1
FIRST AMENDMENT TO
FOURTH RESTATED CREDIT AGREEMENT
This First Amendment to Fourth Restated Credit Agreement (this
"Amendment") is entered into as of the 28th day of April, 1994 by and
among Snyder Oil Corporation ("Borrower"), NationsBank of Texas, N.A.
as Agent ("Agent"), and NationsBank of Texas, N.A., Wells Fargo Bank,
N.A. and Bank One, Texas, N.A., each a national banking association
(NationsBank of Texas, N.A., Wells Fargo Bank, N.A. and Bank One,
Texas, N.A. are collectively referred to herein as the "Banks").
Capitalized terms used but not otherwise defined herein shall have
the respective meanings assigned to such terms in the Fourth Restated
Credit Agreement dated as of July 1, 1993 by and among Borrower,
Agent and the Banks (the "Credit Agreement").
W I T N E S S E T H:
WHEREAS, Borrower, Agent and the Banks entered into the Credit
Agreement pursuant to which the Banks agreed to make Loans to
Borrower on the terms and conditions set forth therein; and
WHEREAS, Borrower, Agent and the Banks desire to amend the
Credit Agreement in certain respects;
NOW, THEREFORE, for and in consideration of the mutual covenants
and agreements set forth herein and other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto hereby agree as follows:
1. Amendments to Definitions. The definitions of "Bank Redemption
Notice," "Borrowing Base Report," "Conversion Price," "Redemption
Notice," and "Restricted Payment" contained in Section 1.1 of the
Credit Agreement shall be amended to read in full as follows:
"Bank Redemption Notice" means any notice required to be given
by Borrower to the Banks pursuant to the definitions of "Qualified
Redemption of First Issue," "Qualified Redemption of Second Issue"
and "Qualified Redemption of Third Convertible Debentures."
"Borrowing Base Report" means the report required to be
delivered to the Banks pursuant to Section 4.1 and 4.3 which shall
(a) set forth the aggregate amount of all obligations of Borrower to
the holders of the Subordinated Notes, the Convertible Debentures and
the Preferred Stock coming due within the twelve (12) month period
following the next succeeding Determination Date, including, without
limitation, (i) dividends anticipated to be paid during such period
whether or not declared, and (ii) the full amount of any redemption,
sinking fund or mandatory prepayment obligation anticipated to come
due during such period with respect to the Subordinated Notes, the
Convertible Debentures or the Preferred Stock (whether or not a Bank
Redemption Notice or Redemption Notice has been delivered), and (b)
include a copy of the Reserve Report and the Related Asset Report
upon which the Total Borrowing Base is to be determined.
"Conversion Price" means (a) in the case of the First Preferred
Stock, the "conversion price" in effect at the time in question as
such term is defined in the First Preferred Stock Designation or, if
the First Preferred Stock has been exchanged for the First
Convertible Debentures, as such term is defined in the First
Page 1
2
Indenture, (b) in the case of the Second Preferred Stock, the
"conversion price" in effect at the time in question as such term is
defined in the Second Preferred Stock Designation or, if the Second
Preferred Stock has been exchanged for the Second Convertible
Debentures, as such term is defined in the Second Indenture and (c)
in the case of the Third Convertible Debentures, the "conversion
price" in effect at the time in question as such term is defined in
the Third Indenture.
"Convertible Debentures" means the First Convertible Debentures,
the Second Convertible Debentures and the Third Convertible
Debentures, collectively.
"Redemption Notice" means a notice by Borrower (or the First
Indenture Trustee, the Second Indenture Trustee or the Third
Indenture Trustee) to the holders of First Preferred Stock, Second
Preferred Stock, First Convertible Debentures, Second Convertible
Debentures or Third Convertible Debentures, as applicable, pursuant
to which Borrower (or the First Indenture Trustee, the Second
Indenture Trustee or the Third Indenture Trustee) calls any such
securities for redemption.
"Restricted Payment" means (a) any Distribution by Borrower or
any Distribution by DJ Partners, L.P., (b) any capital contribution,
loan or advance by Borrower or any Restricted Subsidiary to any
Unrestricted Subsidiary of Borrower or to DJ Partners, L.P., (c) the
issuance of a Guarantee by Borrower or any Restricted Subsidiary with
respect to any Debt or other obligation of any Unrestricted
Subsidiary, (d) the retirement, redemption or prepayment prior to the
scheduled maturity by Borrower or a Restricted Subsidiary of Borrower
of any Debt of Borrower or such Restricted Subsidiary which is
subordinate to the Obligations, including without limitation, the
Subordinate Notes and the Convertible Debentures (and, in the case of
the Third Convertible Debentures, any payment of the Change of
Control Purchase Price [as defined in the Third Indenture]), and (e)
any Investment by Borrower which is a Permitted Investment pursuant
to subsection (e) of the definition of Permitted Investment.
Notwithstanding the foregoing, "Restricted Payments" shall not
include (y) advances made under the Intercompany Loan or (z)
contributions by Borrower and SWAT to DJ Partners, L.P. of (i) oil
and gas properties owned by Borrower and DJ Partners, L.P. on
September 30, 1992 located in Weld County, Colorado (as to the Codell
and Niobrara formation only) and Cheyenne County, Nebraska (as to the
Niobrara formation only) and (ii) the oil and gas properties owned by
Borrower described on Schedule 2 hereto; provided, that, in the case
of (z) (i) and (ii) preceding, such properties shall be mortgaged to
Agent for the benefit of Banks as required by Section 5.1 hereof
prior to the date such properties are contributed to DJ Partners,
L.P. for purposes of this definition, at the time Borrower or any
Restricted Subsidiary issues any Guarantee of any Debt or other
obligation of any Unrestricted Subsidiary, Borrower or such
Restricted Subsidiary will be deemed to have made a Restricted
Payment in an amount equal to the maximum potential liability of
Borrower or such Restricted Subsidiary under such Guarantee.
2. Additional Definitions. The Credit Agreement shall be amended
to include new definitions of "Delmar," "Delmar Acquisition," "Delmar
Plan," "Qualified Redemption of Third Convertible Debentures," "Third
Convertible Debentures," "Third Indenture," "Third Indenture Trustee"
and "Third Registration Statement," which shall read in their
Page 2
3
respective entirety as follows:
"Delmar" means Delmar Operating, Inc., a Delaware corporation
which may become a Subsidiary of Borrower as a result of the Delmar
Acquisition.
"Delmar Acquisition" means the acquisition by Borrower of more
than fifty percent (50%) of the outstanding capital stock (on a fully
diluted basis) of Delmar Petroleum, Inc. a Delaware corporation,
which holds one hundred percent (100%) of the issued and outstanding
capital stock of Delmar.
"Delmar Plan" means the Delmar Operating, Inc. Pension Plan, a
Plan maintained by Delmar.
"Qualified Redemption of Third Convertible Debentures" means a
redemption by Borrower of the Third Convertible Debentures pursuant
to Article XI of the Third Indenture which meets each of the
following qualifications: (a) Borrower shall have given the Banks a
Bank Redemption Notice not less than twenty (20) days nor more than
sixty (60) days prior to the delivery of a Redemption Notice to the
holders of the Third Convertible Debentures; (b) Borrower shall not
(and shall not permit the Third Indenture Trustee to) deliver the
Redemption Notice more than thirty (30) days prior to the date fixed
for redemption; (c) such redemption shall not be effective prior to
March 31, 1997; and (d) the Closing Price of Borrower's Common Stock
on each trading day in the period commencing thirty (30) days prior
to the date of delivery of the Redemption Notice through the fifth
(5th) Domestic Business Day prior to the date fixed for redemption
shall be at least one hundred twenty percent (120%) of the Conversion
Price.
"Third Convertible Debentures" means Borrower's ___% Convertible
Subordinated Notes Due 2001 which may be issued pursuant to the Third
Registration Statement.
"Third Indenture" means an Indenture to be entered into by and
between Borrower and the Third Indenture Trustee setting forth the
terms of the Third Convertible Debentures, which shall be in form and
substance acceptable to Required Banks.
"Third Indenture Trustee" means Texas Commerce Bank National
Association and any successor trustee appointed pursuant to the Third
Indenture.
"Third Registration Statement" means the Registration Statement
on Form S-3 (No. 33-52807) under the Securities Act registering the
offering and sale of the Third Convertible Debentures in accordance
with the Securities Act filed by Borrower with the Securities and
Exchange Commission, together with all changes and completions to
such Registration Statement filed with the Securities and Exchange
Commission after the date hereof, but before the effective date of
such Registration Statement.
3. Amendment to Representation Regarding ERISA. Section 7.7 of the
Credit Agreement shall be amended to read in full as follows:
SECTION 7.7 ERISA. With the exception of the Delmar Plan
(to the extent Borrower completes the Delmar Acquisition),
neither the Borrower nor any of its Subsidiaries is a party
Page 3
4
to or bound by, or at any time prior to the date hereof,
has been a party to or bound by, any Plan.
4. Addition of Representations Regarding Third Convertible
Debentures. The Credit Agreement shall be amended to include a new
Section 7.18 which shall read in full as follows:
SECTION 7.18. Issuance of Third Convertible Debentures. Upon
the issuance and sale of the Third Convertible Debentures upon
the terms and conditions set forth in the Third Indenture, the
Third Convertible Debentures will have been duly authorized by
all necessary corporate action on the part of Borrower, will
require no action by or in respect of or filing with, any
government authority, agency or official and will not
contravene, or constitute a default under any provision of
applicable law or regulation or of the certificates of
incorporation, or partnership agreement, bylaws or other
organizational documents of Borrower or any of its Subsidiaries
or of any Material Agreement, judgment, injunction, order,
decree or other instrument binding upon any such Person or the
creation of any Lien on the assets of any such Person other than
the Liens securing the Notes, and (b) the Third Registration
Statement when it becomes effective will conform in all material
respects to the requirements of the Securities Act and the
Exchange Act. Neither the Third Registration Statement nor the
final prospectus constituting a part thereof (including any
documents incorporated therein by reference) will include any
untrue statement of material fact or omit to state any material
fact required to be stated therein or necessary to make the
statements therein, in light of the circumstances under which
they were made, not misleading. The issuance of the Third
Convertible Debentures will be conducted in accordance with all
provisions of the Securities Act and the Exchange Act and
applicable state securities laws.
5. Amendment to Reporting Covenant. Section 8.1(j) of the Credit
Agreement shall be amended to read in full as follows:
(j) immediately upon receipt of the same, a copy of the any
notice received by Borrower of the occurrence of any Event of
Default under and as defined in the Securities Purchase
Agreement, the First Indenture, the Second Indenture or the
Third Indenture or any event which with notice, lapse of time or
both, would, unless cured or waived, become such an Event of
Default;
6. Amendment to Debt Covenant. Section 9.1 of the Credit Agreement
shall be amended to read in full as follows:
SECTION 9.1. Total Additional Debt of the Borrower, Restricted
Subsidiaries and DJ Partners, L.P. Neither the Borrower, any
Restricted Subsidiary nor DJ Partners, L.P. will incur any Debt
other than (a) Debt secured by Permitted Encumbrances described
in subpart (1) of the definition of Permitted Encumbrances, (b)
Nonrecourse Debt, (c) Third Party Letters of Credit permitted by
Section 2.1 hereof, (d) the Loans, (e) the Intercompany Loan,
(f) margin accounts with brokers and dealers relating to Margin
Stock and other securities, and (g) Guarantees of Debt and other
liabilities of other Restricted Subsidiaries and of Borrower
provided that such Debt and other liabilities are permitted
Page 4
5
pursuant to this Agreement; provided, that the Debt permitted
pursuant to Section 9.1(a) and (b) shall not exceed $15,000,000
in the aggregate; provided further that the Third Party Letter
of Credit Exposure under Cash Secured Third Party Letters of
Credit shall not exceed at any time five percent (5%) of the
Borrowing Base in effect at such time; and provided further,
that the maximum aggregate outstanding balance of Borrower's and
its Subsidiaries' margin accounts shall not exceed one percent
(1%) of Borrower's Consolidated Tangible Net Worth at any time.
In addition to the foregoing, Borrower may issue the First
Convertible Debentures in exchange for the First Preferred
Stock, Borrower may issue the Second Convertible Debentures in
exchange for the Second Preferred Stock, and Borrower may issue
the Third Convertible Debentures; provided, that Borrower shall
give each Bank ninety (90) days advance notice of Borrower's
intention to complete any exchange of Convertible Debentures for
Preferred Stock, and if Majority Banks require that Borrower and
the Restricted Subsidiaries grant Liens on their oil and gas
properties and Related Assets pursuant to Section 5.1(b),
Borrower will not complete such exchange until all requisite
Mortgages have been executed and delivered by Borrower and the
Restricted Subsidiaries and Agent has notified Borrower that all
such Mortgages have been filed of record and that all other
steps necessary to perfect (and confirm perfection) of the Liens
created by such Mortgages have been taken.
7. Amendment to Restricted Payments Covenants. Section 9.2 of the
Credit Agreement shall be amended to read in full as follows:
SECTION 9.2. Restricted Payments. Neither the Borrower, any
Restricted Subsidiary nor DJ Partners, L.P. will declare or make
any Restricted Payment; provided, that, so long as no Default or
Event of Default, Borrowing Base Deficiency or noncompliance
with Section 10.4 exists (without giving effect to the cure
periods provided by Section 4.4 or 10.4), and provided further
that no Default or Event of Default would result from such
Restricted Payment, Borrower, Restricted Subsidiaries and DJ
Partners, L.P. may (a) make Restricted Payments in an aggregate
amount (measured cumulatively from March 31, 1993) not to exceed
the sum of the following (i) $10,000,000, plus (ii) the net cash
proceeds to Borrower from all equity offerings completed by
Borrower after March 31, 1993, plus (iii) all cash Distributions
actually received by Borrower or any Restricted Subsidiary from
Unrestricted Subsidiaries after March 31, 1993, plus (iv) fifty
percent (50%) of Borrower's Consolidated Cash Flow earned after
March 31, 1993, (b) declare and make a Qualified Redemption of
the First Issue, (c) declare and make a Qualified Redemption of
the Second Issue, (d) declare and make a Qualified Redemption of
the Third Convertible Debentures, (e) issue the First
Convertible Debentures in exchange for the Preferred Stock, and
(f) at any time on or after March 31, 1994, issue the Second
Convertible Debentures in exchange for the Second Preferred
Stock.
8. Amendment to Plan Covenant. Section 9.10 of the Credit
Agreement shall be amended to read in full as follows:
SECTION 9.10 Plans. With the exception of the Delmar Plan
(to the extent Borrower completes the Delmar Acquisition),
neither the Borrower nor any of its Subsidiaries shall
Page 5
6
create, adopt or become bound by any Plan. To the extent
Borrower completes the Delmar Acquisition, Borrower shall
(a) immediately notify the Banks of the occurrence of any
Reportable Event (as defined in Section 4043 of ERISA) with
respect to the Delmar Plan, (b) cause the Delmar Plan to at
all times meet the minimum funding requirements contained
in Section 412 of the Code, (c) cause Delmar to take all
steps required to maintain the qualification of the Delmar
Plan under Section 401(a) of the Code and the tax exempt
status of the related trust under Section 501(a) of the
Code, (d) not permit Delmar to materially increase the
benefits provided under the Delmar Plan, and (e) not permit
Delmar to terminate the Delmar Plan if such termination
would result in liability to Borrower or any of its
Subsidiaries (including Delmar) of $1,000,000 or more.
9. Amendment to Schedule of Subsidiaries. Schedule 1 to the Credit
Agreement is hereby amended to delete Lido Atlantic Trading Company,
Inc., Oil Field Systems Corporation and American Onshore Petroleum
Company, Inc. due to the merger of such Subsidiaries out of
existence.
10. Revocation of Exchange Letters. Reference is hereby made to (a)
that certain letter dated September 17, 1993, from Peter E. Lorenzen,
Vice President and General Counsel of Borrower addressed to the Banks
(the "Exchange Notice Letter"), pursuant to which the Banks were
notified of Borrower's intention to issue the First Convertible
Debentures in exchange for the First Convertible Stock (the
"Exchange"), and (b) the letter agreement (the "Collateral Waiver
Letter") dated as of October 6, 1993, by and between Borrower and
Banks regarding the Banks limited waiver of the right contained in
Section 5.1(b) of the Credit Agreement to require the grant of
certain Liens in connection with the Exchange. Borrower has notified
Banks that it did not complete the Exchange and that it does not
currently intend to complete the Exchange. As such, Borrower hereby
rescinds the Exchange Notice and Banks and Borrower hereby mutually
rescind the Collateral Waiver Letter, in each case to the same extent
as if such letters had never been executed or delivered. As a result
of the foregoing, in the event Borrower elects to complete an
exchange of the First Preferred Stock for the First Convertible
Debentures in the future, it will be necessary for Borrower to again
comply with the requirements of Section 9.1 and 5.1(b) of the Credit
Agreement.
11. Conditions to Effectiveness. This Amendment shall not be deemed
effective until the following shall have been received or occurred:
a. Evidence of Corporate Authority; Legal Opinion. Borrower
shall have delivered to the Banks (a) resolutions of Borrower's
(and to the extent requested, each Restricted Subsidiary's)
Board of Directors authorizing execution and delivery of this
Amendment certified as being true and correct by Borrower's (or
the applicable Restricted Subsidiaries') corporate secretary,
and (b) an opinion of Peter E. Lorenzen, Esq., in form and
substance acceptable to the Banks, opining with respect to the
matters set forth in Paragraph 12 hereof and such other
materials as Agent shall reasonably request.
b. Approval of Third Convertible Debentures Offering
Documents. The Third Indenture and any other related documents,
Page 6
7
instruments and agreements shall be in form and substance
acceptable to the Required Banks.
c. Consent of Guarantors. Borrower shall have caused each
Restricted Subsidiary to execute and deliver to the Banks an
Acknowledgement of Guaranty substantially in the form of Exhibit
A attached hereto.
12. Certificate of Effectiveness. Upon satisfaction of each of the
conditions set forth in Paragraph 11 hereof, Borrower and each Bank
shall execute a Certificate of Effectiveness (herein so called)
substantially in the form of Exhibit B attached hereto and
incorporated herein. Upon the execution and delivery of the
Certificate of Effectiveness, the Credit Agreement shall be
automatically amended on the terms set forth herein without the
necessity of any other action on the part of Borrower, Agent or the
Banks. Until the execution and delivery of the Certificate of
Effectiveness, the Credit Agreement shall remain in full force and
effect in accordance with its terms. The date the Certificate of
Effectiveness is delivered is referred to herein as the "Effective
Date."
13. Legal Expenses. Borrower hereby agrees to pay on demand all
reasonable fees and expenses of counsel to Agent incurred by Agent in
connection with the preparation, negotiation and execution of this
Amendment and all related documents.
14. Certification of Representations and Warranties. Borrower
hereby certifies to each Bank that each representation and warranty
of it and the Restricted Subsidiaries contained in the Credit
Agreement and the other Loan Papers (after giving effect to this
Amendment) is true and correct on the date hereof and will be true
and correct on the Effective Date; provided, however, that the
representation and warranty contained in Section 7.5 of the Credit
Agreement shall apply to the most recent financial statements
delivered to the Banks pursuant to Section 8.1 thereof.
15. Binding Effect. Borrower hereby represents and warrants to the
Banks as follows:
a. The execution, delivery and performance by Borrower of this
Amendment is within the Borrower's corporate powers, has been
duly authorized by all necessary action, requires no action by
or in respect of, or filing with, any governmental body, agency
or official and do not violate or constitute a default under any
provision of applicable law or regulation or of any agreement,
judgment, injunction, order, decree or other instrument binding
upon Borrower, any Restricted Subsidiary or DJ Partners, L.P. or
result in the creation or imposition of any Lien upon any of the
assets of Borrower, any Restricted Subsidiary or DJ Partners,
L.P.; and
b. This Amendment constitutes a valid and binding obligation
of the Borrower enforceable in accordance with its terms, except
as (i) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor's rights
generally, and (ii) the availability of equitable remedies may
be limited by equitable principles of general application.
16. No Defenses. Borrower hereby represents and warrants to the
Page 7
8
Banks that there are no defenses to payment, counterclaims or rights
of set-off with respect to the Loans existing on the date hereof.
17. Reaffirmation of Loan Papers; Extension of Liens. Any and all
of the terms and provisions of the Credit Agreement and the Loan
Papers shall, except as amended and modified hereby, remain in full
force and effect. Borrower hereby extends the Liens securing the
Obligations until the Obligations have been paid in full, and agrees
that the amendments and modifications herein contained shall in no
manner affect or impair the Obligations or the Liens securing payment
and performance thereof.
18. Parties in Interest. All of the terms and provisions of this
Amendment shall bind and inure to the benefit of the parties hereto
and their respective successors and assigns.
19. Counterparts. This Amendment may be executed in counterparts,
and all parties need not execute the same counterpart. However, no
party shall be bound by this Amendment until all parties have
executed a counterpart.
20. COMPLETE AGREEMENT. THIS AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN PAPERS COLLECTIVELY REPRESENT THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF BORROWER,
THE AGENT AND THE BANKS. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG
BORROWER, THE AGENT AND BORROWER.
20. Headings. The headings, captions and arrangements used in this
Amendment are, unless specified otherwise, for convenience only and
shall not be deemed to limit, amplify or modify the terms of this
Amendment, nor affect the meaning thereof.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed by their respective authorized officers on the date
and year first above written.
BORROWER
SNYDER OIL CORPORATION,
a Delaware corporation
By: /s/ PETER E. LORENZEN
Peter E. Lorenzen
Vice President
AGENT
NATIONSBANK OF TEXAS, N.A.
By: /s/ E. MURPHY MARKHAM, IV
E. Murphy Markham, IV
Senior Vice President
Page 8
9
BANKS
NATIONSBANK OF TEXAS, N.A.
By: /s/ E. MURPHY MARKHAM, IV
E. Murphy Markham, IV
Senior Vice President
WELLS FARGO BANK, N.A.
By: /s/ KIRK SCOGGINS
Kirk Scoggins
Vice President
BANK ONE, TEXAS, N.A.
By: /s/ BRAD BARTEK
Brad Bartek
Vice President
Page 9