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EXHIBIT 10.11
SECOND AMENDMENT TO INDENTURE
This SECOND AMENDMENT TO INDENTURE, dated as of February 17, 2000
("this Amendment"), is among BRIGHAM EXPLORATION COMPANY, a corporation duly
organized and existing under the laws of the State of Delaware (the "Borrower"),
and CHASE BANK OF TEXAS, NATIONAL ASSOCIATION, a national banking association
existing under the laws of the United States, as trustee (the "Trustee").
PRELIMINARY STATEMENT
All covenants and agreement made by the Borrower herein are for the
benefit and security of the holders of the Borrower's Senior Subordinated
Secured Notes due 2003.
RECITALS
The Borrower and the Trustee are parties to that certain Indenture
dated as of August 20, 1998, as amended by the First Amendment to Indenture
dated as of March 26, 1999 (as amended, the "Indenture"). Capitalized terms used
and not otherwise defined herein are used with the meanings ascribed thereto in
the Indenture.
The Borrower has advised the Noteholders and the Trustee that it
desires to amend certain provisions of the Indenture, and the Borrower has
requested that the Trustee and the Noteholders agree to various amendments to
certain provisions of the Indenture.
The Trustee, upon the consent and authorization of the Noteholders, has
agreed to so amend certain provisions of the Indenture upon the terms and
subject to the conditions and limitations of this Amendment.
NOW, THEREFORE, in consideration of the premises, covenants and
agreements contained herein, the parties hereto agrees as follows:
Section 1. Definitions. The following capitalized terms shall have the
following respective meanings when used herein:
1.1 "RELEASED CLAIMS" SHALL MEAN ANY AND ALL CLAIMS (INCLUDING
WITHOUT LIMITATION ANY LIABILITIES, DAMAGES, DEMANDS AND CAUSES OF
ACTION ARISING THEREFROM), WHETHER (A) AT LAW OR IN EQUITY, (B) ON THE
ALLEGED COMMISSION OF A TORT, (C) ON THE ALLEGED BREACH (OR
ANTICIPATORY BREACH OR REPUDIATION) OF ANY CONTRACT, DUTY, OR WARRANTY
(WHETHER
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ORAL OR WRITTEN, EXPRESS OR IMPLIED), (D) ON THE ALLEGED VIOLATION OF
ANY STATUTE, TARIFF, OR REGULATION (WHETHER PROMULGATED BY THE UNITED
STATES, ANY STATE THEREOF, ANY FOREIGN STATE OR COUNTRY, OR ANY OTHER
GOVERNMENTAL AGENCY OR ENTITY, WHEREVER LOCATED), OR (E) ON ANY OTHER
FACTUAL, LEGAL OR EQUITABLE THEORY, INCLUDING, WITHOUT LIMITATION, ANY
CLAIM FOR DAMAGES OF ANY TYPE OR NATURE, FOR INJUNCTIVE OR OTHER
RELIEF, FOR ATTORNEYS' FEES, INTEREST OR ANY OTHER LIABILITY WHATSOEVER
ON ANY THEORY, INCLUDING WITHOUT LIMITATION ANY LOSS, COST OR DAMAGE IN
CONNECTION WITH OR BASED UPON "LENDER LIABILITY", UNFAIR DEALING,
DURESS, COERCION, CONTROL OR UNDUE INFLUENCE, EXTORTION OR COMMERCIAL
BRIBERY, BREACH OF AN IMPLIED COVENANT OR DUTY OF GOOD FAITH AND FAIR
DEALING, MATERIAL MISREPRESENTATION OR OMISSION, OVERREACHING,
UNCONSCIONABILITY, CONFLICT OF INTEREST, BAD FAITH, MALPRACTICE,
DISPARATE BARGAINING POSITION, DETRIMENTAL RELIANCE, PROMISSORY
ESTOPPEL, ESTOPPEL BY DEED, WAIVER, LACHES, OR ANY OTHER EQUITABLE
THEORY, EQUITABLE SUBORDINATION, BREACH OF FIDUCIARY DUTY OR ANY OTHER
DUTY, OR TORTIOUS INDUCEMENT TO COMMIT SUCH BREACH, TORTIOUS
INTERFERENCE WITH CONTRACT OR PROSPECTIVE BUSINESS RELATIONS, NEGLIGENT
PERFORMANCE OF CONTRACTUAL OBLIGATIONS, OR OTHER THEORIES OF
NEGLIGENCE, NEGLIGENT OR INTENTIONAL INFLICTION OF EMOTIONAL DISTRESS,
SLANDER, LIBEL, OTHER DEFAMATION, FRAUDULENT TRANSFER, CONVERSION,
TRESPASS TO (OR CLOUDING THE TITLE OF) PROPERTY, USURY, VIOLATIONS OF
THE RACKETEER INFLUENCED AND CORRUPT ORGANIZATIONS ACT, DECEPTIVE TRADE
PRACTICES, CONSPIRACY, OR ANY THEORY OF LIABILITY AS PARTNERS OR JOINT
VENTURERS, THAT ANY RELEASING PARTY MAY HAVE AS OF THE DATE HEREOF
AGAINST ANY RELEASED PARTY WITH RESPECT TO THE LENDING RELATIONSHIP.
1.2 "Released Party" shall mean each of the Trustee, the
Noteholders and their respective predecessors, successors, assigns,
directors, officers, partners, employees, agents, attorneys, principals
and Affiliates and all other Persons liable or who might be claimed to
be liable on their behalf (collectively, the "Released Parties").
1.3 "Releasing Party" shall mean each of the Borrower and the
Guarantors and their respective predecessors, successors, assigns,
directors, officers, partners, employees, agents, attorneys,
principals, Affiliates and all other Persons who might have a claim
against any Released Party (collectively, the "Releasing Parties").
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Section 2. Amendments to Indenture. The Indenture is amended as
follows:
2.1 Section 1.01. Section 1.01 is amended as follows:
2.1.1 The definition of "Consolidated Net Income" is amended as
follows:
2.1.1.1 By deleting all of subsection (iv) and replacing with the
following:
"(iv) any extraordinary gains or losses;"
2.1.1.2 By inserting after the end of subsection (iv) a new
subsection (v) as follows:
"(v) any gains or losses attributable to Property sales
not in the ordinary course of business or attributable to
sales of Hydrocarbon Interests other than sales of
Hydrocarbon production in the ordinary course of
business: and"
2.1.1.3 By relettering the existing subsection (v) as subsection
(vi).
2.1.1.4 By adding to the end of such definition the following:
"Any amounts paid on account of the Term ORRI shall be
added to Consolidated Net Income, regardless of the
accounting treatment afforded the Term ORRI."
2.1.2 By adding to the end of the definition of "ECT", the
words "and its successors and assigns".
2.1.3 By deleting the definition of the term "First Borrowing
Base Determination Date" in its entirety and substituting the following
therefor:
"First Borrowing Base Determination Date" shall have the
meaning assigned to it in the Senior Credit Agreement."
2.1.4 By deleting the definition of the term "Interest Expense"
in its entirety and substituting the following therefor:
"Interest Expense" means, for each applicable period for
which EBITDA is to be calculated, the sum of all required
payments of interest (whether paid in cash or in kind,
but excluding any payments made on account of the Term
ORRI) during such period on borrowed money."
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2.1.5 By deleting the definition of the term "Adjusted
Consolidated Net Tangible Assets" in its entirety.
2.1.6 By deleting subsection (a) of the definition of the term
"Permitted Debt" in its entirety and substituting the following
therefor:
"(a) The Senior Loan, up to the lesser of (i) $75,000,000
or (ii) the Borrowing Base; provided that upon the
payment of any portion of the principal of the Senior
Loan, the maximum principal balance permitted under the
Senior Loan Documents shall be reduced by the amount of
the payment unless, until and to the extent reborrowing
such amount would be supported by an industry standard
"borrowing base" as reasonably determined by the Senior
Lenders constituting Majority Lenders under the Senior
Loan Documents, whether as part of a formal Borrowing
Base determination or in determination of the Target
Asset Value (as defined in the Senior Credit Agreement)
under the Senior Credit Agreement;"
2.1.7 By adding the phrase "(other than the Senior Loan)"
following the words "Financial Statements" in subsection (c) of the
definition of "Permitted Debt".
2.1.8 By adding to the end of the definition of "Registration
Rights Agreement", the words ", as it may be amended, supplemented or
restated from time to time".
2.1.9 By inserting the following new definitions:
"Accrued PIK Amount" means, as of any particular day, the
aggregate dollar amount of all accrued interest on the
Notes that has been paid in kind (and not in cash) as of
such day in accordance with this Indenture, as reduced by
any amounts paid on or prior to such day under any Term
ORRI Conveyances or otherwise paid in cash as reduced
pursuant to Section 9.01. The Accrued PIK Amount as of
February 20, 2000 shall be $6,936,456.
"Applied Payments" has the meaning assigned to it in
Section 2.5.
"Non-Proved Reserves" means any reserves, other than
Proved Reserves.
"PDNP Reserves" shall mean proved, developed,
non-producing oil and gas reserves, as determined in
conformity with the guidelines in effect from time to
time as promulgated by the Society of Petroleum Engineers
or its successor association.
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"PDP Reserves" shall mean proved, developed, producing
oil and gas reserves, as determined in conformity with
the guidelines in effect from time to time as promulgated
by the Society of Petroleum Engineers or its successor
association.
"Proved Reserves" means PDP Reserves, PDNP Reserves and
PUD Reserves.
"PUD Reserves" shall mean proved, undeveloped oil and gas
reserves, as determined in conformity with the guidelines
in effect from time to time as promulgated by the Society
of Petroleum Engineers or its successor association.
"Second Amendment" means the Second Amendment to
Indenture among the Borrower and the Trustee dated
February 17, 2000.
"Subject Reserves" means (a) any PDP Reserves and PDNP
Reserves identified by BOG or Borrower (or any Subsidiary
thereof) as of the date hereof as being produced or
producible in paying quantities out of wells now located
on the Hydrocarbon Interests owned by any of them as of
the date hereof including those listed on the attached
Exhibit I or (b) any PDP Reserves and PDNP Reserves
identified by BOG or Borrower (or any Subsidiary thereof)
following the date hereof and on or before December 31,
2000, as being produced or producible in paying
quantities out of any well spudded or acquired by BOG or
Borrower (or any Subsidiary thereof) on or before
December 31, 2000, (c) in the event only that Borrower's
Consolidated Interest Coverage Ratio calculated as of
September 30, 2000 (in accordance with the Indenture), is
less than 1.1 to 1.0, any PDP Reserves and PDNP Reserves
identified by BOG or Borrower (or any Subsidiary thereof)
following December 31, 2000 and on or before December 31,
2001, as being produced or producible in paying
quantities out of any well spudded or acquired after
December 31, 2000 but on or before December 31, 2001, and
(d) in the cases of (a), (b) and (c), above, a sufficient
interest in the Hydrocarbon Interests and Oil and Gas
Properties to afford BOG or the Borrower as applicable
the right, prior to giving effect to any Term ORRI
Conveyance, to secure the maximum authorized share of
production that is allocable to PDP Reserves and, when
applicable, PDNP Reserves found in each Subject Well.
Under no circumstances, and notwithstanding any provision
hereof to the contrary, shall the term "Subject Reserves"
include (1) any PUD Reserves or any Non-Proved Reserves
or (2) any PDP Reserves and/or PDNP Reserves beneficially
or legally owned
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(whether in a vested or contingent manner) by a third
party (which is not an Affiliate of the Borrower) under
or pursuant to any agreement or other matter disclosed in
Exhibit H hereto, or (3) any PDP Reserves or PDNP
Reserves identified by Borrower or BOG as a result of the
deepening or sidetracking of a Subject Well after
December 31, 2000 (in the event item (c) of the
definition of Subject Reserves is not triggered) and
after December 31, 2001, (in the event item (c) of the
definition of Subject Reserves is triggered). Under no
circumstances shall the term "Subject Reserves" include
reserves that are not either producing or capable of
producing (or being made in the case of PDNP Reserves to
produce or capable of producing) in "paying quantities,"
as such term is defined under the Texas common law
(regardless of the jurisdiction in which the subject Oil
and Gas Properties are located).
"Subject Wells" means wells in which Subject Reserves are
now or hereafter identified and which are covered by a
Term ORRI Conveyance.
"Term ORRI" means any present or future right and
interest in the Oil and Gas Properties owned or hereafter
acquired by the Borrower, BOG or any other Affiliate of
the Borrower, to be conveyed by the Borrower and/or its
Subsidiaries, as applicable, to the Noteholders in
accordance with this Indenture, entitling the holders
thereof to 4% of the net proceeds (reducing to 3% of the
net proceeds) received by the Borrower or its Subsidiary
on account of production from the Subject Reserves. Each
Term ORRI shall be conveyed pursuant to a Term ORRI
Conveyance.
"Term ORRI Conveyance" means a conveyance of a Term ORRI
by the Borrower and/or its Subsidiaries, pursuant to
which the Borrower (or the applicable Subsidiary) conveys
to the Noteholders, a Term ORRI in the Oil and Gas
Properties owned or hereafter acquired by the Borrower,
BOG or any other Affiliate of the Borrower, in the form
attached hereto as Exhibit I.
2.2 Section 1.02. Section 1.02 is amended by deleting the phrase
"(including the ACNTA calculations)".
2.3 Section 4.01. Section 4.01 is amended by adding the phrase
"the ORRI and" following the words "subordinate in priority only to",
in the introductory paragraph.
2.4 Section 7.01. Section 7.01 of the Indenture is amended as
follows:
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2.4.1 By deleting the reference "60" from the first sentence of
subsection (b) and inserting the reference "45".
2.4.2 By deleting subparagraph (g) in its entirety and
substituting the following therefor:
"(g) Notices Under Other Loan Agreements. Concurrently
with the furnishing thereof to any Senior Lender or the
Senior Loan Agent, copies of any statement (including
financial statements), report or notice so furnished to
any Senior Lender or the Senior Loan Agent pursuant to
the terms of the Senior Loan Documents and not
previously furnished to the Agent or the Trustee
pursuant to any other provision of this Section 7.01."
2.4.3 By amending subparagraph (j) to add a new sentence to the
end as follows:
"Until the earliest date (i) on which there is a
payment in full of the Accrued PIK Amount and all other
Obligations, (ii) on or after November 21, 2000, on
which there is a payment in full of the Accrued PIK
Amount, or (iii) after November 21, 2000, on which the
Noteholders have received payment in full of the
Accrued PIK Amount through payment of the Term ORRI,
each monthly operating report shall identify all Oil
and Gas Properties that constitute Subject Reserves,
the date at which the well attributable to the Subject
Reserves was spudded and any additions to Subject
Reserves from the previous month's operating report."
2.4.4 By deleting the final paragraph of Section 7.01 and
substituting the following therefor:
"The Borrower will furnish to the Agent, at the time it
furnishes each set of financial statements pursuant to
paragraph (a) or (b) above, a certificate substantially
in the form of Exhibit J attached hereto executed by a
Responsible Officer (i) certifying as to the matters
set forth therein and stating that no Default has
occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in
reasonable detail), (ii) for the year 2000, setting
forth in reasonable detail an aged accounts payable and
accounts receivable listing, (iii) setting forth in
reasonable detail the computations necessary to
determine whether the Borrower is in compliance with
the financial covenants in Sections 8.16 and 8.17 as of
the end of the applicable reporting period(s) and,
together with pro forma calculations for each of such
financial covenants as of the end of the next fiscal
quarter, and (iv) certifying that said financial
statements fairly present the consolidated and
consolidating financial
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condition and consolidated results of operations in
accordance with GAAP, as at the end of, and for, such
period (subject to normal year-end audit adjustments)."
2.5 Section 7.07. Section 7.07 is amended by deleting subsection
(b) in its entirety and substituting the following therefor:
"(b) Not less than 15 days prior to each of the First
Borrowing Base Determination Date and any Scheduled
Redetermination Date, the Borrower shall furnish to the
Agent a Reserve Report. The Reserve Report furnished
for the First Asset Valuation Date (as defined in the
Senior Credit Agreement) shall be prepared as of July
31, 2000, and the Reserve Report furnished for the
First Borrowing Base Determination Date shall be
prepared as of December 31, 2001. The Reserve Report
furnished for the Scheduled Redetermination Date to
occur in March of each year shall be prepared as of the
preceding December 31, and the Reserve Report furnished
for the Scheduled Redetermination Date to occur in
September of each year other than such First Asset
Valuation Date, shall be prepared as of the preceding
June 30. The Reserve Report to be furnished in March of
each year shall be prepared by certified independent
petroleum engineers or other independent petroleum
consultant(s) acceptable to the Agent and the Reserve
Reports to be furnished in September of each year shall
be prepared by or under the supervision of the chief
engineer or Vice President of Operations of the
Borrower who shall certify such Reserve Report to have
been prepared in accordance with the procedures used in
the immediately preceding March Reserve Report. At
Borrower's option, the Reserve Report to be furnished
in September of each year may instead consist of a
report from the independent petroleum engineers
referred to above on any new wells and a roll-forward
by Borrower on any wells previously reported in the
Reserve Report described in the immediately preceding
March."
2.6 Section 7.12. A new Section 7.12 is added to the Indenture as
follows:
"Section 7.12 Term ORRI. (a) Contemporaneously with the
execution of the Second Amendment, the Borrower has executed
and delivered, or caused its Subsidiaries to execute and
deliver, to the Noteholders, in their respective
Participations, a Term ORRI Conveyance to the Noteholders
covering all Hydrocarbon Interests owned by the Borrower and
its Subsidiaries. On the last Business Day of each calendar
month following the date of the Second Amendment, beginning
March 31, 2000, the Borrower shall execute and deliver, or
cause its Subsidiaries to execute and deliver, to the
Noteholders, in their respective Participations, (i) a Term
ORRI Conveyance covering all Hydrocarbon Interests owned by
the Borrower and its Subsidiaries identified
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or acquired during the prior calendar month on or before
December 31, 2000, and (ii) in the event the Borrower's
Consolidated Interest Coverage Ratio calculated as of
September 30, 2000, is less than 1.1 to 1.0, a Term ORRI
Conveyance covering all Hydrocarbon Interests owned by the
Borrower and its Subsidiaries identified or acquired during
the prior calendar month on or before December 31, 2001.
(b) Any and all payments made on account of any Term ORRI or
otherwise pursuant to any Term ORRI Conveyance (the "Applied
Payments"), including payments made on account of the sale of
ORRI Hydrocarbons and payments made on account of a
piggy-back sale, farm-out, exchange or other transfer of a
Term ORRI pursuant to Section 3.2(a) of any Term ORRI
Conveyance, shall reduce the Accrued PIK Amount by the dollar
amount of such payment(s).
(c) Notwithstanding any provision hereof to the contrary, an
actual payment obligation on account of the Term ORRI shall
only be triggered by (i) the actual production, sale and
collection of proceeds on account of PDP Reserves from
Subject Reserves or (ii) a piggy-back sale, farm-out,
exchange or other transfer of any Term ORRI, or any portion
thereof, pursuant to Section 3.2 of any Term ORRI Conveyance,
and the mere identification by Borrower or BOG of PDP
Reserves and/or PDNP Reserves in any particular Subject Well
shall not trigger such an actual payment obligation or
otherwise constitute a representation, warranty or other
assurance that any such reserves (at any level) actually
exist and/or are producible in paying quantities.
(d) Notwithstanding any provision of this Amendment or any
Term ORRI Conveyance to the contrary, Agent shall serve as
agent and attorney-in-fact on behalf of the Noteholders for
purposes of (A) receiving Applied Payments under the Term
ORRI Conveyances, (B) receiving notices and other
communications under the Term ORRI Conveyances and (C)
executing instruments necessary or appropriate, in the
reasonable discretion of Borrower, to give effect to Section
2.4 or the last sentence of Section 3.2 of each Term ORRI
Conveyance.
(e) Notwithstanding any provision of any Term ORRI Conveyance
to the contrary, (i) all of the rights and interests of any
particular Noteholder under all, but not less than all, of
the Term ORRI Conveyances may be assigned by such Noteholder
to an Affiliate of such Noteholder, (ii) all or an undivided
portion of the rights and interests of any particular
Noteholder under all, but not less than all, of the Term ORRI
Conveyances may be assigned to a successor or assign of all
or a portion of such Noteholder's interest in the Loan
Documents, in proportion to the interest so transferred, or
(iii) all or an undivided portion of the rights and interests
of any particular Noteholder under all, but not less than
all, of the Term ORRI Conveyances may be assigned to a
successor or assign of all or a portion of such Noteholder's
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interest in Accrued PIK Amounts subject to payment by virtue
of any Term ORRI. Upon any transfer of a Noteholder's
interest in the Term ORRI's and under the Term ORRI
Conveyances pursuant to this subsection (e), the Agent shall
serve as agent and attorney-in-fact on behalf of the
transferee for purposes of (A) receiving Applied Payments
under the Term ORRI Conveyances, (B) receiving notices and
other communications under the Term ORRI Conveyances and (C)
executing instruments necessary or appropriate, in the
reasonable discretion of Borrower, to give effect to Section
2.4 or the last sentence of Section 3.2 of each Term ORRI
Conveyance.
(f) The Term ORRI shall not apply to any Subject Reserves as
are, as of the date hereof, subject to the rights and
interests of third parties that are not Affiliates of the
Borrower under any agreement or other matter described in
Exhibit H hereto.
(g) Unless and until there is an Event of Default that is
continuing (and no longer subject to a cure period), BOG
under each Term ORRI Conveyance shall, notwithstanding any
provision of Section 4.2 of any Term ORRI Conveyance to the
contrary, have the absolute right to receive all payments for
(or on account of) ORRI Hydrocarbons as defined in the Term
ORRI Conveyance, and to net out Permissible Charges as
defined in the Term ORRI Conveyance and make distributions to
Agent, on behalf of Noteholders. In the event Agent or
Noteholders begin to receive payments on account of the Term
ORRI after and during the continuance of an Event of Default,
on or before the last day of each month, Agent shall provide
Borrower with an accounting of payments received (and a copy
of any invoices delivered to Agent in connection therewith)
during the previous calendar month on account of the Term
ORRI.
(h) Neither the Borrower nor any Subsidiary shall have any
obligation under any Term ORRI Conveyance, express or
implied, to maintain any Oil and Gas Property in force and
effect (whether by drilling, production, payment of delay
rentals, exercise of an option or otherwise), such
maintenance and all decisions with respect thereto to be in
the sole and absolute discretion of Borrower and BOG.
(i) In the event that Borrower's Consolidated Interest
Coverage Ratio calculated as of September 30, 2000 (in
accordance with the Indenture) is 1.1 to 1.0 or greater, the
Noteholders or Agent, on behalf of Noteholders, shall, on or
before January 30, 2001, release and reconvey to BOG, under a
form reasonably satisfactory to both Borrower and Noteholders
and free of all liens, claims and encumbrances created by,
through or under Noteholders, all rights, titles and
interests described in or covered by any Term ORRI
Conveyance, other than those carved out of Oil and Gas
Properties constituting Subject Reserves. In the event that
Borrower's Consolidated Interest Coverage Ratio calculated as
of September 30, 2000 (in accordance with the Indenture) is
1.1 to 1.0 or greater, Noteholders or Agent, on behalf of
Noteholders, shall, on or before January 30, 2002, release
and reconvey to BOG, under a form
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reasonably satisfactory to both Borrower and Noteholders and
free of all liens, claims and encumbrances created by,
through or under Noteholders, all rights, titles and
interests described in or covered by any Term ORRI
Conveyance, other than those carved out of Oil and Gas
Properties constituting Subject Reserves. Upon termination of
the Term ORRIs, the Noteholders shall execute such documents
as the Borrower may reasonably request to evidence such
termination."
2.7 Section 8.01. Section 8.01 of the Indenture is amended as
follows:
2.7.1 By deleting subsection (a) in its entirety and substituting
the following therefor:
"(a) Incur, create or assume any Debt other than Permitted
Debt."
2.7.2 By deleting the last paragraph of Section 8.01 in its
entirety.
2.8 Section 8.07. Section 8.07 of the Indenture is amended hereby
by deleting clause (ii) in its entirety and substituting the following
therefor:
"(ii) after giving effect to such merger or consolidation,
the Borrower or the applicable Subsidiary shall be the
surviving entity, and"
2.9 Section 8.16. Section 8.16 of the Indenture is amended by
deleting the section in its entirety and substituting the following
therefor:
"Section 8.16 Consolidated Interest Coverage Ratio. As of the
last day of each fiscal quarter, beginning September 30,
2000, the Borrower will not permit the Consolidated Interest
Coverage Ratio to be less than (i) 1.05 to 1.0 as of
September 30, 2000, (ii) 1.2 to 1.0 as of December 31, 2000,
(iii) 1.4 to 1.0 as of March 31, 2001, (iv) 1.6 to 1.0 as of
June 30, 2001, (v) 1.8 to 1.0 as of September 30, 2001, and
(vi) 2.0 to 1.0 as of December 31, 2001 and the end of each
fiscal quarter thereafter."
2.10 Article VIII. Article VIII of the Indenture is amended by
inserting the following new Section 8.18 at the end of Article VIII:
"Section 8.18 Prepayments. During the continuation of any
Default, BOG shall not make any optional prepayment of the
Senior Loans pursuant to Section 2.01(i) of the Equity
Conversion Agreement (as defined in the Senior Credit
Agreement)."
2.11 Section 9.01. Section 9.01 of the Indenture is amended by
inserting the following at the end of Section 9.01:
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"In addition, any payments received by the Agent or the
Noteholders (or otherwise owing to the Noteholders in
instances where the Noteholders have elected to be paid
directly on account of the Term ORRI pursuant to Section 4.2
of any Term ORRI Conveyance) which payments are (a)
attributable to any Term ORRI or (b) otherwise received
pursuant to Section 3.2(a) of any Term ORRI Conveyance
(collectively, the "Applied Payments") shall constitute a
prepayment on the Notes of that portion of the principal
balance which has been added to the Notes as a result of the
Borrower's election to pay accrued interest in kind in
accordance with the provisions of Section 9.02(b).
Notwithstanding the foregoing, to the extent that any Applied
Payment received by any Noteholder due to any Term ORRI is
subsequently invalidated, declared to be fraudulent or
preferential, set aside or required to be repaid by the Agent
or any Noteholder to the Borrower, any Subsidiary, trustee,
debtor in possession, receiver or other Person under any
bankruptcy law, common law or equitable cause, then to such
extent and further only to the extent Agent or Noteholder has
actually repaid the affected Applied Payment, the obligations
hereunder with respect to the Notes satisfied by payment of
the Term ORRI in the form of the affected Applied Payment
shall be revived and continue as if such payment or proceeds
had not been received and the Agent's and the Noteholder's
Liens, interests, rights, powers and remedies under this
Indenture and the Loan Documents shall continue in full force
and effect."
2.12 Section 9.02. Section 9.02 of the Indenture is amended as
follows:
2.12.1 By deleting the last two sentences of subsection (a)
beginning with "Notwithstanding".
2.12.2 By deleting subsection (b) in its entirety and
substituting the following therefor:
"(b) The Borrower shall have the option to pay accrued
interest on the Notes in kind on each of the seven (7)
consecutive Interest Payment Dates commencing with and
following February 20, 1999, as provided in this Section
9.02(b). In addition, the Borrower shall have the option to
pay accrued interest on the Notes in kind on November 20,
2000, in the event one of the following events has occurred
following the date of the Second Amendment and on or before
August 31, 2000: (i) Borrower sells common or preferred
equity securities resulting in net proceeds received by
Borrower (after deducting all costs and expenses incurred in
such sale) of at least $10,000,000; or (ii) BOG and/or
Borrower acquires in exchange for common or preferred equity
securities, Oil and Gas Properties containing PDP Reserves
and PDNP Reserves with a collective net
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present value, discounted at 10% per annum, of at least
$10,000,000 (in the reasonable judgement of Majority
Noteholders); or (iii) through a combination of (i) and (ii)
above, Borrower receives net proceeds and newly acquired Oil
and Gas Properties, which (as valued above), total at least
$10,000,000 in net present value. In the event Borrower pays
interest in kind, at any time, the accrued interest due on
the applicable Interest Payment Date shall be calculated at
the rates set forth in this Section 9.02(b) and the interest
due (calculated at the rates set forth in this Section
9.02(b)) shall be deemed an advance of principal on the Notes
and, as of the applicable Interest Payment Date, shall be
added to the outstanding principal balance of the Notes
(notwithstanding the outstanding principal balance may
exceed, in the aggregate, the face amount of the Notes). In
order to not exercise its option under the first sentence of
this Section 9.02(b), the Borrower must, on or before the
applicable Interest Payment Date, deliver written notice to
the Agent executed by a Responsible Officer notifying Agent
of its election to not pay interest in kind. Should Borrower
fail to deliver such written notice in a timely fashion,
Borrower shall be deemed to have irrevocably elected to make
payment of accrued interest in kind on the next applicable
Interest Payment Date. Should Borrower deliver such notice in
a timely fashion, Borrower shall be deemed to have
irrevocably elected to make payment of accrued interest in
cash and any subsequent failure to do so in a timely fashion
(subject to the five (5) day grace period provided in Section
10.01(a)) shall constitute an Event of Default hereunder. In
order to exercise its option under the second sentence of
this Section 9.02(b), the Borrower must, on or before
September 7, 2000, deliver written notice to the Agent
executed by a Responsible Officer certifying to Agent that
Borrower has satisfied the conditions set forth in the second
sentence of this Section 9.02(b), together with reasonable
supporting evidence, and notifying Agent of its election to
pay interest in kind on the November 20, 2000 Interest
Payment Date. Should Borrower fail to deliver such written
notice in a timely fashion, Borrower shall be deemed to have
irrevocably elected not to make payment of accrued interest
in kind on the November 20, 2000 Interest Payment Date.
Should Borrower deliver such notice in a timely fashion,
Borrower shall be deemed to have irrevocably elected to make
payment of accrued interest in cash and any subsequent
failure to do so in a timely fashion (subject to the five (5)
day grace period provided in Section 10.01(a)) shall
constitute an Event of Default hereunder. In the event the
Borrower elects to pay interest in kind, such interest to be
paid shall be calculated at 13% per
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annum commencing on the immediately preceding Interest
Payment Date."
2.13 Section 10.01. Section 10.01 of the Indenture is amended as
follows:
2.13.1 By deleting subsection (a) in its entirety and
substituting the following therefore:
"(a) the Borrower shall default in the payment or prepayment
when due of any Obligation, and such default, other than a
default of a payment or prepayment of principal (which shall
have no cure period), shall continue unremedied for a period
of five (5) days after such Obligation becomes due, in the
case of interest, or thirty (30) days after the Borrower
receives notice from the Agent that such Obligation is due,
in the case of Obligations other than principal or interest;
or"
2.13.2 By deleting clause (ii) of subsection (b) in its entirety
and substituting the following therefor:
"(ii) as to the Senior Loan, there shall have (x) occurred a
default thereunder in the payment of any principal or
interest due on the Senior Loan beyond any cure period
contained in the Senior Loan Documents as of the date of the
Second Amendment, whether or not the Senior Lenders have
waived such default or modified the Senior Loan Documents to
extend the due date thereof or any cure period or (y)
occurred a default thereunder and the holders of the Senior
Loan shall have elected to accelerate the payment of the
Senior Loan (or it shall be accelerated automatically or
otherwise be due and payable in full); or"
2.13.3 By deleting the "." at the end of subsection (m) and
substituting "; or"
2.13.4 By adding the following new subsection (n) at the end of
Section 10.01:
"(n) BOG, Borrower or any Subsidiary of Borrower, shall
default in the performance of its obligations under any Term
ORRI Conveyance and such default shall continue unremedied
for a period of thirty days after the earlier of (A) the date
notice thereof to the Borrower by the Agent or (B) the
Borrower's knowledge thereof; provided that the foregoing 30
day cure period shall be reduced to five days for any payment
default. As used in this Section 10.01(n), "Borrower's
knowledge" shall be limited to the actual knowledge of any of
the officers of the Borrower or BOG."
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15
2.14 Exhibits.
2.14.1 A new Exhibit "H" is added to the Indenture in the form of
Exhibit "H" to this Second Amendment.
2.14.2 A new Exhibit "I" is added to the Indenture in the form of
Exhibit "I" to this Second Amendment.
2.14.3 A new Exhibit "J" is added to the Indenture in the form of
Exhibit "J" to this Second Amendment.
Section 3. Conditions Precedent. This Amendment shall become binding
only upon receipt by the Agent of the following documents and satisfaction of
the other conditions provided in this Section 3 (the "Closing Date"), each of
which must be satisfactory to the Agent in form and substance:
3.1 The Second Amendment. Counterparts of this Amendment executed
by the Borrower and the Trustee.
3.2 New Mortgage. The Borrower shall have satisfied all of its
obligations under Section 7.09(a) of the Indenture, including the (i)
delivery to the Agent of all Mortgages required thereby and (ii)
evidence that the New Mortgage and the related UCC-1 financing
statements delivered have been filed in all jurisdictions necessary to
perfect and protect the security interests, assignments and Liens
created thereby.
3.3 Registration Rights. Counterparts of the Second Amendment to
Registration Rights Agreement executed by the Borrower, JEDI-II and ECT
Merchant.
3.4 Financial Statements. All past due financial statements
through the month of November 1999 described in Section 7.01 of the
Indenture.
3.5 Officer's Certificates. All past due officer's certificates
through the month of November 1999 described in Sections 7.01 and 7.07
of the Indenture.
3.6 Accounts Payable. An aged accounts payable and accounts
receivable listing as of December 31, 1999.
3.7 Secretary's Certificate. Certificates of the Secretary or an
Assistant Secretary of the Borrower and each of the Guarantors setting
forth for each of them (i) the resolutions of its board of directors or
managers (or if such Guarantor is a partnership, resolutions of the
general partner of such partnership), as applicable, with respect to
the authorization to execute and deliver this Amendment and the
consummation of the transactions contemplated
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16
hereby; (ii) the Responsible Officer of such entity authorized to sign
this Amendment, and (iii) the signature of such authorized Responsible
Officer of such entity.
3.8 Term ORRI Conveyance. A Term ORRI Conveyance in the form
attached hereto as Exhibit I conveying a Term ORRI in all Oil and Gas
Properties owned by the Borrower, BOG or any other Affiliate of the
Borrower.
3.9 Consent by Guarantors. A Consent and Acknowledgment executed
by BOG and Brigham, Inc.
3.10 Warrants. Duly executed revised warrants in the form
attached hereto as Exhibit A, issued by the Borrower to the Noteholders
in their respective Participations, in substitution for the current
Warrants issued pursuant to Section 2.03 of the Securities Purchase
Agreement (and any Warrants issued in substitution therefor), for the
purchase of an aggregate of 1,000,000 shares of Common Stock, and which
warrants shall constitute the "Warrants" under the Indenture and the
Securities Purchase Agreement for all purposes.
3.11 Opinion of Counsel. An opinion of Thompson & Knight, LLP in
form satisfactory to the Noteholders.
3.12 Fees and Expenses. Payment of the expenses of the Agent and
the Noteholders in accordance with Section 6 hereof.
3.13 Senior Lenders Consent. A consent executed by each of the
Senior Lenders and the Senior Loan Agent, consenting to the terms of
this Amendment and subordinating all of the liens securing the Senior
Loan to each Term ORRI.
3.14 Letter. A letter from Borrower in the form attached hereto
as Exhibit B.
3.15 Subordination Agreement. An amendment to the Subordination
Agreement satisfactory to the Noteholders, the Senior Lenders, the
Agent and the Senior Loan Agent.
3.16 Closing of Amended Senior Credit Agreement.
Contemporaneously with the Closing Date, the Borrower and/or its
Subsidiaries, the Senior Loan Agent and the Senior Lenders shall have
executed the amended Senior Credit Agreement (in such form as is
satisfactory to the Noteholders) and all other Senior Loan Documents
(in such form as is satisfactory to the Noteholders).
3.17 Other Documents. Such other documents as Agent or its
counsel may reasonably request.
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Section 4. Post Closing. Within 30 days as of the Closing Date hereof,
Brigham Holdings I, LLC and Brigham Holdings II, LLC will execute a Consent and
Acknowledgment.
Section 5. Representations and Warranties.
5.1 Reaffirmation. The Borrower hereby reaffirms that, as of the
date of this Amendment, the representations and warranties made by the
Borrower in the Securities Purchase Agreement and each of the Loan
Documents are true and correct as though made on and as of the date
hereof, subject only to the revisions to the schedules to the
Securities Purchase Agreement and Indenture as are reflected in the
schedules attached hereto and further, the Borrower represents that,
5.1.1 As of the date hereof, no Default or Material Adverse
Effect has occurred and is continuing except as previously disclosed to
the Agent in writing.
5.1.2 The execution, delivery and performance by the Borrower or
the Guarantors of this Amendment and the other Loan Documents and all
instruments and documents to be delivered by the Borrower or the
Guarantors, to the extent a party thereto, hereunder and thereunder and
the creation of all Liens provided for herein and therein: (i) are
within the Borrower's or such Guarantor's corporate power; (ii) have
been duly authorized by all necessary or proper corporate action,
including the consent of stockholders, members and/or partners therein
or thereof; (c) are not in contravention of any provision of the
Borrower's or such Guarantor's certificate of incorporation, bylaws or
similar organizational and/or governing documents; (d) will not violate
(1) any law or regulation or (2) any order or decree of any court or
governmental instrumentality; (e) will not conflict with or result in
the breach or termination of, constitute a default under or accelerate
any performance required by, any indenture, mortgage, deed of trust,
lease, agreement or other instrument to which the Borrower or any of
the Guarantors is a party or by which the Borrower or any of the
Guarantors or any of their respective property is bound; (f) will not
result in the creation or imposition of any Lien upon any of the
property of the Borrower or the Guarantors other than those in favor of
the Agent pursuant to the terms of this Amendment and the other Loan
Documents to be delivered in connection herewith; and (g) do not
require the consent or approval of any governmental body, agency,
authority or any other Person that has not been duly obtained, made or
complied with prior to the date hereof. At or prior to the date hereof,
each of this Amendment and the other Loan Documents to be delivered in
connection herewith shall have been duly executed and delivered for the
benefit of or on behalf of the Borrower or the Guarantors, in each case
to the extent a party thereto, and each shall then constitute a legal,
valid and binding obligation of the Borrower or such Guarantor,
enforceable against it in accordance with its terms.
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5.2 Independent Counsel. Each of the Borrower and the Guarantors
further represents and warrants, for itself only that it (i) is
executing this Amendment, and the documents executed in connection
herewith to which it is a party, after consultation with counsel of its
own choosing, (ii) has read and understands the release granted by
Section 5 hereof, (iii) desires to execute this Amendment and such
documents to which it is a party and (iv) has the requisite authority
to enter into and be bound by this Amendment and such documents to
which it is a party, including the release granted by Section 5 hereof.
Section 6. Release.
6.1 EACH OF THE RELEASING PARTIES DESIRES AND INTENDS FULLY TO
COMPROMISE, RELEASE AND SETTLE ANY AND ALL OF THE RELEASED CLAIMS; AND
EACH OF THE RELEASING PARTIES HEREBY COVENANTS, WARRANTS AND REPRESENTS
UNTO EACH OF THE RELEASED PARTIES THAT SUCH RELEASING PARTY DOES HEREBY
FOREVER RELEASE, ACQUIT, WAIVE AND DISCHARGE EACH OF THE RELEASED
PARTIES OF AND FROM THE RELEASED CLAIMS AND EACH OF THE RELEASING
PARTIES HEREBY DECLARES THE SAME FOREVER RELEASED, ACQUITTED, WAIVED,
SETTLED AND DISCHARGED. THIS RELEASE IS EFFECTIVE WITHOUT REGARD TO
WHETHER (I) SUCH RELEASED CLAIMS ARE KNOWN OR UNKNOWN, (II) DAMAGES
ARISING OUT OF SUCH RELEASED CLAIMS HAVE YET ACCRUED, (III) SUCH
RELEASED CLAIMS AROSE COLLATERALLY, DIRECTLY, DERIVATIVELY, OR
OTHERWISE BETWEEN THE PARTIES HERETO OR (IV) AN ORDINARY PERSON IN THE
SAME OR SIMILAR CIRCUMSTANCES WOULD OR WOULD NOT, THROUGH THE EXERCISE
OF DUE CARE, HAVE DISCOVERED SUCH CLAIMS BY THE DATE OF THIS AMENDMENT.
IN CONNECTION WITH THE FOREGOING RELEASE:
6.2 Borrower and each of the Guarantors represents and warrants
that it has the full power and authority to perform the release granted
in this Section 6 and that it has not in any manner made any assignment
of any Released Claim to any third party.
6.3 The release granted in this Section 6 will be effective upon
execution of this Amendment by all of the parties hereto.
6.4 Each party executing this Amendment understands and agrees
that the release granted in this Section 6 is a full, final and
complete release of the Released Claims and that such release may be
pleaded as an absolute and final bar to any or all suits which may
hereafter be filed or prosecuted by any one or more of the Releasing
Parties or anyone claiming by, through or under any one or more of the
Releasing Parties in respect of any of the matters released hereby, and
that no recovery on account of the Released Claims may hereafter be had
from any of the Released Parties; and that the consideration given for
such release is not an
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19
admission of liability or fault on the part of any of the Released
Parties (it being the express intent of the parties hereto to obtain
peace of mind and avoid the expense and uncertainty of potential
litigation), and that none of the Releasing Parties or those claiming
by, through or under any of them will ever claim that it is.
6.5 The parties hereto acknowledge that the release granted by
this Section 6 does not have any effect with respect to relationships
between the Borrower and each of the Guarantors and the Noteholders and
the Agent other than in connection with the Lending Relationship.
Section 7. Payment of Fees and Expenses; Form of Payment.
7.1 The Borrower agrees, whether or not the transactions
contemplated hereby are consummated, to pay all reasonable expenses of
the Agent and the Noteholders (including, without limitation, all
reasonable fees and disbursements of counsel and other outside
consultants for the Agent and/or the Noteholders) in connection with
the negotiation, investigation, preparation, execution and delivery of,
recording and filing of, preservation of rights under and enforcement
of this Amendment and the other Loan Documents to be delivered in
connection herewith.
7.2 All payments to be made by the Borrower under this Amendment
shall be made in Dollars, in immediately available funds, to the Agent
at such account as the Agent shall specify.
Section 8. Limitations. The amendments set forth herein are limited
precisely as written and shall not be deemed to (a) be a consent to, or waiver
or modification of, any other term or condition of the Securities Purchase
Agreement or the Indenture or any of the other Loan Documents, or (b) prejudice
any right or rights which the Noteholders or the Agent may now have or may have
in the future under or in connection with the Securities Purchase Agreement or
the Indenture or any of the other Loan Documents. Except as expressly
supplemented, amended or modified hereby, the terms and provisions of the
Securities Purchase Agreement or the Indenture or any other Loan Documents are
and shall remain in full force and effect. In the event of a conflict between
this Amendment and any of the foregoing documents, the terms of this Amendment
shall be controlling.
Section 9. Governing Law. This Amendment and the rights and obligations
of the parties hereunder and under the Indenture shall be construed in
accordance with and be governed by the laws of the State of Texas and the United
States of America.
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Section 10. Descriptive Headings, etc. The descriptive headings of the
several Sections of this Amendment are inserted for convenience only and shall
not be deemed to affect the meaning or construction of any of the provisions
hereof.
Section 11. Counterparts. This Amendment may be executed in any number
of counterparts and by different parties on separate counterparts and all of
such counterparts shall together constitute one and the same instrument.
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21
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed as of the date first written above.
NOTICE PURSUANT TO TEX. BUS. & COMM. CODE SECTION 26.02
THIS AMENDMENT AND OTHER LOAN DOCUMENTS EXECUTED BY ANY OF THE PARTIES BEFORE OR
SUBSTANTIALLY CONTEMPORANEOUSLY WITH THE EXECUTION HEREOF TOGETHER CONSTITUTE A
WRITTEN LOAN AGREEMENT AND REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENT BETWEEN THE
PARTIES.
BORROWER: BRIGHAM EXPLORATION COMPANY
By:
----------------------------------------------
Curtis F. Harrell
Chief Financial Officer
TRUSTEE: CHASE BANK OF TEXAS, NATIONAL ASSOCIATION,
as Trustee
By:
----------------------------------------------
Mauri J. Cowen
Vice President and Trust Officer
22
The Noteholders have joined herein solely for the purpose of evidencing their
(i) consent to the foregoing, and (ii) authorization to the Trustee to execute
this Amendment:
JOINT ENERGY DEVELOPMENT INVESTMENTS
II LIMITED PARTNERSHIP, a Delaware limited
partnership, as Purchaser
By: Enron Capital Management II Limited
Partnership, its General Partner
By: Enron Capital II Corp., its
General Partner
By:
--------------------------------------
Mark Warner
Agent and Attorney-in-Fact
ECT MERCHANT INVESTMENTS
CORP., a Delaware corporation
By:
----------------------------------------------
Mark Warner
Agent and Attorney-in-Fact
23
EXHIBIT A
Form of Warrant
24
EXHIBIT B
Form of Letter
February 28, 2000
Mr. John S. Hopley
Enron North America Corp.
1400 Smith Street
Houston, Texas 77002-7361
Dear John:
Brigham Exploration Company ("BEXP") agrees to engage within thirty
days from the date hereof of a reputable investment banking firm mutually
acceptable to Enron North America Corp. and BEXP and to secure from such
investment banking firm advice concerning financial, capitalization, strategic,
sale, merger and restructure options available to BEXP within thirty days after
such engagement. BEXP agrees to present such advice to its board of directors
and to analyze and consider any such advice offered, but shall in no way be
obligated to act on such advice.
Sincerely,
Curtis F. Harrell
CFH/ldl
25
EXHIBIT H
TITLES, ETC.
(a) The rights and interests afforded Gasco Limited Partnership ("Gasco") and
its successors and assigns under the terms of (i) that certain Expense
Allocation and Participation Agreement dated as of April 1, 1996, by and between
Gasco and BOG, as heretofore and/or hereafter amended, expanded, supplemented,
renewed and/or extended, and (ii) that certain Expense Allocation and
Participation Agreement II dated as of April 1, 1997, by and between Gasco and
BOG, as heretofore and/or hereafter amended, expanded, supplemented, renewed
and/or extended, and (iii) that certain Expense Allocation and Participation
Agreement III dated as of March 1, 1998, by and between Gasco and BOG, as
heretofore amended, expanded, supplemented, renewed and/or extended.
(b) The rights and interests afforded Middle Bay Oil Company ("Middle Bay") and
its successors and assigns under the terms of that certain Expense Allocation
and Participation Agreement dated as of April 1, 1996, by and between Middle Bay
and BOG, as heretofore amended, modified, expanded, supplemented, renewed and/or
extended.
(c) The rights and interests afforded Stephens Production Company ("Stephens")
and its successors and assigns under the terms of that certain Anadarko Basin
Joint Participation Agreement dated as of May 1, 1996, by and between BOG and
Stephens, as heretofore amended, modified, expanded, supplemented, renewed
and/or extended.
(d) The rights and interests afforded Vintage Petroleum, Inc. ("Vintage") and
its successors and assigns under the terms of that certain Anadarko Basin Joint
Participation Agreement dated as of May 1, 1996, by and between BOG and Vintage,
as heretofore amended, modified, expanded, supplemented, renewed and/or
extended.
(e) The rights and interests afforded Brigham-Duke (Delaware) LLC ("Duke") and
its successors and assigns under the terms of that certain Joint Development
Agreement dated as of February 17, 1999, by and between Duke and BOG, as
heretofore amended.
(f) The rights and interests, whether real or equitable, vested or contingent,
afforded third parties under the terms of various farmout, exploration, joint
participation and/or operating agreements, in existence as of the date hereof,
under or in relation to which BOG, Borrower or any Subsidiary agrees to farm-out
to one or more third party(ies) one or more Oil and Gas Property and/or
undertakes with one or more third party(ies) the joint exploration and/or
development of one or more Oil and Gas Properties (which rights and interests
may include, without limitation, rights under Area of Mutual Interests
agreements and rights in respect of forfeiture of all or a portion of Borrower's
interests in an Oil and Gas Property, or part thereof or interest therein, that
is triggered by an election not to participate in a proposed operation; and
26
(g) consulting agreements in existence as of the date hereof, as same may have
heretofore been amended, expanded, supplemented, renewed and/or extended, with
third party geologists, landmen or other oil and gas industry participants who
agree to perform services in return, in whole or in part, for an overriding
royalty interest or other interest in or relating to any Oil and Gas Properties.
27
EXHIBIT I
Term ORRI Conveyance
28
EXHIBIT I
Hydrocarbon Interests
29
EXHIBIT J
FORM OF CERTIFICATE ACCOMPANYING
FINANCIAL STATEMENT