EXHIBIT 10.50
EXHIBIT "A"
PROMISSORY NOTE
$16,000,000 June 23, 1997
For value received, Kennecott Uranium Company, a Delaware corporation
(the "Borrower"), promises to pay to Kennecott Energy Company, a Delaware
corporation (the "Lender"), or its order, at the place designated in writing
from time to time by the Lender, without setoff or deduction, the principal sum
of Sixteen Million Dollars (U.S. $16,000,000.00), together with interest accrued
on all amounts outstanding hereunder.
Interest shall be compounded annually as of the last day of each
calendar year on all amounts outstanding hereunder on that date.
Absent an Event of Default, interest shall begin to accrue twenty-two
(22) months after the date hereof. Such interest shall accrue at the rate of ten
and one-half percent (10.5%) per annum.
Principal and interest are payable by Borrower to the Lender in
quarterly installments in an amount equal to twenty percent (20%) of the Cash
Flow from the GMMV Properties for such quarter (the "Payment"). Notwithstanding
the preceding sentence, in no event shall the Payment exceed fifty percent (50%)
of the EBITDA from the GMMV Properties for the end of the quarter immediately
preceding the Payment due date. Concurrently with each Payment, Borrower shall
deliver to Lender a certificate of its Chief Financial Officer ("CFO")
certifying the accuracy of the calculation of the Payment based upon the
financial statements of Borrower (which shall also be certified by the CFO).
Borrower shall provide to Lender complete copies of such financial statements.
Borrower shall keep adequate records and books of account in accordance with
GAAP to support such financial statements and permit any authorized
representative of Lender to inspect, copy and audit the same upon reasonable
prior notice, at least once in every calendar year. All payments due under this
Note shall be applied first against outstanding costs, expenses and fees due
under this Note, then to accrued but unpaid interest and then against the
outstanding principal amount due under this Note.
Payments for each calendar quarter shall be due on each January 20,
April 20, July 20 and October 20 immediately following such quarter, if there is
both Cash Flow and EBITPA from the GMMV Properties with respect to such quarter.
Notwithstanding Cash Flow, EBITPA or any other provision hereof, the entire
balance of this Note shall be due and payable on June 23, 2010. If any Payment
to be made by Borrower shall become due on a day which is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in computing the interest in such payment.
Borrower shall pay all amounts due under this Note in lawful money of
the United States of America.
Borrower may, at its own election, prepay any unpaid principal and
interest without penalty provided such prepayment equals or exceeds one million
dollars ($1,000,000) and notice of such prepayment election is given to Lender
at least ten (10) days prior to such payment.
EXHIBIT 10.50
If any Payment is not paid when due, including any acceleration of the
obligations under this Note due to a default by Borrower, the outstanding
principal balance of this Note shall bear interest, from such due date until the
date of such payment, at a rate per annum equal to the lesser of (a) twelve and
one-half percent (12.5%), or (b) the maximum interest rate permitted to be
charged by the laws of the State of Wyoming (the "Default Rate").
Upon an Event of Default, the Borrower has the right to cure any
monetary default within ten (10) days after the due-date thereof without such
event otherwise constituting a default and for any non-monetary default, the
Borrower has the opportunity to cure such default within thirty (30) days after
written notice to Borrower of such Event of Default. A breach or default by the
Borrower of any term or condition of this Note or the Deed of Trust, Mortgage,
Security Agreement, Financing Statement and Assignment of Proceeds, Rents and
Leases, entered into by the Borrower and Lender on even date herewith (the
"Mortgage") securing this Note, shall constitute a default under this Note and
the Mortgage. Each Event of Default herein and the remedies provided to Borrower
for curing of such defaults shall apply to each of the Note and the Mortgage. To
the extent that an Event of Default and the remedies provided in the Note and
the Mortgage are inconsistent, the terms and conditions of this Note shall
apply. The following constitute an Event of Default:
(i) The failure to pay in full, when due, any payment of interest or
principal required hereunder or the failure to provide any documentation
required by this Note.
(i) the occurrence of any Event of Default which is defined in the
Mortgage.
Borrower agrees that upon the occurrence of any Event of Default and the
failure of the Borrower to cure the default as above provided, Lender shall have
the right, in addition to all other rights and remedies available to Lender
under the Mortgage, or by law, to do any or all of the following and in such
order as Lender, at its sole discretion, deems advisable:
(ii) Lender may accelerate the payment of the Note and thereupon the
principal sum then remaining unpaid on the Note and all accrued interest thereon
shall become immediately due and payable.
(iii) Lender may seek the court appointment of a receiver, without
regard to the solvency of Borrower, to prevent waste, and to protect all rights
accruing to Lender by virtue of the Note and Mortgage. All costs and expenses
incurred in connection with the appointment of such receiver, and all costs
incurred by Lender or the receiver in connection with the protection or
preservation of the Collateral shall be charged against Borrower, may be
enforced as a lien against such Collateral and shall be deemed an increase to
and a part of the Note.
Lender shall have the right to enforce any one or more of the remedies
provided hereunder or by law or in equity either successively or concurrently,
and any such action by Lender shall not be deemed an election of remedies or
otherwise prevent Lender from pursuing any further remedy it may have hereunder
or at law or in equity. The rights and remedies of Lender are cumulative.
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EXHIBIT 10.50
All sums expended and expenses incurred by Lender in the exercise of the
rights conferred in this Note and the Mortgage shall be deemed to be advanced
and loaned to Borrower hereunder, and payment thereof shall be secured by the
Mortgage, provided, however, that Lender may demand immediate repayment of such
sums and that such sums shall bear interest at the Default Rate.
Borrower shall pay to Lender upon demand all reasonable costs, expenses
and fees (including reasonable attorney's fees), whether suit be instituted or
not, both before and after judgment, and for any judicial proceeding at the
trial court and appellate levels (and if suit is instituted, such fees as shall
be fixed by a judge sitting without a jury) incurred by Lender in protecting or
enforcing its rights hereunder, and under the Mortgage, and all expenses of
taking possession, holding and disposing of the Collateral, including as
incurred in any bankruptcy, insolvency, or arbitration proceeding.
Borrower hereby waives diligence, demand, presentment for payment,
notice of nonpayment, protest, notice of dishonor and notice of protest, and
hereby waives any defense by reason of extension of time for payment or other
indulgence granted by Lender.
No delay or failure of Lender in exercising any right, remedy or
privilege under this Note shall affect such right, remedy or privilege, nor
shall any single or partial exercise thereof or any abandonment or
discontinuance of steps to enforce such a right, remedy or privilege preclude
any further exercise thereof or the exercise of any other right, remedy or
privilege. The rights, remedies and privileges of Lender hereunder are
cumulative and not exclusive of any rights, remedies or privileges which Lender
would otherwise have. Any waiver, permit, consent or approval of any kind or
character on the part of Lender of any breach or default under this Note, or of
any provision or condition of this Note, must be in writing and shall be
effective only to the extent specifically set forth in such writing. No notice
to or demand on Borrower shall entitle Borrower to any other or further notice
or demand in other similar circumstances. A waiver on any one occasion shall not
be construed as a waiver or bar to any right, remedy or privilege on any other
occasion.
All notices, consents or communications required under this Note shall
be in writing and shall be deemed to have been properly given if sent by hand
delivery, overnight courier or certified mail, postage prepaid, addressed to the
parties at the addresses set forth in the Mortgage.
No amendment or modification of any provision of this Note shall be
valid unless the same shall be in writing and signed by the Lender and Borrower.
This Note is to be construed and enforced in all respects in accordance
with the laws of the State of Wyoming, without giving effect to any choice or
conflict of law provision or rule either of the State of Wyoming or any other
jurisdiction which would cause the application of any law other than of the
State of Wyoming.
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EXHIBIT 10.50
Whenever used herein the words "Borrower" and "Lender" shall be deemed
to include, to the extent applicable, the successors and assigns of Borrower and
of Lender. This obligation shall bind Borrower and, to the extent applicable,
its successors and assigns, and the benefits hereof shall inure to Lender and
its successors and assigns.
Capitalized terms which are not defined herein shall have the meanings
subscribed to them by Annex I attached hereto.
Time is of the essence of this Note and of all the obligations
hereunder.
Executed this 23rd day of June, 1997.
KENNECOTT URANIUM COMPANY
By: /s/ L. R. Cardey-Yates
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Its: Director/Assitant Corporate Secretary
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EXHIBIT 10.50
ANNEX I
Definitions
"ACQUISITION AGREEMENT" means the acquisition agreement by and among
Borrower, U.S. Energy Corp. and the joint venture between U.S. Energy Corp. and
Crested Corp., dated the 23rd day of June, 1997.
"BUSINESS DAY" means any day other than a Saturday, a Sunday, or a
holiday on which national banking associations in the state of Wyoming are
closed.
"CASH FLOW" means cash flow calculated in accordance with GAAP for the
applicable period.
"CLOSING" means the closing of the transactions contemplated by the
Acquisition Agreement.
"COLLATERAL" means Mortgaged Property as defined in the Mortgage.
"EBITDA" means earnings before interest, Income Tax, depreciation and
amortization calculated in accordance with GAAP for the applicable period.
"GAAP" means United States generally accepted accounting principles as
in effect from time to time.
"GMMV PROPERTIES" means the mill and mining properties which, as of the
date hereof, are subject to the GMMV Agreements.
"GMMV AGREEMENTS" means the following agreements among Borrower, U.S.
Energy Corp. and the joint venture between U.S. Energy Corp. and Crested Corp.:
(i) Mining Venture Agreement dated June 1, 1990; (ii) Letters dated September
10, 1990 and March 1, 1991; (iii) Amendment and Agreement dated September 20,
1991; (iv) Agreement Regarding Sweetwater Mill and Amendment to Mining Venture
Agreement dated September 20, 1991; (v) the Third Amendment to Mining Venture
Agreement dated February 26, 1992; and (vi) the Fourth Amendment of Mining
Venture Agreement dated as of June 23, 1997.
"INCOME TAX" means any federal, state, local, or foreign income tax,
including any interest, penalty, or addition thereto, whether disputed or not.
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