AND THE LENDER TO BE $3,250,000.
THE AMOUNT OF THE BORROWING
BASE (AS ADJUSTED FROM TIME TO TIME UNDER THE TERMS OF THIS AGREEMENT) SHALL BE
REDUCED BY $0.00 ON JUNE 1, 2009 AND BY $58,000 ON JULY 1, 2009 AND ON THE FIRST
DAY OF EACH MONTH THEREAFTER (THE "MONTHLY BORROWING BASE REDUCTION")."
Section 6.16, Tangible Net Worth, is hereby amended by replacing the text of
that section in its entirety with the following text:
"SECTION 6.16
TANGIBLE NET WORTH. PERMIT, AS OF THE CLOSE OF ANY FISCAL
QUARTER, GUARANTOR'S TANGIBLE NET WORTH, ON A CONSOLIDATED BASIS, TO BE LESS
THAN SEVENTY-FIVE PERCENT (75%) OF ITS TANGIBLE NET WORTH, ON A CONSOLIDATED
BASIS, AS OF MARCH 31, 2009, PLUS THE AGGREGATE TOTAL OF SEVENTY-FIVE PERCENT
(75%) OF GUARANTOR'S POSITIVE NET INCOME DETERMINED ON A FISCAL QUARTERLY BASIS
FROM AND AFTER APRIL 1, 2009."
ARTICLE 6, Negative Covenants, is hereby amended by adding to the end thereof
the following new Section 6.17:
"Section 6.17
Hedging Limitation.
Permit more than 80% of the anticipated
monthly notional volumes of crude oil or natural gas attributable to the proved
developed producing reserves that are projected to be produced from Borrowers'
Borrowing Base Oil and Gas Properties, as reflected in the most recently
delivered Reserve Report delivered pursuant to Section 2.7 or as otherwise
determined by the Lender, to be covered by Permitted Commodity Hedge
Agreements."
2
II.
LIMITED WAIVER.
SUBJECT TO THE OTHER
TERMS AND CONDITIONS SET FORTH HEREIN, LENDER HEREBY WAIVES BORROWERS'
COMPLIANCE WITH THE OBLIGATIONS SET FORTH IN SECTION 6.14 (EBITDA TO FIXED
CHARGES) AND SECTION 6.15 (TANGIBLE NET WORTH) OF THE CREDIT AGREEMENT SOLELY IN
RELATION TO THE FISCAL QUARTER ENDING MARCH 31, 2009.
THE WAIVER GRANTED
HEREUNDER DOES NOT INDICATE AN INTENT TO ESTABLISH ANY COURSE OF DEALING BETWEEN
LENDER AND BORROWERS WITH REGARD TO FUTURE WAIVERS, CONSENTS, AGREEMENTS TO
FORBEAR OR ANY OTHER MODIFICATIONS THAT MAY BE REQUESTED.
LENDER'S AGREEING TO
THE WAIVER HEREIN SHOULD NOT BE CONSTRUED AS AN INDICATION THAT LENDER WOULD BE
WILLING TO AGREE TO ANY FURTHER OR FUTURE CONSENTS, WAIVERS, AGREEMENTS TO
FORBEAR OR ANY MODIFICATIONS TO ANY OF THE TERMS OF THE CREDIT AGREEMENT OR
OTHER LOAN DOCUMENTS, OR ANY EVENTS OF DEFAULT OR DEFAULTS THAT MAY EXIST OR
OCCUR THEREUNDER.
III.
CALCULATION AND TESTING OF FINANCIAL
COVENANTS.
BORROWERS AND LENDER HEREBY ACKNOWLEDGE AND AGREE THAT THE FINANCIAL
COVENANTS SET FORTH IN SECTION 6.14 (CURRENT RATIO), SECTION 6.15 (EBITDA TO
FIXED CHARGES), AND SECTION 6.16 (TANGIBLE NET WORTH) OF THE CREDIT AGREEMENT
(AS AMENDED HEREBY) SHALL, AS OF THE CLOSE OF EACH FISCAL QUARTER AFTER
COMMENCING JUNE 30, 2009, BE CALCULATED BASED ON GUARANTOR'S FINANCIAL
STATEMENTS.
IV.
CONDITIONS PRECEDENT.
THIS FIRST AMENDMENT
SHALL BE EFFECTIVE ONCE THE FOLLOWING CONDITIONS PRECEDENT HAVE BEEN SATISFIED:
(A)
THIS FIRST AMENDMENT HAS BEEN EXECUTED AND DELIVERED BY BORROWERS
AND LENDER;
(B)
BORROWERS HAVE PROVIDED TO LENDER EVIDENCE ACCEPTABLE TO LENDER, IN
ITS SOLE DISCRETION, THAT NO LESS THAN 50% OF BORROWERS' ANTICIPATED MONTHLY
NOTIONAL VOLUMES