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EXHIBIT 10.13
THIRD AMENDMENT TO SECOND
AMENDED AND RESTATED LOAN AGREEMENT
This THIRD AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT (the
"Third Amendment") dated August 18, 1998 is by and between VENUS EXPLORATION,
INC., a Delaware corporation, formerly known as XPLOR CORPORATION, a Delaware
corporation (the "Borrower") and WELLS FARGO BANK (TEXAS), N.A., a national
banking association (the "Bank").
W I T N E S S E T H:
WHEREAS, Bank and Borrower entered into that certain Second Amended and
Restated Loan Agreement dated December 22, 1997 (the "Loan Agreement"), pursuant
to which Borrower obtained a credit facility in the amount of up to the lesser
of the Borrowing Base (as defined in the Loan Agreement) or the Commitment (as
defined in the Loan Agreement); and
WHEREAS, Bank and Borrower entered into that certain First Amendment to
Second Amended and Restated Loan Agreement dated May 19, 1998 (the "First
Amendment") in order to modify certain terms of the Loan Agreement to, among
other things, establish the current Borrowing Base and modify certain financial
covenants; and
WHEREAS, Bank and Borrower entered into that certain Second Amendment
to Second Amended and Restated Loan Agreement dated July 8, 1998 (the "Second
Amendment") in order to modify certain terms of the Loan Agreement to, among
other things, further modify the Borrowing Base; and
WHEREAS, Bank and Borrower now desire to further amend that Loan
Agreement as herein set forth.
NOW, THEREFORE, in consideration of the premises herein contained and
other good and valuable consideration, the receipt and sufficiency of which are
hereby acknowledged, the parties hereto agree as follows:
1. Definitions. Except as otherwise provided, unless the context hereof
indicates otherwise, all capitalized terms used herein shall have the same
meaning as such capitalized terms are defined in the Loan Agreement.
2. Borrowing Base. Section 2.2(b) of the Loan Agreement is hereby
deleted in its entirety and replaced with the following:
"(b) After receipt of all of the information required by
Section 2.2(a), Bank may redetermine the amount of the Borrowing
Base in accordance with the customary practices of Bank for oil and
gas loans to be effective as of April 1 and October 1 of such year.
In connection with the initial Redetermination of the Borrowing Base
as
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set forth herein, Borrower agrees to pay to Bank an Engineering Fee
in the amount of $2,500. Thereafter, upon each subsequent delivery
to Bank of the information required by 2.2(a), Borrower shall pay to
Bank an Engineering Fee in the amount of $2,500. Until the next
determination of the amount of the Borrowing Base by Bank on or
about October 1, 1998, the amount of the Borrowing Base shall be
deemed to be $5,240,000. Until each new determination of Borrowing
Base is made by Bank, the amount of the Borrowing Base shall be
deemed to be the Borrowing Base last deemed or calculated, as the
case may be. In addition to the foregoing, Bank or Borrower may
initiate a redetermination of the Borrowing Base at any other time
as it so elects, provided, however, that Borrower may initiate only
two (2) such unscheduled redeterminations during any consecutive
twelve (12) month period by specifying in writing to Bank the date
on which Borrower will furnish the information required by Section
2.2(a) and the date on which it desires such redetermination to
occur. Bank shall have at least forty-five (45) days after the
delivery of the information required by Section 2.2(a) to make any
unscheduled redetermination of the Borrowing Base requested by
Borrower. Bank may, at any time and at its expense, initiate an
unscheduled redetermination of the Borrowing Base by specifying in
writing to Borrower the date by which Borrower is to furnish the
information required by Section 2.2(a) (excluding the information
required by Section 2.2(a)(i) and the projected date on which such
redetermination is to occur. Failure of Borrower to timely furnish
such information required by Section 2.2(a) shall not preclude
Bank's right to redetermine the Borrowing Base based on information
previously furnished to Bank. Bank shall promptly notify Borrower in
writing of the new Borrowing Base. Any redetermination of the
Borrowing Base shall not be effective until written notice is sent
to Borrower."
3. Interest Rate. Section 2.4(a) of the Loan Agreement is hereby
deleted in its entirety and the following substituted therefor:
"(a) Each Prime Rate Advance shall bear interest on the unpaid
principal amount thereof until payment in full at a rate equal to
the sum of the Prime Rate plus one percent (1%) , but in no event to
exceed the Highest Lawful Rate. Any change in the interest rate
accruing on an Advance resulting from a change in the Prime Rate
shall become effective as of the opening of business on the day on
which such change in the Prime Rate shall occur. For the period from
August 19, 1998 through September 30, 1998, Borrower may not elect
to have any Advance accrue interest at a rate using LIBOR.
Thereafter, and as long as no Event of Default or Potential Default
has occurred or is continuing, each LIBOR Advance shall bear
interest on the unpaid principal amount thereof until payment in
full at the Effective LIBOR Rate, but in no event to exceed the
Highest Lawful Rate."
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4. Equity Offering. A new Section 6.34 is hereby added to the Loan
Agreement as follows:
"6.34 Equity Offering. On or before September 30, 1998,
Borrower shall have completed the closing and funding of the
issuance, in accordance with all applicable securities and other
Laws, of an amount of the common stock of Borrower which results in
net proceeds to Borrower (after deducting all costs and expenses
associated therewith, including, without limitation, all
underwriting fees, printing costs, placement fees and expenses,
accountants, attorneys and other professional fees) of at least
$3,000,000, upon terms and conditions which are approved, in
advance, by Bank and provided that the net proceeds thereof shall be
used by Borrower to redevelop, recomplete and workover any of the
existing Oil and Gas Properties of Borrower which are part of the
Collateral and for other general working capital purposes."
5. Ratifications. The terms and provisions as set forth in this Third
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Loan Agreement, and except as expressly modified and superseded by
this Third Amendment, the terms of the Note and any and all other Loan Documents
executed in connection therewith or hereunto are hereby ratified and confirmed
and shall continue in full force and effect. Borrower and Bank agree that the
Loan Agreement, as amended hereby, the Note and the other Loan Documents shall
continue to be the legal, valid and binding obligations of Borrower, enforceable
against Borrower in accordance with their respective terms.
6. Representations and Warranties. Borrower hereby represents and
warrants to Bank that (i) the execution, delivery and performance of this Third
Amendment, and the other documents to be executed and delivered as required
hereby have been duly authorized by all requisite action on the part of
Borrower; (ii) after giving effect to this Third Amendment, the representations
and warranties contained in the Loan Agreement, as amended hereby, and any other
Loan Document executed in connection herewith or therewith are true, correct and
complete on and as of the date hereof as though made on and as of the date
hereof; and (iii) after giving effect to this Third Amendment, no Event of
Default or Potential Default has occurred and is continuing.
7. Covenant Deviation and Waiver. As of the date hereof, Borrower
failed to observe or maintain compliance with the Current Ratio covenant set
forth in Section 6.16 of the Loan Agreement and the Tangible Net Worth covenant
set forth in Section 6.17 of the Loan Agreement. Borrower has requested, and
Bank has approved, a deviation from such compliance with respect to for the
aforementioned covenants for a period from the date hereof through September 30,
1998, at which time Borrower must be in compliance therewith. It is understood
and agreed that Bank's consent to such deviation shall in no way act as a waiver
of any covenants, restrictions, rights or remedies with respect to the Loan
Agreement, but that such deviation shall apply only to the specific matter and
instance set forth hereinabove.
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8. Status of Claims. Borrower hereby represents and warrants to Bank
that no facts, events, status or conditions presently exist which, either now or
with the passage of time or the giving of notice or both, presently constitute
or will constitute a basis for any claim or cause of action against Bank, or any
defense to the payment of any of the Obligations. Borrower hereby releases,
relinquishes and forever discharges Bank, its successors, assigns, agents,
officers, directors, employees and representatives, of and from any and all
claims, demands, actions and causes of action of any and every kind or
character, whether known or unknown, present or future, which Borrower may have
against Bank, its successors, assigns, agents, officers, directors, employees
and representatives, arising out of or with respect to any and all transactions
relating to the Loan Agreement, this Third Amendment, or any Loan Document,
including any loss, cost or damage, of any kind or character, arising out of or
in any way connected with or in any way resulting from the acts, actions or
omissions of Bank, its successors, assigns, agents, officers, directors,
employees or representatives.
9. Conditions Precedent to Effectiveness of Third Amendment. This Third
Amendment shall become effective and be deemed effective upon receipt by Bank of
the following:
(i) counterparts of this Third Amendment duly executed by Borrower
and Bank;
(ii) a copy of resolutions approving this Third Amendment, and
authorizing the transactions contemplated herein or therein duly
adopted by the Executive Committee of the Board of Directors of
Borrower, accompanied by a certificate of the duly authorized Secretary
of Borrower, that such copy is a true and correct copy of resolutions
duly adopted by the Executive Committee of the Board of Directors of
Borrower, and that such resolutions constitute all the resolutions
adopted with respect to such Third Amendment and the transactions
contemplated herein, and have not been amended, modified or revoked in
any respect and are in full force and effect as of the date hereof;
(iii) there shall not have been, in the sole judgment of Bank, any
material adverse change in the financial condition, business or
operations of Borrower;
(iv) payment by Borrower of the fees and expenses of counsel to Bank
in connection with the preparation and negotiation of this Third
Amendment and all documents and instruments contemplated hereby;
(v) the execution and delivery by Borrower of a new Mortgage, Deed
of Trust, Assignment of Production, Security Agreement and Financing
Statement covering the interests of Borrower in the H. E. White #1 well
located in Freestone County, Texas; and
(vi) the execution and delivery by Borrower of such additional
documents and instruments that Bank and its counsel may deem necessary
to effectuate this Third Amendment or any document executed and
delivered to Bank in connection herewith or therewith.
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10. Execution Counterparts. This Third Amendment may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which when taken together shall constitute but one and the same
instrument.
11. Governing Law. This Third Amendment shall be governed by and
construed in accordance with the internal Laws of the State of Texas.
12. Successors and Assigns. This Third Amendment is binding upon and
shall inure to the benefit of Borrower and Bank and their respective successors
and assigns; provided, however, Borrower may not assign or transfer any of their
rights or obligations hereunder without the prior written consent of Bank.
13. Headings. The headings, captions and arrangements used in this
Third Amendment are for convenience only and shall not effect the interpretation
of this Third Amendment.
14. NO ORAL AGREEMENTS. THIS THIRD AMENDMENT, TAKEN TOGETHER WITH THE
OTHER LOAN DOCUMENTS AND ALL SCHEDULES AND EXHIBITS THERETO, REPRESENTS THE
FINAL AGREEMENT OF THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
15. AGREEMENT FOR BINDING ARBITRATION. THE PARTIES AGREE TO BE BOUND BY
THE TERMS AND PROVISIONS OF THE CURRENT ARBITRATION PROGRAM OF WELLS FARGO BANK
(TEXAS), N.A., WHICH IS INCORPORATED BY REFERENCE HEREIN AND IS ACKNOWLEDGED AS
RECEIVED BY THE PARTIES, PURSUANT TO WHICH ANY AND ALL DISPUTES SHALL BE
RESOLVED BY MANDATORY BINDING ARBITRATION UPON THE REQUEST OF EITHER PARTY.
"BORROWER"
VENUS EXPLORATION, INC.
By:
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Name:
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Title:
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"BANK"
WELLS FARGO BANK (TEXAS) N.A.
By:
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Theodore M. Nowak
Vice President
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