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EXHIBIT 10.2
FIRST AMENDMENT TO CREDIT AGREEMENT
This First Amendment to Credit Agreement ("Amendment") is entered into
between Compass Bank, an Alabama state bank ("Lender") and Toreador Royalty
Corporation, a Delaware corporation, Toreador Exploration & Production, Inc., a
Texas corporation, and Tormin, Inc., a Delaware corporation (the "Borrowers")
and Toreador Acquisition Corporation, a Texas corporation (the "Guarantor") and
is dated as of December 17, 1999. Terms defined in the Credit Agreement between
the Lender and the Borrowers and the Guarantor dated September 30, 1999, as
amended (the "Credit Agreement"), are used herein as therein defined, unless
otherwise defined herein or the context otherwise requires.
R E C I T A L S:
WHEREAS, Toreador Exploration & Production, Inc. ("Toreador
Exploration") has entered into a Purchase and Sale Agreement ("Purchase
Agreement") dated November 24, 1999, with Lario Oil & Gas Company ("Lario") for
the purchase by Toreador Exploration of certain oil and gas properties located
in Xxxxxx County, Kansas for $5,000,000 in cash at the closing of such purchase
and $500,000 in installments (the "Lario Installment Debt"), as described in the
Purchase Agreement;
WHEREAS, the Borrowers have requested that the Lender increase the
Borrowing Base under the Credit Agreement to $12,500,000 and provide a term loan
in the amount of $2,000,000, the proceeds of which will be utilized to make such
purchase described in the Purchase Agreement;
WHEREAS, the Borrowers anticipate repaying the Term Loan (hereinafter
defined) and repaying the Lario Installment Debt from the proceeds of the
Subordinated Debt;
WHEREAS, the Lender is willing to amend the Credit Agreement to permit
the above described transactions under the terms and conditions set forth
herein;
NOW, THEREFORE, the Borrowers, the Guarantor and the Lender hereby
agree as follows:
1. The following definitions are hereby added to Section 1.1 of the
Credit Agreement as follows:
"First Amendment to Credit Agreement" means the First
Amendment to Credit Agreement dated December 17, 1999, between the
Lenders, the Borrowers and the Guarantor.
"Subordinated Debt" shall mean Debt of the Parent evidenced by
a promissory note or notes issued by the Parent after February 29,
2000, and before March 1, 2001, in the aggregate principal amount not
to exceed $15,000,000, which Debt shall be subordinated in payment and
liquidation to the Note and the Term Loan and shall contain provisions
and restrictions effecting the following so long as the Note or Term
Loan remain outstanding: (i)
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No interest or principal payments shall be required or accepted on the
Subordinated Debt after a Default or if any such payment would cause a
Default to occur; (ii) upon the occurrence of an Event of Default, the
holders of the Subordinated Debt shall not be entitled to make demand
for payment of interest or principal on the Subordinated Debt, to
accelerate the time for payment of the principal of the Subordinated
Debt or to take any other collection action against any of the
Borrowers or the Guarantor for a period of 365 days following such
Event of Default; (iii) the per annum interest rate payable on the
Subordinated Debt shall not exceed 7-1/2% without the Lender's prior
written consent; (iv) the holders of the Subordinated Debt shall not be
entitled to require the prepayment of the Subordinated Debt prior to
maturity of the Subordinated Debt or a redemption of the Subordinated
Debt prior to maturity of the Subordinated Debt; (v) the Subordinated
Debt shall at all times be and remain unsecured; and (vi) the maturity
date of Subordinated Debt must be no earlier than March 31, 2010,
unless the Lender otherwise consents in writing.
"Term Loan" shall mean the $2,000,000 term loan being made
concurrently herewith by the Lender to the Borrowers pursuant to a term
loan note in the form of Attachment One hereto.
2. The following definitions contained in Section 1.1 of the Credit
Agreement are hereby amended and restated in their entireties as follows:
"Compliance Certificate" means a certificate, substantially in
the form attached to the First Amendment to Credit Agreement entitled
"Form of Compliance Certificate", executed by a Responsible Officer of
the Parent and furnished to the Lender from time to time in accordance
with Section 7.2(a).
"Floating Rate" means the greater of (i) a per annum interest
rate equal to the difference of the CBIR Rate from time to time in
effect minus three-fourths of one percent (minus 3/4 of 1.0%), or (ii)
at any time the outstanding principal of the Note plus the outstanding
principal of the Term Loan plus the L/C Exposure equals or exceeds 80%
of the Borrowing Base in effect at such time, a per annum interest rate
equal to the CBIR Rate from time to time in effect minus one-fourth of
one percent (minus 1/4 of 1.0%) or (iii) at any time the daily average
for the prior calendar month of the outstanding principal of the Note
plus the outstanding principal of the Term Loan plus the L/C Exposure
equals or exceeds 80% of the daily average for such prior calendar
month of the Borrowing Base in effect during such month, a per annum
interest rate equal to the CBIR Rate from time to time in effect minus
one-fourth of one percent (minus 1/4 of 1.0%); but in no event
exceeding in any case the Highest Lawful Rate.
"Permitted Indebtedness" means (i) the Obligations, (ii)
unsecured accounts payable incurred in the ordinary course of business,
which are not unpaid in excess of 120 days beyond the due date thereof
or are being contested in good faith and as to which such reserve as is
required by GAAP has been made and on which interest charges are not
paid or accrued,
First Amend. To Credit Agmt.- Toreador, et. al. 2
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(iii) accrued taxes and unsecured accounts payable owed to insurance
companies for insurance contracts maintained by Borrower in its
ordinary course of business, (iv) endorsements of negotiable
instruments in the ordinary course of business, (v) amounts owed by one
of the Borrowers or the Guarantor to another Borrower or the Guarantor,
(vi) the Subordinated Debt and (vii) the Term Loan.
3. The Borrowing Base shall be $12,500,000 as of December 17, 1999, and
the amount by which the Borrowing Base shall automatically be reduced on the
first day of each month shall be $0.00 per month until January 1, 2000. On
January 1, 2000, and on the first day of each month thereafter, the amount by
which the Borrowing Base shall automatically be reduced shall be $115,000 per
month until redetermined in accordance with the Credit Agreement.
4. On the date hereof, the Borrowers shall pay to the Lender a facility
fee of $10,000 as required under Section 2.6(c) of the Credit Agreement.
5. Section 2.8(f) is hereby added to the Credit Agreement as follows:
(f) In addition to and notwithstanding the provisions of
Section 2.8(a) above, the Lender shall have the right to redetermine the
Borrowing Base at any time or times that Subordinated Debt is issued by the
Parent exceeding, when aggregated with all Subordinated Debt previously issued,
the amount of $4,000,000, and any such redeterminations of the Borrowing Base
shall be treated as a scheduled or Borrower requested redeterminations of the
Borrowing Base for the purposes of Section 2.6(b).
6. The Borrowers shall pay to the Lender an engineering fee in the
amount of $7,500 on the date hereof.
7. Section 7.15(a) of the Credit Agreement is hereby amended and
restated in its entirety as follows:
(a) EBITDA to Debt Service Ratio. The Borrowers will not permit the
ratio of EBITDA to Debt Service for the Parent determined on a consolidated
basis, to be less than 1.25 to 1.0, determined as of the end of each fiscal
quarter of the Parent ending on or after December 31, 1999.
"EBITDA" means, for any fiscal quarter of the Parent, the net
income from operations of the Parent and its consolidated
subsidiaries for such quarter plus interest, taxes,
depreciation, amortization, depletion, and other non-cash
expenses of the Parent and its consolidated subsidiaries for
such quarter less gains on sales of assets and other non-cash
income for such quarter included in the determination of net
income from operations of the Parent and its consolidated
subsidiaries. EBITDA is a quarter-by-quarter calculation.
"Debt Service" means with respect to any fiscal quarter of the
Parent, the actual principal and interest payments on the Debt
of the Parent and its consolidated
First Amend. To Credit Agmt.- Toreador, et. al. 3
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subsidiaries during such quarter other than for the Note plus
required principal and interest payments on the Note during
such quarter.
8. The proceeds of the Subordinated Debt shall be applied, upon
receipt, as follows and in the following order:
(a) to accrued, unpaid interest on the Term Loan,
(b) to the outstanding principal of the Term Loan, whether as
a payment or a prepayment, until fully paid,
(c) to the Lario Installment Debt, whether as a payment or a
prepayment, until fully paid, and
(d) for general corporate purposes, except that such proceeds
shall not be used to pay dividends on the common stock of the Parent.
9. Title. The Lender shall have no obligation to fund any additional
amounts due to the increase in the Borrowing Base as referred to in the recitals
hereof, or to fund the Term Loan described herein, unless all matters related to
title of the properties being acquired from Lario are satisfactory to the Lender
and its counsel in their sole discretion. In this connection, the review of
title information related to the properties being acquired from Lario has not
been completed by counsel to the Lender as of the date of execution of this
Amendment.
10. GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE GOVERNED AND
CONTROLLED BY THE LAWS OF THE STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES
THEREOF RELATING TO CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT CHAPTER 346 OF THE
FINANCE CODE (WHICH REGULATES CERTAIN CREDIT LOAN ACCOUNTS AND TRIPARTY
ACCOUNTS) SHALL NOT APPLY TO THE NOTE.
11. JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT TO,
ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO, OR FROM
THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT MAY BE LITIGATED, AT THE SOLE
DISCRETION AND ELECTION OF THE LENDER, IN COURTS HAVING SITUS IN DALLAS, DALLAS
COUNTY, TEXAS. EACH BORROWER AND THE GUARANTOR HEREBY SUBMITS TO THE
JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED IN DALLAS, DALLAS
COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE
THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST IT BY THE LENDER IN
ACCORDANCE WITH THIS SECTION.
12. WAIVER OF RIGHTS TO JURY TRIAL. EACH BORROWER, THE GUARANTOR AND
THE LENDER HEREBY KNOWINGLY, VOLUNTARILY,
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INTENTIONALLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVE ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT
RELATES TO OR ARISES OUT OF ANY OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR
THE ACTS OR OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR
PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH
RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL INDUCEMENT FOR
THE LENDER ENTERING INTO THIS AGREEMENT.
13. Counterparts. For the convenience of the parties, this Amendment
may be executed in multiple counterparts, each of which for all purposes shall
be deemed to be an original, and all such counterparts shall together constitute
but one and the same agreement.
14. Effect. Except as amended hereby, the Credit Agreement shall remain
unchanged and in full force and effect.
15. ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF. FURTHERMORE, IN
THIS REGARD, THIS AGREEMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT,
COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF SUCH PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
First Amend. To Credit Agmt.- Toreador, et. al. 5
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IN WITNESS WHEREOF, this Amendment is deemed executed effective as of
the date first above written.
BORROWERS:
TOREADOR ROYALTY CORPORATION,
TOREADOR EXPLORATION & PRODUCTION,
INC. and TORMIN, INC.
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By: /s/ G. XXXXXX XXXXXX, III
Telecopy: 214/521-3774 ------------------------------
Name: G. Xxxxxx Xxxxxx, III
Title: President of each Borrower
GUARANTOR:
TOREADOR ACQUISITION CORPORATION
0000 Xxxx Xxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By: /s/ G. XXXXXX XXXXXX, III
Telecopy: 214/521-3774 ------------------------------
Name: G. Xxxxxx Xxxxxx, III
Title: President
LENDER:
COMPASS BANK
0000 X. Xxxxxxx Xxxxxxxxxx
Xxxxx 000
Xxxxxx, Xxxxx 00000 By: /s/ XXXXX X. XXXXX
Attention: Energy Group ------------------------------
Telecopy: 214/706-8054 Name: Xxxxx X. Xxxxx
Title: Assistant Vice President
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ATTACHMENT ONE
Term Loan Note
First Amend. To Credit Agmt.- Toreador, et. al. 7
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FORM OF COMPLIANCE CERTIFICATE
_______________,_____
Compass Bank
0000 X. Xxxxxxx Xxxxxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Energy Group
Re: Credit Agreement dated September 30, 1999, by and between
Compass Bank (the "Lender") and Toreador Royalty Corporation,
Toreador Exploration & Production, Inc. and Tormin, Inc. ( the
"Borrowers") and Toreador Acquisition Corporation, as
Guarantor (as amended, restated, or supplemented from time to
time, the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as a Responsible Officer of each Borrower hereby certifies to you
the following information as true and correct as of the date hereof or for the
period indicated, as the case may be:
[1. TO THE BEST OF THE KNOWLEDGE OF THE UNDERSIGNED, NO DEFAULT EXISTS
AS OF THE DATE HEREOF OR HAS OCCURRED SINCE THE DATE OF OUR PREVIOUS
CERTIFICATION TO YOU, IF ANY.]
[1. TO THE BEST OF THE KNOWLEDGE OF THE UNDERSIGNED, THE FOLLOWING
DEFAULTS EXIST AS OF THE DATE HEREOF OR HAVE OCCURRED SINCE THE DATE OF
OUR PREVIOUS CERTIFICATION TO YOU, IF ANY, AND THE ACTIONS SET FORTH
BELOW ARE BEING TAKEN TO REMEDY SUCH CIRCUMSTANCES:]
2. The compliance of the Borrowers with certain financial covenants of
the Credit Agreement, as of the close of business on___________ , is
evidenced by the following:
(a) Section 7.15(a): EBITDA to Debt Service.
Required Actual
---------- --------
Not less than 1.25 to 1.00 _____ to 1.00
(b) Section 7.15(b): Current Ratio.
Required Actual
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Not less than 1.00 to 1.00 ____ to 1.00
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3. The financial statements being delivered to the Lender concurrently
herewith pursuant to the Credit Agreement fairly and accurately reflect
the financial condition and results of operation of the Borrowers for
the periods and as of the dates set forth therein, and the undersigned
has reviewed the terms of the Credit Agreement and the other Loan
Papers, and has made, or caused to be made under my supervision, a
review of the transactions and financial condition of the Borrowers
during the fiscal period covered by such financial statements.
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
-------------------------------------
[----------------------------]
[_____________] of Toreador Royalty Corporation,
Toreador Exploration & Production, Inc. and Tormin,
Inc.
First Amend. To Credit Agmt.- Toreador, et. al. 9
