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FIRST AMENDMENT TO RESTATED LOAN AGREEMENT
THIS FIRST AMENDMENT TO RESTATED LOAN AGREEMENT (hereinafter referred to
as the "Agreement") executed the 31st day of October, 1996, by and among
NATIONAL ENERGY GROUP, INC., a Delaware corporation ("Borrower"), NATIONAL
ENERGY GROUP OF OKLAHOMA, INC. (formerly known as NEG-OK, Inc.), a Delaware
corporation ("OK"), BOOMER MARKETING CORPORATION, an Oklahoma corporation
("Boomer") (OK and Boomer are hereinafter collectively referred to as
"Guarantors") and BANK ONE, TEXAS, N.A., a national banking association ("Bank
One") and CREDIT LYONNAIS NEW YORK BRANCH ("Credit Lyonnais") and each of the
financial institutions which may from time to time become a party hereto or
any successor or assignee thereof (hereinafter collectively referred to as
"Banks", and individually as "Bank") and Bank One, as "Administrative Agent"
and Credit Lyonnais as "Syndication Agent."
W I T N E S S E T H:
WHEREAS, Borrower, Guarantors, Banks and Agent entered into a Restated
Loan Agreement, dated as of August 29, 1996 (the "Loan Agreement") under the
terms of which the Banks agreed to provide the Borrower with a reducing
revolving line of credit facility in an amount of up to $100,000,000 and a term
loan in an amount of up to $5,000,000; and
WHEREAS, the Borrower, the Guarantors and the Banks have agreed to amend
the Loan Agreement to make certain changes thereto.
NOW, THEREFORE, the parties hereto agree to amend the Loan Agreement as
follows:
1. Section 1 of the Loan Agreement is hereby amended in the
following respects:
(a) The definitions of Cash Flow and Debt Service Coverage
Ratio shall be deleted in their entirety.
(b) The following new definitions shall be added thereto:
"EBITDA" shall mean earnings for any period before
provision for interest expense, income taxes, depreciation,
depletion and amortization for such period, as determined in
accordance with GAAP."
"Minimum Interest Coverage Ratio" shall mean the ratio of
EBITDA to the sum of Total Interest Expense plus any preferred
stock dividends paid in cash during the period being measured."
"Total Interest Expense" shall mean Borrower's total
interest expense for any period, as determined in accordance with
GAAP."
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2. Section 7(b) of the Loan Agreement is hereby amended by the
addition of the following new sentence to the end thereof:
"If the Borrower is ever required to purchase or redeem any of
the notes issued by Borrower pursuant to that certain Indenture (the
"Indenture") dated as of November 1, 1996 by and among Borrower, OK
and Bank One, Columbus, N.A, as Trustee (the "Senior Unsecured Notes"),
or if any portion of the Senior Unsecured Notes become due for any
reason, the Borrowing Base shall automatically be reduced to $0;
provided, however, that with respect to any redemption required pursuant
to Sections 4.11 or 4.17 of the Indenture, the Borrowing Base shall only
be reduced by an amount equal to the amount of Senior Unsecured Notes
redeemed."
3. Section 12(k) of the Loan Agreement is hereby amended by deleting
Subsection (k) in its entirety and substituting the following in lieu thereof:
"(k) Notice of Certain Events. The Borrower shall promptly
notify the Administrative Agent if Borrower or either Guarantor learns
of the occurrence of (i) any event which constitutes an Event of Default
together with a detailed statement by Borrower or such Guarantor of the
steps being taken to cure the Event of Default; (ii) any legal,
judicial or regulatory proceedings affecting Borrower or either
Guarantor, or any of the assets or properties of Borrower or either
Guarantor which, if adversely determined, could reasonably be expected
to have a Material Adverse Effect; (iii) any dispute between Borrower or
either Guarantor and any governmental or regulatory body or any other
Person or entity which, if adversely determined, might reasonably be
expected to cause a Material Adverse Effect; (iv) any event or
circumstance which requires the prepayment, purchase or redemption of
any of the Senior Unsecured Notes or (v) any other matter which in
Borrower's reasonable opinion could have a Material Adverse Effect."
4. Section 13 of the Loan Agreement is hereby amended in the
following respects:
(a) Subsection 13(a) is hereby amended by deleting (ii) in its
entirety and inserting the following in lieu thereof:
"(ii) sell, lease, transfer or otherwise dispose of, in
any fiscal year, any of its assets, except for (A) sales,
leases, transfers or other disposition made in the ordinary
course of the Borrower's and Guarantors' oil and gas businesses
which do not exceed $250,000 in the aggregate in any fiscal
year, (B) dividends or distributions from Guarantors to Borrower,
and (C) sales, leases, transfers or other disposition of assets,
other than non-cash assets constituting part of the collateral,
of the Borrower to any Guarantor or of any Guarantor to the
Borrower, and (D) payments and prepayments of indebtedness
permitted in Subsections 13(f)
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and 13(h), it being intended that no provision hereof is
intended to limit the ability of any Guarantor to transfer cash
to the Borrower."
(b) Subsections 13(c) and (d) are hereby deleted in their
entirety and the following inserted in lieu thereof:
"(c) Minimum Tangible Net Worth. The Borrower's
consolidated Tangible Net Worth shall not, as of the end of any
fiscal quarter, ever be less than $55,000,000 plus an amount
equal to 50% of Borrower's net income (but not loss) on a
cumulative basis.
(d) Minimum Interest Coverage Ratio. The Borrower will
not allow its consolidated Minimum Interest Coverage Ratio to be
less than (i) 2.0 to 1.0 during the period beginning March 31,
1997 and rolling forward each quarter through and including March
31, 1998 and, (ii) thereafter 2.25 to 1.0 as of the end of each
calendar quarter for the preceding four quarters."
(c) Subsection 13(h) is hereby amended by adding the
following to the end of clause (ii) prior to the period:
"and loans and advances by the Borrower to any Guarantor
or by any Guarantor to the Borrower."
(d) Subsection 13(f) is amended by adding the following
at the end of clause (iii) prior to the semicolon:
"and indebtedness evidenced by the Senior Unsecured
Notes."
5. Section 14 of the Loan Agreement is hereby amended by adding a
new paragraph to the end thereof, as follows:
"Notwithstanding any other provision hereof, if any event
specified in Sections 14(a) through (j) shall have
occurred but at such time and at all times thereafter,
until none of such events are continuing, there are no
sums outstanding under the Loan Agreement, then the
occurrence of any such event under Sections 14(a) through
(j) shall not constitute a Default or Event of Default,
but for so long as any
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such event exists, the Revolving Commitment shall be
reduced to $-0-."
6. The Banks hereby consent to the issuance of the Senior Unsecured
Notes described in the Indenture and waive any Event of Default that may occur
as a result of the execution of the Indenture and related documents and
incurrence of the $100,000,000 in Senior Unsecured Notes.
7. As of the date of this Agreement, the Borrowing Base shall be
$25,000,000 and the Monthly Commitment Reduction shall be $0. Both the
Borrowing Base and the Monthly Commitment Reduction to remain in effect until
redetermined effective April 1, 1997 pursuant to Section 7(b) of the Loan
Agreement. Provided, however, that the Borrowing Base shall be subject to the
following sublimits:
(a) Sublimit A: $15,000,000 for general corporate purposes;
and
(b) Sublimit B: $10,000,000 for acquisition of producing oil
and gas properties, subject to the Banks' approval.
8. Except to the extent its provisions are specifically amended,
modified or superseded by this Agreement, the representations, warranties and
affirmative and negative covenants of the Borrower contained in the Loan
Agreement are incorporated herein by reference for all purposes as if copied
herein in full. The Borrower hereby restates and reaffirms each and every term
and provision of the Loan Agreement, as amended, including, without limitation,
all representations, warranties and affirmative and negative covenants. Except
to the extent its provisions are specifically amended, modified or superseded
by this Agreement, the Loan Agreement, as amended, and all terms and provisions
thereof shall remain in full force and effect, and the same in all respects are
confirmed and approved by the Borrower and the Banks.
9. The obligations of Banks under this Agreement shall be subject to
the following conditions precedent:
(a) Execution and Delivery. The Borrower and Guarantors shall
have executed and delivered this Agreement, and other required
documents, all in form and substance satisfactory to Banks;
(b) Corporate Resolutions. Agent shall have received
appropriate certified corporate resolutions of Borrower and Guarantors;
(c) Senior Unsecured Notes. The transactions described in the
Indenture shall have closed and been funded prior to December 1, 1996;
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(d) Interest Rate on Senior Unsecured Notes. The interest
rate on the Senior Unsecured Note shall be less than eleven percent
(11%);
(e) Payoff of Existing Indebtedness. The Banks shall have
received payment in full of all principal, interest and fees then due or
outstanding under the Loan Agreement from the proceeds of the Senior
Unsecured Notes;
(f) Other Documents. Banks shall have received such other
instruments and documents incidental and appropriate to the transaction
provided for herein as Bank One or its counsel may reasonably request,
and all such documents shall be in form and substance satisfactory to
Banks; and
(g) Legal Matters Satisfactory. All legal matters incident to
the consummation of the transactions contemplated hereby shall be
satisfactory to special counsel for Banks retained at the expense of
Borrower.
10. Unless otherwise defined herein, all defined terms used herein
shall have the same meaning ascribed to such terms in the Loan Agreement.
11. Each of the Guarantors hereby consents to the provisions of this
Agreement and the transactions contemplated herein, and hereby ratifies and
confirms their respective Guaranty Agreements, each dated as of August 29,
1996, and agrees that their respective obligations and covenants thereunder are
unimpaired hereby and shall remain in full force and effect.
IN WITNESS WHEREOF, the parties have caused this First Amendment to
Restated Loan Agreement to be duly executed as of the date first above written.
BORROWER:
--------
NATIONAL ENERGY GROUP, INC.
a Delaware corporation
By: /s/ MILES X. XXXXXX
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Miles X. Xxxxxx
President
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GUARANTORS:
-----------
NATIONAL ENERGY GROUP OF
OKLAHOMA, INC.
a Delaware corporation
By: /S/ MILES X. XXXXXX
---------------------------------------
Miles X. Xxxxxx
President
BOOMER MARKETING CORPORATION
an Oklahoma corporation
By: /s/ MILES X. XXXXXX
---------------------------------------
Miles X. Xxxxxx
BANKS:
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BANK ONE, TEXAS, N.A.
By: /s/ WM. XXXX XXXXXXX
---------------------------------------
Wm. Xxxx Xxxxxxx
Vice President
CREDIT LYONNAIS NEW YORK BRANCH
By: /s/ PASCAL POUPELLE
---------------------------------------
Pascal Poupelle
Senior Vice President
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ADMINISTRATIVE AGENT:
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BANK ONE, TEXAS, N.A.
By: /s/ WM. XXXX XXXXXXX
---------------------------------------
Wm. Xxxx Xxxxxxx
Vice President
SYNDICATION AGENT:
-----------------
By: /s/ PASCAL POUPELLE
---------------------------------------
Pascal Poupelle
Senior Vice President
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