Document:

Exhibit 10.4

 

NON-QUALIFIED STOCK OPTION AWARD AGREEMENT

 

THIS NON-QUALIFIED STOCK OPTION AWARD AGREEMENT (this “Agreement”) is made as of the 26th day of September, 2011, between DYNEGY INC., a Delaware corporation (“Dynegy”), and all of its Affiliates (collectively, the “Company”), and CATHERINE B. CALLAWAY (“Employee”).  A copy of the Dynegy Inc. 2010 Long Term Incentive Plan (the “Plan”) is annexed to this Agreement and shall be deemed a part of this Agreement as if fully set forth herein.  Unless the context otherwise requires, all terms that are not defined herein but which are defined in the Plan shall have the same meaning given to them in the Plan when used herein.

 

1.                                       The Grant.  Pursuant to her Employment Agreement, the Board of Directors of Dynegy (the “Board”) granted to Employee, effective on September 26, 2011 (“Effective Date”), as a matter of separate inducement and not in lieu of any salary or other compensation for Employee’s services, the right and option to purchase (the “Option”), in accordance with the terms and conditions set forth in the Plan and in this Agreement the following shares of common stock of Dynegy, $0.01 par value per share (the “Common Stock”), at the following exercise prices (collectively, the “Exercise Prices”):  (a) 50,000 shares of Common Stock, at an Exercise Price of $4.80  per share (“Option A”), (b) 62,500 shares of Common Stock at an Exercise Price of $6.50 per share (“Option B”), (c) 75,000 shares of Common Stock at an Exercise Price of $8.00 per share (“Option C”), and (d) 100,000 shares of Common Stock at an Exercise Price of $10.00 per share (“Option D”).  Employee acknowledges receipt of a copy of the Plan, and agrees that the Option shall be subject to all of the terms and provisions of the Plan, including future amendments thereto, if any, pursuant to the terms thereof, and to all of the terms and conditions of this Agreement.  The Option shall not be treated as an incentive stock option within the meaning of Section 422 of the Internal Revenue Code of 1986, as amended (the “Code”).  The Exercise Prices are, in the judgment of the Board, not less than one hundred percent (100%) of the Fair Market Value of a share of the Common Stock on the Effective Date.

 

2.                                       Exercise.  Subject to the provisions, limitations and other relevant provisions of the Plan and of this Agreement, and the earlier expiration of the Option as herein provided, Employee may exercise the Option to purchase some or all of the Shares as follows:

 

(a)                                  The Option shall become exercisable in four cumulative equal annual installments as follows:

 

(i)                                     on and after the first anniversary of the Effective Date, the right to purchase one-fourth of each of the Option A, B, C, and D Shares shall be exercisable without further action by the Board or the Compensation and Human Resources Committee of the Board (the “Committee”);

 

(ii)                                  on and after the second anniversary of the Effective Date, the right to purchase an additional one-fourth of each of the Option A, B, C, and D Shares shall be exercisable without further action by the Board or Committee;

 

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(iii)                               on and after the third anniversary of the Effective Date, the right to purchase an additional one-fourth of each of the Option A, B, C, and D Shares shall be exercisable without further action by the Board or Committee; and

 

(iv)                              on and after the fourth anniversary of the Effective Date, the right to purchase the remaining one-fourth of each of the Option A, B, C, and D Shares shall be exercisable without further action by the Board or Committee.

 

(b)                                 Notwithstanding any other provision of this Agreement, the unexercised portion of the Option, if any, will automatically and without notice terminate and become null and void upon the expiration of ten (10) years from the Effective Date of the Option.

 

(c)                                  Any exercise by Employee of the Option, or portion thereof, shall be conducted by delivery of an irrevocable notice of exercise to the Company or its designee as provided in the Plan.  In no event shall Employee be entitled to exercise the Option for less than a whole Share.

 

(d)                                 Notwithstanding any other provision of this Agreement, upon the occurrence of a Corporate Change, the Option, if it has not theretofore terminated, shall become fully vested and immediately exercisable in full on the date of the Corporate Change.

 

3.                                       Termination of Employment.  The Option may be exercised only while Employee remains an employee of the Company and will terminate and cease to be exercisable upon Employee’s termination of employment with the Company, except that:

 

(a)                                  if Employee shall die while in the employ of the Company, the Option awarded hereunder shall immediately fully vest with respect to all of the remaining Shares and become fully exercisable without further action by the Board or Committee, and Employee’s legal representative, or the person, if any, who acquired the Option by bequest or inheritance or by reason of the death of Employee, may exercise the Option, to the extent not previously exercised, in respect of any or all such Shares at any time up to and including the date three (3) years after the date of death, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(b)                                 if Employee is determined to have a Disability, the Option awarded hereunder shall immediately fully vest with respect to all of the remaining Shares and become fully exercisable without further action by the Board or Committee, and Employee may exercise the Option, to the extent not previously exercised, in respect of any or all such Shares at any time up to and including the date three (3) years after the date of such determination, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

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(c)                                  if Employee’s employment with the Company terminates by reason of dismissal by the Company for Cause, then the Option, to the extent not previously exercised, will immediately, automatically and without notice or further action by the Board or Committee, terminate and become null and void; and

 

(d)                                 if Employee’s employment with the Company terminates by reason of resignation by the Employee (except as otherwise provided in Section 3(e) or (f) below) and at a time when Employee was entitled to exercise the Option, Employee may exercise the Option, to the extent not previously exercised, with respect to any or all such number of Shares as to which the Option was exercisable as of the date of Employee’s termination of employment, at any time up to and including the date ninety (90) days after the date of termination by reason of such resignation, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(e)                                  if Employee’s employment with the Company terminates by reason of Involuntary Termination, as such term is defined below, the Option awarded hereunder shall immediately fully vest with respect to all of the remaining Shares but shall continue to become exercisable in accordance with Section 2(a) of this Agreement, and Employee may exercise such Option, to the extent not previously exercised, at any time once exercisable up to and including the date that is ninety (90) days after the date the relevant Shares become exercisable in accordance with Section 2(a) of this Agreement, or the end of the option term, whichever is less, after which date the Option will automatically and without notice terminate and become null and void; and

 

(f)                                    notwithstanding Section 3(e) or anything herein to the contrary, if Employee’s employment with the Company is terminated as a result of a Change in Control Termination, as such term is defined below, occurring (i) in connection with, but in no event earlier than sixty (60) days prior to, a Corporate Change or (ii) on or within two years after the effective date upon which a Corporate Change occurs, the Option shall become fully vested and immediately exercisable in full on the effective date of the Corporate Change, and such Option shall remain exercisable from such date for the lesser of: (A) five (5) years  from the date of such Corporate Change; (B) the remaining period of time for exercise of the Option hereunder (irrespective of any mandatory exercise period specified herein that would otherwise be triggered by the termination of employment of such Employee); or (C) such period of time (which period of time may end as early as the consummation of a Corporate Change) as the Committee may determine in connection with or in contemplation of a Corporate Change in the exercise of its discretion under the Plan, with respect to which the Committee has the discretion to, among other things, require the surrender of stock options (which surrender may be in exchange for a cash payment, if applicable) and to cancel such stock options upon the consummation of a Corporate Change as further described in the Plan.

 

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(g)                                 For purposes of this Agreement:

 

“Base Salary” shall mean the regular base salary of Employee but excluding all bonuses, expense reimbursements, benefits paid under any plan maintained by the Company and all equity awards of any type.

 

“Cause” shall mean, and hence arise where, as determined by the Committee in its sole discretion, Employee has (A) been convicted of a misdemeanor involving moral turpitude or a felony, (B) engaged in conduct which is materially injurious (monetarily or otherwise) to the Company (including, without limitation, misuse of the Company’s funds or other property), (C) engaged in misconduct in the performance of Employee’s duties, (D) refused without proper legal reason to perform Employee’s duties, (E) breached any provision of any agreement between the Company and Employee, (F) breached any corporate policy maintained and established by the Company that is of general applicability to its employees; or (G) otherwise failed to meet satisfactorily the standards of her position.

 

“Change in Control Termination” shall mean Employee’s employment is terminated by the Company (or a successor thereto) without Cause, or by Employee following: (i) a significant diminution in Employee’s responsibilities, authority or duties; (ii) a material reduction in Employee’s Base Salary; or (iii) relocation of Employee’s principal place of employment by fifty (50) miles or more, all as determined by the Committee in its sole discretion.

 

“Good Reason” shall have the same meaning as specified in the Dynegy Inc. Executive Severance Pay Plan (as amended and restated effective January 1, 2008).

 

“Involuntary Termination” shall mean (a) a termination of employment by the Company for reasons other than death, Disability or Cause or (b) a termination of employment for Good Reason by Employee.

 

4.                                       Registration.  The Company intends to register the Shares for issuance under the Securities Act of 1933, as amended (the “Act”), and to keep such registration effective throughout the period the Option is exercisable.  In the absence of such effective registration or an available exemption from registration under the Act, issuance of the Shares will be delayed until registration of such shares is effective or an exemption from registration under the Act is available.  The Company intends to use its best efforts to ensure that no such delay will occur.  In the event exemption from registration under the Act is available upon an exercise of the Option, Employee (or the person permitted to exercise the Option in the event of Employee’s death or incapacity), if requested by the Company to do so, will execute and deliver to the Company, in writing, such agreements and other documents containing such provisions as the Company may require to assure compliance with applicable securities laws. 

 

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Employee agrees that the Shares will not be sold or otherwise disposed of in any manner which would constitute a violation of any applicable federal or state securities laws.  Employee also agrees that (a) the certificates representing the Shares may bear such legend or legends as the Committee in its sole discretion deems appropriate in order to assure compliance with applicable securities laws and (b) the Company may refuse to register transfer of the Shares on the stock transfer records of the Company, and may give related instructions to its transfer agent, if any, to stop registration of such transfer, if such proposed transfer would in the opinion of counsel satisfactory to the Company constitute a violation of any applicable securities law.

 

5.                                       Employment Relationship.  For purposes of this Agreement, Employee shall be considered to be in the employment of the Company as long as Employee remains an employee of (a) the Company, (b) an Affiliate (as such term is defined in the Plan) or (c) a corporation (or a parent or subsidiary of such corporation) assuming or substituting a new option for the Option.  Any question as to whether and when there has been a termination of such employment, and the cause of such termination, shall be determined by the Committee in its sole discretion, and its determination shall be final and binding on all parties.

 

6.                                       Withholding Taxes.  By Employee’s acceptance hereof, Employee hereby (a) agrees to reimburse the Company or any Affiliate by which Employee is employed for any federal, state or local taxes required by any government to be withheld or otherwise deducted by such corporation in respect of Employee’s exercise of the Option, (b) authorize the Company or any Affiliate by which Employee is employed to withhold from any cash compensation paid to Employee or in Employee’s behalf, an amount sufficient to discharge any federal, state and local taxes imposed on the Company, or the Affiliate by which Employee is employed, and which otherwise has not been reimbursed by Employee, in respect of Employee’s exercise of the Option and (c) agrees that the corporation by which Employee is employed, may, in its discretion, hold the stock certificates to which Employee is entitled upon exercise of the Option, as security for the payment of the aforementioned withholding tax liability, until cash sufficient to pay that liability has been accumulated, and may, in its discretion, effect such withholding by retaining Shares issuable upon the exercise of the Option having a Fair Market Value on the date of exercise which is equal to the amount to be withheld.

 

7.                                       Miscellaneous.

 

(a)                                  This grant is subject to all the terms, conditions, limitations and restrictions contained in the Plan.  In the event of any conflict or inconsistency between the terms hereof and the terms of the Plan, the terms of the Plan shall be controlling.  In the event of any conflict or inconsistency between the terms hereof and the terms of the Dynegy Inc. Executive Severance Pay Plan, including any amendments or supplements thereto, the terms hereof shall be controlling.

 

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(b)                                 This grant is not a contract of employment and the terms of Employee’s employment shall not be affected hereby or by any agreement referred to herein except to the extent specifically so provided herein or therein.  Nothing herein shall be construed to impose any obligation on the Company or on any Affiliate to continue Employee’s employment, and it shall not impose any obligation on Employee’s part to remain in the employ of the Company or of any Affiliate.

 

(c)                                  All references in this Agreement to any “corporation” shall include a corporation, a general partnership, a joint venture, a limited partnership, a business trust or any other lawful business entity.

 

(d)                                 Any notices or other communications provided for in this Agreement shall be sufficient if in writing. In the case of Employee, such notices or communications shall be effectively delivered when hand delivered to Employee at his or her principal place of employment or when sent by registered or certified mail to Employee at the last address Employee has filed with the Company. In the case of the Company, such notices or communications shall be effectively delivered when sent by registered or certified mail to the Company at its principal executive offices.

 

8.                                       Amendment.  This Agreement may not be amended except by an agreement in writing signed by each of the Company and Employee consenting to such amendment. Notwithstanding the preceding, if it is subsequently determined by the Committee, in its sole discretion, that the terms and conditions of this Agreement and/or the Plan are not compliant with Code Section 409A, or any Treasury regulations or Internal Revenue Service guidance promulgated thereunder, this Agreement and/or the Plan may be amended by the Company accordingly.

 

[Remainder of page intentionally left blank]

 

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IN WITNESS WHEREOF, the Company has caused this Agreement to be duly executed by an officer thereunto duly authorized, and Employee has agreed to and accepted the terms of this Agreement, all as of the date first above written.

 

 

	
 
    	
DYNEGY   INC.
    
	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Robert Flexon
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:   
    	
Robert   Flexon
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
President   and CEO
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
EMPLOYEE
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:   
    	
/s/   Catherine B. Callaway
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Name:
    	
Catherine   B. Callaway
    
	
 
    	
 
    	
 
    
	
 
    	
Title:
    	
EVP   and General Counsel
    

 

7Exhibit 10.1

 

Execution Version

 

FIRST AMENDMENT AND LIMITED WAIVER

 

TO

 

AMENDED AND RESTATED CREDIT AGREEMENT

 

Among

 

KODIAK OIL & GAS (USA) INC.

 

 

as Borrower,

 

WELLS FARGO BANK, N.A.,

as Administrative Agent,

 

and

 

The Lenders Signatory Hereto

 

Dated as of November 14, 2011

 

 

FIRST AMENDMENT AND LIMITED WAIVER TO AMENDED AND RESTATED CREDIT AGREEMENT

 

This First Amendment and Limited Waiver to Amended and Restated Credit Agreement (this “First Amendment”) effective as of the First Amendment Effective Date (as defined below) is among Kodiak Oil & Gas (USA) Inc., a Colorado corporation (the “Borrower”), each of the Lenders that is a signatory hereto and Wells Fargo Bank, N.A., as administrative agent for the Lenders (in such capacity, together with its successors, the “Administrative Agent”).

 

Recitals

 

A.            The Borrower, the Administrative Agent and the Lenders are parties to that certain Amended and Restated Credit Agreement dated as of October 28, 2011 (the “Credit Agreement”), pursuant to which the Lenders have made certain credit available to and on behalf of the Borrower.

 

B.            The Borrower has entered into (i) a Purchase and Sale Agreement dated November 14, 2011 between the Borrower and North Plains Energy, LLC (the “Management PSA”) and (ii) a Purchase and Sale Agreement dated November 14, 2011, between the Borrower and Mercuria Bakken, LLC (the “Equity PSA” and, collectively with the Management PSA, the “PSAs”) pursuant to which the Borrower will acquire certain oil and gas properties from North Plains Energy. LLC and Mercuria Bakken, LLC.

 

C.            The Management PSA is expected to be consummated and close on January 10, 2012 and the Equity PSA is expected to be consummated and close on January 10, 2012.

 

D.            In connection with the financing of transactions contemplated by the PSAs, the Borrower intends to issue Senior Notes, additional Equity Interests of the Borrower and/or enter into an unsecured Senior Bridge Facility.

 

E.             The Administrative Agent, the Borrower and the Majority Lenders have agreed to amend certain provisions of the Credit Agreement.

 

F.             NOW, THEREFORE, 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.               Defined Terms.  Each capitalized term which is defined in the Credit Agreement, but which is not defined in this First Amendment, shall have the meaning ascribed such term in the Credit Agreement.  Unless otherwise indicated, all section references in this First Amendment refer to the Credit Agreement.

 

Section 2.               Amendments to Credit Agreement.

 

2.1           Definitions.

 

(a)           Section 1.02 is hereby amended by inserting the following definitions in sequential alphabetical order:

 

“‘Bridge Loan’ means Debt of the Parent or the Borrower in respect of that certain Senior Bridge Facility pursuant to that certain Commitment Letter dated November 14, 2011, between the Parent, Credit Suisse AG as Agent and the lenders and other Agents party thereto and any senior term loans or senior exchange notes issued by the Parent in connection therewith, not to exceed in the aggregate at any one time an amount equal to the difference of up to $650,000,000 and the principal amount outstanding pursuant to the Senior Notes outstanding at any one time; provided that such senior term loans or senior exchange notes shall be on the same terms and conditions as set forth in subsections (b), (c), (f) and (g) of the definition of “Senior Notes.”

 

 

‘Equity PSA’ means that certain Purchase and Sale Agreement dated November 14, 2011 between the Borrower and Mercuria Bakken, LLC, pursuant to which the Borrower will acquire certain oil and gas properties from Mercuria Bakken, LLC.

 

‘Indenture’ means that certain indenture pursuant to which the Senior Notes are issued in connection with the PSAs.

 

‘Management PSA’ means that certain Purchase and Sale Agreement dated November 14, 2011 between the Borrower and North Plains Energy, LLC, pursuant to which the Borrower will acquire certain oil and gas properties from North Plains Energy, LLC.

 

‘PSAs’ means, collectively, the Equity PSA and the Management PSA.

 

‘Closing’ means the date upon which the Equity PSA and the Management PSA both close and the transactions contemplated thereby are consummated.”

 

(b)           Section 1.02 is hereby amended by modifying the definition of “Senior Notes” as follows:

 

(i) inserting “or Parent” immediately after “the Borrower” in the lead-in of such definition;

 

(ii) amending and restating subsection (a) thereof as follows:

 

‘(a) such Debt is and shall remain unsecured at all times, other than as permitted by Section 9.03(h)’; and

 

(iii) inserting “or Parent” immediately after “the Borrower” in subsection (g) thereof.

 

(c)           Section 1.02 is hereby amended by amending and restating the following definition:

 

“‘Restricted Payment’ means (i) any dividend or other distribution (whether in cash, securities or other Property) with respect to any Equity Interests in the Borrower or any of its Subsidiaries, or any payment (whether in cash, securities or other Property), including any sinking fund or similar deposit, on account of the purchase, redemption, retirement, acquisition, cancellation or termination of any such Equity Interests in the Borrower or any of its Subsidiaries or any option, warrant or other right to acquire any such Equity Interests in the Borrower or any of its Subsidiaries, (ii) any payment, prepayment or redemption of the Debt outstanding (including interest and fees) under the Second Lien Term Loan Agreement, (iii) any payment, prepayment or redemption of the Debt outstanding (including interest and fees) under the Bridge Loan and (iv) any payment, prepayment or redemption of the Debt outstanding (including interest and fees) pursuant to the Senior Notes.”

 

(d)           Section 1.02 is hereby amended by deleting the period, and inserting the following clause, at the end of the definition of “Change in Control”:

 

“; provided that Change in Control shall also mean “Change in Control” as defined in the Indenture.”

 

(e)           Section 1.02 is hereby amended by amending and restating subsection (c) of the definition of “Senior Notes” as follows:

 

“(c)         the financial covenants governing such Debt will be standard incurrence based covenants and all of the other covenants, terms and events of default governing such Debt are not, taken as a whole, materially more restrictive with respect to the Borrower and its Subsidiaries than the covenants and Events of Default under this Agreement;”

 

First Amendment

 

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2.2           Section 2.07(a). Section 2.07(a) is hereby amended and restated as follows:

 

“(a) Initial Borrowing Base.  For the period from and including the Effective Date to but excluding the earlier of (i) the date determined by the Administrative Agent in its sole discretion (which future redetermination on such date shall not constitute an Interim Redetermination pursuant to Section 2.07(b)) and (ii) the next Scheduled Redetermination Date, the amount of the Borrowing Base shall be equal to $225,000,000.  For the avoidance of doubt, the automatic reduction of the Borrowing Base set forth in Section 2.07(g) shall not apply to the issuance of Senior Notes in connection with the PSAs.  Notwithstanding the foregoing, the Borrowing Base may be subject to further adjustments from time to time pursuant to Section 2.07(e), (f), (g) or Section 8.13(c).”

 

2.3           Section 2.07(d). The last paragraph of Section 2.07(d) is hereby amended and restated as follows:

 

“Such amount shall then become the Borrowing Base until the next Scheduled Redetermination Date, the next Interim Redetermination Date or the next adjustment to the Borrowing Base under Section 2.07(e), (f), (g) or Section 8.13(c), whichever occurs first.  Notwithstanding the foregoing, no Scheduled Redetermination or Interim Redetermination shall become effective until the New Borrowing Base Notice related thereto is received by the Borrower.”

 

2.4           Section 9.02(k). Section 9.02(k) is hereby amended and restated as follows:

 

“(k)         (i) Debt under the Senior Notes not to exceed $400,000,000 but only if (A) all Debt outstanding under the Second Lien Term Loan Agreement has been paid in full either before or on the date of issuance of the Senior Notes, and (B) the Second Lien Term Loan Documents and the Intercreditor Agreement have been terminated, cancelled or released to the satisfaction of the Administrative Agent or (ii) so long as the Senior Notes and the proceeds therefrom are held in escrow, Debt under the Senior Notes not to exceed $650,000,000 outstanding in the aggregate at any time, and any guarantees thereof by the Guarantors.”

 

2.5           Section 9.01(a).  Section 9.01(a) is hereby amended and restated as follows:

 

“(a) Ratio of Total Debt to EBITDAX.  The Borrower will not, as of the last day of any fiscal quarter, permit its ratio of Total Debt as of such time to EBITDAX for the four fiscal quarters ending on the last day of the fiscal quarter immediately preceding the date of determination for which financial statements are available to be greater than (i) 4.0 to 1.0.  Notwithstanding the foregoing, for the purpose of determining EBITDAX of the Borrower and its Subsidiaries for this Section 9.01(a) for the four fiscal quarters ending (i) December 31, 2011, EBITDAX shall be equal to the EBITDAX of the Borrower and its Subsidiaries for the fiscal quarter ending on such date multiplied by 4, (ii) March 31, 2012, EBITDAX shall be equal to the EBITDAX of the Borrower and its Subsidiaries for the two fiscal quarters ending on such date multiplied by 2 and (iii) June 30, 2012, EBITDAX shall be equal to the EBITDAX of the Borrower and its Subsidiaries for the three fiscal quarters ending on such date multiplied by 4/3.  To the extent, and only to the extent, such amount is held in escrow, the principal amount of Senior Notes shall not be included for purposes of calculating Total Debt for the fiscal quarter ending December 31, 2011.

 

2.6           Section 9.03.  Sections 9.03(g) and (h) are hereby inserted as follows:

 

“(g) Liens created by the escrow arrangement on the proceeds of Senior Notes issued in connection with the PSAs; and

 

(h) Liens securing the Senior Notes or the Bridge Loans on a “second lien” basis pursuant to customary security documents that are consistent in all material respects with the security documents evidencing the Liens securing the Second Lien Term Loan Agreement and are otherwise reasonably satisfactory to the Administrative Agent; provided that (i) in each case, as applicable, the Administrative Agent shall have executed an intercreditor agreement on behalf of itself and the Lenders no less favorable

 

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to the Lenders taken as a whole than the existing Intercreditor Agreement, (ii) such Liens shall not be perfected until the Closing and (iii) all Debt outstanding under the Second Lien Term Loan Agreement has been paid in full and the Second Lien Term Loan Documents and the Intercreditor Agreement have been terminated, canceled or released to the reasonable satisfaction of the Administrative Agent.”

 

2.7           Section 9.04(a).  Section 9.04(a) is hereby amended and restated as follows:

 

“(a)         The Borrower will not, and will not permit any of its Subsidiaries to, declare or make, or agree to pay or make, directly or indirectly, any Restricted Payment, return any capital to its stockholders or make any distribution of its Property to its Equity Interest holders, except that if no Event of Default has occurred and is outstanding, or would result therefrom (i) the Borrower may declare and pay dividends with respect to its Equity Interests payable solely in additional shares of its Equity Interests (other than Disqualified Capital Stock), (ii) Subsidiaries may declare and pay dividends ratably with respect to their Equity Interests, (iii) the Borrower may make cash distributions to the Parent with respect to the payment of reasonable fees and expenses incurred in the ordinary course of business in connection with the maintenance of its corporate existence, reporting obligations, tax and accounting preparation and other similar fees and expenses, (iv) the Borrower may make Restricted Payments pursuant to and in accordance with stock option plans or other benefit plans for management or employees of the Borrower and its Subsidiaries, (v) the Borrower may make regularly scheduled interest payments pursuant to the Second Lien Term Loan Agreement, Bridge Loan or Senior Notes or may make cash distributions to the Parent for this purpose, (vi) the Borrower may repay all Debt outstanding under the Second Lien Term Loan Agreement with proceeds from the issuance of the Senior Notes and/or Debt pursuant to the Bridge Loan, (vii) the Borrower may repay all, or any portion of, Debt outstanding under the Bridge Loan with proceeds from the issuance of the Senior Notes or additional Equity Interests of the Parent or may make cash distributions to the Parent for this purpose, (viii) the Borrower may repay any Debt outstanding under the Senior Notes or may make cash distributions to the Parent for this purpose (A) with proceeds of the issuance of new Senior Notes, (B) upon a change of control as provided in the Indenture, (C) upon an asset sale as provided in the Indenture, subject to Section 3.04(c)(iii) or (D) to the extent held in escrow, with the proceeds of the issuance of the Senior Notes issued in connection with the PSAs and (ix) the Borrower may prepay interest before January 31, 2012 on the Senior Notes issued in connection with the PSAs and the amount required for any redemption fee for the Senior Notes issued in connection with the PSAs because the Closing (and related Senior Notes escrow release provisions) has not occurred by January 12, 2012 or the Parent has determined that the Closing (and related Senior Notes escrow release conditions) cannot occur by January 12, 2012 or may make cash distributions to the Parent for this purpose.”

 

2.8           Section 9.16.  Section 9.16 is hereby amended by adding the following proviso at the end of the sentence as follows:

 

“; provided that this Section 9.16 shall not apply to the escrow arrangements relating to the proceeds of Senior Notes issued in connection with the PSAs.”

 

Section 3.               Limited Waiver.    The Borrower has informed the Administrative Agent and the Lenders it may enter into one or more Swap Agreements in excess of the 95% limit set forth in Section 9.18(a)(i) of the Credit Agreement in connection with the signing of the PSAs.  The Borrower has requested, and the Administrative Agent and the Majority Lenders hereby agree to grant, a waiver of the limitations in Section 9.18(a)(i) to allow the Borrower to enter into Swap Agreements for a tenor of not more than sixty (60) months and for which the notional volumes of which (when aggregated with other commodity Swap Agreements then in effect 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, (a) on or before December 31, 2012, 5,000 barrels of production per day and (b) after December 31 2012, 90% of (i) the reasonably anticipated production from the Borrower’s existing proved, developed, producing Oil and Gas Properties (based upon the most recently delivered Reserve Report) and (ii) the reasonably anticipated production from the proved, developed, producing oil and gas properties to be acquired by the Borrower pursuant to the PSAs; provided that, if the Closing has not occurred by January 31, 2012 (the “Termination Date”) then, on or before the date that is sixty (60) days after the Termination Date, (A) the Borrower shall, and the Borrower hereby agrees to, unwind and/or terminate any Swap Agreement that would have been in

 

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breach of Section 9.18(a)(i) if not for the terms of this First Amendment, and the Borrowing Base shall be reduced pursuant to Section 2.07(e) and (B) the Borrower shall be back in compliance with the limitation set forth in Section 9.18(a)(i) of the Credit Agreement.

 

Section 4                Conditions Precedent.  This First Amendment shall be effective upon the date of the receipt by the Administrative Agent of the following documents and satisfaction of the other conditions provided in this Section 4, each of which shall be reasonably satisfactory to the Administrative Agent in form and substance (or waived in accordance with Section 12.02 of the Credit Agreement) (the “First Amendment Effective Date”):

 

4.1           First Amendment.  The Administrative Agent shall have received multiple counterparts of this First Amendment as requested from the Borrower and the Majority Lenders.

 

4.2           No Default.  No Default or Event of Default shall have occurred and be continuing as of the First Amendment Effective Date (after giving effect to the terms of this First Amendment).

 

4.3           Fees.  The Administrative Agent and the Lenders shall have received all fees and other amounts due and payable on or prior to the date hereof.

 

4.4           Other.  The Administrative Agent shall have received such other documents as the Administrative Agent or special counsel to the Administrative Agent may reasonably request in advance in writing.

 

The Administrative Agent is hereby authorized and directed to declare this First Amendment to be effective when it has received documents confirming or certifying, to the satisfaction of the Administrative Agent, compliance with the conditions set forth in this Section 4 or the waiver of such conditions as permitted by Section 12.02 of the Credit Agreement.  Such declaration shall be final, conclusive and binding upon all parties to the Credit Agreement for all purposes.

 

Section 5.               Ratification and Affirmation; Representations and Warranties; Etc.    The Borrower hereby (a) acknowledges the terms of this First Amendment; (b) ratifies and affirms its obligations under, and acknowledges 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 as expressly amended hereby; and (c) represents and warrants to the Lenders that, as of the date hereof, after giving effect to the terms of this First Amendment: (i) all of the representations and warranties contained in each Loan Document to which the Borrower is a party are true and correct in all material respects as though made on and as of the First Amendment Effective Date (unless made as of a specific earlier date, in which case, such representation or warranty was true as of such date); (ii) no Default or Event of Default has occurred and is continuing; and (iii) no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

Section 6.               Miscellaneous.

 

6.1           Confirmation.  The provisions of the Credit Agreement (as amended by this First Amendment) shall remain in full force and effect in accordance with its terms following the effectiveness of this First Amendment.  This First Amendment shall constitute a Loan Document, as such term is defined in the Credit Agreement.

 

6.2           No Waiver.  Except as expressly provided in this First Amendment, neither the execution by the Administrative Agent or the Lenders of this First Amendment, nor any other act or omission by the Administrative Agent or the Lenders or their officers in connection herewith, shall be deemed a waiver by the Administrative Agent or the Lenders of any Defaults or Events of Default which may exist, which may have occurred prior to the date of the effectiveness of this First Amendment or which may occur in the future under the Credit Agreement and/or the other Loan Documents.  Similarly, nothing contained in this First Amendment shall directly or indirectly in any way whatsoever either: (a) impair, prejudice or otherwise adversely affect the Administrative Agent’s or the Lenders’ right at any time to exercise any right, privilege or remedy in connection with the Loan Documents with respect to any Default or Event of Default, (b) amend or alter any provision of the Credit Agreement (other than the amendments provided for in Section 2 of this First Amendment), the other Loan Documents, or any other contract or

 

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instrument, or (c) constitute any course of dealing or other basis for altering any obligation of the Borrower or any right, privilege or remedy of the Administrative Agent or the Lenders under the Credit Agreement, the other Loan Documents, or any other contract or instrument.  Nothing in this First Amendment shall be construed to be a consent by the Administrative Agent or the Lenders to any Default or Event of Default.  Each reference in the Credit Agreement to “this Agreement”, “hereunder”, “hereof”, “herein” or any other word or words of similar import shall mean and be a reference to the Credit Agreement as amended hereby, and each reference in any other Loan Document to the Credit Agreement or any word or words of similar import shall be and mean a reference to the Credit Agreement as amended hereby.

 

6.3           Counterparts.  This First Amendment may be executed by one or more of the parties hereto in any number of separate counterparts, and all of such counterparts taken together shall be deemed to constitute one and the same instrument.  Delivery of this First Amendment by facsimile or electronic transmission shall be effective as delivery of a manually executed counterpart hereof.

 

6.4           Successors and Assigns.  This First Amendment shall be binding upon and inure to the benefit of the parties hereto and their respective successors and assigns.

 

6.5           Payment of Expenses.  In accordance with Section 12.03 of the Credit Agreement, the Borrower agrees to pay or reimburse the Administrative Agent for all of its reasonable and documented out-of-pocket costs and reasonable expenses incurred in connection with this First Amendment, any other documents prepared in connection herewith and the transactions contemplated hereby, including, without limitation, the reasonable and documented fees and disbursements of counsel to the Administrative Agent.

 

6.6           Severability.  Any provision of this First Amendment which is prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction, be ineffective to the extent of such prohibition or unenforceability without invalidating the remaining provisions hereof, and any such prohibition or unenforceability in any jurisdiction shall not invalidate or render unenforceable such provision in any other jurisdiction.

 

6.7           No Oral Agreement.  THIS WRITTEN FIRST AMENDMENT, THE CREDIT AGREEMENT AND THE OTHER LOAN DOCUMENTS EXECUTED IN CONNECTION HEREWITH AND THEREWITH REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR UNWRITTEN ORAL AGREEMENTS OF THE PARTIES.  THERE ARE NO SUBSEQUENT ORAL AGREEMENTS BETWEEN THE PARTIES.

 

6.8           Governing Law.  THIS FIRST AMENDMENT (INCLUDING, BUT NOT LIMITED TO, THE VALIDITY AND ENFORCEABILITY HEREOF) SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OF THE STATE OF NEW YORK.

 

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IN WITNESS WHEREOF, the parties hereto have caused this First Amendment to be duly executed effective as of the date first written above.

 

 

	
BORROWER:
    	
KODIAK OIL & GAS (USA) INC.
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Henderson
    
	
 
    	
Name:
    	
James   P. Henderson
    
	
 
    	
Title:
    	
Chief   Financial Officer
    

 

1

 

	
ADMINISTRATIVE AGENT:
    	
WELLS FARGO BANK, N.A., as Administrative Agent
    

 

 

	
 
    	
By:
    	
/s/   Oleg Kogan
    
	
 
    	
Name:   
    	
Oleg   Kogan
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
LENDERS:
    	
WELLS FARGO BANK, N.A., as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Oleg Kogan
    
	
 
    	
Name:
    	
Oleg   Kogan
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
BMO   Harris Financing, Inc., as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James V. Ducote
    
	
 
    	
Name:
    	
James   V. Ducote
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
Royal   Bank of Canada, as a Lender
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Don J. McKinnerney
    
	
 
    	
Name:
    	
Don   J. McKinnerney
    
	
 
    	
Title:
    	
Authorized   Signatory
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
KeyBank   National Association, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   David Morris
    
	
 
    	
Name:
    	
David   Morris
    
	
 
    	
Title:
    	
Vice   President
    

 

2

 

	
 
    	
Credit   Suisse AG, Cayman Islands Branch, as a Lender
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   Mikhail Faybusovich
    
	
 
    	
Name:
    	
Mikhail   Faybusovich
    
	
 
    	
Title:
    	
Director
    
	
 
    	
 
    	
 
    
	
 
    	
 
    	
 
    
	
 
    	
By:
    	
/s/   Vipul Dhadda
    
	
 
    	
Name:
    	
Vipul   Dhadda
    
	
 
    	
Title:
    	
Associate
    

 

3

 

REAFFIRMATION AND RATIFICATION: Each Guarantor hereby (a) acknowledges the terms of this First Amendment; (b) ratifies and affirms its obligations under, and acknowledges its continued liability under, each Loan Document, including each Guaranty Agreement, to which it is a party and agrees that each Loan Document, including each Guaranty Agreement,  to which it is a party remains in full force and effect as expressly amended hereby; and (c) represents and warrants to the Lenders that, as of the date hereof, after giving effect to the terms of this First Amendment: (i) all of the representations and warranties contained in each Loan Document, including each Guaranty Agreement, to which such Guarantor is a party are true and correct in all material respects as though made on and as of the First Amendment Effective Date (unless made as of a specific earlier date, in which case, such representation or warranty was true as of such date); (ii) no Default or Event of Default has occurred and is continuing; and (iii) no event or events have occurred which individually or in the aggregate could reasonably be expected to have a Material Adverse Effect.

 

	
ACKNOWLEDGED   AND RATIFIED:
    	
KODIAK   OIL & GAS CORP., a corporation continued under the laws of Yukon   Territories, Canada
    
	
 
    	
 
    
	
 
    	
 
    
	
 
    	
By:
    	
/s/   James P. Henderson
    
	
 
    	
 
    	
James   P. Henderson
    
	
 
    	
 
    	
Chief   Financial Officer
    

 

Acknowledgment and Ratification

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