Exhibit 10.7
REVOLVING LINE OF CREDIT AGREEMENT
April 30, 2004
Gulfport Energy Corporation
00000 Xxxxx Xxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Ladies and Gentlemen:
CD Holding, LLC, a Delaware limited liability company ("Lender") is pleased
to offer a revolving line of credit financing facility to Gulfport Energy
Corporation, a Delaware corporation (the "Borrower"), pursuant to the following
terms and conditions:
1. Revolving Line of Credit Facility.
(a) Subject to the terms and conditions of this loan agreement (as
amended, supplemented, waived or modified from time to time after the date
hereof, this "Loan Agreement"), Lender shall, from time to time after the
date hereof and up to the Commitment Termination Date (as defined herein)
make advances to the Borrower ("Loans") not to exceed $3,000,000 in the
aggregate outstanding at anytime (the "Commitment") which shall bear
interest at a Base Rate of 10% per annum to be used solely to fund its
capital and operating expenses.
(b) The Loans will be evidenced by a revolving promissory note of the
Borrower, substantially in the form of Exhibit A hereto (together with all
amendments and supplements thereto, substitutions therefor, and all
renewals, extensions, modifications, rearrangements and waivers thereof,
the "Note"), with payment terms, interest rate, and other terms as set
forth therein. This Loan Agreement, the Note, the Loan Request Certificates
(as defined below) and all other documents, certificates and instruments
related to this Loan Agreement or the Loans, whether furnished before or as
of the date hereof, or from time to time hereafter, as each may be amended,
supplemented, waived, or modified from time to time, shall be collectively
referred to herein as the "Loan Documents."
(c) The Commitment shall terminate upon the "Commitment Termination
Date," which shall be the earlier to occur of (i) the termination of the
Commitment pursuant to Paragraph 5 of this Loan Agreement, (ii) the closing
on a Rights Offering (as defined herein) and (iii) August 1, 2005. Until
the Commitment Termination Date, the Borrower may use the Commitment by
borrowing, prepaying the Loans (in whole or in part, at any time and from
time to time, without premium or penalty) and reborrowing, all pursuant to
the terms and conditions of this Loan Agreement. On the Commitment
Termination Date, any outstanding amount of the loans shall be repaid in
full.
Gulfport Energy Corporation
April 30, 2004
Page 2
(d) If Borrower conducts an offering (the "Rights Offering") of rights
("Rights") to purchase shares of its common stock, par value $0.01 per
share ("Common Stock"), or otherwise sells or agrees to sell Common Stock
to Lender during the term of this Loan Agreement, Lender may, at its
option, apply all or part of the principal amount of all outstanding Loans
plus all accrued and unpaid interest owed on the Loans (i) to the exercise
of Rights issued to Lender in the Rights Offering, or (ii) to the purchase
price for such Common Stock, as the case may be. To the extent all of the
outstanding Loans plus all accrued and unpaid interest on the closing date
of the Rights Offering or sale of Common Stock, as the case may be, is not
applied by Lender to the exercise of Rights or purchase of Common Stock,
the remaining amounts due shall be repaid to Lender out of the proceeds of
the Rights Offering or sale of Common Stock.
2. Conditions to Funding. The funding of each Loan is subject to the
satisfaction or waiver by Lender of each of the following conditions, in each
case satisfactory in form and substance to Lender and its counsel, in its sole
and absolute discretion:
(a) The Borrower shall have executed and delivered to Lender a
certificate in a form acceptable to Lender requesting a Loan (a "Loan
Request Certificate") at least ten business days prior to the date of the
requested Loan;
(b) The Borrower shall have executed and delivered the following
documents to Lender prior to the date of requested Loan:
(i) This Loan Agreement;
(ii) The Note; and
(iii) Such other documents, opinions, certificates and evidences
as Lender shall deem necessary or advisable;
(c) Each of the representations and warranties made in, and in
connection with, the Loan Documents shall be true, correct and complete in
all material respects;
(d) No Event of Default (as defined herein) shall have occurred and be
continuing; and
3. Representations and Warranties. In order to induce Lender to enter
into this Loan Agreement and to make Loans to the Borrower, the Borrower hereby
represents and warrants to Lender, as of the date hereof and as of the date of
each extension of credit hereunder, and with respect to subsection (i) hereof at
all times hereafter that the Loans are outstanding, that:
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April 30, 2004
Page 3
(a) Organization; Powers. The Borrower (i) is a corporation duly
organized, validly existing and in good standing under the laws of
Delaware, (ii) has all requisite corporate power and authority to own its
property and assets and to carry on its business as now conducted and as
proposed to be conducted, (iii) is qualified to do business in every
jurisdiction where such qualification is necessary, (iv) has the corporate
power and authority to execute, deliver and perform each agreement or
instrument contemplated hereby to which it is or will be a party, and (v)
is in compliance with all laws, rules, regulations and orders
("Requirements of Law") of governmental bodies, including courts
("Governmental Authorities") except where the failure to so comply would
not have a material adverse effect on the Borrower.
(b) Authorization. The execution, delivery and performance by the
Borrower of the Loan Documents and the borrowing of the Loans (i) have been
duly authorized by all requisite corporate action on the part of the
Borrower, and (ii) will not (x) violate (A) any Requirement of Law or of
the certificate of incorporation or bylaws of the Borrower, or (B) any
indenture, agreement or other instrument to which the Borrower is a party
or by which its property is bound, (y) be in conflict with, result in a
breach of or constitute (with due notice or lapse of time or both) a
default under any such indenture, agreement or other instrument, or (z)
result in the creation of imposition of any lien or security interest upon
any property or assets of the Borrower.
(c) Validity and Binding Nature. The Loan Documents have been duly
executed and delivered by the Borrower and are legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance
with their respective terms (except as enforcement thereof may be limited
by bankruptcy, reorganization, insolvency, moratorium or other laws
affecting the enforcement of credits' rights generally).
(d) No Default. The Borrower is not in default under or with respect
to the terms of any material contractual obligation. No Event of Default
has occurred and is continuing.
(e) Consents and Filings. No consent, approval or authorization of, or
registration or filing with, any Governmental Authority or other person or
entity is required in connection with (i) the execution, delivery and
performance by the Borrower, or the validity or enforceability against the
Borrower, of the Loan Documents, or (ii) the Loans.
(f) No Material Litigation. (i) No material litigation, investigation
or proceeding of or before any arbitrator or any Governmental Authority is
pending or, to the knowledge of the Borrower, threatened by or against the
Borrower, and (ii) there are no undisclosed outstanding or unpaid judgments
against the Borrower.
Gulfport Energy Corporation
April 30, 2004
Page 4
(g) Use of Borrowings. Borrowings by the Borrower under this Loan
Agreement will only be used to fund the capital and operating expenses of
the Borrower.
(h) Disclosure. No representation or warranty made by the Borrower in
any Loan Document and not subsequently corrected in writing, nor any filing
made by the Borrower with any Governmental Authority, contains or will
contain any untrue statement of a material fact or omits or will omit to
state any material fact necessary to make the statements herein or therein
not misleading.
(i) Restricted Debt. The Borrower shall not in any manner owe or be
liable for any debt other than (i) the existing debt to Bank of Oklahoma,
N.A., and (ii) debt incurred in the ordinary course of business.
4. Events of Default . The occurrence of any of the following specified
events shall constitute an "Event of Default":
(a) Nonpayment. The Borrower shall fail to pay when due any principal
of or interest on the Note, or any other amount payable thereunder or
hereunder.
(b) Bankruptcy. The Borrower or any of its subsidiaries shall commence
a voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy" as now or hereafter in effect, or any successor
thereto, or any similar statute or other law as now or hereafter in effect,
or any successor thereto (the "Bankruptcy Code"); or an involuntary case is
commenced against the Borrower or any of its subsidiaries and the petition
is not controverted within 10 days, or is not dismissed within 60 days,
after commencement of the case; or a custodian, liquidator or similar party
is appointed for, or takes charge of, all or any substantial part of the
property of the Borrower or any of its subsidiaries; or the Borrower or any
of its subsidiaries commences any other proceeding under any
reorganization, arrangement, adjustment of debt, relief of debtors,
dissolution, insolvency or liquidation or similar law of any jurisdiction
whether now or hereafter in effect relating to the Borrower or such
subsidiary or there is commenced against the Borrower or any of its
subsidiaries any such proceeding which remains undismissed for a period of
60 days; or the Borrower or any of its subsidiaries is adjudicated
insolvent or bankrupt; or any order of relief or other order approving any
such case or proceeding is entered; or the Borrower or any of its
subsidiaries suffers any appointment of any custodian or the like for it or
any substantial part of its property to continue undischarged or unstayed
for a period of 60 days; or the Borrower or any of its subsidiaries makes a
general assignment for the benefit of creditors; or the Borrower or any of
its subsidiaries shall fail to pay (except with respect to debts which are
being reasonably contested), or shall state that it is unable to pay, or
shall be unable to pay, its debts generally as they become due; or the
Borrower or any of its subsidiaries shall call a meeting of its creditors
with a view to arranging a composition or adjustment of its debts; or the
Borrower or any of its subsidiaries shall be any act acquiescence in any of
Gulfport Energy Corporation
April 30, 2004
Page 5
the foregoing; or any corporate action is taken by the Borrower or any of
its subsidiaries for the purpose of effecting any of the foregoing;
(c) Nonpayment of Other Indebtedness. The Borrower shall fail to make
any payments aggregating U.S.$10,000 or more of principal of or interest on
any indebtedness or other obligations of the Borrower when due (whether at
stated maturity, by acceleration, on demand or otherwise) after giving
effect to any applicable grace periods.
(d) Nonperformance. The Borrower shall fail (other than as specified
in subsections (a), (b) or (c) above) to duly observe, perform or comply
with any covenant, agreement, condition or provision of this Loan Agreement
or the Note, and such failure remains unremedied for a period of ten (10)
days after notice of such failure is given by a Lender to the Borrower.
5. Remedies.
(a) Simultaneously with the occurrence of any Event of Default
described in Subparagraph 4(b) of this Loan Agreement, the following shall
occur automatically without any action being taken by Lender: (i) the
Commitment shall terminate, and (ii) all obligations of the Borrower to
Lender shall become due and payable, whereupon an amount equal to the sum
of the outstanding principal balance of the Note, any accrued but unpaid
interest and all other fees and amounts owing thereunder and under any
other Loan Document to Lender shall become due and payable, without
presentment, demand, protest, notice of protest, notice of intent to
accelerate, notice of acceleration or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in any
other document to the contrary notwithstanding.
(b) Upon the occurrence of any Event of Default not described in
Subparagraph 4(b) of this Loan Agreement, at the option of Lender, Lender
may, by written notice to the Borrower, take either or both of the
following actions, at the same or different times: (i) terminate the
Commitment, and (ii) declare all obligations of the Borrower to Lender to
be forthwith due and payable, whereupon an amount equal to the sum of the
outstanding principal balance of the Note, any accrued but unpaid interest
and all other fees and amounts owing thereunder and under any other Loan
Document to Lender shall become forthwith due and payable, without
presentment, demand, protest, notice of protest, notice of intent to
accelerate, notice of acceleration or any other notice of any kind, all of
which are hereby expressly waived, anything contained herein or in any
other document to the contrary notwithstanding.
6. Indemnity. By acceptance of this Loan Agreement, the Borrower
unconditionally agrees (i) to pay, indemnify and hold harmless Lender and its
directors, officers, members, employees, agents and counsel (each, an
Gulfport Energy Corporation
April 30, 2004
Page 6
"Indemnified Party") from and against any and all liabilities, obligations,
losses, damages, penalties, actions, judgments, suits, costs, expenses or
disbursements of any kind or nature whatsoever with respect to or arising out of
the Loan Documents or the preparation, execution, delivery, enforcement,
performance, or consummation thereof and the borrowings and other transactions
contemplated therein or in connection therewith (collectively, the "Indemnified
Liabilities"), provided that the Borrower shall have no liability hereunder with
respect to Indemnified Liabilities arising solely from gross negligence or
willful misconduct by Lender or such other Indemnified Party, and (ii) to pay to
Lender all of its costs and expenses (including the fees and disbursements of
Lender's inside and outside counsel) arising in connection with the preparation,
execution and delivery of the Loan Documents (collectively, Lender's "Costs and
Expenses"). The Borrower further agrees that its liability in connection with
the Indemnified Liabilities and Lender's Costs and Expenses shall not be
released or diminished by the occurrence or failure to occur of any event,
including, but not limited to, Lender's failure, for any reason, with or without
cause, to make Loans and the Borrower's obligations hereunder shall survive the
repayment in full of the Loans and any termination of this Loan Agreement,
unless such termination specifically terminates this Paragraph and the
Borrower's obligations hereunder.
7. Governing Law. THIS LOAN AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED
AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF OKLAHOMA WITHOUT GIVING
EFFECT TO THE CHOICE OF LAW OR CONFLICT OF LAWS RULES THEREOF.
8. Assignment. The Borrower may not assign this Loan Agreement. Lender
may assign this Loan Agreement to any affiliate of Lender.
9. Counterparts. This Loan Agreement may be executed in any number of
counterparts, each of which shall be deemed to be an original, and all of which
together shall constitute one and the same instrument notwithstanding that all
parties are not signatories to each individual counterpart.
10. Limitation on Interest. It is the intention of the parties hereto to
comply with all applicable usury laws, whether now existing or hereafter
enacted. Accordingly, notwithstanding any provision to the contrary in this Loan
Agreement, the Note, the other Loan Documents or any other document evidencing,
securing, guaranteeing or otherwise pertaining to indebtedness of the Borrower
to Lender, in no contingency or event whatsoever, whether by acceleration of the
maturity of indebtedness of the Borrower to Lender or otherwise, shall the
interest contracted for, charged or received by Lender exceed the maximum amount
permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provisions of this Loan Agreement, the Note, the other Loan
Documents or of any other document evidencing, securing, guaranteeing or
otherwise pertaining to indebtedness of the Borrower to Lender, at the time
performance of such provision shall be due, shall involve transcending the limit
Gulfport Energy Corporation
April 30, 2004
Page 7
of validity prescribed by law, then, ipso facto, the obligation to be fulfilled
shall be reduced to the limit of such validity, and if from any such
circumstances Lender shall ever receive anything of value as interest or deemed
interest by applicable law under this Loan Agreement, the Note, the other Loan
Documents or any other document evidencing, securing, guaranteeing or otherwise
pertaining to indebtedness of the Borrower to Lender or otherwise an amount that
would exceed the highest lawful amount, such amount that would be excessive
interest shall be applied to the reduction of the principal amount owing in
connection with this Loan Agreement or on account of any other indebtedness of
the Borrower to Lender, and not to the payment of interest, or if such excessive
interest exceeds the balance of principal owing in connection with this Loan
Agreement and such other indebtedness, such excess shall be refunded to the
Borrower. In determining whether or not the interest paid or payable with
respect to any indebtedness of the Borrower to Lender, under any specific
contingency, exceeds the highest lawful rate, the Borrower and Lender shall, to
the maximum extent permitted by applicable law, (a) characterize any
non-principal payment as an expense, fee or premium rather than as interest, (b)
exclude voluntary prepayments and the effects thereof, (c) amortize, prorate,
allocate and spread the total amount of interest throughout the full term of
such indebtedness so that the actual rate of interest on account of such
indebtedness does not exceed the maximum amount permitted by applicable law,
and/or (d) allocate interest between portions of such indebtedness, to the end
that no such portion shall bear interest at a rate greater than that permitted
by law. The terms and provisions of this paragraph shall control and supersede
every other conflicting provision of this Loan Agreement, the Note and the other
Loan Documents.
11. [Intentionally Omitted.]
12. Conversion.
(a) Right of Conversion. Lender shall have the right, at any time and
from time to time during the Conversion Period (as defined herein), at
Lender's option, to convert, subject to the terms and provisions of this
Paragraph 12, any and all of the outstanding principal balance of the Note
and/or accrued but unpaid interest thereunder into fully paid and
nonassessable shares of Common Stock at the Conversion Price. The
"Conversion Price" shall mean $1.20 per share of Common Stock, as adjusted
if and as appropriate pursuant to the provisions of this Paragraph 12. The
"Conversion Period" shall mean the period beginning on the date the Rights
Offering contemplated as of the date hereof has been canceled or terminated
by the Board of Directors of the Borrower and ending on the date the entire
outstanding principal balance of the Note together with any accrued but
unpaid interest thereunder have been repaid in full. Prior to or
simultaneously with the conversion by Lender of any of its principal of any
Note, all accrued but unpaid interest on the principal amount being
converted must be converted at the Conversion Price.
(b) Mechanics of Exercise. The right of conversion shall be exercised
by Lender's delivery to the Borrower during usual business hours at its
principal place of business of a written notice that the Lender elects to
convert all or part of its principal of and accrued and unpaid interest on
the Note and specifying the name (with address) in which the certificate
for Common Stock is to be issued and, if the certificate is to be issued to
a person or entity (collectively, a "Person") other than the Lender, by a
written instrument of transfer in form satisfactory to the Borrower, duly
executed by the Lender, duly authorized in writing, together with transfer
tax stamps or funds therefor if required pursuant to Subparagraph (i)
below. Notation shall be made on the Note of the principal and interest
converted.
(c) Time of Conversion. As promptly as practicable after the written
notice of conversion has been delivered to the Borrower, as herein
provided, the Borrower shall deliver or cause to be delivered at the
Borrower's office a certificate for the shares of Common Stock issuable in
connection with such conversion.
(d) Adjustment of Conversion Price. The Conversion Price, and
consequently the number of shares of Common Stock into which the Note is
convertible, shall be subject to adjustment as follows:
(i) Stock Dividends, Subdivisions and Combinations. If at any
time the Borrower shall:
(A) take a record of the holders of its Common Stock for the
purpose of entitling them to receive a dividend payable in, or
other distribution of, additional shares of Common Stock;
(B) subdivide its outstanding shares of Common Stock into a
larger number of shares Common Stock; or
(C) combine its outstanding shares of Common Stock into a
smaller number of shares of Common Stock;
then in each such case the Conversion Price in effect immediately prior
thereto shall be adjusted so that the Lender thereafter surrendering any of
its principal and/or interest for conversion shall be entitled to receive
the number of shares of Common Stock that such Lender would have owned or
have been entitled to receive after the happening of any of the events
described above had such principal and/or interest been converted
immediately prior to the happening of such event.
(ii) Reorganization, Reclassification, Merger, Consolidation or
Disposition of Assets. In case the Borrower shall reorganize its
capital, reclassify its capital stock, consolidate or merge with and
into another corporation (where the Borrower is not the surviving
corporation or where there is a change in or distribution with respect
to the Common Stock of the Borrower), or sell, transfer or otherwise
dispose of all or substantially all of its property, assets or
Gulfport Energy Corporation
April 30, 2004
Page 9
business to another corporation and, pursuant to the terms of such
reorganization, reclassification, merger, consolidation or disposition
of assets, shares of common stock of the successor or acquiring
corporation, or any cash, shares of stock or other securities or
property of any nature whatsoever (including warrants or other
subscription or purchase rights) in addition to or in lieu of common
stock of the successor or acquiring corporation ("Other Property"),
are to be received by or distributed to the holders of Common Stock of
the Borrower, then the Borrower shall, as a condition precedent to
such transaction, cause effective provisions to be made so that Lender
shall have the right thereafter to receive, upon conversion of its
principal and/or interest on the Note, solely the number of shares of
common stock of the successor or acquiring corporation or of the
Borrower, if it is the surviving corporation, and Other Property
receivable upon or as a result of such position of assets, by a
holder of the number of shares of Common Stock for which such
principal and/or interest would have been convertible immediately
prior to such event. In case of any such reorganization,
reclassification, merger, consolidation or disposition of assets, such
provisions shall include the express assumption by the successor or
acquiring corporation (if other than the Borrower) of the due and
punctual observance and performance of each and every covenant and
condition of this Loan Agreement and the Note to be performed and
observed by the Borrower and all the obligations and liabilities
hereunder, subject to such modifications as may be deemed appropriate
(as determined by resolution of the board of directors of the
Borrower) in order to provide for adjustments of shares of the Common
Stock for which the Note is convertible which shall be as nearly
equivalent as practical to the adjustments provided for in this
Paragraph 12. For purposes of this Paragraph 12, "common stock of the
successor or acquiring corporation" shall include stock of such
corporation of any class which is not preferred as to dividends or
assets over any other class of stock of such corporation and which is
not subject to redemption and shall also include any evidences of
indebtedness, shares of stock or other securities which are
convertible into or exchangeable for any such stock, either
immediately or upon the arrival of a specified date or the happening
of a specified event and any warrants or other rights to subscribe for
or purchase any such stock. The foregoing provisions of this Paragraph
12 shall similarly apply to successive reorganizations,
reclassifications, mergers, consolidations or dispositions of assets.
(iii) When Adjustment Not Required. If the Borrower shall take a
record of the holders of its Common Stock for the purpose of entitling
them to receive a dividend or distribution and shall, thereafter and
before the distribution to stockholders thereof, legally abandon its
plan to pay or deliver such dividend or distribution, then thereafter
no adjustment shall be required by reason of the taking of such record
and any such adjustment previously made in respect thereof shall be
rescinded and annulled.
Gulfport Energy Corporation
April 30, 2004
Page 10
(e) No Fractional Shares. Instead of any fractional share of Common
Stock that would otherwise be issuable upon conversion of any principal
and/or interest on the Note, the Borrower may pay a cash adjustment in
respect of such fraction in an amount equal to the same fraction of the
Conversion Price.
(f) Notice of Adjustments. Whenever the Conversion Price shall be
adjusted pursuant to this Paragraph 12, the Borrower shall prepare a
certificate to be executed by the president of the Borrower setting forth,
in reasonable detail, the event requiring the adjustment and the method by
which such adjustment was calculated (including a description of the basis
on which the board of directors of the Borrower determined the fair value
of any evidences of indebtedness, shares of stock, other securities or
property or warrants or other subscription or purchase rights referred to
in this Paragraph 12), specifying the Conversion Price and (if applicable)
describing the number and kind of any other shares of stock or Other
Property into which the Note may be converted, and any change in the
purchase price or prices thereof, after giving effect to such adjustment or
change. The Borrower shall promptly cause a signed copy of such certificate
to be delivered to Lender. The Borrower shall keep at its chief executive
office copies of all such certificates and cause the same to be available
for inspection at said office during normal business hours by any Lender.
(g) No Stockholder Rights. Prior to the issuance of Common Stock upon
conversion, Lender shall not be entitled to any rights of a stockholder
with respect to the Common Stock, including (without limitation) the right
to vote such Common Stock, receive dividends or other distributions
thereon, exercise preemptive rights or be notified of stockholder meetings,
and Lender shall not be entitled to any notice or other communication
concerning the business or affairs of the Borrower except as contractually
agreed to by the Borrower.
(h) Intentionally Omitted.
(i) Taxes and Charges. The issuance of certificates for Common Stock
upon the conversion of principal and/or interest under the Note shall be
made without charge to the converting Lender for such certificates or for
any tax in respect of the issuance of such certificates or the securities
represented thereby, and such certificates shall be issued in the
respective names of, or in such names as may be directed by, the Lender
converting principal and/or interest; provided, however, that the Borrower
shall not be required to pay any tax which may be payable in respect of any
transfer involved in the issuance and delivery of any such certificate in a
name other than that of the converting Lender, and the Borrower shall not
be required to issue or deliver such certificates unless or until the
Person or Persons requesting the issuance thereof shall have paid to the
Borrower the amount of such tax or shall have establish to the satisfaction
of the Borrower that such tax has been paid.
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April 30, 2004
Page 11
(j) Shares to be Reserved. The Borrower covenants that it will at all
times reserve and keep available out of its authorized but unissued Common
Stock, free from preemptive rights, solely for the purpose of issue upon
conversion of Notes as herein provided, such number of shares of Common
Stock as shall then be issuable upon the conversion of all principal of and
accrued but unpaid interest on the then-outstanding Notes; provided,
however, in the event that there is not a sufficient number of shares of
Common Stock authorized and reserved to satisfy the obligations of the
Borrower under this Paragraph 12 and pursuant to the Rights Offering or
sale of Common Stock, as the case may be, (i) the ability of the Borrower
to issue shares of Common Stock pursuant to this Paragraph 12 shall be
subordinated to the Borrower's obligation to issue shares of Common Stock
upon consummation of the Rights Offering or sale of Common Stock, as the
case may be, (ii) the number of shares of Common Stock reserved and
available out of the Company's authorized but unissued Common Stock shall
be equal to the number of authorized but unissued shares of Common Stock
minus the number of shares reserved for issuance pursuant to the Rights
Offering or sale of Common Stock, as the case may be, and (iii) Lender
hereby acknowledges that the right of conversion available to Lender
pursuant to this Paragraph 12 is available only if, and to the extent,
there are shares of Common Stock available out of the Borrower's authorized
but unissued Common Stock subsequent to the consummation of the Rights
Offering or sale of Common Stock, as the case may be. The Borrower
covenants that all Common Stock which shall be so issuable shall, when
issued, be duly and validly issued and fully paid and nonassessable.
13. Miscellaneous.
(a) Entire Agreement. The Loan Documents set forth the entire
agreement among the parties with respect to the subject matter hereof and
supersede all prior agreements or understandings among the parties
pertaining to the subject matter hereof, whether oral or written. There are
no warranties, representations or other agreements between the parties in
connection with the subject matter hereof except as specifically set forth
or incorporated herein.
(b) Amendments & Waivers. No modification, amendment, or waiver of any
provision of, or consent required by, this Loan Agreement, nor any consent
to any departure herefrom, shall be effective unless it is in writing and
signed by the parties hereto. Such modification, amendment, waiver or
consent shall be effective only in the specific instance and for the
purpose for which given.
(c) Severability. Whenever possible, each provision of this Loan
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law, but if any provision of this Loan Agreement shall be
prohibited by or invalid under applicable law, such provision shall be
Gulfport Energy Corporation
April 30, 2004
Page 12
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of
this Loan Agreement.
(d) Survival. Unless otherwise expressly provided herein, all
representations and warranties, agreements and covenants contained in this
Agreement or in any document delivered pursuant to this Agreement or in
connection with this Agreement shall survive the closing and shall remain
in full force and effect.
(e) Notices. All notices, requests and other communications to any
party hereunder shall be in writing and sufficient if delivered personally
or sent by overnight delivery or courier service, or by registered or
certified mail, postage prepaid, return receipt requested, or by facsimile
(with a copy sent by first class U.S. mail), addressed as follows:
To Lender: CD Holding, LLC
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, XX 00000
Attn.: Xxxxxxx X. Xxxxxxxx
Fax No.: 000-000-0000
To Borrower: Gulfport Energy Corporation
00000 Xxxxx Xxx, Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Attn: Xxxx Xxxxxxx
Fax No.: 000-000-0000
(f) Arbitration. Each party agrees that any dispute or proceeding of
any kind arising under or relating to the rights or obligations of any
party under this Loan Agreement or any of the Loan Documents shall be
subject to mandatory binding arbitration. Such arbitration shall be
conducted by a single arbitrator in Oklahoma City, Oklahoma under the rules
of the American Arbitration Association. The arbitrator shall be authorized
to award the prevailing party the costs and expenses of the arbitration,
including reasonable attorneys' fees and expenses. The parties agree that
any state or federal court located in the state of Oklahoma shall be
authorized to enter an order in respect of an award in such arbitration and
expressly consent to the jurisdiction of such courts for such purpose.
(g) Section Titles. The Section titles contained in this Loan
Agreement are and shall be without substantive meaning or content of any
kind whatsoever and are not a part of the agreement between the parties
hereto.
[SIGNATURE PAGE FOLLOWS]
Gulfport Energy Corporation
April 30, 2004
Page 13
Please indicate your agreement of the foregoing by signing below where
indicated and returning a copy of this Loan Agreement to Lender.
Very truly yours,
CD HOLDING, LLC
By:/s/Xxxxxxx X. Xxxxxxxx
----------------------------------------
Name: Xxxxxxx X. Xxxxxxxx
--------------------------------------
Title:
-------------------------------------
Agreed and Accepted
as of this 10th day of May, 2004:
GULFPORT ENERGY CORPORATION
By:/s/Xxxx Xxxxxxx
--------------------------------------
Name: Xxxx Xxxxxxx
------------------------------------
Title: CEP
-----------------------------------
EXHIBIT A
THE SECURITIES EVIDENCED HEREBY HAVE BEEN ISSUED WITHOUT REGISTRATION OR
QUALIFICATION UNDER THE SECURITIES ACT OF 1933, AS AMENDED (THE "ACT"), OR ANY
STATE SECURITIES LAWS AND MAY NOT BE SOLD, OFFERED FOR SALE, TRANSFERRED,
PLEDGED OR HYPOTHECATED WITHOUT REGISTRATION OR QUALIFICATION UNDER THE ACT AND
ANY APPLICABLE STATE SECURITIES LAWS UNLESS REGISTRATION, OR QUALIFICATION IS
NOT REQUIRED IN CONNECTION WITH SUCH DISPOSITION.
REVOLVING PROMISSORY NOTE
U.S. $3,000,000 Oklahoma City, Oklahoma April 30, 2004
For value received, the undersigned, GULFPORT ENERGY CORPORATION, a
Delaware corporation (the "Borrower"), hereby promises to pay to the order of CD
Holding, LLC, a Delaware limited liability company ("Lender"), at the addresses
identified in the Loan Agreement (defined below), or at such other place as from
time to time may be designated by the holder of this Note, in lawful money of
the United States of America in immediately available funds, on or before August
1, 2005, the principal sum of the lesser of (A) THREE MILLION DOLLARS AND NO
CENTS (U.S. $3,000,000), and (B) the aggregate unpaid principal amount of all
Loans made by Lender to the Borrower pursuant to the loan agreement, dated as of
the date hereof, by and between the Borrower and Lender (as such may be amended
or otherwise modified from time to time, the "Loan Agreement"), with accrued
interest on the principal balance from time to time remaining unpaid from the
date of advancement until default or maturity at a rate per annum equal to the
lesser of (a) the Maximum Rate (defined below), and (b) the Base Rate (defined
below). If, at any time, the Base Rate shall exceed the Maximum Rate, thereby
causing the interest herein to be limited to the Maximum Rate as provided for in
clause (a) then any subsequent changes in such rates shall not reduce the rate
of interest charged hereunder below the Maximum Rate until the total amount of
interest accrued hereon equals the amount of interest that would have accrued
hereon if the Base Rate had been in effect at all times in the period during
which the rate charged hereon was limited to the Maximum Rate. All past due
principal and interest shall bear interest from maturity until paid at a rate
per annum equal to the lesser of (a) the Maximum Rate, and (b) the Default Rate
(as hereinafter defined) from the date of such nonpayment until paid in full
(both before and after judgment).
This Note is the Note referred to in the Loan Agreement and is entitled to
the benefits thereof and of all documents executed in connection therewith. All
capitalized terms not otherwise defined herein have the meanings assigned to
such terms in the Loan Agreement. The Loan Agreement contains certain Events of
Default relating to this Note.
The holder of this Note is authorized to record the date and amount of each
advance hereunder made by it and the date and amount of each payment of
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principal hereof on the schedule annexed hereto and made a part hereof or in
such holder's internal records and any such recordation shall constitute prima
facie evidence of the accuracy of the information so recorded; provided,
however, that the failure of such holder to make such a notation or any error in
any such notation shall not affect the obligation of the Borrower to repay all
advances hereunder in accordance with the terms hereof and of the Loan
Agreement.
As used herein the term "Base Rate" means with respect to each tranche a
per annum interest rate equal to 10%. The term "Default Rate" means the Base
Rate plus three percent (3%) per annum; the term "Maximum Rate" means the
maximum non-usurious interest rate permitted under applicable law; and the term
"applicable law" means the applicable laws of the State of Oklahoma or the
applicable laws of any other jurisdiction, whichever laws allow the greater rate
of interest, as such laws now exist or may be changed or amended or come into
effect in the future.
Interest hereunder from the date of each advancement hereof shall be due
and payable (i) quarterly in arrears on the last business day of each March,
June, September and December, commencing on September 30, 2004, and continuing
on the last day of each third month thereafter, until maturity, (ii) at the
maturity of this Note (whether at the stated maturity of August 1, 2005, by
acceleration or otherwise), at which time the entire unpaid principal balance
hereof, together with all unpaid accrued interest thereon, shall be due and
payable, and (iii) after maturity, on demand.
Subject to the provisions of the paragraph of this Note that begins
"Interest on the indebtedness" (the tenth paragraph), each payment received by
Lender shall be applied pro rata based on Lender's participation first to late
charges and collection expenses, if any, due under the Loan Documents, then to
the payment of fees, if any, due under the Loan Documents, then to the payment
of accrued but unpaid interest due hereunder, and finally to the reduction of
the unpaid principal balance hereof.
Upon the occurrence of any Event of Default specified in the Loan
Agreement, Lender may, at Lender's option, exercise any or all of the rights,
remedies, powers and privileges afforded under the Loan Documents or by law,
including, without limitation, the right to declare the unpaid principal balance
of this Note, together with all accrued but unpaid interest on such principal
balance, immediately due and payable without demand or notice and to offset
against amounts then due and owing on this Note and sums deposited by the
Borrower with Lender or otherwise owed to the Borrower by Lender.
No failure or delay on the part of Lender in exercising any right, power or
privilege hereunder and no course of dealing between the Borrower and Lender
shall operate as a waiver thereof; nor shall any single or partial exercise of
any right, remedy, power or privilege hereunder preclude any other or further
exercise thereof or the exercise of any other right, remedy, power or privilege.
Except as may be otherwise provided herein, the borrower, signers,
sureties, guarantors and endorsers of this Note severally waive demand,
presentment, notice or dishonor, notice of intent to demand or accelerate
payment hereof, notice of acceleration, diligence in collecting, grace, notice,
and protest, and agree to one or more extensions for any period or periods of
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time and partial payments, before or after maturity, without prejudice to the
holder. If this Note shall be collected by legal proceedings or through a
probate or bankruptcy court, or shall be placed in the hands of an attorney for
collection after default or maturity, the Borrower agrees to pay all costs of
collection, including reasonable attorney's fees.
Interest on the indebtedness evidenced by this Note is expressly limited so
that in no contingency or event whatsoever, whether by acceleration of the
maturity of this Note or otherwise, shall be interest contracted for, charged or
received by Lender exceed the maximum amount permissible under applicable law.
If from any circumstances whatsoever fulfillment of any provisions of this Note,
the Loan Agreement, the other Loan Documents or of any other document
evidencing, securing, guaranteeing or otherwise pertaining to the indebtedness
evidenced hereby, at the time performance of such provision shall be due, shall
involve transcending the limit of validity prescribed by law, then, ipso facto,
the obligation to be fulfilled shall be reduced to the limit of such validity,
and if from any such circumstances Lender shall ever receive anything of value
as interest or deemed interest by applicable law under this Note, the Loan
Agreement, the other Loan Documents or any other document evidencing, securing,
guaranteeing or otherwise pertaining to the indebtedness evidenced hereby or
otherwise an amount that would exceed the highest lawful amount, such amount
that would be excessive interest shall be applied to the reduction of the
principal amount owing under this Note or on account of any other indebtedness
of the Borrower to Lender, and not to the payment of interest, or if such
excessive interest exceeds the unpaid balance of principal of this Note and such
other indebtedness, such excess shall be refunded to the Borrower. In
determining whether or not the interest paid or payable with respect to any
indebtedness of the Borrower to Lender, under any specific contingency, exceeds
the Maximum Rate, the Borrower and Lender shall, to the maximum extent permitted
by applicable law, (a) characterize any non-principal payment as an expense, fee
or premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, (c) amortize, prorate, allocate and spread the total amount of
interest throughout the full term of such indebtedness so that the actual rate
of interest on account of such indebtedness does not exceed the maximum amount
permitted by applicable law, and/or (d) allocate interest between portions of
such indebtedness, to the end that no such portion shall bear interest at a rate
greater than that permitted by law. The terms and provisions of this paragraph
shall control and supersede every other conflicting provision of this Note.
THIS PROMISSORY NOTE SHALL BE GOVERNED BY AND CONSTRUED AND ENFORCED IN
ACCORDANCE WITH THE SUBSTANTIVE LAWS OF OKLAHOMA WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW OR CONFLICT OF LAWS RULES THEREOF.
EXECUTED as of the date first set forth above.
BORROWER:
GULFPORT ENERGY CORPORATION
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
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EXHIBIT "A"
Unpaid Name of
Principal Person
Payments Balance Making
Date Amount of Loan Principal Interest of Note Notation
---- ---------------- ------------------- ---------- --------
____________ _________________ ___________________ _______________ ____________
____________ _________________ ___________________ _______________ ____________
____________ _________________ ___________________ _______________ ____________
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