AMENDED AND RESTATED SECURED TERM LOAN AND
REVOLVING CREDIT AGREEMENT
THIS AMENDED AND RESTATED SECURED TERM LOAN AND REVOLVING
CREDIT AGREEMENT, made as of September 1, 1995, is by and between
GEORESOURCES, INC., a Colorado corporation (herein called "Borrower"),
and NORWEST BANK MONTANA, NATIONAL ASSOCIATION, a national banking
association (herein called "Norwest").
RECITALS
A. Borrower and Norwest's predecessor, Norwest Bank
Billings, National Association ("NBB"), entered into a Secured Term Loan
and Revolving Credit Agreement dated as of April 29, 1993 (the "Prior
Credit Agreement"), pursuant to which: (1) certain then-outstanding
indebtedness in the amount of $825,000 (the outstanding principal
balance of which is $300,000 as of the date hereof) was consolidated
into one term facility with a maturity date of January 5, 1997, and (2)
NBB made available to Borrower a revolving line of credit in the maximum
amount of $1,000,000 (the outstanding principal balance of which is
$765,000 as of the date hereof), converting to an amortizing term loan
on September 1, 1995.
B. Borrower and Norwest wish to enter into this Amended and
Restated Credit Agreement in order to amend and restate in their
entirety the terms and provisions of the Prior Credit Agreement and to
provide for the terms upon which: (1) the loan described in Recital
A(1) above will be continued, (2) the loan described in Recital A(2)
above will be converted into an amortizing term loan as of the date
hereof, and (3) Norwest will make available to Borrower a new revolving
line of credit in the maximum amount of $1,000,000.
AGREEMENT
IN CONSIDERATION of the following covenants, Borrower and
Norwest agree as follows:
ARTICLE I
Definitions and Accounting Terms
Section 1.01. Certain Defined Terms. As used in this
Agreement, the following terms shall have the following meanings (such
meanings to be equally applicable to both the singular and plural forms
of the terms defined):
"Advance" means any advance made to Borrower pursuant to
Section 2.01(c) below.
"Agreement" means this Amended and Restated Secured Term
Loan and Revolving Credit Agreement, as the same may hereafter be
amended from time to time.
"Borrowing Base" means, at any time, the aggregate loan
value of the Collateral, as determined by Norwest in accordance with
the provisions of Section 2.09 below; provided that the Borrowing Base
for the time period from the date of this Agreement through March 31,
1996 shall be $1,728,000, unless Borrower and Norwest hereafter
mutually agree upon a different amount or unless the Borrowing Base is
redetermined pursuant to the terms of this Agreement prior to the end
of such time period.
"Business Day" means any day other than a Saturday, Sunday
or legal holiday in the State of Montana on which banks are not
required to be open for business in Billings, Montana.
"Collateral" means any and all oil or gas properties, oil or
gas interests and related assets and properties covered by any of the
Security Documents.
"Current Ratio" means, at any time and from time to time,
the ratio of: (a) Borrower's current assets; to (b) Borrower's
current liabilities (excluding regularly scheduled current maturities
of long-term debt), all determined in accordance with generally
accepted accounting principles consistently applied.
"Debt" means, for any Person: (a) all items of indebtedness
or liabilities which in accordance with generally accepted accounting
principles would be included in determining total liabilities as shown
on the liability side of a balance sheet of that Person as of the date
as of which Debt is to be determined, and (b) indebtedness secured by
any mortgage, pledge, lien or security interest existing on property
owned by such Person, whether or not the indebtedness secured thereby
shall have been assumed.
"Event of Default" means any of the events described in
Section 6.01 below.
"Loan Documents" shall mean this Agreement, the 1993 Term
Note, the 1993 Revolver/Term Note, the 1995 Note, the Security
Documents and any other documents executed by Borrower pursuant
hereto.
"Maximum 1995 Loan Amount" means, at any time, the lesser
of: (a)(1) the Borrowing Base, minus (2) the then-outstanding
principal balance of the 1993 Term Loan, minus (3) the then-outstanding
principal balance of the 1993 Revolver/Term Loan; or (b)
$1,000,000.
"Minimum Payment Amount" means the following:
(a) with respect to any Payment Date occurring on or
before September 5, 1998, the amount of interest accrued on the 1995
Loan through such Payment Date;
(b) with respect to any Payment Date occurring after
September 5, 1998 but prior to September 5, 2002, the sum of: (1) the
amount of interest accrued on the 1995 Loan through such Payment Date,
plus (2) the product of: (A) 0.02083333 (1/48), times (B) the
outstanding principal balance of the 1995 Loan as of the close of
business on September 1, 1998; and
(c) with respect to the maturity date of the 1995 Loan
on September 5, 2002, the outstanding principal balance of the 1995 Loan
plus interest accrued through such date.
"Notes" means the 1995 Note, the 1993 Term Note and the 1993
Revolver/Term Note.
"Oil and Gas Properties" means from time to time, all oil
and/or gas properties, pipelines, gathering systems, gas plants and
related interests owned by Borrower.
"Payment Date" means the fifth day of each month, commencing
October 5, 1995.
"Person" means an individual, partnership, corporation
(including a business trust), limited liability company, joint stock
company, trust, unincorporated association, joint venture or other
entity, or a foreign state or political subdivision thereof or any
agency of such state or subdivision.
"Prior Credit Agreement" means the agreement defined as such
in Recital A above.
"Related Person" means any other Person controlled by,
controlling or under common control with Borrower, including without
limitation any subsidiary of Borrower and any officer or director of
Borrower.
"Security Documents" means the Mortgage, Security Agreement,
Assignment of Production and Financing Statement dated as of April 29,
1993, from Borrower to Norwest's predecessor and any and all the deeds
of trust, mortgages, chattel mortgages, assignments of proceeds,
security agreements, financing statements, pledge agreements,
assignments of and/or amendments to any of the foregoing and other
instruments in form and substance satisfactory to Norwest executed by
Borrower as provided herein, granting to and perfecting in favor of
Norwest first and prior liens on or security interests in any portion of
the Oil and Gas Properties required pursuant to this Agreement.
"Tangible Net Worth of Borrower" means the excess of: (a) the tangible
assets of Borrower, determined in accordance with generally accepted
accounting principles, after deducting adequate reserves in each case
where, in accordance with generally accepted accounting principles, a
reserve is proper, over (b) all Debt of Borrower; provided however,
that: (1) in no event shall there be included as tangible assets,
patents, trademarks, tradenames, copyrights, licenses, goodwill,
prepaid expenses to the extent they exceed $50,000 in the aggregate,
deferred charges, notes or accounts receivable due from Related
Persons, or any securities unless the same are readily marketable in
the United States of America or entitled to be used as a credit
against federal income tax liabilities, (2) securities included as
such tangible assets shall be taken into account as required by
generally accepted accounting principles applicable to publicly-traded
companies, and (3) any write-up in the book value of any assets shall
not be taken into account.
"1993 Term Loan" means the loan described in Recital A(1)
above, and any and all modifications to such loan as may be contemplated
by Section 2.01(a) below.
"1993 Term Note" means the Installment Promissory Note dated
as of April 29, 1993, made by Borrower, payable to the order of NBB, in
the face amount of $825,000, as amended by an Allonge in the form of
Exhibit A attached hereto and made a part hereof, which promissory note,
as so amended, shall evidence the 1993 Term Loan.
"1993 Revolver/Term Loan" means the loan described in Recital
A(2) above, and any and all modifications to such loan as may be
contemplated by Section 2.01(b) below.
"1993 Revolver/Term Note" means the Promissory Note dated as
of April 29, 1993, made by Borrower, payable to the order of NBB, in the
face amount of $1,000,000, as amended by an Allonge in the form of
Exhibit B attached hereto and made a part hereof, which promissory note,
as so amended, shall evidence the 1993 Revolver/Term Loan.
"1995 Loan" means the revolving line of credit made available
to Borrower by Norwest in accordance with the terms of this Agreement,
as such revolving line of credit is to be converted to an amortizing
term loan as of September 1, 1998 in accordance with the terms of this
Agreement.
"1995 Note" means the Promissory Note of even date herewith,
made by Borrower, payable to the order of Norwest, in the form of
Exhibit C attached hereto and made a part hereof, which 1995 Note shall
evidence the 1995 Loan.
Section 1.02. Accounting Terms. All accounting terms not
specifically defined herein shall be construed in accordance with
generally accepted accounting principles consistently applied.
ARTICLE II
The Loans
Section 2.01. The Loans. (a) The 1993 Term Loan shall be
governed by the terms of this Agreement and, as to certain matters
(e.g., the amount and timing of principal payments, the interest rate
and the timing of interest payments), by the terms of the 1993 Term
Note.
(b) As of September 1, 1995, the 1993 Revolver/Term
Loan shall be converted from a revolving line of credit to an
amortizing term loan in an amount equal to $765,000, the outstanding
principal balance of the 1993 Revolver/Term Loan as of the close of
business on August 31, 1995. The 1993 Revolver/Term Loan shall be
governed by the terms of this Agreement and, as to certain matters
(e.g., the amount and timing of principal payments, the interest rate
and the timing of interest payments), by the terms of the 1993
Revolver/Term Note.
(c) Subject to the terms and conditions hereof,
Norwest agrees to make Advances on the 1995 Loan to Borrower from time
to time at the request of Borrower upon at least one Business Day's
notice to Norwest from Borrower; provided that Norwest shall not have
any obligation to: (1) make any Advance after September 1, 1998; (2)
make any Advance in an amount less than $10,000; (3) make any Advance
if, after the making of such Advance, the aggregate outstanding
principal balance of the 1995 Loan would exceed the Maximum 1995 Loan
Amount. Within the limitation of the Maximum 1995 Loan Amount, and
subject to the other terms and provisions hereof, Borrower may borrow,
repay and reborrow hereunder.
Section 2.02. The 1995 Note; Interest. Borrower's
obligation to repay the 1995 Loan, with interest thereon, shall be
evidenced by the 1995 Note. The 1995 Note shall bear interest on the
outstanding principal balance thereof at the rates per annum provided
in the 1995 Note. Borrower shall pay all accrued and unpaid interest
due on the 1995 Note on each Payment Date, including without
limitation on September 5, 2002, the maturity date of the 1995 Loan.
Section 2.03. Mandatory Payments.
(a) On each Payment Date, Borrower shall make a
payment on the 1995 Loan to Norwest in the amount of the Minimum
Payment Amount, which payments shall be in addition to: (1) any
amounts payable (whether on a Payment Date or otherwise) with
respect to the 1993 Term loan or the 1993 Revolver/Term Loan, and (2)
any amounts payable with respect to the 1995 Loan as otherwise set
forth in this Agreement, including without limitation as described in
Section 2.03(b) below.
(b) If the aggregate outstanding principal balance of
the 1995 Loan shall at any time exceed the Maximum 1995 Loan Amount,
Borrower shall, not later than 20 days after written notice thereof
from Norwest: (1) pay the excess to Norwest in a lump sum; or (2)
execute and deliver to Norwest additional mortgages, supplements to
mortgages or other instruments satisfactory in form and substance to
Norwest, by which Borrower mortgages, pledges or hypothecates to
Norwest, or creates a security interest in for the benefit of Norwest,
sufficient additional collateral to induce Norwest to make a
redetermination of the Borrowing Base such that the Maximum 1995 Loan
Amount is increased to an amount no less than the aggregate outstanding
principal balance of the 1995 Loan.
(c) The entire outstanding principal balance of the
1995 Loan shall be due and payable, if not sooner paid, on September 5,
2002.
Section 2.04. Time of Payments; Computations.
(a) Borrower shall make each payment hereunder and
under each of the Notes not later than 12:00 noon (Billings, Montana
time) on the day when due in lawful money of the United States of
America to Norwest at its office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇ ▇▇▇▇▇ or at any other location designated by Norwest.
(b) All computations of interest shall be made by
Norwest on the basis of a year of 365 or 366 days, as applicable, for
the actual number of days (including the first day but excluding the
last day) occurring in the period for which such interest is payable.
(c) Should any payment become due and payable on a day
other than a Business Day, the maturity of such payment shall be
extended to the next succeeding Business Day, and, in the case of a
payment of principal or past due interest, interest shall accrue and be
payable thereon for the period of such extension.
Section 2.05. Termination of Agreement. Borrower shall
have the right at any time and from time to time, upon not less than
three business days' prior written notice to Norwest, to terminate this
Agreement. Upon any termination of this Agreement, Borrower shall, at
the time of such termination, prepay all of the Notes in full. Any
such prepayment shall be without penalty or premium.
Section 2.06. Prepayment of the Loans. Borrower shall have
the right to prepay the principal amount of the 1993 Term Loan, the
1993 Revolver/Term Loan or the 1995 Loan at any time as provided
herein. Partial prepayments shall be in the amount of $10,000 or
integral multiples thereof. Each prepayment shall be without premium
or penalty. All prepayments shall first be applied to any and all
accrued interest and unpaid fees and then to unpaid principal, in the
inverse order of approaching maturities.
Section 2.07. Use of Proceeds. Proceeds of the 1995 Loan
shall be used by Borrower exclusively for the financing of Borrower's
working capital requirements and capital expenditures relating to the
acquisition, exploration and development of oil and gas properties.
Section 2.08. Fee. Borrower shall pay to Norwest,
contemporaneously with the execution and delivery of this Agreement,
an origination fee in respect of the 1995 Loan in the amount of
$5,000.
Section 2.09. Borrowing Base Procedures. The Borrowing
Base will be re-determined at least annually by Norwest, as of April 1
of each year through April 1, 2002 (and, at Norwest's sole discretion,
Norwest may re-determine the Borrowing Base at such other times as
Norwest may elect to do so), in accordance with the "Borrowing Base
Calculations" described in Exhibit E attached hereto and made a part
hereof, based upon the engineering reports submitted by Borrower
pursuant to Article V below, the production information submitted by
Borrower pursuant to Article V below and such other information and
data as Norwest deems relevant, and using such assumptions as to
pricing, discount factors, discount rates, expenses, oil and gas
prices and price escalators, operating expense escalators and other
factors as Norwest customarily uses as to borrowing-base oil and gas
loans at the time such re-determination is made. If any such re-determination
of the Borrowing Base by Norwest results in a change in
the Borrowing Base from the Borrowing Base previously in effect,
Norwest shall advise Borrower of such change by providing to Borrower
written notice thereof; provided that if Norwest does not provide such
a notice, then, unless Norwest gives notice to the contrary to
Borrower, the Borrowing Base from the previous period shall be carried
over into the new period until a notice is sent to Borrower by
Norwest.
Section 2.10. The Security. Borrower's obligations
hereunder will be secured by the existing Security Documents and any
additional Security Documents hereafter delivered by Borrower and
accepted by Norwest.
ARTICLE III
Conditions Precedent to 1995 Loan
Section 3.01. Conditions Precedent to 1995 Loan. Norwest
shall have no obligation to make the initial Advance or any subsequent
Advance unless Norwest shall have received all of the following at its
office in Billings, Montana, duly executed and delivered and in form,
substance and date satisfactory to Norwest:
(a) The Notes, including the allonges thereto.
(b) The Security Documents.
(c) An "Omnibus Certificate" of the Secretary of Borrower in
the form of Exhibit D attached hereto and made a part
hereof.
(d) The fee payable by Borrower pursuant to Section 2.08
above.
(e) Such title opinions, supplemental title opinions, UCC
searches and other title information concerning
Borrower's title to the Collateral or any portions
thereof as may be satisfactory to Norwest.
(f) A written certification by Borrower that the Collateral
has been operated in compliance with all federal, state
and local environmental and waste disposal laws and/or
copies of any notices or communications received from any
federal, state or local authorities asserting that a
violation of such laws may have, or has, occurred,
whether or not such assertions are being contested by
Borrower.
(g) Any and all other Loan Documents.
Section 3.02. Additional Conditions Precedent. Norwest shall
have no obligation to make the first or any subsequent Advance unless
the following conditions precedent have been satisfied:
(a) All representations and warranties made by Borrower in any
Loan Document shall be true on and as of the date of such
Advance as if such representations and warranties had
been made as of the date hereof.
(b) No Event of Default, and no event or condition
which, with the giving of notice, the lapse of time, or
both, would constitute an Event of Default, shall exist
as of the date of such Advance.
(c) Borrower shall have performed and complied with all
agreements and conditions herein required to be
performed or complied with by it on or prior to the date
of such Advance.
ARTICLE IV
Representations and Warranties
Section 4.01. Borrower's Representations and Warranties. To
induce Norwest to enter into this Agreement and to make the 1995 Loan,
Borrower represents and warrants to Norwest (which representations and
warranties shall survive the delivery of the 1995 Note and shall be
deemed to be continuing representations and warranties until repayment
in full of the 1995 Note and termination of this Agreement) that:
(a) Organization and Good Standing. Borrower is a
corporation duly organized, validly existing and in good
standing under the laws of the State of Colorado, having
all corporate powers required to carry on its business
and enter into and carry out the transactions
contemplated hereby. Borrower is duly qualified, in
good standing, and authorized to do business in all
other jurisdictions wherein the character of the
properties owned or held by it or the nature of the
business transacted by it makes such qualification
necessary.
(b) Authorization. Borrower has duly taken all corporate
action necessary to authorize the execution and delivery
by it of the Loan Documents and to authorize the
consummation of the transactions contemplated thereby
and the performance of its obligations thereunder.
(c) No Conflicts or Consents. The execution and delivery by
Borrower of the Loan Documents, the performance by
Borrower of its obligations under such Loan Documents,
and the consummation of the transactions contemplated by
the various Loan Documents, do not conflict with any
provision of any of the organizational documents of
Borrower or any agreement, judgment, license, order or
permit applicable to or binding upon Borrower.
(d) Enforceable Obligations. This Agreement and the
other Loan Documents constitute legal and binding
obligations of Borrower, enforceable in accordance
with their respective terms.
(e) Financial Statements. The financial statements
heretofore furnished by Borrower to Norwest fairly
present Borrower's financial position at the date
thereof and the results of Borrower's operations and
the changes in Borrower's financial position for the
period thereof. Since the date of the most recent of
said financial statements, no material adverse change
has occurred in Borrower's financial condition or
business.
(f) Litigation. (1) There are no actions, proceedings or
suits pending or threatened against Borrower before
any court, department, commission, body, board,
bureau, agency, or instrumentality, which do or may
materially and adversely affect Borrower, Borrower's
ownership or use of any of its assets or properties,
its business or financial condition or prospects, or
the right or ability of Borrower to enter into the
Loan Documents or perform its obligations thereunder,
and (2) there are no outstanding judgments,
injunctions, writs, rulings or orders by any such
governmental entity against Borrower which have or may
have any such effect.
(g) Title to Properties. To the best of Borrower's
knowledge, Borrower has good and defensible title to
the Collateral, free and clear of all liens,
encumbrances and defects of title, except for liens,
encumbrances and defects which do not have a material
adverse effect upon the value of the Collateral, taken
as a whole.
(h) Place of Business. The chief executive office and
principal place of business of Borrower are located at
the address of Borrower set out in Section 7.03.
(i) Use of Proceeds. Borrower is not engaged principally,
or as one of its important activities, in the business
of extending credit for the purpose of purchasing or
carrying margin stock (within the meaning of Regulation
U or X of the Board of Governors of the Federal Reserve
System), and no part of the proceeds of the 1995 Loan
will be used to purchase or carry any such margin stock
or to extend credit to any Person for the purpose of
purchasing or carrying any such margin stock.
Section 4.02. Representations by Norwest. Norwest hereby
represents that it will acquire the 1995 Note for its own account in
the ordinary course of its commercial banking business; however, the
disposition of Norwest's property shall at all times be and remain
within its control and this section does not prohibit Norwest's sale
of the 1995 Note or of any participation in the 1995 Note to any bank,
financial institution or similar purchaser.
ARTICLE V
Covenants of Borrower
Section 5.01. Affirmative Covenants. Borrower warrants,
covenants and agrees that until the full and final payment of
Borrower's obligations hereunder and the termination of this
Agreement, unless Norwest has previously agreed otherwise in writing:
(a) Payment and Performance. Borrower will pay all
amounts due under the Loan Documents in accordance with the terms
thereof and will in all material respects observe, perform and comply
with every covenant, term and condition, express or implied, in the
Loan Documents.
(b) Books Financial Statements and Records. Borrower
will at all times maintain full and accurate books of account and
records. Borrower will maintain a standard system of accounting and
will furnish the following statements and reports to Norwest at
Borrower's expense:
(1) as soon as available, and in any event within 120 days
after the end of each fiscal year of Borrower, a copy of
the annual audit report of Borrower, with the
unqualified opinion of a certified public accountant
chosen by Borrower and acceptable to Norwest, prepared
in reasonable detail and in accordance with generally
accepted accounting principles, containing at least a
balance sheet as of the end of such fiscal year of
Borrower and a statement of income, retained earnings
and cash flow, setting forth in comparative form the
corresponding figures for the preceding fiscal year of
Borrower (Borrower's 10-K report);
(2) as soon as available and in any event within 45 days
after the end of each of the first three quarters of each
fiscal year of Borrower, an unaudited balance sheet of
Borrower as at the end of such quarter and related
statements of income, retained earnings and cash flow of
Borrower for such quarterly period and for the fiscal
year to date, in reasonable detail and stating in
comparative form the figures for the corresponding
periods in the previous year, all prepared in accordance
with generally accepted accounting principles (Borrower's
10-Q report);
(3) upon written or telephonic request from Norwest, a report
in form satisfactory to Norwest disclosing with respect
to the month of such request: (A) the amount of oil,
gas, and other hydrocarbon minerals produced from or
allocated to each well included in the Collateral; (B)
the amount of such production per well attributable to
Borrower's interest; (C) the amount of the actual
proceeds from the sale of such oil, gas, and other
hydrocarbon minerals per well and the amount of such
proceeds attributable to Borrower's interest; (D) the
amount of Borrower's share of: (i) the actual costs and
expenses incurred to make such oil, gas and other
hydrocarbon minerals marketable and to transport the same
to the point or points of delivery to the purchaser, and
(ii) production, severance or other taxes required to be
paid with respect to such production and sale, and (E)
the amount actually received by Borrower from the sale of
such oil, gas and other hydrocarbon minerals per well;
and
(4) annually (by March 1 of each year, commencing March 1,
1996) until all of the Notes are paid in full and this
Agreement has been terminated, and at such other times as
Norwest may reasonably request, a report in form
satisfactory to Norwest, certified by an independent
petroleum engineer satisfactory to Norwest, setting forth
the proven producing oil and gas reserves attributable to
Borrower's interest in the currently producing ▇▇▇▇▇ on
the Collateral, together with a forecast of the rates of
production therefrom and the estimated income to Borrower
from such production, calculated in a manner satisfactory
to Norwest, for the estimated economic life of such
properties.
(c) Other Information and Inspections. Borrower will furnish to Norwest
any information which Norwest may from time to time reasonably request
concerning any covenant, provision or condition of the Loan Documents or
any matter in connection with Borrower's business and operations and will
permit representatives appointed by Norwest to visit and inspect, upon
reasonable notice to Borrower and at their sole risk, any and all of such
properties and facilities, including Borrower' books of account, other books
and records, and any facilities or other business assets.
(d) Notice of Material Events. Borrower will promptly notify Norwest:
(1) of any material adverse change in the financial condition of, or any
material occurrence (including without limitation acceleration of Debts,
filing of suits or claims) with respect to, Borrower, (2) of the filing of
any suit or proceeding against Borrower (or the occurrence of any material
development in any such suit or proceeding) in which an adverse decision
could have a material adverse effect upon Borrower's financial condition,
business or operations (or could result in a judgment not covered by
insurance of $250,000 or more against Borrower), or (3) of the occurrence of
any Event of Default or of any event or condition which, with the giving of
notice, the lapse of time, or both, would constitute an Event of Default.
Borrower will also notify Norwest in writing at least twenty Business Days
prior to the date that Borrower changes its name or the location of its
chief executive office or principal place of business or the place where it
keeps its books and records concerning the Collateral, furnishing with such
notice any necessary financing statement amendments or requesting that
Norwest prepare the same.
(e) Maintenance of Existence and Qualifications. Borrower will maintain
and preserve its corporate existence and its rights and franchises in full
force and effect and will qualify to do business as a foreign corporation in
all places where required by applicable law.
(f) Payment of Trade Debt. Taxes, etc. Borrower will: (1) timely file all
required tax returns; (2) timely pay all taxes, assessments, and other
governmental charges or levies imposed upon it or upon its income, profits
or property; and (3) timely pay all Debt owed by it on ordinary trade terms
to vendors, suppliers and other Persons providing goods and services
used by it in the ordinary course of its business. Borrower may,
however, delay paying or discharging any such Debt so long as it is in
good faith contesting the validity thereof by appropriate proceedings.
(g) Payment of Expenses. Borrower will promptly (and
in any event within 30 days after any invoice or other statement or
notice) pay all reasonable costs and expenses incurred by or on behalf
of Norwest (including attorneys' fees) in connection with: (1) the
preparation, execution and delivery of the Loan Documents (including
without limitation any and all future amendments or supplements thereto
or restatements thereof), and any and all consents, waivers or other
documents or instruments relating thereto, (2) the filing, recording,
refiling and re-recording of any Security Documents and any other
documents or instruments or further assurances required to be filed or
recorded or refiled or re-recorded by the terms of any Loan Document,
(3) the examination of Borrower's title to the Collateral, and (4) the
enforcement, after the occurrence of a Default or an Event of Default,
of the Loan Documents.
(h) Compliance with Agreements and Law. Borrower will
perform all material obligations it is required to perform under the
terms of each indenture, mortgage, deed of trust, security agreement,
lease, franchise, agreement, contract or other instrument or obligation
to which it is a party or by which it or any of its properties is
bound, in such a way that they result in no material adverse effect
upon the Collateral or Borrower's ability to perform its obligations
under this Agreement. Borrower will conduct its business and affairs
in compliance in all material respects with all laws, regulations, and
orders applicable thereto (including without limitation those relating
to pollution and other environmental matters).
(i) Additional security Documents. Promptly after a
request therefor by Norwest at any time and from time to time, Borrower
will execute and deliver to Norwest such additional Security Documents
and/or amendments to existing Security Documents as Norwest may deem
necessary or appropriate in order to grant to Norwest a perfected lien
on and security interest in sufficient oil and/or gas interests owned
by Borrower to maintain the Borrowing Base at an amount greater than
the aggregate outstanding principal balances of the 1993 Term Loan, the
1993 Revolver/Term Loan and the 1995 Loan.
(j) Further Assurances. Borrower will execute and deliver
such other and further instruments and will do such other and further acts as
may be reasonably required by Norwest to be necessary or desirable to carry
out more effectively the purpose of this Agreement, including without
limitation: (1) prompt correction of any defect which may hereafter be
discovered in the title to the Collateral or in the execution and
acknowledgement of this Agreement, the Notes, the Security Documents or
any other Loan Documents, and (2) prompt execution and delivery of any
division or transfer orders and other documents which in the opinion of
Norwest are needed to effectuate the transfer to Norwest of the proceeds
of production from the Collateral or any part thereof, pursuant to the
Security Documents.
(k) Current Ratio. Borrower will at all times maintain
a Current Ratio of not less than 1.25:1.00.
(l) Debt to Worth Ratio. Borrower will at all times
maintain a ratio of: (1) Borrower's Debt, to (2) the Tangible Net Worth
of Borrower, of not more than 1.50:1.00.
Section 5.02. Negative Covenants. Borrower warrants,
covenants and agrees that until the full and final payment of Borrower's
obligations hereunder and the termination of this Agreement, unless
Norwest has previously agreed otherwise in writing:
(a) Limitation on Liens. Borrower will not create,
assume or permit to exist any Lien upon any of the Collateral, whether
now owned or hereafter acquired, except: (1) Liens at any time existing
in favor of Norwest; and (2) statutory Liens for taxes, statutory or
contractual mechanics' and materialmen's Liens incurred in the ordinary
course of business, and other similar Liens incurred in the ordinary
course of business; provided that such Liens secure only Debt which is
not delinquent.
(b) Additional Debt. Borrower will not create, incur,
assume or permit to exist Debt except: (1) the 1993 Term Loan, the 1993
Revolver/Term Loan and the 1995 Loan; (2) trade debt owed to suppliers,
pumpers, mechanics, materialmen and others furnishing goods or services
to Borrower in the ordinary course of business; and (3) existing Debt
heretofore disclosed by Borrower to Norwest in writing.
(c) Limitation on Sales of Property. Borrower will not
sell, transfer, lease, exchange, alienate or dispose of any of the
Collateral except as follows (and the following exceptions shall be
subject to any limitations contained in the Security Documents): (1)
equipment which is worthless or obsolete, which is replaced by equipment
of equal suitability and value or which is salvaged from ▇▇▇▇▇ which
have been plugged and abandoned by or on behalf of Borrower; and (2)
inventory (including oil and gas sold as produced) which is sold in the
ordinary course of business.
(d) Limitation on Credit Extensions. Borrower will not
extend credit, make advances or make loans other than: (1) normal and
prudent extensions of credit to customers buying goods and services in
the ordinary course of business, which extensions shall not be for
longer periods than those extended by similar businesses operated in a
normal and prudent manner; and
(2) other extensions of credit, advances and loans which, when added
to the dollar amount of any assumptions, guaranties, endorsements and
secondary liabilities permitted to be outstanding under the provisions
of Section 5.02(f) below, are in an amount not greater than $250,000.
(e) Reorganizations; Combinations. Borrower will
not: (1) change its name, its fiscal year or the nature of its
business, (2) reorganize, liquidate or dissolve, or (3) enter into any
merger or other combination in which it is not the surviving
corporation.
(f) Limitation on Guarantees. Borrower will not
assume, guarantee, endorse or be or become secondarily liable for any
Debt which is the primary obligation of any other Person, other than
assumptions, guaranties, endorsements and secondary liabilities which,
when added to the dollar amount of any extensions of credit, advances
and loans permitted to be outstanding under the provisions of Section
5.02(d)(2) above, are in an amount not greater than $250,000.
ARTICLE VI
Events of Default and Remedies
Section 6.01. Events of Default. Each of the following
events constitutes an Event of Default under this Agreement:
(a) Borrower fails to pay any interest on or principal
of any of the Notes (including without limitation any mandatory
prepayment thereof) or any fees hereunder when due and payable, and
such failure is not remedied within a period of 20 calendar days; or
(b) Borrower fails to pay any other indebtedness under
this Agreement or any of the Security Documents when due and payable,
and such failure is not remedied within a period of 20 calendar days;
or
(c) Any "default" or "event of default," including the
expiration of any applicable period of grace, occurs under any Loan
Document which defines either term; or
(d) Any representation or warranty previously,
presently or hereafter made in writing by or on behalf of Borrower in
connection with any Loan Document shall prove to have been false or
incorrect in any material respect on any date on or as of which made;
or
(e) Borrower fails to duly observe, perform or comply
with any covenant, agreement, condition or provision of this Agreement
(except for those specifically described elsewhere
in this Article VI), and such failure is not remedied within 30 days
after Norwest gives notice to Borrower of such failure; or
(f) Borrower: (1) commences a voluntary case under
any applicable bankruptcy, insolvency or similar law; (2) suffers the
entry against it of a judgment, decree or order for relief by a court
of competent jurisdiction in an involuntary proceeding commenced under
any applicable bankruptcy, insolvency or similar law; (3) suffers the
appointment of a receiver, custodian, trustee or similar official for a
substantial part of its assets; (4) makes a general assignment for the
benefit of creditors; (5) fails generally to pay (or admits in writing
its inability to pay) its debts as such debts become due; or (6)
suffers the entry against it of a final judgment for the payment of
money in excess of $250,000 (not covered by insurance), unless the same
is discharged within 30 days after the date of entry thereof or an
appeal or appropriate proceeding for review thereof is taken within
such period and a stay of execution pending such appeal is obtained; or
(g) There occurs a material change in the management of
Borrower that Norwest determines, in its sole discretion, results in,
or is likely to result in, a change in the operation of the business of
Borrower that may adversely impact the collectability of Norwest's
loans to Borrower, or Borrower's ability to service such loans.
Upon the occurrence of an Event of Default described in subsection (f)
of this Section, the 1993 Term Loan, the 1993 Revolver/Term Loan and
the 1995 Loan shall thereupon be immediately due and payable, without
presentment, demand, protest, notice of protest, declaration or notice
of acceleration or intention to accelerate, or any other notice or
declaration of any kind, all of which are hereby expressly waived by
Borrower. During the continuance of any other Event of Default,
Norwest at any time and from time to time (unless all Events of Default
have theretofore been remedied) may declare any or all of the 1993 Term
Loan, the 1993 Revolver/Term Loan and the 1995 Loan immediately due and
payable, and the 1993 Term Loan, the 1993 Revolver/Term Loan and the
1995 Loan shall thereupon be immediately due and payable.
Section 6.02. Remedies. If any Event of Default (or any
event or condition which, with the giving of notice, the lapse of time,
or both, would constitute an Event of Default) shall occur and be
continuing, the obligation of Norwest to make Advances under this
Agreement shall terminate immediately. If any Event of Default shall
occur, Norwest may protect and enforce its rights under the Loan
Documents by any appropriate proceedings, including proceedings for
specific performance of any covenant or agreement contained in any Loan
Document, and Norwest may enforce the payment of Borrower's obligations
hereunder or enforce any other legal or equitable right.
All rights, remedies and powers conferred upon Norwest under the Loan
Documents shall be deemed cumulative and not exclusive of any other
rights, remedies or powers available under the Loan Documents or at law
or in equity.
Section 6.03. Indemnity. Borrower hereby agrees to
indemnify, defend and hold harmless Norwest and its agents, affiliates,
officers, directors and employees from and against any and all claims,
losses, demands, actions, causes of action, and liabilities whatsoever
(including without limitation reasonable attorneys' fees and expenses,
and costs and expenses reasonably incurred in investigating, preparing
or defending against any litigation or claim, action, suit, proceeding
or demand of any kind or character) arising out of or resulting from:
(a) the Loan Documents (including without limitation the enforcement
thereof), except to the extent such claims, losses, and liabilities are
proximately caused by a Norwest's gross negligence, willful misconduct
or breach of the Loan Documents, and (b) the contamination of the
Collateral by any hazardous substance or environmental pollutant in
violation of any federal, state or local environmental statute, rule,
regulation or ordinance, including without limitation violation of the
Comprehensive Environmental Response, Compensation and Liability Act, as
amended from time to time, or of the Resource Conservation and Recovery
Act, as amended from time to time.
ARTICLE VII
Miscellaneous
Section 7.01. Waiver and Amendment. No failure or delay by
Norwest in exercising any right, power or remedy which it may have under
any of the Loan Documents shall operate as a waiver thereof. No waiver
of any provision of any Loan Document and no consent to any departure
therefrom shall ever be effective unless it is in writing and signed by
Norwest. This Agreement and the other Loan Documents set forth the
entire understanding between the parties hereto, and no modification or
amendment of or supplement to this Agreement or the other Loan Documents
shall be valid or effective unless the same is in writing and signed by
the party against whom it is sought to be enforced.
Section 7.02. Survival of Agreements: Cumulative Nature. All
of Borrower's various representations, warranties, covenants and
agreements in the Loan Documents shall survive until Borrower's
obligations hereunder have been paid in full.
Section 7.03. Notices. All notices, requests, consents, demands and
other communications required or permitted hereunder shall be in writing
and shall be deemed sufficiently given or furnished if delivered by
personal delivery, by expedited delivery service or by United States
mail, postage prepaid, at the addresses specified below sunless changed
by similar notice in writing given by the particular Person whose address
is to be changed), and, when so given, shall be deemed effective upon
delivery:
Borrower's address: ▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
▇.▇. ▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Norwest's address: ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Section 7.04. Parties in Interest. All grants,covenants and
agreements contained in the Loan Documents shall bind and inure to the
benefit of the parties thereto and their respective successors and
assigns; provided that Borrower may notassign or transfer any of its
rights or delegate any of itsduties or obligations under any Loan
Document without the priorconsent of Norwest.
Section 7.05. GOVERNING LAW. THE LOAN DOCUMENTS SHALL BE
DEEMED CONTRACTS AND INSTRUMENTS MADE UNDER THE LAWS OF THE STATE OF
MONTANA AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH AND
GOVERNED BY THE LAWS OF THE STATE OF MONTANA AND THE LAWS OF THE UNITED
STATES OF AMERICA, EXCEPT (A) TO THE EXTENT THAT THE LAW OF ANOTHER
JURISDICTION IS EXPRESSLY ELECTED IN A LOAN DOCUMENT, AND (B) WITH
RESPECT TO SPECIFIC LIENS, OR THE PERFECTION THEREOF, EVIDENCED BY
SECURITY DOCUMENTS COVERING REAL OR PERSONAL PROPERTY WHICH BY THE LAWS
APPLICABLE THERETO ARE REQUIRED TO BE CONSTRUED UNDER THE LAWS OF ANOTHER
JURISDICTION. BORROWER HEREBY IRREVOCABLY SUBMITS ITSELF TO THE NON-EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS OF THE STATE OF
MONTANA.
Section 7.06. Limitation on Interest. Norwest and Borrower
intend to contract in strict compliance with applicable usury laws from
time to time in effect. Norwest agrees to refund to Borrower any amounts
paid by Borrower in excess of the maximum rate under applicable usury
laws.
Section 7.07. Severability. If any term or provision of any
Loan Document shall be determined to be illegal or unenforceable all
other terms and provisions of the Loan Documents shall nevertheless
remain effective and shall be enforced to the fullest extent permitted by
applicable law.
Section 7.08. Counterparts. This Agreement may be separately
executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to
constitute one and the same Agreement.
Section 7.09. Entire Agreement. This Agreement, the Notes,
the Security Documents and the other Loan Documents from time to time
executed in connection herewith state the entire agreement between the
parties with respect to the subject matter hereof. The terms and
provisions of this Agreement shall supersede the terms and provisions
of the Prior Credit Agreement in their entirety.
IN WITNESS WHEREOF, this Agreement is executed as of the
date first written above.
GEORESOUCES, INC,
By: /S/ ▇. ▇. ▇▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇,
President
NORWEST BANK MONTANA, NATIONAL
ASSOCIATION
By: /S/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇,
Vice President
ALLONGE
THIS ALLONGE, dated as of September 1, 1995, is by and between
GEORESOURCES, INC., a Colorado corporation (herein called "Borrower"),
and NORWEST BANK MONTANA, NATIONAL ASSOCIATION, a national banking
association (herein called "Norwest"), successor in interest to NORWEST
BANK BILLINGS, NATIONAL ASSOCIATION.
Reference is made to Amended and Restated Secured Term Loan and
Revolving Credit Agreement dated as of September 1, 1995 (the
"Agreement"), between Borrower and Norwest.
As of the date hereof, the Installment Promissory Note dated as
of April 29, 1993 (the "Note"), made by Borrower, payable to the order of
Norwest Bank Billings, National Association, in the face amount of
$825,000 (the outstanding principal balance of which is $300,000 as of
September 1, 1995), shall be amended as follows:
All references in the Note to "Norwest Bank
Billings, National Association" or the "Bank" shall be deemed
to refer to Norwest Bank Montana, National Association.
EXECUTED as of the date first above written.
GEORESOURCES, INC.
By: /S/ ▇. ▇. ▇▇▇▇▇▇▇
President
NORWEST BANK MONTANA, NATIONAL
ASSOCIATION, successor in
interest to NORWEST BANK
BILLINGS, NATIONAL ASSOCIATION
By: /S/ ▇▇▇▇ ▇▇▇▇▇
Vice President
EXHIBIT B
ALLONGE
THIS ALLONGE, dated as of September 1, 1995, is by and
between GEORESOURCES, INC., a Colorado corporation (herein called
"Borrower"), and NORWEST BANK MONTANA, NATIONAL ASSOCIATION, a national
banking association (herein called "Norwest"), successor in interest to
NORWEST BANK BILLINGS, NATIONAL ASSOCIATION.
Reference is made to Amended and Restated Secured Term Loan
and Revolving Credit Agreement dated as of September 1, 1995 (the
"Agreement"), between Borrower and Norwest.
As of the date hereof, the Promissory Note dated as of April
29, 1993 (the "Note"), made by Borrower, payable to the order of Norwest
Bank Billings, National Association, in the face amount of $1,000,000,
shall be amended as follows:
1. All references in the Note to "Norwest Bank Billings,
National Association" or the "Bank" shall be deemed to refer to Norwest
Bank Montana, National Association.
2. The first sentence of the Note shall be deleted in its
entirety and the following shall be substituted therefor:
FOR VALUE RECEIVED, the undersigned promises to pay to the
order of NORWEST BANK MONTANA, NATIONAL ASSOCIATION (the "Bank"), at
▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇, or at any other place
designated at any time by the holder hereof, in lawful money of the
United States of America, the principal sum of $1,000,000, together
with interest (calculated on the basis of actual days elapsed in a
365- or 366-day year) on the unpaid balance hereof at a fluctuating
rate, adjustable the day of any change, equal to the Base Rate plus
one percentage point per annum.
3. The following shall be inserted immediately after the
second paragraph of the Note:
This Note is issued pursuant to, and is subject to the terms
and provisions of, the Amended and Restated Secured Term Loan and
Revolving Credit Agreement (the "Credit Agreement") dated as of
September 1, 1995, between the undersigned and the Bank.
The outstanding principal amount of this Note ($765,000 as
of September 1, 1995) shall be payable in 47 monthly installments of
$16,000 each, due and payable on the fifth day of each calendar
month, commencing October 5, 1995, and one final installment in an
amount equal to the entire outstanding principal balance of this
Note, due and payable on September 5, 1999 (unless payable sooner
pursuant to the terms of the Credit Agreement).
4. The following provision at the bottom of the Note shall be
deleted: "This Note evidences indebtedness under a revolving credit
facility."
EXECUTED as of the date first above written.
GEORESOURCES, INC.
By: /S/ ▇. ▇. ▇▇▇▇▇▇▇
President
NORWEST BANK MONTANA, NATIONAL
ASSOCIATION, successor in
interest to NORWEST BANK
BILLINGS, NATIONAL ASSOCIATION
By: /S/ ▇▇▇▇ ▇▇▇▇▇
Vice President
EXHIBIT C
PROMISSORY NOTE
$1,000,000 September 1, 1995
Billings, Montana
FOR VALUE RECEIVED, GEORESOURCES, INC., a Colorado corporation
("Borrower"), promises to pay to the order of NORWEST BANK MONTANA,
NATIONAL ASSOCIATION ("Payee"), the principal sum of $1,000,000, or such
lesser amount as may be borrowed hereunder, together with interest on
the outstanding unpaid balance of such principal amount at the rate
provided below.
This Note is issued pursuant to, and is subject to the terms
and provisions of, the Amended and Restated Secured Term Loan and
Revolving Credit Agreement (the "Credit Agreement"), dated as of
September 1, 1995, between Borrower and Payee. Except as otherwise
defined herein, terms defined in the Credit Agreement shall have the
same meanings when used herein.
The outstanding principal amount of this Note shall be payable
as provided in the Credit Agreement. The entire outstanding principal
balance of this Note shall be due and payable on September 5, 2002
(unless payable sooner pursuant to the terms of the Credit Agreement)
and shall bear interest initially at the fluctuating rate, adjustable
the day of any change, equal to the annual rate publicly announced or
published from time to time by Norwest Bank Minnesota, National
Association as its "base" or "prime" rate, which may not be the lowest
interest rate charged by Payee (the "Base Rate"), plus one percentage
point per annum.
Interest shall accrue daily, shall be payable on the fifth day
of each month, commencing October 5, 1995, and at the maturity of this
Note.
All payments of principal and interest hereon shall be made at
Payee's offices at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ ▇▇▇▇▇ (or at
such other place as Payee shall have designated to Borrower in writing)
on the date due in immediately available funds and without set-off or
counterclaim or deduction of any kind. All payments received hereunder
shall be applied first to costs of collection, second to accrued
interest as of the date of payment and third to the outstanding
principal balance of this Note.
This Note is secured by, and the holder of this Note is
entitled to the benefits of, the documents described in the Credit
Agreement (the "Security Documents"). Reference is made to the Security
Documents for a description of the property covered thereby and the
rights, remedies and obligations of the holder hereof in respect
thereto.
Subject to the expiration of any applicable period of grace
provided for in the Credit Agreement, in the event of (a) any default in
any payment of the principal of or interest on this Note when due and
payable, or (b) any other Event of Default (as defined in the Credit
Agreement), then the whole principal sum of this Note plus accrued
interest and all other obligations of Borrower to holder, direct or
indirect, absolute or contingent, now existing or hereafter arising,
shall, at the option of Payee, become immediately due and payable, and
any or all of the rights and remedies provided herein and in the Credit
Agreement and the Security Documents, as they may be amended, modified
or supplemented from time to time may be exercised by Payee.
If Borrower fails to pay any amount due under this Note and
Payee has to take any action to collect the amount due or to exercise
its rights under the Security Documents, including without limitation
retaining attorneys for collection of this Note, or if any suit or
proceeding is brought for the recovery of all or any part of or for
protection of the indebtedness or to foreclose the Security Documents or
to enforce Payee's rights under the Security Documents, then Borrower
agrees to pay on demand all reasonable costs and expenses of any such
action to collect, suit or proceeding, or any appeal of any such suit or
proceeding, incurred by Payee, including without limitation the
reasonable fees and disbursements of Payee's attorneys and their staff.
Borrower waives presentment, notice of dishonor and protest,
and assents to any extension of time with respect to any payment due
under this Note, to any substitution or release of collateral and to the
addition or release of any party, except as provided in the Credit
Agreement. No waiver of any payment or other right under this Note
shall operate as a waiver of any other payment or right.
If any provision in this Note shall be held invalid, illegal
or unenforceable in any jurisdiction, the validity, legality or
enforceability of any defective provisions shall not be in any way
affected or impaired in any other jurisdiction.
No delay or failure of the holder of this Note in the exercise
of any right or remedy provided for hereunder shall be deemed a waiver
of such right by the holder hereof, and no exercise of any right or
remedy shall be deemed a waiver of any other right or remedy that the
holder may have.
All notices given hereunder shall be given as provided in the
Credit Agreement.
This Note is to be governed by and construed according to
the laws of the State of Montana.
GEORESOURCES, INC.
By: /S/ ▇. ▇. ▇▇▇▇▇▇▇
▇. ▇. ▇▇▇▇▇▇▇,
President
EXHIBIT D
CERTIFICATE RE RESOLUTIONS AND
ARTICLES OF INCORPORATION AND BYLAWS
The undersigned, ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, Secretary/Treasurer of
GeoResources, Inc. (the "Company"), a Colorado corporation, hereby
certifies that:
1. Attached hereto is a true and complete copy of
certain Resolutions duly adopted by the Board of Directors of the
Company as in effect on the date hereof.
2. Attached hereto are true and complete copies of the
Articles of Incorporation and the Bylaws of the Company as in effect on
the date hereof.
3. The following persons are duly authorized to execute
Loan Documents (as defined in the Amended and Restated Secured Term Loan
and Revolving Credit Agreement (the "Credit Agreement"), dated as of
September 1, 1995, between the Company and Norwest Bank Montana,
National Association) on behalf of the Company:
Name and Specimen
capacity Signature
▇. ▇. ▇▇▇▇▇▇▇ /S/ ▇. ▇. ▇▇▇▇▇▇▇
President ▇. ▇. ▇▇▇▇▇▇▇
Executed by the undersigned as of the 1st day of September,
1995.
/S/ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇
EXHIBIT B
BORROWING BASE CALCULATION
GEORESOURCES. INC.
Dated
1. Present Worth (PW) of Proved Developed
Producing (PDP) Oil and Gas Properties
Discounted At . __________
2. Less: a) PW of PDP Properties Not
Mortgaged to Norwest. - __________
b) PW of The Next 12 Months of
Production (Subtracted Only
if Borrower Has A Revolving
Line Related To Oil and Gas). - __________
c) Other Ineligible Properties - __________
3. Net PW of PDP = __________
4. Borrowing Base Factor x .50
= __________
5. Plus: a) Anticipated Principal
Amortization of Oil and Gas
Related Term Debt In The Next
12 Months (Added Only If A
Dollar Amount Has Been
Subtracted in 2b). + __________
6. Borrowing Base = __________
7. Less: Principal Balance of all
Revolving and Term Debt
Related To Oil and Gas - __________
8. Margin (Deficit) = __________