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EXHIBIT 10(jj)
THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT
THIS THIRD AMENDMENT TO LOAN AND SECURITY AGREEMENT (this "Amendment"),
dated as of November 1, 1998, is entered into between FINOVA CAPITAL
CORPORATION, a Delaware corporation, ("FINOVA"), and SOUTH TEXAS DRILLING &
EXPLORATION, INC., a Texas corporation ("Borrower").
RECITAL
A. Borrower and FINOVA have previously entered into that certain Loan
and Security Agreement dated as of May 8, 1996, as amended by that certain First
Amendment to Loan and Security Agreement dated as of June 18, 1997 and that
certain Second Amendment to Loan and Security Agreement dated as of October 21,
1997, (the "Loan Agreement"), pursuant to which FINOVA has made certain loans
and financial accommodations available to Borrower. Terms used herein without
definition shall have the meanings ascribed to them in the Loan Agreement.
B. Borrower has requested FINOVA to (a) amend the Loan Agreement to (i)
extend the Initial Term to November 1, 2000, (ii) consolidate Term Loan A, Term
Loan B, Term Loan C and the outstanding amounts under the Capital Expenditure
Facility as of the date hereof under one promissory note and (iii) reduce the
interest rate for Receivable Loans and the Term Loans; and (b) reset and waive
compliance by Borrower with the financial covenant pertaining to minimum debt
service coverage ratio set forth in the Loan Agreement.
C. FINOVA is willing to further amend the Loan Agreement and make such
waiver under the terms and conditions set forth in this Amendment. Borrower is
entering into this Amendment with the understanding and agreement that, except
as specifically provided herein, none of FINOVA's rights or remedies as set
forth in the Loan Agreement is being waived or modified by the terms of this
Amendment.
NOW, THEREFORE, in consideration of the foregoing and the mutual
covenants herein contained, and for other good and valuable consideration, the
receipt and sufficiency of which are hereby acknowledged, the parties hereby
agree as follows:
1. Amendment to "Loans" Provisions of the Loan Agreement.
(a) The second to the last sentence of Section 1.1 of the
Loan Agreement, entitled "Loan Facilities", is hereby amended in its
entirety to read as follows:
"The maximum aggregate amount of Loans available to Borrower
from time to time hereunder shall be reduced dollar for dollar
from the Subsequent Total Facility Amount upon amortization of
the outstanding principal amount of the Term Loan and the
aggregate amount borrowed under the Capital Expenditure
Facility and the aggregate amount of Receivable Loans
outstanding."
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(b) The definition set forth in the Schedule to the Loan
Agreement under the section entitled "INITIAL TOTAL FACILITY AMOUNT
(Section 1.1)" is hereby amended in its entirety as follows:
"INITIAL TOTAL FACILITY AMOUNT (SECTION 1.1):
One Million Seven Hundred Fifty Thousand Dollars
($1,750,000)"
(c) The definition set forth in the Schedule to the Loan
Agreement under the section entitled "SUBSEQUENT TOTAL FACILITY AMOUNT
(Section 1.1)" is hereby amended in its entirety as follows:
"SUBSEQUENT TOTAL FACILITY AMOUNT (SECTION 1.1):
Three Million Six Hundred Seventy Five Thousand
Dollars ($3,675,000)"
(d) Paragraph B of the Section in the Schedule to the Loan
Agreement entitled "LOANS (Section 1.2)" is hereby amended in its
entirety as follows:
"B. Term Loan: A term loan against the value of Borrower's
machinery and equipment in the original principal amount of
Two Million Five Hundred Seventy Five Thousand Dollars
($2,575,000) (the 'Term Loan') which shall be evidenced by and
payable in accordance with the terms of a Secured Promissory
Note by Borrower in favor of FINOVA, substantially in the form
of Exhibit A attached hereto (the 'Term Note')."
2. Amendment to "Interest Rate and Other Charges" Provisions of the
Loan Agreement. The first sentence of the paragraph entitled "Interest" under
the Section in the Schedule to the Loan Agreement entitled "INTEREST AND FEES
(Section 3.1)" is hereby amended in its entirety as follows:
"Interest. Borrower shall pay FINOVA interest on the daily
outstanding balance of Borrower's Receivable Loans account at a per
annum rate of one and three-quarters (1.75) percentage points in excess
of the rate of interest announced publicly by CitiBank, N.A. from time
to time as its 'base rate' (or any successor thereto), which may not be
such institution's lowest rate (the 'Base Rate')."
3. Amendment to Financial Covenant Provisions of the Loan Agreement.
The covenant set forth in the Schedule to the Loan Agreement under the heading
"Total Debt Service Coverage" in the Section entitled "FINANCIAL COVENANTS
(Section 13.14)" is hereby amended in its entirety to read as follows:
"Total Debt Service
Coverage: Borrower shall maintain Total Debt Service
Coverage of not less than 1.0 to 1.0."
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4. Amendment to Term; Termination Provisions of the Loan Agreement.
(a) The paragraph set forth in the Schedule to the Loan
Agreement under the section entitled "TERM (Section 16.1)" is hereby
amended in its entirety as follows:
"The initial term of this Agreement shall be from May
8, 1996 through November 1, 2000 (the 'Initial Term') and
shall be automatically renewed for successive periods of one
(1) year each (each, a 'Renewal Term'), unless earlier
terminated as provided in Section 16 or 17 above or elsewhere
in this Agreement."
(b) The paragraph set forth in the Schedule to the Loan
Agreement under the section entitled "TERMINATION FEE (Section 16.4)"
is hereby amended in its entirety as follows:
"The Termination Fee provided in Section 16.4 shall be in the
amount set forth below during the periods indicated:
(i) two percent (2%) of the Subsequent Total Facility Amount,
if such early termination occurs on or before November 1, 1999; or
(ii) one percent (1%) of the Subsequent Total Facility Amount,
if such early termination occurs after November 1, 1999."
5. Amendment to the Definitions in the Loan Agreement.
(a) The definition of "Term Loan" set forth in Section 18 of
the Loan Agreement is hereby amended in its entirety as follows:
"'Term Loan Note' has the meaning set forth in the
Schedule."
(b) The definition of "Term Loan Note" set forth in Section 18
of the Loan Agreement is hereby amended in its entirety as follows:
"'Term Loan Note' has the meaning set forth in the
Schedule."
(c) The definition of "Total Debt Service Coverage" set forth
in Section 18 of the Loan Agreement is hereby amended in its entirety
as follows:
"'Total Debt Service Coverage' means the ratio of
Operating Cash Flow for the fiscal quarter then ended on March
31, June 30, September 30 or December 31 to the Total Debt
Service for the fiscal quarter then ended on the same date."
6. Consolidation of Term Loans. FINOVA and Borrower acknowledge and
agree that (a) the outstanding amounts as of the date hereof under Term Loan A,
Term Loan B, Term Loan C and the Capital Expenditure Facility are hereby
consolidated as the "Term Loan" under the Loan Agreement; (b) the Term Loan A
Amended and Restated Secured Promissory Note
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dated as of May 8, 1996 in the original principal amount of One Million Two
Hundred Fifty Thousand Dollars ($1,250,000), the Term Loan B Secured Promissory
Note dated as of June 18, 1997 in the original principal amount of One Million
Fifty Thousand Dollars ($1,050,000), the Term Loan C Secured Promissory Note
dated as of October 21, 1997 in the original principal amount of Six Hundred
Thousand Dollars ($600,000), the Secured Capital Expenditure Loan Note dated as
of October 22, 1997 in the original principal amount of Three Hundred Seventy
Thousand Seven Hundred Thirty Dollars ($370,730) and the Secured Capital
Expenditure Loan Note dated as of December 1, 1997 in the original principal
amount of One Hundred Forty Eight Thousand Seven Hundred Thirty Six Dollars
($148,736) are hereby replaced in their entirety with that certain Secured
Promissory Note in the original principal amount of Two Million Five Hundred
Seventy Five Thousand Dollars ($2,575,000) by Borrower in favor of FINOVA
substantially in the form of Exhibit A attached hereto; and (c) Exhibit A
attached hereto is hereby added to the Loan Agreement as Exhibit A thereto.
7. Waiver by FINOVA of Compliance with Financial Covenant. Borrower
hereby acknowledges (i) that it was not in compliance with the financial
covenant relating to the Total Debt Service Coverage ratio set forth in Section
13.14 of the Schedule to the Loan Agreement as of the months ending May 31,
1998, June 30, 1998, July 31, 1998, August 31, 1998 and September 30, 1998, (ii)
that it has advised FINOVA that it will not be in compliance with such financial
covenant as of the month ending October 31, 1998 and (iii) that such
non-compliance constitutes an Event of Default under the Loan Agreement. FINOVA
hereby waives compliance by Borrower with such Total Debt Service Coverage
financial covenant for such months, and shall not exercise its rights and
remedies under the Loan Agreement or applicable law in respect of such Event of
Default; provided, however, that FINOVA shall be free to exercise all of its
rights and remedies under the Loan Agreement in the event of Borrower's
violation or breach after October 31, 1998, of such Total Debt Service Coverage
financial covenant. The foregoing waiver is not a continuing waiver, and FINOVA
does not by this waiver amend the terms and provisions of the Loan Agreement.
Upon the occurrence of any Event of Default after the date hereof, or in the
event that FINOVA learns of any Event of Default which occurred prior to the
date hereof (other than a breach of the Total Debt Service Coverage financial
covenant for the months referenced above), FINOVA shall be free to exercise
any and all of its various rights and remedies under the Loan Agreement.
8. Effectiveness of this Amendment. FINOVA must have received the
following items, in form and content acceptable to FINOVA, before this Amendment
is effective and before FINOVA is required to extend any credit to Borrower as
provided for by this Amendment.
(a) Amendment. This Amendment fully executed in a sufficient
number of counterparts for distribution to FINOVA and Borrower.
(b) Term Note. The Term Note duly executed by Borrower in
favor of FINOVA.
(c) Authorizations. Evidence that the execution, delivery and
performance by Borrower and each guarantor or subordinating creditor of
this Amendment and any instrument or agreement required under this
Amendment have been duly authorized.
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(d) Representations and Warranties. The representations and
warranties set forth in the Loan Agreement must be true and correct.
(e) Other Required Documentation. All other documents and
legal matters in connection with the transactions contemplated by this
Amendment shall have been delivered or executed or recorded and shall
be in form and substance satisfactory to FINOVA.
(f) Payment of Modification Fee. FINOVA shall have received
from Borrower a modification fee of Ten Thousand Dollars ($10,000) for
the processing and approval of this Amendment.
9. Representations and Warranties. The Borrower represents and warrants
as follows:
(a) Authority. The Borrower has the requisite corporate power
and authority to execute and deliver this Amendment, as applicable, and
to perform its obligations hereunder and under the Loan Documents (as
amended or modified hereby) to which it is a party. The execution,
delivery and performance by the Borrower of this Amendment, and the
performance by each Loan Party of each Loan Document (as amended or
modified hereby) to which it is a party have been duly approved by all
necessary corporate action of such Loan Party and no other corporate
proceedings on the part of such Loan Party are necessary to consummate
such transactions.
(b) Enforceability. This Amendment has been duly executed and
delivered by the Borrower. This Amendment and each Loan Document (as
amended or modified hereby) is the legal, valid and binding obligation
of each Loan Party hereto or thereto, enforceable against such Loan
Party in accordance with its terms, and is in full force and effect.
(c) Representations and Warranties. The representations and
warranties contained in each Loan Document (other than any such
representations or warranties that, by their terms, are specifically
made as of a date other than the date hereof) are correct on and as of
the date hereof as though made on and as of the date hereof.
(d) No Default. No event has occurred and is continuing that
constitutes an Event of Default except as referenced in paragraph 7
hereof.
10. Choice of Law. The validity of this Amendment, its construction,
interpretation and enforcement, the rights of the parties hereunder, shall be
determined under, governed by, and construed in accordance with the internal
laws of the State of Arizona governing contracts only to be performed in that
State.
11. Counterparts. This Amendment may be executed in any number of
counterparts and by different parties and separate counterparts, each of which
when so executed and delivered, shall be deemed an original, and all of which,
when taken together, shall constitute one and the same instrument. Delivery of
an executed counterpart of a signature page to this
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Amendment by telefacsimile shall be effective as delivery of a manually executed
counterpart of this Amendment.
12. Due Execution. The execution, delivery and performance of this
Amendment are within the power of Borrower, have been duly authorized by all
necessary corporate action, have received all necessary governmental approval,
if any, and do not contravene any law or any contractual restrictions binding on
Borrower.
13. Reference to and Effect on the Loan Documents.
(a) Upon and after the effectiveness of this Amendment, each
reference in the Loan Agreement to "this Agreement", "hereunder",
"hereof" or words of like import referring to the Loan Agreement, and
each reference in the other Loan Documents to "the Loan Agreement",
"thereof" or words of like import referring to the Loan Agreement,
shall mean and be a reference to the Loan Agreement as modified and
amended hereby.
(b) Except as specifically amended above, the Loan Agreement
and all other Loan Documents, are and shall continue to be in full
force and effect and are hereby in all respects ratified and confirmed
and shall constitute the legal, valid, binding and enforceable
obligations of Borrower to FINOVA.
(c) The execution, delivery and effectiveness of this
Amendment shall not, except as expressly provided herein, operate as a
waiver of any right, power or remedy of FINOVA under any of the Loan
Documents, nor constitute a waiver of any provision of any of the Loan
Documents.
(d) To the extent that any terms and conditions in any of the
Loan Documents shall contradict or be in conflict with any terms or
conditions of the Loan Agreement, after giving effect to this
Amendment, such terms and conditions are hereby deemed modified or
amended accordingly to reflect the terms and conditions of the Loan
Agreement as modified or amended hereby.
14. Ratification. Borrower hereby restates, ratifies and reaffirms each
and every term and condition set forth in the Loan Agreement, as amended hereby,
and the Loan Documents effective as of the date hereof.
15. Estoppel. To induce FINOVA to enter into this Amendment and to
continue to make advances to Borrower under the Loan Agreement, Borrower hereby
acknowledges and agrees that, after giving effect to this Amendment, as of the
date hereof, there exists no Event of Default except as referenced in paragraph
6 hereof and no right of offset, defense, counterclaim or objection in favor of
Borrower as against FINOVA with respect to the Obligations.
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IN WITNESS WHEREOF, the parties have entered into this Amendment as of
the date first above written.
"BORROWER"
SOUTH TEXAS DRILLING &
EXPLORATION, INC.,
a Texas corporation
By: /s/ [ILLEGIBLE]
--------------------------------
Title: President & CEO
-----------------------------
"FINOVA"
FINOVA CAPITAL CORPORATION,
a Delaware corporation
By: /s/ [ILLEGIBLE]
--------------------------------
Title: VP
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EXHIBIT A
SECURED PROMISSORY NOTE
$2,575,000 November 1, 1998
FOR VALUE RECEIVED, SOUTH TEXAS DRILLING & EXPLORATION, INC., a Texas
corporation ("Borrower"), promises to pay to the order of FINOVA CAPITAL
CORPORATION, a Delaware corporation ("FINOVA"), at its offices at 000 Xxxxx
Xxxxxx Xxxxx, Xxxxx 0000, Xxxxxxx, Xxxxxxxx, or at such other place or places as
FINOVA may from time to time designate in writing, the principal sum of Two
Million Five Hundred Seventy Five Thousand Dollars ($2,575,000), plus interest
in the manner and upon the terms and conditions set forth below. This Secured
Promissory Note ("Note") is made pursuant to that certain Loan and Security
Agreement dated as of May 8, 1996, as amended, between FINOVA and Borrower (the
"Loan Agreement"), the provisions of which are incorporated herein by this
reference. Capitalized terms herein, unless otherwise noted, shall have the
meaning set forth in the Loan Agreement.
1. Schedule of Payments.
This Note shall be payable as follows:
(a) Twenty-four (24) equal successive monthly installments of
principal of Thirty Thousand Six Hundred Fifty Four and 76/100 Dollars
($30,654.76) each on the first day of each month, beginning November 1, 1998,
and continuing through and including October 1, 1998: and
(b) A final installment of One Million Eight Hundred Thirty
Nine Thousand Two Hundred Eighty Five and 80/100 Dollars ($1,839,285.80) on
November 1, 2000, together with accrued interest on the principal balance from
time to time remaining unpaid, payable monthly on the first day of each and
every month, beginning November 1, 1998.
2. Rate and Payment of Interest.
Interest shall be computed on the basis of a 360-day year for the
actual number of days elapsed, and shall be at the rate of one and
three-quarters (1.75) percentage points above the Prime Rate (as hereinafter
defined), computed on the basis of a 360-day year; provided, however, upon the
occurrence and during the continuance of an Event of Default (as hereinafter
defined), interest shall accrue on the outstanding principal balance of this
Note at a default rate (the "Default Rate") of three and three-quarters (3.75)
percentage points above the Prime Rate, and shall be payable on demand. "Prime
Rate" means, for any day, the rate of interest per annum (over a year of 360
days) announced by Citibank, N.A. (the "Bank"), from time to time, as its "base
rate" (or any successor thereto) in effect on such day. The Prime Rate is not
necessarily the lowest rate charged by the Bank. The applicable rate of interest
assessed hereunder will be increased or decreased from time to time hereafter in
an amount equal to any
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increase or decrease hereafter made by the Bank in the Prime Rate. A change in
the Prime Rate shall be effective on the first day following such change.
3. Prepayment.
Prepayment may be made under this Note in whole but not in part,
subject to the Termination Fee set forth in the Loan Agreement, provided that
such prepayment is preceded by not less than five (5) business days prior
written notice to FINOVA and accompanied by all accrued and unpaid interest and
the full amount of the applicable Termination Fee. Notwithstanding anything
herein to the contrary, in the event the Loan Agreement is terminated by
Borrower, by FINOVA or by any other person at any time, then the entire unpaid
principal balance of this Note, together with all accrued and unpaid interest
hereon and the full amount of the applicable Termination Fee, shall become
immediately due and payable in full on the effective date of such termination,
without presentment, notice or demand of any kind.
4. Events of Defaults.
The occurrence of any one of the following events shall constitute a
default by Borrower under this Note (hereinafter an "Event of Default"):
(a) if Borrower fails to pay to FINOVA an installment of
principal or interest hereunder when due;
(b) if Borrower fails to pay any of its Obligations (as
defined in the Loan Agreement) to FINOVA when due and payable or declared due
and payable;
(c) if Borrower fails or neglects to perform, keep or observe
any term, provision, covenant, warranty or representation contained in this Note
or the Loan Agreement (other than as referred to in Section 4(a) or Section
4(b)), which is required to be performed, kept or observed by Borrower or if a
default occurs under the Loan Agreement; or
(d) the occurrence of a default or an event of default under
any agreement, instrument or document heretofore, now or at any time or times
hereafter delivered to FINOVA by Borrower or by any guarantor of part or all of
Borrower's Obligations to FINOVA.
5. Remedies.
Upon the occurrence of any Event of Default hereunder, in addition to
FINOVA's right to charge interest on the Obligations at the Default Rate:
(a) at the option of FINOVA, the entire unpaid amount of all
of the Obligations, including without limitation the Termination Fee, shall
become immediately due and payable without demand, notice or legal process of
any kind;
(b) FINOVA may, at its option, without demand, notice or legal
process of any kind, exercise any and all rights and remedies granted to it by
the Loan Agreement or by any other agreement now or hereafter existing between
FINOVA and Borrower or between FINOVA and any guarantor of part or all of
Borrower's liabilities to FINOVA; and
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(c) FINOVA may at its option exercise from time to time any
other rights and remedies available to it under the Uniform Commercial Code or
other law of the State of Arizona.
The remedies of FINOVA as provided herein and in the Loan Agreement
shall be cumulative and concurrent, and may be pursued singularly, successively,
or together, at the sole discretion of FINOVA. No act of omission or commission
of FINOVA, including specifically any failure to exercise any right, remedy or
recourse, shall be deemed to be a waiver or release of the same, such waiver or
release to be effected only through a written document executed by FINOVA and
then only to the extent specifically recited therein. A waiver or release with
reference to any one event shall not be construed as continuing, as a bar to, or
as a waiver or release of, any subsequent right, remedy or recourse as to a
subsequent event.
6. General Provisions.
(a) Borrower warrants and represents to FINOVA that Borrower
has used and will continue to use the loans and advances represented by this
Note solely for proper business purposes, and consistent with all applicable
laws and statutes.
(b) This Note is secured by the Collateral described in the
Loan Agreement.
(c) Borrower waives presentment, demand and protest, notice of
protest, notice of presentment and all other notices and demands in connection
with the enforcement of FINOVA's rights hereunder, except as specifically
provided and called for by this Note, and hereby consents to, and waives notice
of, the release, addition, or substitution, with or without consideration, of
any collateral or of any person liable for payment of this Note. Any failure of
FINOVA to exercise any right available hereunder or otherwise shall not be
construed as a waiver of the right to exercise the same or as a waiver of any
other right at any other time.
(d) If this Note is not paid when due or upon the occurrence
of an Event of Default, Borrower further promises to pay all costs of
collection, foreclosure fees, attorneys fees and expert witness fees incurred by
FINOVA, whether or not suit is filed hereon, and the fees, costs and expenses as
provided in the Loan Agreement.
(e) The contracted for rate of interest of the loan
contemplated hereby, without limitation, shall consist of the following:
(i) the interest rate set forth on the Schedule,
calculated and applied to the principal balance of this Note in accordance with
the provisions of this Note;
(ii) interest after an Event of Default, calculated
and applied to the amounts due under this Note in accordance with the provisions
hereof; and
(iii) all Additional Sums (as herein defined), if
any.
Borrower agrees to pay an effective contracted for rate of interest which is the
sum of the above-referenced elements. All examination fees, attorneys fees,
expert witness fees, letter of credit fees, collateral monitoring fees, closing
fees, facility fees, Termination Fees, Minimum Interest
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Charges, other charges, goods, things in action or any other sums or things of
value paid or payable by Borrower (collectively, the "Additional Sums "),
whether pursuant to this Note, the Loan Agreement or any other documents or
instruments in any way pertaining to this lending transaction, or otherwise with
respect to this lending transaction, that under any applicable law may be deemed
to be interest with respect to this lending transaction, for the purpose of any
applicable law that may limit the maximum amount of interest to be charged with
respect to this lending transaction, shall be payable by Borrower as, and shall
be deemed to be, additional interest and for such purposes only, the agreed upon
and "contracted for rate of interest" of this lending transaction shall be
deemed to be increased by the rate of interest resulting from the inclusion of
the Additional Sums.
(f) It is the intent of the parties to comply with the usury
laws of the State of Arizona (the "Applicable Usury Law "). Accordingly, it is
agreed that notwithstanding any provisions to the contrary in this Agreement, or
in any of the documents securing payment hereof or otherwise relating hereto, in
no event shall this Agreement or such documents require the payment or permit
the collection of interest in excess of the maximum contract rate permitted by
the Applicable Usury Law (the "Maximum Interest Rate"). In the event:
(i) any such excess of interest otherwise would be
contracted for, charged or received from Borrower or otherwise in connection
with the loan evidenced hereby;
(ii) the maturity of the Obligations is accelerated
in whole or in part; or
(iii) all or part of the Obligations shall be
prepaid, so that under any of such circumstances the amount of interest
contracted for, shared or received in connection with the loan evidenced hereby,
would exceed the Maximum Interest Rate, then in any such event:
(A) the provisions of this Section 6(f)
shall govern and control;
(B) neither Borrower nor any other Person
now or hereafter liable for the payment of the Obligations shall be obligated to
pay the amount of such interest to the extent that it is in excess of the
Maximum Interest Rate;
(C) any such excess which may have been
collected shall be either applied as a credit against the then unpaid principal
amount of the Obligations or refunded to Borrower, at FINOVA's option; and
(D) the effective rate of interest shall be
automatically reduced to the Maximum Interest Rate. It is further agreed,
without limiting the generality of the foregoing, that to the extent permitted
by the Applicable Usury Law:
(I) all calculations of interest
which are made for the purpose of determining whether such rate would exceed the
Maximum Interest Rate shall be made by amortizing, prorating, allocating and
spreading during the period of the full stated term of the loan evidenced
hereby, all interest at any time contracted for, charged or received from
Borrower or otherwise in connection with such loan; and
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(II) in the event that the effective rate of
interest on the loan should at any time exceed the Maximum Interest Rate, such
excess interest that would otherwise have been collected had there been no
ceiling imposed by the Applicable Usury Law shall be paid to FINOVA from time to
time, if and when the effective interest rate on the loan otherwise falls below
the Maximum Interest Rate, to the extent that interest paid to the date of
calculation does not exceed the Maximum Interest Rate, until the entire amount
of interest which would otherwise have been collected had there been no ceiling
imposed by the Applicable Usury Law has been paid in full.
Borrower further agrees that should the Maximum Interest Rate be increased at
any time hereafter because of a change in the Applicable Usury Law, then to the
extent not prohibited by the Applicable Usury Law, such increases shall apply to
all indebtedness evidenced hereby regardless of when incurred; but, again to the
extent not prohibited by the Applicable Usury Law, should the Maximum Interest
Rate be decreased because of a change in the Applicable Usury Law, such
decreases shall not apply to the indebtedness evidenced hereby regardless of
when incurred.
(g) FINOVA may at any time transfer this Note and FINOVA's
rights in any or all collateral securing this Note, and FINOVA thereafter shall
be relieved from all liability with respect to such collateral arising after the
date of such transfer.
(h) This Note shall be binding upon Borrower and its legal
representatives, successors and assigns. Wherever possible, each provision of
this Note shall be interpreted in such manner as to be effective and valid under
applicable law, but if any provision of the Note shall be prohibited by or
invalid under such law, such provision shall be severable, and be ineffective to
the extent of such prohibition or invalidity, without invalidating the remaining
provisions of this Note.
7. GOVERNING LAW; WAIVERS.
THIS NOTE HAS BEEN DELIVERED FOR ACCEPTANCE BY FINOVA IN PHOENIX,
ARIZONA AND SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL
LAWS (AS OPPOSED TO THE CONFLICTS OF LAW PROVISIONS) OF THE STATE OF ARIZONA, AS
THE SAME MAY FROM TIME TO TIME BE IN EFFECT, INCLUDING, WITHOUT LIMITATION, THE
UNIFORM COMMERCIAL CODE AS ADOPTED IN ARIZONA. BORROWER HEREBY:
(a) IRREVOCABLY SUBMITS TO THE JURISDICTION OF ANY STATE OR
FEDERAL COURT LOCATED IN MARICOPA COUNTY, ARIZONA OVER ANY ACTION OR PROCEEDING
TO ENFORCE OR DEFEND ANY MATTER ARISING FROM OR RELATED TO THIS NOTE;
(b) WAIVES PERSONAL SERVICE OF ANY AND ALL PROCESS UPON
BORROWER, AND CONSENTS THAT ALL SUCH SERVICE OF PROCESS BE MADE BY MESSENGER,
CERTIFIED MAIL OR REGISTERED MAIL DIRECTED TO BORROWER AT THE ADDRESS SET FORTH
BELOW AND SERVICE SO MADE SHALL BE DEEMED
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TO BE COMPLETED UPON THE EARLIER OF ACTUAL RECEIPT OR THREE (3) DAYS AFTER THE
SAME SHALL HAVE BEEN POSTED TO BORROWER'S ADDRESS;
(c) IRREVOCABLY WAIVES, TO THE FULLEST EXTENT BORROWER MAY
EFFECTIVELY DO SO, THE DEFENSE OF AN INCONVENIENT FORUM TO THE MAINTENANCE OF
ANY SUCH ACTION OR PROCEEDING;
(d) AGREES THAT A FINAL JUDGMENT IN ANY SUCH ACTION OR
PROCEEDING SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY OTHER JURISDICTION BY
SUIT ON THE JUDGMENT OR IN ANY OTHER MANNER PROVIDED BY LAW;
(e) AGREES NOT TO INSTITUTE ANY LEGAL ACTION OR PROCEEDING
AGAINST FINOVA OR ANY OF FINOVA'S DIRECTORS, OFFICERS, EMPLOYEES, AGENTS OR
PROPERTY, CONCERNING ANY MATTER ARISING OUT OF OR RELATING TO THIS NOTE IN ANY
COURT OTHER THAN ONE LOCATED IN MARICOPA COUNTY, ARIZONA; AND
(f) IRREVOCABLY WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY
ACTION ARISING UNDER OR IN CONNECTION WITH THIS NOTE.
NOTHING IN THIS SECTION SHALL AFFECT OR IMPAIR FINOVA'S RIGHT TO SERVE
LEGAL PROCESS IN ANY MANNER PERMITTED BY LAW OR FINOVA'S RIGHT TO BRING ANY
ACTION OR PROCEEDING AGAINST BORROWER OR BORROWER'S PROPERTY IN THE COURTS OF
ANY OTHER JURISDICTION.
IN WITNESS WHEREOF, this Note has been executed and delivered as of the
date first set forth above.
SOUTH TEXAS DRILLING & EXPLORATION,
INC., a Texas corporation
By: /s/ WM. XXXXX XXXXX
--------------------------------------
Name:
-----------------------------------
Title:
-----------------------------------
Federal Taxpayer Identification #: 00-0000000
Address: 0000 Xxxxxxxx, Xxxxxxxx X
Xxx Xxxxxxx, Xxxxx 00000
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