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EXHIBIT 4.1
LOAN AGREEMENT
Between
SOUTH TEXAS DRILLING & THE FROST NATIONAL BANK
EXPLORATION, INC. and 000 X. Xxxxxxx Xxxxxx
0000 Xxxxxxxx, Xxxxxxxx 0 Xxx Xxxxxxx, Xxxxx 00000
Xxx Xxxxxxx, Xxxxx 00000
August 11, 2000
THIS LOAN AGREEMENT (the "Loan Agreement") will serve to set forth the
terms of the financing transactions by and between SOUTH TEXAS DRILLING &
EXPLORATION, INC., a Texas corporation ("Borrower"), and THE FROST NATIONAL
BANK, a national banking association ("Lender"):
1. Credit Facilities. Subject to the terms and conditions set forth in
this Loan Agreement and the other agreements, instruments and documents
evidencing, securing, governing, guaranteeing and/or pertaining to the Loans, as
hereinafter defined (collectively, together with the Loan Agreement, referred to
hereinafter as the "Loan Documents"), Lender hereby agrees to provide to
Borrower the credit facility or facilities hereinbelow (whether one or more, the
"Credit Facilities"):
(a) Borrowing Base Line of Credit. Subject to the terms and
conditions set forth herein, Lender agrees to lend to Borrower, on a
revolving basis from time to time during the period commencing on the
date hereof and continuing through the maturity date of the promissory
note evidencing this Credit Facility from time to time, such amounts as
Borrower may request hereunder; provided, however, the total principal
amount outstanding at any time shall not exceed the lesser of (i) an
amount equal to the Borrowing Base (as such term is defined
hereinbelow), or (ii) $1,000,000.00 (the "Borrowing Base Line of
Credit"). If at any time the aggregate principal amount outstanding
under the Borrowing Base Line of Credit shall exceed an amount equal to
the Borrowing Base, Borrower agrees to immediately repay to Lender such
excess amount, plus all accrued but unpaid interest thereon. The sums
advanced under the Revolving Line of Credit shall be used for support
of short term operating cash needs.
As used in this Loan Agreement, the term "Borrowing Base" shall have
the meaning set forth hereinbelow:
An amount equal to seventy-five percent (75%) of the Borrower's
Eligible Accounts.
As used herein, the term "Eligible Accounts" shall mean at any time, an
amount equal to the aggregate net invoice or ledger amount owing on all
trade accounts receivable of Borrower for goods sold or leased or
services rendered in the ordinary course of business, in which the
Lender has a perfected, first priority lien, after deducting (without
duplication): (i) each such account that is unpaid ninety (90) days or
more after the original invoice date thereof, (ii) the amount of all
discounts, allowances, rebates, credits
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and adjustments to such accounts (iii) the amount of all contra
accounts, setoffs, defenses or counterclaims asserted by or available
to the account debtors, (iv) all accounts with respect to which goods
are placed on consignment or subject to a guaranteed sale or other
terms by reason of which payment by the account debtor may be
conditional, (v) all accounts with respect to which Borrower has
furnished a payment and/or performance bond and that portion of any
account for or representing retainage, if any, until all prerequisites
to the immediate payment of retainage have been satisfied, (vi) all
accounts owing by account debtors for which there has been instituted a
proceeding in bankruptcy or reorganization under the United States
Bankruptcy Code or other law, whether state or federal, now or
hereafter existing for relief of debtors, (vii) all accounts owing by
any affiliates of Borrower, (viii) all accounts in which the account
debtor is the United States or any department, agency or
instrumentality of the United States, except to the extent an
acknowledgment of assignment to Lender of such account in compliance
with the Federal Assignment of Claims Act and other applicable laws has
been received by Lender, (ix) all accounts due Borrower by any account
debtor whose principal place of business is located outside the United
States of America and its territories, (x) all accounts subject to any
provision prohibiting assignment or requiring notice of or consent to
such assignment, and (xi) any other accounts deemed unacceptable by
Lender in its sole and absolute discretion; provided, however, if more
than twenty percent (20%) of the then balance owing by any single
account debtor does not qualify as an Eligible Account under the
foregoing provisions, then the aggregate amount of all accounts owing
by such account debtor shall be excluded from Eligible Accounts.
Borrower agrees to pay Lender a commitment fee at the rate of
one-fourth of one percent (1/4%) per annum on the daily average of the
unused amount of the Borrowing Base Line of Credit during the period
from August 11, 2000 to and including the maturity date of the
Borrowing Base Line of Credit Revolving Promissory Note. Such
commitment fee shall be payable quarterly in arrears on the 11th day of
November, February, May and August of each year commencing November 11,
2000.
(b) Term Loan. Subject to the terms and conditions set forth
herein, Lender agrees to lend to Borrower, and Borrower agrees to
borrow from Lender, the amount of $9,000,000.00 (the "Term Loan") in a
single advance on the date hereof. The sums advanced under the Term
Loan shall be for the purchase of assets and stock of Pioneer Drilling
Co.
All advances under the Credit Facilities shall be collectively called the
"Loans". Lender reserves the right to require Borrower to give Lender not less
than one (1) business day prior notice of each requested advance under the
Credit Facilities, specifying (i) the aggregate amount of such requested
advance, (ii) the requested date of such advance, and (iii) the purpose for such
advance, with such advances to be requested in a form satisfactory to Lender.
2. Promissory Notes. The Loans shall be evidenced by one or more
promissory notes or an Application (whether one or more, together with any
renewals, extensions and increases thereof, the "Notes") duly executed by
Borrower and payable to the order of Lender, in form and substance acceptable to
Lender. Interest on the Notes shall accrue at the rate set forth
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therein. The principal of and interest on the Notes shall be due and payable in
accordance with the terms and conditions set forth in the Notes and in this Loan
Agreement.
3. Collateral. As collateral and security for the indebtedness
evidenced by the Notes and any and all other indebtedness or obligations from
time to time owing by Borrower to Lender, Borrower shall grant, and hereby
grants, to Lender, its successors and assigns, a first and prior lien and
security interest in and to the property described hereinbelow, together with
any and all PRODUCTS AND PROCEEDS thereof (the "Collateral"):
(a) All present and future accounts, chattel paper, documents,
instruments, deposit accounts and general intangibles (including any
right to payment for goods sold or services rendered arising out of the
sale or delivery of personal property or work done or labor performed
by Borrower), now or hereafter owned, held, or acquired by Borrower,
together with any and all books of account, customer lists and other
records relating in any way to the foregoing.
(b) Equipment consisting of various drilling rigs and related
equipment now owned by Borrower and used or usable in Borrower's
business, together with all replacements, accessories, additions,
substitutions and accessions to all of the foregoing.
(c) Equipment consisting of a drilling rig and related
equipment now owned by Pioneer Drilling Co., together with all
replacements, accessories, additions, substitutions and accessions to
all of the foregoing.
The term "Collateral" shall also include all records and data relating to any of
the foregoing (including, without limitation, any computer software on which
such records and data may be located). Borrower agrees to execute such security
agreements, assignments, deeds of trust and other agreements and documents as
Lender shall deem appropriate and otherwise require from time to time to more
fully create and perfect Lender's lien and security interests in the Collateral.
4. Intentionally omitted.
5. Representations and Warranties. Borrower hereby represents and
warrants, and upon each request for an advance under the Credit Facilities
further represents and warrants, to Lender as follows:
(a) Existence. Borrower is a corporation duly organized,
validly existing and in good standing under the laws of the State of
Texas and all other states where it is doing business, and has all
requisite power and authority to execute and deliver the Loan
Documents.
(b) Binding Obligations. The execution, delivery, and
performance of this Loan Agreement and all of the other Loan Documents
by Borrower have been duly authorized by all necessary action by
Borrower, and constitute legal, valid and binding obligations of
Borrower, enforceable in accordance with their respective terms, except
as limited by Bankruptcy, insolvency or similar laws of general
application relating to the enforcement of creditors' rights and except
to the extent specific remedies may generally be limited by equitable
principles.
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(c) No Consent. The execution, delivery and performance of
this Loan Agreement and the other Loan Documents, and the consummation
of the transactions contemplated hereby and thereby, do not (i)
conflict with, result in a violation of, or constitute a default under
(A) any provision of its articles or certificate of incorporation or
bylaws, if Borrower is a corporation, or its partnership agreement, if
Borrower is a partnership, or any agreement or other instrument binding
upon Borrower, or (B) any law, governmental regulation, court decree or
order applicable to Borrower, or (ii) require the consent, approval or
authorization of any third party.
(d) Financial Condition. Each financial statement of Borrower
supplied to the Lender truly discloses and fairly presents Borrower's
financial condition as of the date of each such statement. There has
been no material adverse change in such financial condition or results
of operations of Borrower subsequent to the date of the most recent
financial statement supplied to Lender.
(e) Litigation. There are no actions, suits or proceedings,
pending or, to the knowledge of Borrower, threatened against or
affecting Borrower or the properties of Borrower, before any court or
governmental department, commission or board, which, if determined
adversely to Borrower, would have a material adverse effect on the
financial condition, properties, or operations of Borrower.
(f) Taxes; Governmental Charges. Borrower has filed all
federal, state and local tax reports and returns required by any law or
regulation to be filed by it and has either duly paid all taxes, duties
and charges indicated due on the basis of such returns and reports, or
made adequate provision for the payment thereof, and the assessment of
any material amount of additional taxes in excess of those paid and
reported is not reasonably expected.
6. Conditions Precedent to Advances. Lender's obligation to make any
advance under this Loan Agreement and the other Loan Documents shall be subject
to the conditions precedent that, as of the date of such advance and after
giving effect thereto (i) all representations and warranties made to Lender in
this Loan Agreement and the other Loan Documents shall be true and correct, as
of and as if made on such date, (ii) no material adverse change in the financial
condition of Borrower since the effective date of the most recent financial
statements furnished to Lender by Borrower shall have occurred and be
continuing, (iii) no event has occurred and is continuing, or would result from
the requested advance, which with notice or lapse of time, or both, would
constitute an Event of Default (as hereinafter defined), and (iv) Lender's
receipt of all Loan Documents appropriately executed by Borrower and all other
proper parties.
7. Affirmative Covenants. Until (i) the Notes and all other obligations
and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower agrees and covenants that it will unless
Lender shall otherwise consent in writing:
(a) Accounts and Records. Maintain its books and records in
accordance with generally accepted accounting principles.
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(b) Right of Inspection. Permit Lender to visit its properties
and installations and to examine, audit and make and take away copies
or reproductions of Borrower's books and records, at all reasonable
times.
(c) Right to Additional Information. Furnish Lender with such
additional information and statements, lists of assets and liabilities,
tax returns, and other reports with respect to Borrower's financial
condition and business operations as Lender may request from time to
time.
(d) Compliance with Laws. Conduct its business in an orderly
and efficient manner consistent with good business practices, and
perform and comply with all statutes, rules, regulations and/or
ordinances imposed by any governmental unit upon Borrower and its
businesses, operations and properties (including without limitation,
all applicable environmental statutes, rules, regulations and
ordinances).
(e) Taxes. Pay and discharge when due all of its indebtedness
and obligations, including without limitation, all assessments, taxes,
governmental charges, levies and liens, of every kind and nature,
imposed upon Borrower or its properties, income, or profits, prior to
the date on which penalties would attach, and all lawful claims that,
if unpaid, might become a lien or charge upon any of Borrower's
properties, income, or profits; provided, however, Borrower will not be
required to pay and discharge any such assessment, tax, charge, xxxx,
xxxx or claim so long as (i) the legality of the same shall be
contested in good faith by appropriate judicial, administrative or
other legal proceedings, and (ii) Borrower shall have established on
its books adequate reserves with respect to such contested assessment,
tax, charge, xxxx, xxxx or claim in accordance with generally accepted
accounting principles, consistently applied.
(f) Insurance. Maintain insurance, including but not limited
to, fire insurance, comprehensive property damage, public liability,
worker's compensation, business interruption and other insurance deemed
necessary or otherwise required by Lender.
(g) Notice of Indebtedness. Promptly inform Lender of the
creation, incurrence or assumption by Borrower of any actual or
contingent liabilities not permitted under this Loan Agreement.
(h) Notice of Litigation. Promptly after the commencement
thereof, notify Lender of all actions, suits and proceedings before any
court or any governmental department, commission or board affecting
Borrower or any of its properties.
(i) Notice of Material Adverse Change. Promptly inform Lender
of (i) any and all material adverse changes in Borrower's financial
condition, and (ii) all claims made against Borrower which could
materially affect the financial condition of Borrower.
(j) Additional Documentation. Execute and deliver, or cause to
be executed and delivered, any and all other agreements, instruments or
documents which Lender may reasonably request in order to give effect
to the transactions contemplated under this Loan Agreement and the
other Loan Documents.
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8. Negative Covenants. Until (i) the Notes and all other obligations
and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower will not, without the prior written
consent of Lender:
(a) Nature of Business. Make any material change in the nature
of its business as carried on as of the date hereof.
(b) Liquidations, Mergers, Consolidations. Liquidate, merge or
consolidate with or into any other entity.
(c) Sale of Assets. Sell, transfer or otherwise dispose of any
of its assets or properties, other than in the ordinary course of
business.
(d) Liens. Create or incur any lien or encumbrance on any of
its assets, other than (i) liens and security interests securing
indebtedness owing to Lender, (ii) liens for taxes, assessments or
similar charges that are (1) not yet due or (2) being contested in good
faith by appropriate proceedings and for which Borrower has established
adequate reserves, and (iii) liens and security interests existing as
of the date hereof which have been disclosed to and approved by Lender
in writing.
(e) Indebtedness. Create, incur or assume any indebtedness for
borrowed money or issue or assume any other note, debenture, bond or
other evidences of indebtedness, or guarantee any such indebtedness or
such evidences of indebtedness of others in excess of $3,000,000.00,
other than (i) borrowings from Lender, and (ii) borrowings outstanding
on the date hereof and disclosed in writing to Lender.
(f) Transfer of Ownership. Permit the sale, pledge or other
transfer by Borrower of any of the ownership interests in Borrower in
excess of twenty-five percent (25%) of the market capitalization value
of Borrower's capital stock.
(g) Change in Management. Permit a change in the senior
management of Borrower.
(h) Loans. Make any loans to any person or entity.
(i) Transactions with Affiliates. Enter into any transaction,
including, without limitation, the purchase, sale or exchange of
property or the rendering of any service, with any Affiliate (as
hereinafter defined) of Borrower, except in the ordinary course of and
pursuant to the reasonable requirements of Borrower's business and upon
fair and reasonable terms no less favorable to Borrower than would be
obtained in a comparable arm's-length transaction with a person or
entity not an Affiliate of Borrower. As used herein, the term
"Affiliate" means any individual or entity directly or indirectly
controlling, controlled by, or under common control with, another
individual or entity.
(j) Dividends. Borrower agrees not to declare or pay any
dividends on any shares of Borrower's capital stock, make any other
distributions with respect to any payment on account of the purchase,
redemption, or other acquisition or retirement of any
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shares of Borrower's capital stock, or make any other distribution,
sale, transfer or lease of any of Borrower's assets other than in the
ordinary course of business, unless any such amounts are directly
utilized for the payment of principal or interest on indebtedness and
obligations owing from time to time by Borrower to Lender or to
preferred shareholders of Borrower.
9. Financial Covenants. Until (i) the Notes and all other obligations
and liabilities of Borrower under this Loan Agreement and the other Loan
Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower will maintain the following financial
covenants:
(a) LEVERAGE RATIO. Borrower will maintain a leverage ratio
not to exceed 3.0:1.0, to be tested annually.
Defined as:
Funded Bank Debt
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Net Income + Interest + Taxes + Depreciation + Amortization
(b) CASH FLOW COVERAGE RATIO. Borrower will maintain a cash
flow coverage ratio of not less than 1.25:1.0, to be tested annually.
Defined as:
Net Income + Interest + Taxes + Depreciation + Amortization - Dividends -
Capital Expenditures
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Current Portion of Long-Term Debt + Interest Expense
(c) CAPITALIZATION RATIO. Borrower will maintain, at all
times, a capitalization ratio not to exceed 0.5:1.0, to be tested
quarterly.
Defined as:
Funded Bank Debt
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Net Worth + Funded Bank Debt
Unless otherwise specified, all accounting and financial terms and covenants set
forth above are to be determined according to generally accepted accounting
principles, consistently applied.
10. Reporting Requirements. Until (i) the Notes and all other
obligations and liabilities of Borrower under this Loan Agreement and the other
Loan Documents are fully paid and satisfied, and (ii) the Lender has no further
commitment to lend hereunder, Borrower will, unless Lender shall otherwise
consent in writing, furnish to Lender:
(a) Interim Monthly Financial Statements. As soon as
available, and in any event within thirty (30) days after the end of
each month of each fiscal year of Borrower, a balance sheet, income
statement, and cash flow statement of Borrower as of the end of such
fiscal quarter, all in form and substance and in reasonable detail
satisfactory to Lender and duly certified (subject to year-end review
adjustments) by the President and/or Chief Financial Officer of
Borrower (i) as being true and correct in all material
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aspects to the best of his or her knowledge and (ii) as having been
prepared in accordance with generally accepted accounting principles,
consistently applied.
(b) Quarterly Statements. Within sixty (60) days after the end
of each quarter of each fiscal year of Borrower, a 10-Q Report as filed
with the Securities and Exchange Commission ("SEC"). ---
(c) Annual Statements. Within one hundred twenty (120) days
after the end of each fiscal year of Borrower, a 10-K Report as filed
with the SEC.
(d) Compliance Certificate. A certificate signed by the
President and/or Chief Financial Officer of Borrower, within one
hundred twenty (120) days after the end of each fiscal year, stating
that Borrower is in full compliance with all of its obligations under
this Loan Agreement and all other Loan Documents and is not in default
of any term or provisions hereof or thereof, and demonstrating
compliance with all financial ratios and covenants set forth in this
Loan Agreement.
(e) Borrowing Base Certificate. A borrowing base certificate
signed by the President and/or Chief Financial Officer of Borrower,
within thirty (30) days after the end of each month of each fiscal
year, in form and detail satisfactory to Lender.
(f) Accounts Receivable Aging. An accounts receivable aging
report within thirty (30) days after the end of each month of each
fiscal year, in form and detail satisfactory to Lender.
11. Events of Default. Each of the following shall constitute an "Event
of Default" under this Loan Agreement:
(a) The failure, refusal or neglect of Borrower to pay when
due any part of the principal of, or interest on, the Notes or any
other indebtedness or obligations owing to Lender by Borrower from time
to time.
(b) The failure of Borrower or any Obligated Party (as defined
below) to timely and properly observe, keep or perform any covenant,
agreement, warranty or condition required herein or in any of the other
Loan Documents.
(c) The occurrence of an event of default under any of the
other Loan Documents or under any other agreement now existing or
hereafter arising between Lender and Borrower.
(d) Any representation contained herein or in any of the other
Loan Documents made by Borrower or any Obligated Party is false or
misleading in any material respect.
(e) The occurrence of any event which permits the acceleration
of the maturity of any indebtedness owing by Borrower to any third
party under any agreement or understanding.
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(f) If Borrower or any Obligated Party: (i) becomes insolvent,
or makes a transfer in fraud of creditors, or makes an assignment for
the benefit of creditors, or admits in writing its inability to pay its
debts as they become due; (ii) generally is not paying its debts as
such debts become due; (iii) has a receiver, trustee or custodian
appointed for, or take possession of, all or substantially all of the
assets of such party, either in a proceeding brought by such party or
in a proceeding brought against such party and such appointment is not
discharged or such possession is not terminated within sixty (60) days
after the effective date thereof or such party consents to or
acquiesces in such appointment or possession; (iv) files a petition for
relief under the United States Bankruptcy Code or any other present or
future federal or state insolvency, bankruptcy or similar laws (all of
the foregoing hereinafter collectively called "Applicable Bankruptcy
Law") or an involuntary petition for relief is filed against such party
under any Applicable Bankruptcy Law and such involuntary petition is
not dismissed within sixty (60) days after the filing thereof, or an
order for relief naming such party is entered under any Applicable
Bankruptcy Law, or any composition, rearrangement, extension,
reorganization or other relief of debtors now or hereafter existing is
requested or consented to by such party; (v) fails to have discharged
within a period of thirty (30) days any attachment, sequestration or
similar writ levied upon any property of such party; or (vi) fails to
pay within thirty (30) days any final money judgment against such
party.
(g) If Borrower or any Obligated Party is an entity, the
liquidation, dissolution, merger or consolidation of any such entity
or, if Borrower or any Obligated Party is an individual, the death or
legal incapacity of any such individual.
(h) The entry of any judgment against Borrower or the issuance
or entry of any attachment or other lien against any of the property of
Borrower for an amount in excess of $250,000.00, if undischarged,
unbonded or undismissed within thirty (30) days after such entry.
Nothing contained in this Loan Agreement shall be construed to limit the events
of default enumerated in any of the other Loan Documents and all such events of
default shall be cumulative. The term "Obligated Party", as used herein, shall
mean any party other than Borrower who secures, guarantees and/or is otherwise
obligated to pay all or any portion of the indebtedness evidenced by the Notes.
12. Remedies. Upon the occurrence of any one or more of the foregoing
Events of Default, (a) the entire unpaid balance of principal of the Notes,
together with all accrued but unpaid interest thereon, and all other
indebtedness owing to Lender by Borrower at such time shall, at the option of
Lender, become immediately due and payable without further notice, demand,
presentation, notice of dishonor, notice of intent to accelerate, notice of
acceleration, protest or notice of protest of any kind, all of which are
expressly waived by Borrower, and (b) Lender may, at its option, cease further
advances under any of the Notes. All rights and remedies of Lender set forth in
this Loan Agreement and in any of the other Loan Documents may also be exercised
by Lender, at its option to be exercised in its sole discretion, upon the
occurrence of an Event of Default.
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13. Rights Cumulative. All rights of Lender under the terms of this
Loan Agreement shall be cumulative of, and in addition to, the rights of Lender
under any and all other agreements between Borrower and Lender (including, but
not limited to, the other Loan Documents), and not in substitution or diminution
of any rights now or hereafter held by Lender under the terms of any other
agreement.
14. Waiver and Agreement. Neither the failure nor any delay on the part
of Lender to exercise any right, power or privilege herein or under any of the
other Loan Documents shall operate as a waiver thereof, nor shall any single or
partial exercise of such right, power or privilege preclude any other or further
exercise thereof or the exercise of any other right, power or privilege. No
waiver of any provision in this Loan Agreement or in any of the other Loan
Documents and no departure by Borrower therefrom shall be effective unless the
same shall be in writing and signed by Lender, and then shall be effective only
in the specific instance and for the purpose for which given and to the extent
specified in such writing. No modification or amendment to this Loan Agreement
or to any of the other Loan Documents shall be valid or effective unless the
same is signed by the party against whom it is sought to be enforced.
15. Benefits. This Loan Agreement shall be binding upon and inure to
the benefit of Lender and Borrower, and their respective successors and assigns,
provided, however, that Borrower may not, without the prior written consent of
Lender, assign any rights, powers, duties or obligations under this Loan
Agreement or any of the other Loan Documents.
16. Notices. All notices, requests, demands or other communications
required or permitted to be given pursuant to this Agreement shall be in writing
and given by (i) personal delivery, (ii) expedited delivery service with proof
of delivery, or (iii) United States mail, postage prepaid, registered or
certified mail, return receipt requested, sent to the intended addressee at the
address set forth on the first page hereof and shall be deemed to have been
received either, in the case of personal delivery, as of the time of personal
delivery, in the case of expedited delivery service, as of the date of first
attempted delivery at the address and in the manner provided herein, or in the
case of mail, upon deposit in a depository receptacle under the care and custody
of the United States Postal Service. Either party shall have the right to change
its address for notice hereunder to any other location within the continental
United States by notice to the other party of such new address at least thirty
(30) days prior to the effective date of such new address.
17. Construction. This Loan Agreement and the other Loan Documents have
been executed and delivered in the State of Texas, shall be governed by and
construed in accordance with the laws of the State of Texas, and shall be
performable by the parties hereto in the county in Texas where the Lender's
address set forth on the first page hereof is located.
18. Invalid Provisions. If any provision of this Loan Agreement or any
of the other Loan Documents is held to be illegal, invalid or unenforceable
under present or future laws, such provision shall be fully severable and the
remaining provisions of this Loan Agreement or any of the other Loan Documents
shall remain in full force and effect and shall not be affected by the illegal,
invalid or unenforceable provision or by its severance.
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19. Expenses. Borrower shall pay all costs and expenses (including,
without limitation, reasonable attorneys' fees) in connection with (i) any
action required in the course of administration of the indebtedness and
obligations evidenced by the Loan Documents, (ii) the preparation and
negotiation of the Loan Documents, and (iii) any action in the enforcement of
Lender's rights upon the occurrence of Event of Default.
20. Participation of the Loans. Borrower agrees that Lender may, at its
option, sell interests in the Loans and its rights under this Loan Agreement to
a financial institution or institutions and, in connection with each such sale,
Lender may disclose any financial and other information available to Lender
concerning Borrower to each prospective purchaser.
21. Conflicts. In the event any term or provision hereof is
inconsistent with or conflicts with any provision of the other Loan Documents,
the terms and provisions contained in this Loan Agreement shall be controlling.
22. Counterparts. This Loan Agreement may be separately executed in any
number of counterparts, each of which shall be an original, but all of which,
taken together, shall be deemed to constitute one and the same instrument.
23. Facsimile Documents and Signatures. For purposes of negotiating and
finalizing this Loan Agreement, if this document or any document executed in
connection with it is transmitted by facsimile machine ("fax"), it shall be
treated for all purposes as an original document. Additionally, the signature of
any party on this document transmitted by way of a facsimile machine shall be
considered for all purposes as an original signature. Any such faxed document
shall be considered to have the same binding legal effect as an original
document. At the request of any party, any faxed document shall be re-executed
by each signatory party in an original form.
BORROWER: LENDER:
SOUTH TEXAS DRILLING & EXPLORATION, THE FROST NATIONAL BANK,
INC., a Texas corporation a national banking association
By: /s/ Xxxxxxx X. Xxxxxx By: /s/ Xxxxx X. Xxxxxx
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Xxxxxxx X. Xxxxxx, Chairman & CEO Xxxxx X. Xxxxxx,
Senior Vice President
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