Exhibit 10.119
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AMENDED AND RESTATED LOAN AGREEMENT
among
COMMERCIAL NATIONAL BANK IN SHREVEPORT,
AS AGENT,
THE SEVERAL FINANCIAL INSTITUTIONS
FROM TIME TO TIME PARTY THERETO,
CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP,
CEC GAS MARKETING LIMITED PARTNERSHIP,
CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP,
CASTLE EXPLORATION COMPANY, INC.,
CASTLE PIPELINE COMPANY,
CASTLE PRODUCTION COMPANY,
CEC MARKETING COMPANY,
and
CASTLE ENERGY CORPORATION
Dated as of November 26, 1996
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TABLE OF CONTENTS
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ARTICLE I
Definitions..............................................................................................2
Section 1.1 Definitions..........................................................................2
Section 1.2 Other Definitional Provisions.......................................................19
ARTICLE II
Revolving Credit Loans..................................................................................19
Section 2.1 Revolving Credit Commitments........................................................19
Section 2.2 Revolving Credit Notes..............................................................19
Section 2.3 Repayment of Revolving Credit Loans.................................................19
Section 2.4 Interest............................................................................19
Section 2.5 Use of Proceeds.....................................................................20
Section 2.6 Facility Fee........................................................................20
Section 2.7 [Intentionally Omitted].............................................................20
Section 2.8 Borrowing Base......................................................................20
Section 2.9 Mandatory Prepayments or Addition of Collateral.....................................20
Section 2.10 Required Date and Amount of Mandatory Prepayment....................................21
Section 2.11 Borrowers' Option to Increase Collateral in Lieu of Prepayment......................21
Section 2.12 Evidence of Title...................................................................21
ARTICLE III
Term Loans..............................................................................................22
Section 3.1 Term Loans..........................................................................22
Section 3.2 The Term Notes......................................................................22
Section 3.3 Repayment of Term Loans.............................................................22
Section 3.4 Interest............................................................................22
Section 3.5 Request for Term Loans..............................................................22
Section 3.6 Use of Proceeds.....................................................................22
Section 3.7 Mandatory Prepayment................................................................23
ARTICLE IV
Borrowing Procedure; Payments...........................................................................23
Section 4.1 Borrowing Procedure.................................................................23
Section 4.2 Method of Payment...................................................................23
Section 4.3 Voluntary Prepayment................................................................24
Section 4.4 Pro Rata Treatment..................................................................24
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Section 4.5 Non-Receipt of Funds by the Agent...................................................24
Section 4.6 Computation of Interest.............................................................24
ARTICLE V
Security................................................................................................25
Section 5.1 Collateral..........................................................................25
Section 5.2 Setoff..............................................................................26
ARTICLE VI
Conditions Precedent....................................................................................27
Section 6.1 Initial Loan........................................................................27
Section 6.2 All Loans...........................................................................29
ARTICLE VII
Representations and Warranties..........................................................................30
Section 7.1 Corporate Existence.................................................................30
Section 7.2 Financial Statements................................................................31
Section 7.3 Corporate Action; No Breach.........................................................31
Section 7.4 Operation of Business...............................................................31
Section 7.5 Litigation and Judgments............................................................32
Section 7.6 Rights in Properties; Liens.........................................................32
Section 7.7 Enforceability......................................................................32
Section 7.8 Approvals...........................................................................32
Section 7.9 Debt................................................................................32
Section 7.10 Taxes...............................................................................32
Section 7.11 Use of Proceeds; Margin Securities..................................................32
Section 7.12 ERISA...............................................................................33
Section 7.13 Disclosure..........................................................................33
Section 7.14 Subsidiaries........................................................................33
Section 7.15 Agreements..........................................................................33
Section 7.16 Compliance with Laws................................................................33
Section 7.17 Investment Company Act..............................................................34
Section 7.18 Public Utility Holding Company Act..................................................34
Section 7.19 Environmental Matters...............................................................34
Section 7.20 Pipeline Contracts..................................................................35
Section 7.21 No Obligations......................................................................35
Section 7.22 Prepayment..........................................................................35
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TABLE OF CONTENTS
(Continued)
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Section 7.23 Gas Contracts.......................................................................35
Section 7.24 FERC Jurisdiction...................................................................35
Section 7.25 Lone Star Contract..................................................................36
ARTICLE VIII
Positive Covenants......................................................................................36
Section 8.1 Reporting Requirements..............................................................36
Section 8.2 Maintenance of Existence; Conduct of Business.......................................39
Section 8.3 Maintenance of Properties...........................................................39
Section 8.4 Taxes and Claims....................................................................40
Section 8.5 Insurance...........................................................................40
Section 8.6 Inspection Rights...................................................................40
Section 8.7 Keeping Books and Records...........................................................40
Section 8.8 Compliance with Laws................................................................40
Section 8.9 Compliance with Agreements..........................................................40
Section 8.10 Further Assurances..................................................................40
Section 8.11 ERISA...............................................................................41
Section 8.12 [Intentionally omitted.]............................................................41
Section 8.13 Pledge of Additional Contracts; Future Mortgages....................................41
Section 8.14 FERC Jurisdiction...................................................................41
Section 8.15 Cover Damages.......................................................................41
Section 8.16 Proceeds from the Production Payment and Receivables from Lone Star
Contract.......................................................................................41
ARTICLE IX
Negative Covenants......................................................................................42
Section 9.1 Debt................................................................................42
Section 9.2 Limitation on Liens.................................................................42
Section 9.3 Mergers, Etc........................................................................44
Section 9.4 Sale of Partnership Interests.......................................................44
Section 9.5 Investments.........................................................................44
Section 9.6 Transactions With Affiliates........................................................45
Section 9.7 Disposition of Assets...............................................................45
Section 9.8 Sale and Leaseback..................................................................45
Section 9.9 Prepayment of Debt..................................................................45
Section 9.10 Nature of Business..................................................................45
Section 9.11 Environmental Protection............................................................45
Section 9.12 Accounting..........................................................................46
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TABLE OF CONTENTS
(Continued)
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Section 9.13 Executive Offices...................................................................46
Section 9.14 Fiscal Year.........................................................................46
Section 9.15 FERC Jurisdiction...................................................................46
Section 9.16 Lone Star Contract..................................................................46
Section 9.17 Additional Contracts................................................................46
Section 9.18 Distribution, Etc...................................................................46
ARTICLE X
Financial Covenants.....................................................................................47
Section 10.1 Consolidated Tangible Net Worth.....................................................47
Section 10.2 Cash Flow Coverage Ratio............................................................47
Section 10.3 Net Working Capital.................................................................47
ARTICLE XI
Default.................................................................................................47
Section 11.1 Events of Default...................................................................47
Section 11.2 Remedies............................................................................50
Section 11.3 Performance by the Agent............................................................50
ARTICLE XII
The Agent...............................................................................................51
Section 12.1 Appointment, Powers and Immunities..................................................51
Section 12.2 Rights of Agent as a Bank...........................................................52
Section 12.3 Sharing of Payments, Etc............................................................53
Section 12.4 INDEMNIFICATION.....................................................................53
Section 12.5 Independent Credit Decisions........................................................54
Section 12.6 Several Commitments.................................................................54
Section 12.7 Successor Agent.....................................................................54
Section 12.8 Nonconsenting Bank..................................................................55
ARTICLE XIII
Miscellaneous...........................................................................................55
Section 13.1 Expenses............................................................................55
Section 13.2 INDEMNIFICATION.....................................................................55
Section 13.3 LIMITATION OF LIABILITY.............................................................56
Section 13.4 No Duty.............................................................................57
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TABLE OF CONTENTS
(Continued)
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Section 13.5 No Fiduciary Relationship...........................................................57
Section 13.6 Equitable Relief....................................................................57
Section 13.7 No Waiver; Cumulative Remedies......................................................57
Section 13.8 Successors and Assigns..............................................................57
Section 13.9 Survival............................................................................60
Section 13.10 ENTIRE AGREEMENT....................................................................60
Section 13.11 Amendments, Etc.....................................................................60
Section 13.12 Maximum Interest Rate...............................................................60
Section 13.13 Notices.............................................................................61
Section 13.14 GOVERNING LAW; VENUE; SERVICE OF PROCESS............................................61
Section 13.15 Counterparts........................................................................62
Section 13.16 Severability........................................................................62
Section 13.17 Headings............................................................................62
Section 13.18 Construction........................................................................62
Section 13.19 Independence of Covenants...........................................................62
Section 13.20 Treatment of Certain Information; Confidentiality...................................62
Section 13.21 WAIVERS OF JURY TRIAL...............................................................63
-v-
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement"), dated as of
November 26, 1996, is among CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas
limited partnership ("Pipeline"), CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas
limited partnership ("Marketing"), CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP,
a Texas limited partnership ("Production"), CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation ("Exploration," and together with Pipeline, Marketing
and Production, the "Borrowers"), CASTLE PIPELINE COMPANY, a Texas corporation,
CASTLE PRODUCTION COMPANY, a Texas corporation, CEC MARKETING COMPANY, a Texas
corporation (collectively, the "General Partners"), CASTLE ENERGY CORPORATION, a
Delaware corporation ("Castle"), each of the banks or other lending institutions
which is or which may from time to time become a signatory hereto or any
successor or assignee thereof (individually, a "Bank" and, collectively, the
"Banks"), and COMMERCIAL NATIONAL BANK IN SHREVEPORT, a national banking
association, as agent for itself and the other Banks (in such capacity, together
with its successors in such capacity, the "Agent").
R E C I T A L S:
A. The Borrowers, the General Partners, Castle and Commercial National
Bank In Shreveport ("CNB") previously entered into that certain Loan Agreement
dated as of April 30, 1996, as amended pursuant to that certain First Amendment
to Loan Agreement dated as of November 8, 1996, pursuant to which the Borrowers
borrowed from CNB $6,800,000 (the "Prior Loan Agreement").
B. The Borrowers have requested that the Banks renew, extend, refinance
and increase the debt of the Borrowers outstanding under the Prior Loan
Agreement in the form of (i) revolving credit advances not to exceed an
aggregate principal amount of $10,000,000 outstanding at any time, and (ii) a
term loan in the principal amount of $15,000,000. The Banks are willing to make
such extensions of credit to the Borrowers upon the terms and conditions
hereinafter set forth.
C. The Borrowers and CNB intend that all outstanding indebtedness of
Borrowers under the Prior Loan Agreement as of the date hereof remain
outstanding under this Agreement and that the terms and conditions of this
Agreement hereinafter apply to such indebtedness.
D. The Borrowers and the Banks intend that the repayment of the
outstanding indebtedness of Pipeline and Marketing to GE Capital (as hereinafter
defined) be deemed to have occurred simultaneously with the initial Loan (as
hereinafter defined) hereunder.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
AMENDED AND RESTATED LOAN AGREEMENT - Page 1
ARTICLE I
Definitions
Section 1.1 Definitions. As used in this Agreement, the following terms
have the following meanings:
"Additional Contract" shall mean, with respect to any
Borrower, any contract entered into by such Borrower after the Closing
Date (other than employment contracts and contracts requiring payments
of less than, in the aggregate, $100,000 annually).
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls or
is controlled by, or is under common control with, such Person; (b)
that directly or indirectly beneficially owns or holds five percent or
more of any class of voting stock of such Person; or (c) five percent
or more of the voting stock of which is directly or indirectly
beneficially owned or held by the Person in question. The term
"control" means the possession, directly or indirectly, of the power to
direct or cause direction of the management and policies of a Person,
whether through the ownership of voting securities, by contract, or
otherwise; provided, however, in no event shall the Agent or any Bank
be deemed an Affiliate of any Borrower.
"Applicable Rate" means at any time an annual rate equal to
(i) the prime rate (as most recently reported in the Wall Street
Journal under the "Money Rates" section or, if no longer published
therein, as reported in a similar publication as selected by the
Agent), plus (ii) three-quarters of one percent (3/4%).
"Assigned Contracts" shall be the collective reference to the
Project Documents from and after the date of execution thereof by any
Borrower, and each Additional Contract that the Agent has requested to
be pledged as collateral to it pursuant to Section 8.13 of this
Agreement.
"Assignee" has the meaning assigned to it in Section 13.8(b).
"Assigning Bank" has the meaning assigned to it in Section
13.8(b).
"Assignment and Acceptance" means an assignment and acceptance
entered into by a Bank and its assignee and accepted by the Agent
pursuant to Section 13.8, in substantially the form of Exhibit "G"
hereto.
"Basic Documents" shall be the collective reference to the
Loan Documents, and the Project Documents.
"Borrower(s)" shall mean the singular or collective reference,
as appropriate, to Marketing, Pipeline, Production and Exploration.
AMENDED AND RESTATED LOAN AGREEMENT - Page 2
"Borrower Security Agreement" means the Amended and Restated
Security Agreement of the Borrowers in favor of the Agent for the
benefit of the Agent and the Banks, in substantially the form of
Exhibit "D-1" hereto, as the same may be amended, supplemented, or
modified.
"Borrowing Base" means, at any particular time, the sum of (a)
an amount established at least annually by the Agent and the Banks
equal to fifty percent (50%) of the net present value, discounted at
ten percent (10%) per annum of the proved developed producing reserves
owned directly or indirectly by Borrowers and Castle in which the Agent
holds a perfected, first priority Lien, as outlined, subject to the
review and adjustment by the Banks, in independent consulting
engineers' reports prepared by ▇▇▇▇▇ ▇▇▇▇▇ Company, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇
and/or other engineering firms reasonably acceptable to the Agent and
the Banks under the then applicable SEC Case for the reserves of the
Borrowers, as the same may be reviewed and adjusted by the Banks, plus
(b) the Lone Star Contract Value. In calculating the Borrowing Base,
the Banks may make adjustments to the amount of the borrowing base
established based on the SEC Case of the Borrowers' reserves as
presented in engineering reports prepared by ▇▇▇▇▇ ▇▇▇▇▇ & Associates,
▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ or other engineering firm, which may include any or
all of the following:
(a) Banks may use a price forecast and discount rate
different from the SEC price forecast;
(b) Banks may adjust volume projections made by ▇▇▇▇▇
▇▇▇▇▇ & Associates, ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ or other such
engineering firm to conform to the volume projections
of their own engineers or their consulting engineers;
and
(c) Banks may adjust lease operating expenses and taxes
to conform to the estimates of their own engineers or
their consulting engineers.
"Borrowing Base Overage" shall have the meaning specified in
Section 2.10.
"Business Day" means a day other than Saturday or Sunday, or
day on which any Bank is not authorized or required to close.
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or personal
property, which obligations are required to be classified and accounted
for as a capital lease on a balance sheet of such Person under GAAP.
For purposes of this Agreement, the amount of such Capital Lease
Obligations shall be the capitalized amount thereof, determined in
accordance with GAAP.
"Cash Flow" means, for any period, the sum of the following
for Castle, without duplication: (i) Net Income for such period, plus
(ii) depreciation, depletion and amortization of goodwill and non-cash
expenses (including, without limitation, write-offs),
AMENDED AND RESTATED LOAN AGREEMENT - Page 3
which in determining Net Income for such period were deducted from
gross income, less (iii) non-cash income for such period, determined on
a consolidated basis in accordance with GAAP to the extent included in
Net Income for such period.
"Cash Flow Coverage Ratio" means, at any particular time, the
ratio of Cash Flow to Debt Service.
"Castle" shall mean Castle Energy Corporation, a Delaware
corporation.
"Castle Deeds of Trust" shall mean each Deed of Trust,
Mortgage, Assignment of Production, Security Agreement and Financing
Statement dated as of April 30, 1996, made by Castle in favor of the
Agent for the benefit of the Agent and the Banks, as the same may be
amended, supplemented or otherwise modified from time to time.
"Castle Guaranty" shall mean the Amended and Restated
Guaranty, dated as of the Closing Date, executed by Castle in favor of
the Agent for the benefit of the Agent and the Banks, substantially in
the form of Exhibit "C" attached hereto, as the same may be amended,
supplemented or otherwise modified from time to time.
"Castle Mortgages" shall mean each Open End Mortgage,
Assignment of Production, Security Agreement and Financing Statement
dated as of April 30, 1996, made by Castle in favor of the Agent for
the benefit of the Agent and the Banks, as the same may be amended,
supplemented or otherwise modified from time to time.
"Castle Pledge Agreement" shall mean the Amended and Restated
Pledge Agreement, dated as of the Closing Date, made by Castle in favor
of the Agent for the benefit of the Agent and the Banks, substantially
in the form of Exhibit "E-1" attached hereto, as the same may be
amended, supplemented or otherwise modified from time to time.
"Closing Date" shall mean November 26, 1996.
"CNB" has the meaning specified in the Recitals hereto.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning specified in Section 5.1.
"Collateral Security Documents" shall be the collective
reference to the Borrower Security Agreement, the Security Agreement,
the Deeds of Trust, the Castle Guaranty, the Utility Security Notice,
the Lockbox Operating Agreement and the Pledge Agreements.
"Commitments" means, as to each Bank, its Revolving Credit
Commitment and its Term Loan Commitment.
AMENDED AND RESTATED LOAN AGREEMENT - Page 4
"Consents" shall be the collective reference to each consent
and agreement with respect to the assignment of an Additional Contract,
each of which shall be in form and substance reasonably satisfactory to
the Agent.
"Consolidated Liabilities" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as
liabilities on a consolidated balance sheet of Castle and the
Subsidiaries, including all accruable contingent liabilities (as
defined in FAS #5).
"Consolidated Net Worth" means, at any particular time, all
amounts which, in conformity with GAAP, would be included as
stockholders' equity on a consolidated balance sheet of Castle and the
Subsidiaries.
"Consolidated Tangible Net Worth" means, at any particular
time, the book value of the Gas Contracts, oil and gas properties,
pipelines, furniture and fixtures and all other amounts which, in
conformity with GAAP, would be included as Consolidated Net Worth;
provided, however, there shall be excluded therefrom: (a) any amount at
which shares of capital stock of Castle appear as an asset on Castle's
balance sheet, (b) goodwill, including any amounts, however designated,
that represent the excess of the purchase price paid for assets or
stock over the value assigned thereto, (c) patents, trademarks, trade
names, and copyrights, (d) deferred expenses and deferred taxes, (e)
loans and advances, other than travel and expense related advances to
any stockholder, director, officer, or employee of Castle or any
Affiliate of Castle not made in the ordinary course of business, and
(f) all other assets which are properly classified as intangible
assets.
"Debt" means as to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services,
except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than 90 days, (d) all
Capital Lease Obligations of such Person, (e) all obligations secured
by a Lien existing on property owned by such Person, whether or not the
obligations secured thereby have been assumed by such Person or are
non-recourse to the credit of such Person, (f) all reimbursement
obligations of such Person (whether contingent or otherwise) in respect
of letters of credit, bankers' acceptances, surety or other bonds and
similar instruments, and (g) all liabilities of such Person in respect
of unfunded vested benefits under any Plan; provided, however, that
Debt as to any Person shall not include (i) trade accounts payable of
such Person that are being contested in good faith by such Person and
(ii) production payments and similar obligations of such Person
provided such obligations are non-recourse to such Person.
"Debt Service" means, for any period, the sum of the current
portion of scheduled payments of long-term Debt of Castle and its
Subsidiaries (determined on a consolidated basis) for such period
(determined on a consolidated basis).
AMENDED AND RESTATED LOAN AGREEMENT - Page 5
"Deeds of Trust" shall mean collectively, the Pipeline Deed of
Trust, the Exploration Deed of Trust, the Exploration Mortgages, the
Production Deed of Trust, the Castle Mortgages and the Castle Deeds of
Trust.
"Default" means an Event of Default or the occurrence of an
event or condition which with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means the lesser of (i) the Maximum Rate, or
(ii) the sum of the Applicable Rate in effect from day to day, plus two
percent.
"Dollars" and "$" mean lawful money of the United States of
America.
"Eligible Assignee" means any commercial bank, savings and
loan association, savings bank, finance company, insurance company,
pension fund, mutual fund, or other financial institution (whether a
corporation, partnership, or other entity) acceptable to the Agent and
unless an Event of Default has occurred and is continuing, reasonably
approved by the Borrowers to the extent required in Section 13.8, such
approval by Borrowers not to be unreasonably withheld or delayed.
"Enserch" shall mean ENSERCH Corporation, a Texas corporation.
"Environmental Laws" means any and all federal, state, and
local laws, regulations, and requirements pertaining to health, safety,
or the environment, including, without limitation, the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, 42
U.S.C. Section 9601 et seq., the Resource Conservation and Recovery Act
of 1976, 42 U.S.C. Section 6901 et seq., the Occupational Safety and
Health Act, 29 U.S.C. Section 651 et seq., the Clean Air Act, 42 U.S.C.
Section 7401 et seq., the Clean Water Act, 33 U.S.C. Section 1251 et
seq., and the Toxic Substances Control Act, 15 U.S.C. Section 2601 et
seq., as such laws, regulations, and requirements may be amended or
supplemented from time to time.
"Environmental Liabilities" means as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting fees
and costs of investigation and feasibility studies), fines, penalties,
sanctions, and interest incurred as a result of any claim or demand, by
any Person, whether based in contract, tort, implied or express
warranty, strict liability, criminal or civil statute, including any
Environmental Law, permit, order or agreement with any Governmental
Authority or other Person, arising from environmental, health or safety
conditions or the Release or threatened Release of a Hazardous Material
into the environment, resulting from the past or present operations of
such Person or its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
AMENDED AND RESTATED LOAN AGREEMENT - Page 6
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as the Borrowers or is under
common control (within the meaning of Section 414(c) of the Code) with
the Borrowers.
"Event of Default" has the meaning specified in Section 11.1.
"Event of Loss" shall mean (i) the actual or constructive
total loss of the Pipeline Assets; or (ii) the loss, theft, destruction
or damage of a portion of the Pipeline Assets rendering the Pipeline
Assets unable to meet the Specified Delivery Requirements, unless (x)
no Default or Event of Default shall have occurred and be continuing
and (y) in the reasonable opinion of the Required Banks, sufficient
funds are or will be available to Pipeline to restore the Pipeline
Assets such that it will be able to meet the Specified Delivery
Requirements within 90 days after the occurrence of such event; or
(iii) the condemnation, confiscation or seizure of, or requisition of
title to, or requisition for a period exceeding 90 days of the use of
such portion of, the Pipeline Assets as shall render the Pipeline
Assets unable to meet the Specified Delivery Requirements.
"Exploration Mortgages" shall mean each Open End Mortgage,
Assignment of Production, Security Agreement and Financing Statement
dated as of April 30, 1996, made by Exploration in favor of the Agent
for the benefit of the Agent and the Banks, as amended, supplemented or
otherwise modified from time to time.
"Exploration Deed of Trust" shall mean the Deed of Trust,
Mortgage, Assignment of Production, Security Agreement and Financing
Statement dated as of April 30, 1996, made by Exploration in favor of
the Agent for the benefit of the Agent and the Banks, as amended,
supplemented or otherwise modified from time to time.
"Exploration Pledge Agreement" shall mean the Amended and
Restated Pledge Agreement, dated as of the Closing Date, made by
Exploration in favor of the Agent for the benefit of the Agent and the
Banks, as amended, supplemented or otherwise modified from time to
time.
"Fee Letter" means the letter agreement dated October 15,
1996, between the Agent and Castle.
"Federal Funds Rate" means, for any day, the rate per annum
(rounded upwards, if necessary, to the nearest 1/16 of 1%) equal to the
weighted average of the rates on overnight Federal funds transactions
with members of the Federal Reserve System arranged by Federal funds
brokers on such day, as published by the Federal Reserve Bank of New
York on the Business Day next succeeding such day, provided that (a) if
the day for which such rate is to be determined is not a Business Day,
the Federal Funds Rate for such day shall be such rate on such
transactions on the next proceeding Business Day as so published on the
next succeeding Business Day, and (b) if such rate is not so published
on such next succeeding
AMENDED AND RESTATED LOAN AGREEMENT - Page 7
Business Day, the Federal Funds Rate for any day shall be the average
rate charged to the Agent on such day on such transactions as
determined by the Agent.
"FERC" shall mean the Federal Energy Regulatory Commission or
any successor or analogous United States Federal Governmental
Authority.
"Fiscal Year" shall mean the twelve month period beginning on
October 1st of each year and ending on September 30th of the next
succeeding year.
"GAAP" means generally accepted accounting principles, applied
on a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards
Board and/or their respective successors and which are applicable in
the circumstances as of the date in question. Accounting principles are
applied on a "consistent basis" when the accounting principles applied
in a current period are comparable in all material respects to those
accounting principles applied in a preceding period.
"GAAS" shall mean generally accepted auditing standards in the
United States of America in effect from time to time.
"GE Capital" shall mean General Electric Capital Corporation,
a New York corporation or its successors or assigns.
"General Partner(s)" shall mean the individual or collective
reference, as the case may be, to Pipeline GP, Marketing GP and
Production GP.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"GP Pledge Agreement" shall mean the Amended and Restated
Pledge Agreement, dated as of the Closing Date, made by Pipeline GP,
Marketing GP and Production GP in favor of the Agent for the benefit of
the Agent and the Banks, as amended, supplemented or otherwise modified
from time to time.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in
AMENDED AND RESTATED LOAN AGREEMENT - Page 8
whole or in part), provided that the term "Guarantee" shall not include
(i) endorsements for collection or deposit in the ordinary course of
business and (ii) operating leases entered into in the ordinary course
of business. The term "Guarantee" used as a verb has a corresponding
meaning.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Hydrocarbons" shall mean all crude oil, Natural Gas,
distillate and sulphur, natural gas liquids and all products recovered
in the processing of natural gas liquids, including, without
limitation, natural gasoline, iso-butane, normal butane, propane and
ethane (including such methane allowable in commercial ethane).
"Interconnect Agreement" shall mean the Interconnect
Agreement, dated June 15, 1992, by and between Tabasco and Lone Star,
as assigned by Tabasco to Pipeline pursuant to the Assignment Agreement
(Pipeline Assets), as such Interconnect Agreement may be amended,
supplemented or otherwise modified from time to time.
"Interest Expense" means, for any period, all interest on Debt
(including the interest portion of payments under Capital Lease
Obligations and any capitalized interest) of Castle and its
Subsidiaries (determined on a consolidated basis) paid or accrued
during such period.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Limited Partner(s)" shall mean the individual or collective
reference, as the case may be, to Pipeline LP, Marketing LP and
Production LP.
"Loan Documents" means this Agreement, the Collateral Security
Documents and all promissory notes, security agreements, pledge
agreements, deeds of trust, mortgages, fee letters, assignments,
guaranties, letters of credit, letter of credit applications and other
instruments, documents, and agreements executed and delivered pursuant
to or in connection with this Agreement or the Collateral Security
Documents, as such instruments, documents, and agreements may be
amended, modified, renewed, extended, or supplemented from time to
time.
"Loan Request Form" means a certificate, in substantially the
form of Exhibit "B" hereto, properly completed and signed by the
Borrowers requesting a Loan.
"Loans" means the Revolving Credit Loans and the Term Loans.
AMENDED AND RESTATED LOAN AGREEMENT - Page 9
"Lockbox Operating Agreement" shall mean the Lockbox Operating
Agreement dated as of April 30, 1996, among the Agent and Exploration,
as the same may be amended, supplemented or otherwise modified from
time to time.
"Lone Star" shall mean Lone Star Gas Company, a division of
Enserch.
"Lone Star Contract" shall mean the Replacement Gas Purchase
Contract, dated October 22, 1992, by and between ARCO and Lone Star, as
assigned by ARCO to Marketing, as such contract may be amended,
supplemented or otherwise modified from time to time.
"Lone Star Contract Value" shall initially mean $25,000,000,
which amount shall be reviewed and may be redetermined by the Banks on
an annual basis or more frequently as the Agent and the Banks deem
necessary. In the absence of such redetermination, such amount shall be
reduced by 1/30 of such initial value per month; provided, however,
that the Lone Star Contract Value shall never be less than $0.00.
"LP Pledge Agreement" shall mean the Amended and Restated
Pledge Agreement, dated as of the Closing Date, made by the Limited
Partners in favor of the Agent for the benefit of the Agent and the
Banks, substantially in the form of Exhibit "E-4" attached hereto, as
the same may be amended, supplemented or otherwise modified from time
to time.
"Marketing" shall mean CEC Gas Marketing Limited Partnership,
a Texas limited partnership.
"Marketing GP" shall mean CEC Marketing Company, a Texas
corporation.
"Marketing LP" shall mean CEC Marketing Resources Company, a
Pennsylvania corporation.
"Marketing Partnership Agreement" shall mean the Agreement of
Limited Partnership of Marketing, dated as of November 25, 1992,
between Marketing GP and Marketing LP, as amended by Amendment No. 1
thereto and as may further be amended, supplemented or otherwise
modified from time to time.
"Maximum Rate" means, at any time the maximum rate of interest
permitted by applicable law.
"MGAC" shall mean Metallgesellchaft, AG, an
Aktiengesellschaft, organized under the laws of the Federal Republic of
Germany.
"MGC" shall mean MetallgeSellschaft Corp., a Delaware
corporation.
"MGCC" shall mean Metallgesellschaft Capital Corp., a Delaware
corporation.
AMENDED AND RESTATED LOAN AGREEMENT - Page 10
"MGG" shall mean MG Gathering Corp., a Texas corporation.
"MGNG" shall mean MG Natural Gas Corp., a Texas corporation.
"MGTF" shall mean MG Trade Finance Corp., a Delaware
corporation.
"Mortgaged Properties" shall be the reference to the
properties subject to the Deeds of Trust.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made by
the Borrowers or any ERISA Affiliate and which is covered by Title IV
of ERISA.
"Natural Gas" shall mean, in its gaseous state, all natural
gas, and any natural gas liquids and all products recovered in the
processing of natural gas.
"Net Cash Flow" means, for any period, with respect to any
Person, the Net Income of such Person for such period, plus without
duplication and to the extent reflected as a charge in the statement of
Net Income for such period, the sum of (i) amortization, (ii)
depreciation, and (iii) other non-cash charges and minus, without
duplication and to the extent reflected as a credit or gain in Net
Income for such period, other non-cash credits or gains.
"Net Income" means, for any period, with respect to any
Person, the consolidated net income of such Person and its Subsidiaries
for such period determined in accordance with GAAP provided that there
shall be excluded therefrom: (a) any net income (or net loss) of any
Person in which such Person has an ownership interest other than the
Subsidiaries, except to the extent that any such income has actually
been received by such Person in the form of cash dividends or similar
distributions; (b) any net gain (or net loss) on the sale or other
disposition, not in the ordinary course of business, of investments and
other capital assets, provided that there shall also be excluded any
related items for taxes thereon and other costs associated with the
sale or other disposition thereof; (c) any net gain (or net loss)
arising from the collection of proceeds of any insurance policy; and
(d) changes in deferred taxes.
"New Properties" shall have the meaning specified in Section
2.10.
"NGA" shall mean the Natural Gas Act of 1938, as amended, or
any successor act.
"Notes" means the Revolving Credit Notes and the Term Notes.
"Obligated Party" means any Person who is or becomes party to
any agreement that guarantees or secures payment and performance of the
Obligations or any part thereof.
AMENDED AND RESTATED LOAN AGREEMENT - Page 11
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrowers and the Obligated Parties to the Agent and
the Banks, or any of them, arising pursuant to any of the Loan
Documents, now existing or hereafter arising, whether direct, indirect,
related, fixed, contingent, liquidated, unliquidated, joint, several,
or joint and several, including, without limitation, the obligations,
indebtedness, and liabilities of the Borrowers under this Agreement and
the other Loan Documents, and all interest accruing thereon and all
attorneys' fees and other expenses incurred in the enforcement or
collection thereof.
"Operating Lease" means any lease (other than a lease
constituting a Capital Lease Obligation) of real or personal property.
"OWI Contracts" shall be the collective reference to the Owner
OWI Contracts and the Production $2.90 Contract.
"Owner OWI Contracts" shall be the collective reference to the
contracts covering the ▇▇▇▇▇ listed in Exhibit D to the Supply
Agreement.
"Partnership(s)" shall mean the singular or collective
reference, as appropriate, to Pipeline, Marketing and Production.
"Partnership Agreements" shall be the collective reference to
the Pipeline Partnership Agreement, the Marketing Partnership Agreement
and the Production Partnership Agreement.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Payment Notice" has the meaning specified in Section 2.9.
"Payor" has the meaning assigned to it in Section 4.5.
"Permitted Debt" has the meaning specified in Section 9.1.
"Permitted Liens" has the meaning specified in Section 9.2.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental
Authority, or other entity.
"Pipeline" shall mean Castle Texas Pipeline Limited
Partnership, a Texas limited partnership.
"Pipeline Assets" shall mean all of Pipeline's right, title
and interest in and to the assets and interests comprising a part of or
utilized in connection with Pipeline's intrastate pipeline system
located in ▇▇▇▇ County, Texas, including, without limitation, the
following:
AMENDED AND RESTATED LOAN AGREEMENT - Page 12
(a) real property, whether owned of record or
beneficially, and the improvements, buildings and fixtures
located thereon, including, without limitation, those that are
described on Exhibit A to the Pipeline Deed of Trust;
(b) easements, rights-of-way, licenses and permits,
whether owned of record or beneficially, and all prescriptive
rights, titles, interests and claims, together with the
improvements, buildings and fixtures located thereon,
including, without limitation, those that are described on
Exhibit A to the Pipeline Deed of Trust;
(c) leases of real property, whether owned of record
or beneficially, and the improvements, buildings and fixtures
located thereon, including, without limitation, those that are
described on Exhibit A to the Pipeline Deed of Trust;
(d) pipelines, storage, compressor and other
facilities, whether above or below ground, and all
appurtenances thereto, including, without limitation,
compressor stations, metering stations, valves, cathodic
protection systems, improvements, buildings and fixtures;
(e) certificates of authority, licenses and permits
to construct, own, maintain, operate and remove pipeline
facilities within the boundaries of various federal, state,
municipal and local governmental and quasi-governmental
jurisdictions;
(f) licenses, permits, authorizations, registrations
and exemptions relating to the handling, treatment, disposal
and discharge of pollutants, contaminants and environmentally
sensitive materials and substances;
(g) computer hardware and software, including all
leases and licenses thereof;
(h) radios and other communication equipment;
(i) governmental permits, licenses, franchises,
registrations and similar rights;
(j) contracts, contract rights, agreements and other
instruments including, without limitation, the Transportation
Agreement (Marketing), the Transportation Agreement (MGNG) and
the Interconnect Agreement to the extent such indemnity
agreements cover or relate to the Mortgaged Properties
described in paragraphs (a) through (i) hereof;
(k) materials, supplies and parts and personal
property used or useful in connection with the assets
described as a part of this defined term; and
AMENDED AND RESTATED LOAN AGREEMENT - Page 13
(1) books of account, customer lists, files, papers,
records and computer data bases, together with related file
layouts, and any other relevant files, documents and records
relating to any and all of the properties described in clauses
(a)-(k) above.
"Pipeline Deed of Trust" shall mean the Deed of Trust,
Mortgage, Assignment of Production, Security Agreement and Financing
Statement dated as of April 30, 1996, made by Pipeline in favor of the
Agent for the benefit of the Agent and the Banks, as amended,
supplemented or otherwise modified from time to time.
"Pipeline GP" shall mean Castle Pipeline Company, a Texas
corporation.
"Pipeline Interests" shall mean the real property interests
(including easements, rights of way and similar interests),
constituting a part of the Pipeline Assets.
"Pipeline LP" shall mean Castle Pipeline Resources Company, a
Pennsylvania corporation.
"Pipeline Partnership Agreement" shall mean the Agreement of
Limited Partnership of Pipeline, dated as of November 25, 1992, between
Pipeline GP and Pipeline LP, as amended by Amendment No. 1 thereto and
as may be further amended, supplemented or otherwise modified from time
to time.
"Plan" means any employee benefit or other plan established or
maintained by any Borrower, General Partner or any ERISA Affiliate and
which is covered by Title IV of ERISA.
"Pledge Agreements" shall be the collective reference to the
GP Pledge Agreement, the LP Pledge Agreement, the Exploration Pledge
Agreement and the Castle Pledge Agreement.
"Principal Office" means the principal office of the Agent,
presently located at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
"Production" shall mean Castle Texas Production Limited
Partnership, a Texas limited partnership.
"Production Deed of Trust" shall mean the Deed of Trust,
Mortgage, Assignment of Production, Security Agreement and Financing
Statement dated as of April 30, 1996, made by Production in favor of
Agent for the benefit of the Agent and the Banks, as the same may be
amended, supplemented or otherwise modified from time to time.
"Production GP" shall mean Castle Production Company, a Texas
corporation.
AMENDED AND RESTATED LOAN AGREEMENT - Page 14
"Production LP" shall mean Castle Production Resources
Company, a Pennsylvania corporation.
"Production Partnership Agreement" shall mean the Agreement of
Limited Partnership of Production dated as of November 25, 1992,
between Production GP and Production LP, as the same may be amended,
supplemented or otherwise modified from time to time.
"Production Payment" shall mean the production payment
reserved and created under that certain Assignment and ▇▇▇▇ of Sale
(Oil and Gas Assets) dated effective as of 7:00 a.m. Central Standard
Time on February 1, 1992 from ARCO to Exploration, as recorded in
Volume 1799, Page 713 of the Official Records of ▇▇▇▇ County, Texas,
and as conveyed by ARCO to Exploration under that certain Conveyance of
Production Payment dated as of November 28, 1994 from ARCO to
Exploration.
"Production $2.90 Contract" shall be the reference to the
contract listed on Exhibit E to the Supply Agreement.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Project Documents" shall be the collective reference to the
Partnership Agreements, the Lone Star Contract, the Supply Agreement,
the Interconnect Agreement and the Suspension Agreement.
"Register" has the meaning assigned to it in Section 13.8(d).
"Regulation D" means Regulation D of the Board of Governors of
the Federal Reserve System as the same may be amended or supplemented
from time to time.
"Regulatory Change" means, with respect to any Bank, any
change after the date of this Agreement in United States federal,
state, or foreign laws or regulations (including Regulation D) or the
adoption or making after such date of any interpretations, directives,
or requests applying to a class of banks including such Bank of or
under any United States federal or state, or any foreign, laws or
regulations (whether or not having the force of law) by any court or
governmental or monetary authority charged with the interpretation or
administration thereof.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal, disbursement,
leaching, or migration of Hazardous Materials into or out of property
owned by such Person, including, without limitation, the movement of
Hazardous Materials through or in the air, soil, surface water, ground
water, or property.
AMENDED AND RESTATED LOAN AGREEMENT - Page 15
"Remedial Action" means all actions required under
Environmental Laws to (a) clean up, remove, treat, or otherwise address
Hazardous Materials in the indoor or outdoor environment, (b) prevent
the Release or threat of Release or minimize the further Release of
Hazardous Materials so that they do not migrate or endanger or threaten
to endanger public health or welfare or the indoor or outdoor
environment, or (c) perform pre-remedial studies and investigations and
post-remedial monitoring and care.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Reporting Party" shall have the meaning specified in Section
8.1(a).
"Representing Parties" shall have the meaning specified in
Article VII.
"Required Banks" means at any time while no Loans are
outstanding, Banks having at least 66-2/3% of the aggregate amount of
the Commitments and, at any time while Loans are outstanding, Banks
holding at least 66-2/3% of the outstanding aggregate principal amount
of the Loans.
"Required Payment" has the meaning assigned to it in Section
4.5.
"Responsible Officer" means, with respect to any Person, in
the case of a Person which is a partnership, the president or any vice
president of the general partner of such Person, or with respect to
financial matters, the chief financial officer or chief accounting
officer of the general partner of such Person and in the case of any
Person which is a corporation, the president or any vice president of
such Person or with respect to financial matters, the chief financial
officer of such Person.
"Revolving Credit Commitment" means, as to each Bank, the
obligation of such Bank to make Revolving Credit Loans in an aggregate
principal amount at any one time outstanding up to but not exceeding
the amount set forth opposite the name of such Bank on the signature
pages hereto under the heading "Revolving Credit Commitment," or in the
Assignment and Acceptance pursuant to which such Bank assumed its
Revolving Credit Commitment, as applicable as the same may be (a)
reduced pursuant to Section 2.7 or terminated pursuant to Section 2.7
or 11.2 and (b) reduced or increased from time to time pursuant to
assignments by or to such Bank pursuant to Section 13.8.
"Revolving Credit Loan" means, as to each Bank, the loans to
be made by such Bank pursuant to Section 2.1.
"Revolving Credit Note" means a promissory note of the
Borrowers payable to the order of a Bank, in substantially the form of
Exhibit "A-1" hereto, and all extensions, renewals, and modifications
thereof and all substitutions therefor.
AMENDED AND RESTATED LOAN AGREEMENT - Page 16
"Revolving Credit Termination Date" means 11:00 A.M.
Shreveport, Louisiana time on December 31, 1997 (unless extended
pursuant to a written agreement among the parties hereto), or such
earlier date and time on which the Revolving Credit Commitments
terminate as provided in this Agreement.
"RICO" means the Racketeer Influenced and Corrupt Organization
Act of 1970, as amended from time to time.
"SEC" means the Securities and Exchange Commission.
"Security Agreement" shall mean the Amended and Restated
Security Agreement and Assignment of Production, dated as of the
Closing Date, made by Deerlick Creek Field Limited Partnership in favor
of the Agent for the benefit of the Agent and the Banks, substantially
in the form of Exhibit "D-2" attached hereto, as the same may be
amended, supplemented or otherwise modified from time to time.
"Specified Delivery Requirements" shall mean, with respect to
the Pipeline Assets, the capability of such Pipeline Assets to receive,
transport and deliver the quantities of gas necessary for Marketing to
fully perform its obligations under the Lone Star Contract, in each
case assuming that Lone Star purchases the maximum amount of gas which
it is entitled to purchase (and Marketing is required to deliver)
pursuant to the Lone Star Contract.
"Stock Repurchase Commitment Amount" means (i) from the
Closing Date until February 1, 1997, $4,000,000, and (ii) commencing on
February 1, 1997 and on the first day of each calendar month
thereafter, such amount shall reduce by $333,334 until and including
the Revolving Credit Termination Date.
"Subsidiary" means any corporation of which at least a
majority of the outstanding shares of stock having by the terms thereof
ordinary voting power to elect a majority of the board of directors of
such corporation (irrespective of whether or not at the time stock of
any other class or classes of such corporation shall have or might have
voting power by reason of the happening of any contingency) is at the
time directly or indirectly owned or controlled by any Borrower or one
or more of the Subsidiaries or by a Borrower and one or more of the
Subsidiaries.
"Supply Agreement" shall mean the Gas Purchase Contract, dated
as of December 1, 1992, as amended and restated by the Amended and
Restated Supply Agreement, dated as of August 1, 1993, between MGNG and
Marketing, as the same may be further amended, supplemented or
otherwise modified from time to time.
"Supply Agreement Amendment" shall mean the Amended and
Restated Gas Purchase Contract, dated as of August 1, 1993, between
MGNG and Marketing.
AMENDED AND RESTATED LOAN AGREEMENT - Page 17
"Suspension Agreement" shall mean the Suspension Agreement,
dated as of August 1, 1993, between MGNG and Marketing, as amended,
supplemented or otherwise modified from time to time.
"Tabasco" shall mean Tabasco Gas Pipeline Company, a Delaware
corporation and a subsidiary of ARCO.
"Term Loan" means as to each Bank, the term loan to be made by
such Bank pursuant to Section 3.1.
"Term Loan Commitments" means, as to each Bank, the obligation
of such Bank to make a Term Loan hereunder in the principal amount set
forth opposite the name of such Bank on the signature pages hereto
under the heading "Term Loan Commitment" or on the signature pages of
an Assignment and Acceptance, as the case may be.
"Term Loan Maturity Date" means 11:00 A.M. Shreveport,
Louisiana time on May 31, 1999.
"Term Loan Termination Date" means 11:00 A.M. Shreveport,
Louisiana time on April 10, 1997.
"Term Note" means a promissory note of the Borrowers payable
to the order of a Bank, in substantially the form of Exhibit "A-2"
hereto, and all extensions, renewals, and modifications thereof and all
substitutions therefor.
"Termination Date" means, with respect to the Revolving Credit
Commitments, the Revolving Credit Termination Date, and with respect to
the Term Loan Commitments, the Term Loan Termination Date.
"Transportation Agreement" shall mean the Transportation
Agreement (Marketing).
"Transportation Agreement (Marketing)" shall mean the Gas
Transportation Agreement, dated as of July 1, 1992, by and between ARCO
and Tabasco, as assigned by ARCO to Marketing pursuant to the
Assignment Agreement (Lone Star Agreement and Transportation Agreement)
and by Tabasco to Pipeline pursuant to the Assignment Agreement
(Pipeline Assets), as the same may be amended, supplemented or
otherwise modified from time to time.
"UCC" means the Uniform Commercial Code as in effect in the
State of Louisiana.
"Utility Security Notice" shall mean the Notice of Utility
Security Instrument Affecting Real Property, dated as of April 30,
1996, made by Pipeline, as the same may be amended, supplemented or
otherwise modified from time to time.
AMENDED AND RESTATED LOAN AGREEMENT - Page 18
Section 1.2 Other Definitional Provisions. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof," "herein," and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II
Revolving Credit Loans
Section 2.1 Revolving Credit Commitments. Subject to the terms and
conditions of this Agreement, each Bank severally agrees to make one or more
Revolving Credit Loans to the Borrowers on a joint and several basis, from time
to time from the date hereof to and including the Revolving Credit Termination
Date in an aggregate principal amount at any time outstanding up to but not
exceeding the amount of such Bank's Revolving Credit Commitment as then in
effect, provided that the aggregate amount of all Revolving Credit Loans at any
time outstanding shall not exceed the lesser of (i) the aggregate amount of the
Revolving Credit Commitments or (ii) the Borrowing Base less the aggregate
outstanding principal balance of the Term Loans. Notwithstanding the foregoing,
the aggregate amount of Revolving Credit Loans at any time outstanding, the
proceeds of which were used to make loans to Castle to repurchase outstanding
shares of common stock of Castle pursuant to Section 2.5 shall not at any time
exceed the Stock Repurchase Commitment Amount. Subject to the foregoing
limitations, and the other terms and provisions of this Agreement, the Borrowers
may borrow, repay, and reborrow hereunder the amount of the Revolving Credit
Commitments until the Revolving Credit Termination Date.
Section 2.2 Revolving Credit Notes. The obligation of the Borrowers to
repay each Bank for Revolving Credit Loans made by such Bank and interest
thereon shall be evidenced by a Revolving Credit Note executed by the Borrowers,
payable to the order of such Bank, in the principal amount of such Bank's
Revolving Credit Commitment, and dated the date hereof or such later date as may
be required with respect to transactions contemplated by Section 13.8.
Section 2.3 Repayment of Revolving Credit Loans. The outstanding
principal balance of the Revolving Credit Loans shall be due and payable on the
Revolving Credit Termination Date.
Section 2.4 Interest. The unpaid principal amount of the Revolving
Credit Loans shall bear interest at a varying rate per annum equal from day to
day to the lesser of (a) the Maximum Rate, or (b) the Applicable Rate. If at any
time the Applicable Rate for any Revolving Credit Loan shall exceed the Maximum
Rate, thereby causing the interest accruing on such Revolving Credit Loan to be
limited to the Maximum Rate, then any subsequent reduction in the Applicable
Rate for such Revolving Credit Loan shall not reduce the rate of interest on
such Revolving Credit Loan below the Maximum Rate until the aggregate amount of
interest accrued on such Revolving Credit Loan equals the aggregate amount of
interest which would have accrued on such Revolving Credit
AMENDED AND RESTATED LOAN AGREEMENT - Page 19
Loan if the Applicable Rate had at all times been in effect. Accrued and unpaid
interest on the Revolving Credit Loans shall be due and payable on the first day
of each month commencing January 1, 1997 and on the Revolving Credit Termination
Date. Notwithstanding the foregoing, any outstanding principal of any Revolving
Credit Loan and (to the fullest extent permitted by law) any other amount
payable by the Borrowers under this Agreement or any other Loan Document that is
not paid in full when due (whether at stated maturity, by acceleration, or
otherwise) shall bear interest at the Default Rate for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Interest payable at the Default Rate shall be payable from time to time on
demand.
Section 2.5 Use of Proceeds. The proceeds of Revolving Credit Loans
shall be used by the Borrowers (i) to finance the development of Oak Hill Field,
▇▇▇▇ County, Texas, (ii) up to $4,000,000 may be used to loan to Castle to
repurchase outstanding shares of common stock of Castle, and (iii) for other
purposes reasonably approved by the Agent and the Banks.
Section 2.6 Facility Fee. The Borrowers agree to pay to the Agent on
the date hereof for the account of the Banks a facility fee in the aggregate
amount of $125,000. In the event that the Banks in their sole discretion elect
to extend the Revolving Credit Termination Date, the Borrowers shall not be
required to pay an additional facility fee to the Banks in connection therewith.
Notwithstanding the foregoing, the Banks have no obligation or commitment to so
extend the Revolving Credit Termination Date and nothing contained herein shall
be construed as such.
Section 2.7 [Intentionally Omitted]
Section 2.8 Borrowing Base. The Borrowing Base shall be cumulative of
all other limitations contained in this Agreement and the other Loan Documents.
On or prior to the date hereof, the Banks shall have determined the amount of
the Borrowing Base to be in effect during the period from the date hereof to the
date of the first redetermination of the Borrowing Base pursuant to the
provisions of this Section 2.8. The Borrowing Base shall be redetermined
annually by the Banks on each December 31 as of September 30 of the same
calendar year, which redetermination shall be made by the Banks in accordance
with their customary practices and standards for oil and gas loans and as
contemplated by this Agreement. The Borrowers shall pay to the Agent for the
account of the Banks $15,000 for each annual redetermination of the Borrowing
Base, which shall be used by the Banks to pay for the cost of the annual
redetermination. The Banks shall have the right to redetermine the Borrowing
Base more frequently than annually; however, the Borrowers shall have no
obligation to reimburse the Banks for the cost of any such additional
redetermination of the Borrowing Base. The Borrowers shall have the right to
request that the Agent and the Banks redetermine the Borrowing Base more
frequently than annually and upon such request the Agent and the Banks shall do
so, provided that in connection with such a redetermination of the Borrowing
Base, the Borrowers shall pay to the Agent for the account of the Banks $15,000
for any such additional redetermination of the Borrowing Base.
Section 2.9 Mandatory Prepayments or Addition of Collateral. If the
outstanding principal balance of the Revolving Credit Loans at any time exceeds
the difference of the Borrowing
AMENDED AND RESTATED LOAN AGREEMENT - Page 20
Base, as determined pursuant to Section 2.8, less the aggregate outstanding
principal balance of the Term Loans, the Agent may request the Borrowers by a
notice ("Payment Notice") in writing to pay any such excess amount in the manner
provided below or to increase the Collateral in lieu of such payment, as
provided below.
Section 2.10 Required Date and Amount of Mandatory Prepayment. Within
35 days after the Borrowers have received a Payment Notice, the Borrowers shall
make a prepayment of principal on the Revolving Credit Notes equal to the amount
by which the outstanding principal balance of the Revolving Credit Notes as of
the date of the Payment Notice exceeds the Borrowing Base less the aggregate
outstanding principal balance of the Term Loans (such amount is hereinafter
referred to as the "Borrowing Base Overage"), as of such date, unless either (a)
the Borrowers have notified the Agent in writing (within 10 days after the
Borrowers have received the Payment Notice) of the Borrowers' election to comply
with Section 2.11 hereof and have provided the Agent with complete descriptions
of other properties or interests ("New Properties") which the Borrowers shall
add to the Collateral and subject to Liens in favor of the Agent for the benefit
of itself and the Banks for purposes of Section 2.11 hereof, or (b) the Required
Banks determine that the Borrowers are proceeding diligently with appropriate
actions which will enable the Borrowers to make the prepayment required by this
Section 2.10, then the Required Banks may grant to the Borrowers an additional
period of time within which to make such prepayment.
Section 2.11 Borrowers' Option to Increase Collateral in Lieu of
Prepayment. Within 30 days after the date on which the Agent receives notice of
the Borrowers' election to comply with this Section 2.11, the Borrowers shall
grant to the Agent for the benefit of itself and the Banks, valid, enforceable,
perfected, first priority Liens (subject to Permitted Liens) in the New
Properties, pursuant to security documents in form and substance reasonably
satisfactory to the Agent. In addition, the Borrowers shall deliver to the Agent
upon request such other information, data, and reports describing the New
Properties and the reserves and production related thereto, as the Agent shall
reasonably request. Within a reasonable period of time after the date on which
the Agent receives notice of the Borrowers' election to comply with this Section
2.11, the Banks shall redetermine and notify the Borrowers of the Borrowing Base
determined as if the New Properties were part of the Collateral as of the date
of the last redetermination of the Borrowing Base. Within 10 Business Days after
receipt of such notice, the Borrowers shall make a prepayment of principal on
the Revolving Credit Notes equal to the amount (if any) by which the outstanding
principal balance of the Revolving Credit Loans, as of the date of such
redetermination, exceeds the difference of the applicable Borrowing Base as of
such date as determined by the Banks pursuant to Section 2.8 less the aggregate
outstanding principal balance of the Term Loans.
Section 2.12 Evidence of Title. In the event any New Properties become
a part of the Collateral pursuant to Section 2.11 hereof, at the Agent's request
and option, the Borrowers shall deliver to the Agent title data, ▇▇▇▇▇▇▇ reports
or title opinions covering such properties or provide such other evidence of
title to such New Properties as the Agent may reasonably require.
AMENDED AND RESTATED LOAN AGREEMENT - Page 21
ARTICLE III
Term Loans
Section 3.1 Term Loans. Subject to the terms and conditions of this
Agreement, each Bank agrees to make a Term Loan to the Borrowers on a joint and
several basis, in the amount of its Term Loan Commitment in one or more advances
on or before the Term Loan Termination Date.
Section 3.2 The Term Notes. The obligation of the Borrowers to repay
the Term Loans and interest thereon shall be evidenced by the Term Notes
executed by the Borrowers, payable to the order of a Bank, in the principal
amount of such Bank's Term Loan Commitment and dated the date hereof or such
later date as may be required with respect to transactions contemplated by
Section 13.8.
Section 3.3 Repayment of Term Loans. The Borrower shall repay the
unpaid principal amount of the Term Loans in twenty-nine (29) equal consecutive
monthly installments in the aggregate amount of the lesser of (i) the aggregate
outstanding principal balance of the Term Loans, or (ii) $500,000.00 each,
payable on the first day of each month, commencing on December 1, 1996, until
and including April 1, 1999, with a final installment in the amount of all
outstanding principal of the Term Loans payable on May 31, 1999.
Section 3.4 Interest. The unpaid principal amount of the Term Loans
shall bear interest at a varying rate per annum equal from day to day to the
lesser of (a) the Maximum Rate, or (b) the Applicable Rate. If at any time the
Applicable Rate for any Term Loan shall exceed the Maximum Rate, thereby causing
the interest accruing on such Term Loan to be limited to the Maximum Rate, then
any subsequent reduction in the Applicable Rate for such Term Loan shall not
reduce the rate of interest on such Term Loan below the Maximum Rate until the
aggregate amount of interest accrued on such Term Loan equals the aggregate
amount of interest which would have accrued on such Term Loan if the Applicable
Rate had at all times been in effect. Accrued and unpaid interest on the Term
Loans shall be due and payable on the first day of each month commencing
December 1, 1996 and continuing on the first day of each month thereafter until
and including the Term Loan Maturity Date. Notwithstanding the foregoing, any
outstanding principal of any Term Loan and (to the fullest extent permitted by
law) any other amount payable by the Borrowers under this Agreement or any other
Loan Document that is not paid in full when due (whether at stated maturity, by
acceleration, or otherwise) shall bear interest at the Default Rate for the
period from and including the due date thereof to but excluding the date the
same is paid in full. Interest payable at the Default Rate shall be payable from
time to time on demand.
Section 3.5 Request for Term Loans. The Term Loans shall be made on at
least one Business Day's prior notice from Borrowers to the Agent by means of a
Loan Request Form containing the information required therein.
Section 3.6 Use of Proceeds. The proceeds of the Term Loans shall be
used by Borrowers to (i) refinance the outstanding indebtedness of Pipeline and
Marketing to GE Capital, (ii) renew,
AMENDED AND RESTATED LOAN AGREEMENT - Page 22
extend and modify the outstanding indebtedness of the Borrowers to CNB, (iii)
the balance of the proceeds of the Term Loans may be used to make loans to
Castle for the purpose of repurchasing outstanding shares of common stock of
Castle, (iv) to finance the development of Oak Hill Field, ▇▇▇▇ County, Texas,
and (v) for other purposes approved by the Agent and the Banks.
Section 3.7 Mandatory Prepayment. If an Event of Loss shall occur, the
Borrowers shall prepay in full the unpaid principal amount of the Term Loans,
together with accrued interest thereon to the date of prepayment and all other
amounts owing hereunder and under the Loan Documents, on the earlier of (A) the
date occurring 60 days after the date of such Event of Loss and (B) the date on
which insurance proceeds are received with respect to such Event of Loss.
ARTICLE IV
Borrowing Procedure; Payments
Section 4.1 Borrowing Procedure. The Borrowers shall give the Agent
notice by means of a Loan Request Form of each requested Loan at least one
Business Day before the requested date of the Loan, specifying: (a) the
requested date of such Loan (which shall be a Business Day), (b) the amount of
such Loan, and (c) whether such Loan is a Revolving Credit Loan or a Term Loan.
Each Revolving Credit Loan and each Term Loan shall be in a minimum principal
amount of $250,000. The Agent shall notify each Bank in writing of the contents
of each such notice. Not later than 12:00 P.M. Shreveport, Louisiana time on the
date specified for each Loan hereunder, each Bank will make available to the
Agent at the Principal Office in immediately available funds, for the account of
the Borrowers, its pro rata share of each Loan. After the Agent's receipt of
such funds and subject to the other terms and conditions of this Agreement, the
Agent will make each Loan available to the Borrowers by depositing the same, in
immediately available funds, in an account of the Borrowers (designated by the
Borrowers) maintained with the Agent at the Principal Office. All notices under
this Section shall be irrevocable and shall be given not later than noon
Shreveport, Louisiana, time on the day which is not less than the number of
Business Days specified above for such notice.
Section 4.2 Method of Payment. All payments of principal, interest, and
other amounts to be made by the Borrowers under this Agreement and the other
Loan Documents shall be made to the Agent at the Principal Office for the
account of each Bank in Dollars and in immediately available funds, without
setoff, deduction, or counterclaim, not later than 1:00 P.M., Shreveport,
Louisiana time on the date on which such payment shall become due (each such
payment made after such time on such due date to be deemed to have been made on
the next succeeding Business Day). The Borrowers shall, at the time of making
each such payment, specify to the Agent the sums payable by the Borrowers under
this Agreement and the other Loan Documents to which such payment is to be
applied (and in the event that the Borrowers fail to so specify, or if an Event
of Default has occurred and is continuing, the Agent may apply such payment to
the Obligations in such order and manner as it may elect in its sole discretion,
subject to Section 4.4 hereof). Each payment received by the Agent under this
Agreement or any other Loan Document for the account of a Bank shall be paid
promptly to such Bank, in immediately available funds. Whenever any
AMENDED AND RESTATED LOAN AGREEMENT - Page 23
payment under this Agreement or any other Loan Document shall be stated to be
due on a day that is not a Business Day, such payment may be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.
Section 4.3 Voluntary Prepayment. The Borrowers may prepay the Loans in
whole at any time or from time to time in part without premium or penalty but
with accrued interest to the date of prepayment on the amount so prepaid,
provided that each partial prepayment shall be in the principal amount of
$250,000 or an integral multiple thereof. All notices under this Section shall
be irrevocable and shall be given not later than 1:00 P.M. Shreveport,
Louisiana, time on the day of such prepayment.
Section 4.4 Pro Rata Treatment. Except to the extent otherwise provided
herein: (a) each Loan shall be made by the Banks under Section 2.1 and 3.1; (b)
the payment of the facility fee under Section 2.6 and the engineering fees under
Section 2.8 shall be made for the account of the Banks; and (c) each termination
or reduction of the Revolving Credit Commitments under Section 2.7 shall be
applied to the Revolving Credit Commitments of the Banks, pro rata according to
the respective unused Revolving Credit Commitments.
Section 4.5 Non-Receipt of Funds by the Agent. Unless the Agent shall
have been notified by a Bank or the Borrowers (the "Payor") prior to the date on
which such Bank is to make payment to the Agent of the proceeds of a Loan to be
made by it hereunder or the Borrowers are to make a payment to the Agent for the
account of one or more of the Banks, as the case may be (such payment being
herein called the "Required Payment"), which notice shall be effective upon
receipt, that the Payor does not intend to make the Required Payment to the
Agent, the Agent may assume that the Required Payment has been made and may, in
reliance upon such assumption (but shall not be required to), make the amount
thereof available to the intended recipient on such date and, if the Payor has
not in fact made the Required Payment to the Agent, the recipient of such
payment shall, on demand, pay to the Agent the amount made available to it
together with interest thereon in respect of the period commencing on the date
such amount was so made available by the Agent until the date the Agent recovers
such amount at a rate per annum equal to the Federal Funds Rate (or, in the case
of the Borrowers, the Applicable Rate) for such period.
Section 4.6 Computation of Interest. Interest on the Loans and all
other amounts payable by the Borrowers hereunder shall be computed on the basis
of a year of 360 days and the actual number of days elapsed (including the first
day but excluding the last day) unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be.
AMENDED AND RESTATED LOAN AGREEMENT - Page 24
ARTICLE V
Security
Section 5.1 Collateral. To secure full and complete payment and
performance of the Obligations, the Borrowers shall execute and deliver or cause
to be executed and delivered the documents described below covering the property
described in this Section 5.1 (which, together with any other property which may
now or hereafter secure the Obligations or any part thereof, is sometimes herein
called the "Collateral"):
(a) Each Borrower shall grant to the Agent for the benefit of
itself and the Banks a first priority (subject only to Permitted Liens)
security interest in all of its accounts, accounts receivable,
equipment, machinery, fixtures, inventory, chattel paper, documents,
instruments, and general intangibles, whether now owned or hereafter
acquired, and all products and proceeds thereof, pursuant to the
Borrower Security Agreement; provided, such security interest shall not
attach to (i) funds in possession of the Borrower constituting trust
funds owned by third parties, (ii) capital lease obligations and
property subject to a purchase money security interest to the extent it
is subject to a Permitted Lien, which Permitted Lien prohibits the
imposition of other Liens, (iii) operating leases, licenses and other
agreements (but excluding oil and gas leases) entered in the ordinary
course of business to the extent such agreements prohibit assignment or
the imposition of Liens, (iv) all permits, authorizations,
registrations, consents, approvals, waivers, exceptions, variances,
claims, orders, judgments and decrees, licenses, exemptions,
franchises, registrations, publications, filings, notices to and
declarations of, or with, any Governmental Authority, including,
without limitation, all construction, siting, environmental and
operating permits and licenses that are required for the use and
operation of the Pipeline Assets, to that extent that any of the above
would, by its terms or operation of law, become void, voidable,
terminable or revocable if mortgaged, pledged or assigned or if a
security interest therein were granted hereunder, (v) all licenses,
permits, authorizations, registrations and exemptions relating to the
handling, treatment, disposal and discharge of pollutants, contaminants
and environmentally sensitive materials and substances which are not
assignable by law or in accordance with their terms, (vi) leases,
licenses and other agreements relating to computer hardware and
software which are not assignable by law or in accordance with their
terms, (vii) contracts, contract rights, agreements and other
instruments including, without limitation, the Transportation Agreement
(Marketing) and the Interconnect Agreement, which are not assignable by
law or in accordance with their terms, and (viii) all other consents,
licenses and permits which are not assignable by law or in accordance
with their terms.
(b) Each Borrower shall grant to the Agent for the benefit of
itself and the Banks and confirm its prior grant of a Lien on all of
its real property, Hydrocarbons and all interests therein and proceeds
thereof pursuant to the Deeds of Trust.
AMENDED AND RESTATED LOAN AGREEMENT - Page 25
(c) Castle shall pledge and grant to the Agent for the benefit
of itself and the Banks a first priority security interest in (i) all
of the outstanding capital stock of Exploration and each of the General
Partners and the Limited Partners, and all products and proceeds
thereof, pursuant to the Castle Pledge Agreement. The Agent shall
retain possession in Louisiana of the certificates evidencing the
capital stock of such Subsidiaries, together with stock powers duly
executed in blank by Castle.
(d) Each of the General Partners shall pledge and grant to the
Agent for the benefit of itself and the Banks a first priority security
interest in its general partnership interest in the relevant Borrower
for which it is the general partner, and all products and proceeds
thereof, pursuant to the GP Pledge Agreement.
(e) Each of the Limited Partners shall pledge and grant to the
Agent for the benefit of itself and the Banks a first priority security
interest in its limited partnership interest in the relevant Borrower
for which it is the limited partner, and all products and proceeds
thereof, pursuant to the LP Pledge Agreement.
(f) Exploration shall pledge and grant to the Agent for the
benefit of itself and the Banks a first priority security interest in
Exploration's entire limited partnership interest in Deerlick Creek
Field Limited Partnership and all products and proceeds thereof
pursuant to the Exploration Pledge Agreement.
(g) Castle shall grant to the Agent for the benefit of itself
and the Banks and confirm its prior grant of a Lien on the Mortgaged
Properties owned by Castle pursuant to the Castle Mortgages and the
Castle Deeds of Trust.
(h) The Borrowers, Castle, the General Partners and the
Limited Partners shall execute and cause to be executed such further
documents and instruments, including without limitation, Uniform
Commercial Code financing statements, as the Agent, in its sole
discretion, deems necessary or desirable to evidence and perfect its
liens and security interests in the Collateral.
Section 5.2 Setoff. If an Event of Default shall have occurred and is
continuing, the Agent and each Bank are hereby authorized at any time and from
time to time, without notice to the Borrowers (any such notice being hereby
expressly waived by the Borrowers), to set off and apply any and all deposits
(general, time or demand, provisional or final, other than deposits constituting
trust funds belonging to third parties) at any time held and other indebtedness
at any time owing by the Agent or such Bank to or for the credit or the account
of any Borrower against any and all of the obligations of the Borrowers now or
hereafter existing under this Agreement, the Notes, or any other Loan Document,
irrespective of whether or not the Agent or such Bank shall have made any demand
under this Agreement, the Notes or any other Loan Document and although such
obligations may be unmatured. The rights and remedies of the Agent and each Bank
hereunder are in addition to other rights and remedies (including, without
limitation, other rights of setoff) which the Agent and such Bank may have.
AMENDED AND RESTATED LOAN AGREEMENT - Page 26
ARTICLE VI
Conditions Precedent
Section 6.1 Initial Loan. The obligation of each Bank to make its
initial Loan is subject to the condition precedent that the Agent shall have
received on or before the day of such Loan of all of the following, each dated
(unless otherwise indicated) the date hereof, in form and substance satisfactory
to the Agent:
(a) Resolutions. Resolutions of the Board of Directors of
Castle, Exploration, each General Partner and each Limited Partner
certified by its Secretary or an Assistant Secretary which authorize
the execution, delivery, and performance by such Person (and in the
case of each General Partner, the relevant Borrower) of the Loan
Documents to which such Person is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of Castle,
Exploration, each General Partner and each Limited Partner certifying
the names of the officers of such Person authorized to sign each of the
Loan Documents to which such Person (or the relevant Borrower) is or is
to be a party (including the certificates contemplated herein) together
with specimen signatures of such officers;
(c) Articles of Incorporation. The articles of incorporation
of Castle, Exploration, each General Partner and each Limited Partner
certified by the Secretary or Assistant Secretary of each such Person;
(d) Bylaws. The bylaws of Castle, Exploration, each General
Partner and each Limited Partner certified by the Secretary or an
Assistant Secretary of such Person;
(e) Governmental Certificates. Certificates of (i) the
appropriate government officials of the state of incorporation of
Castle, Exploration, each General Partner and each Limited Partner as
to the existence and good standing of such Person, and (ii)
certificates of existence of each Borrower (other than Exploration) in
the State of Texas, certified by the Secretary of State of Texas, each
dated within ten (10) days prior to the date of the initial Loan;
(f) Certificates of Limited Partnership. Copies of each
Borrower's (other than Exploration) Certificate of Limited Partnership
certified by the Secretary of State of the State of Texas, dated within
ten (10) days prior to the date of the initial Loan;
(g) Revolving Credit Notes. The Revolving Credit Notes
executed by the Borrowers;
(h) Term Notes. The Term Notes executed by the Borrowers;
AMENDED AND RESTATED LOAN AGREEMENT - Page 27
(i) Borrower Security Agreement. The Borrower Security
Agreement executed by the Borrowers;
(j) Security Agreement. The Security Agreement executed by
Exploration;
(k) Financing Statements. Uniform Commercial Code financing
statements executed by the Borrowers, Castle, the General Partners and
the Limited Partners covering the Collateral;
(l) Castle Pledge Agreement. The Castle Pledge Agreement
executed by Castle;
(m) Stock Certificates. The original certificates evidencing
the stock pledged by Castle pursuant to the Castle Pledge Agreement,
together with stock powers duly executed in blank by Castle;
(n) Exploration Pledge Agreement. The Exploration Pledge
Agreement executed by Exploration;
(o) GP Pledge Agreement. The GP Pledge Agreement executed by
the General Partners;
(p) LP Pledge Agreement. The LP Pledge Agreement executed by
the Limited Partners;
(q) Modifications. Modifications of the Deeds of Trust and
such other of the Collateral Security Documents as the Agent deems
necessary, executed by the respective Obligated Parties;
(r) Repayment of Debt. Evidence that Borrowers shall have
satisfied (or upon funding of the Term Loans will satisfy) in full all
amounts owing to GE Capital;
(s) Material Adverse Change. No material adverse change shall
have occurred since the date of the most recent financial statements
delivered by Castle to the Agent, in the financial condition, business,
operations, or prospects of Castle, any Borrower, any General Partner,
any Limited Partner or Lone Star or in any of their respective assets,
liabilities or properties and there shall be no material threatened or
pending litigation adversely affecting any of their respective
property;
(t) Insurance Policies. Copies or other evidence of all
insurance policies required by Section 8.5;
(u) UCC Searches. The results of a Uniform Commercial Code
search showing all financing statements and other documents or
instruments on file against Castle, the Borrowers, the General Partners
and the Limited Partners in such jurisdictions as the Agent
AMENDED AND RESTATED LOAN AGREEMENT - Page 28
shall determine, such searches to be as of a date no more than 10 days
prior to the date of the initial Loan;
(v) Lien Releases. Executed UCC-3 Termination Statements and
other Lien releases that release or assign to the Agent all Liens held
by holders of Debt not constituting Permitted Debt (including, without
limitation, all Liens in favor of GE Capital) and all other Liens that
do not constitute Permitted Liens;
(w) Opinion of Counsel. A favorable opinion of Akin, Gump,
Strauss, ▇▇▇▇▇ & ▇▇▇▇, L.L.P., legal counsel to Castle, the General
Partners, the Limited Partners and the Borrowers, as to the matters set
forth in Exhibit "F" hereto, and such other matters as the Agent may
reasonably request;
(x) Engineering Report. Engineering reports updated on an
annual basis acceptable to the Agent in form and substance from the
▇▇▇▇▇ ▇▇▇▇▇ & Associates and ▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇;
(y) Project Documents. Each of the Project Documents shall be
in full force and effect and no material default shall exist or be
continuing under any Project Document; and
(z) Attorneys' Fees and Expenses. Evidence that the costs,
fees and expenses referred to in the Fee Letter, Section 2.6 and in
Section 13.1, to the extent incurred, shall have been paid in full by
the Borrowers.
Section 6.2 All Loans. The obligation of each Bank to make any Loan
(including the initial Loan) is subject to the following additional conditions
precedent:
(a) Request for Loan. The Agent shall have received, in
accordance with Section 4.1, a Loan Request Form executed by an
authorized officer of the Borrowers;
(b) No Default. No Default shall have occurred and be
continuing, or would result from such Loan;
(c) Representations and Warranties. All of the representations
and warranties contained in Article VII hereof and in the other Loan
Documents shall be true and correct on and as of the date of such Loan
with the same force and effect as if such representations and
warranties had been made on and as of such date except (i) to the
extent such representations and warranties relate to an earlier date,
in which case they were true and correct as of such date, and (ii) as
such representations and warranties are modified to give effect to
transactions expressly permitted hereby; and
(d) Additional Documentation. The Agent shall have received
such additional approvals, opinions, or documents as the Agent or its
legal counsel, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇ P.C., may reasonably request.
AMENDED AND RESTATED LOAN AGREEMENT - Page 29
ARTICLE VII
Representations and Warranties
To induce the Agent and the Banks to enter into this Agreement, each
Borrower, each General Partner, and Castle (collectively, the "Representing
Parties") represent and warrant to the Agent and the Banks that:
Section 7.1 Corporate Existence. (a) Each Borrower (other than
Exploration) is a limited partnership duly organized and validly existing under
the laws of the State of Texas. Exploration is a corporation duly organized and
validly existing and in good standing under the laws of the Commonwealth of
Pennsylvania. Each Borrower is duly qualified to do business under the laws of
each jurisdiction in which the conduct of its business or the ownership, lease
or operation of its property so requires, except where failure to so qualify
would not have a material adverse effect on its business, financial condition,
or operations. The Certificate of Limited Partnership of each Borrower (other
than Exploration) has been duly filed in the office of the Secretary of State of
Texas; the Certificate of Incorporation of Exploration has been duly filed in
the Office of the Secretary of State of the Commonwealth of Pennsylvania; and no
other filing, recording, publishing or other act is necessary or appropriate in
connection with the existence of any Borrower except those which have been duly
made or performed.
(b) Each General Partner is duly organized and validly existing and in
good standing under the laws of Texas, is duly qualified to do business under
the laws of each jurisdiction in which the conduct of its business so requires
(except where the failure to so qualify would not have a material adverse effect
on its business, financial conditions or operations) and has the corporate power
and authority and the legal right to own and operate its property and to conduct
the business in which it is currently engaged.
(c) Pipeline GP is the sole general partner of Pipeline. Marketing GP
is the sole general partner of Marketing. Production GP is the sole general
partner of Production. Pipeline GP, Marketing GP and Production GP are engaged
solely in the business of being the general partners of Pipeline, Marketing and
Production, respectively, and activities incident thereto.
(d) Each Limited Partner is duly organized and validly existing and in
good standing under the laws of Pennsylvania, is duly qualified to do business
under the law of each jurisdiction in which the conduct of its business so
requires (except where the failure to so qualify would not have a material
adverse effect on its business, financial conditions or operations) and has the
corporate power and authority and the legal right to own and operate its
property and to conduct the business in which it is currently engaged.
(e) Pipeline LP is the sole limited partner of Pipeline. Marketing LP
is the sole limited partner of Marketing. Production LP is the sole limited
partner of Production.
AMENDED AND RESTATED LOAN AGREEMENT - Page 30
Section 7.2 Financial Statements. Castle has delivered to the Agent
audited consolidated financial statements (Form 10-K) of Castle and its
Subsidiaries as at and for the fiscal year ended September 30, 1995, and
unaudited consolidated financial statements (Form 10-Q) of Castle and its
Subsidiaries for the nine month period ended June 30, 1996. Such financial
statements have been prepared in accordance with GAAP, and fairly present, in
all material respects, on a consolidated basis, the financial condition of
Castle and its Subsidiaries as of the respective dates indicated therein and the
results of operations for the respective periods indicated therein. Neither
Castle nor any of its Subsidiaries has any material contingent liabilities,
liabilities for taxes, unusual forward or long-term commitments, or unrealized
or anticipated losses from any unfavorable commitments except as scheduled or
referred to or reflected in such financial statements. There has been no
material adverse change in the business, condition (financial or otherwise),
operations, prospects, or properties of Castle, any Borrower, any General
Partner or any Limited Partner since the effective date of the most recent
financial statements referred to in this Section.
Section 7.3 Corporate Action; No Breach. The execution, delivery, and
performance by Castle, each General Partner, each Limited Partner and each
Borrower of the Loan Documents to which such Person is or may become a party and
compliance with the terms and provisions hereof and thereof have been duly
authorized by all requisite corporate or partnership action on the part of such
Person and do not and will not (a) violate or conflict with, or result in a
breach of, or require any consent that has not been obtained under (i) the
articles of incorporation or certificate of limited partnership, as the case may
be, or bylaws or agreement of limited partnership, as the case may be, of such
Person, (ii) any applicable law, rule, or regulation or any order, writ,
injunction, or decree of any Governmental Authority or arbitrator in any way
that would reasonably be expected to have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects or
properties of such Person or the ability of such Person to perform its
obligations under the Loan Documents, or (iii) any agreement or instrument to
which such Person is a party or by which it or any of its property is bound or
subject in any way that would reasonably be expected to have a material adverse
effect on the business, condition (financial or otherwise), operations,
prospects or properties of such person or the ability of such Person to perform
its obligations under the Loan Documents, or (b) constitute a default under any
such agreement or instrument, or result in the creation or imposition of any
Lien (except as provided in Article V) upon any of the revenues or assets of any
such Person in any way that would reasonably be expected to have a material
adverse effect on the business, condition (financial or otherwise), operations,
prospects or properties of such Person or the ability of such person to perform
its obligations under the Loan Documents.
Section 7.4 Operation of Business. Each of Castle, each General
Partner, each Limited Partner and each Borrower possesses all licenses, permits,
franchises, patents, copyrights, trademarks, and tradenames, or rights thereto,
necessary to conduct its business substantially as now conducted and as
presently proposed to be conducted, and no such Person is in violation of any
valid rights of others with respect to any of the foregoing except in each case
to the extent that any such failure or violation would not reasonably be
expected to have a material adverse effect on the business, condition (financial
or otherwise), operations, prospects or properties of such Person or the ability
of such Person to perform its obligations under the Loan Documents.
AMENDED AND RESTATED LOAN AGREEMENT - Page 31
Section 7.5 Litigation and Judgments. Except as disclosed on Schedule 1
hereto, there is no action, suit, investigation, or proceeding before or by any
Governmental Authority or arbitrator pending, or to the knowledge of any
Representing Party, threatened against or affecting Castle, any General Partner,
Limited Partner or Borrower, that would, if adversely determined, have a
material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of such Person or the ability of any such
Person to perform its obligations under the Loan Documents. There are no
outstanding judgments against any such Person.
Section 7.6 Rights in Properties; Liens. Castle, each General Partner,
each Limited Partner and each Borrower have good and indefeasible title to or
valid leasehold interests in their respective properties and assets, real and
personal, including the properties, assets, and leasehold interests reflected in
the financial statements described in Section 7.2, and none of the properties,
assets, or leasehold interests of any such Person is subject to any Lien, except
the Permitted Liens.
Section 7.7 Enforceability. This Agreement constitutes, and the other
Loan Documents to which Castle, any General Partner, Limited Partner or Borrower
is party, when delivered, shall constitute the legal, valid, and binding
obligations of such Person, enforceable against such Person in accordance with
their respective terms, except as limited by bankruptcy, insolvency, or other
laws of general application relating to the enforcement of creditors' rights.
Section 7.8 Approvals. No authorization, approval, or consent of, and
no filing or registration with, any Governmental Authority or third party is or
will be necessary for the execution, delivery, or performance by Castle, any
General Partner, Limited Partner or Borrower of the Loan Documents to which such
Person is or may become a party or for the validity or enforceability thereof,
except (a) routine corporate and limited partnership filings, (b) ▇▇▇-▇, ▇▇▇-▇,
and similar filings, (c) filings in connection with the exercise of remedies by
the Banks, and (d) routine filings in connection with conducting business in the
ordinary course.
Section 7.9 Debt. The Borrowers have no Debt, except Permitted Debt.
Section 7.10 Taxes. Each Borrower, each General Partner, each Limited
Partner and Castle has filed all material tax returns (federal, state, and
local) required to be filed, including all income, franchise, employment,
property, and sales tax returns, and have paid all material respective
liabilities for taxes, assessments, governmental charges, and other levies that
are due and payable. No Representing Party knows of any pending investigation of
any such Person by any taxing authority or of any pending but unassessed tax
liability of any such Person.
Section 7.11 Use of Proceeds; Margin Securities. No Borrower, General
Partner or Limited Partner 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 (within the meaning of Regulations G, T, U, or X of the
Board of Governors of the Federal Reserve System), and no part of the proceeds
of any Loan will be used to purchase or carry any margin stock or to extend
credit to others for the purpose of purchasing or carrying margin stock.
AMENDED AND RESTATED LOAN AGREEMENT - Page 32
Section 7.12 ERISA. Each Borrower, each General Partner and each
Limited Partner are in compliance in all material respects with all applicable
provisions of ERISA. Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any Plan. No notice of intent to
terminate a Plan has been filed, nor has any Plan been terminated. No
circumstances exist which constitute grounds entitling the PBGC to institute
proceedings to terminate, or appoint a trustee to administer, a Plan, nor has
the PBGC instituted any such proceedings. No Borrower, General Partner, Limited
Partner or any ERISA Affiliate has completely or partially withdrawn from a
Multiemployer Plan. Each Borrower, each General Partner and each Limited Partner
and each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of their Plans, and the present value of all vested benefits
under each Plan do not exceed the fair market value of all Plan assets allocable
to such benefits, as determined on the most recent valuation date of the Plan
and in accordance with ERISA. No Borrower, General Partner, Limited Partner or
any ERISA Affiliate has incurred any liability to the PBGC under ERISA.
Section 7.13 Disclosure. No statement, information, report,
representation, or warranty made by any Representing Party in this Agreement or
in any other Loan Document or furnished to the Agent or any Bank in connection
with this Agreement or any transaction contemplated hereby contains any untrue
statement of a material fact or omits to state any material fact necessary to
make the statements herein or therein not misleading. There is no fact known to
such Representing Party which has a material adverse effect, or which might in
the future have a material adverse effect, on the business, condition (financial
or otherwise), operations, prospects, or properties of such Representing Party
that has not been disclosed in writing to the Agent and the Banks.
Section 7.14 Subsidiaries. Castle has no Subsidiaries other than those
listed on Schedule 3 hereto, and Schedule 3 sets forth the jurisdiction of
incorporation of each Subsidiary and the percentage of the Borrower's ownership
of the outstanding voting stock of each Subsidiary. All of the outstanding
capital stock of each Subsidiary has been validly issued, is fully paid, and is
nonassessable.
Section 7.15 Agreements. Neither Castle, any Borrower, any General
Partner nor any Limited Partner is a party to any indenture, loan, or credit
agreement, or to any lease or other agreement or instrument, or subject to any
charter or corporate restriction which would reasonably be expected to have a
material adverse effect on the business, condition (financial or otherwise),
operations, prospects, or properties of such Persons, or the ability of such
Person to pay and perform its obligations under the Loan Documents to which it
is a party. Neither Castle, any Borrower, any General Partner nor any Limited
Partner is in default in any respect in the performance, observance, or
fulfillment of any of the obligations, covenants, or conditions contained in any
agreement or instrument material to its business to which it is a party.
Section 7.16 Compliance with Laws. Neither Castle, any Borrower, any
General Partner nor any Limited Partner is in violation in any material respect
of any law, rule, regulation, order, or decree of any Governmental Authority or
arbitrator.
AMENDED AND RESTATED LOAN AGREEMENT - Page 33
Section 7.17 Investment Company Act. Neither Castle, any Borrower, any
General Partner nor any Limited Partner is an "investment company" within the
meaning of the Investment Company Act of 1940, as amended.
Section 7.18 Public Utility Holding Company Act. None of the Borrowers,
the General Partners nor the Limited Partners is a "holding company" or a
"subsidiary company" of a "holding company" or an "affiliate" of a "holding
company" or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 7.19 Environmental Matters. Except as disclosed on Schedule 4
hereto:
(a) The Borrowers, the General Partners, the Limited Partners
and Castle, and all of their respective properties, assets, and
operations are in compliance in all material respects with all
Environmental Laws. No Representing Party is aware of, nor has any
Representing Party received notice of, any past, present, or future
conditions, events, activities, practices, or incidents which may
interfere with or prevent the compliance or continued compliance of any
such Person with all Environmental Laws;
(b) To the best of such Representing Party's knowledge, the
Borrowers, the General Partners, the Limited Partners and Castle have
obtained all permits, licenses, and authorizations that are required
under applicable Environmental Laws, and have received no notice that
any such permit is not in good standing, or that any such Person is not
in compliance with all of the terms and conditions of such permits;
(c) To the best of such Representing Party's knowledge, no
Hazardous Materials exist on, about, or within or have been used,
generated, stored, transported, disposed of on, or Released from any of
the Mortgaged Properties except in amounts that would not violate
applicable law;
(d) None of the Borrowers nor any of their respective
currently or previously owned or leased properties or operations is
subject to any outstanding or, to the best of such Borrower's
knowledge, threatened order from or agreement with any Governmental
Authority or other Person or subject to any judicial or docketed
administrative proceeding with respect to (i) failure to comply with
Environmental Laws, (ii) Remedial Action, or (iii) any Environmental
Liabilities arising from a Release or threatened Release;
(e) To the best of such Representing Party's knowledge, there
are no conditions or circumstances associated with the currently or
previously owned or leased properties or operations of any Borrower
that could reasonably be expected to give rise to any Environmental
Liabilities;
(f) None of the Borrowers is a treatment, storage, or disposal
facility requiring a permit under the Resource Conservation and
Recovery Act, 42 U.S.C. Section 6901 et seq., regulations thereunder or
any comparable provision of state law. Each of the Borrowers is
AMENDED AND RESTATED LOAN AGREEMENT - Page 34
in substantial compliance with all applicable financial responsibility
requirements of all Environmental Laws; and
(g) No Borrower has received any notice that a Lien arising
under any Environmental Law has attached to any property or revenues of
such Borrower.
Section 7.20 Pipeline Contracts. Pipeline, with respect to the Pipeline
Assets, has fulfilled all requirements for filings, certificates, disclosures of
parties in interest, and other similar matters contained in (or otherwise
applicable thereto by law, rule or regulation) any Basic Document or other
document granting or governing the operation or maintenance of such interests
and assets, and Pipeline is qualified to own, hold and exercise such rights
under such lease unit agreements, Basic Documents or other documents.
Section 7.21 No Obligations. Except for obligations pursuant to the
Project Documents, no Borrower has any obligation or Debt owing to MGTF or any
other MGC Affiliate except in connection with the termination by the Borrowers
of certain management and service agreements to which MGTF, MGC or an Affiliate
thereof is a party.
Section 7.22 Prepayment. Marketing has fully and irrevocably prepaid a
quantity of Natural Gas (a) from Production pursuant to the Production $2.90
Contract equal to the aggregate sum of the Tier II Minuends (as defined in the
Supply Agreement) for each day in the period from August 1, 1993 through May 31,
1999, inclusive, as set forth in Exhibit B to the Supply Agreement, and (b) from
MGNG pursuant to the Supply Agreement equal to all Tier II and Tier III Gas (as
defined therein) to be delivered thereunder.
Section 7.23 Gas Contracts.
(a) Except pursuant to the Supply Agreement and the OWI
Contracts, Marketing is not a party to any contract providing for the
purchase of gas by it nor is it otherwise obligated to purchase gas
from any other source.
(b) Marketing has no obligation to purchase any specified
minimum quantity of gas pursuant to any OWI Contract, nor does it have
any other obligations under any OWI Contract other than the obligation
to pay for any gas actually taken thereunder in the case of the Owner
OWI Contracts, at a price of $2.90 per MMBtu fixed for the life of such
contract and (ii) in the case of the Production $2.90 Contract, at a
price of $2.90 per MMBtu fixed for the life of such contract, such
price having been irrevocably prepaid; provided, however, that
Marketing is not permitted to discriminate against producers within any
field from which it purchases Natural Gas or unjustly and unreasonably
discriminate between fields.
Section 7.24 FERC Jurisdiction.
(a) None of the Assets, nor any portion thereof, is subject to
the jurisdiction of FERC.
AMENDED AND RESTATED LOAN AGREEMENT - Page 35
(b) No Representing Party is aware of any assertion by any
Governmental Authority or any other Person, or any proceeding
asserting, that the Pipeline Assets, or any portion thereof, are
subject to the jurisdiction of FERC.
(c) No transportation of Natural Gas by Pipeline or Marketing
constitutes transportation of Natural Gas in interstate commerce
subject to the jurisdiction of FERC under the NGA.
(d) No Natural Gas sales by Marketing, including the gas sold
to Lone Star under the Lone Star Contract, or by Production or
Exploration are sales in interstate commerce for resale subject to the
jurisdiction of the FERC under the NGA.
(e) The Natural Gas which MGNG or any Affiliate of Marketing
purchases and subsequently sells to Marketing for resale to Lone Star
is purchased by MGNG or such Affiliate only in sales that are not a
sale in interstate commerce for resale subject to FERC jurisdiction
under the NGA and that sales of such gas by MGNG or such Affiliate to
Marketing do not constitute a sale in interstate commerce for resale
subject to FERC jurisdiction under the NGA.
(f) The purchase of gas by Marketing from any other source
does not constitute a sale in interstate commerce for resale subject to
FERC jurisdiction under the NGA.
Section 7.25 Lone Star Contract. As of the date hereof, Lone Star has
not made a payment under the Lone Star Contract during the current Operating
Year in respect of any Natural Gas which it has not already taken, nor does it
have any outstanding credit thereunder permitting it to take any natural gas in
the future without paying for the same.
ARTICLE VIII
Positive Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, such
Borrower will perform and observe the following positive covenants:
Section 8.1 Reporting Requirements. The Borrowers will furnish to the
Agent and each Bank:
(a) Annual Financial Statements. As soon as available, but in
any event within 105 days (or, in the case of Enserch, as soon as
publicly available) after the end of each fiscal year of each Borrower
and Castle (each a "Reporting Party"), a copy of the balance sheet of
such Reporting Party as of the end of such fiscal year and the related
statements of income, retained earnings (or partners' capital) and
changes in cash flows of such Reporting Party (which, in the case of
Pipeline, Marketing and Production, may be combined) for such fiscal
AMENDED AND RESTATED LOAN AGREEMENT - Page 36
year, setting forth in each case in comparative form the figures for
the previous fiscal year, certified without qualification or exception
as to the scope of its audit by independent public accountants of
national standing; and
(b) Quarterly Financial Statements. As soon as available, but
in any event within 45 days after the end of each of the first three
(3) quarterly periods of each fiscal year of each Reporting Party, the
unaudited balance sheet of such Reporting Party as of the end of such
quarterly period and the related unaudited statements of income and
retained earnings (or partners' capital) and changes in cash flows of
such Reporting Party for such quarterly period and for the portion of
the fiscal year then ended, setting forth in each case in comparative
form the figures for the previous period, certified by a Responsible
Officer of such Reporting Party as being fairly presented in all
material respects (subject to normal audit adjustments);
All such financial statements (other than the financial
statements of Enserch, which shall be the financial statements in the
form filed by Enserch on Form 10-K with the Securities and Exchange
Commission) shall be fairly presented in all material respects as to
the matters contained therein and shall be prepared in reasonable
detail and in accordance with GAAP applied consistently throughout the
periods reflected therein and with prior periods (except for changes
approved or required by the independent public accountants certifying
such statements and disclosed therein).
(c) Certificate of No Default. Within 45 days after the end of
each fiscal quarter, a certificate of an authorized officer of each
Borrower (i) stating that to the best of such officer's knowledge, no
Default has occurred and is continuing, or if a Default has occurred
and is continuing, a statement as to the nature thereof and the action
that is proposed to be taken with respect thereto, and (ii) showing in
reasonable detail the calculations demonstrating compliance with
Article X;
(d) Management Letters. Promptly upon receipt thereof, a copy
of any management letter or written report submitted to any Borrower by
independent certified public accountants with respect to the business,
condition (financial or otherwise), operations, prospects, or
properties of the Borrower or any Subsidiary;
(e) Notice of Litigation. Promptly after the commencement
thereof, notice of all actions, suits, and proceedings before any
Governmental Authority or arbitrator affecting any Borrower which, if
determined adversely to such Borrower, could reasonably be expected to
have a material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of such Borrower;
(f) Annual Reserve Report. On or before November 15th of each
fiscal year at the Borrowers' expense, an annual report in form and
substance satisfactory to the Agent prepared by an independent third
party engineering firm acceptable to the Agent and the Banks dated as
of September 30th of the same calendar year, reflecting the quantity of
existing proven and producing oil and gas reserves attributable to the
Mortgaged Properties
AMENDED AND RESTATED LOAN AGREEMENT - Page 37
and any New Properties since the last such annual report submitted to
the Agent and the Banks, a projection of the rate of production and net
operating income with respect thereto as of such date, and such other
information as is customarily obtained from and provided in such
reports, each as prepared in accordance with the SEC Case.
(g) Notice of Default. As soon as possible and in any event
within five (5) days after the occurrence of each Default, a written
notice setting forth the details of such Default and the action that
the Borrowers have taken and propose to take with respect thereto;
(h) ERISA Reports. Promptly after the filing or receipt
thereof, copies of all reports, including annual reports, and notices
which any Borrower files with or receives from the PBGC or the U.S.
Department of Labor under ERISA; and as soon as possible and in any
event within 5 days after such Borrower knows or has reason to know
that any Reportable Event or Prohibited Transaction has occurred with
respect to any Plan or that the PBGC or such Borrower has instituted or
will institute proceedings under Title IV of ERISA to terminate any
Plan, a certificate of the chief financial officer of such Borrower
setting forth the details as to such Reportable Event or Prohibited
Transaction or Plan termination and the action that such Borrower
proposes to take with respect thereto;
(i) Reports to Other Creditors. Promptly after the furnishing
thereof, copies of any statement or report furnished to any other party
pursuant to the terms of any indenture, loan, or credit or similar
agreement and not otherwise required to be furnished to the Agent and
the Banks pursuant to any other clause of this Section;
(j) Notice of Material Adverse Change. As soon as possible and
in any event within 5 days after the occurrence thereof, written notice
of any matter that could have a material adverse effect on the
business, condition (financial or otherwise), operations, prospects, or
properties of Castle, any General Partner, Limited Partner or Borrower,
other than matters affecting the Natural Gas marketing business or the
oil and gas industry generally;
(k) Proxy Statements, Etc. As soon as available and in any
event within 10 days of sending or filing with the Securities and
Exchange Commission or successor agency, one copy of each financial
statement, report, press release, notice or proxy statement sent by
Castle to its stockholders generally as published by Castle and one
copy of each regular, periodic or special report, form (including,
without limitation, all 10-K and 10-Q filings), registration statement,
or prospectus filed by Castle with any securities exchange or the
Securities and Exchange Commission or any successor agency;
(l) Operating Reports. As soon as practicable, but in any
event within 45 days after the end of each calendar month, an operating
report of each Borrower as at the end of such period and for the period
of such Fiscal Year then ended, setting forth the revenues of such
Borrower received during such month and the expenses and extraordinary
items disbursed during such month and containing, (i) with respect to
Pipeline, a summary
AMENDED AND RESTATED LOAN AGREEMENT - Page 38
transportation statement, (ii) with respect to Marketing, a summary of
Natural Gas sales and purchases, and such other information as shall be
agreed to by the Agent and the Borrowers setting forth in comparative
form the corresponding figures for the corresponding periods in the
preceding Fiscal Year (if applicable) and the corresponding figures for
the corresponding periods contained in the current operating budget of
the Borrowers, accompanied by a certificate of a responsible officer of
such Borrower, which certificate shall state that such report is true
and correct to the best of his knowledge, and (iii) with respect to
Production a Summary Operating Statement identifying the most recent
information available regarding the gross volumes of Hydrocarbons
produced from the Mortgaged Properties and a statement of revenues and
expenses attributable to the Mortgaged properties for such calendar
month then ended, such reports to be in form and substance reasonably
satisfactory to the Agent;
(m) Diminution of Natural Gas. Promptly after any material
diminution in (other than ordinary month to month variations of
volume), or interruption of, the supply of Natural Gas to Marketing, or
the flow of Natural Gas through the Pipeline Assets, a notice
describing the circumstances of such diminution or interruption; and
(n) Lone Star Contract. As soon as practicable, but in any
event within 30 days after the end of each Fiscal Year (or, in the
event that the Lone Star Contract terminates prior to January 31 in any
year, within 30 days from the date of such termination), Marketing
shall deliver to the Agent a certificate (together with such back-up
information as may be reasonably requested to confirm the information
contained in such certificate) of a responsible officer of Marketing
setting forth the quantity of gas that Lone Star purchased during such
Operating Year (or such shorter period if applicable) under the Lone
Star Contract together with an itemized statement setting forth whether
Lone Star purchased the quantity of gas required to be purchased under
the Lone Star Contract for such period. In the event that Lone Star
shall fail to purchase the quantity of gas required to be purchased
under the Lone Star Contract for any Operating Year (or shorter period
if applicable) then, simultaneously with the delivery of the
certificate referred to in this paragraph (m), Marketing shall notify
Lone Star in writing (with a copy to the Agent) of such failure in
accordance with paragraph 7.2 of the Lone Star Contract.
(o) General Information. Promptly, such other information
concerning the Borrowers, the General Partners, the Limited Partners or
Castle as the Agent or any Bank may from time to time reasonably
request.
Section 8.2 Maintenance of Existence; Conduct of Business. Each
Borrower will preserve and maintain its existence and all of its leases,
privileges, licenses, permits, franchises, qualifications, and rights that are
necessary or desirable in such Borrower's reasonable business judgment, and in
the ordinary conduct of its business. Each Borrower will conduct its business in
an orderly and efficient manner in accordance with good business practices.
Section 8.3 Maintenance of Properties. Each Borrower will maintain,
keep, and preserve all of its properties (tangible and intangible) necessary or
useful in the proper conduct of its business
AMENDED AND RESTATED LOAN AGREEMENT - Page 39
in good working order and condition, ordinary wear and tear and immaterial
impairments of value and damage by the elements excepted.
Section 8.4 Taxes and Claims. Each Borrower will pay or discharge at or
before maturity or before becoming delinquent (a) all taxes, levies,
assessments, and governmental charges imposed on it or its income or profits or
any of its property, and (b) all lawful claims for labor, material, and
supplies, which, if unpaid, might become a Lien upon any of its property;
provided, however, that the Borrower shall not be required to pay or discharge
any tax, levy, assessment, or governmental charge which is being contested in
good faith by appropriate proceedings diligently pursued, and for which adequate
reserves have been established.
Section 8.5 Insurance. Each Borrower will maintain, and will cause each
of the Subsidiaries to maintain, insurance with financially sound and reputable
insurance companies in such amounts and covering such risks as is usually
carried by Persons engaged in similar businesses and owning similar properties
in the same general areas in which such Borrower operates, provided that in any
event such Borrower will maintain workmen's compensation insurance, property
insurance, $25,000,000 in comprehensive general liability insurance, products
liability insurance, and business interruption insurance reasonably satisfactory
to the Agent and the Banks. Each insurance policy covering Collateral shall
provide that such policy will not be cancelled or reduced without 30 days' prior
written notice to the Agent. Each Borrower will cause each insurance policy
covering Collateral to name the Agent as additional assured and loss payee for
the benefit of itself and the Banks.
Section 8.6 Inspection Rights. The Borrowers will permit
representatives of the Agent and each Bank to examine, copy, and make extracts
from its books and records, to visit and inspect its properties during normal
business hours (unless a Default or an Event of Default has occurred and is then
continuing), and to discuss its business, operations, and financial condition
with its officers and independent certified public accountants.
Section 8.7 Keeping Books and Records. Each Borrower will maintain
proper books of record and account in which entries in conformity with GAAP
shall be made of all dealings and transactions in relation to its business and
activities.
Section 8.8 Compliance with Laws. Each Borrower will comply in all
material respects with all applicable laws, rules, regulations, orders, and
decrees of any Governmental Authority or arbitrator.
Section 8.9 Compliance with Agreements. Each Borrower will comply in
all material respects with all agreements, contracts, and instruments binding on
it or affecting its properties or business.
Section 8.10 Further Assurances. Each Borrower will execute and deliver
such further agreements and instruments and take such further action as may be
requested by the Agent to carry out the provisions and purposes of this
Agreement and the other Loan Documents and, subject to
AMENDED AND RESTATED LOAN AGREEMENT - Page 40
Section 5.1, to create, preserve, and perfect the Liens of the Agent for the
benefit of itself and the Banks in the Collateral.
Section 8.11 ERISA. Each Borrower will comply, and will cause each
Subsidiary to comply, with all minimum funding requirements, and all other
material requirements, of ERISA, if applicable, so as not to give rise to any
liability thereunder.
Section 8.12 [Intentionally omitted.]
Section 8.13 Pledge of Additional Contracts; Future Mortgages.
(a) Upon entering into any Additional Contract, each Borrower
will use reasonable efforts to obtain any required consent to the
pledge as collateral by such Borrower to the Agent of such Additional
Contract (as security for the Obligations). Such Borrower shall pledge
such Additional Contract to the Agent as collateral promptly upon
receipt of such required consent.
(b) Prior to January 1, 1997 and continuing for each year
thereafter so long as the Obligations are outstanding, each Borrower
shall notify the Agent of the acquisition of any property or leasehold
or other interest in real property during the preceding year valued at
the lower of cost or fair market value in excess of $100,000, and shall
execute, deliver, record and file instruments and documents (including,
without limitation, a supplement to the applicable Deed of Trust and
the Borrower Security Agreement) as the Agent shall request in order to
create a perfected Lien thereon in favor of the Agent.
Section 8.14 FERC Jurisdiction.
(a) Marketing shall sell all gas, including all gas sold to
Lone Star under the Lone Star Contract, only in sales that do not
constitute a sale in interstate commerce for resale subject to the
jurisdiction of the FERC under the NGA.
(b) Marketing shall purchase all of its gas, including from
MGNG, only in sales that do not constitute a sale in interstate
commerce for resale subject to the jurisdiction of the FERC under the
NGA.
Section 8.15 Cover Damages. With respect to any Delivery Default (as
defined in the Supply Agreement), Marketing shall, upon consulting with the
Banks, obtain Cover Supplies (as defined in the Supply Agreement).
Section 8.16 Proceeds from the Production Payment and Receivables from
Lone Star Contract. All proceeds received (i) by Exploration from the Production
Payment, and (ii) by Marketing under the Lone Star Contract, shall be payable
directly to a lockbox under the control of the Agent which shall then be
deposited by the Agent into a lockbox account in accordance with the terms of
the Lockbox Operating Agreement. Unless an Event of Default has occurred and is
AMENDED AND RESTATED LOAN AGREEMENT - Page 41
continuing, all such amounts so deposited shall be transferred to such
Borrower's operating account maintained with the Agent within two Business Days
of the deposit thereof in the lockbox account. If an Event of Default has
occurred and is continuing, the Agent may apply all such amounts on deposit in
the lockbox account or the operating accounts to the Obligations pursuant to the
terms hereof. Exploration and Marketing have each executed and delivered notices
to the applicable Persons with respect to the Production Payment and the Lone
Star Contract to effectuate the direct payment thereunder to the lockbox
established pursuant to the Lockbox Agreement.
ARTICLE IX
Negative Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or any Bank has any Commitment hereunder, such
Borrower will perform and observe the following negative covenants:
Section 9.1 Debt. Such Borrower will not incur, create, assume, or
permit to exist any Debt exceeding $100,000 in the aggregate, except the
following (herein referred to as "Permitted Debt"):
(a) Debt to the Agent and the Banks pursuant to the Loan
Documents;
(b) Net oil and gas balancing positions arising in the
ordinary course of business;
(c) Debt to Castle, the General Partners, the Limited Partners
and other Borrowers;
(d) Debt arising under oil and/or gas hedging agreements;
(e) Debt incurred in connection with or necessarily incidental
to commitments for the purchase or sale of, or the transportation or
distribution of, products derived from oil and/or gas producing
properties; and
(f) Existing Debt described on Schedule 2 hereto.
Section 9.2 Limitation on Liens. Such Borrower will not incur, create,
assume, or permit to exist any Lien upon any of its property, assets, or
revenues, whether now owned or hereafter acquired, except the following (herein
referred to as "Permitted Liens"):
(a) Liens on the property described on Schedule 5 hereto to
secure Permitted Debt;
(b) Liens in favor of the Agent for the benefit of itself and
the Banks;
AMENDED AND RESTATED LOAN AGREEMENT - Page 42
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that do
not (individually or in the aggregate) materially affect the value of
the assets encumbered thereby or materially impair the ability of such
Borrower to use such assets in its business, and none of which
encumbrances is violated in any material respect by existing or
proposed structures or land use;
(d) Liens for taxes, assessments, or other governmental
charges which are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen, carriers,
or other similar statutory Liens securing obligations that are incurred
in the ordinary course of business and are not yet due or are being
contested in good faith;
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs or
to secure the performance of tenders, statutory obligations, surety and
appeal bonds, bids, contracts (other than for payment of Debt), or
leases made in the ordinary course of business;
(g) Liens created under pooling orders, operating agreements,
and similar agreements relating to the Mortgaged Properties with
respect to obligations of a Borrower or Castle which are not delinquent
or are being contested in good faith, by appropriate proceedings
diligently pursued and for which adequate reserves have been
established and other Liens incidental to the conduct of its business
or the ownership of its property and assets which do not in the
aggregate materially detract from the value of its property or assets
or materially impair the use thereof in the operation of his business;
(h) Defects or irregularities of title arising from events or
transactions which have been barred by limitations or that are
acceptable to a reasonable and prudent oil and gas operator;
(i) Royalties, overriding royalties, production payments and
other burdens relating to the Mortgaged Properties that do not cause a
Borrower or Castle to have an interest in production under any oil and
gas lease, or unit to which such lease may be contributed, which is
materially less than the interest in production from the Mortgaged
Properties as specified in the Deeds of Trust;
(j) Liens on pipelines or pipeline facilities that arise by
operation of law;
(k) Liens under the Marketing Partnership Agreement, Pipeline
Partnership Agreement, and Production Partnership Agreement, including
all rights of first refusal thereunder; and
(l) Liens securing oil and/or gas hedging agreements.
AMENDED AND RESTATED LOAN AGREEMENT - Page 43
Section 9.3 Mergers, Etc. Such Borrower will not become a party to a
merger or consolidation, or wind-up, dissolve, or liquidate itself.
Section 9.4 Sale of Partnership Interests. Such Borrower shall not sell
(other than to an Affiliate) any partnership interest or create any partnership
interest not in existence on the date hereof.
Section 9.5 Investments. The Borrowers will not make any advance, loan,
extension of credit, or capital contribution to or investment in, or purchase or
own any stock, bonds, notes, debentures, or other securities of, any Person in
excess of $100,000 in the aggregate at any one time outstanding, except:
(a) readily marketable direct obligations of the United States
of America or any agency thereof with maturities of one year or less
from the date of acquisition;
(b) fully insured certificates of deposit with maturities of
one year or less from the date of acquisition issued by any commercial
bank operating in the United States of America having capital and
surplus in excess of $50,000,000;
(c) commercial paper of a domestic issuer if at the time of
purchase such paper is rated in one of the two highest rating
categories of Standard & Poor's Rating Services or ▇▇▇▇▇'▇ Investors
Service, Inc.;
(d) loans to Castle as contemplated by Sections 2.5 and 3.6 to
repurchase outstanding shares of common stock of Castle;
(e) loans to Castle as permitted by Sections 2.5, 3.6 and 9.18
and to any of the other Borrowers;
(f) loans or other extensions of credit to customers in the
ordinary course of business;
(g) oil and/or gas hedging agreements;
(h) investments in the Subsidiaries and partnership interests
owned on the Closing Date;
(i) investments in deposits available for withdrawal on demand
with any commercial bank;
(j) repurchase and reverse repurchase obligations with a term
of not more than seven days for underlying securities of the types
described in clause (a); and
AMENDED AND RESTATED LOAN AGREEMENT - Page 44
(k) investments and expenditures made in the ordinary course
of, and of a nature that is or shall have become customary in, the oil
and gas business as a means of actively exploiting, exploring for,
acquiring, developing, processing, gathering, storing, marketing or
transporting oil and gas through agreements, transactions, interests or
arrangements which permit one to share risks or costs, comply with
regulatory requirements regarding local ownership or satisfy other
objectives customarily achieved through the conduct of oil and gas
business jointly with third parties, including, without limitation, (i)
ownership interests in oil and gas properties or gathering,
transportation, processing, storage or related systems and (ii)
investments and expenditures in the form of or pursuant to operating
agreements, process agreements, farm-in agreements, farm-out
agreements, development agreements, area of mutual interest agreements,
unitization agreements, pooling arrangements, join bidding agreements,
service contracts, joint venture agreements, partnership agreements,
limited liability company agreements, subscription agreements, stock
purchase agreements and other similar agreements with third parties.
Section 9.6 Transactions With Affiliates. Such Borrower will not enter
into any transaction (other than with another Borrower), including, without
limitation, the purchase, sale, or exchange of property or the rendering of any
service, with any Affiliate of the Borrower, except pursuant to the reasonable
requirements of such Borrower's business and upon fair and reasonable terms no
less favorable to such Borrower than would be obtained in a comparable
arm's-length transaction with a Person not an Affiliate of such Borrower.
Section 9.7 Disposition of Assets. Such Borrower will not without the
prior written consent of the Required Banks, sell, lease, assign, transfer, or
otherwise dispose of any of its assets except dispositions in the ordinary
course of business.
Section 9.8 Sale and Leaseback. Such Borrower will not enter into any
arrangement with any Person pursuant to which it leases from such Person real or
personal property that has been or is to be sold or transferred, directly or
indirectly, by it to such Person.
Section 9.9 Prepayment of Debt. Such Borrower will not prepay any Debt,
except the Obligations and Permitted Debt, excluding Permitted Debt set forth on
Schedule 2.
Section 9.10 Nature of Business. Such Borrower will not, without the
prior written consent of the Required Banks, engage in any business other than
the businesses in which they are engaged on the date hereof. The General
Partners and the Limited Partners shall not engage in any business other than
being the general partner or the limited partner, as the case may be, of its
respective Borrower.
Section 9.11 Environmental Protection. Such Borrower will not (a) use
(or permit any tenant to use) any of their respective properties or assets for
the handling, processing, storage, transportation, or disposal of any Hazardous
Material except in amounts that will not violate applicable law, (b) generate
any Hazardous Material in violation of applicable law, (c) conduct any activity
that is likely to cause a Release or threatened Release of any Hazardous
Material in violation
AMENDED AND RESTATED LOAN AGREEMENT - Page 45
of applicable law, or (d) otherwise conduct any activity or use any of their
respective properties or assets in any manner that is likely to violate any
Environmental Law or create any Environmental Liabilities for which such
Borrower would be responsible except for any such violations or Environmental
Liabilities that would not individually or in the aggregate have a material
adverse effect on the business, condition (financial or otherwise), operations,
prospects, or properties of such Borrower.
Section 9.12 Accounting. Such Borrower will not change its fiscal year
or make any change (a) in accounting treatment or reporting practices, except as
required or permitted by GAAP and disclosed to the Agent, or (b) in tax
reporting treatment, except as required or permitted by law and disclosed to the
Agent.
Section 9.13 Executive Offices. Such Borrower shall not transfer its
executive offices or transfer its registered office in the State of Texas (if
any) or change its corporate or partnership name or keep Collateral at any
locations other than those at which the same are presently kept or maintained.
Section 9.14 Fiscal Year. Such Borrower shall not change its fiscal
year.
Section 9.15 FERC Jurisdiction. Such Borrower shall not take any
action, or omit to take any action, which will subject any Borrower, the
Pipeline Assets, or any portion thereof, to the jurisdiction of the FERC under
the NGA.
Section 9.16 Lone Star Contract. Without the consent of Required Banks,
Marketing shall not seek to redetermine the price or modify any other material
term or provision under the Lone Star Contract or the Supply Agreement.
Section 9.17 Additional Contracts. Without the prior consent of
Required Banks, such Borrower will not enter into any Additional Contract.
Section 9.18 Distribution, Etc. Without the prior written consent of
Required Banks, such Borrower shall not make any distributions to its General
Partner, to its Limited Partner or to any other Person in respect of any
partnership interest in such Borrower or any payments of management fees to its
General Partner or its Limited Partner, whether in cash, securities or other
property, or redeem, purchase or otherwise acquire any interest of its General
Partner or its Limited Partner, or permit its General Partner or its Limited
Partner to withdraw any capital from such Borrower; provided, however, so long
as no Event of Default then exists or would result therefrom, the Borrowers
shall have the right to make monthly distributions to the General Partners,
Limited Partners or parent corporation, as the case may be, in an aggregate
amount not to exceed 25% of the Borrowers' Net Cash Flow on a combined basis as
of the end of any such month for the preceding four quarter period then ended
such rolling four quarter period shall commence as of January 1, 1997.
AMENDED AND RESTATED LOAN AGREEMENT - Page 46
ARTICLE X
Financial Covenants
The Borrowers or Castle, as the case may be, covenant and agree that,
as long as the Obligations or any part thereof are outstanding or any Bank has
any Commitment hereunder, the Borrowers will perform and observe the following
financial covenants:
Section 10.1 Consolidated Tangible Net Worth. Castle will maintain
Consolidated Tangible Net Worth in an amount not less than $45,000,000, plus 50%
of positive Net Income of Castle, plus 100% of the net proceeds obtained from
the issuance of equity securities by Castle, calculated quarterly (commencing
December 31, 1996) as of the last day of each March, June, September and
December. Notwithstanding the foregoing, the minimum required Consolidated
Tangible Net Worth shall be reduced (a) up to $11,000,000 in connection with the
repurchase of Castle common stock, (b) up to an additional $10,000,000 in
connection with any required write-down of the note receivable from MG as
determined pursuant to binding arbitration, and (c) up to an additional
$5,400,000 in connection with any writedown of the note receivable from the
purchasers of the Indian Refinery.
Section 10.2 Cash Flow Coverage Ratio. Castle will not permit its Cash
Flow Coverage Ratio to be less than 1.25 to 1.0, calculated quarterly as of the
last day of each March, June, September and December for the four fiscal
quarters of Castle then ended.
Section 10.3 Net Working Capital. Each Borrower will maintain positive
net working capital as of the last day of each March, June, September and
December . For the purposes hereof, net working capital shall mean the amount by
which consolidated current assets exceed consolidated current liabilities, less
the current maturities of long-term debt, as determined in accordance with GAAP.
ARTICLE XI
Default
Section 11.1 Events of Default. Each of the following shall be deemed
an "Event of Default":
(a) Any principal of or interest on any Loan shall not be paid
when due; or any fee or any other amount payable hereunder, under any
Note or under any other Loan Document shall not be paid when due and
shall remain unpaid for five or more days.
(b) Any representation or warranty made or deemed made by any
Borrower or any Obligated Party (or any of their respective officers)
in any Loan Document or in any certificate, report, notice, or
financial statement furnished at any time in connection with this
AMENDED AND RESTATED LOAN AGREEMENT - Page 47
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) Any Borrower, General Partner or Castle shall fail to
perform, observe, or comply with any covenant, agreement, or term
contained in Section 8.1(e), (f), (h) or (i), Article IX, or Article X
of this Agreement; or any Borrower or any Obligated Party shall fail to
perform, observe, or comply with any other covenant, agreement, or term
contained in this Agreement or any other Loan Document (other than
covenants to pay the Obligations) and such failure shall continue for a
period of 30 days after notice thereof to the Borrowers by the Agent or
any Bank (through the Agent).
(d) Any Borrower, any General Partner, Limited Partner or
Castle shall commence a voluntary proceeding seeking liquidation,
reorganization, or other relief with respect to itself or its debts
under any bankruptcy, insolvency, or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or a substantial
part of its property or shall consent to any such relief or to the
appointment of or taking possession by any such official in an
involuntary case or other proceeding commenced against it or shall make
a general assignment for the benefit of creditors or shall generally
fail to pay its debts as they become due or shall take any corporate
action to authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against any
Borrower, any General Partner, Limited Partner or Castle seeking
liquidation, reorganization, or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian or other similar official for it or a substantial
part of its property, and such involuntary proceeding shall remain
undismissed and unstayed for a period of sixty (60) days.
(f) Any Borrower, any General Partner, Limited Partner or
Castle shall fail to discharge within a period of 30 days after the
commencement thereof any attachment, sequestration, or similar
proceeding or proceedings involving an aggregate amount in excess of
$100,000 against any of its assets or properties.
(g) A final judgment or judgments for the payment of money in
excess of $100,000 in the aggregate shall be rendered by a court or
courts against any Borrower, any General Partner, Limited Partner or
Castle and the same shall not be discharged (or provision shall not be
made for such discharge), or a stay of execution thereof shall not be
procured, within 30 days from the date of entry thereof and such
Borrower, General Partner, Limited Partner or Castle shall not, within
said period of thirty (30) days, or such longer period during which
execution of the same shall have been stayed, appeal therefrom and
cause the execution thereof to be stayed during such appeal.
(h) The Borrower, any General Partner, Limited Partner or
Castle shall fail to pay when due any principal of or interest on any
Debt (other than the Obligations) aggregating
AMENDED AND RESTATED LOAN AGREEMENT - Page 48
$100,000 or more, or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof, or any event shall have occurred
that permits (or, with the giving of notice or lapse of time or both,
would permit) any holder or holders of such Debt or any Person acting
on behalf of such holder or holders to accelerate the maturity thereof
or require any such prepayment.
(i) This Agreement or any other Basic Document shall cease to
be in full force and effect or shall be declared null and void or the
validity or enforceability thereof shall be contested or challenged by
any Borrower, any Obligated Party, any other party thereto or any of
their respective shareholders, or any Borrower, any Obligated Party or,
any other party thereto shall deny that it has any further liability or
obligation under any of the Basic Documents, or any lien or security
interest created by the Loan Documents shall for any reason (other than
any Bank's gross negligence or willful misconduct) cease to be a valid,
first priority perfected security interest in and lien upon any of the
Collateral purported to be covered thereby, subject only to the
Permitted Liens.
(j) Any of the following events shall occur or exist with
respect to any Borrower or any ERISA Affiliate: (i) any Prohibited
Transaction involving any Plan; (ii) any Reportable Event with respect
to any Plan; (iii) the filing under Section 4041 of ERISA of a notice
of intent to terminate any Plan or the termination of any Plan; (iv)
any event or circumstance that might constitute grounds entitling the
PBGC to institute proceedings under Section 4042 of ERISA for the
termination of, or for the appointment of a trustee to administer, any
Plan, or the institution by the PBGC of any such proceedings; or (v)
complete or partial withdrawal under Section 4201 or 4204 of ERISA from
a Multiemployer Plan or the reorganization, insolvency, or termination
of any Multiemployer Plan; and in each case above, such event or
condition, together with all other events or conditions, if any, have
subjected or could in the reasonable opinion of Required Banks subject
any Borrower to any tax, penalty, or other liability to a Plan, a
Multiemployer Plan, the PBGC, or otherwise (or any combination thereof)
which in the aggregate exceed or could reasonably be expected to exceed
$100,000.
(k) Any Borrower or any of their material properties,
revenues, and assets, shall become the subject of an order of
forfeiture, seizure, or divestiture (whether under RICO or otherwise)
and the same shall not have been discharged (or provisions shall not be
made for such discharge) within 30 days from the date of entry thereof.
(l) Lone Star or MGNG shall fail to perform or observe any of
its material covenants or obligations contained in any of the Basic
Documents to which it is a party within the grace period, if any,
provided for in such Basic Documents which failure shall continue
unremedied for a period of 30 days after notice by the Agent to the
Borrowers.
(m) Any General Partner shall at any time cease to be the
General Partner of the Borrower of which it is general partner or,
shall transfer, sell, assign, mortgage, pledge or
AMENDED AND RESTATED LOAN AGREEMENT - Page 49
otherwise dispose of its equity interest in such Borrower except in
accordance with the Collateral Security Documents or with the Required
Banks' prior written consent.
(n) Castle shall, at any time, transfer, sell, assign,
mortgage, pledge or otherwise dispose of its equity interests in any
General Partner or any Limited Partner, except (i) to any Borrower,
General Partner or Limited Partner, (ii) in accordance with the
Collateral Security Documents, or (iii) with the Required Banks' prior
written consent.
Section 11.2 Remedies. If any Event of Default shall occur and be
continuing, the Agent may (and if directed by Required Banks, shall) do any one
or more of the following:
(a) Acceleration. Declare all outstanding principal of and
accrued and unpaid interest on the Notes and all other obligations of
the Borrowers under the Loan Documents immediately due and payable, and
the same shall thereupon become immediately due and payable, without
notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, protest, or other
formalities of any kind, all of which are hereby expressly waived by
the Borrowers.
(b) Termination of Commitments. Terminate the Commitments
hereunder without notice to the Borrowers.
(c) Judgment. Reduce any claim to judgment.
(d) Foreclosure. Foreclose or otherwise enforce any Lien
granted to the Agent for the benefit of itself and the Banks to secure
payment and performance of the Obligations in accordance with the terms
of the Loan Documents.
(e) Rights. Exercise any and all rights and remedies afforded
by applicable laws, by any of the Loan Documents, by equity, or
otherwise.
Provided, however, that upon the occurrence of an Event of Default under
Subsection (d) or (e) of Section 11.1, the Commitments of all of the Banks shall
automatically terminate, and the outstanding principal of and accrued and unpaid
interest on the Notes and all other obligations of the Borrowers under the Loan
Documents shall thereupon become immediately due and payable without notice,
demand, presentment, notice of dishonor, notice of acceleration, notice of
intent to accelerate, protest, or other formalities of any kind, all of which
are hereby expressly waived by the Borrowers.
Section 11.3 Performance by the Agent. If any Borrower shall fail to
perform any covenant or agreement in accordance with the terms of the Loan
Documents, the Agent may, at the direction of Required Banks, perform or attempt
to perform such covenant or agreement on behalf of such Borrower. In such event,
the Borrowers shall, at the request of the Agent, promptly pay any amount
expended by the Agent or the Banks in connection with such performance or
attempted performance to the Agent at the Principal Office, together with
interest thereon at the lesser of the Applicable Rate and the Maximum Rate prior
to demand and at the lesser of the Default Rate and the Maximum Rate
AMENDED AND RESTATED LOAN AGREEMENT - Page 50
subsequent to demand from and including the date of such expenditure to but
excluding the date such expenditure is paid in full. Notwithstanding the
foregoing, it is expressly agreed that neither the Agent nor any Bank shall have
any liability or responsibility for the performance of any obligation of the
Borrowers under this Agreement or any of the other Loan Documents.
ARTICLE XII
The Agent
Section 12.1 Appointment, Powers and Immunities. In order to expedite
the various transactions contemplated by this agreement, the Banks hereby
irrevocably appoint and authorize CNB to act as their Agent hereunder and under
each of the other Loan Documents. CNB consents to such appointment and agrees to
perform the duties of the Agent as specified herein. The Banks authorize and
direct the Agent to take such action in their name and on their behalf under the
terms and provisions of the Loan Documents and to exercise such rights and
powers thereunder as are specifically delegated to or required of the Agent for
the Banks, together with such rights and powers as are reasonably incidental
thereto. The Agent is hereby expressly authorized to act as the Agent on behalf
of itself and the other Banks:
(a) To receive on behalf of each of the Banks any payment of
principal, interest, fees or other amounts paid pursuant to this
Agreement and the Notes and to distribute to each Bank its share of all
payments so received as provided in this Agreement;
(b) To receive all documents and items to be furnished under
the Loan Documents;
(c) To act as nominee for and on behalf of the Banks in and
under the Loan Documents;
(d) To arrange for the means whereby the funds of the Banks
are to be made available to the Borrowers;
(e) To distribute to the Banks information, requests, notices,
payments, prepayments, documents and other items received from the
Borrowers, the other Obligated Parties, and other Persons;
(f) To execute and deliver to the Borrowers, the other
Obligated Parties, and other Persons, all requests, demands, approvals,
notices, and consents received from the Banks;
(g) To the extent permitted by the Loan Documents, to exercise
on behalf of each Bank all rights and remedies of Banks upon the
occurrence of any Event of Default;
AMENDED AND RESTATED LOAN AGREEMENT - Page 51
(h) To accept, execute, and deliver the Collateral Security
Documents and any other security documents as the secured party,
including, without limitation all UCC financing statements; and
(i) To take such other actions as may be requested by Required
Banks.
Neither the Agent nor any of its Affiliates, officers, directors,
employees, attorneys, or agents shall be liable for any action taken or omitted
to be taken by any of them hereunder or otherwise in connection with this
Agreement or any of the other Loan Documents except for its or their own gross
negligence or willful misconduct. Without limiting the generality of the
preceding sentence, the Agent (i) may treat the payee of any Note as the holder
thereof until the Agent receives written notice of the assignment or transfer
thereof signed by such payee and in form satisfactory to the Agent; (ii) shall
have no duties or responsibilities except those expressly set forth in this
Agreement and the other Loan Documents, and shall not by reason of this
Agreement or any other Loan Document be a trustee or fiduciary for any Bank;
(iii) shall not be required to initiate any litigation or collection proceedings
hereunder or under any other Loan Document except to the extent requested by
Required Banks; (iv) shall not be responsible to the Banks for any recitals,
statements, representations or warranties contained in this Agreement or any
other Loan Document, or any certificate or other document referred to or
provided for in, or received by any of them under, this Agreement or any other
Loan Document, or for the value, validity, effectiveness, enforceability, or
sufficiency of this Agreement or any other Loan Document or any other document
referred to or provided for herein or therein or for any failure by any Person
to perform any of its obligations hereunder or thereunder; (v) may consult with
legal counsel, independent public accountants, and other experts selected by it
and shall not be liable for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants, or
experts; and (vi) shall incur no liability under or in respect of any Loan
Document by acting upon any notice, consent, certificate, or other instrument or
writing believed by it to be genuine and signed or sent by the proper party or
parties. As to any matters not expressly provided for by this Agreement, the
Agent shall in all cases be fully protected in acting, or in refraining from
acting, hereunder in accordance with instructions signed by Required Banks, and
such instructions of Required Banks and any action taken or failure to act
pursuant thereto shall be binding on all of the Banks; provided, however, that
the Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or any other Loan
Document or applicable law.
Section 12.2 Rights of Agent as a Bank. With respect to its Commitment,
the Loans made by it and the Notes issued to it, CNB in its capacity as a Bank
hereunder shall have the same rights and powers hereunder as any other Bank and
may exercise the same as though it were not acting as the Agent, and the term
"Bank" or "Banks" shall, unless the context otherwise indicates, include the
Agent in its individual capacity. The Agent and its Affiliates may (without
having to account therefor to any Bank) accept deposits from, lend money to, act
as trustee under indentures of, provide merchant banking services to, and
generally engage in any kind of business with the Borrowers, any of its
Subsidiaries, any other Obligated Party, and any other Person who may do
business with or own securities of the Borrowers or any other Obligated Party,
all as if it were not acting as the Agent and without any duty to account
therefor to the Banks.
AMENDED AND RESTATED LOAN AGREEMENT - Page 52
Section 12.3 Sharing of Payments, Etc. If any Bank shall obtain any
payment of any principal of or interest on any Loan made by it under this
Agreement or payment of any other obligation under the Loan Documents then owed
by the Borrowers or any other Obligated Party to such Bank, whether voluntary,
involuntary, through the exercise of any right of setoff, banker's lien,
counterclaim or similar right, or otherwise, in excess of its pro rata share,
such Bank shall promptly purchase from the other Banks participations in the
Loans held by them hereunder in such amounts, and make such other adjustments
from time to time as shall be necessary to cause such purchasing Bank to share
the excess payment ratably with each of the other Banks in accordance with its
pro rata portion thereof. To such end, all of the Banks shall make appropriate
adjustments among themselves (by the resale of participations sold or otherwise)
if all or any portion of such excess payment is thereafter rescinded or must
otherwise be restored. The Borrowers agree, to the fullest extent they may
effectively do so under applicable law, that any Bank so purchasing a
participation in the Loans made by the other Banks may exercise all rights of
setoff, banker's lien, counterclaim, or similar rights with respect to such
participation as fully as if such Bank were a direct holder of Loans to the
Borrowers in the amount of such participation. Nothing contained herein shall
require any Bank to exercise any such right or shall affect the right of any
Bank to exercise, and retain the benefits of exercising, any such right with
respect to any other indebtedness or obligation of the Borrowers.
Section 12.4 INDEMNIFICATION. THE BANKS HEREBY AGREE TO INDEMNIFY THE
AGENT FROM AND HOLD THE AGENT HARMLESS AGAINST (TO THE EXTENT NOT REIMBURSED
UNDER SECTIONS 13.1 AND 13.2, BUT WITHOUT LIMITING THE OBLIGATIONS OF THE
BORROWERS UNDER SECTIONS 13.1 AND 13.2), RATABLY IN ACCORDANCE WITH THEIR
RESPECTIVE COMMITMENTS, ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES,
PENALTIES, ACTIONS, JUDGMENTS, DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING
ATTORNEYS' FEES), AND DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY
BE IMPOSED ON, INCURRED BY, OR ASSERTED AGAINST THE AGENT IN ANY WAY RELATING TO
OR ARISING OUT OF ANY OF THE LOAN DOCUMENTS OR ANY ACTION TAKEN OR OMITTED TO BE
TAKEN BY THE AGENT UNDER OR IN RESPECT OF ANY OF THE LOAN DOCUMENTS; PROVIDED,
FURTHER, THAT NO BANK SHALL BE LIABLE FOR ANY PORTION OF THE FOREGOING TO THE
EXTENT CAUSED BY THE AGENT'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT. WITHOUT
LIMITATION OF THE FOREGOING, IT IS THE EXPRESS INTENTION OF THE BANKS THAT THE
AGENT SHALL BE INDEMNIFIED HEREUNDER FROM AND HELD HARMLESS AGAINST ALL OF SUCH
LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS,
DEFICIENCIES, SUITS, COSTS, EXPENSES (INCLUDING ATTORNEYS' FEES), AND
DISBURSEMENTS OF ANY KIND OR NATURE DIRECTLY OR INDIRECTLY ARISING OUT OF OR
RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE AGENT. WITHOUT
LIMITING ANY OTHER PROVISION OF THIS SECTION, EACH BANK AGREES TO REIMBURSE THE
AGENT PROMPTLY UPON DEMAND FOR ITS PRO RATA SHARE (CALCULATED ON THE BASIS OF
THE COMMITMENTS) OF ANY AND ALL OUT-OF-POCKET EXPENSES (INCLUDING
AMENDED AND RESTATED LOAN AGREEMENT - Page 53
ATTORNEYS' FEES) INCURRED BY THE AGENT IN CONNECTION WITH THE PREPARATION,
EXECUTION, DELIVERY, ADMINISTRATION, MODIFICATION, AMENDMENT OR ENFORCEMENT
(WHETHER THROUGH NEGOTIATIONS, LEGAL PROCEEDINGS, OR OTHERWISE) OF, OR LEGAL
ADVICE IN RESPECT OF RIGHTS OR RESPONSIBILITIES UNDER, THE LOAN DOCUMENTS, TO
THE EXTENT THAT THE AGENT IS NOT REIMBURSED FOR SUCH EXPENSES BY THE BORROWERS.
Section 12.5 Independent Credit Decisions. Each Bank agrees that it has
independently and without reliance on the Agent or any other Bank, and based on
such documents and information as it has deemed appropriate, made its own credit
analysis of the Borrowers and decision to enter into this Agreement and that it
will, independently and without reliance upon the Agent or any other Bank, and
based upon such documents and information as it shall deem appropriate at the
time, continue to make its own analysis and decisions in taking or not taking
action under this Agreement or any of the other Loan Documents. The Agent shall
not be required to keep itself informed as to the performance or observance by
the Borrowers or any Obligated Party of this Agreement or any other Loan
Document or to inspect the properties or books of the Borrowers or any Obligated
Party. Except for notices, reports and other documents and information expressly
required to be furnished to the Banks by the Agent hereunder or under the other
Loan Documents, the Agent shall not have any duty or responsibility to provide
any Bank with any credit or other financial information concerning the affairs,
financial condition or business of the Borrowers or any Obligated Party (or any
of their Affiliates) which may come into the possession of the Agent or any of
its Affiliates.
Section 12.6 Several Commitments. The Commitments and other obligations
of the Banks under this Agreement are several. The default by any Bank in making
a Loan in accordance with its Commitment shall not relieve the other Banks of
their obligations under this Agreement. In the event of any default by any Bank
in making any Loan, each nondefaulting Bank shall be obligated to make its Loan
but shall not be obligated to advance the amount which the defaulting Bank was
required to advance hereunder. In no event shall any Bank be required to advance
an amount or amounts which shall in the aggregate exceed such Bank's Commitment.
No Bank shall be responsible for any act or omission of any other Bank.
Section 12.7 Successor Agent. Subject to the appointment and acceptance
of a successor Agent as provided below, the Agent may resign at any time by
giving notice thereof to the Banks and the Borrowers. Upon any such resignation,
Required Banks will have the right to appoint a successor Agent with the consent
of Borrowers unless the successor Agent is then a Bank in which case, the
Borrowers' consent shall not be required. If no successor Agent shall have been
so appointed by Required Banks and shall have accepted such appointment within
30 days after the retiring Agent's giving of notice of resignation or the
Required Banks' removal of the retiring Agent, then the retiring Agent may, on
behalf of the Banks, appoint a successor Agent, which shall be a commercial bank
organized under the laws of the United States of America or any State thereof
and having combined capital and surplus of at least $100,000,000. Upon the
acceptance of its appointment as successor Agent, such successor Agent shall
thereupon succeed to and become vested with all rights, powers, privileges,
immunities, and duties of the resigning Agent, and the resigning Agent shall be
discharged from its duties and obligations under this Agreement and the
AMENDED AND RESTATED LOAN AGREEMENT - Page 54
other Loan Documents, except as set forth in Section 13.9. After any Agent's
resignation as Agent, the provisions of this Article XII shall continue in
effect for its benefit in respect of any actions taken or omitted to be taken by
it while it was the Agent.
Section 12.8 Nonconsenting Bank. In the event that (a) the Borrower or
the Agent has requested the Banks to consent to a departure or waiver of any
provisions of the Loan Documents or to agree to any amendment thereto, (b) the
consent, waiver or amendment in question requires the agreement of all Banks in
accordance with the terms of Section 13.11 and (c) Required Banks have agreed to
such consent, waiver or amendment, then any Bank that does not agree to such
consent, waiver or amendment shall be deemed a "Nonconsenting Bank." If at any
time any Bank becomes a Nonconsenting Bank, then the Agent may but shall have no
obligation to, on ten Business Day's prior written notice to the Borrowers and
such Bank, replace such Bank by causing such Bank to (and such Bank shall)
assign pursuant to 13.8 all of its rights and obligations under this Agreement
to one or more Banks or other Person(s) selected by the Agent and consented to
by the Borrowers for a purchase price equal to the outstanding principal amount
of such Bank's Loans and all accrued interest and fees and other amounts payable
to such Bank hereunder.
ARTICLE XIII
Miscellaneous
Section 13.1 Expenses. The Borrowers hereby agree to pay on demand: (a)
all reasonable costs and expenses of the Agent in connection with the
preparation, negotiation, execution, and delivery of this Agreement and the
other Loan Documents (up to the amount as agreed to by the Agent and the
Borrowers) and any and all amendments, modifications, renewals, extensions, and
supplements thereof and thereto, including, without limitation, the reasonable
fees and expenses of legal counsel for the Agent, (b) all costs and expenses of
the Agent and the Banks in connection with any Default and the enforcement of
this Agreement or any other Loan Document, including, without limitation, the
reasonable fees and expenses of legal counsel for the Agent and the Banks, up to
the amount agreed upon under the Fee Letter, (c) all transfer, stamp,
documentary, or other similar taxes, assessments, or charges levied by any
Governmental Authority in respect of this Agreement or any of the other Loan
Documents, (d) all costs, expenses, assessments, and other charges incurred in
connection with any filing, registration, recording, or perfection of any
security interest or Lien contemplated by this Agreement or any other Loan
Document, and (e) all other reasonable costs and expenses incurred by the Agent
and the Banks in connection with this Agreement or any other Loan Document,
including, without limitation, all reasonable costs, expenses, and other charges
incurred following the occurrence of a Default in connection with obtaining any
audit or appraisal in respect of the Collateral.
Section 13.2 INDEMNIFICATION. THE BORROWERS SHALL JOINTLY AND SEVERALLY
INDEMNIFY THE AGENT AND EACH BANK AND EACH AFFILIATE THEREOF AND THEIR
RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD
EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES,
AMENDED AND RESTATED LOAN AGREEMENT - Page 55
JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) TO
WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY ARISE FROM OR
RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE, ADMINISTRATION,
OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE TRANSACTIONS
CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY ANY BORROWER OR OBLIGATED
PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER AGREEMENT CONTAINED IN
ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE, THREATENED RELEASE,
DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL LOCATED ON, ABOUT,
WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF THE BORROWERS OR ANY
OBLIGATED PARTY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER PROCEEDING,
INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION, LITIGATION, OR
OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING. WITHOUT LIMITING ANY
PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS THE EXPRESS
INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED UNDER THIS
SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND
EXPENSES (INCLUDING ATTORNEYS' FEES, BUT EXCLUDING THE LOSSES, LIABILITIES,
CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS AND EXPENSES OF SUCH
PERSON TO BE INDEMNIFIED ARISING FROM SUCH PERSON'S GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT) ARISING OUT OF OR RESULTING FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE
OF SUCH PERSON.
Section 13.3 LIMITATION OF LIABILITY. NONE OF THE AGENT, ANY BANK, OR
ANY AFFILIATE, OFFICER, DIRECTOR, EMPLOYEE, ATTORNEY, OR AGENT THEREOF SHALL
HAVE ANY LIABILITY WITH RESPECT TO, AND EACH BORROWER HEREBY WAIVES, RELEASES,
AND AGREES NOT TO ▇▇▇ ANY OF THEM UPON, ANY CLAIM FOR ANY SPECIAL OR PUNITIVE
DAMAGES SUFFERED OR INCURRED BY SUCH BORROWER IN CONNECTION WITH, ARISING OUT
OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS,
OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE OTHER
LOAN DOCUMENTS. EACH BORROWER HEREBY WAIVES, RELEASES, AND AGREES NOT TO ▇▇▇ THE
AGENT OR ANY BANK OR ANY OF THEIR RESPECTIVE AFFILIATES, OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS, OR AGENTS FOR PUNITIVE DAMAGES IN RESPECT OF ANY CLAIM IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR ANY
OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS
AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS.
AMENDED AND RESTATED LOAN AGREEMENT - Page 56
Section 13.4 No Duty. All attorneys, accountants, appraisers, and other
professional Persons and consultants retained by the Agent and the Banks shall
have the right to act exclusively in the interest of the Agent and the Banks and
shall have no duty of disclosure, duty of loyalty, duty of care, or other duty
or obligation of any type or nature whatsoever to the Borrowers, any Obligated
Party or any of the Borrower's shareholders or any other Person.
Section 13.5 No Fiduciary Relationship. The relationship among the
Borrowers and each Bank is solely that of debtor and creditor, and neither the
Agent nor any Bank has any fiduciary or other special relationship with any
Borrower or Obligated Party, and no term or condition of any of the Loan
Documents shall be construed so as to deem the relationship between the
Borrowers and any Bank to be other than that of debtor and creditor.
Section 13.6 Equitable Relief. The Borrowers recognize that in the
event the Borrowers fail to pay, perform, observe, or discharge any or all of
the Obligations, any remedy at law may prove to be inadequate relief to the
Agent and the Banks. The Borrowers therefore agree that the Agent and the Banks,
if the Agent or the Banks so request, shall be entitled to temporary and
permanent injunctive relief in any such case without the necessity of proving
actual damages.
Section 13.7 No Waiver; Cumulative Remedies. No failure on the part of
the Agent or any Bank to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights and remedies
provided by law.
Section 13.8 Successors and Assigns.
(a) This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. The Borrowers may not assign or transfer any of their rights
or obligations hereunder without the prior written consent of the Agent
and all of the Banks. Any Bank may sell participations to one or more
banks or other institutions in or to all or a portion of its rights and
obligations under this Agreement and the other Loan Documents
(including, without limitation, all or a portion of its Commitments and
the Loans owing to it); provided, however, that (i) any transfer to a
bank that is not a U.S. Person may be made only with the prior written
consent of Borrower, (ii) such Bank's obligations under this Agreement
and the other Loan Documents (including, without limitation, its
Commitments) shall remain unchanged, (iii) such Bank shall remain
solely responsible to the Borrowers for the performance of such
obligations, (iv) such Bank shall remain the holder of its Notes for
all purposes of this Agreement, (v) the Borrowers shall continue to
deal solely and directly with such Bank in connection with such Bank's
rights and obligations under this Agreement and the other Loan
Documents, and (vi) such Bank shall not sell a participation that
conveys to the participant the right to vote or give or withhold
consents under this Agreement or any other Loan Document, other than
the right to vote
AMENDED AND RESTATED LOAN AGREEMENT - Page 57
upon or consent to (A) any increase of such Bank's Commitments, (B) any
reduction of the principal amount of, or interest to be paid on, the
Loans of such Bank, (C) any reduction of any commitment fee or other
amount payable to such Bank under any Loan Document, or (D) any
postponement of any date for the payment of any amount payable in
respect of the Loans of such Bank.
(b) The Borrowers and each of the Banks agree that any Bank
(the "Assigning Bank") may, upon thirty days prior written notice to
the Agent and with the Agent's consent and unless an Event of Default
has occurred, the Borrowers' consent which consent of the Borrowers
shall not be unreasonably withheld or delayed, at any time assign to
one or more Eligible Assignees all of its rights and obligations under
this Agreement and the other Loan Documents (including, without
limitation, its Commitments and Loans) (each an "Assignee"); provided,
however, that (i) each such assignment shall be of a consistent, and
not a varying, percentage of all of the assigning Bank's Commitments,
rights and obligations under this Agreement and the other Loan
Documents, and (ii) the parties to each such assignment shall execute
and deliver to the Agent for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance, together
with the Notes subject to such assignment, and a processing and
recordation fee of $2,500, to be paid by the Assignee. Upon such
execution, delivery, acceptance, and recording, from and after the
effective date specified in each Assignment and Acceptance, which
effective date shall be at least five Business Days after the execution
thereof, or, if so specified in such Assignment and Acceptance, the
date of acceptance thereof by the Agent, (x) the assignee thereunder
shall be a party hereto as a "Bank" and, to the extent that rights and
obligations hereunder have been assigned to it pursuant to such
Assignment and Acceptance, have the rights and obligations of a Bank
hereunder and under the Loan Documents and (y) the Bank that is an
assignor thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment and
Acceptance, relinquish its rights and be released from its obligations
under this Agreement and the other Loan Documents (and, in the case of
an Assignment and Acceptance covering all or the remaining portion of a
Bank's rights and obligations under the Loan Documents, such Bank shall
cease to be a party thereto).
(c) By executing and delivering an Assignment and Acceptance,
the Bank that is an assignor thereunder and the assignee thereunder
confirm to and agree with each other and the other parties hereto as
follows: (i) other than as provided in such Assignment and Acceptance,
such assigning Bank makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties, or
representations made in or in connection with the Loan Documents or the
execution, legality, validity, and enforceability, genuineness,
sufficiency, or value of the Loan Documents or any other instrument or
document furnished pursuant thereto; (ii) such assigning Bank makes no
representation or warranty and assumes no responsibility with respect
to the financial condition of the Borrowers or any Obligated Party or
the performance or observance by the Borrowers or any Obligated Party
of its obligations under the Loan Documents; (iii) such assignee
confirms that it has received a copy of the other Loan Documents,
together with copies of the financial
AMENDED AND RESTATED LOAN AGREEMENT - Page 58
statements referred to in Section 7.2 and such other documents and
information as it has deemed appropriate to make its own credit
analysis and decision to enter into such Assignment and Acceptance;
(iv) such assignee will, independently and without reliance upon the
Agent or such assignor and based on such documents and information as
it shall deem appropriate at the time, continue to make its own credit
decisions in taking or not taking action under this Agreement and the
other Loan Documents; (v) such assignee confirms that it is an Eligible
Assignee; (vi) such assignee appoints and authorizes the Agent to take
such action as agent on its behalf and exercise such powers under the
Loan Documents as are delegated to the Agent by the terms thereof,
together with such powers as are reasonably incidental thereto; and
(vii) such assignee agrees that it will perform in accordance with
their terms all of the obligations which by the terms of the Loan
Documents are required to be performed by it as a Bank.
(d) The Agent shall maintain at its Principal Office a copy of
each Assignment and Acceptance delivered to and accepted by it and a
register for the recordation of the names and addresses of the Banks
and the Commitments of, and principal amount of the Loans owing to,
each Bank from time to time (the "Register"). The entries in the
Register shall be conclusive and binding for all purposes, absent
manifest error, and the Borrowers, the Agent and the Banks may treat
each Person whose name is recorded in the Register as a Bank hereunder
for all purposes under the Loan Documents. The Register shall be
available for inspection by the Borrowers or any Bank at any reasonable
time and from time to time upon reasonable prior notice.
(e) Upon its receipt of an Assignment and Acceptance executed
by an assigning Bank and assignee representing that it is an Eligible
Assignee, together with any Note subject to such assignment, the Agent
shall, if such Assignment and Acceptance has been completed and is in
substantially the form of Exhibit "G" hereto, (i) accept such
Assignment and Acceptance, (ii) record the information contained
therein in the Register, and (iii) give prompt written notice thereof
to the Borrowers. Within five (5) Business Days after its receipt of
such notice, the Borrowers, at their expense, shall execute and deliver
to the Agent in exchange for the surrendered Notes new Notes to the
order of such Eligible Assignee in an amount equal to the Commitments
assumed by it pursuant to such Assignment and Acceptance (each such
promissory note shall constitute a "Note" for purposes of the Loan
Documents). Such new Notes shall be in an aggregate principal amount of
the surrendered Notes, shall be dated the effective date of such
Assignment and Acceptance, and shall otherwise be in substantially the
form of Exhibits "A-1" and "A-2" hereto.
(f) Any Bank may, in connection with any assignment or
participation or proposed assignment or participation pursuant to this
Section, disclose to the assignee or participant or proposed assignee
or participant, any information relating to the Borrowers furnished to
such Bank by or on behalf of the Borrowers, subject, however, to the
provisions of Section 13.20.
AMENDED AND RESTATED LOAN AGREEMENT - Page 59
Section 13.9 Survival. All representations and warranties made in this
Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Agent or any Bank or any closing shall affect the
representations and warranties or the right of the Agent or any Bank to rely
upon them. Without prejudice to the survival of any other obligation of the
Borrowers hereunder, the obligations of the Borrowers under Article IV and
Sections 13.1 and 13.2 and the obligations of the Agent and the Banks under
Section 13.20 shall survive repayment of the Notes and termination of the
Commitments.
Section 13.10 ENTIRE AGREEMENT. THIS AGREEMENT, THE NOTES, AND THE
OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE AGREEMENT AMONG
THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS,
REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE
SUBJECT MATTER HEREOF AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF
PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE
PARTIES HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 13.11 Amendments, Etc. No amendment or waiver of any provision
of this Agreement, the Notes, or any other Loan Document to which the Borrowers
are a party, nor any consent to any departure by the Borrowers or Obligated
Parties therefrom, shall in any event be effective unless the same shall be
agreed or consented to by Required Banks and the Borrowers, and each such waiver
or consent shall be effective only in the specific instance and for the specific
purpose for which given; provided, that no amendment, waiver, or consent shall,
unless in writing and signed by all of the Banks and the Borrowers, do any of
the following: (a) increase the Commitments of the Banks or subject the Banks to
any additional obligations; (b) reduce the principal of, or interest on, the
Notes or any fees or other amounts payable to the Banks hereunder; (c) postpone
any date fixed for any payment of principal of, or interest on, the Notes or any
fees or other amounts payable to the Banks hereunder; (d) waive any of the
conditions specified in Article VI; (e) change the percentage of the Commitments
or of the aggregate unpaid principal amount of the Notes or the number of Banks
which shall be required for the Banks or any of them to take any action under
this Agreement; (f) change any provision contained in this Section 13.11; (g)
release any Collateral having a present worth discounted at 10% of greater than
$100,000 as reflected in the most recent independent consultant's report
provided by Borrowers; or (h) change the definition of the Borrowing Base.
Notwithstanding anything to the contrary contained in this Section, no
amendment, waiver, or consent shall be made with respect to Article XII hereof
without the prior written consent of the Agent.
Section 13.12 Maximum Interest Rate. No provision of this Agreement or
of any other Loan Document shall require the payment or the collection of
interest in excess of the maximum amount permitted by applicable law. If any
excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Loan Document or otherwise in connection
with this loan
AMENDED AND RESTATED LOAN AGREEMENT - Page 60
transaction, the provisions of this Section shall govern and prevail and neither
the Borrowers nor the sureties, guarantors, successors, or assigns of the
Borrowers shall be obligated to pay the excess amount of such interest or any
other excess sum paid for the use, forbearance, or detention of sums loaned
pursuant hereto. In the event any Bank ever receives, collects, or applies as
interest any such sum, such amount which would be in excess of the maximum
amount permitted by applicable law shall be applied as a payment and reduction
of the principal of the indebtedness evidenced by the Notes; and, if the
principal of the Notes has been paid in full, any remaining excess shall
forthwith be paid to the Borrowers. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrowers and each Bank shall, to
the extent permitted by applicable law, (a) characterize any non-principal
payment as an expense, fee, or premium rather than as interest, (b) exclude
voluntary prepayments and the effects thereof, and (c) amortize, prorate,
allocate, and spread in equal or unequal parts the total amount of interest
throughout the entire contemplated term of the indebtedness evidenced by the
Notes so that interest for the entire term does not exceed the Maximum Rate.
Section 13.13 Notices. All notices and other communications provided
for in this Agreement and the other Loan Documents to which the Borrowers are a
party shall be given or made by telecopy or mailed by overnight courier or
certified mail return receipt requested, or delivered to the intended recipient
at the "Address for Notices" specified below their names on the signature pages
hereof; or, as to any party at such other address as shall be designated by such
party in a notice to each other party given in accordance with this Section.
Except as otherwise provided in this Agreement, all such communications shall be
deemed to have been duly given when transmitted by telecopy, subject to
telephone confirmation of receipt, or when personally delivered or, in the case
of a mailed notice, when duly deposited in the mails, in each case given or
addressed as aforesaid; provided, however, notices to the Agent pursuant to
Article II and III shall not be effective until received by the Agent.
Section 13.14 GOVERNING LAW; VENUE; SERVICE OF PROCESS. THIS AGREEMENT
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
LOUISIANA AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
AGREEMENT HAS BEEN ENTERED INTO IN CADDO PARISH, LOUISIANA, AND IT SHALL BE
PERFORMABLE FOR ALL PURPOSES IN CADDO PARISH, LOUISIANA. ANY ACTION OR
PROCEEDING AGAINST ANY OBLIGATED PARTY OR THE BORROWERS UNDER OR IN CONNECTION
WITH ANY OF THE LOAN DOCUMENTS MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT IN
CADDO PARISH, LOUISIANA. EACH OBLIGATED PARTY AND EACH BORROWER HEREBY
IRREVOCABLY (A) SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF SUCH COURTS, AND (B)
WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF ANY SUCH
ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT OR THAT ANY SUCH COURT IS AN
INCONVENIENT FORUM. THE OBLIGATED PARTIES AND THE BORROWERS AGREE THAT SERVICE
OF PROCESS UPON THEM MAY BE MADE BY CERTIFIED OR REGISTERED MAIL, RETURN RECEIPT
REQUESTED, AT THE ADDRESS SPECIFIED OR DETERMINED IN ACCORDANCE WITH THE
PROVISIONS OF SECTION 13.13. NOTHING HEREIN OR IN ANY OF THE OTHER LOAN
AMENDED AND RESTATED LOAN AGREEMENT - Page 61
DOCUMENTS SHALL AFFECT THE RIGHT OF THE AGENT OR ANY BANK TO SERVE PROCESS IN
ANY OTHER MANNER PERMITTED BY LAW SHALL LIMIT THE RIGHT OF THE AGENT OR ANY BANK
TO BRING ANY ACTION OR PROCEEDING AGAINST ANY BORROWER OR ANY OBLIGATED PARTY OR
WITH RESPECT TO ANY OF ITS PROPERTY IN COURTS IN OTHER JURISDICTIONS. ANY ACTION
OR PROCEEDING BY ANY BORROWER OR OBLIGATED PARTY AGAINST THE AGENT OR ANY BANK
SHALL BE BROUGHT ONLY IN A COURT LOCATED IN CADDO PARISH, LOUISIANA.
Section 13.15 Counterparts. This Agreement may be executed in one or
more counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 13.16 Severability. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 13.17 Headings. The headings, captions, and arrangements used
in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 13.18 Construction. The Borrowers, the Agent and each Bank
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the parties
hereto.
Section 13.19 Independence of Covenants. All covenants hereunder shall
be given independent effect so that if a particular action or condition is not
permitted by any of such covenants, the fact that it would be permitted by an
exception to, or be otherwise within the limitations of, another covenant shall
not avoid the occurrence of a Default if such action is taken or such condition
exists.
Section 13.20 Treatment of Certain Information; Confidentiality. Each
Bank and the Agent agrees (on behalf of itself and each of its affiliates,
directors, officers, employees, attorneys, agents and representatives) to keep
confidential any non-public information supplied to it by Borrowers pursuant to
this Agreement that the Borrowers identify to such Bank or the Agent (as the
case may be) as confidential at the time the Borrowers so supply such
information, provided, that nothing herein shall limit the disclosure of any
such information (i) to the extent required by statute, rule, regulation or
judicial process, (ii) to counsel for any of the Banks or the Agent, (iii) to
bank examiners, auditors or accountants, (iv) to the Agent or any other Bank,
(v) in connection with any litigation to which any one or more of the Banks or
the Agent is a party, (vi) to a subsidiary or affiliate of such Bank, or (vii)
to any assignee or participant (or prospective assignee or participant) so long
as such assignee or participant (or prospective assignee or participant) first
executes and delivers to the respective Bank an acknowledgement to the effect
that it is bound by the provisions of this Section 13.20, which acknowledgement
may be included as part of the respective assignment
AMENDED AND RESTATED LOAN AGREEMENT - Page 62
or participation agreement pursuant to which such assignee or participant
acquires an interest in the Loans hereunder; and provided, further, that in no
event shall any Bank or the Agent be obligated or required to return any
materials furnished to it by the Borrowers.
Section 13.21 WAIVERS OF JURY TRIAL. EACH BORROWER, GENERAL PARTNER,
CASTLE, THE AGENT, AND EACH BANK HEREBY IRREVOCABLY AND UNCONDITIONALLY WAIVES
TRIAL BY JURY IN ANY LEGAL ACTION OR PROCEEDING BETWEEN ONE OR MORE PARTIES
HERETO RELATING TO THIS AGREEMENT OR ANY OF THE NOTES OR ANY OTHER LOAN DOCUMENT
AND FOR ANY COUNTERCLAIM THEREIN.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
BORROWERS:
CASTLE TEXAS PIPELINE
LIMITED PARTNERSHIP
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CEC GAS MARKETING
LIMITED PARTNERSHIP
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PRODUCTION
LIMITED PARTNERSHIP
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
AMENDED AND RESTATED LOAN AGREEMENT - Page 63
CASTLE EXPLORATION COMPANY, INC.
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
Address for Notices:
▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
With a copy to:
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
GENERAL PARTNERS:
CASTLE PIPELINE COMPANY
CASTLE PRODUCTION COMPANY
CEC MARKETING CORPORATION
By:_________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
AMENDED AND RESTATED LOAN AGREEMENT - Page 64
CASTLE:
CASTLE ENERGY CORPORATION
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
AMENDED AND RESTATED LOAN AGREEMENT - Page 65
AGENT:
COMMERCIAL NATIONAL BANK
IN SHREVEPORT, as Agent
By:________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Assistant Vice President
Address for Notices:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AMENDED AND RESTATED LOAN AGREEMENT - Page 66
BANKS:
COMMERCIAL NATIONAL BANK
IN SHREVEPORT
Revolving Credit Commitment: By:__________________________________
Name: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
$3,400,000 Title: Assistant Vice President
Term Loan Commitment: Address for Notices:
$5,100,000 ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
AMENDED AND RESTATED LOAN AGREEMENT - Page 67
COMERICA BANK-TEXAS
Revolving Credit Commitment: By:__________________________________
▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
$3,300,000 Vice President
Term Loan Commitment: Address for Notices:
$4,950,000 ▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
AMENDED AND RESTATED LOAN AGREEMENT - Page 68
COMPASS BANK
Revolving Credit Commitment: By:__________________________________
▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
$3,300,000 Vice President
Term Loan Commitment: Address for Notices:
$4,950,000 ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: Energy Lending Group
DA963160385
120296 v22
351:3087-29
AMENDED AND RESTATED LOAN AGREEMENT - Page 69
REVOLVING CREDIT NOTE
$3,300,000.00 Shreveport, Louisiana November 26, 1996
FOR VALUE RECEIVED, the undersigned, CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation, CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP, a Texas
limited partnership, CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas limited
partnership, CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas limited partnership
(collectively, the "Makers"), hereby jointly and severally promise to pay to the
order of COMERICA BANK-TEXAS ("Payee"), at the offices of COMMERCIAL NATIONAL
BANK IN SHREVEPORT, a national banking association (together with any successor
as provided in the Agreement, as hereinafter defined, the "Agent"), at its
offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Post Office Box 21119, Shreveport, Caddo Parish,
Louisiana, or at such other location as the Agent may designate in writing to
Maker, in lawful money of the United States of America, the principal sum of
Three Million Three Hundred Thousand and No/100 Dollars ($3,300,000.00), or so
much thereof as may be advanced and outstanding hereunder, together with
interest on the outstanding principal balance from day to day remaining as
herein specified.
The principal balance from time to time outstanding hereunder shall be
due and payable in full on the Revolving Credit Termination Date. Accrued and
unpaid interest on the principal balance from day to day outstanding shall be
due and payable on the first day of each month, commencing January 1, 1997, and
on the first day of each month thereafter until and including the Revolving
Credit Termination Date.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the
Applicable Rate (as defined in the Agreement referred to below) in effect from
day to day, each such change in the rate of interest charged hereunder to become
effective, without notice to Makers, on the effective date of each change in the
Applicable Rate or the maximum rate permitted by applicable law, as the case may
be. All past due principal and interest shall bear interest at the rate set
forth in Article II of the Agreement referred to below.
Interest on the indebtedness evidenced by this Note shall be computed
on the basis of a year of 360 days and the actual number of days elapsed
(including the first day but excluding the last day).
This Note is a Revolving Credit Note provided for in that certain
Amended and Restated Loan Agreement dated of even date herewith among Makers,
Castle Production Company, Castle Pipeline Company, CEC Marketing Company,
Castle Energy Corporation, each of the banks or other lending institutions or
other Eligible Assignees (as defined therein) which is or may become a
REVOLVING CREDIT NOTE - Page 1
signatory thereto and any successors or assigns thereof (collectively, the
"Lenders") and Agent (such Amended and Restated Loan Agreement as the same may
be amended, supplemented or otherwise modified from time to time is hereinafter
referred to as the "Agreement"). All capitalized terms not otherwise defined
herein shall have the same meanings as set forth in the Agreement. Reference is
hereby made to the Agreement for provisions affecting this Note including
provisions regarding repayments, prepayments, Events of Default and Payee's
rights as a result of the occurrence thereof. Maker may borrow, repay and
reborrow under the terms and conditions specified in the Agreement.
If default be made in the payment of principal or interest under this
Note, or upon the occurrence of any other Event of Default, the holder hereof
may, at its option, declare the entire unpaid principal of and accrued interest
on this Note immediately due and payable without notice, demand or presentment,
all of which are hereby waived, and upon such declaration, the same shall become
and shall be immediately due and payable, and the holder hereof shall have the
right to foreclose or otherwise enforce all liens or security interests securing
payment hereof, or any part hereof, and offset against this Note any sum or sums
owed by the holder hereof to Makers. Failure of the holder hereof to exercise
this option shall not constitute a waiver of the right to exercise the same upon
the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce
payment of all or any part or installment of any sum due the holder hereunder,
or if this Note is placed in the hands of an attorney for collection, or if it
is collected through any legal proceedings, Makers agree to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE
LAWS OF THE STATE OF LOUISIANA AND THE APPLICABLE LAWS OF THE UNITED STATES OF
AMERICA. THIS NOTE IS PERFORMABLE IN CADDO PARISH, LOUISIANA.
Each Maker and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
REVOLVING CREDIT NOTE - Page 2
Each Maker hereby authorizes the holder hereof to record in its
internal records all advances made to Makers hereunder and all payments made on
account of the principal hereof, which recordings shall be prima facie evidence
as to the outstanding principal amount of this Note; provided, however, any
failure by the holder hereof to make any recording shall not limit or otherwise
affect the obligations of Makers under the Agreement or this Note.
CASTLE EXPLORATION COMPANY, INC.
By:______________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP
By: CASTLE PRODUCTION COMPANY,
Its General Partner
By:____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PIPELINE LIMITED
PARTNERSHIP
By: CASTLE TEXAS PIPELINE COMPANY,
Its General Partner
By:_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
REVOLVING CREDIT NOTE - Page 3
CEC GAS MARKETING LIMITED
PARTNERSHIP
By: CEC MARKETING COMPANY,
Its General Partner
By:____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
DA963310149
112696 v2
393:3087-29
REVOLVING CREDIT NOTE - Page 4
REVOLVING CREDIT NOTE
$3,400,000.00 Shreveport, Louisiana November 26, 1996
FOR VALUE RECEIVED, the undersigned, CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation, CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP, a Texas
limited partnership, CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas limited
partnership, CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas limited
partnership (collectively, the "Makers"), hereby jointly and severally promise
to pay to the order of COMMERCIAL NATIONAL BANK IN SHREVEPORT ("Payee"), at the
offices of COMMERCIAL NATIONAL BANK IN SHREVEPORT, a national banking
association (together with any successor as provided in the Agreement, as
hereinafter defined, the "Agent"), at its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Post
Office Box 21119, Shreveport, Caddo Parish, Louisiana, or at such other location
as the Agent may designate in writing to Maker, in lawful money of the United
States of America, the principal sum of Three Million Four Hundred Thousand and
No/100 Dollars ($3,400,000.00), or so much thereof as may be advanced and
outstanding hereunder, together with interest on the outstanding principal
balance from day to day remaining as herein specified.
The principal balance from time to time outstanding hereunder shall be due
and payable in full on the Revolving Credit Termination Date. Accrued and unpaid
interest on the principal balance from day to day outstanding shall be due and
payable on the first day of each month, commencing January 1, 1997, and on the
first day of each month thereafter until and including the Revolving Credit
Termination Date.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the
Applicable Rate (as defined in the Agreement referred to below) in effect from
day to day, each such change in the rate of interest charged hereunder to become
effective, without notice to Makers, on the effective date of each change in the
Applicable Rate or the maximum rate permitted by applicable law, as the case may
be. All past due principal and interest shall bear interest at the rate set
forth in Article II of the Agreement referred to below.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day).
This Note is a Revolving Credit Note provided for in that certain Amended
and Restated Loan Agreement dated of even date herewith among Makers, Castle
Production Company, Castle Pipeline Company, CEC Marketing Company, Castle
Energy Corporation, each of the banks or other lending institutions or other
Eligible Assignees (as defined therein) which is or may become a signatory
thereto and any successors or assigns thereof (collectively, the "Lenders") and
Agent (such Amended
REVOLVING CREDIT NOTE - Page 1
and Restated Loan Agreement as the same may be amended, supplemented or
otherwise modified from time to time is hereinafter referred to as the
"Agreement"). All capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Agreement. Reference is hereby made to the
Agreement for provisions affecting this Note including provisions regarding
repayments, prepayments, Events of Default and Payee's rights as a result of the
occurrence thereof. Maker may borrow, repay and reborrow under the terms and
conditions specified in the Agreement.
If default be made in the payment of principal or interest under this Note,
or upon the occurrence of any other Event of Default, the holder hereof may, at
its option, declare the entire unpaid principal of and accrued interest on this
Note immediately due and payable without notice, demand or presentment, all of
which are hereby waived, and upon such declaration, the same shall become and
shall be immediately due and payable, and the holder hereof shall have the right
to foreclose or otherwise enforce all liens or security interests securing
payment hereof, or any part hereof, and offset against this Note any sum or sums
owed by the holder hereof to Makers. Failure of the holder hereof to exercise
this option shall not constitute a waiver of the right to exercise the same upon
the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Makers agree to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
THIS NOTE IS PERFORMABLE IN CADDO PARISH, LOUISIANA.
Each Maker and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
Each Maker hereby authorizes the holder hereof to record in its internal
records all advances made to Makers hereunder and all payments made on account
of the principal hereof, which
REVOLVING CREDIT NOTE - Page 2
recordings shall be prima facie evidence as to the outstanding principal amount
of this Note; provided, however, any failure by the holder hereof to make any
recording shall not limit or otherwise affect the obligations of Makers under
the Agreement or this Note.
CASTLE EXPLORATION COMPANY, INC.
By:___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP
By: CASTLE PRODUCTION COMPANY,
Its General Partner
By:__________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PIPELINE LIMITED
PARTNERSHIP
By: CASTLE TEXAS PIPELINE COMPANY,
Its General Partner
By:___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
REVOLVING CREDIT NOTE - Page 3
CEC GAS MARKETING LIMITED
PARTNERSHIP
By: CEC MARKETING COMPANY,
Its General Partner
By:_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
DA963310140
112696 v2
351:3087-29
REVOLVING CREDIT NOTE - Page 4
REVOLVING CREDIT NOTE
$3,300,000.00 Shreveport, Louisiana November 26, 1996
FOR VALUE RECEIVED, the undersigned, CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation, CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP, a Texas
limited partnership, CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas limited
partnership, CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas limited
partnership (collectively, the "Makers"), hereby jointly and severally promise
to pay to the order of COMPASS BANK ("Payee"), at the offices of COMMERCIAL
NATIONAL BANK IN SHREVEPORT, a national banking association (together with any
successor as provided in the Agreement, as hereinafter defined, the "Agent"), at
its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Post Office Box 21119, Shreveport, Caddo
Parish, Louisiana, or at such other location as the Agent may designate in
writing to Maker, in lawful money of the United States of America, the principal
sum of Three Million Three Hundred Thousand and No/100 Dollars ($3,300,000.00),
or so much thereof as may be advanced and outstanding hereunder, together with
interest on the outstanding principal balance from day to day remaining as
herein specified.
The principal balance from time to time outstanding hereunder shall be due
and payable in full on the Revolving Credit Termination Date. Accrued and unpaid
interest on the principal balance from day to day outstanding shall be due and
payable on the first day of each month, commencing January 1, 1997, and on the
first day of each month thereafter until and including the Revolving Credit
Termination Date.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the
Applicable Rate (as defined in the Agreement referred to below) in effect from
day to day, each such change in the rate of interest charged hereunder to become
effective, without notice to Makers, on the effective date of each change in the
Applicable Rate or the maximum rate permitted by applicable law, as the case may
be. All past due principal and interest shall bear interest at the rate set
forth in Article II of the Agreement referred to below.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day).
This Note is a Revolving Credit Note provided for in that certain Amended
and Restated Loan Agreement dated of even date herewith among Makers, Castle
Production Company, Castle Pipeline Company, CEC Marketing Company, Castle
Energy Corporation, each of the banks or other lending institutions or other
Eligible Assignees (as defined therein) which is or may become a signatory
thereto and any successors or assigns thereof (collectively, the "Lenders") and
Agent (such Amended
REVOLVING CREDIT NOTE - Page 1
and Restated Loan Agreement as the same may be amended, supplemented or
otherwise modified from time to time is hereinafter referred to as the
"Agreement"). All capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Agreement. Reference is hereby made to the
Agreement for provisions affecting this Note including provisions regarding
repayments, prepayments, Events of Default and Payee's rights as a result of the
occurrence thereof. Maker may borrow, repay and reborrow under the terms and
conditions specified in the Agreement.
If default be made in the payment of principal or interest under this Note,
or upon the occurrence of any other Event of Default, the holder hereof may, at
its option, declare the entire unpaid principal of and accrued interest on this
Note immediately due and payable without notice, demand or presentment, all of
which are hereby waived, and upon such declaration, the same shall become and
shall be immediately due and payable, and the holder hereof shall have the right
to foreclose or otherwise enforce all liens or security interests securing
payment hereof, or any part hereof, and offset against this Note any sum or sums
owed by the holder hereof to Makers. Failure of the holder hereof to exercise
this option shall not constitute a waiver of the right to exercise the same upon
the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Makers agree to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
THIS NOTE IS PERFORMABLE IN CADDO PARISH, LOUISIANA.
Each Maker and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
Each Maker hereby authorizes the holder hereof to record in its internal
records all advances made to Makers hereunder and all payments made on account
of the principal hereof, which
REVOLVING CREDIT NOTE - Page 2
recordings shall be prima facie evidence as to the outstanding principal amount
of this Note; provided, however, any failure by the holder hereof to make any
recording shall not limit or otherwise affect the obligations of Makers under
the Agreement or this Note.
CASTLE EXPLORATION COMPANY, INC.
By:___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP
By: CASTLE PRODUCTION COMPANY,
Its General Partner
By:_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PIPELINE LIMITED
PARTNERSHIP
By: CASTLE TEXAS PIPELINE COMPANY,
Its General Partner
By:___________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
REVOLVING CREDIT NOTE - Page 3
CEC GAS MARKETING LIMITED
PARTNERSHIP
By: CEC MARKETING COMPANY,
Its General Partner
By:____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
DA963310142
112696 v2
393:3087-29
REVOLVING CREDIT NOTE - Page 4
TERM NOTE
$4,950,000.00 Shreveport, Louisiana November 26, 1996
FOR VALUE RECEIVED, the undersigned, CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation, CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP, a Texas
limited partnership, CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas limited
partnership, CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas limited
partnership (collectively, the "Makers"), hereby jointly and severally promise
to pay to the order of COMERICA BANK-TEXAS ("Payee"), at the offices of
COMMERCIAL NATIONAL BANK IN SHREVEPORT, a national banking association (together
with any successor as provided in the Agreement, as hereinafter defined, the
"Agent"), at its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Post Office Box 21119, Shreveport,
Caddo Parish, Louisiana, in lawful money of the United States of America, the
principal sum of Four Million Nine Hundred Fifty Thousand and No/100 Dollars
($4,950,000.00), or so much thereof as may be advanced and outstanding
hereunder, together with interest on the outstanding principal balance from day
to day remaining at the rates specified herein, and on the dates provided in the
Agreement referred to below.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the
Applicable Rate (as defined in the Agreement referred to below) in effect from
day to day, each such change in the rate of interest charged hereunder to become
effective, without notice to Makers, on the effective date of each change in the
Applicable Rate or the maximum rate permitted by applicable law, as the case may
be. All past due principal and interest shall bear interest at the rate set
forth in Article III of the Agreement referred to below.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day).
This Note is a Term Note provided for in that certain Amended and Restated
Loan Agreement dated of even date herewith among Makers, Castle Production
Company, Castle Pipeline Company, CEC Marketing Company, Castle Energy
Corporation, each of the banks or other lending institutions or other Eligible
Assignees (as defined therein) which is or may become a signatory thereto and
any successors or assigns thereof (collectively, the "Lenders") and Agent (such
Amended and Restated Loan Agreement as the same may be amended, supplemented or
otherwise modified from time to time is hereinafter referred to as the
"Agreement"). All capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Agreement. Reference is hereby made to the
Agreement for provisions affecting this Note including, but not limited to,
provisions regarding interest rates, repayments, prepayments, Events of Default
and Payee's rights as a result thereof. Maker may prepay the principal of this
Note upon the terms and conditions specified in the Agreement.
TERM NOTE - Page 1
If default be made in the payment of principal or interest under this Note,
or upon the occurrence of any other Event of Default, the holder hereof may, at
its option, declare the entire unpaid principal of and accrued interest on this
Note immediately due and payable without notice, demand or presentment, all of
which are hereby waived, and upon such declaration, the same shall become and
shall be immediately due and payable, and the holder hereof shall have the right
to foreclose or otherwise enforce all liens or security interests securing
payment hereof, or any part hereof, and offset against this Note any sum or sums
owed by the holder hereof to Makers. Failure of the holder hereof to exercise
this option shall not constitute a waiver of the right to exercise the same upon
the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Makers agree to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
THIS NOTE IS PERFORMABLE IN CADDO PARISH, LOUISIANA.
Each Maker and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
CASTLE EXPLORATION COMPANY, INC.
By:___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
TERM NOTE - Page 2
CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP
By: CASTLE PRODUCTION COMPANY,
Its General Partner
By:____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PIPELINE LIMITED
PARTNERSHIP
By: CASTLE PIPELINE COMPANY,
Its General Partner
By:____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CEC GAS MARKETING LIMITED
PARTNERSHIP
By: CEC MARKETING COMPANY,
Its General Partner
By:_____________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
DA963310175
112696 v1
393:3087-29
TERM NOTE - Page 3
TERM NOTE
$5,100,000.00 Shreveport, Louisiana November 26, 1996
FOR VALUE RECEIVED, the undersigned, CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation, CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP, a Texas
limited partnership, CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas limited
partnership, CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas limited
partnership (collectively, the "Makers"), hereby jointly and severally promise
to pay to the order of COMMERCIAL NATIONAL BANK IN SHREVEPORT ("Payee"), at the
offices of COMMERCIAL NATIONAL BANK IN SHREVEPORT, a national banking
association (together with any successor as provided in the Agreement, as
hereinafter defined, the "Agent"), at its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Post
Office Box 21119, Shreveport, Caddo Parish, Louisiana, in lawful money of the
United States of America, the principal sum of Five Million One Hundred Thousand
and No/100 Dollars ($5,100,000.00), or so much thereof as may be advanced and
outstanding hereunder, together with interest on the outstanding principal
balance from day to day remaining at the rates specified herein, and on the
dates provided in the Agreement referred to below.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the
Applicable Rate (as defined in the Agreement referred to below) in effect from
day to day, each such change in the rate of interest charged hereunder to become
effective, without notice to Makers, on the effective date of each change in the
Applicable Rate or the maximum rate permitted by applicable law, as the case may
be. All past due principal and interest shall bear interest at the rate set
forth in Article III of the Agreement referred to below.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day).
This Note is a Term Note provided for in that certain Amended and Restated
Loan Agreement dated of even date herewith among Makers, Castle Production
Company, Castle Pipeline Company, CEC Marketing Company, Castle Energy
Corporation, each of the banks or other lending institutions or other Eligible
Assignees (as defined therein) which is or may become a signatory thereto and
any successors or assigns thereof (collectively, the "Lenders") and Agent (such
Amended and Restated Loan Agreement as the same may be amended, supplemented or
otherwise modified from time to time is hereinafter referred to as the
"Agreement"). All capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Agreement. Reference is hereby made to the
Agreement for provisions affecting this Note including, but not limited to,
provisions regarding interest rates, repayments, prepayments, Events of Default
and Payee's rights as a result thereof. Maker may prepay the principal of this
Note upon the terms and conditions specified in the Agreement.
TERM NOTE - Page 1
If default be made in the payment of principal or interest under this Note,
or upon the occurrence of any other Event of Default, the holder hereof may, at
its option, declare the entire unpaid principal of and accrued interest on this
Note immediately due and payable without notice, demand or presentment, all of
which are hereby waived, and upon such declaration, the same shall become and
shall be immediately due and payable, and the holder hereof shall have the right
to foreclose or otherwise enforce all liens or security interests securing
payment hereof, or any part hereof, and offset against this Note any sum or sums
owed by the holder hereof to Makers. Failure of the holder hereof to exercise
this option shall not constitute a waiver of the right to exercise the same upon
the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Makers agree to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
THIS NOTE IS PERFORMABLE IN CADDO PARISH, LOUISIANA.
Each Maker and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
CASTLE EXPLORATION COMPANY, INC.
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
TERM NOTE - Page 2
CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP
By: CASTLE PRODUCTION COMPANY,
Its General Partner
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PIPELINE LIMITED
PARTNERSHIP
By: CASTLE PIPELINE COMPANY,
Its General Partner
By:_______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CEC GAS MARKETING LIMITED
PARTNERSHIP
By: CEC MARKETING COMPANY,
Its General Partner
By:________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
DA963310179
112696 v1
351:3087-29
TERM NOTE - Page 3
TERM NOTE
$4,950,000.00 Shreveport, Louisiana November 26, 1996
FOR VALUE RECEIVED, the undersigned, CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation, CASTLE TEXAS PRODUCTION LIMITED PARTNERSHIP, a Texas
limited partnership, CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas limited
partnership, CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas limited
partnership (collectively, the "Makers"), hereby jointly and severally promise
to pay to the order of COMPASS BANK ("Payee"), at the offices of COMMERCIAL
NATIONAL BANK IN SHREVEPORT, a national banking association (together with any
successor as provided in the Agreement, as hereinafter defined, the "Agent"), at
its offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, Post Office Box 21119, Shreveport, Caddo
Parish, Louisiana, in lawful money of the United States of America, the
principal sum of Four Million Nine Hundred Fifty Thousand and No/100 Dollars
($4,950,000.00), or so much thereof as may be advanced and outstanding
hereunder, together with interest on the outstanding principal balance from day
to day remaining at the rates specified herein, and on the dates provided in the
Agreement referred to below.
The outstanding principal balance hereof shall bear interest prior to
maturity at a varying rate per annum which shall from day to day be equal to the
lesser of (a) the maximum rate permitted by applicable law, or (b) the
Applicable Rate (as defined in the Agreement referred to below) in effect from
day to day, each such change in the rate of interest charged hereunder to become
effective, without notice to Makers, on the effective date of each change in the
Applicable Rate or the maximum rate permitted by applicable law, as the case may
be. All past due principal and interest shall bear interest at the rate set
forth in Article III of the Agreement referred to below.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day).
This Note is a Term Note provided for in that certain Amended and Restated
Loan Agreement dated of even date herewith among Makers, Castle Production
Company, Castle Pipeline Company, CEC Marketing Company, Castle Energy
Corporation, each of the banks or other lending institutions or other Eligible
Assignees (as defined therein) which is or may become a signatory thereto and
any successors or assigns thereof (collectively, the "Lenders") and Agent (such
Amended and Restated Loan Agreement as the same may be amended, supplemented or
otherwise modified from time to time is hereinafter referred to as the
"Agreement"). All capitalized terms not otherwise defined herein shall have the
same meanings as set forth in the Agreement. Reference is hereby made to the
Agreement for provisions affecting this Note including, but not limited to,
provisions regarding interest rates, repayments, prepayments, Events of Default
and Payee's rights as a result thereof. Maker may prepay the principal of this
Note upon the terms and conditions specified in the Agreement.
TERM NOTE - Page 1
If default be made in the payment of principal or interest under this Note,
or upon the occurrence of any other Event of Default, the holder hereof may, at
its option, declare the entire unpaid principal of and accrued interest on this
Note immediately due and payable without notice, demand or presentment, all of
which are hereby waived, and upon such declaration, the same shall become and
shall be immediately due and payable, and the holder hereof shall have the right
to foreclose or otherwise enforce all liens or security interests securing
payment hereof, or any part hereof, and offset against this Note any sum or sums
owed by the holder hereof to Makers. Failure of the holder hereof to exercise
this option shall not constitute a waiver of the right to exercise the same upon
the occurrence of a subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Makers agree to pay all collection
costs and fees incurred by the holder, including reasonable attorneys' fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF LOUISIANA AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA.
THIS NOTE IS PERFORMABLE IN CADDO PARISH, LOUISIANA.
Each Maker and each surety, guarantor, endorser, and other party ever
liable for payment of any sums of money payable on this Note jointly and
severally waive notice, presentment, demand for payment, protest, notice of
protest and non-payment or dishonor, notice of acceleration, notice of intent to
accelerate, notice of intent to demand, diligence in collecting, grace, and all
other formalities of any kind, and consent to all extensions without notice for
any period or periods of time and partial payments, before or after maturity,
and any impairment of any collateral securing this Note, all without prejudice
to the holder. The holder shall similarly have the right to deal in any way, at
any time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
CASTLE EXPLORATION COMPANY, INC.
By:___________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
TERM NOTE - Page 2
CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP
By: CASTLE PRODUCTION COMPANY,
Its General Partner
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CASTLE TEXAS PIPELINE LIMITED
PARTNERSHIP
By: CASTLE PIPELINE COMPANY,
Its General Partner
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
CEC GAS MARKETING LIMITED
PARTNERSHIP
By: CEC MARKETING COMPANY,
Its General Partner
By:______________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇▇
Vice President
DA963310183
112696 v2
351:3087-29
TERM NOTE - Page 3