Delaware | 001-34776 | 80-0554627 | ||||||||||||
(State or other jurisdiction of
incorporation or organization) |
(Commission
File Number) |
(I.R.S. Employer
Identification No.) |
1001 Fannin Street, Suite 1500
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Houston, Texas
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77002 | |||||||
(Address of principal executive offices) | (Zip Code) |
☐ | Written communications pursuant to Rule 425 under the Securities Act (17 CFR 230.425) |
☐ | Soliciting material pursuant to Rule 14a-12 under the Exchange Act (17 CFR 240.14a-12) |
☐ | Pre-commencement communications pursuant to Rule 14d-2(b) under the Exchange Act (17 CFR 240.14d-2(b)) |
☐ | Pre-commencement communications pursuant to Rule 13e-4(c) under the Exchange Act (17 CFR 240.13e-4(c)) |
Title of each class | Trading Symbol(s) | Name of each exchange on which registered | ||||||||||||
Common Stock | OAS | The Nasdaq Stock Market LLC |
Emerging growth company | ☐ |
Exhibit No. | Description of Exhibit | |||||||||||||
10.1*
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Restructuring Support Agreement, dated September 29, 2020. | |||||||||||||
10.2*
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DIP Commitment Letter, dated September 29, 2020. | |||||||||||||
10.3*
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Exit Commitment Letter, dated September 29, 2020. | |||||||||||||
10.4*
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Amendment to Fourth Amended and Restated Employment Agreement effective as of September 29, 2020 between Oasis Petroleum Inc. and Thomas B. Nusz. | |||||||||||||
10.5*
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Amendment to Fifth Amended and Restated Employment Agreement effective as of September 29, 2020 between Oasis Petroleum Inc. and Taylor L. Reid. | |||||||||||||
10.6*
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Amendment to Third Amended and Restated Employment Agreement effective as of September 29, 2020 between Oasis Petroleum Inc. and Michael H. Lou. | |||||||||||||
10.7*
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Amendment to Third Amended and Restated Employment Agreement effective as of September 29, 2020 between Oasis Petroleum Inc. and Nickolas J. Lorentzatos. | |||||||||||||
99.1*
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Oasis Press Release, dated September 30, 2020. | |||||||||||||
99.2*
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Cleansing Material. | |||||||||||||
104 | Cover Page Interactive Data File - the cover page interactive data file does not appear in the Interactive Data File because its XBRL tags are embedded within the Inline XBRL document. | |||||||||||||
*Filed herewith
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OASIS PETROLEUM INC.
(Registrant)
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Date: September 30, 2020 | By: | /s/ Nickolas J. Lorentzatos | |||||||||||||||||||||
Nickolas J. Lorentzatos | |||||||||||||||||||||||
Executive Vice President, General Counsel and Corporate Secretary |
Aggregate Amounts Beneficially Owned or Managed on Account of: | ||||||||
Notes | ||||||||
RBL | ||||||||
Interests |
GENERAL PROVISIONS REGARDING THE RESTRUCTURING | ||||||||
Chapter 11 Plan
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On the Plan Effective Date, or, other than with respect to the holders of RBL Claims, as soon as is reasonably practicable thereafter, each holder of an Allowed Claim or Interest, as applicable, shall receive under the Plan the treatment described in this Restructuring Term Sheet in full and final satisfaction, settlement, release, and discharge of and in exchange for such holder's Allowed Claim or Interest, except to the extent different treatment is agreed to by the Reorganized Debtors and the holder of such Allowed Claim or Interest, as applicable.
The Plan will constitute a separate chapter 11 plan of reorganization for each Debtor. For the avoidance of doubt, any action required to be taken by the Debtors on the Plan Effective Date pursuant to this Restructuring Term Sheet may be taken on the Plan Effective Date or as soon as is reasonably practicable thereafter other than with respect to the RBL Lenders, DIP Lenders, and Exit Facility Lenders. |
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DIP Facility |
The Consenting RBL Lenders (in such capacity, collectively, the “DIP Lenders”) will provide a senior secured superpriority revolving debtor-in-possession financing facility in an aggregate principal amount of $450 million, consisting of a $150 million new money revolving facility, with a $100 million letter of credit facility sublimit, and $300 million of rolled up RBL Claims and otherwise substantially on the terms set forth in the term sheet attached as Exhibit C (the “DIP Term Sheet”) to the Restructuring Support Agreement. During the Chapter 11 Cases, the Consenting RBL Lenders shall forbear from any attempt to collect any Specified Default Interest and any such amounts shall not be rolled up into the DIP Facility; provided, for the avoidance of doubt, that as set forth in the DIP Term Sheet, the RBL Lenders shall be entitled to adequate protection payments consisting of current cash payments on a monthly basis in an amount equal to the amount of postpetition fees and interest on the RBL Claims at the default rate set forth in the RBL Credit Agreement. On the Plan Effective Date, the Consenting RBL Lenders shall waive any right to payment of Specified Default Interest (as defined below).
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Exit Facility |
The Consenting RBL Lenders will provide a new money senior secured reserve-based facility (the “Exit Facility”) substantially on the terms set forth in the term sheet attached as Exhibit D (the “Exit Facility Term Sheet”) to the Restructuring Support Agreement.
The proceeds of the Exit Facility may be used as necessary to fund cash distributions on the Plan Effective Date to holders of Allowed Claims required by this Restructuring Term Sheet and the Plan and for other uses as set forth in the Exit Facility Term Sheet and the Plan.
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New Common Stock |
On the Plan Effective Date, Reorganized Oasis will issue a single class of common Interests (the “New Common Stock”). The New Common Stock will be distributed to holders of Allowed General Unsecured Claims in accordance with this Restructuring Term Sheet. The Debtors and the Reorganized Debtors shall use commercially reasonable efforts to cause the New Common Stock to become publicly traded and listed on a national securities exchange on or as soon as reasonably practicable after the Plan Effective Date.
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New Warrants |
On the Plan Effective Date, Reorganized Oasis will issue 4-year warrants convertible into 7.5% of the New Common Stock at a strike price equal to the aggregate amount of Notes Claims (including any interest thereon that would have accrued as of the Plan Effective Date) (the “New Warrants”). The documentation for the New Warrants will be included in the Plan Supplement and will not include Black-Sholes protection but will provide that the New Warrants remain outstanding following any stock-for-stock merger transaction following the Plan Effective Date. Any New Common Stock issued pursuant to the New Warrants shall be subject to dilution on account of the Management Inventive Plan.
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Mirada Settlement |
On the Plan Effective Date, the Mirada Settlement Agreement and all terms contained therein will be deemed approved by the Bankruptcy Court and the Mirada Settlement Agreement shall be in full force and effect on the Plan Effective Date. The Plan shall provide that, as set forth in the Mirada Settlement Agreement, on the Plan Effective Date, the Debtors shall (i) pay the sum of $20,000,000.00 for the benefit of certain Mirada related parties and (ii) on or before the 180th day after the date the payment in preceding clause (i) is due, pay the sum of $22,750,000.00 for the benefit of certain Mirada realted parties, in each case on the terms set forth in the Mirada Settlement Agreement.
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Hedging Program | On or before the Plan Effective Date, the Debtors will enter into new hedging arrangements sufficient to cover the Closing Date Minimum Hedge Volumes (as defined in the Exit Facility Term Sheet). | ||||
Cash on Hand |
Cash distributions in accordance with this Restructuring Term Sheet shall be made from cash on hand as of the Plan Effective Date, including proceeds from the Exit Facility and the DIP Facility.
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Definitive Documents |
Any documents, including any Definitive Documents, that remain the subject of negotiation as of the Agreement Effective Date shall be subject to the rights and obligations set forth in Section 3 of the Restructuring Support Agreement. Failure to reference such rights and obligations as it relates to any document referenced in this Restructuring Term Sheet shall not impair such rights and obligations.
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Tax Matters |
The Parties will work together in good faith and will use commercially reasonable efforts to structure and implement the Restructuring Transactions in a tax efficient and cost-effective manner for the Debtors.
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TREATMENT OF CLAIMS AND INTERESTS OF THE DEBTORS UNDER THE PLAN
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Class No.
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Type of Claim
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Treatment | Impairment / Voting | |||||||||||||||||||||||
Unclassified Non-Voting Claims
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N/A | DIP Claims |
On the Plan Effective Date, each holder of an Allowed DIP Claim shall be: (a) in the case of DIP Claims other than the principal amount of the loans under the DIP Credit Agreement, paid in full, in cash in accordance with the terms of the DIP Credit Agreement, and (b) in the case of DIP Claims that represent the principal amount of the loans under the DIP Credit Agreement, converted to an identical principal amount of Exit Facility Revolving Loans.
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N/A | |||||||||||||||||||||||
N/A | Administrative Claims |
On the Plan Effective Date, each holder of an Allowed Administrative Claim shall receive payment in full in cash.
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N/A | |||||||||||||||||||||||
N/A | Priority Tax Claims |
On the Plan Effective Date, each holder of an Allowed Priority Tax Claim shall receive treatment in a manner consistent with section 1129(a)(9)(C) of the Bankruptcy Code.
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N/A | |||||||||||||||||||||||
Classified Claims and Interests of the Debtors
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Class 1
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Other Secured Claims |
On the Plan Effective Date, each holder of an Allowed Other Secured Claim shall receive, at the Debtors’ option and in their sole discretion: (a) payment in full in cash; (b) the collateral securing its Allowed Other Secured Claim; (c) Reinstatement of its Allowed Other Secured Claim; or (d) such other treatment rendering its Allowed Other Secured Claim unimpaired in accordance with section 1124 of the Bankruptcy Code.
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Unimpaired / Deemed to Accept
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Class 2
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Other Priority Claims |
Each holder of an Allowed Other Priority Claim shall receive treatment in a manner consistent with section 1129(a)(9) of the Bankruptcy Code.
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Unimpaired / Deemed to Accept
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Class 3
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RBL Claims |
On the Plan Effective Date, all RBL Claims shall be deemed Allowed in full, including accrued and unpaid interest (at the applicable default rate), fees, costs, and expenses, plus any and all other amounts owed under the RBL Facility Documents.
On the Plan Effective Date, each holder of an Allowed RBL Claim (i) electing to participate in the Exit Facility by entry into the Exit Facility Commitment Letter will receive, (x) on a dollar-for-dollar basis in exchange for the portion of its RBL Claim representing the principal of the loans owed to such lender under the RBL Credit Agreement, an equal amount of the principal of the revolving loans under the Exit Facility as of the Plan Effective Date, upon the terms and conditions set forth in the Exit Facility Term Sheet and (y) with respect to any other portion of such holder’s RBL Claim (to the extent not already paid prior to the Plan Effective Date, including as adequate protection pursuant to the Final DIP Order), cash in an amount equal to such portion of such holder’s RBL Claim, and (ii) not electing to participate in the Exit Facility by electing not to sign the Exit Facility Commitment Letter (x) shall be deemed to have funded a second out term loan on a dollar-for-dollar basis in exchange for the portion of its RBL Claim representing the principal of the loans owed to such lender, any unreimbursed claims for professional fees and expenses under the RBL Credit Agreement, and any of such holder’s Specified Default Interest and (y) with respect to any other portion of such holder’s RBL Claim (to the extent not already paid prior to the Plan Effective Date, including as adequate protection pursuant to the Final DIP Order), cash in an amount equal to such portion of such holder’s RBL Claim. The Liens securing the loans under the RBL Credit Agreement shall be retained and deemed assigned to the administrative agent under the Exit Facility to secure the Exit Facility upon the Plan Effective Date. Notwithstanding the foregoing, on the Plan Effective Date, any Specified Default Interest shall be discharged, released, and deemed waived by all holders of RBL Claims that execute the Restructuring Support Agreement.3
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Impaired / Entitled to Vote | |||||||||||||||||||||||
Class 4 | Notes Claims and Mirada Claims |
On the Plan Effective Date, the Notes Claims shall be Allowed in full, including accrued and unpaid interest, fees, costs, and expenses plus any and all other amounts owed under the indentures governing the Notes Claims.
On the Plan Effective Date, each holder of an Allowed Notes Claim or an Allowed Mirada Claim shall receive its pro rata share (calculated based on the aggregate amount of all Allowed Notes Claims and Allowed Mirada Claims) of 100% of the New Common Stock, subject to dilution on account of the Management Incentive Plan and the New Warrants; provided, that notwithstanding that the Mirada Claims are classified as Class 4 Claims, such claims, in lieu of any treatment as Class 4 Claims, shall be treated in accordance with the Mirada Settlement Agreement.
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Impaired / Entitled to Vote | |||||||||||||||||||||||
Class 5 | General Unsecured Claims | On the Plan Effective Date, each holder of an Allowed General Unsecured Claim shall receive, at the option of the applicable Debtor: (a) payment in full in Cash; or (b) Reinstatement | Unimpaired / Deemed to Accept | |||||||||||||||||||||||
Class 6
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Intercompany Claims |
On the Plan Effective Date, each holder of an Allowed Intercompany Claim shall have its Claim Reinstated or cancelled, released, and extinguish and without any distribution at the Debtors’ election and in their sole discretion.
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Impaired / Deemed to Reject or Unimpaired / Deemed to Accept
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Class 7
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Intercompany Interests Other Than in Oasis
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On the Plan Effective Date, each holder of an Interest other than in Oasis shall have such Interest Reinstated or cancelled, released, and extinguish and without any distribution at the Debtors’ election and in their sole discretion.
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Impaired / Deemed to Reject or Unimpaired / Deemed to Accept
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Class 8 | Interests in Oasis |
On the Plan Effective Date, each holder of an Interest in Oasis shall retain its pro rata share of the New Warrants.
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Impaired / Entitled to Vote |
GENERAL PROVISIONS REGARDING THE PLAN
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Subordination |
The classification and treatment of Claims under the Plan shall conform to the respective contractual, legal, and equitable subordination rights of such Claims, and any such rights shall be settled, compromised, and released pursuant to the Plan.
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Restructuring Transactions |
The Confirmation Order shall be deemed to authorize, among other things, all actions as may be necessary or appropriate to effectuate any transaction described in, approved by, contemplated by, or necessary to consummate the Plan and the Restructuring Transactions therein. On the Plan Effective Date, the Debtors, as applicable, shall issue all securities, notes, instruments, certificates, and other documents required to be issued pursuant to the Restructuring Transactions.
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Cancellation of Notes, Instruments, Certificates, and Other Documents |
On the Plan Effective Date, except with respect to the liens securing the RBL Claims and the Exit Facility and except to the extent otherwise provided in this Restructuring Term Sheet or the Plan, all notes, instruments, certificates, and other documents evidencing Claims or Interests, including credit agreements and indentures, shall be canceled, and the Debtors’ obligations thereunder or in any way related thereto shall be deemed satisfied in full and discharged. Notwithstanding anything to the contrary herein, in the Restructuring Support Agreement, or in the Plan, for the avoidance of doubt, the liens securing the RBL Claims shall not be released, and such liens shall be retained by the Exit Facility Agent to secure the Exit Facility upon the Plan Effective Date.
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Executory Contracts and Unexpired Leases |
The Plan will provide that the executory contracts and unexpired leases that are not rejected as of the Plan Effective Date (either pursuant to the Plan or a separate motion) will be deemed assumed pursuant to section 365 of the Bankruptcy Code.
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Retention of Jurisdiction |
The Plan will provide that the Bankruptcy Court shall retain jurisdiction for usual and customary matters but, for the avoidance of doubt, shall not retain jurisdiction over the Exit Facility.
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Discharge of Claims and Termination of Interests
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Pursuant to section 1141(d) of the Bankruptcy Code and except as otherwise specifically provided in the Plan or in any contract, instrument, or other agreement or document created pursuant to the Plan, the distributions, rights, and treatment that are provided in the Plan shall be in complete satisfaction, discharge, and release, effective as of the Plan Effective Date, of Claims (including any Intercompany Claims that the Debtors resolve or compromise after the Plan Effective Date), Interests, and Causes of Action of any nature whatsoever, including any interest accrued on Claims or Interests from and after the Petition Date, whether known or unknown, against, liabilities of, liens on, obligations of, rights against, and Interests in the Debtors or any of their assets or properties, regardless of whether any property shall have been distributed or retained pursuant to the Plan on account of such Claims and Interests, including demands, liabilities, and Causes of Action that arose before the Plan Effective Date, any liability (including withdrawal liability) to the extent such Claims or Interests relate to services that employees of the Debtors have performed prior to the Plan Effective Date and that arise from a termination of employment, any contingent or noncontingent liability on account of representations or warranties issued on or before the Plan Effective Date, and all debts of the kind specified in sections 502(g), 502(h), or 502(i) of the Bankruptcy Code, in each case whether or not (a) a Proof of Claim based upon such debt or right is filed or deemed filed pursuant to section 501 of the Bankruptcy Code, (b) a Claim or Interest based upon such debt, right, or Interest is Allowed pursuant to section 502 of the Bankruptcy Code, or (c) the holder of such a Claim or Interest has accepted the Plan. The Confirmation Order shall be a judicial determination of the discharge of all Claims and Interests subject to the occurrence of the Plan Effective Date.
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Releases by the Debtors
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Pursuant to section 1123(b) of the Bankruptcy Code, for good and valuable consideration, on and after the Plan Effective Date, each Released Party is deemed released and discharged by the Debtors, the Reorganized Debtors, and their Estates from any and all claims and Causes of Action, whether known or unknown, including any derivative claims, asserted on behalf of the Debtors, that the Debtors, the Reorganized Debtors, or their Estates would have been legally entitled to assert in their own right (whether individually or collectively) or on behalf of the holder of any Claim against or Interest in a Debtor or other Entity, or that any holder of any Claim against or Interest in a Debtor or other Entity could have asserted on behalf of the Debtors, based on or relating to or in any manner arising from in whole or in part, the Debtors, the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions, intercompany transactions, the Chapter 11 Cases, the formulation, preparation, dissemination, solicitation, negotiation, entry into, or filing of the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, the Exit Facility, or any Restructuring Transaction, contract, instrument, release, or other agreement or document created or entered into in connection with the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, the Exit Facility, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other act or omission, transaction, agreement, event, or other occurrence taking place on or before the Plan Effective Date. Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Plan Effective Date obligations of any party or entity under the Plan, any post-Plan Effective Date transaction contemplated by the Restructuring Transactions (including under the Exit Facility), or any document, instrument, or agreement (including those set forth in the Plan Supplement and the Exit Facility) executed to implement the Plan or the Restructuring Transactions or (b) any individual from any Claim or Cause of Action related to an act or omission that is determined in a Final Order by a court of competent jurisdiction to have constituted actual fraud or willful misconduct.
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Releases by Holders of Claims and Interests
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As of the Plan Effective Date, each Releasing Party is deemed to have released and discharged each Debtor, Reorganized Debtor, and Released Party from any and all claims and Causes of Action, whether known or unknown, including any derivative claims, asserted on behalf of the Debtors, the Reorganized Debtors, or the Estates, that such Entity would have been legally entitled to assert (whether individually or collectively), based on or relating to or in any manner arising from, in whole or in part, the Debtors, the Debtors’ in- or out-of-court restructuring efforts, any Avoidance Actions, intercompany transactions, the Chapter 11 Cases, the formulation, preparation, dissemination, solicitation, negotiation, entry into, or filing of the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, the Exit Facility, or any Restructuring Transaction, contract, instrument, release, or other agreement or document created or entered into in connection with the Restructuring Support Agreement, the Disclosure Statement, the DIP Facility, the Plan, the Plan Supplement, the Exit Facility, the Chapter 11 Cases, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance or distribution of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, or upon any other related act or omission, transaction, agreement, event, or other occurrence taking place on or before the Plan Effective Date. Notwithstanding anything to the contrary in the foregoing, the releases set forth above do not release (a) any post-Plan Effective Date obligations of any party or entity under the Plan, any post-Plan Effective Date transaction contemplated by the Restructuring Transactions (including under the Exit Facility), or any document, instrument, or agreement (including those set forth in the Plan Supplement and the Exit Facility) executed to implement the Plan or the Restructuring Transactions or (b) any individual from any claim or Cause of Action related to an act or omission that is determined in a Final Order by a court competent jurisdiction to have constituted actual fraud or willful misconduct.
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Exculpation |
Except as otherwise specifically provided in the Plan, no Exculpated Party shall have or incur, and each Exculpated Party is released and exculpated from any Cause of Action for any claim related to any act or omission in connection with, relating to or arising out of the Chapter 11 Cases, the formulation, preparation, dissemination, negotiation, or filing of the Restructuring Support Agreement and related prepetition transactions, the Disclosure Statement, the Plan, the DIP Facility, the Exit Facility, or any Restructuring Transaction, contract, instrument, release or other agreement or document created or entered into in connection with the Disclosure Statement, the DIP Facility, the Exit Facility, or the Plan, the filing of the Chapter 11 Cases, the pursuit of Confirmation, the pursuit of Consummation, the administration and implementation of the Plan, including the issuance of securities pursuant to the Plan, or the distribution of property under the Plan or any other related agreement, except for claims related to any act or omission that is determined in a Final Order to have constituted willful misconduct or actual fraud. The Exculpated Parties have, and upon completion of the Plan shall be deemed to have, participated in good faith and in compliance with the applicable laws with regard to the solicitation of votes and distribution of consideration pursuant to the Plan and, therefore, are not, and on account of such distributions shall not be, liable at any time for the violation of any applicable law, rule, or regulation governing the solicitation of acceptances or rejections of the Plan or such distributions made pursuant to the Plan. Notwithstanding anything to the contrary in the foregoing, the exculpation set forth above do not exculpate any post-Plan Effective Date obligations of any party or entity under the Plan, any post-Plan Effective Date transaction contemplated by the Restructuring Transactions (including under the Exit Facility), or any document, instrument, or agreement (including those set forth in the Plan Supplement and the Exit Facility) executed to implement the Plan
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Injunction |
Except as otherwise expressly provided in the Plan or for obligations issued or required to be paid pursuant to the Plan or the Confirmation Order, all Entities who have held, hold, or may hold claims or interests that have been released, discharged, or are subject to exculpation are permanently enjoined, from and after the Plan Effective Date, from taking any of the following actions against, as applicable, the Debtors, the Reorganized Debtors, the Exculpated Parties, or the Released Parties: (a) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such claims or interests; (b) enforcing, attaching, collecting, or recovering by any manner or means any judgment, award, decree, or order against such Entities on account of or in connection with or with respect to any such claims or interests; (c) creating, perfecting, or enforcing any encumbrance of any kind against such Entities or the property or the estates of such Entities on account of or in connection with or with respect to any such claims or interests; (d) asserting any right of setoff, subrogation, or recoupment of any kind against any obligation due from such Entities or against the property of such Entities on account of or in connection with or with respect to any such claims or interests unless such holder has filed a motion requesting the right to perform such setoff on or before the Plan Effective Date, and notwithstanding an indication of a claim or interest or otherwise that such holder asserts, has, or intends to preserve any right of setoff pursuant to applicable law or otherwise; and (e) commencing or continuing in any manner any action or other proceeding of any kind on account of or in connection with or with respect to any such claims or interests released or settled pursuant to the Plan. Notwithstanding anything to the contrary in the foregoing, the injunction set forth above does not enjoin the enforcement of any post-Plan Effective Date obligations of any party or entity under the Plan, any post-Plan Effective Date transaction contemplated by the Restructuring Transactions (including under the Exit Facility), or any document, instrument, or agreement (including those set forth in the Plan Supplement and the Exit Facility) executed to implement the Plan.
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Releasing Parties, Released Parties, and Exculpated Parties |
As used in this Restructuring Term Sheet, the term “Released Parties” means, collectively, and in each case in its capacity as such: (a) the Consenting Stakeholders; (b) the indenture trustees under the Debtors’ prepetition secured notes indentures; (c) the RBL Agent; (d) the DIP Lenders; (e) the DIP Agent; (f) each current and former Affiliate of each Entity in clause (a) through (e); and (h) with respect to each of the Debtors, the Reorganized Debtors, and each of the foregoing Entities in clauses (a) through (f), such Entity and its current and former Affiliates and subsidiaries, and such Entities’ and their current and former Affiliates’ and subsidiaries’ current and former directors, managers, officers, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, and assigns, subsidiaries, and each of their respective current and former equity holders, officers, directors, managers, principals, members, employees, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals.
As used in this Restructuring Term Sheet, the term “Releasing Parties” means, collectively, (a) the Consenting Stakeholders; (b) the indenture trustees under the Debtors’ prepetition secured notes indentures; (c) the RBL Agent; (d) the DIP Agent; (e) all holders of Claims or Interests that vote to accept or are deemed to accept the Plan; (f) all holders of Claims or Interests that abstain from voting on the Plan and who do not affirmatively opt out of the releases provided by the Plan by checking the box on the applicable ballot indicating that they opt not to grant the releases provided in the Plan; (g) all holders of Claims or Interests that vote to reject the Plan or are deemed to reject the Plan and who do not affirmatively opt out of the releases provided by the Plan by checking the box on the applicable ballot indicating that they opt not to grant the releases provided in the Plan; (h) each current and former Affiliate of each Entity in clause (a) through (g); and (j) with respect to each of the Debtors, the Reorganized Debtors, and each of the foregoing Entities in clauses (a) through (h), such Entity and its current and former Affiliates and subsidiaries, and such Entities’ and their current and former Affiliates’ and subsidiaries’ current and former directors, managers, officers, equity holders (regardless of whether such interests are held directly or indirectly), predecessors, successors, and assigns, subsidiaries, and each of their respective current and former equity holders, officers, directors, managers, principals, members, employees, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, each in their capacity as such collectively.
As used in this Restructuring Term Sheet, the term “Exculpated Parties” means collectively, and in each case in its capacity as such: (a) the Debtors; (b) any official committees appointed in the Chapter 11 Cases and each of their respective members; (c) the Consenting Stakeholders; (d) the indenture trustees under the Debtors’ prepetition secured notes indentures; (e) the RBL Agent; (f) the DIP Agent; (g) the DIP Lenders; and (h) with respect to each of the foregoing, such Entity and its current and former Affiliates, and such Entity’s and its current and former Affiliates’ current and former equity holders, subsidiaries, officers, directors, managers, principals, members, employees, agents, advisory board members, financial advisors, partners, attorneys, accountants, investment bankers, consultants, representatives, and other professionals, each in their capacity as such.
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OTHER MATERIAL PROVISIONS REGARDING THE RESTRUCTURING
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Governance |
The new board of directors of Reorganized Oasis (the “New Board”) shall consist of seven (7) members and shall include the Chief Executive Officer of Reorganized Oasis and six (6) additional members appointed by the Required Consenting Noteholders. The identities of directors on the New Board shall be set forth in the Plan Supplement to the extent known at the time of filing. Corporate governance for Reorganized Oasis, including charters, bylaws, operating agreements, or other organization documents, as applicable (the “New Organizational Documents”), shall be consistent with this Restructuring Term Sheet and section 1123(a)(6) of the Bankruptcy Code. The Required Consenting Noteholders will discuss and consider appointing the COO to the New Board.
The COO shall waive any right to terminate his employment for “Good Reason” (as defined in his employment agreement) solely to the extent such right arises as a result of not being appointed to the New Board.
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Management Incentive Plan |
On the Plan Effective Date, the Reorganized Debtors will reserve exclusively for management employees a pool of New Common Stock (the “Management Incentive Plan Pool”) representing (on a fully diluted and fully distributed basis) up to 10% of the total equity value of the Reorganized Debtors (the “Management Incentive Plan”). The Management Incentive Plan shall provide for 5% of the Management Incentive Plan Pool to be allocated within thirty (30) days following the Plan Effective Date in the form of restricted stock units (or equivalents) and on terms (including performance metrics and vesting criteria) otherwise to be agreed between management of Reorganized Oasis and the compensation committee of the New Board; provided that such period shall be extended automatically by an additional fifteen (15) days if good faith discussions between management of Reorganized Oasis and the New Board regarding the terms of the Management Incentive Plan remain ongoing at the conclusion of the initial thirty (30) day period. The remaining up to 5% of the Management Incentive Plan Pool will be available to be allocated after the Plan Effective Date, in the form and on terms as determined by the New Board in consultation with management for the Reorganized Debtors. In connection with structure, allocation and documentation of the Management Incentive Plan Pool, the compensation committee of the New Board and the participants in the Management Incentive Plan may discuss modifications as may be appropriate to certain employment agreements or letters, indemnification agreements, severance agreements, or other agreements entered into with current and former employees and assumed pursuant to the Plan.
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Exemption from SEC Registration
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The issuance of all securities under the Plan will be exempt from SEC registration under applicable law.
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Employment Obligations |
Pursuant to the Restructuring Support Agreement and this Restructuring Term Sheet, the Consenting Stakeholders consent to the continuation of the Debtors’ wages, compensation, and benefits programs according to existing terms and practices, including executive compensation programs and any motions in the Bankruptcy Court for approval thereof. On the Plan Effective Date, the Debtors shall (a) assume all employment agreements or letters, indemnification agreements, severance agreements, or other agreements entered into with current and former employees; or (b) enter into new agreements with such employees on terms and conditions acceptable to the Debtor and such employee.
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Indemnification Obligations |
Consistent with applicable law, all indemnification provisions in place as of the Plan Effective Date (whether in the bylaws, certificates of incorporation or formation, limited liability company agreements, other organizational documents, board resolutions, indemnification agreements, employment contracts, or otherwise) for current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Debtors, as applicable, shall be reinstated and remain intact, irrevocable, and shall survive the effectiveness of the Restructuring Transactions on terms no less favorable to such current and former directors, officers, managers, employees, attorneys, accountants, investment bankers, and other professionals of the Debtors than the indemnification provisions in place prior to the Plan Effective Date.
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Retained Causes of Action
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The Reorganized Debtors, as applicable, shall retain all rights to commence and pursue any Causes of Action, other than any Causes of Action that the Debtors have released pursuant to the release and exculpation provisions outlined in this Restructuring Term Sheet and implemented pursuant to the Plan.
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Conditions Precedent to Restructuring
|
The following shall be conditions to the Plan Effective Date (the “Conditions Precedent”):
(a)the Bankruptcy Court shall have entered the Confirmation Order, in form and substance acceptable to the Required Consenting Stakeholders, which shall:
(i)authorize the Debtors to take all actions necessary to enter into, implement, and consummate the contracts, instruments, releases, leases, indentures, and other agreements or documents created in connection with the Plan;
(ii)decree that the provisions in the Confirmation Order and the Plan are nonseverable and mutually dependent;
(iii)authorize the Debtors, as applicable/necessary, to: (a) implement the Restructuring Transactions, including the Rights Offering; (b) distribute the New Common Stock pursuant to the exemption from registration under the Securities Act provided by section 1145 of the Bankruptcy Code or other exemption from such registration or pursuant to one or more registration statements; (c) make all distributions and issuances as required under the Plan, including cash and the New Common Stock; and (d) enter into any agreements, transactions, and sales of property as set forth in the Plan Supplement, including the Exit Facility and the Management Incentive Plan;
(iv)authorize the implementation of the Plan in accordance with its terms; and
(v)provide that, pursuant to section 1146 of the Bankruptcy Code, the assignment or surrender of any lease or sublease, and the delivery of any deed or other instrument or transfer order, in furtherance of, or in connection with the Plan, including any deeds, bills of sale, or assignments executed in connection with any disposition or transfer of assets contemplated under the Plan, shall not be subject to any stamp, real estate transfer, mortgage recording, or other similar tax; and
(vi)be a Final Order;
(b)the Debtors shall have obtained all authorizations, consents, regulatory approvals, rulings, or documents that are necessary to implement and effectuate the Plan;
(c)the final version of the Plan Supplement and all of the schedules, documents, and exhibits contained therein shall have been filed in a manner consistent in all material respects with the Restructuring Support Agreement, this Restructuring Term Sheet, and the Plan;
(d)the Restructuring Support Agreement shall remain in full force and effect;
(e)the Final DIP Order shall remain in full force and effect;
(f)the Mirada Settlement Agreement shall be effective in accordance with its terms and remain in full force and effect;
(g)the OMP Waiver Agreement shall be effective in accordance with its terms and remain in full force and effect
(h)the Exit Facility Documents shall have been duly executed and delivered by all of the Entities that are parties thereto and all conditions precedent (other than any conditions related to the occurrence of the Plan Effective Date) to the effectiveness of the Exit Facility shall have been satisfied or duly waived in writing in accordance with the terms of the Exit Facility and the closing of the Exit Facility shall have occurred;
(i)all professional fees and expenses of retained professionals that require the Bankruptcy Court’s approval shall have been paid in full or amounts sufficient to pay such fees and expenses after the Plan Effective Date shall have been placed in a professional fee escrow account pending the Bankruptcy Court’s approval of such fees and expenses;
(j)all Consenting Stakeholder Fees and Expenses shall have been paid in full in accordance with the Restructuring Support Agreement; and
(k)the Debtors shall have implemented the Restructuring Transactions and all transactions contemplated in this Restructuring Term Sheet in a manner consistent with the Restructuring Support Agreement, this Restructuring Term Sheet, and the Plan.
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Waiver of Conditions Precedent to the Plan Effective Date
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The Debtors, with the prior consent of the Required Consenting Stakeholders, may waive any one or more of the Conditions Precedent to the Plan Effective Date.
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Borrower: |
Oasis Petroleum North America LLC, a Delaware limited liability company (the “Borrower”).
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Guarantors: |
Oasis Petroleum Inc. (“Parent”), Oasis Midstream Services LLC, Oasis Petroleum LLC (“OP LLC”), Oasis Petroleum Marketing LLC, Oasis Petroleum Permian LLC, Oasis Well Services LLC, OMP GP LLC and OMS Holdings LLC, each organized under the laws of the State of Delaware (collectively, the “Guarantors”).
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Debtors:
|
The Borrower and the Guarantors are collectively referred to herein as the “Debtors”.
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DevCos:
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Beartooth DevCo LLC and Bobcat DevCo LLC (the “DevCos”).
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Post-Petition Lenders: |
Wells Fargo Bank, N.A. and the other Pre-Petition Lenders (as defined below) under the Pre-Petition Credit Agreement (as defined below) participating in the DIP Facility (as defined below) in the percentages as set forth in the DIP Facility (collectively, the “Post-Petition Lenders”).
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Post-Petition Agent: |
Wells Fargo Bank, N.A. (in such capacity, the “Post-Petition Agent”).
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Venue: |
Debtors will file a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”, and the date the Debtors’ bankruptcy cases are commenced, the “Petition Date”).
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Documentation Principles: |
The definitive documentation for the DIP Facility, including all other related agreements and documents creating, evidencing or securing indebtedness or obligations of any of the Debtors to the Post-Petition Agent or granting or perfecting liens or security interests by any of the Debtors in favor of and for the benefit of the Post-Petition Agent, for itself and for and on behalf of the Post-Petition Lenders, on account of the DIP Facility shall contain the terms set forth herein and shall otherwise be negotiated in good faith within a reasonable time period to be determined based on the expected Closing Date (as defined below). The documentation will be based on the applicable “Loan Documents” under and as defined in that certain Third Amended and Restated Credit Agreement dated October 16, 2018, among the Parent; OP LLC; the Borrower; each of the lenders from time to time party thereto (the “Pre-Petition Lenders”); and Wells Fargo Bank, N.A., as administrative agent on behalf of itself and the other Pre-Petition Lenders (the “Pre-Petition Agent”) (as in effect immediately prior to the commencement of bankruptcy case of the Borrower, the “Pre-Petition Credit Agreement”), with changes consistent with this DIP Facility Term Sheet and otherwise to reflect customary lender form updates (the “Documentation Principles”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Pre-Petition Credit Agreement.
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DIP Facility:
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A priming secured and superpriority debtor-in-possession revolving credit facility of $450 million (the “DIP Commitments”) consisting of (a) an $150 million new money revolving facility (the “New Money Facility”), which shall include an amount of $100 million in the form of a letter of credit facility and (b) up to $300 million of Pre-Petition Secured Indebtedness (as defined below) that will be deemed to be refinanced as post-petition secured indebtedness (the “Refinancing”) held by the Post-Petition Lenders, as more fully described and documented in the Financing Orders (as defined below) (the New Money Facility and the Refinancing, collectively, the “DIP Facility”), and the credit agreement entered into among the Post-Petition Agent, the Post-Petition Lenders and the Debtors, which in each case must be in form and substance acceptable to the Post-Petition Agent and the Post-Petition Lenders (the “Post-Petition Credit Agreement”). Until the entry of the Final Order (as defined below), (a) a maximum amount of new money funding of $120 million (the “Cap”) of cash which may be drawn by the Borrower, of which up to $80 million of the Cap may be drawn as letters of credit, will be available to the Debtors on an interim basis under the DIP Facility (and which shall include all letters of credit subject to the Pre-Petition LC Refinancing (as defined below)) and (b) up to $240 million of the Pre-Petition Secured Indebtedness will be Refinanced by the DIP Facility (the limitations described in the foregoing clauses (a) and (b), the “Interim Limits”). The actual amounts available to be borrowed under the DIP Facility will be subject to the Initial Budget or the DIP Budget, as applicable, (each term as defined below), subject to the Permitted Variances (as defined below).
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Availability:
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So long as the Total Outstandings (as defined below) do not exceed the lesser of (a) the DIP Loan Limit (as defined below) and (b) the amount then authorized by any Financing Order (including, without limitation, prior to the entry of the Final Order, the Interim Limits): (i) loans under the DIP Facility will be available to be made at any time prior to the Maturity Date (as defined below), (ii) letters of credit under the DIP Facility will be issued and renewed as described in the section entitled “Letters of Credit” below and (iii) amounts repaid under the DIP Facility may be reborrowed. | ||||||||||
“Total Outstandings” means, at any time, the aggregate principal amount of the loans under the DIP Facility then outstanding plus the aggregate stated amount of all issued but undrawn Letters of Credit and, without duplication, all unreimbursed disbursements on any Letter of Credit as of such date.
“DIP Loan Limit” means the DIP Commitments less the amount of any Carve Out Reserves (as defined in Annex II hereto).
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Letters of Credit: |
A portion of the DIP Facility not in excess of $100 million shall be available for the issuance of letters of credit (“Letters of Credit”) by Wells Fargo Bank, N.A. (the “Post-Petition Issuing Bank”). Upon entry of the Interim Order (as defined below), all letters of credit issued under the Pre-Petition Credit Agreement (the “Refinanced L/Cs”) shall be Refinanced and deemed reissued under the Post-Petition Credit Agreement (the “Pre-Petition L/C Refinancing”).
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Permitted Use of Proceeds: | All proceeds under the DIP Facility shall be used strictly in accordance with the Initial Budget or the DIP Budget, as applicable, subject to the Permitted Variance, as provided below. Unless otherwise agreed, no borrowing shall be made more frequently than once per week. | |||||||||||||||||||
Term: |
All commitments of the Post-Petition Lenders under the DIP Facility shall terminate at the earliest of the following events: the date which is 6 months after the Petition Date (or, with the consent of the Majority Post-Petition Lenders, the date that is 9 months after the Petition Date; subject to not less than five (5) business days’ prior written notice by the Borrower of the extension request, the absence of any default or event of default under the Post-Petition Credit Agreement (an “Event of Default”), truth and accuracy in all material respects of representations and warranties (unless such representations and warranties are already qualified by materiality, material adverse effect or a similar qualification in which case such representations and warranties shall be true and correct in all respects), the effectiveness of the restructuring support agreement and payment of the Extension Fee (as defined below), it being understood that such extension shall be binding on all of the Post-Petition Lenders to the extent such extension is approved by the Majority Post-Petition Lenders and the other conditions for such condition are satisfied (such extension, the “Extension”)); the entry of an order pursuant to section 363 of the Bankruptcy Code approving the sale of substantially all of the Debtors’ assets; the effective date of any plan of reorganization; the entry of an order for the conversion of the Debtors’ bankruptcy cases to cases under Chapter 7 of the Bankruptcy Code; the entry of an order for the dismissal of the Debtors’ bankruptcy cases; or at the election of the Post-Petition Agent or the Majority Post-Petition Lenders, the date on which any Event of Default is continuing (the earliest of the events described above, the “Maturity Date”).
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New Money Loan Interest Rate:
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Choice of 1 month Adjusted LIBO Rate (1.0% floor) + 5.50% per annum or Alternate Base Rate (2.0% floor) + 4.50% per annum, payable monthly in cash, provided that no Interest Period may extend beyond the Maturity Date. | |||||||||||||||||||
Refinancing and Rate Applied to Drawn and Unreimbursed Refinanced L/Cs: | Choice of 1 month Adjusted LIBO Rate (1.0% floor) + 4.25% per annum or Alternate Base Rate (2.0% floor) + 3.25% per annum. | |||||||||||||||||||
Default Rate: | Alternate Base Rate (2.0% floor) + 4.75% per annum + an additional 2.00% per annum default rate, effective (a) automatically upon any payment Event of Default and (b) upon written notice to the Borrower of the election of the Majority Post-Petition Lenders for any other Event of Default that has occurred and is continuing, in each case, with accrual of the default rate occurring from and including the first date on which the applicable Event of Default occurred and ending on the date on which such Event of Default has been cured or waived. | |||||||||||||||||||
Facility Fee: |
2.00% of the New Money Commitments payable to the Post-Petition Lenders on the Closing Date (as defined below) ratably in accordance with their New Money Commitments as of such date. “New Money Commitments” shall be defined as (a) $150,000,000 minus (b) the face amount of the Refinanced L/Cs.
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Unused Commitment Fee: | 0.5% per annum on daily average unused amount of the New Money Commitments payable monthly in arrears and on the Maturity Date. | |||||||||||||||||||
Letter of Credit Fees: |
A per annum participation fee payable ratably to each Post-Petition Lender equal in the aggregate to (x) 5.50% with respect to Letters of Credit other than Refinanced L/Cs and (y) 4.25% with respect to Refinanced L/Cs. Borrower shall also pay to the issuing lender additional fronting and standard fees on the terms set forth in the Pre-Petition Credit Agreement.
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Extension Fee:
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50 bps on the amount of the New Money Commitments payable on the date of such Extension (the “Extension Fee”).
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Arrangement Fee and Agency Fee: |
As separately agreed between the Post-Petition Agent and the Borrower.
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Pre-Petition Secured Indebtedness: |
All indebtedness and other obligations under the Pre-Petition Credit Agreement and related loan and security documents (the “Pre-Petition Secured Indebtedness”).
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Adequate Protection Payments and Liens: | As adequate protection of the interests of the Pre-Petition Lenders for the DIP Facility advances, use of cash collateral and other collateral to the extent of any diminution in value of such interests, the Pre-Petition Lenders will receive, subject to the Carve Out (as defined below) (a) replacement liens on all real and personal property, tangible or intangible, wherever located, including all bank accounts, deposits and cash and, subject to and effective upon entry of the Final Order (as defined below), all proceeds of any avoidance actions under chapter 5 of the Bankruptcy Code, whether now existing or hereafter acquired by the Debtors and the Debtors’ bankruptcy estates, and all proceeds, products, rents, revenues and profits of same, and in each case junior to the liens securing the DIP Facility, (b) adequate protection payments consisting of current cash payments on a monthly basis in an amount equal to the amount of post-petition interest and fees on the obligations, at the Pre-Petition Credit Agreement default rate, in respect of the Pre-Petition Secured Indebtedness, (c) adequate protection payments consisting of cash reimbursement of the reasonable and documented (in summary format) fees, costs and expenses (including reasonable professional fees) of the Pre-Petition Agent and (d) super-priority administrative expense claims under Section 507(b) of the Bankruptcy Code and junior to the DIP Facility. | |||||||||||||||||||
Asset Sales: | The (i) net cash proceeds from certain sales of any of the Debtors’ assets outside the ordinary course of business and (ii) the proceeds of any extraordinary receipts, in excess of $5,000,000, individually or in the aggregate, on a combined basis for the foregoing clauses (i) and (ii) during the term of the DIP Facility shall be paid first to the Post-Petition Agent for application to the DIP Facility, and upon the DIP Facility being indefeasibly satisfied in full, then to the Pre-Petition Agent for application to the Pre-Petition Secured Indebtedness. | |||||||||||||||||||
Collateral: |
All indebtedness and obligations of the Debtors under the DIP Facility will be secured by security interests and liens granted pursuant to Section 364(c)(2) and (d)(1) of the Bankruptcy Code (the “Priority Lien”), with priority over all valid and perfected existing and future security interests, liens, claims and encumbrances, in and on all real and personal property of the Debtors, tangible or intangible, wherever located, including all bank accounts, deposits and cash and, subject to and effective upon entry of the Final Order, all proceeds of any avoidance actions under chapter 5 of the Bankruptcy Code (up to the amount of the commitments then in effect under the DIP Facility), whether now existing or hereafter acquired by the Debtors and the Debtors’ bankruptcy estates, and all proceeds, products, rents, revenues and profits of same (the “Collateral”), subject only to the Carve Out (as defined below), and certain liens to the extent they are valid, perfected, unavoidable and of senior priority to the liens and security interests of the Pre-Petition Lenders. In addition, to the extent of the outstanding obligations of the Debtors under the DIP Facility, the Post-Petition Lenders shall be granted superpriority claims over all other claims against the Debtors, subject only to the Carve Out. All of the liens described above shall be effective and perfected as of the Petition Date upon entry of, and pursuant to, the Interim Order. Administrative Agent shall have the discretion to require additional lien perfection filings and account control agreements after the Closing Date.
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Hedge Contracts:
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Any hedge contract under the Post-Petition Credit Agreement to which any Post-Petition Lender is a counterparty shall be secured by liens securing the DIP Facility on a pari passu basis.
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Guaranties: | All Debtors (other than the Borrower) shall guarantee the DIP Facility and secure it with their property that is Collateral. | |||||||||||||||||||
No Surcharge & Marshalling Waiver: |
The DIP Facility shall provide that subject only to and effective upon entry of the Final Order with respect to the Pre-Petition Lenders’ pre-petition collateral and adequate protection collateral, and effective upon entry of the Interim Order with respect to the Post-Petition Lenders’ post-petition collateral, (i) no costs or expenses of administration shall be imposed against such collateral, as applicable, under Section 506(c) of the Bankruptcy Code or otherwise, and (ii) such collateral shall not be subject to the doctrine of marshalling or Section 552 of the Bankruptcy Code “equities of the case” arguments.
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Carve Out: |
The Financing Orders shall include a carve out (the “Carve Out”) substantially identical to Annex II attached hereto.
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Budget: |
On or before the Petition Date, the Debtors shall have furnished to the Post-Petition Agent a thirteen (13) week rolling operating budget and cash flow forecast, in form and substance acceptable to the Post-Petition Agent (the “Initial Budget”), together with such related information and/or materials as the Post-Petition Agent and the Majority Post-Petition Lenders may deem reasonably necessary or desirable in connection therewith.
No later than 12:00 p.m. Central time on Thursday starting with the fourth Thursday of the first full four calendar weeks following the Petition Date, and every four weeks thereafter (or on a more frequent basis if agreeable to the Borrower and the Post-Petition Agent), the Debtors shall propose an updated rolling budget (the “Proposed DIP Budget”) to the Post-Petition Agent. The Post-Petition Agent may approve such Proposed DIP Budget, which will then become the budget then in effect in the Post-Petition Agent’s discretion if approved by the Post-Petition Agent in writing (which approval may be provided by electronic mail communicated by Post-Petition Agent’s counsel to Debtors’ counsel) (the “DIP Budget”); provided, that if the Proposed DIP Budget is not approved by the Post-Petition Agent, the DIP Budget that was last approved by the Post-Petition Agent shall continue to be in effect.
No later than 12:00 p.m. Central time on Thursday starting with the Thursday after the first full two calendar weeks following the Petition Date, and every four weeks thereafter, the Debtors shall deliver to the Post-Petition Agent a 13 week cash flow forecast. For the avoidance of doubt, the 13 week cash flow forecast will not be deemed a Proposed DIP Budget and will not require approval from the Post-Petition Agent.
No later than 12:00 p.m. Central time on Thursday of each week starting with the Thursday after the first full four calendar weeks following the Petition Date, and on a weekly basis thereafter (each a “Report Date”), the Debtors shall deliver to the Post-Petition Agent a weekly variance report (the “Variance Report”). The Variance Report shall measure performance for all actual post-petition disbursements made (a) with respect to the first Report Date, during the period from and including the Petition Date through and including the Friday ending immediately prior to the first Report Date and (b) with respect to each Report Date thereafter, the prior four weeks ending on the Friday immediately preceding such Report Date (the periods described in the foregoing clause (a) or (b), as applicable, the “Test Period”) on a rolling basis against the amount budgeted therefor in the DIP Budget, shall include calculations showing any discrepancies between anticipated and actual receipts and, beginning on the First Testing Date (as defined below), shall include calculations that demonstrate that the Debtors are in compliance with the Permitted Variance (as defined below).
On each Report Date, beginning on the Thursday following the first four full calendar weeks following the Petition Date (the “First Testing Date”), the Debtors shall demonstrate in each such Variance Report (A) that the actual disbursements made (the “Tested Disbursements”) in the prior Test Period, excluding (i) any fluctuations in royalty payments, payments to working interest holders, or similar payments or ad valorem or other taxes due on account of production of oil and gas interests that are attributable to changes in commodity prices, (ii) adequate protection payments to the Pre-Petition Agent and the Pre-Petition Lenders, (iii) reimbursements to Oasis Midstream Partners LP and its subsidiaries for capital expenditures, (iv) professional fees, (v) settlement payments to hedge counterparties and (vi) payments in respect of the DIP Facility (items (i) through (vi), collectively “Excluded Items”), do not exceed the sum of the aggregate amount budgeted therefor in the DIP Budget for the applicable Test Period by more than fifteen percent (15%) of the budgeted amount for such Test Period (the “Permitted Variance”) on a cumulative basis for all disbursements made during such Test Period and (B) that the Debtors’ Liquidity (to be defined as unrestricted cash and cash equivalents of the Debtors’ plus unused commitments under the DIP Facility) is, (i) at any time the Interim Order is in effect, an amount not less than $15 million and (ii) at any time the Final Order is in effect, no less than $20 million. For the avoidance of doubt, Liquidity shall be tested daily, but reported weekly in the Variance Report. Certification of compliance shall be provided on such Report Date, concurrently with delivery of each Variance Report.
Each Variance Report shall include actual disbursements and actual receipts for such Test Period, broken out as line items (but, for the avoidance of doubt, such items shall not be tested, other than the Tested Disbursements tested on an aggregate basis as described above).
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General Conditions Precedent: |
Usual and customary for a facility of this type and otherwise generally consistent with the Documentation Principles, including:
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1.The effectiveness of the Post-Petition Credit Agreement and availability of the DIP Facility will occur on the date (the “Closing Date”) that the following conditions are satisfied or waived:
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(a) The entry of an order by the Bankruptcy Court approving a cash management system for the Debtors and other “first day” orders satisfactory to the Post-Petition Agent; | ||||||||||||||||||||
(b) Execution and delivery of satisfactory definitive documentation for the DIP Facility;
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(c) Receipt of satisfactory Initial Budget approved by the Post-Petition Agent;
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(d) Receipt of a model of projected monthly cash flow, cash balance and balance of debt for borrowed money of the Debtors similar in level of detail to previously delivered models, for the monthly periods commencing on the first day of the month immediately following the month of effectiveness of the DIP Facility through December 31, 2020, in form and substance acceptable to the Post-Petition Agent;
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(e) Bankruptcy Court’s entry within three (3) business days of the Petition Date of an interim order approving the DIP Facility and use of cash collateral in a form and substance acceptable to the Post-Petition Agent (the “Interim Order”);
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(f) Reimbursement of all reasonable and documented (in summary form) fees and expenses of the Pre-Petition Agent and Pre-Petition Lenders and Post-Petition Agent and Post-Petition Lenders to the extent invoiced at least one (1) business day prior thereto;
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(g) Payment in full of unpaid reasonable and documented (in summary form) fees and expenses of Vinson & Elkins LLP and FTI Consulting to the extent invoiced at least one (1) business day prior thereto;
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(h) Use commercially reasonable efforts to, with respect to all hedge contracts entered into prior to the Closing Date, either (i) liquidate such hedges or (ii) reset such hedges to current market terms in existence at the time of such reset in exchange for a lump-sum cash payment substantially similar to the payment that such Debtor would be entitled to receive in respect of a contemporaneous liquidation of such hedge (collectively, the “Specified Liquidations”), in each case, on terms mutually acceptable to the Borrower and the applicable hedge counterparty, and all proceeds of such Specified Liquidations shall have been applied to the prepayment of the loans under the Pre-Petition Credit Agreement;
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(i) All representations and warranties of the Debtors in the Post-Petition Credit Agreement shall be true and correct in all material respects (unless such representations and warranties are already qualified by materiality, material adverse effect or a similar qualification in which case such representations and warranties shall be true and correct in all respects), and there shall be no default or Event of Default in existence at the time of, or immediately after giving effect to the making of, such initial funding;
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(j) The Post-Petition Agent shall have received such documents and other instruments as are customary for transactions of this type or as it may request;
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(k) The delivery of other customary closing deliverables (including, without limitation, delivery of secretary and officer certificates and notice of borrowing); and
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(l) The sum of the outstanding principal amount of loans under the Pre-Petition Credit Agreement and the LC Exposure under the Pre-Petition Credit Agreement shall be no more than $500 million
|
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representations and warranties of the Debtors in the Post-Petition Credit Agreement shall be true and
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2.As to all subsequent advances under the DIP Facility:
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(a) All representations and warranties of the Debtors in the Post-Petition Credit Agreement shall be true and correct in all material respects (unless such representations and warranties are already qualified by materiality, material adverse effect or a similar qualification in which case such representations and warranties shall be true and correct in all respects); there shall be no default or Event of Default in existence at the time of, or after giving effect to the making of, such funding; the delivery of a borrowing request; no violation of any applicable governmental requirement shall occur as a result of such advance; and there shall be no event, development or circumstance that has resulted in or could be expected to result in a material adverse effect.
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(b) With respect to amounts in excess of the Interim Limits or the Cap, the Bankruptcy Court’s entry within thirty (30) days of the Petition Date of a final order approving the DIP Facility and use of cash collateral, in form and substance acceptable to the Post-Petition Agent (the “Final Order”, and the Interim Order and Final Order collectively are referred to herein as the “Financing Orders”), which Final Order shall be in full force and effect and shall not have been stayed, reversed, vacated or otherwise modified; provided that the time period for entry of the Final Order shall automatically be extended to within forty (40) days of the Petition Date in the event the Debtors commence the Chapter 11 Cases on a “prepackaged” basis by commencing solicitation of a chapter 11 plan of reorganization prior to the Petition Date; and
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(c) The making of the requested credit extension would not cause the Total Outstandings to exceed the lesser of (a) the DIP Loan Limit and (b) the amount then authorized by any Financing Order (including, without limitation, prior to the entry of the Final Order, the Interim Limits).
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Representations & Warranties: |
Customary representations and warranties for transactions of this type and otherwise generally consistent with the Documentation Principles.
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Affirmative Covenants: |
Affirmative covenants customary for transactions of this type and otherwise generally consistent with the Documentation Principles, including, without limitation, the following (subject to exceptions and qualifications to be agreed):
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(a)Maintain its corporate existence and do all things necessary to keep rights to the conduct of its business; | ||||||||||||||||||||
(b) Notice of material events;
(c) Perform every act and discharge all of the obligations to be performed and discharged under the Post-Petition Credit Agreement;
(d) Maintain books and records;
(e) Comply with laws, environmental matters, ERISA, Commodity Exchange Act Keepwell Provisions;
(f) Comply with covenants with respect to the DevCo undertakings, marketing activities, further assurances, reserve reports, title information, additional collateral, additional guarantors, taxes and claims;
(g) Operate and maintain its properties and collateral (including the DevCo properties);
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(h) Permit inspections; | ||||||||||||||||||||
(i) Maintain current financial records in accordance with GAAP; | ||||||||||||||||||||
(j) Comply with customary reporting requirements, including audited annual financial reports and quarterly consolidated financial reports; delivery of the items described under the heading “Budget” above; 30 days after the end of each month, delivery of a report of actual production volume for such month; on the last day of each month, delivery of a forecast of production volume for the next month; |
(k) Maintain ownership of DevCo equity interests and ownership of certain general partnership interests;
(l) Support entry of a Final Order providing for a waiver of any claims to surcharge the Post-Petition Agent’s and Pre-Petition Agent’s collateral under section 506(c) of the Bankruptcy Code;
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(m) Maintain insurance in amounts and on terms appropriate to the Debtors’ business and with financially sound and reputable insurers; | ||||||||||||||||||||
(n) Support entry of a Final Order providing for an acknowledgment of the right of the Post-Petition Agent and Pre-Petition Agent, as applicable, to credit bid at any sale of the Debtors’ assets that are subject to the liens of the Post-Petition Lenders or the Pre-Petition Lenders (whether 363 sale or otherwise); and | ||||||||||||||||||||
(o) Comply at all times with the Budget, subject to the Permitted Variance, as described above. | ||||||||||||||||||||
Negative Covenants: |
Negative covenants customary for transactions of this type and otherwise generally consistent with the Documentation Principles, including, without limitation, covenants with respect to the following (subject to exceptions and qualifications to be agreed):
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(a) Create or permit to exist any lien or encumbrance on any asset, except as permitted by the Post-Petition Credit Agreement or the Financing Orders; | ||||||||||||||||||||
(b) Incur or permit to exist any financing under section 364 of the Bankruptcy Code or any other indebtedness, except as permitted by the Post-Petition Credit Agreement; | ||||||||||||||||||||
(c) Create or permit to exist any superpriority administrative expense claim except as specifically permitted by the Post-Petition Agent or the Financing Orders, other than with respect to the DIP Facility or as contemplated by the restructuring support agreement; | ||||||||||||||||||||
(d) Make investments, loans and advances, except as permitted by the Post-Petition Credit Agreement;
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(e) Permit the Liquidity as of the end of any business day to be less than (1) $15 million at any time following entry of the Interim Order but before entry of the Final Order; and (2) $20 million at any time following entry of the Final Order;
(f) Declare or pay dividends or make any distributions to equityholders or pay amounts with respect to subordinated indebtedness or any other prepetition indebtedness, except to the Pre-Petition Lenders and as specifically permitted by the Post-Petition Credit Agreement;
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(g) Merge or consolidate with any other entity, make any fundamental changes in its corporate structure or otherwise change the nature of its business;
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(h) Transfer or otherwise dispose of any assets other than hydrocarbons in the ordinary course of business and other exceptions to be agreed;
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(i) Use cash collateral or the proceeds of the DIP Facility except in accordance with the Initial Budget or DIP Budget, as applicable, and subject to the Permitted Variance; or
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(j) Fail to operate strictly in compliance with the Initial Budget or DIP Budget, as applicable, subject to the Permitted Variance, as described above. |
Case Milestones: |
The Financing Orders and the Post-Petition Credit Agreement shall provide that the Debtors will implement their Chapter 11 Case in accordance with the Milestones as reflected in Annex I attached hereto.
The Debtors may extend a Case Milestone only with the express written consent of the Post-Petition Agent (which consent may be provided by electronic mail communicated by Post-Petition Agent’s counsel to Debtors’ counsel) acting at the direction of the Majority Post-Petition Lenders.
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Events of Default: | Events of default customary for transactions of this type, consistent with the Documentation Principles, including, without limitation (subject to exceptions and qualifications to be agreed): | |||||||||||||||||||
(a) The failure of Debtors to obtain the Final Order from the Bankruptcy Court not later than 30 days after the Petition Date; provided that the foregoing time period shall automatically be extended to forty (40) days after the Petition Date in the event the Debtors commence the Chapter 11 Cases on a “prepackaged” basis by commencing solicitation of a chapter 11 plan of reorganization prior to the Petition Date provided further, however, that in no event shall the foregoing Case Milestone be later than immediately preceding the hearing on confirmation of the Plan;
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(b) Nonpayment of principal, fees, interest or mandatory prepayments when due (with a 3 business day grace period for non-principal payments); | ||||||||||||||||||||
(c) The failure or breach of any warranty or representation of the Debtors; | ||||||||||||||||||||
(d) Violation of covenants (subject, in the case of certain affirmative covenants, to a 30-day grace period);
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(e) Change of control; | ||||||||||||||||||||
(f) Entry of an order for the dismissal or conversion to Chapter 7 of the Debtors’ bankruptcy cases; the appointment of a bankruptcy trustee or examiner (with expanded powers beyond those set forth in section 1106(a)(3) of the Bankruptcy Code) except with the express written consent of the Post-Petition Agent; the granting of any other superpriority administrative expense claim, except with the express written consent of the Post-Petition Agent; any Debtor shall attempt to vacate or modify the Interim Order, the Final Order or the cash collateral order over the objection of the Post-Petition Agent; or any Debtor shall institute any proceeding or investigation or support same by any other person who seeks to challenge the status and/or validity of the liens of the Pre-Petition Agent or the Post-Petition Agent (as security for the Pre-Petition Lenders and the Post-Petition Lenders, respectively);
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(g) The Bankruptcy Court shall enter an order or orders granting relief from the automatic stay to the holder or holders of any security interest or lien (other than in favor of Post-Petition Agent, Post-Petition Lenders, Pre-Petition Agent or Pre-Petition Lenders) to permit the pursuit of any judicial or non-judicial transfer or other remedy against any assets of any of the Debtors, in each case involving assets with an aggregate value in excess of $1 million; | ||||||||||||||||||||
(h) The Debtors shall fail to meet any established Case Milestones (after giving effect to any extension thereof as described under the section entitled “Case Milestones” above);
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(i) Failure by any Debtor to comply in any respect with the Financing Orders;
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(j) The filing or support by the Debtors of any plan of reorganization that (i) does not provide for termination of the unused commitments under the DIP Facility and indefeasible payment in full in cash of all of the Debtors’ obligations under the DIP Facility and (ii) is not otherwise acceptable to the Post-Petition Agent in its sole discretion;
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(k) Bankruptcy Court approves or the Debtors request approval of any sale or other disposition of all or a portion of the Collateral securing the DIP Facility loans pursuant to section 363 of the Bankruptcy Code other than as permitted by the Financing Orders or a plan of reorganization approved by the Post-Petition Agent and the Majority Post-Petition Lenders, or the Post-Petition Credit Agreement;
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(l) The termination of the restructuring support agreement or any agreement attached as an exhibit thereto, either in whole or in part, or any modification, amendment or supplement of the restructuring support agreement, including the exhibits thereto without the prior written consent of the Majority Post-Petition Lenders; and
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(m) Any Debtor files, or supports a motion that has been filed, to reject the restructuring support agreement.
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Upon the occurrence and continuation of any Event of Default, the Post-Petition Agent may, and at the direction of the Majority Post-Petition Lenders shall, subject in all respects to the Financing Orders, exercise rights and remedies in accordance with the Post-Petition Credit Agreement and security documents and applicable law. | ||||||||||||||||||||
Releases/
Covenant Not to Sue:
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Subject to the challenge rights of third parties set forth in the Interim Order and Final Order, the Debtors shall provide each of the Pre-Petition Agent, the Pre-Petition Lenders, the Issuing Bank and the Secured Swap Parties, the Post-Petition Agent, the Post-Petition Issuing Bank, the Post-Petition Lenders and other customary parties a comprehensive release and covenant not to sue as to any and all claims and causes of action against any of them as of the date of such release, and the date of each advance made under the DIP Facility. | |||||||||||||||||||
Expense Reimbursement/ Indemnification: |
All reasonable and documented out-of-pocket expenses (in summary form) of the Post-Petition Agent associated with the preparation, execution, delivery and administration of the DIP Facility and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of counsel), (b) all costs, expenses, Taxes, assessments and other charges incurred by the Post-Petition Agent or any Post-Petition Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by the Post-Petition Credit Agreement and any related documents, (c) all reasonable and documented out-of-pocket expenses (in summary form) incurred in connection with the issuance of any letter of credit, and (d) all out-of-pocket expenses incurred by the Post-Petition Agent or any Post-Petition Lender, including the reasonable and documented (in summary form) fees, charges and disbursements of any counsel for any Post-Petition Lender, in connection with the enforcement or protection of its rights in connection the Post-Petition Credit Agreement and any related documents.
The Post-Petition Agent and the Post-
Petition Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified and held harmless against, any loss, liability, cost or expense incurred in respect of the transactions and the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent such losses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the indemnified person).
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Assignments:
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The Post-Petition Credit Agreement will contain assignment provisions customarily found in the loan agreements for similar debtor in possession financings and subject to the Documentation Principles; provided, that for the avoidance of doubt any assignment under the Post-Petition Credit Agreement shall (1) be subject to the Borrower’s consent (unless an Event of Default has occurred and is continuing or such assignment is made to a Post-Petition Lender or its affiliate); and (2) not be permitted to any Industry Competitor (as defined in the Pre-Petition Credit Agreement). All assignees of DIP Facility loans and letters of credit shall become bound to the terms of the restructuring support agreement (unless the restructuring support agreement is no longer in effect at such time).
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Amendments: |
Any provision of the Post-Petition Credit Agreement or the Financing Orders may be amended with the consent of the Borrower together with the vote of Post-Petition Lenders holding more than 50% of the overall commitments under the Post-Petition Credit Agreement or, in the case of a termination of such commitment, of the revolving loans outstanding thereunder (the “Majority Post-Petition Lenders”), except with respect to certain matters specified in the Post-Petition Credit Agreement requiring the vote of all Post-Petition Lenders or each affected Post-Petition Lender.
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Governing Law: | New York law shall govern the Post-Petition Credit Agreement (provided that perfection of security interests in the Debtors’ real property or midstream assets will be governed by the law of the state in which such assets are located to the extent determined by the Post-Petition Agent to be necessary). Debtors and the Post-Petition Lenders shall agree that all disputes between the Debtors on the one hand and the Post-Petition Lenders on the other hand shall be heard by the Bankruptcy Court so long as the bankruptcy case is pending. | |||||||||||||||||||
DIP to Exit Conversion: |
On the date upon which the conditions precedent to the effectiveness of an “exit credit facility” (the “Exit Facility”) shall have been satisfied or waived as contemplated by the terms specified in the Exit Facility Term Sheet attached as Exhibit A (the “Exit Facility Term Sheet”) to that certain Exit Commitment Letter (the “Exit Facility Commitment Letter”) by and among the Borrower, Wells Fargo Securities, LLC, as Lead Arranger (as defined therein), and the Initial Lenders (as defined therein) (the following clauses (i) through (iv), collectively, the “DIP Debt Conversion”): (i) the aggregate principal amount of all DIP Facility loans that are outstanding as of such date and any Pre-Petition Secured Indebtedness that was not converted into the DIP Facility shall, in each case, be automatically converted on a dollar-for-dollar basis for “Loans” under and as defined in the Exit Facility, (ii) all outstanding Letters of Credit shall be deemed to be issued as “Letters of Credit” under and as defined in the Exit Facility, (iii) all outstanding hedges with a Post-Petition Lender or its affiliate shall be deemed to be secured by the liens securing the Exit Facility, and the Debtors shall receive credit therefor for purposes of satisfying the minimum hedging requirements set forth in the Exit Facility Term Sheet, and (iv) all outstanding treasury management arrangements with a Post-Petition Lender or its affiliate shall be deemed to be secured by the liens securing the Exit Facility. Upon payment in full (as defined in the Post-Petition Credit Agreement), the DIP Facility will terminate and be superseded and replaced in its entirety by the Exit Facility.
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I. Parties
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Borrower: |
Oasis Petroleum North America LLC, a Delaware limited liability company (the “Borrower”).
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Guarantors: |
Oasis Petroleum Inc., a Delaware corporation (the “Parent”), Oasis Petroleum LLC, a Delaware limited liability company (“OP LLC”), Oasis Petroleum Marketing LLC, a Delaware limited liability company, Oasis Well Services LLC, a Delaware limited liability company, Oasis Midstream Services LLC, a Delaware limited liability company, OMS Holdings LLC, a Delaware limited liability company, Oasis Petroleum Permian LLC, a Delaware limited liability company, OMP GP LLC, a Delaware limited liability company (the “General Partner”), and all Material Subsidiaries that are required to guarantee the Facility (defined below) in accordance with its terms during the tenor of the Facility (collectively, the “Guarantors” and, together with the Borrower, the “Credit Parties”); provided that (a) foreign Subsidiaries, (b) domestic Subsidiaries, substantially all the assets of which consist of equity interests, or debt and equity interests, in controlled foreign corporations (“FSHCO”) and (c) domestic Subsidiaries that are direct or indirect Subsidiaries of foreign Subsidiaries, shall not be required to become Guarantors.
“Material Subsidiary” means, as of any date, (a) any restricted domestic Subsidiary that owns any oil and gas property evaluated in the most recently delivered reserve report and (b) any restricted domestic Subsidiary of Parent, OP LLC or the Borrower that, together with its subsidiaries, owns property having a fair market value of $5,000,000 or more; provided that if the aggregate fair market value of all property of all restricted domestic Subsidiaries that are not Guarantors exceeds $10,000,000, then Parent, OP LLC and the Borrower shall promptly designate restricted domestic Subsidiaries that are not then Guarantors as Material Subsidiaries (and cause such designated Material Subsidiaries to comply with the Facility) to the extent necessary so that the aggregate fair market value of all property owned by restricted domestic Subsidiaries that are not then Guarantors is less than $10,000,000. For purposes herein, “Subsidiary” shall exclude Oasis Petroleum International LLC and its subsidiaries, Oasis Midstream Partners, LP (“OMP”) and its subsidiaries and the DevCos (defined below).
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DevCos: |
Beartooth DevCo LLC, a Delaware limited liability company, and Bobcat DevCo LLC, a Delaware limited liability company (each a “DevCo” and together, the “DevCos”).
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Administrative Agent: |
Wells Fargo Bank, N.A. (“Wells Fargo” and in such capacity, the “Administrative Agent”).
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Sole Lead Arranger and Sole Lead Bookrunner: |
Wells Fargo Securities, LLC shall act as sole lead arranger and sole lead bookrunner (in such capacity, the “Lead Arranger”).
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Revolving Lenders: |
Wells Fargo and a syndicate of financial institutions and other entities arranged by the Lead Arranger and approved by the Borrower (each a “Revolving Lender” and, collectively, the “Revolving Lenders”). On the Closing Date (defined below), the Revolving Lenders shall constitute all of the Pre-Petition Lenders (defined below) participating in the DIP Facility (defined below). For the avoidance of doubt, in no event shall any Term Lender (defined below) be considered a Revolving Lender.
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Required Revolving Lenders: |
Revolving Lenders (excluding any defaulting Revolving Lenders) holding not less than 66.67% of the outstanding aggregate amount of the revolving loans under the Facility (the “Loans”) and participations in Letters of Credit (defined below) (or, if no Loans or Letters of Credit are outstanding, Revolving Lenders (excluding any defaulting Revolving Lenders) holding not less than such percentage of the unused Commitments (defined below) under the Facility) (the “Required Revolving Lenders”). For the avoidance of doubt, in no event shall any Term Lender be considered in the determination of Required Revolving Lenders.
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Majority Revolving Lenders: | Revolving Lenders (excluding any defaulting Revolving Lenders) holding more than 50% of the outstanding aggregate amount of the Loans and participations in Letters of Credit (or, if no Loans or Letters of Credit are outstanding, Revolving Lenders (excluding any defaulting Revolving Lenders) holding more than such percentage of the unused Commitments under the Facility). For the avoidance of doubt, in no event shall any Term Lender be considered in the determination of Majority Revolving Lenders. | ||||||||||
Swingline Lender: |
Wells Fargo (in such capacity, the “Swingline Lender”).
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II. Facility
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Type and Amount of Facility: |
The reserve-based revolving credit facility (the “Facility”) shall be in an amount of up to $1.5 billion (the “Aggregate Maximum Credit Amount” and the portion of the Aggregate Maximum Credit Amount allocated to a particular Revolving Lender shall be referred to herein as such Revolving Lender’s “Maximum Credit Amount”).
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Maturity Date: |
The date that is 3.5 years after the Closing Date (the “Maturity Date”).
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Availability: |
Subject to the Borrowing Base and the Aggregate Elected Commitment Amount (each term defined below) then in effect and to the Availability Block and the Initial Hedge Reduction Amount, in each case, described in the row captioned “Initial Hedging”, the Facility shall be available on a revolving basis during the period commencing on the Closing Date subject to satisfaction of the applicable conditions precedent described below, and ending on the earlier of the Maturity Date and the termination of the Commitments (the “Termination Date”), in accordance with the terms of the Facility Documentation (defined below).
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Availability under the Facility shall be limited to the total Commitments of the Revolving Lenders, and shall also be subject to the Availability Block described below and the Initial Hedge Reduction Amount described below. “Commitment” means, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Loans, to acquire participations in Swingline Loans (defined below) and to acquire participations in Letters of Credit under the Facility, expressed as an amount which shall at any time be the least of (a) such Revolving Lender’s Maximum Credit Amount, (b) such Revolving Lender’s applicable percentage of the then effective Borrowing Base and (c) such Revolving Lender’s Elected Commitment (defined below).
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Letters of Credit: |
A portion of the Facility equal to $100 million shall be available for the issuance of letters of credit (the “Letters of Credit”) by Wells Fargo (in such capacity, the “Issuing Bank”). No Letter of Credit shall have an expiration date after the earlier of (a) one year after the date of issuance (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (b) five business days prior to the Maturity Date. On the Closing Date, all letters of credit issued (or deemed reissued) under the DIP Credit Agreement shall be refinanced and deemed reissued under the Credit Agreement (defined below).
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Drawings under any Letter of Credit shall be reimbursed by the Borrower on the same business day if the Borrower receives notice of the applicable Letter of Credit disbursement by 10:00 a.m. New York City time on such day; provided, that if such disbursement is not less than $1,000,000, the Borrower shall be deemed to have requested an ABR Loan (defined below) in the amount of such disbursement. To the extent that the Borrower does not so reimburse the Issuing Bank, the Administrative Agent shall notify each Revolving Lender of (a) the applicable disbursement, (b) the payment then due from the Borrower and (c) such Revolving Lender’s applicable percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its applicable percentage of the payment then due from the Borrower. | |||||||||||
Swingline Loans: |
A portion of the Facility shall be available for the extension by the Swingline Lender of swingline loans (the “Swingline Loans”) not resulting in (a) swingline borrowings in excess of $50,000,000 at any time outstanding or (b) the sum of the outstanding principal amount of the Loans, the outstanding principal amount of the Swingline Loans and the LC Exposure (defined below) (the “Revolving Credit Exposure”) exceeding the aggregate Commitments. Settlement of such Swingline Loans will occur no later than seven (7) business days following the making of a Swingline Loan. Upon the making by the Swingline Lender of any Swingline Loan, the Administrative Agent shall notify each Revolving Lender of its applicable percentage thereof and each Revolving Lender shall pay to the Administrative Agent its applicable percentage of such Swingline Loan. The Borrower may borrow, prepay and reborrow amounts under the subfacility for Swingline Loans provided for in the Credit Agreement; however, in no event may the Borrower continue or convert a Swingline Loan.
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Purpose: |
The proceeds of the Loans shall be used by the Borrower (a) for payments of certain fees, costs and expenses in connection with the Transactions (as defined in the Exit Commitment Letter to which this Exit Facility Term Sheet is attached), (b) to consummate the Refinancing (as defined in the Exit Commitment Letter to which this Exit Facility Term Sheet is attached) and (c) for general corporate purposes (including funding working capital for exploration and production operations) and to repay Swingline Loans; provided that the Borrower will not use any proceeds for any purpose which would violate the provisions of Regulations T, U or X.
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Security: |
The Facility and each commodity swap, interest rate swap or similar agreement between the Borrower and a Revolving Lender or an affiliate of a Revolving Lender (whether such swap was entered into prior to the time, or during the time, that such person or its affiliate is a Revolving Lender (including any swap agreement entered into with such person in existence prior to the Closing Date), even if such person subsequently ceases to be a Revolving Lender (or an affiliate thereof)) shall be ratably secured by:
• First priority (subject to certain permitted liens to be defined in the Facility Documentation in a manner consistent with the Documentation Principles (defined below)), perfected liens and security interests on substantially all assets of the Credit Parties, including a first priority (subject to certain permitted liens), perfected lien on all equipment of the Credit Parties and on all oil and gas properties of the Borrower and its subsidiaries that are Guarantors comprising not less than 90% of the proved oil and gas properties evaluated in the reserve report most recently delivered to the Administrative Agent, in each case, subject to exceptions to be agreed.
• Pledge of (a) 100% of the stock of restricted domestic Subsidiaries and (b) 65% of the stock of restricted foreign Subsidiaries and FSHCOs with, in each case for entities described in this clause (b), total assets greater than $1,000,000.
• Unconditional joint and several guarantee from each Guarantor.
• Pledge of equity in the Credit Parties’ percentage ownership in the DevCos and OMP.
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Borrowing Base: |
The Borrowing Base (the “Borrowing Base”) will be proposed by the Administrative Agent and subject to Revolving Lender approval as described below; provided that each of any proposal made by the Administrative Agent and each Revolving Lender’s determination as to whether to approve or disapprove such proposal will be in the sole discretion of the Administrative Agent and such Revolving Lender, as applicable, based upon its review of the most recently delivered reserve report (including any supplemental information provided thereto) and such other information (including, without limitation, the status of title information with respect to the oil and gas properties of the Credit Parties and the existence of any other debt, the Credit Parties’ other assets, liabilities, fixed charges, cash flow, business, properties, prospects, management and ownership, hedged and unhedged exposure to price, price and production scenarios, interest rate and operating cost changes) as it deems appropriate in its sole discretion and consistent with its normal oil and gas lending criteria as it exists at the particular time. The Borrowing Base will be re-determined on a semi-annual basis, with the parties having the Interim Redetermination Rights as described below. The Borrowing Base will also be subject to interim adjustments in connection with (a) sales of assets, hedge unwinds and title defects such that if the aggregate value of such sales or hedge unwinds exceeds 5.0% of the then existing Borrowing Base, the Borrowing Base will be automatically reduced by an amount equal to such excess and (b) the incurrence of Unsecured Debt, such that upon the incurrence thereof, the Borrowing Base will be automatically reduced by an amount equal to the product of 0.25 multiplied by an amount equal to the difference between (x) the stated principal amount of such Unsecured Debt minus (y) the stated principal amount of previously outstanding Unsecured Debt to the extent such previously outstanding principal amount was redeemed or refinanced with the proceeds of such Unsecured Debt. Scheduled Borrowing Base redeterminations will be on a semi-annual basis each April 1st and October 1st, based upon a reserve report prepared as of the immediately preceding January 1 and July 1, respectively, and delivered to the Administrative Agent and the Revolving Lenders on or before March 1st and September 1st of each year, respectively; provided that the first scheduled Borrowing Base redetermination will occur on or about April 1, 2021. The January 1 reserve report will be comprised of (a) a report prepared by one or more Approved Petroleum Engineers (as defined in the Existing Credit Agreement) with regards to not less than 90% of the proved oil and gas properties of the Borrower and its subsidiaries that are Guarantors and (b) a report on the remainder of such oil and gas properties prepared internally by the Borrower, and the July 1 reserve report will be prepared internally by the Borrower in a form reasonably acceptable to the Administrative Agent.
Upon receipt of a proposed Borrowing Base notice, each Revolving Lender shall have fifteen (15) days to agree with the proposed Borrowing Base or disagree with the proposed Borrowing Base by proposing an alternate Borrowing Base. If, in the case of any proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, at the end of such fifteen (15) days, any Revolving Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of the proposed Borrowing Base. If, in the case of any proposed Borrowing Base that would increase the Borrowing Base then in effect, at the end of such fifteen (15) days, any Revolving Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be a disapproval of the proposed Borrowing Base. If, at or prior to the end of such 15-day period, all of the Revolving Lenders, in the case of a proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Revolving Lenders (defined below), in the case of a proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or, in the case of a decrease or reaffirmation, deemed to have approved, as aforesaid, then the proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in the Facility. If, however, at the end of such 15-day period, all of the Revolving Lenders or the Required Revolving Lenders, as applicable, have not approved or, in the case of a decrease or reaffirmation, deemed to have approved, as aforesaid, then the Administrative Agent shall poll the Revolving Lenders to ascertain the highest Borrowing Base then acceptable to (a) in the case of a decrease or reaffirmation, a number of Revolving Lenders sufficient to constitute the Required Revolving Lenders and (b) in the case of an increase, all of the Revolving Lenders, and such amount shall become the new Borrowing Base, effective on the date specified in the Facility.
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The Borrower or the Administrative Agent, at the request of the Required Revolving Lenders, each may request one additional unscheduled Borrowing Base redetermination during any 12-month period (except for the period commencing on the Closing Date and ending on April 1, 2021) (the “Interim Redetermination Rights”).
To the extent the Closing Date occurs on or before the ninetieth (90th) day after the execution of the Exit Commitment Letter to which this Exit Facility Term Sheet is attached, the initial Borrowing Base shall be an amount equal to (a) $575,000,000 minus (b) the principal amount of the Non-Participating Lender Term Loan (as defined below). Otherwise, the initial Borrowing Base shall be equal to an amount determined by the Administrative Agent and the Revolving Lenders within the period that is thirty (30) days prior to the Closing Date, based on the reserve report prepared as of July 1, 2020 and provided to the Administrative Agent by the Borrower on September 1, 2020, along with such other information as the Administrative Agent may require, and otherwise shall be in accordance with the redetermination criteria described above.
Additionally, the initial Borrowing Base shall be subject to reduction by the Initial Hedge Reduction Amount as described below in the row captioned “Initial Hedging”.
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Elected Commitments: |
In addition to being subject to the Borrowing Base, availability under the Facility will be limited to the aggregate amount of “Elected Commitments” of the Revolving Lenders as set forth in the Facility (such aggregate amount, the “Aggregate Elected Commitment Amount”). The Aggregate Elected Commitment Amount as of the Closing Date shall be equal to the amount of the initial Borrowing Base.
Once between each scheduled redetermination of the Borrowing Base, the Borrower may request that the Aggregate Elected Commitment Amount be increased by either an existing Revolving Lender increasing its Elected Commitment or by having a person acceptable to the Administrative Agent who is not currently a Revolving Lender become a Revolving Lender with an Elected Commitment under the Facility. The Elected Commitments may be increased in amounts no less than $50 million (unless the Administrative Agent consents to such lesser amount); provided that in no event will such increase be permitted if the Aggregate Elected Commitment Amount will exceed the Borrowing Base then in effect.
Upon any redetermination or other adjustment in the Borrowing Base that would result in the Borrowing Base becoming less than the Aggregate Elected Commitment Amount, the Aggregate Elected Commitment Amount shall be automatically reduced (ratably among the Revolving Lenders in accordance with each Revolving Lender’s percentage of the Aggregate Maximum Credit Amount) so that it equals such redetermined Borrowing Base.
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Non-Participating Lender Term Loan Facility: |
To the extent that any holder of RBL Claims (as defined in the Restructuring Support Agreement) does not elect to participate in the Facility, such holder (each such holder, a “Term Lender” and, collectively, the “Term Lenders”; the Term Lenders collectively with the Revolving Lenders, the “Lenders”) shall, in accordance with the terms of the Restructuring Support Agreement, receive a non-amortizing “second-out” term loan which shall (a) accrue interest at the LIBO Rate plus 3.00% pursuant to a three-month Interest Period (as described in Annex I), (b) have a maturity date no earlier than seven (7) years after the Closing Date, (c) not subject the Credit Parties or its Subsidiaries to any representations, warranties or covenants that are more burdensome or restrictive to such entities than those applicable to the Facility, (d) be guaranteed and secured on a pari passu basis with the Facility pursuant to the same Facility Documentation, (e) include limited reporting obligations owed to the Term Lenders to be agreed and (f) otherwise be on terms and conditions acceptable to the Required Revolving Lenders and the Borrower (such term loan, the “Non-Participating Lender Term Loan”). The Non-Participating Lender Term Loan shall be documented as a separate tranche of term loan debt under the Facility Documentation, and the Term Lenders shall not be entitled to vote on any matter under the Facility Documentation (including but not limited to approval of the Borrowing Base and amendments or waivers of covenants) other than with respect to amendments or modifications directly and adversely affecting the economic terms of the Non-Participating Lender Term Loan, such as any amendment or modification that would decrease the interest rate applicable thereto (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest) or extend the maturity thereof.
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III. Certain Payment Provisions
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Fees and Interest Rates: |
As set forth on Annexes I and II.
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Principal Payments: | On the Termination Date. | ||||||||||
Voluntary Prepayments: | Voluntary prepayments of Loans are permitted (subject to payment of applicable breakage costs, if any) in minimum amounts and with prior notices to be set forth in the Credit Agreement but in any case consistent with the Documentation Principles. | ||||||||||
Mandatory Prepayments: |
If, as a result of a scheduled or interim redetermination of the Borrowing Base or an adjustment to the Borrowing Base in respect of title defects, the sum of outstanding Loans and Letters of Credit exceeds the Borrowing Base (a “Borrowing Base Deficiency”), then the Borrower shall, within ten (10) business days (or such longer period as may be acceptable to the Administrative Agent) following receipt of written notice of the redetermination or such adjustment, as applicable, deliver written notice (the “Election Notice”) to the Administrative Agent stating the action which the Borrower proposes to take to eliminate such Borrowing Base Deficiency, and the Borrower shall thereafter, at its option:
(a) prepay the borrowings and/or deposit cash collateral in an aggregate principal amount equal to such Borrowing Base Deficiency within thirty (30) days after the Borrower’s delivery of the Election Notice;
(b) repay such Borrowing Base Deficiency in six (6) equal and consecutive monthly installments, the first installment being due and payable thirty (30) days after the Borrower’s receipt of notice of the redetermined or adjusted Borrowing Base, and each subsequent installment being due and payable on the same day in each of the five (5) subsequent calendar months;
(c) provide additional proved oil and gas properties not evaluated in the most recently delivered reserve report acceptable to the Administrative Agent in its sole discretion (together with title information with respect thereto acceptable to the Administrative Agent in its sole discretion) sufficient to increase the Borrowing Base by an amount at least equal to such Borrowing Base Deficiency within thirty (30) days after its delivery of the Election Notice; or
(d) effect any combination of the foregoing clauses (a), (b) and (c) in amounts necessary to eliminate such Borrowing Base Deficiency; provided that (x) if the Borrower fails to provide a timely Election Notice, it shall be deemed to have selected the option described in clause (b) above and (y) all payments required to be made pursuant to this clause (d) must be made on or prior to the Termination Date. If a Borrowing Base Deficiency remains after prepaying all of the borrowings as a result of an LC Exposure, the Borrower shall deposit with the Administrative Agent on behalf of the Revolving Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in the Facility Documentation.
If a Borrowing Base Deficiency occurs as the result of an asset disposition, unwind or termination of hedge arrangements, or in connection with the incurrence of Unsecured Debt, then the Borrower shall (A) prepay the borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency (i) within one (1) business day after the receipt of proceeds from such disposition, unwind or termination or (ii) on the date of such incurrence of debt, and (B) if a Borrowing Base Deficiency remains after prepaying all of the borrowings as a result of LC Exposure, deposit with the Administrative Agent on behalf of the Revolving Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in the Facility Documentation. The Borrower shall be obligated to make such deposit of cash collateral on or prior to the first business day succeeding the date it or any Credit Party receives cash proceeds as a result of the applicable asset disposition, unwind or termination of hedge arrangements or debt incurrence; provided that in all cases, the Borrowing Base Deficiency must be eliminated on or prior to the Termination Date.
If a Borrowing Base Deficiency occurs as a result of the application of the Initial Hedge Reduction Amount as described below, then, within one (1) business day of such Borrowing Base reduction, the Borrower shall (A) prepay the borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency, and (B) if a Borrowing Base Deficiency remains after prepaying all of the borrowings as a result of LC Exposure, deposit with the Administrative Agent on behalf of the Revolving Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in the Facility Documentation.
Excess Cash Balances. If on the last business day of any week while there are any Loans outstanding, the Borrower or any other Credit Party have any cash or cash equivalents in excess of $50,000,000 in the aggregate (other than (a) cash collateral with respect to Letters of Credit, (b) any cash set aside and to be used to pay royalty or other production revenue obligations of the Credit Parties for amounts which have accrued to unaffiliated third parties, (c) any cash set aside to and to be used to pay in the ordinary course of business amounts (other than royalty or other production revenue obligations) of the Credit Parties then due and owing to unaffiliated third parties and for which the Credit Parties have issued checks or have initiated wires or ACH transfers (or will issue checks or initiate wires or ACH transfers within five business days) in order to make such payments, (d) any cash set aside and used solely for payroll or employee benefits or for the payment of taxes of the Credit Parties and (e) any cash of the Credit Parties constituting purchase price deposits set aside and held in escrow by an unaffiliated third party pursuant to a binding and enforceable purchase and sale agreement with an unaffiliated third party containing customary provisions regarding the payment and refunding of such deposits (the “Excess Cash”), then the Borrower shall prepay the Loans in an amount equal to the lesser of (x) the amount of Excess Cash and (y) the amount of Loans then outstanding, on the next business day); provided that to the extent that any Excess Cash results from the receipt of the proceeds of any sale or disposition of property less than five (5) business days prior to such date, then the Borrower shall not be required to prepay such Excess Cash until the fifth business day following the receipt of such proceeds. Each prepayment of Loans shall be applied as directed by the Borrower, provided that if the Borrower does not provide instructions for the application of such prepayment, such prepayment shall be applied, first, ratably to any ABR Loan then outstanding, and, second, to any LIBO Rate Loan (defined below) then outstanding, and if more than one LIBO Rate Loan is then outstanding, to each such LIBO Rate Loan in order of priority beginning with the LIBO Rate Loan with the least number of days remaining in the Interest Period (defined below) applicable thereto and ending with the LIBO Rate Loan with the most number of days remaining in the Interest Period applicable thereto. Each Excess Cash prepayment of Loans shall be applied ratably to the Loans included in the prepaid borrowings. Prepayments shall be accompanied by accrued interest to the extent required by the Facility Documentation.
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Optional Commitment Reductions: | The Aggregate Maximum Credit Amount and the Aggregate Elected Commitment Amount may be reduced by the Borrower in minimum amounts to be set forth in the Facility Documentation or terminated in whole. | ||||||||||
IV. Certain Conditions to Borrowing and Issuance of Letters of Credit
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Conditions Precedent to Effectiveness and Initial Borrowings: |
The availability of the Facility shall be conditioned upon satisfaction of customary conditions precedent to be agreed (the date upon which all such conditions precedent shall be satisfied or waived, the “Closing Date”), including without limitation:
(a) the negotiation, execution and delivery of satisfactory Facility Documentation, including security documentation, promissory notes and other usual and customary closing documents, certificates, and authorizing resolutions for the Facility;
(b) the Revolving Lenders and the Administrative Agent shall have received all reasonable and documented out-of-pocket fees and expenses required to be paid on or before the Closing Date (including the reasonable and documented fees and expenses of professionals retained by the Administrative Agent) invoiced at least two business days prior thereto;
(c) all representations and warranties of the Credit Parties in the Facility Documentation shall be true and correct in all material respects (or, if already qualified by materiality, material adverse effect or a similar qualification, true and correct in all respects), and there shall be no default or event of default in existence at the time of, or after giving effect to the making of, such funding on such date;
(d) receipt and satisfactory review of (i) Borrower’s audited financial statements for the most recent fiscal year ending at least 90 days prior to the Closing Date, (ii) Borrower’s unaudited financial statements for the most recent fiscal quarter ending at least 60 days prior to the Closing Date, (iii) pro forma financial statements of the Borrower (after giving effect to closing) and (iv) detailed financial projections (to be mutually agreed upon) of the Borrower;
(e) to the extent that the Closing Date has not occurred by March 1, 2021, receipt of a reserve report prepared by an Approved Petroleum Engineer as of January 1, 2020;
(f) satisfactory title information as reasonably required by the Administrative Agent on not less than 90% of the proved oil and gas properties of the Credit Parties evaluated in the most recent reserve report;
(g) receipt of mortgages and security agreements providing perfected, first priority (subject to certain permitted liens to be defined in the Facility Documentation in a manner consistent with the Documentation Principles) liens and security interests on (i) all personal property assets of the Credit Parties constituting collateral, and (ii) not less than 90% of the proved oil and gas properties of the Credit Parties evaluated in the most recent reserve report;
(h) all governmental and third party approvals necessary in connection with the financing contemplated hereby shall have been obtained and be in full force and effect;
(i) the Administrative Agent shall have received lien search results and be satisfied that there are no liens and security interests on the Credit Parties’ property other than (i) those being released and (ii) permitted liens;
(j) the delivery of legal opinions regarding the Facility Documentation, including, as applicable, opinions of local counsel with respect to mortgages governed by North Dakota, Montana and Texas law (which opinions shall include, among other things, the enforceability of the mortgages under applicable local law), in form and substance reasonably satisfactory to the Administrative Agent;
(k) the Administrative Agent and the Revolving Lenders shall have received, by at least three (3) business days prior to the Closing Date, “know your customer” and similar information required by bank regulatory authorities to the extent requested at least six (6) business days prior to the Closing Date;
(l) no material adverse change (excluding the pendency of the bankruptcy cases) from the date the Chapter 11 Cases commenced until the Closing Date;
(m) final redetermination of the Borrowing Base (to the extent required in accordance with the row captioned “Borrowing Base” above);
(n) entry of a final order of the Bankruptcy Court confirming the Plan (as defined in the Restructuring Support Agreement) that has not been reversed, stayed, modified or amended;
(o) the Administrative Agent shall have received satisfactory evidence that the Total Leverage Ratio (as defined below), determined on a pro forma basis after giving effect to the occurrence of the Transactions, does not exceed 1.5 to 1.0 as of the last day of the most recently completed fiscal quarter ended at least 60 days (for any fiscal quarter other than the last fiscal quarter of 2020) or 90 days (for the fiscal quarter ended December 31, 2020) prior to the Closing Date (with EBITDAX calculated on a last quarter annualized basis);
(p) minimum availability under the Facility, determined on a pro forma basis after giving effect to the occurrence of the Transactions of $75 million; provided that to the extent the Borrower has caused the beneficiary of a letter of credit issued (or deemed reissued) under the DIP Credit Agreement that will be reissued under the Facility to, on or prior to the Closing Date, enter into a legally binding agreement (in form and substance reasonably acceptable to the Administrative Agent) among the Borrower, such beneficiary and the Administrative Agent pursuant to which such beneficiary shall agree to return (or to accept an amendment thereto reducing the stated amount thereof) such letter of credit within ten business days of the Closing Date, the stated amount of such letter of credit (or the amount of such agreed reduction thereto) shall increase availability on a dollar for dollar basis solely for the purpose of determining satisfaction of this condition precedent (such adjustment as set forth in this proviso, the “LC Adjustment”); provided further that in the event that any beneficiary of any letter of credit subject to the LC Adjustment fails to comply with the applicable agreement regarding such letter of credit on or before the date that is ten business days after the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion), (x) availability shall be recalculated as of such date without giving effect to the LC Adjustment with respect to the applicable letter of credit and (y) to the extent that availability is less than $75 million after giving effect to such recalculation, an immediate event of default shall occur under the Facility;
(q) entry into hedges covering the Closing Date Minimum Hedge Volumes (as defined below); and
(r) after giving effect to any requested credit extension on the Closing Date, the Credit Parties shall have no outstanding debt except for debt permitted under the Credit Agreement.
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Conditions Precedent to Lending: |
The making of each extension of credit shall be conditioned upon (a) the accuracy in all material respects (or, if already qualified by materiality, material adverse effect or a similar qualification, the accuracy in all respects) of all representations and warranties (including, without limitation, the material adverse change, solvency and litigation representations) in the Facility Documentation on the date of such credit extension, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such credit extension, such representations and warranties shall continue to be true and correct in all material respects (or, if already qualified by materiality, material adverse effect or a similar qualification, true and correct in all respects) as of such specified earlier date, (b) there being no Borrowing Base Deficiency, no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit, (c) delivery of a borrowing request, (d) no violation of, or conflict with, any applicable governmental requirement occurring as a result of such credit extension, (e) there being no event, development or circumstance that has resulted in, or could reasonably be expected to have, a material adverse effect at the time of and immediately after giving effect to such credit extension, (f) no change in law having occurred that enjoins, prohibits or restrains, the making or repayment of any Loan or the consummation of the transactions contemplated the Facility Documentation and (g) there being no litigation pending or threatened seeking to, enjoin, prohibit or restrain, the making or repayment of any Loan or the consummation of the transactions contemplated the Facility Documentation.
At the time of and immediately after giving effect to any borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, the Borrower together with the other Credit Parties shall not have any Excess Cash.
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V. Certain Documentation Matters
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Documentation Principles: |
The definitive documentation for the Facility, including the credit agreement (the “Credit Agreement”) and all other related agreements and documents creating, evidencing or securing indebtedness or obligations of any of the Credit Parties to the Administrative Agent or granting or perfecting liens or security interests by any of the Credit Parties in favor of and for the benefit of the Administrative Agent, for itself and for and on behalf of the Revolving Lenders, on account of the Facility shall contain the terms set forth herein and shall otherwise be negotiated in good faith within a reasonable time period to be determined based on the expected Closing Date (the “Facility Documentation”). The documentation will be based on the applicable “Loan Documents” under and as defined in that certain Third Amended and Restated Credit Agreement dated October 16, 2018, among the Parent, OP LLC and the Borrower; the lenders party thereto (the “Pre-Petition Lenders”); and Wells Fargo, as administrative agent (as in effect immediately prior to the commencement of bankruptcy case of the Borrower, the “Existing Credit Agreement”), with changes consistent with this Exit Facility Term Sheet and otherwise to reflect customary lender form updates, including without limitation updated LIBOR replacement provisions (the “Documentation Principles”).
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Representations and Warranties: | The Facility shall contain representations and warranties customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation: existence and organizational status; power and authority; qualification; execution, delivery and enforceability of Facility Documentation; compliance with laws and agreements; with respect to the execution, delivery and performance of the Facility Documentation, no violation of, or conflict with, law, charter documents or material agreements; litigation; margin regulations; licenses and permits; governmental approvals and other consents with respect to the execution, delivery and performance of the Facility; Investment Company Act; PATRIOT ACT; absence of undisclosed liabilities; accuracy of disclosure and financial statements; since the Closing Date, no material adverse effect; no defaults or Borrowing Base Deficiency; insurance; taxes; ERISA; environmental matters; creation and perfection of security interests; no material misstatements; ownership of properties; maintenance of properties; location of business and offices; DevCo properties; subsidiaries and equity interests; state regulation; title to refined products; gas imbalances; prepayments; marketing of production; hedge agreements; use of loans and letters of credit; sanctions laws/OFAC; EEA Financial Institutions; consolidated solvency; beneficial ownership certification | ||||||||||
Affirmative Covenants: |
The Facility shall contain affirmative covenants customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation: delivery of annual and quarterly financial statements (with annual financial statements to be accompanied by an audit opinion from nationally recognized auditors that is not subject to qualification as to “going concern” or the scope of such audit other than solely with respect to, or resulting solely from (a) an upcoming maturity date under the Facility occurring within one year from the time such opinion is delivered or (b) any potential inability to satisfy any financial maintenance covenant on a future date or in a future period); certificates and other information; delivery of notices of defaults, certain material events and changes in beneficial ownership; maintenance of organizational existence and rights and privileges; conduct of business; performance of obligations under the Facility Documentation; inspections (including books and records); operation and maintenance of properties; maintenance of insurance; payment of taxes; compliance with laws (including environmental laws); delivery of reserve reports as described above; reasonably satisfactory title review on at least ninety percent (90%) of the proved oil and gas properties of the Credit Parties evaluated in the most recent reserve report; additional guarantors and collateral; further assurances on collateral matters consistent with the requirements otherwise set forth herein; ERISA; DevCo properties; marketing activities; Commodity Exchange Act Keepwell Provisions; DevCo parent undertaking; ownership of DevCo equity interests; ownership of General Partner equity interests; unrestricted subsidiaries; use of proceeds; know-your-customer information; sanctions laws/OFAC/anti-money laundering laws; account control agreements; hedge agreements (required minimum rolling hedging of (i) 80% for the next twelve months as of any date of determination and (ii) 70% for months thirteen through twenty-four following any date of determination, in each case (i) tested on a quarterly basis and (ii) based on estimated oil PDP production reflected in the most recently delivered reserve report).
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Initial Hedging: |
The Borrower shall enter into hedges covering minimum hedge volumes of (i) 10,303 MBBL for the first year after the Closing Date, (ii) 6,761 MBBL for the second year after the Closing Date and (iii) 4,945 MBBL for the third year after the Closing Date; provided that, 2/3rds of such hedging shall be entered into on the Closing Date (the “Closing Date Minimum Hedge Volumes”), with the remainder (the “Post-Closing Minimum Hedge Volumes” and, together with the Closing Date Minimum Hedge Volumes, the “Minimum Hedge Volumes”) to be entered into by the date that is thirty (30) days after the Closing Date (the “Post-Closing Deadline”).
In the event that the Closing Date Minimum Hedge Volumes do not satisfy the target hedge pricing requirements set forth below, then availability under the Facility shall be automatically reduced as of the Closing Date by an amount (the “Availability Block”) equal to the product of (1) sixty-five percent (65%) and (2) the positive sum of (a) the difference between the PV-9 value of (i) the Required First Year Target Hedge Pricing (defined below) multiplied by the Closing Date Minimum Hedge Volumes for the first year after the Closing Date and (ii) the actual hedge pricing multiplied by the Closing Date Minimum Hedge Volumes for the first year after the Closing Date, (b) the difference between the PV-9 value of (i) the Required Second Year Target Hedge Pricing (defined below) multiplied by the Closing Date Minimum Hedge Volumes for the second year after the Closing Date and (ii) the actual hedge pricing multiplied by the Closing Date Minimum Hedge Volumes for the second year after the Closing Date and (c) the difference between the PV-9 value of (i) the Required Third Year Target Hedge Pricing (defined below) multiplied by the Closing Date Minimum Hedge Volumes for the third year after the Closing Date and (ii) the actual hedge pricing multiplied by the Closing Date Minimum Hedge Volumes for the third year after the Closing Date. For the avoidance of doubt, the Availability Block will apply until the earliest of (i) satisfaction of the target hedge pricing requirements, (ii) the Post-Closing Deadline or (iii) waiver of the application of the Availability Block by the Required Revolving Lenders.
In the event that the Minimum Hedge Volumes entered into as of the Post-Closing Deadline do not satisfy the target hedge pricing requirements set forth below, then, the Credit Parties shall have ten business days after the Post-Closing Deadline (the “Cure Period”) to satisfy the target hedge pricing requirements set forth below; provided that availability under the Facility shall be automatically reduced as of the Post-Closing Deadline by an amount (the “Initial Hedge Reduction Amount”) equal to the product of (1) sixty-five percent (65%) and (2) the positive sum of (a) the difference between the PV-9 value of (i) the Required First Year Target Hedge Pricing multiplied by the Minimum Hedge Volumes for the first year after the Closing Date and (ii) the actual hedge pricing multiplied by the Minimum Hedge Volumes for the first year after the Closing Date, (b) the difference between the PV-9 value of (i) the Required Second Year Target Hedge Pricing multiplied by the Minimum Hedge Volumes for the second year after the Closing Date and (ii) the actual hedge pricing multiplied by the Minimum Hedge Volumes for the second year after the Closing Date and (c) the difference between the PV-9 value of (i) the Required Third Year Target Hedge Pricing multiplied by the Minimum Hedge Volumes for the third year after the Closing Date and (ii) the actual hedge pricing multiplied by the Minimum Hedge Volumes for the third year after the Closing Date.
If the Credit Parties fail to satisfy the target hedge pricing requirements set forth below for the Minimum Hedge Volumes during the Cure Period, unless the Required Revolving Lenders otherwise agree during the Cure Period, upon the expiration of the Cure Period, the Borrowing Base shall automatically be reduced by the Initial Hedge Reduction Amount and the Credit Parties shall have one business day to cure any Borrowing Base Deficiency resulting from such Borrowing Base reduction.
The target pricing for the hedges described above shall not be less than (i) $43.04/bbl for the first year after the Closing Date (the “Required First Year Target Hedge Pricing”), (ii) $43.94/bbl for the second year after the Closing Date (the “Required Second Year Target Hedge Pricing”) and (iii) $44.79/bbl for the third year after the Closing Date (the “Required Third Year Target Hedge Pricing”).
For the avoidance of doubt, in no event shall either the Availability Block or the Initial Hedge Reduction Amount be an amount less than $0.
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Financial Covenants: |
Financial covenants to consist of (a) a minimum current ratio of not less than 1.0 to 1.0 and (b) a maximum consolidated total leverage ratio (to be tested net of balance sheet cash in an amount not to exceed $50 million) (the “Total Leverage Ratio”) not to exceed 3.0 to 1.0. EBITDAX (as defined below) to be initially calculated LQA, building to trailing four (4) quarters. The first covenant test shall be based upon the fiscal quarter ending March 31, 2021. “EBITDAX” shall have substantially the same meaning ascribed to such term in the Existing Credit Agreement, with the addition of customary addbacks, subject, in each case, to caps to be agreed, with respect to any costs, fees or expenses in connection with the implementation of fresh start accounting, the Chapter 11 Cases, the Plan (as defined in the Restructuring Support Agreement) and the transaction contemplated thereby (including costs, fees and expenses in connection with litigation and settlement thereof confirmed under the Plan).
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Negative Covenants: |
The Facility shall contain negative covenants customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation:
(a) incurrence of debt, with exceptions for, among other things, (i) the Facility, (ii) capital lease arrangements up to a cap to be agreed, (iii) intercompany debt, (iv) any debt incurred on the Closing Date in accordance with an Acceptable Plan (as defined in the DIP Credit Agreement) and (v) unsecured debt in an aggregate principal amount not to exceed $400 million (“Unsecured Debt”), but subject to a pro forma Total Leverage Ratio of less than 2.5 to 1.0, reduction of the Borrowing Base to the extent set forth above, pro forma financial covenant compliance, and usual and customary high yield basket provisions consistent with the Documentation Principles;
(b) liens, which shall permit, among other things, liens (i) created under the Facility Documentation (including those liens securing the Facility, any hedge agreements and any treasury arrangements) and (ii) in respect of purchase money or capital lease arrangements up to a cap to be agreed;
(c) fundamental changes;
(d) asset sales and early monetization or early termination of any hedge or swap positions;
(e) investments and, solely with respect to the period commencing on the Closing Date through and including the last day of calendar year ending December 31, 2021, Capital Expenditures (as defined below), which shall permit (i) investments or Capital Expenditures in an amount not to exceed $25 million; provided that, such investments or Capital Expenditures shall only be permitted to the extent that (w) no event of default exists at the time of such investment, (x) the pro forma Total Leverage Ratio is less than 2.0 to 1.0, (y) immediately after giving effect to such investment the availability under the Facility is not less than 25% of the Borrowing Base, and (z) positive Free Cash Flow (as defined below) of the Borrower and its Subsidiaries, on a consolidated basis, exists at the time of such investment, (ii) the ability to make Capital Expenditures in an amount not to exceed $275 million during the 2021 calendar year; provided that, for the avoidance of doubt, this clause (e)(ii) is in addition to the investments and Capital Expenditures permitted in clause (e)(i) above and (iii) other investments under specified baskets to be set forth in the Facility Documentation;
(f) dividends or distributions on, or redemptions of, Borrower capital stock (“Restricted Payments”); provided that, commencing on the date of the delivery of the compliance certificate for the fourth fiscal quarter ending after the Closing Date, the Borrower shall be permitted to make Restricted Payments subject to (i) no event of default, (ii) a pro forma Total Leverage Ratio test of less than 2.0 to 1.0, (iii) pro forma availability under the Facility of not less than 25% of the Borrowing Base, and (iv) generation by the Borrower and its Subsidiaries on a consolidated basis, of positive Free Cash Flow at the time of such Restricted Payment, provided that clause (iv) shall only be applicable to the extent the pro forma Total Leverage Ratio exceeds 1.5 to 1.0 at the time of the applicable Restricted Payment;
(h) payments of principal on junior debt; provided that the Facility Documentation shall permit the refinancing of such junior debt subject to customary limitations;
(i) environmental matters;
(j) subsidiaries; designation and conversion of restricted and unrestricted subsidiaries;
(k) ERISA compliance;
(l) limitations on negative pledges and limitations on the prohibition of subsidiary distributions;
(m) sale or discount of receivables;
(n) mergers, etc.;
(o) gas imbalance; take-or-pay or other prepayments;
(p) covenants of Parent, OP LLC and the General Partner;
(q) non-qualified ECP Guarantors;
(r) changes to organizational documents of General Partner and DevCos;
(s) transactions with affiliates;
(t) change in nature of business;
(u) international operations; and
(v) use of proceeds.
For purposes of the positive free cash flow governor for Restricted Payments and investments described above, “Free Cash Flow” shall be defined as EBITDAX less (i) Interest Expense (defined in a manner consistent with the Documentation Principles), less (ii) Capital Expenditures (as defined below), less (iii) taxes paid in cash, less (iv) investments made in cash; less (v) mandatory cash payments in respect of debt.
“Capital Expenditures” shall mean accrued capital expenditures (as determined in accordance with GAAP) for any period, including (a) exploration and production expenses and other capital expenditures and (b) midstream capital expenditures associated with the Credit Parties’ retained ownership in the DevCos (specifically excluding (i) the portion of capital expenditures funded by OMP or attributable to OMP in accordance with ownership in each DevCo and (ii) capitalized interest).
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Events of Default: |
The Facility shall contain events of default customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation:
Nonpayment of principal when due; nonpayment of interest, fees or other amounts after a three business day grace period; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain affirmative covenants, to a 30-day grace period); failure to enter into the Post-Closing Date Minimum Hedge Volumes by the Post-Closing Deadline; cross-default to material indebtedness; bankruptcy and insolvency events; ERISA events; material judgment in excess of $25 million that is unstayed or undischarged for a period of thirty (30) consecutive days; the loan documents ceasing to be valid or enforceable; Change of Control (as defined below).
“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of equity interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding equity interests of the Parent, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by persons who were not (i) members of the board of directors of Parent as of the Closing Date, (ii) nominated (or whose nomination was approved) by the board of directors of the Parent or (iii) appointed (or whose appointment was approved) by directors so nominated (or whose nomination was so approved), (c) the Parent fails to own directly or indirectly all of the equity interests of the Borrower, (d) the General Partner shall cease to be the sole general partner of Oasis Midstream Partners LP (the “Midstream MLP”), with substantially the same powers to manage the Midstream MLP as are granted to the General Partner under the Midstream MLP partnership agreement, (e) the failure of the Parent, OP LLC and the Borrower to own directly or indirectly (i) all of the equity interests of the General Partner other than the Class B Units (as defined in the General Partner limited liability company agreement) and (ii) equity interests representing at least 85% of total number of Units (as defined in the General Partner limited liability company agreement) issued by the General Partner, (f) the failure of the Parent to have direct or indirect sole control of the General Partner or (g) the occurrence of a “change of control” (or any other similar event) under any material indebtedness.
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Voting: |
Amendments and waivers with respect to the Facility requires the approval of the Majority Revolving Lenders, except that no such agreement shall (a) increase the Maximum Credit Amount or Elected Commitment of any Revolving Lender without the written consent of such Revolving Lender, (b) increase the Borrowing Base without the written consent of all Revolving Lenders, decrease or maintain the Borrowing Base without the consent (or deemed consent) of the Required Revolving Lenders, or modify the Borrowing Base provisions in any manner that results in an increase in the Borrowing Base without the consent of each Revolving Lender, (c) reduce the principal amount of any Loan or Letter of Credit disbursement without the written consent of each Revolving Lender affected thereby, (d) reduce the rate of interest (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest), or reduce, or waive or excuse the payment of, any fee or other amount payable under the Facility owed to any Revolving Lender without the written consent of such Revolving Lender, (e) postpone the scheduled date of payment or prepayment of the principal amount of any Loan or Letter of Credit disbursement, or any interest thereon, or the scheduled date of any fees or other amounts payable under the Facility, or reduce the amount of, waive or excuse any such payment (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest), or postpone or extend the Termination Date without the written consent of each Revolving Lender affected thereby, (f) change the pro rata sharing of payments provisions without the written consent of each Revolving Lender, (g) release any Guarantor (except as otherwise provided in the Facility Documentation), release all or substantially all of the collateral (except as otherwise provided in the Facility Documentation) or waive or amend other customary provisions consistent with the Documentation Principles without the written consent of each Revolving Lender, or (h) amend, modify or otherwise affect the rights or duties of the Administrative Agent, any other agent, the Issuing Bank or the Swingline Lender under the Facility without the prior written consent of the Administrative Agent, other such agent, the Issuing Bank or the Swingline Lender, as the case may be.
For the avoidance of doubt, Term Lenders shall only be able to vote with respect to amendments or modifications to the Facility Documentation that directly and adversely affect the economic terms of the Non-Participating Lender Term Loan, such as any amendments or modifications that would decrease the interest rate applicable thereto (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest) or extend the maturity thereof.
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Assignments and Participations: |
(a) Consents: (i) Each Lender will be permitted to make assignments, without the consent of the Borrower, if such assignment is to a Lender, an affiliate of a Lender, an Approved Fund or any other assignee during the continuance of an event of default; provided that no such assignment may be made by a Revolving Lender to a Term Lender, an affiliate of a Term Lender or an Approved Fund affiliated with a Term Lender without the consent of the Borrower (other than during the continuance of an event of default), (ii) each Lender will be permitted to make assignments, without the consent of the Administrative Agent, if such assignment is to a Lender or an affiliate of a Lender immediately prior to giving effect to such assignment; provided that no such assignment may be made by a Revolving Lender to a Term Lender or an affiliate of a Term Lender without the consent of the Administrative Agent and (iii) except in the case of an assignment to a Lender or an affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment cannot be less than $5 million without the consent of each of the Borrower (unless an event of default has occurred and is continuing) and the Administrative Agent.
“Approved Fund” means any person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.
(b) Participations: Lenders will be permitted to sell participations with voting rights limited to significant matters such as changes in amount, rate, maturity date and releases of all or substantially all of the collateral securing the Facility or all or substantially all of the value of the guaranties of the Borrower’s obligations made by the Guarantors. Participations will be permitted without the consent of the Borrower, the Administrative Agent, the Swingline Lender or the Issuing Bank.
(c) No Assignment or Participation to Certain Persons: No assignment or participation may be made to natural persons, the Borrower, any other Loan Party, or any of their respective affiliates or subsidiaries or to any defaulting Revolving Lender. No assignment or participation may be sold to any “Industry Competitor” of any Loan Party. “Industry Competitor” means any person (other than Borrower, any Guarantor or any of their affiliates or subsidiaries) that is (or one or more of whose affiliates are) actively engaged as one of its principal businesses in lease acquisitions, exploration and production operations or development of oil and gas properties (including the drilling and completion of producing wells).
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Yield Protection: | The Facility Documentation shall contain customary provisions consistent with the Documentation Principles (a) protecting the Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy or other requirements of law, and from the imposition of or changes in withholding or other taxes and (b) indemnifying the Lenders for “breakage costs” incurred in connection with, among other things, any prepayment of a LIBO Rate Loan on a day other than the last day of an Interest Period with respect thereto. | ||||||||||
Expenses and Indemnification: | The Borrower shall pay (a) all reasonable out-of-pocket expenses of the Administrative Agent associated with the syndication of the Facility and the preparation, execution, delivery and administration of the Facility and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of counsel), (b) all costs, expenses, taxes, assessments and other charges incurred by the Administrative Agent in connection with any filing, registration, recording or perfection of any security interest contemplated by the loan documents, (c) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance of any Letter of Credit, and (d) all out-of-pocket expenses incurred by any agent, the Swingline Lender, the Issuing Bank or any Revolving Lender, including the reasonable fees, charges and disbursements of any counsel for any Agent, the Swingline Lender, the Issuing Bank or any Revolving Lender, in connection with the enforcement or protection of its rights in connection the loan documents. | ||||||||||
The Administrative Agent, the Swingline Lender and the Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified and held harmless against, any loss, liability, cost or expense incurred in respect of the transactions and the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent such losses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the indemnified person and provided that the Borrower shall not indemnify any indemnitee for (a) any financial liability of the Lender to the Parent, OP LLC, the Borrower or any Subsidiary pursuant to and in accordance with the terms of a swap agreement and (b) claims among Lenders or between Lenders and their related parties to the extent unrelated to a breach of an obligation of the Parent, OP LLC, the Borrower or any Subsidiary and (c) losses, claims, damages, liabilities or related expenses that are determined by a court of competent jurisdiction by final and nonappealable judgment to be a direct result of a material breach of the Facility by such indemnitee).
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Defaulting Lenders:
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The Facility Documentation shall include customary market provisions relating to defaulting lenders consistent with the Documentation Principles.
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Eligible Contract Participants and Excluded Swap Obligations: |
The Facility Documentation shall include customary market provisions relating to guarantees of swap obligations by Credit Parties that are not “eligible contract participants” under the Commodity Exchange Act.
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Governing Law and Forum: | State of New York | ||||||||||
DIP to Exit Conversion |
On the Closing Date, (the following clauses (i) through (iv), collectively, the “DIP Debt Conversion”): (i) the aggregate principal amount of all “Loans” under and as defined in the DIP Credit Agreement that are outstanding as of such date and any Pre-Petition Secured Indebtedness of any Revolving Lender that was not converted into the DIP Facility (as defined in that certain DIP Term Sheet attached to that certain Senior Secured Superpriority Debtor-in-Possession Revolving Credit Facility Commitment Letter, dated on or about the date hereof, among the Borrower, the financial institutions party thereto and Wells Fargo Bank, N.A. (the “DIP Term Sheet”)) shall, in each case, be automatically converted on a dollar-for-dollar basis for Loans under the Facility, (ii) all outstanding “Letters of Credit” (as defined in the DIP Term Sheet) shall be deemed to be issued as Letters of Credit under the Facility, (iii) all outstanding hedges with a Revolving Lender or an affiliate of a Revolving Lender under the DIP Facility shall be deemed to be included in the Facility, and the Credit Parties shall receive credit therefor for purposes of satisfying the minimum hedging requirements set forth herein, and (iv) all outstanding treasury management arrangements with a Revolving Lender or an affiliate of a Revolving Lender under the DIP Facility shall be deemed to be included in the Facility. Upon Payment in Full (as defined in the DIP Credit Agreement, including all or in part as a result of the DIP Debt Conversion), the DIP Facility will terminate and be superseded and replaced in its entirety by the Facility.
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Counsel to the Administrative Agent: | Vinson & Elkins L.L.P. |
Interest Rate Options: |
The Borrower may elect that the Loans comprising each borrowing bear interest at a rate per annum equal to:
• the ABR plus the Applicable Margin (such margin set forth on Annex II hereto) (“ABR Loans”); or
• the LIBO Rate (as adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”)) plus the Applicable Margin (“LIBO Rate Loans”).
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As used herein: |
“ABR” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate (defined in a manner consistent with the Documentation Principles) in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1.00%, (c) subject to the availability of LIBO, the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a business day, the immediately preceding business day) plus 1.00% and (d) 2.00%.
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding business day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a business day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it; provided that in no event shall the Federal Funds Effective Rate be less than 0%.
“LIBO Rate” means, subject to the implementation of a replacement rate, with respect to any LIBO Rate borrowing for any Interest Period, the greater of (a) 1.00% and (b) the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two business days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such LIBO Rate borrowing for such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/100 of 1%) at which dollar deposits of an amount comparable to such LIBO Rate borrowing and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) business days prior to the commencement of such Interest Period. Notwithstanding the foregoing, unless otherwise specified in any amendment to the Credit Agreement, in the event that a replacement rate with respect to LIBO Rate is implemented then all references herein to LIBO Rate shall be deemed references to such replacement rate.
Interest Periods for LIBO Rate Loans shall be one, two, three or six months (or, with the consent of each Revolving Lender, nine or twelve months). Interest on ABR Loans shall be payable on the last day of each quarter, upon any prepayment (whether due to acceleration or otherwise) and at final maturity. Interest on LIBO Rate Loans shall be payable in arrears on the last day of each Interest Period, in the case of an Interest Period longer than three months, quarterly, upon any prepayment (whether due to acceleration or otherwise) and at final maturity. Interest on all LIBO Rate Loans shall be calculated for actual days elapsed on the basis of a 360 day year unless such computation would exceed the highest lawful rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days, as applicable). Interest on all ABR Loans and all fees shall be calculated for actual days elapsed on the basis of a 365, or when appropriate 366, day year.
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Interest Period: | With respect to any LIBO Rate borrowing, the period commencing on the date of such borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Revolving Lender, nine or twelve months) thereafter, as the Borrower may elect; provided, that (a) if any Interest Period would end on a day other than a business day, such Interest Period shall be extended to the next succeeding business day unless such next succeeding business day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding business day and (b) any Interest Period pertaining to a LIBO Rate borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last business day of the last calendar month of such Interest Period. For purposes hereof, the date of a borrowing initially shall be the date on which such borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such borrowing. | ||||
Upfront Fees: |
The Borrower agrees to pay to the Administrative Agent, for the account of each Revolving Lender, an upfront fee payable in two (2) installments as follows:
(a) an installment of the upfront fee on the Closing Date of seventy basis points (0.70%) on each Revolving Lender’s applicable percentage of an amount (the “Closing Date Availability Amount”) equal to the Aggregate Elected Commitment Amount minus, if applicable, the amount of the Availability Block in place due to the failure of the Credit Parties to satisfy the target hedge pricing requirements specified in the “Initial Hedging” section above for the Closing Date Minimum Hedge Volumes on the Closing Date; and
(b) an installment of the upfront fee on the next Business Day after the Cure Period of seventy basis points (0.70%) on each Revolving Lender’s applicable percentage of an amount equal to the positive difference, if any, between, the Aggregate Elected Commitment Amount then in effect minus the Closing Date Availability Amount.
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Commitment Fees: | The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Commitment of such Revolving Lender during the period from and including the Closing Date to but excluding the Termination Date. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Termination Date. Solely for purposes of calculating the commitment fee, Swingline Loans will not be deemed to be a utilization of the Commitments. To the extent that the Borrowing Base is reduced by the Initial Hedge Reduction Amount, the Borrower shall be reimbursed for any commitment fees previously paid (or entitled to deduct from the amount of commitment fees to be paid on the next payment date, as applicable) with respect to the portion of the Commitment thereby reduced. | ||||
Letter of Credit Fees: |
The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to LIBO Rate Loans on the average daily amount of such Revolving Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed Letter of Credit disbursements) and shall be payable quarterly in arrears. During the continuation of an event of default, upon written notice to the Borrower of the election of the Majority Revolving Lenders, such Letter of Credit Fees shall increase by 2% per annum over the then applicable rate. “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all Letter of Credit disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its applicable percentage of the total LC Exposure at such time.
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A fronting fee equal to 1/4 of 1% per annum on the face amount of each Letter of Credit, shall be payable quarterly in arrears to the Issuing Bank for its own account. In addition, customary administrative, issuance, amendment, payment and negotiation charges shall be payable to the Issuing Bank for its own account consistent with the Documentation Principles. | |||||
Default/Deficiency Rate: |
(i) Automatically upon the occurrence of any payment or insolvency related event of default and (ii) with respect to any other event of default that has occurred and is continuing, upon written notice to the Borrower of the election of the Majority Revolving Lenders, all outstanding principal, fees and other obligations under the Facility Documentation shall bear interest at 2% above the rate otherwise applicable to ABR Loans; provided that in either case under clause (i) or clause (ii), such default interest shall accrue from the date of the occurrence of the applicable event of default and end on the date on which such event of default has been cured or waived. During a Borrowing Base Deficiency, an amount of the Revolving Credit Exposure equal to the amount of the deficiency shall, upon written notice to the Borrower of the election of the Majority Revolving Lenders, bear interest at 2% above the rate otherwise applicable to such portion of the Revolving Credit Exposure, which shall accrue from the date of occurrence of such Borrowing Base Deficiency until the date that such Borrowing Base Deficiency is cured or waived.
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Total Commitments Utilization Grid | ||||||||||||||||||||||||||||||||
Total Commitments Utilization Percentage | < 25% | ≥ 25% < 50% | ≥ 50% < 75% | ≥ 75% < 90% | ≥ 90% | |||||||||||||||||||||||||||
ABR Loans or Swingline Loans | 2.000% | 2.250% | 2.500% | 2.750% | 3.000% | |||||||||||||||||||||||||||
LIBO Rate Loans | 3.000% | 3.250% | 3.500% | 3.750% | 4.000% | |||||||||||||||||||||||||||
Commitment Fee Rate | 0.500% | 0.500% | 0.500% | 0.500% | 0.500% |
Aggregate Amounts Beneficially Owned or Managed on Account of: | ||||||||
Notes | ||||||||
RBL | ||||||||
Interests |
Aggregate Amounts Beneficially Owned or Managed on Account of: | ||||||||
RBL Claims | ||||||||
Notes Claims |
Borrower: |
Oasis Petroleum North America LLC, a Delaware limited liability company (the “Borrower”).
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Guarantors: |
Oasis Petroleum Inc. (“Parent”), Oasis Midstream Services LLC, Oasis Petroleum LLC (“OP LLC”), Oasis Petroleum Marketing LLC, Oasis Petroleum Permian LLC, Oasis Well Services LLC, OMP GP LLC and OMS Holdings LLC, each organized under the laws of the State of Delaware (collectively, the “Guarantors”).
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Debtors:
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The Borrower and the Guarantors are collectively referred to herein as the “Debtors”.
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DevCos:
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Beartooth DevCo LLC and Bobcat DevCo LLC (the “DevCos”).
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Post-Petition Lenders: |
Wells Fargo Bank, N.A. and the other Pre-Petition Lenders (as defined below) under the Pre-Petition Credit Agreement (as defined below) participating in the DIP Facility (as defined below) in the percentages as set forth in the DIP Facility (collectively, the “Post-Petition Lenders”).
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Post-Petition Agent: |
Wells Fargo Bank, N.A. (in such capacity, the “Post-Petition Agent”).
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Venue: |
Debtors will file a voluntary petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court for the Southern District of Texas, Houston Division (the “Bankruptcy Court”, and the date the Debtors’ bankruptcy cases are commenced, the “Petition Date”).
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Documentation Principles: |
The definitive documentation for the DIP Facility, including all other related agreements and documents creating, evidencing or securing indebtedness or obligations of any of the Debtors to the Post-Petition Agent or granting or perfecting liens or security interests by any of the Debtors in favor of and for the benefit of the Post-Petition Agent, for itself and for and on behalf of the Post-Petition Lenders, on account of the DIP Facility shall contain the terms set forth herein and shall otherwise be negotiated in good faith within a reasonable time period to be determined based on the expected Closing Date (as defined below). The documentation will be based on the applicable “Loan Documents” under and as defined in that certain Third Amended and Restated Credit Agreement dated October 16, 2018, among the Parent; OP LLC; the Borrower; each of the lenders from time to time party thereto (the “Pre-Petition Lenders”); and Wells Fargo Bank, N.A., as administrative agent on behalf of itself and the other Pre-Petition Lenders (the “Pre-Petition Agent”) (as in effect immediately prior to the commencement of bankruptcy case of the Borrower, the “Pre-Petition Credit Agreement”), with changes consistent with this DIP Facility Term Sheet and otherwise to reflect customary lender form updates (the “Documentation Principles”). Capitalized terms used herein and not otherwise defined herein shall have the meanings ascribed to such terms in the Pre-Petition Credit Agreement.
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DIP Facility:
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A priming secured and superpriority debtor-in-possession revolving credit facility of $450 million (the “DIP Commitments”) consisting of (a) an $150 million new money revolving facility (the “New Money Facility”), which shall include an amount of $100 million in the form of a letter of credit facility and (b) up to $300 million of Pre-Petition Secured Indebtedness (as defined below) that will be deemed to be refinanced as post-petition secured indebtedness (the “Refinancing”) held by the Post-Petition Lenders, as more fully described and documented in the Financing Orders (as defined below) (the New Money Facility and the Refinancing, collectively, the “DIP Facility”), and the credit agreement entered into among the Post-Petition Agent, the Post-Petition Lenders and the Debtors, which in each case must be in form and substance acceptable to the Post-Petition Agent and the Post-Petition Lenders (the “Post-Petition Credit Agreement”). Until the entry of the Final Order (as defined below), (a) a maximum amount of new money funding of $120 million (the “Cap”) of cash which may be drawn by the Borrower, of which up to $80 million of the Cap may be drawn as letters of credit, will be available to the Debtors on an interim basis under the DIP Facility (and which shall include all letters of credit subject to the Pre-Petition LC Refinancing (as defined below)) and (b) up to $240 million of the Pre-Petition Secured Indebtedness will be Refinanced by the DIP Facility (the limitations described in the foregoing clauses (a) and (b), the “Interim Limits”). The actual amounts available to be borrowed under the DIP Facility will be subject to the Initial Budget or the DIP Budget, as applicable, (each term as defined below), subject to the Permitted Variances (as defined below).
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Availability:
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So long as the Total Outstandings (as defined below) do not exceed the lesser of (a) the DIP Loan Limit (as defined below) and (b) the amount then authorized by any Financing Order (including, without limitation, prior to the entry of the Final Order, the Interim Limits): (i) loans under the DIP Facility will be available to be made at any time prior to the Maturity Date (as defined below), (ii) letters of credit under the DIP Facility will be issued and renewed as described in the section entitled “Letters of Credit” below and (iii) amounts repaid under the DIP Facility may be reborrowed. | ||||||||||
“Total Outstandings” means, at any time, the aggregate principal amount of the loans under the DIP Facility then outstanding plus the aggregate stated amount of all issued but undrawn Letters of Credit and, without duplication, all unreimbursed disbursements on any Letter of Credit as of such date.
“DIP Loan Limit” means the DIP Commitments less the amount of any Carve Out Reserves (as defined in Annex II hereto).
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Letters of Credit: |
A portion of the DIP Facility not in excess of $100 million shall be available for the issuance of letters of credit (“Letters of Credit”) by Wells Fargo Bank, N.A. (the “Post-Petition Issuing Bank”). Upon entry of the Interim Order (as defined below), all letters of credit issued under the Pre-Petition Credit Agreement (the “Refinanced L/Cs”) shall be Refinanced and deemed reissued under the Post-Petition Credit Agreement (the “Pre-Petition L/C Refinancing”).
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Permitted Use of Proceeds: | All proceeds under the DIP Facility shall be used strictly in accordance with the Initial Budget or the DIP Budget, as applicable, subject to the Permitted Variance, as provided below. Unless otherwise agreed, no borrowing shall be made more frequently than once per week. | |||||||||||||||||||
Term: |
All commitments of the Post-Petition Lenders under the DIP Facility shall terminate at the earliest of the following events: the date which is 6 months after the Petition Date (or, with the consent of the Majority Post-Petition Lenders, the date that is 9 months after the Petition Date; subject to not less than five (5) business days’ prior written notice by the Borrower of the extension request, the absence of any default or event of default under the Post-Petition Credit Agreement (an “Event of Default”), truth and accuracy in all material respects of representations and warranties (unless such representations and warranties are already qualified by materiality, material adverse effect or a similar qualification in which case such representations and warranties shall be true and correct in all respects), the effectiveness of the restructuring support agreement and payment of the Extension Fee (as defined below), it being understood that such extension shall be binding on all of the Post-Petition Lenders to the extent such extension is approved by the Majority Post-Petition Lenders and the other conditions for such condition are satisfied (such extension, the “Extension”)); the entry of an order pursuant to section 363 of the Bankruptcy Code approving the sale of substantially all of the Debtors’ assets; the effective date of any plan of reorganization; the entry of an order for the conversion of the Debtors’ bankruptcy cases to cases under Chapter 7 of the Bankruptcy Code; the entry of an order for the dismissal of the Debtors’ bankruptcy cases; or at the election of the Post-Petition Agent or the Majority Post-Petition Lenders, the date on which any Event of Default is continuing (the earliest of the events described above, the “Maturity Date”).
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New Money Loan Interest Rate:
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Choice of 1 month Adjusted LIBO Rate (1.0% floor) + 5.50% per annum or Alternate Base Rate (2.0% floor) + 4.50% per annum, payable monthly in cash, provided that no Interest Period may extend beyond the Maturity Date. | |||||||||||||||||||
Refinancing and Rate Applied to Drawn and Unreimbursed Refinanced L/Cs: | Choice of 1 month Adjusted LIBO Rate (1.0% floor) + 4.25% per annum or Alternate Base Rate (2.0% floor) + 3.25% per annum. | |||||||||||||||||||
Default Rate: | Alternate Base Rate (2.0% floor) + 4.75% per annum + an additional 2.00% per annum default rate, effective (a) automatically upon any payment Event of Default and (b) upon written notice to the Borrower of the election of the Majority Post-Petition Lenders for any other Event of Default that has occurred and is continuing, in each case, with accrual of the default rate occurring from and including the first date on which the applicable Event of Default occurred and ending on the date on which such Event of Default has been cured or waived. | |||||||||||||||||||
Facility Fee: |
2.00% of the New Money Commitments payable to the Post-Petition Lenders on the Closing Date (as defined below) ratably in accordance with their New Money Commitments as of such date. “New Money Commitments” shall be defined as (a) $150,000,000 minus (b) the face amount of the Refinanced L/Cs.
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Unused Commitment Fee: | 0.5% per annum on daily average unused amount of the New Money Commitments payable monthly in arrears and on the Maturity Date. | |||||||||||||||||||
Letter of Credit Fees: |
A per annum participation fee payable ratably to each Post-Petition Lender equal in the aggregate to (x) 5.50% with respect to Letters of Credit other than Refinanced L/Cs and (y) 4.25% with respect to Refinanced L/Cs. Borrower shall also pay to the issuing lender additional fronting and standard fees on the terms set forth in the Pre-Petition Credit Agreement.
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Extension Fee:
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50 bps on the amount of the New Money Commitments payable on the date of such Extension (the “Extension Fee”).
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Arrangement Fee and Agency Fee: |
As separately agreed between the Post-Petition Agent and the Borrower.
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Pre-Petition Secured Indebtedness: |
All indebtedness and other obligations under the Pre-Petition Credit Agreement and related loan and security documents (the “Pre-Petition Secured Indebtedness”).
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Adequate Protection Payments and Liens: | As adequate protection of the interests of the Pre-Petition Lenders for the DIP Facility advances, use of cash collateral and other collateral to the extent of any diminution in value of such interests, the Pre-Petition Lenders will receive, subject to the Carve Out (as defined below) (a) replacement liens on all real and personal property, tangible or intangible, wherever located, including all bank accounts, deposits and cash and, subject to and effective upon entry of the Final Order (as defined below), all proceeds of any avoidance actions under chapter 5 of the Bankruptcy Code, whether now existing or hereafter acquired by the Debtors and the Debtors’ bankruptcy estates, and all proceeds, products, rents, revenues and profits of same, and in each case junior to the liens securing the DIP Facility, (b) adequate protection payments consisting of current cash payments on a monthly basis in an amount equal to the amount of post-petition interest and fees on the obligations, at the Pre-Petition Credit Agreement default rate, in respect of the Pre-Petition Secured Indebtedness, (c) adequate protection payments consisting of cash reimbursement of the reasonable and documented (in summary format) fees, costs and expenses (including reasonable professional fees) of the Pre-Petition Agent and (d) super-priority administrative expense claims under Section 507(b) of the Bankruptcy Code and junior to the DIP Facility. | |||||||||||||||||||
Asset Sales: | The (i) net cash proceeds from certain sales of any of the Debtors’ assets outside the ordinary course of business and (ii) the proceeds of any extraordinary receipts, in excess of $5,000,000, individually or in the aggregate, on a combined basis for the foregoing clauses (i) and (ii) during the term of the DIP Facility shall be paid first to the Post-Petition Agent for application to the DIP Facility, and upon the DIP Facility being indefeasibly satisfied in full, then to the Pre-Petition Agent for application to the Pre-Petition Secured Indebtedness. | |||||||||||||||||||
Collateral: |
All indebtedness and obligations of the Debtors under the DIP Facility will be secured by security interests and liens granted pursuant to Section 364(c)(2) and (d)(1) of the Bankruptcy Code (the “Priority Lien”), with priority over all valid and perfected existing and future security interests, liens, claims and encumbrances, in and on all real and personal property of the Debtors, tangible or intangible, wherever located, including all bank accounts, deposits and cash and, subject to and effective upon entry of the Final Order, all proceeds of any avoidance actions under chapter 5 of the Bankruptcy Code (up to the amount of the commitments then in effect under the DIP Facility), whether now existing or hereafter acquired by the Debtors and the Debtors’ bankruptcy estates, and all proceeds, products, rents, revenues and profits of same (the “Collateral”), subject only to the Carve Out (as defined below), and certain liens to the extent they are valid, perfected, unavoidable and of senior priority to the liens and security interests of the Pre-Petition Lenders. In addition, to the extent of the outstanding obligations of the Debtors under the DIP Facility, the Post-Petition Lenders shall be granted superpriority claims over all other claims against the Debtors, subject only to the Carve Out. All of the liens described above shall be effective and perfected as of the Petition Date upon entry of, and pursuant to, the Interim Order. Administrative Agent shall have the discretion to require additional lien perfection filings and account control agreements after the Closing Date.
|
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Hedge Contracts:
|
Any hedge contract under the Post-Petition Credit Agreement to which any Post-Petition Lender is a counterparty shall be secured by liens securing the DIP Facility on a pari passu basis.
|
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Guaranties: | All Debtors (other than the Borrower) shall guarantee the DIP Facility and secure it with their property that is Collateral. | |||||||||||||||||||
No Surcharge & Marshalling Waiver: |
The DIP Facility shall provide that subject only to and effective upon entry of the Final Order with respect to the Pre-Petition Lenders’ pre-petition collateral and adequate protection collateral, and effective upon entry of the Interim Order with respect to the Post-Petition Lenders’ post-petition collateral, (i) no costs or expenses of administration shall be imposed against such collateral, as applicable, under Section 506(c) of the Bankruptcy Code or otherwise, and (ii) such collateral shall not be subject to the doctrine of marshalling or Section 552 of the Bankruptcy Code “equities of the case” arguments.
|
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Carve Out: |
The Financing Orders shall include a carve out (the “Carve Out”) substantially identical to Annex II attached hereto.
|
Budget: |
On or before the Petition Date, the Debtors shall have furnished to the Post-Petition Agent a thirteen (13) week rolling operating budget and cash flow forecast, in form and substance acceptable to the Post-Petition Agent (the “Initial Budget”), together with such related information and/or materials as the Post-Petition Agent and the Majority Post-Petition Lenders may deem reasonably necessary or desirable in connection therewith.
No later than 12:00 p.m. Central time on Thursday starting with the fourth Thursday of the first full four calendar weeks following the Petition Date, and every four weeks thereafter (or on a more frequent basis if agreeable to the Borrower and the Post-Petition Agent), the Debtors shall propose an updated rolling budget (the “Proposed DIP Budget”) to the Post-Petition Agent. The Post-Petition Agent may approve such Proposed DIP Budget, which will then become the budget then in effect in the Post-Petition Agent’s discretion if approved by the Post-Petition Agent in writing (which approval may be provided by electronic mail communicated by Post-Petition Agent’s counsel to Debtors’ counsel) (the “DIP Budget”); provided, that if the Proposed DIP Budget is not approved by the Post-Petition Agent, the DIP Budget that was last approved by the Post-Petition Agent shall continue to be in effect.
No later than 12:00 p.m. Central time on Thursday starting with the Thursday after the first full two calendar weeks following the Petition Date, and every four weeks thereafter, the Debtors shall deliver to the Post-Petition Agent a 13 week cash flow forecast. For the avoidance of doubt, the 13 week cash flow forecast will not be deemed a Proposed DIP Budget and will not require approval from the Post-Petition Agent.
No later than 12:00 p.m. Central time on Thursday of each week starting with the Thursday after the first full four calendar weeks following the Petition Date, and on a weekly basis thereafter (each a “Report Date”), the Debtors shall deliver to the Post-Petition Agent a weekly variance report (the “Variance Report”). The Variance Report shall measure performance for all actual post-petition disbursements made (a) with respect to the first Report Date, during the period from and including the Petition Date through and including the Friday ending immediately prior to the first Report Date and (b) with respect to each Report Date thereafter, the prior four weeks ending on the Friday immediately preceding such Report Date (the periods described in the foregoing clause (a) or (b), as applicable, the “Test Period”) on a rolling basis against the amount budgeted therefor in the DIP Budget, shall include calculations showing any discrepancies between anticipated and actual receipts and, beginning on the First Testing Date (as defined below), shall include calculations that demonstrate that the Debtors are in compliance with the Permitted Variance (as defined below).
On each Report Date, beginning on the Thursday following the first four full calendar weeks following the Petition Date (the “First Testing Date”), the Debtors shall demonstrate in each such Variance Report (A) that the actual disbursements made (the “Tested Disbursements”) in the prior Test Period, excluding (i) any fluctuations in royalty payments, payments to working interest holders, or similar payments or ad valorem or other taxes due on account of production of oil and gas interests that are attributable to changes in commodity prices, (ii) adequate protection payments to the Pre-Petition Agent and the Pre-Petition Lenders, (iii) reimbursements to Oasis Midstream Partners LP and its subsidiaries for capital expenditures, (iv) professional fees, (v) settlement payments to hedge counterparties and (vi) payments in respect of the DIP Facility (items (i) through (vi), collectively “Excluded Items”), do not exceed the sum of the aggregate amount budgeted therefor in the DIP Budget for the applicable Test Period by more than fifteen percent (15%) of the budgeted amount for such Test Period (the “Permitted Variance”) on a cumulative basis for all disbursements made during such Test Period and (B) that the Debtors’ Liquidity (to be defined as unrestricted cash and cash equivalents of the Debtors’ plus unused commitments under the DIP Facility) is, (i) at any time the Interim Order is in effect, an amount not less than $15 million and (ii) at any time the Final Order is in effect, no less than $20 million. For the avoidance of doubt, Liquidity shall be tested daily, but reported weekly in the Variance Report. Certification of compliance shall be provided on such Report Date, concurrently with delivery of each Variance Report.
Each Variance Report shall include actual disbursements and actual receipts for such Test Period, broken out as line items (but, for the avoidance of doubt, such items shall not be tested, other than the Tested Disbursements tested on an aggregate basis as described above).
|
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General Conditions Precedent: |
Usual and customary for a facility of this type and otherwise generally consistent with the Documentation Principles, including:
|
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1.The effectiveness of the Post-Petition Credit Agreement and availability of the DIP Facility will occur on the date (the “Closing Date”) that the following conditions are satisfied or waived:
|
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(a) The entry of an order by the Bankruptcy Court approving a cash management system for the Debtors and other “first day” orders satisfactory to the Post-Petition Agent; | ||||||||||||||||||||
(b) Execution and delivery of satisfactory definitive documentation for the DIP Facility;
|
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(c) Receipt of satisfactory Initial Budget approved by the Post-Petition Agent;
|
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(d) Receipt of a model of projected monthly cash flow, cash balance and balance of debt for borrowed money of the Debtors similar in level of detail to previously delivered models, for the monthly periods commencing on the first day of the month immediately following the month of effectiveness of the DIP Facility through December 31, 2020, in form and substance acceptable to the Post-Petition Agent;
|
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(e) Bankruptcy Court’s entry within three (3) business days of the Petition Date of an interim order approving the DIP Facility and use of cash collateral in a form and substance acceptable to the Post-Petition Agent (the “Interim Order”);
|
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(f) Reimbursement of all reasonable and documented (in summary form) fees and expenses of the Pre-Petition Agent and Pre-Petition Lenders and Post-Petition Agent and Post-Petition Lenders to the extent invoiced at least one (1) business day prior thereto;
|
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(g) Payment in full of unpaid reasonable and documented (in summary form) fees and expenses of Vinson & Elkins LLP and FTI Consulting to the extent invoiced at least one (1) business day prior thereto;
|
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(h) Use commercially reasonable efforts to, with respect to all hedge contracts entered into prior to the Closing Date, either (i) liquidate such hedges or (ii) reset such hedges to current market terms in existence at the time of such reset in exchange for a lump-sum cash payment substantially similar to the payment that such Debtor would be entitled to receive in respect of a contemporaneous liquidation of such hedge (collectively, the “Specified Liquidations”), in each case, on terms mutually acceptable to the Borrower and the applicable hedge counterparty, and all proceeds of such Specified Liquidations shall have been applied to the prepayment of the loans under the Pre-Petition Credit Agreement;
|
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(i) All representations and warranties of the Debtors in the Post-Petition Credit Agreement shall be true and correct in all material respects (unless such representations and warranties are already qualified by materiality, material adverse effect or a similar qualification in which case such representations and warranties shall be true and correct in all respects), and there shall be no default or Event of Default in existence at the time of, or immediately after giving effect to the making of, such initial funding;
|
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(j) The Post-Petition Agent shall have received such documents and other instruments as are customary for transactions of this type or as it may request;
|
(k) The delivery of other customary closing deliverables (including, without limitation, delivery of secretary and officer certificates and notice of borrowing); and
|
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(l) The sum of the outstanding principal amount of loans under the Pre-Petition Credit Agreement and the LC Exposure under the Pre-Petition Credit Agreement shall be no more than $500 million
|
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representations and warranties of the Debtors in the Post-Petition Credit Agreement shall be true and
|
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2.As to all subsequent advances under the DIP Facility:
|
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(a) All representations and warranties of the Debtors in the Post-Petition Credit Agreement shall be true and correct in all material respects (unless such representations and warranties are already qualified by materiality, material adverse effect or a similar qualification in which case such representations and warranties shall be true and correct in all respects); there shall be no default or Event of Default in existence at the time of, or after giving effect to the making of, such funding; the delivery of a borrowing request; no violation of any applicable governmental requirement shall occur as a result of such advance; and there shall be no event, development or circumstance that has resulted in or could be expected to result in a material adverse effect.
|
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(b) With respect to amounts in excess of the Interim Limits or the Cap, the Bankruptcy Court’s entry within thirty (30) days of the Petition Date of a final order approving the DIP Facility and use of cash collateral, in form and substance acceptable to the Post-Petition Agent (the “Final Order”, and the Interim Order and Final Order collectively are referred to herein as the “Financing Orders”), which Final Order shall be in full force and effect and shall not have been stayed, reversed, vacated or otherwise modified; provided that the time period for entry of the Final Order shall automatically be extended to within forty (40) days of the Petition Date in the event the Debtors commence the Chapter 11 Cases on a “prepackaged” basis by commencing solicitation of a chapter 11 plan of reorganization prior to the Petition Date; and
|
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(c) The making of the requested credit extension would not cause the Total Outstandings to exceed the lesser of (a) the DIP Loan Limit and (b) the amount then authorized by any Financing Order (including, without limitation, prior to the entry of the Final Order, the Interim Limits).
|
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Representations & Warranties: |
Customary representations and warranties for transactions of this type and otherwise generally consistent with the Documentation Principles.
|
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Affirmative Covenants: |
Affirmative covenants customary for transactions of this type and otherwise generally consistent with the Documentation Principles, including, without limitation, the following (subject to exceptions and qualifications to be agreed):
|
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(a)Maintain its corporate existence and do all things necessary to keep rights to the conduct of its business; | ||||||||||||||||||||
(b) Notice of material events;
(c) Perform every act and discharge all of the obligations to be performed and discharged under the Post-Petition Credit Agreement;
(d) Maintain books and records;
(e) Comply with laws, environmental matters, ERISA, Commodity Exchange Act Keepwell Provisions;
(f) Comply with covenants with respect to the DevCo undertakings, marketing activities, further assurances, reserve reports, title information, additional collateral, additional guarantors, taxes and claims;
(g) Operate and maintain its properties and collateral (including the DevCo properties);
|
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(h) Permit inspections; | ||||||||||||||||||||
(i) Maintain current financial records in accordance with GAAP; | ||||||||||||||||||||
(j) Comply with customary reporting requirements, including audited annual financial reports and quarterly consolidated financial reports; delivery of the items described under the heading “Budget” above; 30 days after the end of each month, delivery of a report of actual production volume for such month; on the last day of each month, delivery of a forecast of production volume for the next month; |
(k) Maintain ownership of DevCo equity interests and ownership of certain general partnership interests;
(l) Support entry of a Final Order providing for a waiver of any claims to surcharge the Post-Petition Agent’s and Pre-Petition Agent’s collateral under section 506(c) of the Bankruptcy Code;
|
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(m) Maintain insurance in amounts and on terms appropriate to the Debtors’ business and with financially sound and reputable insurers; | ||||||||||||||||||||
(n) Support entry of a Final Order providing for an acknowledgment of the right of the Post-Petition Agent and Pre-Petition Agent, as applicable, to credit bid at any sale of the Debtors’ assets that are subject to the liens of the Post-Petition Lenders or the Pre-Petition Lenders (whether 363 sale or otherwise); and | ||||||||||||||||||||
(o) Comply at all times with the Budget, subject to the Permitted Variance, as described above. | ||||||||||||||||||||
Negative Covenants: |
Negative covenants customary for transactions of this type and otherwise generally consistent with the Documentation Principles, including, without limitation, covenants with respect to the following (subject to exceptions and qualifications to be agreed):
|
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(a) Create or permit to exist any lien or encumbrance on any asset, except as permitted by the Post-Petition Credit Agreement or the Financing Orders; | ||||||||||||||||||||
(b) Incur or permit to exist any financing under section 364 of the Bankruptcy Code or any other indebtedness, except as permitted by the Post-Petition Credit Agreement; | ||||||||||||||||||||
(c) Create or permit to exist any superpriority administrative expense claim except as specifically permitted by the Post-Petition Agent or the Financing Orders, other than with respect to the DIP Facility or as contemplated by the restructuring support agreement; | ||||||||||||||||||||
(d) Make investments, loans and advances, except as permitted by the Post-Petition Credit Agreement;
|
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(e) Permit the Liquidity as of the end of any business day to be less than (1) $15 million at any time following entry of the Interim Order but before entry of the Final Order; and (2) $20 million at any time following entry of the Final Order;
(f) Declare or pay dividends or make any distributions to equityholders or pay amounts with respect to subordinated indebtedness or any other prepetition indebtedness, except to the Pre-Petition Lenders and as specifically permitted by the Post-Petition Credit Agreement;
|
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(g) Merge or consolidate with any other entity, make any fundamental changes in its corporate structure or otherwise change the nature of its business;
|
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(h) Transfer or otherwise dispose of any assets other than hydrocarbons in the ordinary course of business and other exceptions to be agreed;
|
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(i) Use cash collateral or the proceeds of the DIP Facility except in accordance with the Initial Budget or DIP Budget, as applicable, and subject to the Permitted Variance; or
|
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(j) Fail to operate strictly in compliance with the Initial Budget or DIP Budget, as applicable, subject to the Permitted Variance, as described above. |
Case Milestones: |
The Financing Orders and the Post-Petition Credit Agreement shall provide that the Debtors will implement their Chapter 11 Case in accordance with the Milestones as reflected in Annex I attached hereto.
The Debtors may extend a Case Milestone only with the express written consent of the Post-Petition Agent (which consent may be provided by electronic mail communicated by Post-Petition Agent’s counsel to Debtors’ counsel) acting at the direction of the Majority Post-Petition Lenders.
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Events of Default: | Events of default customary for transactions of this type, consistent with the Documentation Principles, including, without limitation (subject to exceptions and qualifications to be agreed): | |||||||||||||||||||
(a) The failure of Debtors to obtain the Final Order from the Bankruptcy Court not later than 30 days after the Petition Date; provided that the foregoing time period shall automatically be extended to forty (40) days after the Petition Date in the event the Debtors commence the Chapter 11 Cases on a “prepackaged” basis by commencing solicitation of a chapter 11 plan of reorganization prior to the Petition Date provided further, however, that in no event shall the foregoing Case Milestone be later than immediately preceding the hearing on confirmation of the Plan;
|
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(b) Nonpayment of principal, fees, interest or mandatory prepayments when due (with a 3 business day grace period for non-principal payments); | ||||||||||||||||||||
(c) The failure or breach of any warranty or representation of the Debtors; | ||||||||||||||||||||
(d) Violation of covenants (subject, in the case of certain affirmative covenants, to a 30-day grace period);
|
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(e) Change of control; | ||||||||||||||||||||
(f) Entry of an order for the dismissal or conversion to Chapter 7 of the Debtors’ bankruptcy cases; the appointment of a bankruptcy trustee or examiner (with expanded powers beyond those set forth in section 1106(a)(3) of the Bankruptcy Code) except with the express written consent of the Post-Petition Agent; the granting of any other superpriority administrative expense claim, except with the express written consent of the Post-Petition Agent; any Debtor shall attempt to vacate or modify the Interim Order, the Final Order or the cash collateral order over the objection of the Post-Petition Agent; or any Debtor shall institute any proceeding or investigation or support same by any other person who seeks to challenge the status and/or validity of the liens of the Pre-Petition Agent or the Post-Petition Agent (as security for the Pre-Petition Lenders and the Post-Petition Lenders, respectively);
|
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(g) The Bankruptcy Court shall enter an order or orders granting relief from the automatic stay to the holder or holders of any security interest or lien (other than in favor of Post-Petition Agent, Post-Petition Lenders, Pre-Petition Agent or Pre-Petition Lenders) to permit the pursuit of any judicial or non-judicial transfer or other remedy against any assets of any of the Debtors, in each case involving assets with an aggregate value in excess of $1 million; | ||||||||||||||||||||
(h) The Debtors shall fail to meet any established Case Milestones (after giving effect to any extension thereof as described under the section entitled “Case Milestones” above);
|
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(i) Failure by any Debtor to comply in any respect with the Financing Orders;
|
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(j) The filing or support by the Debtors of any plan of reorganization that (i) does not provide for termination of the unused commitments under the DIP Facility and indefeasible payment in full in cash of all of the Debtors’ obligations under the DIP Facility and (ii) is not otherwise acceptable to the Post-Petition Agent in its sole discretion;
|
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(k) Bankruptcy Court approves or the Debtors request approval of any sale or other disposition of all or a portion of the Collateral securing the DIP Facility loans pursuant to section 363 of the Bankruptcy Code other than as permitted by the Financing Orders or a plan of reorganization approved by the Post-Petition Agent and the Majority Post-Petition Lenders, or the Post-Petition Credit Agreement;
|
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(l) The termination of the restructuring support agreement or any agreement attached as an exhibit thereto, either in whole or in part, or any modification, amendment or supplement of the restructuring support agreement, including the exhibits thereto without the prior written consent of the Majority Post-Petition Lenders; and
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(m) Any Debtor files, or supports a motion that has been filed, to reject the restructuring support agreement.
|
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Upon the occurrence and continuation of any Event of Default, the Post-Petition Agent may, and at the direction of the Majority Post-Petition Lenders shall, subject in all respects to the Financing Orders, exercise rights and remedies in accordance with the Post-Petition Credit Agreement and security documents and applicable law. | ||||||||||||||||||||
Releases/
Covenant Not to Sue:
|
Subject to the challenge rights of third parties set forth in the Interim Order and Final Order, the Debtors shall provide each of the Pre-Petition Agent, the Pre-Petition Lenders, the Issuing Bank and the Secured Swap Parties, the Post-Petition Agent, the Post-Petition Issuing Bank, the Post-Petition Lenders and other customary parties a comprehensive release and covenant not to sue as to any and all claims and causes of action against any of them as of the date of such release, and the date of each advance made under the DIP Facility. | |||||||||||||||||||
Expense Reimbursement/ Indemnification: |
All reasonable and documented out-of-pocket expenses (in summary form) of the Post-Petition Agent associated with the preparation, execution, delivery and administration of the DIP Facility and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of counsel), (b) all costs, expenses, Taxes, assessments and other charges incurred by the Post-Petition Agent or any Post-Petition Lender in connection with any filing, registration, recording or perfection of any security interest contemplated by the Post-Petition Credit Agreement and any related documents, (c) all reasonable and documented out-of-pocket expenses (in summary form) incurred in connection with the issuance of any letter of credit, and (d) all out-of-pocket expenses incurred by the Post-Petition Agent or any Post-Petition Lender, including the reasonable and documented (in summary form) fees, charges and disbursements of any counsel for any Post-Petition Lender, in connection with the enforcement or protection of its rights in connection the Post-Petition Credit Agreement and any related documents.
The Post-Petition Agent and the Post-
Petition Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified and held harmless against, any loss, liability, cost or expense incurred in respect of the transactions and the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent such losses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the indemnified person).
|
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Assignments:
|
The Post-Petition Credit Agreement will contain assignment provisions customarily found in the loan agreements for similar debtor in possession financings and subject to the Documentation Principles; provided, that for the avoidance of doubt any assignment under the Post-Petition Credit Agreement shall (1) be subject to the Borrower’s consent (unless an Event of Default has occurred and is continuing or such assignment is made to a Post-Petition Lender or its affiliate); and (2) not be permitted to any Industry Competitor (as defined in the Pre-Petition Credit Agreement). All assignees of DIP Facility loans and letters of credit shall become bound to the terms of the restructuring support agreement (unless the restructuring support agreement is no longer in effect at such time).
|
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Amendments: |
Any provision of the Post-Petition Credit Agreement or the Financing Orders may be amended with the consent of the Borrower together with the vote of Post-Petition Lenders holding more than 50% of the overall commitments under the Post-Petition Credit Agreement or, in the case of a termination of such commitment, of the revolving loans outstanding thereunder (the “Majority Post-Petition Lenders”), except with respect to certain matters specified in the Post-Petition Credit Agreement requiring the vote of all Post-Petition Lenders or each affected Post-Petition Lender.
|
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Governing Law: | New York law shall govern the Post-Petition Credit Agreement (provided that perfection of security interests in the Debtors’ real property or midstream assets will be governed by the law of the state in which such assets are located to the extent determined by the Post-Petition Agent to be necessary). Debtors and the Post-Petition Lenders shall agree that all disputes between the Debtors on the one hand and the Post-Petition Lenders on the other hand shall be heard by the Bankruptcy Court so long as the bankruptcy case is pending. | |||||||||||||||||||
DIP to Exit Conversion: |
On the date upon which the conditions precedent to the effectiveness of an “exit credit facility” (the “Exit Facility”) shall have been satisfied or waived as contemplated by the terms specified in the Exit Facility Term Sheet attached as Exhibit A (the “Exit Facility Term Sheet”) to that certain Exit Commitment Letter (the “Exit Facility Commitment Letter”) by and among the Borrower, Wells Fargo Securities, LLC, as Lead Arranger (as defined therein), and the Initial Lenders (as defined therein) (the following clauses (i) through (iv), collectively, the “DIP Debt Conversion”): (i) the aggregate principal amount of all DIP Facility loans that are outstanding as of such date and any Pre-Petition Secured Indebtedness that was not converted into the DIP Facility shall, in each case, be automatically converted on a dollar-for-dollar basis for “Loans” under and as defined in the Exit Facility, (ii) all outstanding Letters of Credit shall be deemed to be issued as “Letters of Credit” under and as defined in the Exit Facility, (iii) all outstanding hedges with a Post-Petition Lender or its affiliate shall be deemed to be secured by the liens securing the Exit Facility, and the Debtors shall receive credit therefor for purposes of satisfying the minimum hedging requirements set forth in the Exit Facility Term Sheet, and (iv) all outstanding treasury management arrangements with a Post-Petition Lender or its affiliate shall be deemed to be secured by the liens securing the Exit Facility. Upon payment in full (as defined in the Post-Petition Credit Agreement), the DIP Facility will terminate and be superseded and replaced in its entirety by the Exit Facility.
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Name of Initial DIP Lender
|
Percentages | ||||
Wells Fargo Bank, N.A. | 10.74847695% | ||||
JPMorgan Chase Bank, N.A. | 9.95229346% | ||||
Royal Bank of Canada | 9.95229346% | ||||
Citibank, N.A. | 9.25925926% | ||||
Citizens Bank, N.A. | 5.57328434% | ||||
ING Capital LLC | 5.57328434% | ||||
Canadian Imperial Bank Of Commerce, New York Branch | 5.45962673% | ||||
Capital One, National Association | 5.18518519% | ||||
BBVA USA | 5.18518519% | ||||
Fifth Third Bank, National Association | 4.07407407% | ||||
Mizuho Bank, Ltd. | 4.07407407% | ||||
Truist Bank, formerly Branch Banking & Trust | 4.07407407% | ||||
Regions Bank | 4.07407407% | ||||
BOKF, NA dba Bank of Texas | 3.18518519% | ||||
Comerica Bank | 3.18518519% | ||||
Credit Suisse AG, Cayman Islands Branch | 3.18518519% | ||||
Goldman Sachs Bank USA | 3.18518519% | ||||
Zions Bancorporation, N.A. dba Amegy Bank | 2.59259259% | ||||
IBERIABANK, a division of First Horizon Bank | 1.48148148% | ||||
TOTAL | 100.00% |
I. Parties
|
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Borrower: |
Oasis Petroleum North America LLC, a Delaware limited liability company (the “Borrower”).
|
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Guarantors: |
Oasis Petroleum Inc., a Delaware corporation (the “Parent”), Oasis Petroleum LLC, a Delaware limited liability company (“OP LLC”), Oasis Petroleum Marketing LLC, a Delaware limited liability company, Oasis Well Services LLC, a Delaware limited liability company, Oasis Midstream Services LLC, a Delaware limited liability company, OMS Holdings LLC, a Delaware limited liability company, Oasis Petroleum Permian LLC, a Delaware limited liability company, OMP GP LLC, a Delaware limited liability company (the “General Partner”), and all Material Subsidiaries that are required to guarantee the Facility (defined below) in accordance with its terms during the tenor of the Facility (collectively, the “Guarantors” and, together with the Borrower, the “Credit Parties”); provided that (a) foreign Subsidiaries, (b) domestic Subsidiaries, substantially all the assets of which consist of equity interests, or debt and equity interests, in controlled foreign corporations (“FSHCO”) and (c) domestic Subsidiaries that are direct or indirect Subsidiaries of foreign Subsidiaries, shall not be required to become Guarantors.
“Material Subsidiary” means, as of any date, (a) any restricted domestic Subsidiary that owns any oil and gas property evaluated in the most recently delivered reserve report and (b) any restricted domestic Subsidiary of Parent, OP LLC or the Borrower that, together with its subsidiaries, owns property having a fair market value of $5,000,000 or more; provided that if the aggregate fair market value of all property of all restricted domestic Subsidiaries that are not Guarantors exceeds $10,000,000, then Parent, OP LLC and the Borrower shall promptly designate restricted domestic Subsidiaries that are not then Guarantors as Material Subsidiaries (and cause such designated Material Subsidiaries to comply with the Facility) to the extent necessary so that the aggregate fair market value of all property owned by restricted domestic Subsidiaries that are not then Guarantors is less than $10,000,000. For purposes herein, “Subsidiary” shall exclude Oasis Petroleum International LLC and its subsidiaries, Oasis Midstream Partners, LP (“OMP”) and its subsidiaries and the DevCos (defined below).
|
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DevCos: |
Beartooth DevCo LLC, a Delaware limited liability company, and Bobcat DevCo LLC, a Delaware limited liability company (each a “DevCo” and together, the “DevCos”).
|
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Administrative Agent: |
Wells Fargo Bank, N.A. (“Wells Fargo” and in such capacity, the “Administrative Agent”).
|
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Sole Lead Arranger and Sole Lead Bookrunner: |
Wells Fargo Securities, LLC shall act as sole lead arranger and sole lead bookrunner (in such capacity, the “Lead Arranger”).
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Revolving Lenders: |
Wells Fargo and a syndicate of financial institutions and other entities arranged by the Lead Arranger and approved by the Borrower (each a “Revolving Lender” and, collectively, the “Revolving Lenders”). On the Closing Date (defined below), the Revolving Lenders shall constitute all of the Pre-Petition Lenders (defined below) participating in the DIP Facility (defined below). For the avoidance of doubt, in no event shall any Term Lender (defined below) be considered a Revolving Lender.
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Required Revolving Lenders: |
Revolving Lenders (excluding any defaulting Revolving Lenders) holding not less than 66.67% of the outstanding aggregate amount of the revolving loans under the Facility (the “Loans”) and participations in Letters of Credit (defined below) (or, if no Loans or Letters of Credit are outstanding, Revolving Lenders (excluding any defaulting Revolving Lenders) holding not less than such percentage of the unused Commitments (defined below) under the Facility) (the “Required Revolving Lenders”). For the avoidance of doubt, in no event shall any Term Lender be considered in the determination of Required Revolving Lenders.
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Majority Revolving Lenders: | Revolving Lenders (excluding any defaulting Revolving Lenders) holding more than 50% of the outstanding aggregate amount of the Loans and participations in Letters of Credit (or, if no Loans or Letters of Credit are outstanding, Revolving Lenders (excluding any defaulting Revolving Lenders) holding more than such percentage of the unused Commitments under the Facility). For the avoidance of doubt, in no event shall any Term Lender be considered in the determination of Majority Revolving Lenders. | ||||||||||
Swingline Lender: |
Wells Fargo (in such capacity, the “Swingline Lender”).
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II. Facility
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Type and Amount of Facility: |
The reserve-based revolving credit facility (the “Facility”) shall be in an amount of up to $1.5 billion (the “Aggregate Maximum Credit Amount” and the portion of the Aggregate Maximum Credit Amount allocated to a particular Revolving Lender shall be referred to herein as such Revolving Lender’s “Maximum Credit Amount”).
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Maturity Date: |
The date that is 3.5 years after the Closing Date (the “Maturity Date”).
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Availability: |
Subject to the Borrowing Base and the Aggregate Elected Commitment Amount (each term defined below) then in effect and to the Availability Block and the Initial Hedge Reduction Amount, in each case, described in the row captioned “Initial Hedging”, the Facility shall be available on a revolving basis during the period commencing on the Closing Date subject to satisfaction of the applicable conditions precedent described below, and ending on the earlier of the Maturity Date and the termination of the Commitments (the “Termination Date”), in accordance with the terms of the Facility Documentation (defined below).
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Availability under the Facility shall be limited to the total Commitments of the Revolving Lenders, and shall also be subject to the Availability Block described below and the Initial Hedge Reduction Amount described below. “Commitment” means, with respect to each Revolving Lender, the commitment of such Revolving Lender to make Loans, to acquire participations in Swingline Loans (defined below) and to acquire participations in Letters of Credit under the Facility, expressed as an amount which shall at any time be the least of (a) such Revolving Lender’s Maximum Credit Amount, (b) such Revolving Lender’s applicable percentage of the then effective Borrowing Base and (c) such Revolving Lender’s Elected Commitment (defined below).
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Letters of Credit: |
A portion of the Facility equal to $100 million shall be available for the issuance of letters of credit (the “Letters of Credit”) by Wells Fargo (in such capacity, the “Issuing Bank”). No Letter of Credit shall have an expiration date after the earlier of (a) one year after the date of issuance (or, in the case of any renewal or extension thereof, one year after such renewal or extension) and (b) five business days prior to the Maturity Date. On the Closing Date, all letters of credit issued (or deemed reissued) under the DIP Credit Agreement shall be refinanced and deemed reissued under the Credit Agreement (defined below).
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Drawings under any Letter of Credit shall be reimbursed by the Borrower on the same business day if the Borrower receives notice of the applicable Letter of Credit disbursement by 10:00 a.m. New York City time on such day; provided, that if such disbursement is not less than $1,000,000, the Borrower shall be deemed to have requested an ABR Loan (defined below) in the amount of such disbursement. To the extent that the Borrower does not so reimburse the Issuing Bank, the Administrative Agent shall notify each Revolving Lender of (a) the applicable disbursement, (b) the payment then due from the Borrower and (c) such Revolving Lender’s applicable percentage thereof. Promptly following receipt of such notice, each Revolving Lender shall pay to the Administrative Agent its applicable percentage of the payment then due from the Borrower. | |||||||||||
Swingline Loans: |
A portion of the Facility shall be available for the extension by the Swingline Lender of swingline loans (the “Swingline Loans”) not resulting in (a) swingline borrowings in excess of $50,000,000 at any time outstanding or (b) the sum of the outstanding principal amount of the Loans, the outstanding principal amount of the Swingline Loans and the LC Exposure (defined below) (the “Revolving Credit Exposure”) exceeding the aggregate Commitments. Settlement of such Swingline Loans will occur no later than seven (7) business days following the making of a Swingline Loan. Upon the making by the Swingline Lender of any Swingline Loan, the Administrative Agent shall notify each Revolving Lender of its applicable percentage thereof and each Revolving Lender shall pay to the Administrative Agent its applicable percentage of such Swingline Loan. The Borrower may borrow, prepay and reborrow amounts under the subfacility for Swingline Loans provided for in the Credit Agreement; however, in no event may the Borrower continue or convert a Swingline Loan.
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Purpose: |
The proceeds of the Loans shall be used by the Borrower (a) for payments of certain fees, costs and expenses in connection with the Transactions (as defined in the Exit Commitment Letter to which this Exit Facility Term Sheet is attached), (b) to consummate the Refinancing (as defined in the Exit Commitment Letter to which this Exit Facility Term Sheet is attached) and (c) for general corporate purposes (including funding working capital for exploration and production operations) and to repay Swingline Loans; provided that the Borrower will not use any proceeds for any purpose which would violate the provisions of Regulations T, U or X.
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Security: |
The Facility and each commodity swap, interest rate swap or similar agreement between the Borrower and a Revolving Lender or an affiliate of a Revolving Lender (whether such swap was entered into prior to the time, or during the time, that such person or its affiliate is a Revolving Lender (including any swap agreement entered into with such person in existence prior to the Closing Date), even if such person subsequently ceases to be a Revolving Lender (or an affiliate thereof)) shall be ratably secured by:
• First priority (subject to certain permitted liens to be defined in the Facility Documentation in a manner consistent with the Documentation Principles (defined below)), perfected liens and security interests on substantially all assets of the Credit Parties, including a first priority (subject to certain permitted liens), perfected lien on all equipment of the Credit Parties and on all oil and gas properties of the Borrower and its subsidiaries that are Guarantors comprising not less than 90% of the proved oil and gas properties evaluated in the reserve report most recently delivered to the Administrative Agent, in each case, subject to exceptions to be agreed.
• Pledge of (a) 100% of the stock of restricted domestic Subsidiaries and (b) 65% of the stock of restricted foreign Subsidiaries and FSHCOs with, in each case for entities described in this clause (b), total assets greater than $1,000,000.
• Unconditional joint and several guarantee from each Guarantor.
• Pledge of equity in the Credit Parties’ percentage ownership in the DevCos and OMP.
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Borrowing Base: |
The Borrowing Base (the “Borrowing Base”) will be proposed by the Administrative Agent and subject to Revolving Lender approval as described below; provided that each of any proposal made by the Administrative Agent and each Revolving Lender’s determination as to whether to approve or disapprove such proposal will be in the sole discretion of the Administrative Agent and such Revolving Lender, as applicable, based upon its review of the most recently delivered reserve report (including any supplemental information provided thereto) and such other information (including, without limitation, the status of title information with respect to the oil and gas properties of the Credit Parties and the existence of any other debt, the Credit Parties’ other assets, liabilities, fixed charges, cash flow, business, properties, prospects, management and ownership, hedged and unhedged exposure to price, price and production scenarios, interest rate and operating cost changes) as it deems appropriate in its sole discretion and consistent with its normal oil and gas lending criteria as it exists at the particular time. The Borrowing Base will be re-determined on a semi-annual basis, with the parties having the Interim Redetermination Rights as described below. The Borrowing Base will also be subject to interim adjustments in connection with (a) sales of assets, hedge unwinds and title defects such that if the aggregate value of such sales or hedge unwinds exceeds 5.0% of the then existing Borrowing Base, the Borrowing Base will be automatically reduced by an amount equal to such excess and (b) the incurrence of Unsecured Debt, such that upon the incurrence thereof, the Borrowing Base will be automatically reduced by an amount equal to the product of 0.25 multiplied by an amount equal to the difference between (x) the stated principal amount of such Unsecured Debt minus (y) the stated principal amount of previously outstanding Unsecured Debt to the extent such previously outstanding principal amount was redeemed or refinanced with the proceeds of such Unsecured Debt. Scheduled Borrowing Base redeterminations will be on a semi-annual basis each April 1st and October 1st, based upon a reserve report prepared as of the immediately preceding January 1 and July 1, respectively, and delivered to the Administrative Agent and the Revolving Lenders on or before March 1st and September 1st of each year, respectively; provided that the first scheduled Borrowing Base redetermination will occur on or about April 1, 2021. The January 1 reserve report will be comprised of (a) a report prepared by one or more Approved Petroleum Engineers (as defined in the Existing Credit Agreement) with regards to not less than 90% of the proved oil and gas properties of the Borrower and its subsidiaries that are Guarantors and (b) a report on the remainder of such oil and gas properties prepared internally by the Borrower, and the July 1 reserve report will be prepared internally by the Borrower in a form reasonably acceptable to the Administrative Agent.
Upon receipt of a proposed Borrowing Base notice, each Revolving Lender shall have fifteen (15) days to agree with the proposed Borrowing Base or disagree with the proposed Borrowing Base by proposing an alternate Borrowing Base. If, in the case of any proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, at the end of such fifteen (15) days, any Revolving Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be an approval of the proposed Borrowing Base. If, in the case of any proposed Borrowing Base that would increase the Borrowing Base then in effect, at the end of such fifteen (15) days, any Revolving Lender has not communicated its approval or disapproval in writing to the Administrative Agent, such silence shall be deemed to be a disapproval of the proposed Borrowing Base. If, at or prior to the end of such 15-day period, all of the Revolving Lenders, in the case of a proposed Borrowing Base that would increase the Borrowing Base then in effect, or the Required Revolving Lenders (defined below), in the case of a proposed Borrowing Base that would decrease or maintain the Borrowing Base then in effect, have approved or, in the case of a decrease or reaffirmation, deemed to have approved, as aforesaid, then the proposed Borrowing Base shall become the new Borrowing Base, effective on the date specified in the Facility. If, however, at the end of such 15-day period, all of the Revolving Lenders or the Required Revolving Lenders, as applicable, have not approved or, in the case of a decrease or reaffirmation, deemed to have approved, as aforesaid, then the Administrative Agent shall poll the Revolving Lenders to ascertain the highest Borrowing Base then acceptable to (a) in the case of a decrease or reaffirmation, a number of Revolving Lenders sufficient to constitute the Required Revolving Lenders and (b) in the case of an increase, all of the Revolving Lenders, and such amount shall become the new Borrowing Base, effective on the date specified in the Facility.
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The Borrower or the Administrative Agent, at the request of the Required Revolving Lenders, each may request one additional unscheduled Borrowing Base redetermination during any 12-month period (except for the period commencing on the Closing Date and ending on April 1, 2021) (the “Interim Redetermination Rights”).
To the extent the Closing Date occurs on or before the ninetieth (90th) day after the execution of the Exit Commitment Letter to which this Exit Facility Term Sheet is attached, the initial Borrowing Base shall be an amount equal to (a) $575,000,000 minus (b) the principal amount of the Non-Participating Lender Term Loan (as defined below). Otherwise, the initial Borrowing Base shall be equal to an amount determined by the Administrative Agent and the Revolving Lenders within the period that is thirty (30) days prior to the Closing Date, based on the reserve report prepared as of July 1, 2020 and provided to the Administrative Agent by the Borrower on September 1, 2020, along with such other information as the Administrative Agent may require, and otherwise shall be in accordance with the redetermination criteria described above.
Additionally, the initial Borrowing Base shall be subject to reduction by the Initial Hedge Reduction Amount as described below in the row captioned “Initial Hedging”.
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Elected Commitments: |
In addition to being subject to the Borrowing Base, availability under the Facility will be limited to the aggregate amount of “Elected Commitments” of the Revolving Lenders as set forth in the Facility (such aggregate amount, the “Aggregate Elected Commitment Amount”). The Aggregate Elected Commitment Amount as of the Closing Date shall be equal to the amount of the initial Borrowing Base.
Once between each scheduled redetermination of the Borrowing Base, the Borrower may request that the Aggregate Elected Commitment Amount be increased by either an existing Revolving Lender increasing its Elected Commitment or by having a person acceptable to the Administrative Agent who is not currently a Revolving Lender become a Revolving Lender with an Elected Commitment under the Facility. The Elected Commitments may be increased in amounts no less than $50 million (unless the Administrative Agent consents to such lesser amount); provided that in no event will such increase be permitted if the Aggregate Elected Commitment Amount will exceed the Borrowing Base then in effect.
Upon any redetermination or other adjustment in the Borrowing Base that would result in the Borrowing Base becoming less than the Aggregate Elected Commitment Amount, the Aggregate Elected Commitment Amount shall be automatically reduced (ratably among the Revolving Lenders in accordance with each Revolving Lender’s percentage of the Aggregate Maximum Credit Amount) so that it equals such redetermined Borrowing Base.
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Non-Participating Lender Term Loan Facility: |
To the extent that any holder of RBL Claims (as defined in the Restructuring Support Agreement) does not elect to participate in the Facility, such holder (each such holder, a “Term Lender” and, collectively, the “Term Lenders”; the Term Lenders collectively with the Revolving Lenders, the “Lenders”) shall, in accordance with the terms of the Restructuring Support Agreement, receive a non-amortizing “second-out” term loan which shall (a) accrue interest at the LIBO Rate plus 3.00% pursuant to a three-month Interest Period (as described in Annex I), (b) have a maturity date no earlier than seven (7) years after the Closing Date, (c) not subject the Credit Parties or its Subsidiaries to any representations, warranties or covenants that are more burdensome or restrictive to such entities than those applicable to the Facility, (d) be guaranteed and secured on a pari passu basis with the Facility pursuant to the same Facility Documentation, (e) include limited reporting obligations owed to the Term Lenders to be agreed and (f) otherwise be on terms and conditions acceptable to the Required Revolving Lenders and the Borrower (such term loan, the “Non-Participating Lender Term Loan”). The Non-Participating Lender Term Loan shall be documented as a separate tranche of term loan debt under the Facility Documentation, and the Term Lenders shall not be entitled to vote on any matter under the Facility Documentation (including but not limited to approval of the Borrowing Base and amendments or waivers of covenants) other than with respect to amendments or modifications directly and adversely affecting the economic terms of the Non-Participating Lender Term Loan, such as any amendment or modification that would decrease the interest rate applicable thereto (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest) or extend the maturity thereof.
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III. Certain Payment Provisions
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Fees and Interest Rates: |
As set forth on Annexes I and II.
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Principal Payments: | On the Termination Date. | ||||||||||
Voluntary Prepayments: | Voluntary prepayments of Loans are permitted (subject to payment of applicable breakage costs, if any) in minimum amounts and with prior notices to be set forth in the Credit Agreement but in any case consistent with the Documentation Principles. | ||||||||||
Mandatory Prepayments: |
If, as a result of a scheduled or interim redetermination of the Borrowing Base or an adjustment to the Borrowing Base in respect of title defects, the sum of outstanding Loans and Letters of Credit exceeds the Borrowing Base (a “Borrowing Base Deficiency”), then the Borrower shall, within ten (10) business days (or such longer period as may be acceptable to the Administrative Agent) following receipt of written notice of the redetermination or such adjustment, as applicable, deliver written notice (the “Election Notice”) to the Administrative Agent stating the action which the Borrower proposes to take to eliminate such Borrowing Base Deficiency, and the Borrower shall thereafter, at its option:
(a) prepay the borrowings and/or deposit cash collateral in an aggregate principal amount equal to such Borrowing Base Deficiency within thirty (30) days after the Borrower’s delivery of the Election Notice;
(b) repay such Borrowing Base Deficiency in six (6) equal and consecutive monthly installments, the first installment being due and payable thirty (30) days after the Borrower’s receipt of notice of the redetermined or adjusted Borrowing Base, and each subsequent installment being due and payable on the same day in each of the five (5) subsequent calendar months;
(c) provide additional proved oil and gas properties not evaluated in the most recently delivered reserve report acceptable to the Administrative Agent in its sole discretion (together with title information with respect thereto acceptable to the Administrative Agent in its sole discretion) sufficient to increase the Borrowing Base by an amount at least equal to such Borrowing Base Deficiency within thirty (30) days after its delivery of the Election Notice; or
(d) effect any combination of the foregoing clauses (a), (b) and (c) in amounts necessary to eliminate such Borrowing Base Deficiency; provided that (x) if the Borrower fails to provide a timely Election Notice, it shall be deemed to have selected the option described in clause (b) above and (y) all payments required to be made pursuant to this clause (d) must be made on or prior to the Termination Date. If a Borrowing Base Deficiency remains after prepaying all of the borrowings as a result of an LC Exposure, the Borrower shall deposit with the Administrative Agent on behalf of the Revolving Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in the Facility Documentation.
If a Borrowing Base Deficiency occurs as the result of an asset disposition, unwind or termination of hedge arrangements, or in connection with the incurrence of Unsecured Debt, then the Borrower shall (A) prepay the borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency (i) within one (1) business day after the receipt of proceeds from such disposition, unwind or termination or (ii) on the date of such incurrence of debt, and (B) if a Borrowing Base Deficiency remains after prepaying all of the borrowings as a result of LC Exposure, deposit with the Administrative Agent on behalf of the Revolving Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in the Facility Documentation. The Borrower shall be obligated to make such deposit of cash collateral on or prior to the first business day succeeding the date it or any Credit Party receives cash proceeds as a result of the applicable asset disposition, unwind or termination of hedge arrangements or debt incurrence; provided that in all cases, the Borrowing Base Deficiency must be eliminated on or prior to the Termination Date.
If a Borrowing Base Deficiency occurs as a result of the application of the Initial Hedge Reduction Amount as described below, then, within one (1) business day of such Borrowing Base reduction, the Borrower shall (A) prepay the borrowings in an aggregate principal amount equal to such Borrowing Base Deficiency, and (B) if a Borrowing Base Deficiency remains after prepaying all of the borrowings as a result of LC Exposure, deposit with the Administrative Agent on behalf of the Revolving Lenders an amount equal to such Borrowing Base Deficiency to be held as cash collateral as provided in the Facility Documentation.
Excess Cash Balances. If on the last business day of any week while there are any Loans outstanding, the Borrower or any other Credit Party have any cash or cash equivalents in excess of $50,000,000 in the aggregate (other than (a) cash collateral with respect to Letters of Credit, (b) any cash set aside and to be used to pay royalty or other production revenue obligations of the Credit Parties for amounts which have accrued to unaffiliated third parties, (c) any cash set aside to and to be used to pay in the ordinary course of business amounts (other than royalty or other production revenue obligations) of the Credit Parties then due and owing to unaffiliated third parties and for which the Credit Parties have issued checks or have initiated wires or ACH transfers (or will issue checks or initiate wires or ACH transfers within five business days) in order to make such payments, (d) any cash set aside and used solely for payroll or employee benefits or for the payment of taxes of the Credit Parties and (e) any cash of the Credit Parties constituting purchase price deposits set aside and held in escrow by an unaffiliated third party pursuant to a binding and enforceable purchase and sale agreement with an unaffiliated third party containing customary provisions regarding the payment and refunding of such deposits (the “Excess Cash”), then the Borrower shall prepay the Loans in an amount equal to the lesser of (x) the amount of Excess Cash and (y) the amount of Loans then outstanding, on the next business day); provided that to the extent that any Excess Cash results from the receipt of the proceeds of any sale or disposition of property less than five (5) business days prior to such date, then the Borrower shall not be required to prepay such Excess Cash until the fifth business day following the receipt of such proceeds. Each prepayment of Loans shall be applied as directed by the Borrower, provided that if the Borrower does not provide instructions for the application of such prepayment, such prepayment shall be applied, first, ratably to any ABR Loan then outstanding, and, second, to any LIBO Rate Loan (defined below) then outstanding, and if more than one LIBO Rate Loan is then outstanding, to each such LIBO Rate Loan in order of priority beginning with the LIBO Rate Loan with the least number of days remaining in the Interest Period (defined below) applicable thereto and ending with the LIBO Rate Loan with the most number of days remaining in the Interest Period applicable thereto. Each Excess Cash prepayment of Loans shall be applied ratably to the Loans included in the prepaid borrowings. Prepayments shall be accompanied by accrued interest to the extent required by the Facility Documentation.
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Optional Commitment Reductions: | The Aggregate Maximum Credit Amount and the Aggregate Elected Commitment Amount may be reduced by the Borrower in minimum amounts to be set forth in the Facility Documentation or terminated in whole. | ||||||||||
IV. Certain Conditions to Borrowing and Issuance of Letters of Credit
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Conditions Precedent to Effectiveness and Initial Borrowings: |
The availability of the Facility shall be conditioned upon satisfaction of customary conditions precedent to be agreed (the date upon which all such conditions precedent shall be satisfied or waived, the “Closing Date”), including without limitation:
(a) the negotiation, execution and delivery of satisfactory Facility Documentation, including security documentation, promissory notes and other usual and customary closing documents, certificates, and authorizing resolutions for the Facility;
(b) the Revolving Lenders and the Administrative Agent shall have received all reasonable and documented out-of-pocket fees and expenses required to be paid on or before the Closing Date (including the reasonable and documented fees and expenses of professionals retained by the Administrative Agent) invoiced at least two business days prior thereto;
(c) all representations and warranties of the Credit Parties in the Facility Documentation shall be true and correct in all material respects (or, if already qualified by materiality, material adverse effect or a similar qualification, true and correct in all respects), and there shall be no default or event of default in existence at the time of, or after giving effect to the making of, such funding on such date;
(d) receipt and satisfactory review of (i) Borrower’s audited financial statements for the most recent fiscal year ending at least 90 days prior to the Closing Date, (ii) Borrower’s unaudited financial statements for the most recent fiscal quarter ending at least 60 days prior to the Closing Date, (iii) pro forma financial statements of the Borrower (after giving effect to closing) and (iv) detailed financial projections (to be mutually agreed upon) of the Borrower;
(e) to the extent that the Closing Date has not occurred by March 1, 2021, receipt of a reserve report prepared by an Approved Petroleum Engineer as of January 1, 2020;
(f) satisfactory title information as reasonably required by the Administrative Agent on not less than 90% of the proved oil and gas properties of the Credit Parties evaluated in the most recent reserve report;
(g) receipt of mortgages and security agreements providing perfected, first priority (subject to certain permitted liens to be defined in the Facility Documentation in a manner consistent with the Documentation Principles) liens and security interests on (i) all personal property assets of the Credit Parties constituting collateral, and (ii) not less than 90% of the proved oil and gas properties of the Credit Parties evaluated in the most recent reserve report;
(h) all governmental and third party approvals necessary in connection with the financing contemplated hereby shall have been obtained and be in full force and effect;
(i) the Administrative Agent shall have received lien search results and be satisfied that there are no liens and security interests on the Credit Parties’ property other than (i) those being released and (ii) permitted liens;
(j) the delivery of legal opinions regarding the Facility Documentation, including, as applicable, opinions of local counsel with respect to mortgages governed by North Dakota, Montana and Texas law (which opinions shall include, among other things, the enforceability of the mortgages under applicable local law), in form and substance reasonably satisfactory to the Administrative Agent;
(k) the Administrative Agent and the Revolving Lenders shall have received, by at least three (3) business days prior to the Closing Date, “know your customer” and similar information required by bank regulatory authorities to the extent requested at least six (6) business days prior to the Closing Date;
(l) no material adverse change (excluding the pendency of the bankruptcy cases) from the date the Chapter 11 Cases commenced until the Closing Date;
(m) final redetermination of the Borrowing Base (to the extent required in accordance with the row captioned “Borrowing Base” above);
(n) entry of a final order of the Bankruptcy Court confirming the Plan (as defined in the Restructuring Support Agreement) that has not been reversed, stayed, modified or amended;
(o) the Administrative Agent shall have received satisfactory evidence that the Total Leverage Ratio (as defined below), determined on a pro forma basis after giving effect to the occurrence of the Transactions, does not exceed 1.5 to 1.0 as of the last day of the most recently completed fiscal quarter ended at least 60 days (for any fiscal quarter other than the last fiscal quarter of 2020) or 90 days (for the fiscal quarter ended December 31, 2020) prior to the Closing Date (with EBITDAX calculated on a last quarter annualized basis);
(p) minimum availability under the Facility, determined on a pro forma basis after giving effect to the occurrence of the Transactions of $75 million; provided that to the extent the Borrower has caused the beneficiary of a letter of credit issued (or deemed reissued) under the DIP Credit Agreement that will be reissued under the Facility to, on or prior to the Closing Date, enter into a legally binding agreement (in form and substance reasonably acceptable to the Administrative Agent) among the Borrower, such beneficiary and the Administrative Agent pursuant to which such beneficiary shall agree to return (or to accept an amendment thereto reducing the stated amount thereof) such letter of credit within ten business days of the Closing Date, the stated amount of such letter of credit (or the amount of such agreed reduction thereto) shall increase availability on a dollar for dollar basis solely for the purpose of determining satisfaction of this condition precedent (such adjustment as set forth in this proviso, the “LC Adjustment”); provided further that in the event that any beneficiary of any letter of credit subject to the LC Adjustment fails to comply with the applicable agreement regarding such letter of credit on or before the date that is ten business days after the Closing Date (or such later date as the Administrative Agent may agree in its sole discretion), (x) availability shall be recalculated as of such date without giving effect to the LC Adjustment with respect to the applicable letter of credit and (y) to the extent that availability is less than $75 million after giving effect to such recalculation, an immediate event of default shall occur under the Facility;
(q) entry into hedges covering the Closing Date Minimum Hedge Volumes (as defined below); and
(r) after giving effect to any requested credit extension on the Closing Date, the Credit Parties shall have no outstanding debt except for debt permitted under the Credit Agreement.
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Conditions Precedent to Lending: |
The making of each extension of credit shall be conditioned upon (a) the accuracy in all material respects (or, if already qualified by materiality, material adverse effect or a similar qualification, the accuracy in all respects) of all representations and warranties (including, without limitation, the material adverse change, solvency and litigation representations) in the Facility Documentation on the date of such credit extension, except to the extent any such representations and warranties are expressly limited to an earlier date, in which case, on and as of the date of such credit extension, such representations and warranties shall continue to be true and correct in all material respects (or, if already qualified by materiality, material adverse effect or a similar qualification, true and correct in all respects) as of such specified earlier date, (b) there being no Borrowing Base Deficiency, no default or event of default in existence at the time of, or after giving effect to the making of, such extension of credit, (c) delivery of a borrowing request, (d) no violation of, or conflict with, any applicable governmental requirement occurring as a result of such credit extension, (e) there being no event, development or circumstance that has resulted in, or could reasonably be expected to have, a material adverse effect at the time of and immediately after giving effect to such credit extension, (f) no change in law having occurred that enjoins, prohibits or restrains, the making or repayment of any Loan or the consummation of the transactions contemplated the Facility Documentation and (g) there being no litigation pending or threatened seeking to, enjoin, prohibit or restrain, the making or repayment of any Loan or the consummation of the transactions contemplated the Facility Documentation.
At the time of and immediately after giving effect to any borrowing or the issuance, amendment, renewal or extension of such Letter of Credit, as applicable, the Borrower together with the other Credit Parties shall not have any Excess Cash.
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V. Certain Documentation Matters
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Documentation Principles: |
The definitive documentation for the Facility, including the credit agreement (the “Credit Agreement”) and all other related agreements and documents creating, evidencing or securing indebtedness or obligations of any of the Credit Parties to the Administrative Agent or granting or perfecting liens or security interests by any of the Credit Parties in favor of and for the benefit of the Administrative Agent, for itself and for and on behalf of the Revolving Lenders, on account of the Facility shall contain the terms set forth herein and shall otherwise be negotiated in good faith within a reasonable time period to be determined based on the expected Closing Date (the “Facility Documentation”). The documentation will be based on the applicable “Loan Documents” under and as defined in that certain Third Amended and Restated Credit Agreement dated October 16, 2018, among the Parent, OP LLC and the Borrower; the lenders party thereto (the “Pre-Petition Lenders”); and Wells Fargo, as administrative agent (as in effect immediately prior to the commencement of bankruptcy case of the Borrower, the “Existing Credit Agreement”), with changes consistent with this Exit Facility Term Sheet and otherwise to reflect customary lender form updates, including without limitation updated LIBOR replacement provisions (the “Documentation Principles”).
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Representations and Warranties: | The Facility shall contain representations and warranties customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation: existence and organizational status; power and authority; qualification; execution, delivery and enforceability of Facility Documentation; compliance with laws and agreements; with respect to the execution, delivery and performance of the Facility Documentation, no violation of, or conflict with, law, charter documents or material agreements; litigation; margin regulations; licenses and permits; governmental approvals and other consents with respect to the execution, delivery and performance of the Facility; Investment Company Act; PATRIOT ACT; absence of undisclosed liabilities; accuracy of disclosure and financial statements; since the Closing Date, no material adverse effect; no defaults or Borrowing Base Deficiency; insurance; taxes; ERISA; environmental matters; creation and perfection of security interests; no material misstatements; ownership of properties; maintenance of properties; location of business and offices; DevCo properties; subsidiaries and equity interests; state regulation; title to refined products; gas imbalances; prepayments; marketing of production; hedge agreements; use of loans and letters of credit; sanctions laws/OFAC; EEA Financial Institutions; consolidated solvency; beneficial ownership certification | ||||||||||
Affirmative Covenants: |
The Facility shall contain affirmative covenants customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation: delivery of annual and quarterly financial statements (with annual financial statements to be accompanied by an audit opinion from nationally recognized auditors that is not subject to qualification as to “going concern” or the scope of such audit other than solely with respect to, or resulting solely from (a) an upcoming maturity date under the Facility occurring within one year from the time such opinion is delivered or (b) any potential inability to satisfy any financial maintenance covenant on a future date or in a future period); certificates and other information; delivery of notices of defaults, certain material events and changes in beneficial ownership; maintenance of organizational existence and rights and privileges; conduct of business; performance of obligations under the Facility Documentation; inspections (including books and records); operation and maintenance of properties; maintenance of insurance; payment of taxes; compliance with laws (including environmental laws); delivery of reserve reports as described above; reasonably satisfactory title review on at least ninety percent (90%) of the proved oil and gas properties of the Credit Parties evaluated in the most recent reserve report; additional guarantors and collateral; further assurances on collateral matters consistent with the requirements otherwise set forth herein; ERISA; DevCo properties; marketing activities; Commodity Exchange Act Keepwell Provisions; DevCo parent undertaking; ownership of DevCo equity interests; ownership of General Partner equity interests; unrestricted subsidiaries; use of proceeds; know-your-customer information; sanctions laws/OFAC/anti-money laundering laws; account control agreements; hedge agreements (required minimum rolling hedging of (i) 80% for the next twelve months as of any date of determination and (ii) 70% for months thirteen through twenty-four following any date of determination, in each case (i) tested on a quarterly basis and (ii) based on estimated oil PDP production reflected in the most recently delivered reserve report).
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Initial Hedging: |
The Borrower shall enter into hedges covering minimum hedge volumes of (i) 10,303 MBBL for the first year after the Closing Date, (ii) 6,761 MBBL for the second year after the Closing Date and (iii) 4,945 MBBL for the third year after the Closing Date; provided that, 2/3rds of such hedging shall be entered into on the Closing Date (the “Closing Date Minimum Hedge Volumes”), with the remainder (the “Post-Closing Minimum Hedge Volumes” and, together with the Closing Date Minimum Hedge Volumes, the “Minimum Hedge Volumes”) to be entered into by the date that is thirty (30) days after the Closing Date (the “Post-Closing Deadline”).
In the event that the Closing Date Minimum Hedge Volumes do not satisfy the target hedge pricing requirements set forth below, then availability under the Facility shall be automatically reduced as of the Closing Date by an amount (the “Availability Block”) equal to the product of (1) sixty-five percent (65%) and (2) the positive sum of (a) the difference between the PV-9 value of (i) the Required First Year Target Hedge Pricing (defined below) multiplied by the Closing Date Minimum Hedge Volumes for the first year after the Closing Date and (ii) the actual hedge pricing multiplied by the Closing Date Minimum Hedge Volumes for the first year after the Closing Date, (b) the difference between the PV-9 value of (i) the Required Second Year Target Hedge Pricing (defined below) multiplied by the Closing Date Minimum Hedge Volumes for the second year after the Closing Date and (ii) the actual hedge pricing multiplied by the Closing Date Minimum Hedge Volumes for the second year after the Closing Date and (c) the difference between the PV-9 value of (i) the Required Third Year Target Hedge Pricing (defined below) multiplied by the Closing Date Minimum Hedge Volumes for the third year after the Closing Date and (ii) the actual hedge pricing multiplied by the Closing Date Minimum Hedge Volumes for the third year after the Closing Date. For the avoidance of doubt, the Availability Block will apply until the earliest of (i) satisfaction of the target hedge pricing requirements, (ii) the Post-Closing Deadline or (iii) waiver of the application of the Availability Block by the Required Revolving Lenders.
In the event that the Minimum Hedge Volumes entered into as of the Post-Closing Deadline do not satisfy the target hedge pricing requirements set forth below, then, the Credit Parties shall have ten business days after the Post-Closing Deadline (the “Cure Period”) to satisfy the target hedge pricing requirements set forth below; provided that availability under the Facility shall be automatically reduced as of the Post-Closing Deadline by an amount (the “Initial Hedge Reduction Amount”) equal to the product of (1) sixty-five percent (65%) and (2) the positive sum of (a) the difference between the PV-9 value of (i) the Required First Year Target Hedge Pricing multiplied by the Minimum Hedge Volumes for the first year after the Closing Date and (ii) the actual hedge pricing multiplied by the Minimum Hedge Volumes for the first year after the Closing Date, (b) the difference between the PV-9 value of (i) the Required Second Year Target Hedge Pricing multiplied by the Minimum Hedge Volumes for the second year after the Closing Date and (ii) the actual hedge pricing multiplied by the Minimum Hedge Volumes for the second year after the Closing Date and (c) the difference between the PV-9 value of (i) the Required Third Year Target Hedge Pricing multiplied by the Minimum Hedge Volumes for the third year after the Closing Date and (ii) the actual hedge pricing multiplied by the Minimum Hedge Volumes for the third year after the Closing Date.
If the Credit Parties fail to satisfy the target hedge pricing requirements set forth below for the Minimum Hedge Volumes during the Cure Period, unless the Required Revolving Lenders otherwise agree during the Cure Period, upon the expiration of the Cure Period, the Borrowing Base shall automatically be reduced by the Initial Hedge Reduction Amount and the Credit Parties shall have one business day to cure any Borrowing Base Deficiency resulting from such Borrowing Base reduction.
The target pricing for the hedges described above shall not be less than (i) $43.04/bbl for the first year after the Closing Date (the “Required First Year Target Hedge Pricing”), (ii) $43.94/bbl for the second year after the Closing Date (the “Required Second Year Target Hedge Pricing”) and (iii) $44.79/bbl for the third year after the Closing Date (the “Required Third Year Target Hedge Pricing”).
For the avoidance of doubt, in no event shall either the Availability Block or the Initial Hedge Reduction Amount be an amount less than $0.
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Financial Covenants: |
Financial covenants to consist of (a) a minimum current ratio of not less than 1.0 to 1.0 and (b) a maximum consolidated total leverage ratio (to be tested net of balance sheet cash in an amount not to exceed $50 million) (the “Total Leverage Ratio”) not to exceed 3.0 to 1.0. EBITDAX (as defined below) to be initially calculated LQA, building to trailing four (4) quarters. The first covenant test shall be based upon the fiscal quarter ending March 31, 2021. “EBITDAX” shall have substantially the same meaning ascribed to such term in the Existing Credit Agreement, with the addition of customary addbacks, subject, in each case, to caps to be agreed, with respect to any costs, fees or expenses in connection with the implementation of fresh start accounting, the Chapter 11 Cases, the Plan (as defined in the Restructuring Support Agreement) and the transaction contemplated thereby (including costs, fees and expenses in connection with litigation and settlement thereof confirmed under the Plan).
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Negative Covenants: |
The Facility shall contain negative covenants customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation:
(a) incurrence of debt, with exceptions for, among other things, (i) the Facility, (ii) capital lease arrangements up to a cap to be agreed, (iii) intercompany debt, (iv) any debt incurred on the Closing Date in accordance with an Acceptable Plan (as defined in the DIP Credit Agreement) and (v) unsecured debt in an aggregate principal amount not to exceed $400 million (“Unsecured Debt”), but subject to a pro forma Total Leverage Ratio of less than 2.5 to 1.0, reduction of the Borrowing Base to the extent set forth above, pro forma financial covenant compliance, and usual and customary high yield basket provisions consistent with the Documentation Principles;
(b) liens, which shall permit, among other things, liens (i) created under the Facility Documentation (including those liens securing the Facility, any hedge agreements and any treasury arrangements) and (ii) in respect of purchase money or capital lease arrangements up to a cap to be agreed;
(c) fundamental changes;
(d) asset sales and early monetization or early termination of any hedge or swap positions;
(e) investments and, solely with respect to the period commencing on the Closing Date through and including the last day of calendar year ending December 31, 2021, Capital Expenditures (as defined below), which shall permit (i) investments or Capital Expenditures in an amount not to exceed $25 million; provided that, such investments or Capital Expenditures shall only be permitted to the extent that (w) no event of default exists at the time of such investment, (x) the pro forma Total Leverage Ratio is less than 2.0 to 1.0, (y) immediately after giving effect to such investment the availability under the Facility is not less than 25% of the Borrowing Base, and (z) positive Free Cash Flow (as defined below) of the Borrower and its Subsidiaries, on a consolidated basis, exists at the time of such investment, (ii) the ability to make Capital Expenditures in an amount not to exceed $275 million during the 2021 calendar year; provided that, for the avoidance of doubt, this clause (e)(ii) is in addition to the investments and Capital Expenditures permitted in clause (e)(i) above and (iii) other investments under specified baskets to be set forth in the Facility Documentation;
(f) dividends or distributions on, or redemptions of, Borrower capital stock (“Restricted Payments”); provided that, commencing on the date of the delivery of the compliance certificate for the fourth fiscal quarter ending after the Closing Date, the Borrower shall be permitted to make Restricted Payments subject to (i) no event of default, (ii) a pro forma Total Leverage Ratio test of less than 2.0 to 1.0, (iii) pro forma availability under the Facility of not less than 25% of the Borrowing Base, and (iv) generation by the Borrower and its Subsidiaries on a consolidated basis, of positive Free Cash Flow at the time of such Restricted Payment, provided that clause (iv) shall only be applicable to the extent the pro forma Total Leverage Ratio exceeds 1.5 to 1.0 at the time of the applicable Restricted Payment;
(h) payments of principal on junior debt; provided that the Facility Documentation shall permit the refinancing of such junior debt subject to customary limitations;
(i) environmental matters;
(j) subsidiaries; designation and conversion of restricted and unrestricted subsidiaries;
(k) ERISA compliance;
(l) limitations on negative pledges and limitations on the prohibition of subsidiary distributions;
(m) sale or discount of receivables;
(n) mergers, etc.;
(o) gas imbalance; take-or-pay or other prepayments;
(p) covenants of Parent, OP LLC and the General Partner;
(q) non-qualified ECP Guarantors;
(r) changes to organizational documents of General Partner and DevCos;
(s) transactions with affiliates;
(t) change in nature of business;
(u) international operations; and
(v) use of proceeds.
For purposes of the positive free cash flow governor for Restricted Payments and investments described above, “Free Cash Flow” shall be defined as EBITDAX less (i) Interest Expense (defined in a manner consistent with the Documentation Principles), less (ii) Capital Expenditures (as defined below), less (iii) taxes paid in cash, less (iv) investments made in cash; less (v) mandatory cash payments in respect of debt.
“Capital Expenditures” shall mean accrued capital expenditures (as determined in accordance with GAAP) for any period, including (a) exploration and production expenses and other capital expenditures and (b) midstream capital expenditures associated with the Credit Parties’ retained ownership in the DevCos (specifically excluding (i) the portion of capital expenditures funded by OMP or attributable to OMP in accordance with ownership in each DevCo and (ii) capitalized interest).
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Events of Default: |
The Facility shall contain events of default customary for financings of this type (including materiality thresholds and other qualifications to be agreed) and shall otherwise be consistent with the Documentation Principles, including, without limitation:
Nonpayment of principal when due; nonpayment of interest, fees or other amounts after a three business day grace period; material inaccuracy of representations and warranties; violation of covenants (subject, in the case of certain affirmative covenants, to a 30-day grace period); failure to enter into the Post-Closing Date Minimum Hedge Volumes by the Post-Closing Deadline; cross-default to material indebtedness; bankruptcy and insolvency events; ERISA events; material judgment in excess of $25 million that is unstayed or undischarged for a period of thirty (30) consecutive days; the loan documents ceasing to be valid or enforceable; Change of Control (as defined below).
“Change in Control” means (a) the acquisition of ownership, directly or indirectly, beneficially or of record, by any Person or group (within the meaning of the Securities Exchange Act of 1934 and the rules of the SEC thereunder as in effect on the date hereof), of equity interests representing more than 35% of the aggregate ordinary voting power represented by the issued and outstanding equity interests of the Parent, (b) occupation of a majority of the seats (other than vacant seats) on the board of directors of the Parent by persons who were not (i) members of the board of directors of Parent as of the Closing Date, (ii) nominated (or whose nomination was approved) by the board of directors of the Parent or (iii) appointed (or whose appointment was approved) by directors so nominated (or whose nomination was so approved), (c) the Parent fails to own directly or indirectly all of the equity interests of the Borrower, (d) the General Partner shall cease to be the sole general partner of Oasis Midstream Partners LP (the “Midstream MLP”), with substantially the same powers to manage the Midstream MLP as are granted to the General Partner under the Midstream MLP partnership agreement, (e) the failure of the Parent, OP LLC and the Borrower to own directly or indirectly (i) all of the equity interests of the General Partner other than the Class B Units (as defined in the General Partner limited liability company agreement) and (ii) equity interests representing at least 85% of total number of Units (as defined in the General Partner limited liability company agreement) issued by the General Partner, (f) the failure of the Parent to have direct or indirect sole control of the General Partner or (g) the occurrence of a “change of control” (or any other similar event) under any material indebtedness.
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Voting: |
Amendments and waivers with respect to the Facility requires the approval of the Majority Revolving Lenders, except that no such agreement shall (a) increase the Maximum Credit Amount or Elected Commitment of any Revolving Lender without the written consent of such Revolving Lender, (b) increase the Borrowing Base without the written consent of all Revolving Lenders, decrease or maintain the Borrowing Base without the consent (or deemed consent) of the Required Revolving Lenders, or modify the Borrowing Base provisions in any manner that results in an increase in the Borrowing Base without the consent of each Revolving Lender, (c) reduce the principal amount of any Loan or Letter of Credit disbursement without the written consent of each Revolving Lender affected thereby, (d) reduce the rate of interest (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest), or reduce, or waive or excuse the payment of, any fee or other amount payable under the Facility owed to any Revolving Lender without the written consent of such Revolving Lender, (e) postpone the scheduled date of payment or prepayment of the principal amount of any Loan or Letter of Credit disbursement, or any interest thereon, or the scheduled date of any fees or other amounts payable under the Facility, or reduce the amount of, waive or excuse any such payment (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest), or postpone or extend the Termination Date without the written consent of each Revolving Lender affected thereby, (f) change the pro rata sharing of payments provisions without the written consent of each Revolving Lender, (g) release any Guarantor (except as otherwise provided in the Facility Documentation), release all or substantially all of the collateral (except as otherwise provided in the Facility Documentation) or waive or amend other customary provisions consistent with the Documentation Principles without the written consent of each Revolving Lender, or (h) amend, modify or otherwise affect the rights or duties of the Administrative Agent, any other agent, the Issuing Bank or the Swingline Lender under the Facility without the prior written consent of the Administrative Agent, other such agent, the Issuing Bank or the Swingline Lender, as the case may be.
For the avoidance of doubt, Term Lenders shall only be able to vote with respect to amendments or modifications to the Facility Documentation that directly and adversely affect the economic terms of the Non-Participating Lender Term Loan, such as any amendments or modifications that would decrease the interest rate applicable thereto (it being understood that only the consent of the Majority Revolving Lenders shall be necessary to waive any obligation of the Borrower to pay default interest) or extend the maturity thereof.
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Assignments and Participations: |
(a) Consents: (i) Each Lender will be permitted to make assignments, without the consent of the Borrower, if such assignment is to a Lender, an affiliate of a Lender, an Approved Fund or any other assignee during the continuance of an event of default; provided that no such assignment may be made by a Revolving Lender to a Term Lender, an affiliate of a Term Lender or an Approved Fund affiliated with a Term Lender without the consent of the Borrower (other than during the continuance of an event of default), (ii) each Lender will be permitted to make assignments, without the consent of the Administrative Agent, if such assignment is to a Lender or an affiliate of a Lender immediately prior to giving effect to such assignment; provided that no such assignment may be made by a Revolving Lender to a Term Lender or an affiliate of a Term Lender without the consent of the Administrative Agent and (iii) except in the case of an assignment to a Lender or an affiliate of a Lender or an assignment of the entire remaining amount of the assigning Lender’s Commitment or Loans, the amount of the Commitment or Loans of the assigning Lender subject to each such assignment cannot be less than $5 million without the consent of each of the Borrower (unless an event of default has occurred and is continuing) and the Administrative Agent.
“Approved Fund” means any person (other than a natural person) that is engaged in making, purchasing, holding or investing in bank loans and similar extensions of credit in the ordinary course of its business and that is administered or managed by (a) a Lender, (b) an affiliate of a Lender or (c) an entity or an affiliate of an entity that administers or manages a Lender.
(b) Participations: Lenders will be permitted to sell participations with voting rights limited to significant matters such as changes in amount, rate, maturity date and releases of all or substantially all of the collateral securing the Facility or all or substantially all of the value of the guaranties of the Borrower’s obligations made by the Guarantors. Participations will be permitted without the consent of the Borrower, the Administrative Agent, the Swingline Lender or the Issuing Bank.
(c) No Assignment or Participation to Certain Persons: No assignment or participation may be made to natural persons, the Borrower, any other Loan Party, or any of their respective affiliates or subsidiaries or to any defaulting Revolving Lender. No assignment or participation may be sold to any “Industry Competitor” of any Loan Party. “Industry Competitor” means any person (other than Borrower, any Guarantor or any of their affiliates or subsidiaries) that is (or one or more of whose affiliates are) actively engaged as one of its principal businesses in lease acquisitions, exploration and production operations or development of oil and gas properties (including the drilling and completion of producing wells).
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Yield Protection: | The Facility Documentation shall contain customary provisions consistent with the Documentation Principles (a) protecting the Lenders against increased costs or loss of yield resulting from changes in reserve, tax, capital adequacy or other requirements of law, and from the imposition of or changes in withholding or other taxes and (b) indemnifying the Lenders for “breakage costs” incurred in connection with, among other things, any prepayment of a LIBO Rate Loan on a day other than the last day of an Interest Period with respect thereto. | ||||||||||
Expenses and Indemnification: | The Borrower shall pay (a) all reasonable out-of-pocket expenses of the Administrative Agent associated with the syndication of the Facility and the preparation, execution, delivery and administration of the Facility and any amendment or waiver with respect thereto (including the reasonable fees, disbursements and other charges of counsel), (b) all costs, expenses, taxes, assessments and other charges incurred by the Administrative Agent in connection with any filing, registration, recording or perfection of any security interest contemplated by the loan documents, (c) all reasonable out-of-pocket expenses incurred by the Issuing Bank in connection with the issuance of any Letter of Credit, and (d) all out-of-pocket expenses incurred by any agent, the Swingline Lender, the Issuing Bank or any Revolving Lender, including the reasonable fees, charges and disbursements of any counsel for any Agent, the Swingline Lender, the Issuing Bank or any Revolving Lender, in connection with the enforcement or protection of its rights in connection the loan documents. | ||||||||||
The Administrative Agent, the Swingline Lender and the Lenders (and their affiliates and their respective officers, directors, employees, advisors and agents) will have no liability for, and will be indemnified and held harmless against, any loss, liability, cost or expense incurred in respect of the transactions and the financing contemplated hereby or the use or the proposed use of proceeds thereof (except to the extent such losses are determined by a court of competent jurisdiction by final and nonappealable judgment to have resulted from the gross negligence or willful misconduct of the indemnified person and provided that the Borrower shall not indemnify any indemnitee for (a) any financial liability of the Lender to the Parent, OP LLC, the Borrower or any Subsidiary pursuant to and in accordance with the terms of a swap agreement and (b) claims among Lenders or between Lenders and their related parties to the extent unrelated to a breach of an obligation of the Parent, OP LLC, the Borrower or any Subsidiary and (c) losses, claims, damages, liabilities or related expenses that are determined by a court of competent jurisdiction by final and nonappealable judgment to be a direct result of a material breach of the Facility by such indemnitee).
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Defaulting Lenders:
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The Facility Documentation shall include customary market provisions relating to defaulting lenders consistent with the Documentation Principles.
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Eligible Contract Participants and Excluded Swap Obligations: |
The Facility Documentation shall include customary market provisions relating to guarantees of swap obligations by Credit Parties that are not “eligible contract participants” under the Commodity Exchange Act.
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Governing Law and Forum: | State of New York | ||||||||||
DIP to Exit Conversion |
On the Closing Date, (the following clauses (i) through (iv), collectively, the “DIP Debt Conversion”): (i) the aggregate principal amount of all “Loans” under and as defined in the DIP Credit Agreement that are outstanding as of such date and any Pre-Petition Secured Indebtedness of any Revolving Lender that was not converted into the DIP Facility (as defined in that certain DIP Term Sheet attached to that certain Senior Secured Superpriority Debtor-in-Possession Revolving Credit Facility Commitment Letter, dated on or about the date hereof, among the Borrower, the financial institutions party thereto and Wells Fargo Bank, N.A. (the “DIP Term Sheet”)) shall, in each case, be automatically converted on a dollar-for-dollar basis for Loans under the Facility, (ii) all outstanding “Letters of Credit” (as defined in the DIP Term Sheet) shall be deemed to be issued as Letters of Credit under the Facility, (iii) all outstanding hedges with a Revolving Lender or an affiliate of a Revolving Lender under the DIP Facility shall be deemed to be included in the Facility, and the Credit Parties shall receive credit therefor for purposes of satisfying the minimum hedging requirements set forth herein, and (iv) all outstanding treasury management arrangements with a Revolving Lender or an affiliate of a Revolving Lender under the DIP Facility shall be deemed to be included in the Facility. Upon Payment in Full (as defined in the DIP Credit Agreement, including all or in part as a result of the DIP Debt Conversion), the DIP Facility will terminate and be superseded and replaced in its entirety by the Facility.
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Counsel to the Administrative Agent: | Vinson & Elkins L.L.P. |
Interest Rate Options: |
The Borrower may elect that the Loans comprising each borrowing bear interest at a rate per annum equal to:
• the ABR plus the Applicable Margin (such margin set forth on Annex II hereto) (“ABR Loans”); or
• the LIBO Rate (as adjusted for statutory reserve requirements (the “Adjusted LIBO Rate”)) plus the Applicable Margin (“LIBO Rate Loans”).
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As used herein: |
“ABR” means, for any day, a rate per annum equal to the greatest of (a) the Prime Rate (defined in a manner consistent with the Documentation Principles) in effect on such day, (b) the Federal Funds Effective Rate in effect on such day plus ½ of 1.00%, (c) subject to the availability of LIBO, the Adjusted LIBO Rate for a one month Interest Period on such day (or if such day is not a business day, the immediately preceding business day) plus 1.00% and (d) 2.00%.
“Federal Funds Effective Rate” means, for any day, the weighted average (rounded upwards, if necessary, to the next 1/100 of 1%) of the rates on overnight Federal funds transactions with members of the Federal Reserve System arranged by Federal funds brokers, as published on the next succeeding business day by the Federal Reserve Bank of New York, or, if such rate is not so published for any day that is a business day, the average (rounded upwards, if necessary, to the next 1/100 of 1%) of the quotations for such day for such transactions received by the Administrative Agent from three Federal funds brokers of recognized standing selected by it; provided that in no event shall the Federal Funds Effective Rate be less than 0%.
“LIBO Rate” means, subject to the implementation of a replacement rate, with respect to any LIBO Rate borrowing for any Interest Period, the greater of (a) 1.00% and (b) the rate appearing on Reuters Screen LIBOR01 Page (or on any successor or substitute page of such service, or any successor to or substitute for such service, providing rate quotations comparable to those currently provided on such page of such service, as determined by the Administrative Agent from time to time for purposes of providing quotations of interest rates applicable to dollar deposits in the London interbank market) at approximately 11:00 a.m., London time, two business days prior to the commencement of such Interest Period, as the rate for dollar deposits with a maturity comparable to such Interest Period. In the event that such rate is not available at such time for any reason, then the “LIBO Rate” with respect to such LIBO Rate borrowing for such Interest Period shall be the rate (rounded upwards, if necessary, to the next 1/100 of 1%) at which dollar deposits of an amount comparable to such LIBO Rate borrowing and for a maturity comparable to such Interest Period are offered by the principal London office of the Administrative Agent in immediately available funds in the London interbank market at approximately 11:00 a.m., London time, two (2) business days prior to the commencement of such Interest Period. Notwithstanding the foregoing, unless otherwise specified in any amendment to the Credit Agreement, in the event that a replacement rate with respect to LIBO Rate is implemented then all references herein to LIBO Rate shall be deemed references to such replacement rate.
Interest Periods for LIBO Rate Loans shall be one, two, three or six months (or, with the consent of each Revolving Lender, nine or twelve months). Interest on ABR Loans shall be payable on the last day of each quarter, upon any prepayment (whether due to acceleration or otherwise) and at final maturity. Interest on LIBO Rate Loans shall be payable in arrears on the last day of each Interest Period, in the case of an Interest Period longer than three months, quarterly, upon any prepayment (whether due to acceleration or otherwise) and at final maturity. Interest on all LIBO Rate Loans shall be calculated for actual days elapsed on the basis of a 360 day year unless such computation would exceed the highest lawful rate, in which case interest shall be computed on the basis of a year of 365 days (or 366 days, as applicable). Interest on all ABR Loans and all fees shall be calculated for actual days elapsed on the basis of a 365, or when appropriate 366, day year.
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Interest Period: | With respect to any LIBO Rate borrowing, the period commencing on the date of such borrowing and ending on the numerically corresponding day in the calendar month that is one, two, three or six months (or, with the consent of each Revolving Lender, nine or twelve months) thereafter, as the Borrower may elect; provided, that (a) if any Interest Period would end on a day other than a business day, such Interest Period shall be extended to the next succeeding business day unless such next succeeding business day would fall in the next calendar month, in which case such Interest Period shall end on the next preceding business day and (b) any Interest Period pertaining to a LIBO Rate borrowing that commences on the last Business Day of a calendar month (or on a day for which there is no numerically corresponding day in the last calendar month of such Interest Period) shall end on the last business day of the last calendar month of such Interest Period. For purposes hereof, the date of a borrowing initially shall be the date on which such borrowing is made and thereafter shall be the effective date of the most recent conversion or continuation of such borrowing. | ||||
Upfront Fees: |
The Borrower agrees to pay to the Administrative Agent, for the account of each Revolving Lender, an upfront fee payable in two (2) installments as follows:
(a) an installment of the upfront fee on the Closing Date of seventy basis points (0.70%) on each Revolving Lender’s applicable percentage of an amount (the “Closing Date Availability Amount”) equal to the Aggregate Elected Commitment Amount minus, if applicable, the amount of the Availability Block in place due to the failure of the Credit Parties to satisfy the target hedge pricing requirements specified in the “Initial Hedging” section above for the Closing Date Minimum Hedge Volumes on the Closing Date; and
(b) an installment of the upfront fee on the next Business Day after the Cure Period of seventy basis points (0.70%) on each Revolving Lender’s applicable percentage of an amount equal to the positive difference, if any, between, the Aggregate Elected Commitment Amount then in effect minus the Closing Date Availability Amount.
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Commitment Fees: | The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a commitment fee, which shall accrue at the applicable Commitment Fee Rate on the average daily amount of the unused amount of the Commitment of such Revolving Lender during the period from and including the Closing Date to but excluding the Termination Date. Accrued commitment fees shall be payable in arrears on the last day of March, June, September and December of each year and on the Termination Date. Solely for purposes of calculating the commitment fee, Swingline Loans will not be deemed to be a utilization of the Commitments. To the extent that the Borrowing Base is reduced by the Initial Hedge Reduction Amount, the Borrower shall be reimbursed for any commitment fees previously paid (or entitled to deduct from the amount of commitment fees to be paid on the next payment date, as applicable) with respect to the portion of the Commitment thereby reduced. | ||||
Letter of Credit Fees: |
The Borrower agrees to pay to the Administrative Agent for the account of each Revolving Lender a participation fee with respect to its participations in Letters of Credit, which shall accrue at the same Applicable Margin used to determine the interest rate applicable to LIBO Rate Loans on the average daily amount of such Revolving Lender’s LC Exposure (excluding any portion thereof attributable to unreimbursed Letter of Credit disbursements) and shall be payable quarterly in arrears. During the continuation of an event of default, upon written notice to the Borrower of the election of the Majority Revolving Lenders, such Letter of Credit Fees shall increase by 2% per annum over the then applicable rate. “LC Exposure” means, at any time, the sum of (a) the aggregate undrawn amount of all outstanding Letters of Credit at such time plus (b) the aggregate amount of all Letter of Credit disbursements that have not yet been reimbursed by or on behalf of the Borrower at such time. The LC Exposure of any Revolving Lender at any time shall be its applicable percentage of the total LC Exposure at such time.
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A fronting fee equal to 1/4 of 1% per annum on the face amount of each Letter of Credit, shall be payable quarterly in arrears to the Issuing Bank for its own account. In addition, customary administrative, issuance, amendment, payment and negotiation charges shall be payable to the Issuing Bank for its own account consistent with the Documentation Principles. | |||||
Default/Deficiency Rate: |
(i) Automatically upon the occurrence of any payment or insolvency related event of default and (ii) with respect to any other event of default that has occurred and is continuing, upon written notice to the Borrower of the election of the Majority Revolving Lenders, all outstanding principal, fees and other obligations under the Facility Documentation shall bear interest at 2% above the rate otherwise applicable to ABR Loans; provided that in either case under clause (i) or clause (ii), such default interest shall accrue from the date of the occurrence of the applicable event of default and end on the date on which such event of default has been cured or waived. During a Borrowing Base Deficiency, an amount of the Revolving Credit Exposure equal to the amount of the deficiency shall, upon written notice to the Borrower of the election of the Majority Revolving Lenders, bear interest at 2% above the rate otherwise applicable to such portion of the Revolving Credit Exposure, which shall accrue from the date of occurrence of such Borrowing Base Deficiency until the date that such Borrowing Base Deficiency is cured or waived.
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Total Commitments Utilization Grid | ||||||||||||||||||||||||||||||||
Total Commitments Utilization Percentage | < 25% | ≥ 25% < 50% | ≥ 50% < 75% | ≥ 75% < 90% | ≥ 90% | |||||||||||||||||||||||||||
ABR Loans or Swingline Loans | 2.000% | 2.250% | 2.500% | 2.750% | 3.000% | |||||||||||||||||||||||||||
LIBO Rate Loans | 3.000% | 3.250% | 3.500% | 3.750% | 4.000% | |||||||||||||||||||||||||||
Commitment Fee Rate | 0.500% | 0.500% | 0.500% | 0.500% | 0.500% |
Name of Initial Lender | Percentages | ||||
Wells Fargo Bank, N.A. | 10.36379019% | ||||
JPMorgan Chase Bank, N.A. | 9.59610202% | ||||
Royal Bank of Canada | 9.59610202% | ||||
Citibank, N.A. | 9.59610202% | ||||
Canadian Imperial Bank Of Commerce, New York Branch | 5.37381713% | ||||
Citizens Bank, N.A. | 5.37381713% | ||||
ING Capital LLC | 5.37381713% | ||||
Capital One, National Association | 5.37381713% | ||||
BBVA USA | 5.18518518% | ||||
Fifth Third Bank, National Association | 4.22228489% | ||||
Mizuho Bank, Ltd. | 4.22228489% | ||||
Truist Bank, formerly Branch Banking & Trust | 4.22228489% | ||||
Regions Bank | 4.07407407% | ||||
BOKF, NA dba Bank of Texas | 3.30105910% | ||||
Comerica Bank | 3.30105910% | ||||
Credit Suisse AG, Cayman Islands Branch | 3.30105910% | ||||
Goldman Sachs Bank USA | 3.30105910% | ||||
Zions Bancorporation, N.A. dba Amegy Bank | 2.68690857% | ||||
IBERIABANK, a division of First Horizon Bank | 1.53537632% | ||||
TOTAL | 100.00% |