THIRD AMENDMENT TO
SECOND AMENDED AND RESTATED CREDIT AGREEMENT
AND FORBEARANCE AGREEMENT
This Third Amendment to Second Amended and
Restated Credit Agreement and Forbearance Agreement (this “
Third Amendment ”) is effective as of
August 26, 2009 (the “ Amendment Effective
Date ”), by and among Teton Energy Corporation, a
Delaware corporation (the “ Borrower ”),
JPMorgan Chase Bank, N.A., a national banking association as
Administrative Agent (the “ Administrative
Agent ”), and each of the financial institutions a
party hereto as Lenders (hereinafter collectively referred to as
the “ Lenders ”, and individually, a
“ Lender ”).
WHEREAS, the Borrower, the Administrative Agent
and the Lenders are parties to that certain Second Amended and
Restated Credit Agreement dated as of April 2, 2008 (as
amended, the “ Credit Agreement ”)
(unless otherwise defined herein, all terms used herein with their
initial letter capitalized shall have the meaning given such terms
in the Credit Agreement); and
WHEREAS, pursuant to the Credit Agreement, the
Lenders have made revolving credit loans to the Borrower;
and
WHEREAS, the Defaults and Events of Default
described in Exhibit A hereto have occurred and are continuing
or will occur during the Forbearance Period (defined below) (the
“ Specified Defaults ”); and
WHEREAS, the parties hereto desire to
(a) amend certain terms of the Credit Agreement in certain
respects, (b) establish the Borrowing Base and Conforming
Borrowing Base in an amount equal to $14,000,000, continuing until
the next redetermination or adjustment of the Borrowing Base and
Conforming Borrowing Base thereafter, and (c) confirm the
Lenders’ agreement to forbear from exercising certain rights
and remedies available to them as a result of the Specified
Defaults; and
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, the Borrower, the Administrative
Agent and the Lenders party hereto hereby agree as
follows:
Section 1.
Acknowledgment Of Default And Availability Of
Remedies.
1.1 Default . The Borrower
acknowledges and agrees that (a) the Specified Defaults have
occurred under the Loan Documents which continue to exist on the
date hereof and have not been cured or waived; (b) the
existence of the Specified Defaults absolutely and unconditionally
entitles the Administrative Agent and the Lenders to immediately
exercise the remedies available under the Loan Documents,
applicable law, at equity or otherwise; (c) the Borrower is
not entitled to any notice, grace or cure periods prior to the
exercise by the Administrative Agent and the Lenders of such rights
or remedies other than notices which have been provided and grace
and cure periods which have expired (or to the extent any such
right to notice, grace or cure periods exists, such right is hereby
waived); and (d) the agreements of the Administrative Agent
and the Lenders herein shall not constitute a waiver of any Default
or Event of Default including without limitation the Specified
Defaults. The Administrative Agent and the Lenders expressly
reserve all rights and remedies available to them.
2.1 Forbearance . Upon and subject
to the terms and conditions hereof, the Administrative Agent and
the Lenders agree to forbear from exercising their rights and
remedies as a result of the Specified Defaults under the Loan
Documents, including any rights or remedies arising thereunder
pursuant to applicable law, to (i) accelerate the outstanding
principal balance of the Loans and (ii) commence foreclosure
proceedings under the Security Instruments, during the period from
the Amendment Effective Date to and including the earlier of
(a) the occurrence of any Default or Event of Default other
than the Specified Defaults, or (b) 5:00 p.m.,
September 15, 2009 (Dallas, Texas time) (the “
Forbearance Period ”). Upon the earlier of the
occurrence of any Default or Event of Default other than the
Specified Defaults, or September 15, 2009, the Administrative
Agent’s and the Lenders’ agreement herein to forbear
from exercising such rights and remedies available to them shall
immediately terminate, and the Administrative Agent and the Lenders
shall immediately be entitled to exercise any and all rights and
remedies available to them, individually or collectively, under the
Loan Documents, at law or in equity or otherwise, including,
without limitation, the right (without prior notice or opportunity
to cure of any kind) to accelerate the Loans, exercise rights of
offset over all accounts of the Borrower and its Subsidiaries,
commence foreclosure proceedings and/or seek the appointment of a
receiver.
2.2 No Course of Dealing/Conduct .
The Borrower hereby acknowledges and agrees that
(a) notwithstanding the Administrative Agent’s and the
Lenders’ forbearance as set forth in this Third Amendment,
the Administrative Agent and the Lenders reserve the right to
strictly enforce this Third Amendment and, except as specifically
and expressly limited herein, the Loan Documents; (b) the
Administrative Agent and the Lenders are under no duty or
obligation of any kind or nature whatsoever to enter into any
extension, renewal, restatement or modification of the Loan
Documents, or grant the Borrower any additional period or type of
forbearance or any extension of this Third Amendment; (c) the
Administrative Agent’s and the Lenders’ execution of
this Third Amendment shall not be used to assert any waiver of the
Administrative Agent’s or the Lenders’ rights or
remedies under the Loan Documents or applicable law; (d) this
Third Amendment and accommodations made by the Administrative Agent
and the Lenders herein shall not constitute a “course of
dealing” or a “course of conduct” in
contravention of the Loan Documents; (e) the execution and
performance of this Third Amendment do not in any way release or
constitute an accord and satisfaction or novation of any of the
Loan Documents, all of the terms of which shall remain in full
force and effect except as specifically and expressly limited
herein; and (f) the Borrower and each of its Subsidiaries
hereby ratifies and confirms each and every provision of the Loan
Documents.
Section 3. Amendments . In
reliance on the representations, warranties, covenants and
agreements contained in this Third Amendment, and subject to the
satisfaction of the conditions precedent set forth in
Section 5 hereof, the Credit Agreement is hereby
amended effective as of the Amendment Effective Date in the manner
provided in this Section 3 .
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3.1 Amendments to Definitions .
The definitions of “ Interest Payment Date
” and “ Loan Documents ” contained
in Section 1.02 of the Credit Agreement shall be amended to
read in full as follows:
“ Interest Payment Date
” means with respect to any ABR Loan, the last day of each
month and with respect to any Eurodollar Loan, the last day of the
Interest Period applicable to the Borrowing of which such Loan is a
part and, in the case of a Eurodollar Borrowing with an Interest
Period of more than one month’s duration, each day prior to
the last day of such Interest Period that occurs at intervals of
one month’s duration after the first day of such Interest
Period.
“ Loan Documents ”
means this Agreement, the First Amendment, the Second Amendment,
the Third Amendment, the Notes, the Letter of Credit Agreements,
the Letters of Credit, the Intercreditor Agreement and the Security
Instruments.
3.2 Commitments and Maximum Credit
Amount . Schedule 1 hereto sets forth the Commitment
and Maximum Credit Amount of each Lender as of the Amendment
Effective Date. The aggregate Commitments and Aggregate Maximum
Credit Amounts equal $22,484,296 as of the Amendment Effective
Date.
Section 4.
Borrowing Base Redetermination .
4.1 Borrowing Base . The Borrowing
Base and the Conforming Borrowing Base shall each, pursuant to
Section 2.07 of the Credit Agreement, be redetermined at
$14,000,000 continuing until the next Scheduled Redetermination,
Interim Redetermination or other redetermination of the Borrowing
Base and the Conforming Borrowing Base thereafter. The parties
agree that the redetermination of the Borrowing Base and the
Conforming Borrowing Base provided herein shall constitute the
Supplemental Redetermination required on or about August 1,
2009 pursuant to the Second Amendment and shall not constitute an
Interim Redetermination.
Section 5. Conditions Precedent to
Third Amendment . The effectiveness of this Third Amendment
is subject to the satisfaction of each of the following conditions
precedent:
5.1 No Default . No Default or
Event of Default shall have occurred which is continuing, other
than the Specified Defaults.
5.2 Other Documents . The
Administrative Agent shall have been provided with such other
documents, instruments and agreements, and the Borrower and each of
its Subsidiaries shall have taken such actions, as the
Administrative Agent may reasonably require in connection with this
Third Amendment and the transactions contemplated
hereby.
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5.3 Fees and Expenses . The
Borrower shall have paid all reasonable out-of-pocket fees and
expenses of counsel for the Administrative Agent incurred, to the
extent the same have been invoiced and sent to the Borrower on or
prior to the Amendment Effective Date, including all such
out-of-pocket fees and expenses incurred in connection with the
preparation, negotiation and execution of this Third Amendment and
any other Loan Documents to be executed and delivered in connection
therewith and any and all fees payable to Administrative Agent or
the Lenders pursuant to or in connection with this Third Amendment
in consideration for the agreements set forth herein. The Borrower
shall have paid to counsel for the Administrative Agent the amount
of $50,000 to be held as a retainer for future fees and expenses to
be incurred by such Person.
5.4 Payment of Interest . The
Administrative Agent shall have received confirmation of payment by
the Borrower of all accrued interest under the Loan Documents as of
the Amendment Effective Date.
Section 6. Representations and
Warranties of the Borrower . To induce the Lenders and the
Administrative Agent to enter into this Third Amendment, the
Borrower hereby represents and warrants to the Lenders and the
Administrative Agent as follows:
6.1 Reaffirm Existing Representations and
Warranties . Except for the representations and warranties
made in Sections 7.04(b) and 7.22, each representation and
warranty of the Borrower and its Subsidiaries contained in the
Credit Agreement and the other Loan Documents is true and correct
on the date hereof and will be true and correct after giving effect
to the Third Amendment (other than breaches which result from the
Specified Defaults).
6.2 Due Authorization; No Conflict
. The execution, delivery and performance by the Borrower of this
Third Amendment are within the Borrower’s corporate 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 provision of applicable law or any material agreement binding
upon the Borrower or any of its Subsidiaries or result in the
creation or imposition of any Lien upon any of the assets of the
Borrower or any of its Subsidiaries.
6.3 Validity and Enforceability .
This Third Amendment constitutes the valid and binding obligation
of the Borrower enforceable in accordance with its terms, except as
(a) the enforceability thereof may be limited by bankruptcy,
insolvency or similar laws affecting creditor’s rights
generally, and (b) the availability of equitable remedies may
be limited by equitable principles of general
application.
6.4 No Default or Event of Default
. No Default or Event of Default has occurred which is continuing,
other than the Specified Defaults.
6.5 Accounts .
Schedule 2 attached hereto sets forth a true, accurate
and complete listing of all of the deposit accounts of the Borrower
an
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