THIRD AMENDMENT TO LETTER LOAN AGREEMENT
THIS THIRD AMENDMENT TO LETTER LOAN AGREEMENT (this "Third Amendment") is
made and entered into as of the 4 day of November, 1998, by and between
TEXSTAR PETROLEUM, INC., a Texas corporation(the "Borrower"), and BANK ONE,
TEXAS, N.A., a national banking association (the "Lender").
WHEREAS, the Borrower and the Lender entered into that certain letter
loan agreement dated July 17, 1997, which letter loan agreement was amended
by that certain First Amendment to Letter Loan Agreement dated October 10,
1997 between Borrower and Lender and that certain Second Amendment to Loan
Agreement dated November 18, 1997 between Borrower and Lender (as amended,
the "Loan Agreement");
WHEREAS, the Borrower and the Lender desire to amend certain terms and
provisions of the Loan Agreement, as set forth herein.
NOW, THEREFORE, FOR AND IN CONSIDERATION of the mutual covenants and
agreements contained herein, the parties hereto agree as follows:
1. Section 1 of the Loan Agreement is deleted in its entirety, and the
following is substituted in its place:
Section 1. CREDIT FACILITY. Subject to the terms of this
Agreement, Lender agrees to make available to Borrower a Credit
Facility (the "Credit Facility") consisting of two tranches of loans.
The tranches are defined herein as Tranche A and Tranche B, and each
Tranche shall have the following terms and conditions:
(a) TRANCHE A:
(1) MAXIMUM AVAILABILITY: The lesser of $8,000,000 and
the Borrowing Base (as defined in Section 5(c) hereof).
(2) ADVANCE PROCEDURES: At least one (1) Business Day
(hereinafter defined) prior to the requested date of
advance, Borrower may make a written request to Lender for
direct advances under Tranche A. Prior to the requested
date of advance, Lender shall advise Borrower of whether
Lender will make the advance as requested by Borrower or
whether Lender will require additional engineering reports
or other documents prior to making the requested advance.
(3) TERM: Through February 28, 1999 ("the Maturity
Date").
(4) PURPOSE: To finance certain costs associated with
the acquisition and development of Borrower's oil and gas
properties included in the determination of the Borrowing
Base.
(5) INTEREST RATE: Prime Rate (hereinafter defined)
plus two percent (2%) per annum (the "Tranche A Interest
Rate"), not to exceed the Maximum Rate (hereinafter
defined).
(6) FACILITY FEE: Borrower has previously paid to
Lender a Facility Fee in the amount of $5,000 plus two
percent (2%) of up to $3,600,000.00 in the Borrowing Base.
Borrower shall hereafter pay to Lender a Facility Fee in the
amount of two percent (2%) of any increase in the Borrowing
Base over $3,600,000.00, upon the effectiveness of such
increase.
(7) UNUSED FEE: Borrower shall pay to Lender an unused
fee equal to one half percent (1/2%) of the average amount
by which the Borrowing Base exceeds the principal amount
outstanding under Tranche A, payable in arrears on the last
day of each calendar quarter.
(8) BORROWING BASE REDETERMINATION FEES: Borrower
shall pay to Lender a fee, with respect to each
redetermination of the Borrowing Base, in the amount of
$2,500 for all engineering and related expenses (including a
reasonable charge for services performed by employees of
Lender or affiliates of Lender) incurred by Lender in
connection with such redetermination.
(9) NO FURTHER ADVANCES: Notwithstanding anything to
the contrary contained herein, Borrower acknowledges and
agrees that it shall have no right to any further advances
under Tranche A, whether availability exists under the
Borrowing Base or otherwise.
(b) TRANCHE B:
(1) MAXIMUM AVAILABILITY: $2,000,000.
(2) ADVANCE PROCEDURES: At least three (3) Business
Days prior to the requested date of advance (other than the
initial advance made on the date hereof), Borrower may make
a written request to Lender for direct advances pursuant to
Tranche B, which request shall include a detailed
description of the proposed use of the proceeds of such
advance. If all participants with respect to Tranche B
consent to the making of such advance (to the extent
required by the terms of any applicable Participation
Agreement), Lender will make the advance requested by
Borrower on the requested date.
(3) TERM: Through the Maturity Date.
(4) INTEREST RATE: Prime Rate plus eight percent (8%)
per annum (the "Tranche B Interest Rate"), not to exceed the
Maximum Rate.
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(c) Borrower's obligation to repay the Credit Facility
shall be evidenced by its execution of a promissory note (the
"Note") of even date with the Third Amendment, payable to the
order of Lender, in the original principal amount of $10,000,000,
and in the form attached as Exhibit "A" to the Third Amendment.
2. Whenever the term "Revolving Note" is used in the Loan Agreement or
any other Loan Document, it shall be amended to refer to the "Note" defined
in this Third Amendment.
3. Section 2(a)(1) of the Loan Agreement is deleted in its entirety,
and the following is substituted in its place:
(1) Subject to the provisions of paragraphs (2) and (3) of this
Section 2(a), Borrower shall pay interest on the outstanding principal
amount of advances under Tranche A at the Tranche A Interest Rate, and
shall pay interest on the outstanding principal amount of advances
under Tranche B at the Tranche B Interest Rate. Accrued and unpaid
interest on the Note shall be calculated on the basis of a 365 day
year or 366 day year, as the case may be, and the actual number of
days elapsed.
4. Section 2(a)(4)(B) is deleted in its entirety and the following is
substituted in its place:
(B) "Prime Rate" shall mean that at any time the variable rate
of interest then most recently announced publicly by Lender as its
prime rate of interest and, without notice to Borrower or any other
person, such rate of interest shall change as and when changes in that
prime rate of interest are announced.
Whenever the term "Base Rate" is used in the Loan Agreement or any other Loan
Document, it shall be amended to refer to the "Prime Rate" defined in this
Third Amendment.
5. Section 2(b) of the Loan Agreement is deleted in its entirety and the
following is substituted in its place:
(b) REPAYMENT TERMS. Accrued and unpaid interest on the
outstanding principal amount of advances under Tranche A shall be due
and payable on December 1, 1998 and on the first day of each month
thereafter. Accrued and unpaid interest on the outstanding principal
amount of advances under Tranche B shall be due and payable on
December 1, 1998, and on the first day of each month thereafter,
unless prior to December 1, 1998 Borrower elects by written notice
given to Lender to defer the Tranche B interest payments due on or
after December 1, 1998 until February 28, 1999, and on or prior to
December 1, 1998 all participants with respect to Tranche B consent in
writing to such deferral, in which event such Tranche B interest
payment shall be so deferred. A principal payment on Tranche A in the
amount of $1,500,000.00 shall be due and payable on December 18, 1998
unless on or prior to December 18, 1998, Lender and Borrower have
agreed (by appropriate amendment to the Loan Agreement) that an amount
(the "Additional Participation Amount") of principal outstanding under
Tranche A equal to the difference between $1,500,000.00 and the amount
paid on Tranche A on such date by Borrower shall be deemed paid
through an advance under Tranche B and, simultaneously therewith,
Lender shall have sold an additional participation in Tranche B in the
amount of the Additional
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Participation Amount, all upon such terms and conditions as may be
reasonably satisfactory to Lender. The principal portion of the
Note is subject to mandatory prepayments as set forth in Section 5(c)
hereof. For purposes of determining any principal prepayments
required by Section 5(c), the principal payment due December 18,
1998 (and, if applicable, the reduction of outstanding principal
from Tranche A through an advance under Tranche B on December 18,
1998) shall not be deemed to reduce the outstanding indebtedness
pursuant to the Credit Facility. The balance of unpaid principal
and accrued and unpaid interest on the Note shall be due and
payable on the Maturity Date.
6. Section 4(e) of the Loan Agreement is deleted in its entirety, and the
following is substituted in its place:
(e) [intentionally omitted]
7. Section 5(f) of the Loan Agreement is deleted in its entirety, and
the following is substituted in its place:
(f) GUARANTEE. The Note and other indebtedness hereunder shall
be guaranteed by Benz Energy Ltd., a Yukon Territory corporation
(hereinafter sometimes referred to as "Benz Energy" and sometimes
referred to as "Guarantor").
8. There is added to the Loan Agreement a new section 5(g) which shall
read as follows:
(g) LOCK BOX ACCOUNT: Borrower will, upon execution of the Third
Amendment, arrange for all payments by account debtors on accounts
receivable of Borrower, purchasers of hydrocarbons from Borrower, and
operators or other payors with respect to proceeds from hydrocarbons
to which Borrower is entitled but as to which payment thereon is not
made directly to Borrower, to be sent directly to a lock box
maintained with Lender pursuant to a Lock Box Agreement to be entered
into between Lender and Borrower in a form satisfactory to Lender.
Such Lock Box Agreement shall provide, INTER ALIA, that Lender shall
not "sweep" such lock box account or otherwise exercise control over
the funds in such lock box account unless and until there exists a
payment default under the Credit Facility, and that, upon payment in
full of all amounts under the Credit Facility, this Loan Agreement and
all other documents and instruments executed in connection with or as
security for the indebtedness described in this Loan Agreement,
Borrower shall have the right, upon written request to Lender, to
terminate the Lock Box Agreement and all of Borrower's obligations and
Lender's rights thereunder other than those that expressly survive
termination.
9. There are added to the Loan Agreement new Sections 14 and 15, which
shall read as follows:
Section 14. ARBITRATION. Lender and Borrower agree that upon
the written demand of either party, whether made before or after the
institution of any legal proceedings, but prior to the rendering of
any judgment in that proceeding, all disputes, claims and
controversies between them, whether individual, joint, or class in
nature, arising from this Agreement, the Note, any other Loan Document
or otherwise, including without limitation contract disputes and tort
claims, shall be resolved by binding arbitration pursuant to the
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Commercial Rules of the American Arbitration Association ("AAA"). Any
arbitration proceeding held pursuant to this arbitration provision
shall be conducted in Houston, Texas, or at any other place selected
by mutual agreement of the parties. No act to take or dispose of any
of the Mortgaged Property shall constitute a waiver of this
arbitration agreement or be prohibited by this arbitration agreement.
This arbitration provision shall not limit the right of either party
during any dispute, claim or controversy to seek, use, and employ
ancillary, or preliminary rights and/or remedies, judicial or
otherwise, for the purposes of realizing upon, preserving, protecting,
foreclosing upon or proceeding under forcible entry and detainer for
possession of, any real or personal property, and any such action
shall not be deemed an election of remedies. Such remedies include,
without limitation, obtaining injunctive relief or a temporary
restraining order, invoking a power of sale under any deed of trust or
mortgage, obtaining a writ of attachment or imposition of a
receivership, or exercising any rights relating to personal property,
including exercising the right of set-off, or taking or disposing of
such property with or without judicial process pursuant to the Uniform
Commercial Code. Any disputes, claims or controversies concerning the
lawfulness or reasonableness of an act, or exercise of any right or
remedy concerning any Mortgaged Property, including any claim to
rescind, reform, or otherwise modify any agreement relating to the
Mortgaged Property, shall also be arbitrated; provided, however that
no arbitrator shall have the right or the power to enjoin or restrain
any act of either party. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. The
statute of limitations, estoppel, waiver, laches and similar doctrines
which would otherwise be applicable in an action brought by a party
shall be applicable in any arbitration proceeding, and the
commencement of an arbitration proceeding shall be deemed the
commencement of any action for these purposes. The Federal
Arbitration Act (Title 9 of the United States Code) shall apply to the
construction, interpretation, and enforcement of this arbitration
provision.
Section 15. JURY WAIVER. BORROWER AND LENDER HEREBY
VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY WAIVE ANY
RIGHT TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER
BASED UPON CONTRACT, TORT OR OTHERWISE) BETWEEN OR AMONG BORROWER AND
LENDER ARISING OUT OF OR IN ANY WAY RELATED TO THIS AGREEMENT, THE
NOTE, ANY OTHER LOAN DOCUMENT, OR ANY RELATIONSHIP BETWEEN BORROWER
AND LENDER. THIS PROVISION IS A MATERIAL INDUCEMENT TO LENDER TO
PROVIDE THE FINANCING DESCRIBED HEREIN AND TO MAKE THE AMENDMENTS
DESCRIBED IN THE THIRD AMENDMENT.
10. The closing of the transactions contemplated by this Third Amendment
is subject to the satisfaction of the following conditions:
(a) All legal matters incident to the transactions herein
contemplated shall be satisfactory to Gardere Wynne Sewell & Riggs,
L.L.P., counsel to the Lender;
(b) The Lender shall have received fully executed copies of (i)
this Third Amendment, (ii) the Note, (iii) a Participation Agreement
relating to the sale of a
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participation in Tranche B to BOCP Energy Partners, L.P., and (iv) a
Notice of Final Agreement;
(c) The Lender shall have received an executed copy of
resolutions of the Board of Directors of Borrower, in form and
substance satisfactory to the Lender, authorizing the execution,
delivery and performance of this Third Amendment and all documents,
instruments and certificates referred to herein; and
(d) The Lender shall have received a certificate of the
Secretary of Borrower, setting forth the names of the officers of the
Borrower authorized to execute and deliver this Third Amendment and
all documents, instruments and certificates referred to herein,
together with the true signatures of such officers.
11. The Borrower hereby reaffirms each of the representations,
warranties, covenants and agreements of the Borrower set forth in the Loan
Agreement with the same force and effect as if each were separately stated
herein and made as of the date hereof. Except as amended hereby, the Loan
Agreement shall remain unchanged, and the terms, conditions and covenants of
the Loan Agreement shall continue and be binding upon the parties hereto.
There currently exist certain defaults under the Loan Agreement (the
"Existing Defaults"), and the Borrower has requested waivers with respect
thereto. The Lender is considering such request but has not yet granted it.
The Borrower and Guarantor acknowledge and agree that the Lender has not
waived or agreed to waive any of the Existing Defaults, that the Lender has
no obligation to do so and may refuse to do so in its discretion, and that
neither this Third Amendment, any of the transactions contemplated herein, or
any advance under the Credit Facility constitutes a waiver of any Existing
Defaults under the Loan Agreement, but Lender does hereby agree that, through
February 28, 1999, it will not accelerate the maturity of the Credit Facility
because of any Existing Default or foreclose any of its liens (or otherwise
exercise any of remedies against collateral) because of any Existing Default.
As an inducement to Lender's agreement in this Section 11, the Borrower
hereby represents and warrants to Lender that, to the best knowledge of the
Borrower, it has disclosed all Existing Defaults to Lender.
12. The Borrower hereby agrees that its liability under any and all
documents and instruments executed by the Borrower as security for the Credit
Facility (including, without limitation all mortgages, deeds of trust,
collateral assignments, assignments of production, security agreements and
financing statements executed by the Borrower for the benefit of the Lender)
shall not be reduced, altered, limited, lessened or in any way affected by
the execution and delivery of this Third Amendment or any of the instruments
or documents referred to herein, except as specifically set forth herein or
therein, that all of such documents and instruments are hereby renewed,
extended, ratified, confirmed and carried forward by the Borrower in all
respects, that all of such documents and instruments shall remain in full
force and effect and are and shall remain enforceable against the Borrower in
accordance with their terms and that all of such documents and instruments
shall cover all indebtedness of the Borrower to the Lender described in the
Loan Agreement as amended hereby.
13. As a material inducement to Lender's execution of this Third Amendment
and undertaking its obligations set forth herein, each of Borrower and Guarantor
hereby releases, acquits and forever discharges Lender and its affiliates,
successors, assigns, participants, directors, officers, agents, employees and
attorneys of and from any and all claims, actions, demands, causes of action,
defenses, costs and expenses of every kind and character whatsoever, whether
known or unknown, which Borrower, Guarantor or either of them may now or
hereafter have against Lender or such other persons, if any, regardless of
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whether any such claims, actions, demands, causes of action, defenses, costs
or expenses, arise out of contract, tort, misrepresentation, strict
liability, violation of laws or regulations or otherwise, and which arise, in
whole or in part, as a result of actions taken or omitted to be taken by
Lender, any of such other persons, or any other person prior to the execution
of this Third Amendment.
14. In a letter agreement of even date herewith among Borrower, Benz,
Calibre Energy, L.L.C., BOCP Energy Partners, L.P. and EnCap Energy Capital
Fund III, L.P., certain references are made to potential additional fundings
and other amendments to and under the Loan Agreement and the Credit Facility.
By its execution hereof, Borrower acknowledges that Lender is not a party to
such letter agreement, is not bound by any of the terms thereof, is not
obligated to take any action described therein or to take any other action
with respect to the Loan Agreement or the Credit Facility, and that any
additional funding or other amendment to or under the Loan Agreement or the
Credit Facility is subject to the approval of Lender, which approval Lender
is under no obligation to give.
15. Each of the terms defined in the Loan Agreement is used in this
Third Amendment with the same meaning, except as otherwise indicated in this
Third Amendment. Each of the terms defined in this Third Amendment is used
in the Loan Agreement with the same meaning, except as otherwise indicated in
the Loan Agreement.
16. THIS THIRD AMENDMENT SHALL BE DEEMED TO BE A CONTRACT UNDER,
SUBJECT TO, AND SHALL BE CONSTRUED FOR ALL PURPOSES IN ACCORDANCE WITH THE
LAWS OF THE STATE OF TEXAS.
17. THIS LOAN AGREEMENT, AS AMENDED, REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties have caused this Third Amendment to be
executed by their duly authorized officers as of the day and year first above
written.
TEXSTAR PETROLEUM, INC.
By: TODD GRABOIS
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Name: Todd Grabois
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Title: Vice President
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BANK ONE, TEXAS, N.A.
By: MICHELLE WALPERT
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Name: Michelle Walpert
----------------------
Title: V-P
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The undersigned Guarantor joins in the execution of this Third Amendment
to evidence (1) that it hereby agrees and consents to all of the matters
contained in this Third Amendment and further agrees that (i) its liability
under that certain Guaranty Agreement dated July 17, 1997, executed by
Guarantor for the benefit of the Lender (the "Guaranty") shall not be
reduced, altered, limited, lessened or in any way affected by the execution
and delivery of this Third Amendment or any of the instruments or documents
referred to herein by the parties hereto, except as specifically set forth
herein or therein, (ii) the Guaranty is hereby renewed, extended, ratified,
confirmed and carried forward in all respects, (iii) the Guaranty is and
shall remain in full force and effect and is and shall remain enforceable
against Guarantor in accordance with its terms and (iv) the Guaranty shall
cover all indebtedness of the Borrower to the Lender described in the Loan
Agreement as amended hereby and (2) its agreement to be bound by the terms of
Section 13 of this Third Amendment.
BENZ ENERGY LTD.
By: TODD GRABOIS
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Name: Todd Grabois
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Title: Secretary
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EXHIBIT "A"
PROMISSORY NOTE
$10,000,000.00 November ____, 1998
FOR VALUE RECEIVED, after date, without grace, in the manner, on the
dates and in the amounts so herein stipulated, the undersigned, TEXSTAR
PETROLEUM, INC., a Texas corporation ("Borrower"), PROMISES TO PAY TO THE
ORDER OF BANK ONE, TEXAS, N.A., a national banking association ("Lender"),
in Houston, Harris County, Texas, the sum of TEN MILLION AND NO/100 DOLLARS
($10,000,000.00) or, if less, the aggregate unpaid principal amount of
advances made by Lender to Borrower pursuant to this Promissory Note (this
"Note"), in lawful money of the United States of America, which shall be legal
tender in payment of all debts and dues, public and private, at the time of
payment, and to pay interest on the advanced and unpaid principal amount from
date until maturity at the rate or rates ("Stated Rate") set forth in the
Loan Agreement (hereinafter defined), not to exceed the maximum non-usurious
interest rate permitted by applicable law from time to time in effect as such
law may be interpreted, amended, revised, supplemented or enacted ("Maximum
Rate"), provided that if at any time the Stated Rate exceeds the Maximum Rate
then interest hereon shall accrue at the Maximum Rate. In the event the
Stated Rate subsequently decreases to a level less than the Maximum Rate or
if the Maximum Rate applicable to this Note should subsequently be increased
to a level greater than the Stated Rate, then, in either case, interest
hereon shall thereafter accrue at a rate equal to the applicable Maximum Rate
until the aggregate amount of interest accrued through the term of this Note
equals the aggregate amount of interest which would have accrued at the
Stated Rate without regard to any usury limit, at which time interest hereon
shall again accrue at the Stated Rate,.
This Note is payable as follows:
1. Subject to the provisions of the Loan Agreement concerning
payment of interest with respect to Tranche B (as defined in the Loan
Agreement), accrued and unpaid interest shall be due and payable on the
first day of each month, commencing December 1, 1998.
2. Unless or to the extent not required pursuant to the provisions
of the Loan Agreement, a principal payment on Tranche A (as defined in
the Loan Agreement) in the amount of $1,500,000.00 shall be due and
payable on December 18, 1998.
3. All accrued and unpaid interest and unpaid principal shall be
due and payable on February 28, 1999.
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Initials
All payments under this Note shall be applied in such order and manner as
Lender may from time to time determine in its sole discretion.
This Note is subject to mandatory prepayments, as set forth in the Loan
Agreement. In addition, Borrower may prepay this Note, in whole or in part,
at any time prior to maturity without penalty, and interest shall cease on
any amount prepaid.
Any check, draft, money order or other instrument given in payment of
all or any part hereof may be accepted by Lender and handled in collection in
a customary manner, but same shall not constitute payment hereof or diminish
any rights of Lender except to the extent that actual cash proceeds of such
instrument are unconditionally received by Lender.
It is agreed that time is of the essence of this agreement. In the event
of default in the payment of any installment of principal or interest when
due or in the event of any other default hereunder, Lender may accelerate and
declare this Note immediately due and payable without notice. Any failure to
exercise this option shall not constitute a waiver by Lender of the right to
exercise the same at any other time.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest hereunder shall accrue at the Maximum Rate.
Borrower hereby agrees to pay all expenses, including reasonable
attorneys' fees, all of which shall become a part of the principal hereof,
incurred by Lender if this Note is placed in the hands of an attorney for
collection or if collected by suit or through any probate, bankruptcy or any
other legal proceedings.
Interest charges will be calculated on amounts advanced hereunder on the
actual number of days the amounts are outstanding on the basis of a 365-day
or 366-day year, as is applicable.
It is expressly stipulated and agreed to be the intent of Borrower and
Lender to comply with applicable Texas law governing the maximum non-usurious
rate or amount of interest payable on or in connection with this Note (or
applicable United States federal law to the extent that it permits Lender to
contract for, charge, take, reserve or receive a greater amount of interest
than under Texas law). Accordingly, it is agreed that notwithstanding any
provision to the contrary in this Note, or in any of the documents securing
payment hereof or otherwise relating hereto, no such provision shall require
the payment or permit the collection of interest at a rate in excess of the
Maximum Rate. If any excess of interest in such respect is provided for, or
shall be judicially interpreted to be so provided for, in this Note or in any
of the documents securing payment hereof or otherwise relating hereto, or if
the acceleration of the maturity of this Note or any prepayment by Borrower
results in Borrower's having paid any interest in excess of that permitted by
applicable law, then in any such event, it is the express intent of Borrower
and Lender that (1) the provisions of this
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Initials -2-
paragraph shall govern and control, (2) neither Borrower nor any other person
primarily liable on this Note, nor their respective heirs, legal
representatives, successors or assigns, shall be obligated to pay the amount
of such interest to the extent that it is in excess of the Maximum Rate, (3)
any such excess which may have been collected shall be either applied as a
credit against the then unpaid amount hereof or refunded to Borrower, and (4)
the provisions of this Note and any documents securing payment of this Note
shall be automatically deemed reformed and the amounts thereafter collectible
thereunder reduced, without the necessity of the execution of any new
document, so that the effective rate of interest shall be reduced to the
Maximum Rate. For the purpose of determining the maximum amount of interest
permitted to be charged or collected hereunder, all sums paid or agreed to be
paid to Lender for the use, forbearance or detention of the proceeds of this
Note shall be amortized, prorated, allocated and spread throughout the full
term of this Note so that the rate or amount of interest on account of this
Note is uniform throughout the term hereof and does not exceed the applicable
usury ceiling.
Borrower agrees that the Maximum Rate to be charged or collected
pursuant to this Note shall be the applicable weekly ceiling as defined in
the Texas Finance Code, as supplemented and amended by art. 1D.003 of the
Texas Credit Title, provided that Lender may rely on other applicable laws,
including without limitation laws of the United States, for calculation of
the Maximum Rate if the application thereof results in a greater Maximum
Rate. Except as provided above, the provisions of this Note shall be governed
by the laws of the State of Texas.
Borrower and each other person who is a maker, surety, guarantor or
endorser of this Note hereby waives demand, grace, notice, presentment for
payment, notice of intention to accelerate the maturity hereof, notice of the
acceleration of the maturity hereof and protest, and agrees that this Note
and the liens securing its payment may be renewed, and the time of payment
extended, from time to time, without notice and without releasing any of the
foregoing. As additional security for all amounts owed by Borrower to Lender,
Borrower hereby grants to Lender a lien and security interest on (and the
express right of setoff against) any of Borrower's funds which may from time
to time be deposited with or in the possession of Lender.
The principal of this Note represents funds which Lender may advance to
Borrower, pursuant to and subject to the Loan Agreement, from time to time upon
request of Borrower. Any part of the principal advanced with respect to
Tranche A (as defined in the Loan Agreement) may be repaid by Borrower and
thereafter reborrowed, provided the outstanding principal amount of this Note
shall never exceed the face amount of this Note. Each advance shall
constitute a part of the principal hereof and shall bear interest from the
date of the advance. The provisions of Chapter 346 of the Texas Finance Code,
as the same may be amended, shall not apply to this Note or to any of the
Security Documents. No portion of Tranche B that is repaid may thereafter be
reborrowed.
This Note is given in renewal and extension of a Promissory Note dated
October 10, 1997, executed by Borrower, payable to the order of Lender, in
the original principal amount of
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Initials -3-
$10,000,000.00, and the liens securing the payment of such note are not
released, but are hereby ratified and hereby carried forward to secure this
Note.
This Note is the Note referred to in, is subject to, and is entitled to
the benefits of and security afforded by the following documents (the
"Security Documents"):
(a) that certain letter loan agreement dated July 17, 1997
between Borrower and Lender, as amended by that certain First Amendment
to Letter Loan Agreement dated October 10, 1997 between Borrower and
Lender, by that certain Second Amendment to Letter Loan Agreement dated
October 10, 1997 between Borrower and Lender and by that certain Third
Amendment to Letter Loan Agreement of even date herewith between Borrower
and Lender (said letter loan agreement, as amended and as it may be
further amended, modified or supplemented from time to time, is referred
to herein as the "Loan Agreement");
(b) various mortgages and deeds of trust executed by Borrower and
others for the benefit of Lender and covering the Mortgaged Property (as
defined in the Loan Agreement); and
(c) that certain Guaranty Agreement dated July 17, 1997, executed
by Benz Energy Ltd. for the benefit of Lender.
This Note is subject to the provisions contained in the Security Documents
which, among other things, provide for the acceleration of the maturity
hereof upon the occurrence of certain events.
Borrower represents and warrants that this loan is for business,
commercial, investment of other similar purpose and not primarily for
personal, family, household or agricultural use.
TEXSTAR PETROLEUM, INC.
By:
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Name:
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Title:
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