exv10w1



 






Exhibit 10.1




SECOND AMENDMENT TO AMENDED AND



RESTATED CREDIT AGREEMENT




     THIS SECOND AMENDMENT TO CREDIT AGREEMENT (this “Second Amendment”) dated effective as
of October 8, 2004 (the “Second Amendment Effective Date”), among THE HOUSTON EXPLORATION
COMPANY, a Delaware corporation (the “Company”); the lenders party hereto (the
“Lenders”); WACHOVIA BANK, NATIONAL ASSOCIATION, as Issuing Bank and as Administrative
Agent (in its capacity as Administrative Agent, the “Administrative Agent”); THE BANK OF
NOVA SCOTIA and FLEET NATIONAL BANK, as Co-Syndication Agents; and BNP PARIBAS and COMERICA BANK,
as Co-Documentation Agents.



R E C I T A L S:




     A. The Company, the Lenders, the Administrative Agent, the Co-Syndication Agents and the
Co-Documentation Agents are parties to that certain Amended and Restated Credit Agreement dated as
of April 1, 2004 (as amended by First Amendment to Amended and Restated Credit Agreement dated as
of May 26, 2004, the “Credit Agreement”).



     B. The parties to the Credit Agreement intend to amend the Credit Agreement to, among other
things, amend Section 9.15 (Sale of Oil and Gas Properties) and amend and restate Schedule 7.14
(Listing of Subsidiaries and Partnerships).



     C. Therefore, in consideration of the mutual covenants and agreements herein contained, the
parties hereto hereby agree as follows:



     SECTION 1. Defined Terms. Except as amended hereby, terms used herein when defined in
the Credit Agreement shall have the same meanings herein unless the context otherwise requires.



     SECTION 2. Amendments to Credit Agreement.



          (a) Definitions. The term “Agreement”, defined in Section 1.02 of the Credit
Agreement, is hereby amended in its entirety to read as follows:





     “Agreement” shall mean this Amended and Restated Credit
Agreement, as amended by the First Amendment, as further amended by the
Second Amendment, and as the same may be further amended, supplemented,
waived or otherwise modified from time to time in accordance herewith.



          (b) New Definitions. Section 1.02 of the Credit Agreement is hereby further
amended by adding thereto the following new definitions in their appropriate alphabetical order:





     “Second Amendment” shall mean that certain Second Amendment to
Amended and Restated Credit Agreement dated effective as of March ___, 2005
(the “Second Amendment Effective Date”), among the Company, the
Lenders party thereto, the Administrative Agent, the Issuing Bank, the
Co-Syndication Agents and the Co-Documentation Agents.




     “THEC, LLC” shall mean THEC, LLC, a Delaware limited liability
company, a wholly-owned Subsidiary of the Company.




     “THEC, LP” shall mean THEC, LP, a Texas limited partnership, in
which the Company will have a 1% general partner interest and THEC, LLC will
have a 99% limited partner interest.



 









 





          (c) Conditions Precedent. Section 6.05 of the Credit Agreement is hereby amended in
its entirety to read as follows:





     Section 6.05. Guarantors. In the event a Guarantor shall have
executed a Guaranty Agreement pursuant to Section 9.19, the Lenders’
obligation to make subsequent Loans or to issue, renew, extend or reissue
Letters of Credit shall be subject to the Administrative Agent’s receipt of
the following documents:




     (a) certificates of the Secretary or Assistant Secretary of such
Guarantor (or its general partner or member, as the case may be) setting
forth:




     (i) resolutions of its board of directors (or similar governing
body) in form and substance reasonably satisfactory to the
Administrative Agent with respect to the authorization of the
Guaranty Agreement;




     (ii) the officers of such Guarantor (or its general partner or
member, as the case may be) who are authorized to sign such Guaranty
Agreement and who will, until replaced by another officer or
officers duly authorized for the purpose, act as a representative
for the purposes of signing documents and giving notices and other
communications in connection with such Guaranty Agreement and the
transactions contemplated thereby; and




     (iii) specimen signatures of the officers so authorized.




     The Administrative Agent and the Lenders may conclusively rely on such
certificate until the Administrative Agent receives notice in writing from
such Guarantor to the contrary;




     (b) a copy, certified as true by the Secretary or Assistant Secretary
of such Guarantor (or its general partner or member, as the case may be) ,
of the organizational documents of such Guarantor;




     (c) certificates of the appropriate state agencies with respect to the
valid existence and good standing of such Guarantor and the qualification of
each to do business as a foreign entity in any jurisdiction in which the
ownership of Property or the nature of activities requires such
qualification, except where the failure so to qualify would not have a
Material Adverse Effect;




     (d) a Guaranty Agreement duly executed by such Guarantor; and




     (e) an opinion of counsel to such Guarantor in form and substance
reasonably acceptable to the Administrative Agent.”



          (d) Representations and Warranties. Sections 7.01, 7.05, 7.10 and 7.14 of the Credit
Agreement are hereby amended in their entirety to read as follows:





     “Section 7.01 Corporate Existence. The Company and each
Subsidiary (a) is duly organized, validly existing and in good standing
under the laws of the jurisdiction of its organization, (b) has all
requisite power and authority, and has all material governmental licenses,
authorizations, consents and approvals necessary to own its assets and carry
on its business as now being or as proposed to be conducted, and (c) is
qualified to do business in all jurisdictions in which the nature of the
business conducted by it makes such qualification necessary and where
failure so to qualify would have a Material Adverse Effect.”



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     “Section 7.05 Corporate Action. The Company is duly authorized
and empowered to create and issue the Notes; and the Company and each
Subsidiary are duly authorized and empowered to execute, deliver and perform
the Security Instruments, including this Agreement, to which they
respectively are parties; all action on the Company’s part requisite for the
due creation and issuance of the Notes and on the Company’s and each
Subsidiary’s respective part for the due execution, delivery and performance
of the Security Instruments, including this Agreement, to which the Company
and each Subsidiary respectively are parties has been duly and effectively
taken; and this Agreement does, and the Notes and other Security Instruments
to which the Company and each Subsidiary respectively are parties upon their
creation, issuance, execution and delivery will, constitute valid and
binding obligations of the Company and each Subsidiary, respectively,
enforceable in accordance with their terms.”




     “Section 7.10 Titles, etc. The Company and each Subsidiary
has good and indefeasible title to its material (individually or in the
aggregate) Properties, free and clear of all Liens except Liens permitted by
Section 9.03, and Liens disclosed to the Lenders in Schedule 7.10. After
giving full effect to the Excepted Liens and Liens disclosed to the Lenders
in Schedule 7.10, the Company or the Subsidiary specified as the owner owns
the net interests in production attributable to the wells and units
reflected in the most recently delivered Reserve Report and the ownership of
such Properties shall not in any material respect obligate the Company or
such Subsidiary to bear the costs and expenses relating to the maintenance,
development and operations of each such Property in an amount in excess of
the working interest of each Property set forth in the most recently
delivered Reserve Report. Further, upon delivery of each reserve report
furnished to the Lenders pursuant to Sections 8.04(a) or (b) the statements
made in the preceding sentence shall be true with respect to such furnished
reserve reports. All information contained in the most recently delivered
Reserve Report is true and correct in all material respects as of the Second
Amendment Effective Date.”




     “Section 7.14 Subsidiaries and Partnerships. The Company has
no Subsidiaries and no interest in any partnerships (excluding tax
partnerships), joint ventures, limited liability companies or other entities
except those shown on Schedule 7.14 hereto, which Exhibit is complete and
accurate but which may be amended from time to time as set forth in this
Section 7.14. The Company owns 100% of the issued and outstanding shares of
stock or other equity interests of each such Subsidiary, unless otherwise
disclosed on Schedule 7.14. The Company will forward to the Administrative
Agent a revised Schedule 7.14 prior to or concurrently with the delivery of
the quarterly financial statements required to be delivered pursuant to
Section 8.01(b).



          (e) Corporate Existence, Etc. Section 8.03(a) of the Credit Agreement is hereby
amended in its entirety to read as follows:





     “(a) The Company shall and shall cause each Subsidiary to (i) preserve
and maintain its legal existence and all of its material rights, privileges
and franchises, except as otherwise permitted by Section 9.10 hereof; (ii)
keep books of record and account in which full, true and correct entries
will be made of all dealings or transactions in relation to its business and
activities; (iii) comply with the requirements of all applicable laws,
rules, regulations and orders of governmental or regulatory authorities if
failure to comply with such requirements would have a Material Adverse
Effect; (iv) pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or on any of its
Property prior to the date on which penalties attach thereto, except for any
such tax, assessment, charge or levy the payment of which is being contested
in good faith and by proper proceedings and against which adequate reserves
are being maintained; (v) permit representatives of any Lender or the
Administrative Agent, during normal business hours upon reasonable prior
notice, to examine, copy and make extracts from its books and records, to
inspect its Properties,



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and to discuss its business and affairs with its officers, all to the
extent reasonably requested by such Lender or the Administrative Agent (as
the case may be); and (vi) keep insured by financially sound and reputable
insurers all property of a character usually insured by companies engaged in
the same or similar business similarly situated against loss or damage of
the kinds and in the amounts customarily insured against by such companies
and carry such other insurance as is usually carried by such companies.”



          (f) Sale of Oil and Gas Properties. Section 9.15 of the Credit Agreement is hereby
amended in its entirety to read as follows:





     “Section 9.15. Sale of Oil and Gas Properties. The
Company will not, nor permit any Subsidiary or Affiliate to sell,
assign, transfer or convey any interest in any Oil and Gas
Properties, except as follows:




     (a) Hydrocarbons sold in the ordinary course of business as and
when produced;




     (b) Routine farm-outs of non-proven acreage;




     (c) Sales of Properties, provided the sales of all such
Properties permitted under this clause since the date of the last
Scheduled Redetermination of the Borrowing Base do not have a market
value in excess of $25,000,000 in the aggregate;




     (d) In addition to sales permitted above, sales of Properties included
in the Borrowing Base, provided simultaneously with any such sale the
Borrowing Base is reduced by amounts agreed to at the time by the Required
Lenders;




     (e) The transfer of the Appalachian Assets to Seneca-Upshur and
thereafter the transfer of the common stock of Seneca-Upshur to KeySpan,
each in connection with the KeySpan Split-Off; and




     (f) The transfer of the equitable interest in and to the Company’s
Texas Oil and Gas Properties to THEC, LP, with the Company retaining legal
title to such Properties.”



          (g) Schedule 7.14. Schedule 7.14 attached to the Credit Agreement at the time of its
execution is hereby amended and restated in its entirety to read as set forth on Schedule 7.14
attached to this Second Amendment.




          (h) Other. The Administrative Agent and the Lenders hereby waive any Default which
may have occurred prior to the date hereof or that may occur under any other term or provision of
the Credit Agreement not amended hereby, solely by reason of the formation of THEC, LP and THEC,
LLC or the transfer of the equitable interest in and to the Company’s Texas Oil and Gas Properties
to THEC, LP as contemplated hereby, on or after the Second Amendment Effective Date; provided
that the Company shall retain legal title to such Properties.




     SECTION 3. Conditions Precedent; Effectiveness. This Second Amendment shall become
effective as of the Second Amendment Effective Date when the Administrative Agent shall have
received:




          (i) Counterparts hereof duly executed by the Company and the Required Lenders
(or, in the case of any party as to which an executed counterpart shall not have
been received, telegraphic, telex, or other written confirmation from such party of
execution of a counterpart hereof by such party);



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          (ii) Each of the instruments and documents required to be delivered pursuant to
Section 6.05 of the Credit Agreement, as amended hereby;




          (iii) True and correct copies of all documents and instruments executed and
delivered in connection with the Company’s transfer of the equitable interest in and
to its Texas Oil and Gas Properties to THEC, LP; and




          (iv) Such other documents as the Administrative Agent or special counsel to the
Administrative Agent may reasonably request.



     SECTION 4. Reaffirmation of Representations and Warranties. To induce the Lenders,
the Administrative Agent and the Issuing Bank to enter into this Second Amendment, the Company
hereby reaffirms, as of the date hereof, its representations and warranties in their entirety
contained in Article VII of the Credit Agreement, as amended by this Second Amendment, and
in all other documents executed pursuant thereto (except to the extent such representations and
warranties relate solely to an earlier date).



     SECTION 5. Reaffirmation of Credit Agreement. This Second Amendment shall be deemed
to be an amendment to the Credit Agreement, and the Credit Agreement, as amended hereby, is hereby
ratified, approved and confirmed in each and every respect. All references to the Credit Agreement
herein and in any other document, instrument, agreement or writing shall hereafter be deemed to
refer to the Credit Agreement, as amended hereby.



     SECTION 6. Governing Law; Entire Agreement. This Second Amendment shall be governed
by, and construed in accordance with, the laws of the State of Texas. The Credit Agreement, as
amended by this Second Amendment, the Notes and the other Loan 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.



     SECTION 7. Severability of Provisions. Any provision in this Second Amendment that is
held to be inoperative, unenforceable, or invalid in any jurisdiction shall, as to that
jurisdiction, be inoperative, unenforceable, or invalid without affecting the remaining provisions
in that jurisdiction or the operation, enforceability, or validity of that provision in any other
jurisdiction, and to this end the provisions of this Second Amendment are declared to be severable.



     SECTION 8. Counterparts. This Second Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one agreement, and any of the parties
hereto may execute this Second Amendment by signing any such counterpart.



     SECTION 9. Headings. Article and section headings in this Second Amendment are for
convenience of reference only, and shall not govern the interpretation of any of the provisions of
this Second Amendment.



     SECTION 10. Successors and Assigns. This Second Amendment shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and assigns.



[Signatures begin on next page]




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     IN WITNESS WHEREOF, the parties hereto have executed this Second Amendment effective as of the
Second Amendment Effective Date.



	 	 	 	 	 	 	 
	COMPANY:	 	THE HOUSTON EXPLORATION

COMPANY	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ James F. Westmoreland	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	James F. Westmoreland	 	 
	

	 	Title:
	 	VP and Chief Accounting Officer	 	 
	 
	 	 	 	 	 	 
	AGENTS AND LENDERS:	 	WACHOVIA BANK, NATIONAL
ASSOCIATION, Individually, as Issuing
Bank and as Administrative Agent	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ David E. Humphreys	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	David E. Humphreys	 	 
	

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NOVA SCOTIA,

Individually and as Co-Syndication Agent	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ V. H. Gibson	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	V.H. Gibson	 	 
	

	 	Title:
	 	Assistant Agent	 	 
	 
	 	 	 	 	 	 
	 	 	FLEET NATIONAL BANK, Individually
and as Co-Syndication Agent	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Jeffrey H. Rathkamp	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Jeffrey H. Rathkamp	 	 
	

	 	Title:
	 	Director	 	 
	 
	 	 	 	 	 	 
	 	 	BNP PARIBAS, Individually and as
Co-Documentation Agent	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Douglas H. Liftman	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Douglas H. Liftman	 	 
	

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Polly Scott	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Polly Scott	 	 
	

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	COMERICA BANK, Individually and as
Co-Documentation Agent	 	 
	

	 	By:
	 	/s/ Huma Vadgama	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Huma Vadgama	 	 
	

	 	Title:
	 	Vice President	 	 






 









 






	 	 	 	 	 	 	 
	 	 	UNION BANK OF CALIFORNIA, N.A.	 	 
	

	 	By:
	 	/s/ Ali Hamed	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Ali Hamed	 	 
	

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Scott Myatt	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Scott Myatt	 	 
	

	 	Title:
	 	Assistant Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	THE BANK OF NEW YORK	 	 
	

	 	By:
	 	/s/ Craig J. Anderson	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Craig J. Anderson	 	 
	

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	THE ROYAL BANK OF SCOTLAND	 	 
	

	 	By:
	 	/s/ James R. McBride	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	James R. McBride	 	 
	

	 	Title:
	 	Managing Director	 	 
	 
	 	 	 	 	 	 
	 	 	WELLS FARGO BANK TEXAS, N.A.	 	 
	

	 	By:
	 	/s/ Chris Carter	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Chris Carter	 	 
	

	 	Title:
	 	Relationship Manager	 	 
	 
	 	 	 	 	 	 
	 	 	NATEXIS BANQUES POPULAIRES	 	 
	

	 	By:
	 	/s/ Donovan C. Broussard	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Donovan C. Broussard	 	 
	

	 	Title:
	 	Vice President & Manager	 	 
	 
	 	 	 	 	 	 
	

	 	By:
	 	/s/ Daniel Payer	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Daniel Payer	 	 
	

	 	Title:
	 	Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	COMPASS BANK	 	 
	

	 	By:
	 	/s/ Murray E. Brasseux	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Murray E. Brasseux	 	 
	

	 	Title:
	 	Executive Vice President	 	 
	 
	 	 	 	 	 	 
	 	 	AMEGY BANK, N.A.	 	 
	

	 	By:
	 	/s/ Mark A. Serice	 	 
	

	 	 	 	 	 	 
	

	 	Name:
	 	Mark A. Serice	 	 
	

	 	Title:
	 	Vice President	 	 







 









 








THE HOUSTON EXPLORATION COMPANY

CREDIT AGREEMENT




SCHEDULE 7.14

LISTING OF SUBSIDIARIES AND PARTNERSHIPS




	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	 	 	 	Authorized	 	 	Outstanding	 	 	 	 
	 	Subsidiary	 	 	Shares	 	 	Shares	 	 	Owner	 
	 	THEC, LLC, a
Delaware 
limited
liability company

	 	 	N/A
	 	 	N/A
	 	 	The Houston
Exploration

Company, the Sole
Member	 
	 	THEC, LP, a Texas

limited partnership

	 	 	N/A
	 	 	N/A
	 	 	The Houston
Exploration Company

– 1% general
partner interest


THEC, LLC – 99%
limited partner

interest	 
	 





Schedule 7.14 Page 1