Document:

star_ex1063.htm

Exhibit 10.6.3

 

SECOND AMENDMENT TO THE FIRST AMENDED AND

 

RESTATED CREDIT AGREEMENT

 

This Second Amendment to the First Amended and Restated Credit Agreement (this “Amendment”), dated as of April 15, 2015 (the “Effective Date”) is entered into between SOSVENTURES, LLC, a Delaware limited liability company, as lender (“Lender”) and as administrative agent for the Lenders (in such capacity, the “Administrative Agent”) and STARBOARD RESOURCES, INC, a Delaware corporation, as borrower (the “Borrower”).

 

R E C I T A L S:

 

WHEREAS, the Borrower, Administrative Agent and Lenders are parties to that certain First Amended and Restated Credit Agreement, dated as of July 25, 2013, as amended by First Amendment to the First Amended and Restated Credit Agreement dated as of June 3, 2014 (as the same may be further amended, modified or supplemented from time to time, the “Credit Agreement”);

 

WHEREAS, capitalized terms used herein and not otherwise defined herein and defined in the Credit Agreement shall have meanings given to them in the Credit Agreement;

 

WHEREAS, the Borrower has requested that the Administrative Agent and Lender amend the Credit Agreement and commit to certain funds under its Commitment; and

 

WHEREAS, the Administrative Agent and Lender are willing to amend the Credit Agreement under the terms and conditions set forth herein;

 

NOW THEREFORE, in consideration of the mutual covenants and agreements herein contained and other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the Borrower, the Administrative Agent and the Lenders hereby agree as follows:

 

1. The following definition is hereby added to Section 1 of the Credit Agreement as follows:

 

“Second Amendment to Credit Agreement” means the Second Amendment to Credit Agreement dated as of April 15, 2015, between the Administrative Agent, Lender and the Borrower, amending the Credit Agreement.

 

2. Section 2.9 of the Credit Agreement is hereby amended to read in its entirety as follows:

 

2.9. Use of Proceeds.  The proceeds of the Notes shall be used for funding of Borrower’s oil drilling projects and the repayment of certain of Borrower’s indebtedness to Independent Bank under Independent Bank’s Credit Agreement in conjunction with the execution of the Second Amendment to Credit Agreement.

3. Further Assurances.  The Borrower agrees to execute and deliver or cause the appropriate Person to execute and deliver such certificates, mortgages, amendments to mortgages and other security instruments as the Administrative Agent or Lender may from time to time reasonably request to reflect the terms of this Amendment.

 

4. Benefit of Administrative Agent and Lenders.  All of the conditions in this Amendment and the Credit Agreement are solely for the benefit of the Administrative Agent and Lender, and no Person other than the Administrative Agent and Lender may rely thereon or insist on compliance therewith.

 

5. Suspension of Remedies.  By its execution of this Amendment, Lender and Administrative Agent (a) suspend for one hundred fifty (150) days after the Effective Date of this Amendment their respective remedies against Borrower arising out of any Event of Default resulting from a Borrowing Base Deficiency (as defined in Independent Bank’s Credit Agreement), if any, (b) suspend their respective remedies against Borrower until after December 31, 2015 arising out of any Event of Default resulting from the reclassification of approximately $300,000.00 of 2014 revenue as 2013 revenue, and (c) suspend their respective remedies against Borrower for one hundred fifty (150) days after the Effective Date of this Amendment arising out of any Event of Default resulting from the implementation of any payment blockage under the Intercreditor Agreement dated July 25, 2013, and any amendments thereto, by and between Administrative Agent and Independent Bank due to a Borrowing Base Deficiency, if any.

 

6. Funding.  At Borrower’s request Lender is advancing under its Commitment, $___________, directly to Independent Bank to repay certain of Borrower’s indebtedness to Independent Bank and related closing costs and $5,000,000.00 into a controlled account for the benefit of Borrower held at Independent Bank.

 

  

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7. Ratification.  The Borrower hereby ratifies the Obligations and each of the Loan Documents to which it is a party, and agrees and acknowledges that the Credit Agreement and each of the other Loan Documents to which it is a party shall continue in full force and effect after giving effect to this Amendment.  Nothing in this Amendment extinguishes, novates or releases any right, claim, Lien, security interest or entitlement of the Administrative Agent and Lender created by or contained in any of such documents nor is the Borrower released from any covenant, warranty or obligation created by or contained therein.

 

8. Representations and Warranties.  The Borrower hereby represents and warrants to Lenders that (a) this Amendment has been duly executed and delivered on behalf of the Borrower, (b) this Amendment constitutes a valid and legally binding agreement enforceable against the Borrower in accordance with its terms, and (c) the execution, delivery and performance of this Amendment has been duly authorized by the Borrower.

 

9. Conditions to Effectiveness.  This Amendment shall be effective upon (a) the execution by all parties of this Amendment and the receipt thereof by the Lender and the Administrative Agent, (b) the execution and delivery of the Second Amendment to Intercreditor Agreement of even date herewith by all parties thereto, including Borrower, (c) the delivery by Borrower of the warrants and related documents as provided in such Second Amendment to Intercreditor Agreement and (d) the execution and delivery by Borrower of the Assignment of Overriding Royalty Interest described in such Second Amendment to Intercreditor Agreement.

 

10. RELEASE OF CLAIMS.  The Borrower for itself, its successors and assigns and all those at interest therewith including, without limitation, each Guarantor (collectively, the “Releasing Parties”), jointly and severally, hereby voluntarily and forever, RELEASE, DISCHARGE AND ACQUIT Lenders and the Administrative Agent and their respective officers, directors, shareholders, employees, agents, successors, assigns, representatives, affiliates and insurers (sometimes referred to below collectively as the “Released Parties”) and all those at interest therewith of and from any and all claims, causes of action, liabilities, damages, costs (including, without limitation, attorneys’ fees and all costs of court or other proceedings), and losses of every kind or nature at this time known or unknown, direct or indirect, fixed or contingent, which the Releasing Parties, have or hereafter may have arising out of any act, occurrence, transaction, or omission occurring from the beginning of time to the date of execution of this Amendment if related to the Note or the other Loan Documents (the “Released Claims”), except that (i) the future duties and obligations of Lenders and the Administrative Agent under the Loan Documents and the rights of the Borrower to its funds on deposit with Lenders and the Administrative Agent shall not be included in the term Released Claims and (ii) the right of the Borrower to require the correction of manifest accounting errors and similar administrative errors shall not be included in the term Released Claims.  IT IS THE EXPRESS INTENT OF THE RELEASING PARTIES THAT THE RELEASED CLAIMS SHALL INCLUDE ANY CLAIMS OR CAUSES OF ACTION ARISING FROM OR ATTRIBUTABLE TO THE NEGLIGENCE, GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF ANY OF THE RELEASED PARTIES.

 

11. Counterparts.  For the convenience of the parties, this Amendment may be executed in multiple counterparts, each of which for all purposes shall be deemed to be an original, and all such counterparts shall together constitute but one and the same agreement.  Delivery of an executed counterpart of a signature page of this Amendment by telecopy, e-mail, facsimile transmission, electronic mail in “portable document format” (“.pdf”) form or other electronic means intended to preserve the original graphic and pictorial appearance of the item being sent shall be effective as a delivery of a manually executed counterpart of this Amendment.

 

12. Effect.  This Amendment is one of the Loan Documents.  Except as amended hereby, the Credit Agreement shall remain unchanged and in full force and effect, and the Borrower hereby ratifies the terms of the Credit Agreement (as amended hereby), including, without limitation, the provisions of Sections 9.15, 9.16, 9.17 and 9.18 thereof.

 

[REMAINDER OF PAGE INTENTIONALLY LEFT BLANK]

 

  

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13. ENTIRE AGREEMENT.  THIS AMENDMENT CONSTITUTES THE ENTIRE AGREEMENT BETWEEN THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF.  FURTHERMORE, IN THIS REGARD, THIS AMENDMENT AND THE OTHER WRITTEN LOAN DOCUMENTS REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT AMONG THE PARTIES THERETO AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL AGREEMENTS OF SUCH PARTIES.

 

THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH PARTIES.

 

IN WITNESS WHEREOF, this Agreement is deemed executed effective as of the date first above written.

 

	
BORROWER:

	  	  	  	
Starboard Resources, Inc.

	  	  	  	  
	  	  	  	  	
By:

	  
	  	  	  	  	  	
Michael J. Pawelek

	 	 	 	 	 	CEO, Starboard Resources, Inc.
	  	  	  
	
ADMINISTRATIVE AGENT AND LENDER:

	  	  	  	
SOSventures, LLC

	  	  	  	  
	  	  	  	  	
By:

	  
	  	  	  	  	  	
Sean O’Sullivan

	 	 	 	 	 	Managing Director, SOSventures, LLC
	 	 	 	 	 	Its:

3star_ex1064.htm

Exhibit 10.6.4

SECOND AMENDMENT TO INTERCREDITOR AGREEMENT

(First Lien – Second Lien)

This SECOND AMENDMENT TO INTERCREDITOR AGREEMENT (this “Amendment”) is dated April 15, 2015, and amends that certain Intercreditor Agreement (First Lien – Second Lien) dated July 25, 2013, as amended by that certain First Amendment to Intercreditor Agreement (First Lien-Second Lien) dated May 3, 2014 (as amended, the “Agreement”) among Independent Bank, a Texas state bank, as contractual representative for itself and the Swap Counterparty under various First Lien Loan Documents (in such representative capacity, the “First Lien Agent”), and SOSventures, LLC, a Delaware limited liability company, as “Administrative Agent” for the lenders party from time to time to the Second Lien Loan Agreement (in such representative capacity, the “Second Lien Agent”).  Capitalized terms used but not defined herein have the meaning given to such terms in the Agreement.

 

RECITALS

 

The First Lien Agent and the Second Lien Agent previously entered into the Agreement for the purpose of setting forth their relative rights, priorities and obligations with respect to the First Lien Obligations, the Second Lien Obligations, and the Collateral securing such obligations.

 

The Borrower, the Second Lien Agent, the Second Lien Lender, the First Lien Lender and the First Lien Agent desire to enter into amendments to certain First Lien Loan Documents and Second Lien Loan Documents, and have requested that the First Lien Agent and Second Lien Agent enter into this Amendment in connection with such changes.

 

The First Lien Agent is willing to permit such modifications under the terms and conditions set forth herein and in the Fourth Amendment to Credit Agreement (herein so called) among the Borrower and the First Lien Lender of even date herewith.

 

NOW, THEREFORE, in consideration of the premises and for other good and valuable consideration, the receipt and sufficiency of which are hereby acknowledged, the parties agree as follows:

 

1.           The following definition is hereby added to Section 1.1 of the Agreement to read as follows:

 

“Second Amendment to Intercreditor Agreement” means the Second Amendment to Intercreditor Agreement (First Lien – Second Lien) dated April 15, 2015, between the First Lien Agent and the Second Lien Agent, amending the Agreement.

 

2.           A Section 5.3(c) of the Agreement is amended to read in its entirety as follows:

 

“(c)           The Second Lien Agent and the Borrower represent to the First Lien Agent that the outstanding principal balance under the Second Lien Note as of the date of the First Amendment to Intercreditor Agreement after giving effect to the funding on or around the date thereof is $_________.

 

4.           Interest Payments/Crittendon Assets Override/Warrants.

 

(a)           Notwithstanding the existence of the existing First Lien Defaults which are addressed by Section 9 of the Fourth Amendment to Credit Agreement (the “Existing Defaults”), Borrower shall be permitted to pay, and Second Lien Lender shall be permitted to receive and retain, payments of accrued interest on the Second Lien Obligations if no Borrowing Base Deficiency (as defined in the First Lien Credit Agreement) or any First Lien Default other than the Existing Defaults then exists or will be created by such payments.

 

  

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(b)           Borrower shall be permitted to grant to the Second Lien Lender, and Second Lien Lender shall be permitted to receive and retain, a one percent (1.00%) overriding royalty interest (the “ORRI”) on the entire Crittendon field to become effective upon, and not to be recorded until, the completion or abandonment of the Two Crittendon Wells (as defined in the Fourth Amendment to Credit Agreement) by Borrower pursuant to that certain Assignment of Overriding Royalty Interest in substantially the form of Exhibit “A” attached hereto.  The ORRI shall terminate upon payment in full of the Second Lien Obligations and the termination of the Commitment (as defined in the Second Lien Loan Agreement).

 

(c)           Borrower shall be permitted to grant to Second Lien Lender, and Second Lien Lender shall be permitted to receive and retain, warrants for the purchase of 2,542,397 of the Borrower’s $.001 par value common stock shares at an exercise price of $1.00 per share with a two-year term.

 

5.           Receipt of December Accrued Interest.  In consideration of Second Lien Lender funding under the Second Lien Credit Agreement on or around the date hereof an additional $_________ to Borrower to pay down the First Lien Obligations and certain related closing costs, First Lien Agent consents to the payment by Borrower to Second Lien Lender, and the receipt and retention by Second Lien Lender, in December of 2014, of accrued interest on the Second Lien Obligations and withdraws First Lien Agent’s pervious objection thereto.  This provision resolves all issues raised in that certain letter dated December 19, 2014 from counsel for First Lien Lender to Second Lien Lender.

 

6.           Consent to Loan Documents and Warrants.  Pursuant to Section 2.5 of the Agreement, the First Lien Agent hereby approves the Borrower’s entry into the Second Amendment to the First Amended and Restated Credit Agreement and Borrower’s issuance of the Warrants to Second Lien Lender, which have been furnished by the Second Lien Agent to the First Lien Agent for review prior to the execution and delivery of this Amendment.

 

7.           Representations and Warranties.  (a) The Second Lien Agent hereby represents and warrants to the First Lien Agent that this Amendment has been duly executed and delivered on behalf of the Second Lien Agent and constitutes a valid and legally binding agreement enforceable against the Second Lien Agent and the Second Lien Lender in accordance with its terms.

 

(b)           The First Lien Agent hereby represents and warrants to the Second Lien Agent that this Amendment has been duly executed and delivered on behalf of the First Lien Agent and constitutes a valid and legally binding agreement enforceable against the First Lien Agent and the First Lien Lender in accordance with its terms.

 

8.           Conditions to Effectiveness.  This Amendment shall be effective upon the execution by all parties of this Amendment and the receipt thereof by the First Lien Agent.

 

9.           Counterparts.  This Amendment may be executed in counterparts (and by different parties hereto in different counterparts), each of which shall constitute an original, but all of which when taken together shall constitute a single contract.  Delivery of an executed counterpart of a signature page of this Amendment by telecopy transmission or other electronic transmission in pdf or similar format, from one party to another, shall be effective as delivery of a manually executed counterpart of this Amendment.

 

10.           Effect.  This Amendment is one of the Loan Documents.  Except as amended hereto, the Agreement shall remain unchanged and in full force and effect, and the First Lien Agent and the Second Lien Agent ratify the Agreement (as amended hereby).

 

[Signature pages follow]

 

  

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IN WITNESS WHEREOF, the parties hereto have executed this Amendment as of the date first written above.

 

INDEPENDENT BANK,

as First Lien Agent

 

By:_______________________________________

Name:  John E. Davis

Title:    Executive Vice President

 

SOSVENTURES, LLC,

as Second Lien Agent

 

By:_______________________________________

Name: Sean O’Sullivan

Title: Managing Director

 

ACKNOWLEDGED AS OF THE DATE FIRST WRITTEN ABOVE:

 

STARBOARD RESOURCES, INC.

By:_______________________________________

Name:   Michael J. Pawelek

Title:     Chief Executive Officer

 

  

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Exhibit “A”

ASSIGNMENT OF OVERRIDING ROYALTY INTEREST

 

	STATE OF TEXAS	§	 
	 	§	 
	COUNTY OF WINKLER	§	 

 

KNOW ALL MEN BY THESE PRESENTS:

That the undersigned STARBOARD RESOURCES, INC., a Delaware corporation, whose address is 300 E. Sonterra Blvd., Suite 1220, San Antonio, Texas 78258 (hereinafter referred to as “Assignor”), for and in consideration of the sum of the Ten Dollars ($10.00) and other good and valuable consideration, the receipt and sufficiency of which is hereby confessed and acknowledged does hereby convey, transfer, assign and set over unto SOSVENTURES, LLC, a Delaware limited liability company, whose address is Penrose Warf, 2nd Floor, Alfred Street, Cork, Ireland (hereinafter referred to as “Assignee”), an overriding royalty interest, free and clear of all cost and expense of development and operation, in the amount of one percent (1.00%) of all oil, gas casinghead gas, and other hydrocarbon substances produced, saved and marketed from the following described land pursuant to those certain oil and gas leases, whether one or more, described on Exhibit “A” attached hereto and made a part hereof, and situated in the aforesaid County and State.

TO HAVE AND TO HOLD the interest herein transferred and assigned unto Assignee, its successors and assigns, forever, subject only to the following terms and provisions:

	
A.  

	
The overriding royalty interest herein transferred is payable out of and only out of the oil and gas produced, saved and marketed, pursuant to the terms and provisions of the above-described oil and gas leases.

	
B.  

	
The overriding royalty interest herein provided for shall not, in any event, be paid or accrued upon any oil, gas casinghead gas and other hydrocarbon substances used for operating, development or production purposes upon the above-described lands or unavoidably lost; and no overriding royalty shall be paid upon gas used for repressuring or recycling operations or pressure maintenance operations benefiting said lands.

	
C.  

	
This Assignment of Overriding Royalty Interest is made without warranty of title, express or implied, except as to parties claiming by, through and under Assignor, but not otherwise.

	
D.  

	
If Assignor’s interest in the above-described oil and gas lease, lands or unit is less than the entire interest, or if said oil and gas leases cover less than the entire fee title, then the above overriding royalty interest shall be reduced proportionately.

	
E.  

	
It is understood and agreed that Assignor shall have the right to pool the oil and gas leases and lands covered hereby, or any portion thereof, with other lands and leases into voluntary units, or into units as established by an governmental authority having jurisdiction, and if the leases, and the lands covered thereby, or any part thereof are pooled accordingly, then the overriding royalty interest herein conveyed shall be reduced in proportion that the acreage burden by the overriding royalty interest bears to all the acreage included in any pooled unit.

	
F.  

	
This Assignment of Overriding Royalty Interest shall terminate upon payment in full of the Obligations (as defined in the Second Lien Loan Agreement (hereinafter defined)) and the termination of the Commitment (as defined in the Second Lien Loan Agreement).  As used herein, “Second Lien Loan Agreement” means that certain First Amended and Restated Credit Agreement dated as of July 25, 2013 between Assignor and Assignee, as amended by First Amendment to First Amended and Restated Credit Agreement, dated as of June 3, 2014 and Second Amendment to First Amended and Restated Credit Agreement dated as of April 15, 2015, as the same maybe further amended, supplemented or modified.

	
G.  

	
This Assignment of Overriding Royalty Interest is subject, in all respects, to the terms and conditions of the Intecreditor Agreement (as defined in the Second Lien Loan Agreement).

 

  

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IN WITNESS WHEREOF, Assignor has executed and delivered this assignment of overriding royalty interest this 15th day of April, 2015.

ASSIGNOR:                                                                                 STARBOARD RESOURCES, INC.

By:_____________________________

Michael J. Pawelek

Chief Executive Officer

	STATE OF ________	§	 
	 	§	 
	COUNTY OF ______	§	 

This instrument was acknowledged before me on the ______ day of April, 2015, by Michael J. Pawelek, Chief Executive Officer of STARBOARD RESOURCES, INC., a Delaware corporation, on behalf of said corporation.

______________________________

Notary Public in and for

The State of ___________

ASSIGNEE:                                                                                  SOSVENTURES, LLC

   

By:_____________________________

Sean O’Sullivan

Managing Director

	STATE OF ________	§	 
	 	§	 
	COUNTY OF ______	§

 

This instrument was acknowledged before me on the ______ day of April, 2015, by Sean O’Sullivan, Managing Director of SOSVENTURES, LLC, a Delaware limited liability company, on behalf of said limited liability company.

______________________________

Notary Public in and for

The State of _________

 

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