EXHIBIT 10.25
SIXTH AMENDMENT TO CREDIT AGREEMENT
THIS SIXTH AMENDMENT TO CREDIT AGREEMENT (as same may be renewed,
extended, modified, restated amended and/or rearranged, the "Sixth Amendment")
dated as of January 1, 2003, is between MOUNTAIN COMPRESSED AIR, INC., a Texas
corporation (hereinafter referred to as "Borrower") and XXXXX FARGO BANK TEXAS,
NATIONAL ASSOCIATION, a national banking association ("Bank").
RECITALS:
A. Bank and Borrower entered into that certain Credit Agreement dated
as of February 6, 2001 (the "Original Agreement"), as amended by that certain
First Amendment to Credit Agreement dated as of August 9, 2001 (the "First
Amendment"), as amended by that certain Second Amendment to Credit Agreement
dated as of November 30, 2001 (the "Second Amendment"), as amended by that
certain Third Amendment to Credit Agreement dated as of January 31, 2002 (the
"Third Amendment"), as amended by that certain Fourth Amendment to Credit
Agreement dated as of April 30, 2002 (the "Fourth Amendment"), as amended by
that certain Fifth Amendment to Credit Agreement dated as of August 6, 2002 (the
"Fifth Amendment," together with the Original Agreement, the First Amendment,
the Second Amendment, the Third Amendment, the Fourth Amendment and the Fifth
Amendment, referred to hereafter as the "Agreement").
B. OilQuip Rentals, Inc., a Delaware corporation (the "Parent")
("OilQuip"), Munawar and Xxxxx Xxxxxxxxxxxx (the "Hidayatallahs") and
Xxxxx-Xxxxxxxx Company, a Delaware corporation ("Xxxxx-Xxxxxxxx") each
guaranteed to the Bank the payment and performance of certain indebtedness and
obligations of Borrower to Bank.
C. Borrower and Bank now desire to enter into this Sixth Amendment on
the terms set forth herein.
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 1
GENERAL TERMS
Section 1.1 TERMS DEFINED IN AGREEMENT. As used in this Sixth
Amendment, except as may otherwise be provided herein, all capitalized terms
which are defined in the Agreement, as amended, have the same meaning herein as
therein, all of such terms and their definitions being incorporated herein by
reference.
Section 1.2 CONFIRMATION AND EXTENT OF CHANGES. All terms which are
defined or referred to in the Agreement shall remain unchanged except as
otherwise specifically provided in this Sixth Amendment. It is hereby confirmed
that the term "Agreement" includes the Agreement as amended by this Sixth
Amendment.
ARTICLE 2
AMENDMENTS
Section 2.1 AMENDMENT TO SECTION 1.1(a). Effective as of the date
hereof, Section 1.1(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) Line of Credit. Subject to the terms and conditions of
this Agreement, Bank hereby agrees to make advances to Borrower up to
and including June 30, 2003 not to exceed the aggregate principle
amount of Five Hundred Thousand and No/100 Dollars ($500,000) ("Line of
Credit"), the proceeds of which shall be used to support working
capital, issue letters of credit (with a $240,000.00 sublimit), and
general corporate purposes. Borrower's obligation to repay advances
under the Line of Credit shall be evidenced by a promissory note
substantially in the form of EXHIBIT A attached hereto ("Line of Credit
Note"), all terms of which are incorporated herein by this reference.
If at any time the outstanding principal amount of the Line of Credit
plus the sum of all outstanding Letters of Credit exceeds the Line of
Credit, then the Borrower shall promptly prepay the outstanding Line of
Credit in an aggregate principal amount equal to such excess, together
with interest on the principal amount paid accrued to the date of such
prepayment."
Section 2.2 AMENDMENT TO SECTION 1.1(b). Effective as of the date
hereof, Section 1.1(b) of the Agreement is hereby amended to read in its
entirety as follows:
"(b) Limitation on Borrowings. Outstanding borrowings under
the Line of Credit, to a maximum of the principal amount set forth
above, shall not at any time exceed an aggregate of $500,00.00 through
and including June 30, 2003, when combined with the undrawn Letters of
Credit (as hereinafter defined). All borrowings under the Line of
Credit shall be in amounts of at least $10,000. There will be no
minimum amount required on borrowings under the Line of Credit if
borrowed through Bank's credit sweep product."
Section 2.3 AMENDMENT TO SECTION 1.2(a). Effective as of the date
hereof, Section 1.2(a) of the Agreement is hereby amended to read in its
entirety as follows:
(i) TERM LOAN. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make a loan to Borrower in the
principal amount of Three Million Five Hundred Fifty Thousand and
00/100 Dollars ($3,550,000.00) (as same may be reduced from time to
time, "Term Loan"), the proceeds of which shall be used to finance the
initial purchase of fixed assets of Mountain Air Drilling Service Co.,
Inc., a Colorado corporation (the "Seller"). Advances on the combined
face value of the Term Loan and the Delayed Draw Term Loan will not
exceed seventy-five percent (75%) of the "as improved" orderly
liquidation value ("OLV") of the existing fixed assets being purchased
from the Seller plus the planned upgrades as determined by an
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independent qualified appraiser engaged and approved by Bank and paid
for by Borrower. Borrower's obligation to repay the Term Loan shall be
evidenced by a promissory note substantially in the form of EXHIBIT B
attached hereto ("Term Note"), all terms of which are incorporated
herein by this reference."
Section 2.4 AMENDMENT TO SECTION 1.3(a). Effective as of the date
hereof, Section 1.3(a) of the Agreement is hereby amended to read in its
entirety as follows:
"(a) DELAYED DRAW. Subject to the terms and conditions of this
Agreement, Bank hereby agrees to make advances to Borrower from time to time up
to and including the last day of August, 2001 (notwithstanding any reference to
the contrary contained in the Delayed Draw Term Note to June 30, 2003), not to
exceed the aggregate principal amount of Five Hundred Thousand and 00/100
Dollars ($500,000.00) (as same may be from time to time be reduced, the "Delayed
Draw Term Loan"), the proceeds of which shall be used to finance the planned
upgrade of currently owned equipment, and which shall be converted on the last
day of August, 2001, to a term loan, as described more fully below and in the
Delayed Draw Term Note. Advances on the Delayed Draw Term Loan are not to exceed
one hundred percent (100%) on invoices on the planned purchases of Gardener
Denver Model MDY Boosters, with CAT D353 diesel engines and miscellaneous parts
and labor. In addition, advances on the combined face value of the Term Loan and
the Delayed Draw Term Loan shall not exceed seventy-five percent (75%) of the
"as improved" OLV of the existing fixed assets being purchased from the Seller
plus the planned upgrades as determined by an independent qualified appraiser
engaged and approved by Bank at the expense of Borrower, whether or not the
Delayed Draw Term Loan actually closes or any future advances are actually made.
Borrower's obligation to repay advances under the Delayed Draw Term Loan shall
be evidenced by a promissory note substantially in the form of EXHIBIT C
attached hereto ("Delayed Draw Term Note"), all terms of which are incorporated
herein by this reference."
Section 2.5 AMENDMENT TO SECTION 1.3(c). Effective as of the date
hereof, Section 1.3(c) of the Agreement is hereby amended to read in its
entirety as follows:
"(c) BORROWING AND REPAYMENT. Borrower may from time to time
during the period in which Bank will make advances under the Delayed Draw Term
Loan borrow and partially or wholly repay (subject to prepayment provisions
contained herein and in the Delayed Draw Term Note) its outstanding borrowings,
provided that amounts repaid may not be reborrowed, subject to all the
limitations, terms and conditions contained herein; provided however, that the
total outstanding borrowings under the Delayed Draw Term Loan shall not at any
time exceed the maximum principal amount available thereunder, as set forth
above. The outstanding principal balance and interest of the Delayed Draw Term
Loan shall be due and payable in full on June 30, 2003."
Section 2.6 AMENDMENT TO SECTION 4.9. Effective as of the date hereof,
Section 4.9 of the Agreement is hereby amended to read in its entirety as
follows:
"4.9 Financial Condition. (a) Maintain, or cause to be
maintained, Borrower's financial condition as follows using generally
accepted accounting principles consistently applied and used
consistently with prior practices (except to the extent modified by the
definitions herein):
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(i) Beginning January 1, 2003, Tangible Net Worth not at any
time less than Tangible Net Worth as of December 31, 2002 (plus
seventy-five percent (75%) of cumulative net income after December 31,
2002, excluding any fiscal quarters in which net income is negative),
plus one hundred percent (100%) of equity offerings after the date
hereof, with "Tangible Net Worth" defined herein as the aggregate of
total stockholders' equity less any intangible assets.
(ii) Fixed Charge Coverage Ratio not less than 1.1 to 1.0 for
the fiscal quarter ending March 31, 2003, with "EBITDA" defined herein
as net income plus interest charges, plus taxes, plus depreciation,
amortization and non-cash charges, which shall be computed by
annualizing the period in question beginning on January 1, 2003. "Fixed
Charge Coverage Ratio" as defined herein means (i) EBITDA plus
applicable operating lease payments less unfinanced capital
expenditures divided by (ii) the aggregate of total interest charges
(excluding any applicable paid-in-kind ("PIK") charges), scheduled
principal payments, operating lease payments, cash dividends paid, and
paid taxes for the same period which ratio shall be computed by
annualizing the period in question beginning on January 1, 2003.
(iii) Beginning with the fiscal quarter ending March 31,
2003, maintain the Total Funded Debt to EBITDA ratio of not more than
3.50 to 1.00, with "Total Funded Debt to EBITDA Ratio" defined as Total
Funded Debt divided by EBITDA computed by annualizing the period in
question beginning January 1, 2003. "Total Funded Debt" is defined
herein as all interest-bearing obligations of Borrower, whether secured
or unsecured, senior or subordinated.
(b) Maintain, or cause to be maintained, Xxxxx-Xxxxxxxx' consolidated
Debt Service Coverage Ratio as of each date set forth below, determined for the
period beginning on April 30, 2002 and ending on such date, at not less than the
amount set forth opposite such date using generally accepted accounting
principles consistently applied and used consistently with prior practices:
DATE MINIMUM DEBT SERVICE COVERAGE RATIO
---- -----------------------------------
June 30, 2002 0.9 to 1
September 30, 2002, and thereafter 1.0 to 1
"Debt Service Coverage Ratio" for any period means the ratio
of (i) the sum of (A) Funds From Operations and (B) Interest Expense
MINUS (C) Capital Expenditures to (ii) the sum of (A) Current
Maturities of Long Term Debt and (B) Interest Expense, each for such
period. "Funds From Operations" for any person or entity for a given
period means the sum of such person's or entity's Net Income, (ii)
depreciation and amortization, (iii) deferred income taxes, and (iv)
other non-cash items, each as determined for such period. "Interest
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Expense" means, for any person or entity, for a fiscal year-to-date
period, such person's or entity's total gross interest expense during
such period (excluding interest income), and shall in any event,
include, without limitation (i) interest expensed (whether or not paid
on all Debt, (ii) the amortization of debt discounts, (iii) the
amortization of all fees payable in connection with the incurrence of
Debt to the extent included in interest expense, and (iv) the portion
of any capitalized lease obligation allocable to interest expense.
"Capital Expenditures" for any period means any expenditure of money
for the lease, purchase or other acquisition of any capital asset, or
for the lease of any other asset whether payable currently or in the
future. "Current Maturities of Long Term Debt" for any person or entity
for any period means the amount of such person's or entity's long term
debt and capitalized leases which became due during such period. "Net
Income" means fiscal year-to-date after tax net income from continuing
operations (after overhead allocations from Xxxxx-Xxxxxxxx, if any),
less any deferred income tax benefit. "Debt" means for any person or
entity as of a given date, all items of indebtedness or liability which
in accordance with generally accepted accounting principles would be
included in determining total liabilities as shown on the liabilities
side of a balance sheet for such person or entity and shall also
included the aggregate payments required to be made by such person or
entity at any time under any lease that is considered a capitalized
lease under generally accepted accounting principles."
Section 2.7 AMENDMENT TO SECTION 5.2. Effective as of the date hereof,
Section 5.2 of the Agreement is hereby amended to read in its entirety as
follows:
"Section 5.2 CAPITAL EXPENDITURES. Make any additional
investment in fixed assets in excess of $ 200,000.00 from January 1,
2003 through June 30, 2003.
Section 2.8 ADDITION OF SECTION 5.14. Effective as of the date hereof, Section
5.14 shall be added to the Agreement immediately following Section 5.13 thereof
and shall read in its entirety as follows:
"SECTION 5.14. NO AMENDMENTS TO CERTAIN AGREEMENTS. Borrower
will not amend or permit to be amended the instruments described in Section
6.1(p) hereof, without prior written consent of the Bank; provided, however,
notwithstanding the foregoing, in any event that the Bank consents in writing to
amendments to said instruments, the Borrower shall furnish to the Bank a fully
executed any copy of said amendment within five (5) business days after
execution thereof."
Section 2.9 ADDITION OF SECTION 6.1(P). Effective as of the date
hereof, Section 6.1(p) shall be added to the Agreement immediately following
Section 6.1(o) thereof and shall read in its entirety as follows:
"(p) Borrower shall (i) fail to execute and deliver to the
Bank on or before February 1, 2003, documents with Xxxxx Fargo Equipment
Finance, Inc., and Xxxxx Fargo Energy Capital, Inc. regarding Borrower's
deferral of past due lease payments and past due interest payments to the
aforementioned entities, respectively, in form and substance satisfactory to the
Bank, in the Bank's sole discretion, and/or (ii) pay any amounts owing
thereunder to either of the aforementioned entities in excess of the amounts set
forth in the respective instruments described in (i) above and/or (iii) be in
default under the terms of either of the instruments described in (i) above or
under and any amendment, modification, and/or supplement thereof, as permitted
by this Agreement."
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ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce the Bank to enter into this Sixth Amendment and to
continue to make the loans provided for in the Agreement, the Borrower
represents and warrants (which representations and warranties will survive the
execution and delivery hereof and will be deemed for all purposes to be
additional representations and warranties of the Agreement) that:
Section 3.1 REPRESENTATIONS AND WARRANTIES OF THE AGREEMENT AND THE
LOAN DOCUMENTS. The representations and warranties of the Borrower contained in
the Agreement and the Loan Documents and otherwise made in writing by or on
behalf of the Borrower pursuant to the Agreement and the Loan Documents were
true and correct when made, and are true and correct in all material respects at
and as of the time of delivery of this Sixth Amendment, except for such changes
in the facts represented and warranted as are not in violation of the Agreement
and the Loan Documents.
Section 3.2 COMPLIANCE WITH OBLIGATIONS. The Borrower has performed and
complied with all agreements and conditions contained in the Agreement and the
Loan Documents required to be performed or complied with by the Borrower prior
to or at the time of delivery of this Sixth Amendment.
Section 3.3 DEFAULTS. There exists, and after giving effect to this
Sixth Amendment, will exist, no default or Event of Default, or any condition,
or act which constitutes, or with notice or lapse of time (or both) would
constitute an event of default under any loan agreement, note agreement, or
trust indenture to which the Borrower is a party.
Section 3.4 NO AMENDMENTS. Nothing in Article 3 of this Sixth Amendment
is intended to amend any of the representations or warranties of the Agreement.
ARTICLE 4
CONDITIONS
The Bank has relied upon the representations and warranties contained
in this Sixth Amendment in agreeing to the amendments and supplements to the
Agreement set forth herein and the amendments and supplements to the Agreement
set forth herein are conditioned upon and subject to the accuracy of each and
every representation and warranty of the Borrower made or referred to herein, to
the performance by the Borrower of its obligations to be performed under the
Agreement and the Loan Documents on or before the date of this Sixth Amendment
and to the following further conditions:
Section 4.1 LINE OF CREDIT NOTE. The fully executed Line of Credit Note
shall have been delivered to the Bank.
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Section 4.2 TERM NOTE. The fully executed Term Note shall have been
delivered to the Bank.
Section 4.3 DELAYED DRAW TERM NOTE. The fully executed Delayed Draw
Term Note shall have been delivered to the Bank.
Section 4.4 DOCUMENTS REFERRED TO IN SECTION 6.1(P). The fully executed
documents referred to in Section 6.1(p) shall have been delivered to the Bank.
Section 4.5 SUBORDINATION AND/OR INTERCREDITOR AGREEMENTS. Fully
executed subordination and/or intercreditor agreements of all parties required
by Bank shall have been delivered to the Bank in form and substance satisfactory
to Bank.
Section 4.6 OFFICERS' CERTIFICATE. The Bank shall have received a
certificate of the officers of the Borrower setting forth (i) resolutions of its
board of directors in form and substance satisfactory to the Bank authorizing
the Borrower (and such other parties as may be required by Bank) to execute the
Loan Documents to which it is a party, and (ii) specimen signatures of the
officers so authorized.
Section 4.7 ADDITIONAL DOCUMENTATION. The Borrower shall deliver to the
Bank such additional approvals, opinions, consents, security agreements,
supplemental security agreements, or documents as Bank may require.
ARTICLE 5
MISCELLANEOUS
Section 5.1 LOAN DOCUMENTS. All Loan Documents shall secure the
indebtedness and obligations previously secured by such Loan Documents, as such
indebtedness and obligations are affected by this Sixth Amendment, whether or
not such Loan Documents shall be expressly amended or supplemented in connection
with this Sixth Amendment.
Section 5.2 EXTENT OF AMENDMENTS. Except as otherwise expressly
provided herein, the Agreement, the Loan Documents, the Line of Credit and the
other instruments and agreements referred to therein are not amended, modified
or affected by this Sixth Amendment.
Section 5.3 EFFECTIVE DATE. Except as otherwise expressly provided
herein, the effective date of all provisions of this Sixth Amendment shall be
the date of execution indicated below.
Section 5.4 TITLES OF ARTICLES, SECTIONS AND SUBSECTIONS. All titles or
headings to articles, sections, subsections or other divisions of this Sixth
Amendment are only for the convenience of the parties and shall not be construed
to have any effect or meaning with respect to the other content of such
articles, sections, subsections, or other divisions, such other content being
controlling as to the Agreement among the parties hereto.
Section 5.5 COUNTERPARTS. This Sixth Amendment may be executed in two
or more counterparts. It will not be necessary that the signatures of all
parties hereto be contained on any one counterpart hereof; each counterpart
shall be deemed an original, but all of which together shall constitute one and
the same instrument.
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Section 5.6 FEES AND EXPENSES. Borrower will pay all fees and expenses
incurred by Bank in connection with this Agreement and the transactions
contemplated herein including, without limitation filing fees, search fees, and
reasonable attorneys' fees.
Section 5.7 ENTIRE AGREEMENT. THIS SIXTH AMENDMENT AND ALL OTHER
INSTRUMENTS, DOCUMENTS, AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH
THIS SIXTH AMENDMENT EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
WITH RESPECT TO THE SUBJECT MATTER HEREOF AND THEREOF AND SUPERSEDE ANY AND ALL
PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS AND UNDERSTANDINGS, WHETHER
WRITTEN OR ORAL, RELATING TO THIS SIXTH AMENDMENT AND THE OTHER INSTRUMENTS,
DOCUMENTS AND AGREEMENTS EXECUTED AND DELIVERED IN CONNECTION WITH THIS SIXTH
AMENDMENT, AND MAY NOT BE CONTRADICTED OR VARIED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OR DISCUSSIONS OF THE PARTIES
HERETO. THERE ARE NO ORAL AGREEMENTS AMONG THE PARTIES HERETO.
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IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the 1st day of January 2003.
BORROWER:
MOUNTAIN COMPRESSED AIR, INC.
By: /s/ XXXXXXXX X. POUND, III
-----------------------------
Xxxxxxxx X. Pound, III
Vice President and Secretary
BANK:
XXXXX FARGO BANK TEXAS,
NATIONAL ASSOCIATION
By: /s/ XXXXX XXXXXX
-----------------------------
Xxxxx Xxxxxx
Vice President
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The Parent hereby consents and agrees to this Sixth Amendment and agrees that
the OilQuip Guaranty shall remain in full force and effect, shall continue to
the be legal, valid, and binding obligations of the Parent, and shall continue
to guarantee the indebtedness and obligations described in the OilQuip Guaranty
as such guaranteed obligations are amended by this Sixth Amendment including,
without limitation, such OilQuip Guaranty shall be enforceable against OilQuip
in accordance with its terms.
GUARANTOR:
OilQuip Rentals, Inc.,
a Delaware corporation
By: /s/ XXXXXXXX X. POUND, III
-----------------------------
Xxxxxxxx X. Pound, III
Vice President and Secretary
Munawar and Xxxxx Xxxxxxxxxxxx hereby jointly and severally consent and agree to
this Sixth Amendment and agree that the Hidayatallah Guaranty shall remain in
full force and effect, shall continue to the be legal, valid, and binding
obligations of Munawar and Xxxxx Xxxxxxxxxxxx, and shall continue to guaranty
the indebtedness and obligations described in the Hidayatallah Guaranty as such
guaranteed obligations are amended by this Sixth Amendment including, without
limitation, such Hidayatallah Guaranty shall be enforceable against Munawar and
Xxxxx Xxxxxxxxxxxx in accordance with its terms.
GUARANTOR:
/S/ XXXXXXX XXXXXXXXXXXX
----------------------------------
Xxxxxxx Xxxxxxxxxxxx
/S/ XXXXX XXXXXXXXXXXX
----------------------------------
Xxxxx Xxxxxxxxxxxx
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Xxxxx-Xxxxxxxx consents and agrees to this Sixth Amendment and agrees to comply
with and be bound by all of the terms hereof, and further agrees that its
guaranty shall remain in full force and effect, shall continue to the be legal,
valid, and binding obligations of Xxxxx-Xxxxxxxx, and shall continue to
guarantee the indebtedness and obligations described in its guaranty as such
guaranteed obligations are amended by this Sixth Amendment including, without
limitation, such guaranty shall be enforceable against Xxxxx-Xxxxxxxx in
accordance with its terms.
GUARANTOR:
Xxxxx-Xxxxxxxx Company,
a Delaware corporation
By: /s/ XXXXXXX XXXXXXXXXXXX
----------------------------
Xxxxxxx Xxxxxxxxxxxx
Chief Executive Officer
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EXHIBIT A
LINE OF CREDIT
RENEWED AND EXTENDED REVOLVING LINE OF CREDIT NOTE
--------------------------------------------------
$500,000.00 Houston, Texas
January 1, 2003
FOR VALUE RECEIVED, the undersigned MOUNTAIN COMPRESSED AIR, INC., a
Texas corporation ("Borrower"), promises to pay to the order of XXXXX FARGO BANK
TEXAS, NATIONAL ASSOCIATION ("Bank") at its office at 1000 Louisiana, 3rd Floor,
Houston, Texas, or at such other place as the holder hereof may designate, in
lawful money of the United States of America and in immediately available funds,
the principal sum of Five Hundred Thousand and No/100 Dollars ($500,000.00), or
so much thereof as may be advanced and be outstanding, with interest thereon, to
be computed on each advance from the date of its disbursement as set forth
herein.
INTEREST:
ARTICLE 6 INTEREST. The Borrower agrees to pay interest at the Bank's address
listed above on the unpaid principal note hereof and, to the extent permitted by
law, the accrued interest in respect hereof from time to time from the date
hereof until payment in full of the principal amount hereof and accrued interest
hereon, at the rates and on the dates set forth on the Addendum attached hereto
and incorporated herein for all purposes.
ARTICLE 7 PAYMENT OF INTEREST. Interest accrued on this Note shall be payable on
the last day of each calendar month, commencing on January 31, 2003 and on
maturity hereof.
ARTICLE 8 DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed, unless such calculation would
result in a usurious rate, in which case interest shall be computed on the basis
of a 365/366-day year, as the case may be, actual days elapsed) equal to two
percent (2%) above the rate of interest from time to time applicable to this
Note, but in no event at a rate greater than the Maximum Rate.
BORROWING AND REPAYMENT:
(a) BORROWING AND REPAYMENT. Borrower may from time to time during the
term of this Note borrow, partially or wholly repay its outstanding borrowings,
and reborrow, subject to all of the limitations, terms and conditions of this
Note and of any document executed in connection with or governing this Note;
provided however, that the total outstanding borrowings under this Note shall
not at any time exceed the principal amount stated above. The unpaid principal
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balance of this obligation at any time shall be the total amounts advanced
hereunder by the holder hereof less the amount of principal payments made hereon
by or for any Borrower, which balance may be endorsed hereon from time to time
by the holder. The outstanding principal balance of this Note shall be due and
payable in full on June 30, 2003.
ARTICLE 9 ADVANCES. Advances hereunder, to the total amount of the principal sum
stated above, may be made by the holder at the oral or written request of (i)
Xxxx Xxxxxx, or X.X. Xxxxxxxxxxxx, any one acting alone, who are authorized to
request advances and direct the disposition of any advances until written notice
of the revocation of such authority is received by the holder at the office
designated above, or (ii) any person, with respect to advances deposited to the
credit of any deposit account of any Borrower, which advances, when so
deposited, shall be conclusively presumed to have been made to or for the
benefit of each Borrower regardless of the fact that persons other than those
authorized to request advances may have authority to draw against such account.
The holder shall have no obligation to determine whether any person requesting
an advance is or has been authorized by any Borrower. The amount and date of
each advance requested hereunder shall be designated by an authorized
representative's execution of a Borrowing Request to be received by the Bank at
least one (1) Business Day prior to the date of such loan, which date shall be a
Business Day. Each advance requested hereunder shall be made at the office of
the Bank, and shall be funded prior to 2:00 p.m. Houston time on the day so
requested in immediately available funds in the amount so requested.
ARTICLE 10 APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof.
EVENTS OF DEFAULT:
The occurrence of any of the following shall constitute an "Event of
Default" under this Note:
(b) The failure to pay any principal, interest, fees or other charges
when due hereunder or under any contract, instrument or document executed in
connection with this Note.
ARTICLE 11 The filing of a petition by or against any Borrower, any guarantor of
this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any attachment or like levy on any property of any Borrower or Third
Party Obligor.
ARTICLE 12 The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.
ARTICLE 13 Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder.
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ARTICLE 14 Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.
ARTICLE 15 Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary course
of its business.
ARTICLE 16 Any violation or breach of any provision of, or any defined event of
default under, any addendum to this Note or any other promissory note or any
credit agreement (including without limitation that certain Credit Agreement
dated as of even date herewith between Borrower and the Bank), guaranty,
security agreement, deed of trust, mortgage, pledge agreement, subordination
agreement, or other document executed in connection with or securing this Note.
MISCELLANEOUS:
(c) REMEDIES. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all sums of principal and
accrued and unpaid interest outstanding hereunder to be immediately due and
payable without presentment, demand, or any notices of any kind, including
without limitation notice of nonperformance, notice of protest, protest, notice
of dishonor, notice of intention to accelerate or notice of acceleration, all of
which are expressly waived by each Borrower, and the obligation, if any, of the
holder to extend any further credit hereunder shall immediately cease and
terminate. Each Borrower shall pay to the holder immediately upon demand the
full amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of the holder's in-house counsel to the extent permissible), expended or
incurred by the holder in connection with the enforcement of the holder's rights
and/or the collection of any amounts which become due to the holder under this
Note, and the prosecution or defense of any action in any way related to this
Note, including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.
ARTICLE 17 OBLIGATIONS JOINT AND SEVERAL. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
ARTICLE 18 GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. THIS NOTE IS PERFORMABLE IN
XXXXXX COUNTY, TEXAS. ANY ACTION OR PROCEEDING UNDER OR IN CONNECTION WITH THIS
NOTE AGAINST THE BORROWER OR ANY THIRD PARTY OBLIGOR MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN XXXXXX COUNTY, TEXAS. BORROWER AND EACH THIRD PARTY OBLIGOR
HEREBY IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS,
AND (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN
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INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE BANK TO BRING
ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ANY THIRD PARTY OBLIGOR OR WITH
RESPECT TO ANY COLLATERAL IN ANY STATE OR FEDERAL COURT IN ANY OTHER
JURISDICTION. ANY ACTION OR PROCEEDING BY THE BORROWER OR ANY THIRD PARTY
OBLIGOR AGAINST LENDER SHALL BE BROUGHT ONLY IN A COURT LOCATED IN XXXXXX
COUNTY, TEXAS.
ARTICLE 19 SAVINGS CLAUSE. It is the intention of the parties to comply strictly
with applicable usury laws. Accordingly, notwithstanding any provision to the
contrary in this Note, or in any contract, instrument or document evidencing or
securing the payment hereof or otherwise relating hereto (each, a "Related
Document"), in no event shall this Note or any Related Document require the
payment or permit the payment, taking, reserving, receiving, collection or
charging of any sums constituting interest under applicable laws that exceed the
maximum amount permitted by such laws, as the same may be amended or modified
from time to time (the "Maximum Rate"). If any such excess interest is called
for, contracted for, charged, taken, reserved or received in connection with
this Note or any Related Document, or in any communication by Bank or any other
person to Borrower or any other person, or in the event that all or part of the
principal or interest hereof or thereof shall be prepaid or accelerated, so that
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, reserved or received on the
amount of principal actually outstanding from time to time under this Note shall
exceed the Maximum Rate, then in such event it is agreed that: (i) the
provisions of this paragraph shall govern and control; (ii) neither Borrower nor
any other person or entity now or hereafter liable for the payment of this Note
or any Related Document shall be obligated to pay the amount of such interest to
the extent it is in excess of the Maximum Rate; (iii) any such excess interest
which is or has been received by Bank, notwithstanding this paragraph, shall be
credited against the then unpaid principal balance hereof or thereof, or if this
Note or any Related Document has been or would be paid in full by such credit,
refunded to Borrower; and (iv) the provisions of this Note and each Related
Document, and any other communication to Borrower, shall immediately be deemed
reformed and such excess interest reduced, without the necessity of executing
any other document, to the Maximum Rate. The right to accelerate the maturity of
this Note or any Related Document does not include the right to accelerate,
collect or charge unearned interest, but only such interest that has otherwise
accrued as of the date of acceleration. Without limiting the foregoing, all
calculations of the rate of interest contracted for, charged, taken, reserved or
received in connection with this Note and any Related Document which are made
for the purpose of determining whether such rate exceeds the Maximum Rate shall
be made to the extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of this Note or such
Related Document, including all prior and subsequent renewals and extensions
hereof or thereof, all interest at any time contracted for, charged, taken,
reserved or received by Bank. The terms of this paragraph shall be deemed to be
incorporated into each Related Document.
To the extent that either Chapter 303 or 306, or both, of the Texas
Finance Code apply in determining the Maximum Rate, Bank hereby elects to
determine the applicable rate ceiling by using the weekly ceiling from time to
time in effect, subject to Bank's right subsequently to change such method in
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accordance with applicable law, as the same may be amended or modified from time
to time.
ARTICLE 20 RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of
an Event of Default, (i) Borrower hereby authorizes Bank, at any time and from
time to time, without notice, which is hereby expressly waived by Borrower, and
whether or not Bank shall have declared this Note to be due and payable in
accordance with the terms hereof, to set off against, and to appropriate and
apply to the payment of, Borrower's obligations and liabilities under this Note
(whether matured or unmatured, fixed or contingent, liquidated or unliquidated),
any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars
or any other currency, whether matured or unmatured, and in the case of
deposits, whether general or special (except trust and escrow accounts), time or
demand and however evidenced), and (ii) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such obligations and
liabilities and to return as unpaid for insufficient funds any and all checks
and other items drawn against any deposits so held as Bank, in its sole
discretion, may elect. Borrower hereby grants to Bank a security interest in all
deposits and accounts maintained with Bank and with any other financial
institution to secure the payment of all obligations and liabilities of Borrower
to Bank under this Note.
ARTICLE 21 CERTAIN TRI-PARTY ACCOUNTS. Borrower and Bank agree that Chapter 346
of the Texas Finance Code (which regulates certain revolving credit accounts and
revolving triparty accounts) shall not apply to any revolving loan accounts
created under this Note or maintained in connection herewith.
ARTICLE 22 This note is in renewal and extension of, but not in novation or
discharge of, that certain Revolving Line of Credit Note dated as of April 30,
2002, in the original principal amount of $500,000.00, executed by the Borrower
and payable to the order of the Bank.
NOTICE: THIS NOTE AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS EVIDENCED
HEREBY CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS NOTE AND THE
INDEBTEDNESS EVIDENCED HEREBY.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
MOUNTAIN COMPRESSED AIR, INC.
By: /s/ XXXXXXXX X. POUND, III
-----------------------------
Xxxxxxxx X. Pound, III
Vice President and Secretary
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ADDENDUM TO RENEWED AND EXTENDED REVOLVING LINE OF CREDIT NOTE
(BASE RATE PRICING ADJUSTMENTS)
THIS ADDENDUM is attached to and made a part of that certain renewed
and extended promissory note executed by MOUNTAIN COMPRESSED AIR, INC., a Texas
corporation ("Borrower") and payable to XXXXX FARGO BANK TEXAS, NATIONAL
ASSOCIATION ("Bank"), or order, dated as of January 1, 2003 in the principal
amount of FIVE HUNDRED THOUSAND AND NO/DOLLARS ($500,000.00) (the "Note").
The following provisions are hereby incorporated into the Note to
reflect the interest rate adjustments agreed to by Bank and Borrower:
ARTICLE 23 DEFINITIONS
As used herein, the following terms shall have the meanings set forth
after each, and any other term defined herein:
Section 23.1 "BASE RATE" shall mean the higher of (a) Prime Rate per
annum in effect on that day, and (b) the Federal Fund Rate in effect on that day
as announced by the Federal Reserve Bank of New York, plus 0.5% per annum.
Section 23.2 BUSINESS DAY" shall mean any day except a Saturday,
Sunday, or any other day on which commercial banks in Texas are authorized or
required to close by law.
Section 23.3 "PRIME RATE" shall mean at any time the rate of interest
most recently announced within the Bank at its principal office in San Francisco
at its Prime Rate, with the understanding that the Bank's Prime Rate is one of
its base rates and serves as the basis upon which effective rates of interest
are calculated for those loans making reference thereto; and is evidenced by the
recording thereof after its announcement in such internal publication or
publications as the Bank may designate.
ARTICLE 24 INTEREST RATE ADJUSTMENTS:
Section 24.1 INITIAL INTEREST RATES. The initial interest rates
applicable to this Note shall be the rates set forth in the "INTEREST" paragraph
herein.
Section 24.2 INTEREST RATE ADJUSTMENTS. In addition to any interest
rate adjustments resulting from changes in the Base Rate, Bank shall adjust the
Base Rate margin used to determine the rates of interest applicable to this Note
on the last day of each calendar month of each year, commencing on January 31,
2003, if required to reflect a change in Borrower's ratio of Total Funded Debt
to EBITDA (as such terms are defined in the Credit Agreement referenced herein),
in accordance with the following grid:
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BASE UNUSED
TOTAL FUNDED RATE COMMITMENT
DEBT TO EBITDA MARGIN FEE
-------------- ------ ---
greater than 2.0 to 1.0 1.25% 0.5%
at least 2.0 to 1.0 but
less than 2.5 to 1.0 1.50% 0.5%
at least 2.5 to 1.0 but
less than 3.0 to 1.0 1.75% 0.5%
less than 3.0 to 1.0 2.00% 0.5%
Each such adjustment shall be effective on the first Business Day (as defined in
this Addendum) of the calendar month following the month during which Bank
receives and reviews Borrower's most current month-end financial statements in
accordance with any requirements established by Bank for the preparation and
delivery thereof.
IN WITNESS WHEREOF, this Addendum has been executed as of the same date
as the Note.
MOUNTAIN COMPRESSED AIR, INC.
By: /s/ XXXXXXXX X. POUND, III
------------------------------
Xxxxxxxx X. Pound, III
Vice President and Secretary
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EXHIBIT B
TERM NOTE
RENEWAL TERM NOTE
-----------------
$2,392,098.56 Houston, Texas
January 1, 2003
FOR VALUE RECEIVED, the undersigned MOUNTAIN COMPRESSED AIR, INC., a
Texas corporation ("Borrower"), promises to pay to the order of XXXXX FARGO BANK
TEXAS, NATIONAL ASSOCIATION ("Bank") at its office at 1000 Louisiana, 3rd Floor,
Houston, Texas, or at such other place as the holder hereof may designate, in
lawful money of the United States of America and in immediately available funds,
the principal sum of TWO MILLION THREE HUNDRED NINETY-TWO THOUSAND NINETY-EIGHT
AND 56/100 DOLLARS ($2,392,098.56), with interest thereon as set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:
ARTICLE 25 " Base Rate" means the higher of (a) Prime Rate per annum in effect
on that day, and (b) Federal Fund Rate in effect on that day as announced by the
Federal Reserve Bank of New York, plus 0.5% per annum
ARTICLE 26 "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in Texas are authorized or required by law to
close.
ARTICLE 27 "Credit Agreement" means that certain Credit Agreement between Bank
and Borrower of even date herewith.
ARTICLE 28 "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one, two, three or six months as designed by Borrower, during
which all or a portion of the outstanding principal balance of this Note bears
interest determined in relation to LIBOR; provided however, that no Fixed Rate
Term may be selected for a principal amount less than Five Hundred Thousand and
No/100 Dollars ($500,000.00) and in multiples of One Hundred Thousand and No/100
Dollars ($100,000.00) thereafter; and provided further, that no Fixed Rate Term
shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term
would end on a day which is not a Business Day, then such Fixed Rate Term shall
be extended to the next succeeding Business Day.
ARTICLE 29 "LIBOR" means the rate per annum (rounded upward, if necessary, to
the nearest whole 1/8 of 1%) and determined pursuant to the following formula:
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LIBOR = Base LIBOR
-----------------------------------
100% - LIBOR Reserve Percentage
Section 29.1 "Base LIBOR" means the rate per annum for United States
dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.
Section 29.2 "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the Fixed Rate Term.
ARTICLE 30 "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
ARTICLE 31 "Total Funded Debt" shall have the meaning ascribed to it in the
Credit Agreement.
INTEREST:
(a) INTEREST. The Borrower agrees to pay interest at the Bank's address
listed above on the unpaid principal note hereof and, to the extent permitted by
law, the accrued interest in respect hereof from time to time from the date
hereof until payment in full of the principal amount hereof and accrued interest
hereon, at the rates and on the dates set forth on the Addendum attached hereto
and incorporated herein for all purposes.
(b) SELECTION OF INTEREST RATE OPTIONS. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At the time this
Note is disbursed or Borrower wishes to select a LIBOR option for all or a
portion of the outstanding principal balance hereof, and at the end of each
Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest
rate option selected by Borrower; (ii) the principal amount subject thereto; and
(iii) for each LIBOR selection, the length of the applicable Fixed Rate Term.
Any such notice may be given by telephone (or such other electronic method as
Bank may permit) so long as, with respect to each LIBOR selection, (A) if
requested by Bank, Borrower provides to Bank written confirmation thereof not
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later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at it's sole option
but without obligation to do so, accepts Borrower's notice and quotes a fixed
rate to Borrower. If Borrower does not immediately accept a fixed rate when
quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request
from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time this Note
is disbursed or at the end of any Fixed Rate Term, Borrower shall be deemed to
have made a Prime Rate interest selection for this Note or the principal amount
to which such Fixed Rate Term applied.
ARTICLE 32 TAXES AND REGULATORY COSTS. Borrower shall pay to Bank immediately
upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.
ARTICLE 33 DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed, unless such calculation would
result in a usurious rate, in which case interest shall be computed on the basis
of a 365/366-day year, as the case may be, actual days elapsed) equal to two
percent (2%) above the rate of interest from time to time applicable to this
Note, but in no event at a rate greater than the Maximum Rate.
BORROWINGS:
(c) Borrower may from time to time from the date of this Note up to and
including June 30, 2003, borrow and partially or wholly repay its outstanding
borrowings, subject to all of the limitations, terms and conditions of this Note
and of any document executed in connection with or governing this Note; provided
however, that amounts repaid may not be reborrowed; and provided further, that
the total borrowings under this Note shall not exceed the principal amount
stated above. The unpaid principal balance of this obligation at any time shall
be the total amounts advanced hereunder by the holder hereof less the amount of
principal payments made hereon by or for any Borrower, which balance may be
endorsed hereon from time to time by the holder.
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ARTICLE 34 All Base Rate borrowings shall be in amounts of at least Ten Thousand
and No/100 Dollars ($10,000.00), and all LIBOR borrowings shall be in amounts of
at least Five Hundred Thousand and No/100 Dollars ($500,000.00) and in multiples
of One Hundred Thousand and No/100 Dollars ($100,000.00) thereafter.
(d) The amount and date of each Base Rate borrowing shall be designated
by an authorized representative of the Borrower requesting such borrowing in
form and substance satisfactory to Bank, at Bank's sole discretion, and such
borrowing request shall be received by the Bank at least one (1) Business Day
prior to the date of such loan, which date shall be a Business Day. Each Base
Rate loan shall be made at the office of the Bank and shall be funded prior to
2:00 p.m. Houston time, on the day so requested and immediately available fund
in the amount so requested.
(e) The amount and date of each LIBOR borrowing shall be designated by
an authorized representative of the Borrower requesting such borrowing in form
and substance satisfactory to Bank, at Bank's sole discretion, and such
borrowing request shall be received by the Bank at least three (3) Business Days
prior to the date of such loan, which date shall be a Business Day. Each LIBOR
loan shall be made at the office of the Bank and shall be funded prior to 2:00
p.m. Houston time, on the day so requested and immediately available fund in the
amount so requested.
REPAYMENT AND PREPAYMENT:
(f) REPAYMENT. Principal shall be payable on the last day of each month
in six (6) installments, the first five (5) of which shall be in an amount equal
to Thirty-Five Thousand and No/100 Dollars ($35,000.00) each, commencing on
January 31, 2003 and the sixth (6th) and final installment shall be due and
payable on June 30, 2003 in the amount of the entire principal balance then due
and owing thereon
ARTICLE 35 APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Base Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.
ARTICLE 36 PREPAYMENT.
BASE RATE. Borrower may prepay this Note provided that all terms in the
Credit Agreement and herein are complied with (including the payment of any
prepayment penalties required in the Credit Agreement). As provided herein,
Borrower may prepay principal on any portion of this Note which bears interest
determined in relation to the Base Rate at any time and in the minimum amount of
One Hundred Thousand and No/100 Dollars ($100,000.00); PROVIDED, HOWEVER, that
if the outstanding principal balance of such portion of this Note is less than
said amount, the minimum prepayment amount shall be the entire outstanding
principal hereof.
-00-
XXXXX. Xxxxxxxx may prepay this Note provided that all terms in the
Credit Agreement and herein are complied with (including the payment of any
prepayment penalties required in the Credit Agreement). As provided herein,
Borrower may prepay principal on any portion of this Note which bears interest
determined in relation to LIBOR at any time and in the minimum amount of Five
Hundred Thousand and No/100 Dollars ($500,000.00) and in One Hundred Thousand
and No/100 Dollars ($100,000.00) multiples thereafter); PROVIDED, HOWEVER, that
if the outstanding principal balance of such portion of this Note is less than
said amount, the minimum prepayment amount shall be the entire outstanding
principal balance thereof. In consideration of Bank providing this prepayment
option to Borrower, or if any such portion of this Note shall become due and
payable at any time prior to the last day of the Fixed Rate Term applicable
thereto, Borrower shall pay to Bank immediately upon demand a fee which is the
sum of the discounted monthly differences for each month from the month of
prepayment through the month in which such Fixed Rate Term matures, calculated
as follows for each such month:
Section 36.1 DETERMINE the amount of interest which would have accrued
each month on the amount prepaid at the interest rate applicable to such amount
had it remained outstanding until the last day of the Fixed Rate Term applicable
thereto.
Section 36.2 SUBTRACT from the amount determined in (i) above the
amount of interest which would have accrued for the same month on the amount
prepaid for the remaining term of such Fixed Rate Term at LIBOR in effect on the
date of prepayment for new loans made for such term and in a principal amount
equal to the amount prepaid.
Section 36.3 If the result obtained in (ii) for any month is greater
than zero, discount that difference by LIBOR used in (ii) above.
Each Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank.
In addition, if Borrower makes an optional or required prepayment of a
LIBOR loan before the end of the related interest period, or fails to borrow,
convert, or extend a LIBOR loan after giving notice thereof, of if a LIBOR loan
is converted to Base Rate Loan as a result of certain changes and circumstances,
Borrower will reimburse Bank for any related funding losses and losses of
anticipated earnings.
All prepayments of principal on this Note, whether such prepayment is
in relation to a Base Rate option or a LIBOR option shall be applied first to
reduce the balloon payment due upon maturity hereof, if applicable, and second
to reduce the most remote of the principal installment or installments then
unpaid.
EVENTS OF DEFAULT:
The occurrence of any of the following shall constitute an "Event of
Default" under this Note:
The failure to pay any principal, interest, fees or other charges when due
hereunder or under any contract, instrument or document executed in connection
with this Note.
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ARTICLE 37 The filing of a petition by or against any Borrower, any guarantor of
this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any attachment or like levy on any property of any Borrower or Third
Party Obligor.
ARTICLE 38 The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.
ARTICLE 39 Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder.
ARTICLE 40 Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.
ARTICLE 41 Any sale or transfer of all or a substantial or material part of the
assets of any Borrower or Third Party Obligor other than in the ordinary course
of its business.
ARTICLE 42 Any violation or breach of any provision of, or any defined event of
default under, any addendum to this Note or any other promissory note or any
credit (including, without limitation, the Credit Agreement) agreement,
guaranty, security agreement, deed of trust, mortgage or other document executed
in connection with or securing this Note.
MISCELLANEOUS:
(g) REMEDIES. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all sums of principal and
accrued and unpaid interest outstanding hereunder to be immediately due and
payable without presentment, demand, or any notices of any kind, including
without limitation notice of nonperformance, notice of protest, protest, notice
of dishonor, notice of intention to accelerate or notice of acceleration, all of
which are expressly waived by each Borrower, and the obligation, if any, of the
holder to extend any further credit hereunder shall immediately cease and
terminate. Each Borrower shall pay to the holder immediately upon demand the
full amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of the holder's in-house counsel to the extent permissible), expended or
incurred by the holder in connection with the enforcement of the holder's rights
and/or the collection of any amounts which become due to the holder under this
Note, and the prosecution or defense of any action in any way related to this
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Note, including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.
ARTICLE 43 OBLIGATIONS JOINT AND SEVERAL. Should more than one person or entity
sign this Note as a Borrower, the obligations of each such Borrower shall be
joint and several.
ARTICLE 44 GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. THIS NOTE IS PERFORMABLE IN
XXXXXX COUNTY, TEXAS. ANY ACTION OR PROCEEDING UNDER OR IN CONNECTION WITH THIS
NOTE AGAINST THE BORROWER OR ANY THIRD PARTY OBLIGOR MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN XXXXXX COUNTY, TEXAS. BORROWER AND EACH THIRD PARTY OBLIGOR
HEREBY IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS,
AND (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE BANK TO BRING
ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ANY THIRD PARTY OBLIGOR OR WITH
RESPECT TO ANY COLLATERAL IN ANY STATE OR FEDERAL COURT IN ANY OTHER
JURISDICTION. ANY ACTION OR PROCEEDING BY THE BORROWER OR ANY THIRD PARTY
OBLIGOR AGAINST LENDER SHALL BE BROUGHT ONLY IN A COURT LOCATED IN XXXXXX
COUNTY, TEXAS.
ARTICLE 45 SAVINGS CLAUSE. It is the intention of the parties to comply strictly
with applicable usury laws. Accordingly, notwithstanding any provision to the
contrary in this Note, or in any contract, instrument or document evidencing or
securing the payment hereof or otherwise relating hereto (each, a "Related
Document"), in no event shall this Note or any Related Document require the
payment or permit the payment, taking, reserving, receiving, collection or
charging of any sums constituting interest under applicable laws that exceed the
maximum amount permitted by such laws, as the same may be amended or modified
from time to time (the "Maximum Rate"). If any such excess interest is called
for, contracted for, charged, taken, reserved or received in connection with
this Note or any Related Document, or in any communication by Bank or any other
person to Borrower or any other person, or in the event that all or part of the
principal or interest hereof or thereof shall be prepaid or accelerated, so that
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, reserved or received on the
amount of principal actually outstanding from time to time under this Note shall
exceed the Maximum Rate, then in such event it is agreed that: (i) the
provisions of this paragraph shall govern and control; (ii) neither Borrower nor
any other person or entity now or hereafter liable for the payment of this Note
or any Related Document shall be obligated to pay the amount of such interest to
the extent it is in excess of the Maximum Rate; (iii) any such excess interest
which is or has been received by Bank, notwithstanding this paragraph, shall be
credited against the then unpaid principal balance hereof or thereof, or if this
Note or any Related Document has been or would be paid in full by such credit,
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refunded to Borrower; and (iv) the provisions of this Note and each Related
Document, and any other communication to Borrower, shall immediately be deemed
reformed and such excess interest reduced, without the necessity of executing
any other document, to the Maximum Rate. The right to accelerate the maturity of
this Note or any Related Document does not include the right to accelerate,
collect or charge unearned interest, but only such interest that has otherwise
accrued as of the date of acceleration. Without limiting the foregoing, all
calculations of the rate of interest contracted for, charged, taken, reserved or
received in connection with this Note and any Related Document which are made
for the purpose of determining whether such rate exceeds the Maximum Rate shall
be made to the extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of this Note or such
Related Document, including all prior and subsequent renewals and extensions
hereof or thereof, all interest at any time contracted for, charged, taken,
reserved or received by Bank. The terms of this paragraph shall be deemed to be
incorporated into each Related Document.
To the extent that either Chapter 303 or 306, or both, of the Texas
Finance Code apply in determining the Maximum Rate, Bank hereby elects to
determine the applicable rate ceiling by using the weekly ceiling from time to
time in effect, subject to Bank's right subsequently to change such method in
accordance with applicable law, as the same may be amended or modified from time
to time.
ARTICLE 46 RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of
an Event of Default, (i) Borrower hereby authorizes Bank, at any time and from
time to time, without notice, which is hereby expressly waived by Borrower, and
whether or not Bank shall have declared this Note to be due and payable in
accordance with the terms hereof, to set off against, and to appropriate and
apply to the payment of, Borrower's obligations and liabilities under this Note
(whether matured or unmatured, fixed or contingent, liquidated or unliquidated),
any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars
or any other currency, whether matured or unmatured, and in the case of
deposits, whether general or special (except trust and escrow accounts), time or
demand and however evidenced), and (ii) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such obligations and
liabilities and to return as unpaid for insufficient funds any and all checks
and other items drawn against any deposits so held as Bank, in its sole
discretion, may elect. Borrower hereby grants to Bank a security interest in all
deposits and accounts maintained with Bank and with any other financial
institution to secure the payment of all obligations and liabilities of Borrower
to Bank under this Note.
ARTICLE 47 This note is in renewal and reduction of, but not innovation or
discharge of, that certain Term Note dated as of February 6, 2001, in the
original principal amount of $3,550,000.00, executed by the Borrower and payable
to the order of the Bank.
NOTICE: THIS NOTE AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS
EVIDENCED HEREBY CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL
AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS NOTE AND THE
INDEBTEDNESS EVIDENCED HEREBY.
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IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
MOUNTAIN COMPRESSED AIR, INC.
By: /s/ XXXXXXX XXXXXXXXXXXX
---------------------------
Xxxxxxx Xxxxxxxxxxxx
Chief Executive Officer
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ADDENDUM TO TERM NOTE
(BASE RATE/LIBOR PRICING ADJUSTMENTS)
THIS ADDENDUM is attached to and made a part of that certain renewal
promissory note executed by MOUNTAIN COMPRESSED AIR, INC., a Texas corporation
("Borrower") and payable to XXXXX FARGO BANK, TEXAS, NATIONAL ASSOCIATION
("Bank"), or order, dated as of January 1, 2003 in the principal amount of TWO
MILLION THREE HUNDRED NINETY-TWO THOUSAND NINETY-EIGHT AND 56/100 DOLLARS
($2,392,098.56) (the "Note").
The following provisions are hereby incorporated into the Note to
reflect the interest rate adjustments agreed to by Bank and Borrower:
INTEREST RATE ADJUSTMENTS:
(a) INITIAL INTEREST RATES. The initial interest rates applicable to
this Note shall be the rates set forth in the "INTEREST" paragraph herein.
(b) INTEREST RATE ADJUSTMENTS. In addition to any interest rate
adjustments resulting from changes in the Base Rate, Bank shall adjust the Base
Rate and LIBOR margins used to determine the rates of interest applicable to
this Note on the last day of each calendar month of each year, commencing on the
first such day after the date of the Note, if required to reflect a change in
Borrower's ratio of Total Funded Debt to EBITDA (as such terms are defined in
the Credit Agreement referenced herein), in accordance with the following grid:
APPLICABLE APPLICABLE
TOTAL FUNDED DEBT BASE RATE LIBOR
TO EBITDA MARGIN MARGIN
--------- ------ ------
2.0 to 1.0 or greater 1.25% 3.25%
at least 2.0 to 1.0 but
less than 2.5 to 1.0 1.75% 3.50%
at least 2.5 to 1.0 but
less than 3.0 to 1.0 2.00% 3.75%
less than 3.0 to 1.0 2.25% 4.00%
Each such adjustment shall be effective on the first Business Day (as defined in
the Note) of the calendar month following the month during which Bank receives
and reviews Borrower's most current month-end financial statements in accordance
with any requirements established by Bank for the preparation and delivery
thereof.
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(c) With respect to LIBOR loans, each interest payment shall be payable
on the last day of each calendar month commencing on January 31, 2003 and upon
maturity of the Note.
(d) With respect to Base Rate loans, each interest payment shall be
payable on the last day of each calendar month commencing on January 31, 2003,
through and including maturity of this Note.
IN WITNESS WHEREOF, this Addendum has been executed as of the same date
as the Note.
MOUNTAIN COMPRESSED AIR, INC.
By: /s/ XXXXXXX XXXXXXXXXXXX
---------------------------
Xxxxxxx Xxxxxxxxxxxx
Chief Executive Officer
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EXHIBIT C
DELAYED DRAW TERM NOTE
RENEWAL DELAYED DRAW TERM NOTE
------------------------------
$160,118.50 Houston, Texas
January 1, 2003
FOR VALUE RECEIVED, the undersigned MOUNTAIN COMPRESSED AIR INC., a
Texas corporation ("Borrower") promises to pay to the order of XXXXX FARGO BANK
TEXAS, NATIONAL ASSOCIATION ("Bank") at its office at 1000 Louisiana, 3rd Floor,
Houston, Texas, or at such other place as the holder hereof may designate, in
lawful money of the United States of America and in immediately available funds,
the principal sum of ONE HUNDRED SIXTY THOUSAND ONE HUNDRED EIGHTEEN AND 50/100
DOLLARS ($160,118.50), with interest thereon as set forth herein.
DEFINITIONS:
As used herein, the following terms shall have the meanings set forth
after each, and any other term defined in this Note shall have the meaning set
forth at the place defined:
(a) " Base Rate" means the higher of (a) Prime Rate per annum in effect
on that day, and (b) Federal Fund Rate in effect on that day as announced by the
Federal Reserve Bank of New York, plus 0.5% per annum
(b) "Business Day" means any day except a Saturday, Sunday or any other
day on which commercial banks in Texas are authorized or required by law to
close.
(c) "Credit Agreement" means that certain Credit Agreement between Bank
and Borrower of even date herewith.
(d) "Fixed Rate Term" means a period commencing on a Business Day and
continuing for one, two, three or six months, as designated by Borrower, during
which all or a portion of the outstanding principal balance of this Note bears
interest determined in relation to LIBOR; provided however, that no Fixed Rate
Term may be selected for a principal amount less than Five Hundred Thousand and
No/100 Dollars ($500,000.00) and in multiples of One Hundred Thousand and No/100
Dollars ($100,000.00) thereafter; and provided further, that no Fixed Rate Term
shall extend beyond the scheduled maturity date hereof. If any Fixed Rate Term
would end on a day which is not a Business Day, then such Fixed Rate Term shall
be extended to the next succeeding Business Day.
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(e) "LIBOR" means the rate per annum (rounded upward, if necessary, to
the nearest whole 1/8 of 1%) and determined pursuant to the following formula:
LIBOR = Base LIBOR
----------------------------------------------
100% - LIBOR Reserve Percentage
(i) "Base LIBOR" means the rate per annum for United States
dollar deposits quoted by Bank as the Inter-Bank Market Offered Rate, with the
understanding that such rate is quoted by Bank for the purpose of calculating
effective rates of interest for loans making reference thereto, on the first day
of a Fixed Rate Term for delivery of funds on said date for a period of time
approximately equal to the number of days in such Fixed Rate Term and in an
amount approximately equal to the principal amount to which such Fixed Rate Term
applies. Borrower understands and agrees that Bank may base its quotation of the
Inter-Bank Market Offered Rate upon such offers or other market indicators of
the Inter-Bank Market as Bank in its discretion deems appropriate including, but
not limited to, the rate offered for U.S. dollar deposits on the London
Inter-Bank Market.
(ii) "LIBOR Reserve Percentage" means the reserve percentage
prescribed by the Board of Governors of the Federal Reserve System (or any
successor) for "Eurocurrency Liabilities" (as defined in Regulation D of the
Federal Reserve Board, as amended), adjusted by Bank for expected changes in
such reserve percentage during the applicable Fixed Rate Term.
(f) "Prime Rate" means at any time the rate of interest most recently
announced within Bank at its principal office as its Prime Rate, with the
understanding that the Prime Rate is one of Bank's base rates and serves as the
basis upon which effective rates of interest are calculated for those loans
making reference thereto, and is evidenced by the recording thereof after its
announcement in such internal publication or publications as Bank may designate.
(g) Total Funded Debt shall have the meaning ascribed to it in the
Credit Agreement.
INTEREST:
(a) INTEREST. The Borrower agrees to pay interest at the Bank's address
listed above on the unpaid principal note hereof and, to the extent permitted by
law, the accrued interest in respect hereof from time to time from the date
hereof until payment in full of the principal amount hereof and accrued interest
hereon, at the rates and on the dates set forth on the Addendum attached hereto
and incorporated herein for all purposes.
(b) SELECTION OF INTEREST RATE OPTIONS. At any time any portion of this
Note bears interest determined in relation to LIBOR, it may be continued by
Borrower at the end the Fixed Rate Term applicable thereto so that all or a
portion thereof bears interest determined in relation to the Prime Rate or to
LIBOR for a new Fixed Rate Term designated by Borrower. At any time any portion
of this Note bears interest determined in relation to the Prime Rate, Borrower
may convert all or a portion thereof so that it bears interest determined in
relation to LIBOR for a Fixed Rate Term designated by Borrower. At the time this
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Note is disbursed or Borrower wishes to select a LIBOR option for all or a
portion of the outstanding principal balance hereof, and at the end of each
Fixed Rate Term, Borrower shall give Bank notice specifying: (i) the interest
rate option selected by Borrower; (ii) the principal amount subject thereto; and
(iii) for each LIBOR selection, the length of the applicable Fixed Rate Term.
Any such notice may be given by telephone (or such other electronic method as
Bank may permit) so long as, with respect to each LIBOR selection, (A) if
requested by Bank, Borrower provides to Bank written confirmation thereof not
later than three (3) Business Days after such notice is given, and (B) such
notice is given to Bank prior to 10:00 a.m. on the first day of the Fixed Rate
Term, or at a later time during any Business Day if Bank, at it's sole option
but without obligation to do so, accepts Borrower's notice and quotes a fixed
rate to Borrower. If Borrower does not immediately accept a fixed rate when
quoted by Bank, the quoted rate shall expire and any subsequent LIBOR request
from Borrower shall be subject to a redetermination by Bank of the applicable
fixed rate. If no specific designation of interest is made at the time this Note
is disbursed or at the end of any Fixed Rate Term, Borrower shall be deemed to
have made a Prime Rate interest selection for this Note or the principal amount
to which such Fixed Rate Term applied.
(c) TAXES AND REGULATORY COSTS. Borrower shall pay to Bank immediately
upon demand, in addition to any other amounts due or to become due hereunder,
any and all (i) withholdings, interest equalization taxes, stamp taxes or other
taxes (except income and franchise taxes) imposed by any domestic or foreign
governmental authority and related in any manner to LIBOR, and (ii) future,
supplemental, emergency or other changes in the LIBOR Reserve Percentage,
assessment rates imposed by the Federal Deposit Insurance Corporation, or
similar requirements or costs imposed by any domestic or foreign governmental
authority or resulting from compliance by Bank with any request or directive
(whether or not having the force of law) from any central bank or other
governmental authority and related in any manner to LIBOR to the extent they are
not included in the calculation of LIBOR. In determining which of the foregoing
are attributable to any LIBOR option available to Borrower hereunder, any
reasonable allocation made by Bank among its operations shall be conclusive and
binding upon Borrower.
(d) DEFAULT INTEREST. From and after the maturity date of this Note, or
such earlier date as all principal owing hereunder becomes due and payable by
acceleration or otherwise, the outstanding principal balance of this Note shall
bear interest until paid in full at an increased rate per annum (computed on the
basis of a 360-day year, actual days elapsed, unless such calculation would
result in a usurious rate, in which case interest shall be computed on the basis
of a 365/366-day year, as the case may be, actual days elapsed) equal to four
percent (2%) above the rate of interest from time to time applicable to this
Note, but in no event at a rate greater than the Maximum Rate.
BORROWINGS:
ARTICLE 48 (a) Borrower may from time to time from the date of this Note up to
and including June 30, 2003, borrow and partially or wholly repay its
outstanding borrowings, subject to all of the limitations, terms and conditions
of this Note and of any document executed in connection with or governing this
Note; provided however, that amounts repaid may not be reborrowed; and provided
further, that the total borrowings under this Note shall not exceed the
principal amount stated above. The unpaid principal balance of this obligation
at any time shall be the total amounts advanced hereunder by the holder hereof
less the amount of principal payments made hereon by or for any Borrower, which
balance may be endorsed hereon from time to time by the holder.
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(b) All Base Rate borrowings shall be in amounts of at least Ten
Thousand and No/100 Dollars ($10,000.00), and all LIBOR borrowings shall be in
amounts of at least One Hundred Thousand and No/100 Dollars ($100,000.00) or any
multiple thereof.
(c) The amount and date of each Base Rate borrowing shall be designated
by an authorized representative of the Borrower requesting such borrowing in
form and substance satisfactory to Bank, at Bank's sole discretion, and such
borrowing request shall be received by the Bank at least one (1) Business Day
prior to the date of such loan, which date shall be a Business Day. Each Base
Rate loan shall be made at the office of the Bank and shall be funded prior to
2:00 p.m. Houston time, on the day so requested and immediately available fund
in the amount so requested.
(d) The amount and date of each LIBOR borrowing shall be designated by
an authorized representative of the Borrower requesting such borrowing in form
and substance satisfactory to Bank, at Bank's sole discretion, and such
borrowing request shall be received by the Bank at least three (3) Business Days
prior to the date of such loan, which date shall be a Business Day. Each LIBOR
loan shall be made at the office of the Bank and shall be funded prior to 2:00
p.m. Houston time, on the day so requested and immediately available fund in the
amount so requested.
REPAYMENT AND PREPAYMENT:
(a) REPAYMENT. Principal shall be payable as provided in the Credit
Agreement.
(b) APPLICATION OF PAYMENTS. Each payment made on this Note shall be
credited first, to any interest then due and second, to the outstanding
principal balance hereof. All payments credited to principal shall be applied
first, to the outstanding principal balance of this Note which bears interest
determined in relation to the Base Rate, if any, and second, to the outstanding
principal balance of this Note which bears interest determined in relation to
LIBOR, with such payments applied to the oldest Fixed Rate Term first.
(c) PREPAYMENT.
BASE RATE.
----------
BASE RATE. Borrower may prepay this Note provided that all
terms in the Credit Agreement and herein are complied with (including
the payment of any prepayment penalties required in the Credit
Agreement). As provided herein, Borrower may prepay principal on any
portion of this Note which bears interest determined in relation to the
Base Rate at any time and in the minimum amount of One Hundred Thousand
and No/100 Dollars ($100,000.00); PROVIDED, HOWEVER, that if the
outstanding principal balance of such portion of this Note is less than
said amount, the minimum prepayment amount shall be the entire
outstanding principal hereof.
-00-
XXXXX. Xxxxxxxx may prepay this Note provided that all terms
in the Credit Agreement and herein are complied with (including the
payment of any prepayment penalties required in the Credit Agreement).
As provided herein, Borrower may prepay principal on any portion of
this Note which bears interest determined in relation to LIBOR at any
time and in the minimum amount of One Hundred Thousand and No/100
Dollars ($100,000.00) and in One Hundred Thousand and No/100 Dollars
($100,000.00) multiples thereafter); PROVIDED, HOWEVER, that if the
outstanding principal balance of such portion of this Note is less than
said amount, the minimum prepayment amount shall be the entire
outstanding principal balance thereof. In consideration of Bank
providing this prepayment option to Borrower, or if any such portion of
this Note shall become due and payable at any time prior to the last
day of the Fixed Rate Term applicable thereto, Borrower shall pay to
Bank immediately upon demand a fee which is the sum of the discounted
monthly differences for each month from the month of prepayment through
the month in which such Fixed Rate Term matures, calculated as follows
for each such month:
(i) DETERMINE the amount of interest which would have
accrued each month on the amount prepaid at the interest rate
applicable to such amount had it remained outstanding until
the last day of the Fixed Rate Term applicable thereto.
(ii) SUBTRACT from the amount determined in (i) above
the amount of interest which would have accrued for the same
month on the amount prepaid for the remaining term of such
Fixed Rate Term at LIBOR in effect on the date of prepayment
for new loans made for such term and in a principal amount
equal to the amount prepaid.
(iii) If the result obtained in (ii) for any month is
greater than zero, discount that difference by LIBOR used in
(ii) above.
Each Borrower acknowledges that prepayment of such amount may result in Bank
incurring additional costs, expenses and/or liabilities, and that it is
difficult to ascertain the full extent of such costs, expenses and/or
liabilities. Each Borrower, therefore, agrees to pay the above-described
prepayment fee and agrees that said amount represents a reasonable estimate of
the prepayment costs, expenses and/or liabilities of Bank.
In addition, if Borrower makes an optional or required prepayment of a
LIBOR loan before the end of the related interest period, or fails to borrow,
convert, or extend a LIBOR loan after giving notice thereof, of if a LIBOR loan
is converted to Base Rate Loan as a result of certain changes and circumstances,
Borrower will reimburse Bank for any related funding losses and losses of
anticipated earnings.
All prepayments of principal shall be applied on the most remote
principal installment or installments then unpaid.
-34-
EVENTS OF DEFAULT:
The occurrence of any of the following shall constitute an "Event of
Default" under this Note:
(a) The failure to pay any principal, interest, fees or other charges
when due hereunder or under any contract, instrument or document executed in
connection with this Note.
(b) The filing of a petition by or against any Borrower, any guarantor
of this Note or any general partner or joint venturer in any Borrower which is a
partnership or a joint venture (with each such guarantor, general partner and/or
joint venturer referred to herein as a "Third Party Obligor") under any
provisions of the Bankruptcy Reform Act, Title 11 of the United States Code, as
amended or recodified from time to time, or under any similar or other law
relating to bankruptcy, insolvency, reorganization or other relief for debtors;
the appointment of a receiver, trustee, custodian or liquidator of or for any
part of the assets or property of any Borrower or Third Party Obligor; any
Borrower or Third Party Obligor becomes insolvent, makes a general assignment
for the benefit of creditors or is generally not paying its debts as they become
due; or any attachment or like levy on any property of any Borrower or Third
Party Obligor.
(c) The death or incapacity of any individual Borrower or Third Party
Obligor, or the dissolution or liquidation of any Borrower or Third Party
Obligor which is a corporation, partnership, joint venture or other type of
entity.
(d) Any default in the payment or performance of any obligation, or any
defined event of default, under any provisions of any contract, instrument or
document pursuant to which any Borrower or Third Party Obligor has incurred any
obligation for borrowed money, any purchase obligation, or any other liability
of any kind to any person or entity, including the holder.
(e) Any financial statement provided by any Borrower or Third Party
Obligor to Bank proves to be incorrect, false or misleading in any material
respect.
(f) Any sale or transfer of all or a substantial or material part of
the assets of any Borrower or Third Party Obligor other than in the ordinary
course of its business.
(g) Any violation or breach of any provision of, or any defined event
of default under, any addendum to this Note or any other promissory note or any
credit (including, without limitation, the Credit Agreement) agreement,
guaranty, security agreement, deed of trust, mortgage or other document executed
in connection with or securing this Note.
MISCELLANEOUS:
(a) REMEDIES. Upon the occurrence of any Event of Default, the holder
of this Note, at the holder's option, may declare all sums of principal and
accrued and unpaid interest outstanding hereunder to be immediately due and
payable without presentment, demand, or any notices of any kind, including
-35-
without limitation notice of nonperformance, notice of protest, protest, notice
of dishonor, notice of intention to accelerate or notice of acceleration, all of
which are expressly waived by each Borrower, and the obligation, if any, of the
holder to extend any further credit hereunder shall immediately cease and
terminate. Each Borrower shall pay to the holder immediately upon demand the
full amount of all payments, advances, charges, costs and expenses, including
reasonable attorneys' fees (to include outside counsel fees and all allocated
costs of the holder's in-house counsel to the extent permissible), expended or
incurred by the holder in connection with the enforcement of the holder's rights
and/or the collection of any amounts which become due to the holder under this
Note, and the prosecution or defense of any action in any way related to this
Note, including without limitation, any action for declaratory relief, whether
incurred at the trial or appellate level, in an arbitration proceeding or
otherwise, and including any of the foregoing incurred in connection with any
bankruptcy proceeding (including without limitation, any adversary proceeding,
contested matter or motion brought by Bank or any other person) relating to any
Borrower or any other person or entity.
(b) OBLIGATIONS JOINT AND SEVERAL. Should more than one person or
entity sign this Note as a Borrower, the obligations of each such Borrower shall
be joint and several.
(c) GOVERNING LAW. THIS NOTE SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS. THIS NOTE IS PERFORMABLE IN
XXXXXX COUNTY, TEXAS. ANY ACTION OR PROCEEDING UNDER OR IN CONNECTION WITH THIS
NOTE AGAINST THE BORROWER OR ANY THIRD PARTY OBLIGOR MAY BE BROUGHT IN ANY STATE
OR FEDERAL COURT IN XXXXXX COUNTY, TEXAS. BORROWER AND EACH THIRD PARTY OBLIGOR
HEREBY IRREVOCABLY (I) SUBMITS TO THE NON-EXCLUSIVE JURISDICTION OF SUCH COURTS,
AND (II) WAIVES ANY OBJECTION IT MAY NOW OR HEREAFTER HAVE AS TO THE VENUE OF
ANY SUCH ACTION OR PROCEEDING BROUGHT IN SUCH COURT OR THAT SUCH COURT IS AN
INCONVENIENT FORUM. NOTHING HEREIN SHALL AFFECT THE RIGHT OF THE BANK TO BRING
ANY ACTION OR PROCEEDING AGAINST THE BORROWER OR ANY THIRD PARTY OBLIGOR OR WITH
RESPECT TO ANY COLLATERAL IN ANY STATE OR FEDERAL COURT IN ANY OTHER
JURISDICTION. ANY ACTION OR PROCEEDING BY THE BORROWER OR ANY THIRD PARTY
OBLIGOR AGAINST LENDER SHALL BE BROUGHT ONLY IN A COURT LOCATED IN XXXXXX
COUNTY, TEXAS.
(d) SAVINGS CLAUSE. It is the intention of the parties to comply
strictly with applicable usury laws. Accordingly, notwithstanding any provision
to the contrary in this Note, or in any contract, instrument or document
evidencing or securing the payment hereof or otherwise relating hereto (each, a
"Related Document"), in no event shall this Note or any Related Document require
the payment or permit the payment, taking, reserving, receiving, collection or
charging of any sums constituting interest under applicable laws that exceed the
maximum amount permitted by such laws, as the same may be amended or modified
from time to time (the "Maximum Rate"). If any such excess interest is called
for, contracted for, charged, taken, reserved or received in connection with
this Note or any Related Document, or in any communication by Bank or any other
person to Borrower or any other person, or in the event that all or part of the
principal or interest hereof or thereof shall be prepaid or accelerated, so that
-36-
under any of such circumstances or under any other circumstance whatsoever the
amount of interest contracted for, charged, taken, reserved or received on the
amount of principal actually outstanding from time to time under this Note shall
exceed the Maximum Rate, then in such event it is agreed that: (i) the
provisions of this paragraph shall govern and control; (ii) neither Borrower nor
any other person or entity now or hereafter liable for the payment of this Note
or any Related Document shall be obligated to pay the amount of such interest to
the extent it is in excess of the Maximum Rate; (iii) any such excess interest
which is or has been received by Bank, notwithstanding this paragraph, shall be
credited against the then unpaid principal balance hereof or thereof, or if this
Note or any Related Document has been or would be paid in full by such credit,
refunded to Borrower; and (iv) the provisions of this Note and each Related
Document, and any other communication to Borrower, shall immediately be deemed
reformed and such excess interest reduced, without the necessity of executing
any other document, to the Maximum Rate. The right to accelerate the maturity of
this Note or any Related Document does not include the right to accelerate,
collect or charge unearned interest, but only such interest that has otherwise
accrued as of the date of acceleration. Without limiting the foregoing, all
calculations of the rate of interest contracted for, charged, taken, reserved or
received in connection with this Note and any Related Document which are made
for the purpose of determining whether such rate exceeds the Maximum Rate shall
be made to the extent permitted by applicable laws by amortizing, prorating,
allocating and spreading during the period of the full term of this Note or such
Related Document, including all prior and subsequent renewals and extensions
hereof or thereof, all interest at any time contracted for, charged, taken,
reserved or received by Bank. The terms of this paragraph shall be deemed to be
incorporated into each Related Document.
To the extent that either Chapter 303 or 306, or both, of the Texas
Finance Code apply in determining the Maximum Rate, Bank hereby elects to
determine the applicable rate ceiling by using the weekly ceiling from time to
time in effect, subject to Bank's right subsequently to change such method in
accordance with applicable law, as the same may be amended or modified from time
to time.
(e) RIGHT OF SETOFF; DEPOSIT ACCOUNTS. Upon and after the occurrence of
an Event of Default, (i) Borrower hereby authorizes Bank, at any time and from
time to time, without notice, which is hereby expressly waived by Borrower, and
whether or not Bank shall have declared this Note to be due and payable in
accordance with the terms hereof, to set off against, and to appropriate and
apply to the payment of, Borrower's obligations and liabilities under this Note
(whether matured or unmatured, fixed or contingent, liquidated or unliquidated),
any and all amounts owing by Bank to Borrower (whether payable in U.S. dollars
or any other currency, whether matured or unmatured, and in the case of
deposits, whether general or special (except trust and escrow accounts), time or
demand and however evidenced), and (ii) pending any such action, to the extent
necessary, to hold such amounts as collateral to secure such obligations and
liabilities and to return as unpaid for insufficient funds any and all checks
and other items drawn against any deposits so held as Bank, in its sole
discretion, may elect. Borrower hereby grants to Bank a security interest in all
deposits and accounts maintained with Bank and with any other financial
institution to secure the payment of all obligations and liabilities of Borrower
to Bank under this Note.
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This note is in renewal and reduction of, but not in novation or
discharge of, that certain Delayed Draw Term Note dated as of February 6, 2001,
in the original principal amount of $500,000.00, executed by the Borrower and
payable to the order of the Bank
NOTICE: THIS NOTE AND ALL OTHER DOCUMENTS RELATING TO THE INDEBTEDNESS EVIDENCED
HEREBY CONSTITUTE A WRITTEN LOAN AGREEMENT WHICH REPRESENTS THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES RELATING TO THIS NOTE AND THE
INDEBTEDNESS EVIDENCED HEREBY.
IN WITNESS WHEREOF, the undersigned has executed this Note as of the
date first written above.
MOUNTAIN COMPRESSED AIR, INC.
By: /S/XXXXXXX X. XXXXXXXXXXXX
------------------------------------
Xxxxxxx X. Xxxxxxxxxxxx
Chairman and Chief Executive Officer
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ADDENDUM TO TERM COMMITMENT NOTE
(BASE RATE/LIBOR PRICING ADJUSTMENTS)
THIS ADDENDUM is attached to and made a part of that certain renewal
promissory note executed by MOUNTAIN COMPRESSED AIR, INC., a Texas corporation
("Borrower") and payable to XXXXX FARGO BANK TEXAS, NATIONAL ASSOCIATION
("Bank"), or order, dated as of January 1, 2003, in the principal amount of ONE
HUNDRED SIXTY THOUSAND ONE HUNDRED EIGHTEEN AND 50/100 DOLLARS ($160,118.50)
(the "Note").
The following provisions are hereby incorporated into the Note to
reflect the interest rate adjustments agreed to by Bank and Borrower:
INTEREST RATE ADJUSTMENTS:
(a) INITIAL INTEREST RATES. The initial interest rates applicable to
this Note shall be the rates set forth in the "INTEREST" paragraph herein.
(b) INTEREST RATE ADJUSTMENTS. In addition to any interest rate
adjustments resulting from changes in the Base Rate, Bank shall adjust the Base
Rate and LIBOR margins used to determine the rates of interest applicable to
this Note on the last day of each calendar month of each year, commencing on
January 31, 2003, if required to reflect a change in Borrower's ratio of Total
Funded Debt to EBITDA (as such terms are defined in the Credit Agreement
referenced herein), in accordance with the following grid:
APPLICABLE APPLICABLE
TOTAL FUNDED DEBT BASE RATE LIBOR
TO EBITDA MARGIN MARGIN
--------- ------ ------
greater than 2.0 to 1.0 1.25% 3.25%
at least 2.0 to 1.0 but
less than 2.5 to 1.0 1.75% 3.50%
at least 2.5 to 1.0 but
less than 3.0 to 1.0 2.00% 3.75%
less than 3.0 to 1.0 2.25% 4.00%
Each such adjustment shall be effective on the first Business Day (as defined in
the Note) of the calendar month following the month during which Bank receives
and reviews Borrower's most current month-end financial statements in accordance
with any requirements established by Bank for the preparation and delivery
thereof.
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(c) With respect to LIBOR loans, each interest payment shall be payable
on the last day of each calendar month commencing on January 31, 2003, and upon
maturity of the Note.
(d) With respect to Base Rate loans, each interest payment shall be
payable on the last day of each calendar month commencing on January 31, 2003,
through and including maturity of this Note.
IN WITNESS WHEREOF, this Addendum has been executed as of the same date
as the Note.
MOUNTAIN COMPRESSED AIR, INC.
By: /s/ XXXXXXX XXXXXXXXXXXX
-----------------------------
Xxxxxxx Xxxxxxxxxxxx
Chief Executive Officer
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