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EXHIBIT 10.1
SEVENTH AMENDMENT TO SECOND
AMENDED AND RESTATED LOAN AGREEMENT
This SEVENTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
(the "Seventh Amendment") dated June 30, 1999, is by and between VENUS
EXPLORATION, INC., a Delaware corporation, formerly known as XPLOR CORPORATION,
a Delaware corporation (the "Borrower"), and XXXXX FARGO BANK (TEXAS), N.A., a
national banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, Bank and Borrower entered into that certain Second Amended
and Restated Loan Agreement dated December 22, 1997 (as the same has been
previously amended through the date hereof is herein called the "Loan
Agreement"), pursuant to which Borrower obtained a credit facility in the
amount of up to the lesser of the Borrowing Base (as defined in the Loan
Agreement) or the Commitment (as defined in the Loan Agreement); and
WHEREAS, Borrower has agreed to acquire certain oil and gas producing
properties from Apache Corporation for an amount not to exceed $28,500,000 (the
"Apache Acquisition"); and
WHEREAS, Borrower has agreed to assign its rights, duties and
obligations with respect to the Apache Acquisition to EXUS Energy, LLC
("EXUS"), a Delaware limited liability company which will be jointly owned by
Borrower with EXCO Resources, Inc., a Texas corporation ("EXCO"), and EXUS will
acquire the assets contemplated by the Apache Acquisition; and
WHEREAS, Borrower proposes to obtain certain non-recourse loans from
EXCO in an amount not to exceed $8,000,000 in order to make its' capital
contribution in EXUS; and
WHEREAS, EXUS proposes to enter into a Credit Agreement with the
Nationsbank, N. A. (the "Subordinate Creditor") pursuant to which the
Subordinate Creditor and other financial institutions will make loans to EXUS
in an amount not to exceed $50,000,000 (the "EXUS Credit Agreement"); and
WHEREAS, the forgoing are currently prohibited by the Loan Agreement
and Borrower has requested that Bank consent and approve such transactions; and
WHEREAS, Bank and Borrower now desire to further amend that Loan
Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
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1. Amendments to the Loan Agreement. The Loan Agreement is, effective
the date hereof, and subject to the satisfaction of the conditions precedent
set forth in Section 6 hereof, hereby amended as follows:
(a) Except as provided below, unless the context hereof
indicates otherwise, all capitalized terms used herein shall
have the same meaning as set forth in the Loan Agreement. The
definitions contained in Section 1.1 of the Loan Agreement
shall be and are hereby amended or supplemented as follows:
(i) A new definition of "Apache Acquisition" is
hereby added to read as follows:
"Apache Acquisition shall mean the acquisition by an
affiliate of Borrower of oil and gas producing
properties located in the State of Louisiana from
Apache Corporation pursuant to a Purchase and Sale
Agreement dated May 13, 1999."
(ii) A new definition of "EXCO" is hereby added to
read as follows:
"EXCO shall mean EXCO Resources, Inc., a Texas
corporation whose address is 0000 Xxxxxxxx Xx.,
Xxxxx 000, Xxxxxx, Xxxxx 00000."
(iii) A new definition of "EXCO Note" is hereby
added to read as follows:
"EXCO Note shall mean that certain Convertible
Promissory Note executed by Borrower payable to the
order of EXCO dated June 30, 1999 in the original
principal amount of $8,000,000."
(iv) A new definition of "EXCO Pledge Agreement" is
hereby added to read as follows:
"EXCO Pledge Agreement shall mean that certain
Pledge Agreement executed by Borrower in favor of
EXCO dated June 30, 1999 pursuant to which Borrower
pledges as collateral security for the EXCO Note all
of its membership interests in EXUS."
(v) A new definition of "EXUS" is hereby added to
read as follows:
"EXUS shall mean EXUS Energy, LLC, a Delaware
limited liability company, as such limited liability
company exists or may hereinafter be restated,
amended, or restructured, and any limited liability
company, partnership, joint venture, or corporation
formed as a result of the restructure,
reorganization, or amendment of any such limited
liability company."
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(vi) A new definition of "EXUS Credit Facility" is
hereby added to read as follows:
"EXUS Credit Facility shall mean that certain Credit
Agreement dated June 30, 1999 among EXUS,
Subordinated Creditor, individually and as
administrative agent thereunder, and the financial
institutions who may from time to time become a
party thereto."
(vii) A new definition of "Subordinated Creditor" is
hereby added to read as follows:
"Subordinated Creditor shall mean Nationsbank, N.A.
or any other bank or financial institution who from
time to time becomes a party to the EXUS Credit
Agreement."
(viii) A new definition of "Subordinated Guaranty
Agreement" is hereby added to read as follows:
"Subordinated Guaranty Agreement shall mean that
certain Guaranty Agreement executed by Borrower in
favor of the Subordinate Creditor dated June 30,
1999 pursuant to which Borrower guarantees the
obligations of EXUS under the EXUS Credit
Agreement."
(b) Section 6.9, Debt, to the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:
"6.9 Debt. Borrower shall not, directly or indirectly,
create, incur or suffer to exist any direct, indirect, fixed
or contingent liability for any Debt, other than (a) the
Obligation; (b) current accounts payable incurred in the
ordinary course of business; (c) such other Debt as set forth
on Schedule 6.9; (d) purchase money Debt of Borrower not to
exceed $500,000;and (e) the EXCO Notes, the EXCO Pledge
Agreement and the Subordinated Guaranty Agreement.
(c) Section 6.11, Liens to the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:
"6.11 Liens. Borrower or any Subsidiary shall not, directly
or indirectly, create, incur, suffer or permit to be created
or incurred or to exist, any lien upon any of its assets,
except (i) Permitted Liens; and (ii) the Liens arising under
the EXCO Pledge Agreement.
(d) Section 6.34, Transaction, to the Loan Agreement is
hereby deleted in its entirety and the following substituted therefor:
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"6.34 Transaction. On or before September 30, 1999, Borrower
shall have consummated a Transaction in form and substance
acceptable to Bank."
(e) Section 7.1, Events of Default, to the Loan Agreement is
hereby amended by adding the following:
"(l) A default or event of default occurs under the EXUS
Credit Agreement.
(m) The breach of any representation, warranty or covenant by
Borrower under the EXCO Note, the EXCO Pledge Agreement or
the Subordinated Guaranty Agreement, or Borrower enters into
any amendment of the EXCO Note, the EXCO Pledge Agreement or
the Subordinated Guaranty Agreement, without the express
prior written approval of Bank, which approval may be
withheld by Bank in its sole discretion.
(n) The payment by Borrower to Subordinate Creditor of any
amounts under the Subordinated Guaranty Agreement in
contravention of the Intercreditor and Subordination
Agreement among Borrower, Bank and Subordinate Creditor dated
June 30, 1999."
2. Consent and Waiver. At the special request of Borrower without
waiving any other rights or remedies in favor of Bank and subject to the
fulfillment of the conditions precedent contained in this Seventh Amendment,
Bank hereby consents to (i) the investment by Borrower in EXUS; (ii) the
execution, delivery and performance of the EXCO Note and the EXCO Pledge
Agreement; and (iii) the execution, delivery and performance of the
Subordinated Guaranty Agreement, subject to the limitations set forth in the
Intercreditor and Subordination Agreement among Borrower, Bank and Subordinate
Creditor as described in Paragraph 7(iv) below. As an inducement to Bank to
make the foregoing consents and waivers, Borrower hereby represents and
warrants to Bank that the closing of the Apache Acquisition, the formation of
EXUS, the execution and delivery by Borrower of the EXCO Note, the EXCO Pledge
Agreement and the Subordinated Guaranty Agreement, and the other transactions
contemplated thereby has or will occur simultaneously with the execution and
delivery of this Seventh Amendment. A true and complete copy of the documents
and instruments evidencing the Apache Acquisition, the EXCO Note, the EXCO
Pledge Agreement and the Subordinated Guaranty Agreement (including all
exhibits, schedules and amendments thereto) has been delivered to Bank.
Borrower represents and warrants that it is not in default under any such
documents or under any instrument or document to be delivered in connection
therewith. The representations and warranties made in such documents by
Borrower will be true and correct in all material respects (except for changes
expressly provided for therein or herein) on and as of the date hereof as
though made on and as of such date. The foregoing consent and waiver is
specifically limited to a waiver of the covenants, agreements and defaults
contained in the Loan Agreement prohibiting such transactions. This waiver
shall not constitute a waiver of either (i) any further violation of the
covenants and agreements contained in the Loan Agreement; or (ii) any
violations of covenants and agreements contained in the Loan Agreement which
exists prior to the date hereof; or (iii) any violation of any other provision
of the Loan Agreement, or any Potential Default or Event of Default thereunder,
whether now existing or
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occurring after the date of this Seventh Amendment. Bank hereby specifically
reserves all of the rights and remedies it may have under the Loan Agreement or
otherwise as the result of any such violation, Potential Default or Event of
Default.
3. Ratifications. The terms and provisions as set forth in this
Seventh Amendment shall modify and supersede all inconsistent terms and
provisions set forth in the Loan Agreement, and except as expressly modified
and superseded by this Seventh Amendment, the terms of the Note and any and all
other Loan Documents executed in connection therewith or hereunto are hereby
ratified and confirmed and shall continue in full force and effect. Borrower
and Bank agree that the Loan Agreement, as amended hereby, the Note and the
other Loan Documents shall continue to be the legal, valid and binding
obligations of Borrower, enforceable against Borrower in accordance with their
respective terms.
4. Representations and Warranties. Borrower hereby represents and
warrants to Bank that (i) the execution, delivery and performance of this
Seventh Amendment, and the other documents to be executed and delivered as
required hereby have been duly authorized by all requisite action on the part
of Borrower; (ii) after giving effect to this Seventh Amendment, the
representations and warranties contained in the Loan Agreement, as amended
hereby, and any other Loan Document executed in connection herewith or
therewith are true, correct and complete on and as of the date hereof as though
made on and as of the date hereof; and (iii) after giving effect to this
Seventh Amendment, no Event of Default or Potential Default has occurred and is
continuing.
5. Financial Covenant Deviation and Waiver. Without giving effect to
this Seventh Amendment, Borrower would have failed to observe or maintain
compliance with the Current Ratio covenant set forth in Section 6.16 of the
Loan Agreement and the Tangible Net Worth covenant set forth in Section 6.17 of
the Loan Agreement. Borrower has requested, and Bank has approved, a deviation
from such compliance with respect to the aforementioned covenants for a period
from the date hereof through September 30, 1999, at which time Borrower must be
in compliance therewith. It is understood and agreed that Bank's consent to
such deviation shall in no way act as a waiver of any covenants, restrictions,
rights or remedies with respect to the Loan Agreement, but that such deviation
shall apply only to the specific matter and instance set forth herein above.
6. Status of Claims. Borrower hereby represents and warrants to Bank
that no facts, events, status or conditions presently exist which, either now
or with the passage of time or the giving of notice or both, presently
constitute or will constitute a basis for any claim or cause of action against
Bank, or any defense to the payment of any of the Obligations. Borrower hereby
releases, relinquishes and forever discharges Bank, its successors, assigns,
agents, officers, directors, employees and representatives, of and from any and
all claims, demands, actions and causes of action of any and every kind or
character, whether known or unknown, present or future, which Borrower may have
against Bank, its successors, assigns, agents, officers, directors, employees
and representatives, arising out of or with respect to any and all transactions
relating to the Loan Agreement, this Seventh Amendment, or any Loan Document,
including any loss, cost or damage, of any kind or character, arising out of or
in any way connected with or in any way resulting from the acts, actions or
omissions of Bank, its successors, assigns, agents, officers, directors,
employees or representatives.
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7. Conditions Precedent to Effectiveness of Seventh Amendment. This
Seventh Amendment shall become effective and be deemed effective upon receipt
by Bank of the following:
(i) counterparts of this Seventh Amendment duly executed by
Borrower and Bank;
(ii) there shall not have been, in the sole judgment of Bank,
any material adverse change in the financial condition, business or
operations of Borrower;
(iii) payment by Borrower to Bank of a $10,000.00 waiver
extension fee;
(iv) payment by Borrower of the fees and expenses of counsel
to Bank in connection with the preparation and negotiation of this
Seventh Amendment and all documents and instruments contemplated
hereby;
(v) delivery by Borrower to Bank of true and correct copies
of the documents and instruments contemplated in Paragraph 2 of this
Seventh Amendment;
(vi) the execution and delivery by Borrower and Subordinate
Creditor of an Intercreditor and Subordination Agreement in form and
substance satisfactory to Bank, in its sole discretion; and
(vii) the execution and delivery by Borrower of such
additional documents and instruments that Bank and its counsel may
deem necessary to effectuate this Seventh Amendment or any document
executed and delivered to Bank in connection herewith or therewith.
8. Execution Counterparts. This Seventh Amendment may be executed in
any number of counterparts and by different parties hereto in separate
counterparts, each of which when so executed and delivered shall be deemed to
be an original and all of which when taken together shall constitute but one
and the same instrument.
9. Governing Law. This Seventh Amendment shall be governed by and
construed in accordance with the internal laws of the State of Texas.
10. Successors and Assigns. This Seventh Amendment is binding upon and
shall inure to the benefit of Borrower and Bank and its respective successors
and assigns; provided, however, Borrower may not assign or transfer any of
their rights or obligations hereunder without the prior written consent of
Bank.
11. Headings. The headings, captions and arrangements used in this
Seventh Amendment are for convenience only and shall not effect the
interpretation of this Seventh Amendment.
12. NO ORAL AGREEMENTS. THIS SEVENTH AMENDMENT, TAKEN TOGETHER WITH
THE OTHER LOAN DOCUMENTS AND ALL SCHEDULES AND EXHIBITS THERETO, REPRESENTS THE
FINAL AGREEMENT OF THE PARTIES
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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.
13. AGREEMENT FOR BINDING ARBITRATION. THE PARTIES AGREE TO BE BOUND
BY THE TERMS AND PROVISIONS OF THE CURRENT ARBITRATION PROGRAM OF XXXXX FARGO
BANK (TEXAS), N.A., WHICH IS INCORPORATED BY REFERENCE HEREIN AND IS
ACKNOWLEDGED AS RECEIVED BY THE PARTIES, PURSUANT TO WHICH ANY AND ALL DISPUTES
SHALL BE RESOLVED BY MANDATORY BINDING ARBITRATION UPON THE REQUEST OF EITHER
PARTY.
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"BORROWER"
VENUS EXPLORATION, INC.
By: /s/ XXXX X. XXXX
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Name: Xxxx X. Xxxx
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Title: President
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"BANK"
XXXXX FARGO BANK (TEXAS) N.A.
By: /s/ XXXXXX X. XXX
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Xxxxxx X. Xxx, Vice President
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