1
LOAN AGREEMENT
AGREEMENT, dated December 13 , 1994 , between Cap Rock Electric Cooperative,
Inc., ("Borrower"), a corporation organized and existing under the laws of the
State of Texas (the "State") and NATIONAL RURAL UTILITIES COOPERATIVE FINANCE
CORPORATION ("CFC"), a corporation organized and
existing under the laws of the District of Columbia,
RECITALS
WHEREAS, the Borrower has applied to CFC for three loans for the
purpose(s) set forth in Schedule 1 hereto and CFC is willing to make such a loan
to the Borrower on the terms and conditions stated herein; and
WHEREAS, the Borrower has agreed to enter into three loans and
to-execute three (3) Secured Promissory Notes (each representing a separate and
distinct loan with CFC) to evidence an indebtedness in the aggregate principal
amount of the CFC Commitment;
NOW, THEREFORE, for and in consideration of the premises and the
mutual covenants hereinafter contained, the parties hereto agree and bind
themselves as follows:
ARTICLE I
DEFINITIONS
Capitalized terms that are not defined herein shall have the meanings as set
forth in the Mortgage.
"Advance" or "Advances" shall mean advances by CFC to Borrower
pursuant to the terms and conditions of this Agreement.
"Amortization Basis Date" shall mean the first Payment Date following
the date of the first Advance,
"Business Day" shall mean any day that CFC is open for business,
"CFC Commitment" shall mean the total amount of money that CFC agrees
to lend to Borrower pursuant to the terms and conditions of this Agreement
pursuant to the loans and as evidenced by the Note or Notes and is in the amount
as set forth in Schedule 1 hereto.
"CFC Fixed Rate" shall mean such fixed rate as is then available for
loans similarly classified pursuant to CFC's policies and procedures then in
effect.
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"CFC Variable Rate" shall mean the rates established by CFC for
variable interest rate long-term loans similarly classified pursuant to the
long-term loan programs established by CFC from time to time.
"Conversion Request" shall mean a request of the Borrower's President,
General Manager or Board of Directors, in form and substance satisfactory to
CFC, that requests an interest rate conversion.
"Depreciation and Amortization Expense" shall mean an amount
constituting the depreciation and amortization of the Borrower as computed for
purposes of Form 7.
"Distributions" shall have the meaning defined in Section 5.1.
"Debt Service Coverage Ratio ("DSC")" shall mean the ratio determined
as follows: for any calendar year add (i) Patronage Capital and Operating
Margins, (ii) Non-Operating Margins-Interest, (iii) Interest Expense, (iv)
Depreciation and Amortization Expense for such year, and (v) cash received in
respect of generation and transmission and other capital credits, and divide the
sum so obtained by the sum of all payments of Principal and Interest Expense
during such calendar year; provided, however, that in the event that any
Long-Term Debt has been refinanced during such year the payments of Principal
and Interest Expense required to be made during such year on account of such
Long-Term Debt shall be based (in lieu of actual payments required to be made on
such refinanced Debt) upon the larger of (i) an annualization of the payments
required to be made with respect to the refinancing debt during the portion of
such year such refinancing debt is outstanding or (ii) the payment of Principal
and Interest Expense required to be made during the following year on account of
such refinancing debt.
"Equities and Margins" shall mean Borrower's equities and margins as
computed pursuant to generally accepted accounting principles.
"Equity" shall mean the aggregate of Borrower's Equities and Margins
as computed pursuant to generally accepted accounting principles.
"Form 7" shall mean the form so identified by CFC, or, if no such form
is applicable to the accounts of the Borrower, such reference shall apply to the
corresponding information otherwise determine in accordance with generally
accepted accounting principles.
"Interest Expense" shall mean an amount constituting the interest
expense with respect to Total Long-Term Debt of the Borrower as computed for
purposes of Form 7. In computing Interest Expense, there shall be added, to the
extent not otherwise included, an amount equal to 33-1/3% of the excess of
Restricted Rentals paid by the Borrower over 2% of the Borrower's Equities and
Margins.
"LCTC" shall mean the Loan Capital Term Certificate as described in Section be.
hereto.
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"Long-Term Debt" shall mean any amount included in Total Long-Term
Debt pursuant to generally accepted accounting principles. -
"Maturity Date" shall have the meaning as defined in the Note.
"Mortgage" shall have the meaning as described in Schedule 1 hereto.
"Mortgaged Property" shall have the meaning as defined in the
Mortgage.
"Non-Operating Margins-Interest" shall mean the amount of
non-operating margins-interest of Borrower as computed for purposes of Form 7.
"Note" or "Notes" shall mean a promissory note or notes executed by
the Borrower in the form of Exhibit A hereto which, in the aggregate, equal the
CFC Commitment.
"Patronage Capital and Operating Margins" shall mean the net amount of
operating revenue and patronage capital less the total cost of electric service
of the Borrower as computed for purposes of Form 7.
"Payment Date" shall mean the last day of each of the months referred
to in Schedule 1 hereto.
"Payment Notice" shall mean a notice furnished by CFC to Borrower that
indicates the precise amount of each payment of principal and interest and the
total amount of each payment.
"Principal" shall mean the amount of principal billed on account of
Total Long-Term Debt of Borrower as computed for purposes of Form 7.
"Termination Date" shall mean a date four years after the date hereof.
"Total Long-Term Debt" shall mean an amount constituting the long-term
debt of the Borrower as computed for purposes of Form 7.
"Total Utility Plant" shall mean the amount constituting the total
utility plant of the Borrower computed in accordance with generally accepted
accounting principles.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
Section 2. The Borrower represents and warrants that:
A. Good Standing. The Borrower is a corporation duly incorporated and
validly existing and in good corporate standing under the laws of the State, is
duly qualified in those states in which it is required to be qualified to
conduct its business and has corporate power to enter into and perform this
Agreement, to borrow hereunder and to give security as provided for herein.
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B. Authority. The execution, delivery and performance by the Borrower of
this Agreement, each Note (as hereinafter defined) and the -Mortgage (as defined
in Schedule 1 hereto) and the performance of the transactions contemplated
thereby have been duly authorized by all necessary corporate action and will not
violate any provision of law or of the Articles of Incorporation or By-Laws of
the Borrower or result in a breach of, or constitute a default under, any
agreement, indenture or other instrument to which the Borrower is a party or by
which it may be bound.
C. Litigation. There are no suits or proceedings pending or to the
knowledge of the Borrower threatened against or affecting the Borrower or its
properties which, if adversely determined, would have a material adverse effect
upon the financial condition or the business of the Borrower, The Borrower is
not, to its knowledge, in default with respect to any judgment, order, rule or
regulation of any court, governmental agency or other instrumentality which
would have a material adverse effect on the Borrower.
D. Financial Statements. The balance sheet of the Borrower as at the
date identified in Schedule 1 hereto, and the statement of operations of the
Borrower for the period ending on said date, heretofore furnished to CFC, are
complete and correct. Said balance sheet fairly presents the financial condition
of the Borrower as at said date and said statement of operations fairly reflects
its operations for the period ending on said date, The Borrower has no
contingent obligation or unusual forward or long-term commitments except as
specifically stated in said balance sheet or herein. There has been no material
adverse change in the financial condition or operations of the Borrower from
that set forth in said financial statements except changes disclosed in writing
to CFC prior to the date hereof.
E. Location of Office. The principal place of business of the Borrower and
the office where its records concerning accounts and contract rights are kept Is
identified in Schedule I hereto.
F. Location of Properties. All property owned by the Borrower is located in
the counties identified in Schedule 1 hereto.
G. No Other Liens. As to property which is presently included in the
description of Mortgaged Property (as that term is defined in the Mortgage) the
Borrower has not, without the prior written approval of CFC, signed any security
agreement or filed or permitted to be filed any financing statement with respect
to assets owned by it, other than security agreements and financing statements
running in favor of CFC, except as disclosed in writing to CFC prior to the date
hereof.
H. Required Approvals. No license, consent or approval of any governmental
agency or authority is required to enable the Borrower to enter into this
Agreement or to perform any of its obligations provided for herein except as
disclosed in Schedule 1 hereto.
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I. Survival. All representations and warranties made by the Borrower herein
or made in any certificate delivered pursuant hereto shall survive the making of
the Advances and the execution and delivery to CFC of the Note or Notes.
ARTICLE III
LOAN
Section 3.1. Advances. CFC agrees to make, and the Borrower agrees to
request, on the terms and conditions of this Agreement, Advances from time to
time at the main office of CFC, or at such other place as may be mutually agreed
upon, in an aggregate principal amount not to exceed the CFC Commitment.
On the Termination Date, CFC may stop advancing funds and limit the
CFC Commitment to the amount advanced prior to such date. The obligation of the
Borrower to repay the Advances on each loan shall be evidenced by the
appropriate Note in the principal amount of the unpaid principal amount of the
Advances from time to time outstanding. Each Note represents a separate and
distinct loan by and between Borrower and CFC pursuant to the terms of this
Agreement. The face amount of the Notes in the aggregate shall be equal to the
principal amount of the CFC Commitment, The Borrower shall give CFC written
notice of the date on which each Advance is to be made.
Section 3.2. Application of Advances. The Borrower shall give CFC
prior written notice of the date on which an Advance is to be made. Prior to an
Advance, Borrower shall notify CFC in writing how the Advance is to be applied
with respect to each Note. In the event Borrower fails to provide CFC with said
notice, the Advance shall be applied sequentially to each Note in the order they
are listed in Schedule I attached hereto.
Section 3.3. Interest Rate and Payment. Each Note shall be payable and bear
interest as follows:
A. Payments and Amortization. The Borrower, upon receipt of an invoice
relating to an Advance, shall promptly pay interest only on each Payment Date
until the first Payment Date of the first full quarter following the
Amortization Basis Date.
Thereafter, quarterly or monthly installments, as determined by CFC, of interest
and/or principal in the amounts shown in the Payment Notice, shall be paid on
each Payment Date; except that if not sooner paid, any amount due on account of
the unpaid principal, interest accrued thereon and fees, if any, shall be due
and payable on the Maturity Date. On or after the Amortization Basis Date, and
thereafter at least quarterly, CFC will furnish to the Borrower a Payment
Notice. Such Payment Notice shall be sent to the Borrower at least ten (10) days
before the next ensuing Payment Date.
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Section 3.4. Conversion of Interest Rates
A. CFC Variable Rate to a CFC Fixed Rate. For each loan, the Borrower
may at any time request to convert from the CFC Variable Rate to a CFC Fixed
Rate by submitting to CFC a Conversion Request. Each rate shall be equal to the
rate of interest offered by CFC in effect on the date of the Conversion Request.
The effective date of the new interest rate shall be a date determined by CFC
pursuant to its policies of general application following receipt of the
Conversion Request. Prior to the time when the CFC Fixed Rate is no longer
applicable, the Borrower may select the CFC Variable Rate or a CFC Fixed Rate.
B. CFC Fixed Rate to CFC Variable Rate. For each loan, the Borrower may
at its option at any time convert, at the discretion of CFC, a CFC Fixed Rate to
the CFC Variable Rate, if the Borrower: (I) submits a Conversion Request
requesting that the CFC Variable Rate apply to any outstanding loan balance on
the Note and future Advances pursuant thereto; and (ii) pays to CFC promptly
upon receipt of an invoice a conversion fee calculated pursuant to CFC's
long-term loan policies as established from time to time for similarly
classified long-term loans. The effective date of the CFC Variable Rate shall be
a date determined by CFC pursuant to its policies of general application
following receipt of the Conversion Request.
C. A CFC Fixed Rate to Another CFC Fixed Rate. For each loan and at the
discretion of CFC, the Borrower may at its option at any time convert any amount
outstanding on the Note from a CFC Fixed Rate to another CFC Fixed Rate if the
Borrower (i) submits a Conversion Request requesting that a CFC Fixed Rate apply
to any outstanding loan balance on the Note and (ii) pays to CFC promptly upon
receipt of an invoice any applicable conversion fee calculated pursuant to CFC's
long-term loan policies as established from time to time for similarly
classified long-term loans. The effective date of the new interest rate shall be
a date determined by CFC pursuant to its policies of general application
following receipt of the Conversion Request.
Section 3.5. Prepayment. The Borrower may at any time, on not less than
30 days' written notice to CFC, prepay any Note, in whole or in part, together
with the interest accrued to the date of prepayment and any prepayment premium
that CFC may from time to time prescribe.
ARTICLE IV
CONDITIONS OF LENDING
Section 4. The obligation of CFC to make any Advance hereunder is
subject to satisfaction of the following conditions:
A. Legal Matters. All legal matters incident to the consummation of the
transactions hereby contemplated shall he satisfactory to counsel for CFC and,
as to all matters of local law, to such local counsel as counsel for CFC may
retain.
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B. Documents. CFC shall have been furnished with executed copies,
satisfactory to CFC, of this Agreement, each Note and the Mortgage and
-certified copies, satisfactory to CFC, of all such corporate documents and
proceedings of the Borrower authorizing the transactions hereby contemplated as
CFC or its counsel shall require. CFC shall have received an opinion of counsel
for the Borrower addressing such other legal matters as CFC or its counsel shall
reasonably require.
C. Government Approvals. The Borrower shall have furnished to CFC true and
correct copies of all, certificates, authorizations and consents, including
without limitation the consents referred to in Section 2.H. hereof, necessary
for the execution, delivery or performance by the Borrower of this Agreement,
each Note and the Mortgage.
D. Representations and Warranties. The representations and warranties
contained in Article II shall (except as affected by the -transactions
contemplated by this Agreement) be true on the date of the making of each
Advance hereunder with the same effect as though such representations and
warranties had been made on such date; no Event of Default specified in Article
VI and no event which, with the lapse of time or the notice and lapse of time
specified in Article VI would become such an Event of Default, shall have
occurred and be continuing or will have occurred after giving effect to the
Advance on the books of the Borrower; there shall have occurred no material
adverse change in the business or condition, financial or otherwise, of the
Borrower; and nothing shall have occurred which in the opinion of CFC materially
and adversely affects the Borrower's ability to meet its obligations hereunder,
E. Mortgage Filing. The Mortgage shall have been duly recorded as a
mortgage on real property and duly filed, recorded or indexed as a security
interest in personal property wherever CFC shall have requested, all in
accordance with applicable law, and the Borrower shall have caused satisfactory
evidence thereof to be furnished to CFC.
F. Special Conditions. The Borrower shall have complied with any special
conditions listed in Schedule 1 hereto.
C. Requisitions. The Borrower will requisition all Advances by submitting
its requisition to CFC in form and substance satisfactory to CFC. Requisitions
shall be made only for the purpose(s) set forth herein. The Borrower agrees to
apply the proceeds of the Advances in accordance with its loan application with
such modifications as may be mutually agreed.
ARTICLE V
AFFIRMATIVE COVENANTS
Section 5. After the date hereof and until payment in full of each Note and
performance of all obligations of the Borrower hereunder, the Borrower agrees
that it will:
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A. Membership. Remain a member in good standing of CFC
B. Financial Ratios; Design of Rates. The Borrower, subject to events
in the judgment of CFC to be beyond the control of the Borrower, shall so
operate and manage its business as to achieve a DSC of not less than 1.35, said
ratio being determined by averaging the two highest annual ratios during the
most recent three calendar years. The Borrower shall design its rates so that
such DSC ratio will be achieved. The Borrower shall not decrease its rates if it
has failed to achieve a DSC of 1.35 for the calendar year prior to such
reduction subject only to an order from a regulatory body properly exercising
jurisdiction over the Borrower.
C. Annual Certificates. Within ninety (90) days after the close of each
calendar year, commencing with the year following the year in which the initial
Advance hereunder shall have been made, deliver to CFC a written statement
signed by its General Manager, stating that during such year, and that to the
best of said person's knowledge, the Borrower has fulfilled all of its
obligations under this Agreement, the Note, and the Mortgage throughout such
year or, if there has been a default in the fulfillment of any such obligations,
specifying each such default known to said person and the nature and status
thereof. In addition, the Borrower shall deliver to CFC within ninety (90) days
of CFC's written request, which shall be no more frequently than once every
year, a certification regarding the condition of the Mortgaged Property both in
a form and prepared by a professional engineer satisfactory to CFC.
D. Notice of Change in Place of Business. Notify promptly CFC in writing of
any change in location of its principal place of business or the office where
its records concerning accounts and contract rights are kept.
B. Loan Certificate Purchase. Purchase an LCTC for each loan, if
required, in an amount not to exceed three percent of the face amount of each
Note at a purchase price of 100% of the principal amount thereof. The purchase
price of each LCTC, if any, shall be calculated at the time of the initial
Advance on each loan pursuant to CFC's policies as established from time to time
for loans similarly classified. Such purchase shall be paid for in equal
quarterly installments after the date of the initial Advance on each loan
pursuant to CFC's policies. CFC agrees to deliver the LCTC within ninety days
following the date at which the LCTC has been paid for in full.
F. Limitations on: System Extensions and Additions; Operations and
Maintenance Contracts; Power Purchase Contracts; Power Sales Contracts. Unless
the Borrower shall at the time have an Equity of at least 40% or shall have
achieved a DSC of at least 1.35 for each of the last two calendar years, the
Borrower will not, without the prior written consent of CFC (a) construct, make,
lease, purchase or otherwise acquire any extensions or additions to its system
which provide direct service to any ultimate consumer having an anticipated or
contract demand in excess of twenty-five (25) percent of the Borrower's maximum
system electrical demand recorded during the past twelve months; (h) enter into
any contract or contracts for the sale to the ultimate
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consumer of electric power and energy in excess of twenty-five (25) percent of
the Borrower's maximum system demand for the prior year; (c) subject to the
terms of the Mortgage, enter into any contract or contracts for the use by
others of all or a substantial part of its property; and (d) enter into any
contract or contracts for the purchase of electric power or energy which would
alter the source for the prior year of more than 25% of the Borrower's source of
wholesale power or for any transmission, interconnection or pooling
arrangements.
C. Financial Books; Financial Reports; Right of Inspection. The
Borrower will at all times keep, and safely preserve, proper books, records and
accounts in which full and true entries will be made of all of the dealings,
business and affairs of the Borrower, in accordance with generally acceptable
accounting principles. When requested by CFC, the Borrower will prepare and
furnish CFC from time to time hereunder not later than the last day of each
month financial and statistical reports on its condition and operations for the
previous month, Such reports shall be in such form and include such information
as may be specified by CFC, including without limitation an analysis of
Borrower's revenues, expenses and consumer accounts, The Borrower will cause to
be prepared and furnished to CFC from time to time hereunder, at least once
during each 12-month period during the term hereof, a full and complete report
of its financial condition and of its operations as of the end of the calendar
year in form and substance satisfactory to CFC, audited and certified by
independent certified public accountants nationally recognized or otherwise
satisfactory to CFC and accompanied by a report of such audit in form and
substance satisfactory to CFC. Such report shall be furnished within 120 days of
the end of the such calendar year. CFC, through its representatives, shall at
all times during reasonable business hours and upon prior notice have access to,
and the right to inspect and make copies of, any or all books, records and
accounts, and any or all invoices, contracts, leases, payrolls, canceled checks,
statements and other documents and papers of every kind belonging to or in the
possession of the Borrower or in anyway pertaining to its property or business.
H. Limitations on Mergers and Sale, Lease or Transfer of Capital
Assets; Application of Proceeds. Without the prior written consent of CFC, the
Borrower will not consolidate with, or merge., or sell all or substantially all
of its business or assets, to another entity or person. If no Event of Default
(and no event which with notice or lapse of time and notice would become an
Event of Default) shall have occurred and be continuing, borrower may, without
the prior written consent of CFC, sell, lease or transfer any capital asset in
exchange for fair market value consideration paid to the Borrower if the value
of such capital asset is less than 5% of Total Utility Plant and the aggregate
value of capital assets sold, leased or transferred in any 12-month period is
less than 10% of Total Utility Plant. Subject to the terms of the Mortgage, if
the Borrower does sell, lease or transfer any capital assets, then the proceeds
thereof (less ordinary and reasonable expenses incident to such transaction)
shall immediately (i) be applied as a prepayment of the Notes, to such
installments as may be designated by CFC at the time of any such prepayment;
(ii) in the case of dispositions of equipment, material or scrap, applied to the
purchase of other property useful
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in the Borrower's business, although not necessarily of the same kind as the
property disposed of, which shall forthwith become subject to the lien of the
Mortgage; or (iii) applied to the acquisition or construction of other property
or in reimbursement of the costs of such property.
I. Limitation on Dividends, Patronage Refunds and Other Cash
Distributions. Without the prior written consent of CFC, the Borrower will not,
in any calendar year, declare or pay any dividends, or pay or determine to pay
any patronage refunds, or retire any patronage capital or make any other cash
distributions (such dividends, refunds, retirements and other distributions
being hereinafter collectively called "Distributions"), to its members,
stockholders or consumers if after giving effect to any such Distribution the
total Equity of the Borrower will not equal or exceed 40% of its total assets
and other debits; provided, however, the Borrower may make Distributions
(exclusive of any Distributions to the estates of deceased patrons) up to an
amount not in excess of 25% of the Patronage Capital and Margins of the Borrower
in the next preceding year; provided, further, however, that in no event will
the Borrower make any Distributions if there is unpaid when due any installment
of principal of (premium, if any) or interest on its Notes, if the Borrower is
otherwise in default hereunder or if, after giving effect to any such
Distribution, the Borrower's total current and accrued assets would be less than
its total current and accrued liabilities. Ror the purpose of this section a
"cash distribution" shall be deemed to include any general cancellation or
abatement of charges for electric energy or services furnished by the Borrower,
but not the repayment of a membership fee upon termination of s membership and
not the rebate of an abatement of costs incurred by the Borrower, such as a
reduction of wholesale power cost previously incurred.
J. Limitations on Loans, Investments and Other Obligations. The
Borrower will not, without the prior written consent of CFC, hereafter make any
loan or advance to, or make any investment in, or purchase or make any
commitment to purchase any stock, bonds, notes or other securities of, or
guaranty, assume or otherwise become obligated or liable with respect to the
obligations of, any other person, firm or corporation, except (i) securities or
deposits issued, guaranteed or fully insured as to payment by the United States
Government or any agency thereof, (ii) capital term certificates or other
securities of CFC, (iii) capital credits, (iv) loans, deposits, advances ,
Investments , securities and obligations which the borrower has, prior to; the
date hereof ,. committed itself to make, purchases. or undertake , as the case
may be, and as to which the Borrower has given the notice in writing prior to
the date hereof, and (v) such other loans, guarantees, deposits, advances,
investments and obligations as may from time to time to be made, purchased or
undertaken by the Borrower, provided, however, that the aggregate cost of
investments, plus the total unpaid principal amount of loans, guarantees,
deposits, advances and obligations, permitted under this clause (v) shall not at
any time exceed the greater of 10% of Total Utility Plant or 50% of total
Equities and Margins.
K. Special Affirmative Covenants. The Borrower agrees to comply with any
special affirmative covenant(s) identified in Schedule 1 hereto.
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ARTICLE VI
EVENTS OF DEFAULT
Section 6. The following shall be Events of Default under this
Agreement:
A. Representations and Warranties. Any representation or warranty made by
the Borrower in Article II hereof or any certificate furnished to CFC hereunder
shall prove to have been incorrect in any material respect at the time made and
shall at the time in question be untrue or incorrect in any material respect and
remain uncured;
B. Payment. Default shall be made in the payment of or on account of
interest on or principal of any of the Note or Notes when and as the-same shall
be due and payable, whether by acceleration or otherwise, which shall remain
unsatisfied for five (5) Business Days;
C. Other Covenants. Default by the Borrower in the observance or
performance of any other covenant or agreement contained in this Loan Agreement,
in, any of the Notes or the Mortgage, which shall remain unremedied for 30
calendar days after written notice thereof shall have been given to the Borrower
by CFC;
D. Corporate Existence. The Borrower shall forfeit or otherwise be deprived
of its corporate charter, franchises, permits, easements, consents or licenses
required to carry on any material portion of its business;
E. Other Obligations. Default by the Borrower in the payment of any
obligation, whether direct or contingent, for borrowed money or in the
performance or observance of the terms of any instrument pursuant to which such
obligation was created or securing such obligation;
F. Bankruptcy. A court having jurisdiction in the premises shall enter
a decree or order for relief in respect of the Borrower in an involuntary case
under any applicable bankruptcy, insolvency or other similar law now or
hereafter in effect, or appointing a receiver, liquidator, assignee. custodian,
trustee, sequestrator or similar official, or ordering the winding up or
liquidation of its affairs, and such decree or order shall remain unstayed arid
in effect for a period of ninety (90) consecutive days or the Borrower shall
commence a voluntary case under any applicable bankruptcy, insolvency or other
similar law now or hereafter in effect, or under any such law, or consent to the
appointment or taking possession by a receiver, liquidator, assignee, custodian
or trustee, of a substantial part of its property, or make any general
assignment for the benefit of creditors; or
C. Dissolution or Liquidation. Other than as provided in subsection F.
above, the dissolution or liquidation of the Borrower, or failure by the
Borrower promptly to forestall or remove any execution, garnishment or
attachment of such consequence as will impair its ability to continue its
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business or fulfill its obligations and such execution, garnishment or
attachment shall not be vacated within 30 days. The term "dissolution or
liquidation of the Borrower", as used in this subsection, shall not be construed
to include the cessation of the corporate existence of the Borrower resulting
either from a merger or consolidation of the Borrower into or with another
corporation following a transfer of all or substantially all its assets as an
entirety, under the conditions permitting such actions.
ARTICLE VII
REMEDIES
Section 7. If any of the Events of Default listed in Section 6 hereof
shall occur after the date of this Agreement and shall not have been remedied,
then CFC may pursue all rights and remedies available to CFC that are
contemplated by this Agreement or the Mortgage in the manner, upon the
conditions, and with the effect provided in this Agreement or the Mortgage,
including, but not limited to, a suit for specific performance, injunctive
relief or damages. Nothing herein shall limit the right of CFC to pursue all
rights and remedies available to a creditor following the occurrence of an Event
of Default listed in Section 6 hereof. Each right, power and remedy of CFC shall
be cumulative and concurrent, and recourse to one or more rights or remedies
shall not constitute a waiver of any other right, power or remedy.
ARTICLE VIII
MISCELLANEOUS
Section 8.1. Notices. All notices, requests and other communications provided
for herein including, without limitation, any modifications of, or waivers,
requests or consents under, this Agreement shall he given or made in writing
(including, without limitation, by miscellaneous) and delivered to the intended
recipient at the "Address for Notices" specified below; or, as to any party, at
such other address as shall he designated by such party in a notice to each
other party. Except as otherwise provided in this Agreement, all such
communications shall be deemed to have been duly given when transmitted by
telecopier or personally delivered or, in the case of a mailed notice, upon
receipt, in each case given or addressed as provided for herein. The Address for
Notices of the respective parties are as follows:
National Rural Utilities
Cooperative Finance Corporation
Woodland Park
2201 Cooperative Way
Herndon, Virginia 22071
Fax: (703) 709.6776
Attention: Loan Officer
The Borrower:
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The address set forth in
Schedule 1 hereto
Section 8.2, Expenses. The Borrower will pay all costs and expenses of
CFC, including reasonable fees of counsel, incurred in connection with the
enforcement of this Agreement, each Note, the Mortgage and the other instruments
provided for herein or with the preparation for such enforcement if CFC has
reasonable grounds to believe that such enforcement nay be necessary.
Section 8.3, Late Payments. If payment of any amount due under the
terms of each Note is not received at CFC's office in Herndon, Virginia, or such
other location as CFC may designate to the Borrower within five (5) Business
Days after the due date thereof or such other time period as CFC may prescribe
from time to time in its policies of general application in connection with any
late payment charge (such unpaid amount of principal and/or interest being
herein called the "delinquent amount", and the period beginning after such due
date until payment of the delinquent amount being herein called the
"late-payment period"), the Borrower will pay to CFC, in addition to all other
amounts due under the terms of each Note, the Mortgage and this Agreement, any
late-payment charge as may be fixed by CFC from time to time on the delinquent
amount for the late-payment period.
Section 8.4. Filing Fees. To the extent permitted by law, the Borrower
agrees to pay all expenses of CFC (including the fees and expenses of its
counsel) in connection with the filing or recordation of all financing
statements and instruments as may be required by CFC in connection with this
Agreement, including, without limitation, all documentary stamps, recordation
and transfer taxes and other costs and taxes incident to recordation of any
document or instrument in connection herewith. Borrower agrees to save harmless
and indemnify CFC from and against any liability resulting from the failure to
pay any required documentary stamps, recordation and transfer taxes, recording
costs, or any other expenses incurred by CFC in connection with this Agreement.
The provisions of this subsection shall survive the execution and delivery of
this Agreement and the payment of all other amounts due hereunder or due on each
Note.
Section 8.5, No Waiver. No failure on the part of CFC to exercise, and
no delay in exercising, any right hereunder shall operate as a waiver thereof
nor shall any single or partial exercise by CFC of any right hereunder preclude
any other or further exercise thereof or the exercise of any other right.
SECTION 8.6, GOVERNING LAW. THIS AGREEMENT AND EACH NOTE SHALL BE DEEMED TO
BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE WITH, THE LAWS OR THE COMMONWEALTH
OF VIRGINIA.
<PAGE>
Section 8.7. Holiday Payments. If any payment to be made by the
Borrower hereunder shall become due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day and such extension of
time shall be included in computing any interest in respect of such payment.
Section 8.8. Rescission Fee. The Borrower may elect not to borrow all
or any portion of the CFC Commitment in which event CFC shall release the
Borrower from its obligations hereunder, provided the Borrower complies with
such terms and conditions as CFC may impose for such release including, without
limitation, payment of any rescission fee that CFC may from time to time
prescribe.
Section 8.9. Modifications. No modification or waiver of any provision
of this Agreement or each Note, and no consent to any departure by Borrower
therefrom, shall in any event be effective unless the same shall be in writing
by the party granting such modification, waiver or consent.
Section 8.10. Merger and Integration. This Agreement and the attached
exhibits and matters incorporated by reference contain the entire agreement of
the parties hereto with respect to the matters covered and the transactions
contemplated hereby.
Section 8.11. Headings. The headings and sub-headings contained in the
titling of this Agreement are intended to be used for convenience only and do
not constitute part of this Agreement.
Section 8.12. Severability. If any term, provision or condition, or any
part thereof, of this Agreement, each Note or the Mortgage shall for any reason
be found or held invalid or unenforceable by any governmental agency or court of
competent jurisdiction, such invalidity or unenforceability shall not affect the
remainder of such term, provision or condition nor any other term, provision or
condition, and this Agreement, each Note, and the Mortgage shall survive and be
construed as if such invalid or unenforceable term, provision or condition had
not been contained therein.
Section 8.13. Right of Setoff. Upon the occurrence and during the
continuance of any Event of Default, CFC is hereby authorized at any tune and
from time to time, without prior notice to the Borrower, to exercise rights of
setoff or recoupment and apply any and all amounts held, or hereafter held, by
CFC or owed to the Borrower or for the credit or account of the Borrower against
any and alt of the obligations of the Borrower now or hereafter existing
hereunder or under the Note. CFC agrees to notify the Borrower promptly after
any such setoff or recoupment and the application thereof, provided that the
failure to give such notice shall not affect the validity of such setoff,
recoupment or application. The rights of CFC under this section are in addition
to any other rights and remedies (including other rights of setoff or
recoupment) which CFC may have. Borrower waives all rights of set off,
deduction, recoupment or counterclaim.
<PAGE>
Section 8.14. Schedule 1. Schedule 1 attached hereto is
an integral part of this Agreement.
Section 8.15 Prior Loan Documents, It is understood and agreed that with respect
to all long-term loan agreements previously entered into by and between CFC
and Borrower and all promissory notes thereto secured under the Mortgage
(both hereinafter being referred to as "Prior Loan Documents") the Borrower
shall be required, after the date hereof, to meet reporting and financial
covenants as set forth in this Agreement rather than those set forth in the
Prior Loan Documents. In the event of any conflict between any reporting
and financial covenant set forth in a Prior Loan Document and any reporting
and financial covenant in this Agreement, the requirements as set forth in
this Agreement shall apply. Nothing in this section shall, however,
eliminate or modify any special condition, special affirmative covenant or
special negative covenant, if any, unless specifically agreed to in writing
by CFC. Furthermore, the interest rate options available to Borrower as set
forth in this Agreement shall supersede the interest rate options as set
forth in any Prior Loan Documents.
<PAGE>
IN WITNESS WHEREOF, the parties hereto have caused this Agreement
to be duly executed as of the day and year first above written.
CAP ROCK ELECTRIC COOPERATIVE, INC.
(SEAL)
By: /s/ Russell E. Jones
President
Attest: Alfred Schwartz
Secretary
NATIONAL RURAL UTILITIES COOPERATIVE FINANCE CORPORATION
(SEAL(
By: /s/ Not Legible
Governor
Attest: /s/ Robin C. Reed
Assistant Secretary-Treasurer
<PAGE>
SCHEDULE 1
1.. The purpose of these loans is to fund ongoing construct ion of
distribution facilities.
2. The Mortgage shall mean the Restated Mortgage and Security Agreement,
dated as of March 30, 1993, between the Borrower and CFC, as it may
have been or shall be supplemented, amended, consolidated, or restated
from time to time.
3. The date of the Borrower's balance sheet referred to in Section 2.D, is
12/31/93.
4. The principal place of business of the Borrower referred to in Section
2.E. is 500 West Wall, Suite 400, Midland, TX 79701-1601.
5. All of the property of the Borrower is located in the counties of
Andrews , Borden, Dawson, Ector, Glasscock, Howard, Irion, Martin,
Midland, Reagan, Sterling, Tom Green and Upton in the state of Texas.
6. The governmental authority referred to in Section 2.H. is N/A.
7. The Borrower selects the following number of Notes (each Note
representing a separate loan with CFC), the amount of each Note, and
the Maturity Date for each Note.
<TABLE>
<S> <C> <C> <C>
-----------------------------------------------------------------------------------------------------------
Loan Note Note Term
Designation Amount Maturity Date
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
TX107-A-9039 $5,072,000.00 35 years from the date hereof.
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
TX1O7-A-9O40 $5,072,000.00 35 years from the date hereof.
-----------------------------------------------------------------------------------------------------------
-----------------------------------------------------------------------------------------------------------
TX1O7-A-904l $5,072,000.00 35 years from the date hereof. -
-----------------------------------------------------------------------------------------------------------
</TABLE>
8 . The months relating to the Payment Date are February, May, August and
November
9. Amortization of Advances shall be based upon the Borrower's selection
in writing, prior to the first Advance or as appropriate after the
first Advance, of either of the methods indicated below:
level principal
XXX level debt service
<PAGE>
10. The special condition(s) referred to in Section 4.R. is (are): N/A.
11. The special affirmative covenant(s) referred to in Section 5.H. is (are) as
follows: N/A.
12. The address of the Borrower referred to in Section 8.1. is 500 West Wall,
Suite 400, Midland, TX 79701-1601,
<PAGE>
SECURED PROMISSORY NOTE
$ December 13, 1994
a corporation ("Borrower"), for value received promises to pay, without
setoff, deduction, recoupment or counterclaim, to the order of NATIONAL
RURAL UTILITIES COOPERATIVE FINANCE CORPORATION ("Payee") at the Payee's
main office or such other place as designated by the Payee, in lawful money
of the United States, the sum of the aggregate unpaid principal amount of
all Advances made by the Payee pursuant to the Loan Agreement, dated as of
even date herewith, between the Borrower and the Payee as it may be amended
from time to time (the "Loan Agreement"), on the dates provided in the Loan
Agreement (except that if not sooner paid, any balance shall be due and
payable on a date years. after the date hereof, such date being the
Maturity Date) , with interest thereon in like money from the respective
dates of each Advance (as defined in the Loan Agreement) hereunder, at the
rate or rates and payable at the times provided in said Loan Agreement
together with any other amount payable under the Loan Agreement.
This Note is secured under a Mortgage and Security Agreement dated as
of , between the Borrower and the Payee, as it may have been or shall be
supplemented, amended, consolidated or restated from time to time ("Mortgage").
This Note is the Note referred to in, and has been executed and delivered
pursuant to, the Loan Agreement.
The principal hereof and interest accrued thereon and any other amount
due under the Loan Agreement may be declared to be forthwith due and payable in
the manner, upon the conditions, and with the effect provided in the Mortgage or
the Loan Agreement.
The Borrower waives demand, presentment for payment, notice of
dishonor, protest, notice of protest, and notice of non-payment of this Note.
IN WITNESS WHEREOF the Borrower has caused this Note to be signed in
its corporate name and its corporate seal to be hereunto affixed and to be
attested by its duly authorized officers, all as of the day and year first above
written.
CAP ROCK ELECTRIC COOPERATIVE, INC.
-----------------------------------
(Name of Borrower)
(SEAL)
By: /s/ Russell E. Jones
(President)
Attest: /s/ Alfred Schwartz
----------------------------
(Secretary)
Loan No.:
--------------------------------
