EXHIBIT 10.3
Second Amendment to Sixth Restated Loan Agreement dated as of March 26, 1999,
among Xxxxxxx Xxxxxxxx Energy, Inc., Warrior Gas Co., CWEI Acquisitions, Inc.,
Bank One, Texas, N.A., Paribas and Union Bank of California, N.A.
SECOND AMENDMENT TO SIXTH RESTATED LOAN AGREEMENT
THIS SECOND AMENDMENT TO SIXTH RESTATED LOAN AGREEMENT (hereinafter
referred to as the "First Amendment") executed as of the 26th day of March,
1999, by and among XXXXXXX XXXXXXXX ENERGY, INC., a Delaware corporation (the
"CWE"), WARRIOR GAS CO., a Texas corporation ("Warrior") (CWE and Warrior being
hereinafter sometimes collectively referred to as "Borrower"), CWEI
ACQUISITIONS, INC., a Delaware corporation (hereinafter referred to as
"Guarantor"), BANK ONE, TEXAS, N.A., a national banking association ("Bank
One"), PARIBAS, a French banking corporation ("Paribas") and UNION BANK OF
CALIFORNIA, N.A. ("Union"), Bank One, Paribas and Union Bank each in their
capacity as a lender hereunder together with each and every future holder of any
note issued pursuant to this Agreement are hereinafter collectively referred to
as "Banks", and individually as a "Bank") and Bank One, as "Agent".
W I T N E S S E T H:
WHEREAS, on July 16, 1998 Borrower, Guarantor, Bank One, Paribas and Agent
entered into a Sixth Restated Loan Agreement (the "Sixth Restated"); and
WHEREAS, as of November 20, 1998, Bank One assigned to Union and Compass
Bank ("Compass") a part of its rights and obligations under the Sixth Restated
and as of such date Union and Compass became parties to the Sixth Restated; and
WHEREAS, as of November 20, 1998, Borrower, Guarantor, Bank One, Paribas,
Union, Compass and Agent entered into a First Amendment to Sixth Restated Loan
Agreement (the "First Amendment"); and
WHEREAS, Union has acquired all of Compass' rights and obligations under
the Sixth Restated; and
WHEREAS, the Borrower and the Banks have agreed to make certain additional
changes to the Sixth Restated.
NOW, THEREFORE, the parties hereto agree as follows:
1. Unless otherwise defined herein, all defined terms used herein shall
have the same meaning ascribed to such terms in the Sixth Restated.
2. Section 1 of the Sixth Restated is hereby amended in the following
respects:
(a) Subsection 1(k) of the Sixth Restated is hereby deleted in its
entirety and the following substituted in lieu thereof:
"(k) DEBT SERVICE - At the end of each fiscal quarter, the sum of
(i) the current portion of all notes payable as defined by GAAP
(excluding amounts outstanding on the Revolving Commitment), plus
(ii) the average Revolving Commitment during such quarter divided by
twenty-two plus (iii) the sum of all amounts paid or payable by
Borrower during such fiscal quarter as a result of its election made
pursuant to Section 9(b)(C) hereof."
(b) Subsection 1(v) of the Sixth Restated is hereby deleted in its
entirety and the following substituted in lieu thereof:
"(v) EURODOLLAR MARGIN - The fluctuating Eurodollar Margin in
effect from day to day shall be:
(i) two and one-half percent (2.50%) per annum whenever
the Total Outstandings are greater than 75% of the Elected
Borrowing Limit in effect at the time in question;
(ii) two and one-quarter percent (2.25%) per annum whenever
the Total Outstandings are greater than 50%, but less than or
equal to 75%, of the Elected Borrowing Limit in effect at the
time in question;
(iii) two percent (2%) per annum whenever the Total
Outstandings are greater than 25%, but less than or equal to 50%,
of the Elected Borrowing Limit in effect at the time in question;
(iv) one and three-quarters percent (1.75%), whenever the
Total Outstandings are 25% or less of the Elected Borrowing Limit
in effect at the time in question.
3. Section 13 of the Sixth Restated is hereby amended in the following
respects:
(a) By deleting Subsection (c) thereof in its entirety and
substituting the following in lieu thereof:
"(c) CURRENT RATIO. The Borrower will not allow the Xxxxxxxx
Consolidated Entities' ratio of Current Assets to Current Liabilities
to be less than (i) .70 to 1.0 for the calendar quarter ending
December 31, 1998; (ii) .80 to 1.0 for the calendar quarter ending
March 31, 1999; (iii) .90 to 1.0 for the calendar quarter ending
June 30, 1999; and (iv) 1.0 to 1.0 for the calendar quarter ending
September 30, 1999 and thereafter as of the end of each calendar
quarter."
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(b) By deleting Subsection (d) thereof in its entirety and
substituting the following in lieu thereof:
"(d) RATIO OF CASH FLOW TO DEBT SERVICE. The Borrower will not
allow the Xxxxxxxx Consolidated Entities' ratio of Net Cash Flow (less
cash distributions paid pursuant to Section 13(j) hereof) to Debt
Service, (i) for the calendar quarters ending December 31, 1998,
March 31, 1999 and June 30, 1999 to be less than 1.0 to 1.0; and
(ii) for the calendar quarter ending September 30, 1999 and the end of
each calendar quarter thereafter, 1.10 to 1.0."
(c) By deleting the third sentence of Section 13(e) thereof in its
entirety and substituting the following in lieu thereof:
"The term "Release Price" as used herein shall mean 100% of the
proceeds (net of the direct costs of sale) received by the Borrower or
Guarantor as a result of such sale, conveyance or assignment."
(d) By deleting Subsection (m) thereof in its entirety and
substituting the following in lieu thereof:
"(m) MINIMUM TANGIBLE NET WORTH. For the calendar quarter ending
December 31, 1998 and each calendar quarter thereafter during the
remaining term of the Revolving Commitment, the Xxxxxxxx Consolidated
Entities' Tangible Net Worth shall never be less than $40,000,000 plus
an amount equal to 50% of the Xxxxxxxx Consolidated Entities' Net
Income (without reduction for losses) for each calendar quarter ending
after December 31, 1998 on a cumulative basis."
4. Section 17 of the Credit Agreement is hereby amended by deleting the
first sentence of the fourth unnumbered paragraph of subsection (f) thereof and
substituting the following sentence in lieu thereof:
"Agent shall have the right to exercise or refrain from
exercising, without notice or liability to the Banks, any and all
rights afforded to Agent by the Loan Documents or which Agent may have
as a matter of law; PROVIDED, HOWEVER, that Agent shall not (A)
without the consent of all Banks (i) amend the Loan Documents to (x)
change the method of computing interest so as to decrease the interest
payable on the Notes, (y) increase or decrease the principal amount of
the Notes, (z) extend the Maturity Date; or (ii) waive any default
under the Loan Documents; or (iii) make a redetermination of the
Borrowing Base; or (iv) defer the date for payment of
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principal interest or any fee; or (v) make any changes in the
fees payable hereunder (except the Agency fee which does not
require the consent of the Banks other than the Agent); or (vi)
release any guaranty; or (vii) make any change in the definition of
Majority Banks; or (viii) make any change in the number of Banks
required to take any action under this Agreement; or (ix) make any
change in Sections 7(b), 13(e) or 13(n) of this Agreement; and (B)
without the consent of Majority Banks (i) make any other amendment
to the Loan Documents; or (ii) accelerate the outstanding balance
due on the Notes.
5. This Second Amendment shall be effective as of the date first above
written, but only upon satisfaction of the conditions precedent set forth in
Paragraph 7 hereto (the "Second Amendment Effective Date").
6. As of the Second Amendment Effective Date, the Borrowing Base shall be
$53,000,000 and the Monthly Commitment Reduction shall be $650,000 per month
beginning July 1, 1999; provided, however, that once the Jalmat Divestiture
closes, the Borrowing Base will automatically reduce to $43,000,000. For the
purposes hereof, the term "Jalmat Divestiture" shall mean the sale by the
Borrower of certain of its oil and gas properties located in the State of New
Mexico subject to a purchase and sale agreement with Dervish Energy, L.L.C.
dated as of March 8, 1999 (the "Purchase and Sale Agreement"). If the Jalmat
Divestiture occurs on or before May 1, 1999, the next scheduled Borrowing Base
redetermination shall be November 1, 1999 as provided in the Sixth Restated. If
the Jalmat Divestiture does not close by May 1, 1999, then the Borrowing Base
will be redetermined on or before May 1, 1999.
7. The Borrower hereby agrees to make every reasonable effort to
outsource the cost of stimulating the XX Xxxxxxx Unit No. 1 and the cost of
constructing the pipeline and plant associated with the XX Xxxxxxx Unit No. 1,
said outsourcing to be on terms and conditions acceptable to Agent and Borrower.
8. The obligations of Banks under this Second Amendment shall be subject
to the satisfaction of the following conditions precedent:
(a) EXECUTION AND DELIVERY. The Borrower shall have executed and
delivered this Second Amendment, and other required documents, all in form
and substance satisfactory to the Banks;
(b) GUARANTOR'S EXECUTION AND DELIVERY. The Guarantor shall have
executed and delivered this Second Amendment and other required documents,
all in form and substance satisfactory to the Banks;
(c) CORPORATE RESOLUTIONS. Banks shall have received appropriate
certified corporate resolutions of each Borrower and the Guarantor;
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(d) GOOD STANDING AND EXISTENCE. The Banks shall have received
evidence of existence and good standing for Borrower and the Guarantor;
(e) PURCHASE AND SALE AGREEMENT. The Banks shall have received a
copy of the executed Purchase and Sale Agreement, said Purchase and Sale
Agreement to be in form and substance satisfactory to the Banks;
(f) REVIEW OF FINANCIALS. The Banks shall have received copies of
the Borrower's draft 12-31 financial statements including payables and a
proforma income statement for calendar year 1999. Said financial
information to be in form and substance satisfactory to the Banks;
(g) REPRESENTATIONS AND WARRANTIES. The representations and
warranties of Borrower under the Sixth Restated are true and correct in all
material respects as of such date, as if then made (except to the extent
that such representations and warranties related solely to an earlier
date);
(h) NO EVENT OF DEFAULT. No Event of Default shall have occurred and
be continuing nor shall any event have occurred or failed to occur which,
with the passage of time or service of notice, or both, would constitute an
Event of Default;
(i) OTHER DOCUMENTS. Each Bank shall have received such other
instruments and documents incidental and appropriate to the transaction
provided for herein as such Bank or its counsel may reasonably request, and
all such documents shall be in form and substance satisfactory to such
Bank; and
(j) LEGAL MATTERS SATISFACTORY. All legal matters incident to the
consummation of the transactions contemplated hereby shall be satisfactory
to special counsel for Bank retained at the expense of Borrower.
9. Except to the extent its provisions are specifically amended, modified
or superseded by this Second Amendment, the representations, warranties and
affirmative and negative covenants of the Borrower contained in the Sixth
Restated are incorporated herein by reference for all purposes as if copied
herein in full. The Borrower hereby restates and reaffirms each and every term
and provision of the Sixth Restated, as amended, including, without limitation,
all representations, warranties and affirmative and negative covenants. Except
to the extent its provisions are specifically amended, modified or superseded by
this Second Amendment, the Sixth Restated, as amended, and all terms and
provisions thereof shall remain in full force and effect, and the same in all
respects are confirmed and approved by the Borrower and the Banks.
10. This Second Amendment may be executed in any number of counterparts
and all of such counterparts taken together shall be deemed to constitute one
and the same instrument.
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11. The Guarantor hereby consents to the execution of this Second
Amendment by the Borrower and reaffirms its guaranty of all of the obligations
of the Borrower to the Bank. Borrower and Guarantor acknowledge and agree that
the renewal, extension and amendment of the Loan Agreement shall not be
considered a novation of account or new contract but that all existing rights,
titles, powers, Liens, security interests and estates in favor of the Banks
constitute valid and existing obligations and Liens and security interests as
against the Collateral in favor of the Banks. Borrower and Guarantor confirm
and agree that (a) neither the execution of this Second Amendment or any other
Loan Document nor the consummation of the transactions described herein and
therein shall in any way effect, impair or limit the covenants, liabilities,
obligations and duties of the Borrower and under the Loan Documents and (b) the
obligations evidenced and secured by the Loan Documents continue in full force
and effect. Guarantor hereby further confirms that it unconditionally
guarantees to the extent set forth in its Guaranty the due and punctual payment
and performance of any and all amounts and obligations owed by the Banks under
the Sixth Restated or the other Loan Documents.
IN WITNESS WHEREOF, the parties have caused this Second Amendment to Sixth
Restated to be duly executed as of the date first above written.
BORROWER:
XXXXXXX XXXXXXXX ENERGY, INC.
a Delaware corporation
By: /s/ L. Xxxx Xxxxxx
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L. Xxxx Xxxxxx, Executive Vice President
WARRIOR GAS CO.
a Delaware corporation
By: /s/ L. Xxxx Xxxxxx
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L. Xxxx Xxxxxx, Executive Vice President
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GUARANTOR:
CWEI ACQUISITIONS, INC.
a Delaware corporation
By: /s/ L. Xxxx Xxxxxx
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L. Xxxx Xxxxxx, Executive Vice President
AGENT:
BANK ONE, TEXAS, N.A.
a national banking association
By: /s/ Wm. Xxxx Xxxxxxx
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Wm. Xxxx Xxxxxxx, Vice President
BANKS:
BANK ONE, TEXAS, N.A.
a national banking association
By: /s/ Wm. Xxxx Xxxxxxx
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Wm. Xxxx Xxxxxxx, Vice President
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PARIBAS
a French banking corporation
By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Director
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By: /s/ Xxxxx X. Xxxxxx
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Name: Xxxxx X. Xxxxxx
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Title: Assistant Vice President
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UNION BANK OF CALIFORNIA, N.A.
By: /s/ Xxxx X. Xxxxx
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Name: Xxxx X. Xxxxx
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Title: Vice President
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By: /s/ Xxxx Xxxxxxxxxx
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Name: Xxxx Xxxxxxxxxx
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Title: Assistant Vice President
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