SECOND AMENDED AND RESTATED CREDIT AGREEMENT AMONG SWIFT ENERGY COMPANY AND SWIFT ENERGY OPERATING, LLC, AS BORROWERS JPMORGAN CHASE BANK, N.A. AS ADMINISTRATIVE AGENT AND ISSUING BANK BNP PARIBAS AND WELLS FARGO BANK, N.A., AS CO-SYNDICATION AGENTS BANK OF SCOTLAND PLC AND SOCIETE GENERALE, AS CO-DOCUMENTATION AGENTS AND THE LENDERS SIGNATORY HERETO AND J.P. MORGAN SECURITIES LLC AS SOLE LEAD ARRANGER AND SOLE BOOK RUNNER September 21, 2010 _____________________________________ Revolving Line of Credit of up to $500,000,000 with Letter of Credit Subfacility _____________________________________

"Permitted Refinancing Debt" shall mean Indebtedness of the Borrowers (including senior unsecured notes, subordinated notes, convertible preferred stock with any mandatory redemption and other Indebtedness not ranking pari passu with the Obligations), in such form and with terms, including, when appropriate, the subordination of such Indebtedness to the payment in full of the Obligations, the termination or Cash Collateralization of all Letters of Credit and the termination of the Facility Amounts, approved by the Administrative Agent in writing in advance of the incurrence thereof, the proceeds of which are used to repay all or a p ortion of the outstanding principal amount of the Existing Senior Notes; provided that, until such proceeds are so applied, such proceeds shall be maintained in blocked, interest bearing deposit accounts at JPMC.  The Borrowers hereby grant to (and subject to the control of) the Administrative Agent, for the benefit of the Secured Parties, and agree to maintain, a first priority security interest in all such cash, deposit accounts and all balances therein, and all other property so provided as collateral pursuant hereto, and in all proceeds of the foregoing, all as security for the Obligations.

"Regulatory Change" shall mean, with respect to any Lender or the Issuing Bank, the passage, adoption, institution, or modification of any federal, state, local, or foreign Requirement of Law (including Regulation D), 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 or the Issuing Bank or its Applicable Lending Office; provided however, for purposes of this Agreement and to the extent permitted by applicable Requirements of Law, the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, guidelines or directives in connection therewith are deemed to have gone into effect and adopted after the Closing Date.

"Reserve Requirement" shall mean, for any Interest Period for any Eurodollar Rate Loan, the average maximum rate at which reserves (including any marginal, supplemental, or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System against "Eurocurrency liabilities" (as such term is used in Regulation D) and any other reserves required by reason of any Regulatory Change to be maintained by such member banks against (a) any category of liabilities which includes deposits by reference to which the Eurodollar Rate is to be determined as provided herein in the definition of the term "Eurodollar Rate" or (b) an y category of extensions of credit or other assets which include a Eurodollar Rate Loan.

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.

 

(iv) any Lender is at that time a Defaulting Lender, unless the Issuing Bank has entered into arrangements, including the delivery of Cash Collateral, satisfactory to the Issuing Bank (in its sole discretion) with the Borrowers or such Lender to eliminate the Issuing Bank's actual or potential Fronting Exposure (after giving effect to Section 2.27(a)(iv)) with respect to the Defaulting Lender arising from either the Letter of Credit then proposed to be issued or that Letter of Credit and all other L/C Exposure as to which the Issuing Bank has actual or potential Fronting Exposure, as it may elect in its sole discretion.

 

(d) The Borrowing Base shall represent the determination by the Lenders, in accordance with their customary lending procedures for evaluating oil and gas reserves and other related assets at the time of determination, of the value, for loan purposes, of the Oil and Gas Properties of the Borrowers and the Guarantors located in the United States, subject, in the case of any increase in the Borrowing Base, to the credit approval processes of the Lenders.  Furthermore, the Borrowers acknowledge that the Lenders have no obligation to increase the Borrowing Base and further acknowledge that the determination of the Borrowing Base contains an equit y cushion (market value in excess of loan value), which is acknowledged by the Borrowers to be essential for the adequate protection of the Lenders.  The Administrative Agent and the Lenders have no obligation to agree upon or determine the Borrowing Base at any particular amount, whether in relation to the Maximum Facility Amount or otherwise.  In the event the Required Lenders cannot agree on the Borrowing Base, the Borrowing Base shall be set on the basis of the weighted (based on the Percentage Share of each Lender) arithmetic average of the Borrowing Base as determined by each individual Lender.  However, the amount of the Borrowing Base cannot be increased at any time without consent of 100% of the Lenders.

2.12 Mandatory Prepayments.

 

(a) If at any time the sum of the Loan Balance and the L/C Exposure exceeds the Maximum Facility Amount then in effect, the Borrowers shall immediately prepay the amount of such excess for application on the Loan Balance and, if the Loan Balance has been paid in full, Cash Collateralize the L/C Exposure to the extent necessary to eliminate such excess.

 

(b) If, immediately after giving effect to any automatic reduction of the Borrowing Base pursuant to Section 2.11(e) or (f), the sum of the Loan Balance and the L/C

 

 

2.14 Reduction of Maximum Facility Amount.  The Borrowers shall have the right, upon not less than three Business Days' notice to the Administrative Agent, to terminate 2.16 the Facility Amounts or, from time to time, to reduce the amount of the Facility Amounts; provided that no such termination or reduction of Facility Amounts shall be permitted if, after giving effect thereto and to any prepayments of the Loan Balance made on the effective date thereof, the Loan Balance plus the L/C Exposure would exceed the Maximum Facility Amount.  Any such reduction shall be in an amount equal to $10,000,000, or a whole multiple of $1,000,000 in excess thereof, and shall reduce permanently the Facility Amounts then in effect pro rata in accordance with the Percentage Shares of the Lenders.  If, after giving effect to any reduction of the Facility Amounts, the Letter of Credit Sublimit exceeds the Maximum Facility Amount, the Letter of Credit Sublimit shall be automatically reduced by the amount of such excess.

 

2.16 [Reserved].

 

2.17 Set-off.  In addition to any rights and remedies of the Secured Parties provided by law, each Secured Party shall have the right, if an Event of Default has occurred and is continuing, without notice to the Borrowers or Guarantors, any such notice being expressly waived by the Borrowers and Guarantors to the extent permitted by applicable law, upon any Obligations becoming due and payable by any Borrower or any Guarantor (whether at the stated maturity, by acceleration or otherwise), to apply to the payment of such Obligations, by setoff or otherwise, any and all deposits (general or special, time or demand, provisional or final), in any currency, and any other credits, indebtedness or claims, in any currency, in each case whether direct or indirect, absolute or contingent, matured or unmatured, at any time held or owing by such Secured Party, any affiliate thereof or any of their respective branches or agencies to or for the credit or the account of any Borrower or any Guarantor.  Each Secured Party agrees promptly to notify the applicable Borrower or Guarantor and the Administrative Agent after any such application made by such Secured Party, provided that the failure to give such notice shall not affect the validity of such application.

 

(e) The Administrative Agent, the Issuing Bank and the Lenders agree not to request, and the Borrowers shall not be obligated to pay, any Additional Costs or other sums payable pursuant to this Section unless similar additional costs and other sums payable are also generally assessed by the Administrative Agent, the Issuing Bank or such Lender against other customers similarly situated where such customers are subject to documents providing for such assessment.

 

2.21 Illegality.  Notwithstanding any other provision of this Agreement, in the event that it becomes unlawful for any Lender or its Applicable Lending Office to (a) honor its obligation to make Eurodollar Rate Loans, or (b) maintain Eurodollar Rate Loans, then such Lender shall promptly notify the Administrative Agent and the Borrowers thereof.  The obligation of such Lender to make Eurodollar Rate Loans and convert Alternative Base Rate Loans into Eurodollar Rate Loans shall then be suspended unti l such time as such Lender may again make and maintain Eurodollar Rate Loans, and the outstanding Eurodollar Rate Loans of such Lender shall be converted into Alternative Base Rate Loans in accordance with Section 2.13.

 

(b) Any Foreign Lender that is entitled to an exemption from or reduction of withholding tax under the law of the jurisdiction in which the Borrowers are resident for tax purposes, or any treaty to which such jurisdiction is a party, with respect to payments hereunder or under any other Loan Document shall deliver to the Borrowers (with a copy to the Administrative Agent), at the time or times prescribed by applicable law or reasonably requested by the Borrowers or the Administrative Agent, such properly completed and executed documentation prescribed by applicable law as will permit such payments to be made without withholding or at a reduced rate of withholding.  In addition, any Lender, if requested by the Borrowers or the Administrative Agent, shall deliver such other documentation prescribed by applicable law or reasonably requested by the Borrowers or the Administrative Agent as will enable the Borrowers or the Administrative Agent to determine whether or not such Lender is subject to backup withholding or information reporting requirements.  Without limiting the generality of the foregoing, in the event that the Borrowers are resident for tax purposes in the United States of America, any Foreign Lender shall deliver to the Borrowers and the Administrative Agent (in such number of copies as shall be requested by the recipient) on or prior to the date on which such Foreign Lender becomes a Lender under this Agreement (and from time to time thereafter upon the request of the Borrowers or the Administrative Agent, but only if such Foreign Lender is legally entitled to do so), whichever of the following is applicable: (i) duly compl eted copies of Internal Revenue Service Form W-8BEN claiming eligibility for benefits of an income tax treaty to which the United States of America is a party, (ii) duly completed copies of Internal Revenue Service Form W-8ECI, (iii) in the case of a Foreign Lender claiming the benefits of the exemption for portfolio interest under section 881(c) of the Code, (x) a certificate to the effect that such Foreign Lender is not (A) a "bank" within the meaning of section 881(c)(3)(A) of the Code, (B) a "10 percent shareholder" of any Borrower within the meaning of section 881(c)(3)(B) of the Code, or (C) a "controlled foreign corporation" described in section 881(c)(3)(C) of the Code and (y) duly completed copies of Internal Revenue Service Form W-8BEN, or (iv) any other form prescribed by applicable law as a basis for claiming exemption from or a reduction in United States Federal withholding tax duly completed together with such supplementary documentation as may be prescribed by applicable law to permit the Borr owers to determine the withholding or deduction required to be made.

 

 

(b) In order to effect the termination of the Facility Amount of the Terminated Lender, the Borrowers shall (i) obtain an agreement with one or more Lenders to increase their Facility Amounts and/or (ii) request any one or more other banking institutions to become a "Lender" in place and instead of such Terminated Lender and agree to accept a Facility Amount; provided, however, that such one or more other banking institutions are reasonably acceptable to the Administrative Agent and become parties by executing an Assignment and Assumption (the Lenders or other banking institutions that agree to accept in whole or in part the Facility Amount of the Terminated Lender being referred to herein as the "Replacement Lenders"), such that the aggregate increased and/or accepted Facility Amounts of the Replacement Lenders under clauses (i) and (ii) above equal the Facility Amount of the Terminated Lender.

 

 

2.25 Commitment Fee.  To compensate the Lenders for making funds available under this Agreement, the Borrowers shall pay to the Administrative Agent for the account of the Lenders in proportion to their respective Percentage Share, on the first day of each fiscal quarter and on Final Maturity, a commitment fee (the "Commitment Fee") in the annum rate equal to the Applicable Margin, calculated on the basis of a year of 365 or 366 days, as the case may be, and actual days elapsed (including the first day but excluding the last day), on the average daily amount of the Available Commitment during the preceding fiscal quarter.

 

(c) The effectiveness of any new Lender Agreement or Commitment Increase Agreement shall be contingent upon receipt by the Administrative Age of such corporate resolutions of both Borrowers and legal opinions of counsel to the Borrowers as the Administrative Agent shall reasonably request with respect thereto, in each case, in form and substance satisfactory to the Administrative Agent.

 

(d) If any bank or financial institution becomes a New Lender pursuant to Section 2.26(b) or any Lender's Facility Amount is increased pursuant to Section 2.26(c), additional Advances made on or after the effectiveness thereof (the "Re-Allocation Date") shall be made pro rata based on the Percentage Shares in effect on and after such Re-Allocation Date (except to the extent that any such pro rata borrowings would result in any Lender making an aggregate principal amount of Advances in excess of its Facility Amount, in which case such excess amount will be allocated to, and made by, such New Lender and/or Lenders with such increased Facility Amounts to the extent of, and pro rata based on, their respective Facility Amounts), and continuations of Eurodollar Rate Advances outstanding on such Re-Allocation Date shall be effected by repayment of such Eurodollar Rate Advances on the last day of the Interest Period applicable thereto and the making of new Eurodollar Rate Advances pro rata based on such new Percentage Shares.  In the event that on any such Re-Allocation Date there is an unpaid principal amount of Base Rate Advances, the Borrowers shall make prepayments thereof and borrowings of Base Rate Advances so that, after giving effect thereto, the Base Rate Advances outstanding are held pro rata based on such new Percentage Shares.  In the event that on any such Re-Allocation Date there is an unpaid principal amount of Eurodollar Rate Advances, such Eurodollar Rate Advances shall remain outstanding with the respective holders thereof until the expiration of their respective holders thereof until the expiration of their respective Inter est Periods (unless either Borrower elects to prepay any thereof in accordance with the applicable provisions of this Agreement), and interest on and repayments of such Eurodollar Rate Advances will be paid thereon to the respective Lenders holding such Eurodollar Rate Advances pro rata based on the respective principal amounts thereof outstanding.

 

(ii) Reallocation of Payments.  Any payment of principal, interest, fees or other amounts received by the Administrative Agent for the account of that Defaulting Lender (whether voluntary or mandatory, at maturity, pursuant to Article 7 or otherwise, and including any amounts made available to the Administrative Agent by that Defaulting Lender pursuant to Section 7.3), shall be applied at such time or times as may be determined by the Administrative Agent as follows: first, to the payment of any amounts owing by that Defaulting Lender to the Administrative Agent hereunder; second, to the payment on of any amounts owing by that Defaulting Lender to the Issuing Bank hereunder; third, if so determined by the Administrative Agent or requested by the Issuing Bank, to be held as Cash Collateral for future funding obligations of that Defaulting Lender of any participation in any Letter of Credit; fourth, as the Borrowers may request (so long as no Default or Event of Default exists), to the funding of any Loan in respect of which that Defaulting Lender has failed to fund its portion thereof as required by this Agreement, as determined by the Administrative Agent; fifth, if so determined by the Administrative Agent and the Borrowers, to be held in a non-interest bearing deposit account and released in order to satisfy obligations of that Defaulting Lender to fund Loans under this Agreement; sixth, to the payment of any amounts owing to the Issuing Bank or the Lenders as a result of any judgment of a court of competent jurisdiction obtained by the Issuing Bank or any Lender against that D efaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; seventh, so long as no Default or Event of Default exists, to the payment of any amounts owing to the Borrowers as a result of any judgment of a court of competent jurisdiction obtained by the Borrowers against that Defaulting Lender as a result of that Defaulting Lender's breach of its obligations under this Agreement; and eighth, to that Defaulting Lender or as otherwise directed by a court of competent jurisdiction; provided that if (x) such payment is a payment of the principal amount of any Loans or reimbursement obligations in respect of Letters of Credit in respect of which that Defaulting Lender has not fully funded its appropriate share and (y) such Loans or reimbursement obligations in respect of Letters of Credit were made at a time when the conditions set forth in Section 3.2 and 3.3, as applicable, were satisfied or waived, such payment shall be applied solely to pay the Loans of, and or reimbursement obligations in respect of Letters of Credit owed to, all non-Defaulting Lenders on a pro rata basis prior to being applied to the payment of any Loans of, or reimbursement obligations in respect of Letters of Credit owed to, that Defaulting Lender.  Any payments, prepayments or other amounts paid or payable to a Defaulting Lender that are applied (or held) to pay amounts owed by a Defaulting Lender or to post Cash Collateral pursuant to this Section shall be deemed paid to and redirected by that Defaulting Lender, and each Lender irrevocably consents hereto.

 

 

(b) Defaulting Lender Cure.  If the Borrowers, the Issuing Bank and the Administrative Agent agree in writing in their sole discretion that a Defaulting Lender should no longer be deemed to be a Defaulting Lender, the Administrative Agent will so notify the parties hereto, whereupon as of the effective date specified in such notice and subject to any conditions set forth therein (which may include arrangements with respect to any Cash Collateral), that Lender will, to the extent applicable, purchase that portion of outstanding Loans of the other Lenders or take such other actions as the Administrative Agent may determine to be necessary to cause the Loans and funded and unfunded participations in Letters of Credit to be held on a pro rata basis by the Lenders in accordance with their Percentage Shares (without giving effect to Section 2.27(a)(iv)), whereupon that Lender will cease to be a Defaulting Lender; provided that no adjustments will be made retroactively with respect to fees accrued or payments made by or on behalf of the Borrower while that Lender was a Defaulting Lender; and provided, further, that except to the extent otherwise expressly agreed by the affected parties, no change hereunder from Defaulting Lender to Lender will constitute a waiver or release of any claim of any party hereunder arising from that Lender's having been a Defaulting Lender.

 

 

(c) Application.  Notwithstanding anything to the contrary contained in this Agreement, Cash Collateral provided under any of this Section 2.28 or Sections 2.2, 2.12, 2.27 or 7.2 in respect of Letters of Credit shall be held and applied to the satisfaction of the specific L/C Exposure, obligations to fund participations therein (including, as to Cash Collateral provided by a Defaulting Lender, any interest accrued on such obligation) and other obligations for which the Cash Collateral was so provided, prior to any other application of such property as may be provided for herein.

 

(d) Release.  Cash Collateral (or the appropriate portion thereof) provided to reduce Fronting Exposure or other obligations shall be released promptly following (i) the elimination of the applicable Fronting Exposure or other obligations giving rise thereto (including by the termination of Defaulting Lender status of the applicable Lender (or, as

 

(d) certificates of incumbency and signatures of all officers of each Borrower and each Guarantor who are authorized to execute Loan Documents on behalf of such Borrower or such Guarantor, each such certificate being executed by the secretary or an assistant secretary of such Borrower or such Guarantor;

 

(e) copies of corporate resolutions approving the Loan Documents and authorizing the transactions contemplated herein and therein, duly adopted by the board of directors of each Borrower and each Guarantor, accompanied by certificates of the secretary or an assistant secretary of each Borrower and each Guarantor to the effect that such copies are true and correct copies of resolutions duly adopted at a meeting or by unanimous consent of the board of directors of such Borrower or such Guarantor and that such resolutions constitute all the resolutions adopted with respect to such transactions, have not been amended, modified, or revoked in any respect, and are in full force and effect as of the date of such certificate;

(f) multiple counterparts, as requested by the Administrative Agent, of the following Security Instruments creating, evidencing, perfecting, and otherwise establishing Liens in favor of the Administrative Agent for the benefit of the Secured Parties in and to the Collateral which must be furnished on or before the Closing Date.

(j) evidence satisfactory to the Administrative Agent that all governmental and third party approvals necessary in connection with the continuing operations of the Borrowers and their Subsidiaries and the transactions contemplated hereby shall have been obtained and be in full force and effect, and all applicable waiting periods shall have expired without any action being taken or threatened by any competent authority that would restrain, prevent or otherwise impose adverse conditions on the financing contemplated hereby;

 

(k) results of a recent lien search in each jurisdiction requested by the Administrative Agent, and such search shall reveal no Liens on any of the assets of the Borrowers or their Subsidiaries except for Permitted Liens or Liens discharged on or prior to the Closing Date pursuant to documentation satisfactory to the Administrative Agent; and

 

(l) such other agreements, documents, instruments, opinions, certificates, waivers, consents, and evidence as the Administrative Agent or any Lender may reasonably request.

 

3.2 Conditions Precedent to Each Loan.  The obligations of the Lenders to make each Loan are subject to the satisfaction of the following additional conditions precedent:

(h) the Administrative Agent and each Lender shall have received the payment of all fees payable by the Borrowers hereunder and the Administrative Agent shall have received reimbursement from the Borrowers, or special legal counsel for the Administrative Agent shall have received payment from the Borrowers, for all reasonable fees and expenses of counsel to the Administrative Agent for which the Borrowers are responsible pursuant to applicable provisions of this Agreement and for which invoices have been presented as of or prior to the date of the relevant Loan; and

 

(i) all matters incident to the consummation of the transactions hereby contemplated shall be satisfactory to the Administrative Agent and each Lender.

 

3.3 Conditions Precedent to Issuance of Letters of Credit.  The obligation of the Issuing Bank to issue, renew, or extend any Letter of Credit is subject to the satisfaction of the following additional conditions precedent:

 

(a) a Borrower shall have delivered to the Issuing Bank a written (or oral, confirmed promptly in writing) request for the issuance, renewal, or extension of a Letter of Credit at least three Business Days prior to the requested issuance, renewal, or extension date and a Letter of Credit Application at least one Business Day prior to the requested issuance date; and each statement or certification made in such Letter of Credit Application shall be true and correct in all material respects (provided that to the extent any statement or certification is qualified as to "M aterial Adverse Effect" or otherwise as to "materiality", such statement or certification is true and correct in all respects) on the requested date for the issuance of such Letter of Credit;

 

4.2 [Reserved].

 

4.3 Due Authorization.  The execution and delivery by each Borrower of this Agreement and the borrowings hereunder; the execution and delivery by each Borrower of the Loan Documents; the repayment by the Borrowers of the Indebtedness evidenced by the Loan Documents and interest and fees, if any, provided in the Loan Documents are within the power of each Borrower; have been duly authorized by all necessary corporate, limited liability company, shareholder or member action; and do not and will not (a) require the consent of any Governmental Authority, (b) contravene or conflict with any Requirement of Law or the articles or certificate of incorporation, ce rtificate of formation, bylaws, limited liability company agreement, or other organizational or governing documents of any Borrower, (c) contravene or conflict with any indenture, instrument or other agreement to which any Borrower is a party or by which the Property of any Borrower is bound or encumbered, or (d) result in or require the creation or imposition of any Lien upon any of the Properties of any Borrower other than as contemplated in the Loan Documents.

 

 

4.8 Title to Properties.  Each Borrower and its Subsidiaries has good and indefeasible title to all of its material (individually or in the aggregate) Properties, free and clear of all Liens other than Permitted Liens.

 

4.9 Compliance with Federal Reserve Regulations.  No Borrower is engaged principally, or as one of its important activities, in the business of extending credit for the purpose of purchasing or carrying margin stock (within the meaning of Regulations G, U or X of the Board of Governors of the Federal Reserve System).  No part of the proceeds of any extension of credit under this Agreement will be used to purchase or carry any such margin stock or to extend credit to others for the purpose of purchasing or carrying any such margin stock.  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 G, T, U or X.

4.13 ERISA Compliance.  Each Borrower and each of its Subsidiaries is in compliance in all material respects with the applicable provisions of ERISA.  No "reportable event", as such term is defined in Section 4043 of ERISA, has occurred with respect to any Plan.  No Borrower or any of its Subsidiaries has incurred or expects to incur any material liability to the PBGC or any Plan.  With respect to each Plan, the total value of the accrued benefits (both vested and nonvested) does not materially exceed the value of the assets of such Plan, both valued as of the end of the Plan year immediately prior to the date of this Agreement.&# 160; No Borrower or any of its Subsidiaries currently contributes to, or has an obligation to contribute to, or has at any time contributed to, or had an obligation to contribute to, any Multi-employer Plan.

 

4.14 Take-or-Pay; Gas Imbalances.  Except as set forth on Exhibit VI under the heading "Take-or-Pay", no Borrower or any of its Subsidiaries is 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 its Oil and Gas Properties at some future date without receiving full payment therefor at the time of delivery.  Except as set forth on Exhibit VI under the heading "Gas Imbalances", no Borrower or any of its Subsidiaries has produced gas, in any material amount, subject to balancin g rights of third parties or subject to balancing duties under governmental requirements, except as to such matters for which such Borrower or the relevant Subsidiary has established monetary reserves adequate in amount to satisfy such obligations and has segregated such reserves from other accounts.

(c) no Release of Hazardous Substances by any Borrower or any of its Subsidiaries or, to the best knowledge of the Borrowers after due inquiry made in accordance with good commercial practices, from, affecting or related to any Property of any Borrower or any of its Subsidiaries has occurred which could reasonably result in the imposition of liability in excess of $50,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage); and

 

(d) no Environmental Complaint has been received by the any Borrower or any of its Subsidiaries which seeks to impose liability in excess of $50,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage).

 

4.19 Investment Company Act Compliance.  No Borrower is an "investment company" or a company "controlled" by an "investment company," within the meaning of the Investment Company Act of 1940, as amended.

 

4.25 Solvency.  Each Borrower and each Subsidiary is, and after giving effect to the incurrence of all Obligations will be and will continue to be, Solvent.

 

ARTICLE 5                      

 

 

 

So long as any Obligation remains outstanding or unpaid, any Letter of Credit remains outstanding and not Cash Collateralized or any Facility Amount exists, each Borrower shall:

 

5.1 Maintenance and Access to Records.  Keep, and cause each of its Subsidiaries to keep, adequate records in accordance with GAAP, of all of its transactions so that at any time, and from time to time, its financial condition may be readily determined and, at the reasonable request of the Administrative Agent or any Lender, make such records available for inspection and permit the Administrative Agent or such Lender to make and take away copies thereof.

 

5.2 Quarterly Financial Statements.  Deliver to the Administrative Agent, on or before the 45th day after the end of each of the first three fiscal quarters of Swift Co, the unaudited consolidated and consolidating Financial Statements of Swift Co and its Subsidiaries, as at the end of such period and from the beginning of such fiscal year to the end of such period, as applicable, which Financial Statements shall be certified by the chief financial officer of Swift Co as having been prepared in accordance with GAAP, consistently applied, and as a fair presentation of the condit ion of Swift Co and its Subsidiaries, subject to changes resulting from normal year-end audit adjustments.

 

(b) Deliver to the Administrative Agent no later than October 1 of each year during the term of this Agreement, engineering reports in form and substance satisfactory to the Administrative Agent prepared by or under the supervision of the chief petroleum engineer of the Borrower evaluating the Oil and Gas Properties of each Borrower and its Subsidiaries as of July 1 of the year for which such reserve reports and furnished and updating information provided in the reports pursuant to Section 5.5(a).

 

(c) In connection with any unscheduled redetermination of the Borrowing Base pursuant to Section 2.11, promptly deliver to the Administrative Agent engineering reports in form and substance satisfactory to the Administrative Agent prepared by or under the supervision of the chief petroleum engineer of the Borrower evaluating the Oil and Gas Properties of each Borrower and its Subsidiaries as of a date reasonably requested by the Administrative Agent and updating information provided in the reports pursuant to Section 5.5(a).

 

 

Each Borrower hereby acknowledges that (a) the Administrative Agent and/or the Arranger will make available to the Lenders and the Issuing Bank materials and/or information provided by or on behalf of the Borrowers hereunder (collectively, "Borrower Materials") by posting the Borrower Materials on IntraLinks or another similar electronic system (the "Platform") and (b) certain of the Lenders (each, a "Public Lender") may have personnel who do not wish to receive material non-public information with respect to the Borrowers or their Affiliates, or the respective securities of any of the foregoing, and who may be engaged in investment and other market-related activities with respect to such Persons ' securities.  Each Borrower hereby agrees that (w) all Borrower Materials that are to be made available to Public Lenders shall be clearly and conspicuously marked "PUBLIC" which, at a minimum, shall mean that the word "PUBLIC" shall appear prominently on the first page thereof; (x) by marking Borrower Materials "PUBLIC," the Borrowers shall be deemed to have authorized the Administrative Agent, the Arranger, the Issuing Bank and the Lenders to treat such Borrower Materials as not containing any material non-public information with respect to the Borrower or its securities for purposes of United States Federal and state securities laws; (y) all Borrower Materials marked "PUBLIC" are permitted to be made available through a portion of the Platform designated "Public Side Information;" and (z) the Administrative Agent and the Arranger shall be entitled to treat any Borrower Materials that are not marked "PUBLIC" as being suitable only for posting on a portion of the Platform that is not desig nated "Public Side Information."

5.10 Payment of Assessments and Charges.  Pay, and cause each of its Subsidiaries to pay, all taxes, assessments, governmental charges, claims for labor, supplies, rent and other obligations which, if unpaid, might become a Lien against any of its Property, except any of the foregoing being contested in good faith and as to which adequate reserves in accordance with GAAP have been established or unless failure to pay would not have a Material Adverse Effect.

 

5.11 Compliance with Laws.  Comply, and cause each of its Subsidiaries to comply, with all Requirements of Law, including (a) the Natural Gas Policy Act of 1978, as amended, (b) Environmental Laws, and (c) all permits, licenses, registrations, approvals and authorizations (i) related to any natural or environmental resource or media located on, above, within, in the vicinity of, related to or affected by any of its Property, (ii) required for the performance or conduct of its operations, or (iii) applicable to the use, generation, handling, storage, treatment, transport or disposal of Hazardous Substances; and cause all of its employees, agents, contractors, s ubcontractors and future lessees (pursuant to appropriate lease provisions), while such Persons are acting within the scope of their relationship with such Borrower or such Subsidiary, as the case may be, to comply with all applicable Requirements of Law as may be necessary or appropriate to enable such Borrower or such Subsidiary, as the case may be, to so comply.

 

5.12  ERISA Information and Compliance.  Furnish to each Lender upon request, copies of each annual and other report with respect to each Plan or any trust created thereunder filed with the United States Secretary of Labor or the PBGC; fund, and cause each of its Subsidiaries to fund, all current service pension liabilities as they are incurred under the provisions of all Plans and Multi-employer Plans; and comply, and cause each of its Subsidiaries to comply, with all applicable provisions of ERISA.

 

5.19 Maintenance of Insurance.  Maintain, or cause to be maintained, with financially sound and reputable insurance companies, insurance with respect to the properties and business of each Borrower and each of its Subsidiaries against such liabilities, casualties, risks and contingencies and in at least such amounts as is customary in the industry (including reasonable and customary self-insurance to the extent reasonable and prudent operators of oil and gas properties similar to the Borrowers self-insure for such risks) and providing for not less than 30 days' prior notice to the Administrative Agent of termination, lapse or cancellation of such insurance; an d furnish to the Administrative Agent, at the request of any Lender, certificates evidencing such insurance.

 

5.20 Inspection of Tangible Property.  Permit any authorized representative of any Lender or the Administrative Agent, at the sole risk of such party and such authorized representatives, to visit and inspect any tangible Property of any Borrower or any of its Subsidiaries.

 

5.21 Payment of Notes and Performance of Obligations.  Pay and perform all Obligations in accordance with the terms of the Loan Documents.

 

5.25 Level of Mortgage Coverage.  In connection with each recalculation of the Borrowing Base, review the most recently delivered certificate pursuant to Section 5.5(e) and the list of current Mortgaged Properties to ascertain whether the Mortgaged Properties represent at least 75% of the value of the Oil and Gas Properties used in determining the Borrowing Base for properties situated in the United States.  In the event that the Mortgaged Properties do not represent at least 75% of such value, then the Borrowers shall, and shall cause their Subsidiaries

 

to, grant, within thirty (30) days after delivery of such Reserve Report, to the Administrative Agent as security for the Obligations a first-priority Lien interest on additional Oil and Gas Properties not already subject to a Lien of the Mortgages such that after giving effect thereto, the Mortgaged Properties will represent at least 75% of such value.  All such Liens will be created and perfected by and in accordance with the provisions of Mortgages in sufficient executed (and acknowledged where necessary or appropriate) counterparts for recording purposes.  In order to comply with the foregoing, if any Subsidiary places a Lien on its Oil and Gas Properties and such Subsidiary is not a Guarantor, then it shall become a Guarantor.

 

(b) With respect to any Excluded Foreign Subsidiary directly owned by the Borrower or a Subsidiary (other than an Excluded Foreign Subsidiary) that becomes a Material Subsidiary after the Closing Date, promptly, but in any event within 30 days, (i) execute and deliver to the Administrative Agent such amendments to the Pledge Agreement as the Administrative Agent deems necessary or advisable to grant to the Administrative Agent, for the benefit of the Secured Parties, a perfected first priority security interest in the Capital Stock of such Material Subsidiary that is owned by any Borrower or such Subsidiary (provided that in no event shall more than 65% of the total outstanding voting Capital Stock of any such Material Subsidiary be required to be so pledged), (ii) deliver to the Administrative Agent any certificates representing such Capital Stock, together with undated stock powers, in blank, executed and delivered by a duly authorized officer of the relevant Borrower or Subsidiary, and take such other action as may be necessary or, in the opinion of the Administrative Agent, desirable to perfect the Administrative Agent's security interest therein, and (iii) if requested by the Administrative Agent, deliver to the Administrative Agent legal opinions relating to the matters described above, which opinions shall be in form and substance, and from counsel, reasonably satisfactory to the Administrative Agent.

 

5.27 Post Closing Requirements.

 

(a) Not later than 30 days after the Closing Date (or a later date reasonably acceptable to the Administrative Agent), the Borrowers shall deliver to the Administrative Agent

 

Mortgages (or amendments and supplements to existing Mortgages in form and substance satisfactory to the Administrative Agent) from the Borrowers and the Guarantors covering at least 75% of the value of the Oil and Gas Properties used in determining the Borrowing Base for properties situated in the United States and all improvements, personal property, and fixtures related thereto; together with appropriate UCC-1 financing statements for filing with the appropriate authorities and any other documents, agreements, or instruments necessary to create and perfect a first priority security interest in the Mortgaged Properties.

 

(d) Not later than 30 days after the Closing Date (or a later date reasonably acceptable to the Administrative Agent), the Borrowers shall deliver to the Administrative Agent title opinions, in form and substance and by counsel satisfactory to the Administrative Agent, or other confirmation of title acceptable to the Administrative Agent, covering Oil and Gas Properties constituting at least 75% of the value of the Oil and Gas Properties used in determining the Borrowing Base for properties situated in the United States.

 

ARTICLE 6                      

 

 

 

So long as any Obligation remains outstanding, any Letter of Credit remains outstanding and not Cash Collateralized or any Facility Amount exists, neither Borrower will:

 

6.1 Indebtedness; Contingent Obligations.  Create, incur, assume or permit to exist any Indebtedness or Contingent Obligations, or permit any of its Subsidiaries to do so; provided, however, the foregoing restrictions shall not apply to:

 

(a) the Obligations other than Hedging Obligations;

 

(b) unsecured accounts payable incurred in the ordinary course of business, which are not unpaid in excess of 90 days beyond invoice date or are being processed

for payment in the ordinary course of business or contested in good faith and as to which such reserve as is required by GAAP has been made;

(i) other unsecured Indebtedness not exceeding $15,000,000 in the aggregate at any time outstanding for the Borrower and its Subsidiaries; and

 

(j) the Permitted Refinancing Debt.

 

6.2 [Reserved].

 

 

 

(e) the sale or other disposition of Oil and Gas Properties included in the calculation of the Borrowing Base not exceeding of 5% of the Borrowing Base in the aggregate between each scheduled Borrowing Base determination pursuant to Section 2.11; and

 

(f) if no Default or Event of Default has occurred and is continuing, the sale or other disposition of Oil and Gas Properties not included in the calculation of the Borrowing Base.

 

6.5 Dividends and Distributions.   Declare, pay or make, or permit any of its Subsidiaries to declare, pay or make, whether in cash or other Property, any dividend or distribution on any share of any class of its Capital Stock; or purchase, redeem or otherwise acquire, directly or indirectly, for value or set apart in any way for redemption, retirement or other acquisition, directly or indirectly, any of its stock now or hereafter outstanding; return any capital to its stockholders; or make any distribution (whether by reduction of capital or otherwise) of its assets to its stockholders (collectively, "Restricted Payments"), other than:

 

(a) cash dividends by Swift Co to its stockholders not exceeding $15,000,000 in any fiscal year, provided that both before and after giving effect to any such distribution there shall exist no Default or Event of Default;

 

(c) any Investment expressly permitted by Section 6.8 may be structured as a merger, consolidation or amalgamation.

 

6.7 [Reserved].

 

6.8 Investments.  Make any Investment in, or permit any of its Subsidiaries to do so; provided, however, the foregoing shall not apply to:

 

(a) investments in United States government-issued securities with maturities of no more than one year or certificates of deposit or repurchase agreements issued by (i) any Lender or (ii) any bank or trust company organized under the laws of the United States or any state thereof and having capital surplus and undivided profits aggregating at least $250,000,000 and with maturities of no more than one year;

 

(b) commercial paper rated at least P-1 by Moody's or A-1 by S&P and with maturities of no more than nine months from the date of acquisition thereof;

 

 

6.9 Lines of Business; Subsidiaries.  Expand, on its own or through a Subsidiary, into any line of business other than (a) those in which the Borrower or such Subsidiary is engaged as of the date hereof and (b) other lines of business related to the production of oil, gas and other hydrocarbons; or permit any material change to be made in the character of its business as conducted as of the date hereof.

 

6.10 ERISA Compliance.  Permit any Plan maintained by it or any Subsidiary to (a) engage in any "prohibited transaction" as such term is defined in Section 4975 of the Internal Revenue Code of 1954, as amended, (b) incur any "accumulated funding deficiency," as such term is defined in Section 302 of ERISA, or (c) terminate in a manner which could result in the imposition of a Lien on any Property of the Borrower pursuant to Section 4068 of ERISA; assume an obligation to contribute to any Multi-employer Plan; or acquire any Person or the assets of any Person which has now or has had at any time an obligation to contribute to any Multi-employer Plan.

 

 

 

6.17 Negative Pledges.  Enter into or permit to exist any agreement which prohibits or restricts the granting, incurring, assuming, or permitting to exist any Lien on any of its Properties or provides that any such occurrence shall constitute a default or breach of such agreement other than (a) any restrictions existing under the Loan Documents or (b) any agreements governing any purchase money Liens otherwise permitted hereby (in which case, any prohibition or limitation shall only be effective against the assets financed thereby).

 

6.18 [Reserved].

 

6.19 [Reserved].

 

6.20 Clauses Restricting Subsidiary Distributions.  Enter into or suffer to exist or become effective any consensual encumbrance or restriction on the ability of any Subsidiary of any Borrower to (a) make dividends or distributions in respect of any Capital Stock of such Subsidiary held by, or pay any Indebtedness owed to, any Borrower or any other Subsidiary, (b) make loans or advances to, or other Investments in, any Borrower or any other Subsidiary or (c)

transfer any of its assets to any Borrower or any other Subsidiary, or permit any Subsidiary to do any of the forgoing, except for such encumbrances or restrictions existing under or by reason of (i) any restrictions existing under the Loan Documents and (ii) any restrictions with respect to a Subsidiary imposed pursuant to an agreement that has been entered into in connection with the disposition of all or substantially all of the Capital Stock or assets of such Subsidiary, to the extent otherwise permitted by Section 6.4.

(d) (i) Default shall be made by any Borrower or any of its Subsidiaries in the payment or performance of any bond, debenture, note, security (as defined in the Securities Act of 1933, as amended), or other evidence of Indebtedness (other than Indebtedness hereunder and Indebtedness under Hedging Agreements) in excess of $10,000,000, 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 in excess of the period of grace, if any, with respect thereto, and the effect of such default is to cause, or permit the holders of such Indebtedness or security to cause, the acceleration of the matur ity of any such Indebtedness or to permit a trustee or holder of any security to elect (whether or not such trustee or holder does elect) a majority of the directors on the board of directors of any Borrower or its Subsidiaries or (ii) there occurs under any Hedging Agreement an Early Termination Date (as defined in such Hedging Agreement) resulting from (A) any event of default under such Hedging Agreement as to which any Borrower

 

 

 or any of its Subsidiaries is the Defaulting Party (as defined in such Hedging Agreement) or (B) any Termination Event (as defined in such Hedging Agreement) under such Hedging Agreement as to which any Borrower or any of its Subsidiaries is an Affected Party (as defined in such Hedging Agreement) and, in either event, the termination value owed by such Borrower or such Subsidiary as a result thereof is greater than $10,000,000;

(i) A final and non-appealable order, judgment, or decree shall be entered against any Borrower or any of its Subsidiaries for money damages and/or Indebtedness due in an amount in excess of $10,000,000 (to the extent not covered by independent third-party insurance as to which the insurer does not dispute coverage) and such order, judgment, or decree shall not be dismissed or stayed within 60 days;

 

(j) [Reserved];

 

(k) [Reserved];

 

(l) Any of the Loan Documents shall cease, for any reason, to be in full force and effect, or any Borrower, any Subsidiary or any Affiliate of any Borrower or Subsidiary shall so assert, or any Lien created by any of the Loan Documents shall cease to be enforceable and of the same effect and priority purported to be created thereby;

 

(m) (i) Any "person" or "group" (as such terms are used in Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended (the "Exchange Act")), shall become, or obtain rights (whether by means or warrants, options or otherwise) to become, the "beneficial

owner" (as defined in Rules 13(d)-3 and 13(d) 5 under the Exchange Act), directly or indirectly, of more than 20% of the outstanding common stock of Swift Co; (ii) the board of directors of Swift Co shall cease to consist of a majority of Continuing Directors; or (iii) Swift Co shall cease to own and control, of record and beneficially, directly, 100% of each class of outstanding Capital Stock of Swift LLC free and clear of all Liens (except Liens created by the Loan Documents); or

(b) Upon the occurrence of any other Event of Default, the Administrative Agent may, or upon the request of the Majority Lenders, the Administrative Agent shall, (i) declare all Obligations immediately due and payable, without presentment, demand, protest, notice of protest or dishonor, notice of intent to accelerate maturity, notice of acceleration of maturity or other notice of any kind, all of which are hereby expressly waived by the Borrowers, (ii) declare the Facility Amounts terminated, whereupon the Facility Amounts shall immediately terminate unless and until the Lenders, the Issuing Bank and the Administrative Agent shall reinstate the same in writing and (iii) require that the Borrowers Cash Collateralize the L/C Exposure i n accordance with Section 2.28.

 

 

(c) In addition to the foregoing, upon the occurrence of any Event of Default, the Administrative Agent, with the consent of the Majority Lenders, in accordance with the provisions of this Agreement may exercise any or all of its rights and remedies provided by law or pursuant to the Loan Documents.

 

7.3 Application of Proceeds.  From and during the continuance of any Event of Default, any monies or property actually received by the Administrative Agent pursuant to this Agreement or any other Loan Document, the exercise of any rights or remedies under any Security Instrument or any other agreement with any Borrower or any Subsidiary which secures any of the Obligations, shall be applied in the following order:

 

(a) First, to payment of that portion of the Obligations constituting fees, expenses, indemnities and other amounts, including attorney fees, payable to the Administrative Agent and the Issuing Bank;

 

(b) Second, to payment of that portion of the Obligations constituting fees, indemnities and other amounts (other than principal and interest) payable to the Lenders and the Issuing Bank, including attorney fees (ratably among the Issuing Bank and the Lenders in proportion to the respective amounts described in this clause payable to them);

 

(c) Third, to payment of that portion of the Obligations constituting accrued and unpaid interest on the Loans, Hedging Obligations and Cash Management Obligations (ratably among the Lenders, the Issuing Bank, the Swap Counterparties and the Cash Management Banks in proportion to the respective amounts described in this clause payable to them);

 

(d) Fourth, to payment of that portion of the Obligations constituting unpaid principal of the Loans, Hedging Obligations and Cash Management Obligations (ratably among the Lenders, the Issuing Bank, the Swap Counterparties and the Cash Management Banks in proportion to the respective amounts described in this clause held by them);

 

(e) Fifth, to the Administrative Agent for the account of the Issuing Bank to Cash Collateralize any L/C Exposure then outstanding; and

 

(f) Sixth, any excess after payment in full of all Obligations shall be paid to the Borrowers or any Subsidiary as appropriate or to such other Person who may be lawfully entitled to receive such excess.

 

ARTICLE 8                      

 

 

 

8.1 Appointment.  Each Lender and the Issuing Bank hereby irrevocably designates and appoints the Administrative Agent as the agent of such Lender and the Issuing Bank under this Agreement and the other Loan Documents.  Each Lender and the Issuing Bank irrevocably authorizes the Administrative Agent, as the agent for such Lender and the Issuing Bank, to take such action on behalf of such Lender and the Issuing Bank under the provisions of this Agreement and the other Loan Documents and to exercise such powers and perform such

 

 duties as are expressly delegated to the Administrative Agent by the terms of this Agreement and the other Loan Documents, 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, the Administrative Agent shall not have any duties or responsibilities except those expressly set forth herein or in any other Loan Document or any fiduciary relationship with any Lender or the Issuing Bank; and no implied covenants, functions, responsibilities, duties, obligations or liabilities on the part of the Administrative Agent shall be read into this Agreement or any other Loan Document or otherwise exist against the Administrative Agent.

 

8.4 Reliance by Administrative Agent.  The Administrative Agent shall be entitled to rely, and shall be fully protected in relying, upon any writing, resolution, notice, consent, certificate, affidavit, letter, cablegram, telegram, telecopy, telex, teletype or email 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 Administrative Agent.  The Administrative Agent may deem and treat the holde r of any Loan 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 Administrative Agent.  The Administrative Agent shall be fully justified in failing or refusing to take any action under this Agreement or any other Loan Document unless it shall first receive such advice or concurrence of the Majority Lenders, or the Required Lenders or all Lenders to

 

the extent required by Section 9.2, as it deems appropriate and it shall first be indemnified to its satisfaction by the Lenders against any and all liability and expense that may be incurred by it by reason of taking or continuing to take any such action.  The Administrative Agent shall in all cases be fully protected in acting, or in refraining from acting, under this Agreement and the other Loan Documents in accordance with a request of the Majority Lenders, or the Required Lenders or all Lenders to the extent required by Section 9.2.  Such request and any action taken or failure to act pursuant thereto shall be binding upon the Lenders and all future holders of the Loans.  In no event shall the Administrative Agent be required to take any action that exposes the Administrative Agent to personal liability or that is contrary to any Loan Document or applicable Requirement of Law.

 

Borrowers or the value of the Properties of the Borrowers which may come into the possession of the Administrative Agent or any of its officers, directors, employees, agents, attorneys-in-fact or affiliates.

8.9 Administrative Agent in Its Individual Capacity.  The Administrative Agent and its affiliates may make loans to, accept deposits from and generally engage in any kind of business with the Borrowers as though the Administrative Agent were not the agent hereunder.  With respect to any Loan made by the Lender serving as the Administrative Agent, the Administrative Agent 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 Administrative Agent.  The terms "Lender" and "Lenders" shall include the Administrative Agent in its individual capacity.

 

8.10 Successor Administrative Agent.  The Administrative Agent may resign as Administrative Agent upon ten days' notice to the Lenders, the Issuing Bank and the Borrowers.  If the Administrative Agent shall resign as Administrative Agent under this Agreement and the other Loan Documents, then the Required Lenders shall appoint from among the Lenders a successor agent for the Lenders, whereupon such successor agent shall succeed to the rights, powers and duties of the Administrative Agent.  The term "Administrative Agent" shall mean such successor agent effective upon its appointment.  The rights, powers and duties of the former Ad ministrative Agent as Administrative Agent shall be terminated, without any other or further

 

 act or deed on the part of such former Administrative Agent or any of the parties to this Agreement or any holders of the Loans.  If no successor agent has accepted appointment as Administrative Agent by the date that is 10 days following a retiring Administrative Agent's notice of resignation, the retiring Administrative Agent's resignation shall nevertheless thereupon become effective, and the Lenders shall assume and perform all of the duties of the Administrative Agent hereunder until such time, if any, as the Required Lenders appoint a successor agent as provided for above.  After the removal or resignation of any Administrative Agent hereunder as Administrative Agent, the provisions of this Article and Section 9.16 shall inure to its benefit as to any actions taken or omitted to be taken by it while it was Administrative Agent under this Agreement and the other Loan Documents.

8.12 Collateral and Guaranty Matters.

 

(a) The Secured Parties irrevocably authorize the Administrative Agent, at their option and in their discretion, without the necessity of any notice to or further consent from the Secured Parties:

 

(i) to release any Lien on any property granted to or held by the Administrative Agent under any Security Instrument (i) upon termination of the Facility Amounts and payment in full of all Obligations and the termination or Cash Collateralization of all Letters of Credit, (ii) that is sold or to be sold as part of or in connection with any sale permitted hereunder or under any other Loan Document, or (iii) subject to Section 9.2, if approved, authorized or ratified in writing by the Majority Lenders;

 

(ii) to take any actions with respect to any Collateral or Security Instruments which may be necessary to perfect and maintain first priority perfected security interests in and Liens upon the Collateral granted pursuant to the Security Instruments.

 

 

(f) Anything contained in any of the Loan Documents to the contrary notwithstanding, each Borrower and each Secured Party hereby agree that no Secured Party other than the Administrative Agent shall have any right individually to realize upon any of the Collateral or to enforce any Guaranty, it being understood and agreed that all powers, rights and

 

remedies hereunder and under the Security Instruments may be exercised solely by Administrative Agent on behalf of the Secured Parties in accordance with the terms hereof.

Assignments by Lenders.  Any Lender may at any time assign to one or more assignees all or a portion of its rights and obligations under this Agreement (including all or a portion of its Facility Amount and the Loans at the time owing to it); provided that any such assignment shall be subject to the following conditions:

(i) Minimum Amounts.

 

(A)           in the case of an assignment of the entire remaining amount of the assigning Lender's Facility Amount and the Loans at the time owing to it or in the case of an assignment to a Lender, an Affiliate of a Lender or an Approved Fund, no minimum amount need be assigned; and

 

(B)           in any case not described in paragraph (b)(i)(A) of this Section, the aggregate amount of the Facility Amount (which for this purpose includes Loans outstanding thereunder) or, if the applicable Facility Amount is not then in effect, the principal

 

outstanding balance of the Loans of the assigning Lender subject to each such assignment (determined as of the date the Assignment and Assumption with respect to such assignment is delivered to the Administrative Agent or, if "Trade Date" is specified in the Assignment and Assumption, as of the Trade Date) shall not be less than $10,000,000 (or any whole multiple of $1,000,000 in excess thereof), unless each of the Administrative Agent and, so long as no Event of Default has occurred and is continuing, the Borrowers otherwise consent (each such consent not to be unreasonably withheld or delayed).

(vi) No Assignment to Natural Persons; Defaulting Lenders.  No such assignment shall be made to a natural person or any Defaulting Lender.

 

Subject to acceptance and recording thereof by the Administrative Agent pursuant to paragraph (c) of this Section, from and after the effective date specified in each Assignment and Assumption, the assignee thereunder shall be a party to this Agreement and, to the extent of the interest assigned by such Assignment and Assumption, have the rights and obligations of a Lender under this Agreement, and the assigning Lender thereunder shall, to the extent of the interest assigned by such Assignment and Assumption, be released from its obligations under this Agreement (and, in the case of an Assignment and Assumption covering all of the assigning

Lender's rights and obligations under this Agreement, such Lender shall cease to be a party hereto) but shall continue to be entitled to the benefits of Sections 2.20, 2.22 and 9.16 with respect to facts and circumstances occurring prior to the effective date of such assignment.  Any assignment or transfer by a Lender of rights or obligations under this Agreement that does not comply with this paragraph shall be treated for purposes of this Agreement as a sale by such Lender of a participation in such rights and obligations in accordance with paragraph (d) of this Section.

 

(c) Register.  The Administrative Agent, acting solely for this purpose as an agent of the Borrowers, shall maintain at its Principal Office a copy of each Assignment and Assumption delivered to it and a register for the recordation of the names and addresses of the Lenders, and the Facility Amounts of, and principal amounts of the Loans 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, the Administrative Agent and the Lend ers may 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, notwithstanding notice to the contrary.  The Register shall be available for inspection by any Borrower and any Lender, at any reasonable time and from time to time upon reasonable prior notice.

 

(d) Participations.  Any Lender may at any time, without the consent of, or notice to, any Borrower or the Administrative Agent, sell participations to any Person (other than a natural person, any Defaulting Lender, any Borrower, any Guarantor or any of the Borrowers' or Guarantors' respective Affiliates or Subsidiaries) (each, a "Participant") in all or a portion of such Lender's rights and/or obligations under this Agreement (including all or a portion of its Facility Amount and/or the Loans owing to it); provided that (i) such Lender' s obligations under this Agreement shall remain unchanged, (ii) such Lender shall remain solely responsible to the other parties hereto for the performance of such obligations and (iii) the Borrowers, the Administrative Agent, the Issuing Bank and the Lenders shall continue to deal solely and directly with such Lender in connection with such Lender's rights and obligations under this Agreement.

 

Any agreement or instrument pursuant to which a Lender sells such a participation shall provide that such Lender shall retain the sole right to enforce this Agreement and to approve any amendment, modification or waiver of any  provision of this Agreement; provided that such agreement or instrument may provide that such Lender will not, without the consent of the

Participant, agree to any amendment, modification or waiver described in  Section 9.2(a) that affects such Participant.  Subject to paragraph (e) of this Section, the Borrowers agree that each Participant shall be entitled to the benefits of Sections 2.20 and 2.22 to the same extent as if it were a Lender and had acquired its interest by assignment pursuant to paragraph (b) of this Section.  To the extent permitted by law, each Participant also shall be entitled to the benefits of Section 2.17 as though it were a Lender, provided such Participant agrees to be subject to Section 2.10 as though it were a Lender.

 

(e) Limitations upon Participant Rights.  A Participant shall not be entitled to receive any greater payment under Sections 2.20 and 2.22 than the applicable Lender would have been entitled to receive with respect to the participation sold to such Participant, unless the sale of the participation to such Participant is made with the Borrowers' prior written consent.  A Participant that is not incorporated under the laws of the United States of America or a state

 

thereof shall not be entitled to the benefits of Section 2.22 unless the Borrowers are notified of the participation sold to such Participant and such Participant agrees, for the benefit of the Borrowers, to comply with Section 2.22(b) as though it were a Lender.

 

the determination of the Borrowing Base, any other provision in a manner that would alter the pro rata sharing of payments required thereby, or any other provision hereof specifying the number or percentage of Lenders required to amend, waive or otherwise modify any rights hereunder or make any determination or grant any consent hereunder, or consent to the assignment or transfer by a Borrower of any of its rights or obligations under this Agreement or the other Loan Documents, in any such case without the written consent of all Lenders, (b) amend, modify or waive any provision of Article 8 or the rights or obligations of the Administrative Agent without the written consent of the Administrative Agent, or (c) amend, modify or waive any provision of Section 2.19 or the rights or obligations of the Issuing Bank without the written consent of the Issuing Bank.  Notwithstanding anything to the contrary herein, no Defaulting Lender shall have any right to approve or disapprove any amendment, waiver or consent hereunder (and any amendment, waiver or consent which by its terms requires the consent of all Lenders or each affected Lender may be effected with the consent of the applicable Lenders other than Defaulting Lenders), except that (x) the Facility Amount of any Defaulting Lender may not be increased or extended without the consent of such Lender and (y) the Borrowing Base may not be increased without the consent of such Lender.  Any such amendment, supplement, modification or waiver shall apply equally to each of the Lenders and shall be binding upon the Borrowers, the Lenders, the Issuing Bank, the Administrative Agent, and all future holders of the Loans.  In the event of any waiver, the Borrowers, the Lenders, the Issuing Bank, and the Administrative Agent shall be restored to their respective former positions and rights hereunder and under the other Loan Documents, and any Default or Event of Default waived shall be deemed to be cured and not continuing; but no such waiver shall extend to any subsequent or other Default or Event of Default or impair any right with respect thereto.  Neither this Agreement nor any provision hereof may be changed, waived, discharged or terminated orally, but only by an instrument in writing signed by the party against whom enforcement of the change, waiver, discharge or termination is sought.

 

Borrowers:                       16825 Northchase Drive, Suite 400

                                           Houston, Texas  77060

 

 

 

 

 

Each Lender acknowledges that information furnished to it pursuant to this Agreement or the other Loan Documents may include material non-public information concerning the Borrowers

 

and their Affiliates and their Related Parties or their respective securities, and confirms that it has developed compliance procedures regarding the use of material non-public information and that it will handle such material non-public information in accordance with those procedures and applicable law, including Federal and state securities laws.

9.13 Waiver of Rights to Jury Trial.  Each Borrower, the Administrative Agent, the Issuing Bank, and each Lender hereby knowingly, voluntarily, intentionally, irrevocably, and unconditionally waive all rights to trial by jury in any action, suit, proceeding, counterclaim, or other litigation that relates to or arises out of any of this Agreement or any other Loan Document or the acts or omissions of the Administrative Agent, the Issuing Bank 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 are a material inducement for the Administrative Agent, the Issuing Bank and the Lenders entering into this Agreement.

(b) Indemnification by the Borrowers.  Each Borrower shall indemnify the Administrative Agent (and any sub-agent thereof), the Issuing Bank, each Lender and each Related Party of any of the foregoing Persons (each such Person being called an "Indemnitee") against, and hold each Indemnitee harmless from, any and all losses, claims, damages, liabilities and related expenses (including the fees, charges and disbursements of any counsel for any Indemnitee) incurred by any Indemnitee or asserted against any Indemnitee by any third party or by any Borrower or any Subsidiary arising out of, in connection with, or as a result of (i) the execution or delivery of this A greement, any other Loan Document or any agreement or instrument contemplated hereby or thereby, the performance by the parties hereto of their

respective obligations hereunder or thereunder or the consummation of the transactions contemplated hereby or thereby, (ii) any Loan or Letter of Credit or the use or proposed use of the proceeds therefrom (including any refusal by the Issuing Bank to honor a demand for payment under a Letter of Credit if the documents presented in connection with such demand do not strictly comply with the terms of such Letter of Credit), (iii) any actual or alleged presence or Release of Hazardous Substances on or from any property owned or operated by any Borrower or any of its Subsidiaries, or any liability under Environmental Laws related in any way to any Borrower or any of its Subsidiaries, or (iv) any actual or prospective claim, litigation, investigation or proceeding relating to any of the foregoing, whether based on contract, tort or any other theory, whether brought by a third party or by any Borrower or any of its Subsidiaries, and regardless of whether any Indemnitee is a party thereto, INCLUDING ANY OF THE FOREGOING ARISING FROM NEGLIGENCE, WHETHER SOLE OR CONCURRENT, OF ANY INDEMNITEE; provided that such indemnity shall not, as to any Indemnitee, be available to the extent that such losses, claims, damages, liabilities or related expenses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the bad faith, gross negligence or willful misconduct of such Indemnitee or any material breach of the obligations of such Indemnitee under the Loan Documents.

 

(e) Payments.  All amounts due under this Section shall be payable promptly after demand therefor.  The agreements in this Section 9.16 shall survive the payment and performance of all Obligations and the termination of this Agreement.

 

 

9.17 Collateral Matters; Hedging Obligations; Cash Management Obligations.  The benefit of the Security Instruments and of the provisions of this Agreement relating to any Collateral securing the Obligations shall also extend to and be available to Swap Counterparties and the Cash Management Banks on a pro rata basis in respect of any Hedging Obligations or Cash Management Obligations.  No Swap Counterparty or Cash Management Bank shall have any voting rights under any Loan Document as a result of the existence of any Hedging O bligations or Cash Management Obligations owed to it.

 

9.18 Joint and Several Liability.

 

(a) Each of the Borrowers is accepting joint and several liability hereunder in consideration of the financial accommodations provided by the Secured Parties with respect to the Loan, Letters of Credit and the other Obligations, for the mutual benefit, directly and indirectly, of each of the Borrowers and in consideration of the undertakings of each of the Borrowers to accept joint and several liability for the Obligations of each of them.

 

(b) Each of the Borrowers jointly and severally hereby irrevocably and unconditionally accepts, not merely as a surety but also as a co-debtor, joint and several liability with the other Borrower, with respect to the payment and performance of all of the Obligations, it being the intention of the parties hereto that all the Obligations shall be the joint and several obligations of all the Borrowers without preferences or distinction among them.

 

(c) If and to the extent that any of the Borrowers shall fail to make any payment with respect to any of the Obligations as and when due or to perform any of such Obligations in accordance with the terms hereof, then in each such event the other Borrower will make such payment with respect to, or perform, such Obligation.

 

(d) The obligations of each Borrower under the provisions of this Section constitute full recourse obligations of such Borrower enforceable against it to the full extent of its properties and assets, irrespective of the validity, regularity or enforceability of this Agreement or any other circumstance whatsoever.

 

(e) Except as otherwise expressly provided herein or in the other Loan Documents, each Borrower hereby waives notice of acceptance of its joint and several liability, notice of any and all Loans made or Letter of Credit issued under this Agreement, notice of occurrence of any Default or Event of Default, or of any demand for any payment under this

Agreement, notice of any action at any time taken or omitted by any Secured Party under or in respect of any of the Obligations hereunder, any requirement of diligence and, generally, all demands, notices and other formalities of every kind in connection with this Agreement and the other Loan Documents.  Each Borrower hereby assents to, and waives notice of, any extension or postponement of the time for the payment of any of the Obligations, the acceptance of any partial payment thereon, any waiver, consent or other action or acquiescence by any Secured Party at any time or times in respect of any default by any Borrower in the performance or satisfaction of any term, covenant, condition or provision of this Agreement or any other Loan Document, any and all other indulgences whatsoever by the Secured Parties in respect of any of the Obligations, and the taking, addition, substitution or release, in whole or in part, at any time or times, of any security for any of such Obligations or the addition, substitution or release, in whole or in part, of

any Borrower.  Without limiting the generality of the foregoing, each Borrower assents to any other action or delay in acting or failure to act on the part of the Secured Parties including, without limitation, any failure strictly or diligently to assert any right or to pursue any remedy or to comply fully with applicable laws or regulations thereunder, which might, but for the provisions of this Section, afford grounds for terminating, discharging or relieving such Borrower, in whole or in part, from any of its obligations under this Section, it being the intention of each Borrower that, so long as any of the Obligations remain unsatisfied, the obligations of such Borrower under this Section shall not be discharged except by performance and then only to the extent of such performance.  The obligations of each Borrower under this Section shall not be diminished or rendered unenforceable by any winding up, reorganization, arrangement, liquidation, reconstruction or similar proceeding with respect to any other Borrower.  The joint and several liability of the Borrowers hereunder shall continue in full force and effect notwithstanding any absorption, merger, amalgamation or any other change whatsoever in the name, membership, constitution or place of formation of any Borrower. amount equal to the largest amount that would not render such Borrower's obligations hereunder subject to avoidance under Section 548 of the United States Bankruptcy Code or any comparable provision of any other applicable law.

 

(h) In order to provide for just and equitable contribution among the Borrowers, the Borrowers agree that in the event a payment shall be made on any date under this Agreement by any Borrower (the "Funding Borrower"), each other Borrower (each a "Contributing Borrower") shall indemnify the Funding Borrower in an amount equal to the amount of such payment, in each case multiplied by a fraction the numerator of which shall be the net worth of the Contributing Borrower as of such date and the denominator of which shall

 

 

be the aggregate net worth of all the Contributing Borrowers together with the net worth of the Funding Borrower as of such date.  Any Contributing Borrower making any payment to a Funding Borrower pursuant to this Section 9.18(h) shall be subrogated to the rights of such Funding Borrower to the extent of such payment.

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

 

BORROWERS:

SWIFT ENERGY COMPANY

By:	/s/ Alton D. Heckaman, Jr.

Alton D. Heckaman, Jr.

Executive Vice President

 

and Chief Financial Officer

 

SWIFT ENERGY OPERATING, LLC

By:	/s/ Alton D. Heckaman, Jr.

Alton D. Heckaman, Jr.

Executive Vice President

 

and Chief Financial Officer

 

 

JPMORGAN CHASE BANK, N.A.

By:	/s/ Jo Linda Papadakis

Jo Linda Papadakis

Vice President

 

LENDER:

BANK OF SCOTLAND PLC

By:	/s/ Karen Welch

Name:

Karen Welch

Title:

Vice President

 

LENDER:

BNP PARIBAS

By:	/s/ John A. Clark

Name:

John A. Clark

Title:

Managing Director

 

LENDER:

SOCIETE GENERALE

By:	/s/ Scott Mackey

Name:

Scott Mackey

Title:

Director

 

LENDER:

WELLS FARGO BANK, N.A.

By:	/s/ Brett Steele

Name:

Brett Steele

Title:

Assistant Vice President

 

LENDER:

COMPASS BANK

By:	/s/ Spencer Stasney

Name:

Spencer Stasney

Title:

Vice President

 

LENDER:

COMERICA BANK

By:	/s/ Paul J. Edmonds

Name:

Paul J. Edmonds

Title:

Vice President

 

LENDER:

NATIXIS

By:	/s/ Liana Tchernysheva

Name:

Liana Tchernysheva

Title:

Director

 

LENDER:

AMEGY BANK NATIONAL ASSOCIATION

By:	/s/ Kenneth R. Batson, III

Name:

Kenneth R. Batson, III

Title:

Vice President