Exhibit 10.4

  

THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT

 

THIS THIRD AMENDMENT TO CREDIT AND GUARANTY AGREEMENT (this “Amendment”) is
entered into as of April 28, 2020, by and among Driftwood Holdings LP (f/k/a
Driftwood Holdings LLC), a Delaware limited partnership, as borrower (the
“Borrower”), each of the Guarantors party hereto, each of the Lenders that is a
signatory hereto, and Wilmington Trust, National Association, as administrative
agent (in such capacity, together with its successors and permitted assigns in
such capacity, the “Administrative Agent”). Capitalized terms used and not
otherwise defined herein shall have the meanings given to them in the Credit
Agreement (as defined below).

 

RECITALS

 

A.       The Borrower, the Administrative Agent, the Guarantors from time to
time party thereto, the lenders from time to time party thereto as lenders (the
“Lenders”), and Wilmington Trust, National Association, as Collateral Agent,
have entered into that certain Credit and Guaranty Agreement, dated as of May
23, 2019, as amended by that certain First Amendment to Credit and Guaranty
Agreement, dated as of February 28, 2020 and by that Second Amendment to Credit
and Guaranty Agreement, dated as of March 23, 2020 (as further amended,
restated, amended and restated, supplemented or otherwise modified from time to
time in accordance with its provisions prior to the date hereof, the “Credit
Agreement”).

 

B.       The Borrower wishes to amend, and the Lenders party hereto,
constituting all of the Lenders, are willing to amend, the Credit Agreement and
the other Financing Documents on the terms and subject to the conditions set
forth herein.

 

C.       Pursuant to Section 10.02(b) of the Credit Agreement, each amendment to
the Credit Agreement set forth herein shall not be effective unless set forth in
a writing signed by the Borrower and each Lender affected by such amendment and
acknowledged by the Administrative Agent.

 

NOW THEREFORE, in consideration of the premises set forth above and other good
and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereby agree as follows:

 

1.       Amendments to Credit Agreement. The Borrower and the Lenders party
hereto (constituting collectively all of the Lenders) hereby agree to amend the
Credit Agreement on the Third Amendment Effective Date (as defined below) as
follows:

 

(a)Section 1.01 of the Credit Agreement is hereby amended by adding the
following new definitions in the appropriate alphabetical order:

 

“Equivalent Exchange Offer” has the meaning set forth in Section 6.16.

 

“High Trail Notes” means one or more senior unsecured notes originally issued in
favor of High Trail Capital LP (or an Affiliate thereof) in the original
aggregate principal amount of $56,000,000, together with any exchanged notes in
favor of High Trail Capital LP (or an Affiliate thereof); provided that (a) the
terms of each such note (whether an original or an exchanged note) are identical
(other than with respect to the beneficiary of such note and the principal
amount of such note); and (b) the aggregate principal amount of all such
outstanding notes (whether an original note or an exchanged note) does not at
any time exceed $56,000,000.

 

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“HT Excluded Account” means, collectively, a single unencumbered deposit account
and a single unencumbered securities account, each of which is held solely in
the name of Tellurian and used solely to comply with the minimum cash balance
requirement contained in the High Trail Notes.

 

“Minimum Price” means, as of any relevant time in Section 6.16, as that term is
defined in Nasdaq Rule 5635(d)(1)(A) or any successor rule.

 

“Notes Exchange” has the meaning set forth in Section 6.16.

 

“Second NCS Warrant Agreement” means that certain Warrant to Purchase Common
Stock, dated as of the Third Amendment Effective Date, issued by Tellurian to
Nineteen77 Capital Solutions A LP, as amended, restated or otherwise modified
from time to time.

 

“Third Amendment” means that certain Third Amendment to Credit and Guaranty
Agreement, dated as of April 28, 2020, among the Borrower, the Administrative
Agent, and the Lenders party thereto, which amends this Agreement.”

 

“Third Amendment Effective Date” shall have the meaning set forth in the Third
Amendment.

 

(b)Section 1.01 of the Credit Agreement is hereby amended by amending and
restating the definition of “Excluded Accounts” in its entirety as follows:

 

“Excluded Accounts” means any deposit account or securities account that: (a) is
used solely as a zero-balance payroll account, or solely as an account dedicated
to the payment of accrued employee benefits, or medical, dental and employee
benefits claims, to employees of Tellurian or any Subsidiary thereof; (b) is
used solely as a tax withholding account; (c) is used solely as an escrow
account, a fiduciary or trust account, or other account that is contractually
obligated to be segregated from the other assets of Tellurian or a Subsidiary
thereof for the benefit of unaffiliated third parties in connection with an
acquisition, disposition, or post-closing indemnity required under a purchase
and sale agreement (other than for the issuance of Capital Stock of Tellurian or
any Borrower Group Member); (d) is a segregated account, the balance of which
consists exclusively of funds due and owing to unaffiliated third parties in
connection with royalty payment obligations owed to such third parties, or
working interest payments received from unaffiliated third parties, solely to
the extent such amounts constitute property of such third party held in trust;
(e) is a fiduciary or trust account for the benefit of a Governmental Authority
securing plugging, abandonment, and similar obligations incurred in the ordinary
course of business; (f) subject to Section 5.18(f), is used by Tellurian to
raise capital through the sale of its Capital Stock under its “at the market” or
market equity program; (g) is an escrow account used solely to hold down
payments related to the proposed sale of the Capital Stock of the Borrower; (h)
is an escrow account required by the Driftwood EPC Contract (Phase 1), Driftwood
EPC Contract (Phase 2), Driftwood EPC Contract (Phase 3) or Driftwood EPC
Contract (Phase 4); (i) is a BofA LC Cash Collateral Account or a BofA CC Cash
Collateral Account; (j) is a zero-balance account held by Tellurian Services LLC
(for accounts payable) or Tellurian Supply & Trade LLC (for the receipt of
proceeds from third-party gas sales); (k) is owned or held by ProductionCo or
any of its Subsidiaries, but only for so long as ProductionCo or such
Subsidiary, as applicable, is not required to be a Guarantor hereunder; (l) is
owned or held by any Foreign Subsidiary; (m) is a securities account holding
Capital Stock in UK Oil & Gas PLC received as consideration from Tellurian
Investment’s sale of the Capital Stock of Magellan Petroleum (UK) Investment
Holdings Limited; and (n) the HT Excluded Account.”

 

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(c)Section 1.01 of the Credit Agreement is hereby amended by adding “the Second
NCS Warrant Agreement,” immediately after “the NCS Warrant Agreement,” in the
definition of “Financing Documents”.      (d)Section 1.01 of the Credit
Agreement is hereby amended by adding “or the Second NCS Warrant Agreement”
immediately after “the NCS Warrant Agreement” in the definition of “Indemnified
Taxes”.

 

(e)Section 1.01 of the Credit Agreement is hereby amended by amending and
restating Clause (e) of the definition of “Permitted Restricted Payments” in its
entirety as follows:

 

“(e)       Restricted Payments in respect of an exercise of or pursuant to the
terms of (i) the warrant shares under the NCS Warrant Agreement, (ii) the
warrant shares under the Second NCS Warrant Agreement and (iii) the warrant
shares under that certain Warrant to Purchase Common Stock, dated as of the date
hereof, by Tellurian in favor of High Trail Investments SA LLC (as in effect on
the execution date of the Third Amendment or as amended or modified in a manner
not materially adverse to the Lenders, Tellurian, or the other equity holders of
Tellurian).”

 

(f)Section 1.01 of the Credit Agreement is hereby amended by adding the
following to the end of the Clause (c) of the definition of “Restricted
Payment”:

 

“(other than payments to an equity owner of Tellurian in respect of Permitted
Indebtedness)”

 

(g)Section 5.18 of the Credit Agreement is hereby amended to add the following
as new clause (f) thereto:

 

“(f)       Notwithstanding anything to the contrary in this Agreement, to the
extent: (i) Tellurian or any of its direct or indirect Subsidiaries (other than
ProductionCo or any of its Subsidiaries) receives the cash proceeds of: (A) any
Indebtedness incurred under Section 6.02(t); or (B) the issuance of any Capital
Stock of Tellurian through Tellurian’s “at the market” or market equity program;
and (ii) such cash proceeds are received in an account that is not a Collateral
Account, then the Borrower and each Guarantor shall, and shall cause any direct
or indirect Subsidiary of Tellurian who is not a Guarantor to, transfer such
proceeds to a Collateral Account held by Tellurian Investments: (x) pursuant to
a standard sweep instruction in place on the execution date of the Third
Amendment for the account that receives such proceeds (without any modification
of such instruction on or after such date); or (y) within two (2) Business Day
after receipt thereof.”

 

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(h)Section 5.20 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

 

“Section 5.20 Material Non-Public Information. Upon delivery by the Borrower or
Tellurian to any Secured Party (or receipt by any Secured Party from the
Borrower or Tellurian) of any notice in accordance with the terms of this
Agreement, unless the Borrower or Tellurian has in good faith determined that
the matters relating to such notice do not constitute material, non-public
information relating to Tellurian or any of its Subsidiaries, Tellurian shall,
and the Borrower shall cause Tellurian to, on or prior to 9:00 am New York city
time on the Business Day immediately following such notice delivery date, to
publicly disclose such material, non-public information on a Form 8-K or
otherwise. In the event that the Borrower or Tellurian believes that a notice
contains material, non-public information relating to Tellurian or any of its
Subsidiaries, the Borrower or Tellurian shall so indicate to the applicable
Secured Party explicitly in writing in such notice (or immediately upon receipt
of such notice by the applicable Secured Party, as applicable), and in the
absence of any such written indication in such notice (or notification from the
Borrower or Tellurian immediately upon receipt of notice from the applicable
Secured Party), such Secured Party shall be entitled to presume that information
contained in the notice does not constitute material, non-public information
relating to Tellurian or any of its Subsidiaries.”

 

(i)Section 6.02 of the Credit Agreement is hereby amended by (i) deleting “and”
from clause (q) thereof, (ii) replacing the “.” in clause (r) thereof with a “;”
and (iii) adding the following clauses (s) and (t) in the correct alphabetical
order:

 

“(s)       Indebtedness incurred by Tellurian under the High Trail Notes (as
such notes are in effect on the execution date of the Third Amendment and as
amended as permitted under Section 6.16); and

 

(t)       any unsecured Indebtedness incurred by Tellurian or any of its
Subsidiaries to, or guaranteed in whole or in part by, any governmental
authority, but only to the extent such Indebtedness is incurred pursuant to, and
is subject to the requirements of: (i) the Coronavirus Aid, Relief and Economic
Security (“CARES”) Act (H.R. 6074, H.R. 6201, H.R. 748 and H.R. 266 (116)); or
(ii) any other loan or grant programs made available to Tellurian of any of its
Subsidiaries under any financial support or funding program sponsored, funded,
or guaranteed, in whole or in part, by any Federal Reserve Bank, the Board of
Governors of the Federal Reserve Bank, or any federal, state, or local
governmental authority or body, in each case in response to, and to provide
relief from, impacts of the COVID-19 pandemic.”

 

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(j)Section 6.11(d) of the Credit Agreement is hereby amended to add the
following after the reference to “Closing Date” therein:

 

“, is an HT Excluded Account, is an account listed on Schedule I of the Third
Amendment (which accounts shall be used solely for the receipt of funds under
Tellurian’s “at the market” or market equity program),”

 

(k)Section 6.11 of the Credit Agreement is hereby amended to add the following
as new clause (e) thereto:

 

“(e)       Notwithstanding anything to the contrary in this Agreement, other
than on an intraday basis on the date on which the proceeds of the High Trail
Notes are received, under no circumstances shall the Borrower or any Guarantor
permit the total amount on deposit in the HT Excluded Account to exceed at any
time the lesser of: (i) $10,400,000; and (ii) the amount of unrestricted and/or
unencumbered cash that Tellurian is required to maintain in a deposit account or
securities account held by Tellurian pursuant to the High Trail Notes (as such
notes are in effect on the execution date of the Third Amendment), taking into
account any amounts on deposit in the Collateral Accounts.”

 

(l)Article VI of the Credit Agreement is hereby amended to add the following as
new Section 6.16 thereto:

 

“Section 6.16     High Trail Notes. Notwithstanding anything to the contrary in
this Agreement, each Loan Party shall not amend or modify, or permit the
amendment or modification of, the High Trail Notes or the terms thereof (whether
through an amendment, side letter agreement, or any other contract, agreement,
or understanding) in a manner that:

 

(a)       except as set forth below, amends or modifies the amount or frequency
of “Amortization Payments” or “Additional Amortization Payments” (as each term
is defined in the High Trail Notes as of the execution date of the Third
Amendment) under the High Trail Notes in a manner that is materially more
burdensome, taken as a whole, upon Tellurian and its Subsidiaries than exist
under the High Trail Notes immediately prior to such amendment or modification
as determined by Tellurian (such determination to be evidenced in a written
certification delivered by the Borrower to the Administrative Agent prior to the
effectiveness of such amendment or modification certifying that such change will
not materially increase the likelihood of a payment default under the High Trail
Notes); provided that no such amendment or modification shall require Tellurian
to make “Additional Amortization Payments” under and as defined in the High
Trail Notes in excess of $8,000,000 in the aggregate; and

 

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(b)        amends or modifies any affirmative or negative covenant in Section 8
of the High Trail Notes (or in any other part of the High Trail Notes) to impose
material additional or increased burdens or obligations on Tellurian and its
Subsidiaries taken as a whole;

 

(c)       (i) expands the events or circumstances that constitute an “Event of
Default” under and as defined in the High Trail Notes (or provides for a similar
event); or (ii) expands or modifies the remedies available to holders of the
High Trail Notes in connection with an Event of Default (or another default),
including any amendment or modification that effects the amount or application
of the “Event of Default Acceleration Amount” or amends or modifies Section
10(D) thereof or related definitions thereof in respect of the remedy of
conversion of the High Trail Notes into equity securities of Tellurian upon an
“Event of Default” under and as defined in the High Trail Notes, in each case
under clause (ii), in a manner adverse to Tellurian or the Lenders;

 

(d)       provides for, or results in, a security interest in, or lien on, any
assets of Tellurian or any of its Subsidiaries in favor of the holders of the
High Trail Notes (or any agent on their behalf);

 

(e)       imposes any new interest obligations on the principal balance of the
High Trail Notes or on any amounts owed by Tellurian in connection with the High
Trail Notes, increases any default interest rate under the High Trail Notes, or
imposes any new or additional fees on Tellurian in connection with the High
Trail Notes (other than any new or additional fees that are payable solely in
Tellurian Stock (or warrants to purchase Tellurian Stock), and solely to the
extent an equivalent amount of new or additional fees (for an equivalent amount
of Tellurian Stock or warrants, as applicable) are offered to the Lenders at the
time, and on the same terms, as are offered under the High Trail Notes);

 

(f)       amends or modifies Section 6 of the High Trail Notes (or any other
amendment or modification of the High Trail Notes that effectively results in a
modification or amendment of Section 6 of the High Trail Notes) that is
materially adverse to the Lenders;

 

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(g)       increases the outstanding aggregate principal amount owed by Tellurian
under the High Trail Notes; or

 

(h)      otherwise imposes materially more burdensome terms, taken as a whole,
upon Tellurian and its Subsidiaries than exist under the High Trail Notes
immediately prior to such amendment or modification.

 

In addition:

 

(x)       under no circumstances shall any Loan Party amend or modify, or permit
the amendment or modification of, the High Trail Notes or the terms thereof
(whether through an amendment, side letter agreement, or any other contract,
agreement, or understanding), or enter into any other agreement, in any such
case if the effect thereof is to increase the aggregate economics payable to the
holders of the High Trail Notes thereunder in cash, or to otherwise increase the
cash amounts payable under or in connection with the High Trail Notes; provided
that nothing in this clause (x) is intended to limit or prohibit: (i) any change
to the amount or frequency of “Amortization Payments” or “Additional
Amortization Payments” (as each term is defined in the High Trail Notes as of
the execution date of the Third Amendment) under the High Trail Notes that are
not prohibited by Section 6.16(a) or clause (y) below; and (ii) any increase in
the aggregate economics, or the amounts payable, under or in connection with the
High Trail Notes that are payable solely in Tellurian Stock (or warrants to
purchase Tellurian Stock), and solely to the extent such additional economics or
payments (in the form of an equivalent amount of Tellurian Stock or warrants, as
applicable) are offered to the Lenders at the time, and on the same terms, as
are offered under the High Trail Notes; and

 

(y)       except to the extent set forth in Section 10(D) of the High Trail
Notes (as in effect on the execution date of the Third Amendment), neither
Tellurian nor any other Loan Party shall exchange, or agree to the exchange of,
any principal amount of the High Trail Notes into Tellurian Stock (a “Notes
Exchange”), except:

 

(i) at or above the Minimum Price; or

 

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(ii) at a discount to the Minimum Price, but only if, after 4:00 p.m. Eastern
time but prior to 6:00 p.m. Eastern time on the date the binding agreement for
the Notes Exchange is executed (the “Exchange Notice Date”), Tellurian shall
have delivered to the Lenders: (A) a written offer to the Lenders to exchange,
subject to the requirements of applicable law and Nasdaq rules, up to an equal
amount of the principal of the Loans into Tellurian Stock at the same price
(each such offer, an “Equivalent Exchange Offer”); and (B) a copy of the
irrevocable and binding documentation governing such Notes Exchange; provided
that if the Lenders, due to applicable law or Nasdaq rules, would be prohibited
from receiving the maximum amount of Tellurian Stock that the Lenders would be
entitled to acquire pursuant to such Equivalent Exchange Offer based on the
foregoing, then the total principal amount of the Loans that the Lenders may
exchange shall be limited to the amount permitted by applicable law or Nasdaq
rules, after taking into account the amount of High Trail Notes to be exchanged
in the Note Exchange.

 

If, after receipt of an Equivalent Exchange Offer in accordance with the
foregoing, a Lender notifies the Borrower of its election to participate in such
Equivalent Exchange Offer by 11:00 p.m. Eastern time on the applicable Exchange
Notice Date, and Tellurian and the other Loan Parties have otherwise complied
with this Section 6.16 in connection with such Notes Exchange and Equivalent
Exchange Offer, then, subject to the requirements of applicable law and Nasdaq
rules, Tellurian shall, as soon as practicable thereafter: (I) consummate such
Notes Exchange in accordance with the terms on which the related Equivalent
Exchange Offer were based; and (II) consummate the exchange of the Loans
pursuant to the terms of such Equivalent Exchange Offer; provided that the
Tellurian Stock issued pursuant to such Notes Exchange and such Equivalent
Exchange Offer must be issued to their respective recipients simultaneously.

 

If, after receipt of an Equivalent Exchange Offer in accordance with the
foregoing, a Lender does not notify the Borrower of its election to participate
in such Equivalent Exchange Offer by 11:00 p.m. Eastern time on the applicable
Exchange Notice Date, and Tellurian and the other Loan Parties have otherwise
complied with this Section 6.16 in connection with such Notes Exchange and
Equivalent Exchange Offer, then, subject to the requirements of applicable law
and Nasdaq rules, Tellurian shall be permitted: (I) to consummate such Notes
Exchange in accordance with the terms on which the related Equivalent Exchange
Offer were based; and (II) such Lender shall have no later than three (3)
Business Days after such Exchange Notice Date to notify the Borrower of its
election to participate in such Equivalent Exchange Offer. If such Lender elects
to participate in such Equivalent Exchange Offer, then Tellurian and such Lender
shall consummate the exchange of the Loans pursuant to the terms of such
Equivalent Exchange Offer as soon as practicable thereafter.

 

If, after receipt of an Equivalent Exchange Offer in accordance with the
foregoing, a Lender does not notify the Borrower of its election to participate
in such Equivalent Exchange Offer by 11:00 p.m. Eastern time on the third (3rd)
Business Day after the applicable Exchange Notice Date, then such Lender shall
be deemed to have waived its right to accept such Equivalent Exchange Offer.”

 

 

(m)Article VI of the Credit Agreement is hereby amended to add the following as
new Section 6.17 thereto:

 

“Section 6.17     No Prepayment Restrictions. No Loan Party shall enter into,
permit the maintenance of, or suffer to exist any contract, agreement, or other
understanding that prohibits or restricts the ability of the Borrower to prepay
the Loans in accordance with Section 2.05.”

 

(n)Section 7.01(d) of the Credit Agreement is hereby amended by:

 

(i)adding “Section 5.18(f),” after “Section 5.13” in clause (i) thereof;

 

(ii)adding the word “or” immediately after the semicolon at the end of clause
(ii) thereof; and

 

(iii)adding the following new clause (iii) thereto:

 

“(iii)       Section 3 of the Third Amendment.”

 

(o)Section 7.01(p) of the Credit Agreement is hereby amended by adding “or the
Second NCS Warrant Agreement” immediately after the reference to “the NCS
Warrant Agreement” therein.

 

(p)Section 7.01 of the Credit Agreement is hereby amended to add the following
as new clause (s) thereto:

 

“(s)       without limiting or modifying Section 7.01(r), a default by Tellurian
with respect to any Indebtedness of at least one million dollars ($1,000,000),
or any of its Subsidiaries with respect to any Indebtedness of at least one
million dollars ($1,000,000) (in each case, or its foreign currency equivalent
and other than Indebtedness under the Financing Documents and any lease that
would have been characterized as an operating lease under GAAP as in effect on
December 31, 2018 (whether such lease was entered into before or after such
date)), in each case, which results in such amount of Indebtedness becoming due
prior to its scheduled maturity, unless such default has been waived or cured;”

 

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(q)Section 10.17 of the Credit Agreement is hereby deleted in its entirety and
replaced with the following:

 

“Section 10.17 [Reserved].”

 

2.       Conditions. The amendments to the Credit Agreement set forth in Section
1 above shall not become effective until the date (the “Third Amendment
Effective Date”) on which all of the following conditions have been satisfied:

 

(a)The Borrower, each Lender party hereto (constituting all of the Lenders),
each Guarantor, and the Administrative Agent have delivered their fully executed
signature pages hereto.

 

(b)The Borrower shall have prepaid (in addition to any prepayments of the Loans
made prior to the date hereof) the Loans on a pro rata basis pursuant to Section
2.05(a) of the Credit Agreement an aggregate principal amount at least equal to
$1,750,000, plus any and all accrued but unpaid Cash Interest, fees, and
expenses relating to the Loans. The Lenders hereby consent to such prepayment
not being in a whole multiple of $500,000 and waive all notice requirements in
respect of such prepayment.

 

(c)In lieu of a prepayment of $15,000,000 of the principal amount of the Loans
in cash, Tellurian shall, and the Borrower shall cause Tellurian to, after or
substantially concurrently with the satisfaction of the condition set forth in
Section 2(b) above, as a prepayment of $15,000,000 of the principal amount of
the Loans: (i) issue, or have issued on its behalf, to the Lenders, 9,348,706
shares of Tellurian Stock; and (ii) satisfy the requirements of Section 2(d)
below, and the Lenders confirm that upon satisfaction of clauses (i) and (ii)
above, the principal amount of the Loans shall be decreased by $15,000,000. On
the Third Amendment Effective Date, following the issuance of shares of
Tellurian Stock to the Lenders pursuant to this Amendment, Tellurian shall file
with the United States Securities and Exchange Commission a prospectus
supplement to the prospectus accompanying the Registration Statement relating to
the resale by the Lenders of such shares of Tellurian Stock.

 

(d)Tellurian and Nineteen77 Capital Solutions A LP shall have entered into an
amendment to, or an amendment and restatement of, the NCS Warrant Agreement on
mutually agreed terms, and shall have entered into the Second NCS Warrant
Agreement on mutually agreed terms.

 

(e)Each of the representations and warranties contained in Section 4 of this
Amendment shall be true and correct on the Third Amendment Effective Date as set
forth in Section 4 of this Amendment.

 

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(f)The Borrower shall have paid all reasonable and documented out-of-pocket
costs and expenses, including the reasonable and documented fees of Latham and
Watkins LLP, counsel to the Lenders, required to be reimbursed or paid by the
Borrower under the Credit Agreement in connection with this Amendment.

 

3.       Covenants.

 

(a)       The Borrower shall make a prepayment of the Loans pursuant to Section
2.05(a) of the Credit Agreement of at least $350,000 within thirty (30) days
after the Third Amendment Effective Date. The Lenders hereby consent to such
prepayment being less than $500,000.

 

(b)       On the Third Amendment Effective Date following the issuance of shares
of Tellurian Stock to the Lenders pursuant to this Amendment, Tellurian shall
file with the Securities and Exchange Commission a prospectus supplement under
its Registration Statement for the purpose of registering the resale of all of
the shares of Tellurian Stock to be issued pursuant to: (i) Section 2(c) of this
Amendment; and (ii) the Second NSC Warrant Agreement (collectively, the
“Shares”). Tellurian shall use commercially reasonable efforts to prepare and
file with the Securities and Exchange Commission such amendments and supplements
to the Registration Statement and the prospectus used in connection therewith as
may be necessary to keep the Registration Statement continuously effective for a
period ending when all of the Shares have been issued. If at any time when
Tellurian is required to re-evaluate its status as a “well-known seasoned
issuer” as defined under Rule 405 under the Securities Act, Tellurian determines
that it is not a “well-known seasoned issuer,” Tellurian shall use its
commercially reasonable efforts to refile a registration statement on Form S-3
and, if such form is not available, Form S-1, and keep such registration
statement effective during the period during which such registration statement
is required to be kept effective under this Section 3(b). In the event of the
issuance of any stop order suspending the effectiveness of the Registration
Statement, or the issuance of any order suspending or preventing the use of any
related prospectus or suspending the qualification of any Shares, Tellurian
shall promptly notify the Lenders and use commercially reasonable efforts
promptly to obtain the withdrawal of such order.

 

(c)       Subsequent to the issuance and registration of any Shares, Tellurian
shall take such further action as the Lenders may reasonably request in the
cooperation of the sale of the Shares by the Lenders, including: (i) instructing
the transfer agent for the Tellurian Stock to remove restrictive legends from
any Shares; and (ii) cooperating with the Lenders to facilitate the transfer of
such Shares securities through the facilities of The Depository Trust Company,
in such amounts and credited to such accounts as such Lenders may request.

 

(d)       Tellurian shall use its commercially reasonable efforts: (i) to list
for trading, subject to official notice of issuance, the Shares on the Nasdaq
Capital Market; and (ii) to maintain the listing of the Shares on the Nasdaq
Capital Market.

 

(e)       On the Third Amendment Effective Date, Tellurian shall deposit: (i) a
portion of the proceeds of the High Trail Notes equal to $10,400,000 into the HT
Excluded Account; and (ii) all remaining proceeds of the High Trail Notes into
one or more Collateral Accounts held by Tellurian Investments.

 

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4.        Representations and Warranties.

 

(a)       The Borrower represents and warrants to the Administrative Agent and
each Lender that, as of the Third Amendment Effective Date, both immediately
before and immediately after giving effect to this Amendment: (i) each
representation and warranty of each of the Loan Parties and Tellurian set forth
in the Financing Documents is true and correct in all material respects (unless
such representation or warranty is already qualified by materiality or Material
Adverse Effect, in which case such representation or warranty shall be true and
correct in all respects); provided that if any such representation or warranty
relates solely to an earlier date, then such representation or warranty shall be
true and correct in all material respects as of such earlier date; and (ii) no
Default or Event of Default has occurred and is continuing.

 

(b)       Tellurian and the Borrower represent and warrant to the Administrative
Agent and each Lender that, as of the date of each issuance: (i) each share of
Tellurian Stock issued to the Lenders hereunder will be duly and validly
authorized and issued, and fully paid and non-assessable; (ii) each share of
Tellurian Stock issued to the Lenders hereunder will be unregistered under the
Securities Act; and (iii) such consents, approvals, authorizations, orders,
registrations or qualifications as may be required by the Financial Industry
Regulatory Authority, Inc. and under applicable state securities laws or Blue
Sky laws in connection with the issuance of each share of Tellurian Stock issued
to the Lenders hereunder will be obtained.

 

5.       Scope of Amendment; Reaffirmation. From and after the Third Amendment
Effective Date, all references to the Credit Agreement shall refer to the Credit
Agreement as amended by this Amendment. Except as expressly provided by this
Amendment, all of the terms and provisions of the Financing Documents are
unchanged and shall remain in full force and effect. This Amendment is a
Financing Document. However, in the event of any inconsistency between the terms
of the Credit Agreement (as amended by this Amendment) and any other Financing
Document, the terms of the Credit Agreement shall control and such other
document shall be deemed to be amended to conform to the terms of the Credit
Agreement. Each of the Guarantors acknowledges that its consent to this
Amendment is not required, but each of the undersigned nevertheless does hereby
agree and consent to this Amendment, and the documents and agreements referred
to herein. Each of the Guarantors agrees and acknowledges that (i)
notwithstanding the effectiveness of this Amendment, such Guarantor’s guaranty
(as applicable) and grant of Liens and security interests (as applicable) under
the Financing Documents to which it is a party shall remain in full force and
effect and shall apply to the Obligations as amended hereby and (ii) nothing
herein shall in any way limit any of the terms or provisions of such Guarantor’s
guaranty (as applicable) or grant of Liens and security interests (as
applicable) to the Collateral Agent or any other Financing Document executed by
such Guarantor, all of which are hereby ratified, confirmed and affirmed in all
respects after giving effect to this Amendment. Each of the Guarantors hereby
agrees and acknowledges that no other agreement, instrument, consent, or
document shall be required to give effect to this Section 5. Each of the
Guarantors hereby further acknowledges that the Borrower, the Administrative
Agent and any Lender may, in accordance with the terms of the Credit Agreement,
from time to time enter into any further amendments, modifications, terminations
and/or waivers of any provisions of the Financing Documents without notice to or
consent from such Guarantors and without affecting the validity or
enforceability of such Guarantor’s guaranty or grant of Liens and security
interests under the Financing Documents or giving rise to any reduction,
limitation, impairment, discharge or termination of such Guarantor’s guaranty or
grant of Liens and security interests under the Financing Documents.

 

11

 

 

6.       Miscellaneous.

 

(a)               No Waiver of Defaults. Except as expressly set forth herein,
this Amendment does not constitute: (i) a waiver of, or a consent to: (A) any
provision of the Credit Agreement or any other Financing Document; or (B) any
present or future violation of, or default under, any provision of the Financing
Documents; or (ii) a waiver of the Administrative Agent’s or any Lender’s right
to insist upon future compliance with each term, covenant, condition and
provision of the Financing Documents.

 

(b)               Applicable Law. THIS AMENDMENT SHALL BE GOVERNED BY, AND SHALL
BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

(c)               Waiver of Jury Trial. EACH PARTY HERETO KNOWINGLY,
VOLUNTARILY, AND INTENTIONALLY WAIVES ANY RIGHTS THEY MAY HAVE TO A TRIAL BY
JURY IN RESPECT OF ANY LITIGATION BASED HEREON, OR ARISING OUT OF, UNDER, OR IN
CONNECTION WITH, THIS AMENDMENT, OR ANY COURSE OF CONDUCT, COURSE OF DEALING,
STATEMENTS (WHETHER VERBAL OR WRITTEN), OR ACTIONS OF SUCH PARTY. THIS PROVISION
IS A MATERIAL INDUCEMENT FOR EACH PARTY TO ENTER INTO THIS AMENDMENT.

 

(d)               Counterparts. This Amendment may be executed on any number of
separate counterparts, by facsimile or electronic mail, and all of said
counterparts taken together shall be deemed to constitute one and the same
instrument; signature pages may be detached from multiple separate counterparts
and attached to a single counterpart so that all signatures are physically
attached to the same document. A facsimile or portable document format (“pdf”)
signature page shall constitute an original for purposes hereof.

 

(e)               Headings. The Section headings used herein have been inserted
in this Amendment as a matter of convenience for reference only, and it is
agreed that such Section headings are not a part of this Amendment and shall not
be used in the interpretation of any provision of this Amendment.

 

(f)                Severability. In case any one or more of the provisions
contained in this Amendment should be invalid, illegal, or unenforceable in any
respect, the validity, legality, and enforceability of the remaining provisions
shall not in any way be affected or impaired thereby, and the parties hereto
shall enter into good faith negotiations to replace the invalid, illegal, or
unenforceable provision.

 

12

 

 

(g)               Indemnification of Lenders.

 

(i)                 The Borrower shall indemnify and hold harmless, to the
extent permitted by law, each Lender, such Lender’s officers, directors,
managers, employees, partners, stockholders, members, trustees, affiliates,
agents and representatives, and each person who controls such Lender (within the
meaning of the Securities Act) (the “Holder Indemnified Parties”) against all
losses, claims, actions, damages, liabilities, and expenses (including with
respect to actions or proceedings, whether commenced or threatened, and
including reasonable attorney fees and expenses) caused by, resulting from,
arising out of, based upon or related to any of the following statements,
omissions, or violations (each a “Violation”) by Tellurian or the Borrower: (i)
any untrue or alleged untrue statement of material fact contained in: (A) the
Registration Statement, any other registration statement, prospectus,
preliminary prospectus, or free writing prospectus, or any amendment thereof or
supplement thereto; or (B) any application or other document or communication
(in this clause (g), collectively called an “application”) executed by or on
behalf of Tellurian or the Borrower or based upon written information furnished
by or on behalf of Tellurian or the Borrower filed in any jurisdiction in order
to qualify any Shares covered by such registration under the securities laws
thereof; (ii) any omission or alleged omission of a material fact required to be
stated therein or necessary to make the statements therein not misleading; or
(iii) any violation or alleged violation by Tellurian or the Borrower of the
Securities Act or any other similar federal or state securities laws or any rule
or regulation promulgated thereunder applicable to Tellurian or the Borrower and
relating to action or inaction required of Tellurian or the Borrower in
connection with any such registration, qualification, or compliance. In
addition, the Borrower will reimburse such Lender for any legal or any other
expenses reasonably incurred by them in connection with investigating or
defending any such losses.

 

(ii)              Any person entitled to indemnification hereunder shall: (i)
give prompt written notice to the indemnifying party of any claim with respect
to which it seeks indemnification (provided that the failure to give prompt
notice shall impair any person’s right to indemnification hereunder only to the
extent such failure has prejudiced the indemnifying party); and (ii) unless in
such indemnified party’s reasonable judgment a conflict of interest between such
indemnified and indemnifying parties may exist with respect to such claim,
permit such indemnifying party to assume the defense of such claim with counsel
reasonably satisfactory to the indemnified party. If such defense is assumed,
the indemnifying party shall not be subject to any liability for any settlement
made by the indemnified party without its consent (but such consent shall not be
unreasonably withheld, conditioned, or delayed). An indemnifying party who is
not entitled to, or elects not to, assume the defense of a claim shall not be
obligated to pay the fees and expenses of more than one counsel for all parties
indemnified by such indemnifying party with respect to such claim, unless in the
reasonable judgment of any indemnified party a conflict of interest may exist
between such indemnified party and any other of such indemnified parties with
respect to such claim. In such instance, the conflicted indemnified parties
shall have a right to retain one separate counsel, chosen by the Lenders
representing a majority of the Shares included in the registration if such
Lenders are indemnified parties, at the expense of the indemnifying party.

 

13

 

 

(iii)            No indemnifying party shall, except with the consent of the
indemnified party, consent to the entry of any judgment or enter into any
settlement that does not include as an unconditional term thereof giving by the
claimant or plaintiff to such indemnified party of a release from all liability
in respect to such claim or litigation. Notwithstanding anything to the contrary
in this clause (g), an indemnifying party shall not be liable for any amounts
paid in settlement of any loss, claim, damage, liability, or action if such
settlement is effected without the consent of the indemnifying party, such
consent not to be unreasonably withheld, conditioned, or delayed.

 

(iv)             The indemnification and contribution provided for under this
Amendment shall be in addition to any other rights to indemnification or
contribution that any indemnified party may have pursuant to law or contract and
shall remain in full force and effect regardless of any investigation made by or
on behalf of the indemnified party or any officer, director, or controlling
person of such indemnified party, and shall survive the transfer of the Shares
and the termination or expiration of the Credit Agreement.

 

(h)               Administrative Agent Instructions and Indemnification. By
signing below, each of the Lenders hereby directs the Administrative Agent to
execute this Amendment. The provisions of Sections 8.01 and 10.03 of the Credit
Agreement shall apply in respect of the actions of the Administrative Agent
taken pursuant to this Amendment.

 

(i)                 Recitals. The Recitals to this Agreement are hereby
incorporated and made a part hereof and are an integral part of this Agreement.

 

(j)                 Entirety. The Credit Agreement (as amended hereby) and the
other Financing Documents constitute the entire contract between the parties
hereto relative to the subject matter hereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

14

 

 

This Amendment is executed as of the date set out in the preamble to this
Amendment.

 

  DRIFTWOOD HOLDINGS LP,   a Delaware limited partnership,   as the Borrower    
  By: Driftwood GP Holdings LLC, its general partner

 

  By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

  DRIFTWOOD HOLDCO LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

  TELLURIAN PIPELINE LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

  DRIFTWOOD PIPELINE LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

[Signature Page to Third Amendment to Credit Agreement]

 

 

 

 

  HAYNESVILLE GLOBAL ACCESS PIPELINE LLC,   as a Guarantor       By: /s/ Graham
McArthur

  Name: Graham McArthur   Title: Treasurer

 

  PERMIAN GLOBAL ACCESS PIPELINE LLC,   as a Guarantor       By: /s/ Graham
McArthur

  Name: Graham McArthur   Title: Treasurer

 

  TELLURIAN LNG LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

  DRIFTWOOD LNG TUG SERVICES LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

  DRIFTWOOD LNG LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

[Signature Page to Third Amendment to Credit Agreement]

 

 

 

 

  DRIFTWOOD GP HOLDINGS LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

  DRIFTWOOD LP HOLDINGS LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

  TELLURIAN INC.,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Senior Vice President, Treasurer

 

  TELLURIAN INVESTMENTS LLC,   as a Guarantor       By: /s/ Graham McArthur

  Name: Graham McArthur   Title: Treasurer

 

[Signature Page to Third Amendment to Credit Agreement]

 

 

 

 

  NINETEEN77 CAPITAL SOLUTIONS A LP,   as a Lender       By: UBS O’Connor LLC,
its investment manager         By: /s/ Baxter Watson     Name: Baxter Watson    
Title: Managing Director         By: /s/ Rodrigo Trelles     Name: Rodrigo
Trelles     Title: Managing Director

 

[Signature Page to Third Amendment to Credit Agreement]

 

 

 

 

Acknowledged and agreed by:       WILMINGTON TRUST, NATIONAL ASSOCIATION,   as
Administrative Agent       By: /s/ Amanda Berg  

Name: Amanda Berg  

Title: Banking Officer  

 

[Signature Page to Third Amendment to Credit Agreement]