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SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
SCHEDULE 13E-4
Issuer Tender Offer Statement
(Pursuant to Section 13(e)(1) of the Securities Exchange Act of 1934)
(Amendment No. )
REMINGTON OIL AND GAS CORPORATION
(Name of Issuer)
REMINGTON OIL AND GAS CORPORATION
(Name of Person(s) Filing Statement)
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8 1/4% CONVERTIBLE SUBORDINATED NOTES
DUE 2002 OF
REMINGTON OIL AND GAS CORPORATION 759594 AA 2
(Title of Class of Securities) (CUSIP Number of Class of Securities)
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J. BURKE ASHER
8201 PRESTON ROAD, SUITE 600
DALLAS, TEXAS 75225
(214) 210-2650
(Name, Address and Telephone Number of Person Authorized to Receive Notices and
Communications on Behalf of Person(s) Filing Statement)
JANUARY 20, 1999
(Date Tender Offer First Published, Sent or Given to Security Holders)
CALCULATION OF FILING FEE
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TRANSACTION VALUATION* AMOUNT OF FILING FEE
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$39,118,467 $7,823.70
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* The transaction value shown is only for the purpose of calculating the filing
fee. The amount shown reflects the cost of purchasing $38,371,000 principal
amount of Notes at the purchase price (100% of the principal amount of the
Notes, plus accrued interest through the date of purchase) as of February 25,
1999 (the payment date of the Offer). The amount of the filing fee is
calculated in accordance with Section 13(e)(3) of the Securities Exchange Act
of 1934, as amended.
[ ] Check box if any part of the fee is offset as provided by Rule 0-11(a)(2)
and identify the filing with which the offsetting fee was previously paid.
Identify the previous filing by registration statement number, or the form
or schedule and the date of its filing.
Amount previously paid:
Form or registration no.:
Filing party:
Date filed:
Instruction. When submitting this statement in paper format, ten copies of this
statement, including all exhibits, shall be filed with the
Commission.
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INTRODUCTORY STATEMENT
This Schedule 13E-4 relates to a change in control offer (the "Offer") by
Remington Oil and Gas Corporation, a Delaware corporation (the "Company")
formerly known as Box Energy Corporation, to purchase for cash, on the terms and
subject to the conditions set forth in the attached Change in Control Notice and
Offer to Purchase, dated January 20, 1999 (the "Offer to Purchase") and the
related Letter of Transmittal (the "Letter of Transmittal"), all of the
outstanding 8 1/4% Convertible Subordinated Notes Due 2002 of the Company (the
"Notes"). Effective December 28, 1998, the Company's two classes of common
stock, Class A (Voting) and Class B (Non-Voting), were recapitalized into a
single class of voting stock ("Remington Common Stock") (the
"Recapitalization"). Prior to the Recapitalization, the Notes were convertible
into shares of Class B (Non-Voting) Common Stock, par value $1.00 per share, at
a conversion price of $11.00 per share in accordance with the Indenture under
which the Notes were issued. Subsequent to the Recapitalization, the Notes are
convertible into shares of Remington Common Stock, par value $0.01 per share, at
a conversion price of $11.00 per share. Copies of the Offer to Purchase and the
related Letter of Transmittal are filed as exhibits 99.1(a)(1) and 99.1(a)(2)
hereto.
ITEM 1. SECURITY AND ISSUER.
(a) The issuer of the Notes is the Company. The address of the Company's
principal executive office is 8201 Preston Road, Suite 600, Dallas, Texas
75225-6211.
(b) The securities which are the subject of the Offer are the 8 1/4%
Convertible Subordinated Notes Due 2002 issued by the Company. The Notes are
convertible into shares of Remington Common Stock at a conversion price of
$11.00 per share in accordance with the Indenture under which the Notes were
issued. As of January 18, 1999, there was $38,371,000 aggregate principal amount
of Notes outstanding. The Offer is for any and all Notes, in denominations of
$1,000 or integral multiples thereof, at a purchase price of 100% of the
principal amount of the Notes, plus accrued interest through the date of
purchase. To the best knowledge of the Company, no Notes are being purchased
from any officer, director or affiliate of the Company.
(c) The information set forth in the section of the Offer to Purchase
entitled "Market Price Information" is incorporated herein by reference.
(d) The Company is filing this statement. The address of the Company is set
forth in Item 1(a).
ITEM 2. SOURCE AND AMOUNT OF FUNDS OR OTHER CONSIDERATION.
(a)-(b) The information set forth in the section of the Offer to Purchase
entitled "Sources and Amount of Funds" is incorporated herein by reference.
ITEM 3. PURPOSE OF THE TENDER OFFER AND PLANS OR PROPOSALS OF THE ISSUER OR
AFFILIATE.
The information set forth in the section of the Offer to Purchase entitled
"The Offer -- Purpose and Effects of the Offer" is incorporated herein by
reference. Upon purchase, Notes will cease to be outstanding and will be
delivered to United States Trust Company of New York, as Trustee, for
cancellation immediately after such purchase.
(a) The information set forth in the section of the Offer to Purchase
entitled "The Offer -- General" is incorporated herein by reference.
(b) None.
(c) None.
(d) None.
(e) None.
(f) None.
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(g) None.
(h) Not applicable.
(i) Not applicable.
(j) Not applicable.
ITEM 4. INTEREST IN SECURITIES OF THE ISSUER.
Not applicable.
ITEM 5. CONTRACTS, ARRANGEMENTS OR UNDERSTANDINGS OR RELATIONSHIPS WITH RESPECT
TO THE ISSUER'S SECURITIES.
The information set forth on the cover page to the Offer to Purchase and
the sections of the Offer to Purchase entitled "The Offer -- General," "The
Offer -- Purpose and Effects of the Offer" and "Recent Developments" is
incorporated herein by reference.
ITEM 6. PERSONS RETAINED, EMPLOYED OR TO BE COMPENSATED.
The information set forth in the section of the Offer to Purchase entitled
"The Depositary" is incorporated herein by reference.
ITEM 7. FINANCIAL INFORMATION.
(a) The information set forth in the section of the Company's Offer to
Purchase entitled "Selected Financial Data of the Company" is incorporated
herein by reference. The following documents, which have been filed by the
Company with the Securities and Exchange Commission (the "Commission") under the
Securities Exchange Act of 1934, as amended (the "Exchange Act"), are
incorporated herein by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
The following document, which has been filed by the Company with the
Commission under the Securities Act of 1933, as amended (the "Securities Act"),
is hereby incorporated by reference:
(1) The Company's Registration Statement on Form S-4, declared
effective by the Commission on November 27, 1998, relating to the
registration of the shares of Remington Common Stock.
(b) Not applicable.
ITEM 8. ADDITIONAL INFORMATION.
(a) None.
(b) None, except for compliance with the Exchange Act and the rules and
regulations promulgated thereunder and compliance with applicable requirements
of state securities or "blue sky" laws.
(c) Not applicable.
(d) None.
(e) Reference is made to the exhibits hereto which are incorporated in
their entirety herein by reference.
2
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ITEM 9. MATERIAL TO BE FILED AS EXHIBITS.
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(a) Exhibit 99.1(a)(1) Change in Control Notice and Offer to Purchase, dated
January 20, 1999.
Exhibit 99.1(a)(2) Letter of Transmittal.
Exhibit 99.1(a)(3) Notice of Guaranteed Delivery.
Exhibit 99.1(a)(4) Letter to clients.
Exhibit 99.1(a)(5) Letter to brokers, dealers, commercial banks, trust
companies and other nominees.
(b) Exhibit 99.2 Amended and Restated Secured Revolving Credit Loan Agreement
by and Between Remington Oil and Gas Corporation as Borrower
and Comerica Bank-Texas as Lender in the face amount of
$50,000,000, dated as of September 30, 1998.
(c) Not applicable.
(d) Not applicable.
(e) Not applicable.
(f) Not applicable.
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3
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SIGNATURE
After due inquiry and to the best of my knowledge and belief, I certify
that the information set forth in this statement is true, complete and correct.
REMINGTON OIL AND GAS CORPORATION
By: /s/ JAMES A. WATT
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James A. Watt
President and Chief Executive Officer
Dated: January 20, 1999
4
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EXHIBIT INDEX
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EXHIBIT DESCRIPTION
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99.1(a)(1) -- Change of Control Notice and Offer to Purchase, dated
January 20, 1999.
99.1(a)(2) -- Letter of Transmittal.
99.1(a)(3) -- Notice of Guaranteed Delivery.
99.1(a)(4) -- Letter to clients.
99.1(a)(5) -- Letter to brokers, dealers, commercial banks, trust
companies and other nominees.
99.2 -- Amended and Restated Secured Revolving Credit Loan
Agreement by and Between Remington Oil and Gas
Corporation as Borrower and Comerica Bank-Texas as Lender
in the face amount of $50,000,000, dated as of September
30, 1998.
</TABLE>
5
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REMINGTON OIL AND GAS CORPORATION
CHANGE IN CONTROL NOTICE
AND
OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2002
OF REMINGTON OIL AND GAS CORPORATION
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THIS CHANGE IN CONTROL NOTICE
AND OFFER TO PURCHASE, THE OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M.,
NEW YORK CITY TIME, ON FEBRUARY 19, 1999, UNLESS THE OFFER IS EXTENDED IN
ACCORDANCE WITH THE INDENTURE (AS DEFINED HEREIN) (SUCH TIME AND DATE OR THE
LATEST EXTENSION THEREOF, IF EXTENDED, THE "EXPIRATION DATE"). NOTES TENDERED IN
THE OFFER MAY BE WITHDRAWN AT ANY TIME PRIOR TO THE EXPIRATION DATE.
BECAUSE A CHANGE OF CONTROL AS DEFINED IN THE INDENTURE OCCURRED, THE COMPANY IS
REQUIRED TO MAKE THIS OFFER TO PURCHASE. IF NO CHANGE OF CONTROL HAD OCCURRED,
THE COMPANY WOULD NOT OFFER TO PURCHASE THE NOTES. THE COMPANY DOES NOT BELIEVE
THAT PURCHASING THE NOTES AT THIS TIME IS THE BEST USE OF THE COMPANY'S CAPITAL
OR CREDIT RESOURCES. NO ACTION BY THE NOTE HOLDER IS REQUIRED UNLESS THE NOTE
HOLDER WISHES TO TENDER NOTES UNDER THIS OFFER TO PURCHASE. NOTES NOT TENDERED
WILL REMAIN OBLIGATIONS OF THE COMPANY UNDER THE TERMS AND CONDITIONS OF THE
INDENTURE.
Remington Oil and Gas Corporation (the "Company") hereby offers (the
"Offer") to purchase for the Purchase Price (as defined below) in cash, upon the
terms and subject to the conditions set forth in this Change in Control Notice
and Offer to Purchase (this "Offer to Purchase") and in the accompanying Letter
of Transmittal (the "Letter of Transmittal"), any and all of the outstanding
8 1/4% Convertible Subordinated Notes due 2002 of the Company (the "Notes"). The
"Purchase Price" is 100% of the principal amount of the Notes, plus accrued
interest (in the amount of $19.48 per $1,000 principal amount of Notes) through
February 25, 1999 (the "Payment Date"), or a later date if the Expiration Date
is extended as set forth in "The Offer -- Expiration Date; Extensions;
Amendments; Termination." The Company will not extend the Expiration Date unless
required by law. Unless the Company fails to pay the Purchase Price, any Notes
properly tendered pursuant to the Offer and accepted for payment will cease to
accrue interest after the Payment Date. ANY NOTES NOT SURRENDERED IN THE OFFER
(OR SURRENDERED AND WITHDRAWN PRIOR TO THE EXPIRATION DATE) WILL REMAIN
OBLIGATIONS OF THE COMPANY AND WILL CONTINUE TO ACCRUE INTEREST AND HAVE ALL OF
THE BENEFITS OF THE INDENTURE, INCLUDING BEING CONVERTIBLE INTO SHARES OF THE
COMMON STOCK OF THE COMPANY (THE "REMINGTON COMMON STOCK") AT A CONVERSION PRICE
OF $11.00 PER SHARE, SUBJECT TO THE TERMS OF THE INDENTURE.
(Continued on following page)
January 20, 1999
<PAGE> 2
(Continued from preceding page)
Any holder of Notes (a "Holder") desiring to tender all or any portion of
such Holder's Notes must comply with the procedures for tendering Notes set
forth herein in "Procedures for Tendering Notes" and in the Letter of
Transmittal. Tenders of Notes may be withdrawn at any time prior to the
Expiration Date. In the event of a withdrawal of Notes, the Notes so withdrawn
will be promptly returned to the Holder.
THIS OFFER TO PURCHASE IS REQUIRED TO BE MADE UNDER THE INDENTURE. THIS
OFFER TO PURCHASE IS GOVERNED BY THE INDENTURE AND APPLICABLE LAW AND DOES NOT
CONSTITUTE A REDEMPTION OF, OR AN ELECTION BY THE COMPANY TO REDEEM, THE NOTES.
HOLDERS HAVE AN ELECTION WHETHER OR NOT TO ACCEPT THE OFFER.
The Offer is being made pursuant to the Indenture, dated as of December 1,
1992 (the "Indenture"), between the Company and United States Trust Company of
New York, as Trustee (the "Trustee"), which provides that, following a change in
control (as defined in the Indenture), each Holder will have the right, at such
Holder's option, to require the Company to repurchase all or a portion of such
Holder's Notes at the Purchase Price (a "Change in Control Right"). A Change in
Control (as defined herein) occurred on December 28, 1998, as a result of the
Company's recapitalization of its two classes of common stock into Remington
Common Stock, all the shares of which carry one vote (the "Recapitalization").
As a result of the Recapitalization, former holders of the Company's Class A
(Voting ) Stock no longer held a majority of the voting control of the Company,
triggering a change of control provision in the Indenture.
Through January 15, 1999, the last closing price expressed as a percent of
principal amount of the Notes, as reported on the Nasdaq SmallCap Market was
97%. The last reported sale occurred on January 12, 1999. The closing price per
share of Remington Common Stock, as reported on the Nasdaq National Market
System was $3.188 on January 15, 1999.
Tenders of Notes may be withdrawn at any time prior to the Expiration Date.
In the event of a termination of the Offer, the Notes tendered pursuant to the
Offer will be promptly returned to the tendering Holders.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment) and applicable law, the Company will purchase by accepting for
payment, and will pay for, all Notes validly tendered (and not properly
withdrawn) pursuant to the Offer on the Payment Date, and such payment will be
made by the deposit of immediately available funds by the Company with United
States Trust Company of New York (the "Depositary"), which will act as agent for
tendering Holders for the purpose of receiving payment from the Company and
transmitting such payment to tendering Holders.
No person has been authorized to give any information or to make any
representations directly related to this Offer other than those contained in
this Offer to Purchase and, if given or made, such information or
representations must not be relied upon as having been authorized. This Offer to
Purchase and related documents do not constitute an offer to buy or the
solicitation of an offer to sell securities in any circumstances in which such
offer or solicitation is unlawful. The delivery of this Offer to Purchase shall
not, under any circumstances, create any implication that the information
contained herein is current as of any time subsequent to the date of such
information.
Any questions or requests for assistance or for additional copies of this
Offer to Purchase or related documents may be directed to the Depositary at one
of its telephone numbers set forth on the back cover page hereof. Any beneficial
owner owning interests in Notes may contact such beneficial owner's broker,
dealer, commercial bank, trust company or other nominee for assistance
concerning the Offer.
ii
<PAGE> 3
AVAILABLE INFORMATION
The Company is subject to the informational requirements of the Securities
Exchange Act of 1934, as amended (the "Exchange Act"), and in accordance
therewith files reports, proxy statements and other information with the
Securities and Exchange Commission (the "Commission"). Such reports, proxy
statements and other information concerning the Company can be inspected and
copied at the public reference facilities maintained by the Commission at 450
Fifth Street, N.W., Room 1024, Washington, D.C. 20549, and at the Commission's
Regional Office at Seven World Trade Center, Suite 1300, New York, New York
10048 and Citicorp Center, 500 West Madison Street, Suite 1400, Chicago,
Illinois 60661-2511. Copies of such material also can be obtained, at prescribed
rates, from the Public Reference Section of the Commission at 450 Fifth Street,
N.W., Washington, D.C. 20549. The Commission maintains a site on the Internet's
World Wide Web at http://www.sec.gov that contains reports, proxy and
information statements and other information regarding registrants that file
electronically with the Commission, including the Company. The Notes are listed
and traded on the NASDAQ SmallCap Market and such reports, proxy statements and
other information concerning the Company may be inspected at the offices of the
NASD, 1735 K Street, N.W., Washington, D.C. 20006.
This Offer to Purchase constitutes a part of an Issuer Tender Offer
Statement on Schedule 13E-4 (the "Schedule 13E-4") filed with the Commission by
the Company pursuant to Section 13(e) of the Exchange Act and the rules and
regulations promulgated thereunder. The Schedule 13E-4 and all exhibits thereto
are incorporated in this Offer to Purchase by reference.
INCORPORATION OF CERTAIN DOCUMENTS BY REFERENCE
The following documents, which have been filed by the Company with the
Commission under the Exchange Act, are incorporated by reference:
(1) The Company's Annual Report on Form 10-K for the year ended
December 31, 1997.
(2) The Company's Quarterly Report on Form 10-Q for the quarter ended
September 30, 1998.
The following document, which has been filed by the Company with the
Commission under the Securities Act of 1933, is incorporated by reference:
(1) The Company's Registration Statement on Form S-4, declared
effective by the Commission on November 27, 1998, relating to the
registration of the shares of the common stock of the Company.
All subsequently filed documents by the Company prior to the Expiration
Date pursuant to Section 13(a), 13(c), 14 or 15(d) of the Exchange Act shall be
deemed to be incorporated by reference herein and to be a part hereof from the
date any such document is filed. Any statement contained in a document
incorporated or deemed to be incorporated by reference herein shall be deemed to
be modified or superseded for purposes hereof to the extent that a statement
contained herein or in any other subsequently filed document that also is or is
deemed to be incorporated by reference herein modifies or supersedes such
statement. Any statement so modified or superseded shall not be deemed, except
as so modified or superseded, to constitute a part hereof.
The Company will provide without charge to each person to whom this Offer
to Purchase is delivered a copy of the documents incorporated by reference
herein, other than exhibits thereto not specifically incorporated by reference,
upon written or oral request to Remington Oil and Gas Corporation, 8201 Preston
Road, Suite 600, Dallas, Texas 75225, Attention: J. Burke Asher, telephone (214)
210-2650.
iii
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TABLE OF CONTENTS
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PAGE
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Available Information....................................... iii
Incorporation of Certain Documents by Reference............. iii
The Offer................................................... 1
General................................................... 1
Purpose and Effects of the Offer.......................... 1
Best Use of Company's Resources........................... 2
Expiration Date; Extensions; Amendments; Termination...... 2
Acceptance for Payment.................................... 3
Procedures For Tendering Notes.............................. 3
Tendering Notes........................................... 3
Guaranteed Delivery Procedures............................ 5
Withdrawal Rights......................................... 6
Certain Information Concerning the Company.................. 7
Recent Developments......................................... 7
Change in Control......................................... 7
Operations Update......................................... 7
Notes Convertible into Shares of Remington Common Stock... 8
Bank Credit Agreement..................................... 8
Sources and Amount of Funds................................. 9
Market Price Information.................................... 9
The Notes................................................. 9
Remington Common Stock.................................... 10
Selected Financial Data of the Company...................... 11
Certain Federal Income Tax Consequences..................... 12
The Depositary.............................................. 12
Miscellaneous............................................... 12
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iv
<PAGE> 5
THE OFFER
GENERAL
BECAUSE A CHANGE OF CONTROL AS DEFINED IN THE INDENTURE OCCURRED, THE COMPANY IS
REQUIRED TO MAKE THIS OFFER TO PURCHASE. IF NO CHANGE OF CONTROL HAD OCCURRED,
THE COMPANY WOULD NOT OFFER TO PURCHASE THE NOTES. THE COMPANY DOES NOT BELIEVE
THAT PURCHASING THE NOTES AT THIS TIME IS THE BEST USE OF THE COMPANY'S CAPITAL
OR CREDIT RESOURCES. NO ACTION BY THE NOTE HOLDER IS REQUIRED UNLESS THE NOTE
HOLDER WISHES TO TENDER NOTES UNDER THIS OFFER TO PURCHASE. NOTES NOT TENDERED
WILL REMAIN OBLIGATIONS OF THE COMPANY UNDER THE TERMS AND CONDITIONS OF THE
INDENTURE. SEE "BEST USE OF COMPANY'S RESOURCES."
The Company hereby offers, upon the terms and subject to the conditions set
forth in this Offer to Purchase, to purchase for cash at the Purchase Price any
and all Notes that are properly tendered (and not properly withdrawn), pursuant
to the terms and conditions set forth herein, prior to the Expiration Date. The
Company will accept only tenders of Notes or a portion thereof which are in an
amount equal to $1,000 principal amount of Notes or integral multiples thereof.
Tenders of Notes may be withdrawn at any time prior to the Expiration Date. In
the event of a termination of the Offer, the Notes tendered pursuant to the
Offer will be returned promptly to the tendering Holders.
Upon the terms and subject to the conditions of the Offer (including, if
the Offer is extended or amended, the terms and conditions of any such extension
or amendment) and applicable law, on the Payment Date the Company will purchase
by accepting for payment, and will pay for, all Notes validly tendered (and not
properly withdrawn) pursuant to the Offer. Such payment will be made by the
deposit of immediately available funds by the Company with the Depositary, which
will act as agent for tendering Holders for the purpose of receiving payment
from the Company and transmitting such payment to tendering Holders.
If less than all the principal amount of Notes held by a Holder is tendered
and accepted pursuant to the Offer, the Company will issue, and the Trustee will
authenticate and deliver to or on the order of the Holder thereof, at the
expense of the Company, new Notes of authorized denominations, in principal
amount equal to the portion of the Notes not tendered or not accepted, as the
case may be, as promptly as practicable after the Payment Date.
No Note tendered pursuant to this Offer may be converted into shares of
Remington Common Stock after such Note has been properly tendered to the
Depositary unless the tender of such Note is properly withdrawn, the Company
defaults in payment of the Purchase Price, or the Offer is terminated without
the purchase of Notes.
After the Expiration Date, the Company may purchase additional Notes in the
open market, in privately negotiated transactions, through subsequent tender or
exchange offers or otherwise, subject to compliance with applicable law. Any
future purchases may be on the same terms or on terms that may be more or less
favorable to Holders than the terms of the Offer. Any future purchases will
depend on various factors at that time.
PURPOSE AND EFFECTS OF THE OFFER
The Offer is required to be made pursuant to the Indenture, which provides
that upon the occurrence of a Change in Control (as defined below) each Holder
of Notes will have the right, at such Holder's option, to require the Company to
purchase all or a portion of such Holder's Notes, in denominations of $1,000 or
integral multiples thereof, at a purchase price equal to 100% of the principal
amount thereof plus accrued and unpaid interest through the Payment Date. A
"Change in Control" is deemed to have occurred because the shares of the
Company's Class A (Voting) Common Stock and Class B (Non-Voting) Common Stock
were converted into shares of Remington Common Stock, all the shares of which
are entitled to one vote. Prior to the Recapitalization, the Company's Class A
(Voting) shares, while representing a minority of the total
<PAGE> 6
outstanding shares of the Company's stock, nonetheless had voting control.
Following the conversion to Remington Common Stock former holders of the Class A
(Voting) shares no longer held a majority of the voting common stock of the
Company. This change in the control status of the Class A (Voting ) stockholders
resulted in a change of control as defined in the Indenture.
This Offer to Purchase serves as the "Change in Control Notice" required by
the Indenture.
The Notes purchased in the Offer will cease to be outstanding and will be
delivered to the Trustee for cancellation immediately after such purchase. Any
Notes which remain outstanding after consummation of the Offer will continue to
be obligations of the Company and will continue to be convertible at the option
of the Holder thereof into shares of Remington Common Stock. The Indenture does
not contain any limitations on the ability of the Company to incur additional
indebtedness.
Holders of Notes that are not tendered pursuant to the Offer will not have
the right after the Expiration Date to exercise their Change in Control Rights
relating to such Notes as a result of the recapitalization of the Company's
common stock. Depending upon, among other things, the amount of Notes
outstanding after the consummation of the Offer, the liquidity of untendered
Notes may be adversely affected by the Offer. If a market for the Notes
continues following the Offer, Notes may trade at a discount compared to present
trading prices depending on prevailing interest rates, the market for securities
with similar credit features, the performance of the Company and other factors.
In addition, if substantially all of the Notes are tendered pursuant to the
Offer, the Company may consider delisting the Notes from the NASDAQ SmallCap
Market. Accordingly, there is no assurance that an active market in the Notes
will exist following consummation of the Offer and no assurance as to the prices
at which the Notes may trade.
BEST USE OF COMPANY'S RESOURCES
The Company does not believe that purchasing the Notes at this time is the
best use of the Company's capital or credit resources. Due to the recent and
substantial decline in oil and gas prices, the Company believes that there are,
and will continue to be, attractively priced asset acquisition opportunities
within the Company's core operating areas. Given the substantial cash, borrowing
capacity, and low debt levels of the Company, management and the directors
believe that the Company is positioned to take advantage of these opportunities.
Management believes that it can better pursue its objective of increasing value
to equity owners (including owners of derivative securities such as the Notes,
which are convertible into Remington Common Stock) by utilizing presently
available financial resources to take advantage of these asset acquisition
opportunities rather than using the financial resources to redeem the Notes.
EXPIRATION DATE; EXTENSIONS; AMENDMENTS; TERMINATION
The Offer will expire on the Expiration Date, which pursuant to the
Indenture is the fourth business day next preceding the Payment Date, unless
extended pursuant to the procedures set forth herein. The Indenture does not
provide for extending the Offer unless required by law. During any extension of
the Offer, all Notes previously tendered pursuant to the Offer (and not properly
withdrawn) will remain subject to the Offer and may be accepted for payment by
the Company, subject to the withdrawal rights of Holders.
The Company also expressly reserves the right, subject to the requirements
of the Indenture and applicable law, to amend the terms of the Offer in any
respect.
Any extension, termination or amendment of the Offer will be followed as
promptly as practicable by a public announcement thereof. Without limiting the
manner in which the Company may choose to make a public announcement of any
extension, termination or amendment of the Offer, the Company shall have no
obligation to publish, advertise or otherwise communicate any such public
announcement, other than by issuing a release to the Dow Jones News Service,
except in the case of an announcement of an extension of the Offer, in which
case the Company shall have no obligation to publish, advertise or otherwise
communicate such announcement other than by issuing a notice of such extension
by press release or other public announcement, which notice shall be issued no
later than 9:00 a.m., New York City time, on the next business day following the
previously scheduled Expiration Date.
2
<PAGE> 7
ACCEPTANCE FOR PAYMENT
Upon the terms and subject to the conditions to the Offer (including if the
Offer is extended or amended, the terms of such extension or amendment) and
applicable law, the Company will purchase by accepting for payment, and will pay
for, all Notes properly tendered (and not properly withdrawn) pursuant to the
Offer, on the Payment Date. In all cases, payment by the Depositary to tendering
Holders will be made only after timely receipt by the Depositary of the
documentation described under "Procedures for Tendering Notes -- Tendering
Notes."
For purposes of the Offer, the Company shall be deemed to have accepted for
payment (and thereby to have purchased) tendered Notes, if and when the Company
gives oral or written notice to the Depositary of the Company's acceptance of
such Notes for payment. Subject to the terms and conditions of the Offer,
payment for Notes so accepted will be made by deposit of the consideration
therefor with the Depositary. The Depositary will act as agent for tendering
Holders for the purpose of receiving payment from the Company and then
transmitting payment to such tendering Holders.
PROCEDURES FOR TENDERING NOTES
TENDERING NOTES
The tender of Notes pursuant to any of the procedures set forth in this
Offer to Purchase and in the Letter of Transmittal will constitute a binding
agreement between the tendering Holder and the Company upon the terms and
subject to the conditions of the Offer. The tender of Notes will constitute an
agreement to deliver good and marketable title to all tendered Notes prior to
the Expiration Date free and clear of all liens, charges, claims, encumbrances,
interests and restrictions of any kind.
EXCEPT AS PROVIDED IN "-- GUARANTEED DELIVERY PROCEDURES," UNLESS THE NOTES
BEING TENDERED ARE DEPOSITED BY THE HOLDER WITH THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE (ACCOMPANIED BY A PROPERLY COMPLETED AND DULY EXECUTED LETTER OF
TRANSMITTAL), THE COMPANY MAY, AT ITS OPTION, REJECT SUCH TENDER. PAYMENT FOR
NOTES WILL BE MADE ONLY AGAINST DEPOSIT OF TENDERED NOTES AND DELIVERY OF ALL
OTHER REQUIRED DOCUMENTS.
Only record Holders of Notes are authorized to exercise a Change in Control
Right and tender their Notes pursuant to the Offer. Accordingly, to properly
exercise a Change in Control Right and tender Notes or cause Notes to be
tendered, the following procedures must be followed:
NOTES HELD THROUGH DTC. Each beneficial owner of Notes who wishes to
tender Notes held through a participant (a "DTC Participant") of The
Depository Trust Company ("DTC") (i.e., a custodian bank, depositary,
broker, trust company or other nominee) must instruct such DTC Participant
to cause its Notes to be tendered in accordance with the procedures set
forth in this Offer to Purchase.
Pursuant to an authorization given by DTC to the DTC Participants,
each DTC Participant that holds Notes through DTC must (i) transmit its
acceptance through the DTC Automated Tender Offer Program ("ATOP") (for
which the transaction will be eligible), and DTC will then edit and verify
the acceptance, execute a book-entry delivery to the Depositary's account
at DTC and send an Agent's Message (as defined below) to the Depositary for
its acceptance or (ii) comply with the guaranteed delivery procedures set
forth in this Offer to Purchase. Promptly after the date of this Offer to
Purchase, the Depositary will establish accounts at DTC for purposes of the
Offer with respect to Notes held through DTC, and any financial institution
that is a DTC Participant may make book-entry delivery of interests in
Notes into the Depositary's account through ATOP. Although delivery of
interests in the Notes may be effected through book-entry transfer into the
Depositary's account through ATOP, an Agent's Message in connection with
such book-entry transfer, and any other required documents, must, in any
case, be transmitted to and received by the Depositary at its address set
forth on the back cover of this Offer to Purchase, or the guaranteed
delivery procedures set forth below must be complied with, in each case,
prior to the Expiration Date. Delivery of documents to DTC does not
constitute delivery to the
3
<PAGE> 8
Depositary. The confirmation of a book-entry transfer into the Depositary's
account at DTC, as described above, is referred to herein as a "Book-Entry
Confirmation."
The term "Agent's Message" means a message transmitted by DTC to, and
received by, the Depositary and forming a part of the Book-Entry
Confirmation, which states that DTC has received an express acknowledgment
from each DTC Participant tendering through ATOP that such DTC Participant
has received a Letter of Transmittal and agrees to be bound by the terms of
the Letter of Transmittal and that the Company may enforce such agreement
against such DTC Participant.
All Notes currently held through DTC have been issued in the form of a
global note registered in the name of Cede & Co., DTC's nominee (the
"Global Note"). At or as of the Expiration Date, DTC will deliver to the
Depositary a properly completed and duly executed Letter of Transmittal
with respect to the aggregate principal amount of Notes as to which it has
delivered Agent's Messages, and Cede & Co. will deliver to the Depositary
the Global Note. At or as of the close of business on the third business
day after the Expiration Date, DTC will deliver to the Depositary a
properly completed and duly executed Letter of Transmittal for the
aggregate principal amount of Notes as to which it has delivered Agent's
Messages relating to Notices of Guaranteed Delivery as described under
"-- Guaranteed Delivery Procedures." Thereafter, the aggregate principal
amount of the Global Note will be reduced to represent the aggregate
principal amount of Notes held through DTC and not tendered pursuant to the
Offer, and the Global Note will be returned to Cede & Co.
NOTES HELD BY RECORD HOLDERS. Each record Holder who wishes to tender
Notes must complete and sign a Letter of Transmittal and mail or deliver
such Letter of Transmittal and any other documents required by the Letter
of Transmittal together with certificate(s) representing all tendered
Notes, to the Depositary at its address set forth on the back cover page of
this Offer to Purchase, or the Holder must comply with the guaranteed
delivery procedures set forth in this Offer to Purchase.
All signatures on a Letter of Transmittal must be guaranteed by a
recognized participant in the Securities Transfer Agents Medallion Program,
the NYSE Medallion Signature Program or the Stock Exchange Medallion
Program; provided, however, that signatures on a Letter of Transmittal need
not be guaranteed if such Notes are tendered for the account of an Eligible
Institution (as defined herein). If a Letter of Transmittal or any Note is
signed by a trustee, executor, administrator, guardian, attorney-in-fact,
agent, officer of a corporation or other person acting in a fiduciary or
representative capacity, such person must so indicate when signing and
submit proper evidence satisfactory to the Company of the authority of such
person so to act.
No alternative, conditional, irregular or contingent tenders will be
accepted (unless waived). By executing a Letter of Transmittal or
transmitting an acceptance through ATOP, each tendering Holder waives any
right to receive any notice of the acceptance for purchase of its Notes.
LOST OR MISSING CERTIFICATES. If a record Holder desires to tender
Notes pursuant to the Offer, but the certificates representing such Notes
have been mutilated, lost, stolen or destroyed, such Holder should write to
or telephone the Trustee about procedures for obtaining replacement
certificates representing such Notes, arranging for indemnification or any
other matter which requires handling by the Trustee.
BACKUP FEDERAL INCOME TAX WITHHOLDING. Under the "backup withholding"
provisions of federal income tax law, unless a tendering Holder or his or
her assignee (in either case, the "Payee") satisfies the conditions
described in Instruction 5 of the Letter of Transmittal or is otherwise
exempt, the aggregate purchase price may be subject to backup withholding
tax at a rate of 31%. To prevent backup withholding, each Payee should
complete and sign the Substitute Form W-9 provided in the Letter of
Transmittal. See Instruction 5 of the Letter of Transmittal.
EFFECT OF LETTER OF TRANSMITTAL. Subject to, and effective upon the
acceptance for, purchase of and payment for Notes tendered thereby, by
executing and delivering a Letter of Transmittal a tendering Holder (i)
irrevocably sells, assigns and transfers to the Company, all right, title
and interest in and to all Notes tendered thereby, (ii) waives any and all
rights with respect to such Notes (including without
4
<PAGE> 9
limitation any existing or past defaults and their consequences with
respect to such Notes and the Indenture), (iii) releases and discharges the
Company from any and all claims such Holder may have now or may have in the
future arising out of, or related to, such Notes, including without
limitation any claim that such Holder is entitled to receive additional
principal or interest payments with respect to such Notes or to participate
in any redemption or defeasance of the Notes and (iv) irrevocably
constitutes and appoints the Depositary the true and lawful agent and
attorney-in-fact of such Holder with respect to any such Notes, with full
power of substitution and resubstitution (such power of attorney being
deemed to be an irrevocable power coupled with an interest) to (a) deliver
certificates representing such Notes, or transfer ownership of such Notes,
on the account books maintained by DTC, together, in any such case, with
all accompanying evidences of transfer and authenticity, to the Company,
(b) present such Notes for transfer on the relevant security register and
(c) receive all benefits or otherwise exercise all rights of beneficial
ownership of such Notes (except that the Depositary will have no rights to,
or control over, funds from the Company, except as agent for the Company,
for the Purchase Price for any tendered Notes that are purchased by the
Company), all in accordance with the terms of the Offer.
All questions as to the validity, form, eligibility (including time of
receipt) and acceptance of tendered Notes will be resolved by the Company,
whose determination will be final and binding. The Company reserves the
absolute right to reject any or all tenders that are not in proper form or
the acceptance of which may, in the opinion of counsel for the Company, be
unlawful. The Company also reserves the absolute right to waive any
condition to the Offer and any irregularities or conditions of tender as to
particular Notes. The Company's interpretation of the terms and conditions
of the Offer (including the instructions in the Letter of Transmittal) will
be final and binding. Unless waived, any irregularities in connection with
tenders must be cured within such time as the Company shall determine. The
Company and the Depositary shall not be under any duty to give notification
of defects in such tenders and shall not incur liabilities for failure to
give such notification. Tenders of Notes will not be deemed to have been
made until such irregularities have been cured or waived. Any Notes
received by the Depositary that are not properly tendered and as to which
the irregularities have not been cured or waived will be returned by the
Depositary to the tendering Holder, unless otherwise provided in the Letter
of Transmittal, as soon as practicable following the Expiration Date.
LETTERS OF TRANSMITTAL AND NOTES MUST BE SENT ONLY TO THE DEPOSITARY. DO
NOT SEND LETTERS OF TRANSMITTAL OR NOTES TO THE COMPANY.
THE METHOD OF DELIVERY OF NOTES AND LETTERS OF TRANSMITTAL, ANY REQUIRED
SIGNATURE GUARANTEES AND ALL OTHER REQUIRED DOCUMENTS, INCLUDING DELIVERY
THROUGH DTC AND ANY ACCEPTANCE THROUGH ATOP, IS AT THE ELECTION AND RISK OF THE
PERSONS TENDERING AND DELIVERING ACCEPTANCES OR LETTERS OF TRANSMITTAL, AND,
EXCEPT AS OTHERWISE PROVIDED IN THE LETTER OF TRANSMITTAL, DELIVERY WILL BE
DEEMED MADE ONLY WHEN ACTUALLY RECEIVED BY THE DEPOSITARY. IF DELIVERY IS BY
MAIL, IT IS SUGGESTED THAT THE HOLDER USE PROPERLY INSURED, REGISTERED MAIL WITH
RETURN RECEIPT REQUESTED, AND THAT THE MAILING BE MADE SUFFICIENTLY IN ADVANCE
OF THE EXPIRATION DATE TO PERMIT DELIVERY TO THE DEPOSITARY PRIOR TO THE
EXPIRATION DATE.
GUARANTEED DELIVERY PROCEDURES
DTC PARTICIPANTS. A DTC Participant who wishes to cause its Notes to be
tendered, but who cannot transmit its acceptance through ATOP prior to the
Expiration Date, may cause a tender to be effected if:
(a) guaranteed delivery is made by or through a firm or other entity
identified in Rule 17Ad-15 under the Exchange Act (an "Eligible
Institution"), including (as such terms are defined therein): (i) a bank;
(ii) a broker, dealer, municipal securities dealer, municipal securities
broker, government securities dealer or government securities broker; (iii)
a credit union; (iv) a national securities exchange, registered securities
association or clearing agency; or (v) a savings institution that is a
participant in a Securities Transfer Association recognized program; and
(b) prior to 12:00 noon, New York City time, on the Expiration Date,
the Depositary receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by
5
<PAGE> 10
mail, hand delivery, facsimile transmission or overnight courier)
substantially in the form provided herewith; and
(c) Book-Entry Confirmation of the transfer into the Depositary's
account at DTC, and all other documents required by the Letter of
Transmittal, are received by the Depositary within three New York Stock
Exchange trading days after the date of receipt by the Depositary of such
Notice of Guaranteed Delivery.
RECORD HOLDERS. A record Holder who wishes to tender its Notes but (x)
whose Notes are not immediately available and will not be available for
tendering prior to the Expiration Date or (y) who cannot deliver its Notes, the
Letter of Transmittal, or any other required documents to the Depositary prior
to the Expiration Date, may effect a tender if:
(a) the tender is made by or through an Eligible Institution; and
(b) prior to 12:00 noon, New York City time, on the Expiration Date,
the Depositary receives from such Eligible Institution a properly completed
and duly executed Notice of Guaranteed Delivery (by mail, hand delivery,
facsimile transmission or overnight courier) substantially in the form
provided herewith; and
(c) a properly completed and executed Letter of Transmittal, as well
as the certificate(s) representing all tendered Notes in proper form for
transfer, and all other documents required by the Letter of Transmittal,
are received by the Depositary within three New York Stock Exchange trading
days after the date of receipt by the Depositary of such Notice of
Guaranteed Delivery.
Under no circumstances will interest be paid by the Company by reason of
any delay in making payment to any person using the guaranteed delivery
procedures described above.
WITHDRAWAL RIGHTS
Tenders of Notes (or any portion of such Notes in integral multiples of
$1,000) may be withdrawn at any time prior to the Expiration Date.
NOTES HELD THROUGH DTC. A DTC Participant who has transmitted its
acceptance through ATOP of Notes held through DTC may, prior to the Expiration
Date, withdraw the instruction given thereby by (i) withdrawing its acceptance
through ATOP or (ii) delivering to the Depositary by mail, hand delivery or
facsimile transmission a notice of withdrawal of such instruction. Such notice
of withdrawal must contain the name and number of the DTC Participant, the
principal amount of Notes to which such withdrawal relates and the signature of
the DTC Participant. Withdrawal of such an instruction will be effective upon
receipt of such notice of withdrawal by the Depositary.
NOTES HELD BY RECORD HOLDERS. A Holder may withdraw its tender of Notes,
prior to the Expiration Date, by delivering to the Depositary by mail, hand
delivery or facsimile transmission a notice of withdrawal. Any such notice of
withdrawal must (i) specify the name of the person who tendered the Notes to be
withdrawn, (ii) contain a description of the Notes to be withdrawn and identify
the certificate number or numbers shown on the particular certificates
evidencing such Notes and the aggregate principal amount represented by such
Notes and (iii) be signed by the Holder of such Notes in the same manner as the
original signature on the Letter of Transmittal by which such Notes were
tendered (including any required signature guarantees), or be signed by another
person and accompanied by (x) documents of transfer in a form acceptable to the
Company, in its sole discretion, and (y) a properly completed irrevocable proxy
that authorizes such person to effect such revocation on behalf of such Holder.
If the Notes to be withdrawn have been delivered or otherwise identified to the
Depositary, a signed notice of withdrawal is effective immediately upon receipt
by the Depositary even if physical release is not yet effected. Any Notes
properly withdrawn will be deemed not to be validly tendered for purposes of the
Offer.
All signatures on a notice of withdrawal must be guaranteed by a recognized
participant in the Securities Transfer Agents Medallion Program, the NYSE
Medallion Signature Program or the Stock Exchange
6
<PAGE> 11
Medallion Program; provided, however, that signatures on the notice of
withdrawal need not be guaranteed if the Notes being withdrawn are held for the
account of an Eligible Institution.
A withdrawal of an instruction or a withdrawal of a tender must be executed
by a DTC Participant or a Holder, as the case may be, in the same manner as the
person's name appears on its transmission through ATOP or Letter of Transmittal,
as the case may be, to which such withdrawal relates. If a notice of withdrawal
is signed by a trustee, partner, executor, administrator, guardian,
attorney-in-fact, agent, officer of a corporation or other person acting in a
fiduciary or representative capacity, such person must so indicate when signing
and must submit with the revocation appropriate evidence of authority to execute
the notice of withdrawal. A Holder or DTC Participant may withdraw a tender only
if such withdrawal complies with the provisions of this Offer to Purchase.
A withdrawal of an instruction previously given pursuant to the
transmission of an acceptance through ATOP or a withdrawal of a tender by a
Holder may be rescinded only by (i) a new transmission of acceptance through
ATOP, or (ii) execution and delivery of a new Letter of Transmittal, as the case
may be, in accordance with the procedures described herein.
CERTAIN INFORMATION CONCERNING THE COMPANY
The Company is an independent exploration and production company primarily
engaged in the exploration for, and the development of, oil and natural gas. The
Company was initially organized in 1981 as OKC Limited Partnership (the
"Predecessor Partnership") and converted to a corporation in 1992. The Company's
name was changed from Box Energy Corporation to Remington Oil and Gas
Corporation in December 1997. The Company is a Delaware corporation with
executive offices located at 8201 Preston Road, Suite 600, Dallas, Texas
75225-6211, telephone number (214) 210-2650.
RECENT DEVELOPMENTS
CHANGE IN CONTROL
The Company filed a Certificate of Merger and Restated Certificate of
Incorporation with the Secretary of State of the State of Delaware effective
December 28, 1998. Under the Certificate of Merger, S-Sixteen Holding Company
("SSHC") was merged into the Company pursuant to the Agreement and Plan of
Merger between the Company and SSHC dated as of June 22, 1998 (the "Merger
Agreement"). In addition, the Merger Agreement and the Company's Restated
Certificate of Incorporation provided for the recapitalization of the Company's
Common Stock from two classes of common stock, only one class of which carried
voting rights, to a single class of common stock, all the shares of which have
an equal vote. The Merger Agreement was approved by the Company's Stockholders
on December 23, 1998. The Recapitalization was effective on December 28, 1998.
Prior to the Recapitalization, the Company's Class A Stock, while representing
only 15.8% of the outstanding equity of the Company, held exclusive voting
rights. Following the Recapitalization, the Class A (Voting) shares were
converted into shares of the Company's Common Stock representing approximately
17.3% of the outstanding equity (the "Conversion Percentage"). Because the
Conversion Percentage is less than 50% following the Recapitalization, a change
of control provision in the Indenture was triggered.
OPERATIONS UPDATE
FORWARD-LOOKING INFORMATION
This Offer to Purchase includes forward-looking statements within the
meaning of Section 27A of the Securities Act and Section 21E of the Exchange
Act. All statements other than statements of historical fact included in this
Offer to Purchase are forward-looking statements. Although Remington believes
that its expectations are based upon reasonable assumptions, no assurance can be
given that actual results may not differ materially from those in the
forward-looking statements. Important factors that could cause actual
7
<PAGE> 12
results to vary materially from the expectations of Remington include, among
other things, the prices received or the demand for oil and gas, the uncertainty
of reserve estimates, operating hazards, competition and the effects of
governmental and environmental regulation and conditions in the capital and
equity markets as well as other factors discussed or incorporated by reference
in this Offer to Purchase.
During 1997 and 1998, the management of the Company repositioned the
Company. As compared to 1996, the Company estimates that 1998 results of
operations will include reductions of operating costs by approximately 33%,
general and administrative expenses by approximately 50%, and dry hole costs by
approximately 87%. At January 1, 1998, quantities of oil and gas reserves were
approximately 7% higher than at January 1, 1997. Management expects another
increase in quantities of reserves at January 1, 1999. In addition to reducing
overall general and administrative costs significantly, the Company has been
staffed with highly qualified technical personnel who have been provided an
extensive 3-d seismic data base and the computer software and hardware to
efficiently utilize this data base. The Company's capital budget in early 1999
is dedicated to projects that are expected to result in near term production
increases, which the Company believes will help to achieve its goal of a 35%
production increase in 1999 over 1998 levels. Drilling has commenced at Main
Pass 262 in the Gulf of Mexico, where if the planned sidetrack and deepening of
the #3 well is successful, production through the existing platform can be
commenced immediately after completing the well. Additional developmental
drilling is planned in South Pass Block 87 and Eugene Island 135 to commence
late in January or early February 1999. If the drilling is successful,
production can be commenced through existing platforms immediately after
completing these wells. Two wells are planned in south Texas on an extensive 3-d
survey conducted in 1997 and 1998. If successful, production can be established
quickly on these properties. Approximately $15 million of the Company's $25
million budget for 1999 is dedicated to projects that can result in near term
production increases. The remainder of the Company's planned budget for 1999,
which is designed to stay within available cash flow, will be dedicated to
longer term investments in acreage and prospects for the future.
NOTES CONVERTIBLE INTO SHARES OF REMINGTON COMMON STOCK
As a result of the Recapitalization, the Notes are now convertible into
shares of Remington Common Stock, all the shares of which have an equal vote,
and are no longer convertible into shares of the Class B (Non-Voting) Common
Stock. A Supplemental Indenture regarding this change will be filed by the
Company with the Trustee of the Notes.
BANK CREDIT AGREEMENT
On September 30, 1998, the Company extended and increased its bank
revolving credit facility with Comerica Bank -- Texas. The extended credit
facility provides for a maximum of $50 million and has a term of 18 months. The
initial borrowing base under the facility is $15 million with an automatic
increase to $20 million in the event no more than $10 million of the Notes are
tendered. The borrowing base is also subject to amortization of $1.25 million
per month ($1.67 million in case of a $20 million borrowing base) starting in
April 1999, if the Company fails to increase reserves as specified in the credit
agreement. Likewise, the borrowing base is subject to increase as reserves
increase in accordance with the loan agreement. Up to $15 million of the funds
available through the credit facility may be used for general corporate
purposes. Amounts advanced in excess of the $15 million may be used to acquire
producing oil and gas properties. The Company's oil and gas properties serve as
collateral for the credit facility. The Company is in discussions with the bank
regarding an increase in the borrowing base under the credit facility based on
reserve additions associated with the 1998 drilling program, along with the
properties acquired from UPRC in December 1998 and the oil pipeline acquired in
the merger and Recapitalization completed December 28, 1998. As of January 18,
1999, the loan balance was $3.5 million, and letters of credit aggregating
$250,000 were outstanding under the facility.
Borrowings under the credit facility bear interest at the lender's floating
base rate plus up to one-half percentage point depending on utilization as
defined in the credit agreement. The present interest rate is 7.75% per annum.
The Company also has an option to borrow at rates based on the London Interbank
Offered Rates ("LIBOR"). To date the Company has not utilized the LIBOR option.
8
<PAGE> 13
SOURCES AND AMOUNT OF FUNDS
The precise amount of funds required by the Company to purchase Notes
tendered pursuant to the Offer and to pay the fees and expenses related to the
Offer will not be known until the Expiration Date. If all outstanding Notes were
tendered and purchased, the aggregate amount of funds required to pay the
Purchase Price would be $39,118,467. The Company has not arranged permanent
financing to fund the purchase of the Notes. Management anticipates utilizing
available working capital and current revolving bank line of credit financing
plus, to the extent necessary, arranging additional bank credit and/or issuing
preferred stock sufficient to cover amounts in excess of currently available
funds. There can be no assurance, however, that sufficient additional bank
credit will be made available to the Company.
MARKET PRICE INFORMATION
THE NOTES
The Notes are listed and traded on the NASDAQ SmallCap Market under the
symbol "ROILG." The following table sets forth the high and low last sales
prices expressed as a percent of principal amount of the Notes, as reported by
the NASDAQ SmallCap Market, for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
----- -----
<S> <C> <C>
Year ended December 31, 1997
First Quarter............................................. 102.0% 94.0%
Second Quarter............................................ 99.5 92.0
Third Quarter............................................. 103.5 93.0
Fourth Quarter............................................ 103.8 96.4
Year ended December 31, 1998
First Quarter............................................. 96.4% 94.5%
Second Quarter............................................ 94.5 92.5
Third Quarter............................................. 95.5 90.5
Fourth Quarter............................................ 97.0 94.5
Year ended December 31, 1999
First Quarter (through January 15, 1999).................. 97.0% 97.0%
</TABLE>
Through January 15, 1999, the last reported sales price of the Notes was
97%. The last reported sale occurred on January 12, 1999.
9
<PAGE> 14
REMINGTON COMMON STOCK
Prior to the Recapitalization which was effective December 28, 1998, the
Company had two classes of stock: Class A (Voting) Common Stock and Class B
(Non-Voting) Common Stock. The Notes were convertible only into shares of Class
B Common Stock, which was traded on the Nasdaq National Market System under the
trading symbol ROILB, and on the Pacific Exchange under the trading symbol
REMB.P. As a result of the Recapitalization, the Notes are now convertible into
shares of Remington Common Stock which is traded on the Nasdaq National Market
System under the trading symbol ROIL and on the Pacific Exchange under the
trading symbol REM.P. The following table sets forth the high and low last sales
prices per share for the Class B Common Stock through December 24, 1998, and
Remington Common Stock for the period December 28, 1998, through January 15,
1999, as reported by Nasdaq for the periods indicated.
<TABLE>
<CAPTION>
HIGH LOW
------ ------
<S> <C> <C>
Year ended December 31, 1997
First Quarter............................................. $9.313 $6.625
Second Quarter............................................ 7.500 5.813
Third Quarter............................................. 8.750 6.250
Fourth Quarter............................................ 8.125 5.063
Year ended December 31, 1998
First Quarter............................................. $6.375 $5.000
Second Quarter............................................ 6.750 5.375
Third Quarter............................................. 5.875 3.375
Fourth Quarter (Class B Stock through December 24,
1998).................................................. 4.688 2.875
Fourth Quarter (Remington Common Stock from December 28,
1998, through December 31, 1998)....................... 3.188 2.938
Year ended December 31, 1999
First Quarter (Remington Common Stock through January 15,
1999).................................................. $3.250 $3.000
</TABLE>
On January 15, 1999, the last reported sales prices of Remington Common
Stock was $3.188.
10
<PAGE> 15
SELECTED FINANCIAL DATA OF THE COMPANY
The following table presents selected historical financial data for the
Company for the periods indicated. The financial data for each of the two years
in the period ended December 31, 1997, have been derived from the audited
consolidated financial statements of the Company for such periods. The financial
data for the nine months ended September 30, 1998 and 1997 are unaudited, but in
the opinion of the Company reflect all adjustments (consisting only of normal
recurring accruals) necessary for a fair presentation of such data. The data for
the nine months ended September 30, 1998, are not necessarily indicative of
results of operations for the entire year. The data should be read in
conjunction with the consolidated financial statements, related notes and other
financial information of the Company incorporated by reference in this Offer to
Purchase. See "Incorporation of Certain Documents by Reference."
<TABLE>
<CAPTION>
AT OR FOR AT OR FOR
NINE MONTHS ENDED YEAR ENDED
SEPTEMBER 30, DECEMBER 31,
-------------------- ----------------------------
1998 1997 1997 1996
-------- -------- ------------ ------------
(IN THOUSANDS, EXCEPT PER SHARE AND RATIO DATA)
<S> <C> <C> <C> <C>
INCOME STATEMENT DATA:
Total Revenue............................... $ 81,090 $ 47,669 $ 61,053 $ 70,210
Net income (loss)........................... $ 21,665 $ (6,236) $(26,790) $ (7,662)
Basic income (loss) per share............... $ 1.06 $ (0.30) $ (1.31) $ 0.37
Diluted income (loss) per share............. $ 0.97 $ (0.30) $ (1.31) $ (0.37)
Ratio of Earnings to Fixed Charges.......... 8.04 * * *
BALANCE SHEET DATA:
Total assets................................ $140,736 $136,729 $ 98,515 $136,599
8 1/4% Convertible Subordinated Notes....... $ 38,371 $ 55,077 $ 38,371 $ 55,077
Other indebtedness.......................... $ 9,700 $ 6,000 $ 6,000 --
Stockholders' equity........................ $ 66,396 $ 64,767 $ 44,287 $ 74,356
Book Value per share........................ $ 3.26 $ 3.19 $ 2.18 $ 3.57
</TABLE>
- ---------------
* Fixed charges (as defined in Regulation S-K under the Exchange Act) exceeded
earnings (as defined in Regulation S-K) by $6,236 for the nine months ended
September 30, 1997, by $12,167 for the year ended December 31, 1997 and by
$9,432 for the year ended December 31, 1996.
11
<PAGE> 16
CERTAIN FEDERAL INCOME TAX CONSEQUENCES
The following discussion is for general information only and is based on
the federal income tax law now in effect, which is subject to change, possibly
retroactively. This summary does not discuss all aspects of federal income
taxation which may be relevant to any particular Holder in light of such
Holder's individual investment circumstances or to certain types of Holders
subject to special tax rules (e.g., financial institutions, broker-dealers,
insurance companies, tax-exempt organizations, and foreign taxpayers), nor does
it address specific state, local or foreign tax consequences. This summary
assumes that Holders have held their Notes as "capital assets" under the
Internal Revenue Code of 1986, as amended. EACH HOLDER IS URGED TO CONSULT SUCH
HOLDER'S TAX ADVISOR REGARDING THE SPECIFIC FEDERAL, STATE, LOCAL, AND FOREIGN
INCOME AND OTHER TAX CONSEQUENCES OF THE OFFER.
The receipt of cash by a Holder in exchange for Notes will be a taxable
transaction for federal income tax purposes and may also be a taxable
transaction under applicable state, local or foreign tax laws. Such Holder will
recognize gain or loss in an amount equal to the difference between (i) the
amount of cash received (other than that representing accrued interest) and (ii)
such Holder's adjusted tax basis in the Notes. Subject to the market discount
rules discussed below, such gain or loss will be capital gain or loss. If the
Holder has held such Notes for more than 12 months, the gain will be long-term
gain with a maximum federal income tax rate of 20%. Any capital loss will be
short-term loss if the Notes have been held for 12 months or less and long-term
loss if the Notes have been held for more than 12 months.
The payment of accrued interest on a Note generally will be treated as
ordinary income.
An exception to the capital gain treatment described above applies to a
Holder who holds a Note with a "market discount." Market discount is the amount
by which the Holder's basis in the Note immediately after its acquisition is
exceeded by the stated redemption price of the Note at maturity. A Note,
however, will be considered to have no market discount if such excess is less
than 1/4 of 1% of the stated redemption price of the Note at maturity multiplied
by the number of complete years from the Holder's acquisition date of the Note
to its maturity date. The gain realized by the Holder of a market discount Note
on its purchase by the Company will be treated as ordinary income to the extent
that a market discount has accrued (on a straight line basis or, at the election
of the Holder, on a constant interest basis) from the Holder's acquisition date
to the date of sale, unless the Holder has elected to include market discount in
income currently as it accrues. Gain in excess of such accrued market discount
will be subject to the capital gains rules described above.
THE DEPOSITARY
The Depositary for the Offer is United States Trust Company of New York.
All deliveries, correspondence and questions sent or presented to the Depositary
relating to the Offer should be directed to one of the addresses or telephone
numbers set forth on the back cover of this Offer to Purchase. Requests for
information or additional copies of the Offer to Purchase and the related Letter
of Transmittal should be directed to the Depositary.
The Company will pay the Depositary reasonable and customary compensation
for its services in connection with the Offer, plus reimbursement for reasonable
out-of-pocket expenses.
Brokers, dealers, commercial banks and trust companies will be reimbursed
by the Company for customary mailing and handling expenses incurred by them in
forwarding material to their customers.
MISCELLANEOUS
The Company is not aware of any jurisdiction where the making of the Offer
is not in compliance with the laws of such jurisdiction. If the Company becomes
aware of any jurisdiction where the making of the Offer would not be in
compliance with such laws, the Company will make a good faith effort to comply
with any such laws or seek to have such laws declared inapplicable to the Offer.
If, after such good faith effort, the Company cannot comply with any such
applicable laws, the Offer will not be made to (nor will tenders be accepted
from or on behalf of) the Holders residing in such jurisdiction.
12
<PAGE> 17
The Letter of Transmittal, certificates representing tendered Notes and any
other required documents should be sent or delivered by each Holder or such
Holder's broker, dealer, commercial bank, trust company or other nominee to the
Depositary as follows:
The Depositary for the Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND DELIVERY: BY COURIER:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
P. O. Box 841 Cooper Station 111 Broadway -- Lower Level 770 Broadway -- 13th Floor
New York, New York 10276 New York, New York 10006-1906 New York, New York 10003-9598
</TABLE>
BY FACSIMILE:
(212) 420-6211
(212) 780-0592
CONFIRM BY TELEPHONE:
(800) 225-2398
(212) 420-6668
<PAGE> 1
LETTER OF TRANSMITTAL
TO TENDER
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2002
OF
REMINGTON OIL AND GAS CORPORATION
PURSUANT TO THE CHANGE IN CONTROL NOTICE AND OFFER TO PURCHASE
DATED JANUARY 20, 1999
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FEBRUARY 19, 1999, UNLESS THE OFFER IS EXTENDED IN ACCORDANCE WITH THE INDENTURE
(SUCH TIME AND DATE OR THE LATEST EXTENSION THEREOF, IF EXTENDED, THE
"EXPIRATION DATE"). NOTES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
BECAUSE A CHANGE OF CONTROL AS DEFINED IN THE INDENTURE OCCURRED, THE COMPANY IS
REQUIRED TO MAKE THIS OFFER TO PURCHASE. IF NO CHANGE OF CONTROL HAD OCCURRED,
THE COMPANY WOULD NOT OFFER TO PURCHASE THE NOTES. THE COMPANY DOES NOT BELIEVE
THAT PURCHASING THE NOTES AT THIS TIME IS THE BEST USE OF THE COMPANY'S CAPITAL
OR CREDIT RESOURCES. NO ACTION BY THE NOTE HOLDER IS REQUIRED UNLESS THE NOTE
HOLDER WISHES TO TENDER NOTES UNDER THIS OFFER TO PURCHASE. NOTES NOT TENDERED
WILL REMAIN OBLIGATIONS OF THE COMPANY UNDER THE TERMS AND CONDITIONS OF THE
INDENTURE.
The Depositary for the Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND DELIVERY: BY COURIER:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
P. O. Box 841 Cooper Station 111 Broadway -- Lower Level 770 Broadway -- 13th Floor
New York, New York 10276 New York, New York 10006-1906 New York, New York 10003-9598
</TABLE>
BY FACSIMILE:
(212) 420-6211
(212) 780-0592
CONFIRM BY TELEPHONE:
(800) 225-2398
(212) 420-6668
Delivery of this Letter of Transmittal to an address, or transmission of
instructions via facsimile, other than as set forth above will not constitute
valid delivery. THE INSTRUCTIONS CONTAINED HEREIN AND IN THE OFFER TO PURCHASE
(AS DEFINED BELOW) SHOULD BE READ CAREFULLY BEFORE THIS LETTER OF TRANSMITTAL IS
COMPLETED. AS DESCRIBED IN THE OFFER TO PURCHASE, THE COMPANY IS MAKING THE
OFFER (AS DEFINED BELOW) ONLY BECAUSE IT IS REQUIRED TO DO SO UNDER ARTICLE
TWELVE OF THE INDENTURE UNDER WHICH THE NOTES WERE ISSUED. THE OFFER DOES NOT
CONSTITUTE A REDEMPTION OF, OR AN ELECTION BY THE COMPANY TO REDEEM, THE NOTES.
HOLDERS HAVE AN ELECTION WHETHER OR NOT TO ACCEPT THE OFFER.
<PAGE> 2
List below the Notes to which this Letter of Transmittal relates. If the
space provided below is inadequate, list the certificate numbers and principal
amounts on a separately executed schedule and affix the schedule to this Letter
of Transmittal. Tenders of Notes will be accepted only in principal amounts
equal to $1,000 or integral multiples thereof.
<TABLE>
<S> <C> <C> <C>
- ----------------------------------------------------------------------------------------------------------------------
DESCRIPTION OF NOTES
- ----------------------------------------------------------------------------------------------------------------------
AGGREGATE
NAME(S) AND ADDRESS(ES) OF HOLDER(S) CERTIFICATE PRINCIPAL AMOUNT PRINCIPAL AMOUNT
(PLEASE FILL IN, IF BLANK) NUMBER* REPRESENTED** TENDERED**
- ----------------------------------------------------------------------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
------------------------------------------------------
- ----------------------------------------------------------------------------------------------------------------------
TOTAL PRINCIPAL AMOUNT OF NOTES
- ----------------------------------------------------------------------------------------------------------------------
</TABLE>
* Need not be completed by Holders tendering by book-entry transfer (see
below).
** Unless otherwise indicated in the column labeled "Principal Amount
Tendered" and subject to the terms and conditions of the Offer to
Purchase, a Holder will be deemed to have tendered the entire aggregate
principal amount represented by the Notes indicated in the column labeled
"Aggregate Principal Amount Represented." See Instruction 2.
[ ] CHECK HERE IF TENDERED NOTES ARE BEING DELIVERED PURSUANT TO A NOTICE OF
GUARANTEED DELIVERY PREVIOUSLY DELIVERED TO THE DEPOSITARY AND COMPLETE
THE FOLLOWING:
Name(s) of Registered Holder(s):
-------------------------------------------------------------------------------
Window Ticket No. (if any):
----------------------------------------------------------------------------
Date of Execution of Notice of Guaranteed Delivery:
--------------------------------------------------------------
Name of Eligible Institution that Guaranteed Delivery:
------------------------------------------------------------
- --------------------------------------------------------------------------------
<PAGE> 3
By execution hereof, the undersigned acknowledges receipt of the Change in
Control Notice and Offer to Purchase, dated January 20, 1999 (as the same may be
amended from time to time, the "Offer to Purchase"), of Remington Oil and Gas
Corporation (the "Company") and this Letter of Transmittal and instructions
hereto (the "Letter of Transmittal"), which together constitute the Company's
offer to purchase (the "Offer") any and all of the outstanding 8 1/4%
Convertible Subordinated Notes due 2002 of the Company (the "Notes"), upon the
terms and subject to the conditions set forth in the Offer to Purchase.
HOLDERS WHO WISH TO BE ELIGIBLE TO RECEIVE PAYMENT FOR THE NOTES TO BE
PURCHASED PURSUANT TO THE OFFER MUST VALIDLY TENDER (AND NOT WITHDRAW) THEIR
NOTES TO THE DEPOSITARY PRIOR TO THE EXPIRATION DATE.
This Letter of Transmittal is to be used by holders of Notes ("Holders") if
certificates representing the Notes are to be physically delivered to the
Depositary herewith by Holders. This Letter of Transmittal is also being
supplied for informational purposes only to persons who hold Notes in book-entry
form through the facilities of The Depository Trust Company ("DTC"). Tender of
Notes held through DTC must be made pursuant to the procedures described under
"Procedures for Tendering Notes -- Tendering Notes -- Notes Held Through DTC" in
the Offer to Purchase.
In order to properly complete this Letter of Transmittal, a Holder must (i)
complete the box entitled "Description of Notes;" (ii) if appropriate, check and
complete the boxes relating to guaranteed delivery, Special Issuance or Payment
Instructions and Special Delivery Instructions; (iii) sign the Letter of
Transmittal; and (iv) complete Substitute Form W-9. Each Holder should carefully
read the detailed Instructions contained herein prior to completing this Letter
of Transmittal.
The undersigned has completed, executed and delivered this Letter of
Transmittal to indicate the action the undersigned desires to take with respect
to the Offer.
If Holders desire to tender Notes pursuant to the Offer and (i) certificates
representing such Holder's Notes are not lost but are not immediately available
or time will not permit this Letter of Transmittal, certificates representing
such Notes or other required documents to reach the Depositary prior to the
Expiration Date, or (ii) the procedures for book-entry transfer cannot be
completed prior to the Expiration Date, such Holders may effect a tender of such
Notes in accordance with the guaranteed delivery procedures described under
"Procedure for Tendering Notes -- Guaranteed Delivery Procedures" in the Offer
to Purchase. See Instruction 1.
All capitalized terms used herein and not defined herein shall have the
meaning ascribed to them in the Offer to Purchase.
Your bank or broker can assist you in completing this form. The instructions
included with this Letter of Transmittal must be followed. Questions and
requests for assistance or for additional copies of the Offer to Purchase, this
Letter of Transmittal and the Notice of Guaranteed Delivery may be directed to
the Depositary. See Instruction 9.
The Company is not aware of any jurisdiction where the making of the Offer
would not be in compliance with applicable laws. If the Company becomes aware of
any jurisdiction where the making of the Offer would not be in compliance with
such laws, the Company will make a good faith effort to comply with any such
laws or seek to have such laws declared inapplicable to the Offer. If after such
good faith effort, the Company cannot comply with any such applicable laws, the
Offer will not be made to, nor will tenders be accepted from or on behalf of,
Holders residing in such jurisdiction.
HOLDERS WHO WISH TO ACCEPT THE OFFER AND TENDER THEIR NOTES
MUST COMPLETE THIS LETTER OF TRANSMITTAL IN ITS ENTIRETY.
NOTE: SIGNATURES MUST BE PROVIDED BELOW
PLEASE READ THE ACCOMPANYING INSTRUCTIONS CAREFULLY
Ladies and Gentlemen:
Upon the terms and subject to the conditions of the Offer, the undersigned
hereby tenders to the Company the principal amount of Notes indicated above.
Subject to and effective upon the acceptance for purchase of and payment for
Notes tendered thereby, by executing and delivering a Letter of Transmittal a
tendering Holder (i) irrevocably sells, assigns and transfers to the Company,
all right, title and interest in and to all Notes tendered thereby and (ii)
waives any and all rights with respect to such Notes (including without
limitation any existing or past defaults and their consequences with respect to
such Note and the Indenture under which the Notes were issued), (iii) releases
and discharges the Company from any and all claims such Holder may have now, or
may have in the future arising out of, or related to, such Notes including
without limitation any claims that such Holder is entitled to receive additional
principal or interest payments with respect to such Notes or to participate in
any redemption or defeasance of the Notes and (iv) irrevocably constitutes and
appoints the Depositary the true and lawful agent and attorney-in-fact of such
Holder with respect to any such tendered Notes, with full power of substitution
and resubstitution (such power of attorney being deemed to be an irrevocable
power coupled with an interest) to (a) deliver certificates representing such
Notes, or transfer ownership of such Notes, on the account books maintained by
DTC, together, in any such case, with all accompanying evidences of transfer and
authenticity, to the Company, (b) present such Notes for transfer on the
relevant security register and (c) receive all benefits or otherwise exercise
all rights of beneficial ownership of such
<PAGE> 4
Notes (except that the Depositary will have no rights to, or control over, funds
from the Company, except as agent for the Company, for the purchase price for
any tendered Notes that are purchased by the Company), all in accordance with
the terms of the Offer.
The undersigned understands that tenders of Notes may be withdrawn by
written notice of withdrawal received by the Depositary at any time prior to the
Expiration Date. See Instruction 1.
The undersigned hereby represents and warrants that the undersigned (i) owns
the Notes tendered and is entitled to tender such Notes and (ii) has full power
and authority to tender, sell, assign and transfer the Notes tendered hereby and
that when such Notes are accepted for purchase and payment by the Company, the
Company will acquire good title thereto, free and clear of all liens,
restrictions, charges and encumbrances and not subject to any adverse claim or
right. The undersigned will, upon request, execute and deliver any additional
documents deemed by the Depositary or the Company to be necessary or desirable
to complete the sale, assignment and transfer of the Notes tendered hereby.
For the purposes of the Offer, the undersigned understands that the Company
will be deemed to have accepted for purchase validly tendered Notes (or
defectively tendered Notes with respect to which the Company has waived such
defect) only if, as and when the Company gives oral or written notice thereof to
the Depositary. Payment for Notes purchased pursuant to the Offer will be made
by deposit of the purchase price for such Notes with the Depositary, which will
act as agent for tendering Holders for the purpose of receiving payments from
the Company and transmitting such payments to such Holders.
All authority conferred or agreed to be conferred by this Letter of
Transmittal shall survive the death or incapacity of the undersigned, and every
obligation of the undersigned under this Letter of Transmittal shall be binding
upon the undersigned's heirs, personal representatives, executors,
administrators, successors, assigns, trustees in bankruptcy and other legal
representatives.
The undersigned understands that valid tender of Notes pursuant to any one
of the procedures described under "Procedures for Tendering Notes" in the Offer
to Purchase and in the instructions hereto will constitute a binding agreement
between the undersigned and the Company upon the terms and subject to the
conditions of the Offer, including the undersigned's waiver of any existing
defaults and their consequences with respect to the Notes and the Indenture
(including, without limitation, a default in the payment of interest).
The undersigned understands that the delivery and surrender of Notes is not
effective, and the risk of loss of the Notes does not pass to the Depositary,
until receipt by the Depositary of this Letter of Transmittal, or a facsimile
hereof, properly completed and duly executed, together with all accompanying
evidences of authority and any other required documents in form satisfactory to
the Company. All questions as to the validity, form, eligibility (including time
of receipt) and acceptance for payment of any tender of Notes pursuant to the
procedures described in the Offer to Purchase and the form and validity
(including time of receipt of notices of withdrawal) of all documents will be
determined by the Company, in its sole direction, which determination shall be
final and binding on all parties.
Unless otherwise indicated herein under "Special Issuance or Payment
Instructions," the undersigned hereby requests that any Notes representing
principal amounts not tendered be issued in the name(s) of the undersigned, and
checks constituting payments for Notes purchased in connection with the Offer be
issued to the order of the undersigned. Similarly, unless otherwise indicated
herein under "Special Delivery Instructions," the undersigned hereby requests
that any Notes representing principal amounts not tendered and checks
constituting payments for Notes to be purchased in connection with the Offer be
delivered to the undersigned at the address(es) shown herein. In the event that
the "Special Issuance or Payment Instructions" box or the "Special Delivery
Instructions" box, or both, are completed, the undersigned hereby requests that
any Notes representing principal amounts not tendered be issued in the name(s)
of, certificates for such Notes be delivered to, and checks constituting
payments for Notes purchased in connection with the Offer be issued in the
name(s) of, and be delivered to, the person(s) at the address(es) so indicated,
as applicable. The undersigned recognizes that the Company has no obligation
pursuant to the "Special Issuance or Payment Instructions" box to transfer any
Notes from the name of the registered Holder(s) thereof if the Company does not
accept for purchase any of the principal amount of such Notes so tendered.
<PAGE> 5
SPECIAL ISSUANCE OR
PAYMENT INSTRUCTIONS
(SEE INSTRUCTIONS 2 THROUGH 6)
To be completed ONLY if certificates for Notes represent a greater amount of
Notes than the Holder is tendering or the check for the purchase price for Notes
to be purchased are to be issued to the order of someone other than the person
or persons whose signature(s) appear(s) within this Letter of Transmittal or
issued to an address different from that shown in the box entitled "Description
of Notes" within this Letter of Transmittal.
Issue: [ ] Notes
[ ] Checks
(Complete as applicable)
Name:
- ------------------------------------------------
(Please Print)
Address:
- ----------------------------------------------
(Please Print)
-------------------------------------------------------
(Zip Code)
-------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
SPECIAL DELIVERY INSTRUCTIONS
(SEE INSTRUCTIONS 2 THROUGH 6)
To be completed ONLY if certificates for Notes represent a greater amount of
Notes than the Holder is tendering or the check for the purchase price for Notes
to be purchased is to be sent to an address different from that shown in the box
entitled "Description of Notes" within this Letter of Transmittal.
Deliver: [ ] Notes
[ ] Checks
(Complete as applicable)
Name:
- ------------------------------------------------
(Please Print)
Address:
- ----------------------------------------------
(Please Print)
-------------------------------------------------------
(Zip Code)
-------------------------------------------------------
Taxpayer Identification or Social Security Number
(See Substitute Form W-9 herein)
<PAGE> 6
PLEASE SIGN BELOW
PLEASE COMPLETE SUBSTITUTE FORM W-9 HEREIN
(TO BE COMPLETED BY ALL TENDERING HOLDERS
REGARDLESS OF WHETHER NOTES
ARE BEING PHYSICALLY DELIVERED HEREWITH)
This Letter of Transmittal must be signed by the registered Holder(s) of
Notes exactly as his (their) name(s) appear(s) on certificate(s) for Notes or by
person(s) authorized to become registered Holder(s) by endorsements and
documents transmitted with this Letter of Transmittal. If the signature is by a
trustee, executor, administrator, guardian, attorney-in-fact, officer or other
person acting in a fiduciary or representative capacity, such person must set
forth his or her full title below under "Capacity" and submit evidence
satisfactory to the Company of such person's authority to so act. See
Instruction 3.
If the signature appearing below is not that of the registered Holder(s) of
the Notes, then the registered Holder(s) must sign a valid power of attorney.
X
- --------------------------------------------------------------------------------
X
- --------------------------------------------------------------------------------
(Signature(s) of Holder(s) or Authorized Signatory)
Date:
- --------------------------------------------- , 1999
Name(s):
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Please Print)
Capacity:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
(Include Zip Code)
Area Code and Telephone Number:
- --------------------------------------------------------------------------------
SIGNATURE GUARANTEE (IF REQUIRED -- SEE INSTRUCTION 3)
Certain signatures must be Guaranteed by an Eligible Institution.
- --------------------------------------------------------------------------------
(Name of Eligible Institution Guaranteeing Signatures)
- --------------------------------------------------------------------------------
(Address (including zip code) and Telephone Number (including area code)
of Eligible Institution)
- --------------------------------------------------------------------------------
(Title)
- --------------------------------------------------------------------------------
(Authorized Signature)
- --------------------------------------------------------------------------------
(Printed Name)
- --------------------------------------------------------------------------------
(Title)
Date:
- --------------------------------------------- , 1999
<PAGE> 7
INSTRUCTIONS
FORMING PART OF THE TERMS AND CONDITIONS OF THE OFFER
1. Procedures for Tendering Notes; Guaranteed Delivery Procedures;
Withdrawal of Tenders. To tender Notes in the Offer, certificates representing
such Notes, together with a properly completed and duly executed copy (or
facsimile) of this Letter of Transmittal, and any other documents required by
this Letter of Transmittal must be received by the Depositary at one of its
addresses set forth herein prior to the Expiration Date. The method of delivery
of this Letter of Transmittal, certificates for Notes and all other required
documents to the Depositary is at the election and risk of Holders. If such
delivery is to be made by mail, it is suggested that Holders use properly
insured registered mail, return receipt requested, and that the mailing be made
sufficiently in advance of the Expiration Date to permit delivery to the
Depositary prior to such date. Except as otherwise provided below, the delivery
will be deemed made when actually received or confirmed by the Depositary. THIS
LETTER OF TRANSMITTAL AND NOTES SHOULD BE SENT ONLY TO THE DEPOSITARY, AND NOT
TO THE COMPANY OR THE TRUSTEE.
This Letter of Transmittal is also being supplied for informational purposes
only to persons who hold notes in book-entry form through the facilities of DTC.
Tender of Notes held through DTC must be made pursuant to the procedures
described under "Procedures for Tendering Notes -- Tendering Notes -- Notes Held
Through DTC" in the Offer to Purchase.
Except as provided herein for the book-entry or guaranteed delivery
procedures, unless the Notes being tendered are deposited with the Depositary on
or prior to the Expiration Date (accompanied by the appropriate, properly
completed and duly executed Letter of Transmittal and any required signature
guarantees and other documents required by this Letter of Transmittal), the
Company may, in its sole discretion, reject such tender. Payment for Notes will
be made only against deposit of tendered Notes.
By executing this Letter of Transmittal (or a facsimile thereof), a
tendering Holder waives any right to receive any notice of the acceptance for
payment of tendered Notes.
For a full description of the procedures for tendering Notes, see
"Procedures for Tendering Notes -- Tendering Notes" in the Offer to Purchase.
If a Holder desires to tender Notes pursuant to the Offer and (i)
certificates representing such Holder's Notes are not lost but are not
immediately available or time will not permit this Letter of Transmittal,
certificates representing Notes or other required documents to reach the
Depositary on or prior to the Expiration Date or (ii) the procedures for
book-entry transfer cannot be completed on or prior to the Expiration Date, such
Holder may effect a tender of such Notes in accordance with the guaranteed
delivery procedures described under "Procedures for Tendering
Notes -- Guaranteed Delivery Procedures" in the Offer to Purchase.
Tenders of Notes may be withdrawn at any time prior to the Expiration Date
pursuant to the procedures described under "Procedures For Tendering
Notes -- Withdrawal Rights" in the Offer to Purchase.
2. Partial Tenders. Tenders of Notes pursuant to the Offer will be accepted
only in principal amounts equal to $1,000 or integral multiples thereof. If less
than the entire principal amount of any Notes evidenced by a submitted
certificate is tendered, the tendering Holder must fill in the principal amount
tendered in the last column of the box entitled "Description of Notes" herein.
The entire principal amount represented by the certificates for all Notes
delivered to the Depositary will be deemed to have been tendered unless
otherwise indicated. If the entire principal amount of all Notes is not
tendered, certificates for the principal amount of Notes not tendered will be
sent to the Holder unless otherwise provided in the appropriate box on this
Letter of Transmittal (see Instruction 4), promptly after the Notes are accepted
for purchase.
3. Signatures on this Letter of Transmittal; Bond Powers and Endorsement;
Guarantee of Signatures. If this Letter of Transmittal is signed by the
registered Holder(s) of the Notes tendered hereby, the signature(s) must
correspond with the name(s) as written on the face of the certificate(s) without
alteration, enlargement or any change whatsoever.
IF THIS LETTER OF TRANSMITTAL IS EXECUTED BY A HOLDER WHO IS NOT THE
REGISTERED HOLDER, THEN THE REGISTERED HOLDER MUST SIGN A VALID POWER OF
ATTORNEY, WITH THE SIGNATURE OF SUCH REGISTERED HOLDER GUARANTEED BY AN ELIGIBLE
INSTITUTION.
If any of the Notes tendered hereby are owned of record by two or more joint
owners, all such owners must sign this Letter of Transmittal. If any tendered
Notes are registered in different names on several certificates, it will be
necessary to complete, sign and submit as many copies of this Letter of
Transmittal and any necessary accompanying documents as there are different
names in which certificates are held.
If this Letter of Transmittal is signed by the Holder, and the certificates
for any principal amount of Notes not tendered for purchase are to be issued (or
if any principal amount of Notes that is not tendered for purchase is to be
reissued or returned) to the Holder, and checks constituting payments for Notes
to be purchased in connection with the Offer are to be issued to the order of
the Holder, then the Holder need not endorse any certificates for tendered Notes
nor provide a separate bond power. In any other case (including if this Letter
of Transmittal is not signed by the Holder), the Holder must either properly
endorse the certificates for Notes tendered or transmit a separate properly
completed bond power with this Letter of Transmittal (in either case, executed
exactly as the name(s) of the registered Holder(s) appear(s) on such Notes),
with the signature on the endorsement or bond power guaranteed by an Eligible
Institution, unless such certificates or bond powers are executed by an Eligible
Institution.
<PAGE> 8
If this Letter of Transmittal or any certificates representing Notes or bond
powers are signed by trustees, executors, administrators, guardians,
attorneys-in-fact, officers of corporations or others acting in a fiduciary or
representative capacity, such persons should so indicate when signing, and
submit proper evidence satisfactory to the Company of their authority so to act
with this Letter of Transmittal.
Endorsements on certificates for Notes and signatures on bond powers
provided in accordance with this Instruction 3 by registered Holders not
executing this Letter of Transmittal must be guaranteed by an Eligible
Institution.
No signature guarantee is required if: (i) this Letter of Transmittal is
signed by the registered Holder(s) of the Notes tendered herewith and the
payments for the Notes to be purchased are to be made, or any Notes for
principal amounts not tendered for purchase are to be issued, directly to such
registered Holder(s) and neither the "Special Issuance or Payment Instructions"
box nor the "Special Delivery Instructions" box of this Letter of Transmittal
has been completed; or (ii) such Notes are tendered for the account of an
Eligible Institution. In all other cases, all signatures on Letters of
Transmittal accompanying Notes must be guaranteed by an Eligible Institution.
4. Special Issuance or Payment and Special Delivery Instructions. Tendering
Holders should indicate in the applicable box or boxes the name and address to
which Notes for principal amounts not tendered or not accepted for purchase or
checks constituting payments for Notes to be purchased in connection with the
Offer are to be issued or sent, if different from the name and address of the
Holder signing this Letter of Transmittal. In the case of issuance in a
different name, the taxpayer identification or social security number of the
person named must also be indicated. If no instructions are given, Notes not
tendered or not accepted for purchase will be returned to the Holder of the
Notes tendered.
5. Taxpayer Identification Number and Substitute Form W-9. Each tendering
Holder is required to provide the Depositary with the Holder's correct taxpayer
identification number ("TIN"), generally the Holder's social security or federal
employer identification number, on Substitute Form W-9, which is provided under
"Important Tax Information" below, or, alternatively, to establish another basis
for exemption from backup withholding. A Holder must cross out item (2) in the
Certification box on Substitute Form W-9 if such Holder is subject to backup
withholding. Failure to provide the information on the form may subject the
tendering Holder to 31% federal income tax backup withholding on the payments
made to the Holder or other payee with respect to Notes purchased pursuant to
the Offer. The box in Part 3 of the form should be checked if the tendering
Holder has not been issued a TIN and has applied for a TIN or intends to apply
for a TIN in the near future. If the box in Part 3 is checked and the Depositary
is not provided with a TIN within 60 days, thereafter the Depositary will
withhold 31% from all such payments with respect to the Notes to be purchased
until a TIN is provided to the Depositary.
6. Transfer Taxes. The Company will pay all transfer taxes, if any, payable
on the purchase and transfer of Notes purchased pursuant to the Offer, except in
the case of deliveries of certificates for Notes for principal amounts not
tendered for payment that are to be registered or issued in the name of any
person other than the Holder of Notes tendered hereby, in which case the amount
of any transfer taxes (whether imposed on the registered Holder or such other
person) payable on account of the transfer to such person will be deducted from
the purchase price unless satisfactory evidence of the payment of such taxes or
exemption therefrom is submitted.
Except as provided in this Instruction 6, it will not be necessary for
transfer stamps to be affixed to the certificates listed in this Letter of
Transmittal.
7. Irregularities. All questions as to the validity, form, eligibility
(including the time of receipt) and acceptance for payment of any tenders of
Notes pursuant to the procedures described in the Offer to Purchase and the form
and validity (including the time of receipt of notices of withdrawal) of all
documents will be determined by the Company, in its sole discretion, which
determination shall be final and binding on all parties. The Company reserves
the absolute right to reject any or all tenders determined by it not to be in
proper form or the acceptance of or payment for which may be unlawful. The
Company also reserves the absolute right to waive any of the conditions of the
Offer and any defect or irregularity in the tender of any particular Notes. The
Company's interpretations of the terms and conditions of the Offer (including
without limitation the instructions in this Letter of Transmittal) shall be
final and binding. No alternative, conditional or contingent tenders will be
accepted. Unless waived, any irregularities in connection with tenders must be
cured within such time as the Company shall determine. None of the Company, the
Depositary or any other person will be under any duty to give notification of
any defects or irregularities in such tenders or will incur any liability to
Holders for failure to give such notification. Tenders of such Notes shall not
be deemed to have been made until such irregularities have been cured or waived.
Any Notes received by the Depositary that are not properly tendered and as to
which the irregularities have not been cured or waived will be returned by the
Depositary to the tendering Holders, unless such Holders have otherwise provided
herein, as promptly as practical following the Expiration Date.
8. Mutilated, Lost, Stolen or Destroyed Certificates for Notes. Any Holder
whose certificates for Notes have been mutilated, lost, stolen or destroyed
should contact the Depositary at the address indicated above for further
instructions.
9. Requests for Assistance or Additional Copies. Questions relating to the
procedure for tendering Notes and requests for assistance or additional copies
of the Offer to Purchase and this Letter of Transmittal may be directed to, and
additional information about the Offer may be obtained from the Depositary,
whose address and telephone number appears herein.
<PAGE> 9
IMPORTANT TAX INFORMATION
Under federal income tax laws, a Holder whose tendered Notes are accepted
for payment is required by law to provide the Depositary (as payer) with such
Holder's correct TIN on Substitute Form W-9 included herein or otherwise
establish a basis for exemption from backup withholding. If such Holder is an
individual, the TIN is his social security number. If the Depositary is not
provided with the correct TIN, a $50 penalty may be imposed by the Internal
Revenue Service, and payments made with respect to Notes purchased pursuant to
the Offer may be subject to backup withholding. Failure to comply truthfully
with the backup withholding requirements also may result in the imposition of
severe criminal and/or civil fines and penalties.
Certain Holders (including, among others, all corporations and certain
foreign persons) are not subject to these backup withholding and reporting
requirements. Exempt Holders should furnish their TIN, write "Exempt" on the
face of the Substitute Form W-9, and sign, date and return the Substitute Form
W-9 to the Depositary. A foreign person, including entities, may qualify as an
exempt recipient by submitting to the Depositary a properly completed Internal
Revenue Service Form W-8, signed under penalties of perjury, attesting to that
Holder's foreign status. A Form W-8 can be obtained from the Depositary. See the
enclosed "Guidelines for Certification of Taxpayer Identification Number on
Substitute Form W-9" for additional instructions.
If backup withholding applies, the Depositary is required to withhold 31% of
any payments made to the Holder or other payee. Backup withholding is not an
additional federal income tax. Rather, the federal income tax liability of
persons subject to backup withholding will be reduced by the amount of tax
withheld. If withholding results in an overpayment of taxes, a refund may be
obtained from the Internal Revenue Service.
PURPOSE OF SUBSTITUTE FORM W-9
To prevent backup withholding on payments made with respect to Notes
purchased pursuant to the Offer, the Holder is required to provide the
Depositary with either: (i) the Holder's correct TIN by completing the form
included herein, certifying that the TIN provided on Substitute Form W-9 is
correct (or that such Holder is awaiting a TIN) and that (A) the Holder has not
been notified by the Internal Revenue Service that the Holder is subject to
backup withholding as a result of failure to report all interest or dividends or
(B) the Internal Revenue Service has notified the Holder that the Holder is no
longer subject to backup withholding; or (ii) an adequate basis for exemption.
<PAGE> 10
NUMBER TO GIVE THE DEPOSITARY
The Holder is required to give the Depositary the TIN (e.g., social security
number or employer identification number) of the registered Holder of the Notes.
If the Notes are held in more than one name or are held not in the name of the
actual owner, consult the enclosed "Guidelines for Certification of Taxpayer
Identification Number on Substitute Form W-9" for additional guidance on which
number to report.
PAYER'S NAME: UNITED STATES TRUST COMPANY OF NEW YORK
- --------------------------------------------------------------------------------
<TABLE>
<S> <C> <C>
SUBSTITUTE
FORM W-9
PART 1 -- PLEASE PROVIDE YOUR TIN IN
DEPARTMENT OF THE TREASURY THE BOX AT RIGHT AND CERTIFY BY -------------------------
INTERNAL REVENUE SERVICE SIGNING AND DATING BELOW Social Security Number or
Employer identification number
-------------------------------------------------------------------------------------
PART 2 -- Certification -- Under penalties of perjury, I certify that:
(1) The number shown on this form is my correct Taxpayer Identification Number (or I
am waiting for a number to be issued to me) and
(2) I am not subject to back-up withholding either because (a) I am exempt from
backup withholding, or (b) I have not been notified by the Internal Revenue Service
(IRS) that I am subject to back-up withholding as a result of failure to report
all interest or dividends, or (c) the IRS has notified me that I am no longer
subject to back-up withholding.
-------------------------------------------------------------------------------------
PAYER'S REQUEST FOR Certified instructions -- You must cross out item PART 3 --
TAXPAYER (2) above if you have been notified by the IRS that
IDENTIFICATION you are subject to back-up withholding because of Check if
NUMBER (TIN) underreporting interest or dividends on your tax Awaiting TIN [ ]
return. However, if after being notified by the IRS
that you were subject to backup withholding you
received another notification from the IRS stating
that you are no longer subject to back-up
withholding, do not cross out item (2).
SIGNATURE ----------------------- DATE-----------
- ---------------------------------------------------------------------------------------------------------------------
</TABLE>
NOTE: FAILURE TO COMPLETE AND RETURN THIS FORM MAY RESULT IN BACKUP WITHHOLDING
OF 31% OF ANY PAYMENTS MADE TO YOU PURSUANT TO THE OFFER. PLEASE REVIEW
THE ENCLOSED GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9 FOR ADDITIONAL DETAILS.
YOU MUST COMPLETE THE FOLLOWING CERTIFICATE IF YOU CHECKED THE BOX IN PART
3 OF SUBSTITUTE FORM W-9
CERTIFICATE OF TAXPAYER AWAITING IDENTIFICATION NUMBER
I certify under penalties of perjury that a taxpayer identification number
has not been issued to me, and either (a) I have mailed or delivered an
application to receive a taxpayer identification number to the appropriate
Internal Revenue Service Center or Social Security Administration or (b) I
intend to mail or deliver an application in the near future. I understand that
if I do not provide a taxpayer identification number within 60 days, 31% of all
reportable payments made to me thereafter will be withheld until I provide a
number.
- ------------------------------------------------------
- ------------------------------------ , 1999
Signature Date
<PAGE> 11
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
GUIDELINES FOR DETERMINING THE PROPER IDENTIFICATION NUMBER TO GIVE THE
PAYER. -- Social Security numbers have nine digits separated by two hyphens:
i.e. 000-00-0000. Employer identification numbers have nine digits separated by
only one hyphen: i.e. 00-0000000. The table below will help determine what name
and number to give the payer.
- ---------------------------------------------------------------
---------------------------------------------------------------
<TABLE>
<CAPTION>
GIVE THE
SOCIAL SECURITY
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- --------------------------------------------------------------
GIVE THE EMPLOYER
IDENTIFICATION
FOR THIS TYPE OF ACCOUNT: NUMBER OF --
- --------------------------------------------------------------
<C> <S> <C>
1. An individual's account The individual
2. Two or more individuals (joint The actual owner of the
account) account or, if combined
funds, any one of the
individuals(1)
3. Husband and wife (joint The actual owner of the
account) account or, if joint
funds, either person(1)
4. Custodian account of minor The minor(2)
(Uniform Gift to Minors Act)
5. Adult and minor (joint account) The adult or, if the
minor is the only
contributor, the
minor(1)
6. Account in the name of guardian The ward, minor, or
or committee for a designated incompetent person(3)
ward, minor, or incompetent
person
7. a. The usual revocable savings The actual owner(1)
trust account (grantor is also
trustee)
b. So-called trust account that The actual owner(1)
is not a legal or valid trust
under State law
8. Sole proprietorship The owner(4)
9. Sole proprietorship account The Owner(4)
10. A valid trust, estate, or Legal entity (Do not
pension trust furnish the identifying
number of the personal
representative or
trustee unless the legal
entity itself is not
designated in the
account title.)(5)
11. Corporate account The Corporation
12. Partnership account held in the The partnership
name of the business
13. Association, club, religious, The organization
charitable, educational or
other tax-exempt organization
14. A broker or registered nominee The broker or nominee
15. Account with the Department of The public entity
Agriculture in the name of a
public entity (such as a State
or local government, school
district or prison) that
receives agricultural program
payments
</TABLE>
- ---------------------------------------------------------------
---------------------------------------------------------------
(1) List first and circle the name of the person whose number you furnish. If
only one person on a joint account has an SSN, that person's number must be
furnished.
(2) Circle the minor's name and furnish the minor's social security number.
(3) Circle the ward's, minor's or incompetent person's name and furnish such
person's social security number.
(4) Show the name of the owner. You may also enter your business name.
(5) List first and circle the name of the legal trust, estate, or pension trust.
NOTE: If no name is circled when there is more than one name, the number will be
considered to be that of the first name listed.
<PAGE> 12
GUIDELINES FOR CERTIFICATION OF TAXPAYER IDENTIFICATION
NUMBER ON SUBSTITUTE FORM W-9
PAGE 2
OBTAINING A NUMBER
If you don't have a taxpayer identification number or you don't know your
number, obtain Form SS-5, Application for a Social Security Number Card, or Form
SS-4, Application for Employer Identification Number, at the local office of the
Social Security Administration or the Internal Revenue Service and apply for a
number.
PAYEES EXEMPT FROM BACKUP WITHHOLDING
Payees specifically exempted from backup withholding on ALL payments include the
following:
- - A corporation.
- - A financial institution.
- - An organization exempt from tax under section 501(a), an individual retirement
plan, or a custodial account under section 403(b)(7), if the account satisfies
the requirements of section 401(f)(2).
- - The United States or any agency or instrumentality thereof.
- - A State, the District of Columbia, a possession of the United States, or any
subdivision or instrumentality thereof.
- - A foreign government, a political subdivision of a foreign government, or any
agency, or instrumentality thereof.
- - An international organization or any agency, or instrumentality thereof.
- - A registered dealer in securities or commodities registered in the U.S. or a
possession of the U.S.
- - A real estate investment trust.
- - A common trust fund operated by a bank under section 584(a).
- - An exempt charitable remainder trust, or a non-exempt trust described in
section 4947(a)(1).
- - An entity registered at all times during the tax year under the Investment
Company Act of 1940
- - A foreign central bank of issue.
- - A futures commission merchant registered with the Commodity Futures Trading
Commission.
- - A middleman known in the investment community as a nominee or who is listed in
the most recent publication of the American Society of Corporate Secretaries,
Inc. Nominee List.
Payments of dividends and patronage dividends not generally subject to backup
withholding include the following:
- - Payments to nonresident aliens subject to withholding under section 1441.
- - Payments to partnerships not engaged in a trade or business in the U.S. and
which have at least one nonresident partner.
- - Payments of patronage dividends where the amount received in not paid in
money.
- - Payments made by certain foreign organizations.
- - Section 404(k) payments made by an ESOP.
Payments of interest not generally subject to backup withholding include the
following:
- - Payments of interest on obligations issued by individuals. Note: You may be
subject to backup withholding if this interest is $600 or more and is paid in
the course of the payer's trade or business and you have not provided your
correct taxpayer identification number to the payer.
- - Payments of tax-exempt interest (including exempt interest dividends under
section 852).
- - Payments described in section 6049(b)(5) to nonresident aliens.
- - Payments on tax-free covenant bonds under section 1451.
- - Payments made by certain foreign organizations.
- - Mortgage interest paid to you.
Exempt payees described above should file Form W-9 to avoid possible erroneous
backup withholding. FILE THIS FORM WITH THE PAYER, FURNISH YOUR TAXPAYER
IDENTIFICATION NUMBER, WRITE "EXEMPT" ON THE FACE OF THE FORM, AND RETURN IT TO
THE PAYER. IF THE PAYMENTS ARE INTEREST, DIVIDENDS, OR PATRONAGE DIVIDENDS, ALSO
SIGN AND DATE THE FORM.
Certain payments other than interest, dividends, and patronage dividends that
are not subject to information reporting are also not subject to backup
withholding. For details, see the regulations under section 6041, 6041A(a),
6045, and 6050A.
PRIVACY ACT NOTICE. -- Section 6109 requires most recipients of dividend,
interest, or other payments to give taxpayer identification numbers to payers
who must report the payments to the IRS. The IRS uses the numbers for
identification purposes and to help verify the accuracy of tax returns. Payers
must be given the numbers whether or not recipients are required to file tax
returns. Payers must generally withhold 31% of taxable interest, dividend, and
certain other payments to a payee who does not furnish a taxpayer identification
number to a payer. Certain penalties may also apply.
PENALTIES
PENALTY FOR FAILURE TO FURNISH TAXPAYER IDENTIFICATION NUMBER. -- If you fail
to furnish your taxpayer identification number to a payer, you are subject to a
penalty of $50 for each such failure unless your failure is due to reasonable
cause and not to willful neglect.
CIVIL PENALTY FOR FALSE INFORMATION WITH RESPECT TO WITHHOLDING. -- If you
make a false statement with no reasonable basis which results in no imposition
of backup withholding, you are subject to a penalty of $500.
CRIMINAL PENALTY FOR FALSIFYING INFORMATION. -- Falsifying certifications or
affirmations may subject you to criminal penalties including fines and/or
imprisonment. FOR ADDITIONAL INFORMATION CONTACT YOUR TAX CONSULTANT OR THE
INTERNAL REVENUE SERVICE
<PAGE> 1
NOTICE OF GUARANTEED DELIVERY FOR
TENDER OF CERTIFICATES FOR
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2002
OF
REMINGTON OIL AND GAS CORPORATION
Capitalized terms used but not defined herein have the meanings given them
in the Change in Control Notice and Offer to Purchase, dated January 20, 1999
(the "Offer to Purchase").
This Notice of Guaranteed Delivery may be used to cause a tender of 8 1/4%
Convertible Subordinated Notes due 2002 of the Company (the "Notes") by (i) a
record holder of Notes if certificates for the Notes are not immediately
available or time will not permit all required documents to reach the Depositary
on or prior to the Expiration Date or (ii) by a DTC Participant if the
procedures for book-entry transfer described in the Offer to Purchase cannot be
completed on a timely basis.
The Depositary for the Offer is:
UNITED STATES TRUST COMPANY OF NEW YORK
<TABLE>
<S> <C> <C>
BY MAIL: BY HAND DELIVERY: BY COURIER:
United States Trust Company United States Trust Company United States Trust Company
of New York of New York of New York
P. O. Box 841 Cooper Station 111 Broadway -- Lower Level 770 Broadway -- 13th Floor
New York, New York 10276 New York, New York 10006-1906 New York, New York 10003-9598
BY FACSIMILE:
(212) 420-6211
(212) 780-0592
</TABLE>
CONFIRM BY TELEPHONE:
(800) 225-2398
(212) 420-6668
DELIVERY OF THIS INSTRUMENT TO AN ADDRESS OTHER THAN
AS SET FORTH ABOVE DOES NOT CONSTITUTE A VALID DELIVERY
<PAGE> 2
Ladies and Gentlemen:
By execution hereof, the undersigned acknowledges receipt of the Offer to
Purchase and the Letter of Transmittal.
On the terms and subject to the conditions of the Offer to Purchase and the
Letter of Transmittal, the undersigned hereby represents that it is the holder
of the Notes (or the holder of interests in the Global Note) being tendered (or
caused to be tendered) hereby and is entitled to tender (or cause to be
tendered) such Notes as contemplated by the Offer and, pursuant to the
guaranteed delivery procedures described in the Offer to Purchase and Letter of
Transmittal, hereby tenders (or causes a tender) to the Company the aggregate
principal amount of Notes indicated below.
Except as stated in the Offer to Purchase, all authority herein conferred
or agreed to be conferred shall survive the death or incapacity of the
undersigned, and any obligation of the undersigned hereunder shall be binding
upon the heirs, personal representatives, successors and assigns of the
undersigned.
A record Holder must execute this Notice of Guaranteed Delivery exactly as
its name appears on its Notes, and a DTC Participant must execute this Notice of
Guaranteed Delivery exactly as its name is registered with DTC. If signature is
by a trustee, executor, administrator, guardian, attorney-in-fact, agent,
officer of a corporation or other person acting in a fiduciary or representative
capacity, such person must set forth his or her name, address and capacity as
indicated below and submit evidence to the Company of such person's authority so
to act.
Signed:
- --------------------------------------------------------------------------------
Name(s):
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
Company:
- --------------------------------------------------------------------------------
Capacity:
- --------------------------------------------------------------------------------
Address:
- --------------------------------------------------------------------------------
Dated:
- --------------------------------------------- , 1999
Aggregate Principal Amount of Notes Tendered:
- -------------------------------------------------------
Certificate Nos. for Notes (if applicable):
- --------------------------------------------------------------
If being executed by a DTC Participant:
DTC Participant's No.
- --------------------------------------------------------------------------------
Account No.
- --------------------------------------------------------------------------------
Transaction Code No.
- --------------------------------------------------------------------------------
<PAGE> 3
THE GUARANTEE BELOW MUST BE COMPLETED
GUARANTEE
(NOT TO BE USED FOR SIGNATURE GUARANTEE)
The undersigned, a member of a registered national securities exchange or
of the National Association of Securities Dealers, Inc., or a commercial bank or
trust company having an office or correspondent in the United States or another
"Eligible Guarantor Institution" as defined in Rule 17Ad-15 under the Securities
Exchange Act of 1934, as amended, hereby guarantees that, within three New York
Stock Exchange trading days from the date of receipt by the Depositary of this
Notice of Guaranteed Delivery, a properly completed and validly executed Letter
of Transmittal (or a facsimile thereof), together with Notes tendered hereby in
proper form for transfer, (or confirmation of the book-entry transfer of such
Notes into the Depositary's account at The Depositary Trust Company, pursuant to
the procedures for book-entry transfer set forth under "Procedure for Tendering
Notes" in the Offer to Purchase) and all other required documents will be
delivered by the undersigned to the Depositary.
- --------------------------------------------------------------------------------
NAME OF FIRM
- --------------------------------------------------------------------------------
ADDRESS
- --------------------------------------------------------------------------------
- --------------------------------------------------------------------------------
AREA CODE AND TELEPHONE NO.
- --------------------------------------------------------------------------------
AUTHORIZED SIGNATURE
NAME:
- --------------------------------------------------------------------------------
(PLEASE TYPE OR PRINT)
- --------------------------------------------------------------------------------
TITLE
- --------------------------------------------------------------------------------
DATE
The institution which completes this form must deliver to the Depositary
the Guarantee, the Letter of Transmittal (or facsimile thereof) and certificates
for Notes within the time periods specified herein. Failure to do so could
result in a financial loss to such institution.
DO NOT SEND CERTIFICATES FOR NOTES WITH THIS FORM.
CERTIFICATES SHOULD BE SENT WITH THE LETTER OF TRANSMITTAL.
<PAGE> 1
REMINGTON OIL AND GAS CORPORATION
CHANGE IN CONTROL NOTICE AND OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2002
OF REMINGTON OIL AND GAS CORPORATION
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FEBRUARY 19, 1999, UNLESS THE OFFER IS EXTENDED IN ACCORDANCE WITH THE INDENTURE
(SUCH TIME AND DATE OR THE LATEST EXTENSION THEREOF, IF EXTENDED, THE
"EXPIRATION DATE"). NOTES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
BECAUSE A CHANGE OF CONTROL AS DEFINED IN THE INDENTURE OCCURRED, THE COMPANY IS
REQUIRED TO MAKE THIS OFFER TO PURCHASE. IF NO CHANGE OF CONTROL HAD OCCURRED,
THE COMPANY WOULD NOT OFFER TO PURCHASE THE NOTES. THE COMPANY DOES NOT BELIEVE
THAT PURCHASING THE NOTES AT THIS TIME IS THE BEST USE OF THE COMPANY'S CAPITAL
OR CREDIT RESOURCES. NO ACTION BY THE NOTE HOLDER IS REQUIRED UNLESS THE NOTE
HOLDER WISHES TO TENDER NOTES UNDER THIS OFFER TO PURCHASE. NOTES NOT TENDERED
WILL REMAIN OBLIGATIONS OF THE COMPANY UNDER THE TERMS AND CONDITIONS OF THE
INDENTURE.
January 20, 1999
To our clients:
Enclosed for your consideration is a Change in Control Notice and Offer to
Purchase, dated January 20, 1999 (as the same may be amended from time to time,
the "Offer to Purchase"), and a form of Letter of Transmittal and instructions
thereto (the "Letter of Transmittal"), relating to the offer (the "Offer") by
Remington Oil and Gas Corporation (the "Company") to purchase for cash any and
all of its outstanding 8 1/4% Convertible Subordinated Notes due 2002 (the
"Notes") at 100% of the principal amount thereof, plus accrued interest thereon
through the date of payment.
The materials are being forwarded to you as the beneficial owner of Notes
carried by us for your account or benefit but not registered in your name. A
tender of any Notes may only be made by us as the registered Holder and pursuant
to your instructions.
Accordingly, we request instructions as to whether you wish us to tender
any or all such Notes held by us for your account or benefit pursuant to the
terms and conditions set forth in the Offer to Purchase and the Letter of
Transmittal. We urge you to read carefully the Offer to Purchase and Letter of
Transmittal before instructing us to tender your Notes.
The Company has informed us that the Company is making the Offer only
because it is required to do so pursuant to Article Twelve of the Indenture
under which the Notes were issued.
<PAGE> 2
If you elect to tender Notes, your instructions to us should be forwarded
as promptly as possible in order to permit us to tender Notes on your behalf in
accordance with the provisions of the Offer. Notes tendered pursuant to the
Offer may be validly withdrawn, subject to the procedures described in the Offer
to Purchase, at any time prior to the Expiration Date.
Your attention is directed to the following:
1. The Offer does not constitute a redemption of, or an election by
the Company to redeem, the Notes. Holders have an election whether or not
to accept the Offer. As stated above and discussed in the accompanying
materials, the Company does not believe that purchasing the Notes at this
time is the best use of the Company's capital or credit resources.
2. The Offer is for any and all outstanding Notes.
3. The Offer and withdrawal rights will expire on the Expiration Date.
4. Any transfer taxes incident to the transfer of Notes from the
tendering Holder to the Company will be paid by the Company, except as
provided in the Offer to Purchase and the instructions to the Letter of
Transmittal.
If you wish to have us tender any or all of your Notes held by us for your
account or benefit, please so instruct us by completing, executing and returning
to us the instruction form that appears below. If you authorize the tender of
your Notes, all such Notes will be tendered unless otherwise specified below.
THE ACCOMPANYING LETTER OF TRANSMITTAL IS FURNISHED TO YOU FOR INFORMATIONAL
PURPOSES ONLY AND MAY NOT BE USED BY YOU TO TENDER NOTES HELD BY US AND
REGISTERED IN OUR NAME FOR YOUR ACCOUNT OR BENEFIT.
INSTRUCTIONS
The undersigned acknowledge(s) receipt of your letter and the enclosed
material referred to therein relating to the Offer.
This will instruct you to tender the principal amount of Notes indicated
below (or not to tender any Notes) held by you for the account or benefit of the
undersigned pursuant to the terms of and conditions set forth in the Offer to
Purchase and the Letter of Transmittal.
[ ] Please do not tender any Notes held by you for my account or benefit.
[ ] Please tender all my Notes held by you for my account or benefit.
[ ] Please tender less than all my Notes. I wish to tender $ principal
amount of Notes (Tenders must be in increments of $1000).
Date:
- ------------------------------
---------------------------------------
---------------------------------------
Signature(s)
---------------------------------------
---------------------------------------
Please print name(s) here
UNLESS A SPECIFIC INSTRUCTION IS GIVEN BY MARKING ONE OF THE BOXES, YOUR
SIGNATURE(S) HEREON SHALL NOT CONSTITUTE AN INSTRUCTION TO US TO TENDER ANY OF
YOUR NOTES.
2
<PAGE> 1
REMINGTON OIL AND GAS CORPORATION
CHANGE IN CONTROL NOTICE AND OFFER TO PURCHASE
FOR CASH ANY AND ALL OF THE OUTSTANDING
8 1/4% CONVERTIBLE SUBORDINATED NOTES DUE 2002
OF REMINGTON OIL AND GAS CORPORATION
SUBJECT TO THE TERMS AND CONDITIONS SET FORTH IN THE OFFER TO PURCHASE, THE
OFFER AND WITHDRAWAL RIGHTS WILL EXPIRE AT 5:00 P.M., NEW YORK CITY TIME, ON
FEBRUARY 19, 1999, UNLESS THE OFFER IS EXTENDED IN ACCORDANCE WITH THE INDENTURE
(SUCH TIME AND DATE OR THE LATEST EXTENSION THEREOF, IF EXTENDED, THE
"EXPIRATION DATE"). NOTES TENDERED IN THE OFFER MAY BE WITHDRAWN AT ANY TIME
PRIOR TO THE EXPIRATION DATE.
BECAUSE A CHANGE OF CONTROL AS DEFINED IN THE INDENTURE OCCURRED, THE COMPANY IS
REQUIRED TO MAKE THIS OFFER TO PURCHASE. IF NO CHANGE OF CONTROL HAD OCCURRED,
THE COMPANY WOULD NOT OFFER TO PURCHASE THE NOTES. THE COMPANY DOES NOT BELIEVE
THAT PURCHASING THE NOTES AT THIS TIME IS THE BEST USE OF THE COMPANY'S CAPITAL
OR CREDIT RESOURCES. NO ACTION BY THE NOTE HOLDER IS REQUIRED UNLESS THE NOTE
HOLDER WISHES TO TENDER NOTES UNDER THIS OFFER TO PURCHASE. NOTES NOT TENDERED
WILL REMAIN OBLIGATIONS OF THE COMPANY UNDER THE TERMS AND CONDITIONS OF THE
INDENTURE.
January 20, 1999
To Brokers, Dealers, Commercial Banks,
Trust Companies And Other Nominees:
Enclosed for your consideration is a Change in Control Notice and Offer to
Purchase, dated January 20, 1999 (as the same may be amended from time to time,
the "Offer to Purchase"), and form of Letter of Transmittal and instructions
thereto (the "Letter of Transmittal") relating to the offer (the "Offer") by
Remington Oil and Gas Corporation (the "Company") to purchase for cash all of
the outstanding 8 1/4% Convertible Subordinated Notes due 2002 of the Company
(the "Notes") at 100% of the principal amount thereof, plus accrued interest
thereon through the date of payment.
We are asking you to contact your clients for whom you hold Notes
registered in your name (or in the name of your nominee) and who, to your
knowledge, hold Notes registered in their own names. You will be reimbursed by
the Company for customary mailing and handling expenses incurred by you in
forwarding any of the enclosed materials to your clients. The Company will pay
all transfer taxes, if any, applicable to the tender of Notes, except as
otherwise provided in the Offer to Purchase and the Letter of Transmittal.
Enclosed is a copy of each of the following documents for forwarding to
your clients:
1. The Offer to Purchase.
<PAGE> 2
2. A Letter of Transmittal, including Guidelines for Certification of
Taxpayer Identification Number on Substitute Form W-9, for your use in
connection with the tender of Notes by record holders and for the
information of your clients.
3. A form of letter addressed "To Our Clients" that may be sent to
your clients for whose accounts you hold Notes registered in your name or
the name of your nominee, with space provided for obtaining the clients'
instructions with regard to the Offer.
4. A Notice of Guaranteed Delivery to be used to accept the Offer if
certificates for Notes are not lost but not immediately available, or if
the procedure for book-entry transfer cannot be completed on or prior to
the Expiration Date.
Your prompt action is requested. Notes tendered pursuant to the Offer
may be validly withdrawn, subject to the procedures described in the Offer
to Purchase, at any time prior to the Expiration Date.
Please refer to "Procedures for Tendering Notes" in the Offer to Purchase
for a description of the procedures which must be followed to tender Notes in
the Offer.
Additional copies of the enclosed materials may be obtained from the
Depositary at (800) 225-2398.
Very truly yours,
REMINGTON OIL AND GAS CORPORATION
NOTHING HEREIN OR IN THE ENCLOSED DOCUMENTS SHALL CONSTITUTE YOU OR ANY
PERSON AS AN AGENT OF THE COMPANY, THE TRUSTEE, OR THE DEPOSITARY, OR AUTHORIZE
YOU OR ANY OTHER PERSON TO MAKE ANY STATEMENTS ON BEHALF OF ANY OF THEM WITH
RESPECT TO THE OFFER, EXCEPT FOR STATEMENTS EXPRESSLY MADE IN THE OFFER TO
PURCHASE OR THE LETTER OF TRANSMITTAL.
<PAGE> 1
AMENDED AND RESTATED
SECURED REVOLVING CREDIT LOAN AGREEMENT
BY AND BETWEEN
REMINGTON OIL AND GAS CORPORATION
AS BORROWER
AND
COMERICA BANK - TEXAS
AS LENDER
$50,000,000
SEPTEMBER 30, 1998
<PAGE> 2
TABLE OF CONTENTS
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ARTICLE I CERTAIN DEFINITIONS; USAGE.........................................1
1.1 Definitions........................................................1
1.2 Usage..............................................................1
ARTICLE II REVOLVING CREDIT LOAN..............................................2
2.1 Revolving Loan Commitment..........................................2
2.2 Borrowing Base Considerations......................................2
2.3 Manner of Borrowing................................................4
2.4 Use of Proceeds....................................................4
2.5 Commitment Fee.....................................................4
2.6 Termination or Reduction of Commitment.............................5
2.7 Letter of Credit Facility..........................................5
ARTICLE III THE NOTE AND NOTE PAYMENTS.........................................5
3.1 Revolving Credit Note..............................................5
3.2 Payment of Principal of the Note...................................6
3.3 Payment of Interest on the Note....................................6
3.4 Payments on the Note..............................................10
3.5 Prepayments.......................................................11
ARTICLE IV SECURITY..........................................................11
4.1 Liens and Security Interest.......................................11
4.2 Collateral Account................................................11
4.3 Bank Offset.......................................................13
4.4 Agreement to Deliver Additional Collateral Documents..............13
ARTICLE V CONDITIONS PRECEDENT TO LENDING...................................14
5.1 Initial Advances..................................................14
5.2 All Advances......................................................16
ARTICLE VI REPRESENTATIONS AND WARRANTIES....................................16
6.1 Organization and Good Standing....................................16
6.2 Authorization and Power...........................................17
6.3 No Conflicts or Consents..........................................17
6.4 Enforceable Obligations...........................................17
6.5 Priority of Liens.................................................17
6.6 No Liens..........................................................17
6.7 Financial Condition...............................................18
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6.8 Full Disclosure...................................................18
6.9 No Default........................................................18
6.10 Material Agreements ..............................................18
6.11 No Litigation.....................................................18
6.12 Leases............................................................19
6.13 Estimated Oil and Gas Reserves....................................19
6.14 Working Interest..................................................19
6.15 Net Revenue Interest..............................................19
6.16 Burdensome Contracts .............................................19
6.17 Regulatory Defects................................................20
6.18 Agreements Affecting Mineral Interests............................20
6.19 Use of Proceeds...................................................20
6.20 Taxes.............................................................20
6.21 Principal Office..................................................20
6.22 ERISA.............................................................20
6.23 Compliance with Law...............................................21
6.24 Government Regulation.............................................21
6.25 No Subsidiaries...................................................22
6.26 Hazardous Substances..............................................22
ARTICLE VII AFFIRMATIVE COVENANTS.............................................22
7.1 Financial Statements, Reports and Documents.......................22
7.2 Payment of Taxes and Other Indebtedness...........................25
7.3 Maintenance of Existence and Rights; Conduct of Business..........25
7.4 Notice of Default.................................................25
7.5 Other Notices.....................................................26
7.6 Compliance with Loan Documents....................................26
7.7 Compliance with Material Agreements...............................26
7.8 Operations and Properties.........................................26
7.9 Books and Records; Access.........................................26
7.10 Compliance with Law...............................................27
7.11 Leases............................................................27
7.12 Insurance.........................................................27
7.13 Development and Maintenance.......................................27
7.14 Authorizations and Approvals......................................27
7.15 Maintenance of Liens..............................................28
7.16 Experienced Management............................................28
7.17 Further Assurances................................................28
7.18 ERISA.............................................................28
ARTICLE VII NEGATIVE COVENANTS................................................30
8.1 Mergers and Acquisitions..........................................30
8.2 Limitation on Indebtedness........................................30
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8.3 Negative Pledge...................................................31
8.4 Alteration of Material Agreements.................................31
8.5 Certain Transactions..............................................31
8.6 Limitation on Sale of Properties..................................31
8.7 Fiscal Year and Accounting Method.................................31
8.8 Working Capital...................................................31
8.9 Operating Agreements..............................................32
8.10 Budensome Contracts...............................................32
8.11 Minimum Tangible Net Worth........................................32
8.12 Marketing Contracts...............................................32
8.13 ERISA.............................................................32
ARTICLE IX EVENTS OF DEFAULT.................................................32
9.1 Events of Default.................................................32
9.2 Remedies Upon Event of Default....................................35
9.3 Performance by Bank...............................................35
ARTICLE X MISCELLANEOUS.....................................................35
10.1 Waiver............................................................35
10.2 Payment of Expenses; Indemnity....................................36
10.3 Notices...........................................................37
10.4 Governing Law.....................................................38
10.5 Invalid Provisions................................................39
10.6 Interest Rate.....................................................39
10.7 Parties Bound; Assignment.........................................39
10.8 Headings..........................................................40
10.9 Survival..........................................................41
10.10 Multiple Counterparts.............................................41
10.11 Governmental Regulation...........................................41
10.12 Entirety and Amendments...........................................41
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Exhibit A CERTAIN DEFINITIONS
Exhibit B PERMITTED LIENS
Exhibit 2.3 NOTICE OF BORROWING
Exhibit 3.1 REVOLVING CREDIT NOTE
Exhibit 4.1 LIST OF MORTGAGED PROPERTIES
Exhibit 5.1(c) OPINION OF BORROWER'S COUNSEL
Exhibit 5.1(d) TITLE OPINION REQUIREMENTS
Exhibit 6.11 PENDING ACTIONS
Exhibit 6.22 BORROWER PENSION PLANS
Exhibit 6.25 SUBSIDIARIES
Exhibit 7.1(e) FORM OF COMPLIANCE CERTIFICATE
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AMENDED AND RESTATED
SECURED AND REVOLVING CREDIT LOAN AGREEMENT
THIS AMENDED AND RESTATED SECURED REVOLVING CREDIT LOAN AGREEMENT is
entered into September 30, 1998 by and between REMINGTON OIL AND GAS
CORPORATION, a Delaware corporation formerly known as Box Energy Corporation
("Borrower") and COMERICA BANK-TEXAS, a state banking association ("Bank").
WITNESSETH
WHEREAS, Borrower and Bank entered into that certain Secured and
Revolving Credit Loan Agreement dated as of May 13, 1994, as amended (the "Prior
Agreement") pursuant to which Bank provided certain financial accomodations to
Borrower;
WHEREAS, Borrower has requested that Bank increase and extend the loans
made pursuant to the Prior Agreement; and
WHEREAS, Bank is willing to accede to such request upon the terms and
subject to the conditions set forth in this Loan Agreement which shall amend and
restate in its entirety the Prior Agreement;
NOW, THEREFORE, in consideration of the mutual promises herein
contained and for other valuable consideration the parties hereto do hereby
agree as follows:
ARTICLE I
CERTAIN DEFINITIONS; USAGE
1.1 DEFINITIONS. Capitalized terms used in this Loan Agreement and
not otherwise defined herein shall have the meanings given to them in Exhibit A
to this Loan Agreement.
1.2 USAGE.
(a) Whenever the singular number is used, the same shall
include the plural where appropriate, and vice versa;
(b) "writing," "printing" and words of like import include all
means of reproducing words in a tangible and permanent form;
(c) "tax" and "taxes" mean all imposts, deductions, charges
and withholdings whatsoever charged or collected by any taxing authority
together with interest thereon and penalties with respect thereto, if any, and
charges, fees and other amounts made on or in respect thereof; and
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(d) "Article," "Section" and "subsection", and "Exhibit" refer
to Articles, Sections and subsections of, and Exhibits to, this Loan Agreement.
ARTICLE II
REVOLVING CREDIT LOAN
2.1 REVOLVING LOAN COMMITMENT.
Subject to and upon the terms and conditions herein set forth,
Bank agrees to lend funds to Borrower and to issue Letters of Credit for the
account of Borrower at any time and from time to time during the Availability
Period (each advance made by Bank hereunder called an "Advance", and the
aggregate balance of Advances made by Bank hereunder, less repayments of
principal, are herein collectively called the "Revolving Credit Loan"), provided
that the sum of the aggregate Revolving Credit Loans and Letter of Credit
Exposure outstanding at any time shall not exceed the lesser of (i) $50,000,000
or (ii) the Borrowing Base from time to time in effect (such lesser amount being
the "Commitment"). Subject to the foregoing limitations and the requirements set
forth in Section 2.4 hereof, Borrower may borrow, repay without penalty or
premium (other than required in certain events by Section 3.3(h) and reborrow
hereunder, during the Availability Period.
2.2 BORROWING BASE CONSIDERATIONS.
(a) Initial Borrowing Base.
Commencing on the date hereof the Borrowing Base
shall be $15,000,000.00 until redetermined in accordance with this Section 2.2;
provided, however, if the Merger occurs on or prior to December 31, 1998 and if,
as a result of the Merger, no more than an aggregate $10,000,000 in face amount
of the Subordinated Indebtedness is tendered by the holders thereof for payment
within the time alloted therefor in the Indenture governing such Subordinated
Indebtedness, then, as of the Business Day next succeeding the last Business Day
on which such Indebtedness may be tendered for payment as a result of the
Merger, the Borrowing Base shall automatically increase to $20,000,000;
provided, further, that the Borrowing Base will automatically and without any
action by Bank decline by $1,250,000 ($1,667,667 if the Borrowing Base on March
30, 1999 is $20,000,000) on the first day of each and every month commencing
April 1, 1999 unless such reduction schedule is revised by Bank pursuant to
Section 2.2(b). Such automatic reductions in the Borrowing Base may require
payments by Borrower pursuant to Section 2.2(d).
(b) Subsequent Determination of Borrowing Base.
The Borrowing Base, and the amount of the automatic,
monthly reductions in the Borrowing Base, shall be redetermined as of each March
30 and September 30 during the Availability Period (the "Determination Date").
Borrower shall deliver to Bank on or before each January 31 and July 31, (i)
such information, reports and other data pertaining to the reserves
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attributable to the Mortgaged Properties, in form and substance acceptable to
Bank and as Bank shall reasonably require, which information, reports and other
data shall evaluate (A) the reserves attributable to the Mortgaged Properties,
and (B) the reserves attributable to such other Mineral Interests as Borrower
desires to be considered for Borrowing Base purposes (such evaluation shall
include, without limitation, a description of reserves, rates of production,
gross revenues, operating expenses, ad valorem taxes, capital costs, net
revenues and present value of future net revenues attributable to such reserves
and production therefrom, and a statement of the assumptions upon which such
determinations were made)(provided that the information delivered to Bank on
January 31 of each year shall include a reserve report on the Mortgaged
Properties from a firm of independent petroleum engineers acceptable to Bank
prepared in accordance with customary standards and procedures of the petroleum
industry), (ii) title opinions, satisfactory to Bank for those additional
Mineral Interests referred to in (B) above, and (iii) executed mortgage
instruments, satisfactory in form and substance to Bank and its counsel,
mortgaging such additional Mineral Interests to Bank. Within forty-five (45)
days after the receipt of such reports Bank shall determine the Borrowing Base
for the Determination Date and the amount of the automatic monthly reductions
and give written notice thereof to Borrower. Bank's determination of the
Borrowing Base and the amount of the automatic monthly reductions shall be in
Bank's sole discretion, according to its customary engineering practices, based
on Bank's independent appraisal of the loan value of proved, developed,
producing oil and gas properties comprising the Mortgaged Properties taking into
account, among other things, Borrower's contingent liabilities arising in
connection with any pending litigation.
(c) Special Determination of Borrowing Base.
In addition to the determinations of the Borrowing
Base required pursuant to Section 2.2(b) hereof, special determinations thereof
may be made at the option of Bank if it in good faith believes that events have
occurred and conditions exist that could decrease the then current Borrowing
Base, and may at any time be requested by Borrower if it, in good faith, (i)
believes that events have occurred or conditions exist that could increase the
then current Borrowing Base or (ii) desires to mortgage additional Mineral
Interests to increase the Borrowing Base. Upon any special determination of the
Borrowing Base, if requested by Bank, Borrower shall submit both (i) a current
report of a firm of independent petroleum engineers acceptable to Bank, prepared
in accordance with customary standards and procedures of the petroleum industry
which report shall (A) evaluate the Mineral Interests subject to such special
redetermination (in the same manner as provided in Section 2.2(b)) and (B) be
dated within sixty (60) days of such requested special redetermination, and,
(ii) title opinions, acceptable to Bank, for those additional Mineral Interests
which Borrower desires to be considered within the Borrowing Base. Adjustments
to the Borrowing Base based upon the addition of Mineral Interests shall not be
effective prior to the date of filing and recording of such Collateral Documents
as required by Bank.
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(d) Borrowing Base Deficiency.
If at any time the sum of the principal outstanding
as a Revolving Credit Loan plus the Letter of Credit Exposure exceeds the then
effective Borrowing Base, Borrower shall, within ten (10) days after receipt by
Borrower of demand from Bank, pay to Bank the sum equal to the amount of such
excess so that the sum of the principal outstanding as a Revolving Credit Loan
plus the Letter of Credit Exposure after such payment is not in excess of the
then effective Borrowing Base.
2.3 MANNER OF BORROWING.
The amount and date of each Advance shall be designated by the
Borrower's execution of a Notice of Borrowing to be received by Bank, with
respect to Contract Rate Loans, not later than 10:00 a.m. Dallas time one (1)
Business Day prior to, and, with respect to LIBOR Rate Loans, not later than
10:00 a.m. Dallas time three (3) Business Days prior to, the date of such
requested Advance (which Notice of Borrowing shall be sent as provided in
Section 10.3 hereof, and shall be irrevocable and effective upon receipt by
Bank), except the initial Advance. Each such notice shall be deemed to
constitute a representation and warranty by Borrower that the representations
and warranties set forth in Article VI hereof are true and correct on and as of
the date of such notice, with the same force and effect as if made on and as of
such date, and that no Event of Default or condition, event or act which with
the giving of notice or lapse of time, or both, would constitute an Event of
Default, exists and is continuing at such date. Each Advance requested to be
made by Bank hereunder shall be in the aggregate principal amount of $100,000.00
or any higher integral multiple thereof, except that any requested Advance which
would exhaust the Commitment may be made in an amount of the unused portion of
the Commitment.
2.4 USE OF PROCEEDS.
The proceeds of the Revolving Credit Loan shall be used for
Borrower's working capital and general corporate purposes; provided, however,
every dollar advanced in excess of an aggregate $15,000,000 outstanding shall be
used only for the acquisition of producing Mineral Interests.
2.5 COMMITMENT FEE.
During the Availability Period, Borrower shall pay to the Bank a
commitment fee determined at the rate of three-eighths percent (.375%) per annum
(computed on the basis of the actual number of days elapsed in a year consisting
of 365 or, if appropriate, 366 days), on the average daily unused portion of the
Commitment (the Letter of Credit Exposure shall be considered a used portion of
the Commitment). Such commitment fee shall accrue from and after the first day
of the Availability Period and shall be payable in quarterly installments on the
last Business Day of each December, March, June and September during the term
hereof, commencing December 31, 1998, and on the Commitment Termination Date.
Borrower and Bank acknowledge and agree that the commitment fees payable
hereunder are bona fide commitment fees and are intended as reasonable
compensation
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to Bank for committing to make funds available to Borrower as described herein
and for no other purpose.
2.6 TERMINATION OR REDUCTION OF COMMITMENT.
Borrower shall have the right, at any time and from time to
time, upon not less than five (5) Business Days' prior written notice to Bank
(which notice shall be irrevocable and effective upon receipt), to terminate or
permanently reduce (in whole or in part) the unborrowed portions of the
Commitment; provided that each partial reduction of the Commitment shall be in
the aggregate of at least $100,000; and provided further, that any such
reduction shall be accompanied by the payment in full of any commitment fee then
accrued on the amount of such reduction.
2.7 LETTER OF CREDIT FACILITY.
Bank will, from time to time, upon request by Borrower, issue
Letters of Credit provided that (i) Letter of Credit Exposure at the time
(including the amount of the requested Letter of Credit) does not exceed
$1,000,000, (ii) Borrower would be entitled to an Advance under Section 2.1 in
the amount of the requested Letter of Credit, (iii) any Letter of Credit issued
hereunder shall have an expiration date no later than one year from issuance and
on or earlier than ten (10) calendar days prior to the Commitment Termination
Date and (iv) Borrower pays an issuance fee of the greater of (a) one percent of
the face amount of the requested Letter of Credit or (b) $500 and such other
clerical fees as Bank customarily charges to its customers for issuance of a
letter of credit. Borrower shall execute and deliver Bank's customary Letter of
Credit application for each Letter of Credit, and each Letter of Credit shall be
issued in form satisfactory to Bank. If any Letter of Credit is presented for
payment by the beneficiary thereof, Bank shall be entitled to cause an Advance
as a Revolving Credit Loan to be made to reimburse Bank for the payment under
such Letter of Credit, whether or not Borrower would be entitled to an Advance
for such amount pursuant to Section 2.1.
ARTICLE III
THE NOTE AND NOTE PAYMENTS
3.1 REVOLVING CREDIT NOTE.
The Revolving Credit Loan made by Bank hereunder shall be
evidenced by a Revolving Credit Note (the "Note") of Borrower, which shall (a)
be dated the date hereof, (b) be in the amount of $50,000,000.00, (c) be payable
to the order of Bank at its principal office as provided in Sections 3.2 and
3.4, (d) bear interest in accordance with Section 3.3 hereof, and (e) be in the
form of Exhibit 3.1 attached hereto with blanks appropriately completed in
conformity herewith.
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3.2 PAYMENT OF PRINCIPAL OF THE NOTE.
Borrower shall pay the unpaid principal balance of the
Revolving Credit Loan on the Commitment Termination Date and shall make such
other principal payments as may be required by Section 2.2(d).
3.3 PAYMENT OF INTEREST ON THE NOTE.
(a) Contract Rate. The unpaid principal balance of the Note
outstanding from time to time shall bear interest at a fluctuating rate per
annum from day to day equal to the lesser of (i) the Maximum Rate or (ii) the
Contract Rate (subject to the provisions of Section 3.3(b) below).
(b) LIBOR Option. The Interest Option shall be exercisable by
Borrower, only in the manner provided below and subject to the conditions and
limitations set forth herein, to designate a portion of the unpaid principal
balance of the Note as a LIBOR Rate Loan:
(i) On the date hereof, Borrower shall give Bank
written notice (an "Interest Notice") specifying the initial Interest Option(s)
and the respective initial amounts of the Contract Rate Loan and the LIBOR Rate
Loan or LIBOR Rate Loans designated by Borrower; provided, no LIBOR Rate Loan
designated by Borrower for any Interest Period shall be less than $500,000.00.
If the required Interest Notice shall not have been timely received by Bank or
fails to designate all or a portion of the unpaid principal amount hereof as
either a Contract Rate Loan or a LIBOR Rate Loan in accordance with the terms
and provisions of this Agreement, Borrower shall be deemed conclusively to have
designated such amounts to be a Contract Rate Loan and to have given Bank notice
of such designation.
(ii) By 10:00 a.m. Dallas time on the date at least
three (3) Business Days prior to the termination of any Interest Period for a
LIBOR Rate Loan, Borrower shall give Bank an Interest Notice specifying the
Interest Option which is to be applicable to such LIBOR Rate Loan upon the
expiration of such Interest Period. If the required Interest Notice shall not
have been received by Bank by the time specified in the immediately preceding
sentence, Borrower shall be deemed conclusively to have continued such LIBOR
Rate Loan for a comparable Interest Period immediately upon the expiration of
such Interest Period and to have given Bank notice of such continuation.
(iii) Borrower shall have the right, exercisable on
any Business Day, to convert an eligible portion of the Contract Rate Loan to a
LIBOR Rate Loan by giving Bank an Interest Notice of such designation at least
three (3) Business Days prior to the effective date of such exercise; provided,
however, the minimum amount of any LIBOR Rate Loan shall be $500,000.
Additionally, upon termination of any Interest Period, Borrower shall have the
right to convert all or a portion of such principal amount from a LIBOR Rate
Loan to a Contract Rate
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Loan by giving Bank an Interest Notice of such election at least three (3)
Business Days prior to the effective date of such exercise.
(iv) Borrower may not exercise an Interest Option
if the last day of the Interest Period for such LIBOR Rate Loan would be after
the Commitment Termination Date.
(v) Notwithstanding any provision to the
contrary contained herein, there shall not exist or be outstanding at any time
more than four LIBOR Tranches. For purposes of this Section 3.3(b)(v), LIBOR
Tranches having different Interest Periods, regardless of whether such LIBOR
Rate Loans commence on the same date, shall be considered separate LIBOR
Tranches.
(c) Limitation on Fluctuating Rate.
Notwithstanding the foregoing, if at any time the
Applicable Rate on a given Type of Loan exceeds the Maximum Rate, and,
therefore, the rate of interest on such Loan is limited to the Maximum Rate,
then any subsequent reductions in the Applicable Rate shall not reduce the rate
of interest on such Loan below the Maximum Rate until the total amount of
interest accrued on such Loan equals the amount of interest which would have
accrued thereon if the Applicable Rate had at all times been in effect.
(d) Change in Rate; Past Due Amounts; Calculations of
Interest.
Each change in the Contract Rate under the Note shall
become effective without prior written notice to Borrower automatically as of
the opening of business of Bank on the date of each change in the Base Rate.
Interest shall be calculated on the bases of actual days elapsed in a year
consisting of 365 or, if appropriate, 366 days. If any principal of, or interest
on, the Note is not paid when due, then (in lieu of the interest rate provided
in Section 3.3(a)(i) above) such past due principal and interest on the Note
shall bear interest at a rate equal to the Default Rate.
(e) Interest Payment Dates.
Interest on the Note shall be due and payable monthly
as it accrues, on the last Business Day of each calendar month during the term
of the Note, and on the date the Availability Period terminates; provided,
however, with respect to any LIBOR Rate Loan, interest shall be payable on the
last day of the applicable Interest Period unless such Interest Period is longer
than three months in which case interest shall be payable on each day which is
three months or a whole multiple thereof after the first day of such Interest
Period and on the last day of such Interest Period.
(f) Illegality. If the adoption of any applicable law,
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by Bank with any request or directive (whether or not having the
force of
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law) of any such authority, central bank or comparable agency shall make it
unlawful or impractical Bank to make or maintain a LIBOR Rate Loan, Bank shall
so notify Borrower and any then-existing LIBOR Rate Loan of Bank shall
automatically convert to a Contract Rate Loan either (i) on the last day of the
then-current Interest Period applicable to such LIBOR Rate Loan, if Bank may
lawfully continue to maintain and fund such LIBOR Rate Loan to such day, or (ii)
immediately, if Bank may not lawfully continue to maintain such LIBOR Rate Loan
to such day.
(g) Requirements of Law. If either (i) the adoption of any
applicable law, rule or regulation, or any change therein, or any change in the
interpretation or administration thereof by any governmental authority, central
bank or comparable agency charged with the interpretation or administration
thereof, or compliance by Bank, with any request or directive (whether or not
having the force of law) of any such authority, central bank or comparable
agency shall subject Bank to any tax (including without limitation any United
States interest equalization or similar tax, however named), duty or other
charge with respect to any LIBOR Rate Loan, this Agreement or Bank's obligation
to compute interest on the principal balance of a Note at a rate based upon the
LIBOR Based Rate, or shall change the basis of taxation of payments to Bank of
the principal of or interest on any LIBOR Rate Loan or any other amounts due
under its Note in respect of any LIBOR Rate Loan or Bank's obligation to compute
the interest on the balance of its Note at a rate based upon the LIBOR Based
Rate, or (ii) any governmental authority, central bank or other comparable
authority shall at any time impose, modify or deem applicable any reserve
(including, without limitation, any imposed by the Board of Governors of the
Federal Reserve System), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, Bank, or shall
impose on Bank (or its eurodollar lending office) or any relevant interbank
eurodollar market any other condition affecting any LIBOR Rate Loan, the Note or
Bank's obligation to compute the interest on the balance of its Note at a rate
based upon the LIBOR Based Rate; and the result of any of the foregoing is to
increase the cost to Bank of maintaining any LIBOR Rate Loan, or to reduce the
amount of any sum received or receivable by Bank under the Note by an amount
deemed by Bank to be material, then upon demand by Bank, Borrower shall pay to
Bank such additional amount or amounts as will compensate Bank for such
increased cost or reduction. Bank will promptly notify Borrower of any event of
which it has knowledge, occurring after the date hereof, which will entitle Bank
to compensation pursuant to this paragraph. A certificate of Bank claiming
compensation under this paragraph and setting forth the calculation of such
additional amount or amounts to be paid to Bank hereunder shall be presumed
correct in the absence of manifest error.
(h) Breakage Costs. Borrower may not repay any LIBOR Rate Loan
or convert all or any portion of a LIBOR Rate Loan to a Contract Rate Loan prior
to the expiration of the applicable Interest Period, unless (i) such repayment
or conversion is specifically required by the terms of the Note, (ii) Bank
demands that such repayment or conversion be made, or (iii) Bank, in its sole
discretion, consents to such repayment or conversion. If for any reason any
LIBOR Rate Loan is repaid or converted prior to the expiration of the
corresponding Interest Period, Borrower shall pay to Bank on demand any amounts
required to compensate Bank for any losses, reasonable costs or expenses which
it may incur as a result of such repayment or conversion. A certificate of
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Bank claiming compensation under this paragraph and setting forth the
calculation of any additional amount or amounts to be paid to Bank hereunder
shall be presumed correct in the absence of manifest error.
(i) Taxes. (1) All payments made by the Borrower under this
Agreement and the Note shall be made free and clear of, and without deduction or
withholding for or on account of, any present or future income, stamp or other
taxes, levies, imposts, duties, charges, fees, deductions or withholdings, now
or hereafter imposed, levied, collected, withheld or assessed by any
Governmental Authority, excluding net income taxes, franchise taxes (imposed in
lieu of net income taxes) and doing business taxes imposed on Bank as a result
of a present or former connection between Bank and the jurisdiction of the
Governmental Authority imposing such tax or any political subdivision or taxing
authority thereof or therein (other than any such connection arising solely from
Bank having executed, delivered or performed its obligations or received a
payment under, or enforced, this Agreement or the Note). If any such
non-excluded taxes, levies, imposts, duties, charges, fees, deductions or
withholdings ("Non-Excluded Taxes") are required to be withheld from any amounts
payable to Bank hereunder or under the Note, the amounts so payable to Bank
shall be increased to the extent necessary to yield to Bank (after payment of
all Non-Excluded Taxes) interest or any such other amounts payable hereunder at
the rates or in the amounts specified in this Agreement, provided, however, that
Borrower shall not be required to increase any such amounts payable to any
Non-U.S. Lender if such Non-U.S. Lender fails to comply with the requirements of
paragraph (2) of this subsection. Whenever any Non-Excluded Taxes are payable by
Borrower, as promptly as possible thereafter, Borrower shall send to Bank a
certified copy of an original official receipt received by Borrower showing
payment thereof. If, when Borrower is required by this Section 3.3(i)(1) to pay
any Non-Excluded Taxes, Borrower fails to pay any Non-Excluded Taxes when due to
the appropriate taxing authority or fails to remit to Bank the required receipts
or other required documentary evidence, Borrower shall indemnify Bank for any
incremental taxes, interest or penalties that may become payable by Bank as a
result of any such failure. The agreements in this subsection shall survive the
termination of this Agreement and the payment of the Obligations and all other
amounts payable hereunder.
(2) Any Transferee that is not a citizen or
resident of the United States of America, a corporation, partnership or other
entity created or organized in or under the laws of the United States of
America, or any estate or trust that is subject to federal income taxation
regardless of the source of its income (a "Non-U.S. Lender") shall deliver to
the Borrower and Bank two copies of either U.S. Internal Revenue Service Form
1001 or Form 4224, or, in the case of a Non-U.S. Lender claiming exemption from
U.S. federal withholding tax under Section 871(h) or 881(c) of the Code with
respect to payments of "portfolio interest," a Form W-8, or any subsequent
versions thereof or successors thereto (and, if such Non-U.S. Lender delivers a
Form W-8, an annual certificate representing that such Non-U.S. Lender (i) is
not a"bank" for purposes of Section 881(c) of the Code (and is not subject to
regulatory or other legal requirements as a bank in any jurisdiction, and has
not been treated as a bank in any filing with or submission made to any
Governmental Authority or rating agency), (ii) is not a 10%
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shareholder (within the meaning of Section 871(h)(3)(B) of the Code) of Borrower
and (iii) is not a controlled foreign corporation related to Borrower (within
the meaning of Section 864(d)(4) of the Code)), properly completed and duly
executed by such Non-U.S. Lender claiming complete exemption from U.S. federal
withholding tax on all payments by Borrower under this Agreement and the other
Loan Documents, along with such other additional forms as the Borrower or Bank
may reasonably request to establish the availability of such exemption. Such
forms shall be delivered by each Non-U.S. Lender on or before the date it
becomes a party to this Agreement (or, in the case of any Participant, on or
before the date such Participant purchases the related participation). In
addition, and provided that such Non-U.S. Lender is legally able to do so, each
Non-U.S. Lender shall deliver such forms promptly upon the obsolescence or
invalidity of any form previously delivered by such Non-U.S. Lender. Each
Non-U.S. Lender shall promptly notify Borrower at any time it determines that it
is no longer in a position to provide any previously delivered certificate to
Borrower (or any other form of certification adopted by the U.S. taxing
authorities for such purpose).
(3) If any Transferee shall become aware that it is
entitled to receive a refund in respect of Non-Excluded Taxes paid by Borrower,
or as to which it has been indemnified by Borrower, which refund in the good
faith judgment of such Transferee is allocable to such payment made pursuant to
this Section 3.3(i), it shall promptly notify Borrower of the availability of
such refund and shall, within 30 days after the receipt of a request by
Borrower, apply for such refund. If any Transferee receives a refund in respect
of any Non-Excluded Taxes paid by Borrower, or as to which it has been
indemnified by Borrower, which refund in good faith judgment of such Transferee
is allocable to such payment made pursuant to this Section 3.3(i), it shall
promptly notify Borrower of such refund and shall, within 15 days after receipt,
repay such refund to Borrower net of all out-of-pocket expenses of such
Transferee; provided, however, that Borrower, upon the request of such
Transferee, agrees to repay the amount paid over to Borrower (plus penalties,
interest or other charges) to such Transferee in the event such Transferee is
required to repay such refund to such Governmental Authority. The agreements in
this Section 3.3(i) shall survive the termination of this Agreement and the
payment of the Obligations and all other amounts payable hereunder.
3.4 PAYMENTS ON THE NOTE.
All payments of principal of, and interest on, the Note shall
be made by Borrower to Bank before 11:00 a.m. (Dallas time) in federal or other
immediately available funds at Bank's principal banking office in Dallas, Texas.
Funds received after 11:00 a.m. (Dallas time) shall be treated for all purposes
as having been received by Bank on the first Business Day next following receipt
of such funds. All payments made on the Note shall be credited, to the extent of
amount thereof, in the following manner: (a) first, against all due but unpaid
costs, expenses and other fees (including attorneys' fees) arising under the
terms hereof, (b) second, against the amount of interest accrued and unpaid on
the Note as of the date of such payment, (c) third, against all principal due
and owing on the Note as of the date of such payment, and (d) fourth, to all
other amounts constituting a portion of the Obligations.
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3.5 PREPAYMENTS.
Borrower shall have the right, without premium or penalty, at
any time and from time to time, upon one (1) Business Day's prior notice to Bank
with respect to Contract Rate Loans and three (3) Business Days' prior notice to
Bank with respect to LIBOR Rate Loans, to prepay the aggregate principal amount
of the Note in whole or in part; provided that (a) any partial prepayment must
be at least $100,000.00 or an integral multiple thereof, (b) any prepayment
shall be accompanied by the payment of the interest accrued on the amount being
prepaid to the date of payment and (c) Borrower shall be liable for all breakage
costs, if any, as provided in Section 3.3(h).
ARTICLE IV
SECURITY
4.1 LIENS AND SECURITY INTEREST.
To secure performance by Borrower of the payment of the Note
and the Obligations, Borrower shall grant to Bank a first, prior security
interest and lien in all of Borrower's Mineral Interests described in Exhibit
4.1 attached hereto and the oil, gas and mineral production therefrom or
attributable thereto, and in all operating agreements and oil or gas purchase
contracts (now existing or hereafter arising) relating to Borrower's Mineral
Interests and in related personal properties, fixtures and other properties,
pursuant to mortgages, deeds of trust, assignments of production, security
agreements, financing statements and other documents satisfactory to Bank (said
documents and any documents and instruments from time to time amending or
supplementing the same are herein sometimes collectively called the "Collateral
Documents"). Borrower's Mineral Interests and all related personal properties
and rights to payments or proceeds thereon or therefrom, and all other
properties in which Borrower, now or hereinafter, grants or purports to grant to
Bank a security interest or lien in accordance with this Article IV in order to
secure the Note and the Obligations, are hereinafter collectively called the
"Mortgaged Properties."
4.2 COLLATERAL ACCOUNT.
In order to secure further the performance by Borrower of the
Obligations and to effect and facilitate Bank's right of offset, immediately
following Bank's request, Borrower shall execute such forms, authorizations,
documents and instruments, and do such other things, as Bank shall request, in
order to require that pipeline companies, operators of the Mortgaged Properties
and others (collectively, the "Purchasers") purchasing (or acting as agents for,
or making payments on behalf of, those purchasing) the oil, gas and other
minerals produced or to be produced from, or relating to, the Borrower's Mineral
Interests deliver to a post office box number specified by Bank all royalties,
production payments, checks, cash, proceeds and monies now or hereafter payable
by
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the Purchasers (or any of them) on account of oil, gas or other minerals
produced from or relating to the Borrower's Mineral Interests or otherwise with
respect to the Borrower's Mineral Interest. Bank shall not deliver such
instruments or take other action to collect from the Purchasers until an Event
of Default occurs. Borrower agrees that after an Event of Default all such
royalties, payments and monies delivered to such post office box shall be
deposited by Bank in a cash collateral account at Bank styled "Remington
Production Account." After an Event of Default, Borrower shall, upon receipt,
deposit in the Remington Production Account all such royalties, payments and
monies which Borrower receives directly from the Purchasers. Borrower hereby
irrevocably authorizes and directs Bank to charge from time to time the
Remington Production Account and any other accounts of Borrower at Bank for
amounts due to the Bank hereunder, under the Note and all reimbursement
obligations with respect to Letters of Credit. Bank is hereby authorized, in its
own name or the name of the Borrower, at any time after an Event of Default, to
notify any or all parties obligated to Borrower with respect to the Borrower's
Mineral Interests to make all payments due or to become due thereon directly to
the Bank, or such other person or officer as Bank may require whereupon the
power and authority of the Borrower to collect the same in the ordinary course
of its business shall be deemed to be immediately revoked and terminated. With
or without such general notification after an Event of Default, Bank may take or
bring in Borrower's name or that of the Bank all steps, actions, suits or
proceedings deemed by the Bank necessary or desirable to effect possession or
collection of payments, may complete any contract or agreement of the Borrower
in any way related to any of the Borrower's Mineral Interests, may make
allowances or adjustments related to the Borrower's Mineral Interests, may
compromise any claims related to the Borrower's Mineral Interests or may issue
credit in its own name or the name of the Borrower. Regardless of any provision
hereof, however, Bank shall never be liable for its failure to collect or for
its failure to exercise diligence in the collection, possession, or any
transaction concerning, all or part of the Borrower's Mineral Interests or sums
due or paid thereon, nor shall it or they be under any obligation whatsoever to
anyone by virtue of its security interests and liens relating to the Mortgaged
Properties.
Issuance by the Bank of a receipt to any Person obligated to
pay any amounts to Borrower shall be a full and complete release, discharge and
acquittance to such Person to the extent of any amount so paid to the Bank. The
Bank is hereby authorized and empowered on behalf of the Borrower to endorse the
name of the Borrower upon any check, draft, instrument, receipt, instruction or
other document or items, including, but not limited to, all items evidencing
payment upon any indebtedness of any Person to the Borrower coming into the
Bank's possession, and to receive and apply the proceeds therefrom in accordance
with the terms hereof. The Bank is hereby granted an irrevocable Power of
Attorney, which is coupled with an interest, to execute all checks, drafts,
receipts, instruments, instructions or other documents, agreements or items on
behalf of the Borrower, either before or after demand of payment on the Note, as
shall be deemed by the Bank to be necessary or advisable, in the sole discretion
of the Bank, to protect its security interests and liens in the Borrower's
Mineral Interests or the repayment of the Obligations, and the Bank shall not
incur any liability in connection with or arising from its exercise of such
Power of Attorney.
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The application by Bank of such funds shall, unless Bank shall
agree otherwise in writing, be first to the payment of costs and expenses due
Bank under this Loan Agreement, second to the payment of accrued interest due on
the Note and last to the payment of the principal of the Note and reimbursement
obligations relating to any Letters of Credit. Borrower acknowledges that all
funds so transferred into the Remington Production Account shall be the property
of Borrower only and not subject to any claim by any party other than Bank.
4.3 BANK OFFSET.
In addition to the rights granted to the Bank under Section
4.2 hereof, Borrower hereby grants to Bank a right of offset, to secure
repayment of the Obligations, upon any and all monies, securities or other
property of Borrower and the proceeds therefrom, now or hereafter held or
received by or in transit to Bank, from or for the account of Borrower, whether
for safekeeping, custody, pledge, transmission, collection or otherwise, and
also upon any and all deposits (general or specified) and credits of Borrower,
and any and all claims of Borrower against Bank at any time existing, provided,
however, that Bank's right of offset set forth in this Section 4.3 shall,
without limitation, cover and include account no. 43-01-100-0109802 maintained
by Bank under the terms of that certain Custody Agreement dated January 21,
1994, executed by and between Borrower and Bank. Bank is hereby authorized at
any time and from time to time, without notice to Borrower, to offset,
appropriate, apply and enforce such right of offset against any and all items
hereinabove referred to against the Obligations. Borrower shall be deemed
directly indebteded to Bank in the full amount of the Obligations, and Bank
shall be entitled to exercise the rights of offset provided for above.
4.4 AGREEMENT TO DELIVER ADDITIONAL COLLATERAL DOCUMENTS.
Borrower shall deliver such deeds of trust, mortgages,
security agreements, financing statements, assignments and other collateral
documents (including title opinions and other title assurances) (all of which
shall be deemed part of the "Collateral Documents"), in form and substance
satisfactory to Bank, as Bank may reasonably request from time to time for the
purpose of granting to, or maintaining or perfecting in favor of Bank, mortgage
liens and security interests in any of the Mortgaged Properties, together with
other assurances of the enforceability and priority of Bank's liens and
assurances of due recording and documentation of the Collateral Documents, as
Bank may reasonably require to avoid material impairment of the liens and
security interests granted or purported to be granted pursuant to this Article
IV.
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ARTICLE V
CONDITIONS PRECEDENT TO LENDING
5.1 INITIAL ADVANCES.
The obligation of Bank to make the initial Advance hereunder
is subject to the condition precedent that, on or before the date of such
Advance, Bank shall have received the following, each dated as of the date of
such Advance, in form and substance satisfactory to Bank:
(a) Revolving Credit Note.
The duly executed Note, payable to the order of Bank,
in the form of Exhibit 3.1 attached hereto, with appropriate insertions and
complying with the provisions of Section 3.1 hereof.
(b) Collateral Documents.
The Collateral Documents required to be delivered
under Article IV hereof, duly executed by the appropriate parties, together with
evidence that (to the extent necessary) the Collateral Documents have been duly
filed, evidenced and documented, that all recording taxes and fees have been
paid, and that all other actions have been taken in the manner necessary to
establish, protect, preserve and perfect, as a valid first lien or security
interest the liens granted to Bank thereunder, including without limitation, the
filing of financial statements and modification agreements, all in form and
substance satisfactory to Bank.
(c) Opinion of Borrower's Counsel.
Favorable opinion of Mr. W. Jefferson Burnett,
counsel for Borrower, as to the matters covered in Exhibit 5.1(c) hereto,
satisfactory in form and substance to Bank and its counsel.
(d) Title and Lien Opinions.
Favorable opinions of counsel acceptable to Bank
covering the Mineral Interests listed in Exhibit 4.1 attached hereto, addressing
the matters set forth in Exhibit 5.1(d) attached hereto, and otherwise
satisfactory in form and substance to Bank and its counsel.
(e) Officers' Certificate
A certificate signed by a duly authorized officer of
Borrower, stating that (to the best knowledge and belief of such officer, after
reasonable and due investigation and review of matters pertinent to the subject
matter of such certificate): (i) all of the representations and warranties
contained in Article VI hereof, and the other Loan Documents are true and
correct as of
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the date hereof; and (ii) no event has occurred and is continuing, or would
result from the Advance, which constitutes an Event of Default or which, with
the lapse of time or the giving of notice or both, would constitute an Event of
Default.
(f) Resolutions of Borrower.
Resolutions of Borrower approving the execution,
delivery and performance of this Loan Agreement, the Note, and the other Loan
Documents and the transactions contemplated herein and therein, duly adopted by
Borrower's Board of Directors and accompanied by a certificate of the Secretary
of Borrower stating that such resolutions are true and correct, have not been
altered or repealed and are in full force and effect.
(g) Incumbency Certificate.
A signed certificate of the Secretary of Borrower
which shall certify the names of the officers of Borrower authorized to sign
each of the Loan Documents and the other documents or certificates to be
delivered pursuant to the Loan Documents by Borrower, together with the true
signatures of each such officers. Bank may conclusively rely on such certificate
until it shall receive a further certificate of the Secretary of Borrower
canceling or amending the prior certificate and submitting the signatures of the
offices named in such further certificate.
(h) Certificates.
A Certificate of Good Standing (or other similar
instrument) for Borrower issued by the Secretary of State of the State of
Delaware and the Secretary of State of each of Texas, Mississippi and Louisiana
wherein the Borrower is qualified to do business as a foreign corporation, dated
within ten (10) days prior to the date hereof.
(i) Certificate of Incorporation and Bylaws.
A copy of the Certificate of Incorporation of
Borrower and all amendments thereto, certified by the Secretary of State of the
State of Delaware, and dated within ten (10) days prior to the date hereof, and
a copy of the Bylaws of Borrower, and all amendments thereto, certified by the
Secretary of the Borrower, as being true, correct and complete as of the date of
such certification.
(j) Origination Fee.
Payment to Bank at closing of $37,500.00 as part of
the origination fee for the Revolving Credit Loan and payment of $12,500 to Bank
as the remainder of the origination fee at such time as the events occur which
are required for an increase of the Borrowing Base to $20,000,000 pursuant to
Section 2.2(a), whether or not Borrower accepts such increase in the Borrowing
Base.
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(k) Additional Information.
Such other information and documents as may
reasonably be required by Bank and its counsel.
5.2 ALL ADVANCES.
The obligation of Bank to make each Advance (including without
limitation its initial Advance) and to issue Letters of Credit hereunder is
subject to the conditions that:
(a) Representations and Warranties.
All of the representations and warranties contained
in Article VI hereof shall be true and correct in all material respects on the
date of such Advance or the issuance of such Letter of Credit, as the case may
be, as if such representations and warranties had been made on such date.
(b) No Default.
No event shall have occurred and be continuing, or
would result from the Advance or the issuance of the Letter of Credit, which
constitutes an Event of Default or which, with the lapse of time or the giving
of notice or of both, would constitute an Event of Default.
(c) Request for Advances.
Bank shall have received from Borrower a Notice of
Borrowing requesting such Advance or the issuance of such Letter of Credit
conforming in all respects to the requirements of Section 2.3 and Exhibit 2.3
hereof, which Notice of Borrowing shall include a certificate signed by a duly
authorized officer of Borrower stating that all of the representations and
warranties contained in Article VI hereof and the other Loan Documents are true
and correct and no event has occurred and is continuing which constitutes an
Event of Default.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
To induce Bank to make the Revolving Credit Loan hereunder, Borrower
represents and warrants to Bank that:
6.1 ORGANIZATION AND GOOD STANDING.
Borrower is a corporation duly organized and existing in good
standing under the laws of the State of Delaware, is duly qualified as a foreign
corporation and in good standing in Texas, Mississippi and Louisiana and all
other states in which it is doing business and has the
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corporate power and authority to own its properties and assets and to transact
the business in which it is engaged and is or will be qualified in those states
wherein it proposes to transact business in the future.
6.2 AUTHORIZATION AND POWER.
Borrower has the corporate power and requisite authority to
execute, deliver and perform this Loan Agreement, the Note and the other Loan
Documents to be executed by Borrower; Borrower is duly authorized to, and has
taken all corporate action necessary to authorize Borrower to, execute, deliver
and perform this Loan Agreement, the Note and such other Loan Documents and is
and will continue to be duly authorized to perform this Loan Agreement, the Note
and such other Loan Documents.
6.3 NO CONFLICTS OR CONSENTS.
Neither the execution and delivery of this Loan Agreement, the
Note or the other Loan Documents, nor the consummation of any of the
transactions herein or therein contemplated, nor compliance with the terms and
provisions hereof or with the terms and provisions thereof, will contravene or
materially conflict with any provision of law, statue or regulation to which
Borrower is subject or any judgment, license, order or permit applicable to
Borrower, or any indenture, mortgage, deed of trust, oil and gas lease,
operating agreement, or other agreement or instrument to which Borrower is a
party or by which Borrower may be bound, or to which Borrower may be subject, or
violate any provision of the Certificate of Incorporation or Bylaws of Borrower.
No consent, approval, authorization or order of any court or governmental
authority or third party is required in connection with the execution and
delivery by Borrower of the Loan Documents or to consummate the transactions
contemplated hereby or thereby.
6.4 ENFORCEABLE OBLIGATIONS.
This Loan Agreement, the Note and the other Loan Documents are the
legal and binding obligations of Borrower, enforceable in accordance with their
respective terms, except as limited by bankruptcy, insolvency or other laws of
general application relating to the enforcement of creditors' rights.
6.5 PRIORITY OF LIENS.
As of the date hereof, Bank shall have valid, enforceable,
perfected, first priority liens in the Mortgaged Properties, subject only to the
Permitted Liens.
6.6 NO LIENS.
Except for Permitted Liens, all of the properties and assets
of Borrower (including without limitation the Mineral Interests) are free and
clear of all mortgages, liens, encumbrances and
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other adverse claims of any nature, and Borrower has and will have good and
marketable title to such properties and assets.
6.7 FINANCIAL CONDITION.
Borrower has delivered to Bank copies of the balance sheet of
Borrower as of December 31, 1997, and the related statements of income, changes
in stockholders' equity, and cash flows for the year ended on such date, audited
by Arthur Andersen LLP, independent certified public accountants; such financial
statements are true and correct, fairly present the financial condition of
Borrower as of such date and have been prepared in accordance with Generally
Accepted Accounting Principles applied on a basis consistent with that of prior
periods; as of the date hereof, there are no obligations, liabilities or
indebtedness (including contingent and indirect liabilities and obligations or
unusual forward or long-term commitments) of Borrower which are (separately or
in the aggregate) material and are not reflected in such financial statements;
no changes having a Material Adverse Effect have occurred in the financial
condition or business of Borrower since December 31, 1997.
6.8 FULL DISCLOSURE.
There is no material fact that Borrower has not disclosed to
Bank which could have a Material Adverse Effect on the properties (including the
Mineral Interests), business, prospects or condition (financial or otherwise) of
Borrower. Neither the financial statements referred in Section 6.7 hereof, nor
any certificate or statement delivered herewith or heretofore by Borrower to
Bank in connection with negotiations of this Loan Agreement, contains any untrue
statement of a material fact or omits to state any material fact necessary to
keep the statements contained herein or therein from being misleading.
6.9 NO DEFAULT.
No event has occurred and is continuing which constitutes an
Event of Default or which, with the lapse of time or giving of notice or both,
would constitute an Event of Default.
6.10 MATERIAL AGREEMENTS.
Borrower is not in default in any material respect under any
loan agreement, operating agreement, oil and/or gas lease, mortgage, security
agreement or other material agreement or obligation to which it is a party or by
which any of its properties is bound.
6.11 NO LITIGATION.
Except as disclosed on Exhibit 6.11, there are no actions,
suits or legal, equitable, arbitration or administrative proceedings pending, or
to the knowledge of Borrower threatened,
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against Borrower that would, if adversely determined, have a Material Adverse
Effect on Borrower's financial condition, business or properties.
6.12 LEASES.
The leases which underlie or constitute part of the Mineral
Interests (the "Leases") are in full force and effect, and Borrower has not
defaulted on any of its obligations thereunder so as to impair the value of such
Leases.
6.13 ESTIMATED OIL AND GAS RESERVES.
Borrower has heretofore delivered to Bank copies of all
requested reports (prepared by independent petroleum engineers), which have been
obtained by Borrower and concern the estimated oil and gas reserves and future
net revenues attributable to the Mineral Interests. The statements of fact
contained in said reports with respect to the character and ownership of the
Mineral Interests (including, without limitation, the revenue interest and
working interest of Borrower stated therein) and the other factual data
furnished by Borrower as a basis for the estimates set forth therein are true
and correct and do not omit any material fact necessary to make said statements
not misleading.
6.14 WORKING INTEREST.
Borrower owns a "working interest" in each of the Mortgaged Properties
described in Exhibit 4.1 which is not greater than the interest specified in the
description of such property in Exhibit 4.1, with the term "working interest,"
as used herein, meaning the right to explore for, drill and produce oil, gas or
other minerals, whether such right is created by lease or otherwise, and being
equivalent to the proportionate part of the cost of exploration, development and
marketing of oil, gas and other minerals borne by Borrower with respect to each
respective property.
6.15 NET REVENUE INTEREST.
Borrower owns a "net revenue interest" in each of the
Mortgaged Properties described on Exhibit 4.1 which is not less than the
interest specified in the description of such property on Exhibit 4.1, with the
term "net revenue interest," as used herein, meaning the proportionate share of
the production of oil, gas or other minerals to which Borrower is entitled after
deduction of all royalties, overriding royalties and other interests payable
from or measured by production.
6.16 BURDENSOME CONTRACTS.
Borrower is not a party to, or bound by, any contract which in
Borrower's opinion, is a burdensome contract having a Material Adverse Effect on
the business, operations or financial condition of Borrower.
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6.17 REGULATORY DEFECTS.
As of the date hereof, Borrower has advised Bank, in writing,
of all regulatory defects of which Borrower has been advised or has actual
knowledge. No such regulatory defect has a Material Adverse Effect on the value
of any of the Mineral Interests or Borrower's intended operation thereof or the
value of the sale of production therefrom.
6.18 AGREEMENTS AFFECTING MINERAL INTERESTS.
Borrower has advised Bank of, and delivered to Bank copies of,
all material operating agreements, pooling or unitization agreements, sales or
processing contracts, restrictions, preferential purchase right agreements,
drilling and/or development agreements, pipeline transportation agreements and
other material agreements which pertain to the Mineral Interests, the operation
thereof or the disposition of production attributable thereto.
6.19 USE OF PROCEEDS.
No part of the proceeds of the Revolving Credit Loan will be
used for the purpose, whether immediate, incidental or ultimate, of purchasing
or carrying any Margin Stock or of extending credit to others for the purpose of
purchasing or carrying any Margin Stock. Borrower is not engaged principally, or
as one of its important activities, in the business of extending credit for the
purpose of purchasing or carrying any Margin Stock.
6.20 TAXES.
All tax returns required to be filed by the Borrower in any
jurisdiction have been filed and all taxes (including mortgage recording taxes),
assessments, fees and other governmental charges upon Borrower or upon any of
its properties, income or franchises have been paid prior to the time that such
taxes could give rise to a lien thereon. There is no proposed tax assessment
against Borrower or any basis for such assessment.
6.21 PRINCIPAL OFFICE.
The principal office, chief executive office and principal
place of business of Borrower is at 8201 Preston Road, Suite 600, Dallas, Texas
75225-6211.
6.22 ERISA.
(a) Exhibit 6.22 attached hereto contains a list of all Plans
as of the date hereof. To the best of Borrower's knowledge, following diligent
inquiry, each Plan of the Borrower and any ERISA Affiliate is in compliance with
ERISA and, where applicable, the Code in all material respects; no Reportable
Event has occurred within the last sixty months with respect to any Pension
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Plan that is not a Multiemployer Plan; and Borrower and all ERISA Affiliates are
in compliance in all material respects with the terms and conditions of all
Plans.
(b) (i) The PBGC has not instituted proceedings to terminate
any Pension Plan that is not a Multiemployer Plan; (ii) neither Borrower nor any
ERISA Affiliate (nor any duly appointed administrator of a Pension Plan) has
incurred or is expected to incur any liability to the PBGC with respect to a
Pension Plan that is not a Multiemployer Plan, other than for premiums not yet
due and payable; (iii) as of the date hereof, the aggregate present value of all
Unfunded Benefit Liabilities under all Pension Plans (excluding any
Multiemployer Plan) does not exceed approximately $500,000.00; (iv) no
"accumulated funding deficiency" within the meaning of ERISA Section 302(a)(2),
whether or not waived, exists with respect to any Pension Plan that is not a
Multiemployer Plan; (v) no liability has been incurred by Borrower or any ERISA
Affiliate which remains unsatisfied for any taxes or penalties, (A) with respect
to any Plan that is not a Multiemployer Plan and (B) to the best of Borrower's
knowledge, with respect to any Plan that is a Multiemployer Plan; (vi), no
litigation is pending or threatened concerning or involving any Plan; (vii) to
the best of Borrower's knowledge, no unfunded or unreserved liability exists for
benefits under all Plans in the aggregate in excess of $500,000.00; (viii)
Borrower and each ERISA Affiliate has complied with the requirements of ERISA
Section 515 with respect to each Plan which is a Multiemployer Plan; (ix) as of
the date hereof, the aggregate potential annual withdrawal liability payments,
as determined in accordance with Title IV of ERISA, of the Borrower and any
ERISA Affiliate with respect to all Plans with are Multiemployer Plans is
approximately $500,000.00; (x) with respect to each Plan that is a Multiemployer
Plan, neither Borrower nor any ERISA affiliate has suffered or caused to occur
and does not expect to suffer or cause to occur a "complete withdrawal" or
"partial withdrawal" (as such terms are respectively defined in ERISA Sections
4203 and 4205); (xi) neither Borrower nor any ERISA Affiliate has received
notice of a "termination" (as described in ERISA Section 4041A) for any Plan
that is a Multiemployer Plan; and (xii) neither Borrower nor any ERISA Affiliate
has received notice from any Plan that is a Multiemployer Plan that such plan
will be placed in "reorganization" (as described in Code Section 418 or Title IV
of ERISA). Liability, as referred to in this Paragraph (B), includes joint and
several liability.
(c) Borrower has timely provided all health care continuation
coverage required under Code Section 4980B.
6.23 COMPLIANCE WITH LAW.
Borrower is in compliance with all laws, rules, regulations,
orders and decrees which are applicable to Borrower or its properties (including
the Mineral Interests).
6.24 GOVERNMENT REGULATION.
Borrower is not subject to regulation under the Public Utility
Holding Company Act of 1935, the Federal Power Act, the Investment Company Act
of 1940, the Interstate Commerce Act (as any of the preceding acts have been
amended), or any other law (other than Regulation X) which
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regulates the incurring by Borrower of indebtedness, including but not limited
to laws relating to common contract carriers or the sale of electricity, gas,
steam, water, or other public utility services.
6.25 NO SUBSIDIARIES.
Borrower has not formed or acquired and will not, without
first obtaining the consent of the Bank (which consent shall not be unreasonably
withheld), form or acquire any Subsidiary except those Subsidiaries listed on
Exhibit 6.25 that are acquired as a result of the Merger.
6.26 HAZARDOUS SUBSTANCES.
Borrower : (a) has not received any notice or other
communication or otherwise learned of any Environmental Liability which would
individually or in the aggregate have a Material Adverse Effect arising in
connection with (i) any non-compliance with or violation of the requirements of
any Environmental Laws, or any permit issued under any Environmental Laws, or
(ii) the Release of any Hazardous Material into the environment; (b) has no
actual liability or pending action in connection with the Release of any
Hazardous Material into the environment which would individually or in the
aggregate have a Material Adverse Effect; or (c) has not received notice of any
investigation by any Governmental Authority evaluating whether any remedial
action is needed to respond to a Release or threatened Release of any Hazardous
Material into the environment for which Borrower is or may be liable or which
involve any of Borrower's properties, nor has Borrower, to the extent the
following would relate to the Mineral Interests or the operations relating to or
affecting Borrower, filed any notice under any Environmental Laws (i) reporting
a Release of any Hazardous Material which Release has not been in compliance
with all Environmental Laws, or (ii) reporting a violation of any applicable
Environmental Laws the violation of which will or reasonably could be expected
to result in a Material Adverse Effect.
ARTICLE VII
AFFIRMATIVE COVENANTS
So long as any Revolving Credit Loan or other Obligations are
outstanding, and until payment in full of the Note and the Obligations and the
performance of all other obligations of Borrower under this Loan Agreement and
the other Loan Documents, Borrower agrees that (unless Bank shall otherwise
consent in writing, such consent not to be unreasonably withheld with regard to
Sections 7.1(h) and (i), but any other consents to be in Bank's sole
discretion):
7.1 FINANCIAL STATEMENTS, REPORTS AND DOCUMENTS.
Borrower shall deliver to Bank copies of the following:
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(a) Quarterly Statements.
As soon as available, and in any event within sixty
(60) days after the end of each quarterly fiscal period (except the last) of
each Fiscal Year of Borrower, copies of the balance sheet of Borrower as of the
end of such fiscal period, and related statements of income and cash flows of
Borrower for that quarterly fiscal period and for the portion of the Fiscal Year
ending with such period, in each case setting forth in comparative form the
figures for the corresponding period of the preceding fiscal year, all in
reasonable detail, and certified by the chief financial officer of Borrower as
being true and correct and as having been prepared in accordance with Generally
Accepted Accounting Principles, subject to year-end audit and adjustments;
(b) Annual Statements.
As soon as available and in any event within ninety
(90) days after the close of each Fiscal Year of Borrower, copies of the balance
sheet of Borrower as of the close of such Fiscal Year and related statements of
income, changes in stockholders' equity and cash flow and changes in financial
position of Borrower for such fiscal year, in each case setting forth in
comparative form the figures for the preceding fiscal year, all in reasonable
detail and accompanied by an opinion thereon (which shall not be qualified by
reason of any limitation imposed by Borrower) of Arthur Andersen LLP, or of
other independent public accountants of recognized national standing selected by
Borrower and satisfactory to Bank, to the effect that such financial statements
have been prepared in accordance with Generally Accepted Accounting Principles
consistently maintained and applied (except for changes in which such
accountants concur) and that the examination of such accounts in connection with
such financial statements has been made in accordance with generally accepted
auditing standards and, accordingly, includes such tests of the accounting
records and such other auditing procedures as were considered necessary in the
circumstances;
(c) Audit Reports.
Promptly upon receipt thereof, one copy of each
written report submitted to Borrower by independent accountants in any annual,
quarterly or special audit made, it being understood and agreed that all audit
reports which are furnished to Bank pursuant to this Article VII shall be
treated as confidential, but nothing herein contained shall limit or impair
Bank's right to disclose such reports to any appropriate Governmental Authority
or to use such information to the extent pertinent to an evaluation of the
Obligations or to enforce compliance with the terms and conditions of this Loan
Agreement, or to take any lawful action which Bank deems necessary to protect
its interests under this Loan Agreement;
(d) SEC and Other Reports.
Promptly upon their becoming available, one copy of
each financial statement, report, notice or proxy statement sent by Borrower to
stockholders generally and of each regular or
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periodic report, registration statement or prospectus filed by Borrower with any
securities exchange or the Securities and Exchange Commission or any successor
agency, and copies of any orders in any proceedings to which Borrower is a
party, issued by any Governmental Authority;
(e) Compliance Certificate.
Concurrently with the delivery of the financial
information required by Section 7.1(a) and 7.1(b), a certificate in the form of
Exhibit 7.1(e) executed by the chief financial officer or chief executive
officer of Borrower, stating that a review of the activities of Borrower during
the fiscal period relevant to such financial information has been made under
their supervision and that Borrower has observed, performed and fulfilled each
and every obligation and covenant contained herein and is not in default under
any of the same or, if any such default shall have occurred, specifying the
nature and status thereof;
(f) Production Information, Etc.
On or prior to the last Business Day of each month
hereafter, commencing on October 31, 1998, statements, runsheets, production
reports and data reasonably describing, by Lease, well or unit: (i) the gross
volume of production, values of production and sales attributable to production
from the Mineral Interests during the second calendar month immediately
preceding such month (e.g., for the report due in December, then on or prior to
December 31 of such year, Borrower will deliver to Bank such information with
respect to production during October of such year), (ii) severance taxes,
windfall profits taxes, leasehold operating expenses and capital costs incurred
during such preceding month in connection with and attributable to the Mineral
Interests, (iii) the expenditures made by Borrower during such preceding month
in connection with the exploration and development of the Mineral Interests, and
(iv) complete information regarding any well drilled or completed on any of the
Leases during such preceding month;
(g) Reports Received.
As soon as possible after Borrower's receipt thereof
or obtaining access thereto, copies of any statements or other reports
describing reserves, future income or value attributable to any of the Mineral
Interests and monthly production reports filed with the Minerals Management
Service or other Governmental Authority by the operator of each of the Mortgaged
Properties;
(h) Agreements Affecting the Mineral Interests.
All material operating agreements, pooling or
unitization agreements, sales or processing contracts, restrictions,
preferential purchase right agreements, drilling and/or development agreements,
pipeline transportation agreements and other material agreements which pertain
to the Mineral Interests, the operation thereof or the disposition of production
attributable thereto;
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(i) Certain Government Filings.
Copies of all reports, forms and other documents and
data submitted by Borrower to the United States Department of the Interior
Bureau of Land Management Minerals Management Service, the Louisiana Oil
Conservation Commission, United States Department of Energy, United States
Federal Energy Regulatory Commission or other Governmental Authority, concerning
the operation of, drilling of wells on, sale of production from, or the prices
received for the sale of production from, the Mineral Interests; and
(j) Other Information.
Such other information concerning the business, properties or
financial condition of Borrower as Bank shall reasonably request.
7.2 PAYMENT OF TAXES AND OTHER INDEBTEDNESS.
Borrower will pay and discharge (a) all taxes, assessments and
governmental charges or levies imposed upon it or upon its income or profits, or
upon any property belonging to it, before delinquent, (b) all lawful claims
(including claims for labor, materials and supplies) which might or could, if
unpaid, become a lien or charge on the Mineral Interests; and (c) all costs and
expenses incurred under any joint operating agreement affecting the Mineral
Interests and Borrower shall furnish to Bank, as and when requested, information
as to the status of any joint account maintained under any such operating
agreement; provided, however, that Borrower shall not be required to pay any
such tax, assessment, charge or levy if and so long as the amount, applicability
or validity thereof shall currently be contested in good faith by appropriate
proceedings and appropriate reserves therefor have been established.
7.3 MAINTENANCE OF EXISTENCE AND RIGHTS; CONDUCT OF BUSINESS.
Borrower will preserve and maintain its corporate existence
and all of its rights, privileges and franchises necessary or desirable in the
normal conduct of its business, and conduct its business in an orderly and
efficient manner consistent with good business practices and in accordance with
all valid regulations and orders of any Governmental Authority.
7.4 NOTICE OF DEFAULT.
Borrower will furnish to Bank, immediately upon becoming aware
of the existence of any condition or event which constitutes an Event of Default
or which, with the lapse of time or giving of notice, or both, would become an
Event of Default, a written notice specifying the nature and period of existence
thereof and the action which Borrower is taking or proposes to take with respect
thereto.
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7.5 OTHER NOTICES.
Borrower will promptly notify Bank of (a) any Material Adverse
Effect, (b) any default under any material agreement, contract, or other
instrument to which Borrower is a party or by which any of its properties are
bound, or any acceleration of the maturity of any Indebtedness owing by
Borrower, (c) any material adverse claim against or affecting Borrower, or any
of its properties, including any claim arising in connection with the
non-compliance with or violation of any Environmental Laws, including the
listing of the Mineral Interests on CERCLIS, and (d) any commencement of, and
any material determination in, any litigation, arbitration or other proceeding
with any third party, or any proceeding before any Governmental Authority,
affecting the Borrower which might, in the event of an adverse outcome, have a
Material Adverse Effect or result in the occurrence of an Event of Default.
7.6 COMPLIANCE WITH LOAN DOCUMENTS.
Borrower will promptly comply with any and all covenants and
provisions of this Loan Agreement, the Note and all of the other Loan Documents.
7.7 COMPLIANCE WITH MATERIAL AGREEMENTS.
Borrower will comply in all material respects with all
material agreements, indentures, mortgages or documents binding on it or
affecting its properties or business, including without limitation, all leases
and operating agreements pertaining to any of the Mineral Interests.
7.8 OPERATIONS AND PROPERTIES.
Borrower will act prudently and in accordance with customary
industry standards in managing or operating its assets, properties, business and
investments. Borrower will keep in good working order and condition, ordinary
wear and tear excepted, all of its assets and properties which are necessary to
the conduct of its business, including without limitation all wells and
equipment necessary or useful in the operation of the Mineral Interests.
7.9 BOOKS AND RECORDS; ACCESS.
Borrower will give any representative of Bank, its agents, and
representatives, access during all business hours to, and permit such
representative to examine, copy or make excerpts from, any and all books,
records and documents in the possession of Borrower and relating to its affairs,
and to inspect (at the risk of Bank, its agents, or representatives) at any time
any of the Mortgaged Properties of Borrower. Borrower will maintain complete and
accurate books and records of its transactions in accordance with customary
practices and standards of the oil and gas industry.
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7.10 COMPLIANCE WITH LAW.
Borrower shall comply with all applicable laws, rules,
regulations, and all orders of any Governmental Authority, including without
limitation Environmental Laws, applicable to it or any of its property
(including without limitation the Mineral Interests), business operations or
transactions, a breach of which could have a Material Adverse Effect.
7.11 LEASES.
Borrower will pay and discharge promptly, or cause to be paid
and discharged promptly, all rentals, delay rentals, royalties, overriding
royalties, payments out of production and other indebtedness or obligations
accruing under, and perform or cause to be performed each and every act, matter
or thing required by each and all of, the Leases and all other agreements and
contracts constituting or affecting the Mineral Interests, and do all other
things necessary to keep unimpaired its rights thereunder and prevent any
forfeiture thereof or default thereunder, and operate or cause to be operated
such properties in a diligent, careful and efficient manner and in compliance
with all applicable proration and conservation laws and all applicable rules and
regulations of every Governmental Authority, whether state, federal, municipal
or other jurisdiction, from time to time constituted to regulate the development
and operations of oil and gas properties and the production and sale of oil, gas
and other hydrocarbons therefrom.
7.12 INSURANCE.
Borrower will maintain workmen's compensation insurance,
liability insurance and insurance on its present and future properties, assets
and business against such casualties, risks and contingencies, and in such types
and amounts, as are consistent with customary practices and standards of the oil
and gas industry.
7.13 DEVELOPMENT AND MAINTENANCE.
Borrower will explore, develop and maintain (or cause to be
explored, developed and maintained) the Leases, wells, units and acreage to
which the Mineral Interests pertain in a prudent manner, and as may be
reasonably necessary for the prudent and economical operation of (and in an
effort to maximize the production capacity of) such Leases, wells, units and
acreage.
7.14 AUTHORIZATIONS AND APPROVALS.
Borrower will promptly obtain, from time to time at its own
expense, all such governmental licenses, authorizations, consents, permits and
approvals as may be required to enable Borrower to comply with its obligations
hereunder and under the other Loan Documents.
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7.15 MAINTENANCE OF LIENS.
Borrower shall perform all such acts and execute all such
documents as Bank may reasonably request in order to enable Bank to report, file
and record every instrument that Bank may deem necessary in order to perfect and
maintain Bank's liens in the Mortgaged Properties and otherwise to preserve and
protect the rights of Bank.
7.16 EXPERIENCED MANAGEMENT.
Borrower will at all times hire and retain management and
supervisory personnel adequate for the proper management, supervision and
conduct of Borrower's properties, business and operation.
7.17 FURTHER ASSURANCES.
Borrower will make, execute or endorse, and acknowledge and
deliver or file or cause the same to be done, all such vouchers, invoices,
notices, certifications and additional agreements, undertakings, conveyances,
deeds of trust, mortgages, transfers, assignments, financing statements or other
assurances, and take and all such other action, as the Bank may, from time to
time, deem reasonably necessary or proper in connection with the Loan Agreement
or any of the other Loan Documents, the obligations of the Borrower hereunder or
thereunder, or for better assuring and confirming unto Bank all or any part of
the security for any of such obligations, or for granting to Bank any additional
security for the Obligations which Bank may request from time to time.
7.18 ERISA.
(a) As soon as possible and in any event within thirty (30)
days after the Borrower or any ERISA Affiliate knows or has reason to know that:
(i) any Termination Event with respect to a Plan
has occurred or will occur, or
(ii) any condition exists with respect to a Plan
which represents a material risk of termination of the Plan, imposition of an
excise tax, requirements to provide security to the Plan or other liability
(including joint and several liability) on the Borrower or any ERISA Affiliate,
or
(iii) the Borrower or any ERISA Affiliate has
applied for a waiver of the minimum funding standard under Code Section 412, or
(iv) the Borrower or any ERISA Affiliate has
engaged in a Prohibited Transaction involving any Plan, or
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(v) the aggregate present value of the Unfunded
Benefit Liabilities under all Pension Plans has increased to an amount in excess
of $500,000.00, or
(vi) there is a "complete withdrawal" or "partial
withdrawal" (as described in ERISA Sections 4203 and 4205, respectively) by the
Borrower or any ERISA Affiliate from a Plan that is a Multiemployer Plan, or
(vii) the Borrower or any ERISA Affiliate is in
"default" (as defined in ERISA Section 4219(c)(5) with respect to payments to a
Plan that is a Multiemployer Plan required by reason of its complete or partial
withdrawal from such Plan, or
(viii) a Plan that is a Multiemployer Plan is in
"reorganization" (as described in Code Section 418 or in Title IV of ERISA) or
has "terminated" (as described in ERISA Section 4041A), or
(ix) the potential withdrawal liability (as
determined in accordance with Title IV of ERISA) of the Borrower and any ERISA
Affiliate with respect to all Plans that are Multiemployer Plans has in any year
increased in the aggregate by more than $500,000.00, or
(x) there is an action brought against the
Borrower or any ERISA Affiliate under ERISA Section 502 with respect to its
failure to comply with ERISA Section 5.15, or
(xi) the Code Section 4980B(b) tax liability for
Borrower's failure to satisfy health care continuation coverage requirements
exceed $500,000.00;
Borrower shall provide to Bank a certificate of the President or Chief Financial
Officer of the Borrower setting forth the details of such of the events
described in paragraphs (i) through (xi) as are applicable and the action which
the Borrower or any ERISA Affiliate proposes to take with respect thereto,
together with a copy of any notice of filing from the PBGC or which may be
required by the PBGC or any agency of the United States government with respect
to such of the events described in paragraphs (i) through (xi), as are
applicable.
(b) As soon as possible and in any event within three (3)
business days after the receipt by Borrower or any ERISA Affiliate of a demand
letter from the PBGC notifying the Borrower or any ERISA Affiliate of the final
decision finding liability and the date by which such liability must be paid,
provide to Bank a copy of such letter, together with a certificate of the
President or Chief Financial Officer of the Borrower setting forth the action
which the Borrower or any ERISA Affiliate proposes to take with respect thereto.
(c) As soon as possible and in any event by the date such
amendment is adopted, provide to Bank a copy of any Plan amendment that Borrower
or any ERISA Affiliate proposes to adopt which would require the posting of
security under Code Section 401(a)(29), together with a
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certificate of the President or Chief Financial Officer of the Borrower setting
forth the reasons for the adoption of such amendment.
(d) As soon as possible and in any event by the 10th day after
the due date of any required installment or other payment under Code Section 412
provide to Bank a copy of the notice of failure to make required contributions
provided to the PBGC by the Borrower or any ERISA Affiliate under Code Section
412(n), together with a certificate of the President or Chief Financial Officer
setting forth the action which the Borrower or any ERISA Affiliate proposes to
take with respect thereto.
(e) Borrower and any ERISA Affiliate shall (i) make payment of
all contributions that are required to be made under all Pension Plans in order
to meet the minimum funding standards set forth in ERISA Section 302 with
respect to such Plans within the time prescribed for making such contributions,
and (i) within thirty (30) days after the filing thereof furnish to Bank each
annual report/return (Form 5500 Series), as well as all schedules and
attachments required to be filed with the Department of Labor and/or the
Internal Revenue Service pursuant to ERISA and the regulations promulgated
thereunder, in connection with each of its Plans that is not a Multiemployer
Plan for each Plan year.
ARTICLE VIII
NEGATIVE COVENANTS
So long as any Revolving Credit Loan or Obligations are
outstanding, and until payment in full of the Note and the Obligations and the
performance of all other obligations of Borrower under this Loan Agreement and
the other Loan Documents, Borrower agrees that (unless Bank shall otherwise
consent in writing; such consent not to be unreasonably withheld with regard to
Sections 8.1, 8.9 and 8.12 but any other consents to be in Bank's sole
discretion):
8.1 MERGERS AND ACQUISITIONS.
Except for the Merger, Borrower will not merge or
consolidate with or into any corporation, or acquire by purchase, lease or
otherwise all or substantially all of the assets or capital stock of any Person.
8.2 LIMITATION ON INDEBTEDNESS.
Borrower will not incur, create, contract, waive,
assume, have outstanding, guarantee or otherwise be or become, directly or
indirectly, liable in respect of any Indebtedness, except (a) Indebtedness
arising out of this Loan Agreement, (b) current amounts payable or accrued of
other claims (other than for borrowed funds or purchase money obligations)
incurred in the ordinary course of business (including, but not limited to,
drilling expenditures), provided that all such liabilities, accounts and claims
shall be promptly paid and discharged when due or in conformity with customary
trade terms, (c) Indebtedness of Borrower as reflected in the audited
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financial statement of Borrower as of December 31, 1997, and (d) other
obligations, of Borrower, direct or contingent, not exceeding $3,000,000.00.
8.3 NEGATIVE PLEDGE.
Borrower will not create or suffer to exist any
mortgage, pledge, security interest, conditional sale or other title retention
agreement, charge, encumbrance or other Lien (whether such interest is based on
common law, statute, other law or contract) upon any of its property or assets,
now owned or hereafter acquired, except for Permitted Liens.
8.4 ALTERATION OF MATERIAL AGREEMENTS.
Borrower will not consent to or permit any
alterations, amendments, modifications, release, waivers or terminations of any
material agreement to which it is a party.
8.5 CERTAIN TRANSACTIONS.
Except for the Merger, Borrower will not enter into
any transaction with, or pay any management fees to, any Affiliate; provided,
however, that Borrower may enter into transactions with Affiliates upon terms
not less favorable to Borrower than would be obtainable at the time in
comparable transactions of Borrower in arms-length dealings with Persons other
than Affiliates.
8.6 LIMITATION ON SALE OF PROPERTIES.
Borrower will not sell, assign, convey, exchange,
lease or otherwise dispose of any if its properties, rights, assets or business,
whether now owned or hereafter acquired, except in the ordinary course of its
business and for a fair consideration. Borrower will not sell, assign, transfer
or dispose of any of the Mortgaged Properties or Mineral Interests, except for
hydrocarbons, worn-out or used equipment and leasehold acreage sold in the
ordinary course of its business.
8.7 FISCAL YEAR AND ACCOUNTING METHOD.
Borrower will not change its Fiscal Year. Borrower
will not change methods of accounting unless permitted by GAAP or by established
industry standards.
8.8 WORKING CAPITAL.
Borrower shall not permit, as of any date, the ratio
of its Current Assets to its Current Liabilities to be less than or equal to 1.0
to 1.0.
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8.9 OPERATING AGREEMENTS. Borrower shall not enter into any
operating agreement or amendment to any existing operating agreement after the
date hereof covering any of the Mortgaged Properties.
8.10 BURDENSOME CONTRACTS. Borrower shall not enter into,
become bound by, or subject the Mortgaged Properties to any contract or
agreement which is burdensome on Borrower or materially adversely affects the
operation of the Mortgaged Properties.
8.11 MINIMUM TANGIBLE NET WORTH. Borrower shall not permit at
any time its Tangible Net Worth to be less than $45,000,000.
8.12 MARKETING CONTRACTS. Borrower shall not (without the
prior written consent of Bank, which consent shall not be unreasonably withheld)
enter into any contract relating to the marketing of hydrocarbons or gas
production from the Mortgaged Properties, or terminate or amend any existing
such contracts; provided, however, Borrower may sell hydrocarbons produced from
the Mortgaged Properties under sales contracts with terms less than sixty (60)
days, provided such hydrocarbons are not otherwise subject to Borrower's
existing marketing contracts.
8.13 ERISA. Borrower shall not take, or permit any ERISA
Affiliate to take any action which would increase the aggregate Unfunded Benefit
Liabilities under all Pension Plans to an amount in excess of $500,000.00 or
cause any Pension Plan to have a "funded current liability percentage" (as
defined in Code Section 401(a)(29)) of less than 60%.
ARTICLE IX
EVENTS OF DEFAULT
9.1 EVENTS OF DEFAULT.
An "Event of Default" shall exist if any one or more
of the following events (herein collectively called "Events of Default") shall
occur and be continuing:
(a) Borrower shall fail to pay when due any
principal of, or interest on, the Note or shall fail to pay when due any fee,
expense or other payment required hereunder or fail to pay on demand any
reimbursement obligation incurred pursuant to any Letter of Credit;
(b) any representation or warranty made under
this Loan Agreement, or any of the other Loan Documents, or in any certificate
or statement furnished or made to Bank pursuant hereto or in connection herewith
or with the Revolving Credit Loan hereunder, shall prove to be untrue or
inaccurate in any material respect as of the date on which such representation
or warranty is made;
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(c) default shall occur in the performance of
the covenants or agreements of Borrower contained in Sections 7.4, 7.7, 7.8,
7.10, 7.12 through 7.14, or 7.16, and such default is not remedied within thirty
(30) days after the occurrence thereof;
(d) default shall occur in the performance of
any of the other covenants or agreements of Borrower contained herein, or in any
of the other Loan Documents;
(e) default shall occur in the payment of any
Indebtedness of Borrower, the principal amount of which exceeds $300,000.00, or
default shall occur in respect of any note, loan agreement or credit agreement
relating to any such Indebtedness and such default shall continue for more than
the period of grace, if any, specified therein; or any such Indebtedness shall
become due before its stated maturity by acceleration of the maturity thereof or
shall become due by its terms and shall not be promptly paid or extended;
(f) any of the Loan Documents shall cease to be
legal, valid, binding agreements enforceable against any party executing the
same in accordance with the respective terms thereof or shall in any way be
terminated or become or be declared ineffective or inoperative or shall in any
way whatsoever cease to give or provide the respective liens, security interest,
rights, titles, interest, remedies, powers or privileges intended be created
thereby;
(g) Borrower shall (i) apply for or consent to
\the appointment of a receiver, trustee, custodian, intervenor or liquidator of
itself or of all or a substantial part of its assets, (ii) file a voluntary
petition in bankruptcy or admit in writing that it is unable to pay its debts as
they become due, (iii) make a general assignment for the benefit of creditors,
(iv) file a petition or answer seeking reorganization and arrangement with
creditors or to take advantage of any bankruptcy or insolvency law, (v) file an
answer admitting the material allegations of, or consent to, or default in
answering, a petition filed against it in any bankruptcy, reorganization or
insolvency proceeding, or (vi) take corporate action for the purpose of
effecting any of the foregoing;
(h) an order, order for relief, judgment or
decree shall be entered by any court of competent jurisdiction or other
competent authority approving a petition seeking reorganization of Borrower or
appointing a receiver, custodian, trustee, intervenor or liquidator of Borrower,
or of all or substantially all of its assets, and such order, judgment or decree
shall continue unstayed and in effect for a period of sixty (60) days;
(i) any final judgment(s) for the payment of
money in excess of the sum of $100,000.00 in the aggregate (other than the
judgment rendered in the Phillips Litigation) shall be rendered against Borrower
and such judgment or judgments shall not be satisfied, superseded or discharged
at least ten (10) days prior to the date on which any of the assets of Borrower
could be lawfully sold to satisfy judgment;
(j) Borrower shall make any inter-company loan,
advance, or distribution of capital to any Affiliate other than in the ordinary
course of business;
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(k) there shall occur any change in the
condition (financial or otherwise) of Borrower which, in the opinion of Bank,
has a Material Adverse Effect;
(l) (i) With respect to any Plan (A) any
Termination Event shall occur, or (B) any "accumulated funding deficiencies"
within the meaning of ERISA Section 302(a)(2), whether or not waived, shall
exist; (ii) any person shall engage in any Prohibited Transaction involving any
Plan; (iii) the Borrower or any ERISA Affiliate is in "default" (as defined in
ERISA Section 4219(c)(5)) with respect to payments to a Plan that is a
Multiemployer Plan resulting from the Borrower's or any ERISA Affiliate's
"complete withdrawal" or "partial withdrawal" (as described in ERISA Sections
4203 and 4205, respectively) from such Plan; (iv) the Borrower or any ERISA
Affiliate shall fail to pay when due an amount or amounts aggregating in excess
of $500,000.00 which it shall have become liable to pay to the PBGC or to a
Pension Plan under Title IV of ERISA; (v) a proceeding shall be instituted by a
fiduciary of any Plan against the Borrower or any ERISA Affiliate to enforce
ERISA Section 515 and such proceeding shall not have been dismissed within
thirty days thereafter; or (vi) any other event or condition shall occur or
exist with respect to a Plan, except that no event or condition referred to in
this clause (vi) shall constitute an Event of Default if it, together with all
other such events or conditions at the time existing, would not subject the
Borrower to any tax, penalty, debt or liability that, alone or in the aggregate,
would have a Material Adverse Effect on the Borrower; and by reason of any or
all of such events described in clauses (i) through (vi) as applicable there
shall be, or in the reasonable judgment of Bank there could be, liability of the
Borrower and any ERISA Affiliate in excess of $500,000.00 in the aggregate.
Liability for purposes of this Section 9.1(l) includes joint and several
liability; or
(m) (i) a "Change in Control" shall occur as
defined in that certain Indenture dated as of December 1, 1992 from Borrower to
United States Trust Company of New York, as Trustee, with respect to Borrower's
8 1/4% Convertible Subordinated Notes due December 1, 2002, as the such
Indenture may be amended or supplemented from time to time; or (ii) any Person
or "group" (within the meaning of Section 13(d) or Section 14(d) of the
Securities Exchange Act of 1934, as amended) (x) shall have acquired beneficial
ownership of 30% or more of any outstanding class of capital stock having
ordinary voting power in the election of directors of Borrower or (y) shall
obtain the power (whether or not exercised) to elect a majority of Borrower's
directors, in each case other than the Simplot Affiliates; or
(n) more than $50,000,000 in the aggregate is
paid by Borrower for any one or more of the following purposes: (i) to satisfy
any judgment rendered in the Phillips Litigation or the Dallas Litigation, (ii)
to settle the Phillips Litigation or the Dallas Litigation or (iii) to redeem,
purchase or otherwise retire any of the Subordinated Indebtedness; and five (5)
days shall have elapsed since such occurrence and Bank has not notified Borrower
that Bank is willing to accept Borrower's proposal, if any, for dealing with
such occurrence.
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9.2 REMEDIES UPON EVENT OF DEFAULT.
If an Event of Default shall have occurred and be
continuing, then Bank may (a) terminate Bank's commitment to lend or to issue
Letters of Credit hereunder, (b) declare the principal of, and all interest then
accrued on, the Note and any other liabilities hereunder to be forthwith due and
payable, whereupon the same shall forthwith become due and payable without
presentment, demand, protest, notice of default, notice of acceleration or of
intention to accelerate or other notice of any kind all of which Borrower hereby
expressly waives, anything contained herein or in the Note to the contrary
notwithstanding, (c) reduce any claim to judgment, and/or (d) without notice of
default or demand, pursue and enforce any of Bank's rights and remedies under
the Loan Documents, or otherwise provided under or pursuant to any applicable
law or agreement; provided, however, that if any Event of Default specified in
Section 9.1(g) and (h) shall occur, the principal of, and all interest on, the
Note and other liabilities hereunder shall thereupon become due and payable
concurrently therewith, and any obligation of Bank to lend or to issue Letters
of Credit shall concurrently terminate therewith, without any further action by
Bank and without presentment, demand, protest, notice of default, notice of
acceleration or of intention to accelerate or other notice of any kind, all of
which Borrower hereby expressly waives.
9.3 PERFORMANCE BY BANK.
Should Borrower fail to perform any covenant, duty or
agreement contained herein or in any of the Loan Documents, Bank may, at its
option, perform or attempt to perform such covenant, duty or agreement on behalf
of Borrower. In such event, Borrower shall, at the request of Bank, promptly pay
any amount expended by Bank in such performance or attempted performance to Bank
at its principal office in Dallas, Texas, together with interest thereon at the
Default Rate. Notwithstanding the foregoing, it is expressly understood that
Bank assumes no liability or responsibility for the performance of any duties of
Borrower hereunder or under any of the Loan Documents or other control over the
management and affairs of Borrower.
ARTICLE X
MISCELLANEOUS
10.1 WAIVER.
No failure to exercise, and no delay in exercising,
on the part of Bank, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other further exercise
thereof or the exercise of any other right. The rights of Bank hereunder and
under the Loan Documents shall be in addition to all other rights provided by
law. No modification or waiver of any provision of this Loan Agreement, the Note
or any Loan Documents, nor consent to departure therefrom, shall be effective
unless in writing and no such consent or waiver shall extend beyond the
particular case and purpose involved. No notice or demand given in any case
shall constitute a wavier of the right to take other action in the same, similar
or other instances without such notice or demand.
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10.2 PAYMENT OF EXPENSES; INDEMNITY.
(a) Borrower agrees to pay all out-of-pocket expenses
reasonably incurred by Lender in connection with the negotiation, preparation,
execution, delivery and administration of this Loan Agreement and the other Loan
Documents (including but not limited to engineering fees) or in connection with
any amendments, modifications or waivers of the provisions hereof or thereof
(whether or not the transactions hereby contemplated shall be consummated) or
reasonably incurred by Bank in connection with the enforcement or protection of
its rights in connection with this Loan Agreement and the other Loan Documents
or in connection with the Revolving Credit Loan made or the Note issued
hereunder, including, but not limited to, the reasonable fees, charges and
disbursements of legal counsel for Bank, and in connection with any such
enforcement or protection, the reasonable fees and disbursements of other
counsel for Bank.
(b) THE BORROWER AGREES TO INDEMNIFY BANK AND ITS
RESPECTIVE DIRECTORS, OFFICERS, EMPLOYEES, ATTORNEYS AND AGENTS (EACH SUCH
PERSON, INCLUDING, WITHOUT LIMITATION, BANK BEING CALLED AN "INDEMNITEE")
AGAINST, AND TO HOLD EACH INDEMNITEE HARMLESS FROM, ANY AND ALL LOSSES, CLAIMS,
DAMAGES, LIABILITIES AND RELATED EXPENSES, INCLUDING REASONABLE COUNSEL FEES AND
EXPENSES, INCURRED BY OR ASSERTED AGAINST ANY INDEMNITEE ARISING OUT OF, IN ANY
WAY CONNECTED WITH, OR AS A RESULT OF (I) THE EXECUTION OR DELIVERY OF THIS LOAN
AGREEMENT OR ANY OTHER LOAN DOCUMENT OR ANY AGREEMENT OR INSTRUMENT CONTEMPLATED
THEREBY, THE PERFORMANCE BY THE PARTIES THERETO OF THEIR RESPECTIVE OBLIGATIONS
THEREUNDER OR THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED THEREBY, (II)
THE USE OF THE PROCEEDS OF THE REVOLVING CREDIT LOAN OR (III) ANY CLAIM,
LITIGATION, INVESTIGATION OR PROCEEDING RELATING TO ANY OF THE FOREGOING,
WHETHER OR NOT ANY INDEMNITEE IS A PARTY THERETO; PROVIDED THAT SUCH INDEMNITY
SHALL, AS TO ANY INDEMNITEE, SPECIFICALLY APPLY TO ANY SUCH LOSSES, CLAIMS,
DAMAGES, LIABILITIES OR RELATED EXPENSES ARISING FORM THE NEGLIGENCE OF ANY
INDEMNITEE, BUT NOT SUCH LOSSES, CLAIMS, DAMAGES, LIABILITIES OR RELATED
EXPENSES ARISING FROM THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH
INDEMNITEE. WITHOUT LIMITING THE FOREGOING, BORROWER HEREBY INDEMNIFIES AND
HOLDS EACH INDEMNITEE HARMLESS FROM AND AGAINST, AND AGREES TO REIMBURSE ANY
INDEMNITEE WITH RESPECT TO, ANY AND ALL CLAIMS, DEMANDS, CAUSES OF ACTION, LOSS,
DAMAGE, LIABILITIES, COSTS, AND/OR EXPENSES (INCLUDING ATTORNEYS' FEES AND COURT
COSTS) OF ANY AND EVERY KIND OR CHARACTER, KNOWN OR UNKNOWN, FIXED OR
CONTINGENT, ASSERTED AGAINST OR INCURRED BY SUCH INDEMNITEE AT ANY TIME AND FROM
TIME TO TIME UNDER ANY ENVIRONMENTAL LAWS BY REASON OF ANY AND ALL MATTERS
ARISING OUT OF ANY ACT, OMISSION, EVENT, OR CIRCUMSTANCE OCCURRING ON OR
ADJACENT TO ANY PROPERTY OR FACILITY OWNED OR OPERATED BY BORROWER (INCLUDING,
WITHOUT
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LIMITATION, THE PRESENCE ON, OR THE RELEASE FROM OR ON, ANY PROPERTY OR FACILITY
OWNED OR OPERATED BY BORROWER OF ANY HAZARDOUS MATERIALS) REGARDLESS OF WHETHER
THE ACT, OMISSION, EVENT, OR CIRCUMSTANCE CONSTITUTED A VIOLATION OF ANY
ENVIRONMENTAL LAWS AT THE TIME OF EXISTENCE OF OCCURRENCE. PROMPTLY AFTER
RECEIPT BY ANY INDEMNITEE OF NOTICE OF ANY CLAIM OR THE COMMENCEMENT OF ANY
ACTION, SUCH INDEMNITEE SHALL, IF A CLAIM IN RESPECT THEREOF IS TO BE MADE
AGAINST THE BORROWER, NOTIFY THE BORROWER IN WRITING OF THAT CLAIM OR THE
COMMENCEMENT OF THAT ACTION. IF ANY SUCH CLAIM OR ACTION SHALL BE BROUGHT
AGAINST ANY INDEMNITEE, AND IT SHALL NOTIFY THE BORROWER THEREOF, THE BORROWER
SHALL BE ENTITLED TO PARTICIPATE THEREIN AND, TO THE EXTENT THAT ANY SUCH ENTITY
SO WISHES, TO ASSUME THE DEFENSE THEREOF WITH COUNSEL REASONABLY SATISFACTORY TO
SUCH INDEMNITEE. AFTER NOTICE FROM THE BORROWER OF ITS ELECTION TO ASSUME THE
DEFENSE OF SUCH CLAIM OR ACTION, THE BORROWER SHALL NOT BE LIABLE TO SUCH
INDEMNITEE HEREUNDER FOR ANY LEGAL OR OTHER EXPENSE SUBSEQUENTLY INCURRED BY
SUCH INDEMNITEE IN CONNECTION WITH THE DEFENSE THEREOF OTHER THAN REASONABLE
COST OF INVESTIGATION. NOTWITHSTANDING THE FOREGOING, SUCH INDEMNITEE MAY
THEREAFTER RETAIN ITS OWN COUNSEL, AND SHALL BE ENTITLED TO BE REIMBURSED FOR
THE EXPENSE THEREOF SUBJECT TO THE PROVISIONS AND LIMITATIONS OF THIS SECTION
10.2, IF, IN SUCH INDEMNITEE'S REASONABLE GOOD FAITH JUDGMENT IT IS ADVISABLE
FOR SUCH INDEMNITEE TO BE REPRESENTED BY SEPARATE COUNSEL, OR IF THE BORROWER
SHALL HAVE CONSENTED IN WRITING TO SUCH REPRESENTATION. BORROWER SHALL NOT BE
LIABLE FOR ANY SETTLEMENT OF ANY SUCH CLAIM OR ACTION AFFECTED WITHOUT ITS
WRITTEN CONSENT.
(c) THE PROVISIONS OF THIS SECTION 10.2 SHALL REMAIN
OPERATIVE AND IN FULL FORCE AND EFFECT REGARDLESS OF THE EXPIRATION OF THE TERM
OF THIS LOAN AGREEMENT, THE CONSUMMATION OF THE TRANSACTIONS CONTEMPLATED
HEREBY, THE REPAYMENT OF THE REVOLVING CREDIT LOAN, THE OCCURRENCE OF THE
COMMITMENT TERMINATION DATE, THE INVALIDITY OR UNENFORCEABILITY OF ANY TERM OR
PROVISION OF THIS LOAN AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY
INVESTIGATION MADE BY OR ON BEHALF OF BANK. ALL AMOUNTS DUE UNDER THIS SECTION
10.2 SHALL BE PAYABLE ON WRITTEN DEMAND THEREFOR.
10.3 NOTICES.
Any notice, demand, request or other communication which any
party hereto may be required or may desire to give hereunder shall be in writing
(except where telephonic instructions or notices are expressly authorized herein
to be given) and shall be deemed to be effective (a) if by hand delivery, telex,
telecopy or other facsimile transmission, on the day and at the time on which
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<PAGE> 42
delivered to such party at the address, telex or telecopier numbers specified
below; (b) if by mail, on the day on which it is received after being deposited,
postage prepaid, in the United States registered or certified mail, return
receipt requested, addressed to such party at the address specified below; or
(c) if by Federal Express or other reputable express mail service, on the next
Business Day following the address; or (d) if by telephone, on the day and at
the time communication with one of the individuals named below occurs during a
call to the telephone number or numbers indicated for such party below:
If to the Borrower:
Remington Oil and Gas Corporation
8201 Preston Road, Suite 600
Dallas, Texas 75225-6211
Attn: James Watt, President and
Chief Executive Officer
Telephone: (214) 210-2650
Telecopier: (214) 210-2643
If to Bank:
Comerica Bank - Texas
Energy Lending
P.O. Box 650282
Dallas, Texas 75265-0282
Attn: Jeff Rathkamp
Telephone: (214) 969-6538
Telecopier: (214) 969-6561
Any telephonic or other notice received by Bank after 11:00 a.m. (Dallas, Texas
time) on any day from Borrower pursuant to Section 2.1 (with respect to a Notice
of Borrowing) shall be deemed for the purposes of such Section to have been
given by Borrower on the next succeeding day. Any party may change its address
for purposes of this Agreement by giving notice of such change to the other
parties pursuant to this Section 10.03.
10.4 GOVERNING LAW.
This Loan Agreement has been prepared, is being
executed and delivered, and is intended to be performed in the State of Texas,
and the substantive laws of such state and the applicable federal laws of the
United States of America shall govern the validity, construction, enforcement
and interpretation of this Loan Agreement.
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10.5 INVALID PROVISIONS.
If any provision of this Loan Agreement is held to be
illegal, invalid, or unenforceable under present or future laws effective during
the term of this Loan Agreement, such provision shall be fully severable and
this Loan Agreement shall be construed and enforced as if such illegal, invalid
or unenforceable provision had never comprised a part of this Loan Agreement,
and the remaining provisions of this Loan Agreement shall remain in full force
and effect and shall not be affected by the illegal, invalid or unenforceable
provision or by its severance from this Loan Agreement, unless such continued
effectiveness of this Loan Agreement, as modified, would be contrary to the
basic understandings and intentions of the parties as expressed herein. If any
provision of this Loan Agreement shall conflict with or be inconsistent with any
provision of any of the other Loan Documents, then the terms, conditions and
provisions of this Loan Agreement shall prevail.
10.6 INTEREST RATE.
Regardless of any provisions contained in this Loan
Agreement, the Note or in any of the other Loan Documents, Bank shall never be
deemed to have contracted for or be entitled to receive, collect or apply as
interest on the Note, any amount in excess of the maximum rate of interest
permitted to be charged by applicable law, and, in the event that Bank ever
receives, collects or applies as interest any such excess, such amount which
would be excessive interest shall be applied to the reduction of the unpaid
principal balance of the Note, and, if the principal balance of the Note is paid
in full, any remaining excess shall forthwith be paid to Borrower. In
determining whether or not the interest paid or payable under any specific
contingency exceeds the highest lawful rate, Borrower and Bank shall, to the
maximum extent permitted under applicable law, (i) characterize any
non-principal payment (other than payments which are expressly designated as
interest payments hereunder) as an expense, fee, or premium, rather than as
interest, (ii) exclude voluntary prepayments and the effect thereof, and (iii)
spread the total amount of interest throughout the entire contemplated term of
the Note so that the interest rate is uniform throughout such term.
10.7 PARTIES BOUND; ASSIGNMENT.
(a) The provisions of this Loan Agreement shall
be binding upon and inure to the benefit of the parties hereto and their
respective successors and assigns, except Borrower may neither assign nor
otherwise transfer any of its rights or obligations under this Loan Agreement
without the prior written consent of Bank.
(b) Bank may at any time grant to one or more
banks or other institutions (each a "Participant") a participating interest in
the Commitment or any or all of the Revolving Credit Loan. In the event of any
such grant by Bank of a participating interest to a Participant, Bank shall
remain responsible for the performance of its obligations hereunder, and
Borrower shall remain responsible for the performance of its obligations
hereunder, and Borrower shall continue to deal solely and directly with Bank in
connection with Bank's rights and obligations under this Loan
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<PAGE> 44
Agreement. Any agreement pursuant to which Bank may grant such a participating
interest shall provide that Bank shall retain the sole right and responsibility
to enforce the Obligations hereunder including, without limitation, the right to
approve any amendment, modification or waiver of any provision of this Loan
Agreement. An assignment or other transfer which is not permitted by subsection
(c) below shall be given effect for purposes of this Loan Agreement only to the
extent of a participating interest granted in accordance with this subsection
(b).
(c) Bank may at any time assign to one or more
lending institutions (each an "Assignee") all or a proportionate part of all, of
its rights and obligations under this Loan Agreement and the Note, and such
Assignee shall assume such rights and obligations, pursuant to an Assignment and
Acceptance Agreement; provided, however, that the foregoing shall not be
applicable in the case of, and this subsection (c) shall not restrict, an
assignment or other transfer by Bank to an Affiliate of Bank. Upon execution and
delivery of such Assignment and Acceptance Agreement and payment by such
Assignee to Bank of an amount equal to the purchase price agreed between Bank
and such Assignee, such Assignee shall be a Lender party to this Loan Agreement
and shall have all the rights and obligations of the Bank with a Commitment as
set forth in such Assignment and Acceptance Agreement, and the Bank shall be
released from its obligations hereunder to a corresponding extent, and no
further consent or action by any party shall be required. Upon the consummation
of any assignment pursuant to this subsection (c), the Bank, and Borrower shall
make appropriate arrangements so that, if required, a new Note is issued to such
Assignee and Bank.
(d) Bank shall maintain at its principal offices
in Dallas, Texas or at such other location as the Bank shall designate in
writing to Borrower, a copy of each Assignment and Acceptance Agreement
delivered to and accepted by it and a register for the recordation of the names
and addresses of the Assignees, the amount of each Assignees' Pro Rata
Percentage and its Commitment, and the name and address of each Assignee's agent
for service of process (the "Register"). The entries in the Register shall be
conclusive and binding for all purposes, absent manifest error, and Borrower and
the Bank may treat each person or entity whose name is recorded in the Register
as a Lender hereunder for all purposes of this Loan Agreement. The Register
shall be available for inspection and copying by Borrower during normal business
hours upon reasonable prior notice to the Bank. Upon receipt of any Assignment
and Acceptance Agreement, Bank shall, if such Assignment and Acceptance
Agreement has been completed and fully-executed (i) accept such an Assignment
and Acceptance Agreement, (ii) record the information contained therein in the
Register, and (iii) give prompt notice thereof to Borrower.
10.8 HEADINGS.
Section headings are for convenience of reference
only and shall in no way affect the interpretation of this Loan Agreement.
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<PAGE> 45
10.9 SURVIVAL.
All representations and warranties made by Borrower
herein shall survive delivery of the Note and the making of the Revolving Credit
Loan.
10.10 MULTIPLE COUNTERPARTS.
This Loan Agreement may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
agreement, and any of the parties hereto may execute this Loan Agreement by
signing any such counterpart.
10.11 GOVERNMENTAL REGULATION.
Notwithstanding anything contained in this Loan
Agreement to the contrary, Bank shall not be obligated to extend credit to
Borrower in an amount in violation of any limitation or prohibition provided by
any applicable statute or regulation.
10.12 ENTIRETY AND AMENDMENTS.
This Loan Agreement and the other Loan Documents may
be amended only by instruments in writing executed by an authorized officer of
Borrower and the Bank. THIS WRITTEN LOAN AGREEMENT AND THE LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN 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.
IN WITNESS WHEREOF, the parties hereto have caused this Loan Agreement
to be duly executed as of the day and year first above written.
"BORROWER"
REMINGTON OIL AND GAS
By: /s/ JAMES WATT
--------------------------------------------
Name: James Watt
Title: President and Chief Executive Officer
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"BANK"
COMERICA BANK -- TEXAS
By: /s/ JEFFREY H. RATHKAMP
-------------------------------
Name: Jeffrey H. Rathkamp
-----------------------------
Title: Corporate Banking Officer
----------------------------
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EXHIBIT A
CERTAIN DEFINITIONS
As used herein, the following words and terms shall have the
respective meanings indicated opposite each of them:
"Advance" shall have the meaning assigned to it in Section 2.1
hereof.
"Affiliate" of any Person shall mean any other Person which,
directly or indirectly, controls or is controlled by, or is under common control
with, such Person. For purpose of this definition, "control" and the correlative
meanings of the term such as "controlled by" and "under common control" means
the possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of such Person, whether through the
ownership of Voting Shares or by contract or otherwise.
"Applicable Rate" shall mean the Contract Rate or the
LIBOR-based Rate, as the case may be, that is applicable to any Revolving Credit
Loan made pursuant hereto.
"Availability Period" shall mean the period commencing on the
date hereof and terminating on the Commitment Termination Date.
"Average Quarterly Usage" shall mean the amount obtained,
expressed as a percentage, by dividing the "Average Loan Balance" for a calendar
quarter by the "Average Borrowing Base" for such calendar quarter. For purposes
hereof, the "Average Loan Balance" is determined by adding the unpaid balance of
the Revolving Credit Loans outstanding hereunder for each calendar day during a
calendar quarter and by dividing such sum by the number of days in such calendar
quarter. For purposes hereof, the "Average Borrowing Base" is determined by
adding the amount of the Borrowing Base for each calendar day during a calendar
quarter and by dividing such sum by the number of days in such calendar quarter.
"Base Rate" shall mean the variable rate of interest per annum
announced or quoted from time to time by Bank as its base or prime rate for
commercial loans (which rate of interest may not be the lowest rate of interest
which Bank may charge to its most preferred customers) (if the prime rate for
commercial loans is discontinued by Bank as a standard, the sum of the Federal
Funds Effective Rate plus one percent (1.0%) shall be the Base Rate). Each
change in the Base Rate shall become effective without notice to Borrower on the
effective date of each change in the Base Rate as announced by Bank.
"Borrowing Base" shall mean such amount as Bank in good faith
determines, in its sole discretion, from time to time, pursuant to Article II
hereof.
"Business Day" shall mean any day other than (i) Saturdays or
Sundays, or (ii) any day on which the Bank is authorized to close by a
Governmental Authority.
Exhibit A-1
<PAGE> 48
"Capital Lease" of any Person shall mean, as of any date, any
lease of property, real or personal, which would be capitalized on a balance
sheet of such Person prepared as of such date, in accordance with Generally
Accepted Accounting Principles, together with any other lease which is in
substance a financing lease, including without limitation, any lease under which
(i) such person, as the lessee, has or will have an option to purchase the
property subject thereto at a nominal amount or any amount less than a
reasonable estimate of the fair market value of such property as of the date
such lease is entered into or (ii) the term of the lease approximates or exceeds
the expected useful life of the property leased thereunder.
"CERCLA" shall mean the Comprehensive Environmental Response,
Compensation and Liability Information System.
"Code" shall mean the United State Internal Revenue Code of
1986, as amended.
"Collateral Document" shall have the meaning assigned to it in
Section 4.1 hereof.
"Commitment" shall have the meaning assigned to it in Section
2.1 hereof.
"Commitment Termination Date" shall mean the earlier to occur
of (i) March 31, 2000, or (ii) the date Bank's commitment to fund Advances
herein is terminated pursuant to Section 9.2 hereof.
"Contract Rate" shall mean that rate of interest per annum
equal to the Base Rate plus one-half percent (0.5%); provided, however, that if
Borrower's Average Quarterly Usage during a fiscal quarter, commencing with the
quarter ending December 31, 1998, is less than fifty percent (50%) and no Event
of Default is existing at the end of such quarter, then the Contract Rate for
the immediately succeeding fiscal quarter shall be equal to the Base Rate;
provided, further, that if Borrower's Average Quarterly Usage during a fiscal
quarter, commencing with the quarter ending December 31, 1998, is equal to or
greater than fifty percent (50%) but less than seventy-five percent (75%) and no
Event of Default is existing at the end of such quarter, then the Contract Rate
for the immediately succeeding fiscal quarter shall be equal to the Base Rate
plus one-quarter percent (0.25%). The Contract Rate from the Closing Date
through December 31, 1998 shall be equal to the Base Rate plus one-half percent
(0.5%).
"Contract Rate Loans" shall mean Revolving Credit Loans
bearing interest at the Contract Rate.
"Current Assets" of any Person shall mean, as of any date, the
current assets which would be reflected on a balance sheet of such Person
prepared as of such date in accordance with Generally Accepted Accounting
Principles, but excluding (i) all accounts receivable in respect of products,
goods and/or services which were delivered or performed by such Person at least
90 day prior to such date and (ii) Intangible Assets.
Exhibit A-2
<PAGE> 49
"Current Liabilities" of any Person shall mean, as of any
date, the current liabilities of such Person which would be reflected on a
balance sheet of such Person prepared as of such date in accordance with
Generally Accepted Accounting Principles, including but not limited to, with
respect to Borrower, the amount of any outstanding judgement entered against
Borrower, whether or not such judgment has been stayed or bonded pending appeal,
but excluding any amounts owed to Bank.
"Dallas Litigation" shall mean the lawsuit now pending in
United States District Court, Northern District of Texas, Dallas Division,
styled Remington Oil and Gas Corporation v.
Phillips Petroleum Company, Civil Action No. 3-98CV1794-D.
"Default Rate" shall mean on any day the lesser of (a) the
Floating Base Rate in effect on such date, plus two percent (2%), or (b) the
Maximum Rate.
"Determination Date" shall have the meaning assigned to it in
Section 2.2 (b) hereof.
"Environmental Complaint" shall mean any complaint, order,
citation or notice issued to Borrower with regard to any alleged violation of
requirements of Environmental Laws relating to air emissions, water discharges,
Release, or disposal of any Hazardous Material, noise emissions or any other
environmental, health or safety matter affecting Borrower or the Mineral
Interests.
"Environmental Laws" shall mean (a) CERCLA, (b) the Resource
Conservation and Recovery Act of 1976, as amended by the Hazardous and Solid
Waste Amendments of 1984, 42 U.S.C.A. ss.7401 et seq., as amended by the Clean
Air Act Amendments of 1990, (d) the Clean Water Act of 1977, 33 U.S.C.A. ss.1251
et seq., (e) the Toxic Substances Control Act, 15 U.S.C.A. ss.2601 et seq., (g)
all other federal, state and local laws, ordinances, regulations or policies
relating to pollution, health and safety, or protection of the environment
including without limitation, air pollution, water pollution, noise control or
the use, handling, discharge, disposal, transportation, Release or recovery of
on-site or off-site Hazardous Materials, as each of the foregoing may be amended
from time to time, and (h) any and all regulations promulgated under or pursuant
to any of the foregoing statutes.
"Environmental Liability" shall mean any claim, demand,
obligation, cause of action, order, violation, damage ( including without
limitation, to any Person, property or natural resources), injury, judgment,
penalty or fine, cost of enforcement, cost of remedial action, clean-up,
restoration or any other cost or expense whatsoever, including reasonable
attorney's fees and disbursements resulting from the violation or alleged
violation of any Environmental Laws or the imposition of any Environmental Lien,
or otherwise arising under any Environmental Laws or resulting from any common
law cause of action asserted by any Person.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and the rules and regulations promulgated thereunder by any
Governmental Authority, as from time to time in effect.
Exhibit A-3
<PAGE> 50
"ERISA Affiliate" means any organization, trade or business,
or other arrangement (whether or not incorporated) which is a member of a group
of which Borrower is also a member and which is treated as a single employer
within the meaning of Code Section 414(b), (c), (m) or (o).
"Event Of Default" shall have the meaning assigned to it in
Section 9.1 hereof.
"Federal Funds Effective Rate" shall mean, for any period, a
fluctuating interest rate per annum equal for each day during such period to the
weighted average of the rates on overnight Federal funds transactions with
members of the Federal Reserve System arranged by Federal funds brokers, as
published for such day (or, if such day is not a Business Day, for the next
preceding Business Day) by the Federal Reserve Bank of New York, or, if such
rate is not so published for any day which is a Business Day, the average of the
quotations for such day on such transactions received by Bank from three Federal
funds brokers of recognized standing selected by it.
"Fiscal Year" shall mean each twelve-month period beginning on
January 1 and ending on December 31.
"Funded Debt" of any Person shall mean, as of any date, the
sum of the following (without duplication): (i) all Indebtedness of such Person
as of such date, other than Current Liabilities, (ii) all Indebtedness which
would be classified as "funded indebtedness" or "long-term indebtedness" on a
balance sheet of such Person prepared as of such date in accordance with
Generally Accepted Accounting Principles, (iii) all Indebtedness, whether
secured or unsecured, of such Person, having a final maturity (or which is
renewable or extendable at the option of such Person for a period ending) more
than one year after the date of creation thereof, notwithstanding the fact that
payments in respect thereof (whether installment, serial maturity or sinking
fund payments or otherwise) are required to be made by such Person less than one
year after the date of the creation thereof and notwithstanding the fact that
any amount thereof is at the time included also in Current Liabilities of such
Person, (iv) all Indebtedness outstanding under a revolving credit or similar
agreement providing for borrowings (and renewals and extensions thereof) over a
period of more than one year, notwithstanding the fact that any such
Indebtedness is created within one year of the expiration of such agreement, (v)
the present value (discounted at the implicit rate, if known, or 10% per annum
otherwise) of all obligations in respect of Capital Leases of such Person and
(vi) all obligations under guaranties of such Person.
"Generally Accepted Accounting Principles"shall mean those
generally accepted accounting principles and practices which are recognized as
such by the American Institute of Certified Public Accountants or by the
Financial Accounting Standards Board or through other appropriate boards or
committees thereof and which are consistently applied for all periods after the
date hereof so as to properly reflect the financial condition, and the results
of operations and changes in financial position, of Borrower, except that any
accounting principle or practice required to be changed by the said Financial
Accounting Standards Board (or other appropriate board or committee of the said
Boards) in order to continue as a generally accepted accounting principle or
practice may so be changed. All accounting and financial terms used in any of
the Loan Documents and in compliance with each covenant contained in the Loan
Documents which
Exhibit A-4
<PAGE> 51
relate to financial matters shall be determined in accordance with Generally
accepted Accounting Principles, applied on a basis consistent with the financial
statement of Borrower dated December 31, 1997 except to the extent that a
deviation therefrom is expressly stated in such Loan Documents. Should a change
in Generally Accepted Accounting Principles require change in any method of
accounting, such change shall not result in an Event of Default if, at the time
of such change, such Event of Default had not occurred and was not then
continuing, based upon the former method of accounting used by or on behalf of
the Borrower; provided that, after any such change in accounting methods, unless
and until the financial covenants contained herein have been modified to the
satisfaction of Bank, the financial statements of this Loan Agreement shall be
prepared in comparative form, in compliance with the former methods of
accounting used prior to such change, as well as with the new method or methods
of accounting, and, for the purpose of determining whether an Event of Default
has occurred, Bank shall look solely to that portion of such financial
statements that complies with the former method of accounting.
"Governmental Authority" shall mean any government (or any
political subdivision or jurisdiction thereof), court, bureau, agency or other
governmental authority having jurisdiction over Borrower or any of its business,
operations or properties.
"Hazardous Material" shall mean any substance, material, or
waste which is or becomes regulated, under any federal, state, or local
environmental law or ordinance, including, but not limited to Environmental
Laws, as hazardous to public health or safety or to the environment, including,
but not limited to, (a) any substance or material designated as a "hazardous
substance" pursuant to Section 311 of the Clean Water Act, as amended, 33
U.S.C.A. ss.1251 et seq. (33 U.S.C. ss.1321) or listed pursuant to Section 307
of the Clean Water Act, as amended, (33 U.S.C. ss.1317), (b) any substance or
material defined as "hazardous waste" pursuant to Section 1004 of the Resource
Conservation and Recovery Act, as amended, 42 U.S.C. ss.6901 et seq. (42 U.S.C.
ss.9601, or (d) petroleum products and petroleum waste materials.
"Indebtedness" with respect to any Person shall mean, at any
date, all liabilities and contingent liabilities which would be reflected on a
balance sheet of such Person prepared as of such date in accordance with
Generally Accepted Accounting Principles, including without limitation: (i) all
obligations of such Person for Funded Debt; (ii) all obligations under
conditional sale or other title retention agreements and all obligations issued
or assumed as full or partial payment for property, whether or not any such
obligations represent obligations for borrowed money; (iii) all indebtedness
secured by any Lien existing on property owned or acquired by such Person
subject to any such Lien, whether or not the obligations secured thereby shall
have been assumed; and (iv) indebtedness of any joint venture, partnership or
other Person for which such Person is directly or indirectly liable.
"Interest Option" shall mean the option, exercisable from time
to time by Borrower, to designate portions of the unpaid principal balance of
Revolving Loans as Contract Rate Loans or LIBOR Rate Loans.
"Interest Period" shall mean a period of ninety (90) days or
one hundred eighty (180) days, commencing on the day an Advance is made as a
LIBOR Rate Loan or on the
Exhibit A-5
<PAGE> 52
effective date of an election of the LIBOR-based Rate hereunder, as applicable,
provided that any Interest Period which would otherwise end on a day which is
not a Business Day shall be extended to the next succeeding Business Day, except
that (i) if the next succeeding Business Day falls in another calendar month,
the Interest Period shall end on the next preceding Business Day, (ii) when an
Interest Period begins on a day which has no numerically corresponding day in
the calendar month during which such Interest Period is to end, it shall end on
the last Business Day of such calendar month and (iii) an Interest Period must
end on a date on or before the Maturity Date.
"Code" means the Internal Revenue Code of 1986, as amended.
"Leases" shall have the meaning assigned to it in Section 6.12
hereof.
"Letter of Credit" means any letter of credit issued by Lender
on behalf of Borrower and any renewal or extension thereof.
"Letter of Credit Exposure" means, at any time, the aggregate
undrawn maximum face amount of all Letters of Credit outstanding at such time.
"LIBOR-based Rate" shall mean, with respect to any LIBOR Rate
Loan outstanding hereunder for an applicable Interest Period, a per annum
interest rate (calculated on the basis of actual days elapsed in a year of 360
days) which is equal to the sum of the LIBOR Margin, plus the quotient of:
(a) the LIBOR Rate;
divided by
(b) an amount equal to one (1.00) minus the stated
maximum rate (expressed as a decimal) of all reserve requirements (including,
without limitation, any marginal, emergency, supplemental, special or other
reserves) that is specified at any time during such Interest Period by the Board
of Governors of the Federal Reserve System (or any successor agency thereto) for
determining the maximum reserve requirements with respect to eurodollar funding
(currently referred to as "eurocurrency liabilities") in Regulation D of such
Board maintained by a member bank of such System; all as conclusively determined
by Bank.
"LIBOR Margin" shall mean two and three-quarters percent
(2.75%); provided, however, that if Borrower's Average Quarterly Usage during a
fiscal quarter, commencing with the quarter ending December 31, 1998, is less
than fifty percent (50%) and no Event of Default is existing at the end of such
quarter, then the LIBOR Margin for any Interest Period commencing during the
immediately succeeding fiscal quarter shall be two and one-quarter percent
(2.25%); provided, further, that if Borrower's Average Quarterly Usage during a
fiscal quarter, commencing with the quarter ending December 31, 1998, is equal
to or greater than fifty percent (50%) but less than seventy-five percent (75%)
and no Event of Default is existing at the end of such quarter, then the LIBOR
Margin for any Interest Period commencing during the immediately succeeding
fiscal quarter shall be two and one-half
Exhibit A-6
<PAGE> 53
percent (2.50%). The LIBOR Margin from the Closing Date through December 31,
1998 shall be two and three-quarter percent (2.75%).
"LIBOR Rate" shall mean, with respect to any LIBOR Rate Loan
outstanding hereunder, the per annum rate of interest determined on the basis of
the rate for deposits in Dollars for a period equal to the relevant Interest
Period for such Advance, commencing on the first day of such Interest Period,
appearing on Page BBAM of the Bloomberg Financial Markets Information Service as
of 10:00 a.m. (Dallas, Texas time) (or soon thereafter as practical), two (2)
Business Days prior to the first day of such Interest Period. In the event that
such rate does not appear on Page BBAM of the Bloomberg Financial Markets
Information Service (or otherwise on such Service), the "LIBOR Rate" shall be
determined by reference to such other publicly available service for displaying
eurodollar rates as may be agreed upon by Bank and Borrower, or, in the absence
of such agreement, the "LIBOR Rate" shall, instead, be the per annum rate equal
to the average of the rate at which Bank is offered Dollar deposits at or about
10:00 a.m. (Dallas, Texas time) (or as soon thereafter as practical), two (2)
Business Days prior to the first day of such Interest Period in the interbank
eurodollar market in an amount comparable to the principal amount of the
respective LIBOR Rate Loan which is to bear interest at such LIBOR-based Rate
and for a period equal to the relevant Interest Period. Determination of the
LIBOR Rate shall be made by Bank in its discretion and shall be binding and
conclusive on the Borrower in the absence of manifest error.
"LIBOR Rate Loans" shall mean Revolving Credit Loans bearing
interest at the LIBOR-based Rate.
"Lien" shall mean any lien, mortgage, security interest, tax
lien, pledge, encumbrance, or conditional sale or title retention arrangement,
or any other interest in property designed to secure the repayment of
Indebtedness, whether arising by agreement or under any statute or law, or
otherwise.
"Loan Agreement" shall mean Amended and Related Secured
Revolving Credit Loan Agreement, of which this Exhibit A forms a part, together
with all amendments and modifications thereof and supplements and attachments
thereto.
"Loan Documents" shall mean this Loan Agreement, the Note
(including any renewals, extension and refundings thereof), the Collateral
Documents, and any agreements or documents (and with respect to this Loan
Agreement, and such other agreements and documents, any amendments or
supplements thereto or modifications thereof) executed or delivered pursuant to
the terms of this Loan Agreement or any of the other Loan Documents.
"Margin Stock" shall have the meaning from time to time
ascribed thereto in Regulation U.
"Material Adverse Effect" means any circumstances or events
which (i) could have any adverse effect whatsoever upon the validity,
performance or enforceability of any Loan Documents, (ii) is or might be
material and adverse to the financial condition or business operations of
Borrower, (iii) could impair the ability of Borrower to fulfill its obligations
under
Exhibit A-7
<PAGE> 54
the Loan Documents, or (iv) causes an Event of Default or any event which, with
notice or lapse of time or both, could become an Event of Default.
"Maximum Rate" shall mean, on any day, the highest
non-usurious rate of interest (if any) permitted by applicable law on such day.
To the extent federal law permits Bank to contract for, charge or receive a
greater amount of interest, Bank will rely on federal law instead of the Texas
Finance Code, as supplemented by Texas Credit Title, for the purpose of
determining the Maximum Rate. Bank hereby notifies and discloses to Borrower
that the "applicable rate ceiling" shall be the "weekly rate" referred to in
Chapter 303 of the Texas Finance Code as from time to time in effect.
Additionally, to the maximum extent permitted by applicable law now or hereafter
in effect, Bank may, at its option and from time to time, implement any other
method of computing the Maximum Rate under the Texas Finance Code, as
supplemented by Texas Credit Title, or under other applicable law, by giving
notice, if required, to Borrower as provided by applicable law now or hereafter
in effect, and further subject to any right Bank may have subsequently, under
applicable law, to change the method of determining the Maximum Rate. In no
event shall Chapter 346 of the Texas Finance Code (which regulates certain
revolving loan accounts and revolving tri-party accounts) apply to this
Agreement or the Revolving Credit Loans.
"Merger" shall mean the merger of S-Sixteen Holding Company
into Borrower on the terms described in Note 2 to Financial Statements contained
in Borrower's Form 10-Q filed with the Securities and Exchange Commission with
respect to Borrower's fiscal quarter ending June 30, 1998.
"Mineral Interests" shall mean all present and future rights,
titles and interests that Borrower may now have or hereafter acquire in and to
all (i) oil, gas and/or mineral leases, royalty and overriding royalty
interests, production payments, net profit interests and mineral fee interests;
(ii) present and future unitization, communication and pooling arrangements (and
all properties covered and units created thereby), whether arising by contract
or operation of law, which now or hereafter include all or any part of the
foregoing; and (iii) lands now or hereafter subject to any of the foregoing.
"Mortgaged Properties" shall have the meaning assigned to it
in Section 4.1 hereof.
"Multiemployer Plan" means a multiemployer plan as defined in
ERISA Section 4001(a)(3) or Code Section 414 to which Borrower or any ERISA
Affiliate contributes, has contributed since September 2, 1974 or is required to
contribute.
"Note" shall have the meaning assigned to it in Section 3.1
hereof.
"Notice of Borrowing" shall mean the form of Notice of
Borrowing attached hereto as Exhibit 2.3.
"Obligations" shall mean all present and future indebtedness,
obligations, and liabilities of Borrower to Bank, and all renewals and
extensions thereof, or any part thereof,
Exhibit A-8
<PAGE> 55
arising pursuant to this Loan Agreement or represented by the Note, and all
interest accruing thereon, and attorneys fees incurred in the enforcement or
collection thereof, regardless of whether such indebtedness, obligations and
liabilities are direct, indirect, fixed, contingent, joint, several or joint and
several; together with all indebtedness, obligations and liabilities of Borrower
to Bank evidenced or arising pursuant to any of the other Loan Documents
(including, without limitation, all Letter of Credit Exposure), and all renewals
and extensions thereof, or any part thereof.
"PBGC" means the Pension Benefit Guaranty Corporation, and any
successor to all or any of Pension Benefit Guaranty Corporation's functions
under ERISA.
"Pension Plan" means an employee pension benefit plan as
defined in ERISA Section 3(2) (including a Multiemployer Plan), which is subject
to the funding requirements under ERISA section 302 or Code Section 412, in
whole or in part, and which is maintained or contributed to by Borrower or any
ERISA Affiliate for employees of Borrower or any ERISA Affiliate.
'Permitted Liens" shall mean: (i) Liens granted to Bank; (ii)
Liens described on Exhibit "B" attached hereto; (iii) pledges or deposits made
to secure payment of worker's compensation (or to participate in any fund in
connection with worker's compensation), unemployment insurance, pensions or
social security programs; (iv) Liens imposed by mandatory provisions of law such
as for materialmen's, mechanic's, warehousemen's and other like Liens arising in
the ordinary course of business, securing Indebtedness whose payment is not yet
due: (v) Liens for taxes, assessments and governmental charges or levies imposed
upon a Person or upon such Person's income or profits or property, if the same
are not yet due and payable or if the same are being contested in good faith and
as to which adequate reserves have been provided; (vi) good faith deposits in
connection with tenders, leases, real estate bids or contracts involving the
borrowing of money),pledges or deposits to secure public or statutory
obligations, deposits to secure (or in lieu of) surety, stay, appeal or customs
bonds and deposits to secure the payment of taxes, assessments, customs duties
or of zoning restrictions, easements, or other restrictions on the use of real
property, provided that such do not impair the use of real property for the uses
intended, and none of which is violated by existing or proposed structures or
land use.
"Person" shall mean an individual, sole proprietorship, joint
venture, association, trust, estate, business trust, corporation, non-profit
corporation, sovereign government or agency, instrumentally, or political
subdivision thereof, or any similar entity or organization.
"Phillips Litigation" shall mean the lawsuit now pending in
Orleans Parish, Louisiana styled Phillips Petroleum Company v. OKC Limited
Partnership (Case No. 91-13779).
"Plan" means an employee benefit plan as defined in ERISA
section 3(3) maintained or contributed to by Borrower or any ERISA Affiliate for
employee of Borrower or any ERISA Affiliate.
Exhibit A-9
<PAGE> 56
"Prohibited Transaction" means a transaction that is
prohibited under Code Section 4975 or ERISA Section 406 and not exempt under
Code Section 4975 or ERISA Section 408.
"Purchasers" shall have the meaning assigned to it in Section
4.2 hereof.
"Regulation U" shall mean Regulation U promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part 221, or any
other regulation hereafter promulgated by said board to replace the prior
Regulation U and having substantially the same function.
"Regulation X" shall mean Regulation X promulgated by the
Board of Governors of the Federal Reserve System, 12 C.F.R. Part 224, or any
other regulation hereafter promulgated by said Board to replace the prior
Regulation X and having substantially the same function.
"Release" shall mean any release, spill, emission, leaking,
pumping, injection, deposit, disposal, discharge, dispersal, leaching, or
migration into the indoor or outdoor environment or into or out of any property,
including the movement of any Hazardous Material or any waste, pollutant,
hazardous substance, toxic substance, hazardous waste, special waste, or any
constituent of any such substance or waste, including, but not limited to these
terms as defined in Environmental Laws, through or in the air, soil, surface
water, groundwater, or any property.
"Reportable Event" means (i) any of the event set forth in
ERISA Sections 4043(b) (other than a Reportable Event as to which the provision
of 30 days' notice to the PBGC is waived under applicable regulations), 4062(e)
or 4063(a) or the regulations thereunder, (ii) an event requiring the Borrower
or any ERISA Affiliate to provide security to a Pension Plan under Code Section
401(a)(29) and (iii) an event described in Code Section 412(n).
"Revolving Credit Loan" shall have the meaning assigned to it
in Section 2.1 hereof.
"Simplot Affiliate" means J.R. Simplot or any Affiliate of
J.R. Simplot.
"Subordinated Indebtedness" shall mean Borrower's 8 1/4%
Convertible Subordinated Notes Due 2002, issued in December 1992.
"Subsidiary" shall mean any corporation more than 50% the
Voting Shares of which is at the time owned by Borrower directly or indirectly
through Subsidiaries.
"Tangible Net Worth" shall mean, as of any date, the total
stockholder's equity (including deductions for treasury stock) which would
appear on Borrower's balance sheet prepared as of such date in accordance with
Generally Accepted Accounting Principles, plus the principal amount of the
Subordinated Indebtedness as of such date, less the aggregate book value of
Intangible Assets shown on Borrower's balance sheet prepared as of such date.
Exhibit A-10
<PAGE> 57
"Termination Event" means (a) a Reportable Event or (b) the
termination of a Pension Plan, or the filing of a notice of intent to terminate
a Pension Plan under ERISA Section 4041(a), or the treatment of a Pension Plan
amendment as a termination under ERISA Section 4041(e), or (c) the institution
of proceedings to terminate a Pension Plan Under ERISA section 4042, or (d) the
appointment of a trustee to administer any Pension Plan under ERISA Section
4042.
"Tranche" shall mean the collective reference to LIBOR Rate
Loans the then current Interest Period with respect to all of which begin on the
same date and end on the same later date (whether or not such LIBOR Rate Loans
shall originally have been made on the same day); Tranches may be referred to as
"LIBOR Tranches".
"Transferee" shall mean a Participant or an Assignee as such
terms are defined in Section 10.7.
"Type" shall mean a loan made as a Contract Rate Loan or a
loan made as a LIBOR Rate Loan.
"Unfunded Benefit Liabilities" means with respect to any
Pension Plan at any time, the amount of unfunded benefit liabilities as
determined under ERISA Section 4001(a) (18).
"Voting Shares" of any corporation shall mean shares of any
class or classes (however designated) having ordinary voting power for the
election of at least a majority of themembers of the Board of Directors (or
other governing bodies) of such corporation, other than shares having such power
only by reason of the happening of a contingency.
Exhibit A-11
<PAGE> 58
EXHIBIT B
PERMITTED LIENS
1. Operators liens which arise as a matter of contract pertaining to
Borrower's Mineral Interests to the extent such liens: (i) secure
obligations that are not now past due and (ii) are evidenced by
documents recorded in the parish or county records where such mineral
interests are located or by documents that have been provided by
Borrower to Bank.
2. None others
Exhibit B-1
<PAGE> 59
EXHIBIT 2.3
FORM OF NOTICE OF BORROWING
Remington Oil and Gas Corporation, a Delaware corporation (the
"Borrower") hereby requests an advance on the date, and in the amount, and to be
funded as follows:
1. Amount of Advance: $___________________
2. Date of Advance: ____________________, 19_____
3. Type of Advance
(a) Contract Rate Loan _________
(b) LIBOR Rate Loan _________
(c) If Libor, Interest Period of _____ 90 or _____ 180 days,
commencing _________________
4. Funding Instruction:
5. Average Quarterly Usage for the prior fiscal quarter ending
___________, 19__: __%
pursuant to that certain Amended and Restated Secured Revolving Credit Loan
Agreement (as the same may be amended and supplemented), by and between Borrower
and Comerica Bank- Texas dated September 30, 1998. The undersigned certifies
that she/he is the ___________ _______________________ of Borrower, and that as
such she/he is authorized to execute this Notice of Borrowing on behalf of
Borrower. The undersigned further certifies, represents and warrants on behalf
of Borrower:
(i) That the representations and warranties set forth in Article
VI of the Loan Agreement are true and correct on the date
hereof, with the same force and effect as if made on and as of
the date hereof;
(ii) That no "Event of Default") (as such term is defined in the
Loan Agreement), or condition, event or act which with the
giving of notice or lapse of time, or both, would constitute
an Event of Default, exists and is continuing on the date
hereof; and
(iii) That the Borrower is entitled to receive the requested Advance
under the terms and conditions of the Loan Agreement.
Exhibit 2.3-1
<PAGE> 60
Schedule 1 is attached to this Notice of Borrowing for the purpose of showing
the availability of credit under the Loan Agreement. Each amount thereon is
correctly stated.
REMINGTON OIL AND GAS CORPORATION
By:
----------------------------------
Title:
------------------------------
Exhibit 2.3-2
<PAGE> 61
EXHIBIT 3.1
FIFTH RENEWAL AND EXTENSION
REVOLVING CREDIT NOTE
$50,000,000.00 Dallas, Texas September 30, 1998
FOR VALUE RECEIVED, the undersigned, REMINGTON OIL AND GAS CORPORATION,
formerly known as Box Energy Corporation, a Delaware corporation (the "Maker"),
hereby unconditionally promises to pay to the order of COMERICA BANK-TEXAS (the
"Payee"), on or before March 31, 2000, the lesser of (i) the principal sum of
FIFTY MILLION AND NO/100 DOLLARS ($50,000,000), or (ii) the aggregate unpaid
principal amount of the Revolving Credit Loan made by Payee to Maker pursuant to
the Loan Agreement (hereafter defined), together with interest on the unpaid
principal balance from the date of the initial advance under the Loan Agreement
until maturity at the varying rates per annum and on the dates, as determined in
accordance with the provisions of Section 3.3 of the Loan Agreement. Payments of
both principal and interest herein shall be made to Payee at its principal
office in Dallas, Texas, in lawful money of the United States of America and in
immediately available funds.
This Fifth Renewal and Extension Revolving Credit Note has been
executed and delivered pursuant to, and is subject to certain terms and
conditions set forth in that certain Amended and Restated Secured Revolving
Credit Loan Agreement (as the same may be amended, modified or restated from
time to time, the "Loan Agreement") by and between Maker and Payee, dated as of
the date hereof and is the "Note" referred to therein. This Note is secured by
certain Collateral Documents covering certain Mineral Interests of Borrower.
Reference is hereby made to the Loan Agreement for: (i) a statement of the
rights and obligations of Maker; (ii) a statement of the events upon which the
maturity of this Note may be accelerated; and (iii) the rights of Payee upon the
occurrence of an Event of Default.
Capitalized terms not otherwise defined herein shall have the meaning
respectively assigned to them in the Loan Agreement, unless the context hereof
otherwise requires or provides.
If this Note is placed in the hands of an attorney for collection, or
if it is collected through any legal proceedings, at law or in equity, or in
bankruptcy, receivership or other court proceedings, Maker agrees to pay all
costs of collection, including but not limited to court costs and reasonable
attorneys' fees.
Maker and each surety, endorser, guarantor and any other party now or
hereafter liable for payment of any sums of money payable on this Note, jointly
and severally waive presentment and demand for payment, protest, notice of
protest and nonpayment, notice of intent to accelerate, notice of acceleration
and all other notices, filing of suit and diligence in collecting this Note or
enforcing any security with respect to same, and agree that their liability
under this Note shall not be affected by any renewal or extension in the time of
payment hereof, or in any indulgences, or by any release, substitution or change
in any security for the payment of this Note, and hereby consent to any and all
renewals, extensions, indulgences, releases or changes, regardless of the number
of such renewals, extensions, indulgences, releases or changes.
-1-
<PAGE> 62
Any provision herein, or in the Loan Agreement, or any other document
executed in connection herewith, or in any other agreement or commitment,
whether written or oral, express or implied, to the contrary notwithstanding,
neither Payee nor any holder hereof shall in any event be entitled to receive or
collect, nor shall or may amounts received hereunder be credited, so that Payee
or any holder hereof shall have collected or be paid, as interest, a sum greater
than the Maximum Rate. If any construction of this Note or the Loan Agreement,
or any and all other papers, agreements or commitments, indicates a different
right given to Payee or any holder hereof to ask for, demand or receive any
larger sum as interest, such is a mistake in calculation or wording, which this
clause shall override and control, it being the intention of the parties that
this Note, the Loan Agreement and all other instruments securing the payment of
this Note shall in all things comply with applicable law and proper adjustments
shall automatically be made accordingly. In the event that Payee or any holder
hereof ever receives, collects or applies as interest any sum in excess of the
Maximum Rate, such excess amount shall be applied to the reduction of the unpaid
principal balance of this Note and if this Note is paid in full, any remaining
excess shall be paid to Maker. In determining whether or not the interest paid
or payable, under any specific contingency, exceeds the Maximum Rate, Maker and
Payee or any holder hereof shall, to the maximum extent permitted by applicable
law (a) characterize any non-principal payment as an expense or fee rather than
as interest, (b) exclude voluntary prepayments and the effects thereof, and (c)
"spread" the total amount of interest throughout the entire term of this Note;
provided, that if this Note is paid and performed in full prior to the end of
the full contemplated term thereof, and if the interest received for the actual
period of existence hereof exceeds the Maximum Rate, Payee or any holder hereof
shall refund to the Maker the amount of such excess or credit the amount of such
excess against the aggregate unpaid principal balance of all Loans made by the
Payee or any holder hereof under this Note at the time in question. To the
extent federal law permits Payee to contract for, charge or receive a greater
amount of interest, Payee will rely on federal law instead of the Texas Finance
Code, as supplemented by Texas Credit Title, for the purpose of determining the
Maximum Rate. Additionally, to the maximum extent permitted by applicable law
now or hereafter in effect, Payee may, at its option and from time to time,
implement any other method of computing the Maximum Rate under the Texas Finance
Code, as supplemented by Texas Credit Title, or under other applicable law, by
giving notice, if required, to Maker as provided by applicable law now or
hereafter in effect. Notwithstanding anything to the contrary contained herein
or in any of the other Loan Documents, it is not the intention of Payee to
accelerate the maturity of any interest that has not accrued at the time of such
acceleration or to collect unearned interest at the time of such acceleration.
In no event shall Chapter 346 of the Texas Finance Code (which
regulates certain revolving loan accounts and revolving tri-party accounts)
apply to this note. To the extent that Chapter 303 of the Texas Finance Code is
applicable to this note, the "weekly ceiling" specified in such Chapter 303 is
the applicable ceiling; provided that, if any applicable law permits greater
interest, the law permitting the greatest interest shall apply.
This Note has been prepared, is being executed and delivered, and is to
be performed in the State of Texas, and the substantive laws of such state and
the applicable federal laws of the United States of America shall govern the
validity, construction, enforcement and interpretation of this Note.
All Advances made by Payee to Maker pursuant to the Loan Agreement and
all payments
-2-
<PAGE> 63
of the principal thereof shall be noted by Payee on the schedule attached
hereto, or on a continuation of such schedule attached hereto; provided,
however, that the failure of Payee to make any such notation shall not limit or
otherwise affect the obligations of Maker hereunder or under the Loan Agreement.
This Note is given in renewal, extension and increase of, but not in
extinguishment of, that certain Fourth Renewal and Extension Revolving Credit
Note in the original principal amount of $25,000,000.00 dated as of June 1,
1998 from Borrower to Payee (the "Prior Note"). The execution of this Note is
not intended to and shall not cause or result in a novation with regard to the
indebtedness evidenced by the Prior Note.
"MAKER"
REMINGTON OIL AND GAS
CORPORATION
By: /s/ JAMES WATT
-----------------------
Name: James Watt
Title: President
-3-
<PAGE> 64
EXHIBIT 3.1
REMINGTON OIL AND GAS CORPORATION
REVOLVING CREDIT NOTE
SEPTEMBER 30, 1998
SCHEDULE OF ADVANCES AND PAYMENTS OF PRINCIPAL
<TABLE>
<CAPTION>
- --------------------------------------------------------------------------------------
Amount of
Principal Unpaid
Amount of Paid or Principal Notation
Date Advance Prepaid Balance Made By
<S> <C> <C> <C> <C>
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
- --------------------------------------------------------------------------------------
</TABLE>
Exhibit 3.1-1
