EXHIBIT 10.5
SECOND AMENDMENT
TO
CREDIT AGREEMENT
DATED APRIL 9, 1999
BY AND BETWEEN ATP OIL & GAS CORPORATION
AND AQUILA ENERGY CAPITAL CORPORATION
This Second Amendment ("Second Amendment") to the Credit Agreement dated
April 9, 1999, by and between ATP OIL & GAS CORPORATION, a Texas corporation
(the "Borrower") and AQUILA ENERGY CAPITAL CORPORATION, a Delaware corporation
(the "Lender"), is entered into effective on the 3rd day of November, 1999.
W I T N E S S E T H:
A. Borrower and Lender heretofore entered into a Credit Agreement dated
April 9, 1999, but effective March 31, 1999, as amended by the First Amendment
thereto dated June 23, 1999 (the "Credit Agreement").
B. Borrower and Lender hereby desire to further amend the Credit Agreement
subject to the terms and conditions contained herein.
C. Capitalized terms used, but not defined herein, shall have the meanings
prescribed therefor in the Credit Agreement.
NOW THEREFORE, in consideration of the mutual promises herein contained,
and for other good and valuable consideration, the receipt and sufficiency of
which are acknowledged by Borrower and Lender, and each intending to be legally
bound hereby, the Lender and Borrower agree as follows:
I. Specific Amendments to Credit Agreement
Article I of the Credit Agreement is hereby amended by revising the
following defined terms in their entirety to read as follows:
"Advancing Note" means the Second Amended and Restated Advancing Note
attached as Exhibit "B" to the Second Amendment, which amends and restates
the Amended and Restated Advancing Note executed pursuant to the First
Amendment, which in turn amended and restated the Advancing Note originally
described and defined in Section 2.1(a).
"Loan Termination Date" means the earlier of (a) November 2, 2002, (b)
the date of payment and performance in full of all the Obligations of
Borrower under the Loan Documents (other than the Overriding Royalty
Interest Conveyance), and (c) the date on
which Lender notifies Borrower, as provided in Section 10.2, of the
acceleration of payment of all Obligations because of the occurrence of an
Event of Default.
"Note" means the Second Amended and Restated Advancing Note in the
form attached as Exhibit "B" to the Second Amendment and any amendment,
restatement, replacement or extension thereof.
"ORRI" means that overriding royalty interest in Hydrocarbons
produced, saved and sold or used off the premises of the relevant Lease,
attributable to the undivided interest of the Borrower constituting each
Property, conveyed by Borrower to Lender pursuant to the Amended and
Restated Overriding Royalty Interest Conveyance dated of even date with the
Second Amendment, which, in part, amends and restates the Overriding
Royalty Interest Conveyances dated the Closing Date and dated of even date
with the First Amendment.
"Overriding Royalty Interest Conveyance" means, collectively, the
Amended and Restated Overriding Royalty Interest Conveyance and any other
assignments and any amendment, restatement, replacement or extension
thereof, in form and substance acceptable to Lender, pursuant to which
Borrower grants in favor of Lender an overriding royalty interest in the
Hydrocarbons produced, saved and sold or used off the premises of the
relevant Lease, attributable to the undivided interest of the Borrower
constituting each Property, calculated and paid on the same basis as
royalty payable to the United States Department of Interior, Minerals
Management Service pursuant to applicable rules and regulations but
applicable only as to production on and after the applicable Commencement
Date. The percentage ORRI granted in favor of Lender described in the
preceding sentence shall initially equal six and one-fourth percent (6.25%)
and shall be subject to reduction to three and one-eighth percent (3.125%)
and further subject to termination, all in accordance with the terms
specified in the Amended and Restated Overriding Royalty Interest
Conveyance.
"Properties" means those certain properties described on the Exhibit
"A" attached to and incorporated in the Original Agreement, the First
Amendment and the Second Amendment, respectively, limited, however, to the
extent of the specified undivided interest of Borrower in each such
Property as stated therein; provided, however, that the term "Properties,"
as used in this Agreement (including, but not limited to, for the purposes
of determining Gross Receipts, Operating Expenses, Direct Taxes and Net
Revenue), shall not include the Released Properties, except for purposes of
the ORRI, the Overriding Royalty Interest Conveyance, the Gas Purchase and
Sale Agreement, Section 7.1(b) hereof, and any Swap Agreement entered into
by Borrower with reference to gas volumes attributable to any such Released
Property.
"Title Opinions" means those certain title opinions addressed to
Borrower and Lender and dated on or prior to (a) the Closing Date covering
the Properties described on Exhibit "A" attached to the Original Agreement,
(b) the date of the First Amendment
covering the Properties described on Exhibit "A" attached to the First
Amendment and (c) the date of the Second Amendment covering the properties
described on Exhibit "A" attached to the Second Amendment, as the same may
be or are required to be updated under this Agreement.
Article I of the Credit Agreement is hereby further amended by adding the
following definitions thereto:
"Amended and Restated Overriding Royalty Interest Conveyance" means
the Amended and Restated Overriding Royalty Interest Conveyance executed by
Borrower in favor of Lender dated of even date with the Second Amendment
(which amends and restates the Overriding Royalty Interest Conveyances
dated April 9, 1999 and June 23, 1999 executed by Borrower in favor of
Lender).
"Commencement Date" has the meaning assigned to such term in the
Overriding Royalty Interest Conveyance.
"Original Agreement" means the Credit Agreement as it existed on the
Closing Date.
"Released Properties" means Borrower's right, title and interest in
and to Brazos Block 000, Xxxx Xxxxxxx Xxxxx 000, Xxxx Xxxxxxx Xxxxx 432 and
West Cameron Block 263, as such Properties are more fully described on that
certain Act of Partial Release executed by Lender dated of even date with
the Second Amendment.
"Second Amendment" means that certain Second Amendment to Credit
Agreement executed by Lender and Borrower effective on November 3, 1999.
"Second Amendment Facility Fee" means the fee in the amount of
$177,000.00 owed by Borrower to Lender as consideration, in part, for
structuring and entering into the transactions contemplated under the
Second Amendment, as set forth in Section 7.1(z).
Article I of the Credit Agreement is hereby further amended by modifying
the following definitions in the manner prescribed below:
The definition of "Gross Receipts" is modified by inserting after the
term "Swap Settlement Proceeds" in the third line thereof the following
parenthetical text:
"(excluding, however, all Swap Settlement Proceeds attributable
to any Swap Agreement pertaining to Released Properties)"
The definition of "Net Revenue" is modified by inserting after the
term "Swap Settlement Payables" in the fifth line thereof the following
parenthetical text:
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"(except for any Swap Settlement Payables attributable to any
Swap Agreement pertaining to Released Properties)"
Section 2.1(b) of the Credit Agreement, as amended by the First Amendment,
is amended by changing the period at the end of the first grammatical paragraph
thereof to a semicolon, and by adding the following text after the semicolon:
"provided, however, that out of such total, Development Loans in the amount
of $2,000,000.00, reflected as being discretionary on Supplemental Schedule
2.1(b) attached to the Second Amendment, shall be made solely in Lender's
discretion, notwithstanding anything else herein to the contrary.
Section 2.1(b) of the Credit Agreement, as amended by the First Amendment,
is hereby further amended by replacing the dollar amount "$30,330,000.00" that
appears in the seventh and the last lines thereof with the dollar amount
"$48,030,000.00".
Section 2.1(b) of the Credit Agreement, as amended by the First Amendment,
is hereby further amended by changing the period at the end of the last line in
subparagraph (ii) thereof to a semicolon, and adding the following text after
the semicolon:
"and in its sole discretion, Lender may make additional Development Loans
of up to $2,000,000.00, to fund the discretionary Development Operations
described on Supplemental Schedule 2.1(b) attached to the Second Amendment.
Section 2.2 of the Credit Agreement is hereby amended by inserting the
following new text after the second sentence thereof:
Additional Development Loan proceeds advanced pursuant to the Second
Amendment may be used by Borrower for the purposes of paying the Second
Amendment Facility Fee pursuant to Section 7.1(z) hereof.
Section 2.6 of the Credit Agreement is hereby amended by changing the
period in the fourteenth line thereof after the words "February 1999," to a
semicolon and by adding the following text after the semicolon:
provided, however, that with respect to: (a) the Properties described on
Exhibit A to the Second Amendment, the first Gross Receipts to be included
in the Property Operating Statement shall be those attributable to the
production of Hydrocarbons during the month of September 1999, and the
first Operating Expenses, Direct Taxes, royalties, overriding royalty
interests and other payments out of or measured by production shall be
those relating to production and operations for the month of August, 1999,
and (b) the Released Properties, the last Gross Receipts to be included in
the Property Operating Statement shall be those
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attributable to the production of Hydrocarbons during the month of August
1999, and the last Operating Expenses, Direct Taxes, royalties, overriding
royalty interests and other payments out of or measured by production shall
be those relating to production and operations for the month of July 1999.
Section 2.6(a) of the Credit Agreement is hereby amended by inserting after
the term "Swap Settlement Payables" appearing in the third line thereof the
following parenthetical text:
"(except for Swap Settlement Payables attributable to any Swap Agreement
pertaining to any Released Property)"
Section 2.6(b) of the Credit Agreement is hereby amended in its entirety to
read as follows:
(b) Second, the "Dedication Rate" (as hereinafter defined) times the
Net Revenue, as reflected in the relevant Property Operating Statement, to
Lender for payment of amounts which are included within Debt Service and
other Obligations to Lender for the relevant Interest Period. The amount
paid to Lender pursuant to this subpart (b) shall be applied first to any
interest due on the Advancing Note until all accrued interest is paid in
full, and any remaining amounts paid to Lender pursuant to this subpart (b)
shall be applied to remaining principal of the Advancing Note. The term
"Dedication Rate" means ninety percent (90%); provided that following the
occurrence and during the continuation of an Event of Default the
"Dedication Rate" shall be one hundred percent (100%) until such time as
Borrower and Lender mutually agree or it has been demonstrated at any time
to Lender's reasonable satisfaction by Engineers that the net present value
of the Proved Reserves attributable to Borrower's Net Revenue Interest in
the Properties, using the parameters set forth in Section 7.1(f),
multiplied by ninety percent (90%), is greater than one and one-half (1.5)
times the outstanding principal balance of the Advancing Note, and at such
point and thereafter the "Dedication Rate" shall be ninety-five percent
(95%).
Section 2.6(c) of the Credit Agreement is hereby amended by changing the
period at the end of such Section to a semicolon, and adding the following text
after the semicolon:
provided, however, that if, subsequent to the date of any payment made by
Lender to Borrower pursuant to this Section 2.6(c) in the prior calendar
month, there has accrued any net positive amount that is owed by Lender to
Borrower with respect to all Swap Settlement Payables and Swap Settlement
Proceeds that accrued during such period under any Swap Agreement
pertaining to Released Properties, the net amount due from Lender to
Borrower shall be paid by Lender to Borrower along with the amounts
otherwise owed by Lender to Borrower pursuant to this Section 2.6(c); and
provided, further, that if, subsequent to the date of any payment made by
Lender to Borrower pursuant to this Section 2.6(c) in the prior calendar
month, there has accrued any net positive amount that is owed by Borrower
to Lender with respect to all Swap Settlement Payables and Swap Settlement
Proceeds that accrued during such period under any Swap Agreement
pertaining to Released Properties, the net amount due from Borrower to
Lender shall be deducted by Lender from the amounts
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otherwise owed by Lender to Borrower pursuant to this Section 2.6(c), but
if the net amount due from Borrower to Lender under all such Swap
Agreements pertaining to Released Properties exceeds the amounts otherwise
owed by Lender to Borrower pursuant to this Section 2.6(c), Borrower shall
pay the amount of such excess to Lender within ten (10) days after receipt
of Lender's statement detailing the amount due, and, if any such amount is
not paid when due, at Lender's option any such unpaid amount may be
included in the outstanding balance of the Loans advanced to Borrower
hereunder.
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Section 2.10 of the Credit Agreement is hereby amended by adding the
following text at the end of such section:
Contemporaneously with the execution of the Second Amendment by Borrower
and Lender, Borrower shall at Lender's discretion enter into an additional
Swap Agreement.
Section 3.1 of the Credit Agreement is hereby amended by inserting the
following clause immediately before the parenthetical "(the "Mortgage")": "or
any extension modification, renewal or amendment thereof."
Section 3.4 of the Credit Agreement is hereby amended by adding the
following new text at the end of that section:
Borrower shall also use commercially reasonable efforts to assist Lender in
obtaining, within sixty (60) days after the date of the Second Amendment,
the agreement of all Purchasers of Hydrocarbons who purchase Hydrocarbons
from the Properties described on Exhibit "A" to the Second Amendment, to
remit all proceeds from sales of all production from or allocable to
Borrower's respective Net Revenue Interests constituting such respective
Properties to the Cash Collateral Account.
Section 7.1(z) of the Credit Agreement is hereby amended by replacing the
text therein in its entirety to read as follows:
(z) Facility Fee. A Facility Fee in the amount of $465,000.00 was
paid by Borrower to Lender at Closing out of the advances constituting the
Initial Loan and the Additional Facility Fee in the amount of $241,300.00
was paid by Borrower to Lender out of advances constituting the Royalty
Acquisition Loan. The amount of the Facility Fee is deemed to have been
advanced by Lender to Borrower on the Closing Date as a part of the Initial
Loan, with such advance having been contemporaneously paid by Borrower to
Lender. The amount of the Additional Facility Fee is deemed to have been
advanced by Lender to Borrower contemporaneously with the funding of the
Royalty Acquisition Loan, with such advance having been contemporaneously
paid by Borrower to Lender. The amount of the Second Amendment Facility
Fee is deemed to have been advanced by Lender to Borrower on the date of
the Second Amendment, with such advance having been contemporaneously paid
by Borrower to Lender. The face amount of the Note is the sum of the
Initial Loan (which includes the amount of the Facility Fee), the Royalty
Acquisition Loan (which includes the amount of the Additional Facility
Fee), the Second Amendment Facility Fee and the maximum amount of the
Development Loans.
Section 8.3 of the Credit Agreement is hereby amended by replacing the text
of that section in its entirety with the following text:
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Contemporaneously with the closing of the Second Amendment, Borrower shall
assign to Lender the ORRI applicable to the Properties described on
Exhibits "A" attached to this Agreement, to the First Amendment and to the
Second Amendment by executing and delivering to Lender an Amended and
Restated Overriding Royalty Interest Conveyance in form and substance
mutually satisfactory to Lender and Borrower.
Article IX of the Credit Agreement is hereby amended by adding the
following new Section 9.5:
9.5 Conditions Precedent in Connection with the Second Amendment. The
obligation of Lender to make the Development Loan advances on or after November
3, 1999, referred to in Section 2.1(b) of this Agreement is subject to
satisfaction of the following conditions precedent:
(a) Receipt of Second Amended and Restated Advancing Note, Second Amendment
and Compliance Certificate. Lender shall have received the Second Amended
and Restated Advancing Note, multiple counterparts of the Second Amendment
and the Compliance Certificate in the form attached as Exhibit "C" to the
Second Amendment duly executed by an authorized officer of Borrower.
(b) Receipt of Additional Loan Documents. Lender shall have received the
Mortgages, Security Agreement, Letters in Lieu of Transfer Orders and
Notices of Assignment of Proceeds (or any amendments, extensions, renewals
or restatements thereof), all duly executed and, where appropriate,
acknowledged by Borrower, in form and substance acceptable to Lender,
covering the Properties described on Exhibit "A" attached to the Second
Amendment, and the Amended and Restated Overriding Royalty Interest
Conveyance covering all of the Properties, duly executed and acknowledged
by Borrower.
(c) Second Amendment Facility Fee. Lender shall have received the Second
Amendment Facility Fee.
(d) Receipt of Certified Copy of Corporate Proceedings and Certificate of
Incumbency. Lender shall have received from Borrower copies of the
resolutions of the board of directors authorizing the transactions set
forth in the Second Amendment and the execution of the Second Amendment and
the other Loan Documents contemplated thereby, such copy or copies to be
certified by the secretary or an assistant secretary of Borrower as being
true and correct and in full force and effect as of the date of such
certificate. In addition, Lender shall have received from Borrower a
certificate of incumbency signed by the secretary or an assistant secretary
of Borrower setting for (a) the names of the officers executing the Second
Amendment and the other Loan Documents contemplated thereby, (b) the
office(s) to which such persons have been elected and in which they
presently serve and (c) an original specimen signature of each such person.
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(e) Accuracy of Representations and Warranties and No Event of Default. The
representations and warranties contained in Article IV of the Credit
Agreement shall be true and correct in all material aspects on the date of
such advances with the same effect as though such representations and
warranties had been made on such date; and no Event of Default shall have
occurred and be continuing or will have occurred at the completion of the
making of such Loan.
(f) Legal Matters Satisfactory to Special Counsel to Bank. All legal
matters incident to the consummation of the transactions contemplated by
the Second Amendment shall be satisfactory to the firm of Xxxxxx & Xxxxxx,
L.L.P., special counsel for Lender. Borrower shall have paid to Xxxxxx &
Xxxxxx, L.L.P., on the date of the Second Amendment, a deposit for
estimated recording fees in the amount of $4,000.00; and not later than
thirty (30) days after receipt of such counsel's invoice therefor, Borrower
shall pay all of Lender's legal fees and expenses (less the recording fee
deposit paid at the closing of the Second Amendment) incurred to Xxxxxx and
Xxxxxx, L.L.P. in connection with the Second Amendment and related Loan
Documents.
(g) Partial Prepayment. Lender shall have received from Borrower a partial
prepayment in the amount of $4,000,000.00 to be applied against the
outstanding principal balance of the Loans and accrued unpaid interest
thereon.
(h) No Material Adverse Change. No material adverse change shall have
occurred since the date of this Agreement in the condition, financial or
otherwise, of Borrower.
Exhibit "A" to the Credit Agreement, as amended by the First Amendment, is
hereby further amended by adding thereto the schedule of the Properties that
appear on Exhibit "A" to this Second Amendment.
Exhibit "B" to the Credit Agreement, as replaced pursuant to the First
Amendment, is hereby replaced with Exhibit "B" to the Second Amendment.
Schedule 2.1(b), of the Credit Agreement is hereby supplemented with
Supplemental Schedule 2.1(b), Development Operations, attached to the Second
Amendment.
Schedule 2.8, of the Credit Agreement is hereby supplemented with
Supplemental Schedule 2.8, Purchasers of Production, attached to the Second
Amendment.
II. Lender's Release of the Released Properties. Upon the satisfaction of
all of the conditions precedent to the effectiveness of the Second Amendment, as
set forth in Section 9.5 of the Credit Agreement (as added by this Second
Amendment) Lender shall execute, acknowledge and deliver to Borrower an Act of
Partial Release, effective September 1, 1999, a corresponding UCC-3 Partial
Release, and other documents as reasonably requested by Borrower pursuant to
which the Released Properties are released from all liens and security interests
of Lender that exist pursuant to the Mortgage, the Security Agreement, other
applicable Security Documents and the Notice of
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Assignment of Proceeds, and letters pursuant to which the Purchasers of
Hydrocarbons from or attributable to the Released Properties are directed to
make future remittances directly to Borrower. In addition, Lender acknowledges
and agrees that the Released Properties are no longer subject to the Lockbox
Agreement or the Cash Collateral Account Agreement.
III. Reaffirmation of Representations and Warranties. To induce Lender to
enter into this Second Amendment, Borrower hereby reaffirms, as of the date
hereof, its representations and warranties contained in Article IV of the Credit
Agreement and in all other documents executed pursuant thereto, and additionally
represents and warrants as follows:
A. The execution and delivery of this Second Amendment and the
performance by Borrower of its obligations under this Second Amendment are
within Borrower's power, have been duly authorized by all necessary
corporate action, have received all necessary governmental approval (if any
shall be required), and do not and will not contravene or conflict with any
provision of law or of the Articles of Incorporation or Bylaws of Borrower
or of any agreement binding upon Borrower.
B. The Credit Agreement as amended by this Second Amendment,
represents the legal, valid and binding obligations of Borrower,
enforceable against Borrower in accordance with its terms, subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium or
other similar laws affecting the enforcement of creditors' rights
generally.
C. No Event of Default has occurred and is continuing as of the date
hereof.
IV. Defined Terms. Except as amended hereby, terms used herein that are
defined in the Credit Agreement shall have the same meanings herein.
V. Reaffirmation of Loan Agreement. This Second Amendment shall be deemed
to be an amendment to the Credit Agreement, and the Credit Agreement, as amended
hereby, is hereby ratified, approved and confirmed in each and every respect.
All references to the Credit Agreement herein and in any other document,
instrument, agreement or writing shall hereafter be deemed to refer to the
Credit Agreement as amended hereby.
VI. Entire Agreement. The Credit Agreement, as hereby amended, embodies
the entire agreement between Borrower and Lender and supersedes all prior
proposals, agreements and understandings relating to the subject matter hereof.
Borrower certifies that it is relying on no representation, warranty, covenant
or agreement except for those set forth in the Credit Agreement as hereby
amended and the other documents previously executed or executed of even date
herewith.
VII. Governing Law. THIS SECOND AMENDMENT SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS AND THE APPLICABLE
LAWS OF THE UNITED STATES OF AMERICA. This Second Amendment
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has been entered into in Xxxxxx County, Texas and shall be performable for all
purposes in Xxxxxx County, Texas. Courts within the State of Texas shall have
jurisdiction over any and all disputes between Borrower and Lender, whether in
law or equity, including, but not limited to, any and all disputes arising out
of or relating to this Second Amendment or any other Loan Document.
VIII. Severability. Whenever possible, each provision of this Second
Amendment shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of this Second Amendment shall be
prohibited by or invalid under applicable law, such provision shall be
ineffective to the extent of such prohibition or invalidity, without
invalidating the remainder of such provision or the remaining provisions of this
Second Amendment.
IX. Section Captions. Section captions used in this Second Amendment are
for convenience of reference only, and shall not affect the construction of this
Second Amendment.
X. Successors and Assigns. This Second Amendment shall be binding upon
Borrower and Lender and their respective successors and assigns, and shall inure
to the benefit of Borrower and Lender, and the respective successors and assigns
of Lender.
XI. Non-Application of Chapter 346 of Texas Finance Codes. 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 Credit Agreement
as hereby amended or any other Loan Documents or the transactions contemplated
hereby.
XII. Notice. THIS SECOND AMENDMENT, TOGETHER WITH THE CREDIT AGREEMENT AND
THE OTHER 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 Second Amendment to
be duly executed as of the day and year first above written.
BORROWER:
ATP Oil & Gas Corporation
By: _____________________________
T. Xxxx Xxxxxxx
President
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LENDER:
Aquila Energy Capital Corporation
By: ____________________________
Xxxxxxx X. Xxxxx
Vice President
EXHIBIT "A"
PROPERTIES
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EXHIBIT "B"
SECOND AMENDED AND RESTATED ADVANCING NOTE
1
EXHIBIT "C"
FORM OF COMPLIANCE CERTIFICATE
1
SUPPLEMENTAL SCHEDULE 2.1(B)
ADDITIONAL DEVELOPMENT OPERATIONS
2
SUPPLEMENTAL SCHEDULE 2.8
PURCHASERS OF HYDROCARBONS
NONE.
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