Exhibit 10.13
FIRST AMENDMENT TO
AMENDED AND RESTATED CREDIT AGREEMENT
THIS FIRST AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this "First
Amendment") is entered into as of May 22, 2006 by and among THE CYMRI
CORPORATION, a Texas corporation ("CYMRI"), TRIUMPH ENERGY, INC., a Louisiana
corporation ("TEI") and PETROLEUM ENGINEERS, INC., a Louisiana corporation
("PEI") (each an "Existing Borrower" and collectively, the "Existing
Borrowers"), STERLING BANK, a Texas state chartered bank ("Lender"), and
TRADESTAR ACQUISITION SUB, L.L.C., a Nevada limited liability company ("Buyer").
Capitalized terms used but not defined in this First Amendment have the meaning
given them in the Credit Agreement (defined below).
RECITALS
A. Existing Borrowers, PETROLEUM ENGINEERS INTERNATIONAL, INC., a Louisiana
corporation ("PEII") and Lender entered into that certain Amended and Restated
Credit Agreement dated as of December 3, 2004 (as amended, restated or
supplemented, the "Credit Agreement").
B. Effective as of May 19, 2006, PEII was merged with and into PEI with PEI
being the surviving corporation of the merger.
C. Under the terms of that certain Agreement and Plan of Merger dated as of
May 23, 2006 (the "Merger Agreement") by and among Tradestar Services, Inc., a
Nevada corporation ("Tradestar"), Buyer, CYMRI, and Xxxxx X. Xxxxxx, Xxxxxxxx X.
Xxxxxxxx, Xx., Xxxxxx X. Xxxxxx, and Xxxxxxx X. Xxxxxxx, Tradestar will acquire
from CYMRI all the outstanding capital stock of PEI (the "Stock Sale") and CYMRI
will merge with and into Buyer (the "Merger"), and following the Merger the
separate corporate existence of CYMRI shall cease, Buyer shall continue as the
surviving corporation (the "Surviving Corporation" or "New CYMRI") and
immediately after the Effective Time (defined below), the Surviving Corporation
shall change its name to "CYMRI, L.L.C."
D. The time that the Merger becomes effective pursuant to Section 2.2 of
the Merger Agreement is referred to in this First Amendment as the "Effective
Time." The date on which the closing of the Stock Sale occurs is referred to in
this First Amendment as the "Stock Sale Closing Date".
E. Lender is the current beneficiary of the liens and security interests
granted by the Existing Borrowers to secure the Obligations under the Credit
Agreement.
F. Tradestar and the Existing Borrowers have requested that, concurrently
with the Stock Sale and the Merger, Lender release certain of its liens,
security interests and other rights granted to it by CYMRI and PEI pursuant to
the Credit Agreement.
G. Lender has agreed to consent to the Stock Sale and the Merger and
to amend the Credit Agreement to, among other things, reflect certain
changes resulting from the Stock Sale and Merger and the Loan Documents,
subject to the terms and conditions of this First Amendment.
NOW THEREFORE, for good and valuable consideration, the receipt and
sufficiency of which are acknowledged, the undersigned hereby agree as follows:
1. Consent and Waiver. Existing Borrowers have requested that Lender consent to
the Stock Sale and to the Merger (the "Proposed Transactions"). Subject to the
satisfaction of the conditions set out in this First Amendment, Lender hereby
(a) consents to the Proposed Transactions, (b) waives any violation of, or
non-compliance with, any provision of the Credit Agreement resulting directly
from the Merger or the Stock Sale, and (c) agrees not to exercise any of the
rights or remedies available to it under the Loan Documents which arise solely
as the result of the violation or non-compliance resulting from the Merger or
the Stock Sale. Except as set out in this Section 1, Existing Borrowers and
Buyer hereby agree that such waiver does not constitute a waiver of any present
or future violation of or non-compliance with any provision of any Loan Document
or waiver of Lender's right to insist upon strict compliance with each term,
covenant, condition and provision of the Loan Documents.
2. Release of Liens and Release of PEI. Upon the satisfaction of the conditions
set out in this First Amendment, (a) Lender shall release its liens on (i) the
capital stock of PEI and (ii) the assets of PEI and (b) PEI shall cease to be a
Borrower under the Credit Agreement and shall be released from its obligations
as Borrowers under the Credit Agreement.
3. Joinder. As of the Effective Time, the Surviving Corporation (a) shall assume
all the obligations of CYMRI, as Borrower under the Credit Agreement and the
other Loan Documents, (b) agrees to be bound by the provisions of the Credit
Agreement or such other Loan Documents as if the Surviving Corporation had been
an original party to the Credit Agreement or such other Loan Documents, and (c)
confirms that, after joining the Credit Agreement and the other Loan Documents,
the representations and warranties set forth in the Credit Agreement and the
other Loan Documents with respect to the Borrowers are true and correct in all
material respects as of the date of this First Amendment.
4. Amendments to Credit Agreement. As of the Effective Time of the Merger, the
Credit Agreement shall be amended as follows:
(a) The preamble to the Credit Agreement is deleted in its entirety
and is replaced with the following:
"THIS AMENDED AND RESTATED CREDIT AGREEMENT is made and
entered into as of December 3, 2004, and amended through May 22,
2006, by and among CYMRI, L.L.C. a Nevada limited liability
company, formerly known as TRADESTAR ACQUISITION SUB, L.L.C., a
Nevada limited liability company ("CYMRI"), and TRIUMPH ENERGY,
INC., a Louisiana corporation ("TEI") (each individually and
collectively, the "Borrower"), and STERLING BANK, a Texas state
chartered bank (the "Lender")."
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(b) Section 1.2 of the Credit Agreement is hereby amended to delete in
their entirety the defined terms Accounts Receivable, Borrowing Base
Accounts, Eligible Accounts Receivable, Lockbox, Lockbox Agreement,
Stockholder Notes, and Stockholders.
(c) Section 1.2 of the Credit Agreement is hereby amended to delete in
their entirety the defined terms Borrowing Base Assets, Change of Control,
Collateral, Compliance Certificate, CYMRI, Note and Permitted Liens, and
replace them with the following defined terms in the appropriate
alphabetical order:
"Borrowing Base Assets" shall mean the Borrowing Base Oil and Gas
Properties and the Certificates of Deposit.
"Change of Control" shall mean an event or series of events by which
(i) Tradestar ceases to own and control, directly and indirectly, 100%
of the capital stock of CYMRI or (ii) CYMRI ceases to own and control,
directly and indirectly, 100% of the capital stock of TEI.
"Collateral" shall mean the Borrowing Base Oil and Gas Properties, the
Certificates of Deposit and any other Property now or at any time used
or intended as security for the payment or performance of all or any
portion of the Obligations.
"Compliance Certificate" shall mean each certificate, substantially in
the form attached to the First Amendment as Exhibit III, executed by a
Responsible Officer of CYMRI and furnished to the Lender from time to
time in accordance with Sections 5.2 and 5.3.
"CYMRI" is defined in the preamble and shall mean CYMRI, L.L.C., a
Nevada limited liability company, formerly known as Tradestar
Acquisition Sub, L.L.C., a Nevada limited liability company.
"Note" shall mean the replacement promissory note of the Borrower, in
the form attached as Exhibit I to the First Amendment, with all
renewals, extensions for any period, increases, and rearrangements
thereof.
"Permitted Liens" shall mean (a) Liens for taxes, assessments, or
other governmental charges or levies not yet due or which (if
foreclosure, distraint, sale, or other similar proceedings shall not
have been initiated) are being contested in good faith by appropriate
proceedings, and such reserve as may be required by GAAP shall have
been made therefor, (b) Liens (including, but not limited to, pledges
or deposits) in connection with workers' compensation, unemployment
insurance or other social security (other than Liens created by
Section 4068 of ERISA), old-age pension, or public liability
obligations which are not yet due or which are being contested in good
faith by appropriate proceedings, if such reserve as may be required
by GAAP shall have been made therefor, (c) Liens in favor of vendors,
carriers, warehousemen, repairmen, mechanics, workmen, materialmen,
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construction, or similar Liens arising by operation of law in the
ordinary course of business in respect of obligations which are not
yet due or which are being contested in good faith by appropriate
proceedings, if such reserve as may be required by GAAP shall have
been made therefor, (d) Liens in favor of operators and non-operators
under joint operating agreements or similar contractual arrangements
arising in the ordinary course of the business of the Borrower to
secure amounts owing, which amounts are not yet due or are being
contested in good faith by appropriate proceedings, if such reserve as
may be required by GAAP shall have been made therefor, (e) Liens under
production sales agreements, division orders, operating agreements,
and other agreements customary in the oil and gas business for
processing, producing, and selling hydrocarbons securing obligations
not constituting Indebtedness and provided that such Liens do not
secure obligations to deliver hydrocarbons at some future date without
receiving full payment therefor within 90 days of delivery, (f)
easements, rights of way, restrictions, and other similar
encumbrances, and minor defects in the chain of title which are
customarily accepted in the oil and gas financing industry, none of
which interfere with the ordinary conduct of the business of the
Borrower or materially detract from the value or use of the Property
to which they apply, (g) Liens in favor of the Lender and other Liens
expressly permitted under the Security Instruments (h) second Liens
(A) covering TEI's Borrowing Base Oil and Gas Properties located in
Louisiana as described on Exhibit V attached hereto and (B) first
Liens on the capital stock of TEI in favor of the Prior Stockholders
but subject in each case to the Subordination Agreement and (i) any
other Liens approved by Lender in its sole discretion securing
Indebtedness subordinated to the Obligations.
(d) Section 1.2 of the Credit Agreement is hereby amended to add the
following defined terms in the appropriate alphabetical order:
"First Amendment" shall mean that certain First Amendment to Amended
and Restated Credit Agreement dated as of May 22, 2006.
"First Amendment Closing Date" shall mean May 23, 2006.
"Prior Stockholder Notes" shall mean the promissory notes executed in
favor of the Prior Stockholders in the original aggregate amount of
$2,600,000 for which Tradestar has assumed (but for which CYMRI has
not been release from) the obligations of the maker of such promissory
notes.
"Prior Stockholders" shall mean Don E. Xxxxxxx, Xxxxx Xxxx Xxxxxxx,
X.X. Xxxxxxx, III, Xxxxx X. Xxxxxxx, and The Xxxxx and Xxxxx Xxxxxxxx,
Xx. Trust.
"Tradestar" shall mean Tradestar Services, Inc., a Nevada corporation.
(e) Section 2.2(a) of the Credit Agreement is hereby amended by
deleting that Section in its entirety and replacing it with the following
text:
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"(a) Proceeds of all Loans shall be used solely for (i) the
acquisition and development of Oil and Gas Properties, (ii) payment of
fees and expenses hereunder or (iii) for general corporate purposes."
(f) Section 2.7(a) of the Credit Agreement is hereby amended by
deleting that Section in its entirety and replacing it with the following
text:
"(a) The Borrowing Base as of the First Amendment Closing Date is
acknowledged by the Borrower and the Lender to be $6,500,000 which is
attributable to the Borrowing Base Assets. The amount of the Borrowing
Base (as adjusted from time to time under the terms of this Agreement)
shall be reduced by $50,000 on the last day of each month beginning
June 30, 2006."
(g) Section 2.7(b) of the Credit Agreement is hereby amended by
deleting the last sentence of that Section in its entirety and replacing it
with the following sentence:
Notwithstanding the foregoing, the Lender may at its discretion
redetermine the Borrowing Base attributable to the Borrowing Base
Assets and the amount by which the Borrowing Base shall be reduced
each calendar month as set forth in Section 2.7(a) at any time and
from time to time. Lender may release the Certificates of Deposit as
Collateral at such time as it determines, in its sole discretion, that
the Borrowing Base Oil and Gas Properties are sufficient to support
the then-effective Borrowing, Base taking into consideration all
relevant factors.
(h) Section 2.7(c) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"[Reserved]"
(i) Section 2.20 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"2.20 [Reserved.]"
(j) Section 3.1(q) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"(q) [Reserved.]"
(k) Section 5.5 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"5.5 Title Opinions; Title Defects.
(a) Within 60 days following the First Amendment Closing Date and
promptly any time thereafter upon the request of the Lender, furnish
to the Lender title opinions, in form and substance and by counsel
satisfactory to the Lender, or other confirmation of title acceptable
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to the Lender, covering Oil and Gas Properties constituting not less
than 81% of the value, determined by the Lender in its sole
discretion, of the Borrowing Base Oil and Gas Properties; provided,
however, that within such 60-day period following the First Amendment
Closing Date the Borrowing Base Oil and Gas Properties owned by TEI
shall be covered by current title opinions delivered to Lender in form
and substance satisfactory to the Lender (and not by other
confirmation of title).
(b) Promptly, but in any event within 60 days after notice by the
Lender, clear or cure any defect in the title of the Borrower to any
of its Oil and Gas Properties if such defect, in Lender's opinion,
materially affects the value of the Oil and Gas Properties. If such
title defects are not cured in a timely manner, Borrower shall pay all
related costs and fees incurred by the Lender to clear or cure such
title defects."
(l) Section 5.26 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"5.26 [Reserved.]"
(m) Section 5.27 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"5.27 Within thirty (30) days after the First Amendment Closing Date,
obtain and deliver to the Prior Stockholders, new or replacement Stock
Certificates which evidence CYMRI's stock ownership in TEI and are covered
by the Stock Pledge Agreement; provided that such delivery of the Stock
Certificates shall be subject to the Subordination Agreement."
(n) Section 8.16 of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
"8.16 CYMRI as Agent. TEI hereby appoints CYMRI as its agent and
attorney-in-fact to execute any certificates, requests or other documents
deliverable under this Agreement in the name of each such party as
Borrower, and Lender shall be authorized to rely on any such executed
certificates, requests or other documents as acts of the parties
constituting "Borrower" without the need of further inquiry or
investigation."
(o) Exhibit VI attached to the Credit Agreement is hereby deleted in
its entirety.
5. Conditions. This First Amendment shall be effective once the Stock Sale
Closing Date has occurred, the Effective Time has occurred, and each of the
following have been delivered to Lender:
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(a) this First Amendment executed by Existing Borrowers, Buyer, and
Lender and dated as of the First Amendment Closing Date;
(b) the Note executed by New CYMRI and TEI;
(c) the Master Amendment to Deeds of Trust, Mortgages and Security
Instruments executed by New CYMRI, TEI and Lender;
(d) the Partial Release of Amended and Restated Security Agreement
executed by Lender;
(e) the Partial Release of Stock Pledge Agreement executed by Lender;
(f) the Ratification of Pledge of Certificates of Deposit executed by
X.X. Xxxxxxxx, Xx. and Lender;
(g) the opinion of Xxxxxx & Westheimer, counsel to the Borrower, in
form and substance acceptable to the Lender in its sole discretion;
(h) UCC financing statements, amendments, releases and terminations in
favor of Lender (as secured party), in form and substance acceptable to
Lender, reflecting the changes effected by the Merger and the Stock Sale;
(i) evidence satisfactory to Lender that the Merger Agreement and
Stock Sale have been consummated and all conditions therein have been
satisfied, unless waived by Lender in writing;
(j) a certificate issued by the secretary or an assistant secretary of
CYMRI, New CYMRI and TEI certifying as to the incumbency of all officers of
CYMRI, New CYMRI and TEI who are authorized to execute Loan Documents on
behalf of such CYMRI, New CYMRI and TEI, respectively, together with
specimen signatures of each such officer;
(k) copies of the Certificate of Formation of New CYMRI and the
Certificate of Incorporation of TEI and CYMRI and, in each case, all
amendments thereto, and copies of the bylaws and all amendments thereto of
New CYMRI, TEI and CYMRI, accompanied by a certificate issued by the
secretary or an assistant secretary of New CYMRI, TEI and CYMRI, certifying
to the effect that each such copy is correct and complete;
(l) copies of corporate resolutions duly adopted by the board of
directors of CYMRI, New CYMRI, and TEI, as applicable, approving and
authorizing the Stock Purchase Agreement and Stock Sale, the Merger
Agreement and the Merger, this First Amendment and the transactions
contemplated herein, and the amendments to the other Loan Documents, each
accompanied by certificates of the secretary or an assistant secretary of
CYMRI, New CYMRI, and TEI, as applicable, to the effect that such copies
are true and correct copies of resolutions duly adopted at a meeting or by
written consent of the board of directors of CYMRI, New CYMRI and TEI and
that such resolutions constitute all the resolutions adopted with respect
to such transactions, and that they have not been amended, modified, or
revoked in any respect, and are in full force and effect as of the date of
such certificate;
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(m) certificates dated as of a recent date from the Secretary of State
or other appropriate Governmental Authority evidencing the existence and
good standing of New CYMRI, TEI and Tradestar in each entity's respective
jurisdiction of organization and certificates of authority to do business
in any other jurisdictions where such entity does business;
(n) results of searches of the UCC Records of the Texas Secretary of
State from a source acceptable to Lender and reflecting no Liens against
any of the Collateral as to which perfection of a Lien is accomplished by
the filing of a financing statement other than in favor of the Lender and
Permitted Liens;
(o) receipt of payment in immediately available funds necessary to
reduce the outstanding Loans to an amount not to exceed $6,500,000 as of
the date hereof; and
(p) such other documents as Lender may reasonably request.
6. Representations and Warranties. Buyer and TEI represent and warrant to Lender
that (a) they possess all requisite power and authority to execute, deliver and
comply with the terms of this First Amendment, (b) this First Amendment has been
duly authorized and approved by all requisite corporate action, (c) no other
consent of any Person (other than the Lender) is required for this First
Amendment to be effective, (d) the execution and delivery of this First
Amendment does not violate their organizational documents, and (e) no Default or
Event of Default has occurred and is continuing. The representations and
warranties made in this First Amendment shall survive the execution and delivery
of this First Amendment. No investigation by Lender is required for Lender to
rely on the representations and warranties in this First Amendment.
7. Scope of Amendment and Release. All references to the Credit Agreement shall
refer to the Credit Agreement as amended by this First Amendment. Except as
affected by this First Amendment and the amendments to the Loan Documents
executed in connection with this First Amendment, the Loan Documents are
unchanged and continue in full force and effect. However, in the event of any
inconsistency between the terms of the Credit Agreement (as amended by this
First Amendment) and any other Loan Document, the terms of the Credit Agreement
shall control and such other document shall be deemed to be amended to conform
to the terms of the Credit Agreement. Existing Borrowers hereby release Lender
from any liability for actions or omissions in connection with the Credit
Agreement and the other Loan Documents prior to the First Amendment Closing
Date.
8. Miscellaneous.
(a) Form. Each agreement, document, instrument or other writing to be
furnished to Lender in connection with this First Amendment must be in form
and substance satisfactory to Lender and its counsel.
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(b) Headings. The headings and captions used in this First Amendment
are for convenience only and will not be deemed to limit, amplify or modify
the terms of this First Amendment, the Credit Agreement, or the other Loan
Documents.
(c) Costs, Expenses and Attorneys' Fees. Buyer and Existing Borrowers
agree to pay or reimburse Lender on demand for all its reasonable
out-of-pocket costs and expenses incurred in connection with the
preparation, negotiation, and execution of this First Amendment, including,
without limitation, the reasonable fees and disbursements of Lender's
counsel.
(d) Successors and Assigns. This First Amendment shall be binding upon
and inure to the benefit of each of the undersigned and their respective
successors and permitted assigns.
(f) Multiple Counterparts. This First Amendment may be executed in any
number of counterparts with the same effect as if all signatories had
signed the same document. All counterparts must be construed together to
constitute one and the same instrument. This First Amendment may be
transmitted and signed by facsimile or by portable document format (PDF).
The effectiveness of any such documents and signatures shall have the same
force and effect as manually-signed originals and shall be binding on the
party signing. Lender may also require that any such documents and
signatures be confirmed by a manually-signed original; provided that the
failure to request or deliver the same shall not limit the effectiveness of
any signature.
(g) Governing Law. This First Amendment and the other Loan Documents
must be construed, and their performance enforced, under Texas law.
(h) Entirety. THIS FIRST AMENDMENT AND THE OTHER LOAN DOCUMENTS (AS
AMENDED HEREBY) REPRESENT THE FINAL AGREEMENT BY AND AMONG EXISTING
BORROWERS, BUYER, NEW CYMRI, TEI AND THE LENDER AND MAY NOT BE CONTRADICTED
BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS BY THE
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[Signatures appear on the following pages.]
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This First Amendment is executed as of the date set out in the preamble to
this First Amendment.
THE CYMRI CORPORATION
By:/s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
TRIUMPH ENERGY, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
TRADESTAR ACQUISITION SUB, L.L.C.
(to be known as CYMRI, L.L.C. immediately
following the merger)
By: /s/ Xxxxxxxxx X. Xxxxxxx
-----------------------------------------
Xxxxxxxxx X. Xxxxxxx
Vice President
PETROLEUM ENGINEERS, INC.
By: /s/ Xxxxx X. Xxxxxx
--------------------------------
Xxxxx X. Xxxxxx
Chief Executive Officer
LENDER:
-------
STERLING BANK
By: /s/ Xxxx X. Xxxxxx
-----------------------------------------
Xxxx X. Xxxxxx
Senior Vice President
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