REVOLVER LOAN AGREEMENT

 

Dated as of

November 21, 2017

between

ENERGY 11, L.P. AND ENERGY 11 OPERATING COMPANY, LLC

COLLECTIVELY, “BORROWERS”

AND

BANK SNB

“BANK”

THIS REVOLVER LOAN AGREEMENT, dated effective as of November 21, 2017, is entered into between ENERGY 11, L.P., a Delaware limited partnership (“ELP”), and Energy 11 Operating Company, LLC, a Delaware limited liability company (“ELLC” and together with ELP, collectively “Borrowers”, and each, a “Borrower”), and BANK SNB, an Oklahoma state banking corporation (the “Bank”).

W I T N E S S E T H:

WHEREAS, Borrowers have requested the Bank to establish a joint and several revolving line of credit facility in favor of Borrowers in the maximum principal amount of SEVENTY FIVE MILLION and NO/100 DOLLARS ($75,000,000.00) (the “Revolver Commitment”) until the Revolver Final Maturity Date to be evidenced by Borrowers’ Promissory Note (Revolver Note) payable to the order of the Bank and dated as of even date herewith in the stated face principal amount of $75,000,000.00 (as renewed, extended, rearranged, substituted, replaced, amended or otherwise modified from time to time, collectively the “Revolver Note”), and

WHEREAS, the Bank is willing to establish the Revolver Commitment and make the Revolver Loan advances from time to time hereunder to Borrowers in the maximum principal amount of $75,000,000.00, subject to the Revolver Commitment Amount (initially stipulated to be $20,000,000.00) and the Collateral Borrowing Base, all upon the terms and conditions herein set forth, and upon Borrowers granting in favor of the Bank a continuing and continuous, first priority mortgage lien, pledge of and security interest in not less than 80% of Borrowers’ producing oil, gas and other leasehold and mineral interests in the State of North Dakota, along with certain contract rights, all as more particularly described and defined in the Security Instruments (as hereinafter defined), as collateral and security for all Indebtedness;

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

When used herein, the following terms shall have the following meanings:

“Additional Costs” shall have the meaning given in Section 2.19(c).

“Affected Loans” shall have the meaning given in Section 2.11.

“Affiliate” shall mean any Person which, directly or indirectly, controls, or is controlled by, or is under common control with, another Person and any partner, officer or employee of any such Persons.  For purposes of this definition, “control” shall mean the power, directly or

indirectly, to direct or in effect cause the direction of the management and policies of such Person whether by contract or otherwise.

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

“Applicable Margin” shall mean the Applicable Margin for LIBOR Rate Loans and Base Rate Loans, respectively, set forth at the appropriate intersection in the interest rate Pricing Grid shown below, based on the Borrowing Base Utilization as in effect from time to time:

Each change in the Applicable Margin resulting from a change in the Borrowing Base Utilization shall take effect on the day such change in the Borrowing Base Utilization occurs.

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

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

“Base Rate Margin” shall mean the Applicable Margin for Base Rate Loans specified on the Pricing Grid.

“Base Rate Loans” shall mean Loans and loan advances that accrue interest at the Base Rate.

“Borrowing Base Utilization” shall mean (i) the sum of (a) the outstanding principal amount of Revolver Note plus (b) the aggregate face amount of all undrawn and uncancelled and unexpired Letters of Credit, plus (c) the aggregate of all amounts drawn under all Letters of Credit and not yet reimbursed, divided by (ii) the Collateral Borrowing Base (as described and calculated in accordance with the provisions of Article IV hereof).

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

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

“Closing Date” shall mean the effective date of this Agreement.

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

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

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

“Current Ratio” shall mean as of any fiscal quarter end determination date, the quotient of current assets (including any availability to Borrowers under the Revolver Commitment) divided by current liabilities (excluding any current maturities owed to the Bank and excluding liability associated with Swap Obligations and Hedge Agreements/Hedge Transactions not then due and payable, payables due for capital expenditures, and any current portion of asset retirement obligations).

“Default Rate” shall mean the then applicable contractual rate of interest on the Revolver Note plus four additional percentage points (4.00%) per annum.

“Deficiency” shall have the meaning given in Section 4.2.

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

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

“Equity Interest” means shares of capital stock, partnership interests, membership interests in a limited liability company, beneficial interests in a trust or other equity ownership interests in a Person, and any warrants, options or other rights entitling the holder thereof to purchase or acquire any such equity interest.

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

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

“Excluded Swap Obligation” (a) with respect to any guarantor, any Swap Obligation if, and to the extent that, all or a portion of the guarantee of such guarantor of, or the grant by such guarantor of a security interest to secure, as applicable, such Swap Obligation (or any guarantee thereof) is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof) and (b) with respect to any Borrower, any Swap Obligation of another loan party if, and to the extent that, all or a portion of the joint and several liability of such Borrower with respect to, or the grant of such Borrower of a security interest to secure, as applicable, such Swap Obligation is or becomes illegal under the Commodity Exchange Act or any rule, regulation, or order of the Commodity Futures Trading Commission (or the application or official interpretation of any thereof), by virtue of such guarantor’s (in the case of (a)) or Borrower’ (in the case of (b)) failure to constitute an “eligible contract participant,” as defined in the Commodity Exchange Act and the regulations thereunder, at the time the guarantee of such guarantor, joint and several liability of such Borrower, or grant of such security interest by such guarantor or Borrower, as applicable, becomes or would become effective with respect to such

Swap Obligation. If a Swap Obligation arises under a master agreement governing more than one Swap Obligation, such exclusion shall apply only to the portion of such Swap Obligation that is attributable to Swap Obligations for which such guarantee or security interest or joint and several liability, as applicable, is or becomes illegal.

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

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

“Governmental Authority” shall include the country, the state, county, city and political subdivisions in which any Person or such Person’s property is located or which exercises valid jurisdiction over any such Person or such Person’s property, and any court, agency, department, commission, board, bureau or instrumentality of any of them including monetary authorities which exercises valid jurisdiction over any such Person or such Person’s property.  Unless otherwise specified, all references to Governmental Authority herein shall mean a Governmental Authority having jurisdiction over, where applicable, Borrowers or any subsidiary, or any of their property or the Bank.

“Governmental Requirement” shall mean any applicable law, statute, code, ordinance, order, determination, rule, regulation, judgment, decree, injunction, franchise, permit, certificate, license, authorization or other directive or requirement (having the force of law), including, without limitation, Environmental Laws, energy regulations and occupational, safety and health standards or controls, of any Governmental Authority.

“GP” shall mean Energy 11 GP, LLC, a Delaware limited liability company, the general partner of ELP.

“Guarantee Obligation” as to any Person (the “guaranteeing person”), any obligation, including a reimbursement, counterindemnity or similar obligation, of the guaranteeing Person that guarantees or in effect guarantees, or which is given to induce the creation of a separate obligation by another Person (including any bank under any letter of credit) that guarantees or in effect guarantees, any Indebtedness, leases, dividends or other obligations (the “primary obligations”) of any other third Person (the “primary obligor”) in any manner, whether directly or indirectly, including any obligation of the guaranteeing person, whether or not contingent, (i) to

purchase any such primary obligation or any property constituting direct or indirect security therefor, (ii) to advance or supply funds (1) for the purchase or payment of any such primary obligation or (2) to maintain working capital or equity capital of the primary obligor or otherwise to maintain the net worth or solvency of the primary obligor, (iii) to purchase property, securities or services primarily for the purpose of assuring the owner of any such primary obligation of the ability of the primary obligor to make payment of such primary obligation or (iv) otherwise to assure or hold harmless the owner of any such primary obligation against loss in respect thereof; provided, however, that the term Guarantee Obligation shall not include endorsements of instruments for deposit or collection in the ordinary course of business. For the avoidance of doubt, for purposes of determining any Guarantee Obligations of any guarantor pursuant to the Security Documents, the definition of “Specified Swap Agreement” shall not create any guarantee by any guarantor of (or grant of security interest by any guarantor to support, if applicable) any Excluded Swap Obligation of such guarantor.

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

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

“Hedge Agreement” means any interest rate or commodity Swap, cap or collar agreements, interest rate and/or oil and gas future or option contracts, currency Swap agreements, currency future or option contracts and rate or commodity Risk Management Agreements or other similar Risk Management Agreements, and includes without limitation any ISDA Agreement and related schedules and documents entered into with any Swap Counterparty from time to time and as governed by the Intercreditor Agreement.  “Prohibited Hedge Transactions” shall mean the obligations by Borrowers (or either of them) or any of their respective Subsidiaries entering into (i) both physical and financial hedging transactions effective at concurrent or overlapping periods of time on the same volumes of production or (ii) hedging transactions for more than eighty (80%) of such Borrower’s aggregate monthly production.

“Hedge Transaction” means a transaction pursuant to which Borrowers (or either of them) or any of their respective Subsidiaries hedge the price to be received by them for future production of Borrowers’ (respective) hydrocarbons, including price Swaps under which such Borrower or any of its Subsidiaries agrees to pay a price for a specified amount of hydrocarbons determined by reference to a recognized market on a specified future date and the contracting party agrees to pay such Borrower or any Subsidiaries thereof a fixed price for the same or similar amount of hydrocarbons.

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

“Highest Lawful Rate” shall mean, with respect to the Bank, the maximum non-usurious interest rate, if any, that at any time or from time to time may be contracted for, taken, reserved, charged or received on the Revolver Note or on any other Indebtedness under laws applicable to

the Bank which are presently in effect or, to the extent allowed by law, under such applicable laws which may hereafter be in effect and which allow a higher maximum non-usurious interest rate than applicable laws now allow.

“Hydrocarbons” shall have the meaning assigned to that term in the Mortgage.

“Indebtedness” shall mean and include any and all: (i) indebtedness, obligations and liabilities of Borrowers to the Bank incurred or which may be incurred or purportedly incurred hereafter pursuant to the terms of this Agreement, or any of the other Loan Documents, and any replacements, amendments, extensions, renewals, substitutions, amendments and increases in amount thereof, including all future advances and all such amounts as may be evidenced by the Revolver Note and all lawful interest, late charges, service fees,  commitment fees, fees in lieu of balances, letter of credit fees and other charges, and all reasonable costs and expenses incurred in connection with the preparation, filing and recording of the Loan Documents, including attorneys’ fees and legal expenses; (ii) any and all derivative products obligations, direct, contingent or otherwise, whether now existing or hereafter arising, of Borrowers to the Bank arising under or in connection with any Hedge Agreements or other Risk Management Agreements; (iii) all reasonable costs and expenses paid or incurred by the Bank, including attorneys’ fees, in enforcing or attempting to enforce collection of any Indebtedness and in enforcing or realizing upon or attempting to enforce or realize upon any collateral or security for any Indebtedness, including interest on all sums so expended by the Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate; (iv) all sums expended by the Bank in curing any Event of Default or Default of Borrowers under the terms of this Agreement the other Loan Documents or any other writing evidencing or securing the payment of the Revolver Note together with interest on all sums so expended by the Bank accruing from the date upon which such expenditures are made until paid, at an annual rate equal to the Default Rate, (v) any overdraft, return items or other similar or comparable ACH (automated clearing house) obligations and other treasury management obligations now or hereafter owing by Borrowers to the Bank, and (vi) any indemnity obligations of Borrowers to the Bank; provided, however, that the definition of “Indebtedness” shall not create any Guarantee Obligations by any Subsidiary guarantor of (or grant of security interest by any such Subsidiary guarantor, if any, to support, as applicable) any Excluded Swap Obligations of such Subsidiary guarantor, if any, for purposes of determining any obligations of any such Subsidiary guarantor.

 

and (iv) no Interest Period shall have a duration of less than one month and, if the Interest Period for any LIBOR Rate Loans would otherwise be for a shorter period, such Loans shall not be available hereunder.Available Interest Periods under this Agreement shall be one (1) month, two (2) months or three (3) months only.

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

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

“Letters of Credit” shall mean any and all letters of credit issued by Bank pursuant to the request of Borrowers in accordance with the provisions of Sections 2.1 and 2.5 hereof which at any time remain outstanding and subject to draw by the beneficiary, whether in whole or in part.

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

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

“Leverage Ratio” means the quotient of Borrowers’ (i) total Funded Debt divided by (ii) EBITDAX, calculated quarterly on an annualized basis.

“LIBOR” shall mean, for each Interest Period for any LIBOR borrowing, the rate (expressed to the fifth decimal) per annum (rounded upwards, if necessary, to the nearest 1/16th of 1%) equal to (i) rate of interest which is identified and published in the Bonds, Rates and Yields section of the “Money Rates” column of The Wall Street Journal (Southwest Edition) (the “WSJ”) under the heading “London Interbank Offered Rate” for loans of one (1) month maturity, two (2) month maturity, or three (3) month maturity, as applicable; provided, however, if LIBOR determined as provided above shall be less than zero, LIBOR shall be deemed to be zero for the purposes of this Agreement with respect to any outstanding Loan that is not subject to a Swap Agreement with the Bank or its Affiliates (and with respect to an outstanding Loan that is so subject to a Swap Agreement with the Bank or its Affiliates, the interest rate will nonetheless be subject to the Swap Agreement if LIBOR determined as provided above shall be less than zero).  If such WSJ shall not be available or WSJ does not report the LIBOR in United States Dollars or Bank determines in good faith that the rate so reported no longer accurately reflects the rate available to the Bank in the London Interbank market or if such index no longer accurately reflects the rate available to the Bank in the London Interbank market, any successor or similar

service as may be selected in good faith by the Bank with Borrowers’ consent, which such consent will not be unreasonably withheld, delayed or conditioned.  Each determination by the Bank of LIBOR shall be conclusive and binding, absent manifest error, and may be computed using any reasonable averaging and attribution method.

“LIBOR Margin” shall mean the Applicable Margin for LIBOR Rate Loans specified on the Pricing Grid.

“LIBOR Rate” shall mean, with respect to any LIBOR Rate Loan, a rate (expressed to the fifth decimal) per annum (rounded upwards, if necessary, to the nearest 1/16 of 1%) determined by the Bank to be equal to the quotient of (i) LIBOR for such Loan for the Interest Period for such Loan divided by (ii) one (1) minus the Reserve Requirement, if any, for such Loan for such Interest Period, and any change in the LIBOR Rate shall be effective on the effective date of any continuation thereof or conversion thereto in accordance with this Agreement.

“LIBOR Rate Loans” shall mean Loans, the interest rates on which are determined on the basis of rates referred to in the definition of “LIBOR Rate”.

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

“Loan Documents” shall mean this Agreement, the Revolver Note, any Intercreditor Agreement, the Security Instruments (including without limitation, the Mortgage), the hedge proceeds letter, and all other documents, instruments and certificates executed and delivered to the Bank by Borrowers (or either of them) pursuant to the terms of this Agreement.

“Loans” shall mean any Revolver Loan and any amounts drawn or obligations and liabilities under or arising pursuant to any ISDA Agreement governing Hedge Transactions or other derivative transactions entered into by any Loan Party with the Hedge Counterparty as counterparty.

“Material Adverse Change” shall mean any material and adverse change to (i) the assets, financial condition, business condition, operations or properties of a Borrower, and any future Subsidiaries thereof taken as a whole different from the facts represented or warranted herein or any of the other Loan Documents, (ii) the ability of Borrowers to meet their respective obligations and their other respective material obligations under the Loan Documents on a timely basis, or (iii) the enforceability of the material terms of any of the Loan Documents.

“Mortgage” shall have the meaning assigned to that term in Section 3.1 of this Agreement, including without limitation, any amendments thereto or supplements thereof.

“Mortgaged Property” shall mean the property covered by the Mortgage defined in Section 4.1(b) of this Agreement.

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

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

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

“Pricing Grid” shall mean the Borrowing Base Utilization grid included within the definition of Applicable Margin.

“Proven Reserves” has the meaning ascribed thereto in Section 4.1(c) of this Agreement.

“Qualified ECP Guarantor” means, in respect of any Swap Obligation, Borrowers and any guarantor that is not an individual or a natural person and that has total assets exceeding $10,000,000 at the time the relevant Guarantee or grant of the relevant security interest becomes effective with respect to such Swap Obligation or such other person as constitutes an “eligible contract participant” under the Commodity Exchange Act or any regulations promulgated thereunder and can cause another person to qualify as an “eligible contract participant” at such time by entering into a keepwell under Section 1a(18)(A)(v)(II) of the Commodity Exchange Act.

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

“Regulatory Change” shall mean, with respect to the Bank, any change after the Closing Date in any Governmental Requirement (including Regulation D) or the adoption or making after such date of any interpretations, directives or requests applying to a class of lenders (including the Bank) of or under any Governmental Requirement (whether or not having the force of law) by any Governmental Authority charged with the interpretation or administration thereof.

“Reserve Requirement” shall mean, for any Interest Period for any LIBOR Rate Loan, the average maximum rate at which reserves (including any marginal, supplemental or emergency reserves) are required to be maintained during such Interest Period under Regulation D by member banks of the Federal Reserve System (or any successor thereto) in New York City with deposits exceeding one billion Dollars against “Eurocurrency liabilities” (as such term is used in

Regulation D).  Without limiting the effect of the foregoing, the Reserve Requirement shall reflect any other reserves required to be maintained by such member banks by reason of any Regulatory Change against (i) any category of liabilities which includes deposits by reference to which LIBOR is to be determined as provided in the definition of “LIBOR” or (ii) any category of extensions of credit or other assets which include a LIBOR Rate Loan.

“Revolver Commitment” shall mean the Bank’s obligation to make the Revolver Loans pursuant to the terms, provisions and conditions of this Agreement.

“Revolver Commitment Amount” shall be the maximum outstanding principal amount plus Letter of Credit Exposures the Bank agrees from time to time to make available under the Revolver Commitment (initially stipulated to be equal to $20,000,000.00).

“Revolver Final Maturity Date” shall mean the date certain two (2) years following the Closing Date, unless otherwise extended or renewed in writing by the mutual agreement of Borrowers and the Bank.

“Revolver Loans” shall have the meaning ascribed to it in Section 2.1 of this Agreement.

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

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

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

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

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

“Swap Counterparty” shall mean BP Energy Company, or such other hedge provider, if any, acceptable to the Bank and Borrowers, or their respective successors or permitted assigns, in each case, party to an Intercreditor Agreement, if any.

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

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

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

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

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

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

Accounting Terms and Determinations.  Unless otherwise specified herein, all accounting terms used herein shall be interpreted, all determinations with respect to accounting matters hereunder shall be made, and all financial statements and certificates and reports as to financial matters required to be furnished to the Bank hereunder shall be prepared, in accordance with GAAP, applied on a basis consistent with the financial statements of Borrowers herein.

Interest shall be calculated on the basis of a year of 360 days, but assessed for the actual number of days elapsed in each accrual period.

payments of principal which would otherwise be applied to the Bank’s Affected Loans shall be applied instead to its Base Rate Loans, if any.

Without limiting the effect of this Section 2.12, such breakage and other similar compensation shall include the Bank’s standard breakage administration fee.  Without limiting the effect of the preceding sentence, such compensation shall include an amount equal to the excess, if any, of (i) the amount of interest which would have accrued on the principal amount so paid, prepaid or converted or not borrowed for the period from the date of such payment, prepayment or conversion or failure to borrow to the last day of the Interest Period for such Revolver Loan (or, in the case of a failure to borrow, the Interest Period for such Revolver Loan which would have commenced on the date specified for such borrowing) at the applicable rate of interest for such Revolver Loan provided for herein over (ii) the interest component of the amount Bank would have bid in the London interbank market for Dollar deposits of leading banks in amounts comparable to such principal amount and with maturities comparable to such period (as reasonably determined by Bank).

 

hereof.  If Bank should (for the convenience of Borrowers or for any other reason) make loans or advances which would cause the unpaid principal amount of the Revolver Note plus outstanding and unfunded Letters of Credit to exceed the amount of the applicable Collateral Borrowing Base, no such variance, change or departure shall prevent any such loan or loans from being secured by the Collateral and the security created or intended to be created herein or in the Security Instruments.  The Collateral Borrowing Base shall not in any manner limit the extent or scope of the Collateral and security granted for the repayment of the Revolver Note (or any other Indebtedness) or limit the amount of indebtedness under the Revolver Note (or any other Indebtedness) to be secured.

parent or holding company for any costs which it determines are attributable to the maintenance by the Bank or its parent or holding company, pursuant to any Governmental Requirement, of capital in respect of its Revolver Commitment or making, funding or maintaining any Revolver Loans or Letters of Credit (such compensation to include, without limitation, an amount equal to any reduction of the rate of return on assets or equity of Bank or its parent or holding company to a level below that which the Bank or its parent or holding company could have achieved but for such Governmental Requirement).  Bank will notify Borrowers that it is entitled to compensation pursuant to this Section 2.19(a) as promptly as practicable after it determines to request such compensation.

obligation of to make additional LIBOR Rate Loans shall be suspended until such Regulatory Change or other circumstances ceases to be in effect (in which case the provisions of Section 2.11 shall be applicable).

 

trust dated as of the Closing Date (collectively, the “Mortgage”), which such Mortgage covers and encumbers not less than 80% of ELLC’s currently owned producing oil, gas and other leasehold and mineral interests, including without limitation, those situated in the State of North Dakota.  ELLCshall execute such financing statements, letters in lieu of production forms, assignments, notices and other documents and instruments as shall be necessary or appropriate to perfect the security interests thus created.  ELLChereby acknowledges that all of the Collateral is granted to the Bank as security for the repayment of all of the Indebtedness.  If the Revolver Note is paid in full or satisfied, but any portion of the Indebtedness remains unsatisfied, the Bank may retain its security interest in all of the Collateral until the remaining Indebtedness is paid in full, even if the value of the Collateral far exceeds the amount of Indebtedness outstanding.

factor (in no event shall the present worth be discounted by a factor less than nine percent (9.0%)) and advance rate as it deems appropriate pursuant to the Bank’s then applicable energy lending and engineering policies (consistently applied), procedures and pricing parameters, of the future net revenue estimated by the Bank to be received by Borrowers from not less than eighty percent (80%) of the oil and gas ▇▇▇▇▇/properties so evaluated and attributable to ELLC, multiplied by a percentage then determined by the Bank in good faith to be appropriate on the basis of the Bank’s then applicable energy lending criteria, and (ii) promptly report in writing to ELLC such sum of the evaluation by the Bank of such evaluated oil and gas properties (the “Collateral Borrowing Base”).

In addition to the scheduled semi-annual Collateral Borrowing Base redeterminations, the Bank shall have the right to require additional Collateral Borrowing Base redeterminations at any time, but not more frequently than quarterly, including acquisitions or permitted sales of oil and gas leasehold producing properties included in the most recent Collateral Borrowing Base redetermination.  The initial Collateral Borrowing Base is stipulated to be $30,000,000.00 as of the Closing Date. The good faith determinations of the Bank in such respects shall be conclusive (except in the case of manifest error).  Determinations of the Collateral Borrowing Base shall initially be completed by the Bank on a 12 month roll forward basis; provided that, Bank may modify this approach from time to time consistent with its then applicable energy lending policies (consistently applied).

in conformance with Bank’s then applicable energy lending and engineering/evaluation policies and procedures.

If Borrowers shall have elected to make a prepayment on the Revolver Note under Section 4.3(a) or 4.3(b) hereof, such prepayment, or the first installment of such prepayment, shall be due within fifteen (15) days after Borrowers shall have notified Bank of such election, and the prepayment shall be applied as mandatory principal prepayments of the Revolver Note. If Borrowers shall have elected to make installment payments to eliminate the deficiency under Section 4.3(b) hereof, then, until such deficiency is extinguished, any principal amounts outstanding on the Revolver Note shall bear interest at the then applicable contract rate of interest accruing on the Revolver Note plus two hundred additional basis points (2.0%).  If Borrowers shall elect to execute and deliver one or more supplemental oil and gas mortgages and deeds of trust to Bank under Section 4.3(c) hereof, Borrowers shall provide Bank with descriptions of the additional properties to be mortgaged (together with any title due diligence data and information, current valuations and engineering reports applicable thereto which may be requested by Bank) at the time of ELLC’s notice of such election and shall execute, acknowledge and deliver to Bank the appropriate supplemental mortgages and deeds of trust in recordable form within ten (10) days after such collateral documents shall be tendered to Borrowers by Bank for execution, all in compliance with the provisions of clauses (i), (ii) and (iii) of subsection 4.1(b) above.  Borrowers may, subject to Bank’s prior written consent, utilize a combination of the approaches set forth in this Section 4.3 to address a Deficiency.

matters in connection with this Agreement which Bank shall determine to be advisable.  Bank may conclusively rely on such Certificate until it receives notice in writing to the contrary.

applicable, executed and recordable mortgage lien releases and UCC termination statements from any such lender regarding the Mortgaged Property, and (iii) such other information with respect to the Mortgaged Property of Borrowers as shall be reasonably requested by the Bank.

Each request for a Revolver Loan advance or Letter of Credit issuance (including extensions and conversions) and each acceptance by Borrowers of a Revolver Loan advance or Letter of Credit issuance (including extensions and conversions) shall be deemed to constitute a representation and warranty by Borrowers as of the date of such Revolver Loan advance or Letter of Credit

issuance that the applicable conditions in subsections (a), (b), (c) and (d) of this Section 5.2 have been satisfied.

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

manner for any reason without thirty (30) days prior notice to Bank, and to provide for any other matters which Bank may reasonably require.  Borrowers shall at all times maintain or, where applicable, cause the operators of the Proven Reserves to maintain adequate insurance, by ▇▇▇▇▇-cially sound and reputable insurers, including without limitation, the following coverage’s: (i) insurance against damage to persons and property, including comprehensive general liability, worker’s compensation and automobile liability, and (ii) insurance against sudden and accidental environmental and pollution hazards and accidents that may occur on the Mortgaged Property.  Borrowers shall annually furnish to the Bank reasonable evidence of its compliance with the requirements of this Section 6.4 within fifteen (15) days of renewal of the insurance required hereby.

The preparer of the financial reports (the President or Chief Financial Officer or Manager of Borrower) shall execute and deliver to the Bank a quarterly compliance certification in the form of Exhibit B annexed hereto, including that he/she has obtained no knowledge of any Event of Default or Default as defined herein, or, if any Event of Default or Default existed or exists, specifying the nature and period of existence thereof and that the each of Borrowers is in compliance with all covenants, warranties, and representations set forth herein, including the financial covenant of Section 6.28.

arising out of or related to:  (a) the breach of any representation or warranty of Borrowers contained in Section 7.16 set forth herein; (b) the failure of Borrowers to perform any of their covenants contained in Section 6.7 herein; (c) the ownership, construction, occupancy, operation, use of the Collateral prior to the earlier of the date on which (i) the Indebtedness and obligations secured hereby have been paid and performed in full and the Security Instruments have been released, or (ii) the Collateral has been sold by the Bank following the Bank’s ownership of the Collateral by way of foreclosure of the Liens granted pursuant hereto, deed in lieu of such foreclosure or otherwise (the “Release Date”); provided, however, this indemnity shall not apply with respect to matters caused by or arising solely from the Bank’s activities during any period of time the Bank acquires ownership of the Collateral or otherwise to the extent caused by the Bank’s gross negligence or willful misconduct.

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

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

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

Notwithstanding anything to the contrary stated herein, the indemnities created by this Section 6.8 shall only apply to losses, liabilities, damages, fines, penalties, costs and expenses actually incurred by the Bank as a result of claims, demands, actions, suits or proceedings brought by Persons who are not the beneficiaries of any such indemnity.  The Bank shall act as the exclusive agent for all indemnified Persons under this Section 6.8.  With respect to any claims or demands made by such indemnified Persons, the Bank shall notify Borrowers within twenty (20) days after the Bank’s receipt of a writing advising the Bank of such claim or demand.  Such notice shall identify (i) when such claim or demand was first made, (ii) the identity of the Person making it, (iii) the indemnified Person and (iv) the substance of such claim or demand.  Failure by the Bank to so notify Borrowers within said ten (10) day period shall reduce the

amount of Borrowers’ obligations and liabilities under this Section 6.8 by an amount equal to any damages or losses suffered by Borrowers resulting from any prejudice caused Borrowers by such delay in notification from the Bank.  Upon receipt of such notice, Borrowers shall have the exclusive right and obligation to contest, defend, negotiate or settle any such claim or demand through counsel of its own selection (but reasonably satisfactory to the Bank) and solely at Borrowers’ own cost, risk and expense; provided, that the Bank, at its own cost and expense shall have the right to participate in any such contest, defense, negotiations or settlement.  The settlement of any claim or demand hereunder by Borrowers may be made only upon the prior approval of the Bank of the terms of the settlement, which approval shall not be unreasonably withheld, conditioned or delayed.

and examine the same and to make copies thereof and extracts therefrom during normal business hours.  All such records (or accurate copies thereof if the original records are required by law, rule, regulation or ordinance to be kept in another location) shall be at all times kept and maintained at the offices of Borrowers in Oklahoma City, OK and/or Richmond, Virginia.  Upon any Default or Event of Default, Borrowers will surrender all of such records relating to the Collateral to the Bank upon receipt of any request therefor from the Bank.  Borrowers shall immediately notify Bank of any change in the location of their respective principal offices.

services; and (iii) Liens expressly permitted to exist under the terms of any of the Security Instru-ments.

Default exists hereunder or under any of the other Loan Documents, (ii) no Default or Event of Default would be caused by or result from such cash distribution, and (iii) the Leverage Ratio is less than 1.25 to 1.00 and such additional distributions .

Management Agreement or other Hedge Agreement therewith without the prior verbal consent of Bank (to be confirmed in writing within one (1) Business Day thereafter), which such consent will not be unreasonably withheld, delayed or conditioned).

ARTICLE VII

To induce the Bank to enter into this Agreement and to make Revolver Loans to Borrowers under the provisions hereof, and in consideration thereof, Borrowers represent, warrant and covenant as follows:

their operations for the period then ended, and since the date of such statements there has been no Material Adverse Change in the business, financial condition or operations of Borrowers.

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

each Plan.  Borrowers have met all requirements with respect to funding Plans imposed by ERISA or the Code.  Since the effective date of Title IV of ERISA there have not been any nor are there now existing any events or conditions that would permit any Plan to be terminated under circumstances which would cause the lien provided under Section 4068 of ERISA to attach to the assets of Borrowers.  The value of each Plan’s benefits guaranteed under Title IV of ERISA on the date hereof does not exceed the value of such Plan’s assets allocable to such benefits on the date hereof.

or a material adverse effect on any Borrower or its financial capabilities or the Mortgaged Properties;

allowing other owners in the Collateral to make up the past imbalances in gas sales, or (iii) balance in cash by paying other owners of the collateral for the past gas imbalances except for the matters described on Exhibit E hereto which have been disclosed to Borrowers.

(a) the rate, asset, liability or other notional item underlying any Swap Agreement regarding an interest or monetary rate, or foreign exchange swap, entered into or executed in connection with this Loan Agreement is or is directly related to, a financial term hereof;

(b) the aggregate notional amount of all Swap Agreements entered into or executed by any Borrowers in connection with the financial terms of this Loan Agreement, whether entered into or executed with Borrowers or any other individual or entity, will not at any time exceed the aggregate principal amount outstanding hereunder, as such amounts may be determined or calculated contemporaneously form time to time during and throughout the terms of this Loan Agreement;

(c) each Swap Agreement entered into or executed in connection with the financial terms of this Loan Agreement has been or will be entered into no earlier than

ninety (90) days before and no later than one hundred eighty (180) days after the date hereof or of any transfer of principal hereunder;

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

have been false or misleading in any material respect on the date when made and continues to have a material adverse effect on Borrowers or their financial capacity or business operations; or

delivered in accordance with the Intercreditor Agreement, or if no Intercreditor Agreement is in place, in the Bank’s discretion.

All notices forwarded or submitted hereunder will be effective when hand-delivered (via reputable courier system or otherwise by personal delivery) to the applicable notice address set forth above or when mailed by certified mail, postage prepaid, addressed as aforesaid, three (3) days thereafter.

statements contained in any certificate or other instrument delivered by Borrowers hereunder shall be deemed to constitute representations and warranties by Borrowers.

otherwise shall be canceled automatically by the Bank as of the date of such acceleration or prepayment and, if theretofore paid, shall be credited by the Bank on the principal amount of the Indebtedness (or, to the extent that the principal amount of the Indebtedness shall have been or would thereby be paid in full, refunded by the Bank to Borrowers).  All sums paid or agreed to be paid to the Bank for the use, forbearance or detention of sums due hereunder shall, to the extent permitted by law applicable to the Bank, be amortized, prorated, allocated and spread throughout the full term of the Revolver Loans evidenced by the Revolver Note or any ISDA Agreement until payment in full so that the rate or amount of interest on account of any Revolver Loans hereunder does not exceed the maximum amount allowed by such applicable law.  If at any time and from time to time (i) the amount of interest payable to the Bank on any date shall be computed at the Highest Lawful Rate applicable to the Bank pursuant to this Section 9.7 and (ii) in respect of any subsequent interest computation period the amount of interest otherwise payable to the Bank would be less than the amount of interest payable to the Bank computed at the Highest Lawful Rate applicable to the Bank, then the amount of interest payable to the Bank in respect of such subsequent interest computation period shall continue to be computed at the Highest Lawful Rate applicable to the Bank until the total amount of interest payable to the Bank shall equal the total amount of interest which would have been payable to the Bank if the total amount of interest had been computed without giving effect to this Section 9.7.

Participant shall be deemed a holder of the Revolver Note to the extent of its participation, and Borrowers hereby waive their respective rights, if any, to offset amounts owing to the Bank from Borrowers against any Participant’s portion of such Revolver Note.

transactions contemplated herein or in any of the Loan Documents or the actual or proposed use of the proceeds of the Revolver Loans or the letters of credit issued hereunder, except to the extent such claim, damage, loss, liability, cost, or expense is found in a final, non-appealable judgment by a court of competent jurisdiction to have resulted from such Indemnified Party’s gross negligence or willful misconduct. In the case of an investigation, litigation or other proceeding to which the indemnity in this Section 9.21 applies, such indemnity shall be effective whether or not such investigation, litigation or proceeding is brought by Borrowers or any Subsidiary thereof, their respective directors, shareholders or creditors or an Indemnified Party or any other Person or any Indemnified Party is otherwise a party thereto and whether or not the transactions contemplated hereby are consummated. Borrowers agree not to assert, and hereby waive, any claim against the Bank or any of its directors, officers, employees, attorneys, agents, and advisors, on any theory of liability, for, direct or indirect, special, incidental, consequential, exemplary or punitive damages arising out of or otherwise relating to the Loan Documents, any of the transactions contemplated herein or the actual or proposed use of the proceeds of the Revolver Loans or the letters of credit issued hereunder.

similar authority) or the US or foreign regulatory authorities shall, in each case, be deemed to be a “Change in Law”, regardless of the date enacted, adopted or issued.

 [Signature Pages Follow]

 

 

 

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

 

BORROWERS:	ENERGY 11, LP,
	a Delaware limited partnership
	By: ENERGY 11 GP, LLC, a Delaware limited liaibility
	Company, its general partner
	By:  /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
	▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
	Co-Chief Operating Officer
	ENERGY 11 OPERATING COMPANY, LLC,
	a Delaware limited liability company
	By:   /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III
	▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, III,
	Title: Co-Chief Operating Officer

 

 

 

 

BANK:	BANK SNB, an Oklahoma state banking
	corporation
	By:  /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
	▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President

 

 

 

 

Bank SNB

▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇., ▇▇▇▇▇ ▇▇▇

▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇▇

Attn: ▇▇▇▇▇ ▇▇▇▇▇▇, Senior Vice President

Ladies/Gentlemen:

Pursuant to the provisions of the Revolver Loan Agreement dated effective as of November 21, 2017, as it may be amended from time to time (referred to as the “Loan Agreement”), between ENERGY 11, L.P., a Delaware limited partnership, and Energy 11 Operating Company, LLC, a Delaware limited liability company (collectively, “Borrowers”), and you, Borrowers hereby (i) confirm and ratify your continuing, first and prior security interest in and to all of the Collateral (including proceeds thereof) described or referred to in the Loan Agreement or in the Security Instruments described therein; (ii) apply to you for the Revolver Loans under the Revolver Note in the amount shown on Line 5 below; (iii) certify that no Event of Default or Default under the Loan Agreement has occurred and is continuing as of the date hereof or exists or would continue to exist but for the lapse of time or giving of notice, or both; (iv) represent and warrant to you that the representations, covenants and warranties set forth or referred to in the Loan Agreement are true and correct on and as of this date, except to the extent related to a specific other date; and (v) certify to you the accuracy of the following information:

 

1.	Revolver Commitment Amount pursuant to Loan Agreement	[$20,000,000.00]
2.	Current Outstanding Principal Balance under the Revolver Note	$___________
3.	Unfunded Aggregate Amount of Unexpired Letters of Credit	$___________
4.	Amount Available under Revolver Loan (Line 1 minus sum of Line 2
	plus Line 3 but in no event in excess of the sum of the
	Collateral Borrowing Base)	$____________
5.	Revolver Loan Advance requested (not to exceed amount of Line 4)
	under Revolver Note	($__________)
	Proposed date for Revolver Loan Advance:
	Type of Revolver Loan Advance (Base Rate or LIBOR)
	LIBOR RATE LOAN DATA (if applicable)
	Dollar Amount Requested $
	Requested Funding Date ____________
	Length of Interest Period: (select only one)	30 day
		60 day
		90 day

	LIBOR Rate Loan continuation for LIBOR Rate Loans maturing on
	(a) Aggregate amount to be continued as LIBOR Rate Loan is $________;
	(b) Aggregate amount, if applicable, to be converted to Base Rate Loan is $___________;
	(c) Length of Interest Period for continued LIBOR Rate Loan is ________.

IN WITNESS WHEREOF, the undersigned have hereunto set their hand to this Revolver Loan Request this ______ day of _______________, ______.

ENERGY 11, L.P., a Delaware limited partnership

By:  Energy 11 GP, LLC, a Delaware limited liability company, its general partner

 

 

ENERGY 11 OPERATING COMPANY, LLC
a Delaware limited liability company

By:                                                                      

Name:                                                                

Title:                                                                   

 

“BORROWERS”

 

(QUARTERLY COMPLIANCE CERTIFICATE)

(§6.6(a)(ii))

Pursuant to the Revolver Loan Agreement dated effective as of November 21, 2017 (as the same may at any time hereafter be amended, supplemented or modified and in effect being herein collectively called the “Loan Agreement”), between Energy 11, L.P., a Delaware limited partnership, and Energy 11 Operating Company, LLC, a Delaware limited liability company (collectively, “Borrowers”), and Bank SNB, an Oklahoma state banking corporation (“Bank”), Borrowers have reviewed their respective activities for the fiscal quarter ended on _______________, 201_, (the “Compliance Date”), and hereby represent and warrant to Bank that the information set forth below is true and correct as of the Compliance Date (capitalized terms not otherwise defined herein shall have the meanings assigned in the Loan Agreement):

 

ENERGY 11, L.P.,
a Delaware limited partnership

By:  Energy 11 GP, LLC, a Delaware limited liability company, its general partner

ENERGY 11 OPERATING COMPANY, LLC
a Delaware limited liability company

“Borrowers” 

 

(§ 6.17)

NONE.

(§ 6.19)

NONE.

 

(§ 7.2)

NONE.

 

 

 

 

(§ 7.19)

NONE.