|
AMENDMENT NO. 3 AND WAIVER
This
Amendment No. 3 and Waiver (this
"
Agreement ")
dated as of October 24, 2007 (the "
Effective Date "),
is by and among
Tekoil and Gas Gulf Coast, LLC ,
a Delaware limited liability company (the "
Company "),
Tekoil & Gas Corporation ,
a Delaware corporation, as guarantor (the "
Guarantor "),
the lenders party to the Credit Agreement described below ("
Lenders "),
J. Aron & Company ,
as Lead Arranger and as Syndication Agent (in such capacities,
"
Syndication Agent "),
and
J. Aron & Company ,
as Administrative Agent for such Lenders (together with its
permitted successors in such capacity, the "
Administrative Agent ")
and as counterparty to the Company under the ISDA Agreement
referred to below (in such capacity, "
Lender Counterparty ").
RECITALS
A.
Reference
is made to that certain Credit and Guaranty Agreement dated as
of May 11, 2007 among the Company, the Guarantor, the
Lenders, the Syndication Agent and the Administrative Agent
(as amended or supplemented to the date hereof, the "
Credit Agreement ").
Reference is further made to that certain ISDA Master Agreement
dated as of May 11, 2007 (as amended, supplemented, or restated to
the date hereof, and together with all confirmations issued
thereunder, the "
ISDA Agreement ").
B.
Subject
to the terms and conditions of this Agreement, the Company,
the Guarantor, the Lenders, the Syndication Agent, the
Administrative Agent and the Lender Counterparty, as
applicable, wish to (i) make certain amendments to the Credit
Agreement as provided herein and (ii) provide a waiver for the
Waiver Defaults, as defined below.
NOW
THEREFORE, in consideration of their mutual undertakings, the
Company, the Guarantor, the Lenders, the Syndication Agent,
the Administrative Agent and the Lender Counterparty hereby
agree as follows:
Section
1.
Definitions and Interpretations .
As used in this Agreement, each of the terms defined in the opening
paragraph and the Recitals above shall have the meanings assigned
to such terms therein. 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. Article, Section, Schedule, and Exhibit references
are to this Agreement, unless otherwise specified. 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
2.
Waiver .
(a)
The
Company hereby acknowledges the existence of the following
Events of Default (the "
Waiver Defaults "):
(i) the Company did not furnish the title opinions required by the
Credit Agreement (the "
Post-Closing Title Opinions ")
on or before August 15, 2007, which constitutes an Event of Default
under the Credit Agreement, (ii) none of the following occurred on
or before August 31, 2007: (A) the occurrence of the Required
Capital Date, (B) the deposit of at least $7,500,000 of the
amount contributed by Parent to Company on the Required Capital
Date in the Collateral Account to be held under the control of
Administrative Agent as cash collateral and applied to Other
Permitted Capital Expenditures or other expenditures approved in
writing by the Required Lenders and (C) the repayment in full
of the insurance premium financing Indebtedness described on
Schedule 6.1 to the Credit Agreement from sources other than the
amounts deposited pursuant to clause (B) above, which constitutes
an Event of Default under the Credit Agreement, (iii) the Rail Road
Commission of Texas has not approved the P-4 certificates submitted
by the Company with respect to the wells operated by the Sellers,
which constitutes a failure of the Company to comply with all
requirements of the Credit Agreement and therefore
constitutes
an Event of Default under the Credit Agreement ,
(iv) a
mechanic's and materialman's lien was filed in Chambers County on
July 23, 2007 by K-3 Resources, L.P. for unpaid invoices relating
to work performed on February 3, 2007, on Well No. 1, Point Barrow
SWD Lease ,
which Lien is not permitted under the Credit Agreement and
therefore constitutes an Event of Default under the Credit
Agreement, and (v) the existence of the foregoing Events of Default
under the Credit Agreement constitutes an Event of Default under
the ISDA Agreement.
(b)
Subject
to the terms and conditions of this Agreement, the Lenders and
the Lender Counterparty, as applicable, hereby waive the
Waiver Defaults. The waiver by the Lenders and the Lender
Counterparty described in this Section 2 is contingent upon
the satisfaction of the conditions precedent set forth below
in this Agreement and is limited to the Waiver Defaults. Such
waiver shall not be construed to be a consent to or a
permanent waiver of any Section covered by either of the
Waiver Defaults or any other terms, provisions, covenants,
warranties or agreements contained in the Credit Agreement,
the ISDA Agreement, or in any of the other Transaction
Documents. The Lenders and the Lender Counterparty 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, the ISDA Agreement, or any
other provision of any Transaction Document. The description
herein of the Waiver Defaults is based upon the information
available to the Lenders and the Lender Counterparty on the
date hereof and shall not be deemed to exclude the existence
of any other Events of Default. The failure of the Lenders or
the Lender Counterparty to give notice to any Credit Party of
any such other Events of Default is not intended to be nor
shall be a waiver thereof. The Company and the Guarantor
hereby agree and acknowledge that the Lenders and the Lender
Counterparty require and will require strict performance by
the Company and the Guarantor of all of their respective
obligations, agreements and covenants contained in the Credit
Agreement, the ISDA Agreement, and the other Transaction
Documents, as amended hereby, and no inaction or action
regarding any Event of Default is intended to be or shall be a
waiver thereof.
(c)
Without
limitation of the foregoing, any failure (i) to deliver
acceptable Post-Closing Title Opinions by the date set forth
in Section 8.1(s) of the Credit Agreement (as amended hereby)
or to comply with all reasonable requirements made by the
Administrative Agent pursuant to such opinions by such date,
(ii) of any of the items listed in Section 8.1(n) of the
Credit Agreement (as amended hereby) to occur by the date set
forth in Section 8.1(n) of the Credit Agreement (as amended
hereby), (iii) to obtain any of the approvals required by
Section 8.1(v) of the Credit Agreement by the date set forth
in Section 8.1(v) of the Credit Agreement, or (iv) to pay any
of the obligations required by Section 8.1(w) of the Credit
Agreement by the date set forth in Section 8.1(w) of the
Credit Agreement or to obtain the release of any related Liens
as required thereunder, shall constitute an Event of Default
under the Credit Agreement, and any such Event of Default
under the Credit Agreement shall constitute an Event of
Default under the ISDA Agreement.
(d)
Notwithstanding
the foregoing waiver of the Waiver Defaults, until the
Capitalization Date (as hereinafter defined), for purposes of
the following Sections of the Credit Agreement, the
Administrative Agent may at its election exercise the rights
and receive the benefits, and the Company shall have the
obligations, which are applicable under such Sections during
the existence of an Event of Default: (i) Section 1.1,
definition of "ANCF Capital Expenditures," (ii) Section 1.1,
definition of "Permitted G&A Expense Amount," (iii)
Section 2.6(c)(ii) (monthly interest payments), (iv) Section
2.8 (default interest), (v) Section 2.19 (collateral account),
(vi) Section 5.2(e) (independent engineer's reports); (vii)
Section 6.6 (distributions), and (viii) Section 10.6
(assignments).
Section
3.
Amendments to the Credit Agreement .
(a)
Section
8.1(n) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(n)
Any
of the following shall not have occurred on or before October
26, 2007: (i) the occurrence of the Required Capital
Date, (ii) the deposit of at least $7,500,000 of the
amount contributed by Parent to Company on the Required
Capital Date in the Collateral Account to be held under the
control of Administrative Agent as cash collateral and applied
to Other Permitted Capital Expenditures or other expenditures
or obligations approved in writing or required by the Required
Lenders (including without limitation application to the
reduction of outstanding principal, interest and other sums
owed by the Company on the Loans, the other Obligations, or
otherwise under the Transaction Documents) and (iii) the
repayment in full of the insurance premium financing
Indebtedness described on Schedule 6.1 (from sources other
than amounts deposited pursuant to clause (ii) above) (the
date on which the foregoing items (i), (ii), and (iii) are
satisfied, the "
Capitalization Date ");
(b)
Section
8.1(s) of the Credit Agreement is hereby deleted in its
entirety and replaced with the following:
(s)
Company
shall fail to (i) on or before November 7, 2007 (A)
furnish, title opinions, in form and substance reasonably
satisfactory to Administrative Agent, covering Texas State
Lease MF062790 (State Tract 343), and any lease pooled or
unitized therewith, specifically addressing, without
limitation, the interests of Borrower in and to the following
wells and non-producing reserves: State Tract 343#014, State
Tract 343 #009, State Tract 343 #018 (BP01), State Tract 343
#014 (BP03), or (B) comply with all reasonable requirements
made by Administrative Agent pursuant to such title opinions
or (ii) on or before January 23, 2008 (A) furnish title
opinions, in form and substance reasonably satisfactory to
Administrative Agent, covering Texas State Lease MF030085
(State Tract 5-8A), and any lease pooled or unitized
therewith, specifically addressing, without limitation, the
interests of Borrower in and to the following wells and
non-producing reserves: State Tract 5-8A #02, State Tract 5-8A
#01, State Tract 5-8 #01(BP01), State Tract 5-8A #01(BP02), or
(B) comply with all reasonable requirements made by
Administrative Agent pursuant to such title
opinions;
(c)
Section
8.1 of the Credit Agreement is amended by adding the following
clause (u) in appropriate alphabetical order:
(u)
At
any time after the execution and delivery thereof, the Limited
Guaranty dated as of October 23, 2007, made by Mark S. Western
for the ratable benefit of the Beneficiaries, for any reason,
other than the satisfaction in full of all Obligations, shall
cease to be in full force and effect with respect to Mark S.
Western (other than in accordance with its terms) or shall be
declared to be null and void or Mark S. Western shall
repudiate his obligations thereunder.
(d)
Section
8.1 of the Credit Agreement is amended by adding the following
clause (v) in appropriate alphabetical order:
(v)
The
Railroad Commission of Texas shall not have approved, on or
before January 23, 2008, all of the change of operator
P-4 submissions made by Company with respect to the wells
operated by the Sellers; or
(e)
Section
8.1 of the Credit Agreement is amended by adding the following
clause (w) in appropriate alphabetical order:
(w)
Any
of the following shall not have occurred on or before the
earlier of (i) the Required Capital Date and (ii) October 26,
2007: (A) the repayment in full of all amounts owing to K-3
Resources, L.P. relating to work performed on February 3,
2007, on Well No. 1
|
