EXHIBIT 10.20
NOTE
Houston, Texas
$4,696,040.60 April 15, 1999
FOR VALUE RECEIVED, MILLER EXPLORATION COMPANY, a Delaware
corporation, promises to pay to the order of VERITAS DGC LAND, INC., a
Delaware corporation, at Suite 932, 3701 Kirby Drive, Houston, Texas 77098-
3982 (or such other place as the holder hereof may hereafter designate in
writing), in immediately available funds and in lawful money of the United
States of America, the principal sum of FOUR MILLION SIX HUNDRED NINETY-SIX
THOUSAND FORTY AND 60/100 DOLLARS ($4,696,040.60) (or the unpaid balance of
all principal advanced against this note, if that amount is less), together
with interest as follows: (a) interest on all past due amounts, both
principal and accrued interest, from the respective due dates thereof until
paid at the Past Due Rate and (b) the Additional Interest; PROVIDED, that
for the full term of this note the interest rate produced by the aggregate
of all sums paid or agreed to be paid to the holder of this note for the
use, forbearance or detention of the debt evidenced hereby (including, but
not limited to, all interest on this note at the Stated Rate plus the
Additional Interest) shall not exceed the Ceiling Rate.
1. DEFINITIONS. As used in this note, the following terms shall
have the respective meanings indicated:
(a) "ADDITIONAL INTEREST" means the aggregate of all amounts accrued
or paid pursuant to this note or any of the other Credit Documents (other
than interest on this note at the Stated Rate) which, under applicable
laws, are or may be deemed to constitute interest on the indebtedness
evidenced by this note.
(b) "BUSINESS DAY" means any other day than (i) a Saturday or Sunday
or (ii) a day on which commercial banks in New York, New York or Houston,
Texas are authorized or required to be closed.
(c) "CEILING RATE" means, on any day, the maximum nonusurious rate of
interest permitted for that day by whichever of the applicable federal or
Texas laws permits the higher interest rate, stated as a rate per annum.
On each day, if any, that applicable Texas law establishes the Ceiling
Rate, the Ceiling Rate shall be the "weekly ceiling" (as defined in
<Section>303 of the Texas Finance Code the "TEXAS FINANCE CODE" and
Chapter 1D of Title 79, Texas Rev. Civ. Stats. 1925 "CHAPTER 1D", as
amended, respectively) for that day. Payee may from time to time, as to
current and future balances, implement any other permissible ceiling under
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the Texas Finance Code or Chapter 1D by notice to Maker, if and to the
extent permitted by the Texas Finance Code or Chapter 1D. Without notice
to Maker or any other person or entity, the Ceiling Rate shall
automatically fluctuate upward and downward as and in the amount by which
such maximum nonusurious rate of interest permitted by applicable law
fluctuates.
(d) "CREDIT DOCUMENTS" means any and all papers now or hereafter
governing, evidencing, guaranteeing, securing or otherwise relating to all
or any part of the indebtedness evidenced by this note, including without
limitation this note, the Warrant and the Registration Rights Agreement.
(e) "DEBT" means the indebtedness evidenced by this note and the
indebtedness to Payee incurred under or evidenced by the Credit Documents.
(f) "MAKER" means Miller Exploration Company.
(g) "MATURITY DATE" means the maturity of this note, April 15, 2001,
as the same may hereafter be accelerated pursuant to the provisions of this
note or any of the other Credit Documents.
(h) "PAST DUE RATE" means a rate per annum equal to the lesser of (i)
the Ceiling Rate or (ii) Prime Rate plus four and one half percent (4.5%).
(i) "PAYEE" means Veritas DGC Land, Inc. and any other holder or
holders of this note from time to time and, upon acquisition of this note
by any holder or holders other than the named payee, effective as of the
time of such acquisition, the term "Payee" shall mean all of the then
holders of this note, to the exclusion of all prior holders not then
retaining or reserving an interest in this note, to the end that all the
rights, powers, remedies, liens, benefits and privileges accruing and to
accrue hereunder to Payee, as such term is used herein, shall inure to the
benefit of and be owned and held by the holder or holders of this note from
time to time, whether such holder acquires this note through succession to
or assignment from a prior Payee.
(j) "PRIME RATE" means, on any day, the rate determined by Chase Bank
of Texas, National Association, a national banking association, as being
its prime rate for that day. Without notice to Maker or any other person
or entity, the Prime Rate shall automatically fluctuate upward and downward
as and in the amount by which said prime rate fluctuates, with each change
to be effective as of the date of each change in said prime rate.
(k) "REGISTRATION RIGHTS AGREEMENT" means the Registration Rights
Agreement dated concurrently herewith executed by Maker and Payee.
(l) "STATED RATE" means zero percent (0%) per annum.
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(m) "WARRANT" means the Warrant dated concurrently herewith issued by
Maker.
2. COMPUTATION OF INTEREST. Interest on the amount of each advance
under this note shall be computed on the amount of that advance and from
the date it is made. Such interest shall be computed for the actual number
of days elapsed in a year consisting of 365 or 366 days, as the case may
be.
3. MANDATORY PAYMENTS OF PRINCIPAL AND INTEREST.
(a) The principal of this note, together with any accrued and unpaid
interest on the unpaid principal balance of this note, shall be due and
payable on the Maturity Date.
(b) All payments hereon made pursuant to this paragraph shall be
applied first to accrued interest, if any, and the balance to principal.
(c) If any payment provided for in this note shall become due on a
day other than a Business Day, such payment may be made on the next
succeeding Business Day (unless the result of such extension of time would
be to extend the date for such payment into another calendar month or
beyond the Maturity Date, and in either such event such payment shall be
made on the Business Day immediately preceding the day on which such
payment would otherwise have been due), and such extension of time shall in
such case be included in the computation of interest payable at such time.
4. PREPAYMENT. Maker may at any time pay the full amount or any
part of this note without the payment of any premium or fee.
5. NO USURY INTENDED; SPREADING. Notwithstanding any provision to
the contrary contained in this note or any of the other Credit Documents,
it is expressly provided that in no case or event shall the aggregate of
(i) all interest on the unpaid balance of this note, accrued or paid from
the date hereof and (ii) the aggregate of any other amounts accrued or paid
pursuant to this note or any of the other Credit Documents, which under
applicable laws are or may be deemed to constitute interest upon the
indebtedness evidenced by this note from the date hereof, ever exceed the
Ceiling Rate. In this connection, Maker and Payee stipulate and agree that
it is their common and overriding intent to contract in strict compliance
with applicable usury laws. In furtherance thereof, none of the terms of
this note or any of the other Credit Documents shall ever be construed to
create a contract to pay, as consideration for the use, forbearance or
detention of money, interest at a rate in excess of the Ceiling Rate.
Maker or other parties now or hereafter becoming liable for payment of the
indebtedness evidenced by this note shall never be liable for interest in
excess of the Ceiling Rate. If, for any reason whatever, the interest paid
or received on this note produces a rate which exceeds the Ceiling Rate,
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the holder of this note shall credit against the principal of this note
(or, if such indebtedness shall have been paid in full, shall refund to the
payor of such interest) such portion of said interest as shall be necessary
to cause the interest paid on this note to produce a rate equal to the
Ceiling Rate. All sums paid or agreed to be paid to the holder of this
note for the use, forbearance or detention of the indebtedness evidenced
hereby shall, to the extent permitted by applicable law, be amortized,
prorated, allocated and spread in equal parts throughout the full term of
this note, so that the interest rate is uniform throughout the full term of
this note. The provisions of this Paragraph shall control all agreements,
whether now or hereafter existing and whether written or oral, between
Maker and Payee.
6. DEFAULT. The occurrence of any of the following events shall
constitute a default under this Note, whereupon the obligation (if any) of
Payee to make any further advances against this Note shall cease and
terminate and the owner or holder hereof may, at its, his or her option,
exercise any or all rights, powers and remedies afforded under any of the
Credit Documents and by law, including the right to declare the unpaid
balance of principal and accrued interest on this Note at once mature and
payable:
(a) Any part of the Debt is not paid when due, whether by lapse of
time or upon acceleration or otherwise, and such default remains uncured
for a period of five (5) Business Days or more after the holder of this
Note gives to Maker a notice of such default.
(b) Maker fails to perform, observe or comply with--or defaults
under--any of the terms, covenants, conditions or provisions contained in
any Credit Document, and such default remains uncured for a period of five
(5) Business Days or more after the holder of this Note gives to Maker a
notice of such default.
(c) Any representation or warranty made in this Note or any of the
other Credit Documents or in any other report or other paper now or
hereafter provided to Payee pursuant or incident to this note or any other
Credit Document or the Debt proves to have been untrue or misleading in any
respect that is material and adverse to Payee or any other holder of this
Note as of the date made or deemed made.
(d) Maker: (i) voluntarily suspends transaction of business (which
shall not be deemed to include the cessation of drilling activities,
shutting-in wells or similar activities by Maker); (ii) becomes insolvent
or unable to pay its debts as they mature; (iii) commences a voluntary case
in bankruptcy or files a voluntary petition seeking reorganization or to
effect a plan or other arrangement with creditors; (iv) makes an assignment
of substantially all its assets for the benefit of creditors; (v) applies
for or consents to the appointment of a receiver or trustee for any such
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party or for any substantial portion of its property; or (vi) makes an
assignment to an agent authorized to liquidate any substantial part of its
assets.
(e) In respect of Maker: (i) an involuntary case shall be commenced
with any court or other authority seeking liquidation, reorganization or a
creditor's arrangement of any such party; (ii) an order of any court or
other authority shall be entered appointing any receiver or trustee for
such party or for any substantial portion of its property; or (iii) a writ
or warrant of attachment or any similar process shall be issued by any
court or other authority against any substantial portion of the property of
such party, and in each such case, such petition seeking liquidation,
reorganization or a creditor's arrangement or such order appointing a
receiver or trustee is not vacated or stayed or such writ, warrant of
attachment or similar process is not vacated, released or bonded off within
thirty (30) days after Maker's receipt of notice of its entry or levy.
(f) Any action, suit or proceeding shall be commenced against or
affecting Maker or involving the validity or enforceability of this Note or
any other Credit Document, at law or in equity, or before any governmental
authority, which in Payee's judgment, impairs or would impair Payee's
ability to collect the Debt when due or the enforceability of this note or
any other Credit Document, and such action, suit or proceeding is not
vacated, stayed or dismissed within thirty (30) days after Maker's receipt
notice of its commencement.
(g) Maker's common stock, par value $0.01 per share, shall cease to
be listed on the Nasdaq National Market System, the Nasdaq Small Cap Market
System or other nationally recognized stock exchange or quotation system.
(h) A default, an event of default or a similar event (however
denominated) shall occur under the terms and conditions of the Warrant or
the Registration Rights Agreement, unless Payee declares such default,
event of default or similar event fully cured to Payee's satisfaction
within five (5) Business Days or more after the holder of this Note gives
to Maker a notice of such default.
7. NO WAIVER BY PAYEE. No delay by or omission of Payee or any
other holder hereof to exercise any power, right or remedy accruing to
Payee or any other holder hereof shall impair any such power, right or
remedy or shall be construed to be a waiver of the right to exercise any
such power, right or remedy. Payee's right to accelerate this note for any
late payment or Maker's failure to timely fulfill its other obligations
hereunder or under the other Credit Documents shall not be waived or deemed
waived by Payee by Payee's having accepted a late payment or late payments
in the past or Payee otherwise not accelerating this note or exercising
other remedies for Maker's failure to timely perform its obligations
hereunder or under the other Credit Documents. Payee shall not be
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obligated or be deemed obligated to notify Maker that it is requiring Maker
to strictly comply with the terms and provisions of this note and the other
Credit Documents before accelerating this note and exercising its other
remedies hereunder or under the other Credit Documents because of Maker's
failure to timely perform its obligations under this note and the other
Credit Documents.
8. COSTS AND ATTORNEYS' FEES. If any holder of this note retains an
attorney in connection with any default or to collect, enforce or defend
this note or any of the Credit Documents in any lawsuit or in any probate,
reorganization, bankruptcy or other proceeding, or if Maker sues any holder
in connection with this note or any of the Credit Documents and does not
prevail, then Maker agrees to pay to each such holder, in addition to
principal and interest, all reasonable costs and expenses incurred by such
holder in trying to collect this note or in any such suit or proceeding,
including reasonable attorneys' fees. Any amount to be paid under this
Paragraph by Maker to Payee shall be a demand obligation owing by Maker to
Payee and shall bear interest from the date of expenditure until paid at
the Past Due Rate.
9. WAIVERS BY MAKER AND OTHERS. Except to the extent, if any, that
notice of default is expressly required herein or in any of the other
Credit Documents, Maker and any and all endorsers, guarantors and sureties
severally (i) waive notice (including, but not limited to, notice of intent
to accelerate and notice of acceleration, notice of protest and notice of
dishonor), demand, presentment for payment, protest, diligence in
collecting and filing of suit for the purpose of fixing liability and (ii)
consent that the time of payment hereof may be extended and re-extended
from time to time without notice to any of them. Each such person agrees
that his, her or its liability on or with respect to this note shall not be
affected by any release of or change in any guaranty or security at any
time existing or by any failure to perfect or to maintain perfection of any
lien against or security interest in any such security or the partial or
complete unenforceability of any guaranty or other surety obligation, in
each case in whole or in part, with or without notice and before or after
maturity.
10. PARAGRAPH HEADINGS. Paragraph headings appearing in this note
are for convenient reference only and shall not be used to interpret or
limit the meaning of any provision of this note.
11. VENUE; CHOICE OF LAW. This note is performable in Harris County,
Texas, which shall be a proper place of venue for suit on or in respect of
this note. Maker hereby irrevocably agrees that any legal proceeding in
respect of this note may be brought in the district courts of Harris
County, Texas, or in the United States District Court for the Southern
District of Texas, Houston Division (collectively, the "SPECIFIED COURTS").
Maker hereby irrevocably submits to the nonexclusive jurisdiction of the
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state and federal courts of the State of Texas. Maker hereby irrevocably
waives, to the fullest extent permitted by law, any objection which it may
now or hereafter have to the laying of venue of any suit, action or
proceeding arising out of or relating to this note or any of the other
Credit Documents brought in any Specified Court, and hereby further
irrevocably waives any claims that any such suit, action or proceeding
brought in any such court has been brought in an inconvenient forum. Maker
further irrevocably consents to the service of process out of any of the
Specified Courts in any such suit, action or proceeding by the mailing of
copies thereof by certified mail, return receipt requested, postage
prepaid, to Maker. Nothing herein shall affect the right of Payee to
commence legal proceedings or otherwise proceed against Maker in any
jurisdiction or to serve process in any manner permitted by applicable law.
Maker agrees that a final judgment in any such action or proceeding shall
be conclusive and may be enforced in other jurisdictions by suit on the
judgment or in any other manner provided by law. THIS NOTE SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE APPLICABLE LAWS OF THE
STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN
EFFECT.
12. SUCCESSORS AND ASSIGNS. This note and all the covenants and
agreements contained herein shall be binding upon, and shall inure to the
benefit of, the respective legal representatives, heirs, successors and
assigns of Maker and Payee.
13. RECORDS OF PAYMENTS. The records of Payee shall be prima facie
evidence of the amounts owing on this note.
14. SEVERABILITY. If any provision of this note is held to be
illegal, invalid or unenforceable under present or future laws, the
legality, validity and enforceability of the remaining provisions of this
note shall not be affected thereby, and this note shall be liberally
construed so as to carry out the intent of the parties to it. Each waiver
of any part of this note is subject to the overriding and controlling rule
that it shall be effective only if and to the extent that (a) it is not
prohibited by applicable law and (b) applicable law neither provides for
nor allows any material sanctions to be imposed against Payee for having
bargained for and obtained it.
15. SALE AND ASSIGNMENT. Payee reserves the right, exercisable in
its sole discretion and without notice to Maker or any other person, to
sell participations or assign its interest, or both, in all or any part of
this note or any Debt evidenced by this note.
16. NOTICES. Any notice, request or other communication required or
permitted to be given hereunder shall be given in writing by telecopy or by
delivering it against receipt for it, by depositing it with an overnight
delivery service or by depositing it in a receptacle maintained by the
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United States Postal Service, postage prepaid, registered or certified
mail, return receipt requested, addressed to the respective parties as
follows (and, if so given, shall be deemed given when mailed, or if sent by
telecopy, upon electronic confirmation of receipt):
If to Maker:
Miller Exploration Company
c/o Kelly Miller, President
P.O. Box 348
Traverse City, Michigan 49685-0348
Telecopy: (616) 941-8312
If to Payee:
Veritas DGC Land, Inc.
c/o Deanna Goodwin
Suite 932, 3701 Kirby Drive
Houston, Texas 77098-3982
Telecopy: (713) 512-8729
Maker's address for notice may be changed at any time and from time to
time, but only after ten (10) days' advance written notice to Payee and
shall be the most recent such address furnished in writing by Maker to
Payee. Payee's address for notice may be changed at any time and from time
to time, but only after ten (10) days' advance written notice to Maker and
shall be the most recent such address furnished in writing by Payee to
Maker. Actual notice, however and from whomever given or received, shall
always be effective when received.
17. BUSINESS LOANS. Maker warrants and represents to Payee and all
other holders of this note that all loans evidenced by this note are not
primarily for personal, family, household or agricultural use, as such
terms are used in Chapter 1D or the Texas Finance Code.
18. RENEWAL. This note is given in renewal, extension and
rearrangement, and not in extinguishment, of the indebtedness described on
EXHIBIT A attached hereto.
19. ENTIRE AGREEMENT. This note and the other Credit Documents
embody the entire agreement and understanding between Payee and Maker and
other parties with respect to their subject matter and supersede all prior
conflicting or inconsistent agreements, consents and understandings
relating to such subject matter. Maker acknowledges and agrees that there
is no oral agreement between Maker and Payee which has not been
incorporated in this note and the other Credit Documents.
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IN WITNESS WHEREOF, this note is executed effective as of the date
first set forth above.
MILLER EXPLORATION COMPANY
By: /S/ KELLY E. MILLER
Name: KELLY E. MILLER
Title: PRESIDENT
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