FIRST AMENDMENT

 

TO

 

CREDIT AGREEMENT

 

DATED AS OF FEBRUARY 18, 2013

 

AMONG

 

EMERALD OIL, INC.,
as Borrower,

 

The guarantors PARTY HERETO,

 

Wells Fargo Bank, N.A.,
as Administrative Agent,

 

and

 

The Lenders Party Hereto

 

 

 

 

SOLE BOOKRUNNER AND SOLE LEAD ARRANGER

 

WELLS FARGO SECURITIES LLC

 

 

 

 

FIRST AMENDMENT TO CREDIT AGREEMENT

 

This First Amendment to Credit Agreement (this “First Amendment”) dated as of
February 18, 2013, is among Emerald Oil, Inc., a Montana corporation (the
“Borrower”), each of the undersigned guarantors (the “Guarantors”), each Lender
(as defined below) party hereto, and Wells Fargo Bank, N.A., as administrative
agent for the Lenders (in such capacity, together with its successors and
assigns, the “Administrative Agent”).

 

RECITALS

 

A. The Borrower, the Administrative Agent and the banks and other financial
institutions from time to time party thereto (together with their respective
successors and assigns in such capacity, each as a “Lender”) have entered into
that certain Credit Agreement dated as of November 20, 2012 (as amended,
restated, modified or supplemented from time to time until the date hereof, the
“Credit Agreement”).

 

B. The Borrower has requested and each Lender has agreed to amend certain
provisions of the Credit Agreement.

 

C. NOW, THEREFORE, to induce the Administrative Agent and the Lenders to enter
into this First Amendment and in consideration of the premises and the mutual
covenants herein contained, for good and valuable consideration, the receipt and
sufficiency of which are hereby acknowledged, the parties hereto agree as
follows:

 

Section 1. Definitions. Unless otherwise defined in this First Amendment, each
capitalized term used in this First Amendment has the meaning assigned to such
term in the Credit Agreement. Unless otherwise indicated, all section references
in this First Amendment refer to sections of the Credit Agreement.

 

Section 2. Amendments to Credit Agreement.

 

2.1 Section 1.02.

 

(a) Section 1.02 is hereby amended by deleting the defined terms “Agreement”,
“Change of Control”, “Debt” and “Preferred Stock Agreement” in their entirety
and replacing them with the following respective terms:

 

‘“Agreement’ means this Credit Agreement, including the Schedules and Exhibits
hereto, as amended by the First Amendment to Credit Agreement dated as of
February 18, 2013, as the same may be amended, amended and restated,
supplemented or modified from time to time.

 

‘Change in Control’ means (a) the acquisition of ownership, directly or
indirectly, beneficially or of record, by any Person or group (within the
meaning of the Securities Exchange Act of 1934 and the rules of the SEC
thereunder as in effect on the date hereof), of Equity Interests representing
more than 35% of the ordinary voting power represented by the issued and
outstanding Equity Interests of the Borrower (determined on a fully diluted
basis), (b) the board of directors of the Borrower shall cease to consist of a
majority of Continuing Directors or (c) a “Change of Control” as such term is
defined in the Preferred Stock Agreement.

 

1

 

 

‘Debt’ means, for any Person, the sum of the following (without duplication):
(a) all obligations of such Person for borrowed money or evidenced by bonds,
bankers’ acceptances, debentures, notes or other similar instruments; (b) all
obligations of such Person (whether contingent or otherwise) in respect of
letters of credit, surety or other bonds and similar instruments; (c) all
accounts payable and all accrued expenses, liabilities or other obligations of
such Person to pay the deferred purchase price of Property or services
(excluding accounts payable and accrued expenses, liabilities or other
obligations to pay the deferred purchase price of Property or services, from
time to time incurred in the ordinary course of business which are not greater
than ninety (90) days past the date of invoice or delinquent or which are being
contested in good faith by appropriate action and for which adequate reserves
have been maintained in accordance with GAAP); (d) all obligations under Capital
Leases; (e) all obligations under Synthetic Leases; (f) all Debt (as defined in
the other clauses of this definition) of others secured by (or for which the
holder of such Debt has an existing right, contingent or otherwise, to be
secured by) a Lien on any Property of such Person, whether or not such Debt is
assumed by such Person; (g) all Debt (as defined in the other clauses of this
definition) of others guaranteed by such Person or in which such Person
otherwise assures a creditor against loss of the Debt (howsoever such assurance
shall be made) to the extent of the lesser of the amount of such Debt and the
maximum stated amount of such guarantee or assurance against loss; (h) all
obligations or undertakings of such Person to maintain or cause to be maintained
the financial position or covenants of others or to purchase the Debt or
Property of others; (i) obligations to deliver commodities, goods or services,
including Hydrocarbons, in consideration of one or more advance payments, other
than gas balancing arrangements in the ordinary course of business; (j)
obligations to pay for goods or services even if such goods or services are not
actually received or utilized by such Person; (k) any Debt of a partnership for
which such Person is liable either by agreement, by operation of law or by a
Governmental Requirement but only to the extent of such liability; (l)
Disqualified Capital Stock; and (m) the undischarged balance of any production
payment created by such Person or for the creation of which such Person directly
or indirectly received payment; provided however, that any portion of the
Preferred Stock and the Warrant Shares required by GAAP (as in effect on the
First Amendment Effective Date) to be classified as debt on the balance sheet of
the Borrower shall not be “Debt”. The Debt of any Person shall include all
obligations of such Person of the character described above to the extent such
Person remains legally liable in respect thereof notwithstanding that any such
obligation is not included as a liability of such Person under GAAP.

 

2

 

 

‘Preferred Stock Agreement’ means that certain securities purchase agreement
entered into among the Borrower, WDE Emerald Holdings LLC and White Deer Energy
Fl L.P. dated as of February 1, 2013.”

 

(b) Section 1.02 is hereby amended by amending the defined term “Disqualified
Capital Stock” by inserting the phrase “and the Warrant Shares” after the phrase
“the Preferred Stock” in the last sentence of such definition.

 

(c) Section 1.02 is hereby amended by adding the following defined term in the
appropriate alphabetical order:

 

“First Amendment” means that certain First Amendment to Credit Agreement among
the Borrower, the Administrative Agent and the Lenders dated as of February 18,
2013.

 

“First Amendment Effective Date” has the meaning assigned such term in the First
Amendment.

 

‘Warrant Agreement’ means that certain Warrant to purchase 5,114,633 shares of
Common Stock at an initial price of $5.77 per share, issued by the Borrower to
WDE Emerald Holdings LLC and White Deer Energy Fl L.P.

 

‘Warrant Shares’ means shares issued or issuable upon exercise of the Warrant
Agreement.”

 

2.2 Section 8.17. Section 8.17 is hereby amended and restated in its entirety to
read as follows:

 

“Section 8.17 Preferred Stock. The Borrower may amend the Preferred Stock
Agreement the Warrant Agreement or any other agreement or condition relating to
any such Preferred Stock or Warrant Shares or contained in any instrument or
agreement relating thereto from time to time provided that any such amendment
which would (a) increase the number of Preferred Shares or Warrants issuable
thereunder, (b) alter any redemption requirement or (c) materially affect the
Loans, the priority of the Liens and security interests of the Administrative
Agent in the collateral and Oil and Gas Properties, the Credit Documents or any
Credit Party, must be approved by all of the Lenders.”

 

2.3 Section 9.02. Section 9.02(f) is hereby amended and restated in its entirety
to read as follows:

 

“(f) [Reserved].”

 

2.4 Section 9.04. Section 9.04(iv) is hereby amended and restated in its
entirety to read as follows:

 

3

 

 

“(iv) so long as no Default, Event of Default or Borrowing Base Deficiency is
occurring or would result therefrom, the Borrower may make dividends with
respect to the Preferred Stock at a rate of no more than 10% per annum either by
(A) issuing additional Preferred Stock or (B) in cash.”

 

2.5 Section 10.01(l). Section 10.01(l) is hereby amended and restated in its
entirety to read as follows:

 

“(l) the Borrower or any other Loan Party shall (i) fail to make any payment in
an amount of $250,000 or more (whether in the form of an exchange or redemption
or a dividend) in respect of any Preferred Stock or Warrant Shares, when and as
the same shall become due and payable or (ii) default in the observance or
performance of any material covenant or agreement in the Preferred Stock
Agreement, the Warrant Agreement or any other agreement or condition relating to
any such Preferred Stock or Warrant Shares or contained in any instrument or
agreement relating thereto and such failure shall continued unremedied for any
applicable grace period contained in the Preferred Stock Agreement, the Warrant
Agreement or such other instrument or agreement relating thereto, as
applicable.”

 

2.6 Section 12.02. Section 12.02(a) is hereby amended by numbering the second
paragraph thereof 12.02(b) and deleting the last sentence of such paragraph and
replacing in its entirety to read as follows:

 

“Notwithstanding the foregoing, the Borrower and the Administrative Agent may
amend this Agreement or any other Loan Document without the consent of the
Lenders in order to correct, amend or cure any ambiguity, inconsistency or
defect or correct any typographical error or other manifest error in any Loan
Document.”

 

Section 3. Effectiveness. This First Amendment shall become effective on the
first date on which each of the conditions set forth in this Section 3 is
satisfied (the “First Amendment Effective Date”):

 

3.1 The Administrative Agent shall have received duly executed counterparts (in
such number as may be requested by the Administrative Agent) of this First
Amendment from the Borrower, each Guarantor and each Lender.

 

3.2 The Borrower shall have paid all fees and other amounts due and payable on
or prior to the First Amendment Effective Date to the extent invoiced, all
reasonable out-of-pocket expenses required to be reimbursed or paid by the
Borrower under the Credit Agreement.

 

3.3 The Administrative Agent shall be reasonably satisfied with the terms and
conditions of the Preferred Stock Agreement.

 

3.4 No Default or Event of Default shall have occurred and be continuing as of
the date hereof, after giving effect to the terms of this First Amendment.

 

4

 

 

Section 4. Governing Law. THIS FIRST AMENDMENT SHALL BE GOVERNED BY, AND
CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

Section 5. Miscellaneous. (a) On and after the effectiveness of this First
Amendment, each reference in the Credit Agreement to “this Agreement”,
“hereunder”, “hereof” or words of like import referring to the Credit Agreement,
and each reference in each other Loan Document to “the Credit Agreement”,
“thereunder”, “thereof” or words of like import referring to the Credit
Agreement, shall mean and be a reference to the Credit Agreement as amended or
otherwise modified by this First Amendment; (b) the execution, delivery and
effectiveness of this First Amendment shall not, except as expressly provided
herein, operate as a waiver of any default of the Borrower or any right, power
or remedy of the Administrative Agent or the Lenders under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents; (c) this First Amendment may be executed in any number of
counterparts, all of which taken together shall constitute one and the same
instrument and any of the parties hereto may execute this Agreement by signing
any such counterpart; and (d) delivery of an executed counterpart of a signature
page to this First Amendment by telecopier or electronic mail shall be effective
as delivery of a manually executed counterpart of this First Amendment.

 

Section 6. Ratification and Affirmation; Representations and Warranties. The
Borrower and each Guarantor hereby (a) acknowledges the terms of this First
Amendment; (b) ratifies and affirms its obligations under, and acknowledges,
renews and extends its continued liability under, each Loan Document to which it
is a party and agrees that each Loan Document to which it is a party remains in
full force and effect, except as expressly amended or modified hereby and (c)
represents and warrants to the Lenders that as of the First Amendment Effective
Date, after giving effect to the terms of this First Amendment: (i) all of the
representations and warranties contained in each Loan Document to which it is a
party are true and correct in all material respects (unless already qualified by
materiality in which case such applicable representation and warranty shall be
true and correct), except to the extent any such representations and warranties
are expressly limited to an earlier date, in which case, such representations
and warranties shall continue to be true and correct in all material respects
(unless already qualified by materiality in which case such applicable
representation and warranty shall be true and correct) as of such specified
earlier date, and (ii) no Default or Event of Default has occurred and is
continuing.

 

Section 7. Loan Document. This First Amendment is a Loan Document as defined and
described in the Credit Agreement and all of the terms and provisions of the
Credit Agreement relating to Loan Documents shall apply hereto.

 

Section 8. No Oral Agreements. THE CREDIT AGREEMENT AND THE OTHER LOAN
DOCUMENTS, INCLUDING THIS FIRST AMENDMENT, embody the entire agreement and
understanding between the parties and supersede all other agreements and
understandings between such parties relating to the subject matter hereof and
thereof AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.

 

[Signature Pages Follow]

 

5

 

 

IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be
executed by their officers thereunto duly authorized as of the date first above
written.

 

BORROWER: EMERALD OIL, INC., a Montana corporation       By: /s/ Paul Wiesner  
  Name: Paul Wiesner     Title: Chief Financial Officer

 

GUARANTOR: EMERALD OIL NORTH AMERICA, INC., f/k/a Emerald Oil, Inc., a Delaware
corporation   EMERALD WB LLC   EMERALD GRB LLC   EMERALD TR LLC   EMERALD HEATH
LLC       By: /s/ Paul Wiesner     Name: Paul Wiesner     Title: Chief Financial
Officer, for and on behalf of each of the foregoing Guarantors

 

Signature Page

Emerald oil, inc – First Amendment

 

 

 

ADMINISTRATIVE AGENT AND LENDER: WELLS FARGO BANK, N.A., as Administrative Agent
and as a Lender       By: /s/ Suzanne F. Ridenhour     Name: Suzanne F.
Ridenhour     Title: Director

 

Signature Page

Emerald oil, inc – First Amendment