EXHIBIT 10.4(b)
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SECOND AMENDMENT TO LOAN AGREEMENT
This Second Amendment to Loan Agreement (this "Amendment") dated as of
December 20, 2005, is made between GMX Resources Inc., an Oklahoma corporation
("Borrower"), and Hibernia National Bank, a national banking association
("Lender") who agrees as follows:
RECITALS
A. This Second Amendment to Loan Agreement pertains to that certain Loan
Agreement (Line of Credit) dated as of July 29, 2005, between Borrower and
Lender, as amended by that certain Interim Agreement dated as of November 3,
2005 (as previously amended, the "Loan Agreement"). As used in this Agreement,
capitalized terms used herein without definition herein shall have the meanings
provided in the Loan Agreement.
B. The Borrower and the Lender entered into that certain Waiver Agreement
dated as of December 6, 2005, which provided that the Borrower and the Lender
would execute and deliver an amendment to the Loan Agreement to include, among
other things, various provisions pertaining to a new Subsidiary of the Borrower.
The Borrower and the Lender accordingly desire to enter into this Amendment in
accordance with the Waiver Agreement.
AGREEMENT
NOW, THEREFORE, in consideration of the terms and conditions contained
herein, and the loans and extensions of credit heretofore, now or hereafter made
to the Borrower by the Lender, the parties hereto hereby agree as follows:
ARTICLE 1.
AMENDMENTS
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1.1 Section 1.2 of the Loan Agreement is hereby amended by adding
definitions of the terms "Diamond" and "Diamond Note", each inserted within
Section 1.2 in the proper alphabetical place, such definitions to read in their
entirety as follows:
"Diamond" shall mean Diamond Blue Drilling Co., an Oklahoma
corporation and a wholly owned Subsidiary of the Borrower.
"Diamond Note" shall mean the promissory note issued by Diamond
payable to the order of the Borrower, meeting the requirements of and
pursuant to Section 5.20.
1.2 Section 2.6 of the Loan Agreement is hereby amended by amending and
restating that Section in its entirety, to read as follows:
Section 2.6 Use of Proceeds. The Borrower shall use the proceeds of
the loan (i) in connection with the acquisition and development of oil
and gas properties as well as general corporate and working capital
purposes (including letters of credit hereunder)
and (ii) to loan funds under the Diamond Note to Diamond in accordance
with Section 5.20 and Section 6.3(h).
1.3 Section 3.1 of the Loan Agreement is hereby amended to add new
subsections (viii) and (ix), to read as follows:
(viii) Security Agreement executed by the Borrower, granting a first
priority security interest in 100% of the outstanding shares of
Diamond, together with a UCC financing statement pertaining thereto,
and together with the original stock certificate for the shares of
Diamond, duly endorsed in blank and delivered to the Lender with an
executed stock power.
(ix) The Diamond Note, pledged by the Borrower to the Lender pursuant
to a security agreement, accompanied by delivery and endorsement of
the Diamond Note, and an acknowledgment of pledge document in favor of
the Lender executed by Diamond, together with a copy of the Security
Agreement executed by Diamond securing the Diamond Note and the filed
UCC Financing Statement pertaining thereto with Diamond as debtor and
Borrower as secured party, and a UCC Amendment Statement assigning
said Financing Statement to the Lender.
1.4 Section 4.20 of the Loan Agreement is hereby amended by adding a new
paragraph (c), to read in its entirety as follows:
(c) The Borrower owns and controls 100% of the ownership and voting
rights in Diamond. On the date that each advance by the Borrower to
Diamond is made under the Diamond Note, Diamond will be (i) a duly
organized and legally existing corporation in good standing under the
laws of the State of Oklahoma, and (ii) solvent and having the ability
to pay its debt when and as due. Diamond has no ownership (direct or
beneficial) interest in any Person (whether stock, partnership
interest, membership interest or otherwise).
1.5 Section 5.2 of the Loan Agreement is hereby amended by adding a new
clause (o), to read in its entirety as follows:
(o) Diamond Note - concurrently with the furnishing of the
certificates of compliance under Section 5.3, and at other
times promptly upon the request of the Lender, a report
detailing the status of the loan evidenced by the Diamond Note
as to loan amount, payment history and default (if any), all
as the Lender may reasonably request.
1.6 Article 5 of the Loan Agreement is hereby amended by adding a new
Section 5.20, to read in its entirety as follows:
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Section 5.20 Diamond Note. The Borrower shall cause all loan advances
made by the Borrower to Diamond to be evidenced by a negotiable
promissory note which (i) is payable to the order of the Borrower,
(ii) waives Diamond's right to set off, (iii) is secured by a security
interest in all of Diamond's drilling rigs, and (iv) is otherwise
(together with the related security agreement and UCC financing
statement by Diamond as debtor) in form and substance reasonably
satisfactory to the Lender. The Borrower shall execute a security
agreement pledging the Diamond Note, and endorse and deliver the
Diamond Note to the Lender promptly upon Borrower's receipt thereof,
together with a UCC-3 Amendment Statement, and in any event all no
later than January 25, 2006. The Borrower shall further cause Diamond
to execute and deliver an acknowledgment of the pledge of the Diamond
Note by the Borrower to the Lender as further security for the
Indebtedness, in form and substance reasonably satisfactory to the
Lender, no later than January 25, 2006. The Borrower shall make an
initial or subsequent loan advance to Diamond only if such advance (x)
is evidenced by the Diamond Note, and (y) is in compliance with
Subsection 6.3(h). The Borrower shall not agree to any amendment,
modification or waiver of the terms of the Diamond Note or the
security agreement securing it or agree to any subordination
pertaining to either, in each case without the prior written consent
of the Lender.
1.7 Section 6.1 of the Loan Agreement is hereby amended by adding a new
clause (h), to read in its entirety as follows:
(h) Debt owing to McLachlan Drilling Company for the purchase
price of a drilling rig, provided such Debt shall not exceed
$5,200,000.00, and shall be paid in full no later than January
18, 2006.
1.8 Section 6.2 of the Loan Agreement is hereby amended by adding a new
clause (k), to read in its entirety as follows:
(k) Purchase money Lien in favor of McLachlan Drilling Company,
securing the purchase money Debt permitted by Section 6.1(h),
provided such Lien shall encumber only the drilling rig being
purchased and no other assets, and shall be released of record
no later than January 18, 2006.
1.9 Section 6.3 of the Loan Agreement is hereby amended by amending and
restating clauses (g) and (h), to read in their entirety as follows:
(g) The Borrower's ownership of equity interests in Endeavor, and
until the merger Expedition, and in Diamond, provided that the
total amount of the Borrower's investment (both
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debt and equity) in Diamond at any one time (i) shall not
exceed a maximum limit of $12,000,000.00 and (ii) shall not
consist of more than 50% equity.
(h) Loans and advances made by the Borrower to its Subsidiaries in
the ordinary course of business to be used in normal business
operations of such Subsidiary, provided that with respect to
any loan to Diamond, (i) such loans by the Borrower to Diamond
shall not violate the limit in paragraph (g) of this Section,
(ii) all loan advances by the Borrower to Diamond are
evidenced by the Diamond Note issued by Diamond to the
Borrower, and secured by a security interest in Diamond's
drilling rigs, which Diamond Note and security agreement shall
be subject to a first priority pledge by the Borrower to the
Lender, and (iii) such loan is otherwise in compliance with
Section 5.20.
ARTICLE 2.
ACKNOWLEDGMENT OF COLLATERAL
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2.1 The Borrower hereby specifically reaffirms all of the Collateral
Documents. The Borrower hereby reaffirms its original intention as stated in the
Collateral Documents that said Collateral Documents secure the Indebtedness,
including without limitation the Note as amended or extended from time to time.
The Borrower hereby confirms and agrees that the Collateral Documents secure the
Loan Agreement as amended by this Amendment.
ARTICLE 3.
MISCELLANEOUS
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3.1 The Borrower represents and warrants to the Lender (which
representations and warranties will survive the execution of this Amendment)
that (i) all representations and warranties contained in the Loan Agreement and
the Collateral Documents are true and correct on and as of the date hereof as
though made on and as of such date, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true and correct on and as of
such earlier date, (ii) no event has occurred and is continuing as of the date
hereof which constitutes a Default or Event of Default, (iii) there has not
occurred any material adverse change in the Collateral or other assets,
liabilities, financial condition, business operations, affairs or circumstances
of the Borrower and the Subsidiaries taken as a whole or any other facts,
circumstances or conditions (financial or otherwise) upon which the Lender has
relied or utilized in making its decision to enter into this Amendment, and (iv)
there is no defense, offset, compensation, counterclaim or reconventional demand
with respect to amounts due under, or performance of, the terms of the Note and
the Loan Agreement. To the extent any such defense, offset, compensation,
counterclaim or reconventional demand or other causes of action by the Borrower
against the Lender might exist, whether known or unknown, such items are hereby
waived by the Borrower.
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3.2 Except as expressly modified by this Amendment, all terms and
provisions of the Loan Agreement and the Note are hereby ratified and confirmed
and shall be and shall remain in full force and effect, enforceable in
accordance with their terms.
3.3 Borrower agrees to pay on demand all costs and expenses of the Lender
in connection with the preparation, reproduction, execution and delivery of this
Amendment and the other instruments and documents to be delivered hereunder
(including the reasonable fees and expenses of counsel for the Lender). In
addition, Borrower shall pay any and all stamp or other taxes, recordation fees
and other fees payable in connection with the execution, delivery, filing or
recording of this Amendment and the other instruments and documents to be
delivered hereunder and agrees to hold Lender harmless from and against any all
liabilities with respect to or resulting from any delay or omission in paying
such taxes or fees.
3.4 This Amendment may be executed in multiple separate counterparts, and
it shall not be necessary that the signatures of all parties hereto be contained
on any one counterpart hereof; each party's signature may appear on a separate
counterpart but all such counterpart taken together shall constitute one and the
same instrument. The parties specifically confirm their intent to be bound by
delivery of such signed counterparts by telecopier.
3.5 The provisions of this Amendment shall become effective if and when,
and only when, (i) each and every representation and warranty of Borrower
contained in this Amendment is true, complete and accurate, (ii) no event exists
which constitutes a Default, and (iii) the receipt by the Lender of the
following:
(a) A duly executed counterpart of this Amendment;
(b) A duly executed Security Agreement by the Borrower,
granting a first priority security interest in 100% of the
outstanding shares of Diamond, together with a UCC Financing
Statement and the original stock certificate duly endorsed in
blank and delivered to the Lender with an executed stock
power;
(c) A Certificate of the Secretary of the Borrower, confirming
the continued effectiveness of the resolutions of its Board of
Directors; and
(d) A Certificate of the Secretary of Diamond (i) setting
forth resolutions of its board of directors in form and
substance satisfactory to the Lender, (ii) attaching the
articles of incorporation and bylaws of Diamond, and (iii)
setting forth the officers authorized to sign appropriate
documents.
The Borrower hereby certifies by execution of this Amendment that the foregoing
conditions (i) and (ii) are satisfied and true and correct. The documents
required under condition (iii) in each case shall be in form and substance
satisfactory to the Lender and its counsel.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to be
duly executed as of the date first above written.
GMX RESOURCES INC.
By: /s/ Xxx X. Xxxxxxxxx, Xx.
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Name: Xxx X. Xxxxxxxxx, Xx.
Title: Executive Vice President and
and CFO
HIBERNIA NATIONAL BANK
By: /s/ Xxxxx X. Xxxx
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Name: Xxxxx X. Xxxx
Title: Senior Vice President
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