Document:

Exhibit 10.42

 

FIFTH
AMENDMENT  TO

FIRST
AMENDED AND RESTATED

REVOLVING
CREDIT AGREEMENT

 

THIS Fifth
Amendment to First Amended and Restated Revolving Credit Agreement (“Fifth
Amendment”) by and among BETA OIL & GAS, INC., a Nevada corporation and the
successor via merger to Red River Energy, Inc., an Oklahoma corporation (“Beta
Oil”), and BETA OPERATING COMPANY, L.L.C., an Oklahoma limited liability
company, and the successor via merger and name change to Red River Energy,
L.L.C., an Oklahoma limited liability company (“Beta Operating”) (Beta Oil and
Beta Operating being collectively referred to herein as the “Borrowers”) and
BANK OF OKLAHOMA, NATIONAL ASSOCIATION (the “Bank”) is entered into effective
as of the 30th day of June, 2003.

 

W I T N E S S
E T H:

 

WHEREAS,
pursuant to that certain First Amended and Restated Revolving Credit Agreement
dated as of  March 30, 1999, as
amended from time to time, including without limitation, that certain Fourth
Amendment thereto dated as of March 15, 2002 (collectively referred to
herein as the “Existing Credit Agreement”), the Bank extended to the Borrowers’
on a joint and several basis a (i) Revolver Commitment for a $14,500,000
Revolving Credit Loan upon the terms and conditions therein set forth and under
which Revolving Credit Loan advances would be extended from time to time to the
Borrowers therein described and defined by the Bank, subject to certain
Collateral Borrowing Base and other limitations and conditions therein set
forth, and (ii) Guidance Commitment in the maximum principal amount of
$2,900,00 payable ON DEMAND and subject to the terms and conditions therein set
forth;

 

WHEREAS,
Borrowers have requested that the Bank renew and extend (i) the Revolver
Commitment as evidenced by the $25,000,000 Revolving Credit Note described in
the Existing Credit Agreement from March 15, 2004, to April 1, 2005,
in the maximum Commitment amount  of
$14,500,000, subject to automatic reduction on a monthly basis as of the last
day of each calendar month, commencing July 31, 2003, pursuant to the MCR
provisions of Section 2.13 hereof below (initially such MCR being stipulated to
be $88,000) and with an initial stipulated 
Collateral Borrowing Base of $14,500,000, and (ii) the Guidance Commitment
established pursuant to and governed by the terms and provisions of the ISDA
(as hereinafter defined) entered into between and among the Borrowers and the
Bank to be used solely for hedge products to provide price protection for
Borrowers’ oil and natural gas production, including the issuance from time to
time of standby letters of credit for one or both of the Borrowers’ account in
the name of such other counter-party, as beneficiary, in the increased maximum
principal amount of $3,350,000 payable on a DEMAND
basis and in no event later than April 1, 2004 (the “Guidance Commitment”)
and to otherwise modify and amend certain of the provisions of the Existing
Credit Agreement as hereinafter set forth (the Revolver Commitment and the
Guidance Commitment collectively referred to herein as the “Commitments”); and

 

WHEREAS,
subject to the terms, provisions and conditions hereinafter set forth, the Bank
is willing to so modify and amend the Existing Credit Agreement.

 

 

NOW,
THEREFORE, for good and valuable consideration, the Borrowers and the Bank
hereby agree as follows:

 

1.             Each of the
following Sections in Article I of the Existing Credit Agreement shall be
either deleted or amended in their entirety as follows:

 

1.44 “Notes” shall mean the ISDA Agreement and the Revolver
Note, collectively.

 

Section 1.62
of the Existing Credit Agreement is deleted.

 

2.                                       The following
definitions shall be added to Article I:

 

1.69 “ISDA Agreement” shall have the meaning ascribed thereto in
Section 2.1(b) of this Agreement.

 

1.70 “MCR” shall have the meaning ascribed thereto in Section
2.13 of this Agreement.

 

3.             The Revolver
Commitment is hereby renewed in the maximum principal amount of
$14,500,000.  All Revolving Credit Loans
created pursuant thereto shall be evidenced by that certain replacement
Revolving Credit Note dated as of June 30, 2003, from the Borrowers
payable to the order of the Bank in the face principal amount of $25,000,000
(the “Revolver Note”).  Notwithstanding
the stated face amount of the Revolver Note, the maximum Revolver Commitment
initially shall be limited to the lesser of (i) $14,500,000 minus the
applicable MCR pursuant to Section 2.13 hereof or (ii) the Collateral Borrowing
Base amount as determined and adjusted from time to time in accordance with the
terms and provisions of Article III of the Existing Loan Agreement.

 

4.             Sections 2.1 and
2.2 of the Existing Loan Agreement are deleted and replaced in their entirety
with the following:

 

2.1           The Commitments.

 

(a)           Revolver
Commitment.  The Bank agrees, upon
the terms and subject to the conditions hereinafter set forth, to make a
revolving line of credit loan (collectively the “Revolving Credit Loan”) to the
Borrowers to be funded immediately upon Borrowers’ request and satisfaction of
all of the conditions set forth in Article V hereof for the limited purposes of
financing the Borrowers’ (a) purchase of certain producing oil and gas
properties from time to time, (b) production, work-over and exploration
expenses and other development, drilling and operating expenses pertaining
thereto, (c) the issuance of certain standby letters of credit on Borrowers’
account in connection with their operation of such oil and gas

 

2

 

properties,
and (d) general corporate purposes and business needs. Unless its Revolver
Commitment shall be sooner terminated pursuant to the provisions of this
Agreement or the other Loan Documents, the Revolver Loan shall mature on
April 1, 2005.  In no event shall
the sum of the outstanding and unpaid amount advanced on the Revolving Credit
Loans plus the aggregate unfunded amount of unexpired letters of credit issued
under the Revolver Commitment  be in
excess of the least of (i)
original face amount of the Revolver Note ($25,000,000), (ii) the then
applicable maximum amount of the Revolver Commitment (currently $14,500,000
minus the then applicable aggregate MCR) or (iii) Collateral Borrowing Base
then in effect (initially set at $14,500,000 with the Borrowers’ concurrence
and agreement).  Multiple advances shall
be permitted on the Revolving Credit Loans. 
Notwithstanding the face amount of the Revolver Note, the maximum amount
available thereunder (including the aggregate unfunded amount of issued but
unexpired letters of credit pursuant to the Revolver Commitment) shall in no
event exceed the then applicable amount of the Revolver Commitment (initially
$14,500,000 minus the then applicable aggregate MCR).

 

(b)           Guidance
Commitment.  The Bank agrees, upon
the terms and subject to the conditions hereinafter set forth, to establish a
guidance line of credit (“Guidance Loan”) to the Borrowers for the limited
purpose of utilization of hedging products issued by the Bank or other
financial institutions or similar counter-parties acceptable to the Bank,
including the issuance of  standby
letters of credit in favor of such applicable counter-party(ies), as
beneficiary(ies), in connection with price protection/hedging under the then
applicable ISDA Agreements (collectively the “ISDA Letters Credit”), each with
a final expiry date not later than April 1, 2004.  In no event shall the amount of issued and
unfunded ISDA Letters of Credit outstanding, plus all amounts obligated or
advanced under the Guidance Commitment 
and remaining then outstanding amount of the Borrowers’ obligations owing
under the ISDA Agreement be in excess of $3,350,000.  As used herein, the term “ISDA Agreement” shall mean that certain
International Swap Dealers Association master agreement (together with
applicable schedules, annexes, exhibits, 
attachments or supplements thereto from time to time) entered into
between and among the Borrowers and the Bank in connection with the Borrowers’
hedging, Swaps and or derivative products transaction with the Bank as a
counter-party.

 

2.2           The
Notes

 

(a)           Revolver
Note.  On the Closing Date, the
Borrowers shall execute and deliver to the order of the Bank their term note in
the principal

 

3

 

amount of
$25,000,000, the form of which is annexed hereto as Exhibit A-1 and
hereby made a part herein (hereinafter referred to as the “Revolver
Note”).  The Revolver  Note shall be dated as of the Closing Date,
and shall bear interest payable monthly on the last day of every calendar
month, commencing July 31, 2003, on unpaid balances of principal from time
to time outstanding at the adjustable variable annual rate equal from day to
day to the rate applicable pursuant to the interest rate grid set forth on
Section 2.8(a) of the Existing Credit Agreement. Mandatory principal
prepayments shall be due and payable on the Revolver Note from time to time
pursuant to the MCR in order to avoid the outstanding principal balance of the
Revolver Note from being greater than the Revolver  Commitment amount (as reduced monthly by the MCR pursuant to
Section 2.13 hereof) or the Collateral Borrowing Base (as redetermined in
accordance with Section 3.2 hereof). 
After maturity (whether by acceleration or otherwise), the Revolver  Note shall bear interest at the Default Rate
payable on demand.  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.

 

(b)           ISDA
Agreement.  As of the Closing Date,
the Borrowers shall have executed and delivered to the order of the Bank their
promissory note in the principal amount of $3,350,000, the form of which is
acceptable to the Bank in scope, substance and form.  The Guidance Note shall be dated as of the Closing Date.  All draws on ISDA Letters of Credit issued
under the ISDA Agreement shall be payable to the order of the Bank ON DEMAND and in no event later than
April 1, 2004. Interest shall accrue on all sums and obligations of the
Borrowers under the ISDA Agreement at a variable annual rate equal from day to
day to the rate applicable pursuant to the interest rate grid set forth in
Section 2.8(a) of the Existing Credit Agreement.

 

(c)           Payments
on Notes.  All payments and
prepayments on the Notes shall be made in lawful money of the United States of
America in immediately available funds. 
Any payments or prepayments received by the Bank after 2:00 o’clock p.m.
(applicable current time in Tulsa, Oklahoma) shall be deemed to have been made
on the next succeeding Business Day. 
Any voluntary prepayment shall be applied first to accrued but unpaid
interest then to the next succeeding installment(s) of principal. All
outstanding principal of and accrued interest on the Notes not previously paid
hereunder shall be due and payable ON DEMAND
but in no event later than April 1, 2004 (insofar as the Guidance Note is
concerned) and at final maturity on April 1, 2005 (insofar as the Revolver
Note is concerned), unless such maturity shall be extended by the Bank in
writing or accelerated pursuant to the terms hereof.

 

4

 

5.             Section 2.3 of the Existing Credit
Agreement is hereby amended by replacing “March 15, 2004” with
“April 1, 2005,” thus extending the final maturity date of the Revolver
Note from March 15, 2004 to April 1, 2005.

 

6.             Effective as of the
date of this Fifth Amendment to the date the Revolver Commitment expires or is
otherwise terminated, Borrowers shall pay to the Bank a fee on the unused
portion of the Revolver Commitment equal to one-fourth of one percentage point
(0.25%) per annum, due quarterly in arrears as the same accrues and payable on
the fifteenth day of the month next following the close of each calendar
quarter, commencing July 15, 2003, for the calendar quarter ending
June 30, 2003, calculated on the amount by which the then applicable
Commitment amount available hereunder (currently $14,500,000) minus the then
applicable aggregate MCR exceeds the sum of (i) the average daily outstanding
principal balance of the Revolver Note plus (ii) the amount available on
outstanding but unexpired Letters of Credit issued under the Commitment
pursuant to Sections 2.1 and 2.7 of this Agreement.  Such non-usage fee shall be computed daily on the basis of a
calendar year of 360 days but assessed only for the actual number of days
elapsed during each accrual period.

 

7.                                       Section 2.7 of
the Existing Loan Agreement is deleted and replaced by the following:

 

2.7           Provisions for
Letters of Credit.

 

(a)           Any
Letters of Credit issued with an expiry date later than April 1, 2005, and
any ISDA Letters of Credit issued with an expiry date later than April 1, 2004,
will, at the Bank’s sole option, be fully secured and collateralized by cash or
cash equivalent acceptable to the Bank in its sole discretion and held thereby
from and after April 1, 2004 (insofar as ISDA Letters of Credit are concerned)
or April 1, 2005 (insofar as Letters of Credit are concerned), until
expiration or cancellation of such Letter(s) of Credit or ISDA Letter(s) of
Credit or payment of all draws thereon demand of the Bank.

 

(b)           No
Letter of Credit will be issued if at the time of issuance the aggregate amount
of (i) all unfunded and unexpired Letters of Credit then existing  plus (ii) any amounts advanced under the
Revolver  Note plus (iii) the maximum
amount of such Letter of Credit then being requested would exceed the lesser of (x) $14,500,000 minus the then
applicable aggregate MCR or (y) the then applicable Collateral Borrowing
Base.  No ISDA Letter of Credit will be
issued if at the time of issuance the aggregate amount of (i) all unfunded and
unexpired ISDA Letters of Credit then existing plus (ii) any amounts advanced
or otherwise obligated on the ISDA Agreement and the Guidance Commitment, plus
(iii) the maximum amount of such ISDA Letter of Credit then being requested
would exceed $3,350,000.

 

5

 

(c)           All
Letters of Credit and all ISDA Letters of Credit shall contain language
acceptable to the Bank pertaining to automatic cancellation/reduction, as
applicable.

 

(d)           If
any Letter of Credit or any ISDA Letter of Credit is drawn upon at any time,
each amount drawn, whether a full or partial draw thereon, shall be paid by
wire transfer and reflected by the Bank as an (i) advance on the Revolver  Note (insofar as any Letter of Credit is
concerned) and (ii) advance on the ISDA Agreement (insofar as any ISDA Letter
of Credit is concerned) effective as of the date of the Bank’s honoring the
sight draft, and such Letter of Credit or ISDA Letter of Credit, as applicable,
shall be canceled immediately upon such wire transfer.

 

(e)           In
consideration of the Bank’s agreement to issue Letters of Credit and ISDA
Letters of Credit hereunder, the Borrowers agree to pay to the Bank letter of
credit fees equal to one percent (2.25%) per annum on the face amount of each
Letter of Credit and each ISDA Letter of Credit plus normal processing fees,
which such fees shall be due and payable to the Bank at the time of issuance of
each Letter of Credit or ISDA Letter of Credit, as applicable, and shall be
paid by debit in such amount to the Borrowers’ general operating account
established with the Bank, not sooner than three (3) days following the mailing
by regular mail of notice of such intended debit.

 

8.                                       A new Section
2.13 is added to the Credit Agreement to read in its entirety as follows:

 

“2.13 MCR.  As used
herein, the term “MCR” shall mean the automatic monthly reduction of the amount
of the Revolver Commitment effective as of the last day of each calendar month,
commencing July 31, 2003, initially by the amount of $88,000 per month (in
addition to but not in lieu of the semi-annual redetermination of the
Collateral Borrowing Base pursuant to Section 3.2 hereof below).”

 

9.             Section 3.3 of the
Existing Credit Agreement is amended and modified to provide that mandatory
principal prepayments shall be made by the Borrowers on the Revolver Note as
required by the application of the MCR provisions of Section 2.13 hereof in
reduction of the Commitment amount in order to provide that the outstanding
principal balance of the Revolver Note shall not exceed the Commitment amount
(as adjusted by the MCR) at any time.

 

10.           The remaining terms,
provisions and conditions set forth in the Existing Credit Agreement shall
remain in full force and effect.  The
Borrowers restate, confirm and ratify the warranties, covenants and
representations set forth therein and further represent to the Bank that,
except as and only to the extent expressly waived in writing by the Bank, no
default or Event of Default exists under the Existing Credit Agreement as of
the date hereof.  The Borrowers further
confirm, grant and re-grant, pledge and re-pledge to the Bank a continuing and
continuous first and prior mortgage lien against, security interest in and
pledge

 

6

 

of all of the
items and types of Collateral more particularly described in Article IV of the
Existing Credit Agreement and in the Mortgage and the Security Instruments
described and defined therein, including the Additional Mortgaged Property being
mortgaged concurrently herewith by Beta Oil in favor of the Bank pursuant to
certain supplemental Security Instruments in form, scope and substance
acceptable to the Bank.

 

11.           The Borrowers shall
execute and deliver or cause to be executed and delivered to the Bank each of
the following as express conditions precedent to the effectiveness of the
amendments and modifications contemplated by this Fifth Amendment:

 

(i)                                     this Fifth
Amendment;

 

(ii)                                  the replacement
Revolving Credit Note in the form annexed hereto as Exhibit A-1 and
hereby made a part hereof and the ISDA Agreement in form, scope and substance
acceptable to the Bank;

 

(iii)                applicable closing certificates (with
resolutions attached) from each of the Borrowers in form, scope and content
acceptable to the Bank, and

 

(iv)          applicable supplemental Mortgage instruments
from the Borrowers and other supplemental or amendment Security Instruments,
including without limitation, such additional or amending financing statements
in the name of each of the Borrowers, as debtors;

 

together with
such other and further documents and instruments as may be deemed appropriate
by the Bank or the Bank’s legal counsel.

 

12.          THE
BORROWERS HEREBY CONSENT TO THE JURISDICTION OF ANY OF THE LOCAL, STATE, AND
FEDERAL COURTS LOCATED WITHIN TULSA COUNTY, OKLAHOMA, AND WAIVES ANY OBJECTION
WHICH BORROWERS MAY HAVE BASED ON IMPROPER VENUE OR FORUM  NON
CONVENIENS TO THE CONDUCT OF ANY PROCEEDING IN ANY SUCH COURT AND WAIVE
PERSONAL SERVICE OR ANY AND ALL PROCESS UPON IT, AND CONSENTS THAT ALL SUCH
SERVICE OF PROCESS BE MADE BY MAIL OR MESSENGER DIRECTED TO IT AT THE ADDRESS
SET FORTH IN SUBSECTION 9.1 OF THE EXISTING LOAN AGREEMENT AND THAT SERVICE SO
MADE SHALL BE DEEMED TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE
(3) BUSINESS DAYS AFTER MAILED OR DELIVERED BY MESSENGER.

 

13.           The Borrowers agree
to pay to the Bank on demand all costs, fees and expenses (including without
limitation reasonable attorneys fees and legal expenses and the fees of the
Bank’s engineers for evaluating the Mortgaged Property) incurred or accrued by
the Bank in connection with the preparation, execution, closing, delivery, and
administration of the Credit Agreement 
(including this Fifth Amendment), and the other Loan Documents
(including Security Instruments), or any amendment, waiver, consent or
modification thereto or thereof, or any enforcement thereof.  In any action to enforce or construe the

 

7

 

provisions of
the Credit Agreement or any of the Loan Documents, the prevailing party shall
be entitled to recover its reasonable attorneys’ fees and all costs and
expenses related thereto.

 

14.          BORROWERS FULLY, VOLUNTARILY AND
EXPRESSLY WAIVE ANY RIGHT TO A TRIAL BY JURY IN ANY ACTION OR PROCEEDING TO
ENFORCE OR DEFEND ANY RIGHTS UNDER THIS AGREEMENT, THE NOTES, THE MORTGAGE OR
UNDER ANY AMENDMENT, INSTRUMENT, DOCUMENT OR AGREEMENT DELIVERED (OR WHICH
MAY IN THE FUTURE BE DELIVERED) IN CONNECTION HEREWITH OR ARISING FROM ANY
BANKING RELATIONSHIP EXISTING IN CONNECTION WITH THIS AGREEMENT.  BORROWERS AGREE THAT ANY SUCH ACTION OR
PROCEEDING SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY.

 

15.           Any capitalized term used herein but
not otherwise defined shall have the meaning given to such term in the Existing
Loan Agreement.

 

 

IN WITNESS
WHEREOF, this Fifth Amendment is executed and delivered to the Bank in Tulsa,
Oklahoma, by the undersigned duly authorized officer and manager of each of the
Borrowers, which such officer has full power and authority to do so for, on
behalf and in the name of each of the Borrowers by virtue of all necessary
corporate action of the Board of Directors of each of the Borrowers.

 

	
   

  	
  BETA OIL
  & GAS, INC.,

  
	
   

  	
  a Nevada
  corporation, formerly

  
	
   

  	
  Red River
  Energy, Inc, an Oklahoma corporation

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  David A.
  Wilkins,

  
	
   

  	
   

  	
  President
  and Chief Executive Officer

  
	
   

  	
   

  
	
   

  	
   

  	
  “Beta Oil”

  
	
   

  	
   

  
	
   

  	
  BETA
  OPERATING COMPANY, L.L.C.,

  
	
   

  	
  an Oklahoma
  limited liability company, formerly

  
	
   

  	
  Red River
  Energy, L.L.C.,

  
	
   

  	
  an Oklahoma
  limited liability company

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  David A.
  Wilkins,

  
	
   

  	
   

  	
  President
  and manager

  
	
   

  	
   

  
	
   

  	
   

  	
  “Beta
  Operating”

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  (collectively the “Borrowers”)

  
					

 

8

 

	
   

  	
  BANK OF
  OKLAHOMA, 

  NATIONAL ASSOCIATION

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
  Wes W. Webb,

  
	
   

  	
   

  	
  Vice
  President 

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Bank”

  
					

 

9Exhibit 10.43

 

REVOLVING
CREDIT NOTE

(Revolver
Note)

 

	
  $25,000,000.00

  	
   

  	
  Tulsa, Oklahoma

  June 30, 2003

  

 

FOR VALUE
RECEIVED, BETA OIL & GAS, INC.,
a Nevada corporation, and the successor via merger to Red River Energy, Inc.,
an Oklahoma corporation (“Beta Oil”), and BETA
OPERATING COMPANY, L.L.C., an
Oklahoma limited liability company, and the successor via merger and name
change to Red River Energy, L.L.C., an Oklahoma limited liability company
(“Beta Operating”) (Beta Oil and Beta Operating being collectively referred to
herein as the “Borrowers”), hereby jointly and severally promise to pay to the
order of BANK OF OKLAHOMA, NATIONALASSOCIATION (the “Bank”), at the
Bank’s principal offices in Tulsa, Oklahoma, in lawful money of the United
States of America, in immediately available funds, the principal sum of
TWENTY-FIVE MILLION and NO/100 DOLLARS ($25,000,000.00), or so much thereof as
shall have been advanced hereunder and remains unpaid on or before
April 1, 2005, together with interest thereon from the date hereof on the
unpaid balance of principal from time to time outstanding, and on any past due
interest, at one of the variable annual interest Options set forth in the
Credit Agreement hereinafter defined, which interest is due and payable as it
accrues on the last day of each calendar month (including accrued interest on
the Prior Note hereinafter defined), commencing July 31, 2003, through and
including February 28, 2005, and at final maturity on April 1, 2005.

 

The rate of
interest payable upon the indebtedness evidenced by this Note shall be a
variable annual rate of interest equal from day to day to the (i) Applicable
Prime Rate, as defined in the Credit Agreement, minus the applicable Base Rate margin as prescribed in the
interest rate pricing matrix set forth in Section 2.8(a) of the Credit
Agreement, or (ii) Libor-Rate, as defined in the Credit Agreement, plus the applicable Libor-Rate Margin as
prescribed in the interest rate pricing matrix set forth in Section 2.8(a) of
the Credit Agreement, but in no event at a rate which is greater than permitted
by applicable law.  Reference is made to
the Credit Agreement for a description of the procedures for exercising the
Options and special provisions relating to Libor-Rate loans.  Borrowers stipulate and acknowledge that the
applicable per annum interest rate pricing margins as of the date of this Note
are: Base Rate minus 0.00% and
Libor-Rate plus 2.200%.  Interest shall be computed on the basis of a
year of 360 days, but assessed for the actual number of days elapsed.

 

Upon the
occurrence of any Event of Default as described in the Revolving Credit
Agreement dated August 5, 1998, between Red River Energy, L.L.C.
(“Energy”), as borrower, and the Bank, lender, as amended by the First Amended
and Restated Revolving Credit Agreement dated as of March 30, 1999, among
Energy and Red River Field Services, L.L.C. (“Services”), as borrowers, and the
Bank, as lender, as further amended by the First Amendment thereto dated as of
February 1, 2000, as further from time to time, including without
limitation, the Fifth Amendment thereto dated effective as of even date
herewith, between and among the Borrowers and the Bank (said Revolving Credit
Agreement and the First Amended and Restated Revolving Credit Agreement, as amended
from time to time, including without limitation, the Fifth Amendment, and as
the same may at any time be hereafter amended, extended, supplemented or
modified and in effect being herein collectively called the “Credit
Agreement”), the entire unpaid principal amount and all accrued and unpaid
interest hereunder shall, at the sole option of the Bank, be accelerated

 

 

and
immediately become due and payable without notice by the Bank and shall bear
interest computed at a variable annual rate equal to the Applicable Prime Rate
plus six percentage points (6%) per annum. Upon default in the payment of any
amount of interest payable hereunder, such interest shall, to the full extent
permitted by law, bear interest at the same rate as principal.

 

This Revolving
Credit Note is made pursuant to the Credit Agreement and is the Note therein
described.  The Credit Agreement, among
other things, contains prepayment provisions, provisions for collateral
borrowing base calculations, borrowing limitations hereunder, mandatory
principal prepayments, including MCR provisions affecting the maximum Revolver
Commitment amount, and provisions for acceleration of the maturity hereof upon
the events, terms and conditions therein specified.

 

This Note is
secured by the Collateral described in the Credit Agreement and the Security
Instruments which are described in the Credit Agreement (the “Security
Instruments”) which have been executed by the Borrowers and delivered to the
Bank.  This Note is cross-defaulted and
cross-collateralized with that certain $3,350,000 Master ISDA Agreement
(Guidance Line of Credit) between and among the Borrowers and the Bank (“ISDA
Agreement”).  Reference is hereby made
to the Security Instruments for a description of the property, assets and
interests, thereby mortgaged, conveyed, pledged and/or assigned, as the case
may be, the nature and extent of the security thereunder and the security
interests, pledges or mortgage liens carried forward or created thereby, and
the rights of the Bank (or the holder of this Note) and the Borrowers in
respect thereof.

 

Should the
indebtedness represented by this Note or any part thereof be collected at law
or in equity or in bankruptcy, receivership or other court proceedings or this
Note be placed in the hands of attorneys for collection after default, the
Borrowers and any endorser or guarantor hereof agrees to pay hereunder, in
addition to the principal and interest due and payable hereon, reasonable
attorneys fees, court costs and other collection expenses incurred by the
holder hereof.

 

The Borrowers
hereby waive presentment for payment, demand, notice of nonpayment, protest and
notice of protest with respect to any payment hereunder and agrees to any
extension of time with respect to any payment due hereunder, to any
substitution or release of the security or collateral described in the Security
Instruments and to the addition or release of any party liable hereunder.  No delay on the part of the holder hereof in
exercising any rights hereunder shall operate as a waiver of such rights.

 

Upon the
occurrence of any default hereunder, Bank shall have the right, immediately and
without further action by it, to set off against this Note all money owed by
Bank in any capacity to each or any maker, guarantor, endorser or other person
who is or might be liable for payment hereof, whether or not due, and also to
set off against all other liabilities of the Borrowers, or either of them, to
Bank all money owed by Bank in any capacity to each or any maker; and Bank
shall be deemed to have exercised such right of set off and to have made a
charge against such money immediately upon the occurrence of such default even
though such charge is made or entered into the books of Bank subsequently
thereto.

 

This Note is a
replacement, extension and renewal of the $25,000,000 Revolving Credit Note
from the Borrowers’ payable to the order of the Bank and dated as of
March 15, 2002.  The indebtedness
evidenced hereby shall be construed and enforced in accordance with and
governed by the laws of the

 

2

 

State of
Oklahoma.  This Note is executed by the
undersigned duly authorized officer and manager of each the Borrowers and is
delivered to the order of the Bank in Tulsa, Oklahoma.

 

 

	
   

  	
  BETA OIL & GAS, INC.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  David A.
  Wilkins,

  President and Chief Executive Officer

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
   

  
	
   

  	
  BETA OPERATING COMPANY, L.L.C.

  
	
   

  	
   

  
	
   

  	
   

  
	
   

  	
  By

  	
   

  	
   

  
	
   

  	
   

  	
  David A.
  Wilkins,

  President and manager

  
	
   

  	
   

  	
   

  
	
   

  	
   

  	
  “Borrowers”

  
	
   

  	
   

  	
   

  
	
  DUE: April 1, 2005

  	
   

  	
   

  
						

 

3

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