Exhibit 10.15
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
by and between
RAM ENERGY, INC.,
as Borrower,
and
THE FINANCIAL INSTITUTIONS NAMED HEREIN
as the Lenders,
and
FOOTHILL CAPITAL CORPORATION
as Agent
Dated as of December 27, 1999
TABLE OF CONTENTS
Page(s)
1. DEFINITIONS AND CONSTRUCTION 2
1.1 DEFINITIONS 2
1.2 ACCOUNTING TERMS 26
1.3 CODE 26
1.4 CONSTRUCTION 26
1.5 SCHEDULES AND EXHIBITS 26
2. LOAN AND TERMS OF PAYMENT 26
2.1 REVOLVING ADVANCES 26
2.2 INTENTIONALLY OMITTED 34
2.3 INTENTIONALLY OMITTED 34
2.4 PAYMENTS 34
2.5 OVERADVANCES 35
2.6 INTEREST, RATES, PAYMENTS, AND CALCULATIONS 35
2.7 COLLECTION OF PROCEEDS OF COLLATERAL 37
2.8 CREDITING PAYMENTS; APPLICATION OF COLLECTIONS 39
2.9 DESIGNATED ACCOUNT 40
2.10 MAINTENANCE OF LOAN ACCOUNT; STATEMENTS OF OBLIGATIONS 40
2.11 FEES 40
2.12 LOAN UNDER PRIOR CREDIT AGREEMENT 41
3. CONDITIONS; TERM OF AGREEMENT 41
3.1 CONDITIONS PRECEDENT TO THE INITIAL ADVANCE 41
3.2 CONDITIONS PRECEDENT TO ALL ADVANCES 45
3.3 CONDITIONS SUBSEQUENT 46
3.4 TERM; AUTOMATIC RENEWAL 46
3.5 EFFECT OF TERMINATION 47
3.6 EARLY TERMINATION BY BORROWER 47
3.7 TERMINATION UPON EVENT OF DEFAULT 47
4. CREATION OF SECURITY INTEREST 47
4.1 GRANT OF SECURITY INTEREST 47
4.2 NEGOTIABLE COLLATERAL 48
4.3 COLLECTION OF ACCOUNTS, GENERAL INTANGIBLES, AND
NEGOTIABLE COLLATERAL 48
4.4 DELIVERY OF ADDITIONAL DOCUMENTATION REQUIRED 48
4.5 POWER OF ATTORNEY 48
4.6 RIGHT TO INSPECT 49
4.7 CONTROL AGREEMENTS 49
5. REPRESENTATIONS AND WARRANTIES 49
5.1 NO ENCUMBRANCES 49
5.2 ELIGIBLE PROVED DEVELOPED PRODUCING RESERVES;
OWNERSHIP OF OIL AND GAS PROPERTIES 50
5.3 OPERATIONS OF OIL AND GAS PROPERTIES 51
5.4 EQUIPMENT 51
5.5 LOCATION OF INVENTORY AND EQUIPMENT 51
5.6 OIL AND GAS PROPERTY COLLATERAL RECORDS AND INVENTORY
RECORDS 52
5.7 LOCATION OF CHIEF EXECUTIVE OFFICE; FEIN 52
5.8 DUE ORGANIZATION AND QUALIFICATION; SUBSIDIARIES 52
5.9 DUE AUTHORIZATION; NO CONFLICT 53
5.10 CLAIMS, DISPUTES, AND LITIGATION 54
5.11 NO MATERIAL ADVERSE CHANGE 55
5.12 NO FRAUDULENT TRANSFER 55
5.13 EMPLOYEE BENEFITS 55
5.14 ENVIRONMENTAL CONDITION 55
5.15 COMPLIANCE WITH THE LAW 56
5.16 BONDS AND INSURANCE 57
5.17 HEDGING AGREEMENT 57
5.18 BROKERAGE FEES 57
5.19 PERMITS AND OTHER INTELLECTUAL PROPERTY 57
5.20 YEAR 2000 COMPATIBILITY 58
5.21 LOCATIONS; LEASES 58
5.22 ABSENCE OF CERTAIN CHANGES 58
5.23 OPERATING COSTS 59
5.24 IMBALANCES 59
5.25 NO DEFAULT 59
5.26 LEASES 60
5.27 MARKETING AGREEMENTS 60
5.28 NON-CONSENT OPERATIONS 60
5.29 CONDITION OF EQUIPMENT 60
5.30 ▇▇▇▇▇ 60
6. AFFIRMATIVE COVENANTS 61
6.1 ACCOUNTING SYSTEM 61
6.2 COLLATERAL REPORTING 61
6.3 FINANCIAL STATEMENTS, REPORTS, CERTIFICATES 63
6.4 TAX RETURNS 65
6.5 GUARANTOR REPORTS 65
6.6 [INTENTIONALLY OMITTED] 65
6.7 TITLE TO EQUIPMENT 65
6.8 MAINTENANCE OF OIL AND GAS PROPERTY COLLATERAL AND
EQUIPMENT; OPERATION OF BUSINESS 65
6.9 TAXES 67
6.10 INSURANCE 67
6.11 NO SETOFFS OR COUNTERCLAIMS 69
6.12 LOCATION OF INVENTORY AND EQUIPMENT 69
6.13 COMPLIANCE WITH LAWS 69
6.14 EMPLOYEE BENEFITS 70
6.15 LEASES 70
6.16 BROKER COMMISSIONS 71
6.17 OIL AND GAS PROPERTY TITLE INFORMATION 71
6.18 ADDITIONAL COLLATERAL 72
6.19 HEDGING AGREEMENTS 73
6.20 FURTHER ASSURANCES 73
7. NEGATIVE COVENANTS 73
7.1 INDEBTEDNESS 74
7.2 LIENS 75
7.3 RESTRICTIONS ON FUNDAMENTAL CHANGES 75
7.4 DISPOSAL OF ASSETS 75
7.5 CHANGE NAME 76
7.6 GUARANTEE 76
7.7 NATURE OF BUSINESS 76
7.8 PREPAYMENTS AND AMENDMENTS 77
7.9 CHANGE OF CONTROL 77
7.10 CONSIGNMENTS 77
7.11 DISTRIBUTIONS; REPURCHASES OF CAPITAL STOCK 77
7.12 ACCOUNTING METHODS 77
7.13 INVESTMENTS 78
7.14 TRANSACTIONS WITH AFFILIATES 78
7.15 SUSPENSION 78
7.16 COMPENSATION 78
7.17 USE OF PROCEEDS 79
7.18 CHANGE IN LOCATION OF CHIEF EXECUTIVE OFFICES; INVENTORY
AND EQUIPMENT 79
7.19 NO PROHIBITED TRANSACTIONS UNDER ERISA 79
7.20 FINANCIAL COVENANTS 80
7.21 CAPITAL EXPENDITURES 81
7.22 SECURITIES ACCOUNTS 81
7.23 GAS IMBALANCES, TAKE-OR-PAY OR OTHER PREPAYMENTS 82
7.24 PAYMENTS ON UNSECURED NOTES 82
7.25 LIMITED BUSINESS OF RB OPERATING AND MAGIC CIRCLE
PARTNERSHIPS 82
8. EVENTS OF DEFAULT 82
9. THE LENDER GROUP'S RIGHTS AND REMEDIES 85
9.1 RIGHTS AND REMEDIES 85
9.2 REMEDIES CUMULATIVE 87
10. TAXES AND EXPENSES 87
11. WAIVERS; INDEMNIFICATION 88
11.1 DEMAND; PROTEST; ETC 88
11.2 THE LENDER GROUP'S LIABILITY FOR COLLATERAL 88
11.3 INDEMNIFICATION 88
12. NOTICES 89
13. CHOICE OF LAW AND VENUE; SERVICE OF PROCESS;
JURY TRIAL WAIVER 90
14. DESTRUCTION OF BORROWER'S DOCUMENTS 91
15. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS 91
15.1 ASSIGNMENTS AND PARTICIPATIONS 91
15.2 SUCCESSORS 94
16. AMENDMENTS; WAIVERS 94
16.1 AMENDMENTS AND WAIVERS 94
16.2 NO WAIVERS; CUMULATIVE REMEDIES 95
17. AGENT; THE LENDER GROUP 95
17.1 APPOINTMENT AND AUTHORIZATION OF AGENT 95
17.2 DELEGATION OF DUTIES 96
17.3 LIABILITY OF AGENT 96
17.4 RELIANCE BY AGENT 97
17.5 NOTICE OF DEFAULT OR EVENT OF DEFAULT 97
17.6 CREDIT DECISION 97
17.7 COSTS AND EXPENSES; INDEMNIFICATION 98
17.8 AGENT IN INDIVIDUAL CAPACITY 99
17.9 SUCCESSOR AGENT 99
17.10 WITHHOLDING TAX 99
17.11 COLLATERAL MATTERS 101
17.12 RESTRICTIONS ON ACTIONS BY LENDERS;
SHARING OF PAYMENTS 102
17.13 AGENCY FOR PERFECTION 102
17.14 PAYMENTS BY AGENT TO THE LENDERS 102
17.15 CONCERNING THE COLLATERAL AND RELATED LOAN DOCUMENTS 103
17.16 FIELD AUDITS AND EXAMINATION REPORTS; CONFIDENTIALITY;
DISCLAIMERS BY LENDERS; OTHER REPORTS AND INFORMATION 103
17.17 SEVERAL OBLIGATIONS; NO LIABILITY 104
18. GENERAL PROVISIONS 105
18.1 EFFECTIVENESS 105
18.2 SECTION HEADINGS 105
18.3 INTERPRETATION 105
18.4 SEVERABILITY OF PROVISIONS 105
18.5 AMENDMENTS IN WRITING 105
18.6 COUNTERPARTS; TELEFACSIMILE EXECUTION 105
18.7 REVIVAL AND REINSTATEMENT OF OBLIGATIONS 106
18.8 INTEGRATION 106
18.9 AMENDMENT AND RESTATEMENT; RELEASE 106
SCHEDULES AND EXHIBITS
SCHEDULE C-1 COMMITMENTS
SCHEDULE P-1 PERMITTED LIENS
SCHEDULE 2.7 INITIAL COLLECTION ACCOUNT BANKS
SCHEDULE 5.1(A) INFORMATION REGARDING CERTAIN OWNED OIL AND
GAS PROPERTIES
SCHEDULE 5.1(B) WORKING INTEREST/NET REVENUE
INTEREST/OPERATOR
SCHEDULE 5.1(C) MATERIAL CONTRACT RIGHTS & OBLIGATIONS
SCHEDULE 5.1(D) NON-LEASEHOLD ASSET OWNERSHIP
SCHEDULE 5.1(E) ▇▇▇▇▇▇ GATHERING SYSTEM
SCHEDULE 5.2(A) OUTSTANDING AUTHORITIES FOR EXPENDITURES/NON-
CONSENT ▇▇▇▇▇
SCHEDULE 5.2(B) IMBALANCES IN GAS PRODUCTION
SCHEDULE 5.8 CAPITAL STOCK/SUBSIDIARIES
SCHEDULE 5.10 LITIGATION
SCHEDULE 5.13 ERISA BENEFIT PLANS
SCHEDULE 5.14 ENVIRONMENTAL
SCHEDULE 5.15 COMPLIANCE WITH LEGAL REQUIREMENTS
SCHEDULE 5.16 BONDS AND INSURANCE
SCHEDULE 5.17 HEDGING AGREEMENTS
SCHEDULE 5.19 PERMITS AND OTHER INTELLECTUAL PROPERTY
SCHEDULE 5.21 CERTAIN ADDITIONAL LOCATIONS OF
COLLATERAL
SCHEDULE 5.22 CERTAIN CHANGES SINCE SEPTEMBER 30, 1999
SCHEDULE 5.23 OPERATING COSTS
SCHEDULE 5.27 CERTAIN MARKETING AGREEMENTS
SCHEDULE 5.30 PRODUCING ▇▇▇▇▇ NOT DESCRIBED IN ANY OIL
AND GAS PROPERTY MORTGAGE
SCHEDULE 7.1 PERMITTED OTHER INDEBTEDNESS
EXHIBIT A-1 FORM OF AGREEMENT AND ACCEPTANCE
EXHIBIT B-1 MORTGAGES, OPINIONS, CERTIFICATES AND
CERTAIN OTHER REQUIRED ITEMS AND INFORMATION
EXHIBIT C-1 FORM OF COMPLIANCE CERTIFICATE
EXHIBIT P-1, P-2
& P-3 FORMS OF PRIOR LENDER ASSIGNMENT
AGREEMENTS
EXHIBIT T-1 FORM OF TRANSFER ORDER LETTERS
EXHIBIT 6.2 FORM OF BORROWING BASE CERTIFICATE
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT (THIS
"AGREEMENT"), IS ENTERED INTO AS OF DECEMBER 27, 1999, AMONG THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (SUCH
FINANCIAL INSTITUTIONS, TOGETHER WITH THEIR RESPECTIVE SUCCESSORS
AND ASSIGNS, ARE REFERRED TO HEREINAFTER EACH INDIVIDUALLY AS A
"LENDER" AND COLLECTIVELY AS THE "LENDERS"), FOOTHILL CAPITAL
CORPORATION, A CALIFORNIA CORPORATION, AS AGENT FOR THE LENDERS
("AGENT"), WITH A PLACE OF BUSINESS LOCATED AT ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇, AND
RAM ENERGY, INC., A DELAWARE CORPORATION ("BORROWER"), WITH ITS
CHIEF EXECUTIVE OFFICE LOCATED AT MERIDIAN TOWER, SUITE 650,
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇.
RECITALS
A. Borrower, certain lenders (the "Prior Lenders"), and
Union Bank of California, as Agent (the "Prior Agent"), are
parties to that certain Second Amended and Restated Credit
Agreement, dated as of February 3, 1998, as amended by that
certain Amendment No. 1 and Waiver, dated as of August 17, 1998,
that certain Amendment No. 2 and Waiver, dated as of March 31,
1999, and that certain Amendment No. 3 and Waiver, dated as of
August 12, 1999, that certain Amendment No. 4 dated as of
September 2, 1999, that certain Amendment No. 5 and Consent and
Waiver dated as of September 28, 1999, that certain Amendment
No. 6 dated as of September 30, 1999 and that certain Amendment
No. 7 dated as of December 22, 1999 (such credit agreement, as
amended, the "Prior Credit Agreement").
B. Borrower has requested that (i) the Lenders assume the
obligations of the Prior Lenders under the Prior Credit
Agreement, (ii) Agent assume the agency responsibilities of the
Prior Agent under the Prior Credit Agreement, and (iii) Agent and
the Lenders amend and restate the Prior Credit Agreement and make
credit available to Borrower on the terms and conditions stated
herein. It is Borrower's intention that for purposes of the
Unsecured Notes Indenture (as defined below), (i) this Agreement
and the other Loan Documents (as defined below) refinance, renew,
replace and succeed, but not constitute an extinguishment or a
novation of, the Prior Credit Agreement, and (ii) that the
Indebtedness secured pursuant to this Agreement and the other
Loan Documents renew and refinance, but not constitute an
extinguishment or a novation of, the Indebtedness existing on the
date hereof under the Prior Credit Agreement, and therefore,
solely as among Borrower and the other parties to the Unsecured
Notes Indenture, the intent of Borrower is that the Indebtedness
incurred pursuant to this Agreement shall constitute either
"Indebtedness" under a "Permitted Bank Credit Facility" or
"Permitted Refinancing Indebtedness" (as such terms are defined
in the Unsecured Notes Indenture).
C. Contemporaneously with the above transactions, Agent is
entering into the Prior Lender Assignment Agreements (as defined
below) wherein the assignment of the rights of the Prior Lenders
to the Agent, on behalf of the Lenders, is intended to be for the
ratable benefit of the Lenders.
D. Agent and the Lenders, subject to the terms and
conditions stated herein, are willing to amend and restate the
Prior Credit Agreement and to make such credit facilities
available.
NOW, THEREFORE, for good and valuable consideration, the
receipt and sufficiency of which are acknowledged, the parties
hereto agree as follows:
1. DEFINITIONS AND CONSTRUCTION.
1.1 Definitions. As used in this Agreement, the
following terms shall have the following definitions:
"Account Debtor" means any Person who is or who
may become obligated under, with respect to, or on account of, an
Account.
"Accounts" means all currently existing and
hereafter arising accounts, contract rights, and all other forms
of obligations owing to Borrower or any of its Subsidiaries
arising out of the sale or lease of goods, Hydrocarbons or Oil
and Gas Properties or the rendition of services by Borrower or
any of its Subsidiaries, irrespective of whether earned by
performance, and any and all credit insurance, guaranties, or
security therefor.
"Advances" has the meaning set forth in Section
2.1(a).
"Affiliate" means, as applied to any Person, any
other Person who directly or indirectly controls, is controlled
by, is under common control with or is a director or officer of
such Person. For purposes of this definition, "control" means
the possession, directly or indirectly, of the power to vote 5%
or more of the securities having ordinary voting power for the
election of directors or the direct or indirect power to direct
the management and policies of a Person.
"Agent" means Foothill, solely in its capacity as
agent for the Lenders, and shall include any successor agent.
"Agent Account" means an account at a bank
designated by Agent from time to time as the account into which
Borrower shall make all payments to Agent for the benefit of the
Lender Group, and into which the Lender Group shall make all
payments to Agent, under this Agreement and the other Loan
Documents. Initially, unless and until Agent notifies Borrower
and the Lender Group to the contrary, the Agent Account shall be
that certain deposit account bearing account number 323-266193
and maintained by Agent with The Chase Manhattan Bank, N.A.,
4 New York Plaza, 15th Floor, New York, New York 10004, ABA #021-
000-021.
"Agent Advances" has the meaning set forth in
Section 2.1(g).
"Agent's Liens" has the meaning set forth in
Section 4.1.
"Agent-Related Persons" means Agent and any
successor agent, together with their respective Affiliates, and
the officers, directors, employees, counsel, agents, and
attorneys-in-fact of such Persons and their Affiliates.
"Agreement" has the meaning set forth in the
preamble hereto.
"Assignee" has the meaning set forth in Section
15.1.
"Assignment and Acceptance" has the meaning set
forth in Section 15.1 and shall be in the form of Exhibit A-1
attached hereto.
"Authorized Person" means any officer or other
employee of Borrower.
"Availability" means the amount that Borrower is
entitled to borrow as Advances under Section 2.1, such amount
being the difference derived when (a) the sum of the principal
amount of Advances (including Agent Advances and Foothill Loans)
then outstanding (including any amounts that the Lender Group may
have paid for the account of Borrower pursuant to any of the Loan
Documents and that have not been reimbursed by Borrower) is
subtracted from (b) the least of (i) the Maximum Revolving
Amount, or (ii) the Borrowing Base less the aggregate amount of
the Reserves Against Availability, or (iii) the Unsecured Note
Indebtedness Limitation.
If the Revolving Facility Usage is equal to or greater than the
least of the Borrowing Base, the Maximum Revolving Amount or the
Unsecured Note Indebtedness Limitation, then the Availability is
zero (-0-).
"Average Unused Portion of Maximum Revolving
Amount" means, as of any date of determination, (a) the Maximum
Revolving Amount, less (b) the average Daily Balance of Advances
that were outstanding during the immediately preceding month.
"Bankruptcy Code" means the United States
Bankruptcy Code (11 U.S.C. 101 et seq.), as amended, and any
successor statute.
"Benefit Plan" means a "defined benefit plan" (as
defined in Section 3(35) of ERISA) for which Borrower, any
Subsidiary of Borrower, or any ERISA Affiliate has been an
"employer" (as defined in Section 3(5) of ERISA) within the past
six years.
"Books" means all of Borrower's and its
Subsidiaries' books and records including: ledgers; records
indicating, summarizing, or evidencing Borrower's and its
Subsidiaries' properties or assets (including the Collateral) or
liabilities, including but not limited to well logs and
seismographic reports; all information relating to Borrower's and
its Subsidiaries' business operations or financial condition; and
all computer programs, disk or tape files, printouts, runs, or
other computer prepared information.
"Borrower" has the meaning set forth in the
preamble to this Agreement.
"Borrowing" means a borrowing hereunder consisting
of Advances made on the same day by the Lenders to a Borrower, or
by Foothill in the case of a Foothill Loan, or by Agent in the
case of an Agent Advance.
"Borrowing Base" has the meaning set forth in
Section 2.1(a).
"Borrowing Base Entities" means Borrower, Gulf
States, Magic Circle and ▇▇▇▇▇▇ Field.
"Borrowing Request" has the meaning set forth in
Section 2.1(c).
"Business Day" means any day that is not a
Saturday, Sunday, or other day on which national banks are
authorized or required to close.
"▇▇▇▇▇▇ Field" means ▇▇▇▇▇▇ Field Limited
Partnership, an Oklahoma limited partnership.
"▇▇▇▇▇▇ Gathering System" means that certain
Hydrocarbons gathering and separation system and related
equipment and properties commonly known as "▇▇▇▇▇▇ Gathering
System" presently located in or about ▇▇▇▇▇ County, Oklahoma,
Alfalfa County, Oklahoma and Major County, Oklahoma, together
with all additions, fixtures and accessions thereto and all
easements, rights-of-way and contracts relating thereto.
"CDC" means ▇▇▇▇▇▇ Development Corporation, an
Oklahoma corporation.
"Change of Control" shall be deemed to have
occurred at such time as (a) a "person" or "group" (within the
meaning of Sections 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934) becomes the "beneficial owner" (as defined in Rule
13d-3 under the Securities Exchange Act of 1934), directly or
indirectly, of more than 30% of the total voting power of all
classes of stock then outstanding of Borrower entitled to vote in
the election of directors or (b) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934) other than Borrower becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of any voting power of any
class of stock then outstanding of Magic Circle entitled to vote
in the election of directors or (c) a "person" or "group" (within
the meaning of Sections 13(d) and 14(d)(2) of the Securities
Exchange Act of 1934), other than Borrower becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of any voting power of any
partnership interest or equity interest then outstanding of Gulf
States or (d) a "person" or "group" (within the meaning of
Sections 13(d) and 14(d)(2) of the Securities Exchange Act of
1934) other than Borrower or Magic Circle becomes a "beneficial
owner" (as defined in Rule 13d-3 under the Securities Exchange
Act of 1934), directly or indirectly, of any voting power of any
class of stock then outstanding of MCAC entitled to vote in the
election of directors or (e) a "person" or "group" (within the
meaning of Section 13(d) and 14(d)(2) of the Securities Exchange
Act of 1934) other than Borrower or Magic Circle becomes a
"beneficial owner" (as defined in Rule 13d-3 under the Securities
Exchange Act of 1934), directly or indirectly, of any voting
power of any class of stock then outstanding of CDC entitled to
vote in the election of directors or (f) a "person" or "group"
(within the meaning of Section 13(d) and 14(d)(2) of the
Securities Exchange Act of 1934), other than Borrower, CDC, or
Magic Energy becomes a "beneficial owner" (as defined in Rule 13d-
3 under the Securities Exchange Act of 1934), directly or
indirectly, of any voting power of any partnership interest or
equity interest then outstanding of ▇▇▇▇▇▇ Field.
"Closing Date" means the date of the first to
occur of the making of the initial Advance or the issuance of the
initial Letter of Credit.
"Code" means the California Uniform Commercial
Code.
"Collateral" means all of Borrower's and each
Subsidiary of Borrower's right, title, and interest in and to
each of the following:
(a) the Accounts,
(b) the Books,
(c) the Equipment,
(d) the General Intangibles,
(e) the Inventory,
(f) the Investment Property,
(g) the Negotiable Collateral,
(h) the Oil and Gas Properties,
(i) the Real Property,
(j) any money, or other assets of Borrower that
now or hereafter come into the possession, custody, or control of
any member of the Lender Group, and
(k) the proceeds and products, whether tangible
or intangible, of any of the foregoing, including proceeds of
insurance covering any or all of the Collateral, and any and all
Accounts, the Books, Equipment, General Intangibles, Inventory,
Investment Property, Negotiable Collateral, Real Property, Oil
and Gas Properties, money, deposit accounts, or other tangible or
intangible property resulting from the sale, exchange,
collection, or other disposition of any of the foregoing, or any
portion thereof or interest therein, and the proceeds thereof.
"Collateral Access Agreement" means a landlord
waiver or consent, mortgagee waiver or consent, bailee letter, or
a similar acknowledgement agreement of any warehouseman,
processor, lessor, consignee, or other Person in possession of,
having a Lien upon, or having rights or interests in the
Equipment, Inventory, or Oil and Gas Properties, in each case, in
form and substance satisfactory to Agent.
"Collections" means all cash, checks, notes,
instruments, and other items of payment (including, insurance
proceeds, proceeds of cash sales, rental proceeds, and tax
refunds).
"Commitment" means, at any time with respect to a
Lender, the principal amount set forth beside such Lender's name
under the heading "Commitment" on Schedule C-1 attached hereto or
on the signature page of the Assignment and Acceptance pursuant
to which such Lender became a Lender hereunder in accordance with
the provisions of Section 15.1, as such Commitment may be
adjusted from time to time in accordance with the provisions of
Section 15.1, and "Commitments" means, collectively, the
aggregate amount of the commitments of all of the Lenders.
"Compliance Certificate" means a certificate
substantially in the form of Exhibit C-1 and delivered by the
chief accounting officer of Borrower to Agent.
"Consolidated Net Income" shall mean with respect
to Borrower and its Subsidiaries, for any period, the aggregate
of the net income (or loss) of Borrower and its Subsidiaries
after allowances for taxes for such period, determined on a
consolidated basis in accordance with GAAP; provided that there
shall be excluded from such net income (to the extent otherwise
included therein) the following: (i) the net income of any Person
in which Borrower or any of its Subsidiaries has an interest
(which interest does not cause the net income of such other
Person to be consolidated with the net income of Borrower and its
Subsidiaries in accordance with GAAP), except to the extent of
the amount of dividends or distributions actually paid in such
period by such other Person to Borrower or to any of its
Subsidiaries, as the case may be; (ii) the net income (but not
loss) of any of Borrower's Subsidiaries to the extent that the
declaration or payment of dividends or similar distributions or
transfers or loans by that Subsidiary is not at the time
permitted by operation of the terms of its charter or any
agreement, instrument or Legal Requirement applicable to such
Subsidiary, or is otherwise restricted or prohibited in each case
determined in accordance with GAAP; (iii) the net income (or
loss) of any Person acquired in a pooling-of-interests
transaction for any period prior to the date of such transaction;
(iv) any extraordinary gains, including gains attributable to
Property sales not in the ordinary course of business; (v) the
cumulative effect of a change in accounting principles and any
gains or losses attributable to writeups or writedowns of assets;
and (vi) any writedowns of non-current assets, provided however,
that any ceiling limitation writedowns under SEC guidelines shall
be treated as capitalized costs, as if such writedowns had not
occurred.
"Control Agreement" means a control agreement, in
form and substance reasonably satisfactory to Agent, between
Borrower, Agent, and the applicable securities intermediary with
respect to the applicable Securities Account and related
Investment Property.
"Daily Balance" means the amount of an Obligation
owed at the end of a given day.
"deems itself insecure" means that the Person
deems itself insecure in accordance with the provisions of
Section 1208 of the Code.
"Default" means an event, condition, or default
that, with the giving of notice, the passage of time, or both,
would be an Event of Default.
"Defaulting Lender" means any Lender that fails to
make any Advance that it is required to make hereunder on any
Funding Date and that has not cured such failure by making such
Advance within one (1) Business Day after written demand upon it
by Agent to do so.
"Defaulting Lenders Rate" means the Reference Rate
for the first three (3) days from and after the date the relevant
payment is due and, thereafter, at the interest rate then
applicable to Advances.
"Designated Account" means account number Oklahoma
▇▇▇▇▇▇▇▇ of Borrower maintained with Borrower's Designated
Account Bank, or such other deposit account of Borrower (located
within the United States) which has been designated, in writing
and from time to time, by Borrower to Agent.
"Designated Account Bank" means Bank One,
Oklahoma, N.A., whose office is located at ▇▇▇ ▇. ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇ and whose ABA number is ▇▇▇▇▇▇▇▇▇.
"Disbursement Letter" means an instructional
letter executed and delivered by Borrower to Agent regarding the
extensions of credit to be made on the Closing Date, the form and
substance of which shall be satisfactory to Agent.
"Dollars or $" means United States dollars.
"Duke Energy" means Duke Energy Merchant Finance,
L.L.C.
"Early Termination Premium" has the meaning set
forth in Section 3.6.
"EBITDA" shall mean, for any period, the sum,
determined (without duplication) for Borrower and its
Subsidiaries, of (i) Consolidated Net Income of Borrower and its
Subsidiaries plus (ii) Interest Expense of Borrower and its
Subsidiaries for such period to the extent deducted in the
determination of Consolidated Net Income of Borrower and its
Subsidiaries for such period plus (iii) depreciation,
amortization and other similar non-cash items (with the exception
of non-cash charges that require an accrual or reserve for cash
charges for any future period and normally recurring accruals) to
the extent deducted in the determination of Consolidated Net
Income of Borrower and its Subsidiaries for such period plus (iv)
all taxes accrued for such period on or measured by income to the
extent deducted in the determination of Consolidated Net Income
of Borrower and its Subsidiaries for such period.
"Eligible Proved Developed Producing Reserves"
means the value, as determined by Agent in its sole discretion of
Proved Developed Producing Reserves consisting of Mineral
Interests of a Borrowing Base Entity that: (i) are subject to a
duly executed and recorded Oil and Gas Property Mortgage that
creates a first priority perfected lien in such Mineral Interest;
(ii) either are identified on Schedule 5.1(a) or constitute
Qualified Subsequent Oil and Gas Property; and (iii) strictly
comply with each and all of the representations and warranties
made by such Borrowing Base Entity to Agent in the Loan
Documents. In determining the amount to be so included, Eligible
Proved Developed Producing Reserves shall be valued based upon
the NYMEX Value of such Proved Developed Producing Reserves as of
the date of determination of Eligible Proved Developed Producing
Reserves, with such adjustments as Agent may deem appropriate in
its reasonable discretion. An item of Proved Developed Producing
Reserves shall not be included in Eligible Proved Developed
Reserves if:
(a) through (f) are manually numbered(a) it is
not owned solely by a Borrowing Base Entity or a Borrowing Base
Entity does not have either good, valid and marketable title
thereto or defensible title of record thereto which is acceptable
to Agent in its reasonable judgment, or the title information
relating thereto is not satisfactory to Agent;
(b) it is not subject to a valid and perfected
first priority Lien and security interest in favor of Agent for
the benefit of the Lender Group created by a duly recorded Oil
and Gas Property Mortgage, except for Permitted Liens with
respect to which Agent has established a Reserve Against
Availability in the full amount (or such other amount as may be
determined by Agent in its sole discretion) that any holders of
the Permitted Liens could assert from time to time thereunder
(whether upon the passage of time, the satisfaction of
conditions, or otherwise); or
(c) it is subject to a Lien in favor of any third
Person or any order, judgment, writ or decree, which either
restricts or purports to restrict Borrower or any of its
Subsidiaries' ability to grant Liens to other Persons on or in
respect of its respective assets or properties.
"Eligible Transferee" means: (a) a commercial bank
organized under the laws of the United States, or any state
thereof, and having total assets in excess of $100,000,000; (b) a
commercial bank organized under the laws of any other country
which is a member of the Organization for Economic Cooperation
and Development or a political subdivision of any such country,
and having total assets in excess of $100,000,000; provided that
such bank is acting through a branch or agency located in the
United States; (c) a finance company, insurance company or other
financial institution or fund that is engaged in making,
purchasing or otherwise investing in commercial loans in the
ordinary course of its business and having total assets in excess
of $50,000,000; (d) any Affiliate (other than individuals) of, or
any fund, money market account, investment account or other
account managed by, a pre-existing Lender under this Agreement;
(e) so long as no Event of Default has occurred and is
continuing, any other Person approved by Agent and Borrower; and
(f) during the continuation of an Event of Default, any other
Person approved by Agent.
"Environmental Laws" shall mean any and all Legal
Requirements pertaining to health or the environment in effect in
any and all jurisdictions in which the Borrower or any Subsidiary
is conducting or at any time has conducted business, or where any
Property of the Borrower or any Subsidiary is located, including
without limitation, the OPA, the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and
Liability Act of 1980 ("CERCLA"), as amended, the Federal Water
Pollution Control Act, as amended, the Occupational Safety and
Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking
Water Act, as amended, the Toxic Substances Control Act, as
amended, the Superfund Amendments and Reauthorization Act of
1986, as amended, the Hazardous Materials Transportation Act, as
amended, and other environmental conservation or protection laws.
The term "oil" shall have the meaning specified in OPA, the term
"release" (or "threatened release") has the meaning specified in
CERCLA, and the terms "solid waste" and "disposal" (or
"disposed") have the meanings specified in RCRA; provided,
however, that (i) in the event either OPA, CERCLA or RCRA 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 (ii) to the extent the laws of the state
in which any Property of the Borrower or any Subsidiary is
located establish a meaning for "oil," "release," "solid waste"
or "disposal" which is broader than that specified in either OPA,
CERCLA or RCRA, such broader meaning shall apply.
"Equipment" means all of Borrower's and each
Subsidiary of Borrower's present and hereafter acquired
machinery, machine tools, motors, equipment, furniture,
furnishings, fixtures, drillsite equipment (including separators,
dehydrators, meters, etc.), compressors, gathering lines,
pipelines, vehicles (including motor vehicles and trailers),
tools, parts, and other goods (other than consumer goods, farm
products, or Inventory), wherever located, including, (a) any
interest of Borrower or a Subsidiary of Borrower in any of the
foregoing, and (b) all attachments, accessories, accessions,
replacements, substitutions, additions, and improvements to any
of the foregoing.
"ERISA" means the Employee Retirement Income
Security Act of 1974, 29 U.S.C. 1000 et seq., amendments
thereto, successor statutes, and regulations or guidance
promulgated thereunder.
"ERISA Affiliate" means (a) any corporation
subject to ERISA whose employees are treated as employed by the
same employer as the employees of Borrower under IRC
Section 414(b), (b) any trade or business subject to ERISA whose
employees are treated as employed by the same employer as the
employees of Borrower under IRC Section 414(c), (c) solely for
purposes of Section 302 of ERISA and Section 412 of the IRC, any
organization subject to ERISA that is a member of an affiliated
service group of which Borrower is a member under IRC
Section 414(m), or (d) solely for purposes of Section 302 of
ERISA and Section 412 of the IRC, any party subject to ERISA that
is a party to an arrangement with Borrower and whose employees
are aggregated with the employees of Borrower under IRC
Section 414(o).
"ERISA Event" means (a) a Reportable Event with
respect to any Benefit Plan or Multiemployer Plan, (b) the
withdrawal of Borrower or any of its Subsidiaries or ERISA
Affiliates from a Benefit Plan during a plan year in which it was
a "substantial employer" (as defined in Section 4001(a)(2) of
ERISA), (c) the providing of notice of intent to terminate a
Benefit Plan in a distress termination (as described in
Section 4041(c) of ERISA), (d) the institution by the PBGC of
proceedings to terminate a Benefit Plan or Multiemployer Plan,
(e) any event or condition (i) that provides a basis under
Section 4042(a)(1), (2), or (3) of ERISA for the termination of,
or the appointment of a trustee to administer, any Benefit Plan
or Multiemployer Plan, or (ii) that may result in termination of
a Multiemployer Plan pursuant to Section 4041A of ERISA, (f) the
partial or complete withdrawal within the meaning of
Sections 4203 and 4205 of ERISA, of Borrower, any of its
Subsidiaries or ERISA Affiliates from a Multiemployer Plan, or
(g) providing any security to any Plan under Section 401(a)(29)
of the IRC by Borrower or its Subsidiaries or any of their ERISA
Affiliates.
"Event of Default" has the meaning set forth in
Section 8.
"Exchange Act" means the Securities Exchange Act
of 1934, as amended, and any successor statute thereto.
"FEIN" means Federal Employer Identification
Number.
"Foothill" means Foothill Capital Corporation, a
California corporation.
"Foothill Loans" has the meaning set forth in
Section 2.1(f).
"Funding Date" means the date on which a Borrowing
occurs.
"GAAP" means generally accepted accounting
principles as in effect from time to time in the United States,
consistently applied.
"General Intangibles" means all of Borrower's and
each Subsidiary of Borrower's present and future general
intangibles and other personal property (including contract
rights, rights arising under common law, statutes, or
regulations, choses or things in action, goodwill, Permits,
patents, trade names, trademarks, servicemarks, copyrights,
blueprints, drawings, purchase orders, customer lists, monies due
or recoverable from pension funds, route lists, rights to payment
and other rights under any royalty or licensing agreements,
infringement claims, computer programs, information contained on
computer disks or tapes, literature, reports, catalogs, deposit
accounts, insurance premium rebates, tax refunds, and tax refund
claims), other than goods, Accounts, and Negotiable Collateral.
"Governing Documents" means, with respect to any
Person, the certificate or articles of incorporation, by-laws, or
other organizational or governing documents of such Person.
"Governmental Authority" means any nation or
government, any state, province, or other political subdivision
thereof, any central bank (or similar monetary or regulatory
authority) thereof, any entity exercising executive, legislative,
judicial, regulatory or administrative functions of or pertaining
to government, and any corporation or other entity owned or
controlled, through Stock or capital ownership or otherwise, by
any of the foregoing.
"Guaranty Agreements" means, collectively, any and
all of the guaranty agreements with respect to the Obligations
which are, or are to be, executed by a Guarantor in favor of
Agent for the benefit of the Lender Group, as required from time
to time by Agent, in form and substance satisfactory to Agent, in
each case as the same may be amended, modified, restated,
supplemented, increased, renewed, extended, substituted for or
replaced from time to time.
"Guarantor" means Gulf States, Magic Circle,
▇▇▇▇▇▇ Field, MCAC, CDC, each other Subsidiary of Borrower not a
signatory to this Agreement (other than the Magic Circle
Partnerships and RB Operating), and each other Person who may
hereafter guarantee payment or performance of the whole or any
part of the Obligations.
"Gulf States" means RLP Gulf States, L.L.C., an
Oklahoma limited liability company.
"Hazardous Materials" means (a) substances that
are defined or listed in, or otherwise classified pursuant to,
any applicable laws or regulations as "hazardous substances,"
"hazardous materials," "hazardous wastes," "toxic substances," or
any other formulation intended to define, list, or classify
substances by reason of deleterious properties such as
ignitability, corrosivity, reactivity, carcinogenicity,
reproductive toxicity, or "EP toxicity", (b) oil, petroleum, or
petroleum derived substances, natural gas, natural gas liquids,
synthetic gas, drilling fluids, produced waters, and other wastes
associated with the exploration, development, or production of
crude oil, natural gas, or geothermal resources, (c) any
flammable substances or explosives or any radioactive materials,
and (d) asbestos in any form or electrical equipment that
contains any oil or dielectric fluid containing levels of
polychlorinated biphenyls in excess of 50 parts per million.
"Hedging Agreements" shall mean (i) any interest
rate or currency swap, rate cap, rate floor, rate collar, forward
agreement or other exchange or rate protection agreements or any
option with respect to any such transaction and (ii) any swap
agreement, cap, floor, collar, exchange transaction, forward
agreement or other exchange or protection agreement relating to
Hydrocarbons or any option with respect to any such transaction.
"Hydrocarbons" shall mean oil, natural gas,
casinghead gas, drip gasoline, natural gasoline, condensate,
distillate, liquid hydrocarbons, gaseous hydrocarbons and all
constituents, elements or compounds thereof and products refined
or separated therefrom.
"Indebtedness" means: (a) all obligations of
Borrower or any of its Subsidiaries for borrowed money, (b) all
obligations of Borrower or any of its Subsidiaries evidenced by
bonds, debentures, notes, or other similar instruments and all
reimbursement or other obligations of Borrower or any of its
Subsidiaries in respect of letters of credit, bankers
acceptances, interest rate swaps, or other financial products,
(c) all obligations of Borrower or any of its Subsidiaries under
capital leases, (d) all obligations or liabilities of others
secured by a Lien on any property or asset of Borrower or any of
its Subsidiaries, irrespective of whether such obligation or
liability is assumed, (e) any obligation of Borrower or any of
its Subsidiaries guaranteeing or intended to guarantee (whether
guaranteed, endorsed, co-made, discounted, or sold with recourse
to Borrower or any of its Subsidiaries) any indebtedness, lease,
dividend, letter of credit, or other obligation of any other
Person, (f) the net ▇▇▇▇ to market value of all obligations of
Borrower or any of its Subsidiaries under any Hedging Agreements,
(g) all obligations of Borrower or any of its Subsidiaries to
deliver goods or services including Hydrocarbons in consideration
of advance payments, and (h) the undischarged balance of any
production payment or net profits interest created by Borrower or
any of its Subsidiaries or for the creation of which Borrower or
any of its Subsidiaries directly or indirectly received payment.
"Indemnified Liabilities" has the meaning set
forth in Section 11.3.
"Indemnified Person" has the meaning set forth in
Section 11.3.
"Indenture Guarantors" shall mean the "Subsidiary
Guarantors", as such term is defined in the Unsecured Notes
Indenture.
"Indenture Permitted Indebtedness" shall mean the
"Permitted Indebtedness", as such term is defined in the
Unsecured Notes Indenture.
"Insolvency Proceeding" means any proceeding
commenced by or against any Person under any provision of the
Bankruptcy Code or under any other bankruptcy or insolvency law,
assignments for the benefit of creditors, formal or informal
moratoria, compositions, extensions generally with creditors, or
proceedings seeking reorganization, arrangement, or other similar
relief.
"Intangible Assets" means, with respect to any
Person, that portion of the book value of all of such Person's
assets that would be treated as intangibles under GAAP.
"Intellectual Property" has the meaning ascribed
thereto in Section 5.19.
"Interest Expense" shall mean, for any period, the
sum (determined without duplication) of the aggregate amount of
interest expense accruing during such period on Indebtedness of
Borrower and its Subsidiaries on a consolidated basis, including
the interest portion of payments under capitalized leases and any
capitalized interest, but excluding amortization of debt discount
and expense.
"Inventory" means all present and future inventory
in which Borrower or any of its Subsidiaries has any interest,
including goods and extracted Hydrocarbons held for sale or lease
or to be furnished under a contract of service and all of
Borrower's and each Subsidiary of Borrower's present and future
raw materials, work in process, finished goods, and packing and
shipping materials, wherever located.
"Investment Property" means all of Borrower's and
each Subsidiary of Borrower's present and hereafter acquired
"investment property" as that term is defined in Section 9-115 of
the Code.
"IRC" means the Internal Revenue Code of 1986, as
amended, and the regulations thereunder.
"Legal Requirements" means all applicable
international, foreign, federal, state, and local laws,
judgments, decrees, orders, statutes, ordinances, rules,
regulations, or Permits, including, without limitation, all
Environmental Laws.
"Lender" and "Lenders" have the respective
meanings set forth in the preamble to this Agreement, and shall
include any other Person made a party to this Agreement in
accordance with the provisions of Section 15.1 hereof.
"Lender Group" means, individually and
collectively, each of the individual Lenders and Agent.
"Lender Group Expenses" means all: costs or
expenses (including taxes, and insurance premiums) required to be
paid by Borrower under any of the Loan Documents that are paid or
incurred by the Lender Group; fees or charges paid or incurred by
the Lender Group in connection with the Lender Group's
transactions with Borrower, including, fees or charges for
photocopying, notarization, couriers and messengers,
telecommunication, public record searches (including tax lien,
litigation, and UCC [or equivalent] searches and including
searches with the patent and trademark office, the copyright
office, or the department of motor vehicles), filing, recording,
publication, appraisal (including periodic Oil and Gas Property
Collateral appraisals and engineer reports), Reserve Reports and
environmental audits; costs and expenses incurred by Agent in the
disbursement of funds to Borrower (by wire transfer or
otherwise); charges paid or incurred by Agent resulting from the
dishonor of checks; costs and expenses paid or incurred by the
Lender Group to correct any default or enforce any provision of
the Loan Documents, or in gaining possession of, maintaining,
handling, preserving, storing, shipping, selling, preparing for
sale, or advertising to sell the Collateral, or any portion
thereof, irrespective of whether a sale is consummated; costs and
expenses paid or incurred by Agent in examining the Books; costs
and expenses of third party claims or any other suit paid or
incurred by the Lender Group in enforcing or defending the Loan
Documents or in connection with the transactions contemplated by
the Loan Documents or the Lender Group's relationship with
Borrower (or any of its Subsidiaries party to one or more Loan
Documents); and the Lender Group's reasonable attorneys fees and
expenses incurred in advising, structuring, drafting, reviewing,
administering, amending, terminating, enforcing (including
attorneys fees and expenses incurred in connection with a
"workout," a "restructuring," or an Insolvency Proceeding
concerning Borrower), defending, or concerning the Loan
Documents, irrespective of whether suit is brought.
"Lender-Related Persons" means, with respect to
any Lender, such Lender, together with such Lender's Affiliates,
and the officers, directors, employees, counsel, agents, and
attorneys-in-fact of such Lender and such Lender's Affiliates.
"Lien" means any interest in Property securing an
obligation owed to, or a claim by, any Person other than the
owner of the Property, whether such interest shall be based on
the common law, statute, or contract, whether such interest shall
be recorded or perfected, and whether such interest shall be
contingent upon the occurrence of some future event or events or
the existence of some future circumstance or circumstances,
including (a) the lien or security interest arising from a
mortgage, deed of trust, encumbrance, pledge, hypothecation,
assignment, deposit arrangement, security agreement, adverse
claim or charge, conditional sale or trust receipt, or from a
lease, consignment, or bailment for security purposes and also
including reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases, and
other title exceptions and encumbrances affecting Oil and Gas
Property or Real Property and (b) production payments and the
like payable out of Oil and Gas Property. For purposes of this
Agreement, Borrower or any of its Subsidiaries shall be deemed to
be the owner of any Property which it has acquired or holds
subject to a conditional sale agreement, or leases under a
financing lease or other arrangement pursuant to which title to
the Property has been retained by or vested in some other Person
in a transaction intended to create financing.
"Loan Account" has the meaning set forth in
Section 2.10.
"Loan Documents" means this Agreement, the
Disbursement Letter, the Lockbox Agreements, the Oil and Gas
Property Mortgages, the Real Property Mortgages, the Guaranty
Agreements, the Security Agreements, the Prior Lender Assignment
Agreements, any note or notes executed by Borrower and payable to
the Lender Group, and any other agreement entered into, now or in
the future, in connection with this Agreement.
"Loan Party" means Borrower and each Guarantor.
"Lockbox Account" shall mean a depositary account
established pursuant to one of the Lockbox Agreements.
"Lockbox Agreements" means Lockbox Operating
Procedural Agreements and those certain Depository Account
Agreements, in form and substance satisfactory to Agent, each of
which is among Borrower, Agent, and one of the Lockbox Banks.
"Lockbox Banks" means such banks as may be agreed
to by Borrower and Foothill from time to time.
"Lockboxes" has the meaning set forth in Section
2.7.
"Magic Circle" means Magic Circle Energy
Corporation, a Delaware corporation.
"Magic Circle Partnerships" means Olympia 1980
Drilling Program, an Oklahoma limited partnership, Olympic 1987A
Private Drilling Program Limited Partnership, an Oklahoma limited
partnership, Magic Circle 1988 Drilling Program Limited
Partnership, an Oklahoma limited partnership and Magic Circle
1989 Private Drilling Program Limited Partnership, an Oklahoma
limited partnership.
"Material Adverse Change" means (a) a material
adverse change in the business, prospects, operations, results of
operations, assets, liabilities or condition (financial or
otherwise) of Borrower, (b) a material adverse effect on the
ability of Borrower to carry out its business as at the Closing
Date or as proposed as of the Closing Date, (c) the material
impairment of Borrower's ability to perform its obligations under
the Loan Documents to which it is a party or of the Lender Group
to enforce the Obligations or realize upon the Collateral, (d)
any event or circumstance that in the reasonable judgment of the
Agent is likely to have a material adverse effect on the value of
the Collateral or the amount that the Lender Group would be
likely to receive (after giving consideration to delays in
payment and costs of enforcement) in the liquidation of the
Collateral, or (e) a material impairment of the priority of the
Agent's Liens with respect to the Collateral.
"Material Contract" means, as to any Person, any
supply, purchase, service, employment, tax, indemnity, farmout,
gas marketing, gas imbalance, operating, unitization,
communitization, partnership, joint venture or other agreement of
such Person or any of its Subsidiaries or by which such Person or
any of its Subsidiaries or any of their respective properties are
otherwise bound, if such agreement either (i) requires the
expenditure of over $50,000 by such Person during any calendar
year, or (ii) involves the sale of more than $500,000 in
Hydrocarbons by such Person, or (iii) involves a liability of
such Person in excess of $100,000, or (iv) results or could
result in the loss of title to, or the transfer or creation of a
Lien upon any Collateral, or (v) is otherwise determined by
Agent, in its reasonable judgment, to be material to the
business, operations or properties of such Person, as the same
shall be amended, modified and supplemented and in effect from
time to time.
"Maximum Revolving Amount" means $30,000,000.
"MCAC" means Magic Circle Acquisition Corporation,
an Oklahoma corporation.
"Mineral Interests" shall mean all right, title,
interest and estates now owned or hereafter acquired in and to
oil and gas leases, oil, gas and mineral leases, or other liquid
or gaseous hydrocarbon leases, mineral fee interests, overriding
royalty and royalty interests, net profit interests and
production payment interests, including any reserved interests,
reversionary interests, carried working interests, or residual
interests of whatever nature.
"Moody's" means ▇▇▇▇▇'▇ Investors Service, Inc.
and any successor thereto.
"Multiemployer Plan" means a "multiemployer plan"
(as defined in Section 4001(a)(3) of ERISA) to which Borrower,
any of its Subsidiaries, or any ERISA Affiliate has contributed,
or was obligated to contribute, within the past six years.
"Negotiable Collateral" means all of a Person's
present and future letters of credit, notes, drafts, instruments,
Investment Property, documents, personal property leases (wherein
such Person is the lessor), chattel paper, and the Books relating
to any of the foregoing.
"NYMEX Price" means, as of the date of the
determination thereof, the average of the 24 succeeding monthly
futures contract prices, commencing with the month during which
the determination is to be made, for each of the appropriate
crude oil or natural gas categories included in the most recent
Reserve Report provided by Borrower to Agent pursuant to
Section 6.2, as applicable, as quoted on the New York Mercantile
Exchange ("NYMEX"), or, if the NYMEX no longer provides futures
contract price quotes for 24 month periods, the longest period of
quotes of less than 24 months shall be used, and, if the NYMEX no
longer provides such futures contract quotes or has ceased to
operate, the Agent shall designate another nationally recognized
commodities exchange to replace the NYMEX, as quoted in a
nationally recognized publication for such pricing as selected as
of such date by Agent.
"NYMEX Value" means, at any date of determination
thereof as to any Proved Reserves of the Borrowing Base Entities,
the result of
(a) the discounted present value of future
net revenues (i.e., after deducting production and ad valorem
taxes and less future capital costs and operating expenses) from
Proved Reserves of the Borrowing Base Entities as of such date
utilizing the NYMEX Price for the appropriate category of oil or
gas and assuming that production costs thereafter remain
constant, then discounted at a rate of 10% per year to obtain the
present value; minus
(b) to the extent not taken into account in
subparagraph (a) above, the discounted present value (discounted
at a rate of 10% per year) of the Borrowing Base Entities' future
plugging and abandonment expenses; minus
(c) to the extent not taken into account in
subparagraph (a) above, minority interests and other interests of
Persons other than a Borrowing Base Entity and any natural gas
balancing liabilities of a Borrowing Base Entity.
"Obligations" means all loans, Advances, debts,
principal, interest (including any interest that, but for the
provisions of the Bankruptcy Code, would have accrued), premiums
(including Early Termination Premiums), liabilities (including
all amounts charged to Borrower's Loan Account pursuant hereto),
obligations, fees, charges, costs, or Lender Group Expenses
(including any fees or expenses that, but for the provisions of
the Bankruptcy Code, would have accrued), lease payments,
guaranties, covenants, and duties owing by Borrower to the Lender
Group of any kind and description (whether pursuant to or
evidenced by the Loan Documents or pursuant to any other
agreement between the Lender Group and Borrower, and irrespective
of whether for the payment of money), whether direct or indirect,
absolute or contingent, due or to become due, now existing or
hereafter arising, and including any debt, liability, or
obligation owing from Borrower to others that the Lender Group
may have obtained by assignment or otherwise, and further
including all interest not paid when due and all Lender Group
Expenses that Borrower is required to pay or reimburse by the
Loan Documents, by law, or otherwise.
"Oil and Gas Properties" means all of the present
and future right, title and interest (real, personal, mixed,
contractual or otherwise) of Borrower and its Subsidiaries in, to
and under or derived from the following:
(a) All presently existing and hereafter arising
Mineral Interests and surface interests;
(b) All presently existing and hereafter arising
unitization, communitization and pooling declarations,
orders, and agreements (including all units formed by
voluntary agreement and those formed under the rules,
regulations, orders or other official acts of any
governmental entity or tribal authority having
appropriate jurisdiction);
(c) All presently existing and arising oil sales
contracts, casinghead gas sales contracts, gas sales
contracts, processing contracts, gathering contracts,
transportation contracts, easements, rights-of-way,
servitudes, surface leases, subsurface leases, farm-out
contracts, farm-in contracts, operating agreements,
areas of mutual interest and other contracts,
agreements and instruments;
(d) All presently existing and hereafter arising
personal property, improvements, fixtures, ▇▇▇▇▇
(whether producing, plugged and abandoned, shut-in,
injection, disposal or water supply), tanks, boilers,
buildings, machinery, vehicles, Equipment, gathering
lines, pipelines, utility lines, power lines, telephone
lines, water rights, roads, permits, licenses and other
appurtenances, to the extent the same are situated upon
and used or held for use by Borrower or any of its
Subsidiaries in connection with the ownership,
operation, maintenance or repair of the Mineral
Interests and/or surface interests; and
(e) All reservoir, reserve, seismic, geologic or
geophysical information and data.
"Oil and Gas Property Collateral" means the Oil
and Gas Properties which are identified on Schedule 5.1(a) or
Schedule 5.1(b), and any other Oil and Gas Properties now owned
or hereafter acquired by Borrower or any of its Subsidiaries.
"Oil and Gas Property Mortgages" means one or more
mortgages, deeds of trust, or deeds to secure debt, executed by
Borrower and each of its Subsidiaries in favor of Agent or the
Prior Lenders and assigned to the Agent, the form and substance
of which shall be satisfactory to Agent, that encumber the Oil
and Gas Property Collateral and the related improvements thereto.
"OPA" means the Oil Pollution Act of 1990.
"Overadvance" has the meaning set forth in Section
2.5.
"Participant" has the meaning set forth in Section
15.1(e).
"Pay-Off Letter" means a letter, in form and
substance reasonably satisfactory to Agent, from Prior Lender
respecting the amount necessary to purchase in full all of the
obligations of Borrower owing to Prior Lenders and obtain an
assignment of all of the Liens existing in favor of Prior Lenders
in and to the properties or assets of Borrower and each of the
Subsidiaries of Borrower.
"PBGC" means the Pension Benefit Guaranty
Corporation as defined in Title IV of ERISA, or any successor
thereto.
"Permits" of a Person shall mean all rights,
franchises, permits, authorities, licenses, certificates of
approval or authorizations, including licenses and other
authorizations issuable by a Governmental Authority, which
pursuant to applicable Legal Requirements are necessary to permit
such Person lawfully to conduct and operate its business as
currently conducted and to own and use its assets.
"Permitted Liens" means (a) Liens held by Agent
for the benefit of the Lender Group, (b) Liens for unpaid taxes
that either (i) are not yet due and payable or (ii) are the
subject of Permitted Protests, (c) Liens set forth on Schedule P-
1, (d) the interests of lessors under operating leases and
purchase money Liens of lessors under capital leases to the
extent that the acquisition or lease of the underlying asset is
permitted under Section 7.21 and so long as the Lien only
attaches to the asset purchased or acquired and only secures the
purchase price of the asset, (e) Liens arising by operation of
law in favor of warehousemen, landlords, carriers, mechanics,
materialmen, laborers, or suppliers, or other like Liens arising
by operation of law incidental to the exploration, development,
operation and maintenance of Oil and Gas Properties, in each case
incurred in the ordinary course of business of Borrower or the
relevant Subsidiary of Borrower not in connection with the
borrowing of money, and which Liens either (i) are for sums not
yet due and payable, or (ii) are the subject of Permitted
Protests, (f) Liens arising from deposits made in connection with
obtaining worker's compensation or other unemployment insurance,
(g) Liens on deposits and escrowed funds made to secure
performance of bids, tenders and leases (to the extent permitted
under this Agreement) incurred in the ordinary course of business
of Borrower or the relevant Subsidiary of Borrower and not in
connection with the borrowing of money, (h) Liens of or resulting
from any judgment or award that do not result in and reasonably
could not be expected to result in a Material Adverse Change and
as to which the time for the appeal or petition for rehearing of
which has not yet expired, or in respect of which Borrower or the
relevant Subsidiary of Borrower is in good faith prosecuting an
appeal or proceeding for a review and in respect of which a stay
of execution pending such appeal or proceeding for review has
been secured, (i) Liens with respect to the Oil and Gas Property
Collateral that are exceptions to the title opinions issued in
connection with the Oil and Gas Property Mortgages, as accepted
by Agent, (j) minor defects in title which (i) do not affect the
defensibility of title thereto to an extent unacceptable to Agent
in its reasonable judgment or restrict the full use or other
benefits of ownership by Borrower or such Subsidiary, as the case
may be, and (ii) do not affect the ability of Borrower or such
Subsidiary, as the case may be, to receive a share of production
or proceeds from, allocated to, or attributable to such Mineral
Interests equal to the interest of Borrower or such Subsidiary,
as the case may be, therein as represented herein or in the other
Loan Documents, and (iii) do not materially interfere with the
ordinary conduct of the business of Borrower or such Subsidiary,
as the case may be, and (iv) do not interfere with or impair the
value of Agent's Lien therein for the benefit of the Lender
Group, and (v) are customarily waived by reasonable and prudent
operators, and (k) Liens reserved in leases or farmout agreements
for rent or royalties and for compliance with the terms of the
farmout agreements or leases in the case of leasehold estates, to
the extent that any such Lien referred to in this clause does not
materially impair the use of the Mineral Interest covered by such
Lien for the purposes for which such Mineral Interest is held by
the Borrower or any Subsidiary, does not materially interfere
with or impair the value of such Mineral Interest subject thereto
or Agent's Lien therein for the benefit of the Lender Group, is
customarily waived by reasonable and prudent operators, and is
consented to in writing by Agent, (l) farmout, carried Working
Interests, joint operating, unitization, royalty, overriding
royalty, sales and similar agreements relating to the exploration
or development of, or production from, Oil and Gas Properties or
the sale of the hydrocarbons after they are produced which are
existing at the time of acquisition of such Oil and Gas Property
and are usual and customary for the industry, (m) Liens that
secure Indebtedness permitted by Section 7.1(b), and (n)
continuations and renewals of otherwise Permitted Liens.
"Permitted Protest" means the right of Borrower or
the relevant Subsidiary of Borrower to protest any Lien other
than any such Lien that secures the Obligations, tax (other than
payroll taxes or taxes that are the subject of a United States
federal tax lien), or rental payment, provided that (a) a reserve
with respect to such obligation is established on the books of
Borrower or the relevant Subsidiary of Borrower in an amount that
is satisfactory to Agent, (b) any such protest is instituted and
diligently prosecuted by Borrower or the relevant Subsidiary of
Borrower in good faith, and (c) Agent is satisfied that, while
any such protest is pending, there will be no impairment of the
enforceability, validity, or priority of any of the Agent's Liens
in and to the Collateral.
"Person" means and includes natural persons,
corporations, limited liability companies, limited partnerships,
general partnerships, limited liability partnerships, joint
ventures, trusts, land trusts, business trusts, or other
organizations, irrespective of whether they are legal entities,
and governments and agencies and political subdivisions thereof.
"Personal Property Collateral" means all
Collateral other than the Oil and Gas Property Collateral and
other than the Real Property Collateral.
"Plan" means any employee benefit plan, program,
or arrangement maintained or contributed to by Borrower or with
respect to which it may incur liability.
"Prior Credit Agreement" has the meaning set forth
in the recitals hereto.
"Prior Lender Assignment Agreements" means the
assignment agreements in the form and substance of Exhibits P-1,
P-2 and P-3 attached hereto.
"Prior Lenders" has the meaning set forth in the
recitals.
"Property" means any interest in any kind of
property or asset, whether real, personal or mixed, tangible or
intangible.
"Pro Rata Share" means, with respect to a Lender,
a fraction (expressed as a percentage), the numerator of which is
the amount of such Lender's Commitment and the denominator of
which is the aggregate amount of the Commitments.
"Proved Developed Non-Producing Reserves" means
Proved Reserves of the Borrowing Base Entities, other than Proved
Developed Producing Reserves and Proved Undeveloped Reserves,
that can be expected to be recovered through existing ▇▇▇▇▇ with
existing equipment and operating methods.
"Proved Developed Producing Reserves" means Proved
Reserves of the Borrowing Base Entities, other than Proved
Developed Non-Producing Reserves and Proved Undeveloped Reserves,
that can be expected to be recovered from currently producing
zones under the continuation of present operating methods.
"Proved Reserves" means at any particular time,
the estimated quantities of Hydrocarbons which geological and
engineering data demonstrate with reasonable certainty to be
recoverable in future years from known reservoirs attributable to
Mineral Interests included or to be included in the Reserve
Report under existing economic and operating conditions.
"Proved Undeveloped Reserves" means Proved
Reserves of the Borrowing Base Entities, other than Proved
Developed Producing Reserves and Proved Developed Non-Producing
Reserves, that are expected to be recovered from new ▇▇▇▇▇ on
undrilled acreage, or from existing ▇▇▇▇▇ where a relatively
major expenditure is required for recompletion.
"Qualified Subsequent Oil and Gas Property" means,
as at any date of determination thereof, Oil and Gas Properties
acquired subsequent to the date of this Agreement with respect to
which all of the representations specified in Section 5.2 are
true and correct and Borrower has delivered to Agent the Oil and
Gas Property Mortgages, opinions, certificates and other items
and information described on Exhibit B-1.
"RAM" has the meaning set forth in the preamble
hereto.
"RB Operating" means RB Operating Company, a
Delaware corporation, formerly known as RLP Operating Company
"Real Property" means any estates or interests in
real property now owned or hereafter acquired by Borrower or any
Subsidiary of Borrower, excluding Oil and Gas Properties.
"Real Property Collateral" means the parcel or
parcels of real property and the related improvements thereto
identified on Schedule 5.1(d) and any Real Property hereafter
acquired by Borrower or any Subsidiary of Borrower.
"Real Property Mortgages" means one or more
mortgages, deeds of trust, or deeds to secure debt, executed by
Borrower and each of its Subsidiaries in favor of Agent or the
Prior Lenders and assigned to the Agent, the form and substance
of which shall be satisfactory to Agent, that encumber the Real
Property Collateral and the related improvements thereto.
"Reference Rate" means the variable rate of
interest, per annum, most recently announced by ▇▇▇▇▇ Fargo Bank,
National Association, or any successor thereto, as its "prime
rate," irrespective of whether such announced rate is the best
rate available from such financial institution.
"Renewal Date" has the meaning set forth in
Section 3.4.
"Reportable Event" means any of the events
described in Section 4043(c) of ERISA or the regulations
thereunder other than a Reportable Event as to which the
provision of 30 days notice to the PBGC is waived under
applicable regulations.
"Required Lenders" means, at any time, Lenders
whose Pro Rata Shares aggregate 65% or more of the Commitments,
or, if the Commitments have been terminated irrevocably, 65% of
the Obligations then outstanding.
"Reserve Report" means a report, in form and
substance satisfactory to Agent, prepared by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ &
Associates, Inc. or another firm of independent petroleum
engineers acceptable to Agent evaluating the oil and gas reserves
attributable to the Mineral Interests of the Borrowing Base
Entities (and no other Persons) which shall, among other things,
(a) identify the ▇▇▇▇▇ covered thereby, (b) specify said third
party's opinions with respect to the total volume of Proved
Reserves (specifying with such opinions the terms of categories
Proved Developed Producing Reserves, Proved Developed Non-
Producing Reserves and Proved Undeveloped Reserves) which
Borrower has the right to produce (or cause to be produced) for
its own account, (c) set forth said firm's opinions with respect
to the NYMEX Value of each of the categories of the Proved
Reserves as specified in subclause (b) above, (d) set forth said
firm's opinions with respect to the projected future rate of
production of the Proved Reserves, (e) contain such other
information as requested by Agent with respect to the projected
rate of production, gross revenues, operating expenses, net
income, taxes, capital expenditures and other capital costs, net
revenues and present value of future net revenues attributable to
such reserves and production therefrom, and (f) contain a
statement of the price and escalation parameters, procedures and
assumptions upon which such determinations were based.
"Reserves Against Availability" means such
reserves as Agent determines in Agent's reasonable discretion as
being appropriate to reflect impediments to Agent's ability to
realize upon the Collateral or impairments or reductions to the
value of the Collateral. Without limiting the generality of the
foregoing, Reserves Against Availability may include (but are not
limited to) reserves based upon the following:
(a) accounts payable which are past 90 days from
the original invoice date thereof;
(b) past due or accrued taxes or other
governmental charges, including ad valorem, personal
property, production, severance and other taxes which
may have priority over the Liens or security interests
of Agent in the Collateral;
(c) Liens in favor of third Persons (whether or
not such Liens are Permitted Liens) covering Oil and
Gas Properties, oilfield equipment, the ▇▇▇▇▇▇
Gathering System, other operating assets, Hydrocarbon
production or proceeds from the sale or disposition of
any of the foregoing;
(d) deposits which are due or scheduled to become
due during the immediately following 180 day period
under deposit or escrow arrangement concerning costs,
expenses and liabilities relating to the plugging and
abandonment of Oil and Gas Properties;
(e) estimates of present and future costs,
expenses, deposits and liabilities related to the
plugging and abandonment of the Oil and Gas Properties
net of the amount thereof which has been taken into
account in the most recent Reserve Report or is fully
secured by an escrow arrangement acceptable to Agent;
(f) sums which Borrower or a Subsidiary of
Borrower may be required to pay which are due or are
scheduled to become due during the one hundred eighty
(180) day period following the date of determination
thereof with respect to rental, lease and other amounts
payable under leases with respect to which Borrower has
not delivered to Agent a Collateral Access Agreement;
(g) without duplication of the foregoing, amounts
owing by Borrower or a Subsidiary of Borrower to any
Person to the extent secured by a Lien (whether or not
such Lien is a Permitted Lien) on, or trust
(constructive or otherwise) over, any of the Collateral
(including proceeds thereof or collections from the
sale of Hydrocarbons or Mineral Interests which may
from time to time come into the possession of any of
the Lender Group or its agents), which Lien or trust,
in the reasonable determination of Agent (from the
perspective of an asset-based lender), has a reasonable
possibility of having a priority superior to the
Agent's Liens (such as landlord liens, ad valorem
taxes, production taxes, severance taxes, sales taxes,
Collections attributable to Mineral Interests of
Persons other than a Borrowing Base Entity) in and to
such item of Collateral, proceeds or collection;
(h) to the extent not taken into account in the
most recent Reserve Report submitted to Agent in the
determination of the NYMEX Value of any Proved Reserves
of the Borrowing Base Entities used in determining the
Borrowing Base, sums which Agent determines are
appropriate to account for minority interests and other
interests of Persons other than a Borrowing Base Entity
and any natural gas balancing liabilities of the
Borrowing Base Entities, including, without limitation,
the natural gas balancing liabilities of Borrower
resulting from the Reading and ▇▇▇▇▇ Petroleum
acquisition; and
(i) to the extent not taken into account in the
most recent Reserve Report submitted to Agent in the
determination of the NYMEX Value of any Proved Reserves
of the Borrowing Base Entities used in determining the
Borrowing Base, sums which Agent determines are
appropriate to account for Borrower's production
payments to Duke Energy.
"Retiree Health Plan" means an "employee welfare
benefit plan" within the meaning of Section 3(1) of ERISA that
provides benefits to individuals after termination of their
employment, other than as required by Section 601 of ERISA.
"Revolving Facility Usage" means, as of any date
of determination, the aggregate amount of Advances outstanding.
"RVC Energy" means RVC Energy, Inc, a Delaware
corporation.
"SEC" means the United States Securities and
Exchange Commission and any successor Federal agency having
similar powers.
"Securities Account" means a "securities account"
as that term is defined in Section 8-501 of the Code.
"Security Agreements" means, collectively, any and
all of the security agreement, pledges, mortgages, deeds of
trust, assignments, stock pledge agreements, assignments of
partnership interests, assignments of member interests, and such
other agreements, documents and instruments, in form and
substance satisfactory to Agent, which are, or are to be,
executed by Borrower and/or any one or more of its Subsidiaries
in favor of Agent and/or the Lenders as may be required from time
to time by Agent to provide Agent for the benefit of the Lender
Group with Liens upon all of the assets and properties of
Borrower and its Subsidiaries as security for the payment and
performance in full of the Obligations, in each case as the same
may be amended, modified, restated, supplemented, increased,
renewed, extended, substituted for or replaced from time to time,
together with the Prior Lender Assignment Agreements and the
security agreements, pledges, mortgages, deeds of trust,
assignments, stock pledge agreements, assignments of partnership
interests, and other agreements, documents and instruments
covered thereby.
"Settlement" has the meaning set forth in Section
2.1(h)(i).
"Settlement Date" has the meaning set forth in
Section 2.1(h)(i).
"Solvent" means, with respect to any Person on a
particular date, that on such date (a) at fair valuations, all of
the properties and assets of such Person are greater than the sum
of the debts, including contingent liabilities, of such Person,
(b) the present fair salable value of the properties and assets
of such Person is not less than the amount that will be required
to pay the probable liability of such Person on its debts as they
become absolute and matured, (c) such Person is able to realize
upon its properties and assets and pay its debts and other
liabilities, contingent obligations and other commitments as they
mature in the normal course of business, (d) such Person does not
intend to, and does not believe that it will, incur debts beyond
such Person's ability to pay as such debts mature, and (e) such
Person is not engaged in business or a transaction, and is not
about to engage in business or a transaction, for which such
Person's properties and assets would constitute unreasonably
small capital after giving due consideration to the prevailing
practices in the industry in which such Person is engaged. In
computing the amount of contingent liabilities at any time, it is
intended that such liabilities will be computed at the amount
that, in light of all the facts and circumstances existing at
such time, represents the amount that reasonably can be expected
to become an actual or matured liability.
"Standard & Poor's" means Standard & Poor's
Ratings Services, a division of The ▇▇▇▇▇▇-▇▇▇▇ Companies, Inc.,
and any successor thereto.
"Stock" means all shares, options, warrants,
interests, participations, or other equivalents (regardless of
how designated) of or in a corporation or equivalent entity,
whether voting or nonvoting, including common stock, preferred
stock, or any other "equity security" (as such term is defined in
Rule 3a11-1 of the General Rules and Regulations promulgated by
the SEC under the Exchange Act).
"Subsidiary" of a Person means a corporation,
partnership, limited liability company, or other entity in which
that Person directly or indirectly owns or controls the shares of
Stock or other ownership interests having ordinary voting power
to elect a majority of the board of directors (or appoint other
comparable managers) of such corporation, partnership, limited
liability company, or other entity.
"Tangible Net Worth" means, as of any date of
determination, the difference of (a) Borrower's total
stockholder's equity, minus (b) the sum of: (i) all Intangible
Assets of Borrower, (ii) all of Borrower's prepaid expenses, and
(iii) all amounts due to Borrower from Affiliates.
"Title Opinion" has the meaning set forth in
Section 3.1(l).
"Transfer Order Letters" means transfer order
letters in the form of Exhibit T-1 attached hereto containing the
information as provided for therein.
"Unsecured Notes" means those certain 11 1/2%
unsecured notes in the aggregate original principal amount of
$115,000,000, dated as of February 24, 1998, and maturing on
February 15, 2008, issued under the Unsecured Notes Indenture, as
amended, modified, renewed or restated from time to time.
"Unsecured Notes Estoppel Certificate" means a
certificate, in form and substance acceptable to Agent, executed
by the trustee under the Unsecured Notes Indenture, which
certifies to the unpaid balance of the Unsecured Notes as of the
Closing Date, the absence of any known defaults thereunder by any
party thereto, and such other matters as may be requested by
Agent.
"Unsecured Notes Indebtedness Limitation" means at
any particular date the maximum amount of Indebtedness which may
at such time be outstanding pursuant to this Agreement and not
cause or result in a violation of the provisions as to Indenture
Permitted Indebtedness contained in the Unsecured Notes Indenture
or cause or result in any holders of the Unsecured Notes (or any
trustee or agent for the benefit thereof) having the right to
demand repayment, repurchase, retirement or redemption thereof or
any similar right with respect thereto, as determined by Agent in
its sole discretion.
"Unsecured Notes Indenture" means that certain
Indenture, dated as of February 24, 1998, among Borrower, the
Indenture Guarantors and United States Trust Company of New York,
pursuant to which the Unsecured Notes have been issued, as
amended, modified, renewed or restated from time to time.
"Voidable Transfer" has the meaning set forth in
Section 15.8.
"Working Interest" means that interest in an oil
and gas or mineral lease which gives the owner the right to
explore for, develop, exploit, and/or produce the minerals and
includes the obligation to pay the expense of such activities.
"Year 2000 Compliant" means that Borrower's and
each of its Subsidiaries' computer software programs (whether
used in Borrower's or its Subsidiaries' business or licensed by
or to Borrower or any of its Subsidiaries to or from third
parties) effectively processes data including data fields
requiring references to dates on and after January 1, 1000 and
have been designed not to experience or produce invalid or
incorrect results or abnormal software operation related to or as
a result of the occurrence of such dates.
1.2 Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
GAAP. When used herein, the term "financial statements" shall
include the notes and schedules thereto. Whenever the term
"Borrower" is used in respect of a financial covenant or a
related definition, it shall be understood to mean Borrower on a
consolidated basis unless the context clearly requires otherwise.
1.3 Code. Any terms used in this Agreement that are
defined in the Code shall be construed and defined as set forth
in the Code unless otherwise defined herein.
1.4 Construction. Unless the context of this
Agreement or any other Loan Document clearly requires otherwise,
references to the plural include the singular, references to the
singular include the plural, the term "including" is not
limiting, and the term "or" has, except where otherwise
indicated, the inclusive meaning represented by the phrase
"and/or." The words "hereof," "herein," "hereby," "hereunder,"
and similar terms in this Agreement or any other Loan Document
refer to this Agreement or any other Loan Documents, as the case
may be, as a whole and not to any particular provision of this
Agreement or such other Loan Document, as the case may be. An
Event of Default shall "continue" or be "continuing" until such
Event of Default has been waived in writing by Agent. Section,
subsection, clause, schedule, and exhibit references herein are
to this Agreement unless otherwise specified. Any reference in
this Agreement or in the Loan Documents to this Agreement or any
of the Loan Documents shall include all alterations, amendments,
changes, extensions, modifications, renewals, replacements,
substitutions, joinders, and supplements, thereto and thereof, as
applicable.
1.5 Schedules and Exhibits. All of the schedules and
exhibits attached to this Agreement shall be deemed incorporated
herein by reference.
2. LOAN AND TERMS OF PAYMENT
2.1 Revolving Advances.
(a) Subject to the terms and conditions of this
Agreement and during the term of this Agreement, each Lender
agrees to make advances ("Advances") to Borrower in an amount at
any one time outstanding not to exceed such Lender's Pro Rata
Share of an amount equal to the least of (i) the Maximum
Revolving Amount, or (ii) the Borrowing Base less the aggregate
amount of the Reserves Against Availability, or (iii) the
Unsecured Note Indebtedness Limitation. For purposes of this
Agreement, the "Borrowing Base," as of any date of determination
(which, in the absence of the occurrence and continuation of an
Event of Default, shall be determined no less frequently than
monthly), shall mean the result of:
(x) 45% of Borrower's Eligible Proved
Developed Producing Reserves, minus
(y) the sum of aggregate amount of
reserves, if any, established by Agent under Section
2.1(b).
In determining the Borrowing Base as of any date of
determination, the Proved Developed Producing Reserves shall be
based upon the volumetric quantity and production forecasts and
the related lease operating expenses of Proved Developed
Producing Reserves estimated in the most recently delivered
Reserve Report minus the amount of Proved Developed Producing
Reserves that has been projected to be produced since the date of
such Reserve Report as set forth in the independent petroleum
engineer's opinion with respect to the projected rate of such
future production contained in such Reserve Report (subject to
adjustment if the amount actually produced since such date
materially exceeds the amount projected to be produced since such
date). Unless otherwise required by Agent, the Borrowing Base
shall be determined on the first day of each month. The
Borrowing Base on the Closing Date shall be based upon the
volumetric quantity and production forecasts of Proved Developed
Producing Reserves as of November 30, 1999, multiplied by the
NYMEX Price as of a day not more than 5 Business Days immediately
preceding the Closing Date.
The Lenders shall have no obligation to make further Advances
hereunder to the extent they would cause the outstanding
Revolving Facility Usage to exceed the Maximum Revolving Amount.
Amounts borrowed pursuant to this Section 2.1 may be repaid and,
subject to the terms and conditions of this Agreement, reborrowed
at any time during the term of this Agreement.
(b) Advance Rate Adjustments and Reserves; Proved
Developed Producing Reserves Reappraisals.
(i) Anything to the contrary in this Section
notwithstanding, Agent shall have the right to establish reserves
against the Borrowing Base in such amounts as Foothill, in its
reasonable judgment (from the perspective of an asset-based
lender) shall deem necessary or appropriate, including reserves
on account of (A) sums that Borrower is required to pay (such as
taxes, assessments, insurance premiums, or, in the case of leased
assets, rents or other amounts payable under such leases) and has
failed to pay under any Section of this Agreement or any other
Loan Document, and (B) without duplication of the foregoing,
amounts owing by Borrower or a Subsidiary of Borrower to any
Person to the extent secured by a Lien on, or trust over, any of
the Collateral, which Lien or trust, in the determination of
Foothill (from the perspective of an asset-based lender), could
have a priority superior to the Agent's Liens (such as landlord
liens, ad valorem taxes, or sales taxes where given priority
under applicable law) in and to such item of Collateral.
(ii) Agent shall have the right to require,
from time to time, Borrower to deliver updated Reserve Reports
whereby the volumetric quantity and production forecasts and
related lease operating expenses of Proved Developed Producing
Reserves are redetermined from time to time by a qualified
petroleum engineer approved by Agent after the Closing Date for
the purpose of recalculating the NYMEX Value of the Proved
Developed Producing Reserves located at the Oil and Gas Property
Collateral. In the absence of the occurrence and continuation of
an Event of Default, such redeterminations shall occur semi-
annually as of January 1 and July 1 and such appraisals shall be
delivered to Agent not later than 60 days after each such date.
(c) Procedure for Borrowing. Each Borrowing
shall be made upon Borrower's irrevocable request therefor (the
"Borrowing Request") either delivered in writing or made by
telephone to Agent (which notice must be received by Agent no
later than 10:00 a.m. (California time) on the fifth (5th)
Business Day preceding the requested Funding Date specifying (i)
the amount of the Borrowing, and (ii) the requested Funding Date,
which shall be a Business Day, and each such Borrowing Request
shall be accompanied by a Reserve Report with respect to any Oil
and Gas Properties which are to be acquired by Borrower. All
Advances requested in any Borrowing Request must be in an amount
not less than $1,000,000 and integral multiples of $500,000 in
excess thereof, unless the amount available for further Revolving
Advances under Section 2.1(a) is less than $1,000,000, in which
event the Borrowing Request must be in an amount equal to the
maximum amount then available for further Revolving Advances.
There may be no more than one Advance made during any specific
seven consecutive day period.
(d) Agent's Election. Promptly after receipt of
a request for a Borrowing pursuant to Section 2.1(c), Agent shall
elect, in its discretion, (i) to have the terms of Section 2.1(e)
apply to such requested Borrowing, or (ii) to request Foothill to
make a Foothill Loan pursuant to the terms of Section 2.1(f) in
the amount of the requested Borrowing; provided, however, that if
Foothill declines in its sole discretion to make a Foothill Loan
pursuant to Section 2.1(f), Agent shall elect to have the terms
of Section 2.1(e) apply to such requested Borrowing.
(e) Making of Advances.
(i) In the event that Agent shall elect to
have the terms of this Section 2.1(e) apply to a requested
Borrowing as described in Section 2.1(d), then promptly after
receipt of a request for a Borrowing pursuant to Section 2.1(c),
Agent shall notify the Lenders, not later than 1:00 p.m.
(California time) on the Business Day immediately preceding the
Funding Date applicable thereto, by telecopy, telephone, or other
similar form of transmission, of the requested Borrowing. Each
Lender shall make the amount of such Lender's Pro Rata Share of
the requested Borrowing available to Agent in immediately
available funds, to such account of Agent as Agent may designate,
not later than 10:00 a.m. (California time) on the Funding Date
applicable thereto. After Agent's receipt of the proceeds of
such Advances, upon satisfaction of the applicable conditions
precedent set forth in Section 3 hereof, Agent shall make the
proceeds of such Advances available to Borrower on the applicable
Funding Date by transferring same day funds equal to the proceeds
of such Advances received by Agent to Borrower's Designated
Account; provided, however, that, subject to the provisions of
Section 2.1(k), Agent shall not request any Lender to make, and
no Lender shall have the obligation to make, any Advance if Agent
shall have received written notice from any Lender, or otherwise
has actual knowledge, that (1) one or more of the applicable
conditions precedent set forth in Section 3 will not be satisfied
on the requested Funding Date for the applicable Borrowing unless
such condition has been waived, or (2) the requested Borrowing
would exceed the Availability of the Borrower requesting the
Advance on such Funding Date.
(ii) Unless Agent receives notice from a
Lender on or prior to the Closing Date or, with respect to any
Borrowing after the Closing Date, at least one (1) Business Day
prior to the date of such Borrowing, that such Lender will not
make available as and when required hereunder to Agent for the
account of Borrower the amount of that Lender's Pro Rata Share of
the Borrowing, Agent may assume that each Lender has made or will
make such amount available to Agent in immediately available
funds on the Funding Date and Agent may (but shall not be so
required), in reliance upon such assumption, make available to
Borrower on such date a corresponding amount. If and to the
extent any Lender shall not have made its full amount available
to Agent in immediately available funds and Agent in such
circumstances has made available to Borrower such amount, that
Lender shall on the Business Day following such Funding Date make
such amount available to Agent, together with interest at the
Defaulting Lenders Rate for each day during such period. A
notice submitted by Agent to any Lender with respect to amounts
owing under this subsection shall be conclusive, absent manifest
error. If such amount is so made available, such payment to
Agent shall constitute such Lender's Advance on the date of
Borrowing for all purposes of this Agreement. If such amount is
not made available to Agent on the Business Day following the
Funding Date, Agent will notify Borrower of such failure to fund
and, upon demand by Agent, Borrower shall pay such amount to
Agent for Agent's account, together with interest thereon for
each day elapsed since the date of such Borrowing, at a rate per
annum equal to the interest rate applicable at the time to the
Advances composing such Borrowing. The failure of any Lender to
make any Advance on any Funding Date shall not relieve any other
Lender of any obligation hereunder to make an Advance on such
Funding Date, but no Lender shall be responsible for the failure
of any other Lender to make the Advance to be made by such other
Lender on any Funding Date.
(iii) Agent shall not be obligated to
transfer to a Defaulting Lender any payments made by Borrower to
Agent for the Defaulting Lender's benefit; nor shall a Defaulting
Lender be entitled to the sharing of any payments hereunder.
Amounts payable to a Defaulting Lender shall instead be paid to
or retained by Agent. Agent may hold and, in its discretion, re-
lend to Borrower the amount of all such payments received or
retained by it for the account of such Defaulting Lender. Solely
for the purposes of voting or consenting to matters with respect
to the Loan Documents and determining Pro Rata Shares, such
Defaulting Lender shall be deemed not to be a "Lender" and such
Lender's Commitment shall be deemed to be zero (-0-). This
section shall remain effective with respect to such Lender until
(x) the Obligations under this Agreement shall have been declared
or shall have become immediately due and payable or (y) the
requisite non-Defaulting Lenders and Agent shall have waived such
Lender's default in writing. The operation of this section shall
not be construed to increase or otherwise affect the Commitment
of any Lender, or relieve or excuse the performance by Borrower
of its duties and obligations hereunder.
(f) Making of Foothill Loans.
(i) In the event Agent shall elect, with the
consent of Foothill as a Lender, to have the terms of this
Section 2.1(f) apply to a requested Borrowing as described in
Section 2.1(d), Foothill as a Lender shall make an Advance in the
amount of such Borrowing (any such Advance made solely by
Foothill as a Lender pursuant to this Section 2.1(f) being
referred to as a "Foothill Loan" and such Advances being referred
to collectively as "Foothill Loans") available to Borrower on the
Funding Date applicable thereto by transferring same day funds to
Borrower's Designated Account. Each Foothill Loan is an Advance
hereunder and shall be subject to all the terms and conditions
applicable to other Advances, except that all payments thereon
shall be payable to Foothill as a Lender solely for its own
account (and for the account of the holder of any participation
interest with respect to such Advance). Subject to the
provisions of Section 2.1(k), Agent shall not request Foothill as
a Lender to make, and Foothill as a Lender shall not make, any
Foothill Loan if Agent shall have received written notice from
any Lender, or otherwise has actual knowledge, that (i) one or
more of the applicable conditions precedent set forth in Section
3 will not be satisfied on the requested Funding Date for the
applicable Borrowing unless such condition has been waived, or
(ii) the requested Borrowing would exceed the Availability of
Borrower on such Funding Date. Foothill as a Lender shall not
otherwise be required to determine whether the applicable
conditions precedent set forth in Section 3 have been satisfied
on the Funding Date applicable thereto prior to making, in its
sole discretion, any Foothill Loan.
(ii) The Foothill Loans shall be secured by
the Collateral and shall constitute Advances and Obligations
hereunder, and shall bear interest at the rate applicable from
time to time to Advances pursuant to Section 2.6 hereof.
(g) Agent Advances.
(i) Subject to the limitations set forth in
the proviso contained in this Section 2.1(g), Agent hereby is
authorized by Borrower and the Lenders, from time to time in
Agent's sole discretion, (1) after the occurrence and during the
continuance of a Default or an Event of Default, or (2) at any
time that any of the other applicable conditions precedent set
forth in Section 3 have not been satisfied, to make Advances to
Borrower on behalf of the Lenders that Agent, in its reasonable
business judgment, deems necessary or desirable (A) to preserve
or protect the Collateral, or any portion thereof, (B) to enhance
the likelihood of repayment of the Obligations, or (C) to pay any
other amount chargeable to Borrower pursuant to the terms of this
Agreement, including Lender Group Expenses and the costs, fees,
and expenses described in Section 10 (any of the Advances
described in this Section 2.1(g) being hereinafter referred to as
"Agent Advances"); provided, that the Required Lenders may at any
time revoke Agent's authorization contained in this Section
2.1(g) to make Agent Advances, any such revocation to be in
writing and to become effective upon Agent's receipt thereof.
(ii) Agent Advances shall be repayable on
demand and secured by the Collateral, shall constitute Advances
and Obligations hereunder, and shall bear interest at the rate
applicable from time to time to the Advances pursuant to Section
2.6 hereof.
(h) Settlement. It is agreed that each Lender's
funded portion of the Advances is intended by the Lenders to
equal, at all times, such Lender's Pro Rata Share of the
outstanding Advances. Such agreement notwithstanding, Agent,
Foothill, and the other Lenders agree (which agreement shall not
be for the benefit of or enforceable by Borrower) that in order
to facilitate the administration of this Agreement and the other
Loan Documents, settlement among them as to the Advances, the
Foothill Loans, and the Agent Advances shall take place on a
periodic basis in accordance with the following provisions:
(i) Agent shall request settlement
("Settlement") with the Lenders on a weekly basis, or on a more
frequent basis if so determined by Agent, (1) on behalf of
Foothill, with respect to each outstanding Foothill Loan, (2) for
itself, with respect to each Agent Advance, and (3) with respect
to Collections received, as to each by notifying the Lenders by
telecopy, telephone, or other similar form of transmission, of
such requested Settlement, no later than 2:00 p.m. (California
time) on the Business Day immediately prior to the date of such
requested Settlement (the date of such requested Settlement being
the "Settlement Date"). Such notice of a Settlement Date shall
include a summary statement of the amount of outstanding
Advances, Foothill Loans, and Agent Advances for the period since
the prior Settlement Date, the amount of repayments received in
such period, and the amounts allocated to each Lender of the
interest, fees, and other charges for such period. Subject to
the terms and conditions contained herein (including Section
2.1(e)(iii)): (y) if a Lender's balance of the Advances, Foothill
Loans, and Agent Advances exceeds such Lender's Pro Rata Share of
the Advances, Foothill Loans, and Agent Advances as of a
Settlement Date, then Agent shall by no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately
available funds to the account of such Lender as such Lender may
designate, an amount such that each such Lender shall, upon
receipt of such amount, have as of the Settlement Date, its Pro
Rata Share of the Advances, Foothill Loans, and Agent Advances;
and (z) if a Lender's balance of the Advances, Foothill Loans,
and Agent Advances is less than such Lender's Pro Rata Share of
the Advances, Foothill Loans, and Agent Advances as of a
Settlement Date, such Lender shall no later than 12:00 p.m.
(California time) on the Settlement Date transfer in immediately
available funds to such account of Agent as Agent may designate,
an amount such that each such Lender shall, upon transfer of such
amount, have as of the Settlement Date, its Pro Rata Share of the
Advances, Foothill Loans, and Agent Advances. Such amounts made
available to Agent under clause (z) of the immediately preceding
sentence shall be applied against the amounts of the applicable
Foothill Loan or Agent Advance and, together with the portion of
such Foothill Loan or Agent Advance representing Foothill's Pro
Rata Share thereof, shall constitute Advances of such Lenders.
If any such amount is not made available to Agent by any Lender
on the Settlement Date applicable thereto to the extent required
by the terms hereof, Agent shall be entitled to recover for its
account such amount on demand from such Lender together with
interest thereon at the Defaulting Lenders Rate.
(ii) In determining whether a Lender's
balance of the Advances, Foothill Loans, and Agent Advances is
less than, equal to, or greater than such Lender's Pro Rata Share
of the Advances, Foothill Loans, and Agent Advances as of a
Settlement Date, Agent shall, as part of the relevant Settlement,
apply to such balance the portion of payments actually received
in good funds by Agent or Foothill with respect to principal,
interest, fees payable by Borrower and allocable to the Lenders
hereunder, and proceeds of Collateral. To the extent that a net
amount is owed to any such Lender after such application, such
net amount shall be distributed by Agent or Foothill to that
Lender as part of such next Settlement.
(iii) Between Settlement Dates, Agent, to
the extent no Agent Advances or Foothill Loans are outstanding,
may pay over to Foothill any payments received by Agent, that in
accordance with the terms of this Agreement would be applied to
the reduction of the Advances, for application to Foothill's Pro
Rata Share of the Advances. If, as of any Settlement Date,
Collections received since the then immediately preceding
Settlement Date have been applied to Foothill's Pro Rata Share of
the Advances other than to Foothill Loans or Agent Advances, as
provided for in the previous sentence, Foothill shall pay to
Agent for the accounts of the Lenders, and Agent shall pay to the
Lenders, to be applied to the outstanding Advances of such
Lenders, an amount such that each Lender shall, upon receipt of
such amount, have, as of such Settlement Date, its Pro Rata Share
of the Advances. During the period between Settlement Dates,
Foothill with respect to Foothill Loans, Agent with respect to
Agent Advances, and each Lender with respect to the Advances
other than Foothill Loans and Agent Advances, shall be entitled
to interest at the applicable rate or rates payable under this
Agreement on the daily amount of funds employed by Foothill,
Agent, or the Lenders, as applicable.
(i) Notation. Agent shall record on its books
the principal amount of the Advances owing to each Lender,
including the Foothill Loans owing to Foothill, and Agent
Advances owing to Agent, and the interests therein of each
Lender, from time to time. In addition, each Lender is
authorized, at such Lender's option, to note the date and amount
of each payment or prepayment of principal of such Lender's
Advances in its books and records, including computer records,
such books and records constituting rebuttably presumptive
evidence, absent manifest error, of the accuracy of the
information contained therein.
(j) Lenders' Failure to Perform. All Advances
(other than Foothill Loans and Agent Advances) shall be made by
the Lenders simultaneously and in accordance with their Pro Rata
Shares. It is understood that (i) no Lender shall be responsible
for any failure by any other Lender to perform its obligation to
make any Advances hereunder, nor shall any Commitment of any
Lender be increased or decreased as a result of any failure by
any other Lender to perform its obligation to make any Advances
hereunder, and (ii) no failure by any Lender to perform its
obligation to make any Advances hereunder shall excuse any other
Lender from its obligation to make any Advances hereunder.
(k) Optional Overadvances. Any contrary
provision of this Agreement notwithstanding, if the condition for
borrowing under Section 3.2(d) cannot be fulfilled, the Lenders
nonetheless hereby authorize Agent or Foothill, as applicable,
and Agent or Foothill, as applicable, may, but is not obligated
to, knowingly and intentionally continue to make Advances
(including Foothill Loans) to Borrower such failure of condition
notwithstanding, so long as, at any time (i) the outstanding
Revolving Facility Usage does not exceed the Borrowing Base by
more than five percent (5.0%) of the Borrowing Base, and (ii) the
outstanding Revolving Facility Usage (except for and excluding
amounts charged to the Loan Account for interest, fees, or Lender
Group Expenses) does not exceed the Maximum Revolving Amount.
The foregoing provisions are for the sole and exclusive benefit
of Agent, Foothill, and the Lenders and are not intended to
benefit Borrower in any way. The Advances and Foothill Loans, as
applicable, that are made pursuant to this Section 2.1(k) shall
be subject to the same terms and conditions as any other Advance
or Foothill Loan, as applicable, except that the rate of interest
applicable thereto shall be the rates set forth in Section 2.6(b)
hereof without regard to the presence or absence of a Default or
Event of Default; provided, that the Required Lenders may, at any
time during the continuance of an Event of Default or if Borrower
fails to satisfy any other material lending condition, revoke
Agent's authorization contained in this Section 2.1(k) to make
Overadvances (except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses), any
such revocation to be in writing and to become effective upon
Agent's receipt thereof.
In the event Agent obtains actual knowledge that
Revolving Facility Usage exceeds the amount permitted by the
preceding paragraph, regardless of the amount of or reason for
such excess, Agent shall notify Lenders as soon as practicable
(and prior to making any, or any further, intentional
Overadvances [except for and excluding amounts charged to the
Loan Account for interest, fees, or Lender Group Expenses] unless
Agent determines that prior notice would result in imminent harm
to the Collateral or its value), and the Lenders thereupon shall,
together with Agent, jointly determine the terms of arrangements
that shall be implemented with Borrower intended to reduce,
within a reasonable time, the outstanding principal amount of the
Advances to Borrower to an amount permitted by the preceding
paragraph. In the event any Lender disagrees over the terms of
reduction and/or repayment of any Overadvance, the terms of
reduction and/or repayment thereof shall be implemented according
to the determination of the Required Lenders.
Each Lender shall be obligated to settle with
Agent as provided in Section 2.1(h) for the amount of such
Lender's Pro Rata Share of any unintentional Overadvances by
Agent reported to such Lender, any intentional Overadvances made
as permitted under this Section 2.1(k), and any Overadvances
resulting from the charging to the Loan Account of interest,
fees, or Lender Group Expenses.
(l) Effect of Bankruptcy. If a case is commenced
by or against Borrower under the U.S. Bankruptcy Code, or other
statute providing for debtor relief, then, unless otherwise
agreed by all Lenders, the Lender Group shall not make additional
loans or provide additional financial accommodations under the
Loan Documents to Borrower as debtor or debtor-in-possession, or
to any trustee for Borrower, nor consent to the use of cash
collateral (provided that the Loan Account shall continue to be
charged, to the fullest extent permitted by law, for accruing
interest, fees, and Lender Group Expenses).
2.2 [Intentionally Omitted].
2.3 [Intentionally Omitted].
2.4 Payments.
(a) Payments by Borrower.
(i) All payments to be made by Borrower
shall be made without set-off, recoupment, deduction, or
counterclaim, except as otherwise required by law. Except as
otherwise expressly provided herein, all payments by Borrower
shall be made to Agent for the account of the Lenders at Agent's
address set forth in Section 12, and shall be made in immediately
available funds, no later than 11:00 a.m. (California time) on
the date specified herein. Any payment received by Agent later
than 11:00 a.m. (California time), at the option of Agent, shall
be deemed to have been received on the following Business Day and
any applicable interest or fee shall continue to accrue until
such following Business Day.
(ii) Whenever any payment is due on a day
other than a Business Day, such payment shall be made on the
following Business Day, and such extension of time shall in such
case be included in the computation of interest or fees, as the
case may be.
(iii) Unless Agent receives notice from
Borrower prior to the date on which any payment is due to the
Lenders that Borrower will not make such payment in full as and
when required, Agent may assume that Borrower has made such
payment in full to Agent on such date in immediately available
funds and Agent may (but shall not be so required), in reliance
upon such assumption, distribute to each Lender on such due date
an amount equal to the amount then due such Lender. If and to
the extent Borrower has not made such payment in full to Agent,
each Lender shall repay to Agent on demand such amount
distributed to such Lender, together with interest thereon at the
Reference Rate for each day from the date such amount is
distributed to such Lender until the date repaid.
(b) Apportionment, Application, and Reversal of
Payments. Except as otherwise provided with respect to
Defaulting Lenders and except as may otherwise be agreed among
the Lenders, aggregate principal and interest payments shall be
apportioned ratably among the Lenders (according to the unpaid
principal balance of the Advances to which such payments relate
held by each Lender) and payments of the fees (other than fees
designated for Agent's sole and separate account) shall, as
applicable, be apportioned ratably among the Lenders. All
payments shall be remitted to Agent and all such payments not
relating to principal or interest of specific Advances, or not
constituting payment of specific fees, and all proceeds of
Accounts or other Collateral received by Agent, shall be applied,
first, to pay any fees, or expense reimbursements then due to
Agent from Borrower; second, to pay any fees or expense
reimbursements then due to the Lenders from Borrower; third, to
pay interest due in respect of all Advances (including Foothill
Loans and Agent Advances); fourth, to pay or prepay principal of
Foothill Loans and Agent Advances; fifth, ratably to pay
principal of the Advances (other than Foothill Loans and Agent
Advances); and sixth, ratably to pay any other Obligations due to
Agent or any Lender by Borrower.
2.5 Overadvances. If, at any time or for any reason,
the amount of Obligations pursuant to Sections 2.1 and 2.2 is
greater than either the Dollar or percentage limitations set
forth in Sections 2.1 or 2.2 (an "Overadvance"), Borrower
immediately shall pay to Agent, in cash, the amount of such
excess, which amount shall be used by Agent to reduce the
Obligations in accordance with the priority set forth in Section
2.4(b).
2.6 Interest, Rates, Payments, and Calculations.
(a) Interest Rate. Except as provided in clause
(c) and clause (d) below, all Obligations shall bear interest on
the Daily Balance at a per annum rate equal to the sum of (i) two
percent (2%), plus (ii) the Reference Rate.
(b) [Intentionally omitted]
(c) Default Rate. Upon the occurrence and during
the continuation of an Event of Default, all Obligations shall
bear interest at a per annum rate equal to the sum of (i) six
percent (6%), plus (ii) the Reference Rate.
(d) Minimum Interest. In no event shall the rate
of interest chargeable under Section 2.6(a) for any day be less
than 8% per annum. To the extent that interest accrued hereunder
at the rate set forth in such section would be less than the
foregoing minimum daily rate, the interest rate chargeable
hereunder for such day automatically shall be deemed increased to
the minimum rate.
(e) Payments. Interest payable hereunder shall
be due and payable, in arrears, on the first day of each month
during the term hereof. Borrower hereby authorizes Agent, at its
option, without prior notice to Borrower, to charge such
interest, all Lender Group Expenses (as and when incurred), the
fees and charges provided for in Section 2.11 (as and when
accrued or incurred), and all installments or other payments due
under any Loan Document to Borrower's Loan Account, which amounts
thereafter shall accrue interest at the rate then applicable to
Advances hereunder. Any interest not paid when due shall be
compounded and shall thereafter accrue interest at the rate then
applicable to Advances hereunder.
(f) Computation. The Reference Rate as of the
date of this Agreement is 8.50% per annum. In the event the
Reference Rate is changed from time to time hereafter, the rate
of interest provided for in Section 2.6(a) and Section 2.6(c)(i)
and (ii) automatically and immediately shall be increased or
decreased by an amount equal to such change in the Reference
Rate. All interest and fees chargeable under the Loan Documents
shall be computed on the basis of a 360 day year for the actual
number of days elapsed.
(g) Intent to Limit Charges to Maximum Lawful
Rate. It is the intention of the parties hereto that the Agent
or each Lender shall conform strictly to usury laws applicable to
it. Accordingly, if the transactions contemplated hereby or by
any other Loan Document would be usurious as to the Agent or any
Lender under laws applicable to it (including the laws of the
United States of America and the State of California or any other
jurisdiction whose laws may be mandatorily applicable to such
Lender notwithstanding the other provisions of this Agreement),
then, in that event, notwithstanding anything to the contrary in
any of the Loan Documents or any agreement entered into in
connection with or as security for the Indebtedness, it is agreed
as follows: (i) the aggregate of all consideration which
constitutes interest under law applicable to Agent or any Lender
that is contracted for, taken, reserved, charged or received by
Agent or such Lender under any of the Loan Documents or
agreements or otherwise in connection with the Indebtedness shall
under no circumstances exceed the maximum amount allowed by such
applicable law, and any excess shall be canceled automatically
and if theretofore paid shall be credited by the Agent or such
Lender on the principal amount of the Indebtedness (or, to the
extent that the principal amount of the Indebtedness shall have
been or would thereby be paid in full, refunded by the Agent or
such Lender, as applicable, to the Borrower); and (ii) in the
event that the maturity of the Indebtedness is accelerated by
reason of an election of the holder thereof resulting from any
Event of Default under this Agreement or otherwise, or in the
event of any required or permitted prepayment, then such
consideration that constitutes interest under law applicable to
Agent or any Lender may never include more than the maximum
amount allowed by such applicable law, and excess interest, if
any, provided for in this Agreement or otherwise shall be
canceled automatically by Agent or such Lender, as applicable, as
of the date of such acceleration or prepayment and, if
theretofore paid, shall be credited by Agent or such Lender, as
applicable, on the principal amount of the Indebtedness (or, to
the extent that the principal amount of the Indebtedness shall
have been or would thereby be paid in full, refunded by Agent or
such Lender to the Borrower). All sums paid or agreed to be paid
to Agent or any Lender for the use, forbearance or detention of
sums due hereunder shall, to the extent permitted by law
applicable to Agent or such Lender, be amortized, prorated,
allocated and spread throughout the full term of the Obligations
until payment in full so that the rate or amount of interest on
account of any Obligations hereunder does not exceed the maximum
amount allowed by such applicable law. If at any time and from
time to time (i) the amount of interest payable to Agent or any
Lender on any date shall be computed at the Highest Lawful Rate
(as defined below) applicable to Agent or such Lender pursuant to
this Section 2.6(g) and (ii) in respect of any subsequent
interest computation period the amount of interest otherwise
payable to Agent or such Lender would be less than the amount of
interest payable to Agent or such Lender computed at the Highest
Lawful Rate applicable to Agent or such Lender, then the amount
of interest payable to Agent or such Lender in respect of such
subsequent interest computation period shall continue to be
computed at the Highest Lawful Rate applicable to Agent or such
Lender until the total amount of interest payable to Agent or
such Lender shall equal the total amount of interest which would
have been payable to Agent or such Lender if the total amount of
interest had been computed without giving effect to this
Section 2.6(g). For purposes of this Section 2.6(g), the term
"applicable law" shall mean that law in effect from time to time
and applicable to the loan transaction between Borrower and the
Lender Group that lawfully permits the charging and collection of
the highest permissible, lawful non-usurious rate of interest on
such loan transaction and this Agreement, including laws of the
State of New York and, to the extent controlling, laws of the
United States of America. It is intended that, in the event
that, notwithstanding the parties' express choice of other law to
be applicable to this Agreement, the laws of the State of Texas
are included in determining applicable law, Chapters 301 through
306 of the Texas Finance Code, shall be included in any such
determination, and that, for the purpose of applying the Texas
Finance Code to this Agreement, the maximum interest rate shall
be the "weekly ceiling" (as such term is used in Chapter 303 of
the Texas Finance Code) from time to time in effect. Any Lender
may, from time to time, as to current and future balances,
implement any other ceiling under Chapter 303 of the Texas
Finance Code by notice to Borrower, if and to the extent
permitted by Chapter 303 of the Texas Finance Code. The parties
hereto expressly agree that, except for Section 346.004 thereof,
the provisions of Chapter 346 of the Texas Finance Code shall not
apply to this Agreement or to any of the other Loan Documents or
to any Obligations and that neither this Agreement nor any Loan
shall be governed by or subject to the provisions of Chapter
Fifteen in any manner whatsoever. For purposes of this
Section 2.6(g), "Highest Lawful Rate" means, with respect to
Agent or any Lender, the maximum non-usurious interest rate, if
any, that at any time or from time to time may be contracted for,
taken, reserved, charged or received on the Obligations under the
laws applicable to Agent or such Lender which are currently in
effect or, to the extent allowed by law, under such applicable
laws which may hereafter be in effect and which allow a higher
maximum non-usurious interest rate than applicable laws now
allow.
2.7 Collection of Proceeds of Collateral.
(a) Borrower shall, as of the date of this
Agreement establish and at all times thereafter maintain one or
more bank accounts in Borrower's name (each a "Collection
Account" and, collectively, the "Collection Accounts") at the
bank set forth on Schedule 2.7 or such other banks as are
acceptable to Agent, which Collection Accounts shall be covered
by tri-party blocked account agreements among such banks, Agent
and Borrower, in form and substance acceptable to Agent. Borrower
shall deposit and shall cause each of its Subsidiaries to deposit
or cause to be deposited promptly, and in any event no later than
the first Business Day after the date of receipt thereof, all
cash, checks, drafts or other similar items of payment made in
respect of any and all Collateral (whether or not otherwise
delivered to a Lockbox) into Collection Accounts at banks set
forth on Schedule 2.7. From time to time as requested by Agent,
Borrower shall, and shall cause each of its Subsidiaries to,
execute and deliver Transfer Orders to Agent, in form and
substance satisfactory to Agent, with respect to all present and
future rights to payment relating to or arising from the Oil and
Gas Property Collateral (and Agent may send such Transfer Orders
to Account Debtors and/or other obligors thereon at any time and
from time to time upon or after the occurrence of a Triggering
Event). Borrower shall not establish any other bank accounts
after the date of this Agreement except upon not less than 30
days prior written notice to Agent and the delivery to Agent of a
tri-party blocked account agreement in form and substance
acceptable to Agent among such bank, Agent and Borrower. Each
such blocked account agreement shall provide, among other things,
that (i) all items of payment deposited in such accounts and
proceeds thereof deposited in the applicable Collection Account
are held by such banks as agent or bailee-in-possession for
Agent, (ii) the bank executing such agreement has no rights of
setoff or recoupment or any other claim against such account, as
the case may be, other than for payment of its service fee and
other charges directly related to the administration of such
account and for returned checks or other items of payment, and
(iii) following Agent giving notice to such bank to do so (which
notice Agent agrees not to give to such bank prior to the
occurrence of a Triggering Event), such bank agrees to
immediately forward all amounts received in the applicable
Collection Account to the Agent's Account. From and after the
occurrence of a Triggering Event, no Borrower shall, or shall
cause or permit any Subsidiary thereof to, accumulate or maintain
cash in disbursement or payroll accounts as of any date of
determination in excess of checks outstanding against such
accounts as of that date and amounts necessary to meet minimum
balance requirements. As used in this Agreement, "Triggering
Event" means: (A) the occurrence or continued existence of an
Event of Default or (B) the occurrence or continued existence of
(I) the sum of Availability of Borrower, plus Borrower's
immediately available unrestricted cash on hand, minus an amount
determined by Agent in its reasonable discretion that would be
sufficient to maintain Borrower's and its Subsidiaries' accounts
payable and other current liabilities at less than 90 days from
the original invoice date thereof (as determined on a
consolidated basis), being less than (II) $1,000,000 at any time.
(b) Upon the occurrence of a Triggering Event,
Borrower, upon Agent's written request, (i) shall establish and
maintain lock boxes ("Lockboxes") at one or more banks set forth
on Schedule 2.7, (ii) shall request in writing and otherwise take
such reasonable steps to ensure that all Account Debtors forward
payment directly to such Lockboxes, (iii) shall and shall cause
each of its Subsidiaries to instruct all Account Debtors with
respect to the Accounts, General Intangibles, and Negotiable
Collateral of Borrower or such Subsidiary, as the case may be, to
remit all Collections in respect thereof to such Lockbox Account,
and (iv) shall, and shall cause each of its Subsidiaries to,
deposit all other Collections received by Borrower from any
source immediately upon receipt into the Lockboxes. Borrower,
each of Borrower's Subsidiaries, Agent, and the Lockbox Banks
shall enter into the Lockbox Agreements, which among other things
shall provide for the opening of a Lockbox Account for the
deposit of Collections at a Lockbox Bank. Borrower agrees that
upon the occurrence of a Triggering Event, all Collections and
other amounts received by Borrower or any of its Subsidiaries
from any Account Debtor or any other source immediately upon
receipt shall be deposited into a Lockbox Account. No Lockbox
Agreement or arrangement contemplated thereby shall be modified
by Borrower or any of its Subsidiaries without the prior written
consent of Agent. Upon the terms and subject to the conditions
set forth in the Lockbox Agreements, all amounts received in each
Lockbox Account shall be wired each Business Day into the Agent's
Account; provided, however, that Agent reserves the right, in its
sole discretion, to require that any amounts received in any
Lockbox Account which may represent amounts attributable to trust
funds (i.e., production taxes, severance taxes, or payroll taxes)
or amounts attributable to Mineral Interests of third Persons be
segregated by the Lockbox Bank and held in a separate account or
otherwise as directed by Agent.
(c) The Lockboxes, Collection Accounts and
Designated Account shall be cash collateral accounts, with all
cash, checks and similar items of payment in such accounts
securing payment of the Obligations and all other Indebtedness,
and in which each Loan Party shall have granted a Lien to Agent
hereunder and pursuant to the other Loan Documents.
(d) Borrower shall and shall cause its
Affiliates, officers, employees, agents, directors or other
Persons acting for or in concert with Borrower (each a "Related
Person") to (i) hold in trust for Agent all checks, cash and
other items of payment received by Borrower or any such Related
Person, and (ii) within one (1) Business day after receipt by
Borrower or any Related Person of any checks, cash or other items
of payment, deposit the same into a Collection Account. Borrower
acknowledges and agrees that all cash, checks or items of payment
constituting proceeds of Collateral are the property of Agent for
the benefit of the Lenders. Unless otherwise specified in this
Agreement, all proceeds of the sale or other disposition of any
Collateral shall be deposited directly into the applicable
Collection Account.
2.8 Crediting Payments; Application of Collections.
The receipt of any Collections by Agent (whether from transfers
to Agent by the Lockbox Banks pursuant to the Lockbox Agreements
or otherwise) immediately shall be applied provisionally to
reduce the Obligations outstanding under Section 2.1, but shall
not be considered a payment on account unless such Collection
item is a wire transfer of immediately available federal funds
and is made to the Agent Account or unless and until such
Collection item is honored when presented for payment; provided,
however, that Agent reserves the right, in its sole discretion,
to exclude from such provisional reduction and payment the amount
of any such Collections that Agent determines may constitute
trust funds (e.g., production taxes, severance taxes, or payroll
taxes) or amounts attributable to Mineral Interests of third
Persons. From and after the Closing Date, Agent shall be
entitled to charge Borrower for 1 Business Day of `clearance' or
`float' at the rate set forth in Section 2.6(a) or
Section 2.6(c)(i), as applicable, on all Collections that are
received by the Lockbox Banks or Agent (regardless of whether
forwarded by the Lockbox Banks to Agent, whether provisionally
applied to reduce the Obligations under Section 2.1, whether wire
transferred directly to the Agent at the Agent Account in
connection with a disposition permitted by Section 7.4 hereof or
otherwise). This across-the-board 1 Business Day clearance or
float charge on all Collections is acknowledged by the parties to
constitute an integral aspect of the pricing of the Lender
Group's financing of Borrower, and shall apply irrespective of
the characterization of whether receipts are owned by Borrower or
Agent, and whether or not there are any outstanding Advances, the
effect of such clearance or float charge being the equivalent of
charging 1 Business Day of interest on such Collections. Should
any Collection item not be honored when presented for payment,
then Borrower shall be deemed not to have made such payment, and
interest shall be recalculated accordingly. Anything to the
contrary contained herein notwithstanding, any Collection item
shall be deemed received by Agent only if it is received into the
Agent Account on a Business Day on or before 11:00 a.m.
California time. If any Collection item is received into the
Agent Account on a non-Business Day or after 11:00 a.m.
California time on a Business Day, it shall be deemed to have
been received by Agent as of the opening of business on the
immediately following Business Day. Anything contained herein to
the contrary notwithstanding, the economic benefit of the 1
Business Day clearance or float charge provided for in this
Section 2.8 is not for the ratable benefit of the Lenders, but
instead shall be for the sole and separate account of Agent.
2.9 Designated Account. Agent, Foothill, and the
Lenders are authorized to make the Advances, and the Letters of
Credit under this Agreement based upon telephonic or other
instructions received from anyone purporting to be an Authorized
Person, or without instructions if pursuant to Section 2.6(e).
Borrower agrees to establish and maintain the Designated Account
with the Designated Account Bank for the purpose of receiving the
proceeds of the Advances requested by Borrower and made by Agent,
Foothill or the Lenders hereunder. Unless otherwise agreed by
Agent and Borrower, any Advance requested by Borrower and made
hereunder shall be made to the Designated Account.
2.10 Maintenance of Loan Account; Statements of
Obligations. Agent shall maintain an account on its books in the
name of Borrower (the "Loan Account") on which Borrower will be
charged with all Advances made by Agent, Foothill, or the Lenders
to Borrower or for Borrower's account, including, accrued
interest, Lender Group Expenses, and any other payment
Obligations of Borrower. In accordance with Section 2.8, the
Loan Account will be credited with all payments received by Agent
from Borrower or for Borrower's account, including all amounts
received in the Agent Account from any Lockbox Bank. Agent shall
render statements regarding the Loan Account to Borrower,
including principal, interest, fees, and including an itemization
of all charges and expenses constituting Lender Group Expenses
owing, and such statements shall be conclusively presumed to be
correct and accurate and constitute an account stated between
Borrower and the Lender Group unless, within 30 days after
receipt thereof by Borrower, Borrower shall deliver to Agent
written objection thereto describing the error or errors
contained in any such statements.
2.11 Fees. Borrower shall pay to Agent, for the
ratable benefit of the Lender Group (except as otherwise
indicated), the following fees:
(a) Closing Fee. On the Closing Date, a closing
fee of $600,000, which amount shall be fully earned and
nonrefundable as of the Closing Date.
(b) Unused Line Fee. On the first day of each
month during the term of this Agreement, an unused line fee in an
amount equal to 0.50% per annum times the Average Unused Portion
of the Maximum Revolving Amount during the immediately preceding
month, payable in arrears.
(c) [Intentionally Omitted]
(d) Financial Examination, Documentation, and
Appraisal Fees. For the sole and separate account of Agent:
Agent's customary fee of $750 per day per examiner, plus Agent's
out-of-pocket expenses for each financial analysis and
examination (i.e., audits) of Borrower performed by personnel
employed by Agent; Agent's customary one-time electronic
reporting setup fee of $3,000, plus Agent's out-of-pocket
expenses relating thereto; Agent's customary appraisal fee of
$1,500 per day per appraiser, plus Agent's out-of-pocket expenses
for each appraisal of the Collateral performed by personnel
employed by Agent; and, the actual charges paid or incurred by
Agent if it elects to employ the services of one or more third
Persons to perform such financial analyses and examinations
(i.e., audits) of Borrower or to appraise the Collateral.
(e) Loan Servicing Fee. For the sole and
separate account of Agent, on the first day of each month during
the term of this Agreement, and thereafter so long as any
Obligations are outstanding, a loan servicing fee in an amount
equal to $5,000 per month, which amount shall be fully earned and
nonrefundable, and be payable in arrears on the first day of each
month.
(f) Unsecured Notes Repurchase Fee. Concurrently
with the repurchase or retirement of any of the Unsecured Notes
by Borrower or any of its Subsidiaries, a fee in an amount equal
to 1% of the face amount of the Unsecured Notes so repurchased or
retired; provided, however, such a fee shall not be payable in
connection with the retirement of the Unsecured Notes in the
amount of $7,040,000 that were repurchased by Borrower during
December, 1998, provided such Unsecured Notes are not reissued by
Borrower.
2.12 Loan Under Prior Credit Agreement. On the Closing
Date:
(a) Borrower shall pay all accrued and unpaid
commitment fees outstanding under the Prior Credit Agreement for
the account of each Prior Lender under the Prior Credit
Agreement;
(b) each loan, advance or other extension of
credit under the Prior Loan Agreement shall be deemed to be an
Advance under this Agreement; and
(c) the Prior Credit Agreement and the
commitments thereunder shall be superceded by this Agreement and
such commitments shall terminate.
3. CONDITIONS; TERM OF AGREEMENT.
3.1 Conditions Precedent to the Initial Advance. The
obligation of the Lender Group (or any member thereof) to make
the initial Advance is subject to the fulfillment, to the
satisfaction of Agent and its counsel, of each of the following
conditions on or before the Closing Date:
(a) the Closing Date shall occur on or before
December 30, 1999;
(b) Agent shall have received all financing
statements and fixture filings required by Agent, duly executed
by Borrower, and Agent shall have received searches of all
recording offices requested by Agent reflecting the filing of all
such financing statements and fixture filings, together with
searches of such other offices as Agent may require (including
those of Borrower, and the Subsidiaries of Borrower), each such
search dated a date within 15 days of the Closing Date;
(c) Agent shall have received each of the
following documents, in form and substance satisfactory to Agent,
duly executed (and acknowledged, as the case may be) by all
parties and formalities contemplated thereunder, and each such
document shall be in full force and effect:
i. the tri-party blocked account
agreements;
ii. the Disbursement Letter;
iii. the Pay-Off Letter, together with the
Prior Lender Assignment Agreements, UCC assignment
statements and other documentation evidencing the
assignment by the Prior Lenders (and all other holders,
if any, of the indebtedness, liabilities and other
obligations under or relating to the Prior Credit
Agreement) and each other holder of Liens against the
properties or assets of Borrower or any of its
Subsidiaries (other than Permitted Liens), of its Liens
in and to the properties and assets of Borrower and its
Subsidiaries;
iv. the Oil and Gas Property Mortgages
covering each of the Oil and Gas Properties;
v. Guaranty Agreements, in form and
substance acceptable to Agent, executed by each of
Borrower's Subsidiaries (other than the Magic Circle
Partnerships and RB Operating);
vi. Security Agreements, in form and
substance acceptable to Agent, executed by Borrower and
each of Borrower's Subsidiaries (other than the Magic
Circle Partnerships and RB Operating), with respect to
all of the assets and properties of any and all of
them;
vii. such governmental permits, approvals and
orders for each well and each unit pertaining to the
Oil and Gas Properties described in the Oil and Gas
Property Mortgages as have been requested by Agent,
which shall be in form and substance satisfactory to
Agent;
viii. the Transfer Order Letters for each
well on the Oil and Gas Properties, which shall be in
form and substance satisfactory to Agent;
ix. assignments in form and substance
acceptable to Agent of each Material Contract
pertaining to the Oil and Gas Property Collateral which
either (i) affects Borrower's or any of its
Subsidiaries', as the case may be, title to the Oil and
Gas Property Collateral or otherwise affects the value,
use or operation of the Oil and Gas Property Collateral
in any material respect or (ii) creates or evidences a
material obligation or liability on the part of
Borrower or any or its Subsidiaries, together with
copies of each such Material Contract attached thereto;
x. a solvency certificate with respect to
Borrower and each of its Subsidiaries, in the form and
substance acceptable to Agent, executed by an executive
officer of Borrower;
xi. the Unsecured Notes Estoppel
Certificate;
xii. all original stock certificates
evidencing all the issued and outstanding shares of
capital stock of Magic Circle, CDC and MCAC, together
with stock powers duly executed in blank by the holders
of all of the legal and beneficial ownership of such
shares;
xiii. all original stock certificates
evidencing all the issued and outstanding shares of
capital stock of RVC Energy owned by Borrower, together
with stock powers duly executed in blank by Borrower;
xiv. the Real Property Mortgages, dated as of
the Closing Date; and
xv. such other documents as shall be
required by Agent.
(d) Agent shall have received a certificate from
the Secretary of Borrower attesting to the resolutions of
Borrower's Board of Directors authorizing its execution,
delivery, and performance of this Agreement and the other Loan
Documents to which Borrower is a party and authorizing specific
officers of Borrower to execute the same;
(e) Agent shall have received copies of
Borrower's Governing Documents, as amended, modified, or
supplemented by the Closing Date, certified by the Secretary of
Borrower;
(f) Agent shall have received a certificate of
status with respect to Borrower, dated within 10 days of the
Closing Date, such certificate to be issued by the appropriate
officer of the jurisdiction of organization of Borrower, which
certificate shall indicate that Borrower is in good standing in
such jurisdiction;
(g) Agent shall have received certificates of
status with respect to Borrower, each dated within 15 days of the
Closing Date, such certificates to be issued by the appropriate
officer of the jurisdictions in which its failure to be duly
qualified or licensed would constitute a Material Adverse Change,
which certificates shall indicate that Borrower is in good
standing in such jurisdictions;
(h) Agent shall have received a certificate of
insurance, together with the endorsements thereto, as are
required by Section 6.10, the form and substance of which shall
be satisfactory to Agent and its counsel;
(i) Agent shall have received such Collateral
Access Agreements from lessors, warehousemen, bailees, and other
third persons with respect to (i) Borrower's leased premises and
each Subsidiary of Borrower's leased premises at which is located
its respective executive offices, (ii) all locations at which
Borrower's Books are located from time to time, and (iii) each
other location of Borrower and of each Subsidiary of Borrower
except the Oil and Gas Properties;
(j) Agent shall have received copies of all
contracts set forth on Schedule 5.1(c), and such contracts shall
be in form and substance satisfactory to Agent;
(k) Agent shall have received an opinion of
Borrower's and Guarantor's Oklahoma counsel in form and substance
satisfactory to Agent in its sole discretion, and opinions of
Borrower's and Guarantors' counsel in such other states and
jurisdictions as may be requested by Agent in form and substance
satisfactory to Agent in its sole discretion;
(l) Agent shall have received (i) appraisals of
the Oil and Gas Properties in the form of Reserve Reports
prepared by a third party petroleum engineering firm (including,
but not limited to, appraisals, verifications and liquidation
analyses of Borrower's and each of its Subsidiaries' Proved
Reserves) covering the Borrowing Base Entities' Mineral Interests
listed on Schedule 5.1(a), in each case satisfactory to Agent,
and (ii) title reports and/or title opinions for such of the Oil
and Gas Properties as shall be required by Agent, in its sole
discretion, issued to Agent for the benefit of the Lender Group
by a legal counsel to Borrower or other person that is
experienced in the examination of title to such Oil and Gas
Properties and is satisfactory to Agent (each a "Title Opinion"
and, collectively, the "Title Opinions"), each of which Title
Opinions shall be in form and substance satisfactory to Agent;
(m) The Mineral Interests in the Oil and Gas
Property Collateral shall not be less than the Mineral Interests
for such properties furnished by the Borrowing Base Entities to
Agent in connection with Agent's credit evaluation in connection
with this Agreement;
(n) Borrower shall have delivered to Agent
evidence satisfactory to Agent confirming that each of the
producing ▇▇▇▇▇ listed on Schedule 5.1(b) is located on an Oil
and Gas Property (i) covered by the Title Opinions to the extent
required by Agent and (ii) described in the legal description
contained in an Oil and Gas Property Mortgage which has been duly
executed and delivered to Agent;
(o) Borrower shall have delivered to Agent such
existing environmental reports Borrower currently has (whether
prepared internally or by an outside party) with respect to the
Oil and Gas Property Collateral, including, without limitation,
spill prevention and control plans;
(p) Agent shall have received satisfactory
evidence that all tax returns required to be filed by Borrower
have been timely filed and all taxes upon Borrower or its
properties, assets, income, and franchises (including real
property taxes and payroll taxes) have been paid prior to
delinquency, except such taxes that are the subject of a
Permitted Protest;
(r) Agent shall have received satisfactory
reference investigation reports of key officers and employees;
(s) On the Closing Date, Borrower shall have not
less than $2,000,000 of Availability and unrestricted immediately
available cash on hand (as evidenced to Agent in such manner and
with such documentation as is in form and substance satisfactory
to Agent) after making the payments described in Section
7.17(a)(i) and paying the $600,000 due on the Closing Date
pursuant to Section 2.11(a) and after reserving as an additional
deduction from Availability an amount determined by Agent in its
sole discretion that would be sufficient to maintain Borrower's
and its Subsidiaries' accounts payable and other current
liabilities within reasonable terms (with Borrower providing to
Agent such evidence of the aging of such accounts payable and
other liabilities as is in form and substance acceptable to
Agent);
(t) Agent shall reviewed Borrower's and each of
its Subsidiaries' Hedging Agreements and other hedging
arrangements (with respect to its present and future Hydrocarbon
production and otherwise), and all of such Hedging Agreements and
other hedging arrangements shall be acceptable to Agent;
(u) Agent shall have received evidence
satisfactory to Agent including, without limitation, a
certificate executed by the chief financial officer of Borrower,
to such effect, that no Material Adverse Change has occurred in
the business, assets, operations, prospects or financial or other
condition of Borrower or any of its Subsidiaries since
September 30, 1999; and
(v) all other documents and legal matters in
connection with the transactions contemplated by this Agreement
shall have been delivered, executed, or recorded and shall be in
form and substance satisfactory to Agent and its counsel.
3.2 Conditions Precedent to all Advances. The
following shall be conditions precedent to all Advances
hereunder:
(a) the representations and warranties contained
in this Agreement and the other Loan Documents shall be true and
correct in all respects on and as of the date of such extension
of credit, as though made on and as of such date (except to the
extent that such representations and warranties relate solely to
an earlier date);
(b) no Default or Event of Default shall have
occurred and be continuing on the date of such extension of
credit, nor shall either result from the making thereof;
(c) no injunction, writ, restraining order, or
other order of any nature prohibiting, directly or indirectly,
the extending of such credit shall have been issued and remain in
force by any governmental authority against any Borrower, Agent,
the Lender Group, or any of their Affiliates; and
(d) the amount of the Revolving Facility Usage,
after giving effect to the requested Advance, shall not exceed
the Availability.
The foregoing conditions precedent are not conditions to each
Lender participating in or reimbursing Foothill or the Agent for
such Lenders' Pro Rata Share of any Foothill Loan or Agent
Advance as provided herein.
3.3 Conditions Subsequent. As conditions subsequent
to initial closing hereunder, Borrower shall perform or cause to
be performed the following (the failure by Borrower to so perform
or cause to be performed constituting an Event of Default):
(a) within 30 days of the Closing Date, deliver
to Agent the certified copies of the policies of insurance,
together with the endorsements thereto, as are required by
Section 6.10, the form and substance of which shall be
satisfactory to Agent and its counsel; and
(b) within 5 Business Days of the Closing Date,
pay in full all undisputed amounts set forth on Schedule 5.23,
and all amounts owing to Persons attributable to the sale of
Hydrocarbons of such Persons (which amounts Borrower represents
to Agent and the Lenders is $1,236,042 in the aggregate as of the
date of this Agreement), and provide to Agent a certification
thereof and such other evidence thereof as may be requested by
Agent in its sole discretion.
3.4 Term; Automatic Renewal.
(a) This Agreement shall become effective upon
the execution and delivery hereof by Borrower and the Lender
Group and shall continue in full force and effect for a term
ending on the date (the "Renewal Date") that is 3 years from the
Closing Date and automatically shall be renewed for successive
one (1) year periods thereafter.
(b) Either party may terminate this Agreement on
the Renewal Date or on any one (1) year anniversary of the
Renewal Date by giving the other party at least 90 days prior
written notice. The foregoing notwithstanding, the Lender Group
shall have the right to terminate its obligations under this
Agreement immediately and without notice upon the occurrence and
during the continuation of an Event of Default.
3.5 Effect of Termination
(a) On the date of termination of this Agreement,
all Obligations immediately shall become due and payable without
notice or demand. No termination of this Agreement, however,
shall relieve or discharge Borrower of Borrower's duties,
Obligations, or covenants hereunder or under the other Loan
Documents, and Agent's continuing security interests in the
Collateral, for the benefit of the Lender Group, shall remain in
effect until all Obligations have been fully and finally
discharged and the Lender Group's obligations to provide
additional credit hereunder have been terminated.
(b) If Borrower has sent a notice of termination
pursuant to the provisions of Section 3.4, but fails to pay the
Obligations in full on the date set forth in such notice, then
the Lender Group may, but shall not be required to, renew this
Agreement for an additional term of one (1) year.
3.6 Early Termination by Borrower. The provisions of
Section 3.4 that allow termination of this Agreement by Borrower
only on the Renewal Date and certain anniversaries thereof
notwithstanding, Borrower has the option, at any time upon 90
days prior written notice to Agent, to terminate this Agreement
by paying to Agent, for the ratable benefit of the Lender Group,
in cash, the Obligations in full, together with a premium (the
"Early Termination Premium") equal to (a) if the termination
occurs on or before the first anniversary of the Closing Date, an
amount equal to 3% of the Maximum Revolving Amount, (b) if the
termination occurs after the first anniversary of the Closing
Date but on or before the second anniversary of the Closing Date,
an amount equal to 2% of the Maximum Revolving Amount, and (c) if
the termination occurs after the second anniversary of the
Closing Date (other than on the Renewal Date or on the last day
of any successive renewal period), an amount equal to 1% of the
Maximum Revolving Amount.
3.7 Termination Upon Event of Default. If the Lender
Group terminates this Agreement upon the occurrence of an Event
of Default, in view of the impracticability and extreme
difficulty of ascertaining actual damages and by mutual agreement
of the parties as to a reasonable calculation of the Lender
Group's lost profits as a result thereof, Borrower shall pay to
Agent, for the ratable benefit of the Lender Group, upon the
effective date of such termination, a premium in an amount equal
to the Early Termination Premium. The Early Termination Premium
shall be presumed to be the amount of damages sustained by the
Lender Group as the result of the early termination and Borrower
agrees that it is reasonable under the circumstances currently
existing. The Early Termination Premium provided for in this
Section 3.7 shall be deemed included in the Obligations.
4. CREATION OF SECURITY INTEREST.
4.1 Grant of Security Interest. Borrower hereby
grants to Agent, for the benefit of the Lender Group, continuing
Liens on all right, title, and interest of Borrower in and to all
currently existing and hereafter acquired or arising Collateral
in order to secure prompt repayment of any and all Obligations
and in order to secure prompt performance by Borrower of each of
its covenants and duties under the Loan Documents (the "Agent's
Liens"). The Agent's Liens in and to the Collateral shall attach
to all Collateral without further act on the part of the Lender
Group or Borrower. Anything contained in this Agreement or any
other Loan Document to the contrary notwithstanding, except for
the sale of Inventory to buyers in the ordinary course of
business and except as specifically permitted under Section 7.4,
Borrower has no authority, express or implied, to dispose of any
item or portion of the Collateral. Subject to Section 2.4(b),
the secured claims of the Lender Group secured by the Collateral
shall be of equal priority, and ratable according to the
respective Obligations due each member of the Lender Group.
4.2 Negotiable Collateral. In the event that any
Collateral, including proceeds, is evidenced by or consists of
Negotiable Collateral, Borrower promptly shall, and shall cause
each of its Subsidiaries to, endorse and deliver physical
possession of such Negotiable Collateral to Agent.
4.3 Collection of Accounts, General Intangibles, and
Negotiable Collateral. At any time, Agent or Agent's designee
may (a) notify customers or Account Debtors that the Accounts,
General Intangibles, or Negotiable Collateral have been assigned
to Agent for the benefit of the Lender Group, or that Agent, for
the benefit of the Lender Group, has a security interest therein
and (b) after the occurrence of an Event of Default, collect the
Accounts, General Intangibles, and Negotiable Collateral directly
and charge the collection costs and expenses to the Loan Account.
Borrower agrees that it will, and will cause each of its
Subsidiaries to, hold in trust for the Lender Group, as the
Lender Group's trustee, any Collections that it receives, and
that after the occurrence of an Event of Default it will, and
will cause each of its Subsidiaries to, immediately deliver said
Collections to Agent in their original form as received by
Borrower or any of its Subsidiaries, as the case may be.
4.4 Delivery of Additional Documentation Required. At
any time upon the request of Agent, Borrower shall, and shall
cause each of its Subsidiaries to, execute and deliver to Agent
all financing statements, collateral assignments, continuation
financing statements, fixture filings, security agreements,
pledges, assignments, mortgages, leasehold mortgages, deeds of
trust, leasehold deeds of trust, endorsements of certificates of
title, applications for title, affidavits, reports, notices,
schedules of accounts, letters of authority, and all other
documents that Agent reasonably may request, in form satisfactory
to Agent, to create, perfect and continue perfected the Agent's
Liens on the Collateral (whether now owned or hereafter arising
or acquired), and in order to consummate fully all of the
transactions contemplated hereby and under the other the Loan
Documents.
4.5 Power of Attorney. Borrower hereby irrevocably
makes, constitutes, and appoints Agent (and any of Agent's
officers, employees, or agents designated by Agent) as Borrower's
true and lawful attorney, with power to (a) if Borrower refuses
to, or fails timely to execute and deliver any of the documents
described in Section 4.4 pertaining to the creation, perfection
or continued perfection of the Agent's Liens on the Collateral
(whether now owned or hereafter arising or acquired), sign the
name of Borrower on any of such documents described in Section
4.4, (b) at any time that an Event of Default has occurred and is
continuing, endorse Borrower's name on any Collection item that
may come into the Lender Group's possession, and (c) at any time
that an Event of Default has occurred and is continuing, make,
settle, and adjust all claims under Borrower's policies of
insurance. The appointment of Agent as Borrower's attorney, and
each and every one of Agent's rights and powers, being coupled
with an interest, is irrevocable until all of the Obligations
have been fully and finally repaid and performed and the Lender
Groups' obligations to extend credit hereunder are terminated.
4.6 Right to Inspect. Agent (through any of its
officers, employees, or agents) shall have the right, from time
to time hereafter to inspect the Books and to check, test, audit
and appraise the Collateral in order to verify Borrower's and its
Subsidiaries' financial condition or the amount, quality, value,
condition of, or any other matter relating to, the Collateral
(including checks, tests and audits by a qualified engineer
selected by Agent of Borrower's and each of its Subsidiaries'
onshore and offshore ▇▇▇▇▇, rigs, pipeline distribution systems
and operations).
4.7 Control Agreements. Borrower agrees that it will
not, and that it will cause each of its Subsidiaries not to,
transfer assets out of any Securities Accounts other than as
permitted under Section 7.22 and, if to another securities
intermediary, unless each of Borrower, such Subsidiary, Agent,
and the substitute securities intermediary have entered into a
Control Agreement. No arrangement contemplated hereby or by any
Control Agreement in respect of any Securities Accounts or other
investment property shall be modified by Borrower or any of its
Subsidiaries without the prior written consent of Agent. Upon
the occurrence and during the continuance of a Default or Event
of Default, Agent may notify any securities intermediary to
liquidate or transfer the applicable Securities Account or any
related investment property maintained or held thereby and remit
the proceeds thereof to the Agent Account.
5. REPRESENTATIONS AND WARRANTIES.
In order to induce the Lender Group to enter into this
Agreement, Borrower makes the following representations and
warranties to the Lender Group which shall be true, correct, and
complete in all respects as of the date hereof, and shall be
true, correct, and complete in all respects as of the Closing
Date, and at and as of the date of the making of each Advance
made thereafter, as though made on and as of the date of the
making of such Advance (except to the extent that such
representations and warranties relate solely to an earlier date)
and such representations and warranties shall survive the
execution and delivery of this Agreement:
5.1 No Encumbrances. The Borrowing Base Entities have
either good, marketable and indefeasible title to the Collateral
or defensible title to the Collateral, in all events free and
clear of all Liens (except for Permitted Liens), including but
not limited to:
(a) Ownership by the Borrowing Base Entities of
the Oil and Gas Properties listed on Schedule 5.1(a) as
identified therein, with the NYMEX Value and Lien of the Prior
Lenders that has been assigned to Agent for the benefit of the
Lenders pursuant to the Prior Lender Assignment Agreements as to
such Oil and Gas Properties as described on Schedule 5.1(a);
(b) The amount of the Working Interest and Net
Revenue Interest of the Oil and Gas Properties of the Borrowing
Base Entities, as set forth on Schedule 5.1(b), with the NYMEX
Value thereof as described on Schedule 5.1(b);
(c) All rights under the Material Contracts
listed on Schedule 5.1(c);
(d) Ownership of the Real Property, to the extent
stated on Schedule 5.1(d); and
(e) Ownership of the ▇▇▇▇▇▇ Gathering System,
including all Property listed in Schedule 5.1(e).
5.2 Eligible Proved Developed Producing Reserves;
Ownership of Oil and Gas Properties.
(a) All Eligible Proved Developed Producing
Reserves are Proved Developed Producing Reserves of which a
Borrowing Base Entity has fee simple legal title to or valid
leasehold interest in (in each case, either good, marketable and
indefeasible title or defensible title, except for Permitted
Liens), and of which a Borrowing Base Entity is the beneficial
owner of, to the full extent of the quantity of interest
specified in the most recent Reserve Report delivered to Agent by
Borrower, and all of the information with respect thereto
contained on Schedules 5.1(a), 5.1(b), 5.1(c) and 5.2(b) attached
hereto (and with respect to all Proved Developed Producing
Reserves other than those listed on Schedule 5.1(a), the
analogous supplemental schedules contemplated on Exhibit B-1 with
respect thereto) is true and correct and all information
contained in the footnotes and annexes to such schedules is true
and correct. All Mineral Interests of the Eligible Proved
Developed Producing Reserves are in full force and effect and
each of the Borrowing Base Entities is in full compliance with
its obligations thereunder. To the best of Borrower's knowledge,
all ▇▇▇▇▇ drilled and Hydrocarbons produced with respect to such
Eligible Proved Developed Producing Reserves were drilled and
produced in compliance with all applicable regulations. There
are no outstanding authorities for expenditures with respect to
any Eligible Proved Developed Producing Reserves requiring an
expenditure in excess of $10,000 by Borrower or any of its
Subsidiaries on a combined basis for a single operation which are
not reflected in the most recent Reserve Report delivered by
Borrower to Agent, unless they are disclosed on Schedule 5.2(a)
attached hereto. No Borrowing Base Entity has elected to go
"nonconsent" on any operations with respect to any Eligible
Proved Developed Producing Reserves (except in circumstances
where any penalty or liability for nonconsent has lapsed or
terminated or as set forth in Schedule 5.2(a)). All of such
Eligible Proved Developed Producing Reserves are a part of the
Oil and Gas Properties described in Schedule 5.1(a), are covered
by the engineering reports which Borrower has previously
delivered to and which have been relied upon by Agent in
connection with this Agreement, and are part of the Oil and Gas
Property Collateral covered by the Oil and Gas Property
Mortgages. All bills (except for (i) bills for drilling and
drilling services which are less than 180 days past the original
invoice date and do not give rise to a Lien other than a
Permitted Lien, (ii) bills, other than for drilling and drilling
services, which are less than 120 days past the original invoice
date and do not give rise to a Lien other than a Permitted Lien,
and (iii) the bills described in Schedule 5.23 which are to be
paid within 5 Business Days of the Closing Date) and taxes have
been paid with respect to all Eligible Proved Developed Producing
Reserves.
(b) All of each Borrowing Base Entity's marketing
arrangements with respect to its Proved Reserves are valid,
enforceable and in full force and effect. To the best of
Borrower's knowledge, there do not exist any cumulative
imbalances in gas production or receipt of "take or pay" payments
except as disclosed (as to both existence and extent) on
Schedule 5.2(b) attached hereto or as otherwise permitted under
this Agreement.
(c) Without limiting the foregoing, after giving
full effect to the Permitted Liens, each Borrowing Base Entity
owns the net revenue interests in production attributable to the
Oil and Gas Properties covered by the Oil and Gas Property
Mortgages as is reflected in the most recently delivered Reserve
Report and the ownership of such Properties shall not in any
material respect obligate such Borrowing Base Entity to bear the
costs and expenses relating to the maintenance, development and
operations of each such Property in an amount in excess of the
Working Interest of each such Property set forth in
Schedule 5.2(b) and the most recently delivered Reserve Report.
All information contained in the most recently delivered Reserve
Report is true and correct in all material respects as of the
date thereof.
(d) There has not been any Material Adverse
Change in the Oil and Gas Properties since the date of the most
recent Reserve Report.
5.3 Operations of Oil and Gas Properties. With
respect to each Mineral Interest which is a Working Interest,
Schedule 5.1(b) attached hereto sets forth (i) the Oil and Gas
Property as to which each Borrowing Base Entity is the operator,
and (ii) the Oil and Gas Property as to which the operator is a
Person other than a Borrowing Base Entity.
5.4 Equipment. All of the Equipment is used or held
for use in Borrower's or a Subsidiary of Borrower's business and
is fit for such purposes, subject to (a) normal wear and tear and
(b) dispositions permitted under Section 7.4.
5.5 Location of Inventory and Equipment. The
Inventory and Equipment are not stored with a bailee,
warehouseman, or similar party and are located only at the
locations identified on Schedule 5.21 or otherwise permitted by
Section 6.12, except for Inventory and Equipment which
(a) are located on the Oil and Gas Property
Collateral;
(b) are in-transit for delivery in the ordinary
course of business to a Borrowing Base Entity from such Borrowing
Base Entity's suppliers; or
(c) are located in Texas, Oklahoma, New Mexico,
North Dakota, Louisiana and Mississippi and are in-transit in the
ordinary course of business between the Borrowing Base Entities'
Oil and Gas Properties.
5.6 Oil and Gas Property Collateral Records and
Inventory Records. Each of Borrower and each Subsidiary of
Borrower keeps correct and accurate records itemizing and
describing the kind, type, quality, and quantity of the Oil and
Gas Property Collateral and the Inventory, and Borrower's or, as
the case may be, such Subsidiary of Borrower's cost therefor.
5.7 Location of Chief Executive Office; FEIN. The
chief executive office of each Borrower is located at the address
indicated in the preamble to this Agreement. Borrower's FEIN is
▇▇-▇▇▇▇▇▇▇. Gulf States' FEIN is ▇▇-▇▇▇▇▇▇▇. Magic Circle's
FEIN is ▇▇-▇▇▇▇▇▇▇. ▇▇▇▇▇▇ Field's FEIN is ▇▇-▇▇▇▇▇▇▇.
5.8 Due Organization and Qualification; Subsidiaries.
(a) Borrower is duly organized and existing and
in good standing under the laws of the jurisdiction of its
incorporation and qualified and licensed to do business in, and
in good standing in, any state where the failure to be so
licensed or qualified could be expected to constitute a Material
Adverse Change. Each of Borrower's Subsidiaries is duly organized
and existing and in good standing under the laws of the
jurisdiction of its incorporation or organization and qualified
and licensed to do business in, and in good standing in, any
state where the failure to be so licensed or qualified could be
expected to constitute a Material Adverse Change.
(b) Set forth on Schedule 5.8, is a complete and
accurate description of the authorized capital Stock of Borrower,
by class, and, as of the Closing Date, a description of the
number of shares of each such class that are issued and
outstanding and the number of such shares that are held in
Borrower's treasury. All such outstanding shares have been
validly issued and, as of the Closing Date, are fully paid,
nonassessable shares free of contractual preemptive rights. The
issuance and sale of all such shares have been in compliance with
all applicable federal and state securities laws. Other than as
described on Schedule 5.8, there are no subscriptions, options,
warrants, or calls relating to any shares of Borrower's capital
Stock, including any right of conversion or exchange under any
outstanding security or other instrument. Neither Borrower nor
any of its Subsidiaries is subject to any obligation (contingent
or otherwise) to repurchase or otherwise acquire or retire any
shares of its capital Stock or any security convertible into or
exchangeable for any of its capital Stock.
(c) Set forth on Schedule 5.8, is a complete and
accurate list of Borrower's direct and indirect Subsidiaries,
showing: (i) the jurisdiction of their incorporation or
organization; (ii) the number of shares of each class of common
and preferred Stock authorized for each of such Subsidiaries; and
(iii) the number and the percentage of the outstanding shares of
each such class owned directly or indirectly by Borrower. All of
the outstanding capital Stock of each such Subsidiary has been
validly issued and is fully paid and non-assessable. RAM has no
direct or indirect interest in any partnerships or limited
liability companies (other than the Magic Circle Partnerships,
Gulf States and ▇▇▇▇▇▇ Field). RAM has no equity interest in any
Person other than Borrower's Subsidiaries and RVC Energy.
(d) Except as set forth on Schedule 5.8, no
capital Stock (or any securities, instruments, warrants, options,
purchase rights, conversion or exchange rights, calls,
commitments or claims of any character convertible into or
exercisable for capital Stock) of any direct or indirect
Subsidiary of Borrower is subject to the issuance of any
security, instrument, warrant, option, purchase right, conversion
or exchange right, call, commitment or claim of any right, title,
or interest therein or thereto.
(e) RB Operating has no assets and does not
conduct any business. None of the Magic Circle Partnerships owns
assets having an aggregate fair market value in excess of
$500,000 or conducts any business other than as a non-operating
working interest owner in its oil and gas properties.
5.9 Due Authorization; No Conflict.
(a) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is
a party have been duly authorized by all necessary corporate
action.
(b) The execution, delivery, and performance by
Borrower of this Agreement and the Loan Documents to which it is
a party do not and will not (i) violate any provision of federal,
state, or local law or regulation (including Regulations U and X
of the Federal Reserve Board) applicable to Borrower, the
Governing Documents of Borrower, or any order, judgment, or
decree of any court or other Governmental Authority binding on
Borrower, (ii) conflict with, result in a breach of, or
constitute (with due notice or lapse of time or both) a default
under any Material Contract or other material contractual
obligation or material lease of Borrower, (iii) result in or
require the creation or imposition of any Lien of any nature
whatsoever upon any properties or assets of Borrower, other than
Permitted Liens, or (iv) require any approval of stockholders or
any approval or consent of any Person under any Material Contract
or other material contractual obligation of Borrower.
(c) Other than the taking of any action expressly
required under this Agreement and the Loan Documents, the
execution, delivery, and performance by Borrower of this
Agreement and the Loan Documents to which Borrower is a party do
not and will not require any registration with, consent, or
approval of, or notice to, or other action with or by, any
federal, state, foreign, or other Governmental Authority or other
Person.
(d) This Agreement and the Loan Documents to
which Borrower is a party, and all other documents contemplated
hereby and thereby, when executed and delivered by Borrower will
be the legally valid and binding obligations of Borrower,
enforceable against Borrower in accordance with their respective
terms, except as enforcement may be limited by equitable
principles or by bankruptcy, insolvency, reorganization,
moratorium, or similar laws relating to or limiting creditors'
rights generally.
(e) The Agent's Liens granted by Borrower to
Agent, for the benefit of the Lender Group, in and to its
properties and assets pursuant to this Agreement and the other
Loan Documents are validly created, perfected, and first priority
Liens, subject only to Permitted Liens.
(f) Neither the Borrower nor any of its
Subsidiaries has violated, and neither the Borrower nor any
Subsidiary will be in violation of, any provisions of the Natural
Gas Act or the Natural Gas Policy Act of 1978 or any other
Federal or State law or any of the regulations thereunder
(including those of the respective Conservation Commissions and
Land Offices of the various jurisdictions having authority over
its Oil and Gas Properties) with respect to its Oil and Gas
Properties which would create a Material Adverse Change, and the
Borrower and each Subsidiary have or will have made all necessary
rate filings, certificate applications, well category filings,
interim collection filings and notices, and any other filings or
certifications, and has or will have received all necessary
regulatory authorizations (including without limitation necessary
authorizations, if any, with respect to any processing
arrangements conducted by it or others respecting its Oil and Gas
Properties or production therefrom) required under said laws and
regulations with respect to all of its Oil and Gas Properties or
production therefrom so as not to create a Material Adverse
Change. Said material rate filings, certificate applications,
well category filings, interim collection filings and notices,
and other filings and certifications contain no untrue statements
of material facts nor do they omit any statements of material
facts necessary in said filings.
5.10 Claims, Disputes, and Litigation. There are no
actions or proceedings pending by or against Borrower before any
court or administrative agency and Borrower does not have
knowledge or belief of any pending or threatened litigation,
governmental investigations, or claims, complaints, actions, or
prosecutions involving Borrower or any guarantor of the
Obligations, except for: (a) ongoing collection matters in which
Borrower is the claimant, petitioner or plaintiff; (b) matters
disclosed on Schedule 5.10; and (c) matters arising after the
date hereof that, if decided adversely to Borrower, reasonably
could not be expected to result in a Material Adverse Change.
5.11 No Material Adverse Change. All financial
statements relating to Borrower or any guarantor of the
Obligations that have been delivered by Borrower to the Lender
Group have been prepared in accordance with GAAP (except, in the
case of unaudited financial statements, for the lack of footnotes
and being subject to year-end audit adjustments) and fairly
present Borrower's (or such guarantor's, as applicable) financial
condition as of the date thereof and Borrower's results of
operations for the period then ended. There has not been a
Material Adverse Change with respect to Borrower (or such
guarantor, as applicable) since the date of the latest financial
statements submitted to the Lender Group on or before the
Closing Date.
5.12 No Fraudulent Transfer.
(a) Borrower is Solvent.
(b) No transfer of property is being made by
Borrower and no obligation is being incurred by Borrower in
connection with the transactions contemplated by this Agreement
or the other Loan Documents with the intent to hinder, delay, or
defraud either present or future creditors of Borrower.
5.13 Employee Benefits. None of Borrower, any of its
Subsidiaries, or any of their ERISA Affiliates maintains or
contributes to any Benefit Plan, other than those listed on
Schedule 5.13. Borrower, each of its Subsidiaries and each ERISA
Affiliate have satisfied the minimum funding standards of ERISA
and the IRC with respect to each Benefit Plan to which it is
obligated to contribute. No ERISA Event has occurred nor has any
other event occurred that may result in an ERISA Event that
reasonably could be expected to result in a Material Adverse
Change. None of Borrower or its Subsidiaries, any ERISA
Affiliate, or any fiduciary of any Plan is subject to any direct
or indirect liability with respect to any Plan under any
applicable law, treaty, rule, regulation, or agreement. None of
Borrower or its Subsidiaries or any ERISA Affiliate is required
to provide security to any Plan under Section 401(a)(29) of the
IRC.
5.14 Environmental Condition. None of the Oil and Gas
Properties or the Real Property has ever been designated or
identified in any manner pursuant to any Environmental Laws as a
Hazardous Materials disposal site, or a candidate for closure
pursuant to any environmental protection statute. No Lien
arising under any Environmental Laws has attached to any revenues
or to any real or personal property owned or operated by Borrower
or by any Subsidiary of Borrower. Other than is disclosed on
Schedule 5.14 attached hereto, neither Borrower nor any
Subsidiary of Borrower has received a summons, citation, notice,
or directive from the Environmental Protection Agency or any
other federal or state governmental agency concerning any action
or omission by Borrower or any Subsidiary of Borrower resulting
in the releasing or disposing of Hazardous Materials into the
environment that remains outstanding. Each of Borrower and each
Subsidiary of Borrower has taken all steps reasonably necessary
to determine and, except as disclosed on Schedule 5.14 attached
hereto, has determined that no Hazardous Materials, solid waste,
or oil and gas exploration and production wastes, have been
disposed of or otherwise released and there has been no
threatened release of any Hazardous Materials on or to any
Property of Borrower or any of its Subsidiaries except in
compliance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare
or the environment. To the extent applicable, except as disclosed
on Schedule 5.14 attached hereto, all Property of Borrower and
each of its Subsidiaries which is operated by Borrower and any of
its Subsidiaries or Affiliates currently satisfies all design,
operation, and equipment requirements imposed by the OPA or
scheduled as of the Closing Date to be imposed by OPA during the
term of this Agreement, and Borrower does not have any reason to
believe that such Property, to the extent subject to OPA, will
not be able to maintain compliance with the OPA requirements
during the term of this Agreement. Other than disclosed on
Schedule 5.14 attached hereto, neither Borrower nor any of its
Subsidiaries has any known contingent liability in connection
with any release or threatened release of any oil, Hazardous
Material or solid waste into the environment. To the best of
Borrower's knowledge, all Hazardous Materials, solid waste, and
oil and gas exploration and production wastes, if any, generated
at any and all Property of Borrower or any of its Subsidiaries
have in the past been transported, treated and disposed of in
accordance with Environmental Laws and so as not to pose an
imminent and substantial endangerment to public health or welfare
or the environment, and, to the best knowledge of Borrower, all
such transport carriers and treatment and disposal facilities
have been and are operating in compliance with Environmental Laws
and so as not to pose an imminent and substantial endangerment to
public health or welfare or the environment, and are not the
subject of any existing, pending or threatened action,
investigation or inquiry by any Governmental Authority in
connection with any Environmental Laws.
5.15 Compliance with the Law. Neither Borrower nor any
of its Subsidiaries has violated any requirement of a
Governmental Authority or failed to obtain any license, permit,
franchise or other governmental authorization necessary for the
ownership of the Property or the conduct of its business, which
violation or failure could be expected to result in (in the event
such violation or failure were asserted by any Person through
appropriate action) a Material Adverse Change. Except for such
acts or failures to act as do not result in and could not be
expected to result in a Material Adverse Change, the Oil and Gas
Properties have been maintained, operated and developed in a good
and workmanlike manner and in conformity with all applicable laws
and all rules, regulations and orders of all duly constituted
authorities having jurisdiction and in conformity with the
provisions of all leases, subleases or other contracts comprising
a part of the Mineral Interests and other contracts and
agreements forming a part of the Oil and Gas Properties;
specifically in this connection, (i) after the Closing Date, no
Oil and Gas Properties are subject to having allowable production
reduced below the full and regular allowable (including the
maximum permissible tolerance) because of any overproduction
(whether or not the same was permissible at the time) prior to
the Closing Date and (ii) none of the ▇▇▇▇▇ comprising a part of
the Oil and Gas Properties are deviated from the vertical more
than the maximum permitted by applicable laws, regulations, rules
and orders, and such ▇▇▇▇▇ are, in fact, bottomed under and are
producing from the Oil and Gas Properties. Except as disclosed on
Schedule 5.15 attached hereto, neither Borrower nor any of its
Subsidiaries has entered into, and the Oil and Gas Properties are
not subject to, any agreements, consent orders, administrative
orders or similar obligations based on a violation or alleged
violation of Legal Requirements. Additionally, except as
disclosed on Schedule 5.15 attached hereto, neither Borrower nor
any of its Subsidiaries has entered into and the Oil and Gas
Properties are not subject to any agreements, consent orders,
administrative orders or similar obligations based on a violation
or alleged violation of Legal Requirements.
5.16 Bonds and Insurance. Schedule 5.16 attached
hereto contains an accurate and complete description of all
performance bonds related to operations on or pertaining to the
Oil and Gas Properties, and all material policies of insurance
owned or held by Borrower and each Subsidiary. Except as set
forth on Schedule 5.16, all such policies are in full force and
effect, all premiums with respect thereto covering all periods up
to and including the Closing Date have been paid, and no notice
of cancellation or termination has been received with respect to
any such policy. Such bonds and policies are sufficient for
compliance with all requirements of law and of all agreements to
which Borrower or any of its Subsidiaries is a party; are valid,
outstanding and enforceable policies; provide adequate coverage
in at least such amounts and against at least such risks (but
including in any event public liability) as are required by
Governmental Authorities and/or usually insured or bonded against
in the same general area by companies engaged in the same or a
similar business for the assets and operations of Borrower and
each of its Subsidiaries; will remain in full force and effect
through the respective dates set forth in Schedule 5.16 without
the payment of additional premiums except as set forth on
Schedule 5.16; and will not in any way be affected by, or
terminate or lapse by reason of, the transactions contemplated by
this agreement. Neither Borrower nor any of its Subsidiaries has
been refused any bonds or insurance with respect to its assets or
operations, nor has its coverage been limited below usual and
customary bond or policy limits, by any bonding company or
insurance carrier to which it has applied for any such bond or
insurance or with which it has carried insurance during the last
three years.
5.17 Hedging Agreement. Schedule 5.17 sets forth, as of
the Closing Date, a true and complete list of all Hedging
Agreements (including commodity price swap agreements, forward
agreements or contracts of sale which provide for prepayment for
deferred shipment or delivery of oil, gas or other commodities)
of the Borrower and each of its Subsidiaries, the material terms
thereof (including the type, term, effective date, termination
date and notional amounts or volumes), the net ▇▇▇▇ to market
value thereof, all credit support agreements relating thereto
(including any margin required or supplied), and the counterparty
to each such agreement. Borrower has delivered true and correct
copies of each of the Hedging Agreements to Agent prior to the
date of this Agreement.
5.18 Brokerage Fees. No brokerage commission or finders
fees has or shall be incurred or payable in connection with or as
a result of Borrower's obtaining financing from the Lender Group
under this Agreement, and neither Borrower nor any of its
Subsidiaries has utilized the services of any broker or finder in
connection with Borrower's obtaining financing from the Lender
Group under this Agreement.
5.19 Permits and other Intellectual Property. Except
as set forth on Schedule 5.19, each of Borrower and each
Subsidiary of Borrower owns or possesses adequate licenses or
other rights to use all Permits, patents, patent applications,
trademarks, trademark applications, service marks, service ▇▇▇▇
applications, trade names, copyrights, trade secrets and know-how
(collectively, the "Intellectual Property") that are necessary
for the operation of its business as currently conducted. No
claim is pending or threatened to the effect that Borrower or any
Subsidiary of Borrower infringes upon, or conflicts with, the
asserted rights of any other Person under any Intellectual
Property, and to the best of Borrower's knowledge there is no
basis for any such claim (whether pending or threatened). To the
best of Borrower's knowledge, no claim is pending or threatened
to the effect that any such Intellectual Property owned or
licensed by Borrower or a Subsidiary of Borrower, or in which
Borrower or a Subsidiary of Borrower otherwise has the right to
use is invalid or unenforceable by Borrower or such Subsidiary of
Borrower, and to the best of Borrower's knowledge there is no
basis for any such claim (whether or not pending or threatened).
5.20 Year 2000 Compatibility. Borrower and each of its
Subsidiaries presently are and hereafter will continue to be Year
2000 Compliant. To the best knowledge of Borrower, all suppliers
and vendors of Borrower and each of its Subsidiaries are
presently Year 2000 Compliant.
5.21 Locations; Leases.
(a) The primary accounting and business books,
records and papers of Borrower pertaining to the Collateral are
kept and maintained solely at Borrower's chief executive office
set forth in the beginning of this Agreement and at Borrower's
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇. In addition, the Collateral, and the books, records and
papers of Borrower pertaining thereto, are kept and maintained
solely at Borrower's chief executive office set forth in the
beginning of this Agreement and at those locations which are
listed on Schedule 5.1(a) attached hereto and at Borrower's
office at ▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇, except that certain Oil and Gas Property Collateral also
is located at the locations specified on Schedule 5.21 attached
hereto, which schedules include the names and addresses of each
of Borrower's landlords. Except (i) to accomplish sales of
Inventory in the ordinary course of business, or (ii) to dispose
of Collateral to the extent prescribed under Section 7.4,
Borrower shall not remove any Collateral from said executive
office or those locations listed on Schedule 5.1(a) or
Schedule 5.21, as the case may be.
(b) Except as Borrower shall have notified in
writing prior thereto and Borrower shall have delivered to Agent
a Collateral Access Agreement in form and substance satisfactory
to Agent, no tangible personal property of Borrower or any of its
Subsidiaries shall be in the care or custody of any third party
or stored or entrusted with a bailee or other third party and
none shall hereafter be placed under such care, custody, storage
or entrustment.
5.22 Absence of Certain Changes. Since September 30,
1999, there has not been without Agent's prior written consent:
(a) A waiver of any right relating to the Oil and
Gas Properties;
(b) A sale, lease or other disposition of the Oil
and Gas Properties;
(c) A mortgage, pledge or grant of a lien or
security interest in any of the Oil and Gas Properties, except
for those disclosed on Schedule 5.22 attached hereto;
(d) A contract for the sale of products produced
from the Oil and Gas Properties, except for (i) such contracts
that have been supplied to and reviewed and approved by Agent,
(ii) such contracts as are described in Schedule 5.22 or similar
contracts on like terms, or (iii) such contracts of 30 days or
less duration which are automatically renewed for an additional
period not to exceed 30 days unless terminated prior thereto by a
party thereto, provided the sale price for such contract is not
materially less than the spot price for the appropriate category
of oil or gas covered by such contract;
(e) A contract between Borrower and any of its
Subsidiaries; or
(f) A contract or commitment to do any of the
foregoing.
5.23 Operating Costs. Except as disclosed on
Schedule 5.23 attached hereto, all costs and expenses incurred in
connection with the operation of the Properties have been fully
paid and discharged by Borrower and the Subsidiaries of Borrower,
except normal costs and expenses incurred in operating the Oil
and Gas Properties which (a) in the case of costs and expenses
for drilling and drilling services, are less than 180 days past
the original invoice date and do not give rise to a Lien other
than a Permitted Lien, and (b) in the case of costs and expenses
other than for drilling and drilling services, are less than 120
days past the original invoice date and do not give rise to a
Lien other than a Permitted Lien.
5.24 Imbalances. Except as set forth on
Schedule 5.2(b) or on the most recent Reserve Report delivered to
Agent by Borrower pursuant to Section 6.2(g), or following the
Closing Date as permitted pursuant to Section 7.23, no Borrowing
Base Entity has taken or received any amount of gas, oil, liquid
hydrocarbons (or products refined therefrom) so that any person
or entity may thereafter be entitled to receive any portion of
the interests of such Borrowing Base Entity to "balance" any
previous disproportionate allocation.
5.25 No Default. Except as set forth on Schedule
5.1(c), no Material Contracts exist which encumber the Oil and
Gas Properties. The Material Contracts associated with the Oil
and Gas Properties are in full force and effect in accordance
with their respective terms, and there exist no defaults in the
performance of any obligation thereunder. Additionally, Borrower
is not aware of any event that with notice or lapse of time, or
both, would constitute a default under any such Material
Contracts.
5.26 Leases. The oil and gas leases associated with
the Oil and Gas Properties are in full force and effect in
accordance with their respective terms, and there exist no
material defaults in the performance of any obligation
thereunder. Additionally, Borrower is not aware of any event
that with notice or lapse of time, or both, would constitute a
default under any such oil and gas leases.
5.27 Marketing Agreements. Except as set forth in
Schedule 5.27, the Oil and Gas Properties (and the production
therefrom) are not subject to any purchase agreement, sale
agreement or similar marketing arrangement not cancelable on
thirty (30) days notice, nor are any of the Properties subject to
any agreements with any companies affiliated with Borrower that
cannot be terminated immediately upon Closing without penalty,
cost or liability to Agent.
5.28 Non-Consent Operations. Since the execution of
this Agreement, there have been no operations associated with the
Oil and Gas Properties under an operating agreement, unit
agreement or governmental order with respect to which any
Borrowing Base Entity has become a non-consenting party.
5.29 Condition of Equipment. All of the ▇▇▇▇▇,
facilities and equipment associated with the Oil and Gas
Properties are: (a) structurally sound with no material defects
known to Borrower, (b) in good operating condition, normal wear
and tear excepted and suitable for the purposes for which they
are being utilized, and (c) have been and are maintained in
accordance with prudent business standards.
5.30 ▇▇▇▇▇. Each oil or gas well located on the Oil
and Gas Properties is: (a) except as otherwise disclosed on
Schedule 5.1(b), if such oil or gas well is listed on a Reserve
Report, capable of producing in paying quantities, (b) properly
permitted, (c) to the best of Borrower's knowledge, in compliance
with all applicable Laws, except as otherwise disclosed on
Schedule 5.15 attached hereto, and (d) within the production
tolerances allocated by the governmental entity or tribal
authority having appropriate jurisdiction. Except as otherwise
disclosed on Schedule 5.1(b), all of the leaseholds, in which
there are located Mineral Interests of a Borrowing Base Entity
with respect to which one or more ▇▇▇▇▇ are listed on a Reserve
Report as having a NYMEX Value of $10,000 or more, are producing
Hydrocarbons in commercial quantities (except for up to 10 ▇▇▇▇▇
which otherwise would be producing Hydrocarbons in commercial
quantities that have been off production for not more than 3
months during the immediately preceding 12 month period for
routine maintenance, testing or repairs, temporary pipeline
interruption, minor reworking operations or minor production
enhancement operations). Each of each Borrowing Base Entity's
producing ▇▇▇▇▇ listed on Schedule 5.1(b) is located on an Oil
and Gas Property (i) covered by title searches and attorney title
letters (to the extent of at least $46,000,000 of NYMEX Value in
the aggregate as of the Closing Date, and thereafter as are
required pursuant to Section 6.17(a)), and (ii) described in the
legal description contained in an Oil and Gas Property Mortgage
which has been duly executed and delivered to Agent, except as
otherwise disclosed on Schedule 5.30 attached hereto.
6. AFFIRMATIVE COVENANTS.
Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final
payment of the Obligations, Borrower shall, and shall cause each
of its Subsidiaries to, do all of the following:
6.1 Accounting System. Maintain a standard and modern
system of accounting that enables Borrower to produce financial
statements in accordance with GAAP and maintain records
pertaining to the Collateral that contain information as from
time to time may be requested by Agent. Borrower also shall keep
a modern joint interest billing and remittance system with
respect to each of the Oil and Gas Properties on which it is the
operator and a modern reporting system that shows, among other
things, the value, revenues and profits/losses of the Oil and Gas
Properties, volume of production and value of sales of
Hydrocarbon production, the location and condition of the
Equipment and Borrower's positions and liability exposure under
the Hedging Agreements.
6.2 Collateral Reporting. Provide Agent with the
following documents at the following times in form satisfactory
to Agent during the term of this Agreement:
(a) By no later than the last day of each month,
a detailed update, for the previous month, of the Borrowing Base
on the form of the Borrowing Base Certificate which is attached
hereto as Exhibit 6.2 (or on such other form as Agent in its sole
discretion may require), including (i) a detailed calculation of
the NYMEX Value as of the fifth Business Day immediately
preceding the date of delivery of the most recent Reserve Report
of each of the Oil and Gas Properties (categorized by Proved
Developed Producing Reserves, Proved Developed Non-Producing
Reserves and Proved Undeveloped Reserves, subcategories of
Eligible Proved Developed Producing Reserves, and "other"), (ii)
historical production data of the oil and gas reserves included
in the Oil and Gas Property Collateral since the date of the most
recent Reserve Report, (iii) the Oil and Gas Property Collateral
prices received for production, lease operating expenses and such
other information as Agent may deem necessary or appropriate, in
Agent's sole discretion, (iv) any changes since the date of the
most recent Reserve Report in the categorization of any or all of
the Oil and Gas Properties among Proved Developed Producing
Reserves, Proved Developed Non-Producing Reserves and Proved
Undeveloped Reserves, subcategories of Eligible Proved Developed
Producing Reserves, and "other", (v) a reconciliation and
explanation of the changes of categorization of any Oil and Gas
Properties among Proved Developed Producing Reserves, Proved
Developed Non-Producing Reserves and Proved Undeveloped Reserves,
subcategories of Eligible Proved Developed Producing Reserves,
and "other", since the date of the immediately preceding
Borrowing Base Certificate, and (vi) any changes in the
Borrower's (or such Subsidiaries', as the case may be) Working
Interest or net revenue interest in the Oil and Gas Property
Collateral since the date of the previous month's Borrowing Base
Certificate which are attributable to (A) a decrease resulting
from the sale or other disposition or reduction thereof by
Borrower (or such Subsidiary) or a non-consent election or other
decrease by Borrower (on such Subsidiary), or (B) an increase
resulting from the acquisition or addition thereof by Borrower
(or such Subsidiary) except for those increases in existing Oil
and Gas Properties of Borrower (or such Subsidiary) caused by
other owners of Working Interests therein having made non-consent
elections or failed to honor their joint interest billing
obligations with respect thereto;
(b) By no later than the last day of each month,
(i) a detailed statement of sales and revenues derived from all
products produced from the Oil and Gas Properties, for the
previous month, including prices received, prior period
adjustments to such revenues and prices, and any Material Adverse
Change affecting the sales or marketing agreements or
arrangements with the purchasers of such products, and (ii) a
receivables aging as to all customers of Borrower and its
Subsidiaries;
(c) By no later than the last day of each month,
a written report to Agent, in form and substance acceptable to
Agent, detailing and aging Borrower's and each of its
Subsidiaries' unpaid lease operating expenses and unpaid other
liabilities, for the previous month, with respect to which a
mineral lien, subcontractor's lien, mechanic's lien,
materialmen's lien or other Lien against any of the Collateral
may arise which may have a priority superior to Agent's Lien on
such Collateral;
(d) By no later than the last day of each month,
notice of all claims, disputes, and litigation that have arisen
since the date of the most recent statement to Agent pursuant to
this Section 6.2; except (i) ongoing collection matters in which
Borrower or a Subsidiary of Borrower is the claimant or
plaintiff; and (ii) matters that, if decided adversely to
Borrower or such Subsidiary of Borrower, do not result in and
could not be expected to result in a Material Adverse Change;
(e) By no later than the last day of each month,
a written report to Agent, in form and substance acceptable to
Agent, detailing the costs incurred and revenues received by each
Borrowing Base Entity under its Hedging Agreements for oil and
gas production;
(f) By the last day of the month following each
calendar quarter (i.e., the last day of April, July, October and
January), a report: (i) listing the total amount actually paid
by each Borrowing Base Entity during the preceding quarter for:
(A) plugging and abandonment costs for previous or ongoing
plugging and abandonment operations pertaining to the Oil and Gas
Properties, and (B) general bond and supplemental bond payments
pertaining to plugging and abandonment costs; and (ii) estimating
the future payments for (A) and (B), above, for each of the
succeeding two quarters;
(g) Reserve Reports prepared by an independent
petroleum engineering consultant pertaining to the six-month
period ending December 31st and June 30th of each year (with such
Reserve Reports to be delivered on or before the 60th day
following such six-month period). Each Reserve Report shall be
in form and substance satisfactory to Agent, and shall: (i) be
accompanied by a certification of Borrower to the effect that
nothing has occurred since the date of the last Reserve Report
that could reasonably be expected to result in a Material Adverse
Change, except that which has previously been disclosed to Agent
in writing; (ii) be accompanied by a reconciliation showing any
changes in the Oil and Gas Property Collateral since the date of
the most recent of such Reserve Report in Borrower's (or such
Subsidiaries', as the case may be) Working Interest or net
revenue interest; and (iii) contain such other information as may
be requested by Agent;
(h) Upon request by Agent from time to time,
copies of each Borrowing Base Entity's lease files, well files
and contract files (including production reports on each well,
marketing contracts, and information regarding locations of and
equipment located on each well);
(i) Such other information, reports, statements,
materials and data as to the ▇▇▇▇▇ operated by a Borrowing Base
Entity or in which a Borrowing Base Entity otherwise has an
interest and the accounting and billing procedures utilized by
such Borrowing Base Entity in connection with such ▇▇▇▇▇ as shall
be requested by Agent, including, without limitation, relevant
computer programs, disks and tapes.
(i) Such other reports as to the Collateral or
the business or financial condition of Borrower or any Subsidiary
of Borrower as Agent may request from time to time.
Each delivery of a Reserve Report or a Borrowing Base
Certificate by Borrower to Agent also shall constitute a
representation and warranty by Borrower to Agent that, unless
otherwise disclosed to Agent in writing on or prior to the date
of such delivery, Borrower (or its Subsidiary, as the case may
be) owns the Oil and Gas Properties described in the Reserve
Report, free and clear of any Liens (except Permitted Liens).
6.3 Financial Statements, Reports, Certificates.
Deliver to Agent: (a) as soon as available, but in any event
within 30 days after the end of each month during each of
Borrower's fiscal years, a company prepared balance sheet, income
statement, and statement of cash flow covering Borrower's
operations during such period; and (b) as soon as available, but
in any event within 90 days after the end of each of Borrower's
fiscal years, financial statements of Borrower for each such
fiscal year, audited by independent certified public accountants
reasonably acceptable to Agent and certified, without any
qualifications, by such accountants to have been prepared in
accordance with GAAP, together with a certificate of such
accountants addressed to Agent stating that such accountants do
not have knowledge of the existence of any Default or Event of
Default. Such audited financial statements shall include a
balance sheet, profit and loss statement, and statement of cash
flow and, if prepared, such accountants' letter to management.
If Borrower is a parent company of one or more Subsidiaries, or
Affiliates, or is a Subsidiary of another company, then, in
addition to the financial statements referred to above, Borrower
agrees to deliver financial statements prepared on a
consolidating basis acceptable to Agent so as to present Borrower
and each such related entity separately, and on a consolidated
basis.
Together with the above, Borrower also shall deliver to
Agent, Borrower's Form 10-Q Quarterly Reports, Form 10-K Annual
Reports, and Form 8-K Current Reports, and any other filings made
by Borrower with the SEC, if any, as soon as the same are filed,
or any other information that is provided by Borrower to its
shareholders, and any other information reasonably requested by
the Agent relating to the financial condition of Borrower.
Each month, together with the financial statements
provided pursuant to Section 6.3(a), Borrower shall deliver to
Agent, a certificate signed by its chief financial officer to the
effect that: (i) all financial statements delivered or caused to
be delivered to any one or more members of the Lender Group
hereunder have been prepared in accordance with GAAP (except, in
the case of unaudited financial statements, for the lack of
footnotes and being subject to year-end audit adjustments) and
fairly present the financial condition of Borrower, (ii) the
representations and warranties of Borrower contained in this
Agreement and the other Loan Documents are true and correct in
all material respects on and as of the date of such certificate,
as though made on and as of such date (except to the extent that
such representations and warranties relate solely to an earlier
date), (iii) for each month that also is the date on which a
financial covenant in Section 7.20 is to be tested, a Compliance
Certificate demonstrating in reasonable detail compliance at the
end of such period with the applicable financial covenants
contained in Section 7.20, and (iv) on the date of delivery of
such certificate to Agent there does not exist any condition or
event that constitutes a Default or Event of Default (or, in the
case of clauses (i), (ii), or (iii), to the extent of any non-
compliance, describing such non-compliance as to which he or she
may have knowledge and what action Borrower has taken, is taking,
or proposes to take with respect thereto).
As soon as available and in any event within forty-five
(45) days after the last day of each calendar quarter, a report,
in form and substance satisfactory to the Agent, setting forth as
of the last Business day of such calendar quarter, a true and
complete list of all Hedging Agreements (including commodity
price swap agreements, forward agreements or contracts of sale
which provide for prepayment for deferred shipment or delivery of
oil, gas or other commodities) of the Borrower and each
Subsidiary, the material terms thereof (including the type, term,
effective date, termination date and notional amounts or
volumes), the net ▇▇▇▇ to market values therefor, any new credit
support agreements relating thereto, any margin required or
supplied under any credit support document, and the counterparty
to each such agreement.
Upon request by Agent from time to time, Borrower and
its Subsidiaries shall arrange for its independent certified
public accountants to meet with Agent and its representatives
within a reasonable (as determined by Agent) time following such
request. Borrower shall be permitted to attend such meeting.
In the event that Borrower and its Subsidiaries shall fail to
arrange any such meeting requested by Agent within a reasonable
(as determined by Agent) time following such request, and Agent
shall have notified Borrower of Agent's intention to meet with
such independent certified public accountants, Borrower
authorizes its independent certified public accountants to
communicate with Agent and to release to Agent whatever financial
information concerning Borrower and its Subsidiaries that Agent
reasonably may request at Borrower's expense (including copies of
Borrower's financial statements, papers related thereto, and
other accounting records of any nature in their possession), and
to disclose to Agent any information they may have regarding
Borrower's business affairs and financial conditions.
6.4 Tax Returns. Deliver to Agent copies of each of
Borrower's future federal income tax returns, and any amendments
thereto, within 30 days of the filing thereof with the Internal
Revenue Service.
6.5 Guarantor Reports. Cause any Guarantor of any of
the Obligations to deliver its annual financial statements at the
time when Borrower provides its audited financial statements to
Agent and copies of all federal income tax returns as soon as the
same are available and in any event no later than 30 days after
the same are required to be filed by law.
6.6 [Intentionally Omitted].
6.7 Title to Equipment. Upon Agent's request,
Borrower promptly shall deliver to Agent, properly endorsed, any
and all evidences of ownership of, certificates of title, or
applications for title to any items of Equipment.
6.8 Maintenance of Oil and Gas Property Collateral and
Equipment; Operation of Business.
(a) At its expense, do or cause to be done all
things necessary to preserve and keep in good repair, working
order and efficiency (except for normal wear and tear) all of its
Oil and Gas Property Collateral and other material Properties
including, without limitation, all equipment, machinery and
facilities, and from time to time make all the necessary repairs,
renewals and replacements so that at all times the state and
condition of its Oil and Gas Property Collateral and other
material Property will be fully preserved and maintained,
allowing for depletion in the ordinary course of business, except
to the extent a portion of such Oil and Gas Property Collateral
is no longer capable of producing Hydrocarbons in commercial
quantities (in which case Borrower or the relevant Subsidiary of
Borrower shall fully comply with all of its obligations and Legal
Requirements pertaining to plugging and abandoning its ▇▇▇▇▇
related to such portion). Borrower shall, and shall cause each of
its Subsidiaries to, promptly: (i) pay and discharge, or make
reasonable and customary efforts to cause to be paid and
discharged, all delay rentals, royalties, expenses and
indebtedness accruing under the leases or other agreements
affecting or pertaining to its Oil and Gas Property Collateral;
(ii) perform or make reasonable and customary efforts to cause to
be performed, in accordance with industry standards the
obligations required by each and all of the assignments, deeds,
leases, sub-leases, contracts and agreements affecting its
interests in its Oil and Gas Property Collateral and other
material Properties; (iii) shall, and shall cause each of its
Subsidiaries to, do all other things necessary to keep
unimpaired, except for Permitted Liens, its rights with respect
to each and all of the assignments, deeds, leases, sub-leases,
contracts and agreements affecting its interests in its Oil and
Gas Property Collateral and other material Property and prevent
any forfeiture thereof or a default thereunder, except (A) to the
extent a portion of such Oil and Gas Property Collateral is no
longer capable of producing Hydrocarbons in economically
reasonable amounts and (B) for dispositions permitted by Section
7.4 hereof. Borrower shall, and shall cause each of its
Subsidiaries, to operate its Oil and Gas Property Collateral and
other material Property or cause or make reasonable and customary
efforts to cause such Oil and Gas Property Collateral and other
material Properties to be operated in a reasonably prudent manner
in accordance with the practices of the industry and in
compliance in all material respects with all applicable contracts
and agreements and in compliance in all material respects with
all Legal Requirements.
(b) At its expense, maintain the Equipment in
good operating condition and repair (ordinary wear and tear
excepted), and make all necessary replacements thereto, so that
the value and operating efficiency thereof shall at all times be
maintained and preserved. Other than those items of Equipment
that constitute fixtures on the Closing Date, Borrower shall not
permit any item of Equipment to become a fixture to real estate
or an accession to other property, and such Equipment shall at
all times remain personal property.
(c) At its expense, (i) develop or cause the
relevant Subsidiary of Borrower to develop (to the extent
reasonably necessary to maintain the lease) and maintain or cause
the relevant Subsidiary of Borrower to maintain the leases,
▇▇▇▇▇, units and acreage to which the Oil and Gas Property
Collateral pertains in a prudent and economical manner, (ii) act
prudently (and cause each of its Subsidiaries to act prudently)
and in accordance with customary industry standards in managing
or operating the Oil and Gas Property Collateral, (iii) pay and
promptly discharge all rentals, delay rentals, royalties,
overriding royalties, payments of production and other
indebtedness or obligations accruing under the leases comprising
the Oil and Gas Property Collateral, and perform (or cause the
relevant Subsidiary of Borrower to perform) every act required to
keep such leases in full force and effect, (iv) deliver all
operating agreements, pooling or unitization agreements, sales or
processing contracts, drilling and/or development agreements,
pipeline transportation agreements and other material agreements
which pertain to the Oil and Gas Property Collateral, (v) deliver
production information on a monthly basis, (vi) deliver copies of
all reports, forms and other documents and data submitted by
Borrower or any of its Subsidiaries to the Federal Energy
Regulatory Commission, the applicable state conservation agencies
and any other applicable Governmental Authorities, (vii) not
mortgage, pledge or otherwise encumber or sell (nor permit any
Subsidiary of Borrower to mortgage, pledge or otherwise encumber
or sell) the Oil and Gas Property Collateral except to the
limited extent specifically permitted under this Agreement,
(viii) not alter (or permit any Subsidiary of Borrower to alter)
any Material Contract relating to the Oil and Gas Property
Collateral except for alternations in the ordinary course of
business which could not reasonably be expected to result in a
Material Adverse Change (provided, however, that exception shall
not apply to (A) any alterations to Hedging Agreements that could
reasonably be expected to result in a violation of Section 6.19,
and (B) any alterations to the Unsecured Notes Indenture or the
Unsecured Notes, (ix) pay on or before the due date thereof all
of Borrower's and each of its Subsidiaries' lease operating
expenses and other liabilities with respect to which a mineral
lien, subcontractor's lien, mechanic's lien, materialmen's lien
or other Lien against any of the Collateral may arise which may
have a priority superior to Agent's Lien on such Collateral, and
(x) perform all acts and execute such documents as Agent may
reasonably require in order to maintain the existence, perfection
and first priority of Agent's Lien on the Oil and Gas Property
Collateral and the other Collateral.
6.9 Taxes.
(a) Cause all assessments and taxes, whether
real, personal, or otherwise, due or payable by, or imposed,
levied, or assessed against Borrower (or any Subsidiary of
Borrower) or any of its property or assets to be paid in full,
before delinquency or before the expiration of any extension
period, except to the extent that the validity of such assessment
or tax (other than production taxes, severance taxes, payroll
taxes or taxes that are the subject of a United States federal
tax lien) shall be the subject of a Permitted Protest.
(b) Make due and timely payment or deposit of all
such federal, state, and local taxes, assessments, or
contributions required of it (or a Subsidiary of Borrower) by
law, and will execute and deliver to Agent, on demand,
appropriate certificates attesting to the payment thereof or
deposit with respect thereto.
(c) Make timely payment or deposit of all tax
payments and withholding taxes required of it and its
Subsidiaries by applicable laws, including those laws concerning
F.I.C.A., F.U.T.A., state disability, and local, state, and
federal income taxes, and will, upon request, furnish Agent with
proof satisfactory to Agent indicating that Borrower has made
such payments or deposits.
6.10 Insurance.
(a) At its expense, keep the Collateral insured
against loss or damage by such hazards and risks as are
ordinarily insured against by other owners in similar businesses
and in such amounts as shall be reasonably required by Agent.
Borrower shall also maintain such public liability and property
damage insurance relating to Borrower's ownership and use of
Collateral as is ordinarily maintained by other owners in similar
businesses and in such amounts as shall be reasonably required by
Agent. In addition to and not in limitation of the foregoing,
Borrower shall at its expense maintain the insurance policies
described in Schedule 5.16 in full force and effect.
(b) [Intentionally Omitted.]
(c) All such policies of insurance shall be in
such form, with such companies, and in such amounts as may be
satisfactory to Agent. All insurance required herein shall be
written by companies which have a Best's rating of A for capital
and X for financial stability. All hazard insurance and such
other insurance as Agent shall specify, shall contain a Form
438BFU (NS) mortgagee endorsement, or an equivalent endorsement
satisfactory to Agent, showing Agent as sole loss payee thereof,
and shall contain a waiver of warranties. Every policy of
insurance referred to in this Section 6.10 shall contain an
agreement by the insurer that it will not cancel such policy
except after 30 days prior written notice to Agent and that any
loss payable thereunder shall be payable notwithstanding any act
or negligence of Borrower or the Lender Group which might, absent
such agreement, result in a forfeiture of all or a part of such
insurance payment and notwithstanding (i) occupancy or use of the
Collateral for purposes more hazardous than permitted by the
terms of such policy, (ii) any foreclosure or other action or
proceeding taken by the Lender Group pursuant to the Oil and Gas
Property Mortgages or the Real Property Mortgages upon the
happening of an Event of Default, or (iii) any change in title or
ownership of the Collateral. Borrower shall deliver to Agent
certified copies of such policies of insurance and evidence of
the payment of all premiums therefor.
(d) Original policies or certificates thereof
satisfactory to Agent evidencing such insurance shall be
delivered to Agent at least 30 days prior to the expiration of
the existing or preceding policies. Borrower shall give Agent
prompt notice of any loss covered by such insurance, and Agent
shall have the right to adjust any loss. Agent shall have the
exclusive right to adjust all losses payable under any such
insurance policies without any liability to Borrower or any
Subsidiary of Borrower whatsoever in respect of such adjustments.
Any monies received as payment for any loss under any insurance
policy including the insurance policies mentioned above, shall be
paid over to Agent to be applied at the option of the Required
Lenders either to the prepayment of the Obligations without
premium, in such order or manner as Agent may elect, or shall be
disbursed to Borrower under stage payment terms satisfactory to
Agent for application to the cost of repairs, replacements, or
restorations. All repairs, replacements, or restorations shall
be effected with reasonable promptness and shall be of a value at
least equal to the value of the items or property destroyed prior
to such damage or destruction. Upon the occurrence of an Event
of Default, the Lender Group shall have the right to apply all
prepaid premiums to the payment of the Obligations in such order
or form as Agent shall determine.
(e) Neither Borrower nor any Subsidiary of
Borrower shall take out separate insurance concurrent in form or
contributing in the event of loss with that required to be
maintained under this Section 6.10, unless Agent is included
thereon as named insured with the loss payable to Agent under a
standard 438BFU (NS) Mortgagee endorsement, or its local
equivalent. Borrower immediately shall notify Agent whenever
such separate insurance is taken out, specifying the insurer
thereunder and full particulars as to the policies evidencing the
same, and originals of such policies immediately shall be
provided to Agent.
(f) Borrower shall, and shall cause each of its
Subsidiaries to, either (i) maintain its own, or (ii) use its
best efforts to cause the operator of each Oil and Gas Property
Collateral in which Borrower or any of its Subsidiaries owns a
non-operating Working Interest to maintain for the benefit of all
Working Interest owners, insurance of the types and in the
coverage amounts and with reasonable deductibles as is usual and
customary, including those specified in Section 6.10(b), to name
the non-operating Working Interest owners, including Borrower and
its Subsidiaries, as an additional insured on the liabilities,
and to otherwise have the such insurance comply with the
requirements specified in Section 6.10(c). Borrower shall, and
shall cause each of its Subsidiaries to, use its best efforts to
obtain from its operators certificates of insurance evidencing
coverage of the Oil and Gas Property Collateral as set forth
above as and when requested by Agent.
6.11 No Setoffs or Counterclaims Make payments
hereunder and under the other Loan Documents by or on behalf of
Borrower without setoff or counterclaim and free and clear of,
and without deduction or withholding for or on account of, any
federal, state, or local taxes.
6.12 Location of Inventory and Equipment Keep the
Inventory and Equipment only at the locations identified in
Schedule 5.21 and in the Oil and Gas Property Mortgages in
Schedule 5.1(a); provided, however, that Borrower may amend
Schedule 5.21 so long as such amendment occurs by written notice
to Agent not less than 30 days prior to the date on which the
Inventory or Equipment is moved to such new location, so long as
such new location is within the continental United States, and so
long as, at the time of such written notification, Borrower
provides any financing statements or fixture filings necessary or
advisable to perfect and continue perfected the Agent's Liens on
such assets and also provides to Agent a Collateral Access
Agreement.
6.13 Compliance with Laws.
(a) Comply with the requirements of all
applicable laws, rules, regulations, and orders of any
Governmental Authority, including all Environmental Laws, the
Fair Labor Standards Act and the Americans With Disabilities Act,
other than laws, rules, regulations, and orders the non-
compliance with which, individually or in the aggregate, would
not result in and reasonably could not be expected to result in a
Material Adverse Change.
(b) Establish and implement such procedures as
may be necessary to continuously determine and assure that any
failure of the following would not result in and could not be
expected to result in a Material Adverse Change: (i) all Property
of the Borrower and its Subsidiaries and the operations conducted
thereon and other activities of the Borrower and its Subsidiaries
are in compliance with and do not violate the requirements of any
Environmental Laws, (ii) no oil, Hazardous Materials or solid
wastes are disposed of or otherwise released on or to any
Property owned by any such party except in compliance with
Environmental Laws, (iii) no Hazardous Materials will be released
on or to any such Property in a quantity equal to or exceeding
that quantity which requires reporting pursuant to Section 103 of
CERCLA, and (iv) no oil, oil and gas exploration and production
wastes, or Hazardous Materials is released on or to any such
Property so as to pose an imminent and substantial endangerment
to public health or welfare or the environment.
(c) Promptly notify Agent in writing of any
threatened action, investigation or inquiry by any Governmental
Authority of which Borrower or any of its Subsidiaries has
knowledge in connection with any Environmental Laws, excluding
routine testing and minor corrective action.
(d) Provide environmental audits and tests in
accordance with American Society for Testing and Materials
standards, as requested by Agent or as otherwise required to be
obtained by Agent or by any Governmental Authority in connection
with Borrower's existing and hereafter acquired Oil and Gas
Properties or other material Properties.
6.14 Employee Benefits.
(a) Cause to be delivered to Agent: (i) promptly,
and in any event within 10 Business Days after Borrower or any of
its Subsidiaries knows or has reason to know that an ERISA Event
has occurred that has resulted in or reasonably could be expected
to result in a Material Adverse Change, a written statement of
the chief financial officer of Borrower describing such ERISA
Event and any action that is being taking with respect thereto by
Borrower, any such Subsidiary or ERISA Affiliate, and any action
taken or threatened by the IRS, Department of Labor, or PBGC.
Borrower or such Subsidiary, as applicable, shall be deemed to
know all facts known by the administrator of any Benefit Plan of
which it is the plan sponsor, (ii) promptly, and in any event
within 3 Business Days after the filing thereof with the IRS, a
copy of each funding waiver request filed with respect to any
Benefit Plan and all communications received by Borrower, any of
its Subsidiaries or, to the knowledge of Borrower, any ERISA
Affiliate with respect to such request, and (iii) promptly, and
in any event within 3 Business Days after receipt by Borrower,
any of its Subsidiaries or, to the knowledge of Borrower, any
ERISA Affiliate, of the PBGC's intention to terminate a Benefit
Plan or to have a trustee appointed to administer a Benefit Plan,
copies of each such notice.
(b) Cause to be delivered to Agent, upon Agent's
request, each of the following: (i) a copy of each Plan (or,
where any such plan is not in writing, complete description
thereof) (and if applicable, related trust agreements or other
funding instruments) and all amendments thereto, all written
interpretations thereof and written descriptions thereof that
have been distributed to employees or former employees of
Borrower or its Subsidiaries; (ii) the most recent determination
letter issued by the IRS with respect to each Benefit Plan;
(iii) for the three most recent plan years, annual reports on
Form 5500 Series required to be filed with any governmental
agency for each Benefit Plan; (iv) all actuarial reports prepared
for the last three plan years for each Benefit Plan; (v) a
listing of all Multiemployer Plans, with the aggregate amount of
the most recent annual contributions required to be made by
Borrower or any ERISA Affiliate to each such plan and copies of
the collective bargaining agreements requiring such
contributions; (vi) any information that has been provided to
Borrower or any ERISA Affiliate regarding withdrawal liability
under any Multiemployer Plan; and (vii) the aggregate amount of
the most recent annual payments made to former employees of
Borrower or its Subsidiaries under any Retiree Health Plan.
6.15 Leases. Pay when due all rents and other amounts
payable under any leases to which Borrower or a Subsidiary of
Borrower is a party or by which Borrower's or such Subsidiary's
properties and assets are bound, unless such payments are the
subject of a Permitted Protest. To the extent that Borrower or
any Subsidiary of Borrower fails timely to make payment of such
rents and other amounts payable when due under its leases, Agent
shall be entitled, in its discretion, to reserve an amount equal
to such unpaid amounts against the Borrowing Base.
6.16 Broker Commissions. Pay any and all brokerage
commission or finders fees incurred or payable in connection with
or as a result of Borrower's obtaining financing from the Lender
Group under this Agreement.
6.17. Oil and Gas Property Title Information.
(a) (i) On or before the Closing Date, Borrower
will provide Agent with (x) the results of recent searches
conducted by Borrower of the indexes and records for
grantor/grantee, liens, uniform commercial code financing
statements, judgments and lis pendens in the top twenty counties
or parishes in the United States by NYMEX Value in which are
situated Oil and Gas Properties of the Borrowing Base Entities
(Borrower hereby representing and warranting that such counties
and parishes contain approximately $56,800,000 in NYMEX Value for
Oil and Gas Properties of the Borrowing Base Entities), and in
connection with such searches will provide a certification and
letter from a qualified title attorney in the form previously
supplied to Borrower by Agent, which certification and letter
shall be satisfactory to Agent, and (y) a schedule of the net
revenue interest and actual receipts and disbursements for each
well which a Borrowing Base Entity operates, and the actual
receipts for each well in which a Borrowing Base Entity is a non-
operating Working Interest owner, for each of the 350 most
valuable ▇▇▇▇▇ of the Borrowing Base Entities (Borrower hereby
representing and warranting that such 350 ▇▇▇▇▇ contain
approximately $60,300,000 in NYMEX Value) for the two most recent
calendar months preceding the Closing Date for which such
information is available, but in no event earlier than July and
August 1999, and (ii) on or before delivery to Agent of each
Reserve Report required after the Closing Date by Section 2.1(b)
or Section 6.2, Borrower will provide Agent with (A) current
title opinions covering all of the Oil and Gas Property
Collateral acquired after the Closing Date having a NYMEX Value
of $100,000 or more for which current title opinions have not
previously been provided to Agent and such other Oil and Gas
Property Collateral as Agent may from time to time require so
that at all times the value of Eligible Proved Developed
Producing Reserves for which title opinions are or have been
provided to Agent shall equal or exceed seventy-five percent
(75%) of the NYMEX Value of all Oil and Gas Property Collateral
acquired after the Closing Date, and (B) current ▇▇▇▇▇▇▇ reports
covering all of the Oil and Gas Property Collateral acquired
after the Closing Date having a NYMEX Value of between $50,000
and $100,000 for which current ▇▇▇▇▇▇▇ reports or current title
opinions have not previously provided to Agent.
(b) Borrower shall cure all title defects or
exceptions which are not Permitted Liens, or substitute
acceptable Oil and Gas Property Collateral with no title defects
or exceptions except for Permitted Liens covering Oil and Gas
Property Collateral of an equivalent value, within 30 days after
a request by Agent to cure such defects or exceptions. If the
Borrower is unable to cure any title defect requested by Agent to
be cured within the 30 day period, such failure to cure shall not
be a Default or an Event of Default, but instead such Property
shall remain excluded from the Borrowing Base as provided in
Section 2.1 until such time as title is satisfactory to Agent.
Upon the discovery of any title defect or exception which is not
a Permitted Lien, Agent shall have the right to exercise the
right to remedy such title defect or exception in its sole
discretion from time to time (and any failure to so exercise this
remedy at any time shall not be a waiver as to future exercise of
the remedy by Agent).
6.18 Additional Collateral.
(a) (i) should Borrower or any of its
Subsidiaries purchase, otherwise acquire or own any Oil and Gas
Property that is not already included in the Oil and Gas Property
Collateral and the subject of an Oil and Gas Property Mortgage in
favor of Agent for the benefit of the Lender Group, Borrower will
grant or cause to be granted to Agent as security for the
Obligations a first-priority Lien (subject only to Permitted
Liens) on all of Borrower's or such Subsidiary's, as the case may
be, interest in such Oil and Gas Properties not already subject
to a Lien of such an Oil and Gas Property Mortgage simultaneously
with Borrower's or such Subsidiary's purchase, acquisition or
ownership of such Oil and Gas Property which Lien will be created
and perfected by and in accordance with the provisions of an Oil
and Gas Property Mortgage and other security agreements and
financing statements, or other security instruments, all in form
and substance satisfactory to Agent in its sole discretion and in
sufficient executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes; and (ii) should
Borrower or any of its Subsidiaries purchase, otherwise acquire
or own any Real Property that is not already included in the Real
Property Collateral and the subject of a Real Property Mortgage
in favor of Agent for the benefit of the Lender Group, Borrower
will grant or cause to be granted to Agent as security for the
Obligations a first-priority Lien (subject only to Permitted
Liens) on all of Borrower's or such Subsidiary's, as the case may
be, interest in such Real Property not already subject to a Lien
of such a Real Property Mortgage simultaneously with Borrower's
or such Subsidiary's purchase, acquisition or ownership of such
Real Property which Lien will be created and perfected by and in
accordance with the provisions of a Real Property Mortgage and
other security agreements and financing statements, or other
security instruments, all in form and substance satisfactory to
Agent in its sole discretion and in sufficient executed (and
acknowledged where necessary or appropriate) counterparts for
recording purposes,
(b) Concurrently with the granting of the Lien or
other action referred to in Section 6.18(a) above as to Oil and
Gas Property, Borrower will provide to Agent title information
and (i) a current title opinion covering such Oil and Gas
Property having a NYMEX Value of $100,000 or more and such other
Oil and Gas Property Collateral as Agent may from time to time
require so that at all times the value of Eligible Proved
Developed Producing Reserves for which title opinions are or have
been provided to Agent shall equal or exceed seventy-five percent
(75%) of the NYMEX Value of all Oil and Gas Property Collateral
acquired after the Closing Date, and (ii) current ▇▇▇▇▇▇▇ reports
covering such Oil and Gas Property having a NYMEX Value of
between $50,000 and $100,000, in each case in form and substance
satisfactory to Agent in its sole discretion with respect to
Borrower's or such Subsidiary's, as the case may be, interests in
such Oil and Gas Properties, and concurrently with the granting
of the Lien or other action referred to in Section 6.18(a) above
as to Real Property, Borrower will provide to Agent title
information and a mortgagee title insurance commitment in form
and substance satisfactory to Agent in its sole discretion with
respect to Borrower's or such Subsidiary's, as the case may be,
interests in such Real Property.
(c) Borrower shall cause all of its present and
future Subsidiaries (other than the Magic Circle Partnerships and
RB Operating Company) that are 50% or more owned directly or
indirectly by Borrower to execute a Guaranty Agreement and
Security Agreements.
6.19 Hedging Agreements. The Borrowing Base Entities
shall maintain in effect at all times on a continuous basis one
or more Hedging Agreements with respect to its Hydrocarbon
production with one or more investment grade counterparties,
rated Aa3 or better by ▇▇▇▇▇'▇, A+ or better according to
Standard & Poor's, or the equivalent by a rating agency
acceptable to Agent or with a counterparty otherwise acceptable
to Agent in its reasonable judgment, which Hedging Agreements
taken together shall at all times cover, for the period ending
not less than 6 months from the date of any determination of
compliance with this covenant, aggregate notional volumes of
Hydrocarbons equal to not less than 25% and not more than 75% of
the Borrowing Base Entities' forecasted Hydrocarbon production
for such period from Oil and Gas Properties classified as Proved
Developed Producing Reserves as of the date of the most recent
Reserve Report. Borrower shall use such Hedging Agreements
solely as a part of its normal business operations as a risk
management strategy and/or hedge against changes resulting from
market conditions related to Borrower's and its Subsidiaries' oil
and gas operations and not as a means to speculate for investment
purposes on trends and shifts in financial or commodities
markets. Borrower shall notify Agent immediately upon becoming
aware (in any event not later than the close of business on the
same Business Day) that the production of Hydrocarbons by any
Borrowing Base Entity could reasonably be expected to be
insufficient to meet its obligations under any Hedging
Agreements.
6.20 Further Assurances. Cure promptly any defects in
the creation or issuance of the Obligations or the execution or
delivery of the Obligations and/or Loan Documents, including this
Agreement. Borrower at its expense shall, and shall cause each of
its Subsidiaries to promptly execute and deliver to Agent upon
request all such other documents, agreements and instruments to
comply with or accomplish the covenants and agreements of
Borrower or any of its Subsidiaries in the Loan Documents,
including this Agreement, or to further evidence and more fully
describe the collateral intended as security for the Obligations,
or to correct any omissions in the Loan Documents, or to state
more fully the security obligations set out herein or in any of
the Loan Documents, or to perfect, protect or preserve any Liens
created pursuant to any of the Loan Documents, or to make any
recordings, to file any notices or obtain any consents, all as
may be reasonably necessary or appropriate in connection
therewith.
7. NEGATIVE COVENANTS.
Borrower covenants and agrees that, so long as any
credit hereunder shall be available and until full and final
payment of the Obligations, Borrower will not, and will not
permit any of its Subsidiaries to, do any of the following
without the Required Lenders' prior written consent:
7.1 Indebtedness. Create, incur, assume, permit,
guarantee, or otherwise become or remain, directly or indirectly,
liable with respect to any Indebtedness, except:
(a) Indebtedness evidenced by this Agreement;
(b) Indebtedness set forth on Schedule 7.1;
(c) Indebtedness secured by Permitted Liens;
(d) the Unsecured Notes;
(e) Indebtedness of a Loan Party to another Loan
Party which is not set forth in Schedule 7.1, provided that the
aggregate amount of all such Indebtedness not otherwise disclosed
on Schedule 7.1 as to all Loan Parties may not exceed $2,500,000
at any particular date;
(f) Indebtedness associated with bonds or surety
obligations required by Legal Requirements in connection with the
operation of Borrower's and its Subsidiaries' Oil and Gas
Properties;
(g) Indebtedness under Hedging Agreements
covering oil or gas entered into as a part of its normal business
operations as a risk management strategy and/or hedge against
changes resulting from market conditions related to Borrower's
and its Subsidiaries' oil and gas operations (but not as a means
to speculate for investment purposes on trends and shifts in
financial or commodities markets) but only to the extent that the
total volumes hedged for any 6 month period are neither less than
25% nor greater than 75% of the forecasted Hydrocarbon production
of the Borrowing Base Entities for such period from Oil and Gas
Properties classified as Proved Developed Producing Reserves as
indicated in the most recent Reserve Report; and
(h) refinancings, renewals, or extensions of
Indebtedness permitted under clauses (b) and (c) of this Section
7.1 (and continuance or renewal of any Permitted Liens associated
therewith) and under clause (d) of this Section 7.1, in each such
case so long as: (i) the terms and conditions of such
refinancings, renewals, or extensions do not materially impair
the prospects of repayment of the Obligations by Borrower, (ii)
the net cash proceeds of such refinancings, renewals, or
extensions do not result in an increase in the aggregate
principal amount of the Indebtedness so refinanced, renewed, or
extended, (iii) such refinancings, renewals, refundings, or
extensions do not result in a shortening of the average weighted
maturity of the Indebtedness so refinanced, renewed, or extended,
and (iv) to the extent that Indebtedness that is refinanced was
subordinated in right of payment to the Obligations, then the
subordination terms and conditions of the refinancing
Indebtedness must be at least as favorable to the Lender Group as
those applicable to the refinanced Indebtedness.
7.2 Liens. Create, incur, assume, or permit to exist,
directly or indirectly, any Lien on or with respect to any of its
property or assets, of any kind, whether now owned or hereafter
acquired, or any income or profits therefrom, except for
Permitted Liens (including Liens that are replacements of
Permitted Liens to the extent that the original Indebtedness is
refinanced under Section 7.1(h) and so long as the replacement
Liens only encumber those assets or property that secured the
original Indebtedness).
7.3 Restrictions on Fundamental Changes.
(a) Enter into any merger, consolidation,
reorganization, or recapitalization, or reclassify its capital
Stock, other than (i) a merger into Borrower of one or more of
the other Loan Parties, provided that Borrower is the surviving
entity, and (ii) a recapitalization of the Unsecured Notes
provided that Agent has given prior written consent to the terms
and provisions of such recapitalization and further provided that
any capital stock of Borrower or any Subsidiary of Borrower
issued in connection with such recapitalization must not by its
terms (or by the terms of any security into which it is
convertible or for which it is exercisable, redeemable or
exchangeable), or upon the happening of any event or with the
passage of time, mature, or be mandatorily redeemable, pursuant
to a sinking fund obligation or otherwise, or be redeemable at
the option of the holder thereof, in whole or in part, in each
case on or prior to, the Renewal Date (or any anniversary of the
Renewal Date if this Agreement is renewed), or be convertible
into or be exchangeable for debt securities of Borrower or any
Subsidiary of Borrower, except to the extent that such exchange
or conversion rights cannot be exercised prior to the Renewal
Date (or any anniversary of the Renewal Date if this Agreement is
renewed).
(b) Liquidate, wind up, or dissolve itself (or
suffer any liquidation or dissolution).
(c) Convey, sell, assign, lease, transfer, or
otherwise dispose of, in one transaction or a series of
transactions, all or any substantial part of its property or
assets.
7.4 Disposal of Assets. Sell, lease, assign, farm-
out, convey, transfer, or otherwise dispose of any of any
Borrower's or any of its Subsidiaries' Properties or assets other
than (a) sales of Inventory to buyers in the ordinary course of
such Borrower's business as currently conducted, (b) the sale or
transfer of Equipment (other than in connection with the sale of
an Oil and Gas Property, Equipment located on such Oil and Gas
Property which is an essential component of the existing
Hydrocarbon production, if any, of the ▇▇▇▇▇ on such Oil and Gas
Property), having a fair saleable value of less than an aggregate
amount of $100,000 for Borrower and its Subsidiaries during the
term of this Agreement that is no longer necessary for the
business of Borrower or such Subsidiary or is replaced by
Equipment of at least comparable value and use, and (c) cash
sales of Proved Reserves, as long as (i) no Default or Event of
Default is existing or would result therefrom and (ii) after
payment to Agent of the proceeds of such sale for application to
the Obligations, no Overadvance would result therefrom and
Borrower at such time has at least an aggregate amount of $1.00
of Availability and unrestricted immediately available cash on
hand reserving as an additional deduction from Availability an
amount determined by Agent in its sole discretion that would be
sufficient to maintain Borrower's and its Subsidiaries' accounts
payable and other current liabilities within reasonable terms,
and (iii) the proceeds of the sale of such Proved Reserves are
immediately paid to Agent for application to the Obligations by
wire transfer of immediately available funds to the Agent
Account, and (d) the sale price of such Proved Reserves is equal
to or greater than forty-five percent (45%) of the NYMEX Value of
such Proved Reserves as of the date of the most recent applicable
Reserve Report delivered to Agent by Borrower, provided that (w)
in the case of Proved Developed Producing Reserves, the aggregate
NYMEX Value of such Proved Developed Producing Reserves, as of
the date of the most recent applicable Reserve Report delivered
by Borrower to Agent, shall not exceed $2,500,000 in the
aggregate during any twelve calendar month during the term of
this Agreement, (x) in the case of Proved Reserves other than
Proved Developed Producing Reserves, the aggregate NYMEX Value of
such Proved Reserves, as of the date of the most recent
applicable Reserve Report delivered by Borrower to Agent, shall
not exceed $5,000,000 in the aggregate during the term of this
Agreement, (y) the Borrowing Base shall be adjusted by an amount
equal to the value, if any, assigned to such Proved Reserves in
the most recently determined Borrowing Base, and (z) at or prior
to the closing date of any such sale of any such Proved Reserves,
and as a condition of Borrower's authority to do so, Borrower
shall deliver to Agent a certificate executed by the chief
executive officer or chief financial officer of Borrower
certifying (I) that no Default or Event of Default has occurred
and is continuing, (II) to the valuation of the Proved Reserves
involved utilizing the NYMEX Price for valuation purposes, (III)
that the dispositions proposed will not violate the dollar
limitation set forth in this Section 7.4, (IV) that the
disposition will not result in an Overadvance, (V) the
consideration and manner of the payment thereof to be received by
Borrower for the disposition of the Proved Reserves involved, and
(VI) that Borrower has the minimum Availability required for such
sale. Notwithstanding anything herein to the contrary, in no
event may all or any part of the ▇▇▇▇▇▇ Gathering System be sold
or in any way transferred or disposed of without the prior
written consent of Agent, whose consent may be given or withheld
in Agent's sole discretion.
7.5 Change Name. Change any Borrower's or any of its
Subsidiaries' name, FEIN, corporate structure (within the meaning
of Section 9402(7) of the Code), or identity, or add any new
fictitious name.
7.6 Guarantee. Guarantee or otherwise become in any
way liable with respect to the obligations of any third Person
except by endorsement of instruments or items of payment for
deposit to the account of Borrower or which are transmitted or
turned over to Agent.
7.7 Nature of Business. Make any change in the
principal nature of Borrower's or any of its Subsidiaries'
business as an independent oil and gas exploration and production
company.
7.8 Prepayments and Amendments.
(a) Except in connection with a refinancing
permitted by Section 7.1(h), prepay, redeem, retire, defease,
purchase, or otherwise acquire any Indebtedness owing to any
third Person (including, but not limited to, the Unsecured
Notes), other than the Obligations in accordance with this
Agreement (provided, however, that Borrower shall be permitted to
(i) pay off the Permitted Indebtedness described in Schedule 7.1
other than the Duke Energy production payments and other
production payments, (ii) retire the $7,040,000 in Unsecured
Notes repurchased by Borrower during December, 1998, provided
such Unsecured Notes were not reissued by Borrower, and (iii)
repurchase or redeem or retire up to an additional $10,000,000 in
the original face amount of the Unsecured Notes as long as, as a
condition precedent thereto, (x) no Default or Event of Default
then exists or reasonably could be expected to result therefrom,
(y) Borrower at such time, after giving effect thereto, has at
least an aggregate amount of $5,000,000 of Availability and
unrestricted immediately available cash on hand reserving as an
additional deduction from Availability an amount determined by
Agent in its sole discretion that would be sufficient to maintain
Borrower's and its Subsidiaries' accounts payable and other
current liabilities within reasonable terms, and (z) Borrower has
paid to Agent the fee described in Section 2.11(f) with respect
thereto), and
(b) Directly or indirectly, amend, modify, alter,
increase, or change any of the terms or conditions of any
agreement, instrument, document, indenture (including, but not
limited to, the Unsecured Notes Indenture, except in connection
with a recapitalization permitted pursuant to Section 7.3(a)), or
other writing evidencing or concerning Indebtedness permitted
under Section 7.1(b) (except for (i) the volumetric production
payment (which shall not be payable in cash) in favor of Duke
Energy, provided that any such amendment does not require the
payment of any cash or increase or accelerate the obligations of
Borrower or any of its Subsidiaries thereunder, and (ii) other
indebtedness permitted under Section 7.1 which does not, as
amended, modified, altered, increased or changed, exceed for all
such other indebtedness $800,000 in the aggregate),
Section 7.1(c) or Section 7.1(d).
7.9 Change of Control. Cause, permit, or suffer,
directly or indirectly, any Change of Control.
7.10 Consignments. Consign any Inventory or sell any
Inventory on ▇▇▇▇ and hold, sale or return, sale on approval, or
other conditional terms of sale.
7.11 Distributions; Repurchases of Capital Stock. Make
any distribution or declare or pay any dividends (in cash or
other property, other than capital Stock) on, or purchase,
acquire, redeem, or retire any of Borrower's capital Stock, of
any class, whether now or hereafter outstanding.
7.12 Accounting Methods. Modify or change its method
of accounting or enter into, modify, or terminate any agreement
currently existing, or at any time hereafter entered into with
any third party accounting firm or service bureau for the
preparation or storage of Borrower's accounting records without
said accounting firm or service bureau agreeing to provide Agent
information regarding the Collateral or Borrower's financial
condition. Borrower waives the right to assert a confidential
relationship, if any, it may have with any accounting firm or
service bureau in connection with any information requested by
Agent pursuant to or in accordance with this Agreement, and
agrees that Agent may contact directly any such accounting firm
or service bureau in order to obtain such information.
7.13 Investments. Directly or indirectly make,
acquire, or incur any liabilities (including contingent
obligations) for or in connection with (a) the acquisition of the
securities (whether debt or equity) of, or other interests in, a
Person (except that, as long as no Default or Event of Default is
existing or would result therefrom, Magic Circle may purchase
limited partnership interests in the Magic Circle Partnerships
for fair value on an arm's length basis from the limited partners
thereof which are not Affiliates of Borrower or any of its
Subsidiaries for an aggregate amount which does not exceed
$750,000 in the aggregate during the term of this Agreement, (b)
loans, advances, capital contributions, or transfers of property
to a Person, or (c) the acquisition of all or substantially all
of the properties or assets of a Person (excluding the
acquisition of Oil and Gas Properties and related oilfield
equipment located thereon which is an essential component of the
then existing Hydrocarbon production, if any, of the ▇▇▇▇▇ on
such Oil and Gas Properties from Persons other than Affiliates of
Borrower or its Subsidiaries as long as (i) there has not
occurred an Event of Default and no Default or Event of Default
could reasonably be expected to result from such acquisition,
(ii) Borrower and its Subsidiaries shall have complied with all
of the requirements of Section 6.18 with respect thereto,
(iii) the acquisition thereof is permitted under Section 7.21,
and (iv) neither Borrower nor any of its Subsidiaries incurs any
indebtedness, liability or other obligation in connection with
such acquisition except for prospective liabilities for operation
of such Oil and Gas Properties and plugging and abandonment costs
on such Oil and Gas Properties).
7.14 Transactions with Affiliates. Directly or
indirectly enter into or permit to exist any material transaction
with any Affiliate of Borrower except for transactions that are
in the ordinary course of Borrower's business, upon fair and
reasonable terms, that are fully disclosed to Agent, and that are
no less favorable to Borrower than would be obtained in an arm's
length transaction with a non-Affiliate.
7.15 Suspension. Suspend or go out of a substantial
portion of its business.
7.16 Compensation. Increase the annual fee or per-
meeting fees paid to directors during any year by more than 15%
over the prior year; or pay or accrue total cash compensation,
during any year, to officers and senior management employees in
an aggregate amount in excess of 120% of that paid or accrued in
calendar year 1998.
7.17 Use of Proceeds. Use the proceeds of the Advances
made hereunder for any purpose other than (a) on the Closing
Date, (i) to pay accrued fees and expenses owing to Prior
Lenders, and (ii) to pay transactional fees, costs, and expenses
incurred in connection with this Agreement, and (b) thereafter,
consistent with the terms and conditions hereof, for its lawful
and permitted corporate purposes.
7.18 Change in Location of Chief Executive Offices;
Inventory and Equipment. Relocate its chief executive office to
a new location without providing 30 days prior written
notification thereof to Agent and so long as, at the time of such
written notification, Borrower provides any financing statements
or fixture filings necessary to perfect and continue perfected
the Agent's Liens and also provides to Agent a Collateral Access
Agreement with respect to such new location. The Inventory and
Equipment shall not at any time now or hereafter be stored with a
bailee, warehouseman, or similar party without Agent's prior
written consent. Borrower will not, and will not permit its
Subsidiaries to store, warehouse or bail the Inventory and
Equipment of Borrower and its Subsidiaries at Real Property other
than such Real Property listed on Schedule 5.1(d).
7.19 No Prohibited Transactions Under ERISA. Directly
or indirectly:
(a) engage, or permit any Subsidiary of Borrower
to engage, in any prohibited transaction which is reasonably
likely to result in a civil penalty or excise tax described in
Sections 406 of ERISA or 4975 of the IRC for which a statutory or
class exemption is not available or a private exemption has not
been previously obtained from the Department of Labor;
(b) permit to exist with respect to any Benefit
Plan any accumulated funding deficiency (as defined in
Sections 302 of ERISA and 412 of the IRC), whether or not waived;
(c) fail, or permit any Subsidiary of Borrower to
fail, to pay timely required contributions or annual installments
due with respect to any waived funding deficiency to any Benefit
Plan;
(d) terminate, or permit any Subsidiary of
Borrower to terminate, any Benefit Plan where such event would
result in any liability of Borrower, any of its Subsidiaries or
any ERISA Affiliate under Title IV of ERISA;
(e) fail, or permit any Subsidiary of Borrower to
fail, to make any required contribution or payment to any
Multiemployer Plan;
(f) fail, or permit any Subsidiary of Borrower to
fail, to pay any required installment or any other payment
required under Section 412 of the IRC on or before the due date
for such installment or other payment;
(g) amend, or permit any Subsidiary of Borrower
to amend, a Plan resulting in an increase in current liability
for the plan year such that either of Borrower, any Subsidiary of
Borrower or any ERISA Affiliate is required to provide security
to such Plan under Section 401(a)(29) of the IRC; or
(h) withdraw, or permit any Subsidiary of
Borrower to withdraw, from any Multiemployer Plan where such
withdrawal is reasonably likely to result in any liability of any
such entity under Title IV of ERISA;
which, individually or in the aggregate, results in or reasonably
would be expected to result in a claim against or liability of
Borrower, any of its Subsidiaries or any ERISA Affiliate in
excess of $50,000.
7.20 Financial Covenants. Fail to maintain:
(a) Tangible Net Worth. As of the last day of
each month, a consolidated Tangible Net Worth of Borrower and its
Subsidiaries of at least the amount set forth below corresponding
to such month:
Month Amount
----- ------
December 1999 <$20,500,000>
January 2000 <$21,116,000>
February 2000 <$21,677,000>
March 2000 <$22,409,000>
April 2000 <$23,080,000>
May 2000 <$23,768,000>
June 2000 <$24,458,000>
July 2000 <$25,162,000>
August 2000 <$25,875,000>
September 2000 <$26,625,000>
October 2000 <$27,378,000>
November 2000 <$28,095,000>
December 2000 <$28,773,000>
January 2001 <$29,660,000>
February 2001 <$30,354,000>
March 2001 <$31,122,000>
April 2001 <$31,923,000>
May 2001 <$32,741,000>
June 2001 and each month thereafter <$33,549,000>; and
(b) Consolidated Interest Coverage Ratio. As of
the last day of each period set forth below, Borrower's ratio of
(i) consolidated EBITDA for the period then ended, to (ii)
consolidated Interest Expense for the period then ended, of not
less than the ratio set forth below corresponding to such period:
Period Ratio
------ -----
One month period ending December 1999 0.88:1.0
Three month period ending March 2000 0.73:1.0
Three month period ending June 2000 0.66:1.0
Three month period ending September 2000 0.61:1.0
Three month period ending December 2000 0.63:1.0
Three month period ending March 2001 0.60:1.0
Three month period ending June 2001 0.58:1.0; and
and each three month period ending thereafter
(c) EBITDA. As of the last day of each period
set forth below, Borrower's consolidated EBITDA for the period
then ended of not less than the amount set forth below
corresponding to such period:
Period Amount
------ ------
One month period ending December 1999 $1,080,000
Three month period ending March 2000 $2,695,000
Three month period ending June 2000 $2,459,000
Three month period ending September 2000 $2,290,000
Three month period ending December 2000 $2,370,000
Three month period ending March 2001 $2,250,000
Three month period ending June 2001 and $2,188,000
each three month period ending thereafter
7.21 Capital Expenditures. Make capital expenditures
in any fiscal year in excess of $12,000,000 in the aggregate.
7.22 Securities Accounts. Neither Borrower nor any
Subsidiary of Borrower shall establish or maintain any Securities
Account unless Agent shall have received a Control Agreement,
duly executed and in full force and effect, in respect of such
Securities Account. Borrower agrees that neither it nor any of
its Subsidiaries will transfer assets out of any Securities
Accounts; provided, however, that, so long as no Event of Default
has occurred and is continuing or would result therefrom,
Borrower may use such assets to the extent permitted by this
Agreement.
7.23 Gas Imbalances, Take-or-Pay or Other Prepayments.
Borrower shall not, and shall not permit any of its Subsidiaries
to (i) enter into any contracts or agreements which warrant
production of Hydrocarbons (other than Hedging Agreements
otherwise permitted hereunder, (ii) accept take-or-pay or other
prepayments with respect to its Oil and Gas Property Collateral
which prepayments would require such Person to deliver
Hydrocarbons produced from such Oil and Gas Property at some
future time without then or thereafter receiving full payment
therefor to exceed, during any monthly period, five percent (5%)
of the current aggregate monthly gas production for such monthly
period from the Oil and Gas Property Collateral, (iii) permit,
during any month, a reduction in Borrower's and its Subsidiaries'
(on a consolidated basis) net gas overproduction, which reduction
is caused solely by underproduced parties taking more than their
Working Interest share of production from Oil and Gas Property
Collateral, to exceed 5% of Borrower's and its Subsidiaries'
current aggregate monthly gas production for such month, or (iv)
permit an increase in Borrower's and its Subsidiaries' (on a
consolidated basis) net gas overproduction, which increase is
caused solely by Borrower and its Subsidiaries taking more than
their Working Interest share of production from Oil and Gas
Property Collateral, of more than 5% of the aggregate net
overproduction set out on Schedule 5.2(b).
7.24 Payments on Unsecured Notes Use, or permit to be
used, any of the proceeds of any Advances to make any payment of
interest on the Unsecured Notes; provided, however, that Borrower
shall be permitted to use proceeds of Advances to make regularly
scheduled payments of interest on the Unsecured Notes as long as,
as a condition precedent thereto, (i) no Default or Event of
Default then exists or reasonably could be expected to result
therefrom, and (ii) Borrower, at such time, after giving effect
thereto, has an aggregate amount of Availability and unrestricted
immediately available cash on hand, reserving as an additional
deduction from Availability an amount determined by Agent in its
sole discretion that would be sufficient to maintain Borrower's
and its Subsidiaries' accounts payable and other current
liabilities within reasonable terms, of at least (A) $1,200,000
with respect to the regularly scheduled payment of interest on
the Unsecured Notes due in February 2000, and (B) $2,000,000 with
respect to each regularly scheduled interest on the Unsecured
Notes other than the one due in February 2000.
7.25 Limited Business of RB Operating and Magic Circle
Partnerships. Borrower shall not permit, and shall not allow any
of its Subsidiaries to permit, (a) RB Operating to acquire after
the date of this Agreement any additional assets or incur any
additional indebtedness or other liabilities, or (b) RB Operating
to conduct any business. Borrower shall not use, and shall not
permit to be used, any proceeds of the Advances for (i) RB
Operating or any Magic Circle Partnership to acquire any assets
or pay any indebtedness or other liabilities or (ii) RB Operating
or any Magic Circle Partnership to conduct any Business.
8. EVENTS OF DEFAULT.
Any one or more of the following events shall
constitute an event of default (each, an "Event of Default")
under this Agreement:
8.1 If Borrower or any other Loan Party fails to pay
when due and payable or when declared due and payable, any
portion of the Obligations (whether of principal, interest
(including any interest which, but for the provisions of the
Bankruptcy Code, would have accrued on such amounts), fees and
charges due the Lender Group, reimbursement of Lender Group
Expenses, or other amounts constituting Obligations); provided,
however, that in the case of Overadvances that are caused by the
charging of interest, fees or Lender Group Expenses to the Loan
Account, such event shall not constitute an Event of Default if,
within 5 Business Days of incurring such Overadvance, Borrower or
any other Loan Party repays, or otherwise eliminates such
Overadvance;
8.2 (a) If Borrower fails or neglects to perform,
keep, or observe any term, provision, condition, covenant, or
agreement contained in Section 6.2 (Collateral Reporting), 6.3
(Financial Statements, Reports, Certificates), 6.4 (Tax Returns),
6.7 (Title to Equipment), 6.12 (Location of Inventory and
Equipment), 6.13 (Compliance with Laws), 6.14 (Employee
Benefits), or 6.15 (Leases) of this Agreement and such failure
continues for a period of 5 Business Days; (b) If Borrower fails
or neglects to perform, keep, or observe any term, provision,
condition, covenant, or agreement contained in Section 6.1
(Accounting System) or 6.8 (Maintenance of Oil and Gas Property
Collateral and Equipment) of this Agreement and such failure
continues for a period of 15 Business Days; or (c) If Borrower or
any other Loan Party fails or neglects to perform, keep, or
observe any other term, provision, condition, covenant, or
agreement contained in this Agreement, or in any of the other
Loan Documents (giving effect to any grace periods, cure periods,
or required notices, if any, expressly provided for in such Loan
Documents); in each case, other than any such term, provision,
condition, covenant, or agreement that is the subject of another
provision of this Section 8, in which event such other provision
of this Section 8 shall govern; provided that, during any period
of time that any such failure or neglect of Borrower or such
other Loan Party referred to in this paragraph exists, even if
such failure or neglect is not yet an Event of Default by virtue
of the existence of a grace or cure period or the pre-condition
of the giving of a notice, neither Agent nor any Lender shall be
required during such period to make Advances to Borrower;
8.3 If there is a Material Adverse Change;
8.4 If any material portion of Borrower's or any other
Loan Party's properties or assets is attached, seized, subjected
to a writ or distress warrant, or is levied upon, or comes into
the possession of any third Person;
8.5 If an Insolvency Proceeding is commenced by
Borrower or any other Loan Party;
8.6 If an Insolvency Proceeding is commenced against
Borrower or any other Loan Party and any of the following events
occur: (a) Borrower or such Loan Party, as the case may be,
consents to the institution of the Insolvency Proceeding against
it; (b) the petition commencing the Insolvency Proceeding is not
timely controverted; (c) the petition commencing the Insolvency
Proceeding is not dismissed within 45 calendar days of the date
of the filing thereof; provided, however, that, during the
pendency of such period, Agent, Foothill, and any other member of
the Lender Group shall be relieved of its obligation to extend
credit hereunder; (d) an interim trustee is appointed to take
possession of all or a substantial portion of the properties or
assets of, or to operate all or any substantial portion of the
business of, Borrower or such Loan Party, as the case may be; or
(e) an order for relief shall have been issued or entered
therein;
8.7 If Borrower or any other Loan Party is enjoined,
restrained, or in any way prevented by court order from
continuing to conduct all or any material part of its business
affairs;
8.8 If a notice of Lien, levy, or assessment is filed
of record with respect to any of Borrower's or any other Loan
Party's properties or assets by the United States Government, or
any department, agency, or instrumentality thereof, or by any
state, county, municipal, or governmental agency, or if any taxes
or debts owing at any time hereafter to any one or more of such
entities becomes a Lien, whether ▇▇▇▇▇▇ or otherwise, upon any of
Borrower's or any other Loan Party's properties or assets and the
same is not paid on the payment date thereof;
8.9 If a judgment or other claim becomes a Lien or
encumbrance upon any material portion of Borrower's or any other
Loan Party's properties or assets;
8.10 If there is (a) a default in any material
agreement (including the Unsecured Notes or the Unsecured Notes
Indenture) to which Borrower or any other Loan Party is a party
with one or more third Persons and such default (i) occurs at the
final maturity of the obligations thereunder, or (ii) results in
a right by such third Person(s), irrespective of whether
exercised, to accelerate the maturity of Borrower's or any other
Loan Party's obligations thereunder, to terminate such agreement,
or to refuse to renew such agreement pursuant to an automatic
renewal right therein, or (b) any payment default under the
Unsecured Notes or the Unsecured Notes Indenture;
8.11 If Borrower or any other Loan Party makes any
payment on account of Indebtedness that has been contractually
subordinated in right of payment to the payment of the
Obligations, except to the extent such payment is permitted by
the terms of the subordination provisions applicable to such
Indebtedness;
8.12 If any material misstatement or misrepresentation
exists now or hereafter in any warranty, representation,
statement, or report made to the Lender Group by Borrower or any
other Loan Party or any officer, employee, agent, or director of
Borrower or any other Loan Party, or if any such warranty or
representation is withdrawn;
8.13 If the obligation of any guarantor under its
guaranty or other third Person under any Loan Document is limited
or terminated by operation of law or by the guarantor or other
third Person thereunder, or any such guarantor or other third
Person becomes the subject of an Insolvency Proceeding;
8.14 If Borrower or any of its Subsidiaries makes any
payment of principal or interest on the Unsecured Notes, other
than regularly scheduled payments of interest on the Unsecured
Notes solely under the circumstances under which Borrower would
be permitted to use proceeds of an Advance to make such payment
under Section 7.24 of this Agreement; or
8.15 If Borrower permits, or allows any of its
Subsidiaries to permit, any Magic Circle Partnership to acquire
after the date of this Agreement any additional assets or to
incur any additional indebtedness or other liabilities or to
conduct any business other than as a non-operating working
interest owner in its oil and gas properties.
9. THE LENDER GROUP'S RIGHTS AND REMEDIES.
9.1 Rights and Remedies. Upon the occurrence, and
during the continuation, of an Event of Default, the Required
Lenders (at their election but without notice of their election
and without demand) may, except to the extent otherwise expressly
provided or required below, authorize and instruct Agent to do
any one or more of the following on behalf of the Lender Group
(and Agent, acting upon the instructions of the Required Lenders,
shall do the same on behalf of the Lender Group), all of which
are authorized by Borrower:
(a) Declare by notice to Borrower all
Obligations, whether evidenced by this Agreement, by any of the
other Loan Documents, or otherwise, immediately due and payable;
(b) Cease advancing money or extending credit to
or for the benefit of Borrower under this Agreement, under any of
the Loan Documents, or under any other agreement between Borrower
and the Lender Group;
(c) Terminate this Agreement and any of the other
Loan Documents as to any future liability or obligation of the
Lender Group, but without affecting Agent's rights and security
interests, for the benefit of the Lender Group, in the Collateral
and without affecting the Obligations;
(d) Settle or adjust disputes and claims directly
with Account Debtors for amounts and upon terms which Agent
considers advisable, and in such cases, Agent will credit
Borrower's Loan Account with only the net amounts received by
Agent in payment of such disputed Accounts after deducting all
Lender Group Expenses incurred or expended in connection
therewith;
(e) Cause Borrower to hold all returned Inventory
in trust for the Lender Group, segregate all returned Inventory
from all other property of Borrower or in Borrower's possession
and conspicuously label said returned Inventory as the property
of the Lender Group;
(f) Without notice to or demand upon Borrower or
any guarantor, make such payments and do such acts as Agent
considers necessary or reasonable to protect its security
interests in the Collateral. Borrower agrees to assemble the
Personal Property Collateral if Agent so requires, and to make
the Personal Property Collateral available to Agent as Agent may
designate. Borrower authorizes Agent to enter the premises where
the Personal Property Collateral is located, to take and maintain
possession of the Personal Property Collateral, or any part of
it, and to pay, purchase, contest, or compromise any encumbrance,
charge, or Lien that in Agent's determination appears to conflict
with the Agent's Liens and to pay all expenses incurred in
connection therewith. With respect to any of Borrower's owned or
leased premises, Borrower hereby grants Agent a license to enter
into possession of such premises and to occupy the same, without
charge, for up to 120 days in order to exercise any of the Lender
Group's rights or remedies provided herein, at law, in equity, or
otherwise;
(g) Without notice to Borrower (such notice being
expressly waived), and without constituting a retention of any
collateral in satisfaction of an obligation (within the meaning
of Section 9505 of the Code), set off and apply to the
Obligations any and all (i) balances and deposits of Borrower
held by the Lender Group (including any amounts received in the
Lockbox Accounts), or (ii) indebtedness at any time owing to or
for the credit or the account of Borrower held by the Lender
Group;
(h) Hold, as cash collateral, any and all
balances and deposits of Borrower held by the Lender Group, and
any amounts received in the Lockbox Accounts, to secure the full
and final repayment of all of the Obligations;
(i) Ship, reclaim, recover, store, finish,
maintain, repair, prepare for sale, advertise for sale, and sell
(in the manner provided for herein) the Personal Property
Collateral. Borrower hereby grants to Agent a license or other
right to use, without charge, Borrower's labels, patents,
copyrights, rights of use of any name, trade secrets, trade
names, trademarks, service marks, and advertising matter, or any
property of a similar nature, as it pertains to the Personal
Property Collateral, in completing production of, advertising for
sale, and selling any Personal Property Collateral and Borrower's
rights under all licenses and all franchise agreements shall
inure to the Lender Group's benefit;
(j) Sell the Personal Property Collateral at
either a public or private sale, or both, by way of one or more
contracts or transactions, for cash or on terms, in such manner
and at such places (including Borrower's premises) as Agent
determines is commercially reasonable. It is not necessary that
the Personal Property Collateral be present at any such sale;
(k) Agent shall give notice of the disposition of
the Personal Property Collateral as follows:
(1) Agent shall give Borrower and each
holder of a security interest in the Personal Property Collateral
who has filed with Agent a written request for notice, a notice
in writing of the time and place of public sale, or, if the sale
is a private sale or some other disposition other than a public
sale is to be made of the Personal Property Collateral, then the
time on or after which the private sale or other disposition is
to be made;
(2) The notice shall be personally delivered
or mailed, postage prepaid, to Borrower as provided in Section
12, at least 5 days before the date fixed for the sale, or at
least 5 days before the date on or after which the private sale
or other disposition is to be made; no notice needs to be given
prior to the disposition of any portion of the Personal Property
Collateral that is perishable or threatens to decline speedily in
value or that is of a type customarily sold on a recognized
market. Notice to Persons other than Borrower claiming an
interest in the Personal Property Collateral shall be sent to
such addresses as they have furnished to Agent;
(3) If the sale is to be a public sale,
Agent also shall give notice of the time and place by publishing
a notice one time at least 5 days before the date of the sale in
a newspaper of general circulation in the county in which the
sale is to be held;
(l) The Lender Group may credit bid and purchase
at any public sale;
(m) The Lender Group shall have all other rights
and remedies available to it at law or in equity pursuant to any
other Loan Documents; and
(n) Any deficiency that exists after disposition
of the Personal Property Collateral as provided above will be
paid immediately by Borrower. Any excess will be returned,
without interest and subject to the rights of third Persons, by
Agent to Borrower.
9.2 Remedies Cumulative. The rights and remedies of
the Lender Group under this Agreement, the other Loan Documents,
and all other agreements shall be cumulative. The Lender Group
shall have all other rights and remedies not inconsistent
herewith as provided under the Code, by law, or in equity. No
exercise by the Lender Group of one right or remedy shall be
deemed an election, and no waiver by the Lender Group of any
Event of Default shall be deemed a continuing waiver. No delay
by the Lender Group shall constitute a waiver, election, or
acquiescence by it. Nothing in this Agreement in any way limits,
impairs or reduces any rights of the Lender Group under the Oil
and Gas Property Mortgages or the Real Property Mortgages or any
of the other Loan Documents.
10. TAXES AND EXPENSES.
If Borrower fails to pay any monies (whether taxes,
assessments, insurance premiums, or, in the case of leased
properties or assets, rents or other amounts payable under such
leases) due to third Persons, or fails to make any deposits or
furnish any required proof of payment or deposit, all as required
under the terms of this Agreement, then, to the extent that Agent
determines that such failure by Borrower could result in a
Material Adverse Change, in its discretion and without prior
notice to Borrower, Agent may do any or all of the following:
(a) make payment of the same or any part thereof; (b) set up such
reserves in Borrower's Loan Account as Agent deems necessary to
protect the Lender Group from the exposure created by such
failure; or (c) obtain and maintain insurance policies of the
type described in Section 6.10, and take any action with respect
to such policies as Agent deems prudent. Any such amounts paid
by Agent shall constitute Lender Group Expenses. Any such
payments made by Agent shall not constitute an agreement by the
Lender Group to make similar payments in the future or a waiver
by the Lender Group of any Event of Default under this Agreement.
Agent need not inquire as to, or contest the validity of, any
such expense, tax, or Lien and the receipt of the usual official
notice for the payment thereof shall be conclusive evidence that
the same was validly due and owing.
11. WAIVERS; INDEMNIFICATION.
11.1 Demand; Protest; etc. Borrower waives demand,
protest, notice of protest, notice of default or dishonor, notice
of payment and nonpayment, nonpayment at maturity, release,
compromise, settlement, extension, or renewal of accounts,
documents, instruments, chattel paper, and guarantees at any time
held by the Lender Group on which Borrower may in any way be
liable.
11.2 The Lender Group's Liability for Collateral.
Borrower hereby agrees that: (a) so long as the Lender Group
complies with its obligations, if any, under Section 9207 of the
Code, the Lender Group shall not in any way or manner be liable
or responsible for: (i) the safekeeping of the Collateral; (ii)
any loss or damage thereto occurring or arising in any manner or
fashion from any cause; (iii) any diminution in the value
thereof; or (iv) any act or default of any carrier, warehouseman,
bailee, forwarding agency, or other Person; and (b) all risk of
loss, damage, or destruction of the Collateral shall be borne by
Borrower.
11.3 Indemnification. Borrower shall pay, indemnify,
defend, and hold the Agent-Related Persons, the Lender-Related
Persons with respect to each Lender, each Participant, and each
of their respective officers, directors, employees, counsel,
agents, and attorneys-in-fact (each, an "Indemnified Person")
harmless (to the fullest extent permitted by law) from and
against any and all claims, demands, suits, actions,
investigations, proceedings, and damages, and all reasonable
attorneys fees and disbursements and other costs and expenses
actually incurred in connection therewith (as and when they are
incurred and irrespective of whether suit is brought), at any
time asserted against, imposed upon, or incurred by any of them
in connection with or as a result of or related to the execution,
delivery, enforcement, performance, and administration of this
Agreement and any other Loan Documents or the transactions
contemplated herein, and with respect to any investigation,
litigation, or proceeding related to this Agreement, any other
Loan Document, or the use of the proceeds of the credit provided
hereunder (irrespective of whether any Indemnified Person is a
party thereto), or any act, omission, event or circumstance in
any manner related thereto (all the foregoing, collectively, the
"Indemnified Liabilities"). Borrower shall have no obligation to
any Indemnified Person under this Section 11.3 with respect to
any Indemnified Liability that a court of competent jurisdiction
finally determines to have resulted from the gross negligence or
willful misconduct of such Indemnified Person. This provision
shall survive the termination of this Agreement and the repayment
of the other Obligations.
12. NOTICES.
Unless otherwise provided in this Agreement, all
notices or demands by any party relating to this Agreement or any
other Loan Document shall be in writing and shall be personally
delivered or sent by registered or certified mail (postage
prepaid, return receipt requested), overnight courier, or
telefacsimile to the relevant party at its address set forth
below:
If to Borrower: RAM Energy, Inc.
Meridian Tower, Suite 650
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: McAfee & ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: C. ▇▇▇▇▇ ▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
If to Agent or
the Lender Group
in care of Agent: FOOTHILL CAPITAL CORPORATION
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
Attn: Business Finance Division Manager
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
with copies to: ▇▇▇▇▇▇ ▇▇▇▇▇ LLP
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attn: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
Fax No. ▇▇▇.▇▇▇.▇▇▇▇
The parties hereto may change the address at which they
are to receive notices hereunder, by notice in writing in the
foregoing manner given to all other parties. All notices or
demands sent in accordance with this Section 12, other than
notices by the Lender Group in connection with Sections 9504 or
9505 of the Code, shall be deemed received on the earlier of the
date of actual receipt or 3 days after the deposit thereof in the
mail. Borrower acknowledges and agrees that notices sent by the
Lender Group in connection with Sections 9504 or 9505 of the Code
shall be deemed sent when deposited in the mail or personally
delivered, or, where permitted by law, transmitted telefacsimile
or other similar method set forth above.
13. CHOICE OF LAW AND VENUE; SERVICE OF PROCESS; JURY TRIAL
WAIVER.
THE VALIDITY OF THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS (UNLESS EXPRESSLY PROVIDED TO THE CONTRARY IN ANOTHER
LOAN DOCUMENT IN RESPECT OF SUCH OTHER LOAN DOCUMENT), THE
CONSTRUCTION, INTERPRETATION, AND ENFORCEMENT HEREOF AND THEREOF,
AND THE RIGHTS OF THE PARTIES HERETO AND THERETO WITH RESPECT TO
ALL MATTERS ARISING HEREUNDER OR THEREUNDER OR RELATED HERETO OR
THERETO SHALL BE DETERMINED UNDER, GOVERNED BY, AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF CALIFORNIA.
THE PARTIES AGREE THAT ALL ACTIONS OR PROCEEDINGS
ARISING IN CONNECTION WITH THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS SHALL BE TRIED AND LITIGATED ONLY IN THE STATE AND
FEDERAL COURTS LOCATED IN THE COUNTY OF LOS ANGELES, STATE OF
CALIFORNIA, PROVIDED, HOWEVER, THAT ANY SUIT SEEKING ENFORCEMENT
AGAINST ANY COLLATERAL OR OTHER PROPERTY MAY BE BROUGHT, AT
AGENT'S OPTION, IN THE COURTS OF ANY JURISDICTION WHERE AGENT
ELECTS TO BRING SUCH ACTION OR WHERE SUCH COLLATERAL OR OTHER
PROPERTY MAY BE FOUND. BORROWER AND THE LENDER GROUP WAIVE, TO
THE EXTENT PERMITTED UNDER APPLICABLE LAW, ANY RIGHT EACH MAY
HAVE TO ASSERT THE DOCTRINE OF FORUM NON CONVENIENS OR TO OBJECT
TO VENUE TO THE EXTENT ANY PROCEEDING IS BROUGHT IN ACCORDANCE
WITH THIS SECTION 13. BORROWER HEREBY IRREVOCABLY DESIGNATES CT
CORPORATION SYSTEMS WITH OFFICES AT ▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ AS THE DESIGNEE, APPOINTEE AND AGENT
OF BORROWER TO RECEIVE, FOR AND ON BEHALF OF BORROWER, SERVICE OF
PROCESS IN SUCH RESPECTIVE JURISDICTIONS IN ANY LEGAL ACTION OR
PROCEEDING WITH RESPECT TO THE LOAN DOCUMENTS. IT IS UNDERSTOOD
THAT A COPY OF SUCH PROCESS SERVED ON SUCH AGENT WILL BE PROMPTLY
FORWARDED BY OVERNIGHT COURIER TO BORROWER AT ITS ADDRESS SET
FORTH IN THE PREAMBLE TO THIS AGREEMENT, BUT THE FAILURE OF
BORROWER TO RECEIVE SUCH COPY SHALL NOT AFFECT IN ANY WAY THE
SERVICE OF SUCH PROCESS. IN THE EVENT THAT CT CORPORATION SYSTEM
RESIGNS OR CEASES TO SERVE AS THE BORROWER'S AGENT FOR SERVICE OF
PROCESS HEREUNDER, BORROWER AGREES FORTHWITH (i) TO DESIGNATE
ANOTHER AGENT FOR SERVICE OF PROCESS IN LOS ANGELES, CALIFORNIA;
AND (ii) TO GIVE PROMPT WRITTEN NOTICE TO THE LENDER GROUP OF THE
NAME AND ADDRESS OF SUCH AGENT. BORROWER FURTHER IRREVOCABLY
CONSENTS TO THE SERVICE OF PROCESS OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION OR PROCEEDING BY THE MAILING OF COPIES
THEREOF BY REGISTERED OR CERTIFIED MAIL, POSTAGE REPAID, TO
BORROWER AT ITS SAID ADDRESS, SUCH SERVICE TO BECOME EFFECTIVE
THIRTY (30) DAYS AFTER SUCH MAILING. BORROWER AND THE LENDER
GROUP HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY
CLAIM OR CAUSE OF ACTION BASED UPON OR ARISING OUT OF ANY OF THE
LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS CONTEMPLATED THEREIN,
INCLUDING CONTRACT CLAIMS, TORT CLAIMS, BREACH OF DUTY CLAIMS,
AND ALL OTHER COMMON LAW OR STATUTORY CLAIMS. BORROWER AND THE
LENDER GROUP REPRESENT THAT EACH HAS REVIEWED THIS WAIVER AND
EACH KNOWINGLY AND VOLUNTARILY WAIVES ITS JURY TRIAL RIGHTS
FOLLOWING CONSULTATION WITH LEGAL COUNSEL. IN THE EVENT OF
LITIGATION, A COPY OF THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
14. DESTRUCTION OF BORROWER'S DOCUMENTS.
All documents, schedules, invoices, agings, or other
papers delivered to any one or more members of the Lender Group
may be destroyed or otherwise disposed of by such member of the
Lender Group 4 months after they are delivered to or received by
such member of the Lender Group, unless Borrower requests, in
writing, the return of said documents, schedules, or other papers
and makes arrangements, at Borrower's expense, for their return.
15. ASSIGNMENTS AND PARTICIPATIONS; SUCCESSORS.
15.1 Assignments and Participations.
(a) Any Lender may, with the written consent of
Agent, assign and delegate to one or more assignees (provided
that no written consent of Agent shall be required in connection
with any assignment and delegation by a Lender to an Eligible
Transferee) (each an "Assignee") all, or any ratable part of all,
of the Obligations, the Commitments and the other rights and
obligations of such Lender hereunder and under the other Loan
Documents, in a minimum amount of $5,000,000 (except that such
minimum amount shall not apply in connection with any assignment
and delegation by a Lender (x) to any Affiliate (other than
individuals) of, or any fund, money market account, investment
account or other account managed by, a pre-existing Lender under
this Agreement or (y) of the entire Obligations, Commitments and
other rights and obligations of such Lender hereunder and under
the other Loan Documents); provided, however, that Borrower and
Agent may continue to deal solely and directly with such Lender
in connection with the interest so assigned to an Assignee until
(i) written notice of such assignment, together with payment
instructions, addresses and related information with respect to
the Assignee, shall have been given to Borrower and Agent by such
Lender and the Assignee; (ii) such Lender and its Assignee shall
have delivered to Borrower and Agent an Assignment and Acceptance
("Assignment and Acceptance") in form and substance satisfactory
to Agent; and (iii) the assignor Lender or Assignee has paid to
Agent for Agent's sole and separate account a processing fee in
the amount of $5,000. Anything contained herein to the contrary
notwithstanding, the consent of Agent shall not be required (and
payment of any fees shall not be required) if such assignment is
in connection with any merger, consolidation, sale, transfer, or
other disposition of all or any substantial portion of the
business or loan portfolio of such Lender.
(b) From and after the date that Agent notifies
the assignor Lender that it has received an executed Assignment
and Acceptance and payment of the above-referenced processing
fee, (i) the Assignee thereunder shall be a party hereto and, to
the extent that rights and obligations hereunder have been
assigned to it pursuant to such Assignment and Acceptance, shall
have the rights and obligations of a Lender under the Loan
Documents, and (ii) the assignor Lender shall, to the extent that
rights and obligations hereunder and under the other Loan
Documents have been assigned by it pursuant to such Assignment
and Acceptance, relinquish its rights (except with respect to
Section 11.3 hereof) and be released from its obligations under
this Agreement (and in the case of an Assignment and Acceptance
covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement and the other Loan
Documents, such Lender shall cease to be a party hereto and
thereto), and such assignment shall effect a novation between
Borrower and the Assignee.
(c) By executing and delivering an Assignment and
Acceptance, the assigning Lender thereunder and the Assignee
thereunder confirm to and agree with each other and the other
parties hereto as follows: (1) other than as provided in such
Assignment and Acceptance, such assigning Lender makes no
representation or warranty and assumes no responsibility with
respect to any statements, warranties or representations made in
or in connection with this Agreement or the execution, legality,
validity, enforceability, genuineness, sufficiency or value of
this Agreement or any other Loan Document furnished pursuant
hereto; (2) such assigning Lender makes no representation or
warranty and assumes no responsibility with respect to the
financial condition of Borrower or the performance or observance
by Borrower of any of its obligations under this Agreement or any
other Loan Document furnished pursuant hereto; (3) such Assignee
confirms that it has received a copy of this Agreement, together
with such other documents and information as it has deemed
appropriate to make its own credit analysis and decision to enter
into such Assignment and Acceptance; (4) such Assignee will,
independently and without reliance upon Agent, such assigning
Lender or any other Lender, and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit decisions in taking or not taking action
under this Agreement; (5) such Assignee appoints and authorizes
Agent to take such action as agent on its behalf and to exercise
such powers under this Agreement as are delegated to Agent by the
terms hereof, together with such powers as are reasonably
incidental thereto; and (6) such Assignee agrees that it will
perform in accordance with their terms all of the obligations
which by the terms of this Agreement are required to be performed
by it as a Lender.
(d) Immediately upon each Assignee's making its
processing fee payment under the Assignment and Acceptance, this
Agreement shall be deemed to be amended to the extent, but only
to the extent, necessary to reflect the addition of the Assignee
and the resulting adjustment of the Commitments arising
therefrom. The Commitment allocated to each Assignee shall reduce
such Commitments of the assigning Lender pro tanto.
(e) Any Lender may at any time, with the written
consent of Agent, sell to one or more commercial banks, financial
institutions, or other Persons not Affiliates of such Lender (a
"Participant") participating interests in the Obligations, the
Commitment, and the other rights and interests of that Lender
(the "Originating Lender") hereunder and under the other Loan
Documents (provided that no written consent of Agent shall be
required in connection with any sale of any such participating
interests by a Lender to an Eligible Transferee); provided,
however, that (i) the originating Lender's obligations under this
Agreement shall remain unchanged, (ii) the originating Lender
shall remain solely responsible for the performance of such
obligations, (iii) Borrower and Agent shall continue to deal
solely and directly with the originating Lender in connection
with the originating Lender's rights and obligations under this
Agreement and the other Loan Documents, (iv) no Lender shall
transfer or grant any participating interest under which the
Participant has the sole and exclusive right to approve any
amendment to, or any consent or waiver with respect to, this
Agreement or any other Loan Document, except to the extent such
amendment to, or consent or waiver with respect to this Agreement
or of any other Loan Document would (A) extend the final maturity
date of the Obligations hereunder in which such Participant is
participating; (B) reduce the interest rate applicable to the
Obligations hereunder in which such Participant is participating;
(C) release all or a material portion of the Collateral or
guaranties (except to the extent expressly provided herein or in
any of the Loan Documents) supporting the Obligations hereunder
in which such Participant is participating; (D) postpone the
payment of, or reduce the amount of, the interest or fees payable
to such Participant through such Lender; or (E) change the amount
or due dates of scheduled principal repayments or prepayments or
premiums; and (v) all amounts payable by Borrower hereunder shall
be determined as if such Lender had not sold such participation;
except that, if amounts outstanding under this Agreement are due
and unpaid, or shall have been declared or shall have become due
and payable upon the occurrence of an Event of Default, each
Participant shall be deemed to have the right of set-off in
respect of its participating interest in amounts owing under this
Agreement to the same extent as if the amount of its
participating interest were owing directly to it as a Lender
under this Agreement. The rights of any Participant only shall
be derivative through the originating Lender with whom such
Participant participates and no Participant shall have any direct
rights as to the other Lenders, Agent, Borrower, the Collections,
the Collateral, or otherwise in respect of the Obligations. No
Participant shall have the right to participate directly in the
making of decisions by the Lenders among themselves.
(f) In connection with any such assignment or
participation or proposed assignment or participation, a Lender
may disclose all documents and information which it now or
hereafter may have relating to Borrower or Borrower's business.
(g) Any other provision in this Agreement
notwithstanding, any Lender may at any time create a security
interest in, or pledge, all or any portion of its rights under
and interest in this Agreement in favor of any Federal Reserve
Bank in accordance with Regulation A of the Federal Reserve Bank
or U.S. Treasury Regulation 31 CFR 203.14, and such Federal
Reserve Bank may enforce such pledge or security interest in any
manner permitted under applicable law.
15.2 Successors. This Agreement shall bind and inure
to the benefit of the respective successors and assigns of each
of the parties; provided, however, that Borrower may not assign
this Agreement or any rights or duties hereunder without the
Lenders' prior written consent and any prohibited assignment
shall be absolutely void ab initio. No consent to assignment by
the Lenders shall release Borrower from its Obligations. A
Lender may assign this Agreement and the other Loan Documents and
its rights and duties hereunder and thereunder pursuant to
Section 15.1 hereof and, except as expressly required pursuant to
Section 15.1 hereof, no consent or approval by Borrower is
required in connection with any such assignment.
16. AMENDMENTS; WAIVERS
16.1 Amendments and Waivers. No amendment or waiver of
any provision of this Agreement or any other Loan Document, and
no consent with respect to any departure by Borrower therefrom,
shall be effective unless the same shall be in writing and signed
by the Required Lenders (or by Agent at the written request of
the Required Lenders) and Borrower and then any such waiver or
consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no
such waiver, amendment, or consent shall, unless in writing and
signed by all the Lenders and Borrower and acknowledged by Agent,
do any of the following:
(a) increase or extend the Commitment of any
Lender;
(b) postpone or delay any date fixed by this
Agreement or any other Loan Document for any payment of
principal, interest, fees or other amounts due to the Lenders (or
any of them) hereunder or under any other Loan Document;
(c) reduce the principal of, or the rate of
interest specified herein on any Loan, or any fees or other
amounts payable hereunder or under any other Loan Document;
(d) change the percentage of the Commitments or
Obligations, as the case may be, that is required for the Lenders
or any of them to take any action hereunder;
(f) amend this Section or any provision of the
Agreement providing for consent or other action by all Lenders;
(g) release Collateral other than as permitted by
Section 17.11;
(h) change the definition of "Required Lenders";
(i) release Borrower or Guarantor from any
Obligation for the payment of money; or
(j) amend any of the provisions of Article 17.
and, provided further, however, that no amendment, waiver or
consent shall, unless in writing and signed by Agent, affect the
rights or duties of Agent under this Agreement or any other Loan
Document; and, provided further, however, that no amendment,
waiver or consent shall, unless in writing and signed by Foothill
in its individual capacity as a Lender, affect the specific
rights or duties of Foothill in its individual capacity as a
Lender (as contrasted with rights or duties of Foothill as a
member of the Lender Group) under this Agreement or any other
Loan Document. The foregoing notwithstanding, any amendment,
modification, waiver, consent, termination, or release of or with
respect to any provision of this Agreement or any other Loan
Document that relates only to the relationship of the Lender
Group among themselves, and that does not affect the rights or
obligations of Borrower, shall not require consent by or the
agreement of Borrower.
16.2 No Waivers; Cumulative Remedies. No failure by
Agent or any Lender to exercise any right, remedy, or option
under this Agreement, any other Loan Document, or any present or
future supplement hereto or thereto, or in any other agreement
between or among Borrower and Agent or any Lender, or delay by
Agent or any Lender in exercising the same, will operate as a
waiver thereof. No waiver by Agent or any Lender will be
effective unless it is in writing, and then only to the extent
specifically stated. No waiver by Agent or the Lenders on any
occasion shall affect or diminish Agent's and each Lender's
rights thereafter to require strict performance by Borrower of
any provision of this Agreement. Agent's and each Lender's
rights under this Agreement and the other Loan Documents will be
cumulative and not exclusive of any other right or remedy which
Agent or any Lender may have.
17. AGENT; THE LENDER GROUP.
17.1 Appointment and Authorization of Agent. Each
Lender hereby designates and appoints Foothill as its agent under
this Agreement and the other Loan Documents and each Lender
hereby irrevocably authorizes Agent to take such action on its
behalf under the provisions of this Agreement and each other Loan
Document and to exercise such powers and perform such duties as
are expressly delegated to it by the terms of this Agreement or
any other Loan Document, together with such powers as are
reasonably incidental thereto. Agent agrees to act as such on
the express conditions contained in this Article 17. The
provisions of this Article 17 are solely for the benefit of Agent
and the Lenders, and Borrower shall have no rights as a third
party beneficiary of any of the provisions contained herein;
provided, however, that certain of the provisions of Section
17.10 hereof also shall be for the benefit of Borrower. Any
provision to the contrary contained elsewhere in this Agreement
or in any other Loan Document notwithstanding, Agent shall not
have any duties or responsibilities, except those expressly set
forth herein, nor shall Agent have or be deemed to have any
fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities
shall be read into this Agreement or any other Loan Document or
otherwise exist against Agent; it being expressly understood and
agreed that the use of the word "Agent" is for convenience only,
that Foothill is merely the representative of the Lenders, and
has only the contractual duties set forth herein. Except as
expressly otherwise provided in this Agreement, Agent shall have
and may use its sole discretion with respect to exercising or
refraining from exercising any discretionary rights or taking or
refraining from taking any actions which Agent is expressly
entitled to take or assert under or pursuant to this Agreement
and the other Loan Documents. Without limiting the generality of
the foregoing, or of any other provision of the Loan Documents
that provides rights or powers to Agent, Lenders agree that Agent
shall have the right to exercise the following powers as long as
this Agreement remains in effect: (a) maintain, in accordance
with its customary business practices, ledgers and records
reflecting the status of the Advances, the Collateral, the
Collections, and related matters; (b) execute or file any and all
financing or similar statements or notices, amendments, renewals,
supplements, documents, instruments, proofs of claim, notices and
other written agreements with respect to the Loan Documents; (c)
make Advances for itself or on behalf of Lenders as provided in
the Loan Documents; (d) exclusively receive, apply, and
distribute the Collections as provided in the Loan Documents; (e)
open and maintain such bank accounts and lock boxes as Agent
deems necessary and appropriate in accordance with the Loan
Documents for the foregoing purposes with respect to the
Collateral and the Collections; (f) perform, exercise, and
enforce any and all other rights and remedies of the Lender Group
with respect to Borrower, the Obligations, the Collateral, the
Collections, or otherwise related to any of same as provided in
the Loan Documents; and (g) incur and pay such Lender Group
Expenses as Agent may deem necessary or appropriate for the
performance and fulfillment of its functions and powers pursuant
to the Loan Documents.
17.2 Delegation of Duties. Except as otherwise
provided in this section, Agent may execute any of its duties
under this Agreement or any other Loan Document by or through
agents, employees or attorneys-in-fact and shall be entitled to
advice of counsel concerning all matters pertaining to such
duties. Agent shall not be responsible for the negligence or
misconduct of any agent or attorney-in-fact that it selects as
long as such selection was made in compliance with this section
and without gross negligence or willful misconduct.
17.3 Liability of Agent. None of the Agent-Related
Persons shall (i) be liable for any action taken or omitted to be
taken by any of them under or in connection with this Agreement
or any other Loan Document or the transactions contemplated
hereby (except for its own gross negligence or willful
misconduct), or (ii) be responsible in any manner to any of the
Lenders for any recital, statement, representation or warranty
made by Borrower or any Subsidiary or Affiliate of Borrower, or
any officer or director thereof, contained in this Agreement or
in any other Loan Document, or in any certificate, report,
statement or other document referred to or provided for in, or
received by Agent under or in connection with, this Agreement or
any other Loan Document, or the validity, effectiveness,
genuineness, enforceability or sufficiency of this Agreement or
any other Loan Document, or for any failure of Borrower or any
other party to any Loan Document to perform its obligations
hereunder or thereunder. No Agent-Related Person shall be under
any obligation to any Lender to ascertain or to inquire as to the
observance or performance of any of the agreements contained in,
or conditions of, this Agreement or any other Loan Document, or
to inspect the properties, books or records of Borrower or any of
Borrower's Subsidiaries or Affiliates.
17.4 Reliance by Agent. Agent shall be entitled to
rely, and shall be fully protected in relying, upon any writing,
resolution, notice, consent, certificate, affidavit, letter,
telegraph, facsimile, telex or telephone message, statement or
other document or conversation believed by it to be genuine and
correct and to have been signed, sent, or made by the proper
Person or Persons, and upon advice and statements of legal
counsel (including counsel to Borrower or counsel to any Lender),
independent accountants and other experts selected by Agent.
Agent shall be fully justified in failing or refusing to take any
action under this Agreement or any other Loan Document unless it
shall first receive such advice or concurrence of the Lenders as
it deems appropriate and until such instructions are received,
Agent shall act, or refrain from acting, as it deems advisable.
If Agent so requests, it shall first be indemnified to its
reasonable satisfaction by Lenders against any and all liability
and expense that may be incurred by it by reason of taking or
continuing to take any such action. Agent shall in all cases be
fully protected in acting, or in refraining from acting, under
this Agreement or any other Loan Document in accordance with a
request or consent of the Lenders and such request and any action
taken or failure to act pursuant thereto shall be binding upon
all of the Lenders.
17.5 Notice of Default or Event of Default. Agent
shall not be deemed to have knowledge or notice of the occurrence
of any Default or Event of Default, except with respect to
defaults in the payment of principal, interest, fees, and
expenses required to be paid to Agent for the account of the
Lenders, except with respect to Events of Default of which Agent
has actual knowledge, unless Agent shall have received written
notice from a Lender or Borrower referring to this Agreement,
describing such Default or Event of Default, and stating that
such notice is a "notice of default." Agent promptly will notify
the Lenders of its receipt of any such notice or of any Event of
Default of which Agent has actual knowledge. If any Lender
obtains actual knowledge of any Event of Default, such Lender
promptly shall notify the other Lenders and Agent of such Event
of Default. Each Lender shall be solely responsible for giving
any notices to its Participants, if any. Subject to Section
17.4, Agent shall take such action with respect to such Default
or Event of Default as may be requested by the Required Lenders
in accordance with Section 9; provided, however, that unless and
until Agent has received any such request, Agent may (but shall
not be obligated to) take such action, or refrain from taking
such action, with respect to such Default or Event of Default as
it shall deem advisable.
17.6 Credit Decision. Each Lender acknowledges that
none of the Agent-Related Persons has made any representation or
warranty to it, and that no act by Agent hereinafter taken,
including any review of the affairs of Borrower and its
Subsidiaries or Affiliates, shall be deemed to constitute any
representation or warranty by any Agent-Related Person to any
Lender. Each Lender represents to Agent that it has,
independently and without reliance upon any Agent-Related Person
and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the
business, prospects, operations, property, financial and other
condition and creditworthiness of Borrower and any other Person
(other than the Lender Group) party to a Loan Document, and all
applicable bank regulatory laws relating to the transactions
contemplated hereby, and made its own decision to enter into this
Agreement and to extend credit to Borrower. Each Lender also
represents that it will, independently and without reliance upon
any Agent-Related Person and based on such documents and
information as it shall deem appropriate at the time, continue to
make its own credit analysis, appraisals and decisions in taking
or not taking action under this Agreement and the other Loan
Documents, and to make such investigations as it deems necessary
to inform itself as to the business, prospects, operations,
property, financial and other condition and creditworthiness of
Borrower and any other Person (other than the Lender Group) party
to a Loan Document. Except for notices, reports and other
documents expressly herein required to be furnished to the
Lenders by Agent, Agent shall not have any duty or responsibility
to provide any Lender with any credit or other information
concerning the business, prospects, operations, property,
financial and other condition or creditworthiness of Borrower and
any other Person party to a Loan Document that may come into the
possession of any of the Agent-Related Persons.
17.7 Costs and Expenses; Indemnification. Agent may
incur and pay Lender Group Expenses to the extent Agent deems
reasonably necessary or appropriate for the performance and
fulfillment of its functions, powers, and obligations pursuant to
the Loan Documents, including without limiting the generality of
the foregoing, court costs, reasonable attorneys fees and
expenses, costs of collection by outside collection agencies and
auctioneer fees and costs of security guards or insurance
premiums paid to maintain the Collateral, whether or not Borrower
is obligated to reimburse Agent or Lenders for such expenses
pursuant to the Loan Agreement or otherwise. Agent is authorized
and directed to deduct and retain sufficient amounts from
Collections to reimburse Agent for such out-of-pocket costs and
expenses prior to the distribution of any amounts to Lenders. In
the event Agent is not reimbursed for such costs and expenses
from Collections, each Lender hereby agrees that it is and shall
be obligated to pay to or reimburse Agent for the amount of such
Lender's Pro Rata Share thereof. Whether or not the transactions
contemplated hereby are consummated, the Lenders shall indemnify
upon demand the Agent-Related Persons (to the extent not
reimbursed by or on behalf of Borrower and without limiting the
obligation of Borrower to do so), according to their Pro Rata
Shares, from and against any and all Indemnified Liabilities;
provided, however, that no Lender shall be liable for the payment
to the Agent-Related Persons of any portion of such Indemnified
Liabilities resulting solely from such Person's gross negligence
or willful misconduct. Without limitation of the foregoing, each
Lender shall reimburse Agent upon demand for its ratable share of
any costs or out-of-pocket expenses (including attorneys fees and
expenses) incurred by Agent in connection with the preparation,
execution, delivery, administration, modification, amendment or
enforcement (whether through negotiations, legal proceedings or
otherwise) of, or legal advice in respect of rights or
responsibilities under, this Agreement, any other Loan Document,
or any document contemplated by or referred to herein, to the
extent that Agent is not reimbursed for such expenses by or on
behalf of Borrower. The undertaking in this section shall
survive the payment of all Obligations hereunder and the
resignation or replacement of Agent.
17.8 Agent in Individual Capacity. Foothill and its
Affiliates may make loans to, issue letters of credit for the
account of, accept deposits from, acquire equity interests in and
generally engage in any kind of banking, trust, financial
advisory, underwriting or other business with Borrower and its
Subsidiaries and Affiliates and any other Person (other than the
Lender Group) party to any Loan Documents as though Foothill were
not Agent hereunder and without notice to or consent of the
Lenders. The Lenders acknowledge that, pursuant to such
activities, Foothill or its Affiliates may receive information
regarding Borrower or its Affiliates and any other Person (other
than the Lender Group) party to any Loan Documents that is
subject to confidentiality obligations in favor of Borrower or
such other Person and that prohibit the disclosure of such
information to the Lenders, and the Lenders acknowledge that, in
such circumstances (and in the absence of a waiver of such
confidentiality obligations, which waiver Agent will use its
reasonable best efforts to obtain), Agent shall be under no
obligation to provide such information to them. With respect to
the Foothill Loans and Agent Advances, Foothill shall have the
same rights and powers under this Agreement as any other Lender
and may exercise the same as though it were not Agent, and the
terms "Lender" and "Lenders" include Foothill in its individual
capacity.
17.9 Successor Agent. Agent may resign as Agent upon
45 days notice to the Lenders. If Agent resigns under this
Agreement, the Required Lenders shall appoint a successor Agent
for the Lenders. If no successor Agent is appointed prior to the
effective date of the resignation of Agent, Agent shall appoint,
after consulting with the Lenders, a successor Agent and such
appointed successor Agent shall be deemed acceptable to the
Lenders. If Agent has materially breached or failed to perform
any material provision of this Agreement or of applicable law,
the Required Lenders may agree in writing to remove and replace
Agent with a successor Agent from among the Lenders. In any such
event, upon the acceptance of its appointment as successor Agent
hereunder, such successor Agent shall succeed to all the rights,
powers and duties of the retiring Agent and the term "Agent"
shall mean such successor Agent and the retiring Agent's
appointment, powers and duties as Agent shall be terminated.
After any retiring Agent's resignation hereunder as Agent, the
provisions of this Section 17 shall inure to its benefit as to
any actions taken or omitted to be taken by it while it was Agent
under this Agreement. If no successor Agent has accepted
appointment as Agent by the date which is 45 days following a
retiring Agent's notice of resignation, the retiring Agent's
resignation shall nevertheless thereupon become effective and the
Lenders shall perform all of the duties of Agent hereunder until
such time, if any, as the Lenders appoint a successor Agent as
provided for above.
17.10 Withholding Tax.
(a) If any Lender is a "foreign corporation,
partnership or trust" within the meaning of the IRC and such
Lender claims exemption from, or a reduction of, U.S. withholding
tax under Sections 1441 or 1442 of the IRC, such Lender agrees
with and in favor of Agent and Borrower, to deliver to Agent and
Borrower:
(i) if such Lender claims an exemption from,
or a reduction of, withholding tax under a United States tax
treaty, properly completed IRS Forms 1001 and W-8 before the
payment of any interest in the first calendar year and before the
payment of any interest in each third succeeding calendar year
during which interest may be paid under this Agreement;
(ii) if such Lender claims that interest paid
under this Agreement is exempt from United States withholding tax
because it is effectively connected with a United States trade or
business of such Lender, two properly completed and executed
copies of IRS Form 4224 before the payment of any interest is due
in the first taxable year of such Lender and in each succeeding
taxable year of such Lender during which interest may be paid
under this Agreement, and IRS Form W-9; and
(iii) such other form or forms as may be
required under the IRC or other laws of the United States as a
condition to exemption from, or reduction of, United States
withholding tax.
Such Lender agrees promptly to notify Agent and Borrower of any
change in circumstances which would modify or render invalid any
claimed exemption or reduction.
(b) If any Lender claims exemption from, or
reduction of, withholding tax under a United States tax treaty by
providing IRS Form 1001 and such Lender sells, assigns, grants a
participation in, or otherwise transfers all or part of the
Obligations of Borrower to such Lender, such Lender agrees to
notify Agent of the percentage amount in which it is no longer
the beneficial owner of Obligations of Borrower to such Lender.
To the extent of such percentage amount, Agent will treat such
Lender's IRS Form 1001 as no longer valid.
(c) If any Lender claiming exemption from United
States withholding tax by filing IRS Form 4224 with Agent sells,
assigns, grants a participation in, or otherwise transfers all or
part of the Obligations of Borrower to such Lender, such Lender
agrees to undertake sole responsibility for complying with the
withholding tax requirements imposed by Sections 1441 and 1442 of
the IRC.
(d) If any Lender is entitled to a reduction in
the applicable withholding tax, Agent may withhold from any
interest payment to such Lender an amount equivalent to the
applicable withholding tax after taking into account such
reduction. If the forms or other documentation required by
subsection (a) of this Section are not delivered to Agent, then
Agent may withhold from any interest payment to such Lender not
providing such forms or other documentation an amount equivalent
to the applicable withholding tax.
(e) If the IRS or any other Governmental
Authority of the United States or other jurisdiction asserts a
claim that Agent did not properly withhold tax from amounts paid
to or for the account of any Lender (because the appropriate form
was not delivered, was not properly executed, or because such
Lender failed to notify Agent of a change in circumstances which
rendered the exemption from, or reduction of, withholding tax
ineffective, or for any other reason) such Lender shall indemnify
Agent fully for all amounts paid, directly or indirectly, by
Agent as tax or otherwise, including penalties and interest, and
including any taxes imposed by any jurisdiction on the amounts
payable to Agent under this Section, together with all costs and
expenses (including attorneys fees and expenses). The obligation
of the Lenders under this subsection shall survive the payment of
all Obligations and the resignation or replacement of Agent.
17.11 Collateral Matters.
(a) The Lenders hereby irrevocably authorize
Agent, at its option and in its sole discretion, to release any
Lien on any Collateral (i) upon the termination of the
Commitments and payment and satisfaction in full by Borrower of
all Obligations; (ii) constituting property being sold or
disposed of if a release is required or desirable in connection
therewith and if Borrower certifies to Agent that the sale or
disposition is permitted under Section 7.4 of this Agreement or
the other Loan Documents (and Agent may rely conclusively on any
such certificate, without further inquiry); (iii) constituting
property in which Borrower owned no interest at the time the
security interest was granted or at any time thereafter; or (iv)
constituting property leased to Borrower under a lease that has
expired or is terminated in a transaction permitted under this
Agreement. Except as provided above, Agent will not execute and
deliver a release of any Lien on any Collateral without the prior
written authorization of (y) if the release is of all or
substantially all of the Collateral, of all of the Lenders, or
(z) otherwise, all of the Lenders. Upon request by Agent or
Borrower at any time, the Lenders will confirm in writing Agent's
authority to release any such Liens on particular types or items
of Collateral pursuant to this Section 17.11; provided, however,
that (1) Agent shall not be required to execute any document
necessary to evidence such release on terms that, in Agent's
opinion, would expose Agent to liability or create any obligation
or entail any consequence other than the release of such Lien
without recourse, representation, or warranty, and (2) such
release shall not in any manner discharge, affect, or impair the
Obligations or any Liens (other than those expressly being
released) upon (or obligations of Borrower in respect of) all
interests retained by Borrower, including, the proceeds of any
sale, all of which shall continue to constitute part of the
Collateral.
(b) Agent shall have no obligation whatsoever to
any of the Lenders to assure that the Collateral exists or is
owned by Borrower or is cared for, protected, or insured or has
been encumbered, or that the Agent's Liens have been properly or
sufficiently or lawfully created, perfected, protected, or
enforced or are entitled to any particular priority, or to
exercise at all or in any particular manner or under any duty of
care, disclosure or fidelity, or to continue exercising, any of
the rights, authorities and powers granted or available to Agent
pursuant to any of the Loan Documents, it being understood and
agreed that in respect of the Collateral, or any act, omission or
event related thereto, subject to the terms and conditions
contained herein, Agent may act in any manner it may deem
appropriate, in its sole discretion given Agent's own interest in
the Collateral in its capacity as one of the Lenders and that
Agent shall have no other duty or liability whatsoever to any
Lender as to any of the foregoing, except as otherwise provided
herein.
17.12 Restrictions on Actions by Lenders; Sharing
of Payments.
(a) Each of the Lenders agrees that it shall not,
without the express consent of Agent, and that it shall, to the
extent it is lawfully entitled to do so, upon the request of
Agent, set off against the Obligations, any amounts owing by such
Lender to Borrower or any accounts of Borrower now or hereafter
maintained with such Lender. Each of the Lenders further agrees
that it shall not, unless specifically requested to do so by
Agent, take or cause to be taken any action, including, the
commencement of any legal or equitable proceedings, to foreclose
any Lien on, or otherwise enforce any security interest in, any
of the Collateral the purpose of which is, or could be, to give
such Lender any preference or priority against the other Lenders
with respect to the Collateral.
(b) Subject to Section 17.8, if, at any time or
times any Lender shall receive (i) by payment, foreclosure,
setoff or otherwise, any proceeds of Collateral or any payments
with respect to the Obligations arising under, or relating to,
this Agreement or the other Loan Documents, except for any such
proceeds or payments received by such Lender from Agent pursuant
to the terms of this Agreement, or (ii) payments from Agent in
excess of such Lender's ratable portion of all such distributions
by Agent, such Lender promptly shall (1) turn the same over to
Agent, in kind, and with such endorsements as may be required to
negotiate the same to Agent, or in same day funds, as applicable,
for the account of all of the Lenders and for application to the
Obligations in accordance with the applicable provisions of this
Agreement, or (2) purchase, without recourse or warranty, an
undivided interest and participation in the Obligations owed to
the other Lenders so that such excess payment received shall be
applied ratably as among the Lenders in accordance with their Pro
Rata Shares; provided, however, that if all or part of such
excess payment received by the purchasing party is thereafter
recovered from it, those purchases of participations shall be
rescinded in whole or in part, as applicable, and the applicable
portion of the purchase price paid therefor shall be returned to
such purchasing party, but without interest except to the extent
that such purchasing party is required to pay interest in
connection with the recovery of the excess payment.
17.13 Agency for Perfection. Agent and each Lender
hereby appoints each other Lender as agent for the purpose of
perfecting the Agent's Liens in assets which, in accordance with
Article 9 of the UCC can be perfected only by possession. Should
any Lender obtain possession of any such Collateral, such Lender
shall notify Agent thereof, and, promptly upon Agent's request
therefor shall deliver such Collateral to Agent or in accordance
with Agent's instructions.
17.14 Payments by Agent to the Lenders. All
payments to be made by Agent to the Lenders shall be made by bank
wire transfer or internal transfer of immediately available funds
to:
If to Foothill:The Chase Manhattan Bank
New York, New York
ABA # ▇▇▇-▇▇▇-▇▇▇
Credit: Foothill Capital Corporation
Account No. 323-266193
Re: RAM Energy
or pursuant to such other wire transfer instructions as each
party may designate for itself by written notice to Agent.
Concurrently with each such payment, Agent shall identify whether
such payment (or any portion thereof) represents principal,
premium or interest on revolving advances or otherwise.
17.15 Concerning the Collateral and Related Loan
Documents. Each member of the Lender Group authorizes and
directs Agent to enter into this Agreement and the other Loan
Documents relating to the Collateral, for the benefit of the
Lender Group. Each member of the Lender Group agrees that any
action taken by Agent or all Lenders, as applicable, in
accordance with the terms of this Agreement or the other Loan
Documents relating to the Collateral and the exercise by Agent or
all Lenders, as applicable, of their respective powers set forth
therein or herein, together with such other powers that are
reasonably incidental thereto, shall be binding upon all of the
Lenders.
17.16 Field Audits and Examination Reports;
Confidentiality; Disclaimers by Lenders; Other Reports and
Information. By signing this Agreement, each Lender:
(a) is deemed to have requested that Agent
furnish such Lender, promptly after it becomes available, a copy
of each field audit or examination report (each a "Report" and
collectively, "Reports") prepared by Agent, and Agent shall so
furnish each Lender with such Reports;
(b) expressly agrees and acknowledges that
neither Foothill nor Agent (i) makes any representation or
warranty as to the accuracy of any Report, or (ii) shall be
liable for any information contained in any Report;
(c) expressly agrees and acknowledges that the
Reports are not comprehensive audits or examinations, that Agent
or other party performing any audit or examination will inspect
only specific information regarding Borrower and will rely
significantly upon Borrower's books and records, as well as on
representations of Borrower's personnel;
(d) agrees to keep all Reports and other
material, non-public information regarding Borrower and its
Subsidiaries and their operations, assets, and existing and
contemplated business plans in a confidential manner; it being
understood and agreed by Borrower that in any event such Lender
may make disclosures (a) to counsel for and other advisors,
accountants, and auditors to such Lender, (b) reasonably required
by any bona fide potential or actual Assignee, transferee, or
Participant in connection with any contemplated or actual
assignment or transfer by such Lender of an interest herein or
any participation interest in such Lender's rights hereunder, (c)
of information that has become public by disclosures made by
Persons other than such Lender, its Affiliates, assignees,
transferees, or participants, or (d) as required or requested by
any court, governmental or administrative agency, pursuant to any
subpoena or other legal process, or by any law, statute,
regulation, or court order; provided, however, that, unless
prohibited by applicable law, statute, regulation, or court
order, such Lender shall notify Borrower of any request by any
court, governmental or administrative agency, or pursuant to any
subpoena or other legal process for disclosure of any such non-
public material information concurrent with, or where
practicable, prior to the disclosure thereof; and
(e) without limiting the generality of any other
indemnification provision contained in this Agreement, agrees:
(i) to hold Agent and any such other Lender preparing a Report
harmless from any action the indemnifying Lender may take or
conclusion the indemnifying Lender may reach or draw from any
Report in connection with any loans or other credit
accommodations that the indemnifying Lender has made or may make
to Borrower, or the indemnifying Lender's participation in, or
the indemnifying Lender's purchase of, a loan or loans of
Borrower; and (ii) to pay and protect, and indemnify, defend and
hold Agent and any such other Lender preparing a Report harmless
from and against, the claims, actions, proceedings, damages,
costs, expenses and other amounts (including, attorney costs)
incurred by Agent and any such other Lender preparing a Report as
the direct or indirect result of any third parties who might
obtain all or part of any Report through the indemnifying Lender.
In addition to the foregoing: (x) Any Lender may from time to
time request of Agent in writing that Agent provide to such
Lender a copy of any report or document provided by Borrower to
Agent that has not been contemporaneously provided by Borrower to
such Lender, and, upon receipt of such request, Agent shall
provide a copy of same to such Lender promptly upon receipt
thereof from Borrower; (y) To the extent that Agent is entitled,
under any provision of the Loan Documents, to request additional
reports or information from Borrower, any Lender may, from time
to time, reasonably request Agent to exercise such right as
specified in such Lender's notice to Agent, whereupon Agent
promptly shall request of Borrower the additional reports or
information specified by such Lender, and, upon receipt thereof
from Borrower, Agent promptly shall provide a copy of same to
such Lender; and (z) Any time that Agent renders to Borrower a
statement regarding the Loan Account, Agent shall send a copy of
such statement to each Lender.
17.17 Several Obligations; No Liability.
Notwithstanding that certain of the Loan Documents now or
hereafter may have been or will be executed only by or in favor
of Agent in its capacity as such, and not by or in favor of the
Lenders, any and all obligations on the part of Agent (if any) to
make any credit available hereunder shall constitute the several
(and not joint) obligations of the respective Lenders on a
ratable basis, according to their respective Commitments, to make
an amount of such credit not to exceed, in principal amount, at
any one time outstanding, the amount of their respective
Commitments. Nothing contained herein shall confer upon any
Lender any interest in, or subject any Lender to any liability
for, or in respect of, the business, assets, profits, losses, or
liabilities of any other Lender. Each Lender shall be solely
responsible for notifying its Participants of any matters
relating to the Loan Documents to the extent any such notice may
be required, and no Lender shall have any obligation, duty, or
liability to any Participant of any other Lender. Except as
provided in Section 17.7, no member of the Lender Group shall
have any liability for the acts or any other member of the Lender
Group. No Lender shall be responsible to Borrower or any other
Person for any failure by any other Lender to fulfill its
obligations to make credit available hereunder, nor to advance
for it or on its behalf in connection with its Commitment, nor to
take any other action on its behalf hereunder or in connection
with the financing contemplated herein.
18. GENERAL PROVISIONS.
18.1 Effectiveness. This Agreement shall be binding
and deemed effective when executed by Borrower and each member of
the Lender Group whose signature is provided for on the signature
pages hereof.
18.2 Section Headings. Headings and numbers have been
set forth herein for convenience only. Unless the contrary is
compelled by the context, everything contained in each section
applies equally to this entire Agreement.
18.3 Interpretation. Neither this Agreement nor any
uncertainty or ambiguity herein shall be construed or resolved
against the Lender Group or Borrower, whether under any rule of
construction or otherwise. On the contrary, this Agreement has
been reviewed by all parties and shall be construed and
interpreted according to the ordinary meaning of the words used
so as to fairly accomplish the purposes and intentions of all
parties hereto.
18.4 Severability of Provisions. Each provision of
this Agreement shall be severable from every other provision of
this Agreement for the purpose of determining the legal
enforceability of any specific provision.
18.5 Amendments in Writing. This Agreement can only be
amended by a writing signed by Agent, the requisite Lenders, and
Borrower.
18.6 Counterparts; Telefacsimile Execution. This
Agreement may be executed in any number of counterparts and by
different parties on separate counterparts, each of which, when
executed and delivered, shall be deemed to be an original, and
all of which, when taken together, shall constitute but one and
the same Agreement. Delivery of an executed counterpart of this
Agreement by telefacsimile shall be equally as effective as
delivery of an original executed counterpart of this Agreement.
Any party delivering an executed counterpart of this Agreement by
telefacsimile also shall deliver an original executed counterpart
of this Agreement but the failure to deliver an original executed
counterpart shall not affect the validity, enforceability, and
binding effect of this Agreement. The forgoing shall apply to
each other Loan Document mutatis mutandis.
18.7 Revival and Reinstatement of Obligations. If the
incurrence or payment of the Obligations by Borrower or any
guarantor of the Obligations or the transfer by either or both of
such parties to the Lender Group of any property of either or
both of such parties should for any reason subsequently be
declared to be void or voidable under any state or federal law
relating to creditors' rights, including provisions of the
Bankruptcy Code relating to fraudulent conveyances, preferences,
and other voidable or recoverable payments of money or transfers
of property (collectively, a "Voidable Transfer"), and if the
Lender Group is required to repay or restore, in whole or in
part, any such Voidable Transfer, or elects to do so upon the
reasonable advice of its counsel, then, as to any such Voidable
Transfer, or the amount thereof that the Lender Group is required
or elects to repay or restore, and as to all reasonable costs,
expenses, and attorneys fees of the Lender Group related thereto,
the liability of Borrower or such guarantor automatically shall
be revived, reinstated, and restored and shall exist as though
such Voidable Transfer had never been made.
18.8 Integration. This Agreement, together with the
other Loan Documents, reflects the entire understanding of the
parties with respect to the transactions contemplated hereby and
shall not be contradicted or qualified by any other agreement,
oral or written, before the date hereof.
18.9 Amendment and Restatement; Release. This
Agreement and the obligations of Borrower set forth herein
constitute an amendment, modification and restatement, but not an
extinguishment or novation, of obligations of the Borrower
originally owed to the Prior Lenders and/or the predecessors in
interest to Prior Lenders (the "Prior Obligations"), the Prior
Lenders having assigned all of such Prior Obligations (together
with all Liens and security documents securing the same) to Agent
and the Lender Group pursuant to the Prior Lender Assignment
Agreements. This Agreement and the other Loan Documents are not
intended as, and shall not be construed as, a release, impairment
or novation of the Prior Obligations or the other indebtedness,
liabilities and obligations of Borrower or any of the other Loan
Parties under the agreements, documents and instruments executed
in connection therewith or relating thereto or the Liens granted
therein, all of which Liens are hereby modified and affirmed.
BORROWER AND EACH OTHER LOAN PARTY HEREBY VOLUNTARILY AND
KNOWINGLY RELEASE AND FOREVER DISCHARGE AGENT AND EACH OF THE
LENDERS, ITS PREDECESSORS, AGENTS, EMPLOYEES, ATTORNEYS,
SUCCESSORS AND ASSIGNS, FROM ALL POSSIBLE CLAIMS, DEMANDS,
ACTIONS, CAUSES OF ACTION, DAMAGES, COSTS, EXPENSES, AND
LIABILITIES WHATSOEVER, KNOWN OR UNKNOWN, ANTICIPATED OR
UNANTICIPATED, SUSPECTED OR UNSUSPECTED, FIXED, CONTINGENT, OR
CONDITIONAL, AT LAW OR IN EQUITY, ORIGINATING IN WHOLE OR IN PART
ON OR BEFORE THE DATE THIS AGREEMENT IS EXECUTED, WHICH BORROWER
AND SUCH OTHER LOAN PARTIES, INDIVIDUALLY OR COLLECTIVELY, MAY
NOW OR HEREAFTER HAVE AGAINST AGENT, ANY OF THE LENDERS, ITS
PREDECESSORS, AGENTS, EMPLOYEES, ATTORNEYS, SUCCESSORS AND
ASSIGNS, IF ANY, AND IRRESPECTIVE OF WHETHER ANY SUCH CLAIMS
ARISE OUT OF CONTRACT, TORT, VIOLATION OF LAW OR REGULATIONS, OR
OTHERWISE, AND ARISING FROM ANY ADVANCES, LETTERS OF CREDIT OR
OTHER INDEBTEDNESS, INCLUDING, WITHOUT LIMITATION, ANY
CONTRACTING FOR, CHARGING, TAKING, RESERVING, COLLECTING OR
RECEIVING INTEREST IN EXCESS OF THE HIGHEST LAWFUL RATE
APPLICABLE, THE EXERCISE OF ANY RIGHTS AND REMEDIES UNDER THE
AGREEMENT OR OTHER TRANSACTION DOCUMENTS, AND NEGOTIATION FOR AND
EXECUTION OF THIS AGREEMENT.
[Remainder of Page Intentionally Left Blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed.
BORROWER: RAM ENERGY, INC.
a Delaware corporation
By ▇▇▇▇▇ ▇. ▇▇▇
▇▇▇▇▇ ▇. ▇▇▇
President
AGENT: FOOTHILL CAPITAL CORPORATION,
a California corporation,
as Agent for the Lenders
By ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
LENDER: FOOTHILL CAPITAL CORPORATION,
a California corporation,
as a Lender
By ▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇
Title: Senior Vice President
EXHIBIT A-1
FORM OF ASSIGNMENT AND ACCEPTANCE AGREEMENT
This ASSIGNMENT AND ACCEPTANCE AGREEMENT ("Assignment Agreement")
is entered into as of between
("Assignor") and ("Assignee"). Reference is made
to the Agreement described in Item 2 of Annex I annexed hereto
(the "Loan Agreement"). Capitalized terms used herein and not
otherwise defined shall have the meanings ascribed to them in the
Loan Agreement.
1. In accordance with the terms and conditions of Section 15 of
the Loan Agreement, the Assignor hereby sells and assigns to the
Assignee, and the Assignee hereby purchases and assumes from the
Assignor, that interest in and to the Assignor's rights and
obligations under the Loan Documents as of the date hereof with
respect to the Obligations owing to the Assignor and the
Assignor's Commitment, all as specified in Item 4.a and Item 4.b
of Annex I. After giving effect to such sale and assignment the
Assignee's Commitment will be as set forth in Item 4.b and Item
4.c of Annex I.
2. The Assignor (i) represents and warrants that it is the
legal and beneficial owner of the interest being assigned by it
hereunder and that such interest is free and clear of any adverse
claim; (ii) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or
representations made in or in connection with the Loan Documents
or the execution, legality, validity, enforceability,
genuineness, sufficiency or value of the Loan Documents or any
other instrument or document furnished pursuant thereto; (iii)
makes no representation or warranty and assumes no responsibility
with respect to the financial condition of Borrowers or the
performance or observance by the Borrowers of any of their
obligations under the Loan Documents or any other instrument or
document furnished pursuant thereto; and (iv) advises the
Assignee that the Assignor's right to sell and assign its rights
and obligations under the Loan Documents with respect to the
Obligations owing to the Assignor and the Assignor's Commitment
is subject to the requirement of the written consent of the
Agent.
3. The Assignee (i) confirms that it has received copies of the
Loan Agreement and the other Loan Documents, together with copies
of the financial statements referred to therein and such other
documents and information as it has deemed appropriate to make
its own credit analysis and decision to enter into this
Assignment Agreement; (ii) agrees that it will, independently and
without reliance, as it shall deem appropriate at the time,
continue to make its own credit decisions in taking or not taking
action under the Loan Documents; (iii) confirms that it is
eligible as an assignee under the terms of the Loan Agreement;
(iv) appoints and authorizes the Agent to take such action as
agent on its behalf and to exercise such powers under the Loan
Documents as are delegated to Agent by the terms thereof,
together with such powers as are reasonably incidental thereto;
(v) agrees to be bound by, and that it will perform in accordance
with their terms all of the obligations which by, the terms of
the Loan Documents are required to be performed by it as a Lender
[and (vi) attaches the forms prescribed by the Internal Revenue
Service of the United States certifying as to the Assignee's
status for purposes of determining exemption from United States
withholding taxes with respect to all payments to be made to the
Assignee under the Loan Agreement or such other documents as are
necessary to indicate that all such payments are subject to such
rates at a rate reduced by an applicable tax treaty.]
4. Following the execution of this Assignment Agreement by the
Assignor and Assignee, it will be delivered to the Agent for
written consent by the Agent and, if so consented to by the
Agent, recording by the Agent. The effective date of this
Assignment (the "Settlement Date") shall be the earlier of (a)
the date of the execution hereof by the Assignor and the
Assignee, the payment by Assignor or Assignee to Agent for
Agent's sole and separate account a processing fee in the amount
of $5,000, and the receipt of any consent of the Agent, or (b)
the date specified in Item 5 of Annex I; provided, however, that
in no event shall this Assignment be or become effective without
the written consent of the Agent.
5. Upon such acceptance, written consent and recording by the
Agent, as of the Settlement Date (i) the Assignee shall be a
party to the Loan Agreement and, to the extent provided in this
Assignment Agreement, have all of the rights and obligations of a
Lender thereunder and under the other Loan Documents, and (ii)
the Assignor shall, to the extent provided in this Assignment
Agreement, relinquish its rights and be released from its
obligations under the Loan Agreement and the other Loan
Documents.
6. Upon such acceptance, written consent and recording by the
Agent, from and after the Settlement Date (or such later date as
written consent to this Assignment is given), the Agent shall
make all payments under the Loan Agreement and the other Loan
Documents in respect of the interest assigned hereby (including,
without limitation, all payments or principal, interest and
commitment fees (if applicable) with respect thereto) to the
Assignee. Upon the Settlement Date (or such later date as
written consent to this Assignment is given), the Assignee shall
pay to the Assignor the Assigned Share of the principal amount of
any outstanding Loans under the Loan Agreement and the other Loan
Documents. The Assignor and Assignee shall make all appropriate
adjustments in payments under the Loan Agreement and the other
Loan Documents for periods prior to the Settlement Date (or such
later date as written consent to this Assignment is given)
directly between themselves on the Settlement Date.
7. THIS ASSIGNMENT AGREEMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE
OF CALIFORNIA.
[Remainder of page left intentionally blank.]
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment Agreement to be executed by their respective officers
thereunto duly authorized, as of the first date above written,
such execution being made on Annex I hereto.
[NAME OF ASSIGNOR]
as Assignor
By
Name:
Title:
[NAME OF ASSIGNEE]
as Assignee
By
Name:
Title:
Consented to as of _________, 20__:
FOOTHILL CAPITAL CORPORATION,
as Agent
By:__________________________________
Name: _______________________________
Title: ________________________________
ANNEX FOR ASSIGNMENT AND ACCEPTANCE
ANNEX I
1. Borrowers:
RAM Energy, Inc., a Delaware corporation.
2. Name and Date of Loan Agreement:
Amended and Restated Loan and Security Agreement,
dated as of December 27, 1999, among Borrowers,
the financial institutions signatory thereto as
the Lenders, and Foothill Capital Corporation, a
California corporation, as agent for the Lenders.
3. Date of Assignment Agreement:
4. Amounts (as of date in Item #3 above):
a. Assignor's Total Commitment prior to giving $
effect to Assignment Agreement
b. Assigned Share of Total Commitment %
c. Assignee's Share of Total Commitment $
5. Settlement Date:
6. Notice and Payment Instructions, etc.
Assignee:
_________________________________
_________________________________
_________________________________
7. Agreed and Accepted:
[ASSIGNOR] [ASSIGNEE]
By: By:
Title: Title:
Consented to as of _________, 20__:
FOOTHILL CAPITAL CORPORATION,
as Agent
By:__________________________________
Name: _______________________________
Title: ________________________________
EXHIBIT B-1
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY AND AMONG RAM
ENERGY, INC., AS BORROWER, THE LENDERS SIGNATORY THERETO, AND
FOOTHILL CAPITAL CORPORATION, AS AGENT FOR THE LENDERS
MORTGAGES, OPINIONS, CERTIFICATES AND CERTAIN OTHER REQUIRED
ITEMS AND INFORMATION
1. Agent has received each of the following documents, in form
and substance satisfactory to Agent, duly executed (and
acknowledged, as the case may be) by the Borrowing Base
Entity that is the owner thereof and all other necessary
parties and all formalities contemplated thereunder have
been completed, and each such document shall be in full
force and effect and shall have been recorded in each office
required by Agent:
(a) Oil and Gas Property Mortgages, dated as of the Closing
Date, covering the Applicable Oil and Gas Property on
which the Proved Reserves are located (the "Applicable
Oil and Gas Property");
(b) Copies of the governmental permits, approvals and
orders for each well and each unit pertaining to the
Applicable Oil and Gas Property;
(c) Transfer Order Letters for each well on the Applicable
Oil and Gas Property;
(d) Assignments in form and substance acceptable to Agent
of each Material Contract pertaining to the Applicable
Oil and Gas Property which either (i) affects any
Borrowing Base Entity's or any of its Subsidiaries' or,
as the case may be, title to such Oil and Gas Property
or otherwise affects the value, use or operation of
such Oil and Gas Property in any material respect or
(ii) creates or evidences a material obligation or
liability on the part of any Borrowing Base Entity or
any or its Subsidiaries, together with copies of each
such Material Contract.
2. Agent has received a certificate of insurance, together with
the endorsements thereto with respect to the Applicable Oil
and Gas Property and the insurable risks associated
therewith as described in Section 6.10, with Agent for the
benefit of the Lender Group being named thereon as loss
payee and additional insured, all in form and substance of
which shall be satisfactory to Agent and its counsel.
3. Agent has received copies of all Material Contracts relating
to the Applicable Oil and Gas Property, and such contracts
shall be in form and substance satisfactory to Agent.
4. Agent has received an opinion of Borrower's counsel covering
the Oil and Gas Property Mortgages covering the Applicable
Oil and Gas Property and matters pertaining thereto,
including the due execution, delivery and enforceability
thereof, and creation of lien thereunder, in form and
substance satisfactory to Agent in its sole discretion.
5. Agent has received, to the extent contemplated in Section
6.17 and Section 6.18 of the Agreement, (i) appraisals of
the Applicable Oil and Gas Property in the form of Reserve
Reports prepared by a third party petroleum engineering firm
acceptable to Agent (including, but not limited to,
appraisals, verifications and liquidation analyses of the
Proved Reserves thereof categorized by "Proved Developed
Producing Reserves," "Proved Developed Non-Producing
Reserves," "Proved Undeveloped Reserves," and other), in
each case satisfactory to Agent, and (ii) title opinions for
the Applicable Oil and Gas Property issued to Agent for the
benefit of the Lender Group by a legal counsel to Borrower
that is experienced in the examination of title to the
Applicable Oil and Gas Property and is satisfactory to
Agent, each of which title opinions shall be in form and
substance satisfactory to Agent and:
(A) have been updated within 15 days of the date of the
filing of the Applicable Oil and Gas Property Mortgage
to confirm the priority of the Lien created by the
Applicable Oil and Gas Property Mortgage, and
(B) opine as to such matters incident to the Applicable Oil
and Gas Property as Agent may reasonably request
including the following with respect to the Mineral
Interests in the Applicable Oil and Gas Property:
(I) The Borrowing Base Entity that is the grantor
under the Applicable Oil and Gas Property Mortgage
covering the Applicable Oil and Gas Properties has
defensible title to such Oil and Gas Properties to
the extent of the Mineral Interests as specified
therein, free and clear of all Liens and defects
except Permitted Liens.
(II) The Borrowing Base Entity that is the grantor
under the Oil and Gas Property Mortgage covering
the Oil and Gas Properties is entitled to receive,
after giving effect to all royalties, overriding
royalties and other burdens payable out of
production, a decimal share of all Hydrocarbons
produced and sold from such Oil and Gas
Properties, before and after payout, not less than
set forth in the opinion.
(III)The operating interest in such Oil and Gas
Properties of the Borrowing Base Entity that is
the grantor under the Oil and Gas Property
Mortgage covering the Oil and Gas Properties, is
not obligated to bear a decimal share of all costs
and expenses from the operation thereof in excess
of that set forth therein.
(IV) The Liens created by the Oil and Gas Property
Mortgage are valid and enforceable first priority
mortgage Liens which are first in right and prior
in time and superior to all other Liens against
such Mineral Interests and other Oil and Gas
Properties other than Permitted Liens.
6. Borrower has delivered to Agent evidence satisfactory to
Agent confirming that each of the producing ▇▇▇▇▇ located on
the Applicable Oil and Gas Property is (i) covered by the
title opinions and current ▇▇▇▇▇▇▇ reports to the extent
required pursuant to Section 6.17 or Section 6.18 of the
Agreement and (ii) described in the legal description
contained in an Oil and Gas Property Mortgage which has been
duly executed and delivered to Agent.
7. If reasonably requested by Agent, Agent has received a phase-
I environmental report with respect to the Applicable Oil
and Gas Property, and the environmental consultants, the
scope of the reports or surveys, and the results thereof
shall be acceptable to Agent in its sole discretion.
8. Agent has received all financing statements and fixture
filings required by Agent, duly executed by the Borrowing
Base Entity that is the owner thereof and all other
necessary parties and all formalities contemplated
thereunder have been completed, and Agent shall have
received searches of all recording offices requested by
Agent reflecting the filing of all such financing statements
and fixture filings, together with searches of such other
offices as Agent may require, each dated as of a date
acceptable to Agent.
9. Borrower has delivered to Agent additional information
concerning the Applicable Oil and Gas Property of the type
contemplated (without regard to value) by Schedules 5.1(a),
5.1(b), 5.1(c) and 5.2(b), with such information being
presented in substantially the same format as in such
Schedules.
10. All other documents and legal matters in connection with the
Applicable Oil and Gas Properties and the purchase or
ownership thereof have been delivered, executed, or recorded
and are in form and substance satisfactory to Agent and its
counsel.
EXHIBIT T-1
TO
AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT BY AND AMONG RAM
ENERGY, INC., AS BORROWER, THE LENDERS SIGNATORY THERETO, AND
FOOTHILL CAPITAL CORPORATION, AS AGENT FOR THE LENDERS
Letter in Lieu of Division or Transfer Orders
___________ ___, _______
VIA CERTIFIED MAIL
RETURN RECEIPT REQUESTED
TO:
Re: Letter in Lieu of Transfer Order
Ladies and Gentlemen:
By one or more mortgages and/or deeds of trust, a copy of
which is enclosed with this letter, RAM Energy, Inc., ▇▇▇▇▇▇
Field Limited Partnership, Magic Circle Energy Corporation, and
RLP Gulf States, L.L.C. (hereinafter collectively referred to as
the "Companies") have granted to Foothill Capital Corporation, a
California corporation, as agent (in such capacity together with
its successors in such capacity, "Agent") for one or more lenders
(such lenders, together with their respective successors and
assigns, the "Lenders"), a lien on and security interest in the
property interests described on Schedule I attached hereto (the
"Properties"), including without limitation an assignment and
transfer of all of the present and future production and proceeds
of production from the Properties.
We understand that, pursuant to division orders, transfer
orders, letters-in-lieu thereof or other agreements, you are
currently disbursing proceeds of the production from the
Properties to one or more of the Companies or its designees.
The Companies and Agent on behalf of the Lenders hereby give
you written notice of the matters set forth above and the
assignment and transfer to Agent for the benefit of the Lenders
of all accounts from the sale of hydrocarbons from the
Properties. Furthermore, you are hereby authorized and directed
to commence paying, immediately upon your receipt of this letter,
100% of all proceeds of production distributed by you and
attributable to the interest of any and all of the Companies in
the Properties, less royalty and applicable severance and ad
valorem taxes, directly to Agent for the benefit of the Lenders
at the following address:
The Chase Manhattan Bank, N.A.
▇ ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA #▇▇▇-▇▇▇-▇▇▇
Account Number 323-266193
Credit: Foothill Capital Corporation
Re: RAM Energy, Inc.
You are hereby further authorized and directed to continue to pay
royalty and applicable severance and ad valorem taxes to the
appropriate parties. You are hereby further authorized and
directed to change your records in accordance with this letter
effective immediately upon your receipt of this letter.
In consideration of your acceptance of this letter in lieu
of a division or transfer order, the Companies hereby agree to
indemnify, save and hold you harmless from and against any and
all claims, actions, judgments, damages, liabilities, losses,
costs, recoveries and other expenses which you sustain by reason
of the payments to Agent for the benefit of Lenders of proceeds
of production as requested and authorized hereby.
In order that we have a record evidencing your acceptance of
this letter, we request that you sign two copies of this letter
in the space provided below and return them to Agent at ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ 90025-
3333, Attn: Business Finance Division Manager (Fax No.
▇▇▇.▇▇▇.▇▇▇▇) in the enclosed, self-addressed envelope. If you
have further requirements concerning this transfer, please notify
Agent at the address specified above. None of the terms or
provisions of this letter may be changed without the prior
written consent of Agent.
Sincerely,
RAM ENERGY, INC.
▇▇▇▇▇▇ FIELD LIMITED PARTNERSHIP
MAGIC CIRCLE ENERGY CORPORATION
RLP GULF STATES, L.L.C.
By: ______________________________
Name: ▇▇▇▇▇ ▇. ▇▇▇
Title: President of each of RAM
Energy, Inc. and Magic Circle
Energy Corporation, President
of ▇▇▇▇▇▇ Development
Corporation, which is the
general partner of ▇▇▇▇▇▇
Field Limited Partnership, and
President of RAM Energy, Inc.,
which is the manager of RLP
Gulf States, L.L.C.
FOOTHILL CAPITAL CORPORATION,
as Agent
By: ______________________________
Name:
______________________________
Title:
______________________________
ACCEPTED AND AGREED this ____ day of ___________, ______, and our
records have been changed
effective with _____________________, 2000 production.
___________________________________________
By: ____________________________________
Name: ____________________________________
Title: ____________________________________
EXHIBIT C-1
COMPANY LETTERHEAD
Foothill Capital Corporation, as agent
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇-▇▇▇▇
RE: Compliance Certificate
In accordance with our Amended and Restated Loan and Security
Agreement ("Agreement") dated as of December 27, 1999, I hereby
certify:
All reports, statements or computer prepared information of
any kind or nature delivered or caused to be delivered to
Foothill have been prepared in accordance with GAAP
consistently applied and fairly present the financial
condition of Borrower, except as follows:
Borrower is in timely compliance with all representations,
warranties, and covenants as defined within the Agreement,
except as follows:
On the date of delivery of such certificate to Foothill
there does not exist any condition or event which
constitutes an Event of Default, as defined within the
Agreement, except as follows:
The amount of the Revolving Facility Usage, as defined in
the Agreement, shall not exceed the Availability, as defined
in the Agreement after giving effect to the requested
Advance, as defined in the Agreement.
PLEASE ATTACH A SCHEDULE OF FINANCIAL COVENANTS (AND CALCULATIONS
THEREOF), INCLUDING YEAR TO DATE CAPITAL EXPENDITURES, TO THIS
COMPLIANCE CERTIFICATE.
RAM Energy, Inc.,
A Delaware corporation
By: ___________________________________
▇▇▇▇▇ ▇. ▇▇▇,
President
After recording, return to:
▇▇▇▇▇▇ ▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
THE PARTIES HERETO DIRECT THE CLERKS OF COURT (EX-OFFICIO
RECORDER OF MORTGAGES) FOR THE PARISHES AND COUNTIES LISTED ON
SCHEDULE A ATTACHED HERETO TO MAKE A NOTATION OF THIS
ASSIGNMENT OF NOTES AND LIENS AND MASTER ACT OF AMENDMENT TO
MORTGAGES IN THE MARGIN OF THEIR RECORDS AT THE RECORDATION
REFERENCES NOTED ON SAID SCHEDULE A HERETO TO SERVE AS THE
OCCASION MAY REQUIRE.
ASSIGNMENT OF NOTES AND LIENS
AND
MASTER ACT OF AMENDMENT TO MORTGAGES
THIS ASSIGNMENT OF NOTES AND LIENS AND MASTER ACT OF
AMENDMENT TO MORTGAGES (this "Assignment") is made effective as
of the 27th day of December, 1999, by and among:
UNION BANK OF CALIFORNIA, N.A. ("Union Bank"), a national
banking association, with an address of ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, for itself and as agent for the
lenders that are or become parties to the Credit Agreement (as
defined in Recital A below);
DEN NORSKE BANK, ASA ("Den Norske"), a bank, with an address of
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Union
Bank, Den Norske, and Union Bank as Agent for the lenders that
are parties to the Credit Agreement are referred to herein,
collectively, as the "Assignors" and, individually, as an
"Assignor");
RAM ENERGY, INC. ("Borrower"), a Delaware corporation, whose
chief executive office is Meridian Tower, Suite 650, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
RLP GULF STATES, L.L.C. ("RLP"), an Oklahoma limited liability
company, whose chief executive office is Meridian Tower, Suite
650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
MAGIC CIRCLE ENERGY CORPORATION ("MCE"), a Delaware corporation,
whose chief executive office is Meridian Tower, Suite 650, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇▇▇ FIELD LIMITED PARTNERSHIP ("CFL"), an Oklahoma limited
partnership, whose chief executive office is Meridian Tower,
Suite 650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇▇▇ DEVELOPMENT CORPORATION ("CDC"), an Oklahoma corporation,
whose chief executive office is Meridian Tower, Suite 650, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
MAGIC CIRCLE ACQUISITION CORPORATION ("MCA"), an Oklahoma
corporation, whose chief executive office is Meridian Tower,
Suite 650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
(collectively, RLP, MCE, CFL, CDC and MCA shall be referred to
herein as the "Guarantors"); and
FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), in its capacity as agent for the benefit of the
lenders that are or become parties to the Amended and Restated
Loan and Security Agreement (as amended, restated and renewed
from time to time, the "Amended and Restated Loan and Security
Agreement"), dated December 27, 1999, among Borrower, the
lenders that are or become parties thereto (individually and
collectively, the "Lenders") and Foothill, as agent for the
benefit of the Lenders (Foothill in capacity as agent for the
benefit of the Lenders is hereinafter referred to as the
"Assignee"), whose address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
R E C I T A L S
A. Pursuant to that certain Second Amended and Restated
Credit Agreement, dated as of February 3, 1998, executed by
Borrower, Den Norske and Union Bank individually and as Agent,
as amended by that certain Amendment No. 1 and Waiver, dated as
of August 17, 1998, that certain Amendment No. 2 and Waiver,
dated as of March 31, 1999, that certain Amendment No. 3 and
Waiver, dated as of August 12, 1999, that certain Amendment No.
4 dated as of September 2, 1999, that certain Amendment No. 5
and Consent and Waiver dated as of September 28, 1999, that
certain Amendment No. 6 dated as of September 30, 1999, and that
certain Amendment No. 7 dated as of December 22, 1999, each
respectively executed by Borrower, Den Norske, and Union Bank
individually and as Agent, and certain other agreements,
documents and instruments preceding the same (said Second
Amended and Restated Credit Agreement, as amended, together with
such preceding agreements, documents and instruments, are
hereinafter referred to collectively as the "Credit Agreement"),
Assignors and their predecessors-in-interest have provided
Borrower with a revolving credit facility, the indebtedness
incurred in connection with the Credit Agreement being presently
evidenced by (i) a promissory note in the original principal
amount of $30,000,000, dated February 27, 1998, payable to the
order of Union Bank, executed by Borrower, and (ii) a promissory
note in the original principal amount of $20,000,000, dated
February 27, 1998, payable to the order of Den Norske, executed
by Borrower (individually, a "Note"; and collectively, the
"Notes").
B. As security for payment of the Notes and the
performance of all of the other obligations of Borrower under
the Credit Agreement, Borrower has granted Assignors certain
liens and security interests, which liens and security interests
include those evidenced by the mortgages, deeds of trust,
security agreements, collateral documents and financing
statements described on Schedule A attached hereto.
C. In connection with the Credit Agreement, the
Guarantors have executed guarantees (the "Guarantees")
guaranteeing payment of all the indebtedness of Borrower arising
in connection with the Credit Agreement, which Guarantees
include those being more specifically described on Schedule A
attached hereto.
D. In connection with the Credit Agreement and the
Guarantees, the Guarantors have granted Assignors certain liens
and security interest, which liens and security interests are
evidenced by the mortgages, deeds of trust, security agreements,
collateral documents and financing statements described on
Schedule A attached hereto.
E. Assignors desire to grant, transfer, assign and convey
to Assignee all of their rights, titles and interests in and to
the Notes and the indebtedness and obligations of Borrower, the
Guarantors, and any other party to or guaranteeing or securing
the obligations arising under the Credit Agreement, together
with any and all liens and security interests and guarantees in
connection therewith (the "Security Documents") (including,
without limitation, the Guarantees and the other Security
Documents described on Schedule A attached hereto), including,
but not limited to, all indebtedness and obligations of Borrower
and the Guarantors, together with their affiliates and
subsidiaries, under the documents described on Schedule A
(collectively, the documents described on Schedule A, together
with any other document evidencing the obligations or
indebtedness of Borrower, the Guarantors or any of their
affiliates or subsidiaries in connection with the Credit
Agreement shall be referred to herein as the "Loan Documents").
Schedule A and the property subject to the Liens and security
interests created or evidenced by the Security Documents include
but are not limited to the property covered by the legal
descriptions contained on Annex I attached hereto.
F. Borrower and the Guarantors desire to (i) acknowledge
and agree that they specifically requested that Lenders purchase
the Notes, that Lenders are purchasing the Notes as an
accommodation to them, that they will be benefited, directly and
indirectly, by the purchase of the Notes by Lenders, and that it
is in their best interests for Lenders to purchase the Notes,
and (ii) acknowledge and consent to the sale and acquisition of
the Notes, the Security Documents and the other Loan Documents
to Assignee, and (iii) ratify, affirm, acknowledge and confess
each of their obligations under the Notes, the Security
Documents and the other Loan Documents, and (iv) ratify, affirm,
acknowledge and agree that nothing herein shall, and nothing
herein shall be construed to, adversely affect or impair any
lien, charge, encumbrance or security interest created under the
Security Documents or any of the other Loan Documents or the
priority thereof or release or affect their liability pursuant
to the Security Documents or the other Loan Documents, and (v)
ratify, affirm, acknowledge and agree that all liens, charges,
encumbrances and security interests created under the Security
Documents and the other Loan Documents shall be and hereby are
ratified, affirmed, extended and carried forward and shall
continue to secure the payment and performance of and in all
respects benefit the holders of each of (a) the "Obligations"
under and as defined in the Amended and Restated Loan and
Security Agreement, and (b) all other indebtedness, obligations
and liabilities of Borrower and the Guarantors described in the
"Loan Documents" (as defined in the Amended and Restated Loan
and Security Agreement) (said "Obligations" and such other
indebtedness, obligations, and liabilities described in the
immediately preceding clauses (a) and (b) are hereinafter
referred to, collectively, as the "Foothill Obligations"), and
(vi) along with Assignee amend certain provisions of each of the
following documents (hereinafter collectively referred to as the
"Mortgages"): each Mortgage, Deed of Trust, Security Agreement
and Financing Statement described on Schedule A attached hereto,
each Mortgage, Deed of Trust, Security Agreement, Assignment of
Production and Financing Statement described on such Schedule A,
each Mortgage, Security Agreement, Assignment of Production and
Financing Statement described on such Schedule A, and each Deed
of Trust, Security Agreement, Assignment of Production and
Financing Statement described on such Schedule A.
G. Contemporaneously with the execution of this
Assignment, the parties hereto are entering into two certain
other Assignments of Notes and Liens and Master Acts of
Amendment to Mortgages dated as of even date herewith, pursuant
to which Assignors are assigning to Assignee its mortgages,
liens and encumbrances on the MCAC Assignment Collateral (as
such term is defined on Schedule D attached hereto) and the
▇▇▇▇▇▇ Collateral (as such term is defined on Schedule E
attached hereto) (such two certain other Assignments of Notes
and Liens and Master Acts of Amendment to Mortgages are
hereinafter referred to collectively as the "Parallel
Assignments"). It is the intention of the parties that the
aggregation of the assignments evidenced by this Assignment and
the assignments evidenced by each of the Parallel Assignments
will result in the assignment by Assignors to Assignee of all of
the rights, titles and interests of Assignors in and to the
Notes, the Security Documents and the other Loan Documents.
NOW, THEREFORE, for and in consideration of the forgoing
Recitals and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and confessed,
Assignors, Borrower, the Guarantors and Assignee hereby agree as
follows:
SECTION 1
ASSIGNMENT OF NOTES AND LIENS
1.1 Assignment of Notes and Liens
Each Assignor, severally, in consideration of the payment
by the Assignee to such Assignor of the outstanding principal
balance of the Note payable to such Assignor, as set forth in
the Payoff Letter (herein so called) attached hereto as Schedule
C, the receipt and sufficiency of which are hereby acknowledged
by such Assignor, and intending to be legally bound hereby, does
grant, assign, sell, transfer and convey to the Assignee,
without recourse and without representation or warranty, express
or implied, except as specifically and expressly set forth in
Section 1.4 hereof, the Notes, together with all of the
Assignors' right, title and interest thereunder, to have and to
hold unto the Assignee and its successors and assigns forever.
Borrower hereby affirms, ratifies and acknowledges its
indebtedness and obligations under the Notes in the amount set
forth on Schedule B attached hereto, as well as its obligations
under the Security Documents and the other Loan Documents, and
Borrower hereby ratifies, affirms, acknowledges and agrees that
nothing herein shall, and nothing herein shall be construed to,
adversely affect or impair any lien, charge, encumbrance or
security interest created under the Security Documents or any of
the other Loan Documents or the priority thereof or release,
adversely affect or impair Borrower's liability pursuant to the
Security Documents or the other Loan Documents, and Borrower
hereby ratifies, affirms, acknowledges and agrees that all
liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of, and in all respects otherwise benefit, the holders of the
Foothill Obligations. Each Guarantor hereby ratifies, affirms
and acknowledges its obligations under its respective Guarantee,
as well as its obligations under the other Security Documents
and the other Loan Documents, and each Guarantor hereby
ratifies, affirms, acknowledges and agrees that nothing herein
shall, and nothing herein shall be construed to, adversely
affect or impair any lien, charge, encumbrance or security
interest created under the Security Documents or any of the
other Loan Documents or the priority thereof or release,
adversely affect or impair its liability pursuant to the
Security Documents or the other Loan Documents, and each
Guarantor hereby ratifies, affirms, acknowledges and agrees that
all liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of and in all respects benefit the holders of the Foothill
Obligations.
In addition, each Assignor, severally, in consideration of
the payment by the Assignee as stated above, intending to be
legally bound hereby, does grant, assign, sell, transfer and
convey to the Assignee without recourse and without
representation or warranty, express or implied, except as
specifically and expressly set forth in Section 1.4 hereof, all
of its rights, titles and interests in and to any liens, claims
and encumbrances securing Borrower's and the Guarantors'
(together with their affiliates' and subsidiaries') obligations
under the Notes, the Security Documents, and the other Loan
Documents, provided, however that rights, titles and interests
of Assignors assigned herein shall not include the liens and
encumbrances comprising the MCAC Assignment Collateral and the
▇▇▇▇▇▇ Collateral (collectively, all rights, titles and
interests of Assignors assigned herein in and to the Notes, the
Security Documents and the other Loan Documents shall be
referred as the "Assigned Interests").
Borrower hereby acknowledges and agrees that it requested
that Lenders purchase the Notes, that Lenders are purchasing the
Notes as an accommodation to Borrower, that Borrower is
benefited, directly and indirectly, by the purchase of the Notes
by Lenders, and that it is in the best interests of Borrower for
Lenders to purchase the Notes, and Borrower hereby ratifies,
affirms, acknowledges, and confesses its respective indebtedness
and obligations under and the effectiveness of the Notes and the
Security Documents and the other Loan Documents to which
Borrower is a party, and Borrower hereby ratifies, affirms,
acknowledges and agrees that nothing herein shall, and nothing
herein shall be construed to, adversely affect or impair any
lien, charge, encumbrance or security interest created under the
Security Documents or any of the other Loan Documents or the
priority thereof or release, adversely affect or impair
Borrower's liability pursuant to the Security Documents or the
other Loan Documents, and Borrower hereby ratifies, affirms,
acknowledges and agrees that all liens, charges, encumbrances
and security interests created under the Security Documents and
the other Loan Documents shall be and hereby are ratified,
affirmed, extended and carried forward and shall continue to
secure the payment and performance of and in all respects
benefit the holders of the Foothill Obligations.
Each Guarantor hereby acknowledges and agrees that it
requested that Lenders purchase the Notes, that Lenders are
purchasing the Notes as an accommodation to each Guarantor, that
each Guarantor is benefited, directly and indirectly, by the
purchase of the Notes by Lenders, and that it is in the best
interests of each Guarantor for Lenders to purchase the Notes,
and each Guarantor hereby ratifies, affirms, acknowledges, and
confesses its obligations under and the effectiveness of its
respective Guarantee, the other Security Documents and the other
Loan Documents to which it is a party, and each Guarantor hereby
ratifies, affirms, acknowledges and agrees that nothing herein
shall adversely affect or impair or be construed to adversely
affect or impair any lien, charge, encumbrance or security
interest created under the Security Documents or any of the
other Loan Documents or the priority thereof or to release,
adversely affect or impair its liability pursuant to the
Security Documents or the other Loan Documents, and each
Guarantor hereby ratifies, affirms, acknowledges and agrees that
all liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of and in all respects benefit the holders of the Foothill
Obligations.
This Assignment is made with full substitution and
subrogation in and to all of the rights, titles, and interests
Assignors may have under the Notes, the Guarantees, the other
Security Documents, or any other Loan Document (save and except
only the Reserved Obligations as provided herein). Neither any
existing Guarantee nor any other existing Security Document nor
any other Loan Document shall be released, but is hereby
assigned to the Assignee and shall be carried forward and
extended to secure the payment and performance of the Foothill
Obligations.
1.2 No Assumption.
The Assignee does not assume, and the Assignee shall not be
obligated to pay, perform or discharge, any claim, debt,
obligation, expenses or liability of the Assignors of any kind,
whether known or unknown, absolute or contingent, under the Loan
Documents or otherwise, arising out of any act or omission by
the Assignors.
1.3 Endorsement of Notes
Each Assignor severally agrees that it will promptly
endorse its Note to the order of the Assignee, without recourse
and without representation or warranty, express or implied,
except as expressly set forth in Section 1.4 herein and will
deliver such endorsed Note to the Assignee. The indebtedness
arising under and evidenced by the Notes, the Credit Agreement
and the other Loan Documents is continuing indebtedness and
nothing contained herein shall be construed to have paid or
extinguished any of such indebtedness or to have released or
terminated any lien securing such indebtedness.
Each Assignor disclaims any representation or warranty,
express or implied, to the Assignee in connection with this
Assignment (other than those set forth in Section 1.4),
including, without limitation, as to the collectibility of the
Notes, the value of the property encumbered by the Assigned
Interests, and the ability of Borrower to make due and timely
payment of any amount due from it pursuant to the Notes, in
whole or in part. The Assignee acknowledges the disclaimer of
each Assignor and expressly disclaims reliance upon any
representations or warranties, express or implied (other than
those set forth in Section 1.4).
1.4 Representations and Warranties of each Assignor.
Each Assignor severally represents and warrants to the
Assignee as follows:
(a) It has the full power, legal capacity and
authority to enter into and perform its obligations under
this Assignment and to execute this Assignment.
(b) This Assignment constitutes the valid and binding
obligations of it, enforceable against it in accordance
with its terms, except insofar as enforcement of terms may
be limited by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership and other similar laws
and judicial decisions of general application relating to
or affecting the enforcement of creditors' rights, and by
general equitable principles (whether considered in
proceeding at law or in equity).
(c) It is the legal and equitable holder of its Note,
the Security Documents and the other Loan Documents, and
the indebtedness and obligations evidenced thereby.
(d) The aggregate principal balance outstanding on
its Note as of the date hereof, is set forth on Schedule B,
and all accrued interest on its Note has been paid through
the date hereof.
(e) It has not participated, assigned or otherwise
encumbered with liens or security interests its Note or its
rights under the Credit Agreement, the Security Documents
or the other Loan Documents.
(f) To the best of its knowledge, all the Oil and Gas
Properties (as defined below) currently encumbered by liens
and security interests in favor of Assignors securing the
indebtedness and obligations evidenced by the Notes, the
Guarantees, the other Security Documents or the other Loan
Documents are described in and are covered by the Security
Documents listed on Schedule A attached hereto (or a
Schedule A attached to the Parallel Assignments) and such
Schedule A accurately lists the recording information as to
the recordation of all such Security Documents. For the
purposes of this Assignment, the term "Oil and Gas
Properties" shall mean (i) all right, title, interest and
estates in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases,
mineral fee interests, overriding royalty and royalty
interests, net profit interests and production payment
interests, including any reserved interests, reversionary
interests, carried working interests, or residual interests
of whatever nature, and (ii) all surface interests relating
thereto.
(g) To the best of its knowledge, with respect to
itself only, except for such releases, if any, that are
described in a Certificate dated on or about the date
hereof from Union Bank as Agent to Assignees that is
acknowledged in writing by Assignee, neither Union Bank
individually or as Agent nor Den Norske has released or
agreed to release any of the security interests or liens
created by the Security Documents.
(h) Neither Union Bank individually or as Agent nor
Den Norske has any knowledge of any pending or threatened
adverse claims by any person or entity against the Oil and
Gas Properties or any knowledge of any pending or
threatened claims by Borrower, any Guarantor, any affiliate
of Borrower or of any Guarantor or any other person or
entity challenging, contesting or otherwise adversely
affecting the validity or enforceability of the Notes, any
Security Documents or any Documents or the validity,
priority or enforceability of the liens and security
interests created by the Security Documents or the Loan
Documents.
1.5 Representations and Warranties of the Assignee.
The Assignee represents and warrants to each Assignor as
follows:
(a) The Assignee has full power, legal capacity and
authority to enter into this Assignment, and this
Assignment constitutes the valid and binding obligation of
the Assignee, enforceable against it in accordance with its
terms, except insofar as enforcement of terms may be
limited by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership and other similar laws
and judicial decisions of general application relating to
or affecting the enforcement of creditors' rights, and by
general equitable principles (whether considered in a
proceeding at law or in equity).
(b) The Assignee is an institution which is an
"accredited investor" within the meaning of Rule 501 under
the Securities Act of 1933, as amended (the "Act"). The
Assignee has such knowledge of finance and investments as
to be capable of evaluating the merits and risks of the
purchase of the Notes and the Assigned Interests.
(c) The Assignee is acquiring the Notes and the
Assigned Interests from the Assignors for its own account
and not with a view to the distribution or resale of the
Notes and the Assigned Interests, or any portion thereof in
violation of the Act (it being understood, however, that
the disposition of the Assignee's property shall at all
times be within its control).
(d) The Assignee acknowledges that the Notes and the
Assigned Interests have not been registered under the Act
or the securities or "Blue Sky" laws of any jurisdiction
and agrees that, to the extent the Act or such laws are
applicable, in the absence of such registration, the Notes
and the Assigned Interests will be sold or disposed of only
pursuant to an exemption from such registration
requirements under the Act and such laws.
(e) The Assignee confirms that it has received a copy
of the Credit Agreement, together with such other
documents, including without limitation, the Security
Documents and the other Loan Documents listed on Schedule
A, and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this
Assignment and agrees that it shall have no recourse
against either Assignor with respect to any matters
relating to the Credit Agreement or Security Document or
any other Loan Document or this Assignment except for a
breach by such Assignor of any of its representations and
warranties set forth in Section 1.4 herein.
1.6 Representations and Warranties of Borrower and the
Guarantors
Each of Borrower and the Guarantors represents and warrants
to the Assignee and the Assignors as follows:
(a) Each of this Assignment, the Security Documents
and the other Loan Documents to which it is a party
constitutes its valid and binding obligation, enforceable
against it in accordance with its terms, except insofar as
enforcement of terms may be limited by any bankruptcy,
fraudulent conveyance, and other similar laws and judicial
decisions of general application relating to or affecting
the enforcement of creditors' rights, and by general
equitable principles (whether considered in proceeding at
law or in equity).
(b) It has not assigned its rights or obligations
under the Credit Agreement, the Security Documents or the
other Loan Documents.
(c) The aggregate principal balance outstanding on
each Note as of the date hereof is set forth on Schedule B
and all accrued interest on the Notes has been paid through
the date hereof. No Assignor has forgiven or discharged, in
the absence of payment thereof, any liability of Borrower
evidenced by any Note.
(d) Except for the obligations set forth in the
Notes, the Security Documents, and the other Loan
Documents, it does not have any other obligation, liability
or contractual arrangement with the Assignors.
(e) Schedule A attached hereto (and Schedule A
attached to the Parallel Assignments) contains a complete
list of all currently effective credit agreements,
promissory notes, mortgages, deeds of trust, security
agreements, guaranty agreements, and financing statements
evidencing, securing and guaranteeing the indebtedness
evidenced by the Notes.
(f) All of the indebtedness described in the Credit
Agreement has been assigned to the Assignee by this
Assignment.
(g) It has affirmed, acknowledged and confessed all
of its obligations under the Credit Agreement, the Security
Documents, and the other Loan Documents. It has no right
of offset or other defense to any of its indebtedness,
obligations or other liabilities under the Credit
Agreement, the Security Documents and the other Loan
Documents.
(h) The Recitals are true and correct.
(i) All the Oil and Gas Properties currently
encumbered by liens and security interests in favor of
Assignors securing the indebtedness and obligations
evidenced by the Notes, the Guarantees, the other Security
Documents or the other Loan Documents, are described in and
are covered by the Security Documents listed on Schedule A
attached hereto (and Schedule A attached to the Parallel
Assignments) contains and each such Schedule A accurately
lists the recording information relating to recordation of
such Security Documents.
(j) Except for such releases, if any, that are
described on Schedule D attached hereto, neither Union Bank
individually or as Agent nor Den Norske has released or
agreed to release any of the security interest or liens
created by the Security Documents.
(k) It has no knowledge of any pending or threatened
adverse claims by any person or entity against the Oil and
Gas Properties and no knowledge of any pending or
threatened claims by any person or entity challenging,
contesting or otherwise adversely affecting the validity or
enforceability of the Notes or any of the Loan Documents or
the validity, priority or enforceability of the liens and
security interests created by the Security Documents or any
of the Loan Documents.
(l) Nothing herein shall, and nothing herein shall be
construed to, adversely affect or impair any lien, charge,
encumbrance or security interest created under the Security
Documents or any of the other Loan Documents or the
priority thereof or release, adversely affect or impair its
liability pursuant to the Security Documents or the other
Loan Documents, and all liens, charges, encumbrances and
security interests created under the Security Documents and
the other Loan Documents have been and are hereby ratified,
affirmed, renewed, extended and carried forward and shall
continue to secure the payment and performance of and in
all respects benefit the holders of the Foothill
Obligations.
(m) It requested that Lenders purchase the Note, that
Lenders are purchasing the Notes as an accommodation to it,
that it is benefited, directly and indirectly, by the
purchase of the Notes by Lenders, and that it is in its
best interests for Lenders to purchase the Notes.
1.7 Reserved Obligations.
Notwithstanding any other provision hereof or in any other
agreement, Borrower shall remain fully liable to the Assignors
with respect to (i) all of its obligations and liabilities
regarding indemnification and reimbursement of fees and expenses
pursuant to the Credit Agreement, and (ii) all payments
heretofore or concurrently made by Borrower under or pursuant to
the Credit Agreement or any other Loan Document (collectively,
the "Reserved Obligations"), and such Reserved Obligations shall
be excepted and reserved by the Assignors from the rights,
titles and interests assigned by them to the Assignee hereunder.
Borrower hereby affirms its obligations and liabilities in favor
of the Assignors under the Credit Agreement regarding
indemnification and reimbursement of fees and expenses set forth
in the Credit Agreement. Notwithstanding the reservation in this
Section 1.7 by Assignors, it is the intent of Assignors,
Assignee, Borrower and the Guarantors that the Reserved
Obligations SHALL NOT BE SECURED by any of the Security
Documents or the other Loan Documents. Accordingly, Assignors
hereby expressly waive, release and assign in favor of and to
the Assignee any and all rights that Assignors may have to
establish or enforce any lien, security interest, mortgage,
guarantee or assignment or other encumbrance under any of the
Security Documents or the other Loan Documents which may now
secure Borrower's or any Guarantor's obligations and
indebtedness to Assignors with respect to the Reserved
Obligations; provided, however, that nothing herein shall be
construed to limit in any way the rights of Assignee which
Assignee may now or hereafter have in the Credit Agreement or
any other document transferred to Assignee hereunder or in the
Amended and Restated Loan and Security Agreement.
1.8 Releases.
To induce the Assignors to sell, and the Assignee to
purchase, the Notes and the rights under the Loan Documents,
except for those rights specifically reserved herein, at the
special insistence and request of the Assignee and the
Assignors, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of
Borrower and each Guarantor hereby fully releases and discharges
each Assignor and its successors and assigns, including but not
limited to the Assignee, and their respective officers,
directors, employees, representatives, agents and affiliates,
from all claims, demands, causes of action, liabilities or other
obligations of any kind whatsoever, including, without
limitation, offsets, reductions, rebatements or claims of usury,
known or unknown, whether now existing or hereafter asserted in
connection with the Notes, the Credit Agreement, the Guarantees,
the other Security Documents and the other Loan Documents
arising from matters occurring before the date of this
Assignment. Borrower hereby further releases each of the
Assignors from any of its obligations and commitments under the
Credit Agreement and the other Loan Documents, if any.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NOTHING
HEREIN SHALL BE CONSTRUED AS AN EXTINGUISHMENT OR NOVATION OR
OTHER SATISFACTION OF THE INDEBTEDNESS EVIDENCED BY THE NOTES OR
THE INDEBTEDNESS, OBLIGATIONS, LIABILITIES OF BORROWER AND THE
GUARANTORS EVIDENCED BY OR ARISING UNDER THE LOAN DOCUMENTS.
SECTION 2
AMENDMENTS TO MORTGAGES
2.1 Amendments to Mortgages. In connection with and in
furtherance of the assignment by Assignors to Assignee of the
Notes and the Loan Documents (including, without limitation, the
Mortgages) as described in Section 1.1 of this Assignment,
Borrower, the Guarantors hereby agree with Assignee to amend,
effective as of the date hereof, and hereby amend as of the date
hereof, each of the Mortgages included in the Assigned Interests
to which Borrower or such Guarantor is a party as follows:
(a) All references in the Mortgages to "Credit
Agreement" or otherwise referring to the Credit Agreement
shall now and hereafter refer to and be deemed to
references to the Amended and Restated Loan and Security
Agreement.
(b) All references in the Mortgages to "Banks" or
otherwise referring to Union Bank or Den Norske shall now
and hereafter refer to and be deemed references to the
Lenders.
(c) All references in the Mortgages to "Trustee"
shall now and hereafter refer to and be deemed references
to the following person with the following mailing address:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(d) All references in the Mortgages to "Mortgagee" or
"Secured Party" or otherwise referring to Union Bank as the
agent for the "Banks" under the Credit Agreement shall now
and hereafter refer to and be deemed references to Assignee
as Agent for the Lenders, and shall also be deemed to
include the mailing address of Assignee, which is as
follows:
Foothill Capital Corporation, Agent
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(e) All references in the Mortgages to "Default Rate"
shall now and hereafter be deemed references to the default
rate as calculated under the Amended and Restated Loan and
Security Agreement.
(f) All references in the Mortgages to "Notes" or
otherwise referring to the promissory notes whose payment
is secured by the lien created by such Mortgage shall now
and hereafter be deemed references to the Notes described
in the Recitals to this Assignment.
(g) All references in the Mortgages to "Article IV of
the Credit Agreement" shall now and hereafter be deemed
references to Section 5 of the Amended and Restated Loan
and Security Agreement.
(h) All references in the Mortgages to "Obligations"
or "Indebtedness" or otherwise referring to the
indebtedness, obligations and liabilities whose payment and
performance are secured by the lien created by such
Mortgage shall now and hereafter be deemed references to
the Foothill Obligations.
(i) All references in the Mortgages to "Guaranty" or
otherwise referring to any guarantee agreement executed by
a Guarantor in favor of the Assignors shall now and
hereafter be deemed to also include references to any
"Guaranty Agreements" (as defined in the Amended and
Restated Loan and Security Agreement) executed by such
Guarantor.
(j) [intentionally omitted]
(k) All references in the Mortgages to "Debtor" or
"Mortgagor" shall be deemed to include the mailing address
of Debtor or Mortgagor, as the case may be, which is as
follows:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Drive
Tulsa, Oklahoma 74135
(l) In addition to the other provisions of each
Mortgage, Borrower and the Guarantors hereby agree with
Assignee that in any case where a respective Mortgage
contains a non-judicial power of sale or is otherwise
identified as or is intended to create a "deed of trust" or
grants certain rights and powers to a "Trustee", that the
following statements shall be true of such Mortgage and are
hereby incorporated into such Mortgage:
(i) Such Mortgage shall be effective as a
mortgage as well as a deed of trust, and upon the
occurrence of an Event of Default may be foreclosed as
to the "Collateral" or the "Mortgaged Property", as
the case may be, in any manner permitted by the laws
of the state in which the Collateral or the Mortgaged
Property, as the case may be, is situated;
(ii) Any foreclosure suit may be brought by
Trustee or Secured Party;
(iii) If a foreclosure is commenced by
Trustee, Secured Party may, at any time before the
sale, direct the Trustee to abandon the sale, and may
then institute suit for the collection of the Foothill
Obligations, and for the foreclosure of enforcement of
the assignments, liens, and security interests created
under such Mortgage;
(iv) If Secured Party should institute a
suit for the collection of the Foothill Obligations,
and for a foreclosure or enforcement of the
assignments, liens, and security interests created
under such Mortgage, it may, at any time before the
entry of a final judgment in said suit, dismiss the
same, and require Trustee to sell the Collateral or
the Mortgaged Property, as the case may be, or any
part thereof, in accordance with the provisions of
such Mortgage; and
(v) With respect to any such Mortgage
covering the Mortgaged Property or Collateral situated
in the state of Oklahoma:
(a) The following provision is
hereby added to such Mortgage:
"A POWER OF SALE HAS BEEN GRANTED IN THIS
MORTGAGE, A POWER OF SALE MAY ALLOW THE
MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND
SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY THE
MORTGAGOR UNDER THIS INSTRUMENT"
(b) In addition to, and not in
limitation of, any other remedy provided for in
such Mortgage or by applicable law, in connection
with such Mortgage Borrower and the Guarantors
hereby grant to, and confer upon, Assignee as the
relevant Secured Party a power of sale pursuant
to the Oklahoma Power of Sale Mortgage
Foreclosure Act, Title 46, Sections 40-48 of the
Oklahoma Statutes (the "Oklahoma Act") and any
future amendments thereof or under any future law
granting the same or similar rights, conferring
on the Secured Party pursuant to Title 46,
Section 43D, the option to elect to foreclose
upon the Mortgaged Property or the Collateral, as
the case may be, in the manner provided in
Section 686 of Title 12 of the Oklahoma Statutes.
Upon the occurrence and during the continuance of
an Event of Default or if any of the Secured
Obligations shall become due and payable, and
Mortgagor shall not promptly pay the same,
Secured Party is expressly authorized and
empowered to proceed in accordance with the
provisions of the Oklahoma Act or other future
law to have the Mortgaged Property sold, or
Secured Party may, at its option, exercised at
any time prior to completion of the sale,
institute suit to foreclose this Mortgage in any
court having jurisdiction. Secured Party is
expressly authorized and empowered to sell the
Mortgaged Property as an entirety or in such
lots, parcels or divisions as the Secured Party
may elect, but subject always to any right which
Mortgagor may have by law to suggest the lots,
parcels or divisions in which such Mortgaged
Property is to be sold. Notwithstanding anything
contained in this Mortgage to the contrary, any
notices of sale given in accordance with the
requirements of the Oklahoma Act shall constitute
sufficient notice of sale. The conduct of a sale
pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with the
requirements of the Oklahoma Act and other
applicable laws of the State of Oklahoma in
effect at the time of such sale, notwithstanding
any other provision contained in this instrument
to the contrary. The proceeds of any sale of the
Mortgaged Property pursuant to the power of sale
herein granted shall be applied in accordance
with the Oklahoma Act and any other applicable
laws of the State of Oklahoma in effect at the
time of such sale. In the event of conflict
between the provisions hereof and the Oklahoma
Act, the Oklahoma Act shall control. Sale of a
part of the Mortgaged Property shall not exhaust
the power of sale, but sales may be made from
time to time until the Secured Obligations are
paid in full. If default is made in the payment
of any installment of any of the Secured
Obligations, Secured Party may, at its option, at
once or at any time thereafter while any matured
installment remains unpaid, without declaring all
of the entire Secured Obligations to be due and
payable, enforce the power of sale created by
this instrument and sell all or any portion of
the Mortgaged Property in satisfaction of such
matured Secured Obligations. Sales made without
maturing any of the unmatured balance of the
Secured Obligations may be made hereunder
whenever there is a default in the payment of any
installment of any of the Secured Obligations
without exhausting the power of sale granted
hereby and without affecting in any way the power
of sale granted under this Section, the unmatured
balance of any of the Secured Obligations (except
as to any proceeds of any sale which Secured
Party may apply as prepayment of the
Indebtedness), or the liens securing payment of
the Secured Obligations. If any questions should
be raised as to the regularity or validity of any
sale hereunder, Secured Party shall have the
right and is hereby authorized to make resale of
said property so as to remove any questions or
doubt as to the regularity or validity of the
previous sale, and as many resales may be made as
may be appropriate.
(c) The following provision is
hereby added to such Mortgage:
"If this Mortgage is foreclosed by judicial
proceedings, appraisement of the Mortgaged
Property is hereby expressly waived or not
waived at the option of Secured Party, such
option to be exercised at or prior to the
time judgment or decree of foreclosure is
rendered. Mortgagor, for the considerations
herein expressed, does hereby expressly
waive all benefit of the homestead,
exemption and stay laws of the State of
Oklahoma."
2.2 Reaffirmation of Mortgages. Borrower, the Guarantors
and the Assignee hereby acknowledge and agree that except as
specifically amended, changed or modified by this Assignment,
each of the Mortgages included in the Assigned Interests shall
remain in full force and effect in accordance with its terms.
None of the rights, titles and interests existing and to exist
under the Mortgages as amended are hereby released, diminished
or impaired and each of Borrower and the Guarantors hereby
reaffirms all covenants, representations and warranties made in,
and the indebtedness, liabilities and obligations described in,
each such Mortgage included in the Assigned Interests to which
it is a party, as such Mortgage is amended by this Assignment.
SECTION 3
MISCELLANEOUS
3.1 Further Assurances.
Each of the Assignors, Borrower and the Guarantors agrees
that it will promptly, upon reasonable request of the Assignee
and at the sole expense of Borrower and the Guarantors, execute
and deliver all such other documents in form satisfactory to
Assignee and its legal counsel, and take such other action
satisfactory to Assignee and its legal counsel as may be
reasonable and necessary to fully effectuate the provisions of
this Assignment.
3.2 Taxes, Etc.
Except to the extent prohibited by applicable law, Borrower
and the Guarantors agree to pay or to cause to be paid all
governmental assessments, charges or taxes (excluding federal,
state or local income taxes), including any stamp or documentary
or mortgage registration or other excise or property taxes and
any interest or penalties on any such assessments, charges or
taxes, at any time payable or ruled to be payable in respect of
the execution or delivery of this Assignment by reason of any
federal, state or local, statutory or regulatory provision in
force on the date hereof, or in accordance with a specific
proposal for the amendment of, or enactment of, any such
statutory or regulatory provision published on or before the
date hereof which is thereafter enacted in material conformity
to the form published and any taxes, levies, imports,
assessments or charges imposed in replacement of or in
substitution for any of the foregoing and which are
substantially similar thereto (collectively, the "Tax"), and to
indemnify, defend and hold the Assignors and the Assignee
harmless against liability in connection with any such Taxes.
3.3 Successors and Assigns.
This Assignment shall be binding upon the parties hereto
and their respective successors and assigns.
3.4 Counterparts.
This Assignment is being executed in several counterparts.
All of such counterparts together shall constitute on and the
same instrument.
3.5 Governing Law.
Without regard to principles of conflict of laws, this
Assignment shall be construed and enforced in accordance with
and governed by the internal laws of the State of California,
except to the extent the laws of some other jurisdiction are
required to be applied in connection with or in order to
preserve the validity of this Assignment or the relevant Loan
Document, including without limitation the validity and creation
of any Lien created under this Assignment or such Loan Document,
the priority of any Lien created under this Assignment or such
Loan Document, and the exercise or enforcement of any rights and
remedies under this Assignment or such Loan Document.
3.6 Recording.
In order to facilitate filing and recording of this
Assignment in each county or parish described in each Schedule
and/or Annex attached hereto, a counterpart of this Assignment
with only those portions of Exhibit "A" attached that relate to
properties located in any such county or parish has been
furnished for recording in such county or parish, and such
counterpart shall be effective to the same extent as if it were
a complete original counterpart of this Assignment. A
counterpart of this Assignment with a complete Exhibit "A" has
been retained by Assignee and is available for inspection or
copying upon request.
IN WITNESS WHEREOF, the parties have caused this
Assignment to be executed by their duly authorized officers
effective as of the date first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
THUS DONE AND PASSED this ____ day of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Union Bank and me,
Notary, after reading of the whole.
WITNESSES: UNION BANK OF CALIFORNIA, N.A.
Name:
By:
Name: Name
Title:
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January ____,
2000, by ___________________________, as _______________ of
Union Bank of California, N.A., a national banking association.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ____ day of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Den Norske and me,
Notary, after reading of the whole.
WITNESSES: DEN NORSKE BANK, ASA
By: _________________________________
Name: Name:___________________________
Title:
____________________________
By:
Name: Name:
Title:
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇ the ____ day of January, in the year 2000, before me
personally came ________________________________ to me known,
who, being by me duly sworn, did depose and say that he resides
in __________________, that he is the ___________________ of Den
Norske Bank, ASA, the corporation described on and which
executed the above instrument, and that he signed his name
thereto by authority of the board of directors of such
corporation, and before me personally also came
___________________ to me known, who, being by me duly sworn,
did depose and say that he resides in __________________, that
he is the ____________ of Den Norske Bank, ASA, the corporation
described on and which executed the above, and that he signed
his name thereto by authority of the board of directors of such
corporation.
NOTARY PUBLIC, State of New York
My commission expires:
[SEAL]
THUS DONE AND PASSED this ____ of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Assignee and me,
Notary, after reading of the whole.
WITNESSES: FOOTHILL CAPITAL CORPORATION,
as Agent, a California corporation
Name:
By:
Name: Name:
Title:
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January ____,
2000, by ___________________________, as _______________ of
Foothill Capital Corporation, a California corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this 6th of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Borrower and me,
Notary, after reading of the whole.
WITNESSES: RAM ENERGY, INC.
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January 6th,
2000, by ▇▇▇▇▇ ▇. ▇▇▇, as President of RAM Energy, Inc., a
Delaware corporation
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this 6th of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with RLP and me, Notary,
after reading of the whole.
WITNESSES: RLP Gulf States, L.L.C., an
Oklahoma limited
liability company
By: RAM Energy, Inc., a
Name: Delaware corporation, as
its sole Member and sole
Manager
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January 6th,
2000, by ▇▇▇▇▇ ▇. ▇▇▇, as President of RAM Energy, Inc., a
Delaware corporation, for itself and as the sole Manager and
sole Member of RLP Gulf States, L.L.C., an Oklahoma limited
liability company.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this 6th of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with MCE and me, Notary,
after reading of the whole.
WITNESSES: MAGIC CIRCLE ENERGY CORPORATION,
a Delaware corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January 6th,
2000, by ▇▇▇▇▇ ▇. ▇▇▇, as President of Magic Circle Energy
Corporation, a Delaware corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this 6th of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with CDC and me, Notary,
after reading of the whole.
WITNESSES: ▇▇▇▇▇▇ DEVELOPMENT CORPORATION,
an Oklahoma corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January 6th,
2000, by ▇▇▇▇▇ ▇. ▇▇▇, as President of ▇▇▇▇▇▇ Development
Corporation, an Oklahoma corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this 6th of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with MCA and me, Notary,
after reading of the whole.
WITNESSES: MAGIC CIRCLE ACQUISITION
CORPORATION, an Oklahoma
corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January 6th,
2000, by ▇▇▇▇▇ ▇. ▇▇▇, as President of Magic Circle Acquisition
Corporation, an Oklahoma corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this 6th of January, 2000, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with CFL and me, Notary,
after reading of the whole.
WITNESSES: CARMEN FIELD LIMITED PARTNERSHIP,
an Oklahoma limited partnership
Name: By:▇▇▇▇▇▇ Development Corporation,
an Oklahoma corporation, its sole
General Partner
Name: By:
▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on January 6th,
2000, by ▇▇▇▇▇ ▇. ▇▇▇, as President of ▇▇▇▇▇▇ Development
Corporation, an Oklahoma corporation, for itself and acting as
the sole general partner of Carmen Field Limited Partnership, an
Oklahoma limited partnership.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
After recording, return to:
▇▇▇▇▇▇ ▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
THE PARTIES HERETO DIRECT THE CLERKS OF COURT (EX-OFFICIO
RECORDER OF MORTGAGES) FOR THE PARISHES AND COUNTIES LISTED ON
SCHEDULE A ATTACHED HERETO TO MAKE A NOTATION OF THIS
ASSIGNMENT OF NOTES AND LIENS AND MASTER ACT OF AMENDMENT TO
MORTGAGES IN THE MARGIN OF THEIR RECORDS AT THE RECORDATION
REFERENCES NOTED ON SAID SCHEDULE A HERETO TO SERVE AS THE
OCCASION MAY REQUIRE.
ASSIGNMENT OF NOTES AND LIENS
AND
MASTER ACT OF AMENDMENT TO MORTGAGES
[MCAC Assignment Collateral]
THIS ASSIGNMENT OF NOTES AND LIENS AND MASTER ACT OF
AMENDMENT TO MORTGAGES (this "Assignment") is made effective as
of the 27th day of December, 1999, by and among:
UNION BANK OF CALIFORNIA, N.A. ("Union Bank"), a national
banking association, with an address of ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, for itself and as agent for the
lenders that are or become parties to the Credit Agreement (as
defined in Recital A below);
DEN NORSKE BANK, ASA ("Den Norske"), a bank, with an address of
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Union
Bank, Den Norske, and Union Bank as Agent for the lenders that
are parties to the Credit Agreement are referred to herein,
collectively, as the "Assignors" and, individually, as an
"Assignor");
RAM ENERGY, INC. ("Borrower"), a Delaware corporation, whose
chief executive office is Meridian Tower, Suite 650, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
RLP GULF STATES, L.L.C. ("RLP"), an Oklahoma limited liability
company, whose chief executive office is Meridian Tower, Suite
650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
MAGIC CIRCLE ENERGY CORPORATION ("MCE"), a Delaware corporation,
whose chief executive office is Meridian Tower, Suite 650, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇▇▇ FIELD LIMITED PARTNERSHIP ("CFL"), an Oklahoma limited
partnership, whose chief executive office is Meridian Tower,
Suite 650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇▇▇ DEVELOPMENT CORPORATION ("CDC"), an Oklahoma corporation,
whose chief executive office is Meridian Tower, Suite 650, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
MAGIC CIRCLE ACQUISITION CORPORATION ("MCA"), an Oklahoma
corporation, whose chief executive office is Meridian Tower,
Suite 650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
(collectively, RLP, MCE, CFL, CDC and MCA shall be referred to
herein as the "Guarantors"); and
FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), in its capacity as agent for the benefit of the
lenders that are or become parties to the Amended and Restated
Loan and Security Agreement (as amended, restated and renewed
from time to time, the "Amended and Restated Loan and Security
Agreement"), dated December 27, 1999, among Borrower, the
lenders that are or become parties thereto (individually and
collectively, the "Lenders") and Foothill, as agent for the
benefit of the Lenders (Foothill in capacity as agent for the
benefit of the Lenders is hereinafter referred to as the
"Assignee"), whose address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
R E C I T A L S
A. Pursuant to that certain Second Amended and Restated
Credit Agreement, dated as of February 3, 1998, executed by
Borrower, Den Norske and Union Bank individually and as Agent,
as amended by that certain Amendment No. 1 and Waiver, dated as
of August 17, 1998, that certain Amendment No. 2 and Waiver,
dated as of March 31, 1999, that certain Amendment No. 3 and
Waiver, dated as of August 12, 1999, that certain Amendment No.
4 dated as of September 2, 1999, that certain Amendment No. 5
and Consent and Waiver dated as of September 28, 1999, that
certain Amendment No. 6 dated as of September 30, 1999, and that
certain Amendment No. 7 dated as of December 22, 1999, each
respectively executed by Borrower, Den Norske, and Union Bank
individually and as Agent, and certain other agreements,
documents and instruments preceding the same (said Second
Amended and Restated Credit Agreement, as amended, together with
such preceding agreements, documents and instruments, are
hereinafter referred to collectively as the "Credit Agreement"),
Assignors and their predecessors-in-interest have provided
Borrower with a revolving credit facility, the indebtedness
incurred in connection with the Credit Agreement being presently
evidenced by (i) a promissory note in the original principal
amount of $30,000,000, dated February 27, 1998, payable to the
order of Union Bank, executed by Borrower, and (ii) a promissory
note in the original principal amount of $20,000,000, dated
February 27, 1998, payable to the order of Den Norske, executed
by Borrower (individually, a "Note"; and collectively, the
"Notes").
B. As security for payment of the Notes and the
performance of all of the other obligations of Borrower under
the Credit Agreement, Borrower has granted Assignors certain
liens and security interests, which liens and security interests
include those evidenced by the mortgages, deeds of trust,
security agreements, collateral documents and financing
statements described on Schedule A attached hereto.
C. In connection with the Credit Agreement, the
Guarantors have executed guarantees (the "Guarantees")
guaranteeing payment of all the indebtedness of Borrower arising
in connection with the Credit Agreement, which Guarantees
include those being more specifically described on Schedule A
attached hereto.
D. In connection with the Credit Agreement and the
Guarantees, the Guarantors have granted Assignors certain liens
and security interest, which liens and security interests are
evidenced by the mortgages, deeds of trust, security agreements,
collateral documents and financing statements described on
Schedule A attached hereto.
E. Assignors desire to grant, transfer, assign and convey
to Assignee all of their rights, titles and interests in and to
the Notes and the indebtedness and obligations of Borrower, the
Guarantors, and any other party to or guaranteeing or securing
the obligations arising under the Credit Agreement, together
with any and all liens and security interests and guarantees in
connection therewith (the "Security Documents") (including,
without limitation, the Guarantees and the other Security
Documents described on Schedule A attached hereto), including,
but not limited to, all indebtedness and obligations of Borrower
and the Guarantors, together with their affiliates and
subsidiaries, under the documents described on Schedule A
(collectively, the documents described on Schedule A, together
with any other document evidencing the obligations or
indebtedness of Borrower, the Guarantors or any of their
affiliates or subsidiaries in connection with the Credit
Agreement shall be referred to herein as the "Loan Documents").
Schedule A and the property subject to the Liens and security
interests created or evidenced by the Security Documents include
but are not limited to the property covered by the legal
descriptions contained on Annex I attached hereto.
F. Borrower and the Guarantors desire to (i) acknowledge
and agree that they specifically requested that Lenders purchase
the Notes, that Lenders are purchasing the Notes as an
accommodation to them, that they will be benefited, directly and
indirectly, by the purchase of the Notes by Lenders, and that it
is in their best interests for Lenders to purchase the Notes,
and (ii) acknowledge and consent to the sale and acquisition of
the Notes, the Security Documents and the other Loan Documents
to Assignee, and (iii) ratify, affirm, acknowledge and confess
each of their obligations under the Notes, the Security
Documents and the other Loan Documents, and (iv) ratify, affirm,
acknowledge and agree that nothing herein shall, and nothing
herein shall be construed to, adversely affect or impair any
lien, charge, encumbrance or security interest created under the
Security Documents or any of the other Loan Documents or the
priority thereof or release or affect their liability pursuant
to the Security Documents or the other Loan Documents, and (v)
ratify, affirm, acknowledge and agree that all liens, charges,
encumbrances and security interests created under the Security
Documents and the other Loan Documents shall be and hereby are
ratified, affirmed, extended and carried forward and shall
continue to secure the payment and performance of and in all
respects benefit the holders of each of (a) the "Obligations"
under and as defined in the Amended and Restated Loan and
Security Agreement, and (b) all other indebtedness, obligations
and liabilities of Borrower and the Guarantors described in the
"Loan Documents" (as defined in the Amended and Restated Loan
and Security Agreement) (said "Obligations" and such other
indebtedness, obligations, and liabilities described in the
immediately preceding clauses (a) and (b) are hereinafter
referred to, collectively, as the "Foothill Obligations"), and
(vi) along with Assignee amend certain provisions of each of the
following documents (hereinafter collectively referred to as the
"Mortgages"): each Mortgage, Deed of Trust, Security Agreement
and Financing Statement described on Schedule A attached hereto,
each Mortgage, Deed of Trust, Security Agreement, Assignment of
Production and Financing Statement described on such Schedule A,
each Mortgage, Security Agreement, Assignment of Production and
Financing Statement described on such Schedule A, and each Deed
of Trust, Security Agreement, Assignment of Production and
Financing Statement described on such Schedule A.
G. Contemporaneously with the execution of this
Assignment, the parties hereto are entering into two certain
other Assignments of Notes and Liens and Master Acts of
Amendment to Mortgages dated as of even date herewith, pursuant
to which Assignors are assigning to Assignee its mortgages,
liens and encumbrances on property other than or in addition to
the property described on the documents, instruments and
agreements described on Schedule A attached hereto (such two
certain other Assignments of Notes and Liens and Master Acts of
Amendment to Mortgages are hereinafter referred to collectively
as the "Parallel Assignments"). It is the intention of the
parties that the aggregation of the assignments evidenced by
this Assignment and the assignments evidenced by each of the
Parallel Assignments will result in the assignment by Assignors
to Assignee of all of the rights, titles and interests of
Assignors in and to the Notes, the Security Documents and the
other Loan Documents.
NOW, THEREFORE, for and in consideration of the forgoing
Recitals and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and confessed,
Assignors, Borrower, the Guarantors and Assignee hereby agree as
follows:
SECTION 1
ASSIGNMENT OF NOTES AND LIENS
1.1 Assignment of Notes and Liens
Each Assignor, severally, in consideration of the payment
by the Assignee to such Assignor of the outstanding principal
balance of the Note payable to such Assignor, as set forth in
the Payoff Letter (herein so called) attached hereto as Schedule
C, the receipt and sufficiency of which are hereby acknowledged
by such Assignor, and intending to be legally bound hereby, does
grant, assign, sell, transfer and convey to the Assignee,
without recourse and without representation or warranty, express
or implied, except as specifically and expressly set forth in
Section 1.4 hereof, the Notes, together with all of the
Assignors' right, title and interest thereunder, to have and to
hold unto the Assignee and its successors and assigns forever.
Borrower hereby affirms, ratifies and acknowledges its
indebtedness and obligations under the Notes in the amount set
forth on Schedule B attached hereto, as well as its obligations
under the Security Documents and the other Loan Documents, and
Borrower hereby ratifies, affirms, acknowledges and agrees that
nothing herein shall, and nothing herein shall be construed to,
adversely affect or impair any lien, charge, encumbrance or
security interest created under the Security Documents or any of
the other Loan Documents or the priority thereof or release,
adversely affect or impair Borrower's liability pursuant to the
Security Documents or the other Loan Documents, and Borrower
hereby ratifies, affirms, acknowledges and agrees that all
liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of, and in all respects otherwise benefit, the holders of the
Foothill Obligations. Each Guarantor hereby ratifies, affirms
and acknowledges its obligations under its respective Guarantee,
as well as its obligations under the other Security Documents
and the other Loan Documents, and each Guarantor hereby
ratifies, affirms, acknowledges and agrees that nothing herein
shall, and nothing herein shall be construed to, adversely
affect or impair any lien, charge, encumbrance or security
interest created under the Security Documents or any of the
other Loan Documents or the priority thereof or release,
adversely affect or impair its liability pursuant to the
Security Documents or the other Loan Documents, and each
Guarantor hereby ratifies, affirms, acknowledges and agrees that
all liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of and in all respects benefit the holders of the Foothill
Obligations.
In addition, each Assignor, severally, in consideration of
the payment by the Assignee as stated above, intending to be
legally bound hereby, does grant, assign, sell, transfer and
convey to the Assignee without recourse and without
representation or warranty, express or implied, except as
specifically and expressly set forth in Section 1.4 hereof, all
of its rights, titles and interests in and to any liens, claims
and encumbrances arising under the agreements, documents and
instruments described on Schedule A attached hereto securing
Borrower's and the Guarantors' (together with their affiliates'
and subsidiaries') obligations under the Notes, the Security
Documents, and the other Loan Documents provided, however that
rights, titles and interests of Assignors assigned herein shall
not include the liens and encumbrances comprising the "▇▇▇▇▇▇
Collateral" as such term is defined on Schedule D attached
hereto (collectively, all rights, titles and interests of
Assignors assigned herein in and to the Notes, the Security
Documents and the other Loan Documents shall be referred as the
"Assigned Interests").
Borrower hereby acknowledges and agrees that it requested
that Lenders purchase the Notes, that Lenders are purchasing the
Notes as an accommodation to Borrower, that Borrower is
benefited, directly and indirectly, by the purchase of the Notes
by Lenders, and that it is in the best interests of Borrower for
Lenders to purchase the Notes, and Borrower hereby ratifies,
affirms, acknowledges, and confesses its respective indebtedness
and obligations under and the effectiveness of the Notes and the
Security Documents and the other Loan Documents to which
Borrower is a party, and Borrower hereby ratifies, affirms,
acknowledges and agrees that nothing herein shall, and nothing
herein shall be construed to, adversely affect or impair any
lien, charge, encumbrance or security interest created under the
Security Documents or any of the other Loan Documents or the
priority thereof or release, adversely affect or impair
Borrower's liability pursuant to the Security Documents or the
other Loan Documents, and Borrower hereby ratifies, affirms,
acknowledges and agrees that all liens, charges, encumbrances
and security interests created under the Security Documents and
the other Loan Documents shall be and hereby are ratified,
affirmed, extended and carried forward and shall continue to
secure the payment and performance of and in all respects
benefit the holders of the Foothill Obligations.
Each Guarantor hereby acknowledges and agrees that it
requested that Lenders purchase the Notes, that Lenders are
purchasing the Notes as an accommodation to each Guarantor, that
each Guarantor is benefited, directly and indirectly, by the
purchase of the Notes by Lenders, and that it is in the best
interests of each Guarantor for Lenders to purchase the Notes,
and each Guarantor hereby ratifies, affirms, acknowledges, and
confesses its obligations under and the effectiveness of its
respective Guarantee, the other Security Documents and the other
Loan Documents to which it is a party, and each Guarantor hereby
ratifies, affirms, acknowledges and agrees that nothing herein
shall adversely affect or impair or be construed to adversely
affect or impair any lien, charge, encumbrance or security
interest created under the Security Documents or any of the
other Loan Documents or the priority thereof or to release,
adversely affect or impair its liability pursuant to the
Security Documents or the other Loan Documents, and each
Guarantor hereby ratifies, affirms, acknowledges and agrees that
all liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of and in all respects benefit the holders of the Foothill
Obligations.
This Assignment is made with full substitution and
subrogation in and to all of the rights, titles, and interests
Assignors may have under the Notes, the Guarantees, the other
Security Documents, or any other Loan Document (save and except
only the Reserved Obligations as provided herein). Neither any
existing Guarantee nor any other existing Security Document nor
any other Loan Document shall be released, but is hereby
assigned to the Assignee and shall be carried forward and
extended to secure the payment and performance of the Foothill
Obligations.
1.2 No Assumption.
The Assignee does not assume, and the Assignee shall not be
obligated to pay, perform or discharge, any claim, debt,
obligation, expenses or liability of the Assignors of any kind,
whether known or unknown, absolute or contingent, under the Loan
Documents or otherwise, arising out of any act or omission by
the Assignors.
1.3 Endorsement of Notes
Each Assignor severally agrees that it will promptly
endorse its Note to the order of the Assignee, without recourse
and without representation or warranty, express or implied,
except as expressly set forth in Section 1.4 herein and will
deliver such endorsed Note to the Assignee. The indebtedness
arising under and evidenced by the Notes, the Credit Agreement
and the other Loan Documents is continuing indebtedness and
nothing contained herein shall be construed to have paid or
extinguished any of such indebtedness or to have released or
terminated any lien securing such indebtedness.
Each Assignor disclaims any representation or warranty,
express or implied, to the Assignee in connection with this
Assignment (other than those set forth in Section 1.4),
including, without limitation, as to the collectibility of the
Notes, the value of the property encumbered by the Assigned
Interests, and the ability of Borrower to make due and timely
payment of any amount due from it pursuant to the Notes, in
whole or in part. The Assignee acknowledges the disclaimer of
each Assignor and expressly disclaims reliance upon any
representations or warranties, express or implied (other than
those set forth in Section 1.4).
1.4 Representations and Warranties of each Assignor.
Each Assignor severally represents and warrants to the
Assignee as follows:
(a) It has the full power, legal capacity and
authority to enter into and perform its obligations under
this Assignment and to execute this Assignment.
(b) This Assignment constitutes the valid and binding
obligations of it, enforceable against it in accordance
with its terms, except insofar as enforcement of terms may
be limited by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership and other similar laws
and judicial decisions of general application relating to
or affecting the enforcement of creditors' rights, and by
general equitable principles (whether considered in
proceeding at law or in equity).
(c) It is the legal and equitable holder of its Note,
the Security Documents and the other Loan Documents, and
the indebtedness and obligations evidenced thereby.
(d) The aggregate principal balance outstanding on
its Note as of the date hereof, is set forth on Schedule B,
and all accrued interest on its Note has been paid through
the date hereof.
(e) It has not participated, assigned or otherwise
encumbered with liens or security interests its Note or its
rights under the Credit Agreement, the Security Documents
or the other Loan Documents.
(f) To the best of its knowledge, all the Oil and Gas
Properties (as defined below) currently encumbered by liens
and security interests in favor of Assignors securing the
indebtedness and obligations evidenced by the Notes, the
Guarantees, the other Security Documents or the other Loan
Documents are described in and are covered by the Security
Documents listed on Schedule A attached hereto (or a
Schedule A attached to the Parallel Assignments) and such
Schedule A accurately lists the recording information as to
the recordation of all such Security Documents. For the
purposes of this Assignment, the term "Oil and Gas
Properties" shall mean (i) all right, title, interest and
estates in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases,
mineral fee interests, overriding royalty and royalty
interests, net profit interests and production payment
interests, including any reserved interests, reversionary
interests, carried working interests, or residual interests
of whatever nature, and (ii) all surface interests relating
thereto.
(g) To the best of its knowledge, with respect to
itself only, except for such releases, if any, that are
described in a Certificate dated on or about the date
hereof from Union Bank as Agent to Assignees that is
acknowledged in writing by Assignee, neither Union Bank
individually or as Agent nor Den Norske has released or
agreed to release any of the security interests or liens
created by the Security Documents.
(h) Neither Union Bank individually or as Agent nor
Den Norske has any knowledge of any pending or threatened
adverse claims by any person or entity against the Oil and
Gas Properties or any knowledge of any pending or
threatened claims by Borrower, any Guarantor, any affiliate
of Borrower or of any Guarantor or any other person or
entity challenging, contesting or otherwise adversely
affecting the validity or enforceability of the Notes, any
Security Documents or any Loan Documents or the validity,
priority or enforceability of the liens and security
interests created by the Security Documents or the Loan
Documents.
1.5 Representations and Warranties of the Assignee.
The Assignee represents and warrants to each Assignor as
follows:
(a) The Assignee has full power, legal capacity and
authority to enter into this Assignment, and this
Assignment constitutes the valid and binding obligation of
the Assignee, enforceable against it in accordance with its
terms, except insofar as enforcement of terms may be
limited by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership and other similar laws
and judicial decisions of general application relating to
or affecting the enforcement of creditors' rights, and by
general equitable principles (whether considered in a
proceeding at law or in equity).
(b) The Assignee is an institution which is an
"accredited investor" within the meaning of Rule 501 under
the Securities Act of 1933, as amended (the "Act"). The
Assignee has such knowledge of finance and investments as
to be capable of evaluating the merits and risks of the
purchase of the Notes and the Assigned Interests.
(c) The Assignee is acquiring the Notes and the
Assigned Interests from the Assignors for its own account
and not with a view to the distribution or resale of the
Notes and the Assigned Interests, or any portion thereof in
violation of the Act (it being understood, however, that
the disposition of the Assignee's property shall at all
times be within its control).
(d) The Assignee acknowledges that the Notes and the
Assigned Interests have not been registered under the Act
or the securities or "Blue Sky" laws of any jurisdiction
and agrees that, to the extent the Act or such laws are
applicable, in the absence of such registration, the Notes
and the Assigned Interests will be sold or disposed of only
pursuant to an exemption from such registration
requirements under the Act and such laws.
(e) The Assignee confirms that it has received a copy
of the Credit Agreement, together with such other
documents, including without limitation, the Security
Documents and the other Loan Documents listed on Schedule
A, and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this
Assignment and agrees that it shall have no recourse
against either Assignor with respect to any matters
relating to the Credit Agreement or Security Document or
any other Loan Document or this Assignment except for a
breach by such Assignor of any of its representations and
warranties set forth in Section 1.4 herein.
1.6 Representations and Warranties of Borrower and the
Guarantors
Each of Borrower and the Guarantors represents and warrants
to the Assignee and the Assignors as follows:
(a) Each of this Assignment, the Security Documents
and the other Loan Documents to which it is a party
constitutes its valid and binding obligation, enforceable
against it in accordance with its terms, except insofar as
enforcement of terms may be limited by any bankruptcy,
fraudulent conveyance, and other similar laws and judicial
decisions of general application relating to or affecting
the enforcement of creditors' rights, and by general
equitable principles (whether considered in proceeding at
law or in equity).
(b) It has not assigned its rights or obligations
under the Credit Agreement, the Security Documents or the
other Loan Documents.
(c) The aggregate principal balance outstanding on
each Note as of the date hereof is set forth on Schedule B
and all accrued interest on the Notes has been paid through
the date hereof. No Assignor has forgiven or discharged, in
the absence of payment thereof, any liability of Borrower
evidenced by any Note.
(d) Except for the obligations set forth in the
Notes, the Security Documents, and the other Loan
Documents, it does not have any other obligation, liability
or contractual arrangement with the Assignors.
(e) Schedule A attached hereto (and Schedule A
attached to the Parallel Assignments) contains a complete
list of all currently effective credit agreements,
promissory notes, mortgages, deeds of trust, security
agreements, guaranty agreements, and financing statements
evidencing, securing and guaranteeing the indebtedness
evidenced by the Notes.
(f) All of the indebtedness described in the Credit
Agreement has been assigned to the Assignee by this
Assignment.
(g) It has affirmed, acknowledged and confessed all
of its obligations under the Credit Agreement, the Security
Documents, and the other Loan Documents. It has no right
of offset or other defense to any of its indebtedness,
obligations or other liabilities under the Credit
Agreement, the Security Documents and the other Loan
Documents.
(h) The Recitals are true and correct.
(i) All the Oil and Gas Properties currently
encumbered by liens and security interests in favor of
Assignors securing the indebtedness and obligations
evidenced by the Notes, the Guarantees, the other Security
Documents or the other Loan Documents, are described in and
are covered by the Security Documents listed on Schedule A
attached hereto hereto (and Schedule A attached to the
Parallel Assignments) contains and each such Schedule A
accurately lists the recording information relating to
recordation of such Security Documents.
(j) Except for such releases, if any, that are
described on the Certificate described in Section 1.4(g),
neither Union Bank individually or as Agent nor Den Norske
has released or agreed to release any of the security
interest or liens created by the Security Documents.
(k) It has no knowledge of any pending or threatened
adverse claims by any person or entity against the Oil and
Gas Properties and no knowledge of any pending or
threatened claims by any person or entity challenging,
contesting or otherwise adversely affecting the validity or
enforceability of the Notes or any of the Loan Documents or
the validity, priority or enforceability of the liens and
security interests created by the Security Documents or any
of the Loan Documents.
(l) Nothing herein shall, and nothing herein shall be
construed to, adversely affect or impair any lien, charge,
encumbrance or security interest created under the Security
Documents or any of the other Loan Documents or the
priority thereof or release, adversely affect or impair its
liability pursuant to the Security Documents or the other
Loan Documents, and all liens, charges, encumbrances and
security interests created under the Security Documents and
the other Loan Documents have been and are hereby ratified,
affirmed, renewed, extended and carried forward and shall
continue to secure the payment and performance of and in
all respects benefit the holders of the Foothill
Obligations.
(m) It requested that Lenders purchase the Note, that
Lenders are purchasing the Notes as an accommodation to it,
that it is benefited, directly and indirectly, by the
purchase of the Notes by Lenders, and that it is in its
best interests for Lenders to purchase the Notes.
1.7 Reserved Obligations.
Notwithstanding any other provision hereof or in any other
agreement, Borrower shall remain fully liable to the Assignors
with respect to (i) all of its obligations and liabilities
regarding indemnification and reimbursement of fees and expenses
pursuant to the Credit Agreement, and (ii) all payments
heretofore or concurrently made by Borrower under or pursuant to
the Credit Agreement or any other Loan Document (collectively,
the "Reserved Obligations"), and such Reserved Obligations shall
be excepted and reserved by the Assignors from the rights,
titles and interests assigned by them to the Assignee hereunder.
Borrower hereby affirms its obligations and liabilities in favor
of the Assignors under the Credit Agreement regarding
indemnification and reimbursement of fees and expenses set forth
in the Credit Agreement. Notwithstanding the reservation in this
Section 1.7 by Assignors, it is the intent of Assignors,
Assignee, Borrower and the Guarantors that the Reserved
Obligations SHALL NOT BE SECURED by any of the Security
Documents or the other Loan Documents. Accordingly, Assignors
hereby expressly waive, release and assign in favor of and to
the Assignee any and all rights that Assignors may have to
establish or enforce any lien, security interest, mortgage,
guarantee or assignment or other encumbrance under any of the
Security Documents or the other Loan Documents which may now
secure Borrower's or any Guarantor's obligations and
indebtedness to Assignors with respect to the Reserved
Obligations; provided, however, that nothing herein shall be
construed to limit in any way the rights of Assignee which
Assignee may now or hereafter have in the Credit Agreement or
any other document transferred to Assignee hereunder or in the
Amended and Restated Loan and Security Agreement.
1.8 Releases.
To induce the Assignors to sell, and the Assignee to
purchase, the Notes and the rights under the Loan Documents,
except for those rights specifically reserved herein, at the
special insistence and request of the Assignee and the
Assignors, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of
Borrower and each Guarantor hereby fully releases and discharges
each Assignor and its successors and assigns, including but not
limited to the Assignee, and their respective officers,
directors, employees, representatives, agents and affiliates,
from all claims, demands, causes of action, liabilities or other
obligations of any kind whatsoever, including, without
limitation, offsets, reductions, rebatements or claims of usury,
known or unknown, whether now existing or hereafter asserted in
connection with the Notes, the Credit Agreement, the Guarantees,
the other Security Documents and the other Loan Documents
arising from matters occurring before the date of this
Assignment. Borrower hereby further releases each of the
Assignors from any of its obligations and commitments under the
Credit Agreement and the other Loan Documents, if any.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NOTHING
HEREIN SHALL BE CONSTRUED AS AN EXTINGUISHMENT OR NOVATION OR
OTHER SATISFACTION OF THE INDEBTEDNESS EVIDENCED BY THE NOTES OR
THE INDEBTEDNESS, OBLIGATIONS, LIABILITIES OF BORROWER AND THE
GUARANTORS EVIDENCED BY OR ARISING UNDER THE LOAN DOCUMENTS.
SECTION 2
AMENDMENTS TO MORTGAGES
2.1 Amendments to Mortgages. In connection with and in
furtherance of the assignment by Assignors to Assignee of the
Notes and the Loan Documents (including, without limitation, the
Mortgages) as described in Section 1.1 of this Assignment,
Borrower, the Guarantors hereby agree with Assignee to amend,
effective as of the date hereof, and hereby amend as of the date
hereof, each of the Mortgages included in the Assigned Interests
to which Borrower or such Guarantor is a party as follows:
(a) All references in the Mortgages to "Credit
Agreement" or otherwise referring to the Credit Agreement
shall now and hereafter refer to and be deemed to
references to the Amended and Restated Loan and Security
Agreement.
(b) All references in the Mortgages to "Banks" or
otherwise referring to Union Bank or Den Norske shall now
and hereafter refer to and be deemed references to the
Lenders.
(c) All references in the Mortgages to "Trustee"
shall now and hereafter refer to and be deemed references
to the following person with the following mailing address:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(d) All references in the Mortgages to "Mortgagee" or
"Secured Party" or otherwise referring to Union Bank as the
agent for the "Banks" under the Credit Agreement shall now
and hereafter refer to and be deemed references to Assignee
as Agent for the Lenders, and shall also be deemed to
include the mailing address of Assignee, which is as
follows:
Foothill Capital Corporation, Agent
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(e) All references in the Mortgages to "Default Rate"
shall now and hereafter be deemed references to the default
rate as calculated under the Amended and Restated Loan and
Security Agreement.
(f) All references in the Mortgages to "Notes" or
otherwise referring to the promissory notes whose payment
is secured by the lien created by such Mortgage shall now
and hereafter be deemed references to the Notes described
in the Recitals to this Assignment.
(g) All references in the Mortgages to "Article IV of
the Credit Agreement" shall now and hereafter be deemed
references to Section 5 of the Amended and Restated Loan
and Security Agreement.
(h) All references in the Mortgages to "Obligations"
or "Indebtedness" or otherwise referring to the
indebtedness, obligations and liabilities whose payment and
performance are secured by the lien created by such
Mortgage shall now and hereafter be deemed references to
the Foothill Obligations.
(i) All references in the Mortgages to "Guaranty" or
otherwise referring to any guarantee agreement executed by
a Guarantor in favor of the Assignors shall now and
hereafter be deemed to also include references to any
"Guaranty Agreements" (as defined in the Amended and
Restated Loan and Security Agreement) executed by such
Guarantor.
(j) [Intentionally Omitted]
(k) All references in the Mortgages to "Debtor" or
"Mortgagor" shall be deemed to include the mailing address
of Debtor or Mortgagor, as the case may be, which is as
follows:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Drive
Tulsa, Oklahoma 74135
(l) In addition to the other provisions of each
Mortgage, Borrower and the Guarantors hereby agree with
Assignee that in any case where a respective Mortgage
contains a non-judicial power of sale or is otherwise
identified as or is intended to create a "deed of trust" or
grants certain rights and powers to a "Trustee", that the
following statements shall be true of such Mortgage and are
hereby incorporated into such Mortgage:
(i) Such Mortgage shall be effective as a
mortgage as well as a deed of trust, and upon the
occurrence of an Event of Default may be foreclosed as
to the "Collateral" or the "Mortgaged Property", as
the case may be, in any manner permitted by the laws
of the state in which the Collateral or the Mortgaged
Property, as the case may be, is situated;
(ii) Any foreclosure suit may be brought by
Trustee or Secured Party;
(iii) If a foreclosure is commenced by
Trustee, Secured Party may, at any time before the
sale, direct the Trustee to abandon the sale, and may
then institute suit for the collection of the Foothill
Obligations, and for the foreclosure of enforcement of
the assignments, liens, and security interests created
under such Mortgage;
(iv) If Secured Party should institute a
suit for the collection of the Foothill Obligations,
and for a foreclosure or enforcement of the
assignments, liens, and security interests created
under such Mortgage, it may, at any time before the
entry of a final judgment in said suit, dismiss the
same, and require Trustee to sell the Collateral or
the Mortgaged Property, as the case may be, or any
part thereof, in accordance with the provisions of
such Mortgage; and
(v) With respect to any such Mortgage
covering the Mortgaged Property or Collateral situated
in the state of Oklahoma:
(a) The following provision is
hereby added to such Mortgage:
"A POWER OF SALE HAS BEEN GRANTED IN THIS
MORTGAGE, A POWER OF SALE MAY ALLOW THE
MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND
SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY THE
MORTGAGOR UNDER THIS INSTRUMENT"
(b) In addition to, and not in
limitation of, any other remedy provided for in
such Mortgage or by applicable law, in connection
with such Mortgage Borrower and the Guarantors
hereby grant to, and confer upon, Assignee as the
relevant Secured Party a power of sale pursuant
to the Oklahoma Power of Sale Mortgage
Foreclosure Act, Title 46, Sections 40-48 of the
Oklahoma Statutes (the "Oklahoma Act") and any
future amendments thereof or under any future law
granting the same or similar rights, conferring
on the Secured Party pursuant to Title 46,
Section 43D, the option to elect to foreclose
upon the Mortgaged Property or the Collateral, as
the case may be, in the manner provided in
Section 686 of Title 12 of the Oklahoma Statutes.
Upon the occurrence and during the continuance of
an Event of Default or if any of the Secured
Obligations shall become due and payable, and
Mortgagor shall not promptly pay the same,
Secured Party is expressly authorized and
empowered to proceed in accordance with the
provisions of the Oklahoma Act or other future
law to have the Mortgaged Property sold, or
Secured Party may, at its option, exercised at
any time prior to completion of the sale,
institute suit to foreclose this Mortgage in any
court having jurisdiction. Secured Party is
expressly authorized and empowered to sell the
Mortgaged Property as an entirety or in such
lots, parcels or divisions as the Secured Party
may elect, but subject always to any right which
Mortgagor may have by law to suggest the lots,
parcels or divisions in which such Mortgaged
Property is to be sold. Notwithstanding anything
contained in this Mortgage to the contrary, any
notices of sale given in accordance with the
requirements of the Oklahoma Act shall constitute
sufficient notice of sale. The conduct of a sale
pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with the
requirements of the Oklahoma Act and other
applicable laws of the State of Oklahoma in
effect at the time of such sale, notwithstanding
any other provision contained in this instrument
to the contrary. The proceeds of any sale of the
Mortgaged Property pursuant to the power of sale
herein granted shall be applied in accordance
with the Oklahoma Act and any other applicable
laws of the State of Oklahoma in effect at the
time of such sale. In the event of conflict
between the provisions hereof and the Oklahoma
Act, the Oklahoma Act shall control. Sale of a
part of the Mortgaged Property shall not exhaust
the power of sale, but sales may be made from
time to time until the Secured Obligations are
paid in full. If default is made in the payment
of any installment of any of the Secured
Obligations, Secured Party may, at its option, at
once or at any time thereafter while any matured
installment remains unpaid, without declaring all
of the entire Secured Obligations to be due and
payable, enforce the power of sale created by
this instrument and sell all or any portion of
the Mortgaged Property in satisfaction of such
matured Secured Obligations. Sales made without
maturing any of the unmatured balance of the
Secured Obligations may be made hereunder
whenever there is a default in the payment of any
installment of any of the Secured Obligations
without exhausting the power of sale granted
hereby and without affecting in any way the power
of sale granted under this Section, the unmatured
balance of any of the Secured Obligations (except
as to any proceeds of any sale which Secured
Party may apply as prepayment of the
Indebtedness), or the liens securing payment of
the Secured Obligations. If any questions should
be raised as to the regularity or validity of any
sale hereunder, Secured Party shall have the
right and is hereby authorized to make resale of
said property so as to remove any questions or
doubt as to the regularity or validity of the
previous sale, and as many resales may be made as
may be appropriate.
(c) The following provision is
hereby added to such Mortgage:
"If this Mortgage is foreclosed by judicial
proceedings, appraisement of the Mortgaged
Property is hereby expressly waived or not
waived at the option of Secured Party, such
option to be exercised at or prior to the
time judgment or decree of foreclosure is
rendered. Mortgagor, for the considerations
herein expressed, does hereby expressly
waive all benefit of the homestead,
exemption and stay laws of the State of
Oklahoma."
2.2 Reaffirmation of Mortgages. Borrower, the Guarantors
and the Assignee hereby acknowledge and agree that except as
specifically amended, changed or modified by this Assignment,
each of the Mortgages included in the Assigned Interests shall
remain in full force and effect in accordance with its terms.
None of the rights, titles and interests existing and to exist
under the Mortgages as amended are hereby released, diminished
or impaired and each of Borrower and the Guarantors hereby
reaffirms all covenants, representations and warranties made in,
and the indebtedness, liabilities and obligations described in,
each such Mortgage included in the Assigned Interests to which
it is a party, as such Mortgage is amended by this Assignment.
SECTION 3
MISCELLANEOUS
3.1 Further Assurances.
Each of the Assignors, Borrower and the Guarantors agrees
that it will promptly, upon reasonable request of the Assignee
and at the sole expense of Borrower and the Guarantors, execute
and deliver all such other documents in form satisfactory to
Assignee and its legal counsel, and take such other action
satisfactory to Assignee and its legal counsel as may be
reasonable and necessary to fully effectuate the provisions of
this Assignment.
3.2 Taxes, Etc.
Except to the extent prohibited by applicable law, Borrower
and the Guarantors agree to pay or to cause to be paid all
governmental assessments, charges or taxes (excluding federal,
state or local income taxes), including any stamp or documentary
or mortgage registration or other excise or property taxes and
any interest or penalties on any such assessments, charges or
taxes, at any time payable or ruled to be payable in respect of
the execution or delivery of this Assignment by reason of any
federal, state or local, statutory or regulatory provision in
force on the date hereof, or in accordance with a specific
proposal for the amendment of, or enactment of, any such
statutory or regulatory provision published on or before the
date hereof which is thereafter enacted in material conformity
to the form published and any taxes, levies, imports,
assessments or charges imposed in replacement of or in
substitution for any of the foregoing and which are
substantially similar thereto (collectively, the "Tax"), and to
indemnify, defend and hold the Assignors and the Assignee
harmless against liability in connection with any such Taxes.
3.3 Successors and Assigns.
This Assignment shall be binding upon the parties hereto
and their respective successors and assigns.
3.4 Counterparts.
This Assignment is being executed in several counterparts.
All of such counterparts together shall constitute on and the
same instrument.
3.5 Governing Law.
Without regard to principles of conflict of laws, this
Assignment shall be construed and enforced in accordance with
and governed by the internal laws of the State of California,
except to the extent the laws of some other jurisdiction are
required to be applied in connection with or in order to
preserve the validity of this Assignment or the relevant Loan
Document, including without limitation the validity and creation
of any Lien created under this Assignment or such Loan Document,
the priority of any Lien created under this Assignment or such
Loan Document, and the exercise or enforcement of any rights and
remedies under this Assignment or such Loan Document.
3.6 Recording. In order to facilitate filing and
recording of this Assignment in each county or parish described
in each Schedule and/or Annex attached hereto, a counterpart of
this Assignment with only those portions of Exhibit "A" attached
that relate to properties located in any such county or parish
has been furnished for recording in such county or parish, and
such counterpart shall be effective to the same extent as if it
were a complete original counterpart of this Assignment. A
counterpart of this Assignment with a complete Exhibit "A" has
been retained by Assignee and is available for inspection or
copying upon request.
IN WITNESS WHEREOF, the parties have caused this
Assignment to be executed by their duly authorized officers
effective as of the date first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
THUS DONE AND PASSED this ____ day of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Union Bank and me,
Notary, after reading of the whole.
WITNESSES: UNION BANK OF CALIFORNIA, N.A.
Name:
By:
Name: Name
Title:
STATE OF TEXAS
COUNTY OF
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of
Union Bank of California, N.A., a national banking association.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ day of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Den Norske and me,
Notary, after reading of the whole.
WITNESSES: DEN NORSKE BANK, ASA
By: _________________________________
Name: Name:___________________________
Title:
____________________________
By:
Name: Name:
Title:
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇ the ____ day of December, in the year 1999, before me
personally came ________________________________ to me known,
who, being by me duly sworn, did depose and say that he resides
in __________________, that he is the ___________________ of Den
Norske Bank, ASA, the corporation described on and which
executed the above instrument, and that he signed his name
thereto by authority of the board of directors of such
corporation, and before me personally also came
___________________ to me known, who, being by me duly sworn,
did depose and say that he resides in __________________, that
he is the ____________ of Den Norske Bank, ASA, the corporation
described on and which executed the above, and that he signed
his name thereto by authority of the board of directors of such
corporation.
NOTARY PUBLIC, State of New York
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Assignee and me,
Notary, after reading of the whole.
WITNESSES: FOOTHILL CAPITAL CORPORATION,
as Agent, a California corporation
Name:
By:
Name: Name:
Title:
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of
Foothill Capital Corporation, a California corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Borrower and me,
Notary, after reading of the whole.
WITNESSES: RAM ENERGY, INC.
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of RAM
Energy, Inc., a Delaware corporation
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with RLP and me, Notary,
after reading of the whole.
WITNESSES: RLP Gulf States, L.L.C., an
Oklahoma limited
liability company
By: RAM Energy, Inc., a
Name: Delaware corporation, as
its sole Member and sole
Manager
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of RAM
Energy, Inc., a Delaware corporation, for itself and as the sole
Manager and sole Member of RLP Gulf States, L.L.C., an Oklahoma
limited liability company.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with MCE and me, Notary,
after reading of the whole.
WITNESSES: MAGIC CIRCLE ENERGY CORPORATION,
a Delaware corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of
Magic Circle Energy Corporation, a Delaware corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with CDC and me, Notary,
after reading of the whole.
WITNESSES: ▇▇▇▇▇▇ DEVELOPMENT CORPORATION,
an Oklahoma corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________, as _____________ of ▇▇▇▇▇▇
Development Corporation, an Oklahoma corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with MCA and me, Notary,
after reading of the whole.
WITNESSES: MAGIC CIRCLE ACQUISITION
CORPORATION, an Oklahoma
corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December __,
1999, by ________________________, as _______________ of Magic
Circle Acquisition Corporation, an Oklahoma corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with CFL and me, Notary,
after reading of the whole.
WITNESSES: ▇▇▇▇▇▇ FIELD LIMITED PARTNERSHIP,
an Oklahoma limited partnership
Name: By:▇▇▇▇▇▇ Development Corporation,
an Oklahoma corporation, its sole
General Partner
Name: By:
▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by _____________________, as ___________ of ▇▇▇▇▇▇
Development Corporation, an Oklahoma corporation, for itself and
acting as the sole general partner of ▇▇▇▇▇▇ Field Limited
Partnership, an Oklahoma limited partnership.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
After recording, return to:
▇▇▇▇▇▇ ▇▇▇▇▇ LLP
Attention: ▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
THE PARTIES HERETO DIRECT THE CLERKS OF COURT (EX-OFFICIO
RECORDER OF MORTGAGES) FOR THE PARISHES AND COUNTIES LISTED ON
SCHEDULE A ATTACHED HERETO TO MAKE A NOTATION OF THIS
ASSIGNMENT OF NOTES AND LIENS AND MASTER ACT OF AMENDMENT TO
MORTGAGES IN THE MARGIN OF THEIR RECORDS AT THE RECORDATION
REFERENCES NOTED ON SAID SCHEDULE A HERETO TO SERVE AS THE
OCCASION MAY REQUIRE.
ASSIGNMENT OF NOTES AND LIENS
AND
MASTER ACT OF AMENDMENT TO MORTGAGES
[▇▇▇▇▇▇ Collateral]
THIS ASSIGNMENT OF NOTES AND LIENS AND MASTER ACT OF
AMENDMENT TO MORTGAGES (this "Assignment") is made effective as
of the 27th day of December, 1999, by and among:
UNION BANK OF CALIFORNIA, N.A. ("Union Bank"), a national
banking association, with an address of ▇▇▇ ▇. ▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, for itself and as agent for the
lenders that are or become parties to the Credit Agreement (as
defined in Recital A below);
DEN NORSKE BANK, ASA ("Den Norske"), a bank, with an address of
▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇, ▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇ (Union
Bank, Den Norske, and Union Bank as Agent for the lenders that
are parties to the Credit Agreement are referred to herein,
collectively, as the "Assignors" and, individually, as an
"Assignor");
RAM ENERGY, INC. ("Borrower"), a Delaware corporation, whose
chief executive office is Meridian Tower, Suite 650, ▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
RLP GULF STATES, L.L.C. ("RLP"), an Oklahoma limited liability
company, whose chief executive office is Meridian Tower, Suite
650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
MAGIC CIRCLE ENERGY CORPORATION ("MCE"), a Delaware corporation,
whose chief executive office is Meridian Tower, Suite 650, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇▇▇ FIELD LIMITED PARTNERSHIP ("CFL"), an Oklahoma limited
partnership, whose chief executive office is Meridian Tower,
Suite 650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
▇▇▇▇▇▇ DEVELOPMENT CORPORATION ("CDC"), an Oklahoma corporation,
whose chief executive office is Meridian Tower, Suite 650, ▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇;
MAGIC CIRCLE ACQUISITION CORPORATION ("MCA"), an Oklahoma
corporation, whose chief executive office is Meridian Tower,
Suite 650, ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
(collectively, RLP, MCE, CFL, CDC and MCA shall be referred to
herein as the "Guarantors"); and
FOOTHILL CAPITAL CORPORATION, a California corporation
("Foothill"), in its capacity as agent for the benefit of the
lenders that are or become parties to the Amended and Restated
Loan and Security Agreement (as amended, restated and renewed
from time to time, the "Amended and Restated Loan and Security
Agreement"), dated December 27, 1999, among Borrower, the
lenders that are or become parties thereto (individually and
collectively, the "Lenders") and Foothill, as agent for the
benefit of the Lenders (Foothill in capacity as agent for the
benefit of the Lenders is hereinafter referred to as the
"Assignee"), whose address is ▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇.
R E C I T A L S
A. Pursuant to that certain Second Amended and Restated
Credit Agreement, dated as of February 3, 1998, executed by
Borrower, Den Norske and Union Bank individually and as Agent,
as amended by that certain Amendment No. 1 and Waiver, dated as
of August 17, 1998, that certain Amendment No. 2 and Waiver,
dated as of March 31, 1999, that certain Amendment No. 3 and
Waiver, dated as of August 12, 1999, that certain Amendment No.
4 dated as of September 2, 1999, that certain Amendment No. 5
and Consent and Waiver dated as of September 28, 1999, that
certain Amendment No. 6 dated as of September 30, 1999, and that
certain Amendment No. 7 dated as of December 22, 1999, each
respectively executed by Borrower, Den Norske, and Union Bank
individually and as Agent, and certain other agreements,
documents and instruments preceding the same (said Second
Amended and Restated Credit Agreement, as amended, together with
such preceding agreements, documents and instruments, are
hereinafter referred to collectively as the "Credit Agreement"),
Assignors and their predecessors-in-interest have provided
Borrower with a revolving credit facility, the indebtedness
incurred in connection with the Credit Agreement being presently
evidenced by (i) a promissory note in the original principal
amount of $30,000,000, dated February 27, 1998, payable to the
order of Union Bank, executed by Borrower, and (ii) a promissory
note in the original principal amount of $20,000,000, dated
February 27, 1998, payable to the order of Den Norske, executed
by Borrower (individually, a "Note"; and collectively, the
"Notes").
B. As security for payment of the Notes and the
performance of all of the other obligations of Borrower under
the Credit Agreement, Borrower has granted Assignors certain
liens and security interests, which liens and security interests
include those evidenced by the mortgages, deeds of trust,
security agreements, collateral documents and financing
statements described on Schedule A attached hereto.
C. In connection with the Credit Agreement, the
Guarantors have executed guarantees (the "Guarantees")
guaranteeing payment of all the indebtedness of Borrower arising
in connection with the Credit Agreement, which Guarantees
include those being more specifically described on Schedule A
attached hereto.
D. In connection with the Credit Agreement and the
Guarantees, the Guarantors have granted Assignors certain liens
and security interest, which liens and security interests are
evidenced by the mortgages, deeds of trust, security agreements,
collateral documents and financing statements described on
Schedule A attached hereto.
E. Assignors desire to grant, transfer, assign and convey
to Assignee all of their rights, titles and interests in and to
the Notes and the indebtedness and obligations of Borrower, the
Guarantors, and any other party to or guaranteeing or securing
the obligations arising under the Credit Agreement, together
with any and all liens and security interests and guarantees in
connection therewith (the "Security Documents") (including,
without limitation, the Guarantees and the other Security
Documents described on Schedule A attached hereto), including,
but not limited to, all indebtedness and obligations of Borrower
and the Guarantors, together with their affiliates and
subsidiaries, under the documents described on Schedule A
(collectively, the documents described on Schedule A, together
with any other document evidencing the obligations or
indebtedness of Borrower, the Guarantors or any of their
affiliates or subsidiaries in connection with the Credit
Agreement shall be referred to herein as the "Loan Documents").
Schedule A and the property subject to the Liens and security
interests created or evidenced by the Security Documents include
but are not limited to the property covered by the legal
descriptions contained on Annex I attached hereto.
F. Borrower and the Guarantors desire to (i) acknowledge
and agree that they specifically requested that Lenders purchase
the Notes, that Lenders are purchasing the Notes as an
accommodation to them, that they will be benefited, directly and
indirectly, by the purchase of the Notes by Lenders, and that it
is in their best interests for Lenders to purchase the Notes,
and (ii) acknowledge and consent to the sale and acquisition of
the Notes, the Security Documents and the other Loan Documents
to Assignee, and (iii) ratify, affirm, acknowledge and confess
each of their obligations under the Notes, the Security
Documents and the other Loan Documents, and (iv) ratify, affirm,
acknowledge and agree that nothing herein shall, and nothing
herein shall be construed to, adversely affect or impair any
lien, charge, encumbrance or security interest created under the
Security Documents or any of the other Loan Documents or the
priority thereof or release or affect their liability pursuant
to the Security Documents or the other Loan Documents, and (v)
ratify, affirm, acknowledge and agree that all liens, charges,
encumbrances and security interests created under the Security
Documents and the other Loan Documents shall be and hereby are
ratified, affirmed, extended and carried forward and shall
continue to secure the payment and performance of and in all
respects benefit the holders of each of (a) the "Obligations"
under and as defined in the Amended and Restated Loan and
Security Agreement, and (b) all other indebtedness, obligations
and liabilities of Borrower and the Guarantors described in the
"Loan Documents" (as defined in the Amended and Restated Loan
and Security Agreement) (said "Obligations" and such other
indebtedness, obligations, and liabilities described in the
immediately preceding clauses (a) and (b) are hereinafter
referred to, collectively, as the "Foothill Obligations"), and
(vi) along with Assignee amend certain provisions of each of the
following documents (hereinafter collectively referred to as the
"Mortgages"): each Mortgage, Deed of Trust, Security Agreement
and Financing Statement described on Schedule A attached hereto,
each Mortgage, Deed of Trust, Security Agreement, Assignment of
Production and Financing Statement described on such Schedule A,
each Mortgage, Security Agreement, Assignment of Production and
Financing Statement described on such Schedule A, and each Deed
of Trust, Security Agreement, Assignment of Production and
Financing Statement described on such Schedule A.
G. Contemporaneously with the execution of this
Assignment, the parties hereto are entering into two certain
other Assignments of Notes and Liens and Master Acts of
Amendment to Mortgages dated as of even date herewith, pursuant
to which Assignors are assigning to Assignee its mortgages,
liens and encumbrances on property other than or in addition to
the property described in the documents, instruments and
agreements described on Schedule A attached hereto (such two
certain other Assignments of Notes and Liens and Master Acts of
Amendment to Mortgages are hereinafter referred to collectively
as the "Parallel Assignments"). It is the intention of the
parties that the aggregation of the assignments evidenced by
this Assignment and the assignments evidenced by each of the
Parallel Assignments will result in the assignment by Assignors
to Assignee of all of the rights, titles and interests of
Assignors in and to the Notes, the Security Documents and the
other Loan Documents.
NOW, THEREFORE, for and in consideration of the forgoing
Recitals and other good and valuable consideration, the receipt
and sufficiency of which are hereby acknowledged and confessed,
Assignors, Borrower, the Guarantors and Assignee hereby agree as
follows:
SECTION 1
ASSIGNMENT OF NOTES AND LIENS
1.1 Assignment of Notes and Liens
Each Assignor, severally, in consideration of the payment
by the Assignee to such Assignor of the outstanding principal
balance of the Note payable to such Assignor, as set forth in
the Payoff Letter (herein so called) attached hereto as Schedule
C, the receipt and sufficiency of which are hereby acknowledged
by such Assignor, and intending to be legally bound hereby, does
grant, assign, sell, transfer and convey to the Assignee,
without recourse and without representation or warranty, express
or implied, except as specifically and expressly set forth in
Section 1.4 hereof, the Notes, together with all of the
Assignors' right, title and interest thereunder, to have and to
hold unto the Assignee and its successors and assigns forever.
Borrower hereby affirms, ratifies and acknowledges its
indebtedness and obligations under the Notes in the amount set
forth on Schedule B attached hereto, as well as its obligations
under the Security Documents and the other Loan Documents, and
Borrower hereby ratifies, affirms, acknowledges and agrees that
nothing herein shall, and nothing herein shall be construed to,
adversely affect or impair any lien, charge, encumbrance or
security interest created under the Security Documents or any of
the other Loan Documents or the priority thereof or release,
adversely affect or impair Borrower's liability pursuant to the
Security Documents or the other Loan Documents, and Borrower
hereby ratifies, affirms, acknowledges and agrees that all
liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of, and in all respects otherwise benefit, the holders of the
Foothill Obligations. Each Guarantor hereby ratifies, affirms
and acknowledges its obligations under its respective Guarantee,
as well as its obligations under the other Security Documents
and the other Loan Documents, and each Guarantor hereby
ratifies, affirms, acknowledges and agrees that nothing herein
shall, and nothing herein shall be construed to, adversely
affect or impair any lien, charge, encumbrance or security
interest created under the Security Documents or any of the
other Loan Documents or the priority thereof or release,
adversely affect or impair its liability pursuant to the
Security Documents or the other Loan Documents, and each
Guarantor hereby ratifies, affirms, acknowledges and agrees that
all liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of and in all respects benefit the holders of the Foothill
Obligations.
In addition, each Assignor, severally, in consideration of
the payment by the Assignee as stated above, intending to be
legally bound hereby, does grant, assign, sell, transfer and
convey to the Assignee without recourse and without
representation or warranty, express or implied, except as
specifically and expressly set forth in Section 1.4 hereof, all
of its rights, titles and interests in and to any liens, claims
and encumbrances arising under the agreements, documents and
instruments described on Schedule A attached hereto securing
Borrower's and the Guarantors' (together with their affiliates'
and subsidiaries') obligations under the Notes, the Security
Documents, and the other Loan Documents (collectively, all
rights, titles and interests of Assignors assigned herein in and
to the Notes, the Security Documents and the other Loan
Documents shall be referred as the "Assigned Interests").
Borrower hereby acknowledges and agrees that it requested
that Lenders purchase the Notes, that Lenders are purchasing the
Notes as an accommodation to Borrower, that Borrower is
benefited, directly and indirectly, by the purchase of the Notes
by Lenders, and that it is in the best interests of Borrower for
Lenders to purchase the Notes, and Borrower hereby ratifies,
affirms, acknowledges, and confesses its respective indebtedness
and obligations under and the effectiveness of the Notes and the
Security Documents and the other Loan Documents to which
Borrower is a party, and Borrower hereby ratifies, affirms,
acknowledges and agrees that nothing herein shall, and nothing
herein shall be construed to, adversely affect or impair any
lien, charge, encumbrance or security interest created under the
Security Documents or any of the other Loan Documents or the
priority thereof or release, adversely affect or impair
Borrower's liability pursuant to the Security Documents or the
other Loan Documents, and Borrower hereby ratifies, affirms,
acknowledges and agrees that all liens, charges, encumbrances
and security interests created under the Security Documents and
the other Loan Documents shall be and hereby are ratified,
affirmed, extended and carried forward and shall continue to
secure the payment and performance of and in all respects
benefit the holders of the Foothill Obligations.
Each Guarantor hereby acknowledges and agrees that it
requested that Lenders purchase the Notes, that Lenders are
purchasing the Notes as an accommodation to each Guarantor, that
each Guarantor is benefited, directly and indirectly, by the
purchase of the Notes by Lenders, and that it is in the best
interests of each Guarantor for Lenders to purchase the Notes,
and each Guarantor hereby ratifies, affirms, acknowledges, and
confesses its obligations under and the effectiveness of its
respective Guarantee, the other Security Documents and the other
Loan Documents to which it is a party, and each Guarantor hereby
ratifies, affirms, acknowledges and agrees that nothing herein
shall adversely affect or impair or be construed to adversely
affect or impair any lien, charge, encumbrance or security
interest created under the Security Documents or any of the
other Loan Documents or the priority thereof or to release,
adversely affect or impair its liability pursuant to the
Security Documents or the other Loan Documents, and each
Guarantor hereby ratifies, affirms, acknowledges and agrees that
all liens, charges, encumbrances and security interests created
under the Security Documents and the other Loan Documents shall
be and hereby are ratified, affirmed, extended and carried
forward and shall continue to secure the payment and performance
of and in all respects benefit the holders of the Foothill
Obligations.
This Assignment is made with full substitution and
subrogation in and to all of the rights, titles, and interests
Assignors may have under the Notes, the Guarantees, the other
Security Documents, or any other Loan Document (save and except
only the Reserved Obligations as provided herein). Neither any
existing Guarantee nor any other existing Security Document nor
any other Loan Document shall be released, but is hereby
assigned to the Assignee and shall be carried forward and
extended to secure the payment and performance of the Foothill
Obligations.
1.2 No Assumption.
The Assignee does not assume, and the Assignee shall not be
obligated to pay, perform or discharge, any claim, debt,
obligation, expenses or liability of the Assignors of any kind,
whether known or unknown, absolute or contingent, under the Loan
Documents or otherwise, arising out of any act or omission by
the Assignors.
1.3 Endorsement of Notes
Each Assignor severally agrees that it will promptly
endorse its Note to the order of the Assignee, without recourse
and without representation or warranty, express or implied,
except as expressly set forth in Section 1.4 herein and will
deliver such endorsed Note to the Assignee. The indebtedness
arising under and evidenced by the Notes, the Credit Agreement
and the other Loan Documents is continuing indebtedness and
nothing contained herein shall be construed to have paid or
extinguished any of such indebtedness or to have released or
terminated any lien securing such indebtedness.
Each Assignor disclaims any representation or warranty,
express or implied, to the Assignee in connection with this
Assignment (other than those set forth in Section 1.4),
including, without limitation, as to the collectibility of the
Notes, the value of the property encumbered by the Assigned
Interests, and the ability of Borrower to make due and timely
payment of any amount due from it pursuant to the Notes, in
whole or in part. The Assignee acknowledges the disclaimer of
each Assignor and expressly disclaims reliance upon any
representations or warranties, express or implied (other than
those set forth in Section 1.4).
1.4 Representations and Warranties of each Assignor.
Each Assignor severally represents and warrants to the
Assignee as follows:
(a) It has the full power, legal capacity and
authority to enter into and perform its obligations under
this Assignment and to execute this Assignment.
(b) This Assignment constitutes the valid and binding
obligations of it, enforceable against it in accordance
with its terms, except insofar as enforcement of terms may
be limited by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership and other similar laws
and judicial decisions of general application relating to
or affecting the enforcement of creditors' rights, and by
general equitable principles (whether considered in
proceeding at law or in equity).
(c) It is the legal and equitable holder of its Note,
the Security Documents and the other Loan Documents, and
the indebtedness and obligations evidenced thereby.
(d) The aggregate principal balance outstanding on
its Note as of the date hereof, is set forth on Schedule B,
and all accrued interest on its Note has been paid through
the date hereof.
(e) It has not participated, assigned or otherwise
encumbered with liens or security interests its Note or its
rights under the Credit Agreement, the Security Documents
or the other Loan Documents.
(f) To the best of its knowledge, all the Oil and Gas
Properties (as defined below) currently encumbered by liens
and security interests in favor of Assignors securing the
indebtedness and obligations evidenced by the Notes, the
Guarantees, the other Security Documents or the other Loan
Documents are described in and are covered by the Security
Documents listed on Schedule A attached hereto (or a
Schedule A attached to the Parallel Assignments) and such
Schedule A accurately lists the recording information as to
the recordation of all such Security Documents. For the
purposes of this Assignment, the term "Oil and Gas
Properties" shall mean (i) all right, title, interest and
estates in and to oil and gas leases, oil, gas and mineral
leases, or other liquid or gaseous hydrocarbon leases,
mineral fee interests, overriding royalty and royalty
interests, net profit interests and production payment
interests, including any reserved interests, reversionary
interests, carried working interests, or residual interests
of whatever nature, and (ii) all surface interests relating
thereto.
(g) To the best of its knowledge, with respect to
itself only, except for such releases, if any, that are
described in a Certificate dated on or about the date
hereof from Union Bank as Agent to Assignees that is
acknowledged in writing by Assignee, neither Union Bank
individually or as Agent nor Den Norske has released or
agreed to release any of the security interests or liens
created by the Security Documents.
(h) Neither Union Bank individually or as Agent nor
Den Norske has any knowledge of any pending or threatened
adverse claims by any person or entity against the Oil and
Gas Properties or any knowledge of any pending or
threatened claims by Borrower, any Guarantor, any affiliate
of Borrower or of any Guarantor or any other person or
entity challenging, contesting or otherwise adversely
affecting the validity or enforceability of the Notes, any
Security Documents or any Loan Documents or the validity,
priority or enforceability of the liens and security
interests created by the Security Documents or the Loan
Documents.
1.5 Representations and Warranties of the Assignee.
The Assignee represents and warrants to each Assignor as
follows:
(a) The Assignee has full power, legal capacity and
authority to enter into this Assignment, and this
Assignment constitutes the valid and binding obligation of
the Assignee, enforceable against it in accordance with its
terms, except insofar as enforcement of terms may be
limited by any bankruptcy, insolvency, reorganization,
fraudulent conveyance, receivership and other similar laws
and judicial decisions of general application relating to
or affecting the enforcement of creditors' rights, and by
general equitable principles (whether considered in a
proceeding at law or in equity).
(b) The Assignee is an institution which is an
"accredited investor" within the meaning of Rule 501 under
the Securities Act of 1933, as amended (the "Act"). The
Assignee has such knowledge of finance and investments as
to be capable of evaluating the merits and risks of the
purchase of the Notes and the Assigned Interests.
(c) The Assignee is acquiring the Notes and the
Assigned Interests from the Assignors for its own account
and not with a view to the distribution or resale of the
Notes and the Assigned Interests, or any portion thereof in
violation of the Act (it being understood, however, that
the disposition of the Assignee's property shall at all
times be within its control).
(d) The Assignee acknowledges that the Notes and the
Assigned Interests have not been registered under the Act
or the securities or "Blue Sky" laws of any jurisdiction
and agrees that, to the extent the Act or such laws are
applicable, in the absence of such registration, the Notes
and the Assigned Interests will be sold or disposed of only
pursuant to an exemption from such registration
requirements under the Act and such laws.
(e) The Assignee confirms that it has received a copy
of the Credit Agreement, together with such other
documents, including without limitation, the Security
Documents and the other Loan Documents listed on Schedule
A, and information as it has deemed appropriate to make its
own credit analysis and decision to enter into this
Assignment and agrees that it shall have no recourse
against either Assignor with respect to any matters
relating to the Credit Agreement or Security Document or
any other Loan Document or this Assignment except for a
breach by such Assignor of any of its representations and
warranties set forth in Section 1.4 herein.
1.6 Representations and Warranties of Borrower and the
Guarantors
Each of Borrower and the Guarantors represents and warrants
to the Assignee and the Assignors as follows:
(a) Each of this Assignment, the Security Documents
and the other Loan Documents to which it is a party
constitutes its valid and binding obligation, enforceable
against it in accordance with its terms, except insofar as
enforcement of terms may be limited by any bankruptcy,
fraudulent conveyance, and other similar laws and judicial
decisions of general application relating to or affecting
the enforcement of creditors' rights, and by general
equitable principles (whether considered in proceeding at
law or in equity).
(b) It has not assigned its rights or obligations
under the Credit Agreement, the Security Documents or the
other Loan Documents.
(c) The aggregate principal balance outstanding on
each Note as of the date hereof is set forth on Schedule B
and all accrued interest on the Notes has been paid through
the date hereof. No Assignor has forgiven or discharged, in
the absence of payment thereof, any liability of Borrower
evidenced by any Note.
(d) Except for the obligations set forth in the
Notes, the Security Documents, and the other Loan
Documents, it does not have any other obligation, liability
or contractual arrangement with the Assignors.
(e) Schedule A attached hereto (and Schedule A
attached to the Parallel Assignments) contains a complete
list of all currently effective credit agreements,
promissory notes, mortgages, deeds of trust, security
agreements, guaranty agreements, and financing statements
evidencing, securing and guaranteeing the indebtedness
evidenced by the Notes.
(f) All of the indebtedness described in the Credit
Agreement has been assigned to the Assignee by this
Assignment.
(g) It has affirmed, acknowledged and confessed all
of its obligations under the Credit Agreement, the Security
Documents, and the other Loan Documents. It has no right
of offset or other defense to any of its indebtedness,
obligations or other liabilities under the Credit
Agreement, the Security Documents and the other Loan
Documents.
(h) The Recitals are true and correct.
(i) All the Oil and Gas Properties currently
encumbered by liens and security interests in favor of
Assignors securing the indebtedness and obligations
evidenced by the Notes, the Guarantees, the other Security
Documents or the other Loan Documents, are described in and
are covered by the Security Documents listed on Schedule A
attached hereto (and Schedule A attached to the Parallel
Assignments) contains and each such Schedule A accurately
lists the recording information relating to recordation of
such Security Documents.
(j) Except for such releases, if any, that are
described on the Certificate described in Section 1.4(g),
neither Union Bank individually or as Agent nor Den Norske
has released or agreed to release any of the security
interest or liens created by the Security Documents.
(k) It has no knowledge of any pending or threatened
adverse claims by any person or entity against the Oil and
Gas Properties and no knowledge of any pending or
threatened claims by any person or entity challenging,
contesting or otherwise adversely affecting the validity or
enforceability of the Notes or any of the Loan Documents or
the validity, priority or enforceability of the liens and
security interests created by the Security Documents or any
of the Loan Documents.
(l) Nothing herein shall, and nothing herein shall be
construed to, adversely affect or impair any lien, charge,
encumbrance or security interest created under the Security
Documents or any of the other Loan Documents or the
priority thereof or release, adversely affect or impair its
liability pursuant to the Security Documents or the other
Loan Documents, and all liens, charges, encumbrances and
security interests created under the Security Documents and
the other Loan Documents have been and are hereby ratified,
affirmed, renewed, extended and carried forward and shall
continue to secure the payment and performance of and in
all respects benefit the holders of the Foothill
Obligations.
(m) It requested that Lenders purchase the Note, that
Lenders are purchasing the Notes as an accommodation to it,
that it is benefited, directly and indirectly, by the
purchase of the Notes by Lenders, and that it is in its
best interests for Lenders to purchase the Notes.
1.7 Reserved Obligations.
Notwithstanding any other provision hereof or in any other
agreement, Borrower shall remain fully liable to the Assignors
with respect to (i) all of its obligations and liabilities
regarding indemnification and reimbursement of fees and expenses
pursuant to the Credit Agreement, and (ii) all payments
heretofore or concurrently made by Borrower under or pursuant to
the Credit Agreement or any other Loan Document (collectively,
the "Reserved Obligations"), and such Reserved Obligations shall
be excepted and reserved by the Assignors from the rights,
titles and interests assigned by them to the Assignee hereunder.
Borrower hereby affirms its obligations and liabilities in favor
of the Assignors under the Credit Agreement regarding
indemnification and reimbursement of fees and expenses set forth
in the Credit Agreement. Notwithstanding the reservation in this
Section 1.7 by Assignors, it is the intent of Assignors,
Assignee, Borrower and the Guarantors that the Reserved
Obligations SHALL NOT BE SECURED by any of the Security
Documents or the other Loan Documents. Accordingly, Assignors
hereby expressly waive, release and assign in favor of and to
the Assignee any and all rights that Assignors may have to
establish or enforce any lien, security interest, mortgage,
guarantee or assignment or other encumbrance under any of the
Security Documents or the other Loan Documents which may now
secure Borrower's or any Guarantor's obligations and
indebtedness to Assignors with respect to the Reserved
Obligations; provided, however, that nothing herein shall be
construed to limit in any way the rights of Assignee which
Assignee may now or hereafter have in the Credit Agreement or
any other document transferred to Assignee hereunder or in the
Amended and Restated Loan and Security Agreement.
1.8 Releases.
To induce the Assignors to sell, and the Assignee to
purchase, the Notes and the rights under the Loan Documents,
except for those rights specifically reserved herein, at the
special insistence and request of the Assignee and the
Assignors, and for other good and valuable consideration, the
receipt and sufficiency of which is hereby acknowledged, each of
Borrower and each Guarantor hereby fully releases and discharges
each Assignor and its successors and assigns, including but not
limited to the Assignee, and their respective officers,
directors, employees, representatives, agents and affiliates,
from all claims, demands, causes of action, liabilities or other
obligations of any kind whatsoever, including, without
limitation, offsets, reductions, rebatements or claims of usury,
known or unknown, whether now existing or hereafter asserted in
connection with the Notes, the Credit Agreement, the Guarantees,
the other Security Documents and the other Loan Documents
arising from matters occurring before the date of this
Assignment. Borrower hereby further releases each of the
Assignors from any of its obligations and commitments under the
Credit Agreement and the other Loan Documents, if any.
NOTWITHSTANDING ANYTHING TO THE CONTRARY HEREIN, NOTHING
HEREIN SHALL BE CONSTRUED AS AN EXTINGUISHMENT OR NOVATION OR
OTHER SATISFACTION OF THE INDEBTEDNESS EVIDENCED BY THE NOTES OR
THE INDEBTEDNESS, OBLIGATIONS, LIABILITIES OF BORROWER AND THE
GUARANTORS EVIDENCED BY OR ARISING UNDER THE LOAN DOCUMENTS.
SECTION 2
AMENDMENTS TO MORTGAGES
2.1 Amendments to Mortgages. In connection with and in
furtherance of the assignment by Assignors to Assignee of the
Notes and the Loan Documents (including, without limitation, the
Mortgages) as described in Section 1.1 of this Assignment,
Borrower, the Guarantors hereby agree with Assignee to amend,
effective as of the date hereof, and hereby amend as of the date
hereof, each of the Mortgages included in the Assigned Interests
to which Borrower or such Guarantor is a party as follows:
(a) All references in the Mortgages to "Credit
Agreement" or otherwise referring to the Credit Agreement
shall now and hereafter refer to and be deemed to
references to the Amended and Restated Loan and Security
Agreement.
(b) All references in the Mortgages to "Banks" or
otherwise referring to Union Bank or Den Norske shall now
and hereafter refer to and be deemed references to the
Lenders.
(c) All references in the Mortgages to "Trustee"
shall now and hereafter refer to and be deemed references
to the following person with the following mailing address:
▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, Esq.
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
(d) All references in the Mortgages to "Mortgagee" or
"Secured Party" or otherwise referring to Union Bank as the
agent for the "Banks" under the Credit Agreement shall now
and hereafter refer to and be deemed references to Assignee
as Agent for the Lenders, and shall also be deemed to
include the mailing address of Assignee, which is as
follows:
Foothill Capital Corporation, Agent
▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇-▇▇▇▇
(e) All references in the Mortgages to "Default Rate"
shall now and hereafter be deemed references to the default
rate as calculated under the Amended and Restated Loan and
Security Agreement.
(f) All references in the Mortgages to "Notes" or
otherwise referring to the promissory notes whose payment
is secured by the lien created by such Mortgage shall now
and hereafter be deemed references to the Notes described
in the Recitals to this Assignment.
(g) All references in the Mortgages to "Article IV of
the Credit Agreement" shall now and hereafter be deemed
references to Section 5 of the Amended and Restated Loan
and Security Agreement.
(h) All references in the Mortgages to "Obligations"
or "Indebtedness" or otherwise referring to the
indebtedness, obligations and liabilities whose payment and
performance are secured by the lien created by such
Mortgage shall now and hereafter be deemed references to
the Foothill Obligations.
(i) All references in the Mortgages to "Guaranty" or
otherwise referring to any guarantee agreement executed by
a Guarantor in favor of the Assignors shall now and
hereafter be deemed to also include references to any
"Guaranty Agreements" (as defined in the Amended and
Restated Loan and Security Agreement) executed by such
Guarantor.
(j) That certain Mortgage, Deed of Trust, Security
Agreement and Financing Statement executed by ▇▇▇▇▇▇ Field
to ▇▇▇▇ ▇. ▇▇▇▇▇, Trustee, for the benefit of Union Bank of
California, N.A., as agent, and recorded respectively (x)
on June 10, 1998 as Document No. 015889, in Book 535, Page
211, of the relevant real property records of Alfalfa
County, Oklahoma, (y) on March 26, 1998, as Document No.
51790, in Book 1452, Page 105 of the relevant real property
records of Major County, Oklahoma, and (z) on March 26,
1998, as Document No. 3162-2 in Book 849, Page 339, of the
relevant real property records of ▇▇▇▇▇ County, Oklahoma,
is hereby amended so that all references in such document
to "Mortgagor" shall be deemed to be references to the
"Debtor" as defined in such document and all references in
such document to "Mortgagor's" shall be deemed to be
references to "Debtor's".
(k) All references in the Mortgages to "Debtor" or
"Mortgagor" shall be deemed to include the mailing address
of Debtor or Mortgagor, as the case may be, which is as
follows:
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ Drive
Tulsa, Oklahoma 74135
(l) In addition to the other provisions of each
Mortgage, Borrower and the Guarantors hereby agree with
Assignee that in any case where a respective Mortgage
contains a non-judicial power of sale or is otherwise
identified as or is intended to create a "deed of trust" or
grants certain rights and powers to a "Trustee", that the
following statements shall be true of such Mortgage and are
hereby incorporated into such Mortgage:
(i) Such Mortgage shall be effective as a
mortgage as well as a deed of trust, and upon the
occurrence of an Event of Default may be foreclosed as
to the "Collateral" or the "Mortgaged Property", as
the case may be, in any manner permitted by the laws
of the state in which the Collateral or the Mortgaged
Property, as the case may be, is situated;
(ii) Any foreclosure suit may be brought by
Trustee or Secured Party;
(iii) If a foreclosure is commenced by
Trustee, Secured Party may, at any time before the
sale, direct the Trustee to abandon the sale, and may
then institute suit for the collection of the Foothill
Obligations, and for the foreclosure of enforcement of
the assignments, liens, and security interests created
under such Mortgage;
(iv) If Secured Party should institute a
suit for the collection of the Foothill Obligations,
and for a foreclosure or enforcement of the
assignments, liens, and security interests created
under such Mortgage, it may, at any time before the
entry of a final judgment in said suit, dismiss the
same, and require Trustee to sell the Collateral or
the Mortgaged Property, as the case may be, or any
part thereof, in accordance with the provisions of
such Mortgage; and
(v) With respect to any such Mortgage
covering the Mortgaged Property or Collateral situated
in the state of Oklahoma:
(a) The following provision is
hereby added to such Mortgage:
"A POWER OF SALE HAS BEEN GRANTED IN THIS
MORTGAGE, A POWER OF SALE MAY ALLOW THE
MORTGAGEE TO TAKE THE MORTGAGED PROPERTY AND
SELL IT WITHOUT GOING TO COURT IN A
FORECLOSURE ACTION UPON DEFAULT BY THE
MORTGAGOR UNDER THIS INSTRUMENT"
(b) In addition to, and not in
limitation of, any other remedy provided for in
such Mortgage or by applicable law, in connection
with such Mortgage Borrower and the Guarantors
hereby grant to, and confer upon, Assignee as the
relevant Secured Party a power of sale pursuant
to the Oklahoma Power of Sale Mortgage
Foreclosure Act, Title 46, Sections 40-48 of the
Oklahoma Statutes (the "Oklahoma Act") and any
future amendments thereof or under any future law
granting the same or similar rights, conferring
on the Secured Party pursuant to Title 46,
Section 43D, the option to elect to foreclose
upon the Mortgaged Property or the Collateral, as
the case may be, in the manner provided in
Section 686 of Title 12 of the Oklahoma Statutes.
Upon the occurrence and during the continuance of
an Event of Default or if any of the Secured
Obligations shall become due and payable, and
Mortgagor shall not promptly pay the same,
Secured Party is expressly authorized and
empowered to proceed in accordance with the
provisions of the Oklahoma Act or other future
law to have the Mortgaged Property sold, or
Secured Party may, at its option, exercised at
any time prior to completion of the sale,
institute suit to foreclose this Mortgage in any
court having jurisdiction. Secured Party is
expressly authorized and empowered to sell the
Mortgaged Property as an entirety or in such
lots, parcels or divisions as the Secured Party
may elect, but subject always to any right which
Mortgagor may have by law to suggest the lots,
parcels or divisions in which such Mortgaged
Property is to be sold. Notwithstanding anything
contained in this Mortgage to the contrary, any
notices of sale given in accordance with the
requirements of the Oklahoma Act shall constitute
sufficient notice of sale. The conduct of a sale
pursuant to a power of sale shall be sufficient
hereunder if conducted in accordance with the
requirements of the Oklahoma Act and other
applicable laws of the State of Oklahoma in
effect at the time of such sale, notwithstanding
any other provision contained in this instrument
to the contrary. The proceeds of any sale of the
Mortgaged Property pursuant to the power of sale
herein granted shall be applied in accordance
with the Oklahoma Act and any other applicable
laws of the State of Oklahoma in effect at the
time of such sale. In the event of conflict
between the provisions hereof and the Oklahoma
Act, the Oklahoma Act shall control. Sale of a
part of the Mortgaged Property shall not exhaust
the power of sale, but sales may be made from
time to time until the Secured Obligations are
paid in full. If default is made in the payment
of any installment of any of the Secured
Obligations, Secured Party may, at its option, at
once or at any time thereafter while any matured
installment remains unpaid, without declaring all
of the entire Secured Obligations to be due and
payable, enforce the power of sale created by
this instrument and sell all or any portion of
the Mortgaged Property in satisfaction of such
matured Secured Obligations. Sales made without
maturing any of the unmatured balance of the
Secured Obligations may be made hereunder
whenever there is a default in the payment of any
installment of any of the Secured Obligations
without exhausting the power of sale granted
hereby and without affecting in any way the power
of sale granted under this Section, the unmatured
balance of any of the Secured Obligations (except
as to any proceeds of any sale which Secured
Party may apply as prepayment of the
Indebtedness), or the liens securing payment of
the Secured Obligations. If any questions should
be raised as to the regularity or validity of any
sale hereunder, Secured Party shall have the
right and is hereby authorized to make resale of
said property so as to remove any questions or
doubt as to the regularity or validity of the
previous sale, and as many resales may be made as
may be appropriate.
(c) The following provision is
hereby added to such Mortgage:
"If this Mortgage is foreclosed by judicial
proceedings, appraisement of the Mortgaged
Property is hereby expressly waived or not
waived at the option of Secured Party, such
option to be exercised at or prior to the
time judgment or decree of foreclosure is
rendered. Mortgagor, for the considerations
herein expressed, does hereby expressly
waive all benefit of the homestead,
exemption and stay laws of the State of
Oklahoma."
2.2 Reaffirmation of Mortgages. Borrower, the Guarantors
and the Assignee hereby acknowledge and agree that except as
specifically amended, changed or modified by this Assignment,
each of the Mortgages included in the Assigned Interests shall
remain in full force and effect in accordance with its terms.
None of the rights, titles and interests existing and to exist
under the Mortgages as amended are hereby released, diminished
or impaired and each of Borrower and the Guarantors hereby
reaffirms all covenants, representations and warranties made in,
and the indebtedness, liabilities and obligations described in,
each such Mortgage included in the Assigned Interests to which
it is a party, as such Mortgage is amended by this Assignment.
SECTION 3
MISCELLANEOUS
3.1 Further Assurances.
Each of the Assignors, Borrower and the Guarantors agrees
that it will promptly, upon reasonable request of the Assignee
and at the sole expense of Borrower and the Guarantors, execute
and deliver all such other documents in form satisfactory to
Assignee and its legal counsel, and take such other action
satisfactory to Assignee and its legal counsel as may be
reasonable and necessary to fully effectuate the provisions of
this Assignment.
3.2 Taxes, Etc.
Except to the extent prohibited by applicable law, Borrower
and the Guarantors agree to pay or to cause to be paid all
governmental assessments, charges or taxes (excluding federal,
state or local income taxes), including any stamp or documentary
or mortgage registration or other excise or property taxes and
any interest or penalties on any such assessments, charges or
taxes, at any time payable or ruled to be payable in respect of
the execution or delivery of this Assignment by reason of any
federal, state or local, statutory or regulatory provision in
force on the date hereof, or in accordance with a specific
proposal for the amendment of, or enactment of, any such
statutory or regulatory provision published on or before the
date hereof which is thereafter enacted in material conformity
to the form published and any taxes, levies, imports,
assessments or charges imposed in replacement of or in
substitution for any of the foregoing and which are
substantially similar thereto (collectively, the "Tax"), and to
indemnify, defend and hold the Assignors and the Assignee
harmless against liability in connection with any such Taxes.
3.3 Successors and Assigns.
This Assignment shall be binding upon the parties hereto
and their respective successors and assigns.
3.4 Counterparts.
This Assignment is being executed in several counterparts.
All of such counterparts together shall constitute on and the
same instrument.
3.5 Governing Law.
Without regard to principles of conflict of laws, this
Assignment shall be construed and enforced in accordance with
and governed by the internal laws of the State of California,
except to the extent the laws of some other jurisdiction are
required to be applied in connection with or in order to
preserve the validity of this Assignment or the relevant Loan
Document, including without limitation the validity and creation
of any Lien created under this Assignment or such Loan Document,
the priority of any Lien created under this Assignment or such
Loan Document, and the exercise or enforcement of any rights and
remedies under this Assignment or such Loan Document.
3.6 Recording. In order to facilitate filing and
recording of this Assignment in each county or parish described
in each Schedule and/or Annex attached hereto, a counterpart of
this Assignment with only those portions of Exhibit "A" attached
that relate to properties located in any such county or parish
has been furnished for recording in such county or parish, and
such counterpart shall be effective to the same extent as if it
were a complete original counterpart of this Assignment. A
counterpart of this Assignment with a complete Exhibit "A" has
been retained by Assignee and is available for inspection or
copying upon request.
IN WITNESS WHEREOF, the parties have caused this
Assignment to be executed by their duly authorized officers
effective as of the date first above written.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
THUS DONE AND PASSED this ____ day of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Union Bank and me,
Notary, after reading of the whole.
WITNESSES: UNION BANK OF CALIFORNIA, N.A.
Name:
By:
Name: Name
Title:
STATE OF TEXAS
COUNTY OF
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of
Union Bank of California, N.A., a national banking association.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ day of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Den Norske and me,
Notary, after reading of the whole.
WITNESSES: DEN NORSKE BANK, ASA
By: _________________________________
Name: Name:___________________________
Title:
____________________________
By:
Name: Name:
Title:
▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇ ▇▇ ▇▇▇ ▇▇▇▇
▇▇ the ____ day of December, in the year 1999, before me
personally came ________________________________ to me known,
who, being by me duly sworn, did depose and say that he resides
in __________________, that he is the ___________________ of Den
Norske Bank, ASA, the corporation described on and which
executed the above instrument, and that he signed his name
thereto by authority of the board of directors of such
corporation, and before me personally also came
___________________ to me known, who, being by me duly sworn,
did depose and say that he resides in __________________, that
he is the ____________ of Den Norske Bank, ASA, the corporation
described on and which executed the above, and that he signed
his name thereto by authority of the board of directors of such
corporation.
NOTARY PUBLIC, State of New York
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Assignee and me,
Notary, after reading of the whole.
WITNESSES: FOOTHILL CAPITAL CORPORATION,
as Agent, a California corporation
Name:
By:
Name: Name:
Title:
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of
Foothill Capital Corporation, a California corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with Borrower and me,
Notary, after reading of the whole.
WITNESSES: RAM ENERGY, INC.
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of RAM
Energy, Inc., a Delaware corporation
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with RLP and me, Notary,
after reading of the whole.
WITNESSES: RLP Gulf States, L.L.C., an
Oklahoma limited
liability company
By: RAM Energy, Inc., a
Name: Delaware corporation, as
its sole Member and sole
Manager
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of RAM
Energy, Inc., a Delaware corporation, for itself and as the sole
Manager and sole Member of RLP Gulf States, L.L.C., an Oklahoma
limited liability company.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with MCE and me, Notary,
after reading of the whole.
WITNESSES: MAGIC CIRCLE ENERGY CORPORATION,
a Delaware corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________________, as _______________ of
Magic Circle Energy Corporation, a Delaware corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with CDC and me, Notary,
after reading of the whole.
WITNESSES: ▇▇▇▇▇▇ DEVELOPMENT CORPORATION,
an Oklahoma corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by ___________________, as _____________ of ▇▇▇▇▇▇
Development Corporation, an Oklahoma corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with MCA and me, Notary,
after reading of the whole.
WITNESSES: MAGIC CIRCLE ACQUISITION
CORPORATION, an Oklahoma
corporation
Name:
By:
Name: ▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December __,
1999, by ________________________, as _______________ of Magic
Circle Acquisition Corporation, an Oklahoma corporation.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
THUS DONE AND PASSED this ___ of December, 1999, in my
presence and in the presence of the undersigned competent
witnesses who hereunto sign their names with CFL and me, Notary,
after reading of the whole.
WITNESSES: ▇▇▇▇▇▇ FIELD LIMITED PARTNERSHIP,
an Oklahoma limited partnership
Name: By:▇▇▇▇▇▇ Development Corporation,
an Oklahoma corporation, its sole
General Partner
Name: By:
▇▇▇▇▇ ▇. ▇▇▇
President
STATE OF TEXAS
COUNTY OF DALLAS
This instrument was acknowledged before me on December ___,
1999, by _____________________, as ___________ of ▇▇▇▇▇▇
Development Corporation, an Oklahoma corporation, for itself and
acting as the sole general partner of ▇▇▇▇▇▇ Field Limited
Partnership, an Oklahoma limited partnership.
NOTARY PUBLIC, State of Texas
My commission expires:
[SEAL]
EXHIBIT 6.2
TO AMENDED AND RESTATED LOAN AND SECURITY AGREEMENT
Dated as of December 27, 1999, by and among Ram Energy, Inc., the
Lenders (Defined Therein), and Foothill Capital Corporation, as Agent
FORM OF BORROWING BASE CERTIFICATE
Ram Energy
Form of Borrowing Base Certificate as of 12/26/99
Advances to Borrower at any one time shall not exceed an amount equal
to the lesser of:
I. "Maximum Amount": $30,000,000
(or)
II. The "Borrowing Base" less the aggregate amount
of the "Reserves Against Availability":
(or)
III. the "Unsecured Note Indebtedness Limitation" $25,000,000
----------------------------------------------------------------------------
II. The "Borrowing Base" less the aggregate amount
of the "Reserves Against Availability":
The "Borrowing Base is:
Proved Developed Producing Reserves as of 11/30/99:
Less Ineligible Proved Developed Producing Reserves:
Eligible Proved Developed Producing Reserves:
Advance Rate 45%
Availability prior to "Reserves Against Availability"
"Reserves Against Availability include:
LSA Def.
--------
(a) Accounts Payable Greater than 90 Days from Invoice -
(b) Past Due Taxes or other governmental charges: -
(d) 180 Day Rent Reserve
(c,e,f) Breakdown in LSA: -
(g) Amounts owed by Borrower subject to Liens: -
(h) Reserves for Gas/Oil Imbalances -
(I) Reserves for production payments due to Duke Energy-
Sub-total of Reserves
Availability after Reserves