2
UNITED STATES
SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the
Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): April 4, 2005
PARALLEL PETROLEUM CORPORATION
(Exact name of registrant as specified in its charter)
Delaware
(State or other jurisdiction of incorporation)
0-13305 75-1971716
(Commission file number) (IRS employer identification number)
1004 N. Big Spring, Suite 400, Midland, Texas 79701
(Address of principal executive offices) (Zip code)
(432) 684-3727
(Registrant's telephone number including area code)
Not Applicable
(Former name or former address, if changed since last report)
Check the appropriate box below if the Form 8-K filing is intended to
simultaneously satisfy the filing obligation of the registrant under any of the
following provisions:
[ ] Written communications pursuant to Rule 425 under the Securities Act (17
CFR 230.425)
[ ] Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR
240.14a-12)
[ ] Pre-commencement communications pursuant to Rule 14d-2(b) under the
Exchange Act (17 CFR 240.14d-2(b))
[ ] Pre-commencement communications pursuant to Rule 13e-4(c) under the
Exchange Act (17 CFR 240.13e-4(c))
Item 1.01. Entry into a Material Definitive Agreement.
On April 5, 2005, Parallel Petroleum Corporation and its subsidiaries,
Parallel, L.P. and Parallel, L.L.C., entered into a Second Amendment to Second
Amended and Restated Credit Agreement, dated as of April 1, 2005, with First
American Bank, SSB and the other financial institutions parties thereto. This
Second Amendment:
. amended the definition of "Base Rate Margin" and "LIBOR Margin";
. amended Section 13(m)(iv) of the Second Amended and Restated Credit
Agreement by increasing the dollar amount of certain investments we
are permitted to make during 2005; and
. established a new "borrowing base" in the amount of $90 million which
will again be redetermined on or about October 1, 2005.
The above summary of the material provisions of the Second Amendment
does not purport to be complete and is qualified in its entirety by reference to
the terms of the Second Amendment, which is attached to this Current Report on
From 8-K as Exhibit 10.1.
2
Item 9.01 Financial Statements and Exhibits.
(c) Exhibits
Exhibit No. Description
----------- ------------------
10.1 Second Amendment to Second Amended
and Restated Credit Agreement, dated
as of April 1, 2005
3
4
SIGNATURE
Pursuant to the requirements of the Securities Exchange Act of 1934,
the Registrant has duly caused this report to be signed on its behalf by the
undersigned thereunto duly authorized.
Dated: April 7, 2005
PARALLEL PETROLEUM CORPORATION
By: /s/ Larry C. Oldham
----------------------------------------
Larry C. Oldham, President
4
EXHIBIT INDEX
Exhibit No. Description
----------- ----------------
10.1 Second Amendment to Second Amended
and Restated Credit Agreement, dated
as of April 1, 2005
Exhibit 10.1
SECOND AMENDMENT TO SECOND AMENDED
AND RESTATED CREDIT AGREEMENT
This Second Amendment to Second Amended and Restated Credit Agreement
(this "Second Amendment") dated as of April l, 2005, is by and among PARALLEL
PETROLEUM CORPORATION, a Delaware corporation, and PARALLEL, L.P., a Texas
limited partnership (collectively, the "Borrowers"), and PARALLEL, L.L.C., a
Delaware limited liability company ("Guarantor"), and FIRST AMERICAN BANK, SSB,
BNP PARIBAS, CITIBANK, F.S.B. AND WESTERN NATIONAL BANK (collectively,
"Lenders"), and FIRST AMERICAN BANK, SSB, as Joint Lead Arranger and as
Administrative Agent ("Agent") and BNP PARIBAS, as Joint Lead Arranger and as
Syndication Agent.
RECITALS:
WHERAS, Borrowers, Guarantor and Lenders in the capacities stated
above, entered into that Second Amended and Restated Credit Agreement dated as
of September 27, 2004, as amended by First Amendment to Second Amended and
Restated Credit Agreement dated December 27, 2004 (as amended, the "Credit
Agreement"); and
WHEREAS, Borrowers, Guarantor and Lenders desire to amend the Credit
Agreement in certain respects.
NOW, THEREFORE, in consideration of the mutual covenants and agreements
contained herein and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged and confessed, the parties hereto
agree as follows:
Agreement
Section 1. Definitions. Except as otherwise expressly provided herein,
all terms defined in the Credit Agreement
shall have the same meanings herein.
Section 2. Amendment to Definition of Base Rate Margin. The definition
of "Base Rate Margin" in Section 1 of the Credit Agreement is hereby amended in
its entirety to read as follows:
Base Rate Margin means zero percent (0%) per annum.
Section 3. Amendment to Definition of LIBOR Margin. The definition of
"LIBOR Margin" in Section 1 of the Credit Agreement is hereby amended in its
entirety to read as follows:
LIBOR Margin means:
(a) two and three-quarters percent (2.75%) per annum whenever
the Borrowing Base Usage is equal to or greater than 75%; or
(b) two and one-half percent (2.50%) per annum whenever the
Borrowing Base Usage is equal to or greater than 50%, but less than
75%; or
(c) two and one-quarter percent (2.25%) per annum whenever the
Borrowing Base Usage is less than 50%.
Section 4. Amendment to Investments Covenant. Section 13(m)(iv) of the
Credit Agreement is hereby amended in their entirety to read as follows:
(iv) other investments not to exceed (A) $4,250,000
in the aggregate for Borrowers, Guarantor and Subsidiaries
during the 2005 calendar year, when aggregated with loans and
advances allowed pursuant to Section 13(h)(iii), and (B)
$1,000,000 in the aggregate for Borrowers, Guarantor and
Subsidiaries during any calendar year other than the 2005
calendar year, when aggregated with loans and advances allowed
pursuant to Section 13(h)(iii); or
Section 5. Redetermination of Borrowing Base. In accordance with
Section 7(b) of the Credit Agreement, a semi-annual redetermination of the
Borrowing Base has been made by Lenders. Pursuant to Section 7(b) of the Credit
Agreement, Agent hereby notifies Borrowers that Lenders have redetermined the
Borrowing Base and, effective as of the date of this Second Amendment, the
redetermined Borrowing Base is $90,000,000.00 after giving effect to that
certain Borrowing Base letter agreement dated September 27, 2004, among the
parties hereto. The amount of the new Borrowing Base shall be subject to
redetermination as provided in the Credit Agreement. The next scheduled
semi-annual determination of the Borrowing Base by Lenders pursuant to the
Credit Agreement shall be on or about October 1, 2005. Pursuant to Section 8(b)
of the Credit Agreement, the fee payable to Agent for the ratable benefit of
Lenders in connection with the $700,000.00 increase in the Borrowing Base is
$2,625.00.
Section 6. Representations and Warranties of Borrowers and Guarantor.
Borrowers and Guarantor hereby jointly and severally represent and warrant to
Lenders as follows:
(a) The representations and warranties contained in Section 10
of the Credit Agreement are true and correct on and as of the date hereof as
though made on and as of the date hereof, except for those representations and
warranties which
2
address matters only as of a particular date (which remain true and correct as
of such date).
(b) No Event of Default or Default has occurred and is
continuing under the Credit Agreement.
(c) The execution, delivery and performance by Borrowers and
Guarantor of this Second Amendment are within the Borrowers' and Guarantor's
partnership, corporate and limited liability company powers, have been duly
authorized by all necessary action, require no action by or in respect of, or
filing with, any governmental body, agency or official and do not violate or
constitute a default under any provisions of applicable law or any material
agreement binding upon Borrowers, Guarantor or their respective Subsidiaries or
result in the creation or imposition of any Lien upon any of the assets of
Borrowers, Guarantor or their respective Subsidiaries, except Permitted Liens.
(d) This Second Amendment constitutes the valid and binding
obligation of Borrowers and Guarantor 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 7. Conditions Precedent. This Second Amendment shall be
effective as of the date upon which all of the following conditions have been
satisfied:
(a) Agent shall have received counterparts of this Second
Amendment duly executed by Borrowers, Guarantor and Lenders;
(b) Agent shall have received from Borrowers for the ratable
benefit of Lenders the fees required by Section 8(b) of the Credit Agreement in
connection with the increase in the Borrowing Base provided for above;
(c) the Borrowers and Guarantor shall have provided to Agent
(i) a copy of resolutions, in form and substance satisfactory to Agent, of the
Board of Directors of PPC authorizing the execution, delivery and performance of
this Second Amendment and any other Loan Documents to be executed or delivered
pursuant hereby, certified by the secretary or an assistant secretary of PPC,
which certificate shall be in form and substance satisfactory to Agent and
Agent's counsel and shall state that the resolutions thereby certified have not
been amended, modified, revoked or rescinded, (ii) a copy of the resolutions, in
form and substance satisfactory to Agent, duly adopted by the respective
partners of PLP authorizing the execution, delivery and performance of this
Second Amendment and any other Loan Documents to be executed or delivered by PLP
pursuant hereto, certified by PLP's general partner, which certificate shall be
in form and substance satisfactory to Agent and Agent's counsel and shall state
that the resolutions thereby certified have not been amended, modified, revoked
or rescinded, and (iii) resolutions, in form and substance satisfactory to
Agent, of the managers of Guarantor authorizing the execution, delivery and
performance of this Second Amendment and any other Loan Documents to be executed
or delivered pursuant hereto, certified by its secretary or assistant secretary,
which certificate shall be in form and substance satisfactory to Agent and
Agent's
3
counsel and shall state that the resolutions thereby certified have not been
amended, modified, revoked or rescinded; and
(d) Agent shall have received any other documents,
certificates and opinions in connection with this Second Amendment that may be
requested by Agent, in form and substance satisfactory to Agent.
Section 8. Ratification of Credit Agreement and Other Loan Documents.
Except as expressly amended hereby, the Credit Agreement and all of the other
Loan Documents are and shall be unchanged and all of the terms, provisions,
covenants, conditions, schedules and exhibits thereof shall remain and continue
in full force and effect and are hereby ratified and confirmed by Borrowers,
Guarantor and Lenders as of the date of this Second Amendment as if the Credit
Agreement and the other Loan Documents were executed by Borrowers, Guarantor and
the other parties thereto as of the date of this Second Amendment. The
amendments contemplated hereby shall not limit or impair any Liens securing the
Loans, each of which are hereby ratified, affirmed and extended to secure the
Loans as they may be increased pursuant hereto.
Section 9. No Waiver. Neither the execution by Lenders of this Second
Amendment nor anything contained herein shall in anywise be construed or operate
as a waiver by Lenders of any Default of Event of Default (whether now existing
or that may occur hereafter) or of any of Lenders' or Agent's rights under the
Credit Agreement as amended hereby or under any of the other Loan Documents.
Section 10. Miscellaneous.
10.1 Legal Expenses. The Borrowers hereby agree to pay on
demand all reasonable fees and expenses of counsel to the Agent
incurred by the Agent in connection with the preparation, negotiation
and execution of this Second Amendment and all related documents.
10.2 Multiple Counterparts. This Second Amendment may be
executed in a number of identical separate counterparts (including by
facsimile transmission), each of which for all purposes is to be deemed
an original but all of which shall constitute, collectively, one
agreement. No party to this Second Amendment shall be bound hereby
until a counterpart of this Second Amendment has been executed by all
parties hereto.
10.3 Reference to Agreement. Each of the Loan Documents is
hereby amended so that any reference in the Loan Documents to the
Credit Agreement shall mean a reference to the Credit Agreement as
amended hereby.
10.4 Governing Law. This Second Amendment is being executed
and delivered, and is intended to be performed, in Midland, Midland
County, Texas, and the substantive laws of Texas shall govern the
validity, construction, enforcement and interpretation of this Second
Amendment and all other documents and instruments referred to herein,
unless otherwise specified therein.
4
10.5 Plural and Singular Forms. The definitions given to terms
defined hereby shall be equally applicable to both the singular and
plural forms of such terms.
10.6 Final Agreement. THIS SECOND AMENDMENT, THE CREDIT
AGREEMENT AND THE OTHER LOAN DOCUMENTS 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 ORAL AGREEMENTS BETWEEN THE PARTIES.
[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]
5
IN WITNESS THEREOF, Borrowers, Guarantor and Lenders have caused this
Second Amendment to be duly executed as of the day and year first above written.
BORROWERS: PARALLEL PETROLEUM CORPORATION,
a Delaware corporation
By: /s/ Steven D. Foster
-----------------------------
Steven D. Foster
Chief Financial Officer
PARALLEL, L.P., a Texas limited partnership
By: Parallel Petroleum Corporation,
Its General Partner
By: /s/ Steven D. Foster
----------------------------
Steven D. Foster
Chief Financial Officer
GUARANTOR: PARALLEL, L.L.C., a Delaware limited
liability company
By: /s/ Steven D. Foster
-----------------------------
Steven D. Foster
Chief Financial Officer
6
LENDERS: FIRST AMERICAN BANK, SSB, a state savings
bank, as Joint Lead Arranger and
Administrative Agent and as a Lender
By: /s/ Frank K. Stowers
-----------------------------
Frank K. Stowers
Executive Vice President
[SIGNATURE PAGE TO SECOND AMENDMENT TO SECOND
AMENDED AND RESTATED CREDIT AGREEMENT]
7
BNP PARIBAS, as Joint Lead Arranger and
Syndication Agent and as a Lender
By: /s/ Brian M. Malone
-----------------------------
Name: Brian M. Malone
-----------------------------
Title: Managing Director
-----------------------------
By: /s/ Betsy Jocher
-----------------------------
Name: Betsy Jocher
-----------------------------
Title: Vice President
-----------------------------
[SIGNATURE PAGE TO SECOND AMENDMENT TO SECOND
AMENDED AND RESTATED CREDIT AGREEMENT]
8
CITIBANK, F.S.B.,
as a Lender
By: /s/ Zachary Mayo
-----------------------------
Name: Zachary Mayo
-----------------------------
Title: Senior Vice President
-----------------------------
[SIGNATURE PAGE TO SECOND AMENDMENT TO SECOND
AMENDED AND RESTATED CREDIT AGREEMENT]
9
WESTERN NATIONAL BANK,
as a Lender
By: /s/ Wesley D. Bownds
-----------------------------
Wesley D. Bownds
President
[SIGNATURE PAGE TO SECOND AMENDMENT TO SECOND
AMENDED AND RESTATED CREDIT AGREEMENT]
10