MASTER CREDIT AGREEMENT
ALSATE MANAGEMENT AND INVESTMENT COMPANY,
INTEGRA ENERGY, L.L.C.,
RIAGRA LAND AND CATTLE COMPANY,
LARIAT SERVICES, INC., PETROSOURCE ENERGY COMPANY, L.P. and
PETROSOURCE PRODUCTION COMPANY, L.P.,
MASTER CREDIT AGREEMENT – Page i
MASTER CREDIT AGREEMENT
ARTICLE I. — TERMS DEFINED | 2 | |||||
SECTION 1.1. | Definitions | 2 | ||||
SECTION 1.2. | Accounting Terms and Determinations | 13 | ||||
SECTION 1.3. | Petroleum Terms | 14 | ||||
ARTICLE II. — THE CREDIT | 14 | |||||
SECTION 2.1. | Renewal and Extension | 14 | ||||
SECTION 2.2. | Revolving Commitment | 14 | ||||
SECTION 2.3. | Note | 17 | ||||
SECTION 2.4. | Interest Rates; Payments | 17 | ||||
SECTION 2.5. | Mandatory Prepayments | 18 | ||||
SECTION 2.6. | Voluntary Prepayments | 19 | ||||
SECTION 2.7. | Final Maturity | 19 | ||||
SECTION 2.8. | Application of Payments | 19 | ||||
SECTION 2.9. | Non-Use Fee | 19 | ||||
SECTION 2.10. | Other Fees | 19 | ||||
ARTICLE III. — GENERAL PROVISIONS | 20 | |||||
SECTION 3.1. | Time and Place of Payment | 20 | ||||
SECTION 3.2. | Application of Payments | 20 | ||||
SECTION 3.3. | Funding Losses | 20 | ||||
ARTICLE IV. — BORROWING BASE | 21 | |||||
SECTION 4.1. | Reserve Reports; Proposed Borrowing Base | 21 | ||||
SECTION 4.2. | Redeterminations of the Borrowing Base and Monthly Reduction; Procedures and Standards | 21 | ||||
SECTION 4.3. | Borrowing Base Deficiency | 21 | ||||
SECTION 4.4. | Initial Borrowing Base | 22 | ||||
ARTICLE V. — COLLATERAL | 22 | |||||
SECTION 5.1. | Security | 22 | ||||
SECTION 5.2. | Title Opinions | 23 | ||||
ARTICLE VI. — CONDITIONS PRECEDENT | 23 | |||||
SECTION 6.1. | Conditions to each Revolving Loan Borrowing and each Letter of Credit | 23 | ||||
SECTION 6.2. | Materiality of Conditions | 24 | ||||
ARTICLE VII. — REPRESENTATIONS AND WARRANTIES | 24 | |||||
SECTION 7.1. | Corporate Existence and Power | 24 | ||||
SECTION 7.2. | Authorization; No Contravention | 24 | ||||
SECTION 7.3. | Binding Effect | 24 |
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SECTION 7.4. | Financial Information | 25 | ||||
SECTION 7.5. | Litigation | 25 | ||||
SECTION 7.6. | Taxes and Filing of Tax Returns | 25 | ||||
SECTION 7.7. | Ownership of Properties Generally | 25 | ||||
SECTION 7.8. | Evaluated Mineral Interests | 26 | ||||
SECTION 7.9. | Licenses, Permits, Etc | 26 | ||||
SECTION 7.10. | Compliance with Law | 26 | ||||
SECTION 7.11. | Full Disclosure | 26 | ||||
SECTION 7.12. | Organizational Structure, Nature of Business | 27 | ||||
SECTION 7.13. | Environmental Matters | 27 | ||||
SECTION 7.14. | Burdensome Obligations | 28 | ||||
SECTION 7.15. | Fiscal Year | 28 | ||||
SECTION 7.16. | No Default | 28 | ||||
SECTION 7.17. | Government Regulation | 28 | ||||
SECTION 7.18. | Insider | 28 | ||||
SECTION 7.19. | No Default | 28 | ||||
SECTION 7.20. | ERISA Compliance | 29 | ||||
SECTION 7.21. | Disclosure | 29 | ||||
ARTICLE VIII. — AFFIRMATIVE COVENANTS | 30 | |||||
SECTION 8.1. | Information | 30 | ||||
SECTION 8.2. | Maintenance of Existence | 31 | ||||
SECTION 8.3. | Title Data | 31 | ||||
SECTION 8.4. | Right of Inspection | 31 | ||||
SECTION 8.5. | Maintenance of Insurance | 31 | ||||
SECTION 8.6. | Payment of Taxes and Claims | 31 | ||||
SECTION 8.7. | Compliance with Laws and Documents | 32 | ||||
SECTION 8.8. | Operation of Properties and Equipment | 32 | ||||
SECTION 8.9. | Environmental Law Compliance | 32 | ||||
SECTION 8.10. | Additional Documents | 32 | ||||
SECTION 8.11. | Swap Contracts | 32 | ||||
SECTION 8.12. | Opinion of Counsel | 33 | ||||
ARTICLE IX. — NEGATIVE COVENANTS | 33 | |||||
SECTION 9.1. | Incurrence of Debt | 33 | ||||
SECTION 9.2. | Negative Pledge | 33 | ||||
SECTION 9.3. | Consolidations and Mergers | 33 | ||||
SECTION 9.4. | Asset Dispositions | 33 | ||||
SECTION 9.5. | Amendments to Organizational Documents | 34 | ||||
SECTION 9.6. | Use of Proceeds | 34 | ||||
SECTION 9.7. | Hedge Transactions | 34 | ||||
SECTION 9.8. | Fiscal Year | 34 | ||||
SECTION 9.9. | Change in Business | 34 | ||||
SECTION 9.10. | Change of Control or Management | 34 | ||||
SECTION 9.11. | Restrictions on Dividends and Distributions on and Redemptions of Capital Stock | 35 |
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ARTICLE X. — FINANCIAL COVENANTS | 35 | |||||
SECTION 10.1. | Funded Debt Ratio | 35 | ||||
SECTION 10.2. | Minimum Fixed Charge Coverage | 35 | ||||
SECTION 10.3. | Calculations of Ratios | 35 | ||||
SECTION 10.4. | Net Worth | 35 | ||||
ARTICLE XI. — DEFAULTS | 35 | |||||
SECTION 11.1. | Events of Default | 35 | ||||
ARTICLE XII. — CHANGE IN CIRCUMSTANCES | 37 | |||||
SECTION 12.1. | Taxes | 37 | ||||
SECTION 12.2. | Discretion of Lender as to Manner of Funding | 38 | ||||
ARTICLE XIII. — MISCELLANEOUS | 38 | |||||
SECTION 13.1. | Notices | 38 | ||||
SECTION 13.2. | No Waivers | 38 | ||||
SECTION 13.3. | Expenses: Indemnification | 39 | ||||
SECTION 13.4. | Right of Set-off | 40 | ||||
SECTION 13.5. | Amendments and Waivers | 40 | ||||
SECTION 13.6. | Survival | 40 | ||||
SECTION 13.7. | Limitation on Interest | 40 | ||||
SECTION 13.8. | Invalid Provisions | 41 | ||||
SECTION 13.9. | Waiver of Consumer Credit Laws | 41 | ||||
SECTION 13.10. | Successors and Assigns | 41 | ||||
SECTION 13.11. | Texas Law | 41 | ||||
SECTION 13.12. | Consent to Jurisdiction, Waiver of Immunities | 41 | ||||
SECTION 13.13. | Counterparts, Effectiveness | 42 | ||||
SECTION 13.14. | No Third Party Beneficiaries | 42 | ||||
SECTION 13.15. | Complete Agreement | 42 | ||||
SECTION 13.16. | Waiver of Jury Trial | 42 | ||||
SECTION 13.17. | Arbitration | 42 | ||||
SECTION 13.18. | Agreement Controls | 43 |
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MASTER CREDIT AGREEMENT
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Borrowing Base | Unused Fee | ||||||||||||||||||||
Level | Utilization Ratio | Eurodollar Rate | Base Rate | Percentage | |||||||||||||||||
I | >75% | 2.25 | % | 0.50 | % | 0.35 | % | ||||||||||||||
II | <75%>50% | 2.00 | % | 0.50 | % | 0.25 | % | ||||||||||||||
III | <50% | 1.50 | % | 0.00 | % | 0.125 | % |
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(a) | any Interest Period which would otherwise end on a day which is not a Eurodollar Business Day shall be extended to the next succeeding Eurodollar Business Day unless such Eurodollar Business Day falls in another calendar month, in which case such Interest Period shall end on the next preceding Eurodollar Business Day; and | ||
(b) | no Interest Period shall extend past the Revolving Loan Termination Date. |
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(i) | the form, validity, sufficiency, accuracy, genuineness or legal effect of any document submitted by any Person in connection with the application for and issuance of and presentation of drafts with respect to any Letter of Credit, even if it should prove to be in any or all respects invalid, insufficient, inaccurate, fraudulent or forged; | ||
(ii) | the validity or sufficiency of any instrument transferring or assigning or purporting to transfer or assign the Letter of Credit or the rights or benefits thereunder or proceeds thereof, in whole or in part, which may prove to be invalid or ineffective for any reason; | ||
(iii) | the failure of the beneficiary of the Letter of Credit to comply duly with conditions required in order to draw upon such Letter of Credit; | ||
(iv) | errors, omissions, interruptions or delays in transmission or delivery of any messages, by mail, cable, telegraph, telex or otherwise, whether or not they be in cipher; | ||
(v) | errors in interpretation of technical terms; | ||
(vi) | any loss or delay in the transmission or otherwise of any document required in order to make a drawing under any Letter of Credit or of the proceeds thereof, | ||
(vii) | the misapplication by the beneficiary of the Letter of Credit of the proceeds of any drawing under such Letter of Credit; or | ||
(viii) | any consequences arising from causes beyond the control of Lender. |
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(i) | whether such borrowing is to be the subject of a Base Rate Tranche or a Eurodollar Tranche; | ||
(ii) | the borrowing date of such borrowing, which shall be a Domestic Business Day in the case of a Base Rate Tranche, or a Eurodollar Business Day in the case of a Eurodollar Tranche; | ||
(iii) | the aggregate amount of such borrowing; and | ||
(iv) | in the case of a borrowing the subject of a Eurodollar Tranche, the duration of the Interest Period applicable thereto, subject to the provisions of the definition of Interest Period. |
(i) | the requested date for issuance of such Letter of Credit; | ||
(ii) | the terms of such requested Letter of Credit, including the name and address of the beneficiary, the stated amount, the expiration date and the conditions under which drafts under such Letter of Credit are to be available; and | ||
(iii) | the purpose of such Letter of Credit. |
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BORROWER: | ||||
RIATA ENERGY, INC., a Texas corporation | ||||
By: | /s/ N. Malone Mitchell, 3rd | |||
N. Malone Mitchell, 3rd, President | ||||
Address for Notice: | ||||
701 S. Taylor, Suite 426 | ||||
Amarillo, Texas 79101 | ||||
Fax No. (806) 376-9216 | ||||
GUARANTORS: | ||||
ROC GAS COMPANY, | ||||
a Texas corporation | ||||
By: | /s/ N. Malone Mitchell, 3rd | |||
N. Malone Mitchell, 3rd, President | ||||
ALSATE MANAGEMENT AND | ||||
INVESTMENT COMPANY, | ||||
a Texas corporation | ||||
By: | /s/ N. Malone Mitchell, 3rd | |||
N. Malone Mitchell, 3rd, President | ||||
INTEGRA ENERGY, L.L.C., | ||||
a Texas limited liability company | ||||
By: RIATA ENERGY, INC., Member | ||||
By: | /s/ N. Malone Mitchell, 3rd | |||
N. Malone Mitchell, 3rd, President | ||||
RIAGRA LAND AND CATTLE | ||||
COMPANY, a Texas corporation | ||||
By: | /s/ N. Malone Mitchell, 3rd | |||
N. Malone Mitchell, 3rd, President | ||||
LARIAT COMPRESSION COMPANY, a Texas corporation | ||||
By: | /s/ N. Malone Mitchell, 3rd | |||
N. Malone Mitchell, 3rd, President |
LARIAT SERVICES, INC., a Texas corporation | ||||||
By: | /s/ N. Malone Mitchell, 3rd | |||||
N. Malone Mitchell, 3rd, President | ||||||
PETROSOURCE ENERGY COMPANY, L.P. | ||||||
By: PSE Management, LLC, general partner | ||||||
By: | /s/ N. Malone Mitchell, 3rd | |||||
N. Malone Mitchell, 3rd, President | ||||||
PETROSOURCE PRODUCTION COMPANY, L.P. | ||||||
By: PetroSource Energy Management, LLC, General Partner | ||||||
By: | /s/ N. Malone Mitchell, 3rd | |||||
N. Malone Mitchell, 3rd, President | ||||||
Address for Notice for all Guarantors: | ||||||
701 S. Taylor, Suite 426 | ||||||
Amarillo, Texas 79101 | ||||||
Fax No. (806) 376-9216 | ||||||
LENDER: | ||||||
BANK OF AMERICA, N.A. | ||||||
By: | /s/ Charles Patterson | |||||
Charles Patterson, Senior Vice President | ||||||
Address for Notice: | ||||||
700 Louisiana St | ||||||
Houston, Texas 77002-2700 | ||||||
Fax No. (713) 247-6099 | ||||||
Applicable Lending Office: | ||||||
700 Louisiana St | ||||||
Houston, Texas 77002-2700 | ||||||
Fax No. (713) 247-6099 |
MASTER CREDIT AGREEMENT – Signature Page
MASTER CREDIT AGREEMENT – Exhibit A – Page 1
MASTER CREDIT AGREEMENT – Exhibit B – Page 1
MASTER CREDIT AGREEMENT – Exhibit C – Page 1
$200,000,000 | Amarillo, Texas | January 12, 2006 |
a Texas corporation
By: | ||||
701 S. Taylor, Suite 426
Amarillo, Texas 79101
Fax No. (806) 376-9216
RIATA ENERGY, INC. a Texas corporation | ||||||
By: | ||||||
RIATA ENERGY, INC. a Texas corporation | ||||||
By: | ||||||
(to be attached)
(to be attached)
(to be attached)
(to be attached)
FORM OF ROLLOVER NOTICE
o | Reference is hereby made to the existing Eurodollar Tranche outstanding under the [Revolving Loan] in the amount of $ which is subject to an Interest Period expiring on , . Borrower hereby requests thaton the expiration of such Interest Period the portion of the principal of the [Revolving Loan] which is subject to such Tranche be made the subject ofo Base Rate Tranche oro Eurodollar Tranche having an Interest Period of one (1) month. | ||
o | Borrower hereby requests that on �� , , a portion of the principal of the [Revolving Loan] in the amount of $ which is currently the subject of a Base Rate Tranche be made the subject of a Eurodollar Tranche having an Interest Period of one (1) month. |
(a) | The Authorized Officer signing this instrument is the duly elected, qualified and acting officer of Borrower as indicated below such officer’s signature hereto; | ||
(b) | There does not exist on the date hereof any condition or event which constitutes a Default or Event of Default; and | ||
(c) | The representations and warranties of Borrower set forth in the Agreement and the Loan Papers delivered to Lender are true and correct on and as of the date hereof, with the same effect as though such representations and warranties had been made on and as of the date hereof or, if such representations and warranties are expressly limited to particular dates, as of such particular dates. |
a Texas corporation
By: | ||||
Type of Borrowing | Aggregate Amount | Interest Period | ||
RIATA ENERGY, INC. a Texas corporation | ||||
By: | ||||
N. Malone Mitchell, 3rd, President | ||||
Requested Amount | $ | |
Requested Date of Issuance | ||
Requested Expiration Date | ||
Summary of Terms | ||
(provide a brief description of conditions under which the drafts under such Letter of Credit are to be available) | ||
Beneficiary (Name/Address) | ||
RIATA ENERGY, INC. a Texas corporation | ||||
By: | ||||
N. Malone Mitchell, 3rd, President | ||||
1. | Riata Energy, Inc., is a Texas corporation, duly organized, validly existing and in good standing under the laws of the State of Texas. |
2. | The execution, delivery and performance by Borrower and Guarantors of each Loan Document to which it is a party, and the borrowing and liabilities incurred thereunder (1) have been duly authorized by all necessary action (corporate, partnership or limited liability company) of Borrower and Guarantors, (2) do not (to the best of our knowledge) contravene the terms of the agreements of Borrower or Guarantors, (3) do not (to the best of our knowledge) require the approval or consent of any trustee or the holders of any indebtedness of Borrower or Guarantors, (4) do not (to the best of our knowledge) contravene any law, regulation, rule or order binding on Borrower or Guarantors, and (5) do not (to the best of our knowledge) contravene the provisions of or constitute a default under any agreement or instrument to which Borrower or Guarantors are a party or by which Borrower or Guarantors may be bound or affected. All actions, approvals and consents necessary to authorize the execution, delivery and performance of the Loan Documents by Borrower and Guarantors have occurred or been obtained. |
3. | No government approval or filing or registration with any governmental authority is required for the execution, delivery and performance by Borrower or Guarantors of the Loan Documents or in connection with any of the transactions contemplated thereby. |
4. | The Loan Documents have been duly and validly executed and delivered by Borrower and Guarantors in compliance with the laws of the State of Texas, and constitute legal, valid and binding obligations of Borrower and Guarantors enforceable against Borrower and Guarantors in accordance with their respective terms and provisions,exceptthat enforcement may be limited by bankruptcy, insolvency, reorganization, arrangement, moratorium, or similar laws, or by equitable principles, relating to or limiting the rights of creditors generally. |
5. | There is, to the best of our knowledge, no private, judicial or governmental action, lawsuit, claim, proceeding, inquiry or investigation pending or threatened which involves Borrower or Guarantors, any of the Loan Documents, or the property |
covered by the Deed of Trust and Security Agreement, including but not limited to eminent domain proceedings. In addition, to the best of our knowledge, after due inquiry, no unsatisfied judgments have been entered or returned against the Borrower or Guarantors. | ||
6. | Each of the Deeds of Trust (as modified and amended by the modifications) creates a valid lien upon Borrower’s interest in the property described therein and imparts constructive notice of the lien to third parties. | |
EXHIBIT I — Page 2 |
Bank: | Guarantor: | ||
Bank of America, N.A. | |||
Banking Center: | |||
700 Louisiana St. | |||
Houston, Texas 77002-2700 | |||
(Name and street address, including county) | |||
(Street address) |
By: | _________________________ | |
Printed Name: | _________________________ | |
Title: | _________________________ |
By: | ________________________________ |