1
EXHIBIT 10.1
FIFTH AMENDMENT TO CREDIT AGREEMENT
THIS FIFTH AMENDMENT TO CREDIT AGREEMENT (this "Amendment") is
made and entered into effective as of the 31st day of December, 1997, by and
among SOUTHERN MINERAL CORPORATION, a Nevada corporation (the "Borrower"), SMC
PRODUCTION CO., a Texas corporation, SPRUCE HILLS PRODUCTION COMPANY, INC., a
Delaware corporation and BEC ENERGY, INC., a Texas corporation (collectively,
the "Co-Borrowers") and COMPASS BANK, a Texas state chartered banking
institution ("Lender").
W I T N E S S E T H:
WHEREAS, the Borrower, the Co-Borrowers and Lender did execute
and exchange counterparts of that certain Credit Agreement dated December 20,
1995, executed in connection with a revolving loan extended to the Borrowers by
Lender as amended by First Amendment effective as of June 1, 1996, by letter
amendment dated August 30, 1996, by letter amendment dated January 22, 1997, by
Second Amendment to Credit Agreement effective as of December 17, 1996, by
Third Amendment to Credit Agreement effective as of June 10, 1997, and by
Fourth Amendment to Credit Agreement effective as of June 30, 1997 (the "Credit
Agreement");
WHEREAS, the parties hereto desire to amend the Credit
Agreement as hereinafter set forth;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements contained in the Credit Agreement and this Amendment, the parties
hereto agree as follows:
ARTICLE I
DEFINITIONS AND INTERPRETATION
I.1 Terms Defined Above. As used herein, each of the
terms "Amendment," "Borrowers," "Co- Borrowers," "Lender," and "Credit
Agreement" shall have the meaning assigned to such term herein above.
I.2 Terms Defined in Credit Agreement. As used herein,
each term defined in the Credit Agreement shall have the meaning assigned
thereto in the Credit Agreement, unless expressly provided herein to the
contrary.
I.3 References. References in this Amendment to Article
or Section numbers shall be to Articles and Sections of this Amendment, unless
expressly stated to the contrary. References in this Amendment to "hereby,"
"herein," "hereinafter," "herein above," "herein below," "hereof," and
"hereunder" shall be to this Amendment in its entirety and not only to the
particular Article or Section in which such reference appears.
2
I.4 Articles and Sections. This Amendment, for
convenience only, has been divided into Articles and Sections and it is
understood that the rights, powers, privileges, duties, and other legal
relations of the parties hereto shall be determined from this Amendment as an
entirety and without regard to such division into Articles and Sections and
without regard to headings prefixed to such Articles and Sections.
I.5 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural and likewise the plural shall be understood to include the singular.
Words denoting sex shall be construed to include the masculine, feminine, and
neuter, when such construction is appropriate, and specific enumeration shall
not exclude the general, but shall be construed as cumulative. Definitions of
terms defined in the singular and plural shall be equally applicable to the
plural or singular, as the case may be.
ARTICLE II
AMENDMENTS TO CREDIT AGREEMENT
The Credit Agreement is hereby amended as follows:
II.1 Amendment of Section 1.2. Section 1.2 of the Credit
Agreement is hereby amended to read as follows:
The following definitions are added and/or amended to read as
follows:
"Applicable Margin" shall mean as to each LIBO Rate Loan, the
following:
Borrowing Base LIBO Rate Loan
Utilization Applicable Margin
------------------ -----------------
1) greater than 66-2/3% two percent (2%)
of Borrowing Base
2) less than or equal to one and three-fourths
66-2/3% and greater than percent (1-3/4%)
33-1/3% of Borrowing Base
3) less than or equal to one and one-half
33-1/3% of Borrowing Base percent (1-1/2%)
2
3
The Borrowing Base Utilization and the corresponding LIBO Rate
shall be set at each quarter end for the next quarter. Borrower will
furnish to the Agent a Form of Borrowing Base Utilization, which is
attached as Exhibit V to this Agreement, which shall stipulate the
Borrowing Base Utilization level at the end of such quarter. Such
form shall be furnished to the Agent within five (5) days of the end
of such quarter."
"Borrowing Base Utilization" shall mean the aggregate
principal amount of Loans outstanding hereunder as a percentage of the
Borrowing Base."
II.2 Amendment of Section 2.7. Section 2.7(a) of the
Credit Agreement is hereby amended to read as follows:
"2.7 Borrowing Base Determinations. (a) The Borrowing Base
as of December 31, 1997, is acknowledged by the Borrower, the
Co-Borrowers and the Lender to be $34,000,000. Upon completion of
Borrower's acquisition of Amerac Energy Corporation and Lender's
receipt of acceptable documentation related thereto, the Borrowing
Base shall be increased to $40,000,000. Commencing on February 1,
1998, and continuing thereafter on the first day of each calendar
month until the earlier of the date such amount is redetermined or the
Commitment Termination Date, the amount of the Borrowing Base shall be
reduced by $400,000. In the event that Borrower has not furnished
Lender with a recorded copy of an assignment to Borrower of a 0.225
working interest and a 0.1575 net revenue interest in and to State of
Louisiana Oil and Gas Lease No. 14589, dated December 13, 1993,
recorded under Entry No. 761535, COB 1198, Page 149, of the records of
Lafourche Parish, Louisiana, on or before March 22, 1998, the Lender
shall redetermine the Borrowing Base by deleting the value given to
such lease."
II.3 Amendment of Section 2.10. Section 2.10 of the
Credit Agreement is amended by amending the first sentence to read as follows:
"To compensate the Lender for maintaining funds available, the
Borrower shall pay to the Lender a commitment fee calculated
on the basis of a year of 365 or 366 days, as the case may be,
and actual days elapsed (including the first day but excluding
the last day), on the average daily amount of the Available
Commitment as follows:
Borrowing Base
Utilization Commitment Fee
------------------ --------------
1) greater than 50% one-half percent (1/2%)
of Borrowing Base
3
4
2) less than or equal to three-eighths percent (3/8%)
50% of Borrowing Base
The Borrowing Base Utilization and the corresponding
Commitment Fee shall be set at each quarter end for the next quarter.
II.4 Amendment of Exhibit I. Exhibit I of the Credit
Agreement, i.e. the Form of Promissory Note, is amended as set forth on Exhibit
I to this Fifth Amendment.
ARTICLE III
CONDITIONS
The obligation of the Lender to amend the Credit Agreement as
provided herein is subject to the fulfillment of the following conditions
precedent:
III.1 Receipt of Documents and Other Items. The Lender
shall have received, reviewed, and approved the following documents and other
items, appropriately executed when necessary and in form and substance
satisfactory to the Lender:
(a) multiple counterparts of this Amendment and the Note, as
requested by the Lender;
(b) Mortgage, Deed of Trust, Security Agreement and Financing
Statement covering properties in Lake Raccourci Field and Big
Escambia Creek Field;
(c) Assignment of Contract Rights (Security Agreement)
covering various agreements concerning State of Louisiana Oil
and Gas Lease No. 14589, dated December 13, 1993, recorded
under Entry No. 761535, COB 1198, Page 149, of the records of
Lafourche Parish, Louisiana; and
(d) such other agreements, documents, items, instruments,
opinions, certificates, waivers, consents, and evidence as the
Lender may reasonably request.
III.2 Accuracy of Representations and Warranties. The
representations and warranties contained in Article IV of the Credit Agreement
and in any other Loan Document shall be true and correct, except as affected by
the transactions contemplated in the Credit Agreement and this Amendment.
III.3 Matters Satisfactory to Lender. All matters incident
to the consummation of the transactions contemplated hereby shall be
satisfactory to the Lender.
4
5
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
The Borrower and each of the Co-Borrowers hereby expressly
re-makes, in favor of the Lender, all of the representations and warranties set
forth in Article IV of the Credit Agreement and set forth in any other Loan
Document to which it is a party, and represents and warrants that all such
representations and warranties remain true and unbreached, except as affected
by the transactions contemplated in the Credit Agreement and this Amendment.
ARTICLE V
RATIFICATION
Each of the parties hereto does hereby adopt, ratify, and
confirm the Credit Agreement and the other Loan Documents to which it is a
party, in all things in accordance with the terms and provisions thereof, as
amended by this Amendment and the documents executed in connection herewith.
ARTICLE VI
MISCELLANEOUS
VI.1 Scope of Amendment. The scope of this Amendment is
expressly limited to the matters addressed herein and this Amendment shall not
operate as a waiver of any past, present, or future breach, Default, or Event
of Default under the Credit Agreement, except to the extent, if any, that any
such breach, Default, or Event of Default is remedied by the effect of this
Amendment.
VI.2 Credit Agreement as Amended. All references to the
Credit Agreement in any document heretofore or hereafter executed in connection
with the transactions contemplated in the Credit Agreement shall be deemed to
refer to the Credit Agreement as amended by this Amendment.
VI.3 Parties in Interest. All provisions of this
Amendment shall be binding upon and shall inure to the benefit of the Borrower,
the Co-Borrowers, the Lender, and their respective successors and permitted
assigns.
VI.4 Rights of Third Parties. All provisions herein are
imposed solely and exclusively for the benefit of the parties hereto and their
respective successors and permitted assigns. No other Person shall have
standing to require satisfaction of such provisions in accordance with their
terms and any or all of such provisions may be freely waived in whole or
5
6
in part by the Lender at any time if in its sole discretion it deems it
advisable to do so.
VI.5 Entire Agreement. THIS AMENDMENT CONSTITUTES THE
ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF
AND SUPERSEDES ANY PRIOR AGREEMENT, WHETHER WRITTEN OR ORAL, AMONG SUCH PARTIES
REGARDING THE SUBJECT HEREOF. FURTHERMORE IN THIS REGARD, THIS AMENDMENT, THE
CREDIT AGREEMENT, AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY,
THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH
PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.
VI.6 Governing Law. THIS AMENDMENT AND ALL ISSUES ARISING
IN CONNECTION HEREWITH AND THE TRANSACTIONS CONTEMPLATED HEREBY SHALL BE
CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF TEXAS
WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO CONFLICTS OF LAW.
VI.7 Jurisdiction and Venue. ALL ACTIONS OR PROCEEDINGS
WITH RESPECT TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF,
RELATED TO OR FROM THIS AMENDMENT, THE CREDIT AGREEMENT, OR ANY OTHER LOAN
DOCUMENT MAY BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE LENDER,
IN COURTS HAVING SITUS IN HOUSTON, HARRIS COUNTY, TEXAS. EACH OF THE BORROWERS
HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE, OR FEDERAL COURT
LOCATED IN HOUSTON, HARRIS COUNTY, TEXAS, AND HEREBY WAIVES ANY RIGHTS IT MAY
HAVE TO TRANSFER OR CHANGE THE JURISDICTION OR VENUE OF ANY LITIGATION BROUGHT
AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS SECTION.
VI.8 Waiver of Rights to Jury Trial. THE BORROWER, EACH
OF THE CO-BORROWERS AND THE LENDER HEREBY KNOWINGLY, VOLUNTARILY,
INTENTIONALLY, IRREVOCABLY, AND UNCONDITIONALLY WAIVES ALL RIGHTS TO TRIAL BY
JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM, OR OTHER LITIGATION THAT
RELATES TO OR ARISES OUT OF THIS AMENDMENT, THE CREDIT AGREEMENT, OR ANY OTHER
LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE LENDER IN THE ENFORCEMENT OF ANY
OF THE TERMS OR PROVISIONS OF THIS AMENDMENT, THE CREDIT AGREEMENT, OR ANY
OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS
SECTION ARE A MATERIAL INDUCEMENT FOR THE LENDER ENTERING INTO THIS AMENDMENT.
6
7
IN WITNESS WHEREOF, this Amendment is executed effective as of
the date first herein above written.
SOUTHERN MINERAL CORPORATION
SMC PRODUCTION CO.
SPRUCE HILLS PRODUCTION COMPANY,INC.
BEC ENERGY, INC.
By:/s/ James H. Price
--------------------------------
James H. Price
Vice President-Finance
COMPASS BANK
By:/s/ Allison Hammer
--------------------------------
Allison Hammer
Vice President
7
8
FIFTH AMENDMENT TO
CREDIT AGREEMENT
between
SOUTHERN MINERAL CORPORATION
BEC ENERGY, INC.
SMC PRODUCTION CO.
SPRUCE HILLS PRODUCTION COMPANY, INC.
and
COMPASS BANK
Effective as of
December 31, 1997
9
EXHIBIT I
[FORM OF NOTE]
$100,000,000 Houston, Texas December 31, 1997
FOR VALUE RECEIVED and WITHOUT GRACE, the undersigned
("Maker") promises to pay to the order of COMPASS BANK, successor by merger to
Compass Bank - Houston ("Payee"), at its banking quarters in Houston, Harris
County, Texas, the sum of ONE HUNDRED MILLION DOLLARS ($100,000,000), or so
much thereof as may be advanced against this Note pursuant to the Credit
Agreement dated December 20, 1995, by and among Maker and Payee (as amended,
restated, or supplemented from time to time, the "Credit Agreement"), together
with interest at the rates and calculated as provided in the Credit Agreement.
Reference is hereby made to the Credit Agreement for matters
governed thereby, including, without limitation, certain events which will
entitle the holder hereof to accelerate the maturity of all amounts due
hereunder. Capitalized terms used but not defined in this Note shall have the
meanings assigned to such terms in the Credit Agreement.
This Note is issued pursuant to, is the "Note" under, and is
payable as provided in the Credit Agreement. Subject to compliance with
applicable provisions of the Credit Agreement, Maker may at any time pay the
full amount or any part of this Note without the payment of any premium or fee,
but such payment shall not, until this Note is fully paid and satisfied, excuse
the payment as it becomes due of any payment on this Note provided for in the
Credit Agreement.
This Note is issued in renewal and replacement, but not as a
novation or discharge, of that certain Promissory Note dated December 20, 1995
in the original principal amount of $25,000,000, executed by Maker and payable
to the order of Compass Bank - Houston, now Payee.
Without being limited thereto or thereby, this Note is secured
by the Security Instruments.
THIS NOTE SHALL BE GOVERNED AND CONTROLLED BY THE LAWS OF THE
STATE OF TEXAS WITHOUT GIVING EFFECT TO PRINCIPLES THEREOF RELATING TO
CONFLICTS OF LAW; PROVIDED, HOWEVER, THAT VERNON'S TEXAS CIVIL STATUTES,
ARTICLE 5069, CHAPTER 15 (WHICH REGULATES CERTAIN REVOLVING CREDIT LOAN
ACCOUNTS AND REVOLVING TRIPARTY ACCOUNTS) SHALL NOT APPLY TO THIS NOTE.
10
SOUTHERN MINERAL CORPORATION
SMC PRODUCTION CO.
SPRUCE HILLS PRODUCTION COMPANY, INC.
BEC ENERGY, INC.
By:/s/ James H. Price
-----------------------------------------
James H. Price
Vice President-Finance
11
EXHIBIT V
[FORM OF BORROWING BASE UTILIZATION]
Compass Bank
24 Greenway Plaza, 14th Floor
Houston, Texas 77046
Attention: Energy Lending
Re: Credit Agreement dated as of December 20, 1995, by and
between Compass Bank, Southern Mineral Corporation, BEC
Energy, Inc. SMC Production Co., and Spruce Hills Production
Company, Inc. (as amended, restated, or supplemented from time
to time, the "Credit Agreement")
Ladies and Gentlemen:
Pursuant to applicable requirements of the Credit Agreement, the
undersigned, as Responsible Officers of the Borrowers and the Guarantors,
hereby certify to you the following information as true and correct as of the
date hereof or for the period indicated, as the case may be:
To the best knowledge of the undersigned, the Borrowing Base
Utilization as described in the definition of Applicable Margin for the quarter
ending __________, 19__, was as follows, and the LIBO Rate Loan Applicable
Margin for the following quarter is as follows:
Borrowing Base LIBO Rate Loan
Utilization Applicable Margin
--------------------------------------------------------------------
[1) greater than 66-2/3% two percent (2%)
of Borrowing Base
2) less than or equal to 66-2/3% one and three-fourths
and greater than 33-1/3% percent (1-3/4%)
of Borrowing Base
3) less than or equal to one and one-half
33-1/3% of Borrowing Base percent (1-1/2%)]
To the best knowledge of the undersigned, the Borrowing Base
Utilization for the quarter ending __________, 19__, was as follows and the
Commitment Fee as described in Section 2.11 for the following quarter is as
follows:
12
Borrowing Base
Utilization Commitment Fee
--------------------------------------------------------------
[1) greater than 50% one-half percent (1/2%)
of Borrowing Base
2) less than or equal to 50% three-eighths percent (3/8%)
of Borrowing Base]
Each capitalized term used but not defined herein shall have the
meaning assigned to such term in the Credit Agreement.
Very truly yours,
SOUTHERN MINERAL CORPORATION
SMC PRODUCTION CO.
SPRUCE HILLS PRODUCTION COMPANY, INC.
BEC ENERGY, INC.
By:/s/ James H. Price
-------------------------------------
James H. Price
Vice President-Finance