Document:

EX-10.1

 

Exhibit 10.1

EXECUTION COPY

AMENDMENT NO. 1 AND CONSENT TO THE CREDIT AGREEMENT

AND AMENDMENT NO. 1 TO THE GUARANTEE AND

COLLATERAL AGREEMENT

Dated as of July 31, 2006

          AMENDMENT NO. 1 AND CONSENT TO THE CREDIT AGREEMENT and AMENDMENT NO. 1 TO THE GUARANTEE AND
COLLATERAL AGREEMENT (collectively, the “Amendment”) among FR X Chart Holdings LLC, a
Delaware limited liability company (“Holdings”), Chart Industries, Inc., a Delaware
corporation (the “Borrower”), as successor in interest to CI Acquisition, Inc., and each of
the Lenders (as defined in the Credit Agreement referred to below) listed on the signature pages
hereto.

          PRELIMINARY STATEMENTS:

          1. Holdings and the Borrower have entered into that certain Credit Agreement, dated as of
October 17, 2005 (the “Credit Agreement”) with the Lenders party thereto and Citicorp North
America, Inc. (“CNAI”), as Administrative Agent (in such capacity, the “Administrative
Agent”) and as collateral agent for the Lenders. Capitalized terms not otherwise defined in
this Amendment have the same meanings as specified therefor in the Credit Agreement.

          2. Pursuant to the Credit Agreement, the Loan Parties have entered into a Guarantee and
Collateral Agreement, dated October 17, 2005, with CNAI, as Collateral Agent.

          3. The Borrower intends to consummate an initial public offering (the “Initial Public
Offering”) of its Equity Interests and, in connection therewith, Holdings, the Borrower and the
Lenders have agreed, on the terms and conditions stated below, to amend and modify the Loan
Documents as set forth herein.

          4. The Borrower intends to increase the Revolving Credit Commitments under the Credit
Agreement by U.S.$55.0 million in accordance with Section 2.20 of the Credit Agreement as in effect
immediately prior to the Amendment No. 1 Effective Date (as defined herein).

          SECTION 1. Amendments to the Credit Agreement. The Credit Agreement is, effective as
of the date on which the applicable conditions precedent set forth in Section 4 have been
satisfied, hereby amended as follows:

          (a) Section 1.01 is amended as follows:

         (i) The definition of “Borrowing Minimum” is amended by deleting each reference
to the figure “U.S.$2.0 million” and inserting the figure “U.S.$1.0 million” in replacement
of each reference thereof.

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         (ii) The definition of “Commitments” is amended in full to read as follows:

     “ ‘Commitments’ shall mean (a) with respect to any Lender, such
Lender’s Revolving Facility Commitment and Term B Loan Commitment, (b) with respect
to any Swingline Lender, its Swingline Commitment and (c) with respect to any
Issuing Bank, its Letter of Credit Commitment, as applicable.”

         (iii) The definition of “Consolidated Net Income” is amended by adding “, any
restricted stock plan” immediately after “stock options” in clause (xi) contained therein.

         (iv) The definition of “Net Proceeds” is amended by (i) deleting “or” in the
eighth line contained in clause (a) therein and inserting “,” in replacement thereof and
(ii) inserting “or (n)” immediately after “(l)” in the ninth line contained in clause (a)
therein.

         (v) The definition of “Permitted Business Acquisition Step-Up Period” is
amended in full to read as follows:

     “Permitted Business Acquisition Step-Up Period” shall mean (a) any
period commencing on the first day on which the Leverage Ratio on a Pro Forma Basis
is less than 4.25:1.00 (but greater than or equal to 4.00:1.00) and ending
on the first day thereafter on which the Leverage Ratio on a Pro Forma Basis is
either (i) greater than or equal to 4.25:1.00 or (ii) less than 4.00:1.00 or (b) any
period commencing on the first day on which the Leverage Ratio on a Pro Forma Basis
is less than 4.00:1.00 and ending on the first day thereafter on which the Leverage
Ratio on a Pro Forma Basis is greater than or equal to 4.00:1.00.”.

         (vi) The definition of “Revolving Facility Commitment” is amended by deleting
the last two sentences thereof and replacing them with the following:

     “The Dollar amount of each Revolving Facility Lender’s Revolving Facility
Commitment as of the Amendment No. 1 Effective Date is set forth on Schedule
2.01, or in the Assignment and Acceptance pursuant to which such Revolving
Facility Lender shall have assumed its Revolving Facility Commitment, as applicable.
The aggregate amount of the Revolving Facility Commitments on the Amendment No. 1
Effective Date is U.S.$115.0 million.”.

         (vii) The following new definitions are inserted in the appropriate alphabetical order:

     “Amendment No. 1” shall mean Amendment No. 1 and Consent to this
Agreement, dated as of July 31, 2006, among the Borrower and the Lenders party
thereto.

     “Amendment No. 1 Effective Date” shall have the meaning specified in
Section 4(a) of Amendment No. 1.

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     “Initial Public Offering” shall mean the first underwritten public
offering by the Borrower of its Equity Interests pursuant to a registration
statement filed with the Securities and Exchange Commission in accordance with the
Securities Act.

     “Letter of Credit Commitment” shall mean, with respect to each Issuing
Bank, the commitment of such Issuing Bank to issue Letters of Credit pursuant to
Section 2.05, expressed as a Dollar amount, as such commitment may be (a) ratably
reduced from time to time upon any reduction in the Revolving Facility Commitments
pursuant to Section 2.08 and (b) reduced or increased from time to time pursuant to
assignments by or to such Issuing Bank under Section 9.04. The Dollar amount of
each Issuing Banks’ Letter of Credit Commitment as of the Amendment No. 1 Effective
Date is set forth on Schedule 2.01, or in the Assignment and Acceptance
pursuant to which such Issuing Bank shall have assumed its Letter of Credit
Commitment, as applicable.

     “Regulation S-X” shall mean Regulation S-X promulgated under the
Securities Act.

          (b) Section 1.02 is amended by (i) deleting “.” at the end thereof and adding a new proviso at
the end thereof to read as follows:

     “; provided further that, notwithstanding the foregoing, upon
and following the acquisition of any business or new Subsidiary in accordance with
this Agreement, in each case that would not constitute a “significant subsidiary”
for purposes of Regulation S-X, financial items and information with respect to such
newly-acquired business or Subsidiary that are required to be included in
determining any financial calculations and other financial ratios contained herein
for any period prior to such acquisition shall not be required to be in accordance
with GAAP so long as the Borrower is able to reasonably estimate pro forma
adjustments in respect of such acquisition for such prior periods, and in each case
such estimates are made in good faith and are factually supportable.”

          (c) Article I is amended by adding new Section 1.04 at the end thereof to read as follows:

     “SECTION 1.04. Conforming Amendments and Modifications. Technical and
conforming amendments and modifications to the Loan Documents may be made with the
consent of the Borrower and the Administrative Agent as deemed necessary to
integrate and effectuate the release of Holdings from its obligations under the Loan
Documents.”.

          (d) Section 2.05(b) is amended by deleting the last sentence thereof in its entirety and
replacing it with the following in place thereof:

     “A Letter of Credit shall be issued, amended, renewed or extended only if (and
upon issuance, amendment, renewal or extension of each Letter of Credit the Borrower
shall be deemed to represent and warrant that), after giving effect to

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such issuance, amendment, renewal or extension, (i) the Revolving Facility
Credit Exposure shall not exceed the total Revolving Facility Commitments and (ii)
the aggregate available amount of all Letters of Credit issued by any Issuing Bank
shall not exceed such Issuing Bank’s Letter of Credit Commitment.”.

          (e) Section 2.05(c)(ii) is amended by replacing the figure “$35 million” contained in the last
line therein with the figure “$55.0 million”.

          (f) Section 2.20(a) is amended (i) by deleting the introductory phrase “At any time following
the completion of the syndication of the Facilities (as reasonably determined by the Administrative
Agent)” and replacing it with “At any time following the Amendment No. 1 Effective Date”; (ii)
deleting the figure “U.S.$50.0 million” and replacing it with the figure “U.S.$100.0 million”; and
(iii) adding a new sentence after “U.S.$10.0 million.” in the eighth line therein to read as
follows:

     “Any increase in the Revolving Facility Commitments effectuated pursuant to
this subsection (a) shall be accompanied by an equivalent increase in the Letter of
Credit Commitment provided that each Issuing Bank consents to such
increase.”.

          (g) Section 6.01 is amended by adding new subsection (t), as set forth below, and renumbering
existing subsections (t) and (u) as new subsections (u) and (v), respectively:

     “(t) Indebtedness of the Borrower and its Subsidiaries in respect of factoring
of receivables from a foreign customer held by the Borrower and its Subsidiaries in
an aggregate principal amount not to exceed U.S.$15.0 million at any time.”.

          (h) Section 6.02 is amended by adding new subsection (aa) to read as follows:

     “(aa) Liens to secure the Indebtedness of the Borrower and its Subsidiaries
that is permitted to be incurred under Section 6.01(t) solely on the receivables
held by the Borrower and its Subsidiaries and that are subject to the related
factoring programs.”.

          (i) Section 6.04 is amended by adding a new subsection (r) to the end of Section 6.04 to read
as follows:

     “(r) Investments consisting of the acquisition of Cooler Service Company, Inc.
in an aggregate principal amount not to exceed U.S.$17 million.”.

          (j) Section 6.04(j) is amended by replacing the figure “U.S.$100.0 million” with the figure
“U.S.$200.0 million”.

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          (k) Section 6.05 is amended by amending the introductory paragraph thereof in full to read as
follows:

     “Merge into or consolidate with any other Person, or permit any other Person to merge
into or consolidate with it, or sell, transfer, lease or otherwise dispose of (in one
transaction or in a series of transactions) all or any part of its assets (whether now owned
or hereafter acquired), or issue, sell, transfer or otherwise dispose of any Equity
Interests of any Subsidiary or preferred equity interests of the Borrower (except to the
extent that no cash interest or other cash payments are required in respect thereof), or
purchase, lease or otherwise acquire (in one transaction or a series of transactions) all or
any substantial part of the assets of any other Person, except that this Section shall not
prohibit:”.

          (l) Section 6.05 is further amended by adding new section 6.05(n) to read as follows:

     “(n) factoring of receivables held by the Borrower and its Subsidiaries as permitted
under Section 6.01(t).”.

          (m) Section 6.05 is further amended by deleting the last paragraph thereof and replacing the
following paragraph in place thereof:

     “Notwithstanding anything to the contrary contained in Section 6.05 above, (i) no sale,
transfer or other disposition of assets shall be permitted by this Section 6.05 (other than
sales, transfers, leases or other dispositions to Loan Parties pursuant to paragraph (c)
hereof and purchases, sales or transfers pursuant to paragraph (f) hereof) unless such
disposition is for fair market value, (ii) no sale, transfer or other disposition of assets
shall be permitted by paragraph (a), (d), (f) or (k) of this Section 6.05 unless such
disposition is for at least 75% cash consideration and (v) no sale, transfer or other
disposition of assets in excess of U.S.$5.0 million shall be permitted by paragraph (h) of
this Section 6.05 unless such disposition is for at least 75% cash consideration;
provided that for purposes of clauses (i) and (ii), the amount of any secured
Indebtedness or other Indebtedness of a Subsidiary that is not a Loan Party (as shown on the
Borrower’s or such Subsidiary’s most recent balance sheet or in the notes thereto) of the
Borrower or any Subsidiary of the Borrower that is assumed by the transferee of any such
assets shall be deemed cash.”.

          (n) Section 6.06(c) is amended by adding “, directors’” immediately after “shareholders’” in
the sixth line therein.

          (o) Section 6.06(f) is amended by (i) deleting “;” at the end thereof and (ii) adding the
following at the end thereof:

     “, such amount to be increased following the Initial Public Offering to U.S.$15.0
million.”.

          (p) Section 6.06 is amended by adding the following new paragraphs (i), (j) and (k) at the end
thereof:

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     “(i) from and after the Initial Public Offering, the Borrower may make dividends and
distributions, in each case in accordance with the provision thereof, deemed to occur upon
exercise of stock options or warrants if such Equity Interests represent a portion of the
exercise price of such options or warrants;

     (j) from and after the Initial Public Offering, and so long as no Default or Event of
Default has occurred and is continuing, the Borrower may declare, make or pay distributions,
dividends and repurchases in respect of its Equity Interests not otherwise permitted under
this Section 6.06 in an aggregate amount for any fiscal year of the Borrower not to exceed
U.S.$20.0 million; and

     (k) the Borrower may declare and pay dividends in an amount equal to the sum of the net
cash proceeds of the Initial Public Offering plus cash payments received by the
Borrower on and after May 1, 2006 upon the exercise by Holdings of its warrant rights
less the aggregate amount of such net cash proceeds applied to (i) redeem the Senior
Subordinated Notes pursuant to, and as permitted by, Section 6.09(b) or (ii) prepay any Term
B Borrowings pursuant to Section 2.11(a).”.

          (q) Section 6.07(b)(i) is amended by adding “, including restricted stock plans, stock grants,
directed share program and other stock plans customarily maintained or funded by public companies,”
immediately after “stock ownership plans” contained in the third line therein.

          (r) Section 6.09(b)(i) is amended by amending subsection (C) thereof in its entirety to read
as follows:

     “(C) with respect to the Senior Subordinated Notes, (x) payments made solely with the
net cash proceeds of the Initial Public Offering for the purpose of redeeming Senior
Subordinated Notes in accordance with the Senior Subordinated Notes Indenture, in an
aggregate amount not to exceed U.S.$60.0 million and (y) so long as no Default or Event of
Default has occurred and is continuing or would result therefrom on and after the Amendment
No. 1 Effective Date, additional purchases and redemptions of Senior Subordinated Notes in
an amount not to exceed U.S.$60.0 million less the aggregate amount of any purchases
and redemptions made pursuant to clause (x) above; provided that, after giving
effect to any such additional redemptions pursuant to this clause (y), the Leverage Ratio
shall be less than 3.00:1.00 calculated on a pro forma basis as of the last day of the most
recently ended fiscal quarter in respect of which financial statements have been delivered
pursuant to Section 5.04; or”.

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          (s) Section 6.10(a) is amended by deleting the chart set forth therein and replacing it in its
entirety with the following:

	 	 	 	 	 
	Year	 	Amount	 
	2006
	 	$	32,500,000	 
	2007
	 	$	25,000,000	 
	2008
	 	$	25,000,000	 
	2009
	 	$	25,000,000	 
	2010
	 	$	25,000,000	 

          (t) Article VII is amended by a adding a new section at the end thereof to read as follows:

     “SECTION 7.04. Holdings Covenant Release. Upon the occurrence of the
Amendment No. 1 Effective Date:

     (a) all of the obligations of Holdings under each of the Loan Documents shall
automatically terminate and, thereafter, any failure on the part of Holdings to comply with
those obligations will not constitute a Default or Event of Default;

     (b) except as specifically amended elsewhere in Amendment No. 1 or as set forth in
clause (c) or (d) of this Section 7.04, each reference in Article I to “Holdings” shall be
deemed to be a reference to “the Borrower” or “Subsidiary Loan Party”, as applicable;

     (c) each reference to “Holdings” in the definition of “Capital Expenditures”,
“Holdings” and “Holdings LLC Agreement” shall remain unchanged;

     (d) each reference to “Holdings” in the definition of “Collateral Agreement”,
“Collateral and Guarantee Requirement”, “Management Group” and “Multiemployer Plan” shall be
deleted (with any conforming changes being deemed made as appropriate);

     (e) (i) the obligation of Holdings to make representations and warranties under Article
III and the Collateral Agreement shall automatically terminate, (ii) each reference to
“Holdings” in Article III (other than such reference in Section 3.05(b)) shall be deleted
(with any conforming changes being deemed made as appropriate); and

     (f) each reference to “Holdings” in Article V shall be deleted (with any conforming
changes being deemed made as appropriate).”

          (u) Schedule 2.01 to the Credit Agreement is hereby replaced with Annex 1 hereto.

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          SECTION 2. Amendments to the Guarantee and Collateral Agreement. The Guarantee and
Collateral Agreement is, effective as of the date on which the conditions precedent set forth in
Section 4 have been satisfied, hereby amended as follows:

          (a) The definition of “Guarantors” is amended in full to read as follows:

     “ “Guarantors” shall mean (a) prior to the Amendment No. 1 Effective
Date, Holdings, the Borrower and each Subsidiary Loan Party and (b) upon and after
the Amendment No. 1 Effective Date, the Borrower and each Subsidiary Loan Party.”

          (b) The Guarantee and Collateral Agreement is further amended by (i) deleting the second
reference to Holdings in Section 3.01 and (ii) by replacing each reference to “Holdings” in
Sections 3.03(b), 7.14(b) and the first reference to “Holdings” in Section 3.01 with a reference to
“the Borrower” (in each case, with any conforming changes being deemed made as appropriate).

          SECTION 3. Consent. Effective as of the date hereof and subject to the satisfaction
of the conditions precedent set forth in Section 4(a), each Lender party hereto hereby consents to
the automatic release of Holdings from its obligations under the Guarantee and Collateral
Agreement. Upon the occurrence of the Amendment No. 1 Effective Date, all security interests and
other liens granted by Holdings in favor of the Secured Parties in the Collateral of Holdings
(including, without limitation, the pledge of the shares of the Borrower) shall be released, and
the Collateral Agent shall execute and deliver to Holdings, at Holdings’ expense, all documents
that Holdings shall reasonably request to evidence such release and shall assist Holdings in making
any filing in connection therewith.

          SECTION 4. Conditions of Effectiveness. (a) This Amendment shall become effective as
of the date when, and only when (the “Amendment No. 1 Effective Date”), each of the following
conditions precedent has been satisfied or waived:

          (a) The Administrative Agent shall have received counterparts of this Amendment executed by
Holdings and the Borrower, each of the Required Lenders and each Lender committing to a new or
additional Revolving Facility Commitment or, as to any of such Lenders, advice satisfactory to the
Administrative Agent that such Lender has executed this Amendment, and the Administrative Agent
shall have additionally received certified copies of all documents evidencing any necessary
corporate action and governmental approvals, if any, with respect to this Amendment, the consent
attached hereto (the “Consent”) and the matters contemplated hereby and thereby.

          (b) Consummation of Initial Public Offering. The Initial Public Offering shall have
been consummated.

          (c) Certificate. The Administrative Agent shall have received a certificate of an
officer of the Borrower certifying that (x) the representations and warranties set forth in
Article III of the Credit Agreement shall be true and correct in all material respects on and as
of the Amendment No. 1 Effective Date with the same effect as though made on and as of such date,
except to the extent such representations and warranties expressly relate to an earlier date

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Amendment No. 1 to the Credit Agreement

 

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(in which case such representations and warranties shall be true and correct in all material
respects as of such earlier date) and (y) on the Amendment No. 1 Effective Date, no Event of
Default or Default shall have occurred and be continuing.

          (d) Fees and Expenses. All reasonable and documented accrued fees and expenses of
the Administrative Agent (including the reasonable fees and expenses of Shearman & Sterling LLP,
counsel for the Administrative Agent, for which invoices shall have been provided to the Borrower
at least two Business Days prior to the Amendment No. 1 Effective Date) shall have been paid.

          SECTION 5. Representations and Warranties of Holdings and the Borrowers. Each of
Holdings and the Borrowers represents and warrants as follows:

          (a) The execution, delivery and performance by Holdings and the Borrower of this Amendment and
the performance by Holdings and the Borrower of the Credit Agreement, as amended hereby, have been
duly authorized by all necessary limited liability company or corporate action.

          (b) This Amendment has been duly executed and delivered by Holdings and the Borrower. This
Amendment and the Credit Agreement, as amended hereby, constitute the legal, valid and binding
obligations of the Borrower, enforceable against the Borrower in accordance with their respective
terms, subject to the effect of any applicable bankruptcy, insolvency, reorganization, moratorium
or similar law affecting creditors’ rights generally, and subject to the effects of general
principles of equity (regardless whether considered in a proceeding in equity or at law and implied
covenants of good faith and fair dealing).

          SECTION 6. Reference to and Effect on the Credit Agreement and the other Loan
Documents. (a) On and after the effectiveness of this Amendment, each reference in the Credit
Agreement to “this Agreement”, “hereunder”, “hereof” or words of like import referring to the
Credit Agreement, and each reference in the Notes and each of the other Loan Documents to “the
Credit Agreement”, “thereunder”, “thereof” or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement, as amended by this Amendment.

          (a) The Credit Agreement, the Notes and each of the other Loan Documents, as specifically
amended by this Amendment, are and shall continue to be in full force and effect and are hereby in
all respects ratified and confirmed. Without limiting the generality of the foregoing, the
Collateral Documents and all of the Collateral described thereof do and shall continue to secure
the payment of all Obligations of the Loan Parties under the Loan Documents.

          (b) 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 Agent under any
of the Loan Documents, nor constitute a waiver of any provision of any of the Loan Documents.

          SECTION 7. Execution in Counterparts. This Amendment may be executed in any number of
counterparts and by different parties hereto in separate counterparts, each of which when so
executed shall be deemed to be an original and all of which taken together shall

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constitute but one and the same agreement. Delivery of an executed counterpart of a signature
page to this Amendment by telecopier shall be effective as delivery of a manually executed
counterpart of this Amendment.

          SECTION 8. Governing Law. This Amendment shall be governed by, and construed in
accordance with, the laws of the State of New York.

[The remainder of this page is intentionally left blank]

 

 

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Amendment No. 1 to the Credit Agreement

 

 

Exhibit 10.1

EXECUTION COPY

     IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their
respective officers thereunto duly authorized, as of the date first above written.

	 	 	 	 	 
	 	FR X CHART HOLDINGS LLC,

as Holdings

 	 
	 	By:  	/s/Timothy Day
 	 
	 	 	Name:  	Timothy Day 	 
	 	 	Title:  	Director 	 
	 

	 	 	 	 	 
	 	CHART INDUSTRIES, INC., as the Borrower

 	 
	 	By:  	/s/Michael F. Biehl
 	 
	 	 	Name:  	Michael F. Biehl 	 
	 	 	Title:  	Executive Vice President, Chief Financial
Officer and Treasurer 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	CITIGROUP GLOBAL MARKETS INC.,

as Joint Lead Arranger and Joint Book Manager

 	 
	 	By:  	/s/Stephen P. Cunningham
 	 
	 	 	Name:  	Stephen P. Cunningham 	 
	 	 	Title:  	Managing Director 	 
	 

	 	 	 	 	 
	 	CITICORP NORTH AMERICA, INC.,

as Administrative Agent, as Lender and L/C

Issuing Bank

 	 
	 	By:  	/s/ C.P. Mahon
 	 
	 	 	Name:  	C.P. Mahon 	 
	 	 	Title:  	Director 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	MORGAN STANLEY SENIOR FUNDING, INC.,

as Lender

 	 
	 	By:  	/s/ Eugene F. Martin
 	 
	 	 	Name:  	Eugene F. Martin 	 
	 	 	Title:  	Vice President 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	NATEXIS BANQUES POPULAIRES,

as Co-Documentation Agent

 	 
	 	By:  	/s/Renaud d'Herbes
 	 
	 	 	Name:  	Renaud d'Herbes 	 
	 	 	Title:  	Senior Vice President/Regional Manager 	 
	 

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Timothy Polvado
 	 
	 	 	Name:  	Timothy Polvado 	 
	 	 	Title:  	Vice President/Group Manager 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER:

SOVEREIGN BANK, as Lender

 	 
	 	By:  	/s/ Daniel M. Grondin
 	 
	 	 	Name:  	Daniel M. Grondin 	 
	 	 	Title:  	Senior Vice President 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	 	LENDER: LCM I LIMITED PARTNERSHIP
	 

	 	By:
	 	Lyon Capital Management LLC as

Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	             /s/ Alexander B. McKenna
 	 
	 	 	Name:  	Alexander B. McKenna 	 
	 	 	Title:  	Portfolio Manager 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	 	LENDER: LCM II LIMITED PARTNERSHIP
	 

	 	By:
	 	Lyons Capital Management LLC as

Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	            /s/ Alexander B. McKenna
 	 
	 	 	Name:  	Alexander B. McKenna 	 
	 	 	Title:  	Portfolio Manager 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	 	LENDER: LCM III Ltd.
	 

	 	By:
	 	Lyon Capital Management LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                  /s/ Alexander B. McKenna
 	 
	 	 	Name:  	Alexander B. McKenna 	 
	 	 	Title:  	Portfolio Manager 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	 	LENDER: LCM IV Ltd.
	 

	 	By:
	 	Lyon Capital Management LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                  /s/ Alexander B. McKenna
 	 
	 	 	Name:  	Alexander B. McKenna 	 
	 	 	Title:  	Portfolio Manager 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: WATERVILLE FUNDING LLC

 	 
	 	By:  	/s/Kristi Milton
 	 
	 	 	Name:  	Kristi Milton 	 
	 	 	Title:  	Assistant Vice President 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: OSP FUNDING LLC

 	 
	 	By:  	/s/Kristi Milton
 	 
	 	 	Name:  	Kristi Milton 	 
	 	 	Title:  	Assistant Vice President 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: KC CLO II PC

 	 
	 	By:  	/s/S. Martin
 	 
	 	 	Name:  	S. Martin 	 
	 	 	 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: WB Loan Funding 5, LLC

 	 
	 	By:  	/s/Diana M. Himes
 	 
	 	 	Name:  	Diana M. Himes 	 
	 	 	Title:  	Associate 	 
	 

	 	 	 	 	 
	 	LENDER: WB Loan Funding 4, LLC

 	 
	 	By:  	/s/Diana M. Himes
 	 
	 	 	Name:  	Diana M. Himes 	 
	 	 	Title:  	Associate 	 
	 

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Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: Grand Central Asset Trust, BDC Series

 	 
	 	By:  	/s/Roy Hykal
 	 
	 	 	Name:  	Roy Hykal 	 
	 	 	Title:  	Attorney-in-Fact 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: LightPoint CLO IV, Ltd.

 	 
	 	By:  	/s/Colin Donlan
 	 
	 	 	Name:  	Colin Donlan 	 
	 	 	Title:  	Director 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: VERITAS CLO II, LTD.

 	 
	 	By:  	/s/John Randolph Watkins
 	 
	 	 	Name:  	John Randolph Watkins 	 
	 	 	Title:  	Executive Director 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: Lehman Commercial Paper Inc.

 	 
	 	By:  	/s/Frank P. Turner
 	 
	 	 	Name:  	Frank P. Turner 	 
	 	 	Title:  	Vice President 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER: UBS Loan Finance LLC

 	 
	 	By:  	/s/Richard L. Tavrow
 	 
	 	 	Name:  	Richard L. Tavrow 	 
	 	 	Title:  	Director 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	Banking Products Services, US

 	 
	 	By:  	

/s/Irja R. Otsa
 	 
	 	 	Name:  	Irja R. Otsa 	 
	 	 	Title:  	Associate Director
Banking Products Services, US 	 
	 

	 	 	 	 	 
	 	LENDER: JPMorgan Chase Bank, NA

 	 
	 	By:  	/s/Henry W. Centa
 	 
	 	 	Name:  	Henry W. Centa 	 
	 	 	Title:  	Senior Vice President 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:
	 

	 	BABSON CLO LTD. 2003-I

BABSON CLO LTD. 2004-I

BABSON CLO LTD. 2004-II

BABSON CLO LTD. 2005-I

BABSON CLO LTD. 2005-II

BABSON CLO LTD. 2005-III

BABSON CLO LTD. 2006-I

SUFFIELD CLO LIMITED

 

By: Babson Capital Management LLC as Collateral

Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Marcus Sowell
 	 
	 	 	Name:  	Marcus Sowell 	 
	 	 	Title:  	Managing Director 	 
	 

	 	 	 
	 

	 	MASSACHUSETTS MUTUAL LIFE
INSURANCE COMPANY

 

By: Babson Capital Management LLC as

Investment Adviser

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Marcus Sowell
 	 
	 	 	Name:  	Marcus Sowell 	 
	 	 	Title:  	Managing Director 	 
	 

	 	 	 
	 

	 	MAPLEWOOD (CAYMAN) LIMITED

 

By: Babson Capital Management LLC as

Investment Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Marcus Sowell
 	 
	 	 	Name:  	Marcus Sowell 	 
	 	 	Title:  	Managing Director 	 
	 

	 	 	 
	 

	 	BILL & MELINDA GATES FOUNDATION

 

By: Babson Capital Management LLC as

Investment Adviser

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Marcus Sowell
 	 
	 	 	Name:  	Marcus Sowell 	 
	 	 	Title:  	Managing Director 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

RiverSource Bond Series, Inc.

RiverSource Floating Rate Fund

	 

	 	 

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Lynn A. Hopton
 	 
	 	 	Name:  	Lynn A. Hopton 	 
	 	 	Title:  	Senior Managing Director 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Centurion CDO II, Ltd.

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Centurion CDO VI, Ltd.

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Centurion CDO VII, Ltd.

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Centurion CDO 8, Limited.

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 

	 	 	 
	 

	 	LENDER:

Centurion CDO 9, Ltd.

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Centurion CDO 10, Limited

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Centurion CDO XI, Limited

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Ocean Trust

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 
	 

	 	LENDER:

Sequils-Centurion V, Ltd.

By: RiverSource Investments, LLC

As Collateral Manager

	 	 	 	 	 
	 	 	 
	 	By:  	                                              /s/Traci D. Garcia
 	 
	 	 	Name:  	Traci D. Garcia 	 
	 	 	Title:  	Business Analyst II 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	LENDER:

FRANKLIN CLO IV, LIMITED

FRANKLIN CLO V, LIMITED

 	 
	 	By:  	/s/Guang Yu
 	 
	 	 	Name:  	Guang (Alex) Yu 	 
	 	 	Title:  	Authorized Signatory 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

Exhibit 10.1

EXECUTION
COPY

CONSENT

Dated as of July 31, 2006

     Reference is made to (a) Amendment No. 1 and Consent to the Credit Agreement and Amendment No.
1 to the Guarantee and Collateral Agreement, dated as of July 31, 2006 (collectively, the
“Amendment”), (b) the Credit Agreement dated as of October 17, 2005 (the “Credit
Agreement”) among FR X Chart Holdings LLC, a Delaware limited liability company
(“Holdings”), Chart Industries, Inc., a Delaware corporation (the “Borrower”), as
successor in interest to CI Acquisition, Inc., the Lenders party thereto, Citicorp North America,
Inc. (“CNAI”), as Administrative Agent (in such capacity, the “Administrative
Agent”) and as collateral agent (the “Collateral Agent”) for the Lenders, Morgan
Stanley Senior Funding, Inc. (“MS”), as Syndication Agent, Citigroup Global Markets Inc.,
and MS, as Joint Lead Arrangers and Joint Book Managers, and Natexis Banques Populaires and
Sovereign Bank, as Co-Documentation Agents and (c) the other Loan Documents referred to thereof.
Capitalized terms not otherwise defined in this Consent have the same meanings as specified in the
Credit Agreement.

     The undersigned, as parties to one or more of the Loan Documents, each hereby consents to the
execution, delivery and the performance of the Amendment and agrees that each of the Loan Documents
to which it is a party is, and shall continue to be, in full force and effect and is hereby in all
respects ratified and confirmed as of the Amendment No. 1 Effective Date (as defined in the
Amendment), except that, on and after the Amendment No. 1 Effective Date, each reference to “the
Credit Agreement”, “thereunder”, “thereof”, “thereof” or words of like import referring to the
Credit Agreement shall mean and be a reference to the Credit Agreement, as amended and otherwise
modified by the Amendment.

     This Consent shall be governed by, and construed in accordance with, the laws of the State of
New York.

[Remainder of this page intentionally left blank]

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 
	 	CHART INDUSTRIES, INC.

as Borrower and a Guarantor (in each capacity)

 	 
	 	By:  	/s/ Michael F. Biehl
 	 
	 	 	Name:  	Michael F. Biehl 	 
	 	 	Title:  	Executive Vice President, Chief Financial
Officer and Treasurer 	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

	 	 	 	 	 

	 	 	 	 	 
	 	CHART INC.

CAIRE INC.

CHART ENERGY & CHEMICALS, INC.

CHART COOLER SERVICE COMPANY, INC.

(f/k/a COOLTEL, INC.)

CHART INTERNATIONAL HOLDINGS, INC.

CHART ASIA, INC.

CHART INTERNATIONAL, INC.,

each as a Guarantor

 	 
	 	By:  	/s/ Michael F. Biehl
 	 
	 	 	Name:  	Michael F. Biehl 	 
	 	 	Title:  	Executive Vice President, Chief Financial
Officer and Treasurer 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

 

Exhibit 10.1

EXECUTION
COPY

ANNEX I

Schedule 2.01 to the Credit Agreement

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

SCHEDULE 2.01

REVOLVING FACILITY COMMITMENTS

	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 	 
	 
	 	Name of Lender	 	 	Existing	 	 	 	New Revolving	 	 	 	Total	 	 	 	L/C	 	 
	 	 	 	 	Revolving	 	 	 	Facility	 	 	 	Revolving	 	 	 	Commitment	 	 
	 	 	 	 	Facility	 	 	 	Commitment	 	 	 	Facility	 	 	 	 	 	 
	 	 	 	 	Commitment	 	 	 	 	 	 	 	Commitment	 	 	 	 	 	 
	 	 	 	 	($)	 	 	 	($)	 	 	 	($)	 	 	 	($)	 	 
	 	Natexis Banques
Populaires
	 	 	 	15,000,000	 	 	 	 	10,000,000	 	 	 	 	25,000,000	 	 	 	 	 	 	 
	 	Citicorp North
America, Inc.
	 	 	 	15,000,000	 	 	 	 	5,000,000	 	 	 	 	20,000,000	 	 	 	 	60,000,000	 	 
	 	JPMorgan Chase
Bank, N.A.
	 	 	 	 	 	 	 	 	20,000,000	 	 	 	 	20,000,000	 	 	 	 	55,000,000	 	 
	 	Sovereign Bank
	 	 	 	15,000,000	 	 	 	 	 	 	 	 	 	15,000,000	 	 	 	 	 	 	 
	 	Morgan Stanley
Senior Funding,
Inc.
	 	 	 	1,000,000	 	 	 	 	10,000,000	 	 	 	 	11,000,000	 	 	 	 	 	 	 
	 	Black Diamond CLO
2006-1 (Cayman)
Ltd.
	 	 	 	10,000,000	 	 	 	 	 	 	 	 	 	10,000,000	 	 	 	 	 	 	 
	 	Lehman Brothers
Commercial Bank
	 	 	 	 	 	 	 	 	5,000,000	 	 	 	 	5,000,000	 	 	 	 	 	 	 
	 	UBS Loan Finance LLC
	 	 	 	 	 	 	 	 	5,000,000	 	 	 	 	5,000,000	 	 	 	 	 	 	 
	 	Centurion CDO VII,
Ltd.
	 	 	 	2,000,000	 	 	 	 	 	 	 	 	 	2,000,000	 	 	 	 	 	 	 
	 	Centurion CDO 8,
Limited
	 	 	 	1,000,000	 	 	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 	 	 
	 	Sequils-Centurion
V. Ltd.
	 	 	 	1,000,000	 	 	 	 	 	 	 	 	 	1,000,000	 	 	 	 	 	 	 
	 	TOTAL COMMITMENTS
	 	 	 	60,000,000	 	 	 	 	55,000,000	 	 	 	 	115,000,000	 	 	 	 	115,000,000	 	 
	 

Chart Industries, Inc.

Amendment No. 1 to the Credit Agreement

 

SCHEDULE 2.01

TERM B LOAN FACILITY AND SWING LINE COMMITMENTS

Refer to Register for Lenders and Commitments.

Chart Industries, Inc.

Amendment No. 1 to the Credit AgreementExhibit 10.1

                              REGENCY ENERGY, INC.
                                2242 SO. HWY. #83
                            CRYSTAL CITY, TEXAS 78839
                              830 - 374-9000 - OFF
                              830 - 374-0202 - FAX

                             PARTICIPATION AGREEMENT

July 8, 2006

Tidelands Exploration and Production, Inc.
1862 West Bitters - Bldg. No. 1
San Antonio, Texas 78248

Mr. Michael R. Ward

RE: SOMERSET-BENTON CITY FIELD
    A & B PIPELINE COMPANY OF TEXAS, INC.
    ATACOOSA, MEDINA AND BEXAR COUNTY, TEXAS

Dear Michael:

This letter agreement, when executed by you, shall evidence the entire agreement
between REGENCY ENERGY, INC. (hereinafter referred to as "REGENCY") and yourself
(hereinafter  referred to as  "PARTICIPANT")  pertaining to the above referenced
wells, producing and nonproducing, about to be acquired, oil and gas leases, now
owned or being acquired and the A&B Pipeline Company of Texas, Inc. (hereinafter
referred to as the "SUBJECT PROPERTIES").

                                       (1)

REGENCY  now  owns all the  rights  title  and  interest  in an to that  certain
pipeline system known as the A&B Pipeline Company of Texas,  Inc. and to certain
wells, oil and gas leases, now producing or non-producing,  described in Exhibit
"A" attached hereto and made a part hereof referred to as "Subject  Properties".
Regency herein agrees to assign an undivided fifty (50) percent working interest
in and to the "SUBJECT PROPERTIES" to the Participant for the sum of $500,000.00
(Five Hundred Thousand Dollars and No/100.  It is understood and agreed that the
final  connection  to the pipeline  system has to be completed  and at this time
that  connection has not been  completed.  For the funds above set forth,  it is
anticipated  that said necessary  connection  shall be finalized within the next
two-three weeks and until then gas sales cannot be commenced and no revenues can
be generated. Is is agreed that a gas compressor of necessary size to handle the
volume of gas indicated to be sold will be installed.  Also, an H2S analyzer and
removal system will be installed sufficient to meet the pipeline  specifications
as to H2S removal  before it goes to sales.  It is further  understood,  that in
addition to the existing  wells that are to be connected to the sales  pipeline,
REGENCY  is  continuing  to acquire  oil and gas leases and the funds  furnished

                                       1
<PAGE>

herein shall be used only to finalize this pipeline  connection  and install the
necessary  surface  equipment to deliver the gas from the existing  wells to the
sales point.  Regency  agrees to continue to develop these  properties in a good
and  workmanlike  manner  as any  normal  prudent  operator  would  do and  keep
PARTICIPANT  notified as to the  progress  being made.  All  operations  will be
conducted  under the Rules  and  Regulations  of Texas  Railroad  Commission  in
compliance with all other State and Federal Rules and Regulations.

                                      (11)

It is understood and agreed between Regency and the  Participant,  that the sole
purpose  of  this  letter  agreement  is to  ultimately  fully  develop  an area
encompassing  this  entire  area and field,  to  re-enter  as many as  practical
plugged and abandoned  wells in an attempt to recomplete as many as practical as
producers. Participant will have the continuing option to participate in oil and
gas  lease  to be  acquired  and  each  additional  well  to be  recompleted  or
re-entered on an actual cost basis and Participant for his undivided Fifty (50%)
working  interest  share. On all oil and gas leases acquired and future wells to
be re-entered and recompleted the  Participant,  if they so desires  Participant
will share in his undivided Fifty (50%) working interest share.

                                      (111)

Simultaneously,  with the  execution  of this  Participation  Agreement  and the
payment of the funds outlined  above,  Participate  will execute a Standard Form
Operating  Agreement,  attached hereto as Exhibit "B",  wherein Regency shall be
designated  as  Operator or Record for the  Subject  Properties  and wherein all
operations  on the said  leasehold  estates  shall be conducted  pursuant to the
terms,  conditions and provisions of said  Operating  Agreement with  Accounting
Procedure  attached  thereto as Exhibit  "C" and made a part  thereof;  provided
however,  where the terms and  provisions of said Operating  Agreement  conflict
with the terms of this Participation Agreement, the terms and provisions of this
Participation Agreement shall prevail.

                                      (1V)

Regency will, after receipt of the above  referenced  funds and  simultaneously,
continue  to  diligently  pursue  the  acquisition  of as many other oil and gas
leases as is possible and Regency agrees to pursue its overall  efforts with due
diligence and in a good and workmanlike manner in accordance with the program as
set out. After successful  completion of each well to be reentered,  to promptly
connect  said well to the sales lines and  commence  to sell gas.  In  addition,
Regency agrees to continue to promptly perform the necessary work to connect the
gathering  lines from each well to the sales line so that gas sales can commence
as rapidly as possible.

                                       (V)

During the course of the  recompletion  attempt  and all  subsequent  operations
conducted on the subject lease and/or leases,  well and/or wells,  and pipeline,
Participant  and or his  authorized  representative,  shall  have  access at all
reasonable  times  to  said  lease,  leases,  wells  and  pipeline  and  to  all
information pertaining thereto.

                                       2
<PAGE>

                                      (VI)

The parties hereto, "REGENCY" and "PARTICIPANT",  expressly do not hereby intend
to create a joint venture or partnership  association,  and this agreement shall
not be construed as creating any such legal  relationship.  The liability of the
parties hereto shall be several and not joint or collective.

Each party agrees to elect to be excluded from the  application  of Subchapter K
of Charter I of  Subtitle A of the US  Internal  Revenue  Code.  Each party also
agrees to elect to be  excluded  form the  application  of any present or future
income  tax laws of the  State,  which  there  are not  any,  in the  which  the
properties  covered  hereby are located under which an election  similar to that
provided by Section 761 of the US Internal Revenue Code can be made.

The parties  agrees that for the United States Income and any  applicable  State
Income Tax  purposes  the gains and losses from sales,  abandonments,  and other
Disposition  of the  property  and all classes of costs,  expenses  and credits,
including depreciation and depletion,  shall be shares and accounted for by each
party in the following manner.

     (a)  The  production  costs shall be allocated as deductions to the parties
          in accordance with their respective contributions to such costs.

     (b)  The  exploration  costs,   intangible  drilling  costs,  if  any,  and
          development  costs shall be allocated as  deductions to the parties in
          accordance with their respective contributions of such costs.

     (c)  The  depreciation  on tangible  equipment  shall be  allocated  to the
          parties in  accordance  with  their  respective  contributions  to the
          adjusted basis of such equipment.

     (d)  The deduction for depletion for each taxable year with respect to each
          separate property shall be determined by each party individually based
          on the income from oil and/or gas  production  allocated to each party
          hereunder, except that cost depletion shall be based on the respective
          costs of the leasehold interest attributable to the leases contributed
          by each such party.

     (e)  Gain and losses form such sale,  abandonment,  or other disposition of
          the property  (other than oil, gas, or other  hydrocarbon  substances)
          shall be  allocated  to the parties in such manner as will reflect the
          gains and losses that would have been  includable in their  respective
          income tax returns if such property  were held by the parties  outside
          of this  agreement.  The  computations  shall take into  account  each
          party's  share  of the  proceeds  derived  from  each  sale  or  other
          disposition of such property during the year,  selling  expenses,  and
          the parties respective  contributions to the unadjusted costs basis of
          such property, less any allowed or allowable depreciation, depletions,
          amortization, credits or other deductions which have been allocated to
          each party with respect to such property as provided herein.

                                       3
<PAGE>

     (f)  The investment credit, if any, allowed by the US Internal Revenue Code
          shall be allocated to the parties in accordance with their  respective
          contributions  to qualified  investment  as defined in the US Internal
          Revenue Code.

     (g)  All other classes of costs,  expenses,  and credits not falling within
          Subsection (a), (b), (c), (d), (e) and (f) above shall be allocated to
          and accounted for by the parties in accordance  with their  respective
          contributions to such costs, expenses and credits.

     (h)  Income from the sale of oil, gas and other  minerals  produced,  saved
          and  marketed  from the subject  properties  covered  hereby  shall be
          allocated  between the  parties  hereto  pursuant to their  respective
          rights and interest under this Participation Agreement.

                                      (V11)

Until such time as this overall  program is  completed,  REGENCY is acting as an
independent  contractor,  and a: such REGENCY shall indemnify  "PARTICIPANT" and
hold them  harmless  against  any  claims  for  injuries  to person or  property
sustained  by reason of the  manner of  conducting  operations  on the  "Subject
Properties" by REGENCY and its employees and  subcontractors  until said overall
properties are finalized.  REGENCY, as independent contractor,  agrees to comply
with all rules and regulations of the laws, federal, state and local, applicable
to REGENCY  and  REGENCY'S  business,  equipment  and  personnel  engaged in the
operations covered by this Participation Agreement.

                                     (V111)

All notices  hereunder  shall be given by United  States  mail or Western  Union
Telegraph,  postage or charges  prepaid,  and addressed to the party to whom the
notice is given at the address set forth hereinbelow. Any notice hereunder shall
be deemed given when  delivered  to said  address,  or to such other  address to
which either party shall designate in writing to the party hereto.

                                      (1X)

The mutual  covenants,  agreements,  obligations  and  duties of the  respective
parties hereto,  together with the attendant  rights,  privileges,  and benefits
contemplated  to be derived  form this Letter  Agreement  shall be and  becoming
binding upon and shall inure to the respective  successors,  assigns,  heirs and
legal  representatives  of the  parties  hereto,  and  the  agreement  shall  be
construed  under the laws of the State Of Texas and as a covenant  running  with
the subject the subject leasehold lands covered hereby>

                                       (X)

If the  foregoing is  acceptable  and outlines  your full  understanding  of our
agreement, then please so Indicate by duly executing duplicate originals of this
Letter Agreement,  retaining one duplicate original for your files and returning
the other duplicate original thereof with the funds specified in Paragraph 1 and
1X above.

                                       4
<PAGE>

Yours very truly,

REGENCY ENERGY, INC.
2242 So Hwy #83
Crystal City, Texas 78839

By: /S/ Royis Ward
Royis Ward - President

AGREED AND ACCEPTED TO THIS THE 9TH DAY OF JULY 2006

TIDELANDS EXPLORATION AND PRODUCTION, INC.
1862 W. Bitters, Bldg. 1
San Antonio, Texas 78248

By: /S/ Michael Ward
Michael Ward - President

                                       5

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