FOURTH AMENDMENT OF AMENDED AND RESTATED CREDIT AGREEMENT AND BORROWING BASE REDETERMINATION

EXHIBIT 10.16

 

 

THIS FOURTH AMENDMENT OF AMENDED AND RESTATED CREDIT AGREEMENT AND BORROWING BASE REDETERMINATION (this “Amendment”), dated as of February 1, 2011, is by and among SEFTON RESOURCES, INC., a British Virgin Islands corporation (“Parent”), TEG OIL & GAS U.S.A., INC., a Colorado corporation (“TEGOG”), TEG MIDCONTINENT, INC., a Colorado corporation (“TEGMC”), and BANK OF THE WEST, a California corporation (“BOTW”). Parent, TEGOG and TEGMC are herein collectively referred to as “Borrowers.”

 

 

A.           Borrowers and BOTW entered into an Amended and Restated Credit Agreement dated as of October 21, 2008, as heretofore amended (as so amended, the “Credit Agreement”). Capitalized terms used herein but not defined herein shall have the same meanings as set forth in the Credit Agreement.

 

B.           Borrowers and BOTW desire that this Amendment be executed and delivered in order to amend certain terms and provisions of the Credit Agreement and to evidence a Borrowing Base redetermination.

 

 

NOW, THEREFORE, in consideration of $10.00 and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties hereby agree as follows:

 

1.           Credit Agreement.  The Credit Agreement shall be, and hereby is, amended as follows, effective as of the date hereof:

 

(a)           In lines 1 and 2 of the definition of “Maturity Date” in Section 1.1 on page 7 of the Credit Agreement, “February 28, 2012” shall be substituted for “February 28, 2011.”

 

(b)           The following shall be substituted for the definition of “Maximum Loan Amount” in Section 1.1 on pages 7 and 8 of the Credit Agreement:

 

“Maximum Loan Amount” means, at any time, the amount set forth in Exhibit F attached hereto and made a part hereof for that time; provided that, upon the request of Borrowers, BOTW may, in its sole discretion and upon such terms and conditions as BOTW may determine, increase said amount to an amount not greater than $10,000,000 by giving written notice of such increase to Borrowers, but nothing contained in this Agreement, the Note or any other Loan Document shall be deemed to commit or require BOTW to grant any such increase.

 

 

(c)           The following shall be substituted for BOTW’s address for notice purposes, as set forth in Section 8.3 on page 40 of the Credit Agreement:

 

BOTW’s address:	600 Seventeenth Street, Suite 1500
	Denver, Colorado 80202
	Attention: Duc Duong, Energy Lending
	Fax: 303 ###-###-####

 

(d)           Exhibit F attached hereto shall be added as Exhibit F attached to the Credit Agreement.

 

2.           Borrowing Base Redetermination.  BOTW has redetermined the Borrowing Base as of the date hereof, which redetermination shall be deemed to be in lieu of the regularly-scheduled December 1, 2010 Borrowing Base redetermination, resulting in the Borrowing Base being set as follows until the effective date of the ensuing Borrowing Base redetermination pursuant to the terms of the Credit Agreement: $6,800,000 as of February 1, 2011, reduced by $100,000 as of the close of business on each subsequent Payment Date, commencing with the February 28, 2011 Payment Date.

 

3.           Loan Documents.  All references in any document to the Credit Agreement shall be deemed to refer to the Credit Agreement, as amended pursuant to this Amendment.

 

4.           Certification by Borrowers.  Borrowers hereby certify to BOTW that, as of the date of this Amendment, after giving effect to the provisions hereof: (a) all of Borrowers’ representations and warranties contained in the Credit Agreement are true, accurate and complete in all material respects, (b) Borrowers have performed and complied with all agreements and conditions required to be performed or complied with by Borrowers under the Credit Agreement and/or any Loan Document on or prior to this date, and (c) no Default or Event of Default has occurred under the Credit Agreement.

 

5.           Conditions Precedent.  The obligations of the parties under this Amendment are subject, at the option of BOTW, to the prior satisfaction of the condition that Borrowers shall have delivered to BOTW the following (all documents to be satisfactory in form and substance to BOTW and, if appropriate, duly executed and/or acknowledged on behalf of the parties other than BOTW):

 

(a)           This Amendment.

 

(b)           A fee in the amount of $68,000, payable to BOTW in connection with the extension of the Maturity Date being made pursuant to the terms hereof.

 

6.           Continuation of the Credit Agreement.  Except as specified in this Amendment, the provisions of the Credit Agreement shall remain in full force and effect.

 

7.           Expenses.  Borrowers shall pay all expenses incurred in connection with the transactions contemplated by this Amendment, including without limitation all fees and expenses of the attorney for BOTW and any and all filing and recording expenses.

 

 

8.           Miscellaneous.  This Amendment shall be governed by and construed under the laws of the State of Colorado and shall be binding upon and inure to the benefit of the parties hereto and their successors and assigns. This Amendment may be executed in any number of counterparts, each of which shall be an original, but all of which together shall constitute one instrument.

 

EXECUTED as of the date first above written.

	SEFTON RESOURCES, INC.
	By:	/s/ Jim Ellerton
		Jim Ellerton,
		Chief Executive Officer
	TEG OIL & GAS U.S.A., INC.
	By:	/s/ Jim Ellerton
		Jim Ellerton,
		Chairman
	TEG MIDCONTINENT, INC.
	By:	/s/ Jim Ellerton
		Jim Ellerton,
		Chairman
	BANK OF THE WEST
	By:	/s/ Duc Duong
		Duc Duong,
		Vice President

 

 

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