EXHIBIT 10.42
CREDIT AGREEMENT
Dated as of December 20, 1995
Between
MAGNOLIA PIPELINE CORPORATION,
as Borrower
and
COMPASS BANK-HOUSTON,
as Lender
$1,500,000 Reducing Revolving Credit Facility
TABLE OF CONTENTS
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above
Section 1.02 Certain Defined Terms
Section 1.03 Accounting Terms and Determinations
ARTICLE II
Commitments
Section 2.01 Loans and Letters of Credit
Section 2.02 Borrowings and Letters of Credit
Section 2.03 Changes of Commitment
Section 2.04 Fees
Section 2.05 Note
Section 2.06 Prepayments
Section 2.07 Assumption of Risks
Section 2.08 Obligation to Reimburse and to Prepay
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans
Section 3.02 Interest
ARTICLE IV
Payments; Computations; Etc.
Section 4.01 Payments
Section 4.02 Computations
Section 4.03 Set-off
Section 4.04 Taxes
ARTICLE V
Intentionally Left Blank
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding
Section 6.02 Initial and Subsequent Loans
Section 6.03 Conditions Relating to Letters of Credit
ARTICLE VII
Representations and Warranties
Section 7.01 Corporate Existence
Section 7.02 Financial Condition
Section 7.03 Litigation
Section 7.04 No Breach
Section 7.05 Authority
Section 7.06 Approvals
Section 7.07 Use of Loans
Section 7.08 ERISA
Section 7.09 Taxes
Section 7.10 Titles, etc
Section 7.11 No Material Misstatements
Section 7.12 Investment Company Act
Section 7.13 Public Utility Holding Company Act
Section 7.14 Subsidiaries and Partnerships
Section 7.15 Location of Business and Offices
Section 7.16 Defaults
Section 7.17 Environmental Matters
Section 7.18 Compliance with the Law
Section 7.19 Insurance
Section 7.20 Designated Contracts
Section 7.21 Restriction on Liens
Section 7.22 Material Agreements
ARTICLE VIII
Affirmative Covenants
Section 8.01 Financial Statements
Section 8.02 Litigation
Section 8.03 Maintenance, Etc.
Section 8.04 Environmental Matters
Section 8.05 Further Assurances
Section 8.06 Performance of Obligations
Section 8.07 ERISA Information and Compliance
Section 8.08 Change in Management
ARTICLE IX
Negative Covenants
Section 9.01 Debt
Section 9.02 Liens
Section 9.03 Investments, Loans and Advances
Section 9.04 Dividends, Distributions and Redemptions
Section 9.05 Sales and Leasebacks
Section 9.06 Nature of Business
Section 9.07 Mergers, Etc.
Section 9.08 Proceeds of Note
Section 9.09 ERISA Compliance
Section 9.10 Sale or Discount of Receivables
Section 9.11 Tangible Net Worth
Section 9.12 Cash Flow to Debt Service Coverage Ratio
Section 9.13 Environmental Matters
Section 9.14 Transactions with Affiliates
Section 9.15 Subsidiaries and Partnerships
Section 9.16 Negative Pledge Agreements
Section 9.17 Preservation of Designated Contracts
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default
Section 10.02 Remedies
ARTICLE XI
Miscellaneous
Section 11.01 Waiver
Section 11.02 Notices
Section 11.03 Payment of Expenses, Indemnities, etc
Section 11.04 Amendments, Etc.
Section 11.05 Successors and Assigns
Section 11.06 Assignments and Participations
Section 11.07 Invalidity
Section 11.08 Counterparts
Section 11.09 References
Section 11.10 Survival
Section 11.11 Captions
Section 11.12 no oral agreements
Section 11.14 Interest
Section 11.15 Confidentiality
Section 11.16 ERISA
Section 11.17 exculpation provisions
Exhibit A - Form of Note
Exhibit B - Form of Borrowing Request
Exhibit C - Form of Compliance Certificate
Exhibit D - Form of Legal Opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇,
Special Alabama Counsel
Exhibit E - List of Security Instruments
Exhibit F - Form of Letter of Credit Application
Schedule 1.01 - Designated Contracts
Schedule 7.02 - Liabilities
Schedule 7.03 - Litigation
Schedule 7.09 - Taxes
Schedule 7.10 - Titles, etc.
Schedule 7.14 - Subsidiaries and Partnerships
Schedule 7.17 - Environmental Matters
Schedule 7.19 - Insurance
Schedule 7.22 - Material Agreements
Schedule 9.01 - Debt
Schedule 9.02 - Liens
Schedule 9.03 - Investments, Loans and Advances
THIS CREDIT AGREEMENT dated as of December 20, 1995, is
between: MAGNOLIA PIPELINE CORPORATION, a corporation formed under
the laws of the State of Alabama (the "Borrower"); and COMPASS
BANK-HOUSTON, a Texas State Chartered Banking Institution (the
"Lender").
R E C I T A L S
A. The Borrower has requested that the Lender provide
certain loans to and extensions of credit on behalf of the
Borrower.
B. The Lender has agreed to make such loans and extensions
of credit subject to the terms and conditions of this Agreement.
C. In consideration of the mutual covenants and agreements
herein contained and of the loans, extensions of credit and
commitments hereinafter referred to, the parties hereto agree as
follows:
ARTICLE I
Definitions and Accounting Matters
Section 1.01 Terms Defined Above. As used in this Agreement,
the terms "Borrower" and "Lender" shall have the meanings indicated
above.
Section 1.02 Certain Defined Terms. As used herein, the
following terms shall have the following meanings (all terms
defined in this Article I or in other provisions of this Agreement
in the singular to have the same meanings when used in the plural
and vice versa):
"Affiliate" of any Person shall mean (i) any Person directly
or indirectly controlled by, controlling or under common control
with such first Person, (ii) any director or officer of such first
Person or of any Person referred to in clause (i) above, and (iii)
if any Person in clause (i) above is an individual, any member of
the immediate family (including parents, spouse and children) of
such individual and any trust whose principal beneficiary is such
individual or one or more members of such immediate family and any
Person who is controlled by any such member or trust. As used in
this definition, "control" (including, with its correlative
meanings, "controlled by" and "under common control with") shall
mean any Person which owns directly or indirectly 10% or more of
the securities having ordinary voting power for the election of
directors or other governing body of a corporation or 10% or more
of the partnership or other ownership interests of any other Person
(other than as a limited partner of such other Person) will be
deemed to control such corporation or other Person.
"Agreement" shall mean this Credit Agreement, as the same may
from time to time be amended or supplemented.
"Applicable Margin" shall mean 1% per annum.
"Base Rate" shall mean for any day, the higher of (i) the
Federal Funds Rate for any such day or (ii) the Index Rate for such
day. Each change in any interest rate provided for herein based
upon the Base Rate resulting from a change in the Base Rate shall
take effect at the time of such change in the Base Rate.
"Business Day" shall mean any day other than a day on which
commercial banks are authorized or required to close in Houston,
Texas.
"Closing Date" shall mean December 20, 1995.
"Code" shall mean the Internal Revenue Code of 1986, as
amended from time to time and any successor statute.
"Commitment" shall mean the Lender's obligation to make the
Loans pursuant to Section 2.01(a) and to issue Letters of Credit as
provided in Section 2.01(b).
"Debt" shall mean, for any Person the sum of the following
(without duplication): (i) all obligations of such Person for
borrowed money or evidenced by bonds, debentures, notes or other
similar instruments (including principal, interest, fees and
charges); (ii) all obligations of such Person (whether contingent
or otherwise) in respect of bankers' acceptances, letters of
credit, surety or other bonds and similar instruments; (iii) all
obligations of such Person to pay the deferred purchase price of
Property or services (other than for borrowed money); (iv) all
obligations under leases which shall have been, or should have
been, in accordance with GAAP, recorded as capital leases in
respect of which such Person is liable (whether contingent or
otherwise); (v) all obligations under leases which require such
Person or its Affiliate to make payments over the term of such
lease, including payments at termination, which are substantially
equal to at least eighty percent (80%) of the purchase price of the
Property subject to such lease plus interest as an imputed rate of
interest; (vi) all Debt and other obligations of others secured by
a Lien on any asset of such Person, whether or not such Debt is
assumed by such Person; (vii) all Debt (as described in the other
clauses of this definition) and other obligations of others
guaranteed by such Person or in which such Person otherwise assures
a creditor against loss of the Debtor or obligations of others;
(viii) all obligations or undertakings of such Person to maintain
or cause to be maintained the financial position or covenants of
others or to purchase the Debt or Property of others; and (ix)
obligations to deliver goods or services in consideration of
advance payments.
"Default" shall mean an Event of Default or an event which
with notice or lapse of time or both would become an Event of
Default.
"Designated Contracts" shall mean the contracts or agreements
described or referred to on Schedule 1.01.
"Dollars" and "$" shall mean lawful money of the United States
of America.
"Environmental Laws" shall mean any and all Governmental
Requirements pertaining to health or the environment in effect in
any and all jurisdictions in which the Borrower is conducting or at
any time has conducted business, or where any Property of the
Borrower is located, including without limitation, the Oil
Pollution Act of 1990 ("OPA"), the Clean Air Act, as amended, the
Comprehensive Environmental, Response, Compensation, and Liability
Act of 1980 ("CERCLA"), as amended, the Federal Water Pollution
Control Act, as amended, the Occupational Safety and Health Act of
1970, as amended, the Resource Conservation and Recovery Act of
1976 ("RCRA"), as amended, the Safe Drinking Water Act, as amended,
the Toxic Substances Control Act, as amended, the Superfund
Amendments and Reauthorization Act of 1986, as amended, the
Hazardous Materials Transportation Act, as amended, and other
environmental conservation or protection laws. The term "oil"
shall have the meaning specified in OPA, the terms "hazardous
substance" and "release" (or "threatened release") have the
meanings specified in CERCLA, and the terms "solid waste" and
"disposal" (or "disposed") have the meanings specified in RCRA;
provided, however, that (i) in the event either OPA, CERCLA or RCRA
is amended so as to broaden the meaning of any term defined
thereby, such broader meaning shall apply subsequent to the
effective date of such amendment and (ii) to the extent the laws of
the state in which any Property of the Borrower is located
establish a meaning for "oil," "hazardous substance," "release,"
"solid waste" or "disposal" which is broader than that specified in
either OPA, CERCLA or RCRA, such broader meaning shall apply.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended from time to time, and any successor statute.
"ERISA Affiliate" shall mean each trade or business (whether
or not incorporated) which together with the Borrower would be
deemed to be a "single employer" within the meaning of
section 4001(b)(1) of ERISA or subsections (b), (c), (m) or (o) of
section 414 of the Code.
"ERISA Event" shall mean (i) a "Reportable Event" described in
Section 4043 of ERISA and the regulations issued thereunder, (ii)
the withdrawal of the Borrower or any ERISA Affiliate from a Plan
during a plan year in which it was a "substantial employer" as
defined in Section 4001(a)(2) of ERISA, (iii) the filing of a
notice of intent to terminate a Plan or the treatment of a Plan
amendment as a termination under Section 4041 of ERISA, (iv) the
institution of proceedings to terminate a Plan by the PBGC or (v)
any other event or condition which might constitute grounds under
Section 4042 of ERISA for the termination of, or the appointment of
a trustee to administer, any Plan.
"Event of Default" shall have the meaning assigned such term
in Section 10.01.
"Excepted Liens" shall mean: (i) Liens for taxes, assessments
or other governmental charges or levies not yet due or which are
being contested in good faith by appropriate action and for which
adequate reserves have been maintained; (ii) Liens in connection
with workmen'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 and for which adequate reserves have been maintained in
accordance with GAAP; (iii) operators', vendors', 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 or statutory landlord's liens, each of
which is in respect of obligations that have not been outstanding
more than 90 days or which are being contested in good faith by
appropriate proceedings and for which adequate reserves have been
maintained in accordance with GAAP; (iv) any Liens reserved in
leases or farmout agreements for rent or royalties and for
compliance with the terms of the farmout agreements or leases in
the case of leasehold estates, to the extent that any such Lien
referred to in this clause does not materially impair the use of
the Property covered by such Lien for the purposes for which such
Property is held by the Borrower or materially impair the value of
such Property subject thereto; (v) encumbrances (other than to
secure the payment of borrowed money or the deferred purchase price
of Property or services), easements, restrictions, servitudes,
permits, conditions, covenants, exceptions or reservations in any
rights of way or other Property of the Borrower for the purpose of
roads, pipelines, transmission lines, transportation lines,
distribution lines for the removal of gas, oil, coal or other
minerals or timber, and other like purposes, or for the joint or
common use of real estate, rights of way, facilities and equipment,
and defects, irregularities, zoning restrictions and deficiencies
in title of any rights of way or other Property which in the
aggregate do not materially impair the use of such rights of way or
other Property for the purposes of which such rights of way and
other Property are held by the Borrower or materially impair the
value of such Property subject thereto; (vi) deposits of cash or
securities to secure the performance of bids, trade contracts,
leases, statutory obligations and other obligations of a like
nature incurred in the ordinary course of business; and (vii) Liens
permitted by the Security Instruments.
"Federal Funds Rate" shall mean, for any day, the rate per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
equal to the weighted average of the rates on overnight federal
funds transactions with a member of the Federal Reserve System
arranged by federal funds brokers on such day, as published by the
Federal Reserve Bank of New York on the Business Day next
succeeding such day, provided that (i) if the date for which such
rate is to be determined is not a Business Day, the Federal Funds
Rate for such day shall be such rate on such transactions on the
next preceding Business Day as so published on the next succeeding
Business Day, and (ii) if such rate is not so published for any
day, the Federal Funds Rate for such day shall be the average rate
charged to the Lender on such day on such transactions.
"Financial Statements" shall mean the financial statement or
statements of the Borrower described or referred to in Section
7.02.
"GAAP" shall mean generally accepted accounting principles in
the United States of America in effect from time to time.
"Governmental Authority" shall include the country, the state,
county, city and political subdivisions in which any Person or such
Person's Property is located or which exercises valid jurisdiction
over any such Person or such Person's Property, and any court,
agency, department, commission, board, bureau or instrumentality of
any of them including monetary authorities which exercises valid
jurisdiction over any such Person or such Person's Property.
Unless otherwise specified, all references to Governmental
Authority herein shall mean a Governmental Authority having
jurisdiction over, where applicable, the Borrower or any of its
Property or the Lender.
"Governmental Requirement" shall mean any law, statute, code,
ordinance, order, determination, rule, regulation, judgment,
decree, injunction, franchise, permit, certificate, license,
authorization or other directive or requirement (whether or not
having the force of law), including, without limitation,
Environmental Laws, energy regulations and occupational, safety and
health standards or controls, of any Governmental Authority.
"Guarantors" shall collectively mean ▇▇▇ ▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇. ▇▇▇▇▇▇, ▇▇., ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ and MERI.
"Guaranty Agreement" shall mean a separate agreement executed
by each Guarantor in form and substance satisfactory to the Lender
guarantying, unconditionally, payment of the Indebtedness, as the
same may be amended, modified or supplemented from time to time.
"Highest Lawful Rate" shall mean the maximum nonusurious
interest rate, if any, that at any time or from time to time may be
contracted for, taken, reserved, charged or received on the Note or
on other Indebtedness under laws applicable to the Lender which are
presently in effect or, to the extent allowed by law, under such
applicable laws which may hereafter be in effect and which allow a
higher maximum nonusurious interest rate than applicable laws now
allow, but in no event to exceed 18% per annum.
"Indebtedness" shall mean any and all amounts owing or to be
owing by the Borrower to the Lender in connection with the Loan
Documents, and all renewals, extensions and/or rearrangements of
any of the above.
"Indemnified Parties" shall have the meaning assigned such
term in Section 11.03(b).
"Indemnity Matters" shall mean any and all actions, suits,
proceedings (including any investigations, litigation or
inquiries), claims, demands and causes of action made or threatened
against a Person and, in connection therewith, all losses,
liabilities, damages (including, without limitation, consequential
damages) or reasonable costs and expenses of any kind or nature
whatsoever incurred by such Person whether caused by the sole or
concurrent negligence of such Person seeking indemnification.
"Index Rate" shall mean, on any day, the prime rate as
published in The Wall Street Journal's "Money Rates" table for such
day. If multiple prime rates are quoted in such table, then the
highest prime rate quoted therein shall be the Index Rate. In the
event that a prime rate is not published in The Wall Street
Journal's "Money Rates" table, the Lender will choose a substitute
Index Rate, for purposes of calculating the Base Rate, which is
based on comparable information, until such time as a prime rate is
published in The Wall Street Journal's "Money Rates" tables.
"Initial Funding" shall mean the funding of the initial Loans
pursuant to Section 6.01 hereof.
"LC Commitment" at any time shall mean $250,000.00.
"LC Exposure" at any time shall mean the aggregate face amount
of all undrawn and uncancelled Letters of Credit and the aggregate
of all amounts drawn under all Letters of Credit and not yet
reimbursed.
"Letters of Credit Application" shall mean a letter of credit
application, in the form of Exhibit F hereto, delivered to the
Lender requesting the issuance, reissuance, extension or renewal of
any Letter of Credit and containing the information set forth in
Section 2.02(e).
"Letters of Credit" shall mean the letters of credit issued
pursuant to Section 2.01(b) and all reimbursement obligations
pertaining to any such letters of credit, and "Letter of Credit"
shall mean any one of the Letters of Credit and the reimbursement
obligations pertaining thereto.
"Lien" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of
the Property, whether such interest is based on the common law,
statute or contract, and whether such obligation or claim is fixed
or contingent, and including but not limited to (i) the lien or
security interest arising from a mortgage, encumbrance, pledge,
security agreement, conditional sale or trust receipt or a lease,
consignment or bailment for security purposes. The term "Lien"
shall include reservations, exceptions, encroachments, easements,
rights of way, covenants, conditions, restrictions, leases and
other title exceptions and encumbrances affecting Property. For
the purposes of this Agreement, the Borrower shall be deemed to be
the owner of any Property which it has acquired or holds subject to
a conditional sale agreement, or leases under a financing lease or
other arrangement pursuant to which title to the Property has been
retained by or vested in some other Person in a transaction
intended to create a financing.
"Loan Documents" shall mean this Agreement, the Note, the
Letters of Credit and the Security Instruments.
"Loans" shall mean the loans as provided for by Section
2.01(a).
"Material Adverse Effect" shall mean any material and adverse
effect on (i) the assets, liabilities, financial condition,
business, operations or affairs of the Borrower different from
those reflected in the Financial Statements or from the facts
represented or warranted in this Agreement or any Security
Instrument, or (ii) the ability of the Borrower to carry out its
business as at the Closing Date or as proposed as of the Closing
Date to be conducted or meet its obligations under the Loan
Documents on a timely basis.
"Material Change" shall mean a change in the ownership of the
shares of stock of the Borrower such that a Person (or group of
Persons acting together) other than a holder of stock of the
Borrower on the Closing Date acquires a direct or indirect interest
in more than 50% of the voting power of the voting stock of the
Borrower.
"Maximum Credit Amount" at any time shall equal $1,500,000.00,
subject to reductions in such amount in accordance with Section
2.03.
"MERI" shall mean Midcoast Energy Resources, Inc., a Nevada
corporation.
"MERI CD" shall mean Certificate of Deposit No. 728275 in the
principal amount of $50,000, as such principal amount may be
increased from time to time, payable to MERI and issued by the
Lender on December 20, 1995.
"Mortgaged Property" shall mean the Property owned by the
Borrower and which is subject to the Liens existing and to exist
under the terms of the Security Instruments.
"Multiemployer Plan" shall mean a Plan defined as such in
Section 3(37) or 4001(a)(3) of ERISA.
"Note" shall mean the Note provided for by Section 2.05,
together with any and all renewals, extensions for any period,
increases, rearrangements, substitutions or modifications thereof.
"Other Taxes" shall have the meaning assigned such term in
Section 4.04(b).
"PBGC" shall mean the Pension Benefit Guaranty Corporation or
any entity succeeding to any or all of its functions.
"Person" shall mean any individual, corporation, company,
voluntary association, partnership, joint venture, trust,
unincorporated organization or government or any agency,
instrumentality or political subdivision thereof, or any other form
of entity.
"Plan" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA, which (i) is currently or
hereafter sponsored, maintained or contributed to by the Borrower
or an ERISA Affiliate or (ii) was at any time during the preceding
six calendar years, sponsored, maintained or contributed to, by the
Borrower or an ERISA Affiliate.
"Post-Default Rate" shall mean, in respect of any principal of
any Loan or any other amount payable by the Borrower under this
Agreement or the Note which is not paid when due (whether at stated
maturity, by acceleration or otherwise), a rate per annum during
the period commencing on the due date until such amount is paid in
full or the default is cured or waived equal to 5% per annum above
the Base Rate as in effect from time to time plus the Applicable
Margin (if any), but in no event to exceed the Highest Lawful Rate.
"Principal Office" shall mean the principal office of the
Lender, presently located at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇,
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇.
"Property" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"Quarterly Dates" shall mean the first day of each January,
April, July and October, in each year, the first of which shall be
April 1, 1996; provided, however, that if any such day is not a
Business Day, such Quarterly Date shall be the next succeeding
Business Day.
"Responsible Officer" shall mean, as to any Person, the Chief
Executive Officer, the President or any Vice President of such
Person and, with respect to financial matters, the term
"Responsible Officer" shall include the Controller of such Person.
Unless otherwise specified, all references to a Responsible Officer
herein shall mean a Responsible Officer of the Borrower.
"Revolving Credit Period" shall mean the period from the
Closing Date to and ending on the Revolving Credit Termination
Date.
"Revolving Credit Termination Date" shall mean, unless the
Commitment is sooner terminated pursuant to Sections 2.03(b) or
10.02 hereof, January 15, 1999.
"SEC" shall mean the Securities and Exchange Commission or any
successor Governmental Authority.
"Security Instruments" shall mean the Letters of Credit, the
agreements or instruments described or referred to in Exhibit E,
and any and all other agreements or instruments now or hereafter
executed and delivered by the Borrower or any other Person (other
than participation or similar agreements between the Lender and any
other lender or creditor with respect to any Indebtedness pursuant
to this Agreement) in connection with, or as security for the
payment or performance of the Note, this Agreement, or
reimbursement obligations under the Letters of Credit, as such
agreements may be amended, supplemented or restated from time to
time.
"Tangible Net Worth" shall mean, as at any date, the sum of
the following for the Borrower determined (without duplication) in
accordance with GAAP:
(i) the amount of preferred stock and common stock at
par plus the amount of capital surplus of the Borrower,
plus
(ii) the retained earnings (or, in the case of a retained
earnings deficit, minus the amount of such deficit), minus
(iii) the sum of the following:
cost of treasury shares and the book value of all assets
of the Borrower which should be classified as intangibles
(without duplication of deductions in respect of items
already deducted in arriving at surplus and retained
earnings) but in any event including as such intangibles
the following: goodwill, research and development costs,
trademarks, trade names, copyrights, patents and
franchises, unamortized debt discount and expense, all
reserves and any writeup in the book value of assets
resulting from a revaluation thereof or resulting from
any changes in GAAP subsequent to October 31, 1995.
"Taxes" shall have the meaning assigned such term in
Section 4.04(a).
Section 1.03 Accounting Terms and Determinations. Unless
otherwise specified herein, all accounting terms used herein shall
be interpreted, all determinations with respect to accounting
matters hereunder shall be made, and all financial statements and
certificates and reports as to financial matters required to be
furnished to the Lender hereunder shall be prepared, in accordance
with GAAP, applied on a basis consistent with the audited financial
statements of the Borrower referred to in Section 7.02 (except for
changes concurred with by the Borrower's independent public
accountants).
ARTICLE II
Commitments
Section 2.01 Loans and Letters of Credit.
(a)Loans. The Lender agrees, on the terms of this
Agreement, to make Loans to the Borrower during the period
from and including the Closing Date to and up to, but
excluding, the Revolving Credit Termination Date in an
aggregate principal amount at any one time outstanding up to
but not exceeding the Maximum Credit Amount as then in effect;
provided, however, that the aggregate principal amount of all
such Loans by the Lender hereunder at any one time outstanding
together with the LC Exposure shall not exceed the Maximum
Credit Amount. Subject to the terms of this Agreement, during
the period from the Closing Date to and up to, but excluding,
the Revolving Credit Termination Date, the Borrower may
borrow, repay and reborrow the amount described in this
Section 2.01(a).
(b)Letters of Credit. During the period from and
including the Closing Date but excluding the Revolving Credit
Termination Date, the Lender agrees to extend credit for the
account of the Borrower at any time and from time to time by
issuing renewing extending or reissuing Letters of Credit;
provided however, the LC Exposure at any one time outstanding
shall not exceed the lesser of (i) the LC Commitment or (ii)
the Maximum Credit Amount, as then in effect, minus the
aggregate principal amount of all Loans then outstanding.
Section 2.02 Borrowings and Letters of Credit.
(a) Borrowings. The Borrower shall give the Lender
advance notice as hereinafter provided of each borrowing
hereunder, which shall specify the aggregate amount of such
borrowing and the date (which shall be a Business Day) of the
Loans to be borrowed.
(b) Minimum Amounts. All borrowings shall be in amounts
of at least $25,000 or the remaining balance of the Maximum
Credit Amount, if less, or any whole multiple of $10,000 in
excess thereof.
(c) Notices. All borrowings shall require advance
written notice to the Lender in the form of Exhibit B hereto
(or telephonic notice promptly confirmed by such a written
notice), which in each case shall be irrevocable, from the
Borrower to be received by the Lender not later than 11:00
a.m. Houston, Texas time on the date of such borrowing.
Without in any way limiting the Borrower's obligation to
confirm in writing any telephonic notice, the Lender may act
without liability upon the basis of telephonic notice believed
by the Lender in good faith to be from the Borrower prior to
receipt of written confirmation. In each such case, the
Borrower hereby waives the right to dispute the Lender's
record of the terms of such telephonic notice except in the
case of gross negligence or willful misconduct by the Lender.
(d) Advances. Not later than 11:00 a.m. Houston, Texas
time on the date specified for each borrowing hereunder, the
Lender shall make available the amount of the Loan to be made
on such date in immediately available funds, for the account
of the Borrower. The amount shall, subject to the terms and
conditions of this Agreement, be made available to the
Borrower by transferring the same, in immediately available
funds, to an account of the Borrower, designated by the
Borrower and maintained at the Principal Office.
(e) Letters of Credit. The Borrower shall give the
Lender a Letter of Credit Application to be received by the
Lender not later than 11:00 a.m. Houston, Texas time not less
than three (3) Business Days prior thereto of each request for
the issuance, renewal or extension of a Letter of Credit
hereunder which request shall specify the amount of such
Letter of Credit, the date (which shall be a Business Day)
such Letter of Credit is to be issued, renewed or extended,
the duration thereof, the name and address of the beneficiary
thereof and such other information as the Lender may
reasonably request all of which shall be reasonably
satisfactory to the Lender. Subject to the terms and
conditions of this Agreement, on the date specified for the
issuance, renewal or extension of a Letter of Credit, the
Lender shall issue such Letter of Credit to the beneficiary
thereof.
The Lender will send to the Borrower, immediately upon
issuance of any Letter of Credit, or an amendment thereto, a
true and complete copy of such Letter of Credit, or such
amendment thereto.
Section 2.03 Changes of Commitment.
(a) Commencing on February 1, 1996, and on the first day
of each calendar month thereafter, the Maximum Credit Amount
shall be reduced by an amount equal to $17,860.00. The amount
of such reduction in the Maximum Credit Amount may be adjusted
from time to time based upon semi-annual reviews performed by
the Lender at its option.
(b) The Borrower shall have the right to terminate or to
reduce the amount of the Maximum Credit Amount at any time or
from time to time upon not less than three (3) Business Days'
prior notice to the Lender of each such termination or
reduction, which notice shall specify the effective date
thereof and the amount of any such reduction (which shall not
be less than $100,000 or any whole multiple of $10,000 in
excess thereof) and shall be irrevocable and effective only
upon receipt by the Lender.
(c) The Lender reserves the right, for any reason, to
redetermine at any time and from time to time the Maximum
Credit Amount upon 30 Business Days prior written notice to
the Borrower. Each such redetermination will be made using
Lender's then existing credit and engineering standards.
(d) The Maximum Credit Amount once terminated or reduced
may not be reinstated, without the credit approval of the
Lender.
Section 2.04 Fees.
(a) The Borrower shall pay to the Lender a commitment
fee on the daily average unused amount of the Maximum Credit
Amount for the period from and including the Closing Date up
to but excluding the earlier of the date the Commitment is
terminated or the Revolving Credit Termination Date, at a rate
per annum equal to 1/2 of 1%. Accrued commitment fees shall
be payable quarterly in arrears on each Quarterly Date and on
the earlier of the date the Commitment is terminated or the
Revolving Credit Termination Date.
(b) The Borrower agrees to pay the Lender commissions
for issuing the Letters of Credit on the daily average
outstanding of the maximum liability of the Lender existing
from time to time under such Letter of Credit (calculated
separately for each Letter of Credit) at the rate of 1 1/2%
per annum, provided that each Letter of Credit shall bear a
minimum commission of $500.00 and that each Letter of Credit
shall be deemed to be outstanding up to the full face amount
of the Letter of Credit until the Lender has received the
cancelled Letter of Credit or a written cancellation of the
Letter of Credit from the beneficiary of such Letter of Credit
in form and substance acceptable to the Lender or for any
reductions in the amount of the Letter of Credit (other than
from a drawing), written notification from the Borrower. Such
commissions are payable quarterly in arrears on each Quarterly
Date.
(c) The Borrower agrees to pay the Lender an engineering
fee of $2,500 for (i) each semi-annual engineering review
conducted by the Lender after the Closing Date, and (ii) each
other engineering review conducted by the Lender at the
request of the Borrower.
(d) The Borrower agrees to pay the Lender a facility fee
of $15,000. $7,500 of such fee has been paid, with the
balance of $7,500 being payable on the Closing Date.
Section 2.05 Note. The Loans shall be evidenced by a single
promissory note of the Borrower in substantially the form of
Exhibit A hereto, dated the Closing Date, payable to the order
of the Lender in a principal amount equal to the Commitment
and otherwise duly completed. The date and amount of each
Loan and all payments made on account of the principal
thereof, shall be recorded by the Lender on its books for the
Note, and, prior to any transfer, endorsed by the Lender on
the schedule attached to such Note or any continuation
thereof. Such records shall be deemed conclusive absent
manifest error.
Section 2.06 Prepayments.
(a) The Borrower may prepay the Loans upon not less than
one (1) Business Day's prior notice to the Lender, which
notice shall specify the prepayment date (which shall be a
Business Day) and the amount of the prepayment (which shall be
at least $50,000 or the remaining principal balance
outstanding on the Note) and shall be irrevocable and
effective only upon receipt by the Lender, provided that
interest on the principal prepaid, accrued to the prepayment
date, shall be paid on the prepayment date.
(b) (i) If, after giving effect to any termination or
reduction of the Commitment pursuant to Sections 2.03(a)
or (b), the outstanding aggregate principal amount of the
Loans plus the LC Exposure exceeds the Commitment, the
Borrower shall prepay the Loans on the date of such
termination or reduction in an aggregate principal amount
equal to the excess, together with interest on the
principal amount paid accrued to the date of such
prepayment and, if any excess remains after prepaying all
of the Loans, pay to the Lender an amount equal to the
excess to be held as cash collateral as provided in
Section 2.08(b) hereof.
(ii) If, after giving effect to any redetermination of
the Commitment pursuant to Section 2.03(c), the
outstanding aggregate principal amount of the Loans plus
the LC Exposure exceeds the Commitment, then the Borrower
shall within the 30 Business Days provided for in Section
2.03(c): (i) prepay the Loans in an aggregate principal
amount equal to the excess, together with interest on the
principal amount paid accrued to the date of such
prepayment and, if any excess remains after prepaying all
of the Loans, pay to the Lender an amount equal to the
excess to be held as cash collateral as provided in
Section 2.08(b) hereof; (ii) grant to the Lender, as
security for the Note and other Indebtedness, a first-
priority Lien (subject only to Excepted Liens) on
Property of the Borrower of a character and value
satisfactory to the Lender in its sole discretion; such
Lien to be created and perfected by and in accordance
with the provisions of deeds of trust, security
agreements and financing statements, or other Security
Instruments, all in form and substance satisfactory to
the Lender in its sole discretion and in sufficient
executed (and acknowledged where necessary or
appropriate) counterparts for recording purposes; or
(iii) effect any combination of the alternatives
described in clauses (i) and (ii) of this Section and
acceptable to the Lender in its sole discretion.
(c) Prepayments permitted or required under this Section
2.06 shall be without premium or penalty. Any prepayment
made during the Revolving Credit Period may be reborrowed
subject to the then effective Commitment.
Section 2.07 Assumption of Risks. The Borrower assumes
all risks of the acts or omissions of any beneficiary of any Letter
of Credit or any transferee thereof with respect to its use of such
Letter of Credit. Neither the Lender (except in the case of
willful misconduct or bad faith on the part of the Lender or any of
its employees) nor its correspondents shall be responsible for the
validity, sufficiency or genuineness of certificates or other
documents or any endorsements thereon, even if such certificates or
other documents should in fact prove to be invalid, insufficient,
fraudulent or forged; for errors, omissions, interruptions or
delays in transmissions or delivery of any messages by mail, telex,
or otherwise, whether or not they be in code; for errors in
translation or for errors in interpretation of technical terms; the
validity or sufficiency of any instrument transferring or assigning
or purporting to transfer or assign any Letter of Credit or the
rights or benefits thereunder or proceeds thereof, in whole or in
part, which may prove to be invalid or ineffective for any reason;
the failure of any beneficiary or any transferee of any Letter of
Credit to comply fully with conditions required in order to draw
upon any Letter of Credit; or for any other consequences arising
from causes beyond the Lender's control or the control of its
correspondents. In addition, the Lender shall not be responsible
for any error, neglect, or default of any of its correspondents;
and none of the above shall affect, impair or prevent the vesting
of the Lender's or its rights or powers hereunder, all of which
rights shall be cumulative. The Lender and its correspondents may
accept certificates or other documents that appear on their face to
be in order, without responsibility for further investigation of
any matter contained therein regardless of any notice or
information to the contrary. In furtherance and not in limitation
of the foregoing provisions, the Borrower agrees that any action,
inaction or omission taken or not taken by the Lender or by any
correspondent for the Lender in good faith in connection with any
Letter of Credit, or any related drafts, certificates, documents or
instruments, shall be binding on the Borrower and shall not put the
Lender or its correspondents under any resulting liability to the
Borrower.
Section 2.08 Obligation to Reimburse and to Prepay.
(a) If a disbursement by the
Lender is made under any Letter of Credit, the Borrower shall
pay to the Lender within two (2) Business Days after notice of
any such disbursement is received by the Borrower, the amount
of each such disbursement made by the Lender under the Letter
of Credit (if such payment is not sooner effected as may be
required under this Section 2.08 of this Agreement or under
other provisions of the Letter of Credit) together with
interest on the amount disbursed from and including the date
of disbursement until payment in full of such disbursed amount
at a varying rate per annum equal to (i) the then applicable
interest rate for Base Rate Loans through the second Business
Day after notice of such disbursement is received by the
Borrower and (ii) the Post-Default Rate for Base Rate Loans
(but in no event to exceed the Highest Lawful Rate) for the
period from and including the third Business Day following the
date of such disbursement to and including the date of
repayment in full of such disbursed amount. The obligations
of the Borrower under this Agreement and each 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 limitation, but only to the fullest extent permitted
by applicable law, the following circumstances: (i) any lack
of validity or enforceability of this Agreement, any Letter of
Credit or any of the Security Instruments; (ii) any amendment
or waiver of (including any default), or any consent to
departure from this Agreement (except to the extent permitted
by any amendment or waiver), any Letter of Credit or any of
the Security Instruments; (iii) the existence of any claim,
set-off, defense or other rights which the Borrower may have
at any time against the beneficiary of any Letter of Credit or
any transferee of any Letter of Credit (or any Persons for
whom any such beneficiary or any such transferee may be
acting), the Lender or any other Person, whether in connection
with this Agreement, any Letter of Credit, the Security
Instruments, the transactions contemplated hereby or any
unrelated transaction; (iv) any statement, certificate, draft,
notice or any other document presented under any Letter of
Credit proves to have been forged, fraudulent, insufficient or
invalid in any respect or any statement therein proves to have
been untrue or inaccurate in any respect whatsoever; (v)
payment by the Lender under any Letter of Credit against
presentation of a draft or certificate which appears on its
face to comply, but does not comply, with the terms of such
Letter of Credit; and (vi) any other circumstance or happening
whatsoever, whether or not similar to any of the foregoing.
Notwithstanding anything in this Agreement to the contrary,
the Borrower will not be liable for payment or performance
that results from the gross negligence or willful misconduct
of the Lender, except (i) where the Borrower actually recovers
the proceeds for itself or the Lender of any payment made by
the Lender in connection with such gross negligence or willful
misconduct or (ii) in cases where the Lender makes payment to
the named beneficiary of a Letter of Credit.
(b) In the event of the occurrence of any Event of Default, a
payment or prepayment pursuant to Section 2.06(b) hereof or
the maturity of the Note, whether by acceleration or
otherwise, an amount equal to the LC Exposure shall be deemed
to be forthwith due and owing by the Borrower to the Lender as
of the date of any such occurrence; and the Borrower's
obligation to pay such amount shall be absolute and
unconditional, without regard to whether any beneficiary of
any such Letter of Credit has attempted to draw down all or a
portion of such amount under the terms of a Letter of Credit,
and, to the fullest extent permitted by applicable law, shall
not be subject to any defense or be affected by a right of
set-off, counterclaim or recoupment which the Borrower may now
or hereafter have against any such beneficiary, the Lender or
any other Person for any reason whatsoever. Such payments
shall be held by the Lender as cash collateral securing the LC
Exposure in an account or accounts at the Principal Office;
and the Borrower hereby grants to and by its deposit with the
Lender grants to the Lender a security interest in such cash
collateral. In the event of any such payment by the Borrower
of amounts contingently owing under outstanding Letters of
Credit and in the event that thereafter drafts or other
demands for payment complying with the terms of such Letters
of Credit are not made prior to the respective expiration
dates thereof, the Lender agrees, if no Event of Default has
occurred and is continuing or if no other amounts are
outstanding under any of the Loan Documents, to remit to the
Borrower amounts for which the contingent obligations
evidenced by the Letters of Credit have ceased.
ARTICLE III
Payments of Principal and Interest
Section 3.01 Repayment of Loans. The Borrower will pay to
the Lender, the principal payments required by this Section 3.01.
On the Revolving Credit Termination Date the Borrower shall repay
the outstanding principal amount of the Note.
Section 3.02 Interest. The Borrower will pay to the Lender
interest on the unpaid principal amount of each Loan for the period
commencing on the date such Loan is made to but excluding the date
such Loan shall be paid in full, at the Base Rate (as in effect
from time to time) plus the Applicable Margin, but in no event to
exceed the Highest Lawful Rate.
Notwithstanding the foregoing, the Borrower will pay to the Lender
interest at the applicable Post-Default Rate on any principal of
any Loan, and (to the fullest extent permitted by law) on any other
amount payable by the Borrower hereunder, under any Security
Instrument or under the Note which shall not be paid in full when
due (whether at stated maturity, by acceleration or otherwise), for
the period commencing on the due date thereof until the same is
paid in full.
Accrued interest on the Loans shall be payable monthly commencing
on February 1, 1996, and on the first day of each consecutive
calendar month thereafter.
Promptly after the determination of any interest rate provided for
herein or any change therein, the Lender shall notify the Borrower
thereof. Each determination by the Lender of an interest rate or
fee hereunder shall, except in cases of manifest error, be final,
conclusive and binding on the parties.
ARTICLE IV
Payments; Computations; Etc.
Section 4.01 Payments. Except to the extent otherwise
provided herein, all payments of principal, interest and other
amounts to be made by the Borrower under this Agreement, the Note
and any other Loan Document shall be made in Dollars, in
immediately available funds, to the Lender at such account as the
Lender shall specify by notice to the Borrower from time to time,
not later than 11:00 a.m. Houston, Texas time on the date on which
such payments shall become due (each such payment made after such
time on such due date to be deemed to have been made on the next
succeeding Business Day). Such payments shall be made without (to
the fullest extent permitted by applicable law) defense, set-off or
counterclaim. Each payment to be made to the Lender under this
Agreement or the Note shall be paid promptly to the Lender, in
immediately available funds. If the due date of any payment under
this Agreement or the Note would otherwise fall on a day which is
not a Business Day such date shall be extended to the next
succeeding Business Day and interest shall be payable for any
principal so extended for the period of such extension.
Section 4.02 Computations. Interest shall be computed on the
basis of a year of 365 or 366 days, as the case may be, and actual
days elapsed (including the first day but excluding the last day)
occurring in the period for which payable.
Section 4.03 Set-off. The Borrower agrees that, in addition
to (and without limitation of) any right of set-off, bankers' lien
or counterclaim the Lender may otherwise have, the Lender shall
have the right and be entitled, at its option, to offset balances
held by it or by any of its Affiliates for account of the Borrower
at any of its offices, in Dollars or in any other currency, against
any principal of or interest on any of the Loans or any other
amount payable to the Lender hereunder, which is not paid when due
(regardless of whether such balances are then due to the Borrower),
in which case it shall promptly notify the Borrower thereof,
provided that Lender's failure to give such notice shall not affect
the validity thereof.
Section 4.04 Taxes.
(a) Payments Free and Clear. Any
and all payments by the Borrower hereunder shall be made, in
accordance with Section 4.01, free and clear of and without
deduction for any and all present or future taxes, levies,
imposts, deductions, charges or withholdings, and all
liabilities with respect thereto, excluding, taxes imposed on
its income, and franchise or similar taxes imposed on it, by
(i) any jurisdiction (or political subdivision thereof) of
which the Lender, is a citizen or resident, (ii) the
jurisdiction (or any political subdivision thereof) in which
the Lender is organized, or (iii) any jurisdiction (or
political subdivision thereof) in which the Lender is
presently doing business which taxes are imposed solely as a
result of doing business in such jurisdiction (all such non-
excluded taxes, levies, imposts, deductions, charges,
withholdings and liabilities being hereinafter referred to as
"Taxes"). If the Borrower shall be required by law to deduct
any Taxes from or in respect of any sum payable hereunder to
the Lender (i) the sum payable shall be increased by the
amount necessary so that after making all required deductions
(including deductions applicable to additional sums payable
under this Section 4.04) the Lender shall receive an amount
equal to the sum it would have received had no such deductions
been made, (ii) the Borrower shall make such deductions and
(iii) the Borrower shall pay the full amount deducted to the
relevant taxing authority or other Governmental Authority in
accordance with applicable law.
(b) Other Taxes. In addition, to the fullest extent
permitted by applicable law, the Borrower agrees to pay any
present or future stamp or documentary taxes or any other
excise or property taxes, charges or similar levies that arise
from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to,
this Agreement or any Security Instrument (hereinafter
referred to as "Other Taxes").
(c) indemnification. To the fullest extent permitted by applicable
law, the Borrower will indemnify the Lender for the full amount of
Taxes and Other Taxes (including, but not limited to, any Taxes or
Other Taxes imposed by any Governmental Authority on amounts payable
under this section 4.04) paid by the Lender, and any liability
(including penalties, interest and expenses) arising therefrom or
with respect thereto, whether or not such Taxes or Other Taxes were
correctly or legally asserted unless the payment of such Taxes was
not correctly or legally asserted and the Lender's payment of such
Taxes or Other Taxes was the result of its gross negligence or
willful misconduct. any payment pursuant to such indemnification
shall be made within thirty (30) days after the date the Lender
makes written demand therefor. if the Lender receives a refund or
credit in respect of any Taxes or Other Taxes for which the Lender
has received payment from the Borrower it shall promptly notify
the Borrower of such refund or credit and shall,if no default has
occurred and is continuing, within thirty (30) days after receipt of
a request by the Borrower (or promptly upon receipt, if the Borrower
has requested application for such refund or credit pursuant hereto),
pay an amount equal to such refund or credit to the
Borrower without interest (but with any interest so refunded or
credited), provided that the Borrower, upon the request of the
Lender, agrees to return such refund or credit (plus penalties,
interest or other charges) to the Lender in the event the Lender
is required to repay such refund or credit.
ARTICLE V
Intentionally Left Blank
ARTICLE VI
Conditions Precedent
Section 6.01 Initial Funding.
The obligation of the Lender to make the Initial Funding is
subject to the receipt by the Lender of all fees payable pursuant
to Section 2.04 on or before the Closing Date and the receipt by
the Lender of the following documents and satisfaction of the other
conditions provided in this Section 6.01, each of which shall be
satisfactory to the Lender in form and substance:
(a) A certificate of the Secretary or an Assistant Secretary
of the Borrower setting forth (i) resolutions of its board of
directors with respect to the authorization of the Borrower to
execute and deliver the Loan Documents to which it is a party
and to enter into the transactions contemplated in those
documents, (ii) the officers of the Borrower (y) who are
authorized to sign the Loan Documents to which Borrower is a
party and (z) who will, until replaced by another officer or
officers duly authorized for that purpose, act as its
representative for the purposes of signing documents and
giving notices and other communications in connection with
this Agreement and the transactions contemplated hereby, (iii)
specimen signatures of the authorized officers, and (iv) the
articles or certificate of incorporation and bylaws of the
Borrower, certified as being true and complete. The Lender
may conclusively rely on such certificate until it receives
notice in writing from the Borrower to the contrary.
(b) A certificate of the Secretary or an Assistant Secretary
of MERI setting forth (i) resolutions of its board of
directors with respect to the authorization of MERI to execute
and deliver the Loan Documents to which it is a party and to
enter into the transactions contemplated in those documents,
(ii) the officers of MERI (y) who are authorized to sign the
Loan Documents to which MERI is a party and (z) who will,
until replaced by another officer or officers duly authorized
for that purpose, act as its representative for the purposes
of signing documents and giving notices and other
communications in connection with this Agreement and the
transactions contemplated hereby, (iii) specimen signatures of
the authorized officers, and (iv) the articles or certificate
of incorporation and bylaws of MERI, certified as being true
and complete. The Lender may conclusively rely on such
certificate until it receives notice in writing from MERI to
the contrary.
(c) Certificates of the appropriate state agencies with
respect to the existence, qualification and good standing of
the Borrower and MERI.
(d) A compliance certificate which shall be substantially in
the form of Exhibit C, duly and properly executed by a
Responsible Officer and dated as of the date of the Initial
Funding.
(e) The Note, duly completed and executed.
(f) The Security Instruments described on Exhibit E, duly
completed and executed in sufficient number of counterparts
for recording, if necessary.
(g) An opinion of ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇ & ▇▇▇▇▇▇▇, special Alabama
counsel to the Borrower, substantially in the form of
Exhibit D hereto.
(h) A certificate of insurance coverage of the Borrower
evidencing that the Borrower is carrying insurance in
accordance with Section 7.19 hereof.
(i) The Security Instruments and accompanying financing
statements covering the Mortgaged Property shall have been
properly filed and recorded in the appropriate offices to
establish and perfect the Liens and security interests created
thereby.
(j) The Lender shall have been furnished with appropriate UCC
search certificates reflecting the filing of all financing
statements required to perfect the security interests granted
by the Security Instruments and reflecting no prior liens or
security interests.
(k) Such other documents as the Lender or special counsel to
the Lender may reasonably request.
Section 6.02 Initial and Subsequent Loans. The obligation of
the Lender to make Loans to the Borrower upon the occasion of each
borrowing hereunder and to issue, renew, extend or reissue Letters
of Credit for the account of the Borrower (including the Initial
Funding) is subject to the further conditions precedent that, as of
the date of such Loans and after giving effect thereto: (i) no
Default shall have occurred and be continuing; (ii) no Material
Adverse Effect shall have occurred; and (iii) the representations
and warranties made by the Borrower in Article VII and in the
Security Instruments shall be true on and as of the date of the
making of such Loans or issuance, renewal, extension or reissuance
of a Letter of Credit with the same force and effect as if made on
and as of such date and following such new borrowing, except to the
extent such representations and warranties are expressly limited to
an earlier date or the Lender may expressly consent in writing to
the contrary. Each request for a borrowing or issuance, renewal,
extension or reissuance of a Letter of Credit by the Borrower
hereunder shall constitute a certification by the Borrower to the
effect set forth in the preceding sentence (both as of the date of
such notice and, unless the Borrower otherwise notifies the Lender
prior to the date of and immediately following such borrowing as of
the date thereof).
Section 6.03 Conditions Relating to Letters of Credit. In
addition to the satisfaction of all other conditions precedent set
forth in this Article VI, the issuance, renewal, extension or
reissuance of the Letters of Credit referred to in Section 2.01(b)
hereof is subject to the following conditions precedent:
(a) At least three (3) Business
Days prior to the date of the issuance and at least three (3)
Business Days prior to the date of the renewal, extension or
reissuance of each Letter of Credit, the Lender shall have
received a Letter of Credit Application.
(b) Each of the Letters of Credit
shall (i) be issued by the Lender, (ii) contain such terms and
provisions as are reasonably required by the Lender, (iii) be
for the account of the Borrower, and (iv) expire not later
than two (2) days before the Revolving Credit Termination
Date.
ARTICLE VII
Representations and Warranties
The Borrower represents and warrants to the Lender that (each
representation and warranty herein is given as of the Closing Date
and shall be deemed repeated and reaffirmed on the dates of each
borrowing and issuance, renewal, extension or reissuance of a
Letter of Credit as provided in Section 6.02):
Section 7.01 Corporate Existence. The Borrower: (i) is a
corporation duly organized, legally existing and in good standing
under the laws of the jurisdiction of its incorporation; (ii) has
all requisite corporate power, and has all material governmental
licenses, authorizations, consents and approvals necessary to own
its assets and carry on its business as now being or as proposed to
be conducted; and (iii) is qualified to do business in all
jurisdictions in which the nature of the business conducted by it
makes such qualification necessary and where failure so to qualify
would have a Material Adverse Effect.
Section 7.02 Financial Condition. The unaudited pro forma
balance sheet of the Borrower as at September 8, 1995 heretofore
furnished to the Lender, are complete and correct and fairly
present the financial condition of the Borrower as at said date,
all in accordance with GAAP, as applied on a consistent basis. The
Borrower does not have on the Closing Date any material Debt,
contingent liabilities, liabilities for taxes, unusual forward or
long-term commitments or unrealized or anticipated losses from any
unfavorable commitments, except as referred to or reflected or
provided for in the Financial Statements or in Schedule 7.02.
Since September 8, 1995, there has been no change or event having
a Material Adverse Effect. Since the date of the Financial
Statements, neither the business nor the Properties of the Borrower
have been materially and adversely affected as a result of any
fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking
of Property or cancellation of contracts, permits or concessions by
any Governmental Authority, riot, activities of armed forces or
acts of God or of any public enemy.
Section 7.03 Litigation. Except as disclosed to the Lender
in Schedule 7.03 hereto, at the Closing Date there is no
litigation, legal, administrative or arbitral proceeding,
investigation or other action of any nature pending or, to the
knowledge of the Borrower threatened against or affecting the
Borrower which involves the possibility of any judgment or
liability against the Borrower not fully covered by insurance
(except for normal deductibles), and which would have a Material
Adverse Effect.
Section 7.04 No Breach. Neither the execution and delivery
of the Loan Documents, nor compliance with the terms and provisions
hereof will conflict with or result in a breach of, or require any
consent which has not been obtained as of the Closing Date under,
the respective charter or by-laws of the Borrower, or any
Governmental Requirement or any agreement or instrument to which
the Borrower is a party or by which it is bound or to which it or
its Properties are subject, or constitute a default under any such
agreement or instrument, or result in the creation or imposition of
any Lien upon any of the revenues or assets of the Borrower
pursuant to the terms of any such agreement or instrument other
than the Liens created by the Loan Documents.
Section 7.05 Authority. The Borrower has all necessary
corporate power and authority to execute, deliver and perform their
obligations under the Loan Documents to which they are respectively
a party; and the execution, delivery and performance by the
Borrower of the Loan Documents to which it is party, have been duly
authorized by all necessary corporate action on their part; and the
Loan Documents constitute the legal, valid and binding obligations
of the Borrower, enforceable in accordance with their terms.
Section 7.06 Approvals. No authorizations, approvals or
consents of, and no filings or registrations with, any Governmental
Authority are necessary for the execution, delivery or performance
by the Borrower of the Loan Documents to which it is a party or for
the validity or enforceability thereof, except for the recording
and filing of the Security Instruments as required by this
Agreement.
Section 7.07 Use of Loans. The proceeds of the Loans shall
be used to (a) make an advance to MERI for the purpose of paying in
full certain existing indebtedness of MERI to Rainbow Investments
Company, and (b) for general corporate purposes. The Borrower is
not engaged principally, or as one of its important activities, in
the business of extending credit for the purpose, whether
immediate, incidental or ultimate, of buying or carrying margin
stock (within the meaning of Regulation G, U or X of the Board of
Governors of the Federal Reserve System) and no part of the
proceeds of any Loan hereunder will be used to buy or carry any
margin stock.
Section 7.08 ERISA.
(a) The Borrower and each ERISA Affiliate have complied in
all material respects with ERISA and, where applicable, the
Code regarding each Plan.
(b) Each Plan is, and has been, maintained in substantial
compliance with ERISA and, where applicable, the Code.
(c) No act, omission or transaction has occurred which could
result in imposition on the Borrower or any ERISA Affiliate
(whether directly or indirectly) of (i) either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code
or (ii) breach of fiduciary duty liability damages under
section 409 of ERISA.
(d) No Plan (other than a defined contribution plan) or any
trust created under any such Plan has been terminated since
September 2, 1974. No liability to the PBGC (other than for
the payment of current premiums which are not past due) by the
Borrower or any ERISA Affiliate has been or is expected by the
Borrower or any ERISA Affiliate to be incurred with respect to
any Plan. No ERISA Event with respect to any Plan has
occurred.
(e) Full payment when due has been made of all amounts which
the Borrower or any ERISA Affiliate is required under the
terms of each Plan or applicable law to have paid as
contributions to such Plan, and no accumulated funding
deficiency (as defined in section 302 of ERISA and section 412
of the Code), whether or not waived, exists with respect to
any Plan.
(f) The actuarial present value of the benefit liabilities
under each Plan which is subject to Title IV of ERISA does
not, as of the end of the Borrower's most recently ended
fiscal year, exceed the current value of the assets (computed
on a plan termination basis in accordance with Title IV of
ERISA) of such Plan allocable to such benefit liabilities.
The term "actuarial present value of the benefit liabilities"
shall have the meaning specified in section 4041 of ERISA.
(g) None of the Borrower or any ERISA Affiliate sponsors,
maintains, or contributes to an employee welfare benefit plan,
as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to
former employees of such entities, that may not be terminated
by the Borrower or any ERISA Affiliate in its sole discretion
at any time without any material liability.
(h) None of the Borrower or any ERISA Affiliate sponsors,
maintains or contributes to, or has at any time in the
preceding six calendar years sponsored, maintained or
contributed to, any Multiemployer Plan.
(i) None of the Borrower or any ERISA Affiliate is required
to provide security under section 401(a)(29) of the Code due to a
Plan amendment that results in an increase in current liability for
the Plan.
Section 7.09 Taxes. Except as set out in Schedule 7.09,
the Borrower has filed all United States Federal income tax returns
and all other tax returns which are required to be filed by them
and have paid all material taxes due pursuant to such returns or
pursuant to any assessment received by the Borrower. The charges,
accruals and reserves on the books of the Borrower in respect of
taxes and other governmental charges are, in the opinion of the
Borrower, adequate. No tax lien has been filed and, to the
knowledge of the Borrower, no claim is being asserted with respect
to any such tax, fee or other charge.
Section 7.10 Titles, etc.
(a) Except as set out in Schedule 7.10, the Borrower has good
and defensible title to its material (individually or in the
aggregate) Properties, free and clear of all Liens except
Liens permitted by Section 9.02.
(b) All leases and agreements necessary for the conduct of
the business of the Borrower are valid and subsisting, in full
force and effect and there exists no default or event or
circumstance which with the giving of notice or the passage of
time or both would give rise to a default under any such lease
or leases, which would affect in any material respect the
conduct of the business of the Borrower.
(c) The rights, properties and other assets presently owned,
leased or licensed by the Borrower including, without
limitation, all easements and rights of way, include all
rights, Properties and other assets necessary to permit the
Borrower to conduct its business in all material respects in
the same manner as its business has been conducted prior to
the Closing Date.
(d) All of the assets and Properties of the Borrower which
are reasonably necessary for the operation of its business are
in good working condition and are maintained in accordance
with prudent business standards.
Section 7.11 No Material Misstatements. No written informa-
tion, statement, exhibit, certificate, document or report furnished
to the Lender by the Borrower or MERI in connection with the
negotiation of this Agreement contained any material misstatement
of fact or omitted to state a material fact or any fact necessary
to make the statement contained therein not materially misleading
in the light of the circumstances in which made and with respect to
the Borrower. There is no fact peculiar to the Borrower which has
a Material Adverse Effect or in the future is reasonably likely to
have (so far as the Borrower can now foresee) a Material Adverse
Effect and which has not been set forth in this Agreement or the
other documents, certificates and statements furnished to the
Lender by or on behalf of the Borrower prior to, or on, the Closing
Date in connection with the transactions contemplated hereby.
Section 7.12 Investment Company Act. The Borrower is not an
"investment company" or a company "controlled" by an "investment
company," within the meaning of the Investment Company Act of 1940,
as amended.
Section 7.13 Public Utility Holding Company Act. The
Borrower is not is a "holding company," or a "subsidiary company"
of a "holding company," or an "affiliate" of a "holding company" or
of a "subsidiary company" of a "holding company," or a "public
utility" within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
Section 7.14 Subsidiaries and Partnerships. Except as set
forth on Schedule 7.14, the Borrower has no subsidiaries and has no
interest in any partnerships.
Section 7.15 Location of Business and Offices. The
Borrower's principal place of business and chief executive offices
are located at the address stated on the signature page of this
Agreement.
Section 7.16 Defaults. Neither the Borrower nor MERI is in
default nor has any event or circumstance occurred which, but for
the expiration of any applicable grace period or the giving of
notice, or both, would constitute a default under any material
agreement or instrument to which the Borrower or MERI is a party or
by which the Borrower or MERI is bound which default would have a
Material Adverse Effect. No Default hereunder has occurred and is
continuing.
Section 7.17 Environmental Matters. Except (i) as provided
in Schedule 7.17 or (ii) as would not have a Material Adverse
Effect (or with respect to (c), (d) and (e) below, where the
failure to take such actions would not have a Material Adverse
Effect):
(a) Neither any Property of the Borrower nor the operations
conducted thereon violate any order or requirement of any
court or Governmental Authority or any Environmental Laws;
(b) Without limitation of clause (a) above, no Property of
the Borrower nor the operations currently conducted thereon
or, to the best knowledge of the Borrower, by any prior owner
or operator of such Property or operation, are in violation of
or subject to any existing, pending or threatened action,
suit, investigation, inquiry or proceeding by or before any
court or Governmental Authority or to any remedial obligations
under Environmental Laws;
(c) All notices, permits, licenses or similar authorizations,
if any, required to be obtained or filed in connection with
the operation or use of any and all Property of the Borrower,
including without limitation past or present treatment,
storage, disposal or release of a hazardous substance or solid
waste into the environment, have been duly obtained or filed,
and the Borrower is in compliance with the terms and
conditions of all such notices, permits, licenses and similar
authorizations;
(d) All hazardous substances, solid waste, and oil and gas
exploration and production wastes, if any, generated at any
and all Property of the Borrower have in the past been
transported, treated and disposed of in accordance with
Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the
environment, and, to the best knowledge of the Borrower, all
such transport carriers and treatment and disposal facilities
have been and are operating in compliance with Environmental
Laws and so as not to pose an imminent and substantial
endangerment to public health or welfare or the environment,
and are not the subject of any existing, pending or threatened
action, investigation or inquiry by any Governmental Authority
in connection with any Environmental Laws;
(e) The Borrower has taken all steps reasonably necessary to
determine and has determined that no hazardous substances,
solid waste, or oil and gas exploration and production wastes,
have been disposed of or otherwise released and there has been
no threatened release of any hazardous substances on or to any
Property of the Borrower except in compliance with
Environmental Laws and so as not to pose an imminent and
substantial endangerment to public health or welfare or the
environment;
(f) To the extent applicable, all
Property of the Borrower currently satisfies all design,
operation, and equipment requirements imposed by the OPA or
scheduled as of the Closing Date to be imposed by OPA during
the term of this Agreement, and the Borrower does not have any
reason to believe that such Property, to the extent subject to
OPA, will not be able to maintain compliance with the OPA
requirements during the term of this Agreement; and
(g) The Borrower has no known contingent liability in
connection with any release or threatened release of any oil,
hazardous substance or solid waste into the environment.
Section 7.18 Compliance with the Law. The Borrower has not
violated any Governmental Requirement or failed to obtain any
license, permit, franchise or other governmental authorization
necessary for the ownership of any of its Properties or the conduct
of its business, which violation or failure would have (in the
event such violation or failure were asserted by any Person through
appropriate action) a Material Adverse Effect.
Section 7.19 Insurance. Schedule 7.19 attached hereto
contains an accurate and complete description of all material
policies of fire, liability, workmen's compensation and other forms
of insurance owned or held by MERI. All such policies are in full
force and effect, all premiums with respect thereto covering all
periods up to and including the date of the closing have been paid,
and no notice of cancellation or termination has been received with
respect to any such policy. Such policies are sufficient for
compliance with all requirements of law and of all agreements to
which the Borrower is a party; are valid, outstanding and
enforceable policies; provide adequate insurance coverage in at
least such amounts and against at least such risks (but including
in any event public liability) as are usually insured against in
the same general area by companies engaged in the same or a similar
business for the assets and operations of the Borrower; will remain
in full force and effect through the respective dates set forth in
Schedule 7.19 without the payment of additional premiums; and will
not in any way be affected by, or terminate or lapse by reason of,
the transactions contemplated by this Agreement. Schedule 7.19
identifies all material risks, if any, which MERI and its Board of
Directors or officers have designated as being self insured.
Neither the Borrower nor MERI has not been refused any insurance
with respect to its assets or operations, nor has its coverage been
limited below usual and customary policy limits, by an insurance
carrier to which it has applied for any such insurance or with
which it has carried insurance during the last three years.
Section 7.20 Designated Contracts. The copies of the
Designated Contracts previously delivered by the Borrower to the
Lender are complete and accurate and have not been amended or
modified in any manner. Each Designated Contract is valid, binding
and enforceable against the parties thereto; and the Borrower has
the right to ▇▇▇▇▇ ▇ ▇▇▇▇ and has granted a Lien on the Borrower's
right to receive proceeds under each Designated Contract pursuant
to the Security Instruments, and the Lender may enforce its
remedies contained in the Security Instruments against such
collateral. The Borrower has obtained all consents from
Governmental Authorities necessary to perform under each Designated
Contract.
Section 7.21 Restriction on Liens. The Borrower is not a
party to any agreement or arrangement (other than this Agreement
and the Security Instruments), or subject to any order, judgment,
writ or decree, which either restricts or purports to restrict its
ability to grant Liens to other Persons on or in respect of its
assets or Properties.
Section 7.22 Material Agreements. Set forth on Schedule 7.22
hereto is a complete and correct list of all material credit
agreements, indentures, purchase agreements, obligations in respect
of letters of credit, guarantees, joint venture agreements, and
other instruments in effect or to be in effect as of the Closing
Date providing for, evidencing, securing or otherwise relating to
any Debt of the Borrower, and all obligations of the Borrower to
issuers of surety or appeal bonds issued for account of the
Borrower, and such list correctly sets forth the names of the
debtor or lessee and creditor or lessor with respect to the Debt or
lease obligations outstanding or to be outstanding and the property
subject to any Lien securing such Debt or lease obligation. The
Borrower has heretofore delivered to the Lender a complete and
correct copy of all such material credit agreements, indentures,
purchase agreements, contracts, letters of credit, guarantees,
joint venture agreements, or other instruments, including any
modifications or supplements thereto, as in effect on the Closing
Date.
ARTICLE VIII
Affirmative Covenants
The Borrower covenants and agrees that, so long as the
Commitment is in effect and until payment in full of all Loans
hereunder, all interest thereon and all other amounts payable by
the Borrower hereunder:
Section 8.01 Financial Statements. The Borrower shall
deliver, or shall cause to be delivered, to the Lender:
(a) As soon as available and in any event within 45 days
after the end of each calendar month, the unaudited statements
of income, stockholders' equity, changes in financial position
and cash flow of the Borrower for such period and for the
period from the beginning of the respective fiscal year of the
Borrower to the end of such period, and the related balance
sheets of the Borrower as at the end of such period, and
setting forth in each case in comparative form the
corresponding figures for the corresponding period in the
preceding fiscal year, and accompanied by the certificate of
a Responsible Officer, which certificate shall state that said
financial statements fairly present the financial condition
and results of operations of the Borrower in accordance with
GAAP, as at the end of, and for, such period (subject to
normal year-end audit adjustments).
(b) The financial statements and other financial information
of the Guarantors called for in their respective Guaranty
Agreements.
(c) Promptly after the Borrower knows that any Default or
any Material Adverse Effect has occurred, a notice of such Default
or Material Adverse Effect, describing the same in reasonable
detail and the action the Borrower proposes to take with
respect thereto.
(d) Promptly upon receipt thereof, a copy of each other
report or letter submitted to the Borrower by independent
accountants in connection with any annual, interim or special
audit made by them of the books of the Borrower and a copy of
any response by the Borrower or the Board of Directors of the
Borrower to such letter or report.
(e) Promptly after the furnishing thereof, copies of any
statement, report or notice furnished to or any Person
pursuant to the terms of any indenture, loan or credit or
other similar agreement, other than this Agreement and not
otherwise required to be furnished to the Lender pursuant to
any other provision of this Section 8.01.
(f) From time to time such other information regarding the
business, affairs or financial condition of the Borrower
(including, without limitation, any Plan or Multiemployer Plan
and any reports or other information required to be filed
under ERISA) as the Lender may reasonably request.
The Borrower will furnish to the Lender within 45 days after the
end of each of the first three (3) fiscal quarters of each fiscal
year of the Borrower and within 120 days after the end of each
fiscal year of the Borrower, a certificate substantially in the
form of Exhibit C hereto executed by a Responsible Officer (i)
certifying as to the matters set forth therein and stating that no
Default has occurred and is continuing (or, if any Default has
occurred and is continuing, describing the same in reasonable
detail), and (ii) setting forth in reasonable detail the
computations necessary to determine whether the Borrower is in
compliance with Sections 9.11 and 9.12 as of the end of the
respective fiscal quarter or fiscal year.
Section 8.02 Litigation. The Borrower shall promptly give to
the Lender notice of: (i) all legal or arbitral proceedings, and
of all proceedings before any Governmental Authority affecting the
Borrower, except proceedings which, if adversely determined, would
not have a Material Adverse Effect, and (ii) of any litigation or
proceeding against or adversely affecting the Borrower in which the
amount involved is not covered in full by insurance (subject to
normal and customary deductibles and for which the insurer has not
assumed the defense), or in which injunctive or similar relief is
sought. The Borrower will promptly notify the Lender of any claim,
judgment, Lien or other encumbrance affecting any Property of the
Borrower if the value of the claim, judgment, Lien, or other
encumbrance affecting such Property shall exceed $50,000.
Section 8.03 Maintenance, Etc.
(a) The Borrower shall: preserve and maintain its corporate
existence and all of its material rights, privileges and
franchises; keep books of record and account in which full,
true and correct entries will be made of all dealings or
transactions in relation to its business and activities;
comply with all Governmental Requirements if failure to comply
with such requirements will have a Material Adverse Effect;
pay and discharge all taxes, assessments and governmental
charges or levies imposed on it or on its income or profits or
on any of its Property prior to the date on which penalties
attach thereto, except for any such tax, assessment, charge or
levy the payment of which is being contested in good faith and
by proper proceedings and against which adequate reserves are
being maintained; upon reasonable notice, permit
representatives of the Lender, during normal business hours,
to examine, copy and make extracts from its books and records,
to inspect its Properties, and to discuss its business and
affairs with its officers, all to the extent reasonably
requested by the Lender; and keep, or cause to be kept,
insured by financially sound and reputable insurers all
Property of a character usually insured by Persons engaged in
the same or similar business similarly situated against loss
or damage of the kinds and in the amounts customarily insured
against by such Persons and carry such other insurance as is
usually carried by such Persons including, without limitation,
environmental risk insurance to the extent reasonably
available.
(b) On August 1 of each calendar year (or, if sooner, the
renewal date of any of the Borrower's policies of insurance),
the Borrower will furnish or cause to be furnished to the
Lender a certificate of insurance coverage from the insurer in
form and substance satisfactory to the Lender and, if
requested, will furnish the Lender copies of the applicable
policies.
(c) The Borrower will operate its Properties or cause such
Properties to be operated in a careful and efficient manner in
accordance with the practices of the industry and in
compliance with all applicable contracts and agreements and in
compliance in all material respects with all Governmental
Requirements.
Section 8.04 Environmental Matters.
(a) The Borrower will establish and implement such procedures
as may be reasonably necessary to continuously determine and
assure that any failure of the following does not have a
Material Adverse Effect: (i) all Property of the Borrower and
the operations conducted thereon and other activities of the
Borrower are in compliance with and do not violate the
requirements of any Environmental Laws, (ii) no oil, hazardous
substances or solid wastes are disposed of or otherwise
released on or to any Property owned by any such party except
in compliance with Environmental Laws, (iii) no hazardous
substance will be released on or to any such Property in a
quantity equal to or exceeding that quantity which requires
reporting pursuant to Section 103 of CERCLA, and (iv) no oil,
oil and gas exploration and production wastes or hazardous
substance is released on or to any such Property so as to pose
an imminent and substantial endangerment to public health or
welfare or the environment.
(b) The Borrower will promptly notify the Lender in writing
of any threatened action, investigation or inquiry by any
Governmental Authority of which the Borrower has knowledge in
connection with any Environmental Laws, excluding routine
testing and corrective action.
Section 8.05 Further Assurances. The Borrower will cure
promptly any defects in the creation and issuance of the Note and
the execution and delivery of the Security Instruments and this
Agreement. The Borrower at its expense will promptly execute and
deliver to the Lender upon request all such other documents,
agreements and instruments to comply with or accomplish the
covenants and agreements of the Borrower in the Security
Instruments and this Agreement, or to further evidence and more
fully describe the collateral intended as security for the Note, or
to correct any omissions in the Security Instruments, or state more
fully the security obligations set out herein or in any of the
Security Instruments, or to perfect, protect or preserve any Liens
created pursuant to any of the Security Instruments, or to make any
recordings, to file any notices, or obtain any consents, all as may
be necessary or appropriate in connection therewith.
Section 8.06 Performance of Obligations. The Borrower will
pay the Note according to the reading, tenor and effect thereof;
and the Borrower will do and perform every act and discharge all of
the obligations provided to be performed and discharged by them
under the Security Instruments and this Agreement, at the time or
times and in the manner specified.
Section 8.07 ERISA Information and Compliance. The Borrower
will promptly furnish and will cause any ERISA Affiliate to
promptly furnish to the Lender (i) promptly after the filing
thereof with the United States Secretary of Labor, the Internal
Revenue Service or the PBGC, copies of each annual and other report
with respect to each Plan or any trust created thereunder, (ii)
immediately upon becoming aware of the occurrence of any ERISA
Event or of any "prohibited transaction," as described in section
406 of ERISA or in section 4975 of the Code, in connection with any
Plan or any trust created thereunder, a written notice signed by a
Responsible Officer specifying the nature thereof, what action the
Borrower or the ERISA Affiliate is taking or proposes to take with
respect thereto, and, when known, any action taken or proposed by
the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto, and (iii) immediately upon receipt thereof,
copies of any notice of the PBGC's intention to terminate or to
have a trustee appointed to administer any Plan. With respect to
each Plan (other than a Multiemployer Plan), the Borrower will, and
will cause each ERISA Affiliate to, (i) satisfy in full and in a
timely manner, without incurring any late payment or underpayment
charge or penalty and without giving rise to any lien, all of the
contribution and funding requirements of section 412 of the Code
(determined without regard to subsections (d), (e), (f) and (k)
thereof) and of section 302 of ERISA (determined without regard to
sections 303, 304 and 306 of ERISA), and (ii) pay, or cause to be
paid, to the PBGC in a timely manner, without incurring any late
payment or underpayment charge or penalty, all premiums required
pursuant to sections 4006 and 4007 of ERISA.
Section 8.08 Change in Management. The Borrower will notify
the Lender of any change in management of the Borrower.
ARTICLE IX
Negative Covenants
The Borrower covenants and agrees that, so long as the
Commitment is in effect and until payment in full of all Loans
hereunder, all interest thereon and all other amounts payable by
the Borrower hereunder, without the prior written consent of the
Lender:
Section 9.01 Debt. The Borrower will not incur, create,
assume or suffer to exist any Debt, except:
(a) the Note or other Indebtedness or any guaranty of or
suretyship arrangement for the Note or other Indebtedness;
(b) Debt of the Borrower existing on the Closing Date which
is reflected in the Financial Statements or is disclosed in
Schedule 9.01, and any renewals or extensions (but not
increases) thereof;
(c) accounts payable (for the deferred purchase price of
Property or services) from time to time incurred in the
ordinary course of business which, if greater than 90 days
past the invoice or billing date, are being contested in good
faith by appropriate proceedings if reserves adequate under
GAAP shall have been established therefor;
(d) advances to the Borrower from MERI; provided, however,
repayment of such advances shall not be permitted if any
Default or Event of Default has occurred and is continuing, or
if making such repayment would cause the occurrence of a
Default or Event of Default hereunder and MERI shall have
agreed to same in writing; and
(e) payments of net revenue interests owing by the Borrower
to Rainbow Investments Company; provided, however, such
payments shall be fully subordinated to the payment in full of
the Indebtedness pursuant to an instrument or instruments
satisfactory to the Lender as to form and substance.
Section 9.02 Liens. The Borrower will not create, incur,
assume or permit to exist any Lien on any of its Properties (now
owned or hereafter acquired), except:
(a) Liens securing the payment of the Indebtedness;
(b) Excepted Liens;
(c) Liens disclosed on Schedule 9.02.
SECURITY AGREEMENT
(Accounts, Inventory, Equipment, Chattel Paper, Documents,
Instruments, General Intangibles and Other Property)
Between
MAGNOLIA PIPELINE CORPORATION
and
COMPASS BANK-HOUSTON
December 20, 1995
SECURITY AGREEMENT
Accounts, Inventory, Equipment, Chattel Paper, Documents,
Instruments, General Intangibles and Other Property
THIS SECURITY AGREEMENT (this "Agreement") is made as of
December 20, 1995, between MAGNOLIA PIPELINE CORPORATION, an
Alabama corporation with principal offices at ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Debtor"); and COMPASS BANK-HOUSTON,
a Texas State Chartered Banking Institution with offices at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ ("Secured
Party").
RECITALS
A. On even date herewith, Debtor and Secured Party are
executing a Credit Agreement (such Credit Agreement, as the same
may from time to time be amended or supplemented, being hereinafter
called the "Credit Agreement") pursuant to which, upon the terms
and conditions stated therein, Secured Party agrees to make loans
to and extensions of credit on behalf of Debtor.
B. Secured Party has conditioned its obligations under the
Credit Agreement upon the execution and delivery by Debtor of this
Agreement, and Debtor has agreed to enter into this Agreement.
C. Therefore, in order to comply with the terms and conditions
of the Credit Agreement and for other good and valuable
consideration, the receipt and sufficiency of which are hereby
acknowledged, Debtor hereby agrees with Secured Party as follows:
ARTICLE 1
SECURITY INTEREST
Section 1.01 Pledge, Assignment and Grant of Security Interest.
Debtor hereby pledges, assigns and grants to Secured Party a
security interest in and right of set-off against the assets
referred to in Section 1.02 (the "Collateral") to secure the prompt
payment and performance of the "Obligations" (as defined in
Section 2.02) and the performance by Debtor of this Agreement.
Section 1.02 Collateral. The Collateral consists of the following
types or items of property (including property hereafter acquired
by Debtor as well as property which Debtor now owns or in which
Debtor has rights):
(a) All of Debtor's accounts, inventory, equipment, chattel paper,
documents, instruments and general intangibles.
(b) The certificates of deposit scribed on Schedule 1.02(b)
attached hereto and made a part hereof for all purposes, as such
Schedule 1.02(b) may be amended or supplemented from time to time
(collectively, the "Certificate of Deposit"), together with all
sums now or at any time hereafter evidenced thereby, and any and
all renewals, rearrangements or reissues thereof, whether in
respect of the value thereof, interest paid thereon, dividends
declared thereon or otherwise, and all interest, dividends, incomes
and profits from the foregoing and all other sums due or to become
due on account of any of the foregoing.
(c) All of Debtor's interest in and rights under (whether now
owned or hereafter acquired by operation of law or otherwise) all
presently existing and hereafter created operating agreements,
equipment leases, production agreements, sales agreements, purchase
and/or exchange agreements, transportation agreements, delivery
contracts, and other contracts and/or agreements, and all renewals,
amendments, supplements and modifications thereof and substitutions
and replacements therefor, including, without limitation, the
contracts and/or agreements described or referred to on Schedule
1.02(c) attached hereto and made a part hereof for all purposes, as
such Schedule 1.02(c) may be amended or supplemented from time to
time.
(d) (i) Any related or additional property from time to time
delivered to or deposited with Secured Party by or for the account
of Debtor; (ii) all certificates of title or other documents
evidencing ownership or possession of or otherwise relating to any
property referred to in this Section 1.02; (iii) all property used
or usable in connection with any property referred to in this
Section 1.02; (iv) all policies of insurance (whether or not
required by Secured Party) covering any property referred to in
this Section 1.02; (v) all goods which were at any time included in
the Collateral and which are returned to or for the account of
Debtor following their sale, lease or other disposition; (vi) all
proceeds, products, replacements, additions to, substitutions for,
accessions of, and property necessary for the operation of any of
the property referred to in this Section 1.02, including, without
limitation, insurance payable as a result of loss or damage to any
of the property referred to in this Section 1.02, refunds of
unearned premiums of any such insurance policy and claims against
third parties; and (vii) all books and records related to any of
the property referred to in this Section 1.02, including, without
limitation, any and all books of account, customer lists and other
records relating in any way to the accounts, chattel paper,
instruments or inventory referred to in this Section 1.02.
(e) All general intangibles related to any property referred to in
this Section 1.02, including, without limitation, all (i) letters
of credit, bonds, guaranties, purchase or sales agreements and
other contractual rights, rights to performance, and claims for
damages, refunds (including tax refunds) or other monies due or to
become due; (ii) orders, franchises, permits, certificates,
licenses, consents, exemptions, variances, authorizations or other
approvals by any governmental agency or court; (iii) consulting,
engineering and technological information and specifications,
design data, patent rights, trade secrets, literary rights,
copyrights, trademarks, labels, trade names and other intellectual
property; (iv) business records, computer tapes and computer
software; (v) goodwill; and (vi) other intangible personal
property, whether similar or dissimilar to the property referred to
in this Section 1.02.
It is expressly contemplated that additional property may from time
to time be pledged, assigned or granted to Secured Party as
additional security for the Obligations, and the term "Collateral"
as used herein shall be deemed for all purposes hereof to include
all such additional property, together with all other property of
the types described above related thereto.
Section 1.03 Location of Collateral. The Collateral is located or
(except as otherwise permitted by Section 4.01) shall be located
only in the following places (provided that the Collateral shall be
subject to the security interest created by this Agreement
irrespective of whether or not the Collateral is located in the
following places): The States of Texas and Alabama.
ARTICLE 2
DEFINITIONS
Section 2.01 Terms Defined Above or in the Credit Agreement. As
used in this Agreement, the terms defined above shall have the
meanings respectively assigned to them. Other capitalized terms
which are defined in the Credit Agreement but which are not defined
herein shall have the same meanings as defined in the Credit
Agreement.
Section 2.02 Certain Definitions. As used in this Agreement, the
following terms shall have the following meanings, unless the
context otherwise requires:
"Accounts" means all accounts, chattel paper and instruments (as
such terms are defined in the Code) at any time included in the
Collateral.
"Account Debtor" means any Person liable (whether directly or
indirectly, primarily or secondarily) for the payment or
performance of any obligations included in the Collateral, whether
as an account debtor (as defined in the Code), obligor on an
instrument, issuer of documents or securities, guarantor or
otherwise.
"Agreement" means this Security Agreement, as the same may from
time to time be amended or supplemented.
"Code" means the Uniform Commercial Code as presently in effect in
the State of Texas, Business and Commerce Code, Chapters 1 through
9. Unless otherwise indicated by the context herein, all
uncapitalized terms which are defined in the Code shall have their
respective meanings as used in Chapter 9 of the Code.
"Event of Default" means any event specified in Section 6.01.
"Inventory" means all inventory (as defined in the Code) at any
time included in the Collateral.
"Obligations" means:
(a) The payment and performance of all indebtedness, obligations
(including reimbursement obligations) and liabilities of Debtor to
Secured Party, now or hereafter existing under or in connection
with the Credit Agreement including, without limitation, such
indebtedness, obligations (including reimbursement obligations) and
liabilities arising out of, pursuant to, or evidenced by (i) the
Note, being that certain promissory note of even date herewith in
the principal amount of $1,500,000, issued or to be issued by
Debtor under the Credit Agreement, payable to Secured Party as
therein provided, with final maturity on December 1, 1998, (the
"Note"),(ii) any and all renewals, extensions for any period,
rearrangements, increases and/or modifications of any or all of the
Note, (iii) any Letters of Credit issued or to be issued by Secured
Party for the account of Debtor and described or referred to in the
Credit Agreement, (iv) any and all renewals, extensions, amendments
and/or reissues of any such Letters of Credit, and (v) any and all
other Loan Documents or other documents executed in connection with
or as security for the Credit Agreement, the Note and the Letters
of Credit.
(b) The performance by Debtor of all the terms, agreements and
obligations of Debtor pursuant to this Agreement and of Debtor and
any Obligor arising out of, pursuant to or incurred in connection
with the Loan Documents and any and all other instruments and
documents executed in connection therewith or pursuant thereto.
(c) All interest, charges, expenses, reasonable attorneys' or
other fees and any other sums payable to or incurred by Secured
Party in connection with the execution, administration or
enforcement of Secured Party's rights and remedies hereunder, or
under the Credit Agreement, the Note, the Letters of Credit or any
other Loan Document or other instruments and documents executed in
connection therewith or pursuant thereto.
(d) All post-petition interest on the liabilities in the event of
a bankruptcy or insolvency of Debtor.
(e) Any sums which may be advanced or paid by Secured Party under
the terms hereof or of any other Loan Document on account of the
failure of Debtor to comply with the covenants of Debtor contained
herein or in any other Loan Document; and all other indebtedness of
Debtor arising pursuant to the provisions hereof or thereof.
"Obligor" means any Person, other than Debtor, liable (whether
directly or indirectly, primarily or secondarily) for the payment
or performance of any of the Obligations whether as maker,
co-maker, endorser, guarantor, accommodation party, general partner
or otherwise.
ARTICLE 3
REPRESENTATIONS AND WARRANTIES
In order to induce Secured Party to accept this Agreement,
Debtor represents and warrants to Secured Party (which
representations and warranties will survive the creation and
payment of the Obligations) that:
Section 3.01 Ownership of Collateral; Encumbrances. Debtor is
the legal and beneficial owner of the Collateral free and clear of
any adverse claim, lien, security interest, option or other charge
or encumbrance except for Excepted Liens, and Debtor has full
right, power and authority to assign and grant a security interest
in the Collateral to Secured Party.
Section 3.02 No Required Consent. No authorization, consent,
approval or other action by, and no notice to or filing with, any
governmental authority or regulatory body (other than the filing of
financing statements) is required for (i) the due execution,
delivery and performance by Debtor of this Agreement, (ii) the
grant by Debtor of the security interest granted by this Agreement,
(iii) the perfection of such security interest or (iv) the exercise
by Secured Party of its rights and remedies under this Agreement.
Section 3.03 First Priority Security Interest. The grant of
the security interest in the Collateral pursuant to this Agreement
creates a valid and perfected first priority security interest in
the Collateral, enforceable against Debtor and all third parties
and securing payment of the Obligations.
Section 3.04 No Filings By Third Parties. No financing
statement or other public notice or recording covering the
Collateral is on file in any public office (other than any
financing statement or other public notice or recording naming
Secured Party as the secured party therein), and Debtor will not
execute any such financing statement or other public notice or
recording so long as any of the Obligations are outstanding.
Section 3.05 No Name Changes. Debtor has not, since September
8, 1995, entered into any contract, agreement, security instrument
or other document using a name other than, or been known by or
otherwise used any name other than, the name used by Debtor herein.
Section 3.06 Location of Debtor and Collateral. Debtor's
chief executive office and Debtor's records concerning the
Collateral are located at the address or location set forth in the
opening paragraph hereof. The Collateral is located at Debtor's
address set forth in the opening paragraph hereof or at the
location(s), if any, specified in Section 1.02 or 1.03. Any
Collateral not at such location(s) nevertheless remains subject to
Secured Party's security interest.
Section 3.07 Collateral. All statements or other information
provided by Debtor to Secured Party describing or with respect to
the Collateral is or (in the case of subsequently furnished
information) will be when provided correct and complete in all
material respects. The delivery at any time by Debtor to Secured
Party of additional Collateral or of additional descriptions of
Collateral shall constitute a representation and warranty by Debtor
to Secured Party hereunder that the representations and warranties
of this Article 3 are correct insofar as they would pertain to such
Collateral or the descriptions thereof.
Section 3.08 Accounts.
(a) Each Account represents the genuine, valid and legally
enforceable indebtedness of an Account Debtor arising from the
sale, lease or rendition by Debtor of goods or services and is not
subject to contra accounts, set-offs, defenses, counterclaims,
allowances or adjustments (other than discounts for prompt payment
shown on the invoice), or objections or complaints by the Account
Debtor concerning its liability on the Account; and any goods, the
sale of which gave rise to an Account, have not been returned or
rejected by the Account Debtor or lost or damaged prior to receipt
by the Account Debtor.
(b) The amount shown as to each Account on Debtor's books is
or will be the true amount owing and unpaid thereon. Each Account
arose or shall have arisen in the ordinary course of Debtor's
business; provided, however, that any Accounts which arose or
hereafter arise outside the ordinary course of Debtor's business
shall nevertheless be included as part of the Collateral. Debtor
has no knowledge of any bankruptcy, insolvency or other action
affecting creditors' rights with respect to any Account Debtor.
(c) Each invoice or agreement evidencing the Accounts is or
will be due and payable not more than 90 days from the date
thereof; provided, however, that any Accounts not so due and
payable shall nevertheless be included as part of the Collateral.
Section 3.09 Delivery of Documents or Letters of Credit. With
respect to any Inventory or other Collateral covered by one or more
certificates of title or other documents evidencing ownership or
possession thereof, and with respect to any Accounts or other
Collateral supported by letters of credit, and with respect to the
Certificate of Deposit, each of such certificates, documents or
letters of credit and the Certificate of Deposit has been delivered
to Secured Party (provided that all certificates, documents and
letters of credit referred to in Section 1.02 shall be subject to
the security interest created by this Agreement irrespective of
whether or not such delivery shall have been made).
ARTICLE 4
COVENANTS AND AGREEMENTS
Debtor will at all times comply with the covenants and
agreements contained in this Article 4, from the date hereof and
for so long as any part of the Obligations are outstanding.
Section 4.01 Change in Location of Collateral or Debtor.
Debtor will notify Secured Party on or before the date of any
change in location of the Collateral. Debtor will not, without
Secured Party's prior written consent, change the location of the
Collateral to any state, county or other jurisdiction in which
Secured Party has not already filed a financing statement or taken
other necessary steps to perfect its security interests in the
Collateral or to maintain such perfection. Debtor will give
Secured Party 30 days' prior written notice of (i) the opening or
closing of any place of Debtor's business or (ii) any change in the
location of Debtor's chief executive office or address; provided,
however, only five days' prior written notice shall be required for
any change in the location of Debtor's chief executive office or
address if such change is to a location within the State of Texas.
Section 4.02 Change in Debtor's Name or Corporate Structure.
Debtor will not change its name, identity or corporate structure
(including, without limitation, any merger, consolidation or sale
of substantially all of its assets) without notifying Secured Party
of such change in writing at least 30 days prior to the effective
date of such change. Without the express written consent of
Secured Party, however, Debtor will not engage in any other
business or transaction under any name other than Debtor's name
hereunder.
Section 4.03 Documents; Collateral in Possession of Third
Parties. If certificates of title or other documents evidencing
ownership or possession of the Collateral are issued or
outstanding, Debtor will cause the interest of Secured Party to be
properly noted thereon and will, forthwith upon receipt, deliver
same to Secured Party. If any Collateral is at any time in the
possession or control of any warehouseman, bailee, agent or
independent contractor, Debtor shall notify such Person of Secured
Party's security interest in such Collateral. Upon Secured Party's
request, Debtor shall instruct any such Person to hold all such
Collateral for Secured Party's account subject to Debtor's
instructions, or, if an Event of Default shall have occurred,
subject to Secured Party's instructions.
Section 4.04 Delivery of Letters of Credit and Instruments.
Debtor will deliver each letter of credit, if any, included in the
Collateral to Secured Party, in each case forthwith upon receipt by
or for the account of Debtor. If any Account becomes evidenced by
a promissory note, trade acceptance or any other instrument for the
payment of money (other than checks or drafts in payment of
Accounts collected by Debtor in the ordinary course of business
prior to notification by Secured Party under Section 6.02(h)),
Debtor will immediately deliver such instrument to Secured Party
appropriately endorsed and, regardless of the form of presentment,
demand, notice of dishonor, protest and notice of protest with
respect thereto, Debtor will remain liable thereon until such
instrument is paid in full. Debtor shall immediately deliver any
instrument or certificate evidencing a renewal or reissue of the
Certificate of Deposit.
Section 4.05 Sale, Disposition or Encumbrance of Collateral.
Except as permitted by Section 4.10 or with Secured Party's prior
written consent, Debtor will not in any way encumber any of the
Collateral (or permit or suffer any of the Collateral to be
encumbered) or sell, assign, lend, rent, lease or otherwise dispose
of or transfer any of the Collateral to or in favor of any Person
other than Secured Party.
Section 4.06 Proceeds of Collateral. Except as permitted by
Sections 4.04, 4.10 and 4.11, Debtor will deliver to Secured Party
promptly upon receipt all proceeds delivered to Debtor from the
sale or disposition of any Collateral. If chattel paper, documents
or instruments are received as proceeds, which are required to be
delivered to Secured Party, they will be, immediately upon receipt,
properly endorsed or assigned and delivered to Secured Party as
Collateral. This Section 4.06 shall not be construed to permit
sales or dispositions of Collateral except as may be elsewhere
expressly permitted by this Agreement.
Section 4.07 Records and Information. Debtor shall keep
accurate and complete records of the Collateral (including
proceeds). These records shall reflect complete and accurate stock
records of the Inventory and all facts concerning each Account.
Debtor shall conduct a physical count of the Inventory at such
intervals as Secured Party requests and promptly supply Secured
Party with a copy of such count accompanied by a report of the
value (valued at the lower of cost or market value) of the
Inventory. Secured Party may at any time have access to, examine,
audit, make extracts from and inspect without hindrance or delay
Debtor's records, files and the Collateral. Debtor will promptly
provide written notice to Secured Party of all information which in
any way relates to or affects the filing of any financing statement
or other public notices or recordings, or the delivery and
possession of items of Collateral for the purpose of perfecting a
security interest in the Collateral. Debtor will also promptly
furnish such information as Secured Party may from time to time
reasonably request regarding (i) the business, affairs or financial
condition of Debtor or (ii) the Collateral or Secured Party's
rights or remedies with respect thereto.
Section 4.08 Reimbursement of Expenses. Debtor hereby assumes
all liability for the Collateral, the security interests created
hereunder and any use, possession, maintenance, management,
enforcement or collection of any or all of the Collateral. Debtor
agrees to indemnify and hold Secured Party harmless from and
against and covenants to defend Secured Party against any and all
losses, damages, claims, costs, penalties, liabilities and
expenses, including, without limitation, court costs and attorneys'
fees, incurred because of, incident to, or with respect to the
Collateral (including, without limitation, any use, possession,
maintenance or management thereof, or any injuries to or deaths of
persons or damage to property). All amounts for which Debtor is
liable pursuant to this Section 4.08 shall be due and payable by
Debtor to Secured Party upon demand. If Debtor fails to make such
payment upon demand (or if demand is not made due to an injunction
or stay arising from bankruptcy or other proceedings) and Secured
Party pays such amount, the same shall be due and payable by Debtor
to Secured Party, plus interest thereon from the date of Secured
Party's demand (or from the date of Secured Party's payment if
demand is not made due to such proceedings) at the Highest Lawful
Rate.
Section 4.09 Further Assurances. Upon the request of Secured
Party, Debtor shall (at Debtor's expense) execute and deliver all
such assignments, certificates, financing statements or other
documents and give further assurances and do all other acts and
things as Secured Party may reasonably request to perfect Secured
Party's interest in the Collateral or to protect, enforce or
otherwise effect Secured Party's rights and remedies hereunder.
Section 4.10 Inventory. Until an Event of Default occurs
hereunder, Debtor may use the Inventory in any lawful manner not
inconsistent with this Agreement and with the terms of insurance
thereon and may sell, lease or otherwise dispose of its Inventory
for cash or terms in the ordinary course of business, and Debtor
may retain the proceeds of such sales, leases or other dispositions
(subject to Section 4.04 and subsection 4.11(a)); provided,
however, the Inventory shall remain in Debtor's possession and
control at all times prior to sale, lease or other disposition at
Debtor's address set forth in the opening paragraph hereof or at
such other location(s) as may be specified in Section 1.02 or 1.03.
Debtor shall bear any risk of loss of the Inventory. Debtor shall
not use any item of Inventory in a manner inconsistent with the
holding thereof for sale, lease or other disposition in the
ordinary course of business or in contravention of the terms of any
agreement. A sale, lease or disposition in the ordinary course of
business does not include the exchange of Inventory for services or
goods in kind or transfers of Inventory for the satisfaction of
obligations to suppliers or other indebtedness. Upon an Event of
Default, Debtor will not sell, lease or otherwise dispose of any of
the Inventory without the prior written consent of Secured Party,
and Debtor shall immediately deliver to Secured Party any checks,
cash or other forms of payment which Debtor receives in connection
with any Inventory, appropriately endorsed.
Section 4.11 Accounts.
(a) Prior to notification by Secured Party under
Section 6.02(h), Debtor will collect the Accounts in the ordinary
course of its business and may retain the proceeds of such
collections (subject to Section 4.04).
(b) Debtor will not modify, extend or substitute any
contract, the terms of which shall at any time have given rise to
an Account, except in the ordinary course of business or with the
prior written consent of Secured Party. Debtor will not re-date
any invoice or sale or make sales with an extended payment date
beyond that customary in the industry, and in no event longer than
90 days. Debtor shall not adjust, settle, discount or compromise
any of the Accounts, except in the ordinary course of business or
with the prior written consent of Secured Party.
(c) Debtor will duly perform or cause to be performed
all of Debtor's obligations with respect to the Accounts and the
underlying sales of goods or other transactions giving rise to the
Accounts.
Section 4.12 Condition of Collateral. Debtor will maintain
all the Collateral in good condition, repair and working order, and
in accordance with any manufacturer's manual. Debtor will not
misuse, abuse, waste, destroy or endanger the Collateral or allow
it to deteriorate, except for ordinary wear and tear from its
intended use. Debtor will repair, replace or otherwise improve the
Collateral as may be necessary. Debtor will not use any Collateral
in violation of any law, statute, ordinance, regulation or
administrative order, or suffer it to be so used.
Section 4.13 Collateral Attached to Other Property. In the
event that the Collateral is to be attached or affixed to any real
property, Debtor hereby agrees that this Agreement may be filed for
record in any appropriate real estate records as a financing
statement which is a fixture filing. In connection therewith,
Debtor will take whatever action is required by Section 4.09. If
Debtor is not the record owner of such real property, Debtor will
provide Secured Party with any additional security agreements or
financing statements necessary for the perfection of Secured
Party's security interest in the Collateral. If the Collateral is
wholly or partly affixed to real estate or installed in or affixed
to other goods, Debtor will, on demand of Secured Party, furnish
Secured Party with a disclaimer (including landlord's or other lien
waivers or releases, if applicable), signed by all Persons or
entities having an interest in the real estate or other goods to
which the Collateral may have become affixed, of any prior interest
to Secured Party's interest in the Collateral.
Section 4.14 Collateral Separate and Distinct. Debtor shall
at all times keep the Collateral, including proceeds, or cause it
to be kept (when in the possession of warehousemen, bailees,
agents, independent contractors or other third parties), separate
and distinct from other property.
ARTICLE 5
RIGHTS, DUTIES AND POWERS OF SECURED PARTY
The following rights, duties and powers of Secured Party are
applicable irrespective of whether an Event of Default occurs and
is continuing:
Section 5.01 Discharge Encumbrances. Secured Party may, at
its option, discharge any taxes, liens, security interests or other
encumbrances at any time levied or placed on the Collateral, may
pay for insurance on the Collateral and may pay for the maintenance
and preservation of the Collateral. Debtor agrees to reimburse
Secured Party upon demand for any payment so made, plus interest
thereon from the date of Secured Party's demand at the Highest
Lawful Rate.
Section 5.02 Transfer of Collateral. Secured Party may
transfer any or all of the Obligations, and upon any such transfer
Secured Party may transfer its interest in any or all of the
Collateral and shall be fully discharged thereafter from all
liability therefor. Any transferee of the Collateral shall be
vested with all rights, powers and remedies of Secured Party
hereunder.
Section 5.03 Licenses and Rights to Use Collateral. In
connection with any transfer or sale (to Secured Party or any other
Person) of the Collateral, Secured Party is hereby granted a
transferable license or other right to use, without any charge, any
of Debtor's labels, patents, copyrights, trade names, trade
secrets, trademarks or other similar property in completing
production, advertising or selling such Collateral. Debtor's
rights under all licenses and franchise agreements shall inure to
the benefit of Secured Party and any transferee of all or any part
of the Collateral.
Section 5.04 Cumulative and Other Rights. The rights, powers
and remedies of Secured Party hereunder are in addition to all
rights, powers and remedies given by law or in equity. The
exercise by Secured Party of any one or more of the rights, powers
and remedies herein shall not be construed as a waiver of any other
rights, powers and remedies, including, without limitation, any
other rights of set-off. If any of the Obligations are given in
renewal, extension for any period or rearrangement, or applied
toward the payment of debt secured by any lien, Secured Party shall
be, and is hereby, subrogated to all the rights, titles, interests
and liens securing the debt so renewed, extended, rearranged or
paid.
Section 5.05 Disclaimer of Certain Duties.
(a) The powers conferred upon Secured Party by this Agreement
are to protect its interest in the Collateral and shall not impose
any duty upon Secured Party to exercise any such powers. Debtor
hereby agrees that Secured Party shall not be liable for, nor shall
the indebtedness evidenced by the Obligations be diminished by,
Secured Party's delay or failure to collect upon, foreclose, sell,
take possession of or otherwise obtain value for the Collateral.
(b) Secured Party shall be under no duty whatsoever to make
or give any presentment, notice of dishonor, protest, demand for
performance, notice of non-performance, notice of intent to
accelerate, notice of acceleration, or other notice or demand in
connection with any Collateral or the Obligations, or to take any
steps necessary to preserve any rights against any Obligor, Account
Debtor or other Person. Debtor waives any right of marshaling in
respect of any and all Collateral, and waives any right to require
Secured Party to proceed against any Obligor, Account Debtor or
other Person, exhaust any Collateral or enforce any other remedy
which Secured Party now has or may hereafter have against any
Obligor or other Person.
Section 5.06 Modification of Obligations; Other Security.
Debtor waives (i) any and all notice of acceptance, creation,
modification, rearrangement, renewal or extension for any period of
any instrument executed by any Obligor in connection with the
Obligations and (ii) any defense of any Obligor by reason of
disability, lack of authorization, cessation of the liability of
any Obligor or for any other reason. Debtor authorizes Secured
Party, without notice or demand and without any reservation of
rights against Debtor and without affecting Debtor's liability
hereunder or on the Obligations, from time to time to (x) take and
hold other property, other than the Collateral, as security for the
Obligations, and exchange, enforce, waive and release any or all of
the Collateral, (y) apply the Collateral in the manner permitted by
this Agreement and (z) renew, extend for any period, accelerate,
amend or modify, supplement, enforce, compromise, settle, waive or
release the obligations of any Obligor or any instrument or
agreement of such other Person with respect to any or all of the
Obligations or Collateral.
ARTICLE 6
EVENTS OF DEFAULT
Section 6.01 Events. It shall constitute an Event of Default
under this Agreement if an Event of Default occurs and is
continuing under the Credit Agreement.
Section 6.02 Remedies. Upon the occurrence and during the
continuance of any Event of Default, Secured Party may take any or
all of the following actions without notice (except where expressly
required below or in the Credit Agreement) or demand to Debtor:
(a) Declare all or part of the indebtedness pursuant to
the Obligations immediately due and payable and enforce
payment of the same by Debtor or any Obligor.
(b) Take possession of the Collateral, or at Secured
Party's reasonable request Debtor shall, at Debtor's cost,
assemble the Collateral and make it available at a location to
be specified by Secured Party which is reasonably convenient
to Debtor and Secured Party. Secured Party may, at its
option, render any equipment unusable that may be included in
the Collateral, or, at Secured Party's request, Debtor will
render it unusable. In any event, Debtor shall bear the risk
of accidental loss or damage to or diminution in value of the
Collateral, and Secured Party shall have no liability
whatsoever for failure to obtain or maintain insurance, nor to
determine whether any insurance ever in force is adequate as
to amount or as to risk insured.
(c) Sell or lease, in one or more sales or leases and in
one or more parcels, or otherwise dispose of any or all of the
Collateral in its then condition or in any other commercially
reasonable manner as Secured Party may elect, in a public or
private transaction, at any location as deemed reasonable by
Secured Party (including, without limitation, Debtor's
premises), either for cash or credit or for future delivery at
such price as Secured Party may deem fair, and (unless
prohibited by the Code, as adopted in any applicable
jurisdiction) Secured Party may be the purchaser of any or all
Collateral so sold and may apply upon the purchase price
therefor any Obligations secured hereby. Any such sale or
transfer by Secured Party either to itself or to any other
Person shall be absolutely free from any claim of right by
Debtor, including any equity or right of redemption, stay or
appraisal which Debtor has or may have under any rule of law,
regulation or statute now existing or hereafter adopted. Upon
any such sale or transfer, Secured Party shall have the right
to deliver, assign and transfer to the purchaser or transferee
thereof the Collateral so sold or transferred. It shall not
be necessary that the Collateral or any part thereof be
present at the location of any such sale or transfer. Secured
Party may, at its discretion, provide for a public sale, and
any such public sale shall be held at such time or times
within ordinary business hours and at such place or places as
Secured Party may fix in the notice of such sale. Secured
Party shall not be obligated to make any sale pursuant to any
such notice. Secured Party may, without notice or publication,
adjourn any public or private sale by announcement at any time
and place fixed for such sale, and such sale may be made at any
time or place to which the same may be so adjourned. In the event
any sale or transfer hereunder is not completed or is defective in
the opinion of Secured Party, such sale or transfer shall not
exhaust the rights of Secured Party hereunder, and Secured Party
shall have the right to cause one or more subsequent sales or
transfers to be made hereunder. In the event that any of the
Collateral is sold or transferred on credit, or to be held by
Secured Party for future delivery to a purchaser or
transferee, the Collateral so sold or transferred may be
retained by Secured Party until the purchase price or other
consideration is paid by the purchaser or transferee thereof,
but in the event that such purchaser or transferee fails to
pay for the Collateral so sold or transferred or to take
delivery thereof, Secured Party shall incur no liability in
connection therewith. If only part of the Collateral is sold
or transferred such that the Obligations remain outstanding
(in whole or in part), Secured Party's rights and remedies
hereunder shall not be exhausted, waived or modified, and
Secured Party is specifically empowered to make one or more
successive sales or transfers until all the Collateral shall
be sold or transferred and all the Obligations are paid. In
the event that Secured Party elects not to sell the
Collateral, Secured Party retains its rights to lease or
otherwise dispose of or utilize the Collateral or any part or
parts thereof in any manner authorized or permitted by law or
in equity, and to apply the proceeds of the same towards
payment of the Obligations. Each and every method of
disposition of the Collateral described in this subsection or
in subsection (f) shall constitute disposition in a
commercially reasonable manner.
(d) Take possession of all books and records of Debtor
pertaining to the Collateral. Secured Party shall have the
authority to enter upon any real property or improvements
thereon in order to obtain any such books or records, or any
Collateral located thereon, and remove the same therefrom
without liability.
(e) Apply proceeds of the disposition of the Collateral
to the Obligations in any manner elected by Secured Party and
permitted by the Code or otherwise permitted by law or in
equity. Such application may include, without limitation, the
reasonable expenses of retaking, holding, preparing for sale
or other disposition, and the reasonable attorneys' fees and
legal expenses incurred by Secured Party.
(f) Appoint any Person as agent to perform any act or
acts necessary or incident to any sale or transfer by Secured
Party of the Collateral. Additionally, any sale or transfer
hereunder may be conducted by an auctioneer or any officer or
agent of Secured Party.
(g) Receive, change the address for delivery, open and
dispose of mail addressed to Debtor, and to execute, assign
and endorse negotiable and other instruments for the payment
of money, documents of title or other evidences of payment,
shipment or storage for any form of Collateral on behalf of
and in the name of Debtor.
(h) Notify or require Debtor to notify Account Debtors
that the Accounts have been assigned to Secured Party and
direct such Account Debtors to make payments on the Accounts
directly to Secured Party. To the extent Secured Party does
not so elect, Debtor shall continue to collect the Accounts.
Secured Party or its designee shall also have the right, in
its own name or in the name of Debtor, to do any of the
following: (i) to demand, collect, receipt for, settle,
compromise any amounts due, give acquittances for, prosecute
or defend any action which may be in relation to any monies
due or to become due by virtue of, the Accounts; (ii) to sell,
transfer or assign or otherwise deal in the Accounts or the
proceeds thereof or the related goods, as fully and
effectively as if Secured Party were the absolute owner
thereof; (iii) to extend the time of payment of any of the
Accounts, to grant waivers and make any allowance or other
adjustment with reference thereto; (iv) to endorse the name of
Debtor on notes, checks or other evidences of payments on
Collateral that may come into possession of Secured Party;
(v) to take control of cash and other proceeds of any
Collateral; (vi) to sign the name of Debtor on any invoice or
▇▇▇▇ of lading relating to any Collateral, or any drafts
against Account Debtors or other persons making payment with
respect to Collateral; (vii) to send a request for
verification of Accounts to any Account Debtor; and (viii) to
do all other acts and things necessary to carry out the intent
of this Agreement.
(i) Receive or withdraw any or all funds evidenced by the
Certificate of Deposit.
(j) Exercise all other rights and remedies permitted by
law or in equity.
Section 6.03 Attorney-in-Fact. Debtor hereby irrevocably
appoints Secured Party as Debtor's attorney-in-fact, with full
authority in the place and stead of Debtor and in the name of
Debtor or otherwise, from time to time in Secured Party's
discretion upon the occurrence and during the continuance of an
Event of Default, but at Debtor's cost and expense and without
notice to Debtor:
(a) To obtain, adjust, sell and cancel any insurance with
respect to the Collateral, and endorse any draft drawn by
insurers of the Collateral. Secured Party may apply any
proceeds or unearned premiums of such insurance to the
Obligations (whether or not due).
(b) To take any action and to execute any assignment,
certificate, financing statement, notification, document or
instrument which Secured Party may deem necessary or advisable
to accomplish the purposes of this Agreement, including,
without limitation, to receive, endorse and collect all
instruments made payable to Debtor representing any payment or
other distribution in respect of the Collateral or any part
thereof and to give full discharge for the same.
Section 6.04 Account Debtors. Any payment or settlement of an
Account made by an Account Debtor will be, to the extent of such
payment or to the extent provided under such settlement, a release,
discharge and acquittance of the Account Debtor with respect to
such Account, and Debtor shall take any action as may be required
by Secured Party in connection therewith. No Account Debtor on any
Account will ever be bound to make inquiry as to the termination of
this Agreement or the rights of Secured Party to act hereunder, but
shall be fully protected by Debtor in making payment directly to
Secured Party.
Section 6.05 Liability for Deficiency. If any sale or other
disposition of Collateral by Secured Party or any other action of
Secured Party hereunder results in reduction of the Obligations,
such action will not release Debtor from its liability to Secured
Party for any unpaid Obligations, including costs, charges and
expenses incurred in the liquidation of Collateral, together with
interest thereon, and the same shall be immediately due and payable
to Secured Party at Secured Party's address set forth in the
opening paragraph hereof.
Section 6.06 Reasonable Notice. If any applicable provision
of any law requires Secured Party to give reasonable notice of any
sale or disposition or other action, Debtor hereby agrees that five
days' prior written notice shall constitute reasonable notice
thereof. Such notice, in the case of public sale, shall state the
time and place fixed for such sale and, in the case of private
sale, the time after which such sale is to be made.
Section 6.07 Non-judicial Enforcement. Secured Party may
enforce its rights hereunder without prior judicial process or
judicial hearing, and to the extent permitted by law Debtor
expressly waives any and all legal rights which might otherwise
require Secured Party to enforce its rights by judicial process.
ARTICLE 7
MISCELLANEOUS PROVISIONS
Section 7.01 Notices. Any notice required or permitted to be
given under or in connection with this Agreement shall be given in
accordance with the notice provisions of the Credit Agreement.
Section 7.02 Amendments and Waivers. Secured Party's
acceptance of partial or delinquent payments or any forbearance,
failure or delay by Secured Party in exercising any right, power or
remedy hereunder shall not be deemed a waiver of any obligation of
Debtor or any Obligor, or of any right, power or remedy of Secured
Party; and no partial exercise of any right, power or remedy shall
preclude any other or further exercise thereof. Secured Party may
remedy any Event of Default hereunder or in connection with the
Obligations without waiving the Event of Default so remedied.
Debtor hereby agrees that if Secured Party agrees to a waiver of
any provision hereunder, or an exchange of or release of the
Collateral, or the addition or release of any Obligor or other
Person, any such action shall not constitute a waiver of any of
Secured Party's other rights or of Debtor's obligations hereunder.
This Agreement may be amended only by an instrument in writing
executed jointly by Debtor and Secured Party and may be
supplemented only by documents delivered or to be delivered in
accordance with the express terms hereof.
Section 7.03 Copy as Financing Statement. A photocopy or
other reproduction of this Agreement or any financing statement
covering the Collateral is sufficient as a financing statement, and
the same may be filed with any appropriate filing authority for the
purpose of perfecting Secured Party's security interest in the
Collateral.
Section 7.04 Possession of Collateral. Secured Party shall be
deemed to have possession of any Collateral in transit to it or set
apart for it (or, in either case, any of its agents, affiliates or
correspondents).
Section 7.05 Redelivery of Collateral. If any sale or
transfer of Collateral by Secured Party results in full
satisfaction of the Obligations, and after such sale or transfer
and discharge there remains a surplus of proceeds, Secured Party
will deliver to Debtor such excess proceeds in a commercially
reasonable time; provided, however, that Secured Party shall not be
liable for any interest, cost or expense in connection with any
delay in delivering such proceeds to Debtor.
Section 7.06 Governing Law; Jurisdiction. This Agreement and
the security interest granted hereby shall be construed in
accordance with and governed by the laws of the State of Texas
(except to the extent that the laws of any other jurisdiction
govern the perfection and priority of the security interests
granted hereby).
Section 7.07 Continuing Security Agreement.
(a) Except as may be expressly applicable pursuant to
Section 9.505 of the Code, no action taken or omission to act by
Secured Party hereunder, including, without limitation, any action
taken or inaction pursuant to Section 6.02, shall be deemed to
constitute a retention of the Collateral in satisfaction of the
Obligations or otherwise to be in full satisfaction of the
Obligations, and the Obligations shall remain in full force and
effect, until Secured Party shall have applied payments (including,
without limitation, collections from Collateral) towards the
Obligations in the full amount then outstanding or until such
subsequent time as is hereinafter provided in subsection (b) below.
(b) To the extent that any payments on the Obligations or
proceeds of the Collateral are subsequently invalidated, declared
to be fraudulent or preferential, set aside or required to be
repaid to a trustee, debtor in possession, receiver or other Person
under any bankruptcy law, common law or equitable cause, then to
such extent the Obligations so satisfied shall be revived and
continue as if such payment or proceeds had not been received by
Secured Party, and Secured Party's security interests, rights,
powers and remedies hereunder shall continue in full force and
effect. In such event, this Agreement shall be automatically
reinstated if it shall theretofore have been terminated pursuant to
Section 7.08.
Section 7.08 Termination. The grant of a security interest
hereunder and all of Secured Party's rights, powers and remedies in
connection therewith shall remain in full force and effect until
Secured Party has retransferred and delivered all Collateral in its
possession to Debtor, and executed a written release or termination
statement and reassigned to Debtor without recourse or warranty any
remaining Collateral and all rights conveyed hereby. Upon the
complete payment of the Obligations and the compliance by Debtor
with all covenants and agreements hereof, Secured Party, at the
written request and expense of Debtor, will release, reassign and
transfer the Collateral to Debtor and declare this Agreement to be
of no further force or effect. Notwithstanding the foregoing, the
reimbursement and indemnification provisions of Section 4.08 and
the provisions of subsection 7.07(b) shall survive the termination
of this Agreement.
Section 7.09 Counterparts, Effectiveness. This Agreement may
be executed in two or more counterparts. Each counterpart is
deemed an original, but all such counterparts taken together
constitute one and the same instrument. This Agreement becomes
effective upon the execution hereof by Debtor and delivery of the
same to Secured Party, and it is not necessary for Secured Party to
execute any acceptance hereof or otherwise signify or express its
acceptance hereof.
DEBTOR: MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
Schedule 1.02(b)
None
Schedule 1.02(c)
Transmission Contracts
1. Gas Transportation Agreement between Magnolia Pipeline
Corporation ("Magnolia") and Meridian Oil, Inc. ("Meridian")
dated August 23, 1991.
a. Dedication Agreement between Magnolia and Meridian dated
June 20, 1991.
b. Letter Agreement between Magnolia and Meridian dated July
7, 1992.
c. Notice from Magnolia to Meridian of July, 1993.
2. Gas Transportation Agreement between Magnolia and Transco
Energy Marketing Company ("Transco") dated July 12, 1990, as
amended by Amendment to the Gas Transportation Agreement dated
as of August 1, 1995, between Magnolia and Transco.
Section 9.03 Investments, Loans and Advances. The Borrower
will not make or permit to remain outstanding any loans or advances
to or investments in any Person, except that the foregoing
restriction shall not apply to:
(a) investments, loans or advances reflected in the Financial
Statements or which are disclosed to the Lender in
Schedule 9.03;
(b) accounts receivable arising in the ordinary course of
business;
(c) direct obligations of the United States or any agency
thereof, or obligations guaranteed by the United States or any
agency thereof, in each case maturing within one year from the
date of creation thereof;
(d) commercial paper maturing within one year from the date
of creation thereof rated in the highest grade by Standard &
Poors Corporation or ▇▇▇▇▇'▇ Investors Service, Inc.;
(e) deposits maturing within one year from the date of
creation thereof with, including certificates of deposit
issued by, the Lender or any office located in the United
States of any other bank or trust company which is organized
under the laws of the United States or any state thereof, has
capital, surplus and undivided profits aggregating at least
$100,000,000.00 (as of the date of the Lender's or bank or
trust company's most recent financial reports) and has a short
term deposit rating of no lower than A2 or P2, as such rating
is set forth from time to time, by Standard & Poors
Corporation or ▇▇▇▇▇'▇ Investors Service, Inc., respectively;
(f) deposits in money market funds investing exclusively in
investments described in Section 9.03(d), 9.03(e) or 9.03(f);
(g) a one time advance of $300,000 to MERI; and
(h) other investments, loans or advances not to exceed
$50,000 in the aggregate at any time.
Section 9.04 Dividends, Distributions and Redemptions. The
Borrower will not declare or pay any dividend, purchase, redeem or
otherwise acquire for value any of its stock now or hereafter
outstanding, return any capital to its stockholders or make any
distribution of its assets to its stockholders.
Section 9.05 Sales and Leasebacks. The Borrower will not
enter into any arrangement, directly or indirectly, with any Person
whereby the Borrower shall sell or transfer any of its Property,
whether now owned or hereafter acquired, and whereby the Borrower
shall then or thereafter rent or lease as lessee such Property or
any part thereof or other Property which the Borrower intends to
use for substantially the same purpose or purposes as the Property
sold or transferred.
Section 9.06 Nature of Business. The Borrower will not allow
any material change to be made in the character of its business.
Section 9.07 Mergers, Etc. The Borrower will not merge into
or with or consolidate with any other Person, or sell, lease or
otherwise dispose of (whether in one transaction or in a series of
transactions) all or substantially all of its Property or assets to
any other Person.
Section 9.08 Proceeds of Note. The Borrower will not permit
the proceeds of the Note to be used for any purpose other than
those permitted by Section 7.07. Neither the Borrower nor any
Person acting on behalf of the Borrower has taken or will take any
action which might cause any of the Loan Documents to violate
Regulation G, U or X or any other regulation of the Board of
Governors of the Federal Reserve System or to violate Section 7 of
the Securities Exchange Act of 1934 or any rule or regulation
thereunder, in each case as now in effect or as the same may
hereinafter be in effect.
Section 9.09 ERISA Compliance. The Borrower will not at any
time:
(a) Engage in, or permit any ERISA Affiliate to engage in,
any transaction in connection with which the Borrower or any
ERISA Affiliate could be subjected to either a civil penalty
assessed pursuant to section 502(c), (i) or (l) of ERISA or a
tax imposed by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit any ERISA Affiliate to terminate,
any Plan in a manner, or take any other action with respect to
any Plan, which could result in any liability to the Borrower
or any ERISA Affiliate to the PBGC;
(c) Fail to make, or permit any ERISA Affiliate to fail to
make, full payment when due of all amounts which, under the
provisions of any Plan, agreement relating thereto or
applicable law, the Borrower or any ERISA Affiliate is
required to pay as contributions thereto;
(d) Permit to exist, or allow any ERISA Affiliate to permit
to exist, any accumulated funding deficiency within the
meaning of Section 302 of ERISA or section 412 of the Code,
whether or not waived, with respect to any Plan;
(e) Permit, or allow any ERISA Affiliate to permit, the
actuarial present value of the benefit liabilities under any
Plan maintained by the Borrower or any ERISA Affiliate which
is regulated under Title IV of ERISA to exceed the current
value of the assets (computed on a plan termination basis in
accordance with Title IV of ERISA) of such Plan allocable to
such benefit liabilities. The term "actuarial present value
of the benefit liabilities" shall have the meaning specified
in section 4041 of ERISA;
(f) Contribute to or assume an obligation to contribute to,
or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any Multiemployer Plan;
(g) Acquire, or permit any ERISA Affiliate to acquire, an
interest in any Person that causes such Person to become an
ERISA Affiliate with respect to the Borrower or any ERISA
Affiliate if such Person sponsors, maintains or contributes
to, or at any time in the six-year period preceding such
acquisition has sponsored, maintained, or contributed to, (1)
any Multiemployer Plan, or (2) any other Plan that is subject
to Title IV of ERISA under which the actuarial present value
of the benefit liabilities under such Plan exceeds the current
value of the assets (computed on a plan termination basis in
accordance with Title IV of ERISA) of such Plan allocable to
such benefit liabilities;
(h) Incur, or permit any ERISA Affiliate to incur, a
liability to or on account of a Plan under sections 515, 4062,
4063, 4064, 4201 or 4204 of ERISA;
(i) Contribute to or assume an obligation to contribute to,
or permit any ERISA Affiliate to contribute to or assume an
obligation to contribute to, any employee welfare benefit
plan, as defined in section 3(1) of ERISA, including, without
limitation, any such plan maintained to provide benefits to
former employees of such entities, that may not be terminated
by such entities in their sole discretion at any time without
any material liability; or
(j) Amend or permit any ERISA Affiliate to amend, a Plan
resulting in an increase in current liability such that the
Borrower or any ERISA Affiliate is required to provide
security to such Plan under section 401(a)(29) of the Code.
Section 9.10 Sale or Discount of Receivables. The Borrower
will not discount or sell (with or without recourse) any of its
notes receivable or accounts receivable.
Section 9.11 Tangible Net Worth. The Borrower will not
permit its Tangible Net Worth to be less than $1,750,000 at any
time, with such minimum amount being permanently increased by an
amount equal to 50% of positive net income of the Borrower for each
fiscal quarter of the Borrower, and 100% of equity received by the
Borrower subsequent to September 30, 1995; provided, however such
minimum amount shall not be decreased as a result of any losses or
negative net income of the Borrower.
Section 9.12 Cash Flow to Debt Service Coverage Ratio. The
Borrower will not permit its Cash Flow to Debt Service Ratio as of
the end of any fiscal quarter of the Borrower (calculated on a
rolling four-quarter basis commencing with the quarter ended
December 31, 1995, provided, for the fiscal quarters ending
December 31, 1995, March 31, 1996 and June 30, 1996, the
calculation will be determined for the time period commencing on
October 1, 1995) to be less than 1.25 to 1.00. For purposes of
this Section 9.12, "Cash Flow to Debt Service Ratio" shall mean the
ratio of (i) net income, plus depreciation and other non-cash
expenses, plus the principal amount of the MERI CD if, and only
MERI CD is pledged to the Lender as security for the Indebtedness,
less non-cash income for the four fiscal quarters ending on such
date to (ii) cash payments made for principal on Debt other than
the Loan for such four fiscal quarters of the Borrower, plus
mandatory prepayments of principal pursuant to Section 2.03 made on
the Loans at the end of such four fiscal quarters.
Section 9.13 Environmental Matters. The Borrower will not
cause or permit any of its Property to be in violation of, or do
anything or permit anything to be done which will subject any such
Property to any remedial obligations under any Environmental Laws,
assuming disclosure to the applicable Governmental Authority of all
relevant facts, conditions and circumstances, if any, pertaining to
such Property where such violations or remedial obligations would
have a Material Adverse Effect.
Section 9.14 Transactions with Affiliates. The Borrower will
not enter into any transaction, including, without limitation, any
purchase, sale, lease or exchange of Property or the rendering of
any service, with any Affiliate unless such transactions are
otherwise permitted under this Agreement, are in the ordinary
course of its business and are upon fair and reasonable terms no
less favorable to it than it would obtain in a comparable arm's
length transaction with a Person not an Affiliate.
Section 9.15 Subsidiaries and Partnerships. The Borrower
shall not create any subsidiaries or partnerships without the prior
written consent of the Lender.
Section 9.16 Negative Pledge Agreements. The Borrower will
not create, incur, assume or suffer to exist any contract,
agreement or understanding (other than this Agreement and the
Security Instruments) which in any way prohibits or restricts the
granting, conveying, creation or imposition of any Lien on any of
its Property or which requires the consent of or notice to other
Persons in connection therewith.
Section 9.17 Preservation of Designated Contracts. The
Borrower will not agree to any change, modification or amendment to
or waiver of any of the terms or provisions of any of the
Designated Contracts. The Borrower will not take any action or
permit any action to be taken by others which will release any
Person from its obligations or liabilities under any of the
Designated Contracts.
ARTICLE X
Events of Default; Remedies
Section 10.01 Events of Default. One or more of the
following events shall constitute an "Event of Default":
(a) the Borrower shall default in the payment or prepayment
when due of any principal of or interest on any Loan, of any
reimbursement obligation for a disbursement made under any
Letter of Credit, or any fees or other amount payable by it
hereunder or under any Security Instrument and such default,
other than a default of payment or prepayment of principal,
shall continue unremedied for a period of 3 Business Days; or
(b) the Borrower or MERI shall default in the payment when
due of any principal of or interest on any of its other Debt
aggregating $25,000 or more, or any event specified in any
note, agreement, indenture or other document evidencing or
relating to any such Debt shall occur if the effect of such
event is to cause, or (with the giving of any notice or the
lapse of time or both) to permit the holder or holders of such
Debt (or a trustee or agent on behalf of such holder or
holders) to cause, such Debt to become due prior to its stated
maturity; or
(c) any representation, warranty or certification made or
deemed made herein or in any Security Instrument by the
Borrower, or any certificate furnished to the Lender pursuant
to the provisions hereof or any Security Instrument, shall
prove to have been false or misleading as of the time made or
furnished in any material respect; or
(d) the Borrower shall default in the performance of any of
its obligations under Article IX, except for its obligations
under Sections 9.11, 9.12 and 9.13 of Article IX, or any other
Article of this Agreement other than under Article VIII; or
the Borrower shall default in the performance of any of its
obligations under Article VIII, Sections 9.11, 9.12 and 9.13
of Article IX, or any Security Instrument and such default
shall continue unremedied for a period of thirty (30) days
after the earlier to occur of (i) notice thereof to the
Borrower by the Lender or (ii) the Borrower otherwise becoming
aware of such default; or
(e) the Borrower shall admit in writing its inability to, or
be generally unable to, pay its debts as such debts become
due; or
(f) the Borrower shall (i) apply for or consent to the
appointment of, or the taking of possession by, a receiver,
custodian, trustee or liquidator of itself or of all or a
substantial part of its property, (ii) make a general
assignment for the benefit of its creditors, (iii) commence a
voluntary case under the Federal Bankruptcy Code (as now or
hereafter in effect), (iv) file a petition seeking to take
advantage of any other law relating to bankruptcy, insolvency,
reorganization, winding-up, liquidation or composition or
readjustment of debts, (v) fail to controvert in a timely and
appropriate manner, or acquiesce in writing to, any petition
filed against it in an involuntary case under the Federal
Bankruptcy Code, or (vi) take any corporate action for the
purpose of effecting any of the foregoing; or
(g) a proceeding or case shall be commenced, without the
application or consent of the Borrower, in any court of
competent jurisdiction, seeking (i) its liquidation,
reorganization, dissolution or winding-up, or the composition
or readjustment of its debts, (ii) the appointment of a
trustee, receiver, custodian, liquidator or the like of the
Borrower of all or any substantial part of its assets, or
(iii) similar relief in respect of the Borrower under any law
relating to bankruptcy, insolvency, reorganization, winding-
up, or composition or adjustment of debts, and such proceeding
or case shall continue undismissed, or an order, judgment or
decree approving or ordering any of the foregoing shall be
entered and continue unstayed and in effect, for a period of
60 days; or (iv) an order for relief against the Borrower
shall be entered in an involuntary case under the Federal
Bankruptcy Code; or
(h) a judgment or judgments for the payment of money in
excess of $50,000 in the aggregate shall be rendered by a
court against the Borrower and the same shall not be
discharged (or provision shall not be made for such
discharge), or a stay of execution thereof shall not be
procured, within thirty (30) days from the date of entry
thereof and the Borrower shall not, within said period of 30
days, or such longer period during which execution of the same
shall have been stayed, appeal therefrom and cause the
execution thereof to be stayed during such appeal; or
(i) the Security Instruments after delivery thereof shall
for any reason, except to the extent permitted by the terms
thereof, cease to be in full force and effect and valid,
binding and enforceable in accordance with their terms, or
cease to create a valid and perfected Lien of the priority
required thereby on any of the collateral purported to be
covered thereby, except to the extent permitted by the terms
of this Agreement, or the Borrower shall so state in writing;
or
(j) any Letter of Credit becomes the subject matter of any
order, judgment, injunction or any other such determination,
or if the Borrower or any other Person shall petition or apply
for or obtain any order restricting payment by the Lender
under any Letter of Credit or extending the Lender's liability
under any Letter of Credit beyond the expiration date stated
therein or otherwise agreed to by the Lender; or
(k) the Borrower discontinues its usual business; or
(l) any Guarantor takes, suffers or permits to exist any of
the events or conditions referred to in paragraphs (e), (f),
(g) or (h) hereof or if any provision of any Guaranty
Agreement related thereto shall for any reason cease to be
valid and binding on such Guarantor or if such Guarantor shall
so state in writing; or
(m) the occurrence of a Material Change without the written
consent of the Lender.
Section 10.02 Remedies.
(a) In the case of an Event of Default other than one
referred to in clauses (e), (f) or (g) of Section 10.01 or in
clause (l) to the extent it relates to clauses (e), (f) or
(g), the Lender may, by notice to the Borrower, cancel the
Commitment and/or declare the principal amount then
outstanding of, and the accrued interest on, the Loans and all
other amounts payable by the Borrower hereunder and under the
Note (including without limitation the payment of cash
collateral to secure the LC Exposure as provided in Section
2.08(b) hereof) to be forthwith due and payable, whereupon
such amounts shall be immediately due and payable without
presentment, demand, protest, notice of intent to accelerate,
notice of acceleration or other formalities of any kind, all
of which are hereby expressly waived by the Borrower.
(b) In the case of the occurrence of an Event of Default
referred to in clauses (e), (f) or (g) of Section 10.01 or in
clause (l) to the extent it relates to clauses (e), (f) or
(g), the Commitment shall be automatically cancelled and the
principal amount then outstanding of, and the accrued interest
on, the Loans and all other amounts payable by the Borrower
hereunder and under the Note (including without limitation the
payment of cash collateral to secure the LC Exposure as
provided in Section 2.08(b) hereof) shall become automatically
immediately due and payable without presentment, demand,
protest, notice of intent to accelerate, notice of
acceleration or other formalities of any kind, all of which
are hereby expressly waived by the Borrower.
(c) All proceeds received after maturity of the Note, whether
by acceleration or otherwise shall be applied first to
reimbursement of expenses and indemnities provided for in this
Agreement and the Security Instruments; second to accrued
interest on the Note; third to fees; fourth to principal
outstanding on the Note and other Indebtedness; fifth to serve
as cash collateral to be held by the Lender to secure the LC
Exposure; and, to the extent of any excess, to the Borrower or
as otherwise required by any Governmental Requirement.
ARTICLE XI
Miscellaneous
Section 11.01 Waiver. No failure on the part of the Lender
to exercise and no delay in exercising, and no course of dealing
with respect to, any right, power or privilege under any of the
Loan Documents shall operate as a waiver thereof, nor shall any
single or partial exercise of any right, power or privilege under
any of the Loan Documents preclude any other or further exercise
thereof or the exercise of any other right, power or privilege.
The remedies provided herein are cumulative and not exclusive of
any remedies provided by law.
Section 11.02 Notices. All notices and other communications
provided for herein and in the other Loan Documents (including,
without limitation, any modifications of, or waivers or consents
under, this Agreement or the other Loan Documents) shall be given
or made by telex, telecopy, courier or U.S. Mail or in writing and
telexed, telecopied, mailed or delivered to the intended recipient
at the "Address for Notices" specified below its name on the
signature pages hereof or in the Loan Documents or, as to any
party, at such other address as shall be designated by such party
in a notice to each other party. Except as otherwise provided in
this Agreement or in the other Loan Documents, all such communica-
tions shall be deemed to have been duly given when transmitted, if
transmitted before 1:00 p.m. local time on a Business Day
(otherwise on the next succeeding Business Day) by telex or
telecopier and evidence or confirmation of receipt is obtained, or
personally delivered or, in the case of a mailed notice, three (3)
Business Days after the date deposited in the mails, postage
prepaid, in each case given or addressed as aforesaid.
Section 11.03 Payment of Expenses, Indemnities, etc. The
Borrower agrees:
(a)whether or not the transactions hereby contemplated are
consummated, to pay all reasonable expenses of the Lender in
the administration (both before and after the execution hereof
and including advice of counsel as to the rights and duties of
the Lender with respect thereto) of, and in connection with
the negotiation, syndication, investigation, preparation,
execution and delivery of, recording or filing of,
preservation of rights under, enforcement of, and refinancing,
renegotiation or restructuring of, the Loan Documents and any
amendment, waiver or consent relating thereto (including,
without limitation, travel, photocopy, mailing, courier,
telephone and other similar expenses of the Lender, the cost
of environmental audits, surveys and appraisals at reasonable
intervals, the reasonable fees and disbursements of counsel
and other outside consultants for the Lender and, in the case
of enforcement, the reasonable fees and disbursements of
counsel for the Lender); and promptly reimburse the Lender for
all amounts expended, advanced or incurred by the Lender to
satisfy any obligation of the Borrower under this Agreement or
any Security Instrument, including without limitation, all
costs and expenses of foreclosure;
(b)to indemnify the Lender and its Affiliates and each of their officers,
directors, employees, representatives, agents, attorneys, accountants and
experts ("Indemnified Parties") from, hold each of them harmless against and
promptly upon demand pay or reimburse each of them for, the Indemnity Matters
which may be incurred by or asserted against or involve any of them (whether
or not any of them is designated a party thereto) as a result of, arising out
of or in any way related to (i) any actual or proposed use by the Borrower
of the proceeds of any of the Loans, (ii) the execution, delivery and
performance of the Loan Documents, (iii) the operations of the business of the
Borrower, (iv) the failure of the Borrower or any Guarantor to comply with the
terms of any Security Instrument or this Agreement, or with any Governmental
Requirement, (v) any inaccuracy of any representation or any breach of any
warranty of the Borrower or any Guarantor set forth in any of the Loan
Documents, (vi) the issuance, execution and delivery or transfer of or payment
or failure to pay under any Letter of Credit, or (vii) the payment of a
drawing under any Letter of Credit notwithstanding the non-compliance, non-
delivery or other improper presentation of the manually executed draft(s) and
certification(s), (vii) any assertion that the Lender was not entitled to
receive the proceeds received pursuant to the Security Instruments or (viii)
any other aspect of the Loan Documents, including, without limitation, the
reasonable fees and disbursements of counsel and all other expenses incurred
in connection with investigating, defending or preparing to defend any such
action, suit, proceeding (including any investigations, litigation or
inquiries) or claim and including all Indemnity Matters arising by reason of
the ordinary negligence of any Indemnified Party, but excluding all Indemnity
Matters arising solely by reason of claims of the Lender's shareholders
against the Lender or by reason of the gross negligence or willful misconduct
on the part of the Indemnified Party; and
(c)to indemnify and hold harmless from time to time the Indemnified Party from
and against any and all losses, claims, cost recovery actions, administrative
orders or proceedings, damages and liabilities to which any such Person may
become subject (i) under any Environmental Law applicable to the Borrower or
any of its Properties, including without limitation, the treatment or disposal
of hazardous substances on any of their Properties, (ii) as a result of the
breach or non-compliance by the Borrower with any Environmental Law applicable
to the Borrower, (iii) due to past ownership by the Borrower of any of its
Properties or past activity on any of their Properties which, though lawful
and fully permissible at the time, could result in present liability, (iv) the
presence, use, release, storage, treatment or disposal of hazardous substances
on or at any of the Properties owned or operated by the Borrower, or (v) any
other environmental, health or safety condition in connection with the Loan
Documents, provided, however, no indemnity shall be afforded under this section
11.03(c) in respect of any Property for any occurrence arising from the acts
or omissions of the Lender during the period after which such Person, its
successors or assigns shall have obtained possession of such Property (whether
by foreclosure or deed in lieu of foreclosure, as mortgagee-in-possession or
otherwise).
(d)No Indemnified Party may settle any claim to be indemnified without the
consent of the indemnitor, such consent not to be unreasonably withheld;
provided, that the indemnitor may not reasonably withhold consent to any
settlement that an Indemnified Party proposes, if the indemnitor does not
have the financial ability to pay all its obligations outstanding and
asserted against the indemnitor at that time, including the maximum potential
claims against the Indemnified Party to be indemnified pursuant to this
Section 11.03.
(e)In the case of any indemnification hereunder, the Lender shall give
notice to the Borrower of any such claim or demand being made against the
Indemnified Party and the Borrower shall have the non-exclusive right to join
in the defense against any such claim or demand provided that if the Borrower
provides a defense, the Indemnified Party shall bear its own cost of
defense unless there is a conflict between the Borrower and such Indemnified
Party.
(f)the foregoing indemnities shall extend to the Indemnified Parties
notwithstanding the sole or concurrent negligence of every kind or character
whatsoever, whether active or passive, whether an affirmative act or an
omission, including without limitation, all types of negligent conduct
identified in the restatement (second) of torts of one or more of the
Indemnified Parties or by reason of strict liability imposed without fault on
any one or more of the Indemnified Parties. to the extent that an Indemnified
Party is found to have committed an act of gross negligence or willful
misconduct, this contractual obligation of indemnification shall continue but
shall only extend to the portion of the claim that is deemed to have occurred
by reason of events other than the gross negligence or willful misconduct of
the Indemnified Party.
(g)The Borrower's obligations nder this Section 11.03 shall survive any
termination of this Agreement and the payment of the Note and shall continue
thereafter in full force and effect.
(h)The Borrower shall pay any amounts due under this Section 11.03 within
thirty (30) days of the receipt by the Borrower of notice of the amount due.
Section 11.04 Amendments, Etc. Any provision of this
Agreement or any Security Instrument may be amended, modified or
waived with the Borrower's and the Lender's prior written consent.
Section 11.05 Successors and Assigns. This Agreement shall
be binding upon and inure to the benefit of the parties hereto and
their respective successors and permitted assigns.
Section 11.06 Assignments and Participations.
(a) The Borrower may not assign its rights or obligations
hereunder or under the Note or any Letters of Credit without
the prior consent of the Lender.
(b) The Lender may, upon the written consent of the Borrower
(which consent shall not be unreasonably withheld) assign to
one or more assignees all or a portion of its rights and
obligations under this Agreement. Any assignment will become
effective upon the execution and delivery of the assignment to
the Borrower. Upon receipt and acceptance of such executed
assignment, the Borrower, will execute and deliver new Notes
to the assignor and/or assignee, as appropriate, in accordance
with their respective interests as they appear. Upon the
effectiveness of any assignment pursuant to this Section
11.06(b), the assignee will become a "Lender," if not already
a "Lender," for all purposes of this Agreement and the
Security Instruments. The assignor shall be relieved of its
obligations hereunder to the extent of such assignment (and if
the assigning Lender no longer holds any rights or obligations
under this Agreement, such assigning Lender shall cease to be
a "Lender" hereunder except that its rights under Sections
4.04 and 11.03 shall not be affected).
(c) The Lender may transfer, grant or assign participations
in all or any part of its interests hereunder pursuant to this
Section 11.06(c) to any Person, provided that: (i) the Lender
shall remain the "Lender" for all purposes of this Agreement
and the transferee of such participation shall not constitute
a "Lender" hereunder; and (ii) no participant under any such
participation shall have rights to approve any amendment to or
waiver of any of the Loan Documents except to the extent such
amendment or waiver would (x) extend the Revolving Credit
Termination Date, (y) reduce the interest rate (other than as
a result of waiving the applicability of any post-default
increases in interest rates) or fees applicable to any of the
Commitment or Loans or Letters of Credit in which such
participant is participating, or postpone the payment of any
thereof, or (z) release all or substantially all of the
collateral (except as expressly provided in the Security
Instruments) supporting any of the Commitment or Loans or
Letters of Credit in which such participant is participating.
In the case of any such participation, the participant shall
not have any rights under this Agreement or any of the
Security Instruments (the participant's rights against the
Lender in respect of such participation to be those set forth
in the agreement creating such participation), and all amounts
payable by the Borrower hereunder shall be determined as if
the Lender had not sold such participation. In addition, each
agreement creating any participation must include an agreement
by the participant to be bound by the provisions of Section
11.15.
(d) The Lender may furnish any information concerning the
Borrower in its possession from time to time to assignees and
participants (including prospective assignees and
participants); provided that, such Persons agree to be bound
by the provisions of Section 11.15 hereof.
(e) Notwithstanding anything in this Section 11.06 to the
contrary, the Lender may assign and pledge the Note to any
Federal Reserve Bank or the United States Treasury as
collateral security pursuant to Regulation A of the Board of
Governors of the Federal Reserve System and any operating
circular issued by such Federal Reserve System and/or such
Federal Reserve Bank. No such assignment and/or pledge shall
release the Lender from its obligations hereunder.
(f) Notwithstanding any other provisions of this Section
11.06, no transfer or assignment of the interests or
obligations of the Lender or any grant of participations
therein shall be permitted if such transfer, assignment or
grant would require the Borrower to file a registration
statement with the SEC or to qualify the Loans under the "Blue
Sky" laws of any state.
Section 11.07 Invalidity. In the event that any one or more
of the provisions contained in any of the Loan Documents or the
Letters of Credit, shall, for any reason, be held invalid, illegal
or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of any of the
other Loan Documents.
Section 11.08 Counterparts. This Agreement may be executed
in any number of counterparts, all of which taken together shall
constitute one and the same instrument and any of the parties
hereto may execute this Agreement by signing any such counterpart.
Section 11.09 References. The words "herein," "hereof,"
"hereunder" and other words of similar import when used in this
Agreement refer to this Agreement as a whole, and not to any
particular article, section or subsection. Any reference herein to
a Section shall be deemed to refer to the applicable Section of
this Agreement unless otherwise stated herein. Any reference
herein to an exhibit or schedule shall be deemed to refer to the
applicable exhibit or schedule attached hereto unless otherwise
stated herein.
Section 11.10 Survival. The obligations of the parties under
Section 4.04 and Sections 11.03 and 11.15 shall survive the
repayment of the Loans and the termination of the Commitment. To
the extent that any payments on the Indebtedness or proceeds of any
collateral are subsequently invalidated, declared to be fraudulent
or preferential, set aside or required to be repaid to a trustee,
debtor in possession, receiver or other Person under any bankruptcy
law, common law or equitable cause, then to such extent, the
Indebtedness so satisfied shall be revived and continue as if such
payment or proceeds had not been received and the Lender's Liens,
security interests, rights, powers and remedies under this
Agreement and each Security Instrument shall continue in full force
and effect. In such event, each Security Instrument shall be
automatically reinstated and the Borrower shall take such action as
may be reasonably requested by the Lender to effect such
reinstatement.
Section 11.11 Captions. Captions and section headings
appearing herein are included solely for convenience of reference
and are not intended to affect the interpretation of any provision
of this Agreement.
Section 11.12 no oral agreements. the Loan Documents embody the
entire agreement and understanding between the parties and supersede all other
agreements and understandings between such parties relating to the subject
matter hereof and thereof. the Loan Documents 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.
Section 11.13 governing law; submission to jurisdiction.
(a)this Agreement and the Note shall be governed by, and construed in
accordance with, the laws of the state of texas except to the extent that
united states federal law permits the Lender to charge interest at the rate
allowed by the laws of the state where the Lender is located. tex. rev. civ.
stat. ▇▇▇. art. 5069, ch. 15 (which regulates certain revolving credit loan
accounts and revolving tri-party accounts) shall not apply to this Agreement
or the notes.
(b)any legal action or proceeding with respect to the Loan Documents shall be
brought in the courts of the state of texas or of the united states of america
for the southern district of texas, and, by execution and delivery of this
Agreement, the Borrower hereby accepts for itself and (to the extent permitted
by law) in respect of its Property, generally and unconditionally, the
jurisdiction of the aforesaid courts. the Borrower hereby irrevocably waives
any objection, including, without limitation, any objection to the laying of
venue or based on the grounds of forum non conveniens, which it may now or
hereafter have to the bringing of any such action or proceeding in such
respective jurisdictions. this submission to jurisdiction is non-exclusive and
does not preclude the Lender from obtaining jurisdiction over the Borrower in
any court otherwise having jurisdiction.
(c) the Borrower hereby irrevocably designates Mr. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇ located at
c/o Midcoast Energy Resources, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇
▇▇▇▇▇, as the designee, appointee and agent of the Borrower to receive, for
and on behalf of the Borrower, service of process in such respective
jurisdictions in any legal action or proceeding with respect to the Loan
Documents. it is understood that a copy of such process served on such agent
will be promptly forwarded by overnight courier to the Borrower at its address
set forth under its signature below, but the failure of the Borrower to
receive such copy shall not affect in any way the service of such process.
the Borrower further irrevocably consents to the service of process of any of
the aforementioned courts in any such action or proceeding by the mailing of
copies thereof by registered or certified mail, postage prepaid, to the
Borrower at its said address, such service to become effective thirty (30)
days after such mailing.
(d) nothing herein shall affect the right of the Lender or any holder of the
Note to serve process in any other manner permitted by law or to commence
legal proceedings or otherwise proceed against the Borrower in any other
jurisdiction.
(e)each of the Borrower and the Lender hereby (i) irrevocably waive, to the
maximum extent not prohibited by law, any right it may have to claim or
recover in any such litigation any special, exemplary, punitive or
consequential damages, or damages other than, or in addition to, actual
damages; (ii) certify that no party hereto nor any representative or agent of
counsel for any party hereto has represented, expressly or otherwise, or
implied that such party would not, in the event of litigation, seek to enforce
the foregoing waiver, and (iii) acknowledge that it has been induced to enter
into this Agreement, the Security Instruments and the transactions contemplated
hereby and thereby by, among other things, the mutual waivers and
certifications contained in this section 11.13.
Section 11.14 Interest. It is the intention of the parties
hereto that Lender shall conform strictly to usury laws applicable
to it. Accordingly, if the transactions contemplated hereby would
be usurious as to the Lender under laws applicable to it (including
the laws of the United States of America and the State of Texas or
any other jurisdiction whose laws may be mandatorily applicable to
the Lender notwithstanding the other provisions of this Agreement),
then, in that event, notwithstanding anything to the contrary in
the Loan Documents or any agreement entered into in connection with
or as security for the Note, it is agreed as follows: (i) the
aggregate of all consideration which constitutes interest under law
applicable to the Lender that is contracted for, taken, reserved,
charged or received by the Lender any of the Loan Documents or
agreements or otherwise in connection with the Note shall under no
circumstances exceed the maximum amount allowed by such applicable
law, and any excess shall be cancelled automatically and if
theretofore paid shall be credited by the Lender on the principal
amount of the Indebtedness (or, to the extent that the principal
amount of the Indebtedness shall have been or would thereby be paid
in full, refunded by the Lender to the Borrower); and (ii) in the
event that the maturity of the Note is accelerated by reason of an
election of the holder thereof resulting from any Event of Default
under this Agreement or otherwise, or in the event of any required
or permitted prepayment, then such consideration that constitutes
interest under law applicable to the Lender may never include more
than the maximum amount allowed by such applicable law, and excess
interest, if any, provided for in this Agreement or otherwise shall
be cancelled automatically by the Lender as of the date of such
acceleration or prepayment and, if theretofore paid, shall be
credited by the Lender on the principal amount of the Indebtedness
(or, to the extent that the principal amount of the Indebtedness
shall have been or would thereby be paid in full, refunded by the
Lender to the Borrower). All sums paid or agreed to be paid to the
Lender for the use, forbearance or detention of sums due hereunder
shall, to the extent permitted by law applicable to the Lender, be
amortized, prorated, allocated and spread throughout the full term
of the Loans evidenced by the Note until payment in full so that
the rate or amount of interest on account of any Loans hereunder
does not exceed the maximum amount allowed by such applicable law.
If at any time and from time to time (x) the amount of interest
payable to the Lender on any date shall be computed at the Highest
Lawful Rate applicable to the Lender pursuant to this Section 11.14
and (y) in respect of any subsequent interest computation period
the amount of interest otherwise payable to the Lender would be
less than the amount of interest payable to the Lender computed at
the Highest Lawful Rate applicable to the Lender, then the amount
of interest payable to the Lender in respect of such subsequent
interest computation period shall continue to be computed at the
Highest Lawful Rate applicable to the Lender until the total amount
of interest payable to the Lender shall equal the total amount of
interest which would have been payable to the Lender if the total
amount of interest had been computed without giving effect to this
Section 11.14. To the extent that Article 5069-1.04 of the Texas
Revised Civil Statutes is relevant for the purpose of determining
the Highest Lawful Rate, the Lender elects to determine the
applicable rate ceiling under such Article by the indicated weekly
rate ceiling from time to time in effect.
Section 11.15 Confidentiality. In the event that the
Borrower provides to the Lender written confidential information
belonging to the Borrower, if the Borrower shall denominate such
information in writing as "confidential", the Lender shall
thereafter maintain such information in confidence in accordance
with the standards of care and diligence that each utilizes in
maintaining its own confidential information. This obligation of
confidence shall not apply to such portions of the information
which (i) are in the public domain, (ii) hereafter become part of
the public domain without the Lender breaching its obligation of
confidence to the Borrower, (iii) are previously known by the
Lender from some source other than the Borrower, (iv) are hereafter
developed by the Lender without using the Borrower's information,
(v) are hereafter obtained by or available to the Lender from a
third party who owes no obligation of confidence to the Borrower
with respect to such information or through any other means other
than through disclosure by the Borrower, (vi) are disclosed with
the Borrower's consent, (vii) must be disclosed either pursuant to
any Governmental Requirement or to Persons regulating the
activities of the Lender, or (viii) as may be required by law or
regulation or order of any Governmental Authority in any judicial,
arbitration or governmental proceeding. Further, the Lender may
disclose any such information to any independent petroleum
engineers or consultants, any independent certified public
accountants, any legal counsel employed by such Person in
connection with this Agreement or any Security Instrument,
including without limitation, the enforcement or exercise of all
rights and remedies thereunder, or any assignee or participant
(including prospective assignees and participants) in the Loans;
provided, however, that the Lender shall receive a confidentiality
agreement from the Person to whom such information is disclosed the
same obligation to maintain the confidentiality of such information
as is imposed upon it hereunder. Notwithstanding anything to the
contrary provided herein, this obligation of confidence shall cease
three (3) years from the date the information was furnished, unless
the Borrower requests in writing at least thirty (30) days prior to
the expiration of such three year period, to maintain the
confidentiality of such information for an additional three year
period. The Borrower waives any and all other rights it may have
to confidentiality as against the Lender arising by contract,
agreement, statute or law except as expressly stated in this
Section 11.15.
Section 11.16 ERISA. The parties hereto acknowledge that, as
of the Closing Date, neither the Borrower nor any ERISA Affiliate,
sponsors, maintains or contributes to any Plan and, therefore, the
representations, warranties and covenants contained herein relating
to any such Plan or ERISA shall not apply; provided, however, if,
after the Closing Date, the Borrower or any ERISA Affiliate,
sponsors, maintains or contributes to a Plan, the Borrower shall
immediately notify the Lender of such fact and all such
representations, warranties and covenants contained herein relating
to such Plan and ERISA shall apply.
Section 11.17 exculpation provisions. each of the parties hereto
specifically agrees that it has a duty to read this Agreement and the Security
Instruments and agrees that it is charged with notice and knowledge of the
terms of this Agreement and the Security Instruments; that it has in fact read
this Agreement and is fully informed and has full notice and knowledge of the
terms, conditions and effects of this Agreement; that it has been represented
by independent legal counsel of its choice throughout the negotiations
preceding its execution of this Agreement and the Security Instruments; and
has received the advice of its attorney in entering into this Agreement and
the Security Instruments; and that it recognizes that certain of the terms of
this Agreement and the Security Instruments result in one party assuming the
liability inherent in some aspects of the transaction and relieving the other
party of its responsibility for such liability. each party hereto agrees and
covenants that it will not contest the validity or enforceability of any
exculpatory provision of this Agreement and the Security Instruments on the
basis that the party had no notice or knowledge of such provision or that the
provision is not "conspicuous."
The parties hereto have caused this Agreement to be duly
executed as of the day and year first above written.
BORROWER:
MAGNOLIA PIPELINE CORPORATION
By:_____________________________
Name:
Title:
Address for Notices:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: 713/▇▇▇-▇▇▇▇
Telephone No.: 713/▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
LENDER:
COMPASS BANK - HOUSTON
By:_____________________________
Name:
Title:
Address for Notices:
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Telecopier No.: (▇▇▇) ▇▇▇-▇▇▇▇
Telephone No.: (▇▇▇) ▇▇▇-▇▇▇▇
Attention: ▇▇▇▇▇ ▇▇▇▇▇
FINANCING STATEMENT
(Central)
This Financing Statement is presented to a Filing Officer for
filing pursuant to the Uniform Commercial Code.
1. The name and address of the Debtor is:
Magnolia Pipeline Corporation
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▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
2. The name and address of Secured Party is:
Compass Bank - Houston
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
3. This Financing Statement covers the following Collateral:
All of Debtor's rights, titles and interests in and to
the accounts, equipment, goods, fixtures, general
intangibles, inventory and any and all other personal
property of any kind or character described in and
covered by the Mortgage, Assignment of Proceeds, Security
Agreement and Financing Statement from Debtor to Secured
Party, a copy of which instrument is attached hereto as
Exhibit "A" and made a part hereof for all purposes, and
the proceeds and products of such personal property.
DEBTOR: MAGNOLIA PIPELINE CORPORATION
By:________________________________
Name:
Title:
SUBORDINATION AGREEMENT
SUBORDINATION AGREEMENT dated as of December 20, 1995, made by
RAINBOW INVESTMENTS COMPANY, a corporation organized and existing
under the laws of Texas (the "Subordinated Creditor"), and MIDCOAST
ENERGY RESOURCES, INC., a corporation organized and existing under
the laws of Nevada ("MERI"), in favor of COMPASS BANK-HOUSTON (the
"Lender").
R E C I T A L S
1. The Lender has entered into a Credit Agreement dated as
of December 20, 1995, with MAGNOLIA PIPELINE CORPORATION (the
"Borrower"), an Alabama corporation (said Credit Agreement, as same
may hereafter be amended, supplemented or otherwise modified from
time to time, the "Credit Agreement"). Terms defined in the Credit
Agreement and not otherwise defined herein shall have the meanings
assigned to such terms in the Credit Agreement.
2. MERI has assigned to the Subordinated Creditor a net
revenue interest ("Net Revenue Interest") pursuant to and computed
as set forth in that certain Assignment of Net Revenue Interest
dated effective as of October 3, 1995, from MERI to Subordinated
Creditor (the "Assignment"). Such Net Revenue Interest and other
obligations now or hereafter existing under or in connection with
the Assignment or the Net Revenue Interest payable thereunder, all
future net revenue interests assigned by MERI to the Subordinated
Creditor pursuant to that certain Loan Agreement dated as of
October 3, 1995, between MERI and the Subordinated Creditor, and
all interest and premiums, if any, on the foregoing and all other
amounts payable in respect thereof, are herein collectively
referred to as the "Subordinated Debt".
3. MERI has guaranteed the full and prompt payment of any
and all obligations of the Borrower to the Lender under or in
connection with the Credit Agreement, pursuant to that certain
Guaranty Agreement dated December 20, 1995, executed by MERI for
the benefit of the Lender (as same may hereafter be amended,
supplemented or otherwise modified from time to time, the "Guaranty
Agreement").
4. It is a condition precedent to the obligation of the
Lender to make Loans and issue Letters of Credit to the Borrower
under the Credit Agreement that MERI and the Subordinated Creditor
shall have executed and delivered this Subordination Agreement.
NOW, THEREFORE, in consideration of the premises and in order
to induce the Lender to make Loans under the Credit Agreement, the
Subordinated Creditor and MERI each hereby agree as follows:
SECTION 1.Agreement to Subordinate. The Subordinated Creditor
and MERI each agrees that the Subordinated Debt is and shall be
subordinate, to the extent and in the manner hereinafter set forth,
in right of payment to the prior payment in full of (a) all
obligations of MERI to the Lender now or hereafter existing under
or in connection with the Guaranty Agreement, and (b) all
obligations (including reimbursement obligations) of the Borrower
to the Lender now or hereafter existing under or in connection with
the Credit Agreement, the Note, and any Letter of Credit and the
letter of credit reimbursement agreement executed in connection
therewith, whether for principal, interest (including, without
limitation, interest after the filing of a petition initiating any
proceeding referred to in Section 3(a)), fees, expenses or
otherwise (such obligations being collectively called the
"Obligations"). For the purposes of this Subordination Agreement,
the Obligations shall not be deemed to have been paid in full until
the Revolving Credit Termination Date shall have elapsed and unless
the Lender shall have received full and final payment of the
Obligations.
SECTION ▇.▇▇ Payment on the Subordinated Debt. The
Subordinated Creditor agrees not to ask, demand, ▇▇▇ for, take or
receive from MERI, directly or indirectly, in cash or other
property or in any other manner (including without limitation from
or by way of collateral), payment of all or any of the Subordinated
Debt unless and until the Obligations shall have been fully and
finally paid; provided, however, with the prior written consent of
the Lender the Subordinated Creditor may receive and MERI may make
scheduled payments on the Subordinated Debt on the stated dates of
payment thereof if, at the time of making such payment and
immediately after giving effect thereto, no Event of Default or
event which, with the giving of notice or the lapse of time, or
both, would become an Event of Default shall occur and be con-
tinuing.
SECTION ▇.▇▇ Furtherance of Subordination. The Subordinated
Creditor agrees as follows:
(a) Until the Obligations shall have been fully and
finally paid, upon any distribution of all or any of the
assets of MERI or the Borrower to creditors of MERI or the
Borrower upon the dissolution, winding up, liquidation,
arrangement, or reorganization of MERI or the Borrower,
whether in any bankruptcy, insolvency, arrangement,
reorganization or receivership proceedings or upon an
assignment for the benefit of creditors or any other
marshalling of the assets and liabilities of MERI or the
Borrower or otherwise, any payment or distribution of any kind
(whether in cash, property or securities) which otherwise
would be payable or deliverable upon or with respect to the
Subordinated Debt shall be paid or delivered directly to the
Lender for application (in the case of cash) to or as
collateral (in the case of non-cash property or securities)
for the payment or prepayment of the Obligations.
(b) If any proceeding referred to
in subsection (a) above is commenced by or against MERI or the
Borrower,
(i) the Lender is hereby irrevocably authorized and empowered
(in its own name or in the name of the Subordinated Creditor
or otherwise), but shall have no obligation, to demand, ▇▇▇
for, collect and receive every payment or distribution
referred to in Section 3(a) and give acquittance therefor and
to file claims and proofs of claim and take such other action
(including, without limitation, enforcing any security
interest or other lien securing payment of the Subordinated
Debt) as it may deem necessary or advisable for the exercise
or enforcement of any of the rights or interests of the Lender
hereunder; and
(ii) the Subordinated Creditor shall duly and promptly take
such action as the Lender may request (A) to collect the
Subordinated Debt for account of the Lender and to file
appropriate claims or proofs of claim in respect of the
Subordinated Debt, (B) to execute and deliver to the Lender
such powers of attorney, assignments, or other instruments as
it may request in order to enable it to enforce any and all
claims with respect to, and any security interests and other
liens securing payment of, the Subordinated Debt, and (C) to
collect and receive any and all payments or distributions
which may be payable or deliverable upon or with respect to
the Subordinated Debt.
(c) All payments or distributions upon or with respect to the
Subordinated Debt which are received by the Subordinated
Creditor contrary to the provisions of this Subordination
Agreement shall be received in trust for the benefit of the
Lender, shall be segregated from other funds and property held
by the Subordinated Creditor and shall be forthwith paid over
to the Lender in the same form as so received (with any
necessary indorsement) to be applied (in the case of cash) to
or held as collateral (in the case of non-cash property or
securities) for the payment or prepayment of the Obligations
in accordance with the terms of the Credit Agreement.
(d) The Lender is hereby authorized to demand specific
performance of this Subordination Agreement, whether or not
MERI shall have complied with any of the provisions hereof
applicable to it, at any time when the Subordinated Creditor
shall have failed to comply with any of the provisions of this
Subordination Agreement applicable to it. The Subordinated
Creditor hereby irrevocably waives any defense based on the
adequacy of a remedy at law, which might be asserted as a bar
to such remedy of specific performance.
Nothing contained in this Section 3 or elsewhere in this
Subordination Agreement is to be interpreted as implying Lender's
consent to the existence, placing, creating or permitting of any
such lien or security interest securing the Subordinated Debt.
SECTION 4. No Commencement of Any Proceeding. The
Subordinated Creditor agrees that, so long as any of the
Obligations shall remain unpaid, it will not commence, or join with
any creditor other than the Lender in commencing, any proceeding
referred to in Section 3(a).
SECTION 5. Rights of Subrogation. The Subordinated Creditor
agrees that no payment or distribution to the Lender pursuant to
the provisions of this Subordination Agreement shall entitle the
Subordinated Creditor to exercise any rights of subrogation in
respect thereof until the Obligations shall have been fully and
finally paid.
SECTION 6. Subordination Legend; Further Assurances. The
Subordinated Creditor and MERI will cause the Assignment and each
other instrument evidencing Subordinated Debt to be endorsed with
the following legend:
"The indebtedness evidenced by this instrument is
subordinated to the prior payment in full of the Obliga-
tions (as defined in the Subordination Agreement here-
inafter referred to) pursuant to, and to the extent pro-
vided in, the Subordination Agreement dated December 20,
1995 by Midcoast Energy Resources, Inc. and Rainbow
Investments Company in favor of Compass Bank-Houston.
The Subordinated Creditor and MERI each will further ▇▇▇▇ its books
of account in such a manner as shall be effective to give proper
notice of the effect of this Subordination Agreement and will, in
the case of any Subordinated Debt which is not evidenced by any
instrument, upon the Lender's request cause such Subordinated Debt
to be evidenced by an appropriate instrument or instruments
endorsed with the above legend. The Subordinated Creditor and MERI
each will, at its expense and at any time and from time to time,
promptly execute and deliver all further instruments and documents,
and take all further action, that may be necessary or desirable, or
that the Lender may request, in order to protect any right or
interest granted or purported to be granted hereby or to enable the
Lender to exercise and enforce its rights and remedies hereunder.
SECTION 7. No Change in or Disposition of Subordinated Debt.
The Subordinated Creditor will not:
(a) Cancel or otherwise discharge any of the Subordinated
Debt (except upon payment in full thereof paid to the Lender
as contemplated by Section 3(c)) or subordinate any of the
Subordinated Debt to any indebtedness of MERI other than the
Obligations;
(b) Sell, assign, pledge, encumber or otherwise dispose of any
of the Subordinated Debt unless such sale, assignment, pledge,
encumbrance or disposition is made expressly subject to this
Subordination Agreement; or
(c) Permit the terms of any of the Subordinated Debt to be
changed in such a manner as to have an adverse effect upon the
rights or interests of the Lender hereunder.
SECTION 8. Agreement by MERI. MERI agrees that it will not
make any payment of any of the Subordinated Debt, or take any other
action, in contravention of the provisions of this Subordination
Agreement.
SECTION 9 Obligations Hereunder Not Affected. All rights and
interests of the Lender hereunder, and all agreements and
obligations of the Subordinated Creditor and MERI under this
Subordination Agreement, shall remain in full force and effect
irrespective of:
(i) any lack of validity or enforceability of the Credit
Agreement, the Note, any Letter of Credit and the letter of
credit reimbursement agreement executed in connection
therewith, the Guaranty Agreement, or any other agreement or
instrument relating to any of the foregoing;
(ii) 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 departure from
the Credit Agreement, the Note, any Letter of Credit and the
letter of credit reimbursement agreement executed in
connection therewith, or the Guaranty Agreement;
(iii) any sale, exchange, release or non-perfection of any
collateral, or any release or amendment or waiver of or
consent to departure from any guaranty, for all or any of the
Obligations; or
(iv) any other circumstance which might otherwise constitute
a defense available to, or a discharge of, MERI or the
Borrower in respect of the Obligations or the Subordinated
Creditor in respect of this Subordination Agreement.
This Subordination Agreement shall continue to be effective or be
reinstated, as the case may be, if at any time any payment of any
of the Obligations is rescinded or must otherwise be returned by
the Lender upon the insolvency, bankruptcy or reorganization of
MERI or the Borrower or otherwise, all as though such payment had
not been made.
SECTION 10. Waiver. The Subordinated Creditor and MERI each
hereby waive promptness, diligence, notice of acceptance and any
other notice with respect to any of the Obligations and this
Subordination Agreement and any requirement that the Lender
protect, secure, perfect or insure any security interest or lien or
any property subject thereto or exhaust any right or take any
action against MERI or any other person or entity or any
collateral.
SECTION 11. Representations and Warranties.
The Subordinated Creditor and MERI each hereby represent and warrant as
follows:
(a) The Subordinated Debt is now outstanding.
(b) A true and complete copy of the Assignment and each other
instrument evidencing the Subordinated Debt has been furnished
to the Lender, has been duly authorized by MERI, has not been
amended or otherwise modified, and constitutes the legal,
valid and binding obligation of MERI enforceable against MERI
in accordance with its terms.
(c) There exists no default in respect of any Subordinated
Debt.
(d) The Subordinated Creditor owns the Subordinated Debt now
outstanding free and clear of any lien, security interest,
charge or encumbrance.
SECTION 12. Amendments, Etc. No amendment or waiver of any
provision of this Subordination Agreement nor consent to any
departure by the Subordinated Creditor or MERI therefrom shall in
any event be effective unless the same shall be in writing and
signed by the Lender, and then such waiver or consent shall be
effective only in the specific instance and for the specific
purpose for which given.
SECTION 13.Expenses. MERI agrees to pay, upon demand, to the
Lender the amount of any and all reasonable expenses, including the
reasonable fees and expenses of its counsel, which the Lender may
incur in connection with the exercise or enforcement of any of its
rights or interests hereunder.
SECTION 14.Addresses for Notices. All demands, notices and
other communications provided for hereunder shall be in writing
(including telecopy or facsimile communication) and, if to the
Subordinated Creditor, mailed or sent by telecopy or facsimile or
delivered to it, addressed to it at the address of Subordinated
Creditor set forth below its signature on the signature page
hereof, if to MERI or the Lender, mailed, sent or delivered to it,
addressed to it at the address of MERI or the Lender (as the case
may be) specified in the Guaranty Agreement, or as to each party at
such other address as shall be designated by such party in a
written notice to each other party complying as to delivery with
the terms of this Section. All such demands, notices and other
communications shall be effective, when mailed, three days after
deposit in the mails, postage prepaid, when sent by telecopy or
facsimile, when receipt is acknowledged by the receiving equipment
(or at the opening of the next business day if receipt is after
normal business hours), or when delivered, as the case may be,
addressed as aforesaid.
SECTION ▇▇.▇▇ Waiver; Remedies. No failure on the part of the
Lender to exercise, and no delay in exercising, any right hereunder
shall operate as a waiver thereof; nor shall any single or partial
exercise of any right hereunder preclude any other or further
exercise thereof or the exercise of any other right. The remedies
herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 16.Continuing Agreement. This Subordination Agreement
is a continuing agreement and shall (i) remain in full force and
effect until the Obligations shall have been fully and finally
paid, (ii) be binding upon the Subordinated Creditor, MERI and
their respective successors and assigns, and (iii) inure to the
benefit of and be enforceable by the Lender and its successors,
transferees and assigns.
SECTION 17.Acceptance Presumed. Notice of acceptance of this
Subordination Agreement is waived, acceptance on the part of Lender
being conclusively presumed by Lender's request for this
Subordination Agreement and delivery thereof to Lender.
SECTION 18.Governing Law. This Subordination Agreement shall
be governed by, and construed in accordance with, the laws of the
State of Texas.
IN WITNESS WHEREOF, the Subordinated Creditor and MERI each
has caused this Subordination Agreement to be duly executed and
delivered by its officer thereunto duly authorized as of the date
first above written.
MERI:MIDCOAST ENERGY RESOURCES, INC.
By:
Name:
Title:
SUBORDINATED CREDITOR:
RAINBOW INVESTMENTS COMPANY
By:
Name:
Title:
Address:
$1,500,000.00 December 20, 1995
FOR VALUE RECEIVED, MAGNOLIA PIPELINE CORPORATION, an Alabama
corporation (the "Borrower"), hereby promises to pay to the order
of COMPASS BANK- HOUSTON (the "Lender"), at its Principal Office at
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, the
principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND NO/100
Dollars ($1,500,000.00) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lender
to the Borrower under the Credit Agreement, as hereinafter
defined), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such
Loan until such Loan shall be paid in full, at the rates per annum
and on the dates provided in the Credit Agreement.
The date, amount, and maturity of each Loan made by the Lender
to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, endorsed by the Lender on the schedule
attached hereto or any continuation thereof.
This Note is the Note referred to in the Credit Agreement
dated on even date herewith between the Borrower and the Lender and
evidences Loans made by the Lender thereunder (such Credit
Agreement as the same may be amended or supplemented from time to
time, the "Credit Agreement"). Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit
Agreement.
This Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement and
the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of
certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this
Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
EXHIBIT A
FORM OF NOTE
$1,500,000.00 December 20, 1995
FOR VALUE RECEIVED, MAGNOLIA PIPELINE CORPORATION, an Alabama
corporation (the "Borrower"), hereby promises to pay to the order
of COMPASS BANK- HOUSTON (the "Lender"), at its Principal Office at
▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇.▇. ▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇, ▇▇▇▇▇-▇▇▇▇, the
principal sum of ONE MILLION FIVE HUNDRED THOUSAND AND NO/100
Dollars ($1,500,000.00) (or such lesser amount as shall equal the
aggregate unpaid principal amount of the Loans made by the Lender
to the Borrower under the Credit Agreement, as hereinafter
defined), in lawful money of the United States of America and in
immediately available funds, on the dates and in the principal
amounts provided in the Credit Agreement, and to pay interest on
the unpaid principal amount of each such Loan, at such office, in
like money and funds, for the period commencing on the date of such
Loan until such Loan shall be paid in full, at the rates per annum
and on the dates provided in the Credit Agreement.
The date, amount, and maturity of each Loan made by the Lender
to the Borrower, and each payment made on account of the principal
thereof, shall be recorded by the Lender on its books and, prior to
any transfer of this Note, endorsed by the Lender on the schedule
attached hereto or any continuation thereof.
This Note is the Note referred to in the Credit Agreement
dated on even date herewith between the Borrower and the Lender and
evidences Loans made by the Lender thereunder (such Credit
Agreement as the same may be amended or supplemented from time to
time, the "Credit Agreement"). Capitalized terms used in this Note
have the respective meanings assigned to them in the Credit
Agreement.
This Note is issued pursuant to the Credit Agreement and is
entitled to the benefits provided for in the Credit Agreement and
the Security Instruments. The Credit Agreement provides for the
acceleration of the maturity of this Note upon the occurrence of
certain events, for prepayments of Loans upon the terms and
conditions specified therein and other provisions relevant to this
Note.
THIS NOTE SHALL BE GOVERNED BY, AND CONSTRUED IN ACCORDANCE
WITH, THE LAWS OF THE STATE OF TEXAS.
MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
EXHIBIT B
FORM OF BORROWING REQUEST
____________________, 199__
MAGNOLIA PIPELINE CORPORATION, an Alabama corporation (the
"Borrower"), pursuant to the Credit Agreement dated as of December
20, 1995, between the Borrower and COMPASS BANK - HOUSTON (the
"Lender") (the "Credit Agreement") hereby requests loans on the
date and in the amounts as follows:
(a) Aggregate amount of new Loans to be
$______________________;
(b) Requested funding date is _________________, 199__;
The undersigned certifies that he is the _____________________
of the Borrower, and that as such he is authorized to execute this
certificate on behalf of the Borrower. The undersigned further
certifies, represents and warrants on behalf of the Borrower that
the Borrower is entitled to receive the requested borrowing under
the terms and conditions of the Credit Agreement.
MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
EXHIBIT C
FORM OF COMPLIANCE CERTIFICATE
The undersigned hereby certifies that he is the
________________ of MAGNOLIA PIPELINE CORPORATION, an Alabama
corporation (the "Borrower") and that as such he is authorized to
execute this certificate on behalf of the Borrower. With reference
to the Credit Agreement dated as of December 20, 1995 (together
with all amendments or supplements thereto being the "Agreement")
between the Borrower and COMPASS BANK - HOUSTON (the "Lender"), the
undersigned represents and warrants as follows (each capitalized
term used herein having the same meaning given to it in the
Agreement unless otherwise specified):
(a) The representations and warranties of the Borrower
contained in Article VII of the Agreement and in the
Security Instruments and otherwise made in writing by or
on behalf of the Borrower pursuant to the Agreement and
the Security Instruments were true and correct when made,
and are repeated at and as of the time of delivery hereof
and are true and correct at and as of the time of
delivery hereof, except as such representations and
warranties are modified to give effect to the
transactions expressly permitted by the Agreement.
(b) The Borrower has performed and complied with all
agreements and conditions contained in the Agreement and
in the Security Instruments required to be performed or
complied with by it prior to or at the time of delivery
hereof.
(c) The Borrower has not incurred any material
liabilities, direct or contingent, since
_________________, except those set forth in
Schedule 9.01 to the Agreement and except those allowed
by the terms of the Agreement or consented to by the
Lender in writing.
(d) Since __________________, no change has occurred,
either in any case or in the aggregate, in the condition,
financial or otherwise, of the Borrower which would have
a Material Adverse Effect.
(e) There exists, and, after giving effect to the loan
or loans with respect to which this certificate is being
delivered, will exist, no Default under the Agreement or
any event or circumstance which constitutes, or with
notice or lapse of time (or both) would constitute, an
event of default under any loan or credit agreement,
indenture, deed of trust, security agreement or other
agreement or instrument evidencing or pertaining to any
Debt of the Borrower, or under any material agreement or
instrument to which the Borrower is a party or by which
the Borrower is bound.
(f) The compliance of the Borrower with the financial
covenants of the Agreement, as of the close of business
on __________________, is evidenced by the following:
(1) Section 9.01: Debt
Required:
Actual:
None:
(2) Section 9.11: Tangible Net Worth
Required:
Actual:
$1,750,000 plus 50% of positive
net income of Borrower for each
fiscal quarter of Borrower and
100% of equity received by
Borrower subsequent to September
30, 1995.
(3) Section 9.12: Cash Flow to Debt Service Coverage Ratio
Required:
Actual:
1.25 to 1.0
EXECUTED AND DELIVERED this ____ day of ______________.
MAGNOLIA PIPELINE CORPORATION
By:
Name:
Title:
EXHIBIT D
[TO FOLLOW]
EXHIBIT E
LIST OF SECURITY INSTRUMENTS
1. Guaranty Agreements of:
(a) ▇▇▇ ▇. ▇▇▇▇▇▇▇;
(b) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.;
(c) ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇; and
(d) Midcoast Energy Resources, Inc. ("MERI");
each in favor of Compass Bank-Houston ("Lender")
2. Security Agreement (Accounts, Inventory, Equipment, Chattel
Paper, Documents, Instruments, General Intangibles and Other
Property) from Magnolia Pipeline Corporation ("Borrower") to
Lender
3. Financing Statement relating to document no. 3 above
4. Mortgage, Assignment of Proceeds, Security Agreement and
Financing Statement from Borrower to Lender
5. Financing Statement relating to document no. 4 above
6. Security Agreement (Stocks, Bonds and Other Securities) from
Midcoast Holdings No. One, Inc. to Lender, covering the stock
of Borrower
7. Assignments Separate from Stock Certificates relating to
document no. 6 above, together with original stock certificate
8. Security Agreement from MERI to Lender, covering Certificate
of Deposit No. 728275
9. Subordination Agreement between MERI and Rainbow Investments
Company
GUARANTY AGREEMENT
Between
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
and
COMPASS BANK-HOUSTON
December ____, 1995
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇ (hereinafter
called "Guarantor"), in favor of COMPASS BANK-HOUSTON, a Texas
State Chartered Banking Institution, having banking quarters at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
called "Lender");
W I T N E S S E T H:
WHEREAS, on even date herewith MAGNOLIA PIPELINE CORPORATION,
an Alabama corporation (hereinafter called "Borrower"), and Lender
entered into that certain Credit Agreement (said Credit Agreement,
as the same may from time to time be amended or supplemented,
hereinafter called the "Credit Agreement") pursuant to which Lender
agreed, upon certain terms and conditions therein stated, to make
loans and extend credit to Borrower from time to time; and
WHEREAS, one of the terms and conditions stated in the Credit
Agreement for the making of such loans and extending such credit is
the execution and delivery to Lender of this Guaranty Agreement
guaranteeing Borrower's repayment of such loans and such extensions
of credit;
NOW, THEREFORE, (i) in order to comply with the terms and
conditions of the Credit Agreement, (ii) to induce Lender, at its
option, at any time or from time to time, to loan monies, with or
without security to or for the account of Borrower, (iii) at the
special insistence and request of Lender, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor hereby agrees as follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty
Agreement, the terms "Borrower," "Credit Agreement," "Guarantor"
and "Lender" and shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty
Agreement, the following terms shall have the following meanings,
unless the context otherwise requires:
"Collateral" shall have the meaning indicated in Section 4.1.
"Guaranty Agreement" shall mean this Guaranty Agreement, as
the same may from time to time be amended or supplemented.
"Liabilities" shall have the meaning indicated in Section 2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise
defined herein, all terms beginning with a capital letter which are
defined in the Credit Agreement shall have the same meanings herein
as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a)
Guarantor hereby unconditionally and irrevocably guarantees the
prompt payment when due, whether at maturity or otherwise, of the
following (hereinafter called the "Liabilities"):
(i) All indebtedness, obligations including reimbursement
obligations and liabilities of any kind of Borrower to Lender and
the due fulfillment and performance of all obligations now or
hereafter owed by Borrower to Lender (and also to others to the
extent of participations granted them by Lender) arising out of and
pursuant to the Credit Agreement, now outstanding or owing or which
may hereafter be existing or incurred, directly between Borrower
and Lender or acquired outright as a participation, conditionally
or as collateral security from another by Lender, absolute or
contingent, joint and/or several, secured or unsecured, due or not
due, arising by operation of law or otherwise, or direct or
indirect, including indebtedness, obligations and liabilities to
Lender of Borrower as a member of any partnership, syndicate,
association or other group, and whether incurred by Borrower as
principal, surety, endorser, guarantor, accommodation party or
otherwise, including, without limitation, the Indebtedness, as
defined in the Credit Agreement, including without limitation (A)
the Note, being that certain promissory note of even date herewith
in the amount of $1,500,000.00, executed by Borrower and payable to
the order of Lender; (B) any and all renewals, extensions for any
period, rearrangements increases and/or modifications of the Note;
(C) any Letters of Credit issued or to be issued by the Lender for
the account of Borrower and described or referred to in the Credit
Agreement, and any and all renewals, extensions, amendments and/or
reissues of any such Letters of Credit; and (D) any and all other
Loan Documents or other documents executed in connection with or as
security for the Credit Agreement, the Note and/or the Letters of
Credit;
(ii) All interest, charges, expenses, attorneys' or other fees
and any other sums payable to or incurred by Lender in connection
with the execution, administration or enforcement of Lender's
rights and remedies under the Credit Agreement, the Note, the
Letters of Credit or any other Loan Documents or other agreements
with Borrower; and
(iii) All post-petition interest on the Liabilities in the event
of a bankruptcy or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable, absolute,
unconditional, completed and continuing guaranty of payment and not
a guaranty of collection, and no notice of the Liabilities or any
extension of credit already or hereafter contracted by or extended
to Borrower need be given to Guarantor. The fact that the
Liabilities may be rearranged, increased, reduced, extended for any
period and/or renewed from time to time or paid in full without
notice to Guarantor shall not release, discharge or reduce the
obligation of Guarantor with respect to the Liabilities, and
Guarantor shall remain fully bound hereunder. In the event that
Lender must rescind or restore any payment received by Lender in
satisfaction of the Liabilities, as set forth herein, any prior
release or discharge from the terms of this Guaranty Agreement
given to Guarantor by Lender shall be without effect, and this
Guaranty Agreement shall remain in full force and effect. It is
the intention of Borrower and Guarantor that Guarantor's
obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such
performance. This Guaranty Agreement may be enforced by Lender and
any subsequent holder of the Liabilities and shall not be
discharged by the assignment or negotiation of all or part of the
Liabilities. This Guaranty Agreement may not be revoked by
Guarantor and shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Liabilities is rescinded or must otherwise be returned by Lender
upon the insolvency, bankruptcy, reorganization, receivership or
other debtor relief proceeding involving Borrower, or after any
attempted revocation by Guarantor and after Guarantor's death (in
which event this Guaranty Agreement shall be binding upon
Guarantor's estate and Guarantor's heirs and legal
representatives), all as though such payment had not been made.
Guarantor hereby expressly waives notice of intent to accelerate,
notice of acceleration, presentment, demand, notice of non-payment,
protest, notice of protest and dishonor or any other notice
whatsoever on any and all forms of such Liabilities, and also
notice of acceptance of this Guaranty Agreement, acceptance on the
part of Lender being conclusively presumed by its request for this
Guaranty Agreement and delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender, without
notice or demand and without affecting Guarantor's liability
hereunder, to take and hold security for the payment of this
Guaranty Agreement and/or any of the Liabilities, and exchange,
enforce, waive and release any such security; and to apply such
security and direct the order or manner of sale thereof as Lender
in its discretion may determine; and to obtain a guaranty of the
Liabilities from any one or more Persons and at any time or times
to enforce, waive, rearrange, modify, limit or release any of such
other Persons from their obligations under such guaranties, and
Guarantor hereby acknowledges and agrees that the obligations of
all Persons to pay and satisfy the Liabilities pursuant to their
respective guaranties (including Guarantor's obligations under this
Guaranty Agreement) shall be joint and several. It is hereby
understood and agreed that whether and when and in what order to
exercise any of the remedies of Lender under the Credit Agreement,
the Note, or any other Loan Document executed in connection with
the Liabilities, shall be in the sole and absolute discretion of
Lender, and no delay by Lender to enforce any remedy, including
delay in conducting a foreclosure sale or other disposition of
collateral, shall be a defense to Guarantor's liability under this
Guaranty Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right to
require Lender (and it shall not be necessary for Lender, in order
to enforce such payment by Guarantor to first) (a) to proceed
against Borrower or any other Person liable on the Liabilities,
(b) to proceed against or exhaust any security given to secure the
Liabilities, (c) to have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or any of the
Liabilities, (d) to enforce its rights against any other guarantor
of the Liabilities, (e) to pursue or exhaust any other remedy in
Lender's power whatsoever, or (f) to preserve or perfect any liens
or security interests against any collateral whatsoever. Lender
shall not be required to mitigate damages or take any action to
reduce, collect or enforce the Liabilities. Guarantor waives any
defense or right to the marshalling of any security given to secure
the Liabilities. Guarantor waives any defense arising by reason of
any disability, lack of corporate authority or power, or other
defense of Borrower or any other guarantor of any of the
Liabilities, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any
reason. Until all the Liabilities shall have been paid in full,
Guarantor shall have no right of subrogation, waives all of its
rights at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender) to seek
contribution, indemnification or any other form of reimbursement
from or to enforce any remedy which Lender now has or may hereafter
have against Borrower or any other Person primarily or secondarily
liable for any of the Liabilities and waives any benefit of and any
right to participate in any security now or hereafter held by
Lender to secure directly or indirectly all or any of the
Liabilities. Guarantor waives any and all defenses which might
otherwise be available (but only to the extent permitted by law) by
virtue of any valuation, stay, moratorium law or similar law now or
hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor agrees
that if the maturity of any Liabilities is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed
accelerated for the purpose of this Guaranty Agreement without
demand or notice to Guarantor. Guarantor will pay, forthwith upon
notice from Lender of Borrower's failure to pay any Liabilities at
maturity, to Lender at Lender's banking quarters in Houston, ▇▇▇▇▇▇
County, Texas, the amount due and unpaid by Borrower and guaranteed
hereby. The failure of Lender to give this notice shall not in any
way release Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the
Liabilities after notice from Lender of Borrower's failure to pay
any Liabilities at maturity, and if Lender obtains the services of
an attorney for collection of amounts owing by Guarantor hereunder,
or obtains advise of counsel in respect of any of its rights
hereunder, or if suit is filed to enforce this Guaranty Agreement,
or if proceedings are had in any bankruptcy, probate, receivership
or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing
by Guarantor hereunder is collected through such proceedings,
Guarantor agrees to pay Lender at Lender's banking quarters all
court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that the
liability of Guarantor for the payment of the Liabilities
guaranteed hereby shall be primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or Discharging
Guarantor's Obligations. Guarantor hereby consents and agrees to
each of the following, and agrees that Guarantor's obligations
under this Guaranty Agreement shall not be released, diminished,
impaired, reduced or adversely affected by any of the following,
and waives any rights (including, without limitation, rights to
notice) which Guarantor might otherwise have as a result of or in
connection with any of the following:
(a) Modifications, etc. Any modification, amendment, supplement,
renewal, extension for any period, increase, decrease, alteration
or rearrangement of all or any part of the Liabilities, or of the
Note, or the Credit Agreement or any other Loan Document executed
in connection therewith, or any contract or understanding between
Borrower and Lender, or any other Person, pertaining to the
Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance or
compromise that might be granted or given by Lender to Borrower or
Guarantor or any other Person liable on the Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of Borrower or any other
Person at any time liable for the payment of all or part of the
Liabilities; or any dissolution of Borrower or any sale, lease or
transfer of any or all of the assets of Borrower or Guarantor, or
any changes in the shareholders or members of Borrower; or any
reorganization of Borrower;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any
document or agreement executed in connection with the Liabilities,
for any reason whatsoever, including without limitation the fact
that (i) the Liabilities, or any part thereof, exceeds the amount
permitted by law, (ii) the act of creating the Liabilities or any
part thereof is ultra ▇▇▇▇▇, (iii) the officers or representatives
executing the documents or otherwise creating the Liabilities acted
in excess of their authority, (iv) the Liabilities or any part
thereof violate applicable usury laws, (v) the Borrower or any
other Person at any time liable for the payment of all or any part
of the Liabilities has valid defenses, claims or offsets (whether
at law or in equity, by agreement or by statute) which render the
Liabilities wholly or partially uncollectible from Borrower, (vi)
the creation, performance or repayment of the Liabilities (or the
execution, delivery and performance of any document or instrument
representing part of the Liabilities or executed in connection with
the Liabilities, or given to secure the repayment of the
Liabilities) is illegal, uncollectible, legally impossible or
unenforceable, or (vii) the Credit Agreement, any other Loan
Document, or any other document or instrument pertaining to the
Liabilities has been forged or otherwise is irregular or not
genuine or authentic;
(e) Release of Obligors. Any full or partial release of the
liability of Borrower on the Liabilities or any part thereof, or of
any co-guarantors, or any other Person now or hereafter liable,
whether directly or indirectly, jointly, severally, or jointly and
severally, to pay, perform, guarantee or assure the payment of the
Liabilities or any part thereof; it being recognized, acknowledged
and agreed by Guarantor that Guarantor may be required to pay the
Liabilities in full without assistance or support of any other
Person, and Guarantor has not been induced to enter into this
Guaranty Agreement on the basis of a contemplation, belief,
understanding or agreement that any other Person will be liable to
perform the Liabilities, or Lender will look to any other Person to
perform the Liabilities;
(f) Other Security. The taking or accepting of any other
security, collateral or guaranty, or other assurance of payment,
for all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender, exchange,
subordination, deterioration, waste, loss or impairment (including,
without limitation, negligent, willful, unreasonable or
unjustifiable impairment) of any collateral, property or security,
at any time existing in connection with, or assuring or securing
payment of, all or any part of the Liabilities;
(h) Care and Diligence. The failure of Lender or any other Person
to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all
or any part of such collateral, property or security;
(i) Status of Liens. The fact that any collateral, security or
Lien contemplated or intended to be given, created or granted as
security for the repayment of the Liabilities shall not be properly
perfected or created, or shall prove to be unenforceable or
subordinate to any other Lien; it being recognized and agreed by
Guarantor that Guarantor is not entering into this Guaranty
Agreement in reliance on, or in contemplation of the benefits of,
the validity, enforceability, collectibility or value of any of the
collateral for the Liabilities;
(j) Preference. Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any reason
Lender is required to refund such payment or pay such amount to
Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken or
omitted to be taken with respect to the Credit Agreement, any other
Loan Document, the Liabilities, or the security and collateral
therefor, whether or not such action or omission prejudices
Guarantor or increases the likelihood that Guarantor will be
required to pay the Liabilities pursuant to the terms hereof; it is
the unambiguous and unequivocal intention of Guarantor that
Guarantor shall be obligated to pay the Liabilities when due,
notwithstanding any occurrence, circumstance, event, action, or
omission whatsoever, whether contemplated or uncontemplated, and
whether or not otherwise or particularly described herein, except
for the full and final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations, Warranties and Financial Information
Section 3.1 Representations and Warranties. In order to
induce Lender to accept this Guaranty Agreement, Guarantor
represents and warrants to Lender (which representations and
warranties will survive the creation of the Liabilities and any
extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to
this Guaranty Agreement reasonably has benefitted or may be
expected to benefit, directly or indirectly, Guarantor.
(b) Binding Obligations. This Guaranty Agreement constitutes
valid and binding obligations of Guarantor, enforceable in
accordance with its terms (except that enforcement may be
subject to any applicable bankruptcy, insolvency or similar
laws generally affecting the enforcement of creditors'
rights).
(c) No Legal Bar or Resultant Lien. This Guaranty Agreement
will not violate any contract, agreement, law, regulation,
order, injunction, judgment, decree or writ to which Guarantor
is subject, or result in the creation or imposition of any
Lien upon any Properties of Guarantor (other than those, if
any, granted hereby or permitted by the Credit Agreement).
(d) No Consent. Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the
consent or approval of any other Person, including without
limitation any regulatory authority or governmental body of
the United States or any state thereof or any political
subdivision of the United States or any state thereof.
(e) Familiarity and Reliance. Guarantor is familiar with,
and has independently reviewed books and records regarding,
the financial condition of the Borrower and is familiar with
the value of any and all collateral intended to be created as
security for the payment of the Note and Liabilities;
provided, however, Guarantor is not relying on such financial
condition or the collateral as an inducement to enter into
this Guaranty Agreement.
(f) No Representation. Neither Lender nor any other Person
has made any representation, warranty or statement to
Guarantor with regard to the Borrower or any Person liable for
the payment of all or any part of the Liabilities, or their
respective financial condition in order to induce Guarantor to
execute this Guaranty Agreement.
(g) Solvency. Guarantor hereby represents that (i) it is not
insolvent as of the date hereof and will not be rendered
insolvent as a result of this Guaranty Agreement, (ii) it is
not engaged in business or a transaction, or about to engage
in a business or a transaction, for which any property or
assets remaining with such Guarantor is unreasonably small
capital, and (iii) it does not intend to incur, or believe it
will incur, debts that will be beyond its ability to pay as
such debts mature.
Section 3.2 Financial Information. Guarantor will furnish to
Lender such information respecting the condition, financial or
otherwise, of Guarantor as Lender may from time to time request and
will furnish to Lender as soon as available and in any event within
120 days after the end of each calendar year the personal financial
statement of Guarantor for such year, including statements of
contingent liabilities and cash flow, certified by Guarantor.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for
Guarantor's obligations hereunder, Guarantor hereby grants to
Lender a security interest in, a general lien upon and/or right of
set-off against the following (herein referred to as the
Collateral): the balance of every deposit account, now or
hereafter existing, of Guarantor with Lender and any other claim of
Guarantor against Lender, now or hereafter existing, and all money,
instruments, securities, documents, chattel paper, credits, claims,
demands and any other property, rights and interest of Guarantor,
which at any time shall come into the possession or custody or
under the control of Lender or any of its agents or affiliates, for
any purpose, and shall include the proceeds, products and
accessions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for
it or any of its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly
granted to Lender, at its discretion, to file one or more financing
statements or a copy of this Guaranty Agreement under the Uniform
Commercial Code naming Guarantor, as Debtor, and Lender, as Secured
Party, and indicating therein the types or describing the items of
Collateral.
Section 4.3 Remedies. In the event of default under this
Guaranty Agreement, Lender may sell or cause to be sold in ▇▇▇▇▇▇
County, Texas, or elsewhere, in one or more sales or parcels, at
such price as Lender may deem best, and for cash or on credit or
for future delivery, without assumption of any credit risk, all or
any of the Collateral at any broker's board or at public or private
sale, without demand or performance or notice of intention to sell
or of time or place of sale (except such notice as is required by
applicable statute and cannot be waived), and Lender or anyone else
may be the purchaser of any or all of the Collateral so sold and
thereafter hold the same absolutely, free from any claim or right
of whatsoever kind, including any equity of redemption of
Guarantor, any such demand, notice or right and equity being hereby
expressly waived and released.
Section 4.4 Rights. The grant of the above security interest
and lien shall not in any way limit or be construed as limiting
Lender to collect payment of Guarantor's obligations hereunder only
out of the Collateral, but it is expressly understood and provided
that all such obligations shall constitute the absolute and
unconditional obligations of Guarantor. Lender shall not be
required to take any steps necessary to preserve any rights against
prior parties to any of the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement
is and shall be in every particular available to the successors and
assigns of Lender and is and shall always be fully binding upon the
legal representatives, successors and assigns of Guarantor,
notwithstanding that some or all of the monies, the repayment of
which this Guaranty Agreement applies, may be actually advanced
after any bankruptcy, receivership, reorganization or other event
affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder
shall be ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, until
Borrower has received express written notice of a change of
address. Guarantor's address for notice hereunder shall be the
address given under Guarantor's signature below, until Lender has
received express written notice of a change of address. Any notice
or demand to Guarantor under or in connection with this Guaranty
Agreement may be given and shall conclusively be deemed and
considered to have been given and received upon the deposit
thereof, in writing, duly stamped and addressed to Guarantor at the
address of Guarantor appearing on the records of Lender, in the
U.S. mail, but actual notice, however given or received, shall
always be effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a contract
made under and shall be construed in accordance with and governed by the laws
of the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with
respect to this Guaranty Agreement may be instituted in the courts
of the State of Texas, the United States District Court for the
Southern District of Texas (Houston Division), or elsewhere to the
extent that jurisdiction shall exist apart from the provisions of
this Section, as Lender may elect, and by execution and delivery of
this Guaranty Agreement, Guarantor irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of
such court, and irrevocably and unconditionally waives (a) any
objection Guarantor may now or hereafter have to the laying of
venue in any of such courts, and (b) any claim that any action or
proceeding brought in any of such courts has been brought in an
inconvenient forum. However, Guarantor does not waive its right to
remove any cause of action brought in State Court to the United
States District Court for the Southern District of Texas (Houston
Division). This submission to jurisdiction and venue is
nonexclusive and does not prevent Lender from obtaining
jurisdiction in any court otherwise having jurisdiction or venue.
Guarantor hereby designates and appoints as its authorized agent in the
State of Texas to accept and acknowledge on its behalf service of any and
all process which may be served in any suit, action or proceeding in the
State of Texas, and Guarantor agrees that any service of process upon such
agent shall be deemed in every respect effective service upon Guarantor.
Guarantor agrees that so long as Guarantor shall be obligated to
Lender under this Guaranty Agreement, Guarantor shall maintain duly
appointed agents satisfactory to Lender for the service of process
in the State of Texas and shall keep Lender advised in writing of
the identity and location of such agents. The failure of such
agents to give notice to Guarantor of any such service shall not
impair or affect the validity of such service or of any judgment
rendered in any action or proceeding based thereon.
Section 5.6 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
WITNESS THE EXECUTION HEREOF, as of the _____ day of December,
1995.
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇
Address:
Accepted as of the _____ day of December, 1995.
COMPASS BANK-HOUSTON
By:
Name:
Title:
GUARANTY AGREEMENT
Between
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
and
COMPASS BANK-HOUSTON
December ____, 1995
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇. (hereinafter
called "Guarantor"), in favor of COMPASS BANK-HOUSTON, a Texas
State Chartered Banking Institution, having banking quarters at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
called "Lender");
W I T N E S S E T H:
WHEREAS, on even date herewith MAGNOLIA PIPELINE CORPORATION,
an Alabama corporation (hereinafter called "Borrower"), and Lender
entered into that certain Credit Agreement (said Credit Agreement,
as the same may from time to time be amended or supplemented,
hereinafter called the "Credit Agreement") pursuant to which Lender
agreed, upon certain terms and conditions therein stated, to make
loans and extend credit to Borrower from time to time; and
WHEREAS, one of the terms and conditions stated in the Credit
Agreement for the making of such loans and extending such credit is
the execution and delivery to Lender of this Guaranty Agreement
guaranteeing Borrower's repayment of such loans and such extensions
of credit;
NOW, THEREFORE, (i) in order to comply with the terms and
conditions of the Credit Agreement, (ii) to induce Lender, at its
option, at any time or from time to time, to loan monies, with or
without security to or for the account of Borrower, (iii) at the
special insistence and request of Lender, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor hereby agrees as follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty
Agreement, the terms "Borrower," "Credit Agreement," "Guarantor"
and "Lender" and shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty
Agreement, the following terms shall have the following meanings,
unless the context otherwise requires:
"Collateral" shall have the meaning indicated in Section 4.1.
"Guaranty Agreement" shall mean this Guaranty Agreement, as
the same may from time to time be amended or supplemented.
"Liabilities" shall have the meaning indicated in Section 2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise
defined herein, all terms beginning with a capital letter which are
defined in the Credit Agreement shall have the same meanings herein
as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a)
Guarantor hereby unconditionally and irrevocably guarantees the
prompt payment when due, whether at maturity or otherwise, of the
following (hereinafter called the "Liabilities"):
(i)All indebtedness, obligations including reimbursement
obligations and liabilities of any kind of Borrower to Lender
and the due fulfillment and performance of all obligations now
or hereafter owed by Borrower to Lender (and also to others to
the extent of participations granted them by Lender) arising
out of and pursuant to the Credit Agreement, now outstanding
or owing or which may hereafter be existing or incurred,
directly between Borrower and Lender or acquired outright as
a participation, conditionally or as collateral security from
another by Lender, absolute or contingent, joint and/or
several, secured or unsecured, due or not due, arising by
operation of law or otherwise, or direct or indirect,
including indebtedness, obligations and liabilities to Lender
of Borrower as a member of any partnership, syndicate,
association or other group, and whether incurred by Borrower
as principal, surety, endorser, guarantor, accommodation party
or otherwise, including, without limitation, the Indebtedness,
as defined in the Credit Agreement, including without
limitation (A) the Note, being that certain promissory note of
even date herewith in the amount of $1,500,000.00, executed by
Borrower and payable to the order of Lender; (B) any and all
renewals, extensions for any period, rearrangements increases
and/or modifications of the Note; (C) any Letters of Credit
issued or to be issued by the Lender for the account of
Borrower and described or referred to in the Credit Agreement,
and any and all renewals, extensions, amendments and/or
reissues of any such Letters of Credit; and (D) any and all
other Loan Documents or other documents executed in connection
with or as security for the Credit Agreement, the Note and/or
the Letters of Credit;
(ii)All interest, charges, expenses, attorneys' or other
fees and any other sums payable to or incurred by Lender in
connection with the execution, administration or enforcement
of Lender's rights and remedies under the Credit Agreement,
the Note, the Letters of Credit or any other Loan Documents or
other agreements with Borrower; and
(iii)All post-petition interest on the Liabilities in the
event of a bankruptcy or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable,
absolute, unconditional, completed and continuing guaranty of
payment and not a guaranty of collection, and no notice of the
Liabilities or any extension of credit already or hereafter
contracted by or extended to Borrower need be given to Guarantor.
The fact that the Liabilities may be rearranged, increased,
reduced, extended for any period and/or renewed from time to time
or paid in full without notice to Guarantor shall not release,
discharge or reduce the obligation of Guarantor with respect to the
Liabilities, and Guarantor shall remain fully bound hereunder. In
the event that Lender must rescind or restore any payment received
by Lender in satisfaction of the Liabilities, as set forth herein,
any prior release or discharge from the terms of this Guaranty
Agreement given to Guarantor by Lender shall be without effect, and
this Guaranty Agreement shall remain in full force and effect. It
is the intention of Borrower and Guarantor that Guarantor's
obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such
performance. This Guaranty Agreement may be enforced by Lender and
any subsequent holder of the Liabilities and shall not be
discharged by the assignment or negotiation of all or part of the
Liabilities. This Guaranty Agreement may not be revoked by
Guarantor and shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Liabilities is rescinded or must otherwise be returned by Lender
upon the insolvency, bankruptcy, reorganization, receivership or
other debtor relief proceeding involving Borrower, or after any
attempted revocation by Guarantor and after Guarantor's death (in
which event this Guaranty Agreement shall be binding upon
Guarantor's estate and Guarantor's heirs and legal
representatives), all as though such payment had not been made.
Guarantor hereby expressly waives notice of intent to accelerate,
notice of acceleration, presentment, demand, notice of non-payment,
protest, notice of protest and dishonor or any other notice
whatsoever on any and all forms of such Liabilities, and also
notice of acceptance of this Guaranty Agreement, acceptance on the
part of Lender being conclusively presumed by its request for this
Guaranty Agreement and delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender,
without notice or demand and without affecting Guarantor's
liability hereunder, to take and hold security for the payment of
this Guaranty Agreement and/or any of the Liabilities, and
exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof
as Lender in its discretion may determine; and to obtain a guaranty
of the Liabilities from any one or more Persons and at any time or
times to enforce, waive, rearrange, modify, limit or release any of
such other Persons from their obligations under such guaranties,
and Guarantor hereby acknowledges and agrees that the obligations
of all Persons to pay and satisfy the Liabilities pursuant to their
respective guaranties (including Guarantor's obligations under this
Guaranty Agreement) shall be joint and several. It is hereby
understood and agreed that whether and when and in what order to
exercise any of the remedies of Lender under the Credit Agreement,
the Note, or any other Loan Document executed in connection with
the Liabilities, shall be in the sole and absolute discretion of
Lender, and no delay by Lender to enforce any remedy, including
delay in conducting a foreclosure sale or other disposition of
collateral, shall be a defense to Guarantor's liability under this
Guaranty Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right
to require Lender (and it shall not be necessary for Lender, in
order to enforce such payment by Guarantor to first) (a) to proceed
against Borrower or any other Person liable on the Liabilities,
(b) to proceed against or exhaust any security given to secure the
Liabilities, (c) to have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or any of the
Liabilities, (d) to enforce its rights against any other guarantor
of the Liabilities, (e) to pursue or exhaust any other remedy in
Lender's power whatsoever, or (f) to preserve or perfect any liens
or security interests against any collateral whatsoever. Lender
shall not be required to mitigate damages or take any action to
reduce, collect or enforce the Liabilities. Guarantor waives any
defense or right to the marshalling of any security given to secure
the Liabilities. Guarantor waives any defense arising by reason of
any disability, lack of corporate authority or power, or other
defense of Borrower or any other guarantor of any of the
Liabilities, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any
reason. Until all the Liabilities shall have been paid in full,
Guarantor shall have no right of subrogation, waives all of its
rights at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender) to seek
contribution, indemnification or any other form of reimbursement
from or to enforce any remedy which Lender now has or may hereafter
have against Borrower or any other Person primarily or secondarily
liable for any of the Liabilities and waives any benefit of and any
right to participate in any security now or hereafter held by
Lender to secure directly or indirectly all or any of the
Liabilities. Guarantor waives any and all defenses which might
otherwise be available (but only to the extent permitted by law) by
virtue of any valuation, stay, moratorium law or similar law now or
hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor
agrees that if the maturity of any Liabilities is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed
accelerated for the purpose of this Guaranty Agreement without
demand or notice to Guarantor. Guarantor will pay, forthwith upon
notice from Lender of Borrower's failure to pay any Liabilities at
maturity, to Lender at Lender's banking quarters in Houston, ▇▇▇▇▇▇
County, Texas, the amount due and unpaid by Borrower and guaranteed
hereby. The failure of Lender to give this notice shall not in any
way release Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the
Liabilities after notice from Lender of Borrower's failure to pay
any Liabilities at maturity, and if Lender obtains the services of
an attorney for collection of amounts owing by Guarantor hereunder,
or obtains advise of counsel in respect of any of its rights
hereunder, or if suit is filed to enforce this Guaranty Agreement,
or if proceedings are had in any bankruptcy, probate, receivership
or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing
by Guarantor hereunder is collected through such proceedings,
Guarantor agrees to pay Lender at Lender's banking quarters all
court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that
the liability of Guarantor for the payment of the Liabilities
guaranteed hereby shall be primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or
Discharging Guarantor's Obligations. Guarantor hereby consents and
agrees to each of the following, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released,
diminished, impaired, reduced or adversely affected by any of the
following, and waives any rights (including, without limitation,
rights to notice) which Guarantor might otherwise have as a result
of or in connection with any of the following:
(a) Modifications, etc. Any modification, amendment,
supplement, renewal, extension for any period, increase,
decrease, alteration or rearrangement of all or any part of
the Liabilities, or of the Note, or the Credit Agreement or
any other Loan Document executed in connection therewith, or
any contract or understanding between Borrower and Lender, or
any other Person, pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance
or compromise that might be granted or given by Lender to
Borrower or Guarantor or any other Person liable on the
Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of Borrower or any
other Person at any time liable for the payment of all or part
of the Liabilities; or any dissolution of Borrower or any
sale, lease or transfer of any or all of the assets of
Borrower or Guarantor, or any changes in the shareholders or
members of Borrower; or any reorganization of Borrower;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any
document or agreement executed in connection with the
Liabilities, for any reason whatsoever, including without
limitation the fact that (i) the Liabilities, or any part
thereof, exceeds the amount permitted by law, (ii) the act of
creating the Liabilities or any part thereof is ultra ▇▇▇▇▇,
(iii) the officers or representatives executing the documents
or otherwise creating the Liabilities acted in excess of their
authority, (iv) the Liabilities or any part thereof violate
applicable usury laws, (v) the Borrower or any other Person at
any time liable for the payment of all or any part of the
Liabilities has valid defenses, claims or offsets (whether at
law or in equity, by agreement or by statute) which render the
Liabilities wholly or partially uncollectible from Borrower,
(vi) the creation, performance or repayment of the Liabilities
(or the execution, delivery and performance of any document or
instrument representing part of the Liabilities or executed in
connection with the Liabilities, or given to secure the
repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or (vii) the Credit
Agreement, any other Loan Document, or any other document or
instrument pertaining to the Liabilities has been forged or
otherwise is irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the
liability of Borrower on the Liabilities or any part thereof,
or of any co-guarantors, or any other Person now or hereafter
liable, whether directly or indirectly, jointly, severally, or
jointly and severally, to pay, perform, guarantee or assure
the payment of the Liabilities or any part thereof; it being
recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Liabilities in full
without assistance or support of any other Person, and
Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief,
understanding or agreement that any other Person will be
liable to perform the Liabilities, or Lender will look to any
other Person to perform the Liabilities;
(f) Other Security. The taking or accepting of any other
security, collateral or guaranty, or other assurance of
payment, for all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender,
exchange, subordination, deterioration, waste, loss or
impairment (including, without limitation, negligent, willful,
unreasonable or unjustifiable impairment) of any collateral,
property or security, at any time existing in connection with,
or assuring or securing payment of, all or any part of the
Liabilities;
(h) Care and Diligence. The failure of Lender or any other
Person to exercise diligence or reasonable care in the
preservation, protection, enforcement, sale or other handling
or treatment of all or any part of such collateral, property
or security;
(i) Status of Liens. The fact that any collateral, security
or Lien contemplated or intended to be given, created or
granted as security for the repayment of the Liabilities shall
not be properly perfected or created, or shall prove to be
unenforceable or subordinate to any other Lien; it being
recognized and agreed by Guarantor that Guarantor is not
entering into this Guaranty Agreement in reliance on, or in
contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the
collateral for the Liabilities;
(j) Preference. Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any
reason Lender is required to refund such payment or pay such
amount to Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken
or omitted to be taken with respect to the Credit Agreement,
any other Loan Document, the Liabilities, or the security and
collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay the Liabilities pursuant to
the terms hereof; it is the unambiguous and unequivocal
intention of Guarantor that Guarantor shall be obligated to
pay the Liabilities when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise
or particularly described herein, except for the full and
final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations, Warranties and Financial Information
Section 3.1 Representations and Warranties. In order to
induce Lender to accept this Guaranty Agreement, Guarantor
represents and warrants to Lender (which representations and
warranties will survive the creation of the Liabilities and any
extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to
this Guaranty Agreement reasonably has benefitted or may be
expected to benefit, directly or indirectly, Guarantor.
(b) Binding Obligations. This Guaranty Agreement constitutes
valid and binding obligations of Guarantor, enforceable in
accordance with its terms (except that enforcement may be
subject to any applicable bankruptcy, insolvency or similar
laws generally affecting the enforcement of creditors'
rights).
(c) No Legal Bar or Resultant Lien. This Guaranty Agreement
will not violate any contract, agreement, law, regulation,
order, injunction, judgment, decree or writ to which Guarantor
is subject, or result in the creation or imposition of any
Lien upon any Properties of Guarantor (other than those, if
any, granted hereby or permitted by the Credit Agreement).
(d) No Consent. Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the
consent or approval of any other Person, including without
limitation any regulatory authority or governmental body of
the United States or any state thereof or any political
subdivision of the United States or any state thereof.
(e) Familiarity and Reliance. Guarantor is familiar with,
and has independently reviewed books and records regarding,
the financial condition of the Borrower and is familiar with
the value of any and all collateral intended to be created as
security for the payment of the Note and Liabilities;
provided, however, Guarantor is not relying on such financial
condition or the collateral as an inducement to enter into
this Guaranty Agreement.
(f) No Representation. Neither Lender nor any other Person
has made any representation, warranty or statement to
Guarantor with regard to the Borrower or any Person liable for
the payment of all or any part of the Liabilities, or their
respective financial condition in order to induce Guarantor to
execute this Guaranty Agreement.
(g) Solvency. Guarantor hereby represents that (i) it is not
insolvent as of the date hereof and will not be rendered
insolvent as a result of this Guaranty Agreement, (ii) it is
not engaged in business or a transaction, or about to engage
in a business or a transaction, for which any property or
assets remaining with such Guarantor is unreasonably small
capital, and (iii) it does not intend to incur, or believe it
will incur, debts that will be beyond its ability to pay as
such debts mature.
Section 3.2 Financial Information. Guarantor will furnish to
Lender such information respecting the condition, financial or
otherwise, of Guarantor as Lender may from time to time request and
will furnish to Lender as soon as available and in any event within
120 days after the end of each calendar year the personal financial
statement of Guarantor for such year, including statements of
contingent liabilities and cash flow, certified by Guarantor.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for
Guarantor's obligations hereunder, Guarantor hereby grants to
Lender a security interest in, a general lien upon and/or right of
set-off against the following (herein referred to as the
Collateral): the balance of every deposit account, now or
hereafter existing, of Guarantor with Lender and any other claim of
Guarantor against Lender, now or hereafter existing, and all money,
instruments, securities, documents, chattel paper, credits, claims,
demands and any other property, rights and interest of Guarantor,
which at any time shall come into the possession or custody or
under the control of Lender or any of its agents or affiliates, for
any purpose, and shall include the proceeds, products and
accessions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for
it or any of its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly
granted to Lender, at its discretion, to file one or more financing
statements or a copy of this Guaranty Agreement under the Uniform
Commercial Code naming Guarantor, as Debtor, and Lender, as Secured
Party, and indicating therein the types or describing the items of
Collateral.
Section 4.3 Remedies. In the event of default under this
Guaranty Agreement, Lender may sell or cause to be sold in ▇▇▇▇▇▇
County, Texas, or elsewhere, in one or more sales or parcels, at
such price as Lender may deem best, and for cash or on credit or
for future delivery, without assumption of any credit risk, all or
any of the Collateral at any broker's board or at public or private
sale, without demand or performance or notice of intention to sell
or of time or place of sale (except such notice as is required by
applicable statute and cannot be waived), and Lender or anyone else
may be the purchaser of any or all of the Collateral so sold and
thereafter hold the same absolutely, free from any claim or right
of whatsoever kind, including any equity of redemption of
Guarantor, any such demand, notice or right and equity being hereby
expressly waived and released.
Section 4.4 Rights. The grant of the above security interest
and lien shall not in any way limit or be construed as limiting
Lender to collect payment of Guarantor's obligations hereunder only
out of the Collateral, but it is expressly understood and provided
that all such obligations shall constitute the absolute and
unconditional obligations of Guarantor. Lender shall not be
required to take any steps necessary to preserve any rights against
prior parties to any of the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement
is and shall be in every particular available to the successors and
assigns of Lender and is and shall always be fully binding upon the
legal representatives, successors and assigns of Guarantor,
notwithstanding that some or all of the monies, the repayment of
which this Guaranty Agreement applies, may be actually advanced
after any bankruptcy, receivership, reorganization or other event
affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder
shall be ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, until
Borrower has received express written notice of a change of
address. Guarantor's address for notice hereunder shall be the
address given under Guarantor's signature below, until Lender has
received express written notice of a change of address. Any notice
or demand to Guarantor under or in connection with this Guaranty
Agreement may be given and shall conclusively be deemed and
considered to have been given and received upon the deposit
thereof, in writing, duly stamped and addressed to Guarantor at the
address of Guarantor appearing on the records of Lender, in the
U.S. mail, but actual notice, however given or received, shall
always be effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a contract
made under and shall be construed in accordance with and governed by the laws
of the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with
respect to this Guaranty Agreement may be instituted in the courts
of the State of Texas, the United States District Court for the
Southern District of Texas (Houston Division), or elsewhere to the
extent that jurisdiction shall exist apart from the provisions of
this Section, as Lender may elect, and by execution and delivery of
this Guaranty Agreement, Guarantor irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of
such court, and irrevocably and unconditionally waives (a) any
objection Guarantor may now or hereafter have to the laying of
venue in any of such courts, and (b) any claim that any action or
proceeding brought in any of such courts has been brought in an
inconvenient forum. However, Guarantor does not waive its right to
remove any cause of action brought in State Court to the United
States District Court for the Southern District of Texas (Houston
Division). This submission to jurisdiction and venue is
nonexclusive and does not prevent Lender from obtaining
jurisdiction in any court otherwise having jurisdiction or venue.
uarantor hereby designates and appoints as its authorized agent in the State
of Texas to accept and acknowledge on its behalf service of any and all
process which may be served in any suit, action or proceeding in the State of
Texas, and Guarantor agrees that any service of process upon such agent
shall be deemed in every respect effective service upon Guarantor.
Guarantor agrees that so long as Guarantor shall be obligated to
Lender under this Guaranty Agreement, Guarantor shall maintain duly
appointed agents satisfactory to Lender for the service of process
in the State of Texas and shall keep Lender advised in writing of
the identity and location of such agents. The failure of such
agents to give notice to Guarantor of any such service shall not
impair or affect the validity of such service or of any judgment
rendered in any action or proceeding based thereon.
Section 5.6 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
WITNESS THE EXECUTION HEREOF, as of the _____ day of December,
1995.
By:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇.
Address:
Accepted as of the _____ day of December, 1995.
COMPASS BANK-HOUSTON
By:
Name:
Title:
GUARANTY AGREEMENT
Between
▇▇▇ ▇. ▇▇▇▇▇▇▇
and
COMPASS BANK-HOUSTON
December 20, 1995
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by ▇▇▇ ▇. ▇▇▇▇▇▇▇ (hereinafter called
"Guarantor"), in favor of COMPASS BANK-HOUSTON, a Texas State
Chartered Banking Institution, having banking quarters at ▇▇
▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇ (hereinafter
called "Lender");
W I T N E S S E T H:
WHEREAS, on even date herewith MAGNOLIA PIPELINE CORPORATION,
an Alabama corporation (hereinafter called "Borrower"), and Lender
entered into that certain Credit Agreement (said Credit Agreement,
as the same may from time to time be amended or supplemented,
hereinafter called the "Credit Agreement") pursuant to which Lender
agreed, upon certain terms and conditions therein stated, to make
loans and extend credit to Borrower from time to time; and
WHEREAS, one of the terms and conditions stated in the Credit
Agreement for the making of such loans and extending such credit is
the execution and delivery to Lender of this Guaranty Agreement
guaranteeing Borrower's repayment of such loans and such extensions
of credit;
NOW, THEREFORE, (i) in order to comply with the terms and
conditions of the Credit Agreement, (ii) to induce Lender, at its
option, at any time or from time to time, to loan monies, with or
without security to or for the account of Borrower, (iii) at the
special insistence and request of Lender, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor hereby agrees as follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty
Agreement, the terms "Borrower," "Credit Agreement," "Guarantor"
and "Lender" and shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty
Agreement, the following terms shall have the following meanings,
unless the context otherwise requires:
"Collateral" shall have the meaning indicated in Section 4.1.
"Guaranty Agreement" shall mean this Guaranty Agreement, as
the same may from time to time be amended or supplemented.
"Liabilities" shall have the meaning indicated in Section 2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise
defined herein, all terms beginning with a capital letter which are
defined in the Credit Agreement shall have the same meanings herein
as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a)
Guarantor hereby unconditionally and irrevocably guarantees the
prompt payment when due, whether at maturity or otherwise, of the
following (hereinafter called the "Liabilities"):
(i)All indebtedness, obligations including reimbursement
obligations and liabilities of any kind of Borrower to Lender
and the due fulfillment and performance of all obligations now
or hereafter owed by Borrower to Lender (and also to others to
the extent of participations granted them by Lender) arising
out of and pursuant to the Credit Agreement, now outstanding
or owing or which may hereafter be existing or incurred,
directly between Borrower and Lender or acquired outright as
a participation, conditionally or as collateral security from
another by Lender, absolute or contingent, joint and/or
several, secured or unsecured, due or not due, arising by
operation of law or otherwise, or direct or indirect,
including indebtedness, obligations and liabilities to Lender
of Borrower as a member of any partnership, syndicate,
association or other group, and whether incurred by Borrower
as principal, surety, endorser, guarantor, accommodation party
or otherwise, including, without limitation, the Indebtedness,
as defined in the Credit Agreement, including without
limitation (A) the Note, being that certain promissory note of
even date herewith in the amount of $1,500,000.00, executed by
Borrower and payable to the order of Lender; (B) any and all
renewals, extensions for any period, rearrangements increases
and/or modifications of the Note; (C) any Letters of Credit
issued or to be issued by the Lender for the account of
Borrower and described or referred to in the Credit Agreement,
and any and all renewals, extensions, amendments and/or
reissues of any such Letters of Credit; and (D) any and all
other Loan Documents or other documents executed in connection
with or as security for the Credit Agreement, the Note and/or
the Letters of Credit;
(ii)All interest, charges, expenses, attorneys' or other
fees and any other sums payable to or incurred by Lender in
connection with the execution, administration or enforcement
of Lender's rights and remedies under the Credit Agreement,
the Note, the Letters of Credit or any other Loan Documents or
other agreements with Borrower; and
(iii)All post-petition interest on the Liabilities in the
event of a bankruptcy or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable,
absolute, unconditional, completed and continuing guaranty of
payment and not a guaranty of collection, and no notice of the
Liabilities or any extension of credit already or hereafter
contracted by or extended to Borrower need be given to Guarantor.
The fact that the Liabilities may be rearranged, increased,
reduced, extended for any period and/or renewed from time to time
or paid in full without notice to Guarantor shall not release,
discharge or reduce the obligation of Guarantor with respect to the
Liabilities, and Guarantor shall remain fully bound hereunder. In
the event that Lender must rescind or restore any payment received
by Lender in satisfaction of the Liabilities, as set forth herein,
any prior release or discharge from the terms of this Guaranty
Agreement given to Guarantor by Lender shall be without effect, and
this Guaranty Agreement shall remain in full force and effect. It
is the intention of Borrower and Guarantor that Guarantor's
obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such
performance. This Guaranty Agreement may be enforced by Lender and
any subsequent holder of the Liabilities and shall not be
discharged by the assignment or negotiation of all or part of the
Liabilities. This Guaranty Agreement may not be revoked by
Guarantor and shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Liabilities is rescinded or must otherwise be returned by Lender
upon the insolvency, bankruptcy, reorganization, receivership or
other debtor relief proceeding involving Borrower, or after any
attempted revocation by Guarantor and after Guarantor's death (in
which event this Guaranty Agreement shall be binding upon
Guarantor's estate and Guarantor's heirs and legal
representatives), all as though such payment had not been made.
Guarantor hereby expressly waives notice of intent to accelerate,
notice of acceleration, presentment, demand, notice of non-payment,
protest, notice of protest and dishonor or any other notice
whatsoever on any and all forms of such Liabilities, and also
notice of acceptance of this Guaranty Agreement, acceptance on the
part of Lender being conclusively presumed by its request for this
Guaranty Agreement and delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender,
without notice or demand and without affecting Guarantor's
liability hereunder, to take and hold security for the payment of
this Guaranty Agreement and/or any of the Liabilities, and
exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof
as Lender in its discretion may determine; and to obtain a guaranty
of the Liabilities from any one or more Persons and at any time or
times to enforce, waive, rearrange, modify, limit or release any of
such other Persons from their obligations under such guaranties,
and Guarantor hereby acknowledges and agrees that the obligations
of all Persons to pay and satisfy the Liabilities pursuant to their
respective guaranties (including Guarantor's obligations under this
Guaranty Agreement) shall be joint and several. It is hereby
understood and agreed that whether and when and in what order to
exercise any of the remedies of Lender under the Credit Agreement,
the Note, or any other Loan Document executed in connection with
the Liabilities, shall be in the sole and absolute discretion of
Lender, and no delay by Lender to enforce any remedy, including
delay in conducting a foreclosure sale or other disposition of
collateral, shall be a defense to Guarantor's liability under this
Guaranty Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right
to require Lender (and it shall not be necessary for Lender, in
order to enforce such payment by Guarantor to first) (a) to proceed
against Borrower or any other Person liable on the Liabilities,
(b) to proceed against or exhaust any security given to secure the
Liabilities, (c) to have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or any of the
Liabilities, (d) to enforce its rights against any other guarantor
of the Liabilities, (e) to pursue or exhaust any other remedy in
Lender's power whatsoever, or (f) to preserve or perfect any liens
or security interests against any collateral whatsoever. Lender
shall not be required to mitigate damages or take any action to
reduce, collect or enforce the Liabilities. Guarantor waives any
defense or right to the marshalling of any security given to secure
the Liabilities. Guarantor waives any defense arising by reason of
any disability, lack of corporate authority or power, or other
defense of Borrower or any other guarantor of any of the
Liabilities, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any
reason. Until all the Liabilities shall have been paid in full,
Guarantor shall have no right of subrogation, waives all of its
rights at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender) to seek
contribution, indemnification or any other form of reimbursement
from or to enforce any remedy which Lender now has or may hereafter
have against Borrower or any other Person primarily or secondarily
liable for any of the Liabilities and waives any benefit of and any
right to participate in any security now or hereafter held by
Lender to secure directly or indirectly all or any of the
Liabilities. Guarantor waives any and all defenses which might
otherwise be available (but only to the extent permitted by law) by
virtue of any valuation, stay, moratorium law or similar law now or
hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor
agrees that if the maturity of any Liabilities is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed
accelerated for the purpose of this Guaranty Agreement without
demand or notice to Guarantor. Guarantor will pay, forthwith upon
notice from Lender of Borrower's failure to pay any Liabilities at
maturity, to Lender at Lender's banking quarters in Houston, ▇▇▇▇▇▇
County, Texas, the amount due and unpaid by Borrower and guaranteed
hereby. The failure of Lender to give this notice shall not in any
way release Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the
Liabilities after notice from Lender of Borrower's failure to pay
any Liabilities at maturity, and if Lender obtains the services of
an attorney for collection of amounts owing by Guarantor hereunder,
or obtains advise of counsel in respect of any of its rights
hereunder, or if suit is filed to enforce this Guaranty Agreement,
or if proceedings are had in any bankruptcy, probate, receivership
or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing
by Guarantor hereunder is collected through such proceedings,
Guarantor agrees to pay Lender at Lender's banking quarters all
court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that
the liability of Guarantor for the payment of the Liabilities
guaranteed hereby shall be primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or
Discharging Guarantor's Obligations. Guarantor hereby consents and
agrees to each of the following, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released,
diminished, impaired, reduced or adversely affected by any of the
following, and waives any rights (including, without limitation,
rights to notice) which Guarantor might otherwise have as a result
of or in connection with any of the following:
(a) Modifications, etc. Any modification, amendment,
supplement, renewal, extension for any period, increase,
decrease, alteration or rearrangement of all or any part of
the Liabilities, or of the Note, or the Credit Agreement or
any other Loan Document executed in connection therewith, or
any contract or understanding between Borrower and Lender, or
any other Person, pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance
or compromise that might be granted or given by Lender to
Borrower or Guarantor or any other Person liable on the
Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of Borrower or any
other Person at any time liable for the payment of all or part
of the Liabilities; or any dissolution of Borrower or any
sale, lease or transfer of any or all of the assets of
Borrower or Guarantor, or any changes in the shareholders or
members of Borrower; or any reorganization of Borrower;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any
document or agreement executed in connection with the
Liabilities, for any reason whatsoever, including without
limitation the fact that (i) the Liabilities, or any part
thereof, exceeds the amount permitted by law, (ii) the act of
creating the Liabilities or any part thereof is ultra ▇▇▇▇▇,
(iii) the officers or representatives executing the documents
or otherwise creating the Liabilities acted in excess of their
authority, (iv) the Liabilities or any part thereof violate
applicable usury laws, (v) the Borrower or any other Person at
any time liable for the payment of all or any part of the
Liabilities has valid defenses, claims or offsets (whether at
law or in equity, by agreement or by statute) which render the
Liabilities wholly or partially uncollectible from Borrower,
(vi) the creation, performance or repayment of the Liabilities
(or the execution, delivery and performance of any document or
instrument representing part of the Liabilities or executed in
connection with the Liabilities, or given to secure the
repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or (vii) the Credit
Agreement, any other Loan Document, or any other document or
instrument pertaining to the Liabilities has been forged or
otherwise is irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the
liability of Borrower on the Liabilities or any part thereof,
or of any co-guarantors, or any other Person now or hereafter
liable, whether directly or indirectly, jointly, severally, or
jointly and severally, to pay, perform, guarantee or assure
the payment of the Liabilities or any part thereof; it being
recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Liabilities in full
without assistance or support of any other Person, and
Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief,
understanding or agreement that any other Person will be
liable to perform the Liabilities, or Lender will look to any
other Person to perform the Liabilities;
(f) Other Security. The taking or accepting of any other
security, collateral or guaranty, or other assurance of
payment, for all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender,
exchange, subordination, deterioration, waste, loss or
impairment (including, without limitation, negligent, willful,
unreasonable or unjustifiable impairment) of any collateral,
property or security, at any time existing in connection with,
or assuring or securing payment of, all or any part of the
Liabilities;
(h) Care and Diligence. The failure of Lender or any other
Person to exercise diligence or reasonable care in the
preservation, protection, enforcement, sale or other handling
or treatment of all or any part of such collateral, property
or security;
(i) Status of Liens. The fact that any collateral, security
or Lien contemplated or intended to be given, created or
granted as security for the repayment of the Liabilities shall
not be properly perfected or created, or shall prove to be
unenforceable or subordinate to any other Lien; it being
recognized and agreed by Guarantor that Guarantor is not
entering into this Guaranty Agreement in reliance on, or in
contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the
collateral for the Liabilities;
(j) Preference. Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any
reason Lender is required to refund such payment or pay such
amount to Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken
or omitted to be taken with respect to the Credit Agreement,
any other Loan Document, the Liabilities, or the security and
collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay the Liabilities pursuant to
the terms hereof; it is the unambiguous and unequivocal
intention of Guarantor that Guarantor shall be obligated to
pay the Liabilities when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise
or particularly described herein, except for the full and
final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations, Warranties and Financial Information
Section 3.1 Representations and Warranties. In order to induce
Lender to accept this Guaranty Agreement, Guarantor represents and
warrants to Lender (which representations and warranties will
survive the creation of the Liabilities and any extension of credit
thereunder) that:
(a)Benefit to Guarantor. Guarantor's guaranty pursuant
to this Guaranty Agreement reasonably has benefitted or may be
expected to benefit, directly or indirectly, Guarantor.
(b)Binding Obligations. This Guaranty Agreement
constitutes valid and binding obligations of Guarantor,
enforceable in accordance with its terms (except that
enforcement may be subject to any applicable bankruptcy,
insolvency or similar laws generally affecting the enforcement
of creditors' rights).
(c)No Legal Bar or Resultant Lien. This Guaranty
Agreement will not violate any contract, agreement, law,
regulation, order, injunction, judgment, decree or writ to
which Guarantor is subject, or result in the creation or
imposition of any Lien upon any Properties of Guarantor (other
than those, if any, granted hereby or permitted by the Credit
Agreement).
(d)No Consent. Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the
consent or approval of any other Person, including without
limitation any regulatory authority or governmental body of
the United States or any state thereof or any political
subdivision of the United States or any state thereof.
(e)Familiarity and Reliance. Guarantor is familiar with,
and has independently reviewed books and records regarding,
the financial condition of the Borrower and is familiar with
the value of any and all collateral intended to be created as
security for the payment of the Note and Liabilities;
provided, however, Guarantor is not relying on such financial
condition or the collateral as an inducement to enter into
this Guaranty Agreement.
(f)No Representation. Neither Lender nor any other
Person has made any representation, warranty or statement to
Guarantor with regard to the Borrower or any Person liable for
the payment of all or any part of the Liabilities, or their
respective financial condition in order to induce Guarantor to
execute this Guaranty Agreement.
(g)Solvency. Guarantor hereby represents that (i) it is
not insolvent as of the date hereof and will not be rendered
insolvent as a result of this Guaranty Agreement, (ii) it is
not engaged in business or a transaction, or about to engage
in a business or a transaction, for which any property or
assets remaining with such Guarantor is unreasonably small
capital, and (iii) it does not intend to incur, or believe it
will incur, debts that will be beyond its ability to pay as
such debts mature.
Section 3.2 Financial Information. Guarantor will furnish to
Lender such information respecting the condition, financial or
otherwise, of Guarantor as Lender may from time to time request and
will furnish to Lender as soon as available and in any event within
120 days after the end of each calendar year the personal financial
statement of Guarantor for such year, including statements of
contingent liabilities and cash flow, certified by Guarantor.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for
Guarantor's obligations hereunder, Guarantor hereby grants to
Lender a security interest in, a general lien upon and/or right of
set-off against the following (herein referred to as the
Collateral): the balance of every deposit account, now or
hereafter existing, of Guarantor with Lender and any other claim of
Guarantor against Lender, now or hereafter existing, and all money,
instruments, securities, documents, chattel paper, credits, claims,
demands and any other property, rights and interest of Guarantor,
which at any time shall come into the possession or custody or
under the control of Lender or any of its agents or affiliates, for
any purpose, and shall include the proceeds, products and
accessions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for
it or any of its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly
granted to Lender, at its discretion, to file one or more financing
statements or a copy of this Guaranty Agreement under the Uniform
Commercial Code naming Guarantor, as Debtor, and Lender, as Secured
Party, and indicating therein the types or describing the items of
Collateral.
Section 4.3 Remedies. In the event of default under this
Guaranty Agreement, Lender may sell or cause to be sold in ▇▇▇▇▇▇
County, Texas, or elsewhere, in one or more sales or parcels, at
such price as Lender may deem best, and for cash or on credit or
for future delivery, without assumption of any credit risk, all or
any of the Collateral at any broker's board or at public or private
sale, without demand or performance or notice of intention to sell
or of time or place of sale (except such notice as is required by
applicable statute and cannot be waived), and Lender or anyone else
may be the purchaser of any or all of the Collateral so sold and
thereafter hold the same absolutely, free from any claim or right
of whatsoever kind, including any equity of redemption of
Guarantor, any such demand, notice or right and equity being hereby
expressly waived and released.
Section 4.4 Rights. The grant of the above security interest
and lien shall not in any way limit or be construed as limiting
Lender to collect payment of Guarantor's obligations hereunder only
out of the Collateral, but it is expressly understood and provided
that all such obligations shall constitute the absolute and
unconditional obligations of Guarantor. Lender shall not be
required to take any steps necessary to preserve any rights against
prior parties to any of the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement
is and shall be in every particular available to the successors and
assigns of Lender and is and shall always be fully binding upon the
legal representatives, successors and assigns of Guarantor,
notwithstanding that some or all of the monies, the repayment of
which this Guaranty Agreement applies, may be actually advanced
after any bankruptcy, receivership, reorganization or other event
affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder
shall be ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, until
Borrower has received express written notice of a change of
address. Guarantor's address for notice hereunder shall be the
address given under Guarantor's signature below, until Lender has
received express written notice of a change of address. Any notice
or demand to Guarantor under or in connection with this Guaranty
Agreement may be given and shall conclusively be deemed and
considered to have been given and received upon the deposit
thereof, in writing, duly stamped and addressed to Guarantor at the
address of Guarantor appearing on the records of Lender, in the
U.S. mail, but actual notice, however given or received, shall
always be effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a contract
made under and shall be construed in accordance with and governed by the laws
of the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with
respect to this Guaranty Agreement may be instituted in the courts
of the State of Texas, the United States District Court for the
Southern District of Texas (Houston Division), or elsewhere to the
extent that jurisdiction shall exist apart from the provisions of
this Section, as Lender may elect, and by execution and delivery of
this Guaranty Agreement, Guarantor irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of
such court, and irrevocably and unconditionally waives (a) any
objection Guarantor may now or hereafter have to the laying of
venue in any of such courts, and (b) any claim that any action or
proceeding brought in any of such courts has been brought in an
inconvenient forum. However, Guarantor does not waive its right to
remove any cause of action brought in State Court to the United
States District Court for the Southern District of Texas (Houston
Division). This submission to jurisdiction and venue is
nonexclusive and does not prevent Lender from obtaining
jurisdiction in any court otherwise having jurisdiction or venue.
Guarantor hereby designates and appoints as its authorized agent in
the State of Texas to accept and acknowledge on its behalf service of
any and all process which may be served in any suit, action or proceeding
in the State of Texas, and Guarantor agrees that any service of process upon
such agent shall be deemed in every respect effective service upon Guarantor.
Guarantor agrees that so long as Guarantor shall be obligated to
Lender under this Guaranty Agreement, Guarantor shall maintain duly
appointed agents satisfactory to Lender for the service of process
in the State of Texas and shall keep Lender advised in writing of
the identity and location of such agents. The failure of such
agents to give notice to Guarantor of any such service shall not
impair or affect the validity of such service or of any judgment
rendered in any action or proceeding based thereon.
Section 5.6 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
WITNESS THE EXECUTION HEREOF, as of the 20th day of December,
1995.
By:
▇▇▇ ▇. ▇▇▇▇▇▇▇
Title:
Address:
Accepted as of the 20th day of December, 1995.
COMPASS BANK-HOUSTON
By:
Name:
Title:
GUARANTY AGREEMENT
Between
MIDCOAST ENERGY RESOURCES, INC.
and
COMPASS BANK-HOUSTON
December 20, 1995
GUARANTY AGREEMENT
THIS GUARANTY AGREEMENT by MIDCOAST ENERGY RESOURCES, INC., a
Nevada corporation (hereinafter called "Guarantor"), in favor of
COMPASS BANK-HOUSTON, a Texas State Chartered Banking Institution,
having banking quarters at ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇▇ (hereinafter called "Lender");
W I T N E S S E T H:
WHEREAS, on even date herewith MAGNOLIA PIPELINE CORPORATION,
an Alabama corporation (hereinafter called "Borrower"), and Lender
entered into that certain Credit Agreement (said Credit Agreement,
as the same may from time to time be amended or supplemented,
hereinafter called the "Credit Agreement") pursuant to which Lender
agreed, upon certain terms and conditions therein stated, to make
loans and extend credit to Borrower from time to time; and
WHEREAS, one of the terms and conditions stated in the Credit
Agreement for the making of such loans and extending such credit is
the execution and delivery to Lender of this Guaranty Agreement
guaranteeing Borrower's repayment of such loans and such extensions
of credit;
NOW, THEREFORE, (i) in order to comply with the terms and
conditions of the Credit Agreement, (ii) to induce Lender, at its
option, at any time or from time to time, to loan monies, with or
without security to or for the account of Borrower, (iii) at the
special insistence and request of Lender, and (iv) for other good
and valuable consideration, the receipt and sufficiency of which is
hereby acknowledged, Guarantor hereby agrees as follows:
ARTICLE I
General Terms
Section 1.1 Terms Defined Above. As used in this Guaranty
Agreement, the terms "Borrower," "Credit Agreement," "Guarantor"
and "Lender" and shall have the meanings indicated above.
Section 1.2 Certain Definitions. As used in this Guaranty
Agreement, the following terms shall have the following meanings,
unless the context otherwise requires:
"Collateral" shall have the meaning indicated in Section 4.1.
"Guaranty Agreement" shall mean this Guaranty Agreement, as
the same may from time to time be amended or supplemented.
"Liabilities" shall have the meaning indicated in Section 2.1.
Section 1.3 Credit Agreement Definitions. Unless otherwise
defined herein, all terms beginning with a capital letter which are
defined in the Credit Agreement shall have the same meanings herein
as therein.
ARTICLE 2
The Guaranty
Section 2.1 Liabilities Guaranteed; Maximum Liability. (a)
Guarantor hereby unconditionally and irrevocably guarantees the
prompt payment when due, whether at maturity or otherwise, of the
following (hereinafter called the "Liabilities"):
(i)All indebtedness, obligations including reimbursement
obligations and liabilities of any kind of Borrower to Lender
and the due fulfillment and performance of all obligations now
or hereafter owed by Borrower to Lender (and also to others to
the extent of participations granted them by Lender) arising
out of and pursuant to the Credit Agreement, now outstanding
or owing or which may hereafter be existing or incurred,
directly between Borrower and Lender or acquired outright as
a participation, conditionally or as collateral security from
another by Lender, absolute or contingent, joint and/or
several, secured or unsecured, due or not due, arising by
operation of law or otherwise, or direct or indirect,
including indebtedness, obligations and liabilities to Lender
of Borrower as a member of any partnership, syndicate,
association or other group, and whether incurred by Borrower
as principal, surety, endorser, guarantor, accommodation party
or otherwise, including, without limitation, the Indebtedness,
as defined in the Credit Agreement, including without
limitation (A) the Note, being that certain promissory note of
even date herewith in the amount of $1,500,000.00, executed by
Borrower and payable to the order of Lender; (B) any and all
renewals, extensions for any period, rearrangements increases
and/or modifications of the Note; (C) any Letters of Credit
issued or to be issued by the Lender for the account of
Borrower and described or referred to in the Credit Agreement,
and any and all renewals, extensions, amendments and/or
reissues of any such Letters of Credit; and (D) any and all
other Loan Documents or other documents executed in connection
with or as security for the Credit Agreement, the Note and/or
the Letters of Credit;
(ii)All interest, charges, expenses, attorneys' or other
fees and any other sums payable to or incurred by Lender in
connection with the execution, administration or enforcement
of Lender's rights and remedies under the Credit Agreement,
the Note, the Letters of Credit or any other Loan Documents or
other agreements with Borrower; and
(iii)All post-petition interest on the Liabilities in the
event of a bankruptcy or insolvency of the Borrower.
Section 2.2 Nature of Guaranty. This is an irrevocable,
absolute, unconditional, completed and continuing guaranty of
payment and not a guaranty of collection, and no notice of the
Liabilities or any extension of credit already or hereafter
contracted by or extended to Borrower need be given to Guarantor.
The fact that the Liabilities may be rearranged, increased,
reduced, extended for any period and/or renewed from time to time
or paid in full without notice to Guarantor shall not release,
discharge or reduce the obligation of Guarantor with respect to the
Liabilities, and Guarantor shall remain fully bound hereunder. In
the event that Lender must rescind or restore any payment received
by Lender in satisfaction of the Liabilities, as set forth herein,
any prior release or discharge from the terms of this Guaranty
Agreement given to Guarantor by Lender shall be without effect, and
this Guaranty Agreement shall remain in full force and effect. It
is the intention of Borrower and Guarantor that Guarantor's
obligations hereunder shall not be discharged except by Guarantor's
performance of such obligations and then only to the extent of such
performance. This Guaranty Agreement may be enforced by Lender and
any subsequent holder of the Liabilities and shall not be
discharged by the assignment or negotiation of all or part of the
Liabilities. This Guaranty Agreement may not be revoked by
Guarantor and shall continue to be effective or be reinstated, as
the case may be, if at any time any payment of any of the
Liabilities is rescinded or must otherwise be returned by Lender
upon the insolvency, bankruptcy, reorganization, receivership or
other debtor relief proceeding involving Borrower, or after any
attempted revocation by Guarantor, all as though such payment had
not been made. Guarantor hereby expressly waives notice of intent
to accelerate, notice of acceleration, presentment, demand, notice
of non-payment, protest, notice of protest and dishonor or any
other notice whatsoever on any and all forms of such Liabilities,
and also notice of acceptance of this Guaranty Agreement,
acceptance on the part of Lender being conclusively presumed by its
request for this Guaranty Agreement and delivery of the same to it.
Section 2.3 Lender's Rights. Guarantor authorizes Lender,
without notice or demand and without affecting Guarantor's
liability hereunder, to take and hold security for the payment of
this Guaranty Agreement and/or any of the Liabilities, and
exchange, enforce, waive and release any such security; and to
apply such security and direct the order or manner of sale thereof
as Lender in its discretion may determine; and to obtain a guaranty
of the Liabilities from any one or more Persons and at any time or
times to enforce, waive, rearrange, modify, limit or release any of
such other Persons from their obligations under such guaranties,
and Guarantor hereby acknowledges and agrees that the obligations
of all Persons to pay and satisfy the Liabilities pursuant to their
respective guaranties (including Guarantor's obligations under this
Guaranty Agreement) shall be joint and several. It is hereby
understood and agreed that whether and when and in what order to
exercise any of the remedies of Lender under the Credit Agreement,
the Note, or any other Loan Document executed in connection with
the Liabilities, shall be in the sole and absolute discretion of
Lender, and no delay by Lender to enforce any remedy, including
delay in conducting a foreclosure sale or other disposition of
collateral, shall be a defense to Guarantor's liability under this
Guaranty Agreement.
Section 2.4 Guarantor's Waivers. Guarantor waives any right
to require Lender (and it shall not be necessary for Lender, in
order to enforce such payment by Guarantor to first) (a) to proceed
against Borrower or any other Person liable on the Liabilities,
(b) to proceed against or exhaust any security given to secure the
Liabilities, (c) to have Borrower joined with Guarantor in any suit
arising out of this Guaranty Agreement and/or any of the
Liabilities, (d) to enforce its rights against any other guarantor
of the Liabilities, (e) to pursue or exhaust any other remedy in
Lender's power whatsoever, or (f) to preserve or perfect any liens
or security interests against any collateral whatsoever. Lender
shall not be required to mitigate damages or take any action to
reduce, collect or enforce the Liabilities. Guarantor waives any
defense or right to the marshalling of any security given to secure
the Liabilities. Guarantor waives any defense arising by reason of
any disability, lack of corporate authority or power, or other
defense of Borrower or any other guarantor of any of the
Liabilities, and shall remain liable hereon regardless of whether
Borrower or any other guarantor be found not liable thereon for any
reason. Until all the Liabilities shall have been paid in full,
Guarantor shall have no right of subrogation, waives all of its
rights at law or in equity (including, without limitation, any law
subrogating Guarantor to the rights of Lender) to seek
contribution, indemnification or any other form of reimbursement
from or to enforce any remedy which Lender now has or may hereafter
have against Borrower or any other Person primarily or secondarily
liable for any of the Liabilities and waives any benefit of and any
right to participate in any security now or hereafter held by
Lender to secure directly or indirectly all or any of the
Liabilities. Guarantor waives any and all defenses which might
otherwise be available (but only to the extent permitted by law) by
virtue of any valuation, stay, moratorium law or similar law now or
hereafter in effect.
Section 2.5 Maturity of Liabilities; Payment. Guarantor
agrees that if the maturity of any Liabilities is accelerated by
bankruptcy or otherwise, such maturity shall also be deemed
accelerated for the purpose of this Guaranty Agreement without
demand or notice to Guarantor. Guarantor will pay, forthwith upon
notice from Lender of Borrower's failure to pay any Liabilities at
maturity, to Lender at Lender's banking quarters in Houston, ▇▇▇▇▇▇
County, Texas, the amount due and unpaid by Borrower and guaranteed
hereby. The failure of Lender to give this notice shall not in any
way release Guarantor hereunder.
Section 2.6 Lender's Expenses. If Guarantor fails to pay the
Liabilities after notice from Lender of Borrower's failure to pay
any Liabilities at maturity, and if Lender obtains the services of
an attorney for collection of amounts owing by Guarantor hereunder,
or obtains advise of counsel in respect of any of its rights
hereunder, or if suit is filed to enforce this Guaranty Agreement,
or if proceedings are had in any bankruptcy, probate, receivership
or other judicial proceedings for the establishment or collection
of any amount owing by Guarantor hereunder, or if any amount owing
by Guarantor hereunder is collected through such proceedings,
Guarantor agrees to pay Lender at Lender's banking quarters all
court costs and Lender's reasonable attorneys' fees.
Section 2.7 Primary Liability. It is expressly agreed that
the liability of Guarantor for the payment of the Liabilities
guaranteed hereby shall be primary and not secondary.
Section 2.8 Events and Circumstances Not Reducing or
Discharging Guarantor's Obligations. Guarantor hereby consents and
agrees to each of the following, and agrees that Guarantor's
obligations under this Guaranty Agreement shall not be released,
diminished, impaired, reduced or adversely affected by any of the
following, and waives any rights (including, without limitation,
rights to notice) which Guarantor might otherwise have as a result
of or in connection with any of the following:
(a) Modifications, etc. Any modification, amendment,
supplement, renewal, extension for any period, increase,
decrease, alteration or rearrangement of all or any part of
the Liabilities, or of the Note, or the Credit Agreement or
any other Loan Document executed in connection therewith, or
any contract or understanding between Borrower and Lender, or
any other Person, pertaining to the Liabilities;
(b) Adjustment, etc. Any adjustment, indulgence, forbearance
or compromise that might be granted or given by Lender to
Borrower or Guarantor or any other Person liable on the
Liabilities;
(c) Condition of Borrower or Guarantor. The insolvency,
bankruptcy, arrangement, adjustment, composition, liquidation,
disability, dissolution or lack of power of Borrower or any
other Person at any time liable for the payment of all or part
of the Liabilities; or any dissolution of Borrower or
Guarantor, or any sale, lease or transfer of any or all of the
assets of Borrower or Guarantor, or any changes in the
shareholders or members of Borrower or Guarantor; or any
reorganization of Borrower or Guarantor;
(d) Invalidity of Liabilities. The invalidity, illegality or
unenforceability of all or any part of the Liabilities, or any
document or agreement executed in connection with the
Liabilities, for any reason whatsoever, including without
limitation the fact that (i) the Liabilities, or any part
thereof, exceeds the amount permitted by law, (ii) the act of
creating the Liabilities or any part thereof is ultra ▇▇▇▇▇,
(iii) the officers or representatives executing the documents
or otherwise creating the Liabilities acted in excess of their
authority, (iv) the Liabilities or any part thereof violate
applicable usury laws, (v) the Borrower or any other Person at
any time liable for the payment of all or any part of the
Liabilities has valid defenses, claims or offsets (whether at
law or in equity, by agreement or by statute) which render the
Liabilities wholly or partially uncollectible from Borrower,
(vi) the creation, performance or repayment of the Liabilities
(or the execution, delivery and performance of any document or
instrument representing part of the Liabilities or executed in
connection with the Liabilities, or given to secure the
repayment of the Liabilities) is illegal, uncollectible,
legally impossible or unenforceable, or (vii) the Credit
Agreement, any other Loan Document, or any other document or
instrument pertaining to the Liabilities has been forged or
otherwise is irregular or not genuine or authentic;
(e) Release of Obligors. Any full or partial release of the
liability of Borrower on the Liabilities or any part thereof,
or of any co-guarantors, or any other Person now or hereafter
liable, whether directly or indirectly, jointly, severally, or
jointly and severally, to pay, perform, guarantee or assure
the payment of the Liabilities or any part thereof; it being
recognized, acknowledged and agreed by Guarantor that
Guarantor may be required to pay the Liabilities in full
without assistance or support of any other Person, and
Guarantor has not been induced to enter into this Guaranty
Agreement on the basis of a contemplation, belief,
understanding or agreement that any other Person will be
liable to perform the Liabilities, or Lender will look to any
other Person to perform the Liabilities;
(f) Other Security. The taking or accepting of any other
security, collateral or guaranty, or other assurance of
payment, for all or any part of the Liabilities;
(g) Release of Collateral, etc. Any release, surrender,
exchange, subordination, deterioration, waste, loss or
impairment (including, without limitation, negligent, willful,
unreasonable or unjustifiable impairment) of any collateral,
property or security, at any time existing in connection with,
or assuring or securing payment of, all or any part of the
Liabilities;
(h) Care and Diligence. The failure of Lender or any other
Person to exercise diligence or reasonable care in the
preservation, protection, enforcement, sale or other handling
or treatment of all or any part of such collateral, property
or security;
(i) Status of Liens. The fact that any collateral, security
or Lien contemplated or intended to be given, created or
granted as security for the repayment of the Liabilities shall
not be properly perfected or created, or shall prove to be
unenforceable or subordinate to any other Lien; it being
recognized and agreed by Guarantor that Guarantor is not
entering into this Guaranty Agreement in reliance on, or in
contemplation of the benefits of, the validity,
enforceability, collectibility or value of any of the
collateral for the Liabilities;
(j) Preference. Any payment by Borrower to Lender is held to
constitute a preference under bankruptcy laws, or for any
reason Lender is required to refund such payment or pay such
amount to Borrower or someone else; or
(k) Other Actions Taken or Omitted. Any other action taken
or omitted to be taken with respect to the Credit Agreement,
any other Loan Document, the Liabilities, or the security and
collateral therefor, whether or not such action or omission
prejudices Guarantor or increases the likelihood that
Guarantor will be required to pay the Liabilities pursuant to
the terms hereof; it is the unambiguous and unequivocal
intention of Guarantor that Guarantor shall be obligated to
pay the Liabilities when due, notwithstanding any occurrence,
circumstance, event, action, or omission whatsoever, whether
contemplated or uncontemplated, and whether or not otherwise
or particularly described herein, except for the full and
final payment and satisfaction of the Liabilities.
ARTICLE 3
Representations, Warranties and Covenants
Section 3.1 Representations and Warranties. In order to
induce Lender to accept this Guaranty Agreement, Guarantor
represents and warrants to Lender (which representations and
warranties will survive the creation of the Liabilities and any
extension of credit thereunder) that:
(a) Benefit to Guarantor. Guarantor's guaranty pursuant to
this Guaranty Agreement reasonably has benefitted or may be
expected to benefit, directly or indirectly, Guarantor.
(b) Directors' Determination of Benefit. The Board of
Directors of Guarantor, acting pursuant to a duly called and
constituted meeting, after proper notice, or pursuant to a
valid unanimous consent, has determined that this Guaranty
Agreement directly or indirectly benefits and is in the best
interests of Guarantor.
(c) Corporate Existence. Guarantor is a corporation duly
organized, legally existing and in good standing under the
laws of Nevada, and is duly qualified as a foreign corporation
in all jurisdictions wherein the property owned or the
business transacted by it makes such qualification necessary.
(d) Corporate Power and Authorization. Guarantor is duly
authorized and empowered to execute, deliver and perform this
Guaranty Agreement and all corporate action on Guarantor's
part requisite for the due execution, delivery and performance
of this Guaranty Agreement has been duly and effectively
taken.
(e) Binding Obligations. This Guaranty Agreement constitutes
valid and binding obligations of Guarantor, enforceable in
accordance with its terms (except that enforcement may be
subject to any applicable bankruptcy, insolvency or similar
laws generally affecting the enforcement of creditors'
rights).
(f) No Legal Bar or Resultant Lien. This Guaranty Agreement
will not violate any provisions of Guarantor's articles or
certificate of incorporation, bylaws, or any contract,
agreement, law, regulation, order, injunction, judgment,
decree or writ to which Guarantor is subject, or result in the
creation or imposition of any Lien upon any Properties of
Guarantor (other than those, if any, granted hereby or
permitted by the Credit Agreement).
(g) No Consent. Guarantor's execution, delivery and
performance of this Guaranty Agreement does not require the
consent or approval of any other Person, including without
limitation any regulatory authority or governmental body of
the United States or any state thereof or any political
subdivision of the United States or any state thereof.
(h) Authorization. The undersigned, signing for and on
behalf of Guarantor is duly authorized and empowered to
execute this Guaranty Agreement for and on behalf of
Guarantor.
(i) Familiarity and Reliance. Guarantor is familiar with,
and has independently reviewed books and records regarding,
the financial condition of the Borrower and is familiar with
the value of any and all collateral intended to be created as
security for the payment of the Note and Liabilities;
provided, however, Guarantor is not relying on such financial
condition or the collateral as an inducement to enter into
this Guaranty Agreement.
(j) No Representation. Neither Lender nor any other Person
has made any representation, warranty or statement to
Guarantor with regard to the Borrower or any Person liable for
the payment of all or any part of the Liabilities, or their
respective financial condition in order to induce Guarantor to
execute this Guaranty Agreement.
(k) Solvency. Guarantor hereby represents that (i) it is not
insolvent as of the date hereof and will not be rendered
insolvent as a result of this Guaranty Agreement, (ii) it is
not engaged in business or a transaction, or about to engage
in a business or a transaction, for which any property or
assets remaining with such Guarantor is unreasonably small
capital, and (iii) it does not intend to incur, or believe it
will incur, debts that will be beyond its ability to pay as
such debts mature.
(l) Financial Representations. The balance sheets of
Guarantor and its subsidiaries as at December 31, 1994, and
the related statements of operations and retained earnings of
Guarantor and its subsidiaries for the fiscal year then ended,
and the balance sheet of Guarantor and its subsidiaries as at
October 31, 1995, and the related statements of operations and
retained earnings of Guarantor and its subsidiaries for the 10
months then ended, copies of which have been furnished to
Lender, fairly present (subject in the case of said balance
sheets as at October 31, 1995, and said statements of
operations and retained earnings for the 10 months then ended
to year end adjustments) the financial condition of Guarantor
and its subsidiaries as at such dates and the results of
operations of Guarantor and its subsidiaries for the period
ended on such dates, all in accordance with generally accepted
accounting principals consistently applied, and since October
31, 1995, there has been no material adverse change in such
condition or operations.
Section 3.2 Covenants. Guarantor covenants and agrees that,
so long as the Commitment is in effect and until payment in full of
the Liabilities:
(a) Financial Information. Guarantor will furnish to Lender
such information respecting the condition or operations,
financial or otherwise, of Guarantor and of any of its
subsidiaries as Lender may from time to time request and will
furnish to Lender (i) as soon as available and in any event
within 60 days after the end of each calendar month, the
consolidated balance sheets of Guarantor and its
subsidiaries as at the end of such month and the consolidated
statements of operations of Guarantor and its subsidiaries for
the period commencing at the end of the previous fiscal year
and ending with the end of such month, certified by a
Responsible Officer of Guarantor, (ii) as soon as available
and in any event within 60 days after the end of each of the
first three quarters of each fiscal year of Guarantor, the
consolidating balance sheets of Guarantor and its subsidiaries
as at the end of such quarter and the consolidating statements
of operations of Guarantor and its subsidiaries for the period
commencing at the end of the previous fiscal year and ending
with the end of such quarter, certified by a Responsible
Officer of Guarantor, and (iii) as soon as available and in
any event within 120 days after the end of each fiscal year of
Guarantor the audited consolidated (and the unaudited
consolidating) balance sheets of Guarantor and its
subsidiaries as at the end of such year and the audited
consolidated (and the unaudited consolidating) statements of
operations of Guarantor and its subsidiaries for the fiscal
year then ended, certified, in the case of such audited
statements, by independent public accountants acceptable to
Lender.
(b) Guarantor will furnish to Lender promptly upon its
becoming available, each financial statement, report, notice
or proxy statement sent by Guarantor to stockholders generally
and each regular or periodic report and any registration
statement, prospectus or written communication (other than
transmittal letters) in respect thereof filed by Guarantor
with or received by Guarantor in connection therewith from any
securities exchange or the SEC or any successor agency.
ARTICLE 4
Security
Section 4.1 Grant of Security Interest. As security for
Guarantor's obligations hereunder, Guarantor hereby grants to
Lender a security interest in, a general lien upon and/or right of
set-off against the following (herein referred to as the
Collateral): the balance of every deposit account, now or
hereafter existing, of Guarantor with Lender and any other claim of
Guarantor against Lender, now or hereafter existing, and all money,
instruments, securities, documents, chattel paper, credits, claims,
demands and any other property, rights and interest of Guarantor,
which at any time shall come into the possession or custody or
under the control of Lender or any of its agents or affiliates, for
any purpose, and shall include the proceeds, products and
accessions of and to any thereof. Lender shall be deemed to have
possession of any of the Collateral in transit to or set apart for
it or any of its agents or affiliates.
Section 4.2 Financing Statements. The right is expressly
granted to Lender, at its discretion, to file one or more financing
statements or a copy of this Guaranty Agreement under the Uniform
Commercial Code naming Guarantor, as Debtor, and Lender, as Secured
Party, and indicating therein the types or describing the items of
Collateral.
Section 4.3 Remedies. In the event of default under this
Guaranty Agreement, Lender may sell or cause to be sold in ▇▇▇▇▇▇
County, Texas, or elsewhere, in one or more sales or parcels, at
such price as Lender may deem best, and for cash or on credit or
for future delivery, without assumption of any credit risk, all or
any of the Collateral at any broker's board or at public or private
sale, without demand or performance or notice of intention to sell
or of time or place of sale (except such notice as is required by
applicable statute and cannot be waived), and Lender or anyone else
may be the purchaser of any or all of the Collateral so sold and
thereafter hold the same absolutely, free from any claim or right
of whatsoever kind, including any equity of redemption of
Guarantor, any such demand, notice or right and equity being hereby
expressly waived and released.
Section 4.4 Rights. The grant of the above security interest
and lien shall not in any way limit or be construed as limiting
Lender to collect payment of Guarantor's obligations hereunder only
out of the Collateral, but it is expressly understood and provided
that all such obligations shall constitute the absolute and
unconditional obligations of Guarantor. Lender shall not be
required to take any steps necessary to preserve any rights against
prior parties to any of the Collateral.
ARTICLE 5
Miscellaneous
Section 5.1 Successors and Assigns. This Guaranty Agreement
is and shall be in every particular available to the successors and
assigns of Lender and is and shall always be fully binding upon the
legal representatives, successors and assigns of Guarantor,
notwithstanding that some or all of the monies, the repayment of
which this Guaranty Agreement applies, may be actually advanced
after any bankruptcy, receivership, reorganization or other event
affecting Guarantor.
Section 5.2 Notices. Lender's address for notice hereunder
shall be ▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, until
Borrower has received express written notice of a change of
address. Guarantor's address for notice hereunder shall be the
address given under Guarantor's signature below, until Lender has
received express written notice of a change of address. Any notice
or demand to Guarantor under or in connection with this Guaranty
Agreement may be given and shall conclusively be deemed and
considered to have been given and received upon the deposit
thereof, in writing, duly stamped and addressed to Guarantor at the
address of Guarantor appearing on the records of Lender, in the
U.S. mail, but actual notice, however given or received, shall
always be effective.
Section 5.3 Applicable Law. This Guaranty Agreement is a
contract made under and shall be construed in accordance with and
governed by the laws of the State of Texas.
Section 5.4 Jurisdiction. All actions or proceedings with
respect to this Guaranty Agreement may be instituted in the courts
of the State of Texas, the United States District Court for the
Southern District of Texas (Houston Division), or elsewhere to the
extent that jurisdiction shall exist apart from the provisions of
this Section, as Lender may elect, and by execution and delivery of
this Guaranty Agreement, Guarantor irrevocably and unconditionally
submits to the jurisdiction (both subject matter and personal) of
such court, and irrevocably and unconditionally waives (a) any
objection Guarantor may now or hereafter have to the laying of
venue in any of such courts, and (b) any claim that any action or
proceeding brought in any of such courts has been brought in an
inconvenient forum. However, Guarantor does not waive its right to
remove any cause of action brought in State Court to the United
States District Court for the Southern District of Texas (Houston
Division). This submission to jurisdiction and venue is
nonexclusive and does not prevent Lender from obtaining
jurisdiction in any court otherwise having jurisdiction or venue.
Guarantor hereby designates and appoints ▇▇▇▇▇▇▇ ▇▇▇▇▇▇, whose
address is c/o Midcoast Energy Resources, Inc., ▇▇▇▇ ▇▇▇▇▇▇▇▇▇,
▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, as its authorized agent in the
State of Texas to accept and acknowledge on its behalf service of
any and all process which may be served in any suit, action or
proceeding in the State of Texas, and Guarantor agrees that any
service of process upon such agent shall be deemed in every respect
effective service upon Guarantor. Guarantor agrees that so long as
Guarantor shall be obligated to Lender under this Guaranty
Agreement, Guarantor shall maintain duly appointed agents
satisfactory to Lender for the service of process in the State of
Texas and shall keep Lender advised in writing of the identity and
location of such agents. The failure of such agents to give notice
to Guarantor of any such service shall not impair or affect the
validity of such service or of any judgment rendered in any action
or proceeding based thereon.
Section 5.6 Complete Agreement.
This Guaranty Agreement represents the final agreement between the
parties and may not be contradicted by evidence of prior,
contemporaneous, or subsequent oral agreements of the parties.
There are no unwritten oral agreements between the parties.
WITNESS THE EXECUTION HEREOF, as of the 20th day of December, 1995.
MIDCOAST ENERGY RESOURCES, INC.
Name:
Title:
Address:
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Accepted as of the 20th day of December, 1995.
COMPASS BANK-HOUSTON
By:
Name:
Title: