<PAGE>
U.S. SECURITIES AND EXCHANGE COMMISSION
WASHINGTON, D.C. 20549
FORM 10-QSB
(MARK ONE)
[X] QUARTERLY REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT OF
1934
FOR THE QUARTERLY PERIOD ENDED June 30, 1998
---------------------------------
[ ] TRANSITION REPORT UNDER SECTION 13 OR 15(d) OF THE SECURITIES EXCHANGE ACT
OF 1934
FOR THE TRANSITION PERIOD FROM _______________________ TO ____________________.
COMMISSION FILE NUMBER 0-18205
------------------
OEC COMPRESSION CORPORATION
- -------------------------------------------------------------------------------
(Exact name of small business issuer as specified in its charter)
Oklahoma 73-1345732
- -------------------------------------------------------------------------------
(State or other jurisdiction (IRS Employer
of incorporation or organization) Identification No.)
2501 Cedar Springs Road, Suite 600, Dallas, Texas 75201
- -------------------------------------------------------------------------------
(Address of principal executive offices) (Zip Code)
214-953-9560
- -------------------------------------------------------------------------------
(Issuer's telephone number)
CHECK WHETHER THE ISSUER (1) FILED ALL REPORTS REQUIRED TO BE FILED BY
SECTION 13 OR 15(d) OF THE EXCHANGE ACT DURING THE PAST 12 MONTHS (OR FOR SUCH
SHORTER PERIOD THAT THE REGISTRANT WAS REQUIRED TO FILE SUCH REPORTS), AND (2)
HAS BEEN SUBJECT TO SUCH FILING REQUIREMENTS FOR THE PAST 90 DAYS.
YES X NO
--- ---
Number of Shares of Common Stock Outstanding on August 14, 1998 -, 29,161,643
Transitional Small Business Format (Check one): Yes ; No X
--- ---
<PAGE>
OEC COMPRESSION CORPORATION
TABLE OF CONTENTS
PAGE
----
PART I
FINANCIAL INFORMATION:
Item 1 - Financial Statements
Consolidated Balance Sheets
June 30, 1998 and December 31, 1997............................. 3
Consolidated Statements of Operations
Three and Six Months Ended June 30, 1998 and 1997............... 4
Consolidated Statements of Cash Flows
Six Months Ended June 30, 1998 and 1997......................... 5
Notes to Consolidated Financial Statements....................... 7
Item 2 - Management's Discussion and Analysis of the
Consolidated Financial Statements............................... 8
PART II
OTHER INFORMATION:
Item 6 - (a) Exhibits..................................................... 11
Item 6 - (b) Reports on Form 8-K.......................................... 11
Signatures................................................................ 12
2
<PAGE>
OEC COMPRESSION CORPORATION
CONSOLIDATED BALANCE SHEETS
<TABLE>
JUNE 30, DECEMBER 31,
1998 1997
--------- ------------
UNAUDITED
(In thousands)
<S> <C> <C>
Current Assets:
Cash and cash equivalents................................. $ 6 $ 1
Accounts receivable, less allowance for
doubtful accounts of $124 and $75 in 1998
and 1997, respectively................................... 2,774 2,782
Income tax receivable .................................... 188 212
Compressors and compressor parts inventory................ 4,208 2,674
Other..................................................... 475 282
------- -------
Total current assets.................................... 7,651 5,951
------- -------
Property and equipment, net (Note 2)........................ 87,495 76,888
Note receivable - related party............................. 337 332
Goodwill and other intangibles, net of amortization
of $1,895 in 1998 and $1,819 in 1997....................... 1,707 1,175
Other assets, net........................................... 1 19
------- -------
Total assets............................................ $97,191 $84,365
------- -------
------- -------
Current Liabilities:
Current portion of long-term debt......................... $ -- $ 5
Current portion of capital lease payable.................. 342 251
Accounts payable and accrued liabilities.................. 3,068 4,435
------- -------
Total current liabilities................................... 3,410 4,691
Long-term debt.............................................. 50,349 39,076
Capital lease obligation.................................... 1,520 213
Deferred income taxes....................................... 10,515 10,142
Other....................................................... 89 90
------- -------
Total Liabilities........................................... 65,883 54,212
------- -------
Minority Interest........................................... 1,950 1,418
Commitments (Note 4)
Stockholders' Equity:
Preferred stock, $1.00 par value, 1,000,000
shares authorized, none issued........................... -- --
Common stock, $.01 par value, 60,000,000 shares
authorized, 29,170,710 and 29,080,710 shares
issued and 29,161,643 and 29,071,643 outstanding
in 1997 and 1998, respectively........................... 292 290
Additional paid-in capital................................ 31,840 31,797
Accumulated deficit ...................................... (2,765) (3,343)
Treasury stock, at cost (9,067 shares in 1998 and
1997, respectively)...................................... (9) (9)
------- -------
Total stockholders' equity................................ 29,358 28,735
------- -------
Total Liabilities and Stockholders' Equity.............. $97,191 $84,365
------- -------
------- -------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
3
<PAGE>
OEC COMPRESSION CORPORATION
CONSOLIDATED STATEMENTS OF OPERATIONS
UNAUDITED
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------------- ----------------------
1998 1997 1998 1997
------- ------ ------- ------
(In thousands, except for per share amounts)
<S> <C> <C> <C> <C>
Revenues:
Compressor rentals and service fees $ 5,850 $1,755 $11,093 $3,427
Compressor sales and re-manufacturing 187 239 407 528
Oil & gas sales 523 574 1,193 1,188
------- ------ ------- ------
Total revenues 6,560 2,568 12,693 5,143
------- ------ ------- ------
Expenses:
Operating costs - compressors 2,310 630 4,350 1,337
Cost of compressor sales and re-manufacturing 172 232 405 464
Operating costs - oil and gas 172 184 396 376
Depreciation, depletion and amortization 1,311 642 2,712 1,229
General and administrative 1,008 723 1,802 1,350
------- ------ ------- ------
Total expenses 4,973 2,411 9,665 4,756
------- ------ ------- ------
Income from operations 1,587 157 3,028 387
------- ------ ------- ------
Other income (expense):
Gain on sale of assets 5 -- 5 --
Interest income and other 70 1 100 1
Interest expense (1,053) (209) (2,042) (338)
Minority interest in results of oil and gas operations (34) -- (70) --
------- ------ ------- ------
(1,012) (208) (2,007) (337)
------- ------ ------- ------
Income (loss) before income taxes and extraordinary item 575 (51) 1,021 50
Income tax (expense) benefit (224) 19 (401) (19)
------- ------ ------- ------
Net income (loss) before extraordinary item 351 (32) 620 31
------- ------ ------- ------
Extraordinary item:
Write off of unamortized debt issue costs
on debt retirement (net of $28 tax) -- -- (42) --
------- ------ ------- ------
Net income (loss) $ 351 $ (32) $ 578 $ 31
------- ------ ------- ------
------- ------ ------- ------
Basic and diluted net income before
Extraordinary item per common share $ .01 $ .00 $ .02 $ .00
------- ------ ------- ------
------- ------ ------- ------
Extraordinary item $ .00 $ .00 $ .00 $ .00
------- ------ ------- ------
------- ------ ------- ------
Basic and diluted income per common share $ .01 $ .00 $ .02 $ .00
------- ------ ------- ------
------- ------ ------- ------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
4
<PAGE>
OEC COMPRESSION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS
UNAUDITED
<TABLE>
SIX MONTHS ENDED JUNE 30,
-------------------------
1998 1997
-------- -------
(In thousands)
<S> <C> <C>
Cash flows from operating activities:
Net income................................................ $ 578 $ 31
Adjustments to reconcile net income to net cash
provided by operating activities:
Depletion, depreciation, and amortization................. 2,712 1,229
Accretion of discount on debt............................. 24 --
Write off of unamortized debt issue costs................. 42 --
Deferred income taxes..................................... 401 (77)
Minority interest in results of oil and gas operations.... 70 --
Gain on sale.............................................. (5) --
Changes in operating assets and liabilities:
Accounts receivable and other.......................... 12 (37)
Notes receivable....................................... 13 2
Compressor and compressor parts inventory.............. (1,534) (1,285)
Accounts payable and accrued liabilities............... (1,950) (201)
Other.................................................. (174) (107)
-------- -------
Net cash provided by (used in) operating activities.... 189 (445)
-------- -------
Cash flows from investing activities:
Acquisitions of compressor and other equipment............ (11,652) (4,463)
Proceeds from disposition of compressor
and other equipment.................................... 12 --
Proceeds from disposition of oil and gas properties....... 666 --
Additions to oil and gas properties....................... (265) (606)
-------- -------
Net cash used in investing activities.................. (11,239) (5,069)
-------- -------
Cash flows from financing activities:
Proceeds of long-term debt................................ 36,042 7,527
Payments on long-term debt................................ (24,215) (2,009)
Payments on capital lease payable......................... (231) --
Debt issue costs.......................................... (686) (38)
Proceeds from stock transactions.......................... 45 30
Capital contributions..................................... 100 --
-------- -------
Net cash provided by financing activities.............. 11,055 5,510
-------- -------
Net increase (decrease) in cash and cash equivalents........ 5 (4)
Cash and cash equivalents, beginning of period.............. 1 10
-------- -------
Cash and cash equivalents, end of period.................... $ 6 $ 6
-------- -------
-------- -------
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
5
<PAGE>
OEC COMPRESSION CORPORATION
CONSOLIDATED STATEMENTS OF CASH FLOWS - CONTINUED
UNAUDITED
<TABLE>
SIX MONTHS ENDED JUNE 30,
-------------------------
1998 1997
-------- -------
(In thousands)
<S> <C> <C>
Supplemental disclosure of cash flow information:
Interest paid............................................. $ 1,526 $ 393
-------- -------
-------- -------
Income taxes paid......................................... $ -- $ 5
-------- -------
-------- -------
Non-Cash investing and financing activities:
Capital leases of compressor equipment................. $ 1,629 $ --
Contribution of oil and gas properties by minority
interest owner....................................... $ 362 $ --
</TABLE>
The accompanying notes are an integral part of the
consolidated financial statements.
6
<PAGE>
OEC COMPRESSION CORPORATION
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS
UNAUDITED
NOTE 1 ORGANIZATION AND BASIS OF PRESENTATION
OEC Compression Corporation, formerly Equity Compression Services
Corporation, formerly Hawkins Energy Corporation (the "Company") is engaged
in the leasing, contract management, outsourcing, re-manufacturing and direct
sale of gas compression equipment to operators of producing natural gas wells
and gas gathering systems and in the production of natural gas and oil. Its
principal geographical operating areas lie within the states of Alabama,
Mississippi, Louisiana, Oklahoma, Arkansas, Kansas, and Texas.
The consolidated financial statements include the accounts of the
Company, its wholly owned subsidiaries Ouachita Energy Corporation
("Ouachita"), Equity Leasing Corporation, Sunterra Energy Corporation
("Sunterra") and its oil and gas venture Sunterra Petroleum Company, L.L.C.,
"Sunterra L.L.C."), which was 73% owned at June 30, 1998. All intercompany
transactions have been eliminated.
In the opinion of the Company, the accompanying financial statements
contain all adjustments necessary (all of which are of a normal recurring
nature) to present fairly the financial position of OEC Compression
Corporation and its wholly owned subsidiaries as of June 30, 1998, and the
results of its operations and cash flows for the periods ended June 30, 1998
and 1997. Certain prior period amounts have been reclassed to conform to 1998
presentation.
The financial statements should be read in conjunction with the
Company's Form 10-KSB for the year ended December 31, 1997. The year-end
Consolidated Balance Sheet data was derived from audited financial
statements, but does not include all disclosures required by generally
accepted accounting principles.
NOTE 2 PROPERTY AND EQUIPMENT
<TABLE>
<CAPTION>
JUNE 30, DECEMBER 31,
1998 1997
-------- --------
(In thousands)
<S> <C> <C>
Land and building. . . . . . . . . . . . . . . . . $ 1,850 $ 1,693
Compressor equipment . . . . . . . . . . . . . . . 88,100 76,056
Oil and gas properties, on the full cost method. . 37,420 37,374
Other equipment. . . . . . . . . . . . . . . . . . 3,376 2,317
-------- --------
130,746 117,440
Less accumulated depreciation, depletion and
amortization . . . . . . . . . . . . . . . . . . 43,251 40,552
-------- --------
Net property and equipment . . . . . . . . . . . . $ 87,495 $ 76,888
-------- --------
-------- --------
</TABLE>
NOTE 3 TRANSACTIONS WITH RELATED PARTIES
The Company transacts business with certain companies, which are
directly controlled by members of the Company's Board of Directors. The
terms of these transactions are equivalent to the terms of transactions
conducted with non-related parties.
7
<PAGE>
NOTES TO CONSOLIDATED FINANCIAL STATEMENTS (CONTINUED)
NOTE 4 COMMITMENTS
The Company leases compressor equipment under contracts with terms
ranging from month to month to five years. The future revenues to be
received under contracts at June 30, 1998 are $3.7 million and $4.9 million
in 1998 and 1999, respectively.
NOTE 5 EARNINGS PER SHARE
Earnings per share (EPS) is computed based on the weighted average
number of shares of common stock outstanding during the period.
The following is a reconciliation of basic and diluted EPS computations:
<TABLE>
<CAPTION>
THREE MONTHS SIX MONTHS
ENDED JUNE 30, ENDED JUNE 30,
---------------------- ----------------------
1998 1997 1998 1997
------- ------- ------- -------
<S> <C> <C> <C> <C>
Basic:
Net income (loss) $ 351 $ (32) $ 578 $ 31
Common Stock 29,146 21,064 29,162 21,088
------- ------- ------- -------
Basic EPS $ .01 $ .00 $ .02 $ .00
------- ------- ------- -------
------- ------- ------- -------
Effect of dilutive securities:
Warrants 4,779 -- 4,876 --
Common Stock Options 526 497 542 491
------- ------- ------- -------
5,305 497 5,418 491
Diluted:
Net income (loss) $ 351 $ (32) $ 578 $ 31
Common stock and dilutive securities 34,451 21,561 34,580 21,579
------- ------- ------- -------
Diluted EPS $ .01 $ .00 $ .02 $ .00
------- ------- ------- -------
------- ------- ------- -------
</TABLE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF
FINANCIAL CONDITION AND RESULTS OF OPERATIONS
The following is Management's discussion and analysis of certain
significant factors which have affected the Company's earnings and financial
condition during the periods included in the accompanying Consolidated
Balance Sheets, Statements of Operations and Cash Flows.
RESULTS OF OPERATIONS
1998 VERSUS 1997
In the second quarter of 1998, the Company had net income of $351,000
compared to a net loss of $32,000 for the second quarter of 1997. For the
six months ended June 30, 1998, the Company reported net income of $578,000
compared to net income of $31,000 for the same period in 1997. The Company's
income from operations increased 682% for the six months ended June 30, 1998
when compared to the same period in 1997.
The improved earnings for both the first quarter and six month periods
resulted from increased levels of compression equipment deployed on
rental-with-maintenance and contract compression jobs. The sources of this
growth are internal growth and the acquisition of working compression
equipment, the largest being the Ouachita acquisition completed in August
1997. Total compression horsepower deployed on jobs ("earning compression
horsepower") increased 250% from June 30, 1997 to June 30, 1998. Including
the August 1997 acquired Ouachita compression horsepower in the Company's
June 30, 1997 earning compression horsepower, total earning compression
horsepower grew 23% in the twelve months ending June 30, 1998.
8
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
Compressor rental and contract revenues increased 233% and 224% for the three
and six months ended June 30, 1998 when compared to the same periods in 1997,
as a result of the growth previously described. The average horsepower
utilization rate for the six months ended June 30, 1998 decreased to 80% as
compared to 81% during the same period in 1997 due to purchases of equipment
during the second quarter of 1998. Revenues from the sale of compressors and
re-manufacturing services decreased 22% and 23% for the three and six months
ended June 30, 1998 when compared to the same periods in 1997 due to the
Company's concentration of shop labor on the maintaining and enhancing of the
rental/contract compressor fleet.
Compressor operating costs incurred on rental and contract units
increased 267% and 225% for the three and six months ended June 30, 1998 from
the same periods in 1997, as a result of the increased horsepower on leases.
The second quarter's growth in compressor operating costs outpaced revenue
due primarily to the additional costs associated with the completion of two
compressor acquisitions during the period. The cost of compressor and
re-manufacturing sales decreased 26% and 13% for the three and six months
ended June 30, 1998 when compared to the same periods in 1997 due to the
concentration of shop labor on maintaining and enhancing the rental/contract
fleet.
Total revenues from oil and gas sales decreased 9% for the three months
ended June 30, 1998 and remained relatively constant for the six months ended
June 30, 1998 when compared to the same periods in 1997. During the second
quarter of 1998 the Company sold 44% of the Company's oil reserves (12% of
total reserves) resulting in a 62% and 19% decline in barrels of oil sold for
the three and six months ended June 30, 1998 compared to the same periods in
1997. The average price of oil received by the Company fell 30%, from $20.53
per barrel at June 30, 1997 to $14.41 at June 30, 1998. The volume of
natural gas produced increased by 43% and 62% for the three and six months
ended June 30, 1998 compared to the same periods in 1997 which offset the 22%
decrease in the price of natural gas received by the Company. This increase
in gas revenues is a result of the successful completion of three natural gas
wells and the properties contributed by Prize since October 1, 1997
associated with the formation of Sunterra L.L.C.. Oil and gas operating
costs for the three and six months ended June 30, 1998 decreased 6% and
increased 5%, respectively compared to the same periods in 1997.
Total depreciation, depletion and amortization increased 104% and 121%
for the three and six months ended June 30, 1998 when compared to the same
periods in 1997. Depreciation of the compressor fleet increased 86% and 110%
for the three and six months ended June 30, 1998 from the same periods in
1997 due to additions to the compressor fleet. Depletion, depreciation, and
amortization of the composite cost of evaluated oil and gas properties is
computed on the units-of-production method based on estimated proved
reserves. Total depreciation, depletion and amortization increased 26% and
46% in the three and six months ended June 30, 1998 when compared to the same
periods in 1997 due to higher volumes of gas produced.
General and administrative expense increased 39% and 33% for the three
and six months ended June 30, 1998 compared to the same periods in 1997, due
to expenses associated with the Company's increased level of operations.
However, general and administrative expense as a percentage of total revenues
was 15% for the three months ending June 30, 1998 as compared to 28% for the
same period ending June 30, 1997. For the comparative 6 month trailing
periods of June 30, 1998 and June 30, 1997, the same ratio was 14% and 26%,
respectively.
Interest expense increased by 404% and 504% for the three and six months
ended June 30, 1998 compared to the same periods in 1997 as a result of
increased debt to fund the Ouachita acquisition and additional borrowings to
finance the growth in the compressor fleet.
Unamortized debt issue cost of approximately $70,000 associated with a
prior credit facility were expensed in the first quarter of 1998 as an
extraordinary item.
9
<PAGE>
ITEM 2. MANAGEMENT'S DISCUSSION AND ANALYSIS OF FINANCIAL
CONDITION AND RESULTS OF OPERATIONS (CONTINUED)
FINANCIAL CONDITION AND LIQUIDITY
On March 30, 1998, the Company replaced its previously existing $20
million senior bank credit facility with a new senior bank credit facility.
The initial maximum commitment is $40 million, which can be expanded to $60
million with the future addition of other participating financial
institutions. The facility is a borrowing base revolver effective March,
2000, converting to a three year term loan with a seven year principal
amortization. The initial borrowing base is the $40 million initial
commitment. The credit facility is collateralized by substantially all of
the assets of the Company with the exception of the Company's oil and gas
properties, which have been pledged on the related venture's bank credit
facility. At August 14, 1998, the unused portion was approximately $7.5
million.
In December 1997, Sunterra Petroleum L.L.C., entered into a $10 million
bank revolving credit facility with borrowings limited to a borrowing base
determined on the value of the underlying oil and gas reserves. In December
1999, the revolver converts to a four-year term loan. The credit facility is
collateralized by the venture's oil and gas properties. The initial
commitment is $2 million. At August 14, 1998 the unused portion was
approximately $1.6 million.
Net cash provided by operating activities increased to $189,000 in 1998
from net cash used in operating activities of $445,000 in 1997 primarily due
to increased levels of depreciation expense. Net cash used in investing
activities increased to $11.2 million in 1998 from $5.1 million in 1997 due
to additions to the compressor fleet when compared to 1997. Net cash
provided by financing activities increased to $11.1 million from $5.5 million
in 1997 as a result of additional borrowings to finance the growth in the
compressor fleet. At June 30, 1998, the Company had current assets of
approximately $7.6 million and current liabilities of $3.4 million. The
Company anticipates that 1998 cash flow from operations, as well as the
Company's new senior bank credit facility will be sufficient to fund the
Company's working capital and capital expenditure needs.
10
<PAGE>
PART II
OTHER INFORMATION
ITEM 6. EXHIBITS
(a) Exhibits:
<TABLE>
<CAPTION>
Exhibit
No. Description
------- -----------
<S> <C>
10.12 Revolving Credit Facility dated March 30, 1998 by and among
Ouachita Energy Corporation, the Company and Bank of
Scotland.
27 Financial Data Schedule
</TABLE>
(b) Reports on Form 8-K
On August 7, 1998, the Company filed a report on Form 8-K
referencing a change in the Company's certifying accountant.
11
<PAGE>
SIGNATURES
Pursuant to the requirements of Sections 13 of 15(d) of the Securities
Exchange Act of 1934, the Registrant has duly caused this report to be signed
on its behalf by the undersigned, thereunto duly authorized.
OEC COMPRESSION CORPORATION
DATE: August 14, 1998 By: /s/ Matthew S. Ramsey
--------------------------------------
MATTHEW S. RAMSEY
President and Chief Executive Officer
DATE: August 14, 1998 By: /s/ Jack D. Brannon
--------------------------------------
JACK D. BRANNON
Senior Vice President and Chief Financial
Officer
12
<PAGE>
EXHIBIT INDEX
<TABLE>
<CAPTION>
EXHIBIT
NO. DESCRIPTION
- ------- -----------
<S> <C>
10.12 Revolving Credit Facility dated March 30, 1998 by and among Ouachita
Energy Corporation, the Company and Bank of Scotland
27 Financial Data Schedule
</TABLE>
13
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
Effective Date March 30, 1998
By and Among
OUACHITA ENERGY CORPORATION
and
OEC COMPRESSION CORPORATION
and
BANK OF SCOTLAND
$60,000,000
<PAGE>
TABLE OF CONTENTS
<TABLE>
Page
<S> <C>
ARTICLE I - DEFINITIONS. . . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 3
Section 1.2 Other Definitional Provisions . . . . . . . . . . . . . . . 21
ARTICLE II - LOAN AND INTEREST . . . . . . . . . . . . . . . . . . . . . . 21
Section 2. Loan . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
Section 2.01 Revolving Credit Loans. . . . . . . . . . . . . . . . . . . 21
(a) Borrowing. . . . . . . . . . . . . . . . . . . . . . . 21
(b) Revolving Credit Note. . . . . . . . . . . . . . . . . 21
(c) Notice of Borrowing. . . . . . . . . . . . . . . . . . 22
(d) Non-Conforming Loans . . . . . . . . . . . . . . . . . 23
Section 2.02 Letters of Credit . . . . . . . . . . . . . . . . . . . . . 23
Section 2.03 Additional Loans. . . . . . . . . . . . . . . . . . . . . . 24
(a) Additional Loan Request. . . . . . . . . . . . . . . . 24
(b) Additional Revolving Credit Note . . . . . . . . . . . 24
(c) Notice of Borrowing and other Provisions
of Additional Loans. . . . . . . . . . . . . . . . . 24
(d) Percentage Interests . . . . . . . . . . . . . . . . . 24
Section 2.04 Funding of Advances . . . . . . . . . . . . . . . . . . . . 25
Section 2.05 Term Loan . . . . . . . . . . . . . . . . . . . . . . . . . 25
(a) Term Note. . . . . . . . . . . . . . . . . . . . . . . 25
(b) Nature of the Term Note; Mandatory Payment . . . . . . 25
(c) Interest on the Term Note. . . . . . . . . . . . . . . 25
(d) Repayment of the Term Notes. . . . . . . . . . . . . . 25
(e) Other Provisions of the Term Note. . . . . . . . . . . 26
Section 2.06 Interest on the Notes . . . . . . . . . . . . . . . . . . . 26
(a) Term Loan. . . . . . . . . . . . . . . . . . . . . . . 26
(b) Revolving Credit Loans . . . . . . . . . . . . . . . . 27
(c) Changes in Effective Rate; Rate Changes. . . . . . . . 28
(d) Interest Payment Date; Default Rate. . . . . . . . . . 29
(e) Advances for Interest or Fees. . . . . . . . . . . . . 29
Section 2.07 Repayment of Loan . . . . . . . . . . . . . . . . . . . . . 29
Section 2.08 Unavailability of Eurodollars . . . . . . . . . . . . . . . 30
Section 2.09 Change in Laws. . . . . . . . . . . . . . . . . . . . . . . 30
Section 2.10 Capital Adequacy. . . . . . . . . . . . . . . . . . . . . . 30
Section 2.11 Additional Costs. . . . . . . . . . . . . . . . . . . . . . 31
Section 2.12 Use of Proceeds . . . . . . . . . . . . . . . . . . . . . . 31
Section 2.13 Appraisals. . . . . . . . . . . . . . . . . . . . . . . . . 31
<PAGE>
ARTICLE III - PAYMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Section 3.01 Method of Payment . . . . . . . . . . . . . . . . . . . . . 32
Section 3.02 Prepayments . . . . . . . . . . . . . . . . . . . . . . . . 32
(a) Optional . . . . . . . . . . . . . . . . . . . . . . . 32
(b) Mandatory. . . . . . . . . . . . . . . . . . . . . . . 32
(c) Change of Control. . . . . . . . . . . . . . . . . . . 34
(d) Payment of Mandatory Amounts . . . . . . . . . . . . . 34
(e) Allocations of Payments/Insurance and Foreclosure
Proceeds . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.03 Fees. . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
Section 3.04 Computation of Fees . . . . . . . . . . . . . . . . . . . . 36
Section 3.05 Set-Off; Counterclaims and Taxes. . . . . . . . . . . . . . 36
Section 3.06 Borrowing Base Reports; Review of Security. . . . . . . . . 36
Section 3.07 Controlled Account. . . . . . . . . . . . . . . . . . . . . 37
Section 3.08 Payments to Administrative Agent. . . . . . . . . . . . . . 37
ARTICLE IV - COLLATERAL. . . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.01 Collateral. . . . . . . . . . . . . . . . . . . . . . . . . 37
Section 4.02 Setoff; Security Interest in Controlled Account . . . . . . 39
Section 4.03 Administrative Agent as Collateral Agent. . . . . . . . . . 39
ARTICLE V - CONDITIONS PRECEDENT . . . . . . . . . . . . . . . . . . . . . 40
Section 5.01 Conditions Precedent to Closing . . . . . . . . . . . . . . 40
(i) Closing Fee; Expenses. . . . . . . . . . . . . . . . 40
(ii) Security Instruments . . . . . . . . . . . . . . . . 40
(iii) Resolutions. . . . . . . . . . . . . . . . . . . . . 40
(iv) Certificate. . . . . . . . . . . . . . . . . . . . . 40
(v) Incumbency Certificate . . . . . . . . . . . . . . . 41
(vi) Certificates of Incorporation. . . . . . . . . . . . 41
(vii) Certificates of Existence and Good Standing. . . . . 41
(viii) Bylaws . . . . . . . . . . . . . . . . . . . . . . . 41
(ix) Note . . . . . . . . . . . . . . . . . . . . . . . . 41
(x) Notice of Borrowing Base . . . . . . . . . . . . . . 41
(xi) Insurance Policies . . . . . . . . . . . . . . . . . 41
(xii) Lien and UCC Search. . . . . . . . . . . . . . . . . 41
(xiii) Borrower's Counsel's Opinion . . . . . . . . . . . . 42
(xiv) Local Counsel's Opinion. . . . . . . . . . . . . . . 42
(xv) Environmental Review . . . . . . . . . . . . . . . . 42
(xvi) Controlled Account . . . . . . . . . . . . . . . . . 42
(xvii) Merger Documents . . . . . . . . . . . . . . . . . . 42
(xviii)Intercreditor Agreement. . . . . . . . . . . . . . . 42
Section 5.02 Conditions Precedent to Any Advance . . . . . . . . . . . . 43
<PAGE>
(a) No Event of Default. . . . . . . . . . . . . . . . . 43
(b) Request for Advance. . . . . . . . . . . . . . . . . 43
(c) No Material Injury to Collateral . . . . . . . . . . 43
(d) Other Documents. . . . . . . . . . . . . . . . . . . 43
(e) Legal Matters Satisfactory . . . . . . . . . . . . . 43
Section 5.03 Conditions Precedent to any Advance for Permitted
Acquisitions or Recurring Capital Expenditures. . . . . . 43
Section 5.04 Additional Information. . . . . . . . . . . . . . . . . . . 43
ARTICLE VI - REPRESENTATIONS AND WARRANTIES. . . . . . . . . . . . . . . . 44
Section 6.01 Corporate Power; Existence and Authority. . . . . . . . . . 44
Section 6.02 Financial Statements. . . . . . . . . . . . . . . . . . . . 44
Section 6.03 Default . . . . . . . . . . . . . . . . . . . . . . . . . . 44
Section 6.04 Authorization; Compliance with Laws and Agreements; Merger. 44
Section 6.05 Litigation and Judgments. . . . . . . . . . . . . . . . . . 45
Section 6.06 Rights in Properties; Liens . . . . . . . . . . . . . . . . 45
Section 6.07 Enforceability. . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.08 Approvals . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.09 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.10 Taxes . . . . . . . . . . . . . . . . . . . . . . . . . . . 45
Section 6.11 Use of Proceeds; Margin Securities. . . . . . . . . . . . . 46
Section 6.12 Disclosure. . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.13 Principal Place of Business . . . . . . . . . . . . . . . . 46
Section 6.14 Investment Company Act. . . . . . . . . . . . . . . . . . . 46
Section 6.15 Contracts . . . . . . . . . . . . . . . . . . . . . . . . . 46
Section 6.16 Compliance with Law . . . . . . . . . . . . . . . . . . . . 46
Section 6.17 Environmental Matters . . . . . . . . . . . . . . . . . . . 46
Section 6.18 Public Utility Holding Company Act; Federal Power Act;
Interstate Commerce Act; Other Regulation . . . . . . . . 47
Section 6.19 Title to Properties; Authority. . . . . . . . . . . . . . . 47
Section 6.20 Pension Plans . . . . . . . . . . . . . . . . . . . . . . . 47
Section 6.21 Multiemployer Plans . . . . . . . . . . . . . . . . . . . . 48
Section 6.22 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.23 Patents . . . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 6.24 Security Instruments. . . . . . . . . . . . . . . . . . . . 48
ARTICLE VII - LETTERS OF CREDIT. . . . . . . . . . . . . . . . . . . . . . 48
Section 7.01 Commitment. . . . . . . . . . . . . . . . . . . . . . . . . 48
Section 7.02 Conditions; Application . . . . . . . . . . . . . . . . . . 49
Section 7.03 Terms . . . . . . . . . . . . . . . . . . . . . . . . . . . 49
Section 7.04 Obligations Absolute. . . . . . . . . . . . . . . . . . . . 49
Section 7.05 Uniform Customs and Practices . . . . . . . . . . . . . . . 50
Section 7.06 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . 50
<PAGE>
ARTICLE VIII - POSITIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . 51
Section 8.01 Financial Statements. . . . . . . . . . . . . . . . . . . . 51
(a) Balance Sheets; Financial Statements . . . . . . . . 51
(b) Quarterly Operating Statements . . . . . . . . . . . 51
(c) Annual Financial Statements. . . . . . . . . . . . . 52
(d) Quarterly Certificates . . . . . . . . . . . . . . . 52
(e) Annual/Special Covenant Certificates . . . . . . . . 53
(f) Special Auditing Reports . . . . . . . . . . . . . . 53
(g) Budgets and Projections. . . . . . . . . . . . . . . 53
(h) Periodic Reports . . . . . . . . . . . . . . . . . . 54
(i) Other Reports. . . . . . . . . . . . . . . . . . . . 54
(j) Equipment Location . . . . . . . . . . . . . . . . . 54
Section 8.02 Consolidated and Consolidating Accounts . . . . . . . . . . 54
Section 8.03 Performance of Obligations. . . . . . . . . . . . . . . . . 54
Section 8.04 Preservation of Existence and Conduct of Business . . . . . 54
Section 8.05 Maintenance of Assets; Proceeds . . . . . . . . . . . . . . 54
Section 8.06 Payment of Taxes and Claims . . . . . . . . . . . . . . . . 54
Section 8.07 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . 55
(a) Policies . . . . . . . . . . . . . . . . . . . . . . 55
(b) Application of Proceeds. . . . . . . . . . . . . . . 55
(c) Constructive Total Loss. . . . . . . . . . . . . . . 55
(d) Agreed or Compromised Total Loss . . . . . . . . . . 56
(e) Carriers; Approvals. . . . . . . . . . . . . . . . . 56
(f) Additional Provisions. . . . . . . . . . . . . . . . 56
(g) No Loss of Insurance . . . . . . . . . . . . . . . . 56
(h) Reimbursement of Administrative Agent. . . . . . . . 57
(i) Mortgagee's Insurance. . . . . . . . . . . . . . . . 57
(j) Intercreditor Agreement. . . . . . . . . . . . . . . 57
Section 8.08 Inspection Rights . . . . . . . . . . . . . . . . . . . . . 57
Section 8.09 Keeping Books and Records . . . . . . . . . . . . . . . . . 57
Section 8.10 Compliance with Laws. . . . . . . . . . . . . . . . . . . . 58
Section 8.11 Compliance with Agreements. . . . . . . . . . . . . . . . . 58
Section 8.12 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 58
Section 8.13 Further Assurances. . . . . . . . . . . . . . . . . . . . . 58
Section 8.14 Compliance with Regulations G, T, U, and X. . . . . . . . . 58
Section 8.15 Environmental Compliance. . . . . . . . . . . . . . . . . . 58
Section 8.16 Controlled Account Assignment . . . . . . . . . . . . . . . 59
Section 8.17 Mandatory Prepayments; Interest and Fees. . . . . . . . . . 59
Section 8.18 Notice of Default . . . . . . . . . . . . . . . . . . . . . 59
Section 8.19 Notice of Litigation. . . . . . . . . . . . . . . . . . . . 60
Section 8.20 Notice of Claimed Default . . . . . . . . . . . . . . . . . 60
Section 8.21 Notice of Change of Management. . . . . . . . . . . . . . . 60
Section 8.22 Requested Information . . . . . . . . . . . . . . . . . . . 60
Section 8.23 Field Audits. . . . . . . . . . . . . . . . . . . . . . . . 60
<PAGE>
Section 8.24 Maintenance of Employee Benefit Plans . . . . . . . . . . . 60
ARTICLE IX - NEGATIVE COVENANTS. . . . . . . . . . . . . . . . . . . . . . 61
Section 9.01 Debt. . . . . . . . . . . . . . . . . . . . . . . . . . . . 61
Section 9.02 Limitation on Liens . . . . . . . . . . . . . . . . . . . . 61
Section 9.03 Disposition; Sale of Collateral . . . . . . . . . . . . . . 61
Section 9.04 Mergers, Acquisitions and Dissolutions. . . . . . . . . . . 61
Section 9.05 Restricted Payments . . . . . . . . . . . . . . . . . . . . 61
Section 9.06 Prepayment of Debt. . . . . . . . . . . . . . . . . . . . . 62
Section 9.07 Nature of Business. . . . . . . . . . . . . . . . . . . . . 62
Section 9.08 Minimum Current Ratio . . . . . . . . . . . . . . . . . . . 62
Section 9.09 Debt to EBITDA Ratio. . . . . . . . . . . . . . . . . . . . 62
Section 9.10 Minimum Interest Service Coverage Ratio . . . . . . . . . . 62
Section 9.11 Fixed Charge Coverage Ratio . . . . . . . . . . . . . . . . 63
Section 9.12 Maximum SG&A. . . . . . . . . . . . . . . . . . . . . . . . 63
Section 9.13 Asset Acquisitions. . . . . . . . . . . . . . . . . . . . . 64
Section 9.14 Subsidiary. . . . . . . . . . . . . . . . . . . . . . . . . 64
Section 9.15 Calculation of Covenants; Ratios. . . . . . . . . . . . . . 64
Section 9.16 Pru Debt Amendments . . . . . . . . . . . . . . . . . . . . 64
ARTICLE X - DEFAULT. . . . . . . . . . . . . . . . . . . . . . . . . . . . 65
Section 10.01 Events of Default . . . . . . . . . . . . . . . . . . . . . 65
Section 10.02 Remedies Upon Default . . . . . . . . . . . . . . . . . . . 68
ARTICLE XI - MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . 68
Section 11.02 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.03 Restatement . . . . . . . . . . . . . . . . . . . . . . . . 69
Section 11.04 No Waiver; Cumulative Remedies. . . . . . . . . . . . . . . 69
Section 11.05 Successors and Assigns. . . . . . . . . . . . . . . . . . . 70
Section 11.06 Survival of Representations and Warranties. . . . . . . . . 70
Section 11.07 ENTIRE AGREEMENT; AMENDMENT . . . . . . . . . . . . . . . . 70
Section 11.08 Maximum Interest Rate . . . . . . . . . . . . . . . . . . . 70
Section 11.09 Notices . . . . . . . . . . . . . . . . . . . . . . . . . . 71
Section 11.10 APPLICABLE LAW AND VENUE. . . . . . . . . . . . . . . . . . 72
Section 11.11 Counterparts. . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.12 Severability. . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.13 Headings. . . . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.14 Non-Application of Chapter 15 of Texas Credit Code. . . . . 73
Section 11.15 Participations. . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.16 Construction. . . . . . . . . . . . . . . . . . . . . . . . 73
Section 11.17 ENVIRONMENTAL INDEMNITY . . . . . . . . . . . . . . . . . . 73
Section 11.18 All Rights Cumulative . . . . . . . . . . . . . . . . . . . 74
<PAGE>
Section 11. 19 Amendment and Restatement . . . . . . . . . . . . . . . . . 74
ARTICLE XII - ADDITIONAL LOAN PROCEDURES . . . . . . . . . . . . . . . . . 75
Section 12. Additional Loan Procedures. . . . . . . . . . . . . . . . . 75
Section 12.01 Lender's Obligation . . . . . . . . . . . . . . . . . . . . 75
Section 12.02 Additional Lenders. . . . . . . . . . . . . . . . . . . . . 75
Section 12.03 Administrative Agent. . . . . . . . . . . . . . . . . . . . 75
Section 12.04 Borrower to Pay Administrative Agent. . . . . . . . . . . . 76
Section 12.05 Resignation of Administrative Agent; Administrative Agent's
Expenses. . . . . . . . . . . . . . . . . . . . . . . . . 76
(a) Resignation of Administrative Agent. . . . . . . . . 76
(b) Administrative Agent's Expenses. . . . . . . . . . . 76
Section 12.06 Lender Operations for Advances; Letters of Credit . . . . . 76
(a) Advances . . . . . . . . . . . . . . . . . . . . . . 76
(b) Letters of Credit. . . . . . . . . . . . . . . . . . 76
(c) Administrative Agent to Allocate Payments. . . . . . 77
(d) Lenders' Obligations . . . . . . . . . . . . . . . . 77
(e) Share of Payments, etc. . . . . . . . . . . . . . . 77
(f) Delinquent Lenders; Nonperforming Lenders. . . . . . 78
Section 12.07 Setoff. . . . . . . . . . . . . . . . . . . . . . . . . . . 78
Section 12.08 Copies of Information . . . . . . . . . . . . . . . . . . . 78
Section 12.09 Notices in Writing. . . . . . . . . . . . . . . . . . . . . 78
Section 12.10 Administrative Agent's Actions Binding. . . . . . . . . . . 78
Section 12.11 ADMINISTRATIVE AGENT'S LIABILITY. . . . . . . . . . . . . . 78
Section 12.12 INDEMNITY . . . . . . . . . . . . . . . . . . . . . . . . . 79
Section 12.13 Administrative Agent's Rights as Lender . . . . . . . . . . 79
Section 12.14 Reliance; Tax Status. . . . . . . . . . . . . . . . . . . . 79
Section 12.15 Independent Investigations. . . . . . . . . . . . . . . . . 80
Section 12.16 Participations. . . . . . . . . . . . . . . . . . . . . . . 80
Section 12.17 Majority Decision of Lenders. . . . . . . . . . . . . . . . 80
</TABLE>
<PAGE>
AMENDED AND RESTATED LOAN AGREEMENT
THIS AMENDED AND RESTATED LOAN AGREEMENT (the "Agreement"), dated as of
March 30, 1998, is made by and among OUACHITA ENERGY CORPORATION, a Delaware
corporation, ("Borrower"), OEC COMPRESSION CORPORATION (formerly called Equity
Compression Services Corporation and Hawkins Energy Corporation), an Oklahoma
corporation and sole shareholder of Borrower, as guarantor ("Guarantor"), and
BANK OF SCOTLAND, an authorized bank in the United Kingdom, constituted by an
Act of the Scots Parliament of 1695 under the laws of Scotland, acting through
its New York branch, in its individual capacity as a lender ("Initial Lender")
and as administrative agent ("Administrative Agent") for each of the lenders
("Lenders") executing this Agreement and the Addendum (hereinafter defined).
R E C I T A L S:
1. On July 31, 1997, Bank of Oklahoma, National Association ("BOK")
entered into a Fifth Amended and Restated Revolving Credit and Term Loan
Agreement with Borrower, Guarantor, Equity Compressors, Inc., an Oklahoma
corporation, affiliated with Borrower ("ECI"), and Sunterra Energy Corporation,
an Oklahoma corporation affiliated with Borrower ("Sunterra"), whereunder BOK
extended to Borrower, Guarantor, ECI and Sunterra, as joint and several obligors
("BOK Obligors"), certain revolving credit loans and other financial
accommodations ("BOK Credit").
2. Guarantor is directly obligated to The Prudential Insurance Company of
America and its assignees and holders of the Pru Notes and Subordinated Notes
described below (collectively, "Prudential") pursuant to (a) a $5,000,000 Senior
Floating Rate Secured Term Note due July 31, 2004, dated August 6, 1997, and a
Note Agreement in connection therewith, dated July 31, 1997 (collectively "Pru
Notes"), which indebtedness is guaranteed by Borrower, Sunterra and ECI, and (b)
a $15,000,000 10.15% Secured Senior Subordinated Note due July 31, 2007, dated
August 6, 1997, and a Subordinated Note and Warrant Purchase Agreement, dated as
of July 31, 1997, in connection therewith (collectively "Subordinated Notes"),
which indebtedness is also guaranteed by Borrower, Sunterra and ECI pursuant to
separate Guaranty Agreements, each dated as of July 31, 1997 ("Prudential
Guarantees").
3. Pursuant to a Sixth Amended and Restated Security Agreement and
Assignment dated December 19, 1997 ("BOK Security Agreement"), BOK Obligors
granted to BOK, as collateral agent for itself, other lenders under the BOK
Credit ("BOK Lenders") and Prudential, a security interest in all of their
natural gas compressor fleets and other property and assets (real, personal,
tangible and intangible) ("BOK Collateral"), which BOK Security Agreement
amended, restated and continued security interests previously granted to BOK by
BOK Obligors in and over
<PAGE>
the BOK Collateral in order to secure the BOK Credit, the Pru Notes and the
Subordinated Notes.
4. On August 5, 1997, BOK and Prudential entered into and executed an
Intercreditor Agreement governing the terms under which BOK held the BOK
Collateral for the BOK Lenders and Prudential ("BOK Intercreditor Agreement").
5. On December 19, 1997, (a) Sunterra, with the consent of BOK and
Prudential transferred all of its oil and gas properties to a newly formed,
wholly owned, Oklahoma limited liability company, Sunterra Petroleum L.L.C.
("Sunterra LLC"), and (b) BOK entered into a separate Revolving Credit Agreement
with Sunterra LLC secured by all of Sunterra LLC's oil and gas properties
("Sunterra Collateral"), BUT Sunterra continued to guarantee the Pru Notes and
Subordinated Notes (collectively, "Pru Debt").
6. Effective as of March 6, 1998, with the approval of BOK and
Prudential, ECI has been merged into and all of ECI's assets, properties and
business as a going concern have been transferred to and become a part of
Borrower ("Merger").
7. Initial Lender, on behalf of itself and the other Lenders, has agreed
to make loans and extend credit to Borrower in order to (a) repay and refinance
all of the BOK Obligors indebtedness and obligations to BOK under the BOK
Credit, (b) extend further revolving credit loans to Borrower, which loans are
convertible into a Term Loan, and (c) issue letters of credit for Borrower's
account to assist Borrower with its working capital needs and to permit it to
make additional acquisitions of equipment, which loans and credit facility will
be secured by all of Borrower' s Collateral (hereinafter defined).
8. As a condition to Lenders' Loans hereunder, Guarantor has agreed to
guarantee all of the obligations of Borrower under this Agreement and the Notes
(hereinafter defined).
9. As a condition to Lenders' Loans hereunder and in exchange for the
payment in full by Initial Lender of the BOK Credit, (a) BOK will transfer and
assign to Administrative Agent, as collateral agent for the Lenders and
Prudential, all of BOK's interest in and to all of the BOK Obligors' obligations
and indebtedness under the BOK Credit and all security interests in the BOK
Collateral securing such BOK Credit, (b) Administrative Agent and Lenders will
release Sunterra from any obligations or indebtedness to Lenders, (c) Prudential
will release the BOK Collateral and other Collateral from any liens in favor of
Prudential to secure Sunterra's guaranty of the Pru Debt, and (d) Sunterra and
Sunterra LLC will remain obligated to BOK under a separate credit agreement,
which obligations will continue to be secured by the Sunterra Collateral, but
BOK's rights concerning Sunterra shall be non-recourse to the Collateral
hereunder.
10. Prudential has agreed to the Lenders' Loans hereunder and the
transactions contemplated by this Agreement on condition that, among other
things, (a) Administrative Agent replaces BOK and acts as collateral agent of
the BOK Collateral and other Collateral (defined
2
<PAGE>
herein) on behalf of Prudential, (b) the Lenders' Loans rank on a PARI PASSU
basis with the PARI PASSU Debt (hereinafter defined), and (c) Administrative
Agent enters into an Amended and Restated Intercreditor Agreement with
Prudential governing the terms of Administrative Agent's role as collateral
agent with respect to the BOK Collateral and other Collateral on behalf of
Lenders and Prudential.
NOW THEREFORE, in consideration of the premises, the sums agreed to be
loaned hereunder, and the mutual covenants herein contained, the parties hereto
agree as follows:
ARTICLE I
DEFINITIONS
Section 1. DEFINITIONS. As used in this Agreement, the following terms
have the following meanings:
1.01 "ADDENDUM" means the Addendum to this Agreement executed by Additional
Lenders pursuant to the provisions of Section 12.02 hereof.
1.02 "ADDITIONAL COSTS" shall mean, with respect to a particular Rate
Period applicable to any particular LIBOR Loan, all costs, losses or
payments, as determined by Administrative Agent in its reasonable
discretion (which determination shall be conclusive in the absence of
manifest error), that Lenders or the Lending Office would be required
to incur, suffer or make by reason of:
(a) any and all present or future Taxes (including, without
limitation, any interest equalization tax or any similar tax on
the acquisition of debt obligations, or any stamp or registration
tax, duty or official or sealed papers tax), levies, Imposts or
any other charge of any nature whatsoever imposed by any taxing
authority on or with regard to any aspect of the transactions
contemplated by this Agreement, except such Taxes as may be
measured by the overall net income of Lenders or the Lending
Office and imposed by the jurisdiction, or any political
subdivision or taxing authority thereof, in which each Lender or
the Lending Office is located;
(b) any increase in the cost to Lenders of agreeing to make or
making, funding or maintaining such LIBOR Loan directly caused by
the introduction of, or any change in, or in the interpretation
or administration of any law or regulation or the compliance with
any request from any central bank or other governmental authority
(whether or not having the force of law), for which Lenders shall
not have been reimbursed pursuant to the provisions of clause (b)
above; and
3
<PAGE>
(c) any loss, cost or expense of whatever nature suffered or incurred
by Lenders as a result of paying or prepaying any LIBOR Loan
prior to the end of the applicable Rate Period;
during or in respect of such Rate Period with respect to all LIBOR
Loans.
1.03 "ADDITIONAL LENDERS" means Initial Lender, or any other bank or other
Financial institution which makes, or participates in making,
Additional Loans to Borrower under the provisions of this Agreement,
each an "Additional Lender."
1.04 "ADDITIONAL LOANS" means Revolving Credit Loans in excess of the
Initial Loan, made by Additional Lenders, pursuant to the provisions
of Section 2.03 hereof.
1.05 "ADDITIONAL REVOLVING CREDIT NOTE" OR "NOTES" means the revolving
credit promissory note or notes executed by Borrower in favor of
Additional Lenders, for all Additional Loans, pursuant to the
requirements of Section 2.03 of this Agreement.
1.06 "ADMINISTRATIVE AGENT" means the Initial Lender in its capacity, as
the context may require, as either (a) Administrative Agent for the
Lenders, pursuant to the provisions of Article XII hereof, or (b)
Collateral Agent for the Lenders and Prudential, pursuant to the
provisions of Section 4.03 hereof.
1.07 "ADVANCE" OR "ADVANCES" has the same meaning as, and is used in this
Agreement interchangeably with, the terms Revolving Credit Loan" or
"Revolving Credit Loans," respectively.
1.08 "AFFILIATE" means any Person directly or indirectly controlling,
controlled by, or under common control with the Person in question.
1.09 "AGREEMENT" means this Loan Agreement.
1.10 "AGGREGATE CREDIT" means the sum of each Lender's Maximum Commitment
up to a maximum of Sixty Million Dollars ($60,000,000).
1.11 "AIRCRAFT MORTGAGE" means the Security Agreement (Aircraft Chattel
Mortgage), dated August 5, 1997 from Borrower in favor of BOK,
covering Borrower's Beech Aircraft Model 58P, Serial No. TJ-279 under
Federal Aviation Administration registration number N831JB.
1.12 "AIRCRAFT MORTGAGE ASSIGNMENT" means a Federal Aviation Administration
approved mortgage assignment, in recordable form, executed by BOK in
favor of Administrative Agent, as agent for all the Lenders and
Prudential, assigning the Aircraft Mortgage to Lenders.
4
<PAGE>
1.13 "APPRAISER" means an independent certified appraiser appointed by
Borrower to act on Administrative Agent's behalf, at the cost and for
the expense of Borrower, to inspect, appraise and monitor the value of
the Collateral and any new assets purchased by Borrower and included
in the Borrowing Base and to assist Borrower and AdmInistrative Agent
with determining the Borrowing Base from time to time.
1.14 "ASSIGNMENT OF CONTROLLED ACCOUNT" means the Assignment of Controlled
Account, Pledge and Security Agreement, of even date herewith,
executed by Borrower, in favor of Administrative Agent, assigning to
Administrative Agent the Controlled Account, and all sums and monies
therein, as same may be amended, supplemented or modified.
1.15 "ASSIGNMENT OF INSURANCES" means that certain Assignment of Insurance
policies, of even date herewith, described in Section 4.01(c) hereof.
1.16 "ASSIGNMENT OF MORTGAGE" means the Real Property Mortgage, as assigned
from BOK to Administrative Agent.
1.17 "ASSIGNMENT OF NOTE AND LIENS" means the Assignment and Acceptance of
Note, Liens and Related Loan Documents by BOK to Administrative Agent,
of even date herewith, of all promissory notes, security instruments,
mortgages and liens, granted to BOK to secure the BOK Credit, pursuant
to the provisions of Section 4.01(a) of this Agreement.
1.18 "AVAILABLE COMMITMENT" means, at any time, an amount equal to the
remainder, if any, of (a) the LESSER of (i) the Borrowing Base in
effect at such time less the Pru Debt OR (ii) the Aggregate Credit
MINUS (b) the outstanding principal balance of (x) all Advances made
under the Loans (including all Additional Loans, if any), PLUS (y) the
face amount of all Letters of Credit issued under the terms of this
Agreement.
1.19 "BOARD" means the Board of Governors of the Federal Reserve System of
the United States of America.
1.20 "BOK" AND "BOK CREDIT" have the meanings set forth in Recital 1 of
this Agreement.
1.21 "BOK COLLATERAL" has the meaning set forth in Recital 3 hereof.
1.22 "BOK INTERCREDITOR AGREEMENT" has the meaning set forth in Recital 4
hereof.
1.23 "BOK LENDERS" has the meaning set forth in Recital 3 hereof.
1.24 "BOK OBLIGORS" has the meaning set forth in Recital 1 hereof.
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1.25 "BOK SECURITY AGREEMENT" has the meaning set forth in Recital 3
hereof.
1.26 "BORROWER means Ouachita Energy Corporation.
1.27 "BORROWER'S BORROWING BASE CERTIFICATE" has the meaning set forth in
Section 8.01(d) hereof.
1.28 "BORROWER'S SECURITY AGREEMENT" means the Amended and Restated
Security Agreement executed by Borrower in favor of Administrative
Agent, of even date herewith, in form and substance satisfactory to
Administrative Agent, as the same may be amended, supplemented, or
modified.
1.29 "BORROWING BASE" shall mean, at any time, the LESSER of (a) the sum of
the ConformIng Borrowing Base and the Non-Conforming Borrowing Base,
OR (b) the sum of the Aggregate Credit PLUS all amounts outstanding
under the Pru Notes, from time to time as determined by Administrative
Agent based on Borrower's quarterly Borrowing Base Certificates,
delivered to Administrative Agent, prepared by Borrower and agreed to
by Lender, in accordance with customary practices and standards in the
industry, taking into account such factors as Borrower in its
reasonable discretion (with Lender's agreement) shall deem to be
appropriate, with the initial Borrowing Base being determined on the
Closing Date and thereafter adjusted quarterly effective as of the
first Business Day of each June, September, December and March of each
year during the term of this Agreement and the Notes.
1.30 "BORROWING DATE" means a date upon which a Revolving Credit Loan is to
be made under Section 2.01.
1.31 "BUSINESS DAY" means any day excluding Saturday, Sunday and any other
day on which banks in New York City are authorized by law or other
governmental action to close; provided that, when used in connection
with a LIBOR Loan, the term "Business Day" shall also exclude any day
on which banks are not open for dealings in dollar deposits in the
London interbank market.
1.32 "CAPITALIZED LEASE OBLIGATIONS" means, without duplication, the amount
of all rental obligations which, under GAAP, would be required to be
capitalized on the books of Borrower, in connection with the lease or
use of any real or personal property, or any combination thereof.
1.33 "CASH AND CASH EQUIVALENTS" means, as to any Person, cash, bank
certificates of deposit and other debt securities which are recorded
within such Person's current assets as "cash" or "cash at bank" or "in
hand."
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1.34 "CERCLA" means the Comprehensive Environmental Response, Compensation
and Liability Act of 1980, as amended, 42 U.S.C. Section 9601-9675.
1.35 "CHANGE IN CONTROL" means the failure of (a) Guarantor to own one
hundred percent (100%) of the issued and outstanding voting stock of
Borrower, and (b) the members of the Control Group to own, on a fully
diluted basis, at least 41% of the combined voting power of all then
issued and outstanding voting stock of Guarantor, together with any
one or more of the following: (i) the failure of the members of the
respective Boards of Directors of Borrower or Guarantor existing on
the Closing Date to constitute a majority of such Boards of Directors
of Borrower or Guarantor, respectively, or (ii) the failure of such
Control Group to own, on a fully diluted basis, the largest voting
block of the outstanding voting stock of Guarantor, or (iii) if any of
Matt Ramsey, Jack Brannon or Dennis Estis cease to perform, on a full
time basis, the role each currently performs, or to occupy the offices
they currently hold, with either Borrower or Guarantor, as of the
Closing Date.
1.36 "CLOSING" or "CLOSING DATE" means the latest to occur of the date of
execution of the Note, Security Instruments and all other Loan
Documents, other than this Agreement, and completion of all the
conditions precedent set forth in Section 5.01 hereof.
1.37 "CODE" means the Internal Revenue Code of 1986, as amended.
1.38 "COLLATERAL" has the meaning specified in Section 4.01.
1.39 "COLLATERAL AGENT" means the Administrative Agent in its capacity as
collateral agent of the Collateral on behalf of the Lenders and
Prudential, as further described in Section 4.03 hereof.
1.40 "COLLATERAL VALUES" means, at any point in time, the SUM of the
aggregate value of all of the Collateral as determined by the
Appraiser in his most recent appraisal.
1.41 "COMMITMENT FEE" means a fee payable by Borrower, quarterly in
arrears, equal to 0.375% per annum of the amount of the Available
Commitment undrawn from time to time during any calendar quarter prior
to the Conversion Date, commencing on the Closing Date.
1.42 "COMPRESSOR EQUIPMENT" means all of Borrower's compressor units which
are in operable condition (as such term is generally understood in the
industry).
1.43 "COMPRESSOR RENTAL INCOME" means, on a consolidated basis with respect
to Borrower, the sum of Borrower's rental/maintenance fees and
revenues and all
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revenues and fees from compression services LESS the sum of its direct
compressor rental/maintenance operating expenses, calculated in
accordance with GAAP.
1.44 "CONFORMING BORROWING BASE" means a Dollar amount equal to the sum of
(a) a multiple of six times (6x) the amount of Borrower's aggregate
Compressor Rental Income (determined in accordance with GAAP) from its
most recent trailing six (6) month compressor fleet operations, PLUS
(b) fifty percent (50%) of the aggregate book values (computed,
pursuant to GAAP, as the lower of cost or market value) of all
Inventory owned by Borrower, PROVIDED, HOWEVER, that portion of the
Conforming Borrowing Base which is represented by subclause (b) above
shall be limited to a maximum amount equal to five percent (5%) of
the total amount of the Conforming Borrowing Base.
1.45 "CONFORMING LIBOR RATE" means a rate of interest equal to the LIBOR
Rate PLUS one and three quarters of one percent (1.75%) per annum.
1.46 "CONFORMING LOAN" means each Revolving Credit Loan made by Lenders to
Borrower hereunder, unless such Loan has been designated a
Non-Conforming Loan by Borrower in its Notice of Borrowing.
1.47 "CONTROLLED ACCOUNT" means the operating bank deposit account opened
and owned by Borrower at BOK or another bank acceptable to
Administrative Agent, into which (a) Administrative Agent deposits all
Advances made by Lenders to Borrower, and (b) Borrower deposits or
causes to be deposited all Compressor Rental Income and other income
and proceeds of maintenance, management, leases, rental and sale of
Inventory and Equipment and any insurance recoveries, which deposit
account and monies are assigned absolutely to Administrative Agent on
behalf of Lenders by Borrower.
1.48 "CONTROL GROUP" means those record or beneficial owners of Guarantor
listed on EXHIBIT 1.48 attached hereto.
1.49 "CONVERSION DATE" shall have the meaning set forth in Section 2.05(a).
1.50 "CURRENT ASSETS" means, with respect to Borrower, at any point in
time, the sum of all Cash and Cash Equivalents, notes and accounts
receivable (less reserves for bad debts), advances on Inventory,
Inventory and any other property or asset which is convertible into
cash within the next twelve (12) months, computed in accordance with
GAAP.
1.51 "CURRENT LIABILITIES" means, with respect to Borrower, the sum of all
Debt owed by Borrower which are payable within the next twelve (12)
months.
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1.52 "CURRENT RATIO" means, with respect to Borrower, the ratio of Current
Assets to Current Liabilities.
1.53 "DEBT" means for any Person: (i) all indebtedness, whether or not
represented by bonds, debentures, notes, securities, contracts or
other evidences of indebtedness, for the repayment of money borrowed
or money owed, (ii) all indebtedness representing deferred payment of
the purchase price of property or assets, (iii) all indebtedness under
any Capitalized Lease Obligations or under any lease which, in
conformity with GAAP, is required to be capitalized for balance sheet
purposes, (iv) all indebtedness under guaranties, endorsements,
assumptions, or other contingent obligations, in respect of, or to
purchase, incur or otherwise acquire, indebtedness or other
obligations of others or future indebtedness or other obligations of
Borrower, (v) all indebtedness secured by a Lien existing on property
owned or payable out of the proceeds of such Person, subject to such
Lien, whether or not the indebtedness secured thereby shall have been
assumed by the owner thereof, (vi) mandatory redemption obligations in
respect of redeemable preferred stocks, (vii) unfunded pension
obligations, (viii) any obligation to redeem or repurchase any of such
Person's capital stock, warrants, or stock equivalents and (ix) any
other item which under GAAP would be recorded as a liability on such
Person's balance sheet.
1.54 "DEFAULT" means the occurrence of an event which with notice or lapse
of time or both would become an Event of Default.
1.55 "DEFAULT RATE" means the lesser of (a) the Maximum Rate, or (b) the
amount of the Prime Rate in effect from day to day PLUS three percent
(3%) per annum.
1.56 "DOLLAR," "DOLLARS" and "$" means currency of the United States of
America which is at the time of payment legal tender for the payment
of public and private debts in the United States of America.
1.57 "DUE DATE" means the date on which any amounts of principal, interest,
fees or other costs and expenses are due under the terms of this
Agreement and the Notes.
1.58 "EBITDA" means, for any period, the consolidated net earnings of
Borrower BEFORE any deductions for interest on debt or obligations,
amortization, Taxes, depreciation and any other non-cash charge to the
extent such charge reduces the consolidated net income or earnings of
Borrower, but excluding any extraordinary gains or losses, all
computed in accordance with GAAP.
1.59 "ECI" means Equity Compressors, Inc., an Oklahoma corporation and
wholly owned subsidiary of Guarantor, whose entire business and
operations have, or will, prior to the Closing Date, be merged into
and with, and transferred, in a tax-free merger, to Borrower.
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1.60 "EFFECTIVE DATE" means the date upon which a Rate Period applicable to
a Revolving Credit Loan is to commence.
1.61 "ENVIRONMENTAL LAWS" or "Law" means the federal and state
environmental laws, health and safety laws, rules or regulations, with
respect to the business or operations of Borrower, of the United
States of America and all other applicable jurisdictions, including,
but not limited to CERCLA, as amended by the Superfund Amendments and
Reauthorization Act of 1986 ("SARA"), the Resource Conservation and
Recovery Act ("RCRA"), 42 U.S.C. Sections 6901-6992k, the Hazardous
Materials Transportation Act, 49 U.S.C. Section 5101, et seq., the
Federal Water Pollution Control Act, 33 U.S.C. Section 1251, et seq.,
the Oil Pollution Act of 1990, 33 U.S.C. Section 2701, et seq., the
Clean Air Act, 42 U.S.C. Section 7401, et seq., the Clean Water Act,
33 U.S.C. Section 1251, et seq., the Toxic Substances Control Act
("TSCA") , 15 U.S.C. Sections 2601-2629, the Safe Drinking Water Act,
42 U.S.C. Sections 300F-300J, the Occupational Safety and Health Act
of 1970, 29 U.S.C. Section 651, et seq. ("OSHA") and all similar
federal, state (including, but not limited to, environmental, health
and safety laws of the State of Texas) and local statutes, ordinances
and the regulations, orders and decrees promulgated thereunder.
1.62 "EQUIPMENT" means all of Borrower's "equipment" as defined in Article
9 of the Texas Uniform Commercial Code and all of Borrower's parts,
components, accessories, machinery and materials for use with, or to
be incorporated into, the Inventory and which is not otherwise
incorporated in Inventory and Equipment, and all tools, spare parts,
vehicles, and rolling stock held and used by Borrower or any
Affiliates (not for lease, rental or sale) in Borrower's or such
Affiliate's business and operations, and all other general equipment
and machinery used in the operation of Borrower's business.
1.63 "ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
1.64 "EVENT OF DEFAULT" has the meaning specified in Section 10.01 hereof.
1.65 "EXCESS CASH" means, with respect to Borrower, the sum of all (a) Net
Income PLUS (b) all non-cash charges against income of whatever
nature, PLUS (c) the change in Current Liabilities (excluding current
indebtedness), LESS (c) all non-cash credits of whatever nature, LESS
(e) the change in Current Assets (excluding cash), LESS (f) Permitted
Acquisitions that were paid for in cash, and LESS (g) any regularly
scheduled principal payments, and any optional or mandatory
prepayments, of Debt.
1.66 "FED FUNDS RATE" means, for any day during the term of this Agreement,
the sum of (a) one half of one percent (0.50%) per annum, PLUS (b) the
overnight federal funds rate per annum in New York, New York, as
published for such day (or if
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such day is not a Business Day, for the next preceding Business Day)
in the Federal Reserve Statistical Release H.15 (519), or any
successor publication, or if such rate is not so published on any
Business Day, the average of quotations for such day on overnight
federal funds transactions, in New York, New York, received by
Administrative Agent from three (3) federal funds brokers of
recognized standing selected by Administrative Agent.
1.67 (a) "FEE LETTER" means that certain letter agreement, dated as of the
Closing Date, between Borrower and Administrative Agent providing
for the payment of certain additional fees in connection with the
Loans.
(b) "FEES" means, collectively, the "Commitment Fee," the "Letter of
Credit Fee" and all other fees and expenses payable by Borrower
under the terms of this Agreement, the Security Instruments
and the Fee Letter.
1.68 "FISCAL YEAR" means the period of twelve (12) consecutive calendar
months commencing on (and including) January 1 and ending on (and
including) the next following December 31.
1.69 "FIXED CHARGE COVERAGE RATIO" means, with respect to Borrower as of
any given date, the ratio calculated by DIVIDING (a) EBITDA for the
period in questions BY (b) the sum of all cash interest expense, Taxes
paid in cash and scheduled principal paid on Debt during the period,
PLUS Recurring Capital Expenditures made or to be made during the
period for which such ratio is calculated.
1.70 "GAAP" means generally accepted accounting principles, applied on a
consistent basis in the United States of America, minus any allocation
for "goodwill," as set forth in opinions of the Financial Accounting
Standards Board, its predecessor the Accounting Principles Board, and
the Committee on Accounting Research of the American Institute of
Certified Public Accountants and their respective successors and which
are applicable in the circumstances as of the effective date of this
Agreement. Accounting principles are applied on a "consistent basis"
when the accounting principles observed in a current period are
comparable in all material respects to those accounting principles
applied in a preceding period.
1.71 "GOVERNMENTAL AUTHORITY" means the government of the United States of
America from time to time, any nation, or government, federal, state,
province, city, town, municipality, county, parish, local or other
political subdivision thereof or thereto, and any department,
commission, board, bureau, instrumentality, agency or other entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government.
1.72 "GUARANTEE" means the guarantee of the Obligations and Notes, in form
and substance satisfactory to Administrative Agent, given by the
Guarantor, in an
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amount equal to the Loans and all interest, Fees and expenses (whether
for collection or otherwise) thereon.
1.73 "GUARANTOR" means OEC Compression Corporation (formerly Equity
Compression Services Corporation), an Oklahoma corporation, and sole
shareholder of Borrower.
1.74 "HAZARDOUS SUBSTANCES" means any substance or material that is defined
or otherwise listed as a hazardous substance under CERCLA, as a toxic
substance under TSCA, as a hazardous waste under RCRA, as a hazardous
material under the United States Hazardous Materials Transportation
Act or any petroleum material that, in its concentration and location,
presents a material endangerment to human health or the environment.
1.75 "INITIAL LENDER" means Bank of Scotland, acting through its New York
branch.
1.76 "INITIAL LOAN" means the sum of all Revolving Credit Loans made by the
Initial Lender up to the maximum amount of the lesser of (a) Forty
Million Dollars ($40,000,000) or (b) the Borrowing Base, pursuant to
the terms of Sections 2.01 and 2.02 hereof.
1.77 "INSTALLMENT DATE" means the date on which installments of principal
are due and payable on the Term Note pursuant to the provisions of
Section 3.02(b) hereof.
1.78 "INTEREST COMMENCEMENT DATE" has the meaning set forth in Section
2.06(d) of this Agreement.
1.79 "INTERCREDITOR AGREEMENT" means the Amended and Restated Intercreditor
Agreement (which, among other things, amends and restates the BOK
Intercreditor Agreement), of even date herewith, by and between
Collateral Agent, on behalf of Lenders, and Prudential, in connection
with the Collateral, and consented to by Borrower and Guarantor.
1.80 "INTEREST EXPENSE" means, with respect to any period, the sum (without
duplication) of the following (in each case, eliminating (a) all
offsetting debits and credits between and among Borrower and any
Affiliates, and (b) all other items required to be eliminated in the
course of the preparation of consolidated and consolidating financial
statements of Guarantor and Borrower, in accordance with GAAP): (i)
all interest and prepayment charges in respect to Debt of Borrower
(including imputed interest and prepayment charges in respect of
Capitalized Lease Obligations deducted in determining Net Income for
such period, PLUS (ii) all interest capitalized or deferred during
such period and not deducted in determining Net Income for such
period.
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1.81 "INTEREST PAYMENT DATE" means (i) with respect to Prime Designated
Amounts, the last day of each March, June, September and December of
each year, and (ii) with respect to any LIBOR Loan, the end of each
Rate Period, beginning with the end of the Rate Period immediately
following the making of the first LIBOR Loan to Borrower after the
Closing Date, until such time as the principal of and interest on the
Notes shall have been paid in full, PROVIDED, HOWEVER, that for those
Rate Periods which exceed three (3) months, "Interest Payment Date"
shall mean the quarterly anniversary of the Effective Date of such
Rate Period. If any Interest Payment Date shall end on any day which
is not a Business Day, the relevant Interest Payment Date shall be the
next succeeding Business Day, unless the next succeeding Business Day
shall fall in the next calendar month, in which event the relevant
Interest Payment Date shall be the immediately preceding Business Day.
1.82 "INTEREST RATE" means the interest rate (whether the Conforming LIBOR
Rate, the Non-Conforming LIBOR Rate or the Prime Rate) charged on the
Loan under the provisions of Section 2.06 of this Agreement.
1.83 "INTEREST SERVICE COVERAGE RATIO" means, for any period with respect
to Borrower, the ratio calculated by dividing (a) EBITDA for such
period by (b) Interest Expense for such period.
1.84 "INVENTORY" means and includes all of Borrower's and Subsidiary's raw
material, accessories, parts, compressors in the process of being
manufactured, assembled, fabricated or processed by Borrower or any
Person for use with, or to become a part of, any such natural gas
compressors for lease, rental or sale, and all packaging, labels,
advertising materials, and supplies of every kind to be used in
connection with such natural gas compressors and other items.
1.85 "LENDERS" has the meaning set forth in the opening paragraph to this
Agreement, being the initial Lender and all Additional Lenders, and
each being a "Lender."
1.86 "LENDING OFFICE" means the office of Administrative Agent's New York
branch at 565 Fifth Avenue, New York, New York.
1.87 "LETTER OF CREDIT FEE" means the fees and other expenses charged by
Administrative Agent, for the ratable benefit of Lenders, for the
issuance of each Letter of Credit under the terms of Section 3.03 of
this Agreement.
1.88 "LETTERS OF CREDIT" means one or more standby letters of credit issued
by Administrative Agent, as issuing bank for Lenders, at Borrower's
request, pursuant to the provisions of Section 2.02 and Article VII
hereof, in favor of certain named beneficiaries in connection with the
purchase and leasing of the Collateral, which Letters of Credit shall
be included within and repaid as part of the Loan as hereinafter
provided.
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1.89 "LIBOR" shall mean the rate of interest, appearing on Telerate Page
3750 (British Bankers Association Interest Settlement Rates) (or such
other page as may replace Page 3750 on such system or any other system
used by such association to calculate such Rates under the British
Bankers Associations' Recommended Terms and Conditions dated August 5,
1985) as of 11:00 a.m. (London time) two Business Days prior to the
first day of the applicable Interest Period, determined on the basis
of the rate of deposits in Dollars, in an amount substantially equal
to the amount owed on the Loan or the applicable portion thereof, for
a period equal to the applicable Rate Period, commencing on the first
day of such Interest Period. In the event that such rate does not
appear on Telerate Page 3750 or its equivalent, "LIBOR" shall be
reasonably determined by Lender to be the rate per annum at which
deposits in Dollars are offered by leading reference banks in the
London interbank market to Lender, at approximately 11:00 a.m. (London
time) two Business Days prior to the first day of the applicable Rate
Period, for a period comparable to such Rate Period and in an amount
substantially equal to the amount of the Loan.
1.90 "LIBOR BASED RATE" shall mean the rate of interest being charged
(i.e., the ConformIng LIBOR Rate or the Non-Conforming LIBOR Rate)
during any Interest Period for any LIBOR Loan.
1.91 "LIBOR LOAN" means the portion of the outstanding principal amount of
the Notes upon which interest is being charged at either the
Conforming LIBOR Rate or the Non-Conforming LIBOR Rate during a
particular Rate Period.
1.92 "LIBOR RATE" shall mean, with respect to any LIBOR Loan, a rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
determined by Administrative Agent to be equal to the quotient of (a)
LIBOR for such Rate Period, divided by (b) one (1) minus the Reserve
Requirement for such LIBOR Loan for such Rate Period.
1.93 "LIEN" means any lien, pledge, mortgage, security interest,
assignment, tax lien (statutory or otherwise), pledge, encumbrance,
financing statement, judgment, or conditional sale, deferred purchase
price or title retention agreement, or any other interest in property
designed to secure the repayment of Debt or any other obligation,
whether arising by agreement, operation of law, or otherwise.
1.94 "LOAN OR "LOANS" means the sum of (a) the Initial Loan PLUS (b) the
total of all Additional Loans made by Additional Lender pursuant to
the terms hereof, as same may be converted into the Term Note at the
Conversion Date.
1.95 "LOAN DOCUMENTS" means this Agreement, the Notes, the Assignment of
Note and Liens, the Security instruments, the Fee Letter and all other
instruments, documents, and agreements executed and delivered pursuant
to or in connection
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with this Agreement and the BOK Credit (as same is assigned to
Administrative Agent), as such instruments, documents, and
agreements may be amended, modified, renewed, extended, or
supplemented from time to time.
1.96 "LOUISIANA FACILITY" means the real property and improvements owned by
Borrower located at 228 Industrial, West Monroe, Ouachita Parish,
Louisiana, more particularly described in the Real Property Mortgage.
1.97 "MATURITY" or "MATURITY DATE" means either April 1, 2000 if the Notes
are not converted into the Term Note pursuant to the provisions of
Section 2.05, or otherwise March 31, 2003, or such earlier date as may
be established pursuant to any acceleration or mandatory or voluntary
prepayment provisions contained herein.
1.98 "MAXIMUM COMMITMENT" means, with respect to the Initial Lender, the
lesser of Forty Million Dollars ($40,000,000) or the applicable
Borrowing Base (i.e., Conforming and Non-Conforming) in effect from
time to time and, with respect to Additional Lenders, the maximum
amount set forth beside each such Lender's name on EXHIBIT 1.115
attached hereto, as said Schedule may be amended from time to time.
1.99 "MAXIMUM RATE" means the maximum rate of non-usurious interest
permitted from day to day by applicable law, including, but without
limitation, as to Chapter 303 of the Texas Finance Code (and as the
same may be amended or incorporated by reference in other Texas
statutes), that rate based upon the "weekly rate ceiling" and
calculated after taking into account any and all relevant fees,
payments, and other charges in respect of the Loan Documents which are
deemed to be interest under applicable law.
1.100 "MERGER" has the meaning set forth in Recital 4 of this Agreement.
1.101 "MERGER DOCUMENTS" means the Certificate of Merger, Plan of Merger and
all agreements, documents, resolutions and other corporate instruments
executed by Borrower, ECI and certain other parties, dated March 6,
1998, in connection with the Merger.
1.102 "NET INCOME" means, for any period, the consolidated net income of
Borrower after Tax for such period, computed in accordance with GAAP.
1.103 "NON-CONFORMING BORROWING BASE" means a Dollar amount equal to (a)
sixty-six and two-thirds percent (66-2/3%) of the most current
Collateral Values of Borrower's total compressor fleet, as appraised
by the Appraiser, PLUS (b) the acquisition cost of all Compressor
Equipment acquired by Borrower since the date of the last appraisal of
Collateral Values by the Appraiser, LESS (c) the sum of (i)
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the aggregate value of all sales by Borrower of Compressor Equipment
(including all sales of all units purchased since the date of the
Appraiser's last report) (computed as the greater of their actual
selling price or their carried book value, (as per GAAP)) and (ii) the
Conforming Borrowing Base, PROVIDED, HOWEVER, that the Non-Conforming
Borrowing Base shall never exceed the lesser of $10,000,000 or twenty
percent (20%) of the total Borrowing Base.
1.104 "NON-CONFORMING LIBOR RATE" means a rate of interest equal to the
LIBOR Rate PLUS two and one-quarter of one percent (2.25%) per annum.
1.105 "NON-CONFORMING LOAN" means a Revolving Credit Loan which is
designated as a Non-Conforming Loan by Borrower in its Notice of
Borrowing, pursuant to Section 2.06(b) of the Agreement.
1.106 "NON-CONFORMING PRIME RATE" means a rate of interest equal to the
Prime Rate PLUS one-half of one percent (0.50%) per annum.
1.107 "NOTES" means collectively the Revolving Credit Note, the Term Notes
and all Additional Revolving Credit Notes of Borrower, executed and
delivered under Article 2 hereof. "NOTE" means any one of such Notes.
1.108 "NOTICE OF BORROWING" shall have the meaning set forth in Section
2.01(c) hereof.
1.109 "NOTICE OF BORROWING BASE" means the certification issued to Borrower
by Administrative Agent of Borrower's Borrowing Base Certificate
pursuant to the provisions of Section 3.06 hereof.
1.110 "NOTICE OF RATE CHANGE" shall have the meaning set forth in Section
2.06(b)(iv) hereof.
1.111 "OBLIGATIONS" means all principal, interest, Fees, expenses, costs,
obligations, indebtedness, and liabilities of Borrower to
Administrative Agent and Lenders, now existing or hereafter arising,
whether direct, indirect, related, unrelated, fixed, contingent,
liquidated, unliquidated, joint, several, or joint and several,
including, without limitation, the principal, interest, Fees,
expenses, costs, obligations, indebtedness, and liabilities of
Borrower under this Agreement, the Notes and the other Loan Documents,
all interest accruing thereon, all Fees owed hereunder and all
attorneys' fees and other expenses incurred in the enforcement or
collection thereof.
1.112 "OFFICER'S CERTIFICATE" means a certificate signed in the name of
Borrower or Guarantor by any one or all of their respective Presidents
or Senior Vice Presidents; "OFFICER" means any one of such officers.
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1.113 "OUACHITA" means Ouachita Energy Corporation, the Borrower.
1.114 "PARI PASSU DEBT" means the SUM of all outstanding obligations and
indebtedness of Guarantor under the Pru Notes (provided that the
aggregate principal amount outstanding thereunder shall not exceed
$5,000,000).
1.115 "PERCENTAGE INTERESTS" means the percentage interest of the Aggregate
Credit held by each Lender (as adjusted to reflect Additional Lenders)
as set forth in EXHIBIT 1.115 hereto, as such Schedule will be amended
and attached hereto to reflect Additional Lenders who make Additional
Loans.
1.116 "PERMITTED ACQUISITIONS" means, with respect to Borrower, on a
consolidated and consolidating basis, acquisitions of Borrower
permitted by the provisions of Section 9.13 hereof.
1.117 "PERMITTED DEBT" means the Obligations, the Pru Debt and Debt
representing the deferred payment of the purchase price of property or
assets not exceeding Six Hundred Thousand Dollars ($600,000) in the
aggregate.
1.118 "PERMITTED LIENS" shall mean: (a) Liens for Taxes, assessments or
other governmental charges or levies not yet due or which are being
contested in good faith by appropriate action being diligently pursued
and for which adequate reserves have been maintained; (b) Liens in
connection with worker's compensation, unemployment insurance or other
social security, old age pension or public liability obligations not
yet due or which are being contested in good faith by appropriate
action being diligently pursued and for which adequate reserves have
been maintained in accordance with GAAP; (c) carriers',
warehousemen's, repairmen's, mechanics', workmen's, materialmen's,
construction or other like Liens arising by operation of law in the
ordinary course of business and which are not yet due or which are
being contested in good faith by appropriate proceedings being
diligently pursued and for which adequate reserves have been
maintained in accordance with GAAP; (d) purchase money security
interests securing indebtedness incurred for the acquisition of assets
up to an aggregate of Six Hundred Thousand Dollars ($600,000) and only
to the extent such purchase money lien is confined solely to the item
or items of property so acquired, (e) Liens in favor of Collateral
Agent on behalf of Lenders, to secure the Loans, and Prudential, to
secure the Pru Debt, and (f) Liens permitted by the Security
Instruments, PROVIDED, HOWEVER, those Liens under subclause (c) above
will only be Permitted Liens if same are released or discharged within
ninety (90) days after they arise or attach.
1.119 "PERSON" or "PERSONS" means any individual, corporation, business
trust, association, company, limited liability company, partnership,
joint venture, governmental authority, or other entity.
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1.120 "PLAN" means any employee pension benefit plan within the meaning of
Section 3(2) of ERISA maintained for employees of Borrower, or of any
member of a "controlled group of corporations or "combined group of
trades or businesses under common control" as such terms are defined,
respectively, in Sections 1563 and 414 of the Code, as amended, and
the regulations thereunder, of which Borrower is a part.
1.121 "PRIME DESIGNATED AMOUNT" OR "AMOUNTS" means that portion of the
outstanding principal amount of the Notes, designated by Borrower in
accordance with Section 2.06(b)(iii), upon which interest is to be
calculated at the Prime Rate during a particular Rate Period or any
other Loans bearing interest at the Prime Rate pursuant to the
provisions of Section 2 hereof.
1.122 "PRIME RATE" shall mean the higher of (a) the rate of interest from
time to time announced by Administrative Agent at the Lending Office
as its base or reference rate for U.S. domestic commercial loans in
Dollars, or (b) the Fed Funds Rate. It is understood and agreed that
the base or reference rate is a reference rate only and does not
necessarily represent the lowest or best rate actually charged by
Lenders to any customer. The base or reference rate shall
automatically fluctuate upward or downward without any special notice
by Administrative Agent or Lenders to Borrower.
1.123 "PRU DEBT" means the SUM of all outstanding obligations and
indebtedness of Guarantor under the Pru Notes and the Subordinated
Notes.
1.124 "PRUDENTIAL" has the meaning set forth in Recital 2 hereof.
1.125 "PRUDENTIAL SECURITY" means Prudential's interest in the Collateral
held by Collateral Agent, in connection with and to secure the Pru
Debt.
1.126 "PRU NOTES" has the meaning set forth in Recital 2 of this Agreement.
1.127 "RATE PERIOD" means the period of time for which the LIBOR Based Rate
shall be in effect as to any portion of the Loan, commencing with the
Borrowing Date or the day after the expiration of the immediately
preceding Rate Period, as the case may be, applicable to such Loan
portion, ending one (1), three (3) or six (6) months thereafter, as
Borrower may specify in the Notice of Borrowing or Notice of Rate
Change, subject, however, to the early termination provisions of
Sections 2.07, 2.08, 2.09 and any other early termination provisions
in this Agreement, relating to LIBOR Loans; provided, however, that
any Rate Period which would otherwise end on a day which is not a
Business Day unless such Business Day falls in another calendar month,
in which case such Rate Period shall end on the next preceding
Business Day.
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1.128 "REAL PROPERTY MORTGAGE" means the Multiple Indebtedness Mortgage,
Collateral Assignment and Security Agreement dated August 8, 1997,
executed by Borrower in favor of BOK, covering the Louisiana Facility,
which Real Property Mortgage is assigned by BOK to Administrative
Agent, and amended by Amendment to Multiple Indebtedness Mortgage,
Collateral Assignment and Security Agreement executed by Borrower in
favor of Administrative Agent, with effect from the Closing Date.
1.129 "RECURRING CAPITAL EXPENDITURES" with respect to Borrower on a
consolidated and consolidating basis, means capital expenditures
necessary for the routine and customary maintenance and repair of
Borrower's natural gas compressors and other Inventory, including,
without limitation, capital expenditures necessary for major
overhauls, refurbishments and other similar expenditures in accordance
with GAAP.
1.130 "REGULATION D" means Regulation D of the Board, as the same is from
time to time in effect, and all official rulings and interpretations
thereunder or thereof.
1.131 "RESERVE REQUIREMENT" means, with respect to a LIBOR Based Rate, for
any day as applied to a LIBOR Loan, the aggregate (without
duplication) of the rates (expressed as a decimal fraction) of reserve
requirements in effect on such day (including, without limitation,
basic, supplemental, marginal and emergency reserves under any
regulations of the Board or other Governmental Authority having
jurisdiction with respect thereto) dealing with reserve requirements
prescribed for eurocurrency funding (currently referred to as
"Eurocurrency Liabilities" in Regulation D) maintained by a member
bank of the Federal Reserve System. LIBOR Loans shall be deemed to
constitute Eurocurrency Liabilities and to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to any Lender under
Regulation D.
1.132 "REVOLVING CREDIT LOAN OR "REVOLVING CREDIT LOANS" shall mean the
total of all revolving credit loans made by Lenders under the terms of
this Agreement and the Notes.
1.133 "REVOLVING CREDIT NOTE" shall have the meaning set forth in Section
2.01(b) hereof.
1.134 "SALES PROCEEDS" has the meaning set out in Section 3.02(b)(i) of
this Agreement.
1.135 "SECURITY INSTRUMENTS" means the Borrower's Security Agreement, the
Notes, the Assignment of Note and Liens, the Guarantee, the Assignment
of Controlled Account, the Assignment of Insurances, the Real Property
Mortgage, the Assignment of Mortgage, the Aircraft Mortgage
Assignment, the Title Insurance Policy covering the Facility Mortgage,
the Stock Pledge, the Assignment of Leases,
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Contracts and Contract Proceeds, and all financing statements and all
other security instruments and documents assigned, or given or granted
to Administrative Agent in connection with the Collateral or
otherwise, on behalf of Lenders and Prudential, in support of this
Agreement, the Notes and the Pru Debt and in connection with the
Collateral, as same may be amended from time to time, all in form and
substance reasonably satisfactory to Administrative Agent.
1.136 "SG&A" means, as to any period, Selling, General and Administrative
Expenses of Borrower for such period, calculated in accordance with
GAAP.
1.137 "STOCK PLEDGE" means a Pledge of Shares and Security Agreement
executed by Guarantor in favor of Administrative Agent covering all of
the common stock of Borrower.
1.138 "SUBORDINATED DEBT" means any indebtedness now existing or hereafter
arising owed by (a) Borrower to the Guarantor, and (b) Guarantor and
Borrower to Prudential under the Subordinated Notes (but not exceeding
$15,000,000), which indebtedness by the terms hereof is expressly made
subordinate to the indebtedness of Borrower to Lenders hereunder and
under the Notes.
1.139 "SUBORDINATED NOTES" has the meaning set forth in Recital 1 of this
Agreement.
1.140 "SUBSIDIARY" means Equity Leasing Corporation and any other
subsidiary of Borrower formed with Administrative Agent's prior
consent.
1.141 "SUNTERRA" has the meaning set forth in Recital 1 of this Agreement
and, unless the context may otherwise require, for the purposes of
this Agreement shall also include Sunterra LLC.
1.142 "SUNTERRA COLLATERAL" has the meaning set forth in Recital 5 of this
Agreement.
1.143 "SUNTERRA LLC" has the meaning set forth in Recital 5 of this
Agreement.
1.144 "TAXES" means, with respect to any Person, any present or future
taxes, levies, duties, imposts, AD VALOREM taxes, franchise taxes,
charges, fees, deductions or withholdings of any nature whatsoever
except, with respect to any Lender, for any such taxes or franchise
taxes which are imposed on the overall income of any Lender (excluding
income derived from the Loans and this Agreement) by any taxing
jurisdiction in which any Under does business.
1.145 "TERM LOAN" shall have the meaning set forth in Section 2.05(a)
hereof.
1.146 "TERM NOTE OR "TERM NOTES" shall have the meaning set forth in
Section 2.05(a) hereof.
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1.147 "TOTAL REVENUES" means, as to any period, the total gross revenues of
Borrower, computed in accordance with GAAP, for such period.
1.148 "TRIBUNAL" means any municipal, state, commonwealth, Federal,
foreign, territorial, or other governmental entity, governmental
department, court, commission, board, arbitration tribunal, bureau,
agency or instrumentality.
Section 1.2 OTHER DEFINITIONAL PROVISIONS. All definitions contained in
this Agreement are equally applicable to the singular and plural forms of the
terms defined. The words "hereof," "herein," and "hereunder" and words of
similar import referring to this Agreement refer to this Agreement as a whole
and not to any particular provision of this Agreement. Unless otherwise
specified, all Article and Section references pertain to this Agreement. Unless
otherwise stated in this Agreement, all accounting and financial definitions,
terms, ratios and covenants used in this Agreement, with respect to Borrower
(its earnings, expenses or financial performance), shall be on a consolidated
basis for Guarantor's operations (excluding therefrom, however, (a) the
financial results of Sunterra's operations, and (b) any other revenues and
expenses derived from sources other than Borrower and Subsidiary) and wherever
the term "consolidated" is used in this Agreement with respect to the Borrower's
operations, such term shall be deemed to exclude Sunterra's operations and all
other revenues and expenses derived by Guarantor from sources other than
Borrower and Subsidiary. All accounting terms not specifically defined or
otherwise stated herein shall be construed in accordance with GAAP.
ARTICLE II
LOAN AND INTEREST
Section 2. LOAN. Subject to the terms and conditions and relying on the
representations and warranties contained in this Agreement and in the Security
Instruments, Lenders agree to make the following loans and advances to Borrower:
Section 2.01 REVOLVING CREDIT LOANS.
(a) BORROWING. From the Closing Date through the Conversion
Date, each Lender severally agrees to make revolving credit loans
("Revolving Credit Loans" and each, a "Revolving Credit Loan") to Borrower
on any one or more Business Days prior to the Conversion Date, up to an
aggregate principal amount not exceeding the lesser of each Lender's
Percentage Interest of the applicable Borrowing Base (i.e., Conforming or
Non-Conforming) or each Lender's Maximum Commitment at any one time
outstanding.
(b) REVOLVING CREDIT NOTE. The Revolving Credit Loans shall be
evidenced by one or more revolving credit notes in favor of each Lender
executed by Borrower, each of which shall be dated as of the Borrowing Date
of each Lender's first
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Revolving Credit Loan, shall be in the principal amount of each Lender's
Maximum Commitment, shall be in substantially the form attached hereto
as EXHIBIT 2.01(b) (which shall be deemed to be a part hereof for all
purposes) with all blanks appropriately completed, shall be payable to
the order of each Lender on or before April 1, 2000, and shall be
subject to acceleration upon the occurrence of an Event of Default.
Each Revolving Credit Loan shall bear interest on the unpaid principal
amount thereof from time to time outstanding, payable on each Interest
Payment Date and at Maturity, commencing with the first Interest Payment
Date following the date of such Revolving Credit Loan, at the rate per
annum determined as specified in Section 2.06. The unpaid principal balance
of each Revolving Credit Note at any one time shall be the total amounts
loaned or advanced thereunder by the relevant Lender, less the amount of
payments or prepayments of principal made thereon by Borrower. It is
contemplated that by reason of prepayments thereunder, there may be times
when no indebtedness is owing under a Revolving Credit Note; but
notwithstanding such occurrence, such Revolving Credit Note shall remain
valid and be in full force and effect as to (i) Revolving Credit Loans made
thereunder subsequent to each such occurrence, and (ii) all other
Obligations and indebtedness of Borrower intended to be evidenced thereby,
unless Borrower has prepaid the Notes in whole pursuant to the provisions
of Section 3.02 and otherwise satisfied all its obligations under this
Agreement and the Notes, in which event this Agreement shall terminate and
the Notes be forthwith canceled by each Lender and returned to Borrower.
(c) NOTICE OF BORROWING. Each Revolving Credit Loan shall be in a
principal amount of not less than $100,000 (except in the case of Advances
made for interest, Fees and expenses pursuant to the provisions of Section
2.06(e) hereof, which may be in such lower amounts as may be required by
Administrative Agent). Each such borrowing shall be made by each Lender,
through Administrative Agent, at the Lending Office upon written request
from Borrower executed by a duly authorized officer of Borrower and
delivered to Administrative Agent in the case of LIBOR Loans, at least
three (3) full Business Days prior to, and in the case of Prime Designated
Amounts, at any time prior to 10:00 A.M., New York time, on the same day
as, the Borrowing Date of the Revolving Credit Loan requested ("Notice of
Borrowing"). Each Notice of Borrowing shall also specify (a) the Borrowing
Date, (b) the amount of the proposed borrowing, (c) the rate of interest
(i.e., the Prime Rate or a LIBOR Based Rate) that each such Revolving
Credit Loan shall bear (in the absence of such choice, the borrowing shall
be made at the Prime Rate), and (d) provided the terms and conditions of
Section 2.01(d) below have been met, whether the Revolving Credit Loan is
to be a Non-Conforming Loan. Each Notice of Borrowing shall be irrevocable.
On the Borrowing Date, each Lender shall make its required borrowing
available to Administrative Agent in immediately available funds at the
Lending Office prior to 11:00 A.M., New York time. Each Lender may post on
a schedule attached to its Revolving Credit Note (i) the date and principal
amount of each Revolving Credit Loan made under such Note, (ii) the rate of
interest such Revolving Credit Loan shall bear, and (iii) each payment of
principal thereon. In any legal action or proceeding in respect of the
Revolving Credit Notes, the entries posted on the said schedule shall be
prima facie evidence of the principal and interest owing by Borrower
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thereunder, absent manifest error; PROVIDED, HOWEVER, that failure by any
Lender to endorse any such entry shall not affect the validity of its
Revolving Credit Note or any other rights of Lenders or any subsequent
holder with respect thereto, each Lender's books and records being the
correct determination of all such outstanding amounts, absent manifest
error. Any deposit by Administrative Agent to Borrower's Controlled Account
pursuant to a Notice of Borrowing believed by Administrative Agent to be an
authorized request by Borrower for a Revolving Credit Loan hereunder shall
be deemed to be a Revolving Credit Loan hereunder for all purposes, with
the same effect as if Borrower had, in fact, requested Administrative
Agent, on behalf of each Lender, to make such Revolving Credit Loan.
(d) NON-CONFORMING LOANS. Notwithstanding any other provision to the
contrary contained in this Agreement or any other Loan Document, all Loans
hereunder shall be Conforming Loans subject to the Conforming Borrowing
Base limit, unless the provisions of this Section 2.01(d) apply. At any
time prior to the Conversion Date, if Borrower wishes to obtain a Revolving
Credit Loan from Lenders under either the Revolving Credit Note or the
Additional Revolving Credit Note, and the amount of any such Revolving
Credit Loan would exceed the Conforming Borrowing Base at that time in
effect, Borrower may, in its Notice of Borrowing, request Administrative
Agent to make a Non-Conforming Loan. In such event, Lenders may loan to
Borrower an amount equal to the LESSER of (i) the Revolving Credit Loan
requested by Borrower, or (ii) the amount of the Non-Conforming Borrowing
Base. Such Advance shall only be made by Lenders if Borrower has submitted
a Borrowing Base Certificate and Administrative Agent has issued its Notice
of Borrowing Base with respect thereto at least three (3) days prior to
such Advance detailing the permitted limit of the Non-Conforming Borrowing
Base, based on Borrower's Borrowing Base Certificate, which certifies that
there is sufficient Non-Conforming Borrowing Base to permit Lenders to make
Non-Conforming Loans up to the maximum of the Available Credit. If such
Notice of Borrowing Base will not permit NonConforming Loans, none shall be
made. Thereafter, Borrower may request and receive Non-Conforming Loans up
to the maximum of the Available Credit at any time and from time to time
prior to the Conversion Date, provided there is sufficient Non-Conforming
Borrowing Base to support such Loan, up to the maximum aggregate amount of
the Notes.
Section 2.02 LETTERS OF CREDIT. From the Closing Date through the
Conversion Date, Administrative Agent, as issuing bank for Lenders, may
issue standby Letters of Credit from time to time on any Business Day in
such amounts as Borrower may request in writing, subject to the limits set
forth in Section 7.01 below, PROVIDED, HOWEVER, that the aggregate amount
of all outstanding Letters of Credit and all Revolving Credit Loans may not
exceed the Available Commitment. Such Letters of Credit shall be in a form
reasonably acceptable to Administrative Agent. Upon presentation to and
payment by Administration Agent of any Letters of Credit, the amount paid
thereon by Administrative Agent shall be deemed an Advance under the Loan
by each Lender in its Percentage Interest to Borrower and shall be included
in the outstanding principal amount of the Loan.
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All such Letters of Credit shall further be subject to the terms and
conditions set forth in Article VII below.
Section 2.03 ADDITIONAL LOANS.
(a) ADDITIONAL LOAN REQUEST. At any time prior to the Conversion
Date, Borrower may request Administrative Agent to find Additional Lenders
to make Additional Loans. Any Additional Loans made shall be made in the
manner set forth below. No Additional Loans shall be due to Borrower unless
and until the Additional Lenders have funded Administrative Agent, in
immediately available funds, with the amount of the Additional Loan or
Loans pursuant to the provisions of Article XII hereof. NOTHING CONTAINED
IN THIS AGREEMENT OR ANY LOAN DOCUMENT SHALL BE DEEMED A GUARANTEE OR
COMMITMENT BY ADMINISTRATIVE AGENT THAT IT WILL FIND ADDITIONAL LENDERS OR
THAT IT WILL FUND ADDITIONAL LOANS.
(b) ADDITIONAL REVOLVING CREDIT NOTE. If Additional Loans are made,
all Additional Loans shall be evidenced by an Additional Revolving Credit
Note in favor of each Additional Lender, which shall be dated as of the
Borrowing Date of the first Additional Loan made by each Additional Lender,
shall be in the principal amount of each Lender's Maximum Commitment, shall
be in substantially the form attached hereto as EXHIBIT 2.03(b) (which
shall be deemed to be a part hereof for all purposes) with all blanks
appropriately completed, shall be payable to the order of each Lender on or
before the Conversion Date, and shall be subject to acceleration upon the
occurrence of an Event of Default. Each Additional Loan shall bear interest
on the unpaid principal amount thereof from time to time outstanding,
payable on each Interest Payment Date and at Maturity, commencing with the
first Interest Payment Date following the date of such Additional Loan, at
the rate per annum determined as specified in Section 2.06. The unpaid
principal balance of each Additional Revolving Credit Note at any one time
shall be the total amounts loaned or advanced thereunder by each Lender,
less the amount of payments or prepayments of principal made thereon by
Borrower.
(c) NOTICE OF BORROWING AND OTHER PROVISIONS OF ADDITIONAL LOANS.
Additional Loans may be borrowed by Borrower pursuant to a Notice of
Borrowing in the same manner as set forth in Section 2.01(c) hereof.
Additional Loans shall be deemed to be Revolving Credit Loans, and shall be
governed by all other provisions (including, without limitation, interest
provisions and Notices of Borrowing), which apply to Revolving Credit Loans
under this Agreement.
(d) PERCENTAGE INTERESTS. Borrower and Lenders agree that once
Additional Loans have been funded, Lenders will retain their Percentage
Interests in all Loans and Notes (including the Term Note) thereafter,
notwithstanding the fact that the Borrowing Base requirements might reduce
the outstanding Loans to less than the amount of the Initial Loan.
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Section 2.04 FUNDING OF ADVANCES. All Advances under the Notes shall be
paid by each Lender to the Administrative Agent and shall be deposited by the
Administrative Agent into the Controlled Account. Each such Advance shall be
recorded by each Lender in its books and records and shall be conclusive as
to the sums advanced, absent manifest error.
Section 2.05 TERM LOAN.
(a) TERM NOTE. On April 1, 2000, each Lender severally agrees,
subject to the mandatory prepayment provisions of Sections 3.02, 3.06 and
7.01, and all other applicable terms of this Agreement, to convert all
Revolving Credit Loans into one Term Loan ("Term Loan"), provided there is
no Default hereunder and the conditions of Articles V and VII hereof have
all been met. In this connection, on April 1, 2000, if no Default exists
hereunder and the above said conditions have been met, the outstanding
principal amounts on the Revolving Credit Notes shall be renewed and
extended into one or more new promissory notes (the "Term Notes") dated
April 1, 2000 (the "Conversion Date") executed by Borrower; PROVIDED,
HOWEVER, that the aggregate face amount of all Term Notes shall not exceed
the Borrowing Base as shown in the most recent Notice of Borrowing Base.
The Term Notes shall be payable to the order of each Lender in aggregate
principal amounts of up to each Lender's Maximum Commitment. If Default
exists or any of the applicable conditions of Article V or Article VII have
not been met, the Revolving Credit Notes shall not be renewed and extended
into Term Notes at the Conversion Date and the Notes and this Agreement
shall become immediately due and payable.
(b) NATURE OF THE TERM NOTE; MANDATORY PAYMENT. If, on the
Conversion Date, any Revolving Credit Loans under the Revolving Credit
Notes are Non-Conforming Loans, Borrower shall, simultaneously with the
execution of the Term Notes, prepay to Lenders, in their Percentage
Interests, such principal amount, together with all accrued and unpaid
interest, Fees and expenses thereon, as the Administrative Agent determines
is necessary to reduce the outstanding principal amount of the Loan to an
amount equal to or less than the Conforming Borrowing Base then in effect.
Thereafter, the aggregate amounts outstanding under the Term Notes should
never exceed the Conforming Borrowing Base.
(c) INTEREST ON THE TERM NOTE. The Term Notes shall each bear
interest at the Conforming LIBOR Rate or Prime Rate, as set forth below,
for the entire terms of such Notes. Accrued interest on the Term Note shall
be payable on each Interest Payment Date, commencing with the first
Interest Payment Date following the date of execution of the Term Notes, at
the rate per annum set forth in Section 2.06.
(d) REPAYMENT OF THE TERM NOTES. The Term Notes shall be
repayable to the Administrative Agent, for the ratable benefit of the
Lenders, in quarterly installments each equal to one twenty-eighth (1/28th)
of the principal amount of each Term Note, with the outstanding balance
being due and payable in full on the Maturity Date of each such
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Term Note; PROVIDED, HOWEVER, that Borrower agrees to make any additional
prepayments of principal required by Section 3.02 hereof. Each such
installment shall be due and payable on each Interest Payment Date for
Prime Designated Amounts during the term of the Term Notes (the
"Installment Date") with the first such installment being due and payable
on April 1, 2000 and the final installment being due and payable on March
31, 2003.
(e) OTHER PROVISIONS OF THE TERM NOTE. The Term Notes shall contain
such other terms and provisions and be in the form as set forth in the form
of note attached hereto as EXHIBIT 2.05(e). The Term Notes shall be
subject to acceleration upon the occurrence of an Event of Default and
shall be subject to mandatory and optional prepayments on the occurrence of
certain events described below.
Section 2.06 INTEREST ON THE NOTES. Except as otherwise specified
herein, the Loans shall bear interest on the unpaid principal amounts thereof
from time to time outstanding, until Maturity, at a rate per annum (based on
a year of 360 days in the case of the LIBOR Based Rate, and a year of 365 or
366 days, as the case may be, in the case of the Prime Rate) as follows:
(a) TERM LOAN. The Term Loan shall bear interest at either the
Conforming LIBOR Rate or the Prime Rate until Maturity as follows:
(i) At the commencement of the Term Notes, if Borrower desires
the Term Notes to bear interest at the Conforming LIBOR
Rate, it shall, at least three (3) Business Days prior to
the Conversion Date, issue to Lender a Notice of Borrowing
electing the Conforming LIBOR Rate and the Rate Period (one
(1), three (3) or six (6) months) which is to apply to such
Conforming LIBOR Rate. If Borrower fails to timely issue its
Notice of Borrowing, the Prime Rate shall apply to the Term
Notes.
(ii) Thereafter, Borrower may change the interest rate which
applies to the Term Notes by delivering to Administrative
Agent a Notice of Rate Change (defined in Section
2.06(b)(iv) below). If Borrower's Notice of Rate Change
specifies the Conforming LIBOR Rate, such Notice of Rate
Change shall be delivered to Administrative Agent at least
three (3) Business Days prior to the Effective Date of the
Notice of Rate Change. In the case of the Prime Rate,
Borrower's notice may be given on the Effective Date of such
rate change.
(iii) The Term Note may bear up to three (3) (but no more)
differing LIBOR Based Rates of interest on portions of the
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outstanding principal balance thereof in increments of not
less than $100,000; PROVIDED, HOWEVER, that all Term Notes
must bear the same rates of interest (the intent being that
each Lender shall receive uniform rates of interest on each
portion of their Term Loan).
(iv) If Borrower fails to timely send a Notice of Rate Change or
fails to timely elect a new Rate Period (one (1), three (3)
or six (6) months) prior to the end of any Rate Period for
any portion of the Term Notes, the entire amounts owed on
all Term Notes, or portions thereof for which no Notice of
Rate Change was timely delivered or Rate Period selected,
shall bear interest at the Prime Rate.
(v) In all other respects, Borrower's options, and all
procedures under the Term Notes, with respect to the Prime
Rate or LIBOR Based Rate election shall be the same as for
the Revolving Credit Loans set forth herein.
(b) REVOLVING CREDIT LOANS. The Revolving Credit Loans shall bear
interest as follows:
(i) Each Revolving Credit Loan shall bear interest at either the
Conforming LIBOR Rate or the Prime Rate, at Borrower's
option, unless any such Revolving Credit Loan has been
designated as a Non-Conforming Loan under the terms of this
Agreement and the Notes.
(ii) All Non-Conforming Loans shall bear interest at the
Non-Conforming LIBOR Rate or the Non-Conforming Prime Rate,
at Borrower's option.
(iii) If Borrower, in its Notice of Borrowing, requests a Prime
based rate for either a Conforming Loan or a Non-Conforming
Loan, Borrower shall pay interest on that Revolving Credit
Loan on each Interest Payment Date at the applicable Prime
based rate for such Loan in effect from time to time, until
the earlier of Maturity or the Effective Date of Borrower's
Notice of Rate Change (defined in subclause (iv) below).
(iv) If any Revolving Credit Loan bears interest at the Prime
Rate or Non-Conforming Prime Rate, as set forth above,
Borrower may change the interest rate to apply to such
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outstanding Revolving Credit Loan to a LIBOR Based Rate by
delivering to Administrative Agent a written notice ("Notice
of Rate Change") which sets forth (x) the principal amount
of such Revolving Credit Loan which Borrower wishes to
convert to a LIBOR Based Rate (which shall not be less than
$100,000), and (y) the effective date of the requested rate
change (which shall not be less than three (3) Business Days
after the date of such Notice of Rate Change ("Effective
Date"); PROVIDED, HOWEVER, that the Revolving Credit Notes
(and all Loans thereunder) may bear up to, but may not
exceed, a maximum of three (3) differing LIBOR Based Rates
of interest at any one time.
(v) On the Effective Date of any rate change, the applicable
LIBOR Based Rate shall become effective to such Revolving
Credit Loan and shall remain in effect until the earlier of
the end of the applicable Rate Period or the Conversion
Date. Borrower may not elect a different rate of interest on
only a portion of a Revolving Credit Loan, the intent being
that the full amount of each Revolving Credit Loan must bear
a uniform rate of interest.
(c) CHANGES IN EFFECTIVE RATE; RATE CHANGES.
(i) Each change in the Prime Rate or Non-Conforming Prime Rate,
shall become effective, without notice to Borrower, on the
effective date of each change in such Prime Rate or
Non-Conforming Prime Rate. If at any time the rate of
interest payable on the Loans shall exceed the Maximum Rate,
thereby causing the interest on the Loans to be limited to
the Maximum Rate, then any subsequent reduction in the LIBOR
Based Rate, Prime Rate or Non-Conforming Prime Rate, as
applicable, shall not reduce the rate of interest on the
Loans below the Maximum Rate until the aggregate amount of
interest accrued on the Loans equals the amount of interest
which would have accrued on the Loans if the agreed interest
rate payable on the Loans hereunder had at all times been in
effect.
(ii) Subject to the limit set forth in Sections 2.06(a)(iii) and
2.06(b)(iv) concerning a maximum of three (3) differing
LIBOR Based Rates of interest, Borrower may elect to change
the rate of interest on all or any part of the Conforming
Loans from the Conforming LIBOR Rate to the
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Prime Rate, or from Prime Rate to the Conforming LIBOR Rate
by delivering a Notice of Rate Change to Administrative
Agent in the form set forth in Section 2.06(b)(iv) above.
The rate of interest on a Conforming LIBOR Loan may not be
changed until the end of the particular Rate Period. If
Borrower fails to timely elect a Rate Period for any LIBOR
Loan on or before three (3) Business Days prior to the end
of the particular Rate Period, the portion of the Loan so
affected shall bear interest at the Prime Rate or
Non-Conforming Prime Rate (in the case of Non-Conforming
Loans) as the case may be. In addition, any Notice of Rate
Change given by Borrower to change the Prime Rate or
Non-Conforming Prime Rate on any portion of a Loan to a
LIBOR Based Rate will not take effect until three (3)
Business Days after Administrative Agent receives such
Notice of Rate Change.
(d) INTEREST PAYMENT DATE; DEFAULT RATE. Accrued and unpaid interest
on the Loans shall be payable on each Interest Payment Date during the term
of the Loans, with interest being accrued and owing with effect from the
date of the first Advance under the Revolving Credit Note ("Interest
Commencement Date"), and at Maturity whether due to any acceleration,
pursuant to an Event of Default, or to any prepayment (whether voluntary or
mandatory) or final payment. All past due principal, Fees, interest,
Additional Costs, and expenses shall bear interest at the Default Rate.
(e) ADVANCES FOR INTEREST OR FEES. Until such time as the Loans are
fully drawn, if Borrower fails to pay to any Lender any interest, Fees,
Additional Costs or other costs and expenses owed to any Lender hereunder
or under any other Loan Document by 1:00 p.m. (New York time) on their Due
Date, Borrower hereby authorizes Administrative Agent to draw on the Loan
to pay the amount due for such due interest, Fees, Additional Costs or
other costs and expenses. Any such amount drawn shall be treated as an
Advance under, and become part of the principal on the Loan, shall bear
interest at the Prime Rate until Borrower elects a Notice of Rate Change
with respect thereto and shall reduce the Available Commitment by the
amount so drawn. Administrative Agent shall send notice in writing to
Borrower of the amount of any such Advance and details of how the Advance
was applied under the Loan. Once the Loans have been fully drawn, and no
Available Commitment remains, no further Advances shall be made for the
payment of interest, Fees, Additional Costs or other costs and expenses,
and Borrower shall continue to be responsible to pay same under the terms
of this Agreement and the Notes.
Section 2.07 REPAYMENT OF LOAN. Borrower shall repay the unpaid
principal amount of the Loan in full at Maturity. If the Loan and Notes are
accelerated pursuant to any of the provisions of this Agreement or of the
Security Instruments, all outstanding principal, interest, Fees, Additional
Costs, other fees, costs and amounts due under this Agreement, the Notes or
any
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Security Instrument shall be immediately paid by Borrower to Administrative
Agent, for the ratable benefit of the Lenders, subject to the terms of this
Agreement and any relevant Security Instrument.
Section 2.08 UNAVAILABILITY OF EURODOLLARS. If Administrative Agent in
good faith determines (which determination shall be conclusive) that (a)
deposits in Dollars in the outstanding principal amount of the Loan for which
the LIBOR Based Rate is in effect are not being offered to Lenders in the
London interbank market for the Rate Period applicable thereto, or (b)
adequate and reasonable means do not exist for ascertaining the LIBOR Rate,
then the LIBOR Based Rate shall not become effective or apply to any
Revolving Credit Loan or, if applicable, the Term Loan until Borrower
receives notice from Administrative Agent that the circumstances giving rise
to such determination no longer apply, and until such time as Borrower
receives Administrative Agent's notice, the Loan shall bear interest at the
lesser of (1) the Prime Rate or the Non-Conforming Prime Rate, whichever is
applicable, or (ii) the Maximum Rate.
Section 2.09 CHANGE IN LAWS. Anything in this Agreement to the contrary
notwithstanding, if at any time Administrative Agent in good faith determines
(which determination shall be conclusive) that the introduction of or any
change in any applicable law, rule or regulation or any change in the
interpretation or administration thereof by any governmental or other
regulatory authority charged with the interpretation or administration
thereof shall make it unlawful for Lenders to maintain or fund any Loan by
means of Dollar deposits obtained in the London interbank market,
Administrative Agent shall give notice thereof to Borrower. If a LIBOR Based
Rate is then in effect with respect to all or any portion of the Loans, then
upon such date as shall be specified in such notice from Administrative Agent
the Rate Period shall end and the lesser of the Prime Rate or the Maximum
Rate shall commence to apply in lieu of such LIBOR Based Rate, and shall
continue to apply during the term hereof. Upon such date specified in
Administrative Agent's notice to Borrower, Borrower shall pay to
Administrative Agent, for the ratable benefit of Lenders, (a) accrued and
unpaid interest on the Loan at the LIBOR Based Rate in effect at the time of
such notice to, but not including, such specified date, PLUS (b) such amount
or amounts (to the extent such amount or amounts would not be usurious under
applicable law) as may be necessary to compensate Lenders for any direct or
indirect costs and losses incurred by it (including, but not limited to, all
Additional Costs), but otherwise without penalty. In such event, unless and
until Administrative Agent notifies Borrower that the circumstances giving
rise to such notice no longer apply, the LIBOR Based Rate shall not again
apply to the Loan. Any claim by Administrative Agent for compensation under
sub-clause (b) of this Section 2.09 shall be accompanied by a certificate
setting forth the computation upon which such claim is based, and such
certificate shall be conclusive except in the case of manifest error.
Section 2.10 CAPITAL ADEQUACY. If after the date hereof, Administrative
Agent shall have determined that the adoption of any applicable law, rule or
regulation regarding capital adequacy, or any change therein, or any change
in the interpretation or administration thereof by any governmental
authority, central bank or comparable agency charged with the interpretation
or administration thereof, or compliance by Lenders with any request or
directive regarding capital adequacy (whether or not having the force of law)
of any such authority, central bank or
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comparable agency, has or would have the effect of reducing the rate of
return on any Lender's capital as a consequence of its obligations hereunder
or the transactions contemplated hereby to a level below that which such
Lender could have achieved but for such adoption, change or compliance
(taking into consideration Lender's policies with respect to capital
adequacy) by an amount deemed by such Lender to be material, then from time
to time, within ten (10) Business Days after written demand by Administrative
Agent, Borrower shall pay to Administrative Agent for the ratable benefit of
such Lenders such additional amount or amounts as will compensate all such
Lenders for such reduction. Any Lender claiming compensation under this
Section 2.10 and setting forth, in writing, the additional amount or amounts
to be paid to it hereunder shall be conclusive, provided that the
determination thereof is made on a reasonable basis. In determining such
amount or amounts, Lenders may use any reasonable averaging and attribution
methods.
Section 2.11 ADDITIONAL COSTS. Borrower agrees from time to time, on the
earlier of (a) within ten (10) Business Days after written demand by
Administrative Agent or (b) on the Conversion Date or (c) at Maturity,
Borrower shall pay to Administrative Agent all Additional Costs suffered by
any Lender which have not or will not be recouped by such Lender by any other
applicable provision of this Agreement or the Notes. In its Notice to
Borrower for any Additional Costs, Administrative Agent shall set forth in
reasonable detail, certified by an officer of the relevant Lender, the exact
nature of all Additional Costs and an explanation as to why such Lender has
not and will not be reimbursed for such Additional Costs pursuant to any
other provisions of this Agreement.
Section 2.12 USE OF PROCEEDS. The proceeds of the Loan shall be used to
refinance the BOK Loan, to finance Permitted Acquisitions, Recurring Capital
Expenditures, additional equipment and asset purchases and to provide
additional working capital for Borrower.
Section 2.13 APPRAISALS. In April of each year, in order to assist with
the determination of the Borrowing Base, the Appraiser, at the cost and
expense of Borrower, shall appraise the entire compressor fleet of Borrower
and all other Collateral in order to determine the Collateral Values. In
addition, the Appraiser shall, at the cost and expense of Borrower, perform
additional appraisals if (i) Administrative Agent reasonably determines that
the Collateral has deteriorated in value sufficiently that the Borrowing Base
could be materially adversely affected (but no more than one (1) additional
appraisal on this basis per year) and (ii) a Default has occurred.
Administrative Agent shall have the further right at any time to cause the
Appraiser to carry out further appraisals at Administrative Agent's own cost
and expense.
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ARTICLE III
PAYMENTS
Section 3.01 METHOD OF PAYMENT. All payments of principal, interest, and
other amounts to be made by Borrower hereunder and under the Notes shall be
made on time, on or before 12:00 Noon (New York time) on the applicable Due
Date, to Administrative Agent, for the ratable benefit of each Lender, at the
Lending Office, New York, New York, in Dollars and in immediately available
funds, by wire transfer as follows:
Citibank N.A., New York
ABA No. 021000089
For account of Bank of Scotland, New York
A/C No. 36046633
Ref.: Ouachita Energy Corporation
Attn: Loan Admin.
Unless otherwise specifically provided for in this Agreement to the
contrary (i.e., LIBOR Based Rate payments) whenever any payment, notice,
certificate or report due hereunder or under the Notes shall be stated to be
due on a day that is not a Business Day, such payment, notice, certificate or
report due may be made on the next succeeding Business Day and, in the case
of a payment, interest shall continue to accrue during such extension. All
Mandatory Prepayments payable from Sale Proceeds shall be paid by Borrower
to, and applied by, Administrative Agent against the Obligations in the
manner set forth in Section 3.02(b) below.
Section 3.02 PREPAYMENTS.
(a) OPTIONAL. Borrower shall have the right at any time and from
time to time to prepay the outstanding principal on the Loan and Notes, in
whole or in part, without prepayment or penalty, provided that (i) Borrower
shall give Administrative Agent ten (10) full Business Days' prior written
notice of each proposed prepayment, specifying the principal amount to be
prepaid and the prepayment date, (ii) all accrued and unpaid interest,
Additional Costs, earned Fees and any expenses of Lenders (including those
set forth in Sections 2.08, 2.09 and 2.10 and elsewhere in this Agreement
or the Security Instruments), on such prepaid amount to the date of
prepayment shall be payable at the time of such prepayment, and (iii) each
partial prepayment shall be in a principal amount of at least $100,000, or
any integral multiples thereof, and provided further, that Borrower may not
prepay the Loan or any portion thereof, to which the LIBOR Based Rate
applies prior to the end of the applicable Rate Period.
(b) MANDATORY. In addition to the principal payments required
under Section 2.05(d) above, Borrower shall pay to Administrative Agent,
for the ratable benefit of Lenders, as a prepayment of outstanding
principal on the Loans and Notes, the lesser of (x) all outstanding
principal, interest, Fees, expenses, Additional Costs and other fees
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and costs on the Loan and Note, or (y) one hundred percent (100%) of the
following amounts:
(i) In the event any of the compressor units of Borrower
which are part of the Inventory are sold, all net Sales
Proceeds of any such compressor unit sale or sales in
excess of $1,000,000 in the aggregate (including any
prior sales permitted hereunder) during any consecutive
twelve (12) month period (provided that sales in excess
of an aggregate of $250,000 may not be made in any
fiscal quarter) shall be applied in reduction of the
principal balance of the Loans; PROVIDED, HOWEVER, if a
Borrowing Base deficiency pursuant to Section
3.02(b)(iv) hereof results from or is caused by any
sale of a compressor unit, such portion of the net
Sales Proceeds of any compressor unit in Inventory as
is necessary to satisfy the Section 3.02(b)(iv)
deficiency shall be applied on the Loans prior to
aggregation of the remainder of such net Sales Proceeds
as a principal prepayment on the Notes; and PROVIDED,
HOWEVER, no such sale or sales in excess of $1,000,000
in the aggregate during any consecutive twelve (12)
month time period (or $250,000 in any one fiscal
quarter) shall occur without the prior written consent
of Administrative Agent. For purposes of this section,
"Sales Proceeds" shall mean the net sales price of such
compressor units (after deduction of all direct costs
of sale). Such sale(s) of compressor unit(s) in excess
of $1,000,000 singularly or in the aggregate (or
$250,000 in any one fiscal quarter) shall effect an
automatic reduction of the Borrowing Base and shall
also permit Administrative Agent, at its option, to
effect a redetermination thereof in accordance with the
provisions of Section 3.06 hereof, excluding the
unit(s) being sold.
(ii) All proceeds, amounts and payments received from any
insurance policies on the Collateral and any proceeds
or amounts received by Administrative Agent under the
provisions of the Assignment of Insurances;
(iii) After the Conversion Date, 50% of all Excess Cash,
payable as set forth in subclause (d)(ii) below; and
(iv) All prepayments of principal required by Administrative
Agent's Notice of Borrowing Base, pursuant to the
provisions of Section 2.05(a) above or in Section 3.06
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below, in order to ensure that the amounts loaned under
the Notes at any time do not exceed the Borrowing Base
in effect from time to time.
(c) CHANGE OF CONTROL. If any Event of Default of Change of
Control occurs, Borrower shall immediately pay and discharge all
outstanding Obligations and interest, Fees and expenses (whether for
collection or otherwise) thereon.
(d) PAYMENT OF MANDATORY AMOUNTS.
(i) Any mandatory prepayments required pursuant to the
provisions of subclauses (b)(i) through (iv) of this
Section 3.02, shall be applied ratably by Borrower
among the Loans and the PARI PASSU Debt and shall be
paid pro rata to Administrative Agent, for application
against the Loans, and to Prudential, for application
against the PARI PASSU Debt, unless Prudential elects
not to participate in such prepayment by delivering
written notice to Administrative Agent and Borrower no
later than two full Business Days prior to the date of
Borrower's required prepayment that it elects not to
participate in such prepayment, Borrower shall apply
and make any such prepayments ratably among the Loans
and the PARI PASSU Debt in accordance with the
respective principal amounts then outstanding on the
Loans and PARI PASSU Debt. If Prudential elects not to
participate in such prepayment, by delivering written
notice of such election to the Administrative Agent and
Borrower within the time period set forth above,
Borrower shall pay the full amount of such prepayment
directly to Administrative Agent to be applied on the
Loans.
(ii) Any and all proceeds received by Borrower or deposited
directly into the Controlled Account under subclauses
(b)(i) and (ii) of this Section 3.02 shall be
immediately paid by Borrower in the manner outlined in
subclause (d)(i) above. In addition, Borrower agrees
that if any Lender or Prudential, or their agents or
assignees, receives directly any proceeds under
subclauses (b)(i) and (ii) above, such amounts received
shall be immediately applied and distributed in the
manner set forth in the Intercreditor Agreement. In
such case, Administrative Agent shall notify Borrower
of the amount, time and source of such prepayment, but
failure to do so shall not give rise to any
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liability on Administrative Agent's part, absent gross
negligence or willful misconduct.
(iii) Immediately after the issuance of audited financial
statements for each Borrower for each fiscal year,
commencing with the fiscal year ending December 31,
2000 and provided the Loans have converted to Term
Loans hereunder, and thereafter each year, Borrower
shall make a prepayment under the Notes in an amount
equal to fifty percent (50%) of all Excess Cash. Such
prepayments shall be made and applied in the manner set
forth in Section 3.02(d)(ii) above.
(e) ALLOCATIONS OF PAYMENTS/INSURANCE AND FORECLOSURE PROCEEDS.
All prepayments (whether voluntary or otherwise) shall be accompanied by
the payment of all accrued interest, Fees, expenses, Additional Costs and
other costs on the amount prepaid through the date of prepayment. All
prepayments of principal on the Obligations shall be applied by
Administrative Agent against the Notes (whether for the Initial Loan or
Additional Loans) in inverse order of maturity. All payments of overdue
amounts of principal shall be applied by Administrative Agent in inverse
order of maturity of such overdue amounts. Subject to the provisions of
this Section 3.02 and the terms and conditions of the Intercreditor
Agreement, all insurance, Sale Proceeds and foreclosure proceeds received
by Administrative Agent pursuant to the provisions of this Agreement, the
Notes and any Security Instruments shall be applied by Administrative Agent
against the Notes in the following order of priority: (i) first to the
payment of all costs of collection of such proceeds, (ii) second to the
payment of Borrower's outstanding Obligations other than principal, Fees
and interest on the Notes, (iii) third to the payment of any Fees due at
such time and any other outstanding costs, fees or expenses due to
Administrative Agent under this Agreement or the Security Instruments, (iv)
fourth to the payment of all principal and interest due on the Notes (with
interest being paid first and principal being applied in inverse order of
maturity), (v) fifth to Prudential as may be required under the provisions
of the Pru Notes and Subordinated Notes pursuant to the provisions of the
Intercreditor Agreement, and (vi) any balance shall be paid to Borrower.
Section 3.03 FEES. Borrower agrees to pay the Administrative Agent for
the ratable benefit of the Lenders in their Percentage Interests at the time
of payment the following fees in cash or other immediately available funds:
(a) Quarterly in arrears, the Commitment Fee, on the last
Business Day of each calendar quarter ending after the Closing Date,
commencing with March 31, 1998;
(b) Upon the issuance or renewal of any Letter of Credit, a
Letter of Credit Fee, in an amount equal to the sum of (i) one quarter of
one percent (0.25%) per annum (for the Administrative Agent's own account
as issuer of each Letter of Credit),
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PLUS (ii) one and one half of one percent (1.50%) per annum for the ratable
benefit of each Lender of the face amount of such Letter of Credit, which
Letter of Credit fee shall be deemed earned on the date of issuance of such
Letter of Credit; and
(c) Such other fees as may be agreed by Borrower.
In addition, Borrower shall pay Lender all Fees due under the
provisions of the Fee Letter to Administrative Agent for its own account
and benefit.
Section 3.04 COMPUTATION OF FEES. All Fees expressed as an annual
percentage shall be based on a year of three hundred sixty (360) days, and
actual days elapsed.
Section 3.05 SET-OFF; COUNTERCLAIMS AND TAXES. All payments (whether of
principal, interest, reimbursements or otherwise) under this Agreement or on
the Notes shall be made by Borrower without set-off or counterclaim and shall
be made free and clear of and without deduction for any Taxes of any nature
whatsoever now or hereafter imposed by any taxing authority. If the making of
such payments is prohibited by law unless such a Tax is deducted or withheld
therefrom, Borrower shall pay to Administrative Agent, for the ratable
benefit of the Lenders, on the date of each such payment, such additional
amounts as may be necessary in order that the net amounts received by Lenders
after such deduction or withholding shall equal the amounts which would have
been received if such deduction or withholding were not required. Borrower
shall confirm that all applicable Taxes, if any, imposed on this Agreement or
transactions contemplated hereunder shall have been properly and legally paid
by it to the appropriate taxing authorities by sending official tax receipts
or notarized copies of such receipts to Lender within thirty (30) days after
payment of any applicable Tax.
Section 3.06 BORROWING BASE REPORTS; REVIEW OF SECURITY. On the Closing
Date and thereafter on the first Business Day of each June, September,
December and March, during the term of the Notes, upon receipt by
Administrative Agent of Borrower's Borrowing Base Certificate (described in
Section 8.01(d) below), Administrative Agent shall review same, with the
assistance of the Appraiser, and, if in agreement with its calculations,
shall certify its acceptance on Borrower's Borrowing Base Certificate and
return the certified certificate (in the form of EXHIBIT 8.01(d) hereof) to
Borrower ("Notice of Borrowing Base"). The certified Notice of Borrowing Base
shall set out (i) the Borrowing Base as of the last Business Day of the
immediately preceding month (and with respect to the first such Notice of
Borrowing Base, as of the Closing Date) and (ii) whichever of the following
information is applicable: (a) the maximum amount which may be borrowed by
Borrower under the Notes pursuant to the provisions of this Agreement, (b) the
amount, if any, by which the total Loans advanced under the Notes exceeds the
Borrowing Base (after deducting the Pru Debt), (c) if applicable, the amount,
if any, by which the Term Loan exceeds the Borrowing Base (after deducting
the Pru Debt), and (d) such other information which Lender deems to be
relevant to the Borrowing Base. If the Notice of Borrowing Base indicates
that either the total of all Loans advanced and outstanding under the Notes
or the amount of the Term Note, as the case may be, exceeds the permitted
Borrowing Base (after deducting the Pru Debt), Borrower must, within two (2)
Business Days after receipt of the relevant Notice of
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Borrowing Base, prepay a sufficient amount of principal (together with all
accrued interest thereon) on the Loans to bring the total amount of Loans
outstanding thereunder to a level which is either equal to or below the
Borrowing Base, in accordance with the provisions of Section 3.02 hereof, and
shall also pay all Fees, Additional Costs and other costs, fees and expenses
owed by Borrower pursuant to such prepayment. Such prepayment shall be
subject to the provisions of Section 3.02 hereof.
Section 3.07 CONTROLLED ACCOUNT. Borrower shall establish and maintain
with BOK or such other bank acceptable to Administrative Agent a bank deposit
account under the following terms:
(a) Borrower shall deposit all Compressor Rental Income and all
checks, payments, cash and other instruments received by it with respect to
and from its accounts and lease receivables, Inventory and Equipment,
management, maintenance, leases, rental and sales proceeds and fees in the
form received by it into the Controlled Account, with respect to which
Controlled Account;
(b) Borrower shall direct all of its account debtors, Inventory
and Equipment lessees, customers and purchasers to make all payments under
any lease, rental, sales, maintenance or management agreements and
contracts directly into the Controlled Account; and
(c) Borrower shall have the right to withdraw funds from the
Controlled Account only pursuant to the terms of the Assignment of
Controlled Account, provided no Default has occurred and is continuing.
Section 3.08 PAYMENTS TO ADMINISTRATIVE AGENT. All payments by Borrower
of Obligations hereunder shall be paid to and applied by Administrative Agent
for the ratable benefit of Lenders in their Percentage interests.
ARTICLE IV
COLLATERAL
Section 4.01 COLLATERAL. To secure full and complete payment and
performance of the Notes and Obligations, Borrower shall execute and deliver
or cause to be executed and delivered the Security Instruments and documents,
and shall otherwise take the actions, described below, all in form and
substance satisfactory to Administrative Agent, as collateral agent for the
Lenders, covering the property and collateral described in this Section 4.01
(which, together with any other property and collateral which may now or
hereafter secure the Obligations or any part thereof, is sometimes herein
called the "COLLATERAL"):
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(a) An executed Assignment of Note and Liens delivered to
Administrative Agent, duly endorsed by BOK where necessary, of all the
outstanding promissory notes and indebtedness of Borrower, the BOK Security
Agreement, the Real Property Mortgage, Aircraft Mortgage and all other
first priority security interests, liens, pledges, mortgages and
encumbrances granted in favor of BOK, in form and substance satisfactory to
Administrative Agent ("Assignment of BOK Security Instruments").
(b) The Security Agreement granting Administrative Agent a first
priority security interest in all other assets of Borrower on behalf of
Lenders and Prudential, including all Equipment, Inventory, compressor
leases, contracts, general intangibles, accounts, instruments and other
property, and any and all products and sale, lease and insurance proceeds
thereof.
(c) A separate Assignment of Insurances of all policies and all
proceeds payable to Borrower under all insurance policies on the Collateral
and Borrower's other assets and property.
(d) A mortgagee's title insurance policy on the Louisiana
Facility, in form and substance satisfactory to Administrative Agent.
(e) An Assignment of Leases, Contracts and Contract Proceeds.
(f) One or more waivers, releases or consents executed by
Prudential, with regard to the PARI PASSU Notes and the Subordinated Notes,
consenting to this Agreement, the Loans and other Loan Documents and the
substitution of Administrative Agent for BOK as Collateral Agent, in form
and substance reasonably satisfactory to Administrative Agent.
(g) The Guarantee.
(h) The Assignment of Controlled Account.
(i) A notice of assignment to and consent executed by the
financial institution holding the Controlled Account, agreeing to the
assignment of Controlled Account to Lender and subordinating in favor of
Lender any rights such financial institution might have in such Controlled
Account.
(j) All U.C.C. Financing Statements and assignments thereof
required by Administrative Agent, in its reasonable discretion, for filing
in all jurisdictions where the Equipment, Inventory and other Collateral of
Borrower is located.
(k) The Intercreditor Agreement.
(l) The Assignment of Mortgage and Real Property Mortgage.
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(m) The Aircraft Mortgage Assignment.
(n) An assignment, pledge or security interest in any and all
intercompany receivables, notes, Debt and obligations in favor of Borrower
from Guarantor or any other Affiliate of Borrower.
(o) The Stock Pledge.
(p) Borrower shall execute and cause to be executed such further
documents and instruments, including, without limitation, Uniform
Commercial Code financing statements, as Administrative Agent, in its sole
reasonable discretion, deems necessary or desirable to evidence and perfect
its liens and security interests in the Collateral.
Section 4.02 SETOFF; SECURITY INTEREST IN CONTROLLED ACCOUNT. Subject to
the provisions of the Intercreditor Agreement, Lenders shall have the right
to set off and apply against the Obligations in such manner as each Lender
may determine, at any time and without notice to Borrower, any and all
deposits (general or special, time or demand, provisional or final) or other
sums at any time credited by or owing from such Lender to Borrower whether or
not the Obligations are then due. As further security for the Obligations,
Borrower hereby grants to each Lender a security interest in all money,
instruments, and other property of Borrower now or hereafter held by such
Lender, including, without limitation, property held in safekeeping. In
addition to each Lender's right of setoff and as further security for the
Obligations, Borrower hereby grants to Administrative Agent, for the benefit
of the Lenders and Prudential, a security interest in the Controlled Account
and grants to each Lender and Prudential a security interest in all deposits
(general or special, time or demand, provisional or final) and other accounts
of Borrower now or hereafter on deposit with or held by such Lender and all
other sums at any time credited by or owing from such Lender to Borrower. The
rights and remedies of each Lender and Prudential hereunder are in addition
to other rights and remedies (including, without limitation, other rights of
setoff) which each Lender and Prudential may have. Any amounts received by
any Lender under any right of set off, in connection with the Obligations,
shall immediately be paid by such Lender to the Administrative Agent for
distribution to each Lender in its Percentage Interest and in accordance with
the Intercreditor Agreement.
Section 4.03 ADMINISTRATIVE AGENT AS COLLATERAL AGENT. Borrower,
Guarantor, Administrative Agent and Lenders each agree that, in addition to
acting as collateral agent of the Collateral for the Lenders, Administrative
Agent shall also hold the Collateral as collateral agent for and on behalf of
Prudential pursuant to the terms of the Intercreditor Agreement and Security
Agreement (in such capacity as collateral agent for the Lenders and
Prudential, "Collateral Agent"). Therefore, (a) all liens, rights and
remedies with respect to the Collateral and any proceeds thereof, granted to
Administrative Agent, on behalf of Lenders, under the terms of this Loan
Agreement and the other Loan Documents, shall also be subject to
Administrative Agent's
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rights and obligations as Collateral Agent for Lenders and Prudential, and
(b) with respect to the Collateral, any reference to Administrative Agent in
this Agreement or other Loan Documents shall be deemed to include and refer
to Administrative Agent in its capacity as Collateral Agent.
ARTICLE V
CONDITIONS PRECEDENT
Section 5.01 CONDITIONS PRECEDENT TO CLOSING. The obligation of Lenders
to Close the Loan and make any Advances, issue any Letters of Credit
thereunder, make any Additional Loans and convert the Revolving Credit Note
into a Term Note on the Conversion Date is subject to the condition precedent
that (a) the Merger of ECI and all of its operations, properties and business
into Borrower has been successfully completed and that Administrative Agent
is satisfied the Merger has been legally and validly consummated and has
resulted in all of the business, operations and properties of ECI being
legally transferred to Borrower, and further (b) Borrower has performed all
required actions set forth below, and (c) Lender shall have received on or
before the date of this Agreement all of the following payments and executed
documents, each dated (unless otherwise indicated) the date hereof, in form
and substance satisfactory to Administrative Agent:
(i) CLOSING FEE; EXPENSES. Payment to Administrative Agent of
all agreed Fees due on the Closing Date and other reasonable costs and
expenses (including reasonable attorneys' fees) incurred by Administrative
Agent in negotiating, preparing and executing this Agreement and all
Security Instruments and preparing the initial Notice of Borrowing Base,
all of which shall be deemed fully earned and non-refundable;
(ii) SECURITY INSTRUMENTS. The Security Instruments and
Collateral and all other documents required pursuant to Article IV, duly
executed (where appropriate) and delivered to Administrative Agent by
Borrower;
(iii) RESOLUTIONS. Resolutions of the Board of Directors of both
Borrower and Guarantor, certified by their duly appointed and respective
Secretaries, which authorize the execution, delivery, and performance by
Borrower, of this Agreement and the other Loan Documents and Security
Instruments to which Borrower is, or is to be, a party;
(iv) CERTIFICATE. A certificate executed by the Presidents of
each of the Borrower and the Guarantor stating that (i) Borrower and
Guarantor, respectively, have each complied with all the provisions of
their respective Certificates of Incorporation and their other
organizational documents in order to permit each of them to enter into this
Agreement and to consummate the transactions contemplated hereby, (ii) all
representations and warranties contained in this Agreement and the Security
Instruments and other Loan
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Documents are true and correct as of the date thereof, and (iii) no Default
or Event of Default has occurred;
(v) INCUMBENCY CERTIFICATE. A certificate of incumbency
certified by the respective Secretaries of each of Borrower and Guarantor
certifying the names of the officers of each such entity authorized to sign
this Agreement and each of the other Loan Documents and Security
Instruments to which Borrower and Guarantor are or are to be a party
(including the certificates contemplated herein), together with specimen
signatures of such officers;
(vi) CERTIFICATES OF INCORPORATION. The Certificate of
Incorporation of each of Borrower and Guarantor, each certified by the
Secretary of State of the State of Delaware and the State of Oklahoma,
respectively, and dated within five (5) days prior to the date hereof;
(vii) CERTIFICATES OF EXISTENCE AND GOOD STANDING. Certificates
of Existence and Good Standing, or their equivalent, for Borrower in
Delaware, Arkansas, Oklahoma, Texas, Alabama, Kansas, Mississippi and
Louisiana and for Guarantor, in Oklahoma and Texas and each other
jurisdiction where Borrower and Guarantor have properties or assets or
where each such entity is qualified to do business, each dated within five
(5) days prior to the date hereof;
(viii) BYLAWS. The bylaws of each of Borrower and Guarantor,
certified by the Secretaries of each such entity;
(ix) NOTE. The Revolving Credit Note executed by Borrower;
(x) NOTICE OF BORROWING BASE. AdmInistrative Agent shall have
received Borrower's Borrowing Base Certificate provided by Borrower
pursuant to the provisions of this Agreement.
(xi) INSURANCE POLICIES. Certificates and copies of all insurance
policies required by Section 8.07, and all insurance required for the
transportation of the Equipment and Inventory to their agreed delivery
locations under all leasing or rental contracts, which transportation
insurance shall be primary and of first resort as to such property during
their transportation, together with loss payable endorsements on all
insurance policies in favor of Administrative Agent and a mortgagee's
insurance policy with respect to the Louisiana Facility and all other
Collateral;
(xii) LIEN AND UCC SEARCH. The results of a Uniform Commercial
Code search and a search in all appropriate registries, real estate records
and court records showing no financing statements, mortgages, liens or
other documents or instruments on file against Borrower, the Collateral or
any previous owner of the Collateral in all
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appropriate jurisdictions, except for Permitted Liens, such search to be as
of a date no more than five (5) days prior to the date hereof;
(xiii) BORROWER'S COUNSEL'S OPINION. An opinion of Schlanger,
Mills, Mayer and Grossberg, L.L.P., legal counsel to Borrower in favor of
Lenders, Collateral Agent, its Houston legal counsel and Prudential, as to
(a) corporate authenticity, due authorization and execution and validity
and enforceability of all the Loan Documents (b) that the merger of ECI
into Borrower has been legally and validly completed, (c) that all
properties and assets of ECI have been legally and validly transferred and
merged into Borrower and that Borrower has good title to all of the
Collateral, (d) that the BOK promissory note and security interests have
been validly and legally transferred and assigned to Collateral Agent and
that the Assignment of Note and Liens grants Collateral Agent a first
priority security interest in the Collateral so assigned, and (e) as to
certain other matters, in form and substance satisfactory to Collateral
Agent, its legal counsel and Prudential;
(xiv) LOCAL COUNSEL'S OPINION. An opinion of local legal counsel
satisfactory to Collateral Agent and its Houston legal counsel in Ouachita
parish, Louisiana, and all jurisdictions where Collateral Agent and its
legal counsel reasonably require, that all liens on the Collateral have
been correctly filed or recorded in the respective jurisdictions, are no
liens or encumbrances of record against the Collateral in all appropriate
jurisdictions, except Permitted Liens, and there in form and substance
satisfactory to Collateral Agent;
(xv) ENVIRONMENTAL REVIEW. A phase I Environmental Report dated
within thirty (30) days prior to Closing, and all other reports, in form
and substance satisfactory to Lender, from an independent environmental
company satisfactory to Administrative Agent that the Louisiana Facility
and all other Collateral and facilities of Borrower are "environmentally
clean," that no tanks or other storage facilities on any of Borrower's
properties contains or, to its knowledge after due inquiry, ever contained,
any Hazardous Substances, and that the Collateral is in a general condition
which complies with all Environmental Laws;
(xvi) CONTROLLED ACCOUNT. Evidence satisfactory to Administrative
Agent that the Controlled Account has been opened in Borrower's name and
has been legally assigned to Administrative Agent under applicable law;
(xvii) MERGER DOCUMENTS. Certified copies of the Merger
Documents;
(xviii) INTERCREDITOR AGREEMENT. An executed intercreditor
Agreement; and
(xix) FEE LETTER. The executed Fee Letter.
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Section 5.02 CONDITIONS PRECEDENT TO ANY ADVANCE. Each Request for
Advance by Borrower shall be deemed to be a restatement by Borrower, on such
date, that all representations and warranties set forth in Article VI of this
Agreement are true and correct in all material respects as of such date as if
then made (except to the extent any such representation and warranty related
solely to an earlier date). In addition, prior to any Advance, other than a
deemed Advance upon payment under a Letter of Credit, Administrative Agent
shall be satisfied of the following:
(a) NO EVENT OF DEFAULT. No Default or Event of Default shall
have occurred and be continuing;
(b) REQUEST FOR ADVANCE. Borrower shall have delivered to
Administrative Agent a Notice of Borrowing, together with the items
required to be delivered in connection with same pursuant to the applicable
provisions of this Agreement;
(c) NO MATERIAL INJURY TO COLLATERAL. The Collateral shall not
have been materially injured or damaged by fire, storm or other casualty;
PROVIDED, HOWEVER, that this requirement shall be waived by Administrative
Agent if Administrative Agent has received insurance proceeds sufficient in
the reasonable judgment of Administrative Agent and the Appraiser to
maintain the Borrowing Base at the required level;
(d) OTHER DOCUMENTS. Administrative Agent shall have received
such other instruments and documents incidental and appropriate to the
transaction provided for herein as Administrative Agent or its counsel may
reasonably request, and all such documents shall be in form and substance
reasonably satisfactory to Administrative Agent; and
(e) LEGAL MATTERS SATISFACTORY. All legal matters incident to
the consummation of the transactions contemplated hereby shall be
reasonably satisfactory to special counsel for Administrative Agent
retained at the expense of Borrower.
Section 5.03 CONDITIONS PRECEDENT TO ANY ADVANCE FOR PERMITTED
ACQUISITIONS OR RECURRING CAPITAL EXPENDITURES. Prior to the making of any
Advance for any Permitted Acquisitions or Recurring Capital Expenditures or
any other purchase of Equipment or Inventory, in addition to the other
Conditions Precedent in Sections 5.01 and 5.02 above, Administrative Agent
shall be satisfied that (a) Borrower will be obtaining good title thereto,
free and clear of all liens and encumbrances, (b) Administrative Agent will
obtain a first priority lien in and on such Equipment, Inventory or other
assets pursuant to the terms of this Agreement and the Security Instruments,
and (c) the value of such Equipment, Inventory or other assets is at least
equal to the Advance being requested by Borrower therefor.
Section 5.04 ADDITIONAL INFORMATION. As an additional condition
precedent to all events described in Sections 5.01, 5.02 and 5.03 above,
Administrative Agent shall have received such additional documents,
instruments, and information as Administrative Agent or its legal counsel may
reasonably request.
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ARTICLE VI
REPRESENTATIONS AND WARRANTIES
Section 6. To induce Lenders to enter into this Agreement, Borrower and
Guarantor each represent and warrant to Lenders that:
Section 6.01 CORPORATE POWER; EXISTENCE AND AUTHORITY. Borrower, the
Subsidiary and Guarantor (a) are each a corporation duly organized, validly
existing, and in good standing under the laws of the jurisdiction of its
incorporation; (b) have all requisite corporate power to own their assets and
properties and carry on their respective businesses as now being or as
proposed to be conducted; (c) are each qualified to do business in all
jurisdictions in which the nature of its business makes such qualification
necessary and where failure to so qualify would have a material and adverse
effect on their business, financial condition, or operations; and (d) have
each the corporate power and authority to execute, deliver, and perform its
obligations under this Agreement and other Loan Documents to which it is or
may become a party.
Section 6.02 FINANCIAL STATEMENTS. Borrower and Guarantor have caused to
be delivered to Lender (a) unaudited consolidated and consolidating financial
statements of Guarantor and Borrower as at and for the eleven (11) month
period ended November 30, 1997, and (b) audited consolidated and
consolidating financial statements for the fiscal year 1996. Such financial
statements are true and correct, have been prepared in accordance with GAAP,
and fairly and accurately present the financial condition of Borrower and
Guarantor as of the date indicated therein and the results of operations for
the period indicated therein. Neither Borrower nor Guarantor has any
material contingent liabilities, liabilities for Taxes, material forward or
long-term commitments, or unrealized or anticipated losses from any
unfavorable commitments (of a type required under GAAP to be reflected in
financial statements) not reflected in such financial statements. There has
been no material adverse change in the condition, financial or otherwise, of
operations of either Borrower or Guarantor since the effective date of the
most recent financial statements referred to in this Section.
Section 6.03 DEFAULT. Neither Borrower nor Guarantor is in default in
any material respect under any loan agreement, indenture, mortgage, security
agreement, lease, rental agreement, guarantee, bond, Debt instrument or other
material agreement or obligation to which it is a party or by which any of
its properties may be bound.
Section 6.04 AUTHORIZATION; COMPLIANCE WITH LAWS AND AGREEMENTS; MERGER.
The execution, delivery, and performance by Borrower and Guarantor of this
Agreement, the Guarantee and the other Loan Documents to which each is or may
become a party have been duly authorized by all requisite corporate action on
the part of Borrower and Guarantor and do not and will not violate the
Certificate or the Articles of Incorporation or Bylaws of either Borrower or
Guarantor, or any law, rule, or regulation or any order of any court,
governmental authority, or arbitrator, and do not and will not conflict with,
result in a breach of, or constitute a default under,
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or result in the imposition of any Lien (except as provided in ARTICLE IV)
upon any assets of Borrower or Guarantor or any subsidiary pursuant to the
provisions of any indenture, mortgage, deed of trust, security agreement,
franchise, permit, license or other instrument or agreement by which Borrower
or Guarantor or any of their properties are bound. The Merger has occurred
and all properties and assets of ECI have been validly transferred to and
merged into Borrower prior to the Closing Date.
Section 6.05 LITIGATION AND JUDGMENTS. Except as disclosed in EXHIBIT
6.05 hereto, there is no action, suit, or proceeding before any court,
governmental authority, or arbitrator pending or threatened against or
affecting Borrower or Guarantor or their properties that would, if adversely
determined, have a material adverse effect on the financial condition or
operations of Borrower or the Collateral or the ability of Borrower or
Guarantor to pay and perform the Obligations. There are no outstanding
judgments against Borrower or Guarantor.
Section 6.06 RIGHTS IN PROPERTIES; LIENS. Borrower has good and
marketable title to all of the Collateral and its other properties and
assets, real and personal, and none of the properties or assets of Borrower
nor any of the other Collateral, is subject to any Lien, except Permitted
Liens. At the Closing, Collateral Agent will have a valid and enforceable
first priority lien in, on and over all of the Collateral, on behalf of the
Lenders and Prudential.
Section 6.07 ENFORCEABILITY. This Agreement and Guarantee constitute,
and the Loan Documents to which Borrower and Guarantor are each a party, when
delivered, shall constitute the legal, valid, and binding obligations of
Borrower and Guarantor enforceable against Borrower and Guarantor in
accordance with their respective terms, except as limited by bankruptcy,
insolvency, or other laws of general application relating to the enforcement
of creditor's rights.
Section 6.08 APPROVALS. Except for BOK's and Prudential's consents to
the transactions contemplated hereby, no authorization, approval, or consent
of, and no filing or registration with, any court, governmental authority or
third party is or will be necessary for the execution, delivery, or
performance by Borrower or Guarantor of this Agreement, the Guarantee and the
other Loan Documents to which Borrower or Guarantor is, or may become, a
party or the validity or enforceability thereof.
Section 6.09 DEBT. Neither Borrower nor Guarantor has any Debt, except
(a) Permitted Debt and (b) as disclosed on EXHIBIT 6.09 and EXHIBIT 6.09(a),
respectively, hereto.
Section 6.10 TAXES. Borrower and Guarantor will file all Tax returns
(federal, state, and local) required to be filed, including all income,
franchise, employment, property and sales and other Taxes, and will pay all
of its Tax liabilities. Neither Borrower nor Guarantor knows of any pending
investigation of Borrower or Guarantor by any taxing authority or of any
pending but unassessed Tax liability of Borrower or Guarantor.
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Section 6.11 USE OF PROCEEDS; MARGIN SECURITIES. Borrower is not
engaged principally, or as one of its important activities, in the business
of extending credit for the purpose of purchasing or carrying margin stock
(within the meaning of Regulations G, T, U, or X of the Board), and no part
of the proceeds of any extension of credit under this Agreement will be used
to purchase or carry any such margin stock or to extend credit to others for
the purpose of purchasing or carrying margin stock. Neither Borrower nor any
Person acting on its behalf has taken any action that might cause the
transactions contemplated by this Agreement or the Note to violate
Regulations G, T, U, or X or to violate the Securities Exchange Act of 1934,
as amended. The proceeds of the Loan and Letters of Credit will be used
solely for the purchase, refurbishment, sale or lease of the Equipment and
Inventory and for general working capital purposes.
Section 6.12 DISCLOSURE. No representation or warranty made by
Borrower or Guarantor in this Agreement or in any Loan Document contains any
untrue statement of a material fact or omits to state any material fact
necessary to make the statements herein or therein not misleading. There is
no fact known to Borrower or Guarantor which has a material adverse effect,
or which might in the future have a material adverse effect on the business,
assets, financial condition, or operations of Borrower or Guarantor that has
not been disclosed in writing to Administrative Agent.
Section 6.13 PRINCIPAL PLACE OF BUSINESS. The principal place of
business and chief executive office of Borrower and the place where Borrower
keeps its books and records is located at the address of Borrower set forth
in Article XI of this Agreement.
Section 6.14 INVESTMENT COMPANY ACT. Borrower is not an "investment
company" within the meaning of the investment Company Act of 1940, as amended.
Section 6.15 CONTRACTS. Neither Borrower nor Guarantor is a party to,
or bound by any agreement, condition, contract, or arrangement which might in
the future have a material adverse effect on the respective business,
operations, or financial condition of Borrower or Guarantor or the
Collateral, other than (a) this Agreement and the Loan Documents, and (b) the
Prudential Security Instruments.
Section 6.16 COMPLIANCE WITH LAW. Each Borrower and Guarantor is in
compliance with all laws, rules, regulations, orders, and degrees which are
applicable to Borrower and Guarantor or any of the respective properties and
which might have a material effect on the business, operations or financial
condition of Borrower and Guarantor.
Section 6.17 ENVIRONMENTAL MATTERS. Borrower and Guarantor and their
properties are in compliance with all applicable Environmental Laws or any
health and safety laws, rules, and regulations which might have a material
effect on the business, assets, operations or financial condition of Borrower
and Guarantor or the Collateral and Borrower and Guarantor are not subject to
any liability or obligation for remedial action thereunder. Borrower has been
issued all required
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permits and licenses, certificates and approvals of all Governmental
Authorities under all applicable Environmental Laws that are necessary to the
ownership and operation of its business and assets, and same are still in
effect. There is no pending or threatened investigation or inquiry by any
governmental authority of Borrower, Guarantor or the Collateral pertaining to
any toxic or Hazardous Substance which might have a material effect on the
business, assets, operations, or financial condition of Borrower, Guarantor
or the Collateral. There are no toxic or Hazardous Substances located on, in,
or around the Louisiana Facility or other properties of Borrower or Guarantor
which might have a material effect on the business, assets, operations or
financial condition of Borrower, Guarantor or the Collateral. Neither
Borrower nor Guarantor has caused or permitted any toxic or Hazardous
Substances to be disposed of, on or under, or released from the Louisiana
Facility or any of the Collateral or its other properties which might have a
material effect on the business, operations or financial condition of either
Borrower or Guarantor. Except as disclosed in writing to Administrative
Agent, Borrower has not received any notice of environmental contamination,
release or failure to report from any Governmental Authority, employees,
citizens, local residents or any other Person, and has no knowledge of any
fact that constitutes a violation of any Environmental Laws.
Section 6.18 PUBLIC UTILITY HOLDING COMPANY ACT; FEDERAL POWER ACT;
INTERSTATE COMMERCE ACT; OTHER REGULATION. Neither the Borrower, any of its
Affiliates nor Guarantor is subject to regulation under the Public Utilities
Holding Company Act of 1935, as amended, the Federal Power Act, as amended,
the Interstate Commerce Act, as amended, any state public utilities code, as
amended from time to time, or any other federal or state statute or
regulation, as amended from time to time, which limits the ability of (i) the
Borrower to issue the Notes, or (ii) the Borrower or any of its Affiliates or
Guarantor to perform its respective obligations under this Agreement or the
other Loan Documents.
Section 6.19 TITLE TO PROPERTIES; AUTHORITY. Borrower and Guarantor
have full power, authority and legal right to own and operate the properties
which it now owns and operates, and to carry on the lines of business in
which each is now engaged, and Borrower has good and marketable title to the
Collateral subject to no Lien of any kind except Permitted Liens. Borrower
and Guarantor each further represent to Administrative Agent that any and all
after acquired interests in any of the Collateral being concurrently or
subsequently transferred of record to Borrower is and shall be deemed
encumbered by the Security Interests in all respects.
Section 6.20 PENSION PLANS. With respect to any Plan which plan is now
or previously has been maintained or contributed to by, (a) Borrower, (b) any
member of a "controlled group" of corporations (as defined in Section 414(b)
of the Code that includes Borrower, (c) any trade or business (whether or not
incorporated) that is under "common control" (as defined in Section 414(c) of
the Code) with Borrower, or (d) any organization (whether or not
incorporated) which is a member of an "affiliated service group" (as defined
in Section 414(m) of the Code) that includes Borrower, or (e) any other
entity required to be aggregated with Borrower pursuant to the regulations
under Section 414(o) of the Code (hereinafter, an entity referred to in (a),
(b), (c) and/or (d) is referred to as a "commonly controlled entity"): (i) no
"accumulated funding deficiency" as defined in Code Section 412 or ERISA
Section 302 has occurred, whether or not the accumulated
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funding deficiency has been waived; (ii) no "reportable event" as defined in
ERISA Section 4043 has occurred; (iii) no termination or partial termination
of any plan subject to Title IV of ERISA has occurred; (iv) no termination or
partial termination has occurred; and (v) no lien, encumbrance or liability
in favor of the Pension Benefit Guaranty Corporation exists.
Section 6.21 MULTIEMPLOYER PLANS. With respect to any "multiemployer
plan" as defined in Section 3 (37) of ERISA: (a) neither Borrower nor any
commonly controlled entity has incurred a "complete withdrawal" within the
meaning of ERISA Section 4203; (b) neither Borrower nor any commonly
controlled entity has incurred a "partial withdrawal" within the meaning of
ERISA Section 4205; and (c) no multiemployer plan to which Borrower or any
commonly controlled entity has an obligation to contribute is in
"reorganization" within the meaning of ERISA Section 4241, nor has notice
been received by Borrower or any commonly controlled entity that such a
multiemployer plan will be placed in reorganization.
Section 6.22 INSURANCE. Borrower maintains the insurance coverage
required by the Security Instruments.
Section 6.23 PATENTS. Borrower owns or possesses (or is licensed or
otherwise has the full right to use) all United States or foreign patents or
patent applications necessary for the ownership or operation of its gas
compressors and other assets, without any conflict with the rights of other
Persons.
Section 6.24 SECURITY INSTRUMENTS. The Real Estate Mortgage and other
Security Instruments are in full force and effect, are legal, valid, binding
and enforceable in accordance with their respective terms and are sufficient
to grant Administrative Agent valid security interests in the properties and
assets they were intended to secure.
ARTICLE VII
LETTERS OF CREDIT
Section 7.01 COMMITMENT. From and as of the Closing Date through and
until the Conversion Date, at Borrower's written request, Administrative
Agent, as issuing bank for Lenders, may issue one or more standby Letters of
Credit from time to time on any Business Day up to an aggregate unfunded
amount not to exceed the LESSER of Five Hundred Thousand Dollars ($500,000)
or the Available Commitment. Any such Letter of Credit shall be issued in
U.S. currency and in such amount as Borrower may request in writing up to the
maximum amount of such limit set forth above. Upon presentment and payment by
Administrative Agent, as issuing bank for Lenders, of any Letters of Credit,
the amount paid by Administrative Agent, as issuing bank for Lenders, to any
beneficiary shall automatically be deemed an Advance under the Loan to
Borrower and shall be included in the outstanding principal amount of the
Notes. No Letter of Credit may be issued with an expiry date later than the
Conversion Date. If any Letter of Credit remains outstanding on the
Conversion Date and, after consulting with its legal counsel,
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Administrative Agent is of the reasonable opinion said Letter of Credit may
still legally be drawn on by the beneficiary thereunder, such outstanding but
undrawn amount will be converted with the Term Loan subject to any prepayment
requirements set forth in Sections 3.02(b) and 3.06 hereof. Each Lender
severally, irrevocably and unconditionally agrees that it shall promptly
reimburse the Collateral Agent an amount equal to such Lender's Percentage
Interest of any disbursement made by the Administrative Agent under any
Letter of Credit.
Section 7.02 CONDITIONS; APPLICATION. Prior to, or contemporaneously
with, the issuance of any Letter of Credit, Borrower should have complied
with all the conditions precedent set forth in Article V. Each request for
the issuance of a Letter of Credit should be contained in a Notice of
Borrowing and, in connection therewith, Borrower shall execute Administrative
Agent's standard Letter of Credit Application. In addition, each written
Letter of Credit request from Borrower should contain the name and address of
the proposed beneficiary, contain a sworn statement by Borrower that it has
complied with all of the terms of this Agreement and the Security Instruments
and contain such other provisions as Administrative Agent may reasonably
require.
Section 7.03 TERMS. Each Letter of Credit shall be, irrevocable, shall
be issued for a term not to exceed the earlier of twelve (12) months or the
Conversion Date, shall be made payable to the named beneficiary only at the
counters of Administrative Agent in New York, New York, shall be
non-transferrable and may only be drawn against presentation of the following
documents:
(a) the original Letter of Credit;
(b) the beneficiary's sight draft for the payment
requested; and
(c) compliance by the beneficiary thereunder of all terms
and conditions of, and presentation of all required documentation required
by, Borrower's executed Letter of Credit application.
Section 7.04 OBLIGATIONS ABSOLUTE. Except as otherwise provided by
applicable law, the obligations of Borrower set forth in this Article VII
with respect to any Letter of Credit shall be absolute, unconditional and
irrevocable and shall be paid or performed strictly in accordance with the
terms of this Agreement under all circumstances whatsoever, including,
without limitations, the following circumstances:
(a) any lack of validity or enforceability of this
Agreement, any Security Instrument, other Loan Document or any agreement or
instrument related hereto or thereto;
(b) any amendment or waiver of or any consent to departure
from any Letter of Credit, this Agreement, or any Security Instrument,
other Loan Document or any agreement or instrument related thereto;
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(c) the existence of any claim, setoff, defense or other
rights which Borrower may have at any time against any beneficiary of any
Letter of Credit (or any persons or entities for whom any such beneficiary
or any such transferee may be acting), Administrative Agent (other than the
defense of payment to Administrative Agent of any sums due in accordance
with the terms of this Agreement) or any other Person, whether in
connection with this Agreement, the Security Instruments, other Loan
Documents, any agreement or instrument related hereto or thereto or any
unrelated transaction;
(d) any statement or any other document presented under any
Letter of Credit proving to be forged, fraudulent, invalid or (unless
Administrative Agent shall have been grossly negligent, or shall have
engaged in willful misconduct, in failing to detect such insufficiency)
insufficient in any respect or statement therein proving to be untrue or
inaccurate in any respect whatsoever;
(e) payment by Administrative Agent under any Letter of
Credit against presentation of a draft or certificate which does not comply
with the terms of such Letter of Credit, PROVIDED that such payment shall
not have constituted gross negligence or willful misconduct of
Administrative Agent; and
(f) any other circumstances or happening whatsoever,
whether or not similar to any of the foregoing, PROVIDED that such other
circumstances or happening shall not have been the result of gross
negligence or willful misconduct of Administrative Agent.
Section 7.05 UNIFORM CUSTOMS AND PRACTICES. Borrower agrees that all
Letters of Credit shall be subject to the Uniform Customs and Practice for
Documentary Credits (1993 Revision), International Chamber of Commerce
Publication No. 500 and any revisions thereto subsequently promulgated
("UCP") unless any Letter of Credit expressly provides otherwise. If there is
any conflict between the provisions of the UCP and the applicable law of this
Agreement, the UCP shall prevail to the extent permitted by such applicable
law.
Section 7.06 INDEMNITY. THE BENEFICIARIES UNDER ANY LETTER OF
CREDIT SHALL BE DEEMED TO BE THE AGENT OF BORROWER, AND BORROWER, AND IN ITS
CAPACITY AS GUARANTOR, ASSUMES ALL RISKS OF THE ACTS OR OMISSIONS OF AND
MISUSE OF THE LETTER OF CREDIT BY ANY SUCH BENEFICIARY OR ANY OTHER PERSON.
NEITHER ADMINISTRATIVE AGENT NOR ITS CORRESPONDENTS SHALL BE RESPONSIBLE FOR
FAILURE OF ANY DRAFT TO BEAR ANY ADEQUATE REFERENCE TO A LETTER OF CREDIT OR
FAILURE OF ANY PERSON TO NOTE THE AMOUNT OF ANY DRAFT ON THE REVERSE OF A
LETTER OF CREDIT OR TO SURRENDER OR TAKE UP A LETTER OF CREDIT.
ADMINISTRATIVE AGENT SHALL NOT BE RESPONSIBLE FOR ANY ERROR, NEGLECT OR
DEFAULT OF ADMINISTRATIVE AGENT OR ANY LENDER OR ANY OF THEIR CORRESPONDENTS
OR FOR THE CONSEQUENCES ARISING FROM CAUSES BEYOND THEIR CONTROL. BORROWER
AND GUARANTOR
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SHALL PROTECT ADMINISTRATIVE AGENT AND EACH LENDER AND ANY OTHER DRAWEE IN
PAYING ANY DRAFT DATED ON OR BEFORE THE EXPIRATION OF ANY TIME LIMIT
EXPRESSED IN A LETTER OF CREDIT REGARDLESS OF WHEN DRAWN AND WHEN OR WHETHER
NEGOTIATED. BORROWER AND GUARANTOR ARE JOINTLY AND SEVERALLY RESPONSIBLE TO
ADMINISTRATIVE AGENT FOR ALL OBLIGATIONS IMPOSED UPON ADMINISTRATIVE AGENT
WITH RESPECT TO EACH LETTER OF CREDIT OR THE RELATIVE DRAFTS. IN FURTHERANCE
AND EXTENSION AND NOT IN LIMITATION OF THESE SPECIFIC PROVISIONS SET FORTH,
(A) BORROWER AND GUARANTOR, JOINTLY AND SEVERALLY, AGREE THAT ANY ACTION
TAKEN BY ADMINISTRATIVE AGENT AND EACH LENDER OR ANY OF THEIR CORRESPONDENTS
OR IN CONNECTION WITH, A LETTER OF CREDIT OR THE RELATIVE DRAFTS, IF TAKEN IN
GOOD FAITH, SHALL BE BINDING UPON BORROWER AND GUARANTOR, AND SHALL NOT PUT
ADMINISTRATIVE AGENT OR ANY LENDER OR THEIR CORRESPONDENTS UNDER ANY
RESULTING LIABILITY TO BORROWER, AND (B) BORROWER AND GUARANTOR HEREBY
JOINTLY AND SEVERALLY INDEMNIFY AND HOLD HARMLESS ADMINISTRATIVE AGENT AND
EACH LENDER FROM ANY CLAIM, LOSS, LIABILITY OR EXPENSE ARISING BY REASON OF
SAID FAILURE TO PAY OR FOR ANY OTHER REASON WHATSOEVER IN CONNECTION WITH ANY
LETTER OF CREDIT OR ANY DRAFTS OR DOCUMENTS PRESENTED THEREUNDER, INCLUDING,
WITHOUT LIMITATION, CURRENCY EXCHANGE LOSSES, UNLESS LENDER OR ANY ADDITIONAL
LENDER IS GUILTY OF GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
ARTICLE VIII
POSITIVE COVENANTS
Borrower and Guarantor, jointly and severally, covenant and agree that,
as long as the Note and Obligations or any part thereof are outstanding or
any Lender has any commitment hereunder, Borrower, Guarantor and the
Subsidiary will perform and observe the following positive covenants, unless
Administrative Agent shall otherwise consent in writing:
Section 8.01 FINANCIAL STATEMENTS. Borrower and Guarantor will
furnish to Administrative Agent:
(a) BALANCE SHEETS; FINANCIAL STATEMENTS. Such balance
sheets and financial statements of Borrower and Guarantor, on a
consolidated and consolidating basis, at such times and in such manner as
Administrative Agent may reasonably request.
(b) QUARTERLY OPERATING STATEMENTS. Borrower and Guarantor
shall maintain a standard system of accounting and shall furnish to
Administrative Agent as soon
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as practicable after the end of the first three quarters of each fiscal
year, commencing with the quarter ending March 31, 1998, and in any event
within forty-five (45) days after the end of each said quarter, copies of
consolidated and consolidating statements of income, stockholders' equity
and cash flows for Borrower and Guarantor and the consolidating and
consolidated balance sheets for Borrower and Guarantor, which shall each
be certified on behalf of Borrower and Guarantor by the respective chief
financial officers or other authorized officer of Borrower and Guarantor
for such period (on a consolidated and consolidating basis), all in
reasonable detail.
(c) ANNUAL FINANCIAL STATEMENTS. As soon as practicable
after the end of each fiscal year of Borrower and Guarantor and in any
event within ninety (90) days thereafter, Borrower and Guarantor shall
furnish to Administrative Agent copies of the following financial
statements (on a consolidated and consolidating basis), together with a
report thereon and an unqualified opinion, prepared in accordance with GAAP
of reputable independent certified public accountants of recognized
standing selected by Borrower and Guarantor and acceptable to
Administrative Agent:
(i) A balance sheet of each of Borrower and Guarantor
at the end of such year;
(ii) A statement of income of each of Borrower and
Guarantor for such year; and
(iii) A statement of cash flow of each of Borrower and
Guarantor for such year;
setting forth in each case in comparative form the figures for the previous
fiscal year, if applicable, all in reasonable detail. The report of the
independent certified public accountants shall contain a certification that
in the course of the audit necessary for the certification of such
financial statements, they have obtained no knowledge of any Event of
Default or Default as defined herein, or, if any Event of Default or
Default existed or exists, specifying the nature and period of existence
thereof; PROVIDED, HOWEVER, that such accountants shall not be liable to
any Administrative Agent or any Lender by reason of their failure to obtain
knowledge of any such Event of Default or Default which would not be
disclosed in the course of an audit conducted in accordance with GAAP.
(d) QUARTERLY CERTIFICATES. At the Closing and thereafter
as soon as available and in any event within forty-five (45) days after the
end of each of the first three calendar quarters of each year, concurrently
with the furnishing of the applicable quarterly statements pursuant to
Section 8.01(b), there shall be furnished to Administrative Agent (i) a
Borrowing Base certificate signed by the chief financial officer of
Borrower in the form annexed hereto as EXHIBIT 8.01(d) (the "Borrower's
Borrowing Base Certificate"), (ii) a certificate signed by the chief
financial officer of Borrower summarizing and certifying the Borrower's
trailing 6-month net Compressor Rental Income and Borrower's
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EBITDA for such period, all in accordance with GAAP, (iii) a
certificate of Borrower's President or Senior Vice President which lists
the location of all Borrower's Compressor Equipment and Inventory, and
(iv) a certificate signed by the chief financial officer of Borrower
detailing such information and data concerning Borrower's compressor
fleets and Inventory as are necessary to provide the calculations
required in Administrative Agent's Notice of Borrowing Base pursuant to
the terms of this Agreement and further stating that: (x) the financial
statements were prepared (subject to year end audit adjustments) in
conformity with GAAP, consistently applied, (y) a review of the
activities of Borrower for the period covered by the financial
statements has been made under his supervision with a view to
determining whether Borrower has kept, observed, performed and fulfilled
all of their obligations under this Agreement, the other Loan Documents
and its other documents or instruments referred to herein, and (z) no
Event of Default or an event which with the passage of time or notice,
or both, could become an Event of Default has occurred, and is
continuing, or a statement describing the nature, period of existence
and status of any such event(s) if existing. Such certificates shall
fully demonstrate the method of all calculations therein contained
insofar as compliance with financial covenants hereof are concerned but
shall not be qualified or limited because of restricted or limited
examination of any material portion of Borrower's records by the Party
preparing such quarterly statements.
(e) ANNUAL/SPECIAL COVENANT CERTIFICATES. Concurrently
with the furnishing of the annual financial statements pursuant to Section
8.01(c), there shall be furnished to Administrative Agent a separate
certificate signed by the respective chief financial officers of both
Borrower and Guarantor stating that: (a) the financial statements were
prepared in conformity with GAAP, and (b) no Event of Default or an event
which with the passage of time or notice, or both, could become an Event of
Default has occurred, and is continuing, and status of any such event(s) if
existing. Such certificate shall not be qualified or limited because of
restricted or limited examination of any material portion of Borrower's or
Guarantor's records by the party preparing such annual statements. All
certificates of Borrower and Guarantor submitted pursuant to this Agreement
in connection with compliance with financial or other covenants herein
contained, shall fully demonstrate the method of calculations therein
contained.
(f) SPECIAL AUDITING REPORTS. Promptly upon receipt
thereof, Borrower and Guarantor shall deliver to the Administrative Agent
each report submitted to either of Borrower or Guarantor, by independent
accountants in connection with any annual, interim or special audit made by
them of the books and records of either or both of the Borrower and
Guarantor, including, without limitation, any comment letter submitted by
such accountants to management in connection with their audit.
(g) BUDGETS AND PROJECTIONS. Promptly upon completion
thereof on an annual basis within sixty (60) days following each fiscal
year end, each of Borrower and Guarantor shall deliver to Administrative
Agent copies of their operating budget and
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projection of financial performance (on a consolidated and consolidating
basis) prepared for the Borrower and Guarantor, respectively.
(h) PERIODIC REPORTS. Promptly upon their becoming
available, copies of all financial statements, reports, notices or proxy
statements sent by either Borrower or Guarantor to their stockholders and
all registration statements, periodic reports and other statements and
schedules filed by either Borrower or Guarantor with any securities
exchange, the Securities and Exchange Commission or any similar state or
federal Governmental Authority shall be delivered to Administrative Agent.
(i) OTHER REPORTS. Borrower and Guarantor shall
concurrently deliver to Administrative Agent any other notices, statements,
reports or certificates delivered to Prudential under either the Prudential
Security documents or the Pru Notes, under or pursuant to the terms of such
instruments.
(j) EQUIPMENT LOCATION. Borrower shall, within thirty (30)
days after relocating any of its Compressor Equipment or Inventory to a
state in which Borrower is not currently doing business or in which no
U.C.C. financing statements have been filed by Administrative Agent, advise
Administrative Agent in writing of such new location and will execute any
and all new U.C.C. financing statements which Administrative Agent may
reasonably require.
Section 8.02 CONSOLIDATED AND CONSOLIDATING ACCOUNTS. All financial
statements, balance sheets and other financial information, whether audited
or unaudited, to be provided by Borrower and Guarantor under the terms of
this Agreement and any other Loan Document will be (a) with respect to
Borrower on a separate consolidating basis, and (b) with respect to Guarantor
on a consolidated basis (without, in each case, including any results or
financial data of Sunterra or the Subsidiary), both in accordance with GAAP.
Section 8.03 PERFORMANCE OF OBLIGATIONS. Borrower will duly and
punctually pay and perform the Obligations, all indebtedness under this
Agreement and the Notes and all other Debt.
Section 8.04 PRESERVATION OF EXISTENCE AND CONDUCT OF BUSINESS.
Borrower and Guarantor will each preserve and maintain its corporate
existence, and all of its Inventory, Equipment, leases, other leases,
privileges, franchises, qualifications and rights that are necessary or
desirable in the ordinary conduct of its business and for the ownership and
operation of the Collateral and its other properties, and each will conduct
its business as presently conducted in an orderly and efficient manner in
accordance with good business practices.
Section 8.05 MAINTENANCE OF ASSETS; PROCEEDS. Borrower will maintain
the Collateral, and each portion thereof, in good operating condition and
repair.
Section 8.06 PAYMENT OF TAXES AND CLAIMS. Borrower will pay or
discharge, at or before maturity or before becoming delinquent (a) all Taxes
and governmental charges imposed on it, the
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Collateral and all of its other property, and (b) all lawful claims for
storage and transportation of the Equipment and Inventory and all repairs to
the Inventory which, if unpaid, might become a Lien upon any of the
Collateral or its other property; PROVIDED, HOWEVER, that Borrower shall not
be required to pay or discharge any Tax or governmental charge which is being
contested in good faith by appropriate proceedings diligently pursued, and
for which adequate reserves have been established.
Section 8.07 INSURANCE.
(a) POLICIES. Borrower will maintain, with financially
sound and reputable insurance companies, worker's compensation insurance,
liability insurance, pollution insurance and insurance on the Inventory,
Equipment, Collateral, Louisiana Facility and its other property, assets,
and business (including, but not limited to, an all risks comprehensive
policy on each piece of Inventory, their transportation to and from all
rental sites at least in such amounts and against such risks as are usually
insured against by Persons engaged in similar businesses, all as reasonably
satisfactory to Administrative Agent. Each insurance policy covering the
Collateral shall name Administrative Agent (in its capacity as Collateral
Agent) as loss payee and an additional insured and shall provide that such
policy will not be canceled without thirty (30) days' prior written notice
to Administrative Agent.
(b) APPLICATION OF PROCEEDS. All insurance policies
required hereunder shall provide that all payments in respect of loss or
damage shall be made solely to Administrative Agent for all amounts in
excess of $100,000 and that upon the occurrence and continuance of a
Default hereunder, all proceeds shall be payable solely to Administrative
Agent up to the maximum amount owing to Administrative Agent on the Loans.
Any insurance recoveries under any policies to which Administrative Agent
shall be so entitled shall be applied as provided herein, subject to the
terms of the Intercreditor Agreement. Until a Default has occurred,
Administrative Agent and Borrower shall cooperate in adjusting any claim
with the underwriters of insurance for the Inventory, Equipment and
Collateral and underwriters may rely on any agreement reached with
Borrowers as binding both Administrative Agent and Borrower. Following the
occurrence of a Default, Administrative Agent and Borrower shall continue
to cooperate to adjust any claim, but only Administrative Agent shall have
the power to agree to any adjustment with underwriters on behalf of the
Collateral, Borrower and itself.
(c) CONSTRUCTIVE TOTAL LOSS. In the event of an accident,
occurrence or event resulting in a constructive total loss of any
Inventory, Equipment or other Collateral, Administrative Agent shall have
the right to claim for a constructive total loss of such Inventory,
Equipment or other Collateral and to require that Borrower declares such to
be a constructive total loss, and if both (i) such claim is accepted by all
underwriters under all policies then in force as to such Inventory under
which payment is due for total loss, and (ii) payment in full is made in
cash under such policies, then Administrative Agent shall have the right,
at its election, to abandon such Inventory, Equipment or other
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Collateral to the underwriters under such policies, free from the lien of
this Agreement and the Security Instruments, and apply the proceeds of such
insurance as provided in Section 3.02(b) hereof.
(d) AGREED OR COMPROMISED TOTAL LOSS. In the event of an
accident, occurrence or event of damage to any Inventory, Administrative
Agent shall have the right, in its discretion, to enter into an agreement
or compromise with underwriters providing for an agreed or compromised
total loss of such Inventory and to require that Borrower declares such to
be a constructive total loss, and if both (i) such claim is accepted by all
underwriters under all policies then in force as to such Inventory under
which payment is due for total loss, and (ii) payment in full is made in
cash under such policies, then Administrative Agent shall have the right,
at its election, to abandon such Inventory to the underwriters under such
policies, free from the lien of the Security Instruments and apply the
proceeds of such insurance as provided in Section 3.02(b) hereof.
(e) CARRIERS; APPROVALS. All insurance required under this
Section shall be placed and kept with the United States Government or with
American, British, or other insurance companies, underwriters'
associations, clubs or underwriting funds approved by Administrative Agent.
(f) ADDITIONAL PROVISIONS. All insurance required under
this Section 8.07 shall, unless otherwise first agreed in writing by
Administrative Agent, provide that (i) there shall be no recourse against
any Lender for the payment of premiums, supplemental or back calls or
commissions or warranties or representations to underwriters, (ii) if such
insurance provides for the payment of calls, assessments or advances, there
shall be no recourse against any Lender for the payment thereof, (iii) at
least thirty (30) days' prior written notice of any cancellation, reduction
in amount or change in coverage or other material change of such insurance
shall be given to Administrative Agent by the insurance underwriters, (iv)
the interests of Administrative Agent shall be continued insured regardless
of any breach of or violation by Borrower or any other insured of any
warranties, declarations or conditions contained in such insurance, (v) no
insurance shall be excess over other coverage but shall be primary
insurance and shall not require any contribution from any excess insurance
on the Inventory, Equipment and other Collateral that may be carried by
Administrative Agent, (vi) no insurance shall be invalidated by any
refurbishments or material changes to the Inventory, and (vii) the insurers
agree to advise Administrative Agent promptly in writing of any default in
the payment of any premium and of any other act or omission of which such
insurer has knowledge that might invalidate or render unenforceable, in
whole or in part, any such policy. The policies shall provide for
severability of interest as though separate policies were issued to each
additional insured except with respect to the limits of liability.
(g) NO LOSS OF INSURANCE. Borrower shall not, without the
prior written consent of Administrative Agent, do any act, nor voluntarily
suffer nor permit any act to be done, whereby any insurance required by
this Section 8.07 shall or may be suspended,
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impaired or defeated, or suffer or engage in any activity not permitted
under policies of insurance satisfactory to Administrative Agent in all
respects for the engaging in of such activity.
(h) REIMBURSEMENT OF ADMINISTRATIVE AGENT. In the event
that Borrower shall fail to obtain or maintain insurance in accordance with
the provisions of this Agreement, Administrative Agent shall have the right
to obtain, and pay the premiums on, such insurance as Administrative Agent
reasonably deems necessary. Borrower shall reimburse Administrative Agent
on demand, with interest at the rate in effect pursuant to this Agreement
for any and all expenditures that Administrative Agent may from time to
time make, lay out or expend in providing protection in respect of
insurance, discharge or purchase of any liens, taxes, dues, assessments,
governmental charges, fines and penalties imposed, repairs, attorneys' fees
and other matters as Borrower is obligated herein to provide, but fails to
provide. Such obligation of Borrower to reimburse Administrative Agent,
together with interest as provided above, shall be an additional
indebtedness due from Borrower, secured by this Agreement, and shall be
payable by Borrower on demand. Administrative Agent, though privileged so
to do, shall be under no obligation to Borrower or to any other person to
make any such expenditures, nor shall the making thereof relieve Borrower
of any Event of Default in that respect.
(i) MORTGAGEE'S INSURANCE. In addition to all other
insurance required above, Borrower shall, at its own expense, provide
Administrative Agent with (a) mortgagee's interest insurance or breach of
warranty endorsement on the Inventory, Equipment and other Collateral, and
(b) Mortgagee's interest insurance on the Louisiana Facility, in favor of
Administrative Agent with such underwriters as approved by Administrative
Agent, in an aggregate amount for (a) and (b) equal to at least the
principal amount of the Obligations.
(j) INTERCREDITOR AGREEMENT. The provisions set forth in
this Agreement concerning the use and application of insurance recoveries
and proceeds shall be subject to the provisions of the Intercreditor
Agreement.
Section 8.08 INSPECTION RIGHTS. At any reasonable time and from time to
time, Borrower will permit Administrative Agent and Appraiser to examine and
make copies of the books and records of, and visit and inspect all sites
where the Inventory, Equipment and other Collateral is located and to inspect
the Inventory, Equipment, other Collateral and Louisiana Facility. Such
inspection rights shall include, without limitation, the right of the
representatives of Administrative Agent to inspect and request and make
copies of Borrower's books, records and documentation with respect to the
Inventory, Equipment, other Collateral and Louisiana Facility.
Section 8.09 KEEPING BOOKS AND RECORDS. Borrower and Guarantor will
maintain proper books of record and account in which full, true, and correct
entries in conformity with GAAP shall be made of all dealings and
transactions in relation to its business and activities.
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Section 8.10 COMPLIANCE WITH LAWS. Borrower and Guarantor will comply
with all applicable laws, rules, regulations, and orders of any court,
Governmental Authority, or arbitrator.
Section 8.11 COMPLIANCE WITH AGREEMENTS. Borrower and Guarantor shall
comply in all material respects with all gas compressor, rental and lease
agreements, indentures, storage, repair and sales contracts and other
agreements binding on it or affecting the Collateral.
Section 8.12 NOTICES. Borrower will promptly notify Administrative
Agent of (a) the occurrence of a Default or an Event of Default, (b) the
commencement of any action, suit, or proceeding against Borrower that might
have a material adverse effect on the Collateral, business, assets, financial
condition, or operations of Borrower, and (c) any other matter that might
have a material adverse effect on the Collateral, business, assets, financial
condition, or operations of Borrower.
Section 8.13 FURTHER ASSURANCES. Borrower will execute and deliver
such further instruments as may be reasonably requested by Administrative
Agent to carry out the provisions and purposes of this Agreement and the
Security Instruments and to preserve and perfect the Liens of Administrative
Agent in the Collateral.
Section 8.14 COMPLIANCE WITH REGULATIONS G T, U. AND X . Neither
Borrower nor any Person acting on its behalf will take any action which might
cause this Agreement or any of the Security Instruments to violate, and
Borrower will take all actions necessary to cause compliance with Regulations
G, T, U, and X of the Board and the Securities Exchange Act of 1934, in each
case as now in effect or as the same may hereafter be in effect.
Section 8.15 ENVIRONMENTAL COMPLIANCE.
(a) Borrower will at all times:
(i) be and remain in compliance with the provisions of
all federal, state, and local environmental,
health, and safety laws and all rules and
regulations issued thereunder applicable to the
Collateral and its business;
(ii) notify Administrative Agent immediately in writing
of any material spill of petroleum products and of
any notice of a Hazardous Substances discharge or
any other environmental complaint received from
any Governmental Authority or any other party;
(iii) notify Administrative Agent immediately in writing
of any material spill of petroleum product or
Hazardous Substances discharge from or affecting
any part of the Collateral
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(including, without limitation, the Louisiana
Facility) or Borrower's other properties, wherever
located, and immediately contain and remove the
same, in compliance with all applicable laws and
promptly pay any fine assessed in connection
therewith; and
(iv) upon reasonable notice from Administrative Agent,
permit Administrative Agent to inspect the
Collateral and to conduct tests, environmental
audits and inspections thereon.
(b) Borrower will maintain and will ensure that the
representative, trustee, manager, and any lessee, operator or agent who
operates, holds, transports, stores, or manages the Inventory, Equipment,
Louisiana Facility and other Collateral on its behalf from time to time,
has been issued with and will maintain, all required federal, state, and
local permits, all required certificates and approvals in relation to (i)
air emissions, (ii) discharges to surface and groundwater, (iii) oil and
petroleum wastes, (iv) noise emissions, (v) solid and liquid waste
disposal, and (vi) the use, generation, storage, transportation or disposal
of toxic or hazardous substances or wastes or potentially hazardous
substances or wastes.
(c) To the best of Borrower's knowledge, after diligent
inquiry, except in accordance with any valid governmental permit or
license, there has been, from the Louisiana Facility and all other
properties of Borrower, no emission, spill, release or discharge of any
petroleum products or toxic or Hazardous Substances into or upon the air,
soils, or any improvements located thereon, surface water or groundwater
and, accordingly, the Collateral is (i) free of all such toxic or hazardous
substances, and (ii) are in compliance with all environmental laws, rulings
and regulations.
Section 8.16 CONTROLLED ACCOUNT ASSIGNMENT. Borrower shall maintain
the Controlled Account and shall deposit or cause to be deposited directly
into such account all Compressor Rental Income and all other income, cash,
proceeds and payments collected from the lease, rental, sale or other
operation of the Inventory, Equipment and other Collateral, or any insurance
proceeds or other proceeds collected in respect of any such Collateral.
Section 8.17 MANDATORY PREPAYMENTS: INTEREST AND FEES. Borrower shall
pay promptly to (a) Administrative Agent when due all installment payments of
Fees, Additional Costs and expenses, and (b) pro rata to Administrative Agent
and Prudential (if, as provided in Section 3.02, Prudential so elects), all
mandatory payments of principal and interest on the Note pursuant to the
provisions of this Agreement.
Section 8.18 NOTICE OF DEFAULT. Immediately upon the happening of any
condition or event which constitutes an Event of Default or Default or any
default or event of default under any other loan, mortgage, financing or
security agreement, Borrower shall give Administrative Agent
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a written notice thereof specifying the nature and period of existence
thereof and what actions, if any, Borrower is taking and proposes to take
with respect thereto.
Section 8.19 NOTICE OF LITIGATION. Immediately upon becoming aware of
the existence of any action, suit or proceeding at law or in equity before
any Tribunal, an adverse outcome in which would (a) materially impair the
ability of Borrower or Guarantor to carry on their business substantially as
now conducted, (b) materially and adversely affect the condition (financial
or otherwise) of either Borrower or Guarantor, or (c) result in monetary
damages in excess of $250,000, Borrower or Guarantor, as appropriate, will
give Administrative Agent a written notice specifying the nature thereof and
what actions, if any, Borrower or Guarantor, as appropriate, are taking and
propose to take with respect thereto.
Section 8.20 NOTICE OF CLAIMED DEFAULT. Immediately upon becoming
aware that the holder of any note or any evidence of indebtedness or other
security of either Borrower or Guarantor has given notice or taken any action
with respect to a claimed Default or Event of Default thereunder, if the
amount of the note or indebtedness exceeds $50,000, Borrower and Guarantor
shall give Administrative Agent written notice specifying the notice given or
action taken by such holder and the nature of the claimed default or event of
default thereunder and what actions, if any, Borrower or Guarantor are taking
and propose to take with respect thereto.
Section 8.21 NOTICE OF CHANCE OF MANAGEMENT. Within five (5) days
after any change in executive management of the Borrower or Guarantor,
including any officers of any of the Borrower or Guarantor holding the office
of President, Chairman or chief financial officer thereof, or the occurrence
of a Change in Control, the Borrower or Guarantor, as appropriate, shall give
written notice thereof to Administrative Agent, together with a description
of the reasons for the management/officer change.
Section 8.22 REQUESTED INFORMATION. With reasonable promptness,
Borrower and Guarantor will give Administrative Agent such other data and
information relating to Borrower or Guarantor as from time to time may be
reasonably requested by Administrative Agent.
Section 8.23 FIELD AUDITS. In addition to any other inspection rights
of Administrative Agent and the Appraiser hereunder, Administrative Agent
shall be permitted to conduct, at its own expense, an annual field audit of
Borrower's accounts and books and records relating thereto. Each field audit
shall be conducted by agents of Administrative Agent. Borrower shall fully
cooperate with Administrative Agent and its agents in connection with such
field audits.
Section 8.24 MAINTENANCE OF EMPLOYEE BENEFIT PLANS. Borrower will
maintain each employee benefit plan with respect to which they may have any
liability or responsibility, in compliance with ERISA and all other laws
applicable thereto.
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ARTICLE IX
NEGATIVE COVENANTS
Borrower covenants and agrees that, and Guarantor covenants and agrees
to ensure that, as long as the Obligations or any part thereof are
outstanding or any Lender has any commitment hereunder, Borrower and
Subsidiary (in this Article IX, the term "Borrower" shall include Subsidiary)
shall perform and observe the following negative covenants, unless
Administrative Agent shall otherwise consent in writing:
Section 9.01 DEBT. Borrower will not incur, create, assume or permit
to exist, and will not permit any nominee, agent, employee, manager or
representative who holds, manages or operates the Inventory or any portion
thereof on behalf of Borrower, to incur, create, assume, or permit to exist,
any Debt, except (a) Permitted Debt or (b) trade payables and current
indebtedness (other than (i) for borrowed money or (ii) Capitalized Lease
Obligations) incurred in the ordinary course of business.
Section 9.02 LIMITATION ON LIENS. Borrower will not incur, create,
assume, or permit to exist, any Lien upon any Collateral, its rental or sales
proceeds or revenues, except Permitted Liens.
Section 9.03 DISPOSITION; SALE OF COLLATERAL. Except as permitted by
Section 3.02 (and subject to the prepayment provisions of Section 3.02(b))
concerning permitted sales of Inventory, Equipment or other Collateral,
Borrower shall not sell, transfer or otherwise dispose (and will not permit
the involuntary sale, transfer of disposition of) any Collateral, except in
the ordinary course of business for full and fair consideration, PROVIDED,
HOWEVER, that dispositions of any assets exceeding $250,000 in the aggregate
in a fiscal quarter shall not be deemed to be a disposition in the ordinary
course of business.
Section 9.04 MERGERS, ACQUISITIONS AND DISSOLUTIONS. Neither Borrower
nor Guarantor will become a party to a merger or consolidation, or, except as
permitted by Section 9.13, purchase or otherwise acquire all or a substantial
part of the assets of any Person or any shares or other evidence of
beneficial ownership of any Person, or dissolve or liquidate.
Section 9.05 RESTRICTED PAYMENTS. Except for intercompany payments
necessary to permit Guarantor to service the Pru Debt and pay any salaries
and overhead obligations of Borrower normally paid and handled by Guarantor
in the ordinary course of and for the benefit of Borrower's operations,
Borrower will not declare or pay any dividends or make any other distribution
or payment on account of its common or preferred stock or redeem, purchase,
or retire any of its common or preferred stock, or grant or issue any common
or preferred stock, capital stock or any warrant, right, or option pertaining
to its common or preferred stock, or issue any security convertible into
stock.
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Section 9.06 PREPAYMENT OF DEBT. Borrower will not prepay any Debt,
except the Obligations and any mandatary pro rota prepayment of Pru Debt in
accordance with the provisions of Section 3.02.
Section 9.07 NATURE OF BUSINESS. Borrower will not engage in any
business other than the business in which it is engaged as of the date hereof.
Section 9.08 MINIMUM CURRENT RATIO. Borrower shall not at any time
during terms of the Notes permit its Current Ratio to be less than 1:1.
Section 9.09 DEBT TO EBITDA RATIO. Borrower shall not permit the ratio
of its Debt (including the Pru Debt) to EBITDA for any most recently ended
two trailing fiscal quarters (on an annualized basis), commencing with the
two fiscal quarters ending on September 30,2000, to be less than the ratios
set forth below:
<TABLE>
Maximum Debt
Fiscal Quarters Ending: to EBITDA
----------------------- ------------
<S> <C>
March 31, 2000 3.00:1
June 30, 2000 3.00:1
September 30, 2000 3.00:1
December 31, 2000 2.75:1
March 31,2001 2.75:1
June 30, 2001 2.50:1
September 30, 2001 2.50:1
December 31, 2001 2.25:1
March 31,2002 2.25:1
June 30, 2002 2.00:1
September 30, 2002 2.00:1
December 31, 2002 1.75:1
March 31,2003 1.75:1
</TABLE>
Section 9. 10 MINIMUM INTEREST SERVICE COVERAGE RATIO. Borrower shall
not permit its Interest Service Coverage Ratio, for each fiscal quarter
ending on the dates set forth below, to be less than the ratios set forth
opposite such fiscal quarters:
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<TABLE>
Each Fiscal Interest Service
Quarter Ending: Coverage Ratio
--------------- --------------
<S> <C>
30 Jun 1998 2.50 to 1
30 Sep 1998 2.50 to 1
31 Dec 1998 2.50 to 1
31 Mar 1999 2.50 to 1
30 Jun 1999 2.50 to 1
30 Sep 1999 2.50 to 1
31 Dec 1999 2.50 to 1
31 Mar 2000 2.50 to 1
30 Jun 2000 2.75 to 1
30 Sep 2000 2.75 to 1
1 Dec 2000 2.75 to 1
31 Mar 2001 2.75 to 1
30 Jun 2001 2.75 to 1
30 Sep 2001 2.75 to 1
31 Dec 2001 2.75 to 1
31 Mar 2002 2.75 to 1
30 Jun 2002 3.00 to 1
30 Sep 2002 3.00 to 1
31 Dec 2002 3.00 to 1
31 Mar 2003 3.00 to 1
</TABLE>
Section 9.11 FIXED CHARGE COVERAGE RATIO. Borrower shall not permit,
for any quarterly fiscal period during the terms of the Notes, its Fixed
Charge Coverage Ratio to be less that 1.25:1.
Section 9.12 MAXIMUM SG&A. Borrower shall not permit its aggregate SG&A
expenses, for the fiscal quarters set forth below, to exceed the maximum
percentages of its Total Revenues set forth below:
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<TABLE>
Fiscal Quarters Ending Maximum SG&A
---------------------- ------------
<S> <C>
30 Jun 1998 18%
30 Sep 1998 17%
31 Dec 1998 15%
31 Mar 1999 15%
30 Jun 1999 15%
30 Sep 1999 15%
31 Dec 1999 15%
31 Mar 2000 15%
30 Jun 2000 14%
30 Sep 2000 14%
31 Dec 2000 14%
31 Mar 2001 14%
30 Jun 2001 14%
30 Sep 2001 14%
31 Dec 2001 14%
31 Mar 2002 14%
30 Jun 2002 14%
30 Sep 2002 14%
31 Dec 2002 14%
31 Mar 2003 14%
</TABLE>
Section 9.13 ASSET ACQUISITIONS. Borrower shall not purchase or
acquire from any Person any assets, properties (real, personal or intangible)
(but not including Recurring Capital Expenditures in respect of Inventory) or
capital shares, stock or equity interests of any kind (even if Borrower has
available cash or borrowing capacity under the Revolving Credit Note) if more
than Five Million Dollars ($5,000,000) of the consideration to be paid by
Borrower for such acquisition is to be paid in cash at the time of
acquisition or within twelve (12) months thereafter; subject, however, to
maximum permitted acquisitions in cash of Ten Million Dollars ($10,000,000)
in the aggregate in any fiscal year.
Section 9.14 SUBSIDIARY. Borrower shall not activate, purchase any
assets into or carry on or book any business in the name of the Subsidiary.
Section 9.15 CALCULATION OF COVENANTS: RATIOS. All financial covenants
and ratios of Borrower contained in this Article IX shall be calculated,
computed and based upon the consolidated results of Guarantor's operations
LESS (a) the results of Sunterra's operations, and (b) any other revenues and
expenses of sources not derived from Guarantor, Borrower or Subsidiary.
Section 9.16 PRU DEBT AMENDMENTS. Borrower and Guarantor will not
amend or modify or permit the amendment or modification of the Pru Notes, the
Subordinated Notes, the Prudential Guarantees or any other agreement or
security instrument in connection with any of the Pru Debt.
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ARTICLE X
DEFAULT
Section 10.01 EVENTS OF DEFAULT. The occurrence of any one or more of
the following events shall constitute an "Event of Default" hereunder
(whether such occurrence shall be voluntary or involuntary or come about or
be effected by operation of Law or otherwise):
(a) Borrower shall fail to timely make any payment or
prepayment of principal under this Agreement or the Notes on the due date
thereof or fail to pay, within five (5) days of the due date thereof, any
interest due on the Notes, or fail to pay any other Obligations within ten
(10) days after the same shall become due and payable (whether by
extension, renewal, acceleration or otherwise); or
(b) Any representation or warranty of Borrower or Guarantor
made herein or in any writing furnished in connection with or pursuant to
any of the Loan Documents shall have been false or misleading in any
material respect on the date when made and continues to have a material
adverse effect on one or more of the Borrowers or their respective
financial capacity or business operations; or
(c) Borrower or Guarantor shall fall to duly observe,
perform or comply with any covenant, agreement or term (other than payment
provisions which are governed by Section 10.01(a) hereof) contained in this
Agreement or any of the Loan Documents and such default or breach shall
have not been cured or remedied within the earlier of thirty (30) days
after Borrower or Guarantor shall know (or should have known) of its
occurrence or within twenty (20) days following receipt of notice thereof
from the Administrative Agent; or
(d) Borrower or Guarantor shall default in the payment of
principal or of interest on any other obligation for money borrowed or
received as an advance (or any Capitalized Lease Obligation or obligation
under any conditional sale or other title retention agreement, or any
obligation issued or assumed as full or partial payment for property
whether or not secured by purchase money Lien, or any obligation under
notes payable or drafts accepted representing extensions of credit) in
excess of $100,000 beyond any grace period provided with respect thereto or
shall default in the performance of any other agreement, term or condition
contained in any agreement under which such obligation is created (or if
any other default under such agreement shall occur and be continuing beyond
any period of grace provided with respect thereto) if the effect of such
default is to cause the holder or holders of such obligation (or a trustee
on behalf of such holder or holders) to accelerate the due date of such
obligation prior to its scheduled date of maturity; or
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(e) Any of the following: (i) Borrower, Subsidiary or
Guarantor shall become insolvent or unable to pay its debts as they mature,
make an assignment for the benefit of creditors or admit in writing its
inability to pay its debts generally as they become due or fail generally
to pay its debts as they mature; or (ii) an order for relief, judgment or
decree is entered in respect of Borrower, Subsidiary or Guarantor under any
bankruptcy, reorganization, compromise, arrangement, insolvency,
dissolution, liquidation or similar law, whether now or hereinafter in
effect; and such order, judgment or decree is not dismissed or discharged
within sixty (60) days from the date of entry; or (iii) Borrower,
Subsidiary or Guarantor shall petition or apply to any Tribunal for the
appointment of a trustee, receiver, custodian or liquidator of Borrower,
Subsidiary or Guarantor or of any substantial part of the assets of
Borrower, Subsidiary or Guarantor, or shall commence any proceedings
relating to Borrower, Subsidiary or Guarantor under any bankruptcy,
reorganization, compromise, arrangement, insolvency, readjustment of debts,
dissolution, or liquidation Law of any jurisdiction, whether now or
hereafter in effect; or (iv) any such petition or application shall be
filed, or any such proceedings shall be commenced, of a type described in
subsection (iii) above, against either of Borrower, Subsidiary or Guarantor
and either of Borrower, Subsidiary or Guarantor by any act shall indicate
its approval thereof, consent thereto or acquiescence therein, or an order,
judgment or decree shall be entered appointing any such trustee, receiver,
custodian or liquidator, or approving the petition in any such proceedings,
and such order, judgment or decree shall remain unstayed and in effect, if
being vigorously contested, for more than sixty (60) days; or (v) any
order, judgment or decree shall be entered in any proceedings against
either Borrower, Subsidiary or Guarantor decreeing the dissolution of
either Borrower, Subsidiary or Guarantor and such order, judgment or decree
shall remain unstayed and in effect for more than sixty (60) days; or (vi)
any order, judgment or decree shall be entered in any proceedings against
Borrower, Subsidiary or Guarantor decreeing a split-up of either Borrower,
Subsidiary or Guarantor, which requires the divestiture of a substantial
part of the assets of either Borrower, Subsidiary or Guarantor, and such
order, judgment or decree shall remain unstayed and in effect for more than
sixty (60) days; or (vii) either Borrower, Subsidiary or Guarantor shall
fail to make timely payment or deposit of any amount of Tax required to be
withheld by either Borrower, Subsidiary or Guarantor and paid to or
deposited to or to the credit of the United States of America pursuant to
the provisions of the Internal Revenue Code of 1986, as amended, in respect
of any and all wages and salaries paid to employees of either or both of
Borrower, Subsidiary or Guarantor for a tax deposit amount in excess of
$10,000; or
(f) Any final judgment or order or series of judgments or
orders on the merits for the payment of money in an amount in excess of
$250,000 shall be outstanding against either Borrower, Subsidiary or
Guarantor, and such judgment shall remain unstayed pending appeal and in
effect and unpaid for more than thirty (30) days, or within thirty (30)
days after expiration of any such stay, such judgment(s) or order(s) are
not discharged; or
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(g) Any event with respect to a Plan, which causes or could
cause the termination of such Plan, shall have occurred or Borrower
withdraws from any Plan or Borrower gives notice of withdrawal or
termination of such Plan and, within thirty (30) days after the occurrence
thereof, (a) such event (if correctable) shall not have been corrected, and
(b) the then present value of such Plants vested benefits exceeds the then
current value of assets accumulated in such Plan by more than the amount of
$250,000 (or in the case of a event involving the withdrawal of a
"substantial employer" (as defined in Section 4001(a)(2) of ERISA), the
withdrawing employer's proportionate share of such excess shall exceed such
amount); or
(h) Either Borrower or Guarantor or any of their ERISA
defined Affiliates as employer under a multiemployer plan shall have made a
complete or partial withdrawal from such multiemployer plan and the plan
sponsor of such multiemployer plan shall have notified such withdrawing
employer that such employer has incurred a withdrawal liability in an
aggregate amount exceeding $250,000; or
(i) Any Event of Default occurs (after the expiration of
any applicable grace or curative period) under any of the Pru Notes,
Subordinated Notes or any guaranty agreements in support of either the Pru
Debt or Subordinated Debt; or
(j) This Agreement, any Note, or any other Loan Document
shall cease to be in full force and effect or shall be declared null and
void or the validity or enforceability thereof shall be contested or
challenged by Borrower, Guarantor or any of their respective shareholders,
or Borrower shall deny that it has any further liability or obligation
under any of the Loan Documents; or
(k) Borrower or Guarantor shall fail to provide to
Administrative Agent any report, statement, certificate or other
information required under Section 8.02 hereof; or
(l) An Event of Default (as herein defined) shall have
occurred under any of the Security Instruments; or
(m) Any material environmental damage or hazardous
discharge occurs or is discovered with respect to the Louisiana Facility,
any material part of the Collateral or other material properties owned or
leased by Borrower or Guarantor, and Borrower or Administrative Agent is
notified in writing by any regulatory agency supervising environmental
matters that such damage or hazard exists and must be remedied, and such
damage or hazard is not remedied within a period of thirty (30) days
thereafter or, if less, within such period as may be required by such
agency; or
(n) Any federal, state or local agency asserts or creates a
lien upon the Louisiana Facility, any material portion of the Collateral or
other material properties assets
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<PAGE>
or equipment of Borrower or Guarantor by reason of the occurrence of a
Hazardous Substances discharge or environmental complaint.
Section 10.02 REMEDIES UPON DEFAULT. Upon the occurrence of an Event of
Default, each Lender may, without notice, terminate its commitment to lend
hereunder and Lenders holding Obligations exceeding sixty percent (60%) of
all Obligations outstanding under the Aggregate Credit may request
Administrative Agent to declare the Obligations or any part thereof to be
immediately due and payable, and the same shall thereupon become immediately
due and payable, without notice, demand, presentment, notice of dishonor,
notice of acceleration, notice of intent to accelerate, notice of intent to
demand, protest, or other formalities of any kind, all of which are hereby
expressly waived by Borrower or Guarantor; PROVIDED, HOWEVER, that upon the
occurrence of an Event of Default under Section 10.01(e) or Section 10.01(f),
the commitment of each Lender to lend hereunder shall automatically
terminate, and the Note and Obligations shall become immediately due and
payable without notice, demand, presentment, notice of dishonor, notice of
acceleration, notice of intent to accelerate, notice of intent to demand,
protest, or other formalities of any kind, all of which are hereby expressly
waived by Borrower. Upon the occurrence of any Event of Default,
Administrative Agent, on behalf of Lenders, may exercise all rights and
remedies available to it in law or in equity, under the Guarantee, Security
Instruments, other Loan Documents, or otherwise. After Maturity or on failure
of Borrower or Guarantor to make any principal or interest payment under the
Note, the Agreement or any other Loan Document, the Loan shall bear interest
at the Default Rate.
ARTICLE XI
MISCELLANEOUS
Section 11.01 EXPENSES OF ADMINISTRATIVE AGENT. Borrower hereby agrees
to pay Administrative Agent on demand: (a) all costs and expenses incurred by
Administrative Agent in connection with the preparation, negotiation, and
execution of this Agreement and the other Loan Documents and any and all
amendments, modifications, renewals, extensions, and supplements thereof and
the filing, recording of any mortgages and financing statements in connection
with and the making of the Loans, including, without limitation, the fees and
expenses of Administrative Agent's counsel and the Appraiser (b) the costs
and expenses of the Appraiser in monitoring the Collateral and calculating
and issuing the Notices of Borrowing Base and annual appraisal reports from
time to time, (c) all costs and expenses incurred by Administrative Agent in
connection with the enforcement of this Agreement or any other Loan Document,
including, without limitation, the fees and expenses of Administrative
Agent's legal counsel and Appraiser, and (d) all other costs and expenses
incurred by Administrative Agent in connection with this Agreement or any
other Loan Document, including, without limitation all costs, expenses,
taxes, assessments, filing fees, and other charges levied by any governmental
authority or otherwise payable in respect of this Agreement or any other Loan
Document or in obtaining any audit in respect of the Collateral.
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<PAGE>
Section 11.02 INDEMNIFICATION. BORROWER AND GUARANTOR HEREBY JOINTLY
AND SEVERALLY INDEMNIFY EACH LENDER AND THEIR RESPECTIVE OFFICERS, DIRECTORS,
EMPLOYEES, ATTORNEYS, AND AGENTS FROM, AND HOLDS EACH OF THEM HARMLESS
AGAINST, ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS, AND EXPENSES
(INCLUDING ATTORNEYS' FEES) TO WHICH ANY OF THEM MAY BECOME SUBJECT WHICH
ARISE FROM OR RELATE TO ANY OF THE LOAN DOCUMENTS OR ANY OF THE TRANSACTIONS
CONTEMPLATED THEREBY OR FROM ANY INVESTIGATION, LITIGATION, OR OTHER
PROCEEDING, INCLUDING, WITHOUT LIMITATION, ANY THREATENED INVESTIGATION,
LITIGATION, OR OTHER PROCEEDING RELATING TO ANY OF THE FOREGOING (UNLESS
CAUSED BY THE GROSS NEGLIGENCE OR WILFUL CONDUCT OF ADMINISTRATIVE AGENT OR
ANY LENDER). WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT OR OF ANY OTHER
LOAN DOCUMENT, IT IS THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH
PERSON TO BE INDEMNIFIED UNDER THIS SECTION 11.02 SHALL BE INDEMNIFIED FROM
AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES, CLAIMS, DAMAGES,
COSTS, AND EXPENSES (INCLUDING ATTORNEYS' FEES) ARISING OUT OF OR RESULTING
FROM THE SOLE OR CONTRIBUTORY NEGLIGENCE OF THE PERSON TO BE INDEMNIFIED.
THE OBLIGATIONS OF BORROWER UNDER THIS SECTION 11.02 SHALL SURVIVE THE
REPAYMENT OF THE NOTES.
Section 11.03 RESTATEMENT. The delivery of each Notice of Borrowing,
Letter of Credit application, statement, report and certificate to
Administrative Agent pursuant to this Agreement shall by virtue of such
delivery or request alone constitute a restatement of the representations and
warranties contained in Article VI hereof on and as of the date of delivery
or the date requested for the Advance, except that the representations and
warranties contained in Section 6.02 shall in each instance be deemed to be
made with respect to the financial statements most recently furnished to
Administrative Agent pursuant to Section 6.02 or Section 8.01, as the case
may be. Each such delivery or request shall also constitute a representation
and warranty at the time of said delivery or on the date requested for the
Advance that no Event of Default has occurred and is continuing and that no
event or condition has occurred and is continuing that with notice or lapse
of time or both would be an Event of Default.
Section 11.04 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Administrative Agent to exercise and no delay in exercising, and no course of
dealing with respect to, any right, power, or privilege under this Agreement
shall operate as a waiver thereof, nor shall any single or partial exercise
of any right, power, or privilege under this Agreement preclude any other or
further exercise thereof or the exercise of any other right, power, or
privilege. The rights and remedies provided for in this Agreement and the
other Loan Documents are cumulative and not exclusive of any rights and
remedies provided by law.
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Section 11.05 SUCCESSORS AND ASSIGNS. This Agreement is binding upon and
shall inure to the benefit of Administrative Agent, Lenders and Borrower and
their respective successors and assigns, except that Borrower may not assign or
transfer any of its rights or obligations under this Agreement without the prior
written consent of Administrative Agent.
Section 11.06 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or any other Loan Document
or in any document, statement, or certificate furnished in connection with this
Agreement shall survive the execution and delivery of this Agreement and the
other Loan Documents, and no investigation by Administrative Agent or any
closing shall affect the representations and warranties or the right of
Administrative Agent to rely upon them.
Section 11.07 ENTIRE AGREEMENT; AMENDMENT. THIS WRITTEN LOAN AGREEMENT,
THE SECURITY INSTRUMENTS, FEE LETTER AND LOAN DOCUMENTS BETWEEN BORROWER AND
LENDERS CONCERNING THE TERMS OF THE LOANS AND FEES PAYABLE THEREUNDER REPRESENT
THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE
OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE
ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES. THE PROVISIONS OF THIS
AGREEMENT, THE FEE LETTER AND THE OTHER LOAN DOCUMENTS TO WHICH BORROWER IS A
PARTY MAY BE AMENDED OR WAIVED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE
PARTIES HERETO.
Section 11.08 MAXIMUM INTEREST RATE. No provision of this Agreement, the
Guarantee or of any other Loan Document shall require the payment or the
collection of interest in excess of the maximum permitted by applicable law. If
any excess of interest in such respect is hereby provided for, or shall be
adjudicated to be so provided, in any Loan Document or otherwise in connection
with this loan transaction, the provisions of this Section 11.08 shall govern
and prevail and neither Borrower nor the sureties, guarantors, successors, or
assigns of Borrower shall be obligated to pay the excess amount of such interest
or any other excess sum paid for the use, forbearance, or detention of sums
loaned pursuant hereto. In the event any Lender ever receives, collects, or
applies as interest any such sum, such amount which would be in excess of the
maximum amount permitted by applicable law shall be applied as a payment and
reduction of the principal of the indebtedness evidenced by the Note; and, if
the principal of the Note has been paid in full, any remaining excess shall
forthwith be paid to Borrowers. In determining whether or not the interest paid
or payable exceeds the Maximum Rate, Borrower and Administrative Agent and each
Lender shall, to the extent permitted by applicable law (a) characterize any
nonprincipal payment as an expense, fee, or premium rather than as interest,
(b) exclude voluntary prepayments and the effects thereof, and (c) amortize,
prorate, allocate, and spread in equal or unequal parts the total amount of
interest throughout the entire contemplated term of the indebtedness evidenced
by the Note so that interest for the entire term does not exceed the Maximum
Rate. For purposes of current Texas law, the maximum interest rate permitted to
be charged shall be the weekly rate
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ceiling from time to time in effect, as provided for and defined in Chapter
303 of the Texas Financial Code, as same may be amended from time to time. To
the extent permitted by, and in accordance with, applicable law, Lender shall
have the right to change the applicable rate ceiling from time to time.
Section 11.09 NOTICES. Any notice, consent, or other communication
required or permitted to be given under any of the Loan Documents to
Administrative Agent or Borrower must be in writing and delivered in person or
mailed by registered or certified mail, return receipt requested, postage
prepaid, as follows:
TO LENDER: BANK OF SCOTLAND
New York branch
565 Fifth Avenue
New York, NY 10017
Attn: Annie Chin Tat
Title: Vice President
Telephone No.: (212) 450-0800
Telecopy No.: (212) 557-9460
WITH COPY TO: BANK OF SCOTLAND
Representative Office
1750 Two Allen Center
1200 Smith Street
Houston, Texas 77002-4312
Attn: Rex McSwain
Title: Regional Director
Telephone No.: (713) 651-1870
Telecopy No.: (713) 651-9714
TO BORROWER: OUACHITA ENERGY CORPORATION
2501 Cedar Springs Road
Dallas, Texas 75201
Attn: Jack Brannon
Title: Senior Vice President, Chief
Financial Officer
Telephone No.: (214) 953-9560
Telecopy No.: (214) 953-9561
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TO GUARANTOR: OEC COMPRESSION CORPORATION
2501 Cedar Springs Road
Dallas, Texas 75201
Attn: Jack Brannon
Title: Senior Vice President, Chief
Financial Officer
Telephone No.: (214) 953-9560
Telecopy No.: (214) 953-9561
WITH COPY (IN SCHLANGER, MILLS, MAYER & GROSSBERG, L.L.P.
THE CASE OF BOTH 5847 San Felipe, Suite 1700
BORROWER AND Houston, Texas 77057
GUARANTOR) Attn: Kyle Longhofer
Telephone No.: (713) 785-8556
Telecopy No.: (713) 785-2091
or such other address as shall be set forth in a notice in accordance with this
Section 11.09. Any such notice, consent, or other communication shall be deemed
given when delivered in person or, if mailed, when duly deposited in the mail.
Section 11.10 APPLICABLE LAW AND VENUE. THIS AGREEMENT SHALL BE GOVERNED
BY, CONSTRUED AND INTERPRETED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS
AND THE APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN
ENTERED INTO IN HARRIS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL
PURPOSES IN HARRIS COUNTY, TEXAS. COURTS WITHIN THE STATE OF TEXAS SHALL HAVE
NON-EXCLUSIVE JURISDICTION OVER ANY AND ALL DISPUTES BETWEEN BORROWER AND
ADMINISTRATIVE AGENT OR LENDERS, WHETHER IN LAW OR EQUITY, INCLUDING, BUT NOT
LIMITED TO, ANY AND ALL DISPUTES ARISING OUT OF OR RELATING TO THIS AGREEMENT OR
ANY OTHER LOAN DOCUMENT; AND VENUE IN ANY SUCH DISPUTE WHETHER IN FEDERAL OR
STATE COURT MAY BE LAID IN HARRIS COUNTY, TEXAS; PROVIDED ALWAYS THAT SUIT MAY
BE BROUGHT IN THE COURTS OF ANY STATE OR PLACE WHERE BORROWER OR ANY OF ITS
ASSETS MAY BE FOUND, AND, BY EXECUTION AND DELIVERY OF THIS AGREEMENT, BORROWER
IRREVOCABLY SUBMITS TO EACH SUCH JURISDICTION. BORROWER AGREES THAT SERVICE OF
ANY SUMMONS OR SUIT AGAINST IT UNDER THIS AGREEMENT AND THE LOAN DOCUMENTS MAY
BE MADE IN ANY MANNER PROVIDED BY APPLICABLE LAW, INCLUDING BUT NOT LIMITED TO,
REGISTERED MAIL TO OR PERSONAL SERVICE ON BORROWER AT THE ADDRESS SET FORTH IN
SECTION 11.09 HEREOF AND BORROWER HEREBY IRREVOCABLY WAIVES ANY RIGHT IT MAY
HAVE TO CONTEST SUCH PROPERLY CONDUCTED SERVICE. ANY FINAL JUDGMENT AGAINST
BORROWER IN ANY SUCH ACTION SHALL BE CONCLUSIVE AND MAY BE ENFORCED IN ANY
JURISDICTION WHERE BORROWER'S ASSETS MAY BE
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FOUND. BORROWER ACKNOWLEDGES THAT IT HAS READ THIS SECTION 11.10 AND HAS
CONSULTED WITH ITS LEGAL ADVISOR WITH RESPECT HERETO AND VOLUNTARILY AGREES
TO ITS PROVISIONS OF ITS OWN FREE WILL.
Section 11.11 COUNTERPARTS. This Agreement may be executed in one or more
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 11.12 SEVERABILITY. Any provision of this Agreement held by a
court of competent jurisdiction to be invalid or unenforceable shall not impair
or invalidate the remainder of this Agreement and the effect thereof shall be
confined to the provision held to be invalid or illegal.
Section 11.13 HEADINGS. The headings, captions, and arrangements used in
this Agreement are for convenience only and shall not affect the interpretation
of this Agreement.
Section 11.14 NON-APPLICATION OF CHAPTER 15 OF TEXAS CREDIT CODE. The
provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to this Agreement or any of the other Loan Documents or to the
transactions contemplated hereby.
Section 11.15 PARTICIPATIONS. Each Lender shall have the right at any time
and from time to time to grant participations in the Notes and any other Loan
Documents. Each actual or proposed participant shall be entitled to receive all
information received by each Lender regarding the credit worthiness of Borrower,
including, without limitation, information required to be disclosed to a
participant pursuant to Banking Circular 181 (Rev., August 2, 1984), issued by
the Comptroller of the Currency (whether the actual or proposed participant is
subject to the circular or not).
Section 11.16 CONSTRUCTION. Borrower and each Lender acknowledge that each
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement and the other Loan Documents
with its legal counsel and that this Agreement and the other Loan Documents
shall be construed as if jointly drafted by Borrower and each Lender.
Section 11.17 ENVIRONMENTAL INDEMNITY. BORROWER AND GUARANTOR HEREBY
INDEMNIFY EACH LENDER AND THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES AND
AGENTS FROM AND HOLD EACH OF THEM HARMLESS AGAINST, ANY AND ALL LOSSES,
LIABILITIES, CLAIMS, DAMAGES, COSTS AND EXPENSES TO WHICH ANY OF THEM MAY BECOME
SUBJECT, INSOFAR AS SUCH LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS AND
EXPENSES ARISE FROM OR RELATE TO THE LOAN, ANY DOCUMENTS PREPARED IN
CONNECTION THEREWITH OR THE COLLATERAL, EXCEPT THAT
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WHICH MAY ARISE OUT OF THE (A) GROSS NEGLIGENCE OR WILLFUL ACT OR OMISSION OF
ANY LENDER, OR (B) ANY ACTION OF ADMINISTRATIVE AGENT OR ANY LENDER AFTER
ADMINISTRATIVE AGENT OR ANY LENDER TAKES POSSESSION OF ANY COLLATERAL OR
OTHER ASSETS OR PROPERTY OF BORROWER WHETHER BY FORECLOSURE, DEED IN LIEU OF
FORECLOSURE, RECEIVERSHIP OR OTHER CREDITOR'S REMEDY. WITHOUT LIMITING THE
SCOPE OF THIS INDEMNIFICATION PROVISION, BORROWER AND GUARANTOR SHALL,
JOINTLY AND SEVERALLY, SPECIFICALLY INDEMNIFY ADMINISTRATIVE AGENT AND EACH
LENDER FOR ANY LOSSES, LIABILITIES, CLAIMS, DAMAGES, COSTS AND EXPENSES
RELATING TO OR ARISING UNDER ANY ENVIRONMENTAL LAW, INCLUDING, WITHOUT
LIMITATION, THE RESOURCE CONSERVATION AND RECOVERY ACT OF 1976, 42 U.S.C.
SECTION 6901 ET. SEQ., AS AMENDED, THE COMPREHENSIVE ENVIRONMENTAL RESPONSE,
COMPENSATION AND LIABILITY ACT OF 1980, 42 U.S.C. SECTIONS 9601-9657, AS
AMENDED BY THE SUPERFUND AMENDMENTS AND REAUTHORIZATION ACT OF 1986, THE
HAZARDOUS MATERIALS TRANSPORTATION ACT, 49 U.S.C. SECTION 6901, ET. SEQ., THE
FEDERAL WATER POLLUTION CONTROL ACT, 33 U.S.C. SECTION 1251 ET. SEQ., THE
CLEAN AIR ACT, 42 U.S.C. SECTION 741 ET. SEQ., THE CLEAN WATER ACT, 33 U.S.C.
SECTION 7401, ET. SEQ., THE TOXIC SUBSTANCES CONTROL ACT, 15 U.S.C. SECTIONS
2601-2629, THE SAFE DRINKING WATER ACT, 42 U.S.C. SECTIONS 300F-300J AND ALL
SIMILAR FEDERAL, STATE AND LOCAL STATUTES, ORDINANCES AND THE REGULATIONS,
ORDERS AND DECREES PROMULGATED THEREUNDER.
Section 11.18 ALL RIGHTS CUMULATIVE. The rights and remedies of
Administrative Agent, and each under this Agreement, the Note and the Security
Instruments shall be cumulative and the exercise, or partial exercise of any
such right or remedy shall not preclude the exercise of any other right or
remedy.
Section 11.19 AMENDMENT AND RESTATEMENT. It is the intention and
agreement of Borrower and Lenders that this Agreement amends, extends, renews
and restates (but does not release, or extinguish and is not in novation of) the
BOK Credit and all documents executed by Borrower and Guarantor in connection
with the BOK Credit, with the intention and agreement that all indebtedness,
obligations, liens and security interests relate back and continue to run,
without lapse, from the effective date of the BOK Credit and the date of
attachment and perfection of the BOK Collateral.
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ARTICLE XII
ADDITIONAL LOAN PROCEDURES
Section 12. ADDITIONAL LOAN PROCEDURES. In the event Additional Loans
are made pursuant to the provisions of Section 2.03, Lenders, Borrower and
Guarantor agree the following procedures shall apply:
Section 12.01 LENDER'S OBLIGATION. ADMINISTRATIVE AGENT HAS NO OBLIGATION,
AND HAS ISSUED NO COMMITMENT, TO INCREASE ITS OBLIGATION UNDER THIS AGREEMENT TO
MAKE LOANS OR EXTEND CREDIT TO BORROWER IN EXCESS OF THE INITIAL LOAN.
Section 12.02 ADDITIONAL LENDERS. Each Additional Lender agreeing to make
Additional Loans under this Agreement shall execute an Addendum to this
Agreement substantially in the form of EXHIBIT 12.02 attached hereto, whereby it
agrees to be bound by the terms and provisions of this Agreement and other Loan
Documents executed in connection herewith.
Section 12.03 ADMINISTRATIVE AGENT. By executing this Agreement and the
Addendum, each Lender appoints and authorizes Administrative Agent to act for
the Lenders as Administrative Agent, on their behalf, in connection with the
Loans, Collateral, and other transactions contemplated by this Agreement and the
other Loan Documents, on the terms set forth hereunder. Borrower and Lenders
each agree that, in its role as Administrative Agent, Administrative Agent is
acting for the account of Lender to the extent of the Initial Loan and each
Lender's Maximum Commitment and for the account of each Lender to the extent of
each Lender's percentage interest in the Loans ("Percentage Interests"). All
actions taken by the Administrative Agent in connection with the enforcement of
the Security Instruments, or the exercise of any remedies (other than Lender's
rights of setoff which are provided in this Agreement and in any other Loan
Document) in respect of the Loans and the Obligations shall be taken by the
Administrative Agent on behalf of each Lender in accordance with the provisions
hereof and of the Intercreditor Agreement.
Section 12.04 BORROWER TO PAY ADMINISTRATIVE AGENT. Borrower shall be
fully protected in making all payments in respect of the Loans to the
Administrative Agent, in relying upon consents, modifications and amendments
executed by the Administrative Agent purportedly on the Lenders' behalf, and in
dealing with the Administrative Agent as herein provided.
Section 12.05 RESIGNATION OF ADMINISTRATIVE AGENT; ADMINISTRATIVE AGENT'S
EXPENSES.
(a) RESIGNATION OF ADMINISTRATIVE AGENT. The Administrative
Agent or any successor Agent may resign as Administrative Agent at any time
by giving thirty (30) days' prior written or telegraphic notice to Borrower
and the other Lenders. In the event of such resignation, a successor
Administrative Agent may then be appointed by the Lenders holding at least
seventy-five percent (75%) Percentage Interests in the Loans.
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(b) ADMINISTRATIVE AGENT'S EXPENSES. Each Lender agrees to
reimburse the Administrative Agent, to the extent of such Lender's
Percentage Interest hereunder at the time such expenses are incurred, for
all reasonable out-of-pocket expenses (including attorneys' fees) incurred
by the Administrative Agent hereunder or in connection herewith or in
enforcing the obligations of Borrower or the Guarantor hereunder and for
which the Administrative Agent is not reimbursed by Borrower.
Administrative Agent shall not be required to take any action hereunder or
to prosecute or defend any suit in respect of this Agreement or other Loan
Documents, unless indemnified to its satisfaction by the Lenders' against
loss, cost, liability and expenses. If any indemnity furnished to the
Administrative Agent shall become impaired, it may call for additional
indemnity and cease to do the acts indemnified against until such
additional indemnity is given.
Section 12.06 LENDER OPERATIONS FOR ADVANCES; LETTERS OF CREDIT.
(a) ADVANCES. On the Borrowing Date for each Loan, each
Lender shall advance to the Administrative Agent in immediately
available funds such Lender's Percentage Interest in the portion of
the Loan advanced on such Borrowing Date prior to 11:00 A.M. (New York
time). If such funds are not received at such time, the Administrative
Agent is not obligated or authorized to make such Advance for the
account of any Lender which failed to fund its portion of the
requested Advance. Each Lender is severally obligated to Borrower
for its agreed Loans up to its Maximum Commitment.
(b) LETTERS OF CREDIT. Each of the Lenders authorizes and
requests Administrative Agent to issue the Letters of Credit provided
for in Section 2.02 and agrees to purchase a participation in each of
such Letters of Credit in an amount equal to its Percentage Interest
in the amount of each such Letter of Credit. Promptly upon
Administrative Agent's request, each Lender shall reimburse
Administrative Agent in immediately available funds for such Lender's
Percentage Interest in the amount of all obligations to third parties
incurred by the Lender in respect of each Letter of Credit and each
draft accepted and paid under a Letter of Credit. Administrative
Agent will notify each Lender of the issuance of each Letter of
Credit, the amount and date of payment of any draft drawn or accepted
under a Letter of Credit and in connection with the payment of any
such draft, the amount thereof which was added to the Loans.
(c) ADMINISTRATIVE AGENT TO ALLOCATE PAYMENTS. All
payments of principal and interest in respect of Advances made
pursuant to this Agreement, Fees, and other fees, expenses and costs
under this Agreement shall be made by the Borrower to the
Administrative Agent. The Percentage Interest of each Lender in the
above payments shall be credited to such Lender by the Administrative
Agent in immediately available funds in such manner that the principal
amount of the Loans, interest and Fees shall be paid proportionately
in accordance with Lender's
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respective Percentage Interests in such Loans, except (i) in the
case of Letter of Credit Fees, Lenders agree Administrative Agent
shall be entitled to retain for its own account one quarter of one
percent (0.25%) per annum of such fee as issuer of each such
Letter of Credit (as provided in Section 3.03(b) above), and (ii)
as otherwise provided in this Agreement.
(d) LENDERS' OBLIGATIONS. The obligations of
Administrative Agent and all Lenders under this Agreement and
other Loan Documents are several and not joint and none of the
Administrative Agent or Lenders (other than a defaulting Lender)
shall be responsible for any failure by any Lender to meet all or
any of its obligations under this Agreement or other Loan
Documents nor shall any such failure relieve Borrower or the
remaining Lenders of their respective obligations under this
Agreement and other Loan documents. Further, nothing contained in
this Agreement or other Loan Documents and no action taken by
Administrative Agent and the Lenders pursuant to this Agreement or
other Loan Documents shall be deemed to constitute Administrative
Agent and the Lenders a partnership, association, joint venture or
other entity.
(e) SHARE OF PAYMENTS, ETC. All interest and principal
payments and costs on the Loans and any sum realized upon any
Collateral, are to be divided PRO RATA among each Lender by the
Administrative Agent in accordance with their Percentage Interests
in the Loans. To the extent any Lender has paid its Percentage
Interest of any Letter of Credit pursuant to the provisions of
Sections 2.02 and Article VII, Administrative Agent shall pay to
each such Lender its Percentage Interest of the Letter of Credit
Fee received by Administrative Agent with respect to the issuance
of such Letter of Credit except as provided in Section 12.06(c)
above. In addition, Lender shall pay to each Lender its PRO RATA
share, with Administrative Agent, of all Commitment Fees received
by Lender from Borrower. Additional Lenders shall not share in any
Fees due to Administrative Agent under the Fee Letter, which shall
all belong absolutely to Administrative Agent. Likewise, each
Lender agrees that any sums paid to Administrative Agent by
Guarantor pursuant to the provisions of the Guarantee shall be
shared PRO RATA among the Lenders.
(f) DELINQUENT LENDERS; NONPERFORMING LENDERS. In the
event that any Lender fails to fund the Administrative Agent,
pursuant to Section 12.06(a), for the Percentage Interest of such
Lender's Loans pursuant hereto, Advances due from the delinquent
Lender to the Administrative Agent for Advances owed to the
Borrower shall not be funded by Administrative Agent.
Section 12.07 SETOFF. Subject to the provisions of Section 12.06(e) above
and the provisions of the Intercreditor Agreement, which shall receive payment
of or on account of all or part of its share of the Loans through the exercise
of any right of collection, setoff, counterclaim, banker's lien, or secured
claim under any bankruptcy statute in a greater proportion than the
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proportionate amount of principal, interest, Fees or other costs or expenses due
it under this Agreement and the other Loan Documents shall immediately pay to
the others their various PRO RATA interests of the Loans of all amounts received
in any such setoff so that all recoveries of principal and interest shall be
shared by Lenders in accordance with their PRO RATA interests in the Loans. All
sums received by Lenders through the exercise of any right of collection,
setoff, counterclaim, banker's lien, or secured claim under any bankruptcy
statute shall be paid to the Administrative Agent for distribution to Lenders
under this Agreement, the Intercreditor Agreement and other Loan Documents.
Section 12.08 COPIES OF INFORMATION. Administrative Agent will forward to
all Lenders copies of all material information received by Administrative Agent
under the provisions of this Agreement and any instrument or agreement required
hereunder.
Section 12.09 NOTICES IN WRITING. Upon receipt by Administrative Agent
from Borrower of any communication calling for an action on the part of Lenders,
or upon notice to Administrative Agent of any Event of Default, it will in turn
immediately inform the Lenders in writing of the nature of such communication or
of the Event of Default, as the case may be.
Section 12.10 ADMINISTRATIVE AGENT'S ACTIONS BINDING. Upon any occasion
requiring or permitting an approval, consent, waiver, election or other action
on the part of Lenders, action shall be taken by the Administrative Agent for
and on behalf of or for the benefit of all Lenders upon the direction of
Lenders, and any such action shall be binding on all Lenders. No amendment,
modification, consent or waiver shall be effective which (a) increases the
amount of the Aggregate Credit or changes the commitment of any Lender, (b)
reduces interest, principal or any fee owing hereunder, (c) extends the fixed
date on which any sum is due hereunder, (d) releases any Collateral or the
Guarantee, or (e) amends the provisions of this Article, unless all Lenders
agree in writing thereto.
Section 12.11 ADMINISTRATIVE AGENT'S LIABILITY. ADMINISTRATIVE AGENT
SHALL NOT BE LIABLE OR FOR ANYTHING WHATSOEVER IN CONNECTION WITH THIS
AGREEMENT, ANY OTHER LOAN DOCUMENTS, OR ANY INSTRUMENT OR AGREEMENT REQUIRED
HEREUNDER, INCLUDING RESPONSIBILITY IN RESPECT TO THE EXECUTION, CONSTRUCTION OR
ENFORCEMENT OF THIS AGREEMENT, ANY OTHER LOAN DOCUMENTS OR ANY SUCH INSTRUMENT
OR AGREEMENT, EXCEPT FOR ITS WILLFUL MISCONDUCT OR GROSS NEGLIGENCE, AND
ADMINISTRATIVE AGENT SHALL HAVE NO DUTIES OR OBLIGATIONS OTHER THAN AS PROVIDED
HEREIN AND THEREIN. ADMINISTRATIVE AGENT SHALL BE ENTITLED TO RELY ON ANY
OPINION OF COUNSEL (INCLUDING COUNSEL FOR BORROWER AND GUARANTOR) IN RELATION TO
THIS AGREEMENT, THE LOAN DOCUMENTS AND ANY INSTRUMENT OR AGREEMENT REQUIRED
HEREUNDER, AND UPON STATEMENTS AND COMMUNICATIONS RECEIVED FROM BORROWER, OR
FROM ANY OTHER PERSON, BELIEVED BY IT TO BE AUTHENTIC, AND SHALL NOT BE
78
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LIABLE FOR ANY ACTION TAKEN OR OMITTED IN GOOD FAITH ON SUCH RELIANCE.
Section 12.12 INDEMNITY. EACH LENDER AGREES TO INDEMNIFY ADMINISTRATIVE
AGENT (TO THE EXTENT NOT REIMBURSED BY BORROWER), RATABLY ACCORDING TO ITS
PROPORTIONATE INTEREST IN THE LOANS, FROM AND AGAINST ANY AND ALL LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS OF ANY KIND OR NATURE WHATSOEVER WHICH MAY BE IMPOSED
ON, INCURRED BY OR ASSERTED AGAINST ADMINISTRATIVE AGENT IN ANY WAY RELATING TO
OR ARISING OUT OF THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY INSTRUMENT OR
AGREEMENT REQUIRED HEREUNDER OR ANY ACTION TAKEN OR OMITTED BY ADMINISTRATIVE
AGENT UNDER THIS AGREEMENT, THE LOAN DOCUMENTS OR ANY SUCH INSTRUMENT OR
AGREEMENT.
Section 12.13 ADMINISTRATIVE AGENT'S RIGHTS AS LENDER. Administrative
Agent shall have all rights and powers hereunder given to Lenders in
Administrative Agent's capacity as a Lender hereunder and may exercise the same
as though it were not Administrative Agent; and, unless the context otherwise
requires, Administrative Agent shall be treated in its individual capacity as
though it were not the Administrative Agent hereunder. Administrative Agent and
its subsidiaries and affiliates may accept deposits from, lend money to, and
generally engage in any kind of banking, trust or other business with Borrower
or Guarantor or any of their respective subsidiaries or affiliates as if it were
not Administrative Agent hereunder.
Section 12.14 RELIANCE; TAX STATUS. Administrative Agent may deem and
treat each Lender as the owner of such Lender's portion of the Loans for all
purposes hereof unless and until a written notice of the assignment or transfer
thereof executed by such Lender shall have been received by Administrative
Agent. At the request of Administrative Agent, each Lender (and assignee
thereof) agrees to promptly furnish Administrative Agent with any and all
withholding tax exemption forms and certificates as Administrative Agent may
reasonably request.
Section 12.15 INDEPENDENT INVESTIGATIONS. By executing the Addendum, each
Lender represents that it has made and agrees that it shall continue to make its
own independent investigation of the financial condition and affairs of Borrower
and the Guarantor and its own appraisal of the creditworthiness of Borrower and
the Guarantor in connection with the continuance of the Loans. Administrative
Agent has no duty or responsibility, either initially or on a continuing basis,
to provide any Lender with any credit or other information (other than obtained
under the provisions of this Agreement and the Guarantee) with respect thereto,
whether coming into its possession before the date hereof or at any time
thereafter.
Section 12.16 PARTICIPATIONS. As set forth in Section 11.15 above,
Lenders may at any time sell, assign, grant participations in, or otherwise
transfer to any other Person, firm or
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corporation all or part of the indebtedness of Borrower outstanding under
this Agreement or any Note evidencing such indebtedness, or transfer it to a
different lending branch of any such Lender. Borrower hereby acknowledges and
agrees that any such disposition may give rise to a direct obligation of
Borrower to such participating bank. In the case of the assignment of any
Lender's portion of the Loan to any other Person, the assigning Lender shall
pay to Administrative Agent a processing fee of Three Thousand Five Hundred
Dollars ($3,500) on the effective date of such assignment. Borrower and
Guarantor hereby authorize Administrative Agent, and each Lender and each
such participant, in case of default by Borrower hereunder, to proceed
directly, by right of setoff, banker's lien, or otherwise, against any assets
of Borrower and the Guarantor which may at the time of such default be in the
hands of such Administrative Agent, Lender or any such participant.
Section 12.17 MAJORITY DECISION OF LENDERS. Any action or decision
requiring the vote of Lenders hereunder, shall be taken on the majority vote of
at least seventy-five percent (75%) of the Percentage Interests.
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first above written.
BORROWER:
OUACHITA ENERGY CORPORATION
By: /s/ Jack D. Brannon
---------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
GUARANTOR:
OEC COMPRESSION CORPORATION
(formerly called Equity Compression
Services Corporation)
By: /s/ Jack D. Brannon
---------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
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ADMINISTRATIVE AGENT:
BANK OF SCOTLAND
By: /s/ Annie Chin Tat
---------------------------------
Name: Annie Chin Tat
Title: Vice President
LENDERS:
BANK OF SCOTLAND
By: /s/ Annie Chin Tat
---------------------------------
Name: Annie Chin Tat
Title: Vice President
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EXHIBIT 1.48
RECORD OR BENEFICIAL OWNERS OF GUARANTOR
(Controlling Stockholders)
HACL, LTD: Percentage Interest: 13.2%
OWNERSHIP
---------
Ray Davis
Kelcy Warren
Valhalla Limited Partnership
Jon Stephenson
BMB Capital (Richard Brannon, Managing Partner)
Scott Heape
Matthew Ramsey
ENERGY INVESTORS JOINT VENTURE: Percentage Interest: 13.6%
OWNERSHIP
---------
Lyda Hunt-Herbert Trusts - Douglas Herbert Hunt
Lyda Hunt-Herbert Trusts - Barbara Ann Hunt
Lyda Hunt-Herbert Trusts - Bruce William Hunt
Lyda Hunt-Herbert Trusts - Lyda Bunker Hunt
Lyda Hunt-Herbert Trusts - David Shelton Hunt
R. Lacy
Jim Finley
Bryan Wagner
Duer Wagner, Jr.
Sklar & Phillips
Jim Bryant
Bob Devine
Lynn Smith
Bill Walton
Jim Byrd
Charles Williams
Robert Merrill
Tom Schoonover
Gary Salmon
Keith Lawyer
<PAGE>
DENNIS W. ESTIS: Percentage Interest: 17.8%
<PAGE>
EXHIBIT 1.115
LIST OF MAXIMUM COMMITMENTS/PERCENTAGE INTEREST
<TABLE>
NAME OF LENDER PERCENTAGE INTEREST MAXIMUM COMMITMENT
- -------------- ------------------- ------------------
<S> <C> <C>
Bank of Scotland 100% $40,000,000
TOTAL 100% $40,000,000
---------- -----------
---------- -----------
</TABLE>
<PAGE>
EXHIBIT 2.01(b)
REVOLVING CREDIT NOTE
$40,000,000 March 30, 1998
FOR VALUE RECEIVED, Ouachita Energy Corporation, a corporation organized
and existing under the laws of the State of Delaware ("Borrower"), hereby
promises to pay on or before March 31, 2000 to the order of Bank of Scotland,
New York branch ("Lender"), the principal sum of the lesser of (a) up to a
maximum of Forty Million Dollars ($40,000,000), or (b) Lender's Percentage
Interest of the Borrowing Base (as such terms are defined in the Agreement
referenced below) in effect from time to time, or such lesser sum as may be
outstanding from time to time, in United States dollars and in immediately
available funds, together with interest thereon at such rates, calculated in
such manner and payable at such times as are specified in the said Agreement.
All past due principal and interest shall bear interest at a rate equal to the
lower of the Maximum Rate permitted by applicable law or the Default Rate.
This Note is issued subject to the terms of a certain Amended and Restated
Loan Agreement by and among Administrative Agent, on behalf of itself as Lender
and certain other Lenders, Borrower and OEC Compression Corporation, as
guarantor ("Guarantor"), dated as of March 30, 1998 ("Loan Agreement"), as same
may be further amended from time to time (the Loan Agreement, being referred to
herein as the "Agreement"). Capitalized terms used but not otherwise defined
herein shall have the same respective meanings herein as in the Agreement.
Payments of both principal and interest are to be made in immediately
available funds, in lawful money of the United States of America, to Lender c/o
its New York branch at 565 Fifth Avenue, New York, New York 10017 for the
account of Lender pursuant to the terms of the Agreement, or such other place as
Lender shall designate in writing to Borrower.
If default is made in the payment of this Note and it is placed in the
hands of an attorney for collection, or collected through bankruptcy
proceedings, or if suit is brought on this Note, Borrower agrees to pay
reasonable attorneys' fees and expenses in addition to all other amounts owing
hereunder.
Borrower acknowledges that the actual crediting of the amount of any
Revolving Credit Loan or Advance under the Agreement to a bank account
designated by Borrower or to such other place as may be requested by Borrower,
shall, in the absence of manifest error, constitute conclusive evidence that
such Advance was made and borrowed under the Agreement notwithstanding any
unauthorized instructions received by Lender. Lender shall also attempt to
record all Advances to and repayments made by Borrower on the Grid Schedule
attached hereto, and Lender's records of Advances and Grid Schedule shall
constitute, in the absence of manifest error, conclusive evidence of principal
amounts outstanding and of Advances and repayments made under the Agreement and
this Note at any time and from time to time, provided that the
Page 1 of a 3 Page Note
________
Initials
<PAGE>
failure of Lender to record on the Grid Schedule the type, date or amount of
any Advance shall not affect the obligation of the Borrower to repay any
amount actually advanced to Borrower, together with interest thereon in
accordance with this Note and the Agreement.
It is contemplated that by reason of prepayments hereunder there may be
times when no indebtedness is owing under this Note; but notwithstanding such
occurrence, this Note shall remain valid and in full force and effect as to (i)
Advances made hereunder subsequent to each such occurrence, and (ii) other
obligations and indebtedness of Borrower intended to be evidenced hereby.
This Note is Lender's Revolving Credit Note provided for in, and is
entitled to the benefits of, the Agreement and Security Instruments in support
of such Agreement, as the same may from time to time be amended, which
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, for certain default
interest for late payments of principal and interest and also for prepayments on
account of principal prior to the maturity hereof upon terms and conditions
therein specified.
Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, notice of
intention to accelerate and notice of acceleration, protest and notice of
protest and diligence in collecting and bringing of suit against any party
hereto, and agree to all renewals, extensions or partial payments hereon and to
any release or substitution of security herefor, in whole or in part, with or
without notice, before or after maturity.
This Note shall be governed, construed and interpreted in accordance with
the laws of the State of Texas.
Anything in this Note or the Agreement notwithstanding, the Borrower shall
never be required to pay any unearned interest on this Note or under the
agreement and shall never be required to pay any interest in excess of the
Maximum Rate of interest permitted by applicable law. Lender shall have all the
rights and benefits hereunder concerning the computation, spreading and
recapture of interest as is set out in the Agreement.
This Note is given and executed in renewal, extension, amendment,
modification and restatement, but not in discharge, novation, or extinguishment
of, that certain Promissory Note (Bank Note) dated August 5, 1997, executed by
Borrower, Guarantor, Sunterra Energy Corporation and Equity Compressors, Inc.
and payable to the order of Bank of Oklahoma, National Association ("Bank Note")
in the original principal amount of $40,000,000, which Bank Note was assigned to
Administrative Agent on behalf of Lender on even date herewith. All liens and
security interests securing payment of the Bank Note are hereby ratified,
confined, renewed, extended and brought forward as security for the payment of
this Note. Further it is the intention and agreement of Borrower that this Note
and all liens attaching thereto should relate back to and carry the same
perfection and priority date as of the Bank Note.
Page 2 of a 3 Page Note
________
Initials
<PAGE>
THIS WRITTEN NOTE, THE LOAN AGREEMENT, THE SECURITY INSTRUMENTS, FEE LETTER
AND LOAN DOCUMENTS BETWEEN BORROWER AND LENDER REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
OUACHITA ENERGY CORPORATION
By:
-----------------------------
Name: Jack D. Brannon
Title: Senior Vice President
Page 3 of a 3 Page Note
________
Initials
<PAGE>
GRID SCHEDULE OF LOAN ADVANCES
AND PAYMENT OF
PRINCIPAL AND INTEREST
<TABLE>
- -----------------------------------------------------------------------------------------
AMOUNT OF AMOUNT OF
DATE OF AMOUNT TYPE OF INTEREST RATE DATE PRINCIPAL INTEREST NOTATION
ADVANCE ADVANCED LOAN RATE PERIOD PAID PAID PAID MADE BY
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
Page 4 of a 3 Page Note ________
Initials
<PAGE>
EXHIBIT 2.03(b)
ADDITIONAL REVOLVING CREDIT NOTE
$______________ _______________, 19__
FOR VALUE RECEIVED, Ouachita Energy Corporation, a corporation organized
and existing under the laws of the State of Delaware ("Borrower"), hereby
promises to pay on or before March 31, 2000 to the order of
______________________________________ ("Lender"), the principal sum of the
lesser of (a) up to a maximum of________________________ Dollars
($_______________), or (b) Lender's Percentage Interest of the Borrowing Base
(as such terms are defined in the Agreement referenced below) in effect from
time to time, or such lesser sum as may be outstanding from time to time, in
United States dollars and in immediately available funds, together with interest
thereon at such rates, calculated in such manner and payable at such times as
are specified in the said Agreement. All past due principal and interest shall
bear interest at a rate equal to the lower of the Maximum Rate permitted by
applicable law or the Default Rate.
This Note is issued subject to the terms of a certain Amended and Restated
Loan Agreement by and among Administrative Agent, on behalf of itself and
Lender, Borrower and OEC Compression Corporation, as guarantor ("Guarantor"),
dated as of March 30, 1998 ("Loan Agreement"), as same may be further amended
from time to time (the Loan Agreement, being referred to herein as the
"Agreement"). Capitalized terms used but not otherwise defined herein shall have
the same respective meanings herein as in the Agreement.
Payments of both principal and interest are to be made in immediately
available funds, in lawful money of the United States of America, to Lender at
_____________________________ for the account of Lender pursuant to the terms of
the Agreement, or such other place as Lender shall designate in writing to
Borrower.
If default is made in the payment of this Note and it is placed in the
hands of an attorney for collection, or collected through bankruptcy
proceedings, or if suit is brought on this Note, Borrower agrees to pay
reasonable attorneys' fees and expenses in addition to all other amounts owing
hereunder.
Borrower acknowledges that the actual crediting of the amount of any
Revolving Credit Loan or Advance under the Agreement to a bank account
designated by Borrower or to such other place as may be requested by Borrower,
shall, in the absence of manifest error, constitute conclusive evidence that
such Advance was made and borrowed under the Agreement notwithstanding any
unauthorized instructions received by Lender. Lender shall also attempt to
record all Advances to and repayments made by Borrower on the Grid Schedule
attached hereto, and Lender's records of Advances and Grid Schedule shall
constitute, in the absence of manifest
<PAGE>
error, conclusive evidence of principal amounts outstanding and of Advances
and repayments made under the Agreement and this Note at any time and from
time to time, provided that the failure of Lender to record on the Grid
Schedule the type, date or amount of any Advance shall not affect the
obligation of the Borrower to repay any amount actually advanced to Borrower,
together with interest thereon in accordance with this Note and the Agreement.
It is contemplated that by reason of prepayments hereunder there may be
times when no indebtedness is owing under this Note; but notwithstanding such
occurrence, this Note shall remain valid and in full force and effect as to (i)
Advances made hereunder subsequent to each such occurrence, and (ii) other
obligations and indebtedness of Borrower intended to be evidenced hereby.
This Note is Lender's Additional Revolving Credit Note provided for in, and
is entitled to the benefits of, the Agreement and Security Instruments in
support of such Agreement, as the same may from time to time be amended, which
Agreement, among other things, contains provisions for acceleration of the
maturity hereof upon the happening of certain stated events, for certain default
interest for late payments of principal and interest and also for prepayments on
account of principal prior to the maturity hereof upon terms and conditions
therein specified.
Borrower and any and all endorsers, guarantors and sureties severally waive
grace, demand, presentment for payment, notice of dishonor or default, notice of
intention to accelerate and notice of acceleration, protest and notice of
protest and diligence in collecting and bringing of suit against any party
hereto, and agree to all renewals, extensions or partial payments hereon and to
any release or substitution of security herefor, in whole or in part, with or
without notice, before or after maturity.
This Note shall be governed, construed and interpreted in accordance with
the laws of the State of Texas.
Anything in this Note or the Agreement notwithstanding, the Borrower shall
never be required to pay any unearned interest on this Note or under the
agreement and shall never be required to pay any interest in excess of the
Maximum Rate of interest permitted by applicable law. Lender shall have all the
rights and benefits hereunder concerning the computation, spreading and
recapture of interest as is set out in the Agreement.
This Note is one of the Notes (as defined in the Agreement) given and
executed in renewal, extension, amendment, modification and restatement, but not
in discharge, novation, or extinguishment of, that certain Promissory Note (Bank
Note) dated August 5, 1997, executed by Borrower, Guarantor, Sunterra Energy
Corporation and Equity Compressors, Inc. and payable to the order of Bank of
Oklahoma, National Association ("Bank Note") in the original principal amount of
$40,000,000, which Bank Note was assigned to Administrative Agent on behalf of
Lenders on March 30, 1998. All liens and security interests securing payment of
the Bank Note are hereby ratified, confirmed, renewed, extended and brought
forward as security for the payment of this Note. Further it is the intention
and agreement of Borrower that this Note and
<PAGE>
all liens attaching thereto should relate back to and carry the same
perfection and priority date as of the Bank Note.
THIS WRITTEN NOTE, THE LOAN AGREEMENT, THE SECURITY INSTRUMENTS, FEE LETTER
AND LOAN DOCUMENTS BETWEEN BORROWER AND LENDER REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
OUACHITA ENERGY CORPORATION
By:
------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
<PAGE>
GRID SCHEDULE OF LOAN ADVANCES
AND PAYMENT OF
PRINCIPAL AND INTEREST
<TABLE>
- -----------------------------------------------------------------------------------------
AMOUNT OF AMOUNT OF
DATE OF AMOUNT TYPE OF INTEREST RATE DATE PRINCIPAL INTEREST NOTATION
ADVANCE ADVANCED LOAN RATE PERIOD PAID PAID PAID MADE BY
- -----------------------------------------------------------------------------------------
<S> <C> <C> <C> <C> <C> <C> <C> <C>
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
- -----------------------------------------------------------------------------------------
</TABLE>
<PAGE>
EXHIBIT 2.05(e)
TERM NOTE
$_________ New York, New York March 31, 2000
FOR VALUE RECEIVED, the undersigned Ouachita Energy Corporation, a Delaware
corporation, hereby promises to pay on or before March 31, 2003 to the order of
Bank of Scotland, New York branch ("Lender"), the principal sum of
$_____________________ in quarterly installments each equal to one-twenty-eighth
(1/28th) of the principal amount thereof, commencing on June 30, 2000, and
thereafter on the last Business Day of September, December, March and June of
each year (the "Installment Dates"), to and including March 31, 2003 when the
total unpaid balance will be due and payable; together with interest on the
unpaid balance thereof, payable at the rates and on the dates specified in the
Loan Agreement dated as of March 30, 1998, by and between the undersigned
("Borrower") and Lender, as amended (the "Agreement"). All past due principal
and interest on this Note shall bear interest at a rate equal to the lesser of
(a) the Maximum Rate of interest permitted by applicable law, or (b) the Default
Rate set forth in the Agreement.
Capitalized terms used by not otherwise defined herein shall have the same
respective meanings herein as in the Agreement.
Payments of both principal and interest are to be made in immediately
available funds in lawful money of the United States of America to Lender at its
New York branch at 565 Fifth Avenue, New York, New York 10017, pursuant to the
terms of the Agreement, or such other place as the Lender shall designate in
writing to the Borrower.
If default is made in the payment of this Note and it is placed in the
hands of an attorney for collection, or collected through bankruptcy
proceedings, or if suit is brought on this Note, the Borrower agrees to pay
reasonable attorneys' fees and expenses in addition to all other amounts owing
hereunder.
This Note is one of the Term Notes provided for in, and is entitled to the
benefits of, the Agreement, as the same may from time to time be amended, which
Agreement, among other things, contains provisions for acceleration of the
Maturity hereof upon the happening of certain stated events and also for
prepayments on account of principal hereof prior to the Maturity hereof upon
terms and conditions therein specified, and to the effect that no provision of
said Agreement or this Note shall require the payment or permit the collection
of interest in excess of the Maximum Rate.
<PAGE>
The Borrower and any and all endorsers, guarantors and sureties severally
waive grace, demand, presentment for payment, notice of dishonor or default,
notice of intention to accelerate, protest and notice of protest and diligence
in collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after Maturity.
THIS WRITTEN NOTE, THE LOAN AGREEMENT, THE SECURITY INSTRUMENTS, FEE LETTER
AND LOAN DOCUMENTS BETWEEN BORROWER AND LENDER REPRESENT THE FINAL AGREEMENT
BETWEEN THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
Place of Execution: OUACHITA ENERGY CORPORATION
- ------------------- By:
-------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
<PAGE>
EXHIBIT 6.05
LITIGATION & JUDGMENTS
NONE
EXHIBIT 8.01(d)
BORROWING BASE CERTIFICATE
[TO BE ADDED]
<PAGE>
EXHIBIT 6.09 TO
LOAN AGREEMENT
DEBT OF BORROWER
1. Indebtedness to Prudential Insurance Company of America for the $5,000,000
Senior Term Note and the $15,000,000 Secured Senior Subordinated Note.
2. Capitalized Lease Obligations on Motor Vehicles in favor of GE Capital
Corporation for a total of $480,000.
3. The following UCC financing statements in connection with the $40,000,000
debt to Bank of Oklahoma, National Association:
DEBTOR: OUACHITA ENERGY CORPORATION
<TABLE>
- ---------------------------------------------------------------------------------
<S> <C> <C>
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- ---------------------------------------------------------------------------------
Ouachita Parish, LA No. 37-68366 filed Bank of Oklahoma, National
8/15/97 Association, as Collateral
Agent
- ---------------------------------------------------------------------------------
Texas Secretary of No. 97-172246 filed Bank of Oklahoma, National
State 8/18/97 Association, as Collateral
Agent
- ---------------------------------------------------------------------------------
Alabama Secretary of No. 97-34693 filed Bank of Oklahoma, National
State 8/19/97 Association, as Collateral
Agent
- ---------------------------------------------------------------------------------
Arkansas Secretary of No. 1090003 filed Bank of Oklahoma, National
State 8/19/97 State Association, as
Collateral Agent
- ---------------------------------------------------------------------------------
Kansas Secretary of No. 2380359 filed Bank of Oklahoma, National
State 8/19/97 Association, as Collateral
Agent
- ---------------------------------------------------------------------------------
Mississippi Secretary No. 1133598 filed Bank of Oklahoma, National
of State 8/19/97 State Association, as
Collateral Agent
- ---------------------------------------------------------------------------------
1
<PAGE>
- ---------------------------------------------------------------------------------
Oklahoma Secretary of No. N03189 filed Bank of Oklahoma, National
State 8/18/97 Association, as
Collateral Agent
- ---------------------------------------------------------------------------------
DEBTOR: EQUITY COMPRESSORS, INC.
- ---------------------------------------------------------------------------------
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- ---------------------------------------------------------------------------------
Vermilion Parish, LA No. 57-930969 filed Bank of Oklahoma,
6/18/93 National Association
- ---------------------------------------------------------------------------------
Ouachita Parish, LA No. 37-68367 filed Bank of Oklahoma,
8/15/97 National Association,
as Collateral Agent
- ---------------------------------------------------------------------------------
Oklahoma County, OK No. N01838 filed Bank of Oklahoma,
6/16/93 National Association
- ---------------------------------------------------------------------------------
Oklahoma County, OK No. N03191 filed Bank of Oklahoma,
8/18/97 National Association,
as Collateral Agent
- ---------------------------------------------------------------------------------
Alabama Secretary of State No. 93-21704 filed Bank of Oklahoma,
6/21/93 National Association
- ---------------------------------------------------------------------------------
Alabama Secretary of State No. 97-34694 filed Bank of Oklahoma,
8/19/97 National Association,
as Collateral Agent
- ---------------------------------------------------------------------------------
Texas Secretary of State No. 93-118844 filed Bank of Oklahoma,
8/18/93 National Association
- ---------------------------------------------------------------------------------
Texas Secretary of State No. 97-172244 filed Bank of Oklahoma,
8/18/97 National Association,
as Collateral Agent
- ---------------------------------------------------------------------------------
Kansas Secretary of State No. 1920786 filed Bank of Oklahoma,
6/17/93 National Association
- ---------------------------------------------------------------------------------
Kansas Secretary of State No. 2380358 filed Bank of Oklahoma,
8/19/97 National Association,
as Collateral Agent
- ---------------------------------------------------------------------------------
2
<PAGE>
- ---------------------------------------------------------------------------------
Arkansas Secretary of No. 855334 filed Bank of Oklahoma,
State 6/21/93 National Association
- ---------------------------------------------------------------------------------
Arkansas Secretary of No. 1090002 filed Bank of Oklahoma,
State 8/19/97 National Association,
as Collateral Agent
- ---------------------------------------------------------------------------------
Mississippi Secretary of No. 01133593 filed Bank of Oklahoma,
State 8/18/97 National Association,
as Collateral
- ---------------------------------------------------------------------------------
Mississippi Secretary of No. 0722017 filed Bank of Oklahoma,
State 6/17/93 National Association
- ---------------------------------------------------------------------------------
</TABLE>
4. Pursuant to a letter from Bank One, Louisiana dated July 30, 1997 wherein
pay-off balances owed by Ouachita Energy Corporation, Ouachita Energy Partners,
Ltd., and Ouachita Compression Group, L.L.C. were listed, the bank stated that
once it received certified funds to pay off the debt, it would release the
collateral held for the loans and execute UCC-3s. However, the following UCCs
have not been released and are still of record:
<TABLE>
- ------------------------------------------------------------------------------------------
<S> <C> <C>
DEBTOR SECURED PARTY FINANCING STATEMENT COLLATERAL (GENERAL
DESCRIPTION)
- ------------------------------------------------------------------------------------------
Ouachita Energy Premier Bank, Oklahoma County, all equipment,
Partners Ltd. National Association Oklahoma No. N03469 accounts, chattel
(now known as Bank One, dated 8/13/91 and paper, contract
Louisiana) continued 6/10/96 rights and proceeds
- ------------------------------------------------------------------------------------------
Ouachita Energy Bank One, Louisiana Kansas Sec. of accounts, chattel
Corporation State No. 2267749 paper, contract
dated 7/29/96 rights, general
intangibles and
products and
proceeds
- ------------------------------------------------------------------------------------------
Ouachita Energy Bank One, Louisiana Arkansas Sec. of accounts, chattel
Corporation State No. 1029874 paper, contract
dated 7/30/96 rights, general
intangibles and
products and
proceeds
- ------------------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
5. Pursuant to a letter from NationsBank dated August 4, 1997 advising that
there was no outstanding debt owed by Equity Compression Services Corporation,
Equity Compressors, Inc. or Sunterra, the bank stated that NationsBank Dallas
was releasing all UCCs and liens. However, the following UCCs have not been
released and are still of record:
<TABLE>
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEBTOR SECURED PARTY FINANCING STATEMENT COLLATERAL (GENERAL
DESCRIPTION)
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National Oklahoma County, OK compressors leased
Inc. Bank of Tulsa (now No. N03403 filed to Hawkins Oil &
NationsBank) 7/28/89 and Gas & other
continued 6/6/94 lessees, insurance
proceeds, rents...
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National Oklahoma County, OK compressors,
Inc. Bank of Tulsa (now No. N04642 filed equipment, rents,
NationsBank) (this 11/13/90 and chattel paper,
filing lapsed but the continued 1/25/96 proceeds...
filing below was filed
to cover it)
- --------------------------------------------------------------------------------------------
Equity Compressors, Bank IV Oklahoma Oklahoma County, OK compressors,
Inc. N.A. (now NationsBank) No. 004335 filed equipment, rents,
(filing to cover the 1/25/96 chattel paper,
above UCC) proceeds...
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National Oklahoma County, OK compressors, rights
Inc. Bank of Tulsa (now No. N01890 filed in leases of
NationsBank) 4/26/90 and compressors,
continued 4/12/95 rents...
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National Oklahoma County, OK accounts (H&H
Inc. Bank No. 010176 filed Compressors, Smith
3/1/95 Salvage Equip.,
Compression
Components Corp.)
- --------------------------------------------------------------------------------------------
4
<PAGE>
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National Oklahoma County, OK interest in
Inc. Bank of Tulsa (now No. N01642 filed Installment Sales
NationsBank) 6/1/93 Contract and
Security Agreement
of 4/29/93 with
Stalwart Energy
Company covering
compressors and
equipment
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National OK County, OK No. compressors, right
Inc. Bank of Tulsa (now 1557263 filed under lease
NationsBank) 4/30/90 and agreements, rents
continued 4/19/95 ...
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National OK County, OK No. compressors leased
Inc. Bank of Tulsa (now 2049842 filed to Hawkins Oil &
NationsBank) 8/8/94 Gas & other
lessees, insurance
proceeds, rents...
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National Arkansas Secretary compressors, rights
Inc. Bank of Tulsa (now of State No. 708056 under lease
NationsBank) filed 4/30/90 and agreements, rents
continued 4/26/95 ...
- --------------------------------------------------------------------------------------------
Equity Compressors, Western National Arkansas Secretary compressors leased
Inc. Bank of Tulsa (now of State No. 917905 to Hawkins Oil &
NationsBank) filed 8/9/94 (this Gas & other
was filed to cover lessees, insurance
a lapsed filing - proceeds, rents...
number 0675066)
- --------------------------------------------------------------------------------------------
</TABLE>
5
<PAGE>
6. In addition, the following are active UCC financing statements filed
outside of the Bank of Oklahoma loan:
<TABLE>
- --------------------------------------------------------------------------------------------
<S> <C> <C> <C>
DEBTOR SECURED PARTY FINANCING COLLATERAL (GENERAL
STATEMENT DESCRIPTION
- --------------------------------------------------------------------------------------------
Ouachita Energy Lease Partners Inc. Caddo Parish, LA per lease #46507
Corporation No. 09-932415 filed dated 10/5/95
10/18/95 covering 1
executive digital
key system
- --------------------------------------------------------------------------------------------
Ouachita Energy Gelco Corporation Ouachita Parish, LA forklift, diesel
Corporation dba GE Capital Fleet No. 37-64283 filed engine, mast with
Services 3/10/97 sideshift, 48"
racks, 4 speed
power shuttle
transmission and
accounts
receivable, general
intangibles,
insurance proceeds
- --------------------------------------------------------------------------------------------
</TABLE>
6
<PAGE>
EXHIBIT 6.09(a) TO
LOAN AGREEMENT
DEBT AND LIENS OF GUARANTOR
1. Indebtedness to Prudential Insurance Company of America for the $5,000,000
Senior Term Note and the $15,000,000 Secured Senior Subordinated Note.
2. The following UCC financing statements in connection with the $40,000,000
debt to Bank of Oklahoma, National Association:
DEBTOR: EQUITY COMPRESSION SERVICES CORPORATION
<TABLE>
- --------------------------------------------------------------------------------------------
<S> <C> <C>
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- --------------------------------------------------------------------------------------------
Oklahoma County, OK No. N01960 filed Bank of Oklahoma,
5/14/97 National Association
- --------------------------------------------------------------------------------------------
Oklahoma County, OK No. N03190 filed Bank of Oklahoma,
8/18/97 National Association,
as Collateral Agent
- --------------------------------------------------------------------------------------------
Texas Secretary of State No. 97-101128 filed Bank of Oklahoma,
5/15/97 National Association
- --------------------------------------------------------------------------------------------
Texas Secretary of State No. 97-172245 filed Bank of Oklahoma,
8/18/97 National Association,
as Collateral Agent
- --------------------------------------------------------------------------------------------
Arkansas Secretary of No. 1074779 filed Bank of Oklahoma,
State 5/15/97 National Association
- --------------------------------------------------------------------------------------------
Arkansas Secretary of No. 1090063 filed Bank of Oklahoma,
State 8/19/97 National Association,
as Collateral Agent
- --------------------------------------------------------------------------------------------
</TABLE>
1
<PAGE>
3. The following UCC financing statements by Hawkins Energy Corporation
(predecessor company to Equity Compression Services Corporation), as
Debtor, are to be terminated:
<TABLE>
- --------------------------------------------------------------------------------
<S> <C> <C>
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- --------------------------------------------------------------------------------
Texas Secretary of State No. 90-00118246 filed Western Nation Bank of
5/29/90 and continued Tulsa and Glenn A.
4/14/95 Elrod, Trustee
- --------------------------------------------------------------------------------
Texas Secretary of State
No. 93-00118843 filed Bank of Oklahoma,
6/17/93 National Association
- --------------------------------------------------------------------------------
Texas Secretary of State No. 93-00124574 Bank of Oklahoma,
National Association
- --------------------------------------------------------------------------------
Texas Secretary of State No. 94-00025948 filed Kent A. Rhyne and
2/10/94 Robert L. Humphrey
- --------------------------------------------------------------------------------
Alabama Secretary of State No. 93-21703 filed Bank of Oklahoma,
6/21/93 National Association
- --------------------------------------------------------------------------------
Mississippi Secretary of No. 00722018 filed Bank of Oklahoma,
State 6/17/93 National Association
- --------------------------------------------------------------------------------
Mississippi Secretary of No. 00774918 filed Kent A. Rhyne and
State 2/10/94 Robert L. Humphrey
- --------------------------------------------------------------------------------
Vermilion Parish, Louisiana No. 57-930967 filed Bank of Oklahoma,
6/18/93 National Association
- --------------------------------------------------------------------------------
Arkansas Secretary of State No. 856394 filed Bank of Oklahoma,
6/28/93 National Association
- --------------------------------------------------------------------------------
Arkansas Secretary of State No. 855332 filed Bank of Oklahoma,
6/21/93 National Association
- --------------------------------------------------------------------------------
Arkansas Secretary of State No. 899322 filed Bank of Oklahoma,
4/21/94 National Association
- --------------------------------------------------------------------------------
Arkansas Secretary of State No. 983089 filed Bank of Oklahoma,
9/29/95 National Association
- --------------------------------------------------------------------------------
Kansas Secretary of State No. 1923560 filed Bank of Oklahoma,
6/25/93 National Association
- --------------------------------------------------------------------------------
2
<PAGE>
- --------------------------------------------------------------------------------
Kansas Secretary of State No. 2178784 filed Bank of Oklahoma,
9/29/95 National Association
- --------------------------------------------------------------------------------
Kansas Secretary of State No. 1920787 filed Bank of Oklahoma,
6/17/93 National Association
- --------------------------------------------------------------------------------
Kansas Secretary of State No. 2015109 filed Bank of Oklahoma,
4/20/94 National Association
- --------------------------------------------------------------------------------
Oklahoma Secretary of State No. N01931 filed Bank of Oklahoma,
6/24/93 National Association
- --------------------------------------------------------------------------------
Oklahoma Secretary of State No. N01839 filed Bank of Oklahoma,
6/16/93 National Association
- --------------------------------------------------------------------------------
Oklahoma Secretary of State No. N01100 filed Bank of Oklahoma,
4/19/94 National Association
- --------------------------------------------------------------------------------
Oklahoma Secretary of State No. N03407 filed Bank of Oklahoma,
10/18/95 National Association
- --------------------------------------------------------------------------------
Oklahoma Secretary of State No. N00067 filed Bank of Oklahoma,
1/6/95 National Association
- --------------------------------------------------------------------------------
</TABLE>
3
<PAGE>
EXHIBIT 12.02
ADDENDUM TO LOAN AGREEMENT
[Date]
Re: Amended and Restated Loan Agreement dated as of March 30, 1998 by and
among Bank of Scotland, New York branch ("BOS"), Ouachita Energy
Corporation ("Borrower") and OEC Compression Corporation ("Guarantor)
and BOS, as agent for itself and the other Lenders thereunder (the
"Loan Agreement"); capitalized terms used herein and not otherwise
defined herein shall have the meaning provided in the Loan Agreement.
Ladies and Gentlemen:
We acknowledge that we have received a copy of the Loan Agreement,
all Loan Documents executed by Borrower and Guarantor in connection therewith
and the Intercreditor Agreement, in connection therewith, with Prudential
Insurance Company of America (collectively, "Related Loan Documents"). We
refer to Section 2.03 and Article XII of the Loan Agreement.
Upon your receipt of this Addendum, we (a) shall have all the
rights and benefits of a "Lender" under the Loan Agreement and Related Loan
Documents as if we were an original signatory thereto, and (b) agree to be
bound by the terms and conditions set forth in the Loan Agreement and Related
Loan Documents and to be obligated thereunder as if we were an original
signatory thereto.
[WE HEREBY ADVISE YOU THAT WE HAVE SUCCEEDED TO [[______]% OF] THE
INTEREST OF [BOS OR APPLICABLE ASSIGNEE] UNDER THE CREDIT AGREEMENT AND HAVE
ASSUMED THE OBLIGATIONS OF [BOS OR APPLICABLE ASSIGNEE] THEREUNDER.]
[WE HEREBY ADVISE YOU THAT WE HAVE SUCCEEDED TO [[______]% OF] THE
INTEREST OF [ADDITIONAL LENDER] UNDER THE LOAN AGREEMENT AND HAVE ASSUMED THE
OBLIGATIONS OF [APPLICABLE ADDITIONAL LENDER] THEREUNDER.]
We hereby advise you of the following administrative details:
Address: _________________________
Facsimile: _______________________
Telephone:________________________
Attention: _______________________
<PAGE>
Title: ___________________________
IN WITNESS WHEREOF, the undersigned has caused this Addendum to be duly
executed by its proper officer thereunto duly authorized.
[ADDITIONAL LENDER]
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
-2-
<PAGE>
FORM OF NOTICE OF BORROWING/NOTICE OF RATE CHANGE
____________________, __
OUACHITA ENERGY CORPORATION, a Delaware corporation ("Borrower"),
pursuant to the Loan Agreement dated as of March 30, 1998 (together with all
amendments or supplements thereto, the "Loan Agreement") among Borrower, OEC
Compression Corporation and Bank of Scotland, as Administrative Agent and the
lenders (the "Lenders") which are or become parties thereto, and such
Lenders, hereby makes the requests indicated below (unless otherwise defined
herein, capitalized terms are defined in the Credit Agreement):
[] 1. NOTICE OF BORROWING:
(a) Aggregate amount of new Advance to be $______;
(b) Requested Borrowing Date is ____________, ____;
(c) $_______________ of such borrowings are to be Conforming Loans;
(i) $_______________ of such Conforming Loan is to be at the
Conforming LIBOR Rate.
(ii) $_______________ of such Conforming Loan is to be at the
Conforming Prime Rate.
(d) $_______________ of such borrowings are to be Non-Conforming
Loans;
(i) $_______________ of such Non-Conforming Loan is to be at the
Non-Conforming LIBOR Rate.
(ii) $_______________ of such Non-Conforming Loan is to be at the
Non-Conforming Prime Rate.
(e) Length of Interest Period for LIBOR Based Loans is:
one (1) [] three (3) [] six (6) [] months
<PAGE>
[] 2. NOTICE OF RATE CHANGE:
[] (a) REVOLVING LOANS:
(i) Principal amount to be converted to new rate (not less
than $100,000).
(ii) Type of Loan and Change Requested:
[] Conforming
[] Convert from LIBOR to Prime
[] Convert from Prime to LIBOR
for one (1) [], three (3) [], or six (6) [] months
[] Non-Conforming
[] Convert from LIBOR to Prime
[] Convert from Prime to LIBOR
for one (1) [], three (3) [], or six (6) [] months
(iv) Effective Date of Rate Change ___________, ____.
[] (b) TERM LOAN:
(i) Portion of Principal to be Converted $_______________.
(ii) Change Requested:
[] Convert from Conforming LIBOR to Prime
[] Convert from Prime to Conforming LIBOR
for one (1) [], three (3) [], or six (6) [] months
(iii) Effective Date of Rate Change ___________, ______.
-2-
<PAGE>
The undersigned certifies that he is the _______________ of Borrower,
and that as such he is authorized to execute this certificate on behalf of
Borrower. The undersigned further certifies, represents and warrants on
behalf of Borrower that (i) all representations and warranties set forth in
the Loan Agreement are true and correct in all material respects as of the
date hereof, and (ii) Borrower is entitled to receive the requested Borrowing
Rate Change under the terms and conditions of the Loan Agreement.
DATED the ___ day of_________, 19___.
OUACHITA ENERGY CORPORATION
By:
--------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
-3-
<PAGE>
BANK OF SCOTLAND
New York branch
565 Fifth Avenue
New York, NY 10017
March 30, 1998
OUACHITA ENERGY CORPORATION
2501 Cedar Springs Road
Dallas, Texas 75201
Gentlemen:
We refer to the Amended and Restated Loan Agreement executed by you
("Borrower"), OEC Compression Corporation ("Guarantor", and Bank of Scotland,
New York branch, acting as Administrative Agent ("Agent") for itself and
certain other Lenders, dated as of March 30, 1998 ("Loan Agreement").
Capitalized terms used but not otherwise defined herein bear the respective
meanings assigned to them in the Loan Agreement.
In consideration of our agreeing to act as Agent under the Loan
Agreement, and to extend Loans as a Lender thereunder to Borrower, Borrower
agrees to pay Agent the following fees in connection with the Loans and the
Agent's duties as Administrative Agent under the Loan Agreement:
1. CLOSING FEE.
(a) INITIAL FEE. On the Closing Date set forth in the Loan
Agreement, Borrower shall pay Agent a non-refundable fee of Five
Hundred Thousand Dollars ($500,000).
(b) ADDITIONAL FEES. Borrower shall also pay Agent a non-refundable
fee equal to 0.875% of the amount of all Additional Loans which
each Additional Lender commits to lend to Borrower, payable in
one lump sum on the date each Additional Lender signs the
Addendum to the Loan Agreement committing to make Additional
Loans.
2. MANAGEMENT FEE. Annual Management Fees during the term of the Loans,
payable in four (4) quarterly installments in advance, as follows:
(a) ANNUAL FEES. For all Additional Lenders making Additional Loans
under the Loan Agreement, Agent shall receive (i) an annual
Management Fee of Ten Thousand Dollars ($10,000) for the first
such Additional Lender
<PAGE>
March 30, 1998
Page 2
(payable in quarterly installments in advance), and (ii) for
the second Additional Lender, an additional annual Management
Fee of Five Thousand Dollars ($5,000) (payable in quarterly
installments in advance).
(b) FEES EARNED. The Management Fees shall be deemed fully earned in
advance on the date Additional Lenders commit to Loans. However,
for the convenience of Borrower all Management Fees are being
spread out, quarterly, over the life of the Loans.
(c) PAYMENT. The first quarterly installment of $2,500 for
Management Fees shall be due and payable on the closing date of
the first such Additional Lender's commitment for Additional
Loans, with subsequent installments of $2,500 each being due and
payable on the last Business Day of each March, June, September
and December thereafter. Additional Management Fees for the
second Additional Lender, shall be due and payable in the same
manner as set forth in the first sentence of this Section 2(c).
3. PLACE OF PAYMENT. All Fees set out in this Fee Letter shall be
payable by Borrower to Agent in immediately available funds at the Lending
Office described in the Loan Agreement. Agent shall have full power and
authority to make Advances for the payment of any unpaid Management Fees in
the manner set forth in Section 2.06(e) of the Loan Agreement.
4. MISCELLANEOUS.
(a) This Fee Letter is the Fee Letter referenced and described in the
Loan Agreement and its execution, and the payment of all Fees due
hereunder, is a condition precedent to the Loans to be made
thereunder.
(b) Borrower acknowledges that failure to pay any Fees due hereunder
shall constitute an Event of Default under the Loan Agreement.
(c) This Fee Letter shall be governed, construed and interpreted
under the laws of the State of Texas and shall be entitled to all
of the protections and limitations (including, but not limited
to, Borrower's submission to jurisdiction and usury law
limitations) set forth in the Loan Agreement.
(d) THIS FEE LETTER CONSTITUTES THE FINAL AGREEMENT OF THE PARTIES
WITH REGARD TO THE FEES DESCRIBED HEREIN (WHICH FEES ARE IN
ADDITION TO AND SEPARATE FROM BORROWER'S OBLIGATIONS TO PAY
OTHER FEES UNDER THE
<PAGE>
March 30, 1998
Page 3
PROVISIONS OF THE LOAN AGREEMENT) AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS OF THE PARTIES PERTAINING
HERETO.
If you are in agreement with the provisions of this Fee Letter, please
execute an original of this letter in the space provided below and return an
executed original to Agent.
Yours truly,
BANK OF SCOTLAND, NEW YORK BRANCH
By:
--------------------------
Name: Annie Chin Tat
Title: Vice President
We agree to pay the Fees
set out in this Fee Letter.
AGREED:
OUACHITA ENERGY CORPORATION OEC COMPRESSION CORPORATION, GUARANTOR
By: By:
---------------------------- ----------------------------
Name: Jack D. Brannon Name: Jack D. Brannon
Title: Senior Vice President Title: Senior Vice President
DATED: March 30, 1998
<PAGE>
ASSIGNMENT AND ACCEPTANCE OF NOTE, LIENS
AND RELATED LOAN DOCUMENTS
FOR AND IN CONSIDERATION of payment by Bank of Scotland, New York
branch, for itself and certain other lenders, (hereinafter sometimes called
"Assignee"), of the Assigned Share Amount (as hereinafter defined) and other
good and valuable consideration, received in immediately available funds from
Assignee by Bank of Oklahoma, National Association, for itself and as
collateral agent for certain other lenders (hereinafter called "Assignor"),
Assignor does hereby absolutely and irrevocably assign to Assignee, WITHOUT
WARRANTY OR REPRESENTATION OF ANY KIND EXCEPT AS SET FORTh BELOW, and
Assignee hereby purchases and assumes from Assignor all of the right, title
and interest of Assignor owned and held for itself and on behalf of the
lenders whose names appear on the signature page hereof ("Lenders"), in and
to all obligations, indebtedness and liabilities owed and owing to Assignor
("Indebtedness") by Ouachita Energy Corporation ("Ouachita") and Equity
Compressors, Inc. ("ECI") (collectively, "Obligors") under and pursuant to
the following Loan Agreement, the Note, security instruments, mortgages and
other loan documents (collectively, "Loan Documents") executed by Obligors,
and certain other persons whose names and signatures also appear on the
signature pages hereof ("Other Obligors") in favor of said Assignor (Obligors
and Other Obligors hereinafter sometimes collectively called "Debtors"),
which Loan Documents (a) grant loans and other financial accommodations to
Obligors, and (b) grant security interests in and liens, mortgages and other
encumbrances on natural gas compressors, spare parts, tools, equipment,
inventory and all other assets and properties (real and personal) of Debtors
("Collateral") in favor of Assignor, all assigned by Assignor to the
Assignee, including the following, to-wit:
1. Fifth Amended and Restated Revolving Credit and Term Loan Agreement
between Debtors and Assignor dated as of July 31, 1997 ("Loan Agreement");
2. Promissory Note (Bank Note) in the amount of Forty Million Dollars
($40,000,000), dated as of August 5, 1997, executed by Obligors in favor of
Assignor ("Note").
3. Sixth Amended and Restated Security Agreement and Assignment, dated as
of
<PAGE>
December 19, 1997 ("Security Agreement"), executed by Debtors in favor of
Assignor granting Assignor a security interest in certain of Debtors' assets
and properties (including, but not limited to, Debtors' natural gas
compressor units and fleets, Equipment, Inventory, Accounts, lease
receivables, General Intangibles, lease and sale contracts, fixtures, cash,
intellectual property all products and proceeds thereof).
4. Security Agreement (Aircraft Chattel Mortgage), dated as of August
5, 1997, executed by Ouachita in favor of Assignor, covering Beech Model 58P,
serial number TJ-279, U.S. nationality and registration marks N831JB
("Aircraft Mortgage").
5. Multiple Indebtedness Mortgage, Collateral Assignment and Security
Agreement, dated August 8, 1997, executed by Ouachita in favor of Assignor
covering certain real estate and improvements located in Ouachita Parish,
Louisiana, as more particularly described in Schedule I to said Mortgage
document and recorded at Book no. 1549, Document No. 1207185, Mortgage
Records of Clerk's Office, Ouachita Parish, Louisiana on August 15, 1997
("Louisiana Mortgage").
6. All U.C.C. 1 Financing Statements executed by Debtors and filed by
Assignor in connection with any of the above security interests and liens,
including, but not limited to, the Financing Statements listed on EXHIBIT A
attached hereto.
7. Mortgagee's Title Insurance Commitment dated March 5, 1998, issued
by First American Title Insurance Company in favor of Bank of Oklahoma,
National Association, as Mortgagee.
8. Declaration of Immobilization, dated August 8, 1997, executed by
Ouachita and recorded at Book No. 1709, Document No. 1209184, Conveyance Book
of Clerk's Office, Ouachita Parish, Louisiana on August 15, 1997, in
connection with the Louisiana Mortgage.
9. Intercreditor Agreement dated as of August 5, 1997 ("Intercreditor
Agreement") by and among Assignor, The Prudential Insurance Company of
America and Assignor as Agent for certain Lenders defined in said
Intercreditor Agreement.
10. Lockboxes and all checks, money orders, instruments, notes and cash
deposited thereon, maintained by Obligors with Assignor or its Affiliates.
<PAGE>
11. All amendments, supplements and modifications to any and all of the
foregoing and all other collateral and security documents which are a part of
the above transactions and documents.
Assignor shall deliver all of the originals of the above-referenced Loan
Documents, properly endorsed (insofar as the Note is concerned), to, and
shall deliver title to all of the above referenced lockboxes and accounts,
and hold same in trust for, Assignee, and this Assignment is made by Assignor
WITHOUT RECOURSE AND WITHOUT WARRANTY OR REPRESENTATION OF ANY KIND GENERAL
OR SPECIFIC, (including, without limitation, the validity, perfection or
priority of any liens, security interests, guarantees or other security
devises securing or purporting to secure the Loan Documents or any part
thereof), EXCEPT ONLY THAT ASSIGNOR DOES WARRANT THAT IT IS THE LAWFUL OWNER
OF ALL OF THE ABOVE-REFERENCED LOAN DOCUMENTS AND COLLATERAL, SUBJECT TO THE
TERMS AND PROVISIONS OF THE INTERCREDITOR AGREEMENT, AND THAT UPON THE BEST
INFORMATION AND BELIEF OF ASSIGNOR, THE SAID LOAN DOCUMENTS AND COLLATERAL
ARE IN FULL FORCE AND EFFECT. Assignee acknowledges and represents that,
without reliance on Assignor, it has made its own independent investigation
and analysis of the Loan Documents and the creditworthiness of Obligors and
the Other Obligors, and is not relying on Assignor for any such information.
Additionally, and not by way of qualification or limitation of any of the
above, by accepting this Assignment, Assignee acknowledges and agrees that
Assignor has made no warranty or representation as to the financial condition
of Obligors and the Other Obligors, the value, sufficiency, description of or
title to any of the Collateral covered by the Loan Documents or the legality
or collectibility of any promissory note or guaranty which is a part of the
Loan Documents.
The Note referenced hereinabove shall be endorsed thereon with the
following language, to-wit:
"Assigned without recourse or warranty express or implied to Bank of
Scotland, New York branch, as agent."
Assignor hereby releases, acquits and forever discharges, with
prejudice, all of the Collateral and each of Assignee, Ouachita and ECI from
any security interests, liens, mortgages,
<PAGE>
encumbrances, indebtedness, liabilities or obligations in favor of and to
Assignor, now existing or which may hereafter arise pursuant to the Loan
Documents; PROVIDED, HOWEVER, the Debtors (Obligors and Other Obligors)
hereby release Assignor and its officers, directors, employees, agents and
affiliates from any liabilities, obligations, actions, expenses or claims
arising under the Loan Agreement or the other Loan Documents (whether arising
prior or subsequent to the effective date hereof) and Assignee and the
Debtors hereby agree to indemnify Assignor and its officers, directors,
employees, agents and affiliates and hold them harmless from any and all
liabilities, obligations, actions, expenses (including, without limitation,
any reasonable attorneys fees) or claims arising under the Loan Agreement
from and after the effective date hereof.
Assignor further assigns to Assignee, and Assignee hereby assumes, all
of Assignor's rights, titles, and obligations as Agent for the Lenders under,
and as defined in, the Intercreditor Agreement.
This Assignment may be executed in any number of counterparts, each of
which shall be deemed an original, but all of which together shall constitute
one and the same instrument. For purposes of this Assignment and Acceptance,
"Assigned Share Amount" shall mean a sum equal to all outstanding principal,
PLUS accrued interest and expenses thereon, owed to Assignor and any other
Lenders named below in the Note as of the date hereof as are necessary to
fully purchase Assignor's entire interest in the Note, the Loan Agreement and
the Loan Documents.
DATED this _____ day of March, 1998.
ATTEST: ASSIGNOR:
BANK OF OKLAHOMA, NATIONAL ASSOCIATION
Secretary for itself and as Collateral Agent
WITNESS:
By:
-------------------------
Printed Name: Name:
------------------------- -------------------------
Title:
-------------------------
Printed Name:
-------------------------
<PAGE>
ATTEST: LENDER:
BANK OF OKLAHOMA, NATIONAL
ASSOCIATION
Secretary
WITNESS:
By:
-------------------------
Printed Name: Name:
------------------------- -------------------------
Title:
-------------------------
Printed Name:
-------------------------
ATTEST: ASSIGNEE:
BANK OF SCOTLAND, NEW YORK BRANCH, as
Secretary Agent for itself and other
Lenders under the Intercreditor
Agreement (as same may be amended and
restated).
WITNESS:
By:
-------------------------
Printed Name: Name: Annie Chin Tat
------------------------- Title: Vice President
Printed Name:
-------------------------
ATTEST: OBLIGORS:
EQUITY COMPRESSORS, INC.
Secretary
WITNESS: By:
-------------------------
Name: Jack D. Brannon
Title: Senior Vice President
Printed Name:
-------------------------
Printed Name:
-------------------------
<PAGE>
ATTEST: OUACHITA ENERGY CORPORATION
Secretary
WITNESS: By:
-------------------------
Name: Jack D. Brannon
Title: Senior Vice President
Printed Name:
-------------------------
Printed Name:
-------------------------
OTHER OBLIGORS:
ATTEST: OEC COMPRESSION CORPORATION
(FORMERLY KNOWN AS EQUITY
COMPRESSION CORPORATION)
Secretary
WITNESS: By:
-------------------------
Name: Jack D. Brannon
Title: Senior Vice President
Printed Name:
-------------------------
Printed Name:
-------------------------
ATTEST: SUNTERRA ENERGY CORPORATION
Secretary
WITNESS: By:
-------------------------
Name: Jack D. Brannon
Title: Senior Vice President
Printed Name:
-------------------------
Printed Name:
-------------------------
<PAGE>
STATE OF OKLAHOMA )
)
COUNTY OF ____________ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared _____________________,
_________________ of BANK OF OKLAHOMA, NATIONAL ASSOCIATION (as Agent), to me
personally known and known by me to be the person whose genuine signature is
affixed to the foregoing document, who signed said document before me and in
the presence of the two witnesses whose names are thereto subscribed as such,
being competent witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he/she signed the above and foregoing
document as his/her own free act and deed and for the uses and purposes
therein set forth and apparent.
In witness whereof, the said appearer has signed these presents and I
have hereunto affixed my hand and seal, together with the said witnesses on
the day and date first above written.
My Commission Expires: ----------------------------------
Notary Public - State of Oklahoma
- -----------------------
<PAGE>
STATE OF OKLAHOMA )
)
COUNTY OF ___________ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared______________________,
________________ of BANK OF OKLAHOMA, NATIONAL ASSOCIATION, to me personally
known and known by me to be the person whose genuine signature is affixed to
the foregoing document, who signed said document before me and in the
presence of the two witnesses whose names are thereto subscribed as such,
being competent witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he/she signed the above and foregoing
document as his/her own free act and deed and for the uses and purposes
therein set forth and apparent.
In witness whereof, the said appearer has signed these presents and I
have hereunto affixed my hand and seal, together with the said witnesses on
the day and date first above written.
My Commission Expires: ----------------------------------
Notary Public - State of Oklahoma
- -----------------------
<PAGE>
STATE OF ___________ )
)
COUNTY OF __________ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared ______________________,
______________ of BANK OF SCOTLAND, NEW YORK BRANCH, (for itself and as
Agent) to me personally known and known by me to be the person whose genuine
signature is affixed to the foregoing document, who signed said document
before me and in the presence of the two witnesses whose names are thereto
subscribed as such, being competent witnesses, and who acknowledged, in my
presence and in the presence of said witnesses, that he/she signed the above
and foregoing document as his/her own free act and deed and for the uses and
purposes therein set forth and apparent.
In witness whereof, the said appearer has signed these presents and I
have hereunto affixed my hand and seal, together with the said witnesses on
the day and date first above written.
My Commission Expires: ----------------------------------
Notary Public - State of _________
- -----------------------
<PAGE>
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared ________________________,
_____________of EQUITY COMPRESSORS, INC., to me personally known and known by
me to be the person whose genuine signature is affixed to the foregoing
document, who signed said document before me and in the presence of the two
witnesses whose names are thereto subscribed as such, being competent
witnesses, and who acknowledged, in my presence and in the presence of said
witnesses, that he/she signed the above and foregoing document as his/her own
free act and deed and for the uses and purposes therein set forth and
apparent.
In witness whereof, the said appearer has signed these presents and I have
hereunto affixed my hand and seal, together with the said witnesses on the day
and date first above written.
My Commission Expires: ----------------------------------
Notary Public - State of _________
- -----------------------
<PAGE>
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared _______________________,
_________________ of OUACHITA ENERGY CORPORATION, a corporation, to me
personally known and known by me to be the person whose genuine signature is
affixed to the foregoing document, who signed said document before me and in
the presence of the two witnesses whose names are thereto subscribed as such,
being competent witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he/she signed the above and foregoing
document as his/her own free act and deed and for the uses and purposes
therein set forth and apparent.
In witness whereof, the said appearer has signed these presents and I
have hereunto affixed my hand and seal, together with the said witnesses on
the day and date first above written.
My Commission Expires: ----------------------------------
Notary Public - State of _________
- -----------------------
<PAGE>
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared ______________________,
________________ of OEC COMPRESSION CORPORATION (FORMERLY KNOWN AS EQUITY
COMPRESSION SERVICES CORPORATION), a corporation, to me personally known and
known by me to be the person whose genuine signature is affixed to the
foregoing document, who signed said document before me and in the presence of
the two witnesses whose names are thereto subscribed as such, being competent
witnesses, and who acknowledged, in my presence and in the presence of said
witnesses, that he/she signed the above and foregoing document as his/her own
free act and deed and for the uses and purposes therein set forth and
apparent.
In witness whereof, the said appearer has signed these presents and I have
hereunto affixed my hand and seal, together with the said witnesses on the day
and date first above written.
My Commission Expires: ----------------------------------
Notary Public - State of _________
- -----------------------
<PAGE>
STATE OF ____________ )
)
COUNTY OF ___________ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared__________________________,
___________________ of SUNTERRA ENERGY CORPORATION, a corporation, to me
personally known and known by me to be the person whose genuine signature is
affixed to the foregoing document, who signed said document before me and in
the presence of the two witnesses whose names are thereto subscribed as such,
being competent witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he/she signed the above and foregoing
document as his/her own free act and deed and for the uses and purposes
therein set forth and apparent.
In witness whereof, the said appearer has signed these presents and I have
hereunto affixed my hand and seal, together with the said witnesses on the day
and date first above written.
My Commission Expires: ----------------------------------
Notary Public - State of _________
- -----------------------
<PAGE>
EXHIBIT A TO
ASSIGNMENT AND ACCEPTANCE OF NOTE, LIENS
AND RELATED LOAN DOCUMENTS
UCC 1 FINANCING STATEMENTS EXECUTED BY OBLIGORS AND FILED BY ASSIGNOR
DEBTOR: OUACHITA ENERGY CORPORATION
<TABLE>
- ------------------------------------------------------------------------------------------------
<S> <C> <C>
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- ------------------------------------------------------------------------------------------------
Ouachita Parish, LA No. 37-68366 filed Bank of Oklahoma, National
8/15/97 Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Texas Secretary of State No. 97-172246 filed Bank of Oklahoma, National
8/18/97 Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Alabama Secretary of No. 97-34693 filed Bank of Oklahoma, National
State 8/19/97 Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Arkansas Secretary of No. 1090003 filed 8/19/97 Bank of Oklahoma, National
State Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
DEBTOR: EQUITY COMPRESSION SERVICES CORPORATION
- ------------------------------------------------------------------------------------------------
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- ------------------------------------------------------------------------------------------------
Oklahoma County, OK No. N01960 filed 5/14/97 Bank of Oklahoma, National
Association
- ------------------------------------------------------------------------------------------------
Oklahoma County, OK No. N03190 filed 8/18/97 Bank of Oklahoma, National
Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Texas Secretary of State No. 97-101128 filed Bank of Oklahoma, National
5/15/97 Association
- ------------------------------------------------------------------------------------------------
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- ------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------
Texas Secretary of State No. 97-172245 filed Bank of Oklahoma, National
8/18/97 Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Arkansas Secretary of No. 1074779 filed 5/15/97 Bank of Oklahoma, National
State Association
- ------------------------------------------------------------------------------------------------
Arkansas Secretary of No. 1090063 filed 8/19/97 Bank of Oklahoma, National
State Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
DEBTOR: EQUITY COMPRESSORS, INC.
- ------------------------------------------------------------------------------------------------
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- ------------------------------------------------------------------------------------------------
Vermilion Parish, LA No. 57-930969 filed Bank of Oklahoma, National
6/18/93 Association
- ------------------------------------------------------------------------------------------------
Ouachita Parish, LA No. 37-68367 filed 8/15/97 Bank of Oklahoma, National
Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Oklahoma County, OK No. N01838 filed 6/16/93 Bank of Oklahoma, National
Association
- ------------------------------------------------------------------------------------------------
Alabama Secretary of No. 93-21704 filed 6/21/93 Bank of Oklahoma, National
State Association
- ------------------------------------------------------------------------------------------------
Alabama Secretary of No. 97-34694 filed 8/19/97 Bank of Oklahoma, National
State Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Texas Secretary of State No. 93-118844 filed Bank of Oklahoma, National
8/18/93 Association
- ------------------------------------------------------------------------------------------------
Texas Secretary of State No. 97-172244 filed Bank of Oklahoma, National
8/18/97 Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Kansas Secretary of State No. 1920786 filed 6/17/93 Bank of Oklahoma, National
Association
- ------------------------------------------------------------------------------------------------
FILING JURISDICTION FINANCING STATEMENT SECURED PARTY
INFORMATION
- ------------------------------------------------------------------------------------------------
Kansas Secretary of State No. 2380358 filed 8/19/97 Bank of Oklahoma, National
- ------------------------------------------------------------------------------------------------
<PAGE>
- ------------------------------------------------------------------------------------------------
Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Arkansas Secretary of No. 855334 filed 6/21/93 Bank of Oklahoma, National
State Association
- ------------------------------------------------------------------------------------------------
Arkansas Secretary of No. 1090002 filed 8/19/97 Bank of Oklahoma, National
State Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Mississippi Secretary of No. 01133593 filed Bank of Oklahoma, National
State 8/18/97 Association, as Collateral
Agent
- ------------------------------------------------------------------------------------------------
Mississippi Secretary of No. 0722017 filed 6/17/93 Bank of Oklahoma, National
State Association
- ------------------------------------------------------------------------------------------------
</TABLE>
<PAGE>
AMENDED AND RESTATED SECURITY AGREEMENT
This Amended and Restated Security Agreement ("Security Agreement")
dated as of March 30, 1998, by and between OUACHITA ENERGY CORPORATION, a
Delaware corporation (the "DEBTOR") whose principal place of business and
chief executive office is at 2501 Cedar Springs Road, Suite 600, Dallas,
Texas 75201, and BANK OF SCOTLAND, an authorized bank in the United Kingdom,
constituted by an Act of the Scots Parliament of 1695, acting through its New
York branch, ("Bank"), as collateral agent for itself and the Lenders
hereinafter described ("SECURED PARTY").
W I T N E S S E T H:
R E C I T A L S:
A. Debtor and Secured Party, as Administrative Agent on behalf of
itself and certain lenders, have entered into that certain Amended and
Restated Loan Agreement dated as of March 30, 1998 (such Loan Agreement, as
the same may be amended or modified from time to time, being hereinafter
referred to as the "LOAN AGREEMENT").
B. Secured Party has conditioned its obligations under the Loan
Agreement upon the execution and delivery of this Agreement by Debtor.
C. Secured Party has taken an assignment of all of the rights, titles
and benefits of Bank of Oklahoma, National Association ("BOK") as collateral
agent under and pursuant to that certain Sixth Amended and Restated Security
Agreement and Assignment dated December 19, 1997 ("BOK Security Agreement")
and this Security Agreement amends and restates in its entirety (but does not
extinguish or cause a novation of) the BOK Security Agreement.
D. Secured Party has agreed to act as Collateral Agent, with respect
to the Collateral herein described on behalf of the Lenders defined herein.
E. All Recitals set forth in the Loan Agreement and not otherwise
revised herein or inconsistent with the terms hereof are incorporated herein
verbatim.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE 1
DEFINITIONS
Section 1.1 DEFINITIONS. In addition to the definitions contained in the
above Recitals, when used herein, unless the context shall otherwise require,
the following terms shall have the following meanings:
"ACCOUNTS" shall mean "accounts" as defined in Article 9 of the UCC and
all refunds and rights to reimbursement.
"ACCOUNT DEBTOR" shall mean an "Account debtor" as defined in Article 9
of the UCC and any person or entity obligated to the Debtor with respect to
an Account.
"BANK" shall mean Bank of Scotland, New York branch, in its capacity as
a Lender under the Loan Agreement.
"BOK CREDIT" has the meaning set forth in the Loan Agreement.
"COLLATERAL" shall mean all property, assets or rights in which a
security interest is granted hereunder.
"COLLATERAL AGENT" means Secured Party in its role as collateral agent
for the Lenders and Prudential.
"COMPRESSOR EQUIPMENT" shall mean all of Borrower's compressor units
which are in operable condition (as such term is understood in the industry).
"DEBTOR" means Ouachita Energy Corporation.
"EQUIPMENT" shall mean "equipment" as defined in Article 9 of the UCC
and all of Borrower's machinery, components, accessories and materials to be
used with, and incorporated into, Inventory and all tools, vehicles, rolling
stock held and used by Borrower or its Affiliates (not for lease, rental or
sale) in Borrower's or such Affiliate's business and operations, blueprints,
plans, furniture and fixtures, and all spare parts, replacements and
substitutions of and for the foregoing.
"EVENT OF DEFAULT" shall mean the occurrence of any Default or Event of
Default as defined in the Intercreditor Agreement.
"GENERAL INTANGIBLES" shall mean "general intangibles" as defined in
Article 9 of the UCC.
2
<PAGE>
"INDEBTEDNESS" shall mean all present and future sums owed by, liabilities
and obligations of, Debtor to the Lenders or to any assignee, successor or
transferee thereof, whether said amounts, liabilities or obligations are
liquidated or unliquidated, now existing or hereafter arising under and pursuant
to the Loan Agreement, the Notes, the Loan Documents, the Pru Debt, the Pru
Notes, the Subordinated Notes, or any other documents executed in connection
with any of the foregoing, whether for principal, interest, Fees, deferral and
delinquency charges, or other prepayment premiums and Additional Costs, costs,
expenses and attorney's fees, as therein stipulated. The Indebtedness includes
without limitation all amounts expended, advanced or incurred by the Lenders or
the Secured Party, or for which the Debtor is otherwise obligated, under the
terms of this Security Agreement.
"INTERCREDITOR AGREEMENT" means the Amended and Restated Intercreditor
Agreement, of even date herewith, executed by Bank and Prudential, and consented
to by Debtor (as Borrower) and Guarantor, governing the Collateral and Secured
Party's duties and obligations as Collateral Agent on behalf of Lenders.
"INVENTORY" shall mean (a) all of Borrower's raw material, accessories,
parts, compressors in the process of being manufactured, assembled, fabricated
or processed by Borrower or any Person for use with, or to become a part of any
of Borrower's Compressor Equipment and other natural gas compressors for lease,
rental or sale, and all packaging, labels, advertising materials and supplies of
every kind to be used in connection with such natural gas compressors and other
items, and (b) "inventory" as defined in Article 9 of the UCC and all materials,
parts and supplies of every kind and description.
"LENDERS" shall mean Bank, the Secured Party, Prudential and each financial
institution that becomes a "Lender" pursuant to the terms of the Loan Agreement
and the Intercreditor Agreement.
"NOTES" shall mean the $40,000,000 Revolving Credit Note in favor of the
Secured Party (as Lender) and all other Additional Revolving Credit Notes and
all Term Notes executed in favor of Lenders under the provisions of the Loan
Agreement.
"OBLIGATIONS" shall have the meaning set forth in Section 2.2 hereof.
"PERSON" shall mean and include an individual, a limited liability company,
a partnership, a joint venture, a corporation, a trust, an unincorporated
organization, and a government or any department, agency or political
subdivision thereof.
"PRUDENTIAL" means The Prudential Insurance Company of America and its
assignees and all holders of the Pru Notes and Subordinated Notes.
"PRUDENTIAL NOTES" shall mean, collectively, the Pru Notes and the
Subordinated Notes.
3
<PAGE>
"SECURED PARTY" means Bank of Scotland, New York branch, in its capacity as
agent for the Lenders.
"UCC" shall mean the Uniform Commercial Code in effect at the time in the
State of Texas, if it is determined by a court of law that the laws of another
state or jurisdiction should be applied with respect to any of the Collateral,
then the Uniform Commercial Code or similar laws in effect at the time in the
relevant State or jurisdiction with respect to that portion of the Collateral.
OTHER DEFINITIONS. All other capitalized terms used but not defined herein
shall bear the meanings assigned to them in the Loan Agreement.
ARTICLE 2
SECURITY INTEREST; OBLIGATIONS
Section 2.1 SECURITY INTEREST. Subject to the terms of this Agreement,
Debtor hereby grants and assigns to Secured Party, for the ratable benefit of
the Lenders, a security interest in, lien on and assignment of, the following
property, whether now or hereafter existing or acquired (such property being
hereinafter sometimes called the "COLLATERAL"):
(a) all of the natural gas compressor units and fleets and Compressor
Equipment of Debtor, including such compressor fleets and Compressor
Equipment more particularly described on SCHEDULE 1 annexed hereto,
together with all compressors and parts thereof of Debtor, whether now
owned or hereafter acquired, and all replacements or substitutions thereof
and therefor;
(b) all of the Equipment and Inventory of Debtor, wherever located
and whether now owned or hereafter acquired, including without limitation,
all vehicles and other types of rolling stock, all airplanes, and all
materials, parts, spare parts, components and supplies of every kind and
description, of Debtor, including all such Equipment and Inventory located
at (x) Debtor's offices in Dallas, Texas and its fabrication maintenance
facilities in West Monroe, Ouachita Parish, Louisiana, and (y) the yards
and/or storage areas of Debtor as more particularly described on SCHEDULE 2
annexed hereto and all other locations wherever they may be;
(c) all Accounts, Compressor Rental Income and all other compressor
rental and lease receivables, reimbursements, notes receivable, contracts,
contract rights, general intangibles, chattel paper, documents and
instruments arising out of the sale, rental, lease, management or
maintenance of Compressor Equipment, Inventory or of compressor units or
compressor fleets or from services rendered, and any and all agreements for
the sale, rental or lease of compressor units or products or furnishing of
services pertaining thereto
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by the Debtor, including, without limitation, all employment agreements,
rental and lease fleet agreements, sales contracts and purchase orders;
(d) all General Intangibles of the Debtor, whether now owned or
hereafter acquired, including without limitation the following arising out
of, in connection with or pertaining to the rental, lease, sale,
maintenance, management, construction or transportation of Compressor
Equipment and natural gas compressor units:
(i) all rental, lease and sales contracts, purchase orders and
employee agreements;
(ii) all processes, formulae, scientific and/or technical
information, trade secrets, customer lists, plans, reports,
samples, prototypes, know-how, all items in application,
development or other pending status and all similar items
which are used in connection with Debtor's conduct and
operation of its Compressor Equipment and natural gas
compressor business; and
(iii) all of Debtor's rights, titles, interests, and benefits
under all partnerships and joint venture agreements between
Debtor and any other Person and under all rentals and leases
of natural gas compressors units (whether as lessor or
lessee); PROVIDED, HOWEVER, that neither the Secured Party
nor the Lenders hereby assume any liabilities, obligations
or responsibilities in connection therewith;
(e) all fixtures, furniture and equipment of Debtor, now owned or
hereafter acquired, all additions, accessions, and substitutions thereto
and therefor, and all accessories, parts and equipment now or hereafter
affixed to or used in connection with (i) Debtor's real property and
leasehold interest in real property located in Oklahoma City, Oklahoma
County, Oklahoma, its offices in Dallas, Texas and storage facilities in or
near Kilgore, Texas and elsewhere, wherever situated, and (ii) Debtor's
real property in West Monroe, Ouachita Parish, Louisiana, and described on
SCHEDULE 3 attached hereto, and (iii) all goods and other fixtures,
furniture and equipment acquired with the proceeds thereof;
(f) all Compressor Rental Income, other income, cash, money,
certificates of deposit, time deposits and demand deposits of Debtor and at
any time in the possession or control of any of Secured Party or Lenders;
(g) all ledgers, journals, books, records, vouchers, shipping tickets,
receipts, sales memoranda, contracts, partnership agreements, joint venture
agreements, correspondence and other writings, data or papers evidencing or
relating to the items or types of collateral described above in subsections
(a) through (f), inclusive; and
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(h) all products and proceeds of and all replacements, additions,
substitutions, accessories, appurtenances, and parts for, the items or
types of collateral described above in subsections (a) through (g),
inclusive, whether now owned or hereafter acquired including, without
limitation, insurance and condemnation proceeds.
Section 2.2 OBLIGATIONS. The Collateral shall secure the following
obligations, indebtedness, and liabilities (all such obligations, indebtedness,
and liabilities being hereinafter sometimes called the "OBLIGATIONS"):
(a) the Indebtedness;
(b) all future advances by Secured Party or any Lender to Debtor;
(c) all costs and expenses, including, without limitation, all
attorneys' fees and legal expenses, incurred by Secured Party or any Lender
to preserve and maintain the Collateral, collect the obligations herein
described, and enforce this Agreement; and
(d) all extensions, renewals, and modifications of any of the
foregoing.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
To induce Secured Party to enter into this Agreement and the Loan
Agreement, Debtor represents and warrants to Secured Party that:
Section 3.1 TITLE. Except for the security interest granted herein and
Permitted Liens, Debtor owns, and with respect to Collateral acquired after the
date hereof, Debtor will own, the Collateral free and clear of any lien,
security interest, or other encumbrance.
Section 3.2 ACCOUNTS. Unless Debtor has given Secured Party written notice
to the contrary, whenever the security interest granted hereunder attaches to an
Account, Debtor shall be deemed to have represented and warranted to Secured
Party as to each and all of its Accounts that (i) each Account is genuine and in
all respects what it purports to be, (ii) each Account represents the legal,
valid, and binding obligation of the Account Debtor evidencing indebtedness
unpaid and owed by such Account Debtor arising out of the performance of labor
or services by Debtor or the sale or lease of Compressor Equipment, Inventory or
other goods by Debtor, (iii) the amount of each Account represented as owing is
the correct amount actually and unconditionally owing except for normal trade
discounts granted in the ordinary course of business, and (iv) no Account is
subject to any known offset, counterclaim, or other defense.
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Section 3.3 FINANCING STATEMENTS. No financing statement, security
agreement, or other lien instrument covering all or any part of the Collateral
is on file in any public office, except as may have been filed in favor of
Secured Party pursuant to this Agreement, the BOK Credit and the Prudential
Notes.
Section 3.4 PRINCIPAL PLACE OF BUSINESS. The principal place of business
and chief executive office of Debtor, and the office where Debtor keeps its
books and records, is located at the address of Debtor shown in the first
paragraph of this Agreement.
Section 3.5 LOCATION OF COLLATERAL. All Inventory, Compressor Equipment,
and Equipment of Debtor is located at the addresses and locations of Debtor
described in SCHEDULE 3 hereof. Debtor will not open or establish any warehouse
not owned or established as of the date of this Security Agreement or locate any
Inventory, Compressor Equipment or Equipment at any location except as set forth
above without obtaining the Secured Party's prior written consent and executing
such financing statements as the Secured Party and its counsel deem reasonably
necessary to perfect its security interest therein. Debtor shall immediately
notify Secured Party of the occurrence of any event causing loss or depreciation
in value (except for ordinary wear and tear and loss or depreciation in value)
of Inventory and the amount of such loss or depreciation.
Section 3.6 PUBLIC UTILITY HOLDING COMPANY. The Debtor is not a "holding
company" or a "subsidiary company" of a holding company or an affiliate of a
holding company or of a subsidiary company or a "public utility" within the
meanings of such terms as set forth in the Public Utility Holding Company Act of
1935, as amended. Nor is Debtor a "Utility," and has never filed an election to
be treated as a "Utility," under and within the meaning and provisions of
Article 35.01 of the Texas Business and Commerce Code.
ARTICLE 4
COVENANTS
Debtor covenants and agrees with Secured Party that until the Obligations
are paid and performed in full:
Section 4.1 SALES IN THE ORDINARY COURSE OF BUSINESS; COLLECTIONS BY
DEBTOR. Until such time as the Secured Party shall notify the Debtor of the
revocation of such power and authority because of the occurrence and continuance
of an Event of Default (whether or not the Secured Party takes any other action
or accelerates the Obligations), Debtor (i) may, in the ordinary course of its
business, at its own expense, rent, sell, lease or furnish under contracts of
service any of the Compressor Equipment and Inventory normally held by Debtor
for such purpose, and use and consume, in the ordinary course of its business,
any raw materials, work in process or materials normally held by Debtor for such
purpose, and (ii) will, at its own expense, endeavor to collect,
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as and when due, all amounts due with respect to Accounts, rentals, leases,
lease receivables, lease fleet management agreements, notes receivable,
contracts and General Intangibles, including the taking of such action with
respect to such collection as the Secured Party may reasonably request or, in
the absence of such request, as Debtor may deem advisable.
Section 4.2 MAINTENANCE. Debtor shall maintain the Collateral in good
operating condition and repair and shall not permit any waste or destruction of
the Collateral or any part thereof. Debtor shall not use or permit the
Collateral to be used in violation of any law or inconsistently with the terms
of any policy of insurance. Debtor shall not use or permit the Collateral to be
used in any manner or for any purpose that would impair the value of the
Collateral or expose the Collateral to unusual risk.
Section 4.3 ENCUMBRANCES. Debtor shall not create, permit, or suffer to
exist, and shall defend the Collateral against, any lien, security interest, or
other encumbrance on the Collateral except the security interest of Secured
Party hereunder and the Permitted Liens, and shall defend Debtor's rights in the
Collateral and Secured Party's security interest in the Collateral against the
claims of all persons and entities.
Section 4.4 MODIFICATION OF COLLATERAL. Debtor shall do nothing to impair
the rights of Secured Party in the Collateral. Without the prior written consent
of Secured Party, Debtor shall not grant any extension of time for any payment
with respect to the Collateral, or compromise, compound, or settle any of the
Collateral, or release in whole or in part any person or entity liable for
payment with respect to the Collateral, or allow any credit or discount for
payment with respect to the Collateral other than normal trade discounts granted
in the ordinary course of business, or release any lien, security interest, or
assignment securing the Collateral, or otherwise amend or modify any of the
Collateral.
Section 4.5 DISPOSITION OF COLLATERAL. Debtor shall not sell, rent, lease,
or otherwise dispose of the Collateral or any part thereof without the prior
written consent of Secured Party, except as set out in Section 4.1 above.
Section 4.6 FURTHER ASSURANCES. At any time and from time to time, upon the
request of Secured Party, and at the sole expense of Debtor, Debtor shall
promptly execute and deliver all such further instruments and documents and take
such further action as Secured Party may reasonably deem necessary or desirable
to preserve and perfect its security interest in the Collateral and carry out
the provisions and purposes of this Agreement, including, without limitation,
the execution and filing of such financing statements as Secured Party may
require. Secured Party may sign and file any and all U.C.C. financing statements
it deems necessary in connection with this Agreement and the Collateral. A
carbon, photostatic, photographic, facsimile or other reproduction of this
Agreement or of any financing statement covering the Collateral or any part
thereof shall be sufficient as a financing statement and may be filed as a
financing statement. Debtor shall promptly endorse and deliver to Secured Party
all documents, instruments, and chattel paper that it now owns or may hereafter
acquire.
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Section 4.7 RISK OF LOSS; INSURANCE. Debtor shall be responsible for any
loss of or damage to the Collateral. Debtor shall maintain, with financially
sound and reputable companies, all such insurance policies required by the Loan
Agreement, with losses payable in the manner set forth in the Loan Agreement.
Section 4.8 WAREHOUSE RECEIPTS NON-NEGOTIABLE. Debtor agrees that if any
warehouse receipt or receipt in the nature of a warehouse receipt is issued with
respect to any of its Compressor Equipment or Inventory, such warehouse receipt
or receipt in the nature thereof shall not be "negotiable" (as such term is used
in Section 7-104 of the Uniform Commercial Code as adopted by the State of
Texas).
Section 4.9 MORTGAGEE'S AND LANDLORD WAIVER. Debtor shall cause each
mortgagee of real property owned by Debtor and each landlord of real property
leased by Debtor to execute and deliver instruments satisfactory in form and
substance to Secured Party by which such mortgagee or landlord waives its
rights, if any, in the Collateral.
Section 4.10 CORPORATE CHANGE. Debtor shall not change its name, identity,
or corporate structure in any manner that might make any financing statement
filed in connection with this Agreement seriously misleading unless Debtor shall
have given Secured Party thirty (30) days prior written notice thereof and shall
have taken all action deemed necessary or desirable by Secured Party to make
each financing statement not seriously misleading. Debtor shall not change its
principal place of business, chief executive office, or the place where it keeps
its books and records unless it shall have given Secured Party thirty (30) days
prior written notice thereof and shall have taken all action deemed necessary or
desirable by Secured Party to cause its security interest in the Collateral to
be perfected with the priority required by this Agreement.
Section 4.11 LOAN AGREEMENT COVENANTS. Debtor shall comply with all other
covenants and agreements, concerning the Collateral, as is set forth in the Loan
Agreement and the Prudential Notes.
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ARTICLE 5
RIGHTS OF SECURED PARTY
Section 5.1 POWER OF ATTORNEY. Debtor hereby irrevocably constitutes and
appoints Secured Party and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full irrevocable
power and authority in the name of Debtor or in its own name, upon the
occurrence of an Event of Default hereunder, to take any and all action and to
execute any and all documents and instruments which Secured Party at any time
and from time to time deems necessary or desirable to accomplish the purposes of
this Agreement and, without limiting the generality of the foregoing, Debtor
hereby gives Secured Party the power and right on behalf of Debtor and in its
own name, upon the occurrence of an Event of Default hereunder, to do any of the
following, without notice to or the consent of Debtor:
(i) to demand, sue for, collect, or receive in the name of Debtor or in
its own name, any money or property at any time payable or receivable
on account of or in exchange for any of the Collateral and, in
connection therewith, endorse checks, notes, drafts, acceptances,
money orders, documents of title, or any other instruments for the
payment of money under the Collateral or any policy of insurance;
(ii) to pay or discharge taxes, liens, security interests, or other
encumbrances levied or placed on or threatened against the Collateral;
(iii) to send requests for verification to Account Debtors and other
obligors;
(iv) to notify post office authorities to change the address for delivery
of mail of Debtor to an address designated by Secured Party and to
receive, open, and dispose of mail addressed to Debtor;
(v) (A) to direct Account Debtors and any other parties liable for any
payment under any of the Collateral to make payment of any and all
monies due and to become due thereunder directly to Secured Party or
as Secured Party shall direct; (B) to receive payment of and receipt
for any and all monies, claims, and other amounts due and to become
due at any time in respect of or arising out of any Collateral; (C) to
sign and endorse any invoices, freight or express bills, bills of
lading, storage or warehouse receipts, drafts against debtors,
assignments, proxies, stock powers, verifications, and notices in
connection with accounts and other documents relating to the
Collateral; (D) to commence and prosecute any suit, action, or
proceeding at law or in equity in any court of competent jurisdiction
to collect the Collateral or any part thereof and to enforce any other
right in respect of any Collateral; (E) to defend any suit, action, or
proceeding brought against Debtor with respect to any Collateral; (F)
to settle, compromise, or adjust any suit, action,
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or proceeding described above and, in connection therewith, to give
such discharges or releases as Secured Party may deem appropriate;
(G) to exchange any of the Collateral for other property upon any
merger, consolidation, reorganization, recapitalization, or other
readjustment of the issuer thereof and, in connection therewith,
deposit any of the Collateral with any committee, depository,
transfer agent, registrar, or other designated agency upon such
terms as Secured Party may determine; (H) to add or release any
guarantor, endorser, surety, or other party to any of the
Collateral or the Obligations; (I) to renew, extend, or otherwise
change the terms and conditions of any of the Collateral or
Obligations; (J) to insure, and to make, settle, compromise, or adjust
claims under any insurance policy covering, any of the Collateral; and
(K) to sell, transfer, pledge, make any agreement with respect to or
otherwise deal with any of the Collateral as fully and completely as
though Secured Party were the absolute owner thereof for all purposes,
and to do, at Secured Party's option and Debtor's expense, at any
time, or from time to time, all acts and things which Secured Party
deems necessary to protect, preserve, or realize upon the Collateral
and Secured Party's security interest therein.
This power of attorney is a power coupled with an interest and shall be
irrevocable. Secured Party shall be under no duty to exercise or withhold the
exercise of any of the rights, powers, privileges, and options expressly or
implicitly granted to Secured Party in this Agreement, and shall not be liable
for any failure to do so or any delay in doing so. Secured Party shall not be
liable for any act or omission or for any error of judgment or any mistake of
fact or law in its individual capacity or in its capacity as attorney-in-fact
except acts or omissions resulting from its willful misconduct or gross
negligence. This power of attorney is conferred on Secured Party solely to
protect, preserve, and realize upon its security interest in the Collateral.
Secured Party shall not be responsible for any decline in the value of the
Collateral and shall not be required to take any steps to preserve rights
against prior parties or to protect, preserve, or maintain any security interest
or lien given to secure the Collateral.
Section 5.2 PERFORMANCE BY SECURED PARTY OF DEBTOR'S OBLIGATIONS. If Debtor
fails to perform or comply with any of its agreements contained herein and fails
to correct such default after notification from Secured Party and, as a result,
Secured Party itself causes performance or compliance with such agreement, the
expenses of Secured Party, together with interest thereon at the maximum
nonusurious per annum rate permitted by applicable law, shall be payable by
Debtor to Secured Party on demand and shall constitute Obligations secured by
this Agreement.
Section 5.3 SETOFF; PROPERTY HELD BY SECURED PARTY. Subject to the
provisions of the Intercreditor Agreement, Secured Party shall have the right to
set off and apply against the Obligations, at any time and without notice to
Debtor, any and all deposits (general or special, time or demand, provisional or
final) or other sums at any time credited by or owing from Secured Party to
Debtor whether or not the Obligations are then due. As additional security for
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the Obligations, Debtor hereby grants Secured Party a security interest in all
money, instruments and other property of Debtor now or hereafter held by Secured
Party, including without limitation, property held in safekeeping. In addition
to Secured Party's right of setoff and as further security for the Obligations,
Debtor hereby grants Secured Party a security interest in all deposits (general
or special, time or demand, provisional or final) and other accounts of Debtor
now or hereafter deposited with or held by Secured Party and all other sums at
any time credited by or owing from Secured Party to Debtor. The rights and
remedies of Secured Party hereunder are in addition to other rights and remedies
(including, without limitation, other rights of setoff) which Secured Party may
have.
Section 5.4 ASSIGNMENT BY SECURED PARTY. Subject to the provisions of the
Loan Agreement and Intercreditor Agreement, Secured Party may from time to time
assign the Obligations and any portion thereof and/or the Collateral and any
portion thereof, and the assignee shall be entitled to all of the rights and
remedies of Secured Party under this Agreement in relation thereto.
ARTICLE 6
DEFAULT
Section 6.1 EVENTS OF DEFAULT. Each of the following shall be deemed an
"EVENT OF DEFAULT":
(a) Any Event of Default shall occur under the Loan Agreement or the
Prudential Notes.
(b) Any representation or warranty made or deemed made by Debtor in
this Agreement or in any certificate, report, notice, or statement
furnished at any time in connection with this Agreement is false,
misleading, or erroneous in any material respect on the date when made or
deemed to have been made.
(c) Debtor shall fail to perform, observe, or comply with any
covenant, agreement, or term contained in this Agreement and such default
shall continue for a period of up to thirty (30) days from the occurrence
thereof.
(d) This Agreement shall cease to be in full force and effect or
shall be declared null and void or the validity or enforceability thereof
shall be contested or challenged by Debtor or any of its shareholders, or
Debtor shall deny that it has any further liability or obligation under
this Agreement.
Section 6.2 RIGHTS AND REMEDIES. Upon the occurrence of an Event of
Default, subject to the provisions of the Intercreditor Agreement, Secured Party
shall have the following rights and remedies:
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(i) All rights and remedies available to it under the Loan Agreement, the
Prudential Notes and the Intercreditor Agreement.
(ii) In addition to all other rights and remedies granted to Secured Party
in this Agreement and in any other instrument or agreement securing,
evidencing, or relating to the Obligations or any part thereof, Secured
Party shall have all of the rights and remedies of a secured party under
the Uniform Commercial Code as adopted by the State of Texas. Without
limiting the generality of the foregoing, Secured Party may (A) without
demand or notice to Debtor, collect, receive, or take possession of the
Collateral or any part thereof and for that purpose Secured Party may enter
upon any premises on which the Collateral is located and remove the
Collateral therefrom or render it inoperable, and/or (B) sell, lease, or
otherwise dispose of the Collateral, or any part thereof, in one or more
parcels at public or private sale or sales, at Secured Party's offices or
elsewhere, for cash, on credit, or for future delivery. Upon the request
of Secured Party, Debtor shall assemble the Collateral and make it
available to Secured Party at any place designated by Secured Party that is
reasonably convenient to Debtor and Secured Party. Debtor agrees that
Secured Party shall not be obligated to give more than five (5) days
written notice of the time and place of any public sale or of the time
after which any private sale may take place and that such notice shall
constitute reasonable notice of such matters. Debtor shall be liable for
all expenses of retaking, holding, preparing for sale, or the like, and all
attorneys' fees, legal expenses, and all other costs and expenses incurred
by Secured Party in connection with the collection of the Obligations and
the enforcement of Secured Party's rights under this Agreement. Secured
Party may apply the Collateral against the Obligations in such order and
manner as Secured in such order and manner as Secured Party may elect in
its sole discretion. Debtor shall remain liable for any deficiency if the
proceeds of any sale or disposition of the Collateral are insufficient to
pay the Obligations in full. Debtor waives all rights of marshalling in
respect of the Collateral.
(iii) Secured Party may cause any or all of the Collateral held by it to be
transferred into the name of Secured Party or the name or names of Secured
Party's nominee or nominees.
(v) Secured Party may exercise or cause to be exercised all voting rights
and corporate powers in respect of the Collateral.
(vi) Secured Party may exercise any other rights or take any other action
to which it is entitled by applicable law.
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ARTICLE 7
MISCELLANEOUS
Section 7.1 EXPENSES; INDEMNIFICATION. Debtor agrees to pay on demand all
costs and expenses incurred by Secured Party and the Lenders in connection with
the preparation, negotiation, and execution of the Agreement and any and all
amendments, modifications, and supplements hereto. Debtor agrees to pay and to
hold Secured Party and the Lenders harmless from and against all fees and all
excise, sales, stamp, and other taxes payable in connection with this Agreement
or the transactions contemplated hereby. Debtor hereby indemnifies and holds
Secured Party and the Lenders harmless from and against any and all present and
future claims, actions, liabilities, and damages arising from or relating to
this Agreement, the Obligations, or the Collateral and all costs and expenses
(including attorneys' fees) incurred by Secured Party or any Lender in respect
thereof.
Section 7.2 NO WAIVER; CUMULATIVE REMEDIES. No failure on the part of
Secured Party to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power, or privilege under this Agreement shall
operate as a waiver thereof, nor shall any single or partial exercise of any
right, power, or privilege under this Agreement preclude any other or further
exercise thereof or the exercise of any other right, power, or privilege. The
rights and remedies provided for in this Agreement are cumulative and not
exclusive of any rights and remedies provided by law.
Section 7.3 SUCCESSORS AND ASSIGNS. This Agreement shall be binding upon
and inure to the benefit of Debtor and Secured Party and their respective
successors, and assigns, except that Debtor may not assign any of its rights or
obligations under this Agreement without the prior written consent of Secured
Party.
Section 7.4 AMENDMENT; ENTIRE AGREEMENT. THIS AGREEMENT, TOGETHER WITH THE
OTHER LOAN DOCUMENTS EMBODY THE FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO
AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS, AGREEMENTS, REPRESENTATIONS, AND
UNDERSTANDINGS, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.
THE PROVISIONS OF THIS AGREEMENT MAY BE AMENDED OR WAIVED ONLY BY AN INSTRUMENT
IN WRITING SIGNED BY THE PARTIES HERETO.
Section 7.5 NOTICES. Any notice, consent, or other communication required
or permitted to be given under this Agreement to Secured Party or Debtor must be
in writing and delivered in person or mailed by registered or certified mail,
return receipt requested, postage prepaid, as follows:
To Secured Party: Bank of Scotland
New York branch
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565 Fifth Avenue
New York, NY 10017
Attn: Annie Chin Tat
Vice President
To Debtor: Ouachita Energy Corporation
2501 Cedar Springs Road
Dallas, Texas 75201
Attn: Jack Brannon
Senior Vice President,
Chief Financial Officer
Any such notice, consent, or other communication shall be deemed given when
delivered in person or, if mailed, when duly deposited in the mails.
Section 7.6 APPLICABLE LAW AND VENUE. THIS AGREEMENT SHALL BE GOVERNED BY
AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF TEXAS, AND THE
APPLICABLE LAWS OF THE UNITED STATES OF AMERICA. THIS AGREEMENT HAS BEEN ENTERED
INTO IN HARRIS COUNTY, TEXAS, AND IT SHALL BE PERFORMABLE FOR ALL PURPOSES IN
HARRIS COUNTY, TEXAS. COURTS WITHIN THE STATE OF TEXAS SHALL HAVE JURISDICTION
OVER ANY AND ALL DISPUTES BETWEEN DEBTOR AND SECURED PARTY, WHETHER IN LAW OR
EQUITY, INCLUDING, BUT NOT LIMITED TO, ANY AND ALL DISPUTES ARISING OUT OF OR
RELATING TO THIS AGREEMENT; AND VENUE IN ANY SUCH DISPUTE WHETHER IN FEDERAL OR
STATE COURT SHALL BE LAID IN HARRIS COUNTY, TEXAS.
Section 7.7 HEADINGS. The headings, captions, and arrangements used in this
Agreement are for convenience only and shall not affect the interpretation of
this Agreement.
Section 7.8 SURVIVAL OF REPRESENTATIONS AND WARRANTIES. All
representations and warranties made in this Agreement or in any certificate
delivered pursuant hereto shall survive the execution and delivery of this
Agreement, and no investigation by Secured Party shall affect the
representations and warranties or the right of Secured Party to rely upon them.
Section 7.9 COUNTERPARTS. This Agreement may be executed in any number of
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
Section 7.10 WAIVER OF BOND. In the event Secured Party seeks to take
possession of any or all of the Collateral by judicial process, Debtor hereby
irrevocably waives any bonds and any surety or security relating thereto that
may be required by applicable law as an incident to such
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possession, and waives any demand for possession prior to commencement of any
such action.
Section 7.11 SEVERABILITY. Any provision of this Agreement which is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions of this Agreement, and any such
prohibition or unenforceability in any jurisdiction shall not invalidate or
render unenforceable such provision in any other jurisdiction.
Section 7.12 CONSTRUCTION. Debtor and Secured Party acknowledge that each
of them has had the benefit of legal counsel of its own choice and has been
afforded an opportunity to review this Agreement with its legal counsel and that
this Agreement shall be construed as if jointly drafted by Debtor and Secured
Party.
Section 7.13 OBLIGATIONS ABSOLUTE. The obligations of Debtor under this
Agreement shall be absolute and unconditional and shall not be released,
discharged, reduced, or in any way impaired by any circumstance whatsoever,
including, without limitation, any amendment, modification, extension, or
renewal of this Agreement, the Obligations, or any document or instrument
evidencing, securing, or otherwise relating to the Obligations, or any release
or subordination of collateral, or any waiver, consent, extension, indulgence,
compromise, settlement, or other action or inaction in respect of this
Agreement, the Obligations, or any document or instrument evidencing, securing,
or otherwise relating to the Obligations, or any exercise or failure to exercise
any right, remedy, power, or privilege in respect of the Obligations.
Section 7.14 FURTHER ASSURANCES-LOUISIANA
(a) Anything contained in this Security Agreement to the contrary
notwithstanding, this Security Agreement shall be governed by Chapter 9 -
Commercial Laws - Secured Transactions, Louisiana R.S. 10:9-101 ET SEQ.
(collectively, the "Louisiana UCC") to the extent that any security
interest in any of the Collateral located in the State of Louisiana, and
any remedies hereunder with respect thereto, are required to be governed
by, and interpreted in accordance with, the laws of the State of Louisiana.
(b) If an Event of Default occurs, the Secured Party shall have all
remedies available to a secured party under the Louisiana UCC in addition
to the remedies provided in this Security Agreement. For purposes of
executory process under the laws of the State of Louisiana, Debtor hereby
confesses judgment in favor of the Secured Party, the Lenders and any
future holder or holders of the Indebtedness, for the full amount of the
Obligations, including, without limitation, principal, interest, attorney's
fees, court costs, and all other fees, expenses and charges, up to the
maximum amount of $120,000,000, and consents that judgment be rendered and
signed whether during term of court or in vacation for the full amount of
the Indebtedness.
16
<PAGE>
(c) Debtor hereby expressly waives, to the extent permitted by
Louisiana law, the benefit of appraisement, provided for in Articles 2332,
2336, 2723 and 2724 of the Louisiana Code of Civil Procedure and all other
laws of the State of Louisiana conferring such benefits and the demand and
three days' delay accorded by Articles 2639 and 2721 of the Louisiana Code
of Civil Procedure.
(d) Pursuant to Louisiana R.S. 9:5136, Secured Party is hereby
authorized and empowered to name, at the time of the seizure of any of the
Collateral, a keeper of such property, which said keeper may be the Secured
Party or its designated agent or nominee, who or which shall be named by
the Secured Party in its pleadings to enforce Secured Party's rights and
remedies hereunder in a court of competent jurisdiction. The compensation
of the services of the keeper is hereby fixed at $500 per day for the
period of service, and such compensation and any advances for working
capital or otherwise made by the Secured Party to the keeper shall
constitute a part of the Indebtedness secured hereby.
Section 7.15 FINANCING STATEMENTS. A carbon, photostatic, facsimile or
photographic copy, or other reproduction, of this Security Agreement or of any
financing statement prepared or filed with respect hereto is sufficient as a
financing statement for all purposes.
Section 7.16 PRIOR SECURITY INTERESTS. This Security Agreement
constitutes an amendment, restatement and modification of that certain Sixth
Amended and Restated Security Agreement and Assignment from Debtor, Equity
Compression Services Corporation, Equity Compressors, Inc. and Sunterra Energy
Corporation, as debtors, granting liens and security interests in all of such
Debtors' properties and assets to Bank of Oklahoma, National Association ("BOK")
as collateral agent and Secured Party, dated as of December 19, 1997, together
with the Prior Security Agreements therein described, as such prior liens and
security interests were transferred and assigned by BOK to Secured Party on even
date herewith pursuant to an Assignment of Note, Liens and Related Documents.
Debtor hereby ratifies, confirms and adopts said prior liens and security
interests which shall be extended, renewed and carried forward under the terms
of this Security Agreement. None of the rights, titles and interests existing
and to exist in favor of BOK and its assignees and other lenders in connection
with said prior liens and security interests are hereby released, diminished or
impaired, and any existing financing statements covering the Collateral shall
continue to preserve, protect and perfect all such existing rights, titles and
interests.
17
<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this Agreement as
of the day and year first written above.
DEBTOR:
OUACHITA ENERGY CORPORATION
By:
--------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
SECURED PARTY:
BANK OF SCOTLAND, NEW YORK BRANCH,
As collateral agent
By:
--------------------------------
Name: Annie Chin Tat
Title: Vice President
Schedules:
Schedule 1 - Compressor Equipment
Schedule 2 - Locations of Inventory, Compressor Equipment and Equipment
Schedule 3 - Description of Real Property where Equipment located in OK,
TX and LA
18
<PAGE>
SCHEDULE 2
LOCATIONS OF INVENTORY
COMPRESSOR EQUIPMENT AND EQUIPMENT
ADDRESS CITY STATE
5400 North Grand Boulevard Oklahoma City Oklahoma
214 South High School Avenue Columbia Mississippi
111 Cargill Road Kilgore Texas
Miscellaneous Alabama
Miscellaneous Arkansas
Miscellaneous Kansas
Miscellaneous Louisiana
Miscellaneous Mississippi
Miscellaneous Oklahoma
Miscellaneous Texas
19
<PAGE>
SCHEDULE 3
LEGAL DESCRIPTION
OKLAHOMA CITY, OKLAHOMA
Lease of office space in Grand Center Executive Suites at 5400 North Grand
Boulevard, Oklahoma City, Oklahoma.
DALLAS, TEXAS
Lease of portions of 6th Floor Office Building at 2501 Cedar Springs Road,
Dallas, Texas 75201.
KILGORE, TEXAS
Lease of mini warehouse space at 111 Cargill Road, Kilgore, Texas.
Page 2 of 2
<PAGE>
ASSIGNMENT OF INSURANCES
Ouachita Energy Corporation, a corporation organized under the laws of
the State of Delaware ("Assignor"), in consideration of One Dollar ($1.00)
lawful money of the United States of America and other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged,
has sold, assigned, transferred, set over, and granted a security interest,
and by this instrument does sell, assign, transfer, set over and grant a
security interest in the Insurance Collateral defined below, unto Bank of
Scotland, acting through its New York branch ("Assignee"), as collateral
agent for the benefit of the Lenders (as defined below) and unto the
Assignee's successors and assigns, to it and its successors' and assigns' own
proper use and benefit, and as security for the full and prompt payment when
due (whether at the stated maturity, by acceleration or otherwise) of all
obligations and liabilities of the Assignor, now existing or hereafter
incurred, under, arising out of or in connection with the following
(collectively, "Loan Documents"): (a) the Loan Agreement dated with effect
from March 30, 1998 ("Loan Agreement") by and among Assignor (as Borrower),
OEC Compression Corporation ("Guarantor"), and Assignee, as Administrative
Agent for itself and certain other lenders defined in the Loan Agreement
("Bank Lenders"), (b) all promissory notes in favor of any Bank Lenders,
pursuant to the provisions of such Loan Agreement ("Notes"), and (c)
Assignor's obligations and liabilities to Prudential pursuant to Assignor's
guaranty of Guarantor's indebtedness and liability to Prudential under the Pru
Debt (as the terms "Prudential" and "Pru Debt" are defined in the Loan
Agreement). The collateral assigned to and held by Assignee hereunder
consists of all of the following (collectively, the "Insurance Collateral"):
(i) all insurances (including, without limitation, all risk and peril
insurances, property damage and third party liability policies (to the extent
assignable)) in respect of all of Assignor's Compressor Equipment, Equipment,
Inventory, the Louisiana Facility (as such terms are defined in the Loan
Agreement) and all other assets and properties of Assignor, whether real or
personal, whether heretofore, now or hereafter effected, and all renewals of
or replacements for the same, (ii) except as hereinafter provided, all
claims, returns of premium and other moneys and claims for moneys due and to
become due under or in respect of said insurances, (iii) all other rights of
the Assignor under or in respect of said insurances, and (iv) any proceeds of
any of the foregoing. It is expressly agreed that anything herein contained
to the contrary notwithstanding, the Assignor shall remain liable under said
insurances to perform all of the obligations assumed by it thereunder and the
Assignee shall have no obligation or liability (including, without
limitation, any obligation or liability with respect to the payment of
premiums, calls or assessments) under said insurances by reason of or arising
out of this instrument of assignment nor shall the Assignee be required or
obligated in any manner to perform or fulfill any obligations of the Assignor
under or pursuant to said insurances or to make any payment or to make any
inquiry as to the nature or sufficiency of any payment received by it or to
present or file any claim, or to take any other action to collect or enforce
the payment of any amounts which or may have been assigned to it or to which
it may be entitled hereunder at any time or times.
<PAGE>
This Assignment is made pursuant to and as a condition of the Loan
Agreement. The Bank Lenders and Prudential are herein collectively called the
"Lenders" and capitalized terms used herein and not otherwise defined herein
shall have the meanings as defined in the Loan Agreement.
The Assignor hereby appoints and constitutes the Assignee and its
successors and assigns, the Assignor's true and lawful attorney-in-fact, with
full power (in the name of the Assignor or otherwise) to ask, require,
demand, receive, compound and give acquittance for any and all moneys and
claims for moneys due and to become due under or arising out of said
insurances, to endorse any checks or other instruments or orders in
connection therewith and to file any claims or to take any action or
institute any proceedings which the Assignee may deem to be necessary or
advisable in the premises; PROVIDED, however, that the Assignee shall not
take any action pursuant to the power granted by this paragraph unless an
Event of Default under the Loan Documents shall have occurred and be
continuing. Such appointment of the Assignee as attorney is irrevocable and
is coupled with an interest.
The Assignor hereby covenants and agrees that notice of this Assignment,
in substantially the form of Annex 1 hereto, shall be duly given to all
underwriters of the Insurance Collateral and that where the consent of any
underwriter is required pursuant to any of the insurances assigned hereby,
the Assignee shall use all reasonable efforts to obtain such consent and
evidence thereof shall be given to the Assignee, and that there shall be duly
endorsed upon all slips, cover notes, policies, certificates of entry or
other instruments issued or to be issued in connection with the insurances
assigned hereby such clauses and provisions as may be required by the Loan
Documents.
The powers and authority to the Assignee herein have been given for a
valuable consideration and are hereby declared to be irrevocable.
The Assignor agrees that at any time and from time to time, upon the
written, reasonable request of the Assignee, the Assignor will promptly and
duly execute and deliver any and all such further instruments and documents
as the Assignee may reasonably require in obtaining the full benefits of this
Assignment and of the rights and powers herein granted.
The Assignor hereby warrants and represents that it has not assigned or
pledged, and hereby covenants that, without the prior written consent thereof
of the Assignee, so long as this instrument of assignment shall remain in
effect, it will not assign or pledge the whole or any part of the right,
title and interest hereby assigned to anyone other than the Assignee, its
successors or assigns, and except as permitted by the Loan Documents it will
not take or omit to take any action, the taking or omission of which might
result in an alteration or impairment of said insurances or this Assignment
which could reasonably be expected to have a material adverse effect on any
such policy, or of any of the rights created by said insurances or this
Assignment.
-2-
<PAGE>
All notices or other communications which are required to be made to the
Assignee hereunder shall be made by airmail postage prepaid letter or
telefax, confirmed by letter to:
Bank of Scotland
New York branch, as Agent
565 Fifth Avenue
New York, New York 10017
Attention Annie Chin Tat
Fax No.: 212-557-9460
or at such other address as any such party may designate by notice to the
others.
Assignee holds the Insurance Collateral as collateral agent for the
Lenders pursuant to the provisions of the Intercreditor Agreement defined in
the Loan Agreement. Any payments made pursuant to the terms hereof shall be
made to such account as may, from time to time, be designated by the Assignee
for distribution in accordance with the Loan Documents and Intercreditor
Agreement.
This Assignment shall be governed, construed and interpreted by the laws
of the State of Texas.
None of the terms and conditions of this Assignment may be changed,
waived, modified or varied in any manner whatsoever unless in writing duly
signed by the Assignor and the Assignee.
The Assignor hereby authorizes the Assignee to execute and file
Financing Statements (Form UCC-1) and amendments thereto as provided in
Article 9 of the Texas Uniform Commercial Code.
IN WITNESS WHEREOF, the Assignor has caused this Assignment to be duly
executed the 30th day of March, 1998.
OUACHITA ENERGY CORPORATION
By:
-------------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
-3-
<PAGE>
ANNEX 1
to Assignment of Insurances
NOTICE OF ASSIGNMENT
OUACHITA ENERGY CORPORATION (the "Owner"), HEREBY GIVES NOTICE that by
an Assignment of Insurances dated March 30, 1998 and made between the Owner
and Bank of Scotland, New York branch, as collateral agent for itself and
certain other lenders (the "Assignee"), the Owner assigned to the Assignee
all of the Owner's right, title and interest in and to all insurances and the
benefit of all insurances now or hereafter taken out in respect of all of
Assignor's assets and properties, both real and personal. This Notice of
Assignment and the loss payable clauses and other clauses and provisions as
may be required under Section 8.07 of the Loan Agreement (a true copy of
which section is being furnished herewith) are to be endorsed on all policies
and certificates of entry evidencing such insurance.
OUACHITA ENERGY CORPORATION
By:
-------------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
<PAGE>
ASSIGNMENT OF LEASES, CONTRACTS
AND CONTRACT PROCEEDS
AND SECURITY AGREEMENT
THIS ASSIGNMENT OF LEASES, CONTRACTS AND CONTRACT PROCEEDS AND SECURITY
AGREEMENT (this "ASSIGNMENT" or "AGREEMENT") made as of March 30, 1998 by and
between Ouachita Energy Corporation, a Delaware corporation ("ASSIGNOR"),
whose principal place of business and chief executive office is at 2501 Cedar
Springs Road, Suite 600, Dallas, Texas 75201 and Bank of Scotland, an
authorized bank in the United Kingdom, constituted by an Act of the Scots
parliament of 1695, acting through its New York branch, as collateral agent
for itself and certain other Lenders described below ("SECURED PARTY").
WITNESSETH:
RECITALS:
A. This Assignment is the Assignment of Leases, Contracts and Contract
Proceeds and Security Agreement referenced and defined in that certain
Amended and Restated Loan Agreement, dated as of March 30, 1998 ("Loan
Agreement"), by and among Assignor, OEC Compression Corporation (as
guarantor), the sole shareholder of Assignor ("Guarantor"), and Agent, on
behalf of itself and certain other lenders defined therein ("Bank Lenders").
B. The execution of this Assignment is a condition precedent to Bank
Lenders' obligations under the Loan Agreement and is given as security for and
in support of Assignor's indebtedness and liability (i) to Bank Lenders under
the Loan Agreement and other Loan Documents (defined in the Loan Agreement)
executed in connection therewith ("Bank Loan Documents"), and (ii) pursuant
to a Guaranty Agreement, dated as of July 31, 1997, executed by Assignor to
secure Guarantor's obligations and indebtedness to Prudential, and its
assignees and holders of the Pru Notes and Subordinated Notes in respect of
the Pru Debt (as each such term is defined in the Loan Agreement).
C. The Bank Lenders and Prudential are herein collectively called
"Lenders", and the Bank Loan Documents, all documents evidencing and securing
the Pru Debt and the Intercreditor Agreement (described below) are herein
collectively called the "Loan Documents".
D. All other capitalized terms used but not otherwise defined in this
Assignment shall bear the meanings assigned to them in the Loan Agreement.
NOW THEREFORE, in consideration of the premises and other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
<PAGE>
ARTICLE I
ASSIGNMENT
1. ASSIGNMENT. As security for Borrower's obligation to repay all of
its indebtedness and Obligations under the Loan Documents (hereinafter,
"Indebtedness") Borrower hereby transfers, pledges and assigns to Secured
Party, its successors and assigns, for the ratable benefit of the Lenders,
and grants Secured Party, for the ratable benefit of the Lenders, a security
interest in and to the following collateral ("Collateral"):
a. All present and future gas compressor equipment master rental
agreements, rental agreements, leases, purchase orders, sales contracts and
other contracts of any kind for the rental, lease, operation, use or sale
of any of Borrower's natural gas compressors, Compressor Equipment and
Inventory (as defined in the Loan Agreement and Borrower's Security
Agreement), including, without limitation, those master rental agreements,
leases and contracts identified in EXHIBIT A hereto, which Exhibit Borrower
and Secured Party agree may be updated and supplemented from time to time
(collectively, "Contracts").
b. All present and future maintenance, service and management
contracts with any Person in connection with the lease, rental and sale of
any of the above Compressor Equipment and Inventory (collectively, "Service
Agreements").
c. All revenues, including, accounts receivable, claims,
settlements, recoveries and proceeds of any of the foregoing.
This instrument shall constitute a security agreement within the meaning
of the Texas Business and Commerce Code as now adopted and existing and as it
may hereafter be amended or succeeded.
ARTICLE II
REPRESENTATIONS AND WARRANTIES
2. REPRESENTATIONS AND WARRANTIES. Assignor hereby represents and
warrants to Secured Party and Lenders that:
a. The Contracts and Service Agreements, all of which will be
submitted to Secured Party for prior approval, prior to the earlier of the
Closing Date or execution of each such Contract or Service Agreement (such
approval not to be unreasonably withheld) which have been or will be
delivered by Assignor to Secured Party are true and correct originals or
conforming copies of such Contracts and Service Agreements, and have not
been amended or replaced.
-2-
<PAGE>
b. Assignor has not executed any prior assignment, pledge or
hypothecation of its rights under the Contracts and Service Agreements.
ARTICLE III
COVENANTS AND AGREEMENTS
3. COVENANTS AND AGREEMENTS. Assignor hereby covenants in favor of
Secured Party as follows:
a. Assignor shall promptly deliver to Secured Party the originals of
all Contracts set forth in Exhibit A hereto, together with originals of all
future material Contracts entered into and executed by Assignor with any
third party.
b. Assignor will perform all of its obligations under the Contracts
and Service Agreements in accordance with the terms thereof, and shall not
amend, alter or modify the Contracts and Service Agreements without the
express prior written consent of Secured Party, except as may be provided
in the Loan Agreement (such consent not to be unreasonably withheld).
c. Assignor shall promptly notify Secured Party of any event of
default by Assignor under the Contracts and Service Agreements and shall
immediately remedy same.
d. Assignor shall execute such further and additional instruments
and assignments as may be requested by Secured party to vest in Secured
Party a valid security interest in and to all rights of Assignor under the
Contracts and Service Agreements.
ARTICLE IV
SECURED PARTY AS AGENT
4. SECURED PARTY AS AGENT. Assignor hereby agrees as follows:
a. Secured Party holds the Collateral as collateral agent for the
Lenders pursuant to, and has all the powers and rights with respect thereto
as are set forth in, the Loan Documents, including, but not limited to, the
Intercreditor Agreement defined in the Loan Agreement ("Intercreditor
Agreement");
b. Upon an Event of Default (as defined in the Loan Documents)
Secured Party shall be deemed irrevocably appointed agent and attorney-in-
fact as to performance by Assignor of its obligations under the Contracts
and Service Agreements, and as to the enforcement of Assignor of its rights
and remedies under the Contracts and Service Agreements;
-3-
<PAGE>
c. All costs, expenses and liabilities incurred and payments made by
Secured Party and Lenders on behalf of Assignor shall be considered a loan
by Secured Party and Lenders to Assignor which shall be repayable on demand
and which shall bear interest at the highest legal rate of interest Secured
Party may charge Assignor and said loan shall be secured by the Security
Instruments;
d. Regarding the existence of any Event of Default for purposes of
this Assignment, Assignor agrees that all parties under the Contracts and
Service Agreements may rely upon written certifications from Secured Party
that such an Event of Default exists; and
e. Notwithstanding the foregoing, Secured Party and Lenders shall
have no obligation whatsoever to perform any of Assignor's obligations
under the Contracts and Service Agreements.
ARTICLE V
FORECLOSURE
5. FORECLOSURE. This Assignment is executed as additional security for
the payment of the Indebtedness and all other indebtedness owing or to become
owing by Assignor to Secured Party and Lenders under the Loan Documents, and
it is expressly stipulated, covenanted and agreed that an Event of Default by
Assignor under the terms of the Loan Documents shall constitute a default
under the terms of this Assignment and that foreclosure under the Loan
Documents or this Assignment shall operate to foreclose fully the rights of
Assignor arising from the Contract and Service Agreements, and in such event,
all rights of Assignor under the Contract and Service Agreements shall be
vested in the successful bidder at such foreclosure. In addition, Secured
Party, as collateral agent for the Lenders, shall have all other rights and
remedies of a Secured Party under the Uniform Commercial Code as adopted in
Texas.
ARTICLE VI
GENERAL
6. GENERAL. Assignor hereby further agrees as follows:
a. No remedy or right conferred upon Secured Party by operation of
law, by this Assignment, the Loan Documents or by any other instrument
executed by Assignor in connection therewith is intended to be, nor shall
it be, exclusive of any other right or remedy, but each and every remedy or
right shall be cumulative and shall be in addition to every other remedy or
right conferred upon Assignor and each and every such remedy or right may
be pursued by Secured Party in such manner or order, together or
separately, and at such times as Secured Party may elect.
-4-
<PAGE>
b. If any term or provision of this Assignment, or the application
thereof to any person or circumstance shall, to any extent become invalid
or unenforceable, the remainder of this Assignment, or the application of
such term or provision to persons or circumstances other than those as to
which it is held invalid or unenforceable, shall not be affected thereby,
and each term and provision of this Assignment shall be valid and be
enforced to the fullest extent permitted by law.
c. This Assignment shall be governed by and construed and
interpreted in accordance with the laws of the State of Texas without
regard to its conflict of laws principles.
d. Debtor shall comply with all other covenants and agreements,
concerning the Collateral, as is set forth in the Loan Documents.
e. No failure on the part of Secured Party to exercise and no delay
in exercising, and no course of dealing with respect to, any right, power,
or privilege under this Agreement shall operate as a waiver thereof, nor
shall any single or partial exercise of any right, power, or privilege
under this Agreement preclude any other or further exercise thereof or the
exercise of any other right, power, or privilege. The rights and remedies
provided for in this Agreement are cumulative and not exclusive of any
rights and remedies provided by law.
f. This Agreement shall be binding upon and inure to the benefit of
Assignor and Secured Party and their respective successors, and assigns,
except that Assignor may not assign any of its rights or obligations under
this Agreement without the prior written consent of Secured Party.
g. THIS AGREEMENT, TOGETHER WITH THE OTHER LOAN DOCUMENTS EMBODY THE
FINAL, ENTIRE AGREEMENT AMONG THE PARTIES HERETO WITH RESPECT TO THE
MATTERS COVERED HEREBY AND SUPERSEDE ANY AND ALL PRIOR COMMITMENTS,
AGREEMENTS, REPRESENTATIONS, AND UNDERSTANDINGS, WHETHER WRITTEN OR ORAL,
RELATING TO THE SUBJECT MATTER HEREOF. THE PROVISIONS OF THIS AGREEMENT MAY
BE AMENDED OR WAIVED ONLY BY AN INSTRUMENT IN WRITING SIGNED BY THE PARTIES
HERETO.
h. This Agreement may be executed in any number of counterparts,
each of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
-5-
<PAGE>
EXECUTED on the date first above written.
ASSIGNOR:
OUACHITA ENERGY CORPORATION
By:
-------------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
SECURED PARTY:
BANK OF SCOTLAND, NEW YORK BRANCH, as
Collateral Agent for Lenders
By:
-------------------------------------
Name: Annie Chin Tat
Title: Vice President
-6-
<PAGE>
EXHIBIT A
MASTER RENTAL AGREEMENTS, LEASES AND CONTRACTS
GENERAL
All of Assignor's present and future gas compressor equipment master
rental agreements, rental agreements, leases, purchase orders, sales
contracts and other contracts for the rental, lease, operation, use or sale
of any of Assignor's natural gas compressors.
SPECIFIC
As of March 30, 1998, no specific master rental agreements. Specific master
rental agreements to be listed and supplemented by Assignor from time to time.
<PAGE>
FORM OF ACKNOWLEDGMENT AND CONSENT
The undersigned [Lessor/Purchaser] ("Lessor") named in the foregoing
Assignment hereby acknowledges receipt of a copy of such Assignment, consents
to be bound by the provisions thereof and agrees to perform its obligations
under the [Master Rental Agreement/Rental Agreement/Lease Contract]
("Contract") for Secured Party and its assignees, as collateral agent for
itself and other Lenders, if requested to do so pursuant to the foregoing
Assignment. Lessor acknowledges that Secured Party and Lenders have no
liability to Lessor by virtue of the foregoing Assignment unless and until
Secured Party exercises its rights under the Assignment and that in no event
shall Secured Party or Lenders have liability to Lessor for any default under
the Contract by Assignor prior to the date Secured Party exercises its rights
hereunder, nor shall Lessor claim any such default as a defense against
Secured Party or Lenders for failure to perform its obligations under the
Contract.
LESSOR:
By:
-------------------------------------
Name:
-------------------------------------
Title:
-------------------------------------
STATE OF___________ )
)
COUNTY OF__________ )
This instrument was acknowledged before me on the ___ day of __________,
1998 by ___________________________, ___________________ of
_________________________, on behalf of said ________________________.
-------------------------------------
Notary Public in and for the
State of___________
My Commission Expires:
<PAGE>
GUARANTEE
THIS GUARANTEE ("Guarantee") is made as of March 30, 1998, by OEC
Compression Corporation, an Oklahoma corporation ("Guarantor") in connection
with and in support of that certain Amended and Restated Loan Agreement dated
as of March 30, 1998 (the "Agreement"), by and among OUACHITA ENERGY
CORPORATION ("Borrower"), and BANK OF SCOTLAND, acting through its New York
branch ("Bank"), as Administrative Agent ("Agent"), for itself as a lender,
and for certain other lenders to become parties to the. Agreement
("Lenders"), in the maximum amount of up to SIXTY MILLION DOLLARS
($60,000,000), as Lenders may advance to Borrower under the terms of the
Agreement (the "Loan"). Unless the context clearly indicates to the contrary,
the capitalized terms used herein shall have the meanings attributed to such
terms in the Agreement.
WITNESSETH:
WHEREAS, Guarantor owns 100% of the issued and outstanding common voting
stock of Borrower and Guarantor has determined that its execution, delivery
and performance of this Guarantee may reasonably be expected to benefit
Guarantor, directly or indirectly, and is in the best interest of Guarantor;
WHEREAS, the execution of this Guarantee is a condition precedent to
Lenders extending the Loan to Borrower;
WHEREAS, on even date herewith, Borrower executed in favor of Bank a
Revolving Credit Note in connection with the Loan and, under the Agreement,
Borrower agreed to execute such further Revolving Credit Notes and, after the
Conversion Date, Term Notes, in favor of each additional Lender which becomes
a party to the Agreement (Bank and all such additional lenders hereinafter
collectively referred to as "Lenders" or, individually, a "Lender") (all
Revolving Credit Notes, and all Term Notes are hereinafter sometimes
collectively called "Notes" and, each, a "Note");
WHEREAS, to better secure the Agreement and Notes, Borrower has granted
Lenders, and Agent, on behalf of Lenders, has taken certain security
interests, mortgages, pledges, assignments and liens ("Security Interests")
over certain collateral, property and assets of Borrower ("Collateral"), all
as more particularly described in the Agreement and various security
documents executed in connection therewith ("Security Instruments"); and
<PAGE>
WHEREAS, Prudential (as defined in the Loan Agreement), on behalf of the
holders of the Pru Notes and the Subordinated Notes (each as defined in the
Loan Agreement and, collectively, the "Pru Debt") has consented to the
execution of this Guarantee;
NOW THEREFORE:
In consideration of the loans and financial accommodation extended
thereunder and in order to induce the Lenders to execute and deliver the
Agreement and make the Loans thereunder, Guarantor hereby agrees as follows:
1. GUARANTEE. Guarantor hereby unconditionally and irrevocably
guarantees (as primary obligor and not merely as surety) the full and
punctual payment when due, whether at stated maturity or by acceleration, of
the indebtedness, obligations and liabilities of Borrower under the
Agreement, the Notes and Security Instruments to Agent, Bank and Lenders
whether for principal, interest, Fees, costs, expenses (including, without
limitation, which may be paid or incurred by the Bank in collecting said
indebtedness, obligations or liabilities) or Taxes (all such indebtedness,
obligations and liabilities being hereinafter collectively referred to as the
"Obligations").
2. OBLIGATIONS PAID IN ACCORDANCE WITH TERMS THEREOF. Guarantor
guarantees that the Obligations will be paid in lawful currency of the United
States of America strictly in accordance with the terms and provisions of the
Agreement and Notes, free and clear of and without deduction for any present
or future Tax, or other levy, impost or any other charge, if any, of any
nature whatsoever now or hereafter imposed by any taxing authority. If the
making of such payments is prohibited by law unless such a Tax, or other
levy, impost or other charge is deducted or withheld therefrom, Guarantor
shall pay to Agent, for the equal and ratable benefit of the Bank and
Lenders, such additional amounts as may be necessary in order that the net
amounts received by Agent, for the equal and ratable benefit of the Bank and
Lenders, after such deduction or withholding shall equal the amounts which
would have been received if such deduction or withholding were not required.
The Obligations of Guarantor hereunder shall not be excused, discharged or
affected in any other manner, by any regulation or decree now or hereafter in
effect in any jurisdiction which might in any manner affect any of such terms
or provisions or the rights of the Agent, Bank or Lenders with respect
thereto as against Borrower, or which might cause or permit to be invoked any
alteration in the time, amount or manner of payment by Borrower of any of the
Obligations, and Guarantor agrees to perform its Obligations and make all
payments required hereunder promptly after receipt of a demand therefor from
the Agent.
3. ENFORCEMENT OF GUARANTEE. Subject always to the provisions of the
Loan Agreement and Intercreditor Agreement (defined in the Loan Agreement,
herein "Intercreditor Agreement"), the Agent, in its sole discretion, may
proceed to exercise any right or remedy which it may have under this
Guarantee, for the benefit of Bank and Lenders, without pursuing or
exhausting any right or remedy which it may have against Borrower or any
other guarantor without regard to any actions or omissions of Borrower.
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<PAGE>
4. GUARANTEE ABSOLUTE. This is a Guarantee of payment and not of
collection. The Obligations of Guarantor hereunder shall be absolute and
unconditional irrespective of the validity, legality or enforceability of the
Agreement, the Notes, the Security Instruments or any other circumstances
which might otherwise constitute a legal or equitable discharge of a
guarantor, it being agreed that the Obligations of Guarantor hereunder shall
not be discharged for any reason (including, but not limited to, the payment
by Guarantor of all or part of its Obligations to the Agent, Bank or Lenders
under any other guarantee or instrument) except by payment as herein
provided. The rights of the Bank and the Obligations of Guarantor under this
Guarantee shall in no way be affected by any right of set-off, claim,
counterclaim or defense or any other right which Guarantor may have against
Borrower, the Agent, Bank or Lenders or which Borrower may have against
Agent, Bank or Lenders, and Guarantor hereby expressly subordinates and makes
inferior to Agent, on behalf of Bank and Lenders, any and all indebtedness,
liability, Obligations, claim or right existing, or which hereafter may
arise, in its favor from Borrower.
5. GUARANTEE NOT AFFECTED. Guarantor hereby agrees that this Guarantee
shall not be affected by any invalidity of or defect or deficiency or any
release in or amendment or waiver of or consent to departure from the
Agreement, the Notes or Security Instruments or any mortgage, guarantee, deed
of trust or other instrument whether similar or dissimilar, which (i) is
issued in connection with, evidencing or securing payment of the Obligations,
(ii) any other Obligations of Guarantor to the Agent, Bank or Lenders, or
(iii) secures this Guarantee; and Guarantor further consents and agrees that,
at any time and from time to time:
(a) any action may be taken under or in respect of the Agreement in
the exercise of any remedy, power or privilege therein contained or
otherwise with respect thereto, or such remedy, power or privilege may be
waived, omitted or not exercised;
(b) the time for Borrower's performance of or compliance with any
term, covenant or agreement on its part to be performed or observed under
this Agreement may be extended, or such performance or compliance waived,
or failure in or departure from such performance consented to; and
(c) the liability of Borrower to pay any and all of the Obligations
may be settled or compromised, and the payment of any and all of the
Obligations may be subordinated to the prior payment of any other debts or
claims of Borrower;
all in such manner and upon such terms as the Bank may deem proper, and
without notice to or further assent from Guarantor, and all without affecting
this Guarantee or the Obligations of Guarantor hereunder, which shall
continue in full force and effect until all of the Obligations of Guarantor
hereunder shall have been fully paid and performed. Notwithstanding the
foregoing, without the consent of Guarantor, (i) no amendment or modification
to the Agreement or any terms thereof may increase the aggregate principal
amount of the Loans described in the Agreement and Notes; and (ii) the time
and place of final maturity of the Loans described in the Agreement and Notes
may not be extended or waived.
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<PAGE>
6. WAIVER. Guarantor hereby waives notice of acceptance and acceptance
of this Guarantee, presentment, demand, protest, notice of the occurrence of
an Event of Default under and as defined in the Agreement, any requirement
for bringing of suit against or making any demand on Borrower or any other
party, and any requirement on Agent's, Bank's or Lender's parts to enforce
any of their rights against the Collateral prior to collecting from Guarantor
and any other notice of any kind whatsoever (except for the demand referred
to in Section 2 hereof) with respect to all of the Obligations, and
promptness in making any claim or demand hereunder; but no act or omission of
any kind with regard to any of the foregoing matters shall in any way effect
or impair this Guarantee.
7. REINSTATEMENT. This Guarantee shall continue to be effective or be
reinstated, as the case may be, if at any time payment, or any part thereof,
of any of the Obligations is rescinded or must otherwise be restored or
returned by the Agent, Bank or Lenders upon the insolvency, bankruptcy or
reorganization of Borrower, or otherwise, all as though such payment had not
been made.
8. REPRESENTATIONS AND WARRANTIES. Guarantor hereby represents and
warrants the matters as set forth below as of the date hereof, and shall be
deemed to so represent and warrant as of the date of each Advance and each
Interest Payment Date under the Agreement and Notes:
(a) Guarantor has the full power, authority and legal right to
guarantee and incur the Obligations provided for in this Guarantee and to
execute and deliver, and to perform and observe the terms and provisions
of, this Guarantee;
(b) The execution and delivery of and the performance and observance
of the terms and provisions of this Guarantee do not conflict with, violate
or infringe any provisions of any legal or contractual obligations or
liability of or pertaining to Guarantor, except for its obligations under
the Pru Debt (and Prudential has consented to this Guarantee);
(c) This Guarantee has been duly executed and delivered and
constitutes the legal, valid and binding obligation of Guarantor
enforceable against Guarantor in accordance with its terms;
(d) The value of the consideration received and to be received by
Guarantor in connection with this Guarantee is reasonably worth at least as
much as the liability of and Obligations guaranteed by Guarantor hereunder,
and such liability and Obligations may reasonably be expected to benefit
Guarantor directly or indirectly;
(e) All guarantees and obligations of Guarantor hereunder are
unconditional, direct obligations of Guarantor for the payment and
performance of which the full faith and credit of Guarantor is pledged and
such obligations rank at least PARI PASSU in all
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<PAGE>
respects with all other debts of Guarantor (including, but not limited to,
the Pru Debt), subject however, to the provisions of the Intercreditor
Agreement; and
(f) Guarantor agrees to faithfully and timely honor, comply with and
perform all of the covenants, agreements, Obligations, representations and
warranties, given by and required of Guarantor under the provisions of this
Guarantee and the Agreement.
9. COVENANTS.
(a) Guarantor covenants and agrees that so long as any part of the
Obligations shall remain unpaid, Guarantor will not take any action which
would prevent or interfere with the performance by Borrower of any of the
covenants, agreements and Obligations of Borrower contained in the
Agreement, Notes and Security Instruments and will take or cause to be
taken all necessary action to enable Borrower to perform such covenants,
agreements and Obligations. In the event that, (i) Guarantor shall pay to
the Agent, Bank or any Lender all or any part of the Obligations, and (ii)
all of the Obligations shall be paid in full, the Agent, Bank and Lenders,
at the request in writing of Guarantor, shall execute in favor of and
deliver to Guarantor appropriate documents without representation or
warranty of any kind, necessary to evidence the transfer by subrogation to
the Guarantor of an interest in and to the Obligations resulting from the
payment of Guarantor to the Agent for the equal and ratable benefit of the
Lenders and the Agent, Bank and Lenders shall have no further
responsibility to Guarantor or any other person or entity with respect
thereto.
(b) Further, Guarantor shall, as soon as possible and in any event no
later than fifteen (15) calendar days (or such other period as required
under the Agreement) after acquiring knowledge of its occurrence, give
notice to the Agent of any Event of Default under the Agreement, Notes or
Security Instruments or any event which upon notice or lapse of time, or
both, would constitute an Event of Default under the Agreement, Notes or
Security Instruments, setting forth the details of such Event of Default
and setting forth the details of the action which Borrower proposes to take
with respect thereto. Further, Guarantor shall take any action necessary in
order that its Obligations under this Guarantee will rank in right of
payment and in right of security at least equally and ratably with all
other debt, now or hereafter existing, of Guarantor (including, but not
limited to, the Pru Notes and PARI PASSU Debt) but shall rank superior and
prior to the Subordinated Notes and Subordinated Debt.
10. NO WAIVER: AMENDMENTS. ETC. No failure or delay on the part of the
Agent in exercising any right or remedy hereunder shall operate as a waiver
thereof; nor shall any single or partial exercise of any such right or remedy
preclude any other right or remedy hereunder. No amendment, modification,
termination or waiver of any provision of this Guarantee nor consent to any
departure by Guarantor therefrom shall in any event be effective unless the
same shall be in writing, signed by the Agent and be for the specific purpose
for which given. No notice to or
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<PAGE>
demand on Guarantor in any case shall entitle Guarantor to any other or
further notice or demand in similar or other circumstances.
11. NOTICES. All communications or notices between the Agent and
Guarantor provided for herein shall be in writing:
(a) By personal delivery, mail, first class postage prepaid, or by
authenticated telecopy with automatic certification of receipt, and
addressed to the applicable party as set forth below:
IF TO THE GUARANTOR: OEC COMPRESSION CORPORATION
2501 Cedar Springs Road
Dallas, Texas 75201
Attn: Jack Brannon
Title: Senior Vice President, Chief Financial Officer
Telephone No.: (214) 953-9560
Telecopy No.: (214) 953-9561
IF TO THE AGENT: BANK OF SCOTLAND
New York branch
565 Fifth Avenue
New York, NY 10017
Attn: Annie Chin Tat
Title: Vice President
Telephone No.: (212) 450-0800
Telecopy No.: (212) 557-9460
(b) When so delivered, mailed or telecommunicated, all such
communications and notices shall be effective upon dispatch; PROVIDED,
HOWEVER, that communications or notices to the Agent pursuant to any of the
provisions hereof shall be effective upon receipt.
12. GOVERNING LAW. This Guarantee and other instruments or documents
required hereunder shall be governed and interpreted by, and construed under,
the laws of the State of Texas.
13. CONTINUING GUARANTEE; TRANSFER OF THE INDEBTEDNESS. Guarantor
hereby represents and agrees that this is a continuing guarantee, and (a)
shall remain in full force and effect until payment in full of the
Obligations; (b) shall be binding upon Guarantor and its successors; and (c)
shall inure to the benefit of and be enforceable by the Agent, on behalf of
the Bank and Lenders, its successors, transferees and assigns. Without
limiting the generality of the foregoing clause (c), the Agent, on behalf of
the Bank and Lenders, may upon written notice to Guarantor, pursuant to the
Agreement, sell, assign, transfer and/or grant participation in, or otherwise
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dispose of to any other person, firm or corporation, all or part of the
indebtedness of Borrower outstanding pursuant to the Agreement, Notes or
Security Instruments and such subsequent holder of the Obligations, or any
portion thereof, shall thereupon become vested with all the powers and rights
in respect thereof granted to the Agent, Bank and Lenders herein.
14. JURISDICTION. ETC. Guarantor agrees that any legal action or
proceeding with respect to this Guarantee, or the Obligations or any action
or proceeding to execute or otherwise enforce any judgment obtained against
it or any of its property, may be brought in any state or United States
federal court in the State of Texas; provided always that suit may be brought
in the courts of any state or place where Guarantor or any of its assets may
be found, and, by execution and delivery of this Guarantee, Guarantor
irrevocably submits to each such jurisdiction. Guarantor hereby irrevocably
agrees that service of any summons or suit against it hereunder may be made
in any manner permitted by applicable law (including, but not limited to,
mailing a copy of any summons or other legal process in any such action or
proceeding to Guarantor, postage prepaid, or by personally delivering a copy
of same to Guarantor, at its address specified herein). The mailing, personal
service or other permitted service, as herein provided, of such summons or
other legal process in any such action or proceeding in Texas shall be deemed
personal service and accepted by Guarantor as such, and shall be legal and
binding upon Guarantor for all the purposes of any such action or proceeding.
Should Guarantor fail to appear or file a responsive pleading within the
period of time required by law, it shall be deemed in default and judgment
may be entered in favor of Agent, Bank or Lenders against Guarantor for the
amount as demanded in any summons, complaint or other process so served. Any
final judgment against Guarantor in any such legal action or proceeding shall
be conclusive and may be enforced in other jurisdictions according to the
laws of such other jurisdictions (including, but not limited to, the State of
Texas) by suit on the judgment. In addition, Guarantor irrevocably waives any
objection which it may now or hereafter have to the laying of venue of any
suit, action, or proceeding, arising out of or relating to this Guarantee or
the Obligations, brought in any state court or United States federal court of
the State of Texas, and hereby further irrevocably waives any claim that any
such suit, action or proceeding brought in any such court has been brought in
an inconvenient forum.
15. SEVERABILITY. Should any clause, sentence, paragraph or section of
this Guarantee be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the
remainder of this Guarantee, and the parties hereto agree that the part or
parts of this Guarantee so held to be invalid, unenforceable of void will be
deemed to have been stricken herefrom and the remainder will have the same
force and effectiveness as if such part or parts had never been included
herein.
16. CAPITALIZED TERMS. All capitalized terms used but not otherwise
defined in this Guarantee shall bear the respective meanings assigned to them
in the Agreement and Security Instruments.
17. FINAL AGREEMENT. THIS GUARANTEE, TOGETHER WITH THE AGREEMENT, NOTES
AND OTHER LOAN DOCUMENTS IN CONNECTION
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<PAGE>
THEREWITH, REPRESENT THE FINAL GUARANTEE AGREEMENT BETWEEN THE PARTIES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OR PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO WRITTEN ORAL AGREEMENTS BETWEEN
THE PARTIES.
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<PAGE>
IN WITNESS WHEREOF, the parties hereto have duly executed this
Agreement as of the day and year first written above.
OEC COMPRESSION CORPORATION
By:
-------------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
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ASSIGNMENT OF DEPOSIT ACCOUNT,
PLEDGE AND SECURITY AGREEMENT
THIS ASSIGNMENT OF DEPOSIT ACCOUNT, PLEDGE AND SECURITY AGREEMENT
("Pledge Agreement") is made and entered into as of this 30th day of March,
1998, by OUACHITA ENERGY CORPORATION, a Delaware corporation, ("Borrower"),
in favor of BANK OF SCOTLAND, an authorized bank in the United Kingdom
constituted by an Act of the Scots Parliament of 1695 under the laws of
Scotland, acting through its New York branch, as collateral agent ("Agent")
for itself and certain other Lenders defined below.
RECITALS:
A. This Pledge Agreement is the Assignment of Controlled Account
referenced and defined in that certain Amended and Restated Loan Agreement,
dated as of March 30, 1998 ("Loan Agreement"), by and among Borrower, OEC
Compression Corporation (as guarantor), the sole shareholder of Borrower
("Guarantor"), and Agent, on behalf of itself and certain other lenders
defined therein ("Bank Lenders").
B. The execution of this Pledge Agreement is a condition precedent to
Bank Lenders' obligations under the Loan Agreement and is given as security
for and in support of Borrower's indebtedness and liability (i) to Bank
Lenders under the Loan Agreement and other Loan Documents (defined in the
Loan Agreement) executed in connection therewith ("Bank Loan Documents"), and
(ii) pursuant to a Guaranty Agreement, dated as of July 31, 1997, executed by
Borrower to secure Guarantor's obligations and indebtedness to Prudential,
and its assignees and holders of the Pru Notes and Subordinated Notes in
respect of the Pru Debt (as each such term is defined in the Loan Agreement).
C. The Bank Lenders and Prudential are herein collectively called
"Lenders", and the Bank Loan Documents, all documents evidencing and securing
the Pru Debt and the Intercreditor Agreement (described below) are herein
collectively called the "Loan Documents".
D. All other capitalized terms used but not otherwise defined in this
Pledge Agreement shall bear the meanings assigned to them in the Loan
Agreement.
I. PARTIES, COLLATERAL AND OBLIGATIONS
(1) PARTIES AND COLLATERAL. Borrower, for valuable consideration,
receipt of which is hereby acknowledged, hereby grants a security interest
in, assigns and pledges to Agent for the ratable benefit of the Lenders, all
of the following property and all additions, accessions, substitutions,
renewals or extensions thereof in whatever form (hereinafter collectively
called the "Collateral"):
<PAGE>
The whole of, including the principal amount of and all cash from time to
time in, the deposit account and standing to the credit of the Borrower
deposited with Bank of Oklahoma at Bank of Oklahoma Tower, One Williams
Center, 8th Floor - Energy, Tulsa, OK 74192 ("Depository Bank"); Deposit
Account Number: 100968827 in such principal amount therein as on the date
hereof and all increases in, additions to, accretions, renewals or
extensions thereof, together with all proceeds thereof and interest
thereon, and all monies or other income, sums deposited into and benefits
attributable or accruing to said account, which Borrower is or may
hereafter become entitled to receive from said account, whether for
principal, interest, fees, expenses or otherwise.
Upon the execution of this Pledge Agreement by or on behalf of Borrower,
Borrower shall deliver, or cause to be delivered to Agent, the deposit
account, monies, certificates of deposit, deposit receipts, savings or
passbook accounts and bank balances, subject to this Pledge Agreement, and
all receipts and writings evidencing such deposit account; furthermore, if
any deposit account or accounts, money or monies, certificates of deposit,
time deposits, savings or passbook accounts, bank balances are, at any time
or times, included in the Collateral, whether as proceeds or otherwise,
Borrower shall promptly deliver the same to Agent upon the receipt thereof by
Borrower, and in any event, promptly upon demand therefor by Agent. The Agent
shall hold the Collateral to secure the Obligations (defined below) to the
Lenders pursuant to the terms of the Intercreditor Agreement, of even date
herewith, by and between Prudential and Agent and consented to by Borrower
and Guarantor ("Intercreditor Agreement") and the other Loan Documents.
(2) OBLIGATIONS. The security interest granted herein secures the
payment and performance of all indebtedness (whether for principal, interest,
costs, fees, expenses, etc.), liabilities and obligations of Borrower to
Agent and Lenders (hereinafter collectively called the "Obligations") due or
to become due, now existing or hereafter arising (and all modifications,
renewals, extensions, rearrangements, substitutions and replacements of the
Obligations, and any of the same), under the Loan Documents by or from
Borrower to Agent and Lenders, and including all interest, costs and expenses
and attorneys' fees and legal expenses payable by Agent and Lenders in
connection herewith or therewith. Unless otherwise agreed, all of the
Obligations shall be payable at the offices of Agent.
(3) TITLE: RELEASE. Borrower warrants that it is the legal and
beneficial owner of the Collateral, free and clear of all liens and
encumbrances, other than the lien and security interest granted herein. Agent
agrees that during the term of this Pledge Agreement, title in and to the
Collateral is and shall remain in Borrower subject to this assignment,
security interest and pledge to Agent, and provided that Agent shall have all
the rights and remedies regarding the Collateral as set out in this Pledge
Agreement. Upon satisfaction in full of the Obligations, if Agent has no duty
under the Loan Documents to make further loans or grant further financial
accommodation of any kind to Borrower to be secured by the Collateral, Agent
shall release to Borrower the security interest hereby created and release to
Borrower any and all certificates of deposit, deposits, passbooks, bank
balances, instruments or documents of any kind evidencing the Collateral.
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<PAGE>
(4) PRINCIPAL AND INTEREST INCOME AND MONIES. Notwithstanding any other
provision to the contrary herein contained, unless and until a Default or
Event of Default (as defined in the Loan Documents) has occurred, Borrower
may (a) withdraw, keep, retain and spend in any manner it sees fit all
interest earned on the Collateral, and (b) withdraw, spend and utilize, all
principal and other monies and sums standing to the credit of Borrower in
said deposit account, for and in the regular course of operation of
Borrower's business of owning, leasing, renting and selling natural gas
compressors and all parts and equipment therefor.
(5) AGENT'S ROLE. Notwithstanding any other provisions to the contrary
contained herein, Agent holds the Collateral, and all its rights and powers
thereto and therein are to be exercised, on behalf of the Lenders pursuant to
the terms of the Loan Documents and Intercreditor Agreement.
II. RESTRICTION ON ASSIGNED ACCOUNTS
Borrower hereby agrees that no withdrawal, charge against, encumbrance,
sale or other disposition of or encumbrance against any of the Collateral,
except as may be otherwise specifically provided in Section I(4) above or in
the Loan Documents, shall be permitted without the prior written consent of
Agent. Subject to the provisions of said Loan Documents, the Collateral shall
be held for the sole use and subject to the exclusive control of Agent, and
the Collateral may be released only upon the Agent's written direction. Upon
satisfaction in full of the Obligations, the Collateral shall be released as
set forth in Article I, Section 3 above.
III. REMEDIES
If any Event of Default (as defined in the Loan Documents) shall have
occurred:
(1) RIGHTS UNDER UNIFORM COMMERCIAL CODE. Agent may exercise in respect
of the Collateral, in addition to other rights and remedies provided for
herein or otherwise available to it pursuant to the provisions of applicable
law, all the rights and remedies of a secured party on default under the
Uniform Commercial Code (the "Code") (whether or not the Code, by its terms,
applies to the affected Collateral) and also may, without demand or notice of
any kind to Borrower, (a) withdraw, draw or charge against the Collateral,
all or any part of the Obligations when due, by acceleration or otherwise,
including any interest which shall have accrued thereon or which shall be
payable with respect thereto, (b) execute and deliver such drafts and other
instruments and take all such other action as Agent may deem necessary or
appropriate in order to realize upon the Collateral, and the Depository Bank
is hereby authorized to honor drafts drawn by Agent against any of the
Collateral, and (c) the Depository Bank shall hold the Collateral for the
benefit of Agent or its nominees and assignees and permit no further
withdrawals from or charges against the Collateral except in favor of Agent;
PROVIDED, HOWEVER, that the Depository Bank shall be allowed to collect from
the Collateral in its possession a reasonable maintenance charge therefor and
shall be entitled to charge-back against such Collateral for timely and
properly presented return items.
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<PAGE>
(2) TRANSFER OF COLLATERAL. Agent is expressly granted the right, at
its option, after Default and without notice to Borrower, to transfer or
register the Collateral, or any part thereof, in its name, or in the name of
its nominee, and to receive the monies, income, proceeds or benefits
attributable or accruing thereto and to hold the same as security for the
Obligations or to apply the same on the principal and interest or other
amounts owing on any of the Obligations, whether or not then due, in such
order or manner as Agent may elect.
(3) COLLECTION AND WITHDRAWAL OF COLLATERAL. To facilitate the rights
of Agent hereunder, Borrower authorizes Agent, its officers, agents or
assigns, to collect and withdraw all or any part of the Collateral without
notice to or further consent by Borrower, and Borrower constitutes and
appoints Agent the true and lawful attorney of Borrower with power of
substitution to ask, demand, collect, receive, receipt for, sue for, compound
and give acquittance for any and all amounts which may be or become due or
payable under the Collateral, to execute any and all withdrawal receipts or
other orders for the payment of money drawn on the Collateral and to endorse
the name of Borrower on all commercial paper, drafts, checks and other
instruments given in payment or in part payment thereof, and in its
discretion to file any claim or take any other action or proceeding, either
in its own name or in the name of the undersigned or otherwise, which Agent
may deem necessary or appropriate to protect and preserve the right, title
and interest of Agent hereunder.
(4) RIGHT OF SETOFF. Agent may apply or set off such deposits, cash,
sums or other Collateral as it deems fit to satisfy the Obligations.
(5) DEPOSITORY BANK PAYMENTS. Borrower authorizes and directs the
Depository Bank to pay over to Agent, its officers, agents or assigns, upon
demand, all or any part of the Collateral without the Depository Bank making
any inquiries as to the status or balance of the indebtedness of Borrower to
Agent and without any notice to or further consent by Borrower. Borrower
agrees to indemnify the Depository Bank and hold same harmless from all
expenses and losses which it may incur or suffer as a result of any payment
it makes to Agent pursuant to this or the preceding paragraph.
(6) PROOF OF ACTION OR FACTS. All recitals in any instrument of
assignment or any other instrument executed by Agent incident to the sale,
transfer, assignment or other disposition or utilization of the Collateral or
any part thereof hereunder shall be full proof of the matters stated therein
and no other proof shall be required to establish full, legal propriety of
the sale or other action taken by Agent or of any fact, condition or thing
incident thereto and all prerequisites of such sale or other action or of any
fact, condition or other incident thereto shall be presumed conclusively to
have been performed or to have occurred.
(7) MARSHALLING OF ASSETS. All rights to marshalling of assets of
Borrower, including any such right, with respect to the Collateral, are
hereby waived by Borrower.
(8) RIGHT TO NOTICE AND TO CURE DEFAULT. Borrower shall have all rights
to notice and opportunities to cure any Event of Default given to it under
the terms of the Loan Agreement.
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<PAGE>
(9) RIGHT TO TAKE CONTROL OF COLLATERAL. The right of Agent to take
possession or control of the Collateral upon the happening of any of the events
or conditions constituting an Event of Default may be exercised without resort
to any court proceeding or judicial process whatever and without any hearing
whatever thereon; and, in this connection, BORROWER EXPRESSLY WAIVES ANY
CONSTITUTIONAL RIGHTS OF BORROWER WITH REGARD TO NOTICE, ANY JUDICIAL PROCESS OR
HEARING PRIOR TO THE EXERCISE OF THE RIGHT OF AGENT TO TAKE POSSESSION OR
CONTROL OF THE COLLATERAL UPON THE HAPPENING OF ANY OF THE EVENTS OR CONDITIONS
CONSTITUTING AN EVENT OF DEFAULT.
IV. GENERAL
(1) SECURITY INTEREST ABSOLUTE. All rights of Agent and all obligations of
Borrower hereunder shall be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of the Loan Documents, or
any other agreement or instrument relating thereto or executed in
connection therewith or herewith;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Obligations or any other amendment or
waiver of or any consent to any departure from the Loan Documents, or any
other agreement or instrument relating thereto or executed in connection
therewith;
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from any
guaranty, for all or any of the Obligations; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Borrower in respect of the
Obligations or this Pledge Agreement.
(2) COSTS AND EXPENSES. Borrower agrees to pay on demand all reasonable
costs and expenses in connection with the preparation, execution, delivery,
filing, recording and administration of this Pledge Agreement, including,
without limitation, the reasonable fees and out-of-pocket expenses of counsel
for Agent and Lenders with respect thereto and with respect to advising Agent
as to its rights and responsibilities under this Pledge Agreement and with
respect to the Obligations, all stamp and other taxes or fees payable in
connection herewith or with any other documents executed or delivered
herewith and all costs and expenses, if any, in connection with the
enforcement of this Pledge Agreement and the Obligations, including, but not
limited to, the reasonable fees and out-of-pocket expenses of counsel for
Agent and Lenders with respect thereto and costs and expenses in connection
with the custody, preservation, use or operation of, or the sale of, or
collection from, or other realization upon, any of the Collateral.
FURTHERMORE, BORROWER AGREES TO INDEMNIFY AND HOLD HARMLESS AGENT, LENDERS
AND THE DEPOSITORY BANK FROM AND AGAINST ANY AND ALL, STAMP TAXES, FEES,
CLAIMS, LOSSES AND LIABILITIES, INCLUDING ANY
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SUCH NEGLIGENCE OF BORROWER, GROWING OUT OF OR RESULTING FROM THIS PLEDGE
AGREEMENT (INCLUDING, WITHOUT LIMITATION, ENFORCEMENT OF THIS PLEDGE
AGREEMENT) OR ANY OTHER DOCUMENT OR AGREEMENT EXECUTED IN CONNECTION WITH THE
OBLIGATIONS, EXCEPT CLAIMS, LOSSES OR LIABILITIES RESULTING FROM AGENT'S,
LENDER'S OR THE DEPOSITORY BANK'S GROSS NEGLIGENCE OR WILLFUL MISCONDUCT.
(3) PERSONAL LIABILITY OF BORROWER. This Pledge Agreement shall not be
construed as relieving Borrower from full personal liability on the
Obligations secured hereby and for any deficiency thereon.
(4) NO WAIVERS. No delay or omission on the part of Agent in exercising
any right hereunder shall operate as a waiver of any such right or any other
right. A waiver on any one or more occasions shall not be construed as a bar
to or waiver of any right or remedy on any future occasion.
(5) OTHER SECURITY. The execution and delivery of this Pledge
Agreement in no manner shall impair or affect any other security (by
endorsement or otherwise) for the payment of the Obligations and no security
taken hereafter as security for payment of any part or all of the Obligations
shall impair in any manner or affect this Pledge Agreement, all such present
and future additional security to be considered as cumulative security. Any
of the Collateral may be released from this Pledge Agreement without
altering, varying or diminishing in any way the force, effect, lien, security
interest or charge of this Pledge Agreement as to the Collateral not
expressly released, and this Pledge Agreement shall continue as a first lien,
security interest and charge on all of the Collateral not expressly released
until all sums and indebtedness secured hereby have been paid in full. Any
future assignment or attempted assignment or transfer of the interest of
Borrower in and to any of the Collateral shall not deprive Agent of the right
to sell or otherwise dispose of or utilize all of the Collateral as above
provided or necessitate the sale or disposition thereof in parcels or in
severalty.
(6) NOTICES. Any notice or demand to Borrower hereunder or in
connection herewith may be given and shall conclusively be deemed and
considered to have been given pursuant to the terms of the Loan Documents.
(7) SUCCESSORS AND ASSIGNS. All rights of Agent hereunder shall inure
to the benefit of its successors and assigns; and all obligations of Borrower
shall bind its permitted successors or assigns.
(8) FURTHER TERMS DEFINED. As used in this Pledge Agreement and when
required by the context, each number (singular and plural) shall include all
numbers, and each gender shall include both genders; and unless the context
otherwise requires, the word "person" shall include "corporation, firm or
association."
-6-
<PAGE>
(9) GOVERNING LAW. This pledge Agreement shall be governed, construed
and interpreted in accordance with the laws of the State of Texas and of the
United States of America, to the extent applicable.
(10) SEPARABILITY. Wherever possible, each provision of this Pledge
Agreement shall be interpreted in such manner as to be effective and valid
under applicable law. Should any clause, sentence, paragraph, subsection or
Section of this Pledge Agreement be judicially declared to be invalid,
unenforceable or void, such decision will not have the effect of invalidating
or voiding the remainder of this Pledge Agreement, and Borrower agrees that
the part or parts of this Pledge Agreement so held to be invalid,
unenforceable or void will be deemed to have been stricken herefrom and the
remainder will have the same force and effectiveness as if such stricken part
or parts had never been included herein.
(11) FINAL AGREEMENT. THIS PLEDGE AGREEMENT AND OTHER LOAN DOCUMENTS
REPRESENT THE FINAL AGREEMENT BETWEEN THE PARTIES WITH RESPECT TO THE MATTERS
COVERED HEREBY AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR,
CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
(12) COUNTERPARTS. This Pledge Agreement may be executed in any number
of counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
IN WITNESS WHEREOF, the parties have executed this Pledge Agreement
effective as of the date first above written.
OUACHITA ENERGY CORPORATION
By:
---------------------------
Name: Jack D. Brannon
Title: Senior Vice President
BANK OF SCOTLAND, NEW YORK BRANCH, AS AGENT
By:
---------------------------
Name: Annie Chin Tat
Title: Vice President
-7-
<PAGE>
NOTICE OF ASSIGNMENT OF
DEPOSIT ACCOUNT
TO: Bank of Oklahoma, National Association
P. O. Box 2300
One Williams Center
Tulsa, OK 74192
Attached hereto is one signed copy of an Assignment of Deposit Account,
Pledge and Security Agreement (the "Assignment") which assigns Deposit
Account, No. 100968827, and all monies, cash, proceeds and sums deposited
therein, held in the name of Ouachita Energy Corporation, to Bank of
Scotland, New York branch, as security for the payment to such bank, as
collateral agent for itself and certain other Lenders, of certain Obligations
as defined in the Assignment.
Please evidence your receipt of this Notice of Assignment and the
Assignment by executing the Acceptance attached hereto and returning same to
the undersigned in the enclosed self-addressed, stamped envelope. You may
retain the enclosed copy of the Notice of Assignment of Deposit Account (with
a copy of the Assignment attached) for your files.
Until written notice of release from Bank of Scotland is received by
you, please pay the amount in said account directly to Bank of Scotland, New
York branch, on demand, to the extent provided for in said Assignment.
Dated this ___ day of March, 1998.
BANK OF SCOTLAND, NEW YORK BRANCH, AGENT
By:
---------------------------
Name: Annie Chin Tat
Title: Vice President
OUACHITA ENERGY CORPORATION, ACCOUNT
OWNER
By:
---------------------------
Name: Jack D. Brannon
Title: Senior Vice President
<PAGE>
ACCEPTANCE
TO: Bank of Scotland, New York branch
The undersigned hereby accepts the foregoing Notice of Assignment of
Deposit Account, No. 100968827, and all monies, cash, proceeds and sums
deposited therein (the "Account"), in the name of Ouachita Energy Corporation
("Account Owner") to Bank of Scotland, New York branch, as collateral agent
for itself and certain other lenders ("Bank"), and agrees to hold such sums
for your benefit, subject to use by the Account Owner, to pay all sums in the
Account directly to Bank upon written notification to us by Bank that a
Default has occurred under the Loan Agreement entered into by and between
Account Owner and Bank unless you have released same in writing. Our records
do not disclose any liens or claims of any kind against the Account.
We further certify that the officer signing this acknowledgment has
authority to do so.
Dated this _____ day of March, 1998.
BANK OF OKLAHOMA, NATIONAL ASSOCIATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
<PAGE>
ASSIGNMENT OF SECURITY INTEREST IN AIRCRAFT
For value received, BANK OF OKLAHOMA, NATIONAL ASSOCIATION, as
Collateral Agent (the "SECURED PARTY") does hereby sell, assign, and transfer
all of its right, title, and interest in and to the Security Agreement
(Aircraft Chattel Mortgage) and in the Aircraft (defined hereinafter) covered
thereby, unto BANK OF SCOTLAND, New York branch (the "ASSIGNEE") as
collateral agent for itself and certain other Lenders, and Secured Party
hereby authorizes the said Assignee to do every act and thing necessary to
collect and discharge the same. The Secured Party warrants that it is the
owner of a valid security interest in the said Aircraft, but in all other
respects this Assignment is made without warranty or representation of any
kind and without recourse to Secured Party.
The Security Agreement and collateral assigned in this Assignment
consist of a Security Agreement (Aircraft Chattel Mortgage) dated August 5,
1997, filed September 8, 1997, recorded at the Federal Aviation
Administration ("FAA") Aircraft Registry, Oklahoma City, Oklahoma, on
November 18, 1997, under Conveyance Number EE014914, listing the Debtor as
OUACHITA ENERGY CORPORATION, and the Secured Party as BANK OF OKLAHOMA,
NATIONAL ASSOCIATION, as Collateral Agent, on a Beech Model 58P aircraft,
together with all avionics, appliances, equipment, and accessories used in
connection therewith, FAA Registration Number N831JB, Serial Number TJ-279
(the "Aircraft") (collectively, the "SECURITY AGREEMENT").
This Assignment shall be governed, construed and interpreted with the
laws of the State of Texas and the applicable laws of the United States of
America.
Dated this ____ day of March, 1998.
BANK OF OKLAHOMA, NATIONAL ASSOCIATION
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
WITNESS:
- ---------------------------------
Printed Name:
-------------------
- ---------------------------------
Printed Name:
-------------------
<PAGE>
STATE OF OKLAHOMA )
)
COUNTY OF _______ )
BE IT KNOWN, That on this _____ day of March, 1998, before me, the
undersigned authority, personally came and appeared____________________,
_________________ of BANK OF OKLAHOMA, NATIONAL ASSOCIATION, to me personally
known and known by me to be the person whose genuine signature is affixed to
the foregoing document, who signed said document before me and in the
presence of the two witnesses whose names are thereto subscribed as such,
being competent witnesses, and who acknowledged, in my presence and in the
presence of said witnesses, that he/she signed the above and foregoing
document as his/her own free act and deed and for the uses and purposes
therein set forth and apparent.
In witness whereof, the said appearer has signed these presents and I
have hereunto affixed my hand and seal, together with the said witnesses on
the day and date first above written.
My Commission Expires:
---------------------------------
- ------------------------------- Notary Public - State of Oklahoma
STATE OF OKLAHOMA )
)
COUNTY OF _______ )
Personally before me, the undersigned authority, a Notary Public in and for
the County of _________________, State of _______________, there came and
appeared ____________________ and ____________________, the subscribing
witnesses to the foregoing document, well known to me, Notary, who being first
duly sworn, did depose and say:
That they know ________________, the individual described in and who
executed the foregoing document; that they were present and saw said
_______________________ execute the same, and that they thereupon, at the same
time, subscribed their names as witnesses thereto.
--------------------------------
Affiant
--------------------------------
Affiant
Sworn to and subscribed before me, this ____ day of March, 1998.
My Commission Expires:
---------------------------------
- ------------------------------- Notary Public - State of Oklahoma
<PAGE>
PLEDGE AGREEMENT FOR NOTES
AND AFFILIATE RECEIVABLES
THIS PLEDGE AGREEMENT FOR NOTES AND AFFILIATE RECEIVABLES ("Pledge
Agreement"), entered into as of the 30th day of March, 1998, by and between
OUACHITA ENERGY CORPORATION, a Delaware corporation ("Pledgor") whose
principal place of business and chief executive office is at 2501 Cedar
Springs Road, Suite 600, Dallas, Texas 75201 and BANK OF SCOTLAND, an
authorized bank in the United Kingdom, constituted by an Act of the Scots
Parliament of 1695, acting through its New York branch, ("Secured Party"), as
collateral agent for itself and for the Lenders hereinafter described.
WITNESSETH:
RECITALS:
A. This Pledge Agreement is the assignment, pledge or security interest
in any and all intercompany receivables, notes, Debt and obligations in favor
of Borrower from Guarantor or any other affiliate of Borrower referenced in
Section 4.01(n) of that certain Amended and Restated Loan Agreement, dated as
of March 30, 1998 ("Loan Agreement"), by and among Borrower, OEC Compression
Corporation (as guarantor), the sole shareholder of Borrower ("Guarantor"),
and Agent, on behalf of itself and certain other lenders defined therein
("Bank Lenders").
B. The execution of this Pledge Agreement is a condition precedent to
Bank Lenders' obligations under the Loan Agreement and is given as security
for and in support of Borrower's indebtedness and liability (i) to Bank
Lenders under the Loan Agreement and other Loan Documents (defined in the
Loan Agreement) executed in connection therewith ("Bank Loan Documents"), and
(ii) pursuant to a Guaranty Agreement, dated as of July 31, 1997, executed by
Borrower to secure Guarantor's obligations and indebtedness to Prudential,
and its assignees and holders of the Pru Notes and Subordinated Notes in
respect of the Pru Debt (as each such term is defined in the Loan Agreement).
C. The Bank Lenders and Prudential are herein collectively called
"Lenders", and the Bank Loan Documents, all documents evidencing and securing
the Pru Debt and the Intercreditor Agreement (described below) are herein
collectively called the "Loan Documents".
D. All other capitalized terms used but not otherwise defined in this
Pledge Agreement shall bear the meanings assigned to them in the Loan
Agreement.
NOW THEREFORE, for and in consideration of the foregoing premises, the
mutual covenants set forth in this Pledge Agreement and other good and
valuable consideration, the
<PAGE>
receipt and sufficiency of which are hereby acknowledged, the parties hereto
hereby agree as follows:
Section 1. PLEDGE. As collateral security for the due and timely
payment and performance and discharge in full of the obligations and
indebtedness described in Section 2 hereof, Pledgor hereby pledges,
hypothecates, assigns, transfers, sets over and delivers unto Secured Party,
for the ratable benefit of itself and the Lenders, and hereby creates and
grants to Secured Party, for the ratable benefit of itself and the Lenders, a
security interest in (i) any and all promissory notes executed by Affiliates
and any Subsidiary of Pledgor and made payable to Pledgor (the "Pledged
Notes"), whether currently existing or hereinafter executed which are
herewith or hereafter pledged by Pledgor pursuant to this Pledge Agreement, a
description of which is either included on SCHEDULE 1 hereto or will be added
from time to time to SCHEDULE 1 hereto, (ii) any and all accounts receivable,
intercompany debts and obligations for money owed to Pledgor by its
Affiliates and any Subsidiary ("Inter-Company Receivables"), (iii) any and
all cash, interest earned thereon, proceeds, receipts or other property that
may at any time or from time to time hereafter be distributed or received in
respect of, or on account of, or in exchange or substitution for, or upon
conversion of, the Pledged Notes and Inter-Company Receivables, (iv) any and
all renewals, extensions or substitutions of or for any of the Pledged Notes
and InterCompany Receivables, (v) any and all proceeds arising from the sale,
maturity, collection or disposition of any of the foregoing (the Pledged
Notes and Inter-Company Receivables, together with such cash, interest,
proceeds and other property described in this Section 1 being sometimes
hereinafter collectively referred to as the "Collateral"). Secured Party
holds the Collateral as collateral agent for itself and the Lenders subject
to the provisions of the Intercreditor Agreement (as defined in the Loan
Agreement, herein, "Intercreditor Agreement").
Section 2. OBLIGATIONS SECURED. The security interest created hereby
secures the following (collectively, the "Indebtedness"):
(a) LOAN AGREEMENT. Payment of the indebtedness and obligations of
Debtor to Secured Party and Bank Lenders under the Loan Agreement in the
amount of up to $60,000,000 or such lesser amount thereof as specified in
the Loan Agreement, together with any and all revolving credit promissory
notes and term notes at any time outstanding representing all or any part
of the Indebtedness, and any and all renewals, increases, refundings,
substitutions, replacements, consolidations and/or extensions of such
promissory notes, and, without limiting the foregoing, including, but not
limited to, the following (collectively the "Notes"):
(i) that certain Revolving Credit Note of even date herewith in
the original principal amount of $40,000,000 executed by
Debtor (as Borrower), payable to the order of Bank of
Scotland, New York branch, and containing the usual and
customary provisions for collection and attorneys' fees and
any and all renewals, increases, refinancings,
substitutions,
-2-
<PAGE>
replacements, consolidations and/or extensions of such
Revolving Credit Note, or any part thereof;
(ii) any and all Additional Revolving Credit Notes executed by
Debtor (as Borrower) in favor of Additional Lenders, under
the terms of the Loan Agreement; and
(iii) any and all Term Promissory Notes ("Term Notes")
executed by Debtor (as Borrower) in favor of Bank Lenders,
under the terms of the Loan Agreement.
(b) LOAN AGREEMENT; SECURITY INSTRUMENTS. Payment of the indebtedness
and obligations of Debtor (as Borrower) to Secured Party, as agent for
itself and the Bank Lenders and to the Bank Lenders pursuant to the terms
of the Loan Agreement, the Notes and Security Instruments and any and all
renewals, increases, refinancings, substitutions, replacements,
consolidations and extensions of such documents.
(c) PRU DEBT. All obligations and indebtedness of Borrower under its
guaranty in favor of The Prudential Insurance Company of America, and its
assignees and holders ("Prudential") of the Pru Notes and Subordinated
Notes (each as defined in the Loan Agreement; the Pru Notes and
Subordinated Notes, herein collectively called the "Pru Debt").
(d) FUTURE ADVANCES. Repayment of all additional sums as may be
hereafter advanced to Borrower or expended, as provided in the Loan
Documents, by the Secured Party or Lenders or their assigns on behalf of
Borrower or their assigns for any purpose whatsoever and evidenced by
notes, drafts, open account, or otherwise, with interest thereon at rates
as herein provided or if not so provided to be fixed at the time of
advancing or expending such additional sums; PROVIDED, HOWEVER, that the
making of any such advances or expenditures shall be optional with Secured
Party, or its assigns and this Pledge Agreement shall secure the payment of
any and all extensions or renewals and successive extensions or renewals of
the Notes and of any indebtedness at any time owing to Secured Party, or
its assigns, and shall further secure the payment of any and all
indebtedness owing by Borrower to Secured Party.
(e) THIS PLEDGE AGREEMENT. Payment of any and all indebtedness of
Pledgor hereunder and the performance and discharge of each and every
obligation, covenant, and agreement of Pledgor herein contained.
Section 3. REPRESENTATIONS AND WARRANTIES. Pledgor hereby represents and
warrants to Secured Party that:
-3-
<PAGE>
(a) Pledgor is the legal and equitable owner of the Collateral, has
the necessary corporate authority to pledge the Collateral being pledged by
it and holds the same free and clear of all liens, charges, encumbrances
and security interests of every kind and nature; Pledgor has good right and
legal authority to pledge the Collateral being pledged by it in the manner
hereby done or contemplated and will defend its title thereto against the
claims of all persons whomsoever.
(b) No consent or approval of any person, governmental body or
regulatory authority, or of any securities exchange, was or is necessary to
the validity of such pledge, except for the approval of Prudential, which
has been obtained.
(c) All representations and warranties of Pledgor contained in the
Loan Agreement are herein expressly incorporated by reference and are
herein represented and warranted to by Pledgor.
Section 4. EVENTS OF DEFAULT. The term "Default" as used herein, shall
mean (i) the occurrence of any Event of Default, as that term is defined in
the Loan Documents, or (ii) if any representation, warranty or other
information provided or delivered by Pledgor in connection with this Pledge
Agreement is determined to be in any respect false or misleading in any
material respect.
Section 5. REMEDIES UPON DEFAULT. Subject to the provisions of the
Intercreditor Agreement, upon the occurrence and during the continuance of a
Default:
(a) Secured Party shall be entitled to exercise any and all rights
granted to it by the Loan Agreement and this Pledge Agreement.
(b) Secured Party shall be entitled to exercise any and all rights
and remedies of a secured party under the Uniform Commercial Code of the
State of Texas (the "Code"), and any and all rights granted by any other
applicable law or statute, including, without limitation, the right to take
whatever steps it deems reasonably necessary to preserve the value of the
Collateral pledged to it or in which it otherwise has a security interest
and to enforce and realize upon such security interest in such Collateral.
(c) Secured Party may without giving notice to the Pledgor, by
exercise of a right of offset, apply, in the manner set forth in Section 6
below, amounts or funds representing the Collateral to the payment of the
indebtedness secured hereby.
(d) Secured Party may at its option perform or attempt to perform
(but Secured Party shall not be obligated to do so) any of Pledgor's
covenants, duties, liabilities, obligations, or agreements hereunder or
under the Loan Agreement and/or this Pledge Agreement, and any amount
expended by Secured Party in such performance or
-4-
<PAGE>
attempted performance shall become a part of the obligations, and
Pledgor agrees to promptly pay any such amount to Secured Party.
(e) In order to facilitate Secured Party's enforcing its rights and
remedies with respect to the Collateral and in order to allow Secured Party
to preserve the property or interest in property evidenced by the
Collateral, Secured Party may cause the Pledged Notes and Inter-Company
Receivables or any other Collateral to be transferred to its own name and
it may take such actions as are deemed reasonably necessary by it, and
Pledgor will take whatever actions and execute whatever documents are
deemed reasonably necessary by Secured Party, to register any such
transfer.
Secured Party shall not be liable for any action taken in good faith or
believed in good faith to be within the power, authority and discretion given
to Secured Party hereunder or in the Loan Agreement, and Pledgor does hereby
agree that any action so taken by Secured Party shall not be considered as an
impairment of the Collateral, and Pledgor does hereby waive any and all
rights it may have, or may have in the future, if any, to claim discharge
pursuant to Article 3.606(a)(2) of the Code.
No waiver by Secured Party of any Default shall operate as a waiver of
any other Default or of the same Default on a future occasion, and no failure
or delay by Secured Party in exercising any right, power, or privilege
hereunder shall operate as a waiver thereof, and no single or partial
exercise thereof shall preclude any other or further exercise or the exercise
of any other right, power or privilege.
Section 6. APPLICATION OF PROCEEDS OF SALE AND CASH. Subject to the
provisions of the Intercreditor Agreement, the proceeds of any application of
Collateral applied to the indebtedness secured hereby pursuant to Section 5
hereof, and any cash included in the Collateral shall be applied by Secured
Party in the manner set forth in the Loan Documents.
Section 7. REIMBURSEMENT OF SECURED PARTY. The Pledgor hereby agrees to
reimburse Secured Party on demand for all reasonable expenses incurred by it
and Lenders in connection with the administration and enforcement of this
Pledge Agreement, and agrees to indemnify Secured Party and Lenders and hold
them harmless from and against any and all liability incurred by it hereunder
or in connection herewith, unless such liability shall be due to willful
misconduct or gross negligence on the part of Secured Party, any of the
Lenders or its or their employees, agents or representatives.
Section 8. AUTHORITY OF SECURED PARTY. Secured Party shall have and be
entitled to exercise all such powers hereunder as are specifically delegated
to Secured Party by the terms hereof and the Intercreditor Agreement,
together with such powers as are reasonably incidental thereto. Secured Party
may execute any of its duties hereunder by or through agents or employees and
shall be entitled to retain counsel and to act in reliance upon the advise of
such counsel concerning all matters pertaining to its duties hereunder.
-5-
<PAGE>
Section 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
appoints Secured Party as Pledgor's attorney-in-fact for the purpose of
carrying out the provisions of this Pledge Agreement and taking any action
and executing any instrument which it may deem necessary or advisable to
accomplish the purposes hereof, which appointment is irrevocable and coupled
with an interest. Without limiting the generality of the foregoing, Secured
Party shall have the right and power to receive all cash or other proceeds
otherwise payable to the Pledgor representing any interest or other
distribution or amount payable in respect of the Pledged Notes or other
Collateral or any part thereof and to give full discharge for the same.
Section 10. COVENANTS WITH RESPECT TO COLLATERAL. Pledgor agrees with
Secured Party with respect to the Collateral as follows:
(a) Pledgor hereby transfers the Pledged Notes and Inter-Company
Receivables to Secured Party with proper endorsement and instruments of
assignment duly executed. Pledgor covenants that it will cause any
additional notes, instruments or documents issued to or received by Pledgor
with respect to any of the Collateral, whether for value paid by Pledgor or
otherwise, to be forthwith deposited and pledged hereunder, in each case
accompanied by proper endorsement and instruments of assignment duly
executed in blank by Pledgor.
(b) From and after the date hereof, Pledgor (i) shall not and shall
not attempt to encumber, subject to any further pledge or security
interest, sell, transfer or otherwise dispose of any of the Collateral or
any interest therein; (ii) shall not permit or suffer any of the Collateral
to be attached or levied upon or seized in any legal proceedings, or held
by virtue of any lien or distress; and (iii) shall pay promptly all taxes
and assessments upon any of the Collateral.
(c) Pledgor hereby covenants that it will at times from and after the
date hereof, deliver any Pledged Notes and other instruments representing
any of the Collateral to Secured Party as Collateral under this Pledge
Agreement.
Section 11. TERMINATION. This Pledge Agreement will terminate when the
Loan Documents and all obligations secured hereby have been fully paid and
performed, at which time Secured Party shall reassign and deliver to Pledgor,
or to such person or persons as Pledgor shall designate, against receipt,
such of the Collateral (if any) pledged by Pledgor as shall not have been
applied by Secured Party pursuant to the terms hereof and shall still be held
by it hereunder, together with appropriate instruments of reassignment and
release. Any such reassignment shall be without recourse upon or warranty by
Secured Party and at the expense of Pledgor.
Section 12. BINDING AGREEMENT, ASSIGNMENT. This Pledge Agreement, and
the terms, covenants and conditions hereof, shall be binding upon and inure
to the benefit of the parties hereto and to all holders of indebtedness
secured hereby and their respective successors and assigns, except that
Pledgor shall not be permitted to assign this Pledge Agreement or any
interest
-6-
<PAGE>
herein or in the Collateral, or any part thereof, or otherwise pledge,
encumber or grant any option with respect to the Collateral, or any part
thereof, or any cash or property held by Secured Party as Collateral under
this Pledge Agreement.
Section 13. INTEREST CHARGES NOT PERMITTED BY LAW. No provision of
this Pledge Agreement or of the Loan Agreement shall require the payment or
permit the collection of interest in excess of the maximum permitted by law.
If any interest in excess of the maximum permitted by law is provided for in
this Pledge Agreement or in the Loan Agreement or shall be adjudicated to be
so provided, then neither Pledgor nor its successors or assigns shall be
obligated to pay such interest in excess of the amount permitted by law, and
the right to demand the payment of any such excess shall be and hereby is
waived and this provision shall control any other provision of this Pledge
Agreement or of the Loan Agreement.
Section 14. NOTICES. Any notices or other communications required or
permitted to be given by this Pledge Agreement or any other documents and
instruments referred to herein must be given in writing and delivered to the
address and in the manner set forth in the Loan Agreement.
Section 15. CHOICE OF LAW. It is the intention of the parties hereto
that the laws of the State of Texas, excluding its conflicts of law
provisions, should govern the validity of this Pledge Agreement, the
construction of its terms, and the interpretation of the rights and duties of
the parties hereto, and Pledgor hereby agrees and consents that any action or
proceeding against it to enforce the obligations of this Pledge Agreement,
may, at the option of Secured Party, be commenced in any court of competent
jurisdiction and proper venue within the State of Texas, whether State or
Federal, by service of process upon it by first class, registered or
certified mail, return receipt requested, addressed to Pledgor at its then
address for notices pursuant to Section 14.
Section 16. FURTHER ASSURANCES. Pledgor agrees to do such further acts
and things, and to execute and deliver such additional conveyances,
assignments, agreements and instruments, as Secured Party may at any time
request in connection with the administration and enforcement of this Pledge
Agreement or relative to the Collateral or any part thereof or in order
better to assure and confirm unto Secured Party, its rights and remedies
hereunder.
Section 17. EXECUTION IN COUNTERPARTS. This Pledge Agreement may be
executed in any number of counterparts, each of which shall be deemed to be
an original and all of which taken together shall constitute but one and the
same instrument, but only one of which need be produced.
Section 18. HEADINGS. Section headings used herein are for convenience
only and are not to affect the construction of or to be taken into
consideration in interpreting this Pledge Agreement.
-7-
<PAGE>
Section 19. SEVERABILITY. Should any one or more of the provisions
hereof be determined to be illegal or unenforceable, all other provisions
hereof shall be given effect separately therefrom and shall not be affected
thereby.
Section 20. INTERCREDITOR AGREEMENT. Notwithstanding any provision to
the contrary contained herein, all powers, security interests, rights, duties
and benefits granted to and exercisable by Secured Party herein shall be
exercisable for the ratable benefit of the Lenders subject to the provisions
to the Intercreditor Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Pledge Agreement
to be duly executed as of the day first above written.
OUACHITA ENERGY CORPORATION
By:
-----------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
BANK OF SCOTLAND, NEW YORK BRANCH, as
collateral agent for Lenders
By:
-----------------------------------
Name: Annie Chin Tat
Title: Vice President
-8-
<PAGE>
SCHEDULE 1
Description of Notes and Accounts Receivable Pledged and Assigned to
Secured Party:
As of March 30, 1998, there are no specific promissory notes. Any future
promissory notes representing obligations from Affiliates or Subsidiaries in
favor of Pledgor will be listed and supplemented herein from time to time.
<PAGE>
STOCK PLEDGE AND SECURITY AGREEMENT
THIS STOCK PLEDGE AND SECURITY AGREEMENT ("Shares Pledge"), dated
effective March 30, 1998, by and between OEC COMPRESSION CORPORATION, an
Oklahoma corporation, with offices at 2501 Cedar Springs Road, Dallas, Texas
75201 (hereinafter called the "Pledgor") and BANK OF SCOTLAND, acting through
its New York branch, with offices at 565 Fifth Avenue, New York, New York
10017, as collateral agent for itself, as a lender, and certain other Lenders
described below (hereinafter referred to as the "Secured Party").
R E C I T A L S:
(i) On March 30, 1998, Ouachita Energy Corporation ("Borrower"),
Pledgor (as Guarantor) and Bank of Scotland, acting through its New York
branch, as Administrative Agent ("Agent") for itself, as a lender, and
certain other financial institutions who might become lenders to Borrower
under the terms of the Agreement (defined below) (collectively, "Bank
Lenders" individually, as a "Bank Lender"), entered into an Amended and
Restated Loan Agreement ("Agreement"), whereunder Lenders agreed to lend
Borrower amounts up to the Maximum Commitment of each Lender for an
Aggregated Credit not to exceed Sixty Million Dollars ($60,000,000), as set
forth in the Agreement;
(ii) On even date herewith, Borrower executed a Revolving Credit
Note in favor of Agent, in its capacity as a Bank Lender, to evidence
Borrower's Obligations to such Bank Lender under the Agreement (such
Revolving Credit Note, all other Revolving Credit Notes and any Term
Promissory Notes hereafter executed by Borrower in favor of Bank Lenders
under the Agreement are hereafter collectively called the "Notes");
(iii) To better secure the Agreement and Notes, on even date
herewith, (a) Borrower executed certain security instruments in favor of
Agent, and Agent took an assignment of certain other security instruments
executed by Borrower (collectively, "Security Instruments") and (b) Pledgor
entered into a guarantee agreement ("Guarantee"), guaranteeing all
indebtedness and obligations of Borrower under the Agreement and Notes;
(iv) Pledgor owns one thousand (1,000) shares of common stock of
Borrower, representing one hundred percent (100%) of all of the issued and
outstanding shares of voting common stock of Borrower (the "Shares");
(v) As a condition precedent to the Loans made and to be made to
Borrower under the Agreement and Notes, Pledgor agreed to execute this Shares
Pledge;
<PAGE>
(vi) In consideration of consent granted by Prudential (as defined
in the Loan Agreement) to the execution of this Shares Pledge by Pledgor in
favor of Secured Party, this Shares Pledge is given by Pledgor and Secured
Party agrees to hold the Shares as collateral agent for the Bank Lenders and
Prudential and its assignees and all holders of the Pru Notes and
Subordinated Notes (as "Prudential", "Pru Notes" and "Subordinated Notes" and
each defined in the Agreement, which Pru Notes and Subordinated Notes are
herein collectively referred to as the "Pru Debt"); and
(vii) The Agreement, Notes, Security Instruments, Guarantee and all
other loan documents, notes, security agreements executed in connection with
the Agreement and Pru Debt, are herein collectively called the "Loan
Documents", and the Bank Lenders and Prudential are herein collectively
called the "Lenders").
NOW, THEREFORE, in consideration of the premises and covenants contained
herein, to induce Secured Party to make Loans to the Borrower under the
Agreement and Notes, and for other good and valuable consideration, the
receipt of which is hereby acknowledged, Pledgor and Secured Party hereby
agree as follows:
ARTICLE I
GRANT OF SECURITY INTEREST AND PLEDGE
Pledgor, for itself and its successors, assigns, and legal
representatives, hereby pledges and assigns unto Secured Party for the
ratable benefit of itself and the Lenders, and grants to Secured Party, for
the ratable benefit of itself and the Lenders, a first lien and security
interest in, the Collateral (described in Article II of this Shares Pledge)
to secure (a) the punctual payment when due of any and all principal,
interest, Fees, costs, expenses and other sums owed (i) by Borrower under the
Loan Documents, and (ii) by Guarantor under the Guarantee (collectively,
"Indebtedness"), and (b) the due and punctual performance and observance of
all covenants required hereunder or required of Borrower and Guarantor,
respectively, under the Loan Documents and Guarantee, or to be performed or
observed by the Pledgor, Borrower and Guarantor in respect therewith
("Obligations").
ARTICLE II
COLLATERAL
The Collateral subject to this Pledge Agreement (the "Collateral") is:
(a) (i) Certificate No. 1 representing 1,000 shares of common stock,
having 0.01 cent par value, of Ouachita Energy Corporation and all shares
of stock of Ouachita Energy Corporation represented thereby, and (ii) [no
other certificates] (hereinafter collectively called the "Pledged Shares");
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<PAGE>
(b) all dividends, cash, instruments, proceeds, payments, securities,
and other property from time to time received, receivable or otherwise
distributed in respect of or in exchange for any or all of the Pledged
Shares; and
(c) all stock rights, warrants, right to subscribe for, and
additional shares of stock of Ouachita Energy Corporation or any successor
or assignee of Ouachita Energy Corporation from time to time acquired by
Pledgor in any manner, and the certificates representing such additional
shares, and all dividends, cash, instruments, securities, and other
property from time to time received, receivable or otherwise distributed in
respect of or in exchange for any and all of such shares;
PROVIDED, HOWEVER, THAT, notwithstanding any provision herein to the
contrary, unless and until a Default or an Event of Default (as defined in
Article V hereof) has occurred, Pledgor shall, pursuant to the provisions of
the Loan Documents and that certain Intercreditor Agreement referenced and
defined in the Agreement ("Intercreditor Agreement"), be entitled to receive,
use, consume and otherwise appropriate to its own use, any and all cash
dividends and distributions permitted by the provisions of the Loan Documents
and Intercreditor Agreement in connection with the Collateral without any
further consent of the Secured Party or Lenders; PROVIDED, FURTHER that
immediately upon the occurrence of an Event of Default, Pledgor's right to
use and take any such permitted cash dividends and distributions shall cease,
and all cash payments shall revert to the Secured Party's possession and
control as herein provided.
ARTICLE III
DELIVERY OF COLLATERAL
All certificates or instruments representing or evidencing the
Collateral shall be delivered to and held in trust for the benefit of Secured
Party pursuant hereto and shall be in suitable form for transfer by delivery,
or shall be accompanied by duly executed instruments of transfer or
assignment in blank. Subject to the provisions of the Intercreditor
Agreement, Secured Party shall have the right, at any time following the
occurrence of an Event of Default and without notice to Pledgor, to transfer
to or to register in the name of Secured Party any of all of the Collateral.
In the event that Pledgor receives any property that would constitute
Collateral, Pledgor will hold such property in trust for Secured Party and
will immediately deliver same to Secured Party to be held pursuant to this
Shares Pledge.
All Collateral is delivered and pledged to Secured Party by Pledgor
hereunder to be held by Secured Party as collateral agent for the ratable
benefit of the Lenders and all powers and rights exercisable by Secured Party
hereunder shall be subject to the terms of the Intercreditor Agreement.
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<PAGE>
ARTICLE IV
REPRESENTATIONS AND WARRANTIES
Pledgor represents, warrants, and agrees that: (a) this Shares Pledge
has been duly and validly executed and delivered by Pledgor and constitutes a
legal, valid and binding obligation of Pledgor enforceable against it in
accordance with its terms except as the enforceability hereof may be limited
by applicable bankruptcy, moratorium or similar laws relating to the
enforcement of creditors' rights generally; (b) all financial or credit
statements relied upon by and Collateral deposited with Secured Party prior
to, contemporaneously with, or subsequent to the execution of this Shares
Pledge are or will be true, correct complete, valid and genuine; (c) Pledgor
is not a party to any contract or agreement or subject to any restriction
which materially and adversely affects the Collateral, and neither the
execution nor delivery of this Shares Pledge nor compliance with the terms
and provisions hereof will be contrary to the provisions of, or constitute
default under, any law or any regulation, order, writ, injunction or decree
of any court or governmental instrumentality or any agreement (including, but
not limited to, any shareholders' agreement) to which the Pledgor is a party
or by which it is bound or to which it is subject, with the exception of
Pledgor's obligations under all documents given in connection with and to
secure the Pru Debt and Prudential has consented to the execution of this
Shares Pledge; (d) all investment securities, instruments, chattel paper, and
any like property delivered to Secured Party as Collateral (i) are genuine,
free from adverse claims or other security interests, default, prepayment of
defenses; (ii) all persons appearing to be obligated thereon have authority
and capacity to contract and are bound thereon as they appear to be from the
fact thereof; and (iii) the same comply with applicable laws concerning form,
content, and manner of preparation and execution; (e) Pledgor owns the
Collateral and has the right to transfer any interest therein and the Pledged
Shares constitute one hundred percent (100%) of the issued and outstanding
shares of common voting stock of Borrower; (f) the Collateral is not subject
to the interest in or lien of any third person or entity; (g) Pledgor will
not pledge, assign, encumber or grant a security interest in the Collateral
to any person other than Secured Party; (h) Pledgor will defend the
Collateral and its proceeds against the claims and demands of all third
persons; (i) Secured Party's duty with reference to the Collateral shall be
solely to use reasonable care in the custody and preservation of the
Collateral in Secured Party's possession, and Secured Party shall not be
responsible in any way for any depreciation in the value of the Collateral,
nor shall any duty or responsibility whatsoever rest on Secured Party to take
necessary steps to preserve rights against prior parties or to enforce
collection of the Collateral; (i) any demand, notice, protest, and all
demands and notices of any action taken by Secured Party under this Shares
Pledge or in connection with any note or notes, guaranty or other instrument
or agreement, except as otherwise provided in this Shares Pledge, are hereby
waived, and any indulgence of Secured Party, substitution for, or exchange or
release of, Collateral, in whole or in part, or addition or release of any
person liable on the Collateral is hereby assented and consented to; and (k)
Pledgor shall pay prior to delinquency all taxes, charges, liens, and
assessments against the Collateral, and upon Pledgor's failure to do so,
Secured Party at its option may pay any of them and shall be the sole judge
of the legality or validity thereof and the amount necessary to discharge the
same, and Pledgor shall pay to Secured
-4-
<PAGE>
Party on demand all expenses, including reasonable attorneys' fees and legal
expenses incurred or paid by Secured Party in exercising or protecting its
interests, rights, and remedies hereunder.
ARTICLE V
DEFAULT
Pledgor shall be in default under this Shares Pledge upon the happening
of any of the following events or conditions (each of which is herein
referred to as an "Event of Default"): (a) any Event of Default shall occur
under the Loan Documents; or (b) Pledgor defaults in the punctual performance
of any of the obligations, covenants, terms, or provisions contained or
referred to in this Shares Pledge or Guarantee or in any other security
instrument executed and delivered to Secured Party by Pledgor; or (c) any
warranty, representation, or statement contained in this Shares Pledge or
made or furnished to Secured Party in connection with this Shares Pledge
proves to have been false in any material respect when made or furnished; or
(d) any of the Collateral is levied on or seized or attached.
ARTICLE VI
ASSIGNMENT AND REMEDIES
Subject to the provisions of the Intercreditor Agreement, this Shares
Pledge, Secured Party's rights hereunder, and the Indebtedness and
Obligations secured hereby may be assigned from time to time, and in any such
case the assignee shall be entitled to all of the rights, privileges, and
remedies granted in this Shares Pledge to Secured Party, and Pledgor will
assert no claims or defenses it may have against Secured Party or Lenders
against such assignee except those expressly granted in this Shares Pledge.
Secured Party may, at any time following an Event of Default hereunder,
on behalf of the Lenders and subject to the provisions of the Intercreditor
Agreement, transfer the Collateral to itself or its nominees, receive income,
including money, thereon and hold the income as Collateral or apply the
income to any Indebtedness and the manner of said application shall be in the
sole discretion of Secured Party. Secured Party may at any time demand, on
behalf of the Lenders and subject to the provisions of the Intercreditor
Agreement, sue for, collect or make any compromise or settlement with
reference to the Collateral as Secured Party, in its sole discretion,
chooses. Subject to the provisions of the Intercreditor Agreement, Secured
Party may delay exercising or may omit to exercise any right or remedy under
this Shares Pledge without waiving that or any other past, present or future
right or remedy.
In protecting, exercising, or assuring its interests, rights, and
remedies as collateral agent under this Shares Pledge, Secured Party may
execute, sign, and endorse negotiable and other instruments for the payment,
shipment, or storage of any form of Collateral or proceeds on behalf of and
in the name of Pledgor.
-5-
<PAGE>
Subject to the provisions of the Intercreditor Agreement, upon the
occurrence of an Event of Default, and at any time thereafter: (a) Secured
Party shall have, then or at any time thereafter, the rights and remedies
provided by applicable law, including the rights and remedies of a secured
party on default under the Uniform Commercial Code of Texas; and (b) in
addition to the rights and remedies referred to above, Secured Party may, in
its discretion, sell, assign, and deliver all or any part of the Collateral
at any exchange, broker's board or at Secured Party's office or elsewhere, or
at public or private sale without advertisement, for cash, on credit or for
future delivery, upon such terms as Secured Party may deem commercially
reasonable, and Secured Party may bid and become purchaser at any public sale
or at any broker's board, in accordance with applicable securities laws. To
the extent required by law, Secured Party shall give written notice to
Pledgor fifteen (15) days prior to the date of public sale of the Collateral
or prior to the date after which private sale of the Collateral will be made,
by mailing such notice to Pledgor at the address designated at the beginning
of this Shares Pledge with a copy to Borrower at its address set forth in the
Agreement, which notice shall constitute reasonable notification.
All rights and remedies of Secured Party expressed in the Shares Pledge
(including, without limitation, rights and powers granted under Articles VII,
VIII, IX and X hereof) are in addition to all other rights and remedies
possessed by Secured Party in the Loan Documents and in any other agreement
or instrument relating to the Indebtedness, are granted to and exercisable by
Secured Party as collateral agent for ratable benefit of the Lenders, and are
at all times subject to the provisions of the Intercreditor Agreement.
ARTICLE VII
REGISTRATION RIGHTS, PRIVATE SALES, ETC.
If Secured Party shall determine to exercise its rights to sell all or
part of the Collateral pursuant to Article VI hereof, Pledgor agrees that,
upon request of Secured Party, Pledgor will, at its own expense:
(a) execute and deliver, and cause the issuer of the Collateral
contemplated to be sold and the directors and officers thereof to execute
and deliver, all such instruments and documents, and to use its best
efforts to do or cause to be done all such other acts and things as may be
necessary or, in the opinion of Secured Party, advisable to register such
Collateral under the provisions of the Securities Act of 1933, as from time
to time amended (the "Securities Act"), and to do or cause to be done all
such other acts and things as may be necessary to make such sale of the
Collateral or any part thereof valid and binding and in compliance with
applicable law.
(b) Pledgor agrees to indemnify, protect and save harmless Secured
Party and any controlling persons thereof within the meaning of the
Securities Act from and against any and all liabilities, suits, claims,
costs and expenses (including counsel fees and disbursements)
(collectively, "Losses") arising under the Securities Act, the Securities
and
-6-
<PAGE>
Exchange Act of 1934, as amended, or at common law in connection with
the aforesaid registration by an instrument in writing satisfactory to
Secured Party unless such Losses are caused solely by the gross negligence
or willful misconduct of the Secured Party.
ARTICLE VIII
POWER OF ATTORNEY
Pledgor hereby irrevocably appoints Secured Party to be Pledgor's
attorney-in-fact, effective upon and during the continuance of an Event of
Default, with full authority in the place and stead of Pledgor and in the
name of Pledgor, Secured Party or otherwise, from time to time in Secured
Party's discretion, to take any action and to execute any instrument which
Secured Party may deem necessary or advisable to accomplish the purpose of
this Shares Pledge, including, without limitation:
(a) to ask, demand, collect, sue for, recover, compound, receive and
give acquittance and receipts for moneys due and to become due under or in
respect of any of the Collateral;
(b) to receive, endorse and collect any drafts or other instruments,
documents and chattel paper in connection with clause (a) above, and
(c) to file any claims or take any action or institute any
proceedings which Secured Party may deem necessary or desirable for the
collection of any of the Collateral or otherwise to enforce the rights of
Secured Party with respect to any of the Collateral.
ARTICLE IX
RIGHTS AND OBLIGATIONS ABSOLUTE
All rights of Secured Party, all obligations of Pledgor hereunder and
the security interest hereunder, shall, to the extent permitted by applicable
law, be absolute and unconditional, irrespective of:
(a) any lack of validity or enforceability of the Agreement, the
Notes or any of the other Security Instruments or any other agreement or
security document relating thereto or executed in connection with or
pursuant to any Security Instruments;
(b) any change in the time, manner or place of payment of, or in any
other term of, all or any of the Indebtedness or any other amendment or
waiver of or any consent to any departure from the Agreement, the Notes,
any of the other Security Instruments, or any other agreement or instrument
relating thereto or executed in connection with or pursuant to any Security
Instruments;
-7-
<PAGE>
(c) any exchange, release or non-perfection of any other collateral,
or any release or amendment or waiver of or consent to departure from the
Guarantee or any other guaranty, for all or any of the Indebtedness; or
(d) any other circumstances which might otherwise constitute a
defense available to, or a discharge of, Pledgor or any other person that
is a party to any Security Instrument in respect of the Indebtedness.
ARTICLE X
CONTINUING SECURITY INTEREST
This Shares Pledge and the delivery of the Collateral to Secured Party
create a continuing security interest in the Collateral and shall (a) remain
in full force and effect until termination of the obligations of Secured
Party to make the loan and payment in full thereafter of the Indebtedness,
(b) be binding upon Pledgor and its successors and assigns, and (c) inure to
the benefit of Secured Party and its respective successors, transferees and
assigns. Without limiting the generality of the foregoing clause (c), Secured
Party may assign or otherwise transfer any of its rights under this Shares
Pledge to any other person, and such person shall thereupon become vested
with all the benefits in respect thereof granted herein or otherwise to
Secured Party. Upon termination of the obligations under the Loan Documents
and the payment in full thereafter of the Indebtedness and the performance of
all of the Obligations, Pledgor shall be entitled to the return, upon its
request and its expense, of such of the Collateral as shall not have been
sold or otherwise applied pursuant to the terms hereof.
ARTICLE XI
MISCELLANEOUS PROVISIONS
All rights of marshalling of assets of Pledgor, including any such right
with respect to the Collateral, are hereby waived by Pledgor.
All rights, remedies and powers provided in this Shares Pledge may be
exercised only to the extent that the exercise thereof does not violate any
applicable provision of law, and all the provisions of this Shares Pledge are
intended to be subject to all applicable mandatory provisions of law which
may be controlling and to be limited to the extent necessary so that they
will not render this Shares Pledge invalid, unenforceable, in whole or in
part, or not entitled to be recorded, registered or filed under the
provisions of any applicable law.
Should any clause, sentence, paragraph, subsection or Article of this
Shares Pledge be judicially declared to be invalid, unenforceable or void,
such decision will not have the effect of invalidating or voiding the
remainder of this Shares Pledge, and the parties hereto agree that the part
or parts of this Shares Pledge so held to be invalid, unenforceable or void
will be deemed to
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<PAGE>
have been stricken here from by the parties hereto, and the remainder will
have the same force and effectiveness as if such stricken part or parts had
never been included herein.
The pronouns used in this instrument are of neutral gender but shall be
construed as feminine or masculine as the occasion may require. "Secured
Party" and "Pledgor" as used in this instrument include the heirs, executors,
administrators, successors, representatives, receivers, trustees, and assigns
of those parties. This instrument is governed by and is to be governed,
construed and interpreted in accordance with the laws of the State of Texas
and applicable federal law.
The provisions of the Agreement concerning usury and the Maximum Rate of
interest shall apply to all interest which may be contracted for, paid by or
collected from Pledgor under the provisions of this Shares Pledge.
This Shares Pledge may be executed in any number of counterparts, each
of which shall be deemed an original, but all of which together shall
constitute one and the same instrument.
Capitalized terms used but not otherwise defined in this Shares Pledge
shall bear the meanings assigned to them in the Agreement and Security
Instruments.
THIS STOCK PLEDGE AND SECURITY AGREEMENT REPRESENTS THE FINAL AGREEMENT
AND OBLIGATION OF THE PARTIES WITH RESPECT TO THE PLEDGE OF THE SHARES AND
MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
BETWEEN THE PARTIES.
THIS PAGE LEFT INTENTIONALLY BLANK - SIGNATURES ON FOLLOWING PAGE
-9-
<PAGE>
IN WITNESS WHEREOF, the parties hereto have executed and delivered this
Shares Pledge as of the date first above written.
PLEDGOR:
OEC COMPRESSION CORPORATION
By:
-----------------------------
Name: Jack D. Brannon
Title: Senior Vice President
SECURED PARTY:
BANK OF SCOTLAND, NEW YORK BRANCH,
AS AGENT FOR THE LENDERS
By:
-----------------------------
Name: Annie Chin Tat
Title: Vice President
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<PAGE>
STOCK POWER
For full and adequate consideration received, OEC Compression
Corporation hereby sells, assigns and transfers to ____________________________
one thousand (1,000) shares of the voting common stock of Ouachita Energy
Corporation (the "Corporation") now registered in the name of OEC Compression
Corporation on the books of said Corporation, being certificate number 1.
OEC Compression Corporation hereby appoints ___________________ as agent to
transfer the aforesaid stock on the books of the aforenamed Corporation.
Dated effective as of March ___, 1998.
OEC COMPRESSION CORPORATION
By:
-----------------------------
Name: Jack D. Brannon
Title: Senior Vice President
<PAGE>
BANK OF SCOTLAND
New York branch
565 Fifth Avenue
New York, NY 10017
May 14, 1998
Ouachita Energy Corporation
and
OEC Compression Corporation
2501 Cedar Springs Road
Dallas, TX 75201
Gentlemen:
We refer to the Loan Agreement ("Loan Agreement") and Fee Letter
("Original Fee Letter") by and among Bank of Scotland, New York branch, as
Administrative Agent for itself and certain other Lenders ("Bank"), Ouachita
Energy Corporation ("Borrower") and OEC Compression Corporation ("Guarantor")
executed by each party thereto as of March 10, 1998.
Bank confirms that (a) the "Closing" (as defined in the Loan Agreement)
has never occurred and (b) effective as of the March 30, 1998, Bank, Borrower
and Guarantor have agreed to cancel the Loan Agreement and Original Fee
Letter and enter into an Amended and Restated Loan Agreement and new Fee
Letter.
This letter, therefore, cancels, extinguishes and makes VOID AB INITIO
the Loan Agreement and Original Fee Letter forever with effect as if said
Loan Agreement and Original Fee Letter had never come into effect.
If you are in agreement with the provisions of this letter, please
execute same in the space provided below and return an executed original to
us.
BANK OF SCOTLAND, NEW YORK BRANCH
Administrative Agent
By:
-----------------------------
Name: Annie Chin Tat
Title: Vice President
<PAGE>
AGREED:
OUACHITA ENERGY CORPORATION
Borrower
By:
------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
OEC COMPRESSION CORPORATION
Guarantor
By:
------------------------------
Name: Jack D. Brannon
Title: Senior Vice President
DATED: March 30, 1998
<PAGE>
May 14, 1998
SUNTERRA ENERGY CORPORATION
2501 Cedar Springs
Suite 600
Dallas, TX 75201
Gentlemen:
1. Reference in this Release ("Release") is made to the following
documents ("Assigned Documents"):
a. Assignment and Acceptance of Note, Liens and Related Loan
Documents ("Assignment"), dated with effect from March 31, 1998,
executed by Bank of Oklahoma, National Association, as Assignor
and Lender ("BOK"), Bank of Scotland, New York branch, as Agent
and Assignee ("Assignee"), Equity Compressors, Inc. ("ECI"),
Ouachita Energy Corporation ("Ouachita"), OEC Compression
Corporation (formerly called Equity Compression Corporation,
"OEC") and Sunterra Energy Corporation ("Sunterra").
b. Fifth Amended and Restated Revolving Credit and Term Loan
Agreement, dated as of July 31, 1997, by and among BOK, ECI,
Ouachita, OEC and Sunterra ("Assigned Loan Agreement").
c. Intercreditor Agreement, dated as of August 5, 1997,
("Intercreditor Agreement") by and among BOK, ECI, Ouachita, OEC,
Sunterra and The Prudential Insurance Company of America
("Prudential").
d. Sixth Amended and Restated Security Agreement and Assignment,
dated as of December 19, 1997, by and among BOK, ECI, Ouachita,
OEC and Sunterra ("Security Agreement").
e. Promissory Note (Bank Note), dated as of August 5, 1997, executed
by ECI, Ouachita, OEC and Sunterra in favor of BOK ("Assigned
Note").
2. Assignee hereby acknowledges that, pursuant to the Assignment, with
effect from the date hereof, BOK has assigned to Assignee, and Assignee has
accepted assignment of, among other things, the Assigned Loan Agreement,
Intercreditor Agreement, Security Agreement and Assigned Note.
<PAGE>
3. For Ten Dollars ($10.00) and other good and valuable consideration,
the receipt of which is hereby acknowledged, Assignee hereby irrevocably
releases, acquits, discharges, and relinquishes, forever, Sunterra from any
and all obligations, liability and indebtedness to Assignee, as Agent for
itself and certain other lenders, under and pursuant to the Assigned
Documents and any of them.
4. IN CONSIDERATION OF THE RELEASE AND DISCHARGE HEREIN GIVEN TO
SUNTERRA, SUNTERRA HEREBY IRREVOCABLY RELEASES, ACQUITS, DISCHARGES, AND
EXTINGUISHES FOREVER, WITH PREJUDICE, ASSIGNEE FROM ANY AND ALL OBLIGATIONS,
LIABILITY, UNDERTAKINGS, LOSSES, DAMAGES, CAUSES OF ACTION, CLAIMS OR DEMANDS
WHATSOEVER (COLLECTIVELY, "CLAIMS") ARISING OUT OF OR IN CONNECTION WITH THE
ASSIGNED DOCUMENTS (INCLUDING, WITHOUT LIMITATION, CLAIMS ARISING OUT OF THE
NEGLIGENCE, SIMPLE OR GROSS, ACTIVE OR PASSIVE, OF ASSIGNEE, ITS EMPLOYEES OR
AGENTS, IN CONNECTION THEREWITH).
5. By executing this Release in the space provided below, Prudential,
on behalf of itself and its assignees ("Prudential Releasors"), hereby (i)
agrees and consents to the provisions of paragraphs 3 and 4 above and (ii)
irrevocably releases, acquits, discharges and extinguishes forever, with
prejudice, Assignee and all collateral and security of Ouachita and ECI
assigned to Assignee, as Agent for itself and certain other lenders, in and
under the Assigned Documents, from and with respect to any obligations of
Sunterra or OEC to the Prudential Releasors, under or in connection with the
Assigned Documents (except Sunterra's guaranty of the Pru Notes
[as defined in the Assigned Loan Agreement] and any liens held by Prudential
in or over Sunterra's assets, all of which shall continue undisturbed in
favor of Prudential). Prudential agrees that the collateral and security
interests assigned to Assignee pursuant to the Assigned Documents, shall be
held by Assignee, on behalf of itself and said lenders, free and clear from
any obligations, liability or indebtedness of Sunterra to the Prudential
Releasors.
Dated with effect from March 31, 1998.
BANK OF SCOTLAND, NEW YORK BRANCH
as Administrative Agent
By:
------------------------------
Name: Annie Chin Tat
Title: Vice President
<PAGE>
May 14, 1998
Page 3
AGREED:
SUNTERRA ENERGY CORPORATION
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Dated: March 31, 1998
THE PRUDENTIAL INSURANCE COMPANY OF AMERICA
By:
------------------------------
Name:
------------------------------
Title:
------------------------------
Dated: March 31, 1998
<PAGE>
OFFICER'S CERTIFICATE
OF
OUACHITA ENERGY CORPORATION
The undersigned, Jack D. Brannon, Senior Vice President of Ouachita
Energy Corporation (the "Company"), a Delaware corporation, with offices at
2501 Cedar Springs Road, Dallas, Texas 75201, in connection with the Amended
and Restated Loan Agreement dated March 30, 1998 ("Agreement"), from Bank of
Scotland, as lender, to the Company, as borrower, does hereby certify the
following:
1. He is the duly elected, qualified and acting officer of the Company
and that, as such, he is familiar with the facts herein certified and
is duly authorized on behalf of the Company to certify the same;
2. The execution and delivery of the Loan Documents by the Company and
the consummation of all of the transactions therein contemplated and
the fulfillment of, or compliance with, the terms and provisions
thereof, will not contravene the articles of incorporation or by-laws
of the Company or, to the Company's actual knowledge, conflict with or
result in a breach of any law, or any order, rule or regulation
applicable to the Company in any court, federal or state regulatory
body, administrative agency or other governmental body having
jurisdiction over the Company or its properties or operations;
3. Each of the representations and warranties of the Company contained in
Article VI of the Agreement is true and correct as of the date hereof;
and
4. As of the date hereof, the Company has performed all of its
obligations, and has complied with all covenants and conditions
required by the Agreement to be performed or complied with by the
Company, on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this document as of
the ___ day of March, 1998.
----------------------------------------
Jack D. Brannon, Senior Vice President
<PAGE>
OFFICER'S CERTIFICATE
OF
OEC COMPRESSION CORPORATION
The undersigned, Jack D. Brannon, Senior Vice President of OEC
Compression Corporation (the "Company"), an Oklahoma corporation, with
offices at 2501 Cedar Springs Road, Dallas, Texas 75201, in connection with
the Amended and Restated Loan Agreement dated March 30, 1998 ("Agreement"),
from Bank of Scotland, as lender, to the Company, as borrower, does hereby
certify the following:
1. He is the duly elected, qualified and acting officer of the Company
and that, as such, he is familiar with the facts herein certified and
is duly authorized on behalf of the Company to certify the same;
2. The execution and delivery of the Loan Documents by the Company and
the consummation of all of the transactions therein contemplated and
the fulfillment of, or compliance with, the terms and provisions
thereof, will not contravene the articles of incorporation or by-laws
of the Company or, to the Company's actual knowledge, conflict with or
result in a breach of any law, or any order, rule or regulation
applicable to the Company in any court, federal or state regulatory
body, administrative agency or other governmental body having
jurisdiction over the Company or its properties or operations;
3. Each of the representations and warranties of the Company contained in
Article VI of the Agreement is true and correct as of the date hereof;
and
4. As of the date hereof, the Company has performed all of its
obligations, and has complied with all covenants and conditions
required by the Agreement to be performed or complied with by the
Company, on or prior to the date hereof.
IN WITNESS WHEREOF, the undersigned has executed this document as of
the ____ day of March, 1998.
---------------------------------------
Jack D. Brannon, Senior Vice President
<PAGE>
SECRETARY'S CERTIFICATE
OF
OUACHITA ENERGY CORPORATION
The undersigned hereby certifies that he is the duly elected and acting
Secretary of Ouachita Energy Corporation, a Delaware corporation (the
"CORPORATION"), and is authorized to execute and deliver this certificate and
does hereby further certify as follows:
1. That attached as EXHIBIT A to this Certificate is a true and
correct copy of resolutions which were duly adopted by the Board of Directors
of the Corporation in compliance with the Articles of Incorporation and
Bylaws of the Corporation and applicable law, and that the attached
resolutions are in full force and effect as of the date hereof.
2. The following individuals are duly elected officers of the
Corporation and hold the office set forth opposite their respective names as
of the date hereof and the signatures set forth opposite the respective names
and titles of said officers are their true and genuine signatures.
NAME TITLE SIGNATURE
---- ----- ---------
Jack D. Brannon Senior Vice President
-----------------------
----------------------- Secretary -----------------------
This Certificate is executed this ______ day of March, 1998.
-----------------------
Secretary
-----------------------
The undersigned, being the Senior Vice President of OEC Compression
Corporation, hereby confirms that _________________________ is the duly
elected and qualified Secretary of the Corporation and the signature
appearing opposite his name is his genuine signature.
-------------------------------------
<PAGE>
Jack D. Brannon
Senior Vice President
EXHIBIT A
[BOARD RESOLUTIONS TO BE ATTACHED]
<PAGE>
SECRETARY'S CERTIFICATE
OF
OEC COMPRESSION CORPORATION
The undersigned hereby certifies that he is the duly elected and acting
Secretary of OEC Compression Corporation, an Oklahoma corporation (the
"CORPORATION"), and is authorized to execute and deliver this certificate and
does hereby further certify as follows:
1. That attached as EXHIBIT A to this Certificate is a true and
correct copy of resolutions which were duly adopted by the Board of Directors
of the Corporation in compliance with the Articles of Incorporation and
Bylaws of the Corporation and applicable law, and that the attached
resolutions are in full force and effect as of the date hereof.
2. The following individuals are duly elected officers of the
Corporation and hold the office set forth opposite their respective names as
of the date hereof and the signatures set forth opposite the respective names
and titles of said officers are their true and genuine signatures.
NAME TITLE SIGNATURE
---- ----- ---------
Jack D. Brannon Senior Vice President
-----------------------
----------------------- Secretary -----------------------
This Certificate is executed this ______ day of March, 1998.
-----------------------
Secretary
-----------------------
The undersigned, being the Senior Vice President of OEC Compression
Corporation, hereby confirms that ________________________ is the duly
elected and qualified Secretary of the Corporation and the signature
appearing opposite his name is his genuine signature.
----------------------------------------
<PAGE>
Jack D. Brannon
Senior Vice President
EXHIBIT A
[BOARD RESOLUTIONS TO BE ATTACHED]
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