magnum_8k-ex1001.htm


 







Exhibit 10.1


 


FOURTH AMENDMENT TO


SECOND AMENDED AND RESTATED CREDIT AGREEMENT


 


THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED CREDIT AGREEMENT (this “Amendment”), effective as of the 6th day of December, 2011 (the “Fourth Amendment Effective Date”), is entered into by and among MAGNUM HUNTER RESOURCES CORPORATION, a Delaware corporation (the “Borrower”), the Guarantors party hereto (the
“Guarantors”), the Lenders party hereto (the “Lenders”) and BANK OF MONTREAL, as Administrative Agent for the Lenders (the “Administrative Agent”).


 


RECITALS


 


WHEREAS, the Borrower, the Lenders and the Administrative Agent entered into that certain Second Amended and Restated Credit Agreement dated April 13, 2011 (as amended by the First Amendment to Second Amended and Restated Credit Agreement effective as of June 30, 2011, the Second Amendment to Second Amended and Restated Credit Agreement effective as of August 15, 2011, the Third Amendment to Second Amended and Restated Credit Agreement effective as of September 28, 2011, and as further amended or restated from time to time, the “Credit Agreement”); and


 


WHEREAS, the Borrower has requested that the Lenders and the Administrative Agent amend certain provisions of the Credit Agreement; and


 


WHEREAS, said parties are willing to so amend the Credit Agreement subject to the terms and conditions set forth herein.


 


NOW, THEREFORE, in consideration of the foregoing and the mutual covenants set forth in this Amendment, the Borrower, the Guarantors, the Lenders and the Administrative Agent agree as follows:


 


1. Defined Terms.  Unless otherwise defined herein, capitalized terms used herein have the meanings assigned to them in the Credit Agreement.


 


2. Amendments to Section 1.01.


 



	
(a)  

	
Section 1.01 of the Credit Agreement is hereby amended to delete the definition of “EBITDAX” in its entirety and substitute the following therefor:







 


“EBITDAX” means, for any period, the sum of Consolidated Net Income for such period calculated on a trailing four quarter basis plus the following expenses or charges to the extent deducted from Consolidated Net Income in such period: interest, income Taxes, depreciation, depletion, amortization, expenses associated with the exploration of Oil and Gas Properties, all non-cash charges and adjustments (including stock-based compensation, impairment of asset values, non-cash adjustments to derivative carrying values, non-cash adjustments to asset retirement obligations and other similar items as from time to time
required under GAAP) and all non-recurring expenses, minus all non-cash income added to Consolidated Net Income.  Notwithstanding the foregoing, EBITDAX shall be Consolidated Net Income plus the aforementioned expenses or charges (i) for the most recently ended quarter multiplied by four (4) with respect to the quarter ending December 31, 2011, (ii) for the most recently ended two (2) quarters multiplied by two (2) with respect to the quarter ending March 31, 2012, and (iii) for the most recently ended three (3) quarters multiplied by four-thirds (4/3) with respect to the quarter ending June 30, 2012.  With respect to any acquisitions completed in any fiscal quarter, EBITDAX shall be calculated on a pro forma basis as if such acquisitions had taken place as of the beginning of the quarter during which such acquisitions take place.


 










  





 











  














	
(b)  

	
Section 1.01 of the Credit Agreement is hereby amended to add the following new definition in proper alphabetical order:







 


“Fourth Amendment Effective Date” means December 6, 2011.


 


3. Amendment to Section 2.07(a).  Section 2.07(a) of the Credit Agreement is hereby amended to add the following new paragraph (iv) at the end of said paragraph (a) as follows:


 


“(iv)           Upon the Fourth Amendment Effective Date, the Conforming Borrowing Base shall be equal to $200,000,000 and the Non-Conforming Borrowing Base shall be equal to $0.”


 


4. Amendment to Section 8.01.  Section 8.01 of the Credit Agreement is hereby amended to restate in their entirety subsections (d) and (m) thereof as follows:


 


“(d)           Certificate of Financial Officer - Swap Agreements.  Concurrently with the delivery of each Reserve Report hereunder and concurrently with any delivery of financial statements under Section 8.01(b), a certificate of a Financial Officer, in form and substance reasonably satisfactory to the Administrative Agent, setting forth as of a recent date a true and complete list of all Swap Agreements of the Borrower and each Restricted Subsidiary, the material terms thereof (including the
type, term, effective date, termination date and notional amounts or volumes), the net mark-to-market value therefor, any new credit support agreements relating thereto not listed on Schedule 7.20, any margin required or supplied under any credit support document and the counterparty to each such agreement; provided that each such certificate furnished concurrently with the delivery of financial statements under Section 8.01(b) shall also include the calculations described in Section 9.18(a)(i).


 


(m)           Production Report and Lease Operating Statements.  Within 45 days after the end of each calendar month, a report setting forth, for each calendar month during the then current fiscal year to date, the volume of production and sales attributable to production (and the prices at which such sales were made and the revenues derived from such sales) for each such calendar month from the Oil and Gas Properties, and setting forth the related ad valorem, severance and production taxes and lease operating expenses attributable thereto and incurred for each such
calendar month.”


 










  





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5. Amendment to Section 9.01.  Section 9.01 of the Credit Agreement is hereby amended to restate in its entirety subsection (c) thereof as follows:


 


“(c)           Total Debt to EBITDAX.  The Borrower will not permit, as of the last day of any fiscal quarter, its ratio of (i) total Debt of the Borrower and the Restricted Subsidiaries as of such date to (ii) EBITDAX of the Borrower and the Restricted Subsidiaries for the trailing four quarter period then ended to exceed (A) 4.5 to 1.0 commencing with the fiscal quarter ending June 30, 2011 through the fiscal quarter ending September 30, 2011, (B) 4.25 to 1.0 for the fiscal quarter ending December 31, 2011 and (C) 4.0 to 1.0 commencing with the fiscal
quarter ending March 31, 2012 and for each fiscal quarter thereafter.”


 


6. Amendment to Section 9.04.  Section 9.04 of the Credit Agreement is hereby amended to restate in its entirety clause (c) thereof as follows:


 


“(c)           without limiting the dividends permitted by Section 9.04(b), the Borrower may declare and pay cash dividends on its Series C and Series D preferred stock permitted hereunder so long as (i) no Event of Default exists at the time of, or is caused by, such payment, (ii) after giving effect to such payment, availability under the Borrowing Base is equal to or greater than the greater of (x) two and one-half percent (2.5%) of the Borrowing Base then in effect and (y) $5,000,000, and (iii) such dividends do not exceed $20,000,000 in any calendar
year;”.


 


7. Amendment to Section 9.18.  Section 9.18 of the Credit Agreement is hereby amended to restate in its entirety clause (a)(i) thereof as follows:


 


“(i)           Swap Agreements in respect of commodities (A) with an Approved Counterparty and (B) the notional volumes for which (when aggregated with other commodity Swap Agreements in effect for the same periods as such Swap Agreement, other than basis differential swaps on volumes already hedged pursuant to other Swap Agreements) do not exceed, as of the date such Swap Agreement is executed, for each of crude oil (including natural gas liquids) and natural gas, calculated separately, (1) 80% of the reasonably anticipated production of its Total Proved Reserves for each month during the period in which such Swap
Agreement is in effect, and (2) (x) 100% of the most recent production as provided in the report most recently delivered by the Borrower pursuant to Section 8.01(m) for any succeeding twenty-four month period; provided that, for any Swap Agreement executed during the last quarter of any calendar year, such period shall be extended to December 31st of the second calendar year following execution of such Swap Agreement and (y) 75% of the most recent production as provided in the report most recently delivered by the Borrower pursuant to Section 8.01(m) for any period beyond such twenty-four month period (or
such extended period as provided in the foregoing proviso);”.


 










  





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8. Amendment to Section 10.02.  Section 10.02 of the Credit Agreement is hereby amended to restate in its entirety subsection (c) thereof as follows:


 


“(c)           All proceeds realized from the liquidation or other disposition of collateral or otherwise received after maturity of the Loans or the Notes, whether by acceleration or otherwise, shall be applied:  first, to reimbursement of expenses and indemnities provided for in this Agreement and the Security Instruments; second, to accrued interest on the Loans; third, to fees; fourth, pro rata
to principal outstanding on the Loans and Obligations referred to in clause (iii) of the definition of Obligations; fifth, to any other Obligations; sixth, to serve as cash collateral to be held by the Administrative Agent to secure the LC Exposure; and any excess shall be paid to the Borrower or as otherwise required by any Governmental Requirement.”


 


9. Ratification.  Each of the Borrower and the Guarantors hereby ratifies all of its respective obligations under the Credit Agreement and each of the Loan Documents to which it is a party, and agrees and acknowledges that the Credit Agreement and each of the Loan Documents to which it is a party are and shall continue to be in full force and effect as amended and modified by this Amendment.  Nothing in this Amendment extinguishes, novates or releases any right, claim, lien, security interest or entitlement of
any of the Lenders or the Administrative Agent created by or contained in any of such documents nor is the Borrower nor any Guarantor released from any covenant, warranty or obligation created by or contained herein or therein.


 


10. Representations and Warranties.  The Borrower and Guarantors hereby represent and warrant to the Administrative Agent and the Lenders that (a) this Amendment has been duly executed and delivered on behalf of the Borrower and Guarantors, (b) this Amendment constitutes a valid and legally binding agreement enforceable against the Borrower and Guarantors in accordance with its terms, subject to applicable bankruptcy, insolvency, fraudulent transfer, reorganization, moratorium or other laws affecting
creditors’ rights generally and subject to general principles of equity, regardless of whether considered in a proceeding in equity or at law, (c) the representations and warranties contained in the Credit Agreement and the Loan Documents are true and correct on and as of the date hereof in all material respects as though made as of the date hereof (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 as of such specified earlier date), (d) no Default or Event of Default exists under the Credit Agreement or under any Loan Document as of the Fourth Amendment Effective Date and (e) the execution, delivery and performance of this Amendment has been duly authorized by the Borrower and Guarantors.


 










  





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11. Conditions to Effectiveness.  This Amendment shall be effective on the Fourth Amendment Effective Date upon satisfaction of the following conditions:


 



	
(a)  

	
the Borrower, the Guarantors and each of the Lenders shall have executed and delivered to the Administrative Agent counterparts of this Amendment; and







 



	
(b)  

	
the Borrower shall have paid to the Administrative Agent and the Lenders all fees and expenses that are due in connection with this Amendment.







 


12. Counterparts.  This Amendment may be signed in any number of counterparts, which may be delivered in original, electronic or facsimile form each of which shall be construed as an original, but all of which together shall constitute one and the same instrument.


 


13. Governing Law.  This Amendment, all Notes, the other Loan Documents and all other documents executed in connection herewith shall be deemed to be contracts and agreements under the laws of the State of New York and of the United States of America and for all purposes shall be construed in accordance with, and governed by, the laws of New York and of the United States.


 


14. Final Agreement of the Parties.  Any previous agreement among the parties with respect to the subject matter hereof is superseded by the Credit Agreement, as amended by this Amendment.  Nothing in this Amendment, express or implied is intended to confer upon any party other than the parties hereto any rights, remedies, obligations or liabilities under or by reason of this Amendment.


 


[Signature Pages Follow]


 










  





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IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be executed by their respective officers thereunto duly authorized as of the Fourth Amendment Effective Date.


 


 



	 	 BORROWER: 







MAGNUM HUNTER RESOURCES


CORPORATION, a Delaware corporation












By: /s/ Ronald D. Ormand


Ronald D. Ormand


Chief Financial Officer












GUARANTORS:







PRC WILLISTON, LLC,


a Delaware limited liability company







By:           Magnum Hunter Resources Corporation,


                  its sole member












          By:  /s/ Ronald D. Ormand


          Ronald D. Ormand



          Chief Financial Officer














MAGNUM HUNTER RESOURCES LP,


a Delaware limited partnership







By:  Magnum Hunter Resources GP, LLC,


        its general partner








        By:    Magnum Hunter Resources Corporation,





                  its sole member









                 By: /s/ Ronald D. Ormand 


                Ronald D. Ormand



               Chief Financial Officer











 


 










  





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	 	MAGNUM HUNTER RESOURCES GP, LLC, 

a Delaware limited liability company







By:      Magnum Hunter Resources Corporation,


            its sole member









           By:     /s/ Ronald D. Ormand


           Ronald D. Ormand



           Chief Financial Officer














TRIAD HUNTER, LLC,


a Delaware limited liability company












By:     /s/ Ronald D. Ormand


Ronald D. Ormand


Vice President












EAGLE FORD HUNTER, INC.,


a Colorado corporation












By:     /s/ Ronald D. Ormand


Ronald D. Ormand


Secretary












MAGNUM HUNTER PRODUCTION INC.,


a Kentucky corporation












By:     /s/ Ronald D. Ormand


Ronald D. Ormand


Chief Financial Officer












NGAS HUNTER, LLC












By:     /s/ Ronald D. Ormand


Ronald D. Ormand


Vice President and Treasurer







 


 










  





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MHR CALLCO CORPORATION,


a corporation existing under the laws of the Province of Alberta












By:     /s/ Ronald D. Ormand


Ronald D. Ormand


Vice President












MHR EXCHANGECO CORPORATION,


a corporation existing under the laws of the Province of Alberta












By:     /s/ Ronald D. Ormand


Ronald D. Ormand



Vice President














WILLISTON HUNTER CANADA, INC.,


a corporation existing under the laws of the Province of Alberta












By:     /s/ Ronald D. Ormand


Ronald D. Ormand



Executive Vice President and Chief Financial Officer














WILLISTON HUNTER INC.,


a Delaware corporation












By:     /s/ Ronald D. Ormand


Ronald D. Ormand



Executive Vice President and Chief Financial Officer









 




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




















  





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	 	WILLISTON HUNTER ND, LLC, 

a Delaware limited liability company












By:     /s/ Ronald D. Ormand


Ronald D. Ormand


Vice President and Treasurer







 














 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 





  





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	 	ADMINISTRATIVE AGENT AND LENDER: 






BANK OF MONTREAL












By:     /s/ Gumaro Tijerina


Gumaro Tijerina


Director







 




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 















  





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	 	LENDER: 






CAPITAL ONE, NATIONAL ASSOCIATION












By:     /s/ Nancy M. Mak


Nancy M. Mak


Vice President







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 




















  





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LENDER:







AMEGY BANK NATIONAL ASSOCIATION












By:     /s/ Mark Serice


Mark Serice


Senior Vice President







 




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




















  





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	 	LENDER: 






KEYBANK NATIONAL ASSOCIATION












By:     /s/ David Morris


David Morris


Vice President







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 




















  





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LENDER:







UBS LOAN FINANCE LLC












By:     /s/ Irja R. Otsa


Irja R. Otsa


Associate Director












By:     /s/ Mary E. Evans


Mary E. Evans


Associate Director







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 






























  





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	 	LENDER: 






CITIBANK, N.A.












By:     /s/ Angela McCracken


Angela McCracken


Vice President







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 




















  





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	 	LENDER: 






DEUTSCHE BANK TRUST COMPANY AMERICAS












By:     /s/ Michael Getz


Michael Getz


Vice President












By:     /s/ Carin Keegan


Carin Keegan


Director







 




 







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 





  





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	 	LENDER: 






UNION BANK, N.A.












By:     /s/ Paul E. Cornell


Paul E. Cornell


Senior Vice President







 




 







 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 





  





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	 	LENDER: 






CREDIT SUISSE AG, Cayman Islands Branch












By:     /s/ Nupur Kumar


Nupur Kumar


Vice President












By:     /s/ Rahul Parma


Rahul Parmar


Associate







 




 












 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 





  





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	 	LENDER: 






GOLDMAN SACHS BANK USA












By:     /s/ Mark Walton


Mark Walton


Vice President







 




 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 





  





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	 	LENDER: 






SUNTRUST BANK












By:           /s/ Gregory C. Magnuson


Name:    Gregory C. Magnuson


Title:      Vice President







 




 

















 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 


 




 


Signature Page to Fourth Amendment to Credit Agreement


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