EXHIBIT 10.17
PROMISSORY NOTE
Due September 30, 1998
$1,000,000 The Woodlands, Texas
September 24, 1997
THIS INSTRUMENT HAS NOT BEEN REGISTERED UNDER THE SECURITIES ACT OF 1933,
AS AMENDED, OR ANY APPLICABLE STATE SECURITIES LAWS. IT MAY NOT BE SOLD,
TRANSFERRED OR ASSIGNED IN THE ABSENCE OF REGISTRATION UNDER SUCH ACT AND
APPLICABLE STATE SECURITIES LAWS OR COMPLIANCE WITH AN EXEMPTION FROM SUCH
REGISTRATION. THE HOLDER, BY ACCEPTANCE HEREOF, AGREES TO PROVIDE MAKER WITH
SUCH DOCUMENTS AND ASSURANCES AS MAKER MAY REQUEST WITH RESPECT TO COMPLIANCE
WITH THE FOREGOING RESTRICTIONS PRIOR TO REGISTRATION OF ANY PURPORTED TRANSFER
OR ASSIGNMENT OF THIS INSTRUMENT.
For value received, the undersigned, XPLOR Energy, Inc., a Delaware
corporation (the "Maker"), promises to pay Craig S. Davis ("Payee"), the
principal sum of One Million and No/100 Dollars ($1,000,000.00), without
interest, on September 30, 1998, payable in lawful money of the United States of
America; provided, however, the entire principal sum evidenced by this
Promissory Note shall become immediately due and payable upon the closing of the
sale for cash of equity securities of Maker in a firm commitment underwritten
public offering by Maker registered under the Securities Act of 1933, as
amended.
Maker may prepay all or any portion of this Promissory Note at any time and
from time to time without premium or penalty.
If any amount of the principal payable hereunder is not paid when due, at
maturity or upon acceleration, such amount shall bear interest at the rate of
twelve percent (12%) per annum, accrued from the due date to the day on which
such default is cured to the satisfaction of the holder hereof. All such past
due sums shall be paid at the time of, and as a condition precedent to the
curing of, any default hereunder.
Upon any distribution of assets of Maker upon the dissolution, winding up,
liquidation or reorganization of Maker, or in the event of the default of Maker
under any indebtedness for borrowed money, the payment of the principal and any
interest on this Promissory Note shall be subordinated in right of payment to
the prior payment in full of all other indebtedness of Maker.
This Promissory Note is one of a series of promissory notes of Maker in the
aggregate principal amount of $3.0 million ("Acquisition Notes") which are
issued pursuant to that certain
Acquisition Agreement and Plan of Organization ("Agreement") dated August 19,
1997, and shall be subject to the terms of the Agreement.
To secure payment and performance of this Promissory Note and the other
Acquisition Notes, Maker hereby grants to and in favor of R. A. Krenzke, as
agent ("Agent") for and on behalf of the holders of the Acquisition Notes, a
security interest covering all of Maker's right, title and interest in the INEXS
Shares (as defined in the Agreement), and any and all products or proceeds
thereof ("Collateral"). The security interest granted by the preceding sentence
shall be subordinate to the rights of Credit Lyonnais New York Branch and its
successors and assigns ("Lender"), who shall be granted a security interest in
the Collateral, as security for certain debt of affiliates of Maker owing to
Lender ("Debt"), that will be first and superior in all respect to the rights of
the holders of this Promissory Note (and the other Acquisition Notes) in
accordance with the terms and provisions of that certain Subordination Agreement
of even date herewith by and among Lender, Payee, Agent, Maker and the holders
of the other Acquisition Notes.
To induce holder to accept this Note, Maker hereby agrees as follows: (i)
unless the advance approval of Agent is obtained approving a proposed deviation,
INEXS (as defined in the Agreement) shall be operated in the ordinary course and
substantially as INEXS' business activities are conducted as of the date hereof;
(ii) without the advance approval of Agent, Maker shall not sell, assign,
exchange, or transfer the Collateral, or cause to be sold all or substantially
all of the assets of INEXS, except as security for the Debt; and (iii) no
bankruptcy, dissolution, liquidation or other similar proceeding shall be filed
by, against or on behalf of Maker that is not dismissed within thirty (30) days.
Maker and all endorsers, sureties, guarantors, and all other persons who
may become liable for all or any part of this obligation severally waive
presentment for payment, protest and notice of non-payment. Said parties
consent to any extension of time (whether one or more) of payment hereof, and
renewal (whether one or more) hereof, and any release of any party liable for
payment of this obligation. Any such extension, renewal or release may be made
without notice to any such party and without discharging such party's liability
hereunder. Maker and the Payee stipulate and agree that none of the terms and
provisions hereof shall ever be construed as a contract to pay for the use,
forbearance or detention of money, providing for interest at a rate in excess of
the maximum interest rate permitted to be charged by applicable law.
Notwithstanding anything to the contrary contained in this Promissory Note,
the holder hereof shall not be entitled to obtain a deficiency judgment against
the Maker for the payment of principal and any interest on this Promissory Note.
THIS PROMISSORY NOTE AND THE INDEBTEDNESS EVIDENCED HEREBY SHALL BE
INTERPRETED ACCORDING TO THE INTERNAL LAWS OF THE STATE OF TEXAS.
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IN WITNESS WHEREOF, the undersigned has caused this Promissory Note to be
executed and delivered on its behalf by its duly authorized representative on
this 24th day of September, 1997.
XPLOR ENERGY, INC.
By: /s/ Steven W. Nance
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Steven W. Nance,
President and Chief Executive Officer
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