FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (this "Amendment"), dated as of
December 1, 1995, is between COMPRESSOR DYNAMICS, INC., a Delaware corporation
("Borrower") and FIRST INTERSTATE BANK OF TEXAS, N.A. ("Lender").
RECITALS:
A. Borrower and Lender entered into that certain Letter Loan Agreement dated
as of September 18, 1995 (the "Agreement").
B. Borrower and Lender now desire to amend the Agreement as herein set
forth.
NOW, THEREFORE, in consideration of the premises herein contained and other
good and valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
Definitions
Section 1.01. DEFINITIONS. Capitalized terms used in this Amendment, to
the extent not otherwise defined herein, shall have the meanings given to such
terms in the Agreement, as amended hereby.
ARTICLE II
Amendments
Section 2.01. AMENDMENT TO SECTION 5.01(j). Effective as of the date
hereof, the first sentence of Section 5.01(j) of the Agreement is amended to
read in its entirety as follows:
(j) Borrower shall maintain a Total Fixed Charge Coverage Ratio of at
least 1.15 to 1.00 at all times from and after the date hereof.
ARTICLE III
Conditions Precedent
Section 3.01. CONDITIONS. The effectiveness of this Amendment is subject
to the receipt by Lender of the following in form and substance satisfactory to
Lender:
(a) RESOLUTIONS. Resolutions of the Board of Directors of Borrower
certified by its Secretary or an Assistant Secretary which authorize the
execution, delivery and performance by Borrower of this Amendment and the
other Loan Documents to which Borrower is or is to be a party hereunder.
(b) INCUMBENCY CERTIFICATE. A certificate of incumbency certified by
the Secretary or an Assistant Secretary of Borrower certifying the names
and signatures of the officers of Borrower authorized to sign this
Amendment and each of the other Loan Documents to which Borrower is or is
to be a party hereunder.
(c) CERTIFICATES OF EXISTENCE AND GOOD STANDING. Certificates of the
appropriate governmental officials regarding the existence and good
standing of Borrower in the state of Delaware and as a foreign corporation
in the state of Texas.
(d) MASTER REVOLVING LINE OF CREDIT NOTE. The Master Revolving Line
of Credit Note executed by Borrower.
(e) ADDITIONAL INFORMATION. Such additional documents, instruments
and information as Lender may request.
Section 3.02. ADDITIONAL CONDITIONS. The effectiveness of this Amendment
is also subject to the satisfaction of the additional conditions precedent that
(a) the representations and warranties contained herein and in all other
documents executed in connection with the Agreement and the Notes (the "Loan
Documents"), as amended hereby, shall be true and correct as of the date hereof
as if made on the date hereof, (b) all proceedings, corporate or otherwise,
taken in connection with the transactions contemplated by this Amendment and all
documents, instruments and other legal matters incident thereto shall be
satisfactory to Lender, and (c) no Event of Default shall have occurred and be
continuing and no event or condition shall have occurred that with the giving of
notice or lapse of time or both would be an Event of Default.
ARTICLE IV
Ratifications, Representations, and Warranties
Section 4.01. RATIFICATIONS. The terms and provisions set forth in this
Amendment shall modify and supersede all inconsistent terms and provisions set
forth in the Agreement and except as expressly modified and superseded by this
Amendment, the terms and provisions of the Agreement are ratified and confirmed
and shall continue in full force and effect. Borrower and Lender agree that the
Agreement as amended hereby shall continue to be the legal,
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valid and binding obligation of such Persons enforceable against such Persons in
accordance with its terms.
Section 4.02. REPRESENTATIONS, WARRANTIES AND AGREEMENTS. Borrower hereby
represents and warrants to Lender that (a) the execution, delivery, and
performance of this Amendment and any and all other Loan Documents executed or
delivered in connection herewith have been authorized by all requisite corporate
action on the part of Borrower and will not violate the articles of
incorporation or bylaws of Borrower, (b) the representations and warranties
contained in the Agreement as amended hereby, and all other Loan Documents are
true and correct on and as of the date hereof as though made on and as of the
date hereof, (c) no Event of Default has occurred and is continuing and no event
or condition has occurred that with the giving of notice or lapse of time or
both would be an Event of Default, (d) Borrower is in full compliance with all
covenants and agreements contained in the Agreement as amended hereby, (e)
Borrower is indebted to Lender pursuant to the terms of the Notes, as the same
may have been renewed, modified, extended and rearranged, including, without
limitation, renewals, modifications and extensions made pursuant to this
Amendment, (f) the liens, security interests, encumbrances and assignments
created and evidenced by the Loan Documents are, respectively, valid and
subsisting liens, security interests, encumbrances and assignments and secure
the Notes as the same may have been renewed, modified or rearranged, including,
without limitation, renewals, modifications and extensions made pursuant to this
Amendment, and (g) Borrower has no claims, credits, offsets, defenses or
counterclaims arising from the Loan Documents or Lender's performance under the
Loan Documents.
ARTICLE V
Miscellaneous
Section 5.01. SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Amendment or any other Loan
Documents including any Loan Document furnished in connection with this
Amendment shall fully survive the execution and delivery of this Amendment and
the other Loan Documents, and no investigation by Lender or any closing shall
affect the representations and warranties or the right of Lender to rely on
them.
Section 5.02. REFERENCE TO AGREEMENT. Each of the Loan Documents,
including the Agreement and any and all other agreements, documents, or
instruments now or hereafter executed and delivered pursuant to the terms hereof
or pursuant to the terms of the Agreement, as amended hereby, are hereby amended
so that any reference in such Loan Documents to the Agreement shall mean a
reference to the Agreement, as amended hereby.
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Section 5.03. EXPENSES OF LENDER. As provided in the Agreement, Borrower
agrees to pay on demand all reasonable costs and expenses incurred by Lender in
connection with the preparation, negotiation and execution of this Amendment and
the other documents and instruments executed pursuant hereto and any and all
amendments, modifications and supplements thereto, including, without
limitation, the costs and fees of Lender's legal counsel, and all costs and
expenses incurred by Lender in connection with the enforcement or preservation
of any rights under the Agreement, as amended hereby, or any other Loan
Document, including, without limitation, the costs and fees of Lender's legal
counsel.
Section 5.04. SEVERABILITY. Any provision of this Amendment held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Amendment and the effect thereof shall be
confined to the provision so held to be invalid or unenforceable.
Section 5.05. APPLICABLE LAW. This Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to be performable
in Houston, Xxxxxx County, Texas and shall be governed by and construed in
accordance with the laws of the State of Texas.
Section 5.06. SUCCESSORS AND ASSIGNS. This Amendment is binding upon and
shall inure to the benefit of Lender and Borrower and their respective
successors and assigns, except Borrower may not assign or transfer any of its
rights or obligations hereunder without the prior written consent of Lender.
Section 5.07. COUNTERPARTS. This Amendment may be executed in one or more
counterparts, each of which when so executed shall be deemed to be an original,
but all of which when taken together shall constitute one and the same
instrument.
Section 5.08. EFFECT OF WAIVER. No consent or waiver, express or implied,
by Lender to or for any breach of or deviation from any covenant, condition or
duty by Borrower shall be deemed a consent or waiver to or of any other breach
of the same or any other covenant, condition or duty.
Section 5.09. HEADINGS. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
Section 5.10. ENTIRE AGREEMENT. THIS AMENDMENT AND ALL OTHER INSTRUMENTS,
DOCUMENTS, AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH
RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL PRIOR
COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER WRITTEN OR
ORAL, RELATING TO THIS AMENDMENT AND THE OTHER INSTRUMENTS,
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DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Section 5.11. AGREEMENT FOR BINDING ARBITRATION. Borrower and Lender
agree to be bound by the terms and provisions of Lender's current Arbitration
Program, which is acknowledged as having been received by Borrower and which is
incorporated by reference herein, pursuant to which any and all disputes
regarding the subject matter hereof or of any Loan Documents shall be resolved
by mandatory binding arbitration upon the request of Borrower or Lender.
Executed as of the date first written above.
BORROWER:
COMPRESSOR DYNAMICS, INC.
By: /s/ Xxxx Xxxx
--------------------------------
Xxxx Xxxx
President
LENDER:
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:
---------------------------------
Xxxxx Xxxx
Banking Officer
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COMPRESSOR DYNAMICS, INC.
CERTIFICATE OF SECRETARY
I, Xxxxxxx X. Xxxxxxx, hereby certify that I am the duly elected,
qualified, and acting Secretary of Compressor Dynamics, Inc., a Delaware
corporation (the "Corporation"), and that I am authorized to execute and deliver
this certificate, and I do hereby further certify as follows:
1. RESOLUTIONS. The following resolutions have been duly adopted at a
meeting (duly convened where a quorum of directors was present) of, or by the
unanimous written consent of, the Board of Directors of the Corporation, and
such resolutions have not been amended or revoked, and are now in full force and
effect:
"RESOLVED, that the form and content of that certain First
Amendment to Loan Agreement (the "Amendment") to be entered into by
the Corporation and First Interstate Bank of Texas, N.A. ("Lender") in
the form of drafts exhibited to each director, with such changes as
are hereinafter authorized, and the transactions contemplated therein,
including the extension of the indebtedness of the Corporation to
Lender created pursuant to that certain Letter Loan Agreement, dated
September 18, 1995, between the Corporation and the Lender, and the
execution and delivery by the Corporation of a promissory note in the
principal amount of $1,000,000.00 (the "Note") to the Lender, are
hereby approved; and further
"RESOLVED, that the form and content of all documents executed in
connection with the Amendment and the Note (collectively, "Loan
Documents"), as exhibited to each director and with such changes as
are hereinafter authorized, are hereby approved; and further
"RESOLVED, that the President or any Vice President of the
Corporation is hereby authorized, on behalf of the Corporation, to
execute the Amendment, the Note and the Loan Documents and deliver the
same to Lender in substantially the form approved by these
resolutions, with such amendments or changes thereto as the officer so
acting may approve, such approval to be conclusively evidenced by his
execution and delivery of the same; and further
"RESOLVED, that the President or any Vice President of the
Corporation is hereby authorized, on behalf of the Corporation, to
execute such other instruments and documents, and to take such other
actions as the officer so acting deems necessary or desirable to
effectuate the transactions contemplated by these resolutions; and
further
"RESOLVED, that the Secretary or any Assistant Secretary of the
Corporation is hereby authorized, on behalf of the Corporation, to
certify and attest any documents which he may deem necessary or
appropriate to consummate the transactions contemplated by these
resolutions; provided that such attestation shall not be required for
the validity of any such documents; and further
"RESOLVED, that any and all actions taken by any of the officers
or representatives of the Corporation, for and on behalf and in the
name of the Corporation, with Lender prior to the adoption of these
resolutions, including, without limitation, the negotiation of the
Agreement and the Loan Documents, are hereby ratified, confirmed, are
approved in all respects for all purposes."
2. INCUMBENCY. The following named persons are duly elected or
appointed, acting, and qualified officers of the Corporation holding at the date
hereof the offices set forth opposite their respective names, and the signatures
appearing opposite their respective names are their genuine signatures:
NAME TITLE SPECIMEN SIGNATURE
---- ----- ------------------
Xxxx Xxxx President /s/ Xxxx Xxxx
---------------------------
Xxxxxxx X. Xxxxxxx Secretary /s/ Xxxxxxx X. Xxxxxxx
---------------------------
3. BY-LAWS. The By-Laws of the Corporation have not been amended (except
as reflected in any attachments hereto) or revoked since September 18, 1995, and
are now in full force and effect.
4. ARTICLES OF INCORPORATION. The Articles of Incorporation of the
Corporation have not been amended (except as reflected in any attachments
hereto) or revoked since September 18, 1995, and are now in full force and
effect.
IN WITNESS WHEREOF, I have duly executed this certificate as of the
18 day of January, 1996.
/s/ Xxxxxxx X. Xxxxxxx
-----------------------------------
Secretary
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I, Xxxx Xxxx, President of the Corporation, do hereby certify that Xxxxxxx
X. Xxxxxxx is the duly elected and qualified Secretary of the Corporation and
the signature appearing opposite his name is his genuine signature.
DATED: As of January 18 1996.
/s/ Xxxx Xxxx
-----------------------------------
President
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MASTER REVOLVING LINE OF CREDIT NOTE
$1,000,000.00 Houston, Texas December 1, 1995
FOR VALUE RECEIVED, the undersigned, COMPRESSOR DYNAMICS, INC., a Delaware
corporation ("Maker"), hereby promises to pay to the order of FIRST INTERSTATE
BANK OF TEXAS, N.A., a national banking association ("Payee"), at its offices at
1000 Louisiana, Houston, Xxxxxx County, Texas, in lawful money of the United
States of America, the principal sum of ONE MILLION AND NO/100 DOLLARS
($1,000,000.00), or so much thereof as may be advanced and outstanding
hereunder, together with interest on the outstanding principal balance from day
to day remaining, at a varying rate per annum which shall from day to day be
equal to the lesser of (a) the Maximum Rate (hereinafter defined) or (b) the
Prime Rate (hereinafter defined) of Payee in effect from day to day plus one
half of one percent (.50%), and each change in the rate of interest charged
hereunder shall become effective, without notice to Maker, on the effective date
of each change in the Prime Rate or the Maximum Rate, as the case may be;
provided, however, if at any time the rate of interest specified in clause (b)
preceding shall exceed the Maximum Rate, thereby causing the interest rate
hereon to be limited to the Maximum Rate, then any subsequent reduction in the
Prime Rate shall not reduce the rate of interest hereon below the Maximum Rate
until the total amount of interest accrued hereon equals the amount of interest
which would have accrued hereon if the rate specified in clause (b) preceding
had at all times been in effect.
Principal of and interest on this Note shall be due and payable as follows:
(a) Accrued and unpaid interest on this Note shall be payable
quarterly, on each March 1, June 1, September 1 and December 1, commencing
on March 1, 1996, and upon the maturity of this Note, however such maturity
may be brought about; and
(b) All outstanding principal of this Note and all accrued interest
thereon shall be due and payable on January 31, 1997.
Interest on the indebtedness evidenced by this Note shall be computed on
the basis of a year of 360 days and the actual number of days elapsed (including
the first day but excluding the last day) unless such calculation would result
in a usurious rate in which case interest shall be calculated on the basis of a
year of 365 or 366 days, as the case may be. All past due principal and
interest shall bear interest at the Default Rate (hereinafter defined).
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As used in this Note, the following terms shall have the respective
meanings indicated below:
"AGREEMENT" means that certain Letter Loan Agreement dated as of
September 18, 1995 between Maker and Payee, as amended by First Amendment
to Loan Agreement dated as of December 1, 1995, and as the same may be
further amended or modified from time to time.
"DEFAULT RATE" means the lesser of (a) the sum of the Prime Rate plus
three percent (3.0%) or (b) the Maximum Rate.
"MAXIMUM RATE" means the maximum rate of nonusurious interest
permitted from day to day by applicable law, including as to Article 5069-
1.04, Vernon's Texas Civil Statutes (and as the same may be incorporated by
reference in other Texas statutes), but otherwise without limitation, that
rate based upon the "indicated rate ceiling" and calculated after taking
into account any and all relevant fees, payments, and other charges in
respect of this Note which are deemed to be interest under applicable law.
"PRIME RATE" shall mean that variable rate of interest per annum
established by Payee from time to time as its prime rate which shall vary
from time to time. Such rate is set by Payee as a general reference rate
of interest, taking into account such factors as Payee may deem
appropriate, it being understood that many of Payee's commercial or other
loans are priced in relation to such rate, that it is not necessarily the
lowest or best rate charged to any customer and that Payee may make various
commercial or other loans at rates of interest having no relationship to
such rate.
This Note (a) is the Master Revolving Line of Credit Note provided for in
the Agreement and (b) is secured as provided in the Agreement. Maker may prepay
the principal of this Note upon the terms and conditions specified in the
Agreement. Maker may borrow, repay, and reborrow hereunder upon the terms and
conditions specified in the Agreement.
Notwithstanding anything to the contrary contained herein, no provisions of
this Note shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is herein
provided for, or shall be adjudicated to be so provided, in this Note or
otherwise in connection with this loan transaction, the provisions of this
paragraph shall govern and prevail, and neither Maker nor the sureties,
guarantors, successors or assigns of Maker shall be obligated to pay the excess
amount of such interest, or any other excess sum paid for the use, forbearance
or detention of sums loaned pursuant hereto. If for any reason interest in
excess of the Maximum Rate shall be deemed charged, required or permitted by
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any court of competent jurisdiction, any such excess shall be applied as a
payment and reduction of the principal of indebtedness evidenced by this Note;
and, if the principal amount hereof has been paid in full, any remaining excess
shall forthwith be paid to Maker. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, Maker and Payee shall, to the extent
permitted by applicable law, (a) characterize any non-principal payment as an
expense, fee, or premium rather than as interest, (b) exclude voluntary
prepayments and the effects thereof, and (c) amortize, prorate, allocate, and
spread in equal or unequal parts the total amount of interest throughout the
entire contemplated term of the indebtedness evidenced by this Note so that
the interest for the entire term does not exceed the Maximum Rate.
If default occurs in the payment of principal or interest under this Note
when due, or upon the occurrence of any other Event of Default, as such term is
defined in the Agreement, the holder hereof may, at its option, (a) declare the
entire unpaid principal of and accrued interest on this Note immediately due and
payable without notice, demand or presentment, all of which are hereby waived,
and upon such declaration, the same shall become and shall be immediately due
and payable, (b) foreclose or otherwise enforce all liens or security interests
securing payment hereof, or any part hereof, (c) offset against this Note any
sum or sums owed by the holder hereof to Maker and (d) take any and all other
actions available to Payee under this Note, the Agreement, the Loan Documents
(as such term is defined in the Agreement) at law, in equity or otherwise.
Failure of the holder hereof to exercise any of the foregoing options shall not
constitute a waiver of the right to exercise the same upon the occurrence of a
subsequent Event of Default.
If the holder hereof expends any effort in any attempt to enforce payment
of all or any part or installment of any sum due the holder hereunder, or if
this Note is placed in the hands of an attorney for collection, or if it is
collected through any legal proceedings, Maker agrees to pay all costs,
expenses, and fees incurred by the holder, including all reasonable attorneys'
fees.
THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
THE STATE OF TEXAS AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS
NOTE IS PERFORMABLE IN XXXXXX COUNTY, TEXAS.
Maker and each surety, guarantor, endorser, and other party ever liable for
payment of any sums of money payable on this Note jointly and severally waive
notice, presentment, demand for payment, protest, notice of protest and non-
payment or dishonor, notice of acceleration, notice of intent to accelerate,
notice of intent to demand, diligence in collecting, grace, and all other
formalities of any kind, and consent to all extensions without notice for any
period or periods of time and partial payments, before or after maturity, and
any impairment of any collateral securing this Note, all without prejudice to
the holder. The holder
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shall similarly have the right to deal in any way, at any
time, with one or more of the foregoing parties without notice to any other
party, and to grant any such party any extensions of time for payment of any of
said indebtedness, or to release or substitute part or all of the collateral
securing this Note, or to grant any other indulgences or forbearances
whatsoever, without notice to any other party and without in any way affecting
the personal liability of any party hereunder.
This Note is in renewal and extension of, but not in novation or discharge
of, that certain promissory note in the original principal amount of
$1,000,000.00, dated September 18, 1995, executed by Maker and payable to the
order of Payee.
COMPRESSOR DYNAMICS, INC.
By:/s/Xxxx Xxxx
-------------------------------
Xxxx Xxxx
President
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[FIRST INTERSTATE BANK LETTERHEAD]
September 18, 1995
Compressor Dynamics, Inc.
000 Xxxxx Xxxx
Xxxxxxx, Xxxxx 00000
Re: $1,000,000.00 Master Revolving Line of Credit Note and $2,833,338.00 Term
Note of even date herewith executed by COMPRESSOR DYNAMICS, INC., A
DELAWARE CORPORATION ("Borrower") payable to the order of FIRST
INTERSTATE BANK OF TEXAS, N.A. ("Bank").
Gentlemen:
This letter evidences the agreement ("Agreement") by and between
Borrower, whose address for all purposes is as set forth above, and Bank, whose
address for all purposes is 0000 Xxxxxxxxx, Xxxxxxx, Xxxxx 00000.
ARTICLE I
DEFINITIONS
Section 1.01 CERTAIN DEFINITIONS. In addition to the defined terms set
forth elsewhere herein, the following terms shall mean:
"ACCOUNT DEBTOR" shall mean the person or entity obligated on any account
owing to Borrower.
"AGREEMENT" shall mean this Agreement.
"BORROWER'S CURRENT ASSETS" shall mean Current Assets less any prepaid
expenses of Borrower.
"BUSINESS DAY" shall mean a day on which business is transacted by
national banks in Houston, Texas.
"COMMITMENT" shall mean the sum of $1,000,000.00.
"CURRENT ASSETS" shall mean all assets of Borrower that would be
reflected as current assets on a balance sheet of Borrower prepared in
accordance with generally accepted accounting principles.
"CURRENT LIABILITIES" shall mean any liabilities of Borrower which would
be reflected as current liabilities on a balance sheet of Borrower
prepared in accordance with generally accepted accounting principles.
"ELIGIBLE ACCOUNTS" shall mean an account which is and shall at all times
continue to be acceptable to Bank in all respects and in which Bank has a
first priority, perfected security interest. In general, except as fixed
and revised from time to time by Bank in writing, an account which
continuously meets each of the following requirements is an Eligible
Account:
(a) It is lawfully owned by Borrower and Borrower has the right
to transfer any interest therein;
(b) If it arises from the sale or lease of goods, and the goods
have been shipped or delivered to the person or entity which is
obligated on the account;
(c) If it arises from the performance of services, such
services have been fully rendered or are to be rendered pursuant
to a valid and enforceable Lease Contract;
(d) It is a valid obligation of the Account Debtor, enforceable
in accordance with its terms and is free and clear of all liens,
security interests, restrictions, set-offs, adverse claims,
prepayments and the like other than the security interest of Bank;
(e) It is evidenced by an invoice rendered to the Account
Debtor;
(f) It has not aged more than ninety (90) days from the due
date of the invoice of such account;
(g) It is not owed by an Account Debtor closely affiliated
with, related to, a subsidiary of, employed by or an officer of
Borrower, or domiciled outside of the United States of America,
unless such foreign account is accepted by Bank in writing; and
(h) It is not subject to any retainage, the result of a sale on
a xxxx and hold basis, a contra account, a U.S. government or
agency account or a consignment account.
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As to any one Account Debtor, if more than twenty-five (25%)
percent of the accounts owed by such Account Debtor to Borrower are
unpaid more than one hundred fifteen (115) days from the date of invoice,
then none of the accounts of such Account Debtor owing to Borrower shall
be considered Eligible Accounts.
In addition, as to any one Account Debtor, if the total of
accounts owed by such Account Debtor to Borrower exceed ten percent (10%)
of the Borrower's total accounts, then none of the accounts of such
Account Debtor in excess of ten per cent (10%) of Borrower's total
accounts shall be considered as Eligible Accounts; provided, however,
such ten per cent (10%) limitation shall be increased to twenty per cent
(20%) for accounts owed by TransAmerican Natural Gas Corp. to Borrower
such that only the accounts of TransAmerican Natural Gas Corp. in excess
of twenty per cent (20%) of Borrower's total accounts shall not qualify
as Eligible Accounts.
"ELIGIBLE INVENTORY" shall mean parts inventory, supplies and
miscellaneous goods used in Borrower's business which are and shall at
all times continue to be acceptable to Bank in all respects and in which
Bank has a first priority, perfected security interest. In general,
except as fixed and revised from time to time by Bank and Borrower in
writing, parts inventory, supplies and miscellaneous goods used in
Borrower's business which continuously meet each of the following
requirements are Eligible Inventory:
(a) They are lawfully owned by Borrower and Borrower has the
right to transfer any interest therein;
(c) They are not consignment inventory; and
(d) They are free and clear of all liens and security
interests, other than the security interest of Bank.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974,
as amended, and all applicable regulations adopted thereunder by the
Internal Revenue Service and the Department of Labor.
"EVENT OF DEFAULT" shall mean any of the Events of Default contained in
Section 6.01 hereof.
"INDEBTEDNESS" with respect to Borrower shall mean, at any date, all
liabilities which would be reflected on a balance sheet of Borrower
prepared as of such date in accordance with generally accepted accounting
principles, except for Subordinated Debt.
"INTANGIBLE ASSETS" shall mean those assets of Borrower which are (i)
good will, including any amounts (however designated on such balance
sheet) representing the cost of acquisition of subsidiaries in excess of
underlying tangible assets, unless an appraisal of such assets made by a
reputable firm of appraisers at the time of such acquisition
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indicates sufficient value to cover such excess, (ii) any amount by which
investments in persons or entities appearing on the asset side of such
balance sheet exceed the proportionate share of the person or entity and
its subsidiaries in the book value of the assets of such persons or
entities, and (iii) patents, trademarks, copyrights, deferred charges
(including, but not limited to unamortized discount and expenses,
organizational expenses, experimental and developmental expenses, but
excluding prepaid expense), intangibles and other similar assets.
"LOAN FORMULA CERTIFICATE AND CERTIFICATE OF NO DEFAULT" shall mean the
certificate in the form of EXHIBIT "A" attached hereto.
"LOCK BOX" shall mean an arrangement by which Account Debtors are
instructed by the Borrower to mail payments owing on accounts to Borrower
to a post office box mailing address designated by the Bank. Such post
office box mailing address to be under the sole and exclusive control of
the Bank.
"MASTER REVOLVING LINE OF CREDIT NOTE" shall mean the Master Revolving
Line of Credit Note in the principal amount of $1,000,000.00 delivered
pursuant to Article II hereof and all extensions, renewals, modifications
and rearrangements and enlargements thereof.
"NOTES" shall mean the Master Revolving Line of Credit Note and the Term
Note.
"OBLIGATIONS" shall mean the outstanding principal balance and accrued
unpaid interest owing on the Notes and any and all other indebtedness,
liabilities and obligations whatsoever of Borrower to Bank under the
Notes or the Security Instruments or otherwise, whether direct or
indirect, absolute or contingent, due or to become due, and whether now
existing or hereafter arising, and howsoever evidenced or acquired,
whether joint or several, and whether evidenced by note, draft,
acceptance, guaranty, open account, letter of credit, surety agreement or
otherwise, it being contemplated by the parties hereto that Borrower may
become indebted to Bank in further sum or sums.
"PLAN" shall mean any pension plan that is covered by Title IV of ERISA
maintained by Borrower, or any plan to which the Borrower is required to
contribute on behalf of its employees.
"REVOLVING CREDIT ADVANCE" shall mean an advance to Borrower or
Borrower's account funded under the Master Revolving Line of Credit Note.
"REVOLVING LOAN LIMIT" shall mean at any time an amount equal to the sum
of 80% of Eligible Accounts and 40% of the cost of Eligible Inventory;
provided, however the inventory component shall not exceed $500,000.00.
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"SECURITY INSTRUMENTS" shall mean all documents executed in connection
with or as security for the Notes and the Obligations, including, without
limitation, the instruments referred to in Article III hereof.
"SUBORDINATED DEBT" shall mean any liability of Borrower calculated in
accordance with generally accepted accounting principles, heretofore or
hereafter incurred, and which by the express terms of a subordination
agreement in form and substance reasonably satisfactory to Bank is
validly and effectively made subordinate to payment of the Notes and the
Obligations.
"TANGIBLE ASSETS" shall mean, as of any date, the aggregate book value of
the assets of Borrower that would be reflected on a balance sheet
prepared as of such date in accordance with generally accepted accounting
principles, less the aggregate book value of Intangible Assets at such
date.
"TANGIBLE NET WORTH" shall mean, as of any date, the amount by which
Tangible Assets as of such date exceed the Indebtedness.
"TERM NOTE" shall mean the Term Note in the principal amount of
$2,833,338.00 delivered pursuant to Article II hereof and all extensions,
renewals, modifications and rearrangements and enlargements thereof.
ARTICLE II
THE LOANS
Section 2.01 REVOLVING LINE OF CREDIT.
(a) Bank has approved and extended to Borrower a $1,000,000.00 revolving
line of credit evidenced by the Master Revolving Line of Credit Note.
Borrower will utilize such revolving line of credit by making a request
for Revolving Credit Advances in accordance with Section 2.02 hereof in
order to provide Borrower with working capital. Upon the execution of
this Agreement an initial advance shall be made to payoff the outstanding
principal balance, if any, owing on the Master Revolving Line of Credit
Note in the amount of $1,000,000.00 dated October 6, 1993, executed by
Compressor Dynamics, Ltd. payable to Bank. Compressor Dynamics, Ltd. was
a limited partnership that has been purchased by the Borrower. At any
time there exists any Event of Default, Bank shall not be obligated to
make any Revolving Credit Advances under the Master Revolving Line of
Credit Note. Subject to such limitations and upon the terms and
conditions of this Agreement, Bank may lend to Borrower, and Borrower may
borrow from Bank an aggregate amount at any one time outstanding not to
exceed $1,000,000.00; provided however, aggregate Revolving Credit
Advances shall not exceed the Revolving Loan Limit. During the period
from the date of this Agreement
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to and including the maturity date under the Master Revolving Line of
Credit Note, Borrower may borrow, repay and reborrow hereunder. Each
Revolving Credit Advance shall be evidenced by the Master Revolving Line
of Credit Note and shall automatically increase the principal balance
owed on the Master Revolving Line of Credit Note.
(b) Subject to the terms hereof and the limitations set forth above,
Bank agrees to advance up to an aggregate $1,000,000.00 in Revolving
Credit Advances provided that the use of the Revolving Credit Advances
are directly associated with the costs and expenses of providing working
capital to Borrower or other uses approved in writing by Bank prior to
the making of the Revolving Credit Advance by Bank.
Section 2.02 MAKING OF ADVANCES. Each request by Borrower for a
Revolving Credit Advance under this Article II may be made by verbal request by
Borrower, provided that Borrower has submitted the required Loan Formula
Certificates and Certificates of No Default and has otherwise complied with the
terms of this Agreement. All Revolving Credit Advances when funded shall be
deposited into the account at Bank used by Borrower for operating purposes.
Section 2.03 REVOLVING CREDIT ADVANCES OVER REVOLVING LOAN LIMIT. Bank
shall have no obligation to advance and Borrower shall not be entitle to any
Revolving Credit Advance that would cause all of the Revolving Credit Advances
under the Master Revolving Line of Credit Note to exceed the Revolving Loan
Limit. If, at any time prior to the maturity dated under the Master Revolving
Line of Credit Note, the outstanding Revolving Credit Advances under the Master
Revolving Line of Credit Note exceed the Revolving Loan Limit, Borrower shall
immediately prepay on the Master Revolving Line of Credit Note such amount as
necessary to eliminate such excess.
Section 2.04 CONDITIONS TO MAKING ADVANCES. The obligation of Bank to
make Revolving Credit Advances is subject to the following conditions precedent:
(a) the Bank's having received and approved a current Loan Formula
Certificate and Certificate of No Default as required herein;
(b) that no Event of Default has occurred and is continuing, and no
event has occurred and is continuing which with the giving of notice or
passage of time, or both would be an Event of Default;
(c) that no material adverse change has occurred in the business or
financial condition of Borrower since the date of this Agreement;
(d) that no proceeding or case under the United States Bankruptcy Code
shall have been commenced by or against Borrower; and
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(e) Bank shall have received any other instruments deemed reasonably
necessary by Bank.
Section 2.05 TERM LOAN. Bank has approved and extended to Borrower a
$2,833,338.00 term loan evidenced by the Term Note to be used to refinance
certain debt of Compressor Dynamics, Ltd., evidenced by a Term Note dated
October 6, 1993, in the original principal amount of $4,000,000.00 executed by
Compressor Dynamics, Ltd. payable to Bank.
Section 2.06 PREPAYMENTS. The Borrower may, without notice, premium or
penalty, prepay the Notes at any time, in whole or in part, as provided in the
Notes.
ARTICLE III
COLLATERAL
Section 3.01 SECURITY INSTRUMENTS. As security for the payment of the
Notes and Obligations and performance of Borrower's obligations under this
Agreement, Borrower has delivered or will deliver to Bank the following:
(a) a Commercial Security Agreement in form satisfactory to Bank
granting Bank a first priority security interest in all of Borrower's
assets except certain vehicles currently held by Southwest Bank of Texas,
N.A. as collateral for loans at Southwest Bank of Texas, N.A.
(b) all other instruments necessary to give Bank a perfected security
interest and/or lien in and to the assets of Borrower used as collateral
and security for the Notes.
The Notes and all amounts which may become due and owing by Borrower to
Bank hereunder are secured by the Security Instruments.
Section 3.02 CURING DEFECTS. It is agreed that Borrower will cure any
title defects in and to all interest and rights covered by the Security
Instruments as necessary to provide Bank the security interest in the property
therein described. In the event any such defects are not cured by Borrower
within forty-five (45) days after notice thereof by Bank to Borrower, Borrower
authorizes Bank to retain legal counsel to cure same and to charge all related
reasonable costs and fees to Borrower, or, at Bank's option, to declare the
Notes to be immediately due and payable and any cost and fees incurred to cure
any such defects shall be payable on demand, shall become a part of the
principal indebtedness under the Notes, and shall be secured by the Security
Instruments.
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ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Section 4.01 REPRESENTATIONS AND WARRANTIES. To induce Bank to enter
into this Agreement, Borrower represents and warrants to Bank as follows:
(a) Borrower is not in default with respect to any of its existing
indebtedness to any party, and the performance of Borrower's obligations
under this Agreement, or under any document or instruments referred to
herein, will not result in a default or in the creation or imposition of
any security interest in, or lien or encumbrance upon, any of the assets
of Borrower under any other contract, agreement or instrument to which
Borrower is a party or by which Borrower or its property is bound;
(b) This Agreement, the Notes, the Security Instruments and any other
documents executed in connection with the Notes, when executed and
delivered, will be valid, binding and enforceable in accordance with
their respective terms;
(c) All financial statements or other information of Borrower which
have been submitted heretofore to Bank are materially complete and
correct, have been prepared in accordance with generally accepted
accounting principles and fairly reflect the financial condition of
Borrower for the period or periods indicated. No material adverse change
has occurred in the condition of Borrower, financial or otherwise,
subsequent to the date or dates of any such financial statements or other
information;
(d) There are no actions, suits, or proceedings pending or threatened
against or affecting Borrower which involve the possibility of any
judgment or liability which, in the opinion of management, may materially
and adversely affect the business or assets of Borrower or its ability to
carry on its business as now conducted;
(e) Borrower is not in default under any order, writ, injunction, or
decree of any court or governmental agency which may result in a material
adverse change in the business, operations, properties, or assets of
Borrower;
(f) No part of the proceeds received by Borrower on the Master
Revolving Line of Credit Note will be used, directly or indirectly, for
the purpose of purchasing or carrying, or the payment in whole or in
part, of indebtedness which was incurred for the purpose of purchasing or
carrying, any margin stock, as such term is defined in Section 221.3 of
Regulation U of the Board of Governors of the Federal Reserve System, 12
C.F.R., Part 221. No part of the proceeds received by Borrower hereunder
will be used for any purpose which violates Regulation X of the Board of
Governors of the Federal Reserve System, 12 C.F.R., Part 224;
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(g) No approvals or consents of any government or administrative
agency having jurisdiction over Borrower are necessary or required to
permit Borrower to enter into this Agreement, the Master Revolving Line
of Credit Note or the Security Instruments;
(h) Borrower has and will continue to have good and indefeasible
title, free and clear of all liens, security interests and encumbrances,
to all of the collateral securing the Master Revolving Line of Credit
Note;
(i) Borrower is in compliance in all material respects with the
applicable provisions of ERISA, and to the best of the Borrower's
knowledge, no "reportable event", as such term is defined in Section 4043
of ERISA, has occurred with respect to any Plan of the Borrower;
(j) Borrower is not an "investment company" or a company "controlled"
by an "investment company," within the meaning of the Investment Company
Act of 1940, as amended;
(k) The Borrower is duly formed and existing under the laws of the
State of Delaware, all franchise and other taxes required to maintain the
existence of Borrower have been paid when due and no such taxes are
currently delinquent; no proceedings are pending for the forfeiture of
Borrower's Certificate of Incorporation or for its dissolution, voluntary
or involuntary; Borrower's principal office is located in Houston, Texas;
and the Borrower is fully qualified, authorized and in good standing to
do business in all jurisdictions in which the nature of its business
requires it to be qualified and authorized to do business;
(l) All compressors owned by Borrower are portable and are not
required to be titled in any jurisdiction in which they are located; and
(m) Any existing options to sell compressor units owned by Borrower
contain an exercise price to sell such compressors of not less than the
fair market value of the compressors which are the subject of the option.
ARTICLE V
COVENANTS
Section 5.01 BORROWER'S AFFIRMATIVE COVENANTS. Borrower covenants and
agrees that until the full and final payment of the Notes, and any and all
renewals, extensions, modifications and rearrangements thereof, and of any and
all other amounts secured or to be secured by the Security Instruments that:
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(a) Borrower shall promptly furnish to Bank, within forty-five (45)
days of the end of each calendar month, (i) an aging and listing of all
accounts receivable and accounts payable of Borrower, (ii) in-house
prepared unaudited financial statements, and (iii) a Loan Formula
Certificate and Certificate of No Default, all of such items to be signed
and certified by an officer of Borrower;
(b) Borrower shall furnish to Bank, within forty-five (45) days after
the end of each fiscal year of Borrower, in-house prepared unaudited
annual financial statements of Borrower, such financial statements to be
signed and certified by an officer of Borrower;
(c) Borrower shall furnish to Bank, within ninety (90) days after the
end of each fiscal year of Borrower, audited annual consolidated
financial statements and 10-K filings on its parent company, Catalyst
Energy Services, Inc., prepared by a Certified Public Accountant in form
and content reasonably acceptable to Bank;
(d) Borrower shall furnish to Bank upon execution of this Agreement
and within forty-five (45) days of the end of each calendar quarter a
complete list of all compressor equipment detailing (i) the location of
all such equipment by state and county or parish, (ii) the Lessee, if
any, of such equipment, and (iii) the manufacturer and identification
number of such equipment;
(e) Borrower shall furnish from time to time such further information
regarding the business affairs and other financial conditions of Borrower
as Bank may reasonably request. All financial statements furnished under
this Agreement shall be prepared in accordance with generally accepted
accounting principles consistently followed throughout the period
involved;
(f) Borrower shall promptly inform Bank of a breach of any warranty or
representation made herein, or in the Security Instruments, when same
occurs, said warranties and representations to survive the execution
hereof;
(g) Borrower shall receive and hold all inventory of Borrower for the
sole purposes of storing, utilizing, leasing and/or selling the same at
Borrower's existing places of business or such other places as may be
satisfactory to Bank;
(h) Borrower shall maintain at all times from the date hereof a ratio
of Indebtedness to Tangible Net Worth of not more than 2.10 to 1.00;
(i) Borrower shall maintain a ratio of Current Assets to Current
Liabilities of not less than 1.10 to 1.00 at all times from and after the
date hereof;
(j) Borrower shall maintain a Total Fixed Charge Coverage Ratio of at
least 1.35 to 1.00 at all times from and after the date hereof. Total
Fixed Charge Coverage Ratio
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shall mean the sum of (a) net income, plus (b) depreciation, amortization
and other non-cash charges, plus (c) deferred Federal Income Taxes, plus
(d) interest expense divided by the sum of (x) principal payments made on
current maturities of long term debt, plus (y) interest expense. This
covenant shall be tested on a monthly basis and will be calculated on a
twelve (12) month rolling average;
(k) Borrower shall permit any officer, employee or agent of Bank to
visit Borrower's offices and warehouse facilities to inspect the
collateral which secures the Notes and to examine and make copies of the
Borrower's financial records and records of accounts, and discuss the
affairs, finances and accounts of the Borrower with Borrower's officers,
accountants and auditors on a annual basis, at the cost and expense of
Borrower, provided such expenses are reasonable and customary, and at
such other times as Bank may deem necessary at Bank's expense;
(l) Borrower shall maintain with financially sound and reputable
insurers, reasonably acceptable to Bank, insurance with respect to its
assets, facilities and business against such liabilities, casualties,
risks and contingencies as is customary for its business, but in no event
less than the coverage currently in place, naming the Bank as loss payee
with respect to any insurance covering collateral securing the Master
Revolving Line of Credit Note, and will, upon execution of this Agreement
and at such other times as Bank may request, provide satisfactory
evidence of such insurance;
(m) Borrower shall enter into a Lock Box Agreement with Bank in form
and content acceptable to Bank and shall at all times maintain a Lock
Box;
(n) Borrower shall preserve and maintain its corporate existence,
rights and authority to do business in all states in which it conducts
its business;
(o) Borrower shall keep all of its records and books of accounts in
accordance with generally accepted accounting principles consistently
applied reflecting all transactions of Borrower;
(p) Borrower shall (i) if requested by the Bank, then promptly after
the filing thereof with the United States Secretary of Labor or the
Pension Benefit Guaranty Corporation, it shall furnish copies of each
annual and other report with respect to each Plan or any trust created
thereunder, and (ii) immediately upon becoming aware of the occurrence of
any "reportable event", as such term is defined in Section 4043 of ERISA,
or of any "prohibited transaction", as such term is defined in Section
4975 of the Internal Revenue Code of 1954, as amended, in connection with
any Plan or trust created thereunder, it shall furnish to Bank a notice
signed by its President or a principal financial officer specifying the
nature thereof, what action it is taking or proposes to take with respect
thereof and, when known, any action taken by the Internal Revenue Service
with respect thereto; and
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(q) Borrower shall at all times clearly xxxx all compressor units now
owned, or to be purchased by Borrower, to indicate they are the property
of Borrower.
Section 5.02 BORROWER'S NEGATIVE COVENANTS. Borrower covenants and
agrees that until the full and final payment of the Notes, and any and all
renewals, extensions, modifications and rearrangements thereof, and of any and
all other amounts secured or to be secured by the Security Instruments that
Borrower shall NOT, without the prior written consent of Bank, which consent may
be withheld by Bank in its reasonable discretion, do any of the following:
(a) compensate any officer, director, or employee of Borrower other
than reasonable and customary compensation for services, or consolidate,
or merge with any other company or entity, or give any preferential
treatment, make any advance, directly or indirectly, by way of loan,
gift, bonus, or otherwise, to any company or entity directly or
indirectly, controlling or affiliated with or controlled by Borrower, or
any other company or entity, or to any officer, director, partner or
employee of Borrower, or any such company or entity, except the
contemplated loans to Messrs. Xxxx, Gillioz and Xxxxxxxx to enable them
to pay their 1995 income taxes related to their receipt of stock in
Catalyst Energy Services, Inc., which loans will not exceed $50,000.00 in
the aggregate;
(b) permit any Plan maintained by it to:
(i) engage in any "prohibited transaction" as such term is
defined in Section 4975 of the Internal Revenue Code of
1954, as amended; or
(ii) incur any "accumulated funding deficiency" as such term is
defined in Section 302 of ERISA; or
(iii) terminate any such Plan in a manner which could result in
the imposition of a lien on its property pursuant to
Section 4068 of ERISA.
(c) incur, create, assume or permit to exist any Indebtedness, debt or
liability except (i) the Notes; (ii) Indebtedness incurred in the
ordinary course of Borrower's business in connection with normal trade
obligations; (iii) any Indebtedness previously made or contemplated to be
made in the future by Bank to Borrower; (iv) any Indebtedness described
in the Security Instruments; (v) current Indebtedness owed to Southwest
Bank of Texas, N.A.; and (vi) aggregate Indebtedness, other than the
Indebtedness to Bank, current Indebtedness owed to Southwest Bank of
Texas, N.A., and normal trade obligations, of not more than $250,000.00
at anytime, without written approval by Bank, in its sole discretion;
(d) incur, create, assume or permit to exist any mortgage, pledge,
security interest, lien, charge or other encumbrance (except those
created in the Security Instruments) of
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any nature whatsoever on any of its assets, now owned or hereafter
acquired which are now or hereafter pledged to Bank under the Security
Instruments or otherwise to secure the Notes or any Obligations;
(e) guarantee or otherwise in any way become contingently liable or
responsible for obligations of any person or entity whether by agreement
to purchase the indebtedness of any other person or entity or agreement
for the furnishing of any other funds to any other person or entity
through the purchase of goods, supplies or services for the purpose of
paying or discharging the indebtedness of any other person or entity or
otherwise, except for the endorsement of negotiable instruments by
Borrower in the ordinary course of business for collection or deposit;
(f) unless otherwise approved in writing by Bank in its sole
discretion, sell, lease, transfer or otherwise dispose of all or any part
of its properties or assets except in the ordinary course of business; or
consolidate with or merge into any other entity or permit another entity
to merge into it or acquire all or substantially all of the properties or
assets of any other person or entity; or make any substantial change in
its capitalization; or
(g) grant any option to purchase any compressor unit for less than its
fair market value.
ARTICLE VI
EVENT OF DEFAULT AND REMEDIES
Section 6.01 EVENTS OF DEFAULT. Any of the following events shall be
considered an "Event of Default" under this Agreement:
(a) Default on the Notes, any of the Obligations or any Indebtedness
of Borrower;
(b) Default on the Security Instruments, or any other document
executed in connection with this Agreement;
(c) The discovery by Bank that any representation or warranty made by
Borrower in this Agreement, the Security Instruments, or any other
instrument securing or executed in connection with the Notes is false,
misleading or erroneous in any material respect as of the date such
representation or warranty is made;
(d) The discovery by Bank that any representation, statement
(including financial statements), certificate, or data furnished or made
or to be furnished or made by Borrower hereunder or under the Security
Instruments, or any other instrument securing or executed in connection
with the Notes is false, misleading or erroneous in any
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material respect, as of the date of which the facts therein set forth
were stated or certified;
(e) Default in the performance of any of the covenants contained
herein or in any document executed in connection herewith;
(f) Borrower shall suffer two consecutive quarters of net operating
losses as determined in accordance with generally accepted accounting
principles;
(g) Borrower shall (i) discontinue business or (ii) make a general
assignment for the benefit of creditors or (iii) apply for or consent to
the appointment of a receiver, a trustee or liquidator for itself or for
all or a substantial part of its assets, or (iv) be adjudicated a
bankrupt or insolvent, or (v) file a voluntary petition in bankruptcy or
file a petition or answer seeking reorganization or rearrangement of
creditors or seeking to take advantage of any other law (whether federal
or state) relating to relief for debtors, or admit (by answer, by
default, or otherwise) the material allegations of a petition filed
against it in any bankruptcy, reorganization, rearrangement, insolvency
or other proceedings (whether federal or state) relating to relief for
debtors, or (vi) suffer or permit to continue unstayed and in effect for
ninety (90) consecutive days any judgment, decree or order, entered by a
court of competent jurisdiction, which approves a petition seeking
reorganization of it or appoints a receiver, trustee or liquidator of it
or of all or a substantial part of any of its assets, or (vii) fail to
pay prior to delinquency, any taxes owed to the State of Texas, the
United States of America, or any other entity having jurisdiction over
Borrower or any of its assets, provided, however, Borrower may contest in
good faith the payment of such taxes, as long as Borrower complies with
all applicable laws and maintains the capacity to pay such taxes
reasonably satisfactory to the Bank and provided further that Borrower
shall pay such taxes (a) if required by law in order to contest taxes,
(b) prior to such time that the rights of Bank in the property covered by
the Security Instruments become jeopardized in Bank's reasonable opinion,
and (c) prior to any final judgment being taken against Borrower or
Borrower's assets because of such non-payment.
Section 6.02 REMEDIES. Upon the happening of any Event of Default and
at any time thereafter (i) Bank, at its option, may declare the entire
outstanding principal balance of the Notes and all accrued and unpaid interest
thereon and any and all other indebtedness of Borrower to Bank to be immediately
due and payable without notice of default, presentment, demand, protest, notice
of protest, notice of intention to accelerate the maturity thereof, notice of
the exercise of the intention to accelerate the maturity thereof, or other
notice whatsoever, all of which are hereby expressly waived by Borrower; (ii)
all obligations of Bank hereunder, if any, including, but not limited to the
making, continuing or renewing of any loan hereunder, shall terminate unless and
until same are reinstated in writing by Bank; (iii) Bank may exercise any and
all remedies it has at law or in equity, in the Master Revolving Line of Credit
Note or in the Security Instruments; and (iv) Bank may establish a Cash
Collateral Account as provided in Section 6.03.
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Section 6.03 CASH COLLATERAL ACCOUNT. Upon the happening of any Event
of Default, the Bank shall establish a cash collateral account into which the
finally collected accounts from Account Debtors received in the Lock Box are
deposited (the "Cash Collateral Account"). The Bank shall have the right to
withdraw from the Cash Collateral Account any and all sums within such Cash
Collateral Account for application on the Notes.
Section 6.04 RIGHT OF SET-OFF. Upon the occurrence of and during the
continuance of any Event of Default referred to herein, Bank is hereby
authorized at any time and from time to time, without notice to Borrower, to
set-off and apply any and all deposits (general or special, time or demand,
provisional or final) at any time held and other indebtedness at any time owing
by Bank to or for the credit or the account of Borrower against any and all of
the Obligations of Borrower that are then due and payable, irrespective of
whether Bank shall have made any demand under this Agreement or under the Notes.
Notwithstanding anything to the contrary contained herein, Bank may not exercise
any of it's set-off rights contained in this Section 6.04 against any unmatured
Obligations until it has given Borrower seven (7) days notice of its intent to
exercise it's set-off rights. The rights of Bank under this Section are in
addition to other rights and remedies (including, without limitation, other
rights of set-off) which Bank may have.
Section 6.05 CROSS COLLATERALIZATION AND CROSS DEFAULT. Upon the
occurrence of any Event of Default under this Agreement or default under any
other agreement between Borrower and Bank, then it is agreed by Borrower that
the Bank shall have the right to accelerate all Obligations owing to it by
Borrower, and any collateral securing any of the Obligations of Borrower to Bank
shall act as collateral for all of the Obligations of Borrower to the Bank.
ARTICLE VII
MISCELLANEOUS
Section 7.01 NOTICES. Any notices, requests or communications hereunder
shall be in writing, and shall be delivered by actual delivery or by placing
same in the United States mails, certified mail, return receipt requested,
addressed to the party to whom directed at the address hereinabove set out. Any
such notice, request or communication shall be deemed delivered upon the earlier
to occur of placing same in the mails or upon actual delivery to the party to
whom directed.
Section 7.02 BINDING EFFECT. All covenants and agreements contained in
this Agreement by or on behalf of the Borrower shall bind its successors and
assigns and shall inure to the benefit of Bank and its successors and assigns.
Section 7.03 CONTINUING EFFECT. This Agreement shall remain in effect
until the Notes and all other obligations of Borrower to Bank have been paid in
full.
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Section 7.04 GOVERNING LAW. This Agreement shall be deemed to be a
contract made under and shall be construed and enforced in accordance with the
laws of the State of Texas.
Section 7.05 CONFLICTS. In the event of any conflict between the
provisions of this Agreement and the provisions of the Notes or the Security
Instruments, the provisions of this Agreement shall control.
Section 7.06 CONSTRUCTION. Whenever used herein, the pronouns of any
gender shall include the other genders and either the singular or the plural
shall include the other as the context requires.
Section 7.07 ADDITIONAL DOCUMENTS. Borrower agrees to execute and
deliver such other and further documents and to do and perform such other acts
as may be reasonably necessary and proper in Bank's judgment to carry out the
intention of the parties as herein expressed and to effect the purposes of this
document and the transactions referred to herein.
Section 7.08 COST AND EXPENSES. All reasonable costs, expenses, and
attorneys fees incurred in performing and complying with Borrower's covenants
herein shall be borne by Borrower. If, in pursuance of any covenant herein
contained, Bank shall pay out any money chargeable to Borrower, or subject to
reimbursement by Borrower under the terms hereof, Borrower shall repay the same
to Bank immediately at the place where the Notes are payable. The sum of each
such payment shall be added to either of the Notes and thereafter shall form a
part of the same and shall be secured by this Agreement and the Security
Instruments and by subrogation of Bank to all the rights of the person,
corporation, or body politic receiving such payment.
Section 7.09 WAIVER. It is expressly agreed that no waiver of any
default on the part of Borrower or breach of any of the provisions of this
Agreement shall be considered a waiver of any other or subsequent default or
breach, and no delay or omission in exercising or enforcing the rights and
powers herein granted shall be construed as a waiver of such rights and powers,
and likewise no exercise or enforcement of any rights or powers hereunder shall
be held to exhaust such rights and powers, and every such right and power may be
exercised from time to time; failure by Bank to insist upon the strict
performance by Borrower of any of the terms and provisions hereof shall not be
deemed to be a waiver of any of the terms and provisions hereof, and Bank,
notwithstanding any such failure, shall have the right thereafter to insist upon
the strict performance by Borrower of any and all of the terms and provisions of
this Agreement.
Section 7.10 USURY SAVINGS. It is the intention of the parties hereto
to conform strictly to the usury laws applicable to the Bank and Borrower.
Accordingly, if the transactions contemplated hereby would be usurious under
applicable law (including the laws of the United States of America and the State
of Texas), then, in that event, notwithstanding anything to the contrary in the
Notes, this Agreement, the Security Instruments or any other agreement entered
into in connection with or as security for the Notes, it is agreed as follows:
(i) the aggregate
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of all consideration which constitutes interest under law applicable to the Bank
that is contracted for, taken, reserved, charged or received under the Notes,
this Agreement the Security Instruments or any other agreement or otherwise in
connection with the Notes shall under no circumstances exceed the maximum amount
allowed by such applicable law, and any excess shall be credited by the Bank on
the principal amount of the Notes (or, if the principal amount of the Notes
shall have been paid in full, refunded by the Bank to the Borrower); and (ii) in
the event that maturity of the Notes is accelerated by reason of an election of
the Bank resulting from any Event of Default under this Agreement or otherwise,
or in the event of any required or permitted prepayment, then such consideration
that constitutes interest under law applicable to the Bank may never include
more than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in the Notes, the Security Instruments, this
Agreement or otherwise shall be canceled automatically as of the date of such
acceleration or prepayment and, if theretofore paid, shall be credited by the
Bank on the principal amount of the Notes (or, if the principal amount of the
Notes shall have been paid in full, refunded by the Bank to the Borrower).
Section 7.11 INVALIDITY. In the event that any one or more of the
provisions contained in the Notes, this Agreement or the Security Instruments
shall, for any reason, be held invalid, illegal or unenforceable in any respect,
such invalidity, illegality or unenforceability shall not affect any other
provision of the Notes, this Agreement or the Security Instruments.
Section 7.12 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS. All titles
or headings to articles, sections, subsections or other divisions of this
Agreement or the exhibits hereto are only for the convenience of the parties and
shall not be construed to have any effect or meaning with respect to the other
content of such articles, sections, subsections or other divisions, such other
content being controlling as to the agreement between the parties hereto.
Section 7.13 COUNTERPARTS. This Agreement may be executed in two or
more counterparts, and it shall not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
Section 7.14 AGREEMENT FOR BINDING ARBITRATION. The parties agree to be
bound by the terms and provisions of the current Arbitration Program of First
Interstate Bank of Texas, N.A. which is incorporated by reference herein and is
acknowledged as received by the parties, pursuant to which any and all disputes
shall be resolved by mandatory binding arbitration upon the request of any
party.
NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THIS
LOAN CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH 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
-17-
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES
RELATING TO THIS LOAN.
Please indicate your agreement to the foregoing by executing this
Agreement in the space provided below.
Very truly yours,
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:
---------------------------------
Xxxxx Xxxx, Banking Officer
AGREED AND ACCEPTED this 18 day of September, 1995.
COMPRESSOR DYNAMICS, INC.,
a Delaware corporation
By:/s/ Xxxx Xxxx
------------------------------
Xxxx Xxxx, President
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EXHIBIT "A"
LOAN FORMULA CERTIFICATE AND CERTIFICATE OF NO DEFAULT
TO: First Interstate Bank of Texas, N.A.
0000 Xxxxxxxxx
Xxxxxxx, Xxxxx 00000
Attention: Xxxxx Xxxx
Gentlemen:
This Loan Formula Certificate and Certificate of No Default ("Certificate") for
the month ending ____________________, 199___, is executed and delivered by
COMPRESSOR DYNAMICS, INC. ("Borrower") to FIRST INTERSTATE BANK OF TEXAS, N.A.
("Bank"), pursuant to the certain Loan Agreement ("Agreement") dated September
_____, 1995, between Borrower and Bank. All terms used herein shall have the
meanings assigned to them in the Agreement.
Borrower represents and warrants to Bank that all information contained herein
is true, correct, and complete, and that the total accounts receivable of
Borrower less than 90 days old referred to below represents the Eligible
Accounts that qualify under the Agreement. Borrower further represents and
warrants to the Bank that attached hereto as Schedule 1 is a list of the
accounts showing all accounts receivable aged in 30 day intervals.
ACCOUNTS RECEIVABLE OF BORROWER:
1. Eligible Accounts receivable less than 90 days old $
---------------------
BORROWER'S INVENTORY:
2. Value of Borrower's Eligible Inventory at its cost $
---------------------
BORROWING BASE:
3. 80% of Line 1 $
---------------------
4. The lesser of $500,000.00 or 40% of Line 2 $
---------------------
5. Line 3 plus Line 4 $
---------------------
6. Outstanding principal amount of Master Revolving
Line of Credit Note $
---------------------
7. Available Credit Amount [(the lesser of the
Commitment or Line 5) minus Line 6] $
---------------------
Borrower further represents and warrants to Bank that no Event of Default has
occurred and is continuing and no event that, with notice or lapse of time or
both, would be an Event of Default has occurred and is continuing.
COMPRESSOR DYNAMICS, INC.
By:
-----------------------------
Name:
---------------------------
Title:
--------------------------
COMMERCIAL SECURITY AGREEMENT
THAT, COMPRESSOR DYNAMICS, INC., A DELAWARE CORPORATION, 000 Xxxxx Xxxx,
Xxxxxxx, Xxxxxx Xxxxxx, Xxxxx 00000 (hereinafter referred to as "Debtor"), for
value received, the receipt and sufficiency of which is hereby acknowledged,
hereby grants to FIRST INTERSTATE BANK OF TEXAS, N.A., 0000 Xxxxxxxxx, Xxxxxxx,
Xxxxxx Xxxxxx, Xxxxx 00000 (hereinafter referred to as "Secured Party"), the
security interest (and the pledges and assignments as applicable) hereinafter
set forth and agrees with Secured Party as follows:
A. OBLIGATIONS SECURED. The security interest (and pledges and
assignments as applicable) granted hereby are to secure punctual payment and
performance of the following: (i) that certain Master Revolving Line of Credit
Note of even date herewith in the original principal sum of $1,000,000.00,
executed by Debtor and payable to the order of Secured Party, and any and all
extensions, renewals, modifications and rearrangements thereof, (ii) that
certain Term Note of even date herewith in the original principal sum of
$2,833,338.00, executed by Debtor and payable to the order of Secured Party, and
any and all extensions, renewals, modifications and rearrangements thereof,
(iii) all obligations of Debtor to Secured Party under the Letter Loan Agreement
between Debtor and Secured Party executed on even date herewith and all
extensions, renewals, modifications and rearrangements thereof; and (iv) any and
all other indebtedness, liabilities and obligations whatsoever and of whatever
nature of Debtor to Secured Party whether direct or indirect, absolute or
contingent, primary or secondary, due or to become due and whether now existing
or hereafter arising and howsoever evidenced or acquired, whether joint or
several, or joint and several (all of which are herein separately and
collectively referred to as the "Obligations"). Debtor acknowledges that the
security interest (and pledges and assignments as applicable) hereby granted
shall secure all future advances as well as any and all other indebtedness,
liabilities and obligations of Debtor to Secured Party whether now in existence
or hereafter arising.
B. USE OF COLLATERAL. Debtor represents, warrants and covenants that
the Collateral will be used by Debtor primarily for business purposes.
C. DESCRIPTION OF COLLATERAL. Debtor hereby grants to Secured Party
a security interest in (and hereby pledges and assigns as applicable) and agrees
that Secured Party shall continue to have a security interest in (and a pledge
and assignment of as applicable), the following property, to-wit:
ALL ACCOUNTS. A security interest in all accounts now owned or existing
as well as any and all that may hereafter arise or be acquired by
Debtor, and all the proceeds and products thereof, including without
limitation, all notes, drafts, acceptances, instruments and chattel
paper arising therefrom, and all returned or repossessed goods arising
from or relating to any such accounts, or other proceeds of any sale or
other disposition of inventory.
ALL INVENTORY. A security interest in all of Debtor's inventory,
including all goods, merchandise, raw materials, goods in process,
finished goods and other tangible personal property, wheresoever
located, now owned or hereafter acquired and held for sale or lease or
furnished or to be furnished under contracts for service or used or
consumed in Debtor's business and all additions and accessions thereto
and contracts with respect thereto and all documents of title evidencing
or representing any part thereof, and all products and proceeds thereof,
including, without limitation, all of such which are now or hereafter
located at the following locations: (i) 000 Xxxxx Xxxx, Xxxxxxx, Xxxxx
00000, (ii) 0000 Xxx Xxxxxxxx Xxxxxxx, Xxxxxxxx, Xxxxx 00000, and (iii)
Xxxxxxx 00 to Junction 00 Xxxxx Xxxxxxxx 0/0 xxxx Xxxx xxx xxxx Xxxxx,
Xxxxxxxx Xxxxxx, Oklahoma.
ALL FIXTURES. A security interest in all of Debtor's fixtures and
appurtenances thereto, and such other goods, chattels, fixtures,
equipment and personal property affixed or in any manner attached to the
real estate and/or building(s) or structure(s), including all additions
and accessions thereto and replacements thereof and articles in
substitution therefor, howsoever attached or affixed, located at the
following locations:
See EXHIBIT "A" attached hereto and made a part hereof for
all purposes.
ALL EQUIPMENT. A security interest in all equipment of every nature and
description whatsoever now owned or hereafter acquired by Debtor
including all appurtenances and additions thereto and substitutions
therefor, wheresoever located, including all tools, parts and
accessories used in connection therewith.
GENERAL INTANGIBLES. A security interest in all general intangibles and
other personal property now owned or hereafter acquired by Debtor other
than goods, accounts, chattel paper, documents and instruments.
CHATTEL PAPER. A security interest in all of Debtor's interest under
chattel paper, lease agreements and other instruments or documents,
whether now existing or owned by Debtor or hereafter arising or acquired
by Debtor, evidencing both a debt and security interest in or lease of
specific goods.
INSTRUMENTS. A pledge and assignment of and security interest in all of
Debtor's now owned or existing as well as hereafter acquired or arising
instruments and documents.
The term "Collateral" as used in this Agreement shall mean and include,
and the security interest (and pledge and assignment as applicable) shall cover,
all of the foregoing property, as well as any accessions, additions and
attachments thereto and the proceeds and products thereof, including without
limitation, all cash, general intangibles, accounts, inventory, equipment,
fixtures, notes, drafts, acceptances, securities, instruments, chattel paper,
insurance proceeds payable because of loss or damage, or other property,
benefits or rights arising therefrom, and in and to all returned or repossessed
goods arising from or relating to any of the property described herein or other
proceeds of any sale or other disposition of such property.
As additional security for the punctual payment and performance of the
Obligations, and as part of the Collateral, Debtor hereby grants to Secured
Party a contractual right of set-off to and a security interest in, and a pledge
and assignment of, any and all money, property, deposit accounts, accounts,
securities, documents, chattel paper, claims, demands, instruments, items or
deposits of the Debtor, and each of them, or to which any of them is a party,
now held or hereafter coming within Secured Party's custody or control,
including without limitation, all certificates of deposit and other depository
accounts, whether such have matured or the exercise of Secured Party's rights
results in loss of interest or principal or other penalty on such deposits, but
excluding deposits subject to tax or penalties if assigned. Without prior
notice to or demand upon the Debtor, Secured Party may exercise its rights
granted above at any time when a default has occurred. Secured Party's rights
and remedies under this paragraph shall be in addition to and cumulative of any
other rights or remedies at law and equity, including, without limitation, any
rights of set-off to which Secured Party may be entitled.
D. REPRESENTATIONS, WARRANTIES AND COVENANTS OF DEBTOR. Debtor
represents and warrants as follows:
1. OWNERSHIP; NO ENCUMBRANCES. Except for the security interests,
pledges, assignments, and rights of set-off granted hereby, the Debtor is, and
as to any property acquired after the date hereof which is included within the
Collateral, Debtor will be, the owner of all such Collateral free and clear from
all charges, liens, security interests, adverse claims and encumbrances of any
and every nature.
2. NO FINANCING STATEMENTS. There is no financing statement or
similar filing now on file in any public office covering any part of the
Collateral, excluding existing financing statements filed by Southwest Bank of
Texas, N.A., and Debtor will not execute and there will not be on file in any
public office any financing statement or similar filing except the financing
statements filed or to be filed in favor of Secured Party.
3. ACCURACY OF INFORMATION. All information furnished to Secured
Party concerning Debtor, the Collateral and the Obligations, or otherwise for
the purpose of obtaining or maintaining credit, is or will be at the time the
same is furnished, accurate and complete in all material respects.
4. AUTHORITY. Debtor has full right and authority to execute and
perform this Agreement and to create the security interests, pledges,
assignments, and rights of set-off created by this Agreement. The making and
performance by Debtor of this Agreement will not violate any articles of
incorporation, by-laws or similar document respecting Debtor, any provision of
law, any order of court or governmental agency, or any indenture or other
agreement to which Debtor is a party, or by which Debtor or any of Debtor's
property is bound, or be in conflict with, result in a breach of or constitute
(with due notice and/or lapse of time) a default under any such indenture or
other agreement, or result in the creation or imposition of any charge, lien,
security interest, claim or encumbrance of any and every nature whatsoever upon
the Collateral, except as contemplated by this Agreement.
5. ADDRESSES. The address of Debtor designated at the beginning
of this Agreement is Debtor's place of business if Debtor has only one place of
business; Debtor's chief executive office if Debtor has more than one place of
business; or Debtor's residence if Debtor has no place of business. Debtor
agrees not to change such address without advance written notice to Secured
Party.
E. GENERAL COVENANTS. Debtor covenants and agrees as follows:
1. OPERATION OF THE COLLATERAL. Debtor agrees to maintain and use
the Collateral solely in the conduct of its own business, in a careful and
proper manner, and in conformity with all applicable permits or licenses.
Debtor shall comply in all material respects with all applicable statutes, laws,
ordinances and regulations. Debtor shall not use the Collateral in any unlawful
manner or for any unlawful purposes, or in any manner or for any purpose that
would expose the Collateral to unusual risk, or to penalty, forfeiture or
capture, or that would render inoperative any insurance in connection with the
Collateral.
2. CONDITION. Debtor shall maintain, service and repair the
Collateral so as to keep it in good operating condition. Debtor shall replace
within a reasonable time all parts that may be worn out, lost, destroyed or
otherwise rendered unfit for use, with appropriate replacement parts. Debtor
shall obtain and maintain in good standing at all time all applicable permits,
licenses, registrations and certificates respecting the Collateral.
-2-
3. ASSESSMENTS. Debtor shall promptly pay when due all taxes,
assessments, license fees, registration fees, and governmental charges levied or
assessed against Debtor or with respect to the Collateral or any party thereof.
4. NO ENCUMBRANCES. Debtor agrees not to suffer or permit any
charge, lien, security interest, adverse claim or encumbrance of any and every
nature whatsoever against the Collateral or any part thereof, except those which
are in favor of Secured Party.
5. NO REMOVAL. Except as otherwise provided in this Agreement,
Debtor shall not remove the Collateral from the county or counties designated at
the beginning of this Agreement without Secured Party's prior written consent.
6. NO TRANSFER. Except as otherwise provided in this Agreement,
Debtor shall not, without the prior written consent of Secured Party, sell,
assign, transfer, lease, charter, encumber, hypothecate or dispose of the
Collateral, or any part thereof, or interest therein, or offer to do any of the
foregoing.
7. NOTICES AND REPORTS. Debtor shall promptly notify Secured
Party in writing of any change in the name, identity or structure of Debtor, any
charge, lien, security interest, claim or encumbrance asserted against the
Collateral, any litigation against Debtor or the Collateral, any theft, loss,
injury or similar incident involving the Collateral, and any other material
matter adversely affecting Debtor or the Collateral. Debtor shall furnish such
reports, information and data regarding Debtor's financial condition and
operations, the Collateral and such other matters as Secured Party may request
from time to time.
9. ADDITIONAL FILINGS. Debtor agrees to execute and deliver such
financing statement or statements, or amendments thereof or supplements thereto,
or other documents as Secured Party may from time to time require in order to
comply with the Texas Uniform Commercial Code (or other applicable state law of
the jurisdiction where any of the Collateral is located) and to preserve and
protect the Secured Party's rights to the Collateral.
10. PROTECTION OF COLLATERAL. Secured Party, at its option,
whether before or after default, but without any obligation whatsoever to do so,
may (a) discharge taxes, claims, charges, liens, security interests, assessments
or other encumbrances of any and every nature whatsoever at any time levied,
placed upon or asserted against the Collateral, (b) place and pay for insurance
on the Collateral, including insurance that only protects Secured Party's
interest, (c) pay for the repair, improvement, testing, maintenance and
preservation of the Collateral, (d) pay any filing, recording, registration,
licensing or certification fees or other fees and charges related to the
Collateral, or (e) take any other action to preserve and protect the Collateral
and Secured Party's rights and remedies under this Agreement as Secured Party
may deem necessary and appropriate. Debtor agrees that Secured Party shall have
no duty or obligation whatsoever to take any of the foregoing action. Debtor
agrees to promptly reimburse Secured Party upon demand for any payment made or
any expense incurred by the Secured Party pursuant to this authorization. These
payments and expenditures, together with interest thereon from date incurred
until paid by Debtor at the maximum contract rate allowed under applicable laws,
which Debtor agrees to pay, shall constitute additional Obligations and shall be
secured by and entitled to the benefits of this Agreement.
11. INSPECTION. Debtor shall at all reasonable times allow
Secured Party by or through any of its officers, agents, attorneys or
accountants, to examine the Collateral, wherever located, and to examine and
make extracts from Debtor's books and records.
12. FURTHER ASSURANCES. Debtor shall do, make, procure, execute
and deliver all such additional and further acts, things, deeds, interests and
assurances as Secured Party may require from time to time to protect, assure and
enforce Secured Party's rights and remedies.
13. INSURANCE. Debtor shall have and maintain insurance at all
times with respect to all tangible Collateral insuring against risks of fire
(including extended coverage), theft and other risks as Secured Party may
require, containing such terms, in such form and amounts and written by such
companies as may be reasonably satisfactory to Secured Party, all of such
insurance to contain loss payable clauses in favor of Secured Party as its
interest may appear. All policies of insurance shall provide for ten (10) days'
written minimum cancellation notice to Secured Party and at the request of
Secured Party shall be delivered to and held by it. Secured Party shall be
authorized to apply the proceeds from any insurance to the Obligations secured
hereby whether or not such Obligations are then due and payable. Debtor
specifically authorizes Secured Party to disclose information from the policies
of insurance to prospective insurers regarding the Collateral.
F. ADDITIONAL PROVISIONS REGARDING ACCOUNTS. The following
provisions shall apply to all accounts included within the Collateral:
-3-
1. DEFINITIONS. The term "account", as used in this Agreement,
shall have the same meaning as set forth in the Uniform Commercial Code of Texas
in effect as of the date of execution hereof, and as set forth in any amendment
to the Uniform Commercial Code of Texas to become effective after the date of
execution hereof, and also shall include all present and future notes,
instruments, documents, general intangibles, drafts, acceptances and chattel
paper of Debtor, and the proceeds thereof.
2. ADDITIONAL WARRANTIES. As of the time any account becomes
subject to the security interest (or pledge or assignment as applicable) granted
hereby, Debtor shall be deemed further to have warranted as to each and all of
such accounts as follows: (a) each account and all papers and documents relating
thereto are genuine and in all respects what they purport to be; (b) each
account is valid and subsisting and arises out of a bona fide sale of goods sold
and delivered to, or out of and for services actually rendered by the Debtor to
the account debtor named in the account; (c) the amount of the account
represented as owing is the correct amount actually and unconditionally owing
except for normal cash discounts; and (d) Debtor is the owner thereof free and
clear of any charges, liens, security interests, adverse claims and encumbrances
of any and every nature whatsoever, except those in favor of Secured Party.
3. COLLECTION OF ACCOUNTS. Secured Party shall have the right in
its own name or in the name of the Debtor, after default, to require Debtor
forthwith to transmit all proceeds of collection of accounts to Secured Party,
to notify any and all account debtors to make payments of the accounts directly
to Secured Party, to demand, collect, receive, receipt for, xxx for and give
acquittal for, any and all amounts due or to become due on the accounts and to
endorse the name of Debtor on all commercial paper given in payment or part
payment thereof, and in Secured Party's discretion to file any claim or take any
other action or proceeding that Secured Party may deem necessary or appropriate
to protect and preserve and realize upon the accounts and related Collateral.
Unless and until Secured Party elects to collect accounts, and the privilege of
Debtor to collect accounts is revoked by Secured Party in writing, Debtor shall
continue to collect accounts, account for same to Secured Party, and shall not
commingle the proceeds of collection of accounts with any funds of the Debtor.
In order to assure collection of accounts in which Secured Party has a security
interest (or pledge or assignment of as applicable) hereunder, Secured Party may
notify the post office authorities to change the address for delivery of mail
addressed to Debtor to such address as Secured Party may designate, and to open
and dispose of such mail and receive the collections of all accounts. Secured
Party shall have no duty or obligation whatsoever to collect any account, or to
take any other action to preserve the Collateral; however, should Secured Party
elect to collect any account or take possession of any Collateral, Debtor
releases Secured Party from any claim or claims for loss or damage arising from
any act or omission in connection therewith.
4. IDENTIFICATION AND ASSIGNMENT OF ACCOUNTS. Upon Secured
Party's request, after default, Debtor shall take such action and execute and
deliver such documents as Secured Party may reasonably request in order to
identify, confirm, xxxx, segregate and assign accounts and to evidence Secured
Party's interest in same. Without limitation of the foregoing, Debtor, upon
request, agrees to assign accounts to Secured Party, with respect to the
preceding month or other applicable period, identify and xxxx accounts as being
subject to the security interest (or pledge or assignment as applicable) granted
hereby, xxxx Debtor's books and records to reflect such assignments, and
forthwith to transmit to Secured Party in the form as received by Debtor any and
all proceeds of collection of such accounts.
5. ACCOUNT REPORTS. Debtor will deliver to Secured Party, prior
to the forty-fifth (45th) day of each month, or on such other frequency as
Secured Party may reasonably request, a written report in form and content
satisfactory to Secured Party, with respect to the preceding month or other
applicable period, showing a listing and aging of accounts and such other
information as Secured Party may request from time to time.
G. ADDITIONAL PROVISIONS REGARDING INVENTORY. The following
provisions shall apply to all inventory included within the Collateral:
1. INVENTORY REPORTS. Debtor will deliver to Secured Party,
within forty-five (45) days after the end of each calendar quarter, or on such
other frequency as Secured Party may reasonably request, a written report in
form and content satisfactory to Secured Party, with respect to the preceding
calendar quarter or other applicable period, showing Debtor's opening inventory,
inventory acquired, inventory sold, inventory returned, inventory used in
Debtor's business, closing inventory, any other inventory not within the
preceding categories, and such other information as Secured Party may reasonably
request from time to time. Debtor shall notify Secured Party of any material
matter adversely affecting the inventory, including, without limitation, any
event causing loss or depreciation in the value of the inventory and the amount
of such possible loss or depreciation.
2. LOCATION OF INVENTORY. Debtor will promptly notify Secured
Party in writing if it intends to commence business and/or place any of its
compressor units or other inventory in any state other than the following:
Texas, Louisiana, Oklahoma, Kansas, Wyoming, New Mexico, Colorado, Utah or
California.
3. USE OF INVENTORY. Unless and until the privilege of Debtor to
use inventory in the ordinary course of Debtor's business is revoked by Secured
Party due to an event of default Debtor may use the inventory in any manner not
inconsistent with this Agreement, may sell that part of the Collateral
consisting of inventory provided that all such sales are in the ordinary course
of business, and may use and consume any raw materials or supplies that are
necessary in order to carry on Debtor's business. A sale in the ordinary course
of business does not include a transfer in partial or total satisfaction of a
debt.
-4-
4. ACCOUNTS AS PROCEEDS. All accounts that are proceeds of the
inventory included within the Collateral shall be subject to all of the terms
and provisions hereof.
5. PROTECTION OF INVENTORY. Debtor shall take all action
necessary to protect and preserve the inventory.
H. EVENTS OF DEFAULT. Debtor shall be in default hereunder upon the
occurrence of any "Event of Default" under Section 6.01 of the Letter Loan
Agreement executed by Debtor and Secured Party on even date herewith ("Letter
Loan Agreement").
I. REMEDIES. Upon the occurrence of an "Event of Default" under
Section 6.01 of the Letter Loan Agreement, Secured Party, at its option, shall
be entitled to exercise any one or more of the following remedies (all of which
are cumulative):
1. DECLARE OBLIGATIONS DUE. Secured Party, at its option, may
declare the Obligations or any part thereof immediately due and payable, without
demand, notice of intention to accelerate, notice of acceleration, notice of
non-payment, presentment, protest, notice of dishonor, or any other notice
whatsoever, all of which are hereby waived by Debtor.
2. REMEDIES. Secured Party shall have all of the rights and
remedies provided for in this Agreement and in any other agreements executed by
Debtor, the rights and remedies of the Uniform Commercial Code of Texas, and any
and all of the rights and remedies at law and in equity, all of which shall be
deemed cumulative. Without limiting the foregoing, Debtor agrees that Secured
Party shall have the right to: (a) require Debtor to assemble the Collateral and
make it available to Secured Party at a place designated by Secured Party that
is reasonably convenient to both parties, which Debtor agrees to do; (b)
peaceably take possession of the Collateral and remove same, with or without
judicial process; (c) without removal, render equipment included within the
Collateral unusable, and dispose of the Collateral on the Debtor's premises; (d)
sell, lease or otherwise dispose of the Collateral, at one or more locations, by
public or private proceedings, for cash or credit, without assumption of credit
risk; (e) upon or after default, exercise rights of set-off against funds and
other property of Debtor within Secured Party's custody or control; and/or (f)
after default, collect and receipt for, compromise, and settle, and give
releases, discharges and acquittances with respect to, any and all amounts owed
by any person or entity with respect to the Collateral. Secured Party will send
Debtor reasonable notice of the time and place of any public sale or of the time
after which any private sale or other disposition will be made. Any requirement
of reasonable notice to Debtor shall be met if such notice is mailed, postage
prepaid, to Debtor at the address of Debtor designated at the beginning of this
Agreement, at least fifteen (15) days before the day of any public sale or at
least fifteen (15) days before the time after which any private sale or other
disposition will be made.
3. EXPENSES. Debtor shall be liable for and agrees to pay the
reasonable expenses incurred by Secured Party in enforcing its rights and
remedies, in retaking, holding, testing, repairing, improving, selling, leasing
or disposing of the Collateral, or like expenses, including, without limitation,
attorneys' fees and legal expenses incurred by Secured Party. These expenses,
together with interest thereon from date incurred until paid by Debtor at the
maximum contract rate allowed under applicable laws, which Debtor agrees to pay,
shall constitute additional Obligations and shall be secured by and entitled to
the benefits of this Agreement.
4. PROCEEDS; SURPLUS; DEFICIENCIES. Proceeds received by Secured
Party from disposition of the Collateral shall be applied toward Secured Party's
expenses and other Obligations in such order or manner as Secured Party may
elect. Debtor shall be entitled to any surplus if one results after lawful
application of the proceeds. Debtor shall remain liable for any deficiency.
5. REMEDIES CUMULATIVE. The rights and remedies of Secured Party
are cumulative and the exercise of any one or more of the rights or remedies
shall not be deemed an election of rights or remedies or a waiver of any other
right or remedy. Secured Party may remedy any default and may waive any default
without waiving the default remedied or without waiving any other prior or
subsequent default.
J. OTHER AGREEMENTS.
1. WAIVERS. Debtor waives demand, notice of intention to
accelerate, notice of acceleration, notice of non-payment, presentment, protest,
notice of dishonor and any other similar notice whatsoever.
2. SEVERABILITY. Any provision hereof found to be invalid by
courts having jurisdiction shall be invalid only with respect to such provision
(and then only to the extent necessary to avoid such invalidity). The offending
provision shall be modified to the maximum extent possible to confer upon
Secured Party the benefits intended thereby. Such provision as modified and the
remaining provisions hereof shall be construed and enforced to the same effect
as if such offending provision (or portion thereof) had not been contained
herein, to the maximum extent possible.
3. USE OF COPIES. Any carbon, photographic or other reproduction
of any financing statement signed by Debtor is sufficient as a financing
statement for all purposes, including without limitation, filing in any state as
may be permitted by the provisions of the Uniform Commercial Code of such state.
-5-
4. RELATIONSHIP TO OTHER AGREEMENTS. This Security Agreement and
the security interests (and pledges and assignments as applicable) herein
granted are in addition to (and not in substitution, novation or discharge of)
any and all prior or contemporaneous security agreements, security interests,
pledges, assignments, liens, rights, titles or other interests in favor of
Secured Party or assigned to Secured Party by others in connection with the
Obligations. All rights and remedies of Secured Party in all such agreements
are cumulative, but in the event of actual conflict in terms and conditions, the
terms and conditions of the latest security agreement shall govern and control.
5. NOTICES. Any notice or demand given by Secured Party to Debtor
in connection with this Agreement, the Collateral or the Obligations, shall be
deemed given and effective upon deposit in the United States mail, postage
prepaid, addressed to Debtor at the address of Debtor designated at the
beginning of this Agreement. Actual notice to Debtor shall always be effective
no matter how given or received.
6. HEADINGS AND GENDER. Paragraph headings in this Agreement are
for convenience only and shall be given no meaning or significance in
interpreting this Agreement. All words used herein shall be construed to be of
such gender or number as the circumstances require.
7. AMENDMENTS. This Agreement may be changed, amended, modified,
waived or discharged only by an instrument in writing signed by the party
against whom enforcement of the change, amendment, modification, waiver or
discharge is sought.
8. CONTINUING AGREEMENT. The security interest (and pledges and
assignments as applicable) hereby granted and all of the terms and provisions in
this Agreement shall be deemed a continuing agreement and shall continue in full
force and effect until all obligations are extinguished or this Agreement is
terminated in writing. Any such revocation or termination shall only be
effective if explicitly confirmed in a signed writing issued by Secured Party to
such effect and shall in no way impair or affect any transactions entered into
or rights created or Obligations incurred or arising prior to such revocation or
termination, as to which this Agreement shall be fully operative until same are
repaid and discharged in full. Unless otherwise required by applicable law,
Secured Party shall be under no obligation to issue a termination statement or
similar documents unless Debtor requests same in writing and, provided further,
that all Obligations have been repaid and discharged in full and there are no
commitments to make advances, incur any Obligations or otherwise give value.
9. BINDING EFFECT. The provisions of this Security Agreement
shall be binding upon the heirs, personal representatives, successors and
assigns of Debtor and the rights, powers and remedies of Secured Party hereunder
shall inure to the benefit of the successors and assigns of Secured Party.
10. GOVERNING LAW. This Security Agreement shall be governed by
the law of the State of Texas and applicable federal law.
11. AGREEMENT FOR BINDING ARBITRATION. The parties agree to be
bound by the terms and provisions of the current Arbitration Program of First
Interstate Bank of Texas, N.A. which is incorporated by reference herein and is
acknowledged as received by the parties, pursuant to which any and all disputes
shall be resolved by mandatory binding arbitration upon the request of any
party.
EXECUTED this 18 day of September, 1995.
DEBTOR:
COMPRESSOR DYNAMICS, INC., a
Delaware corporation
By: /s/ Xxxx Xxxx
------------------------
Xxxx Xxxx, President
-6-
EXHIBIT "A"
TRACT I:
Being a 3 acre tract of land 210' frontage by 630' deep, beginning just west of
the west boundary of a 10-1/2 acre tract of the original N.E. 12 acres of Block
6, Section 5 of the E.T. RR Co., Abst. 111, Eastland County, Texas; including a
20' x 40' building and a 40' x 40' building with office space and bath
facilities.
The record owner of Tract I is Southwest Coca-Cola Bottling Company, Inc.
TRACT II:
East 101.76 feet, TR 15, 1.9717 acres of Xxx 00, Xxxxxx Xxxxx X/X, Xxxxxxxxx
Survey, Abstract 160, Xxxxxx County, Texas; and 2.867 acres of land, more or
less, being the most westerly 196.24 feet of Xxx 00, Xxxxxx Xxxxxx Xxxxx
Xxxxxxxx, X.X. Xxxxxxxxx Xxxxxx, Xxxxxxxx 000, Xxxxxx Xxxxxx, Xxxxx, according
to the plat thereof recorded in Volume 0, Xxxx 00, Xxx Xxxxxxx, Xxxxxx Xxxxxx,
Xxxxx.
The record owner of Tract II is Xxxxxx Xxxxxx.
MASTER REVOLVING LINE OF CREDIT NOTE
PAYABLE TO
FIRST INTERSTATE BANK OF TEXAS, N.A.
September 18, 0000 Xxxxxxx, Xxxxx $1,000,000.00
For value received, the undersigned (hereinafter called "Maker")
promises to pay to the order of FIRST INTERSTATE BANK OF TEXAS, N.A.
(hereinafter called "Bank") at its offices at 0000 XXXXXXXXX, XXXXXXX, XXXXX
00000, in lawful money of the United States of America the sum of ONE MILLION
AND NO/100 DOLLARS ($1,000,000.00) together with interest thereon from the date
hereof until maturity at a varying rate per annum which is ONE-HALF PER CENT
(.50%) per annum (hereinafter called the "Margin Percentage") above the rate
quoted by FIRST INTERSTATE BANK OF TEXAS, N.A. from time to time as its Prime
Commercial Rate (but in no event to exceed the maximum rate of nonusurious
interest allowed from time to time by law as now in effect, or allowed by law as
may hereafter be in effect, hereinafter the "Highest Lawful Rate"), with
adjustments in such varying rate to be made on the same day as any change in
such Prime Commercial Rate. The term "Prime Commercial Rate" shall mean the
rate of interest established by Bank from time to time as a general reference
rate of interest, it being understood that many of the Bank's loans are priced
in relation to such rate but that it is not necessarily the lowest or best rate
charged to customers of the Bank.
Adjustments due to changes in the Highest Lawful Rate will be made on
the effective date of any change in the Highest Lawful Rate.
All past due principal and interest shall bear interest at the Highest
Lawful Rate from maturity until paid. Interest shall be computed on a per annum
basis of a year of 365 or 366 days, as the case may be, and for the actual
number of days (including the first but excluding the last day) elapsed.
At the option of the Bank and notwithstanding the foregoing provisions
concerning such varying rate, if at any time the sum of the Margin Percentage
plus such Prime Commercial Rate exceeds the Highest Lawful Rate, the rate of
interest to accrue on this Note shall be limited to the Highest Lawful Rate, but
if thereafter the sum of the Margin Percentage plus such Prime Commercial Rate
is less than the Highest Lawful Rate, the rate of interest to accrue on this
Note shall be the Highest Lawful Rate until the total amount of interest accrued
on this Note equals the amount of interest which would have accrued if a varying
rate per annum equal to the sum of the Margin Percentage plus such Prime
Commercial Rate had at all times been in effect.
Principal and accrued interest on this Note are due and payable as
follows:
One installment of interest only on October 6, 1995, and one final
balloon payment due December 1, 1995, of the entire unpaid principal
balance hereof, plus all unpaid accrued interest.
If any installment or payment of principal or interest of this Note is
not paid when due; or if Maker shall become insolvent (however such insolvency
may be evidenced); or if any proceeding, procedure or remedy supplementary to or
in enforcement of judgement shall be resorted to or commenced against Maker, or
with respect to any property of it; or if any governmental authority or any
court at the instance thereof shall take possession of any substantial part of
the property of or assume control over the affairs or operations of, or a
receiver shall be appointed for or take possession of the property of, or a writ
or order of attachment or garnishments shall be issued or made against any of
the property of Maker; or if any material indebtedness for which Maker is
primarily or secondarily liable shall not be
/s/ GF
----------
(INITIALS)
Page 1 of 4 Pages
paid when due or shall become due and payable by acceleration of maturity
thereof, or if any event or condition shall occur which shall permit the holder
of any such material indebtedness to declare it due and payable upon the lapse
of time, giving of notice or otherwise; or if Maker shall be dissolved, wound
up, liquidated or otherwise terminated, or a party to any merger or
consolidation without the written consent of Bank; or if Maker shall sell
substantially all or an integral portion of its assets without written consent
of Bank; or if Maker fails to furnish financial information reasonably requested
by Bank; or if Maker furnishes or has furnished any financial or other
information or statements which are misleading in any material respect; or if a
default occurs under any instrument now or hereafter executed in connection with
or as security for this Note; thereupon, at the option of the Bank, this Note
and any and all other indebtedness of Maker to Bank shall become and be due and
payable forthwith without demand, notice of default or of intent to accelerate
the maturity hereof, notice of nonpayment, notice of acceleration, presentment,
protest or notice of dishonor, all of which are hereby, to the extent allowed by
law, expressly waived by Maker and each other liable party.
The unpaid principal balance of this Note at any time shall be the total
amounts loaned or advanced hereunder by the holder hereof, less the amount of
payments or prepayments of principal made hereon by or for the account of Maker.
Maker may borrow, repay and reborrow, from time-to-time, prior to the maturity
hereof, up to the face amount hereof, or, up to the amount determined by any
formula set forth in any written agreement executed in connection herewith
between Maker and Bank, whichever is less. It is contemplated that by reason of
prepayments hereon there may be times when no indebtedness is owing hereunder,
but notwithstanding such occurrences, this Note shall remain valid and shall be
in full force and effect as to loans or advances made pursuant to and under the
terms of this Note subsequent to each such occurrence. All loans or advances
and all payments or prepayments made hereunder on account of principal or
interest may be endorsed (and shall so be endorsed prior to any transfer of this
Note) by the holder hereof on a schedule on the back hereof and/or on additional
schedule pages attached hereto from time-to-time by the holder hereof. In all
events, the business records of the Bank, whether computer records or otherwise,
shall be conclusive of the amount owed by Maker hereunder. In the event that
the unpaid principal amount hereof at any time, for any reason, exceeds the
maximum amount hereinabove specified, Maker covenants and agrees to pay the
excess principal amount forthwith upon demand; such excess principal amount
shall in all respects be deemed to be included among the loan or advances made
pursuant to the other terms of this Note and shall bear interest at the rates
hereinabove stated.
Advances hereunder will be made by the holder hereof pursuant to the
terms of the Letter Loan Agreement executed by Maker and Bank on even date
herewith, as amended from time to time. Any loan or advance shall be
conclusively presumed to have been made under the terms of this Note to or for
the benefit of Maker when made pursuant to the terms of such Letter Loan
Agreement, as amended from time to time.
If this Note is not paid at maturity whether by acceleration or
otherwise and is placed in the hands of an attorney for collection, or suit is
filed hereon, or proceedings are had in probate, bankruptcy, receivership,
reorganization, arrangement or other legal proceedings for collection hereof,
Maker agrees to pay Bank its collection costs, including reasonable attorney's
fees. Maker is and shall be directly and primarily, jointly and severally,
liable for the payment of all sums called for hereunder, and Maker hereby
consents to and agrees to remain liable hereon regardless of any renewals,
extensions for any period or rearrangements hereof, or partial prepayments
hereon, or any release or substitution or security herefor, in whole or in part,
with or without notice, from time to time, before or after maturity.
As security for the punctual payment and performance of the Note, and as
part of the security herefor, Maker hereby grants to Bank a security interest
in, and a pledge and assignment of, any and all money, property, deposit
accounts, accounts, securities, documents, chattel paper, claims, demands,
instruments, items or deposits of the Maker, and each of them, or to which any
of them is a party, now held or hereafter coming within Bank's custody or
control, including without limitation, all certificates of deposit and other
depository accounts,
/s/ GF
----------
(INITIALS)
Page 2 of 4 Pages
whether such have matured or the exercise of Bank's rights results in loss of
interest or principal or other penalty on such deposits, but excluding deposits
subject to tax penalties if assigned. Without prior notice to or demand upon
the Maker, Bank may exercise its rights granted above at any time when a default
has occurred. Bank's rights and remedies under this paragraph shall be in
addition to and cumulative of any other rights or remedies at law and equity,
including, without limitation, any rights of set-off to which Bank may be
entitled.
This Note is additionally secured by all assets of Maker except certain
vehicles that are collateral for a loan or loans at Southwest Bank of Texas,
N.A.
It is the intention of Maker and Bank to conform strictly to applicable
usury laws. Accordingly, if the transactions contemplated hereby would be
usurious under applicable law, then, in that event, notwithstanding anything to
the contrary in any agreement entered into in connection with or as security for
this Note, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law that is taken, reserved, contracted
for, charged or received under this Note or under any of the other aforesaid
agreements or otherwise in connection with this Note shall under no
circumstances exceed the maximum amount of interest allowed by applicable law,
and any excess shall be credited on this Note by the holder hereof (or, if this
Note shall have been paid in full, refunded to Maker); and (ii) in the event
that maturity of this Note is accelerated by reason of an election by the holder
hereof resulting from any default hereunder or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest may never include more than the maximum amount allowed by applicable
law, and excess interest, if any, provided for in this Note or otherwise shall
be canceled automatically as of the date of such acceleration or prepayment and,
if theretofore prepaid, shall be credited on this Note (or if this Note shall
have been paid in full, refunded to Maker).
Maker reserves the option of prepaying the principal of this Note, in
whole or in part, at any time after the date hereof without penalty. At the
option of Bank, it may demand (at any time at or after prepayment) all accrued
and unpaid interest with respect to the principal amount prepaid through the
date of prepayment. All payments made hereunder, whether designated as payments
of principal or interest, shall be applied to the principal or interest of this
Note or to expenses provided for herein, or any combination of the foregoing, as
directed by the holder of this Note at its option.
This Note shall be construed under and governed by the laws of the State
of Texas (including applicable federal law), but in any event Tex. Rev. Civ.
Stat. Xxx. art. 5069 ch. 15 (which regulates certain revolving credit loan
accounts and revolving triparty accounts) shall not apply to the loan evidenced
by this Note.
If this Note bears interest at a varying rate, unless changed in
accordance with law, the applicable method of calculating the usury ceiling rate
under Texas law shall be in the indicated (weekly) ceiling rate from time to
time in effect, as provided in Tex. Rev. Civ. Stat. Xxx. art. 5069-1.04, as
amended.
AGREEMENT FOR BINDING ARBITRATION. The parties agree to be bound by the
terms and provisions of the current Arbitration Program of First Interstate Bank
of Texas, N.A. which is incorporated by reference herein and is acknowledged as
received by the parties, pursuant to which any and all disputes shall be
resolved by mandatory binding arbitration upon the request of any party.
/s/ GF
----------
(INITIALS)
Page 3 of 4 Pages
This Note is subject to the terms and conditions of a Letter Loan
Agreement executed by Bank and Maker on even date herewith.
MAKER:
COMPRESSOR DYNAMICS, INC., a
Delaware corporation
By:/s/ Xxxx Xxxx
-------------------------
Xxxx Xxxx, President
Page 4 of 4 Pages
TERM NOTE
September 18, 0000 Xxxxxxx, Xxxxx $2,833,338.00
For value received, the undersigned (hereinafter called "Maker")
promises to pay to the order of FIRST INTERSTATE BANK OF TEXAS, N.A.
(hereinafter called "Bank") at its offices at 0000 XXXXXXXXX, XXXXXXX, XXXXX
00000, in lawful money of the United States of America the sum of TWO MILLION
EIGHT HUNDRED THIRTY-THREE THOUSAND THREE HUNDRED THIRTY-EIGHT AND NO/100
DOLLARS ($2,833,338.00) together with interest thereon from the date hereof
until maturity at the rate of EIGHT PER CENT (8.00%) per annum. As used in this
Note, the term "Highest Lawful Rate" shall mean the maximum rate of nonusurious
interest allowed by law as now in effect, or as allowed by law as may hereafter
be in effect.
All past due principal and interest shall bear interest at the Highest
Lawful Rate from maturity until paid. Interest shall be computed on a per annum
basis of a year of 365 or 366 days, as the case may be, and for the actual
number of days (including the first but excluding the last day) elapsed.
Principal and accrued interest on this Note are due and payable as
follows:
In quarterly principal installments of $166,666.00 each, plus
interest, the first such installment shall be due and payable on
the 6th day of October, 1995, and like installments shall be due
and payable on the same day of each third month thereafter until
October 6, 1999, when the entire balance of unpaid principal and
unpaid accrued interest shall be due and payable.
If any installment or payment of principal or interest of this Note is
not paid when due; or if Maker shall become insolvent (however such insolvency
may be evidenced); or if any proceeding, procedure or remedy supplementary to or
in enforcement of judgement shall be resorted to or commenced against Maker, or
with respect to any property of it; or if any governmental authority or any
court at the instance thereof shall take possession of any substantial part of
the property of or assume control over the affairs or operations of, or a
receiver shall be appointed for or take possession of the property of, or a writ
or order of attachment or garnishments shall be issued or made against any of
the property of Maker; or if any material indebtedness for which Maker is
primarily or secondarily liable shall not be paid when due or shall become due
and payable by acceleration of maturity thereof, or if any event or condition
shall occur which shall permit the holder of any such material indebtedness to
declare it due and payable upon the lapse of time, giving of notice or
otherwise; or if Maker shall be dissolved, wound up, liquidated or otherwise
terminated, or a party to any merger or consolidation without the written
consent of Bank; or if Maker shall sell substantially all or an integral portion
of its assets without written consent of Bank; or if Maker fails to furnish
financial information reasonably requested by Bank; or if Maker furnishes or has
furnished any financial or other information or statements which are misleading
in any material respect; or if a default occurs under any instrument now or
hereafter executed in connection with or as security for this Note; thereupon,
at the option of the Bank, this Note and any and all other indebtedness of Maker
to Bank shall become and be due and payable forthwith without demand, notice of
default or of intent to accelerate the maturity hereof, notice of nonpayment,
notice of acceleration, presentment, protest or notice of dishonor, all of which
are hereby, to the extent allowed by law, expressly waived by Maker and each
other liable party.
If this Note is not paid at maturity whether by acceleration or
otherwise and is placed in the hands of an attorney for collection, or suit is
filed hereon, or proceedings are had in probate, bankruptcy, receivership,
reorganization, arrangement or other legal proceedings for
/s/ GF
------------
(INITIALS)
Page 1 of 3 Pages
collection hereof, Maker agrees to pay Bank its collection costs, including
reasonable attorney's fees. Maker is and shall be directly and primarily,
jointly and severally, liable for the payment of all sums called for hereunder,
and Maker hereby consents to and agrees to remain liable hereon regardless of
any renewals, extensions for any period or rearrangements hereof, or partial
prepayments hereon, or any release or substitution or security herefor, in whole
or in part, with or without notice, from time to time, before or after maturity.
As security for the punctual payment and performance of the Note, and as
part of the security herefor, Maker hereby grants to Bank a security interest
in, and a pledge and assignment of, any and all money, property, deposit
accounts, accounts, securities, documents, chattel paper, claims, demands,
instruments, items or deposits of the Maker, and each of them, or to which any
of them is a party, now held or hereafter coming within Bank's custody or
control, including without limitation, all certificates of deposit and other
depository accounts, whether such have matured or the exercise of Bank's rights
results in loss of interest or principal or other penalty on such deposits, but
excluding deposits subject to tax penalties if assigned. Without prior notice
to or demand upon the Maker, Bank may exercise its rights granted above at any
time when a default has occurred. Bank's rights and remedies under this
paragraph shall be in addition to and cumulative of any other rights or remedies
at law and equity, including, without limitation, any rights of set-off to which
Bank may be entitled.
This Note is additionally secured by all assets of Maker except certain
vehicles that are collateral for a loan or loans at Southwest Bank of Texas,
N.A.
It is the intention of Maker and Bank to conform strictly to applicable
usury laws. Accordingly, if the transactions contemplated hereby would be
usurious under applicable law, then, in that event, notwithstanding anything to
the contrary in any agreement entered into in connection with or as security for
this Note, it is agreed as follows: (i) the aggregate of all consideration which
constitutes interest under applicable law that is taken, reserved, contracted
for, charged or received under this Note or under any of the other aforesaid
agreements or otherwise in connection with this Note shall under no
circumstances exceed the maximum amount of interest allowed by applicable law,
and any excess shall be credited on this Note by the holder hereof (or, if this
Note shall have been paid in full, refunded to Maker); and (ii) in the event
that maturity of this Note is accelerated by reason of an election by the holder
hereof resulting from any default hereunder or otherwise, or in the event of any
required or permitted prepayment, then such consideration that constitutes
interest may never include more than the maximum amount allowed by applicable
law, and excess interest, if any, provided for in this Note or otherwise shall
be canceled automatically as of the date of such acceleration or prepayment and,
if theretofore prepaid, shall be credited on this Note (or if this Note shall
have been paid in full, refunded to Maker).
Maker reserves the option of prepaying the principal of this Note, in
whole or in part, at any time after the date hereof without penalty. At the
option of Bank, it may demand (at any time at or after prepayment) all accrued
and unpaid interest with respect to the principal amount prepaid through the
date of prepayment. All payments made hereunder, whether designated as payments
of principal or interest, shall be applied to the principal or interest of this
Note or to expenses provided for herein, or any combination of the foregoing, as
directed by the holder of this Note at its option.
This Note shall be construed under and governed by the laws of the State
of Texas (including applicable federal law), but in any event Tex. Rev. Civ.
Stat. Xxx. art. 5069 ch. 15 (which regulates certain revolving credit loan
accounts and revolving triparty accounts) shall not apply to the loan evidenced
by this Note.
AGREEMENT FOR BINDING ARBITRATION. The parties agree to be bound by the
terms and provisions of the current Arbitration Program of First Interstate Bank
of Texas, N.A. which is incorporated by reference herein and is acknowledged as
received by the parties, pursuant to which any and all disputes shall be
resolved by mandatory binding arbitration upon the request of any party.
/s/ GF
------------
(INITIALS)
Page 2 of 3 Pages
This Note is subject to the terms and conditions of a Letter Loan
Agreement executed by Bank and Maker on even date herewith.
MAKER:
COMPRESSOR DYNAMICS, INC., a Delaware
corporation
By: /s/ Xxxx Xxxx
---------------------------------
Xxxx Xxxx, President
Page 3 of 3 Pages
NOTICE AND ACKNOWLEDGMENT OF
NO ORAL AGREEMENTS
This agreement (this "Agreement") is made and entered into by and among the
undersigned effective the 18 day of September, 1995.
DEFINITIONS
As used in this Agreement, the following terms shall have the following
meanings:
PARTIES: The undersigned persons and entities.
NOTES: That certain Master Revolving Line of Credit Note dated
September 18, 1995, in the amount of $1,000,000.00, executed by
COMPRESSOR DYNAMICS, INC., A DELAWARE CORPORATION, and that certain
Term Note dated September 18, 1995, in the amount of $2,833,338.00,
executed by COMPRESSOR DYNAMICS, INC., A DELAWARE CORPORATION.
LOAN DOCUMENTS: This Agreement and any and all promissory notes
(including, without limitation, the Notes), loan agreements, security
agreements, assignments, pledges, owner's consent to pledges, letters
of credit, and all other loan documents executed in connection with or
otherwise relating to This Loan.
THIS LOAN: The transaction comprised of the extension of credit and
all related agreements and accommodations by or among any of the
Parties evidenced by or contained in any of the Loan Documents.
AGREEMENTS
In consideration of the extension of This Loan, and for other good and
valuable consideration, the receipt and sufficiency of which are acknowledged by
each of the Parties, the Parties (i) agree that each Party's execution of this
Agreement constitutes acknowledgment that such Party has read and understands
this Agreement, and that it is intended to be a part of and is incorporated by
reference into each of the Loan Documents; (ii) acknowledge receipt of the
following Notice; and (iii) to the extent allowed by law, agree to be bound by
the terms of this Agreement and the following Notice:
NOTICE: THIS DOCUMENT AND ALL OTHER DOCUMENTS RELATING TO THIS LOAN
CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH 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 RELATING TO
THIS LOAN.
AGREEMENT FOR BINDING ARBITRATION. The undersigned Parties, along with any
other parties to any Loan Document incorporating the terms and provisions of the
current
Arbitration Program of First Interstate Bank of Texas, N.A., agree to be bound
by the terms and provisions of said Arbitration Program, pursuant to which any
and all disputes shall be resolved by mandatory binding arbitration upon the
request of any party. The terms and provisions of Lender's current Arbitration
Program are incorporated by reference herein. The Parties each hereby
acknowledge receipt of a copy of said Arbitration Program.
EXECUTED as of the date first above stated.
BANK:
FIRST INTERSTATE BANK OF TEXAS, N.A.
By:
----------------------------------
Xxxxx Xxxx, Banking Officer
BORROWER:
COMPRESSOR DYNAMICS, INC., a Delaware
corporation
By: /s/ Xxxx Xxxx
----------------------------------
Xxxx Xxxx, President
THE STATE OF TEXAS )
)
COUNTY OF XXXXXX )
This instrument was acknowledged before me on the ______ day of September,
1995, by Xxxxx Xxxx, Banking Officer of FIRST INTERSTATE BANK OF TEXAS, N.A., on
behalf of said bank.
-------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
-------------------------------------
Printed Name of Notary
My Commission Expires:
---------------
- 2 -
THE STATE OF TEXAS )
)
COUNTY OF XXXXXX )
This instrument was acknowledged before me on the 18th day of September,
1995, by Xxxx Xxxx, President of COMPRESSOR DYNAMICS, INC., a Delaware
corporation, on behalf of said corporation.
[SEAL] /s/Xxxxx X. Xxxxxx
-------------------------------------
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
/s/Xxxxx X. Xxxxxx
-------------------------------------
Printed Name of Notary
My Commission Expires: 11-29-98
---------------
- 3 -
[logo] ARBITRATION PROGRAM
(A) BINDING ARBITRATION. Upon the demand of any party, whether
made before or after the institution of any judicial proceeding, any Dispute (as
defined below) shall be resolved by binding arbitration in accordance with the
terms of this Arbitration Program. A "Dispute" shall include any action,
dispute, claim, or controversy of any kind, whether in contract or in tort,
statutory or common law, legal or equitable, or otherwise, now existing or
hereafter arising between the parties in any way arising out of, pertaining to
or in connection with (1) any agreement, document or instrument to which this
Arbitration Program is attached or in which it is referred to or any related
agreements, documents, or instruments (the "Documents"),(2) all past, present,
or future loans, notes, instruments, drafts, credits, accounts, deposit
accounts, safe deposit boxes, safekeeping agreements, guarantees, letters of
credit, goods or services, or other transactions, contracts or agreements of any
kind whatsoever,(3) any past, present or future incidents, omissions, acts,
errors, practices, or occurrences causing injury to either party whereby the
other party or its agents, employees or representatives may be liable, in whole
or in part, or (4) any other aspect of the past, present, or future
relationships of the parties including any agency, independent contractor or
employment relationship but excluding claims for workers' compensation and
unemployment benefits ("Relationship"). Any party to this Arbitration Program
may by summary proceedings bring any action in court to compel arbitration of
any Dispute. Any party who fails or refuses to submit to binding arbitration
following a lawful demand by the opposing party shall bear all costs and
expenses incurred by the opposing party in compelling arbitration of any
Dispute. The parties agree that by engaging in activities with or involving each
other as described above, they are participating in transactions involving
interstate commerce. THE PARTIES UNDERSTAND THAT PURSUANT TO THIS ARBITRATION
PROGRAM, DISPUTES SUBMITTED TO ARBITRATION WILL NOT BE DECIDED THROUGH
LITIGATION IN FEDERAL OR STATE COURTS BEFORE A JUDGE OR JURY.
(b) GOVERNING RULES. All Disputes between the parties submitted to
arbitration shall be resolved by binding arbitration administered by the
American Arbitration Association (the "AAA") in accordance with the Commercial
Arbitration Rules of the AAA, the Federal Arbitration Act (Title 9 of the United
States Code) and to the extent the foregoing are inapplicable, unenforceable or
invalid, the laws of the State of Texas. In the event of any inconsistency
between this Arbitration Program and such rules and statutes, this Arbitration
Program shall control. Judgment upon any award rendered hereunder may be entered
in any court having jurisdiction; provided, however, that nothing contained
herein shall be deemed to be a waiver by any party that is a bank of the
protections afforded to it under 12 U.S.C. Section 91 or Texas Banking Code art.
342-609.
(c) NO WAIVER; PRESERVATION OF REMEDIES: MULTIPLE PARTIES. No
provision of, nor the exercise of any rights under, this Arbitration Program
shall limit the right of any party, during any Dispute, to seek, use, and employ
ancillary or preliminary remedies, judicial or otherwise, for the purposes of
realizing upon, preserving, protecting, foreclosing or proceeding under forcible
entry and detainer for possession of any real or personal property, and any such
action shall not be deemed an election of remedies. Such rights shall include,
without limitation, rights and remedies relating to (1) foreclosing against any
real or personal property collateral or other security, (2) exercising self-help
remedies including setoff rights or (3) obtaining provisional or ancillary
remedies such as injunctive relief, sequestration, attachment, garnishment, or
the appointment of a receiver from a court having jurisdiction. Such rights can
be exercised at any time except to the extent such action is contrary to a final
award or decision in any arbitration proceeding. The institution and maintenance
of an action for judicial relief or pursuit of provisional or ancillary remedies
or exercise of self-help remedies shall not constitute a waiver of the right of
any party, including the plaintiff, to submit the Dispute to arbitration, nor
render inapplicable the compulsory arbitration provisions hereof. In Disputes
involving indebtedness or other monetary obligations, each party agrees that the
other party may proceed against all liable persons, jointly or severally, or
against one or more of them, less than all, without impairing rights against
other liable persons. Nor shall a party be required to join the principal
obligor or any other liable persons, such as sureties or guarantors, in any
proceeding against a particular person. A party may release or settle with one
or more liable persons without releasing or impairing rights to proceed against
any persons not so related.
1
CERTIFICATE OF SECRETARY
The undersigned, Secretary of COMPRESSOR DYNAMICS, INC., A DELAWARE
CORPORATION (the "Company"), does hereby certify to FIRST INTERSTATE BANK OF
TEXAS, N.A. (the "Lender"), as follows:
1. Attached hereto as EXHIBIT "A" is a true and correct copy of the
resolutions duly adopted by the Board of Directors of the Company, and such
resolutions have not been altered, amended, rescinded or repealed and are now in
full force and effect.
2. The person who, as officer of the Company, signed the Master Revolving
Line of Credit Note, Term Note, Commercial Security Agreement, Financing
Statements, Notice and Acknowledgment of No Oral Agreements, Letter Loan
Agreement and other documents which are referred to in such resolutions (the
"Closing Documents"), was at the time of such signing and delivery, and is now
duly elected, qualified and acting as such officer, and the signatures appearing
on the Closing Documents are genuine signatures of such officer.
3. The Closing Documents actually executed by the Company and delivered
to the Lender are in substantially the form of the documents submitted to and
approved by the Board of Directors of the Company pursuant to such resolutions.
4. I have reviewed the Articles of Incorporation and By-Laws of the
Company and hereby expressly represent unto the Lender that such Articles of
Incorporation and By-Laws contain no provisions which prohibit the transactions
with the Lender as evidenced by the Closing Documents.
5. The Company is duly organized and existing under the laws of the State
of Delaware, all franchise and other taxes required to maintain the corporate
existence have been paid when due and no such taxes are delinquent; no
proceedings are pending for the forfeiture of its Certificate of Incorporation
or for its dissolution, voluntary or involuntary; it is fully qualified and in
good standing to do business in all jurisdictions in which the nature of its
business requires to be qualified; there are no provisions in the Articles of
Incorporation or By-Laws of the Company limiting the power of the Board of
Directors of the Company to pass such resolutions.
6. The following person is as of the date hereof a duly elected,
qualified and acting officer of the Company holding the office set forth below,
and the signature appearing next to his name is a genuine signature:
NAME SIGNATURE OFFICE
Xxxx Xxxx /s/ Xxxx Xxxx President
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Xxxxx Xxxxxxx /s/ Xxxxx Xxxxxxx Secretary
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IN WITNESS WHEREOF, I have hereunto signed my name this 19 day of
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September, 1995.
/s/ Xxxxx Xxxxxxx
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Xxxxx Xxxxxxx, Secretary
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EXHIBIT "A"
RESOLVED, that the Board of Directors of COMPRESSOR DYNAMICS, INC., A
DELAWARE CORPORATION (the "Company") do hereby authorize XXXX XXXX,
President, on behalf of the Company to negotiate a revolving loan of
$1,000,000.00 and a term loan of $2,833,338.00 (the "Loans") from
FIRST INTERSTATE BANK OF TEXAS, N.A. (the "Lender") to be made to the
Company and to execute and deliver for and on behalf of the Company
the Master Revolving Line of Credit Note and Term Note required in
connection with such Loans; and further
RESOLVED, that XXXX XXXX and each officer of the Company are hereby
authorized to execute and deliver on behalf of the Company (i) the
Master Revolving Line of Credit Note payable to the order of the
Lender, in substantially the form presented to this meeting, with such
changes therein as a person executing the same shall approve, such
approval to be conclusively evidenced by his execution thereof;
(ii)the Term Note payable to the order of the Lender, in substantially
the form presented to this meeting, with such changes therein as a
person executing the same shall approve, such approval to be
conclusively evidenced by his execution thereof; (iii) the Commercial
Security Agreement in substantially the form presented to this
meeting, with such changes therein as the person executing same shall
approve, such approval to be conclusively evidenced by his execution
thereof; (iv)the Letter Loan Agreement in substantially the form
presented to this meeting, with such changes therein as the person
executing the same shall approve and such approval to be conclusively
evidenced by his execution thereof; (v) the Financing Statements in
substantially the forms presented to this meeting, with such changes
therein as the person executing same shall approve, such approval to
be conclusively evidenced by his execution thereof; (vi)the Notice and
Acknowledgment of No Oral Agreements in substantially the form
presented to this meeting, with such changes therein as the person
executing same shall approve, such approval to be conclusively
evidenced by his execution thereof; and (vii) any and all
documentation necessary to complete the contemplated transaction as
may be reasonably requested from time to time by the Lender, all such
documents hereinafter collectively referred to as the "Closing
Documents"; and further
RESOLVED, that XXXX XXXX and each officer of the Company are hereby
authorized to execute and deliver on behalf of the Company and in such
form as the Lender may require, any and all other agreements,
instruments and documents which may be requested or required by the
Lender and to take any and all other action relating to or in
connection with the Closing Documents, and any renewals, extensions
and modifications thereof; and further
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RESOLVED, that the signature of XXXX XXXX or any officer of the
Company on any agreement, instrument or document is sufficient to bind
the Company, no further signature shall be required; and further
RESOLVED, that the Lender may rely on these resolutions and these
resolutions shall remain in full force and effect until such time as
notice to the contrary is duly delivered to the Lender and receipted
for in writing by a Vice President or the President of the Lender
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