FOURTH AMENDMENT TO LETTER LOAN AGREEMENT
THIS FOURTH AMENDMENT TO LETTER LOAN AGREEMENT (this "Fourth Amendment")
is made and entered into as of the 16th day of December, 1998, by and between
TEXSTAR PETROLEUM, INC., a Texas corporation(the "Borrower"), and BANK ONE,
TEXAS, N.A., a national banking association (the "Lender").
WHEREAS, the Borrower and the Lender entered into that certain letter
loan agreement dated July 17, 1997, which letter loan agreement was amended
by that certain First Amendment to Letter Loan Agreement dated October 10,
1997 between Borrower and Lender, that certain Second Amendment to Loan
Agreement dated November 18, 1997 between Borrower and Lender and that
certain Third Amendment to Letter Loan Agreement dated November 4, 1998
between Borrower and Lender (as amended, the "Loan Agreement");
WHEREAS, the Borrower and the Lender desire to amend certain terms and
provisions of the Loan Agreement, as set forth herein.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Section 1(a)(1) of the Loan Agreement is deleted in its entirety,
and the following is substituted in its place:
(1) MAXIMUM AVAILABILITY: The lesser of $7,000,000 and the
Borrowing Base (as defined in Section 5(c) hereof).
2. Section 1(b) of the Loan Agreement is deleted in its entirety, and
the following is substituted in its place:
(b) TRANCHE B:
(1) MAXIMUM AVAILABILITY: $4,500,000.
(2) ADVANCE PROCEDURES: At least three (3) Business Days
prior to the requested date of advance (other than the $1,000,000
advance made on the date hereof and the $1,500,000 advance to be
used to make the principal payment on Tranche A due on December 18,
1998), Borrower may make a written request to Lender for direct
advances pursuant to Tranche B, which request shall include a
detailed description of the proposed use of the proceeds of such
advance. If all participants with respect to Tranche B consent to
the making of such advance (to the extent required by the terms of
any applicable Participation Agreement), and all such participants
have fully
paid for their participation, Lender will make the advance requested
by Borrower on the requested date.
(3) TERM: Through the Maturity Date.
(4) INTEREST RATE: Prime Rate plus eight percent (8%) per
annum (the "Tranche B Interest Rate"), not to exceed the Maximum
Rate.
3. Borrower and Lender acknowledge and agree that pursuant to a First
Amendment to Participation Agreement of even date herewith between Lender and
BOCP Energy Partners, L.P. ("Participant"), Participant is purchasing an
additional participation interest in Tranche B and in consideration thereof
is paying to Lender the sum of $1,000,000 on the date hereof and agreeing to
pay to Lender the sum of $1,500,000 on December 18, 1998. The $1,000,000
amount shall be disbursed to or at the direction of Borrower under Tranche B,
and the $1,500,000 amount shall be applied by Lender to the required
principal payment on Tranche A due December 18, 1998.
4. The closing of the transactions contemplated by this Fourth
Amendment is subject to the satisfaction of the following conditions:
(a) All legal matters incident to the transactions herein
contemplated shall be satisfactory to Gardere Xxxxx Xxxxxx & Xxxxx,
L.L.P., counsel to the Lender;
(b) The Lender shall have received fully executed copies of (i)
this Fourth Amendment, (ii) a First Amendment to Participation Agreement
relating to the sale of an additional participation in Tranche B to
Participant, and (iii) a Notice of Final Agreement;
(c) The Lender shall have received an executed copy of resolutions
of the Board of Directors of Borrower, in form and substance
satisfactory to the Lender, authorizing the execution, delivery and
performance of this Fourth Amendment and all documents, instruments and
certificates referred to herein; and
(d) The Lender shall have received a certificate of the Secretary
of Guarantor, certifying as to resolutions adopted by the Board of
Directors of Guarantor, in form and substance satisfactory to the Lender.
5. The Borrower hereby reaffirms each of the representations,
warranties, covenants and agreements of the Borrower set forth in the Loan
Agreement (including, without limitation the provisions dealing with
arbitration and jury waiver) with the same force and effect as if each were
separately stated herein and made as of the date hereof. Except as amended
hereby, the Loan Agreement shall remain unchanged, and the terms, conditions
and covenants of the Loan Agreement shall continue and be binding upon the
parties hereto. There currently exist certain defaults under the Loan
Agreement (the "Existing Defaults"), and the Borrower has requested waivers
with respect thereto. The Lender is considering such request but has not yet
granted it. The Borrower and
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Guarantor acknowledge and agree that the Lender has not waived or agreed to
waive any of the Existing Defaults, that the Lender has no obligation to do
so and may refuse to do so in its discretion, and that neither this Fourth
Amendment, any of the transactions contemplated herein, or any advance under
the Credit Facility constitutes a waiver of any Existing Defaults under the
Loan Agreement, but Lender does hereby agree that, through February 28, 1999,
it will not accelerate the maturity of the Credit Facility because of any
Existing Default or foreclose any of its liens (or otherwise exercise any of
remedies against collateral) because of any Existing Default. As an
inducement to Lender's agreement in this Section 4, the Borrower hereby
represents and warrants to Lender that, to the best knowledge of the
Borrower, it has disclosed all Existing Defaults to Lender.
6. The Borrower hereby agrees that its liability under any and all
documents and instruments executed by the Borrower as security for the Credit
Facility (including, without limitation all mortgages, deeds of trust,
collateral assignments, assignments of production, security agreements and
financing statements executed by the Borrower for the benefit of the Lender)
shall not be reduced, altered, limited, lessened or in any way affected by
the execution and delivery of this Fourth Amendment or any of the instruments
or documents referred to herein, except as specifically set forth herein or
therein, that all of such documents and instruments are hereby renewed,
extended, ratified, confirmed and carried forward by the Borrower in all
respects, that all of such documents and instruments shall remain in full
force and effect and are and shall remain enforceable against the Borrower in
accordance with their terms and that all of such documents and instruments
shall cover all indebtedness of the Borrower to the Lender described in the
Loan Agreement as amended hereby.
7. As a material inducement to Lender's execution of this Fourth
Amendment and undertaking its obligations set forth herein, each of Borrower
and Guarantor hereby releases, acquits and forever discharges Lender and its
affiliates, successors, assigns, participants, directors, officers, agents,
employees and attorneys of and from any and all claims, actions, demands,
causes of action, defenses, costs and expenses of every kind and character
whatsoever, whether known or unknown, which Borrower, Guarantor or either of
them may now or hereafter have against Lender or such other persons, if any,
regardless of whether any such claims, actions, demands, causes of action,
defenses, costs or expenses, arise out of contract, tort, misrepresentation,
strict liability, violation of laws or regulations or otherwise, and which
arise, in whole or in part, as a result of actions taken or omitted to be
taken by Lender, any of such other persons, or any other person prior to the
execution of this Fourth Amendment.
8. Each of the terms defined in the Loan Agreement is used in this
Fourth Amendment with the same meaning, except as otherwise indicated in this
Fourth Amendment. Each of the terms defined in this Fourth Amendment is used
in the Loan Agreement with the same meaning, except as otherwise indicated in
the Loan Agreement.
9. THIS FOURTH AMENDMENT SHALL BE DEEMED TO BE A CONTRACT UNDER,
SUBJECT TO, AND SHALL BE CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
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10. THIS LOAN AGREEMENT, AS AMENDED, REPRESENTS 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 have caused this Fourth Amendment to be
executed by their duly authorized officers as of the day and year first above
written.
TEXSTAR PETROLEUM, INC.
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
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Name: Xxxxxxx X. Xxxxxxxxx, Xx.
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Title: Chairman and CEO
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BANK ONE, TEXAS, N.A.
By: /s/ Xxxxxxxx Xxxxxxx
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Name: Xxxxxxxx Xxxxxxx
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Title: V-P
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The undersigned Guarantor joins in the execution of this Fourth
Amendment to evidence (1) that it hereby agrees and consents to all of the
matters contained in this Fourth Amendment and further agrees that (i) its
liability under that certain Guaranty Agreement dated July 17, 1997, executed
by Guarantor for the benefit of the Lender (the "Guaranty") shall not be
reduced, altered, limited, lessened or in any way affected by the execution
and delivery of this Fourth Amendment or any of the instruments or documents
referred to herein by the parties hereto, except as specifically set forth
herein or therein, (ii) the Guaranty is hereby renewed, extended, ratified,
confirmed and carried forward in all respects, (iii) the Guaranty is and
shall remain in full force and effect and is and shall remain enforceable
against Guarantor in accordance with its terms and (iv) the Guaranty shall
cover all indebtedness of the Borrower to the Lender described in the Loan
Agreement as amended hereby and (2) its agreement to be bound by the terms of
Section 6 of this Fourth Amendment.
BENZ ENERGY LTD.
By: /s/ Xxxxxxx X. Xxxxxxxxx, Xx.
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Name: Xxxxxxx X. Xxxxxxxxx, Xx.
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Title: Chairman and CEO
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