EXHIBIT 10.59
LOAN AGREEMENT
LOAN AGREEMENT (this "Agreement") dated as of 6-22-99 between CAP ROCK
COOPERATIVE FINANCE CORPORATION ("Borrower"), a corporation organized and
existing under the laws of the State of Texas, and NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION ("CFC"), a cooperative association incorporated
under the laws of the District of Columbia.
RECITALS
WHEREAS, the Borrower has applied to CFC for a loan and agrees to use the
proceeds thereof for the purpose set forth on Schedule 1 hereto, consistent with
the Borrower's articles of incorporation, bylaws and applicable federal, state
and local laws and regulations;
WHEREAS, CFC has approved a loan to the Borrower in the aggregate
principal amount of the CFC Commitment, subject to the terms and conditions
stated herein; and
WHEREAS, the Borrower has agreed to execute one or more secured promissory
notes to evidence Borrower's indebtedness to CFC under this Agreement.
NOW, THEREFORE, for and in consideration of the premises and the mutual
covenants hereinafter contained, the parties hereto agree and bind themselves as
follows:
ARTICLE I
DEFINITIONS
SECTION 1. For purposes of this Agreement, the following capitalized terms
shall have the following meanings (such definitions to be equally applicable to
the singular and plural forms thereof). Capitalized terms that are not defined
herein shall have the meanings as set forth in the Security Agreement.
"ACCOUNTING REQUIREMENTS" shall mean any system of accounts prescribed by
a federal regulatory authority having jurisdiction over the Borrower or, in the
absence thereof, the requirements of generally accepted accounting principles
applicable to businesses similar to that of the Borrower.
"ADVANCE" OR "ADVANCES" shall mean one or more advances of funds by CFC to
Borrower under a Note and pursuant to the terms and conditions of this
Agreement.
"AMORTIZATION BASIS DATE" shall mean, with respect to an Advance that
amortizes, the earlier of (a) two (2) years from the date hereof, (b) the date
on which the CFC Commitment has been fully advanced, (c) the date the date
Borrower selects to begin amortizing such Advance as stated on Schedule 1
hereto, or, if not stated on Schedule 1, then such date as stated on the written
funds requisition submitted by Borrower to CFC pursuant to the terms hereof.
"BUSINESS DAY" shall mean any day that both CFC and the depository it
utilizes for funds transfers hereunder are open for business.
"CFC COMMITMENT" shall have the meaning as defined in Schedule 1.
"CFC FIXED RATE" shall mean the fixed rate as available for loans
similarly classified pursuant to CFC's policies and procedures in effect at the
time a conversion request is approved.
"CFC FIXED RATE TERM" shall mean the specific period of time that a CFC
Fixed Rate is in effect.
"CFC VARIABLE RATE" shall mean the rate established by CFC for variable
interest rate loans similarly classified pursuant to CFC's policies and
procedures in effect in effect at the time a conversion request is approved.
"COLLATERAL" shall have the meaning as defined in the Security Agreement.
"CONVERSION REQUEST" shall mean a request from any duly authorized
official of the Borrower, in form and substance satisfactory to CFC, that
requests an interest rate conversion.
"DEBT SERVICE COVERAGE RATIO ("DSC")" shall mean the ratio determined
as follows: for any calendar year add (a) Operating Margins, (b)
Non-Operating Margins--Interest, (c) Interest Expense, (d) Depreciation and
Amortization Expense for such year, and (e) cash received in respect of
generation and transmission and other capital credits, and divide the sum so
obtained by the sum of all payments of Principal and Interest Expense during
such calendar year; PROVIDED, HOWEVER, that in the event that any Long-Term
Debt has been refinanced during such year the payments of Principal and
Interest required to be made during such year on account of such Long-Term
Debt shall be based (in lieu of actual payments required to be made on such
refinanced Long-Term Debt) upon the larger of (i) an annualization of the
payments required to be made with respect to the refinancing debt during the
portion of such year such refinancing debt is outstanding or (ii) the payment
of Principal and Interest Expense required to be made during the following
year on account of such refinancing debt.
"DEPRECIATION AND AMORTIZATION EXPENSE" shall mean an amount constituting
the depreciation and amortization of the Borrower computed pursuant to
Accounting Requirements.
"DISTRIBUTIONS" shall have the meaning defined in Section 5.H.
"EQUITIES AND MARGINS" shall mean Borrower's equities and margins computed
pursuant to Accounting Requirements.
"EQUITY" shall mean the aggregate of Borrower's Equities and Margins
computed pursuant to Accounting Requirements.
"INTEREST EXPENSE" shall mean an amount constituting the interest expense
with respect to Total Long-Term Debt of the Borrower computed pursuant to
Accounting Requirements. In computing Interest Expense, there shall be added, to
the extent not otherwise included, an
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amount equal to 33-1/3% of the excess of Restricted Rentals paid by the Borrower
over two percent (2%) of the Borrower's Equities and Margins.
"LCTC" shall mean the Loan Capital Term Certificate as described in
Section 4.H. hereto.
"LONG-TERM DEBT" shall mean any amount included in Total Long-Term Debt
pursuant to Accounting Requirements.
"MATURITY DATE", with respect to each Note, shall mean the date set forth
therein, PROVIDED, HOWEVER, that if such date is not a Payment Date, then the
Maturity Date shall be the Payment Date immediately preceding such date.
"NON-OPERATING MARGINS--INTEREST" shall mean the amount of non-operating
margins--interest of Borrower computed pursuant to Accounting Requirements.
"NOTE" or "NOTES" shall mean one or more secured promissory notes executed
by Borrower pursuant to this Agreement in the aggregate principal amount of the
CFC Commitment.
"OPERATING MARGINS" shall mean the amount of net patronage capital and
operating margins of the Borrower computed pursuant to Accounting Requirements.
"PATRONAGE CAPITAL OR OPERATING MARGINS" shall mean the amount of net
patronage capital or margins of the Borrower computed pursuant to Accounting
Requirements.
"PAYMENT DATE" shall mean the last day of each of the months referred to
in Schedule 1.
"PAYMENT NOTICE" shall mean a notice furnished by CFC to Borrower that
indicates the precise amount of each payment of principal and interest and the
total amount of each payment.
"PRINCIPAL" shall mean the amount of principal billed on account of Total
Long-Term Debt of the Borrower as computed for purposes of the Accounting
Requirements.
"RESTRICTED RENTALS" shall mean all rentals required to be paid under
finance leases and charged to income, exclusive of any amounts paid under any
such lease (whether or not designated therein as rental or additional rental)
for maintenance or repairs, insurance, taxes, assessments, water rates or
similar charges. For the purpose of this definition the term "finance lease"
shall mean any lease having a rental term (including the term for which such
lease may be renewed or extended at the option of the lessee) in excess of three
(3) years and covering property having an initial cost in excess of $250,000
other than automobiles, trucks, trailers, other vehicles (including without
limitation aircraft and ships), office, garage and warehouse space and office
equipment (including without limitation computers).
"SECURITY AGREEMENT" shall have the meaning set forth in Schedule 1.
"TERMINATION DATE" shall mean a date four (4) years after the date hereof.
"TOTAL ASSETS" shall mean an amount constituting the total assets of the
Borrower computed pursuant to Accounting Requirements.
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"TOTAL LONG-TERM DEBT" shall mean an amount constituting the long-term
debt of the Borrower computed pursuant to Accounting Requirements.
ARTICLE II
LOAN
SECTION 2.1. ADVANCES. CFC agrees to make, and the Borrower agrees to
request, on the terms and conditions of this Agreement, Advances from time to
time at the main office of CFC, or at such other place as may be mutually agreed
upon, in an aggregate principal amount not to exceed the CFC Commitment.
On the Termination Date, CFC may stop advancing funds and limit the CFC
Commitment to the amount advanced prior to such date. The obligation of the
Borrower to repay the Advances shall be evidenced by one or more Notes. The
Borrower shall give CFC written notice of the date on which each Advance is to
be made.
SECTION 2.2. INTEREST RATE AND PAYMENT. Notes shall be payable and bear
interest as follows:
A. PAYMENTS; MATURITY; AMORTIZATION.
(1) Each Note shall have a Maturity Date as stated therein, PROVIDED,
HOWEVER; that if such date is not a Payment Date, then the Maturity Date shall
be the Payment Date immediately preceding such date.
(2) Prior to or at the time of each amortizing Advance on a Note,
Borrower may elect an amortization method and Amortization Basis Date for
principal. If no election is made, then said Advance shall amortize on a level
debt service basis, and the Amortization Basis Date shall be as provided in the
definitions section of this Agreement.
(a) AMORTIZING ADVANCES: Each amortizing Advance shall amortize
over a period not to exceed thirty-five (35) years from the date of such
Advance, PROVIDED, HOWEVER; that such period shall not extend beyond the
Maturity Date. The Borrower, upon receipt of an invoice relating to an Advance,
shall promptly pay interest only on each Payment Date until the first Payment
Date of the first full quarter following the Amortization Basis Date.
Thereafter, quarterly or monthly installments, as determined by CFC, of interest
and/or principal in the amounts shown in the Payment Notice, shall be paid on
each Payment Date; except that if not sooner paid, any amount due on account of
the unpaid principal, interest accrued thereon and fees, if any, shall be due
and payable on the Maturity Date. The amortization method and amortization term
for each Advance shall be as stated on Schedule 1 or, if not so stated, then as
stated on the written requisition for such Advance submitted by Borrower to CFC
pursuant to the terms hereof or as otherwise set forth in the immediately
preceding subparagraph (2).
(b) NON-AMORTIZING ADVANCES: With the prior consent of CFC, the
Borrower may elect not to amortize an Advance. In such case, the Advance shall
be repaid within thirty-five (35) years from the date of such Advance, or the
Maturity Date, whichever is earlier. On each
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Payment Date, Borrower shall promptly pay interest only until the final Payment
Date corresponding to the term of such Advance, or the Maturity Date (whichever
is applicable), upon which date all unpaid principal, interest accrued thereon
and fees, if any, shall be due and payable. If the term of a non-amortizing
Advance ends on a date that is not a Payment Date, then the repayment of such
Advance shall be due and payable on the Payment Date immediately preceding such
date.
(3) CFC will furnish to the Borrower a Payment Notice at least ten (10)
days before each Payment Date, provided, however, that CFC's failure to send a
Payment Notice shall not constitute a waiver by CFC or be deemed to relieve
Borrower of its obligation to make payments as and when due as provided for
herein.
(4) No provision of this Agreement or the Notes shall require payment,
or permit the collection, of interest in excess of the Maximum Lawful Rate. As
used herein, "Maximum Lawful Rate" means the greater of (i) the highest
non-usurious rate permitted by applicable United States law, or (ii) a rate per
annum equal to the applicable weekly ceiling described in Chapter 303 of the
Texas Finance Code and Art. 5069-1D.002 and Art. 5069-1D.003 of the Texas Credit
Title, as amended, as such weekly ceiling is in effect from time to time. Unless
precluded by law, changes in the Maximum Lawful Rate created by statute or
governmental action during the term of the this Agreement and the Notes shall be
immediately applicable to the Notes, the Advances, this Agreement, and all other
agreements between the Borrower and CFC on the effective date of such changes.
All agreements and transactions between the Borrower and CFC, whether now
existing or hereafter arising, whether contained herein or in any other
instrument, and whether written or oral, are hereby expressly limited so that in
no contingency or event whatsoever, whether by reason of acceleration of the
term of any Advance or the maturity of any Note, late payment, prepayment, or
otherwise, shall the amount of interest contracted for, charged or receive by
CFC from the Borrower for the use, forbearance, or detention of the principal
indebtedness or interest hereof, which remains unpaid from time to time, exceed
the Maximum Lawful Rate, it particularly being the intention of the parties
hereto to conform strictly to the applicable usury laws of the Xxxxx xx Xxxxx
(xx xxxxxxxxxx Xxxxxx Xxxxxx law to the extent that it permits the Borrower to
contract for, charge or receive a greater amount of interest than under Texas
law). Any interest payable hereunder or under any other instrument relating to
the indebtedness evidenced hereby that is in excess of the Maximum Lawful Rate
shall, in the event of acceleration of maturity, late payment, prepayment, or
otherwise, be applied to a reduction of the unrepaid indebtedness hereunder and
not to the payment of interest, or if such excessive interest exceeds the unpaid
balance of such unrepaid indebtedness, such excess shall be refunded to the
Borrower. To the extent not prohibited by applicable law, determination of the
Maximum Lawful Rate shall at all times be made by amortizing, prorating,
allocating and spreading in equal parts during the full term of this loan, all
interest at any time contracted for, charged or received from the Borrower in
connection with this loan, so that the actual rate of interest on account of
such indebtedness is uniform throughout the term of this Agreement, the Notes,
and all other agreements between the Borrower and CFC.
B. APPLICATION OF PAYMENTS. Each payment shall be applied first to any
charges other than interest or principal then due on the related Note, second to
interest accrued on the principal amount to the due date of such payment on such
Note (or, at the election of the holder of the Note, to the date of such payment
if the same is not paid on its due date), and the balance to
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the reduction of principal against the Note according to an amortization
schedule provided to Borrower by CFC.
C. ELECTION OF INTEREST RATE AND INTEREST RATE COMPUTATION. Prior to
each Advance on a Note, the Borrower must select in writing either a CFC Fixed
Rate or the CFC Variable Rate, as follows:
(1) CFC FIXED RATE. If the Borrower elects a CFC Fixed Rate for an
Advance, then such rate shall be in effect for the CFC Fixed Rate Term selected
by Borrower. CFC shall provide the Borrower with at least sixty (60) days prior
written notice of the date on which a CFC Fixed Rate is no longer in effect.
Pursuant to CFC's policies of general application for repricing, the Borrower
may choose any of the interest rate options then available for similarly
classified borrowers repricing from a CFC Fixed Rate. If Borrower does not
select an interest rate in writing when a CFC Fixed Rate is subject to
repricing, then outstanding Advances shall reprice for the same CFC Fixed Rate
Term as in effect immediately prior to the repricing, and shall bear interest at
the then prevailing CFC Fixed Rate in effect for such term. CFC agrees that its
long-term loan policies will include a fixed interest rate option until the
Maturity Date. For any Advance, the Borrower may not select a CFC Fixed Rate
with a CFC Fixed Rate Term that extends beyond the Maturity Date. Interest on
amortizing Advances bearing interest at a CFC Fixed Rate shall be computed for
the actual number of days elapsed on the basis of a year of 365 days, until the
first day of the complete calendar quarter following the Amortization Basis
Date. Thereafter, interest shall be computed on the basis of a 30-day month and
360-day year. Interest on non-amortizing Advances bearing interest at a CFC
Fixed Rate shall be computed for the actual number of days elapsed on the basis
of a year of 365 days.
(2) CFC VARIABLE RATE. If the Borrower elects the CFC Variable Rate for
an Advance, then such CFC Variable Rate shall apply until the Maturity Date,
unless the Borrower elects to convert to a CFC Fixed Rate pursuant to the terms
hereof. Interest on Advances bearing interest at the CFC Variable Rate shall be
computed for the actual number of days elapsed on the basis of a year of 365
days.
SECTION 2.3. CONVERSION OF INTEREST RATES.
A. CFC VARIABLE RATE TO A CFC FIXED RATE. The Borrower may, at its
option, at any time convert from the CFC Variable Rate to a CFC Fixed Rate by
submitting to CFC a Conversion Request requesting that a CFC Fixed Rate apply to
any outstanding Advance. The rate shall be equal to the rate of interest offered
by CFC in effect on the date of the Conversion Request. The effective date of
the new interest rate shall be a date determined by CFC pursuant to its policies
of general application following receipt of the Conversion Request.
B. CFC FIXED RATE TO CFC VARIABLE RATE. The Borrower may, at its
option, at any time convert a CFC Fixed Rate to the CFC Variable Rate by: (i)
submitting a Conversion Request requesting that the CFC Variable Rate apply to
any outstanding Advance; and (ii) paying to CFC promptly upon receipt of an
invoice any applicable conversion fee calculated pursuant to CFC's long-term
loan policies as established from time to time for similarly classified
long-term loans. The effective date of the CFC Variable Rate shall be a date
determined by CFC pursuant to its policies of general application following
receipt of the Conversion Request.
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C. A CFC FIXED RATE TO ANOTHER CFC FIXED RATE. The Borrower may, at its
option, at any time convert from a CFC Fixed Rate to another CFC Fixed Rate if
the Borrower: (i) submits a Conversion Request requesting that a CFC Fixed Rate
apply to any outstanding loan balance on an Advance and (ii) pays to CFC
promptly upon receipt of an invoice any applicable conversion fee calculated
pursuant to CFC's long-term loan policies as established from time to time for
similarly classified long-term loans. The effective date of the new interest
rate shall be a date determined by CFC pursuant to its policies of general
application following receipt of the Conversion Request.
SECTION 2.4. PREPAYMENT. The Borrower may at any time, on not less than
thirty (30) days prior written notice to CFC, prepay any Advance, in whole or in
part, together with the interest accrued to the date of prepayment and any
prepayment premium prescribed by CFC pursuant to its policies of general
application in effect from time to time.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
SECTION 3. The Borrower represents and warrant to CFC as of the date of
this Agreement that:
A. GOOD STANDING. The Borrower is a corporation duly organized, validly
existing and in good standing under the laws of the state of its incorporation,
is duly qualified to do business and is in good standing in those states in
which it is required to be qualified to conduct its business, and has the
corporate power to enter into and perform this Agreement, to borrow hereunder
and to give security as provided for herein.
B. AUTHORITY. Borrower has the corporate power and authority to enter
into this Agreement, the Note and the Security Agreement; to make the borrowing
hereunder; to execute and deliver all documents and instruments required
hereunder and to incur and perform the obligations provided for herein, in the
Note and in the Security Agreement, all of which have been duly authorized by
all necessary and proper corporate and other action; and no consent or approval
of any person, including, without limitation, stockholders and members of
Borrower and any public authority or regulatory body, which has not been
obtained is required as a condition to the validity or enforceability hereof or
thereof.
C. NO CONFLICTING AGREEMENTS. This execution, delivery of and
performance by Borrower of this Agreement, the Note and the Security Agreement,
and the transactions contemplated hereby or thereby, will not: (i) violate any
provision of law, any order, rule or regulation of any court or other agency of
government, any award of any arbitrator, the articles of incorporation or
by-laws of Borrower, or any indenture, contract, agreement, mortgage, deed of
trust or other instrument to which Borrower is a party or by which it or any of
its property is bound; or (ii) be in conflict with, result in a breach of or
constitute (with due notice and/or lapse of time) a default under, any such
award, indenture, contract, agreement, mortgage, deed of trust or other
instrument, or result in the creation or imposition of any Lien (other than
contemplated hereby) upon any of the property or assets of Borrower.
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D. TAXES. Borrower has paid or caused to be paid all federal, state and
local taxes to the extent that such taxes have become due. Borrower has filed or
caused to be filed all federal, state and local tax returns which are required
to be filed by Borrower.
E. TITLE TO PROPERTIES. Borrower has good and marketable title to all
of its real properties and owns all of its other properties and assets free and
clear of any liens, except the lien of the Security Agreement and such liens and
encumbrances as are permitted by the Security Agreement.
F. LICENSES AND PERMITS. Borrower has duly obtained and now holds all
licenses, permits, certifications, approvals and the like necessary to own and
operate its property and business that are required by federal, state and local
laws of the jurisdictions in which Borrower conducts its business and each
remains valid and in full force and effect.
G. LITIGATION. There are no outstanding judgments, suits, claims,
actions or proceedings pending, or to the knowledge of the Borrower, threatened
against or affecting the Borrower or its properties which, if adversely
determined, would have a material adverse effect upon the financial condition or
the business of the Borrower. The Borrower is not, to its knowledge, in default
or violation with respect to any judgment, order, writ, injunction, decree, rule
or regulation of any court, governmental agency or other instrumentality which
would have a material adverse effect on the Borrower.
H. FINANCIAL STATEMENTS. The balance sheet of the Borrower as at the
date identified in Schedule 1 hereto, and the statement of operations of the
Borrower for the period ending on said date, heretofore furnished to CFC, are
complete and correct. Said balance sheet fairly presents the financial condition
of the Borrower as at said date and said statement of operations fairly reflects
its operations for the period ending on said date. The Borrower has no
contingent obligations or unusual forward or long-term commitments except as
specifically stated in said balance sheet or herein. There has been no material
adverse change in the financial condition or operations of the Borrower from
that set forth in said financial statements except changes disclosed in writing
to CFC prior to the date hereof.
I. LOCATION OF OFFICE. The chief executive office of the Borrower and
the office where its records concerning accounts and contract rights are kept is
identified in Schedule 1.
J. LOCATION OF PROPERTIES. All property owned by the Borrower is
located in the county(ies) identified in Schedule 1.
K. NO OTHER LIENS. As to property which is presently included in the
description of Collateral, the Borrower has not, without the prior written
approval of CFC, signed any security agreement or mortgage or filed or permitted
to be filed any financing statement with respect to assets owned by it, other
than security agreements, mortgages and financing statements running in favor of
CFC or except as disclosed in writing to CFC prior to the date hereof.
L. REQUIRED APPROVALS. No license, consent or approval of any
governmental agency or authority is required to enable the Borrower to enter
into this Agreement, any Note or the Security Agreement, or to perform any of
its obligations provided for in such documents, except as disclosed in Schedule
1, all of which Borrower has obtained prior to the date hereof.
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ARTICLE IV
CONDITIONS OF LENDING
SECTION 4. The obligation of CFC to make any Advance hereunder is subject
to satisfaction of the following conditions:
A. LEGAL MATTERS. All legal matters incident to the consummation of the
transactions hereby contemplated shall be satisfactory to counsel for CFC and,
as to all matters of local law, to such local counsel as counsel for CFC may
retain.
B. DOCUMENTS. CFC shall have been furnished with executed originals,
satisfactory to CFC, of this Agreement, each Note and the Security Agreement and
certified copies, satisfactory to CFC, of all such corporate documents and
proceedings of the Borrower authorizing the transactions hereby contemplated as
CFC shall require. CFC shall have received an opinion of counsel for the
Borrower addressing such legal matters as CFC shall reasonably require.
C. GOVERNMENT APPROVALS. The Borrower shall have furnished to CFC true
and correct copies of all certificates, authorizations and consents necessary
for the execution, delivery or performance by the Borrower of this Agreement,
each Note and the Security Agreement.
D. REPRESENTATIONS AND WARRANTIES. The representations and warranties
contained in Article II shall be true on the date of the making of each Advance
hereunder with the same effect as though such representations and warranties had
been made on such date; no Event of Default specified in Article VI and no event
which, with the lapse of time or the notice and lapse of time specified in
Article VI would become such an Event of Default, shall have occurred and be
continuing or will have occurred after giving effect to the Advance on the books
of the Borrower; there shall have occurred no material adverse change in the
business or condition, financial or otherwise, of the Borrower; and nothing
shall have occurred which in the opinion of CFC materially and adversely affects
the Borrower's ability to meet its obligations hereunder.
E. FINANCING STATEMENT. A financing statement (and any amendments or
continuation statements as CFC may require from time to time) shall have been
duly filed, recorded or indexed to perfect a security interest in the Collateral
wherever CFC shall have requested, all in accordance with applicable law, and
the Borrower shall have paid all applicable taxes, recording and filing fees and
caused satisfactory evidence thereof to be furnished to CFC.
F. REQUISITIONS. Borrower shall have requested the Advance in writing
by submitting its requisition to CFC in form and substance satisfactory to CFC.
G. OTHER INFORMATION. Borrower shall have furnished such other
information as CFC may reasonably require, including but not limited to (i)
information regarding the specific purpose for an Advance and the use thereof,
and (ii) feasibility studies, cash flow projections, financial analyses and pro
forma financial statements sufficient to demonstrate to CFC's reasonable
satisfaction that after giving effect to the Advance requested, Borrower shall
continue to achieve the DSC ratio set forth in Section 5.B. herein, to meet all
of its debt service obligations, and
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otherwise to perform and to comply with all other covenants and conditions set
forth in this Agreement.
H. LOAN CAPITAL TERM CERTIFICATE. The Borrower shall purchase an LCTC
in the amount of five percent (5%) of each Advance hereunder at the time of and
with funds from such Advance or from such other source as CFC may approve.
I. SPECIAL CONDITIONS. Borrower shall have complied with any special
conditions listed in Schedule 1.
J. GUARANTY. CFC shall have been furnished with (i) an executed
original of an absolute and unconditional guaranty of the Borrower's obligations
hereunder from a guarantor acceptable to CFC, (ii) certified copies of all such
corporate documents and proceedings of said guarantor relating to such guaranty,
and (iii) and an opinion of counsel for the guarantor addressing such legal
matters as CFC shall reasonably require. The documentation identified in (i)
through (iii) shall be in form and substance satisfactory to CFC.
ARTICLE V
COVENANTS
SECTION 5. Borrower covenants and agrees with CFC that until payment in
full of all Notes and performance of all obligations of the Borrower hereunder:
A. MEMBERSHIP. Borrower agrees that it will either (i) remain a member
in good standing of CFC, (ii) continue to be owned, controlled or operated by
one or more Class A, B, or C members of CFC, or (iii) as determined by CFC,
continue to provide substantial benefit to one or more Class A, B, or C members
of CFC.
B. FINANCIAL RATIOS. The Borrower, subject to events in the judgment of
CFC to be beyond the control of the Borrower, shall so operate and manage its
business as to achieve an annual DSC of not less than that identified on
Schedule 1 hereto, said DSC ratio being determined by averaging the two (2)
highest annual ratios during the most recent three (3) calendar years.
C. ANNUAL CERTIFICATES. Within one hundred twenty (120) days after the
close of each calendar year, commencing with the year following the year in
which the initial Advance here under shall have been made, Borrower will deliver
to CFC a written statement, in form and substance satisfactory to CFC, signed by
Borrower's General Manager or other authorized executive officer, stating that
during such year, and that to the best of said person's knowledge, the Borrower
has fulfilled all of its obligations under this Agreement, each Note, and the
Security Agreement throughout such year or, if there has been a default in the
fulfillment of any such obligations, specifying each such default known to said
person and the nature and status thereof. Borrower shall also deliver to CFC
such other information as CFC may reasonably request from time to time.
D. NOTICE OF CHANGE IN CHIEF EXECUTIVE OFFICE. Borrower will not change
the location of its principal place of business or the office where its records
concerning accounts and
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contract rights are kept without giving prior written notice to CFC thirty
(30) days prior to the effective date of any change.
E. MANAGEMENT FEES. Borrower agrees that it will not pay any management
fees or, if currently paying a management fee, pay any increase in management
fees without the prior written consent of CFC.
F. FINANCIAL BOOKS; FINANCIAL REPORTS; RIGHT OF INSPECTION. The
Borrower will at all times keep, and safely preserve, proper books, records and
accounts in which full and true entries will be made of all of the dealings,
business and affairs of the Borrower, in accordance with generally accepted
accounting principles. When requested by CFC, the Borrower will prepare and
furnish CFC from time to time, not later than the last day of each month,
financial and statistical reports on its condition and operations for the
previous month. Such reports shall be in such form and include such information
as may be specified by CFC, including without limitation an analysis of
Borrower's revenues, expenses and consumer accounts. Within one hundred twenty
(120) days of the end of each calendar year during the term hereof, Borrower
shall furnish to CFC a full and complete report of its financial condition and
statement of its operations as of the end of such calendar year, in form and
substance satisfactory to CFC. In addition, within one hundred twenty (120) days
of the end of each Borrower's fiscal years during the term hereof, Borrower
shall furnish to CFC a full and complete report of its financial condition and
statement of its operations as of the end of such fiscal year, audited and
certified by independent certified public accountants nationally recognized or
otherwise satisfactory to CFC and accompanied by a report of such audit in form
and substance satisfactory to CFC. CFC, through its representatives, shall at
all times during reasonable business hours and upon prior notice have access to,
and the right to inspect and make copies of, any or all books, records and
accounts, and any or all invoices, contracts, leases, payrolls, canceled checks,
statements and other documents and papers of every kind belonging to or in the
possession of the Borrower or in any way pertaining to its property or business.
G. LIMITATIONS ON MERGERS AND SALE, LEASE OR TRANSFER OF CAPITAL
ASSETS. The Borrower shall not consolidate with, merge, or sell all or
substantially all of its business or assets, to another entity without the prior
written consent of CFC.
H. LIMITATIONS ON DIVIDENDS, PATRONAGE REFUNDS AND OTHER DISTRIBUTIONS.
(1) The Borrower may make Distributions in any calendar year if, after
giving effect to the Distribution, the total Equity of the Borrower will be at
least thirty percent (30%) of its Total Assets.
(2) If, after giving effect to the Distribution, the total Equity of the
Borrower will be less than thirty percent (30%) of its Total Assets, then the
Borrower may nevertheless make Distributions of up to thirty percent (30%) of
its Patronage Capital or Operating Margins for the preceding calendar year.
(3) Notwithstanding anything to the contrary in subparagraphs (1) and
(2) above, the Borrower shall not make any Distribution without the prior
written consent of CFC if (a) a payment default or other Event of Default under
this Agreement has occurred and is continuing, or (b) after giving effect to the
Distribution, the Borrower's total current and accrued assets
11
would be less than its total current and accrued liabilities, or (c) such
Distribution would be in excess of the Distributions permitted by subparagraphs
(1) or (2), above.
(4) For purposes of this paragraph H.,the term "Distribution" means any
dividend, patronage refund, patronage capital retirement or cash distribution to
its members, stockholders or consumers (including but not limited to any general
cancellation or abatement of charges for electric energy or services furnished
by the Borrower). The term "Distribution" shall not include (a) a distribution
by the Borrower to the estate of a deceased patron, (b) repayment by the
Borrower of a membership fee upon termination of a membership, or (c) any rebate
to a patron resulting from a cost abatement received by the Borrower, such as a
reduction of wholesale power cost previously incurred.
I. LIMITATIONS ON LOANS, INVESTMENTS AND OTHER OBLIGATIONS.
(a) The Borrower shall not, without first obtaining the written approval
of CFC: (i) purchase or make any commitment to purchase any stock, bonds, notes,
debentures, or other securities or obligations of or beneficial interests in,
(ii) make any other investment in, (iii) make any loan to, or (iv) guarantee,
assume, or otherwise become liable for any obligation of any corporation,
association, partnership, joint venture, trust, government or any agency or
department thereof, or any other entity of any kind if the aggregate amount of
all such purchases, investments, loans and guarantees exceeds the greater of
three percent (3%) of Total Assets or twenty-five percent (25%) of Equities and
Margins.
(b) The following shall not be included in the limitation of purchases,
investments, loans and guarantees in (a) above: (i) bonds, notes, debentures,
stock, or other securities or obligations issued by or guaranteed by the United
States government or any agency or instrumentality thereof; (ii) bonds, notes,
debentures, stock, commercial paper, subordinated capital certificates, or any
other security or obligation of institutions whose senior unsecured debt
obligations are rated by at least two nationally recognized rating organizations
in either of their two highest categories; (iii) investments incidental to loans
made by CFC; and (iv) any deposit that is fully insured by the Federal
Government.
(c) In no event may the Borrower take any action pursuant to subsection
(a) when there is: (i) unpaid any due installment of principal and/or interest
on a Note; or (ii) Borrower has failed to meet the financial ratio tests in
Section 5.B. herein.
J. CHANGE OF NAME. Borrower will not change its name without giving
written notice to CFC thirty (30) days prior to the effective date of any
change.
K. NOTICE OF ADDITIONAL SECURED DEBT. Borrower will notify CFC promptly
in writing if it incurs any additional secured indebtedness other than
indebtedness to CFC.
L. FUNDS REQUISITION; USE OF PROCEEDS. Borrower agrees (1) that CFC may
rely conclusively upon the interest rate option, interest rate term and other
written instructions submitted to CFC in Borrower's written request for an
Advance hereunder, (2) that such instructions shall constitute a covenant under
this Agreement to repay the Advance in accordance with such instructions, the
applicable Note, the Security Agreement and this Agreement, (3) to
12
request Advances only for the purposes set forth herein, and (4) to use the
proceeds thereof only in accordance with the terms hereof.
M. ISSUANCE OF EQUITY INTERESTS. Borrower shall not issue any voting
stock or sell, transfer or issue any equity interest in the Borrower without the
prior written consent of CFC.
N. SPECIAL AFFIRMATIVE COVENANTS. Borrower agrees to comply with any
special affirmative covenant(s) identified in Schedule 1.
ARTICLE VI
EVENTS OF DEFAULT
SECTION 6. The following shall be "Events of Default" under this
Agreement:
A. PAYMENT. Borrower shall fail to pay any amount due under the terms
of a Note or this Agreement within five (5) Business Days of when the same is be
due and payable, whether by acceleration or otherwise;
B. REPRESENTATIONS AND WARRANTIES. Any representation or warranty made
by the Borrower herein, in the Security Agreement or in any certificate or
financial statement furnished to CFC hereunder shall prove to be false or
misleading in any material respect;
C. OTHER COVENANTS. Failure of the Borrower to observe or perform any
other covenant or agreement contained in this Loan Agreement, in a Note or the
Security Agreement, which shall continue for thirty (30) days after written
notice thereof shall have been given to the Borrower by CFC;
D. CORPORATE EXISTENCE. The Borrower shall forfeit or otherwise be
deprived of its corporate charter, franchises, permits, easements, consents or
licenses required to carry on any material portion of its business;
E. OTHER OBLIGATIONS. Default by the Borrower in the payment of any
obligation, whether direct or contingent, for borrowed money or in the
performance or observance of the terms of any instrument pursuant to which such
obligation was created or securing such obligation;
F. BANKRUPTCY. The Borrower or any guarantor of the Borrower's
obligations hereunder shall file a petition in bankruptcy or be adjudicated
bankrupt or insolvent, or shall make an assignment for the benefit of its
creditors, or shall consent to the appointment of a receiver of itself or of its
property, or shall institute proceedings for its reorganization, or proceedings
instituted by others for its reorganization shall not be dismissed within sixty
(60) days after the institution thereof;
G. DISSOLUTION OR LIQUIDATION. Other than as provided in subsection F.
above, the dissolution or liquidation of the Borrower or any guarantor of the
Borrower's obligations hereunder, or failure by the Borrower or any such
guarantor promptly to forestall or remove any execution, garnishment or
attachment of such consequence as will impair its ability to continue its
business
13
or fulfill its obligations and such execution, garnishment or attachment
shall not be vacated within sixty (60) days, or
H. FINAL JUDGMENT. A final judgment in excess of $100,000 shall be
entered against the Borrower and shall remain unsatisfied or without a stay for
a period of sixty (60) days.
ARTICLE VII
REMEDIES
SECTION 7. If any of the Events of Default listed in Section 6 hereof
shall occur after the date of this Agreement and shall not have been remedied
within the grace periods specified therein, the CFC may pursue all rights and
remedies available to CFC that are contemplated by this Agreement, the
Security Agreement or any of the Notes in the manner, upon the conditions,
and with the effect provided in this Agreement, the Security Agreement or any
of the Notes, including, but not limited to, a suit for specific performance,
injunctive relief or damages. Nothing herein shall limit the right of CFC to
pursue all rights and legal and equitable remedies available to a creditor
following the occurrence of an Event of Default listed in Section 6 hereof.
Each right, power and remedy of CFC shall be cumulative and concurrent, and
recourse to one or more rights or remedies shall not constitute a waiver of
any other right, power or remedy.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1. NOTICES. All notices, requests and other communications
provided for herein including, without limitation, and modifications of, or
waivers, requests or consents under, this Agreement shall be given or made in
writing (including, without limitation, by telecopy) and delivered or
telecopied to the intended recipient at the "Address for Notices" specified
below, or, as to any party, at such other address as shall be designated by
such party in a notice to each other party. Except as otherwise provided in
this Agreement, all such communications shall be deemed to have been duly
given when personally delivered or, in the case of a telecopied or mailed
notice, upon receipt, in each case given or addressed as provided for herein.
The Address for Notices of the respective parties as follows:
CFC:
National Rural Utilities Cooperative Finance Corporation
0000 Xxxxxxxxxxx Xxx
Xxxxxxx, Xxxxxxxx 00000-0000
Attention: Senior Vice President - Member Services
Fax: (000) 000-0000
Borrower:
the address set forth in
Schedule 1 hereto
14
SECTION 8.2. EXPENSES. The Borrower will pay all costs and expenses of
CFC, including reasonable fees of counsel, incurred in connection with the
enforcement of this Agreement, the Note, the Security Agreement and the other
instruments provided for herein or with the preparation for such enforcement if
CFC has reasonable grounds to believe that such enforcement may be necessary.
SECTION 8.3. LATE PAYMENTS. If payment of any amount due hereunder is not
received at CFC's office in Herndon, Virginia, or such other location as CFC may
designate to the Borrower within five (5) Business Days after the due date
thereof or such other time period as CFC may prescribe from time to time in its
policies of general application in connection with any late payment charge (such
unpaid amount being herein called the "delinquent amount", and the period
beginning after such due date until payment of the delinquent amount being
herein called the "late-payment period"), the Borrower will pay to CFC, in
addition to all other amounts due under the terms of a Note, the Security
Agreement and this Agreement, any late-payment charge as may be fixed by CFC
from time to time on the delinquent amount for the late-payment period.
SECTION 8.4. FILING FEES. To the extent permitted by law, the Borrower
agrees to pay all expenses of CFC (including the fees and expenses of its
counsel) in connection with the filing or recordation of the Security
Agreement, all financing statements and instruments as may be required by CFC
in connection with this Agreement, including, without limitation, any
supplements, amendments or restatements thereto, all documentary stamps,
recordation and transfer taxes and other costs and taxes incident to
recordation of any document or instrument in connection herewith. Borrower
agrees to save harmless and indemnify CFC from and against any liability
resulting from the failure to pay any required documentary stamps,
recordation and transfer taxes, recording costs, or any other expenses
incurred by CFC in connection with this Agreement. The provisions of this
subsection shall survive the execution and delivery of this Agreement and the
payment of all other amounts due hereunder or due on a Note.
SECTION 8.5. NO WAIVER. No failure on the part of CFC to exercise, and no
delay in exercising, any right hereunder shall operate as a waiver thereof nor
shall any single or partial parties exercise by CFC of any right hereunder
preclude and other or further exercise thereof or the exercise of any other
right.
SECTION 8.6. GOVERNING LAW; SUBMISSION TO JURISDICTION; WAIVER OF JURY
TRIAL.
(A) THE PERFORMANCE AND CONSTRUCTION OF THIS AGREEMENT AND THE NOTES
SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE
COMMONWEALTH OF VIRGINIA.
(B) BORROWER HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE
UNITED STATES COURTS LOCATED IN VIRGINIA AND OF ANY STATE COURT SO LOCATED FOR
PURPOSES OF ALL LEGAL PROCEEDINGS ARISING OUT OF OR RELATING TO THIS AGREEMENT
OR THE TRANSACTIONS CONTEMPLATED HEREBY. BORROWER IRREVOCABLY WAIVES, TO THE
FULLEST EXTENT PERMITTED BY APPLICABLE LAW, ANY OBJECTION THAT IT MAY NOW OR
HEREAFTER HAVE TO THE ESTABLISHING OF THE VENUE OF ANY SUCH PROCEEDING BROUGHT
IN SUCH A
15
COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING HAS BEEN BROUGHT IN AN
INCONVENIENT FORUM.
(C) THE BORROWER AND CFC HEREBY IRREVOCABLY WAIVE, TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL
PROCEEDING ARISING OUT OF OR RELATING TO THIS AGREEMENT OR THE TRANSACTIONS
CONTEMPLATED HEREBY.
SECTION 8.7. HOLIDAY PAYMENTS. If any payment to be made by the Borrower
hereunder shall become due on a day which is not a Business Day, such payment
shall be made on the next succeeding Business Day and such extension of time
shall be included in computing any interest in respect of such payment.
SECTION 8.8. MODIFICATIONS. No modification or waiver of any provision
of this Agreement or a Note, and no consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in
writing by the party granting such modification, waiver or consent.
SECTION 8.9. MERGER AND INTEGRATION. This Agreement (including the
Recitals and all exhibits and schedules hereto), the instructions contained in
the written funds requisition statement with respect to each Advance, and
matters incorporated by reference herein together contain the entire agreement
of the parties hereto with respect to the matters covered and the transactions
contemplated hereby.
SECTION 8.10. HEADINGS. The headings and sub-headings contained in the
titling of this Agreement are intended to be used for convenience only and do
not constitute part of this Agreement.
SECTION 8.11. SEVERABILITY. If any term, provision or condition, or any
part thereof, of this Agreement, any Note or the Security Agreement shall for
any reason be found or held invalid or unenforceable by any government agency or
court of competent jurisdiction, such invalidity or unenforceability shall not
affect the remainder of such term, provision or condition nor any other term,
provision or condition, and this Agreement, and Note, and the Security Agreement
shall survive and be construed as if such invalid or unenforceable term,
provision or condition had not been contained therein.
SECTION 8.12. RIGHT OF SETOFF. Upon the occurrence and during the
continuance of any Event of Default, CFC is hereby authorized at any time and
from time to time, without prior notice to the Borrower, to exercise rights
of setoff or recoupment and apply any and all amounts held, or hereafter
held, by CFC or owed to the Borrower or for the credit or account of the
Borrower against any and all of the obligations of the Borrower now or
hereafter existing hereunder or under any Note. CFC agrees to notify the
Borrower promptly after any such setoff or recoupment and the application
thereof, provided that the failure to give such notice shall not affect the
validity of such setoff, recoupment or application. The rights of CFC under
this section are in addition to any other rights and remedies (including
other rights of setoff or recoupment) which CFC may have. Borrower waives all
rights of setoff, deduction, recoupment or counterclaim.
16
SECTION 8.13. PRIOR LOAN DOCUMENTS. It is understood and agreed that with
respect to all long-term loan agreements previously entered into by and between
CFC and Borrower and all promissory notes thereto secured under the Security
Agreement (both hereinafter being referred to as "Prior Loan Documents") the
Borrower shall be required, after the date hereof, to meet reporting and
financial covenants as set forth in this Agreement rather than those set forth
in the Prior Loan Documents. In the event of any conflict between any reporting
and financial covenant set forth in a Prior Loan Document and any reporting and
financial covenant in this Agreement, the requirements as set forth in this
Agreement shall apply. Nothing in this section shall, however, eliminate or
modify any special condition, special affirmative covenant or special negative
covenant, if any, unless specifically agreed to in writing by CFC. Furthermore,
the interest rate options available to Borrower as set forth in this Agreement
shall supersede the interest rate options as set forth in any Prior Loan
Documents.
SECTION 8.14. SCHEDULE 1. Schedule 1 attached hereto is an integral part
of this Agreement.
SECTION 8.15 RESCISSION FEE. The Borrower may elect not to borrow all or
any portion of the CFC Commitment in which event CFC shall release the Borrower
from its obligation hereunder, provided the Borrower complies with such terms
and conditions as CFC may impose for such release including, without limitation,
payment of any rescission fee that CFC may from time to time prescribe, pursuant
to its policies of general application.
17
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed as of the day and year first above written.
CAP ROCK COOPERATIVE FINANCE CORPORATION
(SEAL)
By: /s / Xxxx X. Xxxxxx
--------------------------------
Title: President
-----------------------------
Attest: /s/ Xxxxxx X. Xxxxxxxxx
--------------------------------
Secretary
NATIONAL RURAL UTILITIES
COOPERATIVE FINANCE CORPORATION
By: /s/ Xxxxx Xxxxx
--------------------------------
Assistant Secretary-Treasurer
Attest: [ILLEGIBLE]
--------------------------------
Assistant Secretary-Treasurer
18
SCHEDULE 1
1. The aggregate "CFC Commitment" is $5,896,985.00. Within this aggregate
amount, Borrower may, at its discretion, execute one or more Notes, each
Note representing a separate loan with CFC and containing a face amount
and Maturity Date in accordance with the terms, conditions and provisions
of this Agreement. Borrower shall use the proceeds of this for re-lending
the NewCorp Resources Electric Cooperative, Inc.
2. The "Security Agreement" shall mean the Security Agreement dated as of
even date herewith between the Borrower and CFC, as it may have been or
shall be supplemented, amended, consolidated, or restarted from time to
time.
3. The "Payment Date" months are February, May, August and November.
4. The date of the Borrower's balance sheet referred to in Section 3.H. is
December 31, 1998.
5. The chief executive office of the Borrower referred to in Section 3.I. is
000 Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000-0000.
6. The location of the Collateral, referred to in Section 3.J., is Midland
County in the State of Texas.
7. The special condition(s) referred to in Section 4.I. is (are): None
8. The special affirmative covenant(s) referred to in Section 5.N. is (are):
None
9. The governmental authority referred to in Section 3.L. is: N/A.
10. The guarantor referred to in Section 4.J. Is Cap Rock Electric
Cooperative, Inc.
11. The DSC ration referred to in Section 5.B. is 1.15.
12. The address for notices to the Borrower referred to in Section 8.1 is 000
Xxxx Xxxx Xxxxxx, Xxxxx 000, Xxxxxxx, XX 00000-0000.
13. The Borrower selects the following number of Loans, the amount of each
Loan, and the amortization method and/or Amortization Basis Date for each
Loan:
--------------- -------------------- ---------------------------------
LOAN NUMBER AMOUNT AMORTIZATION METHOD/BASIS DATE
--------------- -------------------- ---------------------------------
TX 703-A-9003 $5,896,985.00 Level principal payments.
--------------- -------------------- ---------------------------------
