FIRST AMENDMENT TO CREDIT AGREEMENT EXHIBIT 4.1.1
FIRST AMENDMENT TO CREDIT
AGREEMENT BY AND AMONG CONTINENTAL RESOURCES, INC.
CONTINENTAL GAS, INC. AND BANK ONE, OKLAHOMA, N.A. AND THE
INSTITUTIONS NAMED IN THE CREDIT AGREEMENT AS BANKS
AND BANK ONE, OKLAHOMA, N.A., AS AGENT
THIS FIRST AMENDMENT TO CREDIT AGREEMENT ("Amendment"), made and entered
into this 10th day of February, 1999, by and among CONTINENTAL RESOURCES, INC.,
an Oklahoma corporation (individually, "Resources") and CONTINENTAL GAS, INC.,
an Oklahoma corporation (individually, "Gas") (Resources and Gas are herein-
after collectively referred to as "Borrowers" and individually as a "Borrower"),
andBANK ONE, OKLAHOMA, N.A., a national banking association ("Bank One-
Oklahoma"), and each of the financial institutions which is a party hereto (as
evidenced by the signature pages to this Amendment) or which may from time to
time become a party hereto pursuant to the provisions of Section 28 of the
Credit Agreement or any successor or assignee thereof (hereinafter collectively
referred to as "Banks", and individually a "Bank") and Bank One-Oklahoma, as
Agent (the "Agent") .
W I T N E S S E T H:
WHEREAS, on May 14, 1998 Borrowers, Banks and Agent entered into that
certain Credit Agreement (the "Agreement") whereby Banks provided Borrower
with a revolving line of credit in an amount which could not exceed
$175,000,000.00 as evidenced by the Note subject to a Borrowing Base.
WHEREAS, the obligations described in the Agreement are secured by, among
other things not specifically set forth herein, certain Oil and Gas Proper-
ties and other Collateral; and
WHEREAS, all capitalized terms not otherwise defined herein shall have
those meanings assigned to such terms in the Agreement;
WHEREAS, Borrower, Banks and Agent desire to amend the Agreement for the
first time in order to, among other things not specifically set forth in this
recital, amend the dates for reporting semiannual reserve information
and for redeterminations of the Borrowing Base.
NOW THEREFORE, in consideration of the mutual covenants and agreements
herein contained and other good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the Borrower, Banks
and Agent hereby agree to amend the agreement as follows:
CHANGES TO THE AGREEMENT
1. Section 7 of the Agreement, Borrowing Base, at Subsection (b),
Subsequent Determinations of Borrowing Base, is hereby amended and restated in
its entirety as follows:
(b) Subsequent Determinations of Borrowing Base. Subsequent
determinations of the Borrowing Base shall be made by the Banks at least semi-
annually on March 1 and September 1 of each year beginning March 1, 1999 or as
Unscheduled Redeterminations. In connection with, and as of, each determination
of the Borrowing Base, the Banks shall also redetermine the Monthly Commitment
Reduction. The Borrowers shall furnish to the Banks as soon as possible but in
any event no later than February 1 of each year, beginning February 1, 1999,
with an engineering report in form and substance satisfactory to the Agent
prepared by an independent petroleum engineering acceptable to Agent covering
the Oil and Gas Properties utilizing economic and pricing parameters used by
Agent as established from time to time, together with such other information
concerning the value of the Oil and Gas Properties as the Agent shall deem
necessary to determine the value of the Oil and Gas Properties. By August 1
of each year, or within thirty (30) days after either (I) receipt of notice
from Agent that the Banks require an Unscheduled Redetermination, or (ii) the
Borrowers give notice to Agent of their desire to have an Unscheduled Redetermi-
nation performed, the Borrowers shall furnish to the Banks an engineering
report in form and substance satisfactory to Agent prepared by Borrowers'
in-house engineering staff valuing the Oil and Gas Properties utilizing economic
and pricing parameters used by the Agent as established from time to time,
together with such other information, reports and data concerning the value of
the Oil and Gas Properties as Agent shall deem reasonably necessary to
determine the value of such Oil and Gas Properties. Agent shall by notice to
the Borrowers no later than March 1 and September 1 of each year, or within
a reasonable time thereafter (herein called the "Determination Date"), notify
the Borrowers of the designation by the Banks of the new Borrowing Base and
Monthly Commitment Reduction for the period beginning on such Determination
Date and continuing until, but not including, the next Determination Date.
If an Unscheduled Redetermination is made by the Banks, the Agent shall
notify the Borrowers within a reasonable time after receipt of all requested
information of the new Borrowing Base and Monthly Commitment Reduction, and
such new Borrowing Base and Monthly Commitment Reduction shall continue until
the next Determination Date. If the Borrowers do not furnish all such informa-
tion, reports and data by any date specified in this Section 7(b), the Banks may
nonetheless designate the Borrowing Base and Monthly Commitment Reduction
at any amounts which the Banks in their discretion determine and may
redesignate the Borrowing Base and Monthly Commitment Reduction from time to
time thereafter until the Banks receive all such information, reports
and data, whereupon the Banks shall designate a new Borrowing Base and Monthly
Commitment Reduction as described above. Each Bank shall determine the amount
of the Borrowing Base and Monthly Commitment Reduction based upon the loan
collateral value which such Bank in its discretion (using such methodology,
assumptions and discounts rates as such Bank customarily uses in assigning col-
lateral value to oil and gas properties, oil and gas gathering systems, gas
processing and plant operations) assigns to such Oil and Gas Properties and
other Collateral of the Borrowers at the time in question and based upon such
other credit factors consistently applied (including, without limitation, the
assets, liabilities, cash flow, business, properties, prospects, management
and ownership of the Borrowers and their affiliates) as such Bank customarily
considers in evaluating similar oil and gas credits, but such Bank in its dis-
cretion shall not be required to give any additional positive value to any Oil
and Gas Property over the current economic and pricing parameters used by such
Bank for such Determination Date which additional value is derived directly
from a hedging, forward sale or swap agreement covering such Oil and Gas Pro-
perty as of the date of such determination. All determinations or Unscheduled
Redeterminations of the Borrowing Base and the Monthly Commitment Reduction
require the approval of Majority Banks; provided, however, that notwithstanding
anything to the contrary herein, the amount of the Borrowing Base may not be
increased, nor may the Monthly Commitment Reduction be reduced, without the
approval of all Banks. If the Banks cannot otherwise agree on the Borrowing Base
or the Monthly Commitment Reduction, each Bank shall submit in writing to the
Agent its proposed Borrowing Base nd Monthly Commitment Reduction and the
Borrowing Base and Monthly Commitment Reduction shall be set on the basis of
the weighted average of the Borrowing Bases and the weighted average of the
Monthly Commitment Reductions proposed by the Banks. If at any time any of
the Oil and Gas Properties are sold, the Borrowing Base then in effect shall
automatically be reduced by a sum equal to the amount of prepayment required
to be made pursuant to Section 12(r) hereof. The Borrowing Base shall be
additionally reduced from time to time pursuant to the provisions of Sections
2(e) and 2(f) hereof. It is expressly understood that the Banks have no obli-
gation to designate the Borrowing Base or the Monthly Commitment Reduction at
any particular amounts, except in the exercise of their discretion, whether in
relation to the Revolving Commitment or otherwise. Provided, however, that the
Banks shall not have the obligation to designate a Borrowing Base in an amount
in excess of the Revolving Commitment or its legal or internal lending limits.
Upon the issuance of any public note issue permitted pursuant to Section
13(f)(iv) hereof, the Banks shall have the right to perform an Unscheduled
Redetermination of the Borrowing Base.
2. Section 12 of the Agreement, Affirmative Covenants, at Subsection
(a)(iii), Report on Properties, is hereby amended to replace the reference
to the months of "April" and "October" with the months of "February" and
"August" occurring in the second line of said Section 12(a)(iii).
NOTICES AND WAIVERS.
Borrower is hereby notified of the following occurrences and the Banks
hereby provide the following waivers.
1. Borrowing Base. Pursuant to Section 2(e) of the Agreement, the
Borrowers hereby voluntarily reduce the Borrowing Base from $75,000,000.00
to $25,000,000.00 until March 1, 1999. It is agreed by the Borrowers, the
Banks and the Agent that this reduction shall be retroactively effective to
the originally scheduled redetermination date of November 1, 1998.
2. Report on Properties. Banks hereby provide Borrowers with a one-time
waiver of the default created by the Borrower's failure to comply with Section
12(a)(iii) of the Agreement by not providing Agent with the engineering
reports by November 1, 1998.
3. Ratio of Debt to Minimum Tangible Net Worth. Banks hereby provide
the Borrowers with a one-time waiver of the default created by the Borrower's
failure to comply with Section 13 of the Agreement due to their ratio of con-
solidated debt to consolidated tangible net worth exceeding 3.25 to 1.0 as of
the end of the June 30, 1998 quarterly reporting period.
4. Loans and Advances. Banks hereby provide Borrower with a one-time
waiver of the default created by Borrower's failure to comply with Section
13(h)(iv) of the Agreement pertaining to Resources' loan to Harold Hamm which
existed as of June 30, 1998 but has since been repaid.
The waivers set forth in this Section B are not continuing and pertain only
to the specific transactions or occurrences set forth in Subsections 2 through
4 above. The waivers set forth herein are specifically not intended to consti-
tute a waiver of any future violations of any portions of the Agreement.
REPRESENTATIONS AND WARRANTIES
Borrower hereby represents and warrants to Banks that:
Each Borrower is a corporation, duly organized, legally existing, and in
good standing under the laws of the State of Oklahoma, and is duly qualified
as a foreign corporation and in good standing in all other states wherein
the nature of its business or its assets make such qualification necessary.
Each Borrower's execution and delivery of this Amendment and performance of
its obligations hereunder: (a) are and will be within its corporate powers; (b)
are duly authorized by its board of directors; (c) are not and will not
be in contravention of any law, statute, rule or regulation, the terms of its
articles or certificates of incorporation and bylaws, nor of any preferred
stock provision, indenture, agreement or undertaking to which Corporation or
any of its properties are bound; (d) do not require any consent or approval
(including governmental) which has not been given; and (e) will not result
in the imposition of Liens, charges or encumbrances on any of its properties
or assets, except those in favor of Banks hereunder.
This Amendment, when duly executed and delivered, will constitute the
legal, valid and binding obligations of each Borrower, enforceable in accor-
dance with its terms.
All financial statements, balance sheets, income statements and other finan-
cial data which have been or are hereafter furnished to Banks by each Borrower
to induce Banks to make the loans hereunder due, and as to subsequent financial
statements will, fairly represent each Borrower's financial condition as of the
dates for which the same are furnished. All such financial statements, reports,
papers and other data furnished to Banks are and will be, when furnished: pre-
pared in accordance with generally accepted accounting principles consistently
applied; accurate and correct in all material respects; and complete insofar
as completeness may be necessary to give Banks a true and accurate knowledge
of the subject matter. Since the date of the last such financial statements,
no material adverse change has occurred in the operations or condition,
financial or otherwise and other financial data provided to Banks; of either
Borrower, nor, to the best of their knowledge, has either Borrower
incurred, any material liabilities or made any material investment or guaran-
tees, direct or contingent, in any single case or in the aggregate, which has
not been disclosed to Banks.
The Borrower, collectively, is the sole and lawful owner of the Collateral,
pledged, mortgaged or assigned by it, and each Borrower has, and as to after
acquired property or New Properties will have, good right to cause the
Collateral to be hypothecated to Banks as security for the Obligations.
All of each Borrower's other representations and warranties set forth in the
Agreement are true and correct on and as of the date hereof with the same
effect as though made and repeated by Borrower as of the date hereof.
CONDITIONS
The Banks' obligations under the Agreement, as hereby amended, are subject
to the following conditions:
1. The Banks and each Borrower shall have executed and delivered this
Amendment.
2. Agent shall have received certificates dated as of a recent date from
the Secretary of State or other appropriate Governmental Authority evidencing
the existence or qualification and good standing of Resources and Gas in all
jurisdictions covered by the Oil and Gas Properties where such qualification
is required and where failure to be qualified or in good standing could
reasonably be expected to have a Material Adverse Effect;
3. The Agent shall have received results of searches of the UCC records of
the State of Oklahoma and any and all other applicable jurisdictions from a
source acceptable to the Lender and reflecting no Liens, other than
Permitted Liens, against any of the Collateral of Resources or Gas as to
which perfection of a Lien is accomplished by the filing of a financing
statement;
4. The Agent shall have received certificates evidencing the insurance
maintained by the Borrower in compliance with applicable provisions of this
Agreement;
5. Each Borrower's representations and warranties set forth in Section C
hereof shall be true and correct on and as of the date hereof, and the date of
any subsequent advance with the same effect as though such representation and
warranty had been on and as of such date.
6. Borrower shall have executed any and all mortgages, deeds of trust and/
or any other security documents deemed necessary by Agent in its sole discre-
tion.
7. Each Borrower shall have satisfied all conditions set forth in Section
11 of the Agreement.
8. As of the date hereof, and the date of any subsequent Advance, no Event
of Default nor any event which, with the giving of notice or lapse of time,
would constitute an Event of Default shall have occurred and be continuing.
OTHER COVENANTS AND MISCELLANEOUS TERMS
Except as expressly amended and supplemented hereby, the Agreement shall
remain unchanged and in full force and effect, and the same is hereby rati-
fied and extended.
The obligations of Borrowers to Banks, including but not limited to the in-
debtedness evidenced by the Note executed in conjunction with the Agreement,
shall continue to be secured by the Collateral, without interruption or
impairment of any kind.
The Borrowers hereby agree to pay all reasonable attorney fees and legal ex-
penses incurred by Agent in preparation, execution and implementation of this
Amendment and any mortgages, deeds of trust, security agreements, pledge agree-
ments or any amendments thereto.
This Amendment shall be construed in accordance with and governed by the
laws of the State of Oklahoma, and shall be binding on and inure to the bene-
fit of the Borrowers and Banks, and their respective successors and
assigns. All obligations of the Borrowers under the Agreement and all
rights of Banks and any other holder of the Notes, whether expressed here-
in or in any Note, shall be in addition to and not in limitation of those
provided by applicable law. Borrowers irrevocably agree that, subject to
Banks' sole election, all suits or proceedings arising from or related to
the Agreement, as amended, or the Notes may be litigated in courts (whether
State or Federal) sitting in Oklahoma City, Oklahoma, and the Borrower hereby
irrevocably waives any objection to such jurisdiction and venue.
This Amendment may be executed in as many counterparts as are deemed
necessary or convenient, and it shall not be necessary for the signature
of more than any one party to appear on any single counterpart. Each
counterpart shall be deemed an original, but all shall be construed to-
gether as one and the same instrument. The failure of any party to sign
shall not affect or limit the liability of any party executing any such
counterpart.
BORROWER:
CONTINENTAL RESOURCES, INC., an Oklahoma corporation
By: HAROLD HAMM
Harold Hamm
Title: President
CONTINENTAL GAS, INC., an Oklahoma corporation
By: RANDY MOEDER
Randy Moeder
Title: President
BANKS:
BANK ONE, OKLAHOMA, N.A.
By: JOHN K. SLAY, JR.
John K. Slay, Jr.
Title: Sr. Vice President
CHASE BANK OF TEXAS, N.A.
By: DONNA GERMAN
Donna German
Title: Vice President
GE CAPITAL CORPORATION
By: MICHAEL W. DEPRIEST
Michael W. Depriest
Title: Manager of Operations
NATIONAL BANK OF CANADA
By: DOUG CLARK
Doug Clark
Title: Vice President
BANK OF SCOTLAND
By: ANNIE CHIN TAT
Annie Chin Tat
Title: Senior Vice President
MEESPIERSON CAPITAL CORPORATION
By: KARLO LOUMAN
Karlo Louman
Title: Vice President
BANK OF OKLAHOMA, N.A.
By: PAM SCHLOEDER
Pam Schloeder
Title: Vice President
AGENT:
BANK ONE, OKLAHOMA, N.A.
By: JOHN K. SLAY, JR.
John K. Slay, Jr.
Title: Sr. Vice President