Loan Agreement dated as of July 14, 2009 between Isramco, Inc. and I.O.C. – Israel Oil Company, Ltd. ($6.0 million) LOAN AGREEMENT
Exhibit
10.16
Loan
Agreement dated as of July 14, 2009 between Isramco, Inc. and I.O.C. – Israel
Oil Company, Ltd. ($6.0 million)
THIS LOAN
AGREEMENT, dated as of July 14, 2009, is made and entered into by and between
ISRAMCO, INC., a Delaware corporation (the “Borrower”) and I.O.C.
- ISRAEL OIL COMPANY, LTD. (the “Lender”).
WITNESSETH:
WHEREAS,
ISRAMCO RESOURCES, L.L.C., a Texas limited liability company (“Isramco
Resources”), is a wholly owned subsidiary of the Borrower;
WHEREAS,
Isramco Resources is a party to that certain Amended and Restated Credit
Agreement dated as of April 28, 2008, as amended by that certain First Amendment
to Credit Agreement dated as of May 15, 2008, that certain Second Amendment to
Amended and Restated Credit Agreement dated as of December 19, 2008, and that
Third Amendment to Amended and Restated Credit Agreement dated as of June 30,
2009 (as so amended, the “Credit Agreement”), with ”); the Bank Of Nova Scotia,
as “administrative agent” and Capital One, N.A., as “Syndication Agent”
(collectively, the “Lenders”)
WHEREAS,
pursuant to the Credit Agreement Lenders agreed to make and have made loans to
and extensions of credit on behalf of Isramco Resources (the
“Loan”);
WHEREAS,
pursuant to the Credit Agreement Lenders redetermined the “Borrowing Base” to
$35,000,000, which is below the outstanding principal balance of the Loan made
to Isramco Resources;
WHEREAS,
the Borrower desires to obtain financing in the amount of Six Million Dollars
($6,000,000) from the Lender for purposes of contribution to the equity of
Isramco Resources in order to reduce the outstanding principal amount of the
Loan below the redetermined Borrowing Base and to avoid incurring the additional
interest and other obligations specified in the Credit Agreement;
WHEREAS,
the Lender is willing to extend the financing to Borrower upon the terms and
conditions herein set forth.
NOW,
THEREFORE, in consideration of the mutual covenants and agreements contained
herein, and other good and valuable consideration, receipt of which is
acknowledged by the parties hereto, the parties agree, as follows:
ARTICLE
I
CERTAIN
DEFINITIONS
When used
herein, the following terms shall have the following meanings:
Section
1.2 Business Day shall
mean a day other than a Saturday, Sunday or a day upon which banks in the State
of Texas are closed to business generally; provided that when used in connection
with a Libor Loan, the term shall also exclude any day on which banks are not
open for dealings in dollar deposits in the London interbank
market.
Section
1.3 Default Rate shall
mean the Stated Rate plus 12 percentage points (12%) per
annum.
Section
1.4 Effective Date shall mean July 14,
2009.
Section
1.5 Event of Default
shall mean any of the events specified in Section 7.1 of this Agreement, and
Default shall mean any event, which together with any lapse of time or giving of
any notice, or both, would constitute an Event of Default.
Section
1.6 Governmental Authority shall include the country, the state, county, city and
political subdivisions in which any Person or such Person’s property is located
or which exercises valid jurisdiction over any such Person or such Person’s
property, and any Tribunal of any of them, including monetary authorities, which
exercises valid jurisdiction over any such Person or such Person’s
property. Unless otherwise specified, all references to Governmental
Authority herein shall mean a Governmental Authority having jurisdiction over,
where applicable, Borrower, any of its Subsidiaries, any of Borrower’s
properties or the Lender.
Section
1.7 Governmental Requirement shall mean any Law, or other directive or requirement
(whether or not having the force of law), including, without limitation,
environmental laws, energy regulations and occupational, safety and health
standards or controls, of any Governmental Authority.
Section
1.8 Hereby, herein, hereof, hereunder and similar such terms shall mean and refer to this
Agreement as a whole and not merely to the specific section, paragraph or clause
in which the respective word appears.
Section
1.9 Highest Lawful Rate shall mean on any day, the maximum
nonusurious rate of interest permitted for that day by whichever of applicable
federal or Texas laws permits the higher interest rate, stated as a rate per
annum. On each day, if any, that the Texas Finance Code establishes
the “Ceiling Rate”, the Ceiling Rate shall be the “weekly ceiling” (as defined
in the Texas Finance Code) for that day. Lender may from time to
time, as to current and future balances, implement any other ceiling under the
Texas Finance Code by notice to Borrower, if and to the extent permitted by the
Texas Finance Code. Without notice to Borrower or any other person or
entity, the Ceiling Rate shall automatically fluctuate upward and downward as
and in the amount by which such maximum nonusurious rate of interest permitted
by applicable law fluctuates.
Section
1.10 Indebtedness shall
mean any and all: (i) indebtedness, obligations and liabilities of the Borrower
to the Lender incurred or which may be incurred hereafter pursuant to
the terms of this Agreement or any of the other Loan Documents, and any
extensions, renewals, substitutions, amendments and increases in amount thereof,
including such amounts as may be evidenced by the Note and all lawful interest
thereon and other charges, and all reasonable costs and expenses incurred by the
Lender in connection with the preparation, filing and recording of the Loan
Documents, including attorneys fees (ii) all reasonable costs and expenses,
including attorneys’ fees, paid or incurred by the Lender in enforcing or
attempting to enforce collection of any Indebtedness and in enforcing or
realizing upon or attempting to enforce or realize upon any collateral or
security for any Indebtedness and in protecting and preserving the Lender’s
interest in the Indebtedness or any collateral or security for any Indebtedness
in any bankruptcy or reorganization proceeding, including interest on all sums
so expended by the Lender accruing from the date upon which such expenditures
are made until paid, at an annual rate equal to the Default Rate; and (iii) sums
expended by the Lender in curing any Event of Default or Default of the Borrower
under the terms of this Agreement, the other Loan Documents or any other
security agreement or other writing evidencing or securing the payment of the
Indebtedness described herein, including the Note.
Section
1.11 Interest Period shall mean shall mean the period
commencing on the Effective Date and ending on the numerically corresponding day
each year thereafter.
Section
1.12 Law(s) shall mean
all statutes, laws, ordinances, regulations, orders, rules, codes, permits,
franchises, licenses, certificates, writs, injunctions, or decrees of the United
States, any state or commonwealth, any municipality, any foreign country, any
territory or possession, or any Tribunal.
Section
1.13 Libor shall mean, at any time of determination, the rate
per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing
on Dow ▇▇▇▇▇ Market Service Page 3750 (or any successor page) as the London
interbank offered rate for deposits in Dollars at approximately 11:00 a.m.
(London time) two (2) Business Days prior to the first day of such Interest
Period for a term comparable to such Interest Period. If for any
reason such rate is not available, the term “LIBOR” shall mean the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) appearing on
Reuters Screen LIBOR Page as the London interbank offered rate for deposits in
Dollars at approximately 11:00 a.m. (London time) two (2) Business Days prior to
the first day of such Interest Period for a term comparable to such Interest
Period; provided, however, if more than one rate is specified on Reuters Screen
LIBOR Page, the applicable rate shall be the arithmetic mean of all such
rates. In the event that such rate does not appear on either Dow
▇▇▇▇▇ Market Service Page 3750 or Reuters Screen LIBOR Page, “LIBOR” shall be
the rate per annum at which deposits in Dollars are offered by leading reference
banks in the London interbank market to ▇▇▇▇▇ Fargo Bank, N.A. at approximately
11:00 a.m. (London time) two (2) Business Days prior to the first day of the
applicable Interest Period for a period equal to such Interest Period and in an
amount substantially equal to the amount of this Loan.
Section
1.14 Lien shall mean any
mortgage, deed of trust, pledge, security interest, encumbrance, lien or charge
of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any lease in the nature
thereof, and the filing of or agreement to give any financing statement or other
similar form of public notice under the Laws of any
jurisdiction).
Section
1.15 Loan shall mean the funds loaned to the Borrower by the
Lender pursuant to this Agreement.
Section
1.16 Loan Documents
means, on any date, this Agreement, the Note and all other agreements relating
to this Agreement entered into from time to time between Borrower and the Lender
and all other documents and certificates executed and delivered to the Lender by
the Borrower in connection with any of the foregoing, as from time to time
amended, supplemented, amended and restated, or otherwise modified and in effect
on such date.
Section
1.17 Material Adverse Effect shall mean any material and adverse effect on (i) the
assets, liabilities, financial condition, business, operations, prospects or
affairs of the Borrower and its Subsidiaries taken as a whole; or (ii) the
ability of the Borrower and its Subsidiaries, taken as a whole, to carry out
their business on and after the Effective Date or as proposed as of the
Effective Date to be conducted or meet its obligations under the Loan Documents
on a timely basis.
Section
1.18 Maturity Date shall
mean, unless the Note is sooner accelerated pursuant to this Agreement, July 14,
2014.
Section
1.19 Maximum Rate shall
mean at any particular in question, the maximum rate of interest that, under
applicable law, may then be charged. If such maximum rate changes
after the date hereof, the Maximum Rate shall be automatically increased or
decreased, as the case may be, without notice to Borrower from time to time as
the effective date of each change in such maximum rate
period.
Section
1.20 Note shall mean the
Note as described and defined in Article II of this Agreement, together with
each and every extension, renewal, modification, replacement, substitution and
change in form thereof which may be from time to time and for any term or terms
effected.
Section
1.21 Person shall mean
and include an individual, a partnership, a limited partnership, a limited
liability company, a joint venture, a corporation, a trust, an unincorporated
organization, and a government or any department, agency or political
subdivision thereof.
Section
1.22 Responsible Officer
shall mean the chief executive officer, chief operating officer, chief financial
officer, president or managing director of the Borrower.
Section
1.23 Subsidiary shall
mean (i) any corporation, at least 50% of the total combined voting power of all
classes of Voting Stock of which shall, at the time as of which any
determination is being made, be owned by the Borrower either directly or through
Subsidiaries; and (ii) any partnership, joint venture or similar entity if at
least a 50% interest in the profits or capital thereof is owned by the Borrower,
either directly or through Subsidiaries.
Section
1.24 Stated Rate shall mean a rate per annum equal to LIBOR
plus six percent (6%); provided, however, that if the Stated Rate ever exceeds
the Highest Lawful Rate, the Stated Rate shall then and thereafter be fixed at a
rate per annum equal to the Highest Lawful Rate then and from time to time
thereafter in effect until the total amount of interest accrued at the Stated
Rate on the unpaid balance of this Note equals the total amount of interest
which would have accrued at the Highest Lawful Rate from time to time in
effect.
Section
1.25 Taxes shall mean
all taxes, assessments, fees, or other charges or levies from time to time or at
any time imposed by any Laws or by any Tribunal as hereafter
defined.
Section
1.26 Tribunal shall mean
any municipal, state, commonwealth, Federal, foreign, territorial or other
sovereign, governmental entity, governmental department, court, commission,
board, bureau, agency or instrumentality.
Section
1.27 Other Definitional Provisions. References to Sections, subsections,
Exhibits and Schedules shall be to Sections, subsections, Exhibits and
Schedules, respectively, of this Agreement unless otherwise specifically
provided. Any of the terms defined in Article I may, unless the
content otherwise requires, be used in the singular or the plural depending on
the reference. In this Agreement, words importing any gender include
the other genders; the words including, includes and include shall be deemed to
be followed by the words without limitation; references to agreements and other
contractual instruments shall be deemed to include subsequent amendments,
assignments, and other modifications thereto, but only to the extent such
amendments, assignments and other modifications are not prohibited by the terms
of this Agreement or any other Loan Document; references to Persons include
their respective permitted successors and assigns or, in the case of
governmental Persons, Persons succeeding to the relevant functions of such
Persons; and all references to statutes and related regulations shall include
any amendments of same and any successor statutes and
regulations.
ARTICLE
II
LOAN
Section
2.2 Loan. Upon the terms and subject to the conditions
hereinafter set forth, the Lender agrees to loan to Borrower the sum of Six
Million and NO/100 U.S. Dollars (US $6,000,000.00) (the “Loan”). The
Loan will be funded on or before the Effective Date. The unpaid
principal balance and all accrued interest of the Loan are due and payable on
the Maturity Date.
Section
2.3 Payments by
Lender. The Lender shall fund the Loan to Borrower, as
requested by Borrower, by wire transfer of immediately available funds by 11:00
a.m. Houston, Texas time to the account of the Borrower as designated by the
Borrower for such purpose by written notice to the Lender.
Section
2.4 Note. The Borrower shall execute and deliver to
the order of the Lender a promissory note in the original principal amount the
Loan, the form of which is annexed hereto as Exhibit A and hereby made a part
hereof (hereinafter referred to as the “Note”). The Note shall be
dated as of the Effective Date, and shall provide for one annual payment of
accrued interest on the first anniversary of the Effective Date hereof, followed
by four annual payments of accrued interest on each succeeding anniversary date
until the Maturity Date, when the unpaid and outstanding principal balance of
the Note, together with accrued but unpaid interest thereon, shall be due and
payable. The Note shall bear interest on the unpaid balance of
principal from time to time outstanding and on any past due interest at an
annual interest rate determined pursuant to Section 2.6 hereof, but in no event
at a rate greater than permitted by applicable Law. All payments
received shall be applied first to accrued interest and then to the outstanding
principal amount owing on the Note. All payments and prepayments
shall be made in lawful money of the United States of America. After
maturity (whether by acceleration or otherwise) the Note shall bear interest at
the Default Rate, payable on demand. Interest shall be calculated on
the basis of a year of 365 days, but assessed for the actual number of days
elapsed in each Interest Period.
Section
2.5 Proceeds of
Loan. Proceeds of the Loan shall
be used only for the purposes of Borrower’s equity contribution to Isramco
Resources.
Section
2.6 Responsible Officer. A Responsible Officer may,
from time to time, notify the Lender in writing of a change in the Responsible
Officer. From and after the Lender’s receipt of such written notice,
the Lender may rely on any such request or certificate purportedly signed by any
individual who has been so designated as a Responsible Officer pursuant to this
Agreement unless or until it receives written notice from a Responsible Officer
of the deletion of a Responsible Officer.
Section
2.7 Interest Rates.
(a) Interest Prior to Maturity. Subject to
the provisions and limitations hereof, the outstanding principal balance of the
Loan hereunder shall accrue interest at the Stated Rate.
(b) Interest After Maturity. After the
outstanding principal amount of the Loan shall have become past due (by
acceleration or past the stated maturity date), such Loans shall bear interest
for each day until paid (before and after judgment) at the Default
Rate.
Section
2.8 Prepayments. Borrower shall have the right at its option,
from time to time, to prepay the Loan in whole or part without premium or
penalty at any time.
Section
2.9 Payments From
Borrower. All payments shall be payable to the Lender on the
day when due without presentment, demand, protest or notice of any kind, all of
which are hereby expressly waived, and an action therefor shall immediately
accrue if not timely paid within applicable grace or curative periods herein
specified. Such payments shall be made to the Lender at such location
as Lender may from time to time designate in writing in U.S. Dollars in funds
immediately available at such office without set off, counterclaim or other
deduction of any nature. To the extent permitted by law, after there
shall have become due (by acceleration or otherwise), interest or any other
amounts due from the Borrower hereunder or under the Note (excluding overdue
principal, which shall bear interest as described in Section 2.6(b) hereof),
such amounts shall bear interest for each day until paid (before and after
judgment), payable on demand, at the Default Rate.
Section
2.10 Full
Payment. All outstanding principal and accrued but unpaid interest on the
Note shall be due and payable at the Maturity Date.
ARTICLE
III
CONDITIONS PRECEDENT TO
LOANS
Section
3.2 Conditions Precedent to Funding. The effectiveness of this Agreement and the obligation
of the Lender to make the Loan are subject to the satisfaction of all of the
following conditions on or prior to the Effective Date (in addition to the other
terms and conditions set forth herein):
(i) Representations and
Warranties. The covenants, representations and warranties set
forth herein and in the other Loan Documents shall be true and correct in all
material respects on and as of the Effective Date, with the same effect as
though made on and as of the Effective Date.
(ii) Note. The
Borrower shall have executed and delivered to the Lender the Note payable to the
order of the Lender.
(iii) Other
Information. The Lender shall have received such other
information, documents and assurances as shall be reasonably requested by the
Lender.
ARTICLE
IV
AFFIRMATIVE
COVENANTS
The
Borrower covenants and agrees with the Lender that from the date hereof and so
long as this Agreement is in effect (by extension, amendment or otherwise) and
until payment in full of all Indebtedness and the performance of all other
obligations of the Borrower under this Agreement, unless the Lender shall
otherwise consent in writing:
Section
4.2 Payment of Taxes and
Claims. The Borrower will pay and discharge or cause to be paid
and discharged all Taxes imposed upon the income or profits of the Borrower or
upon the property, real, personal or mixed, or upon any part thereof, belonging
to Borrower before the same shall be in default, and all lawful claims for
labor, rentals, materials and supplies which, if unpaid, might become a Lien
upon its property or any part thereof; provided, however, that the Borrower
shall not be required to pay and discharge or cause to be paid or discharged any
such Tax, assessment or claim so long as the validity thereof shall be contested
in good faith by appropriate proceedings, and adequate book reserves shall be
established with respect thereto, and the Borrower shall pay such Tax, charge or
claim before any property subject thereto shall become subject to levy of
attachment or execution.
Section
4.3 Maintenance of
Existence. The Borrower will do or cause to be done all things
necessary to preserve and keep in full force and effect its organizational
existence, rights and franchises and good standing in the State of Delaware and
as a foreign corporation qualified in such other jurisdiction(s) in which the
failure to maintain such qualification would have a Material Adverse
Effect.
Section
4.4 Preservation of
Property. The Borrower will at all times
maintain, preserve and protect all of the Borrower’s properties which are used
or useful in the conduct of the Borrower’s businesses whether owned in fee or
otherwise, or leased, in good repair and operating condition and comply with all
material leases to which it is a party or under which it occupies property so as
to prevent any material loss or forfeiture thereunder.
Section
4.5 Payment of
Indebtedness/Performance of Obligations. The Borrower
will pay the obligations under the Note according to the reading, tenor and
effect thereof and the Borrower hereby agrees to pay, when due and owing, all
Indebtedness, whether or not evidenced by the Note.
Section
4.6 Operation of Properties and
Equipment.
(i) The
Borrower will maintain and operate, and will cause each of its Affiliates (if
any) to maintain and operate, their respective properties in a good and
workmanlike manner, except to the extent a failure to so observe and comply is
not reasonably expected to have a Material Adverse Effect.
(ii) The
Borrower will comply, and will cause each of its Affiliates (if any) to comply,
in all respects with all contracts and agreements applicable to or relating to
their respective properties, except to the extent a failure to so comply is not
reasonably expected to have a Material Adverse Effect.
ARTICLE
V
NEGATIVE
COVENANTS
The
Borrower covenants and agrees with the Lender that from the date hereof and so
long as this Agreement is in effect (by extension, amendment or otherwise) and
until payment in full of all Indebtedness, unless the Lender shall otherwise
consent in writing:
Section
5.2 Liens. Other
than the first lien and security interest of Lenders upon properties of Isramco
Resources, the existing liens securing existing debt of its other Subsidiaries,
and the liens and security interests pledged to Naphtha Israel Petroleum Corp.,
Ltd. by ▇▇▇ Petroleum, L.L.C., the Borrower will not, and will not permit any of
its Subsidiaries (if any), to create, incur, assume, or suffer to exist any lien
upon or with respect to any of its properties, now owned or hereafter acquired,
except:
(i) Liens for
taxes or assessments or other government charges or levies if not yet due and
payable or, if due and payable or, if they are being contested in good faith by
appropriate proceedings and for which appropriate reserves are
maintained;
(ii) Liens
imposed by law, such as mechanics’, materialmen’s, landlords’, warehousemen’s,
and carriers’ Liens, and other similar Liens, securing obligations incurred in
the ordinary course of business which are not past due for more than thirty (30)
days or which are being contested in good faith by appropriate proceedings and
for which appropriate reserves have been established;
(iii) Liens
under workers’ compensation, unemployment insurance, Social Security or similar
legislation;
(iv) Liens,
deposits, or pledges to secure the performance of bids, tenders, contracts
(other than contracts for the payment of money), leases, public or statutory
obligations, surety, stay, appeal, indemnity, performance or other similar
bonds, or other similar obligations arising in the ordinary course of
business;
(v) Judgment
and other similar liens (in the aggregate exceeding $100,000) arising in
connection with court proceedings, provided the execution or other enforcement
of such Liens is effectively stayed and the claims secured thereby are being
actively contested in good faith and by appropriate proceedings.
Section
5.3 Sale of Assets. The Borrower will not sell,
lease, assign, transfer, or otherwise dispose of, any of its now owned or
hereafter acquired assets (including, without limitation, shares of stock,
receivables, and leasehold interests) in excess of $150,000 in the aggregate
during any twelve (12) consecutive month period of time, except: (1) inventory
disposed of or leased in the ordinary course of business; (2) the sale or other
disposition of other assets no longer used or useful in the conduct of its
business; and (3) as otherwise expressly permitted pursuant to this
Agreement.
Section
5.4 Use of Loan
Proceeds. The Borrower shall not use any proceeds of the Loan for any
purpose other than those expressly permitted and contemplated by this Agreement,
and in no event shall any loan proceeds be used for any purpose that would
create or cause a breach, violation or default or event of default hereunder or
under any of the other Loan Documents or violation of Regulations T, U or X or
any other regulation of the Board of Governors of the Federal Reserve System or
to violate Section 7 of the Securities Exchange Act of 1934 or any rule or
regulation thereunder, in each case as now in effect or as the same may
hereinafter be in effect.
ARTICLE
VI
REPRESENTATIONS AND
WARRANTIES
To induce
the Lender to enter into this Agreement and to make the Loan to the Borrower
under the provisions hereof, and in consideration thereof, the Borrower
represents, warrants and covenants as follows:
Section
6.2 Good Standing, and Due
Qualification. The Borrower (a) is a corporation duly formed, validly
existing, and in good standing under the laws of the State of Delaware; (b) has
the power and authority to own its assets and to transact the business in which
it is now engaged or in which it is proposed to be engaged; and (c) is duly
qualified as a foreign corporation and in good standing under the laws of each
other jurisdiction in which such qualification is required, except where the
failure to so qualify could not reasonably be expected to have a Material
Adverse Effect. The initial Responsible Officer of the Borrower has
all necessary corporate power and authority to execute and deliver this
Agreement, the Note, and the other Loan Documents to the
Lender.
Section
6.3 Litigation. There is no action, suit,
investigation or proceeding threatened or pending before any Tribunal against or
affecting the Borrower or any properties or rights of the Borrower, which, if
adversely determined, would result in any material adverse change in the
business or condition, financial or otherwise, of the Borrower, or otherwise
materially adversely affect the ability of the Borrower to perform its
obligations under this Agreement. The Borrower is not in default with
respect to any judgment, order, writ, injunction, decree, rule or regulation of
any Tribunal.
Section
6.4 Conflicting Agreements and
Other Matters. To the best of Borrower’s
knowledge and belief, the Borrower is not in default in the performance of any
material obligation, covenant, or condition in any material agreement to which
it is a party or by which it is bound. Neither the execution nor
delivery of any of the Loan Documents, nor fulfillment of, nor compliance with
their respective terms and provisions will conflict with, or result in a
material breach of the terms, conditions or provisions of, or constitute a
default under, or result in any material violation of, or result in the creation
of any Lien (except those created by the Loan Documents) upon any of the
properties or assets of the Borrower pursuant to, or require any consent,
approval or other action by or any notice to or filing with any Tribunal (other
than routine filings after the Effective Date with the Securities and Exchange
Commission, any securities exchange and/or state blue sky authorities) pursuant
to any award of any arbitrator, or any agreement, instrument or Laws to which
the Borrower is subject.
Section
6.5 Title to Properties,
Authority. The Borrower has full power, authority and legal right to
own and operate the properties that it now owns and operates, and to carry on
the lines of business in which it is now engaged, and to the knowledge of
Borrower has good and defensible title to all of its assets. The
Borrower has full power, authority and legal right to execute and deliver and to
perform and observe the provisions of this Agreement and the other Loan
Documents and the Loan Documents constitute the legal, valid and binding
obligations of the Borrower, enforceable against it in accordance with their
respective terms, subject only to applicable bankruptcy, insolvency or similar
laws and general principles of equity.
Section
6.6 Corporate
Authorization. The Borrower has duly authorized the execution and delivery
of each of the Loan Documents and the performance of their respective
terms. No other authorizations, approvals, consents or actions of any
other Person are required as a prerequisite to the validity and enforceability
of the Loan Documents.
ARTICLE
VII
EVENTS OF
DEFAULT
Section
7.2 Events of
Default. The occurrence of any one or more of the following events
shall constitute an Event of Default (whether such occurrence shall be voluntary
or involuntary or come about or be effected by operation of Law or
otherwise):
(i) Borrower
shall fail to make any monthly or other payment due on the Note, or fail to pay
any other fee, charge or assessment within five (5) days after the same shall
become due and payable (whether by extension, renewal, acceleration, maturity or
otherwise); or
(ii) Any
representation, warranty or certification of the Borrower made herein, or in any
other writing furnished in connection with or pursuant to any of the Loan
Documents shall have been incorrect, false or misleading in any material respect
on the date when made; or
(iii) The
Borrower shall fail to duly observe, perform or comply with any covenant,
agreement or term (other than payment provisions which are governed by
subparagraph (a) hereof) contained in this Agreement or any of the Loan
Documents and such default or breach shall have not been cured or remedied
within thirty (30) days following the date the Lender first notifies the
Borrower in writing; or
(iv) Any of
the following: (i) the Borrower shall be unable to pay its debts as they mature,
or shall make an assignment for the benefit of creditors or admit in writing its
inability to pay its debts generally as they become due or fail generally to pay
its debts as they mature; or (ii) an order, judgment or decree is entered
adjudicating the Borrower insolvent or an order for relief under the United
States Bankruptcy Code is entered with respect to the Borrower; or (iii) the
Borrower shall petition or apply to any Tribunal for the appointment of a
trustee, receiver, custodian or liquidator of the Borrower or of any substantial
part of the assets of the Borrower or shall commence any proceedings relating to
the Borrower under any bankruptcy, reorganization, compromise, arrangement,
insolvency, readjustment of debts, dissolution, or liquidation Law of any
jurisdiction, whether now or hereafter in effect; or (iv) any such petition or
application shall be filed, or any such proceedings shall be commenced, against
the Borrower and the Borrower by any act shall indicate its approval thereof,
consent thereto or acquiescence therein, or an order, judgment or decree shall
be entered appointing any such trustee, receiver, custodian or liquidator, or
approving the petition in any such proceedings, and such order, judgment or
decree shall remain unstayed and in effect for more than thirty (30) days; or
(v) the Borrower shall fail to make timely payment or deposit of any amount of
tax required to be withheld by such Borrower and paid to or deposited to or to
the credit of the United States of America pursuant to the provisions of the
Internal Revenue Code of 1986, as amended, in respect of any and all wages and
salaries paid to employees of the Borrower; or
(v) Any
default or event of default under any of the other Loan Documents following the
lapse of any applicable curative or grace period provided therein.
Section
7.3 Remedies. Upon
the occurrence of any Event of Default referred to in Section 7.1, the Note and
all other Indebtedness shall be immediately due and payable, without notice of
any kind. Upon the occurrence of any other Event of Default, and
without prejudice to any right or remedy of the Lender under this Agreement or
the Loan Documents or under applicable Law or under any other instrument or
document delivered in connection herewith, the Lender may declare the Note and
the Indebtedness, or any part thereof, to be forthwith due and payable,
whereupon the Note and the other Indebtedness, or such portion as is designated
by the Lender shall forthwith become due and payable, without presentment,
demand, notice or protest of any kind, all of which are hereby expressly waived
by the Borrower. No delay or omission on the part of the Lender in
exercising any power or right hereunder or under the Note, the Loan Documents or
under applicable law shall impair such right or power or be construed to be a
waiver of any default or any acquiescence therein, nor shall any single or
partial exercise by Lender of any such power or right preclude other or further
exercise thereof or the exercise of any other such power or right by such
Person. In the event that all or part of the Indebtedness becomes or
is declared to be forthwith due and payable as herein provided, Lender shall
have the right to set off the amount of all the Indebtedness of the Borrower
owing to such Person against, and shall have a lien upon and security interest
in, all property of the Borrower in such Person’s possession at or subsequent to
such default, regardless of the capacity in which such property is held,
including but not limited to any balance or share of any deposit, demand,
collection or agency account. At any time after the occurrence of any
Event of Default, the Lender may, at its option, cause an audit of any and/or
all of the books, records and documents of the Borrower to be made by auditors
satisfactory to the Lender at the expense of the Borrower. The Lender
also shall have, and may exercise, each and every right and remedy granted to it
for default under the terms of the other Loan Documents.
Section
7.4 Application
of Proceeds. After the exercise of remedies provided for in Section
7.2 (or after the Indebtedness automatically becomes immediately due and payable
as set forth in Section 7.2), any amounts received on account of such
Indebtedness shall be applied in the following order:
First: to
payment of that portion of the Indebtedness constituting fees, indemnities,
expenses or other amounts (other than principal and interest) payable to the
Lender (including fees, charges and disbursements of counsel);
Second: to
payment of accrued and unpaid interest on the Indebtedness;
Third: to
payment of unpaid principal of the Indebtedness;
and
Last: the balance, if
any, after all of the Indebtedness has been indefeasibly paid in full, to
Borrower or as otherwise required by applicable Laws.
ARTICLE
VIII
MISCELLANEOUS
Section
8.2 Notices. Unless otherwise provided
herein, all notices, requests, consents and demands shall be in writing and
shall be either hand-delivered (by courier or otherwise), mailed by certified
mail, postage prepaid, or transmitted via telex or facsimile to the respective
addresses specified below, or, as to any party, to such other address as may be
designated by it in written notice to the other
parties:
If to the
Borrower, to:
Isramco,
Inc.
▇▇▇▇
▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇,
▇▇ ▇▇▇▇▇
Telephone
No.: (713) 621 -3882
Facsimile
No.: (713) 621 – 3988
e – mail
▇▇▇▇@▇▇▇▇▇▇▇-▇▇▇.▇▇▇
If to the Lender, to:
I.O.C. -
Israel Oil Company, Ltd.
▇ ▇▇▇▇▇▇
▇▇.
▇.▇.▇.
▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇
▇▇▇▇▇
Israel
Phone: ▇▇▇-▇-▇▇▇-▇▇▇-▇
e-mail: ▇▇▇▇▇▇@▇▇▇▇▇▇▇.▇▇▇
All
notices, requests, consents and demands hereunder will be effective when
hand-delivered or transmitted by telecopier or sent, answer-back received,
respectively, by the Lender to the notice address of the Borrower, or two (2)
Business Days after the date when mailed by certified mail, postage prepaid, in
each case given or addressed as aforesaid by either party hereto.
Section
8.3 Place of
Payment. All sums payable hereunder shall be paid in immediately
available funds, at such location as may be designated from time to time in
writing by Lender. If any interest, principal or other payment falls
due on a date other than a Business Day, then (unless otherwise provided herein)
such due date shall be extended to the next succeeding Business Day, and such
extension of time will, in such case, be included in computing interest, if any,
in connection with such payment.
Section
8.4 Survival of
Agreements. All covenants, agreements, representations and warranties
made herein shall survive the execution and the delivery of Loan
Documents.
Section
8.5 Parties in
Interest. All covenants, agreements and obligations contained in this
Agreement shall bind and inure to the benefit of the parties hereto and the
respective successors and permitted assigns of the parties hereto, except that
the Borrower may not assign any of its rights or obligations hereunder or under
the Note without the prior written consent of the
Lender.
Section
8.6 Governing Law. This Agreement and the Note
shall be deemed to have been made or incurred under the Laws of the State of
Texas and shall be construed and enforced in accordance with and governed by the
Laws of Texas except only where the applicable remedial or procedural laws of
the other jurisdictions are situated are applicable thereto. Tex.
Rev. Civ. Stat. ▇▇▇. Art. 5069, Ch 15 (which regulates certain
revolving credit loan accounts and revolving tri-party accounts) shall not apply
to this Agreement or the Note.
Section
8.7 Interest. It is the intention of the
parties hereto that the Lender shall conform strictly to usury laws applicable
to them. Accordingly, if the transactions contemplated hereby would
be usurious as to the Lender under laws applicable to it (including the laws of
the United States of America or any other jurisdiction whose laws may be
mandatorily applicable the Lender notwithstanding the other provisions of this
Agreement), then, in that event, notwithstanding anything to the contrary in any
of the Loan Documents, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under law applicable to the Lender
that is contracted for, taken, reserved, charged or received by the Lender under
any of the Loan Documents or agreements or otherwise in connection with the Note
shall under no circumstances exceed the Maximum Rate, and any excess shall be
canceled automatically and if theretofore paid shall be credited by such Lender
on the principal amount of the Indebtedness (or, to the extent that the
principal amount of the Indebtedness shall have been or would thereby be paid in
full, refunded by any Lender to the Borrower); and (ii) in the event that the
maturity of the Note is accelerated by reason of an election of the holder
thereof resulting from any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to the Lender may never include
interest greater than the Maximum Rate, and excess interest, if any, provided
for in this Agreement or otherwise shall be canceled automatically as of the
date of such acceleration or prepayment and, if theretofore paid, shall be
credited by the Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have been or would
thereby be paid in full, refunded by the Lender to the Borrower). All
sums paid or agreed to be paid to the Lender for the use, forbearance or
detention of sums due hereunder shall, to the extent permitted by law, be
amortized, prorated, allocated and spread throughout the full term of the Loans
evidenced by the Note until payment in full so that the rate or amount of
interest on account of any Loans hereunder does not exceed the Maximum
Rate. If at any time and from time to time (i) the amount of interest
payable to the Lender on any date shall be computed at the highest lawful rate
applicable to the Lender pursuant to this Section 8.6; and (ii) in respect of
any subsequent interest computation period the amount of interest otherwise
payable to Lender would be less than the amount of interest payable to the
Lender computed at the highest lawful rate applicable to the Lender, then the
amount of interest payable to the Lender in respect of such subsequent interest
computation period shall continue to be computed at the highest lawful rate
applicable to the Lender until the total amount of interest payable to the
Lender shall equal the total amount of interest which would have been payable to
the Lender if the total amount of interest had been computed without giving
effect to this Section 8.6. To the extent that the Texas Credit Title
(V.T.C.A., Texas Finance Code §§ 301.001 et seq.) is relevant to the
Lender for the purpose of determining the highest lawful rate, the Lender hereby
elects to determine the applicable ceiling rate under the Texas Credit Title by
the weekly ceiling from time to time in
effect.
Section
8.8 No Waiver, Cumulative
Remedies. No failure to exercise, and no
delay in exercising, on the part of the Lender, any right, power or privilege
hereunder or under any other Loan Document or applicable Law shall preclude any
other or further exercise thereof or the exercise of any other right, power or
privilege of the Lender. The rights and remedies herein provided are
cumulative and not exclusive of any other rights or remedies provided by any
other instrument or by law. No notice to or demand on the Borrower in
any case shall entitle the Borrower to any other or further notice or demand in
similar or other circumstances.
Section
8.9 Costs. The Borrower agrees to pay to
the Lender on demand all recording fees and filing costs, all reasonable
attorneys fees and reasonable legal expenses incurred or accrued by the Lender
in connection with and preparation, negotiation, closing, administration,
perfection, enforcement, refinancing, renegotiation, restructuring, amendment,
waiver or other modifications of this Agreement and the Loan Documents or any
amendment, waiver, consent or modification to and of the Loan
Documents. In any action to enforce or construe the provisions of
this Agreement or any of the Loan Documents, the Lender shall be entitled to
recover its reasonable attorneys’ fees, disbursements of counsel and all costs
and expenses related thereto.
Section
8.10 Right of Set -
Off. The Borrower hereby grants to the Lender a lien, security
interest and right of setoff as security for all Indebtedness and obligations of
the Borrower upon and against all deposits, credit, and property of the
Borrower, now or hereafter in the possession, custody, safekeeping or control of
such Person; and upon (a) the occurrence and during the continuance of any Event
of Default; and (b) the decision by the Lender to declare the Note due and
payable pursuant to the provisions of Article VII, the Lender is hereby
authorized at any time and from time to time, to set off and otherwise apply any
and all deposits (general or special, time or demand, provisional or final,
other than trust funds) at any time held and other indebtedness at any time
owing by the Lender to or for the credit or the account of the Borrower against
any and all of the Indebtedness of the Borrower now or hereafter existing under
this Agreement and the Note, irrespective of whether demand under this Agreement
or the Note shall have been made and although such Indebtedness may be
unmatured. The Lender shall promptly notify the Borrower after any
such set off and application; provided, however, that the failure to give such
notice shall not affect the validity of such setoff and
application. The rights of the Lender under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set - off) that such Persons may have at law, in equity or
otherwise.
Section
8.11 Headings. The article and section headings
of this Agreement are for convenience of reference only and shall not constitute
a part of the text hereof nor alter or otherwise affect the meaning or
interpretation of any provision hereof.
Section
8.12 Severability. The unenforceability or
invalidity as determined by a Tribunal of competent jurisdiction, of any
provision or provisions of this Agreement shall not render unenforceable or
invalid any other provision or provisions
hereof.
Section
8.13 Confidentiality. In the event that the Borrower
provides to the Lender written confidential information belonging to the
Borrower, the Lender shall thereafter maintain such information in confidence in
accordance with the standards of care and diligence that each utilizes in
maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information which (i) are in
the public domain; (ii) hereafter become part of the public domain, without the
Lender breaching its obligation of confidence to the Borrower; (iii) are
previously known by the Lender from some source other than the Borrower; (iv)
are hereafter developed by the Lender without using the Borrower’s information;
(v) are hereafter obtained by the Lender from a third party who owes no
obligation of confidence to the Borrower with respect to such information; (vi)
are disclosed with the Borrower’s consent; (vii) must be disclosed either
pursuant to any Governmental Requirement or to Persons regulating the activities
of the Lender; or (viii) as may be required by law or regulation or order of any
Governmental Authority in any judicial, arbitration or governmental
proceeding. Further, the Lender may disclose any such information to
consultants, any independent certified public accountants or any legal counsel
employed by such Persons in connection with this Agreement, including without
limitation, the enforcement or exercise of all rights and remedies thereunder,
or any assignee or participant (including prospective assignees and
participants) in the Loan; provided, however, that the Lender imposes on the
Person to whom such information is disclosed the same obligation to maintain the
confidentiality of such information as is imposed upon it
hereunder. Notwithstanding anything to the contrary provided herein,
this obligation of confidence shall cease two (2) years from the date the
information was furnished, unless the Borrower requests in writing at least
thirty (30) days prior to the expiration of such two (2) year period, to
maintain the confidentiality of such information for an additional two (2) year
period. The Lender agrees not to issue or cause to be issued any
tombstone or other publicly published announcement of the lending facilities
established by this Agreement without the Borrower’s review and approval
thereof, which such approval will not be unreasonably
withheld.
Section
8.14 Survival. To the extent that any payments
on the Indebtedness are subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid to a trustee,
debtor-in-possession, receiver or other Person under any bankruptcy law, common
law or equitable cause, then to such extent, the Indebtedness so satisfied shall
be revived and continue as if such payment or proceeds had not been received and
the Liens, security interests, rights, powers and remedies under this Agreement
shall continue in full force and effect.
Section
8.15 NO ORAL
AGREEMENTS.THE LOAN
DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING BETWEEN THE PARTIES AND
SUPERSEDE ALL OTHER AGREEMENTS AND UNDERSTANDINGS BETWEEN SUCH PARTIES RELATING
TO THE SUBJECT MATTER HEREOF AND THEREOF THE LOAN DOCUMENTS REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Section
8.16 Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall constitute one
and the same instrument and any of the parties hereto may execute this Agreement
by signing any such counterpart. Delivery of an executed counterpart
of a signature page to this Agreement by telecopier shall be as effective as
delivery of a manually executed counterpart of this
Agreement.
Section
8.17 Amendments. No amendment or waiver of any
provision of this Agreement, the Note, or any other Loan Document to which the
Borrower is a party, nor any consent to any departure by the Borrower therefrom,
shall in any event be effective unless the same shall be agreed or consented to
by the Lender and the Borrower, 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 the Lender and the Borrower, do any of the
following: (a) reduce the principal of, or interest on, the Note or
any fees or other amounts payable hereunder; (b) postpone any date fixed for any
payment of principal of, or interest on, the Note or any fees or other amounts
payable hereunder; (c) change the percentage of the Commitment or of the
aggregate unpaid principal amount of the Note; or (d) change any provision
contained in this Section 8.16.
Section
8.18 Successors and
Assigns. This Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and
assigns. The Borrower may not assign or transfer any of its rights or
obligations hereunder without the prior written consent of the
Lender. The Borrower and the Lender agree that the Lender may at any
time assign to one or more assignees all, or a proportionate part of all, of its
rights and obligations under this Agreement and the other Loan
Documents.
IN
WITNESS WHEREOF, the Borrower has caused this Agreement to be executed and
delivered to the Lender, effective as of the day and year first above written by
the undersigned duly authorized corporate officer of the Borrower.
BORROWER:
ISRAMCO,
INC.
A
Delaware corporation
By:
Haim
Tsuff, Chief executive Officer
LENDER:
I.O.C.
- ISRAEL OIL COMPANY, LTD.
By:
▇▇▇▇▇▇
▇▇▇▇▇▇, Director
By:
____________________________________
Noa
Lendner, Authorized Representative