Execution Version
Exhibit 10.11
SIXTH AMENDMENT TO CREDIT AGREEMENT
This Sixth Amendment and Agreement (“Agreement”) dated as of March 23, 2010
(“Effective Date”) is by and among Belden & Blake Corporation, an Ohio
corporation (the “Company”), the Lenders (as defined below), and BNP Paribas, as
Administrative Agent (as such term is defined below).
RECITALS
A. The Company, certain subsidiaries of the Company, as Guarantors, the lenders
party thereto from time to time (the “Lenders”), and BNP Paribas, as
administrative agent for such Lenders (together with its permitted successors in
such capacity, the “Administrative Agent”) are parties to the First Amended and
Restated Credit and Guaranty Agreement dated as of August 16, 2005, as amended
by the First Amendment to Credit Agreement dated as of September 27, 2005, the
Second Amendment and Waiver dated as of August 3, 2007, the Third Amendment and
Waiver dated as of March 24, 2008, the Fourth Amendment, Waiver and Agreement
dated as of April 9, 2009, and the Fifth Amendment and Agreement dated as of
September 25, 2009 (as so amended and as the same may be amended or modified
from time to time, the “Credit Agreement”).
B. The Company, the Lenders and the Administrative Agent wish to, subject to the
terms and conditions of this Agreement, (1) reaffirm the Borrowing Base (as
defined in the Credit Agreement) as $65,000,000, (2) provide for a waiver of
compliance with the Leverage Ratio covenant set forth in Section 6.8(b) of the
Credit Agreement each day from December 31, 2009 through the Effective Date (the
“Covenant Waiver”), (3) provide for a waiver of the Existing Default (as defined
below), and (4) make certain amendments to the Credit Agreement.
THEREFORE, the Company, the Administrative Agent, and the Lenders hereby agree
as follows:
Section 1. Defined Terms. As used in this Agreement, each of the terms defined
in the opening paragraph and the Recitals above shall have the meanings herein
assigned. Each term defined in the Credit Agreement and used herein without
definition shall have the meaning assigned to such term in the Credit Agreement,
unless expressly provided to the contrary.
Section 2. Other Definitional Provisions. Article, Section, Schedule, and
Exhibit references are to Articles and Sections of and Schedules and Exhibits to
this Agreement, unless otherwise specified. All references to instruments,
documents, contracts, and agreements are references to such instruments,
documents, contracts, and agreements as the same may be amended, supplemented,
and otherwise modified from time to time, unless otherwise specified. The words
“hereof”, “herein”, and “hereunder” and words of similar import when used in
this Agreement shall refer to this Agreement as a whole and not to any
particular provision of this Agreement. The term “including” means “including,
without limitation,”. Paragraph headings have been inserted in this Agreement as
a matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.
Section 3. Waivers.
(a) The Lenders agree, subject to the terms and conditions of this Agreement, to
the Covenant Waiver. The waiver by the Lenders described in this Section 3 is
contingent upon the

 

 

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satisfaction of the conditions precedent set forth below and is limited to the
Covenant Waiver. Such waiver is limited to the extent described herein and shall
not be construed to be a consent to or permanent waiver of any provision in
Section 6.8(b) of the Credit Agreement, or any other terms, provisions,
covenants, warranties, or agreements contained in the Credit Agreement or in any
of the other Credit Documents. The description herein of the Covenant Waiver is
based upon information provided to the Lenders on or prior to the date hereof
and shall not be deemed to exclude the existence of any Defaults or Events of
Default other than the Event of Default which may exist as of December 31, 2009
under Section 6.8(b) of the Credit Agreement if the Lenders do not agree to the
Covenant Waiver.
(b) On or about November 9, 2009 the Company sold some of its interest in
undeveloped acreage located in Bradford County, Pennsylvania (“Subject Sale”).
Such Subject Sale was prohibited under Section 6.9 of the Credit Agreement and
therefore, such Subject Sale resulted in the occurrence of an Event of Default
(the “Existing Default”). The Company hereby acknowledges the existence of such
Existing Default . The Lenders agree, subject to the terms and conditions of
this Agreement, to waive the Existing Default. The waiver by the Lenders
described in this clause (b) is contingent upon the satisfaction of the
conditions precedent set forth below and is limited to the Existing Default.
Such waiver is limited to the extent described herein and shall not be construed
to be a consent to or permanent waiver of any provision in Section 6.9 of the
Credit Agreement, or any other terms, provisions, covenants, warranties, or
agreements contained in the Credit Agreement or in any of the other Credit
Documents. The description herein of the Existing Default is based upon
information provided to the Lenders on or prior to the date hereof and shall not
be deemed to exclude the existence of any other Defaults or Events of Default.
(c) The Lenders reserve the right to exercise any rights and remedies available
to them in connection with any other present or future defaults with respect to
the Credit Agreement or any other provision of any Credit Document. The failure
of the Lenders to give notice to the Company of any Default or Event of Default
is not intended to be nor shall be a waiver thereof. The Company hereby agrees
and acknowledges that the Lenders require and will require strict performance by
the Company of all of its obligations, agreements, and covenants contained in
the Credit Agreement and the other Credit Documents, and no inaction or action
regarding any Default or Event of Default is intended to be or shall be a waiver
thereof.
Section 4. Amendments to the Credit Agreement.
(a) Section 1.01 of the Credit Agreement is hereby amended by adding the
following new defined terms in alphabetical order:
“Identified Disposition” means, collectively, the disposition of up to 17,300 of
undeveloped acreage located in the Marcellus shale and comprised of 703 net
acres in Bradford County, Pennsylvania, 9,000 net acres in McKean County,
Pennsylvania, 2,331 net acres in Somerset County, Pennsylvania, 1,336 net acres
in Tioga County, Pennsylvania, 798 net acres in Washington County,
Pennsylvnania, 1,039 net acres in Alegany County, New York, and 2,131 net acres
in Broome County, New York.
“Consolidated Senior Secured Debt” means, as at any date of determination, the
aggregate amount of Loans outstanding and the Letter of Credit Usage.
“Senior Secured Leverage Ratio” means the ratio as of the last day of any Fiscal
Quarter or other date of determination of (i) Consolidated Senior Secured Debt
as of such day to (ii) Consolidated EBITDAX for the four-Fiscal Quarter period
ending on such date (or if such date of determination is not the last day of a
Fiscal Quarter, for the

 

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four-Fiscal Quarter period ending as of the most recently concluded Fiscal
Quarter for which financial statements have been required to be delivered under
this Agreement).
(b) Section 1.01 of the Credit Agreement is hereby further amended by replacing
the defined term “Consolidated Interest Expense” in its entirety with the
following:
“Consolidated Interest Expense” means, for any period, total interest expense
(including that portion attributable to Capital Leases in accordance with GAAP
and capitalized interest net of payments received under Interest Rate
Agreements) of Company and its Restricted Subsidiaries on a consolidated basis
with respect to all outstanding Indebtedness of Company and its Restricted
Subsidiaries, including all commissions, discounts and other fees and charges
owed with respect to letters of credit and net costs under Interest Rate
Agreements, but excluding, however, (a) any amounts referred to in
Section 2.11(e) payable on or before the Closing Date and (b) any payments
required under Interest Rate Agreements in the event of an early termination
thereof, after giving effect to any netting agreements.
(c) Section 1.01 of the Credit Agreement is hereby amended by deleting each
reference to "greater than” found in clause (b) of the definition of “Applicable
Margin” and replacing it with a reference to “less than.”
(d) Section 6.5 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
6.5 Restricted Junior Payments. No Credit Party shall, nor shall it permit any
of its Restricted Subsidiaries or Affiliates through any manner or means or
through any other Person to (a) directly or indirectly, declare, order, pay,
make or set apart, or agree to declare, order, pay, make or set apart, any sum
for any Restricted Junior Payment, including but not limited to, principal
payments on the Senior Secured Indebtedness but excluding interest payments on
any Senior Secured Indebtedness or (b) otherwise make any optional or voluntary
repurchase, redemption, prepayment, repayment, defeasance or any other
acquisition or retirement for value (or the segregation of funds with respect to
any of the foregoing in this clause (b)) of the Senior Secured Indebtedness;
provided that, during the Fiscal Quarters ending March 31, 2010 and June 30,
2010, Company may make cash interest payments to Capital C Energy Operations,
L.P. accruing under that certain Subordinated Promissory Note dated August 16,
2005 in the original principal amount of $94,000,000 so long as the aggregate
amount of such interest payments does not exceed $1,600,000.
(e) Effective as of December 31, 2009, Section 6.8(a) of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:
(a) Interest Coverage Ratio. Company shall not permit the Interest Coverage
Ratio as of the last day of each Fiscal Quarter, to be less than 1.75 to 1.00
for each Fiscal Quarter ending on or after December 31, 2009.
(f) Effective as of December 31, 2009, Section 6.8(b) of the Credit Agreement is
hereby deleted in its entirety and replaced with the following:
(b) Senior Secured Leverage Ratio. Company shall not permit, as of each day, the
Senior Secured Leverage Ratio for the four Fiscal Quarters for which financial

 

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statements have most recently been required to be delivered under this Agreement
immediately preceding such day to exceed 2.00 to 1.00.
(g) Section 6.9 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:
6.9 Fundamental Changes; Disposition of Assets; Acquisitions. No Credit Party
shall, nor shall it permit any of its Restricted Subsidiaries to, enter into any
transaction of merger or consolidation, or liquidate, wind-up or dissolve itself
(or suffer any liquidation or dissolution), or convey, sell, lease or sub-lease
(as lessor or sublessor), exchange, transfer or otherwise dispose of, in one
transaction or a series of transactions, all or any part of its business, assets
or property of any kind whatsoever, whether real, personal or mixed and whether
tangible or intangible, whether now owned or hereafter acquired, or acquire by
purchase or otherwise (other than purchases or other acquisitions of inventory,
materials and equipment and Consolidated Capital Expenditures in the ordinary
course of business) all or substantially all of the business, property or fixed
assets of, or stock or other evidence of beneficial ownership of, any Person or
any division or line of business or other business unit of any Person, except:
(a) any Restricted Subsidiary of Company may be merged with or into Company or
any Guarantor, or be liquidated, wound up or dissolved, or all or any part of
its business, property or assets may be conveyed, sold, leased, transferred or
otherwise disposed of, in one transaction or a series of transactions, to
Company or any Guarantor; provided, in the case of such a merger, Company or
such Guarantor, as applicable shall be the continuing or surviving Person;
(b) sales or other dispositions of assets that do not constitute Asset Sales;
(c) any Asset Sale, the proceeds of which (valued at the principal amount
thereof in the case of non-cash proceeds consisting of notes or other debt
Securities and valued at fair market value in the case of other non-cash
proceeds) (i) are less than $5,000,000 with respect to any single Asset Sale or
series of related Asset Sales and (ii) when aggregated with the proceeds of all
other Asset Sales made after September 25, 2009, are less than $10,000,000;
provided that, with respect to any Asset Sale permitted under this clause (c),
(A) the consideration received for such assets shall be in an amount at least
equal to the fair market value thereof (determined in good faith by a Financial
Officer of Company), and (B) no less than 75% thereof shall be paid in cash;
(d) disposals of obsolete, worn out or surplus property;
(e) Permitted Acquisitions, provided, that in connection with any Permitted
Acquisition, any Restricted Subsidiary of Company may be merged with or into any
company acquired in such Permitted Acquisition so long as such Guarantor shall
be the continuing or surviving Person;
(f) Dispositions of Oil and Gas Properties of the Company and the Guarantors
including the Identified Disposition; provided that (i) such Oil and Gas
Properties are not required to be Collateral under this Agreement, (ii) the
Proven Reserves attributable to such Oil and Gas Properties are not included in
the Engineering Report most recently delivered to the Administrative Agent
hereunder, (iii) such Oil and

 

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Gas Properties were not evaluated by the Administrative Agent or the Lenders in
determining the then effective Borrowing Base, (iv) the consideration received
for such assets shall be in an amount at least equal to the fair market value
thereof (determined in good faith by a Financial Officer of Company), (v) no
less than 75% thereof shall be paid in cash, and (vi) the aggregate fair market
value of all such sales (but excluding the Identified Disposition) consummated
between scheduled redeterminations of the Borrowing Base may not exceed
$20,000,000;
(g) the trade or exchange by Company or any Restricted Subsidiary of any Oil and
Gas Property (or interest therein) owned or held by Company or such Restricted
Subsidiary and located in an area for any other Oil and Gas Property (or
interest therein) owned or held by another Person and located in the same area;
provided, that, (i) the aggregate value of trades or exchanges permitted by this
paragraph (g) shall not exceed $5,000,000 during any six-month period commencing
January 1 and ending June 30 or commencing July 1 and ending December 31,
(ii) such trade or exchange may include cash or Cash Equivalents necessary in
order to achieve an exchange of equivalent value , and (iii) such trade or
exchange occurs in the ordinary course of business for the purpose of developing
Oil and Gas Properties that the Company or any Restricted Subsidiary owns which
are not included in such trade or exchange; and
(h) Investments made in accordance with Section 6.7.
Section 5. Borrowing Base. Subject to the terms of this Agreement, the parties
hereto agree that, as of the Effective Date, the Borrowing Base shall be equal
to $65,000,000 and such Borrowing Base shall remain in effect at such amount
until the Borrowing Base is redetermined or reduced in accordance with the
Credit Agreement, as amended hereby. The parties hereto agree that the Borrowing
Base redetermination set forth in this Section 4 shall be in addition to the
Borrowing Base redeterminations provided for in the Credit Agreement.
Section 6. Company Representations and Warranties. The Company represents and
warrants that, after giving effect to this Agreement: (a) the representations
and warranties contained in the Credit Agreement and the representations and
warranties contained in the other Credit Documents, are true and correct in all
material respects on and as of the Effective Date as if made on as and as of
such date except to the extent that any such representation or warranty
expressly relates solely to an earlier date, in which case such representation
or warranty is true and correct in all material respects as of such earlier
date; (b) after giving effect to this Agreement, no Default has occurred and is
continuing; (c) the execution, delivery and performance of this Agreement are
within the corporate power and authority of the Company and have been duly
authorized by appropriate corporate and governing action and proceedings;
(d) this Agreement constitutes the legal, valid, and binding obligation of the
Company enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and general principles of equity;
(e) there are no governmental or other third party consents, licenses and
approvals required in connection with the execution, delivery, performance,
validity and enforceability of this Agreement; and (f) the Liens under the
Security Instruments are valid and subsisting and secure Company’s obligations
under the Credit Documents.
Section 7. Conditions to Effectiveness. This Agreement shall become effective on
the Effective Date and enforceable against the Company, the Administrative
Agent, and the Lenders upon the occurrence of the following conditions
precedent:

 

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(a) The Administrative Agent shall have received multiple original counterparts,
as requested by the Administrative Agent, of this Agreement duly and validly
executed and delivered by duly authorized officers of the Company, the
Administrative Agent and the Lenders;
(b) No Default shall have occurred and be continuing as of the Effective Date.
(c) The representations and warranties in this Agreement shall be true and
correct in all material respects.
(d) The Company shall have paid all costs and expenses which have been invoiced
and are payable pursuant to Section 10.2 of the Credit Agreement.
Section 8. Acknowledgments and Agreements.
(a) The Company acknowledges that on the date hereof all Obligations are payable
without defense, offset, counterclaim or recoupment.
(b) The Administrative Agent and the Lenders hereby expressly reserve all of
their rights, remedies, and claims under the Credit Documents. Nothing in this
Agreement shall constitute a waiver or relinquishment of (i) any Default or
Event of Default under any of the Credit Documents, (ii) any of the agreements,
terms or conditions contained in any of the Credit Documents, (iii) any rights
or remedies of the Administrative Agent or any Lender with respect to the Credit
Documents, or (iv) the rights of the Administrative Agent or any Lender to
collect the full amounts owing to them under the Credit Documents.
(c) Each of the Company, the Administrative Agent and the Lenders does hereby
adopt, ratify, and confirm the Credit Agreement, as amended hereby, and
acknowledges and agrees that the Credit Agreement, as amended hereby, is and
remains in full force and effect, and the Company acknowledges and agrees that
its liabilities and obligations under the Credit Agreement, as amended hereby,
are not impaired in any respect by this Agreement. From and after the Effective
Date, all references to the Credit Agreement and the Credit Documents shall mean
such Credit Agreement and such Credit Documents as amended by this Agreement.
(d) This Agreement is a Credit Document for the purposes of the provisions of
the other Credit Documents. Without limiting the foregoing, any breach of
representations, warranties, and covenants under this Agreement shall be a
Default or Event of Default, as applicable, under the Credit Agreement.
Section 9. Counterparts. This Agreement may be signed in any number of
counterparts, each of which shall be an original and all of which, taken
together, constitute a single instrument. This Agreement may be executed by
facsimile signature and all such signatures shall be effective as originals.
Section 10. Successors and Assigns. This Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted pursuant to the Credit Agreement.
Section 11. Invalidity. In the event that any one or more of the provisions
contained in this Agreement shall for any reason be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or unenforceability
shall not affect any other provision of this Agreement.

 

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Section 12. Governing Law. This Agreement shall be deemed to be a contract made
under and shall be governed by and construed in accordance with the laws of the
State of New York.
Section 13. Entire Agreement. THIS AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY
THIS AGREEMENT, THE NOTES, AND THE OTHER CREDIT DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT THERETO.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
[Signature pages follow.]

 

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EXECUTED effective as of the date first above written.

              COMPANY:   BELDEN & BLAKE CORPORATION    
 
           
 
  By:   /s/ James M. Vanderhider
 
Name: James M. Vanderhider    
 
      Title: President & CFO    

 

 

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              ADMINISTRATIVE AGENT/ LENDER:   BNP PARIBAS,
as Administrative Agent and as Lender    
 
           
 
  By:   /s/ Polly Schott
 
Name: Polly Schott    
 
      Title: Director    
 
           
 
  By:   /s/ Edward Pak
 
Name: Edward Pak    
 
      Title: Vice President    

 

 

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              LENDER:   JPMORGAN CHASE BANK, N.A.
as Lender    
 
           
 
  By:   /s/ Michael A. Kamauf
 
Name: Michael A. Kamauf    
 
      Title: Vice President    

 

 

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              LENDER:   AMEGY BANK NATIONAL ASSOCIATION,
as Lender    
 
           
 
  By:   /s/ Charles W. Patterson
 
Name: Charles W. Patterson    
 
      Title: Senior Vice President