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EXHIBIT 10.56
EXECUTION COPY
FIRST AMENDMENT AND WAIVER
TO CREDIT AGREEMENT
This FIRST AMENDMENT AND WAIVER TO FIRST LIEN CREDIT AGREEMENT
(this
"AMENDMENT") is dated as of January 22, 2008 and is entered into by
and among
PACIFIC ENERGY ALASKA OPERATING LLC, a limited liability company
organized under
the laws of the State of Delaware ("BORROWER"), PACIFIC ENERGY
ALASKA HOLDINGS,
LLC, a limited liability company organized under the laws of the
state of
Delaware ("HOLDINGS"), as a Credit Support Party, CERTAIN FINANCIAL
INSTITUTIONS
listed on the signature pages hereto (the "LENDERS"), SILVER POINT
FINANCE, LLC
("SILVER POINT"), as administrative agent (together with its
permitted successor
in such capacity, "ADMINISTRATIVE AGENT") and collateral agent, and
J. ARON &
COMPANY, as counterparty to Borrower under the ISDA Master
Agreement, dated as
of August 27, 2007 (as amended, supplemented or restated to the
date hereof, and
together with all confirmations issued thereunder, the "ISDA
AGREEMENT") (in
such capacity, the "FIRST LIEN HEDGE COUNTERPARTY"), and is made
with reference
to that certain FIRST LIEN CREDIT AGREEMENT, dated as of August 24,
2007 (as
amended through the date hereof, the "CREDIT AGREEMENT"), by and
among Borrower,
Holdings, the lenders party thereto, and Silver Point, as Sole Lead
Arranger,
Sole Bookrunner, Syndication Agent, Administrative Agent and
Collateral Agent.
Capitalized terms used herein without definition shall have the
same meanings
herein as set forth in the Credit Agreement after giving effect to
this
Amendment.
RECITALS
WHEREAS, pursuant to Section 5.14 of the Credit Agreement, the
Borrower
is to maintain in effect, one or more Hedging Agreements, the
effect of which is
to fix or cap the interest rates applicable to at least 50% of the
Indebtedness
that is projected to be outstanding under the Loan Documents and
the Second Lien
Loan Documents, in each case on terms and conditions reasonably
acceptable,
taking into account current market conditions, to the Agent;
WHEREAS, the Borrower has informed the Administrative Agent,
the
Lenders and the First Lien Hedge Counterparty that such Hedging
Agreements are
not in place, that such failure to maintain such Hedging Agreements
in place is
an Event of Default (the "EXISTING EVENT OF DEFAULT") and has
requested 60 days
following the effective date of this Amendment to put Hedging
Agreements in
place in accordance with Section 5.14 of the Credit Agreement;
WHEREAS, the Borrower and each other Loan Party have requested
that
Required Lenders and the First Lien Hedge Counterparty waive the
Existing Event
of Default and agree to amend certain provisions of the Credit
Agreement as
provided for herein; and
WHEREAS, subject to certain conditions set forth herein,
Required
Lenders and the First Lien Hedge Counterparty are willing to
consent to such
actions and agree to such amendments.
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NOW, THEREFORE, in consideration of the premises and the
agreements,
provisions and covenants herein contained, the parties hereto agree
as follows:
SECTION I.
LIMITED WAIVER AND AGREEMENT
(a) The Required Lenders and the First Lien Hedge Counterparty
hereby
waive, effective as of the First Amendment Effective Date the
Existing Event of
Default; provided that such waiver shall remain in effect only so
long as the
Borrower satisfies the requirements of Section I(b). If the
Borrower fails to
satisfy the requirements of Section I(b) hereof, such failure shall
constitute
an Event of Default.
(b) The Borrower shall, as promptly as practicable and in any
event
within 60 days after the First Amendment Effective Date, enter
into, and for a
period of not less than three years after the Closing Date maintain
in effect,
one or more Hedging Agreements, the effect of which is to fix or
cap the
interest rates applicable to at least 50% of the Indebtedness that
is projected
to be outstanding under the Loan Documents and the Second Lien Loan
Documents,
in each case on terms and conditions reasonably acceptable, taking
into account
current market conditions, to the Agent. Each such Hedging
Agreement shall be
entered into with a person that is reasonably acceptable to the
Agent.
SECTION II.
AMENDMENT TO CREDIT AGREEMENT
2.1 AMENDMENT
TO SECTION 6.11
Section 6.11 is hereby amended by (x) inserting "(a)"
immediately
following the caption "LEVERAGE RATIO." and (y) replacing the table
set forth
therein with the following table:
============================================================
===================
Fiscal Quarter
Maximum Ratio
------------------------------------------------------------
-------------------
4th Fiscal Quarter 2007
8.00 to 1.00
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-------------------
1st and 2nd Fiscal Quarters 2008
6.00 to 1:00
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-------------------
3rd and 4th Fourth Fiscal Quarters 2008
5.50 to 1.00
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-------------------
1st, 2nd, 3rd and 4th Fiscal Quarters 2009
4.00 to 1.00
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-------------------
1st, 2nd, 3rd and 4th Fiscal Quarters 2010 and thereafter
3.50
to 1.00
============================================================
===================
Section 6.11 is hereby further amended to add the following as a
new clause (b)
thereunder:
"(b) (i) With respect to the 4th Fiscal Quarter 2007, Holdings
shall
have (x) cash receipts
from the sale of production in an amount no less than
$40,000,000 and (y)
Consolidated EBIDTA in an amount no less than $20,000,000;
(ii) with respect to the 1st Fiscal Quarter 2008, Holdings
shall have (x) cash receipts from the sale of production in an
amount
no less than $42,000,000 and (y) Consolidated EBITDA in an amount
no
less than $23,000,000."
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SECTION III. CONDITIONS
TO EFFECTIVENESS
This Amendment shall become effective as of January 18, 2008 only
upon
the satisfaction of all of the following conditions precedent (such
date, the
"FIRST AMENDMENT EFFECTIVE DATE"):
A. EXECUTION. Administrative Agent shall have received a
counterpart
signature page of this Amendment duly executed by each of the Loan
Parties,
Required Lenders and the First Lien Hedge Counterparty.
B. PAYMENTS AND
EXPENSES. The Administrative Agent and J. Aron shall
have received all invoiced payments and other amounts due and
payable on or
prior to the First Amendment Effective Date, including, payments
required under
the Letter Agreement (as defined below) and, to the extent
invoiced,
reimbursement or other payment of all out-of-pocket expenses
required to be
reimbursed or paid by Borrower hereunder.
C. NECESSARY CONSENTS. Each Loan Party shall have obtained all
material
consents necessary or advisable in connection with the transactions
contemplated
by this Amendment.
D. NO DEFAULT. After giving effect to the waiver set forth in
Section I
hereof, no event shall have occurred and be continuing that would
constitute an
Event of Default or a Default.
E. ACCURACY OF REPRESENTATIONS AND WARRANTIES. The r
