SENIOR REVOLVER LOAN AGREEMENT

Dated as of

September 20, 2018

between and among

 

EMPIRE LOUISIANA, LLC

 

"BORROWER"

 

 

AND

 

 

CROSSFIRST BANK

 

"BANK"

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

THIS SENIOR REVOLVER LOAN AGREEMENT, dated effective as of September 20, 2018, is entered into between EMPIRE LOUISIANA, LLC, a Delaware limited liability company, ("Borrower"), and CROSSFIRST BANK, a Kansas banking corporation ("Bank").

 

W I T N E S S E T H:

 

WHEREAS, Borrower has requested Bank to establish a senior revolving line of credit facility in favor of Borrower in the maximum principal amount of FIVE MILLION and NO/100 DOLLARS ($5,000,000.00) (the "Revolver Commitment"), subject to the Revolver Commitment Amount (initially stipulated to be $1,350,000.00) and the Collateral Borrowing Base limitations hereof, until the Revolver Final Maturity Date, to be evidenced by Borrower's Promissory Note (Revolver Note) payable to the order of Bank and dated as of even date herewith in the stated face principal amount of $5,000,000.00 (as renewed, extended, rearranged, substituted, replaced, amended or otherwise modified from time to time, collectively the "Revolver Note"), the proceeds of which may be used for (i) the acquisition of oil and natural gas reserves, (ii) the development of oil and natural gas reserves, (iii) the general working capital and capital expenditures of the Borrower, and (iv) the issuance of standby letters of credit; and

 

WHEREAS, Bank is willing to establish the Revolver Commitment and make the Revolver Loan advances from time to time hereunder to Borrower in the maximum principal amount of $5,000,000.00, subject to the Revolver Commitment Amount (initially stipulated to be $1,350,000.00) and the Collateral Borrowing Base, all upon the terms and conditions herein set forth, and upon Borrower's granting in favor of Bank a continuing and continuous, first priority mortgage lien, pledge of and security interest in not less than 80% of Borrower's producing oil, gas and other leasehold and mineral interests in counties in the State of Louisiana, along with certain contract rights, all as more particularly described and defined in the Security Instruments (as hereinafter defined), as collateral and security for all Indebtedness;

 

NOW, THEREFORE, in consideration of the mutual covenants and agreements contained herein, and other good and valuable consideration, receipt of which is acknowledged by the parties hereto, the parties agree as follows:

 

ARTICLE I.
CERTAIN DEFINITIONS

 

 

"Affiliate" shall mean any Person which, directly or indirectly, controls, or is controlled by, or is under common control with, another Person.  For purposes of this definition, "control" shall mean the power, directly or indirectly, to direct or in effect cause the direction of the management and policies of such Person whether by contract or otherwise.

 

"Agreement" shall mean this Senior Revolver Loan Agreement, as amended, restated, supplemented or otherwise modified from time to time.

 

"Authorized Officers" shall mean Thomas Pritchard, Chief Executive Officer and Secretary; Michael R. Morrisett, President and Treasurer; and Anthony Kamin, Chairman of the Board, or any other person(s) authorized in writing thereby or pursuant to limited liability company resolutions duly adopted by the Borrower's board of managers to request Revolver Loans or Letters of Credit hereunder or direct voluntary prepayment(s) of the Revolver Note as permitted hereby.

 

"Bankruptcy Event" shall mean, with respect to any Person, the occurrence of any of the following with respect to such Person: (i) a court or Governmental Authority having jurisdiction in the premises shall enter a decree or order for relief in respect of such Person in an involuntary case under the Bankruptcy Code or any other applicable insolvency or other similar Law now or hereafter in effect, or appointing a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or ordering the winding up or liquidation of its affairs; or (ii) there shall be commenced against such Person an involuntary case under the Bankruptcy Code or any other applicable insolvency or other similar Law now or hereafter in effect, or any case, proceeding or other action for the appointment of a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or for the winding up or liquidation of its affairs, and such involuntary case or other case, proceeding or other action shall remain undismissed, undischarged and unbonded for a period of 60 consecutive days; or (iii) such Person shall commence a voluntary case under the Bankruptcy Code or any other applicable insolvency or other similar Law now or hereafter in effect, or consent to the entry of an order for relief in an involuntary case under any such law, or consent to the appointment or taking possession by a receiver, liquidator, assignee, custodian, trustee, sequestrator (or similar official) of such Person or for any substantial part of its Property or make any general assignment for the benefit of creditors; or (iv) such Person shall be unable to pay or shall fail to pay, or shall admit in writing its inability to pay, its debts generally as they become due.

 

"Base Rate" shall mean the prime rate of interest published by the Wall Street Journal, Southwest Edition, in its Money Rates columns as the prime rate or base rate on corporate loans at large U.S. money center commercial banks or a similar rate if such rate ceases to be published.  If the prime rate is no longer announced or established for any reason, Bank may select as the alternate rate such other announced and established prime or base rate for corporate loans of the New York, New York money center bank that Bank deems in its sole discretion to be most comparable to the no longer announced or established rate.

 

"Business Day" shall mean a day other than a Saturday, Sunday or a day upon which banks in the State of Oklahoma are closed to business generally.

 

"CERCLA" shall mean the Comprehensive Environmental Response, Compensation and Liability Act of 1980, as amended, together with all regulations and rulings promulgated with respect thereto.

 

"Change of Control" shall mean any event, transaction or occurrence, as a result of which, Guarantor, shall in the aggregate cease to own or control, directly or indirectly, at least fifty-one percent (51%) of the voting interests of Borrower.

 

"Closing Date" shall mean the effective date of this Agreement.

 

"Collateral" shall have the meaning assigned to that term in Article III of this Agreement.

 

"Collateral Borrowing Base" shall have the meaning assigned to the term in Section 4.2 of this Agreement.

 

"Commodity Exchange Act" means the Commodity Exchange Act (7 U S. C. Section 61 et. seq.), as amended from time to time, and any successor statute.

 

"Default Rate" shall mean the Base Rate plus four additional percentage points (4.00%) per annum.

"EBITDAX"  shall mean for any period, the sum of a Person's net income for the period minus any non-recurring gains (losses) from the sale of assets, plus the following charges to the extent deducted from net income in such period: interest, income taxes (including franchise taxes calculated with respect to income), depreciation, depletion and amortization, and any other non-cash charges and non-cash revenues plus intangible drilling costs and lease impairment expenses and write downs from impairment of oil and gas properties) and after eliminating extraordinary items.  In addition, for any applicable period during which an acquisition or disposition permitted by this Agreement is consummated, EBITDAX shall be determined on a pro forma basis (with such calculation to be acceptable to, and approved by, Bank) as if such acquisition or disposition were consummated on the first day of such applicable period.

"Environmental Laws" shall mean Laws, including without limitation federal, state or local Laws, ordinances, rules, regulations, and orders of courts or administrative agencies or authorities relating to pollution or protection of the environment (including, without limitation, ambient air, surface water, groundwater, land surface and subsurface strata), including without limitation CERCLA, SARA, RCRA, HSWA, OPA, HMTA, TSCA and other Laws relating to (i) Polluting Substances or (ii) the manufacture, processing, distribution, use, treatment, handling, storage, disposal or transportation of Polluting Substances.

 

"ERISA" shall mean the Federal Employee Retirement Income Security Act of 1974, as amended, together with all regulations and rulings promulgated with respect thereto.

 

"Event of Default" shall mean any of the events specified in Section 8.1 of this Agreement, and "Default" shall mean any event, which together with any lapse of time or giving of any notice, or both, would constitute an Event of Default.

 

"Excluded Swap Obligation" (a) with respect to any Guarantor, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such Guarantor of, or the grant by such Guarantor of a security interest to secure, as applicable, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) and (b) with respect to any Borrower, any Swap Obligation of another loan party if, and to the extent that, all or a portion of the joint and several liability of such Borrower with respect to, or the grant of such Borrower of a security interest to secure, as

 

applicable, such Swap Obligation is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof), by virtue of such Guarantor's (in the case of (a)) or Borrower's (in the case of (b)) failure to constitute an "eligible contract participant," as defined in the Commodity Exchange Act and the regulations thereunder, at the time the guarantee of such Guarantor, joint and several liability of such Borrower, or grant of such security interest by such Guarantor or Borrower, as applicable, becomes or would become effective with respect to such Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one Swap Obligation, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Obligations for which such guarantee or security interest or joint and several liability, as applicable, is or becomes illegal.

 

"Funded Debt" shall mean, with respect to any Person, without duplication, (i) all obligations of such Person for borrowed money, (ii) all obligations of such Person evidenced by bonds, debentures, notes or similar instruments, or upon which interest payments are customarily made, (iii) all purchase money Indebtedness (including Indebtedness in respect of conditional sale or title retention arrangements and obligations in respect of the deferred purchase price of property or services) of such Person, including the principal portion of all obligations of such Person under capital leases, (iv) all contingent debt of such Person with respect to Funded Debt of another Person, (v) all Funded Debt of another Person secured by a Lien on any property of such Person, whether or not such Funded Debt has been assumed, and (vi) the Funded Debt of any partnership or joint venture in which such Person is a general partner or joint venturer, but only to the extent to which there is recourse to such Person for the payment of such Funded Debt.

 

"GAAP" shall mean generally accepted accounting principles applied on a consistent basis in all material respects to those applied in the preceding period.  Unless otherwise indicat-ed herein, all accounting terms will be defined according to GAAP.

 

"Guarantor" means Empire Petroleum Corporation, a Delaware corporation, and the sole member of Borrower, and its successors and permitted assigns.

 

"Guaranty Agreement" means that certain Guaranty Agreement from Guarantor and his trust, if applicable, in favor of Bank, in form, scope and substance acceptable to Bank.

 

"HMTA" shall mean the Hazardous Materials Transportation Act, as amended, together with all regulations and rulings promulgated with respect thereto.

 

"HSWA" shall mean the Hazardous and Solid Waste Amendments of 1984, as amended, together with all regulations and rulings promulgated with respect thereto.

 

"Hedge Agreement" means any interest rate or commodity Swap, cap or collar agreements, interest rate and/or oil and gas future or option contracts, currency Swap agreements, currency future or option contracts and rate or commodity Risk Management Agreements or other similar Risk Management Agreements, and includes without limitation any ISDA Agreement and related schedules and documents entered into with any Swap Counterparty from time to time and as governed by the Intercreditor Agreement.  "Prohibited Hedge

 

Transactions" shall mean the obligations by Borrower or any of its Subsidiaries entering into (i) both physical and financial hedging transactions effective at concurrent or overlapping periods of time on the same volumes of production or (ii) hedging transactions for more than eighty (80%) of Borrower's aggregate monthly production.

 

"hereby", "herein", "hereof", "hereunder" and similar such terms shall mean and refer to this Agreement as a whole and not merely to the specific section, paragraph or clause in which the respective word appears.

 

"Highest Lawful Rate" shall mean, with respect to Bank, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Revolver Note or on any other Indebtedness under laws applicable to Bank which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.

 

"Hydrocarbons" shall have the meaning assigned to that term in the Mortgages.

 

"Indebtedness" shall mean and include any and all: (i) indebtedness, obligations and liabilities of Borrower to Bank incurred or which may be incurred or purportedly incurred hereafter pursuant to the terms of this Agreement, or any of the other Loan Documents, and any replacements, amendments, extensions, renewals, substitutions, amendments and increases in amount thereof, including all future advances and all such amounts as may be evidenced by any ISDA Agreement, the Revolver Note and all lawful interest, late charges, service fees,  commitment fees, fees in lieu of balances, letter of credit fees and other charges, and all reasonable costs and expenses incurred in connection with the preparation, filing and recording of the Loan Documents, including attorneys' fees and legal expenses; (ii) any and all derivative products obligations, direct, contingent or otherwise, whether now existing or hereafter arising, of Borrower to Bank and/or any Swap Counterparty arising under or in connection with any Hedge Agreements or other Risk Management Agreements (including any ISDA Agreement with any Swap Counterparty, with related schedules, exhibits, confirmations, addenda and annexes attached thereto) to which any Swap Counterparty is a counterparty; (iii) all reasonable costs and expenses paid or incurred by Bank or any Swap Counterparty, including attorneys' fees, in enforcing or attempting to enforce collection of any Indebtedness and in enforcing or realizing upon or attempting to enforce or realize upon any collateral or security for any Indebtedness, including interest on all sums so expended by Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate; (iv) all sums expended by Bank or any Swap Counterparty in curing any Event of Default or Default of Borrower under the terms of this Agreement the other Loan Documents or any other writing evidencing or securing the payment of the Revolver Note together with interest on all sums so expended by Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate; and (v) any overdraft, return items or other similar or comparable ACH (automated clearing house) obligations and other treasury management obligations now or hereafter owing by Borrower to Bank.

 

"Intercreditor Agreement" means any Intercreditor Agreement hereafter entered into, as amended, replaced, restated, supplemented or otherwise modified from time to time, together

 

 

with exhibits, schedules, addenda and annexes attached thereto from time to time, between and among Borrower, Bank and the Swap Counterparty each in their respective roles thereunder, to govern the relationship of the parties thereto with respect to the priority of payment of obligations and Liens securing obligations regarding any ISDA Agreement referenced therein and the other Loan Documents.

 

"Interest Coverage Ratio" means, as of any date, the ratio of (i) EBITDAX for such date divided by (ii) Interest Expense for such period, initially calculated on an annualized basis until twelve (12) months of operations have occurred, and thereafter, commencing December 31, 2019, on a trailing twelve (12) month basis.

 

"Interest Expense" means Borrower's cash interest expense for a fiscal quarter end period; provided that for purposes of calculating the financial ratio set forth in Section 6.29 for each fiscal quarter end period, commencing December 31, 2018.

 

"ISDA Agreement" means any International Swap Dealers Association agreement, as amended, modified, replaced or supplemented from time to time, together with schedules, exhibits, confirmations, addenda and annexes attached thereto from time to time, entered into between or among any of Borrower and a Swap Counterparty, to govern each Hedge Agreement with such Swap Counterparty.

 

"Laws" shall mean all statutes, laws, ordinances, regulations, orders, writs, injunctions, or decrees of the United States, any state or commonwealth, any municipality, any foreign country, any territory or possession, or any Tribunal.

 

"Letters of Credit" shall mean any and all letters of credit issued by Bank pursuant to the request of Borrower in accordance with the provisions of Sections 2.1 and 2.6 hereof which at any time remain outstanding and subject to draw by the beneficiary, whether in whole or in part.

 

"Letter of Credit Exposure" means, at any date, the sum of (a) the aggregate face amount of all drafts that may then or thereafter be presented by beneficiaries under all Letters of Credit then outstanding, plus (b) the aggregate face amount of all drafts that the Letter of Credit Issuer has previously accepted under Letters of Credit but has not paid or reflected as advances against the Revolver Note.

 

"Letter of Credit Issuer" means, for any Letter of Credit issued hereunder, Bank, or in the event Bank does not for any reason issue a requested Letter of Credit, an Affiliate thereof or another financial institution designated by Bank to issue such Letter of Credit.

 

"Leverage Ratio" means the quotient of Borrower's (i) total Funded Debt divided by (ii) EBITDAX, calculated quarterly based initially on an annualized basis until twelve (12) months of operations by Borrower have occurred and thereafter on a trailing twelve (12) months basis.

 

"Lien" shall mean any Mortgages, pledge, security interest, assignment, encumbrance, lien or charge of any kind (including any agreement to give any of the foregoing, any conditional sale or other title retention agreement, any lease in the nature thereof, and the filing of or agreement to give any financing statement or other similar form of public notice under the Laws of any jurisdiction).

 

"Loan Documents" shall mean this Agreement, the Revolver Note, the Guaranty Agreement and any ISDA Agreement, any Intercreditor Agreement, the Security Instruments (including without limitation, the Mortgages) and all other documents, instruments and certificates executed and delivered to Bank by Borrower pursuant to the terms of this Agreement.

 

"Material Adverse Change" shall mean any material and adverse change to (i) the assets, financial condition, business condition, operations or properties of Borrower or Guarantor, and any future subsidiaries of any Borrower taken as a whole, or (ii) the ability of Borrower or Guarantor to meet its obligations and its other material obligations under the Loan Documents on a timely basis.

 

"MCR" shall have the meaning assigned thereto in Section 2.13 of this Agreement.

 

"Mortgages" shall have the meaning assigned to that term in Section 3.1 of this Agreement, including without limitation, any amendments thereto or restatements and supplements thereof.

 

"Mortgaged Property" shall mean the property covered by the Mortgages defined in Section 4.1(b) of this Agreement.

 

"OPA" shall mean the Oil Pollution Act of 1990, as amended, together with all regulations and rulings promulgated with respect thereto.

 

"Person" shall mean and include an individual, a partnership, a joint venture, a corporation, a trust, an unincorporated organization, and a government or any department, agency or political subdivision thereof.

 

"Polluting Substances" shall mean all pollutants, contaminants, chemicals or industrial, toxic or hazardous substances or wastes and shall include, without limitation, any flammable explosives, radioactive materials, oil, hazardous materials, hazardous or solid wastes, hazardous or toxic substances or related materials defined in CERCLA/SARA, RCRA/HSWA and in the HMTA; provided, in the event either CERCLA/SARA, RCRA/HSWA or HMTA is amended so as to broaden the meaning of any term defined thereby, such broader meaning shall apply subsequent to the effective date of such amendment and, provided further, to the extent that the Laws of any State or other Tribunal establish a meaning for "hazardous substance", "hazardous waste," "hazardous material," "solid waste" or "toxic substance" which is broader than that specified in CERCLA/SARA, RCRA/HSWA, or HMTA, such broader meaning shall apply.

 

"Proven Reserves" shall have the meaning assigned thereto in Section 4.1(c) of this
Agreement.

 

"Qualified ECP Guarantor" means, in respect of any Swap Obligation, Borrower and any Guarantor that is not an individual or a natural person and that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an "eligible contract participant" under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an "eligible contract participant" at such

 

 

time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

 

"RCRA" shall mean the Resource Conservation and Recovery Act of 1976, as amended, together with all regulations and rulings promulgated with respect thereto.

 

"Revolver Commitment" shall mean Bank's obligation to make the Revolver Loan pursuant to the terms, provisions and conditions of this Agreement.

 

"Revolver Commitment Amount" shall be the maximum outstanding principal amount Bank agrees from time to time to make available under the Revolver Commitment, including the Letter of Credit Exposure (initially stipulated to be equal to $1,350,000.00).

 

"Revolver Final Maturity Date" shall mean September 20, 2020, unless otherwise extended or renewed in writing by the mutual agreement of Borrower and Bank.

 

"Revolver Loan" shall have the meaning ascribed to it in Section 2.1 of this Agreement.

 

"Revolver Note" shall have the meaning ascribed thereto in the Preamble of this Agreement, as more fully described and defined in Section 2.2 of this Agreement, together with each and every extension, renewal, modification, replacement, substitution, rearrangement, consolidation and change in form of any thereof which may be from time to time and for any term or terms effected.

 

"Risk Management Agreements" shall mean any commodity, interest rate or currency Swap, rate cap, rate floor, rate collar, forward agreement or other exchange, price or rate protection ISDA, Hedge Agreement or similar derivative agreements or any option with respect to any such derivative or hedging transaction.

 

"SARA" shall mean the Superfund Amendments and Re-authorization Act of 1987, as amended, together with all regulations and rulings promulgated with respect thereto.

 

"Sanctioned Country" means, at any time, a country or territory which is the subject or target of any Sanctions.

 

"Sanctioned Entities" means:

 

(i)

an agency of the government of,

(ii)

an organization directly or indirectly controlled by, or

(iii)

a person resident in a country that is subject to

 a country sanctions program administered and enforced by OFAC described or referenced at OFAC's website http://www.ustreas.gov/offices/enforcement/ofac/ or as otherwise published from time to time.

 

"Sanctioned Person"  shall mean any of the following currently or in the future:  (i) an entity, vessel, or individual named on the list of Specially Designated Nationals or Blocked Persons maintained by OFAC (as defined under Sanctions Laws) currently available at http://www.treasury.gov/resource-center/sanctions/SDN-List/Pages/default.aspx or on the consolidated list of persons, groups, and entities subject to EU financial sanctions currently available at http://eeas.europa.eu/cfsp/sanctions/consol-list_en.htm; or (ii) anyone more than 50-percent owned by an entity or individual described in (i) above; or (iii) (A) an agency or instrumentality of, or an entity owned or controlled by, the government of a Sanctioned Country, (B) an entity located in a Sanctioned Country, or (C) an individual who is a citizen or resident of, or located in, a Sanctioned Country, to the extent that the agency, instrumentality, entity, or individual is subject to a sanctions program administered by OFAC; or (iv) an entity or individual engaged in activities sanctionable under CISADA (as defined under Sanctions Laws), ITRA (as defined under Sanctions Laws), IFCA (as defined under Sanctions Laws below), or any other Sanctions Laws as amended from time to time.

 

"Sanctions" means economic or financial sanctions or trade embargoes imposed, administered or enforced from time to time by (a) the U.S. government, including those administered by OFAC or the U.S. Department of State, or (b) the United Nations Security Council, the European Union or any EU member state.

 

"Sanctions Laws" means (a) any Sanctions, prohibitions or requirements imposed by any executive order, regulation or by any sanctions program administered by OFAC or the U.S. Department of State and (b) any sanctions measures imposed by the United Nations Security Council, the European Union or any EU member state.

 

"Security Instruments" shall mean the Mortgages and all other financing statements, security agreements, assignments, pledges, documents or writings and any and all amendments and supplements thereto, granting, conveying, assigning, transferring or in any manner providing Bank with a security interest in any property as security for the repayment of all or any part of the Indebtedness.

 

"Subsidiaries" means, with respect to Borrower at any date, any corporation, limited liability company, partnership, association or other entity the accounts of which would be consolidated with those of Borrower in Borrower's financial statements if such financial statements were prepared in accordance with GAAP as of such date, as well as any other corporation, limited liability company, partnership, association or other entity (a) of which securities or other ownership interests representing more than 50% of the equity or more than 50% of the ordinary voting power or, in the case of a partnership, more than 50% of the general partnership interests are, as of such date, owned, controlled or held by Borrower, or (b) that is, as of such date, otherwise controlled, by Borrower or one or more subsidiaries of Borrower.

 

"Swap Counterparty" shall mean Cargill Incorporated and/or another hedge provider, if any, acceptable to Bank and Borrower, or their respective successors or permitted assigns, in each case, party to an Intercreditor Agreement, if any.

 

"Swap Agreement" shall mean, with respect to any Person, payment obligations with respect to interest rate swaps, currency swaps, commodity swaps and similar obligations

 

 

obligating such Person to make payments, whether periodically or upon the happening of a contingency.  For the purposes of this Agreement, the amount of the obligations under any Swap Agreement shall be the amount determined in respect thereof as of the end of the then most recently ended fiscal quarter of such Person, based on the assumption that such Swap Agreement had terminated at the end of such fiscal quarter, and in making such determination, if any agreement relating to such Swap provides for the netting of amounts payable by and to such Person thereunder or if any such agreement provides for the simultaneous payment of amounts by and to such Person, then in each such case, the amount of such obligation shall be the net amount so determined.

 

"Swap Obligations" means, with respect to any future guarantor, if any, any obligations to pay or perform under any agreement, contract or transaction that constitutes a "Swap" within the meaning of Section 1a(47) of the Commodity Exchange Act.

 

"Taxes" shall mean all taxes, assessments, fees, or other charges or levies from time to time or at any time imposed by any Laws or by any Tribunal.

 

"Tribunal" shall mean any municipal, state, commonwealth, Federal, foreign, territorial or other sovereign, governmental entity, governmental department, court, commission, board, bureau, agency or instrumentality.

 

"TSCA" shall mean the Toxic Substances Control Act, as amended, together with all regulations and rulings promulgated with respect thereto.

 

 

ARTICLE II.
LOANS

 

 

 

All payments and prepayments shall be made in lawful money of the United States of America in immediately available funds.  Any payments or prepayments on the Revolver Note received by Bank after 2:00 o'clock p.m. (applicable current time in Tulsa, Oklahoma) shall be deemed to have been made on the next succeeding Business Day.  Any voluntary prepayment may be without any penalty or premium and shall, unless Borrower directs otherwise in writing and no payment is then due and owing, be applied first to accrued but unpaid interest then to the principal.  All outstanding principal of and accrued interest on the Revolver Note not previously paid hereunder shall be due and payable at the Revolver Final Maturity Date, unless such maturity shall be extended by Bank in writing or accelerated pursuant to the terms hereof.

 

 

 

 

 

amount equal to the Revolver Commitment Amount less (a) the actual daily balance of the sum of the Revolver Loans outstanding, multiplied by (b) twenty five basis points (0.25%) computed on the basis of a calendar year of 360 days but assessed for the actual number of days elapsed during each quarterly accrual period.  Such Revolver non-usage fee is to be paid quarterly in arrears, commencing with the calendar quarter ending December 31, 2018, and payable within ten (10) days following Borrower's receipt of a written invoice therefor reasonably detailing Bank's calculation thereof.

 

 

 

 

 

amount of the Revolver Note plus the Letter of Credit Exposure exceeds the lesser of (i) Collateral Borrowing Base or (ii) the then applicable Revolver Commitment Amount.

 

 

 

 

 

 

 

Base Redetermination Date.  To the extent the outstanding principal balance of the Revolver Note (including Letter of Credit Exposure) is in excess of the adjusted amount of the Revolver Commitment Amount, the Borrower shall make a mandatory principal prepayment on the Revolver Note in such amount as is necessary to reduce the outstanding principal balance of the Revolver Note (including Letter of Credit Exposure) to an amount less than or equal to the adjusted Revolver Commitment Amount, which such mandatory principal prepayment shall be made within five (5) days of the applicable MCR application.

ARTICLE III.
SECURITY

 

 

 

 

 

all other existing or future obligations, liabilities and indebtedness of Borrower to Bank or of Borrower to the Swap Counterparty.

 

 

 

ARTICLE IV.
COLLATERAL BORROWING BASE

 

 

 

 

 

 

 

 

 

In addition to the scheduled semi-annual Collateral Borrowing Base redeterminations, Bank shall have the right to require additional Collateral Borrowing Base redeterminations at any time, including acquisitions or permitted sales of oil and gas leasehold producing properties included in the most recent Collateral Borrowing Base redetermination and Borrower shall have the right to request an unscheduled redetermination once between each scheduled redetermination.  The initial Collateral Borrowing Base is stipulated to be $1,350,000.00 as of the Closing Date. The good faith determinations of Bank in such respects shall be conclusive absent manifest error.

 

 

from and after the date of any such deficiency notice Borrower shall notify Bank in writing of its election to:

 

 

 

 

If Borrower shall have elected to make a prepayment on the Revolver Note under Section 4.3(a) or 4.3(b) hereof, such prepayment, or the first installment of such prepayment, shall be due within the lesser of thirty (30) days after Borrower shall have notified Bank of such election or thirty (30) days after Bank's written notice of a Deficiency, and the prepayment shall be applied as mandatory principal prepayments of the Revolver Note. If Borrower shall have elected to make installment payments to eliminate the deficiency under Section 4.3(b) hereof, then, until such deficiency is extinguished, any principal amounts outstanding on the Revolver Note shall bear interest at the then applicable contract rate of interest accruing on the Revolver Note plus two hundred additional basis points (2.0%).  If Borrower shall elect to execute and deliver one or more supplemental oil and gas mortgages and deeds of trust to Bank under Section 4.3(c) hereof, Borrower shall provide Bank with descriptions of the additional properties to be mortgaged (together with any title due diligence data and information, current valuations and engineering reports applicable thereto which may be requested by Bank) at the time of Borrower's notice of such election and shall execute, acknowledge and deliver to Bank the appropriate supplemental mortgages and deeds of trust in recordable form within ten (10) days after such collateral documents shall be tendered to Borrower by Bank for execution, all in compliance with the provisions of clauses (i), (ii) and (iii) of Section 4.1(b) above.

 

ARTICLE V.
CONDITIONS PRECEDENT TO LOANS

 

 

 

Loan advance hereunder, and to issue Letters of Credit, are subject to the satisfaction of all of the following conditions on or prior to the Closing Date (in addition to the other terms and conditions set forth herein):

 

 

 

 

 

 

 

 

(h)              Guaranty Agreements.  Borrower shall have caused the Guarantor to deliver its Guaranty Agreement to Bank, appropriately executed.

 

(i)              ISDA Agreement.  Borrower shall have executed and delivered any applicable ISDA Agreement to the Swap Counterparty, if any, in counterparts as reasonably required by the Swap Counterparty, within 15 days after the Closing Date.

 

 

 

 

 

 

 

 

 

 

 

Each request for a Revolver Loan advance or Letter of Credit issuance (including extensions and conversions) and each acceptance by Borrower of a Revolver Loan advance or Letter of Credit issuance (including extensions and conversions) shall be deemed to constitute a representation and warranty by Borrower as of the date of such Revolver Loan advance or Letter of Credit issuance that the applicable conditions in subsections (a), (b), (c) and (d) of this Section 5.2 have been satisfied.

 

ARTICLE VI.
COVENANTS

 

Borrower covenants and agrees with Bank that from the date hereof and so long as this Agreement is in effect (by extension, amendment or otherwise) and until payment in full of all Indebtedness and the performance of all other obligations of Borrower under this Agreement, unless Bank shall otherwise consent in writing:

 

 

 

and Borrower shall pay such Tax, charge or claim before any property subject thereto shall become subject to execution.

 

 

 

 

 

 

 

 

Borrower shall furnish to Bank the following internally prepared financial statements, on a sound accounting basis in accordance with GAAP, consistently applied:

 

 

 

 

 

 

 

 

Bank of and provide Bank with copies of any notifications of discharges or releases or threatened releases or discharges of a Polluting Substance on, upon, into or from the Collateral which are given or required to be given by or on behalf of Borrower to any federal, state or local Tribunal if any of the foregoing may materially and adversely affect Borrower or any part of the Collateral, and such copies of notifications shall be delivered to Bank at the same time as they are delivered to the Tribunal.  Borrower further agrees promptly to undertake and diligently pursue to completion any legally required remedial containment and cleanup action in the event of any release or discharge or threatened release or discharge of a Polluting Substance on, upon, into or from the Collateral.  At all times while owning and operating the Collateral, Borrower will maintain and retain complete and accurate records of all releases, discharges or other disposal of Polluting Substances on, onto, into or from the Collateral, including, without limitation, records of the quantity and type of any Polluting Substances disposed of on or off the Collateral.

 

 

The indemnities contained in this Section 6.8 apply, without limitation, to any violation on or before the Release Date of any Environmental Laws and any liability or obligation relating to the environmental conditions on, under or about the Collateral on or prior to the Release Date (including, without limitation:  (a) the presence on, upon or in the Collateral or release, discharge or threatened release on, upon or from the Collateral of any Polluting Substances generated, used, stored, treated, disposed of or otherwise released prior to the Release Date, and (b) any and all damage to real or personal property or natural resources and/or harm or injury including wrongful death, to persons alleged to have resulted from such release of any Polluting Substances regardless of whether the act, omission, event or circumstances constituted a violation of any Environmental Law at the time of its existence or occurrence).  The term "release" shall have the meaning specified in CERCLA/SARA and the terms "stored," "treated" and "disposed" shall have the meanings specified in RCRA/HSWA; provided, however, any broader meanings of such terms provided by applicable laws of the States where the Collateral is located.

 

The provisions of this Section 6.8 shall be in addition to any other obligations and liabilities Borrower may have to Bank at common law and shall survive the Release Date and shall continue thereafter in full force and effect.

 

Bank agrees that in the event that such claim, suit or enforcement action is asserted or threatened in writing or instituted against it or any of its officers, employers, agents or contractors or any such remedial, removal or response action is requested of it or any of its officers, employees, agents or contractors for which Bank may desire indemnity or defense hereunder, Bank shall give written notification thereof to Borrower.

 

Notwithstanding anything to the contrary stated herein, the indemnities created by this Section 6.8 shall only apply to losses, liabilities, damages, fines, penalties, costs and expenses actually incurred by Bank as a result of claims, demands, actions, suits or proceedings brought by Persons who are not the beneficiaries of any such indemnity.  Bank shall act as the exclusive agent for all indemnified Persons under this Section 6.8.  With respect to any claims or demands made by such indemnified Persons, Bank shall notify Borrower within thirty (30) days after Bank's receipt of a writing advising Bank of such claim or demand.  Such notice shall identify (i) when such claim or demand was first made, (ii) the identity of the Person making it, (iii) the indemnified Person and (iv) the substance of such claim or demand.  Failure by Bank to so notify Borrower within said thirty (30) day period shall reduce the amount of Borrower's obligations and liabilities under this Section 6.8 by an amount equal to any damages or losses suffered by Borrower resulting from any prejudice caused Borrower by such delay in notification from Bank.  Upon receipt of such notice, Borrower shall have the exclusive right and obligation to contest, defend, negotiate or settle any such claim or demand through counsel of its own selection (but reasonably satisfactory to Bank) and solely at Borrower's own cost, risk and expense; provided, that Bank, at its own cost and expense shall have the right to participate in any such contest, defense, negotiations or settlement.  The settlement of any claim or demand hereunder by Borrower may be made only upon the prior approval of Bank of the terms of the settlement, which approval shall not be unreasonably withheld, conditioned or delayed.

 

 

 

 

 

notice specifying the notice given or action taken by such holder and the nature of the claimed default or event of default thereunder and what actions, if any, Borrower is taking and propose to take with respect thereto.

 

 

 

 

 

 

 

 

 

 

 

cash distribution, Borrower may make cash distributions to its equity member(s) only for payment of income taxes attributable to Borrower's "pass through" status with reasonably detailed calculations of the distribution amount thereof to be timely furnished to Bank.

 

 

 

 

 

 

 

 

 

 

content and substance acceptable to Bank).  Such hedging by Borrower shall also cover such specified percentages of Borrower's monthly crude oil and/or natural gas production permitted hereby for a period of time not less than a rolling twelve (12) month period.  Borrower shall not enter into any Prohibited Hedge Transaction, including, without limitation, any financial and physical hedge transactions affecting or covering the same volume of production for concurrent or overlapping periods of time.  The applicable counterparty to any ISDA Agreement shall be the Swap Counterparty or such other counterparty acceptable to Bank and approved thereby in writing and, to the extent deemed necessary or appropriate by the Bank, shall enter into an Intercreditor Agreement and hedge proceeds letter as either or both are deemed necessary or appropriate by the Bank.

 

 

 

ARTICLE VII.
REPRESENTATIONS AND WARRANTIES

 

To induce Bank to enter into this Agreement and to make Loans to Borrower under the provisions hereof, and in consideration thereof, Borrower represents, warrants and covenants as follows:

 

 

 

 

 

have been furnished to Bank have been prepared in conformity with sound accounting principles, consistently applied, show all material liabilities, direct and contingent, and fairly present the financial condition of Borrower as of the date of such statements and the results of their operations for the period then ended, and since the date of such statements there has been no Material Adverse Change in the business, financial condition or operations of Borrower.

 

 

 

 

 

 

rules, regulations and other legal requirements applicable to Borrower, or (ii) could or would have a material adverse effect on the business or condition, financial or otherwise, of Borrower.

 

 

 

 

 

 

 

 

events or conditions that would permit any Plan to be terminated under circumstances which would cause the lien provided under Section 4068 of ERISA to attach to the assets of Borrower.  The value of each Plan's benefits guaranteed under Title IV of ERISA on the date hereof does not exceed the value of such Plan's assets allocable to such benefits on the date hereof.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

For purposes hereof, the term (i) "financial term" shall include, without limitation, the duration or term of the Loan Agreement, rate of interest, the currency or currencies in which the Loan is made and its principal amount, and (ii) "transfer of principal" means any draw of principal under the Loan Agreement, any amendment, restructuring, extension or other modification of the Loan Agreement.

 

7.23 Security Instruments.  The Mortgage is effective to create in favor of Bank a legal, valid, binding and enforceable Lien on the Mortgaged Properties described therein and proceeds and products thereof; and when the Mortgage is filed in the designated recording offices, the Mortgage shall constitute a fully perfected Lien on, and security interest in, all right, title and interest of Borrower in the Mortgaged Properties described therein and the proceeds and products thereof, as security for the Indebtedness, in each case prior and superior in right to any other Person (other than Permitted Liens as contemplated by the Mortgages).

 

 

ARTICLE VIII.
EVENTS OF DEFAULT

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

ARTICLE IX.
MISCELLANEOUS

 

 

All notices forwarded or submitted hereunder will be effective when hand-delivered (via reputable courier system or otherwise by personal delivery) to the applicable notice address set forth above or when mailed by certified mail, postage prepaid, addressed as aforesaid.

 

 

 

 

 

 

 

 

amount allowed by such applicable law, and any excess shall be canceled automatically and if theretofore paid shall be credited by Bank on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by Bank to Borrower); and (ii) in the event that the maturity of the Revolver Note or any ISDA Agreement is accelerated by reason of an election of the holder thereof resulting from any Event of Default under this Agreement or otherwise, or in the event of any required or permitted prepayment, then such consideration that constitutes interest under law applicable to Bank may never include more than the maximum amount allowed by such applicable law, and excess interest, if any, provided for in this Agreement or otherwise shall be canceled automatically by Bank as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by Bank on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by Bank to Borrower).  All sums paid or agreed to be paid to Bank for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to Bank, be amortized, prorated, allocated and spread throughout the full term of the Loans evidenced by the Revolver Note or any ISDA Agreement until payment in full so that the rate or amount of interest on account of any Loans hereunder does not exceed the maximum amount allowed by such applicable law.  If at any time and from time to time (i) the amount of interest payable to Bank on any date shall be computed at the Highest Lawful Rate applicable to Bank pursuant to this Section 9.7 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to Bank would be less than the amount of interest payable to Bank computed at the Highest Lawful Rate applicable to Bank, then the amount of interest payable to Bank in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to Bank until the total amount of interest payable to Bank shall equal the total amount of interest which would have been payable to Bank if the total amount of interest had been computed without giving effect to this Section 9.7.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

"Indemnified Party") from and against any and all claims, damages, losses, liabilities, costs, and expenses (including reasonable attorneys' fees, disbursements and other charges) that may be incurred by or asserted or awarded against any Indemnified Party, in each case arising out of or in connection with or by reason of (including in connection with any investigation, litigation, or proceeding and regardless of whether such Indemnified Party is a party thereto or preparation of defense in connection therewith) the Loan Documents or any of the transactions contemplated herein or in any of the Loan Documents or the actual or proposed use of the proceeds of the Revolver Loans or the letters of credit issued hereunder, except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party's gross negligence or willful misconduct or breach of this Agreement. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.21 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by Borrower or any Subsidiary thereof, their respective directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. Borrower agrees not to assert, and hereby waives, any claim against Bank or any of its directors, officers, employees, attorneys, agents, and advisors, on any theory of liability, for, special, exemplary, consequential or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Revolver Loans or the letters of credit issued hereunder.

 

 

 

of any request, rule, policy, guideline or directive, whether or not having the force of law; provided that notwithstanding anything herein to the contrary, (x) the Dodd-Frank Wall Street Reform and Consumer Protection Act and all requests, rules, guidelines or directives thereunder or issued in connection therewith and (y) all requests, rules, guidelines or directives concerning capital adequacy promulgated by Bank for International Settlements, the Basel Committee on Banking Supervision (or any successor or similar authority) or the US or foreign regulatory authorities shall, in each case, be deemed to be a "Change in Law", regardless of the date enacted, adopted or issued.

 

 

 

 

 

 

 

parties; (d) to another financial institution in connection with a disposition or proposed disposition to that financial institution of all or part of its interests hereunder or a participation interest in its Proportionate Share; or (e) if an Event of Default has occurred and is continuing, to the extent that the Bank determines such disclosure to be necessary or appropriate in the enforcement or for the protection of the rights and remedies under the Loan Documents. For purposes of the foregoing, "confidential information" shall mean all information respecting the Borrower delivered to the Bank, other than (i) information that was publicly known prior to the time of such disclosure (including information previously filed with any Governmental Agency and available to the public), (ii) information that subsequently becomes publicly known through no violation of this Section by the Bank, its Affiliates or any of the officers, directors, employees and agents of any of the foregoing and (iii) information that otherwise becomes known to the Bank other than through non-confidential disclosure by, or on behalf of, the Borrower or any Affiliate thereof. Nothing in this Section 9.28 shall be construed to create or give rise to any fiduciary duty on the part of any of the Bank to the Borrower.

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

 

IN WITNESS WHEREOF, the parties hereto have caused this Revolver Loan Agreement to be duly executed and delivered by the undersigned duly authorized officer of Borrower to Bank in Tulsa, Oklahoma, effective as of the day and year first above written.

 

 

BORROWER:	EMPIRE LOUISIANA, LLC, a Delaware limited liability company
	By:	/s/ Michael R. Morrisett
		Michael Morrisett, President

 

 

 

BANK:	CROSSFIRST BANK, a Kansas banking corporation
	By:	/s/ Terry D. Blain
		Terry D. Blain,
		Senior Vice President/Energy Bank

 

 

 

 

 

 

 

 

 

 

 

 

 

LOAN AGREEMENT SIGNATURE PAGE