EIGHTH AMENDMENT TO CREDIT AGREEMENT
This EIGHTH AMENDMENT TO CREDIT AGREEMENT (this "Eighth
Amendment") is made and entered into effective as of May 1, 1999, by and between
XXXXXXXX PETROLEUM COMPANY, L.L.C. ("GP"), a Louisiana limited liability
company, successor by merger to XXXXXXXX PETROLEUM COMPANY OF LOUISIANA, a
Nevada corporation ("GPCL"), (the "Borrower"), XXXXXXXX PETROLEUM CORPORATION, a
Delaware corporation, ("Xxxxxxxx"), and COMPASS BANK, an Alabama state chartered
banking institution (the "Lender").
W I T N E S S E T H:
WHEREAS, GPCL, GPC, Inc. of Louisiana (which was merged into
GPCL), the Lender, and Xxxxxxxx are parties to the Credit Agreement dated August
16, 1995, as amended by First Amendment to Credit Agreement dated as of December
15, 1995, and Letter Amendment dated March 26, 1996, and Second Amendment to
Credit Agreement dated as of June 1, 1996, and Letter Amendment dated November
12, 1996, and by Third Amendment to Credit Agreement dated as of January 31,
1997, and by Fourth Amendment to Credit Agreement dated as of June 1, 1997 and
by Fifth Amendment to Credit Agreement dated as of October 16, 1997, and as
amended by Letter Amendment dated February 25, 1998, and as amended by Sixth
Amendment to Credit Agreement dated as of March 27, 1998, and as further amended
by Seventh Amendment to Credit Agreement dated as of December 21, 1998 (as
amended, the "Agreement"), pursuant to which the Lender has extended credit to
GPCL and GP and Xxxxxxxx has guaranteed the payment and performance of certain
indebtedness and other obligations of GPCL and GP to the Lender; and
WHEREAS, the parties hereto desire to amend the Agreement as
hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in the Agreement and this Eighth Amendment, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
I.1 Terms Defined Above. As used herein, each of the terms
"Agreement," "Borrower," "Eighth Amendment," "GP," "GPCL", "Xxxxxxxx," and
"Lender" shall have the meaning assigned to such term hereinabove.
I.2 Terms Defined in Agreement. As used herein, each term defined
in the Agreement shall have the meaning assigned thereto in the Agreement,
unless expressly provided herein to the contrary.
1
I.3 References. References in this Eighth Amendment to Article or
Section numbers shall be to Articles and Sections of this Eighth Amendment,
unless expressly stated to the contrary. References in this Eighth Amendment to
"hereby," "herein," "hereinafter," "hereinabove," "hereinbelow," "hereof," and
"hereunder" shall be to this Eighth Amendment in its entirety and not only to
the particular Article or Section in which such reference appears.
I.4 Articles and Sections. This Eighth Amendment, for convenience
only, has been divided into Articles and Sections and it is understood that the
rights, powers, privileges, duties, and other legal relations of the parties
hereto shall be determined from this Eighth Amendment as an entirety and without
regard to such division into Articles and Sections and without regard to
headings prefixed to such Articles and Sections.
I.5 Number and Gender. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural and
likewise the plural shall be understood to include the singular. Words denoting
sex shall be construed to include the masculine, feminine, and neuter, when such
construction is appropriate, and specific enumeration shall not exclude the
general, but shall be construed as cumulative. Definitions of terms defined in
the singular and plural shall be equally applicable to the plural or singular,
as the case may be.
ARTICLE II
AMENDMENTS
The Borrower, Guarantor and the Lender hereby amend the
Agreement in the following particulars:
2.01 Amendment of Section 1.2. Section 1.2 of the Agreement
is hereby amended as follows:
The following definitions are added, deleted and/or amended to
read as follows:
"Commitment Termination" Date shall mean February 1, 2001.
"Debt Service" shall mean, for any period and with respect to
Indebtedness of Xxxxxxxx on a consolidated basis, the sum of
(a) all principal payments made during such period other than
with respect to the Obligations plus (b) required principal
payments with respect to the Obligation. For purposes of this
definition required payments under Tranche A will not be
considered.
"Excess Cash Flow" shall mean Net Income as reported for the
Borrower (and its parent on a consolidated basis) plus: (a)
depreciation, depletion, amortization and other non-cash
expenses and (b) reported losses on the sale of assets; less
(w) non-cash income, (x) reported gains on the sale of assets,
2
(y) approved budgeted capital expenditures, and (z) the
monthly principal reductions set forth in Section 2.23.
"Net Income" shall mean, for any period, the net income of the
Borrower for such period, determined in accordance with GAAP.
"Tranche A Principal" shall mean the sum of $9,000,000.
2.02 Addition of Section 2.4A. Section 2.4A shall be added to the
Agreement to read as follows:
"2.4A Repayment of Tranche A Principal and Interest. Accrued
and unpaid interest at the Index Rate plus two percent (2%) on Tranche
A Principal shall be due and payable monthly commencing on the first
day of June, 1999, and continuing on the first day of each calendar
month thereafter until December 1, 1999, when all accrued interest and
principal shall be due and payable. Any payments on Tranche A Principal
shall permanently reduce Tranche A Principal by a like amount. Borrower
shall not be allowed to reborrow under the Tranche A Principal."
2.03 Amendment of Section 2.7(a). Section 2.7(a) of the Agreement
shall be amended to read as follows:
"2.7 Borrowing Base Determinations. (a) The Borrowing Base as
of March 29, 1999, is acknowledged by the Borrower and the Lender to be
$20,500,000. The Borrowing Base shall be reduced on April 1 and May 1,
1999, by $50,000 each date and on June 1, 1999, by $200,000. Commencing
on July 1, 1999, and continuing on the first day of each calendar month
thereafter until the earlier of the date such amount is redetermined or
the Commitment Termination Date, the amount of the Borrowing Base shall
be reduced by $300,000."
2.04 Addition of Section 2.23. Section 2.23 shall be added to the
Agreement to read as follows:
"2.23 Excess Cash Flow Application. Beginning May 1, 1999, and
continuing on the first day of each month thereafter until the earlier
of December 1, 1999, or the payment in full of Tranche A Principal
together with all accrued interest, the Excess Cash Flow shall be
applied as follows:
(a) Up to $200,000 of Excess Cash Flow: 100% shall be applied
to Tranche A Principal;
(b) Excess Cash Flow over $200,000 and up to $500,000: 75%
shall be applied to Tranche A Principal with the balance
being retained by the Borrower for working capital and
other general corporate purposes;
3
(c) Excess Cash Flow in excess of $500,000: 50% shall be
applied to Tranche A Principal with the balance being
retained by the Borrower for working capital and other
general corporate purposes.
Provided, however, if the application of this provision in regard to
Excess Cash Flow results in cash on hand of the Borrower (and/or its
parent on a consolidated basis) being less than $100,000, the amount of
the payment set forth in this section shall be reduced to the extent
necessary to allow cash on hand to be at least $100,000."
2.05 Addition of Section 5.20. Section 5.20 shall be added to the
Agreement to read as follows:
"5.20 Additional Reporting Requirements. (A) Deliver to the
Lender within 45 days of each month end the following:
(i) a monthly statement of the calculation of Excess Cash
Flow;
(ii) a capital expenditure budget for the next six month
period. The amount of such capital expenditure budget
shall be subject to the approval of the Lender and such
approval shall be effective for a period of six months
from the date of such approval or until such time as an
increase is requested and if actual capital
expenditures do not exceed the approved budgeted
amount, the determination of capital expenditures shall
be at the sole discretion of the Borrower;
(iii) a report of monthly production of its Oil and Gas
Properties, setting forth production volumes for oil,
gas, other hydrocarbons and water, broken out by major
fields.
(B) Deliver to the Lender within 15 days of each month end a
report setting forth all accounts payable with amounts due and aged
according to invoice date."
2.06 Addition of Section 5.21. Section 5.21 shall be added to the
Agreement to read as follows:
"5.21 Asset Sales Proceeds. Upon the sale of any Property,
100% of the net proceeds from such sale shall be applied as follows:
(i) first, to reduce the Borrowing Base to the extent of
the allocated Borrowing Base value for such Property
as decided by the Lender in its sole discretion; and
(ii) the remainder to be applied to Tranche A Principal."
4
2.07 Addition of Section 5.22. Section 5.22 shall be added to the
Agreement to read as follows:
"5.22 Cash Collateral Account. (a) The Borrower shall
establish a cash collateral account with the Lender, being account
number ________ in the name of the Borrower. The Borrower shall send
notices to purchasers of production representing a minimum of 90% of
sales proceeds (based on average over the prior six months) to begin
immediately to remit via wire transfer the proceeds from production
into the above account. Such notices shall be in the form on the
attached Exhibit A. Borrower will execute a Collateral Assignment of
Deposit Accounts and Security Agreement pledging the above account as
well as any other account with the Lender."
(b) The Borrower and the Lender acknowledge that the
Collateral is comprised of Borrower's undivided interest in Oil and Gas
Properties and accordingly cash deposited in the Cash Collateral
Account may include the interests of other Persons ("Other Revenues").
The Lender agrees that if it receives appropriate evidence that a part
of such funds are Other Revenues, such funds will be released to such
Persons. The Lender shall not be liable, however, for any actions by
the Lender which are taken in compliance with the terms of this
Agreement and the Security Instruments with respect to the Other
Revenues in the Cash Collateral Account which are taken before the
Lender received such evidence that such funds are Other Revenues."
2.08 Amendment of Section 6.7. Section 6.7 of the Agreement shall
be amended to read as follows:
"6.7 Dividends and Distributions. Neither the Borrower nor the
Guarantor shall declare, pay or make, whether in cash or other
Property, any dividend or distribution on any membership interest or
any share of its capital stock at any time Tranche A Principal is
outstanding or at any time that a Default or Event of Default exists or
would occur as a result thereof."
2.09 Amendment of Section 6.11. Section 6.11 is amended to read
as follows:
"6.11 Consolidated Tangible Net Worth. Permit Consolidated
Tangible Net Worth at any time to be less than $3,750,000 plus, for all
fiscal quarters ending subsequent to December 31, 1998, plus 50% of
positive Consolidated Net Income and 100% of all cash equity proceeds.
2.10 Addition of Section 6.13. Section 6.13 shall be added to the
Agreement to read as follows:
"6.13 Accounts Payable. Permit vendor accounts as they apply
to the Borrower payable to exceed $2,500,000 as of June 30, 1999."
5
2.11 Additions to Section 7.1. Section 7.1 of the Agreement shall
be amended to read as follows by adding the following subparagraph:
"(m) an Event of Default shall occur automatically and
without any further notice to the Borrower if any
reduction in the Borrowing Base as described in
Section 2.7(a) is not made on the first day of each
month beginning 2:00 p.m. central time on June 1,
1999; and
(n) an Event of Default shall occur automatically and
without any further notice should the payment of
royalties on its Oil and Gas Properties not be made
when due."
ARTICLE III
CONDITIONS
The obligation of the Lender to amend the Agreement as
provided herein is subject to the fulfillment of the following conditions
precedent:
III.1 Receipt of Documents and Other Items. The Lender shall have
received, reviewed, and approved the following documents and other items,
appropriately executed when necessary and in form and substance satisfactory to
the Lender:
(a) multiple counterparts of this Eighth Amendment executed
by the Borrower and Xxxxxxxx, as requested by the Lender;
and
(b) a current list (including addresses) of purchasers of
production;
(c) Collateral Assignment of Deposit Accounts and Security
Agreement from the Borrower pledging certain accounts
with the Lender;
(d) Security Agreement (Pledge of Certificate of Ownership)
with blank power of sale from the Guarantor, as Debtor,
to the Lender, as Secured Party pledging 100% of its
interest in the Borrower;
(e) six month capital budget of the Borrower acceptable to
the Lender prior to the execution of the First Amendment
and which shall be subject to the terms of Section 5.20;
and
(f) such other agreements, documents, items, instruments,
opinions, certificates, waivers, consents, and evidence
as the Lender may reasonably request.
III.2 Accuracy of Representations and Warranties. The
representations and warranties contained in Article IV of the Agreement and in
6
any other Loan Document shall be true and correct, except as affected by the
transactions contemplated in the Agreement and this Eighth Amendment.
III.3 Matters Satisfactory to Lender. All matters incident to the
consummation of the transactions contemplated hereby shall be satisfactory to
the Lender.
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Each of the Borrower and Xxxxxxxx hereby expressly re-makes, in
favor of the Lender, all of the representations and warranties set forth in
Article IV of the Agreement and set forth in any other Loan Document to which it
is a party, and represents and warrants that all such representations and
warranties remain true and unbreached, except as affected by the transactions
contemplated in the Agreement and this Eighth Amendment.
ARTICLE V
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and
confirm the Agreement and the other Loan Documents to which it is a party, in
all things in accordance with the terms and provisions thereof, as amended by
this Eighth Amendment and the documents executed in connection herewith.
ARTICLE VI
MISCELLANEOUS
VI.1 Scope of Amendment. The scope of this Eighth Amendment is
expressly limited to the matters addressed herein and this Eighth Amendment
shall not operate as a waiver of any past, present, or future breach, Default,
or Event of Default under the Agreement, except to the extent, if any, that any
such breach, Default, or Event of Default is remedied by the effect of this
Eighth Amendment.
VI.2 Agreement as Amended. All references to the Agreement in any
document heretofore or hereafter executed in connection with the transactions
contemplated in the Agreement shall be deemed to refer to the Agreement as
amended by this Eighth Amendment.
VI.3 Parties in Interest. All provisions of this Eighth Amendment
shall be binding upon and shall inure to the benefit of the Borrower, the
Lender, Xxxxxxxx, and their respective successors and permitted assigns.
VI.4 Rights of Third Parties. All provisions herein are imposed
solely and exclusively for the benefit of the parties hereto and their
respective successors and permitted assigns. No other Person shall have standing
to require satisfaction of such provisions in accordance with their terms and
any or all of such provisions may be freely waived in whole or in part by the
Lender at any time if in its sole discretion it deems it advisable to do so.
7
VI.5 Entire Agreement. THIS EIGHTH AMENDMENT CONSTITUTES THE
ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND
SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, AMONG SUCH PARTIES
REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS EIGHTH AMENDMENT,
THE AGREEMENT, AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE
FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
VI.6 Governing Law. THIS EIGHTH AMENDMENT AND ALL ISSUES ARISING
IN CONNECTION HEREWITH AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.
VI.7 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS WITH
RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED
TO OR FROM THIS EIGHTH AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT MAY
BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE LENDER, IN COURTS
HAVING SITUS IN HOUSTON, XXXXXX COUNTY, TEXAS. EACH OF THE BORROWER AND XXXXXXXX
HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT LOCATED
IN HOUSTON, XXXXXX COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY HAVE TO
TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT AGAINST
IT BY THE LENDER IN ACCORDANCE WITH THIS SECTION.
VI.8 Waiver of Rights to Jury Trial. EACH OF THE BORROWER,
XXXXXXXX, AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY,
IRREVOCABLY, AND UNCONDITIONALLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY
ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT RELATES TO OR
ARISES OUT OF THIS EIGHTH AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT
OR THE ACTS OR OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR
PROVISIONS OF THIS EIGHTH AMENDMENT, THE AGREEMENT, OR ANY OTHER LOAN DOCUMENT
OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION ARE A MATERIAL
INDUCEMENT FOR THE LENDER ENTERING INTO THIS EIGHTH AMENDMENT.
IN WITNESS WHEREOF, this Eighth Amendment is executed
effective as of the date first hereinabove written.
BORROWER:
XXXXXXXX PETROLEUM COMPANY, L.L.C.
By:
-------------------------------
Xxxxxx X. Xxxxxxxxx
Management Committee Member
8
GUARANTOR:
XXXXXXXX PETROLEUM CORPORATION
By:
-------------------------------
Xxxxxx X. Xxxxxxxxx
Chief Financial Officer and Treasurer
LENDER:
COMPASS BANK
By:
-------------------------------
Xxxxxxx Xxxxxxxx Xxxxxx
Senior Vice President
9
EIGHTH AMENDMENT TO
CREDIT AGREEMENT
between
XXXXXXXX PETROLEUM COMPANY, L.L.C.
and
COMPASS BANK
Effective as of
May 1, 1999
EXHIBIT A
[FORM OF LETTER]
Re: Owner Number
REMITTANCE ADDRESS CHANGE NOTICE
Dear Gentlemen:
Effective immediately please wire amounts to Xxxxxxxx Petroleum Company, L.L.C.
at the following account.
Xxxxxxxx Petroleum Company, L.L.C.
Account Number ____________
Compass Bank
ABA Number _____________
Please note that going forward, these remittance instructions cannot be changed
without written notice from both Xxxxxxxx Petroleum Company, L.L.C. and Compass
Bank. If you have any questions or need additional information before changing
the address please call me at (000) 000-0000.
Sincerely,
------------------------
000 Xxxxx Xxxxxx, Xxxxx 0000 - Xxxxxxxxxx, Xxxxxxxxx 00000
Telephone: (000) 000-0000 - Telecopy: (000) 000-0000
A-i
