EXHIBIT 10(i)a
The Bank of Cherry Creek
Member Xxxxx Financial Group
Cherry Creek
0000 Xxxx Xxxxx Xxxxxx
Xxxxxx, Xxxxxxxx 00000-0000
(000) 000-0000
Fax (000) 000-0000
xxx.xxxxxxxxxxxxxxxxx.xxx
March 4, 2002
Xx. Xxx Xxxxxxxxx
President
Basic Earth Science Systems, Inc.
0000 Xxxxxxxx, Xxxxx 000
Xxxxxx, XX 00000-0000
AMENDED AND RESTATED LETTER AGREEMENT
Dear Xx. Xxxxxxxxx:
This amended and restated letter agreement, dated March 4, 2002, is effective as
of December 31, 2001 and sets forth the terms pursuant to which The Bank of
Cherry Creek, N.A. ("BOCC") is making available to Basic Earth Science Systems,
Inc. ("Borrower"), a revolving line of credit which shall be convened into a
term loan (collectively, the "Loan"), to be evidenced by a Promissory Note
("Exhibit A" or the "Note").
RECITALS
1. Borrower executed and delivered to Norwest Bank Colorado, N.A., a national
banking association ("Norwest"), a letter agreement dated August 1, 1994,
and this letter agreement may have thereafter been amended, modified,
replaced, or amended and restated (the "Loan Agreement").
2. Xxxxx Fargo Bank, N.A., a national banking association ("Xxxxx Fargo"),
succeeded Norwest and delivered to BOCC an assignment of the Loan Agreement
effective as of December 31, 2001.
3. Borrower is executing and delivering to BOCC this letter agreement for the
purpose of amending and restating, in its entirety, the Loan Agreement.
All language, terms, and conditions in the Loan Agreement are hereby amended,
restated, and replaced as follows:
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Capital Hill Xxxxxxxx Xxxxxx Xxxxx Xxxxxx
0000 Xxxxx Xxxxxx 0000 Xxxxxx Xxxxxx 0000 Xxxxxxxx Xxxx.
Xxxxxx, XX 00000 Xxxxx 000 Xxxxxx, XX 00000
(000) 000-0000 Xxxxxxxxx, XX 00000-0000 (000) 000-0000
Fax (000) 000-0000 (000) 000-0000 Fax (000) 000-0000
Fax (000) 000-0000
American Ag. Poudre Valley Banking Center Boulder Branch
0000 00xx Xxxxxx 1031 Conifer #6 0000 Xxxxx Xxxxxx
Xxxxx 000 Xx. Xxxxxxx, XX 00000 Xxxxxxx, XX 00000
Xxxxxxx, XX 00000 (000) 000-0000 (000) 000-0000
(000) 000-0000 Fax (000) 000-0000 Fax (000) 000-0000
Fax (000) 000-0000
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Borrower: Basic Earth Science Systems, Inc.
Commitment Amount: The lesser of $1,000,000 or the Borrowing Base as determined
from time to time as described herein and which is $400,000
as of the date of this agreement.
Revolving Period: From the date of this agreement through July 31, 2002.
During the Revolving period Borrower may borrow, repay, and
re-borrow funds. At no time, however, may the aggregate
outstanding principal balance of all Advances exceed the
Commitment Amount.
Amortization: After the end of the Revolving Period, in addition to the
interest payments due and payable as described below,
Borrower shall make monthly principal payments to BOCC
according to the schedule presented in Exhibit B attached
hereto, (such schedule may be adjusted, at BOCC's
discretion, at the end of the Revolving Period and at times
of the annual borrowing base reviews, as described below),
but in no event less than the amount payable monthly if the
outstanding principal balance of the Loan were amortized on
a straight-line basis from the end of the Revolving Period
(or from the time of the semi-annual borrowing base review,
as of which such schedule is being adjusted) to the
Maturity Date. Each such payment shall be due and payable on
the last day of each calendar month, commencing with the
calendar month immediately after the calendar month in which
the end of the Revolving Period occurs.
Maturity Date: December 31, 2006, on which date Borrower agrees to repay
the remaining balance of the Loan in its entirety,
including all outstanding principal, interest, fees,
expenses and other amounts due in connection therewith.
Interest: Interest on the outstanding principal balance of the Loan
shall accrue at an annual rate equal to the fluctuating
Prime Rate (as defined in the Note), plus two percentage
points per annum, the sum of the foregoing being equal to
six and three quarters (675%) percent per annum as of the
date of this agreement. After the occurrence of an Event of
Default, interest on the Loan shall accrue at a rate equal
to the Prime Rate at the time of the default plus five
percentage points per annum, Borrower shall pay interest
monthly on the last day of each calendar month, commencing
March 31, 2002, and on the Maturity Date.
Advances: BOCC shall make advances ("Advances") to Borrower from time
to time upon written notice by Borrower to BOCC no later
Amended and Restated Letter Agreement Page 2 of 14 March 4, 2002
than 12:00 noon, Denver time, on the date of any Advance,
which shall be a business day. Any request by Borrower for
an Advance shall be deemed a certification by Borrower that
the conditions precedent contained in this letter agreement
have been satisfied as of the time of such request.
Limitations: BOCC shall not have any obligation to: (a) make an Advance
after the end of the Revolving Period, or (b) make an
Advance if after the making of such Advance, the aggregate
amount of all Advances outstanding hereunder would exceed
the Commitment Amount.
Facility Fee: Borrower agrees to pay to B0CC a facility fee of $4,000
(four thousand dollars), due and payable upon the closing of
the Loan. In addition, Borrower agrees to pay B0CC future
facility fees in the amount of 1% of any increase in the
then current Borrowing Base.
Collateral: Borrower shall grant to BOCC a first-priority lien and
security interest covering Borrower's interests, whether now
owned or hereafter acquired, in any and all properties to
which B0CC gives value in determining the Borrowing Base and
any other properties hereafter requested by BOCC. Borrower
agrees to execute and deliver to BOCC such security
agreements financing, statements and other documents as may
be requested by BOCC in order to accomplish the foregoing.
Borrowing Base
Procedures: B0CC may perform reviews of the Collateral at any time and
will perform semi annual reviews on or about July 1 and
January 1 of each year through the Maturity Date, beginning
on or about July 1, 2002, in order to determine the
borrowing baBe value (the "Borrowing Base") of the
Collateral. The Borrowing Base will be determined by BOCC in
its sole and absolute discretion, using such assumptions as
to pricing, discount factors, discount rates, cash flow,
expenses and other factors as BOCC customarily uses. Any
increase in the Borrowing Base will "be subject to the
standard and customary BOCC loan approval process; without
such approval the Borrowing Base will not be increased. If
at any time the aggregate outstanding principal balance of
all Advances exceeds the Commitment Amount, Borrower shall,
within 30 days after written notice from B0CC: (a) repay to
B0CC a portion of the Loan in the amount of the excess in a
lump sum; and/or (b) commence (and thereafter continue) an
amortization schedule under which Borrower repays to BOCC
the Loan in the amount of the excess in six equal monthly
principal installments on the last business day of each
calendar month, which amounts shall be in addition to any
Amended and Restated Letter Agreement Page 3 of 14 March 4, 2002
monthly principal and interest payments otherwise due, such
that the Loan is prepaid in the amount of the excess within
six months; and/or (c) execute and deliver to BOCC
additional mortgages, supplements to mortgages or other
instruments satisfactory in form and substance satisfactory
to 30CC, by which Borrower mortgages, pledges or
hypothecates to BOCC, and/or creates a security interest in
for the benefit of BOCC, sufficient additional oil and gas
interest and related property to induce BOCC to make a
redetermination of the Borrowing Base such that the
Commitment Amount is increased to an amount no less than the
aggregate outstanding principal balance of all Advances.
Representations
and Warranties: Borrower represents and warrants to 30CC that: (a) Borrower
is duly organized, validly existing and in good standing
under the laws of the State of Colorado, having all powers
required to carry on its business and to enter into and
carry out the transactions contemplated hereby, and is duly
qualified, in good standing, and authorized to do business
in all other jurisdictions where such qualification is
necessary, (1) this letter agreement, the note and all other
documents executed in connection herewith, are legal 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 as limited by general equitable principles, (c) the
financial statement of Borrower heretofore provided to BOCC
by Borrower fairly present Borrower's financial positions at
the respective dates thereof; and, since said dates, no
material adverse change has occurred in the financial
condition or business of Borrower, (d) to the best of
Borrower's knowledge, there are no actions, suits or other
proceedings pending or threatens against Borrower, (e)
Borrower has good and defensible title to the Collateral,
(f) all tax returns required to be filed by Borrower have
been filed, and all taxes and other governmental charges
upon Borrower or upon any of its assets or income have been
paid, and (g) Borrower is not engaged principally, or as one
of its important activities, in the business of extending
credit for the purpose of purchasing or carrying margin
stock (within the meaning of Regulation U or X of the Board
of Governors of the Federal Reserve System), and no part of
the proceeds of the Loan will be used to purchase or carry
any such margin stock or to extend credit to any person or
entity for the purpose of purchasing or carrying any such
margin stock.
Amended and Restated Letter Agreement Page 4 of 14 March 4, 2002
Reporting
Requirements: Borrower agrees to submit to BOCC; (a) within 90 days of
each fiscal year-end of Borrower, annual financial
statements of Borrower, prepared in accor4ance with
generally accepted accounting principals, (b) within 60 days
of the end of the first, second, and third fiscal quarters
of Borrower, quarterly financial statements of Borrower
prepared in accordance with generally accepted accounting
principals, (c) at the times of submission of the financial
statements described herein, a certificate signed by the
Principal Accounting Officer of the Borrower: attesting to
the authenticity of such financial statements and stating
that no Event of Default has occurred and is continuing and
showing compliance with the Financial Covenants stipulated
below, (d) within 5 days after filing of the same, copies of
Borrowers public filings as required by the Securities arid
Exchange Commission which may include, and substitute for,
the reporting required under paragraphs (a) and (b) of this
section provided that such reporting occurs within the time
limitations of paragraphs (a) and (b) of this section, (e)
within 10 days after the filing of the same, copies of all
federal income tax returns filed, by Borrower, (f) on or
before May 1 of each year, an engineering report in form and
substance satisfactory to BOCC, covering the Collateral,
prepared by Borrower (or, if so requested by BOCC, by an
independent petroleum engineer acceptable to BOCC) as of the
preceding fiscal year end, (g) within 45 days of each
fiscal-quarter-end, a report describing, for each calendar
month during such calendar quarter, the gross and net volume
of production and sales attributable to production (and the
prices at which such sales were made and the revenues
derived from such sales) for each such calendar month from
the Collateral, and describing the related ad valorem,
severance and production taxes and lease operating expenses
attributable thereto and incurred for each such calendar
month, (h) any internal budgets and planning documents
approved for implementation by the Board of Directors of the
Borrower within 10 days of such approval, and (i) such other
information as BOCC may request at any time or from time to
time.
Affirmative
Covenants: Borrower will: (a) operate its assets in a good an
workmanlike manner, (b) maintain insurance with responsible
carriers and in amounts' customary in the industry for the
types of operations to be conducted by Borrower, (c) in all
material respects conduct its business amid affairs in
compliance with all Jaws, regulations and orders applicable
thereto (including those relating to pollution and other
environmental matters), (d) permit representatives appointed
Amended and Restated Letter Agreement Page 5 of 14 March 4, 2002
by B0CC to visit and inspect, at their sole risk, any
property, books of account, other books and records, and any
facilities or other business assets of Borrower, (e) pay all
amounts due hereunder or in connection herewith in
accordance with the terms hereof; (1) observe, perform and
comply with every covenant, term and condition, express or
implied, herein or in any other documents delivered in
connection herewith, (g) promptly notify BOCC of: (l) any
material adverse change in the financial condition of
Borrower, (2) any material adverse development with respect
to the business, property or assets of Borrower, and (3) the
occurrence of any Event of Default, (h) maintain and
preserve its existence, rights and franchises in full force
and effect and qualify to do business in all states or
jurisdictions where required by applicable law, (i) pay all
reasonable costs and expenses incurred by or on behalf of
130CC (including without limitation attorneys' fees) in
connection with: (1) the preparation, execution and delivery
of this letter agreement, the Note and all related documents
(including without limitation any and all future amendments
or supplements thereto or restatements thereof), (2) the
filing and recording of any security documents and any other
documents Or instruments or further assurances required to
be filed or recorded in connection herewith, and (3) the
enforcement of this letter agreement, the Note and all
related documents, and (j) indemnify BOCC froth and against
any and all claims, losses, demands, actiOns, causes of
action and liabilities whatsoever (including without
limitation reasonable attorneys' fees and expenses) arising
out of or resulting from: (1) this letter agreement, the
Note or the documents executed in connection herewith, and
(2) the contamination, of any of the Collateral by any
hazardous substance or environmental pollutant in violation
of any federal, state or local environmental statute, rule,
regulation or ordinance.
Financial
Covenants: Borrower will maintain the following financial covenants
which will be calculated at the end of each of the
Borrower's fiscal quarters based on the information supplied
under paragraphs (a), (b), and (d) of Reporting
Requirements, above, and submitted as a part thereof: (a)
Borrower will maintain a minimum net worth (total
shareholders equity) defined as total assets minus total
liabilities, of $1.75 million unless reduction below that
amount is due to a ceiling test write-down, in which case
Borrower will maintain a minimum net worth of $1.50 million,
and (b) Borrower will maintain a current ratio, defined as
current assets (inclusive of unused borrowing capacity under
this facility) divided by current liabilities (exclusive of
outstandings under this facility) in excess of 1.00.
Amended and Restated Letter Agreement Page 6 of 14 March 4, 2002
Negative Covenants: Without BOCC's prior written consent, Borrower will not: (a)
incur any indebtedness other than the Loan, and trade debt
incurred by Borrower in the ordinary course of business, (b)
make loans or advances to any third party, except trade debt
extended in the ordinary course of business, (c) create or
permit to exist any lien, security interest or other
encumbrance on any of the Collateral or any other assets of
Borrower, except those securing the Loan, (d) reorganize,
merge with any other entity, or change its name or business,
(e) sell, lease or dispose of any assets during any 12-month
period which have an aggregate value in excess of $20,000,
(1) permit a change in the present ownership of Borrower
which would result in any single person or entity owning
more than 50% of the outstanding public shares of the
Borrower or which would result in Xx. Xxx Xxxxxxxxx,
President owning less than 20% of the outstanding public
shares of the Borrower, (g) assume, guaranty, endorse or
otherwise become liable for the obligations of any other
person or entity, (h) cause or permit Borrower to be in
violation of any applicable statute, rule or regulation,
including without limitation those relating to environmental
matters, (i) make distributions to or pay dividends to
shareholders, (j) effect a change in management which
results in the replacement of Xx. Xxx Xxxxxxxxx as President
or dilutes his authority over the Borrower, or (k) hedge,
through financial instruments or delivery contracts or other
means, the prices associated with more than two thirds
(2/3) of the annual production volumes shown in the most
recent engineering report submitted in accordance with item
(1) of the Reporting Requirements, above.
Events of Default: The occurrence of any of the following shall be deemed an
Event of Default hereunder, shall relieve B0CC of any
further obligation to make advances hereunder and shall
permit B0CC, at its option, to declare the Loan to be
forthwith due and payable together with all accrued and
unpaid interest thereon, without presentation, demand,
protest or other notice of any kind, all of which are
expressly waived by Borrower: (a) Borrower fails to pay any
amount due hereunder or in connection herewith when due and
payable, (b) any "default" or "event of default" occurs
under any document executed in connection herewith, (c)
Borrower fails to d4ly observe, perform or comply with any
covenant, agreement, condition or provision (other than
those referred to in subsections (a) and (b) above) of this
letter agreement or of any other document executed in
connection herewith and such failure continues beyond 30
days after notice thereof from B0CC to Borrower, (d) any
Amended and Restated Letter Agreement Page 7 of 14 March 4, 2002
representation or warranty previously presented or hereafter
made in writing by or on behalf of Borrower in connection
herewith shall prove to have been false or incorrect in any
material respect on any date on or as of which made, (e)
Borrower suffers the commencement of any voluntary or
involuntary bankruptcy proceeding against it, suffers the
appointment of a receiver, liquidator, trustee or similar
official for a substantial part of its assets, makes a
general assignment for the benefit of creditors, fails
generally to pay (or admits in writing its inability to pay)
its debts as such debts become due, or suffers the entry of
any order issued by any court or tribunal seizing all or any
substantial part of its property, or (1) any default occurs
with respect to any indebtedness owed by Borrower to any
other person or entity.
Arbitration: Subject to the provisions of the next paragraph below, B0CC
and Borrower agree to submit to binding arbitration any and
all claims, disputes and controversies between them (and
their respective employees, officers, directors, attorneys
and other agents), whether in tort, contact or otherwise,
arising out of or in any way relating to this letter
agreement, the Note, the security documents contemplated
hereby, the Loan and the negotiation, execution,
administration, collateralization, repayment, modification,
extension, collection, enforcement, default or termination
thereof Such arbitration shall proceed in Denver, Colorado,
shall be governed by Colorado law (including without
limitation the provisions of CRS 13-21-102(5) and all
applicable statutes of limitations) and shall be conducted
in accordance with the Commercial Arbitration Rules of the
American Arbitration Association (the "AAA"). Any award
entered in an arbitration, whether on motions or at a
hearing, with or without testimony from witnesses, shall be
made by a written opinion stating the reasons for the award
made. The decision of any arbitration pursuant to this
letter agreement shall be made based on Colorado law without
reference to any choice of law rules. Judgment on any award
hereunder may be entered in any court having jurisdiction.
Nothing in the preceding paragraph, nor the exercise of any
right to arbitrate thereunder, shall limit the right of any
party hereto: (a) to foreclose against any real or personal
property collateral by the exercise of the power of sale
under a deed of trust, mortgage, or other security agreement
or instrument or applicable law; (b) to exercise self-help
remedies such as setoff or repossession; or (c) to obtain
provisional or ancillary remedies such as replevin,
injunctive relief; attachment or appointment of a receiver
from a court having jurisdiction, before, during or after
the pendency of any arbitration proceeding. The institution
Amended and Restated Letter Agreement Page 8 of 14 March 4, 2002
and maintenance of any action for such judicial relief; or
pursuit of provisional or ancillary remedies, or exercise of
self-help remedies shall not constitute a waiver of the
right or obligation of any party to submit any claim or
dispute to arbitration, including those claims or disputes
arising from exercise of any judicial relief; or pursuit of
provisional or ancillary remedies or exercise of self-help
remedies.
If the amount in dispute is $500,000 or more, arbitration
hereunder shall be before a three-person panel of neutral
arbitrators, consisting of one person from each of the
following categories: (1) an attorney who has practiced in
the area of commercial law for at least eight years or a
retired judge at the Colorado or United States District
Court or an appellate court level: (2) a person with at
least eight years experience in commercial lending: and
(3) a person with at least eight years experience in the
petroleum industry. The panics to the dispute or their
representatives shall obtain from the AAA a list of persons
meeting the criteria outlined above for each category of
arbitrator, and the parties shall select one persOn from
each category in the manner established by the AAA. If the
amount in dispute is less than $500,000, the arbitration
shall be conducted before one arbitrator, who shall be an
attorney who has practiced in the area of commercial law for
at least eight years or a retired judge at the Colorado or
United States District Court or an appellate court level.
The parties to the dispute or their representatives shall
obtain from the AAA a list of persons meeting the criteria
outlined above; and the parties shall select the person in
the manner established by the AAA.
In any arbitration hereunder: (1) the arbitrator(s) shall
decide (by documents only or with a hearing, at the
arbitrators' discretion) any pre-hearing motions which are
substantially similar to pre-hearing motions to dismiss for
failure to state a claim or motions for summary
adjudication; (2) discovery shall be permitted, but shall be
limited as provided in Rule 26.1(o) of the Colorado Rules of
Civil Procedure, and shall be subject to the scheduling by
the arbitrator(s), and any discovery disputes shall be
subject to final determination by the arbitrator(s); and (3)
the arbitrator(s) shall award costs and expenses of the
arbitration proceeding in accordance with the provisions of
this letter agreement, the Note and/or the other loan
documents.
Miscellaneous: This letter agreement may be executed in any number of
counterparts, each of which shall be an original, but all of
which together shall constitute one instrument. This letter
Amended and Restated Letter Agreement Page 9 of 14 March 4, 2002
agreement, the Note and the other documents executed in
connection herewith set forth the entire understanding
between the parties hereto, and no modification or amendment
of or supplement hereto or thereto shall be valid or
effective unless the same is in writing and signed by the
party against whom it is sought to be enforced. In the event
of any conflict between the provisions of this letter
agreement, the Note or any of the other documents executed
in connection herewith, the provisions of this letter
agreement shall control. All notices shall be in writing and
shall be deemed sufficiently given or furnished if delivered
by personal delivery or by expedited delivery service with
proof of delivery, or by registered or certified United
States mail, return receipt requested, postage prepaid, at
the addresses of the parties specified on the letterhead and
the inside address hereof (unless changed by similar notice
in writing given by the particular person whose address is
to be changed). The maturity of any payment which becomes
due and payable hereunder on a day other than a business
day, shall be extended to the next succeeding business day.
This letter agreement shall be deemed a contract made under
the laws of the State of Colorado.
If these terms and conditions meet with your approval, please evidence your
acceptance of these terms and conditions by executing this letter agreement in
the space provided below.
Regards,
THE BANK OF CHERRY CREEK, N.A.
By: /s/ Xxxx X. Xxxx
--------------------
Xxxx X. Xxxx, Vice President
EFFECTIVE AS OF DECEMBER 31,2001
ACCEPTED AND AGREED TO AS OF THE DATE FIRST NOTED ABOVE:
BASIC EARTH SCIENCE SYSTEMS, INC.
By: /s/ Xxx Xxxxxxxxx /s/ Signature on file
--------------------- --------------------------
Xxx Xxxxxxxxx, President Secretary / Treasurer
Amended and Restated Letter Agreement Page 10 of 14 March 4, 2002
EXHIBIT A
---------
AMENDED PROMISSORY NOTE
-----------------------
$1,000,000 March 4, 0000
Xxxxxx, Xxxxxxxx
FOR VALUE RECEIVED, Basic Earth Science Systems, Inc., a Delaware
Corporation ("Borrower"), promises to pay to the order of THE BANK OF CHERRY
CREEK, N.A. ("Payee"), the principal sum of $1,000,000, or so much thereof as
may be advanced hereunder, together with interest on the outstanding unpaid
balance of such principal amount at the rates provided below.
This Amended Promissory Note is the "Note" issued pursuant to, and is
subject to the terms and provisions of an amended and restated letter agreement
dated March 4, 2002 (the "Letter Agreement"), between Borrower and Payee. Except
as otherwise defined herein, terms defined in the Letter Agreement shall have
the same meanings when used herein, and the definitions contained in the Letter
Agreement of all such terms used herein are hereby incorporated in this Note by
reference.
This Amended Promissory Note is a continuation and substitution of that
Promissory Note Dated August 1, 1994, as amended, which was endorsed to Payee by
Xxxxx Fargo Bank, N.A. as successor to Norwest Bank Colorado, N.A.
The outstanding principal amount of this Note shall be due and payable on
December 31, 2008, unless due and payable sooner pursuant to the terms of the
Letter Agreement.
Except as otherwise provided below with respect to amounts not paid when
due, interest on the Loan shall accrue at the "Prime Rate" (as defined below),
plus two percentage points per annum, From and after the occurrence of, and
during the continuance of, any event of default described in the Letter
Agreement (an "Event of Default"), interest on the Loan shall accrue, from the
date of occurrence of the Event of Default until the date the Event of Default
is cured, at a fixed annual rate equal to the Prime Rate as of the date of
occurrence of the Event of Default plus five percentage points per annum. As
used herein, "Prime Rate" shall mean the annual interest rate identified as the
prime rate in the Wall Street Journal Western Edition, as such rate may
fluctuate from day to day, which may not be the lowest interest rate charged by
Payee. The Prime Rate is only an index rate from which interest rates actually
charged to customers may be measured. The use of the Prime Rate is for
convenience only and does not constitute a commitment by Payee to lend money at
a preferred rate of interest. The Prime Rate is a benchmark for pricing certain
types of loans. Depending upon the circumstances, such as the amount and the
term of a loan, the creditworthiness of a borrower or any guarantor, the
presence and the nature of collateral and other relationships between a borrower
and Payee, loans to other borrowers may be priced at, above or below the Prime
Rate.
Amended and Restated Letter Agreement Page 11 of 14 March 4, 2002
Interest on the Loan shall be due and payable: (a) monthly on the last day
of each calendar month, commencing March 31, 2002 (or on the next business day
if the due date for any such payment is not a business day), and (b) at the
maturity of this Note.
All payments of principal and interest hereon shall be made in U.S.
currency at Payee's offices at 0000 Xxxx Xxxxx Xxxxxx, Xxxxxx, Xxxxxxxx 00000,
or at such other place as Payee shall have designated to Borrower in writing, in
immediately available funds and without set-off or counterclaim or deduction of
any kind. Any payment made with a check shall constitute payment only when
collected. All payments received hereunder shall be applied first to costs of
collection, second to accrued interest as of the date of payment and third to
the outstanding principal balance of this Note.
It is not intended hereby to charge interest at a rate in excess of the
maximum rate of interest that Payee may charge to Borrower under applicable
usury and other laws, but if, notwithstanding, interest in excess of such rate
shall be paid hereunder, the interest rate on this Note shall be adjusted to the
maximum permitted under applicable law during the period or periods that the
interest rate otherwise provided herein would exceed such rate and any excess
amount applied at Payee's option to reduce the outstanding principal balance of
this Note or to be returned to Borrower.
This Note is secured by, and the holder of this Note is entitled to
the benefits of, the documents described in the Letter Agreement (the "Security
Documents"). Reference is made to the Security Documents for a description of
the property covered thereby in respect thereto.
In the event of: (a) any default in any payment of the principal of or
interest on this Note when due and payable, or (b) any other Event of Default,
then the whole principal sum of this Note plus accrued interest and all other
obligations of Borrower to holder, direct or indirect, absolute or contingent,
now existing or hereafter arising, shall, at the option of Payee, become
immediately due and payable, and any or all of the rights and remedies provided
herein and in the Letter Agreement and the Security Documents, as they may be
amended, modified or supplemented from time to time may be exercised by Payee.
If Borrower fails to pay any amount due under this Note and Payee has to
take any action to collect the amount due or to exercise its rights under the
Security Documents, including without limitation, retaining attorneys for
collection of this Note, or if any suit or proceeding is brought for the
recovery of all or any part of or for protection of the indebtedness or to
foreclose the Security Documents or to enforce Payee's rights under the Security
Documents, then Borrower agrees to pay on demand all reasonable costs and
expenses of any such action to collect, suit or proceeding, or any appeal of any
such suit or proceeding, incurred by Payee, including without limitation, the
reasonable fees and disbursements of Payee's attorneys and their staff.
Amended and Restated Letter Agreement Page 12 of 14 March 4, 2002
Borrower waives presentment, notice of dishonor and protest, and assents to
any extension of time with respect to any payment due under this Note, to any
substitution or release of collateral and to the addition or release of any
party, except as provided in the Letter Agreement. No waiver of any payment or
other right under this Note shall operate as a waiver of any other payment or
right.
If any provision in this Note shall be held invalid, illegal or
unenforceable in any jurisdiction, the validity, legality or enforceability of
any defective provisions shall not be in any way affected or impaired in any
other jurisdiction.
No delay or failure of the holder of this Note in the exercise of any right
or remedy provided for hereunder shall be deemed a waiver of such right by the
holder hereof; and no exercise of any right or remedy shall be deemed a waiver
of any other right or remedy that the holder may have.
All notices given hereunder shall be given as provided in the Letter
Agreement.
At the option of the holder hereof, an action may be brought to enforce
this Note in the District Court in and for the City and County of Denver, State
of Colorado, in the United States District Court for the District of Colorado or
in any other court in which venue and jurisdiction are proper. Borrower and all
signers or endorsers hereof consent to venue and jurisdiction in the District
Court iii and for the City and County of Denver, State of Colorado and in the
United States District Court for the District of Colorado and to service of
process under Sections 13-1-124(1)(a) and 13-1-125, Colorado Revised Statutes
(1992), as amended, in any action commenced to enforce this Note.
This Note is to be governed by and construed according to the laws of the
State of Colorado.
BASIC EARTH SCIENCE SYSTEMS, INC
By: ______________
Xxx Xxxxxxxxx, President
Amended and Restated Letter Agreement Page 13 of 14 March 4, 2002
EXHIBIT B
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AMORTIZATION SCHEDULE
---------------------
Amortization of principal will be made according to the schedule shown below.
This amortization schedule may be modified under the terms of this Letter
Agreement.
--------------------------------------------------------------------------------
Date Monthly Amortization
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March 4, 2002 through July 31, 2002 Interest Only
August 31, 2002 through July 31, 2003 $15,500 principal plus interest
August 31, 2003 through December 31, 2004 $12,000 principal plus interest
January 31, 2005 Remaining principal and interest in full
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Amended and Restated Letter Agreement Page 14 of 14 March 4, 2002
