Exhibit 10.3
EXECUTION
VERSION
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
SECOND AMENDMENT TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT (hereinafter referred to as the “
Amendment ”) is dated as of July 14, 2008, but
effective as of June 30, 2008, by and among EXCO RESOURCES,
INC. (“ Borrower ”), CERTAIN SUBSIDIARIES OF
BORROWER, as Guarantors (the “ Guarantors
”), the LENDERS party hereto (the “ Lenders
”), and JPMORGAN CHASE BANK, N.A., as Administrative Agent
(“ Administrative Agent ”). Unless the
context otherwise requires or unless otherwise expressly defined
herein, capitalized terms used but not defined in this Amendment
have the meanings assigned to such terms in the Credit Agreement
(as defined below).
WITNESSETH:
WHEREAS , Borrower,
Guarantors, Administrative Agent and Lenders have entered into that
certain Second Amended and Restated Credit Agreement dated as of
May 2, 2007, as amended by that certain First Amendment to
Second Amended and Restated Credit Agreement dated as of
February 20, 2008 (as the same may further be amended,
restated, supplemented or otherwise modified from time to time, the
“ Credit Agreement ”); and
WHEREAS , Borrower
has requested that the Administrative Agent and the Lenders amend
the Credit Agreement to modify certain financial covenants and for
certain other purposes as provided herein; and
WHEREAS , the
Administrative Agent and the Lenders have agreed to amend the
Credit Agreement as provided herein upon the terms and conditions
set forth herein.
NOW, THEREFORE ,
for and in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged and
confessed, Borrower, Guarantors, Administrative Agent and the
Lenders hereby agree as follows:
SECTION 1.
Amendments to Credit Agreement. Subject to the satisfaction or waiver in
writing of each condition precedent set forth in
Section 2 hereof, and in reliance on the
representations, warranties, covenants and agreements contained in
this Amendment, the Credit Agreement shall be amended in the manner
provided in this Section 1 .
1.1
Restricted Payments . Section 7.06 of the Credit
Agreement shall be and it hereby is amended in its entirety to read
as follows:
Section 7.06
Restricted Payments . The Borrower will not, nor will
it permit any of its Restricted Subsidiaries to, declare or make,
or agree to pay or make, directly or indirectly, any Restricted
Payment, except that (a) the Borrower may declare and make
Restricted Payments with respect to its Equity Interests payable
solely in its Equity Interests (other than Disqualified Stock),
(b) the Borrower may make Restricted Payments pursuant to and
in accordance with stock option plans or other benefit plans for
management or employees of the Borrower and its Restricted
Subsidiaries in an aggregate amount not to exceed
1
$2,000,000 in any fiscal
year, (c) so long as no Default has occurred and is
continuing, the Borrower may declare and make distributions of the
MLP Rights, (d) any Restricted Subsidiary may make Restricted
Payments to the Borrower or any Guarantor; provided that no Default
has occurred and is continuing or would result from the making of
such Restricted Payment, (e) the Borrower may declare and pay
dividends with respect to its Preferred Stock in additional shares
of Preferred Stock, and (f) the Borrower may pay cash
dividends on the Preferred Stock; provided that on the date of any
such payment, (i) no Default has occurred and is continuing or
would result from such payment, (ii) the amount of such cash
dividends in any fiscal year shall not exceed the lesser of
(x) $200,000,000 and (y) the amount of cash dividends
accrued on the Preferred Stock in such fiscal year, and
(iii) after giving effect to such Restricted Payment, the
Aggregate Commitment exceeds Aggregate Credit Exposure by an amount
equal to or greater than ten percent (10%) of the Borrowing Base;
provided that if such cash dividends are being paid by the Borrower
in connection with the exercise of any right to convert Preferred
Stock into common stock of the Borrower, the failure to comply with
this clause (iii) shall not restrict the Borrower from making
such cash dividend.
1.2
Financial Covenants; Leverage Ratio . Clause (b) of
Section 7.11 of the Credit Agreement shall be and it
hereby is amended in its entirety to read as follows:
(b)
Leverage Ratio .
(i)
The Borrower will not permit the ratio, determined as of the end
of the fiscal quarter ending September 30, 2007, of
(A) Consolidated Funded Indebtedness as of the end of such
fiscal quarter, to (B) Consolidated EBITDAX for such fiscal
quarter multiplied by four (4) to be greater than 3.50 to
1.00.
(ii)
The Borrower will not permit the ratio, determined as of the end
of any fiscal quarter ending after September 30, 2007 and on
or before March 31, 2008, of (A) Consolidated Funded
Indebtedness as of the end of such fiscal quarter, to
(B) Consolidated EBITDAX for the period from July 1, 2007
to the end of such fiscal quarter multiplied by a fraction, the
numerator of which is four (4) and the denominator of which is
the number of fiscal quarters ended since July 1, 2007,
including the then ending fiscal quarter, to be greater than 3.50
to 1.00.
(iii)
The Borrower will not permit the ratio, determined as of the end
of any fiscal quarter ending on or after June 30, 2008 and on
or before December 31, 2008, of (A) Consolidated Funded
Indebtedness as of the end of such fiscal quarter to
(B) Consolidated EBITDAX for the trailing four fiscal quarter
period ending on such date, to be greater than 4.00 to
1.00.
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(iv)
The Borrower will not permit the ratio, determined as of the end
of the fiscal quarter ending on March 31, 2009, of
(A) Consolidated Funded Indebtedness as of the end of such
fiscal quarter to (B) Consolidated EBITDAX for the trailing
four fiscal quarter period ending on such date, to be greater than
3.75 to 1.00.
(v)
The Borrower will not permit the ratio, determined as of the end
of any fiscal quarter ending on or after June 30, 2009, of
(A) Consolidated Funded Indebtedness as of the end of such
fiscal quarter to (B) Consolidated EBITDAX for the trailing
four fiscal quarter period ending on such date, to be greater than
3.50 to 1.00.
SECTION 2.
Conditions. The amendments to the Credit Agreement
contained in Section 1 of this Amendment shall be
effective upon the satisfaction of each of the conditions set forth
in this Section 2 .
2.1
Execution and Delivery . Each Credit Party, the Majority Lenders
and the Administrative Agent shall have executed and delivered this
Amendment.
2.2
No Default . No Default or Event of Default shall
have occurred and be continuing or shall result after giving effect
to this Amendment.
2.3
Other Documents . The Administrative Agent shall have
received such other instruments and documents incidental and
appropriate to the transaction provided for herein as the
Administrative Agent or its special counsel may reasonably request,
and all such documents shall be in form and substance satisfactory
to the Administrative Agent.
SECTION 3.
Representations and Warranties of Borrower
. To induce the
Lenders to enter into this Amendment, each Credit Party hereby
represents and warrants to the Lenders as follows:
3.1
Reaffirmation of Representations and Warranties/Further
Assurances . After giving effect to the amendments
herein, each representation and warranty of such Credit Party
contained in the Credit Agreement or in any other Loan Document is
true and correct in all material respects on the date hereof
(except to the extent such representations and warranties relate
solely to an earlier date, in which case such representations and warranties
shall have been true and correct in all material respects as of
such date ).
3.2
Corporate Authority; No Conflicts . The execution, delivery and performance
by such Credit Party of this Amendment and all documents,
instruments and agreements contemplated herein are within such
Credit Party’s corporate or other organizational powers, have
been duly authorized by all necessary action, require no action by
or in respect of, or filing with, any court or agency of government
and do not violate or constitute a default under any provision of
any applicable law or other agreements binding upon such Credit
Party or result in the creation or imposition of any Lien upon any
of the assets of such Credit Party except for Liens permitted under
Section 7.02 of the Credit Agreement.
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3.3
Enforceability . This Amendment constitutes the valid
and binding obligation of such Credit Party 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.
SECTION 4.
Miscellaneous .
4.1
Reaffirmation of Loan Documents and Liens . Any and all of the terms and
provisions of the Credit Agreement and the Loan Documents shall,
except as amended and modified hereby, remain in full force and
effect. Each Credit Party hereby agrees that the amendments
and modifications herein contained shall in no manner affect or
impair the liabilities, duties and obligations of any Credit Party
under the Credit Agreement and the other Loan Documents or the
Liens securing the payment and performance thereof.
4.2
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.
4.3
Legal Expenses. Each Credit Party hereby agrees to pay
all reasonable fees and expenses of special counsel to the
Administrative Agent incurred by the Administrative Agent in
connection with the preparation, negotiation and execution of this
Amendment and all related documents.
4.4
Counterparts . Th
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