Exhibit 10.17
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The Securities represented by this Note have not been registered under the
Securities Act of 1933, as amended ("Act"), or applicable state securities laws
("State Acts") and shall not be sold, hypothecated, donated or otherwise
transferred unless the Borrower shall have received an opinion of Legal Counsel
for the Borrower, or such other evidence as may be satisfactory to Legal Counsel
for the Borrower, to the effect that any such transfer shall not require
registration under the Act and the State Acts.
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MAVERICK BASIN EXPLORATION, LLC
12.00% SENIOR SECURED NOTE
$2,050,000 No: 1
DATE OF ISSUE: JULY 14, 2004
Maverick Basin Exploration, LLC (a Delaware limited liability
corporation) (hereinafter referred to as the "Borrower") is indebted and, for
value received, herewith promises to pay to:
TRIDENT GROWTH FUND, LP
or to its order, (together with any assignee, jointly or severally, the "Holder"
or "Lender") on or before July 31, 2005 (the "Termination Date") (unless this
Note shall have been sooner called for redemption or presented for conversion as
herein provided), the sum of Two Million Fifty Thousand Dollars ($2,050,000)
(the "Principal Amount") and to pay interest on the Principal Amount at the rate
of twelve percent (12.00%) per annum as provided herein. In furtherance thereof,
and in consideration of the premises, the Borrower covenants, promises and
agrees as follows:
1. Interest: Interest on the Principal Amount outstanding from time to
time shall accrue at the rate of 12.00% per annum and be payable in cash via
wire transfer in monthly installments commencing July 31, 2004 and subsequent
payments shall be made on the last day of each month thereafter until the
Principal Amount and all accrued and unpaid interest shall have been paid in
full. Overdue principal and interest on the Note shall, to the extent permitted
by applicable law, bear interest at the rate of 18.00% per annum. All payments
of both principal and interest shall be made at the address of the Holder hereof
as it appears in the books and records of the Borrower, or at such other place
as may be designated by the Holder hereof in writing to Borrower.
2. Maturity: If not sooner redeemed or accelerated, this Note shall
mature on July 31, 2005 at which time all then remaining unpaid principal,
interest and any other charges then due under the Loan Agreement shall be due
and payable in full via wire transfer.
3. Optional Redemption: (a) On any interest payment date and after
prior irrevocable notice as provided for below, the outstanding principal amount
of this Note is redeemable at the option of the Borrower, in whole but not in
part, at 100% of par.
(b) The Borrower may exercise its right to redeem prior to Termination
Date by giving notice (the "Redemption Notice") thereof to the Holder as such
name appears on the books of the Borrower, which notice shall specify the terms
of redemption (including the place at which the Holder may obtain payment), the
total principal amount to be redeemed (such principal amount herein called the
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"Redemption Amount") and the date for redemption (the "Redemption Date"), which
date shall not be less than 90 days nor more than 120 days after the date of the
Redemption Notice. On the Redemption Date, the Borrower shall pay all accrued
unpaid interest on the Note up to and including the Redemption Date, and shall
pay to the Holder a dollar amount equal to the Redemption Amount. In the case of
Notes called for redemption, the conversion rights will expire at the close of
business on the Redemption Date.
4. Intentionally Deleted:
5. Intentionally Deleted:
6. Intentionally Deleted:
7. Taxes: The Borrower shall pay any documentary or other transactional
taxes attributable to the issuance or delivery of this Note.
8. Default:
(a) Event of Default: An "Event of Default" shall exist if any one or
more of the following events (herein collectively called "Events of Default")
shall occur and be continuing:
(i) Borrower shall fail to pay (or shall state in writing an
intention not to pay or its inability to pay), not later than 10 days after the
due date, any installment of interest on or principal of, any Note or any fee,
expense or other payment required hereunder;
(ii) Any of events stated in Section 7 of the Loan Agreement.
(b) Remedies Upon Event of Default: If an Event of Default shall have
occurred and be continuing, then Lender may exercise any one or more of the
following rights and remedies, and any other remedies provided in any of the
Loan Documents, as Lender in its sole discretion, may deem necessary or
appropriate:
(i) declare the unpaid Principal Amount (after application of
any payments or installments received by Lender) of, and all interest then
accrued but unpaid on, the Notes and any other liabilities hereunder to be
forthwith due and payable, whereupon the same shall forthwith become due and
payable without presentment, demand, protest, notice of default, notice of
acceleration or of intention to accelerate or other notice of any kind, all of
which Borrower hereby expressly waives.
(ii) reduce any claim to judgment, and/or
(iii) without notice of default or demand, pursue and enforce
any of Lender's rights and remedies under the Loan Documents, or otherwise
provided under or pursuant to any applicable law or agreement, all of which
rights may be specifically enforced.
(c) Remedies Nonexclusive: Each right, power or remedy of the holder
hereof upon the occurrence of any Event of Default as provided for in this Note
or now or hereafter existing at law or in equity or by statute shall be
cumulative and concurrent and shall be in addition to every other right, power
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Issuer's Initial___________
or remedy provided for in this Note or now or hereafter existing at law or in
equity or by statute, and the exercise or beginning of the exercise by the
holder or transferee hereof of any one or more of such rights, powers or
remedies shall not preclude the simultaneous or later exercise by the holder of
any or all such other rights, powers or remedies.
(d) Expenses: Upon the occurrence of a Default or an Event of Default,
which occurrence is not cured within the notice provisions, if any provided
therefore, Borrower agrees to pay and shall pay all costs and expenses
(including Lenders attorney's fees and expenses) reasonably incurred by Lender
in connection with the preservation and enforcement of Lender's rights under the
Loan Agreement, the Notes, or any other Loan Document.
9. Failure to Act and Waiver: No failure or delay by the holder hereof
to require the performance of any term or terms of this Note or not to exercise
any right, or any remedy shall constitute a waiver of any such term or of any
right or of any default, nor shall such delay or failure preclude the holder
hereof from exercising any such right, power or remedy at any later time or
times. By accepting payment after the due date of any amount payable under this
Note, the holder hereof shall not be deemed to waive the right either to require
payment when due of all other amounts payable, or to later declare a default for
failure to effect such payment of any such other amount. The failure of the
holder of this Note to give notice of any failure or breach of the Borrower
under this Note shall not constitute a waiver of any right or remedy in respect
of such continuing failure or breach or any subsequent failure or breach.
10. Consent to Jurisdiction: The Borrower hereby agrees and consents
that any action, suit or proceeding arising out of this Note may be brought in
any appropriate court in the State of Texas including the United States District
Court for the Northern District of Texas, or in any other court having
jurisdiction over the subject matter, all at the sole election of the holder
hereof, and by the issuance and execution of this Note the Borrower irrevocably
consents to the jurisdiction of each such court.
11. Holders Right to Request Multiple Notes: The Holder shall, upon
written request and presentation of the Note, have the right, at any interest
payment date, to request division of this Note into two or more units, each of
such to be in such amounts as shall be requested; provided however that no Notes
shall be issued in denominations of face amount less than $50,000.00.
12. Transfer: This Note may be transferred on the books of the Borrower
by the registered Holder hereof, or by Holder's attorney duly authorized in
writing, only upon (i) delivery to the Borrower of a duly executed assignment of
the Note, or part thereof, to the proposed new Holder, along with a current
notation of the amount of payments received and net Principal Amount yet
unfunded, and presentment of such Note to the Borrower for issue of a
replacement Note, or Notes, in the name of the new Holder, (ii) the designation
by the new Holder of the Lender's agent for notice, such agent to be the sole
party to whom Borrower shall be required to provide notice when notice to Lender
is required hereunder and who shall be the sole party authorized to represent
Lender in regard to modification or waivers under the Note, the Loan Agreement,
or other Loan Documents; and any action, consent or waiver, (other than a
compromise of principal and interest), when given or taken by Lender's agent for
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Issuer's Initial___________
notice, shall be deemed to be the action of the holders of a majority in amount
of the Principal Amount of the Notes, as such holders are recorded on the books
of the Borrower, and (iii) in compliance with the legend to read "The Securities
represented by this Note have not been registered under the Securities Act of
1933, as amended ("Act"), or applicable state securities laws ("State Acts") and
shall not be sold, hypothecated, donated or otherwise transferred unless the
Borrower shall have received an opinion of Legal Counsel for the Borrower, or
such other evidence as may be satisfactory to Legal Counsel for the Borrower, to
the effect that any such transfer shall not require registration under the Act
and the State Acts."
The Borrower shall be entitled to treat any holder of record of the Note as the
Holder in fact thereof and of the Note and shall not be bound to recognize any
equitable or other claim to or interest in this Note in the name of any other
person, whether or not it shall have express or other notice thereof, save as
expressly provided by the laws of Texas.
13. Notices: All notices and communications under this Note shall be in
writing and shall be either delivered in person or by overnight delivery and
accompanied by a signed receipt therefor; or mailed first-class United States
certified mail, return receipt requested, postage prepaid, and addressed as
follows: (i) if to the Borrower at its address for notice as stated in the Loan
Agreement; and, (ii) if to the holder of this Note, to the address (a) of such
holder as it appears on the books of the Borrower, or (b) in the case of a
partial assignment to one or more holders, to the Lender's agent for notice, as
the case may be. Any notice of communication shall be deemed given and received
as of the date of such delivery if delivered; or if mailed, then three days
after the date of mailing.
14. Maximum Interest Rate: Regardless of any provision contained in
this Note, Lender shall never be entitled to receive, collect or apply as
interest on the Note any amount in excess of interest calculated at the Maximum
Rate, and, in the event that Lender ever receives, collects or applies as
interest any such excess, the amount which would be excessive interest shall be
deemed to be a partial prepayment of principal and treated hereunder as such;
and, if the principal amount of the Note is paid in full, any remaining excess
shall forthwith be paid to Borrower. In determining whether or not the interest
paid or payable under any specific contingency exceeds interest calculated at
the Maximum Rate, Borrower and Lender shall, to the maximum extent permitted
under applicable law, (i) characterize any non principal payment as an expense,
fee or premium rather than as interest; (ii) exclude voluntary prepayments and
the effects thereof, and (iii) amortize, pro rate, allocate and spread, in equal
parts, the total amount of interest throughout the entire contemplated term of
the Note; provided that, if the Note is paid and performed in full prior to the
end of the full contemplated term thereof, and if the interest received for the
actual period of existence thereof exceeds interest calculated at the Maximum
Rate, Lender shall refund to Borrower the amount of such excess or credit the
amount of such excess against the principal amount of the Note and, in such
event, Lender shall not be subject to any penalties provided by any laws for
contracting for, charging, taking, reserving or receiving interest in excess of
interest calculated at the Maximum Rate.
"Maximum Rate" shall mean, on any day, the less of (i) 18% or (ii)
highest nonusurious rate of interest (if any) permitted by applicable law on
such day that at any time, or from time to time, may be contracted for, taken,
reserved, charged or received on the Indebtedness evidenced by the Note under
the laws which are presently in effect of the United States of America and the
State of Texas or by the laws of any other jurisdiction which are or may be
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Issuer's Initial___________
applicable to the holders of the Note and such Indebtedness or, to the extent
permitted by law, under such applicable laws of the United States of America and
the State of Texas or by the laws of any other jurisdiction which are or may be
applicable to the holder of the Note and which may hereafter be in effect and
which allow a higher maximum nonusurious interest rate than applicable laws now
allow.
15. Rights under Loan Agreement: This Note is issued pursuant to that
certain Loan Agreement of approximate date hereof by and between the Lender and
Borrower (the "Loan Agreement"), and the holder hereof is entitled to all the
rights and benefits, and is subject to all the obligations of Lender under said
agreement. Both Borrower and Lenders have participated in the negotiation and
preparation of the Loan Agreement and of this Note. Borrower agrees that a copy
of the Loan Agreement with all amendments, additions and substitutions therefore
shall be available to the Holder at the offices of the Borrower. This Note is
secured pursuant to a security agreement of approximate date hereof.
16. Governing Law: This Note shall be governed by and construed and
enforced in accordance with the laws of the State of Texas, or, where
applicable, the laws of the United States. There are no unwritten oral
agreements between the parties.
[Signature page follows]
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Issuer's Initial___________
IN WITNESS WHEREOF, the undersigned Borrower has caused this Note to be
duly issued and executed on the Date of Issue as stated above.
Address for Notice: Maverick Basin Exploration, LLC
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▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇ ▇▇▇
▇▇▇▇ ▇▇▇▇▇▇ ▇▇ ▇▇▇▇▇ By:
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South Oil, Inc.
Attest
By:
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Name:
Secretary
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