1
EXHIBIT 10
LOAN AGREEMENT AMONG SOUTHERN FLOW COMPANIES, INC.,
XXXXXX GAS TRANSMISSION, INC., XXXXXX NATURAL GAS
SERVICES, INC. AND COMMERCIAL NATIONAL BANK IN SHREVEPORT
DATED AS OF APRIL 18, 1997, AS AMENDED MAY 14, 1997.
2
********************************************************************************
LOAN AGREEMENT
among
SOUTHERN FLOW COMPANIES, INC.,
XXXXXX GAS TRANSMISSION, INC.,
XXXXXX NATURAL GAS SERVICES, INC.
and
COMMERCIAL NATIONAL BANK IN SHREVEPORT
Dated as of April 18, 1997
******************************************************************************
3
TABLE OF CONTENTS
Page
----
ARTICLE I - Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
Section 1.2. Other Definitional Provisions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
ARTICLE II - Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.1. Commitment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.2. The Note . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.3. Repayment of Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.4. Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 9
Section 2.5. Borrowing Procedure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.6. Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.7. Operating Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 10
Section 2.8. Mandatory Prepayments or Addition of Collateral . . . . . . . . . . . . . . . . . . . . . 10
Section 2.9. Required Date and Amount to Mandatory Prepayment . . . . . . . . . . . . . . . . . . . . . 10
Section 2.10. Borrowers' Option to Increase Collateral in Lieu of Prepayment . . . . . . . . . . . . . . 11
ARTICLE III - Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.1. Method of Payment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.2. Prepayment . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.3. Computation of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
Section 3.4. Capital Adequacy . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
ARTICLE IV - Security . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.1. Collateral . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
Section 4.2. Setoff . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE V - Conditions Precedent . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Section 5.1. Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
ARTICLE VI - Representations and Warranties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.1. Corporate Existence . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.2. Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
Section 6.3. Corporate Action; No Breach . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.4. Operation of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.5. Litigation and Judgments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.6. Rights in Properties; Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.7. Enforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.8. Approvals . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Section 6.9. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.10. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
-i-
4
TABLE OF CONTENTS
Page
----
Section 6.11. Use of Proceeds; Margin Securities . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.12. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.13. Disclosure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Section 6.14. Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.15. Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.16. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.17. Inventory . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.18. Investment Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.19. Public Utility Holding Company Act . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
Section 6.20. Environmental Matters . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE VII - Positive Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Section 7.1. Reporting Requirements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
Section 7.2. Maintenance of Existence; Conduct of Business . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.3. Maintenance of Properties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.4. Taxes and Claims . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.5. Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.6. Inspection Rights . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.7. Keeping Books and Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
Section 7.8. Compliance with Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.9. Compliance with Agreements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.10. Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.11. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.12. Operating Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 7.13. Intercompany Payables . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
ARTICLE VIII - Negative Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.1. Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
Section 8.2. Limitation on Liens . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.3. Mergers, Etc. . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.4. Restricted Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
Section 8.5. Loans and Investments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.6. Limitation on Issuance of Capital Stock . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.7. Transactions With Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.8. Disposition of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.9. Sale and Leaseback . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.10. Prepayment of Debt . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
Section 8.11. Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.12. Environmental Protection . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.13. Accounting . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 8.14. Bank Accounts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
-ii-
5
TABLE OF CONTENTS
Page
----
ARTICLE IX - Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.1. Consolidated Tangible Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
Section 9.2. Debt Service Coverage Ratio . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
ARTICLE X - Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.1. Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Section 10.2. Remedies Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 10.3. Performance by the Lender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
ARTICLE XI - Miscellaneous . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.1. Expenses . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
Section 11.2. INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 11.3. LIMITATION OF LIABILITY . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
Section 11.4. No Duty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.5. Lender Not Fiduciary . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.6. Equitable Relief . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.7. No Waiver; Cumulative Remedies . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.8. Successors and Assigns . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.9. Survival . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.10. ENTIRE AGREEMENT; AMENDMENT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
Section 11.11. Maximum Interest Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.12. Notices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.13. Governing Law; Venue; Service of Process . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 11.14. Counterparts . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11.15. Severability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11.16. Headings . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11.17. Participations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11.18. Construction . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11.19. Independence of Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
Section 11.20. WAIVER OF JURY TRIAL . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
-iii-
6
LOAN AGREEMENT
THIS LOAN AGREEMENT, dated as of April 18, 1997, is among SOUTHERN
FLOW COMPANIES, INC., a Delaware corporation, XXXXXX GAS TRANSMISSION, INC., a
Colorado corporation (individually, a "Borrower" and collectively, the
"Borrowers"), and for the purposes of Section 9.1, XXXXXX NATURAL GAS SERVICES,
INC., a Delaware corporation ("Guarantor"), and COMMERCIAL NATIONAL BANK IN
SHREVEPORT, a national banking association (the "Lender").
R E C I T A L S:
The Borrowers have requested the Lender to make a term loan to the
Borrowers in an aggregate principal amount of Four Hundred Thousand and No/100
Dollars ($400,000.00). The Lender is willing to make such loan to the Borrowers
upon the terms and conditions hereinafter set forth.
NOW THEREFORE, in consideration of the premises and the mutual
covenants herein contained, the parties hereto agree as follows:
ARTICLE I
Definitions
A. Definitions. As used in this Agreement, the following terms
have the following meanings:
"Advance" means an advance of funds by the Lender to the
Borrowers pursuant to Article II.
"Advance Request Form" means a certificate, in substantially
the form of Exhibit "B" hereto, properly completed and signed by the
Borrowers requesting an Advance.
"Affiliate" means, as to any Person, any other Person (a) that
directly or indirectly, through one or more intermediaries, controls
or is controlled by, or is under common control with, such Person; (b)
that directly or indirectly beneficially owns or holds five percent
(5%) or more of any class of voting stock of such Person; or (c) five
percent (5%) or more of the voting stock of which is directly or
indirectly beneficially owned or held by the Person in question. The
term "control" means the possession, directly or indirectly, of the
power to direct or cause direction of the management and policies of a
Person, whether through the ownership of voting securities, by
contract, or otherwise; provided, however, in no event shall the
Lender be deemed an Affiliate of any Borrower or any of their
Subsidiaries.
-1-
7
"Base Rate" means, at any time, the rate of interest per annum
equal to the "Prime Rate" published in the "Money Rates" section of
the Wall Street Journal, as such "Prime Rate" may change from time to
time and which rate may not be the lowest rate of interest charged by
the Lender to its borrowers. Each change in any interest rate provided
for herein based upon the Base Rate resulting from a change in the
Base Rate shall take effect without notice to the Borrower at the time
of such change in the Base Rate.
"Borrowing Base" means at any particular time, an amount equal
to eighty percent (80%) of Eligible Accounts.
"Business Day" means any day on which commercial banks are not
authorized or required to close in Shreveport, Louisiana.
"Capital Lease Obligations" means, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease
of (or other agreement conveying the right to use) real and/or
personal property, which obligations are required to be classified and
accounted for as a capital lease on a balance sheet of such Person
under GAAP. For purposes of this Agreement, the amount of such Capital
Lease Obligations shall be the capitalized amount thereof, determined
in accordance with GAAP.
"Code" means the Internal Revenue Code of 1986, as amended,
and the regulations promulgated and rulings issued thereunder.
"Collateral" has the meaning specified in Section 4.1.
"Commitment" means the obligation of the Lender to make an
Advance pursuant to Section 2.1 in an aggregate principal amount up to
but not exceeding Four Hundred Thousand and No/100 Dollars
($400,000.00), as the same may be terminated pursuant to Section 10.2.
"Consolidated Tangible Net Worth" means, at any particular
time, all amounts which, in conformity with GAAP, would be included as
stockholders' equity on a consolidated balance sheet of the Guarantor
and its Subsidiaries; provided, however, there shall be excluded
therefrom: (a) any amount at which shares of capital stock of the
Guarantor appear as an asset on Guarantor's balance sheet, (b)
goodwill, including any amounts, however designated, that represent
the excess of the purchase price paid for assets or stock over the
value assigned thereto, (c) patents, trademarks, trade names, and
copyrights, (d) loans and advances to any stockholder, director,
officer, or employee of the Guarantor or any Affiliate of the
Guarantor, and (e) all other assets which are properly classified as
intangible assets.
-2-
8
"Debt" means as to any Person at any time (without
duplication): (a) all obligations of such Person for borrowed money,
(b) all obligations of such Person evidenced by bonds, notes,
debentures, or other similar instruments, (c) all obligations of such
Person to pay the deferred purchase price of property or services,
except trade accounts payable of such Person arising in the ordinary
course of business that are not past due by more than ninety (90)
days, (d) all Capital Lease Obligations of such Person, (e) all Debt
or other obligations of others Guaranteed by such Person, (f) all
obligations secured by a Lien existing on property owned by such
Person, whether or not the obligations secured thereby have been
assumed by such Person or are non-recourse to the credit of such
Person, (g) all reimbursement obligations of such Person (whether
contingent or otherwise) in respect of letters of credit, bankers'
acceptances, surety or other bonds and similar instruments, and (h)
all liabilities of such Person in respect of unfunded vested benefits
under any Plan.
"Debt Service Coverage Ratio" means a ratio calculated for any
given time period equal to (a) the earnings of Southern Flow
calculated before deductions for depreciation, interest, taxes and
amortization of Southern Flow, each as determined in accordance with
GAAP, divided by (b) the current maturities of all long-term Debt of
Southern Flow (excluding Subordinated Debt but including the Term
Loan), each as determined in accordance with GAAP.
"Deed of Trust" means the Deed of Trust of Southern Flow in
favor of the Lender, in substantially the form of Exhibit "C" hereto,
as the same may be amended, supplemented, or modified from time to
time.
"Default" means an Event of Default or the occurrence of an
event or condition which with notice or lapse of time or both would
become an Event of Default.
"Default Rate" means the lesser of eighteen percent (18%) or
the Maximum Rate.
"Dollars" and "$" mean lawful money of the United States of
America.
"Eligible Accounts" means, at any time, all accounts
receivable of the Borrowers created in the ordinary course of business
that are acceptable to the Lender in its sole discretion and satisfy
the following conditions:
(a) The account complies with all applicable
laws, rules, and regulations, including, without limitation,
usury laws, the Federal Truth in Lending Act, and Regulation Z
of the Board of Governors of the Federal Reserve System;
(b) The account has not been outstanding for more
than sixty (60) days past the original date of invoice;
-3-
9
(c) The account was created in connection with
(i) the sale of goods by the Borrowers in the ordinary course
of business and such sale has been consummated and such goods
have been shipped and delivered and received by the account
debtor, or (ii) the performance of services by a Borrower in
the ordinary course of business and such services have been
completed and accepted by the account debtor;
(d) The account represents a complete bona fide
transaction which requires no further act on the part of
either Borrower to make such account receivable payable by the
account debtor;
(e) The account does not arise from the sale of
any good that is on a xxxx-and-hold, guaranteed sale,
sale-or-return, sale on approval, consignment, or any other
repurchase or return basis;
(f) The Borrowers have good and indefeasible
title to the account and the account is not subject to any
Lien except Liens in favor of the Lender;
(g) The account does not arise out of a contract
with or order from an account debtor that, by its terms,
prohibits or makes void or unenforceable the grant of a
security interest by the Borrowers to the Lender in and to
such account;
(h) The account is not subject to any setoff,
counterclaim, defense, dispute, recoupment, or adjustment
other than normal discounts for prompt payment;
(i) The account debtor is not insolvent or the
subject of any bankruptcy or insolvency proceeding and has not
made an assignment for the benefit of creditors, suspended
normal business operations, dissolved, liquidated, terminated
its existence, ceased to pay its debts as they become due, or
suffered a receiver or trustee to be appointed for any of its
assets or affairs;
(j) The account is not evidenced by chattel paper
or an instrument;
(k) No default exists under the account by any
party thereto;
(l) The account debtor has not returned or
refused to retain, or otherwise notified the Borrowers of any
dispute concerning, or claimed nonconformity of, any of the
goods from the sale of which the account arose;
(m) The account is not owed by an Affiliate of
the Borrowers;
(n) The account is payable in Dollars by the
account debtor;
-4-
10
(o) The account shall be ineligible if the
account debtor is domiciled in any country other than the
United States of America;
(p) The account shall be ineligible if more than
ten percent (10%) of the aggregate balances then outstanding
on accounts owed by such account debtor and its Affiliates to
the Borrowers are more than sixty (60) days past due from the
dates of their original invoices; and
(q) The account shall be ineligible if the
account debtor is the United States of America or any
department, agency, or instrumentality thereof, and the
Federal Assignment of Claims Act of 1940, as amended, shall
not have been complied with.
"Environmental Laws" means any and all federal, state, and
local laws, regulations, and requirements pertaining to health,
safety, or the environment, including, without limitation, the
Comprehensive Environmental Response, Compensation and Liability Act
of 1980, 42 U.S.C. Section 9601 et seq., the Resource Conservation and
Recovery Act of 1976, 42 U.S.C. Section 6901 et seq., the Occupational
Safety and Health Act, 29 U.S.C. Section 651 et seq., the Clean Air
Act, 42 U.S.C. Section 7401 et seq., the Clean Water Act, 33 U.S.C.
Section 1251 et seq., and the Toxic Substances Control Act, 15 U.S.C.
Section 2601 et seq., as such laws, regulations, and requirements may
be amended or supplemented from time to time.
"Environmental Liabilities" means, as to any Person, all
liabilities, obligations, responsibilities, Remedial Actions, losses,
damages, punitive damages, consequential damages, treble damages,
costs, and expenses (including, without limitation, all reasonable
fees, disbursements and expenses of counsel, expert and consulting
fees and costs of investigation and feasibility studies), fines,
penalties, sanctions, and interest incurred as a result of any claim
or demand, by any Person, whether based in contract, tort, implied or
express warranty, strict liability, criminal or civil statute,
including any Environmental Law, permit, order or agreement with any
Governmental Authority or other Person, arising from environmental,
health or safety conditions or the Release or threatened Release of a
Hazardous Material into the environment, resulting from the past,
present, or future operations of such Person or its Affiliates.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereunder.
"ERISA Affiliate" means any corporation or trade or business
which is a member of the same controlled group of corporations (within
the meaning of Section 414(b) of the Code) as any of the Borrowers or
is under common control (within the meaning of Section 414(c) of the
Code) with any of the Borrowers.
"Event of Default" has the meaning specified in Section 10.1.
-5-
11
"GAAP" means generally accepted accounting principles, applied
on a consistent basis, as set forth in Opinions of the Accounting
Principles Board of the American Institute of Certified Public
Accountants and/or in statements of the Financial Accounting Standards
Board and/or their respective successors and which are applicable in
the circumstances as of the date in question. Accounting principles
are applied on a "consistent basis" when the accounting principles
applied in a current period are comparable in all material respects to
those accounting principles applied in a preceding period.
"Governmental Authority" means any nation or government, any
state or political subdivision thereof and any entity exercising
executive, legislative, judicial, regulatory, or administrative
functions of or pertaining to government.
"Guarantee" by any Person means any obligation, contingent or
otherwise, of such Person directly or indirectly guaranteeing any Debt
or other obligation of any other Person and, without limiting the
generality of the foregoing, any obligation, direct or indirect,
contingent or otherwise, of such Person (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Debt or
other obligation (whether arising by virtue of partnership
arrangements, by agreement to keep-well, to purchase assets, goods,
securities or services, to take-or-pay, or to maintain financial
statement conditions or otherwise) or (b) entered into for the purpose
of assuring in any other manner the obligee of such Debt or other
obligation of the payment thereof or to protect the obligee against
loss in respect thereof (in whole or in part), provided that the term
"Guarantee" shall not include endorsements for collection or deposit
in the ordinary course of business. The term "Guarantee" used as a
verb has a corresponding meaning.
"Guarantor" means Xxxxxx Natural Gas Services, Inc., a
Delaware corporation.
"Guaranty" means the guaranty of Guarantor in favor of Lender,
in substantially the form of Exhibit "E" hereto, as the same may be
amended, supplemented, or modified from time to time.
"Hazardous Material" means any substance, product, waste,
pollutant, material, chemical, contaminant, constituent, or other
material which is or becomes listed, regulated, or addressed under any
Environmental Law, including, without limitation, asbestos, petroleum,
and polychlorinated biphenyls.
"Lien" means any lien, mortgage, security interest, tax lien,
financing statement, pledge, charge, hypothecation, assignment,
preference, priority, or other encumbrance of any kind or nature
whatsoever (including, without limitation, any conditional sale or
title retention agreement), whether arising by contract, operation of
law, or otherwise.
"Loan Documents" means this Agreement and all promissory
notes, security agreements, deeds of trust, assignments, guaranties,
and other instruments, documents, and agreements executed and
delivered pursuant to or in connection with this Agreement,
-6-
12
as such instruments, documents, and agreements may be amended,
modified, renewed, extended, or supplemented from time to time.
"MGT" means Xxxxxx Gas Transmission, Inc., a Colorado
corporation.
"Maximum Rate" means, at any time, the maximum rate of
interest under applicable law that the Lender may charge the Borrower.
The Maximum Rate shall be calculated in a manner that takes into
account any and all fees, payments, and other charges in respect of
the Loan Documents that constitute interest under applicable law. Each
change in any interest rate provided for herein based upon the Maximum
Rate resulting from a change in the Maximum Rate shall take effect
without notice to the Borrower at the time of such change in the
Maximum Rate.
"Multiemployer Plan" means a multiemployer plan defined as
such in Section 3(37) of ERISA to which contributions have been made
by any Borrower or any ERISA Affiliate and which is covered by Title
IV of ERISA.
"Note" means the promissory note of the Borrowers payable to
the order of Lender, in substantially the form of Exhibit "A" hereto,
and all extensions, renewals, and modifications thereof.
"Obligated Party" means the Guarantor or any other Person who
is or becomes party to any agreement that guarantees or secures
payment and performance of the Obligations or any part thereof.
"Obligations" means all obligations, indebtedness, and
liabilities of the Borrowers to the Lender, now existing or hereafter
arising, whether direct, indirect, related, unrelated, fixed,
contingent, liquidated, unliquidated, joint, several, or joint and
several, including, without limitation, the obligations, indebtedness,
and liabilities of the Borrowers under this Agreement and the other
Loan Documents, and all interest accruing thereon and all attorneys'
fees and other expenses incurred in the enforcement or collection
thereof.
"Operating Lease" means any lease (other than a lease
constituting a Capital Lease Obligation) of real or personal property.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to all or any of its functions under ERISA.
"Permitted Liens" has the meaning specified in Section 8.2.
"Person" means any individual, corporation, business trust,
association, company, partnership, joint venture, Governmental
Authority, or other entity.
-7-
13
"Plan" means any employee benefit or other plan established or
maintained by any Borrower or any ERISA Affiliate and which is covered
by Title IV of ERISA.
"Pledge Agreement" means the Pledge Agreement of MGT in favor
of the Lender in substantially the form of Exhibit "D-2" hereto, as
the same may be amended, supplemented or modified.
"Principal Office" means the principal office of the Lender,
presently located at 000 Xxxxx Xxxxxx, Xxxxxxxxxx, Xxxxxxxxx 00000.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Code.
"Real Property" means the real property and interests in real
property identified on Schedule 1 attached hereto and all improvements
and fixtures thereon and all appurtenances thereto.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Release" means, as to any Person, any release, spill,
emission, leaking, pumping, injection, deposit, disposal,
disbursement, leaching, or migration of Hazardous Materials into the
indoor or outdoor environment or into or out of property owned by such
Person, including, without limitation, the movement of Hazardous
Materials through or in the air, soil, surface water, ground water, or
property.
"Remedial Action" means all actions required to (a) clean up,
remove, treat, or otherwise address Hazardous Materials in the indoor
or outdoor environment, (b) prevent the Release or threat of Release
or minimize the further Release of Hazardous Materials so that they do
not migrate or endanger or threaten to endanger public health or
welfare or the indoor or outdoor environment, or (c) perform
pre-remedial studies and investigations and post-remedial monitoring
and care.
"RICO" means the Racketeer Influenced and Corrupt Organization
Act of 1970, as amended from time to time.
"Security Agreement" means the Security Agreement of the
Borrowers in favor of the Lender in substantially the form of Exhibit
"D-1" hereto, as the same may be amended, supplemented, or modified.
"Southern Flow" means Southern Flow Companies, Inc., a
Delaware corporation.
"Subordinated Debt" means the indebtedness of Southern Flow
owing to the Guarantor in the outstanding principal amount of
$8,045,757 and any Debt of the Borrowers to the Guarantor hereafter
incurred that is subordinated to the payment in full of the
Obligations upon terms reasonably satisfactory to the Lender.
-8-
14
"Subsidiary" means any corporation of which at least a
majority of the outstanding shares of stock having by the terms
thereof ordinary voting power to elect a majority of the board of
directors of such corporation (irrespective of whether or not at the
time stock of any other class or classes of such corporation shall
have or might have voting power by reason of the happening of any
contingency) is at the time directly or indirectly owned or controlled
by the Guarantor or one or more of the Subsidiaries or by the
Guarantor and one or more of the Subsidiaries.
"Term Loan" has the meaning specified in Section 2.1.
"UCC" means the Uniform Commercial Code as in effect in the
State of Texas.
Section 1.1. Other Definitional Provisions. All definitions
contained in this Agreement are equally applicable to the singular and plural
forms of the terms defined. The words "hereof," "herein," and "hereunder" and
words of similar import referring to this Agreement refer to this Agreement as
a whole and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. All
accounting terms not specifically defined herein shall be construed in
accordance with GAAP. Terms used herein that are defined in the UCC, unless
otherwise defined herein, shall have the meanings specified in the UCC.
ARTICLE II
Term Loan
Section 2.1. Commitment. Subject to the terms and conditions of
this Agreement, the Lender agrees to make a loan (the "Term Loan") jointly and
severally to the Borrowers in a principal amount up to but not exceeding the
amount of the Commitment in a single Advance on the date on which each of the
conditions set forth in Section 5.1 have been satisfied.
Section 2.2. The Note. The obligation of the Borrowers to repay
the Term Loan shall be evidenced by the Note executed by the Borrowers, payable
to the order of the Lender, in the principal amount of the Term Loan, and dated
the date hereof.
Section 2.3. Repayment of Term Loan. The Borrowers shall jointly
and severally repay the unpaid principal amount of the Term Loan in thirty-five
(35) equal consecutive monthly installments in the amount of Eleven Thousand
One Hundred Eleven and 11/100 Dollars ($11,111.11) each, payable on the last
day of each month, plus a final installment in the amount of all outstanding
principal of the Term Loan payable on March 31, 2000.
Section 2.4. Interest. The unpaid principal amount of the Term
Loan shall bear interest prior to maturity at a varying rate per annum equal
from day to day to the lesser of (a) the Maximum Rate, or (b) the sum of the
Base Rate in effect from day to day plus one percent (1%). If at any time the
rate of interest specified in clause (b) above shall exceed the Maximum Rate,
thereby causing the interest accruing on the Term Loan to be limited to the
Maximum
-9-
15
Rate, then any subsequent reduction in the Base Rate shall not reduce the rate
of interest on the Term Loan below the Maximum Rate until the aggregate amount
of interest accrued on the Term Loan equals the aggregate amount of interest
which would have accrued on the Term Loan if the interest rate specified in
clause (b) above had at all times been in effect. Accrued and unpaid interest
on the Term Loan shall be payable on the last day of each month and on March
31, 2000. Notwithstanding the foregoing, any outstanding principal of any
Advance and (to the fullest extent permitted by law) any other amount payable
by the Borrowers under this Agreement or any other Loan Document that is not
paid in full when due (whether at stated maturity, by acceleration, or
otherwise) shall bear interest at the Default Rate for the period from and
including the due date thereof to but excluding the date the same is paid in
full. Interest payable at the Default Rate shall be payable from time to time
on demand.
Section 2.5. Borrowing Procedure. The Borrowers shall give the
Lender notice on or before the closing date of the Term Loan borrowing by means
of an Advance Request Form containing the information required therein. Subject
to the terms and conditions of this Agreement, the Term Loan shall be made
available to the Borrowers by depositing the same, in immediately available
funds, in an account of the Borrowers with the Lender at the Principal Office
designated by the Borrowers.
Section 2.6. Use of Proceeds. The proceeds of the Term Loan shall
be used by the Borrowers to fund the organization of and the investment by MGT
in the Xxxxxx Midstream 1997-1 Business Trust.
Section 2.7. Operating Accounts. Southern Flow shall deposit all
proceeds of Collateral received by such Borrower directly in such Borrower's
operating account maintained at Bank One, Louisiana-Lafayette, N.A.
(collectively, the "Operating Accounts"). If an Event of Default has occurred
and is continuing, all amounts in excess of $50,000 deposited in the Operating
Accounts shall be transferred on a daily basis to the Borrowers' operating
account maintained with Lender and the Lender may apply all such amounts on
deposit in the operating account to the Obligations pursuant to the terms
hereof. The Borrowers have obtained and delivered to the Lender the consent in
the form of Exhibit "G" attached hereto, of Bank One, Louisiana-Lafayette, N.A.
(a "Bank Consent"), which consent acknowledges the first priority security
interest of the Lender hereunder in all moneys, securities and instruments
deposited in the Operating Accounts and contains the irrevocable agreement of
Bank One, Louisiana-Lafayette, N.A., to act in accordance with the written
instructions of Lender after such bank has been notified in writing by the
Lender that an Event of Default has occurred and is continuing. The Bank
Consent further provides that until such bank has received a notice from Lender
to the contrary, the Borrowers may withdraw in the ordinary course of business,
funds from time to time on deposit in the Operating Accounts.
Section 2.8. Mandatory Prepayments or Addition of Collateral. If
the outstanding principal balance of the Term Loan at any time exceeds the
Borrowing Base, as determined pursuant to the most recently delivered borrowing
base report, the Lender may request the Borrowers by a notice ("Payment
Notice") in writing to pay any such excess amount in the manner provided below
or to increase the Collateral in lieu of such payment as provided below.
-10-
16
Section 2.9. Required Date and Amount to Mandatory Prepayment.
Within 15 Business Days after the Borrowers have received a Payment Notice, the
Borrowers shall make a prepayment of principal on the Term Loan equal to the
amount by which the outstanding principal balance of the Term Loan as of the
date of the Payment Notice exceeds the Borrowing Base (such amount is
hereinafter referred to as the "Borrowing Base Overage"), as of such date,
unless the Borrowers have notified the Lender in writing (within 10 Business
Days after the Borrowers have received the Payment Notice) of the Borrowers'
election to comply with Section 2.10 hereof and have provided the Lender with
complete descriptions of other properties or interests ("New Properties") which
the Borrowers shall add to the Collateral and subject to Liens in favor of the
Lender.
Section 2.10. Borrowers' Option to Increase Collateral in Lieu of
Prepayment. Within 30 days after the date on which the Lender receives notice
of the Borrowers' election to comply with this Section 2.10, the Borrowers
shall grant to the Lender valid, enforceable, perfected, first priority Liens
in the New Properties, pursuant to security documents in form and substance
reasonably satisfactory to the Lender. In addition, the Borrowers shall deliver
to the Lender upon request such other information, data, and reports describing
the New Properties as the Lender shall reasonably request.
ARTICLE III
Payments
Section 3.1. Method of Payment. All payments of principal,
interest, and other amounts to be made by the Borrowers under this Agreement
and the other Loan Documents shall be made to the Lender at the Principal
Office in Dollars and immediately available funds, without setoff, deduction,
or counterclaim, not later than 2:00 P.M., Shreveport, Louisiana time on the
date on which such payment shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next succeeding
Business Day). The Borrowers shall, at the time of making each such payment,
specify to the Lender the sums payable by the Borrowers under this Agreement
and the other Loan Documents to which such payment is to be applied (and in the
event the Borrowers fail to so specify, or if an Event of Default has occurred
and is continuing, the Lender may apply such payment to the Obligations in such
order and manner as it may elect in its sole discretion). Whenever any payment
under this Agreement or any other Loan Document shall be stated to be due on a
day that is not a Business Day, such payment shall be made on the next
succeeding Business Day, and such extension of time shall in such case be
included in the computation of the payment of interest.
Section 3.2. Prepayment. The Borrowers may, on at least three (3)
Business Days' prior notice to Lender, prepay the Term Loan in whole at any
time or from time to time in part without premium or penalty but with accrued
and unpaid interest to the date of prepayment on the amount so prepaid,
provided that each partial prepayment shall be in the principal amount of
$50,000.00 or an integral multiple thereof and shall be applied to principal
installments of the Term Loan in inverse order of maturity.
-11-
17
Section 3.3. Computation of Interest. Interest on the Term Loan
and on all other amounts payable by the Borrowers hereunder 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.
Section 3.4. Capital Adequacy. If after the date hereof, the
Lender shall have determined that the adoption or implementation of any
applicable law, rule, or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
central bank or other Governmental Authority charged with the interpretation or
administration thereof, or compliance by the Lender (or its parent) with any
guideline, request, or directive regarding capital adequacy (whether or not
having the force of law) of any such central bank or other Governmental
Authority, has or would have the effect of reducing the rate of return on the
Lender's (or its parent's) capital as a consequence of its obligations
hereunder or the transactions contemplated hereby to a level below that which
the Lender (or its parent) could have achieved but for such adoption,
implementation, change, or compliance (taking into consideration the Lender's
policies with respect to capital adequacy) by an amount deemed by the Lender to
be material, then from time to time, within ten (10) Business Days after demand
by the Lender, the Borrowers shall pay to the Lender (or its parent) such
additional amount or amounts as will compensate the Lender for such reduction.
A certificate of the Lender claiming compensation under this Section and
setting forth the additional amount or amounts to be paid to it hereunder shall
be conclusive, provided that the determination thereof is made on a reasonable
basis. In determining such amount or amounts, the Lender may use any reasonable
averaging and attribution methods.
ARTICLE IV
Security
Section 4.1. Collateral. To secure full and complete payment and
performance of the Obligations, the Borrowers shall execute and deliver or
cause to be executed and delivered the documents described below covering the
property and collateral described in this Section (which, together with any
other property and collateral which may now or hereafter secure the Obligations
or any part thereof, is sometimes herein called the "Collateral"):
(a) Southern Flow shall grant to the Lender a first
priority lien on the Real Property and shall assign to the Lender all
present and future rents, leases, and profits relating to the Real
Property pursuant to the Deed of Trust.
(b) MGT shall pledge and grant to the Lender a first
priority security interest in all of its beneficial ownership interest
in Xxxxxx Midstream 1997-1 Business Trust pursuant to the Pledge
Agreement.
(c) Each Borrower shall grant to the Lender a first
priority security interest in all of its accounts, accounts
receivable, equipment, machinery, fixtures, inventory,
-12-
18
chattel paper, documents, instruments, and general intangibles,
whether now owned or hereafter acquired, and all products and proceeds
thereof, pursuant to the Security Agreement.
(d) The Borrowers shall execute and cause to be executed
such further documents and instruments, including without limitation,
Uniform Commercial Code financing statements, as the Lender, in its
sole discretion, deems necessary or desirable to create, evidence,
preserve, and perfect its liens and security interests in the
Collateral.
Section 4.2. Setoff. If an Event of Default shall have occurred
and be continuing, the Lender shall have the right to set off and apply against
the Obligations in such manner as the Lender may determine, at any time and
without notice to the Borrowers, any and all deposits (general or special, time
or demand, provisional or final) or other sums at any time credited by or owing
from the Lender to any Borrower whether or not the Obligations are then due.
As further security for the Obligations, each Borrower hereby grants to the
Lender a security interest in all money, instruments, and other property of
such Borrower now or hereafter held by the Lender, including, without
limitation, property held in safekeeping. In addition to the Lender's right of
setoff and as further security for the Obligations, each Borrower hereby grants
to the Lender a security interest in all deposits (general or special, time or
demand, provisional or final) and other accounts of such Borrower now or
hereafter on deposit with or held by the Lender and all other sums at any time
credited by or owing from the Lender to such Borrower. The rights and remedies
of the Lender hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which the Lender may
have.
ARTICLE V
Conditions Precedent
Section 5.1. Term Loan. The obligation of the Lender to make the
Term Loan is subject to the condition precedent that the Lender shall have
received on or before the day of the making of the Term Loan all of the
following, each dated (unless otherwise indicated) the date hereof, in form and
substance satisfactory to Lender:
(a) Resolutions. Resolutions of the Board of Directors
of each Borrower certified by the Secretary or an Assistant Secretary
of such Borrower which authorize the execution, delivery, and
performance by such Borrower of this Agreement and the other Loan
Documents to which such Borrower is or is to be a party;
(b) Incumbency Certificate. A certificate of incumbency
certified by the Secretary or an Assistant Secretary of each Borrower
certifying the names of the officers of such Borrower authorized to
sign this Agreement and each of the other Loan Documents to which such
Borrower is or is to be a party (including the certificates
contemplated herein) together with specimen signatures of such
officers;
-13-
19
(c) Articles of Incorporation. The articles of
incorporation of each Borrower certified by the Secretary of State of
state of incorporation of such Borrower and dated within ten (10) days
prior to the date of the Advance;
(d) Bylaws. The bylaws of each Borrower certified by the
Secretary or an Assistant Secretary of such Borrower;
(e) Governmental Certificates. Certificates of the
appropriate government officials of the state of incorporation of each
Borrower as to the existence and good standing of such Borrower, each
dated within ten (10) days prior to the date of the Advance;
(f) Note. The Note executed by the Borrowers;
(g) Security Agreement. The Security Agreement executed
by the Borrowers;
(h) Deed of Trust. The Deed of Trust executed by
Southern Flow;
(i) Financing Statements. Uniform Commercial Code
financing statements executed by each Borrower and covering the
Collateral owned by such Borrower as the Lender may request;
(j) Guaranty. The Guaranty executed by the Guarantor;
(k) Pledge Agreement. The Pledge Agreement executed by
MGT;
(l) Insurance Policies. Copies of all insurance policies
required by Section 7.5, together with loss payable endorsements in
favor of the Lender with respect to all insurance policies covering
Collateral;
(m) Bank Consent. A Bank Consent executed by Bank One,
Louisiana-Lafayette, N.A.;
(n) Consent to Pledge. Any and all acknowledgments
and/or consents deemed reasonably necessary by the Lender in
connection with the pledge by MGT of its beneficial ownership interest
in Xxxxxx Midstream 1997-1 Business Trust;
(o) UCC Searches. The results of Uniform Commercial Code
searches showing all financing statements and other documents or
instruments on file against each Borrower in the offices of the
Secretary of State of Colorado and Texas, such searches to be as of a
date no more than ten (10) days prior to the date of the Advance;
(p) Advance Request Form. An Advance Request Form, dated
the date of the Advance comprising the Term Loan, executed by an
authorized officer of each of the Borrowers;
-14-
20
(q) Attorneys' Fees and Expenses. Evidence that the
costs and expenses (including reasonable attorneys' fees) referred to
in Section 11.1, to the extent incurred, shall have been paid in full
by the Borrower;
(r) Facility Fee. Payment of a facility fee by the
Borrowers to Lender in the amount of $12,000;
(s) No Default. No Default shall have occurred and be
continuing, or would result from the Term Loan;
(t) Representations and Warranties. All of the
representations contained in Article VI hereof and in the other Loan
Documents shall be true and correct on and as of the date of the Term
Loan with the same force and effect as if such representations and
warranties had been made on and as of such date; and
(u) Additional Documentation. Such additional approvals,
opinions, or documents as the Lender or its legal counsel, Xxxxxxxx
Xxxxxxxx & Xxxxxx P.C., may reasonably request.
ARTICLE VI
Representations and Warranties
To induce the Lender to enter into this Agreement, each Borrower
represents and warrants to the Lender that:
Section 6.1. Corporate Existence. Such Borrower and each of its
Subsidiaries (a) is a corporation duly organized, validly existing, and in good
standing under the laws of the jurisdiction of its incorporation; (b) has all
requisite corporate power and authority to own its assets and carry on its
business as now being or as proposed to be conducted; and (c) is qualified to
do business in all jurisdictions in which the nature of its business makes such
qualification necessary and where failure to so qualify would have a material
adverse effect on its business, condition (financial or otherwise), operations,
prospects, or properties. Such Borrower has the corporate power and authority
to execute, deliver, and perform its obligations under this Agreement and the
other Loan Documents to which it is or may become a party.
Section 6.2. Financial Statements. The Guarantor has delivered to
the Lender audited consolidated financial statements of the Guarantor and its
Subsidiaries as at and for the fiscal year ended December 31, 1996. Such
financial statements are true and correct, have been prepared in accordance
with GAAP, and fairly and accurately present, on a consolidated basis, the
financial condition of the Guarantor and its Subsidiaries as of the respective
dates indicated therein and the results of operations for the respective
periods indicated therein. Neither the Guarantor nor any of its Subsidiaries
has any material contingent liabilities, liabilities for taxes, unusual forward
or long-term commitments, or unrealized or anticipated losses from any
unfavorable commitments except as referred to or reflected in such financial
statements. There
-15-
21
has been no material adverse change in the business, condition (financial or
otherwise), operations, prospects, or properties of the Guarantor or any of its
Subsidiaries since the effective date of the most recent financial statements
referred to in this Section.
Section 6.3. Corporate Action; No Breach. The execution,
delivery, and performance by such Borrower of this Agreement and the other Loan
Documents to which such Borrower is or may become a party and compliance with
the terms and provisions hereof and thereof have been duly authorized by all
requisite corporate action on the part of such Borrower and do not and will not
(a) violate or conflict with, or result in a breach of, or require any consent
under (i) the articles of incorporation or bylaws of such Borrower or any of
its Subsidiaries, (ii) any applicable law, rule, or regulation or any order,
writ, injunction, or decree of any Governmental Authority or arbitrator, or
(iii) any agreement or instrument to which such Borrower or any of the
Subsidiaries is a party or by which any of them or any of their property is
bound or subject, or (b) constitute a default under any such agreement or
instrument, or result in the creation or imposition of any Lien (except as
provided in Article IV) upon any of the revenues or assets of such Borrower or
any of its Subsidiaries.
Section 6.4. Operation of Business. Such Borrower and each of its
Subsidiaries possess all licenses, permits, franchises, patents, copyrights,
trademarks, and tradenames, or rights thereto, to conduct their respective
businesses substantially as now conducted and as presently proposed to be
conducted, and such Borrower and each of its Subsidiaries are not in violation
of any valid rights of others with respect to any of the foregoing.
Section 6.5. Litigation and Judgments. Except as disclosed on
Schedule 2 hereto, there is no action, suit, investigation, or proceeding
before or by any Governmental Authority or arbitrator pending, or to the
knowledge of such Borrower, threatened against or affecting such Borrower or
any of its Subsidiaries, that would, if adversely determined, have a material
adverse effect on the business, condition (financial or otherwise), operations,
prospects, or properties of such Borrower or any of its Subsidiaries or the
ability of such Borrower to pay and perform the Obligations. There are no
outstanding judgments against such Borrower or any of its Subsidiaries.
Section 6.6. Rights in Properties; Liens. Such Borrower and each
of its Subsidiaries have good and indefeasible title to or valid leasehold
interests in their respective properties and assets, real and personal,
including the properties, assets, and leasehold interests reflected in the
financial statements described in Section 6.2, and none of the properties,
assets, or leasehold interests of such Borrower or any of its Subsidiaries is
subject to any Lien, except as permitted by Section 8.2.
Section 6.7. Enforceability. This Agreement constitutes, and the
other Loan Documents to which such Borrower is party, when delivered, shall
constitute legal, valid, and binding obligations of such Borrower, enforceable
against such Borrower in accordance with their respective terms, except as
limited by bankruptcy, insolvency, or other laws of general application
relating to the enforcement of creditors' rights.
-16-
22
Section 6.8. Approvals. No authorization, approval, or consent
of, and no filing or registration with, any Governmental Authority or third
party is or will be necessary for the execution, delivery, or performance by
such Borrower of this Agreement and the other Loan Documents to which such
Borrower is or may become a party or the validity or enforceability thereof.
Section 6.9. Debt. Such Borrower and its Subsidiaries have no
Debt, except as disclosed on Schedule 3 hereto.
Section 6.10. Taxes. Such Borrower and each of its Subsidiaries
have filed all tax returns (federal, state, and local) required to be filed,
including all income, franchise, employment, property, and sales tax returns,
and have paid all of their respective liabilities for taxes, assessments,
governmental charges, and other levies that are due and payable. Such Borrower
knows of no pending investigation of such Borrower or any of its Subsidiaries
by any taxing authority or of any pending but unassessed tax liability of the
Borrower or any of its Subsidiaries which would result in any material
additional tax liability. The federal income tax liability of such Borrower and
its Subsidiaries has been audited by the Internal Revenue Service and has been
finally determined and satisfied for all taxable years up to and including the
taxable year ended December 31, 1994.
Section 6.11. Use of Proceeds; Margin Securities. Neither such
Borrower nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose of
purchasing or carrying margin stock (within the meaning of Regulations G, T, U,
or X of the Board of Governors of the Federal Reserve System), and no part of
the proceeds of any Advance will be used to purchase or carry any margin stock
or to extend credit to others for the purpose of purchasing or carrying margin
stock.
Section 6.12. ERISA. Such Borrower and each of its Subsidiaries
are in compliance in all material respects with all applicable provisions of
ERISA. Neither a Reportable Event nor a Prohibited Transaction has occurred and
is continuing with respect to any Plan. No notice of intent to terminate a Plan
has been filed, nor has any Plan been terminated. No circumstances exist which
constitute grounds entitling the PBGC to institute proceedings to terminate, or
appoint a trustee to administer, a Plan, nor has the PBGC instituted any such
proceedings. Neither such Borrower nor any ERISA Affiliate has completely or
partially withdrawn from a Multiemployer Plan. Such Borrower and each ERISA
Affiliate have met their minimum funding requirements under ERISA with respect
to all of their Plans, and the present value of all vested benefits under each
Plan do not exceed the fair market value of all Plan assets allocable to such
benefits, as determined on the most recent valuation date of the Plan and in
accordance with ERISA. Neither such Borrower nor any ERISA Affiliate has
incurred any liability to the PBGC under ERISA.
Section 6.13. Disclosure. No statement, information, report,
representation, or warranty made by such Borrower in this Agreement or in any
other Loan Document or furnished to the Lender, in writing, in connection with
this Agreement or any of the transactions contemplated hereby contains any
untrue statement of a material fact or omits to state any
-17-
23
material fact necessary to make the statements herein or therein not
misleading. There is no fact known to such Borrower which has a material
adverse effect, or which might in the future have a material adverse effect, on
the business, condition (financial or otherwise), operations, prospects, or
properties of such Borrower or any of its Subsidiaries that has not been
disclosed in writing to the Lender.
Section 6.14. Subsidiaries. Such Borrower has no Subsidiaries
other than those listed on Schedule 4 hereto, and Schedule 4 sets forth the
jurisdiction of incorporation of each Subsidiary and the percentage of such
Borrower's ownership of the outstanding voting stock of each of its
Subsidiaries. All of the outstanding capital stock of each of its Subsidiaries
has been validly issued, is fully paid, and is nonassessable.
Section 6.15. Agreements. Neither such Borrower nor any of its
Subsidiaries is a party to any indenture, loan, or credit agreement, or to any
lease or other agreement or instrument, or subject to any charter or corporate
restriction which could have a material adverse effect on the business,
condition (financial or otherwise), operations, prospects, or properties of
such Borrower or any of its Subsidiaries, or the ability of such Borrower to
pay and perform its obligations under the Loan Documents to which it is a
party. Neither such Borrower nor any of its Subsidiaries is in default in any
respect in the performance, observance, or fulfillment of any of the
obligations, covenants, or conditions contained in any agreement or instrument
material to its business to which it is a party.
Section 6.16. Compliance with Laws. Neither such Borrower nor any
of its Subsidiaries is in violation in any material respect of any law, rule,
regulation, order, or decree of any Governmental Authority or arbitrator.
Section 6.17. Inventory. All inventory of such Borrower has been
and will hereafter be produced in compliance with all applicable laws, rules,
regulations, and governmental standards, including, without limitation, the
minimum wage and overtime provisions of the Fair Labor Standards Act, as
amended (29 U.S.C. Sections 201-219), and the regulations promulgated
thereunder.
Section 6.18. Investment Company Act. Neither such Borrower nor
any of its Subsidiaries is an "investment company" within the meaning of the
Investment Company Act of 1940, as amended.
Section 6.19. Public Utility Holding Company Act. Neither such
Borrower nor any of its Subsidiaries is a "holding company" or a "subsidiary
company" of a "holding company" or an "affiliate" of a "holding company" or a
"public utility" within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
Section 6.20. Environmental Matters. Except as disclosed on
Schedule 5 hereto:
(a) Such Borrower, each of its Subsidiaries, and all of
their respective properties, assets, and operations are in full
compliance with all Environmental Laws.
-18-
24
such Borrower is not aware of, nor has such Borrower received notice
of, any past, present, or future conditions, events, activities,
practices, or incidents which may interfere with or prevent the
compliance or continued compliance of such Borrower and its
Subsidiaries with all Environmental Laws;
(b) Such Borrower and each of its Subsidiaries have
obtained all permits, licenses, and authorizations that are required
under applicable Environmental Laws, and all such permits are in good
standing and such Borrower and its Subsidiaries are in compliance with
all of the terms and conditions of such permits;
(c) No Hazardous Materials exist on, about, or within or
have been used, generated, stored, transported, disposed of on, or
Released from any of the properties or assets of such Borrower or any
Subsidiary. The use which such Borrower and its Subsidiaries make and
intend to make of their respective properties and assets will not
result in the use, generation, storage, transportation, accumulation,
disposal, or Release of any Hazardous Material on, in, or from any of
their properties or assets;
(d) Neither such Borrower nor any of its Subsidiaries
nor any of their respective currently or previously owned or leased
properties or operations is subject to any outstanding or threatened
order from or agreement with any Governmental Authority or other
Person or subject to any judicial or docketed administrative
proceeding with respect to (i) failure to comply with Environmental
Laws, (ii) Remedial Action, or (iii) any Environmental Liabilities
arising from a Release or threatened Release;
(e) There are no conditions or circumstances associated
with the currently or previously owned or leased properties or
operations of such Borrower or any of its Subsidiaries that could
reasonably be expected to give rise to any Environmental Liabilities;
(f) Neither such Borrower nor any of its Subsidiaries is
a treatment, storage, or disposal facility requiring a permit under
the Resource Conservation and Recovery Act, 42 U.S.C. Section 6901 et
seq., regulations thereunder or any comparable provision of state law.
Such Borrower and its Subsidiaries are in compliance with all
applicable financial responsibility requirements of all Environmental
Laws;
(g) Neither such Borrower nor any of its Subsidiaries
has filed or failed to file any notice required under applicable
Environmental Law reporting a Release; and
(h) No Lien arising under any Environmental Law has
attached to any property or revenues of such Borrower or its
Subsidiaries.
-19-
25
ARTICLE VII
Positive Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or the Lender has any Commitment hereunder,
such Borrower will perform and observe the following positive covenants, unless
the Lender shall otherwise consent in writing:
Section 7.1. Reporting Requirements. Such Borrower will furnish
or cause to be furnished to the Lender:
(a) Annual Financial Statements. As soon as available,
and in any event within one hundred twenty (120) days after the end of
each fiscal year of the Guarantor, beginning with the fiscal year
ending December 31, 1997, a copy of the annual audit report of the
Guarantor and the Subsidiaries for such fiscal year containing, on a
consolidated and consolidating basis, if applicable, balance sheets
and statements of income, retained earnings, and cash flow as at the
end of such fiscal year and for the 12-month period then ended, in
each case setting forth in comparative form the figures for the
preceding fiscal year, all in reasonable detail and audited and
certified by Deloitte & Touche, LLP, or other independent certified
public accountants of recognized standing acceptable to the Lender, to
the effect that such report has been prepared in accordance with GAAP;
(b) Quarterly Financial Statements. As soon as
available, and in any event within sixty (60) days after the end of
each of the quarters of each fiscal year of the Guarantor, a copy of
an unaudited financial report of the Guarantor and the Subsidiaries as
of the end of such fiscal quarter and for the portion of the fiscal
year then ended, containing, on a consolidated and consolidating
basis, if applicable, balance sheets and statements of income, and
cash flow, in each case setting forth in comparative form the figures
for the corresponding period of the preceding fiscal year, all in
reasonable detail certified by the chief financial officer or
principal accounting officer of the Borrower or Guarantor to have been
prepared in accordance with GAAP and to fairly and accurately present
(subject to year-end audit adjustments) the financial condition and
results of operations of the Guarantor and the Subsidiaries, on a
consolidated and consolidating basis, if applicable, at the date and
for the periods indicated therein;
(c) Certificate of No Default. Concurrently with the
delivery of each of the financial statements referred to in
subsections 7.1(a) and 7.1(b), a certificate of the chief financial
officer or principal accounting officer of the Borrowers or Guarantor
(i) stating that to the best of such officer's knowledge, no Default
has occurred and is continuing, or if a Default has occurred and is
continuing, a statement as to the nature thereof and the action which
is proposed to be taken with respect thereto, and (ii) showing in
reasonable detail the calculations demonstrating compliance with
Article IX;
-20-
26
(d) Management Letters. Promptly upon receipt thereof, a
copy of any management letter or written report submitted to the
Guarantor or any of its Subsidiaries by independent certified public
accountants with respect to the business, condition (financial or
otherwise), operations, prospects, or properties of the Guarantor or
any of its Subsidiaries;
(e) Notice of Litigation. Promptly after the
commencement thereof, notice of all actions, suits, and proceedings
before any Governmental Authority or arbitrator affecting any Borrower
or any of its Subsidiaries which, if determined adversely to such
Borrower or such Subsidiary, could have a material adverse effect on
the business, condition (financial or otherwise), operations,
prospects, or properties of such Borrower or its Subsidiary;
(f) Notice of Default. As soon as possible and in any
event within five (5) days after the occurrence of each Default, a
written notice setting forth the details of such Default and the
action that the Borrowers have taken and proposes to take with respect
thereto;
(g) ERISA Reports. Promptly after the filing or receipt
thereof, copies of all reports, including annual reports, and notices
which any Borrower or any of its Subsidiaries files with or receives
from the PBGC or the U.S. Department of Labor under ERISA; and as soon
as possible and in any event within five (5) Business Days after such
Borrower or any of its Subsidiaries knows or has reason to know that
any Reportable Event or Prohibited Transaction has occurred with
respect to any Plan or that the PBGC or such Borrower or any of its
Subsidiaries has instituted or will institute proceedings under Title
IV of ERISA to terminate any Plan, a certificate of the chief
financial officer of such Borrower setting forth the details as to
such Reportable Event or Prohibited Transaction or Plan termination
and the action that such Borrower proposes to take with respect
thereto;
(h) Reports to Other Creditors. Promptly after the
furnishing thereof, copies of any statement or report furnished to any
other party pursuant to the terms of any indenture, loan, or credit or
similar agreement and not otherwise required to be furnished to the
Lender pursuant to any other clause of this Section;
(i) Notice of Material Adverse Change. As soon as
possible and in any event within five (5) Business Days after the
occurrence thereof, written notice of any matter that could have a
material adverse effect on the business, condition (financial or
otherwise), operations, prospects, or properties of any Borrower or
any of its Subsidiaries;
(j) Borrowing Base Report. As soon as available, and in
any event within ten (10) Business Days after the end of each calendar
month, a Borrowing Base Report, in substantially the form of Exhibit
"F" hereto, certified by the chief executive officer, chief financial
officer, or principal accounting officer of Borrower or Guarantor;
-21-
27
(k) Proxy Statements, Etc. As soon as available, one
copy of each financial statement, report, notice or proxy statement
sent by the Guarantor or any Subsidiary to its stockholders generally
and one copy of each regular, periodic or special report, registration
statement, or prospectus filed by the Guarantor or any Subsidiary with
any securities exchange or the Securities and Exchange Commission or
any successor agency; and
(l) General Information. Promptly, such other
information concerning any Borrower or any of its Subsidiaries as the
Lender may from time to time reasonably request.
Section 7.2. Maintenance of Existence; Conduct of Business. Such
Borrower will preserve and maintain, and will cause each of its Subsidiaries to
preserve and maintain, its corporate existence and all of its leases,
privileges, licenses, permits, franchises, qualifications, and rights that are
necessary or desirable in the ordinary conduct of its business. Such Borrower
will conduct, and will cause each of its Subsidiaries to conduct, its business
in an orderly and efficient manner in accordance with good business practices.
Section 7.3. Maintenance of Properties. Such Borrower will
maintain, keep, and preserve, and cause each of its Subsidiaries to maintain,
keep, and preserve, all of its properties (tangible and intangible) necessary
or useful in the proper conduct of its business in good working order and
condition.
Section 7.4. Taxes and Claims. Such Borrower will pay or
discharge, and will cause each of its Subsidiaries to pay or discharge, at or
before maturity or before becoming delinquent (a) all taxes, levies,
assessments, and governmental charges imposed on it or its income or profits or
any of its property, and (b) all lawful claims for labor, material, and
supplies, which, if unpaid, might become a Lien upon any of its property;
provided, however, that neither such Borrower nor any of its Subsidiaries shall
be required to pay or discharge any tax, levy, assessment, or governmental
charge which is being contested in good faith by appropriate proceedings
diligently pursued, and for which adequate reserves have been established.
Section 7.5. Insurance. Such Borrower will maintain, and will
cause each of its Subsidiaries to maintain, insurance with financially sound
and reputable insurance companies in such amounts and covering such risks as is
usually carried by corporations engaged in similar businesses and owning
similar properties in the same general areas in which such Borrower and its
Subsidiaries operate, provided that in any event such Borrower will maintain
and cause each of its Subsidiaries to maintain workmen's compensation
insurance, property insurance, comprehensive general liability insurance,
products liability insurance, and business interruption insurance reasonably
satisfactory to the Lender. Each insurance policy covering Collateral shall
name the Lender as loss payee and shall provide that such policy will not be
cancelled or reduced without thirty (30) days' prior written notice to the
Lender.
Section 7.6. Inspection Rights. At any reasonable time and from
time to time, such Borrower will permit, and will cause each of its
Subsidiaries to permit, representatives of the
-22-
28
Lender to examine, copy, and make extracts from its books and records, to visit
and inspect its properties, and to discuss its business, operations, and
financial condition with its officers, employees, and independent certified
public accountants.
Section 7.7. Keeping Books and Records. Such Borrower will
maintain, and will cause each of its Subsidiaries to maintain, proper books of
record and account in which full, true, and correct entries in conformity with
GAAP shall be made of all dealings and transactions in relation to its business
and activities.
Section 7.8. Compliance with Laws. Such Borrower will comply, and
will cause each of its Subsidiaries to comply, in all material respects with
all applicable laws, rules, regulations, orders, and decrees of any
Governmental Authority or arbitrator.
Section 7.9. Compliance with Agreements. Such Borrower will
comply, and will cause each of its Subsidiaries to comply, in all material
respects with all agreements, contracts, and instruments binding on it or
affecting its properties or business.
Section 7.10. Further Assurances. Such Borrower will, and will
cause each of its Subsidiaries to, execute and deliver such further agreements
and instruments and take such further action as may be requested by the Lender
to carry out the provisions and purposes of this Agreement and the other Loan
Documents and to create, preserve, and perfect the Liens of the Lender in the
Collateral.
Section 7.11. ERISA. Such Borrower will comply, and will cause
each of its Subsidiaries to comply, with all minimum funding requirements, and
all other material requirements, of ERISA, if applicable, so as not to give
rise to any liability thereunder.
Section 7.12. Operating Accounts. Each Borrower will maintain its
Operating Account and will promptly, and in any event within three (3) Business
Days of its receipt thereof, deposit all proceeds of Collateral directly in its
Operating Account.
Section 7.13. Intercompany Payables. Each Borrower hereby agrees
that any and all obligations of any Borrower to any other Borrower, whether now
existing or hereafter arising and whether evidenced by a note, contract or open
account shall be subordinate and junior in right of payment to the prior
payment in full of the Obligations, and each Borrower hereby assigns any such
obligations to Lender as security for the Obligations.
ARTICLE VIII
Negative Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or the Lender has any Commitment hereunder,
such Borrower will perform and observe the following negative covenants, unless
the Lender shall otherwise consent in writing:
-23-
29
Section 8.1. Debt. Such Borrower will not incur, create, assume,
or permit to exist, and will not permit any of its Subsidiaries to incur,
create, assume, or permit to exist, any Debt, except:
(a) Debt to the Lender;
(b) Existing Debt described on Schedule 3 hereto; and
(c) Subordinated Debt.
Section 8.2. Limitation on Liens. Such Borrower will not incur,
create, assume, or permit to exist, and will not permit any of its Subsidiaries
to incur, create, assume, or permit to exist, any Lien upon any of its
property, assets, or revenues, whether now owned or hereafter acquired, except
the following (collectively, the "Permitted Liens"):
(a) Liens disclosed on Schedule 6 hereto;
(b) Liens in favor of the Lender;
(c) Encumbrances consisting of minor easements, zoning
restrictions, or other restrictions on the use of real property that
do not (individually or in the aggregate) materially affect the value
of the assets encumbered thereby or materially impair the ability of
such Borrower or its Subsidiaries to use such assets in their
respective businesses, and none of which is violated in any material
respect by existing or proposed structures or land use;
(d) Liens for taxes, assessments, or other governmental
charges which are not delinquent or which are being contested in good
faith and for which adequate reserves have been established;
(e) Liens of mechanics, materialmen, warehousemen,
carriers, or other similar statutory Liens securing obligations that
are not yet due and are incurred in the ordinary course of business;
and
(f) Liens resulting from good faith deposits to secure
payments of workmen's compensation or other social security programs
or to secure the performance of tenders, statutory obligations, surety
and appeal bonds, bids, or contracts (other than for payment of Debt),
or leases made in the ordinary course of business.
Section 8.3. Mergers, Etc. Such Borrower will not, and will not
permit any of its Subsidiaries to, become a party to a merger or consolidation,
or purchase or otherwise acquire all or any part of the assets of any Person or
any shares or other evidence of beneficial ownership of any Person, or wind-up,
dissolve, or liquidate.
-24-
30
Section 8.4. Restricted Payments. Such Borrower will not declare
or pay any dividends or make any other payment or distribution (in cash,
property, or obligations) on account of its capital stock, or redeem, purchase,
retire, or otherwise acquire any of its capital stock, or permit any of its
Subsidiaries to purchase or otherwise acquire any capital stock of such
Borrower or another Subsidiary, or set apart any money for a sinking or other
analogous fund for any dividend or other distribution on its capital stock or
for any redemption, purchase, retirement, or other acquisition of any of its
capital stock.
Section 8.5. Loans and Investments. Such Borrower will not make,
and will not permit any of its Subsidiaries to make, any advance, loan,
extension of credit, or capital contribution to or investment in, or purchase,
or permit any of its Subsidiaries to purchase, any stock, bonds, notes,
debentures, or other securities of any Person, other than the Guarantor,
except:
(a) readily marketable direct obligations of the United
States of America;
(b) fully insured certificates of deposit with
maturities of one year or less from the date of acquisition of any
commercial bank operating in the United States having capital and
surplus in excess of $50,000,000.00; and
(c) commercial paper of a domestic issuer if at the time
of purchase such paper is rated in one of the two highest rating
categories of Standard and Poor's Corporation or Xxxxx'x Investors
Service.
Section 8.6. Limitation on Issuance of Capital Stock. Such
Borrower will not, and will not permit any of its Subsidiaries to, at any time
issue, sell, assign, or otherwise dispose of (a) any of its capital stock, (b)
any securities exchangeable for or convertible into or carrying any rights to
acquire any of its capital stock, or (c) any option, warrant, or other right to
acquire any of its capital stock.
Section 8.7. Transactions With Affiliates. Such Borrower will not
enter into, and will not permit any of its Subsidiaries to enter into, any
transaction, including, without limitation, the purchase, sale, or exchange of
property or the rendering of any service, with any Affiliate of such Borrower
or such Subsidiary, except in the ordinary course of and pursuant to the
reasonable requirements of such Borrower's or such Subsidiary's business and
upon fair and reasonable terms no less favorable to such Borrower or such
Subsidiary than would be obtained in a comparable arm's-length transaction with
a Person not an Affiliate of such Borrower or such Subsidiary.
Section 8.8. Disposition of Assets. Such Borrower will not sell,
lease, assign, transfer, or otherwise dispose of any of its assets, or permit
any of its Subsidiaries to do so with any of its assets, except dispositions of
inventory in the ordinary course of business.
Section 8.9. Sale and Leaseback. Such Borrower will not enter
into, and will not permit any of its Subsidiaries to enter into, any
arrangement with any Person pursuant to which
-25-
31
it leases from such Person real or personal property that has been or is to be
sold or transferred, directly or indirectly, by it to such Person.
Section 8.10. Prepayment of Debt. Such Borrower will not prepay,
and will not permit any of its Subsidiaries to prepay, any Debt, except the
Obligations.
Section 8.11. Nature of Business. Such Borrower will not, and will
not permit any of its Subsidiaries to, engage in any type of business other
than the businesses in which they are engaged as of the date hereof.
Section 8.12. Environmental Protection. Such Borrower will not,
and will not permit any of its Subsidiaries to, (a) use (or permit any tenant
to use) any of their respective properties or assets for the handling,
processing, storage, transportation, or disposal of any Hazardous Material, (b)
generate any Hazardous Material, (c) conduct any activity that is likely to
cause a Release or threatened Release of any Hazardous Material, or (d)
otherwise conduct any activity or use any of their respective properties or
assets in any manner that is likely to violate any Environmental Law or create
any Environmental Liabilities for which the Borrower or any of its Subsidiaries
would be responsible.
Section 8.13. Accounting. Such Borrower will not, and will not
permit any of its Subsidiaries to, change its fiscal year or make any change
(a) in accounting treatment or reporting practices, except as required by GAAP
and disclosed to the Lender, or (b) in tax reporting treatment, except as
required by law and disclosed to the Lender.
Section 8.14. Bank Accounts. Such Borrower will not deposit the
proceeds of any Collateral in any bank account other than its Operating Account
or any account maintained with Lender.
ARTICLE IX
Financial Covenants
Each Borrower covenants and agrees that, as long as the Obligations or
any part thereof are outstanding or the Lender has any Commitment hereunder,
the Borrower will observe and perform the following financial covenants,
calculated as of the end of each fiscal quarter, unless the Lender shall
otherwise consent in writing:
Section 9.1. Consolidated Tangible Net Worth. The Guarantor will
at all times maintain Consolidated Tangible Net Worth in an amount not less
than Six Million Five Hundred Thousand Dollars ($6,500,000.00).
Section 9.2. Debt Service Coverage Ratio. Southern Flow will at
all times maintain a Debt Service Coverage Ratio of not less than 1.1 to 1.0,
calculated as of the end of each fiscal quarter of Southern Flow on a rolling
four (4) quarter basis.
-26-
32
ARTICLE X
Default
Section 10.1. Events of Default. Each of the following shall be
deemed an "Event of Default":
(a) The Borrowers shall fail to pay within five (5)
Business Days of the date due the Obligations or any part thereof.
(b) Any representation or warranty made or deemed made
by any Borrower or any Obligated Party (or any of their respective
officers) in any Loan Document or in any certificate, report, notice,
or financial statement furnished at any time in connection with this
Agreement shall be false, misleading, or erroneous in any material
respect when made or deemed to have been made.
(c) Any Borrower or any Obligated Party shall fail to
perform, observe, or comply with any covenant, agreement, or term
contained in this Agreement or any other Loan Document and such
failure shall continue for ten (10) Business Days.
(d) Any Borrower, any of its Subsidiaries, or any
Obligated Party shall commence a voluntary proceeding seeking
liquidation, reorganization, or other relief with respect to itself or
its debts under any bankruptcy, insolvency, or other similar law now
or hereafter in effect or seeking the appointment of a trustee,
receiver, liquidator, custodian, or other similar official of it or a
substantial part of its property or shall consent to any such relief
or to the appointment of or taking possession by any such official in
an involuntary case or other proceeding commenced against it or shall
make a general assignment for the benefit of creditors or shall
generally fail to pay its debts as they become due or shall take any
corporate action to authorize any of the foregoing.
(e) An involuntary proceeding shall be commenced against
any Borrower, any of its Subsidiaries, or any Obligated Party seeking
liquidation, reorganization, or other relief with respect to it or its
debts under any bankruptcy, insolvency, or other similar law now or
hereafter in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official for it or a
substantial part of its property, and such involuntary proceeding
shall remain undismissed and unstayed for a period of thirty (30)
days.
(f) Any Borrower, any of its Subsidiaries or any
Obligated Party shall fail to discharge within a period of thirty (30)
days after the commencement thereof any attachment, sequestration, or
similar proceeding or proceedings involving an aggregate amount in
excess of One Hundred Thousand Dollars ($100,000.00) against any of
its assets or properties.
-27-
33
(g) A final judgment or judgments for the payment of
money in excess of One Hundred Thousand Dollars ($100,000.00) in the
aggregate shall be rendered by a court or courts against any Borrower,
any of their Subsidiaries, or any Obligated Party and the same shall
not be discharged (or provision shall not be made for such discharge),
or a stay of execution thereof shall not be procured, within thirty
(30) days from the date of entry thereof and such Borrower or the
relevant Subsidiary or Obligated Party shall not, within said period
of thirty (30) days, or such longer period during which execution of
the same shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal.
(h) Any Borrower, any of its Subsidiaries, or any
Obligated Party shall fail to pay when due (including any applicable
grace period) any principal of or interest on any Debt (other than the
Obligations), or the maturity of any such Debt shall have been
accelerated, or any such Debt shall have been required to be prepaid
prior to the stated maturity thereof, or any event shall have occurred
that permits (or, with the giving of notice or lapse of time or both,
would permit) any holder or holders of such Debt or any Person acting
on behalf of such holder or holders to accelerate the maturity thereof
or require any such prepayment.
(i) This Agreement or any other Loan Document shall
cease to be in full force and effect or shall be declared null and
void or the validity or enforceability thereof shall be contested or
challenged by any Borrower, any of its Subsidiaries, any Obligated
Party or any of their respective shareholders, or any Borrower or any
Obligated Party shall deny that it has any further liability or
obligation under any of the Loan Documents, or any lien or security
interest created by the Loan Documents shall for any reason cease to
be a valid, first priority perfected security interest in and lien
upon any of the Collateral purported to be covered thereby.
(j) Any of the following events shall occur or exist
with respect to any Borrower or any ERISA Affiliate: (i) any
Prohibited Transaction involving any Plan; (ii) any Reportable Event
with respect to any Plan; (iii) the filing under Section 4041 of ERISA
of a notice of intent to terminate any Plan or the termination of any
Plan; (iv) any event or circumstance that might constitute grounds
entitling the PBGC to institute proceedings under Section 4042 of
ERISA for the termination of, or for the appointment of a trustee to
administer, any Plan, or the institution by the PBGC of any such
proceedings; (v) complete or partial withdrawal under Section 4201 or
4204 of ERISA from a Multiemployer Plan or the reorganization,
insolvency, or termination of any Multiemployer Plan; and in each case
above, such event or condition, together with all other events or
conditions, if any, have subjected or could in the reasonable opinion
of the Lender subject any Borrower to any tax, penalty, or other
liability to a Plan, a Multiemployer Plan, the PBGC, or otherwise (or
any combination thereof) which in the aggregate exceed or could
reasonably be expected to exceed One Hundred Thousand Dollars
($100,000.00).
-28-
34
(k) Any Borrower, any of their Subsidiaries, or any
Obligated Party, or any of their properties, revenues, or assets,
shall become subject to an order of forfeiture, seizure, or
divestiture (whether under RICO or otherwise) and the same shall not
have been discharged within thirty (30) days from the date of entry
thereof.
Section 10.2. Remedies Upon Default. If any Event of Default shall
occur and be continuing, the Lender may without notice terminate the Commitment
and declare the Obligations or any part thereof to be immediately due and
payable, and the same shall thereupon become immediately due and payable,
without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by each Borrower; provided, however, that upon the occurrence of an
Event of Default under Section 10.1(d) or Section 10.1(e), the Commitment shall
automatically terminate, and the Obligations shall become immediately due and
payable without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by each Borrower. If any Event of Default shall occur and be continuing,
the Lender may exercise all rights and remedies available to it in law or in
equity, under the Loan Documents, or otherwise.
Section 10.3. Performance by the Lender. If any Borrower shall
fail to perform any covenant or agreement contained in any of the Loan
Documents, the Lender may perform or attempt to perform such covenant or
agreement on behalf of such Borrower. In such event, the Borrowers shall, at
the request of the Lender, promptly pay any amount expended by the Lender in
connection with such performance or attempted performance to the Lender,
together with interest thereon at the Default Rate from and including the date
of such expenditure to but excluding the date such expenditure is paid in full.
Notwithstanding the foregoing, it is expressly agreed that the Lender shall not
have any liability or responsibility for the performance of any obligation of
the Borrowers under this Agreement or any other Loan Document.
ARTICLE XI
Miscellaneous
Section 11.1. Expenses. The Borrowers hereby agree jointly and
severally to pay on demand: (a) all costs and expenses of the Lender in
connection with the preparation, negotiation, execution, and delivery of this
Agreement and the other Loan Documents and any and all amendments,
modifications, renewals, extensions, and supplements thereof and thereto,
including, without limitation, the fees and expenses of legal counsel for the
Lender not to exceed $15,000, (b) all costs and expenses of the Lender in
connection with any Default and the enforcement of this Agreement or any other
Loan Document, including, without limitation, the fees and expenses of legal
counsel for the Lender, (c) all transfer, stamp, documentary, or other similar
taxes, assessments, or charges levied by any Governmental Authority in respect
of this Agreement or any of the other Loan Documents, (d) all costs, expenses,
assessments, and other charges incurred in connection with any filing,
registration, recording, or perfection of any security interest or Lien
contemplated by this Agreement or any other Loan Document, and
-29-
35
(e) all other costs and expenses incurred by the Lender in connection with this
Agreement or any other Loan Document, including, without limitation, all costs,
expenses, and other charges incurred in connection with obtaining any mortgagee
title insurance policy, survey, audit, or appraisal in respect of the
Collateral.
Section 11.2. INDEMNIFICATION. THE BORROWERS SHALL JOINTLY AND
SEVERALLY INDEMNIFY THE LENDER AND EACH AFFILIATE THEREOF AND THEIR RESPECTIVE
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLD EACH OF
THEM HARMLESS AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
PENALTIES, JUDGMENTS, DISBURSEMENTS, COSTS, AND EXPENSES (INCLUDING ATTORNEYS'
FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH DIRECTLY OR INDIRECTLY
ARISE FROM OR RELATE TO (A) THE NEGOTIATION, EXECUTION, DELIVERY, PERFORMANCE,
ADMINISTRATION, OR ENFORCEMENT OF ANY OF THE LOAN DOCUMENTS, (B) ANY OF THE
TRANSACTIONS CONTEMPLATED BY THE LOAN DOCUMENTS, (C) ANY BREACH BY ANY BORROWER
OR OBLIGATED PARTY OF ANY REPRESENTATION, WARRANTY, COVENANT, OR OTHER
AGREEMENT CONTAINED IN ANY OF THE LOAN DOCUMENTS, (D) THE PRESENCE, RELEASE,
THREATENED RELEASE, DISPOSAL, REMOVAL, OR CLEANUP OF ANY HAZARDOUS MATERIAL
LOCATED ON, ABOUT, WITHIN, OR AFFECTING ANY OF THE PROPERTIES OR ASSETS OF ANY
BORROWER OR ANY SUBSIDIARY, OR (E) ANY INVESTIGATION, LITIGATION, OR OTHER
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING, RELATING TO ANY OF THE FOREGOING. WITHOUT
LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER LOAN DOCUMENT, IT IS
THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH PERSON TO BE INDEMNIFIED
UNDER THIS SECTION SHALL BE INDEMNIFIED FROM AND HELD HARMLESS AGAINST ANY AND
ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, PENALTIES, JUDGMENTS, DISBURSEMENTS,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING
FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF SUCH PERSON.
Section 11.3. LIMITATION OF LIABILITY. NEITHER THE LENDER NOR ANY
AFFILIATE, OFFICER, DIRECTOR, EMPLOYEE, ATTORNEY, OR AGENT OF THE LENDER SHALL
HAVE ANY LIABILITY WITH RESPECT TO, AND EACH BORROWER HEREBY WAIVES, RELEASES,
AND AGREES NOT TO XXX ANY OF THEM UPON, ANY CLAIM FOR ANY SPECIAL, INDIRECT,
INCIDENTAL, OR CONSEQUENTIAL DAMAGES SUFFERED OR INCURRED BY ANY BORROWER IN
CONNECTION WITH, ARISING OUT OF, OR IN ANY WAY RELATED TO, THIS AGREEMENT OR
ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF THE TRANSACTIONS CONTEMPLATED BY
THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS. EACH BORROWER HEREBY WAIVES,
RELEASES, AND AGREES NOT TO XXX THE LENDER OR ANY OF THE LENDER'S AFFILIATES,
OFFICERS, DIRECTORS, EMPLOYEES, ATTORNEYS, OR AGENTS FOR PUNITIVE DAMAGES IN
RESPECT OF ANY CLAIM IN CONNECTION WITH, ARISING OUT OF, OR IN ANY
-30-
36
WAY RELATED TO, THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS, OR ANY OF
THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT OR ANY OF THE OTHER LOAN
DOCUMENTS.
Section 11.4. No Duty. All attorneys, accountants, appraisers, and
other professional Persons and consultants retained by the Lender shall have
the right to act exclusively in the interest of the Lender and shall have no
duty of disclosure, duty of loyalty, duty of care, or other duty or obligation
of any type or nature whatsoever to any Borrower or any Borrower's shareholders
or any other Person.
Section 11.5. Lender Not Fiduciary. The relationship between the
Borrowers and the Lender is solely that of debtor and creditor, and the Lender
has no fiduciary or other special relationship with any Borrower, and no term
or condition of any of the Loan Documents shall be construed so as to deem the
relationship between the Borrowers and the Lender to be other than that of
debtor and creditor.
Section 11.6. Equitable Relief. Each Borrower recognizes that in
the event any Borrower fails to pay, perform, observe, or discharge any or all
of the Obligations, any remedy at law may prove to be inadequate relief to the
Lender. The Borrowers therefore agree that the Lender, if the Lender so
requests, shall be entitled to temporary and permanent injunctive relief in any
such case without the necessity of proving actual damages.
Section 11.7. No Waiver; Cumulative Remedies. No failure on the
part of the Lender to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise of
any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement and the other
Loan Documents are cumulative and not exclusive of any rights and remedies
provided by law.
Section 11.8. Successors and Assigns. This Agreement is binding
upon and shall inure to the benefit of the Lender and the Borrowers and their
respective successors and assigns, except that no Borrower may assign or
transfer any of its rights or obligations under this Agreement without the
prior written consent of the Lender.
Section 11.9. Survival. All representations and warranties made in
this Agreement or any other Loan Document or in any document, statement, or
certificate furnished in connection with this Agreement shall survive the
execution and delivery of this Agreement and the other Loan Documents, and no
investigation by the Lender or any closing shall affect the representations and
warranties or the right of the Lender to rely upon them. Without prejudice to
the survival of any other obligation of the Borrowers hereunder, the
obligations of the Borrowers under Sections 3.4, 11.1, and 11.2 shall survive
repayment of the Note and termination of the Commitment.
-31-
37
Section 11.10. ENTIRE AGREEMENT; AMENDMENT. THIS AGREEMENT, THE
NOTE, AND THE OTHER LOAN DOCUMENTS REFERRED TO HEREIN EMBODY THE FINAL, ENTIRE
AGREEMENT AMONG THE PARTIES HERETO AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF 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. The provisions of this Agreement and the other Loan Documents
to which any Borrower is a party may be amended or waived only by an instrument
in writing signed by the parties hereto.
Section 11.11. Maximum Interest Rate. No provision of this
Agreement or any other Loan Document shall require the payment or the
collection of interest in excess of the maximum amount permitted by applicable
law. If any excess of interest in such respect is hereby provided for, or shall
be adjudicated to be so provided, in any Loan Document or otherwise in
connection with this loan transaction, the provisions of this shall govern and
prevail and neither the Borrowers nor the sureties, guarantors, successors, or
assigns of the Borrowers 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. In the event the Lender ever receives, collects,
or applies as interest any such sum, such amount which would be in excess of
the maximum amount permitted by applicable law shall be applied as a payment
and reduction of the principal of the indebtedness evidenced by the Note; and,
if the principal of the Note has been paid in full, any remaining excess shall
forthwith be paid to the Borrowers. In determining whether or not the interest
paid or payable exceeds the Maximum Rate, the Borrowers and the Lender 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 the
Note so that interest for the entire term does not exceed the Maximum Rate.
Section 11.12. Notices. All notices and other communications
provided for in this Agreement and the other Loan Documents to which any
Borrower is a party shall be given or made by telecopy or in writing and
telecopied, mailed by certified mail return receipt requested, or delivered to
the intended recipient at the "Address for Notices" specified below its name on
the signature pages hereof; or, as to any party at such other address as shall
be designated by such party in a notice to the other party given in accordance
with this Section. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopy, subject to telephone confirmation of receipt, or when personally
delivered or, in the case of a mailed notice, when duly deposited in the mails,
in each case given or addressed as aforesaid; provided, however, notices to the
Lender pursuant to Article II shall not be effective until received by the
Lender.
-32-
38
Section 11.13. Governing Law; Venue; Service of Process. This
Agreement shall be governed by and construed in accordance with the laws of the
State of Louisiana and the applicable laws of the United States of America.
This Agreement has been entered into in Caddo Parish, Louisiana, and it shall
be performable for all purposes in Caddo Parish, Louisiana. Any action or
proceeding against the Borrower under or in connection with any of the Loan
Documents may be brought in any state or federal court in Caddo Parish,
Louisiana. Each Borrower hereby irrevocably (a) submits to the nonexclusive
jurisdiction of such courts, and (b) waives any objection it may now or
hereafter have as to the venue of any such action or proceeding brought in any
such court or that any such court is an inconvenient forum. Each Borrower
agrees that service of process upon it may be made by certified or registered
mail, return receipt requested, at its address specified or determined in
accordance with the provisions of Section 11.12. Nothing herein or in any of
the other Loan Documents shall affect the right of the Lender to serve process
in any other manner permitted by law or shall limit the right of the Lender to
bring any action or proceeding against any Borrower or with respect to any of
their property in courts in other jurisdictions. Any action or proceeding by
any Borrower against the Lender shall be brought only in a court located in
Caddo Parish, Louisiana.
Section 11.14. Counterparts. This Agreement may be executed in one
or more counterparts, each of which shall be deemed an original, but all of
which together shall constitute one and the same instrument.
Section 11.15. Severability. Any provision of this Agreement held
by a court of competent jurisdiction to be invalid or unenforceable shall not
impair or invalidate the remainder of this Agreement and the effect thereof
shall be confined to the provision held to be invalid or illegal.
Section 11.16. Headings. The headings, captions, and arrangements
used in this Agreement are for convenience only and shall not affect the
interpretation of this Agreement.
Section 11.17. Participations. The Lender shall have the right at
any time and from time to time to grant participations in the Note and any
other Loan Documents. Each actual or proposed participant shall be entitled to
receive all information received by the Lender regarding the Borrowers and the
Subsidiaries, including, without limitation, information required to be
disclosed to a participant pursuant to Banking Circular 181 (Rev., August 2,
1984), issued by the Comptroller of the Currency (whether the actual or
proposed participant is subject to the circular or not).
Section 11.18. Construction. Each Borrower and the Lender
acknowledge that each of them has had the benefit of legal counsel of its own
choice and has been afforded an opportunity to review this Agreement and the
other Loan Documents with its legal counsel and that this Agreement and the
other Loan Documents shall be construed as if jointly drafted by the Borrowers
and the Lender.
Section 11.19. Independence of Covenants. All covenants hereunder
shall be given independent effect so that if a particular action or condition
is not permitted by any of such
-33-
39
covenants, the fact that it would be permitted by an exception to, or be
otherwise within the limitations of, another covenant shall not avoid the
occurrence of a Default if such action is taken or such condition exists.
Section 11.20. WAIVER OF JURY TRIAL. TO THE FULLEST EXTENT
PERMITTED BY APPLICABLE LAW, EACH BORROWER HEREBY IRREVOCABLY AND EXPRESSLY
WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING, OR COUNTERCLAIM
(WHETHER BASED UPON CONTRACT, TORT, OR OTHERWISE) ARISING OUT OF OR RELATING TO
ANY OF THE LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED THEREBY OR THE
ACTIONS OF LENDER IN THE NEGOTIATION, ADMINISTRATION, OR ENFORCEMENT THEREOF.
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first above written.
NOTICE OF INDEMNIFICATION: BORROWERS:
------------------------- ---------
EACH BORROWER HEREBY SOUTHERN FLOW COMPANIES, INC.
ACKNOWLEDGES THAT THIS
LOAN AGREEMENT CONTAINS
CERTAIN INDEMNIFICATION
PROVISIONS PURSUANT TO By: /s/ W. Xxxxxxx Xxxxxx
SECTION 11.2 HEREOF. -------------------------------
Name: W. Xxxxxxx Xxxxxx
--------------------------
Title: Chief Executive Officer
-------------------------
XXXXXX GAS TRANSMISSION, INC.
By: /s/ W. Xxxxxxx Xxxxxx
---------------------------------
Name: W. Xxxxxxx Xxxxxx
---------------------------
Title: Chief Executive Officer
--------------------------
Address for Notices:
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx. Xxxx Xxxxxxxxxx
-34-
40
GUARANTOR:
XXXXXX NATURAL GAS SERVICES, INC.
By: /s/ W. Xxxxxxx Xxxxxx
---------------------------------
Name: W. Xxxxxxx Xxxxxx
----------------------------
Title: President and CEO
---------------------------
Address for Notices:
0000 Xxxxxxxx, Xxxxx 0000
Xxxxxx, Xxxxxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx. Xxxx Xxxxxxxxxx
LENDER:
COMMERCIAL NATIONAL BANK
IN SHREVEPORT
By: /s/ Xxxxx Xxxxx, III
---------------------------------
Xxxxx Xxxxx, III,
Senior Vice President
Address for Notices:
000 Xxxxx Xxxxxx
Xxxxxxxxxx, Xxxxxxxxx 00000
Fax No.: (000) 000-0000
Telephone No.: (000) 000-0000
Attention: Xx. Xxxxx Xxxxx, III
-35-
41
INDEX TO EXHIBITS
Exhibit Description of Exhibit Section
------- ------------------------ -------
"A" Note 2.2
"B" Advance Request Form 2.5
"C" Deed of Trust 4.1(a)
"D-1" Security Agreement 4.1(c)
"D-2" Pledge Agreement 4.1(b)
"E" Guaranty 4.2
"F" Borrowing Base Report 7.1(j)
"G" Bank Consent 2.7
INDEX TO SCHEDULES
Schedule Description of Schedule Section
-------- ------------------------- -------
1 Legal Description of Real Property 4.1(a)
2 Existing Litigation 6.5
3 Existing Debt 6.9
4 List of Subsidiaries 6.14
5 Environmental Matters 6.20
6 Existing Liens 8.2
42
FIRST AMENDMENT TO LOAN AGREEMENT
THIS FIRST AMENDMENT TO LOAN AGREEMENT (the "Amendment"), dated as of
May 14, 1997, is by and among SOUTHERN FLOW COMPANIES, INC., a Delaware
corporation, XXXXXX GAS TRANSMISSION, INC., a Colorado corporation
(individually, a "Borrower" and collectively, the "Borrowers"), XXXXXX NATURAL
GAS SERVICES, INC., a Delaware corporation ("Guarantor"), and COMMERCIAL
NATIONAL BANK IN SHREVEPORT ("Lender").
RECITALS:
A. The Borrowers, Guarantor and Lender have entered into that
certain Loan Agreement dated as of April 18, 1997 (as the same may be amended
or otherwise modified from time to time, the "Agreement").
B. Pursuant to the Agreement, Guarantor executed that certain
Guaranty Agreement (the "Guaranty") dated as of April 18, 1997 which guaranteed
to Lender the payment and performance of the Obligations (as defined in the
Agreement).
C. The Borrowers, Guarantor 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
1.1 Definitions. Capitalized terms used in this Amendment, to the
extent not otherwise defined herein, shall have the same meanings as in the
Agreement, as amended hereby.
ARTICLE II
Amendments
2.1 Amendment to Section 2.3. Effective as of the date hereof,
Section 2.3 of the Agreement is hereby amended in its entirety to read as
follows:
"Section 2.3. Repayment of Term Loan. The Borrowers shall
jointly and severally repay the unpaid principal amount of the Term
Loan in thirty-five (35) equal consecutive monthly installments in the
amount of Eleven Thousand One
1
43
Hundred Eleven and 11/100 Dollars ($11,111.11) each, payable on the
last day of each month, commencing May 31, 1997, plus a final
installment in the amount of all outstanding principal of the Term
Loan payable on April 30, 2000."
2.2 Amendment to Section 2.4.
(a) Effective as of the date hereof, the first sentence
of Section 2.4 of the Agreement is hereby amended in its entirety to
read as follows:
"The unpaid principal amount of the Term Loan shall bear
interest prior to maturity from the date the Advance is made at a
varying rate per annum equal from day to day to the lesser of (a) the
Maximum Rate, or (b) the sum of the Base Rate in effect from day to
day plus one percent (1%).
(b) Effective as of the date hereof, the reference to
"March 31, 1997" contained in the third sentence of Section 2.4, is
hereby amended in its entirety to read "April 30, 1997."
2.3 Amendment to Section 2.7. Effective as of the date hereof,
Section 2.7 is hereby amended in its entirety to read as follows:
Section 2.7 Operating Accounts. Southern Flow shall deposit
all proceeds of Collateral received by it directly in its operating
account maintained at Bank One, Louisiana-Lafayette, N.A. If an Event
of Default has occurred and is continuing, all amounts in excess of
$50,000 deposited in such operating account shall be transferred on a
daily basis to Southern Flow's operating account maintained with
Lender and Lender may apply all such amounts to the Obligations
pursuant to the terms hereof.
2.4 Amendment to Section 5.1. Effective as of the date hereof,
Section 5.1 is hereby amended to delete clause (m) in its entirety.
2.5 Amendment to Agreement. Effective as of the date hereof, (i)
Exhibit "G" to the Agreement is hereby deleted in its entirety, and (ii)
Exhibit "A" to the Agreement is hereby amended to read in its entirety as set
forth on Annex I attached hereto.
ARTICLE III
Conditions Precedent
3.1 Conditions. The effectiveness of this Amendment is subject to
the satisfaction of the following conditions precedent:
(a) Lender shall have received all of the following, each
dated (unless otherwise indicated) the date of this Amendment, in form
and substance satisfactory to Lender:
2
44
(1) Resolutions. Resolutions of the Board of
Directors of each Borrower certified by its Secretary or an
Assistant Secretary which authorize the execution, delivery,
and performance by such Borrower of this Amendment and the
other Loan Documents to which such Borrower is or is to be a
party hereunder;
(2) Incumbency Certificate. A certificate of
incumbency certified by the Secretary or an Assistant
Secretary of each Borrower certifying the names of the
officers of such Borrower authorized to sign this Amendment
and each of the other Loan Documents to which such Borrower is
or is to be a party hereunder (including the certificates
contemplated herein) together with specimen signatures of such
officers;
(3) Note. The Note executed by the Borrowers
substantially in the form of Annex I attached hereto;
(4) Modification of Deed of Trust. A
Modification of Deed of Trust executed by Southern Flow; and
(5) Additional Information. Lender shall have
received such additional documents, instruments and
information as Lender or its legal counsel, Xxxxxxxx Xxxxxxxx
& Xxxxxx P.C., may request; and
(b) The representations and warranties contained herein
and in all other Loan Documents, as amended hereby, shall be true and
correct as of the date hereof as if made on the date hereof;
(c) No Default shall have occurred and be continuing; and
(d) All corporate proceedings taken in connection with
the transactions contemplated by this Amendment and all documents,
instrument, and other legal matters incident thereto shall be
satisfactory to Lender and its legal counsel, Xxxxxxxx Xxxxxxxx &
Xxxxxx P.C.
ARTICLE IV
Ratifications, Representations and Warranties
4.1 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 and the other Loan
Documents are ratified and confirmed and shall continue in full force and
effect. Borrowers and Lender agree that the Agreement as amended hereby and
the other Loan Documents shall continue to be legal, valid, binding and
enforceable in accordance with their respective terms.
3
45
4.2 Representations and Warranties. Each Borrower hereby
represents and warrants to Lender that (i) the execution, delivery and
performance of this Amendment and any and all other Loan Documents executed
and/or delivered in connection herewith have been authorized by all requisite
corporate action on the part of such Borrower and will not violate the articles
of incorporation or bylaws of such Borrower, (ii) the representations and
warranties contained in the Agreement, as amended hereby, and any other Loan
Document are true and correct on and as of the date hereof as though made on
and as of the date hereof, (iii) no Default has occurred and is continuing, and
(iv) such Borrower is in full compliance with all covenants and agreements
contained in the Agreement as amended hereby.
ARTICLE V
Miscellaneous
5.1 Survival of Representations and Warranties. All
representations and warranties made in this Amendment or any other Loan
Document including any Loan Document furnished in connection with this
Amendment shall 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 upon
them.
5.2 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.
5.3 Expenses of Lender. As provided in the Agreement, the
Borrowers agree to pay on demand all costs and expenses incurred by Lender in
connection with the preparation, negotiation, and execution of this Amendment
and the other Loan Documents 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.
5.4 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.
5.5 Applicable Law. This Amendment and all other Loan Documents
executed pursuant hereto shall be deemed to have been made and to be
performable in Shreveport, Caddo Parish, Louisiana and shall be governed by and
construed in accordance with the laws of the State of Louisiana.
4
46
5.6 Successors and Assigns. This Amendment is binding upon and
shall inure to the benefit of Lender and Borrowers and their respective
successors and assigns, except neither Borrower may assign or transfer any of
its rights or obligations hereunder without the prior written consent of
Lender.
5.7 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.
5.8 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 either Borrower or Guarantor shall be deemed a consent or waiver to or
of any other breach of the same or any other covenant, condition or duty.
5.9 Headings. The headings, captions, and arrangements used in
this Amendment are for convenience only and shall not affect the interpretation
of this Amendment.
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 AND
SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THIS AMENDMENT, AND MAY
NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OR DISCUSSION OF THE PARITIES HERETO. THERE ARE NO
ORAL AGREEMENTS AMONG THE PARTIES HERETO.
Executed as of the date first written above.
Borrowers:
---------
SOUTHERN FLOW COMPANIES, INC.
By: /s/ W. Xxxxxxx Xxxxxx
--------------------------------------
Name: W. Xxxxxxx Xxxxxx
------------------------------------
Title: Chief Executive Officer
-----------------------------------
XXXXXX GAS TRANSMISSION, INC.
By: /s/ W. Xxxxxxx Xxxxxx
--------------------------------------
Name: W. Xxxxxxx Xxxxxx
------------------------------------
Title: Chief Executive Officer
-----------------------------------
5
47
Guarantor:
---------
XXXXXX NATURAL GAS SERVICES, INC.
By: /s/ W. Xxxxxxx Xxxxxx
--------------------------------------
Name: W. Xxxxxxx Xxxxxx
------------------------------------
Title: President and Chief Executive
Officer
-----------------------------------
Lender:
------
COMMERCIAL NATIONAL BANK
IN SHREVEPORT
By: /s/ Xxxxx Xxxxx, III
--------------------------------------
Xxxxx Xxxxx, III
Senior Vice President
Guarantor hereby consents and agrees to this Amendment and agrees that
the Guaranty shall remain in full force and effect and shall continue to be the
legal, valid and binding obligation of Guarantor enforceable against Guarantor
in accordance with its terms. Guarantor hereby further acknowledges and agrees
that the indebtedness evidenced by the Term Note executed in connection
herewith constitutes a portion of the "Guaranteed Indebtedness" (as such term
is defined in the Guaranty) and the payment and performance thereof is
guaranteed pursuant to the terms of the Guaranty.
Guarantor:
---------
XXXXXX NATURAL GAS SERVICES, INC.
By: /s/ W. Xxxxxxx Xxxxxx
--------------------------------------
Name: W. Xxxxxxx Xxxxxx
------------------------------------
Title: President and Chief Executive
Officer
-----------------------------------
6
