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EXHIBIT 4.66
CREDIT AGREEMENT
Among
TIPPERARY CORPORATION,
as Borrower,
TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD, (ACN 077 536 871)
as Guarantor,
TIPPERARY OIL & GAS CORPORATION,
TCW DEBT & ROYALTY FUND VI, L.P.
and
the other
LENDERS
party hereto,
and
TCW ASSET MANAGEMENT COMPANY,
in the capacities described herein
$17,000,000
Dated as of
April 28, 2000
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TABLE OF CONTENTS
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Article 1 DEFINITIONS AND ACCOUNTING MATTERS.....................................................................1
Section 1.1 Defined Term..........................................................................1
Section 1.2 Accounting Terms and Determinations..................................................21
Section 1.3 Interpretation.......................................................................22
Article 2 LOANS.................................................................................................22
Section 2.1 Loan Advances........................................................................22
Section 2.2 The Notes............................................................................22
Section 2.3 Request for Advances.................................................................23
Section 2.4 Use of Proceeds......................................................................23
Section 2.5 Coupon Interest......................................................................24
Section 2.6 Accrual and Payment of Coupon Interest...............................................24
Section 2.7 Computation of Interest..............................................................24
Section 2.8 Payment of Principal; Quarterly Payments.............................................25
Section 2.9 Prepayment...........................................................................26
Section 2.10 General Payment Provision............................................................27
Section 2.11 Yield Adjustment Payment.............................................................28
Section 2.12 Collateral Accounts..................................................................28
Article 3 CONDITIONS PRECEDENT TO LENDING.......................................................................30
Section 3.1 Conditions Precedent to Initial Loan Advance.........................................30
Section 3.2 Conditions Precedent to Any Advance..................................................32
Section 3.3 Special Conditions Precedent for an Additional Loan Advance..........................33
Section 3.4 Special Condition to Any Advance.....................................................34
Article 4 REPRESENTATIONS AND WARRANTIES........................................................................34
Section 4.1 Representations and Warranties of Borrower, TOGC and TOGA............................34
Section 4.2 Representations of the Lenders, the Collateral Agent and the Agent...................41
Article 5 COVENANTS OF BORROWER AND TOGA........................................................................42
Section 5.1 Affirmative Covenants................................................................42
Section 5.2 Negative Covenants...................................................................53
Section 5.3 Coverage Ratio.......................................................................55
Article 6 SECURITY..............................................................................................56
Section 6.1 The Security.........................................................................56
Section 6.2 Agreement to Deliver Security Documents..............................................56
Section 6.3 Perfection and Protection of Security Interests and Liens............................56
Section 6.4 Appointment of Agent and Collateral Agent............................................57
Article 7 EVENTS OF DEFAULT AND REMEDIES........................................................................60
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Section 7.1 Events of Default....................................................................60
Section 7.2 Remedies.............................................................................63
Section 7.3 Indemnity............................................................................64
Article 8 MISCELLANEOUS.........................................................................................64
Section 8.1 Waivers and Amendments; Acknowledgment...............................................64
Section 8.2 Survival of Agreements; Cumulative Nature............................................66
Section 8.3 Notices..............................................................................66
Section 8.4 Parties in Interest..................................................................68
Section 8.5 Governing Law; Submission to Process.................................................68
Section 8.6 Limitation on Interest...............................................................68
Section 8.7 Survival.............................................................................69
Section 8.8 Severability.........................................................................69
Section 8.9 Counterparts.........................................................................70
Section 8.10 Waiver of Jury Trial, Punitive Damages, Etc..........................................70
Section 8.11 Exhibits and Schedules; Additional Definitions.......................................70
Section 8.12 Confidentiality of Holders...........................................................70
Section 8.13 Transfer of Notes....................................................................71
Section 8.14 Reproduction of Documents............................................................71
Section 8.15 Currency in Which Payments Shall Be Made.............................................72
Section 8.16 Judgments in Other Than Dollars......................................................72
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Exhibits:
Exhibit A - Form of Australian Charge
Exhibit B - Form of Collateral Account Agreement
Exhibit C - Form of Guarantee Agreement
Exhibit D - Form of TC Pledge and Security Agreement
Exhibit E - Form of Royalty Agreement
Exhibit F - Form of TOGA Security Agreement
Exhibit G - Intentionally Deleted
Exhibit H - Form of Subordination Agreement
Exhibit I - Form of TOGA-Borrower Management Agreement
Exhibit J - Form of TOGC Security Agreement
Exhibit K - Form of Senior Secured Promissory Note
Exhibit L - Form of Request for Initial Loan Advance
Exhibit M - Form of Request for Additional Loan Advance
Exhibit N - Form of Term Sheet for Participant Loans
Exhibit O - Form of Form of Letter Directing Payment to
Collateral Account
Exhibit P - Form of Omnibus Certificate of Secretary
Exhibit Q - Form of Compliance Certificate
Exhibit R-1 - Form of Opinion of Australian counsel
Exhibit R-2 - Form of Opinion of Texas counsel
Exhibit R-3 - Form of Opinion of New York counsel
Exhibit S - Form of Collateral Properties
Exhibit T - Form of Supplement to Royalty Agreement
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Schedules:
Schedule 1 - Disclosure Schedule
Schedule 2 - List of Lenders
Schedule 3 - Holders' Individual Note Amounts/Pro Rata Shares
Schedule 4 - Security Schedule
Schedule 5 - Payment Accounts
Schedule 6 - Insurance
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT ("AGREEMENT") is entered into as of
April 28, 2000, by:
TIPPERARY CORPORATION, a Texas corporation ("BORROWER");
TIPPERARY OIL & GAS (AUSTRALIA) PTY. LTD (ACN 077 536 871), a
Queensland, Australia corporation ("TOGA");
TIPPERARY OIL & GAS CORPORATION, a Texas corporation ("TOGC");
LENDERS (as defined below) that are party hereto;
TCW ASSET MANAGEMENT COMPANY, a California corporation
("TAMCO"), as Agent (as defined below); and
TAMCO, as Collateral Agent (as defined below).
RECITALS:
A. Borrower owns all of the outstanding stock of TOGC, which in turn
owns ninety percent (90%) of the outstanding stock of TOGA. The remaining ten
percent (10%) of the outstanding stock of TOGA is owned by Slough Estates USA
Inc.
B. Borrower seeks to provide funds to TOGA to assist TOGA in (i)
refinancing certain existing debt, (ii) continuing the development of Comet
Ridge Project (as defined below) and (iii) obtaining additional working capital.
C. Borrower desires to obtain loans from Lenders in the aggregate
principal amount of up to Seventeen Million and 00/100 Dollars ($17,000,000) for
the purpose of financing the activities described in Recital B above and herein
and other related activities.
D. Lenders are willing to make such loans to Borrower on the terms
herein.
NOW THEREFORE, in consideration of the mutual covenants and agreements
contained herein, and other good and valuable consideration the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:
Article 1
DEFINITIONS AND ACCOUNTING MATTERS
Section 1.1 DEFINED TERM. As used with capital letters in this
Agreement, each of the following terms has the meaning given in this Section 1.1
or in the Sections referred to below:
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"ADDITIONAL ADVANCE FUNDING DATE" means the date on which the
Lenders fund any Additional Loan Advance pursuant to the provisions in Section
2.1(b).
"ADDITIONAL LOAN ADVANCE" has the meaning given in Section
2.1.
"ADJUSTED INVESTMENT" means the sum, at the time in question,
of:
(i) the outstanding principal Obligations under the
Notes; plus
(ii) any past due payments owing for fifteen (15)
days or more under this Agreement (including interest and un-reimbursed
professional fees and other advances, expenses and costs payable by a
Related Person hereunder) and under any Royalty Document; plus
(iii) all lessor royalties or similar burdens on the
Collateral which remain unpaid for thirty (30) days beyond the terms
contained in the applicable leases (other than disputed royalties for
which designated cash reserves have been set aside); plus
(iv) the absolute value of TOGA's Working Capital,
but only in the event the Working Capital is negative.
"ADVANCE" means an Initial Loan Advance or an Additional Loan
Advance.
"AFFILIATE" of a specified Person means:
(i) any other Person directly or indirectly owning,
controlling or holding with power to vote 10% or more of the
outstanding voting securities of the specified Person;
(ii) any other Person 10% or more of whose
outstanding voting securities are directly or indirectly owned,
controlled or held with power to vote by the specified Person;
(iii) any other Person directly or indirectly
controlling, controlled by or under common control with the specified
Person; or
(iv) any officer, director, partner or sanguineous or
affined kin of the specified Person or of any other Person described in
clause (iii) above.
As used herein the term `control' means possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of a Person whether through the direct or indirect ownership of
partnership interests, voting securities or other equity interests, or
otherwise.
The preceding sentence notwithstanding, for purposes of the
Loan Documents, Trustco, TAMCO and the Lenders shall be deemed not to be
"Affiliates" of Borrower.
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"AFFILIATE PAYMENTS" means any payments or transfers of any
kind directly or indirectly made to any of Borrower's Affiliates, whether as (i)
distributions, (ii) purchases or redemptions of equity interests in Borrower,
(iii) repayments of any loans from Affiliates, (iv) loans, investments or
advances made from or to Affiliates, or (v) purchases of properties, goods or
services from Affiliates, including without limitation, the payment of
Management Fees by TOGA to either TOGC or Borrower.
"AGENT" has the meaning given in Section 6.4(a).
"AGREEMENT" has the meaning given in the preamble hereto.
"ANCF" (or "ADJUSTED NET CASH FLOW") means, with respect to a
period, the sum of:
(1) the positive difference of:
(i) Project Gross Cash Revenues during any
Calculation Period (or other period of calculation, if
applicable),
less
(ii) Actual payments by either Borrower or TOGA
during such Calculation Period (or other period of
calculation, if applicable), of
(A) Lessor royalties and other burdens on production
existing as of the Closing Date with respect to the
Project Properties and Royalties;
(B) Direct Taxes with respect to the Project Properties;
(C) Coupon Interest on the Notes (reduced by payments of
coupon interest received with respect to the
Participant Loans) and payment of other Obligations
under the Loan Documents (other than Principal
Payments or payments of Late Payment Interest); and
(D) Approved LOE, Approved G&A Costs, Approved Capital
Expenditures and Approved Third Party Costs incurred
in connection with the Project to the extent and only
to the extent such amounts exceed (and are not funded
directly or indirectly by) the proceeds of Advances
(excluding Advances used to make Participant Loans)
and/or the $3,500,000 capital contribution to TOGA
pursuant to Section 3.1(a)(xv).
plus
(2) Net TOGA Non-Project Cash Flow.
"APPROVED" means approved in writing by the Agent.
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"APPROVED CAPITAL EXPENDITURES" means, for any period, Capital
Expenditures made or to be made by or on behalf of TOGA which (i) are included
in the Approved Plan of Development or (ii) otherwise Approved specifically as
"Approved Capital Expenditures" by Agent in its sole and absolute discretion.
"APPROVED G&A COSTS" means G&A Costs Approved specifically as
Approved G&A Costs (rather than Permitted G&A Costs) by Agent in its sole and
absolute discretion. The Approved G&A Costs will be $0 per annum until otherwise
approved by the Agent.
"APPROVED PLAN OF DEVELOPMENT" means TOGA's plan of
development for the Subject Properties that describes, among other things: (i)
the expenditures and improvements necessary to develop the Project Properties,
(ii) the timetable for such development, and (iii) the sources of capital
(including but not limited to the Advances) to be used for such development, all
as revised and Approved annually by December 1 of each year.
"AUSTRALIAN CHARGE DOCUMENT" means that Fixed and Floating
Charge between TOGA and Collateral Agent in substantially the form attached
hereto as Exhibit A.
"AUSTRALIAN WITHHOLDING TAXES" means Australian withholding
tax on amounts paid pursuant to this Agreement, the other Loan Documents or the
Project Documents under applicable Australian Governmental Rules.
"BANK DEBT" means the Debt owed by Borrower to U.S. Bank N.A.
under the Revolving Credit Agreement between Central Bank National Association,
TOGA, Borrower and Tipperary Petroleum Company dated March 30, 1992, as amended
as of the date thereof.
"BORROWER" has the meaning given in the preamble hereto.
"BORROWER/TOGC COLLATERAL ACCOUNT" means that certain lockbox
account established with a bank Approved by Agent in its sole discretion
pursuant to the Borrower/TOGC Collateral Account Agreement, or any other lockbox
account established pursuant to a replacement Collateral Account Agreement.
"BORROWER/TOGC COLLATERAL ACCOUNT AGREEMENT" means that
certain Collateral Account Agreement among Borrower, TOGA, the Lenders and a
bank Approved by Agent in its sole discretion, as amended from time to time or
as replaced by any other Collateral Account Agreement from time to time.
"BUSINESS DAY" means a day, other than a Saturday, Sunday or
legal holiday on which commercial banks are authorized or obligated by law or
executive order to close in either the City of New York, State of New York,
U.S.A. or the City of Brisbane, Queensland, Australia.
"CALCULATION PERIOD" means a three month period consisting of
any December through February, any March through May, any June through August,
and any September through November.
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"CALENDAR MONTH" means any of January, February, March, April,
May, June, July, August, September, October, November or December.
"CALENDAR QUARTER" means a three Calendar Month period ending
on March 31, June 30, September 30 or December 31 of any year.
"CALENDAR YEAR" means a twelve Calendar Month period ending on
December 31 of any year.
"CAPITAL EXPENDITURES" shall mean, for any period,
expenditures made or to be made for the drilling and completion of any wells on
the properties in the Collateral, including new drilling, completion, production
facilities, lifting equipment, gathering systems, workovers, redrilling
recompletions and stimulation or other similar types of oil and gas field
operations.
"CHANGE IN CONTROL" means with respect to TOGA, Borrower no
longer owns, directly or indirectly, at least seventy percent (70%) of the
issued and outstanding voting equity interests, on a fully diluted basis of TOGA
and at least (70%) of the issued and outstanding non-voting equity interests, on
a fully diluted basis of TOGA.
"CLOSING" or "CLOSING DATE" means the date hereof.
"COLLATERAL" means all Property of any kind which is subject
to a Lien in favor of Holders or Collateral Agent or which, under the terms of
any Security Document, is purported or intended to be subject to such a Lien.
"COLLATERAL ACCOUNTS" means the Borrower/TOGC Collateral
Account, the TOGA Dollar Collateral Account and the TOGA Australian Collateral
Account.
"COLLATERAL ACCOUNT AGREEMENTS" means the Borrower/TOGC
Collateral Account Agreement, the TOGA Dollar Collateral Account Agreement and
the TOGA Australian Collateral Account Agreement each in substantially the form
attached hereto as Exhibit B, as may be modified in the sole and absolute
discretion of the Agent.
"COLLATERAL AGENT" has the meaning given in Section 6.4(b).
"COLLATERAL PROPERTIES" has the meaning given in Section
4.1(t).
"COMET RIDGE PROJECT" means the exploration and development
for the recovery of, and production of Hydrocarbons from lands originally
covered by Authority To Prospect Number 526P, including but not limited to all
Property, leases and other interests in connection with such land whether
acquired by assignment or by operation of the Project JOA due to
non-participation of certain parties thereto.
"COMMISSION" means the United States Securities and Exchange
Commission.
"COMMITMENT PERIOD" means the period from and including the
date hereof until the Funding Expiry Date.
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"COUPON INTEREST" has the meaning given in Section 2.5.
"COVERAGE DEFAULT" means that the Coverage Ratio is less than
125%.
"COVERAGE DEFICIENCY" means that the Coverage Ratio is less
than 150%.
"COVERAGE RATIO" has the meaning given in Section 5.3.
"DEBT" means, as to any Person at any date, all or any,
indebtedness, liabilities and obligations of such Person, whether matured or
unmatured, liquidated or unliquidated, primary or secondary, direct or indirect,
absolute, fixed or contingent, and whether or not required to be considered
pursuant to GAAP and includes indebtedness, liabilities or obligations
guaranteed by such Person.
"DEDICATION RATE" means 80%, provided that the Dedication Rate
will automatically increase to 100% whenever (a) an Event of Default exists, or
(b) a Coverage Deficiency occurs and Borrower does not cure such Coverage
Deficiency within one month thereafter.
"DEFAULT" means any Coverage Default, any Event of Default,
and any default, event or condition which would, with the giving of any
requisite notices and the passage of any requisite periods of time, constitute
an Event of Default without regard to whether such required notices have been
given or such required grace periods have expired.
"DIRECT TAXES" means production, severance, ad valorem, excise
or other taxes or governmental charges or assessments on (i) the Eligible Proved
Properties, (ii) the production therefrom or (iii) the proceeds of such
production, but excluding any income or franchise taxes.
"DISCLOSURE SCHEDULE" means (i) Schedule 1 and (ii) any
documents listed on such schedule and expressly incorporated therein by
reference, so long as Borrower or TOGA has heretofore delivered true and correct
copies of such documents to the Lenders. Insofar as any representations and
warranties made herein are incorporated by reference or otherwise remade in Loan
Documents delivered as of a date after the date hereof, the term "Disclosure
Schedule" shall in such representations and warranties be deemed to refer as
well to all other documents which Borrower or TOGA has at the time in question
delivered to the Lenders in the manner prescribed for the delivery of notices in
Section 8.3 if and only if Borrower or TOGA shall have delivered to the Lenders
a written notice expressly stating that the same shall be added to and become a
part of the "Disclosure Schedule."
"DOLLARS" or "$" means the lawful and official currency of the
United States of America.
"ELIGIBLE PROVED PROPERTY" means an oil and gas property which
at the particular time in question (i) is either owned by TOGA or a Comet Ridge
Participant and subject to the enforceable contract or other rights of TOGA or a
Comet Ridge Participant under the Project JOA which entitle it to its
proportional share of Hydrocarbon production therefrom; (ii) is subject to
registered Australian Charge Documents and filed Security Documents or to
registered and filed Participant Loan Documents in each case which create
perfected first security interests in
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such property or rights in favor of Collateral Agent; (iii) is not subject to
forfeiture under the Project JOA or any other Project Documents; (iv) is not
subject to any Prohibited Liens; and (v) is the subject of favorable title
opinions or other assurance to Lenders from legal counsel acceptable to Agent,
(A) based upon abstract or record examinations to dates acceptable to Agent, (B)
stating or advising that TOGA or a Comet Ridge Participant, as the case may be,
or the source of title of TOGA or a Comet Ridge Participant, has good and
marketable title to such property and that it is subject to no Prohibited Liens,
and (C) covering such other matters as Agent may reasonably request.
"ENGINEERING REPORT" means (i) the Initial Engineering Report
and (ii) any engineering report to be delivered to the Lenders pursuant to
Section 5.1(b)(vii).
"ENVIRONMENTAL LAWS" means any and all federal, state, local
and foreign statutes, laws, regulations, ordinances, rules, judgments, orders,
decrees, permits, concessions, grants, franchises, licenses, agreements or other
Governmental Rules relating to the environment or to emissions, discharges,
releases or threatened releases of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes into the environment
including ambient air, surface water, ground water, or land, or otherwise
relating to the manufacture, processing, distribution, use, treatment, storage,
disposal, transport, or handling of pollutants, contaminants, chemicals, or
industrial, toxic or hazardous substances or wastes.
"ENVIRONMENTAL REPORT" means an environmental report that
satisfies the same terms and conditions as the Initial Environmental Report.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, together with all rules and regulations
promulgated with respect thereto.
"ERISA PLAN" means any pension benefit plan subject to Title
IV of ERISA maintained by any Related Person or any Affiliate thereof with
respect to which Borrower has any fixed or contingent liability.
"EVENT OF DEFAULT" has the meaning given in Section 7.1.
"EXCESS ANCF" means, with respect to a period, the positive
difference of (i) ANCF for that period, less (ii) the Principal Payment for such
period.
"FUNDED AMOUNT" means, as of any date of calculation thereof
the aggregate original principal amount of all Advances made as of such date.
"FUNDING EXPIRY DATE" means the earliest to occur of:
an Event of Default;
March 31, 2001; or
a Coverage Deficiency.
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"GAAP" means, with respect to Borrower and TOGA and any
Related Person domiciled in the United States, those generally accepted
accounting principles and practices which are recognized as such by the
Financial Accounting Standards Board (or any generally recognized successor) in
the United States.
"G&A COSTS" means all overhead and administrative costs paid
by or on behalf of TOGA.
"GOVERNMENTAL APPROVAL" means any authorization, consent,
decree, permit, privilege, approval, certificate, license, lease, ruling,
permit, waiver, exemption, filing, registration or notice by or with any
Governmental Person necessary for the maintenance and operation of the Project,
the ongoing operation of the Borrower or TOGA and the execution of and
performance of the Borrower's and TOGA's obligations under the Loan Documents.
"GOVERNMENTAL PERSON" means for any country, such country and
its government and any international, national (Federal or foreign), state or
local government, any political subdivision or any governmental,
quasi-governmental, judicial, public or statutory instrumentality, authority,
corporation or commission, court, agency, body or entity under the direct or
indirect control of such country.
"GOVERNMENTAL RULE" means:
(i) any statute, constitutional provision, law, rule,
regulation, ordinance, order, code, judgment, decree, directive,
guideline, permit or policy by a Governmental Person; or
(ii) any similar form of decision, interpretation or
administration by a Governmental Person having the force of law of the
foregoing in clause (i) above, whether in effect as the date of this
Agreement or thereafter and in each case as amended (including without
limitation, all Environmental Laws and any of the foregoing pertaining
to land use or zoning restrictions).
"GROSS PROCEEDS" shall have the meaning ascribed thereto in
the Royalty Agreement.
"GUARANTEE AGREEMENT" means that certain Guarantee Agreement
in substantially the same form as Exhibit C among TOGA, Agent and Collateral
Agent.
"HAZARDOUS MATERIALS" means any substances which are regulated
or could lead to liability under any Environmental Law, whether as pollutants,
contaminants, or chemicals, or as industrial, toxic or hazardous substances or
wastes, or otherwise.
"HIGHEST LAWFUL RATE" means the maximum non-usurious rate of
interest that the Lenders or Holders are permitted under applicable law to
contract for, take, charge, or receive with respect to the Obligation in
question.
"HOLDERS" means the holders of the Notes from time to time.
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"HYDROCARBONS" shall have the meaning ascribed thereto in the
Royalty Agreement.
"INDEMNITORS" means, collectively, Borrower, TOGA and all
subsidiaries of TOGA, if any.
"INDEPENDENT ENGINEERING REPORT" means any Engineering Report
prepared by an Independent Engineer.
"INDEPENDENT ENGINEERS" means S. A. Holditch & Associates or
other independent petroleum reserve engineers acceptable to both Borrower and
Agent.
"INITIAL AMORTIZATION DATE" means the first Quarterly Payment
Date to occur after Closing.
"INITIAL ENGINEERING REPORT" means the engineering report
dated October 29, 1999 prepared by S.A. Holditch & Associates evaluating the
Subject Properties.
"INITIAL ENVIRONMENTAL REPORT" has the meaning given thereto
in Section 3.1(x).
"INITIAL FINANCIAL STATEMENTS" means the unaudited financial
statements of Borrower and TOGA dated as of March 31, 2000, including the notes
thereto.
"INITIAL FUNDING DATE" means the date on which the Lenders
fund the Initial Loan Advance pursuant to the provisions of Section 2.1.
"INITIAL LOAN ADVANCE" has the meaning given in Section 2.1.
"INTER-COMPANY DEBT" means any Debt i) owed by TOGA to
Borrower, ii) owed by TOGA to TOGC or iii) owed by TOGC to Borrower in each case
whether or not such Debt is evidenced by a promissory note.
"JOA PROPERTY" means the Authority to Prospect 526P issued
under the Petroleum Act 1923 (Qld) and any tenement or other land to which the
Project JOA applies.
"LANDS" has the meaning given in Section 5.1(m).
"LATE PAYMENT RATE" means, at the time in question, the lesser
of (i) fourteen percent (14%) per annum or (ii) the Highest Lawful Rate.
"LATE PAYMENT RATE INTEREST" means any interest accrued at the
Late Payment Rate.
"LENDERS" means the entities set forth on Schedule 2 attached
hereto which have executed a counterpart hereof.
"LIEN" means, with respect to any Property, any right or
interest therein of a creditor to secure Debt owed to him or any other
arrangement with such creditor which provides for the payment of such Debt out
of such Property or which allows him to have such Debt
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satisfied out of such Property prior to the general creditors of any owner
thereof, including any lien, mortgage, security interest, pledge, deposit,
production payment, rights of a vendor under any title retention or conditional
sale agreement or lease substantially equivalent thereto, right of recoupment
under a gas balancing agreement, tax lien, mechanic's or materialman's lien, or
any other charge or encumbrance for security purposes, whether arising by law or
agreement or otherwise, but excluding any right of offset which arises without
agreement in the ordinary course of business. "Lien" also means any filed
financing statement, any registration of a pledge (such as with an issuer of
unregistered securities), or any other arrangement or action which would serve
to perfect a Lien described in the preceding sentence, regardless of whether
such financing statement is filed, such registration is made, or such
arrangement or action is undertaken before or after such Lien exists.
"LOANS" means the loans contemplated hereby.
"LOAN DOCUMENTS" means this Agreement, the Notes, the Security
Documents, the Royalty Agreement, the Guarantee Agreement and all other
agreements, certificates, documents, instruments and writings at any time
delivered in connection with the Loans (exclusive of the term sheets, commitment
letters, correspondence and similar documents used in the negotiation hereof,
except to the extent the same contain information about Borrower or its
Affiliates or their properties, business or prospects and such information is
the subject of a written representation or certificate upon which the Lenders
shall rely).
"LOE" means leasehold operating expenses and other field level
or lease level charges for operations on the properties of TOGA included within
the Collateral including overhead charges of a third party operator under the
Project JOA.
"MANAGEMENT FEES" shall mean management fees payable pursuant
to the TOGA-Borrower Management Agreement.
"MATERIAL ADVERSE EFFECT" shall mean a material adverse effect
on any of the following (determined, with respect to any event, occurrence,
circumstance or condition by reference to the situation which would have been in
effect without the occurrence of such event, occurrence, circumstance or
condition):
(a) the Property, the Project, the business,
operations, condition (financial or otherwise), liabilities or
capitalization of Borrower or any Related Persons taken as a whole,
which adversely affects the ability of Borrower or the Related Persons
to perform in a timely manner its and their material obligations under
any Loan Document and any Project Document;
(b) the validity or enforceability of any of the Loan
Documents and Project Documents;
(c) the availability of any material Governmental
Approval (in whole or in material part) as shall then or thereafter be
necessary to be obtained under applicable Governmental Rules in
connection with the development, financing, construction, operation,
expansion and ownership of the Project which adversely affects
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the ability of Borrower and the Related Persons to perform its and
their material obligations under any Loan Document or any Project
Document;
(d) the validity or enforceability of any of the
material rights, remedies, powers and privileges of any Lender, Holder,
Agent or Collateral Agent under the Loan Documents; or
(e) the validity or enforceability of the Liens on
any material item of Collateral under any of the Security Documents.
"MATURITY DATE" means March 30, 2006.
"MODIFIED NPV10" means the sum of:
(i) with respect to any Proved Developed Producing
Reserves attributable to the Eligible Proved Properties, NPV10 of a
percentage between 90% and 100% of such Reserves, as such percentage is
chosen by Agent in its sole and absolute discretion; plus
(ii) with respect to any Proved Developed
Non-Producing Reserves attributable to the Eligible Proved Properties,
NPV10 of a percentage between 70% and 90% of such Reserves, as such
percentage is chosen by Agent in its sole and absolute discretion; plus
(iii) with respect to any Proved Undeveloped Reserves
attributable to the Eligible Proved Properties, NPV10 of a percentage
between 70% and 90% of such Reserves, as such percentage is chosen by
Agent in its sole and absolute discretion;
provided, however, that the Modified NPV10 for any particular Proved
Developed Non-Producing Reserves or Proved Undeveloped Reserves shall
be zero (0) unless capital expenditures for the development of such
Reserves, in at least the amounts required pursuant to the most recent
Engineering Report, have been scheduled and such capital is reasonably
expected to be available from Advances or as a deduction from ANCF as
Approved Capital Expenditures.
"NET TOGA NON-PROJECT CASH FLOW" means the positive difference
of:
(i) Non-Project TOGA Gross Cash Revenues during any
Calculation Period (or other period of calculation, if applicable),
less
(ii) Actual payments by TOGA during such Calculation
Period (or other period of calculation, if applicable), of
(A) Lessor royalties and other burdens on production
payable to parties other than Affiliates of Borrower
with respect to the Non-Project Properties and
Royalties;
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(B) Direct Taxes with respect to the Non-Project
Properties;
(C) Permitted LOE, Permitted G&A Costs (excluding any
Management Fees), Permitted Capital Expenditures and
Permitted Third Party Costs, in each case, incurred
in connection with the Non-Project Properties to the
extent, and only to the extent, not funded by either
capital contributions or advances of Inter-company
Debt to TOGA.
"NON-PROJECT PROPERTIES" means all Properties of TOGA that are
not Project Properties.
"NON-PROJECT TOGA GROSS CASH REVENUES" means all cash and
non-monetary revenues and receipts (excluding accounts receivable and other
accruals) received by or on behalf of TOGA (without duplication) from or in any
way relating to the Non-Project Properties or by or on behalf of TOGA from any
other source, including without limitation interest or other earnings received
in respect of all invested funds and insurance proceeds but excluding cash
receipts from (a) sales of any portion of the Collateral approved by Agent which
are used to make a mandatory prepayment of principal pursuant to Section 2.9,
(b) an Approved refinancing of the Loans which are used to make a mandatory
prepayment of principal pursuant to Section 2.9(b)(ii), and (c) insurance
proceeds necessary and used to replace or repair Non-Project assets.
"NOTES" has the meaning given in Section 2.2.
"NPV10" means with respect to any Proved Reserves expected to
be produced from the Eligible Proved Properties, the net present value of the
future net revenues expected to accrue to TOGA's interests in such Reserves
during the remaining expected economic lives of such Reserves, discounted at 10%
per annum. Each calculation of such expected future net revenues shall be made
as of the date when requested in accordance with the then existing standards of
the Society of Petroleum Engineers, provided that in any event:
(i) appropriate deductions shall be made for (A)
Direct Taxes and existing burdens that are Permitted Liens (excluding,
however, the Royalty), (B) LOE, (C) Third Party Costs, and (D) Capital
Expenditures (including plugging and abandonment costs), all consistent
with the most recent Engineering Report; and
(ii) the pricing assumptions used in determining
NPV10 for any particular Proved Reserves shall be:
(A) the contract price, if any, during the term
of any written oil and gas sales contract with respect to such
Proved Reserves between Borrower or TOGA and unrelated
Persons; or
(B) if no sales contract exists:
(I) for volumes of oil and gas swapped
or hedged with investment grade
counter parties, the hedged price
net of any costs, expenses or
deductions relating thereto; and
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(II) for "naked" or long unhedged
volumes, the lower of the last
twelve (12)-month average of prices
actually received or the last six
(6)-month average of prices
actually received.
"OBLIGATIONS" means the sum of all Debt from time to time
owing by Related Persons to the Holders, the Lenders, Collateral Agent or Agent
under or pursuant to any of the Loan Documents. "OBLIGATION" means any part of
the Obligations.
"OWNED PROPERTIES" means TOGA's interest in Authorities to
Prospect 655P and 675P issued under the Petroleum Act 1923 (Qld) and any other
interest which TOGA has in and which is intended to be used for the purpose of
exploration or extraction of Hydrocarbons.
"PARTICIPANT LOANS" shall have the meaning given hereto in
Section 2.4(c).
"PARTICIPANT LOAN DOCUMENTS" shall have the meaning given
hereto in Section 2.4(c).
"PARTICIPANT ROYALTY DOCUMENTS" shall have the meaning given
hereto in Section 2.4(c).
"PERMITTED BORROWER PAYMENTS" means any payment made by TOGA
to Borrower or TOGA whether as a distribution, as a payment of Approved
Management Fees or otherwise, which shall be used by Borrower for the payment of
the Obligations, provided, however, that no payment shall be a Permitted
Borrower Payment if it shall have the effect of reducing the outstanding
Inter-company Debt of TOGA to an amount less than an amount Approved by the
Agent.
"PERMITTED CAPITAL EXPENDITURES" means, for any period,
Approved Capital Expenditures and Capital Expenditures made or to be made by or
on behalf of TOGA which are funded by either capital contributions or advances
of Inter-company Debt to TOGA from Borrower or TOGC including such contributions
or advances by Borrower using proceeds of any Advance.
"PERMITTED DEBT" means, without duplication:
(i) Obligations owing to the Lenders, Holders, Agent
or Collateral Agent created pursuant to the Loan Documents;
(ii) liabilities for taxes, assessments, governmental
charges or levies which are being contested in good faith with cash
reserves established pursuant to GAAP;
(iii) tax liabilities of TOGA, if any, arising as a
result of the filing of TOGA's tax return;
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<PAGE> 18
Inter-company Debt which is (a) pledged to the
Collateral Agent pursuant to the Pledge and Security Agreement and (b)
subordinated to the Obligations in a manner acceptable to Agent; and
Currency hedging contracts relating to the net cash
flows from TOGA's oil and gas operations at any time not to exceed the
projected production revenues over the immediately following twelve
(12) month period.
"PERMITTED G&A COSTS" means G&A Costs which (i) are Approved
Management Fees, or (ii) shall not exceed such amounts set forth in an Approved
operating budget of TOGA or (iii) shall be Approved by Agent in its sole and
absolute discretion.
"PERMITTED INVESTMENTS" means investments:
(i) in open market commercial paper, maturing within
270 days after acquisition thereof, which at the time of investment has
the highest or second highest credit rating given by either Standard &
Poor's Corporation or Moody's Investors Service, Inc.;
(ii) in marketable obligations, maturing within
twelve (12) months after acquisition thereof, issued or unconditionally
guaranteed by the United States of America or an instrumentality or
agency thereof and entitled to the full faith and credit of the United
States of America;
(iii) in demand deposits, time deposits or other
"money market instruments" (including certificates of deposit) maturing
within twelve (12) months from the date of deposit thereof, with any
office of a domestic office of any national or state bank or trust
company which is organized under the laws of the United States of
America or any state therein, which has capital, surplus and undivided
profits of at least $500,000,000, and whose certificates of deposit
have at least the third highest credit rating given by either Standard
& Poor's Corporation or Moody's Investors Service, Inc.; or
(iv) in repurchase agreements entered into with any
bank or trust company organized under the laws of the United States of
America or any State thereof and having capital and surplus in an
aggregate amount not less than $500,000,000 relating to United States
of America government obligations.
"PERMITTED LIENS" means:
(i) deposits or pledges (but not other Liens) to
secure the payment of worker's compensation, unemployment insurance or
other social security benefits or obligations, or public or statutory
obligations of a like general nature incurred in the ordinary course of
business;
(ii) Liens securing surety or appeal bonds, bid or
performance bonds or other obligations of a like general nature
incurred in the ordinary course of business if such Liens (A) are
either approved by Agent or reasonably necessary to obtain the bonds,
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<PAGE> 19
(B) secure obligations in an aggregate amount not to exceed $500,000 at
any time, and (C) do not constitute Liens on any of Borrower's
interests in the Project;
(iii) zoning restrictions, easements, licenses, or
restrictions on the use of real property which do not materially impair
the use of such property in the operation of the business of Borrower,
or the value of such property;
(iv) inchoate liens arising under applicable
Governmental Rules to secure current service pension liabilities as
they are incurred under the provisions of employee benefits plans from
time to time in effect;
(v) state and municipal liens for personal property
taxes where no enforcement or execution proceedings have been taken in
respect thereof, and provided same do not exceed $100,000 in the
aggregate at any time;
(vi) the rights of any lessors under any leases
capitalized in accordance with GAAP which constitute Permitted Debt;
(vii) Liens arising by operation of any Governmental
Rule in connection with trade debt constituting Permitted Debt so long
as the same are junior and subordinate to the Lien of the Security
Documents; or
(viii) Liens arising under the Project JOA.
"PERMITTED LOE" means LOE relating to Non-Project Properties
to the extent, and only to the extent, funded from Non-Project TOGA Gross Cash
Revenues or capital contributions or advances of Inter-company Debt.
"PERMITTED MANAGEMENT FEES" means the Management Fees paid by
TOGA to Borrower pursuant to the Management Agreement all as Approved by Agent.
"PERMITTED THIRD PARTY COSTS" means Third Party Costs to the
extent, and only to the extent, funded from Non-Project TOGA Gross Cash Revenues
or capital contributions or advances of Inter-company Debt.
"PERSON" means an individual, corporation, partnership,
association, joint stock company, trust or trustee thereof, estate or executor
thereof, unincorporated organization or joint venture, court or governmental
unit or any agency or subdivision thereof, or any other legally recognizable
entity.
"PLEDGE AND SECURITY AGREEMENT" means that certain Pledge and
Security Agreement substantially in the form of Exhibit D between Borrower and
Collateral Agent.
"PRINCIPAL PAYMENT" shall have the meaning given thereto in
Section 2.8.
"PROHIBITED LIEN" means any Lien not expressly allowed under
Section 5.2(b).
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<PAGE> 20
"PROJECT" means the Comet Ridge Project and all related assets
and facilities whether now in existence or hereinafter acquired, including any
other properties funded directly or indirectly with the proceeds of any
Advances.
"PROJECT DOCUMENTS" shall mean each agreement or document
necessary for the development, financing, construction operation and ownership
of the Project and shall in any event include without limitation the Project
JOA, Government Approvals, the leases, contracts, or other documents
establishing or evidencing the Collateral or Secured Properties and the
insurance policies required under Section 3.1 of the Loan Agreement.
"PROJECT GROSS CASH REVENUES" means all cash and non-monetary
revenues and receipts (excluding accounts receivable and other accruals)
received by or on behalf of TOGA, TOGC or Borrower (without duplication) from or
in any way relating to the Project, including without limitation interest or
other earnings received in respect of all invested funds and insurance proceeds
but excluding cash receipts from (a) sales of any portion of the Collateral
approved by Agent which are used to make a mandatory prepayment of principal
pursuant to Section 2.9, (b) an Approved refinancing of the Loans which are used
to make a mandatory prepayment of principal pursuant to Section 2.9(b)(ii), (c)
insurance proceeds necessary and used to replace or repair Project assets, (d)
Advances, (e) Inter-company Debt payments and (f) payments with respect to
Participant Loans.
"PROJECT PROPERTIES" means the Eligible Proved Properties
within the Project.
"PROJECT JOA" means that certain Operating Agreement between
Tri-Star, TOGA, and the Comet Ridge Participants dated May 15, 1992, as amended
from time to time.
"PROPERTY" means any interest in any kind of property or
asset, whether real, personal or mixed.
"PRO RATA SHARE" means, with respect to each Holder, the
percentage set forth opposite such Holder's name on Schedule 3; provided,
however, that upon any transfer, change or re-issuance of Notes, the Pro Rata
Share for each Holder will be recalculated at the time of such transfer, change
or re-issuance based upon the outstanding principal amounts of the Notes held by
such Holder.
"PROVED DEVELOPED NON-PRODUCING RESERVES" are Proved Reserves
that are Shut-in and Behind-pipe Reserves. "SHUT-IN RESERVES" are those expected
to be recovered from completion intervals open at the time of the estimate, but
which had not started producing, or were shut in for market conditions or
pipeline connections, or were not capable of production for mechanical reasons
(including the requirement for installation or restaging of compression), and
the time when sales will start is uncertain. "BEHIND-PIPE RESERVES" are those
expected to be recovered from zones behind casing in existing wells, which will
require additional completion work or a future completion prior to the start of
production.
"PROVED DEVELOPED PRODUCING RESERVES" means Proved Reserves
that are expected to be recovered from completion intervals open and producing
at the time of the estimate.
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<PAGE> 21
"PROVED DEVELOPED RESERVES" means Proved Developed Producing
Reserves and Proved Developed Non-Producing Reserves.
"PROVED RESERVES" means those Reserves which are "proved oil
and gas reserves" within the meaning of Rule 4-10 of Regulation S-X, 17 C.F.R.
Section 210.4-10 of the Commission.
"PROVED UNDEVELOPED RESERVES" means Proved Reserves that are
assigned to undrilled locations which satisfy the following conditions: (i) the
locations are direct offsets to wells which have indicated commercial production
in the objective formation, (ii) it is reasonably certain that the locations are
within the known proved productive limits of the objective formation, (iii) the
locations conform to existing well spacing regulations, if any, and (iv) it is
reasonably certain that the locations will be developed. Reserves for other
undrilled locations are classified as Proved Undeveloped Reserves only in those
cases where interpretations of data from wells indicate that the objective
formation is laterally continuous and contains commercially recoverable
hydrocarbons at locations beyond direct offsets.
"QUARTERLY PAYMENT DATE" means the penultimate Business Day of
each Calendar Quarter.
"RELATED PERSON" means Borrower, TOGA, TOGC, any Indemnitor,
and any Subsidiary of Borrower or TOGA.
"REPAYMENT DATE" means the date the Obligations, other than
Royalties, are repaid in full.
"REQUEST FOR ADVANCE" means a written or telephonic request,
or a written confirmation, made by Borrower which meets the requirements of
Section 2.3.
"RESERVES" means estimated volumes of crude oil, condensate,
natural gas, natural gas liquids, and associated substances anticipated to be
commercially recoverable from known accumulations from a given date forward,
under then existing economic conditions, by established operating practices, and
under current government regulations. Reserve estimates are based on
interpretation of geologic or engineering data available at the time of the
estimate. Reserves do not include volumes of crude oil, condensate, natural gas
(including storage gas), or natural gas liquids being held in inventory. If
required for financial reporting, reserve estimates or other purposes, Reserves
may be reduced for on-site or processing losses.
"RESTRICTED DEBT" of any Person means Debt in any of the
following categories:
(i) Debt for borrowed money;
(ii) Debt constituting an obligation to pay the
deferred purchase price of property or services;
(iii) Debt evidenced by a bond, debenture, note or
similar instrument;
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<PAGE> 22
(iv) Debt which would under GAAP or, with respect to
TOGA, GAAP or Australian generally accepted accounting principles be
shown on such Person's balance sheet as a liability;
(vi) Debt constituting principal under leases
capitalized in accordance with GAAP;
(vii) Debt arising under conditional sales or other
title retention agreements;
(viii) Debt owing under direct or indirect guaranties
of Debt of any other Person or constituting obligations to purchase or
acquire or to otherwise protect or insure a creditor against loss in
respect of Debt of any other Person (such as obligations under working
capital maintenance agreements, agreements to keep-well, or agreements
to purchase Debt, assets, goods, securities or services), but excluding
endorsements in the ordinary course of business of negotiable
instruments in the course of collection;
(ix) Debt with respect to letters of credit or
applications or reimbursement agreements therefor; or
(x) Debt with respect to other obligations to deliver
goods or services in consideration of advance payments therefor;
provided, however, that the term "Restricted Debt" of any Person shall not
include Debt that was incurred on ordinary trade terms and is owed by the Person
incurring the same to vendors, suppliers, or other Persons providing goods and
services for use by such Person in the ordinary course of its business which
relate to items included in or constituting Permitted Capital Expenditures,
Permitted LOE, Permitted Third Party Cost or Permitted G&A Costs unless such is
more than ninety (90) days past due.
"ROYALTY" means any overriding royalty granted or agreed to be
paid pursuant to any Royalty Agreement.
"ROYALTY AGREEMENT" shall mean that certain Overriding Royalty
Agreement dated as of even date herewith in substantially the same form attached
hereto as Exhibit E, as the same may be amended or supplemented from time to
time.
"ROYALTY AGREEMENTS" means the Royalty Agreement and any
Supplement to Royalty Agreement and any Royalty Conveyance (as defined in the
Royalty Agreement), collectively, or individually as the context may so require.
"ROYALTY DETERMINATION DATE" means (i) if Agent or Lenders
shall exercise the right under Section 3.4 hereof to refuse to fund any Advance
or to terminate or cancel the obligation to make future Advances, the later of
(a) the date of disbursement of the last Advance to be funded or (b) the date of
completion of the last work comprising Approved Capital Expenditures deducted in
the calculation of ANCF, or (ii) in all other events, the Repayment Date.
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"ROYALTY PAYEE" means the Payee as defined in the Royalty
Agreements.
"SECURITY AGREEMENT" means the Security Agreement
substantially in the form of Exhibit F between TOGA and Collateral Agent.
"SECURITY DOCUMENTS" means the Security Agreement, Australian
Charge Document, the Pledge and Security Agreement, the TOGC Security Agreement,
the Subordination Agreement, the financing statements, any other instruments
listed in the Security Schedule, and all other security agreements, deeds of
trust, mortgages, chattel mortgages, pledges, guaranties, financing statements,
continuation statements, extension agreements and other agreements or
instruments now, heretofore, or hereafter delivered by any Related Person to
Lenders, Holders or Collateral Agent in connection with this Agreement or any
transaction contemplated hereby to secure or guarantee the payment of any part
of the obligations or the performance of any Related Person's other duties and
obligations under the Loan Documents.
"SECURITY SCHEDULE" means Schedule 4.
"SCHEDULED MINIMUM PRINCIPAL PAYMENT" shall have the meaning
given hereto in Section 2.8(c)(ii).
"SPOT RATE" means in relation to the conversion of any amount
in a currency other than Dollars to the noon date spot rate of exchange
announced by the Federal Reserve Bank of New York on the Business Day
immediately prior to the date that the calculation or currency is to be made for
the conversion of the currency in question. Each determination of the Spot Rate
shall be made by the Agent and shall be conclusive absent manifest error.
"SUBJECT HYDROCARBONS" has the meaning given in the Royalty
Agreement.
"SUBJECT PROPERTIES" means, collectively, the oil and gas
leases, oil, gas and mineral leases, mineral leases, licenses, concessions,
authorities to prospect and other mineral interests and properties and the lands
covered thereby described in Exhibit A to the Overriding Royalty Agreement and
by reference to any Royalty Conveyance (as defined in the Overriding Royalty
Agreement).
"SUBORDINATION AGREEMENT" means the Subordination Agreement
among Borrower, TOGC and TAMCO substantially in the form attached hereto as
Exhibit H.
"SUBSIDIARY" of a specified Person means any corporation,
association, partnership, joint venture, or other business or corporate entity,
enterprise or organization which is directly or indirectly (through one or more
intermediaries) controlled by or owned fifty percent or more by the specified
Person, provided that associations, joint ventures or other relationships (i)
which are established pursuant to a standard form operating agreement or similar
agreement or which are partnerships for purposes of federal income taxation
only, (ii) which are not corporations or partnerships (or subject to the Uniform
Partnership Act) under applicable state law, and (iii) whose businesses are
limited to the exploration, development and operation of oil, gas or mineral
properties and interests owned directly by the parties in such associations,
joint ventures or relationships, shall not be deemed to be "Subsidiaries" of the
specified Person.
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"SUPPLEMENT TO ROYALTY AGREEMENT" has the meaning given in
Section 5.1(l).
"TAXES" shall have the meaning given thereto in Section
5.1(h).
"TCW GOVERNING DOCUMENTS" shall have the meaning given thereto
in Section 6.4(d).
"TERMINATION EVENT" means:
(i) the occurrence with respect to any ERISA Plan of
(A) a reportable event described in Sections 4043(b)(5) or (6) of ERISA
or (B) any other reportable event described in Section 4043(b) of ERISA
other than a reportable event not subject to the provision for 30-day
notice to the Pension Benefit Guarantee Corporation pursuant to a
waiver by such corporation under Section 4043(a) of ERISA;
(ii) the withdrawal of any Related Person or of any
Affiliate of any Related Person from an ERISA Plan during a plan year
in which it was a "substantial employer" as defined in Section
4001(a)(2) of ERISA;
(iii) the filing of a notice of intent to terminate
any ERISA Plan or the treatment of any ERISA Plan amendment as a
termination under Section 4041 of ERISA;
(iv) the institution of proceedings to terminate any
ERISA Plan by the Pension Benefit Guarantee Corporation under Section
4042 of ERISA; or
(v) any other event or condition which might
constitute grounds under Section 4042 of ERISA for the termination of,
or the appointment of a trustee to administer, any ERISA Plan.
"THIRD PARTY COSTS" means any costs paid to persons other than
Affiliates of Borrower for the transportation, processing, treating and
marketing of Subject Hydrocarbons.
"TOGA AUSTRALIAN COLLATERAL ACCOUNT" means that certain
lockbox account established with the Brisbane office of ANZ Bank pursuant to the
TOGA Australian Collateral Account Agreement, or any other lockbox account
established pursuant to a replacement Collateral Account Agreement.
"TOGA AUSTRALIAN COLLATERAL ACCOUNT AGREEMENT" means that
certain Collateral Account Agreement between Borrower, TOGA, the Lenders and ANZ
Bank, as amended from time to time or as replaced by any other Collateral
Account Agreement from time to time.
"TOGA-BORROWER MANAGEMENT AGREEMENT" means that certain
Services Agreement to be entered into between TOGA and Borrower in substantially
the form attached hereto as Exhibit I.
"TOGA DOLLAR COLLATERAL ACCOUNT" means that certain lockbox
account established with the Brisbane office of ANZ Bank pursuant to the TOGA
Dollar Collateral
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Account Agreement, or any other lockbox account established pursuant to a
replacement Collateral Account Agreement.
"TOGA DOLLAR COLLATERAL ACCOUNT AGREEMENT" means that certain
Collateral Account Agreement between Borrower, TOGA, the Lenders and ANZ Bank,
as amended from time to time or as replaced by any other Collateral Account
Agreement from time to time.
"TOGC SECURITY AGREEMENT" means that certain Pledge and
Security Agreement between TOGC and Collateral Agent in substantially the form
attached hereto as Exhibit J.
"TOTAL MODIFIED NPV10" means the sum of the Modified NPV10's
for all Proved Developed Producing Reserves, Proved Developed Non-Producing
Reserves and Proved Un-Developed Reserves.
"TRI-STAR" has the meaning given in Section 4.1(t).
"TRI-STAR LITIGATION" means that certain litigation captioned
Tipperary v. Tri-Star, Case No. CV-42, 256 before the District Court of Midland
County, Texas, 238th Judicial District.
"TRUSTCO" means Trust Company of the West, a California trust
company.
"WORKING CAPITAL" has the meaning given in Section 5.2(k).
"YIELD ADJUSTMENT PAYMENT" has the meaning given in Section
2.11.
Section 1.2 ACCOUNTING TERMS AND DETERMINATIONS.
(a) Except as otherwise expressly provided in this Agreement,
all accounting terms used in this Agreement (including the term "WORKING
CAPITAL") shall be interpreted, and all financial statements and certificates
and reports as to financial matters required to be delivered to the Lenders,
Holders, Agent or Collateral Agent under this Agreement shall (unless otherwise
disclosed to the Lenders, Holders, Agent or Collateral Agent in writing at the
time of delivery in the manner described in subsection (b) below) be prepared in
accordance with GAAP applied on a basis consistent with those used in the
preparation of the latest financial statements furnished to the Lenders,
Holders, Agent or Collateral Agent under this Agreement (which, prior to the
delivery of the first audited financial statements under Section 5.1(b)(i),
shall mean the Initial Financial Statements). Except as otherwise expressly
provided in this Agreement, all calculations made for the purposes of
determining compliance with this Agreement shall (except as otherwise expressly
provided in this Agreement) be made by application of GAAP applied on a basis
consistent with those used in the preparation of the latest annual or quarterly
financial statements furnished to the Lenders, Holders, Agent or Collateral
Agent pursuant to Section 5.1(b)(i) or (ii).
(b) To enable the ready and consistent determination of
compliance with the covenants set forth in this Section 1.2 and Section 5.1,
Borrower will not change the last day of its fiscal year from September 30 of
each year, or the last days of the first three fiscal quarters in
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each of its fiscal years from December 31, March 31 and June 30 of each year,
respectively, except with Agent's reasonable consent.
Section 1.3 INTERPRETATION. In this Agreement, unless otherwise
indicated, the singular includes the plural and conversely; words importing one
gender include the others and neuter includes all genders; references to
statutes or regulations are to be construed as including all statutory or
regulatory provisions consolidating, amending or replacing the statute or
regulation referred to; references to "writing" include printing, typing,
lithography and other means of reproducing words in a tangible visible form; the
word "or" shall not be exclusive (i.e., shall be deemed to include "and/or");
the words "hereof," "herein" and "hereunder" and words of similar import refer
to this Agreement as a whole and not to any particular provision of this
Agreement; the Table of Contents and article and section headings and other
captions are for the purpose of reference only and do not limit or effect the
meaning of the terms and provisions hereof; the words "including," "includes"
and "include" shall be deemed a reference to such agreement and/or instrument
and shall be followed by the words "without limitation"; references to articles,
sections (or subdivisions of sections), exhibits, annexes or schedules are to
such parts of this Agreement; references to agreements and other contractual
instruments shall be deemed a reference to such agreement and/or instrument and
shall include all subsequent amendments, extensions and other modifications to
such instruments (without, however, limiting any prohibition on any such
amendments, extensions and other modifications by the terms of this Agreement);
and references to Persons include their respective permitted successors and
assigns and, in the case of Governmental Persons, Persons succeeding to their
respective functions and capacities.
ARTICLE 2
LOANS
Section 2.1 LOAN ADVANCES.
(a) Subject to the terms and conditions hereof, the Lenders
agree on behalf of the Holders to make an initial advance to Borrower (the
"INITIAL LOAN ADVANCE") on the Initial Funding Date in the aggregate amount of
Six Million and 00/100 Dollars ($6,000,000).
(b) Subject to the terms and conditions precedent hereof,
including Section 3.3, the Lenders agree on behalf of the Holders to make
additional advances to Borrower (the "ADDITIONAL LOAN ADVANCES") from time to
time during the Commitment Period so long as the aggregate amount of the
Additional Loan Advances does not exceed Eleven Million and 00/100 Dollars
($11,000,000) and the aggregate amount of all Advances does not exceed Seventeen
Million and 00/100 Dollars ($17,000,000).
Section 2.2 THE NOTES. Borrower's obligation to repay to the Lenders
the aggregate amount of the Advances, together with interest accruing in
connection therewith, shall be evidenced by senior secured promissory notes (the
"NOTES") made by Borrower in the form of Exhibit E with appropriate insertions,
each payable to the order of the Holders in the stated principal amounts set
forth on Schedule 3 (as the same may be revised, from time to time). All
Advances will be made under the Notes in proportion to their relative stated
principal amounts. The amount of principal owing on each Note at any given time
shall be such proportionate share
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of the aggregate amount of the Advances theretofore made minus such
proportionate share of all payments of principal theretofore received by the
Holders on such Notes. Interest on the Notes shall accrue and be due and payable
as provided herein and therein. Amounts borrowed and repaid on the Notes may not
be re-borrowed hereunder.
Section 2.3 REQUEST FOR ADVANCES.
(a) Borrower must give the Lenders at least fifteen (15) days
prior written notice (or telephonic notice promptly confirmed in writing by the
Lenders) of any requested Additional Loan Advance. Each such written notice (or
confirmation) must be made (i) if the Initial Loan Advance, in the form and
substance of the "Request for Initial Advance" in Exhibit L duly completed; and
(ii) if an Additional Loan Advance, in the form and substance of the "Request
for Additional Advance" in Exhibit M. Each such telephonic request shall be
deemed a representation, warranty, acknowledgment and agreement by Borrower as
to the matters which are to be set out in the written confirmation.
(b) If all conditions precedent to such Advance have been met,
the Lenders will, on the funding date specified in the Borrower's Request for
Advance or on the date such conditions precedent have been met, make such
Advance available to Borrower in immediately available funds.
Section 2.4 USE OF PROCEEDS.
(a) Borrower shall use the proceeds from the Initial Loan
Advance for the sole purpose of capitalizing TOGA by means of either Approved
capital contributions or Approved advances of Inter-company Debt in order for
TOGA to:
(i) Refinance approximately $4,800,000 of existing Debt
owed by TOGA to Slough Estates USA Inc.; and
(ii) Use up to $1,200,000 for Approved Working Capital
purposes.
(b) Borrower shall use approximately $6,700,000 (or such
additional amount as may be deducted from the amounts in Section 2.4(c) due to
non consent of Persons among interests pursuant to the Project JOA relating to
the Project) of the proceeds from the Additional Loan Advances, which funds may
be drawn upon as set forth in this Section 2.4 and in Article 3, for the sole
purpose of capitalizing TOGA for the continued development of TOGA's interests
in the Project in accordance with the Approved Plan of Development.
(c) No more than $4,300,000 of the proceeds from Additional
Loan Advances may be used to make loans to third-party Persons owning interests
pursuant to the Project JOA ("COMET RIDGE PARTICIPANTS") in connection with the
continued development thereof or for other uses Approved by the Agent in its
sole and absolute discretion. All such loans to Comet Ridge Participants
(collectively, "PARTICIPANT LOANS") shall be made pursuant to loan documents in
terms consistent with the terms sheet attached hereto as Exhibit N (which shall
provide for the execution of royalty conveyances in substantially the form of
the Royalty Conveyances) and in form approved by Agent in its sole and absolute
discretion ( the "PARTICIPANT LOAN DOCUMENTS"). All such Participant Loans made
pursuant to this subsection
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<PAGE> 28
(c) shall be collaterally assigned to Collateral Agent as additional security
for the repayment of the Notes. Upon the full repayment of the Notes, Collateral
Agent shall release such security interest (excluding any security interests or
liens securing the payment of royalties agreed to be paid by such Comet Ridge
Participants) upon written request of the Borrower.
(d) In no event shall the funds from any Advance be used
directly or indirectly by any Person for personal, family, household or
agricultural purposes or for the purpose, whether immediate, incidental or
ultimate, of purchasing, acquiring or carrying any "margin stock" or any "margin
securities" (as such terms are defined respectively in Regulations U, G and X
promulgated by the Board of Governors of the Federal Reserve System) or to
extend credit to others directly or indirectly for the purpose of purchasing or
carrying any such margin stock or margin securities. Borrower represents and
warrants to the Lenders, Holders, Agent and Collateral Agent that Borrower is
not engaged principally, or as one of Borrower's important activities, in the
business of extending credit to others for the purpose of purchasing or carrying
such margin stock or margin securities.
Section 2.5 COUPON INTEREST. Subject to modification pursuant to
Section 2.7, the Notes shall bear interest ("COUPON INTEREST") from and
including the dates of the Advances on the unpaid principal amount from time to
time outstanding at the rate of ten percent (10%) per annum.
Section 2.6 ACCRUAL AND PAYMENT OF COUPON INTEREST. Coupon Interest
shall accrue on the Notes from and including the Initial Funding Date until
their repayment in full. For each Calendar Quarter (or part thereof) commencing
on or after the Initial Funding Date and ending on or before the Maturity Date,
Coupon Interest on the Notes shall be calculated for the entire such Calendar
Quarter in the manner provided in Section 2.7, but shall be due and payable on
the Quarterly Payment Date of such Calendar Quarter.
Section 2.7 COMPUTATION OF INTEREST.
(a) Coupon Interest shall be computed on the Notes on the
basis of a 360-day year and on the actual number of days elapsed in any period
including the date of Advance but excluding the date by which the Holders are
deemed, pursuant to Section 2.10(a), to have received payment. Coupon Interest
on the Notes for each Calendar Quarter (or part thereof) ending on or before the
Maturity Date shall be computed as the sum of the daily interest for the
Calendar Quarter (or part thereof), taking into account the outstanding
principal balance of the Notes on each day of the period (where such balance on
any given day shall reflect any payment of principal credited on such date
pursuant to Section 2.10 hereof). For purposes of clarity, for purposes of
computing the Coupon Interest due and payable on the Quarterly Payment Date of
such Calendar Quarter, the daily interest for the period from and including the
Quarterly Payment Date through the end of the Calendar Quarter shall be based on
the outstanding principal balance after crediting all payments of principal
through the Quarterly Payment Date.
(b) Any principal or Coupon Interest payment due on the Notes
or any other monetary Obligation which is not paid when due, whether at stated
maturity, by notice of acceleration or otherwise, shall bear interest
(calculated in the manner set forth above) at the Late Payment Rate.
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<PAGE> 29
Section 2.8 PAYMENT OF PRINCIPAL; QUARTERLY PAYMENTS.
(a) Borrower shall not be required to make payments of
principal on the Notes during the period commencing on the Initial Funding Date
and ending on the day before the Initial Amortization Date.
(b) The outstanding principal balance of the Notes shall be
due and payable in full on the Maturity Date.
(c) Commencing upon the first Quarterly Payment Date after the
Initial Amortization Date, and on every Quarterly Payment Date thereafter until
the Maturity Date, Borrower shall make a principal payment to Lenders on account
of the outstanding principal balance of the Notes (each, a "PRINCIPAL PAYMENT")
in an amount equal to the greater of:
(i) The sum of (A) the Dedication Rate multiplied by the
ANCF for the preceding Calculation Period plus (B) the amount
of all Principal Payments made during such Calculation Period
on the Participant Loans; or
(ii) The "SCHEDULED MINIMUM PRINCIPAL PAYMENT" applicable
on such Quarterly Payment Date, defined as the product of (A)
the unpaid principal balance on the Notes as of December 31,
2002 and (B) the percentage set forth below for the month and
year in which such Quarterly Payment Date occurs, rounded to
the next higher $1,000:
PERCENTAGES FOR COMPUTATION OF
SCHEDULED MINIMUM PRINCIPAL PAYMENTS
<TABLE>
<CAPTION>
----------------------------------------------------------------------------------------------------------
YEAR MARCH JUNE SEPTEMBER DECEMBER TOTAL
------------------- ----------------- ---------------- ------------------ ----------------- --------------
<S> <C> <C> <C> <C> <C>
2000 0% 0% 0% 0%
2001 0% 0% 0% 0%
2002 0% 0% 0% 0%
2003 5% 5% 5% 5% 20%
2004 9% 9% 9% 9% 36%
2005 10% 10% 10% 10% 40%
2006 Remainder 4%
------------------- ----------------- ---------------- ------------------ ----------------- --------------
Total 100%
------------------- ----------------- ---------------- ------------------ ----------------- --------------
</TABLE>
(d) All payments of principal made by Borrower hereunder shall
be applied to the Notes to which such payments relate ratably among the Holders
of such Notes proportionately to their respective Pro Rata Shares. All
prepayments of principal made pursuant to Section 2.9 shall apply to principal
payments thereafter required in inverse order of their maturity.
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<PAGE> 30
Section 2.9 PREPAYMENT.
(a) OPTIONAL PREPAYMENTS. In addition to the payments required
under Sections 2.6 and 2.8, Borrower may, from time to time, on or after October
1, 2000 through March 1, 2002, and upon ten (10) Business Days' prior written
notice to Lenders, prepay the Notes, in whole but not in part, so long as such
prepayment is accompanied by the payment of, and there shall be due and payable
upon any prepayment in full of principal during such period whether by optional
prepayment or mandatory prepayment pursuant to Section 2.9(b), a prepayment
premium (the "PREPAYMENT PREMIUM") equal to the product of the applicable
"PREPAYMENT PREMIUM PERCENTAGE" set forth below opposite the time period in
which the date of prepayment occurs multiplied by the principal amount prepaid:
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------
DATE OF PREPAYMENT PREPAYMENT PREMIUM PERCENTAGE
------------------------------------------------ ------------------------------------------------------
<S> <C>
Prior to October 1, 2000 No Prepayment Allowed
------------------------------------------------ ------------------------------------------------------
October 1, 2000 to March 31, 2001 12.5%
------------------------------------------------ ------------------------------------------------------
April 1, 2001 to June 30, 2001 10%
------------------------------------------------ ------------------------------------------------------
July 1, 2001 to September 30, 2001 7.5%
------------------------------------------------ ------------------------------------------------------
October 1, 2001 to December 31, 2001 5%
------------------------------------------------ ------------------------------------------------------
January 1, 2002 to February 28, 2002 2.5%
------------------------------------------------ ------------------------------------------------------
</TABLE>
In addition to the payments required under Sections 2.6 and 2.8,
Borrower may, on or after March 1, 2002, from time to time and upon ten (10)
Business Days' prior written notice to Lenders, prepay the Notes, in whole or in
part, so long as each partial prepayment of principal on the Notes is greater
than or equal to $250,000. Each partial prepayment of principal shall be applied
to the Minimum Principal Payments due under the Notes in the inverse order of
their maturities.
Each prepayment of principal under this Section 2.9 shall be
accompanied by all interest then accrued and unpaid on the principal so prepaid.
Any principal prepaid pursuant to this Section 2.9 shall be in addition to, and
not in lieu of, all payments otherwise required to be paid under the Loan
Documents at the time of such prepayment.
(b) MANDATORY PREPAYMENTS.
(i) If the Agent Approves any request by TOGA to sell all or any
portion of the Eligible Proved Properties (which approval shall be in
Agent's sole and absolute discretion as to any Collateral comprising a
portion of the Project but which approval shall not be withheld
unreasonably as to any Collateral not comprising a portion of the
Project, notwithstanding any other provision hereof, all sales proceeds
must be applied to the prepayment of the Notes unless otherwise
approved in writing by the Agent, which approval the Agent may withhold
in its sole and absolute discretion.
(ii) If Borrower refinances all or any portion of the Loans, which
prior to October 1, 2000 shall be subject to receipt of Approval of the
Agent
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<PAGE> 31
which may be withheld in Lenders' sole and absolute discretion,
notwithstanding any other provision hereof, all refinancing proceeds
shall be applied to prepayment of the Scheduled Principal Payments in
inverse order of their maturities.
(iii) Borrower shall apply any Excess ANCF not used for additional
development expenditures pursuant to the Approved Plan of Development
within nine months after receipt to the prepayment of the Scheduled
Principal Payment in inverse order of their maturities.
Any mandatory prepayments made pursuant to this Section 2.9(b) shall be free
from prepayment penalties.
(c) EFFECT ON ROYALTY. Under no circumstances shall the
Royalty be released in connection with any prepayment pursuant to subsection (a)
or (b) above.
Section 2.10 GENERAL PAYMENT PROVISION.
(a) Borrower shall make each payment which Borrower owes under
any of the Loan Documents not later than 11:00 a.m., Los Angeles, California
time, on the date such payment becomes due and payable, in lawful money of the
United States of America, without set-off, deduction or counterclaim, and in
immediately available funds sent by wire transfer to the payment accounts set
forth on Schedule 5 (or to such other bank and accounts and pursuant to such
other directions as Holders may from time to time specify). Any payment received
by Holders after such time shall be deemed to have been made on the next
following Business Day. Should any such payment become due and payable on a day
other than a Business Day, the maturity of such payment shall be the preceding
Business Day. Each payment under a Loan Document shall be due and payable at the
place provided therein and, if no specific place of payment is provided, shall
be due and payable at the place of payment of the Notes. When the Holders
collect or receive money on account of the Obligations which is insufficient to
pay all Obligations then due and payable, the Holders may apply such money as
they elect to the various Obligations which are then due and payable.
(b) Any amount received by the Agent or Collateral Agent, or
any Holder, whether as a Coupon Interest payment or principal payment from or on
behalf of Borrower, shall be applied as follows in descending order of priority:
(i) to all costs and expenses (including reasonable
attorneys' fees and costs; costs of maintaining, preserving or
disposing of any Collateral; and costs of settlement) incurred
by the Lenders, Holders, Agent or Collateral Agent either
pursuant to Section 5.1(j) or in enforcing any Obligations of,
or in collecting any payments from, any obligor hereunder or
under the other Loan Documents;
(ii) to Obligations (other than principal or interest)
then due and owing the Lenders, Holders, Agent or Collateral
Agent under any of the Loan Documents;
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<PAGE> 32
(iii) to Late Payment Rate Interest which has accrued on
past due payments hereunder pursuant to Section 2.7(b);
(iv) to Coupon Interest that is currently due and payable
on the Notes pursuant to Sections 2.6 and 2.7(a);
(v) to the payment of past due principal on the Notes;
(vi) to payment of principal on the Notes currently due
and payable pursuant to Section 2.8; and
(vii) to the prepayment of principal under the Notes,
which prepayment shall be applied to future Scheduled Minimum
Principal Payments in inverse order of their maturities.
Section 2.11 YIELD ADJUSTMENT PAYMENT. Concurrently with the funding of
the Initial Loan Advance, Borrower shall pay in immediately available funds to
Lenders a yield adjustment payment (the "YIELD ADJUSTMENT PAYMENT") in an amount
equal to One Hundred Twenty Thousand Dollars ($120,000).
Section 2.12 COLLATERAL ACCOUNTS.
(a) ESTABLISHMENT OF COLLATERAL ACCOUNTS; RULES.
(i) Borrower shall establish and maintain at its expense
the Borrower/TOGC Collateral Account pursuant to the
Borrower/TOGC Collateral Account Agreement and TOGA shall
establish and maintain at its expense the TOGA Dollar
Collateral Account pursuant to the TOGA Dollar Collateral
Account and the TOGA Australian Collateral Account pursuant to
the TOGA Australian Collateral Account Agreement.
(ii) TOGA, and to the extent applicable Borrower, shall
deposit into the TOGA Dollar Collateral Account or the TOGA
Australian Collateral Account all Project Gross Cash Revenues
and Net TOGA Non-Project Cash Flow from and after the Initial
Funding Date through the Repayment Date.
(iii) TOGA may make monthly withdrawals from the TOGA
Dollar Collateral Account or the TOGA Australian Collateral
Account on the last day of each Calendar Month to pay Approved
LOE, Approved Third Party Costs, Approved Capital Expenditures
and Direct Taxes provided that all Obligations then due and
payable have been paid in full and no Default shall then exist
or be outstanding.
(iv) From and after the Initial Funding Date through the
Repayment Date, Borrower, TOGA and TOGC shall deposit into the
Borrower/TOGC Collateral Account all Permitted Borrower
Payments, and all payments of Inter-company Debt of TOGC with
respect to or in any way relating to the Advances or TOGA.
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<PAGE> 33
(v) Collateral Agent may instruct the administrator of the
Collateral Accounts to transfer or disburse amounts from it to
Agent only to the extent such amounts are due and payable
under the Notes, this Agreement or any other Loan Document.
(vi) After the occurrence of an Event of Default under any
Loan Document or Borrower's or TOGA's failure to comply with
the terms of this Section 2.12, Collateral Agent may, at its
option, apply all sums in the Collateral Accounts to the
reduction of outstanding principal of, and interest and other
sums owed by Borrower on, the Notes.
(vii) Upon the satisfaction in full of all amounts owed by
Borrower under the Loan Documents, Collateral Agent shall have
all amounts remaining in the Borrower/TOGC Collateral Account
disbursed to Borrower and all amounts remaining in the TOGA
Dollar Collateral Account and the TOGA Australian Collateral
Account disbursed to TOGA.
(b) NOTICE. Not later than 15 Business Days preceding the
Initial Funding Date or 15 Business Days after the execution of any new or
future gas sales contract, TOGA shall send a notice, substantially in the form
of Exhibit O, to all existing and/or new Hydrocarbon purchasers, including
without limitation, Energex Retail Pty Ltd, directing them to forward all
amounts payable to TOGA directly to the TOGA Dollar Collateral Account at the
mailing address of the depositary bank for deposit into the TOGA Dollar
Collateral Account. The failure of such Hydrocarbon purchasers to comply with
any such notice shall not constitute a Default hereunder by any Related Person,
provided that (i) such Hydrocarbon purchasers' failure to comply with such
notice is not done at the request of Borrower or TOGA and (ii) Borrower and TOGA
shall forward all amounts received from such Hydrocarbon purchasers to the TOGA
Dollar Collateral Account within one (1) Business Day of Borrower's or TOGA's
receipt thereof.
(c) ACKNOWLEDGMENTS. Each of Borrower and TOGA hereby
acknowledge that:
(i) It has granted and assigned to Collateral Agent a
first priority, perfected security interest in the Collateral
Accounts, all funds therein and all proceeds thereof pursuant
to the Security Agreement; and
(ii) Neither Borrower nor TOGA shall be permitted to
withdraw, transfer or disburse any funds from the Collateral
Accounts except in accordance with the terms hereof and each
other Loan Document.
(d) ATTORNEY-IN-FACT. Each of Borrower and TOGA hereby appoint
Collateral Agent its attorney-in-fact, with full power of substitution, to
execute and file on behalf of Borrower or TOGA, respectively, any financing
statement, continuation statement or instrument of further assurance to more
effectively perfect, continue or confirm (i) the provisions of this Section 2.12
and of any agreement entered into by Borrower, TOGA, Collateral Agent and the
depositary bank administering the Collateral Accounts and (ii) the security
interest granted in the
29
<PAGE> 34
Collateral Accounts. This power, being coupled with an interest, shall be
irrevocable until all amounts due in connection with the Notes have been paid in
full.
ARTICLE 3
CONDITIONS PRECEDENT TO LENDING
Section 3.1 CONDITIONS PRECEDENT TO INITIAL LOAN ADVANCE. The Lenders
have no obligation to make the Initial Loan Advance unless all of the following
conditions precedent have been satisfied in which event the Initial Loan Advance
shall be made:
(a) The Lenders shall have received all of the following at
Agent's office in Los Angeles, California, duly executed and delivered and in
form, substance and date satisfactory to the Lenders:
(i) The Notes;
(ii) Each Security Document listed in the Security
Schedule;
(iii) An "OMNIBUS CERTIFICATE" substantially in the form
of Exhibit P of the Secretary or the Board of Directors of
each of Borrower and TOGA which shall contain the names and
signatures of its officers authorized to execute the Loan
Documents to which it is a party and which shall certify to
the truth, correctness and completeness of the following
exhibits attached to the certificate: (i) a copy of
resolutions of Borrower's and TOGA's, respectively, board of
directors in full force and effect at the time this Agreement
is entered into, authorizing the execution of the Loan
Documents delivered or to be delivered by Borrower or TOGA in
connection herewith and the consummation of the transactions
contemplated in the Loan Documents; (ii) a copy of Borrower's
and TOGC's Articles of Incorporation and all amendments
thereto, certified by the Secretary of the State of Texas; or
(iii) a copy of the necessary Authorization authorizing
observers to the board of directors of Borrower and TOGA as
provided under Section 5.1(c)(iv); and (iv) a copy of the
appointment of all legal representatives and attorneys in fact
of Borrower and TOGA duly registered;
(iv) A "COMPLIANCE CERTIFICATE," substantially in the form
of Exhibit Q, of the President and the Chief Financial Officer
of Borrower, TOGC and TOGA of even date with such Advance, in
which such persons certify to the satisfaction of the
conditions set out in clauses (i) through (ii) above;
(v) Opinions of Allen, Allen & Hemsley, Australian counsel
for the Related Persons, covering the items set forth in
Exhibit R-1, and such other matters requested be Agent and
otherwise in form acceptable to Agent and its counsel;
(vi) An opinion of Morrison & Foerster LLP, or other New
York counsel acceptable to Agent for the Related Persons,
substantially in the form of
30
<PAGE> 35
Exhibit R-2, and such other matters requested be Agent and
otherwise in form acceptable to Agent and its counsel;
(vii) An opinion of Glast, Phillips & Murray, or other
Texas counsel acceptable to Agent for the Related Persons,
substantially in the form of and Exhibit R-3, and such other
matters requested be Agent and otherwise in form acceptable to
Agent and its counsel;
(viii) An opinion of counsel to the Lenders, or other
assurance satisfactory to the Lenders in their sole
discretion, that the Loans are permitted investments by the
Lenders under the terms of all governing documents relating to
the Lenders and as to such other matters as the Lenders may
reasonably request;
(ix) The Initial Financial Statements;
(x) The Initial Engineering Report;
(xi) An environmental report (the "INITIAL ENVIRONMENTAL
REPORT") relating to all Properties of TOGA included in the
Project prepared by an environmental engineering consultant
reasonably approved by Agent which is satisfactory to Agent
and its counsel in form and substance, including the
satisfactory compliance with all applicable environmental laws
and regulations;
(xii) Certificates from the Secretary of State of Texas as
to the existence, good standing and due qualification to do
business of Borrower;
(xiii) A certified copy of the Certificates of
Incorporation of TOGA issued by the Australia Securities &
Investment Commission;
(xiv) Title opinions and other title information
concerning the Project in form, substance and authorship
satisfactory to Agent;
(xv) Evidence that the board of directors and any required
equity owners of the Borrower and of TOGA have approved the
transactions contemplated hereby and any other required
governmental or regulatory approval or consent;
(xvi) Evidence that TOGA has received $3,500,000 which
shall be deposited into the TOGA Dollar Collateral Account in
immediately available funds as a capital contribution from
Borrower as payment for the newly issued Capital Stock of
TOGA;
(xvii) A shareholder approval executed by Slough Estates
USA Inc., as shareholder in TOGA, in form Approved by Agent in
its sole discretion, approving (a) the terms of the issuance
of shares of TOGA to TOGC or Borrower in consideration of the
transfer to TOGA of interests under the Project JOA heretofore
acquired by Borrower or TOGC, the $3.5 million capital
contribution described in clause (xvi) above, and the proceeds
of any Advance, (b) the
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<PAGE> 36
Management Fees and TOGA - Borrower Management Agreement and
(c) the execution and delivery by TOGA of the Guarantee
Agreement and other Loan Documents executed by TOGA.
(xviii) The Borrower should have prepared a drilling
program proposal consisting of at least twenty (20) wells
pursuant to the terms of the Project JOA covering the Project,
the time periods for consent and non-consent by all parties
thereto shall have expired and Agent shall have received
copies of all communications relating to such proposals and
evidence satisfactory to the Agent in its sole and absolute
discretion that such drilling programs will be undertaken on a
schedule acceptable to Agent (including copies of the drilling
contract executed with respect thereto) and that adequate
funding will be available to finance the same;
(xix) Evidence that the U.S. Bank Debt has been paid in
full and all liens, claims and other security interests have
been released;
(xx) Evidence that the debt described in subsection
2.4(a)(i) shall be paid in full and all liens, claims and
other security interests securing the same have been released
and all obligations of TOGA to pay any overriding royalty,
Contractual Payments (as defined in Section 3 of the
Promissory Note dated December 22, 1998 in the original
principal amount of $6,000,000 executed by TOGA to Slough
Estates USA Inc.) or other amounts thereunder shall be
terminated and released concurring with the Initial Loan
Advance; and
(xxi) Such other information as the Lenders may reasonably
require, including evidence satisfactory to the Lenders that
all conditions precedent to Initial Funding Date set forth in
this Article and to any disbursement to be made at Initial
Funding Date have been satisfied.
(b) Borrower and TOGA shall have established the TOGA Dollar
Collateral Account.
(c) The notices required pursuant to Section 2.12(b) shall
have been delivered.
(d) Borrower shall have transferred to TOGA, either directly
or indirectly through TOGC, all rights and interests in the Project heretofore
acquired by Borrower or TOGC from parties to the Project JOA pursuant to
documentation in form and substance satisfactory to Agent.
Section 3.2 CONDITIONS PRECEDENT TO ANY ADVANCE. The Lenders have no
obligation to make any Advance (including the Initial Loan Advance) unless all
of the following conditions precedent have been satisfied, to the Agent's
satisfaction and in its sole discretion (in which event the Advance shall be
made):
(a) All representations and warranties made by Borrower and by
TOGA and any other Related Person in any Loan Document shall be true in all
material respects on and as of the date of such Advance (except to the extent
that the facts upon which such representations are
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<PAGE> 37
based (i) have been changed by the extension of credit hereunder and (ii) are
true and correct in all material respects only when taken together with all
other representations and warranties thereof in any Loan Document previously
delivered) as if such representations and warranties had been made as of the
date of such Advance.
(b) No Default shall exist at the date of such Advance.
(c) No Material Adverse Effect shall have occurred to
Borrower's or to TOGA's financial condition or businesses since the date of this
Agreement.
(d) Each of Borrower and TOGA shall have performed and
complied in all material respects with all agreements and conditions required in
the Loan Documents to be performed or complied with by it on or prior to the
date of such Advance.
(e) The making of such Advance shall not be prohibited by any
law or any regulation or order of any court or governmental agency or authority
and shall not subject the Lenders, Holders, Collateral Agent or Agent to any
penalty or other onerous condition which would impose on any Lender a material
additional cost in making a funding under or pursuant to any such law,
regulation or order.
(f) Lenders shall have received or shall have been authorized
and instructed to withhold from the Initial Loan Advance the Yield Adjustment
Payment.
(g) Lenders shall have (i) reviewed Borrower's and TOGA's
financial condition, and (ii) found the same to be satisfactory.
(h) Each of Borrower, TOGC and TOGA shall have procured and
maintained the insurance required under Schedule 6 hereto.
Section 3.3 SPECIAL CONDITIONS PRECEDENT FOR AN ADDITIONAL LOAN
ADVANCE. After the Initial Loan Advance, the Lenders shall be obligated to make
an Additional Loan Advance only:
(i) before the Funding Expiry Date;
(ii) in the amount requested by Borrower in Borrower's
Request for Advance, not to exceed $11,000,000 in the aggregate
for all Additional Loan Advances;
(iii) upon Lenders' receipt of a timely Request for Advance
and all documents and instruments which the Lenders have then
requested, in addition to those described in Sections 3.1 and
3.2 (including opinions of legal counsel, corporate documents
and records, documents evidencing Governmental Approvals and
exemptions, and certificates of Governmental Persons and of
officers and representatives of Borrower, TOGA and other
Persons), as to (i) the accuracy and validity of or compliance
with, in all material respects, all representations, warranties
and covenants made in the Loan Documents, (ii) the satisfaction
of all conditions contained therein, and (iii) all other
matters
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<PAGE> 38
pertaining thereto. All such additional documents and
instruments shall be satisfactory to the Lenders in form,
substance and date;
(iv) upon Lender's satisfactory review of the Engineering
Report for the Comet Ridge Project as set forth in the Approved
Plan of Development; and
(v) If the Additional Advance is being used to develop
properties not covered by the Initial Environmental Report
("ADDITIONAL PROPERTIES"), upon receipt of an Environmental
Report covering the Additional Properties.
Section 3.4 SPECIAL CONDITION TO ANY ADVANCE. Notwithstanding anything
in this Agreement or any other Loan Document to the contrary, the parties
expressly acknowledge and agree that uncertainties exist with respect to the
Tri-Star Litigation and Agent and Lenders reserve the right, in their sole and
absolute discretion, to refuse to fund any Advance and/or terminate or cancel
any obligation to make future Advances if Agent or Lenders determine, in their
sole and absolute discretion, that the operating relationship between TOGA and
the operator of the Project is unacceptable to Agent or Lenders. It is further
acknowledged and agreed that the Lenders and Agent shall have the right to
consider, and approve or disapprove the status of such operating relations prior
to each Advance and the making of any Advance shall not estop, limit or restrict
Agent's or Lenders' rights under the preceding sentence with respect to
subsequent Advances. Borrower, TOGC and TOGA hereby waive and release any and
all claims or causes of action against Agent, Lenders and any Indemnitees (as
defined in Section 7.3 below) arising from the exercise by Agent or Lenders of
the rights set forth in this Section 3.4.
ARTICLE 4
REPRESENTATIONS AND WARRANTIES
Section 4.1 REPRESENTATIONS AND WARRANTIES OF BORROWER, TOGC AND TOGA.
To confirm the Lenders' understanding concerning Borrower, TOGC and TOGA and
Borrower's, TOGC's and TOGA's business, Properties and obligations and to induce
the Lenders, the Holders, Collateral Agent and Agent to enter into this
Agreement and to make the Loans, each of Borrower, TOGC and TOGA represents and
warrants to the Holders, Agents and Collateral Agent as of the date hereof and
as of the Initial Funding Date that:
(a) NO DEFAULT. None of Borrower, TOGC or TOGA is in default
in the performance of any of the material covenants and agreements contained
herein. No event has occurred and is continuing which, with the passage of time
or giving of notice, would constitute a Default.
(b) ORGANIZATION AND GOOD STANDING. Each of Borrower, TOGC and
TOGA is duly organized and validly existing and in good standing under the laws
of its jurisdiction of organization, having all powers required to carry on its
business and enter into and carry out the transactions contemplated hereby and
by the Loan Documents to which it is a party. Each of Borrower, TOGC and TOGA is
duly qualified, in good standing and authorized to do
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business in all other jurisdictions wherein the character of the properties
owned or held by it or the nature of the business transacted by it makes such
qualification necessary.
(c) AUTHORIZATION AND VALIDITY. Each of Borrower, TOGC and
TOGA has duly taken all requisite corporate action necessary to authorize the
execution and delivery by it of the Loan Documents to which it is a party and to
authorize the consummation of the transactions contemplated thereby and the
performance of its obligations thereunder. Borrower is duly authorized to borrow
funds hereunder.
(d) COMPLIANCE WITH LAWS AND CONTRACTS. The execution and
delivery by each of Borrower, TOGC and TOGA of the Loan Documents to which it is
a party, the performance by it of its obligations under such Loan Documents, and
the consummation by it of the transactions contemplated by the various Loan
Documents to which it is a party, do not and will not (i) breach, violate or
conflict with any provision of (A) any Governmental Rule, (B) the articles or
certificate of incorporation, bylaws, charter, or partnership agreement or
certificate of Borrower, TOGC or TOGA, as applicable, or (C) any agreement,
judgment, license, order or permit applicable to or binding upon Borrower, TOGC
or TOGA; (ii) result in the acceleration of any Debt owed by Borrower, TOGC or
TOGA; (iii) require any Governmental Approval other than those already obtained
by Borrower, TOGC or TOGA or not yet required to be obtained by Borrower, TOGC
or TOGA; or (iv) result in or require the creation of any Lien upon any assets
or properties of Borrower, TOGC or TOGA except as expressly contemplated in the
Loan Documents. Except as expressly contemplated in the Loan Documents, no
consent, approval, authorization or order of, and no notice to or filing with,
any court or governmental authority or third party is required in connection
with the execution, delivery or performance by Borrower, TOGC or TOGA of any
Loan Documents to which it is a party or to consummate any transactions
contemplated by the Loan Documents to which it is a party. Each of Borrower,
TOGC and TOGA is fully aware of and has complied with all regulations
promulgated in connection with the U.S. Foreign Corrupt Practices Act of 1974,
as amended and chapter 4 of Division 70 of the Criminal Code Act of 1995 (Cth)
of Australia.
(e) ENFORCEABLE OBLIGATIONS. This Agreement is, and the other
Loan Documents to which Borrower, TOGC or TOGA is a party will be, when duly
executed and delivered, legal, valid and binding obligations of Borrower, TOGC
or TOGA, as applicable, enforceable against Borrower, TOGC and TOGA in
accordance with their respective terms except as such enforcement may be limited
by bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights and general principles of equity.
(f) INITIAL FINANCIAL STATEMENTS. The Initial Financial
Statements were prepared in accordance with GAAP and fairly presented Borrower's
consolidated and TOGA's financial position at the statements' date and the
results of Borrower's consolidated and TOGA's operations and Borrower's
consolidated and TOGA's cash flows for the statements' periods. Since the
statements' date, no Material Adverse Effect has occurred with respect to
Borrower's or TOGA's financial condition or businesses.
(g) OTHER OBLIGATIONS AND RESTRICTIONS. Neither Borrower, TOGC
nor TOGA has any outstanding Debt of any kind (including contingent obligations,
tax assessments, and unusual forward or long-term commitments) which is, in the
aggregate, (i) material to
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Borrower, TOGC or TOGA or material with respect to Borrower's, TOGC's or TOGA's
financial condition and (ii) not (A) shown in the Initial Financial Statements
or (B) disclosed in the Disclosure Schedule. Except as shown in the Initial
Financial Statements or disclosed in the Disclosure Schedule, no Related Person
is subject to or restricted by any franchise, contract, deed, charter
restriction, or other instrument or restriction which is materially likely in
the foreseeable future to materially and adversely affect the businesses,
properties, prospects, operations, or financial condition of Borrower, TOGC or
TOGA.
(h) FULL DISCLOSURE. No certificate, written statement or
other written information delivered herewith or heretofore by any Related Person
to the Lenders in connection with the negotiation of this Agreement or the other
Loan Documents or in connection with any transaction contemplated hereby
contains any untrue statement of a material fact or omits to state any material
fact known to Borrower, TOGC or TOGA (other than industry-wide risks normally
associated with the types of businesses conducted by Borrower, TOGC or TOGA,
respectively) necessary to make the statements contained herein or therein not
misleading as of the date made or deemed made. There is no fact known to
Borrower, TOGC or TOGA (other than industry-wide risks normally associated with
the types of businesses conducted by Borrower, TOGC or TOGA, respectively) that
has not been disclosed to the Lenders in writing that might reasonably be
expected to cause a Material Adverse Effect upon Borrower's, TOGC's, TOGA's or
any of TOGA's Subsidiaries' properties, businesses, prospects or condition
(financial or otherwise). Borrower has heretofore delivered to the Lenders true,
correct and complete copies of the Initial Financial Statements and the Initial
Engineering Report.
(i) LITIGATION. Except as disclosed in the Initial Financial
Statements or in the Disclosure Schedule: (i) there are no actions, suits or
legal, equitable, arbitrative or administrative proceedings pending, or to the
knowledge of Borrower, TOGC or TOGA threatened, against any Related Person
before any Governmental Person which could reasonably be expected to have a
Material Adverse Effect on Borrower, TOGC or TOGA, or the right or ability of
Borrower, TOGC or TOGA to enter into the Loan Documents to which it is a party
or to consummate the transactions contemplated thereby or to perform its
obligations thereunder and (ii) there are no outstanding judgments, injunctions,
writs, rulings or orders by any such Governmental Person against any Related
Person which have a material probability of causing a Material Adverse Effect on
such Related Person.
(j) ERISA LIABILITIES. There are no currently existing ERISA
Plans or similar plans in Australia. No Related Person is required to contribute
to, or has any other absolute or contingent liability in respect of, any
"multiemployer plan" as defined in Section 4001 of ERISA or any other Australian
law which has a comparable effect to ERISA.
(k) ENVIRONMENTAL AND OTHER LAWS. Except as disclosed in the
Disclosure Schedule:
(i) each of Borrower, TOGC and TOGA is conducting its
businesses in material compliance with all applicable
Governmental Rules, including applicable Environmental Laws,
and has been and is in compliance in all material respects
with all Governmental Approvals required under such
Governmental Rules, including applicable Environmental Laws;
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(ii) to the best of Borrower's, TOGC's and TOGA's
knowledge, none of the operations or properties of any Related
Person is the subject of any applicable Governmental Persons
investigation evaluating any release of any Hazardous
Materials into the environment or the improper storage or
disposal (including storage or disposal at offsite locations)
of any Hazardous Materials;
(iii) no Related Person (and to the best knowledge of
Borrower, TOGC and TOGA, no other Person) has filed any notice
under any Governmental Rule indicating that any Related Person
is responsible for the release into the environment, or the
improper storage or disposal, of any material amount of any
Hazardous Materials or that any Hazardous Materials have been
released, or are improperly stored or disposed of, upon any
property of any Related Person;
(iv) no Related Person has transported or arranged for the
transportation of any Hazardous Material to any location (A)
in contravention of any Environmental Law or (B) is the
subject of any applicable Governmental Person's enforcement
actions or, to the best of Borrower's, TOGC's and TOGA's
knowledge, other Governmental Person's investigations which
may lead to claims against any Related Person for clean-up
costs, remedial work, damages to natural resources or for
personal injury claims (whether under Environmental Laws or
otherwise), in each case, where such action could reasonably
be expected to have a Material Adverse Effect; and
(v) no Related Person otherwise has any known material
contingent liability under any Environmental Laws or in
connection with the release into the environment, or the
storage or disposal, of any Hazardous Materials.
(l) NAMES AND PLACES OF BUSINESS. Except as disclosed in the
Disclosure Schedule, neither Borrower, TOGC nor TOGA has, had, been known by, or
used any other partnership, trade, or fictitious name, except as disclosed in
the Disclosure Schedule. The chief executive office and principal place of
business of Borrower, TOGC and TOGA are located at the address for Borrower,
TOGC and TOGA, respectively, set out in Section 8.3.
(m) NO SUBSIDIARIES. Except as disclosed in the Disclosure
Schedule, Borrower, TOGC and TOGA have no Subsidiaries, own no stock in any
other Person, and is not a member of any general or limited partnership, joint
venture or association of any kind.
(n) REGULATIONS G, U AND X. Neither Borrower, TOGC nor TOGA is
engaged principally, or as one of its important activities, in the business of
extending credit for the purpose of purchasing or carrying "margin stock" (as
defined in Regulations G, U and X of the Board of Governors of the Federal
Reserve System) or any Australian law of comparable effect.
(o) COMMISSIONS. Except as set forth in the Disclosure
Schedule, neither Borrower, TOGC nor TOGA, nor any other Related Person, has
entered into any agreement or
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incurred any obligation which might result in the obligation to pay a brokerage
commission or finder's fee (other than fees to one or more Lenders) with respect
to the Loans.
(p) CERTAIN REGULATIONS. Neither Borrower, TOGC nor TOGA (i)
is an "investment company," or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940 or any other
Australian law which has a comparable effect; (ii) is a "holding company," an
"affiliate" of a "holding company" or a "subsidiary company" of a "holding
company," within the meaning of the Public Utility Holding Company Act of 1935
or any other Australian law which has a comparable effect; or (iii) is subject
to any other Governmental Rule restricting its ability to incur debt or to grant
Liens.
(q) OWNERSHIP OF TOGC AND TOGA. Borrower owns one hundred
percent (100%) of the outstanding stock of TOGC. TOGC owns ninety percent (90%)
of the outstanding stock of TOGA. Except for the rights created under the Loan
Documents, no other Person has a Lien on or any right to acquire any stock,
equity interest or other interest whatsoever in TOCG or TOGA.
(r) GOVERNMENTAL APPROVALS; GOVERNMENTAL RULES. To the best of
TOGA's and Borrower's knowledge and belief, Tri-Star as record holder of the
Project Properties and as operator under the Project JOA holds all Governmental
Approvals necessary under Governmental Rules for the ownership and operation of
the Project in the ordinary course as well as the consummation of the
transactions contemplated in the Loan Documents, except for those Governmental
Approvals which are not currently required. TOGA has no reasonable basis to
believe that any Governmental Approvals which have not been obtained by Tri-Star
as of the date of this Agreement, but which will be required in the future, will
not be obtained in due course on or prior to the commencement of the appropriate
stage of the expansion of the Project or that they will not be free from any
condition or requirements, compliance with which could reasonably be expected to
have a Material Adverse Effect on TOGA. The Project, if constructed in
accordance with the Approved Plan of Development and otherwise developed,
constructed, operated and maintained as contemplated by the Loan Documents, is
expected to conform to and comply with all covenants, conditions, restrictions
and reservations in the Governmental Approvals applicable thereto and all
Governmental Rules, except to the extent any such noncompliance could not
reasonably be expected to have a Material Adverse Effect on TOGA.
(s) NATURE OF BUSINESS. TOGA has not engaged in any business
other than: (i) its participation in the Project and (ii) other energy related
activities in Australia including ownership and development of authorities to
prospect. Neither the business nor any Property of TOGA are or have been
affected by any fire, explosion, accident, strike, lockout or other labor
dispute, drought, storm, hail, earthquake, embargo, act of God or of the public
enemy or other casualty (whether or not covered by insurance), that individually
or in the aggregate has had or could reasonably be expected to result in a
Material Adverse Effect on Borrower, TOGC, TOGA or any Related Person.
(t) TITLE; SECURITY DOCUMENTS; INTERESTS COMPANY COLLATERAL.
Subject to this paragraph, each of Borrower, TOGC and TOGA own and have good,
legal and marketable title (with respect to personalty) and good, legal and
indefeasible title (with respect to real property) to the Collateral purported
to be so owned and covered by the Security Documents to
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which it is a party free and clear of all Liens other than Permitted Liens.
Lender and Agent specifically acknowledge that as of the date of this Agreement,
TOGA's interest in the Project is a valid and enforceable contractual or
equitable interest only under the Project JOA. TOGA has brought proceedings in
the Courts of the State of Texas against Tri-Star Petroleum Company ("TRI-STAR")
to remove Tri-Star as the operator of the Project and to require Tri-Star to
transfer to TOGA and the other working group interest owners who are parties to
the Project JOA their proportionate interests in the Authority to Prospect 526P
and other property held in connection with the Project Properties. TOGA's
proportionate interest in the Project Properties is not encumbered by any Liens
other than Permitted Liens. TOGA's ownership of the interest in Eligible Proved
Properties has not been forfeited and there is no basis for a claim of
forfeiture under the Project JOA and other Project Documents and it is entitled
to receive (net of all Permitted Liens) the share of the oil, gas and other
minerals produced from or allocated to the wells, leases and lands listed or
described in Exhibit S hereto or in any Security Document (the "COLLATERAL
PROPERTIES") specified as fractional, percentage or decimal interests in such
Exhibit S hereto or Security Document under the heading "NRI". Such shares of
production which TOGA is entitled to receive (and TOGA's share of expenses
relating to the Collateral Properties with respect to each lease and lands
affected thereby and also specified in Exhibit S or Security Document under the
heading "WI") are not subject to change except, and only to the extent that,
such changes are reflected in Exhibit S; and such shares of production and the
oil and gas interests to which some of them relate are (and, unless and until
released by Collateral Agent, shall remain) encumbered by the Security
Documents. There is no financing statement, mortgage or similar document
covering any Collateral Property on file in any public office naming any party
other than Collateral Agent as mortgagee or secured party other than financing
statements, mortgage or similar documents which have heretofore expired or been
terminated.
(u) STATUS OF LEASES, ETC. With respect to the Owned
Properties and the JOA Properties, the leases and other contracts and
agreements, permits and approvals forming a part of the Eligible Proved
Properties, which are material to the operation or value of any Properties, when
taken as a whole, are in full force and effect. All rents, royalties and other
payments due and payable under such leases and other contracts and agreements,
forming a part of the Eligible Proved Properties, or under the Permitted Liens,
have been properly and timely paid in accordance with prudent industry
practices, but in no event later than ninety (90) days past due. TOGA in respect
of the Owned Properties and, to the best of TOGA's knowledge and belief, the
operator under the Project JOA in respect of JOA Properties, is not in default
with respect to its obligations other than to Comet Ridge Participants (and is
not aware of any default by any third party with respect to such third party's
obligations where such default could adversely affect the ownership or operation
of the Eligible Proved Properties) under such leases and other contracts or
agreements, or under Permitted Liens, or otherwise attendant to the ownership or
operation of the Eligible Proved Properties, where such default could have a
Material Adverse Effect.
(v) PRODUCTION SALES, ETC. Except as set forth in the
Disclosure Schedule, with respect to the Owned Properties and the JOA Properties
(to the best of TOGA's, TOGC's and the Borrower's knowledge and belief), neither
TOGA, TOGC or Borrower nor to the best of TOGA's, TOGC's and the Borrower's
knowledge and belief, Tri-Star as operator under the Project JOA (in respect of
the JOA Properties) or TOGA's predecessors-in-title (in respect of the Owned
Properties) have received prepayments (including, but not limited to, payments
for gas not taken pursuant to "take or pay" arrangements) for any oil or gas to
be produced from the
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Eligible Proved Properties after the Closing, no Eligible Proved Property is
subject to any contractual or other arrangement whereby payment for production
from such Eligible Proved Property is to be deferred for a substantial period
after the end of the calendar month in which such production is delivered in the
case of oil, not in excess of thirty (30) days, and in the case of gas, not in
excess of sixty (60) days. Except as heretofore disclosed, in writing by
Borrower, TOGC or TOGA to Agent, no Eligible Proved Property is subject to any
contractual or other arrangement for the sale of hydrocarbons which cannot be
canceled on ninety (90) days' or less notice. No Eligible Proved Property is
subject at the present time to any regulation refund obligation, and to the best
of TOGA's, TOGC's and Borrower's knowledge and belief, no situation exists where
the same might be imposed. Except as heretofore disclosed in writing by Borrower
to Agent, no Eligible Proved Property is subject to a gas balancing arrangement
under which an imbalance exists, with respect to which imbalance TOGA is in an
overproducing status and is required to (i) permit one or more third parties to
take a portion of the production attributable to such Collateral Property
without payment (or without full payment) therefor and/or (ii) make payment in
cash, in order to correct such imbalance.
(w) OPERATION OF COLLATERAL PROPERTIES. Borrower has disclosed
to Agent and Lenders that Borrower and TOGA have asserted certain claims in the
Tri-Star Litigation that, among other things, the Project Properties are not
being operated in a good and workmanlike manner in compliance with the Project
JOA and applicable laws, rules and regulations. Notwithstanding such alleged
breaches of the Project JOA and applicable laws, rules and regulations by
Tri-Star, none of Borrower, TOGC or TOGA is aware of any fact or condition that
would cause a material risk that (1) the Project Properties will not continue to
produce Hydrocarbons as projected in the Initial Engineering Report, (2) either
the Hydrocarbons produced from the Project Properties will not be sold or TOGA's
share of sales proceeds not remitted at its direction, in each case as
consistent with prior practice, and (3) once proposed pursuant to the Project
JOA and funded as contemplated hereby, the Approved Plan of Development will not
be conducted as contemplated therein.
(x) TAX FILINGS. Except as set forth in the Disclosure
Schedule, each of Borrower, TOGC and TOGA has filed all required tax returns and
paid all taxes and governmental charges or levies (which taxes, charges or
levies are material in the aggregate to Borrower, TOGC or TOGA) imposed upon its
income, properties or profits, before the same became in default, including, but
not limited, to all ad valorem taxes assessed under the Collateral Properties or
any part thereof and all occupational taxes and all production, severance,
windfall profit, excise and other taxes assessed against, or measured by, the
production of (or the value of, proceeds or the production of) oil, gas, or
other minerals accruing to the Collateral Properties.
(y) USE OF PROCEEDS. The proceeds of each Funding will be used
solely in accordance with, and solely for the purposes contemplated by, Section
2.4 hereof. No part of the proceeds of any extension of credit hereunder will be
used for the purpose, whether immediate, incidental or ultimate, of buying or
carrying any margin stock within the meaning of Regulations U and X or to extend
credit to others for such purpose.
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Section 4.2 REPRESENTATIONS OF THE LENDERS, THE COLLATERAL AGENT AND
THE AGENT. To confirm the Borrower's and TOGA's understanding concerning the
Lenders, the Collateral Agent and the Agent and to induce the Borrower and TOGA
to enter into this Agreement, each of the Lenders, the Collateral Agent and the
Agent severally and not jointly represents and warrants to TOGA and Borrower as
of the date hereof and as of the Initial Funding Date and any Additional Funding
Date that:
(a) ORGANIZATION AND GOOD STANDING. Each of the Lenders, the
Collateral Agent and the Agent is duly organized and validly existing and in
good standing under the laws of its jurisdiction of organization, having all
powers required to carry on its business and enter into and carry out the
transactions contemplated hereby and by the Loan Documents to which it is a
party. Each of the Lenders, the Collateral Agent and the Agent is duly
qualified, in good standing and authorized to do business in all other
jurisdictions wherein the character of the properties owned or held by it or the
nature of the business transacted by it makes such qualification necessary.
(b) AUTHORIZATION AND VALIDITY. Each of the Lenders, the
Collateral Agent and the Agent has duly taken all requisite corporate action
necessary to authorize the execution and delivery by it of the Loan Documents to
which it is a party and to authorize the consummation of the transactions
contemplated thereby and the performance of its obligations thereunder.
(c) ENFORCEABLE OBLIGATIONS. This Agreement is, and the other
Loan Documents to which the each Lender, the Collateral Agent and the Agent is a
party will be, when duly executed and delivered, legal, valid and binding
obligations of the Lenders, the Collateral Agent and the Agent, as applicable,
enforceable against the Lenders, the Collateral Agent and the Agent in
accordance with their respective terms except as such enforcement may be limited
by bankruptcy, insolvency or similar laws of general application relating to the
enforcement of creditors' rights and general principles of equity.
(d) INVESTMENT. Each Lender represents to Borrower and TOGA,
as of the dates set forth above:
(i) it is an "accredited investor" as such term is defined
in Regulation D adopted under the Securities Act; and
(ii) it is making the Initial Advance as well as any
subsequent Advances and purchasing the Notes for investment
purposes and not with a view towards sale or distribution in
violation of applicable laws.
(iii) it understands that the Notes have not been
registered under the Securities Act and may be resold only if
registered pursuant to the provisions of the Securities Act or
if an exemption from registration is available, except under
circumstances where neither such registration nor such an
exemption is required by law, and that the Borrower is not
required to register the Notes.
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ARTICLE 5
COVENANTS OF BORROWER AND TOGA
Section 5.1 AFFIRMATIVE COVENANTS. To conform with the terms and
conditions under which the Lenders and the Holders are willing to have credit
outstanding to Borrower, and to induce the Lenders and the Holders to enter into
this Agreement and make the Loans, each of Borrower and TOGA warrants, covenants
and agrees that until the full and final payment of the Obligations and the
termination of this Agreement, unless the Agent previously agrees otherwise:
(a) PAYMENT AND PERFORMANCE. Borrower will pay all amounts due
under the Loan Documents in accordance with the terms thereof and each of
Borrower and TOGA will observe, perform and comply in all material respects with
every covenant, term and condition expressed in the Loan Documents to which it
is a party.
(b) BOOKS, FINANCIAL STATEMENTS AND REPORTS. Each of Borrower
and TOGA will at all times maintain full and accurate books of account and
records and a standard system of accounting and will furnish the following
statements and reports to the Agent at Borrower's expense:
(i) (A) By the date hereof in the case of the 1999 fiscal
year ended September 30, 1999 and (B) promptly after becoming
available, and in any event not later than ninety (90) days
after the close of each fiscal year beginning with the 2000
fiscal year, the audited Consolidated and consolidating
balance sheets of Borrower and of TOGA as of the end of the
Borrower's fiscal year and the audited Consolidated and
consolidating statements of profit and loss of Borrower and of
TOGA for such fiscal year, all such financial statements
prepared without regard to whether Borrower's or TOGA's
financial results would otherwise be shown on consolidated
financial statements of another Person and setting forth in
each case in comparative form the corresponding figures for
the preceding fiscal year, all in reasonable detail and all
prepared in conformity with GAAP or Australian GAAP, as
applicable, certified in a manner by such independent
certified public accountants.
(ii) Promptly after becoming available, and in any event
not later than forty-five (45) days after the end of each
fiscal quarter beginning with the 2000 fiscal year, the
unaudited Consolidated balance sheets of Borrower and of TOGA
as of the end of said fiscal quarter, and the Consolidated
statements of profits and loss of Borrower and of TOGA for
such quarter and for the period from the beginning of the
fiscal year to the end of such quarter, setting forth in each
case in comparative form the corresponding figures for the
corresponding period of the preceding fiscal year, all
prepared in reasonable detail and in accordance with GAAP or
Australian GAAP, as applicable.
(iii) A certificate signed by Borrower's or TOGA's chief
financial officer, to be furnished with each set of financial
statements under paragraph (i) and (ii) above. The certificate
shall state that, to the officer's knowledge based
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upon his or her due diligence review, under his or her
supervision, of Borrower's or TOGA's affairs, respectively,
(A) all of the representations and warranties made herein
continue to be true and correct as of the date of the
certificate (or, if any representation or warranty is not true
or correct as of such date, the certificate shall state the
nature of the representation or warranty no longer valid and
the actions which Borrower or TOGA is taking or proposes to
take with respect thereto) and (B) such financial statements
are accurate and complete in all material respects. In the
case of a certificate accompanying the financial statements in
paragraph (ii), the certificate shall also state that the
officer reviewed the Loan Documents containing calculations
showing compliance (or non-compliance) at the end of the
applicable fiscal quarter with the requirements of Sections
5.2(a), (e), (f), (g), (j) and (k), and determined that no
Default or Coverage Deficiency existed at the end of such
Fiscal Quarter or at the time of such certificate (or, if the
officer determines otherwise, the certificate shall specify
the nature and period of existence of the Default or Coverage
Deficiency).
(iv) Promptly after becoming available, copies of all
financial statements, reports, notices and proxy statements
sent by Borrower or TOGA to its stockholders and all
registration statements, periodic reports on Forms 8-K, 10-K
or 10-Q and other statements and schedules filed by Borrower
or TOGA with any securities exchange, the Commission or any
similar Governmental Person.
(v) Promptly upon receipt thereof, each other report
submitted to Borrower or TOGA by an independent certified
public accountant in connection with any annual, quarterly,
interim or special audit made by such accountant of the books
or records of Borrower or TOGA.
(vi) On each Quarterly Payment Date, to the extent such
information is made available to TOGA from the operator of the
Project (and Borrower and TOGA shall exercise all rights and
remedies as requested by Agent to obtain such information), a
consolidated report in detail acceptable to Agent with respect
to the Eligible Proved Properties during the Calendar Quarter
immediately prior thereto containing the following
information:
(A) a description of cash flows for such period with
a detailed breakdown of all relevant sources and uses of
cash for the applicable quarter;
(B) a description by well and field of the gross
quantities of Hydrocarbons and water produced from or
injected into the Eligible Proved Properties during such
period;
(C) a description by well and field of the net
quantities of Hydrocarbons sold during such period out of
production from the Eligible Proved Properties and
calculating the average sales prices of such oil, gas, and
natural gas liquids;
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(D) a detailed calculation of ANCF and Excess ANCF
for such period including a detailed aging of TOGA's
accounts receivable and payable;
(E) regardless of whether the same are included in
such calculation of ANCF, a detailed calculation of any
LOE, G&A Costs, Third Party Costs, Capital Expenditures,
and other direct charges or overhead costs with respect to
the Eligible Proved Properties specifying any material
differences from those Approved and those actually
incurred;
(F) a summary of wells drilled, completed or worked
over during the reporting period showing the total depth
drilled or tested, the depth at which production casing
was set, and the existing or anticipated perforated
interval and upon request copies of any well logs across
the pay sectors;
(G) a discussion of any current operating problems
with any wells and any proposed solutions;
(H) any technical studies conducted during the
reporting period of performance; and
(I) a projection of Capital Expenditures for the next
Calendar Quarter and if not Approved, all other sources of
capital and periods beyond and if any of such Capital
Expenditures are not Approved Capital Expenditures the
sources of capital for the payment thereof, together with
accompanying authority for expenditures if requested by
Agent or Lenders.
(vii) An annual Engineering Report, to be effective as of
October 1 of each year and to be delivered to Agent prior to
December 1 of that year (or, in the case of 1999, by the date
hereof). Each Engineering Report shall:
(A) be prepared by S.A. Holditch & Associates or such
other nationally or regionally recognized independent
petroleum engineers, which may be chosen by TOGA if
acceptable to Agent in its sole and absolute discretion,
concerning all of the oil and gas properties of TOGA
including without limitation the Eligible Proved
Properties, prepared at Borrower's expense;
(B) separately report on Proved Developed Producing
Reserves, Proved Developed Non-Producing Reserves and
Proved Undeveloped Reserves of the Eligible Proved
Properties and Subject Properties, and separately
calculate the NPV10 and Modified NPV10 of each such
category of Reserves;
(C) use pricing specified in the definition of NPV10;
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(D) address the various factors to be taken into
account in calculating ANCF so that projected ANCF can be
readily calculated from the report;
(E) take into account TOGA's actual experiences with
LOE and other costs in determining projected LOE and other
costs;
(F) take into account any "over-produced" status
under gas balancing arrangements;
(G) contain information and analysis comparable in
scope to that contained in the Initial Engineering Report;
(H) set forth all monetary sums in Dollars using the
Spot Rate as of the effective date of such report for the
purposes of converting any amounts payable in any currency
other than Dollars to Dollars; and
(I) otherwise be in form and substance satisfactory
to Agent.
In the event that Borrower or TOGA and Agent disagree over whether or not any
work-overs or other remedial Capital Expenditures should be included in the LOE
of an Engineering Report for the purposes of calculating NPV10, the engineers
preparing the report shall resolve such disagreement by determining whether such
expenditures are likely to be required in accordance with prudent industry
practice and shall include or exclude such expenditures based upon such
determination.
(viii) Interim engineering reports shall be prepared with
an effective date of April 1 and delivered no later than May 1
of each year if requested by Agent. Such interim engineering
reports shall include, but not be limited to, calculations of
NPV10 on the Eligible Proved Properties, and shall use prices
supplied by Lenders except as modified by prices actually
received as of April 1 by TOGA pursuant to oil and gas sales
contracts between TOGA (as seller) and third parties (as
buyers).
(ix) Within ten (10) days after submission to any
Governmental Person, a copy of any and all reports required to
be furnished pursuant to any Governmental Rule pertaining to
the Eligible Proved Properties.
(x) An Independent Engineering Report shall be prepared as
of and delivered within thirty (30) days after the Repayment
Date covering all properties held by TOGA and all subsidiaries
of TOGA, if any.
(c) OTHER INFORMATION AND INSPECTIONS.
(i) Borrower and TOGA will furnish to the Lenders at
Borrower's or TOGA's, respectively, reasonable expense any
information which the Agent may from time to time reasonably
request concerning any covenant, provision or condition of the
Loan Documents or any matter in connection with Borrower's or
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TOGA's businesses and operations. Borrower and TOGA will
permit representatives appointed by Lenders (including
independent accountants, engineers, agents, attorneys,
appraisers and any other Persons) upon reasonable notice to
visit and inspect any of Borrower's or TOGA's property,
including books of account, other books and records, and any
facilities or other business assets, and to make extra copies
therefrom and photocopies and photographs thereof, and to
record any information such representatives obtain, and shall
further permit Lenders or its representatives to investigate
and verify the accuracy of the information furnished to
Lenders in connection with the Loan Documents and to discuss
all such matters with its officers, employees and
representatives.
(ii) On a Monthly basis or in any event no less than once
each Quarter, TOGA will review with Agent (an "OPERATIONS
REVIEW") all operational activities on the Subject Properties
in sufficient detail so as to give a full account and
reconciliation of operational and financial progress from the
Closing and from any preceding Operations Review, to the
extent that such information has been provided by the operator
to the Project, and Such Operations Reviews will include, but
not be limited to, progress as of such date on the Approved
Plan of Development, any substitutions or changes to the
Approved Plan of Development requested by Lenders, and changes
to the Approved Plan of Development due to cost or expense
overruns, under-runs, unanticipated mechanical problems or
differences in reserve or production estimates. Such
Operations Reviews shall include, to the extent permitted by
the operator of the particular Property, on-site inspections
at the Project either by two of Lenders' representatives once
per Calendar Year or by one of Lenders' representatives twice
per Calendar Year, which inspections shall be at Borrower's
expense.
(iii) Each of the Lenders, Holders, Agents and Collateral
Agent agrees that it will take all reasonable steps to keep
confidential any proprietary information given to it by
Borrower or TOGA; provided, however, that this restriction
shall not apply to information which has at the time in
question entered the public domain; provided further that any
such party may disclose any such information to the limited
extent that such information (i) is required to be disclosed
by law or by any order, rule or regulation (whether valid or
invalid) of any court or governmental agency, or any
regulatory authority (whether or not governmental); (ii) is
disclosed to the Affiliates, auditors, attorneys, or agents of
the Lenders, provided that such Persons agree to keep any such
information confidential to the same extent as any such party
is required to; (iii) is furnished to any purchaser or
prospective purchaser of participations or other interests in
the Loans or the Notes, provided that such Persons agree to
keep any such information confidential to the same extent as
such party is required to; or (iv) is disclosed by such party
in the course of collecting the obligations or enforcing its
rights under the Loan Documents following the occurrence of an
Event of Default without violating such party's
confidentiality obligations to Borrower or TOGA.
(iv) The Lenders shall be entitled to have observers to
the Borrower's and TOGA's Board of Directors ("Board") who
shall have the right
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to attend and receive all materials distributed for or at all
meetings (telephonic and otherwise) of directors and shall be
entitled to the same rights expense reimbursement rights as
directors of the Borrower and TOGA, except that such observers
shall not be entitled to vote on matters presented to or
discussed by the Board nor participate in attorney-client
privileged discussions or receive or review any documents
subject to an attorney-client or attorney work product
privilege. Lenders will be notified of all meetings of and all
proposed actions by the Board as if a representative of each
Lender were a member of the Board. Such observers will receive
no compensation for their services as observers, but shall be
entitled to be reimbursed by the Borrower or TOGA,
respectively, for all reasonable costs and expenses incurred
in connection with their participation in meetings or other
activities of the Board.
(d) NOTICE OF MATERIAL EVENTS AND CHANGE OF ADDRESS. Each of
Borrower and TOGA will notify the Lenders of any of the following events
promptly, and in any event within ten (10) Business Days, after learning of the
event's occurrence:
(i) a Material Adverse Effect;
(ii) a Default;
(iii) (A) the acceleration of the maturity of any Debt
owed by any Related Person or (B) a default by any Related
Person under any indenture, mortgage, agreement, contract or
other instrument to which such Related Person is a party or by
which it or any of its properties is bound, if such
acceleration or default would reasonably be expected to have a
Material Adverse Effect upon Borrower's or TOGA's financial
condition or a Material Adverse Effect on the value of the
Collateral;
(iv) a claim of $250,000 or more, any claim or notice of
potential liability under any Environmental Laws, or any other
material adverse claim asserted against Borrower or TOGA or
with respect to its properties;
(v) the filing of any suit or proceeding against any
Related Person in which an adverse decision would have a
material probability of causing a Material Adverse Effect;
(vi) a written notice, claim, allegation or assertion that
Borrower, TOGA or the Project is in violation or noncompliance
of any Governmental Rule of any Governmental Person having
jurisdiction over Borrower, TOGA or the Project, which
violation or noncompliance would reasonably be expected to
have a Material Adverse Effect on Borrower, TOGA or any other
Related Person; and
(vii) if a Change in Control has occurred with respect to
Borrower or TOGA.
Upon the occurrence of any of the foregoing, Borrower and TOGA will take all
necessary or appropriate steps to remedy promptly any such Default under (ii)
above, Material Adverse Effect
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or acceleration; to protect against any such adverse claim; to defend any such
suit or proceeding; and to resolve all controversies on account of any of the
foregoing. Borrower or TOGA will also notify Agent in writing at least twenty
(20) Business Days prior to the date that Borrower, TOGA or any of TOGA's
Subsidiaries changes its name or the location of its chief executive office or
principal place of business or the place where it keeps its books and records
concerning the Collateral, furnishing with such notice any necessary financing
statement amendments or requesting Agent and its counsel to prepare the same.
(e) MAINTENANCE AND DEVELOPMENT OF PROPERTIES; MAINTENANCE OF
AGREEMENTS. Each of Borrower and TOGA will or will cause the operator of the
Project to the extent of Borrower's and TOGA's abilities under the Project JOA,
as applicable to:
(i) maintain, preserve, protect and keep all Eligible
Proved Properties and all other Collateral used or useful in
the conduct of its business in good condition (normal wear and
tear excepted) and in compliance in all material respects with
all applicable laws, rules and regulations, except where (A)
the necessity of compliance therewith is contested in good
faith by appropriate proceedings or (B) non-compliance
therewith would not have a Material Adverse Effect;
(ii) develop the Project in accordance with the Approved
Plan of Development;
(iii) from time to time make all repairs, renewals and
replacements needed to enable the Project and operations
carried on in connection therewith to be conducted at all
times consistent with prudent industry practices;
(iv) maintain bonding and insurance coverages, as set
forth in Schedule 6 hereto or as Approved by the Agent;
provided, however, that Borrower shall cause the insurance
coverages described in Paragraph 1(h) of said Schedule 6 to be
in full force and effect at or before the earlier of (1) the
time of the first to occur of the issuance of a press release
or SEC filing with respect to the execution and delivery of
this Agreement or the disclosure to any Comet Ridge
Participant or Governmental Person of the execution and
delivery of this Agreement or (2) the fifth (5th) date after
the date of execution and delivery of this Agreement by the
parties hereto; and
(v) keep and perform all of the terms, covenants, and
conditions of the Loan Documents to which it is a party.
(f) MAINTENANCE OF EXISTENCE AND QUALIFICATIONS. Each of
Borrower and TOGA will:
(i) maintain and preserve its existence as a corporation
under Texas or Australian law, respectively, and its rights in
full force and effect; and
(ii) qualify to do business as a foreign corporation in
every state or jurisdiction where required to do so by
applicable law, except in any jurisdiction
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where no Collateral is located and the failure to qualify will
have no Material Adverse Effect.
(g) PAYMENT OF TRADE DEBT, ETC. Each of Borrower and TOGA
will:
(i) pay, within ninety (90) days after the date of
invoice, any Debt owed by it on ordinary trade terms to
vendors, suppliers or other Persons providing goods and
services used by it in the ordinary course of its business;
(ii) pay and discharge when due all other Debt, royalties
and encumbrances now or hereafter owed by it unless the same
is being contested in good faith by appropriate means and for
which adequate cash reserves have been established; and
(iii) maintain appropriate accruals and reserves for all
of the foregoing Debt in accordance with GAAP and Australian
GAAP, as applicable.
Borrower or TOGA may, however, delay paying or discharging
any such Debt so long as it is in good faith contesting the validity thereof by
appropriate proceedings and has set aside on its books adequate reserves
therefor.
(h) PAYMENT OF TAXES, ETC. Each of Borrower and TOGA will:
(i) timely file all required tax returns;
(ii) timely pay all Taxes, assessments, and other
governmental charges or levies properly imposed upon it or
upon its income, profits or property; and
(iii) maintain appropriate accruals and reserves for all
of the foregoing Taxes in accordance with GAAP.
Borrower or TOGA may, however, delay paying or discharging
any such Taxes described in clauses (i) through (iii) above so long as it is in
good faith contesting the validity thereof by appropriate proceedings and has
set aside adequate cash reserves therefor.
(iv) Each of Borrower and TOGA agrees to pay or to cause
to be paid all governmental assessments, charges, taxes,
levies, imposts or other liabilities imposed by any Australian
Governmental Person (including Australian Withholding Taxes)
including any interest or penalties thereon and any stamp or
documentary or other excise or property taxes, at any time
payable by it or ruled to be payable by it, by reason of any
Australian Governmental Person or Australian Governmental Rule
(collectively, "TAXES"), and to indemnify and hold the Holders
and Collateral Agent harmless against liability fees or
additional expense with respect to or in connection with any
such Taxes. Each of Borrower and TOGA hereby further agrees as
follows:
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(A) Any and all payments made by Borrower and TOGA
hereunder and under any of the other Loan Documents,
whether of principal, Coupon Interest, Royalty, expenses
or otherwise shall be free and clear of and without
deduction or withholding for any and all Taxes and all
liabilities with respect thereto including Australian
Withholding Taxes. If TOGA shall be required by law to
deduct or withhold any Taxes (including Australian
Withholding Taxes) from or in respect of any sum payable
to the Collateral Agent or any Holder hereunder or under
any of the other Loan Documents, the sums payable under
the Notes or the Loan Documents shall be increased as may
be necessary so that after making all required deductions
and withholdings (including deductions or withholdings
applicable to additional sums payable under this
paragraph) the Holders or Collateral Agent receives an
amount equal to the sum it would have received had no such
deductions or withholdings been made. TOGA shall make such
deductions or withholdings and Borrower and TOGA shall pay
the full amount deducted or withheld to the relevant
Australian or other foreign taxation authority or other
Australian or other foreign authority in accordance with
applicable law.
(B) Indemnitors shall indemnify the Holders and
Collateral Agent for the full amount of Taxes paid by the
Holders and Collateral Agent and any liability (including
penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes were
correctly or legally asserted, provided, that any refunds
for any Taxes incorrectly paid shall be remitted to
Borrower promptly upon receipt by Collateral Agent or any
Holder, to the extent such refunds are received by
Collateral Agent, or any Holder and are not otherwise
necessary to pay any Obligations then due and payable.
Payments under this indemnification shall be made within
thirty (30) days from the date the Holders, or Collateral
Agent makes written demand therefor after payment of such
Taxes. A certificate as to the amount of such Taxes and
the calculation thereof (if determinable), submitted to
Borrower by the Holders or Collateral Agent shall be
conclusive and binding for all purposes, absent manifest
error. With respect to any payment request made by any
Person pursuant to the tax indemnity set forth in this
clause (B), if the Borrower shall request, such Person
shall in good faith at Borrower's expense contest the
imposition of or the amount of any such request amount,
keep the Borrower reasonably informed in respect thereof,
consult in good faith with the counsel to Borrower
regarding such contest, and shall not compromise or
otherwise settle such contest without the consent of
Borrower.
(v) Upon the reasonable request of Holder, TOGA and
Borrower shall furnish to the Holder copies of the presented
forms filed in connection therewith and the original or a
certified copy of a receipt or certificate evidencing payment
thereof. Without prejudice to the survival of any other
agreement of Borrower or TOGA hereunder, the agreements and
obligations of Borrower and
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TOGA contained in this Section 5.1 shall survive for a period
of ten (10) years after the date of termination hereof.
(i) PAYMENT OF EXPENSES. Whether or not the transactions
contemplated by this Agreement are consummated, Borrower will promptly (and in
any event, within fifteen (15) days after any invoice or other statement or
notice) pay all reasonable costs and expenses incurred by or on behalf of the
Lenders, Holders, Agent or Collateral Agent (including reasonable attorneys'
fees) in connection with (A) the negotiation, preparation, execution and
delivery of the Loan Documents, and any and all amendments, consents, waivers or
other documents or instruments relating thereto, (B) the filing, recording,
refiling and re-recording of any Loan Documents and any other documents or
instruments or further assurances required to be filed or recorded or refiled or
re-recorded by the terms of any Loan Document, (C) the borrowings hereunder and
other action reasonably required in the course of administration of the various
Loan Documents (except for allocations of indirect overhead costs of the Lenders
or its affiliates), (D) the defense or enforcement of the Loan Documents or the
Lenders', Holders' Agent's or Collateral Agent's exercise of their rights
thereunder, and (E) Borrower's or TOGA's performance of its obligations and the
Lenders', Holders', Agent's or Collateral Agent's exercise of their or its
rights under Sections 5.1(c)(i) and (ii).
Notwithstanding anything to the contrary herein, on the
Initial Funding Date and the date of each Advance thereafter, and in any event
no later than fifteen (15) days after receipt of invoices for the following,
Borrower shall pay to the Lenders the reasonable fees, office charges and
expenses of Milbank, Tweed, Hadley & McCloy LLP and MinterEllison, counsel to
Agent, Collateral Agent and the Lenders. Notwithstanding anything to the
contrary herein, on or before the Initial Funding Date, Borrower shall pay to
the Lenders:
(A) the Yield Adjustment Payment;
(B) $30,000 for payment of out-of-pocket costs and
expenses incurred by or on behalf of the Lenders, Holders,
Agent, Collateral Agent as of the Initial Funding Date which
has been paid prior to the execution of this Agreement; and
(C) the reasonable fees, office charges and expenses
of Milbank, Tweed, Hadley & McCloy LLP and MinterEllison,
counsel to Agent, Collateral Agent and the Lenders.
Borrower's obligations under this subsection shall survive the payment of the
Notes.
(j) PERFORMANCE ON BORROWER'S BEHALF. If Borrower or TOGA
fails to pay any taxes, insurance premiums, expenses, attorneys' fees or other
amounts it is required to pay under any Loan Document, Holders, Agent or
Collateral Agent may pay the same after giving ten (10) Business Days' prior
notice to Borrower or TOGA, respectively, of the intended payment (except in
cases of exigent circumstances, such as the imminent termination of insurance
coverage, where such notice shall not be required). Borrower or TOGA,
respectively, shall immediately reimburse Holders, Agent or Collateral Agent for
any such payments and each amount paid by Holders, Agent or Collateral Agent
shall constitute an Obligation owed under
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this Agreement which is due and payable on the date such amount is paid by
Holders, Agent or Collateral Agent and shall accrue interest from such date at
the Late Payment Rate.
(k) COMPLIANCE WITH AGREEMENTS AND LAW. Each of Borrower and
TOGA will perform all material obligations it is required to perform under the
terms of each indenture, mortgage, deed of trust, security agreement, lease,
franchise, agreement, contract or other instrument or obligation to which it is
a party or by which it or any of its properties is bound. Each of Borrower and
TOGA will conduct its business and affairs in compliance in all material
respects with all laws, regulations, and orders applicable thereto, including
applicable Environmental Laws, and, within two (2) years of the Initial Funding
Date, except where (i) the necessity of compliance therewith is contested in
good faith by appropriate proceedings (with bonds, cash reserves or other
assurance of compliance reasonably satisfactory to the Lenders) or (ii)
non-compliance therewith would not have a Material Adverse Effect.
(l) EVIDENCE OF COMPLIANCE. Each of Borrower and TOGA will
furnish to Holders, Agent or Collateral Agent at Borrower's expense all evidence
which Holders, Agent or Collateral Agent from time to time reasonably request as
to the accuracy and validity of, or compliance in all material respects with,
all representations, warranties and covenants made by Borrower or TOGA in the
Loan Documents, the satisfaction of all conditions contained therein, and all
other matters pertaining thereto.
(m) EXECUTION OF SUPPLEMENTS TO ROYALTY AGREEMENT; ASSIGNMENT
OF ROYALTIES FROM COMET RIDGE PARTICIPANTS. Borrower shall execute and deliver
to Royalty Payee from time to time, upon request of Royalty Payee, Supplements
to the Royalty Agreement agreeing to pay, and Borrower hereby agrees to pay,
overriding royalties in the form of Exhibit T (collectively, the "SUPPLEMENT TO
ROYALTY AGREEMENT") with respect to all properties, authorities to prospect,
licenses, leases, wells and other interests (determined in as broad a manner as
practicable with reference to lands covered by any of the foregoing and not just
with respect to wells, spacing units or well bores) (collectively, "LANDS")
beneficially owned or in which interests are owned or held by TOGA or any
Subsidiary of TOGA, whether now or hereafter acquired, at any time after the
Closing Date through and including the Royalty Determination Date which Lands
are (1) categorized or include or have attributed to them reserves which are
categorized as Proved Reserves in any Engineering Report, including without
limitation the Engineering Report to be delivered pursuant to Section 5.1(b)(x),
upon either (i) the request of the Royalty Payee or (ii) the Royalty
Determination Date and (2) either comprise a portion of the Project or
constitute Non-Project Properties which have been developed by Capital
Expenditures which were Approved Capital Expenditures deducted in the
calculation of ANCF. Furthermore, Borrower and TOGA agree to assign, transfer
and convey to Royalty Payee effective upon the receipt thereof by Borrower or
TOGA and without the payment of any additional consideration or amount, all
rights, titles and interests of Borrower or TOGA to any royalty, overriding
royalty, additional interest or similar payments assigned, conveyed or agreed to
be paid by the Comet Ridge Participants in connection with the Participating
Loans or pursuant to the Participating Loan Documents.
(n) WITHDRAWAL AS OPERATOR. If at any time TOGA or any
Affiliate thereof assumes operations of the Project and an Event of Default
occurs which is not cured within one hundred twenty (120) days, TOGA will, or
will cause its Affiliate to, withdraw as operator of all
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or a portion of the Project at the request of Lenders. TOGA will support
Lenders' designee as replacement operator.
(o) EXECUTION OF OTHER INSTRUMENTS; ADDITIONAL ACTS. Each of
Borrower and TOGA shall do, execute, acknowledge and deliver, or cause to be
done, executed, acknowledged and delivered, such further instruments and
documents in form and substance reasonably satisfactory to Holders, Agent or
Collateral Agent as such Person may reasonably request from time to time in
order to carry out the intent and purpose of this Agreement and the other Loan
Documents.
(p) WAIVER OF LITIGATION PAYMENTS. In the event that any
action or lawsuit is initiated by or on behalf of any of the Lenders, Holders,
Agent, Collateral Agent or their successors, transferees or assignees (such
entity being referred to in this Section 5.1 as "PLAINTIFF") in Australia or
elsewhere against Borrower or TOGA, each of Borrower and TOGA irrevocably waives
its right to have, and agrees not to request, plead or claim that, Plaintiff
post, pay or offer any "cautio judicatum solve" bond or "excepcion de arraigo"
due to its status as a foreign entity, and each of Borrower and TOGA further
waives any objection that it may now or hereafter have to a Plaintiff's claim
that such Plaintiff should be exempt or immune from posting, paying, making or
offering any such "cautio judicatum solvi" bond or "excepcion de arraigo" due to
its status as a foreign entity.
Section 5.2 NEGATIVE COVENANTS. To conform with the terms and
conditions under which the Lenders are willing to have credit outstanding to
Borrower, and to induce the Lenders to enter into this Agreement and make the
Loans, each of Borrower and TOGA warrants, covenants and agrees that until the
full and final payment of the Obligations and the termination of this Agreement,
unless the Lenders have previously agreed otherwise:
(a) RESTRICTED DEBT. TOGA will not in any manner owe or be
liable for Restricted Debt, except for Permitted Debt.
(b) LIMITATION ON LIENS. TOGA will not create, assume or
permit to exist any Lien upon any of the properties or assets relating to the
Project which TOGA now owns or hereafter acquires, except Permitted Liens.
Borrower will not create, assume or permit to exist any Lien upon (i) any of the
capital stock of TOGC or (ii) any of the Collateral which Borrower or any
subsidiary of Borrower now owns or hereafter acquires.
(c) NO MERGERS. Without Agent's prior written consent, neither
Borrower nor TOGA will merge or consolidate with or into any other business
entity, create any additional Subsidiaries of TOGA other than those in existence
on the date hereof or enter into any contracts (including contracts to borrow
money) with any Subsidiaries of TOGA.
(d) LIMITATION ON SALES OF PROPERTY. TOGA will not sell,
transfer, lease, exchange, discount, assign, abandon, surrender, alienate or
dispose of any interest in the Project or any material interest therein,
including without limitation the Collateral, without the express written consent
of Agent except for any equipment or other tangible personal property which is
replaced by comparable equipment or other tangible personal property of equal or
greater mutability or value. Borrower will not sell, transfer, lease, exchange,
discount, assign, abandon,
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surrender, alienate or dispose of (i) any capital stock or other equity of TOGC
or any debt Obligation owed by TOGC to Borrower or (ii) any part of the
Collateral or any material interest therein without the express written consent
of Agent.
(e) LIMITATION ON AFFILIATE PAYMENTS. TOGA shall not make any
distributions or Affiliate Payments except for Permitted Borrower Payments.
(f) LIMITATION ON INVESTMENTS AND NEW BUSINESS. TOGA will not:
(i) make any expenditure or commitment or incur any
obligation or enter into or engage in any transaction except
in the ordinary course of business;
(ii) engage directly or indirectly in any business or
conduct any operations except in connection with or incidental
to its present business; or
(iii) without prior approval of the Agent, form or acquire
any or make any other acquisitions of or capital contributions
to or investments in any Person, other than Permitted
Investments and as contemplated in Section 2.4(c).
(g) LIMITATION ON CREDIT EXTENSIONS. Except for Permitted
Investments, as contemplated in Section 2.4(c) or the extension of trade credit
in the ordinary course of business as operator of oil and gas properties, TOGA
will not extend credit, make advances or make loans.
(h) TRANSACTIONS WITH AFFILIATES. Except for investments
otherwise expressly permitted under this Agreement, TOGA will not engage,
without Agent's prior written approval, in any material transaction with any
other Related Person or any Affiliate thereof.
(i) CERTAIN CONTRACTS: AMENDMENTS; MULTIEMPLOYER ERISA PLANS.
TOGA will not:
(i) enter into any "take-or-pay" contract or other
contract or arrangement for the purchase of goods or services
which obligates TOGA to pay for such goods or service
regardless of whether they are delivered or furnished to it;
(ii) incur any obligation to contribute to any
"multiemployer plan" as defined in Section 4001 of ERISA;
(iii) amend or permit any change to any material terms of
any Project Document (except, in each case, with the approval
of Agent, which approval shall not be unreasonably withheld or
delayed);
(iv) waive any default under, or breach of, any Project
Document or waive, fail to enforce, forgive, compromise,
settle, adjust or release any right, interest or entitlement,
howsoever arising, under, or in respect of any Project
Document;
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(v) exercise any right to initiate an arbitration
proceeding under any Project Documents (except, in each case,
with the approval of Agent which approval shall not be
unreasonably withheld or delayed);
(vi) petition, request or take any other legal or
administrative action that seeks, or may reasonably be
expected, to cancel, suspend, void, or terminate any Project
Document; or
(vii) amend or permit any change to any contract or lease
which releases, qualifies, limits, makes contingent or
otherwise detrimentally affects the rights and benefits of
Holders, Agent or Collateral Agent under or acquired pursuant
to any Security Documents.
Furthermore, TOGA will insure that no other Related Person makes or permits any
amendment described in clause (vii) above.
(j) LIMITATION ON TOGA'S G&A COSTS. TOGA shall not incur or
expend any G&A Costs other than Permitted G&A Costs.
(k) MINIMUM WORKING CAPITAL. TOGA and its Subsidiaries, if
any, will maintain consolidated working capital ("WORKING CAPITAL") of at least
$1,000,000 (excluding, so long as no default exists, the maturities on the
Notes) at all times. For the purpose of calculating working capital, the
following accounts receivable shall be excluded: (i) those owing by
shareholders, Affiliates, directors or employees, (ii) those payable greater
than sixty (60) days after the end of the related production month and (iii)
those outstanding greater than one hundred twenty (120) days after the end of
the related production month.
(l) PRESS RELEASES; PUBLIC ANNOUNCEMENTS. Neither Borrower nor
TOGA will make or permit any public announcement or press release respecting the
transactions contemplated herein or any agreements related hereto without the
Agent's prior Approval unless required by law to comply with disclosure
requirements.
(m) DISCRETIONARY SPENDING. To the extent not advanced or
reimbursed by a Related Party as Inter-company Debt or a Capital Contribution to
TOGA, TOGA will not, in the aggregate, expend amounts exceeding $100,000 per
year other than those amounts specifically contemplated in the Approved Plan of
Development, excluding any amounts funded by Borrower as a capital contribution
to TOGA.
(n) LIMITATION ON ISSUANCE OF CAPITAL STOCK. TOGA will not
issue any voting or non-voting capital stock to any Person unless such Person
concurrently with the issuance thereof pledges such stock to Collateral Agent to
secure the Obligations by a perfected first priority Lien. Borrower will not
permit any issuance of capital stock by TOGC to any party other than Borrower.
Section 5.3 COVERAGE RATIO.
From and after the Closing Date, Borrower and TOGA in the
aggregate shall maintain a Coverage Ratio (as defined below) of at least 150% at
all times while any of the
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Obligations under the Loan Documents remain outstanding. If any Coverage
Deficiency exists, Borrower and TOGA shall as soon as reasonably commercially
practicable after obtaining knowledge thereof cure such Coverage Deficiency,
either by furnishing and mortgaging additional engineered producing oil and gas
wells satisfactory to Lenders in order to increase Modified NPV10 or by making
payments (or identifying and segregating cash in the TOGA Dollar Collateral
Account) in order to reduce the Adjusted Investment. If any Coverage Default
exists, Borrower and TOGA shall within thirty (30) days after obtaining
knowledge thereof cure such Coverage Default, either by furnishing and
mortgaging additional engineered producing oil and gas wells satisfactory to
Lenders in order to increase Modified NPV10 or by making payments (or
identifying and segregating cash in the TOGA Dollar Collateral Account) in order
to reduce the Adjusted Investment. As used in this Section 5.3, "COVERAGE RATIO"
means at any time in question the quotient obtained by dividing:
(i) The sum of (A) the Total Modified NPV10 as determined
from the Engineering Report most recently prepared as of such
time (which report shall adjust the projected cash flow and
volumes of oil and gas reserves produced since the last report
and engineering of new wells all in a manner satisfactory to
Lenders) and (B) the Working Capital (if positive);
by
(ii) the Adjusted Investment at such time.
ARTICLE 6
SECURITY
Section 6.1 THE SECURITY. The Obligations will be secured by perfected
first-priority liens (subject only to Liens permitted under Section 5.2(b) if
expressly permitted to be senior to the Liens securing the Obligations) in the
Collateral and all other assets under the Security Documents listed in the
Security Schedule, and by the liens and security interests (including security
interests in the shares of TOGA) granted in any additional Security Documents
hereafter delivered by any Related Person and accepted by Agent or Collateral
Agent. TOGA agrees that if it is successful in having any additional interest in
the Project Properties transferred to it, it will use its best efforts to
further secure the Obligations to the Collateral Agent at TOGA's cost.
Section 6.2 AGREEMENT TO DELIVER SECURITY DOCUMENTS. Each of Borrower
and TOGA agrees to deliver or cause to be delivered, to further secure the
Obligations whenever requested by Agent or Collateral Agent in its sole and
absolute discretion, deeds of trust, mortgages, chattel mortgages, security
agreements, financing statements and other Security Documents in form and
substance satisfactory to Collateral Agent for the purpose of granting,
confirming, and perfecting first and prior liens or security interests in any
real or personal property of Borrower or TOGA.
Section 6.3 PERFECTION AND PROTECTION OF SECURITY INTERESTS AND LIENS.
Each of Borrower and TOGA will from time to time deliver to Collateral Agent any
financing statements, continuation statements, extension agreements and other
documents properly completed and executed (and acknowledged when required) by
the Related Persons in form and
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substance satisfactory to Collateral Agent, which Agent or Collateral Agent
requests for the purpose of perfecting, confirming, or protecting any Liens or
other rights in Collateral securing any Obligations.
Section 6.4 APPOINTMENT OF AGENT AND COLLATERAL AGENT.
(a) AGENT. Each Lender, for itself in the capacity in which it
is acting herein, and each other Holder hereby appoints TAMCO as agent (together
with its successors in such capacity herein called "AGENT") to act for and on
behalf of the Lenders and each other Holder under or pursuant to this Agreement
and the other Loan Documents, and TAMCO hereby accepts such appointment. Agent
is authorized to act on behalf of the Lenders and each other Holder in (i)
exercising rights and remedies with respect to Collateral (which may be
delegated to Collateral Agent) or with respect to any other matter under any of
the Loan Documents, (ii) giving notices or instructions to Borrower and TOGA,
(iii) receiving information from or notices by Borrower and TOGA, and (iv)
communicating to Borrower and TOGA determinations required or permitted to be
made under this Agreement or any other Loan Document. Agent may, on behalf of
any Lender and any other Holder, take any other action which such Lender or such
Holder is entitled to take hereunder or under any of the Loan Documents. Such
appointment of TAMCO as Agent shall not, however, impair or modify any rights,
obligations or duties which TAMCO or any Affiliate of TAMCO otherwise has with
respect to any Lender or any other Holder. In its administration of this
Agreement and the other Loan Documents, except to the extent to which another
standard applies to TAMCO by reason of any other document between TAMCO and the
Lenders or other Holder, Agent will exercise the same care that it exercises in
the administration or handling of transactions for its own account, subject,
however, to subsection (h) below.
(b) COLLATERAL AGENT. Each Lender, for itself in each capacity
in which it is acting herein, and each other Holder hereby appoints TAMCO as
Collateral Agent (herein, together with its successors and assigns in such
capacity, "COLLATERAL AGENT") under the Loan Documents, to exercise such powers
under the Loan Documents as are delegated to Collateral Agent by the terms
thereof, together with all such powers as are reasonably incidental thereto,
including taking, holding and disposing of the Collateral. TAMCO hereby accepts
such appointment. Collateral Agent shall act for and on behalf of the Lenders
and the Holders in connection with all Collateral and Security Documents. In its
administration of this Agreement and the other Loan Documents, except to the
extent to which another standard applies to TAMCO by reason of any other
document between TAMCO and the Lenders and any other Holder, Collateral Agent
will exercise the same care that it exercises in the administration or handling
of transactions for its own account, subject, however, to subsection (h) below.
(c) REQUISITE HOLDERS. Except with respect to any matters
expressly provided for by this Agreement, the Notes, the Security Documents, any
other Loan Documents or the TCW Governing Documents (as defined in subsection
(d)(iii) below), each Holder agrees that neither Agent nor Collateral Agent
shall be required to exercise any discretion or take any action, but shall be
required to act or to refrain from acting (and each Holder agrees that Agent and
Collateral Agent shall be fully protected in so acting or refraining from
acting) upon the written instructions of the Requisite Holders. For the purpose
hereof, the "REQUISITE HOLDERS" shall mean, at any time, the Holders holding at
least sixty-six and two-thirds percent (66 2/3%)
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of the outstanding principal amount of all Notes. The Requisite Holders may, in
their reasonable discretion, remove TAMCO from its respective appointments as
Agent and Collateral Agent and then select a new party to fulfill, in accordance
with the terms hereof, such positions. All powers of Agent and Collateral Agent
shall be exercised for the benefit of all Holders and in accordance with the
directions of the Requisite Holders. Agent and Collateral Agent shall take every
reasonable action to implement the Requisite Holders' directions. If any Note is
ever held by any Person other than the original Holders in accordance herewith,
Agent and Collateral Agent may insist on the execution of any agency agreement
among all holders of Notes, in form satisfactory to Agent and Collateral Agent
and providing for satisfactory indemnification, before carrying out any further
actions under the Loan Documents. Until any such agency agreement is executed:
(i) Agent and Collateral Agent shall be fully protected in acting on the
instructions of Persons holding Notes representing sixty-six and two-thirds
percent (66 2/3%) or more of the aggregate principal indebtedness owing under
all Notes in the manner described herein; (ii) TAMCO shall have the right to
withdraw as Agent and Collateral Agent, respectively, subject, however, to its
rights an duties under any other agreements with the Lenders or any other
Holder; and (iii) any action of Collateral Agent under any Security Document
shall be binding on the Lenders and Holders.
(d) LIMITATION OF DUTIES AND FIDUCIARY RELATIONSHIP. Neither
Agent nor Collateral Agent shall have any duties or responsibilities, except
those expressly set forth in:
(i) this Agreement;
(ii) the Security Documents; and
(iii) the other documents entered into between Trustco and
TAMCO described in the definitions of "Lenders" and "Holders"
(such other documents, collectively the "TCW GOVERNING
DOCUMENTS"),
nor shall Agent or Collateral Agent have any additional fiduciary relationship
with any Holder arising under this Section 6.4 and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or the other Loan Documents against Agent or Collateral
Agent.
(e) DISTRIBUTION OF PROCEEDS. The Holders shall share in the
proceeds obtained by Agent and in any other benefit either arising under the
Loan Agreement, the Notes and the Security Documents or obtained by Agent or
Collateral Agent in connection therewith, in the relative proportions which the
amounts then owed by Borrower to each of the Holders bear to the total amount
then owed by Borrower to all of the Holders; provided that Agent and Collateral
Agent shall be the first to be reimbursed for all costs and expenses incurred on
behalf of all parties in their respective capacities as Agent and Collateral
Agent to the extent permitted by the TCW Governing Documents. The duties
undertaken by Agent and Collateral Agent have been undertaken as an
accommodation to the Holders and, accordingly, Agent and Collateral Agent shall
not be compensated for their services hereunder except as provided in the TCW
Governing Documents.
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(f) WRITTEN DIRECTIONS. Agent or Collateral Agent may at any
time request written directions from all the Holders with respect to (i) any
interpretation of this Agreement, the Notes and the Security Documents, or (ii)
any action to be taken or not to be taken hereunder or thereunder and may
withhold any action until such directions have been received from the Requisite
Holders. Agent and Collateral Agent shall in all cases be fully protected in
acting, or in refraining from acting, under this Agreement in accordance with a
direction of the Requisite Holders under the terms of this Agreement and such
request and any action taken or withheld pursuant to such direction shall be
binding upon all the Holders.
(g) AGENTS AND ATTORNEYS. Agent or Collateral Agent may
execute any of its respective duties under this Agreement, the Notes and the
Security Documents by or through agents or attorneys selected by Agent or
Collateral Agent, respectively, using reasonable care. Neither Agent nor
Collateral Agent shall be responsible for the negligence or misconduct of any
agents or attorneys so selected. Agent and Collateral Agent shall be entitled to
the advice of counsel concerning all matters pertaining to their respective
duties hereunder.
(h) LIMITATION OF LIABILITY. Agent, Collateral Agent, and
their respective officers, directors, employees, agents, attorneys-in-fact and
affiliates shall not:
(i) be liable for any action taken or omitted to be taken
by any of such Persons or for any error in judgment under or
in connection with this Agreement, the Notes and the Security
Documents, except for any such Person's gross negligence or
willful misconduct; or
(ii) be responsible in any manner to any Holder or any
other Person for any failure of any other party to perform its
obligations under this Agreement, the Notes and the Security
Documents.
Nothing in this subsection, however, shall be deemed to limit or restrict any
liability, fiduciary duty or responsibility of TAMCO in any capacity other than
as Agent or Collateral Agent, including any liability, fiduciary duty or
responsibility under the TCW Governing Documents.
(i) RELIANCE UPON DOCUMENTATION. Agent or Collateral Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
writing, resolution, notice, consent, certificate, affidavit, letter, cablegram,
telegram, telecopy, telex or teletype message, statement, order or other
document or any telephone conversation believed, respectively, by Agent or
Collateral Agent to be genuine and correct and to have been signed, sent, made
or spoken by the proper person or persons, and upon the advice and statements of
legal counsel, independent accountants and other experts selected, respectively,
by Agent or Collateral Agent.
(j) RELIANCE BY BORROWER AND TOGA. Each Lender and each Holder
agree that, prior to the delivery to Borrower or TOGA of a notice of the removal
or termination of TAMCO as Agent as set forth below, Borrower and TOGA shall be
entitled to rely on TAMCO's or any subsequent Agent's authority to act on behalf
of each Lender and each Holder in all dealings with TAMCO (or any such
subsequent Agent) with respect to the Loans and the Loan Documents; Borrower and
TOGA shall be protected in relying on actions, communications, notices and
terminations relating thereto or required or permitted thereunder by
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Agent; and Borrower and TOGA shall discharge their obligations under this
Agreement and the Loan Documents by delivering payments, notices and other
information to Agent. In the event of the removal of Agent and the appointment
of a successor Agent by Holders, Borrower and TOGA shall not be required to
recognize any such removal or appointment unless and until Borrower or TOGA
shall have received a writing setting forth such removal and appointment
executed by the Requisite Holders, and Borrower and TOGA shall be entitled to
rely on such writing as being genuine and what it purports to be without any
necessity of any investigation whatsoever. Borrower and TOGA shall be entitled
to rely upon the actions, communications and notices of TAMCO with respect to
the Collateral until Borrower or TOGA receives notice in writing from Agent that
TAMCO has resigned or been replaced as Collateral Agent.
ARTICLE 7
EVENTS OF DEFAULT AND REMEDIES
Section 7.1 EVENTS OF DEFAULT.
(a) If any of the following events shall occur and be
continuing, it shall constitute an "EVENT OF DEFAULT" under this Agreement:
(i) Borrower or any Related Person fails to pay any
Obligation when due and payable, whether at a date for the
payment of a fixed installment or as a contingent or other
payment becomes due and payable or as a result of acceleration
or otherwise and such failure continues for ten (10) Business
days thereafter.
(ii) Any "default" or "event of default" occurs under any
Loan Document which defines either such term and such
occurrence is not remedied within the applicable period of
grace (if any) provided in such Loan Document.
(iii) Borrower, TOGA or any Related Person fails (other
than as referred to in paragraphs (i) and (ii) above) to duly
observe, perform or comply with any covenant, agreement,
condition or provision of any Loan Document, and such failure
is not remedied within thirty (30) days after Borrower, TOGA
or any Related Person first learns of such failure (whether by
notice from the Lenders or otherwise);
(iv) Any representation or warranty previously, presently
or hereafter made in writing by or on behalf of Borrower, TOGA
or any Related Person in connection with any Loan Document
shall prove to have been false or incorrect in any material
respect on any date on or as of which made, or any Loan
Document at any time ceases to be valid, binding and
enforceable in any material respect as warranted in Section
4.1(e) for any reason other than its release or subordination
by the Lenders or Collateral Agent;
(v) Borrower, TOGA or any Related Person fails to duly
observe, perform or comply with any agreement with any Person
or with any material term or condition of any instrument, if
such agreement or instrument is material to the
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business or financial condition of Borrower or TOGA, if the
effect of such event is to cause or (with the giving of notice
or lapse of time or both) to permit such agreement or
instrument to be modified or terminated;
(vi) (A) Borrower or TOGA fails to pay when due any
portion in excess of $100,000 of any of its Debt and such
failure continues for sixty (60) days unless the same is being
contested in good faith and for which adequate cash reserves
have been established, or (B) Borrower or TOGA breaches or
defaults in the performance of any material term or condition
of any agreement or instrument by which any such Debt is
issued, evidenced, governed, or secured, and any such failure,
breach or default continues beyond any applicable period of
grace provided therefor unless the same is being contested in
good faith;
(vii) Either (A) any "accumulated funding deficiency" (as
defined in Section 412(a) of the Internal Revenue Code of
1986, as amended) in excess of $100,000 exists with respect to
any ERISA Plan, whether or not waived by the Secretary of the
Treasury or his delegate, or (B) any Termination Event occurs
with respect to any ERISA Plan and the then current value of
such ERISA Plan's benefit liabilities exceeds the then current
value of its assets available for the payment of such benefit
liabilities by more than $100,000 (or in the case of a
Termination Event involving the withdrawal of a substantial
employer, the withdrawing employer's proportionate share of
such excess exceeds such amount);
(viii) Any Governmental Approval necessary for the
execution, delivery or performance of this Agreement, the
Notes (i) any of the other Loan Documents, or (ii) the
validity or enforceability of Borrower's, TOGA's or any
Related Person's obligations under this Agreement, the Notes
or the other Loan Documents, is not effected or given or is
withdrawn or ceases to remain in full force and effect for a
period in excess of thirty (30) days;
(ix) The occurrence of any of the following with respect
to Borrower or TOGA:
(A) Borrower or TOGA suffers the entry against it of
a judgment, decree or order for relief by a court of
competent jurisdiction in an involuntary proceeding
commenced under any applicable bankruptcy, insolvency or
other similar law of any jurisdiction now or hereafter in
effect, including the federal Bankruptcy Code, as from
time to time amended, or has any such proceeding commenced
against it which remains undismissed for a period of sixty
(60) days; or
(B) Borrower or TOGA commences a voluntary case under
any applicable bankruptcy, insolvency or similar law now
or hereafter in effect, including the federal Bankruptcy
Code, as from time to time amended; or applies for or
consents to the entry of an order for relief in an
involuntary case under any such law; or makes a general
assignment for
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the benefit of creditors; or fails generally to pay (or
admits in writing Borrower's or TOGA's inability to pay)
its debts as such debts become due; or takes corporate or
other action to authorize any of the foregoing; or
(C) Borrower or TOGA suffers the appointment of or
taking possession by a receiver, liquidator, assignee,
custodian, trustee, sequestrator or similar official of
all or a substantial part of Borrower's or TOGA's assets
or of any part of the Collateral in a proceeding brought
against or initiated by Borrower or TOGA, and such
appointment or taking possession is neither made
ineffective nor discharged within sixty (60) days after
the making thereof, or such appointment or taking
possession is at any time consented to, requested by, or
acquiesced to by Borrower or TOGA; or
(D) Borrower or TOGA suffers the entry against it of
a final judgment for the payment of money in excess of
$100,000 with respect to Borrower and TOGA unless the same
is discharged within thirty (30) days after the date of
entry thereof or an appeal or appropriate proceeding for
review thereof is taken within such period and a stay of
execution pending such appeal is obtained prior to the
first date on which such execution is allowed; or
(E) Borrower or TOGA suffers a writ or warrant of
attachment or any similar process to be issued by any
court against all or any substantial part of Borrower's or
TOGA's assets or any part of the Collateral, and such writ
or warrant of attachment or any similar process is not
stayed or released within thirty (30) days after the entry
or levy thereof or after any stay is vacated or set aside;
or
(F) a Change in Control has occurred without the
Approval of the Agent.
(x) A Material Adverse Effect occurs and is not remedied
within thirty (30) days after a Related Person first learns of
such occurrence (whether by notice from the Lenders or
otherwise);
(xi) TOGA shall be dissolved and shall not be
reincorporated within fifteen (15) days after the date of such
dissolution;
(xii) Borrower shall be dissolved;
(xiii) This Agreement, the Notes or any Loan Document at
any time for any reason ceases to be in full force and effect,
or is declared to be void or is repudiated, or the validity or
enforceability hereof or thereof is at any time contested by
Borrower, TOGA or any Related Person or such documents ceases
to give or provide the respective Liens, rights, titles,
remedies, powers or privileges intended to be created thereby;
and
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(xiv) Any Governmental Person confiscates, takes,
restricts, appropriates, condemns, seizes or otherwise
expropriates all or a substantial portion of the Project or
the properties, assets or the capital stock of Borrower, TOGA
or a Related Person, or assumes custody or control or
interferes with the administration or management of a material
part of such property or other assets or business operations
of Borrower or TOGA.
(b) Upon the occurrence of an Event of Default described in
paragraph (ix)(A), (ix)(B) or (ix)(C) of subsection (a) above, all of the
Obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which are
hereby expressly waived by Borrower, TOGA and each Related Person who at any
time ratifies or approves this Agreement. During the continuance of any other
Event of Default, the Agent or Requisite Holders at any time and from time to
time may without notice to Borrower, TOGA or any other Related Person declare
any or all of the Obligations immediately due and payable, and all such
obligations shall thereupon be immediately due and payable, without demand,
presentment, notice of demand or of dishonor and nonpayment, protest, notice of
protest, notice of intention to accelerate, declaration or notice of
acceleration, or any other notice or declaration of any kind, all of which, to
the extent provided by applicable law, are hereby expressly waived by Borrower,
TOGA and each Related Person who at any time ratifies or approves this
Agreement. After any such acceleration (whether automatic or due to declaration
by the Agent or Requisite Holders), any obligation of the Lenders or Holders to
make any further Advances or loans of any kind under any agreement with Borrower
shall be permanently terminated.
Section 7.2 REMEDIES. If any Event of Default shall occur and be
continuing, the Lenders may protect and enforce their rights under the Loan
Documents by any appropriate proceedings, including proceedings for specific
performance of any covenant or agreement contained in any Loan Document, and the
Lenders may enforce the payment of any obligations due or enforce any other
legal or equitable right. All rights, remedies and waivers conferred upon the
Lenders or Collateral Agent under the Loan Documents shall be deemed cumulative
and not exclusive of any other rights, remedies or powers available under the
Loan Documents or at law or in equity.
In addition to any and all other rights and remedies that the
Holders shall have, the Holders shall have the option to either:
(i) Maintain this Agreement in full force and effect and
sue for the Principal Payments and Coupon Interest as they
become due and payable;
(ii) Accelerate all amounts due under the Notes and sue
for the Principal Payment and Coupon Interest as they become
due and payable; or
(iii) Accelerate all amounts due under the Notes, and to
collect in addition to the amount of outstanding principal,
accrued Coupon Interest and other amounts owing with respect
to the Obligations, all costs and expenses of the
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Holders in enforcing these provisions, including without
limitation attorneys' fees and costs; and the Early Payment
Premium.
Section 7.3 INDEMNITY. Indemnitors agree to indemnify the Lenders, the
Holders, Agent and Collateral Agent and their directors, officers, shareholders,
partners, members, employees, affiliates and professional advisers and
consultants (collectively, "INDEMNITEES"), upon demand, from and against any and
all liabilities, obligations, claims, losses, damages, penalties, fines,
actions, judgments, suits, settlements, costs, expenses or disbursements
(including reasonable fees of attorneys, accountants, experts and advisors) of
any kind or nature whatsoever (in this Section 7.3 collectively called
"LIABILITIES AND COSTS") which to any extent (in whole or in part) may be
imposed on, incurred by, or asserted against such Indemnitees growing out of,
resulting from or in any other way associated with any of the Collateral, the
Loan Documents, or the transactions and events (including the enforcement or
defense thereof) at any time associated therewith or contemplated therein
(including any violation or noncompliance with any Environmental Laws by the
Borrower, TOGA or any Related Person or any liabilities or duties of the
Borrower, TOGA or any Related Person or of such Indemnities with respect to
Hazardous Materials found in or released into the environment); provided,
however, that Borrower shall not be obligated to indemnify Indemnitees for
liabilities and costs attributable to taxes imposed on Indemnitees or their
income other than Australian Withholding Taxes. THE FOREGOING INDEMNIFICATION
SHALL APPLY WHETHER OR NOT SUCH LIABILITIES AND COSTS ARE IN ANY WAY OR TO ANY
EFFECT CAUSED, IN PART BUT NOT IN WHOLE, BY ANY NEGLIGENT ACT OR OMISSION OF ANY
KIND BY THE INDEMNITEES, provided only that any Indemnitee shall not be entitled
under this Section 7.3 to receive indemnification for that portion, if any, of
any liabilities and costs which is proximately caused by its own individual
fraud, gross negligence or willful misconduct, as determined in a final
judgment, or by its own individual actions with respect to Collateral in its
possession. As used in this Section 7.3, the term "LENDERS" shall refer not only
to the Persons designated as such in the preamble hereto, but also to Trustco,
TAMCO, and each director, officer, agent, trustee, manager, attorney, employee,
representative and Affiliate of any such Person.
ARTICLE 8
MISCELLANEOUS
Section 8.1 WAIVERS AND AMENDMENTS; ACKNOWLEDGMENT.
(a) WAIVERS AND AMENDMENTS. No failure or delay (whether by
course of conduct or otherwise) by Lenders, Holders, Agent or Collateral Agent
in exercising any right, power or remedy which any of them may have under any of
the Loan Documents shall operate as a waiver thereof or of any other right,
power or remedy, nor shall any single or partial exercise by Lenders, Holders,
Agent or Collateral Agent of any such right, power or remedy preclude any other
or further exercise thereof or of any other right, power or remedy. No waiver of
any provision of any Loan Document and no consent to any departure therefrom
shall ever be effective unless it is in writing and signed by Agent or by
Collateral Agent, and then such waiver or consent shall be effective only in the
specific instances and for the purposes for which given and to the extent
specified in such writing. No notice to or demand on any Related Person shall in
any case of itself entitle any Related Person to any other or further notice or
demand in similar
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or other circumstances. This Agreement and the other Loan Documents set forth
the entire understanding and agreement of the parties hereto and thereto with
respect to the transactions contemplated herein and therein and supersede all
prior discussions and understandings with respect to the subject matter hereof
and thereof, and no modification or amendment of or supplement to this Agreement
or the other Loan Documents shall be valid or effective unless the same is in
writing and signed by the party against whom it is sought to be enforced. THIS
WRITTEN AGREEMENT AND THE OTHER LOAN DOCUMENTS REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
(b) ACKNOWLEDGMENTS AND ADMISSIONS. Each of Borrower and TOGA
hereby represents, warrants, acknowledges and admits that:
(i) it has been advised by counsel in the negotiation,
execution and delivery of the Loan Documents to which it is a
party;
(ii) it has made an independent decision to enter into
this Agreement and the other Loan Documents to which it is a
party, without reliance on any representation, warranty,
covenant or undertaking by the Lenders, Holders, Agent or
Collateral Agent, whether written, oral or implicit, other
than as expressly set out in this Agreement or in another Loan
Document delivered on or after the date hereof;
(iii) there are no representations, warranties, covenants,
undertakings or agreements by the Lenders, Holders, Agent or
Collateral Agent as to the Loan Documents except as expressly
set out in this Agreement or in another Loan Document
delivered on or after the date hereof;
(iv) neither the Lenders, Holders, Agent nor Collateral
Agent owes any fiduciary duty to Borrower or TOGA with respect
to any Loan Document or the transactions contemplated thereby;
(v) the relationship pursuant to the Loan Documents
between Borrower or TOGA, on one hand, and the Lenders,
Holders, Agent or Collateral Agent, on the other hand, is and
shall be solely that of debtor and creditor, respectively;
(vi) no partnership or joint venture exists with respect
to the Loan Documents between Borrower or TOGA and the
Lenders, the Holders, Agent or Collateral Agent;
(vii) should an Event of Default or Default occur or
exist, each of the Lenders, Holders, Agent and Collateral
Agent will determine in its sole discretion and for its own
reasons what remedies and actions it will or will not exercise
or take at that time;
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(viii) without limiting any of the foregoing, each of
Borrower and TOGA is not relying upon any representation or
covenant by the Lenders, Holders, Agent or Collateral Agent,
or any representative thereof, and no such representation or
covenant has been made, that the Lenders, Holders, Agent or
Collateral Agent will, at the time of an Event of Default or
Default, or at any other time, waive, negotiate, discuss, or
take or refrain from taking any action permitted under the
Loan Documents with respect to any such Event of Default or
Default or any other provision of the Loan Documents; and
(ix) The Lenders have relied upon the truthfulness of the
acknowledgments in this Section 8.1 in deciding to execute and
deliver this Agreement and to make the Loans.
Section 8.2 SURVIVAL OF AGREEMENTS; CUMULATIVE NATURE. All of the
Related Persons' various representations, warranties, covenants and agreements
in the Loan Documents shall survive the execution and delivery of this Agreement
and the other Loan Documents and the performance hereof and thereof, including
the making or granting of the Loans and the delivery of the Notes and the other
Loan Documents, and shall further survive until all of the Obligations are paid
in full to the Lender, Holders, Agent and Collateral Agent and all of the
Lenders' obligations to Borrower hereunder are terminated. The representations,
warranties, and covenants made by the Related Persons in the Loan Documents, and
the rights, powers and privileges granted to the Lenders, Holders, Agent and
Collateral Agent in the Loan Documents, are cumulative, and, except for
expressly specified waivers and consents, no Loan Document shall be construed in
the context of another to diminish, nullify, or otherwise reduce the benefit to
the Lender, Holders, Agent or Collateral Agent of any such representation,
warranty, covenant, right, power or privilege. In particular and without
limitation, no exception set out in this Agreement to any representation,
warranty or covenant herein contained shall apply to any similar representation,
warranty or covenant contained in any other Loan Document, and each such similar
representation, warranty or covenant shall be subject only to those exceptions
which are expressly made applicable to it by the terms of the various Loan
Documents.
Section 8.3 NOTICES. All notices, requests, consents, demands and other
communications required or permitted under any Loan Document shall be in
writing, unless otherwise specifically provided in such Loan Document, and shall
be deemed sufficiently given or furnished if delivered by personal delivery, by
telecopy, by delivery service with proof of delivery, or by registered or
certified United States mail, postage prepaid, to Borrower, TOGA and the Related
Persons and to the Lenders, Holders, Agent and Collateral Agent at the addresses
specified below (unless changed by similar notice in writing given by the
particular Person whose address is to be changed)
Borrower: Tipperary Corporation
633 Seventeenth Street
Suite 1550
Denver, Colorado 80202
Attention: David L. Bradshaw,
President
Telephone: (303) 293-9379
Telecopy: (303) 292-3428
66
<PAGE> 71
With a copy to: Jones & Keller, P.C.
Sixteenth Floor
1625 Broadway
Denver, Colorado 80202
Attention: Reid Godbolt, Esq.
Telephone: (303) 573-1600
Telecopy: (303) 573-0769
TOGA: Tipperary Oil & Gas (Australia) Pty.
Ltd (ACN 077 536 871)
Level 5, 359 Queen Street
Brisbane, Queensland 4000
Australia
Attention: Richard A. Barber
Telephone: 61-7-3229-5774
Telecopy: 61-7-3221-7666
Lenders and Holders: Trust Company of the West
865 South Figueroa Street
Los Angeles, California 90017
Attention: Arthur R. Carlson
Telephone: (213) 244-0053
Telecopy: (213) 244-0604
With a copy to: TCW Asset Management Company
1000 Louisiana Street, Suite 2175
Houston, Texas 77002
Attention: Marc MacAluso
Telephone: (713) 615-7410
Telecopy: (713) 615-7460
With a copy to: Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street
30th Floor
Los Angeles, California 90017
Attention: David A. Lamb, Esq.
Telephone: (213) 892-4434
Telecopy: (213) 629-5063
Agent and Collateral Agent: Trust Company of the West
865 South Figueroa Street
Los Angeles, California 90017
Attention: Arthur R. Carlson
Telephone: (213) 244-0053
Telecopy: (213) 244-0604
67
<PAGE> 72
With a copy to: TCW Asset Management Company
1000 Louisiana Street, Suite 2175
Houston, Texas 77002
Attention: Marc MacAluso
Telephone: (713) 615-7410
Telecopy: (713) 615-7460
With a copy to: Milbank, Tweed, Hadley & McCloy LLP
601 South Figueroa Street
30th Floor
Los Angeles, California 90017
Attention: David A. Lamb, Esq.
Telephone: (213) 892-4434
Telecopy: (213) 629-5063
Section 8.4 PARTIES IN INTEREST. All grants, covenants and agreements
contained in the Loan Documents shall bind and inure to the benefit of the
parties thereto and their respective successors and assigns; provided, however,
that no Related Person may assign or transfer any of its rights or delegate any
of its duties or obligations under any Loan Document without the prior consent
of the Lenders.
Section 8.5 GOVERNING LAW; SUBMISSION TO PROCESS. EXCEPT TO THE EXTENT
THAT THE LAW OF ANOTHER JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT,
THE LOAN DOCUMENTS, INCLUDING THIS AGREEMENT, SHALL BE GOVERNED BY AND CONSTRUED
IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF NEW YORK, WITHOUT REGARD TO
PRINCIPLES OF CONFLICTS OF LAW. THE BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF
TO THE NON-EXCLUSIVE PERSONAL JURISDICTION OF THE STATE AND FEDERAL COURTS
SITTING IN THE STATE OF NEW YORK AND THE COUNTY OF NEW YORK AND AGREES AND
CONSENTS THAT SERVICE OF PROCESS MAY BE MADE UPON IT OR ANY OF ITS SUBSIDIARIES
IN ANY LEGAL PROCEEDING RELATING TO THE LOAN DOCUMENTS OR THE OBLIGATIONS BY ANY
MEANS ALLOWED UNDER NEW YORK OR FEDERAL LAW. BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT IN SUCH
A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. BORROWER HAS APPOINTED CT CORPORATION AS ITS
AGENT FOR SERVICE OF PROCESS IN THE STATE OF NEW YORK AND SHALL NOTIFY THE
LENDERS IN WRITING OF ANY CHANGE IN SUCH APPOINTMENT (WHICH MAY BE CHANGED ONLY
TO ANOTHER CORPORATE AGENT HAVING AN ADDRESS IN NEW YORK, NEW YORK).
Section 8.6 LIMITATION ON INTEREST.
(a) The Lenders, Holders, the Related Persons and any other
parties to the Loan Documents intend to contract in strict compliance with
applicable usury law from time to
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<PAGE> 73
time in effect. In furtherance thereof, such Persons stipulate and agree that
none of the terms and provisions contained in the Loan Documents shall ever be
construed to create a contract to pay, for the use, forbearance or detention of
money, interest in excess of the maximum amount of interest permitted to be
charged by applicable law from time to time in effect. Neither any Related
Person nor any present or future guarantors, endorsers, or other Persons
hereafter becoming liable for payment of any Obligation shall ever be liable for
unearned interest thereon or shall ever be required to pay interest thereon in
excess of the maximum amount that may be lawfully charged under applicable law
from time to time in effect, and the provisions of this Section 8.6 shall
control over all other provisions of the Loan Documents which may be in conflict
or apparent conflict herewith.
(b) The Lenders and Holders expressly disavow any intention to
contract for, charge or collect unearned interest or finance charges in the
event the maturity of any Obligation is accelerated. If (i) the maturity of any
Obligation is accelerated for any reason, (ii) any Obligation is prepaid and as
a result any amounts held to constitute interest are determined to be in excess
of the legal maximum, or (iii) the Lenders or any other Holder of any or all of
the Obligations shall otherwise collect moneys which are determined to
constitute interest which would otherwise increase the interest on any or all of
the Obligations to an amount in excess of that permitted to be charged by
applicable law then in effect, then all such sums determined to constitute
interest in excess of such legal limit shall, without penalty, be promptly
applied to reduce the then outstanding principal of the related Obligations or,
at the Lenders' or such Holder's option, promptly returned to Borrower or the
other payor thereof upon such determination.
(c) In determining whether or not the interest paid or payable
under any specific circumstances exceeds the maximum amount permitted under
applicable law, the Lenders, Holders and the Related Persons (and any other
payors thereof) shall, to the greatest extent permitted under applicable law,
(i) characterize any non-principal payment as an expense, fee or premium rather
than as interest, (ii) exclude voluntary prepayments and the effects thereof,
and (iii) amortize, prorate, allocate, and spread the total amount of interest
throughout the entire contemplated term of the instruments evidencing the
Obligations in accordance with the amounts outstanding from time to time
thereunder and the Highest Lawful Rate from time to time in effect under
applicable law in order to lawfully charge the maximum amount of interest
permitted under applicable law.
Section 8.7 SURVIVAL. Any waivers or admissions made by any Related
Person in any Loan Document and any obligations which any Person may have to
indemnify or compensate the Lenders, Holders, Agent or Collateral Agent shall
survive any termination of this Agreement or any other Loan Document.
Section 8.8 SEVERABILITY. If any term or provision of any Loan Document
shall be determined to be illegal or unenforceable, all other terms and
provisions of the Loan Documents shall nevertheless remain effective and shall
be enforced to the fullest extent permitted by applicable law.
69
<PAGE> 74
Section 8.9 COUNTERPARTS. This Agreement may be separately executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed shall be deemed to constitute one
and the same Agreement.
Section 8.10 WAIVER OF JURY TRIAL, PUNITIVE DAMAGES, ETC. EACH OF THE
BORROWER, TOGA, AGENT, COLLATERAL AGENT, LENDERS AND HOLDERS HEREBY:
(a) KNOWINGLY, VOLUNTARILY, INTENTIONALLY, AND IRREVOCABLY
WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED BY LAW, ANY RIGHT IT MAY HAVE TO A
TRIAL BY JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR DIRECTLY OR
INDIRECTLY AT ANY TIME ARISING OUT OF, UNDER OR IN CONNECTION WITH THE LOAN
DOCUMENTS OR ANY LOAN CONTEMPLATED THEREBY OR ASSOCIATED THEREWITH, BEFORE OR
AFTER MATURITY;
(b) IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT NOT PROHIBITED
BY LAW, ANY RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY
SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR
IN ADDITION TO, ACTUAL DAMAGES;
(c) CERTIFIES THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR
AGENT OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR OTHERWISE,
OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION, SEEK TO
ENFORCE THE FOREGOING WAIVERS; AND
(d) ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS
AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND
THEREBY BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED
IN THIS SECTION 8.10.
Section 8.11 EXHIBITS AND SCHEDULES; ADDITIONAL DEFINITIONS. All
Exhibits and Schedules to this Agreement are a part hereof for all purposes.
Certain additional terms may be defined in the Security Schedule and used but
not defined in the body of this Agreement; reference is hereby made to the
Security Schedule for the meaning of any such terms.
Section 8.12 CONFIDENTIALITY OF HOLDERS.
(a) Notwithstanding the termination of this Agreement and
except as otherwise provided in subsection (b), (c) or (d) below, Borrower shall
maintain the confidentiality of the identities of (i) any Holder or any holder
of any Obligation other than the Notes; (ii) any participant in any of the TCW
Funds; and (iii) any owner of a beneficial interest in the Notes (collectively,
"CONFIDENTIAL INFORMATION") and shall not, without Lenders' or the
70
<PAGE> 75
Holder's prior written consent, disclose any such information to another Person
or use such information for purposes other than those contemplated herein.
(b) Borrower and TOGA may disclose at any time and to any
Person the fact that Trustco or TAMCO is a party hereto in various agency,
custodial, or fiduciary capacities, without disclosing the identities of the
principals or beneficiaries represented directly or indirectly by Trustco or
TAMCO.
(c) Borrower and TOGA may disclose Confidential Information to
its directors, officers, employees, and agents (including attorneys,
accountants, and consultants) to whom such disclosure is reasonably necessary
for the execution or effectuation hereof, provided Borrower or TOGA,
respectively, notifies all such Persons that the Confidential Information
disclosed to them is subject to this Section 8.12 and requires them not to
disclose or use such information in breach of this Section 8.12.
(d) If Borrower or TOGA is requested or required by legal
process (including law or regulation, oral questions, interrogatories, request
for information or documents, subpoena, and civil investigative demand) to
disclose any Confidential Information, Borrower or TOGA, respectively, shall
promptly notify the Lenders or the particular Holder of such request prior to
complying with such process so that the Lenders or the particular Holder may
seek an appropriate protective order or waive the respondent's compliance with
this Section 8.12. If, after such notice and after providing the Lenders and
such Holder a reasonable opportunity to obtain a protective order or to grant
such waiver, Borrower or TOGA is nonetheless legally compelled to disclose such
information, Borrower or TOGA, respectively, may do so without liability under
this Section 8.12.
Section 8.13 TRANSFER OF NOTES. The Lenders and any Holder shall be
entitled to transfer all or a portion of its interests in the Notes to any
Holder or any Affiliate thereof, or to any other Person, provided that any such
transferee as a condition to such transfer shall execute and deliver a
counterpart to this Agreement as then in effect in the capacity as an assignee
Holder and shall thereby be deemed to have ratified and approved each of the
other Loan Documents then in effect. Upon surrender of any of the Notes by any
transferor Holder or any such transferee Borrower shall execute and deliver one
or more substitute notes in such denominations and of a like aggregate unpaid
principal amount issued to the Lenders or Holder or to the designated transferee
or transferees for the Lenders or Holder or to the order of such transferees.
The terms and provisions of this Agreement shall inure to the benefit of any
such assignee or transferee of the Notes or such substitute note(s), and in the
event of such transfer or assignment, the rights and privileges herein conferred
shall automatically extend to and be vested in such transferee or assignee, all
subject to the terms hereof. Until notified in writing of the transfer of any
Note(s) or substitute note(s), Borrower shall be entitled to deem the Lenders or
such Person who has been identified to Borrower as the Holder of the Note(s) or
substitute note(s), as the owner and Holder of the Note(s) or substitute
note(s).
Section 8.14 REPRODUCTION OF DOCUMENTS. This Agreement and all
documents relating hereto may be reproduced by any party and by any
photographic, photostatic, microfilm, microcard, miniature photographic or other
similar process and any party may destroy any original documents so produced.
Each of the parties hereto agrees and stipulates that, to the
71
<PAGE> 76
extent permitted by applicable law, any such reproduction shall be admissible in
evidence as the original itself in any judicial or administrative proceeding
(whether or not the original is in existence and whether or not such
reproduction was made by you in the regular course of business) and any
enlargement, facsimile or further reproduction of such reproduction shall
likewise be admissible in evidence.
Section 8.15 CURRENCY IN WHICH PAYMENTS SHALL BE MADE. All payments
made by Borrower to any Lender, Holder, Agent or Collateral Agent hereunder or
under any Loan Document shall be made in Dollars.
Section 8.16 JUDGMENTS IN OTHER THAN DOLLARS. This is a loan
transaction that involves certain international components and in which the
specification of Dollars and payment in Los Angeles is of the essence, and the
obligations of the Borrower or TOGA under this Agreement or any of the other
Loan Documents to make payment to any Lender, Holder, Agent or Collateral Agent
in Dollars shall not be discharged or satisfied by any tender or recovery
pursuant to any judgment expressed in or converted into any other currency or in
another place except to the extent that such tender or recovery results in the
effective receipt by such Lender, Holder, Agent or Collateral Agent in Los
Angeles of the full amount of Dollars payable to such Lender, Holder, Agent or
Collateral Agent under this Agreement. If any judgment in favor of the Lenders,
the Holders, the Agent or the Collateral Agent, or with respect to the
Obligations or any other obligations of Borrower or TOGA under this Agreement
cannot, for any reason, be entered in terms of Dollars, the parties hereto
expressly agree that the amount of such judgment as denominated in a currency
other than Dollars shall be determined using the rate of exchange for such other
currency viz Dollars on the date of entry of judgment. Any payment made to or
for the account of any Lender, any Holder, the Agent or the Collateral Agent in
respect of any amount payable by Borrower or TOGA in Dollars which payment is
made in currency of any other country, whether pursuant to any judgment or order
of a court or tribunal or otherwise, shall constitute a discharge of Borrower or
TOGA only to the extent of the United States currency equivalent thereof using
the Spot Rate on the date payment is actually received by any Lender, any
Holder, the Agent or the Collateral Agent. Each of Borrower and TOGA shall, as a
separate and independent obligation which shall not be merged in any such
judgment or order, pay or cause to be paid the amount not so discharged in
accordance with the foregoing and indemnify and hold harmless any Lender, any
Holder, the Agent or the Collateral Agent against any loss or damage as a result
of any such amount being paid in currency of any other country.
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<PAGE> 77
IN WITNESS WHEREOF, this Agreement is executed as of the date
first written above.
BORROWER: TIPPERARY CORPORATION, a Texas
corporation
By:
------------------------------------
Name: David L. Bradshaw
Title: President
TOGA: TIPPERARY OIL & GAS (AUSTRALIA) PTY
LTD (ACN 077 536 871), a Queensland,
Australia corporation
By:
------------------------------------
Name: David L. Bradshaw
Title: President
LENDERS: TCW DEBT AND ROYALTY FUND VI, L.P., a
California limited partnership
By: TCW Asset Management Company, a
California corporation, as General
Partner
By:
------------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
------------------------------------
Name: Marc MacAluso
Title: Senior Vice President
73
<PAGE> 78
TCW ASSET MANAGEMENT COMPANY, a
California corporation, as Investment
Manager pursuant to the Investment
Management Agreement dated as of
October 27, 1997 between Delta Air
Lines, Inc., TCW Asset Management
Company and Trust Company of the West
By:
------------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
------------------------------------
Name: Marc MacAluso
Title: Senior Vice President
TCW ASSET MANAGEMENT COMPANY, a
California corporation, as Investment
Manager pursuant to the Investment
Management and Custody Agreement dated
as of October 27, 1997 between
University of Chicago, TCW Asset
Management Company and Trust Company of
the West
By:
------------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
------------------------------------
Name: Marc MacAluso
Title: Senior Vice President
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<PAGE> 79
TCW ASSET MANAGEMENT COMPANY, a
California corporation, as Investment
Manager pursuant to the Investment
Management and Custody Agreement dated
as of October 27, 1997 between
University of Notre Dame du Lac, TCW
Asset Management Company and Trust
Company of the West
By:
------------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
------------------------------------
Name: Marc MacAluso
Title: Senior Vice President
TCW ASSET MANAGEMENT COMPANY, a
California corporation, as Investment
Manager pursuant to the Investment
Management and Custody Agreement dated
as of October 24, 1997 between William
N. Pennington Separate Property Trust
dated January 1, 1991, TCW Asset
Management Company and Trust Company of
the West
By:
------------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
------------------------------------
Name: Marc MacAluso
Title: Senior Vice President
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<PAGE> 80
LION II CUSTOM INVESTMENTS LLC
LIFE INSURANCE COMPANY OF GEORGIA
SECURITY LIFE OF DENVER INSURANCE COMPANY
SOUTHLAND LIFE INSURANCE COMPANY
By: TCW Asset Management Company, a
California corporation, as
Investment Manager
By:
---------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
---------------------------------
Name: Marc MacAluso
Title: Senior Vice President
AGENT: TCW ASSET MANAGEMENT COMPANY,
a California corporation
By:
------------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
------------------------------------
Name: Marc MacAluso
Title: Senior Vice President
COLLATERAL AGENT: TCW ASSET MANAGEMENT COMPANY,
a California corporation
By:
------------------------------------
Name: Arthur R. Carlson
Title: Managing Director
By:
------------------------------------
Name: Marc MacAluso
Title: Senior Vice President
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<PAGE> 81
SCHEDULE 1
DISCLOSURE SCHEDULE
1. Re: Article 4 of the Credit Agreement. The Form 10-Q of Tipperary
Corporation for the Quarter Ended December 31, 1999, as well as its
Annual Report on Form 10-K for the Fiscal Year Ended September 30,
1999, copies of which have been delivered to the Agent, are
incorporated herein by reference.
2. Re: Section 4(m) of the Credit Agreement. Subsidiaries of Tipperary
Corporation:
Tipperary Oil & Gas Corporation, a Texas corporation - wholly owned;
Burro Pipeline Corporation, a New Mexico corporation - wholly owned.
3. Re: Section 4(o) of the Credit Agreement. In connection with the
execution of the Loan Documents, the Borrower is obligated to pay a fee
to Weisser, Johnson & Co. under an agreement with said company dated
October 15, 1998. A copy of this agreement has been delivered to the
Agent.
4. Re: Section 4(v) of the Credit Agreement. Copies of all existing gas
sales contracts of TOGA have been previously delivered to the Agent.
5. Re: Section 4(v) of the Credit Agreement. A Gas Imbalance Schedule as
of February, 2000 relating to the Comet Ridge Project has been
delivered to the Agent.
6. Re: Section 4(x) of the Credit Agreement. Tipperary Corporation has not
filed tax returns in Australia for the fiscal years ended September 30,
1996 and 1997. TOGA has not filed tax returns in Australia for the
fiscal years ended September 30, 1998 and 1999.
<PAGE> 82
SCHEDULE 2
LENDERS
TCW DEBT AND ROYALTY FUND VI, L.P., a California limited partnership.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management Agreement dated as of October 27, 1997
between Delta Air Lines, Inc., TCW Asset Management Company and Trust Company of
the West.
LION II CUSTOM INVESTMENTS LLC.
LIFE INSURANCE COMPANY OF GEORGIA.
SECURITY LIFE OF DENVER INSURANCE COMPANY.
SOUTHLAND LIFE INSURANCE COMPANY.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
27, 1997 between University of Chicago, TCW Asset Management Company and Trust
Company of the West.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
27, 1997 between University of Notre Dame du Lac, TCW Asset Management Company
and Trust Company of the West.
TCW ASSET MANAGEMENT COMPANY, a California corporation, as Investment Manager
pursuant to the Investment Management and Custody Agreement dated as of October
24, 1997 between William N. Pennington Separate Property Trust dated January 1,
1991, TCW Asset Management Company and Trust Company of the West.
<PAGE> 83
SCHEDULE 3
HOLDERS' INDIVIDUAL NOTE AMOUNTS/PRO RATA SHARES
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------
INITIAL
NOTE PRO RATA
HOLDER AMOUNT SHARE
=============================================================== ================== ==============
<S> <C> <C>
TCW Debt and Royalty Fund VI, L.P., a California limited $8,319,177.00 48.936335%
partnership
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as $2,849,033.00 16.759019%
Sub-Custodian for the Delta Master Trust dated May 27, 1982,
as amended, under the Sub-Custody Agreement and Power of
Attorney dated October 30, 1997
--------------------------------------------------------------- ------------------ --------------
LION II CUSTOM INVESTMENTS LLC $267,447.00 1.573216%
--------------------------------------------------------------- ------------------ --------------
LIFE INSURANCE COMPANY OF GEORGIA $133,724.00 0.786608%
--------------------------------------------------------------- ------------------ --------------
SECURITY LIFE OF DENVER INSURANCE COMPANY $668,617.00 3.933041%
--------------------------------------------------------------- ------------------ --------------
SOUTHLAND LIFE INSURANCE COMPANY $267,447.00 1.573217%
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as $1,139,613.00 6.703607%
Custodian for the University of Chicago
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as $505,909.00 2.975937%
Custodian for the University of Notre Dame du Lac
--------------------------------------------------------------- ------------------ --------------
TRUST COMPANY OF THE WEST, a California trust company, as $2,849,033.00 16.759019%
Custodian for William N. Pennington Separate Property Trust
dated January 1, 1991
=============================================================== ================== ==============
TOTAL $17,000,000.00 100.000000%
--------------------------------------------------------------- ------------------ --------------
</TABLE>
<PAGE> 84
SCHEDULE 4
SECURITY SCHEDULE
<TABLE>
<CAPTION>
-------------------------------------------------------------------------------------------------------------------------------
WHERE TIMING
PARTY COLLATERAL INSTRUMENT(S) FILED REQUIREMENT
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
<S> <C> <C> <C> <C>
Borrower o All interests in TOGA o Borrower Pledge and
o All interests in TOGC to Security Agreement
the extent related to TOGA o UCC-1 Financing
o Any Inter-company Debt Statement Texas,
owed by TOGC or TOGA to Colorado
Borrower
o All rights, claims and
interests in the Tri-Star
Litigation
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
o All funds received from o Borrower-TOGA
TOGA or TOGC in Borrower-TOGC Collateral Account
Collateral Account Agreement
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
TOGC o Capital Stock of TOGA o TOGC Pledge and
o Inter-company Debt owed Security Agreement
from TOGA o UCC-1 Financing Texas,
o All other interests in TOGA Statement Colorado
o All rights, claims and
interests in the Tri-Star
Litigation
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
o All funds received from o Borrower-TOGA
TOGA in Borrower-TOGC Collateral Account
Collateral Account Agreement
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
Guarantor o All rights, claims and o TOGA Security Agreement
interest under Project JOA and o UCC-1 Form Texas,
in the Tri-Star Litigation Colorado
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
o Participant Loans o Assignment by way of Queensland
Australian Mortgage
Document
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
o All assets of TOGA o Australian Fixed and Queensland
including all interests in Floating Charge Document
ATPs and Leases
------------------ ------------------------------------- --------------------------------- ---------------- -------------------
o All funds in the TOGA o TOGA Dollar Collateral
Dollar Collateral Account Account Agreement
------------------ ------------------------------------- ---------------------------------- ---------------- ------------------
o All funds in the TOGA o TOGA Australian
Australian Collateral Account Collateral Account Agreement
-------------------------------------------------------------------------------------------------------------------------------
</TABLE>
<PAGE> 85
SCHEDULE 5
PAYMENT ACCOUNTS
I. PRINCIPAL AND COUPON INTEREST PAYMENTS
All payments on account of the Notes shall be made by wire transfer of
immediately available funds for credit to:
Investors Bank & Trust Company
ABA #: 011001438
F/C Client Funds No. 569530395
Attention: Peter Maescher
Account #: 76T02327-4
TCW Debt & Royalty Funds VI
II. YIELD ADJUSTMENT PAYMENT/PREPAYMENT PREMIUM
Investors Bank & Trust Company
ABA #: 011001438
F/C Client Funds No. 569530395
Attention: Peter Maescher
Account #: 76T02327-4
TCW Debt & Royalty Funds VI
III. EXPENSE REIMBURSEMENT/PAYMENT AND OTHER EXPENSES
Bank of America
Los Angeles, CA
AC #: 49575-02303
Benefit: TAMCO
ABA #: 121000358
<PAGE> 86
SCHEDULE 6
INSURANCE
(1) Borrower, TOGC and TOGA shall procure at their own expense and maintain
in full force and effect at all times on and after the Initial Funding
Date, (except for insurance required by 1(h), which shall be in effect
as set forth in the Credit Agreement) and continuing throughout the
term of the Credit Agreement, insurance policies with responsible
insurance companies authorized to do business in Queensland, Australia
(if required by law or regulation) with a Best Insurance Reports rating
of "A-" or better and a financial size category of "IX" or higher, or
if not rated by Best, a Standard & Poors claims paying ability rating
of BBB+ or higher (and other companies acceptable to Agent), with
limits and coverage provisions sufficient to satisfy the requirements
set forth in each of the Project Documents, but in no event less than
the limits and coverage provisions set forth below:
(a) Employer's Liability Insurance: Employer's liability insurance
with a $500,000 minimum limit per accident. A maximum
deductible or self-insured retention of $25,000 per occurrence
shall be allowed.
(b) General Liability Insurance: Liability insurance on an
occurrence basis against claims for personal injury (including
bodily injury and death) and property damage. Such insurance
shall provide coverage for products-completed operations,
blanket contractual, broad form property damage, personal
injury insurance, and sudden and accidental pollution
liability with a $1,000,000 minimum limit per occurrence for
combined bodily injury and property damage provided that
policy aggregates, if any, shall apply separately to claims
occurring with respect to the Project. A maximum deductible or
self-insured retention of $25,000 per occurrence shall be
allowed.
(c) Automobile Liability Insurance. Automobile liability insurance
against claims for personal injury (including bodily injury
and death) and property damage covering all owned, leased
non-owned and hired motor vehicles, including loading and
unloading, with a $1,000,000 minimum limit per occurrence for
combined bodily injury and property damage and containing
appropriate no-fault insurance provisions wherever applicable.
A maximum deductible or self-insured retention of $25,000 per
occurrence shall be allowed.
(d) Excess Insurance: Excess liability insurance on an occurrence
basis (with coverage at least as broad as the coverage under
all primary policies) covering claims in excess of the
underlying insurance described in the foregoing
<PAGE> 87
subsections (b), (c) and (d), with a $10,000,000 minimum limit
per occurrence, provided that aggregate limits of liability,
if any, shall apply separately to claims occurring with
respect to the Project.
The amounts of insurance required in the foregoing subsections
(a), (b), (c) and this subsection (d) may be satisfied by
Borrower purchasing coverage in the amounts specified or by
any combination of primary and excess insurance, so long as
the total amount of insurance meets the requirements specified
above.
(e) Aircraft Insurance: If the performance of any of the Project
Documents requires the use of any aircraft that is owned,
leased or chartered by Borrower, aircraft liability insurance
with a $25,000,000 minimum limit per occurrence for combined
property damage and bodily injury, including passengers and
crew.
(f) Physical Damage Insurance: Property damage insurance on an
"all risk" basis, boiler and machinery insurance on a
comprehensive basis (covering all production machinery,
including but not limited to pressure vessels, reciprocating
engines, generators, transformers and other related equipment,
motors, air tanks, machinery, pressure piping or any other
similar objects) including coverage against damage or loss
caused by earth movement (including but not limited to
earthquake, landslide, subsidence and volcanic eruption),
sabotage, terrorism and flood and providing coverage for (1)
the Project (excluding power transmission lines and towers) in
a minimum aggregate amount equal to the "required insured
value" of the Project, (2) transit including ocean marine
transit, if applicable, with sub-limits sufficient to insure
the full replacement value of the property or equipment prior
to its being removed from the Project and while located away
from the Project, (3) foundations and other property below the
surface of the ground, and (4) attorneys fees, engineering and
other consulting costs, and permit fees directly incurred in
order to repair or replace damaged insured property in a
minimum amount of $1,000,000. For purposes of this Section
(f), "required insured value" shall mean not less than 75% of
the full replacement value of the Project, including any
improvements, equipment, spare parts, fuel and supplies,
without deduction for physical depreciation and/or
obsolescence; all such insurance may have deductibles of not
greater than $100,000 per occurrence. Such insurance shall (5)
not include any coinsurance provision, (6) provide for
increased cost of construction and loss to undamaged property
as the result of enforcement of building laws or ordinances
with sub-limits not less than 10% of the "full insurable
value" of the Project, and (7) include debris removal with
sub-limits not less than $500,000 or 25% of the loss,
whichever is greater. The earth movement and flood coverage
may be insured with a sublimit not less than 100% of the "full
insurable value" of the Project plus 100% of the business
income amount required by Section (g) below. The sabotage and
terrorism coverage may be insured with a sub-limit not less
than 50% of the "full insurable value" of the Project plus 50%
of the business income amount required by Section (g) below.
The property damage coverage shall not contain an exclusion
for freezing, mechanical breakdown, loss or damage covered
under any guarantee or warranty, or resultant damage caused by
faulty workmanship, design or materials.
2
<PAGE> 88
If the insurance company providing the physical damage
insurance is different from the company providing the boiler &
machinery insurance required in this Section, then a joint
loss agreement between them will be required and included as
part of the respective policies.
(g) Business Interruption Insurance: Business Interruption
insurance covering 100% of continuing normal operating
expenses including payroll and debt service of the Project for
a period of twelve (12) months, arising from loss required to
be insured by Section (B)(2)(a) above. The maximum deductible
shall be no greater than thirty (30) days per occurrence. Such
insurance shall also include, (1) an indemnity period of not
less than fifteen (15) months and (2) extra expenses (defined
as extraordinary expenses incurred after an insured loss to
make temporary repairs and expedite the permanent repair of
the damaged property in excess of the business interruption
even if such expense does not reduce the business interruption
loss) in an amount not less than $1,000,000. Such insurance
shall not contain any coinsurance clause or include a waiver
of such clause.
Notwithstanding Subsections (f) and (g) above, if under the
applicable Governmental Approvals or Project Documents,
Borrower is not obligated to restore the Project in the event
of a casualty such that Borrower can apply the Casualty
Proceeds against the Obligations, Borrower shall not be
required to maintain the insurance described in Subsection (f)
above in an amount greater than the sum of (i) the
then-outstanding principal balance of the Notes, plus (ii) all
accrued and unpaid interest thereon, plus (iii) an amount
equal to the total interest payable on the Notes during the
succeeding six (6) months.
(h) Contractual Liability Insurance. Contractual liability
insurance against claims arising from or in connection with
Borrower's indemnity obligation to Indemnitees under the Loan
Documents including without limitation with respect to third
party claims with a $5,000,000 minimum limit.
(2) Endorsements: All policies of insurance to be maintained by Borrower
shall provide for waivers of subrogation in favor of the Holders,
Agent, and Collateral Agent, their Affiliates, and all of their
respective directors, officers and employees (and such other Persons as
may be required by the Project Documents). All policies of liability
insurance required to be maintained by Borrower under Section (1)
above, other than employer's liability, shall be endorsed as follows:
(a) To provide a severability of interest or cross liability
clause.
(b) That the insurance shall be primary and not excess to or
contributing with any insurance or self-insurance maintained
by the Holders, Agent, or Collateral Agent, and their
Affiliates.
3
<PAGE> 89
(c) To name the Holders, Agent, and Collateral Agent, their
Affiliates, and all of their respective officers and employees
(and such other persons as may be required by the Project
Documents) as additional insureds.
(d) To name Borrower and its officers and employees as a named
insured.
(3) Waiver of Subrogation: Borrower hereby waives any and every claim for
recovery from Holders, Agent, or Collateral Agent, and their
Affiliates, and all of their officers, directors, employees,
contractors, and agents, for any and all loss or damage covered by any
of the insurance policies to be maintained under the Credit Agreement
to the extent that such loss or damage is recovered under any such
policy. Inasmuch as the foregoing waiver will preclude the assignment
of any such claim to the extent of such recovery, by subrogation (or
otherwise), to an insurance company (or other person), Borrower shall
give written notice of the terms of such waiver to each insurance
company which has issued, or which may issue in the future, any such
policy of insurance (if such notice is required by the insurance
policy) and shall cause each such insurance policy to be properly
endorsed by the issuer thereof to, or to otherwise contain one or more
provisions that, prevent the invalidation of the insurance coverage
provided thereby by reason of such waiver.
(4) Amendment of Requirements: Agent or Collateral Agent may at any time
amend the requirements and approved insurance companies of this
Schedule 7 due to (i) new information not known by Agent or Collateral
Agent on the date hereof or (ii) changed circumstances after the date
hereof which in the reasonable judgment of Agent or Collateral Agent
either renders such coverage materially inadequate or materially
reduces the financial ability of the approved insurance companies to
pay claims.
In the event any insurance (including the limits or deductibles
thereof) hereby required to be maintained shall not be reasonably
available and commercially feasible in the commercial insurance market,
Agent shall not unreasonably withhold its agreement to waive such
requirement to the extent the maintenance thereof is not so available;
provided, however, that (i) Borrower shall first request any such
waiver in writing, which request shall be accompanied by written
reports prepared by two independent insurance advisors of recognized
national standing (one of which may be the Borrower's insurance advisor
and one of which may be Agent's insurance advisor), certifying that
such insurance is not reasonably available and commercially feasible in
the commercial insurance market for oil, gas and hydrocarbon producing
facilities of similar type, location and capacity (and, in any case
where the required amount is not so available, certifying as to the
maximum amount which is so available) and explaining in detail the
basis for such conclusions; (ii) at any time after the granting of any
such waiver, but not more often than once a year, Agent may request,
and Borrower shall furnish to Agent within fifteen (15) days after such
request, supplemental reports reasonably acceptable to Agent from such
independent insurance broker or an insurance consultant updating their
prior reports and reaffirming such conclusion; and (iii) any such
waiver shall be effective only so long as such insurance shall not be
reasonably available and commercially
4
<PAGE> 90
feasible in the commercial insurance market, it being understood that
the failure of Borrower to timely furnish any such supplement report
shall be conclusive evidence that such waiver is no longer effective
because such condition no longer exists, but that such failure is not
the only way to establish such non-existence. The failure at any time
to satisfy the condition to any waiver of an insurance requirement set
forth in the proviso to the preceding sentence shall not impair or be
construed as a relinquishment of Borrower's ability to obtain a waiver
of an insurance requirement pursuant to the preceding sentence at any
other time upon satisfaction of such conditions.
(5) Application of Proceeds:
(a) The insurance required by Sections (1)(f) and (g) of this
Schedule 7 (the "CASUALTY INSURANCE"), shall (except as
provided below) be payable to Agent and Collateral Agent, and
Borrower hereby authorizes and directs any affected insurance
company to make payment of such proceeds directly to Agent
and/or Collateral Agent. If Borrower receives any proceeds of
such Casualty Insurance, Borrower (i) shall promptly deposit
such proceeds into a segregated account (the "RESTORATION
ACCOUNT") in which Collateral Agent shall have a perfected
security interest; (ii) to the extent relating to damage or
destruction of the Project, such proceeds shall be available
for repair or reconstruction as provided in Section (c) below;
and (iii) such proceeds so deposited or received directly by
Collateral Agent shall be the "CASUALTY PROCEEDS."
(b) Borrower is hereby authorized and empowered by Agent to
settle, adjust or compromise any and all Casualty Insurance
claims in the aggregate amount of $500,000 or less; provided,
however, that no Event of Default has occurred and is
outstanding. The mutual written agreement of Borrower and
Agent shall be required to settle, adjust or compromise any
and all Casualty Insurance claims in the aggregate amount of
greater than $500,000; provided, however, that no Event of
Default has occurred and is outstanding. Collateral Agent is
hereby authorized and empowered by Borrower to settle, adjust
or compromise any and all claims for loss, damage and
destruction under any policy or policies of insurance at any
time an Event of Default has occurred and is outstanding.
(c) In the event of any damage or destruction of the Project that
is insured by the Casualty Insurance (other than business
interruption or delayed startup insurance), then, except as
provided in Section (4) below, Collateral Agent shall disburse
to Borrower from such separate account loss proceeds remaining
after deduction of all expenses of collection and settlement
thereof, including, without limitation, attorneys' and
adjustors' fees and expenses, to pay or reimburse the payment
of costs of the restoration of the Project but only as repairs
or replacements are effected in a diligent manner with
contractors and pursuant to lump-sum contracts reasonably
acceptable to Collateral Agent (which contracts shall provide
for not less than 5% retainage). If the cost of the
restoration, as reasonably determined by Collateral Agent, is
less than $500,000, then Collateral Agent shall, except as
5
<PAGE> 91
provided in Section (4)(a) below, pay upon receipt thereof the
Casualty Insurance proceeds to Borrower in one lump sum to
apply to the restoration of the Project to its condition
existing prior to the casualty ("RESTORATION").
(d)
(i) If (i) an Event of Default occurs, (ii) Borrower
notifies Agent or Collateral Agent to apply the
Casualty Insurance proceeds against the Obligations,
or (iii) Agent or Collateral Agent reasonably
determines that (A) the proceeds of the insurance are
not adequate in amount to complete the Restoration
and Borrower has not provided adequate security or
other commitments acceptable to Agent in its sole
discretion to cover any such deficiency in Casualty
Insurance proceeds or (B) the Restoration cannot be
achieved due to the unavailability of Governmental
Approvals, then Agent and Collateral Agent shall not
be obligated to make any further disbursements
pursuant to the Loan Documents and Collateral Agent
shall apply all Casualty Insurance loss proceeds,
after deductions as herein provided, to the repayment
of the outstanding balance of the Notes, together
with all accrued interest thereon, notwithstanding
that the outstanding balance may not be due and
payable.
(ii) Without limiting the provisions of Section (c) above,
Collateral Agent shall disburse Casualty Proceeds
subject to the following conditions:
(A) the contracts, contractors, plans and
specifications for the Restoration shall
have been approved in advance by Collateral
Agent, which approval shall not be
unreasonably withheld or delayed, and Agent
shall be provided with satisfactory proof
that any subordinate lienholder has
consented to the Restoration and has agreed
to make any Casualty Proceeds it is entitled
to available for such Restoration;
(B) such Restoration is then allowed by
applicable Governmental Rules, and all
necessary Governmental Approvals for the
commencement of construction shall have been
obtained or shall be obtained as required to
complete the Restoration in a timely manner;
(C) the net Casualty Proceeds received by
Borrower from time to time plus any
deficiency funded by Borrower shall be
deposited with Agent in the Restoration
Account;
(D) at the time of any disbursement from the
Restoration Account, no Event of Default
shall have occurred since the date of the
casualty;
6
<PAGE> 92
(E) disbursement from the Restoration Account
shall be made by Agent to Borrower in an
amount not exceeding the cost of the work
completed since the date of the last
disbursement, net of retainage provided
under the applicable contracts, within 10
Business Days after receipt by Agent of
reasonably satisfactory evidence of the
stage of completion and of performance of
the work in a good and workmanlike manner in
accordance with the contracts, plans and
specifications; provided that Borrower may
not make requisitions more often than
monthly; and
(F) Notwithstanding anything in this Section
(5)(d) to the contrary, if at any time
during the course of Restoration a
deficiency has been identified in the amount
available for Restoration, no further
disbursements shall be made from the
Restoration Account until Collateral Agent
receives either payment of such deficiency
or commitment to fund such deficiency
acceptable to Collateral Agent in its sole
discretion. All Casualty Proceeds, if any,
remaining in the Restoration Account after
completion of Restoration shall be applied
by Agent to the reduction of the
Obligations.
(e) Borrower shall promptly notify Agent of any loss in excess of
$100,000 covered by any Casualty Insurance.
(6) Conditions:
(1) All policies of insurance required to be maintained pursuant
to this Schedule 6 shall be endorsed such that if at any time
such policies are canceled, or coverage be reduced which
affects the interests of the Holders, Agent, and/or Collateral
Agent, such cancellation or reduction shall not be effective
as to the Holders, Agent, or Collateral Agent for forty-five
(45) days, except for non-payment of premium which shall be
for ten (10) days, after receipt by Agent of written notice
from such insurer of such cancellation or reduction.
(2) All policies of insurance required to be maintained pursuant
to Sections (1)(f) and (g) shall not include any annual or
term aggregate limits of liability or clause requiring the
payment of additional premium to reinstate the limits after
loss except as regards the insurance applicable to the perils
of flood, earth movement, sabotage and terrorism.
(7) Evidence of Insurance: On the Initial Funding Date and on an annual
basis at least ten (10) days prior to each policy anniversary, Borrower
shall furnish Agent with (1) approved certification of all required
insurance and (2) a schedule of the insurance policies held by or for
the benefit of Borrower and required to be in force by the provisions
of this Schedule 6. Such certification shall be executed by each
insurer or by
7
<PAGE> 93
an authorized representative of each insurer where it is not practical
for such insurer to execute the certificate itself. Such certification
shall identify underwriters, the type of insurance, the insurance
limits and the policy term and shall specifically list the special
provisions enumerated for such insurance required by this Schedule 6.
Upon request, Borrower will promptly furnish Agent with copies of all
insurance policies, binders and cover notes or other evidence of such
insurance relating to the insurance required to be maintained by
Borrower. The schedule of insurance shall include the name of the
insurance company, policy number, type of insurance, major limits of
liability and expiration date of the insurance policies.
(8) Reports: Concurrently with the furnishing of the certification referred
to in this Section (8), Borrower shall furnish Agent with a report of
an independent broker, signed by an officer of the broker, stating that
in the opinion of such broker, the insurance then carried or to be
renewed is in accordance with the terms of this Schedule 6, and
attaching an updated copy of the schedule of insurance required by this
Section (8) above. In addition, Borrower will advise Agent in writing
promptly of any default in the payment of any premium and of any other
act or omission on the part of Borrower which may invalidate or render
unenforceable, in whole or in part, any insurance being maintained by
Borrower pursuant to this Schedule 6.
(9) Failure to Maintain Insurance: In the event Borrower fails, or fails to
cause the contractors or the Operator, to take out or maintain the full
insurance coverage required by this Schedule 6, Agent, upon thirty (30)
days' prior notice (unless the aforementioned insurance would lapse
within such period, in which event notice should be given as soon as
reasonably possible) to Borrower of any such failure, may (but shall
not be obligated to) take out the required policies of insurance and
pay the premiums on the same. All amounts so advanced thereof by Agent
shall become an additional obligation of Borrower to Agent, and
Borrower shall forthwith pay such amounts to Collateral Agent, together
with interest thereon at the Late Payment Rate from the date so
advanced.
(10) No Duty to Verify or Review: No provision of this Schedule 6 or any
provision of the Credit Agreement or any Project Document shall impose
on the Holders, Agent, or Collateral Agent any duty or obligation to
verify the existence or adequacy of the insurance coverage maintained
by Borrower, nor shall any of the Holders, Agent, or Collateral Agent
be responsible for any representations or warranties made by or on
behalf of Borrower to any insurance company or underwriter. Any failure
on the part of the Holders, Agent, or Collateral Agent to pursue or
obtain the evidence of insurance required by the Credit Agreement from
Borrower and/or failure of the Holders, Agent, or Collateral Agent to
point out any non-compliance of such evidence of insurance shall not
constitute a waiver of any of the insurance requirements in the Credit
Agreement.
(11) Maintenance of Insurance: Borrower shall at all times maintain the
insurance coverage required of it under the terms of the Project
Documents.
8
<PAGE> 94
EXHIBIT A
AUSTRALIAN CHARGE DOCUMENT
<PAGE> 95
EXHIBIT B
COLLATERAL ACCOUNT AGREEMENT
<PAGE> 96
EXHIBIT C
GUARANTEE AGREEMENT
<PAGE> 97
EXHIBIT D
TC PLEDGE AND SECURITY AGREEMENT
<PAGE> 98
EXHIBIT E
ROYALTY AGREEMENT
<PAGE> 99
EXHIBIT F
SECURITY AGREEMENT
<PAGE> 100
EXHIBIT G
SLOUGH STOCK PLEDGE AGREEMENT
<PAGE> 101
EXHIBIT H
SUBORDINATION AGREEMENT
<PAGE> 102
EXHIBIT I
TOGA-BORROWER
MANAGEMENT AGREEMENT
<PAGE> 103
EXHIBIT J
TOGC SECURITY AGREEMENT
<PAGE> 104
EXHIBIT K
SENIOR SECURED PROMISSORY NOTE
$____________ New York, New York
Note No. _______ Date: April _____, 2000
FOR VALUE RECEIVED, the undersigned, TIPPERARY CORPORATION, a
Texas corporation ("PROMISOR"), hereby unconditionally promises to pay to the
order of _______________________________________________________________________
__________________________________________________, or assigns ("HOLDER"), the
principal sum of __________________AND 00/100 DOLLARS ($__________) (or so much
thereof as shall not have been repaid) on or before March 30, 2006. The
undersigned also promises to pay to the Holder hereof interest on the unpaid
principal hereof, at the rate set forth in and in accordance with that certain
Credit Agreement, dated as of even date herewith, among Promisor, TCW Asset
Management Company in the capacities described therein and the other parties
thereto (as amended, modified or restated from time to time, the "CREDIT
AGREEMENT"). All undefined capitalized terms used herein shall have the meaning
given in the Credit Agreement. Payments of principal and interest shall be
computed on the bases set forth in the Credit Agreement and shall be payable as
follows: (i) from and after the Initial Funding Date and until this Note is
repaid in full, Coupon Interest for each Calendar Quarter (or part thereof)
shall be payable quarterly on the Quarterly Payment Date, (ii) from and after
the Initial Amortization Date, principal shall be payable quarterly on the
Quarterly Payment Date in the amount equal to the Principal Payment for such
quarter set forth in the Credit Agreement, (iii) Late Payment Rate Interest
shall be payable immediately upon accrual, and (iv) the outstanding principal
balance shall be payable on the Maturity Date. Payments of principal and
interest are to be made in lawful money of the United States of America in
immediately available funds.
This Note is issued pursuant to the Credit Agreement and is
secured by and entitled to the benefits thereof. This Note is also secured by
certain of, and entitled to the benefits provided in, the other Loan Documents
(by the terms of which agreements the Holder hereof, by its acceptance hereof,
agrees to be bound), in each case to the extent provided in said agreements.
All principal under and interest on this Note shall be payable
without deduction or withholding for or on account of any present or future
taxes, duties, fees or other charges levied or imposed on this Note or the
Holder by the Commonwealth of Australia or any political subdivision or taxing
authority thereof or therein. If the Promisor is required by law to make any
such deduction or withholding, it will pay the Holder such additional amounts as
may be necessary so that every net payment of principal of and interest on the
Note received by the
<PAGE> 105
Holder will not be less than the amount provided in the Credit Agreement to be
then due and payable.
THIS NOTE HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF
1933, AS AMENDED, OR REGISTERED OR QUALIFIED UNDER ANY STATE SECURITIES LAWS,
AND TRANSFER OF THIS NOTE IS SUBJECT TO RESTRICTIONS SET FORTH IN THE CREDIT
AGREEMENT.
Subject to the terms and conditions set forth in the Credit
Agreement, upon surrender of this Note, duly endorsed, or accompanied by a
written instrument of transfer or assignment or request for reissuance, duly
executed by the registered Holder hereof or such Holder's attorney duly
authorized in writing, one or more new Notes for a like principal amount will be
issued to, and, at the option of the Holder, registered in the name of, such
Holder or the designated transferee(s) or assignee(s). Promisor may deem and
treat the person in whose name this Note is registered as the Holder and owner
hereof for the purpose of receiving payments and for all other purposes
whatsoever.
If an Event of Default shall occur and be continuing, the
principal of this Note may, under certain circumstances, become or be declared
due and payable in the manner and with the effect provided in the Credit
Agreement.
This Note shall be binding upon the successors and assigns of
the Promisor and shall inure to the benefit of the successors and assigns of the
Holder.
This Note shall be governed by and construed in accordance
with the laws of the State of New York, United States of America. Promisor
hereby submits to the nonexclusive jurisdiction of the state and federal courts
sitting in the State of New York and County of New York for the purposes of all
legal proceedings arising out of or relating to this Note or the transactions
contemplated hereby. Promisor irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the laying
of the venue of any such proceeding brought in such court and any claim that any
such proceeding brought in such a court has been brought in an inconvenient
forum.
TIPPERARY CORPORATION, a Texas
corporation
By:
-------------------------------
Name: David L. Bradshaw
Title: President
2
<PAGE> 106
EXHIBIT L
REQUEST FOR INITIAL LOAN ADVANCE
Reference is made to that certain Credit Agreement dated as of
April _____, 2000 (as from time to time amended), by and among TIPPERARY
CORPORATION, a Texas corporation ("BORROWER"), TIPPERARY OIL & GAS (AUSTRALIA)
PTY. LTD, a Queensland corporation ("TOGA"), and LENDERS that are party thereto,
TCW ASSET MANAGEMENT COMPANY, a California corporation ("TAMCO"), as Agent, and
TAMCO, as Collateral Agent. Terms which are defined in the Credit Agreement are
used herein with the meanings given them in the Credit Agreement.
Pursuant to the terms of the Credit Agreement, Borrower hereby
requests the Lenders to make an Initial Loan Advance to Borrower in the
principal amount of $6,000,000 and specifies [__________], as the date Borrower
desires for the Lenders to make such Initial Loan Advance and to deliver to
Borrower the proceeds thereof, by wire transfer to the following:
Tipperary Corporation
Acct #
----------------------
[Bank]
----------------------
[City, State]
----------------
ABA #
-----------------------
To induce the Lenders to make such Initial Loan Advance,
Borrower hereby represents, warrants, acknowledges, and agrees that:
The officer of Borrower signing this instrument is the duly
elected, qualified and acting officer of Borrower as indicated below
such officer's signature hereby, having all necessary authority to act
for Borrower in making the request herein contained.
All representations and warranties made by Borrower, TOGA, or
each Related Person in any Loan Document are true and correct on and as
of the date hereof as if such representations and warranties had been
made as of the date hereof.
There does not exist on the date hereof any condition or event
which constitutes a Default which has not been waived in writing by
Collateral Agent, Agent and the Lenders; nor will any such Default
exist upon Borrower's receipt and application of the Initial Loan
Advance requested hereby. Borrower will use the Initial Loan Advance
hereby requested in compliance with Section 2.4 of the Credit
Agreement.
<PAGE> 107
Except to the extent waived in writing by Collateral Agent,
Agent and the Lenders, Borrower, TOGA and each Related Person have
performed and complied with all agreements and conditions required in
the Loan Documents to be performed or complied with by it on or prior
to the date hereof, and each of the conditions precedent to the Initial
Loan Advance contained in the Credit Agreement shall be satisfied as of
the date thereof.
The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in the Credit
Agreement.
The person signing this instrument hereby certifies, that, to
the best of [his] knowledge after due inquiry, the above representations,
warranties, acknowledgements, and agreements of Borrower are true, correct and
complete.
IN WITNESS WHEREOF, this instrument is executed as of April
_____, 2000.
TIPPERARY CORPORATION, a Texas
corporation
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
ACKNOWLEDGED:
TCW ASSET MANAGEMENT COMPANY, a
California corporation as Agent for the Lenders
party to the Credit Agreement
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
2
<PAGE> 108
EXHIBIT M
REQUEST FOR ADDITIONAL LOAN ADVANCE
Reference is made to that certain Credit Agreement dated as
of April _____, 2000 (as from time to time amended), by and among TIPPERARY
CORPORATION, a Colorado corporation ("BORROWER"), TIPPERARY OIL & GAS
(AUSTRALIA) PTY. LTD, a Queensland corporation ("TOGA"), and LENDERS that are
party thereto, TCW ASSET MANAGEMENT COMPANY, a California corporation ("TAMCO"),
as Agent, and TAMCO, as Collateral Agent. Terms which are defined in the Credit
Agreement are used herein with the meanings given them in the Credit Agreement.
Pursuant to the terms of the Credit Agreement, Borrower
hereby requests the Lenders to make an Additional Loan Advance to Borrower in
the principal amount of $________ and specifies [__________], as the date
Borrower desires for the Lenders to make such Additional Loan Advance and to
deliver to Borrower the proceeds thereof, by wire transfer to the following:
Tipperary Corporation
Acct #
----------------------
[Bank]
----------------------
[City, State]
----------------
ABA #
-----------------------
To induce the Lenders to make such Additional Loan Advance,
Borrower hereby represents, warrants, acknowledges, and agrees that:
The officer of Borrower signing this instrument is the duly
elected, qualified and acting officer of Borrower as indicated below
such officer's signature hereby, having all necessary authority to act
for Borrower in making the request herein contained.
All representations and warranties made by Borrower, TOGA, or
each Related Person in any Loan Document are true and correct on and as
of the date hereof as if such representations and warranties had been
made as of the date hereof.
There does not exist on the date hereof any condition or event
which constitutes a Default which has not been waived in writing by
Collateral Agent, Agent and the
<PAGE> 109
Lenders; nor will any such Default exist upon Borrower's receipt and
application of the Additional Loan Advance requested hereby. Borrower
will use the Additional Loan Advance hereby requested in compliance
with Section 2.4 of the Credit Agreement.
Except to the extent waived in writing by Collateral Agent,
Agent and the Lenders, Borrower, TOGA and each Related Person have
performed and complied with all agreements and conditions required in
the Loan Documents to be performed or complied with by it on or prior
to the date hereof, and each of the conditions precedent to Additional
Loan Advance contained in the Credit Agreement shall be satisfied as of
the date thereof.
The Loan Documents have not been modified, amended or
supplemented by any unwritten representations or promises, by any
course of dealing, or by any other means not provided for in the Credit
Agreement.
The person signing this instrument hereby certifies,
that, to the best of [his] knowledge after due inquiry, the above
representations, warranties, acknowledgements, and agreements of Borrower are
true, correct and complete.
IN WITNESS WHEREOF, this instrument is executed as of
_________, 2000.
TIPPERARY CORPORATION, a Texas
corporation
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
ACKNOWLEDGED:
TCW ASSET MANAGEMENT COMPANY, a
California corporation as Agent for the Lenders
party to the Credit Agreement
By:
----------------------------------------------
Name:
-----------------------------------------
Title:
----------------------------------------
2
<PAGE> 110
EXHIBIT N
TERM SHEET FOR PARTICIPANT LOANS
<PAGE> 111
EXHIBIT O
FORM OF LETTER DIRECTING PAYMENT TO COLLATERAL ACCOUNT
[TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD LETTERHEAD]
[Purchaser Address]
Ladies and Gentlemen:
We hereby irrevocably authorize and direct you to make all
payments owed by you to us in connection with that certain Operating Agreement
dated May 15, 1992, as amended, among Tri-Star Petroleum Company, as operator,
and other parties thereto, or otherwise owned by you, payable to Tipperary Oil &
Gas (Australia) Pty Ltd and forward said payments directly by (i) mail to
[_____________________________________________________] or (ii) wire transfer to
[_____________________________________________]. The instructions set forth
herein are irrevocable and are not subject to modification in any manner unless
you are so notified in writing and said writing is executed by both TCW Asset
Management Company and the undersigned.
Very truly yours,
TIPPERARY OIL & GAS (AUSTRALIA) PTY LTD
(ACN 077 536 871), a Queensland
corporation
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
<PAGE> 112
EXHIBIT P
OMNIBUS CERTIFICATE OF SECRETARY
I, _______________, do hereby certify that I am the duly
elected, qualified and acting Secretary of Tipperary Corporation, a Texas
corporation (the "BORROWER"), and that, in such capacity, I am authorized to
certify on behalf of the Borrower to TCW Asset Management Company, a California
corporation ("Tamco"), acting in the capacity of "COLLATERAL AGENT" and "AGENT,"
pursuant to that certain Credit Agreement dated as of April _____, 2000 (the
"CREDIT AGREEMENT"), by and among the Borrower, Tamco, in the capacities set
forth therein, and the other parties thereto that:
1. Attached hereto as Exhibit A are true, correct and complete
copies of the Articles of Incorporation of the Borrower, and all
amendments thereto, certified by the _______________, and as in effect
on the date hereof.
2. Attached hereto as Exhibit B are true, correct and complete
copies of the Bylaws of the Borrower, and all amendments thereto,
certified by the _______________, and as in effect on the date hereof.
3. Attached hereto as Exhibit C are true, correct and complete
copy of the unanimous written consent of the Board of Directors of the
Borrower, approving the Loan Documents (as defined in the Credit
Agreement) and the transactions contemplated in the Loan Documents,
authorizing the execution, delivery and performance by the Borrower of
the Loan Documents to which it is a party and the consummation of the
transactions contemplated therein, which resolutions have not been
revoked, modified, amended or rescinded and are still in full force and
effect on the date hereof.
4. The below-named persons have been duly elected and
qualified and on ____________, _____, were and at all time subsequent
thereto, including the date hereof, have been officers of the Borrower,
holding the offices indicated opposite their respective names, and the
signatures set forth opposite their respective names are their genuine
signatures.
<TABLE>
<CAPTION>
Name Office Signature
---- ------ ---------
<S> <C> <C>
------------------ -------------------- --------------------
------------------ -------------------- --------------------
</TABLE>
<PAGE> 113
DATED AND EFFECTIVE as of this _____ day of April, 2000.
TIPPERARY CORPORATION, a Texas
corporation
By:
------------------------------------
Name:
-------------------------------
Title:
------------------------------
The undersigned hereby certifies that _____________ who
executed the foregoing certificate is the duly elected ______________ of the
Borrower, and the signature set forth above his name is his genuine signature.
------------------------------------
Name:
-------------------------------
Title: [President]
2
<PAGE> 114
EXHIBIT Q
COMPLIANCE CERTIFICATE
The undersigned, _____________________, the duly elected,
qualified and acting President of TIPPERARY CORPORATION, a Texas corporation,
hereby certifies to TRUST COMPANY OF THE WEST, a California trust company, TCW
ASSET MANAGEMENT COMPANY, a California corporation, and TCW DEBT AND ROYALTY
FUND VI, L.P., a California limited partnership, in connection with that certain
Credit Agreement dated as of April _____, 2000, by and among said aforementioned
parties, in the capacities set forth therein, and the other parties thereto
that:
1. All representations and warranties made
by it in any Loan Document shall be true in all material
respects on and as of the date hereof (except to the extent
that the facts upon which such representations are based (i)
have been changed by the extension of credit hereunder and
(ii) are true and correct only when taken together with all
other representations and warranties thereof in any Loan
Document previously delivered) as if such representations and
warranties had been made as of the date hereof.
2. No Default exists at the date hereof.
3. No Material Adverse Effect as described
in Section 3.2(c) of the Credit Agreement has occurred since
the date of the Credit Agreement.
4. It has performed and complied in all
material respects with all agreements and conditions required
in the Loan Documents to be performed or complied with by it
on or prior to the date hereof.
Capitalized terms used herein but not otherwise defined shall
have the meanings ascribed thereto in the Credit Agreement.
DATED AND EFFECTIVE as of this _____ day of April, 2000.
TIPPERARY CORPORATION, a Texas
corporation
By:
------------------------------------
Name:
-------------------------------
Title: [President]
<PAGE> 115
EXHIBIT R-1
OPINION OF AUSTRALIAN COUNSEL
<PAGE> 116
EXHIBIT R-2
OPINION OF NEW YORK COUNSEL
<PAGE> 117
EXHIBIT R-3
OPINION OF TEXAS COUNSEL
<PAGE> 118
EXHIBIT S
COLLATERAL PROPERTIES
1. PL 90 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
2. PL 91 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
3. PL 92 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
4. PL 99 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview South Extended
5. PL 100 (Petroleum Lease)
Principal Holder: Tri-Star Petroleum Company
Location: Fairview Field
6. ATP 526 (Authority to Prospect)
Principal Holder: Tri-Star Petroleum Company
Location: North east of Injune (Bowen/Surat Basins)
7. ATP 655 (Authority to Prospect)
Principal Holder: Tipperary Corporation
Location: Surrounding Injune (Bowen/Surat Basins)
8. ATP 675 (Authority to Prospect)
Principal Holder: Tipperary Corporation
Location: North west of Injune (Bowen/Surat Basins)
<PAGE> 119
OPERATING AGREEMENT between Tri-Star Petroleum Company, Tipperary Oil & Gas
(Australia) Pty Ltd and the Comet Ridge Participants dated May 15, 1992, as
amended from time to time.
-2-
<PAGE> 120
EXHIBIT T
SUPPLEMENT TO ROYALTY AGREEMENT
