EXHIBIT 10.5
LOAN AGREEMENT
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This Loan Agreement (the "Agreement") is made and entered into
effective as of this 12th day of March, 2003, by and among American Natural
Energy Corporation, an Oklahoma corporation (the "Borrower") and Bank One, N.A.,
formerly known as Bank One, Michigan, N.A., which was formerly known as NBD Bank
(the "Bank").
W I T N E S S E T H:
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants and agreements contained herein, and for other good and valuable
consideration, the receipt and adequacy of which are hereby acknowledged, the
Bank and the Borrower covenant and agree as follows:
1. Recitations.
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1.1 Credit Agreement. On or about November 24, 1995, Couba Operating
Company ("Couba") made, executed and delivered to the Bank a Credit Agreement
(the "Credit Agreement").
1.2 Revolving Credit Note. On or about November 24, 1995, Couba made,
executed and delivered to the Bank a Revolving Credit Note in the original
amount of $2,000,000 (the "Couba Note").
1.3 Continuing Security Agreement. On or about November 24, 1995, Couba
made, executed and delivered to the Bank a Continuing Security Agreement (the
"Security Agreement") providing the Bank with a security interest in all of
Couba's assets, including but not limited to, accounts receivable, inventory,
equipment and general intangibles.
1.4 Mortgage. On or about November 24, 1995, Couba made, executed and
delivered to the Bank a Mortgage, Security Agreement, Assignment of Production
and Financing Statement (the "Mortgage") providing the Bank with a first
mortgage on all of Couba's interest in a lease on property located in St.
Xxxxxxx Xxxxxx, Louisiana and described on Exhibit "A" to the Mortgage (the
"Leasehold Interest").
1.5 Financing Statements. On or about November 24, 1995, Couba made,
executed and delivered to the Bank certain UCC-1 Financing Statements covering
all of the Bank's Collateral which were filed in the State of Louisiana and the
State of Oklahoma.
1.6 First Amendment to Credit Agreement. On or about February 27, 1996,
Couba made, executed and delivered to the Bank that certain First Amendment to
Credit Agreement providing for an increase in Couba's credit facility pursuant
to the Credit Agreement to the sum of $2,250,000.00 (the "First Amendment").
1.7 Revised Revolving Credit Note. On or about February 27, 1996, Couba
made, executed and delivered to the Bank a Revised Revolving Credit Note (the
"Revised Couba Note") in the original amount of $2,250,000.00.
1.8 Bankruptcy. On March 14, 2000, an involuntary Chapter 11 Bankruptcy
Petition (the "Petition") was filed against Couba in the United States
Bankruptcy Court for the Western District of Oklahoma, bearing Case No.
00-11837-WV (the "Bankruptcy Case"). The Bankruptcy Case was later converted to
a voluntary case.
1.9 Borrower's Plan. On June 6, 2001, the Borrower and Couba jointly
filed a First Amended Joint Plan of Reorganization proposing to purchase from
Couba's bankruptcy estate the assets that are subject to the Bank's Mortgage,
Security Agreement and Financing Statements. The First Amended Joint Plan was
later amended by the Second Amended Joint Plan of Reorganization (the "Plan").
The Plan was confirmed by the Bankruptcy Court on November 16, 2001.
1.10 Amendment and Restatement. This Agreement is intended to amend,
restate and replace the terms of the Plan that apply to the parties hereto.
2. Definitions.
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2.1 Terms Previously Defined. Except as otherwise specifically set
forth, the terms defined in the recitals to this Agreement shall have the same
meaning when used below.
2.2 Other Definitions. As used in this Agreement, the following terms
shall have the meanings indicated below, unless the context otherwise requires,
and the singular shall include the plural and vice versa.
2.2.1 Agreement. and such terms as "herein," "hereof,"
"hereby," "hereunder," and the like shall mean and refer to this Loan
Agreement and any all supplements, modifications or amendments hereto.
2.2.2 ANEC Mortgage. The term "ANEC Mortgage" shall mean that
certain Mortgage, Security Agreement, Financing Statement and
Assignment of Production and Financing Statement executed by Borrower
in form and substance acceptable to Bank, granting the Bank a first and
prior mortgage lien against the Property subject to that certain
Subordination Agreement by and between Bank and Quest Investment
Corporation and that certain Subordination Agreement by and between
Bank and Transatlantic Petroleum (USA) Corp (collectively the
"Subordination Agreements").
2.2.3 ANEC Note shall mean the promissory note made, executed
and delivered by the Borrower to the Bank in connection with this
Agreement, as required by paragraph 4.1 below, which note shall be in
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form and substance acceptable to Bank, together with any and all
renewals, extensions, modifications and restatements thereof.
2.2.4 ANEC Security Agreement shall mean that certain First
Supplement to Security Agreement and Financing Statement executed by
Borrowers in favor of the Bank in form and substance acceptable to
Bank, as amended, granting the Bank a security interest in all of the
property more particularly described therein.
2.2.5 Base Rate shall mean that fluctuating annual rate of
interest published by the Bank as its "Prime Rate."
2.2.6 Business Day shall mean that portion of any day, other
than a Saturday, a Sunday or a legal holiday for commercial banks under
the laws of the United States, during which the Bank is open for
substantially all of its normal banking functions.
2.2.7 CERCLA. The term "CERCLA" shall mean the Comprehensive
Environmental Response, Compensation and Liability Act of 1980, as
amended.
2.2.8 Code shall mean the Uniform Commercial Code of the State
of Oklahoma and the State of Louisiana, as the same may from time to
time be in effect.
2.2.9 Collateral shall mean and refer to the items of
collateral described in paragraph 3.2 of this Agreement.
2.2.10 Confirmation Date shall mean the date upon which the
Bankruptcy Court enters an Order confirming the Plan pursuant to
ss.1129 of the Bankruptcy Code.
2.2.11 Debt shall mean and include, as of any date, all items
which, in accordance with generally accepted accounting principles,
would be included on the liabilities side of the Borrower's
consolidated balance sheet, including all obligations under leases
which, in accordance with generally accepted accounting principles,
would be recorded as capital leases, but excluding stated capital,
paid-in capital and retained earnings and deferred income taxes.
2.2.12 Default shall mean the occurrence of any event which,
but for the giving of notice or the passage of time, or both, would
constitute an Event of Default.
2.2.13 Effective Date. Effective Date shall be December 31,
2001, which is the forty-fifth (45th) day after the Confirmation Date
as set forth in the Plan. By agreement of the parties, an earlier
Effective Date may be chosen.
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2.2.14 Environmental Laws. The term "Environmental Laws" shall
mean all Laws including, without limitation, all federal, state, or
local Laws, ordinances, rules, regulations, interpretations and orders
of courts or administrative agencies or authorities relating to
pollution or protection of the environment (including, without
limitation, ambient air, surface water, groundwater, land surface, and
subsurface strata), including without limitation CERCLA/XXXX,
RCRA/HSWA, and other Laws relating to (i) Polluting Substances or (ii)
the manufacture, processing, distribution, use, treatment, handling,
storage, disposal, or transportation of Polluting Substances
2.2.15 Event of Default shall mean the occurrence of any of
the events specified in paragraph 9.
2.2.16 Financing Statements. The term "Financing Statements"
shall mean Uniform Commercial Code Financing Statements, as provided
for by Revised Article in a form satisfactory to the Bank, for the
purpose of providing public notice of the security interests created
hereunder or under the terms of any of the other Loan Documents.
2.2.17 General Intangibles shall mean all property included
within the meaning assigned to that term under Article 9 of the Code,
as revised, which is included in the assets Borrower is purchasing from
Couba in accordance with the Plan.
2.2.18 Highest Lawful Rate. The term "Highest Lawful Rate"
shall mean the maximum rate of interest from time to time which the
Bank is allowed to contract for, charge for, take, reserve, or receive
under applicable law after taking into account, to the extent required
by applicable law, any and all relevant payments or charges hereunder.
2.2.19 HSWA. The term "HSWA" shall mean The Hazardous and
Solid Waste Amendments of 1984, as amended.
2.2.20 Indebtedness shall mean and include all liabilities,
obligations or indebtedness of the Borrower to the Bank, of every kind
and description, now existing or hereafter incurred, direct or
indirect, absolute or contingent, due or to become due, matured or
unmatured, and whether or not of the same or a similar class or
character as the Advances and whether or not contemplated by the Bank
or the Borrower, together with future advances and all extensions and
renewals.
2.2.21 Laws. The term "Laws" shall mean all statutes, laws,
ordinances, regulations, orders, writs, injunctions or decrees of the
United States, any state or commonwealth, any municipality, any foreign
country, any territorial possession, or any Tribunal.
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2.2.22 The Loan shall mean and refer to the extension of
credit from Bank to Borrower evidenced by the ANEC Note.
2.2.23 Loan Documents shall mean this Loan Agreement, the
Security Agreement, the Mortgage, the ANEC Note, the ANEC Security
Agreement, the ANEC Mortgage and all other instruments and documents
executed or issued or to be executed or issued pursuant hereto or
thereto or in connection with the Loan, and all amendments,
modification, extensions and renewals of any of the foregoing. It shall
also include this Agreement and any other document or instrument
related to the Indebtedness owed to the Bank or executed by the
Borrower in connection with its Chapter 11 Plan.
2.2.24 Maturity Date. The term "Maturity Date" shall mean the
earlier of (i) the occurrence of an Event of Default, or (ii) December
31, 2003.
2.2.25 Polluting Substances. The term "Polluting Substances"
shall mean all pollutants, contaminants, chemicals, or industrial,
toxic or hazardous substances or wastes and shall include, without
limitation, any flammable explosives, radioactive materials, oil,
hazardous materials, hazardous or solid wastes, hazardous or toxic
substances or related materials defined in CERCLA/XXXX, RCRA/HSWA and
in the Hazardous Materials Transportation Act ("HMTA"), as amended, and
in the regulations adopted and publications promulgated thereto;
provided, in the event either CERCLA/XXXX, RCRA/HSWA or HMTA is amended
so as to broaden the meaning of any term defined thereby, such broader
meaning shall apply subsequent to the effective date of such amendment
and, provided further, to the extent that the Laws of any State or
other Tribunal establish a meaning for "hazardous substance,"
"hazardous waste," "hazardous material," "solid waste," or "toxic
substance" which is broader than that specified in either CERCLA/XXXX,
RCRA/HSWA, or HMTA, such broader meaning shall apply.
2.2.26 Proceeds shall mean, with respect to the Collateral,
property included within the meaning assigned to that term under the
Code and, in any event, shall include, but shall not be limited to, (i)
any and all Proceeds of any insurance, judgment, indemnity, warranty or
guaranty payable to or for the account of Borrower, from time to time,
with respect to any of the Collateral; (ii) any and all Proceeds in the
form of accounts, collections, contract rights, documents, instruments,
chattel paper or general intangibles relating in whole or in part to
the Collateral; (iii) any and all payments (in any form whatsoever)
made or due and payable to or for the account of Borrower, from time to
time, in connection with any requisition, confiscation, condemnation,
seizure or forfeiture of all or any part of the Collateral by any
governmental department, commission, board, bureau, authority, agency
or body (domestic or foreign); and (iv) as described in any Loan
Document.
2.2.27 Property. The term "Property" shall collectively mean
that certain oil and gas leasehold interest owned by Couba and the
underlying real property and minerals as described on Exhibit "A" to
the Mortgage.
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2.2.28 RCRA. The term "RCRA" shall mean The Resource
Conservation and Recovery Act of 1976, as amended.
2.2.29 Receivables shall mean all accounts, accounts
receivable and any other obligations or indebtedness owed to Borrower
related to or arising from the Collateral; all rights of Borrower to
receive any payments in money or kind related to or arising from the
Collateral; all guarantees of Receivables and security thereof; all
cash or non-cash proceeds of all of the foregoing; all of the right,
title and interest of Borrower in and with respect to the goods,
services or other property which gave rise to or which secure any of
the Receivables, and insurance policies and proceeds relating thereto,
and all of the rights of Borrower as an unpaid seller of goods or
services related to or arising from the Collateral, including, without
limitation, the rights of stoppage in transit, replevin, reclamation
and resale; and all of the foregoing, whether now existing or hereafter
created or acquired.
2.2.30 XXXX. The term "XXXX" shall mean The Superfund
Amendments and Reauthorization Act of 1987, as amended.
2.2.31 Tribunal. The term "Tribunal" shall mean any state,
commonwealth, federal, foreign, territorial or other court or
governmental department, commission, board, bureau, agency or
instrumentality.
2.3 Accounting Terms. Accounting and financial terms used
herein and not otherwise defined with respect to the Borrower's
financial statements and financial position shall have the meanings
ascribed thereto pursuant to generally accepted accounting principles
in effect from time to time, applied on a consistent basis, as set
forth in opinions of the Accounting Principles Board of the American
Institute of Certified Public Accountants and/or Statements of the
Financial Accounting Standards Board which may be applicable in the
circumstances as of the date involved.
3. The Bank's Secured Claim.
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3.1 Amounts Due. The Borrower acknowledges that the Bank is the holder
of a secured claim in the Bankruptcy Case by virtue of holding the Couba Note
and the Loan Documents and that as of the beginning of business on March 4,
2003, (a) the outstanding balance of the Revised Couba Note was Two Million Two
Hundred Fifty Thousand Dollars ($2,250,000.00) in unpaid principal, (b) the
amount of accrued, unpaid interest at the default rate was One Million Three
Hundred Eight Thousand Eight Hundred Sixty-Six & 43/100 Dollars ($1,308,866.43);
(c) other amounts were due and payable for attorney fees, costs associated with
legal proceedings, appraisal, expert and valuation expenses, and other related
costs in the amount of Four Hundred Two Thousand Six Hundred Forty-Two & 49/100
Dollars ($402,642.49) (collectively, the "Indebtedness"). The Borrower
acknowledges and agrees that the Indebtedness is absolute, unconditional, due,
owing, unpaid and not subject to any offset, crossclaim, demand, claim, suit,
action, proceeding, counterclaim or other dispute.
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3.2 Collateral and Bank's Secured Status. Pursuant to the Loan
Documents executed by Couba, the Bank is the holder of a first mortgage or
security interest in and to all assets of Couba including, but not limited to,
the Property, Receivables, equipment, machinery and General Intangibles,
including all 3-D seismic data (collectively, the "Collateral"). The terms
Collateral and Property shall also include: (i) the State Lease and any other
property described in the ANEC Mortgage or any other security documents executed
herewith or pursuant hereto, and (ii) the Exxon Related Property as described in
Section 7.13. Subject to the Subordination Agreements, Borrower acknowledges and
agrees that the Bank's mortgage and security interests are valid and existing
first priority liens on the Collateral and in and to all proceeds, products,
offspring, rents or profits from the Collateral, and all other cash, negotiable
instruments, documents of title, securities, deposit accounts, or other cash
equivalents in which Couba and its bankruptcy estate have an interest. The
Borrower acknowledges that the Bank is fully secured by the Collateral and that
the secured claim of the Bank in Couba's bankruptcy proceeding shall include the
Bank's post-Petition interest, reasonable attorney fees and costs.
3.3 Reaffirmations and Acknowledgments. The Borrower reaffirms and
acknowledges the liens granted to the Bank as set forth in the Loan Documents on
the Collateral thereunder are valid, continuing, perfected, enforceable,
unavoidable and first in priority subject to the Subordination Agreements.
3.4 The Plan. The Plan jointly filed by Couba and the Borrower provides
that the Collateral is to be transferred to the Borrower and that the Borrower
will become liable for the Indebtedness on the terms and conditions set forth
therein and in this Agreement.
4. LENDING AGREEMENT.
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Subject to the provisions of this Agreement and the other Loan
Documents, the Bank will accept the terms of the Plan and Borrower shall become
liable for the Indebtedness on the following terms:
4.1 Principal. The Loan shall be evidenced by the ANEC Note and shall
not exceed the principal amount of One Million Seven Hundred Fifteen Thousand
One Hundred Thirty-Three and 96/100s Dollars ($1,715,133.96). The principal
amount of the ANEC Note shall be deemed to have been fully advanced as of the
date this Agreement is executed.
4.2 Maturity Date. The entire unpaid principal balance of the ANEC Note
plus all accrued interest thereon will be due and payable on the Maturity Date.
4.3 Interest. The unpaid principal balance outstanding under the ANEC
Note shall bear interest at a rate per annum which shall be equal to the lesser
of: (i) the Highest Lawful Rate in effect from day to day, or (ii) the Base Rate
plus two percent (2.00%) per annum. Interest hereunder shall be calculated on
the basis of a 360 day year for the actual number of days in each calendar
month.
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4.4 Repayment of the Indebtedness. The Borrower shall make quarterly
payments of interest with the first payment of interest due 90 days from the
date of the ANEC Note and subsequent payments of interest due on the last day of
each calendar quarter thereafter until the ANEC Note is paid in full. All
outstanding and unpaid principal, all accrued and unpaid interest and any other
amounts of Indebtedness outstanding shall be completely due and payable on the
Maturity Date. All payments shall be recorded by the Bank on its books and the
unpaid balance so recorded or endorsed shall be conclusive evidence of the
amount of interest or principal owing thereon, absent manifest error.
4.5 Default Interest. While any default exists hereunder or under the
terms of the ANEC Note or any other Loan Document, in lieu of the interest rate
provided in the ANEC Note, all sums owing by the Borrower to the Bank in
connection with this Agreement shall bear interest at the rate equal to five
percent (5%) per annum in excess of the rate of interest otherwise charged
thereunder, but not more than the Highest Lawful Rate, accrued from the date of
default to the date on which such default is cured to the satisfaction of the
Bank (the "Default Rate").
4.6 Prepayment of Note/Prepayment Penalty. The Borrower shall have the right to
prepay the principal balance of the ANEC Note at any time without penalty.
4.7 No Further Advances. The Bank shall not be obligated to make any
advances of new funds to the Borrower.
4.8 Making of Payments. All payments, including prepayments, of
principal of, or interest, shall be made in immediately available funds by the
Borrower to the Bank. Whenever a payment is due on a day other than a Business
Day, the due date shall be extended to the next succeeding Business Day and
interest (if any) shall accrue during such extension. All payments shall be made
to the Bank at its principal office in Tulsa, Oklahoma, not later than 2:00
p.m., Tulsa time, on the date due, and funds received after that hour shall be
deemed to have been received by the Bank on its next following Business Day.
4.9 Renewal and Extension. In the event the Loan is renewed and
extended, then the terms and provisions of this Agreement shall continue in full
force and effect, except as may otherwise be agreed in writing by the Borrower
and the Bank. Notwithstanding the foregoing, nothing contained in this Agreement
shall be construed as obligating the Bank to agree or consent to any such
renewal and extension.
4.10 Maximum Lawful Interest Rate. It is not the intention of the Bank
or the Borrower to violate the laws of any applicable jurisdiction relating to
usury or other restrictions on the maximum lawful interest rate. The Loan
Documents and all other agreements between the Borrower and the Bank, whether
written or oral, are hereby limited so that in no event shall the interest paid
or agreed to be paid to the Bank for the use, forbearance or detention of money
loaned, or for the payment or performance of any covenant or obligation
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contained herein or in any other Loan Document, exceed the maximum amount
permissible under applicable law. If from any circumstances whatsoever
fulfillment of any provision hereof or of any other Loan Document, at the time
the 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. If from any such
circumstances, the Bank shall ever receive anything of value deemed interest
under applicable law which would exceed interest at the highest lawful rate,
such excessive interest shall be applied to the reduction of the principal
amount owing hereunder, and not the payment of interest, or if such excessive
interest exceeds any unpaid balance of principal, such excess shall be refunded
to the Borrower. All sums paid or agreed to be paid to the Bank for the use,
forbearance or detention of monies shall, to the extent permitted by applicable
law, be amortized, prorated, allocated and spread throughout the full term of
such indebtedness until payment in full so that the rate of interest on account
of such indebtedness is uniform throughout the term thereof. This paragraph 4.10
shall control every other provision of the Loan Documents and all other
agreements between the Bank and the Borrower contemplated thereby.
4.11 The Couba Loan Documents. Unless otherwise modified herein, the
Borrower assumes and agrees to be bound by all of the terms, conditions, and
provisions of the Security Agreement and the Mortgage executed and provided to
the Bank by Couba.
5. CONDITIONS OF LENDING.
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The obligation of the Bank to perform this Agreement is subject to the
performance and existence of all of the conditions in this Agreement and the
following:
5.1 ANEC Loan Documents. The Loan Documents required by this Agreement
from ANEC shall have been duly and validly authorized, executed, acknowledged
(where appropriate) and delivered to the Bank, all in form and substance
satisfactory to Bank and its counsel. The Borrower shall also have provided a
certificate (the "Perfection Certificate") of the Borrower providing, under
oath, all information required for filing, from time to time, financing
statements with respect to the Collateral under the Uniform Commercial Code, 12A
O.S. ss.1-9-101 et. Seq. including the Perfection Certificate provided by
Borrower in form and substance acceptable to Bank.
5.2 Cash Payment. On the date of this Agreement, Borrower shall pay the
Bank a cash payment in the amount of Two Million Two Hundred Fifty Thousand &
00/100 Dollars ($2,250,000.00).
5.3 Borrower's Organizational Documents. The Bank shall have been
provided with the following, all in form and substance satisfactory to the Bank
and Bank's counsel:
(a) Resolutions adopted by the Board of Directors of the
Borrower duly authorizing the execution, delivery and performance of
its obligations under the Loan Documents, certified by its duly elected
and acting corporate Secretary, together with certificates of such
Secretary as to the incumbency of the officers designated and
authorized to execute and deliver the Loan Documents to be executed by
ANEC.
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(b) A current certificate issued by the Secretary of State of
Oklahoma as to the due organization, existence and good standing of the
Borrower.
(c) A copy of the Borrower's Articles of Incorporation and
By-Laws, and any amendments thereto, certified as true and correct by
Borrower's Chief Executive Officer, as of a current date.
5.4 Perfection: Recordings and Filings. All actions shall have been
taken as are necessary or appropriate for Bank to maintain a valid and perfected
first mortgage and lien on the Collateral, subject to the Subordination
Agreements, including without limitation, the filing and recording of such of
the Loan Documents as may be necessary and appropriate.
5.5 Insurance. Borrower shall have provided to Bank policies of hazard
and liability insurance, certified by the appropriate agent, broker or insurer,
or certificates and other evidence in respect thereof, in form and substance
satisfactory to the Bank, accompanied by satisfactory evidence of payments of
premiums therefor, in the following particulars:
(a) Liability Insurance. General comprehensive public
liability insurance insuring Borrower in an amount of not less than
$1,000,000.00 per occurrence, and $5,000,000.00 in the aggregate, by a
company acceptable to Bank.
5.6 Financial Information. Borrower shall have provided Bank with
copies of financial statements and such other financial information relating to
the Borrower as required by the Loan Documents or as otherwise reasonably
required in writing by Bank.
5.7 Legal Matters. All legal matters incident to the Loan Documents,
the ANEC Note, the ANEC Security Agreement and the ANEC Mortgage shall be
satisfactory to the Bank and its counsel.
5.8 No Defaults. There shall have not have occurred and be continuing
any Default or Event of Default, and the representations and warranties set
forth in the Loan Documents shall be true and accurate.
5.9 Executed Loan Documents. The Bank shall have received this
Agreement, the ANEC Note, the ANEC Mortgage, the ANEC Security Agreement, and
any other Loan Documents, all of which shall be fully executed and in sufficient
signed counterparts to provide one for the Bank and to record and/or file in all
applicable counties, states and other filing offices as the Bank may deem to be
desirable, and the ANEC Mortgage and the Financing Statements have been properly
filed and/or recorded in the appropriate filing and recording offices.
6. REPRESENTATIONS AND WARRANTIES.
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In addition to the other representations and warranties made herein,
the Borrower represents and warrants to the Bank that:
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6.1 Borrower's Corporate Existence. The Borrower is and will continue
to be a corporation duly organized, validly existing and in good standing under
the laws of the State of Oklahoma and duly qualified and licensed as a foreign
corporation in all jurisdictions in which it holds any properties or conducts
any business, except where failure to be qualified or licensed would not have a
material adverse effect on its financial condition, business operations or
properties, or render any of its material agreements void or unenforceable, or
materially impair its ability to fulfill its obligations under the Loan
Documents. The Borrower is duly authorized, qualified and licensed under all
applicable laws, regulations, ordinances or orders of public authorities to
carry on its business as presently conducted or as contemplated to be conducted.
6.2 Authority Validity and Binding Nature. The Borrower is duly
authorized and empowered to execute, deliver and perform the Loan Documents, and
all corporate and other action necessary for such execution, delivery and
performance has been duly and validly taken. The Loan Documents to which it is a
party are valid and binding obligations of the Borrower enforceable in
accordance with their respective terms. The execution, delivery and performance
of the Loan Documents will not violate any provisions of the Articles of
Incorporation or By-Laws of the Borrower.
6.3 Conflicting Agreements and Restrictions. Neither the execution and
delivery of the Loan Documents, nor fulfillment or compliance with the terms and
provisions thereof, (i) will conflict with, or result in a breach of, the terms,
conditions or provisions of, or constitute a default under, or result in any
violation of any agreement, instrument, undertaking, judgment, decree, order,
writ, injunction, statute, law, rule or regulation to which the Borrower is
subject, (ii) result in the creation or imposition of any lien, charge or
encumbrance on, or security interest in, any property now or hereafter owned by
the Borrower pursuant to the provision of any mortgage, indenture, security
agreement, contract, undertaking or other agreement, other than the Loan
Documents and as set forth in the Subordination Agreements, or (iii) will
require any authorization, consent, license, approval or authorization of or
other action by, or notice or declaration to, or registration with, any court or
administrative or governmental department, commission, board, bureau, authority,
agency, or body (domestic or foreign), or, to the extent that any such consent
or other action may be required, it has been validly procured or duly taken.
6.4 No Violation of Applicable Law. The Borrower has not violated and
is not violating any applicable statute, regulation or ordinance of the United
States of America or any foreign country, or of any state, municipality or any
other jurisdiction, or of any agency thereof, which violation has or is likely
to have a material adverse effect on the financial condition, business
operations or properties of the Borrower taken as a whole or materially impair
the Borrower's ability to fulfill its obligations under the Loan Documents.
6.5 Taxes. The Borrower has filed all federal, state, local, county and
foreign tax returns required by law to be filed, has paid all material taxes,
assessments and similar charges (collectively referred to as "Taxes") shown to
be due and payable on said returns, and has paid all other Taxes imposed upon
it, to the extent that such Taxes have become due, except those being diligently
contested by appropriate legal proceedings in good faith and against which
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reserves have been established in conformity with generally accepted accounting
principles. As of the date of this Agreement, no extensions of time are in
effect for assessments of deficiencies for federal income taxes of the Borrower.
For purposes of this paragraph, Taxes owing to a particular taxing authority or
governmental agency shall not be considered material if they do not exceed
$5,000 in the aggregate (excluding sales taxes).
6.6 Survival of Representations. All representations and warranties
made herein or in any other Loan Documents will survive the delivery of the
Notes and any investigation at any time made by or on behalf of the Bank shall
not diminish its rights to rely thereon. All statements contained in any
certificate or other instrument delivered by or on behalf of the Borrower under
or pursuant to this Agreement or any other Loan Documents or in connection with
the transactions contemplated hereby or thereby shall constitute representations
and warranties made hereunder.
7. AFFIRMATIVE COVENANTS.
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Until the Indebtedness is paid in full, the Borrower agrees to perform
or cause to be performed the following unless the Bank shall otherwise consent
in writing:
7.1 Reports Certificates and Notifications.
7.1.1 Annual Financial Statements. Commencing with the
Borrower's current fiscal year, within one hundred twenty (120) days
after the close of each fiscal year, the Borrower will furnish to the
Bank a copy of an annual audited financial statement of the Borrower
prepared on a consolidating and consolidated basis and in conformity
with generally accepted accounting principles applied on a consistent
basis, by independent certified public accountants of recognized
standing selected by the Borrower and reasonably acceptable to the
Bank. All financial statements required to be produced to the Bank
shall be prepare in accordance with Generally Accepted Accounting
Principles ("GAAP").
7.1.2 Interim Financial Reports. Within forty-five (45) days
after the end of each month, the Borrower will furnish to the Bank a
copy of an unaudited financial statement of the Borrower, signed by the
Chief Executive Officer or Chief Financial Officer of Borrower,
prepared in accordance with generally accepted accounting principals,
consistently applied from prior periods, and containing at least a
balance sheet as of the close of such month and a statement of earnings
for such month and for the period from the beginning of such fiscal
year to the close of such month.
7.1.3 Tax Returns. Borrower will furnish Bank with a full,
true and correct copy of Borrower's Federal income tax return within
ten (10) days from the date said return is filed.
7.1.4 Other Financial Information. Within ten (10) days from
request, Borrower will furnish the Bank with such other information
12
concerning the business, operations and financial condition of the
Borrower as may be reasonably requested by the Bank, from time to time.
7.1.5 Litigation. The Borrower will promptly furnish the Bank
with written notice if at any time there are pending lawsuits or other
legal proceedings against either the Borrower where the aggregate
amount sued for or the total value of the property involved is in
excess of $50,000.00, or is not otherwise adequately covered by
insurance. Thereafter, the Borrower will keep the Bank informed on a
current basis as to status of all such litigation until all matters are
settled or adjudicated.
7.1.6 Notification of Liens. The Borrower will notify the Bank
of the existence or asserted existence of any mortgage, pledge, lien,
charge or encumbrance on any of the properties of the Borrower,
personal or real, tangible or intangible, forthwith upon the Borrower's
obtaining knowledge thereof, excluding only: (i) encumbrances, if any,
in favor of the Bank, Quest Investment Corporation and Transatlantic
Petroleum (USA) Corp; (ii) deposits to secure payment of worker's
compensation, unemployment insurance and similar benefits; (iii)
statutory liens arising in the ordinary course of the Borrower's
business which secure current obligations of the Borrower which are not
in default.
7.2 Books. Records and Inspections. The Borrower will maintain adequate
and accurate books and records of account in conformity with generally accepted
accounting principles, consistently applied.
7.3 Taxes. Other Liens. The Borrower will pay when due all taxes,
assessments, governmental charges or levies, and all claims for labor,
materials, supplies, rent and other obligations which, if unpaid, might become a
lien against its property, excluding only liabilities being diligently contested
in good faith by appropriate legal proceedings and against which there are
established reserves in conformity with sound business practices and generally
accepted accounting principles.
7.4 Maintenance. The Borrower will maintain its existence, remain
licensed or qualified and in good standing in each jurisdiction in which it
holds any properties or conducts any business, except where failure to be
qualified or licensed would not have a material adverse effect on the financial
condition, business operations or properties of the Borrower, taken as a whole,
or render any of Borrower's material agreements void or unenforceable, or
materially impair the Borrower's ability to fulfill its obligations under the
Loan Documents. The Borrower will maintain all franchises, permits, trademarks,
trade names, and licenses necessary or useful in the operation of its business
as heretofore operated and as to be operated as contemplated hereby, subject to
changes in the ordinary course of business, and maintain or cause to be
maintained all of its properties in good and workable condition, repair, and
appearance, and protect the same from deterioration, other than normal wear and
tear, at all times.
7.5 Compliance with Laws. The Borrower will comply in all material
respects with all statutes, laws, rules or regulations to which it is subject or
by which its properties are bound or affected, including without limitation, (i)
13
those pertaining or relating to environmental standards and controls and
hazardous waste disposal, (ii) those pertaining to occupational health and
safety standards, (iii) those pertaining to equal employment and credit
practices and civil rights, and (iv) those pertaining to its business or
operations, except to the extent that any of the foregoing are being diligently
contested in good faith by appropriate legal proceedings and against which there
are established reserves in conformity with sound business practices and
generally accepted accounting principles. Borrower will promptly notify Bank in
the event Borrower receives any notice from any governmental agency of any
alleged failure to comply with any such laws, rules or regulations.
7.6 Further Assurances. The Borrower will promptly cure any defects or
omissions in the execution and delivery of, or the compliance with the Loan
Documents, or the conditions described therein, including the execution and
delivery of additional documents reasonably requested by the Bank.
7.7 Access. The Bank shall have the right to examine and copy the books
and records of the Borrower and to discuss with the Borrower its affairs,
finances and accounts. Any authorized representative of the Bank will be
afforded access to any property owned by the Borrower during normal business
hours upon reasonable prior notice. The Bank agrees to maintain any records of
Borrower in Bank's possession in strict confidence.
7.8 Insurance. Policies of insurance will be maintained by the Borrower
with insurance companies satisfactory to the Bank, in amounts and against risks
satisfactory to the Bank, to the extent insurance coverage is required by
applicable state and federal regulatory agencies or is consistent with insurance
coverage customarily or typically maintained by similar businesses which are
similarly situated, and the Bank will be furnished with a certificate of
insurance in form and substance satisfactory to the Bank. The Borrower will not
commit or suffer to be committed any act whereby any insurance required hereby
shall or may be suspended, impaired or defeated, nor will the Borrower suffer or
permit its properties to be used in a manner not permitted under any applicable
policy of insurance then in effect.
7.9 Financial Covenants. Intentionally left blank.
7.10 Laws and Permits. To comply with all Laws, ordinances and
regulations applicable to the operation of the Property and the Borrowers, at
the Bank's request, shall allow the Bank, during normal business hours, to
inspect the original or true copies of all permits required with respect to the
Property. In the event such permits, or any of them are revoked by any Tribunal
or other body having jurisdiction, and the revocation of such permits has not
been set aside within sixty (60) days thereof, such will constitute an Event of
Default under the ANEC Mortgage and the other Loan Documents and the Bank may
exercise any and all of its remedies thereunder. Borrowers will use their best
efforts to promptly comply with any and all requirements of any applicable
Tribunal, and furnish the Bank, upon request, with evidence of such compliance.
14
7.11 Operation of the Property. At all times while owning and operating
the Property, the Borrowers covenant and agree that:
7.11.1 Borrower shall comply with the requirements of all
applicable federal, state and local environmental, occupational health,
safety and sanitation Laws, ordinances, codes, rules and regulations,
permits, licenses and interpretations and orders of regulatory and
administrative Tribunals with respect thereto. Without limiting the
generality of the foregoing, Borrowers agree to comply with all
requirements of CERCLA/XXXX and RCRA/HSWA, the Federal Water Pollution
Control Act, the Federal Clean Air Act, the Toxic Substances Control
Act, all as amended, and all air, water and hazardous and solid waste
Laws of the State of Louisiana,
7.11.2 Borrowers shall immediately notify the Bank of and
provide the Bank with copies of any notifications of discharges or
releases or threatened releases or discharges of a Polluting Substance
on, upon, into, or from Borrower's Property which are given or required
to be given by or on behalf of Borrower to any federal, state or local
Tribunal, and such copies of notifications shall be delivered to the
Bank at the same time as they are delivered to the Tribunal. Borrower
further agrees to promptly undertake and diligently pursue to
completion any appropriate and legally required or authorized remedial
containment and cleanup action in the event of any release or discharge
or threatened release or discharge of a Polluting Substance on, upon,
into or from such Borrower's Property, and
7.11.3 At all times while owning and operating the Property,
Borrowers agree to maintain and retain complete and accurate records of
all releases, discharges or other disposal of Polluting Substances on,
onto, into or from any Borrower's Property, including without
limitation, records of the quantity and type of any Polluting
Substances disposed of on or off such Property.
7.12 Indemnities. Effective as of December 31, 2001, the Borrower
hereby agrees to jointly and severally indemnify, defend and hold the Bank and
any purchaser through foreclosure and each of their officers, directors,
employees, agents, consultants, attorneys, affiliates, transferees, successors
and assigns harmless from and against, and to reimburse said persons in full
with respect to, any and all loss, liability, damage, fines, penalties, costs
and expenses, of every kind and character, including reasonable attorneys' fees
and court costs, known or unknown, fixed or contingent, occasioned by or
associated with any claims, demands, causes of action, suits and/or enforcement
actions, including any administrative or judicial proceedings, and any remedial,
removal or response actions ever asserted, threatened, instituted or requested
by any persons, including any Tribunal, arising out of or related to: (a) the
breach by Borrower of any representation or warranty contained in this
Agreement; (b) the failure of Borrower to perform any of its covenants or
obligations contained in this Agreement; (c) the ownership, construction,
occupancy, operation and use of the Property from the Effective Date through the
earlier of the date on which (i) the Loan has been paid and performed in full
and the Loan Documents have been released, or (ii) the Collateral has been sold
by Bank following Bank's ownership of the Collateral by way of foreclosure of
15
the liens granted pursuant hereto, deed in lieu of such foreclosure or otherwise
(the "Release Date"); provided, however, this indemnity shall not apply with
respect to matters caused by or arising solely from the Bank's activities during
any period of time the Bank acquires ownership of the Collateral.
The indemnity contained in the preceding paragraph applies, without
limitation, to any violation that arises on the Effective Date through the
Release Date of any Environmental Law and any liability or obligation relating
to the environmental conditions on, under, or about the Property or the
Collateral that arises on the Effective Date through the Release Date (including
without limitation: (a) the presence on, upon or in the Property or the
Collateral, or the release, discharge or threatened release on, upon or from the
Property, of any Polluting Substances generated, used, stored, treated, disposed
of or otherwise released from the Effective Date through the Release Date, and
(b) any and all damage to real or personal property or natural resources and/or
harm or injury including wrongful death, to persons alleged to have resulted
from such release of any Polluting Substances regardless of whether the act,
omission, event or circumstances constituted a violation of any Environmental
Law at the time of its existence or occurrence). The term "release" shall have
the meaning specified in CERCLA/XXXX and the terms "stored," "treated," and
"disposed" shall have the meanings specified in RCRA/HSWA; provided, however,
that in the event such terms have broader meanings under the laws of the State
of Louisiana, as the same may be amended from time to time, then such broader
meanings shall apply.
The provisions of the two foregoing paragraphs shall be in addition to
any other obligations and liabilities the Borrower may have to the Bank at
common law and shall survive the Release Date and shall continue thereafter in
full force and effect. The Bank agrees that in the event that such claim, suit
or enforcement action is asserted or threatened in writing or instituted against
it or any of its officers, employees or agents, or that remedial, removal or
response action is requested of the Bank or any of its officers, employees or
agents for which the Bank may desire indemnity or defense hereunder, the Bank
shall give written notification thereof to the Borrower.
7.13 Development Agreement. Borrower acknowledges that specific leases
have not been entered into by Borrower with respect to that certain Development
Agreement dated November 22, 2002, by and between Borrower and Exxon Mobil
Corporation (the "Development Agreement"). Should Borrower enter into any lease,
prospect, drill prospect, opportunity, action or any other agreement, under the
Development Agreement (collectively the "Exxon Related Property"), it shall
within five (5) days thereof provide written notice of such to Bank. In such an
event, Borrower shall execute, sign, deliver and provide to Bank any
documentation necessary for the Bank to perfect a mortgage, lien, or encumbrance
in the Borrower's rights under the Development Agreement including, but not
limited to mortgages, security agreements, and UCC-1 Financing Statements.
Borrower agrees that it will provide the Bank with a calendar quarterly
certified report describing all activity, leases, prospects and agreements that
have occurred under the Development Agreement beginning on June 30, 2003.
16
8. NEGATIVE COVENANTS.
-------------------
So long as any Indebtedness is unpaid, the Borrower will not perform or
permit to be performed any of the following acts unless the Bank shall otherwise
agree in writing:
8.1 Creation or Existence of Liens. The Borrower will not create,
assume or suffer to exist any mortgage, pledge, lien, charge or encumbrance on
any of the Collateral, excluding only: (i) encumbrances in favor of the Bank,
Quest Investment Corporation and Transatlantic Petroleum (USA) Corp; (ii)
deposits to secure payment of worker's compensation, unemployment insurance and
similar benefits; (iii) statutory liens, against which there are established
reserves in accordance with generally accepted accounting principles, and which
(a) are being contested in good faith by appropriate legal proceedings, or (b)
arise in the ordinary course of the Borrower's business and secure current
obligations of the Borrower which are not in default; (iv) liens for property
taxes not yet due, and (v) liens required by the Plan.
8.2 Limitation on Dividends and Redemption. Borrower will not directly
or indirectly (i) declare or pay, or become obligated to declare or pay, any
dividends or set apart any sum or any of its assets for the payment of
dividends, or make any other distribution, by reduction or capital or otherwise,
in respect of any class of stock of the Borrower, (ii) purchase, redeem or
otherwise retire any such shares or apply or set apart any sum or any of is
assets therefor, or (iii) otherwise make any payments in cash or assets to any
stockholder, other than reasonable compensation for services rendered. For the
purpose of this paragraph, references to stock of the Borrower shall include
options or warrants to purchase such shares.
8.3 Changes to Method of Accounting. The Borrower will not make any
material change in its method of accounting for purposes of the reporting
requirements of this Agreement, except as may be mandated by generally accepted
accounting principles and with the consent of the Borrower's independent
certified public accountants.
8.4 Sale-Leaseback Transactions. The Borrower will not make any sale,
transfer or disposition of any of the Collateral in a sale-leaseback
transaction.
8.5 Payments on Subordinated Debt. The Borrower will not make any
payment of principal on its debts that are subordinated to the Bank, and will
pay interest only as and when due under the express terms of the subordinated
debt. Upon the occurrence of an Event of Default, Borrower will make no payments
on its debt subordinated to the Bank without Bank's prior consent.
8.6 Conveyances; Encumbrances. Borrowers will not sell, transfer, lease
or convey all or any portion of the Collateral (except for those certain
transactions with Quest Investment Corporation and Transatlantic Petroleum (USA)
Corp), nor create, assume or suffer to exist any mortgage, pledge, security
interest, lien or encumbrance on the Collateral (excluding those in favor of
17
Quest Investment Corporation and Transatlantic Petroleum (USA) Corp), without
the Bank's prior written consent, except as may be allowed by the Plan.
9. EVENTS OF DEFAULT.
------------------
The occurrence of any of the following events, unless waived in writing
by the Bank, shall constitute an "Event of Default":
9.1 Nonpayment. The failure of the Borrower to make any payment
required by this Agreement or the ANEC Note when the same shall have become due
and payable; or,
9.2 Other Nonpayment. The failure of the Borrower to pay any other
amount due and payable to the Bank under the terms of the Loan Documents within
ten (10) calendar days after the date any such payment shall have become due and
payable; or,
9.3 Representations and Warranties. Any representation, statement,
certificate, schedule or report made or furnished to the Bank by or on behalf of
the Borrower or the Guarantor proves to have been false or erroneous in any
material respect as of the date on which such representation was made, or any
warranty ceases to be complied with in any material respect, and the Borrower or
the applicable Guarantor fails to correct such false or erroneous representation
or to comply with such warranty within twenty (20) Business Days after written
notice thereof from the Bank (provided that no notice or opportunity to cure
need be given if by its nature the false representation or breach of warranty is
incapable of being corrected); or,
9.4 Covenants. The failure of the Borrower to perform or observe any of
the covenants or agreements contained in of this Agreement and continuance
thereof
9.5 Other breach of Covenants. The failure of the Borrower to perform
or observe any other covenant or agreement contained in any other Loan Documents
and continuance thereof beyond the expiration of any applicable grace period
expressly stated therein; or,
9.6 Insolvency. The Borrower shall (i) apply for or consent to the
appointment of a custodian, receiver, trustee or liquidator of the Borrower or
any of its properties, (ii) admit in writing the inability to pay, or generally
fail to pay, its Debts as they become due, (iii) make a general assignment of
the benefit of creditors, (iv) commence any proceeding relating to the
bankruptcy, reorganization, liquidation, receivership, conservatorship,
insolvency, readjustment of debt, dissolution, or liquidation of the Borrower,
or if action should be taken by the Borrower for the purpose of effecting any of
the foregoing, (v) suffer any such appointment or commencement of a proceeding
as described in clause (i) or (iv) of this paragraph, which appointment or
proceeding is not terminated or discharged within thirty (30) days, or (vi)
become insolvent; or,
9.7 Judgment. Entry by any court of a final judgment or judgments
against the Borrower and/or the Guarantor for an aggregate amount in excess of
$250,000.00 or the attachment of, levy upon or garnishment of any of their
respective properties having a fair market value in an aggregate amount in
18
excess of $250,000.00, which in either case is not discharged to the
satisfaction of the Bank within thirty (30) days thereafter; provided, however,
that no Default or Event of Default shall occur if any such judgment has been
appealed and execution thereon stayed by the posting of a supersedes bond; or,
9.8 Maturity of Other Debt. The acceleration by the holder of the
maturity of any indebtedness for borrowed funds of the Borrower to any other
person or entity for an aggregate amount in excess of $50,000.00, or the
Borrower shall be in material breach of or default under any material agreement
with any person or entity and such breach or default shall remain unremedied for
a period of thirty (30) days.
10. REMEDIES.
---------
10.1 Acceleration of Indebtedness. Upon the occurrence of any Event of
Default specified in paragraph 9.1, the Indebtedness shall become immediately
due and payable, all without notice or demand. Upon the occurrence of any other
Event of Default specified in paragraph 9, the Bank, without further notice or
demand, may, at its option, declare all Indebtedness to be immediately due and
payable, whereupon the same shall be forthwith due and payable. The Bank will
promptly advise the Borrower of any such declaration, but failure to do so shall
not impair the effect of such declaration. Upon such acceleration of maturity,
the Bank shall be entitled to exercise all remedies available to it under the
Loan Documents or otherwise under applicable law, including without limitation:
(i) terminating the Bank's obligations and the Borrower's rights under this
Agreement, and (ii) commencing one or more actions against the Borrower and/or
the Guarantor to reduce the claim of the Bank against the Borrower and/or the
Guarantor to judgment. In the event the Bank elects to enforce its rights under
any one or more of the Loan Documents selectively and successively, such action
shall not be deemed a waiver or discharge of any other right until such time as
the Bank shall have been paid in full all Indebtedness.
10.2 Waiver of Default. The Bank may, by an instrument in writing,
waive any Default or Event of Default and any of the consequences of such
Default or Event of Default, and, in such event, the Bank, the Borrower shall be
restored to its respective former positions, rights and obligations hereunder.
Any Default or Event of Default so waived shall for all purposes of this
Agreement be deemed to have been cured and not be continuing, but no such waiver
shall extend to any subsequent or other Default or Event of Default or impair
any consequence of such subsequent or other Default or Event of Default.
10.3 Deposits; Setoff. Regardless of the adequacy of any collateral
held by the Bank, any deposits or other sums credited by or due from the Bank to
the Borrower shall at all times constitute collateral security for the
Indebtedness and, upon the occurrence of an Event of Default, may be set off
against the absolute or contingent, due or to become due, now existing or
hereafter arising, Indebtedness of the Borrower to the Bank. The rights granted
by this paragraph 10.3 shall be in addition to the rights of the Bank under any
statutory banker's lien or the common law right of set off. This paragraph shall
not apply to any monies of which the Borrower is only the beneficial owner,
regardless of the name in which the money is deposited, nor shall this paragraph
19
apply to any monies which the Borrower is contractually obligated to spend in
whole or in part for the accounts of others, provided that the Borrower shall
have established special accounts or given the Bank written notice that
particular funds are beneficially owned by others or are dedicated for
particular expenditures. If the Borrower fails to establish such special
accounts and fails to give such notice, the Bank may assume that funds on
deposit to the account of the Borrower belong solely to the named depositor and
are subject to this paragraph .
11. TERM.
-----
This Agreement shall remain in full force and effect until all
Indebtedness of Borrower to Bank has been paid in full.
12. GENERAL PROVISIONS.
-------------------
12.1 Hold Harmless. Except for a successful claim against the Bank by
the Borrower, the Borrower will indemnify and hold the Bank, and any participant
in any or one or more of the Loans, harmless from all liability, loss, damages
or expense, including reasonable attorney's fees, that the Bank or any such
participant may incur in good faith as a result of entering into the Loan
Documents, or in compliance with or in the enforcement of the terms of the Loan
Documents.
12.2 Cumulative Remedies. No failure on the part of the Bank to
exercise, and no delay in exercising, any right or remedy under the Loan
Documents shall operate as a waiver thereof, nor shall any single or partial
exercise by the Bank of any right thereunder preclude any other or further right
of exercise thereof or the exercise of any other right. The remedies herein
provided are cumulative and not alternative.
12.3 Notices. All notices, requests and demands shall be served in
person or delivered by registered or certified mail as follows:
The Borrower American Natural Energy Corporation
0000 Xxxxx Xxxx, Xxxxx 000
Xxxxx, Xxxxxxxx 00000
The Bank Bank One, N.A.
Managed Asset Division
Mail Code OK2-6045
00 Xxxx 0xx Xxxxxx
Xxxxx, Xxxxxxxx 00000
or at such other address as to the other party hereto shall designate for such
purpose in a written notice to the other party hereto. Notices served in person
shall be effective and deemed given when delivered, and notices sent by mail
shall be effective and deemed given on the second Business Day following deposit
in the U.S. mail, postage prepaid; provided, however, that any notice changing
20
the address to which notice shall be sent shall only be effective when actually
received by the party to whom it is directed.
12.4 Construction; Applicable Law. Irrespective of the place of
execution, this Agreement and all other Loan Documents shall be deemed executed
in Oklahoma County, Oklahoma, and shall be construed in accordance with the laws
of the State of Oklahoma. Nothing in this Agreement shall be construed to
constitute the Bank as a joint venturer with the Borrower or to constitute a
partnership. The descriptive headings of the paragraphs of this Agreement are
for convenience only and shall not be used in the construction of the content of
this Agreement.
12.5 Binding Effect. This Agreement and the other Loan Documents shall
be binding on, and shall inure to the benefit of, the parties hereto and their
respective successors and assigns; provided that, without the prior, written
consent of the Bank, the Borrower will not assign or transfer any of its
interest, rights or obligations arising out of or relating to the Loan
Documents.
12.6 Severability. In the event any one or more of the provisions
contained in this Agreement or the other Loan Documents shall, for any reason,
be held to be invalid, illegal or unenforceable in any respect and in any
jurisdiction, (i) such invalidity, illegality or unenforceability shall not
affect any other provision thereof, (ii) the remaining provisions shall continue
in full force and effect, and (iii) such invalid, illegal or unenforceable
provision shall not be affected in any other jurisdiction.
12.7 Entire Agreement; Conflicting Provisions. This Agreement
constitutes the entire agreement of the parties hereto with respect to the Loan
and all matters arising out of or related thereto. In the event of any direct
conflict between or among the provisions of this Agreement and the provisions of
any other Loan Document(s), the provisions on this Agreement shall control.
12.8 Waivers. No act, delay, omission or course of dealing between or
among the parties hereto will constitute a waiver of their respective rights or
remedies under this Agreement or the other Loan Documents. No waiver, change,
modification or discharge of any of the rights and duties of the parties hereto
will be effective unless contained in a written instrument signed by the party
sought to be bound.
IN WITNESS WHEREOF, the Bank and the Borrower have caused this
Agreement to be duly executed in multiple counterparts, each of which shall be
considered an original, as of the date first above written.
21
BORROWER: American Natural Energy Corporation
By:
--------------------------------------
Name:
--------------------------------
Titile:
------------------------------
BANK: Bank One, N.A., formerly known as Bank One,
Michigan, N.A., formerly known as NBD Bank
By:
--------------------------------------
Name:
--------------------------------
Titile:
------------------------------
22
