AMENDMENT NO. 1
Exhibit 10.2
AMENDMENT NO. 1
This AMENDMENT NO. 1 (the “Amendment”) dated October 23, 2009 (the “Effective
Date”) is among Contango Oil & Gas Company, a Delaware corporation (“Contango”),
Contango Energy Company, a Delaware corporation (“CEC”), and Contango Operators, Inc., a
Delaware corporation and successor by merger to Contango Resources Company (“COI”, together
with Contango and CEC, collectively, the “Borrowers” and individually, a
“Borrower”), the Lenders (as defined below), and Guaranty Bank, as administrative agent (in
such capacity, the “Administrative Agent”) and as issuing lender (in such capacity, the
“Issuing Lender”) for such Lenders.
RECITALS
A. The Borrowers are party to that certain Amended and Restated Credit Agreement dated as of
March 31, 2009, among the Borrowers, the lenders party thereto from time to time (the
“Lenders”), the Issuing Lender and the Administrative Agent (as the same may be amended,
modified or supplemented from time to time, the “Credit Agreement”).
B. The Borrowers, the Lenders, the Administrative Agent and the Issuing Lender wish to,
subject to the terms and conditions of this Amendment, amend the Credit Agreement as provided
herein.
THEREFORE, the Borrowers, the Lenders, the Administrative Agent and the Issuing Lender hereby
agree as follows:
Section 1. Defined Terms. As used in this Amendment, each of the terms defined in the
opening paragraph and the Recitals above shall have the meanings assigned to such terms therein.
Each term defined in the Credit Agreement and used herein without definition shall have the meaning
assigned to such term in the Credit Agreement, unless expressly provided to the contrary.
Section 2. Other Definitional Provisions. Article, Section, Schedule, and Exhibit
references are to Articles and Sections of and Schedules and Exhibits to this Amendment, unless
otherwise specified. All references to instruments, documents, contracts, and agreements are
references to such instruments, documents, contracts, and agreements as the same may be amended,
supplemented, and otherwise modified from time to time, unless otherwise specified. The words
“hereof”, “herein”, and “hereunder” and words of similar import when used in this Amendment shall
refer to this Amendment as a whole and not to any particular provision of this Amendment. The term
“including” means “including, without limitation,”. Paragraph headings have been inserted in this
Amendment as a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Amendment and shall not be used in the interpretation of any
provision of this Amendment.
Section 3. Amendments to Credit Agreement.
(a) Section 1.01
(Certain Defined Terms). Section 1.01 of the Credit Agreement is
hereby amended by adding the following new defined terms in alphabetical order:
“Conterra — No. 1” means Conterra — No. 1, a tax partnership for
purposes of federal income taxation, formed pursuant to that certain
“Conterra” Joint
Venture Development Agreement, dated as of October 1, 2009, between Patara
Oil & Gas LLC, a Delaware limited liability company, and Conterra Company.
“Conterra Assets” means, collectively, any assets owned by either
Conterra Entity; provided that the term “Conterra Assets” shall not
include any equity interests of any Conterra Entity.
“Conterra Company” means Conterra Company, a Delaware corporation.
“Conterra Entities” means, collectively, Conterra Company and
Conterra — No. 1, and each being referred to herein as a “Conterra
Entity”.
“Conterra Hedge Contracts” means, collectively, each of the Hedge
Contracts entered into by any Conterra Entity.
“Non-Conterra Hedge Contracts” means, collectively, each of the
Hedge Contracts entered into by any Borrower or any Subsidiary of a Borrower
other than any Conterra Entity.
(b) Section 6.01 (Liens, Etc.). Section 6.01 of the Credit Agreement is hereby
amended by (1) deleting “and” at the end of subsection (h), (2) replacing the period at the end of
subsection (i) with “; and”, and (3) adding the following new subsection (j) to the end thereof as
follows:
(j) Liens securing obligations under Conterra Hedge Contracts which are not
prohibited by the terms of Section 6.14; provided that such Liens
encumber only the Conterra Assets and not any of the other Properties of any
Borrower or any Subsidiary of a Borrower.
(c) Section 6.05 (Restricted Payments). Section 6.05 of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:
6.05 Restricted Payments. No Borrower shall, nor shall any Borrower
permit any of its Subsidiaries to, make any Restricted Payments except that
if (a) no Default or Event of Default has occurred or will occur after
giving effect to the making of such Restricted Payment, (b) no Borrowing
Base deficiency of the type described in Section 2.05(b) shall exist before
or after giving effect to the making of such Restricted Payment, and (c) the
Borrowing Base shall, both before and after giving effect to such Restricted
Payment, be equal to or greater than five (5) times the aggregate
Commitments then in effect, then (i) the Subsidiaries may make Restricted
Payments to a Borrower, (ii) Conterra — No. 1 may make Restricted Payments
to Conterra Company, (iii) CEC may make Restricted Payments to Contango,
(iv) COI may make Restricted Payments to CEC, and (v) the Borrowers may make
Restricted Payments described in clause (a) of the definition thereof.
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(d) Section 6.06 (Investments). Section 6.06(e) of the Credit Agreement is hereby
deleted in its entirety and replaced with the following:
(e) Other Investments in an aggregate amount not to exceed $30,000,000.
(e) Section 6.14 (Limitation on Speculative Hedging). Section 6.14 of the Credit
Agreement is hereby deleted in its entirety and replaced with the following:
6.14 Limitation on Speculative Hedging. Other than the Hedge
Contracts set forth on Schedule 4.20 hereto (which Hedge Contracts shall not
be modified without the prior written consent of the Administrative Agent),
no Borrower shall, nor shall any Borrower permit any of its Subsidiaries to,
(a) purchase, assume, or hold a speculative position in any commodities
market or futures market or enter into any Hydrocarbon Hedge Agreement,
Interest Hedge Agreement or similar hedge arrangement for speculative
purposes or (b) be party to or otherwise enter into any Hedge Contract which
(i) is entered into for reasons other than as a part of its normal business
operations as a risk management strategy and/or hedge against changes
resulting from market conditions related to such Borrower’s or such
Subsidiary’s operations; (ii) with respect to Non-Conterra Hedge Contracts,
covers notional volumes that would be in excess of (A) 80% of the production
volumes anticipated by the Administrative Agent to be produced by the
Borrowers during each of the Winter/Spring Months for periods that such
Hedge Contract is in effect, and (B) 35% of the production volumes
anticipated by the Administrative Agent to be produced by the Borrowers
during the Summer/Fall Months for periods that such Hedge Contract is in
effect; provided that notwithstanding anything in this subsection
(ii) to the contrary, the Borrowers may purchase commodity floors or puts on
up to 100% of the production volumes anticipated during the period such
hedge arrangement is in effect and attributable to Proven Reserves of the
Borrowers and their respective Subsidiaries that are categorized as
“proved, developed and producing”; and (iii) with respect to Conterra Hedge
Contracts, (A) covers notional volumes in excess of 100% of the anticipated
production volumes attributable to Proven Reserves of the Conterra Entities
which are categorized as “proved, developed and producing” during the period
such hedge arrangement is in effect, (B) allows the applicable counterparty
to have recourse to any Borrower or any Subsidiary of a Borrower (other than
the Conterra Entities) or their respective assets (other than the Conterra
Assets), or is otherwise guaranteed or supported by any Borrower or any
Subsidiary of a Borrower (other than the Conterra Entities), (C) is longer
than three (3) years in duration, or (D) is with a counterparty or has a
guarantor of the obligation of the counterparty who (unless such
counterparty is a Lender or one of its Affiliates) at the time the contract
is made does not have long-term obligations rated BBB+ or Baa1 or better,
respectively, by either Standard & Poor’s Ratings Group or Xxxxx’x Investors
Service, Inc. (or such counterparty’s obligations are guaranteed by
such a Person). For purposes of the foregoing Section, the “Winter/Spring
Months” shall be December, January, February, March, April, May and June,
and the “Summer/Fall Months” shall be July, August, September, October and
November.
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(f) Article VI (Negative Covenants). Article VI of the Credit Agreement is hereby
amended by adding the following new Section 6.17 to the end thereof as follows:
6.17 Conterra Entities. Notwithstanding anything to the contrary
contained herein, no Borrower shall, nor shall any Borrower permit any of
its Subsidiaries (other than the Conterra Entities) to (i) create, assume,
incur or suffer to exist any Lien on or in respect of any of its Property
for the benefit of any Conterra Entity, other than Liens securing the
Obligations, (ii) sell, assign, pledge, or otherwise transfer any of its
Properties to any Conterra Entity, except as permitted under Section 6.04
and on terms permitted by Section 6.07, or (iii) except as permitted under
Section 6.06(j), make or permit to exist any loans, advances, or capital
contributions to, or make any investment in, or purchase or commit to
purchase any stock or other securities or evidences of indebtedness of or
interests in, any Conterra Entity or in any of its Properties, including
without limitation the Conterra Assets.
Section 4. Borrowers Representations and Warranties. The Borrowers represent and
warrant that: (a) the representations and warranties contained in the Credit Agreement, as amended
hereby, and the representations and warranties contained in the other Loan Documents, are true and
correct in all material respects on and as of the Effective Date as if made on as and as of such
date except to the extent that any such representation or warranty expressly relates solely to an
earlier date, in which case such representation or warranty is true and correct in all material
respects as of such earlier date; (b) no Default has occurred and is continuing; (c) the execution,
delivery and performance of this Amendment are within the corporate, limited liability company,
limited partnership or partnership power, as applicable, and authority of each Borrower and have
been duly authorized by appropriate corporate, limited liability company, limited partnership or
partnership, as applicable, and governing action and proceedings; (d) this Amendment constitutes
the legal, valid, and binding obligation of each Borrower enforceable in accordance with its terms,
except as limited by applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and general principles of equity; (e) there are no
governmental or other third party consents, licenses and approvals required in connection with the
execution, delivery, performance, validity and enforceability of this Amendment; and (f) the Liens
under the Security Instruments are valid and subsisting and secure each Borrower’s obligations
under the Loan Documents.
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Section 5. Conditions to Effectiveness. This Amendment shall become effective on the
Effective Date and enforceable against the parties hereto upon the occurrence of the following
conditions precedent:
(a) The Administrative Agent shall have received multiple original counterparts, as requested
by the Administrative Agent, of this Amendment duly and validly executed and delivered by duly
authorized officers of the Borrowers, the Administrative Agent, the Issuing Lender and the Required
Lenders.
(b) No Default shall have occurred and be continuing as of the Effective Date.
(c) The representations and warranties in this Amendment shall be true and correct.
(d) The Borrowers shall have paid all costs and expenses which have been invoiced and are
payable pursuant to Section 10.04 of the Credit Agreement.
Section 6. Acknowledgments and Agreements.
(b) Each Borrower acknowledges that on the date hereof all Obligations are payable without
defense, offset, counterclaim or recoupment.
(c) The Administrative Agent and the Lenders hereby expressly reserve all of their rights,
remedies, and claims under the Loan Documents. Nothing in this Amendment shall constitute a waiver
or relinquishment of (i) any Default or Event of Default under any of the Loan Documents, (ii) any
of the agreements, terms or conditions contained in any of the Loan Documents, (iii) any rights or
remedies of the Administrative Agent or any Lender with respect to the Loan Documents or (iv) the
rights of the Administrative Agent or any Lender to collect the full amounts owing to them under
the Loan Documents.
(d) Each of the Borrowers, the Administrative Agent, the Issuing Lender and the Lenders does
hereby adopt, ratify, and confirm the Credit Agreement, as amended hereby, and acknowledges and
agrees that the Credit Agreement, as amended hereby, is and remains in full force and effect, and
each Borrower acknowledges and agrees that its liabilities and obligations under the Credit
Agreement, as amended hereby, are not impaired in any respect by this Amendment.
(e) From and after the Effective Date, all references to the Credit Agreement and the Loan
Documents shall mean such Credit Agreement and such Loan Documents as amended by this Amendment.
(f) This Amendment is a Loan Document for the purposes of the provisions of the other Loan
Documents. Without limiting the foregoing, any breach of representations, warranties, and
covenants under this Amendment shall be a Default or Event of Default, as applicable, under the
Credit Agreement.
Section 7. Counterparts. This Amendment may be signed in any number of counterparts,
each of which shall be an original and all of which, taken together, constitute a single
instrument. This Amendment may be executed by facsimile signature and all such signatures shall be
effective as originals.
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Section 8. Successors and Assigns. This Amendment shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns permitted pursuant to
the Credit Agreement.
Section 9. Invalidity. In the event that any one or more of the provisions contained
in this Amendment shall for any reason be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other provision of this
Amendment.
Section 10. Governing Law. This Amendment shall be deemed to be a contract made under
and shall be governed by and construed in accordance with the laws of the State of Texas.
Section 11. RELEASE. EACH BORROWER ACKNOWLEDGES THAT ON THE DATE HEREOF ALL
OBLIGATIONS ARE PAYABLE WITHOUT DEFENSE, OFFSET, COUNTERCLAIM OR RECOUPMENT. IN ADDITION, EACH
BORROWER (FOR THEMSELVES AND THEIR RESPECTIVE SUBSIDIARIES, SUCCESSORS, AGENTS, ASSIGNS,
TRANSFEREES, OFFICERS, DIRECTORS, EMPLOYEES, SHAREHOLDERS, ATTORNEYS AND AGENTS) HEREBY RELEASES
ANY AND ALL CLAIMS, CAUSES OF ACTION OR OTHER DISPUTES IT MAY HAVE AGAINST THE ADMINISTRATIVE
AGENT, THE ISSUING LENDER, ANY OF THE LENDERS, LEGAL COUNSEL TO THE ADMINISTRATIVE AGENT, THE
ISSUING LENDER OR ANY OF THE LENDERS, CONSULTANTS HIRED BY ANY OF THE FOREGOING, OR ANY OF THEIR
RESPECTIVE AFFILIATES, SUBSIDIARIES, SHAREHOLDERS, AGENTS, DIRECTORS, OFFICERS, EMPLOYEES,
REPRESENTATIVES, SUCCESSORS OR ASSIGNS OF ANY KIND OR NATURE ARISING OUT OF, RELATED TO, OR IN ANY
WAY CONNECTED WITH, THE CREDIT AGREEMENT OR THE LOAN DOCUMENTS, IN EACH CASE WHICH MAY HAVE ARISEN
ON OR BEFORE THE DATE OF THIS AMENDMENT. EACH OF THE BORROWERS (FOR THEMSELVES AND THEIR
RESPECTIVE SUBSIDIARIES) HEREBY ACKNOWLEDGES THAT IT HAS READ THIS AMENDMENT AND HAS CONFERRED WITH
ITS COUNSEL AND ADVISORS REGARDING ITS CONTENT, INCLUDING THIS SECTION 11, AND IS FREELY AND
VOLUNTARILY ENTERING INTO THIS AMENDMENT, AND HEREBY AGREES TO WAIVE ANY CLAIM THAT THE TERMS OF
THIS AMENDMENT (INCLUDING, WITHOUT LIMITATION, THE RELEASES CONTAINED HEREIN) ARE INVALID OR
OTHERWISE UNENFORCEABLE.
Section 12. Entire Agreement. THIS AMENDMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS
AMENDMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE THE ENTIRE UNDERSTANDING AMONG THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS,
WRITTEN OR ORAL, WITH RESPECT THERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
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EXECUTED effective as of the date first above written.
| BORROWERS: | CONTANGO OIL & GAS COMPANY |
|||
| By: | /s/ Xxxxxxx X. Peak | |||
| Name: | Xxxxxxx X. Peak | |||
| Title: | Chairman and Chief Executive Officer | |||
| CONTANGO ENERGY COMPANY |
||||
| By: | /s/ Xxxxxxx X. Peak | |||
| Name: | Xxxxxxx X. Peak | |||
| Title: | Chairman and Chief Executive Officer | |||
| CONTANGO OPERATORS, INC. |
||||
| By: | /s/ Xxxxxxx X. Peak | |||
| Name: | Xxxxxxx X. Peak | |||
| Title: | Chairman and Chief Executive Officer | |||
Signature Page to Amendment No. 1
| ADMINISTRATIVE AGENT/ ISSUING LENDER/SOLE LENDER: |
GUARANTY BANK, as Administrative Agent, Issuing Lender and sole Lender |
|||
| By: | /s/ Xxxx X. Xxxxx | |||
| Name: | Xxxx X. Xxxxx | |||
| Title: | Managing Director | |||
Signature Page to Amendment No. 1
