Exhibit 10.22.5.8

 

 

SEVENTH AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

AMONG

PRIMEENERGY CORPORATION

PRIMEENERGY MANAGEMENT CORPORATION

PRIME OPERATING COMPANY

EASTERN OIL WELL SERVICE COMPANY

SOUTHWEST OILFIELD CONSTRUCTION COMPANY

EOWS MIDLAND COMPANY

COMPASS BANK

AS AGENT AND LETTER OF CREDIT ISSUER

AND

THE LENDERS SIGNATORY HERETO

MARCH 1, 2010

 

 

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TABLE OF CONTENTS

 

          PAGE ARTICLE I    DEFINITIONS    1

1.1

   Terms Defined Above    1

1.2

   Terms Defined in Agreement    1

1.3

   References    1

1.4

   Articles and Sections    2

1.5

   Number and Gender    2

1.6

   Negotiated Transaction    2 ARTICLE II    AMENDMENTS    2

2.1

   Amendment of Section 2.1    2

2.2

   Amendment of Section 2.10    2

2.3

   Amendment of Section 5.4    3

2.4

   Amendment of Section 5.5    4

2.5

   Amendment of Schedule 6.1    4

2.6

   Amendment to Section 6.6    5

2.7

   Amendment of Section 6.7    5

2.8

   Amendment of Exhibit III    6 ARTICLE III    RATIFICATION AND ACKNOWLEDGMENT
   6 ARTICLE IV    REPRESENTATIONS AND WARRANTIES    6 ARTICLE V   
MISCELLANEOUS    6

5.1

   Parties in Interest    6

5.2

   Rights of Third Parties    6

5.3

   Counterparts    6

5.4

   Integration    7

5.5

   Invalidity    7

5.6

   Governing Law    7

5.7

   Scope of Amendment    7

 

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SEVENTH AMENDMENT TO

AMENDED AND RESTATED CREDIT AGREEMENT

This SEVENTH AMENDMENT TO AMENDED AND RESTATED CREDIT AGREEMENT (this
“Amendment”) is made and entered into effective as of March 1, 2010 (the
“Effective Date”), by and among PRIMEENERGY CORPORATION, a Delaware corporation,
PRIMEENERGY MANAGEMENT CORPORATION, a New York corporation, PRIME OPERATING
COMPANY, a Texas corporation, EASTERN OIL WELL SERVICE COMPANY, a West Virginia
corporation, SOUTHWEST OILFIELD CONSTRUCTION COMPANY, an Oklahoma corporation,
and EOWS MIDLAND COMPANY, a Texas corporation (collectively, the “Borrower”),
each lender that is a signatory hereto (individually, together with its
successors and assigns, a “Lender” and collectively together, with their
respective successors and assigns, the “Lenders”) and COMPASS BANK, an Alabama
banking association and successor in interest to Guaranty Bank, FSB, a federal
savings bank, as agent for the Lenders (in such capacity, together with its
successors in such capacity pursuant to the terms of the Amended and Restated
Credit Agreement referred to hereinafter, the “Agent”) and letter of credit
issuer.

WITNESSETH:

WHEREAS, the Borrower, the Lenders and the Agent are parties to that certain
Amended and Restated Credit Agreement dated December 28, 2006, as amended to the
Effective Date (as so amended, the “Agreement”), to which reference is here made
for all purposes;

WHEREAS, the Borrower, the Lenders and the Agent are desirous of amending the
Agreement in the particulars hereinafter set forth;

NOW, THEREFORE, in consideration of the mutual covenants and agreements of the
parties to the Agreement, as set forth therein, and the mutual covenants and
agreements of the parties hereto, as set forth herein, the Borrower, the Lenders
and the Agent agree as follows:

ARTICLE I

DEFINITIONS

1.1 Terms Defined Above. As used in this Seventh Amendment to Amended and
Restated Credit Agreement, each of the terms “Agent,” “Agreement,” “Amendment,”
“Borrower,” “Effective Date,” “Lender” and “Lenders” shall have the meaning
assigned to such term hereinabove.

1.2 Terms Defined in Agreement. As used herein, each term defined in the
Agreement shall have the meaning assigned thereto in the Agreement, unless
expressly provided herein to the contrary.

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1.3 References. References in this Amendment to Schedule, Exhibit, Article, or
Section numbers shall be to Schedules, Exhibits, Articles, or Sections of this
Amendment, unless expressly stated to the contrary. References in this Amendment
to “hereby,” “herein,” “hereinafter,” “hereinabove,” “hereinbelow,” “hereof,”
“hereunder” and words of similar import shall be to this Amendment 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 Amendment 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 Amendment to “writing”
include printing, typing, lithography, facsimile reproduction, and other means
of reproducing words in a tangible visible form. References in this Amendment to
amendments 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 Amendment.
References in this Amendment to Persons include their respective successors and
permitted assigns.

1.4 Articles and Sections. This Amendment, 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.

1.5 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.

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

ARTICLE II

AMENDMENTS

2.1 Amendment of Section 2.1. Section 2.1 of the Agreement is amended to delete
in its entirety the last sentence of subsection (c) of subsection B of such
Section 2.1.

 

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2.2 Amendment of Section 2.10. Section 2.10 of the Agreement is amended to read
as follows in its entirety:

“2.10 Mandatory Prepayments. If at any time the Loan Balance exceeds the sum of
the Borrowing Base then in effect and the Revolving Line of Credit Number 2 Loan
Available Commitment then in effect, the Borrower shall, within 60 days of
notice from the Agent of such occurrence, (a) prepay, or make arrangements
acceptable to the Lenders for the prepayment of, the amount of such excess for
application on the Loan Balance, (b) provide additional collateral, of character
and value satisfactory to the Lenders in their reasonable discretion, to secure
the Obligations by the execution and delivery to the Lenders of security
instruments in form and substance satisfactory to the Lenders in the exercise of
their reasonable discretion, or (c) effect any combination of the alternatives
described in the immediately preceding clauses (a) and (b) acceptable to the
Lenders in their reasonable discretion. In the event that a mandatory prepayment
is required under this Section and the Loan Balance exclusive of the L/C
Exposure is less than the amount required to be prepaid, the Borrower shall
repay the entire Loan Balance exclusive of the L/C Exposure and, in accordance
with the provisions of the relevant Letter of Credit Applications executed by
the Borrower or otherwise to the reasonable satisfaction of the Lenders, deposit
with the Agent, as additional collateral securing the Obligations, an amount of
cash, in immediately available funds, equal to the L/C Exposure in excess of the
sum of the Borrowing Base then in effect and the Revolving Line of Credit No. 2
Loan Available Commitment then in effect. The cash deposited with the Agent in
satisfaction of the requirement provided in this Section may be invested, at the
reasonable discretion of the Agent and then only at the express direction of the
Borrower as to investment vehicle and maturity (which shall be no later than the
latest expiry date of any then outstanding Letter of Credit), for the account of
the Borrower in cash or cash equivalent investments offered by or through the
Agent.”

2.3 Amendment of Section 5.4. Section 5.4 of the Agreement is amended to read as
follows in its entirety:

“5.4 Oil and Gas Reserve Reports. (a) Deliver to the Agent no later than May 1
of each year during the term of this Agreement, engineering reports in form and
substance satisfactory to the Agent, certified by Ryder Scott Company or by any
nationally-recognized or regionally-recognized independent consulting petroleum
engineers acceptable to the Agent, as fairly and accurately setting forth
(i) the proven and producing, shut-in, behind-pipe, and undeveloped oil and gas
reserves (separately classified as such) attributable, as of January 1 of the
year for which such reserve reports are furnished, to the Oil and Gas Properties
of the Borrower and those limited partnerships in which the Borrower is a
partner and the partnership interest of the Borrower in such limited
partnerships is subject to a first priority Lien in favor of the Agent to secure
the Obligations, (ii) the aggregate present value of the future net income with
respect to such Oil and Gas Properties, discounted at a stated per annum
discount rate of proven and producing reserves, (iii) projections of the annual
rate of production, gross income, and net income with respect to such proven and
producing reserves, and (iv) information with respect to the “take-or-pay,”
“prepayment,” and gas-balancing liabilities of the Borrower or any relevant
limited partnership.

 

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(b) Deliver to the Agent no later than November 1 of each year during the term
of this Agreement, engineering reports in form and substance satisfactory to the
Agent prepared by or under the supervision of any nationally-recognized or
regionally-recognized independent consulting petroleum engineer evaluating the
Oil and Gas Properties of the Borrower and those limited partnerships in which
the Borrower is a partner and the partnership interest of the Borrower in such
limited partnership is subject to a first priority Lien in favor of the Agent to
secure the Obligations as of July 1 of the year for which such reserve reports
are furnished and updating the information provided in the reports pursuant to
Section 5.4(a).

(c) Each of the reports provided pursuant to this Section shall be submitted to
the Agent together with additional data concerning pricing, quantities of
production from the Mortgaged Properties, volumes of production sold, purchasers
of production, gross revenues, expenses, identification of wells listed on the
relevant report owned by limited partnerships, rather than by the Borrower
directly, and confirming that the working interest and net revenue interest set
forth for each such well in the relevant report represents the Borrower’s
partnership interest share of the total working interest and total net revenue
interest of the relevant limited partnership in the relevant well and such other
information and engineering and geological data with respect thereto as the
Agent may reasonably request.”

2.4 Amendment of Section 5.5. Section 5.5 of the Agreement is amended to read as
follows in its entirety:

“5.5 Title Opinions; Title Defects; Collateral. Promptly upon the request of the
Agent, furnish to the Agent title opinions, in form and substance and by counsel
satisfactory to the Agent, or other confirmation of title acceptable to the
Agent, covering Oil and Gas Properties constituting not less than 80% of the
present value, determined by the Agent in its sole discretion, of the Oil and
Gas Properties included in the Borrowing Base; and promptly, but in any event
within 60 days after notice by the Agent of any defect, material in the opinion
of the Agent, in value in the title of the Borrower or the relevant limited
partnership to any of the Oil and Gas Properties included in the Borrowing Base,
clear such title defects, and, in the event any such title defects are not cured
in a timely manner, pay all related costs and fees incurred by the Agent to do
so. The Borrower further agrees to provide the Agent, at all times during the
term of this Agreement, with valid first priority Liens on Oil and Gas
Properties or partnership interests constituting not less than 80% of the
present value, determined by the Agent in its sole discretion, of all the Oil
and Gas Properties included in the Borrowing Base.”

 

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2.5 Amendment of Schedule 6.1. Section 6.1 of the Agreement is amended to read
as follows in its entirety:

“6.1 Indebtedness. Create, incur, assume, or suffer to exist, and will not
permit any limited partnership of which the Borrower serves as the sole general
partner or the managing general partner and which owns Oil and Gas Properties
contributing to the Borrowing Base to 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 60 days beyond invoice date or are being contested in good
faith and as to which such reserve as is required by GAAP has been made ,
(c) Commodity Hedge Agreements, in form and substance and with a Person
acceptable to the Lender, provided that (i) each commitment issued under such
agreement must also be approved by the Lender, (ii) such agreements shall not be
entered into with respect to Oil and Gas Properties included in the Borrowing
Base constituting more than 85% of monthly production of proven producing
reserves as forecast in the most recent engineering report, provided by the
Borrower, utilizing the Agent’s then current commodity price forecast and
approved by the Agent, and (iv) the Agent shall receive a security interest in
the Commodity Hedge Agreements, (d) Rate Management Transactions, in form and
substance and with a Person acceptable to the Agent or (e) other unsecured
Indebtedness of the Borrower not exceeding $1,500,000 in the aggregate at any
point in time; or vote its partnership interest in Chase Energy, L.P., a Texas
limited partnership, in favor of such entity’s incurring any Indebtedness other
than Indebtedness of the character falling within the preceding proviso in this
Section 6.1, Indebtedness owing to the Borrower as a result of loans or advances
from the Borrower not prohibited by the provisions of Section 6.6 or Section 6.7
and Indebtedness owing to Westwind Exploration, LLC, a Texas limited liability
company in an amount equal to such Indebtedness owing to the Borrower.”

2.6 Amendment to Section 6.6. Section 6.6 of the Agreement is amended to
substitute the following for clause (c) of the proviso appearing in such
Section 6.6:

“(c) loans or advances to limited partnerships in which the interest of the
Borrower therein is subject to a first priority Lien in favor of the Agent to
secure the Obligations (including, for the avoidance of doubt, Chase Energy,
L.P., a Texas limited partnership) outstanding as of December 31, 2009 and
additional loans and advances made thereafter not exceeding $1,000,000 in the
aggregate each calendar year when considered together with Investments by the
Borrower which are the subject of clause (e) in the proviso appearing in
Section 6.7.”

2.7 Amendment of Section 6.7. Section 6.7 of the Agreement is amended to delete
“or” preceding clause (d) of the proviso appearing in such Section 6.7 and to
add the following immediately after such clause (d):

“, or (e) Investments in limited partnerships in which the interest of the
Borrower therein is subject to a first priority Lien in favor of the Agent to
secure the Obligations (including, for the avoidance of doubt, Chase Energy,
L.P., a Texas limited partnership) existing as of December 31, 2009 and
additional Investments made thereafter not exceeding $1,000,000 in the aggregate
each calendar year when considered together with loans and advances by the
Borrower which are the subject of clause (c) in the proviso appearing in
Section 6.6.”

 

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2.8 Amendment of Exhibit III. Exhibit III to the Agreement is replaced with the
Exhibit III appended to this Amendment.

ARTICLE III

RATIFICATION AND ACKNOWLEDGMENT

Each of the Borrower, the Lenders and the Agent does hereby adopt, ratify and
confirm the Agreement, as amended hereby, and acknowledges and agrees that the
Agreement, as amended hereby, and each of the other Loan Documents to which it
is a party is and remains in full force and effect. Each of the Borrower, the
Lenders and the Agent hereby agrees and acknowledges that: (a) as of the
Effective Date, the Borrowing Base is $93,500,000, (b) as of the Effective Date,
the Revolving Line of Credit No. 2 Loan Available Commitment is $6,500,000,
(c) as of the Effective Date the Monthly Reduction Amount is $2,000,000, with
the first reduction of the Borrowing Base amount subsequent to the Effective
Date as a result of such Monthly Reduction Amount to occur on June 1, 2010.

ARTICLE IV

REPRESENTATIONS AND WARRANTIES

The Borrower does hereby re-make in favor of the Lenders and the Agent each of
the representations and warranties made by it in the Loan Documents to which it
is a party and further represents and warrants that each of such representations
and warranties made by it remains true and correct as of the date of execution
of this Amendment. Further to the foregoing, the Borrower specifically
represents and warrants to the Lenders and the Agent that no Default or Event of
Default existing as of the date of execution of this Amendment and giving effect
to this Amendment.

ARTICLE V

MISCELLANEOUS

5.1 Parties in Interest. This Amendment shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns
permitted pursuant to the Agreement.

5.2 Rights of Third Parties. Except as provided in Section 5.1, all provisions
herein are imposed solely and exclusively for the benefit of the parties hereto.

5.3 Counterparts. This Amendment may be executed by one or more of the parties
hereto in any number of separate counterparts, and all of such counterparts
taken together shall be deemed to constitute one and the same instrument and
shall be enforceable upon the execution of one or more counterparts hereof by
each of the parties hereto. In this regard, each of the parties hereto
acknowledges that a counterpart of this Amendment containing a set of
counterpart execution pages reflecting the execution of each party hereto shall
be sufficient to reflect the execution of this Amendment by each necessary party
hereto and shall constitute one instrument.

 

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5.4 Integration. This Amendment constitutes the entire agreement among the
parties hereto with respect to the subject hereof. All prior understandings,
statements and agreements, whether written or oral, relating to the subject
hereof are superseded by this Amendment.

5.5 Invalidity. IN THE EVENT THAT ANY ONE OR MORE OF THE PROVISIONS CONTAINED IN
THIS AMENDMENT SHALL FOR ANY REASON BE HELD INVALID, ILLEGAL OR UNENFORCEABLE IN
ANY RESPECT, SUCH INVALIDITY, ILLEGALITY OR UNENFORCEABILITY SHALL NOT AFFECT
ANY OTHER PROVISION OF THIS AMENDMENT.

5.6 Governing Law. THIS AMENDMENT SHALL BE DEEMED TO BE A CONTRACT MADE UNDER
AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE
OF TEXAS, WITHOUT REGARD TO PRINCIPLES OF SUCH LAWS RELATING TO CONFLICT OF
LAWS.

5.7 Scope of Amendment. This Amendment shall constitute a Loan Document. The
execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
any Lender or the Agent under any of the Loan Documents, nor, except as
expressly provided herein, constitute a waiver or amendment of any provision of
any of the Loan Documents.

(Signatures appear on following pages)

 

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IN WITNESS WHEREOF, this Seventh Amendment to Amended and Restated Credit
Agreement is executed effective as of the Effective Date.

 

BORROWER: PRIMEENERGY CORPORATION

PRIMEENERGY MANAGEMENT CORPORATION

PRIME OPERATING COMPANY EASTERN OIL WELL SERVICE COMPANY

SOUTHWEST OILFIELD CONSTRUCTION COMPANY

EOWS MIDLAND COMPANY By:  

 

  Beverly A. Cummings  

Executive Vice President, Treasurer and

Chief Financial Officer of each such entity

(Signatures continue on following pages)

 

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AGENT:

COMPASS BANK

(successor in interest

to Guaranty Bank, FSB),

as Agent

By:  

 

  Kathleen J. Bowen   Senior Vice President LENDER:

COMPASS BANK

(successor in interest

to Guaranty Bank, FSB)

By:  

 

  Kathleen J. Bowen   Senior Vice President

(Signatures continue on following pages)

 

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LENDER: BNP PARIBAS By:  

 

Name:  

 

Title:  

 

By:  

 

Name:  

 

Title:  

 

(Signatures continue on following page)

 

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LENDER: JPMORGAN CHASE BANK, N.A. By:  

 

  Jo Linda Papadakis   Vice President

 

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EXHIBIT III

[FORM OF COMPLIANCE CERTIFICATE]

(date)

Compass Bank

24 Greenway Plaza

Suite 1400A

Houston, Texas 77046

Attention: Kathleen J. Bowen

 

  Re: Amended and Restated Credit Agreement dated as of December 28, 2006, as
amended, by and among PRIMEENERGY CORPORATION, PRIMEENERGY MANAGEMENT
CORPORATION, PRIME OPERATING COMPANY, EASTERN OIL WELL SERVICE COMPANY,
SOUTHWEST OILFIELD CONSTRUCTION COMPANY, EOWS MIDLAND COMPANY and COMPASS BANK,
successor in interest to Guaranty Bank, FSB, as Agent, and the Lenders signatory
thereto from time to time (as amended, restated, or supplemented from time to
time, the “Credit Agreement”)

Ladies and Gentlemen:

Pursuant to applicable requirements of the Credit Agreement, the undersigned, as
a Responsible Officer of the Borrower, hereby certifies to you the following
information as true and correct as of the date hereof or for the period
indicated, as the case may be:

1. To the best of the knowledge of the undersigned, no Default or Event of
Default exists as of the date hereof or has occurred since the date of our
previous certification to you, if any.

1. To the best of the knowledge of the undersigned, the following Defaults or
Events of Default exist as of the date hereof or have occurred since the date of
our previous certification to you, if any, and the actions set forth below are
being taken to remedy such circumstances:

2. The compliance of the Borrower with the financial covenants of the Credit
Agreement, as of the close of business on                     , is evidenced by
the following:

 

  (a) Section 6.1: Limitation on Commodity Hedge Agreements. See the attached
report demonstrating compliance with this limitation.

 

  (b) Section 6.6: Limitation on Loans and Advances to Limited Partnerships and
Prime Offshore, L.L.C. See the attached report demonstrating compliance with
this limitation.

 

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  (c) Section 6.7: Limitation on Investments in Limited Partnerships. See the
attached report demonstrating compliance with this limitation.

 

  (d) Section 6.13: Interest Coverage Ratio. Permit, as of the close of any
fiscal quarter, the ratio of (a) quarterly EBITDAX on a trailing four-quarter
basis to (b) Interest Expense to be less than 3.00 to 1.00, measured on a
trailing four-quarter basis.

 

    Actual  

                     to 1.0

 

  (e) Section 6.14: Current Ratio. Permit, as of the close of any fiscal
quarter, the ratio of Current Assets to Current Liabilities to be less than 1.00
to 1.00.

 

    

Actual

 

                     to 1.0

 

  (f) Section 6.15: Tangible Net Worth. Permit Tangible Net Worth, as of the
close of any fiscal quarter, to be less than $40,000,000 at September 30, 2006,
plus 75% of positive quarterly net income thereafter.

 

  Actual

 

  (g) Section 6.16: Bank Debt Coverage Ratio. Permit, as of the close of any
fiscal quarter, the ratio of (a) Bank Debt to (b) EBITDAX to be greater than
4.00 to 1.00, measured on a trailing four-quarter basis.

 

    

Actual

                       to 1.0

 

  3. No Material Adverse Effect has occurred since the date of the Financial
Statements dated as of                     .

 

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Each capitalized term used but not defined herein shall have the meaning
assigned to such term in the Credit Agreement.

 

Very truly yours, PRIMEENERGY CORPORATION PRIMEENERGY MANAGEMENT CORPORATION,
PRIME OPERATING COMPANY, EASTERN OIL WELL SERVICE COMPANY, SOUTHWEST OILFIELD
CONSTRUCTION COMPANY EOWS MIDLAND COMPANY By:  

 

  Beverly A. Cummings   Executive Vice President, Treasurer, and   Chief
Financial Officer   of each such entity

 

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