (i) Agent and Collateral
Agent shall be fully protected in acting on the instructions of Persons holding
Notes representing sixty-six and two-thirds percent (66 2/3%) or more of the
aggregate principal indebtedness owing under all Notes in the manner described
herein; (ii) TAMCO shall have the right to withdraw as Agent and Collateral
Agent, respectively, subject, however, to its rights an duties under any other
agreements with the Lenders or any other Holder;
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and (iii) any action of Collateral Agent under any Security Document shall be
binding on the Lenders and Holders.
(d) Limitation of Duties and Fiduciary Relationship. Neither Agent nor
Collateral Agent shall have any duties or responsibilities, except those
expressly set forth in:
(i) this Agreement;
(ii) the Security Documents; and
(iii) the other documents entered into between Trustco and TAMCO
described in the definitions of "Lenders" and "Holders" (such other
documents, collectively the "TCW Governing Documents"),
nor shall Agent or Collateral Agent have any additional fiduciary relationship
with any Holder arising under this Section 6.4 and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or the other Loan Documents against Agent or Collateral
Agent.
(e) Distribution of Proceeds. The Holders shall share in the proceeds
obtained by Agent and in any other benefit either arising under the Loan
Agreement, the Notes and the Security Documents or obtained by Agent or
Collateral Agent in connection therewith, in the relative proportions which the
amounts then owed by Borrower to each of the Holders bear to the total amount
then owed by Borrower to all of the Holders; provided that Agent and Collateral
Agent shall be the first to be reimbursed for all costs and expenses incurred on
behalf of all parties in their respective capacities as Agent and Collateral
Agent to the extent permitted by the TCW Governing Documents. The duties
undertaken by Agent and Collateral Agent have been undertaken as an
accommodation to the Holders and, accordingly, Agent and Collateral Agent shall
not be compensated for their services hereunder except as provided in the TCW
Governing Documents.
(f) Written Directions. Agent or Collateral Agent may at any time request
written directions from all the Holders with respect to (i) any interpretation
of this Agreement, the Notes and the Security Documents, or (ii) any action to
be taken or not to be taken hereunder or thereunder and may withhold any action
until such directions have been received from the Requisite Holders. Agent and
Collateral Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement in accordance with a direction of
the Requisite Holders under the terms of this Agreement and such request and any
action taken or withheld pursuant to such direction shall be binding upon all
the Holders.
(g) Agents and Attorneys. Agent or Collateral Agent may execute any of its
respective duties under this Agreement, the Notes and the Security Documents by
or through agents or attorneys selected by Agent or Collateral Agent,
respectively, using reasonable care. Neither Agent nor Collateral Agent shall be
responsible for the negligence or misconduct of any agents or attorneys so
selected. Agent and Collateral Agent shall be entitled to the advice of counsel
concerning all matters pertaining to their respective duties hereunder.
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(h) Limitation of Liability. Agent, Collateral Agent, and their respective
officers, directors, employees, agents, attorneys-in-fact and affiliates shall
not:
(i) be liable for any action taken or omitted to be taken by any of
such Persons or for any error in judgment under or in connection with this
Agreement, the Notes and the Security Documents, except for any such
Person's gross negligence or willful misconduct; or
(ii) be responsible in any manner to any Holder or any other Person
for any failure of any other party to perform its obligations under this
Agreement, the Notes and the Security Documents.
Nothing in this subsection, however, shall be deemed to limit or restrict any
liability, fiduciary duty or responsibility of TAMCO in any capacity other than
as Agent or Collateral Agent, including any liability, fiduciary duty or
responsibility under the TCW Governing Documents.
(i) Reliance upon Documentation. Agent or Collateral Agent shall be
entitled to rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or any telephone conversation believed, respectively, by Agent or
Collateral Agent to be genuine and correct and to have been signed, sent, made
or spoken by the proper person or persons, and upon the advice and statements of
legal counsel, independent accountants and other experts selected, respectively,
by Agent or Collateral Agent.
(j) Reliance by Borrower and TOGA. Each Lender and each Holder agree that,
prior to the delivery to Borrower, TOGC or TOGA of a notice of the removal or
termination of TAMCO as Agent as set forth below, Borrower, TOGC and TOGA shall
be entitled to rely on TAMCO's or any subsequent Agent's authority to act on
behalf of each Lender and each Holder in all dealings with TAMCO (or any such
subsequent Agent) with respect to the Loans and the Loan Documents; Borrower,
TOGC and TOGA shall be protected in relying on actions, communications, notices
and terminations relating thereto or required or permitted thereunder by Agent;
and Borrower, TOGC and TOGA shall discharge their obligations under this
Agreement and the Loan Documents by delivering payments, notices and other
information to Agent. In the event of the removal of Agent and the appointment
of a successor Agent by Holders, Borrower, TOGC and TOGA shall not be required
to recognize any such removal or appointment unless and until Borrower, TOGC or
TOGA shall have received a writing setting forth such removal and appointment
executed by the Requisite Holders, and Borrower, TOGC and TOGA shall be entitled
to rely on such writing as being genuine and what it purports to be without any
necessity of any investigation whatsoever. Borrower, TOGC and TOGA shall be
entitled to rely upon the actions, communications and notices of TAMCO with
respect to the Collateral until Borrower, TOGC or TOGA receives notice in
writing from Agent that TAMCO has resigned or been replaced as Collateral Agent.
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ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 Events of Default.
(a) If any of the following events shall occur and be continuing, it
shall constitute an "Event of Default" under this Agreement:
(i) Borrower or any Related Person fails to pay any Obligation
when due and payable, whether at a date for the payment of a fixed
installment or as a contingent or other payment becomes due and payable
or as a result of acceleration or otherwise and such failure continues
for ten (10) Business days thereafter.
(ii) Any "default" or "event of default" occurs under any Loan
Document which defines either such term and such occurrence is not
remedied within the applicable period of grace (if any) provided in such
Loan Document.
(iii) Borrower, TOGA or any Related Person fails (other than as
referred to in paragraphs (i) and (ii) above) to duly observe, perform
or comply with any covenant, agreement, condition or provision of any
Loan Document, and such failure is not remedied within thirty (30) days
after Borrower, TOGA or any Related Person first learns of such failure
(whether by notice from the Lenders or otherwise);
(iv) Any representation or warranty previously, presently or
hereafter made in writing by or on behalf of Borrower, TOGA or any
Related Person in connection with any Loan Document shall prove to have
been false or incorrect in any material respect on any date on or as of
which made, or any Loan Document at any time ceases to be valid, binding
and enforceable in any material respect as warranted in Section 4.1(e)
for any reason other than its release or subordination by the Lenders or
Collateral Agent;
(v) Borrower, TOGA or any Related Person fails to duly observe,
perform or comply with any agreement with any Person or with any
material term or condition of any instrument, if such agreement or
instrument is material to the business or financial condition of
Borrower or TOGA, if the effect of such event is to cause or (with the
giving of notice or lapse of time or both) to permit such agreement or
instrument to be modified or terminated;
(vi) (A) Borrower or TOGA fails to pay when due any portion in
excess of $100,000 of any of its Debt and such failure continues for
sixty (60) days unless the same is being contested in good faith and for
which adequate cash reserves have been established, or (B) Borrower or
TOGA breaches or defaults in the performance of any material term or
condition of any agreement or instrument by which any such Debt is
issued, evidenced, governed, or secured, and any such
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failure, breach or default continues beyond any applicable period of
grace provided therefor unless the same is being contested in good
faith;
(vii) Either (A) any "accumulated funding deficiency" (as defined
in Section 412(a) of the Internal Revenue Code of 1986, as amended) in
excess of $100,000 exists with respect to any ERISA Plan, whether or not
waived by the Secretary of the Treasury or his delegate, or (B) any
Termination Event occurs with respect to any ERISA Plan and the then
current value of such ERISA Plan's benefit liabilities exceeds the then
current value of its assets available for the payment of such benefit
liabilities by more than $100,000 (or in the case of a Termination Event
involving the withdrawal of a substantial employer, the withdrawing
employer's proportionate share of such excess exceeds such amount);
(viii) Any Governmental Approval necessary for the execution,
delivery or performance of this Agreement, the Notes (i) any of the
other Loan Documents, or (ii) the validity or enforceability of
Borrower's, TOGA's or any Related Person's obligations under this
Agreement, the Notes or the other Loan Documents, is not effected or
given or is withdrawn or ceases to remain in full force and effect for a
period in excess of thirty (30) days;
(ix) The occurrence of any of the following with respect to
Borrower or TOGA:
(A) Borrower or TOGA suffers the entry against it of a
judgment, decree or order for relief by a court of competent
jurisdiction in an involuntary proceeding commenced under any
applicable bankruptcy, insolvency or other similar law of any
jurisdiction now or hereafter in effect, including the federal
Bankruptcy Code, as from time to time amended, or has any such
proceeding commenced against it which remains undismissed for a
period of sixty (60) days; or
(B) Borrower or TOGA commences a voluntary case under any
applicable bankruptcy, insolvency or similar law now or hereafter
in effect, including the federal Bankruptcy Code, as from time to
time amended; or applies for or consents to the entry of an order
for relief in an involuntary case under any such law; or makes a
general assignment for the benefit of creditors; or fails generally
to pay (or admits in writing Borrower's or TOGA's inability to pay)
its debts as such debts become due; or takes corporate or other
action to authorize any of the foregoing; or
(C) Borrower or TOGA suffers the appointment of or taking
possession by a receiver, liquidator, assignee, custodian, trustee,
sequestrator or similar official of all or a substantial part of
Borrower's or TOGA's assets or of any part of the Collateral in a
proceeding brought against or initiated by Borrower or TOGA, and
such appointment or taking possession is neither made ineffective
nor discharged within sixty (60)
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days after the making thereof, or such appointment or taking
possession is at any time consented to, requested by, or acquiesced
to by Borrower or TOGA; or
(D) Borrower or TOGA suffers the entry against it of a
final judgment for the payment of money in excess of $100,000 with
respect to Borrower and TOGA unless the same is discharged within
thirty (30) days after the date of entry thereof or an appeal or
appropriate proceeding for review thereof is taken within such
period and a stay of execution pending such appeal is obtained
prior to the first date on which such execution is allowed; or
(E) Borrower or TOGA suffers a writ or warrant of
attachment or any similar process to be issued by any court against
all or any substantial part of Borrower's or TOGA's assets or any
part of the Collateral, and such writ or warrant of attachment or
any similar process is not stayed or released within thirty (30)
days after the entry or levy thereof or after any stay is vacated
or set aside; or
(F) a Change in Control has occurred without the Approval
of the Agent.
(x) A Material Adverse Effect occurs and is not remedied within
thirty (30) days after a Related Person first learns of such occurrence
(whether by notice from the Lenders or otherwise);
(xi) TOGA shall be dissolved and shall not be reincorporated
within fifteen (15) days after the date of such dissolution;
(xii) Borrower shall be dissolved;
(xiii) This Agreement, the Notes or any Loan Document at any time
for any reason ceases to be in full force and effect, or is declared to
be void or is repudiated, or the validity or enforceability hereof or
thereof is at any time contested by Borrower, TOGA or any Related Person
or such documents ceases to give or provide the respective Liens,
rights, titles, remedies, powers or privileges intended to be created
thereby; and
(xiv) Any Governmental Person confiscates, takes, restricts,
appropriates, condemns, seizes or otherwise expropriates all or a
substantial portion of the Project or the properties, assets or the
capital stock of Borrower, TOGA or a Related Person, or assumes custody
or control or interferes with the administration or management of a
material part of such property or other assets or business operations of
Borrower or TOGA.
(b) Upon the occurrence of an Event of Default described in paragraph
(ix)(A), (ix)(B) or (ix)(C) of subsection (a) above, all of the Obligations
shall thereupon be immediately due and payable, without demand, presentment,
notice of demand or of dishonor
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and nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of any
kind, all of which are hereby expressly waived by Borrower, TOGA and each
Related Person who at any time ratifies or approves this Agreement. During the
continuance of any other Event of Default, the Agent or Requisite Holders at any
time and from time to time may without notice to Borrower, TOGA or any other
Related Person declare any or all of the Obligations immediately due and
payable, and all such obligations shall thereupon be immediately due and
payable, without demand, presentment, notice of demand or of dishonor and
nonpayment, protest, notice of protest, notice of intention to accelerate,
declaration or notice of acceleration, or any other notice or declaration of any
kind, all of which, to the extent provided by applicable law, are hereby
expressly waived by Borrower, TOGA and each Related Person who at any time
ratifies or approves this Agreement. After any such acceleration (whether
automatic or due to declaration by the Agent or Requisite Holders), any
obligation of the Lenders or Holders to make any further Advances or loans of
any kind under any agreement with Borrower shall be permanently terminated.
Section 7.2 Remedies. If any Event of Default shall occur and be
continuing, the Lenders may protect and enforce their rights under the Loan
Documents by any appropriate proceedings, including proceedings for specific
performance of any covenant or agreement contained in any Loan Document, and the
Lenders may enforce the payment of any obligations due or enforce any other
legal or equitable right. All rights, remedies and waivers conferred upon the
Lenders or Collateral Agent under the Loan Documents shall be deemed cumulative
and not exclusive of any other rights, remedies or powers available under the
Loan Documents or at law or in equity.
In addition to any and all other rights and remedies that the Holders
shall have, the Holders shall have the option to either:
(i) Maintain this Agreement in full force and effect and ▇▇▇
for the Principal Payments and Coupon Interest as they become due and
payable;
(ii) Accelerate all amounts due under the Notes and ▇▇▇ for the
Principal Payment and Coupon Interest as they become due and payable; or
(iii) Accelerate all amounts due under the Notes, and to collect
in addition to the amount of outstanding principal, accrued Coupon
Interest and other amounts owing with respect to the Obligations, all
costs and expenses of the Holders in enforcing these provisions,
including without limitation attorneys' fees and costs; and the Early
Payment Premium.
Section 7.3 Indemnity. Indemnitors jointly and severally agree to
indemnify the Lenders, the Holders, Agent and Collateral Agent and their
directors, officers, shareholders, partners, members, employees, affiliates and
professional advisers and consultants (collectively, "Indemnitees"), upon
demand, from and against any and all liabilities, obligations, claims, losses,
damages, penalties, fines, actions, judgments, suits, settlements, costs,
expenses or disbursements (including reasonable fees of attorneys, accountants,
experts and advisors) of any kind or nature whatsoever (in this Section 7.3
collectively called "liabilities and costs") which to any extent (in whole or in
part) may be imposed on, incurred by, or asserted against such
65
Indemnitees growing out of, resulting from or in any other way associated with
any of the Collateral, the Loan Documents, or the transactions and events
(including the enforcement or defense thereof) at any time associated therewith
or contemplated therein (including any violation or noncompliance with any
Environmental Laws by the Borrower, TOGA or any Related Person or any
liabilities or duties of the Borrower, TOGA or any Related Person or of such
Indemnities with respect to Hazardous Materials found in or released into the
environment); provided, however, that Borrower shall not be obligated to
indemnify Indemnitees for liabilities and costs attributable to taxes imposed on
Indemnitees or their income other than Australian Withholding Taxes. Without
limitation of the foregoing, the Indemnitors jointly and severally agree to
indemnify any Indemnitee for any liability or cost such Indemnitee may incur in
connection with the Tri-Star Litigation, whether such Indemnitee is named or
joined in such action, served with a subpoena, required to attend or produce any
discovery in connection with such action or otherwise incurs any liabilities or
costs in connection therewith (the "Tri-Star Litigation Indemnity"). THE
FOREGOING INDEMNIFICATION AGREEMENTS SHALL APPLY WHETHER OR NOT SUCH LIABILITIES
AND COSTS ARE IN ANY WAY OR TO ANY EFFECT CAUSED, IN PART BUT NOT IN WHOLE, BY
ANY NEGLIGENT ACT OR OMISSION OF ANY KIND BY THE INDEMNITEES, provided only that
any Indemnitee shall not be entitled under this Section 7.3 to receive
indemnification for that portion, if any, of any liabilities and costs which is
proximately caused by its own individual fraud, gross negligence or willful
misconduct, as determined in a final judgment, or by its own individual actions
with respect to Collateral in its possession. As used in this Section 7.3, the
term "Lenders" shall refer not only to the Persons designated as such in the
preamble hereto, but also to Trustco, TAMCO, and each director, officer, agent,
trustee, manager, attorney, employee, representative and Affiliate of any such
Person.
ARTICLE 8
MISCELLANEOUS
Section 8.1 Waivers and Amendments; Acknowledgment.
(a) Waivers and Amendments. No failure or delay (whether by course of
conduct or otherwise) by Lenders, Holders, Agent or Collateral Agent in
exercising any right, power or remedy which any of them may have under any of
the Loan Documents shall operate as a waiver thereof or of any other right,
power or remedy, nor shall any single or partial exercise by Lenders, Holders,
Agent or Collateral Agent of any such right, power or remedy preclude any other
or further exercise thereof or of any other right, power or remedy. No waiver of
any provision of any Loan Document and no consent to any departure therefrom
shall ever be effective unless it is in writing and signed by Agent or by
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Related Person shall in
any case of itself entitle any Related Person to any other or further notice or
demand in similar or other circumstances. This Agreement and the other Loan
Documents set forth the entire understanding and agreement of the parties hereto
and thereto with respect to the transactions contemplated herein and therein and
supersede all prior discussions and understandings with respect to the subject
matter hereof and thereof, and no modification or amendment of or supplement to
this Agreement or the other Loan Documents shall be valid or effective unless
the same is in writing and signed by the party against whom it is sought to be
enforced. THIS
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WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(b) Acknowledgments and Admissions. Each of Borrower and TOGA hereby
represents, warrants, acknowledges and admits that:
(i) it has been advised by counsel in the negotiation,
execution and delivery of the Loan Documents to which it is a party;
(ii) it has made an independent decision to enter into this
Agreement and the other Loan Documents to which it is a party, without
reliance on any representation, warranty, covenant or undertaking by the
Lenders, Holders, Agent or Collateral Agent, whether written, oral or
implicit, other than as expressly set out in this Agreement or in
another Loan Document delivered on or after the date hereof;
(iii) there are no representations, warranties, covenants,
undertakings or agreements by the Lenders, Holders, Agent or Collateral
Agent as to the Loan Documents except as expressly set out in this
Agreement or in another Loan Document delivered on or after the date
hereof;
(iv) neither the Lenders, Holders, Agent nor Collateral Agent
owes any fiduciary duty to Borrower or TOGA with respect to any Loan
Document or the transactions contemplated thereby;
(v) the relationship pursuant to the Loan Documents between
Borrower or TOGA, on one hand, and the Lenders, Holders, Agent or
Collateral Agent, on the other hand, is and shall be solely that of
debtor and creditor, respectively;
(vi) no partnership or joint venture exists with respect to the
Loan Documents between Borrower or TOGA and the Lenders, the Holders,
Agent or Collateral Agent;
(vii) should an Event of Default or Default occur or exist, each
of the Lenders, Holders, Agent and Collateral Agent will determine in
its sole discretion and for its own reasons what remedies and actions it
will or will not exercise or take at that time;
(viii) without limiting any of the foregoing, each of Borrower and
TOGA is not relying upon any representation or covenant by the Lenders,
Holders, Agent or Collateral Agent, or any representative thereof, and
no such representation or covenant has been made, that the Lenders,
Holders, Agent or Collateral Agent will, at the time of an Event of
Default or Default, or at any other time, waive, negotiate, discuss, or
take or refrain from taking any action permitted
67
under the Loan Documents with respect to any such Event of Default or
Default or any other provision of the Loan Documents; and
(ix) The Lenders have relied upon the truthfulness of the
acknowledgments in this Section 8.1 in deciding to execute and deliver
this Agreement and to make the Loans.
Section 8.2 Survival of Agreements; Cumulative Nature. All of the Related
Persons' various representations, warranties, covenants and agreements in the
Loan Documents shall survive the execution and delivery of this Agreement and
the other Loan Documents and the performance hereof and thereof, including the
making or granting of the Loans and the delivery of the Notes and the other Loan
Documents, and shall further survive until all of the Obligations are paid in
full to the Lender, Holders, Agent and Collateral Agent and all of the Lenders'
obligations to Borrower hereunder are terminated. The representations,
warranties, and covenants made by the Related Persons in the Loan Documents, and
the rights, powers and privileges granted to the Lenders, Holders, Agent and
Collateral Agent in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
the Lender, Holders, Agent or Collateral Agent of any such representation,
warranty, covenant, right, power or privilege. In particular and without
limitation, no exception set out in this Agreement to any representation,
warranty or covenant herein contained shall apply to any similar representation,
warranty or covenant contained in any other Loan Document, and each such similar
representation, warranty or covenant shall be subject only to those exceptions
which are expressly made applicable to it by the terms of the various Loan
Documents. Notwithstanding the foregoing, in the event of any inconsistency
between the terms of this Agreement and any other Loan Document, the terms of
this Agreement shall prevail.
Section 8.3 Notices. All notices, requests, consents, demands and other
communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document, and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower, TOGA and the Related
Persons and to the Lenders, Holders, Agent and Collateral Agent at the addresses
specified below (unless changed by similar notice in writing given by the
particular Person whose address is to be changed)
Borrower: Tipperary Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
68
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
Sixteenth Floor
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
TOGA: Tipperary Oil & Gas (Australia) Pty. Ltd (ACN
077 536 871)
Level 18, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Telephone: ▇▇-▇-▇▇▇▇-▇▇▇▇
Telecopy: ▇▇-▇-▇▇▇▇-▇▇▇▇
TOGC: Tipperary Corporation
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇▇▇ & ▇▇▇▇▇▇, P.C.
Sixteenth Floor
▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Lenders and Holders: Trust Company of the West
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: TCW Asset Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
69
With a copy to: Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Agent and Collateral Agent: Trust Company of the West
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: TCW Asset Management Company
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: Milbank, Tweed, ▇▇▇▇▇▇ & ▇▇▇▇▇▇ LLP
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇, Esq.
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
Section 8.4 Parties in Interest. All grants, covenants and agreements
contained in the Loan Documents shall bind and inure to the benefit of the
parties thereto and their respective successors and assigns; provided, however,
that no Related Person may assign or transfer any of its rights or delegate any
of its duties or obligations under any Loan Document without the prior consent
of the Lenders.
Section 8.5 Governing Law; Submission to Process. EXCEPT TO THE EXTENT
THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT,
THE LOAN DOCUMENTS, INCLUDING THIS AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF
TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT OR ANY OF ITS SUBSIDIARIES
IN ANY LEGAL PROCEEDING RELATING TO THE LOAN DOCUMENTS OR THE OBLIGATIONS BY
70
ANY MEANS ALLOWED UNDER NEW YORK OR FEDERAL LAW. BORROWER IRREVOCABLY WAIVES, TO
THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. BORROWER HAS APPOINTED CT CORPORATION AS ITS
AGENT FOR SERVICE OF PROCESS IN THE STATE OF NEW YORK AND SHALL NOTIFY THE
LENDERS IN WRITING OF ANY CHANGE IN SUCH APPOINTMENT (WHICH MAY BE CHANGED ONLY
TO ANOTHER CORPORATE AGENT HAVING AN ADDRESS IN NEW YORK, NEW YORK).
Section 8.6 Limitation on Interest.
(a) The Lenders, Holders, the Related Persons and any other parties to
the Loan Documents intend to contract in strict compliance with applicable usury
law from time to time in effect. In furtherance thereof, such Persons stipulate
and agree that none of the terms and provisions contained in the Loan Documents
shall ever be construed to create a contract to pay, for the use, forbearance or
detention of money, interest in excess of the maximum amount of interest
permitted to be charged by applicable law from time to time in effect. Neither
any Related Person nor any present or future guarantors, endorsers, or other
Persons hereafter becoming liable for payment of any Obligation shall ever be
liable for unearned interest thereon or shall ever be required to pay interest
thereon in excess of the maximum amount that may be lawfully charged under
applicable law from time to time in effect, and the provisions of this Section
8.6 shall control over all other provisions of the Loan Documents which may be
in conflict or apparent conflict herewith.
(b) The Lenders and Holders expressly disavow any intention to contract
for, charge or collect unearned interest or finance charges in the event the
maturity of any Obligation is accelerated. If (i) the maturity of any Obligation
is accelerated for any reason, (ii) any Obligation is prepaid and as a result
any amounts held to constitute interest are determined to be in excess of the
legal maximum, or (iii) the Lenders or any other Holder of any or all of the
Obligations shall otherwise collect moneys which are determined to constitute
interest which would otherwise increase the interest on any or all of the
Obligations to an amount in excess of that permitted to be charged by applicable
law then in effect, then all such sums determined to constitute interest in
excess of such legal limit shall, without penalty, be promptly applied to reduce
the then outstanding principal of the related Obligations or, at the Lenders' or
such Holder's option, promptly returned to Borrower or the other payor thereof
upon such determination.
(c) In determining whether or not the interest paid or payable under
any specific circumstances exceeds the maximum amount permitted under applicable
law, the Lenders, Holders and the Related Persons (and any other payors thereof)
shall, to the greatest extent permitted under applicable law, (i) characterize
any non-principal payment as an expense, fee or premium rather than as interest,
(ii) exclude voluntary prepayments and the effects thereof, and (iii) amortize,
prorate, allocate, and spread the total amount of interest throughout the entire
contemplated term of the instruments evidencing the Obligations in accordance
with the amounts outstanding from time to time thereunder and the Highest Lawful
Rate from time to time in
71
effect under applicable law in order to lawfully charge the maximum amount of
interest permitted under applicable law.
Section 8.7 Survival. Any waivers or admissions made by any Related
Person in any Loan Document and any obligations which any Person may have to
indemnify or compensate the Lenders, Holders, Agent or Collateral Agent shall
survive any termination of this Agreement or any other Loan Document.
Section 8.8 Severability. If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable, all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
Section 8.9 Counterparts. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
Section 8.10 Waiver of Jury Trial, Punitive Damages, Etc. EACH OF THE
BORROWER, TOGA, AGENT, COLLATERAL AGENT, LENDERS AND HOLDERS HEREBY:
(a) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY WAIVES, TO
THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR INDIRECTLY AT ANY
TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN DOCUMENTS OR ANY LOAN
CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR AFTER MATURITY;
(b) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW,
ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES;
(c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR AGENT OR
COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED
THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO ENFORCE THE
FOREGOING WAIVERS; AND
(d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT,
THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY
BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS
SECTION 8.10.
72
Section 8.11 Exhibits and Schedules; Additional Definitions. All Exhibits
and Schedules to this Agreement are a part hereof for all purposes. Certain
additional terms may be defined in the Security Schedule and used but not
defined in the body of this Agreement; reference is hereby made to the Security
Schedule for the meaning of any such terms.
Section 8.12 Confidentiality of Holders.
(a) Notwithstanding the termination of this Agreement and except as
otherwise provided in subsection (b), (c) or (d) below, Borrower shall maintain
the confidentiality of the identities of (i) any Holder or any holder of any
Obligation other than the Notes; (ii) any participant in any of the TCW Funds;
and (iii) any owner of a beneficial interest in the Notes (collectively,
"Confidential Information") and shall not, without Lenders' or the Holder's
prior written consent, disclose any such information to another Person or use
such information for purposes other than those contemplated herein.
(b) Borrower and TOGA may disclose at any time and to any Person the
fact that Trustco or TAMCO is a party hereto in various agency, custodial, or
fiduciary capacities, without disclosing the identities of the principals or
beneficiaries represented directly or indirectly by Trustco or TAMCO.
(c) Borrower and TOGA may disclose Confidential Information to its
directors, officers, employees, and agents (including attorneys, accountants,
and consultants) to whom such disclosure is reasonably necessary for the
execution or effectuation hereof, provided Borrower or TOGA, respectively,
notifies all such Persons that the Confidential Information disclosed to them is
subject to this Section 8.12 and requires them not to disclose or use such
information in breach of this Section 8.12.
(d) If Borrower or TOGA is requested or required by legal process
(including law or regulation, oral questions, interrogatories, request for
information or documents, subpoena, and civil investigative demand) to disclose
any Confidential Information, Borrower or TOGA, respectively, shall promptly
notify the Lenders or the particular Holder of such request prior to complying
with such process so that the Lenders or the particular Holder may seek an
appropriate protective order or waive the respondent's compliance with this
Section 8.12. If, after such notice and after providing the Lenders and such
Holder a reasonable opportunity to obtain a protective order or to grant such
waiver, Borrower or TOGA is nonetheless legally compelled to disclose such
information, Borrower or TOGA, respectively, may do so without liability under
this Section 8.12.
Section 8.13 Transfer of Notes. The Lenders and any Holder shall be
entitled to transfer all or a portion of its interests in the Notes to any
Holder or any Affiliate thereof, or to any other Person, provided that any such
transferee as a condition to such transfer shall execute and deliver a
counterpart to this Agreement as then in effect in the capacity as an assignee
Holder and shall thereby be deemed to have ratified and approved each of the
other Loan Documents then in effect. Upon surrender of any of the Notes by any
transferor Holder or any such transferee Borrower shall execute and deliver one
or more substitute notes in such denominations and of a like aggregate unpaid
principal amount issued to the Lenders or Holder
73
or to the designated transferee or transferees for the Lenders or Holder or to
the order of such transferees. The terms and provisions of this Agreement shall
inure to the benefit of any such assignee or transferee of the Notes or such
substitute note(s), and in the event of such transfer or assignment, the rights
and privileges herein conferred shall automatically extend to and be vested in
such transferee or assignee, all subject to the terms hereof. Until notified in
writing of the transfer of any Note(s) or substitute note(s), Borrower shall be
entitled to deem the Lenders or such Person who has been identified to Borrower
as the Holder of the Note(s) or substitute note(s), as the owner and Holder of
the Note(s) or substitute note(s).
Section 8.14 Reproduction of Documents. This Agreement and all documents
relating hereto may be reproduced by any party and by any photographic,
photostatic, microfilm, microcard, miniature photographic or other similar
process and any party may destroy any original documents so produced. Each of
the parties hereto agrees and stipulates that, to the extent permitted by
applicable law, any such reproduction shall be admissible in evidence as the
original itself in any judicial or administrative proceeding (whether or not the
original is in existence and whether or not such reproduction was made by you in
the regular course of business) and any enlargement, facsimile or further
reproduction of such reproduction shall likewise be admissible in evidence.
Section 8.15 Currency in Which Payments Shall Be Made. All payments made
by Borrower to any Lender, Holder, Agent or Collateral Agent hereunder or under
any Loan Document shall be made in Dollars.
Section 8.16 Judgments in Other Than Dollars. This is a loan transaction
that involves certain international components and in which the specification of
Dollars and payment in Los Angeles is of the essence, and the obligations of the
Borrower or TOGA under this Agreement or any of the other Loan Documents to make
payment to any Lender, Holder, Agent or Collateral Agent in Dollars shall not be
discharged or satisfied by any tender or recovery pursuant to any judgment
expressed in or converted into any other currency or in another place except to
the extent that such tender or recovery results in the effective receipt by such
Lender, Holder, Agent or Collateral Agent in Los Angeles of the full amount of
Dollars payable to such Lender, Holder, Agent or Collateral Agent under this
Agreement. If any judgment in favor of the Lenders, the Holders, the Agent or
the Collateral Agent, or with respect to the Obligations or any other
obligations of Borrower or TOGA under this Agreement cannot, for any reason, be
entered in terms of Dollars, the parties hereto expressly agree that the amount
of such judgment as denominated in a currency other than Dollars shall be
determined using the rate of exchange for such other currency viz Dollars on the
date of entry of judgment. Any payment made to or for the account of any Lender,
any Holder, the Agent or the Collateral Agent in respect of any amount payable
by Borrower or TOGA in Dollars which payment is made in currency of any other
country, whether pursuant to any judgment or order of a court or tribunal or
otherwise, shall constitute a discharge of Borrower or TOGA only to the extent
of the United States currency equivalent thereof using the Spot Rate on the date
payment is actually received by any Lender, any Holder, the Agent or the
Collateral Agent. Each of Borrower and TOGA shall, as a separate and independent
obligation which shall not be merged in any such judgment or order, pay or cause
to be paid the amount not so discharged in accordance with the foregoing and
indemnify and hold harmless any Lender, any Holder, the Agent or the Collateral
Agent
74
against any loss or damage as a result of any such amount being paid in currency
of any other country.
Section 8.17 Ratification of Credit Agreement and Loan Documents. The
Credit Agreement and other Loan Documents are hereby ratified and confirmed in
all respects, and Borrower, TOGA and TOGC acknowledge and agree that they have
no counterclaims against, Agent, Collateral Agent or Lenders or defenses to
enforcement thereof.
75
IN WITNESS WHEREOF, this Agreement is executed as of the date first
written above.
BORROWER: TIPPERARY CORPORATION, a Texas corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
TOGA: TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD (▇▇▇ ▇▇▇
▇▇▇ ▇▇▇), ▇ ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
TOGC: TIPPERARY OIL & GAS CORPORATION, a Texas
corporation
By: /s/ ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
LENDERS: TCW DEBT AND ROYALTY FUND VI, L.P., a California
limited partnership
By: TCW Asset Management Company, a
California corporation, as General Partner
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
76
TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant to the
Investment Management Agreement dated as of
October 27, 1997 between Delta Air Lines, Inc.,
TCW Asset Management Company and Trust Company of
the West
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant to the
Investment Management and Custody Agreement dated
as of October 27, 1997 between University of
Chicago, TCW Asset Management Company and Trust
Company of the West
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
77
TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant to the
Investment Management and Custody Agreement dated
as of October 27, 1997 between University of Notre
Dame du Lac, TCW Asset Management Company and
Trust Company of the West
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
TCW ASSET MANAGEMENT COMPANY, a California
corporation, as Investment Manager pursuant to the
Investment Management and Custody Agreement dated
as of October 24, 1997 between ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇▇▇ Separate Property Trust dated January
1, 1991, TCW Asset Management Company and Trust
Company of the West
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
78
LION II CUSTOM INVESTMENTS LLC
LIFE INSURANCE COMPANY OF GEORGIA
SECURITY LIFE OF DENVER INSURANCE
COMPANY
SOUTHLAND LIFE INSURANCE COMPANY
By: TCW Asset Management Company, a
California corporation, as Investment Manager
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
--------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
AGENT: TCW ASSET MANAGEMENT COMPANY,
a California corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------------------------------
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
79
COLLATERAL AGENT: TCW ASSET MANAGEMENT COMPANY, a California
corporation
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
_________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Managing Director
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
_________________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: Managing Director
80
SCHEDULE 1
DISCLOSURE SCHEDULE
1. Re: Article 4 of the Credit Agreement. The Form 10-Q of Tipperary
Corporation for the Quarter Ended December 31, 1999, as well as its Annual
Report on Form 10-KSB for the Fiscal Year Ended September 30, 2000, a copy
of which has been delivered to the Agent, is incorporated.
2. Re: Section 4.1 (m) of the Credit Agreement. Subsidiaries of Tipperary
Corporation:
Tipperary Oil & Gas Corporation, a Texas corporation - wholly owned;
Burro Pipeline Corporation, a New Mexico corporation - wholly owned.
3. Re: Section 4.1 (o) of the Credit Agreement. In connection with the
execution of the Loan Documents, the Borrower is obligated to pay a fee to
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & Co. under an agreement with said company dated October
15, 1998. A copy of this agreement has been delivered to the Agent.
4. Re: Section 4.1 (v) of the Credit Agreement. Copies of all existing gas
sales contracts of TOGA have been previously delivered to the Agent. A
copy of a gas sales contract with Energex entered into in June 2000 has
been delivered to the Agent.
5. Re: Section 4.1 (v) of the Credit Agreement. A Gas Imbalance Schedule as
of December, 2000 relating to the Comet Ridge Project has been delivered to
the Agent.
6. Re: Section 4.1 (x) of the Credit Agreement. Tipperary Corporation has not
filed tax returns in Australia for the fiscal years ended September 30,
1996 and 1997. TOGA has not filed tax returns in Australia for the fiscal
years ended September 30, 1998 and 1999.
SCHEDULE 2
LENDERS
TCW DEBT AND ROYALTY FUND VI, L.P., a California limited partnership.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management Agreement dated as of October 27, 1997
between Delta Air Lines, Inc., TCW Asset Management Company and Trust Company of
the West.
LION II CUSTOM INVESTMENTS LLC.
LIFE INSURANCE COMPANY OF GEORGIA.
SECURITY LIFE OF DENVER INSURANCE COMPANY.
SOUTHLAND LIFE INSURANCE COMPANY.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
27, 1997 between University of Chicago, TCW Asset Management Company and Trust
Company of the West.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
27, 1997 between University of Notre Dame du Lac, TCW Asset Management Company
and Trust Company of the West.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
24, 1997 between ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇ Separate Property Trust dated January 1,
1991, TCW Asset Management Company and Trust Company of the West.
SCHEDULE 3
HOLDERS' INDIVIDUAL NOTE AMOUNTS/PRO RATA SHARES
Initial
Note Pro Rata
Holder Amount Share
===============================================================================================
TCW Debt and Royalty Fund VI, L.P., a California $ 8,319,177.00 48.936335%
limited partnership
-----------------------------------------------------------------------------------------------
TRUST COMPANY OF THE WEST, a California trust $ 2,849,033.00 16.759019%
company, as Sub-Custodian for the Delta Master
Trust dated May 27, 1982, as amended, under the
Sub-Custody Agreement and Power of Attorney
dated October 30, 1997
-----------------------------------------------------------------------------------------------
LION II CUSTOM INVESTMENTS LLC $ 267,447.00 1.573216%
-----------------------------------------------------------------------------------------------
LIFE INSURANCE COMPANY OF GEORGIA $ 133,724.00 0.786608%
-----------------------------------------------------------------------------------------------
SECURITY LIFE OF DENVER INSURANCE COMPANY $ 668,617.00 3.933041%
-----------------------------------------------------------------------------------------------
SOUTHLAND LIFE INSURANCE COMPANY $ 267,447.00 1.573217%
-----------------------------------------------------------------------------------------------
TRUST COMPANY OF THE WEST, a California trust $ 1,139,613.00 6.703607%
company, as Custodian for the University of
Chicago
-----------------------------------------------------------------------------------------------
TRUST COMPANY OF THE WEST, a California trust $ 505,909.00 2.975937%
company, as Custodian for the University of
Notre Dame du Lac
-----------------------------------------------------------------------------------------------
TRUST COMPANY OF THE WEST, a California trust $ 2,849,033.00 16.759020%
company, as Custodian for ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇▇
Separate Property Trust dated January 1, 1991
===============================================================================================
TOTAL $17,000,000.00 100.000000%
-----------------------------------------------------------------------------------------------
SCHEDULE 4
SECURITY SCHEDULE
Party Collateral Instrument(s) Where Filed Timing
Requirement
--------------------------------------------------------------------------------------------------------------
Borrower . All interests in TOGA . Borrower Pledge and
. All interests in TOGC to Security Agreement
the extent related to TOGA . UCC-1 Financing
. Any Inter-company Debt owed Statement Texas,
by TOGC or TOGA to Borrower Colorado,
. All rights, claims and New York
interests in the Tri-Star
Litigation
--------------------------------------------------------------------------------------------------------------
. All funds received from . Borrower-TOGA
TOGA or TOGC in Borrower-TOGC Collateral Account
Collateral Account Agreement
--------------------------------------------------------------------------------------------------------------
TOGC . Capital Stock of TOGA . TOGC Pledge and
. Inter-company Debt owed Security Agreement
from TOGA . UCC-1 Financing Texas,
. All other interests in TOGA Statement Colorado,
. All rights, claims and New York
interests in the Tri-Star
Litigation
--------------------------------------------------------------------------------------------------------------
. All funds received from . Borrower-TOGC
TOGA in Borrower-TOGC Collateral Account
Collateral Account Agreement
--------------------------------------------------------------------------------------------------------------
Guarantor . Guarantee Agreement Queensland
--------------------------------------------------------------------------------------------------------------
. All rights, claims and . TOGA Security Agreement
interest under Project JOA . UCC-1 Financing Texas,
and in the Tri-Star Litigation Statement Colorado,
. All assets of TOGA New York,
including all interests in Queensland
ATPs and Leases
--------------------------------------------------------------------------------------------------------------
. All assets of TOGA . Australian Fixed and Queensland
including all interests in Floating Charge Document
ATPs and Leases
--------------------------------------------------------------------------------------------------------------
. All funds in the TOGA . TOGA Dollar Collateral
Dollar Collateral Account Account Agreement
--------------------------------------------------------------------------------------------------------------
. All funds in the TOGA . TOGA Australian
Australian Collateral Account Collateral Account Agreement
--------------------------------------------------------------------------------------------------------------
SCHEDULE 5
PAYMENT ACCOUNTS
I. Principal and Coupon Interest Payments
All payments on account of the Notes shall be made by wire transfer of
immediately available funds for credit to:
Investors Bank & Trust Company
ABA #: ▇▇▇▇▇▇▇▇▇
F/C Client Funds No. 569530395
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Account #: 76T02327-4
TCW Debt & Royalty Funds VI
II. Yield Adjustment Payment/Prepayment Premium
Investors Bank & Trust Company
ABA #: ▇▇▇▇▇▇▇▇▇
F/C Client Funds No. 569530395
Attention: ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
Account #: 76T02327-4
TCW Debt & Royalty Funds VI
III. Expense Reimbursement/Payment and Other Expenses
Bank of America
Los Angeles, CA
AC #: 49575-02303
Benefit: TAMCO-D&R Funds VI
ABA #: ▇▇▇▇▇▇▇▇▇
SCHEDULE 6
INSURANCE
(1) Borrower, TOGC and TOGA shall procure at their own expense and maintain in
full force and effect at all times on and after the Initial Funding Date,
(except for insurance required by 1(h), which shall be in effect as set
forth in the Credit Agreement) and continuing throughout the term of the
Credit Agreement, insurance policies with responsible insurance companies
authorized to do business in Queensland, Australia (if required by law or
regulation) with a Best Insurance Reports rating of "A-" or better and a
financial size category of "IX" or higher, or if not rated by Best, a
Standard & Poors claims paying ability rating of BBB+ or higher (and other
companies acceptable to Agent), with limits and coverage provisions
sufficient to satisfy the requirements set forth in each of the Project
Documents, but in no event less than the limits and coverage provisions set
forth below:
(a) Employer's Liability Insurance: Employer's liability insurance with a
$500,000 minimum limit per accident. A maximum deductible or self-
insured retention of $25,000 per occurrence shall be allowed.
(b) General Liability Insurance: Liability insurance on an occurrence
basis against claims for personal injury (including bodily injury and
death) and property damage. Such insurance shall provide coverage for
products-completed operations, blanket contractual, broad form
property damage, personal injury insurance, and sudden and accidental
pollution liability with a $1,000,000 minimum limit per occurrence
for combined bodily injury and property damage provided that policy
aggregates, if any, shall apply separately to claims occurring with
respect to the Project. A maximum deductible or self-insured
retention of $25,000 per occurrence shall be allowed.\
(c) Automobile Liability Insurance. Automobile liability insurance
against claims for personal injury (including bodily injury and
death) and property damage covering all owned, leased non-owned and
hired motor vehicles, including loading and unloading, with a
$1,000,000 minimum limit per occurrence for combined bodily injury
and property damage and containing appropriate no-fault insurance
provisions wherever applicable. A maximum deductible or self-insured
retention of $25,000 per occurrence shall be allowed.
(d) Excess Insurance: Excess liability insurance on an occurrence basis
(with coverage at least as broad as the coverage under all primary
policies) covering claims in excess of the underlying insurance
described in the foregoing subsections (b), (c) and (d), with a
$10,000,000 minimum limit per occurrence, provided that aggregate
limits of liability, if any, shall apply separately to claims
occurring with respect to the Project.
The amounts of insurance required in the foregoing subsections (a),
(b), (c) and this subsection (d) may be satisfied by Borrower
purchasing coverage in the amounts specified or by any combination of
primary and excess insurance, so long as the total amount of
insurance meets the requirements specified above.
(e) Aircraft Insurance: If the performance of any of the Project
Documents requires the use of any aircraft that is owned, leased or
chartered by Borrower, aircraft liability insurance with a
$25,000,000 minimum limit per occurrence for combined property damage
and bodily injury, including passengers and crew.
(f) Physical Damage Insurance: Property damage insurance on an "all risk"
basis, boiler and machinery insurance on a comprehensive basis
(covering all production machinery, including but not limited to
pressure vessels, reciprocating engines, generators, transformers and
other related equipment, motors, air tanks, machinery, pressure
piping or any other similar objects) including coverage against
damage or loss caused by earth movement (including but not limited to
earthquake, landslide, subsidence and volcanic eruption), sabotage,
terrorism and flood and providing coverage for (1) the Project
(excluding power transmission lines and towers) in a minimum
aggregate amount equal to the "required insured value" of the
Project, (2) transit including ocean marine transit, if applicable,
with sub-limits sufficient to insure the full replacement value of
the property or equipment prior to its being removed from the Project
and while located away from the Project, (3) foundations and other
property below the surface of the ground, and (4) attorneys fees,
engineering and other consulting costs, and permit fees directly
incurred in order to repair or replace damaged insured property in a
minimum amount of $1,000,000. For purposes of this Section (f),
"required insured value" shall mean not less than 75% of the full
replacement value of the Project, including any improvements,
equipment, spare parts, fuel and supplies, without deduction for
physical depreciation and/or obsolescence; all such insurance may
have deductibles of not greater than $100,000 per occurrence. Such
insurance shall (5) not include any coinsurance provision, (6)
provide for increased cost of construction and loss to undamaged
property as the result of enforcement of building laws or ordinances
with sub-limits not less than 10% of the "full insurable value" of
the Project, and (7) include debris removal with sub-limits not less
than $500,000 or 25% of the loss, whichever is greater. The earth
movement and flood coverage may be insured with a sublimit not less
than 100% of the "full insurable value" of the Project plus 100% of
the business income amount required by Section (g) below. The
sabotage and terrorism coverage may be insured with a sub-limit not
less than 50% of the "full insurable value" of the Project plus 50%
of the business income amount required by Section (g) below. The
property damage coverage shall not contain an exclusion for freezing,
mechanical breakdown, loss or damage covered under any guarantee or
warranty, or resultant damage caused by faulty workmanship, design or
materials.
If the insurance company providing the physical damage insurance is
different from the company providing the boiler & machinery insurance
required in this
2
Section, then a joint loss agreement between them will be required
and included as part of the respective policies.
(g) Business Interruption Insurance: Business Interruption insurance
covering 100% of continuing normal operating expenses including
payroll and debt service of the Project for a period of twelve (12)
months, arising from loss required to be insured by Section (B)(2)(a)
above. The maximum deductible shall be no greater than thirty (30)
days per occurrence. Such insurance shall also include, (1) an
indemnity period of not less than fifteen (15) months and (2) extra
expenses (defined as extraordinary expenses incurred after an insured
loss to make temporary repairs and expedite the permanent repair of
the damaged property in excess of the business interruption even if
such expense does not reduce the business interruption loss) in an
amount not less than $1,000,000. Such insurance shall not contain any
coinsurance clause or include a waiver of such clause.
Notwithstanding Subsections (f) and (g) above, if under the
applicable Governmental Approvals or Project Documents, Borrower is
not obligated to restore the Project in the event of a casualty such
that Borrower can apply the Casualty Proceeds against the
Obligations, Borrower shall not be required to maintain the insurance
described in Subsection (f) above in an amount greater than the sum
of (i) the then-outstanding principal balance of the Notes, plus (ii)
all accrued and unpaid interest thereon, plus (iii) an amount equal
to the total interest payable on the Notes during the succeeding six
(6) months.
(2) Endorsements: All policies of insurance to be maintained by Borrower shall
provide for waivers of subrogation in favor of the Holders, Agent, and
Collateral Agent, their Affiliates, and all of their respective directors,
officers and employees (and such other Persons as may be required by the
Project Documents). All policies of liability insurance required to be
maintained by Borrower under Section (1) above, other than employer's
liability, shall be endorsed as follows:
(a) To provide a severability of interest or cross liability clause.
(b) That the insurance shall be primary and not excess to or contributing
with any insurance or self-insurance maintained by the Holders,
Agent, or Collateral Agent, and their Affiliates.
(c) To name the Holders, Agent, and Collateral Agent, their Affiliates,
and all of their respective officers and employees (and such other
persons as may be required by the Project Documents) as additional
insureds.
(d) To name Borrower and its officers and employees as a named insured.
(3) Waiver of Subrogation: Borrower hereby waives any and every claim for
recovery from Holders, Agent, or Collateral Agent, and their Affiliates,
and all of their officers, directors, employees, contractors, and agents,
for any and all loss or damage covered by any of the insurance policies to
be maintained under the Credit Agreement to the extent that such loss or
damage is recovered under any such policy. Inasmuch as the foregoing
3
waiver will preclude the assignment of any such claim to the extent of such
recovery, by subrogation (or otherwise), to an insurance company (or other
person), Borrower shall give written notice of the terms of such waiver to
each insurance company which has issued, or which may issue in the future,
any such policy of insurance (if such notice is required by the insurance
policy) and shall cause each such insurance policy to be properly endorsed
by the issuer thereof to, or to otherwise contain one or more provisions
that, prevent the invalidation of the insurance coverage provided thereby
by reason of such waiver.
(4) Amendment of Requirements: Agent or Collateral Agent may at any time amend
the requirements and approved insurance companies of this Schedule 7 due to
(i) new information not known by Agent or Collateral Agent on the date
hereof or (ii) changed circumstances after the date hereof which in the
reasonable judgment of Agent or Collateral Agent either renders such
coverage materially inadequate or materially reduces the financial ability
of the approved insurance companies to pay claims.
In the event any insurance (including the limits or deductibles thereof)
hereby required to be maintained shall not be reasonably available and
commercially feasible in the commercial insurance market, Agent shall not
unreasonably withhold its agreement to waive such requirement to the extent
the maintenance thereof is not so available; provided, however, that (i)
Borrower shall first request any such waiver in writing, which request
shall be accompanied by written reports prepared by two independent
insurance advisors of recognized national standing (one of which may be the
Borrower's insurance advisor and one of which may be Agent's insurance
advisor), certifying that such insurance is not reasonably available and
commercially feasible in the commercial insurance market for oil, gas and
hydrocarbon producing facilities of similar type, location and capacity
(and, in any case where the required amount is not so available, certifying
as to the maximum amount which is so available) and explaining in detail
the basis for such conclusions; (ii) at any time after the granting of any
such waiver, but not more often than once a year, Agent may request, and
Borrower shall furnish to Agent within fifteen (15) days after such
request, supplemental reports reasonably acceptable to Agent from such
independent insurance broker or an insurance consultant updating their
prior reports and reaffirming such conclusion; and (iii) any such waiver
shall be effective only so long as such insurance shall not be reasonably
available and commercially feasible in the commercial insurance market, it
being understood that the failure of Borrower to timely furnish any such
supplement report shall be conclusive evidence that such waiver is no
longer effective because such condition no longer exists, but that such
failure is not the only way to establish such non-existence. The failure at
any time to satisfy the condition to any waiver of an insurance requirement
set forth in the proviso to the preceding sentence shall not impair or be
construed as a relinquishment of Borrower's ability to obtain a waiver of
an insurance requirement pursuant to the preceding sentence at any other
time upon satisfaction of such conditions.
(5) Application of Proceeds:
(a) The insurance required by Sections (1)(f) and (g) of this Schedule 7
(the "Casualty Insurance"), shall (except as provided below) be
payable to Agent and
4
Collateral Agent, and Borrower hereby authorizes and directs any
affected insurance company to make payment of such proceeds directly
to Agent and/or Collateral Agent. If Borrower receives any proceeds
of such Casualty Insurance, Borrower (i) shall promptly deposit such
proceeds into a segregated account (the "Restoration Account") in
which Collateral Agent shall have a perfected security interest; (ii)
to the extent relating to damage or destruction of the Project, such
proceeds shall be available for repair or reconstruction as provided
in Section (c) below; and (iii) such proceeds so deposited or
received directly by Collateral Agent shall be the "Casualty
Proceeds."
(b) Borrower is hereby authorized and empowered by Agent to settle,
adjust or compromise any and all Casualty Insurance claims in the
aggregate amount of $500,000 or less; provided, however, that no
Event of Default has occurred and is outstanding. The mutual written
agreement of Borrower and Agent shall be required to settle, adjust
or compromise any and all Casualty Insurance claims in the aggregate
amount of greater than $500,000; provided, however, that no Event of
Default has occurred and is outstanding. Collateral Agent is hereby
authorized and empowered by Borrower to settle, adjust or compromise
any and all claims for loss, damage and destruction under any policy
or policies of insurance at any time an Event of Default has occurred
and is outstanding.
(c) In the event of any damage or destruction of the Project that is
insured by the Casualty Insurance (other than business interruption
or delayed startup insurance), then, except as provided in Section
(4) below, Collateral Agent shall disburse to Borrower from such
separate account loss proceeds remaining after deduction of all
expenses of collection and settlement thereof, including, without
limitation, attorneys' and adjustors' fees and expenses, to pay or
reimburse the payment of costs of the restoration of the Project but
only as repairs or replacements are effected in a diligent manner
with contractors and pursuant to lump-sum contracts reasonably
acceptable to Collateral Agent (which contracts shall provide for not
less than 5% retainage). If the cost of the restoration, as
reasonably determined by Collateral Agent, is less than $500,000,
then Collateral Agent shall, except as provided in Section (4)(a)
below, pay upon receipt thereof the Casualty Insurance proceeds to
Borrower in one lump sum to apply to the restoration of the Project
to its condition existing prior to the casualty ("Restoration").
(d)
(i) If (i) an Event of Default occurs, (ii) Borrower notifies Agent
or Collateral Agent to apply the Casualty Insurance proceeds
against the Obligations, or (iii) Agent or Collateral Agent
reasonably determines that (A) the proceeds of the insurance
are not adequate in amount to complete the Restoration and
Borrower has not provided adequate security or other
commitments acceptable to Agent in its sole discretion to cover
any such deficiency in Casualty Insurance proceeds or (B) the
Restoration cannot be achieved due to the unavailability of
Governmental Approvals, then Agent and Collateral Agent shall
not be obligated to make any further
5
disbursements pursuant to the Loan Documents and Collateral
Agent shall apply all Casualty Insurance loss proceeds, after
deductions as herein provided, to the repayment of the
outstanding balance of the Notes, together with all accrued
interest thereon, notwithstanding that the outstanding balance
may not be due and payable.
(ii) Without limiting the provisions of Section (c) above,
Collateral Agent shall disburse Casualty Proceeds subject to
the following conditions:
(A) the contracts, contractors, plans and specifications for
the Restoration shall have been approved in advance by
Collateral Agent, which approval shall not be
unreasonably withheld or delayed, and Agent shall be
provided with satisfactory proof that any subordinate
lienholder has consented to the Restoration and has
agreed to make any Casualty Proceeds it is entitled to
available for such Restoration;
(B) such Restoration is then allowed by applicable
Governmental Rules, and all necessary Governmental
Approvals for the commencement of construction shall
have been obtained or shall be obtained as required to
complete the Restoration in a timely manner;
(C) the net Casualty Proceeds received by Borrower from time
to time plus any deficiency funded by Borrower shall be
deposited with Agent in the Restoration Account;
(D) at the time of any disbursement from the Restoration
Account, no Event of Default shall have occurred since
the date of the casualty;
(E) disbursement from the Restoration Account shall be made
by Agent to Borrower in an amount not exceeding the cost
of the work completed since the date of the last
disbursement, net of retainage provided under the
applicable contracts, within 10 Business Days after
receipt by Agent of reasonably satisfactory evidence of
the stage of completion and of performance of the work
in a good and workmanlike manner in accordance with the
contracts, plans and specifications; provided that
Borrower may not make requisitions more often than
monthly; and
(F) Notwithstanding anything in this Section (5)(d) to the
contrary, if at any time during the course of
Restoration a deficiency has been identified in the
amount available for Restoration, no further
disbursements shall be made from the Restoration Account
until Collateral Agent receives either payment of such
deficiency or commitment to fund such deficiency
acceptable to Collateral Agent in its sole discretion.
All Casualty Proceeds, if any,
6
remaining in the Restoration Account after completion of
Restoration shall be applied by Agent to the reduction
of the Obligations.
(e) Borrower shall promptly notify Agent of any loss in excess of
$100,000 covered by any Casualty Insurance.
(6) Conditions:
(1) All policies of insurance required to be maintained pursuant to this
Schedule 6 shall be endorsed such that if at any time such policies
are canceled, or coverage be reduced which affects the interests of
the Holders, Agent, and/or Collateral Agent, such cancellation or
reduction shall not be effective as to the Holders, Agent, or
Collateral Agent for forty-five (45) days, except for non-payment of
premium which shall be for ten (10) days, after receipt by Agent of
written notice from such insurer of such cancellation or reduction.
(2) All policies of insurance required to be maintained pursuant to
Sections (1)(f) and (g) shall not include any annual or term
aggregate limits of liability or clause requiring the payment of
additional premium to reinstate the limits after loss except as
regards the insurance applicable to the perils of flood, earth
movement, sabotage and terrorism.
(7) Evidence of Insurance: On the Initial Funding Date and on an annual basis
at least ten (10) days prior to each policy anniversary, Borrower shall
furnish Agent with (1) approved certification of all required insurance and
(2) a schedule of the insurance policies held by or for the benefit of
Borrower and required to be in force by the provisions of this Schedule 6.
Such certification shall be executed by each insurer or by an authorized
representative of each insurer where it is not practical for such insurer
to execute the certificate itself. Such certification shall identify
underwriters, the type of insurance, the insurance limits and the policy
term and shall specifically list the special provisions enumerated for such
insurance required by this Schedule 6. Upon request, Borrower will
promptly furnish Agent with copies of all insurance policies, binders and
cover notes or other evidence of such insurance relating to the insurance
required to be maintained by Borrower. The schedule of insurance shall
include the name of the insurance company, policy number, type of
insurance, major limits of liability and expiration date of the insurance
policies.
(8) Reports: Concurrently with the furnishing of the certification referred to
in this Section (8), Borrower shall furnish Agent with a report of an
independent broker, signed by an officer of the broker, stating that in the
opinion of such broker, the insurance then carried or to be renewed is in
accordance with the terms of this Schedule 6, and attaching an updated copy
of the schedule of insurance required by this Section (8) above. In
addition, Borrower will advise Agent in writing promptly of any default in
the payment of any premium and of any other act or omission on the part of
Borrower which may invalidate or render unenforceable, in whole or in part,
any insurance being maintained by Borrower pursuant to this Schedule 6.
7
(9) Failure to Maintain Insurance: In the event Borrower fails, or fails to
cause the contractors or the Operator, to take out or maintain the full
insurance coverage required by this Schedule 6, Agent, upon thirty (30)
days' prior notice (unless the aforementioned insurance would lapse within
such period, in which event notice should be given as soon as reasonably
possible) to Borrower of any such failure, may (but shall not be obligated
to) take out the required policies of insurance and pay the premiums on the
same. All amounts so advanced thereof by Agent shall become an additional
obligation of Borrower to Agent, and Borrower shall forthwith pay such
amounts to Collateral Agent, together with interest thereon at the Late
Payment Rate from the date so advanced.
(10) No Duty to Verify or Review: No provision of this Schedule 6 or any
provision of the Credit Agreement or any Project Document shall impose on
the Holders, Agent, or Collateral Agent any duty or obligation to verify
the existence or adequacy of the insurance coverage maintained by Borrower,
nor shall any of the Holders, Agent, or Collateral Agent be responsible for
any representations or warranties made by or on behalf of Borrower to any
insurance company or underwriter. Any failure on the part of the Holders,
Agent, or Collateral Agent to pursue or obtain the evidence of insurance
required by the Credit Agreement from Borrower and/or failure of the
Holders, Agent, or Collateral Agent to point out any non-compliance of such
evidence of insurance shall not constitute a waiver of any of the insurance
requirements in the Credit Agreement.
(11) Maintenance of Insurance: Borrower shall at all times maintain the
insurance coverage required of it under the terms of the Project Documents.
8
EXHIBIT A
AUSTRALIAN CHARGE DOCUMENT
EXHIBIT B-1
RESTRICTED ACCOUNT AGREEMENT
EXHIBIT B-2
BANKERS DEED OF COVENANT
EXHIBIT C-1
GUARANTEE AGREEMENT
EXHIBIT C-2
GUARANTEE AND INDEMNITY
EXHIBIT D
TC PLEDGE AND SECURITY AGREEMENT
EXHIBIT D-1
FIRST AMENDMENT TO TC PLEDGE AND SECURITY AGREEMENT
EXHIBIT E
ROYALTY AGREEMENT
EXHIBIT F
TOGA SECURITY AGREEMENT
EXHIBIT G-1
EQUITY LETTER OF CREDIT
EXHIBIT G-2
TRI-STAR LITIGATION INDEMNITY LETTER OF CREDIT
EXHIBIT H
SUBORDINATION AGREEMENT
EXHIBIT I
TOGA-BORROWER
MANAGEMENT AGREEMENT
EXHIBIT J
FIRST AMENDED AND RESTATED TOGC PLEDGE AND SECURITY AGREEMENT
EXHIBIT K
SENIOR SECURED PROMISSORY NOTE
$________________ New York, New York
Note No. _______ Date: April _____, 2000
FOR VALUE RECEIVED, the undersigned, TIPPERARY CORPORATION, a Texas
corporation ("Promisor"), hereby unconditionally promises to pay to the order of
-------------------------------------------------------------------------------
-----------------------------------------------------, or assigns ("Holder"),
the principal sum of __________________ AND 00/100 DOLLARS ($__________)
(or so much thereof as shall not have been repaid) on or before March 30, 2006.
The undersigned also promises to pay to the Holder hereof interest on the unpaid
principal hereof, at the rate set forth in and in accordance with that certain
Credit Agreement, dated as of even date herewith, among Promisor, TCW Asset
Management Company in the capacities described therein and the other parties
thereto (as amended, modified or restated from time to time, the "Credit
Agreement"). All undefined capitalized terms used herein shall have the meaning
given in the Credit Agreement. Payments of principal and interest shall be
computed on the bases set forth in the Credit Agreement and shall be payable as
follows: (i) from and after the Initial Funding Date and until this Note is
repaid in full, Coupon Interest for each Calendar Quarter (or part thereof)
shall be payable quarterly on the Quarterly Payment Date, (ii) from and after
the Initial Amortization Date, principal shall be payable quarterly on the
Quarterly Payment Date in the amount equal to the Principal Payment for such
quarter set forth in the Credit Agreement, (iii) Late Payment Rate Interest
shall be payable immediately upon accrual, and (iv) the outstanding principal
balance shall be payable on the Maturity Date. Payments of principal and
interest are to be made in lawful money of the United States of America in
immediately available funds.
This Note is issued pursuant to the Credit Agreement and is secured by
and entitled to the benefits thereof. This Note is also secured by certain of,
and entitled to the benefits provided in, the other Loan Documents (by the terms
of which agreements the Holder hereof, by its acceptance hereof, agrees to be
bound), in each case to the extent provided in said agreements.
All principal under and interest on this Note shall be payable without
deduction or withholding for or on account of any present or future taxes,
duties, fees or other charges levied or imposed on this Note or the Holder by
the Commonwealth of Australia or any political subdivision or taxing authority
thereof or therein. If the Promisor is required by law to make any such
deduction or withholding, it will pay the Holder such additional amounts as may
be necessary so that every net payment of principal of and interest on the Note
received by the
Holder will not be less than the amount provided in the Credit Agreement to be
then due and payable.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933, AS
AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS, AND
TRANSFER OF THIS NOTE IS SUBJECT TO RESTRICTIONS SET FORTH IN THE CREDIT
AGREEMENT.
Subject to the terms and conditions set forth in the Credit Agreement,
upon surrender of this Note, duly endorsed, or accompanied by a written
instrument of transfer or assignment or request for reissuance, duly executed by
the registered Holder hereof or such Holder's attorney duly authorized in
writing, one or more new Notes for a like principal amount will be issued to,
and, at the option of the Holder, registered in the name of, such Holder or the
designated transferee(s) or assignee(s). Promisor may deem and treat the person
in whose name this Note is registered as the Holder and owner hereof for the
purpose of receiving payments and for all other purposes whatsoever.
If an Event of Default shall occur and be continuing, the principal of
this Note may, under certain circumstances, become or be declared due and
payable in the manner and with the effect provided in the Credit Agreement.
This Note shall be binding upon the successors and assigns of the
Promisor and shall inure to the benefit of the successors and assigns of the
Holder.
This Note shall be governed by and construed in accordance with the
laws of the State of New York, United States of America. Promisor hereby
submits to the nonexclusive jurisdiction of the state and federal courts sitting
in the State of New York and County of New York for the purposes of all legal
proceedings arising out of or relating to this Note or the transactions
contemplated hereby. Promisor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
TIPPERARY CORPORATION, a Texas corporation
By:______________________________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Title: President
2
EXHIBIT L
REQUEST FOR INITIAL LOAN ADVANCE
EXHIBIT M
REQUEST FOR ADDITIONAL LOAN ADVANCE
Reference is made to that certain First Amended and Restated Credit
Agreement dated as of February 2, 2001, amending and restating that certain
Credit Agreement dated as of April 28, 2000 (as from time to time amended), by
and among TIPPERARY CORPORATION, a Colorado corporation ("Borrower"), TIPPERARY
OIL & GAS (AUSTRALIA) PTY. LTD, a Queensland corporation ("TOGA"), and LENDERS
that are party thereto, TCW ASSET MANAGEMENT COMPANY, a California corporation
("TAMCO"), as Agent, and TAMCO, as Collateral Agent. Terms which are defined in
the Credit Agreement are used herein with the meanings given them in the Credit
Agreement.
Pursuant to the terms of the Credit Agreement, Borrower hereby
requests the Lenders to make an Additional Loan Advance to Borrower in the
principal amount of $________ and specifies [__________], as the date Borrower
desires for the Lenders to make such Additional Loan Advance and to deliver to
Borrower the proceeds thereof, by wire transfer to the following:
Tipperary Corporation
Acct # ______________________
[Bank]_______________________
[City, State] _______________
ABA # _______________________
To induce the Lenders to make such Additional Loan Advance, Borrower
hereby represents, warrants, acknowledges, and agrees that:
The officer of Borrower signing this instrument is the duly elected,
qualified and acting officer of Borrower as indicated below such officer's
signature hereby, having all necessary authority to act for Borrower in
making the request herein contained.
All representations and warranties made by Borrower, TOGA, or each
Related Person in any Loan Document are true and correct on and as of the
date hereof as if such representations and warranties had been made as of
the date hereof.
There does not exist on the date hereof any condition or event which
constitutes a Default which has not been waived in writing by Collateral
Agent, Agent and the Lenders; nor will any such Default exist upon
Borrower's receipt and application of the AdditionalLoan Advance requested
hereby. Borrower will use the Additional Loan Advance hereby requested in
compliance with Section 2.4 of the Credit Agreement.
Except to the extent waived in writing by Collateral Agent, Agent and
the Lenders, Borrower, TOGA and each Related Person have performed and
complied with all agreements and conditions required in the Loan Documents
to be performed or complied with by it on or prior to the date hereof, and
each of the conditions precedent to Additional Loan Advance contained in
the Credit Agreement shall be satisfied as of the date thereof.
The Loan Documents have not been modified, amended or supplemented by
any unwritten representations or promises, by any course of dealing, or by
any other means not provided for in the Credit Agreement.
The person signing this instrument hereby certifies, that, to the best
of [his] knowledge after due inquiry, the above representations, warranties,
acknowledgements, and agreements of Borrower are true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of _________, 2001.
TIPPERARY CORPORATION, a Texas corporation
By:______________________________________________
Name:_________________________________________
Title:________________________________________
ACKNOWLEDGED:
TCW ASSET MANAGEMENT COMPANY, a
California corporation as Agent for the Lenders
party to the Credit Agreement
By:______________________________________________
Name:_________________________________________
Title:________________________________________
2
EXHIBIT N
[Deleted]
EXHIBIT O
FORM OF LETTER DIRECTING PAYMENT TO COLLATERAL ACCOUNT
[TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD LETTERHEAD]
[Purchaser Address]
Ladies and Gentlemen:
We hereby irrevocably authorize and direct you to make all payments owed by
you to us in connection with that certain Operating Agreement dated May 15,
1992, as amended, among Tri-Star Petroleum Company, as operator, and other
parties thereto, or otherwise owned by you, payable to Tipperary Oil & Gas
(Australia) Pty Ltd and forward said payments directly by (i) mail to
[_____________________________________________________] or (ii) wire transfer to
[_____________________________________________]. The instructions set forth
herein are irrevocable and are not subject to modification in any manner unless
you are so notified in writing and said writing is executed by both TCW Asset
Management Company and the undersigned.
Very truly yours,
TIPPERARY OIL & GAS (AUSTRALIA) PTY
LTD (ACN 077 536 871), a Queensland corporation
By:_____________________________________________
Name:________________________________________
Title:_______________________________________
EXHIBIT P
OMNIBUS CERTIFICATE OF SECRETARY
I, __________________________, do hereby certify that I am the duly
elected, qualified and acting Secretary of Tipperary Corporation, a Texas
corporation (the "Borrower"), and that, in such capacity, I am authorized to
certify on behalf of the Borrower to TCW Asset Management Company, a California
corporation ("Tamco"), acting in the capacity of "Collateral Agent" and "Agent,"
pursuant to that certain First Amended and Restated Credit Agreement dated as of
February 2, 2001, amending and restating that certain Credit Agreement dated as
of April 28, 2000 (the "Credit Agreement"), by and among the Borrower, Tamco, in
the capacities set forth therein, and the other parties thereto that:
1. Attached hereto as Exhibit A are true, correct and complete copies
of the Articles of Incorporation of the Borrower, and all
amendments thereto, certified by the _______________, and as in
effect on the date hereof.
2. Attached hereto as Exhibit B are true, correct and complete copies
of the Bylaws of the Borrower, and all amendments thereto,
certified by the _______________, and as in effect on the date
hereof.
3. Attached hereto as Exhibit C are true, correct and complete copy
of the unanimous written consent of the Board of Directors of the
Borrower, approving the Loan Documents (as defined in the Credit
Agreement) and the transactions contemplated in the Loan
Documents, authorizing the execution, delivery and performance by
the Borrower of the Loan Documents to which it is a party and the
consummation of the transactions contemplated therein, which
resolutions have not been revoked, modified, amended or rescinded
and are still in full force and effect on the date hereof.
4. The below-named persons have been duly elected and qualified and
on ____________, _____, were and at all time subsequent thereto,
including the date hereof, have been officers of the Borrower,
holding the offices indicated opposite their respective names, and
the signatures set forth opposite their respective names are their
genuine signatures.
Name Office Signature
---- ------ ---------
__________________ ____________________ ____________________
__________________ ____________________ ____________________
DATED AND EFFECTIVE as of this _____ day of February, 2001.
TIPPERARY CORPORATION, a Texas corporation
By:______________________________________________
Name:_________________________________________
Title:________________________________________
The undersigned hereby certifies that _____________ who executed the
foregoing certificate is the duly elected ______________ of the Borrower, and
the signature set forth above his name is his genuine signature.
______________________________________________
Name:_________________________________________
Title: [President]
2
EXHIBIT Q
COMPLIANCE CERTIFICATE
The undersigned, _____________________, the duly elected, qualified
and acting President of TIPPERARY CORPORATION, a Texas corporation, hereby
certifies to TRUST COMPANY OF THE WEST, a California trust company, TCW ASSET
MANAGEMENT COMPANY, a California corporation, and TCW DEBT AND ROYALTY FUND VI,
L.P., a California limited partnership, in connection with that certain First
Amended and Restated Credit Agreement dated as of February 2, 2001, amending and
restating that certain Credit Agreement dated as of April 28, 2000, by and among
said aforementioned parties, in the capacities set forth therein, and the other
parties thereto that:
1. All representations and warranties made by it in any
Loan Document shall be true in all material respects on and as of the
date hereof (except to the extent that the facts upon which such
representations are based (i) have been changed by the extension of
credit hereunder and (ii) are true and correct only when taken
together with all other representations and warranties thereof in any
Loan Document previously delivered) as if such representations and
warranties had been made as of the date hereof.
2. No Default exists at the date hereof.
3. No Material Adverse Effect as described in Section
3.2(c) of the Credit Agreement has occurred since the date of the
Credit Agreement.
4. It has performed and complied in all material respects
with all agreements and conditions required in the Loan Documents to
be performed or complied with by it on or prior to the date hereof.
Capitalized terms used herein but not otherwise defined shall have the
meanings ascribed thereto in the Credit Agreement.
DATED AND EFFECTIVE as of this _____ day of February, 2001.
TIPPERARY CORPORATION, a Texas corporation
By:______________________________________________
Name:__________________________________________
Title: [President]
EXHIBIT R-1
OPINION OF AUSTRALIAN COUNSEL
EXHIBIT ▇-▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇ COUNSEL
EXHIBIT ▇-▇
▇▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ COUNSEL
EXHIBIT S
COLLATERAL PROPERTIES
1. PL 90 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
2. PL 91 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
3. PL 92 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
4. PL 99 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview South Extended
5. PL 100 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
6. ATP 526 (Authority to Prospect)
Principal Holder: Tri-Star Petroleum Company
Location: North east of Injune (▇▇▇▇▇/Surat Basins)
7. ATP 655 (Authority to Prospect)
Principal Holder: Tipperary Corporation
Location: Surrounding Injune (▇▇▇▇▇/Surat Basins)
8. ATP 675 (Authority to Prospect)
Principal Holder: Tipperary Corporation
Location: North west of Injune (▇▇▇▇▇/Surat Basins)
Operating Agreement between Tri-Star Petroleum Company, Tipperary Oil & Gas
(Australia) Pty Ltd and the Comet Ridge Participants dated May 15, 1992, as
amended from time to time.
EXHIBIT T
SUPPLEMENT TO ROYALTY AGREEMENT