FORBEARANCE AGREEMENT
THIS FORBEARANCE AGREEMENT (the "Agreement") is entered into
as of December 1, 1997, by and among Ametech, Inc., an Oklahoma
corporation ("Ametech"), Environmental Transportation Services,
Inc., an Oklahoma corporation ("ETS") (Ametech and ETS are at times
referred to herein, individually and collectively, as "Borrower"),
and Congress Financial Corporation (Southwest) ("Lender").
RECITALS
A. Borrower and Lender are parties to that certain Loan and
Security Agreement dated as of July 17, 1997, as amended from time
to time (as so amended, together with all riders, supplements,
addenda and exhibits thereto, the "Security Agreement") and other
agreements, instruments and other documents relating thereto or
executed in connection therewith (collectively, the "Related
Documents"). Capitalized terms not otherwise defined herein shall
have the meanings given such terms in the Security Agreement.
B. To secure its obligations to Lender under the Security
Agreement and otherwise, Borrower has granted to Lender a security
interest in the Collateral.
C. Borrower acknowledges that certain Events of Default have
occurred and are continuing to exist under the Security Agreement
(collectively, the "Existing Defaults"), including, but not limited
to, the following: (1) Borrower has violated Section 9.13 of the
Security Agreement by failing to maintain the Minimum Adjusted Net
Worth level as set forth therein, (2) Borrower has violated Section
2.1(c) of the Security Agreement by failing to immediately repay
Revolving Loans in excess of the lending formulas set forth
therein, and (3) Borrower has violated Section 10.1(j) of the
Security Agreement by indicating in a press release its intention
to temporarily cease doing business. By reason of the existence of
the Existing Defaults, Lender has full legal right to exercise its
rights and remedies under the Security Agreement and the Related
Documents. Such remedies include, but are not limited to, the
right to repossession and sale of the Collateral.
D. Borrower has requested that Lender forbear for a period
of time until January 5, 1998, from exercising certain of its
rights and remedies under the Security Agreement.
E. Lender is willing to agree for a period of time until
January 5, 1998, to forbear from exercising certain of its remedies
under the Security Agreement, on the terms and conditions set forth
herein.
AGREEMENT
In consideration of the Recitals and of the mutual promises
and covenants contained herein, Lender and Borrower agree as
follows:
1. Agreement to Forbear; Release of Reserves; Permitted
Over-Advance; Continued Extensions of Credit; Collateral Proceeds;
Collateral Sales.
(a) Forbearance. During the period commencing on
the date hereof and ending on the earlier to occur of
5:00 p.m. (Dallas, Texas time) on January 5, 1998, or the
date that any Forbearance Default (as defined in Section
6 hereof) occurs (the "Forbearance Period"), and subject
to the other terms and conditions of this Agreement and
the Security Agreement, Lender agrees that it will
forbear from (i) initiating judicial proceedings for the
collection of the Obligations; (ii) filing or joining in
filing any involuntary petition in bankruptcy with
respect to Borrower, or otherwise initiating or
participating in the commencement of similar insolvency,
reorganization, or moratorium proceedings for the benefit
of creditors of Borrower; (or (iii) repossessing or
selling, through judicial proceedings or otherwise, any
of the collateral, provided that Lender may, but shall
not be obligated to, collect the Accounts and proceeds of
other Collateral and apply such collections and proceeds
to the Obligations as provided in the Security Agreement.
Upon the expiration or termination of the Forbearance
Period, Lender's forbearance shall automatically
terminate and Lender shall be entitled to exercise any
and all of its rights and remedies under this Agreement,
the Security Agreement and/or the Related Documents.
Borrower agrees that Lender shall have no obligation to
extend the Forbearance Period.
(b) Release of Reserves. Effective immediately and
continuing throughout the Forbearance Period, Lender will
release for use by the Borrower the following reserves:
(1) the Licensing Payment Reserve totaling $135,416; and
(2) the Primary Reserve totaling $375,000.
(c) Permitted Over-Advance. Effective immediately
and continuing throughout the Forbearance Period, Lender
will make an over-advance accommodation to Borrower of up
to $160,000 over and above the lending formulas set forth
in Section 2.1 of the Security Agreement; provided,
however, that effective on December 22, 1997, and
continuing throughout the remainder of the Forbearance
Period, Lender will make an additional over-advance
accommodation to Borrower of $40,0000 for a total of up
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to $200,000 over and above the lending formulas set forth
in Section 2.1 of the Security Agreement.
(d) Continued Extensions of Credit. Subject to the
terms of this Agreement, the Security Agreement and the
Related Documents, Lender will continue to extend loans
to Borrower during the Forbearance Period; provided, however,
that in no event shall the total Loans to Borrower outstanding
at any time during the Forbearance Period exceed $7,200,000.00.
(e) Collateral Proceeds. With the exception of the
proceeds of Accounts which shall continue to be remitted
to the Blocked Accounts, all proceeds resulting from the
sale or other disposition of any Collateral shall be paid
directly to Lender and applied to the Obligations as
provided in the Security Agreement. Notwithstanding the
foregoing, however, all proceeds resulting from the sale
or other disposition of any Equipment shall be applied as
a permanent reduction to the outstanding balance owing on
the Term Loan.
(f) Collateral Sales. Borrower shall either sell
or liquidate, or contract to sell or liquidate, a
substantial amount of the Collateral by December 22,
1997.
2. Conditions Precedent to Effectiveness of Agreement. This
Agreement shall not be effective against Lender unless and until
each of the following conditions shall have been satisfied in
Lender's sole discretion or waived by Lender, for whose sole
benefit such conditions exist:
(a) Payment of Lender's Reasonable Out-of-Pocket
Costs and Expenses. Borrower shall have paid to Lender
all of Lender's reasonable out-of-pocket costs and
expenses (including Lender's attorney's fees and
expenses) incurred in connection with the preparation of
this Agreement; and
(b) Corporate Proceedings. All corporate
proceedings taken in connection with the transactions
contemplated by this Agreement and all documents,
instruments and other legal matters incident thereto
shall be satisfactory to Lender and its counsel.
3. Representations and Warranties. Borrower hereby
represents and warrants to Lender as follows:
(a) Recitals. The Recitals in this Agreement are
true and correct in all respects.
(b) Corporate Power; Authorization. Borrower has
the corporate power, and has been duly authorized by all
requisite corporate action, to execute and deliver this
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Agreement and to perform its obligations hereunder and
thereunder. This Agreement has been duly executed and
delivered by Borrower.
(c) Enforceability. This Agreement is the legal,
valid and binding obligations of Borrower, enforceable
against Borrower in accordance with its terms.
(d) No Violation. Borrower's execution, delivery
and performance of this Agreement does not and will not
(i) violate any law, rule, regulation or court order to
which Borrower is subject; (ii) conflict with or result
in a breach of Borrower's Articles of Incorporation or
Bylaws or any agreement or instrument to which Borrower
is a party or by which it or its properties are bound; or
(iii) result in the creation or imposition of any lien,
security interest or encumbrance on any property of
Borrower, whether now owned or hereafter acquired, other
than liens in favor of Lender.
(e) Obligations Absolute. The obligation of
Borrower to repay the Obligations, together with all
interest accrued thereon, is absolute and unconditional,
and there exists no right of set off or recoupment,
counterclaim or defense of any nature whatsoever to
payment of the Obligations.
(f) Full Opportunity for Review; No Undue
Influence. This Agreement was reviewed by Borrower which
acknowledges and agrees that Borrower (i) understands
fully the terms of this Agreement and the consequences of
the issuance hereof; (ii) has been afforded an
opportunity to have this Agreement reviewed by, and to
discuss this Agreement with, such attorneys and other
persons as Borrower may wish; and (iii) has entered into
this Agreement of its own free will and accord and
without threat or duress. This Agreement and all
information furnished to Lender is made and furnished in
good faith, for value and valuable consideration. This
Agreement has not been made or induced by any fraud,
duress or undue influence exercised by Lender or any
other person.
4. Covenants of Borrower. Unless Lender otherwise consents
in writing, Borrower agrees that during the Forbearance Period and
thereafter until such time as all of the obligations have been
finally and indefeasibly paid in full in cash, it will:
(a) Compliance with Security Agreements and the
Related Documents. Comply with all covenants and other
obligations of Borrower under the Security Agreement and
the Related Documents, as amended hereby.
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(b) Consent of Lender. Obtain the consent of
Lender before (i) disposing of any machinery or equipment
(whether owned, leased or otherwise used by Borrower); or
(ii) employing, hiring or retaining any consultant or
consulting firm.
(c) Expenditures. Borrower has submitted to Lender
the budget attached hereto as Exhibit A, identifying the
anticipated operating expenses that the Borrower will
incur during the Forbearance Period. Borrower
acknowledges that Lender has relied on that budget for
purposes of entering into this Agreement. Borrower
covenants and represents to Lender that (i) its actual
expenditures during the Forbearance Period will not
exceed the amounts set forth in the budget, and (ii) the
proceeds of its loan requests shall not be used for
purposes other than the payment of expenditures
identified in the budget.
5. Collateral.
(a) Disposition of Collateral. Borrower hereby
renounces and waives all rights that are waivable under
Article 9 of the Uniform Commercial Code (the "UCC") of
any jurisdiction in which any Collateral may now or
hereafter be located. Without limiting the generality of
the foregoing, Borrower hereby (i) renounces any right to
receive notice of any disposition by Lender of the
Collateral pursuant to Section 9-504(3) of the UCC upon
termination of the Forbearance Period, whether such
disposition is by public or private sale under the UCC or
otherwise, and (ii) waives any rights relating to
compulsory disposition of the Collateral pursuant to
Sections 9-504 and 9-505 of the UCC.
(b) Consent to Relief from Automatic Stay.
Borrower hereby agrees that if during the Forbearance
Period it shall (i) file with any bankruptcy court of
competent jurisdiction or be the subject of any petition
under Title 11 of the U.S. Code, as amended, (iii) file
or be the subject of any petition seeking any
reorganization, arrangement, composition, readjustment,
liquidation, dissolution, or similar relief under any
present or future federal or state act or law relating to
bankruptcy, insolvency, or other relief for debtors, (iv)
seek, consent to or acquiesce in the appointment of any
trustee, receiver, conservator or liquidation, (v) be the
subject of any order, judgment or decree entered by any
court of competent jurisdiction approving a petition
filed against Borrower for any reorganization,
arrangement, composition, readjustment, liquidation,
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dissolution, or similar relief under any present or
future federal or state act or law relating to
bankruptcy, insolvency, or relief for debtors without
providing Lender 24 hours advance written notice thereof
(excluding involuntary actions or proceedings against the
Borrower which are not in the control of the Borrower),
Lender shall thereupon be entitled to relief from any
automatic stay imposed by Section 362 of Title 11 of the
U.S. Code, as amended, or from any other stay or
suspension of remedies imposed in any other manner with
respect to the exercise of the rights and remedies
otherwise available to Lender under the Security
Agreement and any of the Related Documents.
(c) Appointment of Receiver. Borrower agrees that
upon termination of the Forbearance Period, Lender shall
be entitled to appointment of a receiver for the
Collateral.
6. Default. Each of the following shall constitute a
"Forbearance Default" hereunder:
(a) the occurrence during the Forbearance Period of
any Event of Default (other than the Existing Defaults)
under the Security Agreement or any of the Related
Documents; or
(b) Borrower shall fail to keep or perform any of
the covenants or agreements contained herein; or
(c) the failure of any condition set forth in
Section 2 of this Agreement; or
(d) any representation or warranty of Borrower
herein shall be false, misleading or incorrect in any
material respect.
7. Effect and Construction of Agreement. Except as
expressly provided herein, all terms and provisions of the Security
Agreement and the Related Documents are hereby ratified and
confirmed and shall be and shall remain in full force and effect in
accordance with their respective terms, and this Agreement shall
not be construed to:
(a) impair the validity, perfection or priority of
any lien or security interest securing the Obligations;
or
(b) waive or impair any rights, powers or remedies
of Lender under the Security Agreement and the Related
Documents upon termination of the Forbearance Period; or
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(c) constitute an agreement by Lender or require
Lender to extend the Forbearance Period, or grant
additional forbearance periods, or extend the term of the
Security Agreement or the time for payment of any of the
obligations; or
(d) constitute an agreement by Lender or require
Lender to make any loans or other extensions of credit to
Borrower after termination of the Forbearance Period.
Borrower acknowledges that it has consulted with counsel and with
such other experts and advisors as it has deemed necessary in
connection with the negotiation, execution and delivery of this
Agreement. This Agreement shall be construed without regard to any
presumption or rule requiring that it be construed against the
party causing this Agreement or any part hereof to be drafted.
8. Expenses. Borrower agrees to pay to Lender all
reasonable out-of-pocket costs, fees (including Lender's attorneys'
fees and expenses) and expenses of Lender and Lender's attorneys
incurred in connection with the negotiation, preparation,
administration and enforcement of, and the preservation of any
rights under, this Agreement, the Security Agreement and/or the
Related Documents, and the transactions and other matters
contemplated hereby and thereby, including, but not limited to, the
fees, costs and expenses incurred by Lender in the employment of
auditors and/or consultants to perform work on Lender's behalf to
audit, appraise, monitor and otherwise review any and all portions
of the Collateral.
9. Miscellaneous.
(a) Further Assurances. Borrower agrees to execute
such other and further documents and instruments as
Lender may request to implement the provisions of this
Agreement and to perfect and protect the liens and
security interests created by the Security Agreement.
(b) Benefit of Agreement. This Agreement shall be
binding upon and inure to the benefit of and be
enforceable by the parties hereto, their respective
successors and assigns. No other person or entity shall
be entitled to claim any right or benefit hereunder,
including, without limitation, the status of a third-
party beneficiary of this Agreement.
(c) Integration. This Agreement, together with the
Security Agreement and the Related Documents, constitutes
the entire agreement and understanding among the parties
relating to the subject matter hereof, and supersedes all
prior proposals, negotiations, agreements and
understandings relating to such subject matter. In
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entering into this Agreement, Borrower acknowledges that
it is relying on no statement, representation, warranty,
covenant or agreement of any kind made by the Lender or
any employee or agent of the Lender, except for the
agreements of Lender set forth herein.
(d) Severability. The provisions of this Agreement
are intended to be severable. If any provisions of this
Agreement shall be held invalid or unenforceable in whole
or in part in any jurisdiction, such provision shall, as
to such jurisdiction, be ineffective to the extent of
such invalidity or unenforceability without in any manner
affecting the validity or enforceablity of such provision
in any other jurisdiction or the remaining provisions of
this Agreement in any jurisdiction.
(e) Governing Law. This Agreement shall be
governed by and construed in accordance with the internal
substantive laws of the State of Texas, without regard to
the choice of law principles of such state.
(f) Counterparts; Telecopied Signatures. This
Agreement may be executed in any number of counterparts
and by different parties to this Agreement on separate
counterparts, each of which, when so executed, shall be
deemed an original, but all such counterparts shall
constitute one and the same agreement. Any signature
delivered by a party by facsimile transmission shall be
deemed to be an original signature hereto.
(g) Notices. Any notices with respect to this
Agreement shall be given in the manner provided for in
Section 12.2 of the Security Agreement.
(h) Survival. All representations, warranties,
covenants, agreements, undertakings, waivers and releases
of Borrower contained herein shall survive the
termination of the Forbearance Period and payment in full
of the obligations of Borrower under the Security
Agreement.
(i) Amendment. No amendment, modification,
rescission, waiver or release of any provision of this
Agreement shall be effective unless the same shall be in
writing and signed by the parties hereto.
10. Misrepresentation. Borrower shall indemnify and hold
Lender harmless from and against any and all losses, damages, costs
and expenses (including attorneys' fees) incurred by Lender as a
direct or indirect result of (i) any breach or default under any of
the covenants or agreements contained in this Agreement or in the
Security Agreement.
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11. Ratification of Liens and Security Interest. Borrower
hereby acknowledges and agrees that the liens and security
interests of the Security Agreement and the Related Documents are
valid, subsisting and enforceable liens and security interests and
are superior to all liens and security interests other than those
exceptions approved by Lender in writing.
12. No Commitment. Borrower agrees that Lender has made no
commitment or other agreement regarding the Security Agreement or
the Related Documents, except as expressly set forth in this
Agreement, the Security Agreement or the Related Documents.
Borrower warrants and represents that Borrower will not rely on any
commitment, further agreement to forbear or other agreement on the
part of Lender unless such commitment or agreement is in writing
and signed by Lender.
13. No Counterclaims; Release of Claims; Waiver; Hold
Harmless. Borrower declares that Borrower has no set-off,
counterclaim, defense, cross-complaint, claim, demand or other
cause of action (together, the "Counterclaims") against Lender
which arise out of the transactions evidenced by the Security
Agreement or the Related Documents, any transactions that were
renewed or extended by the Security Agreement or the Related
Documents, any other transaction with Lender, or which could be
asserted to reduce or eliminate all or any part of Borrower's
liability to repay the "Obligations" or to seek affirmative relief
or damages of any kind or nature from Lender, irrespective of
whether any such claims arise out of contract, tort, violation of
law or regulations, or otherwise, including, without limitation,
any contracting for, changing, taking, reserving, collecting or
receiving interest in excess of the highest lawful rate applicable,
the exercise of any rights and remedies under the Security
Agreement or any of the Related Documents, the negotiation for and
execution of this Agreement and any settlement negotiations. To
the extent that any Counterclaims may exist, whether known or
unknown, such are waived and hereby released by Borrower.
Furthermore, Borrower, on behalf of Borrower, its successors,
agents, attorneys, officers, directors, assigns and personnel and
legal representatives, does hereby release, remise, acquit and
forever discharge Lender and Lender's employees, agents,
representatives, consultants, attorneys, fiduciaries, servants,
officers, directors, partners, predecessors, successors and
assigns, subsidiary corporations, parent corporations, and related
corporate divisions (all of the foregoing hereinafter called the
"Released Parties"), from any and all actions and causes of action,
judgments, executions, suits, debts, claims, demands, liabilities,
obligations, damages and expenses of any and every character, known
or unknown, direct or indirect, at law or in equity, of whatsoever
kind or nature, whether heretofore or hereafter arising, for or
because of any matter or things done, omitted or suffered to be
done by any of the Released Parties prior to and including the date
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of execution hereof, and in any way directly or indirectly arising
out of or in any way connected to this Agreement, the Security
Agreement or the Related Documents, irrespective of whether any
such claims arise out of contract, tort, violation of law or
regulations or otherwise, including but not limited to, any
contracting for, charging, taking, reserving, collecting or
receiving interest in excess of the highest lawful rate applicable,
the exercise of any rights and remedies under the Security
Agreement or any of the Related Documents, the negotiation for and
execution of this Agreement, or any settlement negotiations (all of
the foregoing hereinafter called the "Released Matters"); and
Borrower hereby covenants and agrees never to institute any action
or suit at law or in equity, nor institute, prosecute, or in any
way aid in the institution or prosecution of, any claim, action or
cause of action, rights to recover debts or demands of any nature
against any of the Released Parties arising out of or related to
Lender's actions, omissions, statements, requests or demands in
administering, enforcing, monitoring, collecting or attempting to
collect, the Obligations, indebtedness and other obligations of
Borrower to Lender. Borrower agrees to indemnify and hold Lender
harmless from any and all Counterclaims that Borrower or any other
person or entity claiming by, through, or under Borrower may at any
time assert against Lender. Borrower acknowledges that the
agreements in this paragraph are intended to be in full
satisfaction of all or any alleged injuries or damages to Borrower,
its successors, agents, attorneys, officers, directors, assigns and
personal and legal representatives arising in connection with the
Released Matters. Borrower represents and warrants to Lender that
it has not purported to transfer, assign or otherwise convey any
right, title or interest of Borrower in any Related matter to any
other person and that the foregoing constitutes a full and complete
release of Borrower's claims with respect to all Released Matters.
14. VENUE; JURISDICTION; JURY TRIAL WAIVER. LENDER AND
BORROWER EACH HEREBY IRREVOCABLY:
(A) CONSENT TO THE JURISDICTION OF ANY XXXXX XX
XXXXXXX XXXXX XXXXXXX XX XXXXXX XXXXXX, XXXXX;
(B) AGREE THAT VENUE SHALL BE PROPER IN ANY COURT
OF COMPETENT JURISDICTION LOCATED IN DALLAS COUNTY,
TEXAS; AND
(C) WAIVE THEIR RIGHT TO TRIAL BY JURY IN ANY
CONTROVERSY ARISING OUT OF OR RELATING TO THIS AGREEMENT,
THE SECURITY AGREEMENT OR THE RELATED DOCUMENTS.
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IN WITNESS WHEREOF, the parties hereto have executed this
Agreement as of the day and year first above written.
LENDER:
CONGRESS FINANCIAL CORPORATION
(SOUTHWEST)
By:
___________________________
Xxxxxx X. Xxxxxx
Senior Vice President
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BORROWER:
AMETECH, INC.
By: /s/ Xxxxxxx X. X'Xxxxxxxxx
___________________________
Xxxxxxx X. X'Xxxxxxxxx
President and
Chief Executive Officer
ENVIRONMENTAL TRANSPORTATION
SERVICES, INC.
By: /s/ Xxxxxxx X. X'Xxxxxxxxx
____________________________
Xxxxxxx X. X'Xxxxxxxxx
President and
Chief Executive Officer
STATE OF OKLAHOMA )
)
COUNTY OF CLEVELAND )
On this 3rd day of November, 1997, before me appeared Xxxxxxx
X. X'Xxxxxxxxx, to me personally known, who, being by me duly sworn
did say that he is the President and Chief Executive Officer of
each of Ametech, Inc., an Oklahoma corporation, and Environmental
Transportation Services, Inc., an Oklahoma corporation, and that
said instrument was signed and sealed in behalf of each said
corporation by authority of its board of directors, and
acknowledged said instrument to be the free act and deed of each
said corporation.
IN WITNESS WHEREOF, I have hereunto set my hand and affixed my
official seal in the year first above written.
/s/ Xxxxxxx Xxxxxx
______________________________
Notary Public
My Commission Expires:
9-22-2001
______________________
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Environmental Transportation Services, Inc.
Forecasted Sources & Uses of Cash and Borrowing Availability
December 1997
05-Dec-97 12-Dec-97 19-Dec-97 26-Dec-97
_________ _________ _________ _________
Sources
Accounts Receivable Collections
$200 $200 $200 $100
_____ _____ _____ _____
Disbursements
Payroll and Related Taxes 37
Driver Pay 10 5
Health Insurance 20
Rents & Leases 10
Telephone & Utilities 1 2 2
Travel Expenses 5 5 3 2
Other/Misc. 5 5 5 5
Owner Operators 15
_____ _____ _____ _____
31 84 10 12
Contingency 5 5 5 5
_____ _____ _____ _____
36 89 15 17
Interest Congress 60
_____ _____ _____ _____
Total Disbursements 96 89 15 17
Borrowing Availability
20% of Collections 40 40 40 20
80% of Xxxxxxxx 24 32 16 8
_____ _____ _____ _____
Availability 64 72 56 28
Disbursements in Excess of Availability
Weekly (32) (17) 41 11
Cumulative (32) (49) (8) 3
02-Jan-98 Total
_________ _______
$100 $800
_____ _____
33 70
15
20
10
2 7
2 17
5 25
15
_____ _____
42 179
5 25
_____ _____
47 204
50 110
_____ _____
97 314
20 160
0 80
_____ _____
20 240
(77) (74)
(74)
Availability 11/28/97 14
_____
Total Estimated Net Deficit for December 1997 (60)
ISTE:\D-F\ETSI\CONGRESS\XXXXXXX0000.Xx
