1
EXHIBIT 10.12
LOAN AGREEMENT
This Loan Agreement is entered into effective the 15th day of September,
1998, by and between Business Exchange Investments, Inc (a Nevada Corporation)
("Lender") and Power Exploration, Inc. ("borrower").
WITNESSETH
Whereas, "BORROWER" is the owner of 100% of Oil Seeps, Inc a Texas
corporation (hereinafter referred to as "OSI"): and
Whereas, as part of the inducement to Lender to enter into an Agreement
to lend Two Hundred and Fifty Thousand Dollars ($250,000), Borrower has agreed
to pledge 100% of the shares of OSI. Evidenced by the attached special minutes
of the Board of Directors of Power Exploration, Inc. (said shares being
referred to herein as the "COLLATERAL") as security for its obligations;
NOW, THEREFORE, in consideration of the agreements and promises herein recited
and contained, the sufficiency of which is hereby acknowledged, the parties
hereto hereby agree as follows:
1. PLEDGE OF COLLATERAL
Borrower has agreed to and does hereby pledge for the benefit of Lender the
COLLATERAL, said COLLATERAL being validly issued together with a duly
executed stock transfer powers or powers in blank. The COLLATERAL is
pledged as security for the payment in full of the obligations by Borrower
to Lender in the amount of Two Hundred and Fifty Thousand Dollars
($250,000) plus interest at the rate of Ten percent per annum. Lender
shall have a lien upon security title to and a security interest in all of
the COLLATERAL delivered pursuant hereto.
2. VOTING AND DIVIDENDS
So long as no default has occurred hereunder, Lender shall be entitled to
vote any and all COLLATERAL, receive all dividends, and give all consents,
waivers and ratifications in respect thereof. All such rights to vote,
receive dividends, and give consents, waivers and ratifications shall cease
upon the occurrence of a default as defined in Paragraph 5 hereof.
2
3. WARRANTIES
BORROWER hereby warrants to LENDER that he is the sole and lawful owner of
the COLLATERAL; that the COLLATERAL is free and clear of all encumbrances
and liens and that BORROWER have full right to pledge, assign, convey and
transfer the COLLATERAL as provided herein.
4. TERMS AND CONDITIONS
LENDER by their execution of the loan Agreement, accept the pledge of the
COLLATERAL hereunder and agree to hold the COLLATERAL in accordance with
the provisions hereof and applicable law.
5. REMEDIES FOR DEFAULT
A. The following constitutes a default hereunder:
(i) Failure by BORROWER to pay LENDER, on or before January 15, 1999
the sum of Two Hundred and Fifty Thousand Dollars ($250,000)
together with interest at the rate of Ten Percent (10%) per
annum; or
(ii) The breach of any of the warranties, representations,
covenants, or agreements applicable to the acquisition of the
securities, the subject matter of this Loan Agreement, and the
failure to cure the same after receipt of written notice as is
set forth therein.
B. Upon the occurrence of a default, LENDER;
(i) At any time thereafter, so long as such default is continuing
and, at its option, exercise its rights under this Loan
Agreement;
(ii) Vote all or any part of the COLLATERAL (whether or not
transferred into its name or the name of the nominee or
nominees as provided below) and give all consents, waivers and
ratifications in respect thereof and otherwise act with respect
thereto as though it were the outright owner thereof;
(iii) Exercise from time to time any right and remedies available
under the Uniform Commercial Code as in effect at that time; and
(iv) Subject to any requirements of applicable law, and without
limiting any rights otherwise available hereunder or under law,
transfer into its name, or into the name of any nominee or
nominees LENDER may appoint, all or part of the COLLATERAL and
retain the same in full satisfaction from any further; or sell,
assign and deliver the
3
COLLATERAL at public or private sale for cash, on credit or for
other property, for immediate or future delivery, without any
assumption of credit risk, and for such price or prices and on
such terms as in LENDER'S uncontrolled discretion may determine.
If any notification of intended disposition of any of the
COLLATERAL is required by law, such notification shall be deemed
reasonable and properly given if in writing and mailed at least
thirty (30) days before such disposition by prepaid registered
or certified mail, addressed to the address specified below.
C. If sold at public sale, any proceeds of any disposition of the
COLLATERAL may be applied to the payment of expenses in connection with
the COLLATERAL, including reasonable attorney's fees and legal
expenses, and any balance of such proceeds after payment Two Hundred
and Fifty Thousand Dollars ($250,000) and expenses shall be returned.
No delay or failure on the part of LENDER the exercise of any right or
remedy hereunder shall operate as a waiver thereof, and no remedy
hereunder shall preclude any further exercise thereof or the exercise
of any other right or remedy hereunder.
6. TERMINATION
Upon the payment to LENDER from any source the sum of Two Hundred and Fifty
Thousand Dollars ($250,000) plus interest, this Loan Agreement shall
terminate and LENDER shall cancel all related agreements and/or deliver the
COLLATERAL to BORROWER or the designees of BORROWER.
7. SUCCESSORS AND ASSIGNS
LENDER and BORROWER agree that this Loan Agreement shall be binding upon,
inure to benefit of and be enforceable by the parties hereto and their
respective heirs, personal representatives, successors and assigns.
8. ATTORNEYS FEES
If action be instituted regarding this Pledge Agreement the prevailing party
shall be entitled to reasonable attorney's fees and costs.
9. PRIOR AGREEMENTS
This Pledge Agreement constitutes the entire agreement between the parties
with respect to the subject matter hereof.
4
10. NOTICES
All notices, offers, acceptances and other communications hereunder shall
be made in writing signed by the party making the same, and shall be deemed
delivered on the date mailed if sent by certified or registered United
States mail, postage prepaid, to the addresses set forth below:
Business Exchange Investments, Inc
C/O Xxx Xxxxxx
0000 X. Xxxxxx Xxxx., Xxx. 000
Xxx Xxxxx, Xxxxxx 00000
Xxxx Xxxxxx
C/O Power Exploration, Inc.
0000 Xxxxxxxxxx Xxxxxx, Xxxxx 000
Xxxx Xxxxx, Xxxxx 00000
Or such other address as either party may specify by written notice to the
other party
11. APPLICABLE LAW
This Pledge Agreement shall be construed in accordance with and governed by
the laws of the State of Nevada.
12. COUNTERPART
This Pledge Agreement may be executed in counterpart and each copy so
executed shall be considered an original.
IN WITNESS WHEREOF, the following have executed and delivered and have
accepted this Pledge Agreement on the date given above.
LENDER: BORROWER:
BUSINESS EXCHANGE POWER EXPLORATION, INC
INVESTMENTS, INC
By: /s/ XXXX XXXXXX By: /s/ M.O. XXXX, III
---------------- ------------------------
Xxxx Xxxxxx M.O. Xxxx, III, Chairman
