CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "Agreement") is entered into as of September
22, 2000 (the "Effective Date"), by and among ST OIL COMPANY, a Nevada
corporation, whose address is 0000 Xxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000,
FM ENERGY LLC, a California limited liability company, whose address is 00000
Xxxxx Xxxxxxx, Xxxxxx, Xxxxxxxxxx 00000, and THE SHORELINE COMPANIES, LLC, a
Colorado limited liability company, whose address is Xxxx Xxxxxx Xxx 0000,
Xxxxxxxxx, Xxxxxxxx 00000 (collectively, "Lenders"), and COLORADO WYOMING
RESERVE COMPANY, a Wyoming corporation ("Borrower"), whose address is 0000
Xxxxxxxx, Xxxxx 000, Xxxxxx, Xxxxxxxx 00000.
EXPLANATORY STATEMENT
A. Borrower owns mineral working interests in and to certain oil and gas
leases and seismic options covering approximately 61,000 acres of land located
in the Paradox Basin in San Xxxx County, Utah, together with associated seismic
data, maps and other related proprietary information.
B. Effective as of even date herewith, Lenders and Borrower have entered
into a certain farmout agreement, whereby the Lenders will earn an aggregate 50%
of Borrower's interests in and to such leases and seismic options (to the extent
such seismic options have not been exercised by the date on which such interests
are assigned) by completing, processing and interpreting a three-dimensional
seismic survey of up to 50 square miles covered by the above referenced oil and
gas leases and seismic options (the "Farmout Agreement").
C. Effective as of even date herewith, Lenders have entered into a certain
Seismic Acquisition Agreement (the "Seismic Agreement") for purposes of
performing their obligations under the Farmout Agreement.
D. Borrower needs certain financial resources for general
corporate purposes. Lenders are willing to provide such financial resources,
upon the terms, provisions and conditions set forth below.
AGREEMENT
FOR VALUABLE CONSIDERATION, including, without limitation, the mutual
promises, covenants and agreements contained in this Agreement, Lenders and
Borrower, each intending to be legally bound, covenant and agree as follows:
1.0 CREDIT FACILITY. Subject to the terms, provisions and conditions
contained in this Agreement, Lenders shall make available for Borrower's use
from time to time, a revolving credit facility in an aggregate principal amount
not to exceed, at any time, the sum of $100,000.00 (the "Credit"); provided,
however, that the amount of the Credit available for borrowing by Borrower shall
be reduced, on a dollar-for-dollar basis, by the amount of capital in excess of
$100,000.00 raised by Borrower during the one year period commencing on the
Effective Date of this Agreement, from private investors and/or private
placements (collectively, "Privately Raised Funds"). For example, if Borrower
does not raise $100,000.00 in Privately Raised Funds during such one-year
period, the entire amount of the Credit will be available for borrowing by
Borrower and if Borrower raises $200,000.00 in Privately Raised Funds during
such one-year period, then Borrower shall not be entitled to draw any Advances
under the Credit, exclusive of Advances previously drawn.
1.1 MANNER OF BORROWING. Borrower may request one or more advances
("Advance" or "Advances") under the Credit by notifying Lenders of the amount of
the requested Advance and the aggregate amount of the Advances then outstanding
under the Credit. Upon receipt of such notification and if all other conditions
to borrowing have been satisfied, Lenders shall deliver the amount of the
Advance to Borrower, or otherwise as directed by Borrower, within two business
days.
1.2 ADVANCES TO CONSTITUTE ONE LOAN. All Advances by Lenders to
Borrower under this Agreement shall constitute one loan and all indebtedness and
obligations of Borrower to Lenders under this Agreement shall constitute one
general obligation.
1.3 PROMISSORY NOTE. The aggregate amount of Advances under the
Credit shall be evidenced by a promissory note, in the form attached hereto as
EXHIBIT A, dated of even date herewith (the "Note"), executed and delivered by
Borrower, payable to the order of Lenders, in the maximum principal amount
referenced in Section 1.0 of this Agreement, bearing interest at the rate of 8%
per annum. Notwithstanding the principal amount stated on the face of the Note,
the amount of principal actually owing on the Note at any given time shall be
the aggregate amount of all Advances made to Borrower then outstanding under the
Credit.
1.4 PAYMENT OF PRINCIPAL AND INTEREST. The aggregate amount of all
principal Advances made under the Credit, as evidenced by the Note, together
with all accrued and unpaid interest thereon, shall be due and payable in full
at Maturity (as defined in Section 1.5 below).
1.5 MATURITY OF CREDIT. All Advances made under the Credit, as
evidenced by the Note, together with all accrued and unpaid interest thereon,
shall be due and payable on the later of (i) the date which is twelve (12)
months after the Effective
2
Date, and (ii) the date on which the Seismic Agreement terminates ("Maturity").
The Credit shall automatically terminate at Maturity, without notice, and
Lenders shall not have any further obligation to advance funds to Borrower under
the Credit. Lenders shall not have any obligation to renew the Credit
established hereby.
1.6 NO PREPAYMENT PENALTY. Borrower may prepay all or any
portion of the Credit at any time prior to maturity, without premium or penalty.
Any such prepayment shall be applied first to accrued interest and then to
reduction of principal.
1.7 NO USURY. Notwithstanding anything to the contrary contained in
this Agreement and/or the Note, Lenders shall never be deemed to have contracted
for or be entitled to receive, collect or apply as interest under this Agreement
and/or the Note, any amount in excess of the maximum amount of interest
permitted under applicable law, and in the event Lenders ever receive, collect
or apply as interest any amount in excess of the maximum amount permitted by
applicable law, such amount that would be excessive interest shall be applied to
the reduction of the unpaid principal balance of the indebtedness hereunder, as
evidenced by the Note, or if the principal balance is paid in full, any
remaining excess shall be returned to Borrower.
2.0 AFFIRMATIVE COVENANTS. Until payment in full of the Note
and all the obligations of Borrower hereunder and under the Credit, Borrower
shall fulfill the covenants set forth below:
2.1 COMPLIANCE WITH AGREEMENT. Borrower shall observe and comply in
all material respects with the covenants and provisions of this Agreement and
the Note, and shall comply with any and all laws, rules, regulations, orders and
ordinances applicable to it and/or its business, including, without limitation,
compliance with any and all securities reporting obligations.
2.2 FURTHER ASSURANCES. Borrower shall execute and deliver any and
all additional agreements, documents, instruments, financing statements and
other assurances, and take any and all such other action, as Lenders may, from
time to time deem reasonably necessary to effectuate the intent of this
Agreement.
3.0 MISCELLANEOUS.
3.1 WAIVER. No failure to exercise, and no delay in exercising on
the part of Lenders, any right hereunder shall operate as a waiver thereof, nor
shall any single or partial exercise thereof preclude any other or further
exercise thereof or the exercise of any other right. The rights of Lenders
hereunder and under any documents and instruments executed in connection with
this Agreement shall be in addition to all other rights provided by law. No
modification or waiver of any provision of this Agreement, the Note or any
documents or instruments executed in connection herewith, nor consent to
departure therefrom, shall be effective unless in writing and no consent or
waiver shall extend beyond the particular case and purpose involved. No notice
or demand given in
3
any case shall constitute a waiver of the right to take other action in the
same, similar or other instances without such notice or demand.
3.2 SURVIVAL. Any of the terms and covenants contained in this
Agreement which require the performance of either party after execution hereof
shall survive the execution and delivery of this Agreement and all documents
related hereto.
3.3 ASSIGNMENT. Borrower shall not transfer or assign this Agreement
without the prior written consent of Lenders, and any such transfer or
assignment without Lenders' prior written consent shall be null and void. No
Lender shall transfer or assign this Agreement without the prior written consent
of the other Lenders and of Borrower, and any such transfer or assignment
without such prior written consent shall be null and void.
3.4 LAW GOVERNING. This Agreement shall be governed by and
construed in accordance with the laws of the State of Colorado, without regard
to principles of conflicts of laws.
3.5 ATTORNEYS' FEES. In the event an arbitration, suit or action is
brought by Lenders under this Agreement to enforce any of its terms, or in any
appeal therefrom, Lenders shall be entitled to an award of its reasonable
attorneys' fees and costs to be fixed by the arbitrator, trial court, and/or
appellate court.
3.6 TITLES AND CAPTIONS. All section and paragraph titles or
captions contained in this Agreement are for convenience only and shall
not be deemed part of the context nor affect the interpretation of this
Agreement.
3.7 NOTICES. Any notice under this Agreement shall be in writing and
shall be effective when actually delivered in person, within one (1) business
day after being sent via facsimile to the facsimile number set forth below or
within seven (7) business days after being deposited in the U.S. mail,
registered or certified, postage prepaid and addressed to the party at the
address stated in this Agreement or such other address as either party may
designate by written notice to the other.
3.8 ENTIRE AGREEMENT. This Agreement, the Note and all other
documents executed in connection herewith contain the entire understanding
between and among the parties and supersede any prior understandings and
agreements among them respecting the subject matter of this Agreement.
3.9 AGREEMENT BINDING. This Agreement shall be binding upon
the respective heirs, executors, administrators, successors and assigns of the
parties hereto.
3.10 FURTHER ACTION. The parties hereto shall execute and deliver
all documents, provide all information and take or forbear from all such action
as may be necessary or appropriate to achieve the purposes of this Agreement.
4
3.11 COUNTERPARTS. This Agreement may be executed in several
counterparts and all so executed shall constitute one Agreement, binding on all
the parties hereto even though all the parties are not signatories to the
original or the same counterpart.
3.12 PARTIES IN INTEREST. Nothing herein shall be construed to be to
the benefit of any third party, nor is it intended that any provision shall be
for the benefit of any third party.
3.13 SAVINGS CLAUSE. If any provision of this Agreement, or the
application of such provision to any person or circumstance, shall be held
invalid, the remainder of this Agreement, or the application of such provision
to persons or circumstances other than those as to which it is held invalid,
shall not be affected thereby.
5
IN WITNESS WHEREOF, the parties hereto have executed this Agreement as of
the date first above written.
LENDERS:
ST OIL COMPANY
By: /S/ XXXXXX X. XXXXXX
---------------------------------------
Name: Xxxxxx X. Xxxxxx
Title: Vice President
Facsimile Number: 296-0329
FM ENERGY LLC
By: /S/ XXXXX X. XXXXX
---------------------------------------
Name: Xxxxx X. Xxxxx
Title: Co-Chairman
Facsimile Number: 000-000-0000
THE SHORELINE COMPANIES, LLC
By: /S/ F. XXXXXX XXXXXXX
---------------------------------------
Name: F. Xxxxxx Xxxxxxx
Title: Managing Member
Facsimile Number: 000-000-0000
BORROWER:
COLORADO WYOMING RESERVE COMPANY
By: /S/ XXX XXXXXX
---------------------------------------
Name: Xxx Xxxxxx
Title: President
Facsimile Number: _________________
