EXHIBIT 10.3(C)
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THIRD AMENDMENT TO CREDIT AGREEMENT
BY AND BETWEEN GMX RESOURCES, INC.
AND LOCAL OKLAHOMA BANK, N.A.
THIS THIRD AMENDMENT TO CREDIT AGREEMENT (the "Amendment") is executed
to be effective as of the 16th day of August, 2002 by and between GMX RESOURCES
INC., an Oklahoma corporation, ENDEAVOR PIPELINE INC., an Oklahoma corporation,
and EXPEDITION NATURAL RESOURCES INC., an Oklahoma corporation (the "Borrowers")
and LOCAL OKLAHOMA BANK, N.A. (the "Bank").
W I T N E S S E T H:
WHEREAS, effective October 31, 2000 Borrowers and Bank entered into
that certain Credit Agreement (the "Original Agreement") whereby Bank provided
Borrowers with a revolving line of credit in an amount governed by a Borrowing
Base which shall not exceed $15,000,000.00, as evidenced by reducing revolving
promissory note with a stated like amount of even date with the Original
Agreement (the "Original Note").
WHEREAS, as of June 18, 2001, Borrowers and Bank amended the Original
Agreement for the first time (the "First Amendment") in order to permit certain
preferred stock dividends and to evidence certain other changes as set forth
therein.
WHEREAS, as of May 28, 2002, Borrowers and Bank amended the Original
Agreement as amended by the First Amendment for the second time (the "Second
Amendment") in order to increase the rate of interest, include a termination
fee, alter the reporting requirements and to make such additional changes as are
set forth therein (the Original Agreement as amended by the First and Second
Amendment is referred to herein as the "Agreement").
WHEREAS, the obligations described in the Agreement are secured by,
among other things not specifically set forth herein, certain oil and gas
properties and other properties as set forth in the Agreement; and
WHEREAS, all capitalized terms not otherwise defined herein shall have
those meanings assigned to such terms in the Agreement;
WHEREAS, Borrowers and Bank desire to amend the Agreement for the third
time in order to evidence such changes to the Agreement as more particularly set
forth herein;
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrowers and the Bank hereby
agree to amend the Agreement as follows:
A. CHANGES TO THE AGREEMENT
1. Section 7.1 of the Agreement, Adjusted Current Ratio, Section 7.2 of
the Agreement, Debt Service Coverage Ratio, and Section 7.3 of the Agreement,
Indebtedness to Tangible Net Worth, are hereby amended and restated in their
entirety as follows:
7.1 Adjusted Current Ratio. Beginning with the month ending July 31,
2002, maintain a minimum Adjusted Current Ratio, calculated and
submitted on a monthly basis of, at least, 1.00:1.00. The "Adjusted
Current Ratio" is defined as Current Assets plus the Available
Commitment divided by Current Liabilities, minus any liabilities
resulting from "xxxx-to-market" accounting treatment for hedging
contracts, minus any balance outstanding on this credit facility that
would otherwise be accounted for as a Current Liability.
7.2 Debt Service Coverage Ratio. Beginning with the month
ending July 31, 2002, maintain a Debt Service Coverage Ratio,
calculated and submitted on a monthly basis, of not less than
1.10:1.00 For purposes of this calculation, the Debt Service Coverage
Ratio is defined as the quotient of:
the sum of consolidated Net Income, minus dividends, plus
interest, depletion, depreciation, and amortization expenses
(for the month then ended),
DIVIDED BY
the greater of (i) sum of the monthly principal reductions
required to amortize the Loan Balance (as of month end) over
the Half Life of the Borrowers' Oil and Gas Properties (not to
exceed 84 months) or (ii) the actual Monthly Commitment
Reductions realized during the month then-ended, plus interest
expense for the month then ended, plus any other current
maturities of long term debt (including Capital Lease
Obligations) realized during the month then ended.
7.3 Indebtedness to Tangible Net Worth Ratio. Beginning with
the monthly reporting period ending July 31, 2002 and calculated and
submitted on a monthly basis thereafter, maintain a ratio of
Indebtedness to Tangible Net Worth of not more than 1.50:1.00.
B. REPRESENTATIONS AND WARRANTIES
Each Borrower hereby represents and warrants to Bank that:
1 Each Borrower is a corporation, duly organized, legally
existing, and in good standing under the laws of the State of Oklahoma, and is
duly qualified as a foreign corporation and in good standing in all other states
wherein the nature of its business or its assets make such qualification
necessary.
2. Each Borrower's execution and delivery of this Amendment
and performance of its obligations hereunder: (a) are and will be within its
powers; (b) are duly authorized by its board of directors; (c) are not and will
not be in contravention of any law, statute, rule or regulation, the terms of
its articles or incorporation and bylaws, nor of any agreement or undertaking to
which any Borrower or any of its properties are bound; (d) do not require any
consent or approval (including governmental) which has not been given; and (e)
will
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not result in the imposition of liens, charges or encumbrances on any of its
properties or assets, except those in favor of Bank hereunder.
3. This Amendment, when duly executed and delivered, will
constitute the legal, valid and binding obligations of Borrowers, enforceable in
accordance with its terms.
4. All financial statements, balance sheets, income statements
and other financial data which have been or are hereafter furnished to Bank by
Borrowers to induce Bank to make the loans hereunder due, and as to subsequent
financial statements will, fairly represent each Borrower's financial condition
as of the dates for which the same are furnished. All such financial statements,
reports, papers and other data furnished to Bank are and will be, when
furnished: prepared in accordance with generally accepted accounting principles
consistently applied; accurate and correct in all material respects; and
complete insofar as completeness may be necessary to give Bank a true and
accurate knowledge of the subject matter. Since the date of the last such
financial statements, no material adverse change has occurred in the operations
or condition, financial or otherwise and other financial data provided to Bank;
of any Borrower, nor, to the best of their knowledge, has any Borrower incurred,
any material liabilities or made any material investment or guarantees, direct
or contingent, in any single case or in the aggregate, which has not been
disclosed to Bank.
5. The Borrowers are the sole and lawful owner of the
Collateral, pledged, mortgaged or assigned by it, and Borrowers have, and as to
after acquired property or new properties will have, good right to cause the
Collateral to be hypothecated to Bank as security for the obligations described
in the Agreement, as amended hereby. Further, the ownership interests set forth
in that certain Engineering Report dated March 19, 2002 from Xxxxxxx Associates,
Inc. purported to be owned by Borrowers, or any one of them, are true and
correct and Borrowers do, in fact, own such interests in such Collateral.
6. The Collateral set forth on that certain Engineering Report
dated March 19, 2002 from Xxxxxxx Associates, Inc. are free and clear of all
mortgages, liens and encumbrances, except for Permitted Liens and liens in favor
of Xxxx Pressure Control, Inc. and Xxxxxx Drilling USA, LP which will be paid
with proceeds of the Loan. Further, Borrowers have no invoices for labor related
to such properties or materials provided to such properties which have not been
paid within 90 days from the date such invoice is due and payable.
7. All of each Borrower's other representations and warranties
set forth in Section 8 of the Agreement, Representations and Warranties, are
true and correct on and as of the date hereof with the same effect as though
made and repeated by such Borrower as of the date hereof.
C. CONDITIONS
Bank's obligations under the Agreement, as hereby amended, are subject
to the following conditions:
1. Bank and Borrowers shall have executed and delivered this
Amendment.
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2. Borrowers shall, or will from time to time, have executed
such additional mortgages, deeds of trust, financing statement and such
other documents as are deemed necessary by Bank in order to perfect a
lien in favor of Bank in and to those Oil and Gas Properties necessary
to achieve the percentages required by the covenants set forth herein.
3. Each Borrower's representations and warranties set forth in
Section B hereof shall be true and correct on and as of the date
hereof, and the date of any subsequent advance with the same effect as
though such representation and warranty had been on and as of such
date.
4. Borrowers shall have satisfied all conditions set forth in
the Agreement.
5. As of the date hereof, and the date of any subsequent
Advance, no Event of Default nor any event which, with the giving of
notice or lapse of time, would constitute an Event of Default shall
have occurred and be continuing.
D. OTHER COVENANTS AND MISCELLANEOUS TERMS
1. Borrowers hereby agree to provide such additional mortgages
and title work pertaining to the Oil and Gas Properties to Bank's satisfaction
within thirty (30) days of any such request by Bank.
2. Except as expressly amended and supplemented hereby, the
Agreement shall remain unchanged and in full force and effect, and the same is
hereby ratified and extended.
8. The obligations described in the Agreement, as amended
hereby, including but not limited to the indebtedness evidenced by the Note
executed in conjunction with the Agreement, shall continue to be secured by the
Collateral, without interruption or impairment of any kind.
9. Borrowers agree to execute such additional mortgages, deeds
of trust and/or amendments to such documents already in place as Bank deems
necessary to adequately secure the loan at any time and from time to time
hereafter.
10. The Borrowers hereby agree to pay all reasonable attorney
fees and legal expenses incurred by Bank in preparation, execution and
implementation of this Amendment and any mortgages, guaranty agreements,
subordination agreements, deeds of trust, security agreements, pledge agreements
or any amendments thereto.
11. This Amendment shall be construed in accordance with and
governed by the laws of the State of Oklahoma, and shall be binding on and inure
to the benefit of the Borrower and Bank, and their respective successors and
assigns. All obligations of the Borrowers under the Agreement and all rights of
Bank and any other holder of the Note, whether expressed herein or in any Note,
shall be in addition to and not in limitation of those provided by applicable
law. Borrowers irrevocably agree that, subject to Bank's sole election, all
suits or proceedings arising from or related to the Agreement, as amended, or
the Note may be litigated
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in courts (whether State or Federal) sitting in Oklahoma City, Oklahoma, and the
Borrowers hereby irrevocably waives any objection to such jurisdiction and
venue.
12. This Amendment may be executed in as many counterparts as
are deemed necessary or convenient, and it shall not be necessary for the
signature of more than any one party to appear on any single counterpart. Each
counterpart shall be deemed an original, but all shall be construed together as
one and the same instrument. The failure of any party to sign shall not affect
or limit the liability of any party executing any such counterpart.
BORROWERS:
GMX RESOURCES INC.,
an Oklahoma corporation
/s/ Xxx X. Xxxxxxxxx, Xx.
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By: Xxx X. Xxxxxxxxx, Xx.
Title: Chief Financial Officer
ENDEAVOR PIPELINE INC.,
an Oklahoma corporation
/s/ Xxx X. Xxxxxxxxx, Xx.
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By: Xxx X. Xxxxxxxxx, Xx.
Title: Chief Financial Officer
EXPEDITION NATURAL RESOURCES INC.,
an Oklahoma corporation
/s/ Xxx X. Xxxxxxxxx, Xx.
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By: Xxx X. Xxxxxxxxx, Xx.
Title: Chief Financial Officer
BANK:
LOCAL OKLAHOMA BANK, N.A.
/s/ Xxxx X. Xxxx, Xx.
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By: Xxxx X. Xxxx, Xx.
Title: Senior Vice President
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