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EXHIBIT 10.1
CREDIT AGREEMENT
THIS CREDIT AGREEMENT is dated as of the 3rd day of June, 1997, and is
by and between XXXXXXXXX ENERGY, INC., a Delaware corporation with offices
located in Snyder, Texas (the "Borrower"), XXXXXXXXX DRILLING COMPANY,
XXXXXXXXX DRILLING PROGRAMS, INC., XXXXXXXXX PETROLEUM, INC. and XXXXXXXXX
TRADING COMPANY, INC. (each a "Guarantor" and collectively, the "Guarantors")
and NORWEST BANK TEXAS, NATIONAL ASSOCIATION, a national banking association
with offices located in Wichita Falls, Texas (the "Bank").
RECITALS:
WHEREAS, the Borrower has requested the Bank to extend an advancing,
non-revolving credit line in the principal amount of THIRTY MILLION AND NO/100
DOLLARS ($30,000,000.00) (the "Credit") for acquisition, capital expenses and
working capital purposes; and,
WHEREAS, the Bank is willing to make the Credit available to the
Borrower subject to the provisions of this Credit Agreement;
NOW, THEREFORE, in consideration of the premises and of the mutual
agreements herein, the parties agree as follows:
SECTION 1 Definitions
1.1 In addition to those terms defined in the above recitals, as used
herein:
"Agreement" shall mean this Credit Agreement and all amendments and
supplements hereto which may from time to time become effective hereafter in
accordance with the terms hereof.
"Banking Day" shall mean any day other than a Saturday, Sunday or a
legal holiday on which banks in Wichita Falls, Texas are required or authorized
to be closed.
"Borrowed Money" shall mean funds obtained by incurring contractual
indebtedness and shall not include trade accounts payable or money borrowed
from the Bank.
"Cash Flow" shall mean, for the fiscal year of the Borrower, the
aggregate amount of the following items properly shown on its income statement,
determined in accordance with generally accepted accounting principles
consistently applied: net income after taxes plus (i) amortization,
depreciation and depletion expense; less (ii) dividends, extraordinary income
and similar types of noncash charges against income which the Bank determines,
in its sole discretion, to be appropriate "add-backs."
"Closing Date" shall mean the effective date of this Agreement.
"Current Assets" shall mean the aggregate amount of the Borrower's
assets properly shown as current assets on its balance sheet, determined in
accordance with generally accepted accounting principles consistently applied,
minus the following: receivables, loans and other amounts due from any
shareholder, director, officer, or employee of the Borrower, and
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receivables, loans and other amounts due from any other related or affiliated
person, corporation, partnership, trust, or other entity of the Borrower.
"Current Liabilities" shall mean the aggregate amount of the
Borrower's liabilities properly shown as current liabilities on its balance
sheet, determined in accordance with generally accepted accounting principles
consistently applied.
"Current Maturities of Long-Term Debt" shall mean, that portion of the
Borrower's "Long-Term Debt" that matures or that is scheduled to be paid during
the next four fiscal quarters of the Borrower. For the purposes of this
definition, "Long-Term Debt" shall mean the following: (i) the aggregate amount
of the Borrower's liabilities properly shown as non-current liabilities on its
balance sheet, determined in accordance with generally accepted accounting
principles consistently applied, as of the last day of the quarter; and (ii)
any new liabilities of the Borrower incurred during the quarter that, in
accordance with generally accepted accounting principles consistently applied,
should be shown as non-current liabilities on its balance sheet at quarter-end.
"Note" shall mean the promissory note of the Borrower substantially in
the form of attached Exhibit A, evidencing borrowings under Section 2.1 hereof.
"Events of Default" shall mean any and all events of default described
in Section 8 hereof.
"Guarantors" shall mean Xxxxxxxxx Drilling Company, Xxxxxxxxx Drilling
Programs, Inc., Xxxxxxxxx Petroleum, Inc. and Xxxxxxxxx Trading Company, Inc..
"Indebtedness" shall mean, as to the Borrower, or any Subsidiary, all
items of indebtedness, obligation or liability, whether matured or unmatured,
liquidated or unliquidated, direct or contingent, joint or several.
"Interest Period" shall mean, with respect to the LIBOR Rate, a period
of three months, which shall begin on (and include) the date on which such
election is effective or continued and, unless the maturity of the Note is
accelerated, shall end on (but exclude) the day which is three months
thereafter, provided, however, that if such Interest Period would otherwise end
on a day which is not a Banking Day, such Interest Period shall end on the next
following business day.
"LIBOR Rate" shall mean, for any Interest Period, an interest rate per
annum equal to the three-month LIBOR Rate as published in the "Money Rates"
section of the Wall Street Journal on the second business day preceding the
first day of an Interest Period.
"Maturity Date" shall mean January 1, 2000.
"Net Worth" shall mean the aggregate amount of the Borrower's items
properly shown as assets on its balance sheet minus the aggregate amount of the
Borrower's items properly shown as liabilities on its balance sheet, determined
in accordance with generally accepted accounting principles consistently
applied.
"Permitted Liens" shall mean:
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A. Liens in favor of the Bank;
B. Existing liens disclosed to the Bank in writing prior
to the date of this Agreement as set forth on Schedule 1 hereto; and
C. Liens for taxes not delinquent or which Borrower is
contesting in good faith.
"Subsidiary" shall mean any corporation of which more than fifty
percent (50%) of the outstanding voting securities shall, at the time of
determination, be owned directly, or indirectly through one or more
intermediaries, by the Borrower.
"Tangible Net Worth" shall mean Net Worth minus the aggregate amount
of the Borrower's items properly shown as the following types of assets
on its balance sheet, determined in accordance with generally accepted
accounting principles consistently applied: (i) goodwill, patents, copyrights,
mailing lists, trade names, trademarks, servicing rights, organizational and
franchise costs, bond underwriting costs, and other like assets properly
classified as intangible; (ii) leasehold improvements; (iii) receivables, loans
and other amounts due from any shareholder, director, officer, or employee of
the Borrower, and receivables, loans and other amounts due from any other
related or affiliated person, corporation, partnership, trust, or other entity
of the Borrower; and (iv) investments or interests in non- public companies,
cooperatives, or partnerships.
1.2 Computation of Time Periods. In this Agreement in the computation of
periods of time from a specified date to a later specified date, the word
"from" means "from and including" and the words "to" and "until" each means "to
but excluding."
1.3 Accounting Terms. All accounting terms not specifically defined
herein shall be construed in accordance with generally accepted accounting
principles consistent with those applied in the preparation of the financial
statements referred to in Section 5.6.
SECTION 2 The Credit Facilities
2.1 The Credit. Subject to the other provisions of this Agreement, the
Bank agrees to lend to the Borrower in one or more advances from time to time
from the effective date hereof until December 31, 1997 sums not to exceed an
aggregate of THIRTY MILLION AND NO/100 DOLLARS ($30,000,000.00). Each
borrowing under this Section 2.1 shall be requested in writing on the form set
forth in Exhibit B hereto. Each borrowing under this Section 2.1 will be
evidenced by a notation on the Bank's records, which shall be conclusive
evidence of such borrowing, and by the Note. Amounts borrowed and repaid under
the Credit are non-revolving.
2.2 Interest Rate. Interest on the unpaid principal of the Note shall be
calculated at an annual rate equal to two and one-half percent (2.5%) in excess
of the LIBOR Rate, which rate shall change at the beginning of each Interest
Period. Interest shall be computed on the basis of the actual number of days
elapsed in a year of 365/366 days.
2.3 Repayment. Prior to December 31, 1997, interest on the Note shall be
payable monthly, commencing June 30, 1997, and continuing on the last day of
each succeeding month.
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Commencing January 31, 1998, and continuing on the last day of each succeeding
month, principal and interest shall be payable in monthly installments in an
amount determined by the Bank as sufficient to fully amortize the outstanding
balance based upon an amortization schedule of seven years. A final payment of
all remaining outstanding principal plus accrued interest shall be due and
payable on the Maturity Date. Amounts received shall be applied first to
interest and then to principal.
2.4 Prepayment. The Borrower may at any time prepay the Note in whole or
from time to time in part without premium or penalty. Prepayments of principal
shall be applied in inverse order of maturity.
2.5 Fees. On the Closing Date the Borrower shall pay to the Bank an
origination fee equal to $75,000.00. Such fee shall be fully earned and
nonrefundable upon payment.
2.6 Sums Payable. All sums payable to the Bank hereunder shall be paid
directly to the Bank in immediately available funds. The Bank shall send the
Borrower statements of all amounts due hereunder, which statements shall be
considered correct and conclusively binding on the Borrower unless the Borrower
notifies the Bank to the contrary within 15 days of its receipt of any
statement which it deems to be incorrect.
2.7 Inability to Determine LIBOR Rate. If for any reason the Bank shall
have determined that adequate and reasonable means do not exist for
ascertaining the LIBOR Rate for any Interest Period, the Bank shall establish,
in good faith, an alternative interest rate index which will result in an
overall interest rate which approximates as closely as possible the interest
rate that would have been determined under Section 2.2.
SECTION 3 Conditions Precedent
3.1 The Borrower shall deliver the following to the Bank on or before the
Closing Date:
A. This Agreement, duly executed by Borrower.
B. The Note, duly executed by Borrower.
C. The Guaranties, duly executed by each Guarantor.
D. Certified corporate resolutions or certificates of
authority from the Borrower and each of the Guarantors authorizing the
execution, delivery and performance of this Agreement, the Note and
each other document to be delivered pursuant hereto.
E. Copies of the Articles of Incorporation and Bylaws
from the Borrower and each of the Guarantors.
F. Certificates, as of the most recent date practicable,
of the secretary of state of Texas and Delaware, as to the good
standing of the Borrower and the Guarantors.
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G. A Legal Opinion of counsel to the Borrower and the
Guarantors relating to the authorization, execution and enforceability
of this Agreement, the Note, the Guaranties and such other matters as
the Bank may reasonably request.
3.2 The Bank shall not be obligated to lend hereunder on the occasion for
any borrowing unless:
A. The representations and warranties contained in
Section 5 hereof are true and accurate on and as of such date;
B. No Event of Default, and no event which might become
an Event of Default after the lapse of time or the giving of notice
and the lapse of time, has occurred and is continuing or will exist
upon the disbursement of such loan; and,
C. The Borrower shall have delivered to the Bank a
certification by an appropriate officer of the Borrower as to the
matters set forth in Sections 3.2(A) and 3.2(B) hereof.
SECTION 4 Security
4.1 Security Interest. The Note shall be an unsecured obligation of the
Borrower.
4.2 Guaranties. The Borrower shall cause to be executed and delivered to
the Bank a guaranty agreement from each of the Guarantors, whereby each
Guarantor shall guaranty all indebtedness of the Borrower to the Bank.
SECTION 5 Representations and Warranties
To induce the Bank to enter into this Agreement, the Borrower
represents and warrants to the Bank as follows:
5.1 Corporate Status. The Borrower and each Guarantor is a corporation
duly organized, existing and in good standing under the laws of the state of
its incorporation.
5.2 Good Standing. The Borrower and each Guarantor is duly qualified to
do business and is in good standing in any additional jurisdictions where, on
advice of legal counsel, registration was deemed necessary.
5.3 Authority. The execution, delivery and performance of this Agreement
and the Note by the Borrower are within its corporate powers, have been duly
authorized, and are not in contravention of law, or the terms of Borrower's
Certificate of Incorporation or By-Laws or of any undertaking to which the
Borrower is a party or by which it is bound.
5.4 Consent. No consent, approval or authorization of or declaration or
filing with any governmental authority on the part of the Borrower is required
in connection with the execution and delivery of this Agreement or the
borrowings by the Borrower hereunder or on the part of the Borrower in
connection with the consummation of any transaction contemplated hereby.
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5.5 Liens. The property of the Borrower and each Guarantor is not subject
to any lien except Permitted Liens.
5.6 Litigation. No litigation or governmental proceeding is pending or,
to the knowledge of the officers of the Borrower, threatened against the
Borrower or any Guarantor which could have a material adverse effect on the
Borrower's or Guarantor's financial condition or business.
5.7 Financial Statements. All financial statements delivered to Bank by
or on behalf of Borrower, including any schedules and notes pertaining thereto,
have been prepared in accordance with generally accepted accounting principles
consistently applied, and fully and fairly present the financial condition of
the Borrower at the dates thereof and the results of operations for the periods
covered thereby, and there have been no material adverse changes in the
consolidated financial condition or business of the Borrower from December 31,
1996 to the date hereof.
5.8 Licenses. The Borrower and each Guarantor possesses adequate
licenses, permits, franchises, patents, copyrights, trademarks and trade names,
or rights thereto, to conduct its business substantially as now conducted and
as presently proposed to be conducted.
5.9 ERISA. The Borrower and the Guarantors do not have any unfunded
liabilities in any pension plan, as such terms is defined in the Employee
Retirement Income Security Act of 1974, as amended, and any successor statute
of similar import ("ERISA"), together with the regulations thereunder. As used
in this section, "unfunded liabilities" means with regard to any plan, the
excess of the current value of the plan's benefits guaranteed under ERISA over
the current value of the plan's assets allocable to such benefits. y5.10
Environmental. The Borrower and each Guarantor to the best of its knowledge
has obtained all material permits, licenses and other authorizations which are
required under federal, state and/or local laws ("Environmental Laws") relating
to pollution or protection of the environment, including laws relating to
emissions, discharges, releases or threatened releases of pollutants,
contaminants, hazardous or toxic materials or wastes into ambient air, surface
water, ground water or land, or otherwise relating to the manufacture,
processing, distribution, use, treatment, storage, disposal, transport or
handling of pollutants, contaminants or hazardous or toxic materials or wastes
("Environmental Matters"). The Borrower and each Guarantor is in compliance in
all material respects with all terms and conditions of such required permits,
licenses and authorizations and is also in full compliance with all other
limitations, restrictions, conditions, standards, prohibitions, requirements,
obligations, schedules and timetables contained in the Environmental Laws or
contained in any plan, order, decree, judgment or notice. The Borrower and the
Guarantors are not aware of, nor have any such parties received notice of, any
events, conditions, circumstances, activities, practices, incidents, actions or
plans which may interfere with or prevent continued compliance or which may
give rise to any liability under any Environmental Laws or the common law. The
Borrower and the Guarantors have not received any summons, citation, directive,
letter or other communication, written or oral, from any agency or department
of any state, federal or local government relating to any Environmental Matters
or any alleged Environmental Matters. No investigation, administrative order,
consent order and agreement, litigation or settlement with respect to any
Environmental Matters or any alleged Environmental Matters has been received by
the Borrower or to the best of its knowledge is proposed, threatened,
anticipated or in existence with respect to the Borrower or the Guarantors.
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5.11 Validity. This Agreement is, and the Note and Guaranties when issued
will be, valid and binding in accordance with their terms.
5.12 Default. Neither the Borrower nor any Guarantor is in default of a
material provision under any material agreement, instrument, decree or order to
which it is a party or by which it or its property is bound or affected.
SECTION 6 Affirmative Covenants
The Borrower and each of the Guarantors hereby covenants and agrees
that so long as any indebtedness remains outstanding hereunder, unless the Bank
shall otherwise consent in writing, it will:
6.1 Corporate Existence. Maintain its corporate existence and comply in
all material respects with all laws and regulations applicable thereto.
6.2 Taxes. Pay, when due, all taxes assessed against it or its property
except to the extent and so long as contested in good faith.
6.3 Reports. Furnish to the Bank:
A. Within 100 days after the end of each fiscal year of
the Borrower a detailed report of audit of the Borrower and the
Guarantors on a consolidated basis for such fiscal year including the
balance sheet as of the end of such fiscal year and the statements of
profit and loss and surplus for the fiscal year then ended, prepared
by independent certified public accountants satisfactory to the Bank.
B. Within 10 days after filing with the Securities and
Exchange Commission, quarterly financial statements, including a
balance sheet and income statement, for the Borrower.
C. Within 10 days after filing, all other reports and
information filed by or on behalf of the Borrower with the Securities
and Exchange Commission.
D. Promptly upon knowledge thereof, notice to the Bank
in writing of the occurrence of any event which has or might, after
the lapse of time or the giving of notice and the lapse of time,
become an Event of Default.
E. Promptly, such other information as the Bank may
reasonably request.
6.4 Operations. Operate or cause to be operated its properties in a
diligent, careful and efficient manner and in compliance in all material
respects with all applicable laws and all applicable rules and regulations of
every agency and authority, whether state, federal, municipal or other
jurisdiction, from time to time constituted to regulate the development and
operation of oil and gas properties and the production and sale of oil, gas and
other hydrocarbons therefrom. Borrower shall explore, develop, operate and
maintain or cause to be explored, developed, operated and maintained, all of
the leases, xxxxx, units and acreage constituting its properties in a
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prudent manner, according to customary practices and standards of the oil and
gas industry and as may be reasonably necessary to the prudent, economical
operation of such leases, xxxxx, units and acreage.
6.5 Accounts Payable. Pay all of its accounts payable within 120 days,
except for payables being disputed in good faith and for which, if requested by
the Bank, adequate reserves have been made.
6.6 Maintenance of Property. Maintain its inventory, equipment, real
estate and other properties in good condition and repair (normal wear and tear
excepted), and pay and discharge or cause to be paid and discharged when due,
the cost of repairs to or maintenance of the same, and pay or cause to be paid
all rental or mortgage payments due on such real estate.
6.7 Insurance. Cause its properties of an insurable nature to be
adequately insured by reputable and solvent insurance companies against loss or
damages customarily insured against by persons operating similar properties,
and similarly situated, and carry such other insurance as usually carried by
persons engaged in the same or similar businesses and similarly situated.
6.8 Environmental. Comply in all material respects with all applicable
Environmental Laws.
6.9 Records. Keep true, complete and accurate books, records and accounts
in accordance with generally accepted accounting principles consistently
applied
6.10 Inspection. Permit any of Bank's duly authorized employees or agents
the right, at any reasonable time and from time to time, to visit and inspect
the properties of Borrower and to examine and take abstracts from its books and
records.
6.11 Cash Flow Coverage. Maintain the Borrower's ratio of Cash Flow to
Current Maturities of Long Term Debt plus current capital lease obligations, on
a consolidated basis, at not less than 2.0 to 1 on a rolling four fiscal
quarters basis.
6.12 Debt to Tangible Net Worth. Maintain the Borrower's ratio of Debt to
Tangible Net Worth, on a consolidated basis, at not more than 0.6 to 1.0 at the
end of each fiscal quarter.
6.13 Current Ratio. Maintain the Borrower's ratio of Current Assets to
Current Liabilities, on a consolidated basis, at not less than 1.75 to 1.0 at
the end of each fiscal quarter.
6.14 Net Income. Maintain a positive net income on a rolling four fiscal
quarters basis.
6.15 Primary Depository. Maintain the Borrower's and Guarantor's primary
operating accounts with the Bank. The Bank hereby waives any right of offset
against any accounts of Borrower held at the Bank.
SECTION 7 Negative Covenants
Without the Bank's written consent, so long as any indebtedness
remains outstanding under the Credit, neither the Borrower nor any Guarantor
will:
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7.1 Liens. Permit any lien including, without limitation, any pledge,
assignment, mortgage, title retaining contract or other type of
security interest to exist on its property, real or personal, except
Permitted Liens and any leases by Xxxxxxxxx Drilling Company of real
or personal property to third parties.
7.2 Merger. Enter into any transaction of merger or consolidation (unless
the Borrower or the Guarantor is the surviving entity in such merger or
consolidation), or transfer, sell, assign, lease or otherwise dispose of (other
than sales in the ordinary course of business) all or a substantial part of its
properties or assets, or any of its notes or accounts receivable, or any assets
or properties necessary or desirable for the proper conduct of its business, or
change the nature of its business, or wind up, liquidate or dissolve, or agree
to do any of the foregoing.
7.3 Borrowed Money. Create, incur, assume or suffer to exist,
contingently or otherwise, indebtedness for Borrowed Money, except indebtedness
disclosed to the Bank in writing as existing at the time of execution of this
Agreement.
7.4 Guarantee. Become or remain a guarantor or surety, or pledge its
credit or become liable in any manner (except by endorsement for deposit in the
ordinary course of business) on undertakings of another.
7.5 Dividends. The Borrower shall not pay, or authorize the payment of,
any dividends on any stock, debenture or other security in them, respectively,
without the prior written consent of the Bank.
7.6 Accounting. Make a material change in its accounting procedures,
whether for tax purposes or otherwise.
SECTION 8 Events of Default
8.1 The following shall constitute Events of Default hereunder:
A. Payment. Default in any payment of interest or of
principal on the Note when due, and continuance thereof for 10
calendar days;
B. Performance. Default in the observance or
performance of any other agreement of the Borrower set forth herein or
in any other agreement between the Borrower and the Bank and
continuance thereof for 30 days following written notice from the
Bank;
C. Borrowed Money. Default by the Borrower or any
Guarantor in the payment of any other indebtedness for Borrowed Money
or in the observance or performance of any term, covenant or agreement
of the Borrower or any Guarantor in any agreement relating to any
indebtedness for Borrowed Money of such party, the effect of which
default is to permit the holder of such indebtedness for Borrowed
Money to declare the same due prior to the date fixed for its payment
under the terms thereof;
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D. Representations. Any representation or warranty made
by the Borrower herein, or in any statement or certificate furnished
by the Borrower hereunder, is untrue in any material respect; or
E. Litigation. The occurrence of any litigation or
governmental proceeding which is pending or threatened against the
Borrower or any Guarantor, which could have a material adverse effect
on the financial or business condition of the Borrower and the
Guarantors, taken as a whole, and which is not remedied within a
reasonable period of time (a reasonable period of time not to exceed
30 days) after notice thereof to the Borrower;
F. Guarantor Bankruptcy. The occurrence of any event of
bankruptcy or insolvency with respect to any Guarantor;
G. Bankruptcy. The Borrower becomes insolvent or
bankrupt, or makes an appointment for the benefit of creditors or
consents to the appointment of a custodian, trustee or receiver for
itself or for the greater part of its properties; or a custodian,
trustee or receiver is appointed for the Borrower, or for the greater
part of its properties without its consent and is not discharged
within 60 days; or bankruptcy, reorganization or liquidation
proceedings are instituted by or against the Borrower and, if
instituted against it, are consented to by it or remain undismissed
for 60 days;
Upon the occurrence of any of the above Events of Default, or at any time
thereafter, unless such Event of Default is remedied, the Bank or the holder of
the Note may, by notice in writing to the Borrower, terminate the Credit or
declare the Note to be due and payable, or both, whereupon the Credit shall
terminate forthwith or the Note shall immediately become due and payable, or
both, as the case may be.
Upon the occurrence of an Event of Default described under 8.1(F) or (G), then
the Credit shall automatically terminate and the Note shall automatically
become immediately due and payable, without notice.
SECTION 9 Miscellaneous
9.1 Other Agreements. The provisions of this Agreement shall be in
addition to those of any guaranty, pledge or security agreement, note or other
evidence of liability held by the Bank, all of which shall be construed as
complementary to each other. Nothing herein contained shall prevent the Bank
from enforcing any or all other notes, guaranties, pledges or security
agreements in accordance with their respective terms.
9.2 Waiver. The Bank shall have the right at all times to enforce the
provisions of this Agreement in strict accordance with the terms hereof and
thereof, notwithstanding any conduct or custom on the part of the Bank in
refraining from so doing at any time or times. The failure of the Bank at any
time or times to enforce its rights under such provisions, strictly in
accordance with the same, shall not be construed as having created a custom in
any way or manner contrary to specific provisions of this Agreement or as
having in any way or manner modified or waived
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the same. All rights and remedies of the Bank are cumulative and concurrent
and the exercise of one right or remedy shall not be deemed a waiver or release
of any other right or remedy.
9.3 Expenses. The Borrower will pay all expenses, including the
reasonable fees and expenses of legal counsel for the Bank, incurred in
connection with the preparation, administration, amendment, modification or
enforcement of this Agreement and related documents, and the collection or
attempted collection of the Note.
9.4 Notices. Any notices or consents required or permitted by this
Agreement shall be in writing and shall be deemed delivered if delivered in
person or if sent by certified mail, postage prepaid, return receipt requested,
or telegraph, as follows, unless such address is changed by written notice
hereunder:
A. If to the Borrower: Xxxxxxxxx Energy, Inc.
0000 Xxxxxx Xxxxxxx
Xxxxxx, Xxxxx 00000
Attention: Chief Financial Officer
B. If to the Bank: Norwest Bank Texas, National Association
0000 Xxxx Xxxxxxxxx
Xxxxxxx Xxxxx, Xxxxx 00000
Attention: Business Banking Manager
9.5 Usury Savings Clause. The Bank and the Borrower intend that the
extension of credit evidenced hereby shall conform strictly to the usury laws
applicable to this transaction. Notwithstanding any provision of this
Agreement, the Note, the Guaranty, or any Other Document, if at any time this
transaction is construed or administered so as to be usurious under applicable
law except for the applicability of this paragraph, Bank and the Borrower agree
that the total of all consideration which constitutes interests under
applicable law that is contracted for, charged or received under this
Agreement, the Note, the Guaranty, or the Other Documents shall under no
circumstances exceed the amount permissible under such applicable usury laws,
and any excess interest shall be canceled without further action or, if
theretofore paid, at the option of the holder of the Note, such excess shall be
credited on the unpaid portion of the Note or refunded.
9.6 Indemnification Regarding Environmental Matters. Borrower agrees to
indemnify the Bank and hold the Bank harmless from and against any and all
claims, demands, losses, damages, liabilities, causes of action, judgments,
penalties, costs and expenses (including attorney's fees and court costs) of
any and every kind or character, known or unknown, fixed or contingent, imposed
on, asserted against or incurred by Bank at any time and from time to time by
reason of, in connection with or arising out of (a) the breach of any
representation or warranty set forth herein regarding the applicable
environmental laws, (b) the failure to perform any obligation herein required
to be performed regarding the applicable environmental laws, (c) any violation
of any applicable environmental laws in effect on or before the effective date
(d) the removal of hazardous substances or solid wastes from the properties,
and/or (e) any act, omission, event or circumstance existing or occurring on or
prior to the full and final payment of the Credit. The
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foregoing indemnification shall apply also, as applicable, to the directors,
officers, employees and agents of the Bank, and shall also apply to claims,
demands, losses, damages, liabilities, causes of action, judgments, penalties,
costs and expenses (including attorney's fees and court costs) which in whole
or in part are caused by or arise out of the negligence of each such
indemnified party.
If any claim or demand is asserted against the Bank in respect of
which the Bank may be entitled to indemnification under the provisions of this
Section 9.6, the Borrower shall have the right, by notifying the Bank within
ten days of its receipt of notice of claim or demand, to assume the entire
control (subject to the right of the Bank to participate, at its expense and
with counsel of the Bank's choice) of the defense, compromise or settlement of
the matter, including at the Borrower's expense, employment of counsel of the
Borrower's choice. Written notice of any such claim or demand must be given by
the Bank to the Borrower within thirty days after receipt by the Bank of such
claim or demand. Selection of counsel by the Borrower shall be subject to the
approval of the Bank, which approval shall not be unreasonably withheld. If
the Borrower formally gives notice to the Bank that it will assume control of
the defense, compromise or settlement of the matter, the Borrower will be
deemed to have waived all defenses to the claims for indemnification by the
Bank with respect to the matter. If the Borrower has assumed control of the
defense, compromise or settlement as provided in this paragraph and a judgment
is entered against the Bank, the Bank shall be entitled to indemnification
payment from the Borrower at such time as the judgment creditor is entitled to
execute on the judgment. The Borrower may prosecute one or more appeals from
such judgment only so long as execution on such judgment is stayed. The cost
of any bond or proceeding to stay execution shall be borne by the Borrower.
9.7 State Law. The substantive laws of the State of Texas shall govern
the construction of this Agreement and the rights and remedies of the parties
hereto.
9.8 Successors. This Agreement shall inure to the benefit of, and shall
be binding upon, the respective successors and permitted assigns of the parties
hereto. The Borrower has no right to assign any of its rights or obligations
hereunder without the prior written consent of the Bank. This Agreement, and
the documents executed and delivered pursuant hereto, constitute the entire
agreement between the parties, and may be amended only by a writing signed on
behalf of each party.
9.9 Validity. If any provision of this Agreement shall be held invalid
under any applicable Laws, such invalidity shall not affect any other provision
of this Agreement that can be given effect without the invalid provision, and,
to this end, the provisions hereof are severable.
9.10 Banking Day. Whenever any installment of the interest on the Notes
becomes due and payable on a day which is not a Banking Day, the maturity or
due date thereof shall be extended to the next succeeding Banking Day and, in
the case of principal of the Notes, interest shall be payable thereon at the
rate per annum specified in the Notes during such extension.
9.11 FINAL AGREEMENT. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
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13
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NORWEST BANK TEXAS, XXXXXXXXX ENERGY, INC.
NATIONAL ASSOCIATION
By: By:
----------------------- ----------------------------
Its: Its:
---------------------- ---------------------------
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XXXXXXXXX DRILLING COMPANY
as Guarantor
By:
----------------------------
Its:
---------------------------
XXXXXXXXX PETROLEUM, INC.
as Guarantor
By:
----------------------------
Its:
---------------------------
XXXXXXXXX TRADING COMPANY
as Guarantor
By:
----------------------------
Its:
---------------------------
XXXXXXXXX DRILLING PROGRAMS, INC.
as Guarantor
By:
----------------------------
Its:
---------------------------
-14-
15
EXHIBIT A
PROMISSORY NOTE
$30,000,000.00 June 3, 1997
For value received, XXXXXXXXX ENERGY, INC. (the "Borrower") promises
to pay to the order of NORWEST BANK TEXAS, NATIONAL ASSOCIATION (the "Bank") as
set forth below at its office in Wichita Falls, Texas or at any other place
designated at any time by the holder hereof, in lawful money of the United
States of America, the principal sum of Thirty Million and no/100 Dollars
($30,000,000.00), or so much thereof as is disbursed and remains outstanding
hereunder on the due date hereof, as shown by the Bank's liability record,
together with interest (calculated on the basis of actual days elapsed in year
of 365 or 366 days) on the unpaid balance hereof from the date hereof until
this Note is fully paid, at the "LIBOR Rate" plus two and one-half percent
(2.5%). The "LIBOR Rate" means for any Interest Period, an interest rate per
annum equal to the three-month LIBOR Rate as published in the "Money Rates"
section of the Wall Street Journal on the second business day preceding the
first day of an Interest Period. "Interest Period" shall mean, with respect to
the LIBOR Rate, a period of three months, which shall begin on (and include)
the date on which such election is effective or continued and, unless the
maturity of the Note is accelerated, shall end on (but exclude) the day which
is three months thereafter, provided, however, that if such Interest Period
would otherwise end on a day which is not a Banking Day, such Interest Period
shall end on the next following business day.
Prior to December 31, 1997, interest on this Note shall be payable
monthly, commencing June 30, 1997, and continuing on the last day of each
succeeding month. Commencing January 31, 1998, and continuing on the last day
of each succeeding month, principal and interest shall be payable in monthly
installments in amounts determined by the Bank as described in the Credit
Agreement of even date (the "Credit Agreement") between the Bank and the
Borrower. A final payment of all remaining outstanding principal plus accrued
interest shall be due and payable on January 1, 2000. Amounts received shall
be applied first to interest and then to principal.
The Borrower may at any time prepay this Note in whole or in part
without premium or penalty. The Bank and the Borrower intend that this Note
shall conform strictly to applicable usury laws. Notwithstanding any provision
of this Note or the Credit Agreement, if at any time this Note is construed or
administered so as to be usurious under applicable law except for the
applicability of this paragraph, Bank and the Borrower agree that the total of
all consideration which constitutes interest under applicable law that is
contracted for, charged or received under this Note shall under no
circumstances exceed the amount permissible under such applicable usury laws,
and any excess interest shall be canceled without further action or, if
theretofore paid, at the option of the holder of this Note, such excess shall
be credited on the unpaid portion of this Note or refunded
This Note is issued pursuant the Credit Agreement and is subject to
the terms and conditions thereof, including the events of default and the
remedies available to the Bank under such Credit Agreement, which shall apply
to this Note to the same extent as if set forth herein.
16
Unless prohibited by law, the Borrower agrees to pay all costs of
collection, including reasonable attorneys' fees and legal expenses, incurred
by the holder hereof in the event this Note is not duly paid. The holder
hereof may at any time renew this Note or extend its maturity date for any
period and release any security for, or any party to, this Note, all without
notice to or consent of and without releasing any accommodation maker, endorser
or guarantor from liability on this Note. Presentment or other demand for
payment, notice of dishonor and protest are hereby waived by the Borrower and
each endorser and guarantor. This Note shall be governed by the substantive
laws of the State of Texas.
XXXXXXXXX ENERGY, INC.
By:
------------------------
Its:
-----------------------
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EXHIBIT B
XXXXXXXXX ENERGY, INC.
ADVANCE / PAYDOWN OF REVOLVING LINE REQUEST
To Be Sent Via Fax To: (000) 000-0000 By 3:00 P.M. Two Business Days
Prior To The Date Of The Requested Advance
To: Norwest Bank Texas, From: Xxxxxxxxx Energy, Inc.
National Association 0000 Xxxxxx Xxxxxxx
0000 Xxxx Xxxxxxxxx Xxxxxx, Xxxxx 00000
Xxxxxxx Xxxxx, Xxxxx 00000 (the "Borrower")
(the "Bank")
Pursuant to the terms of the Credit Agreement (the "Agreement")
entered into between the Bank and the Borrower and dated as of June 3, 1997,
the Borrower makes the following request with respect to the Credit documented
in the Agreement:
[ ] REQUEST FOR CREDIT ADVANCE. The Borrower requests that the Bank advance to
the Borrower on ___________________, ______ , (which is not less than two
Banking days from the date of this Certificate) by direct deposit into its
demand deposit account maintained with the Bank, account #_______________,
funds in the amount of U.S.$ _______________________________.
The advance will bear interest as provided in the Agreement.
In making this request, the Borrower certifies that this request, plus amounts
currently outstanding, are not in excess of the maximum available amount of the
Credit.
[ ] REQUEST FOR PAYDOWN OF CREDIT. The Borrower requests that the Bank debit
the Borrower's demand deposit account #_______________, on ___________________
in the amount of U.S.$ ________________________, and apply the proceeds to the
payment of the outstanding balance of principal and interest due on the
Revolving Note that evidences its borrowings under the Credit.
The officer signing this Request on behalf of the Borrower also personally
certifies that he or she has read and is familiar with the terms of the
Agreement and has no knowledge of an existing event of default or event which
after the lapse of time or the delivery of notice would constitute an event of
default under the Agreement.
XXXXXXXXX ENERGY, INC.
By:
-------------------------
Its:
------------------------
