EXHIBIT 99.3
FIRST AMENDMENT TO CREDIT AGREEMENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT (this "Amendment") dated
as of June 1, 1998 is among: XXXXXX PETROLEUM CORPORATION, a Delaware
corporation (the "Borrower"); each of the Lenders (as defined in the Credit
Agreement as hereinafter defined) that is a signatory hereto; and BANK OF
MONTREAL, a Canadian bank (in its individual capacity, "BMO"), as agent for
the Lenders (in such capacity, together with its successors in such capacity,
the "Agent").
R E C I T A L S
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A. The Borrower, the Agents, and the Lenders have entered into that
certain Credit Agreement dated as of December 17, 1997 (the "Credit
Agreement"), pursuant to which the Lenders have agreed to make certain loans
and extensions of credit to the Borrower upon the terms and conditions as
provided therein; and
B. The Borrower, the Agents, and the Lenders now desire to make
certain amendments to the Credit Agreement.
NOW, THEREFORE, in consideration of the premises and other good and
valuable consideration and the mutual benefits, covenants and agreements
herein expressed, the parties hereto now agree as follows:
Section 1. Certain Definitions. Unless otherwise defined herein, all
terms beginning with a capital letter which are defined in the Credit
Agreement shall have the same meanings herein as therein unless the context
hereof otherwise requires.
Section 2. Amendments to Credit Agreement.
(a) Defined Terms.
(i) The terms "Beaver Creek Acquisition" and "Beaver Creek
Conversion Termination Date" are hereby deleted. The terms "Aggregate
Facility A Maximum Credit Amounts", "Aggregate Facility B Commitments",
"Amoco Properties", "Amoco Purchase and Sale Agreement", "Applicable Margin",
"Borrowing Base Letter", "Closing Date", " Facility B Maturity Date" and
"Initial Reserve Reports" which are defined in Section 1.02 of the Credit
Agreement, are hereby amended to read as follows:
"Aggregate Facility A Maximum Credit Amounts" at any time
shall equal the sum of the Facility A Maximum Credit Amounts of
the Lenders (not to exceed $130,000,000), as the same may be
reduced pursuant to Section 2.03(b).
"Aggregate Facility B Commitments" at any time shall equal
the sum of the Facility B Commitments of the Lenders (not to
exceed $30,000,000).
"Amoco Properties" shall mean the Oil and Gas Properties
covered by the appraisal report of XxXxxxxx and XxXxxxxxxx, dated
December 1, 1997, intended to be acquired by the Borrower
pursuant to the Amoco Purchase and Sale Agreement (excluding the
Beaver Creek Unit and Beaver Creek Plant, as such terms are
defined by the First Amendment to Purchase and Sale Agreement
dated May 22, 1998 between Amoco Production Company and the
Borrower).
"Amoco Purchase and Sale Agreement" shall mean that certain
Purchase and Sale Agreement dated November 20, 1997, between
Amoco Production Company, as seller and the Borrower, as buyer,
as amended by the First Amendment to Purchase and Sale Agreement
dated May 22, 1998 between Amoco Production Company and Xxxxxx
Petroleum Corporation, and as further amended.
"Applicable Margin" shall mean (i) if Facility B is
outstanding, for the period up to and including November 30,
1998, 0% per annum with respect to Base Rate Loans and one and
one-half percent (1 1/2%) per annum with respect to Eurodollar
Loans, with the Applicable Margin thereafter increasing by
one-half of one percent (1/2) for Base Rate Loans and Eurodollar
Loans at each of December 1, 1998 and March 1, 1999 and (ii) if
Facility B has been repaid, the applicable per annum percentage
set forth at the appropriate intersection in the table shown
below, based on the Borrowing Base Utilization Percentage as in
effect from time to time:
Borrowing Base Utilization Percentage Eurodollar Rate Base Rate
------------------------------------- --------------- ---------
Less than or equal to 50% 0.625% 0.000%
Greater than 50%,
but less than or equal to 75% 0.875% 0.000%
Greater than 75%
but less than or equal to 100% 1.125% 0.000%
Greater than 100% 1.500% 0.000%
Each change in the Applicable Margin resulting from a change in
the Borrowing Base Utilization Percentage shall take effect at
the time of such change in the Borrowing Base Utilization
Percentage.
"Borrowing Base Letter" shall mean that certain letter
agreement of even date herewith between the Borrower and the
Agent as the same may be amended from time to time.
"Closing Date" shall mean December 17, 1997.
"Facility B Maturity Date" shall mean be May 30, 1999.
"Initial Reserve Reports" shall mean (i) the appraisal
report of XxXxxxxx and XxXxxxxxxx, dated December 1, 1997 with
respect to the Oil and Gas Properties intended to be purchased by
the Borrower pursuant to the Amoco Purchase and Sale Agreement,
and (ii) the audit report of X. X. Xxxx and Associates dated as
of January 1, 1997, copies of each of which have been delivered
to the Agent, provided that, when such reports are referred to in
this Agreement, each shall not include the Beaver Creek Unit or
the Beaver Creek Plant, as such terms are defined by the First
Amendment to Purchase and Sale Agreement dated May 22, 1998
between Amoco Production Company and the Borrower.
(b) Additional Defined Terms. Section 1.02 of the Credit Agreement
is hereby further amended and supplemented by adding the following new
definition, which is read in its entirety as follows:
"First Amendment" shall mean that certain First Amendment
to Credit Agreement dated as of June 1, 1998 among the Borrower,
the Lenders and the Agent.
Section 3. Additional Amendments to the Credit Agreement. The
following provisions of the Credit Agreement shall be amended as follows:
(a) Section 2.01(b) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Facility B Loans. Each Lender severally agrees, subject
to the terms and conditions of this Agreement, to make a term
loan to the Borrower not to exceed its Facility B Commitment.
The Facility B Loan shall be fully advanced upon execution of the
First Amendment. Any portion of each Lender's Facility B
Commitment not utilized by such borrowing shall be permanently
canceled. Any repayments of the Facility B Loans are not
available to be redrawn."
(b) A new clause (e) is hereby added to Section 2.01 to read as
follows:
(e) Overall limitation in Aggregate of Facility A Loans and
Facility B Loans. Notwithstanding anything to the contrary herein, the
aggregate of all Facility A Loans and Facility B Loans at any one time
outstanding shall not exceed $150,000,000.
(c) Section 2.08(a) of the Credit Agreement is hereby amended by
deleting the phrase ", except as provided in the Borrowing Base Letter with
respect to the Beaver Creek Acquisition" from the third sentence thereof.
(d) Section 7.10(a) of the Credit Agreement is hereby amended by
deleting the words "(except, until the Beaver Creek Acquisition, the
Properties to be acquired thereby)", both places they appear in such Section,
and replacing them in each case, with the words "(except the Beaver Creek
Unit and Beaver Creek Plant, as such terms are defined by the First Amendment
to Purchase and Sale Agreement dated May 22, 1998 between Amoco Production
Company and the Borrower)".
(e) Section 8.09 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Mortgages. If Facility B has not been paid on or before
December 1, 1998, the Borrower will grant to the Agent as
security for the Indebtedness a first-priority Lien interest
(subject only to Excepted Liens) on the Borrower's interest on at
least eighty percent (80%) of the value of the Oil and Gas
Properties evaluated by the Initial Reserve Reports, which Liens
will be created by and in accordance with the provisions of
mortgages, deeds of trust, security agreements and financing
statements, or other Loan Documents (the "Mortgages"), dated
effective December 1, 1998, all in form and substance
satisfactory to the Agent in its sole discretion and in
sufficient executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes. The Mortgages
will be delivered to the Agent on or before November 1, 1998 and
will be filed by the Agent on or after December 1, 1998 if
Facility B has not been paid before that date. In the event that
Facility B is paid on or before November 30, 1998 the Agent will
return the mortgages to the Borrower. In connection with the
delivery of Mortgages, as aforesaid, the Borrower will furnish
(i) title information to the Agent which establishes to the
Agent's satisfaction that Borrower has good and defensible title
to the Oil and Gas Properties covered by the Mortgage and the
Mortgage is first and prior and (ii) opinions of counsel
satisfactory to the Agent with respect to the enforceability of
the Mortgage and such other matters in connection therewith as
the Agent may reasonably request."
(f) Section 8.11 of the Credit Agreement is hereby amended in its
entirety to read as follows:
"Minimum Capital. By May 30, 1999, the Borrower shall
raise Subordinated Debt or equity in a principal amount of not
less than $50,000,000."
(g) Section 10.01(m) of the Credit Agreement is hereby amended in its
entirety to read as follows:
"(m) the Guarantor's Tangible Net Worth shall at any
time be less than $40,000,000, plus 75% of the proceeds received
by the Guarantor from equity capital offerings after the Closing
Date, plus 75% of the Guarantor's consolidated net income for
each fiscal year for which net income is positive beginning with
the fiscal year ending December 31, 1998. Such test shall be
measured at the end of each fiscal quarter and at fiscal year
end. For each quarterly test and at fiscal year end, the interim
net losses may be netted against interim net income for the same
reporting year to determine the net income, if positive, to be
used in such test for such reporting year."
(h) Annex I to the Credit Agreement is hereby deleted in its
entirety, and Annex I attached hereto is substituted therefor.
Section 4. Amendment to Borrowing Base Letter. The second paragraph
of the Borrowing Base Letter is hereby amended in its entirety to read as
follows:
"The Borrowing Base shall be $120,000,000 until the
Scheduled Redetermination Date of November 1, 1998 unless sooner
redetermined pursuant to Section 2.08(d)."
Section 5. Amendment to Facility A Note. Each reference to "Loan" in
the Facility A Note is hereby deleted and replaced with "Facility A Loan".
Section 6. Conditions Precedent. This Amendment shall become binding
upon the following conditions, each of which must be satisfied to the
satisfaction of the Agent:
(a) counterparts of this Amendment executed by the Borrower,
the Agent and the Lenders;
(b) certificates of the Secretary or an Assistant Secretary of
the Borrower and of the Guarantor setting forth for each of them (i)
the resolutions of its board of directors with respect to the
authorization to execute, deliver and perform this Amendment; (ii) the
officer of such entity authorized to sign this Amendment, and (iii) the
signature of such authorized officer of such entity;
(c) the Agent shall have received an amendment to the Fee
Letter in form and substance satisfactory to the Agent and the
amendment fee called for therein shall have been paid; and
(d) such other documents as Agent or its counsel may reasonably
request.
Section 7. Representations and Warranties. The Borrower hereby
reaffirms that as of the effective date of this Amendment, the
representations and warranties made by the Borrower in the Credit Agreement
will be true and correct as though made on and as of the effective date of
this Amendment, and further, the Borrower represents that no Default or
Material Adverse Effect shall have occurred and be continuing on such date.
Section 8. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or
waiver or modification of, any other term or condition of the Credit
Agreement or any of the other Loan Documents, or (b) prejudice any right or
rights which the Lenders may now have or may have in the future under or in
connection with the Credit Agreement or any of the other Loan Documents.
Except as expressly supplemented, amended or modified hereby, the terms and
provisions of the Credit Agreement or any other Loan Documents are and shall
remain in full force and effect. In the event of a conflict between this
Amendment and any of the foregoing documents, the terms of this Amendment
shall be controlling.
Section 9. Governing Law. This Amendment and the rights and
obligations of the parties hereunder and under the Credit Agreement shall be
construed in accordance with and be governed by the laws of the State of
Texas and the United States of America.
Section 10. Descriptive Headings, etc. The descriptive headings of 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 11. 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.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SECTION 26.02
This Amendment and other Loan Documents executed by any of the parties
before or substantially contemporaneously with the execution hereof together
constitute a written Loan Agreement and represent 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
agreement between the parties.
BORROWER: XXXXXX PETROLEUM CORPORATION
By:_____________________________
Xxxxxx X. Xxxxxxx
Vice President & Secretary
LENDER AND AGENT: BANK OF MONTREAL
By:_____________________________
Name: Xxxxxx X. Xxxxxxx
Title: Director, U.S. Corporate Banking
RATIFICATION
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Guarantor hereby agrees that its liabilities under the Guaranty
Agreement dated December 17, 1997 (the "Guaranty"), guaranteeing the
indebtedness, obligations and liabilities under that certain Credit Agreement
dated December 17, 1997 among the Borrower, the Agent and the Lenders, shall
remain enforceable against Guarantor in accordance with the terms of the
Guaranty and shall not be reduced, altered, limited, lessened or in any way
affected by the execution and delivery of the First Amendment to Credit
Agreement dated as of June 1, 1998. Guarantor hereby confirms and ratifies
its liabilities under the Guaranty in all respects.
XXXXXX CORPORATION
By:________________________
Xxxxxxx X. Xxxxxx
President & Chief operating Officer
ANNEX 1
LIST OF FACILITY A MAXIMUM CREDIT AMOUNTS
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Facility A
Name of Lender Percentage Share Maximum Credit Amount
-------------- ---------------- ---------------------
Bank of Montreal 100% $130,000,000
LIST OF FACILITY B COMMITMENTS
------------------------------
Facility B
Name of Lender Percentage Share Commitments
-------------- ---------------- -----------
Bank of Montreal 100% $ 30,000,000
