COLLATERAL ASSIGNMENT OF CONTRACTS
(SECURITY AGREEMENT)
In consideration of Ten and No/100 Dollars ($10.00) and other good and
valuable consideration in hand paid, the receipt and sufficiency of which are
hereby acknowledged and confessed, CONTINENTAL RESOURCES, INC., an Oklahoma
corporation (the "Debtor"), having an address 302 N. Independence, Suite 300,
Enid, Oklahoma 73701 and GUARANTY BANK, FSB, a federal savings bank, as Bank and
as Collateral Agent as defined under the Credit Agreement hereinafter defined
(the "Secured Party"), having an address of 333 Clay Street, Suite 4430,
Houston, Texas 77002, agree as follows:
Article I.
Assignment; Collateral; Security
1.1 Assignment. Debtor hereby conveys, grants, transfers and absolutely
assigns to Secured Party, its successors and assigns, all right, title, and
interest of such Debtor in, to and under the collateral (the "Collateral")
described or referred to in this Collateral Assignment of Contracts (this
"Assignment") to secure all amounts due or owing to Secured Party by Debtor
under that certain Fourth Amended and Restated Credit Agreement dated of even
date herewith by and among Debtor, Secured Party as Collateral/Documentation
Agent, Co-Arranger and a Bank, Union Bank of California, N.A., as Administrative
Agent, LC Issuer, Lead Arranger, Fronting Bank and a Bank, Fortis Capital Corp.,
as Syndication Agent, Co-Arranger and a Bank and the other financial
institutions and banks from time to time parties to the Credit Agreement (as the
same may be amended, supplemented or modified from time to time, the "Credit
Agreement") and all other obligations to be performed by the Debtor under the
Credit Agreement, including, but not limited to, the indebtedness evidenced by
the Notes (as defined in the Credit Agreement); together with any and all other
indebtedness now or hereafter owed by Debtor to Secured Party, whether or not
currently contemplated and whether or not arising under the Credit Agreement.
1.2 Collateral. The Collateral covered by this Assignment is all right,
title and interest of Debtor in and to the Contracts described on Exhibit "A"
attached hereto and incorporated herein by reference for all purposes (the
"Contracts"), including all amendments of, supplements to, and renewals and
extensions of the Contracts at any time made; together with all proceeds,
earnings, income, issues and profits arising from the Contracts and all other
sums due or to become due under and pursuant thereto; together with any and all
guarantees of or under any of the Contracts; together with all proceeds payable
under any policy of insurance covering loss of income under any Contract for any
cause; together with all rights, powers, privileges, options, and other benefits
of Debtor under the Contracts, including, but not by way of limitation, (a) the
immediate and continuing right to receive and collect all proceeds, income,
revenues, issues, profits, damages, moneys, and security payable or receivable
under or with respect to the Contracts, or pursuant to any of the provisions
thereof, and (b) the right to make all waivers, agreements, and settlements, to
give and receive all notices, consents, and releases, to take such action upon
the happening of a default under any Contract, including the commencement,
conduct, and consummation of proceedings at law or in equity as shall be
permitted under any provision of any Contract or by law, and to do any and all
other things, whatsoever, which Debtor is or may become entitled to do under the
Contracts; SUBJECT, however, to the right and license hereinafter granted to
Debtor by Secured Party.
1.3 Security. This Assignment is made and given as security for, and shall
remain in full force and effect until, (i) the payment in full of all principal,
interest, and premium, if any, on the Notes and (ii) the full and complete
performance and observance by Debtor of all of the terms, covenants, and
conditions to be performed or observed by Debtor under the Notes, this
Assignment, and the other Loan Documents (as defined in the Credit Agreement) to
which Debtor is a party.
Article II
Representations; Covenants; Waivers
2.1 Representations and Covenants. Debtor shall pay to Secured Party any
and all sums due or which may become due pursuant to the Notes and the Credit
Agreement in accordance with the terms of such Notes and Credit Agreement,
respectively, and the terms of this Assignment. Upon Debtor's default under this
Assignment following any applicable notice period as may be provided hereunder
or under the Credit Agreement, at the option of Secured Party, Debtor shall pay
immediately, without demand, notice of any such default or event, notice of
intent to accelerate maturity, notice of acceleration of maturity or presentment
for payment or acceleration or any other act or notice whatsoever the entire
unpaid indebtedness of Debtor to Secured Party whether created or incurred
pursuant to this Assignment or otherwise.
Debtor represents, warrants and agrees as follows:
1. Debtor owns the Collateral and has the right to transfer the
Collateral as provided herein, the Collateral is not subject to the
interest of any third person other than the parties to the Contract,
no financing statement covering the Collateral or its proceeds will be
on file in any public office (other than financing statements in favor
of Secured Party), and Debtor will defend the Collateral and its
proceeds against the claims and demands of all third persons.
2. Debtor shall keep accurate and complete records of the Collateral and
its proceeds.
3. Debtor will promptly notify Secured Party of any occurrences or
circumstances which result in or are likely to result in the failure
of any third party to any of the Contracts to perform its obligations
as described in such Contracts.
2.2 Waivers by Debtor. To the fullest extent permitted by applicable law
and, to the extent applicable, Debtor, for itself, its successors and assigns,
and each and every person with any interest in the Collateral, or any part
thereof, whether now owned or hereafter acquired, hereby waives demand,
presentment for payment, diligence in collection, and notice of non-payment and
protest; hereby consents and agrees to any extension of time, whether one or
more, for the payment thereof and/or to any and all renewals thereof; and hereby
consents and agrees that Secured Party may amend the terms thereof, may release
all or any part of the security for the payment thereof, without, in any event,
affecting the terms or effect of this Assignment or the obligations or
liabilities hereunder of Debtor, its successors or assigns, or any person with
any interest in the Collateral, or any part thereof, whether now owned or
hereafter acquired.
Article III
Default; Activation
3.1 Events of Default. Debtor shall be in default under this Assignment
upon the occurrence of and continuation of any of the events or conditions
defined as Events of Default in Section 7.01 of the Credit Agreement (herein
called an "Event of Default") beyond any applicable notice period.
3.2 Declaration of Activation. Secured Party may, upon the occurrence of an
Event of Default, execute and deliver, by depositing in the United States Mail,
postage prepaid, certified mail, addressed to Debtor at the address noted in
Section 5.4 of this Assignment, a Declaration of Activation of Assignment of
Proceeds (hereinafter referred to as a "Declaration of Activation"), declaring
that Secured Party terminates the license granted to Debtor pursuant to Section
4.4 hereof and thereafter shall exercise its rights under this Assignment and
declares that constructive possession of the Collateral is vested in Secured
Party and that all of the legal and equitable interest in the proceeds, issues
and profits of the Collateral is vested in Secured Party. Said Declaration of
Activation shall not be deemed ineffective or deficient by reason of the fact
that it may contain any matter or matters in addition to the foregoing or by
reason of the fact that no specific Event of Default is set forth therein. Said
Declaration of Activation shall be in effect immediately upon its deposit in the
United States Mail.
Article IV
Rights of Secured Party
4.1 Powers of Secured Party. After the occurrence of an Event of
Activation, Secured Party, without in any way waiving any default, shall, at its
option, have the complete right, power and authority, at any time thereafter to
terminate the right and license granted to Debtor hereunder and thereafter may
transfer the Collateral to itself or its nominee, receive income thereon or
therefrom, and apply such income first to any costs incurred by Secured Party in
connection with the Notes, or the Credit Agreement, second to accrued but unpaid
interest due under the Notes, and third to reduction of the principal balance of
the Notes, Debtor remaining liable for any deficiency. Secured Party may delay
exercising or elect not to exercise any right or remedy under this Assignment or
any indebtedness secured hereby without waiving that or any other past, present
or future right or remedy. Secured Party's exercising its right to apply the
Collateral and/or proceeds from the Collateral toward its indebtedness shall not
constitute an election of remedies, therefore Debtor shall remain liable for any
deficiency and Secured Party may exercise or enforce any and all other rights
and remedies it may have after enforcing its remedies hereunder. Secured Party
shall have the rights, powers and remedies of a secured party under the Uniform
Commercial Code under the Texas Business and Commerce Code. Notwithstanding
anything to the contrary in this Assignment, if any applicable provision of any
law requires Secured Party to give reasonable notice of any sale or disposition
or other action, Debtor hereby agrees that ten (10) days prior written notice
shall constitute reasonable notice thereof.
Debtor further agrees that after the occurrence of an Event of Activation,
Secured Party may at any time thereafter demand that all proceeds of any and all
Collateral be paid to Secured Party whether or not there are any sums then due
on any indebtedness secured hereby, and Debtor authorizes any obligor under any
of said Collateral to pay any sums so demanded to Secured Party.
4.2 Attorney-in-Fact. Debtor further agrees, at its expense, to do, make,
procure, assign, endorse, and deliver all acts, things, writings, and assurances
as Secured Party may at any time require to protect, assure, or enforce its
interest and remedies created by this Assignment; including but not limited to
any check, endorsement, certificate, or any other instrument required by Secured
Party. Debtor further agrees that while any Event of Default remains uncured,
Secured Party may following a Declaration of Activation receive any and all
proceeds or income from the Collateral, and Secured Party may execute, assign,
and endorse appropriate receipts, releases and satisfaction, or negotiable or
non-negotiable instruments, or any other instruments or documents in the name of
and as agent for Debtor, or in its own name, which Debtor has agreed to execute,
sign, or endorse herein or under the Contract, and Secured Party is hereby
constituted and appointed the agent and attorney-in-fact of Debtor to do all
acts with respect to the Contracts and to execute and endorse all such
instruments. Debtor agrees that this power of attorney is coupled with an
interest and shall not be revoked until all indebtedness secured by this
Assignment has been paid in full. Without limiting the generality of the
foregoing, Secured Party shall be entitled at any time to file, and Debtor
hereby authorizes Secured Party to file, a Uniform Commercial Code Financing
Statement or this Agreement (or any amendment to either such instrument) or a
carbon, photographic, or other reproduction of this Agreement, as a financing
statement (or amendment thereto), in any form or medium provided by the UCC,
with or without Debtor's signature, but the failure of Secured Party to do so
shall not impair the validity or enforceability of this Agreement.
4.3 Direction to Party to Contract. Debtor hereby consents to and
irrevocably authorizes and directs the parties under the Contracts and any
successors to the interest of said parties, upon demand and notice from Secured
Party of the right of Secured Party to receive the proceeds and other amounts
payable under such Contracts following a Declaration of Activation, to pay to
Secured Party the proceeds and other amounts due or to become due under the
Contracts, and said parties shall have the right to rely upon such demand and
notice from Secured Party and shall pay such proceeds and other amounts to
Secured Party without any obligation or right to determine the actual existence
of the right of Secured Party to receive such proceeds and other amounts,
notwithstanding any notice from or claim of Debtor to the contrary, and Debtor
shall not have any right or claim against said parties for any such proceeds and
other amounts so paid by said parties to Secured Party. Debtor hereby agrees
that, at the request of Secured Party, Debtor will furnish each party under any
Contract with a true and complete copy of this Assignment.
4.4 License to Debtor. Notwithstanding the foregoing provisions making and
establishing a present and absolute transfer and assignment of the Contracts and
the proceeds, earnings, income, and profits arising therefrom, so long as no
Event of Activation shall have occurred, Debtor shall have the right and license
to collect, use, and enjoy the proceeds, issues, profits, and other sums payable
under and by virtue of any Contract, but only as the same become due under the
provisions of such Contract, and to enforce the covenants of each Contract and
amend, supplement or renew each Contract as required in the ordinary course of
business.
4.5 Rights Optional. Secured Party shall not be obligated to perform or
discharge any obligation, duty, or liability of Debtor, nor shall Secured Party
be responsible for its failure to exercise or enforce any rights granted to it
under this Assignment. Any failure or omission by Secured Party to enforce this
Assignment for any period of time shall not impair the force or effect hereof or
prejudice the rights of Secured Party, and Secured Party shall not be required
under this Assignment to exercise or enforce any of the rights herein granted to
it, it being understood that all matters contained herein are strictly within
the discretion of Secured Party.
By executing this Assignment, Debtor agrees that Secured Party does not
assume any of Debtor's obligations or duties concerning the Contracts,
including, but not limited to, any obligation of performance under the
Contracts.
4.6 Rights Cumulative. No right or remedy herein conferred upon or
otherwise available to Secured Party is intended to be or shall be construed to
be exclusive of any other right or remedy, but each and every one of the rights
and remedies of Secured Party hereunder are cumulative and not in lieu of, but
in addition to, any rights or remedies which Secured Party may have under the
Loan Documents, at law, or in equity, any and all of which such rights and
remedies may be exercised by Secured Party prior to, simultaneously with, or
subsequent to any action taken hereunder. Any and all rights and remedies of
Secured Party may be exercised from time to time and as often as Secured Party
deems such exercise to be expedient, and the delay or failure of Secured Party
to avail itself of any of the terms, provisions, and conditions of this
Assignment for any period of time, at any time or times, shall not be construed
or deemed to be or constitute a waiver or impairment thereof. No delay or
omission to exercise any right or power accruing upon any default or Event of
Default shall impair any such right or power or shall be construed to be a
waiver of any such default or Event of Default or an acquiescence therein; nor
shall the giving, taking, or enforcement of any other or additional security,
collateral, or guaranty for the payment of the indebtedness secured under this
Assignment operate to prejudice, waive, or affect the security of this
Assignment or any rights, powers, or remedies hereunder; nor shall Secured Party
be required to first look to, enforce, or exhaust, any such other or additional
security, collateral, or guaranty. Secured Party hereby further agrees that (a)
none of the rights or remedies of Secured Party available under any other Loan
Document or otherwise shall be delayed or in any way prejudiced by this
Assignment; (b) notwithstanding any variation or modification, at any time, of
the terms of the Notes, the Credit Agreement, and/or any other Loan Document or
any extension of time for payment thereunder or under the Notes or any release
of part or parts of the security conveyed under any of the Loan Documents, the
Contracts and all of the benefits assigned hereunder shall continue as
additional security in accordance with the terms hereof; and (c) each and all of
the Contracts shall remain in full force and effect.
4.7 No Waiver. Debtor hereby agrees that the collection of proceeds and the
application as aforesaid, the taking of possession of the Collateral, or any
part thereof, or the exercise of any other right or remedy by Secured Party
shall not cure or waive any Event of Default hereunder; waive, modify, or affect
any Declaration of Activation or other notice given hereunder; cure or waive any
default; waive, modify, or affect any notice of default under the Notes or any
of the Loan Documents; affect or impair any other right or remedy of Secured
Party; or invalidate any act done pursuant to any such Declaration of Activation
or other notice. The enforcement of any right or remedy by Secured Party, once
exercised, shall continue for so long as Secured Party shall elect, and if
Secured Party shall thereafter elect to discontinue the exercise of any such
right or remedy, then the same or any other right or remedy hereunder or
otherwise available may be reasserted at any time and from time to time upon any
subsequent or continuing default.
4.8 Indulgences by Secured Party. In the event that Secured Party (a)
grants any extension of time or forbearance with respect to the payment of any
indebtedness secured by this Assignment; (b) takes other or additional security
for the payment thereof; (c) waives or fails to exercise any right granted
herein or under the Notes, the Credit Agreement or any Loan Document; (d) grants
any release, with or without consideration, of the whole or any part of the
security held for the payment of the debts secured hereby or the release of any
person liable for payment of such debts; or (e) amends or modifies, in any
respect, any of the terms and provisions hereof or of the Notes (including
substitution of other Notes), the Credit Agreement or any of the Loan Documents;
then and in any such event, such act or omission to act shall not release Debtor
or any co-makers, sureties, or guarantors of this Assignment or the Notes under
any covenant of this Assignment or the Notes nor preclude Secured Party from
exercising any right, power, or privilege herein granted or intended to be
granted in the event of any other default or Event of Default then made or any
subsequent default or Event of Default, nor in any way impair or affect the lien
or priority of this Assignment or any other Loan Document.
Article V
Miscellaneous Provisions
5.1 Successors of Debtor. In the event of the sale or transfer of all or
any part of the Collateral, by operation of law or otherwise, Secured Party is
authorized and empowered to deal with the transferee with reference to this
Assignment, the Collateral, or the debts secured hereby, or with reference to
any of the terms or conditions contained herein, as fully and to the same extent
as it might deal with Debtor and without in any way releasing or discharging any
liabilities of Debtor hereunder or under the Notes, the Credit Agreement or the
other Loan Documents.
5.2 Successors and Assigns. This Assignment shall be assignable by Secured
Party, and all representations, warranties, covenants, powers, and rights
hereunder contained shall be binding upon Secured Party and Debtor, and their
respective successors and assigns, and shall inure to the benefit of Secured
Party, and its successors and assigns, and Debtor, and, but only to the extent
permitted hereunder, its successors and assigns.
5.3 Expenses of Secured Party. If Secured Party is made a party to any suit
or proceeding by reason of the interest of the Secured Party in the Collateral,
or if the Notes, this Assignment, the Credit Agreement, or any other Loan
Document is placed in the hands of an attorney or attorneys to defend or enforce
any rights of Secured Party, then Debtor shall reimburse Secured Party for all
costs and expenses, including attorneys' fees, incurred by Secured Party in
connection therewith. All amounts incurred by Secured Party hereunder shall be
secured hereby and shall be due and payable by Debtor to Secured Party forthwith
on demand, with interest thereon at the rate at which interest accrues on
amounts due under the Notes after the same become due.
5.4 Notices. All notices, demands, or documents of any kind which may be
required or permitted to be served by either party hereto upon or to the other
shall be effective upon delivery if served by delivering the same personally or
by sending the same in the United States Mail, postage prepaid, certified mail,
addressed to Debtor or Secured Party, as the case may be, at its address, as set
forth above, or at such other address as either Debtor or Secured Party may from
time to time designate by like notice to the other or as otherwise provided by
the Credit Agreement. Any notice so mailed shall be deemed to have been given on
the date delivered.
5.5 Amendment. Neither this Assignment nor any term, covenant, or condition
hereof may be amended, modified, or terminated, except by an agreement in
writing, signed by the party against whom enforcement of the amendment,
modification, or termination is sought.
5.6 Construction. The Notes, this Assignment, the Credit Agreement, and the
other Loan Documents shall be construed without regard to any presumption or
rule requiring construction against the party causing such instruments to be
drafted. The headings and captions contained in this Assignment are solely for
convenience of reference and shall not affect its interpretation. All terms and
words used in this Assignment, whether singular or plural and regardless of the
gender thereof, shall be deemed to include any other number and any other gender
as the context may require.
5.7 Severability. If any term, covenant, or condition of this Assignment or
the application thereof to any person or circumstance, shall, to any extent, be
invalid or unenforceable, then the remainder of this Assignment or the
application of such term, covenant, or condition to persons or circumstances
other than those as to which it is held invalid or unenforceable, shall not be
affected thereby, and each term, covenant and condition of this Assignment shall
be valid and enforceable to the fullest extent permitted by applicable law.
5.8 Counterparts. This Assignment may be executed, acknowledged, and
delivered in any number of counterparts, each of which shall constitute an
original, but, all together, only one instrument.
5.9 Duration. This Assignment shall become null, void, and of no further
force or effect upon the payment in full of any indebtedness under the Notes,
the Credit Agreement, this Assignment, and the other Loan Documents; whereupon
the lien and security interest hereof shall be released at the cost and expense
of the Debtor, and any Collateral held by Secured Party and not then covered by
any of the other Loan Documents shall be reconveyed to Debtor at the cost and
expense of Debtor.
5.10 Applicable Law. The law governing this transaction shall be that of
the State of Texas, except that the rate of interest that may be contracted for,
charged or received on the indebtedness or obligations described herein shall be
construed pursuant to the applicable federal or state law whichever allows the
highest rate of interest.
5.11 Benefit of All Banks. Debtor agrees and acknowledges that Secured
Party executes this document as a Bank and as the Collateral Agent for the other
Banks under the Credit Agreement and any and all rights, benefits and
entitlements under this Agreement in favor of Secured Party are for the benefit
of all Banks under the Credit Agreement.
[Signature Page Follows]
EXECUTED this 28th day of March, 2002.
DEBTOR:
CONTINENTAL RESOURCES, INC.
an Oklahoma corporation
By: ROGER CLEMENT
Roger Clement, Sr. Vice President
and Chief Financial Officer
SECURED PARTY:
GUARANTY BANK, FSB,
as Collateral Agent
By: RICHARD MENCHACA
Richard Menchaca
Vice President
THE STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
BEFORE ME, the undersigned authority, on this day personally appeared Roger
Clement, Sr. Vice President and Chief Financial Officer of Continental
Resources, Inc., an Oklahoma corporation, known to me to be the person whose
name is subscribed to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein expressed, as the
act and deed of said corporations and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this day of March, 2002.
NOTARY PUBLIC, STATE OF OKLAHOMA
THE STATE OF OKLAHOMA )
)
COUNTY OF OKLAHOMA )
BEFORE ME, the undersigned authority, on this day personally appeared
Richard Menchaca, Vice President of Guaranty Bank, FSB, a federal savings bank,
as Collateral Agent, known to me to be the person whose name is subscribed to
the foregoing instrument, and acknowledged to me that he executed the same for
the purposes and consideration therein expressed, as the act and deed of said
bank and in the capacity therein stated.
GIVEN UNDER MY HAND AND SEAL OF OFFICE this day of March, 2002.
NOTARY PUBLIC, STATE OF OKLAHOMA
EXHIBIT "A"
CONTRACTS