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EXHIBIT 10.11
FIRST AMENDMENT TO CREDIT AGREEMENT
This FIRST AMENDMENT TO CREDIT AGREEMENT is made and entered into
effective as of this 30th day of June, 1996 (this "Amendment") among DLB OIL &
GAS, INC., a corporation formed under the laws of the State of Oklahoma (the
"Borrower"); each of the lenders that is or becomes a party to the Credit
Agreement (defined below) (individually, together with its successors and
assigns, a "Lender" and, collectively, the "Lenders"); and FIRST UNION NATIONAL
BANK OF NORTH CAROLINA, a national banking association (in its individual
capacity, "First Union"), as agent for the Lenders (in such capacity, together
with its successors in such capacity, the "Agent").
RECITALS
A. The Borrower, the Agent and the Lender previously entered into
that certain Credit Agreement dated as of December 28, 1995 (the "Credit
Agreement"), pursuant to which the Lenders agreed to make certain loans to and
extensions of credit on behalf of the Borrower upon the terms and conditions as
provided therein.
B. The Borrower and the Lenders now desire to make certain
amendments and supplements 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:
1. All capitalized terms used in this Amendment and not otherwise
defined herein shall have the meanings ascribed to such terms in the Credit
Agreement.
2. The definition of "Eurodollar Loans" in Section 1.02 of the
Credit Agreement is deleted in its entirety, and the following definition is
substituted therefor:
"LIBOR Loans" shall mean Loans the interest rates on which are
determined on the basis of rates referred to in-the definition of
"LIBOR Rate". Any references in this Agreement to Eurodollar Loans
shall instead be deemed to be a reference to LIBOR Loans."
3. The definition of "Fixed Eurodollar Rate" in Section 1.02 of
the Credit Agreement is deleted in its entirety, and the following definition
is substituted therefor:
"LIBOR" shall mean the rate of interest determined on the
basis of the rate for deposits in Dollars for a period equal
to the applicable Interest Period commencing on the first day
of such Interest Period appearing on Telerate Page 3750 as of
11:00 a.m. (London time) two (2) Business Days prior to the
first
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day of the applicable Interest Period. In the event that such
rate does not appear on Telerate Page 3750, "LIBOR" shall be
determined by the Agent to be the rate per annum at which
deposits in Dollars are offered by leading reference banks in
the London interbank market to First Union at approximately
11:00 a.m. (London time) two Business days prior to the first
day of the applicable Interest Period for a period equal to
such Interest Period and in an amount substantially equal to
the amount of the applicable Loan. Any referenced in this
Agreement to Fixed Eurodollar Rate shall instead be deemed to
be a reference to LIBOR."
4. The definition of "Fixed Rate" in Section 1.02 of the Credit
Agreement is deleted in its entirety, and the following definition is
substituted therefor:
"LIBOR Rate" shall mean, with respect to any LIBOR Loan, a
rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) determined by the Agent to be equal to the
quotient of (i) LIBOR for such Loan for the Interest Period
for such Loan divided by (ii) 1 minus the Reserve Requirement
for such Loan for such Interest Period. Any reference in this
Agreement to Fixed Rate shall instead be deemed to be a
reference to LIBOR Rate.
5. The definitions of "Agreement", "Applicable Margin", "Reserve
Report" and "Termination Date" in Section 1.02 of the Credit Agreement are
hereby amended to read as follows:
"Agreement" shall mean this Credit Agreement, as amended by
the First Amendment, and as the same may be further amended
or supplemented from time to time.
"Applicable Margin" shall mean for Base Rate Loans or LIBOR
Loans the following rate per annum as applicable:
======================================================================
Borrowing Base Utilization Base Rate Loans LIBOR Loans
Percentage
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less than 50% 0.00% 1.35%
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less than 75%, but 0.00% 1.60%
greater than or equal
to 50%
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greater than or equal 0.25% 1.75%
to 75%
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"Reserve Report" shall mean a report, in form and substance
satisfactory to the Agent, setting forth, as of each January 1
and July 1 (or such other date in the event of an unscheduled
redetermination): (i) the oil and gas reserves attributable to
the Oil and Gas Properties together with a projection of the
rate of production and future net income, taxes, operating
expenses and capital expenditures with respect thereto as of
such date, based upon the pricing assumptions consistent with
SEC reporting requirements at the time, and (ii) such other
information as the Agent may reasonably request. The term
"Reserve Report" shall also include the information to be
provided by the Borrower by October 1 of each year pursuant to
Section 8.05(a).
"Termination Date" shall mean, unless extended pursuant to
Section 2.01(c) or terminated pursuant to Section 10.02, December 31,
1999. If the Termination Date is extended, "Termination Date" shall
mean the date to which final maturity of the Notes has been extended
to as provided in Section 2.01(c).
6. Section 1.02 of the Credit Agreement is hereby supplemented,
where alphabetically appropriate, with the addition of the following
definition:
"First Amendment" shall mean that certain First Amendment to
Credit Agreement dated effective as of June 30, 1996 among the
Borrower, the Agent and the Lenders.
7. Section 2.01(c) of the Credit Agreement is hereby amended by
substituting the date "July 1, 1996" with the date "July 1, 1997."
8. Section 2.07(a) of the Credit Agreement is hereby amended by
deleting the phrase ", provided that interest on the principal prepaid, accrued
to the prepayment date, shall be paid on the prepayment date" from the first
sentence thereof.
9. Section 2.07(b) of the Credit Agreement is hereby amended by
deleting the phrase ", together with interest on the principal amount paid
accrued to the date of such prepayment" from clause (i) thereof.
10. References to "Majority Lenders" in Section 2.08(b) of Credit
Agreement shall be deemed to be references to "Lenders". Section 2.08(b) is
further amended by adding the following sentence:
"Any Borrowing Base redetermination shall require the
agreement of all the Lenders."
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11. The first sentence of Section 2.08(d) of the Credit
Agreement is hereby amended as follows:
"So long as any of the Commitments are in effect and until
payment in full of the LC Exposure and all Loans hereunder, on or
around the first (1st) Business Day of each June and December,
commencing December 1, 1996 ("Scheduled Redetermination Dates"), the
Lenders shall redetermine the amount of the Borrowing Base in
accordance with Section 2.08(b)."
12. Section 8.05(a) of the Credit Agreement is hereby amended to
read as follows:
"By March 1 and October 1 of each year commencing October 1, 1996, the
Borrower shall furnish to the Agent and the Lenders a Reserve Report evaluating
the Oil and Gas Properties of the Borrower. The Reserve Report due each March
1 with an as of date of January 1 shall be prepared by certified independent
petroleum engineers or other independent petroleum consultant(s) acceptable to
the Agent, such acceptance not to be unreasonably withheld, and the Reserve
Report due each October 1 with an as of date of July 1 shall be prepared by or
under the supervision of the chief engineer of the Borrower who shall certify
such Reserve Report to be true and accurate and to have been prepared in
accordance with the procedures used in the Reserve Report due each March 1."
13. Section 8.07(a) of the Credit Agreement is hereby amended to
read as follows:
"(a) The Borrower shall at all times maintain as security
for the Indebtedness a first priority Lien (subject only to Liens permitted
by Section 9.02) on its Oil and Gas Properties representing at least
ninety-five percent (95%) of the present discounted value of its Oil and Gas
Properties as set forth in the most recent Reserve Report. Should the
Borrower acquire any additional Oil and Gas Properties, the borrower will
grant to the Agent as security for the Indebtedness a first-priority Lien
(subject only to Liens permitted by Section 9.02) on the Borrower's interest
in such Oil and Gas Properties to maintain the 95% requirement as set forth
in the preceding sentence. This Lien will be created and perfected by and in
accordance with the provisions of deeds of trust, security agreements and
financing statements or other Security Instruments, 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."
14. Credit Agreement is hereby amended by adding the following
Section 12.18:
Section 12.8 ARBITRATION AND PRESERVATION OF REMEDIES.
(a) UPON DEMAND OF ANY PARTY HERETO, WHETHER MADE BEFORE OR
AFTER INSTITUTION OF ANY JUDICIAL ACTION,
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ANY DISPUTE, CLAIM OR CONTROVERSY ARISING OUT OF OR
CONNECTED WITH THE LOAN DOCUMENTS ("DISPUTES") SHALL BE
RESOLVED BY BINDING ARBITRATION AS PROVIDED HEREIN.
DISPUTES MAY INCLUDE, WITHOUT LIMITATION, TORT CLAIMS,
COUNTERCLAIMS, CLAIMS BROUGHT AS CLASS ACTIONS, CLAIMS
ARISING FROM LOAN DOCUMENTS EXECUTED IN THE FUTURE.
ARBITRATION SHALL BE CONDUCTED UNDER THE COMMERCIAL
FINANCIAL DISPUTES ARBITRATION RULES (THE "ARBITRATION
RULES") OF THE AMERICAN ARBITRATION ASSOCIATIO AND TITLE 9
OF THE U.S. CODE. ALL ARBITRATION HEARINGS SHALL BE
CONDUCTED IN HOUSTON, TX OR ANY PLACE AGREED TO IN WRITING
BY THE PARTIES. THE EXPEDITED PROCEDURES SET FORTH IN
RULE 51 ET SEQ. OF THE ARBITRATION RULES SHALL BE
APPLICABLE TO CLAIMS OF LESS THAN $1,000,000. ALL
APPLICABLE STATUTES OF LIMITATION SHALL APPLY TO ANY
DISPUTE. A JUDGEMENT UPON THE AWARD MAY BE ENTERED IN ANY
COURT HAVING JURISDICTION. THE PANEL FROM WHICH ALL
ARBITRATORS ARE SELECTED SHALL BE COMPRISED OF LICENSED
ATRORNEYS. THE SINGLE ARBITRATOR SELECTED FOR EXPEDITED
PROCEDURE SHALL BE A RETIRED JUDGE FROM THE HIGHEST COURT
OF GENERAL JURISDICTION, STATE, OR FEDERAL, OF THE STATE
THE HEARING WILL BE CONDUCTED.
(b) NOTWITHSTANDING THE PRECEDING BINDING ARBITRATION
PROVISION, THE AGENT, THE LENDERS AND THE BORROWER
PRESERVE CERTAIN REMEDIES THAT ANY PARTY HERETO MAY
EXERPCISE FREELY, EITHER ALONE OR DURING A DISPUTE. THE
BORROWER OR THE AGENT ACTING ON BEHALF OF THE LENDERS
SHALL HAVE THE RIGHT TO PROCEED IN ANY COURT OF PROPER
JURISDICTION OR BY SELF HELP TO EXERCISE OR PROSECUTE THE
FOLLOWING REMEDIES, AS APPLICABLE: (i) ALL RIGHTS TO
FORECLOSE AGAINST ANY REAL OR PERSONAL PROPERTY OR OTHER
SECURITY BY EXERCISING A POWER OF SALE GRANTED IN THE LOAN
DOCUMENTS OR UNDER APPLICABLE LAW, (ii) ALL RIGHTS OF SELF
HELP INCLUDING PEACEFUL OCCUPATION OF REAL PROPERTY AND
COLLECTION OF RENTS, SET-OFF, AND PEACEFUL POSSESSION OF
PERSONAL PROPERTY, (iii) OBTAINING PROVISIONAL OR
ANCILLARY REMEDIES INCLUDING INJUCTIVE RELIEF,
SEQUESTRATION, GARNISHMENT, ATTACHMENT, AND APPOINTMENT OF
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RECEIVER AND (iv) WHEN APPLICABLE, A JUDGEMENT BY
CONFESSION OF JUDGEMENT. PRESERVATION OF THESE REMEDIES
DOES NOT LIMIT THE POWER OF AN ARBITRATOR TO GRANT SIMILAR
REMEDIES THAT MAY BE REQUESTED BY A PARTY IN A DISPUTE.
THE BORROWER, THE AGENT, AND THE LENDERS, AGREE THAT THEY
SHALL NOT HAVE A REMEDY OF PUNITIVE OR EXEMPLARY DAMAGES
AGAINST THE OTHER IN ANY DISPUTE AND HEREBY WAIVE ANY
RIGHT OR CLAIM TO PUNITIVE OR EXEMPLARY DAMAGES THEY HAVE
NOW OR WHICH MAY ARISE IN THE FUTURE IN CONNECTION WITH
ANY DISPUTE WHETHER THE DISPUTE IS RESOLVED BY ARBITRATION
OR JUDICIALLY.
(c) NOTWITHSTANDING THE FOREGOING, THIS ARBITRATION PROVISION
DOES NOT APPLY TO DISPUTES UNDER OR RELATED TO SWAP AGREEMENTS.
15. Section 10.01 (j) of the Credit Agreement is hereby
amended to read as follows:
"(j) The Borrower discontinues its usual business
or there is any material change in the ownership,
management or control of the Borrower; or"
16. During the period from and after June 10, 1996 until
the Borrowing Base is redetermined in accordance with Section 2.08 or adjusted
pursuant to Section 8.06(c), the amount of the Borrowing Base shall be
$50,000,000.
17. This Amendment shall become binding when the Agent
shall have received the following:
(a) counterparts of this Amendment executed by the Borrower and the
Lenders;
(b) new Notes executed by the Borrower payable to the order of
each of the Lenders; and
(c) any fees due the Agent as a result of this Amendment; and
(d) such other documents as the Agent or its counsel may reasonably
request.
18. The parties hereto hereby acknowledge and agree that,
except as specifically supplemented and amended, changed or modified hereby,
the Credit Agreement shall remain in full force and effect in accordance with
its terms.
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19. The Borrower hereby reaffirms that as of the date of this
Amendment, the representations and warranties made by the Borrower in Article
VII of the Credit Agreement are true and correct on the date hereof as though
made on and as of the date of this Amendment.
20. This Amendment shall be governed by, and construed in
accordance with the laws of the State of Texas.
21. This Amendment may be executed in two or more counterparts,
and it shall not be necessary that the signatures of all parties hereto be
contained on any one counterpart hereof; each counterpart shall be deemed an
original, but all of which together shall constitute one and the same
instrument.
22. THE CREDIT AGREEMENT, THIS AMENDMENT, THE NOTES AND THE
SECURITY INSTRUMENTS 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 OR ORAL AGREEMEENTS BETWEEN
THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to
be duly executed effective as of the date first above written.
BORROWER: DLB OIL & GAS, INC.
By: /s/ Ronald D. Youtsey
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Name: Ronald D. Youtsey
Title: Chief Financial Officer
AGENT AND LENDER: FIRST UNION NATIONAL BANK
OF NORTH CAROLINA
By: /s/ Michael J. Kolosowsky
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Name: Michael J. Kolosowsky
Title: Vice President
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