Exhibit 10.15
AMENDED AND RESTATED CREDIT AGREEMENT
AMONG
ALAMCO, INC.,
ALAMCO-DELAWARE, INC.
AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION
Effective as of October 1, 1995
REVOLVING LINE OF CREDIT OF UP TO $30,000,000
TABLE OF CONTENTS
Page
ARTICLE I DEFINITIONS AND INTERPRETATION . . . . . . . . . . . . . . 1
1.1 Terms Defined Above . . . . . . . . . . . . . . . . . . . . 1
1.2 Additional Defined Terms . . . . . . . . . . . . . . . . . 1
1.3 Undefined Financial Accounting Terms . . . . . . . . . . . 13
1.4 References . . . . . . . . . . . . . . . . . . . . . . . . 13
1.5 Articles and Sections . . . . . . . . . . . . . . . . . . . 13
1.6 Number and Gender . . . . . . . . . . . . . . . . . . . . . 14
1.7 Incorporation of Exhibits . . . . . . . . . . . . . . . . . 14
ARTICLE II AMOUNT AND TERMS OF FACILITY . . . . . . . . . . . . . . . 14
2.1 Revolving Line of Credit . . . . . . . . . . . . . . . . . 14
2.2 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 14
2.3 Use of Proceeds and Letters of Credit. . . . . . . . . . . 15
2.4 Interest . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.5 Repayment of Advances and Interest Thereon . . . . . . . . 15
2.6 Advances and Payments on Note . . . . . . . . . . . . . . . 15
2.7 Borrowing Base Determinations . . . . . . . . . . . . . . . 16
2.8 Mandatory Prepayments . . . . . . . . . . . . . . . . . . . 17
2.9 Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 17
2.10 Commitment Fees . . . . . . . . . . . . . . . . . . . . . . 17
2.11 Facility Fees . . . . . . . . . . . . . . . . . . . . . . . 17
2.12 Engineering Fees . . . . . . . . . . . . . . . . . . . . . 18
2.13 Letter of Credit Fees . . . . . . . . . . . . . . . . . . . 18
2.14 Advances to Satisfy Obligations of Borrowers . . . . . . . 18
2.15 Pledge of and Security Interest in Accounts and Right of
Offset or Lien . . . . . . . . . . . . . . . . . . . . . . 18
2.16 General Provisions Relating to Interest . . . . . . . . . . 19
2.17 Yield Protection . . . . . . . . . . . . . . . . . . . . . 20
2.18 Power of Attorney . . . . . . . . . . . . . . . . . . . . . 21
ARTICLE III CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . 22
3.1 Receipt of Loan Documents and Other Items; First Advance . 22
3.2 Each Advance and Letter of Credit . . . . . . . . . . . . . 24
ARTICLE IV REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . 25
4.1 Due Authorization and Corporate Existence . . . . . . . . . 25
4.2 Valid and Binding Obligations . . . . . . . . . . . . . . . 25
4.3 Title to Assets . . . . . . . . . . . . . . . . . . . . . . 26
4.4 Scope and Accuracy of Financial Statements . . . . . . . . 26
4.5 Liabilities, Litigation and Restrictions . . . . . . . . . 26
4.6 Authorizations and Consents . . . . . . . . . . . . . . . . 26
4.7 Compliance with Laws . . . . . . . . . . . . . . . . . . . 26
4.8 Proper Filing of Tax Returns and Payment of Taxes Due . . . 26
4.9 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
4.10 Environmental Laws . . . . . . . . . . . . . . . . . . . . 27
4.11 Compliance with Federal Reserve Regulations . . . . . . . . 28
4.12 Investment Company Act Compliance . . . . . . . . . . . . . 28
4.13 Public Utility Holding Company Act Compliance . . . . . . . 28
4.14 Refunds . . . . . . . . . . . . . . . . . . . . . . . . . . 28
4.15 Gas Contracts . . . . . . . . . . . . . . . . . . . . . . . 28
4.16 No Material Misstatements . . . . . . . . . . . . . . . . . 29
4.17 Casualties or Taking of Property . . . . . . . . . . . . . 29
4.18 Locations of Business, Offices and Property . . . . . . . . 29
4.19 Security Instruments . . . . . . . . . . . . . . . . . . . 29
4.20 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE V AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . 29
5.1 Maintenance and Access to Records . . . . . . . . . . . . . 29
5.2 Quarterly Financial Statements . . . . . . . . . . . . . . 30
5.3 Annual Financial Statements . . . . . . . . . . . . . . . . 30
5.4 Reserve Reports . . . . . . . . . . . . . . . . . . . . . . 30
5.5 Lockbox Reports . . . . . . . . . . . . . . . . . . . . . . 31
5.6 Stockholder Communications and Securities and Exchange
Commission Filings . . . . . . . . . . . . . . . . . . . . 31
5.7 Notices of Certain Events . . . . . . . . . . . . . . . . . 31
5.8 Notification Letters . . . . . . . . . . . . . . . . . . . 32
5.9 Additional Information . . . . . . . . . . . . . . . . . . 33
5.10 Compliance with Laws . . . . . . . . . . . . . . . . . . . 33
5.11 Payment of Assessments and Charges . . . . . . . . . . . . 33
5.12 Indemnification . . . . . . . . . . . . . . . . . . . . . . 33
5.13 Maintenance of Corporate Existence and Good Standing . . . 34
5.14 Further Assurances . . . . . . . . . . . . . . . . . . . . 34
5.15 Initial Fees and Expenses of Lender and/or Legal Counsel
to Lender . . . . . . . . . . . . . . . . . . . . . . . . . 35
5.16 Subsequent Fees and Expenses of Lender . . . . . . . . . . 35
5.17 Maintenance and Inspection of Tangible Properties . . . . . 36
5.18 Maintenance of Insurance and Evidence Thereof . . . . . . . 36
5.19 Payment of Note and Performance of Obligations . . . . . . 36
5.20 Operation of Oil and Gas Properties . . . . . . . . . . . . 36
5.21 Current Ratio . . . . . . . . . . . . . . . . . . . . . . . 36
5.22 Shareholders' Equity . . . . . . . . . . . . . . . . . . . 37
5.23 Existing Business . . . . . . . . . . . . . . . . . . . . . 37
5.24 Lockbox Arrangement With Lockbox Account and Working
Interest Owners Account . . . . . . . . . . . . . . . . . . 37
5.25 Debt Coverage Ratio . . . . . . . . . . . . . . . . . . . . 37
ARTICLE VI NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . 38
6.1 Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 38
6.2 Contingent Obligations . . . . . . . . . . . . . . . . . . 38
6.3 Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
6.4 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . 39
6.5 Loans or Advances . . . . . . . . . . . . . . . . . . . . . 39
6.6 Payment of Accounts Payable . . . . . . . . . . . . . . . . 39
6.7 Cancellation of Insurance . . . . . . . . . . . . . . . . . 39
6.8 Leases . . . . . . . . . . . . . . . . . . . . . . . . . . 39
6.9 Investments . . . . . . . . . . . . . . . . . . . . . . . . 39
6.10 Changes in Corporate Structure . . . . . . . . . . . . . . 40
6.11 Transactions with Affiliates . . . . . . . . . . . . . . . 40
6.12 Lines of Business . . . . . . . . . . . . . . . . . . . . . 41
6.13 Organization or Acquisition of Subsidiaries, L.L.C.'s,
Partnerships and/or Joint Ventures . . . . . . . . . . . . 41
6.14 Clarksburg Gas and Tax Credit Properties . . . . . . . . . 41
ARTICLE VII EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . 41
7.1 Enumeration of Events of Default . . . . . . . . . . . . . 41
7.2 Remedies . . . . . . . . . . . . . . . . . . . . . . . . . 44
ARTICLE VIII MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . 45
8.1 Transfers and Participations . . . . . . . . . . . . . . . 45
8.2 Survival of Representations, Warranties and Covenants . . . 45
8.3 Notices and Other Communications . . . . . . . . . . . . . 45
8.4 Parties in Interest . . . . . . . . . . . . . . . . . . . . 46
8.5 Rights of Third Parties . . . . . . . . . . . . . . . . . . 46
8.6 Renewals and Extensions . . . . . . . . . . . . . . . . . . 46
8.7 No Waiver; Rights Cumulative . . . . . . . . . . . . . . . 46
8.8 Survival Upon Unenforceability . . . . . . . . . . . . . . 47
8.9 Amendments or Modifications . . . . . . . . . . . . . . . . 47
8.10 Controlling Provision Upon Conflict . . . . . . . . . . . . 47
8.11 Time, Place and Method of Payments . . . . . . . . . . . . 47
8.12 Disposition of Collateral . . . . . . . . . . . . . . . . . 47
8.13 GOVERNING LAW . . . . . . . . . . . . . . . . . . . . . . . 48
8.14 JURISDICTION AND VENUE . . . . . . . . . . . . . . . . . . 48
8.15 WAIVER OF RIGHTS TO JURY TRIAL . . . . . . . . . . . . . . 48
8.16 ENTIRE AGREEMENT . . . . . . . . . . . . . . . . . . . . . 48
LIST OF EXHIBITS
EXHIBIT I - Form of Note
EXHIBIT II - Form of Compliance Certificate
EXHIBIT III - Disclosures
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT, made and entered
into effective as of the 1st day of October, 1995, by and among ALAMCO, INC., a
Delaware corporation ("Alamco") and ALAMCO-DELAWARE, INC., a Delaware corpo-
ration ("Aladel") (Alamco and Aladel each a "Borrower" and collectively, the
"Borrowers"), and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking
association (the "Lender"), evidences the arrangements concerning certain
advances to the Borrowers by the Lender.
W I T N E S S E T H:
WHEREAS, Alamco, Lender, and Interstate Resources, Inc. entered
into that certain Credit Agreement dated March 27, 1991, as amended by that
certain First Amendment to Credit Agreement dated effective as of April 22,
1992, the Second Amendment to Credit Agreement dated effective as of December
14, 1992, and the Third Amendment to Credit Agreement dated effective as of July
26, 1993, and Alamco, Lender and Aladel entered into that certain Fourth
Amendment to Credit Agreement dated effective as of August 1, 1994 (such Credit
Agreement as so amended, the "Prior Agreement"); and
WHEREAS, Alamco, Aladel, and Lender desire to amend and restate
the Prior Agreement as provided herein;
NOW THEREFORE, in consideration of the mutual covenants and
agreements herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the Borrowers and the
Lender hereby amend and restate the Prior Agreement to read as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
1.1 Terms Defined Above. As used in this Credit Agreement,
the terms "Aladel," "Alamco," "Borrower," "Borrowers," and "Lender" shall have
the meaning assigned to such terms hereinabove.
1.2 Additional Defined Terms. As used in this Credit
Agreement, each of the following terms shall have the meaning assigned thereto
in this Section, unless the context otherwise requires:
"Advance" shall mean an advance of funds made by the
Lender to the Borrowers under this Agreement and any payment made by
the Lender under a Letter of Credit.
"Affiliate" shall mean any Person directly or indirectly
controlling, or under common control with, either Borrower and
includes any Subsidiary and any "affiliate" of either Borrower
within the meaning of the regulations promulgated pursuant to the
Securities Act of 1933, as amended, with "control," as used in this
definition, meaning possession, directly or indirectly, of the power
to direct or cause the direction of management, policies or action
through ownership of voting securities, contract, voting trust,
membership in management or in the group appointing or electing
management or otherwise through formal or informal arrangements or
business relationships.
"Agreement" shall mean this Amended and Restated Credit
Agreement and all exhibits and schedules hereto, as the same may be
amended, modified, supplemented or restated from time to time
according to the terms hereof.
"Assignment" shall mean the Assignment and ▇▇▇▇ of Sale
dated as of August 11, 1994, from Alamco in favor of Clarksburg Gas,
and recorded in Book 1255, Page 649 of the assignment records of
▇▇▇▇▇▇▇▇ County, West Virginia.
"Available Commitment" shall mean, at any time, an amount
equal to the remainder, if any, of (a) the lesser of the Commitment
Amount or the Borrowing Base in effect at such time minus (b) the
sum of the Loan Balance at such time plus the L/C Exposure at such
time.
"Base Rate" shall mean, at any time, an interest rate per
annum equal to the interest rate then most recently announced or
published by the Lender as its base rate, which may not be the
lowest interest rate charged by the Lender, AND which Base Rate
shall change upon any change in such announced or published base
rate of the Lender, all without notice to the Borrowers.
"Borrowing Base" shall mean, at any time, the amount
determined by the Lender in accordance with Section 2.7 and then in
effect.
"Business Day" shall mean a day other than a Saturday,
Sunday or legal holiday for commercial banks under the laws of the
State of Texas.
"Clarksburg Gas" shall mean Clarksburg Gas Limited
Partnership, a West Virginia limited partnership.
"Closing Date" shall mean the effective date of this
Agreement.
"Code" shall mean the United States Internal Revenue Code
of 1986, as amended from time to time.
"Collateral" shall mean the Mortgaged Properties and any
other Property of either Borrower, wherever located and whether now
owned or existing or hereafter acquired or arising, that is now or
at any time used or intended to be subject to the Liens created in
the Security Instruments or otherwise as security for the payment or
performance of all or any portion of the Obligations, including,
without limitation, products and proceeds existing in connection
with any of the foregoing.
"Commitment" shall mean the obligation of the Lender,
subject to applicable provisions of this Agreement, to make Advances
to or for the benefit of the Borrowers pursuant to Section 2.1 and
to issue Letters of Credit pursuant to Section 2.2.
"Commitment Amount" shall mean the amount of $30,000,000.
"Commitment Fee" shall mean each fee payable to the Lender
by the Borrowers pursuant to Section 2.10.
"Commitment Period" shall mean the period from and
including the Closing Date to but not including the Drawdown
Termination Date.
"Commonly Controlled Entity" shall mean any Person which
is under common control with either Borrower within the meaning of
Section 4001 of ERISA.
"Compliance Certificate" shall mean each certificate,
substantially in the form attached hereto as Exhibit II, executed by
a Responsible Officer of each Borrower and furnished to the Lender
from time to time in accordance with this Agreement.
"Contingent Obligation" shall mean, as to any Person (the
"Guarantor"), any obligation of such Guarantor guaranteeing or in
effect guaranteeing any Indebtedness, leases, dividends or other
obligations of any other Person (the "Primary Obligor") (for
purposes of this definition, a "primary obligation") in any manner,
whether directly or indirectly, including, without limitation, any
obligation of such Guarantor, regardless of whether such obligation
is contingent, (a) to purchase any primary obligation or any
Property constituting direct or indirect security therefor, (b) to
advance or supply funds (i) for the purchase or payment of any
primary obligation, or (ii) to maintain working capital or equity
capital of the Primary Obligor in respect of any primary obligation,
or otherwise to maintain the net worth or solvency of any other
Person, (c) to purchase Property, securities or services primarily
for the purpose of assuring the owner of any primary obligation of
the ability of the Person primarily liable for such primary
obligation to make payment thereof, or (d) otherwise to assure or
hold harmless the owner of any such primary obligation against loss
in respect thereof, with the amount of any Contingent Obligation
being deemed to be equal to the stated or determinable amount of the
primary obligation in respect of which such Contingent Obligation is
made or, if not stated or determinable, the maximum reasonably
anticipated liability in respect thereof as determined by such
Guarantor in good faith.
"Default" shall mean any event or occurrence which with
the lapse of time or the giving of notice or both would become an
Event of Default.
"Default Rate" shall mean a per annum variable interest
rate equal to the Base Rate plus five percent (5%), calculated on
the basis of a year of 360 days and actual number of days elapsed
(including the first day but excluding the last day), but in no
event exceeding the Highest Lawful Rate.
"Drawdown Termination Date" shall mean July 1, 1998.
"Engineering Fee" shall mean each fee payable to the
Lender by the Borrowers pursuant to Section 2.12.
"Environmental Complaint" shall mean any written or oral
complaint, order, directive, claim, citation, notice of
environmental report or investigation or other notice by any
Governmental Authority or any other Person with respect to (a) air
emissions, (b) spills, releases or discharges to soils or any
improvements located thereon, surface water, groundwater or the
sewer, septic system or waste treatment, storage or disposal systems
servicing any Property of either Borrower, (c) solid or liquid waste
disposal, (d) either the use, generation, storage, transportation or
disposal of any Hazardous Substance, or (e) other environmental,
health or safety matters affecting any Property of either Borrower
or the business conducted thereon.
"Environmental Laws" shall mean (a) the following federal
laws as they may be cited, referenced and amended from time to time:
the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act,
the Water Pollution Control Act, the Environmental Pesticides Act,
the Comprehensive Environmental Response, Compensation and Liability
Act, the Endangered Species Act, the Resource Conservation and
Recovery Act, the Occupational Safety and Health Act, the Hazardous
Materials Transportation Act, the Superfund Amendments and
Reauthorization Act, and the Toxic Substances Control Act; (b) any
and all equivalent environmental statutes of any state in which
Property of either Borrower is situated, as they may be cited,
referenced and amended from time to time; (c) any so-called federal,
state or local "Superfund" or "Superlien" statute, (d) any rules or
regulations promulgated under or adopted pursuant to the above
federal and state laws; and (e) any other equivalent federal, state
or local statute or any requirement, rule, regulation, code,
ordinance or order adopted pursuant thereto, including, without
limitation, those relating to the generation, transportation, treat-
ment, storage, recycling, disposal, handling or release of Hazardous
Substances.
"ERISA" shall mean the Employee Retirement
Income Security Act of 1974, as amended from time to time, and the
regulations thereunder and interpretations thereof.
"Event of Default" shall mean any of the events specified
in Section 7.1.
"Existing Security Instruments" shall mean the Security
Instruments, as such term is defined in the Prior Agreement, as such
instruments have been or may be amended, restated, or supplemented
from time to time.
"Facility Fee" shall mean each fee payable to the Lender
by the Borrowers pursuant to Section 2.11.
"Financial Statements" shall mean statements of the
financial condition of the Borrowers as at the point in time and for
the period indicated and consisting of at least a balance sheet and
related statements of operations, common stock and other
stockholders' equity for the Borrowers and, when required by
applicable provisions of this Agreement to be audited, accompanied
by the unqualified certification of a nationally-recognized firm of
independent certified public accountants or other independent
certified public accountants acceptable to the Lender and footnotes
to any of the foregoing, all of which shall be prepared in
accordance with GAAP and GAAS consistently applied and in
comparative form with respect to the corresponding period of the
preceding fiscal period.
"Floating Rate" shall mean an interest rate per annum
equal to the Base Rate from time to time in effect, plus one-fourth
of one percent (1/4%).
"GAAP" shall mean generally accepted accounting principles
established by the Financial Accounting Standards Board or the
American Institute of Certified Public Accountants and in effect in
the United States from time to time during the term of this
Agreement.
"GAAS" shall mean generally accepted auditing standards
established by the American Institute of Certified Public
Accountants and in effect in the United States from time to time
during the term of this Agreement.
"Governmental Authority" shall mean any nation, country,
commonwealth, territory, government, state, county, parish,
municipality or other political subdivision and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
"Hazardous Substances" shall mean flammables, explosives,
radioactive materials, hazardous wastes, asbestos or any material
containing asbestos, polychlorinated biphenyls (PCB's), toxic
substances or related materials, petroleum and petroleum products
and associated oil or natural gas exploration, production and
development wastes or any substances defined as "hazardous
substances," "hazardous materials," "hazardous wastes" or "toxic
substances" under the Comprehensive Environmental Response,
Compensation and Liability Act, as amended, the Superfund Amendments
and Reauthorization Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Resource Conservation and
Recovery Act, as amended, the Toxic Substances Control Act, as
amended, or any other law or regulation now or hereafter enacted or
promulgated by any Governmental Authority, including, without
limitation, those elements or compounds which are contained in the
list of hazardous substances adopted by the United States
Environmental Protection Agency and the list of toxic pollutants
designated by Congress or the Environmental Protection Agency or
under any Environmental Law.
"Highest Lawful Rate" shall mean the maximum non-usurious
interest rate permissible under applicable laws of the State of
Texas or those of the United States of America applicable to the
Lender, whichever authorizes the greater rate.
"Indebtedness" shall mean, with respect to any Person,
without duplication, (a) all liabilities which would appear on a
balance sheet of such Person, prepared in accordance with GAAP and
GAAS, (b) all obligations of such Person evidenced by bonds,
debentures, promissory notes or such similar evidences of
indebtedness, (c) all other indebtedness of such Person for borrowed
money, and (d) all obligations of others, to the extent any such
obligation is secured by a Lien on the assets of such Person
(whether or not such Person has assumed or become liable for the
obligation secured by such Lien).
"Insolvent" or "Insolvency" shall mean, with respect to
any Multiemployer Plan, that such Plan is insolvent within the
meaning of such term as used in Section 4245 of ERISA.
"Insolvency Proceeding" shall mean application (whether
voluntary or instituted by another Person) for or the consent to the
appointment of a receiver, trustee, conservator, custodian or
liquidator of any Person or of all or a substantial part of the
Property of such Person, or the filing of a petition (whether
voluntary or instituted by another Person) commencing a case under
Title 11 of the United States Code, seeking liquidation,
reorganization or rearrangement or taking advantage of any
bankruptcy, insolvency, debtor's relief or other similar law of the
United States, the State of Texas or any other jurisdiction.
"Investment" in any Person shall mean any stock, bond,
note or other evidence of Indebtedness or any other security (other
than current trade and customer accounts) of, investment or
partnership interest in or loan to, such Person.
"L/C Exposure" shall mean, at any time, the aggregate
maximum amount available to be drawn under outstanding Letters of
Credit at such time.
"Letter of Credit" shall mean any commercial letter of
credit issued by the Lender for the account of either Borrower
pursuant to Section 2.2.
"Letter of Credit Application" shall mean the standard
letter of credit application employed by the Lender from time to
time in connection with letters of credit.
"Letter of Credit Fee" shall mean each fee payable to the
Lender by the Borrowers pursuant to Section 2.13 upon or in
connection with the issuance of a Letter of Credit.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of
such Property, whether such interest is based on common law, statute
or contract, and including, but not limited to, the lien or security
interest arising from a mortgage, ship mortgage, encumbrance,
pledge, security agreement, conditional sale or trust receipt, or a
lease, consignment or bailment for security purposes (other than
true leases or true consignments), liens of mechanics, materialmen
and artisans, maritime liens and reservations, exceptions,
encroachments, easements, rights of way, covenants, conditions,
restrictions, leases and other title exceptions and encumbrances
affecting Property which secure an obligation owed to, or a claim
by, a Person other than the owner of such Property (for the purpose
of this Agreement, each Borrower shall be deemed to be the owner of
any Property which it has acquired or holds subject to a conditional
sale agreement, financing lease or other arrangement pursuant to
which title to the Property has been retained by or vested in some
other Person for security purposes) and the filing or recording of
any financing statement or other security instrument in any public
office.
"Limitation Period" shall mean any period while any amount
remains owing on the Note, and interest on such amount, calculated
at the applicable interest rate, plus any fees payable hereunder and
deemed to be interest under applicable law, would exceed the amount
of interest which would accrue at the Highest Lawful Rate.
"Loan Balance" shall mean, at any time, the outstanding
principal balance of the Note at such time.
"Loan Documents" shall mean this Agreement, the Note, the
Letter of Credit Applications, the Letters of Credit, the Security
Instruments, and all other documents and instruments now or
hereafter delivered pursuant to the terms of or in connection with
this Agreement, the Note, the Letter of Credit Applications, the
Letters of Credit, or the Security Instruments, and all renewals and
extensions of, or amendments or supplements to, or restatements of
any or all of the foregoing from time to time in effect.
"Lockbox" shall mean Post ▇▇▇▇▇▇ ▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ established by Alamco pursuant to Section 5.24, to which
all purchasers of production from the Mortgaged Properties shall be
directed to make remittance.
"Lockbox Account" shall mean account numbered 0010050912
of Alamco established with the Lender pursuant to Section 5.24 in
association with the Lockbox and to which Alamco and the Lender
shall have access by way of draft, check, wire transfer of funds or
otherwise to the extent specified in Section 5.24.
"Lockbox Agreement" shall mean the lockbox agreement
between Alamco and the Lender relating to the Lockbox and being in
form and substance satisfactory to the Lender, as the same may be
amended from time to time.
"Material Adverse Effect" shall mean any material adverse
effect upon the Collateral, the business, condition (financial or
otherwise), operations or prospects of either Borrower.
"Mortgaged Properties" shall mean all Oil and Gas
Properties of either Borrower or any other Person subject to
perfected first-priority Liens pursuant to the Security Instruments
in favor of the Lender, subject only to Permitted Liens, as security
for the Obligations.
"Multiemployer Plan" shall mean a Plan which is a
multiemployer plan as defined in Section 4001(a)(3) of ERISA.
"Note" shall mean the promissory note of the Borrowers
dated of even date herewith, in the form attached hereto as Exhibit
I, together with all renewals, extensions for any period, increases,
and rearrangements thereof.
"Obligations" shall mean, without duplication, (a) all
Indebtedness evidenced by the Note, (b) the Reimbursement
Obligations, (c) the undrawn, unexpired amount of all outstanding
Letters of Credit, (d) the obligation of the Borrowers for the
payment of Commitment Fees, Engineering Fees, Facility Fees, and
Letter of Credit Fees, and (e) all other obligations and liabilities
of either Borrower to the Lender, now existing or hereafter
incurred, under, arising out of or in connection with any Loan
Document, and with respect to all of the foregoing to the extent
that any of the same includes or refers to the payment of amounts
deemed or constituting interest, only so much thereof as shall have
accrued, been earned, and remains unpaid at each relevant time of
determination.
"Oil and Gas Properties" shall mean fee, leasehold or
other interests in or under mineral estates or oil, gas and other
liquid or gaseous hydrocarbon leases with respect to Properties
situated in the United States or offshore from any State of the
United States, including, without limitation, overriding royalty and
royalty interests, leasehold estate interests, net profits
interests, production payment interests and mineral fee interests,
together with contracts executed in connection therewith and all
tenements, hereditaments, appurtenances and Properties appertaining,
belonging, affixed or incidental thereto.
"PBGC" shall mean the Pension Benefit Guaranty Corporation
established pursuant to Subtitle A of Title IV of ERISA or any
entity succeeding to any or all of its functions under ERISA.
"Permitted Liens" shall mean (a) Liens for taxes,
assessments or other governmental charges or levies not yet due or
which (if foreclosure, distraint, sale or other similar proceedings
shall not have been initiated) are being contested in good faith by
appropriate proceedings, and such reserve as may be required by GAAP
and GAAS shall have been made therefor; (b) Liens in connection with
workers' compensation, unemployment insurance or other social
security (other than Liens created by Section 4068 of ERISA),
old-age pension or public liability obligations which are not yet
due or which are being contested in good faith by appropriate
proceedings, if such reserve as may be required by GAAP and GAAS
shall have been made therefor; (c) Liens in favor of vendors,
carriers, warehousemen, repairmen, mechanics, workmen, materialmen,
construction or similar Liens arising by operation of law in the
ordinary course of business in respect of obligations which are not
yet due or which are being contested in good faith by appropriate
proceedings, if such reserve as may be required by GAAP and GAAS
shall have been made therefor; (d) Liens of operators and non-
operators under joint operating agreements arising in the ordinary
course of the business of Alamco or other owner of the Mortgaged
Property to secure amounts owing, which amounts are not yet due or
are being contested in good faith by appropriate proceedings, if
such reserve as may be required by GAAP and GAAS shall have been
made therefor; (e) Liens under production sales agreements, division
orders, operating agreements and other agreements customary in the
oil and gas business for processing, producing and selling
hydrocarbons; (f) easements, rights of way, restrictions and other
similar encumbrances, and minor defects in the chain of title which
are customarily accepted in the oil and gas financing industry, none
of which interfere with the ordinary conduct of the business of
Alamco or materially detract from the value or use of the Property
to which they apply; (g) Liens of record under terms and provisions
of the leases, unit agreements, assignments and other transfer of
title documents in the chain of title under which Alamco acquired
the relevant Property; (h) Liens arising from performance surety
bonds provided by Alamco in the ordinary course of business not
exceeding at any time the aggregate amount of $250,000; (i) purchase
money Liens arising from the acquisition of equipment of Alamco
acquired in connection with the drilling and maintenance of and/or
production from the Oil and Gas Properties of Alamco and the
Mortgaged Properties not exceeding at any time the aggregate amount
of $150,000; (j) other Liens existing as of December 31, 1994 which
have been disclosed on the Financial Statements dated December 31,
1994 previously delivered to the Lender or disclosed on Exhibit III
attached hereto under the heading "Permitted Liens"; and (k) Liens
created in favor of the Lender and other Liens expressly permitted
under the Security Instruments.
"Person" shall mean an individual, corporation,
partnership, trust, unincorporated organization or a government or
any agency or political subdivision thereof.
"Plan" shall mean, at any time, any employee benefit plan
which is covered by ERISA and in respect of which either Borrower or
any Commonly Controlled Entity is (or, if such plan were terminated
at such time, would under Section 4069 of ERISA be deemed to be) an
"employer" as defined in Section 3(5) of ERISA.
"Principal Office" shall mean the principal office of the
Lender in Houston, ▇▇▇▇▇▇ County, Texas, presently located at ▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Prohibited Transaction" shall have the meaning assigned
to such term in Section 406 of ERISA or Section 4975 of the Code.
"Property" shall mean any interest in any kind of property
or asset, whether real, personal or mixed, tangible or intangible.
"Reimbursement Obligation" shall mean the obligation of
the Borrowers to provide to the Lender or reimburse the Lender for
any amounts payable, paid, or incurred by the Lender with respect to
Letters of Credit.
"Release of Hazardous Substances" shall mean any emission,
spill, release, disposal or discharge, except in accordance with a
valid permit, license, certificate or approval of the relevant
Governmental Authority, of any Hazardous Substance into or upon (a)
the air, (b) soils or any improvements located thereon, (c) surface
water or groundwater, or (d) the sewer, septic system or waste
treatment, storage or disposal system servicing any Property of
either Borrower.
"Reorganization" shall mean, with respect to any
Multiemployer Plan, that such Plan is in reorganization within the
meaning of such term in Section 4241 of ERISA.
"Reportable Event" shall mean any of the events set forth
in Section 4043(b) of ERISA, other than those events as to which the
thirty-day notice period is waived under subsections .13, .14, .16,
.18, .19 or .20 of PBGC Reg. Section 2615.
"Request for Advance" shall mean each written request, by
the Borrowers to the Lender for an Advance pursuant to Section 2.1,
each of which shall:
(a) be signed by a Responsible Officer of
each Borrower;
(b) specify the amount and the date of the
Advance (which shall be a Business Day); and
(c) be delivered to the Lender no later than
11:00 a.m., Central Standard or Daylight Savings
Time, as the case may be, on the Business Day
preceding the requested Advance.
"Requirement of Law" shall mean, as to any Person, the
certificate or articles of incorporation and by-laws or other
organizational or governing documents of such Person, and any
applicable law, treaty, ordinance, order, judgment, rule, decree or
regulation or determination of an arbitrator, court or other
Governmental Authority, including, without limitation, rules,
regulations and orders and requirements for permits, licenses,
registrations, approvals or authorizations, in each case as such now
exist or may be hereafter amended and are applicable to or binding
upon such Person or any of its Property or to which such Person or
any of its Property is subject.
"Reserve Report" shall mean each report delivered to the
Lender pursuant to Section 5.4.
"Responsible Officer" shall mean, as to any Person, its
President or Vice President.
"Security Instruments" shall mean the Existing Security
Instruments, the security instruments executed and delivered in
satisfaction of the condition set forth in Section 3.1, and all
other documents and instruments at any time executed as security for
all or any portion of the Obligations, as the same may be amended,
restated, or supplemented from time to time.
"Shareholders' Equity" shall mean, at any time, all
amounts which would, in conformity with GAAP and GAAS, be included
under common stock and other stockholders' equity of the Borrowers
(including, without limitation, amounts for non-redeemable preferred
stock, common stock, capital surplus and retained earnings and other
stockholders' equity so long as not subject to any mandatory
redemption).
"Single Employer Plan" shall mean any Plan which is
covered by Title IV of ERISA, but which is not a Multiemployer Plan.
"Subsidiary" shall mean, as to any Person, a corporation
of which shares of stock having ordinary voting power (other than
stock having such power only by reason of the happening of a
contingency) to elect a majority of the board of directors or other
managers of such corporation are at the time owned, or the
management of which is otherwise controlled, directly or indirectly
through one or more intermediaries, or both, by such Person.
"Superfund Site" shall mean those sites listed on the
Environmental Protection Agency National Priority List (NPL) and
eligible for remedial action, or any comparable state registries or
list in any state of the United States.
"Tax Credit Properties" shall mean the Oil and Gas
Properties described in, and transferred to Clarksburg Gas by Alamco
pursuant to, the Assignment.
"Transferee" shall mean any Person to which the Lender has
sold, assigned, transferred or granted a participation in any of the
Obligations, as authorized pursuant to Section 8.1, and any Person
acquiring, by purchase, assignment, transfer or participation, from
any such purchaser, assignee, transferee or participant, any part of
such Obligations.
"Working Interest Owners Account" shall mean account
numbered 0010050896 of Alamco established with the Lender pursuant
to Section 5.24 in association with the Lockbox and to which Alamco
shall have access by way of draft, check, wire transfer of funds or
otherwise.
1.3 Undefined Financial Accounting Terms. Undefined
financial accounting terms used in this Agreement shall be defined according to
GAAP and GAAS at the time in effect.
1.4 References. References in this Agreement to Exhibit,
Article or Section numbers shall be to Exhibits, Articles or Sections of this
Agreement, unless expressly stated to the contrary. References in this
Agreement to "hereby," "herein," "hereinafter," "hereinabove," "hereinbelow,"
"hereof," "hereunder" and words of similar import shall be to this Agreement in
its entirety and not only to the particular Exhibit, Article or Section in which
such reference appears.
1.5 Articles and Sections. This Agreement, for convenience
only, has been divided into Articles and Sections and it is understood that the
rights and other legal relations of the parties hereto shall be determined from
this instrument as an entirety and without regard to the aforesaid division into
Articles and Sections and without regard to headings prefixed to such Articles
or Sections.
1.6 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural; and likewise, the plural shall be understood to include the singular.
Definitions of terms defined in the singular or plural shall be equally
applicable to the plural or singular, as the case may be, unless otherwise
indicated. Words denoting sex shall be construed to include the masculine,
feminine and neuter, when such construction is appropriate; and specific
enumeration shall not exclude the general but shall be construed as cumulative.
1.7 Incorporation of Exhibits. The Exhibits attached to
this Agreement are incorporated herein and shall be considered a part of this
Agreement for all purposes.
ARTICLE II
AMOUNT AND TERMS OF FACILITY
2.1 Revolving Line of Credit. Subject to the terms and
conditions (including, without limitation, the right of the Lender to decline to
make any Advance so long as any Default or Event of Default exists) and relying
on the representations and warranties contained in this Agreement, the Lender
agrees, during the Commitment Period, to make Advances, in immediately available
funds at the Principal Office to or for the benefit of the Borrowers from time
to time following receipt by the Lender of a Request for Advance; provided,
however, no Advance shall exceed the then existing Available Commitment.
Subject to the terms of this Agreement, during the Commitment Period, the
Borrowers may borrow, repay and reborrow in respect of such Advances. No
individual Advance shall be in an amount less than $100,000. The Advances shall
be made and maintained at the Principal Office and shall be evidenced by the
Note.
2.2 Letters of Credit. 1. Upon the terms and conditions
(including, without limitation, the right of the Lender to decline to issue any
Letter of Credit so long as any Default or Event of Default exists) and relying
on the representations and warranties contained in this Agreement, the Lender
agrees, during the Commitment Period, to issue Letters of Credit following the
receipt not less than two (2) Business Days prior to the requested date for
issuance of the relevant Letter of Credit, of a Letter of Credit Application
executed by the applicable Borrower; provided, however, (i) no Letter of Credit
shall have an expiration date which is more than two years after the issuance
thereof or subsequent to the Drawdown Termination Date, and (ii) the Lender
shall not be obligated to issue any Letter of Credit if (A) the face amount
thereof would exceed the Available Commitment, or (B) after giving effect to
the issuance thereof, (I) the L/C Exposure, when added to the Loan Balance
then outstanding, would exceed the lesser of the Commitment Amount or the
Borrowing Base then in effect, or (II) the L/C Exposure would exceed $750,000.
(b) Should the Lender be called upon by the beneficiary of
any Letter of Credit to honor all or any portion of the commitment thereunder,
whether upon the presentation of drafts or otherwise, such payment by the
Lender on account of such Letter of Credit shall be treated, for all purposes,
as an Advance against the Note accruing interest at the Floating Rate.
2.3 Use of Proceeds and Letters of Credit. 2. Proceeds of
the Advances shall be used by the Borrowers solely for the following purposes:
a. to purchase or acquire interests in any Oil and Gas Properties, b. to
provide general working capital of the Borrowers, including, without
limitation, capital expenditures incurred in connection with the acquisition or
development of Oil and Gas Properties, c. to allow Alamco to purchase shares of
its common stock, the purchase price of which may not exceed $2,000,000 in the
aggregate in any twelve (12) month period, or (iv) general corporate purposes of
the Borrowers not duplicative of other uses set forth herein.
(b) Letters of Credit shall be used solely in connection
with the operation of the Mortgaged Property and the other Oil and Gas
Properties of the Borrowers in the ordinary course of business.
2.4 Interest. Interest on the Advances shall accrue and be
payable at a rate per annum equal to the Floating Rate; provided, however,
interest on past-due principal and, to the extent permitted by applicable law,
past-due interest, shall accrue at the Default Rate and shall be payable upon
demand by the Lender at any time as to all or any portion of such interest.
Interest shall be computed on the basis of a year of 360 days, but counting the
actual days elapsed (including the first day but excluding the last day) during
the period for which payable.
2.5 Repayment of Advances and Interest Thereon. Accrued and
unpaid interest on the Note shall be due and payable monthly on the first day of
each calendar month while any Loan Balance remains outstanding, the payment in
each instance to be the amount of interest which has accrued and remains
unpaid. The Loan Balance, together with all accrued and unpaid interest thereon,
shall be due and payable at the Drawdown Termination Date. The Lender shall
have the authority to debit the Lockbox Account for the amount of any payment of
interest, principal, fee, or any other sums owing under the terms of this
Agreement then due if such payment has not been received by the Lender on the
applicable payment date.
2.6 Advances and Payments on Note. The Lender is
irrevocably authorized by the Borrowers to attach to and make a part of the Note
a ledger reflecting amounts advanced to or paid by the Borrowers and to attach
to and make a part of the Note a continuation of any such schedule of advances
and payments, as and when required. All Advances and all payments and
prepayments made on account of the principal thereof shall be reflected by an
appropriate notation on such ledger or any continuation thereof attached to the
Note; provided, however, the failure of the Lender to do so shall not relieve
the Borrowers of the liability hereunder or under the Note or subject the
Borrowers to additional liability hereunder or under the Note. The outstanding
principal balance reflected by the notations by the Lender on its records or
ledger sheets affixed to the Note shall be deemed rebuttably presumptive
evidence of the principal amount owing on the Note. Interest provided for
herein shall be calculated on unpaid sums actually advanced and outstanding
pursuant to the terms of this Agreement and only for the period from the date or
dates of such Advances until repayment. The liability for payment of principal
and interest evidenced by the Note shall be limited to principal amounts
actually advanced and outstanding pursuant to this Agreement and interest on
such amounts calculated in accordance with this Agreement.
2.7 Borrowing Base Determinations. (a) The Borrowing Base
as of the Closing Date is acknowledged by the Borrowers and the
Lender to be $30,000,000.
(b) The Borrowing Base shall be redetermined semi-annually
on the basis of information supplied by the Borrowers in compliance with the
provisions of this Agreement, including, without limitation, Reserve Reports,
and all other information available to the Lender and shall be in accordance
with the then applicable policy of the Lender for loans of this nature.
Notwithstanding the foregoing, the Lender may at its discretion make
redeterminations of the Borrowing Base at any time and from time to time,
including, without limitation, upon the occurrence of any sale or other
disposition of any Mortgaged Property by the Borrowers, provided, that nothing
in this provision shall be deemed to authorize any sale of Property prohibited
pursuant to this Agreement or any other Loan Document.
(c) Upon each determination of the Borrowing Base by the
Lender as provided in Section 2.7(b), the Lender shall notify the Borrowers
verbally (confirming such notice promptly in writing) of such determination, and
the Borrowing Base so communicated to the Borrowers shall become effective upon
such verbal notification and shall remain in effect until the next subsequent
determination of the Borrowing Base.
(d) The Borrowing Base shall represent the determination by
the Lender, in its sole discretion and in accordance with its standard
engineering and lending policies and practices customary for loans of this
nature, of the value, for loan purposes, of the Mortgaged Properties.
Furthermore, the Borrowers acknowledge that the determination of the Borrowing
Base contains an equity cushion (market value in excess of loan value), which is
acknowledged by the Borrowers to be essential for the adequate protection of the
Lender.
2.8 Mandatory Prepayments. If at any time the sum of the
Loan Balance and the L/C Exposure exceeds the lesser of the Commitment Amount or
the Borrowing Base then in effect, the Borrowers shall, within 30 Business Days
of notice from the Lender of such occurrence, (a) prepay, or make arrangements
acceptable to the Lender for the prepayment of, the amount of such excess for
application on the Loan Balance, (b) provide additional collateral, of character
and value satisfactory to the Lender in its sole discretion, to secure the
Obligations by the execution and delivery to the Lender of security instruments
in form and substance satisfactory to the Lender, or (c) effect any combination
of the alternatives described in clauses (a) and (b) of this Section and accept-
able to the Lender in its sole discretion. In the event that a mandatory
prepayment is required under this Section and the Loan Balance is less than the
amount required to be prepaid, the Borrowers shall repay the entire Loan Balance
and, in accordance with the provisions of the relevant Letter of Credit
Applications or otherwise to the satisfaction of the Lender, deposit with the
Lender, as additional collateral securing the Obligations, an amount of cash, in
immediately available funds, equal to the L/C Exposure minus the lesser of the
Commitment Amount or the Borrowing Base. The cash deposited with the Lender in
satisfaction of the requirement provided in this Section may be invested, at the
sole discretion of the Lender and then only at the express direction of the
Borrowers as to investment vehicle and maturity (which shall be no later than
the latest expiry date of any then outstanding Letter of Credit), for the
account of the Borrowers in cash or cash equivalent investments offered by or
through the Lender.
2.9 Voluntary Prepayments. The Borrowers shall have the
right at any time or from time to time to prepay without premium or penalty, all
or any part of the Loan Balance outstanding on the Note; provided, however, that
no such prepayment shall, until all Obligations are fully paid and satisfied,
excuse the payment as it becomes due of any installment provided for herein.
All prepayments made pursuant to this Section shall be applied first to accrued
and unpaid interest and then to the Loan Balance.
2.10 Commitment Fees. In addition to interest on the Note as
provided herein and the Engineering Fees, Facility Fees, and Letter of Credit
Fees payable hereunder and to compensate the Lender for maintaining funds
available, the Borrowers shall pay to the Lender, in immediately available
funds, on the first day of each calendar quarter during the Commitment Period, a
fee in the amount of one-half of one percent (1/2%) per annum, calculated on the
basis of a year of 360 days, but counting the actual days elapsed (including the
first day but excluding the last day), on the average daily amount of the
Available Commitment during the preceding three-month period.
2.11 Facility Fees. In addition to interest on the Note as
provided herein and the Commitment Fees, Engineering Fees, and Letter of Credit
Fees payable hereunder and to compensate the Lender for the costs of the
extension of credit hereunder, the Borrowers shall pay to the Lender, in
immediately available funds, on the date of each Borrowing Base increase which
is accompanied by a like increase in the Commitment Amount, a fee in the amount
of three-eighths of one percent (3/8%) of the difference between the Borrowing
Base in effect immediately preceding the Borrowing Base increase and the new
Borrowing Base; provided, however, in the event that the Borrowing Base should
be decreased at any time and thereafter increased there shall be no fee due on
the portion of such Borrowing Base increase which has previously had a fee
assessed against it hereunder.
2.12 Engineering Fees. In addition to interest on the Note
as provided herein and the Commitment Fees, Facility Fees, and Letter of Credit
Fees payable hereunder and to compensate the Lender for the costs of evaluating
the Mortgaged Properties and reviewing the Reserve Reports, the Borrowers shall
pay to the Lender, in immediately available funds, on the date that notification
is given to the Borrowers of each redetermination of the Borrowing Base, a fee
in the amount of $5,000.
2.13 Letter of Credit Fees. In addition to interest on the
Note as provided herein and the Commitment Fees, Engineering Fees, and Facility
Fees payable hereunder, the Borrowers shall pay to the Lender, on the date of
issuance of each Letter of Credit, a fee equal to the greater of (a) one percent
(1%) per annum, calculated on the basis of a year of 360 days and actual days
elapsed (including the first day but excluding the last day), on the face amount
of such Letter of Credit during the period for which such Letter of Credit is
issued or (b) $250.00. The Borrowers shall also pay to the Lender, on demand,
the Lender's customary letter of credit transactional fees, including, without
limitation, amendment fees, payable with respect to each Letter of Credit.
2.14 Advances to Satisfy Obligations of Borrowers. The
Lender may, but shall not be obligated to, make advances for the benefit of the
Borrowers and apply same to the satisfaction of any condition, warranty,
representation or covenant of the Borrowers contained in this Agreement or any
other Loan Document; provided, however, the Lender shall give the Borrowers five
Business Days' prior notice before making any such advances. Any funds so
advanced and applied shall be part of the proceeds advanced under and evidenced
by the Note and shall bear interest at the Floating Rate.
2.15 Pledge of and Security Interest in Accounts and Right of
Offset or Lien. As security for the payment and/or performance of the
Obligations, each Borrower hereby transfers, assigns and pledges to the Lender
and/or grants to the Lender a security interest in all funds of such Borrower
now or hereafter or from time to time on deposit with the Lender (including,
without limitation, the funds of either Borrower held in the Lockbox or Lockbox
Account, but excluding funds of any other Person on deposit in the Alamco, Inc.
Plugging Account, the Alamco, Inc. Ad Valorem Account, the Clarksburg Gas
Limited Partnership Account and the Phoenix-Alamco Ventures Account), with such
interest of the Lender to be retransferred, reassigned and/or released by the
Lender, as the case may be, at the expense of the Borrowers upon payment in full
and/or complete performance by the Borrowers of all Obligations. All remedies
as secured party or assignee of such funds shall be exercisable by the Lender
upon the occurrence of any Event of Default, regardless of whether the exercise
of any such remedy would result in any penalty or loss of interest or profit
with respect to any withdrawal of funds deposited in a time deposit account
prior to the maturity thereof. Furthermore, each Borrower hereby grants to the
Lender the right, exercisable at such time as any Obligation shall mature,
whether by acceleration of maturity or otherwise, of offset or banker's lien
against all funds of such Borrower now or hereafter or from time to time on
deposit with the Lender (including, without limitation, the funds of either
Borrower held in the Lockbox or Lockbox Account), regardless of whether the
exercise of any such remedy would result in any penalty or loss of interest or
profit with respect to any withdrawal of funds deposited in a time deposit
account prior to the maturity thereof.
2.16 General Provisions Relating to Interest. It is the
intention of the parties hereto to comply strictly with any applicable usury
laws as in effect from time to time and, in this regard, there shall never be
taken, received, contracted for, collected, charged or received on any sums
advanced hereunder interest in excess of that which would accrue at the Highest
Lawful Rate. For purposes of Article 5069-1.04, Vernon's Texas Civil Statutes,
as amended, the Borrowers agree that the Highest Lawful Rate shall be the
"indicated (weekly) rate ceiling" as defined in such Article, provided that the
Lender may also rely, to the extent permitted by applicable laws of the State of
Texas or the United States of America, on alternative maximum rates of interest
under other laws of the State of Texas or the United States of America
applicable to the Lender, if greater. Vernon's Texas Civil Statutes, Article
5069, Chapter 15 (which regulates certain revolving credit loan accounts and
revolving tri-party accounts) shall not apply to this Agreement or the Note.
Notwithstanding anything herein or in the Note or the other Loan
Documents to the contrary, during any Limitation Period, the interest rate to be
charged on the Obligations shall be the Highest Lawful Rate, and the obligation,
if any, of the Borrowers for the payment of fees or other charges deemed to be
interest under applicable law shall be suspended only to the extent that such
fees are, when added to interest accruing on the Note and other Obligations, if
any, in excess of the Highest Lawful Rate. During any period or periods of time
following a Limitation Period, to the extent permitted by applicable laws of the
State of Texas or the United States of America, the interest rate to be charged
hereunder shall remain at the Highest Lawful Rate until such time as there has
been paid to the Lender (a) the amount of interest in excess of that accruing at
the Highest Lawful Rate that the Lender would have received during the
Limitation Period had the Floating Rate been in effect at all times, and (b) all
interest and fees otherwise payable to the Lender but for the effect of such
Limitation Period.
If, under any circumstances, the aggregate amounts paid on the
Note or under this Agreement or any other Loan Document include amounts which by
law are deemed interest and which would exceed the amount permitted if the
Highest Lawful Rate were in effect, the Borrowers stipulate that such payment
and collection will have been and will be deemed to have been, to the fullest
extent permitted by applicable laws of the State of Texas or the United States
of America, the result of mathematical error on the part of the Borrowers and
the Lender; and the Lender shall promptly credit the amount of such excess to
the principal amount of the outstanding Obligations, or if the principal amount
of the Obligations shall have been paid in full, refund the amount of such
excess to the Borrowers (to the extent only of such interest payments in excess
of that which would have accrued and been payable on the basis of the Highest
Lawful Rate) upon discovery of such error by the Lender or notice thereof from
the Borrowers.
If the maturity of the Note is accelerated by reason of an
election of the Lender resulting from any Event of Default or otherwise, or in
the event of any prepayment, then such consideration that constitutes interest
under applicable laws may never include amounts which are more than the Highest
Lawful Rate, and the amount of such excess, if any, provided for in this
Agreement or otherwise shall be cancelled automatically by the Lender 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 Obligations, or if the
principal amount of the Obligations shall have been paid in full, refunded by
the Lender to the Borrowers.
All sums paid, or agreed to be paid, to the Lender for the use,
forbearance and detention of the proceeds of any Advance hereunder shall, to the
extent permitted by applicable law, be amortized, prorated, allocated and spread
throughout the full term hereof until paid in full so that the actual rate of
interest is uniform but does not exceed the Highest Lawful Rate throughout the
full term hereof.
2.17 Yield Protection. If at any time after the Closing
Date, and from time to time, the Lender determines that due to the adoption or
modification of any applicable law, regarding taxation, the required levels of
reserves of the Lender, deposits, insurance or capital (including any allocation
of capital requirements or conditions), or similar requirements, or any
interpretation or administration thereof by any Governmental Authority, central
bank or comparable agency charged with the interpretation, administration or
compliance of the Lender with any of such requirements, has or would have the
effect of (a) increasing the costs of the Lender relating to the Obligations,
(b) reducing the yield or rate of return of the Lender on the Obligations to a
level below that which the Lender could have achieved but for the adoption or
modification of any such requirements, (c) imposing, modifying, or holding
applicable any reserve, special deposit, or similar requirement against any
Letter of Credit or obligation to issue Letters of Credit, or (d) imposing upon
the Lender any other condition regarding any Letter of Credit or obligation to
issue Letters of Credit and the result of any such event shall be to increase
the cost to the Lender of issuing or maintaining any Letter of Credit or
obligation to issue Letters of Credit or any liability with respect to payments
by the Lender under Letters of Credit, or to reduce any amount receivable in
connection therewith, the Borrowers shall, within 60 Business Days of
notification by the Lender (which notification shall be in writing and shall
contain information relating to the effects described in clauses (a), (b), (c),
or (d) above), pay to the Lender such additional amounts as (in the good faith
judgment of the Lender based on reasonable computation) will compensate the
Lender for such increase in costs or reduction in yield or rate of return of the
Lender; provided, however, such amounts shall be payable by the Borrowers as an
increase in the Floating Rate, as determined by the Lender in its sole
discretion, commencing on the next monthly payment date (whether of interest or
interest and principal) following 60 days after such notification by the
Lender. No failure by the Lender to demand immediate payment of any additional
amounts payable under this Section shall constitute a waiver of the right of the
Lender to demand payment of such amounts at any subsequent time. Nothing
contained in this Section shall be construed or so operate as to require the
Borrowers to pay any interest, fees, costs or charges greater than permitted by
applicable law.
2.18 Power of Attorney. Each Borrower does hereby designate
the Lender as its agent and attorney-in-fact to act in its name, place and stead
for the purpose of completing and delivering any and all of the notification
letters previously delivered by the Borrowers to the Lender or hereafter
delivered by the Borrowers to the Lender pursuant to Section 5.8, including,
without limitation, completing any blanks contained in such letters and
attaching exhibits thereto describing the relevant Oil and Gas Property or
Collateral. Each Borrower hereby ratifies and confirms all that the Lender
shall lawfully do or cause to be done by virtue of this power of attorney and
the rights granted with respect to such power of attorney. This power of
attorney is coupled with the interests of the Lender in the Collateral, shall
commence and be in full force and effect as of the Closing Date and shall remain
in full force and effect and shall be irrevocable until the obligations, if any,
of the Lender hereunder have terminated and the full satisfaction of all
Obligations. The powers conferred on the Lender by this appointment are solely
to protect the interests of the Lender under the Loan Documents and shall not
impose any duty upon the Lender to exercise any such powers. The Lender shall
be accountable only for amounts that it actually receives as a result of the
exercise of such powers and shall not be responsible to the Borrowers or any
other Person for any act or failure to act with respect to such powers, except
for gross negligence or willful misconduct.
ARTICLE III
CONDITIONS
The obligation of the Lender to enter into this Agreement is
subject to the satisfaction of the following conditions precedent:
3.1 Receipt of Loan Documents and Other Items; First
Advance. The Lender shall have no obligation under this Agreement unless and
until all matters incident to the consummation of the transactions contemplated
herein, including, without limitation, the review by the Lender or its counsel
of the title of Alamco to its Oil and Gas Properties which are becoming
Mortgaged Properties for the first time, shall be satisfactory to the Lender,
and the Lender shall have received, reviewed and approved the following
documents and other items, appropriately executed when necessary and, where
applicable, acknowledged, all in form and substance satisfactory to the Lender
and dated, where applicable, of even date herewith or a date prior thereto and
acceptable to the Lender:
(a) multiple counterparts of this Agreement, as
requested by the Lender;
(b) the Note;
(c) copies of any amendments to the Articles of
Incorporation and the Bylaws of Alamco and Aladel since August 1,
1994, accompanied by a certificate issued by the secretary or an
assistant secretary of each of Alamco and Aladel, to the effect that
each such copy is correct and complete and that such amendments,
together with the Articles of Incorporation and Bylaws of Alamco and
Aladel, and all amendments thereto, previously delivered to the
Lender, constitute the complete Articles of Incorporation and Bylaws
of Alamco and Aladel, respectively;
(d) the following Security Instruments transferring,
creating, evidencing, perfecting and otherwise establishing Liens in
favor of the Lender, in and to the Collateral:
(i) A Mortgage, Collateral Real Estate Mortgage,
Deed of Trust, Indenture, Security Agreement, Financing
Statement and Assignment of Production from Alamco
covering certain Oil and Gas Properties located in
Kentucky, and all improvements, personal property and
fixtures related thereto;
(ii) Financing Statements from Alamco, as debtor,
constituent to the instrument described in clause (i)
above;
(iii) An Amendment and Ratification of A Credit Line
Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production from Alamco covering certain Oil
and Gas Properties located in West Virginia, and all
improvements, personal property and fixtures related
thereto;
(iv) Amendment of Financing Statements Covering
Minerals and Other Rights from Alamco, as debtor,
constituent to the instrument described in clause (iii)
above;
(v) An Amendment and Ratification of Leasehold
Deed of Trust, Security Agreement, Financing Statement and
Assignment of Production from Alamco covering certain Oil
and Gas Properties located in Tennessee, and all
improvements, personal property and fixtures related
thereto;
(vi) First Amendment to Assignment of Partnership
and Joint Venture Interests and Contract Rights (Security
Agreement) from Alamco;
(vii) First Amendment to Security Agreement
(Equipment) from Alamco;
(viii) Financing Statements Changes from Alamco, as
debtor, constituent to the instruments described in
clauses (vi) and (vii) above; and
(ix) Assignment of Note and Lien from Aladel,
together with the subject Promissory Note endorsed in
favor of the Lender;
(x) Notification letters, in form and substance
satisfactory to the Lender, from Alamco to each purchaser
of production and/or disburser of the proceeds of
production from or attributable to the Mortgaged
Properties covered by the documents referenced in
subsections (i), (ii), and (iii) above, authorizing and
directing the addressees to make future payments
attributable to production from such Mortgaged Properties
directly to the Lockbox;
(e) a Notice of Final Agreement;
(f) certificate dated as of a recent date from the Secretary
of State or other appropriate Governmental Authority evidencing the
qualification and good standing of Alamco in the State of Kentucky;
(g) results of searches of the UCC records of the State of
Kentucky from a source acceptable to the Lender and reflecting no
Liens, other than Permitted Liens, against any of the Collateral as
to which perfection of a Lien is accomplished by the filing of a
financing statement other than in favor of the Lender;
(h) confirmation, acceptable to the Lender, including,
without limitation, opinions of counsel satisfactory to the Lender,
of the title of Alamco to the Mortgaged Properties covered by the
documents referenced in subsections (i), (ii), and (iii) above, free
and clear of Liens other than Permitted Liens;
(i) all operating, lease and sublease, royalty, sales,
exchange and processing, farmout and bidding, pooling, unitization,
communitization, joint venture, partnership and other agreements
relating to such Mortgaged Properties and requested by the Lender;
and
(j) such other agreements, documents, instruments, opinions,
certificates, waivers, consents and evidence as the Lender may
reasonably request.
3.2 Each Advance and Letter of Credit. In addition to the
conditions precedent stated in Section 3.1 having been fulfilled as of the
Closing Date, the Lender shall not be obligated to make any Advance or issue
any Letter of Credit unless:
(a) the Borrowers shall have delivered to the Lender a
Request for Advance or a Letter of Credit Application, as the case
may be, at least the requisite time prior to the requested date for
the relevant Advance or the issuance of the relevant Letter of
Credit; and each statement or certification made in such Request for
Advance or Letter of Credit Application, as the case may be, shall
be true and correct in all material respects on the requested date
for such Advance or the issuance of such Letter of Credit;
(b) no Event of Default or Default exists or, by virtue of
the requested Advance or the issuance of the requested Letter of
Credit, shall exist or will occur;
(c) if requested by the Lender, the Borrowers shall have
delivered evidence satisfactory to the Lender substantiating any of
the matters contained in this Agreement which are necessary to
enable the Borrowers to qualify for such Advance or the issuance of
such Letter of Credit;
(d) each of the representations and warranties contained in
this Agreement shall be true and correct in all material respects
and shall be deemed to be repeated by the Borrowers as if made on
the requested date for such Advance or the issuance of such Letter
of Credit; and
(e) all matters incident to the consummation of the
transactions hereby contemplated shall be satisfactory to the
Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
To induce the Lender to enter into this Agreement and to make Advances
and issue Letters of Credit, each Borrower represents and warrants to the
Lender (which representations and warranties shall survive the delivery of the
Note) that:
4.1 Due Authorization and Corporate Existence. The execution and
delivery by the Borrowers of this Agreement and the borrowings hereunder; the
execution and delivery by the Borrowers of the Note; the repayment of the Note
and interest and fees provided for in the Note and this Agreement; the execution
and delivery of the Security Instruments by the Borrowers and the performance of
all obligations of the Borrowers under the Loan Documents are within the power
of the Borrowers, have been duly authorized by all necessary corporate action of
the Borrowers, do not and will not require the consent of any Governmental
Authority and do not and will not (a) contravene or conflict with any
Requirement of Law, (b) contravene or conflict with any indenture, instrument or
other agreement to which either Borrower is a party or by which any Property of
either Borrower may be presently bound or encumbered, or (c) result in or
require the creation or imposition of any Lien in, upon or of any Property of
the Borrowers under any such indenture, instrument or other agreement, other
than the Loan Documents. Each Borrower is a corporation duly organized, legally
existing and in good standing under the laws of its state of incorporation and
is duly qualified as a foreign corporation and is in good standing in all
jurisdictions wherein the ownership of its Property or the operation of its
business necessitates same, other than those jurisdictions wherein the failure
to so qualify will not have a Material Adverse Effect.
4.2 Valid and Binding Obligations. All Loan Documents, when duly
executed and delivered by the Borrowers, will be the legal, valid and binding
obligations of the Borrowers, enforceable against the Borrowers in accordance
with their respective terms.
4.3 Title to Assets. Each Borrower has good and indefeasible
title to all of its Properties, free and clear of all Liens except Permitted
Liens, and Alamco and Clarksburg Gas, between them, have good and indefeasible
title to all of the Mortgaged Properties.
4.4 Scope and Accuracy of Financial Statements. The Financial
Statements of the Borrowers as of December 31, 1994, present fairly the
financial position and results of operations of the Borrowers in accordance with
GAAP and GAAS as at the relevant point in time or for the period indicated, as
applicable. No event or circumstance has occurred since December 31, 1994,
which could reasonably be expected to have a Material Adverse Effect.
4.5 Liabilities, Litigation and Restrictions. Other than as
listed under the heading "Liabilities" on Exhibit III attached hereto, the
Borrowers have no liabilities, direct or contingent, which may materially and
adversely affect their business or operations or their ownership of the
Collateral. Except as set forth under the heading "Litigation" on Exhibit III
hereto, no litigation or other action of any nature affecting the Borrowers is
pending before any Governmental Authority or, to the best knowledge of the
Borrowers, threatened against or affecting the Borrowers which might reasonably
be expected to result in any impairment of their ownership of any Collateral or
to have a Material Adverse Effect. To the best knowledge of the Borrowers,
after due inquiry, and other than as listed under the heading "Restrictions" on
Exhibit III attached hereto, no unusual or unduly burdensome restriction,
restraint or hazard exists by contract, Requirement of Law or otherwise relative
to the business or operations of the Borrowers or the ownership and operation of
the Collateral other than such as relate generally to Persons engaged in
business activities similar to those conducted by the Borrowers.
4.6 Authorizations and Consents. Except as expressly contemplated
by this Agreement, no authorization, consent, approval, exemption, franchise,
permit or license of, or filing with, any Governmental Authority or any other
Person is required to authorize or is otherwise required in connection with the
valid execution and delivery by the Borrowers of the Loan Documents or any
instrument contemplated hereby, the repayment by the Borrowers of the Note and
interest and fees provided in the Note and this Agreement, or the performance by
the Borrowers of the Obligations.
4.7 Compliance with Laws. The Borrowers and their Property,
including, without limitation, the Mortgaged Property, are in compliance with
all applicable Requirements of Law, including, without limitation, Environmental
Laws, the Natural Gas Policy Act of 1978, as amended, and ERISA.
4.8 Proper Filing of Tax Returns and Payment of Taxes Due. Each
Borrower has duly and properly filed its United States income tax return and all
other tax returns which are required to be filed and has paid all taxes due
except such as are being contested in good faith and as to which adequate
provisions and disclosures have been made. The charges and reserves of the
Borrowers with respect to taxes and other governmental charges are adequate, and
the Borrowers have no knowledge of any deficiency or additional assessment in a
material amount in connection with taxes, assessments, or charges not provided
for on their books.
4.9 ERISA. The Borrowers are in compliance in all material
respects with all applicable provisions of ERISA. No Reportable Event has
occurred with respect to any Single Employer Plan, and each Single Employer Plan
has complied with and been administered in all material respects in accordance
with applicable provisions of ERISA and the Code. To the best knowledge of the
Borrowers, (a) no Reportable Event has occurred with respect to any
Multiemployer Plan, and (b) each Multiemployer Plan has complied with and been
administered in all material respects with applicable provisions of ERISA and
the Code. The present value of all benefits vested under each Single Employer
Plan maintained by the Borrowers or any Commonly Controlled Entity (based on the
assumptions used to fund such Plan) did not, as of the last annual valuation
date applicable thereto, exceed the value of the assets of such Plan allocable
to such vested benefits. Neither the Borrowers nor any Commonly Controlled
Entity has had a complete or partial withdrawal from any Multiemployer Plan for
which there is any withdrawal liability. As of the most recent valuation date
applicable to any Multiemployer Plan, neither the Borrowers nor any Commonly
Controlled Entity would become subject to any liability under ERISA if the
Borrowers or Commonly Controlled Entity were to withdraw completely from such
Multiemployer Plan. Neither the Borrowers nor any Commonly Controlled Entity
has received notice that any Multiemployer Plan is Insolvent or in
Reorganization. To the best knowledge of the Borrowers, no such Insolvency or
Reorganization is reasonably likely to occur. Based upon GAAP and GAAS existing
as of the date of this Agreement and current factual circumstances, the
Borrowers have no reason to believe that the annual cost during the term of this
Agreement to the Borrowers and all Commonly Controlled Entities for post-
retirement benefits to be provided to the current and former employees of the
Borrowers and all Commonly Controlled Entities under Plans which are welfare
benefit plans (as defined in Section 3(1) of ERISA) will, in the aggregate, have
a Material Adverse Effect.
4.10 Environmental Laws. To the best knowledge and belief of the
Borrowers, except as would not have a Material Adverse Effect, or as described
on Exhibit III under the heading "Environmental Matters":
(a) no Property of the Borrowers is currently on or has ever
been on, or is adjacent to any Property which is on or has ever been
on, any federal or state list of Superfund Sites;
(b) no Hazardous Substances have been generated, transported
and/or disposed of by the Borrowers at a site which was, at the time
of such generation, transportation and/or disposal, or has since
become, a Superfund Site;
(c) except in accordance with applicable Requirements of Law
or the terms of a valid permit, license, certificate or approval of
the relevant Governmental Authority, no Release of Hazardous
Substances by the Borrowers or from, affecting or related to any
Property of the Borrowers or adjacent to any Property of the
Borrowers has occurred; and
(d) no Environmental Complaint has been received by the
Borrowers.
4.11 Compliance with Federal Reserve Regulations. No transaction
contemplated by the Loan Documents is in violation of any regulations
promulgated by the Board of Governors of the Federal Reserve System, including,
without limitation, Regulations G, U or X.
4.12 Investment Company Act Compliance. Neither Borrower is,
directly or indirectly, controlled by or acting on behalf of any Person which
is, an "investment company" or an "affiliated person" of an "investment company"
within the meaning of the Investment Company Act of 1940, as amended.
4.13 Public Utility Holding Company Act Compliance. Neither
Borrower is a "holding company," or an "affiliate" of a "holding company" or of
a "subsidiary company" of a "holding company," within the meaning of the Public
Utility Holding Company Act of 1935, as amended.
4.14 Refunds. Except as described on Exhibit III under the
heading, "Refunds," no orders of, proceedings pending before, or other
requirements of, the Federal Energy Regulatory Commission or any Governmental
Authority exist which could result in the Borrowers being required to refund any
material portion of the proceeds received or to be received from the sale of
hydrocarbons constituting part of the Mortgaged Property.
4.15 Gas Contracts. Except as described on Exhibit III under the
heading, "Gas Contracts," neither Borrower (a) is obligated in any material
respect by virtue of any prepayment made under any contract containing a "take-
or-pay" or "prepayment" provision or under any similar agreement to deliver
hydrocarbons produced from or allocated to any of the Mortgaged Property at some
future date without receiving full payment therefor at the time of delivery, and
(b) has produced gas, in any material amount, subject to, and is, nor is any of
the Mortgaged Property, subject to balancing rights of third parties or subject
to balancing duties under governmental requirements, except as to such matters
for which the Borrowers have established monetary reserves adequate in an amount
to satisfy such obligations and has segregated such reserves from other
accounts.
4.16 No Material Misstatements. No information, exhibit, statement
or report furnished to the Lender by or at the direction of the Borrowers in
connection with this Agreement contains any material misstatement of fact or
omits to state a material fact or any fact necessary to make the statements
contained therein not misleading as of the date made or deemed made.
4.17 Casualties or Taking of Property. Except as disclosed on
Exhibit III under the heading "Casualties," since December 31, 1994, neither the
business nor any Property of the Borrowers has been materially adversely
affected as a result of any fire, explosion, earthquake, flood, drought,
windstorm, accident, strike or other labor disturbance, embargo, requisition or
taking of Property or cancellation of contracts, permits or concessions by any
Governmental Authority, riot, activities of armed forces or acts of God.
4.18 Locations of Business, Offices and Property. The principal
place of business and chief executive office of each Borrower is located at the
address of such Borrower set forth in Section 8.3 or at such other location as
such Borrower may have, by proper written notice hereunder, advised the Lender,
provided that such other location is within a state in which appropriate
financing statements from such Borrower in favor of the Lender have been filed,
if necessary.
4.19 Security Instruments. The provisions of each Security
Instrument are effective to create in favor of the Lender, a legal, valid and
enforceable Lien in all right, title and interest of the Borrowers in the
Collateral described therein, which Liens, assuming the accomplishment of
recording and filing in accordance with applicable laws prior to the
intervention of rights of other Persons, shall constitute fully perfected
first-priority Liens on all right, title and interest of the Borrowers in the
Collateral described therein, subject to Permitted Liens.
4.20 Subsidiaries. Alamco has no Subsidiaries as of the Closing
Date except for Aladel and Hawg Hauling & Disposal, Inc. and is not a member of
any limited liability company except for Phoenix-Alamco Ventures, L.L.C. Aladel
has no Subsidiaries as of the Closing Date.
ARTICLE V
AFFIRMATIVE COVENANTS
Unless agreed in writing by the Lender to the contrary, each
Borrower covenants, so long as any Obligation remains outstanding or unpaid or
any Commitment exists, to:
5.1 Maintenance and Access to Records. Keep adequate records, in
accordance with GAAP and GAAS, of all its transactions so that at any time, and
from time to time, its true and complete financial condition may be readily
determined, and within fifteen days following the reasonable request of the
Lender, make such records available for inspection by the Lender and, at the
expense of the Borrowers, allow the Lender to make and take away copies thereof.
5.2 Quarterly Financial Statements. Deliver to the Lender, (a) on
or before the 45th day after the close of each of the first three quarterly
periods of each fiscal year of the Borrowers, a copy of the unaudited Financial
Statements of the Borrowers as at the close of such quarterly period and from
the beginning of such fiscal year to the end of such period, such Financial
Statements to be certified by a Responsible Officer of each Borrower as having
been prepared in accordance with GAAP and GAAS consistently applied and as a
fair presentation of the condition of the Borrowers, subject to changes
resulting from normal year-end audit adjustments, and (b) concurrent with (a)
above, a Compliance Certificate.
5.3 Annual Financial Statements. Deliver to the Lender, (a) on or
before the 90th day after the close of each fiscal year of the Borrowers, a copy
of the annual audited Financial Statements of the Borrowers, and (b) concurrent
with (a) above, a Compliance Certificate.
5.4 Reserve Reports. 4. Deliver to the Lender no later than March
1 of each year during the term of this Agreement, engineering reports in form
and substance meeting the requirements of the Securities and Exchange Commission
for financial reporting purposes, certified by any nationally-recognized or
regionally-recognized independent consulting petroleum engineers acceptable to
the Lender as fairly and accurately setting forth (i) the proven and producing,
shut in, behind pipe and undeveloped oil and gas reserves (separately classified
as such) attributable to the Mortgaged Properties as of December 31 of the year
for which such reserve reports are furnished, (ii) the aggregate present value
determined on the basis of stated pricing assumptions, of the future net income
with respect to such Mortgaged Properties, discounted at a stated per annum
discount rate of proven and producing reserves, (iii) projections of the annual
rate of production, gross income and net income with respect to such proven and
producing reserves, and (iv) information with respect to any "take or pay,"
"prepayment" and gas balancing liabilities of the Borrowers.
(b) Deliver to the Lender no later than September 1 of each
year during the term of this Agreement, engineering reports in form and
substance satisfactory to the Lender prepared by or under the supervision of the
chief petroleum engineer of the Borrowers evaluating the Mortgaged Properties as
of June 30 of the year for which such reserve reports are furnished and updating
the information provided in the reports delivered pursuant to Section 5.4(a).
(c) Each of the reports provided pursuant to this Section
shall be submitted to the Lender together with additional data concerning
pricing, quantities of production from the Mortgaged Properties, purchasers of
production and such other information and engineering and geological data with
respect thereto as the Lender may reasonably request.
5.5 Lockbox Reports. Deliver to the Lender on or before the 20th
day of each month after the occurrence and during the continuance of an Event of
Default, a report setting forth (a) the gross proceeds from the sale of
production of oil, gas and/or minerals from or attributable to the Mortgaged
Properties for the preceding month, (b) an estimate of the lease operating
expenses and production taxes attributable to such gross proceeds for the
preceding month, and (c) an estimate of the proceeds of production attributable
to other working interest and/or royalty owners to be disbursed by Alamco as
operator attributable to production from the Mortgaged Properties for the
preceding month, all as consistently calculated from month to month.
5.6 Stockholder Communications and Securities and Exchange
Commission Filings. Furnish to the Lender within ten Business Days after any
material report (other than Financial Statements) or other communication is sent
by Alamco to its stockholders or filed by Alamco with the Securities and
Exchange Commission or any successor or analogous Governmental Authority, copies
of such report or communication.
5.7 Notices of Certain Events. Notify the Lender immediately, and
thereafter deliver to the Lender written notification within five days, upon
having knowledge of the occurrence of any of the following events or
circumstances, a written statement with respect thereto, signed by a Responsible
Officer of each Borrower and setting forth the relevant event or circumstance
and the steps being taken by the Borrowers with respect to such event or
circumstance:
(a) any Default or Event of Default;
(b) any default or event of default under any material
contractual obligation of the Borrowers, or any material litigation,
investigation or proceeding between the Borrowers and any
Governmental Authority;
(c) any litigation or proceeding involving either
Borrower as a defendant or in which any Property of either Borrower
is subject to a claim and in which the amount involved is $100,000
or more and which is not covered by insurance or in which injunctive
or similar relief is sought;
(d) any Reportable Event or imminently expected
Reportable Event with respect to any Plan; any withdrawal from, or
the termination, Reorganization or Insolvency of, any Multiemployer
Plan; the institution of proceedings or the taking of any other
action by the PBGC, the Borrowers or any Commonly Controlled Entity
or Multiemployer Plan with respect to the withdrawal from, or the
termination, Reorganization or Insolvency of, any Single Employer
Plan or Multiemployer Plan; or any Prohibited Transaction in
connection with any Plan or any trust created thereunder and the
action being taken by the Internal Revenue Service with respect
thereto;
(e) the receipt by either Borrower of any Environ-
mental Complaint or any formal request from any Governmental
Authority or other Person for information (other than requirements
for compliance reports) regarding any Release of Hazardous
Substances by the Borrowers or from, affecting or related to any
Mortgaged Property or other Property of the Borrowers or adjacent to
any Mortgaged Property or other Property of the Borrowers;
(f) any actual, proposed or threatened testing or
other investigation by any Governmental Authority or other Person
concerning the environmental condition of, or relating to, any
Mortgaged Property or other Property of the Borrowers or adjacent to
any Mortgaged Property or other Property of the Borrowers following
any allegation of a violation of any Environmental Law;
(g) any Release of Hazardous Substances by either
Borrower or from, affecting or related to any Mortgaged Property or
other Property of the Borrowers or adjacent to any Mortgaged
Property or other Property of the Borrowers, except in accordance
with applicable Environmental Law or the terms of a valid permit,
license, certificate or approval of the relevant Governmental
Authority, or the violation of any Environmental Law, or the
revocation, suspension or forfeiture of or failure to renew, any
permit, license, registration, approval or authorization;
(h) the change in identity or address of any Person
remitting to the Borrowers proceeds from the sale of hydrocarbon
production from or attributable to any Mortgaged Property;
(i) any change in the senior management of either
Borrower; and
(j) any other event or condition which could
reasonably be expected to have a Material Adverse Effect.
5.8 Notification Letters. Within ten days after request by the
Lender at any time and from time to time and without limitation on the rights of
the Lender pursuant to Section 2.18, execute such notification letters, in
addition to the letters previously signed by the Borrowers and delivered to the
Lender, as are necessary or appropriate to transfer and deliver to the Lockbox
or the Lender, as the case may be, proceeds from or attributable to the sale of
production from any Mortgaged Property.
5.9 Additional Information. Furnish to the Lender, within ten
days after request by the Lender, such additional financial or other information
concerning the assets, liabilities, operations and transactions of the Borrowers
as the Lender may from time to time reasonably request; and notify the Lender
not less than thirty Business Days prior to the occurrence of any condition or
event that may change the proper location for the filing of any financing
statement or other public notice or recording for the purpose of perfecting a
Lien in any Collateral, including, without limitation, any change in its name or
the location of its principal place of business or chief executive office; and
upon the request of the Lender, execute such additional Security Instruments as
may be necessary or appropriate in connection therewith.
5.10 Compliance with Laws. Comply with all applicable Requirements
of Law, including, without limitation, (a) the Natural Gas Policy Act of 1978,
as amended, (b) the minimum funding requirements of ERISA so as not to give rise
to any material liability or Reportable Event thereunder, (c) Environmental Laws
(i) related to any natural or environmental resource or media located on, above,
within, in the vicinity of, related to or affected by any Mortgaged Property or
other Property of the Borrowers, (ii) required for the performance or conduct of
the operations of the Borrowers, including, without limitation, all permits,
licenses, registrations, approvals and authorizations, or (iii) applicable to
the use, generation, handling, storage, treatment, transport or disposal of any
Hazardous Substances; and cause all employees, crew members, agents,
contractors, subcontractors and future lessees (pursuant to appropriate lease
provisions) of the Borrowers, while such Persons are acting within the scope of
their relationship with the Borrowers, to comply with all such Requirements of
Law as may be necessary or appropriate to enable the Borrowers to so comply.
5.11 Payment of Assessments and Charges. Pay all taxes,
assessments, governmental charges, rent and other Indebtedness which, if unpaid,
might become a Lien against the Mortgaged Property or other Property of the
Borrowers, except any of the foregoing being contested in good faith and as to
which adequate reserve in accordance with GAAP and GAAS has been established.
5.12 Indemnification. Indemnify and hold the Lender harmless from
and against any and all claims, losses, damages, liabilities, fines, penalties,
charges, administrative and judicial proceedings and orders, judgments, remedial
actions, requirements and enforcement actions of any kind, and all costs and
expenses incurred in connection therewith (including, without limitation,
attorneys' fees and expenses), arising directly or indirectly, in whole or in
part, from (a) the presence of any Hazardous Substances on, under or from any
Mortgaged Property or other Property of the Borrowers, whether prior to or
during the term hereof, (b) any activity carried on or undertaken on or off any
Mortgaged Property or other Property of the Borrowers, whether prior to or
during the term hereof, and whether by the Borrowers or any predecessor in
title, employee, agent, contractor or subcontractor of the Borrowers or any
other Person at any time occupying or present on such Property, in connection
with the handling, treatment, removal, storage, decontamination, cleanup,
transportation or disposal of any Hazardous Substances at any time located or
present on or under such Property, (c) any residual contamination on or under
any Mortgaged Property or other Property of the Borrowers, (d) any contamination
of any Property or natural resources arising in connection with the generation,
use, handling, storage, transportation or disposal of any Hazardous Substances
by the Borrowers or any employee, agent, contractor or subcontractor of the
Borrowers while such Persons are acting within the scope of their relationship
with the Borrowers, irrespective of whether any of such activities were or will
be undertaken in accordance with applicable Requirements of Law, or (e) the
performance and enforcement of any Loan Document, any allegation by any
beneficiary of a Letter of Credit of a wrongful dishonor by the Lender of a
claim or draft presented thereunder, or any other act or omission in connection
with or related to any Loan Document or the transactions contemplated thereby,
including, without limitation, any of the foregoing arising from negligence,
whether sole or concurrent, on the part of the Lender; with the foregoing
indemnity surviving satisfaction of all Obligations and the termination of this
Agreement, unless all such Obligations have been satisfied wholly in cash from
the Borrowers and not by way of realization against any Collateral or the
conveyance of any Property in lieu thereof, provided that such indemnity shall
not extend to any act or omission by the Lender with respect to any Property
subsequent to the Lender becoming the owner of such Property and with respect to
which Property such claim, loss, damage, liability, fine, penalty, charge,
proceeding, order, judgment, action or requirement arises subsequent to the
acquisition of title thereto by the Lender.
5.13 Maintenance of Corporate Existence and Good Standing.
Maintain its corporate existence or qualification and good standing in its
jurisdiction of incorporation and in all jurisdictions wherein the Property now
owned or hereafter acquired or business now or hereafter conducted necessitates
same.
5.14 Further Assurances. Promptly cure any defects in the
execution and delivery of any of the Loan Documents and all agreements
contemplated thereby, and execute, acknowledge and deliver such other assurances
and instruments as shall, in the opinion of the Lender, be necessary to fulfill
the terms of the Loan Documents.
5.15 Initial Fees and Expenses of Lender and/or Legal Counsel to
Lender. (a) Upon request by the Lender, promptly reimburse the Lender for all
reasonable legal fees and expenses and all other reasonable expenses of Lender
in connection with the preparation of this Agreement and all documentation
contemplated hereby, the satisfaction of the conditions precedent set forth
herein, and the consummation of the transactions contemplated in this Agreement
(including, without limitation, all reasonable fees and expenses of ▇▇▇▇▇▇▇ &
▇▇▇▇▇▇, L.L.P. and all recording and filing fees), and (b) each Borrower agrees
to indemnify and hold harmless the Lender and to reimburse Lender, on demand,
for any payments made by the Lender in respect of (i) any income, franchise
and/or excise taxes paid to the state of Tennessee and/or West Virginia as may
be required by any laws of such states in effect at any time, (ii) the costs
associated with qualifying to do business by the Lender in the states of
Tennessee and/or West Virginia, if required by such states, and (iii) all
reasonable costs and expenses incurred by the Lender with respect to the payment
of any such taxes or fees, including reasonable attorney's fees and expenses and
accountants' fees incurred in the preparation of any tax return related thereto;
provided, however, the Borrowers shall only be obligated to indemnify the Lender
hereunder for that portion of any taxes and costs paid by the Lender pursuant to
this subsection (b) that are attributable to the transactions contemplated under
this Agreement. Notwithstanding the above, the Borrowers shall have the option,
at their election, instead of paying the taxes and costs required by this
subsection (b), to (i) request that the Lender execute releases of any or all of
the Collateral located in Tennessee and/or West Virginia and (ii) pay any
mandatory prepayments which may become due as a result thereof pursuant to
Section 2.8; provided, however, the option available under this sentence shall
not serve to discharge any obligation of the Borrowers to pay any such taxes and
costs which are assessed for any period when there was Collateral located in the
states of Tennessee and/or West Virginia or any taxes and costs attributable to
the transactions contemplated under this Agreement assessed by such states
irrespective of Collateral being located within such state.
5.16 Subsequent Fees and Expenses of Lender. Upon request by the
Lender, promptly reimburse the Lender (to the fullest extent permitted by law)
for all amounts reasonably expended, advanced or incurred by the Lender to
satisfy any obligation of the Borrowers under any of the Loan Documents; to
collect the Obligations; to enforce the rights of the Lender under any of the
Loan Documents; or to protect the Mortgaged Property or other Properties or
business of the Borrowers, including, without limitation, the Collateral, which
amounts shall be deemed compensatory in nature and liquidated as to amount upon
notice to the Borrowers by the Lender and which amounts shall include, but not
be limited to (a) all court costs, (b) reasonable attorneys' fees, (c)
reasonable fees and expenses of auditors and accountants incurred to protect the
interests of the Lender, (d) fees and expenses reasonably incurred by the Lender
in connection with the participation by the Lender as a member of the creditors'
committee in a case commenced under any Insolvency Proceeding, (e) fees and
expenses reasonably incurred by the Lender in connection with lifting the
automatic stay prescribed in Sec. 362 Title 11 of the United States Code, and
(f) fees and expenses reasonably incurred by the Lender in connection with any
action pursuant to Sec. 1129 Title 11 of the United States Code in connection
with the collection of any sums due under the Loan Documents, together with
interest at the per annum interest rate equal to the Floating Rate, calculated
on a basis of a calendar year of 360 days, but counting the actual number of
days elapsed, on each such amount from the date of notification that the same
was expended, advanced or incurred by the Lender until the date it is repaid to
the Lender, with the obligations under this Section surviving the non-assumption
of this Agreement in a case commenced under any Insolvency Proceeding and being
binding upon the Borrowers and/or a trustee, receiver, custodian or liquidator
of the Borrowers appointed in any such case.
5.17 Maintenance and Inspection of Tangible Properties. Maintain
all of its tangible Properties in good repair and condition, ordinary wear and
tear excepted; make all necessary replacements thereof and operate such
Properties in a good and workmanlike manner; and permit any authorized
representative or representatives of the Lender to visit and inspect, and permit
one authorized representative of the Lender to visit and inspect one time each
year at the expense of the Borrowers, any Mortgaged Property or other tangible
Property of either Borrower.
5.18 Maintenance of Insurance and Evidence Thereof. Obtain and/or
continue to maintain insurance with respect to its Properties and businesses
against such liabilities, casualties, risks and contingencies as is customary in
the relevant industry and sufficient to prevent a Material Adverse Effect, all
such insurance to be in amounts and from insurers reasonably acceptable to the
Lender, and, upon any renewal of any such insurance and at other times upon
request by the Lender, furnish to the Lender evidence, satisfactory to the
Lender, of the maintenance of such insurance.
5.19 Payment of Note and Performance of Obligations. Pay the Note
according to the reading, tenor and effect thereof, as modified hereby, and do
and perform every act and discharge all other Obligations.
5.20 Operation of Oil and Gas Properties. Develop, maintain and
operate its Oil and Gas Properties and all of the Mortgaged Property in a
prudent and workmanlike manner in accordance with industry standards.
5.21 Current Ratio. Maintain at the end of each calendar quarter a
ratio of (a) assets which would, in accordance with GAAP and GAAS, be included
as current assets on a balance sheet of the Borrowers as of the date of
calculation plus an amount equal to the Available Commitment to (b) liabilities
which would, in accordance with GAAP and GAAS, be included as current
liabilities on a balance sheet of the Borrowers as of the date of calculation,
including, without limitation, the current portion of any Indebtedness of the
Borrowers treated as long-term, of no less than 1.25 to 1.0.
5.22 Shareholders' Equity. Commencing with the quarter ending June
30, 1995, maintain, at the end of each calendar quarter, Shareholders' Equity of
not less than 5. $25,766,750 plus 6. a cumulative amount equal to 75% of the net
income of the Borrowers from all sources for each quarter plus 7. the cumulative
amount received from the sale of capital stock of Alamco less the expenses
associated with any such stock offering during each quarter, if any, less 8. the
cumulative amount paid to acquire treasury stock of Alamco during each quarter,
each determined in accordance with GAAP and GAAS and as shown on the Financial
Statements of the Borrowers delivered to the Lender for such quarterly period.
5.23 Existing Business. Maintain its line of business as engaged
in as of the Closing Date.
5.24 Lockbox Arrangement With Lockbox Account and Working Interest
Owners Account. Execute, maintain in full force and effect, and comply in all
respects with the provisions of such documentation as may be reasonably required
by the Lender to establish the Lockbox, the Lockbox Account and the Working
Interest Owners Account (including, without limitation, the Lockbox Agreement
with attached schedule of Lockbox Standard Processing Procedures and an
associated Lockbox Setup Checklist), and direct all purchasers of production
and/or disbursers of the proceeds from the Mortgaged Properties to make
remittance to the Lockbox. Funds received in the Lockbox shall be transferred
daily by the Lender to the Lockbox Account and the Borrowers shall also deposit
directly into the Lockbox Account all funds received by the Borrowers, if any,
in connection with the Mortgaged Properties which are not sent directly to the
Lockbox. All funds collected in the Lockbox Account attributable to Persons
other than the Borrowers and Clarksburg Gas shall be transferred by Alamco to
the Working Interest Owners Account and all funds remaining in the Lockbox
Account, subject to Section 2.5, shall be available to the Borrowers for use in
the ordinary course of business; provided, however, upon the occurrence of an
Event of Default, access by the Borrowers to the Lockbox Account shall terminate
and the Lender shall thereafter transfer monthly from the Lockbox Account to the
Working Interest Owners Account, within 10 days after receipt by the Lender of
the Lockbox Report, all funds identified in such Lockbox Report as being
attributable to working interest owners of the Mortgaged Properties, other than
the Borrowers and Clarksburg Gas.
5.25 Debt Coverage Ratio. Maintain, as of the close of each
calendar quarter, a ratio of 9. net income of the Borrowers for the preceding
four calendar quarters determined in accordance with GAAP plus interest expense
and depreciation, amortization, depletion, and other non-cash expenses for such
period less payment of any cash dividends on common stock of Alamco for such
period and less the amount, if any, paid to acquire treasury stock of Alamco
during such period to 10. the sum of a. payments of interest on Indebtedness of
the Borrowers paid during the preceding four calendar quarters, plus b. payments
of principal on Indebtedness of the Borrowers (other than the Obligations)
required to be paid during the following four calendar quarters, plus c. an
amount equal to the average daily Loan Balance for the preceding four calendar
quarters divided by 6, of not less than 1.25 to 1.0.
ARTICLE VI
NEGATIVE COVENANTS
Unless agreed in writing by the Lender to the contrary, so long as
any Obligation remains outstanding or unpaid or any Commitment exists, each
Borrower will not:
6.1 Indebtedness. And no joint venture in which either Borrower
is a member or any partnership in which either Borrower is a sole general
partner will, create, incur, assume or suffer to exist any Indebtedness, whether
by way of loan or otherwise; provided, however, the foregoing restriction shall
not apply to (a) the Obligations or (b) unsecured current accounts payable
incurred in the ordinary course of business, which are not unpaid in excess of
90 days beyond invoice date or are being contested in good faith and as to which
such reserve as is required by GAAP and GAAS has been made.
6.2 Contingent Obligations. And no joint venture in which either
Borrower is a member or any partnership in which either Borrower is a sole
general partner will, create, incur, assume or suffer to exist any Contingent
Obligation; provided, however, the foregoing restriction shall not apply to (a)
performance guarantees and performance surety or other bonds provided in the
ordinary course of business, (b) trade credit incurred or operating leases
entered into in the ordinary course of business, (c) indemnification agreements
of the Borrowers existing as of the Closing Date, including, without limitation,
agreements provided to officers and directors, underwriting agents, and
bankruptcy trustees for lost common stock certificates, or (d) Contingent
Obligations disclosed on Exhibit III.
6.3 Liens. And no joint venture in which either Borrower is a
member or any partnership in which either Borrower is a sole general partner
will create, incur, assume, or suffer to exist any Lien on any of its Oil and
Gas Properties or any other Property, whether now owned or hereafter acquired;
provided, however, the foregoing restrictions shall not apply to (a) Permitted
Liens or (b) Liens on the Tax Credit Properties in favor of either Borrower,
which Liens shall be at all times second and inferior to the Liens on such
properties in favor of the Lender.
6.4 Sales of Assets. Without the prior written consent of the
Lender, sell, transfer or otherwise dispose of in any one fiscal year, in one
or any series of transactions, assets of either Borrower, whether now owned or
hereafter acquired, the aggregate book value of which exceeds $500,000, or
enter into any agreement to do so; provided, however, the foregoing restriction
shall not apply to the (a) sale of hydrocarbons or lease inventory in the
ordinary course of business, or (b) the sale or other disposition of Property
destroyed, lost, worn out, damaged or having only salvage value or no longer
used or useful in the business of either Borrower.
6.5 Loans or Advances. Make or agree to make or allow to remain
outstanding any loans or advances to any Person; provided, however, the
foregoing restrictions shall not apply to (a) advances or extensions of credit
in the form of accounts receivable incurred in the ordinary course of business
and upon terms common in the industry for such accounts receivable, (b) loans or
advances to officers and employees of the Borrowers not to exceed at any time
the aggregate amount of $500,000, (c) loans or advances to working interest
owners of the Mortgaged Properties not to exceed at any time the aggregate
amount of $300,000, and (d) loans or advances disclosed on Exhibit III attached
hereto under the heading "Loans or Advances."
6.6 Payment of Accounts Payable. Allow any account payable to be
in excess of 45 days past due, except such as are being contested in good faith
and as to which such reserve as required by GAAP and GAAS has been established
with respect thereto or if the failure to pay such account payable would not
have a Material Adverse Effect.
6.7 Cancellation of Insurance. Allow any insurance policy
required to be carried hereunder to be terminated or lapse or expire without
provision for adequate renewal.
6.8 Leases. And no joint venture in which either Borrower is a
member or any partnership in which either Borrower is a sole general partner -
will, enter into, or agree to enter into, any rental or lease agreements, the
aggregate of rental and lease payments under which in any fiscal year will
exceed the sum of $250,000; provided, however, the foregoing restriction shall
not apply to oil, gas and mineral leases or permits or similar agreements
entered into in the ordinary course of business of the Borrowers.
6.9 Investments. Acquire Investments in, or purchase or otherwise
acquire all or substantially all of the assets of, any Person; provided,
however, the foregoing restriction shall not apply to (a) the purchase or
acquisition of additional interests in the Mortgaged Properties or other Oil and
Gas Properties of the Borrowers and as to which Alamco is the operator, (b) the
purchase or acquisition of new interests in Oil and Gas Properties, and (c)
certificates of deposit, eurodollar or repurchase obligations of any commercial
bank operating in the United States having capital and surplus in excess of
$100,000,000.00 with maturities of one year or less from the date of acquisition
thereof.
6.10 Changes in Corporate Structure.
(a) As to Alamco:
(i) Issue, sell or otherwise dispose of any shares of
the capital stock of Aladel issued in the name of Alamco such
that Alamco would cease to own all of the outstanding capital
stock of Aladel; or
(ii) Issue or agree to issue additional shares of
capital stock or transfer any treasury shares of capital
stock, in one or any series of transactions, to any other
Person if the effect of such issuance or transfer would be a
Change in Control (as such term is defined in Section 8.2 of
that certain Employment Agreement dated January 1, 1995, by
and between ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and Alamco).
(b) As to Aladel:
(i) Issue or agree to issue additional shares of
capital stock or transfer any treasury shares of capital
stock, in one or any series of transactions, to any other
Person.
(c) As to each Borrower:
(i) Enter into any transaction of consolidation,
merger, amalgamation; or liquidate, wind up or dissolve (or
suffer any liquidation or dissolution); provided, however,
such restriction shall not apply to a merger or consolidation
of Aladel with or into Alamco, provided that Alamco shall be
the continuing or surviving corporation and, after giving
effect to such merger or consolidation, no Default or Event of
Default exists.
6.11 Transactions with Affiliates. Directly or indirectly, enter
into any sale, lease or exchange of Property or any contract for the rendering
of goods or services (including, but not limited to, operating agreements under
which Alamco or an Affiliate serves as operator) with any of its Affiliates,
other than upon fair and reasonable terms no less favorable than could be
obtained in an arm's length transaction with a Person which was not an
Affiliate; provided, however, the foregoing restriction shall not apply to loans
or advances to officers and employees of the Borrowers not to exceed at any time
the aggregate amount of $500,000 or loans and advances currently existing and
disclosed on Exhibit III hereto.
6.12 Lines of Business. Expand into any line of business other
than those in which such Borrower is engaged as of the Closing Date.
6.13 Organization or Acquisition of Subsidiaries, L.L.C.'s,
Partnerships and/or Joint Ventures. Organize or acquire any Subsidiaries in
addition to those existing as of the Closing Date; be a member of any limited
liability company in addition to Phoenix-Alamco Ventures, L.L.C.; from and after
the Closing Date, organize or be a partner in any limited or general partnership
wherein either Borrower is not the sole general partner; or, from and after the
Closing Date, organize or be a member of any joint venture wherein either
Borrower does not hold title to the Oil and Gas Property subject to such joint
venture agreement.
6.14 Clarksburg Gas and Tax Credit Properties. Without the prior
written consent of the Lender, (a) withdraw as or cease to be the sole general
partner of Clarksburg Gas, or (b) cease to be the operator of the Tax Credit
Properties.
ARTICLE VII
EVENTS OF DEFAULT
7.1 Enumeration of Events of Default. Any of the following events
shall constitute an Event of Default as that term is used herein:
(a) default shall be made in the payment when due of
any installment of principal or interest under this Agreement or the
Note or in the payment when due of any Commitment Fee, Engineering
Fee, Facility Fee, or Letter of Credit Fee and such default shall
continue for a period in excess of 2 days;
(b) an Event of Default as defined in any Loan
Document shall have occurred;
(c) default shall be made by either Borrower in the
due observance or performance of any of its obligations or agreements
contained in any of the Loan Documents, except those
contained in Sections 5.2, 5.3, 5.4 and 6.5(b) and (c) of this
Agreement;
(d) default shall be made by either Borrower in the
due observance or performance of (i) Sections 5.2, 5.3 and 6.5(b)
and (c), and such default shall continue for a period in excess of
ten days, or (ii) Section 5.4, and such default shall continue for a
period in excess of thirty days;
(e) any representation or warranty made by either
Borrower in any of the Loan Documents, including, without
limitation, in a Request for Advance, proves to have been untrue in
any material respect or any representation, statement (including
Financial Statements), certificate or data furnished or made to the
Lender in connection herewith proves to have been untrue in any
material respect as of the date the facts therein set forth were
stated or certified;
(f) default shall be made by either Borrower (as
principal or guarantor or other surety) in the payment or
performance of any bond, debenture, note or other evidence of
Indebtedness or under any credit agreement, loan agreement,
indenture, promissory note or similar agreement or instrument
executed in connection with any of the foregoing, and such default
shall remain unremedied for in excess of the period of grace, if
any, with respect thereto and such default shall have a Material
Adverse Effect;
(g) the Borrowers shall be unable to satisfy any
condition or cure any circumstance specified in Article III, the
satisfaction or curing of which is precedent to the right of the
Borrowers to obtain an Advance or the issuance of a Letter of
Credit, and such inability shall continue for a period in excess of
30 days;
(h) either Borrower shall (i) apply for or consent to
the appointment of a receiver, trustee or liquidator of it or all or
a substantial part of its assets, (ii) file a voluntary petition
commencing an Insolvency Proceeding, (iii) make a general assignment
for the benefit of creditors, (iv) be unable, or admit in writing
its inability, to pay its debts generally as they become due, or (v)
file an answer admitting the material allegations of a petition
filed against it in any Insolvency Proceeding;
(i) an order, judgment or decree shall be entered
against either Borrower by any court of competent jurisdiction or by
any other duly authorized authority, on the petition of a creditor
or otherwise, granting relief in any Insolvency Proceeding or
approving a petition seeking reorganization or an arrangement of its
debts or appointing a receiver, trustee, conservator, custodian or
liquidator of it or all or any substantial part of its assets and
such order, judgment or decree shall not be dismissed or stayed
within 60 days;
(j) the levy against any significant portion of the
Mortgaged Property or other Property of either Borrower, or any
execution, garnishment, attachment, sequestration or other writ or
similar proceeding which is not permanently dismissed or discharged
within 60 days after the levy;
(k) a final and non-appealable order, judgment or
decree shall be entered against either Borrower for money damages
and/or Indebtedness due in an amount in excess of $500,000 and such
order, judgment or decree shall not be dismissed or stayed within 60
days;
(l) any Person shall engage in any Prohibited
Transaction involving any Plan; any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall
exist with respect to any Plan for which an excise tax is due or
would be due in the absence of a waiver; a Reportable Event shall
occur with respect to, or proceedings shall commence to have a
trustee appointed, or a trustee shall be appointed, to administer or
to terminate, any Single Employer Plan, which Reportable Event or
commencement of proceedings or appointment of a trustee is, in the
reasonable opinion of the Lender, likely to result in the
termination of such Plan for purposes of Title IV of ERISA; any
Single Employer Plan shall terminate for purposes of Title IV of
ERISA; the Borrowers or any Commonly Controlled Entity shall incur,
or in the reasonable opinion of the Lender, be likely to incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan; or any other event or
condition shall occur or exist with respect to a Plan and the result
of such events or conditions referred to in this Section 7.1(l)
could subject the Borrowers or any Commonly Controlled Entity to any
tax (other than an excise tax under Section 4980 of the Code),
penalty or other liabilities which taken in the aggregate would have
a Material Adverse Effect and any such circumstance shall exist for
in excess of 60 days;
(m) any Security Instrument shall for any reason not,
or cease to, create valid and perfected first-priority Liens,
subject only to Permitted Liens or the failure of the Lender to file
UCC continuation statements as necessary, against the Collateral
purportedly covered thereby;
(n) Clarksburg Gas shall cease to have good and
indefeasible title to the Tax Credit Properties, free and clear of
all Liens except Permitted Liens or Liens in favor of either
Borrower;
(o) default shall be made by Clarksburg Gas in the due
observance or performance of any of its obligations or agreements
(i) under this Agreement or the Security Instruments assumed and
agreed to by Clarksburg Gas pursuant to the Assignment or (ii) under
the Second-Lien Deed of Trust, Security Agreement, Mineral Filing,
and Fixture Filing dated as of August 11, 1994, in favor of Alamco
covering the Tax Credit Properties, subsequently assigned by Alamco
to Aladel and recorded in Book 784, Page 427 of the deed of trust
records of ▇▇▇▇▇▇▇▇ County, West Virginia; or
(p) the occurrence of a Material Adverse Effect and
the same shall remain unremedied for in excess of 60 days after
notice given by the Lender.
7.2 Remedies. (a) Upon the occurrence of an Event of Default
specified in Subsections 7.1(h) or (i), immediately and without notice, (i) all
Obligations shall automatically become immediately due and payable, without
presentment, demand, protest, notice of protest, default or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrowers; (ii) the Commitment
shall immediately cease and terminate unless and until reinstated by the Lender
in writing,; and (iii) access by the Borrowers to the Lockbox Account shall
terminate and in such event the Lender is hereby authorized at any time and
from time to time, without notice to the Borrowers (any such notice being
expressly waived by the Borrowers), to set-off and apply any and all deposits
(general or special, time or demand, provisional or final) held by the Lender,
including, without limitation, the funds of the Borrowers held in the Lockbox
or Lockbox Account, and any and all other indebtedness at any time owing by
the Lender to or for the credit or account of the Borrowers against any and
all of the Obligations.
(b) Upon the occurrence of any Event of Default other than
those specified in Subsections 7.1(h) or (i), (i) the Lender may, by notice to
the Borrowers, declare all Obligations immediately due and payable, without
presentment, demand, protest, notice of protest, default or dishonor, notice of
intent to accelerate maturity, notice of acceleration of maturity or other
notice of any kind, except as may be provided to the contrary elsewhere herein,
all of which are hereby expressly waived by the Borrowers; (ii) the Commitment
shall immediately cease and terminate unless and until reinstated by the Lender
in writing; and (iii) access by the Borrowers to the Lockbox Account shall
terminate and in such event the Lender is hereby authorized at any time and from
time to time, without notice to the Borrowers (any such notice being expressly
waived by the Borrowers), to set-off and apply any and all deposits (general or
special, time or demand, provisional or final) held by the Lender, including,
without limitation, the funds of the Borrowers held in the Lockbox or Lockbox
Account, and any and all other indebtedness at any time owing by the Lender to
or for the credit or account of the Borrowers against any and all of the
Obligations although such Obligations may be unmatured.
(c) Upon the occurrence of any Event of Default, the Lender
may, in addition to the foregoing, exercise any or all of its rights and
remedies provided by law or pursuant to the Loan Documents.
ARTICLE VIII
MISCELLANEOUS
8.1 Transfers and Participations. The Lender may, at any time,
sell, transfer, assign or grant participations in the Obligations, provided that
the Obligations, if transferred by the Lender other than by participation, shall
be transferred only as a whole; and the Lender may forward to such Transferee
and each prospective Transferee all documents and information relating to such
Obligations, whether furnished by the Borrowers or otherwise obtained, as the
Lender determines necessary or desirable. The Borrowers agree that such
Transferee, other than a participant, may exercise all rights (including,
without limitation, rights of set-off) with respect to the Obligations held by
it as fully as if such Transferee were the direct holder thereof, subject to any
agreements between such Transferee and the transferor to such Transferee.
8.2 Survival of Representations, Warranties and Covenants. All
representations and warranties of the Borrowers and all covenants and agreements
herein made shall survive the execution and delivery of the Note and the
Security Instruments and shall remain in force and effect so long as any
Obligation is outstanding or any Commitment exists.
8.3 Notices and Other Communications. Except as to verbal notices
expressly authorized herein, which verbal notices shall be confirmed in writing,
all notices, requests and communications hereunder shall be in writing
(including by telegraph or telecopy). Unless otherwise expressly provided
herein, any such notice, request, demand or other communication shall be deemed
to have been duly given or made when delivered by hand, or, in the case of
delivery by mail, deposited in the mail, certified mail, return receipt
requested, postage prepaid, or, in the case of telegraphic notice, when
delivered to the telegraph company, or, in the case of telecopy notice, when
receipt thereof is acknowledged orally, addressed as follows:
(a) if to the Lender, to:
BANK ONE, TEXAS, NATIONAL ASSOCIATION
▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
(b) if to Alamco, to:
ALAMCO, INC.
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; and
(c) if to Aladel, to:
ALAMCO-DELAWARE, INC.
Organization Services, Inc.
▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Any party may, by proper written notice hereunder to the other,
change the individuals or addresses to which such notices to it shall thereafter
be sent.
8.4 Parties in Interest. Subject to applicable restrictions
contained herein, all covenants and agreements herein contained by or on behalf
of the Borrowers or the Lender shall be binding upon and inure to the benefit of
the Borrowers or the Lender, as the case may be, and their respective legal
representatives, successors and assigns.
8.5 Rights of Third Parties. All provisions herein are imposed
solely and exclusively for the benefit of the Lender and the Borrowers. No
other Person shall have any right, benefit, priority or interest hereunder or as
a result hereof or have standing to require satisfaction of provisions hereof in
accordance with their terms, and any or all of such provisions may be freely
waived in whole or in part by the Lender at any time if in its sole discretion
it deems it advisable to do so.
8.6 Renewals and Extensions. All provisions of this Agreement
relating to the Note shall apply with equal force and effect to each promissory
note hereafter executed which in whole or in part represents a renewal or
extension of any part of the Indebtedness of the Borrowers under this Agreement,
the Note or any other Loan Document.
8.7 No Waiver; Rights Cumulative. No course of dealing on the
part of the Lender, its officers or employees, nor any failure or delay by the
Lender with respect to exercising any of its rights under any Loan Document
shall operate as a waiver thereof. The rights of the Lender under the Loan
Documents shall be cumulative and the exercise or partial exercise of any such
right shall not preclude the exercise of any other right. Neither the making of
any Advance nor the issuance of any Letter of Credit shall constitute a waiver
of any of the covenants, warranties or conditions of the Borrowers contained
herein. In the event the Borrowers are unable to satisfy any such covenant,
warranty or condition, neither the making of any Advance nor the issuance of any
Letter of Credit shall have the effect of precluding the Lender from thereafter
declaring such inability to be an Event of Default as hereinabove provided.
8.8 Survival Upon Unenforceability. In the event any one or more
of the provisions contained in any of the Loan Documents or in any other
instrument referred to herein or executed in connection with the Obligations
shall, for any reason, be held to be invalid, illegal or unenforceable in any
respect, such invalidity, illegality or unenforceability shall not affect any
other provision of any Loan Document or of any other instrument referred to
herein or executed in connection with such Obligations.
8.9 Amendments or Modifications. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
8.10 Controlling Provision Upon Conflict. In the event of a
conflict between the provisions of this Agreement and those of any other Loan
Document, the provisions of this Agreement shall control.
8.11 Time, Place and Method of Payments. All payments required
pursuant to this Agreement or the Note shall be made in lawful money of the
United States of America and in immediately available funds; shall be deemed
received by the Lender on the next Business Day following receipt if such
receipt is after 2:00 p.m. Central Standard or Daylight Savings Time, as the
case may be, on any Business Day; and shall be made at the Principal Office of
the Lender. Except as provided to the contrary herein, if the due date of any
payment hereunder or under the Note would otherwise fall on a day which is not
a Business Day, such date shall be extended to the next succeeding Business
Day and interest shall be payable for any principal so extended for the period
of such extension.
8.12 Disposition of Collateral. Notwithstanding any term or
provision, express or implied, in any of the Security Instruments, the
realization, liquidation, foreclosure or any other disposition on or of any or
all of the Collateral shall be in the order and manner and determined in the
sole discretion of the Lender; provided, however, that in no event shall the
Lender violate applicable law or exercise rights and remedies other than those
provided in such Security Instruments or otherwise existing at law or in equity.
8.13 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE DEEMED
TO BE CONTRACTS MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE
WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS.
8.14 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO OR FROM THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE
SOLE DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITUS IN HOUSTON,
▇▇▇▇▇▇ COUNTY, TEXAS. EACH BORROWER HEREBY SUBMITS TO THE JURISDICTION OF ANY
LOCAL, STATE OR FEDERAL COURT LOCATED IN HOUSTON, ▇▇▇▇▇▇ COUNTY, TEXAS, AND
HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR
VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS
SECTION.
8.15 WAIVER OF RIGHTS TO JURY TRIAL. EACH BORROWER AND THE LENDER
HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY
WAIVE ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM
OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF ANY OF THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE LENDER IN THE
ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION
ARE A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AGREEMENT.
8.16 ENTIRE AGREEMENT. THIS AGREEMENT AMENDS, RESTATES, AND
REPLACES THE PRIOR AGREEMENT AND CONSTITUTES THE ENTIRE AGREEMENT AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE ANY
PREVIOUS AGREEMENT BETWEEN THE PARTIES HERETO, WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT HEREOF, INCLUDING, WITHOUT LIMITATION, THE PRIOR AGREEMENT.
FURTHERMORE, IN THIS REGARD, THIS WRITTEN AGREEMENT AND THE OTHER WRITTEN LOAN
DOCUMENTS REPRESENT, COLLECTIVELY, 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.
IN WITNESS WHEREOF, this Agreement is deemed executed effective as of
the date first above written.
BORROWERS:
ALAMCO, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and Chief Executive
Officer
ALAMCO-DELAWARE, INC.
By: /s/ ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
LENDER:
BANK ONE, TEXAS, NATIONAL
ASSOCIATION
By: /s/ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
EXHIBIT I
PROMISSORY NOTE
$75,000,000 Houston, Texas October 1, 1995
FOR VALUE RECEIVED, the undersigned ("Maker", whether one or more)
promises to pay to the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Payee"),
at its banking quarters in Houston, ▇▇▇▇▇▇ County, Texas, the sum of SEVENTY
FIVE MILLION DOLLARS ($75,000,000), or so much thereof as may be advanced
against this Note pursuant to the Amended and Restated Credit Agreement dated
effective as of October 1, 1995, by and between Maker and Payee (as amended,
modified, supplemented, or restated from time to time, the "Credit Agreement"),
together with interest at the rate and calculated as provided in the Credit
Agreement. The indebtedness evidenced by this Note, both principal and
interest, is payable as provided in the Credit Agreement.
Subject to compliance with applicable provisions of the Credit
Agreement, Maker may at any time pay the full amount or any part of this Note
without the payment of any premium or fee, but such payment shall not, until
this Note is fully paid and satisfied, excuse the payment as it becomes due of
any payment on this Note provided for in the Credit Agreement.
This Note is issued, in part, in renewal and extension, but not in
novation or discharge, of the remaining principal balance and accrued and unpaid
interest due thereon of that certain Promissory Note dated August 1, 1994, in
the original principal amount of $20,000,000, executed by Maker, payable to the
order of Payee.
This Note is issued pursuant to, is the "Note" under, and is entitled to
all benefits of, the Credit Agreement; and reference is made to the Credit
Agreement for matters governed thereby, including, without limitation, certain
events which will entitle the holder hereof to accelerate the maturity of all
amounts due hereon.
Without being limited thereto or thereby, this Note is secured by the
Security Instruments (as such term is defined in the Credit Agreement and so
used herein).
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF THE
STATE OF TEXAS; PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES, ARTICLE
5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS AND
REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
ALAMCO, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and
Chief Executive Officer
ALAMCO-DELAWARE, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
EXHIBIT II
FORM OF COMPLIANCE CERTIFICATE
, ▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Re: Amended and Restated Credit Agreement dated effective as of October
1, 1995, by and among Alamco, Inc., Alamco-Delaware, Inc., and Bank
One, Texas, National Association (the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as Responsible Officers of the Borrowers, hereby certify to you the
following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
(1. No Default or Event of Default exists as of the date hereof or has
occurred since the date of our previous certification to you, if any.)
(1. The following Defaults or Events of Default exist as of the date
hereof or have occurred since the date of our previous certification to
you, if any, and the actions set forth below are being taken to remedy
such circumstances:)
2. The compliance of the Borrowers with the financial covenants of the
Credit Agreement, as of the close of business on , is
evidenced by the following:
(a) Section 5.21: Current Ratio
Required Actual
Not less than 1.25 to 1.0 to 1.0
(b) Section 5.22: Shareholders' Equity
Required Actual
Not less than
(i) $25,766,750
+(ii) 75% of net income = $________
+(iii)net sale of stock = $________
-(iv) purchase of
treasury stock = $________
TOTAL: $ $
(c) Section 5.25: Debt Coverage Ratio
Required Actual
Not less than 1.25 to 1.0
(i) Numerator:
(A) net income = $
+(B) interest expense = $
+(C) DD&A = $
+(D) non-cash expenses
(other) = $
-(E) cash dividends = $
-(F) purchase of
treasury stock = $
(ii) Denominator:
(A) interest payments = $
+(B) principal payments
(other) = $
+(C) average daily
Loan Balance divide 6 = $ to 1.0
(d) Section 6.4: Sales of Assets
Permitted Actual
Not more than $500,000 $
3. No Material Adverse Effect has occurred since the date of the
Financial Statements dated as of .
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
ALAMCO, INC.
By:
Printed Name:
Title:
ALAMCO-DELAWARE, INC.
By:
Printed Name:
Title:
EXHIBIT III
DISCLOSURES
Sections 1.2, 4.5 & 4.15 Permitted Liens/Liabilities/Restrictions/Gas
Contracts
1. CNG Transmission Corporation ("CNG") has a lien recorded with the
Secretary of State of West Virginia at No. 293960 on November 17,
1989, with respect to approximately 114 ▇▇▇▇▇ and certain property
relating thereto located in West Virginia, which lien was granted
pursuant to the November 14, 1989 Contract Reformation Agreement
between Alamco, Inc. and CNG. Rights of CNG under the Contract
Reformation Agreement include delivery of quantities of gas by
Alamco, Inc. to CNG for which payment has already been made; the
right to receive gas for a certain period at a fixed price; the
right to suspend or reduce purchases of gas under certain
circumstances; the right of first refusal with respect to certain
gas; and other similar rights as set forth in said agreement. CNG's
lien on approximately 114 ▇▇▇▇▇ (Tallmansville) is subordinate only
to existing record liens and encumbrances in favor of Pittsburgh
National Bank ("PNB"). CNG's right to recoup gas terminates on the
earlier of (i) the date of full recoupment of the gas, and (ii)
January 1, 2000.
2. Alamco, Inc. is a party to three capital lease agreements with
▇▇▇▇▇▇▇▇ Corporation with respect to well equipment, referred to as
Programs 1, 2 and 3. Program 1 was entered into on December 21,
1982, Program 2 was entered into on August 1, 1983, Program 3 was
entered into on October 1, 1984, and all three were extended until
November 30, 2002. These agreements set forth various obligations
and rights. Certain rights of ▇▇▇▇▇▇▇▇ Corporation (including
payment) have been assigned to PNB. The ▇▇▇▇▇▇▇▇ Corporation lien,
recorded with the Secretary of State of West Virginia at No. 199085
on June 18, 1985, was subsequently continued by a filing by PNB on
May 7, 1990.
3. Union National Bank (now Bank One West Virginia) has a lien recorded
with the Secretary of State of West Virginia at No. 274303 which was
filed on January 18, 1989 and relates to a money market account.
4. Letters of credit and/or surety bonds issued in the ordinary course
of business to permit drilling and related activities, including,
but not limited to, (a) State of West Virginia, Letter of Credit No.
252-A for $50,000 against Royalty Owners Trust Certificate of
Deposit No. 2-23122-C at Bank One, Clarksburg, WV; (b) State of
Tennessee, Letters of Credit Nos. 271, 272, 280, 286, 327 and 330
totalling $46,800 against Royalty Owners Trust Certificate of
Deposit No. 2-23122-C at Bank One, Clarksburg, WV; (c) State of
Tennessee, Letters of Credit Nos. 343 and 344 totalling $20,000
against Royalty Owners Trust Money Market Account No. ▇▇-▇▇▇▇-▇ at
Bank One, Clarksburg, WV; and (d) State of West Virginia, Letters of
Credit Nos. 334 and 335 totalling $60,000 against Hawg Hauling
Checking Account No. ▇▇-▇▇▇▇-▇ at Bank One, Clarksburg, WV.
5. Alamco, Inc. maintains an account with ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Markets
as security for a crude oil hedging account. To date, Alamco, Inc.
has not traded in the futures market but it may choose to do so in
the future.
6. Pursuant to contracts and other agreements, at times Alamco, Inc.
receives and holds funds on behalf of third parties, such as:
(a) Any cash held for royalty owners whose identity cannot be
determined. These funds are presently held in the Royalty
Owners Trust Account No. ▇▇-▇▇▇▇-▇ and Royalty Owners Trust
Certificate of Deposit No. 2-19983-C at Bank One, Clarksburg,
West Virginia.
(b) Any cash received from drilling partners to fund drilling
operations. These funds are held in segregated drilling fund
accounts.
(c) Cash held by the Company from gas and oil proceeds relative to
outside working interest and royalty owners.
(d) Any cash the Company may hold relating to litigation
settlements. Alamco currently is holding cash paid under the
1989 Contract Reformation Agreement with CNG relating to the
outside working interest owners' share of the Tallmansville
prepayment funds and will distribute such funds as CNG recoups
the affected volumes of gas.
(e) Any cash relative to West Virginia income tax withholding from
nonresident partners.
(f) Any cash relating to employee contributions in the Alamco,
Inc. Cafeteria Plan.
7. Pursuant to contracts and other agreements, Alamco, Inc. is
obligated to make payments of certain royalty and overriding royalty
interests, whether or not these instruments are recorded. In
addition, pursuant to certain farmout agreements, Alamco, Inc. is
obligated to make payments to third parties.
8. Alamco, Inc. has obligations with respect to the following PNC notes
which Alamco, Inc. assumed as a result of settlement of certain
lawsuits:
(a) The note in the principal amount of $60,000 bears interest at
the PNC prime interest rate. Monthly payments are due on the
15th of each month, the amount of which is tied to proceeds
from distribution by a partnership. Any remaining balance is
due on September 1, 1995.
(b) The note in the principal amount of $55,500 bears interest at
10%, which interest is to be paid only if an event of default
occurs. Annual payments of $5,500 are to be made on December
1 of each year beginning on December 12, 1990.
(c) The note in the principal amount of $63,000 bears interest at
10%, which interest is to be paid only if a default occurs.
Annual payments of $6,300 are to be made on December 1 of each
year beginning with a payment on December 1, 1990.
(d) The note in the principal amount of $75,000 bears interest at
10%, which interest is to be paid only if a default occurs.
Annual payments of $7,500 are to be made on December 1 of each
year beginning with a payment on December 1, 1990.
(e) The note in the principal amount of $263,000 bears interest at
the PNC prime interest rate. Payments are due in quarterly
installments, in amounts equal to accrued interest plus 1/20
of the face value of the note, beginning on April 1, 1991 and
on the first day of each July, October, January and April
thereafter until repaid in full. All amounts outstanding are
due on January 1, 1996.
9. Liabilities disclosed on Alamco, Inc.'s December 31, 1994
consolidated financial statements which were sent to Bank One,
Texas, National Association by Alamco, Inc.
Section 4.5 Litigation
1. Columbia Gas Transmission Corporation v. Alamco, Inc., et al., Cir.
Ct. of ▇▇▇▇▇▇▇▇ Cty., WV, C.A. No. 88-C-38-2. On January 19, 1988,
Columbia Gas Transmission Corporation filed this action requesting a
judicial declaration of the correct interpretation of a provision of
a 1983 gas purchase agreement requiring Columbia to resume
purchasing gas from the Company in 1986. In this action, the
Company seeks compensatory damages from Columbia for failing to
resume such purchases in 1986 in accordance with the Company's
interpretation of the disputed contract provision.
2. Alamco, Inc. v. Columbia Gas Systems, Inc., et al., U.S. Dist. Ct.,
N.D. WV, C.A. No. 90-0097-C. In early September 1990, the Company
filed a complaint in federal district court against Columbia Gas
Systems, Inc. and its subsidiaries alleging, among other things,
monopolization, attempted monopolization, monopoly leveraging and
illegal tying in connection with Columbia's refusal to provide
transportation to the Company on reasonable and non-discriminatory
terms for the period from 1983 to 1986 which Columbia used as
leverage to attempt to reduce the price payable by Columbia for gas
produced by the Company since 1986. The Company seeks compensatory
damages, trebled as provided under the federal antitrust laws.
3. Under a June 8, 1992 settlement agreement with Columbia, the Company
has agreed to stay pending litigation in state and federal court in
West Virginia and to terminate such litigation upon Columbia's
adoption of a plan of reorganization implementing the terms of the
settlement agreement.
Section 4.10 Environmental Matters
On May 23, 1994, the United States Environmental Projection Agency (the
"EPA") issued an administrative complaint against the Company for alleged
violations of the Clean Water Act resulting from an oil discharge at the
Company's Days Chapel Field in Claiborne County, Tennessee. The incident
occurred in December 1993 when vandals severed locks securing the valves
on the Company's oil storage tanks and discharged approximately 174
barrels of oil into a local creek. The EPA has proposed that penalties of
nearly $124,000 be assessed against the Company. However, the Company
contends that the asserted penalties exceed statutorily authorized
limits. Settlement negotiations are ongoing and the Company believes that,
due to meritorious defenses, any final penalties will be substantially
less than those proposed although no assurances can be given as to the
exact amount of any final penalties.
Section 4.14 Refunds
Section 4.17 Casualties
Section 6.2 Contingent Obligations
None, except as disclosed on 1994 10-K
Section 6.5 Loans or Advances
Alamco, Inc. loaned $271,950 to Interstate Production Company ("IPC") on
March 1, 1994 relative to IPC's purchase of Interstate Resources, Inc.
("IRI"), operating rights for providing well tending services to certain
▇▇▇▇▇, certain leases and certain claims against "non-settled investors"
from settlements pertaining to investor-related lawsuits with PNC. The
loan is to be amortized over a seven year period with constant principal
payments. The interest on the note is 10.00 percent per annum fixed.
EXHIBIT I
PROMISSORY NOTE
$75,000,000 Houston, Texas October 1, 1995
FOR VALUE RECEIVED, the undersigned ("Maker", whether one or more)
promises to pay to the order of BANK ONE, TEXAS, NATIONAL ASSOCIATION ("Payee"),
at its banking quarters in Houston, ▇▇▇▇▇▇ County, Texas, the sum of SEVENTY
FIVE MILLION DOLLARS ($75,000,000), or so much thereof as may be advanced
against this Note pursuant to the Amended and Restated Credit Agreement dated
effective as of October 1, 1995, by and between Maker and Payee (as amended,
modified, supplemented, or restated from time to time, the "Credit Agreement"),
together with interest at the rate and calculated as provided in the Credit
Agreement. The indebtedness evidenced by this Note, both principal and
interest, is payable as provided in the Credit Agreement.
Subject to compliance with applicable provisions of the Credit
Agreement, Maker may at any time pay the full amount or any part of this Note
without the payment of any premium or fee, but such payment shall not, until
this Note is fully paid and satisfied, excuse the payment as it becomes due of
any payment on this Note provided for in the Credit Agreement.
This Note is issued, in part, in renewal and extension, but not in
novation or discharge, of the remaining principal balance and accrued and unpaid
interest due thereon of that certain Promissory Note dated August 1, 1994, in
the original principal amount of $20,000,000, executed by Maker, payable to the
order of Payee.
This Note is issued pursuant to, is the "Note" under, and is
entitled to all benefits of, the Credit Agreement; and reference is made to the
Credit Agreement for matters governed thereby, including, without limitation,
certain events which will entitle the holder hereof to accelerate the maturity
of all amounts due hereon.
Without being limited thereto or thereby, this Note is secured by
the Security Instruments (as such term is defined in the Credit Agreement and so
used herein).
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE INTERNAL LAWS OF
THE STATE OF TEXAS; PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES,
ARTICLE 5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN ACCOUNTS
AND REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
ALAMCO, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President and
Chief Executive Officer
ALAMCO-DELAWARE, INC.
By:
▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
President
EXHIBIT II
FORM OF COMPLIANCE CERTIFICATE
, ▇▇
▇▇▇▇ ▇▇▇, ▇▇▇▇▇, N.A.
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
Re: Amended and Restated Credit Agreement dated effective as of October
1, 1995, by and among Alamco, Inc., Alamco-Delaware, Inc., and Bank
One, Texas, National Association (the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as Responsible Officers of the Borrowers, hereby certify to you the
following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
(1. No Default or Event of Default exists as of the date hereof or has
occurred since the date of our previous certification to you, if any.)
(1. The following Defaults or Events of Default exist as of the date
hereof or have occurred since the date of our previous certification to
you, if any, and the actions set forth below are being taken to remedy
such circumstances:)
2. The compliance of the Borrowers with the financial covenants of the
Credit Agreement, as of the close of business on , is
evidenced by the following:
(a) Section 5.21: Current Ratio
Required Actual
Not less than 1.25 to 1.0 to 1.0
(b) Section 5.22: Shareholders' Equity
Required Actual
Not less than
(i) $25,766,750
+(ii) 75% of net income = $________
+(iii)net sale of stock = $________
-(iv) purchase of
treasury stock = $________
TOTAL: $ $
(c) Section 5.25: Debt Coverage Ratio
Required Actual
Not less than 1.25 to 1.0
(i) Numerator:
(A) net income = $
+(B) interest expense = $
+(C) DD&A = $
+(D) non-cash expenses
(other) = $
-(E) cash dividends = $
-(F) purchase of
treasury stock = $
(ii) Denominator:
(A) interest payments = $
+(B) principal payments
(other) = $
+(C) average daily
Loan Balance divide 6 = $ to 1.0
(d) Section 6.4: Sales of Assets
Permitted Actual
Not more than $500,000 $
3. No Material Adverse Effect has occurred since the date of the
Financial Statements dated as of .
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
ALAMCO, INC.
By:
Printed Name:
Title:
ALAMCO-DELAWARE, INC.
By:
Printed Name:
Title:
EXHIBIT III
DISCLOSURES
Sections 1.2, 4.5 & 4.15 Permitted Liens/Liabilities/Restrictions/Gas
Contracts
1. CNG Transmission Corporation ("CNG") has a lien recorded with the
Secretary of State of West Virginia at No. 293960 on November 17,
1989, with respect to approximately 114 ▇▇▇▇▇ and certain property
relating thereto located in West Virginia, which lien was granted
pursuant to the November 14, 1989 Contract Reformation Agreement
between Alamco, Inc. and CNG. Rights of CNG under the Contract
Reformation Agreement include delivery of quantities of gas by
Alamco, Inc. to CNG for which payment has already been made; the
right to receive gas for a certain period at a fixed price; the
right to suspend or reduce purchases of gas under certain
circumstances; the right of first refusal with respect to certain
gas; and other similar rights as set forth in said agreement. CNG's
lien on approximately 114 ▇▇▇▇▇ (Tallmansville) is subordinate only
to existing record liens and encumbrances in favor of Pittsburgh
National Bank ("PNB"). CNG's right to recoup gas terminates on the
earlier of (i) the date of full recoupment of the gas, and (ii)
January 1, 2000.
2. Alamco, Inc. is a party to three capital lease agreements with
▇▇▇▇▇▇▇▇ Corporation with respect to well equipment, referred to as
Programs 1, 2 and 3. Program 1 was entered into on December 21,
1982, Program 2 was entered into on August 1, 1983, Program 3 was
entered into on October 1, 1984, and all three were extended until
November 30, 2002. These agreements set forth various obligations
and rights. Certain rights of ▇▇▇▇▇▇▇▇ Corporation (including
payment) have been assigned to PNB. The ▇▇▇▇▇▇▇▇ Corporation lien,
recorded with the Secretary of State of West Virginia at No. 199085
on June 18, 1985, was subsequently continued by a filing by PNB on
May 7, 1990.
3. Union National Bank (now Bank One West Virginia) has a lien recorded
with the Secretary of State of West Virginia at No. 274303 which was
filed on January 18, 1989 and relates to a money market account.
4. Letters of credit and/or surety bonds issued in the ordinary course
of business to permit drilling and related activities, including,
but not limited to, (a) State of West Virginia, Letter of Credit No.
252-A for $50,000 against Royalty Owners Trust Certificate of
Deposit No. 2-23122-C at Bank One, Clarksburg, WV; (b) State of
Tennessee, Letters of Credit Nos. 271, 272, 280, 286, 327 and 330
totalling $46,800 against Royalty Owners Trust Certificate of
Deposit No. 2-23122-C at Bank One, Clarksburg, WV; (c) State of
Tennessee, Letters of Credit Nos. 343 and 344 totalling $20,000
against Royalty Owners Trust Money Market Account No. ▇▇-▇▇▇▇-▇ at
Bank One, Clarksburg, WV; and (d) State of West Virginia, Letters of
Credit Nos. 334 and 335 totalling $60,000 against Hawg Hauling
Checking Account No. ▇▇-▇▇▇▇-▇ at Bank One, Clarksburg, WV.
5. Alamco, Inc. maintains an account with ▇▇▇▇▇▇▇ ▇▇▇▇▇ Capital Markets
as security for a crude oil hedging account. To date, Alamco, Inc.
has not traded in the futures market but it may choose to do so in
the future.
6. Pursuant to contracts and other agreements, at times Alamco, Inc.
receives and holds funds on behalf of third parties, such as:
(a) Any cash held for royalty owners whose identity cannot be
determined. These funds are presently held in the Royalty
Owners Trust Account No. ▇▇-▇▇▇▇-▇ and Royalty Owners Trust
Certificate of Deposit No. 2-19983-C at Bank One, Clarksburg,
West Virginia.
(b) Any cash received from drilling partners to fund drilling
operations. These funds are held in segregated drilling fund
accounts.
(c) Cash held by the Company from gas and oil proceeds relative to
outside working interest and royalty owners.
(d) Any cash the Company may hold relating to litigation
settlements. Alamco currently is holding cash paid under the
1989 Contract Reformation Agreement with CNG relating to the
outside working interest owners' share of the Tallmansville
prepayment funds and will distribute such funds as CNG recoups
the affected volumes of gas.
(e) Any cash relative to West Virginia income tax withholding from
nonresident partners.
(f) Any cash relating to employee contributions in the Alamco,
Inc. Cafeteria Plan.
7. Pursuant to contracts and other agreements, Alamco, Inc. is
obligated to make payments of certain royalty and overriding royalty
interests, whether or not these instruments are recorded. In
addition, pursuant to certain farmout agreements, Alamco, Inc. is
obligated to make payments to third parties.
8. Alamco, Inc. has obligations with respect to the following PNC notes
which Alamco, Inc. assumed as a result of settlement of certain
lawsuits:
(a) The note in the principal amount of $60,000 bears interest at
the PNC prime interest rate. Monthly payments are due on the
15th of each month, the amount of which is tied to proceeds
from distribution by a partnership. Any remaining balance is
due on September 1, 1995.
(b) The note in the principal amount of $55,500 bears interest at
10%, which interest is to be paid only if an event of default
occurs. Annual payments of $5,500 are to be made on December
1 of each year beginning on December 12, 1990.
(c) The note in the principal amount of $63,000 bears interest at
10%, which interest is to be paid only if a default occurs.
Annual payments of $6,300 are to be made on December 1 of each
year beginning with a payment on December 1, 1990.
(d) The note in the principal amount of $75,000 bears interest at
10%, which interest is to be paid only if a default occurs.
Annual payments of $7,500 are to be made on December 1 of each
year beginning with a payment on December 1, 1990.
(e) The note in the principal amount of $263,000 bears interest at
the PNC prime interest rate. Payments are due in quarterly
installments, in amounts equal to accrued interest plus 1/20
of the face value of the note, beginning on April 1, 1991 and
on the first day of each July, October, January and April
thereafter until repaid in full. All amounts outstanding are
due on January 1, 1996.
9. Liabilities disclosed on Alamco, Inc.'s December 31, 1994
consolidated financial statements which were sent to Bank One,
Texas, National Association by Alamco, Inc.
Section 4.5 Litigation
1. Columbia Gas Transmission Corporation v. Alamco, Inc., et al., Cir.
Ct. of ▇▇▇▇▇▇▇▇ Cty., WV, C.A. No. 88-C-38-2. On January 19, 1988,
Columbia Gas Transmission Corporation filed this action requesting a
judicial declaration of the correct interpretation of a provision of
a 1983 gas purchase agreement requiring Columbia to resume
purchasing gas from the Company in 1986. In this action, the
Company seeks compensatory damages from Columbia for failing to
resume such purchases in 1986 in accordance with the Company's
interpretation of the disputed contract provision.
2. Alamco, Inc. v. Columbia Gas Systems, Inc., et al., U.S. Dist. Ct.,
N.D. WV, C.A. No. 90-0097-C. In early September 1990, the Company
filed a complaint in federal district court against Columbia Gas
Systems, Inc. and its subsidiaries alleging, among other things,
monopolization, attempted monopolization, monopoly leveraging and
illegal tying in connection with Columbia's refusal to provide
transportation to the Company on reasonable and non-discriminatory
terms for the period from 1983 to 1986 which Columbia used as
leverage to attempt to reduce the price payable by Columbia for gas
produced by the Company since 1986. The Company seeks compensatory
damages, trebled as provided under the federal antitrust laws.
3. Under a June 8, 1992 settlement agreement with Columbia, the Company
has agreed to stay pending litigation in state and federal court in
West Virginia and to terminate such litigation upon Columbia's
adoption of a plan of reorganization implementing the terms of the
settlement agreement.
Section 4.10 Environmental Matters
On May 23, 1994, the United States Environmental Projection Agency (the
"EPA") issued an administrative complaint against the Company for alleged
violations of the Clean Water Act resulting from an oil discharge at the
Company's Days Chapel Field in Claiborne County, Tennessee. The incident
occurred in December 1993 when vandals severed locks securing the valves
on the Company's oil storage tanks and discharged approximately 174
barrels of oil into a local creek. The EPA has proposed that penalties of
nearly $124,000 be assessed against the Company. However, the Company
contends that the asserted penalties exceed statutorily authorized
limits. Settlement negotiations are ongoing and the Company believes that,
due to meritorious defenses, any final penalties will be substantially
less than those proposed although no assurances can be given as to the
exact amount of any final penalties.
Section 4.14 Refunds
Section 4.17 Casualties
Section 6.2 Contingent Obligations
None, except as disclosed on 1994 10-K
Section 6.5 Loans or Advances
Alamco, Inc. loaned $271,950 to Interstate Production Company ("IPC") on
March 1, 1994 relative to IPC's purchase of Interstate Resources, Inc.
("IRI"), operating rights for providing well tending services to certain
▇▇▇▇▇, certain leases and certain claims against "non-settled investors"
from settlements pertaining to investor-related lawsuits with PNC. The
loan is to be amortized over a seven year period with constant principal
payments. The interest on the note is 10.00 percent per annum fixed.