EXHIBIT 10.1

 

 

 

 

TERM LOAN AGREEMENT

 

among

 

PETRODOME AROUND THE HORN, LLC,

PETRODOME BAYOU CHOCTAW, LLC,

PETRODOME BLOOMINGTON, LLC,

PETRODOME BUCKEYE, LLC,

PETRODOME DIETZEL, LLC,

PETRODOME EAST CREOLE, LLC,

PETRODOME EC, LLC,

PETRODOME ENERGY, LLC,

PETRODOME LIBERTY, LLC,

PETRODOME LONE STAR, LLC,

PETRODOME LOUISIANA PIPELINE, LLC,

PETRODOME MAURICE, LLC,

PETRODOME NAPOLEONVILLE, LLC,

PETRODOME OPERATING, LLC,

PETRODOME PHEASANT BLESSING, LLC,

PETRODOME PINEVILLE, LLC,

PETRODOME PINTAIL, LLC, PETRODOME QUAIL RIDGE, LLC,

PETRODOME RIO RANCH, LLC,

PETRODOME ST. GABRIEL II, LLC,

PETRODOME THUNDERBOLT, LLC, and

PETRODOME WHARTON, LLC

as initial Co-Borrowers

 

and

405 PETRODOME LLC,

as Administrative Agent

 

and

 

THE LENDERS SIGNATORY HERETO

 

December 22, 2017

 
 

SENIOR SECURED TERM LOAN OF $8,510,638

 

 

 

TABLE OF CONTENTS

 

Page

ARTICLE I DEFINITIONS AND INTERPRETATION

2

1.1

Terms Defined Above

2

1.2

Additional Defined Terms

2

1.3

Undefined Financial Accounting Terms

21

1.4

References

22

1.5

Articles and Sections

22

1.6

Number and Gender

22

1.7

Incorporation of Schedules and Exhibits

22

1.8

Negotiated Transaction

22

 

ARTICLE II TERMS OF FACILITY

22

2.1

Term Loan

22

2.2

Use of Loan Proceeds

23

2.3

Repayment of Term Loans

23

2.4

Reserved.

24

2.5

Outstanding Amounts

24

2.6

Taxes and Time, Place, and Method of Payments

24

2.7

Pro Rata Treatment; Adjustments

27

2.8

Voluntary Prepayments

28

2.9

Mandatory Prepayments

28

2.10

Loans to Satisfy Obligations of Borrowers

28

2.11

General Provisions Relating to Interest

29

2.12

Reserved.

30

2.13

Reserved.

30

2.14

Security Interest in Accounts; Right of Offset

30

2.15

Illegality

30

2.16

Regulatory Change

30

2.17

Power of Attorney

31

2.18

Keepwell

31

2.19

Joint and Several Liability

32

2.20

Overriding Royalty Interest

32

2.21

Increase in Term Loan

32

2.22

Availability of Capital Expenditures.

34

  

ARTICLE III CONDITIONS

35

3.1

Initial Funding

35

  

ARTICLE IV REPRESENTATIONS AND WARRANTIES

38

4.1

Due Authorization

38

4.2

Existence

39

4.3

Valid and Binding Obligations

39

4.4

Security Documents

39

4.5

Title to Property

39

 

 
- i -
 
 

 

4.6

Scope and Accuracy of Financial Statements

39

4.7

No Material Adverse Effect or Default

39

4.8

No Material Misstatements

39

4.9

Liabilities, Litigation and Restrictions

40

4.10

Authorizations; Consents

40

4.11

Compliance with Laws

40

4.12

ERISA

40

4.13

Environmental Laws

40

4.14

Compliance with Federal Reserve Regulations

41

4.15

Investment Company Act Compliance

41

4.16

Proper Filing of Tax Returns; Payment of Taxes Due

41

4.17

Refunds

41

4.18

Gas Contracts

41

4.19

Intellectual Property

41

4.20

Casualties or Taking of Property

42

4.21

Location of Borrowers

42

4.22

Subsidiaries

42

4.23

Compliance with Anti-Terrorism Laws

42

4.24

Identification Numbers

43

4.25

Solvency

43

4.26

Petrodome PSA

43

4.27

Related Party Transactions

43

4.28

Ownership of Property

43

4.29

Plugged and Abandoned and Non-Producing Oil and Gas Properties

43

 

ARTICLE V AFFIRMATIVE COVENANTS

44

5.1

Maintenance and Access to Records

44

5.2

Monthly Unaudited Financial Statements and Compliance Certificates

44

5.3

Annual Audited Financial Statements and Compliance Certificate

44

5.4

Reserve Reports; LOE Reports; Production Reports; Payables Aging; Additional Development Plans and Financial Projections

45

5.5

Title Opinions; Title Defects; Mortgaged Properties

46

5.6

Notices of Certain Events

46

5.7

Letters in Lieu of Transfer Orders or Division Orders

47

5.8

Commodity Hedging

47

5.9

Tax Returns

47

5.10

Additional Information

47

5.11

Compliance with Laws

48

5.12

Payment of Assessments and Charges

48

5.13

Maintenance of Existence or Qualification and Good Standing

48

5.14

Payment of Notes; Performance of Obligations

48

5.15

Further Assurances; Post-Closing Obligations

48

5.16

Initial Expenses of Agent

48

5.17

Subsequent Expenses of Agent and Lenders

49

5.18

Maintenance and Inspection of Properties

50

5.19

Maintenance of Insurance

50

5.20

Environmental Indemnification

50

 

 
- ii -
 
 

 

5.21

General Indemnification

 

51

 

5.22

Evidence of Compliance with Anti-Terrorism Laws

 

51

 

5.23

Board and Management Meetings

 

51

 

5.24

Maximum Permitted Monthly General and Administrative Expense Allocation

 

51

 

5.25

Material Contracts

 

52

 

5.26

Credit Policies

 

52

 

5.27

DACA Accounts

 

52

 

5.28

Lockbox Account

 

52

 

5.29

Other Financial Reporting Obligations

 

52

 

5.30

Additional Collateral; Other Deliveries

 

52

 

 

 

 

 

ARTICLE VI NEGATIVE COVENANTS

 

52

 

6.1

Indebtedness

 

52

 

6.2

Contingent Obligations

 

53

 

6.3

Liens

 

53

 

6.4

Sales of Assets

 

53

 

6.5

Leasebacks

 

53

 

6.6

Sale or Discount of Receivables

 

53

 

6.7

Loans or Advances

 

53

 

6.8

Investments

 

54

 

6.9

Dividends and Distributions

 

54

 

6.10

Issuance of Equity; Changes in Corporate Structure

 

54

 

6.11

Transactions with Affiliates and Certain Other Person

 

54

 

6.12

Lines of Business

 

55

 

6.13

Plan Obligation

 

55

 

6.14

Anti-Terrorism Laws

 

55

 

6.15

Amendment of Material Contracts

 

55

 

6.16

Provisions of Commodity Hedge Agreements

 

55

 

6.17

Maintenance of Commodity Hedge Agreements

 

55

 

6.18

Deposit Accounts

 

55

 

6.19

Development Plan

 

55

 

6.20

Reserved

 

56

 

6.21

Current Ratio

 

56

 

6.22

PDP Collateral Coverage

 

56

 

6.23

Proved Reserves Coverage

 

56

 

6.24

Capital Expenditures

 

56

 

6.25

Capital Leases

 

56

 

6.26

Amendments to Organizational Documents

 

56

 

6.27

Additional Subsidiaries

 

57

 

6.28

Equity Raise

 

57

 

6.29

Negative Pledge Agreements

 

57

 

6.30

Material Accounting Changes

 

57

 

 

 

 

 

ARTICLE VII EVENTS OF DEFAULT

 

57

 

7.1

Enumeration of Events of Default

 

57

 

7.2

Remedies

 

59

 

  
 
- iii -
 
 

 

ARTICLE VIII THE AGENT

61

8.1

Appointment

61

8.2

Delegation of Duties

61

8.3

Exculpatory Provisions

61

8.4

Reliance by Agent

62

8.5

Notice of Default

62

8.6

Non-Reliance on Agent and Other Lenders

63

8.7

Indemnification

63

8.8

Restitution

64

8.9

Agent in Its Individual Capacity

64

8.10

Successor Agent

64

8.11

Applicable Parties

64

8.12

Releases

65

 

ARTICLE IX MISCELLANEOUS

65

9.1

Assignments; Participations

65

9.2

Survival of Representations, Warranties, and Covenants

66

9.3

Notices and Other Communications

67

9.4

Parties in Interest

68

9.5

Rights of Third Parties

68

9.6

Renewals; Extensions

68

9.7

No Waiver; Rights Cumulative

68

9.8

Survival Upon Unenforceability

68

9.9

Amendments; Waivers

69

9.10

Controlling Agreement

69

9.11

Disposition of Collateral

69

9.12

Governing Law

69

9.13

Dispute Resolution

69

9.14

Jurisdiction and Venue

72

9.15

Integration

72

9.16

Waiver of Punitive and Consequential Damages

72

9.17

Counterparts

72

9.18

USA Patriot Act Notice

73

9.19

Tax Shelter Regulations

73

9.20

Contribution and Indemnification

73

 

 
- iv -
 
 

 

LIST OF SCHEDULES

 

Schedule 1.2A

Development Plan

S-1.2A-i

Schedule 1.2C

Percentage Shares

S-1.2C-i

Schedule 2.2

Use of Loan Proceeds

S-2.2-i

Schedule 3.1(g)

Direction Letters

S-3.1(g)-i

Schedule 3.1(p)

Certain Agreements

S-3.1(p)-i

Schedule 4.5

Liens

S-4.5-i

Schedule 4.6

Accounts Payable

S-4.6-i

Schedule 4.9

Liabilities and Litigation

S-4.9-i

Schedule 4.10

Authorizations; Consents

S-4.10-i

Schedule 4.13

Environmental Disclosures

S-4.13-i

Schedule 4.17

Refunds

S-4.17-i

Schedule 4.18

Gas Contracts

S-4.18-i

Schedule 4.22

Subsidiaries

S-4.22-i

Schedule 4.24

EIN, Jurisdiction of Formation and Location

S-4.24-i

Schedule 4.27

Related Party Transactions

S-4.27-i

Schedule 4.28

Ownership of Property

S-4.28-i

Schedule 5.2

Budget

S-5.2-i

Schedule 6.18

Deposit Accounts

S-6.18-i

 

LIST OF EXHIBITS

 

 

 

 

Exhibit A

Form of Note

A-i

Exhibit B

Form of Compliance Certificate

B-i

Exhibit C

Form of Assignment Agreement

C-i

Exhibit D

Form of Pledge Agreement

D-i

Exhibit E

Form of Security Agreement

E-i

Exhibit F

Form of Texas Deed of Trust

F-i

Exhibit G

Form of Louisiana Mortgage

G-i

Exhibit H

Form of Mississippi Mortgage

H-i

Exhibit I

Form of Assignment of ORRI (Texas)

I-i

Exhibit J

Form of Assignment of ORRI (Louisiana)

J-i

Exhibit K

Form of Assignment of ORRI (Mississippi)

K-i

Exhibit L

Form of Deposit Account Control Agreement

L-i

 

 

- v -

 
 

 

TERM LOAN AGREEMENT

 

This TERM LOAN AGREEMENT is made and entered into effective December 22, 2017, by and among PETRODOME AROUND THE HORN, LLC (“Horn”), a Louisiana limited liability company, PETRODOME BAYOU CHOCTAW, LLC (“Choctaw”), a Louisiana limited liability company, PETRODOME BLOOMINGTON, LLC (“Bloomington”), a Texas limited liability company, PETRODOME BUCKEYE, LLC (“Buckeye”), a Texas limited liability company, PETRODOME DIETZEL, LLC (“Dietzel”), a Texas limited liability company, PETRODOME EAST CREOLE, LLC (“East Creole”), a Louisiana limited liability company, PETRODOME EC, LLC (“EC”), a Texas limited liability company, PETRODOME ENERGY, LLC (“Petrodome Energy”), a Texas limited liability company, PETRODOME LIBERTY, LLC (“Liberty”), a Texas limited liability company, PETRODOME LONE STAR, LLC (“Lone Star”), a Texas limited liability company, PETRODOME LOUISIANA PIPELINE, LLC (“Pipeline”), a Texas limited liability company, PETRODOME MAURICE, LLC (“Maurice”), a Texas limited liability company, PETRODOME NAPOLEONVILLE, LLC (“Napoleonville”), a Louisiana limited liability company, PETRODOME OPERATING, LLC (“Operating”), a Texas limited liability company, PETRODOME PHEASANT BLESSING, LLC (“Pheasant Blessing”), a Texas limited liability company, PETRODOME PINEVILLE, LLC (“Pineville”), a Mississippi limited liability company, PETRODOME PINTAIL, LLC (“Pintail”), a Louisiana limited liability company, PETRODOME QUAIL RIDGE, LLC (“Quail Ridge”), a Texas limited liability company, PETRODOME RIO RANCH, LLC (“Rio Ranch”), a Texas limited liability company, PETRODOME ST. GABRIEL II, LLC (“St. Gabriel”), a Texas limited liability company, PETRODOME THUNDERBOLT, LLC (“Thunderbolt”), a Texas limited liability company, and PETRODOME WHARTON, LLC (“Wharton”), a Texas limited liability company, (each of Horn, Choctaw, Bloomington, Buckeye, Dietzel, East Creole, EC, Petrodome Energy, Liberty, Lone Star, Pipeline, Maurice, Napoleonville, Operating, Pheasant Blessing, Pineville, Pintail, Quail Ridge, Rio Ranch, St. Gabriel, Thunderbolt and Wharton, a “Borrower” or “Co-Borrower” and, collectively, the “Borrowers”), each lender that is a signatory hereto or becomes a party hereto as provided in Section 2.21 and Section 9.1 (individually, together with its successors and assigns, a “Lender” and, collectively, together with their respective successors and assigns, the “Lenders”), and 405 PETRODOME LLC, a Delaware limited liability company (“405 Petrodome”), as administrative agent for the Lenders (in such capacity, together with its successors in such capacity pursuant to the terms hereof, the “Agent”).

 

W I T N E S S E T H:

 

In consideration of the mutual covenants and agreements herein contained, the parties hereto hereby agree as follows:

 

- 1 -

 

ARTICLE I

 

DEFINITIONS AND INTERPRETATION

 

1.1 Terms Defined Above. As used in this Agreement, each of the terms “Agent,” “405 Petrodome,”, “Borrower,” “Borrowers,” “Co-Borrower,” “Lender,” and “Lenders,” shall have the meaning assigned to such term hereinabove.

 

1.2 Additional Defined Terms. As used in this Agreement, each of the following terms shall have the meaning assigned thereto in this Section 1.2 or in Sections referred to in this Section 1.2, unless the context otherwise requires:

 

AAA” shall mean the American Arbitration Association.

 

Acquisition Properties” shall mean the Oil and Gas Properties owned by one or more of the Borrowers as of the Effective Date.

 

Additional Amount” shall have the meaning set forth for such term in Section 2.6.

 

Additional Commitment Funds” shall have the meaning set forth for such term in Section 2.21.

 

Additional Costs” shall mean costs which are attributable to the obligation of the Agent or any Lender to maintain the Term Loan, or any reduction in any amount receivable by the Agent or such Lender in respect of any such obligation or any Term Loan, resulting from any Regulatory Change which (a) changes the basis of taxation of any amounts payable to the Agent or such Lender under this Agreement or any Note in respect of any Loan (other than taxes imposed on the overall net income of the Agent or such Lender or its Applicable Lending Office (including franchise or similar taxes) for the Term Loan), (b) imposes or modifies any reserve, special deposit, minimum capital, capital ratio or similar requirement (other than the Reserve Requirement utilized in the determination of the LIBO Rate used in any determination of the Contract Rate) relating to any extensions of credit or other assets of, or any deposits with or other liabilities of, the Agent or such Lender with respect to the Term Loan and Dollar deposits in the London interbank market in connection with the Term Loan, or the Commitment of the Agent or such Lender to maintain the Term Loan, or the London interbank market or (c) imposes any other condition affecting this Agreement or any Note or any of such extensions of credit, liabilities or Commitments, in each case with respect to the Term Loans.

 

Additional Lender” shall have the meaning set forth for such term in Section 2.21.

 

 
- 2 -
 
 

 

Adjusted Strip Prices” shall mean the 12-month average closing settlement price for crude oil and natural gas future contracts for calendar year 2018 and the 12-month average closing settlement price for each of the succeeding four calendar years, as applicable hereunder, in each case as published by NYMEX and, if not already so adjusted in such published prices, adjusted for severance taxes, ad valorem taxes, gathering, transportation and marketing expenses and historical basis differentials.

 

Administrator” shall have the meaning assigned to such term in Section 9.13.

 

Affiliate” shall mean, as to any Person, any other Person directly or indirectly, controls, is controlled by, or under common control with, such Person and includes, as to the Borrowers, any Subsidiary of the Borrowers and any “affiliate” of the Borrowers within the meaning of Rule 12b-2 promulgated by the Securities and Exchange Commission pursuant to the Securities Exchange Act of 1934, with “control,” as used in this definition, meaning possession, directly or indirectly, of the power to direct or cause the direction of management, policies or action through ownership of voting securities, contract, voting trust, or membership in management or in the group appointing or electing management or otherwise through formal or informal arrangements or business relationships.

 

Agent Observer” shall mean any representative of the Agent designated by the Agent from time to time by written notice to the Borrowers.

 

Agreement” shall mean this Term Loan Agreement, as it may be amended, supplemented, restated, amended and restated or otherwise modified from time to time.

 

Anti-Terrorism Laws” shall mean any laws relating to terrorism or money laundering, including Executive Order No. 13224 and the USA Patriot Act.

 

Applicable Lending Office” shall mean, for each Lender, the lending office of such Lender (or an Affiliate of such Lender) designated on the signature pages hereof or in an Assignment Agreement or such other office of such Lender (or an Affiliate of such Lender) as such Lender may from time to time specify to the Agent and the Borrowers in writing as the office by which its Percentage Share of the Term Loan is to be made and maintained.

 

Applicable Rate” shall mean (a) from the Closing Date through June 30, 2018, nine and eight hundred seventy-five thousandths percent (9.875%) per annum, (b) from July 1, 2018 through December 31, 2018, eleven and three hundred seventy-five thousandths percent (11.375%) per annum, (c) from January 1, 2019 until June 30, 2019, twelve and eight hundred seventy-five thousandths percent (12.875%) and (d) from July 1, 2019 until December 21, 2019, fourteen and three hundred seventy-five thousandths percent (14.375%).

 

 
- 3 -
 
 

 

Applicable Tax Percentage” shall mean the highest effective marginal combined rate of federal, state and local income taxes (taking into account the deductibility of state and local taxes for federal income tax purposes) to which any Person holding voting Equity Interests of any Borrower would be subject in the relevant year of determination, taking into account only such Person’s share of income and deductions attributable to its equity ownership interest in such Borrower.

 

Approved Hedge Counterparty” shall mean any Lender or a counterparty to a Commodity Hedge Agreement with a Borrower or Borrowers approved by the Agent and the Lenders.

 

Arbitration Order” shall have the meaning assigned to such term in Section 9.13.

 

Assignment Agreement” shall mean an Assignment Agreement in substantially the form of Exhibit C, with appropriate insertions or such other form as approved by the Agent.

 

Assignment of ORRI” shall mean a conveyance of overriding royalty interest, in the form attached hereto as Exhibit D or otherwise in form acceptable the Agent.

 

Base Price” shall mean $55.00/Bbl for oil and $3.50/Mmbtu for natural gas.

 

Benefited Lender” shall have the meaning assigned to such term in Section 2.7(c).

 

Blocked Person” shall have the meaning assigned to such term in Section 4.23.

 

Business Day” shall mean (a) any day other than a Saturday, Sunday, legal holiday for commercial banks under the laws of the State of New York, or any other day when banking is suspended in the State of New York and (b) with respect to all notices, determinations and payments in connection with the LIBO Rate, the term “Business Day” shall mean any day which is a Business Day described in clause (a) and which is also a day for trading by and between banks in Dollar deposits in the London Interbank market.

 

Business Entity” shall mean a corporation, partnership, joint venture, limited liability company, joint stock association, business trust, or other business entity.

 

 
- 4 -
 
 

 

CapEx Account” shall mean the deposit account maintained by 405 Petrodome at Citibank in which funds for Capital Expenditures shall be held.

 

Capital Expenditures” shall have the meaning assigned to such term by GAAP.

 

Capital Lease” shall (for the avoidance of doubt) have the meaning assigned to such term by GAAP.

 

Change of Control” shall mean an event or series of events by which James Doris shall cease for any reason to be active in the day to day management of the Borrowers.

 

Closing Date” shall mean the Effective Date of this Agreement.

 

Collateral” shall mean the Mortgaged Properties, all of the Equity Interests in the Borrowers, all Property interest secured by any of the Security Documents and any other Property of any Person now or at any time used or intended as security for the payment or performance of all or any portion of the Obligations, and expressly including “as extracted collateral” as defined in the UCC or the Uniform Commercial Code of any other applicable state.

 

Commitment” shall mean, as to each Lender, its obligations to make its Percentage Share of the Term Loan and maintain its Percentage Share of the Loan Balance.

 

Commodity Exchange Act” shall mean the Commodity Exchange Act (7 U.S.C. § 1 et seq.).

 

Commodity Hedge Agreement” shall have the meaning assigned to such term in Section 1a(47) of the Commodity Exchange Act and, if not within the scope of such definition, shall include any crude oil, natural gas or other hydrocarbon floor, collar, cap, swap, price protection or hedge agreements, including any schedules, annexes and supplements thereto and trade confirmations thereunder.

 

Commonly Controlled Entity” shall mean any Person which is under common control with the Borrowers within the meaning of Section 4001 of ERISA.

 

Compliance Certificate” shall mean each certificate, substantially in the form attached hereto as Exhibit B, executed by the Financial Officer of the Borrowers and furnished to the Agent from time to time in accordance with the provisions of Section 5.2 or Section 5.3, as the case may be.

 

 
- 5 -
 
 

 

Contingent Obligation” shall mean, as to any Person, any obligation of such Person guaranteeing or in effect guaranteeing any Indebtedness, leases including Capital Leases, dividends, or other obligations of any other Person (for purposes of this definition, a “primary obligation”) in any manner, whether directly or indirectly, including any obligation of such Person, regardless of whether such obligation is contingent, (a) to purchase any primary obligation or any Property constituting direct or indirect security therefor, (b) to advance or supply funds (i) for the purchase or payment of any primary obligation, or (ii) to maintain working or equity capital of any other Person in respect of any primary obligation, or otherwise to maintain the net worth or solvency of any other Person, (c) to purchase Property, securities or services primarily for the purpose of assuring the owner of any primary obligation of the ability of the Person primarily liable for such primary obligation to make payment thereof, or (d) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof, with the amount of any Contingent Obligation being deemed to be equal to the stated or determinable amount of the primary obligation in respect of which such Contingent Obligation is made or, if not stated or determinable, the maximum reasonably anticipated liability in respect thereof as determined by such Person in good faith.

 

Contract Rate” shall mean a daily interest rate equal to the per annum interest rate equal to the LIBO Rate for each relevant day plus the Applicable Rate converted to a daily rate on the basis of a year of 360 days and the rate so determined for each relevant day being applied on the basis of actual days elapsed (including the first day, but excluding the last day) during the period for which interest is payable at such rate, but in no event shall any such rate exceed, as to any Lender, the Highest Lawful Rate.

 

Contribution Percentage” shall mean, for each party obligated to make a payment due pursuant to the provisions of Section 9.20, the percentage obtained by dividing such party’s Obtained Benefit by the aggregate Obtained Benefits of the Borrowers.

 

Control Account” shall mean each of the deposit accounts maintained by Petrodome Energy or its Subsidiaries at Wells Fargo Bank, National Association or elsewhere, which deposit accounts shall be subject to a Deposit Account Control Agreement among the account owner, the Agent and Wells Fargo Bank, National Association, or such other financial institution at which a Borrower account is located.

 

Current Assets” shall mean all assets which would, in accordance with GAAP, be included as current assets on a consolidated balance sheet of the Borrowers as of the date of calculation, after deducting adequate reserves in each case in which a reserve is proper in accordance with GAAP, but excluding deferred tax assets, if any, and non-cash derivative current assets to the extent such positions have not been closed arising from Commodity Hedge Agreements, if any, otherwise included as an asset in preparing such a balance sheet.

 

 
- 6 -
 
 

 

Current Liabilities” shall mean the sum of (a) all liabilities which would, in accordance with GAAP, be included as current liabilities on a consolidated balance sheet of the Borrowers as of the date of calculation, (b) payments on other Liabilities pursuant to the provisions of Section 2.3(a) or Section 2.10, other than the payment of principal due on the Maturity Date and (c) payments on other Liabilities not prohibited by applicable provisions of this Agreement, if any, but excluding from the resulting amount (x) deferred tax obligations, if any, due within one year after the date of determination of such sum, (y) required principal payments in reduction of the Loan Balance and (z) non-cash derivative current liabilities arising from Commodity Hedge Agreements, including those arising from the application of ASC Topic 815, Derivatives and Hedging or ASC Topic 410, Asset Retirement and Environmental Obligations, to extent any of such items (x), (y) or (z) would otherwise be included as a liability in determining such sum.

 

Default” shall mean any event or occurrence which with the lapse of time or the giving of notice or both would become an Event of Default.

 

Default Rate” shall mean an interest rate equal to the Contract Rate plus two percent (2%), but in no event shall such rate exceed the Highest Lawful Rate.

 

Deposit Account Control Agreement” shall mean an agreement among one or more of the Borrowers, the Agent, and a financial institution in which such Borrower maintains an account, providing for immediate or subsequent control of such account by the Agent, for itself and the Lenders, such agreement to be in form and substance acceptable to Agent, in its sole discretion.

 

Development Plan” shall mean the plan for the development of the Acquisition Properties (or such other Oil and Gas Properties as may be approved by the Agent in its sole discretion) proposed by the Borrower, as updated pursuant to Section 5.4(e). A copy of the proposed, but unapproved Development Plan as of the Closing Date is attached hereto as Schedule 1.2A.

 

Direction Letters” shall mean, collectively, letters, in form and substance reasonably satisfactory to the Agent, from the relevant Borrower to all purchasers of production and royalty interest payors directing such payor to remit payment to the Lockbox by mail or to the Lockbox Account by wire transfer.

 

Dispute” shall have the meaning assigned to such term in Section 9.13.

 

Dollars” and “$” shall mean dollars in lawful currency of the United States of America.

 

EBITDA” shall mean: (a) consolidated net income; plus (b) consolidated interest expense; plus (c) all amounts treated as expenses for depreciation, depletion and the amortization of intangibles of any kind; plus (d) all accrued taxes on or measured by income; plus or minus (e) any gains or losses attributable to writeups or writedowns of assets; plus or minus (g) non-cash share based compensation or recovery amounts.

 

 
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Effective Date” means the date on which the conditions specified in Section 3.1 are satisfied.

 

Eligible Contract Participant” shall have the meaning assigned to such term in the Commodity Exchange Act and the regulations thereunder.

 

Environmental Complaint” shall mean any written or oral complaint, order, directive, claim, citation, notice of environmental report or investigation, or other notice by any Governmental Authority or any other Person with respect to (a) air emissions, (b) spills, releases, or discharges to soils, any improvements located thereon, surface water, groundwater, or the sewer, septic, waste treatment, storage, or disposal systems servicing any Property of the Borrowers, (c) solid or liquid waste disposal, (d) the use, generation, storage, transportation, or disposal of any Hazardous Substance, or (e) other environmental, health, or safety matters affecting any Property of the Borrowers or the business conducted thereon.

 

Environmental Laws” shall mean (a) the following federal laws as they may be cited, referenced, and amended from time to time: the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the Comprehensive Environmental Response, Compensation and Liability Act, the Endangered Species Act, the Resource Conservation and Recovery Act, the Hazardous Materials Transportation Act, the Occupational Safety and Health Act, the Oil Pollution Act, the Resource Conservation and Recovery Act, the Superfund Amendments and Reauthorization Act, and the Toxic Substances Control Act; (b) any and all equivalent environmental statutes of any state in which Property of any Borrower is situated, as they may be cited, referenced and amended from time to time; (c) any rules or regulations promulgated under or adopted pursuant to the above federal and state laws; and (d) any other equivalent federal, state, or local statute or any requirement, rule, regulation, code, ordinance, decree, permit, concession, grant, franchise, license, agreement or governmental restrictions or order adopted pursuant thereto, including all common law relating to pollution or the protection of health, safety or the environment or the release of any materials into the environment, including those related to the generation, transportation, treatment, storage, recycling, disposal, handling, or release of Hazardous Substances, air emissions, discharges to waste or public systems and health and safety matters.

 

Equity Interests” shall mean shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such Equity Interest.

 

 
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Equity Raise” shall mean the issuance of Equity Interests in the Borrowers and the exercise, for cash, of any warrants issued by the Borrowers and outstanding on the Closing Date.

 

ERISA” shall mean the Employee Retirement Income Security Act of 1974, and the regulations thereunder and interpretations thereof.

 

Event of Default” shall mean any of the events specified in Section 7.17.1.

 

Excess Payments” shall have the meaning assigned to such term in Section 9.20.

 

Excluded Swap Obligation” shall mean, with respect to the Borrowers, any Swap Obligation if, and to the extent that, all or a portion of the grant by the relevant Borrower of a Lien to secure such Swap Obligation is or becomes illegal under the Commodity Exchange Act or any rule, regulation or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) by virtue of the relevant Borrower’s failure, for any reason, to constitute an Eligible Contract Participant at the time the grant of such Lien becomes effective with respect to such Swap Obligation and, if a Swap Obligation arises under a master agreement governing more than one Swap, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Commodity Hedge Agreements for which such Lien is or becomes illegal.

 

Excluded Taxes” means (a) with respect to any and all payments to the Agent, any Lender or any recipient of any payment to be made by or on account of any Obligation, income taxes, branch profits taxes, franchises and excise taxes (to the extent imposed in lieu of net income taxes), and all interest, penalties and liabilities with respect thereto, imposed on the Agent or any Lender, and (b) with respect to Agent, any Lender or any other Person, any Taxes unrelated to the Obligations or this Agreement.

 

Executive Order No. 13224” shall mean Executive Order No. 13224 on Terrorist Financing, effective September 24, 2001, as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

 

Facility Amount” shall mean $30,000,000.

 

Federal Funds Rate” shall mean, for any day, the rate per annum (rounded upwards to the nearest 1/100 of 1%) equal to the weighted average of the rates on overnight Federal funds transactions with members of the Federal Reserve System, as published by the Federal Reserve Bank on the second Business Day next succeeding such day; provided that (a) if such day is not a Business Day, the Federal Funds Rate for such day shall be such rate on such transactions on the second succeeding Business Day as so published on the second succeeding Business Day, and (b) if no such rate is so published on such second succeeding Business Day, the Federal Funds Rate for such day shall be the average rate charged to the Agent on such day on such transactions as determined by the Agent.

 

 
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Financial Officer” shall mean, for any Business Entity, the chief financial officer, principal accounting officer, treasurer, manager or controller of such Business Entity.

 

Financial Statements” shall mean statements of the financial condition of the Borrowers on a consolidated basis, as at the point in time and for the period indicated, including all notes thereto, and consisting of at least a balance sheet and related statements of operations, shareholders, members’ or partners’ equity and cash flows and, when required by applicable provisions of this Agreement, to be audited, accompanied by the unqualified certification of a nationally-recognized or regionally-recognized firm of independent certified public accountants or other independent certified public accountants reasonably acceptable to the Agent and footnotes to any of the foregoing, all of which, unless otherwise indicated, shall be prepared in accordance with GAAP consistently applied and in comparative form with respect to the corresponding period of the preceding fiscal year and comparative form with respect to the Budget delivered pursuant to Schedule 5.2.

 

Foreign Lender” shall have the meaning assigned to such term in Section 2.6(f).

 

Funding Request” shall have the meaning assigned to such term in Section 2.21.

 

GAAP” shall mean generally accepted accounting principles established by the Financial Accounting Standards Board or the American Institute of Certified Public Accountants and in effect in the United States of America from time to time.

 

Governmental Authority” shall mean any nation, country, commonwealth, territory, government, state, county, parish, municipality, or other political subdivision and any entity exercising executive, legislative, judicial, regulatory, or administrative functions of or pertaining to government.

 

Hazardous Substances” shall mean any substance regulated or as to which liability might arise under any applicable Environmental Law including: flammables, explosives, radioactive materials, hazardous wastes, asbestos, or any material containing asbestos, polychlorinated biphenyls (PCBs), radon, infectious or medical wastes, toxic substances or related materials, petroleum, petroleum products, petroleum substances, associated oil or natural gas exploration, production, and development wastes and any components, fractions, or derivatives thereof, or any chemical, compound, material, product, byproduct, substance or waste defined as “hazardous substances,” “hazardous materials,” “hazardous wastes,” “solid waste,” “toxic waster,” “extremely hazardous substance,” or “toxic substances,” “contaminant,” “pollutant,” or words of similar meaning or import found in the Comprehensive Environmental Response, Compensation and Liability Act, the Superfund Amendments and Reauthorization Act, the Hazardous Materials Transportation Act, the Resource Conservation and Recovery Act, the Toxic Substances Control Act, or any other Requirement of Law.

 

 
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Highest Lawful Rate” shall mean, with respect to any Lender, the maximum non-usurious interest rate, if any (or, if the context so requires, an amount calculated at such rate), that at any time or from time to time may be contracted for, taken, reserved, charged or received under laws applicable to such Lender, as such laws are presently in effect or, to the extent allowed by applicable law, as such laws may hereafter be in effect and which allow a higher maximum non-usurious interest rate than such laws now allow.

 

Hydrocarbon Interests” means all rights, titles, interests and estates now or hereafter acquired in and to oil and gas leases, oil, gas and mineral leases, or other liquid or gaseous hydrocarbon leases, mineral fee interests, overriding royalty and royalty interests, farm-outs, net profit interests, carried interests and production payments and similar mineral interests, including any reserved or residual interests of whatever nature.

 

Hydrocarbons” means oil, gas, coal seam gas, casinghead gas, drip gasoline, natural gasoline, condensate, distillate, and all other liquid and gaseous hydrocarbons produced or to be produced in conjunction therewith from a well bore and all products, by-products, and other substances produced in conjunction with such substances, including sulfur, geothermal steam, water, carbon dioxide, helium, and any and all minerals, ores, or substances of value and all products refined or separated therefrom and the proceeds therefrom.

 

Increasing Lender” shall have the meaning assigned to such term in Section 2.21.

 

Incremental Agreement” shall have the meaning assigned to such term in Section 2.21.

 

Indebtedness” shall mean, as to any Person, without duplication, (a) all liabilities (excluding capital, surplus, reserves for deferred income taxes, deferred compensation liabilities and other deferred liabilities and credits) which in accordance with GAAP would be included in determining total liabilities as shown on the liability side of a balance sheet, (b) all obligations of such Person evidenced by bonds, debentures, promissory notes or similar evidences of indebtedness, (c) all other indebtedness of such Person for borrowed money, (d) all obligations of others, to the extent any such obligation is secured by a Lien on the assets of such Person (whether or not such Person has assumed or become liable for the obligation secured by such Lien), (e) the principal component of all direct or Contingent Obligations of such Person under letters of credit, banker’s acceptances and similar instruments and (f) net obligations of such Person payable with respect to any Commodity Hedge Agreements, except for ordinary course of business settlement payments.

 

 
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Indemnified Taxes” means Taxes other than Excluded Taxes.

 

Indemnitee” shall have the meaning assigned to such term in Section 5.20.

 

Initial Commitment” has the meaning assigned such term in Section 2.1(a).

 

Initial Funding” has the meaning assigned such term in Section 2.1(b).

 

Insolvency Proceeding” shall mean application (whether voluntary or instituted by another Person) for or the consent to the appointment of a receiver, trustee, conservator, custodian, or liquidator of any Person or of all or a substantial part of the Property of such Person, or the filing of a petition (whether voluntary or instituted by another Person) commencing a case under Title 11 of the United States of America Code, seeking liquidation, reorganization, or rearrangement or taking advantage of any bankruptcy, insolvency, debtor’s relief, or other similar law of the United States of America, the State of Texas, or any other jurisdiction.

 

Intellectual Property” shall mean patents, patent applications, trademarks, tradenames, copyrights, technology, know‑how, and processes.

 

Interest Payment Date” means, with respect to any Term Loan, the first Business Day of each calendar month.

 

Investment” in any Person shall mean any stock, bond, note or other evidence of Indebtedness, or any other security (other than current trade and customer accounts) of, investment or partnership interest in or loan to, such Person.

 

Liabilities” shall mean, for the Borrowers on a consolidated basis, all Indebtedness and other liabilities and obligations, whether matured or unmatured, liquidated or unliquidated, primary or secondary, direct or indirect or absolute, fixed or contingent, and whether or not required to be considered for purposes of compliance with GAAP.

 

 
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LIBO Rate” shall mean, with respect to any period of twelve (12) months following a determination of the Contract Rate, the rate per annum (rounded upwards, if necessary, to the nearest 1/100 of 1%) that appears on Bloomberg ICE Benchmark Administration LIBOR Rates Page (or the successor thereto if the ICE Benchmark Administration is no longer making a LIBOR rate available) at approximately 11:00 a.m., New York time, on the second Business Day of each month during the relevant twelve (12) month period for Dollar deposits in an amount comparable to the principal amount of the then existing Loan Balance. If such rate does not appear on such screen or service, or such screen or service shall cease to be available, then LIBOR shall be determined by Agent to be the offered rate on such other screen or service that displays an average interest settlement rate for deposits in Dollars (for delivery on such date of calculation) for a term of twelve (12) months as of 11:00 a.m. on the relevant determination date. If neither of the referenced rates is available, then LIBOR for a term of twelve (12) months will be determined by such alternate method as is reasonably selected by Agent.

 

Lien” shall mean any interest in Property securing an obligation owed to, or a claim by, a Person other than the owner of such Property, whether such interest is based on common law, statute, or contract, and including, but not limited to, the lien or security interest arising from a mortgage, ship mortgage, encumbrance, pledge, security agreement, conditional sale or trust receipt, or a lease, consignment, or bailment for security purposes (other than true leases or true consignments), liens of mechanics, materialmen, and artisans, maritime liens and reservations, exceptions, encroachments, easements, rights of way, covenants, conditions, restrictions, leases, and other title exceptions and encumbrances affecting Property which secure an obligation owed to, or a claim by, a Person other than the owner of such Property (for the purpose of this Agreement, the Borrowers shall be deemed to be the owner of any Property which it has acquired or holds subject to a conditional sale agreement, financing lease, or other arrangement pursuant to which title to the Property has been retained by or vested in some other Person for security purposes).

 

Limitation Period” shall mean, with respect to any Lender, any period while any amount remains owing on the Note payable to such Lender and interest on such amount, calculated at the Contract Rate, plus any fees or other sums payable to such Lender under any Loan Document and deemed to be interest under applicable law, would exceed the amount of interest which would accrue at the Highest Lawful Rate.

 

Loan Balance” shall mean, at any point in time, the aggregate outstanding principal balance of the Notes at such time.

 

Loan Documents” shall mean this Agreement, the Assignment of ORRI, the Notes, the Security Documents and all other documents and instruments now or hereafter delivered pursuant to the terms of or in connection with any of the foregoing, and all renewals and extensions of, amendments and supplements to, and restatements of, any or all of the foregoing from time to time in effect.

 

 
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Lockbox” shall mean the Post Office Box maintained with or through Citibank, pursuant to the Lockbox Services Agreement between 405 Petrodome and Citibank.

 

Lockbox Account” shall mean the deposit account maintained by 405 Petrodome at Citibank and associated with the Lockbox.

 

Material Adverse Effect” shall mean (a) any adverse effect on the business, operations, properties, liabilities or financial condition of the Borrowers, on a consolidated basis, which increases, in any material respect, the risk that any of the Obligations will not be repaid as and when due, (b) any material and adverse effect upon the Collateral, including any material and adverse effect upon the value or impairment of any Borrowers’ or any other Person’s ownership of any material portion of the Collateral, (c) any material adverse effect on the validity or enforceability of any Loan Document or (d) any material adverse effect on the rights or remedies of the Agent or any Lender under an Loan Document.

 

Maturity Date” shall mean the earlier to occur of (i) the date that is twenty four (24) months from the Closing Date or (ii) the date the Term Loans are accelerated pursuant to this Agreement.

 

Minimum Funding Amount” shall mean $1,000,000.

 

Minimum Required Commodity Hedge Agreements” shall mean Commodity Hedge Agreements between one or more of the Borrowers and one or more Approved Hedge Counterparties covering not less than seventy-five percent (75%) of the Borrower’s thirty-six (36) month forward projected oil production based on PDP Reserves set forth in the most recent Reserve Report.

 

Mortgaged Properties” shall mean all Oil and Gas Properties of the Borrowers subject to a perfected first priority Lien (subject only to Permitted Liens) in favor of the Agent, as security for the Obligations.

 

Notes” shall mean, collectively, the promissory note or notes executed by the Borrowers and payable to each Lender in the face amount of the Percentage Share of such Lender of the amount of the Term Loan in the form attached hereto as Exhibit A with all blanks in such form completed appropriately, together with all renewals, extensions for any period, increases and rearrangements thereof.

 

NYMEX” shall mean the New York Mercantile Exchange.

 

 
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Obligations” shall mean, without duplication of the same amount in more than one category, (a) all Indebtedness of the Borrowers evidenced by the Notes, (b) all other obligations and liabilities of the Borrowers to the Agent or the Lenders, now existing or hereafter incurred, under, arising out of or in connection with any other Loan Document, and (c) amounts owing or to be owing by any Borrowers to any Lender under any Commodity Hedge Agreements between such Borrowers and such Lender (which it is agreed shall rank pari passu with all other items listed in this definition), except Excluded Swap Obligations, and to the extent that any of the foregoing includes or refers to the payment of amounts deemed or constituting interest, only so much thereof as shall have accrued, been earned and which remains unpaid at each relevant time of determination.

 

Obtained Benefit” shall mean, with respect to any Borrower, the aggregate amount of benefits, both direct and indirect, obtained by the relevant Borrower from the extension of credit to the Borrowers under this Agreement and not repaid by the relevant Borrower.

 

OFAC” shall mean the Office of Foreign Assets Control of the United States of America Department of the Treasury, or any other any successor Governmental Authority.

 

Oil and Gas Properties” means (a) Hydrocarbon Interests; (b) the Properties now or hereafter pooled or unitized with Hydrocarbon Interests; (c) all presently existing or future unitization, communitization, pooling agreements and declarations of pooled units and the units created thereby (including without limitation all units created under orders, regulations and rules of any Governmental Authority) which may affect all or any portion of the Hydrocarbon Interests; (d) all operating agreements, contracts and other agreements, including production sharing contracts and agreements, which relate to any of the Hydrocarbon Interests or the production, sale, purchase, exchange or processing of Hydrocarbons from or attributable to such Hydrocarbon Interests; (e) all Hydrocarbons in and under and which may be produced and saved or attributable to the Hydrocarbon Interests, including all oil in tanks, pipes or wherever else the same my be stored or in transit from time to time, and all rents, issues, profits, proceeds, products, revenues and other incomes from or attributable to the Hydrocarbon Interests; (f) all tenements, hereditaments, appurtenances and Properties in any manner appertaining, belonging, affixed or incidental to the Hydrocarbon Interests and (g) all Properties, rights, titles, interests and estates described or referred to above, including any and all Property, real or personal, now owned or hereafter acquired and situated upon, used, held for use or useful in connection with the operating, working or development of any of such Hydrocarbon Interests or Property (excluding drilling rigs, automotive equipment, rental equipment or other personal Property which may be on such premises for the purpose of drilling a well or for other similar temporary uses) and including any and all oil wells, gas wells, salt water disposal wells, injection wells or other wells, buildings, structures, fuel separators, liquid extraction plants, plant compressors, pumps, pumping units, field gathering systems, tanks and tank batteries, fixtures, valves, fittings, machinery and parts, engines, boilers, meters, apparatus, equipment, appliances, tools, implements, cables, wires, towers, casing, tubing and rods, surface leases, rights-of-way, easements and servitudes together with proceeds from and all additions, substitutions, replacements, accessions and attachments to any and all of the foregoing.

 

 
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Operating Account” shall mean one or more separate deposit accounts, including the Control Account, maintained by one or more of the Borrowers with Wells Fargo Bank, National Association, each of which deposit accounts shall be subject to a Deposit Account Control Agreement with shifting control among the Borrowers, Wells Fargo Bank, National Association and the Agent.

 

Other Taxes” means any and all present or future stamp or documentary taxes or any other excise or property taxes, charges or similar levies arising from any payment made under any Loan Document or from the execution, delivery or enforcement of, or otherwise with respect to, any Loan Document.

 

ORRI” shall mean the overriding royalty interest conveyed pursuant to the Assignment of ORRI.

 

PDP” shall mean Proved Developed Producing Reserves.

 

Percentage Share” shall mean, as to each Lender, the applicable percentage set forth on Schedule 1.2C.

 

Permitted Liens” shall mean (a) Liens for taxes, assessments, or other governmental charges or levies not yet due or which (if foreclosure, distraint, sale, or other similar proceedings shall not have been initiated) are being contested in good faith by appropriate proceedings, and such reserve as may be required by GAAP shall have been made therefor, (b) Liens in connection with workers’ compensation, unemployment insurance or other social security (other than Liens created by Section 4068 of ERISA), old-age pension, employee benefits, or public liability obligations which are not yet due or which are being contested in good faith by appropriate proceedings, if such reserve as may be required by GAAP shall have been made therefor, (c) Liens in favor of vendors, carriers, warehousemen, repairmen, mechanics, workmen, materialmen, constructors, laborers, landlords or similar Liens arising by operation of law in the ordinary course of business in respect of obligations that are not yet due or which are being contested in good faith by appropriate proceedings, if such reserve as may be required by GAAP shall have been made therefor, (d) Liens securing leases of equipment, provided that, as to any particular lease, the Lien covers only the relevant leased equipment and secures only amounts which are not yet due and payable under the relevant lease or are being contested in good faith by appropriate proceedings and such reserve as required by GAAP shall have been made therefor, (e) Liens in favor of the Agent securing the Obligations and other Liens expressly permitted hereunder or in the Security Documents, and (f) Liens securing equipment financed with Indebtedness, provided, however, such Liens shall in all respects be subject and subordinate in priority to the Liens created by the Security Documents.

 

 
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Permitted Tax Distributions” shall mean, with respect to any Borrower so long as it is taxable as a partnership for United States federal income tax purposes, tax distributions to the partners or members of the relevant Borrower in an aggregate amount that does not exceed, with respect to any period , an amount equal to (a) the product of (i) the Applicable Tax Percentage multiplied by (ii) such Borrower’s federal taxable income, minus (b) to the extent not previously taken into account, any income tax benefit attributable to such Borrower which could be utilized by its partners or members, in the current or any prior year, or portion thereof, from and after the Closing Date (including any tax losses or tax credits), computed at the Applicable Tax Percentage of the year that such benefit is taken into account for purposes of this computation; provided that the computation of distributions under this definition shall also take into account (x) the deductibility of state and local taxes for federal income tax purposes and (y) any difference in the Applicable Tax Percentage resulting from the nature of the taxable income (such as capital gain as opposed to ordinary income, if applicable).

 

Person” shall mean an individual, corporation, partnership, limited liability company, trust, unincorporated organization, government, any agency or political subdivision of any government or any other form of entity.

 

Petrodome Energy Interests” shall mean one hundred percent (100%) of the outstanding Equity Interests in Petrodome Energy.

 

Petrodome Management” shall mean the individuals responsible for managing the operations of the Borrowers, including but not limited to the President, any Vice Presidents, Managers, and the Financial Officer.

 

Petrodome PSA” shall mean that certain Membership Interest Purchase Agreement, dated November 10, 2017, between Black Rhino, LP and Viking Energy Group, Inc.

 

Plan” shall mean, at any time, any employee benefit plan which is covered by Title IV of ERISA and in respect of which the Borrowers, or any Commonly Controlled Entity is (or, if such plan were terminated at such time, would under Section 4069 of ERISA be deemed to be) an “employer” as defined in Section 3(5) of ERISA.

 

Principal Office” shall mean the principal office or account of the Agent in New York, New York, presently located at 405 Lexington Avenue, 59th Floor, New York, New York 10174 or such other location or account as Agent may designate from time to time.

 

 
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Property” shall mean any interest in any kind of property or asset, whether real, personal or mixed, tangible or intangible.

 

Proved Developed Producing Reserves” has the meaning assigned to such term in the SPE/SEC Standards.

 

Proved Reserves” has the meaning assigned to such term in the SPE/SEC Standards.

 

Proved Undeveloped Reserves” has the meaning assigned such term in the SPE/SEC Standards.

 

PUD” shall mean Proved Undeveloped Reserves.

 

PV-10” shall mean present value discounted at ten percent (10%).

 

Qualified ECP Borrower” shall mean, in respect of any Swap Obligation, each Borrower that has total assets exceeding $10,000,000 at the time the relevant grant of any Lien becomes effective with respect to such Swap Obligation or such other Person as constitutes an Eligible Contract Participant and can cause another Person to qualify as an Eligible Contract Participant at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

Register” shall have the meaning assigned to it in Section 9.1(b).

 

Regulatory Change” shall mean, with respect to any Lender, the passage, adoption, institution, or amendment of any federal, state, local, or foreign Requirement of Law, or any interpretation, directive, or request (whether or not having the force of law) of any Governmental Authority or monetary authority charged with the enforcement, interpretation, or administration thereof, occurring after the Closing Date and applying to a class of lenders including such Lender; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith, shall in each case be deemed to be a “Regulatory Change”, regardless of the date enacted, adopted or issued and (y) all requests, rules, guidelines or directives promulgated by the Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the United States or foreign regulatory authorities, in each case pursuant to Basel III, shall in each case be deemed to be a “Regulatory Change”, regardless of the date enacted, adopted or issued.

 

Release of Hazardous Substances” shall mean any emission, spill, release, disposal, or discharge, except in accordance with a valid permit, license, certificate, or approval of the relevant Governmental Authority, of any Hazardous Substance into or upon (a) the air, (b) soils or any improvements located thereon, (c) surface water or groundwater, or (d) the sewer or septic system, or the waste treatment, storage, or disposal system servicing any Property of the Borrowers.

 

 
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Repurchase Option” shall have the meaning set forth for such term in Section 2.20.

 

Required Lenders” shall mean Lenders whose Percentage Shares total at least fifty one percent (51%).

 

Requirement of Law” shall mean, as to any Person, the certificate or articles of incorporation and by-laws, the certificate or articles of organization and regulations, operating agreement or limited liability company agreement, the agreement of limited partnership or other organizational or governing documents of such Person, and any applicable law, treaty, ordinance, order, judgment, rule, decree, regulation or determination of an arbitrator, court or other Governmental Authority, including rules, regulations, orders and requirements for permits, licenses, registrations, approvals or authorizations, in each case as such now exist or may be hereafter amended and are applicable to or binding upon such Person or any of its Property or to which such Person or any of its Property is subject.

 

Reserve Report” shall mean each report prepared by LaRoche Petroleum Consultants, Ltd. or such other petroleum engineering firm approved in writing by the Agent, covering the Reserves attributable to the interests of one or more of the Borrowers in Oil and Gas Properties.

 

Reserve Requirement” means the percentage in effect from time to time under the regulations of any applicable Governmental Authority as the maximum reserve requirement applicable with respect to Eurocurrency liabilities. The LIBO Rate shall be adjusted as of the effective date of any change in the Reserve Requirement.

 

Reserves” shall mean volumes of Hydrocarbons.

 

Responsible Officer” shall mean, as to any Business Entity, its President, any of its Vice Presidents, managers, its Financial Officer or any other Person duly authorized, in accordance with the applicable organizational documents, bylaws, operating agreement, regulations or resolutions, to act on behalf of such Business Entity.

 

SEC” means the Securities and Exchange Commission or any successor Governmental Authority.

 

Security Documents” shall mean, collectively, (a) the security documents executed and delivered by the Borrowers securing the Term Loan, including but not limited to any deed of trust, mortgage, pledge agreement, security agreement, collateral agreement or Deposit Account Control Agreement and (b) other documents and instruments at any time executed as security for all or any portion of the Obligations, as such instruments may be amended, supplemented, restated or otherwise modified from time to time (for avoidance of doubt, including each Deposit Account Control Agreement with Wells Fargo Bank, National Association or any other depository institution).

 

 
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Solvent” means, with respect to any Person on any date of determination (after giving effect to the making of the Term Loan and the application of the proceeds thereof and to the provisions of Section 9.20, if applicable), that on such date (a) the fair value of the assets of such Person is not less than the total amount of liabilities, including contingent liabilities, of such Person, (b) the present fair saleable value of the assets of such Person is not less than the amount that will be required to pay the probable liability of such Person on its debts as they become absolute and matured, (c) such Person is able to pay its debts and liabilities, Contingent Obligations and other commitments as they mature in the ordinary course of business and (d) such Person is not engaged in business or a transaction, and is not about to engage in business or a transaction, for which such Person’s assets would constitute an unreasonably small capital. For purposes of this definition, the amount of contingent liabilities at any time shall be computed as the amount that, in the light of all the facts and circumstances existing at such time, represents the amount that can reasonably be expected to become an actual or matured liability.

 

SPE” means the Society of Petroleum Engineers.

 

SPE Definitions” means, with respect to any term, the definition thereof as adopted by the Board of Directors of the SPE.

 

SPE/SEC Standards” means the more restrictive of the standards and/or definitions, as determined by the Agent, set forth by (a) the SEC and (b) the Society of Petroleum Engineers or the SPE Definitions.

 

Subordinated Indebtedness” means any sum of money and/or property, whether now owing or otherwise owed by one or more of the Borrowers to (i) any other Borrower, (ii) any manager, member, general partner, limited partner or officer of any Borrower, (iii) Viking Energy Group, Inc., and (iv) any other party directly or indirectly related to any Borrower.

 

Subsidiary” shall mean, as to any Person, any Business Entity of which shares of stock or other Equity Interests having ordinary voting power (other than stock having such power only by reason of the happening of a contingency) to elect a majority of the board of directors or other governing body or managers of such Business Entity are at the time owned, or the management of which is otherwise controlled, directly or indirectly through one or more intermediaries, or both, by such Person.

 

 
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Superfund Site” shall mean those sites listed on the Environmental Protection Agency National Priority List and eligible for remedial action or any comparable state registries or list in any state of the United States of America.

 

Swap” has the meaning assigned to such term in Section 1a(47) of the Commodity Exchange Act.

 

Swap Obligation” shall mean, with respect to the Borrowers, any obligation to pay or perform under any agreement, contract or transaction that constitutes a Swap or any rules or regulations promulgated thereunder.

 

Taxes” means any and all present or future taxes, levies, imposts, duties, fees, deductions, charges or withholdings imposed by any Governmental Authority.

 

Term Loan” shall mean the loan made by the Lenders to or for the benefit of the Borrowers pursuant to this Agreement.

 

Term Loan Repayment Date” shall have the meaning assigned to such term in Section 2.3(a).

 

Transferee” shall mean any Person to which any Lender has sold, assigned, transferred or granted a participation in any of the Obligations, as authorized pursuant to the provisions of Section 9.1, and any Person acquiring, by purchase, assignment, transfer or participation, from any such purchaser, assignee, transferee or participant, any part of such Obligations.

 

WI Owner” shall have the meaning assigned thereto in the applicable Assignment of ORRI.

 

UCC” shall mean the Uniform Commercial Code as from time to time in effect in the State of New York.

 

USA Patriot Act” shall mean USA Patriot Act (Title III of Pub. L. 107-56 (signed into law October 26, 2001), as the same has been, or shall hereafter be, renewed, extended, amended or replaced.

 

1.3 Undefined Financial Accounting Terms. Financial accounting terms used in this Agreement without definition are used herein with the respective meanings assigned thereto in accordance with GAAP at the time in effect.

 

 
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1.4 References. References in this Agreement to Schedule, Exhibit, Article or Section numbers shall be to Schedules, Exhibits, Articles or Sections of this Agreement, unless expressly stated to the contrary. References in this Agreement to “hereby,” “herein,” “hereinafter,” “hereinabove,” “hereinbelow,” “hereof,” “hereunder” and words of similar import shall be to this Agreement in its entirety and not only to the particular Schedule, Exhibit, Article or Section in which such reference appears. Specific enumeration herein shall not exclude the general and, in such regard, the terms “includes” and “including” used herein shall mean “includes, without limitation,” or “including, without limitation,” as the case may be, where appropriate. Except as otherwise indicated, references in this Agreement to statutes, sections or regulations are to be construed as including all statutory or regulatory provisions consolidating, amending, replacing, succeeding or supplementing the statute, section or regulation referred to. References in this Agreement to “writing” include printing, typing, lithography, facsimile reproduction and other means of reproducing words in a tangible visible form. References in this Agreement to agreements and other contractual instruments shall be deemed to include all exhibits and appendices attached thereto and all subsequent amendments and other modifications to such instruments, but only to the extent such amendments and other modifications are not prohibited by the terms of this Agreement. References in this Agreement to Persons include their respective successors and permitted assigns.

 

1.5 Articles and Sections. This Agreement, for convenience only, has been divided into Articles and Sections; and it is understood that the rights and other legal relations of the parties hereto shall be determined from this instrument as an entirety and without regard to the aforesaid division into Articles and Sections and without regard to headings prefixed to such Articles or Sections.

 

1.6 Number and Gender. Whenever the context requires, reference herein made to the single number shall be understood to include the plural; and likewise, the plural shall be understood to include the singular. Definitions of terms defined in the singular or plural shall be equally applicable to the plural or singular, as the case may be, unless otherwise indicated. Words denoting sex shall be construed to include the masculine, feminine and neuter, when such construction is appropriate; and specific enumeration shall not exclude the general but shall be construed as cumulative.

 

1.7 Incorporation of Schedules and Exhibits. The Schedules and Exhibits attached to this Agreement are incorporated herein and shall be considered a part of this Agreement for all purposes.

 

1.8 Negotiated Transaction. Each party to this Agreement affirms to the others that it has had the opportunity to consult, and discuss the provisions of this Agreement with, independent counsel and fully understands the legal effect of each provision.

 

ARTICLE II

 

TERMS OF FACILITY

 

2.1 Term Loan.

 

(a) Subject to the terms and conditions of this Agreement, each Lender severally agrees to make a Term Loan to the Borrowers on the Effective Date in a principal amount not to exceed the applicable term loan commitment set forth on Schedule 1.2C (the “Initial Commitment”) to be funded as provided in the sources and uses statement prepared by Chicago Title Insurance Company, in the manner and for the purposes provided in Section 2.1(b) and Section 2.2. Notwithstanding anything to the contrary contained herein (and without affecting any other provisions hereof), the funded portion of each Term Loan made on the Effective Date shall be equal to ninety-four percent (94.00%) of the principal amount of such Term Loan (it being agreed that the full principal amount of each such Term Loan shall be the “initial” principal amount of such Term Loan and deemed outstanding on the Effective Date and the Borrowers shall be obligated to repay one hundred percent (100%) of the principal amount of each such Term Loan as provided hereunder).

 

 
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(b) Each Lender shall severally make available to the Agent an amount equal to such Lender’s Applicable Percentage of the Initial Commitment (the “Initial Funding”) at an account designated by the Agent by 11:00 a.m. Eastern Standard Time on the Effective Date. The amount so received by the Agent shall, subject to the terms and conditions hereof, be made available to one or more of the Borrowers, as directed by the Borrowers, in immediately available funds. The portion of the Term Loan to be repaid to each Lender shall be evidenced by the Note of such Lender.

 

(c) The failure of any Lender to make the portion of the loan on the Closing Date required to be made by it hereunder shall not relieve any other Lender of its obligation to make the portion of the loan on the Closing Date required to be made by it, and no Lender shall be responsible for the failure of any other Lender to make its portion of the loan on the Closing Date.

 

2.2 Use of Loan Proceeds. Proceeds of the Term Loans shall be: (a) used by Petrodome Energy to acquire the Petrodome Energy Interests (or such other properties as approved by Agent in its sole discretion), (b) to develop the Acquisition Properties pursuant to the Development Plan (or such other properties as approved by Agent in its sole discretion), (c) for the working capital of the Borrowers not otherwise prohibited under applicable provisions of this Agreement and approved by the Agent, and (d) to pay fees and expenses incurred in connection with this Agreement and the other Loan Documents. Schedule 2.2 attached hereto reflects the flow of funds from the proceeds of the Term Loans and the Contribution (as defined below) to be applied on the Closing Date.

 

2.3 Repayment of Term Loans.

 

(a) Principal. The Borrowers shall pay to the Agent, for the account of the Lenders, on the first Business Day of each calendar month beginning July 1, 2018, and continuing on the first day of each calendar month thereafter, or if any such day is not a Business Day, on the immediately succeeding Business Day (each such date being called a “Term Loan Repayment Date”), a payment of principal in the amount of: (1) $75,000.00 for the first six (6) payments due hereunder, (2) $125,000.00 for each payment thereafter, and (3) the remainder upon the Maturity Date.

 

(b) Interest. Each Term Loan shall bear interest on the principal amount thereof from the Effective Date, at a rate per annum equal to the Contract Rate (x) in the case of the first three Interest Payments Dates following the Effective Date payable (A) in kind (“PIK Interest”) or (B) so long as the Borrowers shall have given the Agent at least three (3) Business Days’ written notice before the applicable Interest Payment Date, in cash and (y) in cash on each Interest Payment Date thereafter. Accrued cash interest on each Term Loan may be paid in cash in arrears on each Interest Payment Date applicable to such Term Loan and any PIK Interest shall increase the principal amount of the Term Loans by the accrued amount of PIK Interest on each Interest Payment Date. Interest on past‑due principal and, to the extent permitted by applicable law, past‑due interest, shall accrue at the Default Rate and shall be payable upon demand by the Agent. While any Event of Default exists or after acceleration, interest shall accrue and the Borrowers shall pay interest (after as well as before entry of judgment thereon to the extent permitted by law) on any amount payable by the Borrowers hereunder, at a per annum rate equal to the lesser of (A) the Highest Lawful Rate and (B) the Default Rate.

 

 
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2.4 Reserved.

 

2.5 Outstanding Amounts. The outstanding principal balance of the Note of each Lender reflected by the notations of such Lender on its records shall be deemed presumptive evidence of the principal amount owing on such Note. The liability for payment of principal and interest evidenced by each Note shall be limited to principal amounts actually advanced and outstanding pursuant to this Agreement, the original issue discount amount and interest on such amounts calculated in accordance with this Agreement. The Agent shall maintain accounts in which it will record (i) the amount of each Loan made hereunder and the Contract Rate or other interest rate applicable thereto; (ii) the amount of any principal or interest due and payable or to become due and payable from the Borrowers to each Lender hereunder; and (iii) the amount of any sum received by the Agent hereunder for the account of the Lenders and each Lender’s share thereof. The entries made in the accounts maintained pursuant to this paragraph shall be prima facie evidence of the existence and amounts of the obligations therein recorded; provided that the failure of any Lender or the Agent to maintain such accounts or any error therein shall not in any manner affect the obligations of the Borrowers to repay the Term Loan in accordance with their terms. In the event of any conflict between the records maintained by any Lender and the records of the Agent in respect of such matters, the records of the Agent shall control in the absence of manifest error.

 

2.6 Taxes and Time, Place, and Method of Payments.

 

(a) All payments required pursuant to this Agreement or the Notes shall be made without set-off or counterclaim in Dollars and in immediately available funds free and clear of, and without deduction for, any Indemnified Taxes or Other Taxes; provided, however that if any Borrower shall be required to deduct any Indemnified Taxes or Other Taxes from such payments, then (i) the sum payable shall be increased by the amount (the “Additional Amount”) necessary so that after making all required deductions (including deductions applicable to additional sums described in this Section 2.6(a)) the Agent or any Lender, as the case may be, receives an amount equal to the sum it would have received had no such deductions been made, (ii) each Borrower shall make any such deductions and (iii) each Borrower shall pay the full amount deducted to the relevant Governmental Authority in accordance with applicable law. In addition, to the extent not paid in accordance with the preceding sentence, each Borrower shall pay any Other Taxes to the relevant Governmental Authority in accordance with applicable law.

 

 
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(b) The Borrowers, on a joint and several basis with any other Borrower, shall indemnify the Agent and each Lender for Indemnified Taxes and Other Taxes payable by such Person, provided, however, that no Borrower shall be obligated to make payment to the Agent or any Lender in respect of penalties, interest and other similar liabilities attributable to such Indemnified Taxes or Other Taxes if such penalties, interest or other similar liabilities are attributable to the gross negligence or willful misconduct of the Person seeking indemnification; provided further, that neither any Lender nor the Agent shall be entitled to indemnification for Indemnified Taxes and Other Taxes paid by such Person more than three (3) months prior to the date such Lender or the Agent gives notice and demand thereof to the Borrowers (except that, if the indemnification is based on a Regulatory Change giving rise to such Indemnified Taxes or Other Taxes the effect of which is retroactive, then the three (3) month period referred to above shall be extended to include the period of retroactive effect thereof).

 

(c) If a Lender or the Agent shall become aware that it is entitled to claim a refund from a Governmental Authority in respect of Indemnified Taxes or Other Taxes paid by any Borrower pursuant to this Section 2.6, including Indemnified Taxes or Other Taxes as to which it has been indemnified by the Borrowers, or with respect to which any Borrower has paid Additional Amounts pursuant to the Loan Documents, it shall promptly notify the relevant Borrower of the availability of such refund claim and, if the Lender or the Agent, as the case may be, determines in good faith that making a claim for refund will not have an adverse effect to its taxes or business operations, it shall, within 10 days after receipt of a request by the Borrowers, make a claim to such Governmental Authority for such refund at the expense of the Borrowers. If a Lender or the Agent receives a refund in respect of any Indemnified Taxes or Other Taxes paid by any Borrower pursuant to the Loan Documents, it shall within 30 days from the date of such receipt pay over such refund to the relevant Borrower (but only to the extent of Indemnified Taxes or Other Taxes paid pursuant to the Loan Documents, including indemnity payments made or Additional Amounts paid, by the relevant Borrower under this Section 2.6 with respect to the Indemnified Taxes or Other Taxes giving rise to such refund), net of all reasonable out of pocket expenses of such Lender or the Agent, as the case may be, and without interest (other than interest paid by the relevant Governmental Authority with respect to such refund).

 

(d) If any Lender or the Agent is or becomes eligible under any applicable law, regulation, treaty or other rule to a reduced rate of taxation, or a complete exemption from withholding, with respect to Indemnified Taxes or Other Taxes on payments made to it by the Borrowers or any of them, such Lender or the Agent, as the case may be, shall, upon the request, and at the cost and expense, of the Borrowers, complete and deliver from time to time any certificate, form or other document demanded by the Borrowers, the completion and delivery of which are a precondition to obtaining the benefit of such reduced rate or exemption, provided that the taking of such action by such Lender or the Agent, as the case may be, would not, in the reasonable judgment of such Lender or the Agent, as the case may be, be disadvantageous or prejudicial to such Lender or the Agent, as the case may be, or inconsistent with its internal policies or legal or regulatory restrictions. For any period with respect to which a Lender or the Agent, as the case may be, has failed to provide any such certificate, form or other document requested by any Borrower, such Lender or the Agent, as the case may be, shall not be entitled to any payment under this Section 2.6 in respect of any Indemnified Taxes or Other Taxes that would not have been imposed but for such failure.

 

 
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(e) Each Lender organized under the laws of a jurisdiction in the United States of America, any State thereof or the District of Columbia (other than Lenders that are corporations or otherwise exempt from United States of America backup withholding Tax) shall (i) deliver to the Borrowers and the Agent, when such Lender first becomes a Lender, upon the written request of the Borrowers or the Agent, two original copies of United States of America Internal Revenue Service Form W-9 or any successor form, properly completed and duly executed by such Lender, certifying that such Lender is exempt from United States of America backup withholding Tax on payments of interest made under the Loan Documents and (ii) thereafter at each time it is so reasonably requested in writing by the Borrowers or the Agent, deliver within a reasonable time two original copies of an updated Form W-9 or any successor form thereto.

 

(f) Each Lender that is organized under the laws of a jurisdiction other than the United States of America, any State thereof or the District of Columbia (each such Lender, a “Foreign Lender”) that is entitled to an exemption from or reduction of withholding Tax under the laws of the jurisdiction in which the Borrowers are located, or any treaty to which such jurisdiction is a party, with respect to payments under the Loan Documents shall deliver to the Borrowers and the Agent, but only at the written request of any Borrower or the Agent, such properly completed and duly executed documentation prescribed by applicable law or reasonably requested by the Borrowers or the Agent as will permit such payments to be made without withholding or at a reduced rate, unless in the good faith opinion of any Foreign Lender such documentation would expose such Foreign Lender to any material adverse consequence or risk. Such documentation shall be delivered by such Foreign Lender on or before the date it becomes a Lender. In addition, each Foreign Lender shall deliver such forms promptly upon the obsolescence or invalidity of any form previously delivered by such Foreign Lender. Each Lender (and, in the case of a Foreign Lender its lending office), represents that on the Closing Date, payments made hereunder by the Borrowers or the Agent to it would not be subject to United States of America federal withholding tax.

 

(g) Notwithstanding the provisions of Section 2.6(a), the Borrowers shall not be required to indemnify any Foreign Lender or to pay any Additional Amounts to any Foreign Lender, in respect of United States of America federal withholding tax pursuant to Section 2.6(a)2.6(a), (i) to the extent that the obligation to withhold amounts with respect to United States of America federal withholding tax existed on the date such Foreign Lender became a Lender; (ii) with respect to payments to a new lending office with respect to such Lender’s Percentage Share of the Loan Balance, but only to the extent that such withholding tax exceeds any withholding tax that would have been imposed on such Lender had it not designated such new lending office; (iii) with respect to a change by such Foreign Lender of the jurisdiction in which it is organized, incorporated, controlled or managed, or in which it is doing business, from the date such Foreign Lender changed such jurisdiction, but only to the extent that such withholding tax exceeds any withholding tax that would have been imposed on such Lender had it not changed the jurisdiction in which it is organized, incorporated, controlled or managed, or in which it is doing business; or (iv) to the extent that the obligation to indemnify any Foreign Lender or to pay such Additional Amounts would not have arisen but for a failure by such Foreign Lender to comply with the provisions of Section 2.6(f).

 

 
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(h) All payments by any Borrower hereunder shall be deemed received on receipt and may be deemed (at the Agent’s sole discretion) received the next Business Day (including for purposes of calculating interest thereon) the next Business Day following receipt if such receipt is after 2:00 p.m., Eastern Standard or Eastern Daylight Savings Time, as the case may be, on any Business Day, and shall be made to the Agent at the Principal Office. Except as provided to the contrary herein, if the due date of any payment hereunder or under any Note would otherwise fall on a day which is not a Business Day, such date shall be extended to the next succeeding Business Day, and interest shall be payable for any principal so extended for the period of such extension.

 

2.7 Pro Rata Treatment; Adjustments.

 

(a) Except to the extent otherwise expressly provided herein (for the avoidance of doubt, including Section 9.11), (i) the borrowing pursuant to this Agreement shall be made from the Lenders pro rata in accordance with their respective Percentage Shares, (ii) each payment by the Borrowers of fees shall be made for the account of the Agent or the Lenders as agreed among them, (iii) each payment in reduction of the Loan Balance shall be made for the account of the Lenders pro rata in accordance with their respective shares of the Loan Balance, (iv) each payment of interest hereunder shall be made for the account of the Lenders pro rata in accordance with their respective shares of the aggregate amount of interest due and payable to the Lenders, and (v) each payment by the Borrowers under Commodity Hedge Agreements with a Lender shall be made only to the Person or Persons entitled thereto.

 

(b) The Agent shall distribute all payments with respect to the Obligations to the Lenders promptly upon receipt in like funds as received. In the event that any payments made hereunder by the Borrowers or one or more of them at any particular time are insufficient to satisfy in full the Obligations due and payable at such time, such payments shall be applied pro rata in accordance with the Lenders’ respective shares of the Loan Balance (i) first, to fees and expenses due pursuant to the terms of this Agreement or any other Loan Document, (ii) second, to accrued interest and (iii) third, to the Loan Balance and any other Obligations pro rata on the basis of the ratio of the amount of all such Obligations then owing to the Agent or the relevant Lender or Affiliate of any Lender, as the case may be, to the total amount of the Obligations then owing.

 

(c) If any Lender (for purposes of this Section 2.7(c), a “Benefited Lender”) shall at any time receive any payment of all or part of its portion of the Obligations, or receive any Collateral in respect thereof (whether voluntarily or involuntarily, by set-off, pursuant to events or proceedings of the nature referred to in Section 7.1(f) or Section 7.1(g) or otherwise) in an amount greater than such Lender was entitled to receive pursuant to the terms hereof, such Benefited Lender shall purchase for cash from the other Lenders such portion of the Obligations of such other Lenders, or shall provide such other Lenders with the benefits of any such Collateral or the proceeds thereof, as shall be necessary to cause such Benefited Lender to share the excess payment or benefits of such collateral or proceeds with each of the Lenders according to the terms hereof. If all or any portion of such Excess Payment or Obtained Benefits is thereafter recovered from such Benefited Lender, such purchase shall be rescinded and the purchase price and benefits returned by such Lender, to the extent of such recovery, but without interest. The Borrowers agree that each such Lender so purchasing a portion of the Obligations of another Lender may exercise all rights of payment (including rights of set-off) with respect to such portion as fully as if such Lender were the direct holder of such portion. If any Lender ever receives, by voluntary payment, exercise of rights of set-off or banker’s lien, counterclaim, cross-action or otherwise, any funds of any Borrowers to be applied to the Obligations, or receives any proceeds by realization on or with respect to any Collateral, all such funds and proceeds shall be forwarded immediately to the Agent for distribution in accordance with the terms of this Agreement.

 

 
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2.8 Voluntary Prepayments. Subject to applicable provisions of this Agreement, the Borrowers shall have the right, at any time or from time to time, to prepay all or any portion of the Loan Balance without penalty or premium, including by providing written instructions to Agent to apply all or any portion of the balance in the CapEx Account as a prepayment of all or any portion of the Loan Balance, other than the obligation to repay one hundred percent (100%) of the principal amount of each Term Loan pursuant to the Section 2.1(a), which shall not be deemed to be a penalty or premium; provided, however, that (a) the Borrowers shall give the Agent written notice of each such prepayment no less than three (3) Business Days prior to prepayment, (b) the Borrowers shall pay all accrued and unpaid interest on the amounts prepaid, and (c) no such prepayment shall serve to postpone the repayment when due of any Obligation or any installments thereof.

 

2.9 Mandatory Prepayments. In addition to payments in reduction of the Loan Balance provided for in Section 2.3, the Borrowers shall pay to the Agent upon at least one (1) Business Days’ prior written notice, for application to reduce the amount of the payment due at the Maturity Date to repay the then existing Loan Balance in full all proceeds (net of reasonable and customary transaction costs) from (a) the incurrence of any Indebtedness not permitted by the proviso to Section 6.1 (without waiving or modifying in any way remedies available to the Agent or the Lenders as a result of any Event of Default arising from such incurrence of Indebtedness by any one or more of the Borrowers), (b) asset sales (other than the sale of Hydrocarbons or inventory in the ordinary course of business, provided such proceeds are funded into the Lockbox Account), whether or not permitted by the proviso to Section 6.4 (without waiving or modifying in any way remedies available to the Agent or the Lenders as a result of any Event of Default arising from such incurrence of Indebtedness by any one or more of the Borrowers), (c) any insurance claim, except as to any proceeds allowed by the Agent to repair or replace damaged Property giving rise to the relevant insurance claim and (d) an Equity Raise at a time when there exists a Default or an Event of Default or if such Equity Raise causes such Event of Default. Any mandatory prepayment pursuant to this Section 2.9 shall be made without penalty or premium other than the obligation to repay one hundred percent (100%) of the principal amount of each Term Loan pursuant to the Section 2.1(a), which shall not be deemed to be a penalty or premium. No such prepayment made pursuant to this Section 2.9 shall serve to postpone the repayment when due of any Obligation or any installments thereof.

 

2.10 Loans to Satisfy Obligations of Borrowers. Upon the occurrence and during the continuation of a Default or an Event of Default, the Lenders may, but shall not be obligated to, make loans for the benefit of the Borrowers or any of them and apply proceeds thereof to the satisfaction of any condition, warranty, representation or covenant of any Borrowers contained in this Agreement or any other Loan Document. Such loans shall be and shall bear interest at the Contract Rate, subject, however, to the provisions of Section 2.3 regarding the accrual of interest at the Default Rate, which provisions shall be applicable to any loan made for the benefit of one or more of the Borrowers pursuant to the preceding sentence of this Section 2.10.

 

 
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2.11 General Provisions Relating to Interest.

 

(a) It is the intention of the parties hereto to comply strictly with the usury laws of the State of New York and the United States of America. In this connection, there shall never be collected, charged or received on the sums advanced hereunder plus the amount of the original issue discount interest in excess of that which would accrue at the Highest Lawful Rate.

 

(b) Notwithstanding anything herein or in the Notes to the contrary, during any Limitation Period, the interest rate to be charged on amounts evidenced by the Notes shall be the Highest Lawful Rate, and the obligation, if any, of the Borrowers for the payment of fees or other charges deemed to be interest under applicable law shall be suspended. During any period or periods of time following a Limitation Period, to the extent permitted by applicable laws of the State of New York or the United States of America, the interest rate to be charged hereunder shall remain at the Highest Lawful Rate until such time as there has been paid to each applicable Lender (i) the amount of interest in excess of that accruing at the Highest Lawful Rate that such Lender would have received during the Limitation Period had the interest rate remained at the otherwise applicable rate and (ii) all interest and fees otherwise payable to such Lender but for the effect of such Limitation Period.

 

(c) If, under any circumstances, the aggregate amounts paid on the Notes or under this Agreement or any other Loan Document include amounts which by law are deemed interest and which would exceed the amount permitted if the Highest Lawful Rate were in effect, the Borrowers stipulate that such payment and collection will have been and will be deemed to have been, to the extent permitted by applicable laws of the State of New York or the United States of America, the result of mathematical error on the part of the Borrowers, the Agent and the Lenders; and the party receiving such excess shall promptly refund the amount of such excess (to the extent only of such interest payments in excess of that which would have accrued and been payable on the basis of the Highest Lawful Rate) upon discovery of such error by such party or notice thereof from the Borrowers. In the event that the maturity of any Obligation is accelerated, by reason of an election by the Lenders or otherwise, or in the event of any required or permitted prepayment, then the consideration constituting interest under applicable laws may never exceed that payable on the basis of the Highest Lawful Rate, and excess amounts paid which by law are deemed interest, if any, shall be credited by the Agent and the Lenders on the principal amount of the Obligations, or if the principal amount of the Obligations shall have been paid in full, refunded to the Borrowers.

 

(d) All sums paid, or agreed to be paid, to the Agent and the Lenders for the use, forbearance and detention of the proceeds of any advance hereunder shall, to the extent permitted by applicable law, be amortized, prorated, allocated and spread throughout the full term hereof until paid in full so that the actual rate of interest is uniform but does not exceed the Highest Lawful Rate throughout the full term hereof.

 

 
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2.12 Reserved.

 

2.13 Reserved.

 

2.14 Security Interest in Accounts; Right of Offset. As security for the payment and performance of the Obligations, the Borrowers hereby transfer, assign and pledge to the Agent and each Lender (for the pro rata benefit of all Lenders) and grant to the Agent and each Lender (for the pro rata benefit of all Lenders) a security interest in all funds of such Borrower now or hereafter or from time to time on deposit with the Agent or such Lender, with such interest of the Agent and the Lenders to be retransferred, reassigned and/or released at the expense of the Borrowers upon payment in full and complete performance by the Borrowers of all Obligations. All remedies as secured party or assignee of such funds shall be exercisable by the Agent and the Lenders with the oral consent (confirmed promptly in writing) of the Required Lenders upon the occurrence of any Event of Default, regardless of whether the exercise of any such remedy would result in any penalty or loss of interest or profit with respect to any withdrawal of funds deposited in a time deposit account prior to the maturity thereof. Furthermore, the Borrowers hereby grants to the Agent and each Lender (for the pro rata benefit of all Lenders) the right, exercisable at such time as any Obligation shall mature, whether by acceleration of maturity or otherwise, of offset or banker’s lien against all funds of such Borrowers now or hereafter or from time to time on deposit with the Agent or such Lender, regardless of whether the exercise of any such remedy would result in any penalty or loss of interest or profit with respect to any withdrawal of funds deposited in a time deposit account prior to the maturity thereof. If the foregoing provisions conflict with the provisions of any of the Security Documents, the relevant provision of the relevant Security Document shall control.

 

2.15 Illegality. Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to maintain loans bearing interest at a rate determined by the Agent to exceed the Highest Lawful Rate, then the Agent shall charge an interest rate with respect to the Term Loans that will approximate the Contract Rate or Default Rate, as applicable, that was initially agreed to in this Agreement by the parties hereto as reasonably determined by the Agent such that the interest no longer exceeds the Highest Lawful Rate.

 

2.16 Regulatory Change. In the event that by reason of any Regulatory Change or any other circumstance arising after the Closing Date affecting any Lender, such Lender (a) incurs Additional Costs based on or measured by the excess above a level, as prescribed from time to time by any Governmental Authority with jurisdiction, of the amount of a category of deposits or other liabilities of such Lender which included deposits by reference to which the interest rate applicable to the Loan Balance owed to such Lender is determined as provided in this Agreement or a category of extensions of credit or other assets of such Lender which includes any loans bearing interest at a rate determined on the basis of the LIBO Rate or (b) becomes subject to restrictions on the amount of such a category of liabilities or assets which it may hold, then, at the election of such Lender with notice to the Agent and the Borrowers, the obligation of such Lender to maintain loans bearing interest at a rate determined on the basis of the LIBO Rate shall be suspended until such time as such Regulatory Change or other circumstance ceases to be in effect, and the Agent shall charge an interest rate with respect to the Term Loans that will approximate the Contract Rate or Default Rate, as applicable, that was initially agreed to in this Agreement by the parties hereto as reasonably determined by the Agent.

 

 
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2.17 Power of Attorney. The Borrowers hereby designate the Agent as its agent and attorney-in-fact, to act in its name, place and stead solely for the purpose of completing and delivering any and all of the Direction Letters and letters in lieu of transfer or division orders delivered by such Borrowers pursuant to the provisions of Section 3.1(h) or Section 5.75.7, including completing any blanks contained in such letters and attaching exhibits thereto describing the relevant Collateral. The Borrowers hereby ratify and confirm all that the Agent shall lawfully do or cause to be done by virtue of this power of attorney and the rights granted with respect to such power of attorney. This power of attorney is coupled with the interest of the Agent and the Lenders in the Collateral, shall commence and be in full force and effect as of the Closing Date and shall remain in full force and effect and shall be irrevocable so long as any Obligations (other than Contingent Obligations with respect to which no claim has been made) remain outstanding. The powers conferred on the Agent by this appointment are solely to protect the interests of the Agent and the Lenders under the Loan Documents and Commodity Hedge Agreements with respect to the assignment of production proceeds under certain of the Security Documents and shall not impose any duty upon the Agent to exercise any such powers. The power of attorney under this Section 2.17 is expressly limited to the rights and powers set forth herein and no additional rights or powers are herein created or implied. The Agent shall be accountable only for amounts that it actually receives as a result of the exercise of such powers and shall not be responsible to the Borrowers or any other Person for any act or failure to act with respect to such powers, except for gross negligence or willful misconduct.

 

2.18 Keepwell. Each Qualified ECP Borrower hereby jointly and severally, absolutely, unconditionally and irrevocably undertakes to provide such funds or other support as may be needed from time to time by each other Borrower to honor all of its obligations in respect of Swap Obligations constituting a portion of the Obligations; provided, however, that each Qualified ECP Borrower shall only be liable under this Section 2.18 for the maximum amount of such liability that can be hereby incurred without rendering its obligations under this Section 2.18, or otherwise hereunder or under any other Loan Document, voidable under applicable law relating to fraudulent conveyance or fraudulent transfer, and not of any greater amount. The obligations of each Qualified ECP Borrower under this Section 2.18 shall remain in full force and effect until the Obligations are paid and performed in full. Each Qualified ECP Borrower intends that this Section 2.18 constitute, and this Section 2.18 shall be deemed to constitute, a “keepwell, support or other agreement” for the benefit of each other Borrower for all purposes of Section 1a(18)(A)(v)(II) of the Commodity Exchange Act. Notwithstanding any other provisions of this Agreement or any other Loan Document, the Obligations owed by any Borrower or secured by any Lien granted by such Borrowers under any Loan Document shall exclude all Excluded Swap Obligations with respect to such Borrower.

 

 
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2.19 Joint and Several Liability. The Borrowers acknowledge and agree that each Borrower shall be jointly and severally liable for all obligations of the Borrowers or any of them hereunder or under any other Loan Document.

 

2.20 Overriding Royalty Interest.

 

(a) The Agent shall execute recordable conveyances in favor of the WI Owner, in form and substance reasonably satisfactory to the Agent.

 

(b) On the date twelve (12) months after the Effective Date (the “First Reversion Date”), fifty percent (50%) of the ORRI transferred to Agent under the Assignment of ORRI shall revert back to the WI Owner, provided that the WI Owner has been in compliance with Article IV, Article V and Article VI of this Agreement since the Effective Date and remains in compliance with Article IV, Article V and Article VI of this Agreement on the First Reversion Date.

 

(c) On the date twelve (12) months after the date on which the Term Loan is finally paid-in-full (the “Payoff Date”), twenty-five percent (25%) of the ORRI transferred to the Agent under the Assignment of ORRI will revert back to the WI Owner.

 

(d) For the remaining ORRI held by the Agent not subject to sections (a) and (b) of this Section 2.20, the WI Owner shall have the right to repurchase such ORRI (the “Repurchase Option”) at any time during the twenty-four (24) months immediately following the Payoff Date. The purchase price shall be equivalent to one hundred percent (100%) of the PV-10 of the PDP Reserves attributed to such remaining ORRI based on the greater of (a) the Base Price and (b) the Adjusted Strip Price as determined within forty-five (45) days of the notice to the Agent that the WI Owner intends to exercise the Repurchase Option.

 

(e) The provisions of this Section 2.20 shall survive the payment and performance of all Obligations and the termination of this Agreement.

 

2.21 Increase in Term Loan.

 

(a) Subject to the conditions set forth in Section 2.21(b), the Borrower may, from time to time beginning three (3) months following the Closing Date and ending twenty-one (21) months thereafter, increase the amount of the Term Loan (any such increase “Additional Commitment Funds”) by either or both (as determined by the Borrower) requesting an increase in the Commitment of one or more Lenders (an “Increasing Lender”) or by causing one or more Persons that at such time is not a Lender to become a Lender (an “Additional Lender”) Borrower must provide thirty (30) days prior written notice to the Agent, which will promptly notify the Lenders (each a “Funding Request”).

 

 
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(b) Any increase in the Term Loan shall be subject to the following additional conditions:

 

(i) no default or event of default of the terms and conditions of the Term Loan or any of the Loan Documents shall have occurred or be continuing after giving effect to such increase;

 

(ii) the Agent must consent to the increase in Commitments of an Increasing Lender and the addition of any Additional Lender, such consent to be in Agent’s sole discretion;

 

(iii) the Additional Commitment Funds will be used solely for the drilling and completion of additional wells or to fund acquisitions permitted under Section 6.8(a);

 

(iv) each Funding Request must be equal to or greater than the Minimum Funding Amount and in multiples of $500,000;

 

(v) the Borrower may submit a Funding Request not more than once per sixty (60) day period;

 

(vi) the Additional Commitment Funds plus the Initial Commitment may not exceed the Facility Amount;

 

(vii) the maturity date of such increase shall be the same as the Maturity Date and the Commitments under the Additional Commitment Funds shall have no mandatory prepayment or commitment reduction other than as provided hereunder; and

 

(viii) the increase shall be on the same terms and pursuant to the same documentation applicable to this Agreement (other than with respect to any arrangement, structuring, upfront or other fees or discounts payable in connection with such Additional Commitment Funds) (provided that the Applicable Rate may be increased to be consistent with that for such Additional Commitment Funds).

 

(c) Each Increasing Lender or Additional Lender shall execute and deliver to the Borrower and the Agent customary documentation (any such documentation, an “Incremental Agreement”) implementing any Additional Commitment Funds, and for any Additional Lender, all documents and information required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations. Upon receipt by the Agent of one or more executed Incremental Agreements increasing the Commitments of Lenders or adding Commitments from Additional Lenders as provided in this Section 2.21, (i) the Term Loan shall be increased automatically on the effective date set forth in such Incremental Agreements by the aggregate amount indicated in such Incremental Agreements without further action by the Borrower and the Agent, (ii) Schedule 1.2C shall be amended to add such Additional Lender’s Commitment or to reflect the increase in the Commitment of an Increasing Lender, and the Percentage Share of the Lenders shall be adjusted accordingly to reflect the Incremental Increase of each Additional Lender or each Increasing Lender, (iii) the Agent shall distribute to the Borrower and each Lender the revised Schedule 1.2C, (iv) any such Additional Lender shall be deemed to be a party in all respects to this Agreement and any other Credit Documents to which the Lenders are a party, and (v) upon the effective date set forth in such Incremental Agreement, any such Lender party to the Incremental Agreement shall purchase a pro rata portion of the Loan Balance from each of the current Lenders such that each Lender (including any Additional Lender, if applicable) shall hold its respective Percentage Share of the Loan Balance as reflected in the revised Schedule 1.2C required by this Section 2.21.

 

 
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2.22 Availability of Capital Expenditures. The Borrowers acknowledge and agree that certain proceeds from the Term Loan will be deposited into the CapEx Account and will not be available to Borrowers until they meet certain criteria with respect to such proposed Capital Expenditures, including, but not limited to:

 

(a) Approval of a Development Plan by the Agent, in its sole discretion;

 

(b) Each request for disbursement shall require continued conformity with the Development Plan and the other terms and conditions of this Agreement, as determined by the Agent;

 

(c) With respect to recompleting any existing wells, provide Agent supplement title opinions in form and substance acceptable to Agent in its sole discretion, together with such other information as Agent may reasonably request;

 

(d) With respect to drilling any new wells, provide Agent with drilling title opinions in form and substance acceptable to Agent in it sole discretion, together with such other information as Agent may reasonably request;

 

(e) With respect to the acquisition of any new Oil and Gas Properties or the equity of an entity holding Oil and Gas Properties; provide Agent with mineral title diligence, including oil and gas title opinions, copies of leases, seismic data and such other information or documentation as Agent shall request in its sole discretion;

 

(f) With respect to each Operating Account or any other account owned by a Borrower, deliver a Deposit Account Control Agreement pursuant to Section 5.27(b); and

 

(g) No Default or Event of Default shall be continuing.

 

 
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ARTICLE III

 

CONDITIONS

 

3.1 Initial Funding. The obligations of the Agent and the Lenders to enter into this Agreement and to advance the Term Loan on the Closing Date are subject to the satisfaction of the following conditions precedent that (a) all matters incident to the consummation of the transactions contemplated herein shall be satisfactory to the Agent and the Lenders and (b) the Agent shall have received, reviewed and approved the following documents and other items, appropriately executed when necessary and, where applicable, acknowledged by one or more Responsible Officers or other duly authorized representatives of the Borrowers, acting on behalf of the Borrowers, or others as the case may be, all in form and substance reasonably satisfactory to the Agent and dated, where applicable, of even date herewith or a date prior thereto and acceptable to the Agent:

 

(a) this Agreement;

 

(b) the Notes;

 

(c) the Assignment of ORRI;

 

(d) the Security Documents covering all Oil and Gas Properties of the Borrowers, including, without limitation, the Acquisition Properties;

 

(e) the Security Documents establishing first priority Liens (and upon appropriate filing, perfected first priority Liens) in favor or for the benefit of the Agent for the benefit of the Lenders, in and to the Oil and Gas Properties and other Collateral, constituting one hundred percent (100%) of the PV-10 value of the proved, probable and possible reserves and future revenue of such Oil and Gas Properties, as determined by the Agent in its discretion, as reflected in the Reserve Report;

 

(f) the Security Documents covering all assets of the Borrowers as to which a security interest against such assets may be created and perfected under the provisions of the Uniform Commercial Code as adopted and in effect in the applicable state or states of the United States of America, including the Equity Interests in the Borrowers;

 

(g) copies of Direction Letters executed by the relevant Borrower to be sent to each purchaser of production set forth on Schedule 3.1(g) attached hereto on or before the Closing Date;

 

(h) undated Direction Letters and letters in lieu of transfer, in form and substance reasonably satisfactory to the Agent, executed by the relevant Borrower and addressed to each purchaser of production from or attributable to the Mortgaged Properties or transportation fees, with the addresses for payment left blank, authorizing and directing the addressee to make future payments attributable to production from the Mortgaged Properties and/or transportation fees to such account as the Agent may specify from time to time;

 

(i) Reserved;

 

(j) a copy of the Lockbox Services Agreement between 405 Petrodome and Citibank;

 

(k) Reserved;

 

 
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(l) copies of the organizational documents of the Borrowers, accompanied by a certificate dated the Closing Date issued by the secretary or an assistant secretary or another authorized representative of the Borrowers, to the effect that each such copy is correct and complete;

 

(m) a certificate of incumbency dated the Closing Date, including specimen signatures of all officers or other representatives of the Borrowers, who are authorized to execute Loan Documents on behalf of the Borrowers, such certificate being executed by the secretary or an assistant secretary or another authorized representative of the relevant Borrower;

 

(n) copies of resolutions adopted by the relevant governing body the Borrowers approving the Loan Documents to which the relevant Borrower is a party and authorizing the transactions contemplated herein and therein, accompanied by a certificate dated the Closing Date issued by the secretary or an assistant secretary or another authorized representative of the Borrowers, to the effect that such copies are true and correct copies of resolutions duly adopted at a meeting or by unanimous consent and that such resolutions constitute all the resolutions adopted with respect to such transactions, have not been amended, modified or rescinded in any respect and are in full force and effect as of the date of such certificate;

 

(o) a copy of the proposed, but unapproved Development Plan that, for the avoidance of doubt, delineates all proposed Capital Expenditures to be undertaken for the development of Acquisition Properties for the twelve (12) months from the Closing Date and includes the monthly corporate general and administrative expense budget;

 

(p) copies of executed counterparts of all operating, lease, sublease, royalty, sales, exchange, processing, farmout, bidding, pooling, unitization, communitization and other agreements relating to the Oil and Gas Properties of the Borrowers or any one or more of them, each of which is described on Schedule 3.1(p) attached hereto;

 

(q) copies of executed operating agreements with Operating;

 

(r) joint operating agreements satisfactory to Agent existing as of the Effective Date covering the Oil and Gas Properties;

 

(s) a Reserve Report prepared as of December 1, 2017 confirming that Borrowers own at least $16,000,000 in PDP Reserves;

 

(t) audited financial statements of the Borrowers as at and for the fiscal year ended December 31, 2016 and unaudited financial statements of the Borrowers at October 31, 2017;

 

(u) certificates dated as of a recent date from the appropriate Governmental Authority evidencing the existence or qualification and, if applicable, good standing of the Borrowers in its jurisdiction of organization and in each jurisdiction in which it owns material assets or conducts material operations;

 

 
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(v) for each Borrower, results of searches of the uniform commercial code records of the Secretary of State of the respective state in which the Borrower is organized, such search reports reflecting no Liens, other than Permitted Liens, against Borrowers, or any of the Collateral as to which perfection of a Lien is accomplished by the filing of a financing statement;

 

(w) confirmation, acceptable to the Agent, of title of the Oil and Gas Properties included in the Reserve Report (regardless of whether PV-10 value is attributed thereto), free and clear of Liens other than Permitted Liens, in the aggregate, equal to one hundred percent (100%) of the PV-10 value of the proved, probable and possible reserves and future revenue of such Oil and Gas Properties, as determined by the Agent in its discretion, as reflected in the Reserve Report;

 

(x) evidence that an equity or debt contribution, in an aggregate amount of not less than $1,000,000 (the “Contribution”), has been made by Viking Energy Group, Inc. to Petrodome Energy in cash as common units of Petrodome Energy or in the form of Indebtedness, subject to a subordination agreement in form and substance acceptable to Agent in its sole discretion;

 

(y) a certificate or certificates evidencing the insurance coverage required by the provisions of Section 5.19;

 

(z) a fully executed copy of the Petrodome PSA with all exhibits and schedules attached thereto and such other documents satisfactory to Agent evidencing closing under the Petrodome PSA, including, without limitation, conveyance instruments conveying the Petrodome Energy Interests to Viking Energy Group, Inc.;

 

(aa) copies of all Commodity Hedge Agreements, in form and substance reasonably acceptable to the Agent and with Approved Hedge Counterparties, establishing the Minimum Required Commodity Hedge Agreements;

 

(bb) payment from the Borrowers or any one or more of them of estimated fees charged by filing officers and other public officials incurred or to be incurred in connection with the filing and recordation of any Security Documents;

 

(cc) the opinions of Fishman Haygood, LLP, Graves Doughtery Hearon & Moody, P.C., and Bradley Arant Boult Cummings LLP, as counsel to the Borrowers for purposes of the transactions which are the subject of this Agreement, in form and substance reasonably satisfactory to the Agent;

 

(dd) a certificate of a Responsible Officer of the Borrowers to the effect that, after giving effect to the transactions which are the subject of this Agreement, all representations and warranties made by the Borrowers in this Agreement or any other Loan Documents in place on the Closing Date are true and correct, in all material respects, as of the Closing Date;

 

(ee) confirmation reasonably acceptable to the Agent that no event or circumstance shall have occurred which could reasonably be expected to have a Material Adverse Effect or adverse change in loan syndication, financial, banking or capital market conditions;

 

 
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(ff) payment of estimated fees and expenses of counsel to the Agent and Approved Hedge Counterparty incurred through the Closing Date and plus an amount estimated for initial post-closing matters;

 

(gg) payment of up an upfront fee in an amount equal to one percent (1%) of the Initial Commitment;

 

(hh) a duly executed W9 tax form (or such other applicable IRS tax form) for each Borrower;

 

(ii) evidence that the environmental condition of Petrodome Energy, LLC and the other Borrowers is acceptable to the satisfaction of the Agent;

 

(jj) subordination of Borrowers’ existing Indebtedness to the satisfaction of the Agent;

 

(kk) completion of background and credit checks on the Borrowers and Petrodome Management to the satisfaction of the Agent;

 

(ll) execution of a subordination agreement in form and substance acceptable to Agent to the extent the Contribution is in the form of Indebtedness; and

 

(mm) such other agreements, documents, instruments, opinions, certificates, waivers, consents, diligence and evidences as the Agent or any Lender may reasonably request.

 

ARTICLE IV

 

REPRESENTATIONS AND WARRANTIES

 

To induce the Agent and the Lenders to enter into this Agreement and to induce the Lenders to make the Term Loans, the Borrowers represent and warrant to the Agent and each Lender (which representations and warranties shall survive the delivery of the Notes) that:

 

4.1 Due Authorization. The execution and delivery by the Borrowers of this Agreement and the borrowing hereunder, the execution and delivery by the Borrowers of the Notes, the repayment of the Notes, payment of interest and fees provided for in the Notes and this Agreement, the execution and delivery by each Borrower of the Security Documents to which it is a party and the performance by each Borrower of its obligations under the Loan Documents to which it is a party are within the power of the relevant Borrower, have been duly authorized by all necessary action by the relevant Borrower, and do not and will not (a) require the consent of any Governmental Authority, (b) contravene or conflict with any Requirement of Law, (c) contravene or conflict with any indenture, instrument or other agreement to which the relevant Borrower is a party or by which any Property of the relevant Borrower may be presently bound or encumbered or (d) result in or require the creation or imposition of any Lien in, upon or on any Property of the relevant Borrower under any such indenture, instrument or other agreement, other than under any of the Loan Documents to which it is a party.

 

 
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4.2 Existence. Each Borrower is a corporation, limited liability company or limited partnership, as the case may be, duly organized, legally existing and, if applicable, in good standing under the laws of its jurisdiction of organization and is duly qualified as a foreign corporation, foreign limited partnership, or foreign limited liability company, as the case may be, and, if applicable, is in good standing in all jurisdictions wherein the ownership of Property or the operation of its business necessitates the same, other than those jurisdictions wherein the failure to so qualify would not have a Material Adverse Effect.

 

4.3 Valid and Binding Obligations. All Loan Documents to which a Borrower is a party, when duly executed and delivered by the relevant Borrower, constitute the legal, valid and binding obligations of the relevant Borrower enforceable against such Borrower in accordance with their respective terms, subject to applicable bankruptcy, insolvency, reorganization, moratorium or other laws affecting creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law.

 

4.4 Security Documents. The provisions of each Security Document executed by the Borrowers are effective to create, in favor of the Agent, a legal, valid and enforceable Lien in all right, title and interest of the relevant Borrower in the Property of such Borrower described therein, which Lien constitutes a first-priority Lien upon filing with the appropriate government office (except as to Permitted Liens) on all right, title and interest of the relevant Borrower in the Property of such Borrower described therein.

 

4.5 Title to Property. Except for such encumbrances, preferential rights, whether vested or otherwise, and Liens (except Permitted Liens) set forth on Schedule 4.5 attached hereto, each Borrower has good and defensible title to all of its material Property, free and clear of all encumbrances, preferential rights, whether vested or otherwise, and Liens (except Permitted Liens) related to the Property.

 

4.6 Scope and Accuracy of Financial Statements. The draft consolidated Financial Statements provided to the Agent in satisfaction of the condition set forth in Section 3.1(t) present fairly (subject to normal year-end audit adjustments) the financial position and results of operations and cash flows of the Borrowers on a consolidated basis, in accordance with GAAP as at the relevant point in time or for the period indicated, as applicable. Schedule 4.6 attached hereto identifies all accounts payable, other than those arising in the ordinary course of business which are not more than 30 day past due, of each Borrower.

 

4.7 No Material Adverse Effect or Default. No event or circumstance has occurred since October 31, 2017, which could reasonably be expected to have a Material Adverse Effect, and no Default has occurred and is continuing.

 

4.8 No Material Misstatements. No information, exhibit, statement or report furnished to the Agent or any Lender by or at the direction of the Borrowers in connection with this Agreement or any other Loan Document contains any material misstatement of fact or omits to state a material fact or any fact necessary to make the statements contained therein not misleading as of the date made or deemed made; provided that, with respect to projected financial information, it represents only that such information was prepared in good faith based upon assumptions believed to be reasonable at the time.

 

 
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4.9 Liabilities, Litigation and Restrictions. Other than as reflected in the Financial Statements prepared as of December 31, 2016 or as listed on Schedule 4.9 under the heading “Liabilities”, no Borrower has any liabilities, including, without limitation, tax liabilities, direct or contingent, which could reasonably be expected to have a Material Adverse Effect. Except as set forth under the heading “Litigation” on Schedule 4.9, no litigation or other action of any nature involving any Borrower is pending before any Governmental Authority or, to the best knowledge of each Borrower, threatened against or involving such Borrower which might reasonably be expected to result in any impairment of its ownership of any of its Property or have a Material Adverse Effect.

 

4.10 Authorizations; Consents. Except as expressly contemplated by this Agreement or set forth on Schedule 4.10 attached hereto, no authorization, consent, approval, exemption, franchise, permit or license of, or filing with, any Governmental Authority or any other Person is required to authorize or is otherwise required in connection with the valid execution and delivery by the Borrowers of the Loan Documents to which it is a party or any instrument contemplated hereby, the repayment by the Borrowers of the Notes, payment of interest and fees provided in the Notes and this Agreement or the performance by the Borrowers of the Obligations.

 

4.11 Compliance with Laws. Each Borrower and its Property are in compliance in all material respects with all applicable Requirements of Law, including Environmental Laws and ERISA.

 

4.12 ERISA. None of the Borrowers maintain, nor have any of the Borrowers maintained, any Plan. None of the Borrowers currently contribute to or have any obligation to contribute to or otherwise have any liability with respect to any Plan.

 

4.13 Environmental Laws. Except as disclosed on Schedule 4.13 attached hereto:

 

(a) No Property of the Borrowers (including, but not limited to, the Acquisition Properties) is currently on or has ever been on any federal or state list of Superfund Sites;

 

(b) no Hazardous Substances have been generated, transported and/or disposed of by the Borrowers at a site which was, at the time of such generation, transportation, and/or disposal, or has since become, a Superfund Site;

 

(c) except in accordance with applicable Requirements of Law or the terms of a valid permit, license, certificate or approval of the relevant Governmental Authority, no Release of Hazardous Substances by the Borrowers or from, affecting or related to any Property of the Borrowers (including, but not limited to, the Acquisition Properties) has occurred; and

 

(d) no Environmental Complaint has been received by the Borrowers.

 

 
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4.14 Compliance with Federal Reserve Regulations. No transaction contemplated by the Loan Documents is in violation of any regulations promulgated by the Board of Governors of the Federal Reserve System, including Regulations T, U or X.

 

4.15 Investment Company Act Compliance. None of the Borrowers are, nor is any Borrower directly or indirectly controlled by or acting on behalf of any Person which is, an “investment company” or an “affiliated person” of an “investment company” within the meaning of the Investment Company Act of 1940.

 

4.16 Proper Filing of Tax Returns; Payment of Taxes Due. Each Borrower has duly and properly filed its United States of America income tax returns or income tax information returns, and all other tax returns which are required to be filed by the Borrowers, as applicable, and has paid all taxes, if any, shown as due from the Borrowers, as applicable, except where appropriate extensions have been filed or except such as are being contested in good faith and as to which adequate provisions and disclosures have been made or as could not reasonably be expected to have a Material Adverse Effect. The respective charges and reserves on the books of the Borrowers with respect to Taxes and other governmental charges, if any of such are required by applicable law or GAAP, are adequate, except as could not reasonably be expected to have a Material Adverse Effect.

 

4.17 Refunds. Except as described on Schedule 4.17, there are no orders of, proceedings pending before, or other requirements of any Governmental Authority which could result in the Borrowers being required to refund any portion of the proceeds received or to be received from the sale of Hydrocarbons constituting part of the Mortgaged Property.

 

4.18 Gas Contracts. Except as described on Schedule 4.18, (a) none of the Borrowers are obligated, in any material respect, by virtue of any prepayment made under any contract containing a “take-or-pay” or “prepayment” provision or under any similar agreement to deliver Hydrocarbons produced from or allocated to any of the Mortgaged Properties at some future date without receiving full payment therefor within 90 days of delivery and (b) none of Borrowers have produced gas, in any material amount, subject to, and neither the Borrowers nor any of the Mortgaged Properties or other Oil and Gas Properties are subject to, balancing rights of third parties or subject to balancing duties under Requirements of Law, except (i) as to such matters for which the relevant Borrower has, to the extent required by GAAP, established adequate reserves necessary to satisfy such obligations and segregated such reserves from other accounts or (ii) as could not reasonably be expected to have a Material Adverse Effect.

 

4.19 Intellectual Property. Each of the Borrowers owns or is licensed to use all Intellectual Property necessary to conduct all business (financial or otherwise) or operations as such business or operations are currently conducted. No claim has been asserted or is pending by any Person with respect to the use by the Borrowers of any such Intellectual Property or challenging or questioning the validity or effectiveness of any such Intellectual Property; and none of the Borrowers know of any valid basis for any such claim. The use of such Intellectual Property by the relevant Borrower does not infringe on the rights of any Person.

 

 
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4.20 Casualties or Taking of Property. Since October 31, 2017, neither the business nor any Property of any Borrower has been materially and adversely affected as a result of any casualty or taking of Property or cancellation of contracts, permits or concessions by any Governmental Authority.

 

4.21 Location of Borrowers. The principal place of business and chief executive office of each Borrower is located at the address of such Borrower set forth in Section 9.3 or at such other location as such Borrower may have, by proper written notice hereunder, advised the Agent, provided that such other location is within a state in which appropriate financing statements naming such Borrower as debtor and naming Agent as secured party, have been filed, if required by applicable law.

 

4.22 Subsidiaries. Except as set forth on Schedule 4.22 as amended pursuant to Section 6.27, Borrowers have no Subsidiaries.

 

4.23 Compliance with Anti-Terrorism Laws.

 

(a) No Borrower nor any Affiliate of any Borrower is in violation of any Anti-Terrorism Law or knowingly engages in or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any Anti-Terrorism Law.

 

(b) No of Borrower nor any Affiliate of any Borrower is any of the following (each a “Blocked Person”):

 

 

(i) a Person that is listed in the annex, to, or is otherwise subject to the provisions of, Executive Order No. 13224;

 

 

 

 

(ii) a Person owned or controlled by, or acting for or on behalf of, any Person that is listed in the annex to, or is otherwise subject to the provisions of, Executive Order No. 13224;

 

 

 

 

(iii) a Person or entity with which any bank or other financial institution is prohibited from dealing or otherwise engaging in any transaction by any Anti-Terrorism Law;

 

 

 

 

(iv) a Person or entity that commits, threatens or conspires to commit or supports “terrorism” as defined in Executive Order No. 13224;

 

 

 

 

(v) a Person or entity that is named as a “specially designated national” on the most current list published by OFAC at its official website or any replacement website or other replacement official publication of such list; or

 

 

 

 

(vi) a Person or entity who is affiliated with a Person or entity listed above.

 

 
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(c) None of the Borrowers nor any Affiliate of the Borrowers (i) conducts any business or engages in making or receiving any contribution of funds, goods or services to or for the benefit of any Blocked Person or (ii) deals in, or otherwise engages in any transaction relating to, any Property or interests in Property blocked pursuant to Executive Order No. 13224.

 

(d) None of the Borrowers nor any Affiliate of the Borrowers are in violation of any rules or regulations promulgated by OFAC or of any economic or trade sanctions administered and enforced by OFAC or conspires to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate, any of the prohibitions set forth in any rules or regulations promulgated by OFAC.

 

4.24 Identification Numbers. The federal employer identification number of each Borrower and its organizational number with appropriate Governmental Authorities are set forth on Schedule 4.24.

 

4.25 Solvency. Each Borrower is Solvent.

 

4.26 Petrodome PSA. The Petrodome PSA has not been amended or otherwise modified except as disclosed to the Agent in writing. Except as set forth on Schedule 4.9 attached hereto, no litigation or other action of any nature involving the Acquisition Properties is pending before any Governmental Authority and no such litigation or other action is threatened against or involving the Acquisition Properties.

 

4.27 Related Party Transactions. Except as set forth on Schedule 4.27 attached hereto, (i) none of the Borrowers are party to or bound by any agreement, contract, whether written or oral, or other instrument with any person or entity that is controlled by, whether directly or indirectly, or in common control with or by one or more of the members of such Borrower, and (ii) none of the Properties owned by the Borrowers are subject to any agreement that grants an interest in and to such Properties to any person or entity that is controlled by, whether directly or indirectly, or in common control with or by one or more of the members of such Borrower.

 

4.28 Ownership of Property. Except as set forth on Schedule 4.28 attached hereto, Petrodome Management does not own, whether directly or indirectly through one or more intermediaries, any interests in Oil and Gas Properties or other Collateral.

 

4.29 Plugged and Abandoned and Non-Producing Oil and Gas Properties.

 

(a) Horn, East Creole, EC, and St. Gabriel do not own, whether directly or indirectly through one or more intermediaries, any interests in Oil and Gas Properties.

 

(b) The Oil and Gas Properties in which Choctaw and Pintail own interests are non-producing and not otherwise held by production.

 

 
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ARTICLE V

 

AFFIRMATIVE COVENANTS

 

So long as any Obligation remains outstanding or unpaid, the Borrowers shall:

 

5.1 Maintenance and Access to Records. Keep adequate records, in accordance with GAAP, of all of their transactions so that at any time, and from time to time, the Borrowers true and complete financial condition may be readily determined, and promptly following the reasonable request of the Agent or any Lender, make such records available for inspection by the Agent or any Lender and, at the expense of the Borrowers, allow the Agent or any Lender to make and take away copies thereof.

 

5.2 Monthly Unaudited Financial Statements and Compliance Certificates. Deliver to the Agent, on or before the 30th day after the close of each fiscal month, commencing with the month ending December 31, 2017, (a) a copy of the Financial Statements as of the close of the relevant fiscal month and from the first day of the then current fiscal year to the end of the relevant fiscal month, such Financial Statements to be certified by the Financial Officer of the Borrowers as having been prepared by the Borrowers in accordance with GAAP consistently applied and as a fair presentation of the financial condition of the Borrowers, on a consolidated basis, subject to changes resulting from normal year-end audit adjustments, (b) a Compliance Certificate prepared, as to section 2 thereof, as of the close of the relevant fiscal month or quarterly period, as applicable, and executed by the Financial Officer of the Borrowers, and (c) a reconciliation, setting forth in reasonable detail, the variance between the actual financial performance relative to the projections in the form contained in the Budget as set forth Schedule 5.2 attached hereto (each such report being referred to as a “Budget Variance Report”), including, without limitation, a reconciliation between the actual and projected cash receipts and disbursements and a written summary of the causes for any material variations for the relevant fiscal month and from the first day of the then current fiscal year to the end of the relevant fiscal month.

 

5.3 Annual Audited Financial Statements and Compliance Certificate. Deliver to the Agent, on or before the 90th day after the close of each fiscal year of the Borrowers, commencing with that ending on December 31, 2017, (a) a copy of the audited Financial Statements as at the close of such fiscal year and for the fiscal year then ended, audited by a mutually acceptable full service accounting firm of regional or national reputation having a dedicated oil and gas audit practice and approved by the Agent in writing, and (b) a Compliance Certificate prepared, as to section 2 thereof, as of the close of the end of the relevant fiscal year.

 

 
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5.4 Reserve Reports; LOE Reports; Production Reports; Payables Aging; Additional Development Plans and Financial Projections.

 

(a) Deliver to the Agent, no later than each June 30th during the term of this Agreement, a Reserve Report, in form satisfactory to the Agent, prepared as of the preceding May 31st, and certified by LaRoche Petroleum Consultants, Ltd. or such other petroleum engineering firm approved in writing by Agent preparing the relevant Reserve Report as fairly and accurately setting forth (i) the PDP, PUD, shut-in, behind-pipe and undeveloped Reserves (separately classified as such) attributable to the Mortgaged Properties and other Oil and Gas Properties of the Borrowers, (ii) the aggregate PV-10 value of the future net income with respect to PDP Reserves attributable to the Mortgaged Properties and other Oil and Gas Properties of the Borrowers, (iii) projections of the annual rate of production, gross income and net income with respect to such PDP Reserves, (iv) information with respect to the “take-or-pay,” “prepayment” and gas-balancing liabilities of the Borrowers with respect to such PDP Reserves and (v) general economic assumptions.

 

(b) Deliver to the Agent, no later than each December 31st during the term of this Agreement, a Reserve Report, in substantially the format of and providing the information provided in the Reserve Report provided pursuant to Section 5.4(a), prepared as of the preceding November 30th and certified by LaRoche Petroleum Consultants, Ltd. or such other petroleum engineering firm approved in writing by the Agent as fairly and accurately setting forth the information provided therein.

 

(c) Deliver to the Agent, no later than the 30th day following the end of each fiscal month, a report in comparative form to the Budget as set forth on Schedule 5.4 hereto, in form reasonably satisfactory to the Agent, setting forth information as to quantities of production from the Mortgaged Properties, volumes of production sold, volumes of production committed to Commodity Hedge Agreements, pricing, purchasers of production, gross revenues, lease operating expenses, EBITDA and such other information as the Agent or any Lender may request with respect to the relevant monthly period.

 

(d) Deliver to the Agent, no later than the 30th day after the end of each fiscal month, an aging of the accounts payable of the Borrowers, on a consolidated basis, at the end of the relevant monthly period.

 

(e) Deliver to the Agent, no later than December 31st of each year, a Development Plan, in form reasonably acceptable to the Agent, setting forth proposed activities with respect to the Oil and Gas Properties of the Borrowers during the subsequent fiscal year.

 

(f) Deliver to the Agent, no later than December 31st of each year, financial projections for the Borrowers, on a consolidated basis, as at the close of each month of the subsequent fiscal year, which financial projections shall be presented in the form of Financial Statements.

 

(g) Deliver to the Agent, in connection with any proposed Capital Expenditures on any Oil and Gas Property pursuant to the Development Plan, title information including, but not limited to, new or supplemental title opinions with respect to existing oil and gas wells and drilling title opinions with respect to any new well, each prepared by Hameline & Eccleston, LLP or other counsel approved by the Agent, leases, seismic data and landman information, and such other information requested by Agent related to the proposed Capital Expenditure.

 

 
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5.5 Title Opinions; Title Defects; Mortgaged Properties.

 

(a) Promptly upon the request of the Agent, furnish to the Agent title opinions, in form and by counsel reasonably satisfactory to the Agent, or other confirmation of title reasonably acceptable to the Agent, covering Oil and Gas Properties of the relevant Borrower.

 

(b) Promptly, but in any event within 30 days after notice by the Agent of any title defect having a Material Adverse Effect, clear such title defect.

 

(c) Promptly upon the request of the Agent, execute and deliver to the Agent additional Security Documents as necessary to maintain, as Mortgaged Properties, Oil and Gas Properties of the Borrowers the PV-10 value of the Proved Reserves attributable to which, in the aggregate, equals at least one hundred percent (100%) of the total Proved Reserves reflected in the Reserve Report most recently provided to the Agent pursuant to the provisions of Section 5.4.

 

5.6 Notices of Certain Events. Deliver to the Agent, immediately upon having knowledge of the occurrence of any of the following events or circumstances, a written statement with respect thereto, signed by a Responsible Officer of the Borrowers, and setting forth the relevant event or circumstance and the steps being taken by the relevant Borrower with respect to such event or circumstance:

 

(a) any Default or Event of Default;

 

(b) any default or event of default under any contractual obligation of any Borrower, or any litigation, investigation or proceeding between any Borrower and any Governmental Authority which, in either case, if not cured or if adversely determined, as the case may be, could reasonably be expected to have a Material Adverse Effect;

 

(c) any litigation or proceeding involving any Borrower as a defendant or in which any Property of any Borrower is subject to a claim and in which the amount involved is $25,000 or more and which is not covered by insurance or in which injunctive or similar relief is sought;

 

(d) the receipt by the Borrowers of any Environmental Complaint, which if adversely determined could reasonably be expected to have a Material Adverse Effect;

 

 
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(e) any actual, proposed or threatened testing or other investigation by any Governmental Authority or other Person concerning the environmental condition of, or relating to, any Property of the Borrowers following any allegation of a violation of any Requirement of Law;

 

(f) any Release of Hazardous Substances by the Borrowers or from, affecting or related to any Property of the Borrowers or Property of others adjacent to Property of the Borrowers which could reasonably be expected to have a Material Adverse Effect, except in accordance with applicable Requirements of Law or the terms of a valid permit, license, certificate or approval of the relevant Governmental Authority, or the violation of any Environmental Law, or the revocation, suspension or forfeiture of or failure to renew, any permit, license, registration, approval or authorization which could reasonably be expected to have a Material Adverse Effect;

 

(g) any change in Petrodome Management; and

 

(h) any other event or condition which could reasonably be expected to have a Material Adverse Effect.

 

5.7 Letters in Lieu of Transfer Orders or Division Orders. Promptly upon request by the Agent at any time and from time to time, and without limitation on the rights of the Agent pursuant to the provisions of Section 2.17, execute such letters in lieu of transfer or division orders, in addition to the letters delivered to the Agent in satisfaction of the condition set forth in Section 3.1(h), as are necessary or appropriate to transfer and deliver to the remittances of Agent proceeds from or attributable to any of the Mortgaged Property.

 

5.8 Commodity Hedging. Within five (5) Business Days of the Closing Date place in effect and comply, in all material respects, with the provisions of the Minimum Required Commodity Hedge Agreements and, if the daily closing price for WTI is less than $50/bbl for more than nine (9) days during any rolling thirty (30) day period (such occurrence referred to as an “Additional Hedge Adjustment Event”), the Borrowers shall hedge additional future production volumes, as determined by the Agent in its sole discretion, within fifteen (15) days after receipt of notice from the Agent specifying the amounts and duration of the future production volumes to be hedged as a result of such Additional Hedge Adjustment Event.

 

5.9 Tax Returns. Furnish to the Agent, promptly upon, but in no event more than thirty (30) days after, each filing of the annual federal income tax return of the Borrowers with the Internal Revenue Service, a copy thereof.

 

5.10 Additional Information. Furnish to the Agent and any Lender, promptly upon the request of the Agent, such additional financial or other information concerning the assets, liabilities, operations and transactions of the Borrowers as the Agent may from time to time reasonably request; and notify the Agent not less than ten (10) Business Days prior to the occurrence of any condition or event that may change the proper location for the filing of any financing statement or other public notice or recording for the purpose of perfecting a Lien in any Property of the Borrowers, including any change in its name or the location of the jurisdiction of organization, principal place of business or chief executive office of the relevant Borrower; and upon the request of the Agent, execute such additional Security Documents as may be necessary or appropriate in connection therewith.

 

 
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5.11 Compliance with Laws. Comply, in all material respects, with all applicable Requirements of Law, including (a) ERISA, (b) Environmental Laws, (c) Anti-Terrorism Laws and (d) all permits, licenses, registrations, approvals and authorizations (i) related to any natural or environmental resource or media located on, above, within, related to or affected by any Property of the Borrowers, (ii) required for the performance of the operations of the Borrowers, or (iii) applicable to the use, generation, handling, storage, treatment, transport, or disposal of any Hazardous Substances; and use its best efforts to cause all employees, agents, contractors, subcontractors and future lessees (pursuant to appropriate lease provisions) of the Borrowers, while such Persons are acting within the scope of their relationship with the relevant Borrower, to comply with all such Requirements of Law as may be necessary or appropriate to enable the relevant Borrower to so comply.

 

5.12 Payment of Assessments and Charges. Pay all Taxes, assessments, governmental charges, rent and other Indebtedness which, if unpaid, might become a Lien against any Property of the Borrowers, except any of the foregoing being contested in good faith and as to which an adequate reserve in accordance with GAAP has been established or unless failure to pay would not have a Material Adverse Effect.

 

5.13 Maintenance of Existence or Qualification and Good Standing. Maintain its corporate, limited liability company or limited partnership, as the case may be, existence or qualification and, if applicable, good standing in its jurisdiction of organization and in all jurisdictions wherein any material Property now owned or hereafter acquired or business now or hereafter conducted by it necessitates same.

 

5.14 Payment of Notes; Performance of Obligations. Pay the Notes according to the reading, tenor and effect thereof, as modified hereby, and do and perform every act and discharge all of the other Obligations.

 

5.15 Further Assurances; Post-Closing Obligations. Promptly upon written request of the Agent, cure any defects in the execution and delivery of any of the Loan Documents to which the relevant Borrower is a party and all agreements contemplated thereby, and execute, acknowledge and deliver to the Agent such other assurances and instruments as shall, in the reasonable opinion of the Agent, be necessary to fulfill the terms of the Loan Documents to which the relevant Borrower is a party. Any failure by Borrowers to timely perform and comply (or to cause any other Person that is an Affiliate to perform and comply) with any of the covenants and requirements as set forth in this Section 5.15 (as determined by Administrative Agent, in its sole but reasonable discretion) shall constitute an Event of Default under Section 7.1(c) of the Credit Agreement.

 

5.16 Initial Expenses of Agent. Upon request by the Agent, promptly reimburse the Agent for, or pay directly to such special counsel, all reasonable fees and expenses of K&L Gates LLP, special counsel to the Agent, or Agent’s other advisors in connection with the preparation of this Agreement and all documentation contemplated hereby, the satisfaction of the conditions precedent set forth herein, the filing and recordation of Security Documents, and the consummation of the transactions contemplated in this Agreement.

 

 
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5.17 Subsequent Expenses of Agent and Lenders. Promptly reimburse:

 

(a) all third party out-of-pocket amounts reasonably expended, advanced or incurred by or on behalf of the Agent (i) to satisfy any obligation of the Borrowers under any of the Loan Documents; (ii) to ratify, amend, restate or prepare additional Loan Documents, as the case may be; (iii) in connection with the filing and recordation of Security Documents; and which amounts shall include all reasonable attorney’s fees, together with interest at the Contract Rate on each such amount from the date of notification by the Agent that the same was expended, advanced or incurred by the Agent until the date it is repaid to the Agent; (iv) in connection with certain back office and administrative services related to the Term Loan provided by Cortland Capital Market Services LLC or such other third party loan servicer as Agent may select from time to time; (v) in connection with all valuation services related to the Term Loan; and (vi) associated with rating agency services, risk mitigation providers and insurance, provided, however, the fees and expenses in connection with (a)(iv) and (a)(vi) shall not exceed $25,000 per year; and

 

(b) following an Event of Default, all out-of-pocket costs and expenses, if any, of the Agent or any of the Lenders (i) to enforce their respective rights under any of the Loan Documents; (ii) to collect the Obligations and (iii) to protect the Properties or business of the Borrowers, which amounts shall be deemed compensatory in nature and liquidated as to amount upon notice to the relevant Borrower by the Agent and which costs and expenses shall include (a) all court costs, (b) reasonable attorneys’ fees, (c) reasonable fees and expenses of auditors and accountants and other professionals incurred to protect the interests of the Agent or the Lenders, (d) fees and expenses incurred in connection with the participation by the Agent and the Lenders as members of the creditors’ committee in any Insolvency Proceeding, (e) fees and expenses incurred in connection with lifting the automatic stay prescribed in §362 Title 11 of the United States of America Code and (f) fees and expenses incurred in connection with any action pursuant to §1129 Title 11 of the United States of America Code all reasonably incurred by the Agent and the Lenders in connection with the collection of any sums due under the Loan Documents, together with interest at the Contract Rate on each such amount from the date of notification that the same was expended, advanced or incurred by the Agent or any Lender until the date it is repaid to the Agent or such Lender, with the obligations under this Section 5.17 surviving the non-assumption of this Agreement in any Insolvency Proceeding and being binding upon the Borrowers and/or a trustee, receiver, custodian or liquidator of the Borrowers appointed in any such case.

 

(c) Notwithstanding any provision to the contrary herein, the Borrowers agree that, upon five (5) Business Days’ notice, the Agent may debit the Borrowers’ account or accounts that are subject to exclusive control by the Agent for any amounts payable pursuant to this Section 5.17.

 

 
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5.18 Maintenance and Inspection of Properties. Maintain or, to the extent that the right or obligation to do so rests with another Person, exercise commercially reasonable efforts to cause such other Person to maintain all of the tangible Properties of the Borrowers in good repair and condition, ordinary wear and tear excepted; make or, to the extent that the right or obligation to do so rests with another Person, exercise commercially reasonable efforts to cause such other Person to make all necessary replacements thereof and operate such Properties in a good and workmanlike manner; and permit any authorized representative of the Agent, upon prior notice to the Borrowers, to visit and inspect, at reasonable times, any tangible Property of the Borrowers.

 

5.19 Maintenance of Insurance. Maintain or cause to be maintained insurance with respect to its Properties and businesses against such liabilities, casualties, risks and contingencies as is customary in the relevant industry and sufficient to prevent a Material Adverse Effect, all such insurance to be in amounts and from insurers reasonably acceptable to the Agent and name the Agent as an additional insured and loss payee.

 

5.20 Environmental Indemnification. Indemnify and hold the Agent and each of the Lenders and their respective shareholders, officers, directors, employees, agents, advisors, attorneys-in-fact and Affiliates and each trustee for the benefit of the Agent or the Lenders under any Security Document (each of the foregoing an “Indemnitee”) harmless from and against any and all claims, losses, damages, liabilities, fines, penalties, charges, administrative and judicial proceedings and orders, judgments, remedial actions, requirements and enforcement actions of any kind, and all reasonable costs and expenses incurred in connection therewith (including attorneys’ fees and expenses), arising directly or indirectly, in whole or in part, from (a) the presence of any Hazardous Substances on, under, or from any Property of the Borrowers, whether prior to or during the term hereof, (b) any activity carried on or undertaken on any Property of the Borrowers, whether prior to or during the term hereof, and whether by of the Borrowers or any of the predecessors in title, employees, agents, contractors or subcontractors of or any other Person at any time occupying or present on such Property, in connection with the handling, treatment, removal, storage, decontamination, cleanup, transportation or disposal of any Hazardous Substances at any time located or present on or under such Property, (c) any residual contamination on or under any Property of the Borrowers, (d) any contamination of any Property or natural resources arising in connection with the generation, use, handling, storage, transportation or disposal of any Hazardous Substances by of the Borrowers or any employees, agents, contractors or subcontractors of the Borrowers while such Persons are acting within the scope of their relationship with the relevant Borrower, irrespective of whether any of such activities were or will be undertaken in accordance with applicable Requirements of Law or (e) the performance and enforcement of any Loan Document or any other act or omission in connection with or related to any Loan Document or the transactions contemplated thereby, including any such claim, loss, damage, liability, fine, penalty, charge, administrative or judicial proceeding, order, judgment, remedial action, requirement, enforcement action, cost or expense, arising from the negligence (but not the gross negligence or willful misconduct), whether sole or concurrent, of any Indemnitee; with the foregoing indemnity surviving satisfaction of all Obligations and the termination of this Agreement, unless all such Obligations have been satisfied wholly in cash and not by way of realization against any Collateral or the conveyance of any Property in lieu thereof, provided that such indemnity shall not extend to any act or omission by the Agent or any Lender with respect to any Property subsequent to the Agent or any Lender becoming the owner of such Property and with respect to which Property such claim, loss, damage, liability, fine, penalty, charge, proceeding, order, judgment, action or requirement arises subsequent to the acquisition of title thereto by the Agent or any Lender. All amounts due under this Section 5.20 shall be payable on written demand therefor by the Agent.

 

 
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5.21 General Indemnification. Indemnify and hold each Indemnitee harmless from and against any and all losses, claims, damages, liabilities and related expenses, including reasonable counsel fees and expenses, incurred by or asserted against any Indemnitee arising out of, in any way connected with or as a result of (i) the preparation, execution, delivery and administration of this Agreement and the other Loan Documents, the performance by the parties hereto and thereto of their respective obligations hereunder and thereunder and consummation of the transactions contemplated hereby and thereby, (ii) the use of proceeds of the Term Loan, or (iii) any claim, litigation, investigation or proceeding relating to any of the foregoing, whether or not any Indemnitee is a party thereto, including any such loss, claim, damage, liability or expense arising from the negligence (but not the gross negligence or willful misconduct), whether sole or concurrent, of any Indemnitee; with the foregoing indemnity surviving satisfaction of all Obligations and the termination of this Agreement. For the avoidance of doubt, subsection (i) and subsection (iii) of this Section 5.21 includes the reasonable fees, disbursements and other charges of a single lead counsel for, and special and local counsel as my be required by, the Agent. All amounts due under this Section 5.21 shall be payable on written demand therefor.

 

5.22 Evidence of Compliance with Anti-Terrorism Laws. Deliver to the Agent and any Lender any certification or other evidence requested from time to time by the Agent or such Lender, in their reasonable discretion, confirming compliance by the Borrowers with the provisions of any or all applicable Anti-Terrorism Laws.

 

5.23 Board and Management Meetings. Hold (a) a meeting of the governing body of the Borrower or its manager, as the case may be, at least quarterly and, in connection with each such meeting or any proposed action without a meeting, as the case may be, (i) provide to the Agent reasonable advance notice of the meeting or reasonable advance notice of any proposed action without a meeting, (ii) provide to the Agent, reasonably in advance of the meeting or proposed action without a meeting, copies of all written materials provided to the directors and (iii) so long as the Loan Balance exceeds $100,000 allow the Agent Observer to attend the meeting as a non-voting observer and (b) regular operations meetings of the management team of the Borrower and special meetings of such management team at the reasonable request of the Agent. Any of the meetings held pursuant to this Section 5.23(b) may be held telephonically. Borrower will reimburse the Agent Observer for all reasonable and documented costs and expenses incurred in connection with its participation in any meetings pursuant to this Section 5.23.

 

5.24 Maximum Permitted Monthly General and Administrative Expense Allocation. Not deduct or receive a monthly general and administrative expense allocation (measured in arrears) in excess of $125,000 per month. For the avoidance of doubt, any and all overhead shall be considered a general and administrative expense for purposes of this Section 5.24.

 

 
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5.25 Material Contracts. Comply in all material respects with material contracts.

 

5.26 Credit Policies. Maintain written credit policies consistent with standard business practices and in form and substance acceptable to Agent.

 

5.27 DACA Accounts. Within thirty (30) calendars days of the Closing Date, with respect to all Borrowers, deliver one or more Deposit Account Control Agreements with shifting control among Petrodome Energy and the other Borrowers, the Agent and Wells Fargo Bank, National Association or any other financial institution holding an account of one or more Borrowers with respect to each Operating Account or any other account in which any Borrower holds an interest.

 

5.28 Lockbox Account. (a) Remit all payments received by it to the Lockbox Account and (b) direct all account debtors and royalty payors to remit all payments due to Borrowers to the Lockbox Account.

 

5.29 Other Financial Reporting Obligations. Deliver to the Agent any and all annual and quarterly financial reporting information of Viking Energy Group, Inc. as well as any special reporting delivered to its securities regulator no later than three (3) days after such information is delivered to the SEC.

 

5.30 Additional Collateral; Other Deliveries. At the request of the Agent in its sole discretion, deliver to the Agent Security Documents covering all Oil and Gas Properties and other Properties of the Borrowers and establishing perfected first priority Liens in favor or for the benefit of the Agent for the benefit of the Lenders or such other deliveries as the Agent shall reasonably request, including but not limited to new, amendment or otherwise revised Direction Letters and letters in lieu of transfer.

 

ARTICLE VI

 

NEGATIVE COVENANTS

 

So long as any Obligation remains outstanding or unpaid, none of the Borrowers will:

 

6.1 Indebtedness. Create, incur, assume or suffer to exist any Indebtedness, whether by way of loan or otherwise; provided, however, the foregoing restriction shall not apply to (a) the Obligations, (b) unsecured accounts payable incurred in the ordinary course of business, which are not unpaid in excess of forty-five (45) days beyond the invoice date or are being contested in good faith and as to which such reserve as is required by GAAP has been made, (c) Indebtedness of the Borrowers at any time owing by the relevant Borrower under any of the Minimum Required Commodity Hedge Agreements or other Commodity Hedge Agreement with Approved Hedge Counterparties and approved by the Agent, (d) Indebtedness associated with Permitted Liens, and (e) Indebtedness of the Borrowers owing to Viking Energy Group, Inc., provided, however, that such Indebtedness permitted under subsection (e) of this Section 6.1 (i) may not exceed $1,000,000, (ii) shall not be secured, and (iii) shall be subject to a subordination agreement in favor of Agent and the Lenders in form and substance acceptable to Agent in its sole discretion.

 

 
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6.2 Contingent Obligations. Create, incur, assume or suffer to exist any Contingent Obligation; provided, however, the foregoing restriction shall not apply to (a) performance guarantees, performance surety or other bonds or endorsements of items deposited for collection, in each case provided in the ordinary course of business or (b) trade credit incurred or operating leases entered into in the ordinary course of business.

 

6.3 Liens. Create, incur, assume or suffer to exist any Lien on any of its Property, whether now owned or hereafter acquired; provided, however, the foregoing restriction shall not apply to Permitted Liens.

 

6.4 Sales of Assets. Sell, transfer or otherwise dispose of, any of its Property, whether now owned or hereafter acquired, or enter into any agreement to do so; provided, however, the foregoing restriction shall not apply to (a) the sale of Hydrocarbons or inventory in the ordinary course of business, provided that no contract for the sale of Hydrocarbons shall obligate the relevant Borrower to deliver Hydrocarbons produced from any of its Oil and Gas Properties at some future date without receiving full payment therefor within sixty (60) days of delivery, (b) the sale or other disposition of Property destroyed, lost, worn out, damaged or having only salvage value or no longer used or useful in the business in which it is used and not exceeding $25,000 in the aggregate, for Borrowers on a consolidated basis, during any calendar year, (c) the sale, transfer or other disposition of Property from the Borrowers to any other Borrowers or direct obligor hereunder, (d) sales or other dispositions of Property not constituting Collateral and not exceeding $25,000 in the aggregate, for the Borrowers on a consolidated basis, during any calendar year, or (e) sales or other dispositions of Property, the proceeds of which are used to pay the Obligations in full in cash.

 

6.5 Leasebacks. Enter into any agreement to sell or transfer any Property and thereafter rent or lease as lessee such Property or other Property intended for the same use or purpose as the Property sold or transferred.

 

6.6 Sale or Discount of Receivables. Except to minimize losses on bona fide debts previously contracted, discount or sell with recourse, or sell for less than the greater of the face or market value thereof, any of its notes receivable or accounts receivable.

 

6.7 Loans or Advances. Make or agree to make or allow to remain outstanding any loans or advances to any Person; provided, however, the foregoing restriction shall not apply to (a) advances or extensions of credit in the form of accounts receivable incurred in the ordinary course of business and on terms customary in the relevant industry, (b) loans or advances by the relevant Borrower to any of the other Borrower or (c) other loans or advances not exceeding $25,000, in the aggregate for the Borrowers on a consolidated basis, at any time outstanding. Notwithstanding the forgoing, the Borrowers shall not make any advance or loan to or for the benefit of, whether directly or otherwise, to: (i) any Person directly or indirectly related to any Borrower or (ii) any officer or manager of such Borrower, without the express written consent of the Agent.

 

 
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6.8 Investments. Make or acquire Investments in, or purchase or otherwise acquire all or substantially all of the assets of, any Person; provided, however, the foregoing restriction shall not apply to (a) the purchase or acquisition of Oil and Gas Properties, pipelines and gathering systems or other Property related thereto or related to farm-out, farm-in, joint operating, joint venture or area of mutual interest agreements or other similar arrangements which are usual and customary in the oil and gas exploration and production business located within the geographic boundaries of the United States of America (including, the federal Outer Continental Shelf), provided that the Agent must consent in writing prior to any purchase or acquisition under this Section 6.8(a), (b) Investments in the form of (i) debt securities issued or directly and fully guaranteed or insured by the United States of America or any agency or instrumentality thereof, with maturities of no more than one year, (ii) commercial paper of a domestic issuer rated at the date of acquisition at least P-2 by Moody’s Investor Service, Inc. or A-2 by Standard & Poor’s Corporation and with maturities of no more than one year from the date of acquisition or (iii) repurchase agreements covering debt securities or commercial paper of the type permitted in this Section 6.8, or (iv) certificates of deposit, demand deposits, eurodollar time deposits, overnight bank deposits and bankers’ acceptances, with maturities of no more than one year from the date of acquisition, issued by or acquired from or through any Lender or any bank or trust company organized under the laws of the United States of America or any state thereof and having capital surplus and undivided profits aggregating at least $100,000,000, (c) other short-term Investments similar in nature and degree of risk to those described in clause (b) of this proviso to this Section 6.8, (d) Investments in money-market funds sponsored or administered by Persons acceptable to the Agent and which funds invest in short-term Investments similar in nature and degree of risk to those described in clause (b) of this proviso to this Section 6.8, or (e) evidences of loans or advances not prohibited by the provisions of Section 6.7.

 

6.9 Dividends and Distributions. Declare, pay or make, whether in cash or Property of the relevant Borrower, any dividend or distribution on, or purchase, redeem or otherwise acquire for value, any of its Equity Interests other than dividends and distributions paid (a) in additional shares of Equity Interests, so long as such additional shares of Equity Interests do not have any redemption rights or cash payments, (b) pursuant to and in accordance with stock option plans or other benefit plans for management, employees or consultants of the relevant Borrower, so long as such additional shares of Equity Interests do not have any redemption rights or cash payments or (c) so long as no Default or Event of Default exists or would reasonably be expected to result in a Default or Event of Default, as a Permitted Tax Distribution.

 

6.10 Issuance of Equity; Changes in Corporate Structure. Issue or agree to issue any Equity Interests other than common Equity Interests; enter into any transaction of consolidation, merger or amalgamation; or liquidate, wind-up or dissolve (or suffer any liquidation or dissolution).

 

6.11 Transactions with Affiliates and Certain Other Person. Directly or indirectly, enter into any transaction (including the sale, lease or exchange of Property or the rendering of service) with any of its Affiliates or with any Person directly or indirectly related to any Borrower or any manager or officer of such Borrower (other than transactions entered into in the normal course of business between the Borrowers and any other Borrower not otherwise prohibited hereunder), other than: (a) upon fair and reasonable terms no less favorable than could be obtained in an arm’s length transaction with a Person which was not an Affiliate and (b) upon terms approved by the Agent in writing.

 

 
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6.12 Lines of Business. Engage in any line of business other than those in which the relevant Borrower is engaged as of the Closing Date.

 

6.13 Plan Obligation. Assume or otherwise become subject to an obligation to contribute to or maintain any Plan or acquire any Person which has at any time had an obligation to contribute to or maintain any Plan.

 

6.14 Anti-Terrorism Laws. Conduct any business or engage in any transaction or dealing with any Blocked Person, including the making or receiving of any contribution of funds, goods or services to or for the benefit of any Blocked Person; deal in, or otherwise engage in any transaction relating to, any Property or interests in Property blocked pursuant to Executive Order No. 13224; engage in or conspire to engage in any transaction that evades or avoids, or has the purpose of evading or avoiding, or attempts to violate (i) any of the prohibitions set forth in Executive Order No. 13224 or the USA Patriot Act or (ii) any prohibitions set forth in the rules or regulations issued by OFAC or any sanctions against targeted foreign countries, terrorism sponsoring organizations and international narcotics traffickers based on United States of America foreign policy.

 

6.15 Amendment of Material Contracts. Amend, supplement, restate or otherwise modify, in any material respect, any material contract to which the relevant Borrower is a party, including, without limitation, any Development Plan or joint operating agreement, without express written consent from the Agent.

 

6.16 Provisions of Commodity Hedge Agreements. Enter into or maintain in effect any Commodity Hedge Agreement containing any provision obligating the relevant Borrower to provide to the relevant Approved Hedge Counterparty any collateral, margin, letter of credit or any other form of security or credit support for the obligations, contingent or otherwise, of the relevant Borrower thereunder.

 

6.17 Maintenance of Commodity Hedge Agreements. Enter into any Commodity Hedge Agreement, whether with an Approved Hedge Counterparty or another Person, other than the Minimum Required Commodity Hedge Agreements or liquidate or terminate any of Minimum Required Commodity Hedge Agreements.

 

6.18 Deposit Accounts. Establish or maintain funds on deposit in a deposit account with any financial institution other than (a) the Lockbox Account, (b) the CapEx Account, (c) the Control Account or (d) other Operating Accounts (including deposit accounts used to maintain funds in suspense or royalties due to third-parties) as described on Schedule 6.18 attached hereto.

 

6.19 Development Plan. Amend the general administrative and expense budget or target development locations of the most recent Development Plan without the prior written consent of the Agent.

 

 
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6.20 Reserved.

 

6.21 Current Ratio. Allow, as of the close of any fiscal month, commencing with that ending May 31, 2018, the ratio of Current Assets to Current Liabilities to be less than 1.00 to 1.00.

 

6.22 PDP Collateral Coverage. Allow, as of each of the dates indicated in the table below in this Section 6.22, (a) the positive difference of (i) the Loan Balance as of the relevant date minus (ii) the amount of cash in the CapEx Account as of the relevant date, divided by (b) the PV-10 value of the PDP Reserves (using Adjusted Strip Prices on the relevant date applied to the PDP Reserves of the Borrowers, on a consolidated basis), as reflected in the Reserve Report provided to the Agent pursuant to the provisions of Section 5.4, to be more than the percentage indicated in the table below for the relevant date:

 

Date

 

Percentage

May 31, 2018

 

70%

November 30, 2018

 

65%

May 31, 2019

 

60%

November 30, 2019 and thereafter

 

55%

 

6.23 Proved Reserves Coverage. Allow, as of May 31, 2018 and each November 30th and May 31st thereafter, the positive difference of (a) the difference of (i) the Loan Balance as of the relevant date minus (ii) the amount of cash in the CapEx Account, as of the relevant date, to be more than (b) fifty percent (50%) of the PV-10 value of Proved Reserves (using Adjusted Strip Prices on the relevant date applied to the Proved Reserves of the Borrowers, on a consolidated basis) as reflected in the most recent Reserve Report provided to the Agent pursuant to the provisions of Section 5.24, provided, that only twenty percent (20%) of the PV-10 value of PUD shall be included for purposes of calculating the PV-10 value of Proved Reserves.

 

6.24 Capital Expenditures. Make or commit or agree to make, in any fiscal quarter, Capital Expenditures that would cause Capital Expenditure made or committed or agreed to in the relevant fiscal quarter to exceed the amount set forth in the Development Plan for such fiscal quarter by more than ten percent (10%). For purposes of this Section 6.24, Capital Expenditures may be made by purchase or by Capital Lease and include costs associated with the exploration and development of Oil and Gas Properties. This Section 6.24 does not apply to any Capital Expenditure required by law or legally mandated by a safety, environmental or regulatory agency having authority over the Borrowers.

 

6.25 Capital Leases. Create, incur, assume or suffer to exist any Capital Lease in excess of $50,000 in the aggregate in any calendar year.

 

6.26 Amendments to Organizational Documents. Without the prior written consent of the Agent, alter, amend or modify its certificate of formation, limited liability company, agreement, articles of incorporation, by-laws, or any other similar organizational document.

 

 
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6.27 Additional Subsidiaries. Form or acquire any Subsidiary without the prior written consent of the Agent. In the event that the Agent provides such prior written consent to any formation or acquisition of any Subsidiary, the Borrower shall contemporaneously with such formation, cause such Subsidiary to (a) become a Co-Borrower by delivering to the Agent a duly executed amendment to the Agreement or such other document as the Agent shall deem appropriate for such purpose, (b) grant a security interest in all Collateral of the type described in the Security Documents subject to the exceptions specified therein, including all Oil and Gas Properties, owned by such Subsidiary by delivering to the Agent a duly executed supplement to the Security Documents or such other document as the Agent shall deem appropriate for such purpose, (c) deliver to the Agent such opinions, documents and certificates referred to in Section 3.1 as may reasonably be requested by the Agent, (d) deliver to the Agent such original certificated Equity Interests or other certificates evidencing the Equity Interests of such Subsidiary, together with stock or other transfer powers duly executed in blank, (e) deliver to the Agent such updated Schedules to the Loan Documents as requested by the Agent with respect to such Subsidiary, and (f) deliver to the Agent such other documents as may be reasonably requested by the Agent, all in form, content and scope reasonably satisfactory to the Agent.

 

6.28 Equity Raise. Without the prior written consent of the Agent, use any proceeds from an Equity Raise to redeem or repay any Subordinated Indebtedness or to declare, pay or make any dividend or distribution.

 

6.29 Negative Pledge Agreements. Will not create, incur, assume or suffer to exist any contract, agreement or understanding (other than this Agreement, the Security Documents, agreements with respect to purchase money Indebtedness or Capital Leases secured by Permitted Liens, but then only with respect to the Property that is the subject of such Capital Lease or purchase money Indebtedness), that in any way prohibits or restricts the granting, conveying, creation or imposition of any Lien on any of its Property in favor of the Agent and the Lenders.

 

6.30 Material Accounting Changes. Change the last day of its fiscal year from December 31 of each year, or the last days of the first three fiscal quarters in each of its fiscal years from March 31, June 30 and September 30 of each year, respectively. Make (without the consent of the Agent) any material change in its accounting treatment and reporting practices except as required by GAAP.

 

ARTICLE VII

 

EVENTS OF DEFAULT

 

7.1 Enumeration of Events of Default. Any of the following events shall constitute an Event of Default:

 

(a) default shall be made in the payment when due of any installment of principal or interest under this Agreement or the Notes or in the payment when due of any fee or other sum payable under any Loan Document to which the relevant Borrower is a party and such default shall continue unremedied for five (5) days, except such amounts due on the Maturity Date, for which no such grace period shall apply;

 

 
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(b) default shall be made by the Borrowers in the due observance or performance of any of its obligations under the Loan Documents, and, as to compliance with the obligations of the Borrowers under Article V (other than Section 5.14), and such default shall continue for five (5) days after the earlier of notice thereof to the relevant Borrower or Borrowers by the Agent or knowledge thereof by the relevant Borrower or any of the other Borrowers;

 

(c) any representation or warranty made by the Borrowers in any of the Loan Documents to which the relevant Borrower is a party proves to have been untrue in any material respect or any representation, statement (including Financial Statements), certificate, including the perfection certificate, or data furnished or made to the Agent or any Lender in connection herewith proves to have been untrue in any material respect as of the date the facts therein set forth were stated or certified;

 

(d) default shall be made by any Borrower (as principal or guarantor or other surety) in the payment or performance of any bond, debenture, note or other Indebtedness in excess of $50,000 in the aggregate as to the relevant Borrower or under any credit agreement, loan agreement, indenture, promissory note or similar agreement or instrument executed in connection with any of the foregoing, and such default shall remain unremedied for five (5) days in excess of the period of grace, if any, with respect thereto;

 

(e) the levy against any significant portion of the Property of the Borrowers, or any execution, garnishment, attachment, sequestration or other writ or similar proceeding in an amount in excess of $50,000 as to the relevant Borrower which is not permanently dismissed or discharged within sixty (60) days after the levy;

 

(f) any Borrower shall (i) apply for or consent to the appointment of a receiver, trustee or liquidator of it or all or a substantial part of its assets, (ii) file a voluntary petition commencing an Insolvency Proceeding, (iii) make a general assignment for the benefit of creditors of all or substantially all of its assets, (iv) be unable, or admit in writing its inability, to pay its debts generally as they become due or (v) file an answer admitting the material allegations of a petition filed against it in any Insolvency Proceeding;

 

(g) an order, judgment or decree shall be entered against any Borrower by any court of competent jurisdiction or by any other Governmental Authority, on the petition of a creditor or otherwise, granting relief in any Insolvency Proceeding or approving a petition seeking reorganization or an arrangement of its debts or appointing a receiver, trustee, conservator, custodian or liquidator of it or all or any substantial part of its assets, and such order, judgment or decree shall not be dismissed or stayed within thirty (30) days;

 

(h) a final and non-appealable order, judgment or decree shall be entered against any Borrower for money damages and/or Indebtedness due in an amount in excess of $50,000, and such order, judgment or decree shall not be dismissed or stayed within 60 days or is not fully covered by insurance;

 

(i) any charges are filed or any other action or proceeding is instituted by any Governmental Authority against any Borrower under the Racketeering Influence and Corrupt Organizations Statute (18 U.S.C. §1961 et seq.), the result of which could be the forfeiture or transfer of any material Property of the relevant Borrower subject to a Lien in favor of the Agent without (i) satisfaction or provision for satisfaction of such Lien or (ii) such forfeiture or transfer of such Property being expressly made subject to such Lien;

 

 
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(j) no Borrower shall have (i) concealed, removed or diverted, or permitted to be concealed, removed or diverted, any part of its Property, with intent to hinder, delay or defraud its creditors or any of them, (ii) made or suffered a transfer of any of its Property which may be fraudulent under any bankruptcy, fraudulent conveyance or similar law with intent to hinder, delay or defraud its creditors, (iii) made any transfer of its Property to or for the benefit of a creditor at a time when other creditors similarly situated have not been paid with intent to hinder, delay or defraud its creditors or (iv) shall have suffered or permitted, while insolvent, any creditor to obtain a Lien upon any of its Property through legal proceedings or distraint which is not vacated within sixty (60) days from the date thereof;

 

(k) any Security Document shall for any reason not, or cease to, create valid and perfected first‑priority Liens against the Property of the Borrower which is a party thereto purportedly covered thereby, except to the extent permitted by this Agreement;

 

(l) any Borrower contests in any manner the validity or enforceability of any provision of any Loan Document to which it is a party, or denies that it has any liability under any Loan Document to which it is a party;

 

(m) any Borrower purports to revoke, terminate or rescind any Loan Document or any provision of any Loan Document;

 

(n) any Borrower pays, in cash or otherwise, any portion of any Subordinated Indebtedness not expressly permitted pursuant to the terms of a subordination agreement in favor of the Agent; or

 

(o) a Change of Control occurs.

 

7.2 Remedies.

 

(a) Upon the occurrence of an Event of Default specified in Section 7.1(f) or Section 7.1(g), immediately and without notice, all Obligations shall automatically become immediately due and payable, without presentment, demand, protest, notice of protest, default or dishonor, notice of intent to accelerate maturity, notice of acceleration of maturity or other notice of any kind, except as may be provided to the contrary elsewhere herein, all of which are hereby expressly waived by the Borrowers.

 

(b) Upon the occurrence of any Event of Default other than those specified in Section 7.1(f) or Section 7.1(g), the Agent may, and upon the request of the Required Lenders shall, by notice in writing to any Borrower, declare all Obligations immediately due and payable, without presentment, demand, protest, notice of protest, default or dishonor, notice of intent to accelerate maturity, notice of acceleration of maturity or other notice of any kind, except as may be provided to the contrary elsewhere herein, all of which are hereby expressly waived by each Borrower.

 

 
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(c) Upon the occurrence of any Event of Default, the Lenders, with the oral consent of the Required Lenders (confirmed promptly in writing), and the Agent, in accordance with the terms hereof, may, in addition to the foregoing in this Section 7.2, exercise any or all of their rights and remedies provided by law or pursuant to the Loan Documents.

 

(d) Should the Obligations under the Loan Documents become immediately due and payable in accordance with any of the preceding subsections of this Section 7.2, the Agent shall be entitled to proceed against the Collateral.

 

(e) Upon the occurrence of any Event of Default, the Agent shall be authorized and entitled, in its sole and uncontrolled discretion, to withdraw all cash in the Lockbox Account on a daily basis to be applied against the Loan Balance pursuant to Section 7.2(f) until such time as no Event of Default exists under any of the preceding subsections of this Section 7.2.

 

(f) Proceeds received by the Agent from realization against the Collateral and any other funds received by the Agent from any Borrower when an Event of Default has occurred and is continuing shall be applied pro rata (i) first, to fees and expenses due pursuant to the terms of this Agreement, any other Loan Document or any Commodity Hedge Agreement with a Lender, (ii) second, to accrued interest on the Obligations under the Loan Documents or any Commodity Hedge Agreement with a Lender and (iii) third, to the Loan Balance and any other Obligations then due and payable, pro rata in accordance with the ratio of the Loan Balance or such other Obligations, as the case may be, to the sum of the Loan Balance and such other Obligations. Notwithstanding the foregoing, amounts received from any Borrower that is not an Eligible Contract Participant shall not be applied to any Excluded Swap Obligations owing to a Lender, it being understood that in the event any amount is applied to the Obligations other than Excluded Swap Obligations as a result of this sentence, the Agent shall make such adjustments as it determines are appropriate pursuant to this sentence, from amounts received from Eligible Contract Participants to ensure, as nearly as possible, that the proportional aggregate recoveries with respect to the Obligations described in the preceding sentence of this subsection (f) of this Section 7.2 by Lenders that are the holders of any Excluded Swap Obligations are the same as the proportional aggregate recoveries with respect to other Obligations pursuant to the preceding sentence of this subsection (e) of this Section 7.2.

 

 
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ARTICLE VIII

 

THE AGENT

 

8.1 Appointment. Each Lender hereby designates and appoints the Agent as the agent of such Lender under this Agreement and the other Loan Documents to which the Agent is a party or under which the Agent is granted any right or remedy. Each Lender authorizes the Agent, as the agent for such Lender, to take such action on behalf of such Lender under the provisions of this Agreement or the other Loan Documents to which the Agent is a party or under which the Agent is granted any right or remedy and to exercise such powers and perform such duties as are expressly delegated to the Agent by the terms of this Agreement or the other Loan Documents to which the Agent is a party or under which the Agent is granted any right or remedy, together with such other powers as are reasonably incidental thereto. Notwithstanding any provision to the contrary elsewhere in this Agreement or in any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy, the Agent shall not have any duties or responsibilities except those expressly set forth herein or in any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy or any fiduciary relationship with any Lender; and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Agent shall be read into this Agreement or any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy or otherwise exist against the Agent.

 

8.2 Delegation of Duties. The Agent may execute any of its duties under this Agreement and the other Loan Documents to which the Agent is a party or under which the Agent is granted any right or remedy by or through agents or attorneys-in-fact and shall be entitled to advice of counsel concerning all matters pertaining to such duties. The Agent shall not be responsible to any Lender for the negligence or misconduct of any agents or attorneys-in-fact selected by it with reasonable care.

 

8.3 Exculpatory Provisions. Neither the Agent nor any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates shall be (a) required to initiate or conduct any litigation or collection proceedings hereunder, except with the concurrence of the Required Lenders and contribution by each Lender of its Percentage Share of costs reasonably expected by the Agent to be incurred in connection therewith, (b) liable for any action lawfully taken or omitted to be taken by it or such Person under or in connection with this Agreement or any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy (except for gross negligence or willful misconduct of the Agent or such Person) or (c) responsible in any manner to any Lender for any recitals, statements, representations or warranties made by any Borrower or any Responsible Officer thereof contained in this Agreement or any other Loan Document or in any certificate, report, statement or other document referred to or provided for in, or received by the Agent under or in connection with, this Agreement or any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy, or for the value, validity, effectiveness, genuineness, enforceability or sufficiency of this Agreement or any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy or for any failure of any Borrower to perform its obligations hereunder or thereunder. The Agent shall not be under any obligation to any Lender to ascertain or to inquire as to the observance or performance of any of the agreements contained in, or conditions of, this Agreement or any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy, or to inspect the Properties, books or records of the Borrowers.

 

 
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8.4 Reliance by Agent. The Agent shall be entitled to rely, and shall be fully protected in relying, upon any Note, writing, resolution, notice, consent, certificate, affidavit, letter, telegram, telecopy, telex or teletype message, statement, order or other document or conversation believed by it to be genuine and correct and to have been signed, sent or made by the proper Person or Persons and upon advice and statements of legal counsel (including counsel to the Borrowers), independent accountants and other experts selected by the Agent. The Agent may deem and treat the payee of any Note as the owner thereof for all purposes unless and until a written notice of assignment, negotiation or transfer thereof shall have been received by the Agent. The Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy unless it shall first receive such advice or concurrence of the Required Lenders as it deems appropriate and contribution by each Lender of its Percentage Share of costs reasonably expected by the Agent to be incurred in connection therewith. The Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents to which the Agent is a party or under which the Agent is granted any right or remedy in accordance with a request of the Required Lenders. Such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and all future holders of the Notes. In no event shall the Agent be required to take any action that exposes the Agent to liability or that is contrary to any Loan Document to which the Agent is a party or under which the Agent is granted any right or remedy or applicable Requirement of Law.

 

8.5 Notice of Default. The Agent shall not be deemed to have knowledge or notice of the occurrence of any Default or Event of Default unless the Agent has received written notice from a Lender or the Borrowers referring to this Agreement, describing such Default or Event of Default and stating that such notice is a “notice of default.” In the event that the Agent receives such a notice, the Agent shall promptly give notice thereof to the Lenders. The Agent shall take such action with respect to such Default or Event of Default as shall be reasonably directed by the Required Lenders; provided that unless and until the Agent shall have received such directions, subject to the provisions of Section 7.2, the Agent may (but shall not be obligated to) take such action, or refrain from taking such action, with respect to such Default or Event of Default as it shall deem advisable in the best interests of the Lenders. In the event that the officer of the Agent primarily responsible for the lending relationship with the Borrowers or any Responsible Officer of any Lender primarily responsible for the lending relationship with the Borrowers becomes aware that a Default or Event of Default has occurred and is continuing, the Agent or such Lender, as the case may be, shall use its good faith efforts to inform the other Lenders or the Agent, as the case may be, promptly of such occurrence. Notwithstanding the preceding sentence, failure to comply with the preceding sentence shall not result in any liability to the Agent or any Lender.

 

 
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8.6 Non-Reliance on Agent and Other Lenders. Each Lender expressly acknowledges that neither the Agent nor any other Lender nor any of their respective officers, directors, employees, agents, attorneys-in-fact or Affiliates has made any representation or warranty to such Lender and that no act by the Agent or any other Lender hereafter taken, including any review of the affairs of the Borrowers, shall be deemed to constitute any representation or warranty by the Agent or any Lender to any other Lender. Each Lender represents to the Agent that it has, independently and without reliance upon the Agent or any other Lender, and based on such documents and information as it has deemed appropriate, made its own appraisal of and investigation into the business, operations, property, condition (financial and otherwise) and creditworthiness of the Borrowers and the value of the Properties of the Borrowers and has made its own decision to enter into this Agreement. Each Lender also represents that it will, independently and without reliance upon the Agent or any other Lender and based on such documents and information as it shall deem appropriate at the time, continue to make its own credit analysis, appraisals and decisions in taking or not taking action under this Agreement and the other Loan Documents, and to make such investigation as it deems necessary to inform itself as to the business, operations, property, condition (financial and otherwise) and creditworthiness of the Borrowers and the value of the Properties of the Borrowers. Except for notices, reports and other documents expressly required to be furnished to the Lenders by the Agent hereunder, the Agent shall not have any duty or responsibility to provide any Lender with any credit or other information concerning the business, operations, property, condition (financial and otherwise) or creditworthiness of the Borrowers or the value of the Properties of the Borrowers which may come into the possession of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates.

 

8.7 Indemnification. Each Lender agrees to indemnify the Agent and its officers, directors, employees, agents, attorneys-in-fact and Affiliates (to the extent not reimbursed by the Borrowers and without limiting the obligation of the Borrowers to do so), ratably according to the Percentage Share of such Lender, from and against any and all liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements of any kind whatsoever which may at any time (including any time following the payment and performance of all Obligations and the termination of this Agreement) be imposed on, incurred by or asserted against the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates in any way relating to or arising out of this Agreement or any other Loan Document, or any other document contemplated or referred to herein or the transactions contemplated hereby or any action taken or omitted by the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates under or in connection with any of the foregoing, including any liabilities, claims, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses and disbursements imposed, incurred or asserted as a result of the negligence, whether sole or concurrent, of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates; provided that no Lender shall be liable for the payment of any portion of such liabilities, obligations, losses, damages, penalties, actions, judgments, suits, costs, expenses or disbursements resulting solely from the gross negligence or willful misconduct of the Agent or any of its officers, directors, employees, agents, attorneys-in-fact or Affiliates. The agreements in this Section 8.7 shall survive the payment and performance of all Obligations and the termination of this Agreement.

 

 
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8.8 Restitution. Should the right of the Agent or any Lender to realize funds with respect to the Obligations be challenged and any application of such funds to the Obligations be reversed, whether by Governmental Authority or otherwise, or should the Borrowers otherwise be entitled to a refund or return of funds distributed to the Lenders in connection with the Obligations, the Agent or such Lender, as the case may be, shall promptly notify the Lenders of such fact. Not later than Noon, Eastern Standard or Eastern Daylight Savings Time, as the case may be, of the Business Day following such notice, each Lender shall pay to the Agent an amount equal to the ratable share of such Lender of the funds required to be returned to the Borrowers entitled to such funds. The ratable share of each Lender shall be determined on the basis of the percentage of the payment all or a portion of which is required to be refunded originally distributed to such Lender, if such percentage can be determined, or, if such percentage cannot be determined, on the basis of the Percentage Share of such Lender. The Agent shall forward such funds to the relevant Borrower or to the Lender required to return such funds. If any such amount due to the Agent is made available by any Lender after Noon, Eastern Standard or Eastern Daylight Savings Time, as the case may be, of the Business Day following such notice, such Lender shall pay to the Agent (or the Lender required to return funds to the relevant Borrower, as the case may be) for its own account interest on such amount at a rate equal to the Federal Funds Rate for the period from and including the date on which restitution to the relevant Borrower is made by the Agent (or the Lender required to return funds to the relevant Borrower, as the case may be) to but not including the date on which such Lender failing to timely forward its share of funds required to be returned to the relevant Borrower shall have made its ratable share of such funds available.

 

8.9 Agent in Its Individual Capacity. Lender serving as the Agent hereunder and its Affiliates may make loans to, accept deposits from, and generally engage in any kind of business with the Borrowers or any of them as though such Lender were not the agent hereunder. With respect to any Note issued to the Lender serving as the agent, such Lender shall have the same rights and powers under this Agreement as a Lender and may exercise such rights and powers as though it were not the agent hereunder. The terms “Lender” and “Lenders” shall include the Agent in its individual capacity as a Lender.

 

8.10 Successor Agent. The Agent may resign as Agent upon ten days’ notice to the Lenders and the Borrowers. If the Agent shall resign as Agent under this Agreement and the other Loan Documents, Required Lenders shall appoint from among the Lenders or Affiliates of Lender a successor agent for the Lenders, whereupon such successor agent shall succeed to the rights, powers and duties of the Agent. The term “Agent” shall mean such successor agent effective upon its appointment. The rights, powers and duties of the former Agent as Agent shall be terminated, without any other or further act or deed on the part of such former Agent or any of the parties to this Agreement or any holders of the Notes. After the removal or resignation of any Agent hereunder as Agent, the provisions of this Article VIII and those of any Section of this Agreement relating to the Agent, including Section 5.16, Section 5.17, Section 5.21, Section 5.22 and Section 8.7 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Agent under this Agreement and the other Loan Documents.

 

8.11 Applicable Parties. The provisions of this Article VIII are solely for the benefit of the Agent and the Lenders, and none of the Borrowers shall have any rights as a third party beneficiary or otherwise under any of the provisions of this Article VIII. In performing functions and duties hereunder and under the other Loan Documents, the Agent shall act solely as the agent of the Lenders and does not assume, nor shall it be deemed to have assumed, any obligation or relationship of trust or agency with or for the Borrowers or any legal representative, successor or assign of the Borrowers.

 

 
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8.12 Releases. Each Lender hereby authorizes the Agent to release any Collateral that is permitted to be sold or released pursuant to the terms of the Loan Documents. Each Lender hereby authorizes the Agent to execute and deliver to the Borrowers or any of them, at the sole cost and expense of the Borrowers, any and all releases of Liens, termination statements, assignments or other documents reasonably requested by the Borrowers in connection with any sale or other disposition of Property to the extent such sale or other disposition is permitted by the terms of the Loan Documents.

 

ARTICLE IX

 

MISCELLANEOUS

 

9.1 Assignments; Participations.

 

(a) None of the Borrowers may assign any of its rights or obligations under any Loan Document without the prior written consent of the Agent and the Lenders.

 

(b) With the consent of the Agent and, so long as there exists no Default or Event of Default, the Borrowers (which shall not be unreasonably withheld in either case), any Lender may assign to one or more assignees all or a portion of its rights and obligations under this Agreement pursuant to an Assignment Agreement. Any such assignment shall be in the amount of at least $25,000 (or any whole multiple of $25,000 in excess thereof), unless the relevant assignment is to an affiliate of the assigning Lender or is an assignment of the entire Commitment of the assigning Lender. The assignee shall pay to the Agent, if requested by the Agent, a transfer fee in the amount of $2,500 for each such assignment. Any such assignment shall become effective upon receipt by the Agent of all documentation and other information with respect to the assignee that is required by regulatory authorities under applicable “know your customer” and anti-money laundering rules and regulations, including the USA Patriot Act, the execution and delivery to the Agent of the Assignment Agreement and recordation by the Agent in the Register in accordance with this Section 9.1(b). Promptly following receipt of an executed Assignment Agreement, the Agent shall send to the Borrowers a copy of such executed Assignment Agreement. Promptly following receipt of such executed Assignment Agreement, the Borrowers shall execute and deliver, at their own expense, new Notes to the assignee and, if applicable, the assignor, in accordance with their respective interests, whereupon the prior Notes of the assignor and, if applicable, the assignee, shall be canceled and returned to the Borrowers. Upon the effectiveness of any assignment pursuant to this Section 9.1(b), the assignee will become a “Lender,” if not already a “Lender,” for all purposes of the Loan Documents, and the assignor shall be relieved of its obligations hereunder to the extent of such assignment. If the assignor no longer holds any rights or obligations under this Agreement, such assignor shall cease to be a “Lender” hereunder, except that its rights under Section 5.17, Section 5.21, Section 5.22 and Section 8.7, shall not be affected. On the last Business Day of each month during which an assignment has become effective pursuant to this Section 9.1(b), the Agent shall update the Register to show all such assignments effected during such month and will promptly provide a copy thereof to the Borrowers and each Lender. Agent, acting for this purpose as a non-fiduciary agent of Borrowers, shall maintain at one of its offices located in the Unites States of America a copy of each Assignment Agreement delivered to it and a Register for the recordation of the names and addresses of the Lenders, and the Commitment of, and principal amount and stated interest of the Term Loan owing to, each Lender pursuant to the terms hereof from time to time (the “Register”). The entries in the Register shall be conclusive and the Borrowers, Agent and the Lenders shall treat each person whose name is recorded in the Register pursuant to the terms hereof as a Lender hereunder for all purposes of this Agreement, in the absence of manifest error. Notwithstanding anything to the contrary, any assignment of any Loan shall be effective only upon appropriate entries with respect thereto being made in the Register. The Register shall be available for inspection by any Borrower, Agent and any Lender, at any reasonable time and from time to time upon reasonable prior written notice. This Section 9.1(b) shall be construed so that the Term Loans are at all times maintained in “registered form” within the meanings of Sections 163(f), 871(h)(2) and 881(c)(2) of the IRC and any related regulations (and any successor provisions).

 

 
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(c) Each Lender may, without the consent of the Borrower, transfer, grant or assign participations in all or any portion of its interests hereunder to any Person pursuant to this Section 9.1(c), provided that such Lender shall remain a “Lender” for all purposes of this Agreement and the Transferee of such participation shall not constitute a “Lender” hereunder. In the case of any such participation, the participant shall not have any rights under any Loan Document, the rights of the participant in respect of such participation to be against the granting Lender as set forth in the agreement with such Lender creating such participation, and all amounts payable by the Borrowers hereunder shall be determined as if such Lender had not sold such participation. Each agreement creating a participation must include an agreement by the participant to be bound by the provisions of Section 8.3, Section 8.6 and Section 8.7.

 

(d) The Agent or any Lender may furnish any information concerning the Borrowers in the possession of the Agent or such Lender from time to time to assignees and participants and prospective assignees and participants.

 

(e) Notwithstanding anything in this Section 9.1 to the contrary, any Lender which is a national or state bank may assign and pledge all or any of its Notes or any interest therein to any Federal Reserve Bank or the Department of the Treasury of the United States of America as collateral security pursuant to Regulation A of the Board of Governors of the Federal Reserve System and any operating circular issued by such Federal Reserve System or such Federal Reserve Bank. No such assignment or pledge shall release the assigning or pledging Lender from its obligations hereunder.

 

(f) Notwithstanding any other provisions of this Section 9.1, no transfer or assignment of the interests or obligations of any Lender or grant of participations therein shall be permitted if such transfer, assignment or grant would require the Borrowers to file a registration statement with the Securities and Exchange Commission or any successor Governmental Authority or qualify the Term Loans under the “Blue Sky” laws of any state.

 

9.2 Survival of Representations, Warranties, and Covenants. All representations and warranties of the Borrowers and all covenants and agreements herein made by the Borrowers shall survive the execution and delivery of the Notes and shall remain in force and effect so long as any Obligation is outstanding.

 

 
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9.3 Notices and Other Communications. Except as to oral notices expressly authorized herein, if any, which oral notices shall be promptly confirmed in writing, all notices, requests and communications hereunder shall be in writing (including by facsimile or electronic mail). Unless otherwise expressly provided herein, any such notice, request, demand or other communication shall be deemed to have been duly given or made when delivered personally, or, in the case of delivery by mail, when deposited in the mail, certified mail with return receipt requested, postage prepaid, in the case of facsimile notice, when receipt thereof is acknowledged orally or by written confirmation report or, in the case of electronic mail, when sent and no undeliverable notification is received, addressed as follows:

 

(a) if to the Agent, to:

 

405 Petrodome LLC

 

405 Lexington Avenue

59th Floor

New York, New York 10174

Attention: Greg White

E-mail: gwhite@arenaco.com

 

With an email copy to:

 

reporting@arenaco.com, arenaagency@cortlandglobal.com, and gpaulsen@arenaco.com

 

And a copy to:

 

K&L Gates LLP

1717 Main Street

Suite 2800

Dallas, TX 75201

Attention: Michael Cuda

E-mail: michael.cuda@klgates.com

 

(b) if to any Lender, to the Applicable Lending Office, including, without limitation, each email address of such Lender appearing below such Lender’s Applicable Lending Office.

 

(c) if to any Borrower, to:

 

Petrodome Energy, LLC

4200 Montrose Boulevard, Suite 410

Houston, Texas 77006

Attention: Robert G. Wonish

Email: bob@petrodomeenergy.com

 

 
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With a copy to:

 

Viking Energy Group, Inc.

1330 Avenue of the Americas, Suite 23A

New York, New York 10019

Attention: James A. Doris

Email: jdoris@vikingenergygroup.com

 

Any party may, by proper written notice hereunder to the others, change the individuals or addresses to which such notices to it shall thereafter be sent.

 

9.4 Parties in Interest. Subject to the restrictions on changes in structure set forth in Section 6.10 and other applicable restrictions contained herein, all covenants and agreements herein contained by or on behalf of the Borrowers, the Agent or the Lenders shall be binding upon and inure to the benefit of the relevant Borrower, the Agent or the Lenders, as the case may be, and their respective legal representatives, successors and assigns.

 

9.5 Rights of Third Parties. Except as provided in Section 9.4, all provisions herein are imposed solely and exclusively for the benefit of the Agent, the Lenders and the Borrowers and no other Person shall have any right, benefit, priority or interest hereunder or as a result hereof or have standing to require satisfaction of provisions hereof in accordance with their terms.

 

9.6 Renewals; Extensions. All provisions of this Agreement relating to the Notes shall apply with equal force and effect to each promissory note hereafter executed which in whole or in part represents a renewal or extension of any part of the Indebtedness of the Borrowers under this Agreement, the Notes or any other Loan Document.

 

9.7 No Waiver; Rights Cumulative. No course of dealing on the part of the Agent or the Lenders or their officers or employees, nor any failure or delay by the Agent or the Lenders with respect to exercising any of their rights under any Loan Document shall operate as a waiver thereof. The rights of the Agent and the Lenders under the Loan Documents shall be cumulative and the exercise or partial exercise of any such right shall not preclude the exercise of any other right. The making of the Term Loans shall not constitute a waiver of any of the covenants, warranties or conditions of the Borrowers contained herein. In the event any of the Borrowers are unable to satisfy any such covenant, warranty or condition, the making of the Term Loans shall not have the effect of precluding the Agent or the Lenders from thereafter declaring such inability to be an Event of Default as hereinabove provided.

 

9.8 Survival Upon Unenforceability. In the event any one or more of the provisions contained in any of the Loan Documents or in any other instrument referred to herein or executed in connection with the Obligations shall, for any reason, be held to be invalid, illegal or unenforceable in any respect, such invalidity, illegality or unenforceability shall not affect any other provision of any Loan Document or of any other instrument referred to herein or executed in connection with such Obligations.

 

 
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9.9 Amendments; Waivers. Neither this Agreement nor any provision hereof may be amended, waived, discharged or terminated orally, except by an instrument in writing signed by the Agent and the party against whom enforcement of the amendment, waiver, discharge or termination is sought. Subject to the preceding sentence, any provision of this Agreement or any other Loan Document may be amended or modified by the Borrowers and the Required Lenders or waived by the Required Lenders; provided that, notwithstanding any provision of this Agreement to the contrary, (a) no amendment, modification or waiver which extends the Maturity Date, forgives the principal amount of any Indebtedness of the Borrowers outstanding under this Agreement or interest thereon or fees owing under this Agreement, releases any guarantor of such Indebtedness, releases all or substantially all of the Property of the Borrowers subject to the Security Documents, reduces the interest rate applicable to the Loan Balance or the fees payable to the Lenders generally, delays the payment of interest, fees or principal payments, reduces any principal payments, makes changes to the pro rata application of payments or disbursement to the Lenders, affects this Section 9.9 or modifies the definition of “Required Lenders” shall be effective without the unanimous written consent of all Lenders and the Agent; (b) no amendment, modification or waiver which increases the Percentage Share of any Lender shall be effective without the written consent of such Lender and the Agent; and (c) no amendment, modification or waiver which modifies the rights, duties or obligations of the Agent shall be effective without the written consent of the Agent.

 

9.10 Controlling Agreement. In the event of a conflict between the provisions of this Agreement and those of any other Loan Document, the provisions of this Agreement shall control.

 

9.11 Disposition of Collateral. Notwithstanding any term or provision, express or implied, in any of the Security Documents, the realization, liquidation, foreclosure or any other disposition on or of any or all of the Property of the Borrowers subject to the Security Documents shall be in the order and manner and determined in the sole discretion of the Agent; provided, however, that in no event shall the Agent violate applicable law or exercise rights and remedies other than those provided in such Security Documents or otherwise existing at law or in equity.

 

9.12 Governing Law. This Agreement and the Notes shall be deemed to be contracts made under and shall be construed in accordance with and governed by the laws of the State of New York, without giving effect to principles thereof relating to conflicts of law.

 

9.13 Dispute Resolution. This Section 9.13 contains a jury waiver, a class action waiver and an arbitration provision. READ CAREFULLY.

 

(a) THIS DISPUTE RESOLUTION PROVISION SHALL SUPERSEDE AND REPLACE ANY PRIOR “JURY WAIVER,” “JUDICIAL REFERENCE,” “CLASS ACTION WAIVER,” “ARBITRATION,” “DISPUTE RESOLUTION” OR SIMILAR ALTERNATIVE DISPUTE AGREEMENT OR PROVISION BETWEEN OR AMONG THE PARTIES HERETO RELATING TO THE TRANSACTION WHICH IS THE SUBJECT OF THIS AGREEMENT.

 

 
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(b) TO THE EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY HERETO HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ITS RIGHTS TO A TRIAL BEFORE A JURY IN CONNECTION WITH ANY CLAIM, DISPUTE OR CONTROVERSY WITH RESPECT TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT (EACH OF THE FOREGOING, A “DISPUTE”), AND, EXCEPT AS PROVIDED BELOW IN THIS SECTION 9.13, DISPUTES SHALL BE RESOLVED BY A JUDGE SITTING WITHOUT A JURY. IF A COURT DETERMINES THAT THIS PROVISION IS NOT ENFORCEABLE FOR ANY REASON AND AT ANY TIME PRIOR TO TRIAL OF THE DISPUTE, BUT NOT LATER THAN THIRTY (30) DAYS AFTER ENTRY OF THE ORDER DETERMINING THIS PROVISION IS UNENFORCEABLE, ANY PARTY HERETO SHALL BE ENTITLED TO MOVE THE COURT FOR AN ORDER COMPELLING ARBITRATION AND STAYING OR DISMISSING SUCH LITIGATION PENDING ARBITRATION (AN “ARBITRATION ORDER”). IF PERMITTED BY APPLICABLE LAW, EACH PARTY ALSO WAIVES THE RIGHT TO LITIGATE IN COURT OR AN ARBITRATION PROCEEDING ANY DISPUTE AS A CLASS ACTION, EITHER AS A MEMBER OF A CLASS OR AS A REPRESENTATIVE, OR TO ACT AS A PRIVATE ATTORNEY GENERAL.

 

(c) IF A DISPUTE ARISES, AND ONLY IF A JURY TRIAL WAIVER IS NOT PERMITTED BY APPLICABLE LAW OR RULING BY A COURT, ANY PARTY MAY REQUIRE THAT THE DISPUTE BE RESOLVED BY BINDING ARBITRATION BEFORE A SINGLE ARBITRATOR. BY AGREEING TO ARBITRATE A DISPUTE, EACH PARTY HERETO GIVES UP ANY RIGHT THAT PARTY MAY HAVE TO A JURY TRIAL AS WELL AS OTHER RIGHTS THAT PARTY WOULD HAVE IN COURT THAT ARE NOT AVAILABLE OR ARE MORE LIMITED IN ARBITRATION, SUCH AS THE RIGHTS TO DISCOVERY AND TO APPEAL.

 

ARBITRATION SHALL BE COMMENCED BY FILING A PETITION WITH, AND IN ACCORDANCE WITH THE APPLICABLE ARBITRATION RULES OF, THE AAA (THE “ADMINISTRATOR”) AS SELECTED BY THE INITIATING PARTY. IF THE PARTIES TO THE DISPUTE AGREE, ARBITRATION MAY BE COMMENCED BY APPOINTMENT OF A LICENSED ATTORNEY WHO IS SELECTED BY THE PARTIES TO THE DISPUTE AND WHO AGREES TO CONDUCT THE ARBITRATION WITHOUT AN ADMINISTRATOR. DISPUTES INCLUDE MATTERS (I) RELATING TO A DEPOSIT ACCOUNT, APPLICATION FOR OR DENIAL OF CREDIT, ENFORCEMENT OF ANY OF THE OBLIGATIONS ANY PARTY HERETO HAS TO ANY OF THE OTHER PARTIES HERETO, COMPLIANCE WITH APPLICABLE LAWS AND/OR REGULATIONS, PERFORMANCE OF SERVICES PROVIDED UNDER ANY AGREEMENT BY ANY PARTY HERETO, (II) BASED ON OR ARISING FROM AN ALLEGED TORT OR (III) INVOLVING ANY PARTY’S EMPLOYEES, AGENTS, AFFILIATES OR ASSIGNS, DISPUTES DO NOT, HOWEVER, INCLUDE THE VALIDITY, ENFORCEABILITY, MEANING OR SCOPE OF THIS ARBITRATION PROVISION AND SUCH MATTERS MAY BE DETERMINED ONLY BY A COURT. IF A THIRD PARTY IS A PARTY TO A DISPUTE, EACH PARTY HERETO CONSENTS TO INCLUDING THE THIRD PARTY IN THE ARBITRATION PROCEEDING FOR RESOLVING THE DISPUTE WITH THE THIRD PARTY. VENUE FOR THE ARBITRATION PROCEEDING SHALL BE AT A LOCATION DETERMINED BY MUTUAL AGREEMENT OF THE PARTIES THERETO OR, ABSENT SUCH AN AGREEMENT, IN THE CITY AND STATE WHERE THE AGENT IS HEADQUARTERED.

 

 
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IF A COURT ISSUES AN ARBITRATION ORDER, ALL PARTIES TO THE DISPUTE THAT DID NOT SEEK THE ARBITRATION ORDER SHALL COMMENCE ARBITRATION. THE PARTY HERETO THAT SOUGHT THE ARBITRATION ORDER MAY COMMENCE ARBITRATION, BUT SHALL HAVE NO OBLIGATION TO DO SO, AND SHALL NOT IN ANY WAY BE ADVERSELY PREJUDICED BY INITIATING OR PARTICIPATING IN LITIGATION OR ELECTING NOT TO COMMENCE ARBITRATION. THE ARBITRATOR SHALL (I) HEAR AND RULE ON APPROPRIATE DISPOSITIVE MOTIONS FOR JUDGMENT ON THE PLEADINGS, FOR FAILURE TO STATE A CLAIM OR FOR FULL OR PARTIAL SUMMARY JUDGMENT, (II) RENDER A DECISION AND ANY AWARD APPLYING APPLICABLE LAW, (III) GIVE EFFECT TO ANY LIMITATIONS PERIOD IN DETERMINING ANY DISPUTE OR DEFENSE, (IV) ENFORCE THE DOCTRINES OF COMPULSORY COUNTERCLAIM, RES JUDICATA AND COLLATERAL ESTOPPEL, IF APPLICABLE, (V) WITH REGARD TO MOTIONS AND THE ARBITRATION HEARING, APPLY RULES OF EVIDENCE GOVERNING CIVIL CASES AND (VI) APPLY THE LAW OF THE STATE SPECIFIED IN THE AGREEMENT GIVING RISE TO THE DISPUTE. FILING OF A PETITION FOR ARBITRATION SHALL NOT PREVENT ANY PARTY FROM (I) SEEKING AND OBTAINING FROM A COURT OF COMPETENT JURISDICTION (NOTWITHSTANDING ONGOING ARBITRATION) PROVISIONAL OR ANCILLARY REMEDIES, INCLUDING INJUNCTIVE RELIEF, PROPERTY PRESERVATION ORDERS, FORECLOSURE, EVICTION, ATTACHMENT, REPLEVIN, GARNISHMENT AND/OR THE APPOINTMENT OF A RECEIVER, (II) PURSUING NON-JUDICIAL FORECLOSURE OR (III) AVAILING ITSELF OF ANY SELF-HELP REMEDIES, SUCH AS SETOFF AND REPOSSESSION. THE EXERCISE OF SUCH RIGHTS SHALL NOT CONSTITUTE A WAIVER OF THE RIGHT TO SUBMIT ANY DISPUTE TO ARBITRATION.

 

JUDGMENT UPON AN ARBITRATION AWARD MAY BE ENTERED IN ANY COURT HAVING JURISDICTION, EXCEPT THAT, IF THE ARBITRATION AWARD EXCEEDS $50,000, ANY PARTY TO THE RELEVANT DISPUTE SHALL BE ENTITLED TO A DE NOVO APPEAL OF THE AWARD BEFORE A PANEL OF THREE ARBITRATORS. TO ALLOW FOR SUCH APPEAL, IF THE AWARD (INCLUDING THE ADMINISTRATOR’S, THE ARBITRATOR’S AND ATTORNEY’S FEES AND COSTS) EXCEEDS $50,000, THE ARBITRATOR WILL ISSUE A WRITTEN, REASONED DECISION SUPPORTING THE AWARD, INCLUDING A STATEMENT OF AUTHORITY AND ITS APPLICATION TO THE DISPUTE. A REQUEST FOR DE NOVO APPEAL MUST BE FILED WITH THE ARBITRATOR WITHIN THIRTY (30) DAYS FOLLOWING THE DATE OF THE ARBITRATION AWARD. IF SUCH A REQUEST IS NOT MADE WITHIN THAT TIME PERIOD, THE ARBITRATION DECISION SHALL BECOME FINAL AND BINDING. ON APPEAL, THE ARBITRATORS SHALL REVIEW THE AWARD DE NOVO, MEANING THAT THEY SHALL REACH THEIR OWN FINDINGS OF FACT AND CONCLUSIONS OF LAW, RATHER THAN DEFERRING IN ANY MANNER TO THE ORIGINAL ARBITRATOR. APPEAL OF AN ARBITRATION AWARD SHALL BE PURSUANT TO THE RULES OF THE ADMINISTRATOR OR, IF THE ADMINISTRATOR HAS NO SUCH RULES, THEN THE AAA ARBITRATION APPELLATE RULES SHALL APPLY.

 

ARBITRATION UNDER THIS PROVISION CONCERNS A TRANSACTION INVOLVING INTERSTATE COMMERCE AND SHALL BE GOVERNED BY THE FEDERAL ARBITRATION ACT, 9 U.S.C. § 1 ET SEQ. THIS ARBITRATION PROVISION SHALL SURVIVE ANY TERMINATION, AMENDMENT OR EXPIRATION OF THIS AGREEMENT. IF THE TERMS OF THIS PROVISION VARY FROM THE ADMINISTRATOR’S RULES, THIS ARBITRATION PROVISION SHALL CONTROL.

 

(d) EACH PARTY HERETO (I) CERTIFIES THAT NO ONE HAS REPRESENTED TO SUCH PARTY THAT ANY OTHER PARTY WOULD NOT SEEK TO ENFORCE JURY AND CLASS ACTION WAIVERS IN THE EVENT OF SUIT, AND (II) ACKNOWLEDGES THAT IT AND THE OTHER PARTIES HAVE BEEN INDUCED TO ENTER INTO THIS AGREEMENT BY, AMONG OTHER THINGS, THE MUTUAL WAIVERS, AGREEMENTS AND CERTIFICATIONS IN THIS SECTION 9.13.

 

 
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THE BORROWERS HEREBY KNOWINGLY, VOLUNTARILY, INTENTIONALLY, IRREVOCABLY AND UNCONDITIONALLY WAIVES ALL RIGHTS TO TRIAL BY JURY IN ANY ACTION, SUIT, PROCEEDING, COUNTERCLAIM OR OTHER LITIGATION THAT RELATES TO OR ARISES OUT OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR THE ACTS OR OMISSIONS OF THE AGENT OR ANY LENDER IN THE ENFORCEMENT OF ANY OF THE TERMS OR PROVISIONS OF THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT OR OTHERWISE WITH RESPECT THERETO. THE PROVISIONS OF THIS SECTION 9.13 ARE A MATERIAL INDUCEMENT FOR THE AGENT AND EACH OF THE LENDERS TO ENTER INTO THIS AGREEMENT.

 

9.14 Jurisdiction and Venue. All actions or proceedings with respect to, arising directly or indirectly in connection with, out of, related to or from this Agreement or any other Loan Document may be litigated, at the sole discretion and election of the Agent, in courts having situs in New York, New York County, New York. In such regard, each Borrower hereby submits to the jurisdiction of any local, state or federal court located in New York, New York County, New York, and hereby waives any rights it may have to transfer or change the jurisdiction or venue of any litigation brought against it by the Agent or any Lender in accordance with this Section 9.14.

 

9.15 Integration. This Agreement and the other Loan Documents constitute the entire agreement among the parties hereto and thereto with respect to the subject hereof and thereof and shall supersede any prior agreement among the parties hereto and thereto, whether written or oral, relating to the subject matter hereof and thereof, including any term sheet or summary of principal terms provided to the Borrowers by 405 Petrodome LLC, the Agent or any Lender. Furthermore, in this regard, this Agreement and the other Loan Documents represent, collectively, the final agreement among the parties hereto and may not be contradicted by evidence of prior, contemporaneous or subsequent oral agreements of such parties. There are no unwritten oral agreements among such parties.

 

9.16 Waiver of Punitive and Consequential Damages. Each Borrower, the Agent and each Lender hereby knowingly, voluntarily, intentionally and irrevocably (a) waives, to the maximum extent it may lawfully and effectively do so, any right it may have to claim or recover, in any Dispute based hereon or directly or indirectly at any time arising out of, under or in connection with the Loan Documents or any transaction contemplated thereby or associated therewith, before or after maturity, any special, exemplary, punitive or consequential damages, or damages other than, or in addition to, actual damages and (b) acknowledge that it has been induced to enter into this Agreement, the other Loan Documents and the transactions contemplated hereby and thereby by, among other things, the mutual waivers and certifications contained in this Section 9.16.

 

9.17 Counterparts. For the convenience of the parties, this Agreement may be executed in multiple counterparts and by different parties hereto in separate counterparts, each of which for all purposes shall be deemed to be an original, and all such counterparts shall together constitute but one and the same Agreement. In this regard, each of the parties hereto acknowledges that a counterpart of this Agreement containing a set of counterpart execution pages reflecting the execution of each party hereto shall be sufficient to reflect the execution of this Agreement by each party hereto.

 

 
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9.18 USA Patriot Act Notice. Each Lender and the Agent (for itself and not on behalf of any Lender) hereby notifies each Borrower that, pursuant to the requirements of the USA Patriot Act, it is required to obtain, verify and record information that identifies each Borrower, which information includes the name and address of such Borrower and other information that will allow such Lender or the Agent, as applicable, to identify each Borrower in accordance with the USA Patriot Act.

 

9.19 Tax Shelter Regulations. None of the Borrowers intend to treat the Term Loans and related transactions hereunder and under the other Loan Documents as a “reportable transaction” (within the meanings under current Treasury Regulation Section 1.6011-4 and Proposed Treasury Regulation Section 1.6011-4, promulgated on November 1, 2006). In the event the Borrowers determine to take any action inconsistent with the foregoing statement, it will promptly notify the Agent thereof. If the Borrowers so notify the Agent, the Borrowers acknowledge that one or more of the Lenders may treat its Percentage Share of the Term Loan and the related transactions hereunder and under the other Loan Documents as part of a transaction that is subject to current Treasury Regulation Section 301.6112-1 or Proposed Treasury Regulation Section 301.6112-1, promulgated on November 1, 2006, and, in such case, such Lender or Lenders, as applicable, will maintain the lists and other records required, if any, by such Treasury Regulations.

 

9.20 Contribution and Indemnification. In the event that the Borrowers pay (whether through direct payments or as a result of providing Collateral for the Obligations) any amounts on the Obligations in excess of the relevant Borrowers’ Obtained Benefit (the “Excess Payments”), the relevant Borrower shall be entitled to make demand on the other Borrowers for such Excess Payments, and to receive from each other Borrowers that received an Obtained Benefit, such Borrowers’ Contribution Percentage of the Excess Payment. If any party obligated to make such a payment is unable to pay the Contribution Percentage of the Excess Payment, each other Borrowers agrees to make a contribution to the party entitled to such payment to the extent necessary so that each Borrowers shares equally the liability for such Excess Payment in relation to the relative Obtained Benefit received by such Borrowers. In such regard, to the maximum extent permitted by law, each Borrowers shall indemnify, defend and hold harmless the other Borrowers from and against such Borrowers’ Contribution Percentage of any and all liability, claims, costs and expenses (including reasonable attorneys’ fees and expenses) arising with respect to the Obligations and exceeding such other Borrowers’ Obtained Benefit as provided herein. Any amount due under this Section 9.20 shall be due and payable within ten (10) days of demand therefor by the party entitled to payment and shall be made to the party entitled thereto at the address for notices to the Borrowers under this Agreement, in immediately available funds, not later than 2:00 p.m., Eastern Standard or Daylight Time, on the date on which such payment shall come due. The remedies available to the Borrowers pursuant to the provisions of this Section 9.20 are not exclusive. All rights and claims of contribution, indemnification and reimbursement under this Section 9.20 shall be subordinate in right of payment to the prior payment in full of all principal of and interest on the Term Loan and all fees payable hereunder. The provisions of this Section 9.20 shall, to the extent expressly inconsistent with any provision in any Loan Document, supersede such inconsistent provision.

 

(Signatures appear on following pages)

 

 
- 73 -
 
 

 

IN WITNESS WHEREOF, this Agreement is executed as of the date first above written.

 

 

 

BORROWERS:

 

PETRODOME AROUND THE HORN, LLC

       
By: /s/ James A. Doris

 

 

James A. Doris  
    Chairman and Secretary  
       

 

PETRODOME BAYOU CHOCTAW, LLC

 

 

 

 

 

 

By: 

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME BLOOMINGTON, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME BUCKEYE, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME DIETZEL, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME EAST CREOLE, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

(Signatures continue on following pages)

 

Signature Page of Credit Agreement

 

 
 
 
 

 

  PETRODOME EC, LLC
       
By: /s/ James A. Doris

 

 

James A. Doris  
    Chairman and Secretary  

 

 

 

 

 

PETRODOME ENERGY, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris  

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME LIBERTY, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME LONE STAR, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME LOUISIANA PIPELINE, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME MAURICE, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

(Signatures continue on following pages)

 

Signature Page of Credit Agreement

 

 
 
 
 

 

 

PETRODOME NAPOLEONVILLE, LLC

       
By: /s/ James A. Doris

 

 

James A. Doris  
    Chairman and Secretary  

 

 

 

 

 

PETRODOME OPERATING, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

    James A. Doris  

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME PHEASANT BLESSING, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME PINEVILLE, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME PINTAIL, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME QUAIL RIDGE, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

(Signatures continue on following pages)

 

Signature Page of Credit Agreement

 

 
 
 
 

 

 

PETRODOME RIO RANCH, LLC

       
By: /s/ James A. Doris

 

 

James A. Doris  
    Chairman and Secretary  
       

 

PETRODOME ST. GABRIEL II, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME THUNDERBOLT, LLC

 

 

 

 

 

 

By:

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

 

 

 

 

PETRODOME WHARTON, LLC

 

 

 

 

 

 

By: 

/s/ James A. Doris

 

 

 

James A. Doris

 

 

 

Chairman and Secretary

 

 

(Signatures continue on following pages)

 

Signature Page of Credit Agreement

 

 
 
 
 

 

 

 

AGENT:

 

 

 

 

405 PETRODOME LLC

 

       
By: /s/ Lawrence Cutler

 

 

Lawrence Cutler  
    Authorized Signatory  
       

 

LENDER:

 

 

 

 

 

405 PETRODOME LLC

 

 

 

 

 

 

By:

/s/ Lawrence Cutler

 

 

 

Lawrence Cutler

 

 

 

Authorized Signatory

 

 

 

 

 

 

Applicable Lending Office:

405 Lexington Avenue

59th Floor

New York, New York 10174

Attn: Greg White

E-mail: gwhite@arenaco.com, reporting@arenaco.com and

gpaulsen@arenaco.com

 

CARGILL INCORPORATED

 

 

 

 

 

 

By:

/s/ Tyler Smith

 

 

 

Tyler Smith

Authorized Signer

 

 

 

 

 

 

Applicable Lending Office:

 

9350 Excelsior Boulevard

Mailstop #150

Hopkins, Minnesota 55343

Attn: Tyler R. Smith

E-mail: tyler_smith_1@cargill.com

 

 

Signature Page of Credit Agreement

 

 
 
 
 

 

 

(End of signature pages)

 

 

Signature Page of Credit Agreement

 

 

 
 
 
 

 

SCHEDULE 1.2A

 

PROPOSED DEVELOPMENT PLAN

 

Petrodome Energy LLC

2018 Development Plan - PHASE 1

Well Name

Location

Objective

Est. Start

Date

(Month)

Net Budgete

 Costs

($)

Incremental Production Gain - Gross (BOE/day)

Incremental Production Gain- Net (BOE/day)

Incremental PDP PV-10 Value - Net

($)

Woods (Chevalier)

LA

PUD

12/2017

424,000

35

20

317,330

Wissman Sugar

LA

PUD

1/2018

424,000

50

30

410,920

East Hemphill

LA

PUD

1/2018

424,000

40

25

355,660

East Summerville

LA

PUD

1/2018

424,000

45

25

384,270

West Sinton

TX

PUD

4/2018

600,000

75

45

1,558,580

North Pasture

TX

PUD

2/2018

664,000

75

45

1,590,360

Acreage / Lease

 

Acquisition

1/2018

1,000,000

 

3,960,000

320

190

4,617,120

 

 

S-1.2A-i

 
 

 

SCHEDULE 1.2C

 

PERCENTAGE SHARES

 

Name/Address for Notice

 

Percentage

Share

 

 

Initial Commitment

 

405 Petrodome LLC 405 Lexington Avenue

59th Floor

New York, New York 10174

Attn: Greg White

E-mail: gwhite@arenaco.com, reporting@arenaco.com and

gpaulsen@arenaco.com

 

 

99.00 %

 

$ 7,920,000

 

 

 

 

 

 

 

 

 

 

Cargill, Incorporated

9350 Excelsior Boulevard

Mailstop #150

Hopkins, Minnesota 55343

Attn: Tyler R. Smith

E-mail:  tyler_smith_1@cargill.com

 

 

1.00 %

 

$ 80,000

 

 

 

 

100.00

%

 

 

$8,000,000

 

 

 

S-1.2C-i

 
 

 

SCHEDULE 2.2

 

USE OF LOAN PROCEEDS

 

Funding Source:

 

 

 

 

 

 

 

Arena Management Co., LLC

 

 

 

Pre-Funded Lender Work Fee

 

$ 49,990.00

 

LaRoche Petroleum Consultants Invoice

 

$ (15,645.15 )

K&L Gates LLP - Demand Invoice

 

$ (30,000.00 )

Contingency Holdback (accrued but unpaid expenses)

 

$ (4,344.85 )

Balance to be Wired to CTIC Escrow Acct

 

$ -

 

 

 

 

 

 

405 Petrodome LLC

 

 

 

 

Funding Amt of Term Loan

 

$ 7,920,000.00

 

Upfront Payment - (Retained By Lender)

 

$ (79,200.00 )

Funds Wired to CTIC Escrow Acct

 

$ 7,840,800.00

 

 

 

 

 

 

Cargill Incorporated

 

 

 

 

Funding Amt of Term Loan

 

$ 80,000.00

 

Upfront Payment - (Retained By Lender)

 

$ (800.00 )

Funds Wired to CTIC Escrow Acct

 

$ 79,200.00

 

 

 

 

 

 

Total Lender Funds Wired to CTIC Escrow Acct

 

$ 7,920,000.00

 

 

 

 

 

 

Viking Energy Group, Inc.

 

 

 

 

Required Cash Contribution

 

$ 999,980.00

 

Pre-Funded Lender Work Fee (11/22)

 

$ (49,990.00 )

Third Party Fees - Wire Transfer - K&L Gates (12/11)

 

$ (50,000.00 )

Funds Wired to CTIC Escrow Acct

 

$ 899,990.00

 

 

 

 

 

 

Total Funds Wired to CTIC Escrow Acct

 

$ 8,819,990.00

 


 

S-2.2-i

 
 


Escrow Distributions

 

 

 

 

 

 

 

Black Rhino, LP - Closing Payment

 

$ 3,222,355.44

 

K&L Gates LLP (legal fees)

 

$ 160,000.00

 

Hameline & Eccleston, LLP (legal fees)

 

$ 45,613.95

 

Slattery, Marino & Roberts (legal fees)

 

$ 32,000.00

 

Brunini, Grantham, Grower & Hewes, PLLC (legal fees)

 

$ 8,093.75

 

Porter Hedges LLP (legal fees)

 

$ 1,920.00

 

Fishman Haygood, LLP (legal fees)

 

$ 59,189.12

 

Graves Dougherty Hearon & Moody (legal fees)

 

$ 25,508.00

 

Bradley Arant Boult Cummings LLP (legal fees)

 

$ 14,723.55

 

Mayhall Fondren Blaize (legal fees)

 

$ 17,233.40

 

Gieger, Laborde & Laperouse, LLC (legal fees)

 

$ 17,750.00

 

Filing fees related to all UCC-1 financing statements (all assets/pledged equity)

 

$ 3,000.00

 

CTIC - Recording fees for DoTs, mortgages and ORRI conveyances

 

$ 10,000.00

 

CTIC - Escrow Fees

 

$ 3,500.00

 

Total Escrow Distributions

 

$ 3,620,887.21

 

Balance of Escrowed Funds to 405 Petrodome LLC Operating Account at Citi

 

$ 5,199,102.79

 

Total

 

$ 8,819,990.00

 

 

 

 

 

 

Wiring Instructions

 

 

 

 

 

 

 

 

 

405 Petrodome LLC

 

 

 

 

405 Lexington Avenue, 59th FL

 

 

 

 

New York, NY 10174

 

 

 

 

 

 

 

 

 

Wire Instructions:

 

 

 

 

 

 

 

 

 

ABA:

 

 

 

 

Account Name: 405 Petrodome LLC Operating

 

 

 

 

A/C:

 

 

 

 

REF: LN2151 Petrodome Energy LLC

 

 

 

 

 
 

S-2.2-ii

 
 


Black Rhino LP

 

 

 

 

3 Greenway Plaza, 10th Floor

 

 

 

 

Houston, TX 77046

 

 

 

 

 

 

 

 

 

Wire Instructions:

 

 

 

 

 

 

 

 

 

ABA:

 

 

 

 

Account Name: Black Rhino LP

 

 

 

 

A/C:

 

 

 

 

REF: Petrodome Transaction

 

 

 

 

 

 

 

 

 

K&L Gates LLP

 

 

 

 

1717 Main Street, Suite 2800

 

 

 

 

Dallas, Texas 75201

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: K&L Gates LLP

 

 

 

 

Account #

 

 

 

 

Ref: Arena/Viking No. 1205648.00003

 

 

 

 

 

 

 

 

 

Slattery, Marino & Roberts

 

 

 

 

1100 Poydras Street, Suite 1800

 

 

 

 

New Orleans, Louisiana 70163

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

Routing No.

 

 

 

 

Account Name: Slattery, Marino & Roberts

 

 

 

 

Operating Account No.

 

 

 

 

For Credit To: Slattery, Marino & Roberts

 

 

 

 

 

 

 

 

 

Brunni, Grantham, Grower & Hewes, PLLC

 

 

 

 

190 East Capitol Street, Suite 100

 

 

 

 

Jackson, MS 39201

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: Brunini, Grantham , Grower & Hewes

 

 

 

 

Account Number:

 

 

 

 

For Credit To: Brunini, Grantham , Grower & Hewes

 

 

 

 

  
 

S-2.2-iii

 
 


Hameline & Eccleston, LLP

 

 

 

 

2814 Main Street, Suite 200

 

 

 

 

Dallas, Texas 75226

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: Hameline & Eccelston

 

 

 

 

Account Number:

 

 

 

 

For Credit To: Hameline & Eccelston

 

 

 

 

 

 

 

 

 

Porter Hedges LLP

 

 

 

 

1000 Main Street, 36th Fl.

 

 

 

 

Houston, Texas 77002

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: PORTER HEDGES LLP Operating Account

 

 

 

 

Account Number:

 

 

 

 

For Credit To: PORTER HEDGES LLP

 

 

 

 

Reference: 014851-0011

 

 

 

 

 

 

 

 

 

Fishman Haygood, LLP

 

 

 

 

200 W. Congress St.

 

 

 

 

Lafayette, LA 70501

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: Fishman Haygood Operating Account

 

 

 

 

Account Number:

 

 

 

 

For Credit To: FISHMAN HAYGOOD, LLP

 

 

 

 

Reference: 3341-01 Invoice #45902

 

 

 

 

 

 

 

 

 

Graves Dougherty Hearon & Moody

 

 

 

 

401 Congress Ave, Ste 2200

 

 

 

 

Austin, TX 78701-3790

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: Graves Dougherty Hearon & Moody IOLTA

 

 

 

 

Account Number:

 

 

 

 

For Credit To: Graves Dougherty Hearon & Moody IOLTA

 

 

 

 

Reference: 3341-01 Invoice #45902

 

 

 

 

 
 

 S-2.2-iv

 
 


Bradley Arant Boult Cummings LLP

 

 

 

 

1819 5th Avenue North

 

 

 

 

Birmingham, AL 35203

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: Bradley Arant Boult Cummings LLP Attorney Trust Account

 

 

 

 

Account Number:

 

 

 

 

For Credit To: Bradley Arant Boult Cummings LLP

 

 

 

 

Reference: Petrodome/Viking

 

 

 

 

 

 

 

 

 

Mayhall Fondren Blaize

 

 

 

 

5800 One Perkins Place Drive, Suite 2-B

 

 

 

 

Baton Rouge, LA 70808-9114

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: Mayhall Fondren Blaize LLC

 

 

 

 

Account Number:

 

 

 

 

For Credit To: Mayhall Fondren Blaize LLC

 

 

 

 

Reference: Petrodome Producing Properties

 

 

 

 

 

 

 

 

 

Gieger, Laborde & Laperouse, LLC

 

 

 

 

701 Poydras Street; Suite 4800

 

 

 

 

New Orleans, LA 70139

 

 

 

 

 

 

 

 

 

Wire Instructions

 

 

 

 

 

 

 

 

 

ABA Routing Number:

 

 

 

 

Account Name: Gieger, Laborde & Laperouse, LLC New Orleans Operating Account

 

 

 

 

Account Number:

 

 

 

 

For Credit To: Gieger Laborde & Laperouse

 

 

 

 

Reference: Black Rhino Payoff Letter

 

 

 

 

 
 

S-2.2-v

 
 

 

SCHEDULE 3.1(g)

 

DIRECTION LETTERS

 

Purchasers of production:

 

Petrodome Bloomington

Plains Marketing LP

ATTN: Customer Relations

PO BOX 4648

Houston, TX 77210-4648

800-772-7589/713-646-4460

713-646-4311 FAX

 

Petrodome Pineville

Plains Marketing LP

ATTN: Customer Relations

PO BOX 4648

Houston, TX 77210-4648

800-772-7589/713-646-4460

713-646-4311 FAX

 

Petrodome Dietzel

LIG Gathering Company II, LLC

PO BOX 993

Bellville, TX 77418

210-410-3150

 

Petrodome Liberty

Costa Energy, LLC

1212 Corporate Drive

Suite 200

Irving, TX 75038

817-633-7777

 

Petrodome Napoleonville

Shell Trading (US) Company

PO BOX 4604

Houston, TX 77210-4604

800-992-8470

 

 

S-3.1(g)-i

 
 

 

Petrodome Pheasant Blessing

Gulfmark Energy, Inc.

PO BOX 844

Houston, TX 77001-0844

713-881-3603

 

Kebo Oil & Gas, Inc.

701 Wildcat Drive

Portland, TX 78374

361-643-8821

 

Petrodome Quail Ridge

Neumin Production Company

PO BOX 769

Point Comfort, TX 77978

361-987-8900

 

Petrodome Thunderbolt

Choice Exploration, Inc.

PO BOX 167626

Irving, TX 75016

817-633-7777

 

 

S-3.1(g)-ii

 
 

 

SCHEDULE 3.1(p)

 

CERTAIN AGREEMENTS

 

Entity

Project Name

Agreement Type

Effective date

Operator/other

PETRODOME AROUND THE HORN, LLC

Terrebonne Parish, Louisiana

Around the Horn

Letter of Intent

January 5, 2010

Cabot Oil & Gas Corp to Petrodome

 

Operating Agreement

December 1, 2009

Cabot Oil & Gas Corporation

 

Guarantee

December 8, 2010

Cabot Oil & Gas Corporation

 

Notice of Operating Agreement

December 1, 2009

Cabot Oil & Gas Corporation

 

PETRODOME BAYOU CHOCTAW, LLC

West Baton Rouge and Iberville Parishes, Louisiana

Bayou Choctaw Program

Participation and Development Agreement

February 1, 2011

Northwind Oil & Gas, LLC to Petrodome

 

Operating Agreement

February 1, 2011

Northwind Oil & Gas

 

Memo of JOA -- is this intended to be the “recorded supplement”

February 1, 2011

Northwind, et al

 

PETRODOME BUCKEYE, LLC

Matagorda County, Texas

Buckeye Prospect

Participation Agreement

November 20, 2009

Houston Energy, L.P. and Petrodome

 

Operating Agreement

October 1, 2009

Gemarmi Inc.

 

PETRODOME EAST CREOLE, LLC

Cameron Parish, Louisiana

East Creole Prospect

Prospect Letter Agreement

May 25, 2011

Petrodome Opr/Jordan Oil

 

Operating Agreement

March 15, 2011

Jordan Oil Company, Inc.

 

Amendment to Operating Agreement

May 27, 2011

Petrodome Operating, LLC

 

Memorandum of JOA

March 15, 2011

Petrodome, et al

 

Contract for Sale and Purchase of Natural Gas

February 1, 2012

Petrodome and Central Crude, Inc.

 

S-3.1(p)-i

 
 

 

PETRODOME EC, LLC

Offshore Louisiana

East Cameron Block 37, OCS

Assignment of Contract Rights

April 1, 2009

Probe to Petrodome

 

East Cameron Block 36, OCS

Purchase and Sale Agreement

April 1, 2009

Probe to Petrodome

 

Vermilion Block 20, OCS

Offshore Operating Agreement

April 1, 2009

Probe Resources US LTD

 

(VR20, EC37, EC38)

 

Mortgage and Security Agreement

April 1, 2009

Probe and Petrodome

 

Settlement Agreement and Release

August 12, 2011

Probe and Petrodome

 

PETRODOME LOUISIANA PIPELINE, LLC

Cameron Parish, Louisiana

East Creole Prospect, Kings Bayou Field

Quitclaim, Bill of Sale and Assignment

October 2, 2011

Central Crude, Inc to Petrodome

 

Pipeline Purchase and Sale Letter Agreement

January 26, 2012

Central Crude, Inc & Petrodome

 

Base Contract for Sale and Purchase of NG

February 1, 2012

Central Crude & Petrodome

 

PETRODOME NAPOLEONVILLE, LLC

Assumption Parish, Louisiana

14-52 Prospect, Napoleonville Field Area

Operating Agreement

March 1, 2012

PetroPro Energy, LP

 

First Amendment to JOA

May 31, 2012

Petrodome Operating, LLC

 

Assignment of O&G Leases

July 23, 2013

GG Oil & Gas, Inc. to Petrodome

 

Assignment of O&G Leases

August 5, 2013

Waterloo Oil & Gas, LLC to Petrodome

 

Assignment of O&G Leases

July 23, 2013`

Whittemore to Petrodome

 

 
 

S-3.1(p)-ii

 
 

 

PETRODOME NAPOLEONVILLE, LLC

Assumption Parish, Louisiana

14-54 Prospect, Napoleonville Field Area

Participation Agreement as Amended6-20-2012

December 14, 2011

Petrodome/Waterloo, et al

 

cont. 2-25-2013, 10-16,2013,3-4-2014,5-1-2014

 

Participation Agreement as Amended6-20-2012

December 14, 2011

Petrodome/GG Oil&Gas1, Inc.

 

cont. 2-25-2013, 10-16-2913, 10-16,2013,3-4-2014,5-1-2014

 

Operating Agreement

December 14, 2011

Petrodome/Waterloo,etal&GG Oil&Gas

 

Participation Agreement-Blended Interest

May 1, 2014

Petrodome/ CincoNGR

 

Waterloo, GG, KC, Cinco, Adams, Mantle, Hughes

 

Participation Agreement, Operating Agreement

January 1, 2014

Petrodome/Princeton

 

PETRODOME PHEASANT BLESSING, LLC

Matagorda County, Texas

Pheasant Blessing Prospect

Participation Agreement

August 17, 2009

Sanchez Oil & Gas Corp. and Petrodome

 

Operating Agreement

August 17, 2009

Sanchez Oil & Gas Corp.

 

Assignment of Oil and Gas Leases

February 1, 2010

LLOG Expl. Texas, L.P. to Petrodome, et al

 

Yeaman’s Blessing

Farmout Agreement

July 22, 2010

Petrodome, et al to DSX Energy, Ltd., LLP

 

Assignment of Oil and Gas Leases

February 1, 2010

Sanchez and Petrodome to DSX

 

PETRODOME RIO RANCH, LLC

Matagorda County, Texas

Rio Ranch Prospect

Participation Agreement

August 20, 2009

Houston Energy, LP to Petrodome

 

Operating Agreement

August 20, 2009

Houston Energy, LP

 

Memo of JOA

August 20, 2009

Houston Energy, LP

 

Purchase and Sales Agreement

May 1, 2010

HEI, Helis, OGRS to Petrodome

 

AMI letter

January 14, 2010

HEI, Helis, OGRS, Petrodome, McRae

 

Gas Processing Agreement with Amendments

various

Harvest, Helis

 

Gas Purchase Agreement with Amendments

various

Houston Pipe Line Co., L.P. and Petrodome

 

Gas Purchase Agreement and Amendments

various

LIG and Petrodome

 

Facilities and Sites Agreement and Amendment

various

Houston Pipe Line Co., L.P. and Petrodome

 

Crude Oil Purchase Agreement

February 1, 2014

Sunoco Partners and Petrodome

 

 

 

S-3.1(p)-iii

 
 

 

PETRODOME ST. GABRIEL II, LLC

 

Iberville Parish, Louisiana

St Gabriel II Prospect

First Amendment to Participation Agreement

July 1, 2011

Rio Bravo, etal to Petrodome

 

Amendment to Operating Agreement dated 3/25/2011

July 1, 2011

Petrodome/Rio Bravo, etal

 

Gas Purchase Agreement

May 7, 2012

LIG Gathering Company and Petrodome

 

PETRODOME PINEVILLE, LLC

Jasper & Smith County, Texas

Pineville3D Project

Pineville Project Participation Agreement

January 1, 2013

Renpetco II, LLC, Lowes Partners, LP

 

Clovelly Oil,Co., LLC

 

Pineville Project Participation Agreement

February 1, 2013

Renpetco II, LLC, Petrodome Pineville, LLC

Jasper County, Mississippi

North Bay Spings Operating Agreement

March 1, 2015

Renpetco II, LLC, Lowe Partners, L.P.

 

Clovelly Oil Co, LLC, Petrodome Pineville, LLC

Smith County, Mississippi

Sylvarena Operating Agreement

June 1, 2014

Renpetco II, LLC, Renpetco III, LLC

 

Clovelly Oil Co, LLC, Petrodome Pineville, LLC

 

Oolite/Clovelly/Lowe JV Agreement

October 10, 2014

Renpetco II, LLC, Lowes Partners, LP

 

Clovelly Oil,Co., LLC

 
 

S-3.1(p)-iv

 
 

 

SCHEDULE 4.5

 

LIENS

 

None.

 

 

S-4.5-i

 
 

 

SCHEDULE 4.6

 

ACCOUNTS PAYABLE

 

Borrower

Vendor

Effective

Date

Invoice

 Date

Invoice #

Invoice

Description

Due

Date

Amount

($)

Petrodome Operating, LLC

Oil Country Tubular Corporation

08/06/2015

05/21/2015

CM-1549

Carter Estate #1, Kings Bayou Field

8/30/2015

(15,064.01)

Petrodome Pheasant Blessing, LLC

Sanchez Oil & Gas Corporation

07/12/2017

06/30/2017

I2017061000257

Jun 2017 - Pheasant Blessing #1 LOE’s, Less Insurance

7/30/2017

713.76

 

 

S-4.6-i

 
 

 

SCHEDULE 4.9

 

LIABILITIES AND LITIGATION

 

Liabilities:

None.

Litigation:

 

S-4.9-i

 
 

 

SCHEDULE 4.10

 

AUTHORIZATIONS; CONSENTS

 

None.

 

 

 

S-4.10-i

 
 

 

SCHEDULE 4.13

 

ENVIRONMENTAL DISCLOSURES

 

S-4.13-i

 
 

 

SCHEDULE 4.17

 

REFUNDS

 

 

 

S-4.17-i

 
 

 

SCHEDULE 4.18

 

GAS CONTRACTS

 

None.

 

 

S-4.18-i

 
 

 

SCHEDULE 4.22

 

SUBSIDIARIES

 

Subsidiaries of Petrodome Energy, LLC:

 

Petrodome Around the Horn, LLC, a Louisiana limited liability company

Petrodome Bayou Choctaw, LLC, a Louisiana limited liability company

Petrodome East Creole, LLC, a Louisiana limited liability company

Petrodome Louisiana Pipeline, LLC, a Louisiana limited liability company

Petrodome Napoleonville, LLC, a Louisiana limited liability company

Petrodome Pintail, LLC, a Louisiana limited liability company

Petrodome St. Gabriel II, LLC, a Louisiana limited liability company

Petrodome Buckeye, LLC, a Texas limited liability company

Petrodome Bloomington, LLC, a Texas limited liability company

Petrodome Dietzel, LLC, a Texas limited liability company

Petrodome EC, LLC, a Texas limited liability company

Petrodome Liberty, LLC, a Texas limited liability company

Petrodome Lone Star, LLC, a Texas limited liability company

Petrodome Maurice, LLC, a Texas limited liability company

Petrodome Operating, LLC, a Texas limited liability company

Petrodome Pheasant Blessing, LLC, a Texas limited liability company

Petrodome Quail Ridge, LLC, a Texas limited liability company

Petrodome Rio Ranch, LLC, a Texas limited liability company

Petrodome Thunderbolt, LLC, a Texas limited liability company

Petrodome Wharton, LLC, a Texas limited liability company

Petrodome Pineville, LLC a Mississippi limited liability company

 

 

S-4.22-i

 
 

 

SCHEDULE 4.24

 

EIN, JURISDICTION OF FORMATION AND LOCATION

 

Borrower

Organizational Number with

Secretary of State

Federal EIN

 

Petrodome Around The Horn, LLC

 

40082473K (LA)

 

27-1624912

 

Petrodome Bayou Choctaw, LLC

 

40408345K (LA)

 

27-4635467

 

Petrodome East Creole, LLC

 

40520937K (LA)

 

80-0730505

 

Petrodome Louisiana Pipeline, LLC

 

40731214K (LA)

 

30-0718128

 

Petrodome Napoleonville, LLC

 

40617122K (LA)

 

45-3305266

 

Petrodome Pintail, LLC

 

40319604K (LA)

 

27-3647188

 

Petrodome St. Gabriel II, LLC (fka Petrodome Plumb Bob, LLC)

 

40524675K (LA)

 

80-0732411

 

Petrodome Bloomington, LLC

 

801595975 (TX)

 

36-4733297

 

Petrodome Buckeye, LLC

 

801185482 (TX)

 

27-1202931

 

Petrodome Dietzel, LLC

 

801604683 (TX)

 

30-0739562

 

Petrodome EC, LLC

 

801127867 (TX)

 

27-0497170

 

Petrodome Energy, LLC

 

801086504 (TX)

 

26-4272248

 

Petrodome Liberty, LLC

 

801268483 (TX)

 

27-2563365

 

Petrodome Lonestar, LLC

 

801192058 (TX)

 

27-1502663

 

Petrodome Maurice, LLC

 

801276391 (TX)

 

27-2772922

 

Petrodome Operating, LLC

 

801155945 (TX)

 

40013580Q (LA)

 

1076393 (MS)

 

044-710 (AL)

 

27-0757664

 

Petrodome Pheasant Blessing, LLC

 

801158294 (TX)

 

27-0781539

 

Petrodome Quail Ridge, LLC

 

801467669 (TX)

 

45-3029420

 

Petrodome Rio Ranch, LLC

 

801158280 (TX)

 

27-0781306

 

Petrodome Thunderbolt, LLC

 

801781744 (TX)

 

80-0923049

 

Petrodome Wharton, LLC

 

801141211 (TX)

 

27-0497641

 

Petrodome Pineville, LLC

 

1014877 (MS)

 

80-0892332

 

 

S-4.24-i

 
 

 

SCHEDULE 4.27

 

RELATED PARTY TRANSACTIONS

 

1. See Schedule 3.1(p)

 

 

2. Petrodome Energy, LLC owns 100% of the outstanding Equity Interests in each Borrower other than Petrodome Energy, LLC. As such, Petrodome Energy, LLC is a party to the organizational documents of each other Borrower, as they have been amended from time to time.

 

 

S-4.27-i

 
 

 

SCHEDULE 4.28

 

OWNERSHIP OF PROPERTY

 

None.

 

 

 

S-4.28-i

 
 

 

SCHEDULE 5.2

BUDGET

 

Petrodome Energy LLC [2018 FY] Cash Flow Projection

 

Gross Production (Monthly Volumes)

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

PDP

Bbl/month

 

mcf/month

 

PDNP

 

Bbl/month

 

mcf/month

 

PUD

 

Bbl/month

 

mcf/month

 

Total Gross Oil Production

 

Total Gross GasProduction

 

Total Gross BOE Production

 

Average Daily Production (Boe/d)

 

Net Production (Monthly Volumes)

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

PDP

Bbl/month

 

mcf/month

 

PDNP

 

Bbl/month

 

mcf/month

 

PUD

 

Bbl/month

 

mcf/month

 

Total Net Oil Production

 

Total Net Gas Production

 

 

 
S-5.2-i
 
 

 

Total Net BOE Production

 

Oil Daily Production (Bbls/d)

 

Gas Daily Production (Mcf/d)

 

Average Daily Production (Boe/d)

 

% Growth / Decline

 

% Oil

 

Pricing - NYMEX

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

 

Benchmark Oil Price ($ / Bbl)

 

Benchmark Gas Price ($ / Mcf)

 

Realized Prices W/O Hedges:

 

Average Oil price ($/Bbl)

 

Average Gas price ($/Mcf)

 

Average BOE price ($/BOE)

 

Realized Prices With Hedges:

 

Average BOE price ($/BOE)

 

Hedging

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

 

Fixed Price Swaps - West TX Intermediate

 

Hedged Volumes (bbls)

 

Swap Price ($/ Bbl)

 

NYMEX Price ($/ Bbl)

 

Hedge Gain (Loss) on Oil Contracts

 

 
 
S-5.2-ii
 
 

 

Development Plan

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

 

PDNP Capex

 

PUD Capex

 

Recompletion Capex

 

Restoration

 

Net Capex

 

Period (Month)

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

WTI ($/BBL) - SWAP Price

 

WTI ($/BBL) - NYMEX

 

NYMEX ($/MCF)

 

Cash Flows

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

 

Oil & Gas Revenue - PDP

 

Oil & Gas Revenue - PDNP

 

Oil & Gas Revenue - PUD

 

Realized Hedging Effect

 

Total Revenue

 

Lender ORRI

 

Lease Operating Expenses

 

Severance & Production Taxes

 

Property Level EBITDA

 

NetBack ($/Boe)

 

Margin %

 

G&A Expense

 

EBITDA

 

Trailing 3-Month EBITDA (Annualized)

 

Trailing 12-Month EBITDA

 

 
 
S-5.2-iii
 
 

 

Credit Metrics

Jan-18

Feb-18

Mar-18

Apr-18

May-18

Jun-18

Jul-18

Aug-18

Sep-18

Oct-18

Nov-18

Dec-18

Term Loan

 

Principal Amount

 

less: OID

 

Funded Amount

 

Less: Restricted Cash (Approved for CAPEX)

 

Net Debt Balance

 

Net Debt / Trailing 3-Month EBITDA (Annualized)

 

Net Debt / Trailing 12-Month EBITDA

 

EBITDA

 

Interest Payment

 

PIK Interest Payment

 

Principal Payment

 

Cash Flow

 

Cumulative Cash Flow

 

 
S-5.2-iv
 
 

 

SCHEDULE 6.18

 

DEPOSIT ACCOUNTS

 

Account Holder

Bank

Account No.

Petrodome Bayou Choctaw LLC

 

 

Petrodome Bloomington, LLC

 

 

Petrodome Buckeye, LLC

 

 

Petrodome Dietzel, LLC

 

 

Petrodome East Creole

 

 

Petrodome EC

 

 

Petrodome Energy, LLC

 

 

Petrodome Liberty, LLC

 

 

Petrodome Louisiana Pipeline

 

 

Petrodome Maurice, LLC

 

 

Petrodome Napoleonville

 

 

Petrodome Operating, LLC

 

 

Petrodome Pheasant Blessing

 

 

PETRODOME PINEVILLE, LLC

 

 

Petrodome Pintail, LLC