EXHIBIT 10.17
June 24, 2002
Natural Gas Services Group, Inc.
0000 X. Xxxxxx Xxxx 0000
Xxxxxxx, Xxxxx 00000
Gentlemen:
In accordance with recent discussions, Western National Bank ("WNB") is pleased
to make the following commitment to Natural Gas Services Group, Inc., including,
but not limited to, the terms and conditions set forth below.
BORROWER: Natural Gas Services Group, Inc. ("NGSG")
AMOUNT: $3,500,000
PURPOSE: Refinance remaining balance on indebtedness to Dominion
after initial public offering and partial paydown.
TERM: Five Years
RATE: Wall Street Journal Prime + 1.0%, floating daily.
REPAYMENT: Monthly payments of $58,333 + accrued interest.
COLLATERAL: Superior security interest in all A/R, Inventory, and
Equipment of borrowing entity and subsidiaries.
Cross-collateralized with the with WNB notes # 816559, #
816307, # 817093, and # 817092.
$1,000,000 life insurance policy on Xxxxx Xxxxxx.
GUARANTORS: Unlimited guaranties of: NGE Leasing; Rotary Gas; Hi-Tech
Compressor; Flare King; and Great Lakes Compression.
REPRESENTATIONS & WARRANTIES:
Usual and customary representations and warranties for
transactions of this nature, including but not limited to
the following:
(1) No material adverse change in financial condition of
Borrower
(2) Absence of litigation or any existing or pending
adverse decree orders from a court or environmental
agency.
(3) No change in the nature of NGSG's primary business
practices.
CONDITIONS PRECEDENT:
(1) Negotiation and execution of loan documents
satisfactory to WNB and Xxxxxxxx.
(2) Completion of Initial Public Offering with NGSG
netting at least $8,000,000 in proceeds.
(3) NGSG shall be in compliance with existing loan
agreement at time of funding.
(4) Proceeds from the Initial Public Offering used to
reduce Dominion debt to $3,500,000
COVENANTS:
This facility is governed by a comprehensive loan agreement
containing all of the standard representations, warranties,
and events of default including, but not limited to, the
following provisions:
(1) NGSG shall provide monthly financial statements
(consolidated with all subsidiaries), accounts
receivable aging, borrowing base certificate ($750M
RLOC), and compliance certificates within 45 days of
each month end.
(2) NGSG shall provide a quarterly report listing the
physical location of all lease units including any
remaining lease terms.
(3) NGSG shall provide annual audited financial
statements of borrower and all subsidiaries
(combined) within 90 days of fiscal year end.
(4) NGSG shall incur no additional debts, liens, or
encumbrances in excess of $100M without prior,
written WNB approval.
(5) NGSG shall make no asset sales in excess of $100,000
without prior written WNB approval.
(6) NGSG shall make no distributions / dividends (except
for stated dividends on existing preferred stock)
without prior, written WNB approval.
(7) NGSG shall make no changes in management at the CEO
/ President level without prior, written WNB
approval.
(8) Use of loan proceeds limited to pay off of
$3,500,000 Dominion Debt.
(9) NGSG will allow WNB, at borrowers expense, to
perform limited visual inspections on a portion of
the leased compressors at least semi annually, not
to exceed one inspection per quarter.
(10) NGSG shall maintain a three month moving average
traditional cash flow coverage of not less than
1.25x beginning 9/30/02. Calculated per existing
loan agreement.
(11) NGSG shall maintain a minimum current ratio of 1.5x
measured monthly beginning 9/30/02.
(12) NGSG shall not exceed a maximum debt less
subordinated debt / tangible worth + subordinated
debt as equity ratio of 1.0x beginning 9/30/02.
(13) NGSG shall maintain a minimum tangible net worth of
$11.5MM beginning 9/30/02.
CLOSING COSTS:
Borrower will pay all necessary fees and expenses incurred
by WNB with respect to preparation of loan documents and
filing fees.
Thank you for the opportunity to continue to serve your banking needs. If you
are in agreement with the terms and conditions outlined above, please sign this
commitment and return it to me at your earliest convenience. If you should have
any questions, comments, or simply wish to further our discussions pertaining to
your request, please do not hesitate to contact me at 000-0000.
Sincerely,
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
Executive Vice President
Western National Bank
AGREED TO AND ACCEPTED THIS 25TH DAY OF JUNE, 2002.
BORROWER: NATURAL GAS SERVICES GROUP, INC.
BY: XXXXX XXXXXX, PRESIDENT
/s/ Xxxxx Xxxxxx
Xxxxx Xxxxxx
President / Natural Gas Services Group, Inc.
