Exhibit 10.1


 


SECOND AMENDMENT TO CREDIT AGREEMENT


 


THIS SECOND
AMENDMENT TO CREDIT AGREEMENT (herein called this “Amendment”), dated as of
October 1, 2004, is among Cimarex Energy Co., a
Delaware corporation (“Borrower”), Bank One, NA, a national banking association
having its principal office in Chicago, Illinois, as LC Issuer and as
Administrative Agent, and the Lenders party to the Original Agreement defined
below (“Lenders”).


 


W I T N E S S E T H:


 


WHEREAS,
Borrower, Administrative Agent and Lenders entered into that certain Credit
Agreement dated as of October 2, 2002, which was subsequently amended by that
certain First Amendment dated as of April 21, 2003 (as amended, supplemented,
or restated to the date hereof, the “Original Agreement”), for the purpose and
consideration therein expressed, whereby Lenders became obligated to make loans
to Borrower as therein provided; and


 


WHEREAS, J. P.
Morgan Securities, Inc. is successor in interest to Banc One Capital Markets,
Inc. as Lead Arranger and Sole Book Runner; and


 


WHEREAS,
Borrower, Administrative Agent and Lenders desire to amend the Original
Agreement as set forth 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


 


§ 1.1.                    Terms
Defined in the Original Agreement. 
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.


 


§ 1.2.                    Other
Defined Terms.  Unless the context
otherwise requires, the following terms when used in this Amendment shall have
the meanings assigned to them in this Section 1.2.


 


“Amendment” means this Second Amendment to Credit Agreement.


 





















 


“Amendment Documents” means this Amendment, the Renewal Notes and any
other documents and agreements executed and delivered pursuant hereto.


 


“Credit Agreement” means the Original Agreement as amended hereby.


 


“Renewal Notes” means promissory notes in the form of Exhibit A
attached hereto payable to each Lender listed on Schedule 2 hereto, and
each of which shall be a “Note” as defined in Section 2.14 of the Original
Agreement.


 


ARTICLE II


 


AMENDMENTS TO ORIGINAL AGREEMENT


 


§ 2.1.                    New Defined Term. 
Section 1.1 of the Original Agreement is hereby amended to add the
following definitions thereto in appropriate alphabetical order to read as
follows:


 


“‘Fifty Percent Utilization Period’ means any period during which the
Borrowing Base Usage Percentage on each consecutive day is and remains greater
than or equal to 50%.”


 


“‘Fiscal Year’ means the fiscal year of the Borrower.”


 


§ 2.2.                    Amended Defined Term. 
The definitions of “Arranger” and “Facility Termination Date” in Section
1.1 of the Original Agreement are hereby amended in their entirety to read as
follows:


 


“‘Arranger’ means J. P. Morgan Securities Inc., a Delaware corporation,
and its successors, in its capacity as Lead Arranger and Sole Book Runner.


 


“‘Facility
Termination Date’ means October 2, 2009, or any earlier date on which the
Aggregate Commitment is reduced to zero or otherwise terminated pursuant to the
terms hereof.”


 


§ 2.3.                    Production Reports.


 


(a)                                  Section
6.1 (vii) is hereby added to the Original Agreement to read as follows:


 


“(vii)                     Promptly
upon the furnishing thereof to the stockholders of the Borrower, copies of all
financial statements, reports and proxy statements so furnished.”


 


(b)                                 Both
Sections 6.1(xii) of the Original Agreement are hereby deleted and new Section
6.1(xii) is hereby added to read as follows:


 


2





















 


“(xii)                       By
March 31 and September 30 of each year, beginning March 31, 2003, a report
describing the gross volume of production and sales attributable to production
during the preceding six-month period from the properties described in the
Engineering Report in Section 6.1(x) or Section 6.1(xi) and describing the
related severance taxes, other taxes, and leasehold operating expenses
attributable thereto and incurred during such month.”


 


§ 2.4.                    Insurance. 
Section 6.6 of the Original Agreement is hereby amended in its entirety
to read as follows:


 


“The
Borrower will furnish to any Lender upon request full information as to the
insurance carried by Borrower and its Subsidiaries.  Upon demand by Administrative Agent
any insurance policies covering Collateral shall be endorsed (a) to
provide for payment of losses to Administrative Agent as its interests may
appear, and (b) during any Fifty Percent Utilization Period, to provide
that such policies may not be canceled or reduced or affected in any material
manner for any reason without fifteen days prior notice to Administrative
Agent, and (c) to provide for any other matters specified in any
applicable Collateral Document or which Administrative Agent may reasonably
require; provided that the Borrower shall self insure against fire, casualty,
and other hazards normally insured against. 
Notwithstanding anything contained in this Section 6.6 or any Collateral
Document to the contrary, Borrower may self insure against all liabilities,
risks and hazards to the extent Borrower deems to be sound business practice.”


 


§ 2.5.                    Restricted Payments. 
Section 7.1 of the Original Agreement is hereby amended in its entirety
to read as follows:


 


“7.1.                        Restricted
Payments.  The Borrower will
not, nor will it permit any Subsidiary to, directly or indirectly, declare or
make any Restricted Payment during any Fifty Percent Utilization Period;
provided that (a) during any Fifty Percent Utilization Period any Subsidiary
may declare and pay Dividends to the Borrower or to a Wholly-Owned Subsidiary
and (b) during any Fifty Percent Utilization Period, the Borrower and its
Subsidiaries may declare or make Restricted Payments so long as (i) no Default, Unmatured Default
or Deficiency (as defined in Section 2.8) exists or would exist after giving
effect thereto and (ii) all Restricted Payments made by Borrower and its
Subsidiaries at any time during the period from the beginning of the first
Fifty Percent Utilization Period to occur after October 1, 2004 until the
Facility Termination Date (in this Section called the “Calculation Period”), do
not exceed $100,000,000 during the Calculation Period and do not exceed
$25,000,000 during any fiscal year which occurs during the Calculation Period.”


 


§ 2.6.                    Indebtedness. 
Sections 7.2(iii), (vi) and (vii) of the
Original Agreement are hereby amended in their entirety to read as follows:


 


“(iii)                         Indebtedness
arising under Rate Management Transactions permitted by Section 7.11.”


 


3





















 


“(vi)                        Indebtedness
of Borrower in respect of guarantee obligations of Cimarex
Energy Services, Inc., an Oklahoma corporation, which do not in the aggregate
exceed $50,000,000 at any one time outstanding.”


 


“(vii)                     miscellaneous
items of Indebtedness not described in subsections(i)
through (vi) above which do not in the aggregate (taking into account all such
Indebtedness of Borrower and its Subsidiaries) exceed $10,000,000 at any one
time outstanding.”


 


§2.7.                       Merger. 
Section 7.3 of the Original Agreement is hereby amended in its entirety
to read as follows:


 


“The Borrower
will not, nor will it permit any Subsidiary to, merge or consolidate with or
into any other Person, except that a Subsidiary, including, without limitation,
Key, may merge into the Borrower or a Wholly-Owned Subsidiary.”


 


§2.8.                       Sale of Assets. 
Section 7.4(iv) of the Original Agreement is hereby amended in its
entirety to read as follows:


 


“(iv)  Leases,
sales or other dispositions of its Property that, together with all other
Property of the Borrower and its Subsidiaries previously leased, sold or
disposed of (other than (i), (ii), and (iii) above)
as permitted by this Section during any fiscal year of Borrower, do not
constitute more than 10% of the Engineered Value of the Borrowing Base
Properties as determined by Administrative Agent in its sole discretion.”


 


§ 2.9.                    Collateral.


 


(a)                                  Section
9.1.1 of the Original Agreement is hereby amended in its entirety to read as
follows:


 


“9.1.1.  To the extent necessary
to comply with the first sentence of Section 9.1, (i) within
30 days after the beginning of each Fifty Percent Utilization Period and within
30 days after each Determination Date that occurs during a Fifty Percent
Utilization Period and (ii) prior to each increase in the Aggregate
Commitment that occurs during a Fifty Percent Utilization Period, Borrower and
its Subsidiaries shall execute and deliver to Administrative Agent, for the
ratable benefit of each Lender, Mortgages in form and substance acceptable to
Administrative Agent and duly executed by Borrower and any such Subsidiary (as
applicable) together with such other assignments, conveyances, amendments,
agreements and other writings (each duly authorized and executed) as Administrative
Agent shall deem necessary or appropriate to grant, evidence and perfect the
Liens required by this Section 9.1.”


 


(b)                                 Section
9.1.4 is hereby added to the Original Agreement to read as follows:


 


4





















 


“9.1.4                  Notwithstanding
anything contained in this Section 9.1 to the contrary, except for amendments
to Mortgages necessary to reflect the extended maturity date and changes to the
Notes provided for by the Second Amendment to Credit Agreement dated as of
October 1, 2004 among Borrower, Administrative Agent, and the Lenders party
thereto, Borrower shall have no obligation to provide Mortgages in addition to
those Mortgages provided for prior to the delivery of the Second Amendment
until a Fifty Percent Utilization Period begins, and then only to the extent
provided above.”


 


§2.10.                 Confidentiality. 
Section 12.11 of the Original Agreement is hereby amended in its
entirety to read as follows:


 


12.11                     Confidentiality.  Each Lender agrees to use any confidential
information which it may receive from the Borrower or its Affiliates concerning
the Borrower or its Affiliates or its or their properties (“Confidential
Information”) solely for the purposes of the Loan Documents and the
transactions provided for therein (the “Purposes”) and not for any other
purpose.  Each Lender agrees to hold
Confidential Information in confidence and to not disclose Confidential
Information to any Person other than (a) the other Lenders, Affiliates of such
Lender, and Affiliates of the other Lenders, (b)  legal counsel to such Lender, (c)
professional advisors (such as petroleum engineering, geological and
geophysical firms) who are engaged by such Lender or any potential Transferee
to evaluate the properties of Borrower and its Affiliates in connection with
the Loans, provided that prior to delivering Confidential Information to
any such advisor, such advisor shall have entered into a confidentiality
agreement in the form of Exhibit J, and (d) to any of the following
Persons, provided that such Person is advised of and agrees to be bound
by the obligations of confidentiality contained in this section: (i) the direct or indirect contractual counterparties of
such Lender or such Lender’s Affiliates in swap agreements relating to the
obligations or assets of Borrower or its Subsidiaries, (ii) rating agencies if
required by such agencies in connection with a rating relating to the Advances
hereunder, (iii) any Transferee, and (iv) as permitted by Section 15.4.  Nothing contained herein shall be deemed to
prevent disclosure of any Confidential Information if such disclosure (i) is required by law, rule, regulation or regulatory
officials, (ii) is required to be made in a judicial, administrative or
governmental proceeding pursuant to a valid subpoena or other applicable order,
or (iii) is made to any Person in connection with any legal proceeding to which
such Lender is a party; provided, however, in making any such disclosure, only
that portion of the Confidential Information relevant in the circumstances
described above shall be disclosed and all reasonable efforts have been taken
to preserve the confidentiality thereof.”


 


§2.11.                 Pricing Schedule. 
Schedule 1 to the Original Agreement is hereby deleted and there
is hereby substituted therefore new Schedule 1, which shall be identical
to Schedule 1 attached hereto. The changes reflected in the revised
Pricing Schedule shall be effective as of the date hereof.


 


5





















 


§2.12.                 Lenders Schedule. 
Schedule 2 to the Original Agreement is hereby deleted and there
is hereby substituted therefore new Schedule 2, which shall be identical
to Schedule 2 attached hereto.


 


§2.13.                 Disclosure Schedule. 
Schedule 3 to the Original Agreement is hereby deleted and there
is hereby substituted therefor, new Schedule 3,
which shall be identical to Schedule 3 attached hereto.


 


§2.14.                 Confidentiality Agreement.  The Original Agreement is hereby amended by
adding Exhibit J, which shall be identical to Exhibit J attached
hereto.


 


§2.15.                 Redetermination of the Borrowing Base.  Administrative Agent hereby notifies Borrower
that from the date hereof until the next date hereafter as of which the
Borrowing Base is redetermined, the Borrowing Base
shall be $300,000,000.


 


§2.16.                 Aggregate Commitment. 
Borrower, Administrative Agent and Lenders hereby confirm that as of the
date hereof, the Aggregate Commitment is $200,000,000.


 


§2.17.                 Address of Borrower. 
For purposes of Section 16.1 of the Original Agreement, Borrower hereby
notifies Administrative Agent and Lenders that the new address of Borrower and
its Subsidiaries is as follows:


 


Paul Korus


Cimarex Energy Co.


1700 Lincoln
Street, Suite 1800


Denver,
Colorado  80203


 


ARTICLE III


 


CONDITIONS OF EFFECTIVENESS


 


§ 3.1.                    Effective Date. 
This Amendment shall become effective as of the date first above written
when and only when:


 


(a)                                  Administrative
Agent shall have received all of the following, at Administrative Agent’s
office, duly executed and delivered and in form and substance satisfactory to Administrative
Agent, all of the following:


 


(i)                                     this Amendment;


 


(ii)                                  a Guaranty of Key Production Texas L.P., Cimarex
Texas L.P., Key Texas LLC, and Cimarex Texas LLC
(each a “New Guarantor”);


 


(iii)                               a Partnership Interest Pledge Agreement by Cimarex, Key, Key Texas LLC and Cimarex
Texas LLC and an LLC Interest Pledge Agreement by Cimarex
and Key;


 


6





















 


(iv)                              the Renewal Notes;


 


(v)                                 certificates
of the Secretary of each of Borrower and Key, dated the date of this Amendment,
certifying: (a) that resolutions previously adopted by the Board of Directors
of each of Borrower and Key, respectively, authorize the execution, delivery
and performance of this Amendment and the other Amendment Documents by Borrower
and Key and remain in full force and effect; and (b) the names and true
signatures of the officers of the Borrower and Key, respectively, authorized to
sign this Amendment and the other Amendment Documents;;


 


(vi)                              Copies
of the articles of organization or certificate of limited partnership, as
applicable, and the operating agreement or limited partnership agreement, as
applicable of each New Guarantor, together with all amendments, and a
certificate of good standing, each certified by the appropriate governmental officer
in its jurisdiction of organization;


 


(vii)                           a
written opinion of counsel to Borrower with respect to the Amendment Documents
as to the matters listed in Schedule 4 hereto, in form and substance
acceptable to Administrative Agent; and


 


(viii)                        such other supporting documents as Administrative Agent may
reasonably request.


 


(b)                                 Borrower
shall have paid, in connection with such Loan Documents, all fees and
reimbursements to be paid to Administrative Agent pursuant to any Loan
Documents, or otherwise due Administrative Agent and including fees and
disbursements of Administrative Agent’s attorneys.


 


ARTICLE IV


 


REPRESENTATIONS AND WARRANTIES


 


§ 4.1.                    Representations and Warranties of Borrower.  In order to induce Administrative Agent and
each Lender to enter into this Amendment, Borrower represents and warrants to
Administrative Agent and each Lender that:


 


(a)                                  The
representations and warranties contained in Article V of the Original Agreement
are true and correct at and as of the time of the effectiveness hereof, except
to the extent that the facts on which such representations and warranties are
based have been changed by the extension of credit under the Credit Agreement.


 


(b)                                 Borrower
is duly authorized to execute and deliver this Amendment and the other Amendment
Documents and is and will continue to be duly authorized to borrow monies and
to perform its obligations under the Credit Agreement.  Borrower has duly taken all corporate action
necessary to authorize the execution and delivery of this Amendment and the
other 


 


7





















 


Amendment
Documents and to authorize the performance of the obligations of Borrower
hereunder and thereunder.


 


(c)                                  The
execution and delivery by Borrower of this Amendment and the other Amendment
Documents, the performance by Borrower of its obligations hereunder and thereunder and the consummation of the transactions
contemplated hereby and thereby do not and will not conflict with any provision
of law, statute, rule or regulation or of the certificate of incorporation and
bylaws of Borrower, or of any material agreement, judgment, license, order or
permit applicable to or binding upon Borrower, or result in the creation of any
lien, charge or encumbrance upon any assets or properties of Borrower.  Except for those which have been obtained, no
consent, approval, authorization or order of any court or governmental
authority or third party is required in connection with the execution and
delivery by Borrower of this Amendment and the other Amendment Documents or to
consummate the transactions contemplated hereby and thereby.


 


(d)                                 When
duly executed and delivered, each of this Amendment and the Credit Agreement
will be a legal and binding obligation of Borrower, enforceable in accordance
with its terms, except as limited by bankruptcy, insolvency or similar laws of
general application relating to the enforcement of creditors’ rights and by
equitable principles of general application.


 


(e)                                  The
audited annual consolidated financial statements of Borrower dated as of
December 31, 2003 fairly present the consolidated financial position at such
dates and the consolidated statement of operations and the changes in
consolidated financial position for the periods ending on such dates for
Borrower.  Copies of such financial
statements have heretofore been delivered to each Lender.  Since such dates no material adverse change
has occurred in the financial condition or businesses or in the consolidated
financial condition or businesses of Borrower.


 


ARTICLE V


 


MISCELLANEOUS


 


§ 5.1.                    Ratification of Agreements.  The Original Agreement as hereby amended is
hereby ratified and confirmed in all respects. 
Any reference to the Credit Agreement in any Loan Document shall be
deemed to be a reference to the Original Agreement as hereby amended.  Any reference to the Notes in any other Loan
Document shall be deemed to be a reference to the Renewal Notes issued and
delivered pursuant to this Amendment. The execution, delivery and effectiveness
of this Amendment and the other Amendment Documents shall not, except as
expressly provided herein, operate as a waiver of any right, power or remedy of
Lenders under the Credit Agreement or any other Loan Document nor constitute a
waiver of any provision of the Credit Agreement or any other Loan Document.


 


§ 5.2.                    Survival of Agreements.  All representations, warranties, covenants
and agreements of Borrower herein shall survive the execution and delivery of
this Amendment and 


 


8





















 


the
performance hereof, including without limitation the making or granting of the
Loans, and shall further survive until all of the Obligations are paid in
full.  All statements and agreements
contained in any certificate or instrument delivered by Borrower or any
Subsidiary hereunder or under the Credit Agreement to any Lender shall be
deemed to constitute representations and warranties by, and/or agreements and
covenants of, Borrower under this Amendment and under the Credit Agreement.


 


§ 5.3.                    Loan Documents.  This Amendment and the other Amendment
Documents are each a Loan Document, and all provisions
in the Credit Agreement pertaining to Loan Documents apply hereto and thereto.


 


§ 5.4.                    CHOICE OF LAW.  THIS AMENDMENT SHALL BE
CONSTRUED IN ACCORDANCE THE INTERNAL LAWS OF THE STATE OF COLORADO, BUT GIVING
EFFECT TO FEDERAL LAWS APPLICABLE TO NATIONAL BANKS.


 


§ 5.5.                    Counterparts. 
This Amendment may be executed in any number counterparts, all of which
taken together shall constitute one agreement, and any of the parties hereto
may execute this Amendment by signing any such counterpart.  This Agreement shall be effective when it has
been executed by the Borrower, the Administrative Agent, the LC Issuer and the
Lenders and each party has notified the Administrative Agent by facsimile
transmission or telephone that it has taken such action.


 


§ 5.6.                    Agents. 
Notwithstanding the cover page to the Original Agreement, effective upon
the delivery of the Second Amendment, the Co-Syndication Agents shall be U.S.
Bank National Association and Bank of America, N.A.,
and the Documentation Agent shall be Wells Fargo Bank, N.A.


 


§ 5.7.                    Mortgages. 
Borrower shall deliver to the Administrative Agent, within 60 days after
the date of this Amendment, all Mortgage amendments necessary to reflect the
extended maturity date and changes to the Notes described in this Amendment, in
form and substance acceptable to Administrative Agent.  Failure to do so shall constitute a Default.


 


THIS AMENDMENT
AND THE OTHER 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 OF THE PARTIES.


 


9





















 


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


 


 


	
   

  	
  CIMAREX
  ENERGY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul
  Korus

  
	
   

  	
   

  	
  Paul Korus

  
	
   

  	
   

  	
  Chief
  Financial Officer

  



 





















 


	
   

  	
  BANK ONE,
  NA,

  
	
   

  	
  Individually,
  as LC Issuer and as Administrative Agent

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ J. Scott
  Fowler

  
	
   

  	
   

  	
  J. Scott
  Fowler

  
	
   

  	
   

  	
  Director,
  Capital Markets

  



 





















 


	
   

  	
  BANK OF
  AMERICA, N.A., a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  D. Earl

  
	
   

  	
   

  	
  Michael D.
  Earl

  
	
   

  	
   

  	
  Senior Vice
  President

  



 





















 


	
   

  	
  BANK OF
  OKLAHOMA, N.A., a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Michael
  M. Logan

  
	
   

  	
   

  	
  Michael M.
  Logan

  
	
   

  	
   

  	
  Senior Vice
  President

  



 





















 


	
   

  	
  COMERICA
  BANK, formerly known as Comerica 

  
	
   

  	
  Bank –
  Texas, a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Peter L.
  Sefzik

  
	
   

  	
   

  	
  Peter L. Sefzik

  
	
   

  	
   

  	
  Vice
  President

  



 





















 


	
   

  	
  NATEXIS
  BANQUES  POPULAIRES, a
  Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Donovan
  C. Broussard

  
	
   

  	
   

  	
  Donovan C.
  Broussard

  
	
   

  	
   

  	
  Vice
  President & Manager

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Louis P.
  Laville, III

  
	
   

  	
   

  	
  Louis P. Laville, III

  
	
   

  	
   

  	
  Vice
  President & Manager

  



 





















 


	
   

  	
  UNION BANK
  OF CALIFORNIA, N.A., a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kimberly
  Coil

  
	
   

  	
   

  	
  Kimberly
  Coil

  
	
   

  	
   

  	
  Assistant
  Vice President

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Ali
  Ahmed

  
	
   

  	
   

  	
  Ali Ahmed

  
	
   

  	
   

  	
  Vice
  President

  



 





















 


	
   

  	
  U.S. BANK
  NATIONAL ASSOCIATION,

  
	
   

  	
  a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Kathryn
  A. Gaiter

  
	
   

  	
   

  	
  Kathryn A.
  Gaiter

  
	
   

  	
   

  	
  Vice
  President

  



 





















 


	
   

  	
  WELLS FARGO
  BANK, N.A., a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Laura Bumgarner

  
	
   

  	
   

  	
  Laura Bumgarner

  
	
   

  	
   

  	
  Relationship
  Manager

  



 





















 


	
   

  	
  COMPASS
  BANK, a Lender

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ John M. Falbo

  
	
   

  	
   

  	
  John M. Falbo

  
	
   

  	
   

  	
  Senior Vice
  President

  



 





















 


Second Amendment


 


CONSENT AND AGREEMENT


 


Each
undersigned Guarantor hereby (i) consents to the
provisions of this Amendment and the transactions contemplated herein, (ii)
ratifies and confirms the Subsidiary Guaranty dated as of October 2, 2002 made
by it for the benefit of Administrative Agent and Lenders executed pursuant to
the Credit Agreement and the other Loan Documents to which such Guarantor is a
party, (iii) agrees that all of its respective obligations and covenants thereunder shall remain unimpaired by the execution and
delivery of this Amendment and the other documents and instruments executed in
connection herewith, and (iv) agrees that the Guaranty and such other Loan
Documents shall remain in full force and effect.


 


	
   

  	
  KEY
  PRODUCTION COMPANY, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul Korus

  	
   

  
	
   

  	
   

  	
  Paul Korus

  
	
   

  	
   

  	
  Vice
  President, Chief Financial Officer & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  BROCK GAS
  SYSTEMS AND EQUIPMENT, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul
  Korus

  	
   

  
	
   

  	
   

  	
  Paul Korus

  
	
   

  	
   

  	
  Vice
  President, Chief Financial Officer & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  COLUMBUS
  ENERGY CORP.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul
  Korus

  	
   

  
	
   

  	
   

  	
  Paul Korus

  
	
   

  	
   

  	
  Vice
  President, Chief Financial Officer & Treasurer

  
	
   

  	
   

  	
   

  
	
   

  	
  CIMAREX
  ENERGY SERVICES, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
  /s/ Paul
  Korus

  	
   

  
	
   

  	
   

  	
  Paul Korus

  
	
   

  	
   

  	
  Vice
  President, Chief Financial Officer & Treasurer

  



 





















 


SCHEDULE 1


 


PRICING SCHEDULE


 


	
  Applicable 

  Margin

  	
   

  	
  Level I 

  Status

  	
   

  	
  Level II 

  Status

  	
   

  	
  Level III 

  Status

  	
   

  	
  Level IV 

  Status

  	
   

  	
  Level V 

  Status

  	
   

  
	
  Eurodollar Rate

  	
   

  	
  1.125

  	
  %

  	
  1.25

  	
  %

  	
  1.375

  	
  %

  	
  1.50

  	
  %

  	
  1.75

  	
  %

  
	
  Floating Rate

  	
   

  	
  0.00

  	
  %

  	
  0.00

  	
  %

  	
  0.125

  	
  %

  	
  0.25

  	
  %

  	
  0.50

  	
  %

  



 


	
  Applicable Fee 

  Rate

  	
   

  	
  Level I 

  Status

  	
   

  	
  Level II 

  Status

  	
   

  	
  Level III 

  Status

  	
   

  	
  Level IV 

  Status

  	
   

  	
  Level V 

  Status

  	
   

  
	
  Commitment Fee

  	
   

  	
  0.25

  	
  %

  	
  0.30

  	
  %

  	
  0.375

  	
  %

  	
  0.375

  	
  %

  	
  0.50

  	
  %

  



 


For the purposes of this Schedule, the following terms have the
following meanings, subject to the final paragraph of this Schedule:


 


“Level I Status” exists at any date if, the Borrowing Base Usage
Percentage on such date is less than 25%.


 


“Level II Status” exists at any date if, on
such date Borrowing Base Usage Percentage is greater than or equal to 25% and
less than 50%.


 


“Level III Status” exists at any date if,
Borrowing Base Usage Percentage on such date is greater than or equal to 50%
and less than 75%.


 


“Level IV Status” exists at any date if Borrowing Base Usage Percentage
on such date is greater than or equal to 75% and less than 90%.


 


“Level V Status” exists at any date if Borrowing Base Usage Percentage
on such date is greater than or equal to 90%.


 


“Status” means either Level I Status, Level II
Status, Level III Status, Level IV Status or Level V Status.


 


The Applicable Margin and Applicable Fee Rate shall be determined on a
daily basis in accordance with the foregoing table based on the Borrowing Base
Usage Percentage on such day.


 





















 


SCHEDULE 2


LENDERS SCHEDULE


 





















 


SCHEDULE 3


DISCLOSURE SCHEDULE


 


A.                                    Subsidiaries
(Section 5.8):


 


	
  Name

  	
   

  	
  Type

  	
   

  	
  Jurisdiction

  	
   

  	
  Owned

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cimarex
  Energy Services, Inc.

  	
   

  	
  Corporation

  	
   

  	
  Oklahoma

  	
   

  	
  100% owned
  by Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key
  Production Company, Inc.

  	
   

  	
  Corporation

  	
   

  	
  Delaware

  	
   

  	
  100% owned
  by Borrower

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Columbus
  Energy Corp.

  	
   

  	
  Corporation

  	
   

  	
  Colorado

  	
   

  	
  100% owned
  by Key Production Company, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Brook Gas
  Systems and Equipment, Inc.

  	
   

  	
  Corporation

  	
   

  	
  Texas

  	
   

  	
  100% owned
  by Key Production Company, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Columbus Gas
  Services, Inc. 

  	
   

  	
  Corporation 

  	
    

  	
  Delaware 

  	
    

  	
  100% owned
  by Columbus Energy Corp. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Columbus
  Texas, Inc.

  	
   

  	
  Corporation

  	
   

  	
  Nevada

  	
   

  	
  100% owned
  by Columbus Energy Corp.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Columbus
  Energy, LP

  	
   

  	
  Limited
  Partnership

  	
   

  	
  Texas

  	
   

  	
  1% owned by
  Columbus Energy Corp. and 99% owned by Columbus Texas, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cimarex
  Texas L.P. 

  	
   

  	
  Limited
  Partnership 

  	
    

  	
  Texas 

  	
    

  	
  99% by Cimarex Texas LLC and 1% by Cimarex
  Energy Co. 

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cimarex
  Texas LLC

  	
   

  	
  Limited
  Liability Company

  	
   

  	
  Colorado

  	
   

  	
  100% by Cimarex Energy Co.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key
  Production Texas L.P.

  	
   

  	
  Limited
  Partnership

  	
   

  	
  Texas

  	
   

  	
  99% by Key
  Texas LLC and 1% by Key Production Company, Inc.

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Key Texas
  LLC

  	
   

  	
  Limited
  Liability Company

  	
   

  	
  Colorado

  	
   

  	
  100% by Key
  Production Company

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
  Cimarex
  California Pipeline LLC

  	
   

  	
  Limited
  Liability Company

  	
   

  	
  Colorado

  	
   

  	
  100% by Cimarex Energy Co.

  	
   

  



 





















 


B.                                    Defined
Benefit Pension Plan (Section 5.9):


 


In 1997, Key
completed the termination of the defined benefit plan of Brock Exploration
Company, which at the time was a wholly-owned subsidiary of Key.  The plan was terminated in a standard
termination, and Key made all of the required filings with the Internal Revenue
Service and with PBGC.


 


C.                                    Existing
Indebtedness (Section 7.2(ii)):


 


1.                                       Borrower
may have obligations arising under joint operating agreements in the normal
course of business.


 


2.                                       Take
or pay liabilities recorded on the books of Borrower and/or Key that do not
currently exceed $1,000,000.


 


3.                                       At
present, Borrower has several operating leases with various expiration dates
and terms.  The operating leases
represent commitments for office space. 
As operating leases expire or requirements for office space change, the
Borrower may possibly renew, renegotiate, terminate, or make arrangements for
additional office space.


 


4.                                       In
the normal course of business, Borrower makes drilling commitments on oil and
gas wells.  These drilling commitments
become contingent liabilities when a well is approved for drilling or in the
process of being drilled.  An estimate of
these amounts is disclosed in the Management’s Discussion and Analysis of
Financial Condition and Result of Operations as filed with the Securities and
Exchange Commission in the Company’s annual report filed on form 10-K and
quarterly report filed on form10-Q.  Even though these commitments are routine,
the dollar amount and number of commitments may vary greatly depending on the
number of projects approved and in progress, the stage completion and the
estimated costs.


 


5.                                       Borrower
is in the process of implementing a purchase card (company card and payment)
program.  Cards will be issued to field
employees (pumpers) for fuel maintenance on company
vehicles.   Cards will also be issued to
employees for travel and entertainment, and other approved business
purposes.  The Borrower will be obligated
per the terms of the “purchase card agreement.” Currently, Borrower has an
airline travel account through American Express and various gas cards like
Wright Express and Texaco for fuel and maintenance in the field.  The new purchase card program is intended to
replace existing credit card arrangements.


 


D.                                    Investments, Acquisitions,
Partnerships and Joint Ventures (Section 7.5 (iii)):


 


None


E.                                      Existing Liens
(Section 7.6 (v)):


 


None


 





















 


SCHEDULE 4


 


OPINION MATTERS


 


•                  Each
entity is validly existing and in good standing under the laws of the state of
its organization.


 


•                  Each
entity has the power and authority to execute and deliver each Amendment
Document to which it is a party and to perform its obligations thereunder.


 


•                  Each
Amendment Document has been duly authorized, executed and delivered by each
entity party thereto.


 


•                  Each
party to an Amendment Document is in good standing and duly authorized to do
business in each state in which it does business.


 


•                  Each
Amendment Document is enforceable against each entity party thereto to it in
accordance with its terms.


 


•                  The
Credit Agreement as amended by the Amendment is enforceable against the
Borrower in accordance with its terms.


 





















 


EXHIBIT A


 


NOTE


 


	
  $                      

  	
  October 1, 2004

  



 


Cimarex Energy Co., a Delaware corporation
(the “Borrower”), promises to pay to the order of                                           
(the “Lender”) the principal sum of                                         
Dollars ($                     )
or, if greater or less, the aggregate unpaid principal amount of all Loans made
by the Lender to the Borrower pursuant to Article II of the Agreement (as
hereinafter defined), in immediately available funds at the main office of Bank
One, NA in Chicago, Illinois, as Administrative Agent, together with interest
on the unpaid principal amount hereof at the rates and on the dates set forth
in the Agreement.  The Borrower shall pay
the principal of and accrued and unpaid interest on the Loans in full on the
Facility Termination Date.


 


The Lender
shall, and is hereby authorized to, record on the schedule attached hereto, or
to otherwise record in accordance with its usual practice, the date and amount
of each Loan and the date and amount of each principal payment hereunder.


 


This Note is
one of the Notes issued pursuant to, and is entitled to the benefits of, the
Credit Agreement dated as of October 2, 2002 (which, as it may be amended or
modified and in effect from time to time, is herein called the “Agreement”),
among the Borrower, the lenders party thereto, including the Lender, the LC
Issuer and Bank One, NA, as Administrative Agent, to which Agreement reference
is hereby made for a statement of the terms and conditions governing this Note,
including the terms and conditions under which this Note may be prepaid or its
maturity date accelerated.  This Note is
secured pursuant to the Collateral Documents and guaranteed pursuant to the
Guaranty, all as more specifically described in the Agreement, and reference is
made thereto for a statement of the terms and provisions thereof. Capitalized
terms used herein and not otherwise defined herein are used with the meanings
attributed to them in the Agreement. 
This Note is given in partial renewal, extension and restatement of (but
not in extinguishment or novation of) indebtedness
evidenced by the Notes issued under the Agreement prior to the date hereof.


 


	
   

  	
  CIMAREX
  ENERGY CO.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By:

  	
   

  
	
   

  	
  Name:

  	
   

  
	
   

  	
  Title:

  	
   

  



 





















 


SCHEDULE OF LOANS AND PAYMENTS OF PRINCIPAL

TO

NOTE OF CIMAREX ENERGY CO.,

DATED OCTOBER 1, 2002


 


	
  Date

  	
   

  	
  Principal 

  Amount of 

  Loan

  	
   

  	
  Maturity 

  of Interest 

  Period

  	
   

  	
  Principal 

  Amount 

  Paid

  	
   

  	
  Unpaid 

  Balance

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  	
   

  



 





















 


EXHIBIT J


CONFIDENTIALITY AGREEMENT


 


 


[Insert Date]


 


 


 


 


 


Re:             Credit Agreement, dated as of October 2,
2002, as amended (the “Credit 

Agreement”), among Cimarex Energy Co. (“Cimarex”), Bank One, NA, as 

Administrative Agent and certain Lenders party thereto


 


Ladies
and Gentlemen:


 


                                     
(“Lender”) has requested that you assist it in evaluating oil and gas
properties (and the related reserves and production) of Cimarex
Energy Co. and its subsidiaries (collectively, the “Company”) for purposes of
determining the Borrowing Base under the Credit Agreement, which Borrowing Base
is to be determined semiannually by April 30 and October 30 of each year and
pursuant to certain Special Redeterminations (“Determination
Date”).  Lender has made and/or will make
available to you certain information concerning the Company’s oil and gas
properties and related operations (all of which information so provided to you,
whether prior or subsequent to your execution of this agreement, shall be known
as the “Evaluation Material”).  The term “Evaluation
Material” does not include information which is or becomes generally available
to you on a non-confidential basis, provided that the source of such
information was not known by you after due inquiry to be bound by a
confidentiality agreement or other obligation of confidentiality with respect
to such information.


 


You
agree that you will use the Evaluation Material solely for the purposes
described above and that the Evaluation Material will not be used for any other
purpose.  You agree to keep the
Evaluation Material confidential and not to disclose the Evaluation Material to
any person or entity other than such of your officers, directors and employees
who have a bona fide need to have access to the Evaluation Material in order
for you to carry out the purposes described above and who have agreed in
writing to be bound by the obligations of confidentiality contained herein.  You shall be responsible and liable for any
use or disclosure of the Evaluation Material by such parties in violation of
this agreement.  Nothing contained herein
shall be deemed to prevent disclosure of any of the Evaluation Material if, in
the opinion of your legal counsel, such disclosure is legally required to be
made in a judicial, administrative or governmental proceeding pursuant to a
valid subpoena or other applicable order; provided, however, you shall give the
Company at least 10 days prior written notice (unless less time is permitted by
the applicable proceeding) before disclosing any of the Evaluation Material in
a proceeding and, in making such disclosure, you will disclose only that
portion thereof required to be disclosed and shall take all reasonable efforts
to preserve the confidentiality thereof, including obtaining protective orders
and supporting the Company in intervention.


 





















 


The
Company specifically disclaims and makes no representation or warranty, express
or implied, to you with respect to the Evaluation Material.  You agree not to make or reproduce any copies
of any document (or any portion thereof) or other materials which is part of
the Evaluation Material.  Within twenty
business days after the applicable Determination Date for which the Evaluation
Material was made available to you, you will return to the Company all
documents (including all copies thereof) and other materials which have been
delivered or disclosed to you or which you have obtained, as part of the Evaluation
Material.


 


You
agree that if this agreement is breached, or if a breach hereof is threatened,
the remedy at law may be inadequate, and therefore, without limiting any other
remedy at law or in equity, an injunction, restraining order, specific performance
and other forms of equitable relief or money damages or any combination thereof
shall be available to the Company.  The
successful party in any action or proceeding brought to enforce this agreement
shall be entitled to recover the costs, expenses and fees incurred in any such
action or proceeding, including, without limitation, attorney’s fees and
expenses.


 


This
agreement is personal unto you, and you may not assign, pledge or otherwise
transfer your rights or delegate your duties or obligations under this
agreement without the prior written consent of the Company.


 


This
agreement constitutes the entire understanding between us with respect to the
subject matter thereof and supersedes all negotiations, prior discussions, or
prior agreements and understandings relating to such subject matter.  All duties, obligations, rights, powers and
remedies provided herein are in addition to the duties, obligations and rights,
powers and remedies existing at law or in equity, including, without
limitation, the Uniform Trade Secrets Act and similar statutes and rules of law
pertaining to trade secrets and confidential and proprietary information.


 


This
agreement shall be governed by and construed in accordance with the laws of the
State of Colorado, without giving effect to its conflicts of laws, principles
or rules.  The parties consent to
jurisdiction and venue in any court of competent jurisdiction in such state and
in and to the federal courts sitting in such state.


 


Please
confirm your agreement with the foregoing by signing and returning one copy of
this letter to the Company.


 


	
   

  	
   

  	
  Very
  truly yours,

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  CIMAREX ENERGY CO.

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  By:

  	
   

  
	
   

  	
   

  	
  Name:

  
	
   

  	
   

  	
  Title:

  
	
   

  	
   

  	
   

  
	
  ACCEPTED AND AGREED:

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
  By:

  	
   

  	
   

  	
   

  
	
  Name:

  	
   

  	
   

  
	
  Title: