AMENDMENT NO. 2 AND WAIVER
AMENDMENT
NO. 2
AND WAIVER
This Amendment
No. 2 and Waiver (this
"Agreement")
dated
as of August 15, 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"),
X.
Xxxx & Company,
as Lead
Arranger and as Syndication Agent (in such capacities, "Syndication
Agent"),
and
X.
Xxxx & 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 July 23, 2007, which constitutes an Event of Default under the Credit
Agreement, (ii) none of the following occurred on or before August 9, 2007:
(A) the occurrence of the Required Capital Date, (B) the deposit of at
least $5,000,000 of the $7,500,000 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 and (C) the repayment in full of the insurance premium
financing Indebtedness described on Schedule 6.1 to the Credit Agreement from
the $7,500,000 contributed by Parent to Company on the Required Capital Date,
which constitutes an Event of Default under the Credit Agreement, and (iii)
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 to deliver the Post-Closing Title
Opinions by the date set forth in Section 8.1(s) of the Credit Agreement (as
amended hereby), or any failure 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), 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.
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:
(s) Any
of
the following shall not have occurred on or before August 31, 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 approved in writing by the Required Lenders
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);
2
(b) Section
8.1(s) of the Credit Agreement is hereby deleted in its entirety and replaced
with the following:
(s) Borrower
shall fail to (i) furnish, on or before August 15, 2007, title opinions, in
form
and substance reasonably satisfactory to Administrative Agent, covering Texas
State Lease MF030085 (State Tract 5-8A), 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 xxxxx
and
non-producing reserves: (a) State Tract 5-8A #02, (b) Xxxxx Xxxxx 0-0X #00,
Xxxxx Xxxxx 5-8 #01(BP01), State Tract 5-8A #01(BP02), State Xxxxx 000#000,
Xxxxx Xxxxx 000 #000, Xxxxx Xxxxx 343 #018 (BP01), State Xxxxx 000 #000 (XX00),
xx (xx) comply with all reasonable requirements made by Administrative Agent
pursuant to such title opinions; or
Section
4. No
Obligation to Make Payments.
Notwithstanding anything herein to the contrary, Company hereby acknowledges,
confirms and agrees that for so long as any Event of Default or Potential Event
of Default (as such terms are defined in the ISDA Agreement) is outstanding
with
respect to Company, any obligation Lender Counterparty may have to make any
payment under the ISDA Agreement shall be suspended.
Section
5. Representations
and Warranties.
(a) The
Guarantor represents and warrants that (i) after giving effect to this
Agreement, the representations and warranties set forth in the Credit Agreement,
the representations and warranties set forth in the ISDA Agreement, and the
representations and warranties contained in the other Transaction Documents
to
which the Guarantor is a party are true and correct in all material respects
on
and as of the Effective Date as if made on and as of such date; (ii) other
than
the Waiver Defaults, no Default or Event of Default, or Event of Default or
Potential Event of Default (as such terms are defined in the ISDA Agreement)
has
occurred and is continuing; (iii) the execution, delivery and performance of
this Agreement and the other documents, instruments, certificates and agreements
required to be delivered by this Agreement ("Other
Documents")
and to
which the Guarantor is a party are within the corporate power and authority
of
the Guarantor and have been duly authorized by appropriate corporate action
and
proceedings; (iv) this Agreement and the Other Documents to which the Guarantor
is a party constitute legal, valid, and binding obligations of the Guarantor
enforceable in accordance with their respective terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and general principles of equity;
(v) there are no governmental or other third party consents, licenses and
approvals required in connection with the execution, delivery, performance,
validity and enforceability of this Agreement or any of the Other Documents
to
which the Guarantor is a party; and (vi) the Liens under the Security Documents
are valid and subsisting and secure the Company's and the Guarantor's
obligations under the Credit Agreement, the ISDA Agreement, and the other
Transaction Documents.
3
(b) The
Company represents and warrants that: (i) after giving effect to this Agreement,
the representations and warranties contained in the Credit Agreement, the
representations and warranties set forth in the ISDA Agreement, and the
representations and warranties contained in the other Transaction Documents
to
which the Company is a party are true and correct in all material respects
on
and as of the Effective Date as if made on and as of such date; (i) other than
the Waiver Defaults, no Default or Event of Default or Event of Default or
Potential Event of Default (as such terms are defined in the ISDA Agreement)
has
occurred and is continuing; (ii) the execution, delivery and performance of
this
Agreement and the Other Documents to which the Company is a party are within
the
limited liability company power and authority of the Company and have been
duly
authorized by appropriate limited liability company action and proceedings;
(iv)
this Agreement and the Other Documents to which the Company is a party
constitute legal, valid, and binding obligations of the Company enforceable
in
accordance with their respective terms, except as limited by applicable
bankruptcy, insolvency, reorganization, moratorium, or similar laws affecting
the rights of creditors generally and general principles of equity; (v) there
are no governmental or other third party consents, licenses and approvals
required in connection with the execution, delivery, performance, validity
and
enforceability of this Agreement or any of the Other Documents to which the
Company is a party; and (vi) the Liens under the Security Documents are valid
and subsisting and secure Company's obligations under the Credit Agreement,
the
ISDA Agreement, and the other Transaction Documents.
Section
6. Conditions
to Effectiveness.
This
Agreement shall become effective and enforceable against the parties hereto,
the
Credit Agreement shall be amended as provided herein, upon the occurrence of
the
following conditions precedent on or before the Effective Date:
(a) Agreement.
The
Administrative Agent shall have received multiple original counterparts of
this
Agreement duly and validly executed and delivered by duly authorized officers
of
the Company, the Guarantor, the Administrative Agent, the Lenders, and the
Lender Counterparty; and
(b) No
Default; Representations.
Other
than the Waiver Defaults, no Default or Event of Default or Event of Default
or
Potential Event of Default (as such terms are defined in the ISDA Agreement)
shall have occurred and be continuing as of the Effective Date. The
representations and warranties in this Agreement, and in the Credit Agreement
and the ISDA Agreement, shall be true and correct in all material
respects.
Section
7. Effect
on Transaction Documents; Acknowledgments.
(a) The
Company and the Guarantor each acknowledges that on the date hereof all
Obligations are payable without defense, offset, counterclaim or
recoupment.
4
(b) Except
as
set forth in Section 2 above, the Lenders, Lender Counterparty, and
Administrative Agent hereby expressly reserve all of their respective rights,
remedies, and claims under the Credit Agreement, the ISDA Agreement, and the
other Transaction Documents. Nothing in this Agreement shall constitute a waiver
or relinquishment of (i) any Default or Event of Default, or any Event of
Default or Potential Event of Default (as such terms are defined in the ISDA
Agreement), under the Credit Agreement, the ISDA Agreement, or any of the other
Transaction Documents other than as expressly set forth in Section 2 above,
(ii)
any of the agreements, terms or conditions contained in the Credit Agreement,
the ISDA Agreement, or any of the other Transaction Documents, (iii) any rights
or remedies of the Lenders, Lender Counterparty, Administrative Agent, Royalty
Owner, or Warrant Owner with respect to the Credit Agreement, the ISDA
Agreement, and the other Transaction Documents, or (iv) the rights of each
of
the Lenders, the Lender Counterparty, and the Administrative Agent to collect
the full amounts owing to it under the Credit Agreement, the ISDA Agreement,
and
the other Transaction Documents.
(c) The
Company, the Guarantor, the Lenders and Administrative Agent, each hereby
adopts, ratifies, and confirms the Credit Agreement, as amended hereby, and
the
Company, the Guarantor, and the Lender Counterparty each hereby adopts,
ratifies, and confirms the ISDA Agreement, and each of the foregoing parties
acknowledges and agrees that the Credit Agreement, as amended hereby, the ISDA
Agreement and the other Transaction Documents are and remain in full force
and
effect, and the Company and the Guarantor each acknowledges and agrees that
neither its liabilities under the Credit Agreement, the ISDA Agreement, and
the
other Transaction Documents nor the validity, perfection, or priority of any
lien or security interest securing the Obligations are impaired in any respect
by this Agreement.
(d) From
and
after the Effective Date, all references to the Credit Agreement, the ISDA
Agreement, and the Transaction Documents shall mean such Credit Agreement,
such
ISDA Agreement, and such Transaction Documents as amended by this
Agreement.
(e) This
Agreement and each of the Other Documents is a Transaction Document for the
purposes of the provisions of the other Transaction Documents. Without limiting
the foregoing, any breach of representations, warranties, and covenants under
this Agreement shall be a Default or Event of Default, as applicable, under
the
Credit Agreement.
Section
8. Reaffirmation
of the Guaranty.
The
Guarantor hereby ratifies, confirms, and acknowledges that its obligations
under
the Guaranty are in full force and effect and that the Guarantor continues
to
unconditionally and irrevocably guarantee the full and punctual payment, when
due, whether at stated maturity or earlier by acceleration or otherwise, all
of
the Guaranteed Obligations as such Guaranteed Obligations have been increased
and amended by this Agreement. The Guarantor hereby acknowledges that its
execution and delivery of this Agreement does not indicate or establish an
approval or consent requirement by the Guarantor under the Credit Agreement
in
connection with the execution and delivery of amendments to the Credit
Agreement, the Notes, the ISDA Agreement, or any of the other Transaction
Documents.
Section
9. Miscellaneous.
(a) Counterparts.
This
Agreement may be signed in any number of counterparts, each of which shall
be an
original and all of which, taken together, constitute a single instrument.
This
Agreement may be executed by facsimile signature and all such signatures shall
be effective as originals.
(b) Successors
and Assigns.
This
Agreement shall be binding upon and inure to the benefit of the parties hereto
and their respective successors and assigns permitted pursuant to the Credit
Agreement or ISDA Agreement, as applicable.
5
(c) Invalidity.
In the
event that any one or more of the provisions contained in this Agreement shall
for any reason be held invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
of this Agreement.
(d) Governing Law.
THIS
AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE
GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS
OF
THE STATE OF NEW YORK WITHOUT REGARD TO CONFLICT OF LAWS PRINCIPLES
THEREOF.
THIS
AGREEMENT, THE CREDIT AGREEMENT AS AMENDED BY THIS AGREEMENT, THE NOTES, THE
ISDA AGREEMENT, AND THE OTHER TRANSACTION DOCUMENTS CONSTITUTE THE ENTIRE
UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF
AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.
THERE
ARE NO UNWRITTEN
ORAL AGREEMENTS AMONG THE PARTIES.
[Remainder
of this page intentionally left blank. Signature pages to follow.]
6
IN
WITNESS WHEREOF, the parties hereto have caused this Agreement to be executed
by
their respective officers thereunto duly authorized, as of the date first above
written.
| COMPANY | ||
| TEKOIL AND GAS GULF COAST, LLC | ||
| By: | Tekoil & Gas Corporation, its Managing Member | |
| |
|
|
| By: | /s/ Xxxx X. Western | |
|
Xxxx
Xxxxxxx
|
||
| CEO and Chairman of the Board of Directors | ||
|
GUARANTOR
|
||
|
TEKOIL
& GAS CORPORATION
|
||
| |
|
|
| By: | /s/ Xxxx X. Western | |
|
Xxxx Xxxxxxx |
||
| CEO and Chairman of the Board of Directors | ||
| X. XXXX & COMPANY, | ||
|
as
Lead Arranger, Syndication Agent,
Administrative
Agent, Lender Counterparty and a Lender
|
||
| |
|
|
| By: |
/s/
Xxxxx Xxxxx
|
|
|
Authorized
Signatory
|
||
2
