Exhibit 10.1
LOAN AGREEMENT
BY AND AMONG
AMEN PROPERTIES, INC.
AS BORROWER;
AND
MCGRAW BROTHERS INVESTMENTS,
MORIAH INVESTMENT PARTNERS,
LCM PARTNERSHIP,
W POWER & LIGHT, LP,
XXXXX X. XXXXXXXXX,
XXX X. XXXXXX,
XXXX XXXXXX,
XXXX XXXXXXX,
XXXXX X. XXXXXXXXX,
XXXXXXX XXXXXXX, XX.,
AND
XXXX XXXXXXX,
AS GUARANTORS;
AND
WESTERN NATIONAL BANK,
AS LENDER
$5,000,000.00 February 28, 2005
LOAN AGREEMENT
THIS LOAN AGREEMENT (the "AGREEMENT") is made and entered into as of
this 28th day of February 2005, by and among AMEN PROPERTIES, INC, a Delaware
corporation (alternatively, "AMEN" or the "BORROWER"), whose address is 000 Xxxx
Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000; MCGRAW BROTHERS INVESTMENTS, a
Texas general partnership, MORIAH INVESTMENT PARTNERS, a Texas general
partnership, LCM PARTNERSHIP, a Texas general partnership, W POWER AND LIGHT,
LP, a Delaware limited partnership, whose address is 000 Xxxx Xxxx Xxxxxx, Xxxxx
000, Xxxxxxx, Xxxxx 00000; XXXXX X. XXXXXXXXX., an individual, XXX X. XXXXXX, an
individual, whose address is 000 X. Xxxx Xxxxxx, Xxxxx 0000, Xxxxxxx, Xxxxx
00000; XXXX XXXXXX, an individual, XXXX XXXXXXX, an individual, XXXXX XXXXXXXXX,
an individual, XXXXXXX XXXXXXX, XX., an individual, and XXXX XXXXXXX, an
individual, (collectively, the "GUARANTORS"); and WESTERN NATIONAL BANK, a
national banking association, with offices and place of business at 000 Xxxx
Xxxx, Xxxxx 0000, Xxxxxxx, Xxxxx 00000 (alternatively, "WESTERN" or the "BANK").
NOTICE IS TAKEN OF THE FOLLOWING:
A. Borrower is a publicly traded company which has formed a subsidiary, W
Power and Light, LP, a Delaware limited partnership (alternatively,
"WPL" or the "SUBSIDIARY") to compete in the Texas retail electricity
market providing said electricity, related billing services, and
customer service collection and remittance services to residential and
commercial customers.
B. The Borrower and the Guarantors have requested that the Lender advance
a line of credit to the Borrower in order to provide interim funding
for the accounts receivable of the Subsidiary. The Borrower's
obligations and commitments will be secured by accounts receivables
pledged by the Subsidiary. In addition, the Borrower's indebtedness
will be guaranteed by each of the Subsidiary's limited partners, and
those guarantees will be supported by letters of credit.
C. The Bank has agreed to accommodate the requests of the Borrower and the
Guarantors, but only upon and subject to the terms and provisions which
are hereinafter specified.
NOW, THEREFORE, for and in consideration of the premises and Ten and
No/100 Dollars and other good and valuable consideration granted by the Bank to
the Borrower, which is of direct and material benefit to Guarantors, the receipt
and sufficiency of which is specifically acknowledged by the Borrower and
Guarantors, the parties do hereby agree as follows:
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ARTICLE I
DEFINITION OF TERMS
In addition to those terms defined in the preamble and the recitations
found above, the following terms shall have the respective meanings indicated
below for purposes of this Agreement:
1.01. ADVANCE: The disbursement of a sum loaned or to be loaned by Bank
to the Borrower pursuant to this Agreement.
1.02. AGREEMENT: This Loan Agreement, as amended, supplemented, or
otherwise modified from time to time.
1.03. BANK LIENS: The Liens in favor of Bank, securing all or any
portion of the Obligation, including, without limitation, rights in any of the
Collateral created in favor of Bank, whether by mortgage, pledge, hypothecation,
assignment, transfer or other granting or creation of Liens.
1.04. BORROWING BASE: The lesser of the following amounts: (a) the face
amount of the Note, or (b) the Adjusted Eligible Accounts established pursuant
to the terms of Section 3.07 of this Agreement plus $500,000.00 availability for
issuance of Letters of Credit.
1.05. BUSINESS DAY: Every day (other than Saturday or Sunday) on which
Bank is open to the public generally for the transaction of banking business.
1.06. CAP: The sum of Two Million Five Hundred Thousand and No/100
Dollars ($2,500,000.00), which, regardless of the face amount of the Note and
the Borrowing Base is the maximum amount that the Bank has agreed to advance to
the Borrower under the terms of this Agreement, as of the execution hereof.
1.07. COLLATERAL: All of the items and types of property described in
the Loan Documents conveyed by the Borrower and WPL to Western to secure full
and complete payment and performance of the Obligation.
1.08. CURRENT ASSETS: The current assets of any person shall mean, as
of any date, the current assets that would be reflected on a balance sheet of
that person prepared as of any date in conformity with GAAP.
1.09. CURRENT LIABILITIES: The current liabilities that would be
reflected on a balance sheet of any person prepared as of any date in conformity
with GAAP.
1.10. DEBT: As to any person, all liabilities, obligations, and
indebtedness to any person, of any kind or nature, now or hereafter owing,
arising, due or payable, howsoever evidenced, created, incurred, acquired or
owing, whether primary, secondary, direct, contingent, fixed, or otherwise.
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1.11. DEBT SERVICE COVERAGE RATIO: As to any person, the ratio of Cash
Flow, subsequent to effecting any permissible distributions, during any
specified time period, to those payments of principal and interest required
under the Note for the same time period.
1.12. EVENT OF DEFAULT: Any one of those events described in Article
VIII below giving rise to a breach by the Borrower or any of the Guarantors of
the terms of this Agreement.
1.13. FINANCING STATEMENT: The financing statement or financing
statements (prepared upon standard Uniform Commercial Code forms), executed and
delivered by the Borrower and the Guarantors in connection with any security
agreements or assignments relating to the Loan.
1.14. GAAP: Generally accepted accounting principles consistently
applied.
1.15. GOVERNMENTAL AUTHORITY: The United States of America, the State
of Texas, the County of Midland, Texas, the City of Midland, Texas, or any
agency, department, commission, bureau or instrumentality of any of them.
1.16. GUARANTORS: All of the Guarantors acting individually pursuant to
the Guaranty Agreements to be executed at closing.
1.17. GUARANTY AGREEMENTS: Collectively, the instruments to be executed
by each of the Guarantors at closing as additional security for the Loan. For
purposes of this Agreement, the Guaranty Agreements of the Guarantors shall
guaranty the performance of the Borrower, without limitation.
1.18. HIGHEST LAWFUL RATE: The maximum nonusurious rate of interest
(or, if the context so requires, an amount calculated at such rate) that Bank is
allowed to contract for, charge, take, reserve, or receive under applicable law
after taking into account, to the extent required by applicable law, any and all
relevant payments or charges under the Loan Documents.
1.19. LIEN: Any lien, mortgage, security interest, charge, or
encumbrance of any kind, including, without limitation, the rights of a vendor,
lessor, or similar party under any conditional sales agreement or other title
retention agreement or lease substantially equivalent thereto, any other right
of, or arrangement with, any creditor to have its claim satisfied out of any
property or assets, or the proceeds therefrom, prior to the general creditors of
the owner thereof.
1.20. LOAN: The obligations of the Borrower to the Bank under that
certain Revolving Line of Credit Note, dated February 25, 2005, in the original
principal amount of $5,000,000.00, evidenced by the Note, of even date herewith,
in the original principal amount of $5,000,000.00 which is described in greater
detail in Article III below.
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1.21. LOAN DOCUMENTS: This Agreement, the Note, the Security
Agreements, the Financing Statements, the Guaranty Agreements and all other
agreements or assignments reasonably required by Bank which secure or relate to
the Loan.
1.22. LOAN PARTIES: Collectively, the Borrower and the Guarantors.
1.23. MATERIAL ADVERSE CHANGE: Any set of circumstances or events that:
(i) will or could reasonably be expected to have any significant effect upon the
validity, performance, or enforceability of any Loan Document; (ii) is or could
reasonably be expected to be material and adverse to the financial condition or
business operations of the Borrower or any of the Guarantors; (iii) will or
could reasonably be expected to impair the ability of the Borrower or any of the
Guarantors to fulfill its obligations under the terms and conditions of the Loan
Documents; or (iv) will or could reasonably be expected to cause an Event of
Default.
1.24. MATERIAL AGREEMENT: Any material written or oral agreement,
contract, commitment, or understanding to which any person is a party, having an
annualized value of Twenty-Five Thousand and No/100 Dollars ($25,000.00) or
more, by which such person is directly or indirectly bound, or to which any
assets of such person may be subject, which is not subject to cancellation by
such person upon 30 days or less notice without liability for further payment
other than nominal penalty.
1.25. MATURITY DATE: MARCH 31, 2008, being the final maturity date when
all of the outstanding principal and accrued interest then due under the
Revolver Loan shall be finally due and payable.
1.26. NOTE: The certain Revolving Line of Credit Note, of even date
with this Agreement, in the original amount of Five Million and No/100 Dollars
($5,000,000.00).
1.27. OBLIGATION: All present and future indebtedness, obligations and
liabilities, and all renewals and extensions thereof, or any part thereof, now
or hereafter owed to Bank by the Borrower and the Guarantors, arising from, by
virtue of, or pursuant to any Loan Document, together with all interest accruing
thereon and costs, expenses, and attorneys' fees incurred in the enforcement or
collection thereof, whether such indebtedness, obligations, and liabilities are
direct, indirect, fixed, contingent, liquidated, unliquidated, joint, several,
or joint and several or were, prior to acquisition thereof by Bank, owed to some
other person.
1.28. SECURITY AGREEMENTS: Those instruments to be executed by the
Borrower and the Subsidiary, under which they grant to Western a security
interest in the following types of Collateral: (i) all of their accounts
receivable, chattel paper, documents and instruments; (ii) all general
intangibles; (iii) any related or additional property from time to time
delivered to or deposited with Western expressly securing the Obligation; (iv)
all property in any state or condition used or usable in connection with any
property referred to in (i) through (vi) above; (v) all policies of insurance
(whether or not required by Western) covering any of their property; (vi) all
proceeds, products, replacements, additions to, substitutions for, accessions
of, and property necessary for the operation of any of the foregoing, including,
without limitation, insurance payable as a result of loss or damage to the
foregoing property and any proceeds thereunder, refunds or unearned premiums of
any such insurance policy, and claims against third parties; (vii) all books and
records related to any of the foregoing, including without limitation any and
all books of account, customer lists and other records relating in any way to
the accounts and inventory; and (viii) any of the aforementioned collateral
hereafter acquired by any of them as well as Collateral which they now own or in
which they otherwise have rights related to any property of the type and
character described above.
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1.29. TANGIBLE NET WORTH: The sum of any person's total assets, less
that person's total liabilities and intangible assets. "INTANGIBLE ASSETS" shall
mean those assets that are: (a) organizational costs; (b) accounts or notes
receivable from officers or stockholders, shareholders, partners, members, or
other holders of equity interests; (b) deferred assets, other than prepaid
insurance and prepaid taxes; and (c) patents, copyrights, trademarks, trade
names, franchises, goodwill (including capitalization of noncompetition
agreements net of amortization), experimental expenses and other similar assets
that would be classified as intangible assets on a balance sheet prepared in
conformity with GAAP.
1.30. OTHER DEFINITIONAL PROVISIONS:
A. All terms defined in this Agreement shall have the
above described meanings when used in any other Loan
Document or in any certificate, report or other
document made or delivered pursuant to this
Agreement, unless same shall otherwise expressly
require.
B. Terms used herein in the singular shall import the
plural and VICE VERSA.
C. Terms not specifically defined herein shall have the
meanings accorded them under generally accepted
accounting principles, or the Texas Uniform
Commercial Code, as appropriate.
D. The words "hereof," "herein," "hereto," "hereunder"
and similar terms when used in this Agreement shall
refer to this Agreement as a whole and not to any
particular provisions of this Agreement.
ARTICLE II
SCHEDULES AND EXHIBITS
Attached hereto are the following Schedule and Exhibits, the terms of
which are for all purposes incorporated herein by reference:
Exhibit "A" Form of Borrowing Base Certificate
Exhibit "B" Form of Compliance Certificate
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ARTICLE III
THE ORIGINAL OBLIGATION
3.01. THE REVOLVER LOAN. Bank hereby agrees to lend to the Borrower
(and the Borrower hereby agrees to borrow from Bank) the Loan, to be in the
original principal amount of Five Million and No/100 Dollars ($5,000,000.00) and
subject to the terms and provisions of this Agreement, such sum to be evidenced
by the Note.
3.02. LIMITATIONS ON ADVANCES AND BORROWER'S LIABILITY. Borrower's
liability for repayment of the interest on account of the Loan shall be limited
to and calculated with respect to proceeds from the Note actually advanced to
Borrower pursuant to the terms of this Agreement and only from the date or dates
of such Advances. Loan proceeds advanced by Bank (acting in its sole discretion
upon the occurrence of an Event of Default) by journal entry to pay interest,
financing costs, and any other costs associated with foreclosure, as well as
Loan proceeds advanced directly by Bank to pay costs or expenses required to be
paid by Borrower pursuant to this Agreement, shall constitute actual Advances to
Borrower.
3.06. ORIGINAL OBLIGATION. The Advances to be made under the Loan shall
constitute Borrower's Original Obligation to Bank for purposes of this
Agreement.
3.07. BORROWING BASE. At any time, and from time to time, the amounts
outstanding under the Note shall not exceed the lesser of: (a) the face amount
of the Note; or (b) the Borrowing Base, as determined from time to time by the
Bank, acting in its sole and unlimited discretion (said lesser amount being
referred to herein as the "COMMITMENT"). As used in this Agreement, the term
"BORROWING BASE" shall mean an amount equal to seventy-five percent (75%) of the
Eligible Accounts of Borrower and the Subsidiary.
For the purposes of this Agreement, the term "ELIGIBLE ACCOUNT" shall
mean an account receivable of the Borrower or the Subsidiary (net of any credit
balance, trade discount, or unbilled amount or retention) for which each of the
following statements is accurate and complete (and the Borrower and the
Subsidiary, by including such account receivable in any computation of the
Borrowing Base shall be deemed to represent and warrant to the Bank the accuracy
and completeness of such statements):
a. Said account receivable is a binding and
valid obligation of the obligor thereon, in
full force and effect, and enforceable in
accordance with its terms;
b. Said account receivable is genuine, in all
respects, as appearing on its face as
represented in the books and records of Loan
Parties, and all information set forth
therein is true and correct;
c. Said account receivable is free of all
default of any party thereto, counterclaims,
offsets, and defenses, and from any
rescission, cancellation, or avoidance, and
all right thereof, whether by operation of
law or otherwise;
D. The payment of said account receivable is
not more than ninety (90) days past due the
invoice date thereof;
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e. Said account receivable is free of
concessions or understandings with the
obligor thereon of any kind not disclosed to
and approved by the Bank in writing;
f. Said account receivable is, and at all times
will be, free and clear of all liens except
those in favor of the Bank;
g. Said account receivable is not a receivable
arising from intercompany indebtedness
existing between or among any of the Loan
Parties;
h. Said account receivable is derived from
sales made or services rendered to the
obligor in the ordinary course of the
business of the Loan Parties;
i. The obligor on said account receivable (i)
is located within the United States or the
District of Columbia; (ii) is not the
subject of any Bankruptcy or insolvency
proceeding, nor has a trustee or receiver
been appointed for all or a substantial part
of its property, nor has said obligor made
an assignment for the benefit of creditors,
admitted its inability to pay its debts as
they mature or suspended its business, (iii)
is not affiliated, directly or indirectly,
with AMEN or WPL as a subsidiary or
affiliate, employee or otherwise; and (iv)
is not a state or federal government
department, commission, board, bureau, or
agency; and
j. Said account receivable did not arise from
sales to an obligor as to whom ten percent
(10%) or more of the total accounts
receivable owing by such obligor to the Loan
Parties are delinquent accounts receivable
(that is, an account that is more than
ninety (100) days delinquent).
During the period from the date of this Agreement until March 31, 2005,
the amount of the Borrowing Base for borrowings under the Revolver Note will be
the lesser amount of: (a) $5,000,000.00 or (b) seventy-five percent (75%) of the
Eligible Accounts of Borrower and the Subsidiary. Within thirty (30) days of
March 31, 2005, and thereafter within thirty (30) days of each month end,
Borrower shall submit to the Bank a completed Borrowing Base Certificate,
prepared upon the form attached hereto as Exhibit "A." Also, discounted from the
Borrowing Base will be those face amounts of any outstanding Letters of Credit
issued by the Bank for the benefit of the Borrower. Upon receipt of a completed
version of the Borrowing Base Certificate, the Bank shall redetermine the
Borrowing Base, in the exercise of its sole discretion and in accordance with
its customary practices and standards for loans of a similar nature. The Bank
specifically reserves the right to discount all or part of any receivable from
the Borrowing Base calculations. Each redetermination of the Borrowing Base
shall be effective and applicable for the purposes of this Agreement until the
effective date of the next redetermination of the Borrowing Base.
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If the aggregate amounts outstanding under the Revolver Note exceeds
the Revolver Commitment at any time, the Bank shall provide written notice of
that event to the Borrower. On or before the tenth (10th) day following receipt
of such notification by the Borrower, Borrower shall either (a) make a mandatory
payment to the Bank of the principal of the Note in an amount at least equal to
the amount necessary to cause the outstanding principal balance of the Note to
be less than or equal to the Borrowing Base or (b) create liens on other assets
of the Borrower, satisfactory in nature, quantity, and value to the Bank, acting
in its sole discretion.
3.08. LIMITATION TO CAP. Regardless of the face amount of the Revolver
Note and the Borrowing Base, as presently determined or subsequently determined,
Borrowers and the Bank acknowledge and agree that the Bank will not be required
to advance any amount under the Revolver Loan in excess of the Cap.
ARTICLE IV
COLLATERALIZATION
4.01. COLLATERAL. To secure full and complete payment and performance
of the Obligation, Borrower and WPL hereby grant, convey to, and create in favor
of Bank Liens in, to, and on all of the property covered by the Security
Agreement (the "COLLATERAL").
4.02. GUARANTY AGREEMENTS. In addition to the Borrower's grant of a
security interest in the collateral, Borrower's performance under the loan shall
be supported by the execution by the Guarantors of the Guaranty Agreements. The
Guaranty Agreement under which WPL guarantees the Obligation will be unlimited.
The Guaranty Agreement of each of the other Guarantors will be up to, but not to
exceed the following amounts:
McGraw Brothers Investments $1,000,000.00
Moriah Investment Partners $1,000,000.00
Xxx X. Xxxxxx $ 562,480.00
Xxxx Xxxxxx $ 562,520.00
Xxxx Xxxxxxx $ 500,000.00
LCM Partnership $ 250,000.00
Xxxxxxx Xxxxxxx, Xx. $ 500,000.00
Xxxx Xxxxxxx $ 250,000.00
Xxxxx X. Xxxxxxxxx $ 250,000.00
Xxxxx X. Xxxxxxxxx $ 125,000.00
4.03. LETTERS OF CREDIT. To provide support for their performances
under the Guaranty Agreements, each of the Guarantors other than WPL shall
provide to the Bank a letter of credit, of even date herewith, each of which
shall cover, at a minimum, at least one-half of the amount covered by each
Guaranty Agreement (collectively, the "LETTERS OF CREDIT").
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ARTICLE V
THE ADVANCES
5.01. LOAN LIMITATIONS. Notwithstanding anything stated herein to the
contrary, in no event shall Bank be obligated to advance to Borrower hereunder
or under the Loan Documents any amounts in excess of the lesser of:
a. The Loan Amount; or
b. The maximum amount Bank may advance to any
borrower under applicable regulations
governing Bank.
5.02. CONDITIONS PRECEDENT. The obligation of Bank to make each Advance
hereunder, including the Initial Advance, shall be subject to the prior or
simultaneous occurrence or satisfaction of each of the following conditions:
a. Bank shall have received from Borrower all
of the Loan Documents duly executed by
Borrower, and the Loan Documents shall
remain outstanding and enforceable in
accordance with their terms, all as required
hereunder.
b. The representations and warranties made by
Borrower, which are set forth in Article VI,
shall be true and correct in every material
respect as of the date of each Advance, and
if requested by Bank, Borrower shall give a
certificate to Bank to that effect.
c. The covenants made by Borrower to Bank,
which are set forth in Article VII hereof,
shall have been fully complied with, except
as such compliance may be limited by the
passage of time.
d. No Event of Default under the Loan Documents
shall currently exist.
e. If required by the Bank, Borrower shall have
furnished to Bank certified copies of
resolutions of Borrower authorizing
execution, delivery, and performance of all
of the Loan Documents and authorizing the
borrowing hereunder, along with, regardless
of the nature of the borrowing entity, such
certificates of existence, certificates of
good standing, and other certificates or
documents a Bank may reasonably require to
evidence Borrower's authority.
f. If requested by Bank, Borrower shall have
furnished to Bank an opinion of counsel for
Borrower to the effect that:
i. The Borrower and the Subsidiary are
duly organized and validly existing
in good standing under the laws of
the State of Delaware. Borrower
possesses full power and authority
to perform Borrower's obligations
hereunder;
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ii. The Loan Documents have been duly
authorized, executed, and delivered
by Borrower and constitute the
valid and binding obligations of
Borrower, not subject to any
defense based upon usury, capacity
of the Borrower, or otherwise;
iii. the Loan Documents are enforceable
in accordance with their respective
terms, except as limited by
Bankruptcy, insolvency, and other
laws affecting creditors' rights
generally, and except that certain
remedial provisions thereof may be
limited by the laws of the State of
Texas;
iv. such counsel is neither handling
nor has knowledge of actions,
suits, or proceedings pending or
threatened against or affecting
Borrower or involving the priority,
validity, or enforceability of the
liens or security interests arising
out of the Loan Documents;
v. to the knowledge of such counsel,
after reasonable inquiry, Borrower
is not in default with respect to
any order, writ, injunction, decree
or demand of any court of any
Governmental Authority;
vi. to the knowledge of such counsel,
after reasonable inquiry, the
consummation of the transactions
hereby contemplated and the
performance of this Agreement will
not violate or contravene any
provision of the agreement creating
or governing the business
operations of Borrower and will not
result in any breach of, or
constitute a default under, any
mortgage, deed of trust, lease,
Bank loan, or credit agreement, or
other instrument to which the
Borrower is a party or by which the
Borrower may be bound or affected;
and
vii. such other matters as Bank may
reasonably request.
g. Bank shall have received from the Borrower
such other instruments, evidence, and
certificates as it may reasonably require.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES OF BORROWER
Borrower and Guarantors jointly and severally represent and warrant to
Western that:
6.01. LEGAL COMPLIANCE. Borrower has no knowledge of any violation of
any law, ordinance, order, rule, or regulation of any Governmental Authority
that exists with respect to any real property leased or owned by the Borrower;
the use thereof complies with all applicable zoning ordinances, regulations, and
restrictive covenants affecting the that real property; and all laws,
ordinances, orders, rules and regulations of all Governmental Authorities for
such use have been or will be satisfied.
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6.02. FINANCIAL STATEMENTS. The financial statements and information
regarding the financial condition of the Borrower and Guarantors heretofore
delivered to Bank are true and correct in all material respects, having been
prepared for federal income tax purposes with respect to the Borrower and
Guarantors, and fairly and accurately present the financial condition of the
Borrower and Guarantors as of the date thereof; no Material Adverse Change has
occurred in the financial condition of the Borrower and Guarantors reflected
therein since the date thereof; and no additional borrowing has been made or
committed to by the Borrower and Guarantors since the date thereof other than
the borrowing contemplated hereby.
6.03. PENDING LITIGATION. No actions, suits or proceedings are pending
or, to the knowledge of the Borrower, threatened against or affecting the
Borrower, or the priority of the liens thereof, at law or in equity, or before
or by any Governmental Authority, except actions, suits and proceedings fully
covered by insurance, or which, if adversely determined, would not impair the
ability of the Borrower to pay when due any amounts included in the Obligation.
6.04. ABSENCE OF GOVERNMENTAL DEFAULT. The Borrower is not in default
with respect to any order writ, injunction, decree or demand of any court of any
Governmental Authority.
6.05. ABSENCE OF EVENT OF DEFAULT. No Event of Default (as defined in
Article VIII hereof) has occurred and is continuing, and no event has occurred
and is continuing which with notice or the passage of time or both would
constitute an Event of Default hereunder, which has not been cured to the
satisfaction of Bank.
6.06. ORGANIZATION. The Borrower is duly organized and validly existing
in good standing under the laws of the state of its organization and is in good
standing under the laws of the states in which qualification is necessary for it
to transact business. The Borrower has full power and authority to enter into
and perform Borrower's obligations under the Loan Documents, including the
making of the borrowing contemplated hereby; and the Loan Documents to which the
Borrower is a party, when executed, will have been, and shall continue to be as
long as the Loan is outstanding, duly authorized, executed and delivered by the
Borrower and constitute Borrower's valid and binding obligations, enforceable
against Borrower in accordance with its respective terms, not subject to any
defense based upon usury, capacity of the Borrower, or otherwise.
6.07. ABSENCE OF DEFAULT UNDER OTHER AGREEMENTS. The consummation of
the transactions contemplated by, and the performance of, this Agreement and the
Loan Documents will not violate or contravene any provision of any instrument
creating or governing the business operations of the Borrower and will not
result in a breach of, or constitute a default under, any mortgage, deed of
trust, lease, Bank loan or credit agreement or other instrument to which the
Borrower is a party or by which the Borrower may be bound or affected.
6.08. NO CONSENT NECESSARY. No consent of any other party and no
consent, license, approval or authorization of, or registration or declaration
with, any Governmental Authority is required in connection with the execution,
delivery, performance, validity or enforceability of the transactions
contemplated by this Agreement or the instruments executed in connection
herewith which have not previously been obtained.
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6.09. USE OF PROCEEDS. The Borrower has entered into this Agreement
consistent with its duly authorized purposes and will use the proceeds of the
Loan made pursuant to this Agreement as provided herein as principal for its own
account and for business and commercial purposes as such terms are used in the
Consumer Credit Protection Act (and the Truth in Lending Act forming a part
thereof).
ARTICLE VII
COVENANTS OF LOAN PARTIES
7.01. LOAN PARTIES' AFFIRMATIVE COVENANTS. Until the Note and other
liabilities of the Borrower and the Guarantors hereunder are paid in full, the
Borrower and Guarantors agree that they shall fulfill the following covenants:
a. The Borrower shall furnish to Western, within one hundred and
twenty (120) days after the close of each fiscal year,
beginning with the fiscal year ending December 31, 2004,
copies of consolidated financial statements which will include
a balance sheet and statements of operations setting forth the
financial position of the Borrower, the Subsidiary, and all of
their affiliates and subsidiaries as of the end of such fiscal
year and all of the debts, liabilities and obligations owing
by the Borrower and the Subsidiary during such period, which
shall have been audited by independent certified public
accountants selected by the Borrower satisfactory to Bank,
said statements to be accompanied by certificates of
compliance executed by the President or Chief Financial
Officer of the Borrower;
b. The Borrower shall furnish to Western, within forty-five (45)
days of the end of each fiscal quarter, with the first quarter
ending on March 31, 2005, copies of consolidated financial
statements which will include a balance sheet and statements
of operations setting forth the financial position of the
Borrower, the Subsidiary, and all of their affiliates and
subsidiaries as of the end of such fiscal year and all of the
debts, liabilities and obligations owing by the Borrower and
the Subsidiary during such period, which shall have been
audited by independent certified public accountants selected
by the Borrower satisfactory to Bank, said statements to be
accompanied by certificates of compliance executed by the
President or Chief Financial Officer of the Borrower;
c. The Subsidiary of shall furnish to Western, within thirty (30)
days after the end of each calendar month, with the first
month ending on March 31, 2005, copies of internally prepared
financial statements to consist of a balance sheet, income
statement, accounts receivable and accounts payable aging
reports;
12
d. The Borrower and the Subsidiary shall furnish to Bank, within
thirty (30) days of the end of each calendar month, with the
first to be due for the month ending March 31, 2005, the
Borrowing Base Certificate described in Article III, Section
3.05 above, which Borrowing Base Certificate shall include an
aging report on all Eligible Accounts;
e. The Borrower shall furnish to Western, within thirty (30) days
of transmitting any tax return to any governmental authority,
beginning December 31, 2005, a copy of that tax return;
f. Beginning on December 31, 2005, the Borrower shall maintain a
consolidated Debt Service Coverage Ratio of at least 1.1 to
1.0, measured annually;
g. The Borrower and the Subsidiary shall maintain all of their
primary deposit accounts with the Bank;
h. Each of the Guarantors shall provide to Western a letter of
credit in an amount sufficient to support one-half of their
respective Guaranty Agreement with a minimum maturity of one
year, to be renewed annually and to remain in full force until
the maturity date of this Agreement.
i. The Borrower shall pay all reasonable legal fees incurred by
the Bank in connection with the preparation of this Agreement,
the Note, and all other agreements and documents contemplated
hereby or thereby. The Loan Parties will, upon request,
promptly reimburse the Bank for all amounts expended, advanced
or incurred by the Bank to satisfy any obligation of the Loan
Parties under this Agreement or the Note. The Loan Parties
shall pay all reasonable legal fees incurred by the Bank to
collect the Note or to enforce the rights of the Bank under
this Agreement or any other instruments referred to or
mentioned herein or therein or executed in connection herewith
or therewith, which amounts will include all court costs,
attorneys' fees, fees of auditors and accountants, and
investigation expenses reasonably incurred by the Bank from
third parties in connection with any such matters, together
with interest at the Highest Lawful Rate on each such amount
from the date that the same is expended, advanced or incurred
by the Bank until the date it is repaid to the Bank;
13
j. The Borrower shall observe and comply with all laws statutes,
codes, acts, ordinances, orders, judgments, decrees,
injunctions, certificates, franchises, permits, licenses,
authorizations, rules, regulations, directions and
requirements of all federal, state, county, municipal and
other governments, departments, commissions, boards, courts,
authorities, officials and officers, domestic and foreign. The
Loan Parties reserve the right to contest in good faith, by
appropriate proceedings diligently conducted, any of the
foregoing; and
k. The Borrower shall promptly cure any defects in the execution
and delivery of this Agreement, the Note, or any other
instrument or instruments referred to or mentioned herein or
therein. The Loan Parties will immediately execute and
deliver, upon request of the Bank, all such further documents
or agreements or instruments in compliance with or
accomplishment of the covenants and agreements of the Loan
Parties in this Agreement.
7.02. LOAN PARTIES' NEGATIVE COVENANTS. Until the expiration or
termination of the credit extended hereunder, and thereafter until the Note and
other liabilities of Borrower and Guarantors hereunder are paid in full or
unless the Bank shall otherwise consent in writing, the Loan Parties agree that:
a. Neither the Borrower nor the Subsidiary shall incur, create,
assume or suffer to exist any debts, liens, or encumbrances
without first obtaining the prior written consent of the Bank,
not to be unreasonably withheld.
b. Neither Borrower nor the Subsidiary shall guarantee, endorse,
or otherwise become liable upon any material obligations of
any other person, by the endorsement of negotiable instrument
for deposit or collection, other than the Obligations imposed
under this Agreement.
c. Without first obtaining the written consent of the Bank, not
to be unreasonably withheld, neither the Borrower nor the
Subsidiary shall make a conveyance of any substantial assets
to any third party, save and except for any assets of nominal
value no longer needed in their business, and except for
conveyances made for adequate consideration in the normal
course of business.
d. Neither the Borrower nor the Subsidiary shall enter into any
transaction, including, without limitation, any purchase,
sale, lease or exchange of property or the rendering of any
service, with any affiliate or related entity unless such
transaction is otherwise permitted under this Agreement or is
in the ordinary course of their business and is upon fair and
reasonable terms no less favorable to them than they would
obtain in a comparable arm's length transaction with an entity
not affiliated or related.
e. Neither Borrower nor the Subsidiary shall declare or pay any
dividend, purchase, redeem, or otherwise acquire for value any
of the stock or partnership interests of any of the Guarantors
now or hereafter outstanding, return any capital to their
shareholders or partners, or make any distribution of their
assets to their shareholders or partners as such, or permit
any subsidiary to purchase or otherwise acquire for value any
stock or partnership interests of the Guarantors.
f. Neither Borrower nor the Subsidiary shall discount or sell
with recourse, or sell for less than the greater of the face
or market value thereof, any notes or accounts receivable.
g. Neither Borrower nor the Subsidiary shall create any new class
of stock, whether common or preferred, nor issue any
additional common or preferred stock, nor grant any stock
options covering any stock of the Guarantors.
14
ARTICLE VIII
EVENTS OF DEFAULT
8.01. DEFINITION. The following shall constitute "Events of Default"
hereunder:
a. If either the Borrower or any of the Guarantors fails to
timely pay, within three (3) days of its due date, any
installment of principal or interest on the Note when due or
shall fail to timely pay any other indebtedness secured by the
Loan Documents when due;
b. If either the Borrower or any of the Guarantors fails to
fulfill any of the terms, provisions, or requirements of any
Material Agreement;
c. If either the Borrower or any of the Guarantors fails to
comply with any of the covenants, duties, or obligations of
Borrower or such Guarantors, and such failure continues for
thirty (30) days after the delivery of written notice to the
relevant Borrower or Guarantor;
d. If a default, including the passage of any applicable notice
and cure periods, occurs under any of the Loan Documents;
e. If at any time any representation or warranty made by any of
the Loan Parties is materially incorrect;
f. If either the Borrower or any of the Guarantors:
i. applies for or consents to the appointment of a
receiver, trustee, or liquidator,
ii. is unable or admits in writing its inability to pay
its debts as they mature,
iii. makes a general assignment for the benefit of
creditors,
iv. is adjudicated bankrupt or insolvent, or
v. files a voluntary petition in bankruptcy or file a
petition or answer seeking reorganization or an
arrangement with creditors or take advantage of any
insolvency law or files an answer admitting the
material allegations of a petition filed against it
in any bankruptcy or insolvency proceeding, or any
action shall be taken by either Borrower or any of
the Guarantors for the purpose of effecting any of
the foregoing;
g. If an order, judgment or decree shall be entered, without the
application, approval, or consent of either Borrower or any of
the Guarantors by any court of competent jurisdiction,
appointing a receiver, trustee or liquidator of the Borrower
or any of the Guarantors or of all or a substantial part of
the assets of any of the Loan Parties, and such order,
judgment, or decree shall continue unstayed and in effect for
any period of sixty (60) consecutive days;
15
h. If any Loan Party executes any conditional xxxx of sale,
chattel mortgage, or other security instrument covering any
materials, fixtures, or articles intended to be incorporated
in the Premises or the appurtenances thereto, or covering
articles of personal property placed in the Premises, or files
a financial statement publishing notice of such security
instrument, or if any of such materials, fixtures, or articles
be not purchased so that the ownership thereof will vest
unconditionally in the relevant Loan Party, free from
encumbrances, on delivery at the Premises and payment of the
purchase price upon customary terms (not more than thirty (30)
days), or if a Loan Party does not produce to Bank upon
reasonable demand true and correct copies of the contracts,
bills of sale, statements, receipted vouchers, or agreements,
or any of them, under which that Loan Party claims title to
such materials, fixtures, and articles;
i. If any Loan Party defaults under any other loan documents
representing, evidencing, or securing any other loan made to
that Loan Party; or
j. If a Loan Party fails to comply with any requirement of any
Governmental Authority within thirty (30) days after notice in
writing of such requirement shall have been received by that
Loan Party.
8.02. REMEDIES. Upon the occurrence of any Event of Default described
in Section 8.01, the lending obligations, if any, of Bank hereunder shall
immediately terminate, and the entire principal amount of all Obligations
outstanding together with interest then accrued and unpaid thereon shall become
immediately due and payable, all without demand and presentment for payment,
notice of nonpayment, protest, notice of protest, notice of dishonor, notice of
intention to accelerate maturity or notice of acceleration of maturity, or any
other notice of default of any kind, all of which are hereby expressly waived by
the Loan Parties.
8.03. NON-COMPLIANCE. Should Borrower be in default of, or fail to
comply with any covenant contained in this Loan Agreement, and if Borrower shall
fail to cure such default or failure to comply with such covenant, within ten
(10) days after the receipt of written notice of such default or failure to
comply, then, Bank may at Bank's option, increase the interest rate provided for
in the Note to reflect the increased monitoring by Bank and increased risk to
Bank of Borrower's non-compliance. Bank may increase the interest rate an
additional one percent for failure to comply with reporting requirements
regarding Financial Statement and Other Information as required by the Loan
Agreement, and an additional one percent for Borrower's non-compliance with
performance standards detailed in the Financial Covenants contained in the Loan
Agreement. Nothing in this paragraph shall require or obligate Bank to exercise
this option to increase the interest rate on the Note in lieu of any other
remedy available to Bank, including that of acceleration of the Note. If the
interest rate on the Note is increased as provided for in this paragraph, and
thereafter Borrower achieves compliance with all of its covenants contained in
this Loan Agreement, then Bank, upon Borrower's written request, will reinstate
the interest rate provided for in the Note.
16
8.04. RIGHT OF SETOFF. Upon the occurrence and during the continuance
of any Event of Default, or if any Loan Party becomes insolvent, however
evidenced, Bank is hereby authorized at any time and from time to time, without
prior notice to any Loan Party (any such notice being expressly waived by the
Loan Parties), to set off and apply any and all deposits (general or special,
time or demand, provisional or final) at any time held and other indebtedness at
any time owing by Bank to or for the credit or the account of the Loan Parties
against any and all of the Obligations, irrespective of whether or not Bank
shall have made any demand under this Agreement or the Note and although such
Obligations may be unmatured. Bank agrees promptly to notify the affected Loan
Parties after any such setoff and application, provided that the failure to give
such notice shall not affect the validity of such setoff and application. The
rights of Bank under this Section 8.03 are in addition to other rights and
remedies (including, without limitation, other rights of setoff) which Bank may
have.
8.05. DELEGATION OF DUTIES AND RIGHTS. Bank may perform any of its
duties or exercise any of its Rights under the Loan Papers by or through its
officers, directors, employees, attorneys, agents or other representatives.
8.06. BANK NOT IN CONTROL. None of the covenants or other provisions
contained in this Agreement or the other Loan Papers shall, or shall be deemed
to, give Bank the Right to exercise control over the affairs or management of
any of the Loan Parties.
8.07. WAIVERS BY BANK. The Loan Parties specifically recognize and
agree that the acceptance by Bank at any time and from time to time of part
payment on the Obligation shall not be deemed to be a waiver of any Event of
Default then existing. No waiver by Bank of any Event of Default shall be deemed
to be a waiver of any other then-existing or subsequent Event of Default. No
delay or omission by Bank in exercising any right under this Agreement or any of
the other Loan Documents shall impair such Right or be construed as a waiver
thereof or any acquiescence therein.
8.08. CUMULATIVE RIGHTS. All rights available to Bank under this
Agreement and the other Loan Documents are cumulative of, and in addition to,
all other rights available to Bank at law or in equity. The exercise or partial
exercise of any such right shall not preclude the exercise of any other right
under the Loan Documents or otherwise.
8.09. EXPENDITURES BY BANK. All court costs, reasonable attorneys'
fees, other costs of collection, and other sums spent by Bank pursuant to the
exercise of any right provided herein shall be payable to Bank on demand, shall
become part of the Obligation, and shall bear interest at the Highest Lawful
Rate per annum on each such amount commencing on the date notice of such claims,
judgments, costs, charges or attorneys' fees is given to Borrower by Bank until
the date paid by Borrower.
17
ARTICLE IX
BANK'S DISCLAIMERS - BORROWER'S INDEMNITIES
9.01. LIMITATION ON INTEREST. All agreements between Borrower and Bank,
whether now existing or hereby arising and whether written or oral, are hereby
expressly limited so that in no contingency or event whatsoever, whether by
reason of acceleration of the maturity of the Loan or otherwise, shall the
amount paid, or agreed to be paid, to Bank for the use, forbearance or detention
of the money to be loaned hereunder or otherwise, or for the payment or
performance of any covenant or obligation contained herein or in the Note, or in
any other Loan Documents, exceed the Highest Lawful Rate. If under any
circumstance whatsoever fulfillment of any provision hereof or of the Note, or
other Loan Documents, at the time performance of such provision shall be due,
shall involve transcending the Highest Lawful Rate, then, ipso facto, the
obligation to be fulfilled shall be reduced to the limit of such validity; and
if under any circumstance Bank shall ever receive as interest or otherwise an
amount which would exceed the Highest Lawful Rate, the amount, if any, which
would exceed the Highest Lawful Rate shall be applied to the reduction of the
principal amount owing on account of the Loan or on account of any other
principal indebtedness of Borrower to Bank, and not to the payment of interest,
or, if such excessive interest exceeds the unpaid balance of principal hereof
and such other indebtedness, the amount of such excessive interest that exceeds
the unpaid balance of principal hereof and such other indebtedness shall be
refunded to Borrower. All sums paid or agreed to be paid to Bank for the use,
forbearance, or detention of the indebtedness of Borrower to Bank shall be
amortized, prorated, allocated, and spread throughout the full term of such
indebtedness until payment in full so that the actual rate of interest on
account of such indebtedness is uniform throughout the term thereof and, in
conjunction therewith, if the Loan should ever be deemed to consist of two or
more loans, then any sum paid or agreed to be paid to Bank for the use,
forbearance, or detention of the indebtedness of Borrower to Bank which is
deemed to be excessive interest with respect to one or more of such loans shall
be allocated to the loan or loans for which the Highest Lawful Rate has not been
contracted for, charged, or received or for which no maximum rate of interest
exists.
9.02. BORROWER'S MANAGEMENT. Any term or condition hereof, or of any of
the Loan Documents to the contrary notwithstanding, Bank shall not have, and by
its execution and acceptance of this Agreement hereby expressly disclaims, any
obligation or responsibility for the management, conduct or operation of the
business and affairs of the Borrower; and any term or condition hereof, or of
any of the Loan Documents, permitting Bank to disburse funds, whether from the
proceeds of the Loan or otherwise, or to take or refrain from taking any action
with respect to either Borrower, the Improvements or any other collateral for
repayment of the Loan, shall be deemed to be solely to permit Bank to audit and
review the management, operation, and conduct of the business and affairs of
either Borrower, and to maintain and preserve the security given by either
Borrower to Bank for the Loan, and may not be relied upon by any other person.
Further, Bank shall not have, has not assumed, and by its execution and
acceptance of this Agreement hereby expressly disclaims any liability or
responsibility for the payment or performance of any indebtedness or obligation
of either Borrower, and no term or condition hereof, or of any of the Loan
Documents, shall be construed otherwise. Borrower hereby expressly acknowledges
that no term or condition hereof, or of any of the Loan Documents, shall be
construed so as to deem the relationship between Borrower and Bank to be other
than that of borrower and lender. Borrower shall at all times represent that the
relationship between Borrower and Bank is solely that of borrower and lender.
Borrower hereby indemnifies and agrees to hold Bank harmless from and against
any cost, expense, or liability incurred or suffered by Bank as a result of any
assertion or claim of any obligation or responsibility of Bank for the
management, operation, and conduct of business and affairs of the Borrower, or
as a result of any assertion or claim of any liability or responsibility of Bank
for the payment or performance of any indebtedness or obligation of the
Borrower.
18
9.03. INDEMNIFICATION OF BANK. Borrower hereby expressly acknowledges
and recognizes Borrower's responsibility for and agrees to indemnify and hold
Bank and its successors and assigns absolutely harmless from and against all
costs, expenses, liabilities, losses, damages, or obligations incurred by or
imposed upon or alleged to be due from Bank or its successors and assigns in
connection with the assertion of:
a. Any claim for brokerage, agency or finder's fees or
commissions in connection with the Loans; or
b. any claim for attorneys', appraisal, title insurance,
inspection, or other fees, costs, and expenses incurred in
connection with the negotiation, closing, administration,
collection or refinancing of the Loans, which arise by,
through, or on behalf of the Borrower or any agent or
representative of them.
Without intending to limit the remedies available to Bank with respect to the
enforcement of its indemnification rights as stated herein or as stated in any
Loan Document, in the event any claim or demand is made or any other fact comes
to the attention of Bank in connection with, relating or pertaining to, or
arising out of the transactions contemplated by this Agreement, which Bank
reasonably believes might involve or lead to some liability of Bank, Borrower
shall, immediately upon receipt of written notification of any such claim or
demand, assume in full the personal responsibility for and the defense of any
such claim or demand and pay in connection therewith any loss, damage,
deficiency, liability, or obligation, including, without limitation, legal fees
and court costs incurred in connection therewith. In the event of court action
in connection with any such claim or demand, Borrower shall assume in full the
responsibility for the defense of any such action and shall immediately satisfy
and discharge any final decree or judgment rendered therein. Bank may, in its
sole and absolute discretion, make any payments sustained or incurred by reason
of any of the foregoing; and Borrower shall immediately repay to Bank in cash
the amount of such payment, with interest thereon at the maximum rate of
interest permitted by applicable law from the date of such payment, or in the
event no such maximum rate exists, then at a rate equal to two percent (2%)
above the prime rate established on a daily basis by THE WALL STREET JOURNAL.
Bank shall have the right to implead Borrower as party defendants in any legal
action brought against Bank, and Borrower hereby consents to the entry of an
order making the Borrower a party defendant to any such action.
9.04. AGENCY DISCLAIMER. Nothing herein shall be construed as making or
constituting Bank as the agent of the Borrower in making payments pursuant to
any construction contracts or subcontracts entered into by the Borrower for
development of the Premises or otherwise, the purpose of all requirements of
Bank hereunder being solely to allow Bank to check and require documentation
(including, but not limited to, lien waivers) sufficient to protect Bank and the
Loan contemplated hereby. Borrower shall have no right to rely on any procedures
required by Bank, Borrower hereby acknowledges that:
19
a. Borrower has sole responsibility for development of the
Premises; and
b. Borrower has solely on Borrower's own behalf selected or
approved each contractor, each subcontractor, and each
materialman, Bank having no responsibility for such persons or
entities or for the quality of their materials or workmanship
and development of the Premises.
9.05. ADDITIONAL DISCLAIMERS. In addition to the disclaimers and
indemnities set forth above, the parties agree that the following provisions
shall govern:
a. Borrower agrees to indemnify and hold the Bank (for purposes
of this paragraph, the term the "Bank" shall include the
directors, officers, partners, employees, and agents of the
Bank, and any persons or entities owned or controlled by,
owning or controlling, or under common control or affiliated
with the Bank) harmless from and against, and to reimburse the
Bank with respect to, any and all claims, demands, losses,
damages (including consequential damages), liabilities, causes
of action, judgments, penalties, costs, and expenses
(including attorneys' fees and court costs) of any and every
kind or character, known or unknown, fixed or contingent,
imposed on, asserted against, or incurred by the Bank at any
time and from time to time by reason of, in connection with,
or arising out of:
i. the breach of any representation or warranty of
Borrower as set forth herein regarding asbestos,
material containing asbestos, or Applicable
Environmental Laws (defined hereinabove in Section
6.11(b));
ii. the failure of Borrower to perform any obligation
herein required to be performed by Borrower regarding
asbestos, material containing asbestos, or Applicable
Environmental Laws;
iii. any violation on or before the maturity date of the
Note (as hereinafter defined) of any Applicable
Environmental Law in effect on or before the maturity
date of the Note;
iv. the removal of hazardous substances or solid wastes
from the Premises (or if removal is prohibited by
law, the taking of whatever action is required by
law);
v. the removal of asbestos or material containing
asbestos from the Premises (or if removal is
prohibited by law, the taking of whatever action is
required by law including without limitation the
implementation of any required operation and
maintenance program);
vi. any act, omission, event, or circumstance existing or
occurring on or prior to the maturity date of the
Note (including without limitation the presence on
the Premises or release from the Premises of
hazardous substances or solid wastes disposed of or
otherwise released on or prior to the maturity date
of the Note), resulting from or in connection with
the ownership, construction, occupancy, operation,
use or maintenance of the Premises, regardless of
whether the act, omission, event, or circumstance
constitutes a violation of any Applicable
Environmental Law at the time of its existence or
occurrence; and
20
vii. any and all claims or proceedings (whether brought by
a private party or Governmental Authority) for bodily
injury, property damage, abatement, or remediation,
environmental damage, or impairment, or any other
injury or damage resulting from, or relating to any
hazardous substance or solid waste located upon or
migrating into, from, or through the Premises
(whether or not any or all of the foregoing was
caused by the Borrower or its successors or assigns,
or a prior owner of the Premises or successors or
assigns, or any third party and whether or not the
alleged liability is attributable to the handling,
storage, generation, transportation, or disposal of
such substance or waste or the mere presence of such
substance or waste on the Premises). Without
limitation, the foregoing indemnities shall apply to
each indemnified party with respect to claims,
demands, losses, damages (including consequential
damages), liabilities, causes of action, judgments,
penalties, costs, and expenses (including attorneys'
fees and court costs) which in whole or in part are
caused by or arise out of the negligence of such (or
any other) indemnified party. However, such
indemnities shall not apply to any indemnified party
to the extent the subject of the indemnification is
caused by or arises out of the gross negligence or
willful misconduct of such indemnified party. The
"maturity date of the Note" as used herein shall mean
the earlier of the following two dates:
a. The date on which the indebtedness and
obligations secured hereby have been paid
and performed in full and the obligations
under this Agreement have been discharged;
or
b. the date on which the lien of any Security
Agreement is foreclosed or a conveyance by
deed in lieu of such foreclosure is fully
effective; provided, if such payment,
performance, release, foreclosure, or
conveyance is challenged, in bankruptcy
proceedings or otherwise, the maturity date
of the Note shall be deemed not to have
occurred until such challenge is rejected,
dismissed, or withdrawn with prejudice.
The foregoing indemnities shall not terminate upon the maturity date of
the Note or upon the release, foreclosure, or other termination of this
Agreement but will survive the maturity date, or conveyance in lieu of
foreclosure, and the repayment of the secured indebtedness and the
discharge and release of this Agreement and the other Loan Documents
evidencing or securing the secured indebtedness. Any amount to be paid
hereunder by Borrower to the Bank shall be a demand obligation owing by
Borrower to the Bank. Nothing in this paragraph, elsewhere in this
Agreement, or in any other document evidencing, securing, or relating
to the indebtedness secured hereby shall limit or impair any rights or
remedies of the Bank against the Borrower or any third party under
Applicable Environmental Laws, including without limitation any rights
of contribution or indemnification available thereunder.
21
ARTICLE X
ORGANIZATIONAL CHANGES AND DISTRIBUTIONS
Without the consent of the Bank, not to be unreasonably withheld, the
Loan Parties shall not make distributions to their shareholders, members, or
partners, increase the salaries of any of those parties, or otherwise effect any
change in their structure or capitalization.
ARTICLE XI
SUPERSEDEAS
In the event of a conflict between the terms and conditions of this
Agreement and the terms and conditions of any other Loan Document, the terms and
conditions of this Agreement shall control.
ARTICLE XII
MISCELLANEOUS
12.01. INUREMENT. This Agreement shall be binding upon, and shall inure
to the benefit of the Loan Parties and the Bank, and their respective heirs,
legal representatives, successors and assigns; provided that no Loan Party may
assign any rights or obligations under this Agreement without the prior written
consent of Bank; and provided further that Bank specifically, but without
limitation, has the right to transfer or assign all or any part of its rights,
duties, and obligations under and pursuant to the Loan Documents, and commencing
at the time of and following any such transfer or assignment, Bank shall have no
liability or obligation with respect to such rights, duties, and obligations so
transferred or assigned.
12.02. SURVIVAL. The provisions hereof shall survive the execution of
all instruments herein mentioned, shall continue in full force and effect until
the Loan has been paid in full, and shall not be affected by any investigation
made by any party. This instrument may be amended only by an instrument in
writing executed by the parties hereto.
12.03. NOTICES. Any notice required or permitted to be given hereunder
shall be in writing and shall be considered properly given if mailed by first
class United States mail, postage prepaid, registered or certified with return
receipt requested, or by delivering same in person to the intended addressee or
by prepaid telegram. Notice so mailed shall be effective upon its deposit in a
Post Office or other depository under the care or custody of the United States
Postal Service. Notice given in any other manner shall be effective only if and
when received by the addressee. For purposes of notice, the addresses of the
parties shall be as set forth below; provided, however, that any party shall
have the right to change such party's address for notice hereunder to any other
location within the continental United States by the giving of thirty (30) days'
notice to all other parties in the manner set forth hereinabove:
22
If to Borrower: AMEN Properties, Inc.
000 Xxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
If to Guarantors:McGraw Brothers Investments
Moriah Investment Partners
LCM Partnership
W Power and Light, LP
000 Xxxx Xxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Xxxxx X. Xxxxxxxx
Xxx X. Xxxxxx
Xxxx Xxxxxx
Xxxxxxx Xxxxxxx, Xx.
Xxxx Xxxxxxx
Xxxx Xxxxxxx
Xxxxx X. Xxxxxxxxx
If to Bank: Western National Bank
000 Xxxx Xxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000
Attn: Xx. Xxxxxx X. Xxxxxx
23
12.04. SEVERANCE. Bank is relying and is entitled to rely upon each and
all of the provisions of this Agreement; and accordingly, if any provision or
provisions of this Agreement should be held to be invalid or ineffective, then
all other provisions hereof shall continue in full force and effect
notwithstanding.
12.05. ENTIRETIES. THIS AGREEMENT, THE NOTE, ANY CONTRACTS OR
INSTRUMENTS RELATING THERETO, REPRESENT THE ENTIRE AGREEMENT BETWEEN THE
PARTIES, AND IT IS EXPRESSLY UNDERSTOOD THAT ALL PRIOR CONVERSATIONS OR
MEMORANDA BETWEEN THE PARTIES REGARDING THE TERMS OF THIS AGREEMENT SHALL BE
SUPERSEDED BY THIS AGREEMENT. ANY AMENDMENT, APPROVAL, OR WAIVER BY WESTERN OF
THE TERMS OF THIS AGREEMENT, THE NOTE AND ANY CONTRACTS OR INSTRUMENTS RELATING
THERETO, MUST BE IN WRITING OR CONFIRMED WRITING, AND SHALL BE EFFECTIVE ONLY TO
THE EXTENT SPECIFICALLY SET FORTH IN SUCH WRITING. THIS AGREEMENT, IN
CONJUNCTION WITH THE NOTE AND ANY CONTRACTS OR INSTRUMENTS RELATING THERETO,
SHALL SERVE TO EVIDENCE THE TERMS OF THE ENTIRE AGREEMENT BETWEEN THE PARTIES.
24
IN WITNESS HEREOF, the parties hereto have executed this Agreement in
one or more counterparts, each of which shall be deemed an original and all of
which together shall constitute one and the same instrument, effective as of the
day and year first above written.
BORROWER:
AMEN PROPERTIES, INC.
BY: /s/ XXX X. XXXXXX
----------------------------------
XXX X. XXXXXX, PRESIDENT
GUARANTORS:
MCGRAW BROTHERS INVESTMENTS
BY: /s/ XXXX X. XXXXXX
-----------------------------------
XXXX X. XXXXXX
XXXXXX INVESTMENT PARTNERS
BY: /s/ XXXX X. XXXXX
-----------------------------------
XXXX X. XXXXX, PARTNER
BY: /s/ XXXX XXXXX
-----------------------------------
XXXX XXXXX, PARTNER
LCM PARTNERSHIP
BY: /s/ XXXXX X. XXXXXXXXX
-----------------------------------
XXXXX X. XXXXXXXXX, PARTNER
BY: XXXXX XXXXXXXXX EAGLE
-----------------------------------
XXXXX XXXXXXXXX EAGLE, PARTNER
BY: /s/ XXXXXX XXXXXXXXX XXXXXXXX
-----------------------------------
XXXXXX XXXXXXXXX XXXXXXXX, PARTNER
W POWER AND LIGHT, LP
25
BY: AMEN PROPERTIES, INC., ITS
GENERAL PARTNER
BY: /s/ XXX X. XXXXXX
-----------------------------------
XXX X. XXXXXX, PRESIDENT
BY: /s/ XXXXX X. XXXXXXXXX
-----------------------------------
XXXXX X. XXXXXXXXX, INDIVIDUALLY
/s/ XXX X. XXXXXX
----------------------------------
XXX X. XXXXXX, INDIVIDUALLY
/s/ XXXX XXXXXX
----------------------------------
XXXX XXXXXX, INDIVIDUALLY
/s/ XXXXXXX XXXXXXX, XX.
----------------------------------
XXXXXXX XXXXXXX, XX., INDIVIDUALLY
/s/ XXXX XXXXXXX
----------------------------------
XXXX XXXXXXX, INDIVIDUALLY
/s/ XXXX XXXXXXX
----------------------------------
XXXX XXXXXXX, INDIVIDUALLY
----------------------------------
XXXXX X. XXXXXXXXX, INDIVIDUALLY
26
BANK:
WESTERN NATIONAL BANK
BY: XXXXXX X. XXXXXX, PRESIDENT
27
SCHEDULE 6.03
PENDING LITIGATION
NONE.
28
EXHIBIT "A"
FORM OF BORROWING BASE CERTIFICATE
W POWER AND LIGHT, LP
BORROWING BASE REPORT
ACCOUNTS RECEIVABLES:
Eligible Accounts Receivable as of ------------------------------- $ ----------
Multiplier x 75%
Receivables portion of Borrowing Base $-----------
Plus $500,000.00 availability for issuance of Letters of Credit $-----------
Borrowing Base: $-----------
Less issued and outstanding Letters of Credit $-----------
Less amount advanced under line of credit $-----------
Amount available (or required paydown) on line of credit $-----------
Submitted By: AMEN Properties, Inc. and W Power and Light, LP
-----------------------------------
Xxx X. Xxxxxx, President
-----------------------------------
Date
29
EXHIBIT B
COMPLIANCE CERTIFICATE
Reference is made to that certain Loan Agreement dated as of February
25, 2005, among AMEN PROPERTIES, INC. (the "BORROWER"); MCGRAW BROTHERS
INVESTMENTS, MORIAH INVESTMENT PARTNERS, LCM PARTNERSHIP, W POWER AND LIGHT, LP,
XXXXX X. XXXXXXXXX, XXX X. XXXXXX, XXXX XXXXXX, XXXXXXX XXXXXXX, XX., XXXX
XXXXXXX, XXXX XXXXXXX AND XXXXX XXXXXXXXX (collectively, the "GUARANTORS"); and
WESTERN NATIONAL BANK ("BANK") (as so restated, the "LOAN AGREEMENT").
1. Pursuant to the provisions of the Loan Agreement, the undersigned
hereby certifies, represents and warrants to Bank that, to the best of their
knowledge, except as set forth below, (I) during the period covered by this
certificate, no Event of Default has occurred; (ii) there exists no condition or
event that, with the giving of notice or lapse of time or both, would constitute
an Event of Default; and (iii) during the period covered by this certificate,
Borrower has observed, performed and complied in all material respects with all
covenants, agreements, duties and obligations contained in the Loan Papers.
Exceptions to the above certification: [State "none" or specify the
nature and period of existence thereof and the action that Borrower is taking or
proposed to take with respect thereto.]
2. The Borrower's Debt Service Coverage Ratio is ___ to 1.0.
3. To the best knowledge of the undersigned, the attached financial
statements are true and correct and correctly set forth the financial position
and results of operations at the date(s) and for the period(s) stated. The
attached financial statements include all contingent liabilities and cash flow
information of Borrower.
4. Period covered: [Year, Quarter, or Month] ended ______________,
20___.
5. Capitalized terms used but not defined herein shall have the
respective meanings ascribed thereto in the Loan Agreement.
Dated: __________________________
W POWER & LIGHT, LP
BY: AMEN PROPERTIES, INC.,
ITS GENERAL PARTNER
By: /s/ XXX X. XXXXXX
---------------------------------
XXX X. XXXXXX, PRESIDENT
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