FIRST AMENDMENT TO BASE CONTRACT FOR SALE AND PURCHASE OF NATURAL GAS
Exhibit
10.14
FIRST
AMENDMENT TO BASE CONTRACT FOR SALE AND
PURCHASE
OF NATURAL GAS
FIRST
AMENDMENT TO
BASE
CONTRACT FOR THE SALE AND PURCHASE OF NATURAL GAS
This
First Amendment To Base Contract For The Sale And Purchase Of Natural Gas (this
"Amendment")
is
made and entered into on November ___, 2005 (the “Effective
Date”)
by and
between Atlas America, Inc., a Pennsylvania corporation (“Atlas
PA”),
Atlas
America, Inc. a Delaware corporation ("Atlas
DE"),
and
UGI Energy Services, Inc. d/b/a/ GASMARK, a Pennsylvania corporation
("GASMARK").
This
Amendment modifies, supplements, forms part of, and amends that certain Base
Contract for the Sale and Purchase of Natural Gas entered into as of November
13, 2002 between GASMARK and Viking Resources Corporation and assigned by Viking
Resources Corporation to Atlas PA by Assignment and Assumption Agreement dated
October 1, 2004 (the "Base
Contract").
Capitalized terms used in this Amendment that are not herein defined will have
the meanings ascribed to them in the Base Contract. In the event of a conflict
between the terms of this Amendment and the Base Contract, the terms of this
Amendment shall apply. Atlas PA, Atlas DE and GASMARK are at times referred
to
herein individually as a "Party" and collectively as the "Parties."
WHEREAS,
GASMARK has requested that Atlas PA assign its rights, duties and interests
as
seller under the Base Contract, and Atlas DE has agreed to the assignment and
assumption; and
WHEREAS,
GASMARK and Atlas DE wish to amend the Base Contract prospectively in order
to
define and limit the obligations that each Party shall have to provide
collateral to the other in conjunction with future gas purchase and sale
transactions under the Base Contract
NOW,
THEREFORE, for and in consideration of the premises and mutual covenants herein
contained and other good and valuable consideration, the receipt and sufficiency
of which are hereby acknowledged, and intending to be bound hereby the Parties
hereby agree as follows:
I.
ASSIGNMENT
AND ASSUMPTION
1.1 Assignment.
Effective as of the Effective Date, Atlas PA does hereby sell, grant, convey,
assign, transfer and set over to Atlas DE all of its right, title and interest
in and to the Base Contract and all transactions confirmed
thereunder.
1.2 Consent
to Assignment.
GASMARK
hereby consents to the assignment of the Base Contract, and all transactions
confirmed thereunder, from Atlas PA to Atlas DE effective as of the Effective
Date.
1.3 Assumption.
Atlas
DE hereby assumes and agrees to pay, discharge or perform, as appropriate,
the
Base Contract and all transactions confirmed thereunder, and such Base Contract
is hereby declared to be the debts, liabilities and obligations of Atlas DE
from
and after the Effective Date.
1.4 Release
and Discharge.
Upon
execution of this Amendment by Atlas DE, Atlas PA will be released from
any
liability or obligation under this Base Contract and any transaction confirmed
thereunder, that arises or accrues after the Effective Date of assignment.
II.
CREDIT
SUPPORT TERMS
2.1 Integration;
Amendment to Definition of Event of Default.
This
Article II defines the terms of the Credit Support Obligation among the Parties,
and supercedes and replaces in their entirety Sections 10.1 and 10.2(vii) of
the
Base Contract. Section 10.2 is hereby amended to add the following as an Event
of Default thereunder: "material failure to receive or deliver the Contract
Quantity under a Transaction Confirmation."
2.2 Collateral
Threshold.
On any
day during the term of the Base Contract that an Event of Default has not
occurred, the amount of Exposure that either Atlas DE or GASMARK will accept
in
Transactions with the other without requiring the posting of additional
collateral shall be Ten Million Dollars ($10,000,000)(the “Collateral
Threshold”).
For
purposes of this Amendment, “Exposure"
shall
mean the Market Value of all Terminated Transactions, Excluded Transactions
and
other applicable charges that either Party would owe to the other on the date
of
calculation if an Early Termination Date had been designated, as provided for
in
Section 10.3.1 of the Base Contract. The Parties acknowledge that the Exposure
that each has to the other under the Transactions in place as of the Effective
Date exceeds the Collateral Threshold.
2.3 Collateral
for Obligations of GASMARK.
GASMARK
currently has collateral posted in support of its obligations under the Base
Contract in the form of a parent guaranty effective as of January 1, 2005 from
UGI Corporation in favor of Viking Resources Corp. in the amount of Seven
Million Dollars ($7,000,000) (the "Guaranty").
Within ten (10) Business Days after the Effective Date, GASMARK will cause
to be
executed and delivered to Atlas DE a new parent guaranty from UGI Corporation
in
favor of Atlas DE in the amount of Eight Million Dollars ($8,000,000)(the
“Revised
Guaranty”)
containing terms and conditions reasonably acceptable to Atlas DE and
substantially identical terms to the Guaranty. The Revised Guaranty will
supercede and replace in its entirety the Guaranty and will be effective as
of
the Effective Date. It shall be a condition precedent to GASMARK's performance
under this section that Atlas DE perform its obligations under Section
2.3.
2.4 Collateral
for Obligations of Atlas DE.
Within
ten (10) Business Days after the Effective Date, Atlas DE will cause to be
executed and delivered to GASMARK an irrevocable standby letter of credit issued
by Wachovia Bank, N.A. or other lender(s) reasonably acceptable to GASMARK,
containing terms and conditions that are reasonably acceptable to GASMARK,
in
the amount of Ten Million Dollars ($10,000,000)(the “Atlas
LC”),
which
shall be exercisable by GASMARK in the event that Atlas DE is the Defaulting
Party under the Base Contract. GASMARK will, upon invoice, reimburse Atlas
DE
for the charges assessed by the issuing bank specifically for issuing the Atlas
LC, up to a maximum reimbursement amount of $187,500 for the first annual
period. The Atlas LC will be effective as of the Effective Date, and will remain
in effect until September 30, 2006; provided,
however,
that if
GASMARK’s Exposure as of September 30, 2006 exceeds the Collateral Threshold,
Atlas DE will provide GASMARK with a new letter of credit to replace the Atlas
LC, in the amount of the then expiring Atlas LC (the "Replacement
LC").
The
Replacement LC shall terminate on the earlier of one year from the date of
issuance or the expiration of the Base Contract. GASMARK will, upon invoice,
reimburse Atlas DE for the charges assessed by the issuing bank specifically
for
issuing the Replacement LC, up to a maximum reimbursement amount of 1.875%
of
the face amount of the Replacement LC. The Replacement LC shall be subject
to
decrease as set forth in Section 2.4. It shall be a condition precedent to
Atlas
DE's performance under this section that GASMARK perform its obligations under
Section 2.2.
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2.5 Reduction
of Posted Collateral.
Commencing December 31, 2005 and on the last day of each month thereafter,
GASMARK and Atlas DE will jointly review the amount of GASMARK’s Exposure under
all prompt month and forward month Transactions entered into between the Parties
under the Base Contract. If GASMARK and Atlas reasonably determine that (i)
GASMARK’s Exposure is below Fifteen Million Dollars ($15,000,000), (ii) no Event
of Default with respect to Atlas DE has occurred and is continuing, and (iii)
no
Early Termination Date has occurred or been designated by GASMARK for which
there exists any unsatisfied payment obligations under the Base Contract, then
the Atlas LC shall be amended, and GASMARK shall consent to such amendment,
to
reduce the amount of the Atlas LC to Five Million Dollars ($5,000,000). If
GASMARK and Atlas DE reasonably determine that (i) GASMARK’s Exposure is below
the Collateral Threshold, (ii) no Event of Default with respect to Atlas DE
has
occurred and is continuing, and (iii) no Early Termination Date has occurred
or
been designated by GASMARK for which there exists any unsatisfied payment
obligations under the Base Contract, then Atlas DE will be permitted to
terminate the Atlas LC. Any costs incurred by Atlas DE in reducing or
terminating the Atlas LC will be borne solely by Atlas DE.
III.
MISCELLANEOUS
3.1 Warranties.
Each
Party represents and warrants to the others that it has the corporate authority
to execute, deliver and perform this Amendment and has taken all actions
necessary to secure all necessary approvals required to be secured in connection
therewith. The execution, delivery and performance of this Amendment and the
Base Contract have been duly authorized by all necessary corporate
action.
3.2. No
Third Party Benefit.
Nothing
contained in this Amendment, express or implied, is intended to or shall be
construed to confer upon or give any person, firm, or corporation, other than
the Parties and their respective permitted successors and assigns, any remedy
or
claim under, or by reason of, this Amendment, or any term, covenant or condition
hereof. All conditions, promises and agreements contained in this Amendment
shall be for the sole and exclusive benefit of the Parties and their respective
permitted successors and assigns.
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3.4 Headings.
The
headings contained in this Amendment are for convenience of reference only
and
shall not affect, in any way, the meaning or interpretation of this
Amendment.
3.5 Amendments;
Waivers.
To be
binding, any amendment of this Amendment must be effected by an instrument
in
writing signed by all of the Parties. Rights
hereunder shall not be waived, except pursuant to a writing signed by the Party
against which enforcement of the waiver is sought.
3.6 Rights
and Remedies.
The
rights and remedies granted under this Amendment shall not be exclusive but
shall be in addition to all other rights and remedies available under the Base
Contract, at law or in equity.
3.7 Expenses
of Negotiation.
Except
to the extent specifically provided herein, whether or not the transactions
contemplated hereby are consummated, all costs and expenses incurred in
connection with this Amendment are to be borne by the Party incurring such
costs.
3.8 Severability.
It is
the intention of the Parties hereto that whenever possible, each provision
of
the Base Contract and this Amendment will be interpreted in such manner as
to be
effective and valid under applicable law, but that if any provision of the
Base
Contract or this Amendment, as the case may be, is held to be invalid, illegal
or unenforceable in any respect under any applicable law, such invalidity,
illegality or unenforceability will not affect any other provision, and the
Base
Contract and this Amendment, as the case may be, will be reformed, construed
and
enforced in such jurisdiction as if such invalid, illegal or unenforceable
provision had never been contained herein and/or therein, as the case may be.
3.9 Counterparts;
and Facsimile Signatures.
This
Amendment may be executed, including by facsimile signature, in one or more
counterparts, each of which when so executed shall be deemed to be an original
and all of which together shall constitute one and the same
instrument.
3.10 Governing
Law.
The
interpretation and performance of this Amendment shall be governed by the laws
of the jurisdiction indicated in the Base Contract.
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IN
WITNESS WHEREOF, the Parties hereto have duly executed this instrument or have
caused this instrument to be duly executed on their behalf, on the Effective
Date.
| UGI ENERGY SERVICES, INC. |
ATLAS
AMERICA, INC.,
a
Pennsylvania
corporation
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| By: | By: | ||
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Name: Xxxxxxx
X. Xxxx
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Name:
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Title: President
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Title
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ATLAS
AMERICA, INC.,
a
Delaware corporation
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| By: | |||
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Name:
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Title:
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