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EXHIBIT 10.7
AMENDMENT TO CREDIT AGREEMENT AND NOTE
This Amendment to Credit Agreement and Note is made as of May 18, 2000 by
United States Exploration, Inc., a Colorado corporation ("Borrower"), Producers
Service Incorporated, a Kansas corporation ("Guarantor"), and Xxxxxx Mineral
Group, Inc., an Oklahoma corporation ("BMG").
RECITALS
A. Pursuant to that certain Agreement dated as of April 14, 2000 (the "Note
Purchase Agreement") by and among ING (U.S.) Capital LLC, as successor-by-merger
to ING (U.S.) Capital Corporation ("Original Lender"), Borrower and the other
parties thereto, BMG as Permitted Designee under the Note Purchase Agreement is
contemporaneously purchasing from Original Lender on the date hereof (i) that
certain promissory note (the "Note") dated as of May 15, 1998, executed by
Borrower and payable to the order of Original Lender, in the original principal
amount of $35 million, (ii) Original Lender's interest in that certain Credit
Agreement dated as of May 15, 1998 (the "Credit Agreement") executed by and
between Borrower, as borrower, and Original Lender as "Agent" and "Lender" (as
such terms are defined in the Credit Agreement), and (iii) Original Lender's
interest under all other Loan Documents (as defined in the Credit Agreement).
B. BMG is paying $4,000,000 to the Original Lender for the Note and the
Original Lender's rights under the Credit Agreement and the other Loan
Documents. Borrower is contemporaneously paying or causing to be paid to the
Original Lender the balance of the purchase price of the Note and such rights as
specified in the Note Purchase Agreement. Borrower and BMG have agreed that the
payments made or caused to be made by Borrower to the Original Lender shall be
payments on the Note and that BMG will write the Note down to the amount
actually paid by it for the Note.
C. Pursuant to the terms and conditions of this Amendment, BMG and Borrower
desire to amend the Credit Agreement and the Note in certain other respects, on
the terms and subject to the conditions contained herein.
AGREEMENT
Accordingly, in consideration of the mutual covenants and
agreements contained herein, and other good and valuable consideration the
receipt and sufficiency of which are hereby acknowledged, and subject to the
conditions set forth below, the parties hereto agree as follows:
Section 1. Amendment of Note.
1.1 Reduction of Principal Balance. The outstanding
principal balance of the Note is hereby reduced to $4,000,000.
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1.2 Interest; Repayment. The Note is hereby amended to
replace the third through the sixth grammatical paragraphs thereof with the
following language:
The principal amount of this Note shall bear interest from
and after May 18, 2000 at the rate of 9% per annum, compounded
quarterly. In the event that this Note is not paid when due or
declared due hereunder, the entire overdue amount, including
both principal and interest, shall thereafter bear interest at
the rate of 15% per annum, compounded quarterly, until fully
paid. Interest on overdue amounts shall be payable on demand.
The principal and all accrued interest on this Note shall
be due and payable in a single payment on May 17, 2001.
1.3 Legend on Note. Upon the delivery of the Note to BMG by
the Original Lender, BMG agrees to endorse the Note with the following legend:
This Note has been amended by an Amendment to Credit Agreement
and Note between the Maker and Xxxxxx Mineral Group, Inc.
dated May 18, 2000, and is subject to the terms of that
Amendment.
Section 2. Amendments to Credit Agreement. The Credit
Agreement is hereby amended as follows:
2.1 Certain References. All references to "Agent",
"Lender", "Lenders", "Bank Party" or "Bank Parties" shall be deemed or referred
to BMG.
2.2 Termination of Commitments. All commitments of the
Lenders to make further loans to Borrower or to issue letters of credit for the
benefit of Borrower are hereby terminated.
2.3 Default Rate. The definition of "Default Rate" in
Section 1.1 of the Credit Agreement is amended to read in its entirety as
follows:
"Default Rate" means 15% per annum, not to exceed the Highest
Lawful Rate.
2.4 Termination of Fees. The obligation of Borrower to
pay fees under Section 2.5 is hereby terminated.
2.5 Prepayments. Section 2.6 of the Credit Agreement
is amended to read in its entirety as follows:
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Borrower may prepay the Note in whole or in part at any time
without premium or penalty.
2.6 Repayment. Section 2.7 of the Agreement is amended
to read in its entirety as follows:
The principal amount of the Note and all accrued interest
thereon shall be due and payable in a single payment on May
17, 2001.
2.7 Place of Payment. Section 3.1 is amended to
provide that Borrower will make each payment under the Loan Documents to BMG at
BMG's offices in Denver, Colorado in immediately available funds, without
setoff, deduction or counterclaim.
2.8 Elimination of Financial Covenants. Sections 7.11,
7.12 and 7.13 of the Agreement are deleted.
2.9 Expenses. The expenses of BMG (including
attorneys' fees, travel costs and miscellaneous expenses) in connection with (i)
the negotiation, preparation, execution and delivery of this Amendment and all
other documents or instruments relating thereto, (ii) the filing, recording,
refiling and re-recording of any and all documents necessary to reflect the
acquisition by BMG of the Note and the rights of the Original Lender under the
Credit Agreement and the other Loan Documents, (iii) the acquisition of the
Note, the Credit Agreement and the other Loan Documents from the Original Lender
and any action reasonably required in the administration thereof following such
acquisition, (iv) monitoring or confirming (or preparation or negotiation of any
document related to) Borrower's compliance with any covenants or conditions
contained in the Credit Agreement or in any other Loan Document and (v) all
reasonable costs and expenses incurred by or on behalf of BMG (including
attorneys' fees, consultants' fees, and accounting fees) in connection with the
defense or enforcement of any of the Loan Documents or any exercise by BMG of
its rights hereunder or under the Credit Agreement or any other Loan Document,
are included as expenses payable by Borrower pursuant to Section 10.4.
Section 3. Forgiveness of Other Amounts Due. Except for the
principal amount of the Note as amended by Section 1.1 of this Amendment and
interest accruing thereon from and after the date hereof, BMG hereby irrevocably
forgives and discharges (i) the principal amount of the Note to the extent that
it exceeds the amended principal amount specified above, (ii) all interest on
the Note accruing prior to the date hereof, (iii) all fees owed by Borrower
under Section 2.5 of the Credit Agreement, (iv) all expenses owed by Borrower
under Section 10.4 of the Credit Agreement, other than expense of BMG as
provided in Section 2.9 above and (v) all defaults, breaches, violations or
other noncompliance by Borrower with the terms and conditions of the Credit
Agreement or any other Loan Document prior to the date hereof. Nothing contained
in this Amendment will excuse Borrower from its obligation to comply with the
terms and conditions of the Credit Agreement and the other Loan Documents from
and after the date hereof until all amounts owing under the Note, as amended
hereby, have been paid in full. It is the purpose and intent of
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Borrower and BMG that BMG shall have all of the rights and benefits of the
Original Lender under the Credit Agreement and the other Loan Documents with
respect to the amounts owing under the Note as amended hereby, and that Borrower
shall comply with all of the terms and conditions of the Credit Agreement, as
amended hereby, and the other Loan Documents from and after the date hereof.
Section 4. Release of Liens as to Certain Properties. BMG
agrees, simultaneously with its acquisition of the Note, to execute such
documents and instruments as the Borrower may reasonably request to release the
lien created by the Loan Documents on the leases and xxxxx described in Exhibit
A hereto. Such release shall not affect BMG's continuing liens on the rest of
the collateral covered by the Loan Documents.
Section 5. Release of Liens Upon Kansas Properties. BMG
acknowledges that Borrower intends to sell its properties located in the State
of Kansas that are subject to the liens created by the Loan Documents. BMG
agrees, upon any such sale and at the request of Borrower, to release its liens
on such properties. In addition, if the sale also involves the stock of
Guarantor, BMG agrees to release its pledge of such stock and to release its
security interest in the assets of Guarantor. The proceeds of any such sale of
the Kansas properties or the stock of Guarantor shall be applied against the
Note.
Section 6. Acknowledgment of Assignment of Guarantee.
Guarantor acknowledges and consents to the assignment of its guarantee of the
obligations of Borrower under the Loan Documents to BMG and agrees that such
assignment shall not affect in any way its obligations under the Loan Documents.
Section 7. Agreement to Refinance or Prepay. Borrower
acknowledges that BMG has agreed to acquire the Note as an accommodation to
enable Borrower to exercise its option under the Note Purchase Agreement and
that the amended maturity of the Note is intended to give Borrower a reasonable
opportunity to refinance the indebtedness represented by the Note or otherwise
prepay the Note. Borrower agrees to use its best efforts to refinance the Note
as soon as reasonably possible and to use the proceeds of any such refinancing
to pay the Note or purchase the Note from BMG for an amount equal to the amended
principal thereof plus accrued interest thereon. Borrower acknowledges that the
terms of any such refinancing will probably be less favorable to Borrower than
the terms of the Note and Credit Agreement as amended hereby. If Borrower is
unable to refinance the Note or has not yet refinanced the Note when other funds
are available or can be obtained for prepayment, it agrees to use its best
efforts to prepay the Note from internally generated funds, proceeds of the sale
of properties or otherwise. Nothing contained in this Section 7 shall excuse
Borrower from its obligations to pay the Note, as amended, when due or declared
due under the Credit Agreement as amended hereby.
Section 8. Conditions Precedent. The effectiveness of this
Amendment and the obligations and agreements of BMG hereunder are subject to the
following conditions precedent:
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(a) Borrower shall have paid or caused to be paid to
the Original Lender such amounts as may be necessary, in addition to the amount
to be paid by BMG as indicated herein, to pay the full purchase price of the
Note under the Note Purchase Agreement;
(b) The Board of Directors of Borrower shall have
duly authorized this Amendment by all necessary corporate action and Borrower
shall have been duly executed and delivered this Amendment; and
(c) The Original Lender shall have delivered the Note
to BMG, endorsed as provided in the Note Purchase Agreement, and shall have
executed and delivered to BMG the Assignment of Note and Liens attached as
Exhibit A to the Note Purchase Agreement.
Section 9. No Other Amendments. Except as expressly amended
hereby, the Credit Agreement and the other Loan Documents shall remain in full
force and effect and are hereby ratified and confirmed by Borrower.
IN WITNESS WHEREOF, Borrower, Guarantor and BMG have executed
this Agreement as of the day and year first above written.
United States Exploration, Inc.
By: /s/ F. Xxxxxxx Xxxxxx
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F. Xxxxxxx Xxxxxx, Vice-President acting at the,
direction of the Special Committee of the
Board of Directors
Producers Service, Incorporated
By: /s/ F. Xxxxxxx Xxxxxx
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F. Xxxxxxx Xxxxxx, Vice-President, acting at the
direction of the Special Committee of the
Board of Directors
Xxxxxx Mineral Group, Inc.
By: /s/ Xxxxx X. Xxxxxx
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Xxxxx X. Xxxxxx, President
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