SUBORDINATION AGREEMENT
THIS SUBORDINATION AGREEMENT (this "Agreement") is made and entered
into effective the 14th of November, 2000, by and among PARAWON CORPORATION
("Parawon"); PLAYA MINERALS & ENERGY, INC., a Texas corporation (the "Borrower")
and BANK ONE, TEXAS, NATIONAL ASSOCIATION, a national banking association (the
"Lender").
WITNESSETH:
WHEREAS, pursuant to that certain Credit Agreement dated November 14,
2000, by and between the Borrower and the Lender (as such agreement may be
amended, modified, supplemented or restated from time to time, the "Credit
Agreement"), the Lender has agreed to make Loans to or for the benefit of the
Borrower;
WHEREAS, Parawon has advanced certain funds to the Borrower pursuant
to that certain note from Borrower to Parawon (the "Parawon Agreement"), dated
April 4, 2000 (the "Debt");
WHEREAS, pursuant to the Credit Agreement and as an inducement to the
Lender to extend credit to the Borrower under the Credit Agreement, Parawon and
the Borrower have agreed to execute this Agreement in favor of the Lender;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
1.01 Terms Defined Above. As used in this Agreement, each of the terms
"Agreement," "Borrower," "Credit Agreement," "Debt," "Lender," "Parawon," and
the "Parawon Agreement" shall have the meaning assigned to such term
hereinabove.
1.02 Terms Defined in Credit Agreement. Each term defined in the
Credit Agreement and used herein without definition shall have the meaning
assigned to such term in the Credit Agreement.
1.03 Other Definitional Provision
(a) The words "hereby," herein," "hereinafter,"
"hereinabove," "hereinbelow," "hereof," "hereunder," and words of
similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular Article, Section or
provision of this Agreement.
(b) Section references are to such Sections of this
Agreement unless otherwise specified.
(c) As used herein and in any certificate or other document
made or delivered pursuant hereto, accounting and financial terms not
otherwise defined shall be defined according to GAAP.
(d) "Equiva Collateral" shall mean the oil and gas property
of Borrower situated in San Xxxx County, New Mexico and pledged to
Equiva Trading Company.
ARTICLE II
SUBORDINATION
2.01 Subordination of Payment. The payment of the Debt is hereby
expressly subordinated in right of payment to the prior payment in full of all
Obligations and all other indebtedness of the Borrower to the Lender. The
Borrower shall make no payments of interest or principal on the Debt except that
the Borrower may make payments on the Debt from the proceeds of an equity
offering and may make payments so long as there is excess cash flow from the
Equiva Collateral over and above the payments of principal and interest to
Equiva Trading Company.
2.02 Parawon Debt Subordinated to Prior Payment of Obligations on
Dissolution, Liquidation or Reorganization of the Borrower. Upon any
distribution of assets of the Borrower upon any voluntary or involuntary
dissolution, winding up, liquidation or reorganization of the Borrower (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or otherwise):
(a) the Lender shall first be entitled to receive payment in
full (or to have such payment duly provided for to their satisfaction)
of the principal thereof and interest due on the Obligations and other
amounts due in connection therewith before Parawon is entitled to
receive any payment on account of the principal of or interest on the
Debt;
(b) any payment or distribution of assets of the Borrower of
any kind or character, whether in cash, property or securities, to
which Parawon would be entitled except for the provisions of this
Agreement, shall be paid by the liquidating trustee or agent or other
person making such payment or distribution directly to the Lender or
its representative, to the extent necessary to make payment in full of
all Obligations remaining unpaid, after giving effect to any
concurrent payment or distribution or provision therefor to the
Lender; and
(c) in the event that, notwithstanding the foregoing, any
payment or distribution of assets of the Borrower of any kind or
character, whether in cash, property or securities, shall be received
by Parawon on account of principal of or interest on the Debt before
all Obligations are paid in full or provision made for their payment,
such payment or distribution (subject to the further provisions of
this Article) shall be paid over to the Lender or its representative
for application to the payment of all Obligations remaining unpaid or
unprovided for until all such Obligations shall have been paid in
full, after giving effect to any concurrent payment or distribution or
provision therefor to the Lender.
2.03 Subordination of Liens. So long as any Obligation remains
outstanding or any obligation of the Lender exists to make Loans under the
Credit Agreement, Parawon hereby subordinates all Liens, now existing or
hereafter created or arising, securing all or any portion of the Debt to all
Liens, now existing or hereafter created or arising, securing all or any portion
of the Obligations, notwithstanding any defect, deficiency, error or omission
which may be contained in any Loan Document creating or perfecting any such Lien
securing all or any portion of the Obligations. All Liens, now existing or
hereafter created or arising, securing all or any portion of the Debt shall at
all times remain subordinate, secondary and inferior to all Liens, now existing
or hereafter created or arising, securing all or any portion of the Obligations.
2.04 Subordination of Remedies. So long as any Obligation remains
outstanding or any obligation of the Lender exists to make Loans under the
Credit Agreement, neither Parawon shall not, without the prior written consent
of the Lender, declare any Debt due or in default or foreclose upon or exercise
any power of sale with respect to any security for all or any portion of the
Debt or exercise any other right, power or remedy of Parawon provided for in any
document or instrument executed in connection with the Debt or by law or
initiate or join with any other creditor of the Borrower in initiating any plan
or proceeding pursuant to any bankruptcy, insolvency or receivership proceedings
or seeking an assignment for the benefit of creditors or the marshalling of the
assets and liabilities of the Borrower. Upon any distribution of assets of the
Borrower or the dissolution, winding up, liquidation or reorganization (whether
in bankruptcy, insolvency or receivership proceedings or upon an assignment for
the benefit of creditors or the marshalling of the assets and liabilities of the
Borrower or otherwise), any payment to which Parawon would otherwise be entitled
with respect to the Debt shall be held in trust for, and shall be immediately
paid over or delivered to, the Lender for application to the Obligations until
all Obligations shall have been paid in full.
2.05 Continuing Agreement. This Agreement shall continue in full force
and effect and the liabilities and obligations of the Borrower and Parawon
hereunder shall not be affected or impaired by any amendment, modification or
alteration of any Loan Document, except as may be expressly provided in any such
amendment, modification or alteration. This Agreement shall continue to be
effective or shall be reinstated, as the case may be, if at any time any payment
of any of the Obligations is rescinded or must otherwise be returned by the
Lender upon the insolvency, bankruptcy or reorganization of the Borrower or
otherwise, all as though such payment had not been made.
2.06 Liability Not Impaired. The liabilities and obligations of the
Borrower and Parawon hereunder shall not be affected or impaired by (a) the
failure of the Lender or any other Person to exercise diligence or reasonable
care in the preservation , protection or other handling or treatment of all or
any part of any Collateral for all or any portion of the Obligations, (b) the
failure of any Lien intended to be granted or created to secure all or any part
of the Obligations to be properly perfected or created or the unenforceability
of any such Lien for any other reason, or (c) the subordination of any such Lien
to any other Lien. The Lender may at any time and from time to time, without the
consent of or notice to Parawon, and without incurring any responsibility to
Parawon, and without impairing or releasing or otherwise affecting any of the
obligations or agreements of Parawon hereunder, (a) change the manner, place or
terms of payment, or change or extend the time of payment of, renew, or alter
all or any portion of the Obligations, (b) exchange, release, surrender, realize
upon or otherwise deal with, in any manner and any order, any Property at any
time subject to any Lien in favor of the Lender, (c) exercise or refrain from
exercising any rights against the Borrower or others, and (d) sell, transfer,
assign or grant participations in the Obligations or any portion thereof.
2.07 Waivers. Parawon waives any right to require the Lender to (a)
proceed against the Borrower or make any effort at the collection of the
Obligations from the Borrower or any other Person liable for all or any portion
of the Obligations, (b) proceed against or exhaust any Collateral securing all
or any portion of the Obligations, or (c) pursue any other remedy in the power
of the Lender. The liability and obligations of Parawon hereunder shall not be
affected or impaired by any action or inaction by the Lender in regard to any
matter waived herein.
2.08 Modification of Parawon Debt. Without the prior written consent
of the Lender, none of the terms or provisions of the Parawon Agreement, or the
payment of the Debt evidenced thereby, shall be modified, amended, accelerated,
renewed or extended.
2.09 Obligation of the Borrower. Nothing contained in this Agreement
shall affect the obligation of the Borrower to make, or prevent the Borrower
from making, payment of the principal of or interest on the Debt, except as
otherwise provided in this Agreement and the Parawon Agreement.
ARTICLE III
MISCELLANEOUS
3.01 Survival of Covenants and Agreements. All covenants and
agreements of the Borrower and Parawon herein made shall survive the execution
and delivery hereof and shall remain in force and effect so long as any
Obligation remains outstanding or any obligation of the Lender exists to make
Loans under the Credit Agreement.
3.02 Parties in Interest. All covenants and agreements herein
contained by or on behalf of the Borrower, Parawon or the Lender shall be
binding upon and inure to the benefit of the Borrower, Parawon, or the Lender,
as the case may be, and their respective legal representatives, successors and
assigns.
3.03 Rights of Third Parties. All provisions herein are imposed solely
and exclusively for the benefit of the Borrower, Parawon, and the Lender. No
other Person shall have any right, benefit, priority or interest hereunder or as
a result hereof or have standing to require satisfaction of provisions hereof in
accordance with their terms; and any or all of such provisions may be freely
waived in whole or in part by the Lender at any time if in its sole discretion
it deems it advisable to do so.
3.04 Articles and Sections. This Agreement, for convenience only, has
been divided into Articles and Sections; and it is understood and agreed that
the rights and other legal relations of the parties hereto shall be determined
from this Agreement as an entirety and without regard to the aforesaid division
into Articles and Sections and without regard to headings prefixed to such
Articles or Sections.
3.05 Number and Gender. Whenever the context requires, reference
herein made to the single number shall be understood to include the plural; and
likewise, the plural shall be understood to include the singular. Definitions of
terms defined in the singular or plural shall be equally applicable to the
plural or singular, as the case may be, unless otherwise indicated. Words
denoting sex shall be construed to include the masculine, feminine and neuter,
when such construction is appropriate; and specific enumeration shall not
exclude the general but shall be construed as cumulative.
3.06 No Waiver; Rights Cumulative. No course of dealing on the part of
the Lender, its officers or employees, nor any failure or delay by the Lender
with respect to exercising any of its rights hereunder or under any Loan
Document shall operate as a waiver of any of the rights of the Lender hereunder
or under such Loan Document. The rights of the Lender hereunder and under the
Loan Documents shall be cumulative, and the exercise or partial exercise of any
such right shall not preclude the exercise of any other right.
3.07 Survival Upon Unenforceability. In the event any one or more of
the provisions contained herein or executed in connection herewith shall, for
any reason, be held to be invalid, illegal or unenforceable in any respect, such
invalidity, illegality or unenforceability shall not affect any other provision
hereof or of any such other instrument.
3.08 Amendments or Modifications. Neither this Agreement nor any
provision hereof may be changed, waived, discharged or terminated orally, but
only by an instrument in writing signed by the party against whom enforcement of
the change, waiver, discharge or termination is sought.
3.09 GOVERNING LAW. THIS AGREEMENT SHALL BE DEEMED TO BE A CONTRACT
MADE UNDER AND SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE LAWS OF
THE STATE OF TEXAS.
3.10 JURISDICTION AND VENUE. ALL ACTIONS OR PROCEEDINGS WITH RESPECT
TO, ARISING DIRECTLY OR INDIRECTLY IN CONNECTION WITH, OUT OF, RELATED TO OR
FROM THIS AGREEMENT MAY BE LITIGATED, AT THE SOLE DISCRETION AND ELECTION OF THE
LENDER, IN COURTS HAVING SITUS IN HOUSTON, XXXXXX COUNTY, TEXAS. EACH OF THE
BORROWER AND PARAWON HEREBY SUBMITS TO THE JURISDICTION OF ANY LOCAL, STATE OR
FEDERAL COURT LOCATED IN HOUSTON, XXXXXX COUNTY, TEXAS, AND HEREBY WAIVES ANY
RIGHTS IT MAY HAVE TO TRANSFER OR CHANGE THE JURISDICTION OF VENUE OF ANY
LITIGATION BROUGHT AGAINST IT BY THE LENDER IN ACCORDANCE WITH THIS SECTION.
3.11 ENTIRE AGREEMENT. THIS AGREEMENT CONSTITUTES THE ENTIRE AGREEMENT
AMONG THE PARTIES HERETO WITH RESPECT TO THE SUBJECT HEREOF AND SHALL SUPERSEDE
ANY PRIOR AGREEMENT AMONG THE PARTIES HERETO, WHETHER WRITTEN OR ORAL, RELATING
TO THE SUBJECT HEREOF. THIS AGREEMENT 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.
WITNESSES: PARAWON CORPORATION
----------------------------------- By:
---------------------------------
Printed Name: Printed Name:
---------------------- -----------------------
Title:
------------------------------
-----------------------------------
Printed Name:
---------------------
WITNESSES: PLAYA MINERALS & ENERGY, INC.
------------------------------------ By:
---------------------------------
Printed Name: Xxxx X. Xxxxxx
----------------------- President and Chief Executive
Officer
------------------------------------
Printed Name:
----------------------
WITNESSES: BANK ONE, TEXAS, NATIONAL
ASSOCIATION
------------------------------------ By:
---------------------------------
Printed Name: Xxxxxxx X. Xxxxxx
----------------------- First Vice President
----------------------------
Printed Name:
-----------------------
THE STATE OF TEXAS ss.
ss.
COUNTY OF XXXXXX xx.
BEFORE ME, the undersigned authority, on this day personally appeared
XXXX X. XXXXXX, President and Chief Executive Officer of PLAYA MINERALS &
ENERGY, INC., a Texas corporation, known to me to be the person whose name is
subscribed to the foregoing instrument, and acknowledged to me that he executed
the same for the purposes and consideration therein expressed, as the act and
deed of such corporation, and in the capacity therein stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the City of Houston, State of Texas, this __ day of November, 2000.
--------------------------------
NOTARY PUBLIC in and for the
State of Texas
THE STATE OF TEXAS ss.
ss.
COUNTY OF XXXXXX xx.
BEFORE ME, the undersigned authority, on this day personally appeared
_________________, President of PARAWON CORPORATION, known to me to be the
person whose name is subscribed to the foregoing instrument, and acknowledged to
me that he executed the same for the purposes and consideration therein
expressed, as the act and deed of such corporation, and in the capacity therein
stated.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the City of Houston, State of Texas, this __ day of November, 2000.
--------------------------------
NOTARY PUBLIC in and for the
State of Texas
THE STATE OF TEXAS ss.
ss.
COUNTY OF XXXXXX xx.
BEFORE ME, the undersigned authority, on this day personally appeared
XXXXXXX X. XXXXXX, First Vice President of BANK ONE, TEXAS, NATIONAL
ASSOCIATION, a national banking association, known to me to be the person whose
name is subscribed to the foregoing instrument, and acknowledged to me that he
executed the same for the purposes and consideration therein expressed, in the
capacity therein stated and as the act and deed of said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my official
seal in the City of Houston, State of Texas, this __ day of November, 2000.
--------------------------------
NOTARY PUBLIC in and for the
State of Texas
