EXHIBIT 10.13
PROMISSORY NOTE
$1,000,000.00 Houston, Texas As of September 1, 1996
FOR VALUE RECEIVED, the undersigned, TEXOIL, INC., a Nevada corporation (
the "BORROWER"), promises to pay to the order of the T. W. HOEHN, JR. AND BETTY
JOE HOEHN REVOCABLE TRUST (the "LENDER") in lawful money of the United States of
America, the maximum principal amount of ONE MILLION AND NO/100 DOLLARS
($1,000,000.00), or so much thereof as may be outstanding, upon the terms
provided in this Note, plus interest and such other additional amounts as may be
added to principal pursuant to the terms of this Note.
1. DEFINITIONS. As used in this Note,
HIGHEST LAWFUL RATE means the maximum rate (or, if the context so
requires, an amount calculated at such rate) of interest which the holder
of this Note is allowed to contract for, charge, take, reserve, or receive
under applicable law after taking into account, to the extent required by
applicable law, any and all relevant payments or charges.
MATURITY DATE means the earlier to occur of (a) October 1, 2002, and
(b) the date occurring 30 days after all of the notes issued under the
RIMCO Note Purchase Agreement have been paid in full or exchanged for
common stock of the Borrower and all commitments of the RIMCO Purchasers
to fund under RIMCO Finance Documents have terminated.
PRIME RATE means the annual interest rate most recently announced by
Wells Fargo - Texas, N.A. (f\k\a First Interstate Bank of Texas, N.A.) as
its prime rate in effect at its principal office, automatically
fluctuating upward and downward with and as specified in each announcement
without special notice to Borrower or any other person (which prime rate
may not necessarily represent the lowest or best rate actually charged to
a customer).
PRINCIPAL DEBT means, when determined, the outstanding principal
balance of this Note.
RIMCO FINANCE DOCUMENTS means the RIMCO Note Purchase Agreement, the
RIMCO Guaranty, the RIMCO Tranche A Notes, any other notes issued under
the RIMCO Note Purchase Agreement, and any pledge agreements, mortgages or
other documents executed in connection therewith.
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Exhibit 10.13 - Page 1
RIMCO GUARANTY means the Guaranty and Exchange Agreement dated the
same date as this Note, and executed by the Company (as a guarantor),
Texoil Company, and the RIMCO Purchasers.
RIMCO NOTE PURCHASE AGREEMENT means that Note Purchase Agreement
dated the same date as this Note, among the Borrower, Texoil Company, and
the RIMCO Purchasers, under which the RIMCO Tranche A Notes, and certain
other notes, were issued.
RIMCO PURCHASERS means RIMCO Partners, L.P., RIMCO Partners, L.P.
II, RIMCO Partners, L.P. III, and RIMCO Partners, L.P. IV, each a Delaware
limited partnership, and their respective successors and assigns.
RIMCO TRANCHE A NOTES means the 10% Senior Secured Exchangeable
General Obligation Notes in the aggregate principal amount of $3,000,000
issued by Texoil Company to the RIMCO Purchasers.
SUBORDINATION AGREEMENT means that certain Subordination Agreement
dated as of September 6, 1996, and executed by Borrower, Lender, Texoil
Company and the RIMCO Purchasers.
TEXOIL COMPANY means Texoil Company, a Tennessee corporation and a
wholly-owned subsidiary of the Borrower.
2. PAYMENT TERMS. The entire unpaid Principal Debt, plus all accrued and
unpaid interest on this Note and all fees, expenses, and costs due from Borrower
to Lender under the terms of this Note, shall be due and payable on the Maturity
Date. Subject to the terms of Section 11, interest on the outstanding Principal
Debt is due and payable monthly as it accrues commencing on October 10, 1996,
and continuing on the 10th day of each month thereafter through and including
the Maturity Date. Subject to the terms of Section 11, installments of Principal
Debt in an amount equal to the lesser of (a) the sum of (i) $142,800 plus (ii)
all unpaid cumulative Deficits, and (b) 95.24% of the amount by which the
unencumbered cash or cash equivalents owned by Texoil Company at such date
exceed $150,000, are due and payable quarterly on the 10th day of each January,
April, July, and October beginning on the later of (i) April 10, 1997 and (ii)
the 10th day of the first January, April, July or October occurring after the
total amounts advanced under the RIMCO Tranche A Notes equals or exceeds
$2,800,000. Subject to the terms of Section 11, if any installment of Principal
Debt paid under this Section 2 is less than $142,800, then an amount equal to
the difference of $142,800 and the amount of the installment actually paid (the
"DEFICIT") shall be due and payable on the next quarterly installment date and
all such Deficits shall cumulate and shall continue to be due on each subsequent
quarterly installment date until fully paid. No Deficit shall be deemed to be
past due for purposes of Section 4 or Section 5(a).
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All payments are to be made to the following address:
c/o T. W. Hoehn, Jr., Trustee
2302 Rue Adriane
La Jolla, California 92037
Lender may change the address to which payments are to be sent by giving the
Borrower fifteen (15) days notice by regular mail addressed to the Borrower last
known address as shown on the Lender's records.
3. INTEREST RATE. Except as provided in Section 11, interest shall accrue
on the Principal Debt from the date of this Note until due at a variable rate
equal to the Prime Rate plus 2% per annum. Interest shall be calculated on a
365-day (or 366-day, as the case may be) basis.
4. PAST DUE INTEREST. Except as provided in Section 11, all past due
installments of principal and interest shall accrue interest from the date due
until paid at a default rate (the "DEFAULT RATE") which shall be equal to 14%
per annum.
5. DEFAULT. The term "DEFAULT," as used in this Note, shall mean the
occurrence or happening, at any time and from time to time, of any one or more
of the following:
5.1. PAYMENT. Borrower fails to pay all or any portion of the
amounts due under this Note when due (except for payments which become due
during a No Payment Period as provided in Section 11) and such failure
remains uncured for a period of 10 days.
5.2. PERFORMANCE OF OBLIGATIONS. Borrower fails to fully and timely
perform, discharge or observe any terms, covenants, or conditions
contained in this Note as and when required and such failure remains
uncured for a period of 30 days.
5.3. CROSS-DEFAULT. The occurrence of any Event of Default under,
and as defined in, the RIMCO Note Purchase Agreement or the other RIMCO
Finance Documents.
6. COLLECTION COSTS. If this Note is placed in the hands of an attorney
for collection, or if it is collected through any legal proceedings, the
Borrower shall be liable for and agrees to pay the court costs, reasonable
attorneys' fees, and other costs of collection incurred by or on behalf of the
holder of this Note.
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7. WAIVER. Except as provided in this Note, the Borrower and any party
which may be or become liable for the payment of any sums of money payable on
this Note (including any surety, endorser, or guarantor) jointly and severally
waive (to the extent permitted by law), presentment and demand for payment,
protest, notice of protest and nonpayment, notice of the intention to
accelerate, and notice of acceleration.
8. APPLICABLE LAW. This Note shall be construed in accordance with and
governed by the laws of the State of Texas and all applicable laws of the United
States of America.
9. REMEDIES OF LENDER. Subject to the terms of the Subordination
Agreement, if a Default exists, Lender may, at its option, declare the Principal
Debt and all accrued and unpaid interest thereon immediately due and payable,
whereupon the entire indebtedness under this Note shall become immediately due
and payable. In addition, if a Default exists, Lender shall have (subject to the
terms of the Subordination Agreement) all rights and remedies granted in this
Note and those available at law or equity and the same (a) shall be cumulative
and concurrent, (b) may be pursued separately, successively, or concurrently
against Borrower or any other liable party or against any one or more of them in
such order as Lender, in its sole discretion, shall determine, (c) may be
exercised as often as occasion therefor shall arise, it being agreed by Borrower
and any other liable party that the exercise or failure to exercise any of the
same shall in no event be construed as a waiver or release thereof or of any
other right, remedy, or recourse, and (d) are intended to be, and shall be,
nonexclusive. Notwithstanding the foregoing to the contrary, but subject to the
terms of the Subordination Agreement, if a Default is in respect of a bankruptcy
or insolvency proceeding, the entire Principal Debt and all accrued and unpaid
interest under this Note shall automatically become due and payable without
action of any kind.
10. INTEREST LIMITATION. Regardless of any provision contained in this
Note, the holder shall never be entitled to receive, collect, or apply, as
interest on this Note, any amount in excess of the Highest Lawful Rate. In the
event the holder ever receives, collects, or applies as interest, any excess
amount which would be excessive interest, that amount shall be treated as a
principal prepayment and applied to reduce the Principal Debt of this Note;
PROVIDED THAT, if the principal hereof is paid in full, any remaining excess
shall be paid to Borrower. In determining whether or not the interest paid or
payable, under any specific contingency, exceeds the Highest Lawful Rate,
Borrower and the holder hereof shall, to the maximum extent permitted under
applicable law, (a) characterize any nonprincipal payment as an expense, fee, or
premium rather than as interest, (b) exclude voluntary prepayments and the
effects thereof, and (c) spread the total amount of interest throughout the
entire contemplated term of this Note; PROVIDED THAT, if this Note is paid and
performed in full prior to the end of the full contemplated term hereof, and if
the interest received by the holder hereof for the actual period of existence
hereof exceeds the Highest Lawful Rate, then the holder hereof shall refund to
Borrower the amount of such excess, and, in such event, the holder hereof shall
not be subject to any penalties provided by any laws for contracting for,
charging, taking,
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reserving, or receiving interest in excess of the Highest Lawful Rate. To the
extent that the holder hereof is relying on Article 5069-1.04, as amended, of
the REVISED CIVIL STATUTES OF TEXAS to determine the Highest Lawful Rate, the
holder hereof will use the indicated weekly rate ceiling from time to time in
effect as provided in Article 5069-1.04, as amended. To the extent United States
federal law permits the holder hereof to contract for, charge, or receive a
greater amount of interest, the holder hereof will rely on United States federal
law instead of Article 5069-1.04, as amended, for the purpose of determining the
Highest Lawful Rate.
11. SUBORDINATION AGREEMENT OR RIMCO FINANCE DOCUMENTS. This Note is
subject to the terms of the Subordination Agreement. If, under the terms of the
Subordination Agreement or the RIMCO Finance Documents, Borrower is precluded
from paying, and Lender is precluded from receiving, any payments under the
terms of this Note ("NO PAYMENT PERIOD"), each payment which becomes due during
such period shall not thereafter accrue interest, shall not be deemed to be past
due for purposes of Section 4 above, and shall be deemed to be due on the
Maturity Date. If Borrower again is permitted to make scheduled payments under
the terms of this Note, Borrower is not obligated to pay the installments which
became due during the No Payment Period. Instead, Borrower shall begin paying
installments with the next installment due after the No Payment Period ends and
the scheduled payments that were not paid during the No Payment Period shall be
due and payable at the Maturity Date. Installments which become due during a No
Payment Period shall not thereafter accrue interest. All amounts which, under
the terms of this Section 11, are deemed to be due at the Maturity Date may be
paid under Section 2 after all other Principal Debt and accrued interest has
been paid in full.
12. REPLACEMENT NOTE. This Note is issued in replacement of, but not as a
novation of, that certain promissory note dated as of July 31, 1996, in the
original principal amount of $1,000,000, executed by Borrower and made payable
to the order of Lender.
NOTICE: THE RIGHTS AND OBLIGATIONS OF THE BORROWER AND LENDER SHALL BE
DETERMINED SOLELY FROM WRITTEN AGREEMENTS, DOCUMENTS AND INSTRUMENTS, AND ANY
PRIOR ORAL AGREEMENTS BETWEEN THE BORROWER AND LENDER ARE SUPERSEDED BY AND
MERGED INTO SUCH WRITINGS. THIS NOTE (AS AMENDED IN WRITING FROM TIME TO TIME)
AND THE OTHER WRITTEN DOCUMENTS EXECUTED BY BORROWER AND LENDER (OR BY BORROWER
FOR THE BENEFIT OF LENDER) REPRESENT THE FINAL AGREEMENT BETWEEN BORROWER AND
LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS BY THE BORROWER AND LENDER. THERE ARE NO UNWRITTEN
ORAL AGREEMENTS BETWEEN THE BORROWER AND LENDER. THIS PARAGRAPH IS INCLUDED
HEREIN PURSUANT TO SECTION 26.02
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OF THE TEXAS BUSINESS AND COMMERCE CODE, AS AMENDED FROM TIME TO
TIME.
TEXOIL, INC.
By: /S/ RUBEN MEDRANO
Ruben Medrano, President
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