SECURITIES AND EXCHANGE COMMISSION
Washington, D.C. 20549
FORM 8-K
CURRENT REPORT
Pursuant to Section 13 or 15(d) of the Securities Exchange Act of 1934
Date of Report (Date of earliest event reported): August 7, 1996
DSI Industries, Inc.
(Exact name of registrant as specified in its charter)
Delaware 0-15784 13-3273041
(State or other (Commission (IRS Employer
jurisdiction of File Number) Identification No.)
incorporation)
5211 Brownfield Highway, Suite 230, Lubbock, Texas 79407
(Address of principal executive offices) (Zip Code)
Registrant's telephone number, including area code: 806-785-8400
(Former name or former address, if changed since last report)
Exhibit Index is on page 3<PAGE>
Item 5. Other Events.
On August 7, 1996, the registrant executed a Security Agreement and a
Guaranty Agreement (the "Agreements") dated as of August 1, 1996 by and
between The Plains National Bank of West Texas (the "Lender") and the
registrant. The Agreements, copies of which are attached as Exhibits 10.35
and 10.36 to this Current Report on Form 8-K, are incorporated in their
entirety herein by reference.
Pursuant to or in accordance with the Agreements, the registrant
granted to the Lender a continuing security interest in all of the
outstanding common stock (1,000 shares) of its only operating subsidiary,
Norton Drilling Company ("Norton"), evidenced by common stock certificate
#1. Furthermore, the registrant unconditionally guaranteed the prompt and
full payment and performance of Norton's present and future, joint and/or
several, direct and indirect, absolute and contingent , express and implied,
indebtedness, liabilities, obligations and covenants to Lender, including
any amendments, extensions modifications, renewals, or substitutions,
thereto. The registrant's obligations under the Agreements are unlimited and
shall include all present or future obligations between Norton and the
Lender, together with all interest and all of Lender's expenses and costs,
incurred in connection with the obligations.
The Agreements were executed in consideration for the Lender's funding
of a promissory note in the amount of $3,000,000 and a revolving or draw
note in the amount of $750,000. Payment on the $3,000,000 note shall be made
on demand, but if no demand is made, then in 82 payments of principal in the
amount of $35,715.00 plus accrued interest beginning September 1, 1996 and
continuing at monthly time intervals thereafter. A final payment of the
unpaid principal balance plus accrued interest is due and payable on July 1,
2003. The $750,000 note is due on demand, but if no demand is made, then
interest only payments beginning September 1, 1996 and continuing at monthly
time intervals thereafter. A final payment of the unpaid principal balance
plus accrued interest is due and payable on April 1, 1997.
<PAGE>
Item 7. Financial Statements and Exhibits. Page
(b) Financial Statements 5
Exhibit No. Name
10.35 Commercial Security Agreement dated as of 7
August 1, 1996, by and between The Plains
National Bank of West Texas and DSI Industries,
Inc..
10.36 Commercial Continuing Guaranty, dated as of 17
August 1, 1996 by and between The Plains
National Bank of West Texas and DSI Industries,
Inc.
<PAGE>
SIGNATURES
Pursuant to the requirements of the Securities Exchange Act of 1934,
the registrant has duly caused this report to be signed on its behalf by the
undersigned hereunto duly authorized.
DSI Industries, Inc.
(Registrant)
Date: August 22, 1996 /s/ Sherman H. Norton
Sherman H. Norton, Jr., President
Item 7. Financial Statements
DSI INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED BALANCE SHEETS
(Unaudited)
July 31,
1996
Current assets:
Cash and cash equivalents $ 414,378
Accounts receivable , trade, less allowance
for doubtful accounts of $90,000 3,140,389
Costs and estimated earnings in excess of
billings on uncompleted contracts 613,000
Prepaid expenses and other current assets 362,100
Total current assets 4,529,867
Property and equipment, at cost, net of
accumulated depreciation 7,351,227
Goodwill, net of accumulated amortization 1,444,080
Security deposits 128,991
Total assets $13,454,165
Current liabilities:
Current maturities of notes payable $ 1,421,901
Accounts payable 3,819,932
Accrued expenses and other current
liabilities 1,031,980
Net liabilities of discontinued operations 1,360,033
Total current liabilities 7,633,846
Notes payable, less current maturities 2,185,732
Commitments and contingencies - -
Stockholder's equity:
Common stock-par value $.01; authorized-
100,000,000 shares, issued and
outstanding-23,693,365 shares 226,103
Additional paid-in capital 9,643,111
Accumulated deficit (6,234,627)
Total stockholders' equity 3,634,587
Total liabilities and stockholder's equity $13,454,165
These financial statements include adjustments to reflect the bank refinancing
which occurred subsequent to July 31, 1996.
DSI INDUSTRIES, INC. AND SUBSIDIARIES
CONSOLIDATED STATEMENTS OF OPERATIONS
(Unaudited)
For the eight
months ended
July 31,
1996
Operating revenues:
Contract drilling revenues $15,735,328
Other 48,375
Total operating revenues 15,783,703
Operating costs and expenses:
Direct drilling costs 13,792,498
General and administrative 718,087
Depreciation, depletion and
amortization 855,244
Other 11,752
Total operating costs and expenses 15,377,581
Operating income 406,122
Other income (expense):
Net gain on sale of assets 113,040
Interest expense ( 245,831)
Total other expense, net ( 132,791)
Income before provision for
income taxes and discontinued operations 273,331
Income taxes - -
Income from continuing operations 273,331
Income from discontinued operations, net
of income tax effect of $-0- 2,115,007
Net income $ 2,388,338
Exhibit 10.35
OWNER OF COLLATERAL
DSI INDUSTRIES, INC.
THE PLAINS NATIONAL BANK PNB
5010 University COMMERCIAL
Lubbock, Texas 79413 SECURITY
(806) 795-7131 "LENDER" AGREEMENT
Lubbock County
ADDRESS
5211 BROWNFIELD HWY, SUITE 230
LUBBOCK, TX 79407
Telephone Identification No.
785-8400
BORROWER LOCATION OF COLLATERAL
NORTON DRILLING COMPANY
ADDRESS
5211 BROWNFIELD HWY, SUITE 230
LUBBOCK, TX 79407
Telephone Identification No.
785-8400
1. SECURITY INTEREST. Owner of Collateral ("Owner") grants to Lender
identified above a continuing security interest in the Collateral described
below to secure the obligations described in this Agreement.
2. OBLIGATIONS. The Collateral shall secure the payment and performance of
all of Borrower's and Owner's present and future, joint and/or several, direct
and indirect, absolute and contingent, express and implied, indebtedness,
(including costs of collection, legal expenses and attorneys' fees, incurred
by Lender upon the occurrence of a default under this Agreement, in collecting
or enforcing payment of such indebtedness or preserving, protecting or
realizing on the Collateral), liabilities, obligations and covenants
(cumulatively "Obligations") to Lender; pursuant to:
a. this Agreement and the following promissory notes and agreements:
INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
RATE CREDIT LIMIT AGREEMENT DATE NUMBER NUMBER
VARIABLE $750,000.00 08/01/96 04/01/97 991307
VARIABLE $3,000,000.00 08/01/96 07/01/03 1015908
b. all other present or future, written or oral, agreements between
Borrower or Owner to Lender (whether executed for the same or
different purposes than the preceding documents)
c. all amendments, modifications, replacements or substitutions to any of
the foregoing; and
d. applicable law.
3. COLLATERAL. The Collateral shall consist of all of the following
described property and Owner's rights, title and interest in such property
whether now owned or hereafter acquired by Owner and wheresoever located:
All accounts and contract rights including, but not limited to, the
accounts and contract rights described on Schedule A attached hereto and
incorporated herein by this reference;
All chattel paper including, but not limited to, the chattel paper
described on Schedule A attached hereto and incorporated herein by this
reference;
All documents including, but not limited to, the documents described on
Schedule A attached hereto and incorporated herein by this reference;
All equipment, including, but not limited to, the equipment described on
Schedule A attached hereto and incorporated herein by this reference;
All fixtures, including, but not limited to, the fixtures located or to
be located on the real property described on Schedule B attached hereto
and incorporated herein by this reference;
All general intangibles including, but not limited to, the general
intangibles described on Schedule A attached hereto and incorporated
herein by this reference;
All instruments including, but not limited to, the instruments described
on Schedule A attached hereto and incorporated herein by this reference;
All inventory including, but not limited to, the inventory described on
Schedule A attached hereto and incorporated herein by this reference;
All minerals or the like located on or related to the real property
described on Schedule B attached hereto and incorporated herein by this
reference;
All standing timber located on the real property described on Schedule B
attached hereto and incorporated herein by this
reference;
The property described in Schedule A;
All monies, instruments, and savings, checking or other deposit accounts
within Lender's custody or control (excluding IRA, Keogh, trust accounts, and
deposits subject to tax penalties if so assigned)
All accessions, accessories, additions, amendments, attachments,
modifications, replacements and substitutions to any of the above;
All proceeds and products of any of the above
All policies of insurance pertaining to any of the above as well as any
proceeds and unearned premiums pertaining to such policies; and
All books and records pertaining to any of the above.
4. OWNER'S TAXPAYER IDENTIFICATION. Owner's social security number or
federal taxpayer identification number is: 75-2394846
5. RESIDENCY/LEGAL STATUS. Owner is a resident of the state of: n/a
Owner is a: X Corporation; Partnership; Non-Profit Association;
Limited Liability Company; duly organized, validly existing and in good
standing under the laws of the state of: Delaware
6. REPRESENTATIONS, WARRANTIES, AND COVENANTS. Owner represents, warrants
and covenants to Lender that:
(a) Owner is and shall remain the sole owner of the Collateral;
(b)
(c) Owner's chief executive office, chief place of business, office where
its business records are located, or residence is the address
identified above. Owner's other executive offices, places of business,
locations of its business records, or domiciles are described
on Schedule C attached hereto and incorporated herein by this reference.
Owner shall immediately advise Lender in writing of any
change in or addition to the foregoing addresses;
(d)Owner shall not become a party to any restructuring of its form of
business or participate in any consolidation, merger, liquidation or
dissolution without providing Lender with thirty (30) or more days'
prior written notice of such change
(e) Owner shall notify Lender of the nature of any intended change of
Owner's name, or the use of any trade name, and the effective
date of such change
(f) The Collateral is and shall at all times remain free of all tax and
other liens, security interests, encumbrances and claims of any kind
except for those belonging to Lender and those described on Schedule D
attached hereto and incorporated herein by this reference. Without
waiving the event of default as a result thereof, Owner shall take any
action and execute any document needed to discharge the foregoing liens,
security interests, encumbrances and claims;
(g) Owner shall defend the Collateral against all claims and demands of all
persons at any time claiming any interest therein;
(h) All of the goods, fixtures, minerals or the like, and standing timber
constituting the Collateral is and shall be located at Owner's
executive offices, places of business, residence and domiciles
specifically described in this Agreement.
(i) Owner shall provide Lender with possession of all chattel paper and
instruments constituting the Collateral
(j) All of Owners accounts or contract rights; chattel paper; documents;
general intangibles; instruments; and federal, state, county,
and municipal government and other permits and licenses; trusts, liens,
contracts, leases, and agreements constituting the Collateral are and
shall be valid, genuine and legally enforceable obligations and rights
belonging to Owner against one or more third parties and not subject to
any claim, defense, set-off or counterclaim of any kind
(k) Owner shall not amend, modify, replace, or substitute any account or
contract right; chattel paper; document, general intangible; or
instrument constituting the Collateral without the prior written consent
of Lender;
(l) Owner has the right and is duly authorized to enter into and perform
its obligations under this Agreement. Owner's execution and
performance of these obligations do not and shall not conflict with the
provisions of any statute, regulation, ordinance, rule of law
contract or other agreement which may now or hereafter be binding on
Owner;
(m) No action or proceeding is pending against Owner which might result in
any material or adverse change in its business operations or
financial condition or materially affect the Collateral; other than what
has previously been disclosed.
(n)Owner has not violated and shall not violate any applicable federal,
state, county or municipal statute, regulation or ordinance
(including, but not limited to, those governing Hazardous Materials)
which may materially and adversely affect its business
operations or financial condition or the Collateral; and
(o)This Agreement and the obligations described in this Agreement are
executed and incurred for business and not consumer
purposes .
7. SALE OF COLLATERAL. Owner shall not assign, convey, lease, sell or
transfer any of the Collateral to any third party without the prior written
consent of Lender except for sales of inventory to buyers in the ordinary
course of business.
8. FINANCING STATEMENTS AND OTHER DOCUMENTS. Owner shall take all actions
and execute all documents required by Lender to attach, perfect and maintain
its security interest in the Collateral and establish and maintain its right
to receive the payment of the proceeds of the Collateral including but not
limited to, executing any financing statements, fixture filings, continuation
statements, notices of security interest and other documents required by the
Uniform Commercial Code and other applicable law. Owner shall pay the costs of
filing such documents in all offices wherever filing or recording is deemed by
Lender to be necessary or desirable. In lieu of filing security agreements
financing statements, and effective financing statements, Lender shall be
entitled to perfect its security interest in the Collateral by filing carbon,
photographic or other reproductions of the aforementioned documents with any
authority required by the Uniform Commercial Code or other applicable law.
9. INQUIRIES AND NOTIFICATION TO THIRD PARTIES. Owner hereby authorizes
Lender to contact any third party and make any inquiry pertaining to Owner's
financial condition or the Collateral. In addition, Lender is authorized to
provide oral or written notice of its security interest in the Collateral to
any third party.
10. COLLECTION OF INDEBTEDNESS FROM THIRD PARTIES. Lender shall be entitled
to notify, and upon the request of Lender, Owner shall notify any account
debtor or other third party (including, but not limited to, insurance
companies) to pay any indebtedness or obligation owing to Owner and
constituting the Collateral (cumulatively "Indebtedness") to Lender whether or
not a default exists under this Agreement. Owner shall diligently collect the
Indebtedness owing to Owner from its account debtors and other third parties
until the giving of such notification. In the event that Owner possesses or
receives possession of any instruments or other remittances with respect to
the Indebtedness following the giving of such notification or if the
instruments or other remittances constitute the prepayment of any Indebtedness
or the payment of any insurance proceeds, Owner shall hold such instruments
and other remittances in trust for Lender apart from its other property,
endorse the instruments and other remittances to Lender, and immediately
provide Lender with possession of the instruments and other remittances.
Lender shall be entitled, but not required, to collect (by legal proceedings
or otherwise), extend the time for payment, compromise exchange or release any
obligor or collateral upon, or otherwise settle any of the Indebtedness
whether or not an event of default exists under this Agreement. Lender shall
not be liable to Owner for any action, error, mistake, omission or delay
pertaining to the actions described in this paragraph or any damages resulting
therefrom.
11. POWER OF ATTORNEY. Owner hereby appoints Lender as its attorney-in-fact
to endorse Owner's name on all instruments and other remittances payable to
Owner with respect to the Indebtedness or other documents pertaining to
Lender's actions in connection with the Indebtedness. In addition, Lender
shall be entitled, but not required, to perform any action or execute any
document required to be taken or executed by Owner under this Agreement.
Lender's performance of such action or execution of such documents shall not
relieve Owner from any obligation or cure any default under this Agreement.
The powers of attorney described in this paragraph are coupled with an
interest and are irrevocable.
12. USE AND MAINTENANCE OF COLLATERAL. Owner shall use the Collateral
solely in the ordinary course of its business, for the usual purposes intended
by the manufacturer (if applicable), with due care, and in compliance with the
laws, ordinances, regulations requirements and rules of all federal, state,
county and municipal authorities including environmental laws and regulations
and insurance policies. Owner shall not make any alterations, additions or
improvements to the Collateral without the prior written consent of Lender.
Without limiting the foregoing, all alterations, additions and improvements
made to the Collateral shall be subject to the security interest belonging to
Lender, shall not be removed without the prior written consent of Lender, and
shall be made at Owner's sole expense. Owner shall take all actions and make
any repairs or replacements needed to maintain the Collateral in good
condition and working order.
13. LOSS OR DAMAGE. Owner shall bear the entire risk of any loss, theft,
destruction or damage (cumulatively "Loss or Damage") to all or any part of
the Collateral. In the event of any Loss or Damage, Owner will either restore
the Collateral to its previous condition, replace the Collateral with similar
property acceptable to Lender in its sole discretion, or pay or cause to be
paid to Lender the decrease in the fair market value of the affected
Collateral.
14. INSURANCE. The Collateral will be kept insured for its full value
against all hazards including loss or damage caused by fire, collision, theft
or other casualty. If the Collateral consists of a motor vehicle, Owner will
obtain comprehensive and collision coverage in amounts at least equal to the
actual cash value of the vehicle with deductibles not to exceed $ n/a
OWNER MAY FURNISH REQUIRED INSURANCE EITHER THROUGH EXISTING POLICIES OWNED OR
CONTROLLED BY OWNER OR THROUGH ANY INSURANCE COMPANY AUTHORIZED TO TRANSACT
BUSINESS IN TEXAS, BUT LENDER MAY REFUSE ANY INSURER FOR REASONABLE CAUSE. The
insurance policies shall require the insurance company to provide Lender with
at least thirty (30) days' written notice before such policies are altered or
canceled in any manner. The insurance policies shall name Lender as a loss
payee and provide that no act or omission of Owner or any other person shall
affect the right of Lender to be paid the insurance proceeds pertaining to the
loss or damage of the Collateral. In the event Owner fails to acquire or
maintain insurance, Lender (after providing notice as may be required by law)
may in its discretion procure appropriate insurance coverage upon the
Collateral and charge the insurance cost as an advance of principal under the
promissory note. Owner shall furnish Lender with evidence of insurance
indicating the required coverage. Lender may act as attorney-in-fact for Owner
in making and settling claims under insurance policies, canceling any policy
or endorsing Owner's name on any draft or negotiable instrument drawn by any
insurer.
15. INDEMNIFICATION. Lender shall not assume or be responsible for the
performance of any of Owner's obligations with respect to the Collateral under
any circumstances. Owner shall immediately provide Lender with written notice
of and indemnify and hold Lender and its shareholders, directors, officers,
employees and agents harmless from all claims, damages, liabilities (including
attorneys' fees and legal expenses), causes of action, actions, suits and
other legal proceedings (cumulatively "Claims") pertaining to its business
operations or the Collateral including, but not limited to, those arising from
Lender's performance of Owner's obligations with respect to the Collateral. It
is the express intention of the parties hereto that the indemnity provided for
herein is intended to and shall indemnify and protect Lender from the
consequences of Lender's own negligence, whether or not that negligence is the
sole or concurring cause of any claim, damage, liability, loss, deficiency,
penalty, cost or expense. Owner, upon the request of Lender, shall hire legal
counsel to defend Lender from such Claims/ and pay the attorneys' fees, legal
expenses and other costs incurred in connection therewith. In the alternative,
Lender shall be entitled to employ its own legal counsel to defend such Claims
at Owner's cost.
16. TAXES AND ASSESSMENTS. Owner shall execute and file all tax returns and
pay all taxes, licenses, fees and assessments relating to its business
operations and the Collateral (including, but not limited to, income taxes,
personal property taxes, withholding taxes, sales taxes, use taxes, excise
taxes and workers' compensation premiums) in a timely manner.
17. INSPECTION OF COLLATERAL AND BOOKS AND RECORDS. Owner shall allow
Lender or its agents to examine, inspect and make abstracts and copies of the
Collateral and Owner's books and records pertaining to Owner's business
operations and financial condition or the Collateral during normal business
hours. Owner shall provide any assistance required by Lender for these
purposes. All of the signatures and information pertaining to the Collateral
or contained in the books and records shall be genuine, true, accurate and
complete in all respects. Owner shall note the existence of Lender's security
interest in its books and records pertaining to the Collateral.
18. DEFAULT. Owner shall be in default under this Agreement in the event
that Owner, Borrower or any guarantor:
(a)fails to make any payment under this Agreement or any other
indebtedness to Lender when due
(b)fails to perform any obligation or breaches any warranty or covenant to
Lender contained in this Agreement or any other present or future
written agreement regarding this or any other indebtedness to Lender
(c)provides or causes any false or misleading signature or representation
to be provided to Lender;
(d)allows any loss, diminution, or impairment of the physical condition,
value, title, priority, possession, or control of any Collateral or
Owner's or Lender's rights therein, including, but not limited to,
allowing any part of the Collateral to be placed into receivership,
removed, impaired, lost, stolen, destroyed, damaged, seized, confiscated
or affected in any material way;
(e)seeks to revoke, terminate or otherwise limit its liability under any
continuing guaranty;
(f)permits the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Owner, any guarantor, or any of their
property
(g)becomes legally incompetent, is dissolved or terminated, ceases to
operate its business, becomes insolvent, makes an assignment for the
benefit of creditors, or becomes the subject of any bankruptcy,
insolvency or debtor rehabilitation proceeding
(h)allows the Collateral to be used by anyone to transport or store goods,
the possession, transportation, or use of which, is illegal;
(i)causes Lender in good faith to deem itself insecure for any reason. and
Borrower has been unable to provide assurances or restore the Bank's
security.
19. RIGHTS OF LENDER ON DEFAULT. If there is a default under this
Agreement, Lender shall be entitled to exercise one or more of the following
remedies without notice or demand (except as required by law):
(a)to declare the Obligations immediately due and payable in full
(b)to collect the outstanding Obligations with or without resorting to
judicial process
(c)to change Owner's mailing address, open Owner's mail, and retain any
instruments or other remittances constituting the Collateral contained
therein
(d)to lawfully and peaceably take possession of any Collateral in any
manner permitted by law;
(e)to apply for and obtain, without notice and upon ex parte application,
the appointment of a receiver for the Collateral without regard to
Owner's financial condition or solvency, the adequacy of the Collateral
to secure the payment or performance of the obligations, or the
existence of any waste to the Collateral
(f)to require Owner to deliver and make available to Lender any Collateral
at a place reasonably convenient to Owner and Lender;
(g)to sell, lease or otherwise dispose of any Collateral and collect any
deficiency balance with or without resorting to legal process
(h)to set-off Owner's obligations against any amounts due to Owner
including, but not limited to, monies, instruments, and deposit
accounts maintained with Lender, and
(i) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and
in any order. If notice to Owner of intended disposition of Collateral is
required by law, Lender will provide reasonable notification of the time and
place of any sale or intended disposition as required under the Uniform
Commercial Code. In the event that Lender institutes an action to recover any
Collateral or seeks recovery of any Collateral by way of a prejudgment remedy
in an action against Owner, Owner waives the posting of any bond which might
otherwise be required. Owner waives and consents to any release or other
impairment of any Collateral because of any failure of Lender to perfect its
security interest, any damage to any Collateral, or any other reason
whatsoever, even if caused by Lender's negligence.
20. APPLICATION OF PAYMENTS. Whether or not a default has occurred under
this Agreement, all payments made by or on behalf of Owner and all credits due
to Owner from the disposition of the Collateral or otherwise may be applied
against the amounts paid by Lender (including attorneys' fees and legal
expenses) in connection with the exercise of its rights or remedies described
in this Agreement and any interest thereon and then to the payment of the
remaining Obligations in whatever order Lender chooses.
21. REIMBURSEMENT OF AMOUNTS EXPENDED BY LENDER. Owner shall reimburse
Lender for all amounts (including attorneys' fees and legal expenses) expended
by Lender in the performance of any action required to be taken by Owner or
the exercise of any right or remedy belonging to Lender under this Agreement,
together with interest thereon at the lower of the highest rate described in
any promissory note or credit agreement executed by Borrower or Owner or the
highest rate allowed by law from the date of payment until the date of
reimbursement. These sums shall be Included in the definition of Obligations,
shall be secured by the Collateral identified in this Agreement and shall be
payable upon demand.
22. ASSIGNMENT. Owner shall not be entitled to assign any of its rights,
remedies or obligations described in this Agreement without the prior written
consent of Lender. Consent may be withheld by Lender in its sole discretion.
Lender shall be entitled to assign some or all of its rights and remedies
described in this Agreement without notice to or the prior consent of Owner in
any manner.
23. MODIFICATION AND WAIVER. The modification or waiver of any of Owner's
Obligations or Lender's rights under this Agreement must be contained in a
writing signed by Lender. Lender may perform any of Owner's Obligations or
delay or fail to exercise any of its rights without causing a waiver of those
Obligations or rights. A waiver on one occasion shall not constitute a waiver
on any other occasion. Owner's Obligations under this Agreement shall not be
affected if Lender amends, compromises, exchanges, fails to exercise, impairs
or releases any of the obligations belonging to any Owner or third party or
any of its rights against any Owner, third party or collateral.
24. SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon and inure
to the benefit of Owner and Lender and their respective successors, assigns,
trustees, receivers, administrators, personal representatives, legatees, and
devisees.
25. NOTICES. Any notice or other communication to be provided under this
Agreement shall be in writing and sent to the parties at the addresses
described In this Agreement or such other address as the parties may designate
in writing from time to time.
26. SEVERABILITY. If any provision of this Agreement violates the law or is
unenforceable, the rest of the Agreement shall remain valid.
27. APPLICABLE LAW. THIS AGREEMENT SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS AND APPLICABLE FEDERAL LAW. OWNER OF COLLATERAL CONSENTS TO THE
JURISDICTION AND VENUE OF ANY COURT LOCATED IN THE COUNTY IN WHICH THIS
AGREEMENT IS SIGNED OR IN WHICH OWNER OF COLLATERAL RESIDES IN THE EVENT OF
ANY LEGAL PROCEEDING UNDER THIS AGREEMENT.
28. COLLECTION EXPENSES. If Lender hires an attorney (who is not a salaried
employee of Lender) to assist in collecting amounts owed or enforcing Lender's
rights or remedies, Owner agrees to pay Lender's reasonable attorneys' fees,
court costs and related expenses to the extent permitted by law, subject to
court award.
29. MISCELLANEOUS. This Agreement is executed for commercial purposes.
Owner shall supply information regarding Owner's business operations and
financial condition or the Collateral in the form and manner as requested by
Lender. All information furnished by Owner to Lender shall be true, accurate
and complete in all respects. Owner and Lender agree that time is of the
essence. All references to Owner in this Agreement shall include all parties
signing below. If there is more than one Owner, their obligations shall be
joint and several. This Agreement shall remain in full force and effect until
Lender provides Owner with written notice of termination. This Agreement and
any related documents represent the complete and integrated understanding
between Owner and Lender pertaining to the terms and conditions of those
documents.
30. ADDITIONAL TERMS:
Borrower will have no more than thirty (30) days to cure any default from the
date of written notice by the Bank.
Owner acknowledges that Owner has read, understands, and agrees to the terms
and conditions of this Agreement.
This Agreement and related documents have been signed in the county of
Lender's address unless otherwise specified: LUBBOCK
Dated: AUGUST 1, 1996
LENDER: PLAINS NATIONAL BANK OF WEST TEXAS
P.O. Box 271
DARRELL W ADAMS
SENIOR VICE PRESIDENT
OWNER: DSI INDUSTRIES, INC. OWNER:
/s/ Sherman H. Norton, Jr.
SHERMAN H. NORTON, JR. - CHAIRMAN
OF THE BOARD
OWNER: OWNER:
OWNER: OWNER:
OWNER: OWNER:
SCHEDULE A
NORTON DRILLING COMPANY COMMON STOCK CERTIFICATE #1 FOR 1,000 SHARES
SCHEDULE B
SCHEDULE C
SCHEDULE D
THE PLAINS NATIONAL BANK PNB GUARANTOR
5010 University DSI INDUSTRIES, INC.
Lubbock, Texas 79413 DISCLAIMER OF
(806)-795-7131 "LENDER" ORAL AGREEMENTS
Lubbock County
ADDRESS
5211 Brownfield Hwy, Suite 230
LUBBOCK, TX 79407
Telephone No. Identification No.
785-8400
OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE NUMBER NUMBER
052 VARIABLE $750,000.00 08/01/96 04/01/97 991307
Owner and Lender (the "Parties") incorporate by reference into each of the
documents executed in connection with the transaction described above, the
following provision:
THIS WRITTEN LOAN AGREEMENT 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.
Dated: AUGUST 1, 1996
LENDER: PLAINS NATIONAL BANK OF WEST TEXAS
P.O. Box 271
DARRELL W ADAMS
SENIOR VICE PRESIDENT
OWNER: DSI INDUSTRIES, INC. OWNER:
/s/ Sherman H. Norton, Jr.
SHERMAN H. NORTON, JR. - CHAIRMAN
OF THE BOARD
OWNER: OWNER:
OWNER: OWNER:
OWNER: OWNER:
Exhibit 10.36
The Plains National Bank PNB
5010 University
Lubbock, Texas 79413
(806-795-7131 "LENDER" Lubbock County
COMMERCIAL CONTINUING GUARANTY
GUARANTOR BORROWER
DSI INDUSTRIES, INC. NORTON DRILLING COMPANY
ADDRESS ADDRESS
5211 BROWNFIELD HWY, SUITE 230 5211 BROWNFIELD HWY, SUITE 230
LUBBOCK, TX 79407 LUBBOCK, TX. 79407
Telephone Identification No. Telephone Identification No.
785-8400 785-8400
1. CONSIDERATION. This Guaranty is being executed to induce Lender
indicated above to enter into one or more loans or other financial
accommodations with or on behalf of Borrower.
2. GUARANTY. Guarantor hereby unconditionally guarantees the prompt and
full payment and performance of Borrower's present and future, joint and/or
several, direct and indirect, absolute and contingent, express and implied,
indebtedness, liabilities, obligations and covenants to Lender, including any
amendments, extensions modifications, renewals, or substitutions, thereto
(cumulatively "Obligations"):
X UNLIMITED: Guarantor's Obligations under this Guaranty shall be unlimited
and shall include all present or future Obligations between Borrower and
Lender (whether executed for the same or different purposes), together with
all interest and all of Lender's expenses and costs, incurred in connection
with the Obligations.
LIMITED TO: Guarantor's Obligations under this Guaranty shall include all
present and future written agreements between Borrower and Lender (whether
executed for the same or different purposes), but shall be limited to the
principal amount of________________Dollars, together with all interest and
all of Lender's expenses and costs incurred in connection with the
Obligations.
LIMITED TO THE FOLLOWING DESCRIBED NOTES/AGREEMENTS: Guarantor's
Obligations under this Guaranty shall be limited to the obligations
described in the following notes and agreements together with all interest
and all of Lender's expenses and costs, incurred in connection with the
Obligations:
Interest Principal Amount/ Funding/ Maturity Customer Loan
Rate Credit Limit Agreement Date Date Number Number
3. ABSOLUTE AND CONTINUING NATURE OF GUARANTY. Guarantor's obligations
under this Guaranty are absolute and continuing and shall not be affected or
impaired if Lender amends, renews, extends, compromises, exchanges, fails to
exercise, impairs or releases any of the obligations belonging to any
Borrower, Co-guarantor or third party or any of Lender's rights against any
Borrower, Co-guarantor, third party, or collateral. In addition, Guarantor's
Obligations under this Guaranty shall not be affected or impaired by the
death, incompetency, termination, dissolution, insolvency, business cessation,
or other financial deterioration of any Borrower, Guarantor, or third party.
4. DIRECT AND UNCONDITIONAL NATURE OF GUARANTY. Guarantor's Obligations
under this Guaranty are direct and unconditional and may be enforced without
requiring Lender to exercise, enforce, or exhaust any right or remedy against
any Borrower, Co-guarantor, third party, or collateral.
5. WAIVER OF NOTICE. Guarantor hereby waives notice of the acceptance of
this Guaranty; notice of present and future extensions of credit and other ,
financial accommodations by Lender to any Borrower;
THIS GUARANTY HAS BEEN SIGNED IN THE COUNTY OF THE LENDER'S ADDRESS UNLESS
OTHERWISE SPECIFIED:
GUARANTOR ACKNOWLEDGES GUARANTOR HAS READ, UNDERSTANDS, AND AGREES TO THE
TERMS AND CONDITIONS OF THIS AGREEMENT INCLUDING THE TERMS AND CONDITIONS ON
THE REVERSE SIDE. GUARANTOR ACKNOWLEDGES RECEIPT OF AN EXACT COPY OF THIS
AGREEMENT.
DATED: AUGUST 1, 1996
GUARANTOR: DSI INDUSTRIES, INC. GUARANTOR:
/S/ Sherman H. Norton, Jr.
SHERMAN H. NORTON, JR.- CHAIRMAN
OF THE BOARD
GUARANTOR: GUARANTOR:
6. DEFAULT. Guarantor shall be in default under this Guaranty in the
event that any Borrower or Guarantor:
(a) fails to pay any amount under this Guaranty or any other indebtedness
to Lender when due (whether such amount is due by acceleration or
otherwise);
(b) fails to perform any obligation or breaches any warranty or covenant
to Lender contained in this Guaranty or any other present or future
written agreement;
(c)provides or causes any false or misleading signature or representation
to be provided to Lender;
(d) allows any collateral for the Obligations or this Guaranty to be
destroyed, lost or stolen, or damaged in any material respect
(e) permits the entry or service of any garnishment, judgment, tax levy,
attachment or lien against Borrower, Guarantor, or any of their property;
(f) becomes legally incompetent, is dissolved or terminated, ceases to
operate its business, becomes insolvent, makes an assignment for the
benefit of creditors, or becomes the subject of any bankruptcy, insolvency
or debtor rehabilitation proceeding; or
(g) causes Lender to deem itself insecure in good faith for any reason.
and Borrower has been unable to provide assurances or
or restore the Bank's security.
7. RIGHTS OF LENDER ON DEFAULT. If there is a default under this Guaranty,
Lender shall be entitled to exercise one or more of the following remedies
without notice or demand (except as required by law):
(a) to declare Guarantor's Obligations under this Guaranty immediately
due and payable in full;
(b) to collect the outstanding obligations under this Guaranty with or
without resorting to judicial process;
(c) to set-off Guarantor's Obligations under this Guaranty against any
amounts due to Guarantor including, but not limited to, monies,
instruments, and deposit accounts maintained with Lender; and
(d) to exercise all other rights available to Lender under any other
written agreement or applicable law.
Lender's rights are cumulative and may be exercised together, separately, and
in any order. Guarantor waives and consents to any release or other impairment
of any collateral securing the Obligations because of any failure of Lender to
perfect a security interest in any such collateral or any other reason
whatsoever even if caused by Lender's negligence.
8. SUBORDINATION. Any indebtedness of Borrower now or hereafter owed to or
held by Guarantor is hereby subordinated to the payment in full of the
Obligations of Borrower to Lender during the term of this Agreement. Guarantor
agrees that Lender shall be preferred to Guarantor in any assignment for the
benefit of Borrower's creditors in any bankruptcy, insolvency, liquidation, or
reorganization proceeding commenced by or against Borrower in any federal or
state court.
9. INDEPENDENT INVESTIGATION. Guarantor's execution and delivery to Lender
of this Guaranty is based solely upon Guarantor's independent investigation of
Borrower's financial condition and not upon any written or oral representation
of Lender in any manner. Guarantor assumes full responsibility for obtaining
any additional information regarding Borrower's financial condition and Lender
shall not be required to furnish Guarantor with any information of any kind
regarding Borrower's financial condition.
10. ACCEPTANCE OF RISKS. Guarantor acknowledges the absolute and continuing
nature of this Guaranty and voluntarily accepts the full range of risks
associated herewith including, but not limited to, the risk that Borrower's
financial condition shall deteriorate or, if this Guaranty is unlimited, the
risk that Borrower shall incur additional Obligations to Lender in the future.
11. SUBROGATION. Guarantor, after performing under this Guaranty, shall not
be subrogated to any of Lender's rights against any Borrower which presently
is or may become the subject of any bankruptcy proceedings. Under these
circumstances, Guarantor specifically waives any rights and claims as a
creditor of such Borrower's bankruptcy estate. Other than as mentioned above,
Guarantor, after fully performing under this Guaranty, will be subrogated to
any of Lender's rights against any Borrower, any other guarantor, any third
party or any collateral which may secure the obligations of any of these
parties.
12. APPLICATION OF PAYMENTS. Lender will be entitled to apply any payments
or other monies received from Borrower, any third party, or any collateral
against Borrower s present and future obligations to Lender in any order.
13. ESSENCE OF TIME. Guarantor and Lender agree that time is of the
essence.
14. TERMINATION. This Guaranty shall remain in full force and effect until
Lender executes and delivers to Guarantor a written release thereof.
Notwithstanding the foregoing, Guarantor shall be entitled to terminate any
unlimited guaranty of Borrower's future Obligations to Lender following any
anniversary of this Guaranty by providing Lender with sixty (60) or more days'
written notice of such termination by hand-delivery or certified mail. Notice
shall be deemed given when received by Lender. Such notice of termination
shall not effect or impair any of the agreements and obligations of the
Guarantor under this Agreement with respect to any of the obligations
(including legal, binding obligations to lend additional funds in the future)
existing prior to the time of actual receipt of such notice by Lender, any
extensions or renewals thereof, and any interest on any of the foregoing.
15. ASSIGNMENT. Guarantor shall not be entitled to assign any of its rights
or obligations described in this Guaranty without Lender's prior written
consent which may be withheld by Lender in its sole discretion. Lender shall
be entitled to assign some or all of its rights and remedies described in this
Guaranty without notice to or the prior consent of Guarantor in any manner.
Unless the Lender shall otherwise consent in writing, the Lender shall have an
unimpaired right prior and superior to that of any assignee, to enforce this
Guaranty for the benefit of the Lender, as to those Obligations that the
Lender has not assigned
16. MODIFICATION AND WAIVER. The modification or waiver of any of
Guarantor's obligations or Lender's rights under this Guaranty must be
contained in a writing signed by Lender. Lender may delay in exercising or
fail to exercise any of its rights without causing a waiver of those rights. A
waiver on one occasion shall not constitute a waiver on any other occasion.
17. SUCCESSORS AND ASSIGNS. This Guaranty shall be binding upon and inure
to the benefit of Guarantor and Lender and their respective successors,
assigns, trustees, receivers, administrators, personal representatives,
legatees, and devisees.
18. NOTICE. Any notice or other communication to be provided under this
Guaranty shall be in writing and sent to the parties at the addresses
described in this Guaranty or such other addresses as the parties may
designate in writing from time to time.
19. SEVERABILITY. If any provision of this Guaranty violates the law or is
unenforceable, the rest of the Guaranty shall remain valid.
20. APPLICABLE LAW. THIS GUARANTY SHALL BE GOVERNED BY THE LAWS OF THE
STATE OF TEXAS AND APPLICABLE FEDERAL LAWS.
21. COLLECTION COSTS. If Lender hires an attorney to assist in collecting
any amount due or enforcing any right or remedy under this Guaranty, Guarantor
agrees to pay Lender's reasonable attorneys' fees, legal expenses and other
costs as permitted by law.
22. MISCELLANEOUS. This Guaranty is executed in connection with a
commercial or agricultural loan. Guarantor will provide Lender with a current
financial statement upon request. All references to Guarantor in this Guaranty
shall include all entities or persons signing on reverse. If there is more
than one Guarantor, their obligations shall be joint and several. This
Guaranty and any related documents represent the complete and integrated
understanding between Guarantor and Lender pertaining to the terms and
conditions of those documents.
23. ADDITIONAL TERMS:
Borrower will have no more than thirty (30) days to cure any default from the
date of written notice by the bank.
THE PLAINS NATIONAL BANK PNB GUARANTOR
5010 University DSI INDUSTRIES, INC.
Lubbock, Texas 79413 DISCLAIMER OF
(806)-795-7131 "LENDER" ORAL AGREEMENTS
Lubbock County
ADDRESS
5211 Brownfield Hwy, Suite 230
LUBBOCK, TX 79407
Telephone No. Identification No.
785-8400
OFFICER INTEREST PRINCIPAL AMOUNT/ FUNDING/ MATURITY CUSTOMER LOAN
INITIALS RATE CREDIT LIMIT AGREEMENT DATE NUMBER NUMBER
052 VARIABLE $3,000,000.00 08/01/96 07/01/03 1015908
Guarantor and Lender (the "Parties") incorporate by reference into each of the
documents executed in connection with the transaction described above, the
following provision:
THIS WRITTEN LOAN AGREEMENT 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.
Date: August 1, 1996
Lender: Plains National Bank of West Texas
P.O. Box 271
DARRELL W ADAMS
SENIOR VICE PRESIDENT
GUARANTOR: DSI INDUSTRIES, INC. GUARANTOR:
/S/ Sherman H. Norton, Jr.
SHERMAN H. NORTON, JR.- CHAIRMAN
OF THE BOARD
GUARANTOR: GUARANTOR:
