Exhibit 10.118
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment"), dated as of
November 8, 1996, is among CASTLE TEXAS PIPELINE LIMITED PARTNERSHIP, a Texas
limited partnership ("Pipeline"), CEC GAS MARKETING LIMITED PARTNERSHIP, a Texas
limited partnership ("Marketing"), CASTLE EXPLORATION COMPANY, INC., a
Pennsylvania corporation ("Exploration"), CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP, a Texas limited partnership ("Production," and together with
Pipeline, Marketing and Exploration, the "Borrowers"), CASTLE PIPELINE COMPANY,
a Texas corporation, CASTLE PRODUCTION COMPANY, a Texas corporation, CEC
MARKETING COMPANY, a Texas corporation (collectively, the "General Partners"),
CASTLE ENERGY CORPORATION, a Delaware corporation ("Castle") and COMMERCIAL
NATIONAL BANK IN SHREVEPORT ("Lender").
RECITALS:
A. Borrowers, the General Partners, Castle and Lender entered into that
certain Loan Agreement dated as of April 30, 1996 (as the same may be amended or
otherwise modified from time to time, the "Agreement").
B. Pursuant to the Agreement, Castle executed that certain Guaranty
Agreement (the "Castle Guaranty") dated as of April 30, 1996 which guaranteed to
Lender the payment and performance of the Obligations (as defined in the
Agreement).
C. The Borrowers, General Partners, Castle and Lender now desire to
amend the 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:
ARTICLE I
Definitions
1.1 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
FIRST AMENDMENT TO LOAN AGREEMENT - Page 1
ARTICLE II
Amendments
2.1 Amendment to Agreement. Effective as of the date hereof, the
Agreement is hereby amended to add the following section thereto to
read in its entirety as follows:
SECTION 2A AMOUNT AND TERM OF SECOND TERM LOAN
2.1A Second Term Loan. Subject to and upon the terms and conditions
set forth herein, Lender agrees to make a second term loan (the "Second
Term Loan") to the Borrowers, on a joint and several basis, in one or
more advances to be made on or prior to December 6, 1996 in the
aggregate principal amount of up to Three Million Dollars ($3,000,000).
Amounts borrowed and repaid under the Second Term Loan cannot be
reborrowed.
2.2A Second Term Note. The Second Term Loan made by Lender shall be
evidenced by a single promissory note of the Borrowers, substantially
in the form of Exhibit A-1 (the "Second Term Note"), with appropriate
insertions, payable to the order of Lender and in the aggregate
principal amount equal to the Second Term Loan. The Second Term Note
shall (i) be dated November 8, 1996, (ii) represent the joint and
several obligations of the Borrowers to pay the principal amount of and
interest on the Second Term Loan, (iii) provide for the payment of
interest in accordance with subsection 2.5A, (iv) be entitled to the
benefit of this Agreement and the Collateral Security Documents, (v)
mature on August 29, 1997, and (vi) be payable in five (5) consecutive
monthly installments in an amount equal to the lesser of (a) the
outstanding principal balance of the Second Term Note, plus accrued and
unpaid interest thereon, or (b) Five Hundred Thousand Dollars
($500,000) each, plus accrued and unpaid interest thereon, commencing
on March 4, 1997, and continuing on each Installment Payment Date
thereafter until and including July 4, 1997, with a final installment
in the amount of all outstanding principal of the Second Term Loan,
plus all accrued and unpaid interest thereon due and payable on August
29, 1997.
2.3A Use of Proceeds. The proceeds of the Second Term Loan shall be
used by the Borrowers to make a loan to Castle, the proceeds of which
will be used by Castle to repurchase outstanding shares of its common
stock. With reference to Sections 6.8 and 6.13, Lender hereby consents
to such loan to Castle on such terms as the Borrowers may, in their
discretion, approve.
2.4A Prepayments. (a) Mandatory Prepayments.
(i) If an Event of Loss shall occur, the Borrowers shall
prepay in full the unpaid principal amount of the then outstanding
Second Term Note, together with accrued interest thereon to the
date of prepayment and all other amounts owing hereunder and under
FIRST AMENDMENT TO LOAN AGREEMENT - Page 2
the Collateral Security Documents, on the earlier of (A) the date
occurring 60 days after the date of such Event of Loss and (B)
the date on which insurance proceeds are received with respect to
such Event of Loss.
(ii) Notwithstanding anything to the contrary otherwise
contained in this Agreement, in the event that (A) the Senior Loan
Termination Date has not occurred on or before September 4, 1997,
(B) the principal amount of the Senior Obligations is increased
(other than in accordance with the terms of the Senior Loan
Agreement as in effect on the date hereof) to an amount in excess
of the principal amount of the Senior Obligations outstanding on
the Closing Date, or (C) the Term Loan Interest Rate (as defined in
the GE Capital Loan Agreement) is modified such that it is greater
than 8.33%, the Obligations shall become immediately due and
payable and the Borrowers shall, within three (3) days of such
event, prepay in full the unpaid principal amount of the then
outstanding Second Term Note, together with accrued and unpaid
interest thereon to the date of prepayment and all other amounts
owing hereunder and under the Collateral Security Documents.
(iii) Notwithstanding anything to the contrary otherwise
contained in this Agreement, in the event that the Borrowers and
the Lender consummate the transactions contemplated by that certain
commitment letter dated October 17, 1996, Lender's commitment to
make advances under the Second Term Loan shall terminate and the
Obligations shall be refinanced pursuant to the revolving credit
facility described in such commitment letter.
(b) Optional Prepayments. The Borrowers may on at least three (3)
Business Days prior notice to Lender, at any time and from time to time
prepay the Second Term Loan, in whole or in part, without premium or
penalty but with accrued and unpaid interest to the date of prepayment
on the amount so prepaid. Partial prepayments shall be in a principal
amount of $100,000.00 or an integral multiple thereof.
(c) Partial Prepayments. Partial prepayment of the Second Term Loan
shall be applied to the installments thereof in the inverse order of
maturity.
2.5A Interest Rate and Payment Dates. (a) The Second Term Loan
shall bear interest on the unpaid principal amount thereof at the Term
Loan Interest Rate.
(b) If all or a portion of the principal amount of the Second Term
Loan made hereunder or any other amount due and payable hereunder shall
not be paid when due (whether at the stated maturity, by acceleration
or otherwise), the Second Term Loan or other amount shall bear interest
at a rate per annum which is 2% above the Term Loan Interest Rate from
the date of such non-payment until paid in full (as well after as
before judgment).
FIRST AMENDMENT TO LOAN AGREEMENT - Page 3
(c) Interest on the unpaid principal amount of the Second Term Loan
shall be payable monthly in arrears on each Installment Payment Date
and on the date the Second Term Loan is paid in full; provided that
interest accruing pursuant to subsection 2.5A(b) shall be payable from
time to time on demand.
2.6A Payments and Payment Dates. (b) All payments (including
prepayments hereunder) due hereunder or under the Second Term Note on
account of principal, interest, fees, or any other obligation incurred
hereunder shall be paid to the Lender at its office at 333 Texas
Street, P.O. Box 21119, Xxxxxxxxxx, Xxxxxxxxx 00000, in freely
transferable Dollars and in immediately available funds without set-off
or counterclaim. Borrowers shall, at the time of making each such
payment, specify to Lender the sums payable by Borrowers under this
Agreement, the Second Term Note or other Loan Documents to which such
payment is to be applied (and in the event Borrowers fail to so specify
or if an Event of Default has occurred and is continuing, Lender may
apply such payment to the Obligations in such order and manner as it
may elect in its sole discretion). All payments hereunder shall be made
without any presentment of the Second Term Note to the Borrowers, but
upon payment in full of the Second Term Note, the holder thereof shall
cancel it and return it to the Borrowers.
(b) If any payment hereunder becomes due and payable on a day other
than a Business Day, such payment shall be extended to the next
succeeding Business Day and, with respect to payments of principal,
interest thereon shall be payable at the then applicable rate during
such extension.
2.7A Computation of Interest and Fees. Interest on the Second Term
Loan and all fees hereunder shall be calculated on the basis of a
360-day year and the actual number of days elapsed (including the first
day but excluding the last day of any relevant period).
2.8A Applicable Law. In the event that Lender shall have determined
that any change in any Applicable Law regarding capital adequacy or in
the interpretation or application thereof or compliance by Lender or
any corporation controlling Lender with any request or directive
regarding capital adequacy (whether or not having the force of law)
from any Governmental Authority made subsequent to the date hereof does
or shall have the effect of reducing the rate of return on Lender's or
such corporation's capital as a consequence of its obligations
hereunder to a level below that which Lender or such corporation could
have achieved but for such change or compliance (taking into
consideration Lender's or such corporation's policies with respect to
capital adequacy) by an amount deemed by Lender to be material, then
from time to time, after submission by Lender to the Borrowers of a
written request therefor, the Borrowers shall pay to Lender such
additional amount or amounts as will compensate Lender for such
reduction. A certificate as to any additional amounts payable pursuant
to this subsection 2.8A submitted by Lender to the Borrowers shall be
conclusive in the absence of manifest error.
FIRST AMENDMENT TO LOAN AGREEMENT - Page 4
2.9A Joint and Several Obligations. The Borrowers shall, subject to
the terms of the Intercreditor Agreement with respect to Pipeline and
Marketing, be jointly and severally liable for all payments of
principal and interest on the Second Term Note and for the observance
and performance of all obligations, covenants, conditions, indemnities
and other terms and provisions hereunder applicable to the Borrowers or
to any Borrower.
2.10A Commitment Fee. The Borrowers have agreed to pay to Lender a
non-refundable commitment fee in the aggregate amount of $60,000, which
shall be payable on January 2, 1997.
2.11A Maximum Interest Rate. Anything to the contrary
notwithstanding, the Lender shall not charge, take or receive and the
Borrowers shall not be obligated to pay to the Lender, any amounts
constituting interest on the Second Term Loan in excess of the maximum
rate permitted by applicable law. The Second Term Loan is made for
commercial and business purposes as contemplated by La. R.S. 9:3509.
2.12A Recourse to Borrowers. Subject to the terms of the
Intercreditor Agreement, there shall be full recourse to the Borrowers
and all of their assets for the liabilities and obligations of the
Borrowers under this Agreement and the Second Term Note, but in no
event shall there be any recourse against any partners or any officer,
director, employee, shareholder or holder of any equity interest in any
Borrower or any partner, or any affiliate thereof, nor shall any
partners or any officer, director, employee, shareholder or holder of
any equity interest in any Borrower or any partner, or any affiliate
thereof, be personally liable or obligated for such liabilities and
obligations of the Borrowers, except that each party hereto shall be
liable for (i) any representations and warranties made by it and (ii)
any obligations of such party specifically provided for in any other
Loan Document to which such Person is a party. Subject to the terms of
the Intercreditor Agreement with respect to Pipeline and Marketing,
nothing herein contained shall limit or be construed to limit the
liabilities and obligations of any such Person for any representations
made by it or limit such Person's obligations and liabilities set forth
in any other Basic Document creating such liabilities and obligations
to which such Person is a party.
2.13A Borrowing Procedure. The Borrowers shall give the Lender
notice of each requested advance under the Second Term Loan by means of
an Advance Request Form substantially in the form of Exhibit L attached
hereto ("Advance Request Form") containing the information therein
required on at least one Business Day before the requested date of each
FIRST AMENDMENT TO LOAN AGREEMENT - Page 5
such advance. At its option the Lender may accept telephonic
requests for advances, provided that such acceptance shall not
constitute a waiver of the Lender's right to delivery of an Advance
Request Form in connection with subsequent advances. Any telephonic
request for an advance by the Borrowers shall be promptly confirmed by
submission of a properly completed Advance Request Form to Lender.
2.2 Amendment to Section 7. Effective as of the date hereof, clause (i)
of subsection 7(e) of the Agreement is hereby amended in its entirety to read as
follows:
(e) Any Borrower or any General Partner shall (i) default in
any payment of principal or interest on any Indebtedness (other than
the Term Note or the Second Term Note) or in the payment of any
Guarantee Obligation, for a period in excess of the period of grace, if
any, provided in the instrument and agreement under which such
Indebtedness or Guarantee Obligation was created;
2.3 Amendment to Agreement. Effective as of the date hereof, the
Agreement is hereby amended to add Exhibits A-1 and L thereto to read in their
respective entireties as set forth on Annexes 1 and 2 attached hereto.
2.4 Amendments to Appendix A.
(a) Effective as of the date hereof, Appendix A to the Agreement is
hereby amended to add the following definitions thereto to read in
their respective entireties as follows:
"Second Term Loan" shall have the meaning assigned to such term in
subsection 2.1A of the Loan Agreement.
"Second Term Note" shall have the meaning assigned to such term in
subsection 2.2A of the Loan Agreement.
(b) Effective as of the date hereof, the definitions of Loan
Documents and Obligations set forth in Appendix A to the Agreement are
hereby amended and restated to read in their entireties as follows:
"Loan Documents" shall be the collective reference to the Loan
Agreement, the Term Note, the Second Term Note and the Collateral
Security Documents.
"Obligations" shall mean all the unpaid principal amount of, and
accrued and unpaid interest on, the Term Note, the Second Term Note and
all other obligations and liabilities of the Borrowers or any other
Person to the Lender, whether direct or indirect, absolute or
contingent, due or to become due, or now existing or hereafter
incurred, which may arise under, out of or in connection with the Loan
Agreement, the Term Note, the Second Term Note, the Collateral Security
FIRST AMENDMENT TO LOAN AGREEMENT - Page 6
Documents, or any other Loan Document whether on account of principal,
interest, reimbursement obligations, fees, indemnities, costs, expenses
(including, without limitation, all fees and disbursements of counsel
to Lender) or otherwise.
ARTICLE III
Conditions Precedent
3.1 Conditions. The effectiveness of this Amendment is subject to the
satisfaction of the following conditions precedent:
(a) Lender shall have received all of the following, each dated
(unless otherwise indicated) the date of this Amendment, in form
and substance satisfactory to Lender:
(1) Resolutions. Resolutions of the Board of Directors of each
General Partner certified by its Secretary or an Assistant
Secretary which authorize the execution, delivery, and performance
by such General Partner and the relevant Borrower of this Amendment
and the other Loan Documents to which such General Partner and the
relevant Borrower are or are to be parties hereunder;
(2) Incumbency Certificate. A certificate of incumbency certified
by the Secretary or an Assistant Secretary of each General Partner
certifying the names of the officers of such Person authorized to
sign this Amendment and each of the other Loan Documents to which
such Person or the relevant Borrower is or is to be a party
hereunder (including the certificates contemplated herein) together
with specimen signatures of such officers;
(3) Second Term Note. The Second Term Note executed by the
Borrowers in substantially the form of Annex 1 attached hereto;
(4) Consents. Any and all consents, waivers, authorizations and
approvals from third parties necessary for the execution, delivery
and performance of this Amendment and the Second Term Note by
Borrowers shall have been obtained;
(5) Opinion of Counsel. A favorable opinion of Akin, Gump, Strauss,
Xxxxx & Xxxx L.L.P., legal counsel to the Borrowers, the General
Partners and Castle, addressing the matters set forth on Annex II
attached hereto;
(6) Additional Information. Lender shall have received such
additional documents, instruments and information as Lender or its
legal counsel, Xxxxxxxx Xxxxxxxx & Xxxxxx P.C., may request; and
FIRST AMENDMENT TO LOAN AGREEMENT - Page 7
(a) The representations and warranties contained herein and in all
other Loan Documents, as amended hereby, shall be true and correct
as of the date hereof as if made on the date hereof;
(b) No Event of Default shall have occurred and be continuing and
no event or condition shall have occurred that with the giving of
notice or lapse of time or both would be an Event of Default.
(c) All corporate proceedings taken in connection with the
transactions contemplated by this Amendment and all documents,
instruments, and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel, Xxxxxxxx Xxxxxxxx &
Xxxxxx P.C.
ARTICLE IV
Ratifications, Representations and Warranties
4.1 Ratifications. The terms and provisions set forth in this Amendment
shall modify and supersede all inconsistent terms and provisions set forth in
the Agreement and except as expressly modified and superseded by this Amendment,
the terms and provisions of the Agreement and the other Loan Documents are
ratified and confirmed and shall continue in full force and effect. Borrower and
Lender agree that the Agreement as amended hereby and the other Loan Documents
shall continue to be legal, valid, binding and enforceable in accordance with
their respective terms. Each of the Borrowers and the General Partners
acknowledge and agree that the indebtedness, liabilities and obligations of the
Borrowers under the Second Term Note constitute a portion of the Obligations and
are secured by the Collateral Security Documents.
4.2 Representations and Warranties. Each Borrower hereby represents and
warrants to Lender that (i) the execution, delivery and performance of this
Amendment and any and all other Loan Documents executed and/or delivered in
connection herewith have been authorized by all requisite corporate action on
the part of such Borrower and will not violate the articles of incorporation or
bylaws of such Borrower or breach the terms of any material agreement to which
such Borrower is a party, (ii) the representations and warranties contained in
the Agreement, as amended hereby, and any other Loan Document are true and
correct on and as of the date hereof as though made on and as of the date
hereof, (iii) no Event of Default has occurred and is continuing and no event or
condition has occurred that with the giving of notice or lapse of time or both
would be an Event of Default, and (iv) such Borrower is in full compliance with
all covenants and agreements contained in the Agreement as amended hereby.
FIRST AMENDMENT TO LOAN AGREEMENT - Page 8
ARTICLE V
Miscellaneous
5.1 Survival of Representations and Warranties. All representations and
warranties made in this Amendment or any other Loan Document including any Loan
Document furnished in connection with this Amendment shall survive the execution
and delivery of this Amendment and the other Loan Documents, and no
investigation by Lender or any closing shall affect the representations and
warranties or the right of Lender to rely upon them.
5.2 Reference to Agreement. Each of the Loan Documents, including the
Agreement and any and all other agreements, documents, or instruments now or
hereafter executed and delivered pursuant to the terms hereof or pursuant to the
terms of the Agreement as amended hereby, are hereby amended so that any
reference in such Loan Documents to the Agreement shall mean a reference to the
Agreement as amended hereby.
5.3 Expenses of Lender. As provided in the Agreement, the Borrowers
agree to pay on demand all costs and expenses incurred by Lender in connection
with the preparation, negotiation, and execution of this Amendment and the other
Loan Documents executed pursuant hereto and any and all amendments,
modifications, and supplements thereto, including without limitation the costs
and fees of Lender's legal counsel, and all costs and expenses incurred by
Lender in connection with the enforcement or preservation of any rights under
the Agreement, as amended hereby, or any other Loan Document, including without
limitation the costs and fees of Lender's legal counsel.
5.4 Severability. Any provision of this Amendment held by a court of
competent jurisdiction to be invalid or unenforceable shall not impair or
invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
5.5 Applicable Law. This Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Shreveport, Caddo Parish, Louisiana and shall be governed by and construed in
accordance with the laws of the State of Louisiana.
5.6 Successors and Assigns. This Amendment is binding upon and shall
inure to the benefit of Lender, Borrowers, the General Partners and Castle and
their respective successors and assigns, except no Borrower may assign or
transfer any of its rights or obligations hereunder without the prior written
consent of Lender.
5.7 Counterparts. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
FIRST AMENDMENT TO LOAN AGREEMENT - Page 9
5.8 Effect of Waiver. No consent or waiver, express or implied, by
Lender to or for any breach of or deviation from any covenant, condition or duty
by any Borrower, any General Partner or Castle shall be deemed a consent or
waiver to or of any other breach of the same or any other covenant, condition or
duty.
5.9 Headings. The headings, captions, and arrangements used in this
Amendment are for convenience only and shall not affect the interpretation of
this Amendment.
5.10 ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY NOT
BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES HERETO. THERE ARE NO ORAL
AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
Borrowers:
CASTLE TEXAS PIPELINE
LIMITED PARTNERSHIP
By: Castle Pipeline Company,
its General Partner
By:
-------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
CEC GAS MARKETING LIMITED
PARTNERSHIP
By: CEC Marketing Company,
its General Partner
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
FIRST AMENDMENT TO LOAN AGREEMENT - Page 10
CASTLE EXPLORATION COMPANY, INC.
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
CASTLE TEXAS PRODUCTION LIMITED
PARTNERSHIP
By: Castle Production Company,
its General Partner
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
CASTLE PIPELINE COMPANY
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
CASTLE PRODUCTION COMPANY
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
CEC MARKETING COMPANY
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
CASTLE ENERGY CORPORATION
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx, Vice President
FIRST AMENDMENT TO LOAN AGREEMENT - Page 11
Lender:
COMMERCIAL NATIONAL BANK
IN SHREVEPORT
By:
---------------------------------------
Xxxxxx X. Xxxxxx
Assistant Vice President
Each of the undersigned hereby consents and agrees to this Amendment
and agrees that the Loan Documents executed by such Person shall remain in full
force and effect and shall continue to be the legal, valid and binding
obligation of such Person enforceable against such Person in accordance with
their respective terms. Each of the undersigned hereby further acknowledges and
agrees that the indebtedness, obligations and liabilities of the Borrowers under
the Second Term Note constitute a portion of the Obligations and are secured by
the Collateral Security Documents.
CASTLE ENERGY CORPORATION
CASTLE PRODUCTION RESOURCES
COMPANY
CASTLE PIPELINE RESOURCES COMPANY
CEC MARKETING RESOURCES COMPANY
By:
---------------------------------------
Xxxxxxx X. Xxxxxxxxx
Vice President of each of the above
DEERLICK CREEK FIELD LIMITED
PARTNERSHIP
By: Pennsylvania Castle Energy Corporation
Its: General Partner
By:
----------------------------------
Xxxxxxx X. Xxxxxxxxx
Vice President
FIRST AMENDMENT TO LOAN AGREEMENT - Page 12
ANNEX 1
Second Term Note
ANNEX 2
Advance Request Form
