EXHIBIT 10.1
LOAN AND SECURITY AGREEMENT
by and between
FLEET CAPITAL CORPORATION
and
BLACK WARRIOR WIRELINE CORP.
and
XXXXX WIRELINE CO., INC.
Dated: March 16, 1998
$19,000,000
TABLE OF CONTENTS
Page
SECTION 1. CREDIT FACILITY.............................................
1.1 Revolving Credit Loans......................................
1.2 Term Loan and Equipment Loans...............................
1.3 Joint and Several Liability; Rights of Contribution.........
1.4 Structure of Credit Facility................................
SECTION 2. INTEREST, FEES AND CHARGES..................................
2.1 Interest....................................................
2.2 Computation of Interest and Fees............................
2.3 Closing Fee.................................................
2.4 Commitment Fee..............................................
2.5 Collateral Administration Fee...............................
2.6 Audit and Appraisal Fees....................................
2.7 Reimbursement of Expenses...................................
2.8 Bank Charges................................................
SECTION 3. LOAN ADMINISTRATION.........................................
3.1 Manner of Borrowing Revolving Credit Loans..................
3.2 Payments....................................................
3.3 Mandatory Prepayments; Proceeds of Sale, Loss,
Destruction or Condemnation of Collateral...................
3.4 Application of Payments and Collections.....................
3.5 All Loans to Constitute One Obligation......................
3.6 Loan Account................................................
3.7 Statements of Account.......................................
SECTION 4. TERM AND TERMINATION........................................
4.1 Term of Agreement...........................................
4.2 Termination.................................................
SECTION 5. SECURITY INTERESTS..........................................
5.1 Security Interest in Collateral.............................
5.2 Lien Perfection; Further Assurances.........................
5.3 Lien on Realty..............................................
5.4 Partial Release of Collateral...............................
SECTION 6. COLLATERAL ADMINISTRATION...................................
6.1 General ....................................................
6.2 Administration of Accounts..................................
6.3 Administration of Inventory.................................
6.4 Administration of Equipment.................................
6.5 Payment of Charges..........................................
SECTION 7. REPRESENTATIONS AND WARRANTIES..............................
7.1 General Representations and Warranties......................
7.2 Continuous Nature of Representations and Warranties.........
7.3 Survival of Representations and Warranties..................
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS.........................
8.1 Affirmative Covenants.......................................
8.2 Negative Covenants..........................................
8.3 Specific Financial Covenants................................
SECTION 9. CONDITIONS PRECEDENT........................................
9.1 Documentation...............................................
9.2 No Default..................................................
9.3 Other Loan Documents........................................
9.4 Equity......................................................
9.5 Availability................................................
9.6 Articles of Incorporation...................................
9.7 Good Standing Certificates..................................
9.8 Opinion Letters.............................................
9.9 Insurance...................................................
9.10 Disbursement Letter.........................................
9.11 Dominion Account............................................
9.12 Landlord Agreements.........................................
9.13 No Litigation...............................................
9.14 Customer Reference Checks...................................
9.15 Evidence of Perfection and Priority of Liens in Collateral..
9.16 Title Insurance Policies....................................
9.17 Environmental Site Assessments..............................
9.18 Acquisition.................................................
9.19 Pro-Forma Balance Sheet.....................................
9.20 Subordinated Debt...........................................
9.21 GECC Agreements.............................................
9.22 Collateral Assignment of Purchase Documents.................
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND
REMEDIES ON DEFAULT.........................................
10.1 Events of Default...........................................
10.2 Acceleration of the Obligations.............................
10.3 Other Remedies..............................................
10.4 Remedies Cumulative; No Waiver..............................
SECTION 11. MISCELLANEOUS...............................................
11.1 Power of Attorney...........................................
11.2 Indemnity...................................................
11.3 Modification of Agreement; Sale of Interest.................
11.4 Severability................................................
11.5 Successors and Assigns......................................
11.6 Cumulative Effect; Conflict of Terms........................
11.7 Execution in Counterparts...................................
11.8 Notice......................................................
11.9 Lender's Consent............................................
11.10 Credit Inquiries............................................
11.11 Time of Essence.............................................
11.12 Entire Agreement; Appendix A and Exhibits and Schedules.....
11.13 Interpretation..............................................
11.14 GOVERNING LAW; CONSENT TO FORUM.............................
11.15 WAIVERS BY BORROWER.........................................
11.16 Waiver of Consumer Rights...................................
11.17 Oral Agreements Ineffective.................................
11.18 Nonapplicability of Chapter 346.............................
11.19 Certain Matters of Construction.............................
LOAN AND SECURITY AGREEMENT
THIS LOAN AND SECURITY AGREEMENT is made this 16th day of March, 1998, by
and between FLEET CAPITAL CORPORATION ("Lender"), a Rhode Island corporation
with an office at 0000 Xxxxx Xxxxxxx Xxxxxx, Xxxxx 0000, LB 21, Xxxxxx, Xxxxx
00000; and BLACK WARRIOR WIRELINE CORP., a Delaware corporation ("Black
Warrior"), and XXXXX WIRELINE CO., INC., an Alabama corporation ("Xxxxx") (Black
Warrior and Xxxxx are hereinafter sometimes referred to individually and
collectively as the "Borrower"), each with its chief executive office and
principal place of business at 0000 Xxxxxxx 00 Xxxxx, Xxxxxxxx, Xxxxxxxxxxx
00000. Capitalized terms used in this Agreement have the meanings assigned to
them in Appendix A, General Definitions. Accounting terms not otherwise
specifically defined herein shall be construed in accordance with GAAP
consistently applied.
SECTION 1. CREDIT FACILITY
Subject to the terms and conditions of, and in reliance upon the
representations and warranties made in, this Agreement and the other Loan
Documents, Lender agrees to make a total credit facility of up to Nineteen
Million Dollars ($19,000,000) available upon Borrower's request therefor, as
follows:
1.1 Revolving Credit Loans.
1.1.1 Loans and Reserves. Lender agrees, during the term of this
Agreement and for so long as no Default or Event of Default exists, to make
Revolving Credit Loans to Borrower from time to time, as requested by Borrower
in the manner set forth in Section 3.1.1 hereof, up to a maximum principal
amount at any time outstanding equal to the Borrowing Base at such time minus
reserves, if any. Lender shall have the right to establish reserves in such
amounts, and with respect to such matters, as Lender shall deem necessary or
appropriate, against the amount of Revolving Credit Loans which Borrower may
otherwise request under this Section 1.1.1, including, without limitation, with
respect to (i) price adjustments, damages, unearned discounts, returned products
or other matters for which credit memoranda are issued in the ordinary course of
Borrower's business; (ii) other sums chargeable against Borrower's Loan Account
as Revolving Credit Loans under any section of this Agreement; (iii) amounts
owing by Borrower to any Person to the extent secured by a Lien other than a
Permitted Lien on, or trust over, any Property of Borrower; (iv) all amounts of
past due rent or other charges owing at such time by Borrower to any landlord of
any premises where any of the Collateral is located; and (v) such other matters,
events, conditions or contingencies as to which Lender, in its sole credit
judgment, determines reserves should be established from time to time hereunder.
1.1.2 Use of Proceeds. The Revolving Credit Loans shall be used solely
for the acquisition by Black Warrior of all of Phoenix's domestic directional
drilling business and
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survey business and certain other drilling and related assets of Phoenix, and
for Borrower's general operating capital needs in a manner consistent with the
provisions of this Agreement and Applicable Law. In no event shall any proceeds
of any Revolving Credit Loans be used to purchase or to carry, reduce, retire or
refinance any Indebtedness incurred to purchase or carry any margin stock
(within the meaning of Regulations G or U of the Federal Reserve Board).
1.2 Term Loan and Equipment Loans.
1.2.1 Term Loan. Lender agrees to make a term loan to Borrower on the
Closing Date in the principal amount of Nine Million Dollars ($9,000,000), which
shall be repayable in accordance with the terms of the Term Note and shall be
secured by all of the Collateral. The proceeds of the Term Loan shall be used
solely for purposes for which the proceeds of the Revolving Credit Loans are
authorized to be used. Borrower may not reborrow any amount repaid with respect
to the Term Loan.
1.2.2 Equipment Loans. Lender agrees, during the term of this
Agreement and for so long as no Default or Event of Default exists, to make
Loans ("Equipment Loans") to Borrower from time to time to finance Borrower's
purchases of Equipment for use in its business. Each Equipment Loan shall be in
the aggregate principal amount of not less than Two Hundred Fifty Thousand
Dollars ($250,000), and shall not exceed (i) with respect to Equipment acquired
by Borrower, eighty percent (80%) of the invoiced purchase price (excluding
taxes, title, freight, and installation costs) of the Equipment being acquired
with the proceeds of such Equipment Loan, or (ii) with respect to Equipment
manufactured or remanufactured by Borrower, eighty percent (80%) of the
appraised value of the Equipment being manufactured or remanufactured with the
proceeds of such Equipment Loan. Each Equipment Loan shall be secured by all of
the Collateral and shall be evidenced by the Equipment Note, which Equipment
Note shall specify the rate of interest and the repayment terms applicable to
each such Equipment Loan. The principal amount of all Equipment Loans hereunder
shall not exceed, in the aggregate, Two Million Dollars ($2,000,000). Borrower
may not reborrow any amount repaid with respect to any Equipment Loan.
1.3 Joint and Several Liability; Rights of Contribution.
(A) Each Borrower states and acknowledges that: (i) pursuant to this
Agreement, Borrowers desire to utilize their borrowing potential on a
consolidated basis to the same extent possible if they were merged into a single
corporate entity and that this Agreement reflects the establishment of credit
facilities which would not otherwise be available to such Borrower if each
Borrower were not jointly and severally liable for payment of all of the
Obligations; (ii) it has determined that it will benefit specifically and
materially from the advances of credit contemplated by this Agreement; (iii) it
is both a condition precedent to the obligations of Lender hereunder and a
desire of the Borrowers that each Borrower execute and deliver to Lender this
Agreement; and (iv) Borrowers have requested and bargained for the structure and
terms of and security for the advances contemplated by this Agreement.
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(B) Each Borrower hereby irrevocably and unconditionally: (i) agrees
that it is jointly and severally liable to Lender for the full and prompt
payment of the Obligations and the performance by each Borrower of its
obligations hereunder in accordance with the terms hereof; (ii) agrees to fully
and promptly perform all of its obligations hereunder with respect to each
advance of credit hereunder as if such advance had been made directly to it; and
(iii) agrees as a primary obligation to indemnify Lender on demand for and
against any loss incurred by Lender as a result of any of the obligations of any
one or more of the Borrowers being or becoming void, voidable, unenforceable or
ineffective for any reason whatsoever, whether or not known to Lender or any
Person, the amount of such loss being the amount which Lender would otherwise
have been entitled to recover from any one or more of the Borrowers.
(C) It is the intent of each Borrower that the indebtedness,
obligations and liability hereunder of no one of them be subject to challenge on
any basis, including, without limitation, pursuant to any applicable fraudulent
conveyance or fraudulent transfer laws. Accordingly, as of the date hereof, the
liability of each Borrower under this Section 1.3, together with all of its
other liabilities to all Persons as of the date hereof and as of any other date
on which a transfer or conveyance is deemed to occur by virtue of this
Agreement, calculated in amount sufficient to pay its probable net liabilities
on its existing Indebtedness as the same become absolute and matured ("Dated
Liabilities") is, and is to be, less than the amount of the aggregate of a fair
valuation of its property as of such corresponding date ("Dated Assets"). To
this end, each Borrower under this Section 1.3, (i) grants to and recognizes in
each other Borrower, ratably, rights of subrogation and contribution in the
amount, if any, by which the Dated Assets of such Borrower, but for the
aggregate of subrogation and contribution in its favor recognized herein, would
exceed the Dated Liabilities of such Borrower or, as the case may be, (ii)
acknowledges receipt of and recognizes its right to subrogation and contribution
ratably from each of the other Borrowers in the amount, if any, by which the
Dated Liabilities of such Borrower, but for the aggregate of subrogation and
contribution in its favor recognized herein, would exceed the Dated Assets of
such Borrower under this Section 1.3. In recognizing the value of the Dated
Assets and the Dated Liabilities, it is understood that Borrowers will
recognize, to at least the same extent of their aggregate recognition of
liabilities hereunder, their rights to subrogation and contribution hereunder.
It is a material objective of this Section 1.3 that each Borrower recognizes
rights to subrogation and contribution rather than be deemed to be insolvent (or
in contemplation thereof) by reason of an arbitrary interpretation of its joint
and several obligations hereunder. In addition to and not in limitation of the
foregoing provisions of this Section 1.3, the Borrowers and Lender hereby agree
and acknowledge that it is the intent of each Borrower and of Lender that the
obligations of each Borrower hereunder be in all respects in compliance with,
and not be voidable pursuant to, applicable fraudulent conveyance and fraudulent
transfer laws.
1.4 Structure of Credit Facility. Each Borrower agrees and acknowledges
that the present structure of the credit facilities detailed in this Agreement
is based in part upon the financial and other information presently known to
Lender regarding each Borrower, the corporate structure of Borrowers, and the
present financial condition of each Borrower. Each Borrower hereby agrees that
Lender shall have the right, in its sole credit judgment, to require that any or
all of the following changes be made to these credit facilities: (i) restrict
loans and
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advances between Borrowers, (ii) establish separate lockbox and dominion
accounts for each Borrower, (iii) separate the Term Loan and/or the Equipment
Loans into separate loans to such of the Borrowers as shall be determined by
Lender, and (iv) establish such other procedures as shall be reasonably deemed
by Lender to be useful in tracking where Loans are made under this Agreement and
the source of payments received by Lender on such Loans.
SECTION 2. INTEREST, FEES AND CHARGES
2.1 Interest.
2.1.1 Rates of Interest. The outstanding principal amount of the Loans
shall bear interest at the following rates per annum (individually called, as
applicable, an "Applicable Annual Rate"): (i) for Revolving Credit Loans, at a
fluctuating rate per annum equal to one-half percent (0.50%) above the Base
Rate, and (ii) for the Term Loan and the Equipment Loans, at a fluctuating rate
per annum equal to three-fourths percent (0.75%) above the Base Rate. The rate
of interest applicable to all Loans shall increase or decrease by an amount
equal to any increase or decrease in the Base Rate, effective as of the opening
of business on the day that any such change in the Base Rate occurs.
2.1.2 Default Rate of Interest. Upon and after the occurrence of an
Event of Default, and during the continuation thereof, the principal amount of
all Loans shall bear interest at a rate per annum equal to two percent (2.00%)
above the Applicable Annual Rate or at such other rate per annum above the
Applicable Rate (not to exceed two percent (2.00%)) as Lender shall, in its sole
discretion, elect (the "Default Rate").
2.1.3 Maximum Interest. (A) Notwithstanding anything to the contrary
in this Agreement or otherwise, (i) if at any time the amount of interest
computed on the basis of an Applicable Annual Rate or a Default Rate would
exceed the amount of such interest computed upon the basis of the maximum rate
of interest permitted by applicable state or federal law in effect from time to
time hereafter (the "Maximum Legal Rate"), the interest payable under this
Agreement shall be computed upon the basis of the Maximum Legal Rate, but any
subsequent reduction in such Applicable Annual Rate or Default Rate, as
applicable, shall not reduce such interest thereafter payable hereunder below
the amount computed on the basis of the Maximum Legal Rate until the aggregate
amount of such interest accrued and payable under this Agreement equals the
total amount of interest which would have accrued if such interest had been at
all times computed solely on the basis of an Applicable Annual Rate or Default
Rate, as applicable; and (ii) unless preempted by federal law, an Applicable
Annual Rate or Default Rate, as applicable, from time to time in effect
hereunder may not exceed the "weekly ceiling" from time to time in effect under
Chapter 303 of the Texas Finance Code (Vernon's Texas Code Annotated), as
amended from time to time (as amended, the "Texas Finance Code"). If the
applicable state or federal law is amended in the future to allow a greater rate
of interest to be charged under this Agreement than is presently allowed by
applicable state or federal law, then the limitation of interest hereunder shall
be increased to the maximum rate of interest allowed by applicable state or
federal law as amended, which increase shall be effective hereunder on the
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effective date of such amendment, and all interest charges owing to Lender by
reason thereof shall be payable in accordance with Section 3.2.2 hereof.
(B) Excess Interest. No agreements, conditions, provisions or
stipulations contained in this Agreement or any other instrument, document or
agreement between Borrower and Lender or default of Borrower, or the exercise by
Lender of the right to accelerate the payment of the maturity of principal and
interest, or to exercise any option whatsoever contained in this Agreement or
any other Loan Document, or the arising of any contingency whatsoever, shall
entitle Lender to contract for, charge, or receive, in any event, interest
exceeding the Maximum Legal Rate. In no event shall Borrower be obligated to pay
interest exceeding such Maximum Legal Rate and all agreements, conditions or
stipulations, if any, which may in any event or contingency whatsoever operate
to bind, obligate or compel Borrower to pay a rate of interest exceeding the
Maximum Legal Rate, shall be without binding force or effect, at law or in
equity, to the extent only of the excess of interest over such Maximum Legal
Rate. In the event any interest is contracted for, charged or received in excess
of the Maximum Legal Rate ("Excess Interest"), Borrower acknowledges and
stipulates that any such contract, charge, or receipt shall be the result of an
accident and bona fide error, and that any Excess received by Lender shall be
applied, first, to reduce the principal then unpaid hereunder; second, to reduce
the other Obligations; and third, returned to Borrower, it being the intention
of the parties hereto not to enter at any time into a usurious or otherwise
illegal relationship. Borrower recognizes that, with fluctuations in the Base
Rate and the Maximum Legal Rate, such a result could inadvertently occur. By the
execution of this Agreement, Borrower covenants that (i) the credit or return of
any Excess Interest shall constitute the acceptance by Borrower of such Excess
Interest, and (ii) Borrower shall not seek or pursue any other remedy, legal or
equitable, against Lender, based in whole or in part upon contracting for,
charging or receiving of any interest in excess of the maximum authorized by
applicable law. For the purpose of determining whether or not any Excess
Interest has been contracted for, charged or received by Lender, all interest at
any time contracted for, charged or received by Lender in connection with this
Agreement shall be amortized, prorated, allocated and spread in equal parts
during the entire term of this Agreement.
(C) Incorporation by this Reference. The provisions of Section
2.1.3(B) shall be deemed to be incorporated into every document or communication
relating to the Obligations which sets forth or prescribes any account, right or
claim or alleged account, right or claim of Lender with respect to Borrower (or
any other obligor in respect of Obligations), whether or not any provision of
Section 2.1.3(B) is referred to therein. All such documents and communications
and all figures set forth therein shall, for the sole purpose of computing the
extent of the Obligations of Borrower (or any other obligor) asserted by Lender
thereunder, be automatically re-computed by Borrower or any such obligor, and by
any court considering the same, to give effect to the adjustments or credits
required by Section 2.1.3(B).
2.2 Computation of Interest and Fees. Interest and commitment fees
hereunder shall be calculated daily and shall be computed on the actual number
of days elapsed over a year of 360 days. For the purpose of computing interest
hereunder, all items of payment received by Lender shall be deemed applied by
Lender on account of the Obligations (subject to xxxxx
0
payment of such items) one (1) Business Day after receipt by Lender of such
items in Lender's account located in Providence, Rhode Island, and Lender shall
be deemed to have received such items of payment on the date specified in
Section 3.4 hereof.
2.3 Closing Fee. Borrower shall pay to Lender a closing fee of One Hundred
Thirty-Five Thousand Dollars ($135,000), which shall be fully earned and (except
to the extent otherwise required by Applicable Law) nonrefundable on the Closing
Date, and shall be paid concurrently with the initial Loan hereunder.
2.4 Commitment Fee. Borrower shall pay to Lender a commitment fee equal to
one-half percent (0.50%) per annum of the amount by which the Average Monthly
Revolving Credit Loan Balance is less than the Total Revolving Credit Facility
and the amount of any unused portion of the Equipment Loans. The commitment fee
shall be payable monthly, in arrears, on the last day of each calendar month
hereafter.
2.5 Collateral Administration Fee. Borrower shall pay to Lender a quarterly
collateral administration fee of Five Thousand Dollars ($5,000), which fee shall
be paid to Lender on the Closing Date and on each July 1, October 1, January 1,
and April 1 thereafter during the term hereof.
2.6 Audit and Appraisal Fees. Borrower shall reimburse Lender for all
reasonable out-of-pocket costs and expenses incurred by Lender in connection
with audits and appraisals of Borrower's books and records and such other
matters as Lender shall deem appropriate. All such out-of-pocket expenses shall
be payable on demand.
2.7 Reimbursement of Expenses. If, at any time or times regardless of
whether or not an Event of Default then exists, Lender or any Participant incurs
legal or accounting expenses or any other costs or out-of-pocket expenses in
connection with (i) the negotiation and preparation of this Agreement or any of
the other Loan Documents, any amendment of or modification of this Agreement or
any of the other Loan Documents, or any sale or attempted sale of any interest
herein to any other Person; (ii) the administration of this Agreement or any of
the other Loan Documents and the transactions contemplated hereby and thereby;
(iii) any litigation, contest, dispute, suit, proceeding or action (whether
instituted by Lender, Borrower or any other Person) in any way relating to the
Collateral, this Agreement or any of the other Loan Documents or Borrower's
affairs; (iv) any attempt to enforce any rights of Lender or any Participant
against Borrower or any other Person which may be obligated to Lender by virtue
of this Agreement or any of the other Loan Documents, including the Account
Debtors; or (v) any attempt to inspect, verify, protect, preserve, restore,
collect, sell, liquidate or otherwise dispose of or realize upon the Collateral;
then all such legal and accounting expenses, other costs and out of pocket
expenses of Lender shall be charged to Borrower. All amounts chargeable to
Borrower under this Section 2.7 shall be Obligations secured by all of the
Collateral, shall be payable on demand to Lender or to such Participant, as the
case may be, and shall bear interest from the date such demand is made until
paid in full at the rate applicable to Revolving Credit Loans from time to time.
Borrower shall also reimburse Lender for expenses incurred by Lender in its
administration of the Collateral to the extent and in the manner provided in
Section 6 hereof.
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2.8 Bank Charges. Borrower shall pay to Lender, on demand, any and all
normal and customary fees, costs or expenses which Lender or any Participant
pays to a bank or other similar institution (including any fees paid by Lender
to any Participant) arising out of or in connection with (i) the forwarding to
Borrower or any other Person on behalf of Borrower, by Lender or any
Participant, of proceeds of loans made by Lender to Borrower pursuant to this
Agreement and (ii) the depositing for collection, by Lender or any Participant,
of any check or item of payment received or delivered to Lender or any
Participant on account of the Obligations.
SECTION 3. LOAN ADMINISTRATION
3.1 Manner of Borrowing Revolving Credit Loans. Borrowings under the credit
facility established pursuant to Section 1 hereof shall be as follows:
3.1.1 Loan Requests. A request for a Revolving Credit Loan shall be
made, or shall be deemed to be made, in the following manner: (i) Borrower shall
give Lender notice of its intention to borrow, in which notice Borrower shall
specify the amount of the proposed borrowing and the proposed borrowing date, no
later than 11:00 a.m. Dallas, Texas time on the proposed borrowing date;
provided, however, Lender shall have the right to refuse to accept such a
request or refuse to make a Revolving Credit Loan if at such time there exists a
Default or an Event of Default; and (ii) the becoming due of any amount required
to be paid under this Agreement, under the Term Note or under any of the other
Loan Documents, whether as principal, accrued interest, fees or other charges,
shall be deemed irrevocably to be a request by Borrower from Lender for a
Revolving Credit Loan on the due date of, and in an aggregate amount required to
pay, such principal, accrued interest, fees or other charges, and the proceeds
of any such Revolving Credit Loan may be disbursed by Lender by way of direct
payment of the relevant Obligation (whether or not any Default, Event of Default
or Out-of-Formula Condition exists at the time of or would result from such
Revolving Credit Loan) and shall bear interest at the rate of interest
applicable to Revolving Credit Loans. As an accommodation to Borrower, Lender
may permit telephonic requests for loans and electronic transmittal of
instructions, authorizations, agreements or reports to Lender by Borrower.
Unless Borrower specifically directs Lender in writing not to accept or act upon
telephonic or electronic communications from Borrower, Lender shall have no
liability to Borrower for any loss or damage suffered by Borrower as a result of
Lender's honoring of any requests, execution of any instructions, authorizations
or agreements or reliance on any reports communicated to Lender telephonically
or electronically and purporting to have been sent to Lender by any individual
from time to time designated by Borrower as an authorized officer and Lender
shall have no duty to verify the origin or authenticity of any such
communication.
3.1.2 Disbursement. Borrower hereby irrevocably authorizes Lender to
disburse the proceeds of each Revolving Credit Loan requested, or deemed to be
requested, pursuant to this Section 3.1.2 as follows: (i) the proceeds of each
Revolving Credit Loan requested under Section 3.1.1(i) shall be disbursed by
Lender in lawful money of the United States of America in immediately available
funds, in the case of the initial borrowing, in accordance with the terms of the
written disbursement letter from Borrower, and in the case of each subsequent
borrowing, by
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wire transfer to such bank account as may be agreed upon by Borrower and Lender
from time to time or elsewhere if pursuant to a written direction from Borrower;
and (ii) the proceeds of each Revolving Credit Loan requested under Section
3.1.1(ii) shall be disbursed by Lender by way of direct payment of the relevant
interest or other Obligation.
3.1.3 Authorization. Borrower hereby irrevocably authorizes Lender, in
Lender's sole discretion, to advance to Borrower, and to charge to Borrower's
Loan Account hereunder as a Revolving Credit Loan, a sum sufficient to pay all
interest accrued on the Obligations during the immediately preceding month and
to pay all costs, fees and expenses at any time owed by Borrower to Lender
hereunder.
3.2 Payments. All payments with respect to any of the Obligations shall be
made to Lender on the date when due, in Dollars and in immediately available
funds, without any offset or counterclaim. Except where evidenced by notes or
other instruments issued or made by Borrower to Lender specifically containing
payment provisions which are in conflict with this Section 3.2 (in which event
the conflicting provisions of said notes or other instruments shall govern and
control), the Obligations shall be payable as follows:
3.2.1 Principal. Principal payable on account of Revolving Credit
Loans shall be payable by Borrower to Lender immediately upon the earliest of
(i) except as otherwise provided in Section 3.3 hereof, the receipt by Lender or
Borrower of any proceeds of any of the Collateral, to the extent of said
proceeds, (ii) the occurrence of an Event of Default in consequence of which
Lender elects to accelerate the maturity and payment of the Obligations, or
(iii) termination of this Agreement pursuant to Section 4 hereof; provided,
however, that if an Out-of-Formula Condition shall exist at any time, Borrower
shall, on demand, repay the Obligations to the extent necessary to eliminate the
Out-of-Formula Condition.
3.2.2 Interest. Interest accrued on the Revolving Credit Loans shall
be due on the earliest of (i) the first calendar day of each month (for the
immediately preceding month), computed through the last calendar day of the
preceding month, (ii) the occurrence of an Event of Default in consequence of
which Lender elects to accelerate the maturity and payment of the Obligations or
(iii) termination of this Agreement pursuant to Section 4 hereof.
3.2.3 Costs, Fees and Charges. Costs, fees and charges payable
pursuant to this Agreement shall be payable by Borrower as and when provided in
Section 2 hereof, to Lender or to any other Person designated by Lender in
writing.
3.2.4 Other Obligations. The balance of the Obligations requiring the
payment of money, if any, shall be payable by Borrower to Lender as and when
provided in this Agreement, the Other Agreements or the Security Documents, or,
if no date of payment is otherwise specified in the Loan Documents, on demand.
3.3 Mandatory Prepayments; Proceeds of Sale, Loss, Destruction or
Condemnation of Collateral. If Borrower sells any of the Equipment or real
Property, or if any of the Collateral is lost or destroyed or taken by
condemnation, Borrower shall pay to Lender, unless otherwise
8
agreed by Lender, as and when received by Borrower and as a mandatory prepayment
of the Term Loan (or, at Lender's option, such of the other Obligations as
Lender may elect), a sum equal to the net proceeds (including insurance
payments) received by Borrower from such sale, loss, destruction or condemnation
(other than proceeds of the disposition of Equipment otherwise permitted under
Section 6.4.2 hereof which is replaced in accordance with Section 6.4.2 hereof).
Nothing in this Section 3.3 shall authorize Borrower to sell any of the
Collateral without Lender's prior written consent except as otherwise expressly
provided elsewhere in this Agreement.
3.4 Application of Payments and Collections. All items of payment received
by Lender by 1:00 p.m., Providence, Rhode Island time, on any Business Day shall
be deemed received on that Business Day. All items of payment received after
1:00 p.m., Providence, Rhode Island time, on any Business Day shall be deemed
received on the following Business Day. Borrower irrevocably waives the right to
direct the application of any and all payments and collections at any time or
times hereafter received by Lender from or on behalf of Borrower, and Borrower
does hereby irrevocably agree that Lender shall have the continuing exclusive
right to apply and reapply any and all such payments and collections received at
any time or times hereafter by Lender or its agent against the Obligations, in
such manner as Lender may deem advisable, notwithstanding any entry by Lender
upon any of its books and records. If as the result of collections of Accounts
as authorized by Section 6.2.6 hereof a credit balance exists in the Loan
Account, such credit balance shall not accrue interest in favor of Borrower, but
shall be available to Borrower at any time or times for so long as no Default or
Event of Default exists. Such credit balance shall not be applied or be deemed
to have been applied as a prepayment of the Term Loan, except that Lender may,
at its option, offset such credit balance against any of the Obligations upon
and after the occurrence of an Event of Default.
3.5 All Loans to Constitute One Obligation. All Loans shall constitute one
general Obligation of Borrower, and shall be secured by Lender's security
interest and Lien upon all of the Collateral, and by all other security
interests and Liens heretofore, now or at any time or times hereafter granted by
Borrower to Lender.
3.6 Loan Account Lender shall establish an account on its books (the "Loan
Account") and shall enter all Loans as debits to the Loan Account and shall also
record in the Loan Account all payments made by Borrower on any Obligations and
all proceeds of Collateral which are finally paid to Lender, and may record
therein, in accordance with customary accounting practice, other debits and
credits, including interest and all charges and expenses properly chargeable to
Borrower.
3.7 Statements of Account. Lender will account to Borrower monthly with a
statement of Loans, charges and payments made pursuant to this Agreement, and
such account rendered by Lender shall be deemed final, binding and conclusive
upon Borrower unless Lender is notified by Borrower in writing to the contrary
within thirty (30) days after the date each accounting is deemed to have been
sent pursuant to Section 11.8 hereof. Such notice shall only be deemed an
objection to those items specifically objected to therein.
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SECTION 4. TERM AND TERMINATION
4.1 Term of Agreement. Subject to Section 4.2 hereof and Lender's right to
cease making Loans to Borrower upon or after the occurrence of any Default or
Event of Default, this Agreement shall be in effect for a period of three (3)
years from the date hereof, through and including March 15, 2001 (the "Original
Term").
4.2 Termination.
4.2.1 Termination by Lender. Lender may terminate this Agreement
without notice as of the last day of the Original Term and at any time without
notice upon or after the occurrence of an Event of Default.
4.2.2 Termination by Borrower. Upon (i) at least fifteen (15) days
prior written notice to Lender in the event of a termination resulting from a
secondary public offering permitted hereunder or (ii) at least sixty (60) days
prior written notice to Lender in all other circumstances, Borrower may, at its
option, terminate this Agreement; provided, however, no such termination shall
be effective until Borrower has paid all of the Obligations in immediately
available funds. Any notice of termination given by Borrower shall be
irrevocable unless Lender otherwise agrees in writing, and Lender shall have no
obligation to make any Loans on or after the termination date stated in such
notice. Borrower may elect to terminate this Agreement in its entirety only. No
section of this Agreement or type of Loan available hereunder may be terminated
singly.
4.2.3 Termination Charges. On the effective date of termination of
this Agreement for any reason, Borrower shall pay to Lender (in addition to the
then outstanding principal, accrued interest and other charges owing under the
terms of this Agreement and any of the other Loan Documents) as liquidated
damages for the loss of the bargain and not as a penalty, an amount equal to
three percent (3.0%) of the Total Credit Facility if termination occurs during
the first twelve-month period of the Original Term (March 16, 1998, through
March 15, 1999); two percent (2.0%) of the Total Credit Facility if termination
occurs during the second twelve-month period of the Original Term (March 16,
1999 through March 15, 2000); and one percent (1.0%) of the Total Credit
Facility if termination occurs during the third twelve-month period of the
Original Term (March 16, 2000 through March 15, 2001); provided, however, that
in the event the Total Credit Facility is prepaid solely from the proceeds of a
secondary public offering of capital stock (or other securities acceptable to
Lender) of Black Warrior, Borrower shall pay to Lender an amount equal to one
percent (1.0%) of the then outstanding principal balance of the Total Credit
Facility if such secondary public offering closes during the first
eighteen-month period of the Original Term (March 16, 1998, through September
15, 1999), and no termination charge shall be payable if such secondary public
offering closes after the first eighteen-month period of the Original Term. If
termination occurs on the last day of the Original Term, no termination charge
shall be payable.
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4.2.4 Effect of Termination. All of the Obligations shall be
immediately due and payable upon the termination date stated in any notice of
termination of this Agreement. All undertakings, agreements, covenants,
warranties and representations of Borrower contained in the Loan Documents shall
survive any such termination and Lender shall retain its Liens in the Collateral
and all of its rights and remedies under the Loan Documents notwithstanding such
termination until Borrower has paid the Obligations to Lender, in full, in
immediately available funds, together with the applicable termination charge, if
any. Notwithstanding the payment in full of the Obligations, Lender shall not be
required to terminate its security interests in the Collateral unless, with
respect to any loss or damage Lender may incur as a result of dishonored checks
or other items of payment received by Lender from Borrower or any Account Debtor
and applied to the Obligations, Lender shall, at its option, (i) have received a
written agreement, executed by Borrower and by any Person whose loans or other
advances to Borrower are used in whole or in part to satisfy the Obligations
(provided, however, that such agreement shall not be required by any Person
other than Borrower in the event of a secondary public offering of capital stock
of Borrower), indemnifying Lender from any such loss or damage; or (ii) have
retained such monetary reserves and Liens on the Collateral for such period of
time as Lender, in its discretion, may deem necessary to protect Lender from any
such loss or damage.
SECTION 5. SECURITY INTERESTS
5.1 Security Interest in Collateral. To secure the prompt payment and
performance to Lender of all of the Obligations, Borrower hereby grants to
Lender a continuing security interest and Lien upon all of Borrower's assets,
including all of the following Property and interests in Property of Borrower,
whether now owned or existing or hereafter created, acquired or arising and
wheresoever located:
(i) All Accounts;
(ii) All Inventory;
(iii) All Equipment, with the sole exception of the GECC Equipment;
(iv) All General Intangibles;
(v) All investment property (as defined in Section 9.115 of the
Code);
(vi) All real Property, with the sole exception of the Conroe
Property;
(vii)All monies and other Property of any kind now or at any time or
times hereafter in the possession or under the control of Lender or a bailee or
Affiliate of Lender;
(viii) All accessions to, substitutions for and all replacements,
products and cash and non-cash proceeds of (i) through (vii) above, including,
without limitation, proceeds of and unearned premiums with respect to insurance
policies insuring any of the Collateral; and
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(ix) All books and records (including, without limitation, customer
lists, credit files, computer programs, print-outs, and other computer materials
and records) of Borrower pertaining to any of (i) through (viii) above.
5.2 Lien Perfection; Further Assurances. Borrower shall execute such UCC-1
financing statements as are required by the Code and such other instruments,
assignments or documents as are necessary to perfect Lender's Lien upon any of
the Collateral and shall take such other action as may be required to perfect or
to continue the perfection of Lender's Lien upon the Collateral. Unless
prohibited by Applicable Law, Borrower hereby authorizes Lender to execute and
file any such financing statement on Borrower's behalf. The parties agree that a
carbon, photographic or other reproduction of this Agreement shall be sufficient
as a financing statement and may be filed in any appropriate office in lieu
thereof. At Lender's request, Borrower shall also promptly execute or cause to
be executed and shall deliver to Lender any and all documents, instruments and
agreements deemed necessary by Lender to give effect to or carry out the terms
or intent of the Loan Documents.
5.3 Lien on Realty. The due and punctual payment and performance of the
Obligations shall also be secured by the Lien created by each Mortgage upon all
real Property of Borrower described therein. Each Mortgage shall be executed by
Borrower in favor of Lender and shall be duly recorded, at Borrower's expense,
in each office where such recording is required to constitute a fully perfected
Lien on the real Property covered thereby. Borrower shall deliver to Lender, at
Borrower's expense, mortgagee title insurance policies issued by a title
insurance company satisfactory to Lender, which policies shall be in form and
substance satisfactory to Lender and shall insure a valid first Lien in favor of
Lender on the Property covered thereby, subject only to those exceptions
reasonably acceptable to Lender and its counsel. Borrower shall deliver to
Lender such other documents, including, without limitation, as-built survey
prints of the real Property, as Lender and its counsel may request relating to
the real Property subject to each Mortgage.
5.4 Partial Release of Collateral. In the event Borrower is meeting at
least six (6) months of initial projections of EBITDA of Borrower agreed upon
between Borrower and Lender and attached hereto as Exhibit Q (considered
cumulatively over the number of months reviewed) and Lender is unwilling to
provide funding in excess of the Total Credit Facility to Borrower (if requested
by Borrower and if the amount of such funding is reasonable), then Lender will,
upon forty-five (45) days' prior written request from Borrower, release its Lien
on certain Equipment and/or Inventory of Borrower selected by Lender, subject to
the following conditions: (i) at least six (6) months have elapsed from the
Closing Date to the date of such request; (ii) no Default or Event of Default
exists at the time of such request or at the time of such proposed release;
(iii) Lender shall have received, at least ten (10) days prior to such proposed
release, an appraisal, conducted by an appraiser acceptable to Lender and in
form and substance satisfactory to Lender and dated not more than three (3)
months prior to the proposed release, that demonstrates to Lender's satisfaction
that, after giving effect to such release, the appraised value of the remaining
Equipment shall be equal to at least one hundred fifty percent (150%) of the
outstanding principal balance of the Term Loan as of the date of such release;
and (iv) all costs and expenses related to such appraisal and release shall be
paid by Borrower.
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SECTION 6. COLLATERAL ADMINISTRATION
6.1 General
6.1.1 Location of Collateral. All tangible items of Collateral, other
than Inventory in transit, such Equipment in transit as may be reasonably
necessary to perform work at locations other than the business locations set
forth on Exhibit B hereto, and only for long as may be reasonably necessary to
complete such work, motor vehicles and investment property held in an account
with a securities intermediary, shall at all times be kept by Borrower and its
Subsidiaries at one or more of the business locations set forth on Exhibit B
hereto and shall not, without the prior written approval of Lender, be moved
therefrom except, prior to an Event of Default and Lender's acceleration of the
maturity of the Obligations in consequence thereof, for (i) sales of Inventory
in the ordinary course of business; and (ii) removals in connection with
dispositions of Equipment that are authorized by Section 6.4.2 hereof.
6.1.2 Insurance of Collateral. Borrower shall maintain and pay for
insurance upon all Collateral wherever located and with respect to Borrower's
business, covering casualty, hazard, public liability and such other risks in
such amounts and with such insurance companies as are reasonably satisfactory to
Lender. Borrower shall deliver the originals or certified copies of such
policies to Lender with satisfactory lender's loss payable endorsements, which
policies shall name Lender as sole loss payee, assignee or additional insured,
as appropriate. Each policy of insurance or endorsement shall contain a clause
requiring the insurer to give not less than thirty (30) days prior written
notice to Lender in the event of cancellation of the policy for any reason
whatsoever and a clause specifying that the interest of Lender shall not be
impaired or invalidated by any act or neglect of Borrower or the owner of the
Property or by the occupation of the premises for purposes more hazardous than
are permitted by said policy. If Borrower fails to provide and pay for such
insurance, Lender may, at its option, but shall not be required to, procure the
same and charge Borrower therefor. Borrower agrees to deliver to Lender,
promptly as rendered, true copies of all reports made in any reporting forms to
insurance companies.
6.1.3 Protection of Collateral. All expenses of protecting, storing,
warehousing, insuring, handling, maintaining and shipping the Collateral, any
and all excise, property, sales, and use taxes imposed by any Applicable Law on
any of the Collateral or in respect of the sale thereof, and all other payments
required to be made by Lender to any Person to realize upon any Collateral shall
be borne and paid by Borrower. If Borrower fails to promptly pay any portion
thereof when due, Lender may, at its option, but shall not be required to, pay
the same and charge Borrower therefor. Lender shall not be liable or responsible
in any way for the safekeeping of any of the Collateral or for any loss or
damage thereto (except for reasonable care in the custody thereof while any
Collateral is in Lender's actual possession) or for any diminution in the value
thereof, or for any act or default of any warehouseman, carrier, forwarding
agency, or other Person whomsoever, but the same shall be at Borrower's sole
risk.
6.2 Administration of Accounts.
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6.2.1 Records, Schedules and Assignments of Accounts. Borrower shall
keep accurate and complete records of its Accounts and all payments and
collections thereon and shall submit to Lender on such periodic basis as Lender
shall request a sales and collections report for the preceding period, in form
satisfactory to Lender. On or before the twentieth (20th) day of each month from
and after the date hereof, Borrower shall deliver to Lender, in form acceptable
to Lender, a detailed aged trial balance of all Accounts existing as of the last
day of the preceding month, specifying the names, addresses, face value, dates
of invoices and due dates for each Account Debtor obligated on an Account so
listed ("Schedule of Accounts"), and, upon Lender's request therefor, copies of
proof of delivery and the original copy of all documents, including, without
limitation, repayment histories and present status reports relating to the
Accounts so scheduled and such other matters and information relating to the
status of then existing Accounts as Lender shall reasonably request. In
addition, if Accounts in an aggregate face amount in excess of Twenty-Five
Thousand Dollars ($25,000) become ineligible because they fall within one of the
specified categories of ineligibility set forth in the definition of Eligible
Accounts or otherwise established by Lender, Borrower shall notify Lender of
such occurrence on the first Business Day following the day such occurrence
becomes known to Borrower and the Borrowing Base shall thereupon be adjusted to
reflect such occurrence. If requested by Lender, Borrower shall execute and
deliver to Lender agings and formal written assignments of all of its Accounts
weekly or daily, which shall include all Accounts that have been created since
the date of the last assignment, together with copies of invoices or invoice
registers related thereto.
6.2.2 Discounts, Allowances, Disputes. If Borrower grants any
discounts, allowances or credits that are not shown on the face of the invoice
for the Account involved, Borrower shall report such discounts, allowances or
credits, as the case may be, to Lender as part of the next required Schedule of
Accounts. If any amounts due and owing in excess of Twenty-Five Thousand Dollars
($25,000) are in dispute between Borrower and any Account Debtor, Borrower shall
provide Lender with written notice thereof at the time of submission of the next
Schedule of Accounts, explaining in detail the reason for the dispute, all
claims related thereto and the amount in controversy. Upon and after the
occurrence of an Event of Default, Lender shall have the right to settle or
adjust all disputes and claims directly with the Account Debtor and to
compromise the amount or extend the time for payment of the Accounts upon such
terms and conditions as Lender may deem advisable, and to charge the
deficiencies, costs and expenses thereof, including attorney's fees, to
Borrower.
6.2.3 Taxes. If an Account includes a charge for any tax payable to
any governmental taxing authority, Lender is authorized, in its sole discretion,
to pay the amount thereof to the proper taxing authority for the account of
Borrower and to charge Borrower therefor; provided, however, that Lender shall
not be liable for any such taxes to any governmental taxing authority that may
be due by Borrower.
6.2.4 Account Verification. Whether or not a Default or an Event of
Default has occurred, any of Lender's officers, employees or agents shall have
the right, at any time or times hereafter, in the name of Lender, any designee
of Lender or Borrower, to verify the validity,
14
amount or any other matter relating to any Accounts by mail, telephone,
facsimile transmission or otherwise. Borrower shall cooperate fully with Lender
in an effort to facilitate and promptly conclude any such verification process.
6.2.5 Maintenance of Dominion Account. Borrower shall maintain a
Dominion Account pursuant to a lockbox arrangement acceptable to Lender with
such banks as may be selected by Borrower and be acceptable to Lender. Borrower
shall issue to any such banks an irrevocable letter of instruction directing
such banks to deposit all payments or other remittances received in the lockbox
to the Dominion Account for application on account of the Obligations. All funds
deposited in the Dominion Account shall immediately become the property of
Lender and Borrower shall obtain the agreement by such banks in favor of Lender
to waive any offset rights against the funds so deposited.
6.2.6 Collection of Accounts, Proceeds of Collateral. To expedite
collection, Borrower shall endeavor in the first instance to make collection of
its Accounts for Lender. All remittances received by Borrower in respect of
Accounts, together with the proceeds of any other Collateral, shall be held as
Lender's property by Borrower as trustee of an express trust for Lender's
benefit and Borrower shall immediately deposit same in kind in the Dominion
Account. Lender retains the right at all times after the occurrence of a Default
or an Event of Default to notify Account Debtors that Accounts have been
assigned to Lender and to collect Accounts directly in its own name and to
charge the collection costs and expenses, including reasonable attorneys' fees
to Borrower.
6.3 Administration of Inventory. Except in the ordinary course of business,
Borrower shall keep accurate and complete records of its Inventory. Borrower
shall not return any of its Inventory to a supplier or vendor thereof, or to any
other Person, whether for cash, credit against future purchases or then existing
payables, or otherwise.
6.4 Administration of Equipment.
6.4.1 Records and Schedules of Equipment. Borrower shall keep accurate
records itemizing and describing the kind, type, quality, quantity and value of
its Equipment and all dispositions made in accordance with Section 6.4.2 hereof,
and shall furnish Lender with a current schedule containing the foregoing
information on at least an annual basis and more often if requested by Lender.
Immediately on request therefor by Lender, Borrower shall deliver to Lender any
and all evidence of ownership, if any, of any of the Equipment.
6.4.2 Dispositions of Equipment. Borrower will not sell, lease or
otherwise dispose of or transfer any of the Equipment on which Lender has a
first Lien or any part thereof without the prior written consent of Lender;
provided, however, that the foregoing restriction shall not apply, for so long
as no Default or Event of Default exists, to (i) dispositions of Equipment
which, in the aggregate during any consecutive twelve-month period, has a fair
market value or book value, whichever is less, of Two Hundred Fifty Thousand
Dollars ($250,000) or less, provided that all proceeds thereof are remitted to
Lender for application to the Loans, or (ii) replacements of Equipment that is
substantially worn, damaged or obsolete with
15
Equipment of like kind, function and value, provided that the replacement
Equipment shall be acquired prior to or concurrently with any disposition of the
Equipment that is to be replaced, the replacement Equipment shall be free and
clear of Liens other than Permitted Liens that are not Purchase Money Liens, and
Borrower shall have given Lender at least five (5) days' prior written notice of
such disposition.
6.4.3 Condition of Equipment. Borrower represents and warrants to
Lender that the Equipment is in good operating condition and repair, and all
necessary replacements of and repairs thereto shall be made so that the value
and operating efficiency of the Equipment shall be maintained and preserved,
reasonable wear and tear excepted. Borrower will not permit any of the Equipment
to become affixed to any real Property leased to Borrower so that an interest
arises therein under the real estate laws of the applicable jurisdiction unless
the landlord of such real Property has executed a landlord waiver or leasehold
mortgage in favor of and in form acceptable to Lender, or, at Lender's
discretion, a reserve for rent, acceptable to Lender, has been established, and
Borrower will not permit any of the Equipment to become an accession to any
personal Property that is subject to a Lien unless the Lien is a Permitted Lien.
6.5 Payment of Charges. All amounts chargeable to Borrower under Section 6
hereof shall be Obligations secured by all of the Collateral, shall be payable
on demand and shall bear interest from the date such advance was made until paid
in full at the rate applicable to Revolving Credit Loans from time to time.
SECTION 7. REPRESENTATIONS AND WARRANTIES
7.1 General Representations and Warranties. To induce Lender to enter into
this Agreement and to make advances hereunder, Borrower warrants and represents
to Lender and covenants with Lender that:
7.1.1 Organization and Qualification. Each of Borrower and its
Subsidiaries is a corporation duly organized, validly existing and in good
standing under the laws of the jurisdiction of its incorporation. Each of
Borrower and its Subsidiaries is duly qualified and is authorized to do business
and is in good standing as a foreign corporation in each state or jurisdiction
listed on Exhibit C hereto and in all other states and jurisdictions where the
character of its Properties or the nature of its activities make such
qualification necessary, except where the failure to be so qualified would not
have a Material Adverse Effect.
7.1.2 Corporate Power and Authority. Each of Borrower and its
Subsidiaries is duly authorized and empowered to enter into, execute, deliver
and perform this Agreement and each of the other Loan Documents to which it is a
party. The execution, delivery and performance of this Agreement and each of the
other Loan Documents have been duly authorized by all necessary corporate action
and do not and will not (i) require any consent or approval of the shareholders
of Borrower or any of its Subsidiaries; (ii) contravene Borrower's or any of its
Subsidiaries' charter, articles or certificate of incorporation or by-laws;
(iii) violate, or cause Borrower or any of its Subsidiaries to be in default
under, any provision of any law, rule, regulation, order, writ, judgment,
injunction, decree, determination or award in effect having
16
applicability to Borrower or any of its Subsidiaries; (iv) result in a breach of
or constitute a default under any indenture or loan or credit agreement or any
other agreement, lease or instrument to which Borrower or any of its
Subsidiaries is a party or by which it or its Properties may be bound or
affected; or (v) result in, or require, the creation or imposition of any Lien
(other than Permitted Liens) upon or with respect to any of the Properties now
owned or hereafter acquired by Borrower or any of its Subsidiaries.
7.1.3 Legally Enforceable Agreement. This Agreement is, and each of
the other Loan Documents when delivered under this Agreement will be, a legal,
valid and binding obligation of each of Borrower and its Subsidiaries
enforceable against them in accordance with its respective terms, except to the
extent that such enforcement may be limited by applicable bankruptcy, insolvency
or similar laws affecting creditors' rights generally or by principles of equity
pertaining to the availability of equitable remedies.
7.1.4 Capital Structure. Exhibit D hereto states (i) the correct name
of each of the Subsidiaries of Borrower, its jurisdiction of incorporation and
the percentage of its Voting Stock owned by Borrower, (ii) the name of each of
Borrower's corporate or joint venture Affiliates and the nature of the
affiliation, (iii) the number and nature of all outstanding Securities of
Borrower and each Subsidiary of Borrower and (iv) the number of authorized,
issued and treasury shares of Borrower and each Subsidiary of Borrower. Borrower
has good title to all of the shares it purports to own of the stock of each of
its Subsidiaries, free and clear in each case of any Lien other than Permitted
Liens. All such shares have been duly issued and are fully paid and
non-assessable. Except as set forth on Exhibit D, there are no outstanding
options to purchase, or any rights or warrants to subscribe for, or any
commitments or agreements to issue or sell, or any Securities or obligations
convertible into, or any powers of attorney relating to, shares of the capital
stock of Borrower or any of its Subsidiaries.
7.1.5 Corporate Names. Neither Borrower nor any of its Subsidiaries
has been known as or used any corporate, fictitious or trade names except those
listed on Exhibit E hereto. Except as set forth on Exhibit E, neither Borrower
nor any of its Subsidiaries has been the surviving corporation of a merger or
consolidation or acquired all or substantially all of the assets of any Person.
7.1.6 Business Locations; Agent for Process. Each of Borrower's and
its Subsidiaries' chief executive office and other places of business are as
listed on Exhibit B hereto. During the preceding five-year period, neither
Borrower nor any of its Subsidiaries has had an office, place of business or
agent for service of process other than as listed on Exhibit B. Except as shown
on Exhibit B, no Inventory of Borrower or any of its Subsidiaries is stored with
a bailee, warehouseman or similar Person, nor is any Inventory consigned to or
from any Person.
7.1.7 Title to Properties; Priority of Liens. Each of Borrower and its
Subsidiaries has good and indefeasible title to and fee simple ownership of, or
valid and subsisting leasehold interests in, all of its real Property, and good
title to all of the Collateral and all of its other Property, in each case, free
and clear of all Liens except Permitted Liens. Neither Borrower nor any of its
Subsidiaries has acquired any of the Collateral from any Person (other
17
than (i) purchases of Inventory and Equipment in the ordinary course of business
of the seller thereof, or through Borrower's acquisitions of Dynajet, Inc.,
Petrolog, Inc., Production Well Services, Inc., Diamondback Directional, Inc.,
and Cam Wireline, Inc. or (ii) Property purchased by Black Warrior from Phoenix
pursuant to the Purchase Documents) within the five-year period immediately
preceding the Closing Date. Borrower has paid or discharged all lawful claims
which, if unpaid, might become a Lien against any of Borrower's Properties that
is not a Permitted Lien. The Liens granted to Lender under Section 5 hereof are
first priority Liens, subject only to Permitted Liens.
7.1.8 Accounts. Lender may rely, in determining which Accounts of
Borrower are Eligible Accounts, on all statements and representations made by
Borrower with respect to any Account or Accounts. Unless otherwise indicated in
writing to Lender, with respect to each Account:
(i) It is genuine and in all respects what it purports to be, and
it is not evidenced by a judgment;
(ii) It arises out of a completed, bona fide sale and delivery of
goods or rendition of services by Borrower in the ordinary course of its
business and in accordance with the terms and conditions of all purchase orders,
contracts or other documents relating thereto and forming a part of the contract
between Borrower and the Account Debtor;
(iii) It is for a liquidated amount maturing as stated in the
duplicate invoice covering such sale or rendition of services, a copy of which
has been furnished or is available to Lender;
(iv) Such Account, and Lender's security interest therein, is not
subject to any offset, Lien, deduction, defense, dispute, counterclaim or any
other adverse condition, except for disputes resulting in returned goods where
the amount in controversy is deemed by Lender to be immaterial, and each such
Account is absolutely owing to Borrower and is not contingent in any respect or
for any reason;
(v) Borrower has made no agreement with any Account Debtor
thereunder for any extension, compromise, settlement or modification of any such
Account or any deduction therefrom, except discounts or allowances which are
granted by Borrower in the ordinary course of its business for prompt payment
and which are reflected in the calculation of the net amount of each respective
invoice related thereto and are reflected in the Schedules of Accounts submitted
to Lender pursuant to Section 6.2.1 hereof;
(vi) There are no facts, events or occurrences which in any way
impair the validity or enforceability of any Accounts or tend to reduce the
amount payable thereunder from the face amount of the invoice and statements
delivered to Lender with respect thereto;
18
(vii) To the best of Borrower's knowledge, the Account Debtor
thereunder (a) had the capacity to contract at the time any contract or other
document giving rise to the Account was executed and (b) such Account Debtor is
Solvent; and
(viii) To the best of Borrower's knowledge, there are no
proceedings or actions which are threatened or pending against any Account
Debtor thereunder which might result in any material adverse change in such
Account Debtor's financial condition or the collectibility of such Account.
7.1.9 Financial Statements; Fiscal Year. The Consolidated and
consolidating balance sheet of Borrower and its Subsidiaries as of September 30,
1997, and the related statements of income, changes in stockholder's equity, and
changes in financial position for the periods ended on such dates, have been
prepared in accordance with GAAP, and present fairly the Consolidated and
consolidating financial position of Borrower and its Subsidiaries at such date
and the results of Borrower's and its Subsidiaries' operations for such periods.
Since September 30, 1997, there has been no material change in the condition,
financial or otherwise, of Borrower and its Subsidiaries (except for changes to
account for the acquisition of Diamondback Directional, Inc. and CAM Wireline,
Inc.) and since such date there has been no change in the aggregate value of
Equipment and real Property owned by Borrower and its Subsidiaries, except
changes in the ordinary course of business, none of which individually or in the
aggregate has been materially adverse. The fiscal year of Borrower and each of
its Subsidiaries ends on December 31 of each year.
7.1.10 Full Disclosure. The financial statements referred to in
Section 7.1.9 hereof do not, nor does this Agreement or any other written
statement of Borrower or any of its Subsidiaries to Lender, contain any untrue
statement of a material fact or omit a material fact necessary to make the
statements contained therein or herein not misleading. There is no fact or
circumstance which Borrower has failed to disclose to Lender in writing which
could reasonably be expected to have a Material Adverse Effect.
7.1.11 Solvent Financial Condition. Each of Borrower and its
Subsidiaries is now and, after giving effect to the Loans to be made and
hereunder, at all times will be, Solvent.
7.1.12 Surety Obligations. Neither Borrower nor any of its
Subsidiaries is obligated as surety or indemnitor under any surety or similar
bond or other contract issued or entered into any agreement to assure payment,
performance or completion of performance of any undertaking or obligation of any
Person.
7.1.13 Taxes. The federal tax identification number of each Borrower
and each of Borrower's Subsidiaries is shown on Exhibit F hereto. Borrower and
their respective Subsidiaries has filed all federal, state and local tax returns
and other reports it is required by law to file and has paid, or made provision
for the payment of, all Taxes upon it, its income and Properties as and when
such Taxes are due and payable, except to the extent any such Taxes are being
Properly Contested. The provision for Taxes on the books of Borrower and its
19
Subsidiaries are adequate for all years not closed by applicable statutes, and
for its current fiscal year.
7.1.14 Brokers. Except as set forth on Exhibit R, there are no claims
for brokerage commissions, finder's fees or investment banking fees in
connection with the transactions contemplated by this Agreement.
7.1.15 Patents, Trademarks, Copyrights and Licenses. Each of Borrower
and its Subsidiaries owns or possesses all the patents, trademarks, service
marks, trade names, copyrights and licenses necessary for the present and
planned future conduct of its business without any known conflict with the
rights of others. All such patents, trademarks, service marks, trade names,
copyrights, licenses and other similar rights are listed on Exhibit G hereto.
7.1.16 Governmental Consents. Each of Borrower and its Subsidiaries
has, and is in good standing with respect to, all governmental consents,
approvals, licenses, authorizations, permits, certificates, inspections and
franchises necessary to continue to conduct its business as heretofore or
proposed to be conducted by it and to own or lease and operate its Properties as
now owned or leased by it.
7.1.17 Compliance with Laws. Each of Borrower and its Subsidiaries has
duly complied with, and its Properties, business operations and leaseholds are
in compliance in all material respects with, the provisions of all Applicable
Laws and there have been no citations, notices or orders of noncompliance issued
to Borrower or any of its Subsidiaries under any such law, rule or regulation.
Each of Borrower and its Subsidiaries has established and maintains an adequate
monitoring system to insure that it remains in compliance with all federal,
state and local laws, rules and regulations applicable to it. No Inventory has
been produced in violation of the Fair Labor Standards Act (29 U.S.C. ss. 201 et
seq.), as amended.
7.1.18 Restrictions. Neither Borrower nor any of its Subsidiaries is a
party or subject to any contract, agreement, or charter or other corporate
restriction, which has, or could reasonably be expected to have, a Material
Adverse Effect. Neither Borrower nor any of its Subsidiaries is a party or
subject to any contract or agreement which restricts its right or ability to
incur Indebtedness, other than as set forth on Exhibit H hereto, none of which
prohibit the execution of or compliance with this Agreement or the other Loan
Documents by Borrower or any of its Subsidiaries, as applicable.
7.1.19 Litigation. Except as set forth on Exhibit I hereto, there are
no actions, suits, proceedings or investigations pending, or to the knowledge of
Borrower, threatened, against or affecting Borrower or any of its Subsidiaries,
or the business, operations, Properties, prospects, profits or condition of
Borrower or any of its Subsidiaries. Neither Borrower nor any of its
Subsidiaries is in default with respect to any order, writ, injunction,
judgment, decree or rule of any court, governmental authority or arbitration
board or tribunal.
7.1.20 No Defaults. No event has occurred and no condition exists
which would, upon or after the execution and delivery of this Agreement or
Borrower's performance
20
hereunder, constitute a Default or an Event of Default. Neither Borrower nor any
of its Subsidiaries is in default, and no event has occurred and no condition
exists which constitutes, or which with the passage of time or the giving of
notice or both would constitute, a default in the payment of any Indebtedness to
any Person for Money Borrowed.
7.1.21 Leases. Exhibit J hereto sets forth a complete listing of all
capitalized leases of Borrower and its Subsidiaries and Exhibit K hereto sets
forth a complete listing of all operating leases of Borrower and its
Subsidiaries. Each of Borrower and its Subsidiaries is in full compliance with
all of the terms of each of its respective capitalized and operating leases.
7.1.22 Pension Plans. Except as disclosed on Exhibit L hereto, neither
Borrower nor any of its Subsidiaries has any Plan. Borrower and each of its
Subsidiaries is in full compliance with the requirements of ERISA and the
regulations promulgated thereunder with respect to each Plan. No fact or
situation that could result in a material adverse change in the financial
condition of Borrower or any of its Subsidiaries exists in connection with any
Plan. Neither Borrower nor any of its Subsidiaries has any withdrawal liability
in connection with a Multiemployer Plan.
7.1.23 Trade Relations. There exists no actual or threatened
termination, cancellation or limitation of, or any modification or change in,
the business relationship between Borrower or any of its Subsidiaries and any
customer or any group of customers whose purchases individually or in the
aggregate are material to the business of Borrower or any of its Subsidiaries,
or with any material supplier, and there exists no present condition or state of
facts or circumstances which would materially affect adversely Borrower or any
of its Subsidiaries or prevent Borrower or any of its Subsidiaries from
conducting such business after the consummation of the transaction contemplated
by this Agreement in substantially the same manner in which it has heretofore
been conducted.
7.1.24 Labor Relations. Except as described on Exhibit M hereto,
neither Borrower nor any of its Subsidiaries is a party to any collective
bargaining agreement. There are no material grievances, disputes or
controversies with any union or any other organization of Borrower's or any of
its Subsidiaries' employees, or threats of strikes, work stoppages or any
asserted pending demands for collective bargaining by any union or organization.
7.1.25 Acquisition. No default has occurred under any of the Purchase
Documents.
7.2 Continuous Nature of Representations and Warranties. Each
representation and warranty contained in this Agreement and the other Loan
Documents shall be continuous in nature and shall remain accurate, complete and
not misleading at all times during the term of this Agreement, except for
changes in the nature of Borrower's or its Subsidiaries' business or operations
that would render the information in any exhibit attached hereto either
inaccurate, incomplete or misleading, so long as Lender has consented to such
changes or such changes are expressly permitted by this Agreement, and except
for such representations and warranties that by their nature are limited only to
a specific date in time.
21
7.3 Survival of Representations and Warranties. All representations and
warranties of Borrower contained in this Agreement or any of the other Loan
Documents shall survive the execution, delivery and acceptance thereof by Lender
and the parties thereto and the closing of the transactions described therein or
related thereto.
SECTION 8. COVENANTS AND CONTINUING AGREEMENTS
8.1 Affirmative Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that, unless otherwise consented to by Lender in writing, it shall:
8.1.1 Visits and Inspections. Permit representatives of Lender, from
time to time, as often as may be reasonably requested, but only during normal
business hours, to (i) visit and inspect its Properties and the Properties of
each of its Subsidiaries, and (ii) inspect, audit and make extracts from its
books and records, and discuss with its officers, its employees and its
independent accountants, Borrower's and each of its Subsidiaries' business,
assets, liabilities, financial condition, business prospects and results of
operations.
8.1.2 Notices. Notify Lender in writing (i) of the occurrence of any
event or the existence of any fact which renders any representation or warranty
in this Agreement or any of the other Loan Documents inaccurate, incomplete or
misleading; (ii) promptly after Borrower's learning thereof, of the commencement
of any litigation affecting Borrower, any Subsidiary of Borrower or any of their
respective Properties, whether or not the claim is considered by Borrower to be
covered by insurance, and of the institution of any administrative proceeding
which if determined adversely to Borrower or any of its Subsidiaries, would have
a Material Adverse Effect; (iii) at least fifteen (15) days prior thereto, of
Borrower's opening of any new office or place of business or Borrower's closing
of any existing office or place of business; (iv) promptly after Borrower's
learning thereof, of any labor dispute to which Borrower or any of its
Subsidiaries may become a party, any strikes or walkouts relating to any of
their respective plants or other facilities, and the expiration of any labor
contract to which any of them is a party or by which any of them is bound; (v)
promptly after Borrower's learning thereof, of any material default by any Loan
Party under any note, indenture, loan agreement, mortgage, lease, deed, guaranty
or other similar agreement relating to any Indebtedness exceeding One Hundred
Thousand Dollars ($100,000); (vi) promptly after the occurrence thereof, of any
Default or Event of Default; (vii) promptly after the occurrence thereof, of any
default by any obligor under any note or other evidence of Indebtedness payable
to Borrower or any of its Subsidiaries; and (viii) promptly after the rendition
thereof, of any judgment rendered against any Loan Party in an amount exceeding
Twenty-Five Thousand Dollars ($25,000).
8.1.3 Financial Statements. Keep, and cause each Subsidiary to keep,
adequate records and books of account with respect to its business activities in
which proper entries are made in accordance with GAAP reflecting all its
financial transactions; and cause to be prepared and furnished to Lender the
following (all to be prepared in accordance with GAAP applied on a
22
consistent basis, unless Borrower's certified public accountants concur in any
change therein and such change is disclosed to Lender and is consistent with
GAAP):
(i) not later than ninety (90) days after the close of each
fiscal year of Borrower, unqualified audited financial statements of Borrower
and its Subsidiaries as of the end of such year, on a Consolidated and
consolidating basis, certified by a firm of independent certified public
accountants of recognized standing selected by Borrower but acceptable to Lender
(except for a qualification for a change in accounting principles with which the
accountant concurs);
(ii) not later than thirty (30) days after the end of each month
hereafter, including the last month of Borrower's fiscal year, unaudited interim
financial statements of Borrower and its Subsidiaries as of the end of such
month and of the portion of Borrower's financial year then elapsed, on a
Consolidated and consolidating basis, certified by the principal financial
officer of Borrower as prepared in accordance with GAAP and fairly presenting
the Consolidated financial position and results of operations of Borrower and
its Subsidiaries for such month and period subject only to changes from audit
and year-end adjustments and except that such statements need not contain notes;
(iii) promptly after the sending or filing thereof, as the case
may be, copies of any proxy statements, financial statements or reports which
Borrower and/or its Subsidiaries has made available to its shareholders and
copies of any regular, periodic and special reports or registration statements
which Borrower and/or its Subsidiaries files with the Securities and Exchange
Commission or any governmental authority which may be substituted therefor, or
any national securities exchange;
(iv) promptly after the filing thereof, copies of any annual
report to be filed with ERISA in connection with each Plan; and
(v) such other data and information (financial and otherwise) as
Lender, from time to time, may reasonably request, bearing upon or related to
the Collateral or Borrower's and each of its Subsidiaries' financial condition
or results of operations.
Concurrently with the delivery of the financial statements described
in clause (i) of this Section 8.1.3, Borrower shall forward to Lender a copy of
the accountants' letter to Borrower's management that is prepared in connection
with such audited financial statements and also shall cause to be prepared and
shall furnish to Lender a certificate of the aforesaid certified public
accountants certifying to Lender that, based upon their examination of the
financial statements of Borrower and its Subsidiaries performed in connection
with their examination of said financial statements, they are not aware of any
Default or Event of Default, or, if they are aware of such Default or Event of
Default, specifying the nature thereof, and acknowledging, in a manner
satisfactory to Lender, that they are aware that Lender is relying on such
financial statements in making its decisions with respect to the Loans.
Concurrently with the delivery of the financial statements described in clauses
(i) and (ii) of this Section 8.1.3, or more frequently if requested by Lender,
Borrower shall cause to be prepared and furnished to
23
Lender a Compliance Certificate in the form of Exhibit N hereto executed by the
chief financial officer of Borrower.
8.1.4 Landlord and Storage Agreements. Provide Lender with copies of
all agreements between Borrower or any of its Subsidiaries and any landlord or
warehouseman which owns any premises at which any Inventory may, from time to
time, be kept.
8.1.5 Guarantor Financial Statements. In addition to the financial
statements of Borrower to be supplied pursuant to Section 8.1.3 hereof, deliver
or cause to be delivered to Lender financial statements for each Guarantor
(other than Borrower's Subsidiaries, if any) in form and substance satisfactory
to Lender, at such intervals and covering such time periods as Lender may
request.
8.1.6 Projections. No later than thirty (30) days prior to the end of
each fiscal year of Borrower, deliver to Lender projections of Borrower
(consisting of Consolidated and consolidating balance sheets, income statements
and cash flow statements, together with appropriate supporting details and
underlying assumptions) for the forthcoming three (3) years, year by year, and
for the forthcoming fiscal year, month by month.
8.1.7 Taxes. Pay and discharge, and cause each Subsidiary to pay and
discharge, all Taxes prior to the date on which such Taxes become delinquent or
penalties attach thereto, except and only to the extent that such Taxes are
being Properly Contested.
8.1.8 Compliance with Laws. Comply and cause each Subsidiary to
comply, with all Applicable Laws, including all laws, statutes, regulations and
ordinances regarding the collection, payment and deposit of all Taxes, and all
ERISA and Environmental Laws, and obtain and keep in force any and all licenses,
permits, franchises, or other governmental authorizations necessary to the
ownership of its Properties or to the conduct of its business, which violation
or failure to obtain could reasonably be expected to have a Material Adverse
Effect.
8.1.9 Insurance. In addition to the insurance required herein with
respect to the Collateral, Borrower and each of its Subsidiaries shall maintain,
with financially sound and reputable insurers, insurance with respect to its
Properties and business against such casualties and contingencies of such type
(including product liability, business interruption, larceny, embezzlement, or
other criminal misappropriation insurance) as is customary in its business and
in such amounts as is acceptable to Lender.
8.1.10 Equity Conversion. Borrower shall cause not less than
$4,900,000 of Indebtedness owed by Black Warrior to St. Xxxxx to be converted
into equity capital of Black Warrior no later than May 31, 1998, on terms and
conditions satisfactory to Lender, and shall deliver written evidence thereof
satisfactory to Lender no later than June 5, 1998.
8.2 Negative Covenants. During the term of this Agreement, and thereafter
for so long as there are any Obligations to Lender, Borrower covenants that,
unless Lender has first consented thereto in writing, it will not:
24
8.2.1 Mergers; Consolidations; Acquisitions. Merge or consolidate, or
permit any of its Subsidiaries to merge or consolidate, with any Person; nor
acquire, nor permit any of its Subsidiaries to acquire, all or any substantial
part of the Properties of any Person; provided, however, that Borrower may merge
Xxxxx into Black Warrior, so long as Black Warrior is the surviving entity of
such merger.
8.2.2 Loans. Make, or permit any of its Subsidiaries to make, any
loans or other advances of money to any Person, except for travel advances,
advances against commissions and other similar advances in the ordinary course
of business.
8.2.3 Total Indebtedness. Create, incur, assume, or suffer to exist,
or permit any of its Subsidiaries to create, incur or suffer to exist, any
Indebtedness, except:
(i) Obligations owing to Lender;
(ii) Subordinated Debt existing on the date of this Agreement;
(iii) Indebtedness of any Subsidiary of Borrower to Borrower;
(iv) accounts payable to trade creditors and current operating
expenses (other than for Money Borrowed) which are not aged more than thirty
(30) days from the due date, in each case incurred in the ordinary course of
business and paid within such time period, unless the same are being Properly
Contested;
(v) Obligations to pay Rentals permitted by Section 8.2.13;
(vi) Permitted Purchase Money Indebtedness;
(vii) contingent liabilities arising out of endorsements of
checks and other negotiable instruments for deposit or collection in the
ordinary course of business;
(viii) Indebtedness existing on the date hereof and described on
Exhibit O hereto; and
(ix) Indebtedness not included in paragraphs (i) through (viii)
above which does not exceed at any time, in the aggregate, the sum of Fifty
Thousand Dollars ($50,000).
8.2.4 Affiliate Transactions. Enter into or be a party to, or permit
any of its Subsidiaries to enter into or be a party to, any transaction with any
Affiliate or stockholder, except in the ordinary course of and pursuant to the
reasonable requirements of Borrower's or such Subsidiary's business and upon
fair and reasonable terms which are fully disclosed to Lender and are no less
favorable than would be obtained in a comparable arm's length transaction with a
Person not an Affiliate or stockholder of Borrower or such Subsidiary.
25
8.2.5 Limitation on Liens. Create or suffer to exist, or permit any
its Subsidiaries to create or suffer to exist, any Lien upon any of its
Property, income or profits, whether now owned or hereafter acquired, except:
(i) Liens at any time granted in favor of Lender;
(ii) Liens for taxes (excluding any Lien imposed pursuant to any
of the provisions of ERISA) not yet due or being Properly Contested;
(iii) Liens arising in the ordinary course of its business by
operation of law or regulation in favor of materialmen, mechanics, carriers,
warehousemen, landlords and similar Persons, but only if (a) payment in respect
of any such Lien is not at the time required or (b) the Indebtedness secured by
such Lien is being Properly Contested and such Lien does not materially detract
from the value of the Property or materially impair the use thereof in the
operation of its business;
(iv) Purchase Money Liens securing Permitted Purchase Money
Indebtedness;
(v) Liens securing Indebtedness of one of Borrower's Subsidiaries
to Borrower or another such Subsidiary;
(vi) such other Liens as appear on Exhibit P hereto; and
(vii) such other Liens as Lender may hereafter approve in
writing.
8.2.6 Subordinated Debt. Make, or permit any of its Subsidiaries to
make, any payment of all or any part of any Subordinated Debt or take any other
action or omit to take any other action in respect of any Subordinated Debt
(including, but not limited to, any amendment, supplement, or modification of
any agreement, instrument or document evidencing any such Subordinated Debt),
except in accordance with the subordination agreement relative thereto.
8.2.7 Distributions. Declare or make, or permit any of its
Subsidiaries to declare or make, any Distributions.
8.2.8 Capital Expenditures. Make Capital Expenditures (including by
way of capitalized leases) which, in the aggregate, as to Borrower and its
Subsidiaries, exceed: (i) Seven Million Dollars ($7,000,000) during the first
fiscal year of Borrower immediately following the Closing Date, provided,
however, that not more than One Million Five Hundred Thousand Dollars
($1,500,000), in the aggregate, may be paid for in cash or the proceeds of any
Revolving Credit Loans, except that if, at the time of such Capital Expenditure,
(a) the total outstanding balance on the Revolving Credit Loans is zero, and (b)
after giving effect to the Capital Expenditure, the Availability is not less
than $2,500,000, then the Borrower may pay for the Capital Expenditure in cash
without the foregoing limitation ; or (ii) One Million Five Hundred
26
Thousand Dollars ($1,500,000) during any fiscal year of Borrower thereafter;
provided, however, that the foregoing limitations shall not apply to Capital
Expenditures made by Borrower solely with funds generated exclusively by an
issuance of capital stock of Borrower.
8.2.9 Disposition of Assets. Sell, lease or otherwise dispose of, or
permit any of its Subsidiaries to sell, lease or otherwise dispose of, any of
its Properties, including any disposition of Property as part of a sale and
leaseback transaction, to or in favor of any Person, except (i) sales of
Inventory in the ordinary course of business for so long as no Event of Default
exists hereunder, (ii) a transfer of Property to Borrower by a Subsidiary of
Borrower or (iii) dispositions expressly authorized by this Agreement.
8.2.10 Stock of Subsidiaries. Permit any of its Subsidiaries to issue
any additional shares of its capital stock, except director's qualifying shares.
8.2.11 Xxxx-and-Hold Sales, Etc. Make a sale to any customer on a
xxxx-and-hold, guaranteed sale, sale and return, sale on approval or consignment
basis, or any sale on a repurchase or return basis.
8.2.12 Restricted Investment. Make or have, or permit any of its
Subsidiaries to make or have, any Restricted Investment.
8.2.13 Operating Leases. Become, or permit any of its Subsidiaries to
become, a lessee under any operating lease (other than a lease under which
Borrower or any of its Subsidiaries is lessor) of Property if the aggregate
Rentals payable during any current or future period of twelve (12) consecutive
months under the lease in question and all other leases under which Borrower or
any of its Subsidiaries is then lessee would exceed One Million Dollars
($1,000,000). The term "Rentals" means, as of the date of determination, all
payments which the lessee is required to make by the terms of any lease.
8.2.14 Tax Consolidation. File or consent to the filing of any
consolidated income tax return with any Person other than its Subsidiaries or
another Borrower.
8.2.15 Diamondback Seller Note. Make, or permit any of its
Subsidiaries to make, any payment to the holder of the Diamondback Seller Note,
except pursuant to the terms and conditions of the Diamondback Seller Note as
approved by Lender and Borrower, and provided that, at the time of any such
payment, and after giving effect to any such payment, (i) no Default or Event of
Default exists, and either (ii) (a) Borrower shall have minimum Availability,
after giving effect to such payment, of Two Million Dollars ($2,000,000)
(determined on a monthly average for the three (3)-month period immediately
preceding such payment) or (b) if Borrower shall not have minimum Availability,
after giving effect to such payment, of Two Million Dollars ($2,000,000)
(determined on a monthly average for the three (3)-month period immediately
preceding such payment) then Borrower must pay the Diamondback Seller Note
solely from the proceeds of a secondary offering of capital stock (or other
securities acceptable to Lender) of Borrower, or take any other action or omit
to take any
27
other action with respect to the Diamondback Seller Note (including, but not
limited to, any amendment, supplement, replacement or modification of the
Diamondback Seller Note).
8.2.16 St. Xxxxx Subordinated Debt. Make, or permit any of its
Subsidiaries to make, any payment of all or any part of any St. Xxxxx
Subordinated Debt or take any other action or omit to take any other action in
respect of the St. Xxxxx Subordinated Debt (including, but not limited to, any
amendment, supplement or modification of any St. Xxxxx Subordinated Debt
Documents) except in accordance with the St. Xxxxx Subordination Agreement.
8.3 Specific Financial Covenants. During the term of this Agreement, and
thereafter for so long as there are any Obligations to Lender, Borrower
covenants that unless otherwise consented to by Lender in writing, it shall:
8.3.1 Fixed Charge Ratio. Maintain, on a Consolidated basis, as of the
end of each fiscal quarter set forth below, for the cumulative period ending on
such date, a Fixed Charge Ratio of not less than the ratio set forth below for
each period indicated below:
Period Ratio
------ -----
(i) Three calendar month period (i) 1.60 to 1.0
ending on
June 30, 1998
(ii) Six calendar month period (ii) 1.60 to 1.0
ending on
September 30, 1998
(iii) Nine calendar month period (iii) 1.65 to 1.0
ending on
December 31, 1998
(iv) Twelve calendar month period (iv) 1.65 to 1.0
ending on
March 31, 1998
(v) Twelve calendar month period (v) 2.00 to 1.0
ending on
June 30, 1999
(vi) Twelve calendar month period (vi) 2.40 to 1.0
ending on September 30, 1999
28
(vii) Twelve calendar month period (vii) 2.70 to 1.0
ending respectively on the
last day of each thereafter
occurring fiscal quarter
8.3.2 Senior Interest Coverage Ratio. Achieve, at the end of each
fiscal quarter set forth below, for the cumulative period ending on such date, a
Senior Interest Coverage Ratio equal to or greater than the ratio set forth
below for the period corresponding thereto:
Period Ratio
------ -----
(i) Three calendar month period (i) 2.50 to 1.0
ending on
June 30, 1998
(ii) Six calendar month period (ii) 2.70 to 1.0
ending on
September 30, 1998
(iii) Nine calendar month period (iii) 2.80 to 1.0
ending on
December 31, 1998
(iv) Twelve calendar month period (iv) 2.90 to 1.0
ending on
March 31, 1999
(v) Twelve calendar month period (v) 3.40 to 1.0
ending on
June 30, 1999
(vi) Twelve calendar month period (vi) 3.90 to 1.0
ending respectively on the
last day of each thereafter
occurring fiscal quarter
29
8.3.3 Adjusted Tangible Net Worth. Maintain, as of the last day of
each fiscal quarter indicated below, Consolidated Adjusted Tangible Net Worth of
not less than the amount shown below as of the date shown below:
Date Amount
---- ------
(i) June 30, 1998 (i) $15,600,000
(ii) September 30, 1998 (ii) $16,400,000
(iii) December 31, 1998 (iii) $17,200,000
(iv) March 31, 1999 (iv) $18,100,000
(v) June 30, 1999 (v) $19,600,000
(vi) September 30, 1999 (vi) $21,100,000
(vii) December 31, 1999 (vii) $22,600,000
(viii) March 31, 2000 and quarterly (viii) $24,100,000
thereafter
8.3.4 Total Indebtedness to Tangible Net Worth. Maintain on a
Consolidated basis, as of the last day of each period set forth below, a ratio
of (i) Borrower's total Indebtedness for Money Borrowed for the cumulative
period ending on such date, to (ii) Borrower's Tangible Net Worth for the
cumulative period ending on such date, of not greater than the ratio set forth
below for the period corresponding thereto.
Period Ratio
------ -----
(i) Three calendar month period (i) 2.60 to 1.0
ending on
June 30, 1998
(ii) Six calendar month period (ii) 2.45 to 1.0
ending on
September 30, 1998
(iii) Nine calendar month period (iii) 2.35 to 1.0
ending on
December 31, 1998
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(iv) Twelve calendar month period (iv) 2.25 to 1.0
ending on March 31, 1998
(v) Twelve calendar month period (v) 2.00 to 1.0
ending on
June 30, 1999
(vi) Twelve calendar month period (vi) 1.90 to 1.0
ending on
September 30, 1999
(vii) Twelve calendar month period (vii) 1.80 to 1.0
ending
(viii) Twelve calendar month period (viii) 1.70 to 1.0
ending respectively on the
last day of each thereafter
occurring fiscal quarter
SECTION 9. CONDITIONS PRECEDENT
Notwithstanding any other provision of this Agreement or any of the other
Loan Documents, and without affecting in any manner the rights of Lender under
the other sections of this Agreement, Lender shall not be required to make any
Loan under this Agreement unless and until each of the following conditions has
been and continues to be satisfied:
9.1 Documentation. Lender shall have received, in form and substance
satisfactory to Lender and its counsel, a duly executed copy of this Agreement
and the other Loan Documents, together with such additional documents,
instruments and certificates as Lender and its counsel shall require in
connection therewith from time to time, all in form and substance satisfactory
to Lender and its counsel.
9.2 No Default. No Default or Event of Default shall exist.
9.3 Other Loan Documents. Each of the conditions precedent set forth in the
other Loan Documents shall have been satisfied.
9.4 Equity. Lender shall have received evidence satisfactory to it that:
(i) St. Xxxxx has agreed that not less than $4,900,000 of Indebtedness owed by
Black Warrior to St. Xxxxx will be converted into equity capital of Black
Warrior not later than May 31, 1998, on terms and conditions satisfactory to
Lender, and (ii) not less than $3,000,000 in cash has been contributed to Black
Warrior as equity capital, on terms and conditions satisfactory to Lender.
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9.5 Availability. Lender shall have determined that immediately after
Lender has made the initial Loans contemplated hereby, and paid (or made
provisions for payment of) all closing costs incurred in connection with the
transactions contemplated hereby, Availability shall not be less than Two
Million Five Hundred Thousand Dollars ($2,500,000).
9.6 Articles of Incorporation. Lender shall have received a copy of the
Articles or Certificate of Incorporation of Borrower and each of its
Subsidiaries, and all amendments thereto, certified by the Secretary of State or
other appropriate official of the jurisdiction of Borrower's and each
Subsidiary's incorporation.
9.7 Good Standing Certificates. Lender shall have received good standing
certificates for Borrower and each of its Subsidiaries, issued by the Secretary
of State or other appropriate official of Borrower's and each Subsidiary's
jurisdiction of incorporation and each jurisdiction where the conduct of
Borrower's or any of its Subsidiary's business activities or ownership of its
Property necessitates qualification.
9.8 Opinion Letters. Lender shall have received a favorable, written
opinion of counsel to Borrower, as to the transactions contemplated by this
Agreement, to be in form and substance satisfactory to Lender and Lender's
counsel, in their sole discretion.
9.9 Insurance. Lender shall have received copies of the casualty insurance
policies of Borrower and each of its Subsidiaries, together with loss payable
endorsements on Lender's standard form of loss payee endorsement naming Lender
as loss payee and copies of Borrower's and each such Subsidiary's liability
insurance policies, together with endorsements naming Lender as a co-insured.
9.10 Disbursement Letter. Lender shall have received written instructions
from Borrower directing application of proceeds of the initial Loans made
pursuant to this Agreement, and an initial Borrowing Base Certificate from
Borrower, in form satisfactory to Lender.
9.11 Dominion Account. Lender shall have received the duly executed
agreement establishing the Dominion Account with a financial institution
acceptable to Lender for the collection or servicing of the Accounts.
9.12 Landlord Agreements. Lender shall have received all landlord or
warehouseman agreements with respect to all premises leased by Borrower and its
Subsidiaries and which are disclosed on Exhibit K hereto, except for such leased
premises as may be noted on Exhibit K, at Lender's discretion, with respect to
which Borrower and Lender have agreed on reserves in lieu thereof.
9.13 No Litigation. No action, proceeding, investigation, regulation or
legislation shall have been instituted, threatened or proposed before any court,
governmental agency or legislative body to enjoin, restrain or prohibit, or to
obtain damages in respect of, or which is related to or arises out of this
Agreement or the consummation of the transactions contemplated hereby.
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9.14 Customer Reference Checks. Lender shall have received a satisfactory
reference check from such customers of Borrower as shall be required by Lender.
9.15 Evidence of Perfection and Priority of Liens in Collateral. Lender
shall have received copies of all filing receipts or acknowledgments issued by
any governmental authority to evidence any filing or recordation necessary to
perfect the Liens of Lender in the Collateral and evidence in form satisfactory
to Lender that such Liens constitute valid and perfected security interests and
Liens, and that there are no other Liens upon any Collateral except for
Permitted Liens.
9.16 Title Insurance Policies. Lender shall have received fully paid
mortgagee title insurance policies (or binding commitments to issue title
insurance policies, marked to Lender's satisfaction to evidence the form of such
policies to be delivered after the Closing Date), in standard ALTA form issued
by a title insurance company satisfactory to Lender, each in an amount equal to
not less than the fair market value of the real Property subject to each
relevant Mortgage, insuring such Mortgage to create a valid Lien on all real
Property described therein, with no exceptions which Lender shall not have
approved in writing.
9.17 Environmental Site Assessments. Lender shall have received a Phase I
environmental site assessment report, upon which Lender is expressly entitled to
rely, from environmental consulting firm(s) satisfactory to Lender, stating such
firms' (i) opinion as to Borrower's compliance with all Environmental Laws with
respect to all of the real Property acquired by Black Warrior from Phoenix
pursuant to the Acquisition and the Snyder, Texas, Midland, Texas, and Wyoming
properties, and (ii) estimation of costs required to place Borrower in
compliance with all Environmental Laws with respect to such real Property.
9.18 Acquisition. The Acquisition shall have been consummated substantially
in accordance with the terms of the Purchase Documents.
9.19 Pro-Forma Balance Sheet. Lender shall have received a pro-forma
balance sheet of Borrower as of the Closing Date in form and substance
satisfactory to Lender.
9.20 Subordinated Debt. Lender shall have received, in form and substance
satisfactory to Lender evidence of the investment by St. Xxxxx or its Affiliates
in Black Warrior of Ten Million Dollars ($10,000,000) in Subordinated Debt, and
Lender shall have received a fully executed counterpart, in form and substance
satisfactory to Lender, of the St. Xxxxx Subordination Agreement.
9.21 GECC Agreements. Lender shall have received in form and substance
satisfactory to Lender, fully executed counterparts of the GECC Amendment and
the GECC Partial Releases.
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9.22 Collateral Assignment of Purchase Documents. Lender shall have
received, in form and substance satisfactory to Lender, a fully executed
counterpart of the Collateral Assignment of Purchase Documents.
SECTION 10. EVENTS OF DEFAULT; RIGHTS AND REMEDIES ON DEFAULT
10.1 Events of Default. The occurrence of one or more of the following
events shall constitute an "Event of Default":
10.1.1 Payment of Note. Borrower shall fail to pay any installment of
principal, interest or premium, if any, owing on the Term Note or the Equipment
Note on the due date of such installment.
10.1.2 Payment of Other Obligations. Borrower shall fail to pay any of
the Obligations that are not evidenced by the Term Note or the Equipment Note on
the due date thereof (whether due at stated maturity, on demand, upon
acceleration or otherwise).
10.1.3 Misrepresentations. Any representation, warranty or other
statement made or furnished to Lender by or on behalf of Borrower, any
Subsidiary of Borrower or any other Loan Party in this Agreement, any of the
other Loan Documents or any instrument, certificate or financial statement
furnished in compliance with or in reference thereto proves to have been false
or misleading in any material respect when made or furnished or when reaffirmed
pursuant to Section 7.2 hereof.
10.1.4 Breach of Specific Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in Sections 5.2, 5.3, 6.1.1,
6.1.2, 6.2, 8.1.1, 8.1.3, 8.2 or 8.3 hereof on the date that Borrower is
required to perform, keep or observe such covenant.
10.1.5 Breach of Other Covenants. Borrower shall fail or neglect to
perform, keep or observe any covenant contained in this Agreement (other than a
covenant which is dealt with specifically elsewhere in Section 10.1 hereof) and
the breach of such other covenant is not cured to Lender's satisfaction within
fifteen (15) days after the sooner to occur of Borrower's receipt of notice of
such breach from Lender or the date on which such failure or neglect first
becomes known to any officer of Borrower.
10.1.6 Default Under Security Documents/Other Agreements/Purchase
Documents. Any event of default shall occur under, or any Loan Party shall
default in the performance or observance of any term, covenant, condition or
agreement contained in, any of the Security Documents, the Other Agreements or
the Purchase Documents and such default shall continue beyond any applicable
grace period.
10.1.7 Other Defaults. There shall occur any default or event of
default on the part of Borrower or any of its Subsidiaries under any agreement,
document or instrument to which Borrower or any such Subsidiary is a party or by
which Borrower or any of its Subsidiaries or any of their respective Property is
bound, creating or relating to any Indebtedness
34
(other than the Obligations) if the payment or maturity of such Indebtedness is
or may be accelerated in consequence of such event of default or demand for
payment of such Indebtedness is made.
10.1.8 Uninsured Losses. Any material loss, theft, damage or
destruction of any of the Collateral not fully covered (subject to such
deductibles as Lender shall have permitted) by insurance.
10.1.9 Adverse Changes. There shall occur any material adverse change
in the financial condition or business prospects of Borrower or any Loan Party.
10.1.10 Insolvency and Related Proceedings. Any Loan Party shall cease
to be Solvent or shall suffer the appointment of a receiver, trustee, custodian
or similar fiduciary, or shall make an assignment for the benefit of creditors,
or any petition for an order for relief shall be filed by or against a Loan
Party under the Bankruptcy Code (and if, with respect to any petition filed
against any Loan Party, such proceeding shall continue for more than thirty (30)
days), or any Loan Party shall make any offer of settlement, extension or
compromise to such Loan Party's unsecured creditors generally.
10.1.11 Business Disruption; Condemnation. There shall occur a
cessation of a substantial part of the business of Borrower, any Subsidiary of
Borrower or any Guarantor for a period which significantly affects Borrower's,
such Subsidiary's or such Guarantor's capacity to continue its business, on a
profitable basis; or Borrower, any Subsidiary of Borrower or any Guarantor shall
suffer the loss or revocation of any license or permit now held or hereafter
acquired by Borrower, such Subsidiary or such Guarantor which is necessary to
the continued or lawful operation of its business; or Borrower, any Subsidiary
of Borrower or any Guarantor shall be enjoined, restrained or in any way
prevented by court, governmental or administrative order from conducting all or
any material part of its business affairs; or any material lease or agreement
pursuant to which Borrower, any Subsidiary of Borrower or any Guarantor leases,
uses or occupies any Property shall be canceled or terminated prior to the
expiration of its stated term; or any part of the Collateral shall be taken
through condemnation or the value of such Property shall be impaired through
condemnation.
10.1.12 Change of Ownership. (i) St. Xxxxx shall cease to own and
control, beneficially and of record, (a) at least fifty-five percent (55.0%) of
each class of the issued and outstanding capital stock of Black Warrior (on a
fully diluted basis), prior to a secondary public offering of capital stock (or
other securities acceptable to Lender) of Black Warrior, or, (b) pursuant to a
secondary public offering of capital stock (or other securities acceptable to
Lender) of Black Warrior, at least thirty percent (30.0%) of each class of the
issued and outstanding capital stock of Black Warrior (on a fully diluted
basis); or (ii) Black Warrior shall cease to own and control, beneficially and
of record, all of the issued and outstanding capital stock of each of its
Subsidiaries, including without limitation, Xxxxx.
10.1.13 ERISA. A Reportable Event shall occur which Lender, in its
sole discretion, shall determine in good faith constitutes grounds for the
termination by the Pension
35
Benefit Guaranty Corporation of any Plan or for the appointment by the
appropriate United States district court of a trustee for any Plan, or if any
Plan shall be terminated or any such trustee shall be requested or appointed, or
if Borrower, any Subsidiary of Borrower or any Guarantor is in "default" (as
defined in Section 4219(c)(5) of ERISA) with respect to payments to a
Multiemployer Plan resulting from Borrower's, such Subsidiary's or such
Guarantor's complete or partial withdrawal from such Plan.
10.1.14 Challenge to Agreement. Borrower, any Subsidiary of Borrower
or any other Loan Party, or any Affiliate of any of them, shall challenge or
contest in any action, suit or proceeding the validity or enforceability of this
Agreement, or any of the other Loan Documents, the legality or enforceability of
any of the Obligations or the perfection or priority of any Lien granted to
Lender.
10.1.15 Repudiation of or Default Under Guaranty Agreement. Any
Guarantor shall revoke or attempt to revoke the Guaranty Agreement signed by
such Guarantor, or shall repudiate such Guarantor's liability thereunder or
shall be in default under the terms thereof.
10.1.16 Criminal Forfeiture. Borrower, any Subsidiary of Borrower or
any Guarantor shall be criminally indicted or convicted under any law that could
lead to a forfeiture of any Property of Borrower, any Subsidiary of Borrower or
any Guarantor.
10.1.17 Judgments. Any (i) money judgment is filed against Borrower,
any Subsidiary of Borrower or any Guarantor or any of their respective Property,
and such judgment shall remain unpaid, unsatisfied by insurance, and unstayed
for more than thirty (30) days, whether or not consecutive, (except that
Borrower shall pay in full the Atlas Judgment within thirty (30) days from the
Closing Date) or (ii) writ of attachment or similar process is filed against
Borrower, any Subsidiary of Borrower or any Guarantor, or any of their
respective Property, and such writ of attachment or similar process is not
bonded or secured in an amount and manner reasonably satisfactory to lender.
10.2 Acceleration of the Obligations. Without in any way limiting the right
of Lender to demand payment of any portion of the Obligations payable on demand
in accordance with Section 3.2 hereof, upon or at any time after the occurrence
of an Event of Default, all or any portion of the Obligations shall, at the
option of Lender and without presentment, demand, protest, notice of intent to
accelerate, notice of acceleration, or any other further notice by Lender,
become at once due and payable and Borrower shall forthwith pay to Lender, the
full amount of such Obligations; provided, however, that upon the occurrence of
an Event of Default specified in Section 10.1.10 hereof, all of the Obligations
shall become automatically due and payable without declaration, notice or demand
by Lender.
10.3 Other Remedies. Upon and after the occurrence of an Event of Default,
Lender shall have and may exercise from time to time the following rights and
remedies:
10.3.1 All of the rights and remedies of a secured party under the
Code or under other Applicable Law, and all other legal and equitable rights to
which Lender may be entitled,
36
all of which rights and remedies shall be cumulative and shall be in addition to
any other rights or remedies contained in this Agreement or any of the other
Loan Documents, and none of which shall be exclusive.
10.3.2 The right to take immediate possession of the Collateral, and
to (i) require Borrower to assemble the Collateral, at Borrower's expense, and
make it available to Lender at a place designated by Lender which is reasonably
convenient to both parties, and (ii) enter any premises where any of the
Collateral shall be located and to keep and store the Collateral on said
premises until sold (and if said premises be the Property of Borrower, Borrower
agrees not to charge Lender for storage thereof).
10.3.3 The right to sell or otherwise dispose of all or any Collateral
in its then condition, or after any further manufacturing or processing thereof,
at public or private sale or sales, with such notice as may be required by law,
in lots or in bulk, for cash or on credit, all as Lender, in its sole
discretion, may deem advisable. Borrower agrees that any requirement of notice
to Borrower of any proposed public or private sale or other disposition of
Collateral by Lender shall be deemed reasonable notice thereof if given at least
ten (10) days prior thereto, and any such sale may be held at such locations as
Lender may designate in said notice. Lender shall have the right to conduct such
sales on Borrower's premises, without charge therefor, and such sales may be
adjourned from time to time in accordance with Applicable Law. Lender shall have
the right to sell, lease or otherwise dispose of the Collateral, or any part
thereof, for cash, credit or any combination thereof, and Lender may purchase
all or any part of the Collateral at public or, if permitted by law, private
sale and, in lieu of actual payment of such purchase price, may set off the
amount of such price against the Obligations. The proceeds realized from the
sale of any Collateral may be applied, after allowing two (2) Business Days for
collection, first to the costs, expenses and attorneys' fees incurred by Lender
in collecting the Obligations, in enforcing the rights of Lender under the Loan
Documents and in collecting, retaking, completing, protecting, removing,
storing, advertising for sale, selling and delivering any Collateral; second to
the interest due upon any of the Obligations; and third, to the principal of the
Obligations. If any deficiency shall arise, Borrower and each Guarantor shall
remain jointly and severally liable to Lender therefor.
10.3.4 The right to exercise all of Lender's rights and remedies under
any mortgage/deed of trust with respect to any real Property forming a part of
the Collateral.
10.3.5 Lender is hereby granted a license or other right to use,
without charge, Borrower's labels, patents, copyrights, rights of use of any
name, trade secrets, trade names, trademarks and advertising matter, or any
Property of a similar nature, as it pertains to the Collateral, in advertising
for sale and selling any Collateral and Borrower's rights under all licenses and
all franchise agreements shall inure to Lender's benefit.
10.4 Remedies Cumulative; No Waiver. All covenants, conditions, provisions,
warranties, guaranties, indemnities, and other undertakings of Borrower
contained in this Agreement and the other Loan Documents, or in any document
referred to herein or contained in any agreement supplementary hereto or in any
schedule or in any Guaranty Agreement given to
37
Lender or contained in any other agreement between Lender and Borrower,
heretofore, concurrently, or hereafter entered into, shall be deemed cumulative
to and not in derogation or substitution of any of the terms, covenants,
conditions, or agreements of Borrower herein contained. The failure or delay of
Lender to require strict performance by Borrower of any provision of this
Agreement or to exercise or enforce any rights, Liens, powers, or remedies
hereunder or under any of the aforesaid agreements or other documents or
security or Collateral shall not operate as a waiver of such performance, Liens,
rights, powers and remedies, but all such requirements, Liens, rights, powers,
and remedies shall continue in full force and effect until all Loans and all
other Obligations owing or to become owing from Borrower to Lender shall have
been fully satisfied. None of the undertakings, agreements, warranties,
covenants and representations of Borrower contained in this Agreement or any of
the other Loan Documents and no Event of Default by Borrower under this
Agreement or any other Loan Documents shall be deemed to have been suspended or
waived by Lender, unless such suspension or waiver is by an instrument in
writing specifying such suspension or waiver and is signed by a duly authorized
representative of Lender and directed to Borrower.
SECTION 11. MISCELLANEOUS
11.1 Power of Attorney. Borrower hereby irrevocably designates, makes,
constitutes and appoints Lender (and all Persons designated by Lender) as
Borrower's true and lawful attorney (and agent-in-fact) and Lender, or Lender's
agent, may, without notice to Borrower and in either Borrower's or Lender's
name, but at the cost and expense of Borrower:
11.1.1 At such time or times as Lender or said agent, in its sole
discretion, may determine, endorse Borrower's name on any checks, notes,
acceptances, drafts, money orders or any other evidence of payment or proceeds
of the Collateral which come into the possession of Lender or under Lender's
control.
11.1.2 At such time or times upon or after the occurrence of an Event
of Default as Lender or its agent in its sole discretion may determine: (i)
demand payment of the Accounts from the Account Debtors, enforce payment of the
Accounts by legal proceedings or otherwise, and generally exercise all of
Borrower's rights and remedies with respect to the collection of the Accounts;
(ii) settle, adjust, compromise, discharge or release any of the Accounts or
other Collateral or any legal proceedings brought to collect any of the Accounts
or other Collateral; (iii) sell or assign any of the Accounts and other
Collateral upon such terms, for such amounts and at such time or times as Lender
deems advisable; (iv) take control, in any manner, of any item of payment or
proceeds relating to any Collateral; (v) prepare, file and sign Borrower's name
to a proof of claim in bankruptcy or similar document against any Account Debtor
or to any notice of lien, assignment or satisfaction of lien or similar document
in connection with any of the Collateral; (vi) receive, open and dispose of all
mail addressed to Borrower and to notify postal authorities to change the
address for delivery thereof to such address as Lender may designate; (vii)
endorse the name of Borrower upon any of the items of payment or proceeds
relating to any Collateral and deposit the same to the account of Lender on
account of the Obligations; (viii) endorse the name of Borrower upon any chattel
paper, document, instrument, invoice, freight xxxx, xxxx of lading or similar
document or agreement relating to the Accounts,
38
Inventory and any other Collateral; (ix) use Borrower's stationery and sign the
name of Borrower to verifications of the Accounts and notices thereof to Account
Debtors; (x) use the information recorded on or contained in any data processing
equipment and computer hardware and software relating to the Accounts,
Inventory, Equipment and any other Collateral; (xi) make and adjust claims under
policies of insurance; and (xii) do all other acts and things necessary, in
Lender's determination, to fulfill Borrower's obligations under this Agreement.
11.2 Indemnity. BORROWER HEREBY INDEMNIFIES, HOLDS HARMLESS, AND SHALL
DEFEND LENDER AND ITS DIRECTORS, OFFICERS, AGENTS, COUNSEL AND EMPLOYEES
("INDEMNIFIED PERSONS") FROM AND AGAINST ANY AND ALL LOSSES, LIABILITIES,
DAMAGES, COSTS, EXPENSES, SUITS, ACTIONS AND PROCEEDINGS ("LOSSES") EVER
SUFFERED OR INCURRED BY ANY INDEMNIFIED PERSON ARISING OUT OF OR RELATING TO
THIS AGREEMENT OR ANY OTHER TRANSACTION CONTEMPLATED HEREBY, INCLUDING, WITHOUT
LIMITATION, ANY LOSSES CAUSED BY THE NEGLIGENCE OF ANY SUCH INDEMNIFIED PERSON,
BUT NOT INCLUDING ANY LOSSES CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL
MISCONDUCT OF ANY SUCH INDEMNIFIED PERSON, AND BORROWER SHALL REIMBURSE LENDER
AND EACH OTHER INDEMNIFIED PERSON FOR ANY EXPENSES (INCLUDING IN CONNECTION WITH
THE INVESTIGATION OF, PREPARATION FOR OR DEFENSE OF ANY ACTUAL OR THREATENED
CLAIM, ACTION OR PROCEEDING ARISING THEREFROM, INCLUDING ANY SUCH COSTS OF
RESPONDING TO DISCOVERY REQUESTS OR SUBPOENAS, REGARDLESS OF WHETHER LENDER OR
SUCH OTHER INDEMNIFIED PERSON IS A PARTY THERETO). WITHOUT LIMITING THE
GENERALITY OF THE FOREGOING, THIS INDEMNITY SHALL EXTEND TO ANY CLAIMS ASSERTED
AGAINST LENDER OR ANY OTHER INDEMNIFIED PERSON BY ANY PERSON UNDER ANY
ENVIRONMENTAL LAWS OR SIMILAR LAWS BY REASON OF BORROWER'S OR ANY OTHER PERSON'S
FAILURE TO COMPLY WITH LAWS APPLICABLE TO SOLID OR HAZARDOUS WASTE MATERIALS OR
OTHER TOXIC SUBSTANCES. BORROWER MAY SELECT COUNSEL WITH RESPECT TO ANY LOSSES;
PROVIDED, HOWEVER, EACH INDEMNIFIED PERSON SHALL HAVE THE RIGHT TO MONITOR THE
PROGRESS OF ANY CLAIMS, SUITS AND ADMINISTRATIVE PROCEEDINGS DEFENDED BY
BORROWER HEREUNDER WITH COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE, OR CONDUCT
ITS DEFENSE THROUGH COUNSEL OF SUCH INDEMNIFIED PERSON'S CHOICE, IN THE EVENT
THAT (I) SUCH INDEMNIFIED PERSON DETERMINES IN GOOD FAITH THAT THE CONDUCT OF
ITS DEFENSE BY BORROWER COULD BE MATERIALLY PREJUDICIAL TO SUCH INDEMNIFIED
PERSON'S INTERESTS OR THAT OTHER REASONABLE GROUNDS EXIST WHICH DEMONSTRATE A
LACK OF EFFECTIVENESS OR HIGH LEVEL OF QUALITY IN THE CONDUCT OF SUCH DEFENSE BY
BORROWER, AND (II) PRIOR TO RETAINING SUCH COUNSEL FOR SUCH PURPOSE, SUCH
INDEMNIFIED PERSON SHALL CONSULT WITH BORROWER AND SHALL ATTEMPT IN GOOD FAITH
TO AGREE UPON COUNSEL TO CONDUCT THE DEFENSE ON BEHALF OF BORROWER AND SUCH
INDEMNIFIED PERSON, AND IN EACH CASE THE FEES AND DISBURSEMENTS OF SUCH COUNSEL
SHALL BE PAID BY BORROWER; PROVIDED, HOWEVER, THAT
39
IF SUCH MUTUAL AGREEMENT IS NOT REACHED WITHIN A REASONABLE TIME ON SELECTING
COUNSEL, THEN SUCH INDEMNIFIED PERSON MAY RETAIN ITS OWN COUNSEL AT BORROWER'S
EXPENSE. NOTWITHSTANDING ANY CONTRARY PROVISION OF THIS AGREEMENT, THE
OBLIGATION OF BORROWER UNDER THIS SECTION 11.2 SHALL SURVIVE THE PAYMENT IN FULL
OF THE OBLIGATIONS AND THE TERMINATION OF THIS AGREEMENT.
11.3 Modification of Agreement; Sale of Interest. This Agreement may not be
modified, altered or amended, except by an agreement in writing signed by
Borrower and Lender. Borrower may not sell, assign or transfer any interest in
this Agreement, any of the other Loan Documents, or any of the Obligations, or
any portion thereof, including Borrower's rights, title, interests, remedies,
powers, and duties hereunder or thereunder. Borrower hereby consents to Lender's
participation, sale, assignment, transfer or other disposition, at any time or
times hereafter, of this Agreement and any of the other Loan Documents, or of
any portion hereof or thereof, including Lender's rights, title, interests,
remedies, powers, and duties hereunder or thereunder. In the event of a
participation, Lender will continue to administer this Agreement and any of the
other Loan Documents as the representative of such participants. In the case of
an assignment, the assignee shall have, to the extent of such assignment, the
same rights, benefits and obligations as it would if it were "Lender" hereunder
and Lender shall be relieved of all obligations hereunder upon any such
assignment. Borrower agrees that it will use its best efforts to assist and
cooperate with Lender in any manner reasonably requested by Lender to effect the
sale of participations in or assignments of any of the Loan Documents or any
portion thereof or interest therein, including assisting in the preparation of
appropriate disclosure documents. Borrower further agrees that Lender may
disclose credit information regarding Borrower and its Subsidiaries to any
potential Participant or assignee.
11.4 Severability. Wherever possible, each provision of this Agreement
shall be interpreted in such manner as to be effective and valid under
Applicable Law, but if any provision of this Agreement shall be prohibited by or
invalid under Applicable Law, such provision shall be ineffective only to the
extent of such prohibition or invalidity, without invalidating the remainder of
such provision or the remaining provisions of this Agreement.
11.5 Successors and Assigns. This Agreement, the Other Agreements and the
Security Documents shall be binding upon and inure to the benefit of the
successors and assigns of Borrower and Lender permitted under Section 11.3
hereof.
11.6 Cumulative Effect; Conflict of Terms. The provisions of the Other
Agreements and the Security Documents are hereby made cumulative with the
provisions of this Agreement. Except as otherwise provided in Section 3.2 hereof
and except as otherwise provided in any of the other Loan Documents by specific
reference to the applicable provision of this Agreement, if any provision
contained in this Agreement is in direct conflict with, or inconsistent with,
any provision in any of the other Loan Documents, the provision contained in
this Agreement shall govern and control.
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11.7 Execution in Counterparts. This Agreement may be executed in any
number of counterparts and by different parties hereto in separate counterparts,
each of which when so executed and delivered shall be deemed to be an original
and all of which counterparts taken together shall constitute but one and the
same instrument.
11.8 Notice. All notices, requests and demands to or upon a party hereto
shall be in writing and shall be sent by certified or registered mail, return
receipt requested, by personal delivery against receipt, by overnight courier or
by facsimile transmissions and shall be deemed to have been validly served,
given or delivered immediately when delivered against receipt or three (3)
Business Days after deposit in the mail, postage prepaid, or with an overnight
courier or, in the case of facsimile transmission, when sent, answerback
received, in each case addressed as follows:
If to Lender: Fleet Capital Corporation
0000 Xxxxx Xxxxxxx Xxxxxx
Xxxxx 0000, XX 21
Xxxxxx, Xxxxx 00000
Attention: Loan Administration Manager
Facsimile No.: (000) 000-0000
With a copy to: Xxxxxx Xxxxx, L.L.P.
0000 Xxxx Xxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxx, Esq.
Facsimile No.: (000) 000-0000
If to Borrower: Black Warrior Wireline Corp.
0000 Xxxxxxx 00 Xxxxx
Xxxxxxxx, Xxxxxxxxxxx 00000
Attention: Xx. Xxxxxxx X. Xxxxxxx
Facsimile No.: (000) 000-0000
With a copy to: Rosen, Cook, Sledge, Davis, Xxxxxxx & Xxxxx, P.A.
000 Xxxxxx Xxxx
X.X. Xxx 0000
Xxxxxxxxxx, Xxxxxxx 00000-0000
Attention: Xxxxx X. Xxxxxx, Esq.
Facsimile No.: (000) 000-0000
or to such other address as each party may designate for itself by notice given
in accordance with this Section 11.8; provided, however, that any notice,
request or demand to or upon Lender pursuant to Section 3.1.1 or 4.2.2 hereof
shall not be effective until received by Lender. Any written notice or demand
that is not sent in conformity with the provisions hereof shall nevertheless be
effective on the date that such notice is actually received by the noticed
party.
41
11.9 Lender's Consent. Whenever Lender's consent is required to be obtained
under this Agreement, any of the Other Agreements or any of the Security
Documents as a condition to any action, inaction, condition or event, Lender
shall be authorized to give or withhold such consent in its sole and absolute
discretion.
11.10 Credit Inquiries. Borrower hereby authorizes and permits Lender (but
Lender shall have no obligation) to respond to usual and customary credit
inquiries from third parties concerning Borrower or any of its Subsidiaries.
11.11 Time of Essence. Time is of the essence of this Agreement, the Other
Agreements and the Security Documents.
11.12 Entire Agreement; Appendix A and Exhibits and Schedules. This
Agreement and the other Loan Documents, together with all other instruments,
agreements and certificates executed by the parties in connection therewith or
with reference thereto, embody the entire understanding and agreement between
the parties hereto and thereto with respect to the subject matter hereof and
thereof and supersede all prior agreements, understandings and inducements,
whether express or implied, oral or written. Appendix A and each of the Exhibits
and Schedules attached hereto are incorporated into this Agreement and by this
reference made a part hereof.
11.13 Interpretation. No provision of this Agreement or any of the other
Loan Documents shall be construed against or interpreted to the disadvantage of
any party hereto by any court or other governmental or judicial authority by
reason of such party having or being deemed to have structured or dictated such
provision.
11.14 GOVERNING LAW; CONSENT TO FORUM. THIS AGREEMENT HAS BEEN NEGOTIATED,
EXECUTED AND DELIVERED AT AND SHALL BE DEEMED TO HAVE BEEN MADE IN DALLAS,
DALLAS COUNTY, TEXAS. THIS AGREEMENT SHALL BE GOVERNED BY AND CONSTRUED IN
ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS: PROVIDED, HOWEVER, THAT IF ANY
OF THE COLLATERAL SHALL BE LOCATED IN ANY JURISDICTION OTHER THAN TEXAS, THE
LAWS OF SUCH JURISDICTION SHALL GOVERN THE METHOD, MANNER AND PROCEDURE FOR
FORECLOSURE OF LENDER'S LIEN UPON SUCH COLLATERAL AND THE ENFORCEMENT OF
LENDER'S OTHER REMEDIES IN RESPECT OF SUCH COLLATERAL TO THE EXTENT THAT THE
LAWS OF SUCH JURISDICTION ARE DIFFERENT FROM OR INCONSISTENT WITH THE LAWS OF
TEXAS. AS PART OF THE CONSIDERATION FOR NEW VALUE RECEIVED, AND REGARDLESS OF
ANY PRESENT OR FUTURE DOMICILE OR PRINCIPAL PLACE OF BUSINESS OF BORROWER OR
LENDER, BORROWER HEREBY CONSENTS AND AGREES THAT THE DISTRICT COURT OF DALLAS
COUNTY, TEXAS, OR, AT LENDER'S OPTION, THE UNITED STATES DISTRICT COURT FOR THE
NORTHERN DISTRICT OF TEXAS, DALLAS DIVISION, SHALL HAVE JURISDICTION TO HEAR AND
DETERMINE ANY CLAIMS OR DISPUTES BETWEEN BORROWER AND LENDER PERTAINING TO
42
THIS AGREEMENT OR TO ANY MATTER ARISING OUT OF OR RELATED TO THIS AGREEMENT.
BORROWER EXPRESSLY SUBMITS AND CONSENTS IN ADVANCE TO SUCH JURISDICTION IN ANY
ACTION OR SUIT COMMENCED IN ANY SUCH COURT, AND BORROWER HEREBY WAIVES ANY
OBJECTION WHICH BORROWER MAY HAVE BASED UPON LACK OF PERSONAL JURISDICTION,
IMPROPER VENUE OR FORUM NON CONVENIENS AND HEREBY CONSENTS TO THE GRANTING OF
SUCH LEGAL OR EQUITABLE RELIEF AS IS DEEMED APPROPRIATE BY SUCH COURT. BORROWER
HEREBY WAIVES PERSONAL SERVICE OF THE SUMMONS, COMPLAINT AND OTHER PROCESS
ISSUED IN ANY SUCH ACTION OR SUIT AND AGREES THAT SERVICE OF SUCH SUMMONS,
COMPLAINT AND OTHER PROCESS MAY BE MADE BY REGISTERED OR CERTIFIED MAIL
ADDRESSED TO BORROWER AT THE ADDRESS SET FORTH IN THIS AGREEMENT AND THAT
SERVICE SO MADE SHALL BE DEEMED COMPLETED UPON THE EARLIER OF BORROWER'S ACTUAL
RECEIPT THEREOF OR THREE (3) DAYS AFTER DEPOSIT IN THE U.S. MAILS, PROPER
POSTAGE PREPAID. NOTHING IN THIS AGREEMENT SHALL BE DEEMED OR OPERATE TO AFFECT
THE RIGHT OF LENDER TO SERVE LEGAL PROCESS IN ANY OTHER MANNER PERMITTED BY LAW,
OR TO PRECLUDE THE ENFORCEMENT BY LENDER OF ANY JUDGMENT OR ORDER OBTAINED IN
SUCH FORUM OR THE TAKING OF ANY ACTION UNDER THIS AGREEMENT TO ENFORCE SAME IN
ANY OTHER APPROPRIATE FORUM OR JURISDICTION.
11.15 WAIVERS BY BORROWER. BORROWER WAIVES (I) THE RIGHT TO TRIAL BY JURY
(WHICH LENDER HEREBY ALSO WAIVES) IN ANY ACTION, SUIT, PROCEEDING OR
COUNTERCLAIM OF ANY KIND ARISING OUT OF OR RELATED TO ANY OF THE LOAN DOCUMENTS,
THE OBLIGATIONS OR THE COLLATERAL; (II) PRESENTMENT, DEMAND AND PROTEST AND
NOTICE OF PRESENTMENT, PROTEST, DEFAULT, NON-PAYMENT, INTENT TO ACCELERATE,
ACCELERATION, MATURITY, RELEASE, COMPROMISE, SETTLEMENT, EXTENSION OR RENEWAL OF
ANY OR ALL COMMERCIAL PAPER, ACCOUNTS, CONTRACT RIGHTS, DOCUMENTS, INSTRUMENTS,
CHATTEL PAPER AND GUARANTIES AT ANY TIME HELD BY LENDER ON WHICH BORROWER MAY IN
ANY WAY BE LIABLE AND HEREBY RATIFIES AND CONFIRMS WHATEVER LENDER MAY DO IN
THIS REGARD; (III) NOTICE PRIOR TO TAKING POSSESSION OR CONTROL OF THE
COLLATERAL OR ANY BOND OR SECURITY WHICH MIGHT BE REQUIRED BY ANY COURT PRIOR TO
ALLOWING LENDER TO EXERCISE ANY OF LENDER'S REMEDIES; (IV) THE BENEFIT OF ALL
VALUATION, APPRAISEMENT AND EXEMPTION LAWS; AND (V) NOTICE OF ACCEPTANCE HEREOF.
BORROWER ACKNOWLEDGES THAT THE FOREGOING WAIVERS ARE A MATERIAL INDUCEMENT TO
LENDER'S ENTERING INTO THIS AGREEMENT AND THAT LENDER IS RELYING UPON THE
FOREGOING WAIVERS IN ITS FUTURE DEALINGS WITH BORROWER. BORROWER WARRANTS AND
REPRESENTS THAT IT HAS REVIEWED THE FOREGOING WAIVERS WITH ITS LEGAL COUNSEL AND
HAS KNOWINGLY
43
AND VOLUNTARILY WAIVED ITS JURY TRIAL RIGHTS FOLLOWING CONSULTATION WITH LEGAL
COUNSEL. IN THE EVENT OF LITIGATION, THIS AGREEMENT MAY BE FILED AS A WRITTEN
CONSENT TO A TRIAL BY THE COURT.
11.16 WAIVER OF CONSUMER RIGHTS. BORROWER HEREBY WAIVES ITS RIGHTS UNDER
THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT SECTION 17.41 ET. SEQ.
BUSINESS & COMMERCE CODE, A LAW THAT GIVES CONSUMERS SPECIAL RIGHTS AND
PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF BORROWER'S OWN SELECTION,
BORROWER VOLUNTARILY CONSENTS TO THIS WAIVER. BORROWER EXPRESSLY WARRANTS AND
REPRESENTS THAT BORROWER (I) IS NOT IN A SIGNIFICANTLY DISPARATE BARGAINING
POSITION RELATIVE TO LENDER, AND (II) HAS BEEN REPRESENTED BY LEGAL COUNSEL IN
CONNECTION WITH THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
11.17 ORAL AGREEMENTS INEFFECTIVE. THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES, AND THE SAME MAY
NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL
AGREEMENTS BETWEEN THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
11.18 Nonapplicability of Chapter 346. Borrower and Lender hereby agree
that, except for Section 346.004 thereof, the provisions of Chapter 346 of the
Texas Finance Code (regulating certain revolving credit loans and revolving
tri-party accounts) shall not apply to this Agreement or any of the other Loan
Documents.
11.19 Certain Matters of Construction. All references to statutes and
related regulations in this Agreement, the Other Agreements and the Security
Documents shall include any amendments of same and any successor statutes and
regulations. All references in this Agreement, the Other Agreements and the
Security Documents to any of the Loan Documents shall include any and all
modifications thereto and any and all extensions or renewals thereof.
[REMAINDER OF THIS PAGE INTENTIONALLY LEFT BLANK]
44
IN WITNESS WHEREOF, this Agreement has been duly executed in Dallas, Texas,
on the day and year specified at the beginning of this Agreement.
BORROWER:
BLACK WARRIOR WIRELINE CORP.
By: ___________________________________
Name:____________________________________
Title: __________________________________
XXXXX WIRELINE CO., INC.
By: ___________________________________
Name:____________________________________
Title: __________________________________
Accepted in Dallas, Dallas County, Texas:
LENDER:
FLEET CAPITAL CORPORATION
By: ___________________________________
Xxxxx X. Xxxxx, Vice President
45
APPENDIX A
GENERAL DEFINITIONS
When used in the Loan and Security Agreement dated March 16, 1998, by and
between Fleet Capital Corporation, and Black Warrior Wireline Corp. and Xxxxx
Wireline Co., Inc., the following terms shall have the following meanings (terms
defined in the singular to have the same meaning when used in the plural and
vice versa):
Account Debtor - any Person who is or may become obligated under or on
account of an Account.
Accounts - all accounts, contract rights, chattel paper, instruments
and documents, whether now owned or hereafter created or acquired by
Borrower or in which Borrower now has or hereafter acquires any interest.
Acquisition - the purchase by Borrower of all of Phoenix's domestic
directional drilling business and survey business and certain other
drilling and related assets of Phoenix pursuant to the Purchase Documents.
Adjusted Net Earnings From Operations - with respect to any fiscal
period, means the net earnings (or loss) after provision for income taxes
for such fiscal period of Borrower, as reflected on the financial statement
of Borrower supplied to Lender pursuant to Section 8.1.3 of the Agreement,
but excluding:
(i) any gain or loss arising from the sale of capital assets;
(ii) any gain arising from any write-up of assets;
(iii) earnings of any Subsidiary of a Borrower accrued prior to
the date it becomes a Subsidiary;
(iv) earnings of any corporation, substantially all the assets of
which have been acquired in any manner by a Borrower, realized by such
corporation prior to the date of such acquisition;
(v) net earnings of any business entity (other than a Subsidiary
of a Borrower) in which such Borrower has an ownership interest,
unless such net earnings shall have actually been received by Borrower
in the form of cash distributions;
(vi) any portion of the net earnings of any Subsidiary of a
Borrower which for any reason is unavailable for payment of dividends
to such Borrower;
A-1-1
(vii) the earnings of any Person to which any assets of a
Borrower shall have been sold, transferred or disposed of, or into
which such Borrower shall have merged, or been a party to any
consolidation or other form of reorganization, prior to the date of
such transactions;
(viii) any gain arising from the acquisition of any Securities of
a Borrower; and
(ix) any gain arising from extraordinary or non-recurring items.
Adjusted Tangible Assets - all assets except: (i) any surplus
resulting from any write-up of assets subsequent to September 30, 1997;
(ii) deferred assets, other than prepaid insurance and prepaid taxes; (iii)
patents, copyrights, trademarks, trade names, non-compete agreements,
franchises and other similar intangibles; (iv) goodwill, including any
amounts, however designated on a Consolidated balance sheet of a Person or
its Subsidiaries, representing the excess of the purchase price paid for
assets or stock over the value assigned thereto on the books of such
Person; (v) Restricted Investments; (vi) unamortized debt discount and
expense; (vii) assets located and notes and receivables due from obligors
outside of the United States of America; and (viii) Accounts, notes and
other receivables due from Affiliates or employees.
Adjusted Tangible Net Worth - at any date means a sum equal to:
(i) the net book value (after deducting related depreciation,
obsolescence, amortization, valuation, and other proper reserves) at
which the Adjusted Tangible Assets of a Person would be shown on a
balance sheet at such date in accordance with GAAP, minus
(ii) the amount at which such Person's liabilities (other than
capital stock and surplus) would be shown on such balance sheet in
accordance with GAAP, and including as liabilities all reserves for
contingencies and other potential liabilities.
Affiliate - a Person (other than a Subsidiary): (i) which directly or
indirectly through one or more intermediaries controls, or is controlled
by, or is under common control with, a Person; (ii) which beneficially owns
or holds 5% or more of any class of the Voting Stock of a Person; or (iii)
5% or more of the Voting Stock (or in the case of a Person which is not a
corporation, 5% or more of the equity interest) of which is beneficially
owned or held by a Person or a Subsidiary of a Person.
Agreement - the Loan and Security Agreement referred to in the first
sentence of this Appendix A, all Exhibits and Schedules thereto and this
Appendix A, as amended, renewed, extended and restated from time to time.
Applicable Annual Rate - as defined in Section 2.1.1 of the Agreement.
A-1-2
Applicable Law - all laws, rules and regulations applicable to the
Person, conduct, transaction, covenant or Loan Documents in question,
including all applicable common law and equitable principles; all
provisions of all applicable state and federal constitutions, statutes,
rules, regulations and orders of governmental bodies; and orders, judgments
and decrees of all courts and arbitrators.
Atlas Judgment - the judgment with respect to the Atlas litigation
described on Exhibit I.
Availability - the amount of money which Borrower is entitled to
borrow from time to time as Revolving Credit Loans, such amount being the
difference derived when the sum of the principal amount of Revolving Credit
Loans then outstanding (including any amounts which Lender may have paid
for the account of Borrower pursuant to any of the Loan Documents and which
have not been reimbursed by Borrower) is subtracted from the Borrowing
Base. If the amount outstanding is equal to or greater than the Borrowing
Base, Availability is zero (0).
Average Monthly Revolving Credit Loan Balance - the amount obtained by
adding the aggregate unpaid principal amount of Revolving Credit Loans at
the end of each day during the month in question and by dividing such sum
by the number of days in such month.
Bank - Fleet National Bank, and its successors or assigns.
Base Rate - the rate of interest announced or quoted by Bank from time
to time as its prime rate for commercial loans, whether or not such rate is
the lowest rate charged by Bank to its most preferred borrowers; and, if
such prime rate for commercial loans is discontinued by Bank as a standard,
a comparable reference rate designated by Bank as a substitute therefor
shall be the Base Rate.
Borrowing Base - as at any date of determination thereof, an amount
equal to the lesser of:
(a) Total Revolving Credit Facility; or
(b) an amount equal to up to eighty-five percent (85%) of the net
amount of Eligible Accounts outstanding at such date;
MINUS (subtract from each of
clauses (a) and (b) above)
(c) the amount of any reserves established by Lender pursuant to
Section 1.1.1 at such date.
A-1-3
For purposes of clause (b) hereof, the net amount of Eligible Accounts
at any time shall be the face amount of such Eligible Accounts less any and
all returns, rebates, discounts (which may, at Lender's option, be
calculated on shortest terms), credits, allowances or sales, excise or
withholding taxes of any nature at any time issued, owing, claimed by
Account Debtors, granted, outstanding or payable in connection with such
Accounts at such time.
Business Day - any day excluding Saturday, Sunday and any day which is
a legal holiday under the laws of the State of Texas or is a day on which
banking institutions located in such state are closed.
Capital Expenditures - expenditures made or liabilities incurred for
the acquisition of any fixed assets or improvements, replacements,
substitutions or additions thereto which have a useful life of more than
one year, including the total principal portion of Capitalized Lease
Obligations.
Capitalized Lease Obligation - any Indebtedness represented by
obligations under a lease that is required to be capitalized for financial
reporting purposes in accordance with GAAP.
Closing Date - the date on which all of the conditions precedent in
Section 9 of the Agreement are satisfied and the initial Loan is made under
the Agreement.
Code - the Uniform Commercial Code as adopted and in force in the
state of Texas, as from time to time in effect.
Collateral - all of the Property and interests in Property described
in Section 5 of the Agreement, and all other Property and interests in
Property that now or hereafter secure the payment and performance of any of
the Obligations, with the sole exceptions of the Conroe Property and the
GECC Equipment.
Collateral Assignment of Purchase Documents - the Collateral
Assignment of the Asset Purchase Agreement (and any other Purchase
Documents) dated as of the Closing Date executed by and among Phoenix,
Black Warrior and Lender.
Conroe Property - that certain tract of land containing approximately
13.4 acres located in Conroe, Texas that Black Warrior intends to purchase
in order to construct and operate an office/shop facility thereon.
Consolidated - the consolidation in accordance with GAAP of the
accounts or other items as to which such term applies.
Current Assets - at any date means the amount at which all of the
current assets of a Person would be properly classified as current assets
shown on a balance sheet at such
A-1-4
date in accordance with GAAP except that amounts due from Affiliates and
investments in Affiliates shall be excluded therefrom.
Default - an event or condition the occurrence of which would, with
the lapse of time or the giving of notice, or both, become an Event of
Default.
Default Rate - as defined in Section 2.1.2 of the Agreement.
Diamondback Seller Note - that certain promissory note dated September
1, 1997, executed by Black Warrior, as Maker, and payable to Diamondback
Directional, Inc., in the original principal amount of $3,000,000.
Distribution - in respect of any corporation means and includes: (i)
the payment of any dividends or other distributions on capital stock of the
corporation (except distributions in such stock) and (ii) the redemption or
acquisition of Securities unless made contemporaneously from the net
proceeds of the sale of Securities.
Dollars and the sign "$" - lawful money of the United States of
America.
Dominion Account - a special account of Lender established by Borrower
pursuant to the Agreement at a bank selected by Borrower, but acceptable to
Lender in its reasonable discretion, and over which Lender shall have sole
and exclusive access and control for withdrawal purposes.
EBIT - Adjusted Net Earnings from Operations plus Interest Expense
plus Taxes.
EBITDA - for any fiscal period of Borrower, means the sum of (i)
Adjusted Net Earnings from Operations for such period, plus (ii) Taxes for
such period, plus (iii) Interest Expense for such period, plus (iv)
depreciation and amortization for such period.
Eligible Account - an Account arising in the ordinary course of
Borrower's business from the sale of goods or rendition of services which
is payable in Dollars and which Lender, in its sole discretion, deems to be
an Eligible Account. Without limiting the generality of the foregoing, no
Account shall be an Eligible Account if: (i) it arises out of a sale made
by Borrower to a Subsidiary or an Affiliate of Borrower or to a Person
controlled by an Affiliate of Borrower; (ii) it is due or unpaid more than
ninety (90) days after the original invoice date; (iii) twenty percent
(20%) or more of the Accounts from the Account Debtor are not deemed
Eligible Accounts hereunder; (iv) the total unpaid Accounts of the Account
Debtor exceed twenty percent (20%) of the net amount of all Eligible
Accounts, to the extent of such excess; (v) any covenant, representation or
warranty contained in the Agreement with respect to such Account has been
breached; (vi) the Account Debtor is also Borrower's creditor or supplier,
or the Account Debtor has disputed liability with respect to such Account,
or the Account Debtor has made any claim with respect to any other Account
due from such Account Debtor to Borrower, or the Account otherwise is or
may become subject to any right of setoff, counterclaim,
A-1-5
reserve or chargeback, provided that, in any event, the Accounts of such
Account Debtor shall be ineligible only to the extent of the amount owing
by Borrower to such creditor or supplier or to the extent of such offset,
counterclaim, disputed amount, reserve or chargeback; (vii) the Account
Debtor has commenced a voluntary case under the federal bankruptcy laws or
made an assignment for the benefit of creditors, or a decree or order for
relief has been entered by a court having jurisdiction in the proceedings
in respect of the Account Debtor in an involuntary case under the federal
bankruptcy laws or any other petition or other application for relief under
the federal bankruptcy laws has been filed against the Account Debtor, or
if the Account Debtor has failed, suspended business, ceased to be Solvent,
or consented to or suffered a receiver, trustee, liquidator or custodian to
be appointed for it or for all or a significant portion of its assets or
affairs; (viii) it arises from a sale to an Account Debtor with its
principal office, assets or place of business outside the United States,
unless the sale is backed by an irrevocable letters of credit issued or
confirmed by Bank and is in form and substance acceptable to Lender,
payable in the full amount of the Account in freely convertible Dollars at
a place of payment within the United States; (ix) it arises from a sale to
the Account Debtor on a xxxx-and-hold, guaranteed sale, sale-or-return,
sale-on-approval, consignment or any other repurchase or return basis; (x)
(a) the Account Debtor is the United States of America or any department,
agency or instrumentality thereof, unless Borrower assigns its right to
payment of such Account to Lender, in a manner satisfactory to Lender, so
as to comply with the Assignment of Claims Act of 1940 (31 U.S.C. ss.203 et
seq.) or (b) the Account Debtor is a state, county or municipality, or a
political subdivision or agency thereof, which is subject to any Applicable
Law that would disallow an assignment of Accounts on which it is the
Account Debtor; (xi) the Account Debtor is located in New Jersey,
Minnesota, Indiana, West Virginia or any other state imposing similar
conditions on the right of a creditor to collect accounts receivable unless
Borrower has either qualified to transact business in such state as a
foreign corporation or filed a Notice of Business Activities Report or
other required report with the appropriate officials in those states for
the then current year; (xii) the Account is subject to a Lien other than a
Permitted Lien; (xiii) the goods giving rise to such Account have not been
delivered to and accepted by the Account Debtor or the services giving rise
to such Account have not been performed by Borrower and accepted by the
Account Debtor or the Account otherwise does not represent a final sale;
(xiv) the Account is evidenced by chattel paper or an instrument of any
kind, or has been reduced to judgment; (xv) Borrower has made any agreement
with the Account Debtor for any deduction therefrom, except for discounts
or allowances which are made in the ordinary course of business for prompt
payment and which discounts or allowances are reflected in the calculation
of the face value of each invoice related to such Account; or (xvi)
Borrower has made an agreement with the Account Debtor to extend the time
of payment thereof.
Environmental Laws - all federal, state and local laws, rules,
regulations, ordinances, programs, permits, guidances, orders and consent
decrees relating to health, safety or environmental matters.
A-1-6
Equipment - all machinery, apparatus, equipment, fittings, furniture,
fixtures, motor vehicles and other tangible personal Property (other than
Inventory) of every kind and description used in Borrower's operations or
owned by Borrower or in which Borrower has an interest, whether now owned
or hereafter acquired by Borrower and wherever located, and all parts,
accessories and special tools and all increases and accessions thereto and
substitutions and replacements therefor, with the sole exception of the
GECC Equipment.
Equipment Loans - the Loans described in Section 1.2.2 of the
Agreement.
Equipment Note - the Equipment Promissory Note to be executed by
Borrower on or about the Closing Date in favor of Lender to evidence the
Equipment Loans, which shall be in the form of Exhibit A-2 to the
Agreement.
ERISA - the Employee Retirement Income Security Act of 1974, as
amended, and all rules and regulations from time to time promulgated
thereunder.
Event of Default - as defined in Section 10.1 of the Agreement.
Excess Interest - as defined in Section 2.1.3(B) of the Agreement.
Fixed Charge Ratio - for any fiscal period means, the ratio of (i) an
amount equal to (a) the sum of (1) Adjusted Net Earnings from Operations
for such period and (2) depreciation for such period, minus (b) Capital
Expenditures not financed by Equipment Loans hereunder or borrowings under
any other financing arrangement otherwise permitted hereunder during such
period, to (ii) Fixed Charges of Borrower for such period.
Fixed Charges - for any fiscal period means the sum of scheduled
principal payments required to be made during such period in respect to
Indebtedness.
GAAP - generally accepted account principles in the United States of
America in effect from time to time.
GECC - General Electric Capital Corporation, a New York corporation,
its successors and assigns.
GECC Amendment - the Amendment dated prior to or as of the Closing
Date executed by and among GECC and Borrower pursuant to which GECC
modifies the terms of that certain Master Security Agreement dated as of
November 19, 1997, by and among GECC, as Secured Party, and Borrower, as
Debtor, so as to release certain collateral designated by Lender.
A-1-7
GECC Equipment - the equipment described in Exhibit S attached hereto,
which is the same equipment covered by the GECC Security Agreement as
amended by the GECC Amendment.
GECC Partial Releases - the partial releases of the financing
statements recorded to the security interests of GECC evidenced by the GECC
Security Agreement, which partial releases shall be executed by GECC with
respect to the collateral released pursuant to the GECC Amendment and shall
be filed of record in the appropriate recording offices.
GECC Security Agreement - that certain Master Security Agreement dated
as of November 19, 1997, by and among GECC, as Secured Party, and Borrower,
as Debtor.
General Intangibles - all general intangibles of Borrower, whether now
owned or hereafter created or acquired by Borrower, including all choices
in action, causes of action, corporate or other business records, deposit
accounts, inventions, blueprints, designs, patents, patent applications,
trademarks, trademark applications, trade names, trade secrets, service
marks, goodwill, brand names, copyrights, registrations, licenses,
franchises, customer lists, tax refund claims, computer programs,
operational manuals, all claims under guaranties, security interests or
other security held by or granted to Borrower to secure payment of any of
the Accounts by an Account Debtor, all rights to indemnification and all
other intangible property of every kind and nature (other than Accounts).
Guarantor - Any Person who may hereafter guarantee payment or
performance of the whole or any part of the Obligations.
Guaranty Agreements - collectively, any and all continuing guaranty
agreements which are executed by a Guarantor in form and substance
satisfactory to Lender.
Indebtedness - as applied to a Person means, without duplication: (i)
all items which in accordance with GAAP would be included in determining
total liabilities as shown on the liability side of a balance sheet of such
Person as at the date as of which Indebtedness is to be determined,
including Capitalized Lease Obligations; (ii) all obligations of other
Persons which such Person has guaranteed; and (iii) in the case of Borrower
(without duplication), the Obligations.
Indemnified Persons - as defined in Section 11.2 of the Agreement.
Interest Expense - with respect to any fiscal period, the interest
expense incurred for such period as determined in accordance with GAAP.
Inventory - all of Borrower's inventory, whether now owned or
hereafter acquired, including, but not limited to, all goods intended for
sale or lease by Borrower, or for display or demonstration; all work in
process; all raw materials and other materials and supplies of every nature
and description used or which might be used in connection
A-1-8
with the manufacture, printing, packing, shipping, advertising, selling,
leasing or furnishing of such goods or otherwise used or consumed in
Borrower's business; and all documents evidencing and General Intangibles
relating to any of the foregoing, whether now owned or hereafter acquired
by Borrower.
Lien - any interest in Property securing an obligation owed to, or a
claim by, a Person other than the owner of the Property, whether such
interest is based on common law, statute or contract. The term "Lien" shall
also include reservations, exceptions, encroachments, easements,
rights-of-way, covenants, conditions, restrictions, leases and other title
exceptions and encumbrances affecting Property. For the purpose of the
Agreement, Borrower shall be deemed to be the owner of any Property which
it has acquired or holds subject to a conditional sale agreement or other
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
Loan Account - the loan account established on the books of Lender
pursuant to Section 3.6 of the Agreement.
Loan Documents - the Agreement, the Other Agreements and the Security
Documents.
Loan Party - Borrower, each Guarantor and each other Person (other
than Lender) who is at any time a party to any Loan Document.
Loans - all loans and advances of any kind made by Lender pursuant to
the Agreement.
Losses - as defined in Section 11.2 of the Agreement.
Material Adverse Effect - the effect of any event or condition which,
alone or when taken together with other events or conditions occurring or
existing concurrently therewith, (a) has a material adverse effect upon the
business, operations, Properties, condition (financial or otherwise) or
business prospects of Borrower or any Subsidiary of Borrower; (b) has any
material adverse effect whatsoever upon the validity or enforceability of
the Agreement or any of the other Loan Documents; (c) has or may be
reasonably expected to have any material adverse effect upon the value of
the whole or any material part of the Collateral, the Liens of Lender with
respect to the Collateral or any material part thereof or the priority of
such Liens; (d) materially impairs the ability of Borrower or any other
Loan Party to perform its obligations under this Agreement or any of the
other Loan Documents, including repayment of the Obligations when due; or
(e) materially impairs the ability of Lender to enforce or collect the
Obligations or realize upon any of the Collateral in accordance with the
Loan Documents and Applicable Law.
Maximum Legal Rate - as defined in Section 2.1.3(A) of the Agreement.
A-1-9
Money Borrowed - means (i) Indebtedness arising from the lending of
money by any Person to Borrower; (ii) Indebtedness, whether or not in any
such case arising from the lending by any Person of money to Borrower, (A)
which is represented by notes payable or drafts accepted that evidence
extensions of credit, (B) which constitutes obligations evidenced by bonds,
debentures, notes or similar instruments, or (C) upon which interest
charges are customarily paid (other than accounts payable) or that was
issued or assumed as full or partial payment for Property; (iii)
Indebtedness that constitutes a Capitalized Lease Obligation; and (iv)
Indebtedness of Borrower under any guaranty of obligations that would
constitute Indebtedness for Money Borrowed under clauses (i) through (iii)
hereof, if owed directly by Borrower.
Mortgages - each respective mortgage or deed of trust to be executed
by Borrower in favor of Lender, and by which Borrower shall grant and
convey to Lender, as security for the Obligations, a Lien upon all real
Property owned in fee by Borrower, including, without limitation, the real
Property owned in fee by Borrower and located at Broussard (LaFayette)
Louisiana, and Corpus Christi and Odessa, Texas.
Multiemployer Plan - has the meaning set forth in Section 4001(a)(3)
of ERISA.
Obligations - all Loans, and all other advances, debts, liabilities,
obligations, covenants and duties, together with all interest, fees and
other charges thereon, owing, arising, due or payable from Borrower to
Lender of any kind or nature, present or future, whether or not evidenced
by any note, guaranty or other instrument, whether arising under the
Agreement or any of the other Loan Documents or otherwise, and whether
direct or indirect (including those acquired by assignment), absolute or
contingent, primary or secondary, due or to become due, now existing or
hereafter arising and however acquired.
Original Term - as defined in Section 4.1 of the Agreement.
Other Agreements - any and all agreements, instruments and documents
(other than the Agreement and the Security Documents), heretofore, now or
hereafter executed by Borrower, any Subsidiary of Borrower or any other
third party and delivered to Lender in respect of the transactions
contemplated by the Agreement.
Out-of-Formula Condition - at any date of determination thereof, a
condition such that the outstanding principal amount of Revolving Credit
Loans on such date exceeds the Borrowing Base on such date.
Participant - each Person who shall be granted the right by Lender to
participate in any of the Loans described in the Agreement and who shall
have entered into a participation agreement in form and substance
satisfactory to Lender.
Permitted Lien - a Lien of a kind specified in Section 8.2.5 of the
Agreement.
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Permitted Purchase Money Indebtedness - Purchase Money Indebtedness of
Borrower incurred after the date hereof which is secured by a Purchase
Money Lien and which, when aggregated with the principal amount of all
other such Indebtedness and Capitalized Lease Obligations of Borrower at
the time outstanding, does not exceed Three Million Dollars ($3,000,000) in
1998 and Five Million Dollars ($5,000,000) thereafter. For the purposes of
this definition, the principal amount of any Purchase Money Indebtedness
consisting of capitalized leases shall be computed as a Capitalized Lease
Obligation.
Person - an individual, partnership, corporation, limited liability
company, joint stock company, land trust, business trust, or unincorporated
organization, or a government or agency or political subdivision thereof.
Phoenix - Phoenix Drilling Services, Inc., a Delaware corporation.
Plan - an employee benefit plan now or hereafter maintained for
employees of Borrower that is covered by Title IV of ERISA.
Properly Contested - in the case of any Indebtedness of a Loan Party
(including any Taxes) that is not paid as and when due or payable by reason
of such Loan Party's bona fide dispute concerning its liability to pay same
or concerning the amount thereof, that (i) such Indebtedness and any Liens
securing same are being properly contested in good faith by appropriate
proceedings promptly instituted and diligently conducted, (ii) such Loan
Party has established appropriate reserves as shall be required in
conformity with GAAP, (iii) the non-payment of such Indebtedness will not
have a Material Adverse Effect and will not result in a forfeiture of any
assets of such Loan Party; (iv) no Lien is imposed upon any of such Loan
Party's assets with respect to such Indebtedness unless such Lien is at all
times junior and subordinate in priority to the Liens in favor of Lender
(except only with respect to property taxes that have priority as a matter
of applicable state law); (v) if the Indebtedness results from the entry,
rendition or issuance against a Loan Party or any of its assets of a
judgment, writ, order or decree, such judgment, writ, order or decree is
stayed or bonded pending a timely appeal or other judicial review; and (vi)
if such contest is abandoned, settled or determined adversely to such Loan
Party, such Loan Party forthwith pays such Indebtedness and all penalties
and interest in connection therewith.
Property - any interest in any kind of property or asset, whether
real, personal or mixed, or tangible or intangible.
Purchase Documents - the Asset Purchase Agreement and all documents
and instruments executed or delivered in connection therewith.
Purchase Money Indebtedness - means and includes (i) Indebtedness
(other than the Obligations) for the payment of all or any part of the
purchase price of any fixed assets, (ii) any Indebtedness (other than the
Obligations) incurred at the time of or within
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ten (10) days prior to or after the acquisition of any fixed assets for the
purpose of financing all or any part of the purchase price thereof, and
(iii) any renewals, extensions or refinancings thereof, but not any
increases in the principal amounts thereof outstanding at the time.
Purchase Money Lien - a Lien upon fixed assets which secures Purchase
Money Indebtedness, but only if such Lien shall at all times be confined
solely to the fixed assets the purchase price of which was financed through
the incurrence of the Purchase Money Indebtedness secured by such Lien.
Rentals - as defined in Section 8.2.13 of the Agreement.
Reportable Event - any of the events set forth in Section 4043(b) of
ERISA.
Restricted Investment - any investment made in cash or by delivery of
Property to any Person, whether by acquisition of stock, Indebtedness or
other obligation or Security, or by loan, advance or capital contribution,
or otherwise, or in any Property except the following:
(i) investments in one or more Subsidiaries of Borrower to the extent
existing on the Closing Date;
(ii) Property to be used in the ordinary course of business;
(iii) Current Assets arising from the sale of goods and services in
the ordinary course of business of Borrower and its Subsidiaries;
(iv) investments in direct obligations of the United States of
America, or any agency thereof or obligations guaranteed by the United
States of America, provided that such obligations mature within one
year from the date of acquisition thereof;
(v) investments in regular checking, "money-market" or like accounts,
certificates of deposit maturing within one year from the date of
acquisition issued by a bank or trust company organized under the laws
of the United States or any state thereof having capital surplus and
undivided profits aggregating at least $100,000,000; and
(vi) investments in commercial paper given the highest rating by a
national credit rating agency and maturing not more than 270 days from
the date of creation thereof.
Revolving Credit Loan - a Loan made by Lender as provided in Section
1.1 of the Agreement.
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Schedule of Accounts - as defined in Section 6.2.1 of the Agreement.
Security - shall have the same meaning as in Section 2(1) of the
Securities Act of 1933, as amended.
Security Documents - the Guaranty Agreements and all other instruments
and agreements now or at any time hereafter securing the whole or any part
of the Obligations.
Senior Debt - means all Money Borrowed, excluding Subordinated Debt.
Senior Interest Coverage Ratio - with respect to any period of
determination, the ratio of (i) an amount equal to the sum of (a) Adjusted
Net Earnings From Operations for such period, (b) accrued taxes for such
period, and (3) Interest Expense for such period, to (ii) Interest Expense
for such period in respect of all Indebtedness, all as determined in
accordance with GAAP.
Solvent - as to any Person, such Person (i) owns Property whose fair
salable value is greater than the amount required to pay all of such
Person's Indebtedness (including contingent debts), (ii) is able to pay all
of its Indebtedness as such Indebtedness matures and (iii) has capital
sufficient to carry on its business and transactions and all business and
transactions in which it is about to engage.
St. Xxxxx - St. Xxxxx Capital Partners, L.P., a Delaware limited
partnership, its successors and assigns.
St. Xxxxx Subordinated Debt - the Indebtedness in the aggregate
principal amount of $10,000,000 owing to St. Xxxxx and evidenced by the St.
Xxxxx Subordinated Debt Documents.
St. Xxxxx Subordinated Debt Documents - the Agreement for Purchase and
Sale dated January 23, 1998 between Borrower and St. Xxxxx, and all other
agreements, instruments and documents evidencing the St. Xxxxx Subordinated
Debt.
St. Xxxxx Subordination Agreement - the Subordination Agreement dated
as of the Closing Date executed by and between Lender and St. Xxxxx,
together with any and all amendments, substitutions and modifications
thereto.
Subordinated Debt - Indebtedness of Borrower that is subordinated to
the Obligations in a manner satisfactory to Lender.
Subsidiary - any corporation of which a Person owns, directly or
indirectly through one or more intermediaries, more than 50% of the Voting
Stock at the time of determination.
X-0-00
Xxxxxxxx Xxx Xxxxx - Xxxxxxxx Tangible Net Worth plus Subordinated
Debt.
Taxes - any present or future taxes, levies, imposts, duties, fees,
assessments, deductions, withholdings or other charges of whatever nature,
including, without limitation, income, receipts, excise, property, sales,
transfer, license, payroll, withholding, social security and franchise
taxes now or hereafter imposed or levied by the United States, or any
state, local or foreign government or by any department, agency or other
political subdivision or taxing authority thereof or therein and all
interest, penalties, additions to tax and similar liabilities with respect
thereto.
Term Loan - the Loan described in Section 1.2.1 of the Agreement.
Term Note - the Secured Promissory Note to be executed by Borrower on
or about the Closing Date in favor of Lender to evidence the Term Loan,
which shall be in the form of Exhibit A-1 to the Agreement.
Texas Finance Code - as defined in Section 2.1.3(A) of the Agreement.
Total Credit Facility - Nineteen Million Dollars ($19,000,000.00).
Total Liabilities - at any date means all amounts properly classified
as liabilities on a balance sheet at such date in accordance with GAAP,
plus all reserves for contingencies and all other potential liabilities for
which no reserves have previously been established on such balance sheet,
to the extent such amounts are not already classified as liabilities in
accordance with GAAP.
Total Revolving Credit Facility - Eight Million Dollars
($8,000,000.00).
Voting Stock - Securities of any class or classes of a corporation the
holders of which are ordinarily, in the absence of contingencies, entitled
to elect a majority of the corporate directors (or Persons performing
similar functions).
OTHER TERMS. All other terms contained in the Agreement shall have, when
the context so indicates, the meanings provided for by the Code to the extent
the same are used or defined therein.
CERTAIN MATTERS OF CONSTRUCTION. The terms "herein", "hereof" and
"hereunder" and other words of similar import refer to the Agreement as a whole
and not to any particular section, paragraph or subdivision. Any pronoun used
shall be deemed to cover all genders. In the computation of periods of time from
a specified date to a later specified date, the word "from" means "from and
including" and the words "to" and "until" each means "to but excluding." The
section titles, table of contents and list of exhibits appear as a matter of
convenience only and shall not affect the interpretation of the Agreement. All
references to statutes and related regulations shall include any amendments of
same and any successor statutes and regulations. All references to any of the
Loan Documents shall include any and all modifications thereto and
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any and all extensions or renewals thereof. Wherever the phrase "including"
shall appear in the Agreement, such word shall be understood to mean "including,
without limitation."
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LIST OF EXHIBITS
----------------
Exhibit A-1 Term Note
Exhibit A-2 Equipment Note
Exhibit B Borrower's and each Subsidiary's Business Locations
Exhibit C Jurisdictions in which Borrower and each Subsidiary is
Authorized to do Business
Exhibit D Capital Structure of Borrower
Exhibit E Corporate Names
Exhibit F Tax Identification Numbers of Borrower and Subsidiaries
Exhibit G Patents, Trademarks, Copyrights and Licenses
Exhibit H Contracts Restricting Borrower's Right to Incur Debts
Exhibit I Litigation
Exhibit J Capitalized Leases
Exhibit K Operating Leases
Exhibit L Pension Plans
Exhibit M Labor Contracts
Exhibit N Compliance Certificate
Exhibit O Permitted Indebtedness
Exhibit P Permitted Liens
Exhibit Q Initial Projections
Exhibit R Brokers
Exhibit S GECC Equipment
X-0-00
XXXXXXX X-0
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TERM NOTE
(See attached)
1
EXHIBIT A-2
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EQUIPMENT NOTE
(See attached)
1
