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EXHIBIT 10.2
REVOLVING LINE OF CREDIT AGREEMENT
August 18, 1998
Gulfport Energy Corporation
0000 Xxxxxxxxx Xxxx., Xxxxx 000
Xxxxxxxx Xxxx, XX 00000
Ladies and Gentlemen:
Wexford Special Situations 1996, L.P., Wexford Special Situations 1996
Institutional, L.P., Wexford Special Situations 1996, Limited, Wexford-Euris
Special Situations 1996, L.P., Wexford Spectrum Investors LLC, Wexford Capital
Partners II, L.P., Wexford Overseas Partners I, L.P., CD Holding Company LLC,
Liddell Investments LLC and Liddell Holdings LLC, jointly, but not severally
(the "Lenders"), are 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 letter
agreement (as amended, supplemented, waived or modified from time to
time after the date hereof, this "Letter Agreement"), the Lenders
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 (the "Commitment"), such advances to
be made jointly, not severally, by the Lenders based on the percentages
specified on Schedule I hereto to be used by the Borrower solely to (i)
prepay $2.0 million of principal owed by the Borrower to ING (U.S.)
Capital Corporation ("ING") under that certain $15,000,000 credit
agreement (the "ING Credit Agreement") and (ii) fund its 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 Letter Agreement, the Note,
the Loan Request Certificates (as defined below) and all other
documents, certificates and instruments related to this Letter
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 Letter
Agreement, and (ii) August 17, 1999. Until the termination of the
Commitment, 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 Letter Agreement.
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(d) If Borrower conducts an offering (the "Rights Offering")
of rights to purchase shares of its common stock, par value $0.01 per
share (the "Common Stock"), or otherwise sells or agrees to sell Common
Stock to the Lenders during the term of this Letter Agreement, the
principal amount of all outstanding Loans plus all interest owed on the
closing date of the Rights Offering shall be applied to the exercise of
participation rights issued to the Lenders in the Rights Offering, or
to the purchase price for such Common Stock, as the case may be. To the
extent the Loans plus all interest owed on the closing date of the
Rights Offering or other sale of Common Stock exceeds the pro rata
participation rights of the Lenders, the remaining amount due shall be
repaid 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 the Lenders of each of the following conditions, in
each case satisfactory in form and substance to the Lenders and their counsel,
in their sole and absolute discretion:
(a) The Borrower shall have executed and delivered to the
Lenders a certificate in a form acceptable to the Lenders 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 the Lenders prior to the date of requested Loan:
(i) This Letter Agreement;
(ii) The Note; and
(iii) Such other documents, opinions, certificates
and evidences as the Lenders 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 the Lenders to
enter into this Letter Agreement and to make Loans to the Borrower, the Borrower
hereby represents and warrants to the Lenders, 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:
(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
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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 charter or foundation documents 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. Other than consent from ING which
has been obtained, 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.
(g) Use of Borrowings. Borrowings by the Borrower under this
Letter Agreement will only be used to (i) prepay $2.0 million of
principal owed by the Borrower to ING under the ING Credit Agreement
and (ii) fund the 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
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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 ING, 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, 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 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.
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(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 Letter 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 Letter Agreement, the following
shall occur automatically without any action being taken by the
Lenders: (i) the Commitment shall terminate, and (ii) all obligations
of the Borrower to the Lenders 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 the Lenders 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 Letter Agreement, at the option of the
Lenders, the Lenders 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 the Lenders 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 the
Lenders 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 Letter Agreement, the Borrower
unconditionally agrees (i) to pay, indemnify and hold the Lenders and their
respective directors, officers, members, employees, stockholders, agents and
counsel (each, an "Indemnified Party") harmless 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 an 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 the Lenders or such other Indemnified Party,
and (ii) to pay to the Lenders all of their costs and expenses (including the
fees and disbursements of the Lenders' inside and outside counsel) arising in
connection with the preparation, execution and delivery of the Loan Documents
(collectively, the Lenders' "Costs and Expenses"). The Borrower further agrees
that its liability in connection with the Indemnified Liabilities and the
Lenders' Costs and Expenses
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shall not be released or diminished by the occurrence or failure to occur of any
event, including, but not limited to, any 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 Letter
Agreement, unless such termination specifically terminates this Paragraph and
the Borrower's obligations hereunder.
7. GOVERNING LAW. THIS LETTER AGREEMENT SHALL BE GOVERNED BY AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE SUBSTANTIVE LAWS OF NEW YORK
WITHOUT GIVING EFFECT TO THE CHOICE OF LAW OR CONFLICT OF LAWS RULES THEREOF.
8. Assignment. The Borrower may not assign this Letter Agreement. Each
Lender may assign this Letter Agreement to any affiliate of such Lender.
9. Counterparts. This Letter 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
Letter Agreement, the Note, the other Loan Documents or any other document
evidencing, securing, guaranteeing or otherwise pertaining to indebtedness of
the Borrower to the Lenders, in no contingency or event whatsoever, whether by
acceleration of the maturity of indebtedness of the Borrower to the Lenders or
otherwise, shall the interest contracted for, charged or received by the Lenders
exceed the maximum amount permissible under applicable law. If from any
circumstances whatsoever fulfillment of any provisions of this Letter Agreement,
the Note, the other Loan Documents or of any other document evidencing,
securing, guaranteeing or otherwise pertaining to indebtedness of the Borrower
to the Lenders, 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 the Lenders shall ever receive anything of
value as interest or deemed interest by applicable law under this Letter
Agreement, the Note, the other Loan Documents or any other document evidencing,
securing, guaranteeing or otherwise pertaining to indebtedness of the Borrower
to the Lenders 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 Letter Agreement
or on account of any other indebtedness of the Borrower to the Lenders, and not
to the payment of interest, or if such excessive interest exceeds the balance of
principal owing in connection with this Letter 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 the Lenders, under any specific contingency, exceeds the highest
lawful rate, the Borrower and the Lenders 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
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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 Letter Agreement, the Note and the
other Loan Documents.
11. Commitment Fee. The Borrower shall pay to the Lenders an aggregate
commitment fee equal to 2% of the Commitment, such fee to be due and payable
upon the execution of this Letter Agreement. Upon election of the Lender, the
Commitment Fee may be held back at the time the advance is made. The principal
amount advanced shall be noted on Exhibit "A" to the Note as if the Lender had
made a full advance and that the Commitment Fee had been remitted to Lender.
12. Conversion.
(a) Right of Conversion. Any Lender shall have the right, at any
time and from time to time during any Conversion Period (as defined
herein), at such Lender's option, to convert, subject to the terms and
provisions of this Paragraph 12, any and all of the principal of and/or
accrued but unpaid interest on its proportionate interest in any Note
into fully paid and nonassessable shares of Common Stock at the
Conversion Price. The "Conversion Price" shall mean, on any date during
any Conversion Period, the price expressed in dollars per share of
Common Stock, equal to $0.20, as adjusted if and as appropriate
pursuant to the provisions of this Paragraph 12. A "Conversion Period"
shall mean either the period beginning on the earlier to occur of (A)
the date the Registration Statement is withdrawn from registration with
the Commission and (B) the date the Rights Offering is rescinded, and
ending on the date all principal and interest on all Loans have been
repaid in full. Prior to or simultaneously with the conversion by any
Lender of any of its principal of any Note, all accrued but unpaid
interest on the principal amount being converted must be converted or
paid in cash.
(b) Mechanics of Exercise. The right of conversion shall be
exercised by the 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 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.
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(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
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 each 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 reorganization, reclassification, merger,
consolidation or disposition 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
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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 Letter 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.
(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 forthwith
prepare a certificate to be executed by the chief financial officer 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 each Lender. The Borrower shall keep at its chief
executive office copies of all
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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, the Lenders 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 such Lenders 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) No Registration or Listing of Shares. The shares of Common
Stock issuable on conversion are not registered with any governmental
authority or listed on any exchange, and the Borrower may cause any
Common Stock issued upon conversion of the Note to bear a restrictive
legend describing limitations of the transferability of such Common
Stock.
(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.
(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, (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, (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,
and (iii) the Lenders hereby acknowledge that the right of conversion
available to each such 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
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authorized but unissued Common Stock subsequent to the consummation of
the Rights Offering. 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.
Please indicate your agreement of the foregoing by signing below where
indicated and returning a copy of this Letter Agreement to each of the Lenders.
Very truly yours,
WEXFORD SPECIAL SITUATIONS 1996, L.P.
By:
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Name:
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Title:
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WEXFORD SPECIAL SITUATIONS 1996
INSTITUTIONAL, L.P.
By:
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Name:
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Title:
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WEXFORD SPECIAL SITUATIONS 1996, LIMITED
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
WEXFORD-EURIS SPECIAL SITUATIONS 1996,
L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
12
Gulfport Energy Corporation
August 18, 1998
Page 12
WEXFORD SPECTRUM INVESTORS LLC
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
WEXFORD CAPTIAL PARTNERS II, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
WEXFORD OVERSEAS PARTNERS I, L.P.
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
CD HOLDING COMPANY LLC
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
LIDDELL INVESTMENTS LLC
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
13
Gulfport Energy Corporation
August 18, 1998
Page 13
LIDDELL HOLDINGS LLC
By:
---------------------------------------
Name:
-------------------------------------
Title:
------------------------------------
Agreed and Accepted
as of this 19th day of August, 1998:
GULFPORT ENERGY CORPORATION
By:
----------------------------
Name:
-----------------------
Title:
----------------------
14
EXHIBIT A
THE OBLIGATIONS UNDER THIS NOTE ARE SUBORDINTATE TO CERTAIN OTHER OBLIGATIONS OF
GULFPORT ENERGY CORPORATION, AS MORE FULLY DESCRIBED IN THAT CERTAIN
SUBORDINATION AGREEMENT, DATED AUGUST 18, 1998, BETWEEN GULFPORT ENERGY
CORPORATION AND ING (U.S.) CAPITAL CORPORATION.
REVOLVING PROMISSORY NOTE
U.S. $3,000,000 Oklahoma City, Oklahoma August 18, 1998
For value received, the undersigned, GULFPORT ENERGY CORPORATION, a
company with limited liability organized under the laws of Delaware (the
"Borrower"), hereby promises to pay to the order of the parties specified on
Schedule I hereto (the "Lenders") at the addresses identified therein, 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 August 18, 1999, the principal sum of the lesser of THREE MILLION
UNITED STATES DOLLARS AND NO CENTS (U.S. $3,000,000.00), and (B) the aggregate
unpaid principal amount of all Loans made by the Lenders to the Borrower
pursuant to the Letter Agreement, dated as of the date hereof, by and between
the Borrower and the Lenders (as such may be amended or otherwise modified from
time to time, the "Loan Agreement"), with 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 (as
hereinafter defined), and (b) a rate per annum, calculated on the basis of the
actual number of calendar days elapsed, equal to the Base Rate (as hereinafter
defined). Each change in the interest rate to be charged hereunder shall become
effective without notice to the Borrower on the effective date of such change.
Notwithstanding the foregoing, 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) preceding, 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 varying rate per annum equal to the lesser of (a) the
Maximum Rate, and (b) a rate per annum, calculated on the basis of the actual
number of calendar days elapsed, equal to 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
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,
A-1
15
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.
In the event that at maturity or final payment of this Note, whether
arising by acceleration, prepayment, the passage of time or otherwise, the total
amount of interest paid or accrued hereon is less than the total amount of
interest that would have accrued hereon if a rate per annum equal to the Base
Rate had at all times been in effect, then on such date of maturity or final
payment, to the fullest extent permitted by applicable law, the Borrower shall
pay a final interest payment hereon equal to the amount by which the amount of
interest actually accrued or paid thereon through such date is less than the
lesser of (a) the amount of interest that would have accrued hereon if the
highest lawful rate had at all times been in effect, or (b) the amount of
interest that would have accrued hereon if the Base Rate had at all times been
in effect.
As used herein the term "Base Rate" means with respect to each tranche
a per annum interest rate equal to LIBOR plus 3%. As used herein, LIBOR shall
mean the rate appearing on the ISDA page screen display of Reuter Monitor Money
Rates service at approximately 11:00 a.m. London time (or as soon thereafter as
practicable) on the day of the relevant advance applicable to periods of
deposits of U.S. dollars for terms of six months. 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 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, 1998, 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 18, 1999, 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 eleventh paragraph), each payment
received by the Lenders shall be applied pro rata based on each 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, the Lenders may, at the Lenders' 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 the Lenders or otherwise owed to the Borrower by the Lenders.
A-2
16
No failure or delay on the part of the Lenders in exercising any right,
power or privilege hereunder and no course of dealing between the Borrower and
the Lenders 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
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 the Lenders 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 the Lenders 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 the Lenders, 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 the Lenders, under any specific
contingency, exceeds the Maximum Rate, the Borrower and the Lenders 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 NEW YORK WITHOUT GIVING EFFECT TO THE
CHOICE OF LAW OR CONFLICT OF LAWS RULES THEREOF.
A-3
17
EXECUTED as of the date first set forth above.
BORROWER:
GULFPORT ENERGY CORPORATION
By:
-------------------------------
Name:
-----------------------------
Title:
----------------------------
A-4
18
EXHIBIT "A"
Unpaid Name of
Principal Person
Payments Balance Making
Date Amount of Loan Principal Interest of Note Notation
---- -------------- ------------------ --------- --------
------- ----------------- ---------------------- ------------- -----------
------- ----------------- ---------------------- ------------- -----------
------- ----------------- ---------------------- ------------- -----------
A-5
19
Schedule I
Lender Participation
------ -------------
Wexford Special Situations 1996, L.P. 7.3797698%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Wexford Special Situations 1996 Institutional, L.P. 1.2324902%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Wexford Special Situations 1996, Limited 0.3318257%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Wexford-Euris Special Situations 1996, L.P. 2.0998429%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Wexford Spectrum Investors LLC 0.1376114%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Wexford Capital Partners II, L.P. 8.8211870%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Wexford Overseas Partners I, L.P. 1.6465981%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
CD Holding Company LLC 58.3161530%
000 Xxxx Xxxxxx Xxxxxx
Xxxxxxxxx, Xxxxxxxxxxx 00000
Liddell Investments LLC 10.0829527%
0000 Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
Liddell Holdings LLC 9.9515691%
0000 Xxxxxxxxx Xxxx.
Xxxxx 000
Xxxxxxxx, XX 00000
A-6
