3
REVOLVING CREDIT NOTE
$25,000,000.00 Tulsa, Oklahoma
March 15, 2002
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, NATIONAL
ASSOCIATION (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 March 15, 2004, 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 March 31, 2002, and at final
maturity on March 15, 2004.
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 Fourth Amendment thereto dated 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 Fourth 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 borrowing base calculations,
borrowing limitations hereunder 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 $2,900,000 Promissory Note (Guidance Line of Credit) from the
Borrower payable to the order of the Bank and dated as of even date herewith
("Guidance Note"). 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 and extension of the $25,000,000 Revolving
Credit Note from the Borrowers' payable to the order of the Bank and dated as of
March 19, 2001. The indebtedness evidenced hereby shall be construed and
enforced in accordance with and governed by the laws of the 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
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Steve Antry,
President
BETA OPERATING COMPANY, L.L.C.
By
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Steve Antry,
President and manager
"Borrowers"
DUE: March 15, 2004