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EXHIBIT 10.10
EXECUTION COPY
SECOND AMENDMENT TO
INTERCREDITOR AND SUBORDINATION AGREEMENT
This Second Amendment to Intercreditor and Subordination
Agreement (this "Amendment") is dated as of February 17, 2000 by and among ECT
Merchant Investments Corp., a Delaware corporation ("ECT Merchant"), Joint
Energy Development Investments II Limited Partnership, a Delaware limited
partnership ("JEDI-II," and, together with ECT Merchant, the "Subordinated
Lender"), and JEDI-II, as agent for the Subordinated Lender (in such capacity,
the "Subordinated Agent"), and Bank of Montreal, as agent (in such capacity, and
together with any successor in such capacity, the "Senior Agent") for each of
the lenders that is a signatory to, or which becomes a signatory to, the Senior
Credit Agreement (as defined below) and/or the Restated Senior Credit Agreement
(as defined below) (collectively, the "Senior Lender"), for the benefit of the
Senior Agent and the Senior Lender.
RECITALS
X. Xxxxxxx Oil & Gas, L.P., a Delaware limited partnership
(the "Borrower"), the Senior Agent and the Senior Lender previously entered into
that certain Credit Agreement dated as of January 26, 1998, as amended by First
Amendment to Credit Agreement dated August 20, 1998, Second Amendment to Credit
Agreement dated as of March 26, 1999, Third Amendment to Credit Agreement dated
as of July 19, 1999 and Fourth Amendment to Credit Agreement dated as of October
7, 1999 (as so amended, the "Senior Credit Agreement"), pursuant to which the
Senior Lender agreed to make certain loans and extensions of credit to the
Borrower.
B. On even date herewith, Borrower, Senior Agent, and Bank of
Montreal, Societe Generale, Southwest Agency ("Soc-Gen") and Shell Capital Inc.
("SCI"), each a Senior Lender are executing that certain Amended and Restated
Credit Agreement (such agreement as may from time to time be amended or
modified, called the "Restated Senior Credit Agreement"), which amends and
restates the Senior Credit Agreement in its entirety.
X. Xxxxxxx Exploration Company, a Delaware corporation (the
"Parent") has executed an Indenture dated August 20, 1998, with Chase Bank of
Texas, National Association, Trustee, as amended by First Amendment to Indenture
dated March 26, 1999 and by Second Amendment to Indenture dated as of February
17, 2000 (as so amended, the "Indenture"), pursuant to which the Parent has
issued its Senior Subordinated Secured Notes due 2003, in the aggregate
principal amount of $50,000,000 (the "Subordinated Notes").
D. JEDI-II and ECT Merchant, as the Subordinated Lender, own
100% of the Subordinated Notes currently outstanding under the Indenture.
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E. The Parent owns indirectly 100% of the general and limited
partnership interests in the Borrower, and the Parent and Borrower are members
of the same consolidated group of companies and are engaged in related
businesses, and the Parent has derived and will derive direct and indirect
economic benefit from the Restated Senior Credit Agreement.
F. Pursuant to the terms and conditions stated in the
Indenture, the Senior Credit Agreement and the Restated Senior Credit Agreement,
the Subordinated Lender, the Subordinated Agent, the Senior Agent, the Borrower,
the Parent and certain of the Parent's Subsidiaries entered into the
Intercreditor and Subordination Agreement (the "Subordination Agreement") dated
as of August 20, 1998.
G. The Subordinated Lender, the Subordinated Agent and the
Senior Agent now desire to amend certain provisions of the Subordination
Agreement.
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the Subordinated Lender, the Subordinated Agent and
the Senior Agent hereby agree that the Subordination Agreement shall be amended
as follows:
Section 1. Certain Definitions. As used in this Amendment, the terms "Senior
Agent", "Amendment", "Subordinated Agent", "Borrower", "SCI", "Soc-Gen",
"Subordination Agreement", "Senior Credit Agreement", "Restated Senior Credit
Agreement", "Parent", "Senior Lender," "Subordinated Notes", "ECT Merchant",
"JEDI-II", and "Subordinated Lender" shall have the meanings indicated above;
and unless otherwise defined herein, all terms beginning with a capital letter
which are defined in the Subordination Agreement shall have the same meanings
herein as therein unless the context hereof otherwise requires.
Section 2. Amendments to Subordination Agreement.
2.1 Section 1.2 of the Subordination Agreement is amended
hereby:
(i) by inserting the following definitions where
alphabetically appropriate:
"Affiliate" of any Person shall mean (i) any Person
directly or indirectly controlled by, controlling or under
common control with such first Person, (ii) any director
or officer of such first Person or of any Person referred
to in clause (i) above and (iii) if any Person in clause
(i) above is an individual, any member of the immediate
family (including parents, spouse and children) of such
individual and any trust whose principal beneficiary is
such individual or one or more members of such immediate
family and any Person who is controlled by any such member
or trust. For purposes of this definition, any Person
which owns directly or
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indirectly 20% or more of the securities having
ordinary voting power for the election of directors or
other governing body of a corporation or 20% or more of
the partnership or other ownership interests of any other
Person (other than as a limited partner of such other
Person) will be deemed to "control" (including, with its
correlative meanings, "controlled by" and "under common
control with") such corporation or other Person.
"Term ORRI" shall heave the meaning attributed to
such term under the Indenture.
"Term ORRI Conveyance" shall have the meaning
attributed to such term under the Indenture.
(ii) by deleting the definition of the term "Hedging
Agreement" in its entirety and substituting the
following therefor:
"Hedging Agreement" shall mean any commodity,
interest rate or currency swap, cap, floor, collar,
forward agreement or other exchange or protection
agreements or any option with respect to any such
transaction in existence as of the date hereof or
hereafter arising between (i) Borrower and Bank of
Montreal and its successors or assigns (a "BMO Hedge
Party") and Soc-Gen and its successors or assigns (a
"Soc-Gen Hedge Party") entered into while such BMO Hedge
Party or such Soc-Gen Hedge Party is a Lender; and (ii)
Borrower and SCI and its successors or assigns (with Loans
or Commitments of $20 million or more) or any Affiliate of
SCI (SCI and any Affiliate of SCI a "SCI Hedge Party")
entered into while such SCI Hedge Party or Fathom Energy
Capital I, L.L.C, is a Lender.
(iii) by deleting the reference "Hedging Agreement" in the
definition of "Senior Indebtedness" and substituting
therefor the reference "Hedging Agreements."
(iv) by amending the Recital H of the Subordination
Agreement by inserting the words "as any of such
documents or instruments may be amended,
supplemented or replaced from time to time" after
the words "attached hereto" in the last line
thereof.
2.2 Section 2.6(a)(i) of the Subordination Agreement is
amended by inserting, after the phrase "modify the interest payment schedule"
the additional phrase: "so as to require earlier payments of interest".
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2.3 Section 2.6 of the Subordination Agreement is amended by
inserting the following phrase at the beginning of subsections (b) and (d):
"Subject to the Term ORRI Conveyances,"
2.4 The following new Section 2.9 to the Subordination
Agreement is inserted after Section 2.8:
"Section 2.9. Notwithstanding anything in this Agreement or
any other Senior Loan Document to the contrary, (a) no Term
ORRI Conveyance shall be considered a Subordinated Loan
Document for the purposes of this Agreement, (b) no
obligations or liabilities under any Term ORRI Conveyance
shall be Subordinated Indebtedness, and (c) reductions of the
Subordinated Indebtedness pursuant to the terms of the Term
ORRI Conveyances shall not be prohibited under the terms of
this Agreement and any other Senior Indebtedness Document.
Upon any payment or distribution of property or securities to
the creditors of the Parent, BOG, or any other grantor under
any Term ORRI Conveyance in a liquidation, dissolution,
insolvency or reorganization of such person or property or in
an assignment for the benefit of creditors or any marshaling
of its assets and liabilities, the grantee under any Term ORRI
Conveyance shall be entitled to receive payment in full of all
amounts not paid when due pursuant to Section 4.2 of the Term
ORRI Conveyances without any limitation under this Agreement
or any Senior Loan Document. In the event the Senior Agent or
any Senior Lender shall receive any amounts owed to the
grantee under any Term ORRI Conveyance (but only such amounts
owed pursuant to such Term ORRI Conveyance), the Senior Agent
or such Senior Lender will hold any amount so received in
trust for such grantee and will forthwith turn over such
payment to grantee in the form received by it (together with
any necessary endorsement)."
2.5 Section 3.3(d) of the Subordination Agreement is amended
to hereafter read in its entirety as follows:
"(c) not amend, supplement or otherwise modify the terms of
the Subordinated Indebtedness (including, without limitation,
the Subordinated Loan Documents) without the express written
consent of the Senior Agent, which consent will not be
unreasonably withheld, which has the effect of (i) increasing
the principal amount of the Subordinated Indebtedness,
provided that the foregoing shall not affect the Parent's
right to make payment in kind of accrued interest or the
Subordinated Lender's ability to accept payment in kind as
provided in the Subordinated Loan Documents, thereby
increasing the principal amount of the Subordinated
Indebtedness, (ii) increasing the rate of interest or any fees
charged on the Subordinated Indebtedness (provided that the
foregoing shall not prohibit any fees or changes in the rate
of interest contemplated by the terms of the
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Securities Purchase Agreement), (iii) amending or modifying
the terms of the Term ORRI Conveyance or (iv) amending or
modifying the terms of the Indenture which relate to the Term
ORRI."
2.6 All references to the "Senior Credit Agreement" in the
Subordination Agreement shall henceforth refer to the Restated Senior Credit
Agreement as defined in this Amendment, as such Restated Senior Credit Agreement
is from time to time further amended, supplemented or restated.
Section 3. Representations and Warranties. The Subordinated
Lender and the Subordinated Agent hereby reaffirm that as of the effective date
of this Amendment, the representations and warranties made by the Subordinated
Lender and the Subordinated Agent in Article III of the Subordination Agreement
will be true and correct as though made on and as of the effective date of this
Amendment. The Senior Agent hereby reaffirms that as of the effective date of
this Amendment, the representations and warranties made by the Senior Agent in
Article III of the Subordination Agreement will be true and correct as though
made on and as of the effective date of this Amendment.
Section 4. Consents.
(a) Notwithstanding any provisions of Section 2.6 of the
Subordination Agreement, the Subordinated Lender and the Subordinated Agent of
their own free will hereby consent in all respects to and acknowledge the Senior
Credit Agreement, as amended as provided in Recital A above (a copy of which is
attached hereto as Schedule I), and the Restated Senior Credit Agreement, as
restated and amended as provided in Recital B above (a copy of which is attached
hereto as Schedule II) and to the transactions contemplated thereby and confirm
that they remain bound by the subordination provisions of Article II of the
Subordination Agreement. The Senior Lenders and the Senior Agent hereby consent
to the amendment of the Indenture pursuant to the Second Amendment to Indenture
and to the transactions contemplated therein, including the execution of the
Term ORRI Conveyances.
(b) The Senior Agent and the Senior Lender covenant and agree
not to contest or dispute, whether in any proceeding or otherwise, the validity,
enforceability, attachment, priority or perfected status of (i) any Lien granted
in favor of the Subordinate Agent or any Subordinate Lender or (ii) any Term
ORRI Conveyance or, with respect to the Term ORRI Conveyance, take any steps or
actions, including the institution of any proceedings, to enjoin or restrain the
grantee under any Term ORRI Conveyance from the exercise of the remedies
afforded them under any Term ORRI Conveyance.
Section 5. Ratification. The Subordinated Lender, the
Subordinated Agent and the Senior Agent hereby expressly ratify and affirm their
respective obligations under the Subordination Agreement (as amended hereby) and
agree that the Subordination Agreement remains in full force and effect.
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Section 6. Descriptive Headings, etc. The headings,
descriptive or otherwise, of this Amendment and the several Sections of this
Amendment are inserted for convenience only and shall not be deemed to affect
the meaning or construction of any of the provisions hereof.
Section 7. Counterparts. This Amendment may be executed in any
number of counterparts and by different parties on separate counterparts and all
of such counterparts shall together constitute one and the same instrument.
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IN WITNESS WHEREOF, the parties hereto have caused this
Amendment to be duly executed and delivered and effective as of the date first
above written.
SENIOR AGENT:
BANK OF MONTREAL
By:
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Name: Xxxxxx XxXxxx
Title: Director
SUBORDINATED LENDER:
ECT MERCHANT INVESTMENTS CORP.
By:
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Name:
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Title:
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JOINT ENERGY DEVELOPMENT INVESTMENTS II
LIMITED PARTNERSHIP
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its General
Partner
By:
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Name:
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Title:
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SUBORDINATED AGENT:
JOINT ENERGY DEVELOPMENT INVESTMENTS II
LIMITED PARTNERSHIP, as a Subordinated
Lender and Subordinated Agent
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its General
Partner
By:
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Name:
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Title:
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ACKNOWLEDGED AND CONSENTED TO:
Xxxxxxx Exploration Company
By:
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Xxxxx X. Xxxxx
Vice President
Xxxxxxx Oil & Gas, L.P.
By: Xxxxxxx, Inc., its
General Partner
By:
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Xxxxx X. Xxxxx
Vice President
Xxxxxxx, Inc.
By:
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Xxxxx X. Xxxxx
Vice President
Xxxxxxx Holdings I, LLC,
a Nevada limited liability company
By:
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Name:
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Title:
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Xxxxxxx Holdings II LLC,
a Nevada limited liability company
By:
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Name:
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Title:
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