Exhibit 10.1

 

Execution Version

 

AGREEMENT AND AMENDMENT NO. 1

TO SECOND LIEN CREDIT AGREEMENT

 

This AGREEMENT AND AMENDMENT NO. 1 TO SECOND LIEN CREDIT AGREEMENT (“Agreement”)
dated as of July 15, 2011 (“Effective Date”) is by and among Kodiak Oil & Gas
(USA) Inc., a corporation duly formed and existing under the laws of the State
of Colorado (“Borrower”), Kodiak Oil & Gas Corp., as guarantor (the
“Guarantor”), the Lenders (as defined below) party to the Credit Agreement (as
defined below), and Wells Fargo Energy Capital, Inc., as administrative agent
for the Lenders (in such capacity, the “Administrative Agent”).

 

RECITALS

 

A.            The Borrower is party to that certain Second Lien Credit Agreement
dated as of November 30, 2010, among the Borrower, the financial institutions
party thereto from time to time, as lenders (the “Lenders”), and the
Administrative Agent (the “Credit Agreement”).

 

B.            The Borrower has requested that the Lenders (i) provide
commitments to make additional Loans pursuant to the Credit Agreement in an
aggregate principal amount equal to $15,000,000 (the “Second Lien Increase”) and
(ii) agree to amend certain provisions of the Credit Agreement.

 

C.            The parties hereto wish to, subject to the terms and conditions of
this Agreement, amend the Credit Agreement as provided herein.

 

NOW THEREFORE, in consideration of the premises and the mutual covenants,
representations and warranties contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto hereby agree as follows:

 

Section 1.               Defined Terms.  As used in this Agreement, each of the
terms defined in the opening paragraph and the Recitals above shall have the
meanings assigned to such terms therein.  Unless otherwise specifically defined
herein, each term defined in the Credit Agreement and used herein without
definition shall have the meaning assigned to such term in the Credit Agreement.

 

Section 2.               Other Definitional Provisions.  Article, Section,
Schedule, and Exhibit references are to Articles and Sections of and Schedules
and Exhibits to this Agreement, unless otherwise specified.  The words “hereof”,
“herein”, and “hereunder” and words of similar import when used in this
Agreement shall refer to this Agreement as a whole and not to any particular
provision of this Agreement.  The term “including” means “including, without
limitation,”.  Paragraph headings have been inserted in this Agreement as a
matter of convenience for reference only and it is agreed that such paragraph
headings are not a part of this Agreement and shall not be used in the
interpretation of any provision of this Agreement.

 

Section 3.               Additional Loans.  Subject to the terms of this
Agreement, each Lender agrees to make on the Effective Date a Loan to the
Borrower in the principal amount set forth

 

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next to such Lender’s name on Exhibit A attached hereto (which amount shall be
the amount of such Lender’s Commitment as of the Effective Date).  The aggregate
amount of each Lender’s Loans as of the Effective Date (after giving effect to
the making of the Loans contemplated by the preceding sentence) is set forth in
Exhibit B attached hereto.

 

Section 4.               Amendments to Credit Agreement.

 

(a)           Section 1.02 (Certain Defined Terms) of the Credit Agreement is
hereby amended by adding the following new defined terms in alphabetical order:

 

“Amendment No. 1” means that certain Agreement and Amendment No. 1 to Second
Lien Credit Agreement dated as of July 15, 2011 among the parties thereto which
amends this Agreement.

 

“Amendment No. 1 Effective Date” means the effective date of Amendment No. 1.

 

“Make-Whole Amount” means, with respect to the prepayment of any Loan, an amount
equal to the sum of (a) the product of (i) the weighted average interest rate
applicable to the Loans being prepaid, times (ii) x/365, where “x” equals the
number of days until the first anniversary of the Effective Date, times
(iii) the principal amount of the Loans being prepaid, plus (b) the prepayment
premium that would be due between the first anniversary of the Effective Date
and second anniversary date of the Effective Date, plus (c) the amount of
interest accrued and owed as of the date of such prepayment.

 

(b)           Section 1.02 (Certain Defined Terms) of the Credit Agreement is
hereby amended by deleting the defined terms “Commitment” in its entirety and
replacing it with the following corresponding term:

 

“Commitment” means, with respect to each Lender, the commitment of such Lender
to make Loans hereunder on the Effective Date and on the Amendment No. 1
Effective Date, and “Commitments” means the aggregate amount of the Commitments
of all Lenders.  The amount of each Lender’s Commitment as of the Amendment
No. 1 Effective Date is set forth on Annex I.

 

(c)           Section 2.01 (Term Loan) of the Credit Agreement is hereby deleted
and replaced in its entirety with the following:

 

Section 2.01.        Term Loan.  On the Effective Date, the Lenders made Loans
to the Borrower in an aggregate principal amount equal to $40,000,000.  Subject
to the terms and conditions set forth herein, each Lender agrees to make on the
Amendment No. 1 Effective Date, a Loan in dollars to the Borrower in an
aggregate principal amount equal to such Lender’s Commitment on such date.  The
Commitments are not revolving and amounts repaid or prepaid may not be
re-borrowed under any circumstance.  Any portion of the Commitments available on
the Effective Date or the Amendment No. 1 Effective Date and not drawn by the
Borrower on or before 4:00 p.m. Denver, Colorado time on the Effective Date or

 

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the Amendment No. 1 Effective Date, as applicable, shall be permanently
cancelled.

 

(d)           Section 2.06 (Termination of Commitments) of the Credit Agreement
is hereby deleted and replaced in its entirety with the following:

 

Section 2.06.        Termination of Commitments.  The Commitments shall
terminate at 4:00 p.m. Denver, Colorado time on the Amendment No. 1 Effective
Date.

 

(e)           Section 3.04(a) (Optional Prepayments) of the Credit Agreement is
hereby deleted and replaced in its entirety with the following:

 

(a)          Optional Prepayments.  Subject to any break funding costs payable
pursuant to Section 5.02 and prior notice in accordance with Section 3.04(b) and
subject to the Intercreditor Agreement, the Borrower shall have the right to
prepay the Loans at any time and from time to time in whole or in part, as
follows:

 

(i)           at any time during the period commencing on the Effective Date but
prior to the first anniversary of the Effective Date, the Loans may be prepaid
in whole or in part so long as the principal amount prepaid is accompanied by a
premium equal to the Make-Whole Amount applicable to such principal amount
prepaid; provided that if such principal amount being prepaid is greater than
$40,000,000, then such Make-Whole Amount shall only be applicable to $40,000,000
and the remaining amount shall have no premium applied thereto;

 

(ii) at any time during the period commencing on the first anniversary of the
Effective Date but prior to the second anniversary of the Effective Date, the
Loans may be prepaid in whole or in part so long as the principal amount prepaid
is accompanied by a premium equal to 2.0% of such amount prepaid; provided that
if such principal amount being prepaid is greater than $40,000,000, then such
premium shall only be applicable to $40,000,000 and the remaining amount shall
have no premium applied thereto;

 

(iii)         at any time during the period commencing on the second anniversary
of the Effective Date but prior to the third anniversary of the Effective Date,
the Loans may be prepaid in whole or in part so long as the principal amount
prepaid is accompanied by a premium equal to 1.0% of such amount prepaid;
provided that if such principal amount being prepaid is greater than
$40,000,000, then such premium shall only be applicable to $40,000,000 and the
remaining amount shall have no premium applied thereto;

 

provided that, in any event each prepayment pursuant to this Section 3.04 shall
be in an aggregate principal amount of $500,000 or any whole multiple of
$500,000 in excess thereof.

 

(f)            The Credit Agreement is hereby further amended by deleting Annex
I (List of Commitments) attached thereto and replacing it with Exhibit A (List
of Commitments) attached hereto.

 

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Section 5.               Credit Parties Representations and Warranties.  Each
Credit Party represents and warrants that: (a) after giving effect to this
Agreement, the representations and warranties contained in the Credit Agreement,
as amended hereby, and the representations and warranties contained in the other
Loan Documents are true and correct in all material respects (except that such
materiality qualifier shall not be applicable to any representation or warranty
that already is qualified or modified by materiality in the text thereof) on and
as of the Effective Date as if made on as and as of such date except to the
extent that any such representation or warranty expressly relates solely to an
earlier date, in which case such representation or warranty is true and correct
in all material respects (except that such materiality qualifier shall not be
applicable to any representation or warranty that already is qualified or
modified by materiality in the text thereof) as of such earlier date; (b) after
giving effect to this Agreement, no Default has occurred and is continuing;
(c) the execution, delivery and performance of this Agreement are within the
limited liability company, limited partnership, or corporate power and authority
of such Credit Party and have been duly authorized by appropriate limited
liability company, limited partnership or corporate action and proceedings;
(d) this Agreement constitutes the legal, valid, and binding obligation of such
Credit Party enforceable in accordance with its terms, except as limited by
applicable bankruptcy, insolvency, reorganization, moratorium, or similar laws
affecting the rights of creditors generally and general principles of equity;
(e) there are no governmental or other third party consents, licenses and
approvals required in connection with the execution, delivery, performance,
validity and enforceability of this Agreement; (f) the Liens under the Security
Instruments are valid and subsisting and secure the Indebtedness (as such
Indebtedness may be increased as a result of the transactions contemplated
hereby); and (g) no authorization or approval or other action by, and no notice
to or filing with, any Governmental Authority or other Person (other than those
that have been, or on the Effective Date will be, duly obtained or made and that
are, or on the Effective Date will be, in full force and effect) is required for
the incurrence of the Borrowing Base Increase or for the due execution, delivery
and/or performance of Senior Revolving Credit Documents in connection with the
Borrowing Base Increase, in each case by the parties thereto.

 

Section 6.               Conditions to Effectiveness.  This Agreement shall
become effective on the Effective Date and enforceable against the parties
hereto upon the occurrence of the following conditions precedent:

 

(a)           The Administrative Agent shall have received:

 

(i)            multiple original counterparts, as requested by the
Administrative Agent, of this Agreement duly and validly executed and delivered
by duly authorized officers of the Borrower, the Guarantors, the Administrative
Agent and the Lenders;

 

(ii)           evidence that the Borrowing Base under the Senior Revolving
Credit Agreement has been increased to $110,000,000;

 

(iii)          executed original Notes, if any, requested by the Lenders made by
the Borrower payable to such requesting Lenders in the amount of such Lenders’
respective Loans after giving effect to the transactions contemplated hereby;

 

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(iv)          a certificate, dated as of the Effective Date, duly executed and
delivered by the Borrower’s and each Guarantor’s Secretary or Assistant
Secretary as to (A) no change in the officers’ incumbency delivered at the
original closing date for the Credit Agreement, (B) no change in authorizing
resolutions delivered at such closing date, and (C) no change in organizational
documents delivered at such closing date or, if any such changes have occurred,
attaching new incumbency certificates, authorizing resolutions and/or
organizational documents, as they case may be;

 

(v)           certificates of existence and good standing for the Borrower in
its state of organization, which certificates shall be dated a date not sooner
than 30 days prior to Effective Date;

 

(vi)          a certificate, dated as of the Effective Date, duly executed and
delivered by a Responsible Officer of the Borrower as to governmental approvals,
if any, with respect to this Agreement; and

 

(vii)         such other information, documents, governmental certificates,
agreements, and lien searches as the Administrative Agent or any Lender may
reasonably request.

 

(b)           The representations and warranties in this Agreement shall be true
and correct in all material respects.

 

(c)           The Borrower shall have paid (i) all reasonable fees and expenses
of the Administrative Agent’s outside legal counsel and other consultants
pursuant to all invoices presented for payment on or prior to the Effective
Date, and (ii) hereby agrees to pay to the Administrative Agent, for the pro
rata account of each Lender, an upfront fee or an original issue discount on the
Second Lien Increase in an amount equal to 2.00% of the Second Lien Increase.

 

Section 7.               Acknowledgments and Agreements.

 

(a)           The Borrower acknowledges that on the date hereof all outstanding
Indebtedness is payable in accordance with its terms and the Borrower waives any
defense, offset, counterclaim or recoupment with respect thereto.

 

(b)           The Administrative Agent and the Lenders hereby expressly reserve
all of their rights, remedies, and claims under the Loan Documents, as amended
hereby.  Except as expressly set forth herein, this Agreement shall not
constitute a waiver or relinquishment of (i) any Default or Event of Default
under any of the Loan Documents, as amended hereby, (ii) any of the agreements,
terms or conditions contained in any of the Loan Documents, as amended hereby,
(iii) any rights or remedies of the Administrative Agent or any Lender with
respect to the Loan Documents, as amended hereby, or (iv) the rights of the
Administrative Agent or any Lender to collect the full amounts owing to them
under the Loan Documents, as amended hereby.

 

(c)           The Borrower, each Guarantor, the Administrative Agent and each
Lender do hereby adopt, ratify, and confirm the Credit Agreement, as amended
hereby, and acknowledge and agree that the Credit Agreement, as amended hereby,
is and remains in full force and effect, and the Borrower and each Guarantor
acknowledge and agree that their respective liabilities and

 

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obligations under the Credit Agreement, as amended hereby, the Guarantee and
Collateral Agreement and the other Loan Documents are not impaired in any
respect by this Agreement.

 

(d)           From and after the Effective Date, all references to the Credit
Agreement in the Loan Documents shall mean the Credit Agreement, as amended by
this Agreement.  This Agreement is a Loan Document for the purposes of the
provisions of the other Loan Documents.

 

Section 8.               Reaffirmation of the Guarantee and Collateral
Agreement.  Each Guarantor hereby ratifies, confirms, acknowledges and agrees
that its obligations under the Guarantee and Collateral Agreement are in full
force and effect and that such Guarantor continues to unconditionally and
irrevocably guarantee the full and punctual payment, when due, whether at stated
maturity or earlier by acceleration or otherwise, of all of the Obligations (as
defined in the Guarantee and Collateral Agreement), as such Obligations may have
been amended by this Agreement, and its execution and delivery of this Agreement
does not indicate or establish an approval or consent requirement by such
Guarantor under the Guarantee and Collateral Agreement in connection with the
execution and delivery of amendments, consents or waivers to the Credit
Agreement, the Notes or any of the other Loan Documents.

 

Section 9.               Counterparts.  This Agreement may be signed in any
number of counterparts, each of which shall be an original and all of which,
taken together, constitute a single instrument.  This Agreement may be executed
by facsimile or PDF electronic mail signature, and all such signatures shall be
effective as originals.

 

Section 10.             Successors and Assigns.  This Agreement shall be binding
upon and inure to the benefit of the parties hereto and their respective
successors and assigns permitted pursuant to the Credit Agreement.

 

Section 11.             Invalidity.  In the event that any one or more of the
provisions contained in this Agreement shall for any reason be held invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this Agreement.

 

Section 12.             Governing Law.  This Agreement shall be deemed to be a
contract made under and shall be governed by and construed in accordance with
the laws of the State of Colorado.

 

Section 13.             Entire Agreement. THIS AGREEMENT, THE CREDIT AGREEMENT
AS AMENDED BY THIS AGREEMENT, THE NOTES, AND THE OTHER LOAN DOCUMENTS CONSTITUTE
THE ENTIRE UNDERSTANDING AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT
MATTER HEREOF AND SUPERSEDE ANY PRIOR AGREEMENTS, WRITTEN OR ORAL, WITH RESPECT
THERETO.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.

 

[SIGNATURES BEGIN ON NEXT PAGE]

 

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

 

 

BORROWER:

 

 

 

KODIAK OIL & GAS (USA) INC.

 

 

 

 

 

 

 

By:

/s/ James P. Henderson

Name: James P. Henderson

 

 

Title:   Chief Financial Officer

 

 

 

 

 

 

 

 

 

GUARANTOR:

 

 

 

KODIAK OIL & GAS CORP.

 

 

 

 

 

 

 

By:

/s/ James P. Henderson

 

Name:

James P. Henderson

 

Title:

Chief Financial Officer

 

Signature page to Amendment No. 1 to Second Lien Credit Agreement

 

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ADMINISTRATIVE AGENT:

 

 

 

 

WELLS FARGO ENERGY CAPITAL, INC.,

 

as the Administrative Agent

 

 

 

 

 

 

 

By:

/s/ Bryan McDavid

 

 

Bryan McDavid

 

 

Director

 

 

 

 

 

 

 

LENDER:

 

 

 

 

WELLS FARGO BANK, N.A.,

 

as a Lender

 

 

 

 

 

 

 

By:

/s/ Bryan McDavid

 

 

Bryan McDavid

 

 

Director

 

Signature page to Amendment No. 1 to Second Lien Credit Agreement

 

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EXHIBIT A

 

ANNEX I

LIST OF COMMITMENTS

(as of Amendment No. 1 Effective Date)

 

Name of Lender

 

Commitment Amount

 

Wells Fargo Bank, N.A.

 

$

15,000,000

 

TOTAL

 

$

15,000,000

 

 

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EXHIBIT B

 

OUTSTANDING LOANS

 

The aggregate outstanding principal amount of each Lender’s Loans as of the
Effective Date (after giving effect to the making of the Loans contemplated by
the preceding sentence) is as follows:

 

Name of Lender

 

Percentage

 

Aggregate Outstanding
Principal Amount

 

Wells Fargo Bank, N.A.

 

100.00

%

$

55,000,000

 

TOTAL

 

100.00

%

$

55,000,000

 

 

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