EXHIBIT 10.12.1
AMENDMENT NO. 3 AND CONSENT AND WAIVER
This Amendment No. 3 and Consent and Waiver dated
effective as of August 12, 1999 ("Amendment") is by Union
Bank of California, N.A. and Den norske Bank ASA
(collectively, the "Banks") in favor of RAM Energy, Inc., a
Delaware corporation ("Borrower").
INTRODUCTION
A. The Borrower, the Banks and Union Bank of
California, N.A., as agent for the Banks (the "Agent"), have
entered into the Second Amended and Restated Credit
Agreement dated as of February 3, 1998, as amended by
Amendment No. 1 and Waiver dated as of August 17, 1998 and
Amendment No. 2 and Waiver dated as of March 31, 1999 (the
"Credit Agreement").
B. The Borrower wishes to sell all of its right,
title and interest in the Oil and Gas Properties described
on Schedule I attached hereto outside the ordinary course of
business in one or more transactions ("Asset Sales").
C. The proposed Asset Sales violate several
provisions of the Credit Agreement and the other Credit
Documents, including, but not limited to, Section 6.04 of
the Credit Agreement.
D. The Banks are willing to consent to the Asset
Sales and to make certain other amendments subject to the
terms of this Agreement.
THEREFORE, the Agent, the Borrower and the Banks hereby
agree as follows:
Section 1. Definitions; References. Unless
otherwise defined in this Amendment, each term used in this
Amendment which is defined in the Credit Agreement has the
meaning assigned to such term in the Credit Agreement.
Section 2. Consent and Waiver. The Banks hereby
(a) consent to the Asset Sales as described above and (b)
waive any and all defaults arising or which may have
heretofore arisen under Section 6.04 of the Credit Agreement
resulting from the execution, delivery or performance of the
transactions and agreements in connection with the Asset
Sales; provided that (i) the Net Cash Proceeds from each
Asset Sale are deposited directly by the seller of such Oil
and Gas Properties into Account No. 0880423444, "UBOC CL RAM
Energy" maintained at Union Bank of California, N.A. (the
"Cash Collateral Account") on the terms and in the manner
described in Section 3 below and (ii) the Borrower receives
Net Cash Proceeds in an amount greater than or equal to the
minimum release price set forth for each such Oil and Gas
Property on Schedule I attached hereto. This waiver is
limited to the extent described herein and shall not be
construed to be a consent to or a waiver of any other
actions prohibited by the Credit Agreement. The Agent and
each of the Banks reserves the right to exercise any rights
and remedies available to it in connection with any future
defaults with respect to Section 6.04 of the Credit
Agreement or any other provision of any Credit Document.
Further, if any such transaction is not completed as
described above, all consents granted hereunder shall be
void. For purposes of this Section 2, "Net Cash Proceeds"
means, with respect to any sale, transfer, or other
disposition of any of the Borrower's or any of its
Subsidiaries' Property, all cash and Liquid Investments
received by the Borrower or any of its Subsidiaries from
such sale, transfer or other disposition after (a) payment
of, or provision for, all brokerage commissions and other
reasonable out-of-pocket fees and expenses actually
incurred; (b) payment of any outstanding obligations
relating to such Property paid in connection with, and
necessary for, any such sale, transfer, or other
disposition; and (c) the amount of reserves recorded in
accordance with GAAP for indemnity or similar obligations of
the Borrower and its Subsidiaries directly related to such
sale, transfer or other disposition.
Section 3. Cash Collateral Account.
(a) All funds in the Cash Collateral Account shall be
invested and reinvested as instructed by the Borrower from
time-to-time in Permitted Investments, as defined below,
such investments and reinvestments to be made in the name of
the Borrower at the sole risk of the Borrower from
time-to-time by the Agent as provided in this Section 3(a).
All income earned from and proceeds of the sale or other
liquidation of Permitted Investments shall be credited to
the Cash Collateral Account and shall become part of such
account. For the purpose of this Amendment the term
"Permitted Investments" shall mean (i) readily marketable
direct obligations of the United States of America,
(ii) certificates of deposit, eurodollar deposits, bankers
acceptances, or commercial paper issued by the Agent, (iii)
commercial paper if at the time of purchase such commercial
paper is rated not less than "A-1" or "P-1" and
(iv) securities issued or guaranteed by an agency of the
government of the United States of America.
(b) The Agent shall promptly furnish to the Borrower
such information regarding the balance in the Cash
Collateral Account as may be reasonably requested by the
Borrower from time-to-time on a monthly basis.
(c) As security for and as payment and performance of
Borrower's obligations under the Credit Agreement (the
"Obligations"), the Borrower hereby pledges, assigns and
grants to the Agent for the benefit of the Banks a first and
prior security interest and right of set-off in the Cash
Collateral Account, all balances therein, all Permitted
Investments in connection therewith, and all proceeds
thereof.
(d) Upon the payment and performance in full of all
the Obligations and the termination of the Borrower's
Obligations under the Credit Agreement, any Permitted
Investments then held by the Agent shall be liquidated as
instructed by the Borrower and any balance remaining in the
Cash Collateral Account shall be paid to the Borrower.
(e) On August 16, 1999, the Banks agree to release all
of the funds out of the Cash Collateral Account to the
Borrower for the sole purpose of paying interest on the
Senior Notes; provided, however that after the Borrower pays
the interest due and payable on the Senior Notes, to the
extent that the Borrower is entitled to receive interest on
any of the Senior Notes that it owns, such interest shall be
deposited directly into the Cash Collateral Account and
shall be immediately distributed to Den Norske Bank ASA as a
prepayment of its Revolving Advances and permanent reduction
of its Revolving Commitment and shall be credited against
the $10,000,000 prepayment due September 30, 1999 as set
forth in Section 4(a).
(f) After the payment of interest on the Senior Notes
on August 16, 1999, 75% of all Net Cash Proceeds thereafter
received by the Borrower from the sale of its Oil and Gas
Properties shall be deposited directly into the Cash
Collateral Account and the remaining 25% of such funds shall
be released to the Borrower to use in accordance with the
terms and conditions of the Credit Agreement.
(g) Any Bank may, at any time and in its sole
discretion, release to the Borrower all or any portion of
such Bank's Pro Rata Share of the balance in the Cash
Collateral Account. Any portion not so released by such
Bank shall continue to be held for the benefit of such Bank
and shall be subject to the terms and conditions of the
Credit Agreement.
(h) To the extent there is a balance in the Cash
Collateral Account on any of the prepayment dates specified
in Section 4(a) below, such balance shall be distributed to
the Banks and applied to the prepayment of the Revolving
Advances; provided, however that at any time any Bank may in
its sole discretion elect to have its Pro Rata Share of the
amounts on deposit in the Cash Collateral Account
distributed to such Bank as a prepayment of its outstanding
Revolving Advances.
Section 4. Required Prepayments. The Borrower
shall make the following mandatory prepayments of the
Revolving Advances:
(a) Mandatory Prepayments. The Borrower agrees to
make a mandatory prepayment of the outstanding principal
amount of the Revolving Advances in an amount equal to (i)
$10,000,000 on September 30, 1999, (ii) $5,000,000 on
December 31, 1999, (iii) $5,000,000 on March 31, 2000 and
(iv) the outstanding principal balance of the Revolving
Advances on June 30, 2000; provided, however that any Bank
may elect, by notice to the Agent by telephone (confirmed by
telecopy) prior to any prepayment date, to decline all or
any portion of such Bank's Pro Rata Share of any such
prepayment of its Revolving Advances (such Bank or Banks
being "Declining Banks"), in which case the aggregate amount
of the prepayment due from Borrower on such prepayment date
shall be reduced by the amount of the prepayment declined by
the Declining Banks and the amount of the prepayment paid by
the Borrower applied to reduce the Revolving Advances in
according with the adjusted entitlements of the Banks.
(b) Excess Cash Flow. On the fifteenth of each month
commencing October 15, 1999, the Borrower shall deposit
$250,000 into the Cash Collateral Account. On the last day
of each month commencing October 31, 1999, the Borrower
shall prepay the outstanding principal amount of the
Revolving Advances in an amount equal to the greater of (i)
$250,000 or (ii) 40% of the Excess Cash Flow for the
preceding calendar month. The Banks agree to apply the
$250,000 previously deposited in the Cash Collateral Account
to the prepayment of the Revolving Advances. For the
purposes of this Section 4(b), "Excess Cash Flow" means: (a)
gross cash revenue from any source received by Borrower and
its Subsidiaries during any calendar month; plus (b) cash
retained by Borrower and its Subsidiaries under clause (d)
of this definition for the immediately preceding month; less
(c) the actual cash payments made by Borrower and its
Subsidiaries during such calendar month for (i) leasehold
operating expenses and other field level or lease level
charges for operation other than capital expenditures, (ii)
severance, ad valorem and other direct taxes on production,
but excluding any federal, state or local income taxes,
(iii) reasonable and customary general and administrative
expenses which shall not exceed $450,000 during any calendar
month, (iv) capital expenditures made by Borrower and its
Subsidiaries for the maintenance of its current oil and gas
properties, (v) payments of principal and interest on the
Revolving Advances and (vi) capital expenditures described
on Exhibit A; less (d) cash retained by Borrower and its
Subsidiaries to pay any of the obligations described in
clause (c) of this definition to the extent accrued and
unpaid on the last day of such calendar month; less (e) cash
retained by Borrower and its Subsidiaries to pay for capital
expenditures described on Exhibit A. Notwithstanding the
foregoing, any Bank may elect, by notice to the Agent by
telephone (confirmed by telecopy) prior to any prepayment
date, to decline all or any portion of such Bank's Pro Rata
Share of any such prepayment of its Revolving Advances (such
Bank or Banks being "Declining Banks"), in which case the
aggregate amount of the prepayment due from Borrower on such
prepayment date shall be reduced by the amount of the
prepayment declined by the Declining Banks and the amount of
the prepayment paid by the Borrower applied to reduce the
Revolving Advances in according with the adjusted
entitlements of the Banks. On the last day of each month
commencing October 31, 1999, the Borrower shall deliver to
each of the Banks a certificate dated as of such date from
the president or chief financial officer of the Borrower
certifying that the calculation of Excess Cash Flow as of
the last day of the previous calendar month was true and
correct. Notwithstanding anything herein to the contrary
the Banks are not approving or disapproving any capital
expenditures to be made by the Borrower, such decision to be
made in the business judgment of the Borrower.
(c) Application of Prepayments. Each prepayment
pursuant to Section 4(a) shall be accompanied by accrued
interest on the amount prepaid to the date of such
prepayment and amounts, if any, required to be paid pursuant
to Section 2.12 as a result of such prepayment being made on
such date. Each prepayment made under this Section 4 shall
be applied to the Revolving Advances as determined by the
Agent and agreed to by the Banks in their sole discretion.
Section 5. Reduction of Revolving Commitments.
(a) The Borrower, the Agent, and the Banks hereby
agree that the Revolving Commitments of the Banks under the
Credit Agreement shall be modified to reflect the Revolving
Commitments for the Banks set forth on the attached Schedule
2 and upon the effectiveness of this Agreement pursuant to
Section 9 below, each such Bank's Revolving Commitment shall
be the Revolving Commitment set forth on the attached
Schedule 2 (such Revolving Commitment being subject to
further amendment, reduction or termination pursuant to the
terms of the Credit Agreement).
(b) Upon each prepayment of the Revolving Advances
pursuant to Sections 3 or 4, the Revolving Commitments shall
be automatically and permanently reduced by the amount of
such prepayment.
Section 6. Amendments. The Credit Agreement shall,
subject to the terms of this Amendment, be amended as
follows:
(a) Section 2.05(b). Section 2.05(b) shall be amended
by adding an "or" after subsection (i) thereof, replacing
the "or" with a period after subsection (ii) thereof and
deleting subsection (iii) in its entirety.
(b) Section 6.23. Section 6.23 is hereby renumbered
as Section 6.18.
(c) Section 6.19. A new Section 6.19 is added as
follows:
Section 6.19. Accounts Payable. The Borrower
shall not permit the aggregate amount of its accounts
payable more than 90 days past due to be greater than
$650,000, except for accounts payable subject to a bona
fide dispute and for which adequate reserves are
maintained in accordance with GAAP.
(d) Section 6.20. A new Section 6.20 is added as
follows:
Section 6.20. Allowable General and Administrative
Expenses. The Borrower shall not permit the amount of
general and administrative expenses to be greater than
$400,000 for each calendar month; provided, however that the
amount of general and administrative expenses may be greater
than $400,000 for any calendar month provided that such
general and administrative expenses are not greater than
$450,000 for such calendar month and provided further that
the average monthly general and administrative expenses for
each fiscal quarter is not greater than $400,000.
Section 7. Suspension of Eurodollar Rate Advances.
Subject to Section 8 below, effective July 14, 1999, each
Revolving Borrowing consisting of Eurodollar Rate Advances
shall be Converted to a Revolving Borrowing consisting of
Reference Rate Advances bearing interest at the Adjusted
Reference Rate in effect from time to time plus 2.0% (but in
any event not to exceed the Maximum Rate). Further, the
right of the Borrower to request continuations of, or
conversions to, Revolving Borrowings consisting of
Eurodollar Rate Advances is hereby suspended indefinitely
until the Banks agree in writing that such right is
reinstated.
Section 8. Effectiveness. This Amendment shall
become effective upon the date first set forth above when
the Agent shall have received from the Borrower duly and
validly executed originals of this Amendment.
Section 9. Representations and Warranties. The
Borrower represents and warrants that (a) the execution,
delivery and performance of the Asset Sale are within the
corporate power and authority of the Borrower and have been
duly authorized by appropriate proceedings, (b) the Liens
under the Security Documents are valid and subsisting and
secure the Borrower's obligations under the Credit
Agreement, (c) the representations and warranties of the
Borrower contained in the Credit Documents are true and
correct as of the date hereof, except as otherwise
previously disclosed to the Agent, and (d) no Default has
occurred and is continuing as of the date hereof.
Section 10. Choice of Law. This Amendment shall be
governed by and construed and enforced in accordance with
the laws of the State of Texas.
Section 11. Counterparts. This Amendment may be
signed in any number of counterparts, each of which shall be
an original. Delivery of an executed counterpart of this
Amendment by facsimile shall be effective as delivery of a
manually executed counterpart of this Amendment.
This written agreement and the Credit Documents, as defined in the
Credit Agreement, represent the final agreement among the parties and may
not be contradicted by evidence of prior, contemporaneous, or subsequent
oral agreements of the parties.
There are no unwritten oral agreements between the parties.
EXECUTED as of the date first set forth above.
UNION BANK OF CALIFORNIA, N.A.
By: XXXX XXXXXXXX
Xxxx Xxxxxxxx
Senior Vice President and Manager
By: XXXXXX XXXXXXX
Xxxxxx Xxxxxxx
Assistant Vice President
DEN NORSKE BANK ASA
By: XXXXXXX X. XXXX
Name: Xxxxxxx X. Xxxx
Title: Senior Vice President
By: J. XXXXXX XXXXXX
Name: J. Xxxxxx Xxxxxx
Title: First Vice President
Acknowledged and accepted this
13th day of August, 1999.
RAM ENERGY, INC.
By: XXXXX X. XXX
Xxxxx X. Xxx
President
