Exhibit 10.46
SECOND AMENDMENT TO
SECOND AMENDED AND RESTATED SUBORDINATED CREDIT AGREEMENT
     THIS SECOND AMENDMENT TO SECOND AMENDED AND RESTATED SUBORDINATED CREDIT
AGREEMENT (herein called this “Amendment”) is made as of the 19th day of
December, 2005, by and among BRIGHAM OIL & GAS, L.P., a Delaware limited
partnership (the “Borrower”), BRIGHAM EXPLORATION COMPANY, a Delaware
corporation (“Brigham Exploration”), BRIGHAM, INC., a Nevada corporation (the
“General Partner”), the lenders party to the Agreement from time to time (the
“Lenders”), and THE ROYAL BANK OF SCOTLAND plc, as Agent (in such capacity, the
“Agent”).
W I T N E S S E T H:
     WHEREAS, Borrower, Brigham Exploration and General Partner (collectively,
the “Credit Parties”), Agent, and Lenders have entered into that certain Second
Amended and Restated Subordinated Credit Agreement dated as of January 21, 2005
(as heretofore amended as of June 29, 2005 (“the First Amendment”) the “Original
Agreement”), for the purposes and consideration therein expressed, pursuant to
which Lenders made and became obligated to make loans to Borrower, which loans
are unconditionally and irrevocably guaranteed by Brigham Exploration and
General Partner (collectively, the “Guarantors”), all as therein provided;
     WHEREAS, Credit Parties, Agent, and Lenders desire to further amend the
Original Agreement for the purposes described herein;
     NOW, THEREFORE, in consideration of the premises and the mutual covenants
and agreements contained herein and in the Original Agreement, in consideration
of the loans which may hereafter be made by Lenders to Borrower, and for other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto do hereby agree as follows:
ARTICLE I.
DEFINITIONS AND REFERENCES
     Section 1.1. Defined Terms. Unless the context otherwise requires or unless
otherwise expressly defined herein, the terms defined in the Original Agreement
shall have the same meanings whenever used in this Amendment. As used herein,
the following terms shall have the following meanings:
     “Credit Agreement” means the Original Agreement as amended by this
Amendment.

 

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ARTICLE II.
AMENDMENTS
     Section 2. Definitions.
          (a) The definition of “NPV” contained in Section 1.01 of the Original
Agreement is hereby deleted in its entirety and replaced by the following:
          “NPV” means, with respect to any Proved Reserves expected to be
produced from any Oil and Gas Properties, the net present value, discounted at
9% per annum, of the future net revenues expected to accrue to the Borrower’s
and its Subsidiaries’ collective interests in such reserves during the remaining
expected economic lives of such reserves. Each calculation of such expected
future net revenues shall be made in accordance with the then existing standards
of the Society of Petroleum Engineers, provided that in any event:
     (a) appropriate deductions shall be made for severance and ad valorem
taxes, and for operating, gathering, transportation and marketing costs required
for the production and sale of such reserves,
     (b) appropriate adjustments shall be made for hedging operations; provided
that: (i) Hydrocarbon Hedge Agreements with counterparties other than those
which at the time such Hydrocarbon Hedge Agreement is made are either (A) a
Lender or an Affiliate of a Lender, or (B) a counterparty rated at least A- or
better by Standard & Poor’s or A3 or better by Moody’s Investor Services, shall
not be taken into account to the extent that such Hydrocarbon Hedge Agreements
improve the position of or otherwise benefit the Borrower or any of its
Subsidiaries; and (ii) Hydrocarbon Hedge Agreements with counterparties which at
the time such Hydrocarbon Hedge Agreement is made are either (A) a Lender or an
Affiliate of a Lender, or (B) a counterparty rated at least A- or better by
Standard & Poor’s or A3 or better by Moody’s Investor Services, shall not be
subject to the limits in clause (c) immediately following,
     (c) the NPV for any particular reserves shall be the higher amount of the
amounts computed using: (i) (A) for natural gas, the Gas Strip Price, provided
that if any Gas Strip Price is greater than $5.50 per MMBtu, the price shall be
capped at $5.50 per MMBtu and (B) for crude oil, the Oil Strip Price, provided
that if any Oil Strip Price is greater than $36 per barrel, the price shall be
capped at $36 per barrel and (ii) (A) for natural gas, the Alternate Gas Price
and (B) for crude oil, the Alternate Oil Price, and
     (d) the cash-flows derived from the pricing assumptions set forth in clause
(c) above shall be further adjusted to account for the historical basis
differentials for each month during the preceding 12-month period calculated by
comparing realized crude oil and natural gas prices to Cushing, Oklahoma and
Henry Hub NYMEX prices for each month during such period.
As used in this definition, (i) “Gas Strip Price” means, for any calendar year
following the effective date of an Engineering Report (or, with respect to the
initial partial calendar year following the effective date of any Internal
Engineering Report, for such partial year), the unweighted average of the
quotations for deliveries of natural gas at Henry Hub, Louisiana for

 

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each future month during such year (or partial year) for which a futures price
is quoted on the New York Mercantile Exchange (provided that for years after the
last December for which such a futures price is quoted, the price used shall be
the Gas Strip Price for the year ending with such December), (ii) “Oil Strip
Price” means, for any calendar year following the effective date of an
Engineering Report (or, with respect to the initial partial calendar year
following the effective date of any Internal Engineering Report, for such
partial year), the unweighted average of the quotations for deliveries of light,
sweet crude oil at Cushing, Oklahoma for each future month during such year (or
partial year) for which a futures price is quoted on the New York Mercantile
Exchange (provided that for years after the last December for which such a
futures price is quoted, the price used shall be the Oil Strip Price for the
year ending with such December), and (iii) “Alternate Gas Price” and “Alternate
Oil Price”, respectively, mean the prices for natural gas and crude oil,
respectively, if designated by the Agent from time to time and for such periods
as it determines in its sole discretion and provides to Borrower. Each Gas Strip
Price and Oil Strip Price shall be determined as of the effective date of the
Engineering Report in which such price is to be used, provided that if such
effective date is not a Business Day such determination shall be made on the
first Business Day thereafter.
          (b) The following definition is hereby added to Section 1.01 of the
Original Agreement:
“Second Amendment” means the Second Amendment to Second Amended and Restated
Subordinated Credit Agreement dated as of December 19, 2005, among the Borrower,
Brigham Exploration, the General Partner, the Lenders and the Agent.
ARTICLE III.
CONDITIONS TO EFFECTIVENESS OF THE AMENDMENT
     Section 3.1. Effective Date. This Amendment shall become effective as of
the date first above written when Agent shall have received all of the items set
forth in (a) — (f) below, provided that the conditions in (g) and (h) below
shall then be satisfied:
          (a) this Amendment, duly authorized, executed and delivered by the
Credit Parties, Agent, and each Lender, and in form and substance satisfactory
to Agent;
          (b) copies, certified as of the date of this Agreement by a
Responsible Officer or the secretary or an assistant secretary of the Borrower
of (A) the resolutions of the applicable governing body of the Borrower
approving this Amendment, (B) the organizational documents of the Borrower (to
the extent the same have changed since copies thereof were delivered in
connection with the Original Agreement), and (C) all other documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Amendment;
          (c) certificates of a Responsible Officer or the secretary or an
assistant secretary of the Borrower certifying the names and true signatures of
the officers of the Borrower authorized to sign this Amendment;

 

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          (d) copies, certified as of the date of this Agreement by a
Responsible Officer or the secretary or an assistant secretary of each Guarantor
of (A) the resolutions of the applicable governing body of such Guarantor
approving the Amendment, (B) the organizational documents of such Guarantor (to
the extent the same have changed since copies thereof were delivered in
connection with the Original Agreement), and (C) all other documents evidencing
other necessary corporate action and governmental approvals, if any, with
respect to this Amendment;
          (e) a certificate of the secretary or an assistant secretary of each
Guarantor certifying the names and true signatures of officers of such Guarantor
authorized to sign this Amendment, the Security Instruments and the other Loan
Documents to which such Guarantor is a party;
          (f) such other documents as Agent may reasonably request;
          (g) no Default or Event of Default shall then have occurred and be
continuing; and
          (h) each Representation and Warranty in the Credit Agreement or any
other Subordinated Loan Document shall be and remain true and correct as of the
date hereof and on the date the Agent shall have received all of (a) —
(f) above, except for such Representations and Warranties which relate only to a
specific date, which Representations and Warranties shall remain correct as of
such date.
ARTICLE IV.
MISCELLANEOUS
     Section 4.1. Ratification of Agreements. The Original Agreement as hereby
amended is hereby ratified and confirmed in all respects. Without in any way
modifying or limiting the foregoing, each of the undersigned Guarantors hereby
(a) consents to the provisions of this Amendment and the transactions
contemplated herein, and (b) ratifies and confirms its guaranty obligations made
by it in favor of Agent for the benefit of each Lender pursuant to and in
accordance with Article VIII of the Credit Agreement, and agrees that its
obligations and covenants thereunder are unimpaired hereby and shall remain in
full force and effect. Any reference to the Credit Agreement in any Subordinated
Loan Document shall be deemed to be a reference to the Original Agreement as
hereby amended. The Subordinated Loan Documents, as they may be amended or
affected by this Amendment, are hereby ratified and confirmed in all respects.
The execution, delivery and effectiveness of this Amendment shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
Lenders under the Credit Agreement, the Subordinated Note, or any other
Subordinated Loan Document nor constitute a waiver of any provision of the
Credit Agreement, the Subordinated Note, or any other Subordinated Loan
Document.
     Section 4.2. Survival of Agreements; Representations and Warranties. All
representations, warranties, covenants and agreements of the Credit Parties
herein shall survive the execution and delivery of this Amendment and the
performance hereof, including without limitation the making, granting or
maintenance of the Advances, and shall further survive until all of the
Subordinated Obligations are paid in full. All statements and agreements
contained in

 

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any certificate or instrument delivered by any Credit Party hereunder or under
the Credit Agreement to any Lender shall be deemed to constitute representations
and warranties by, and/or agreements and covenants of, such Credit Party under
this Second Amendment and under the Credit Agreement. Each Representation and
Warranty in the Credit Agreement or any other Subordinated Loan Document is true
and correct as of the date hereof, except for such Representations and
Warranties which relate only to a specific date, which Representations and
Warranties shall remain correct as of such date.
     Section 4.3. Subordinated Loan Documents. This Amendment is a Subordinated
Loan Document, and all provisions in the Credit Agreement pertaining to
Subordinated Loan Documents apply hereto.
     Section 4.4. GOVERNING LAW. THIS AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.
     Section 4.5. Counterparts. This Amendment may be separately executed in
counterparts and by the different parties hereto in separate counterparts, each
of which when so executed shall be deemed to constitute one and the same
Amendment.
     THIS AMENDMENT AND THE OTHER SUBORDINATED LOAN DOCUMENTS 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 AGREEMENTS AMONG THE PARTIES HERETO.
[Signatures on Following Page]

 

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     IN WITNESS WHEREOF, this Amendment is executed as of the date first above
written.

      BRIGHAM OIL & GAS, L.P.
 
   
By:
  /s/ Eugene Shepherd, Jr.
 
   
 
  Eugene B. Shepherd, Jr.
 
  Executive Vice President & Chief
Financial Officer
 
    BRIGHAM EXPLORATION COMPANY
 
   
By:
  /s/ Eugene Shepherd, Jr.
 
   
 
  Eugene B. Shepherd, Jr.
 
  Executive Vice President & Chief
Financial Officer
 
    BRIGHAM, INC.    
 
   
By:
  /s/ Eugene Shepherd, Jr.
 
   
 
  Eugene B. Shepherd, Jr.
 
  Executive Vice President & Chief
Financial Officer
 
    THE ROYAL BANK OF SCOTLAND plc,
as Agent and Lender
 
   
By:
  /s/ Phillip Ballard
 
   
 
  Phillip Ballard
 
  Managing Director