Exhibit 10.2
LOAN AGREEMENT
Among
BLUEFIELD GAS COMPANY
and
SUNTRUST BANK
and
RGC RESOURCES, INC.
Date: November 25, 2005
TABLE OF CONTENTS
Page
ARTICLE I 1
RECITALS AND PURPOSES OF LOAN 1
1.1 Recitals 1
1.2 Purposes 1
ARTICLE II 1
DEFINITIONS 1
ARTICLE III 4
THE LOAN 4
3.1 The Loan 4
3.2 Method of Payment 4
3.3 Prepayments 5
3.4 Illegality 5
3.5 Disaster 5
3.6 Funding Loss Indemnification 5
3.7 Guaranty 5
ARTICLE IV 5
CONDITIONS OF LENDING 5
4.1 Borrowing Under the Loan 5
4.2 Conditions for Bank's Benefit 7
ARTICLE V 7
PAYMENT OF ADVANCES 7
5.1 Under the Loan 7
ARTICLE VI 7
GENERAL REPRESENTATIONS AND WARRANTIES 7
6.1 Organization, Qualification, Properties 7
6.2 Authority 7
6.3 Binding Effect and Enforceability 8
6.4 No Corporate or Contract Violation 8
6.5 Financial Statements 8
6.6 Proceedings 8
6.7 Approvals 8
6.8 ERISA 8
6.9 Compliance 9
6.10 Use of Proceeds 9
6.11 No Default 9
6.12 Title to Property, Perfection of Liens 9
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6.13 RICO or CCE Actions 9
6.14 Accuracy of Information 9
6.15 Labor Disputes and Acts of God 9
6.16 Other Agreements 9
6.17 Operation of Business 9
6.18 OFAC 10
6.19 Patriot Act 10
ARTICLE VII 10
AFFIRMATIVE COVENANTS 10
7.1 Financial Statements, Reports 10
7.2 Taxes 10
7.3 Corporate and Partnership Franchises 11
7.4 Corporate and Partnership Existence 11
7.5 Access to Premises and Records 11
7.6 Notices of Default 11
7.7 Compliance with Laws 11
7.8 ERISA 11
7.9 Financial Covenants 11
7.10 Non-Bank Debt 11
7.11 Insurance 11
7.12 Environmental Matters 11
7.13 Indemnity 12
7.14 General Information 13
ARTICLE VIII 13
NEGATIVE COVENANTS 13
8.1 Mergers, Consolidations 13
8.2 Disposition of Assets 13
8.3 Additional Debt 13
8.4 Negative Pledge 13
8.5 Change in Control 13
8.6 No Sale and Lease Back 14
8.7 Loan 14
8.8 Contingent Liabilities 14
ARTICLE IX 14
EVENTS OF DEFAULT 14
9.1 Events of Defaults 14
9.2 Remedies 15
ARTICLE X 16
MISCELLANEOUS PROVISIONS 16
10.1 Notices 16
10.2 Term of Agreement 16
10.3 No Waiver 16
10.4 Seal, Jurisdiction 17
10.5 Consent to Jurisdiction 17
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10.6 Severability 17
10.7 Offset 17
10.8 Change, Waivers, etc 17
10.9 Singular and Plural 17
10.10 Use of Defined Terms 17
10.11 Binding Effect of Agreement 17
10.12 Headings 17
10.13 Accounting Terms 17
10.14 Counterparts 18
10.15 Expenses 18
10.16 WAIVER OF JURY TRIAL 18
10.17 Further Assurances 18
10.18 Merger of Commitment 18
10.19 Time of the Essence 18
10.20 Entire Agreement 18
10.21 Construction and Conflicts 18
10.22 Assignment 19
10.22 Guarantor as Party 19
LIST OF EXHIBITS AND SCHEDULES
Schedule 2.1 - Permitted Encumbrances
Schedule 6.6 - Proceedings
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LOAN AGREEMENT
THIS LOAN AGREEMENT dated as of November 25, 2005, by and among
BLUEFIELD GAS COMPANY, a West Virginia corporation (the "Borrower"); and
SUNTRUST BANK, a Georgia banking corporation (the "Bank"); and RGC RESOURCES,
INC., a Virginia corporation (the "Guarantor") provides:
ARTICLE I
RECITALS AND PURPOSES OF LOAN
1.1 Recitals. Subject to the terms and conditions set forth in this
Agreement, the Bank agrees to make a certain term loan to the Borrower in the
amount of $2,000,000.00 (the "Loan").
1.2 Purpose. The purpose of the Loan is to finance certain capital
needs of the Borrower and to refinance certain short term debt of the Borrower.
ARTICLE II
DEFINITIONS
2.1 The terms defined in this Article II shall for all purposes of this
Agreement have the meanings herein specified unless the context expressly or by
necessary implication otherwise requires:
"Affiliate" means any Person (1) which directly or
indirectly controls, or is controlled by, or is under common control with, the
Borrower; or (2) which directly or indirectly beneficially owns or holds five
percent (5%) or more interest in the Borrower. The term "control" means the
possession, directly or indirectly, of the power to direct or cause the
direction of the management and policies of a Person, whether through the
ownership of voting securities, by contract, or otherwise.
"Agreement" means this loan agreement between the Borrower,
the Bank, and the Guarantor, as amended, supplemented, modified or replaced from
time to time.
"Business" means the business carried on by the Borrower
during the fiscal year ended September 30, 2005, activities ancillary thereto
and such other activities as may be warranted as the result of changes in the
natural gas and propane industry and markets.
"Business Day" means any day other than Saturday, Sunday or
other day on which commercial banks in Roanoke, Virginia, are authorized or
required to close under applicable laws.
"Capitalized Lease Obligations" means with respect to any
Person any and all lease obligations required or permitted under GAAP to be
capitalized on the books of such person.
"Closing Date" means November 25, 2005.
"Commitment" means the letter agreement dated September 15,
2005 from the Bank, as may be amended from time to time, and accepted by the
Borrower, setting forth certain terms and conditions relating to the Loan.
"Customer" means the account debtor with respect to any of
the Receivables, the obligor on any chattel paper, the prospective purchaser
with respect to any contract right, and any person who enters into or proposes
to enter into any contract or other arrangement with the Borrower pursuant to
which the Borrower is to deliver any goods or other personal property or for
whom the Borrower performs any service.
"Dollar(s)" means lawful money of the United States of
America.
"Environmental Laws" means any Federal, state or local
laws, rules, ordinances or common law, and any judicial interpretation thereof,
relating primarily to the environment or to environmental protection, including,
but not limited to, the Clean Air Act, 42 U.S.C. Section 7401, et seq.; Federal
Water Pollution Control Act, 33 U.S.C. Section 1251, et seq.; Solid Waste
Disposal Act, 42 U.S.C. Section 6901, et seq.; Comprehensive Environmental
Response Compensation and Liability Act, 42 U.S.C. Section 9601, et seq.;
National Environmental Policy Act, 42 U.S.C. Section 4321, et seq.; and Toxic
Substances Control Act, 15 U.S.C. Section 2601, et seq.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations and published interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or
not incorporated) which together with the Borrower would be treated as a single
employer under Section 4001 of ERISA.
"Event of Default" means an event specified in Section 9.1
of this Agreement.
"Funded Debt" means as to the Borrower, the sum (without
duplication) of all interest bearing obligations, Capitalized Lease Obligations
and outstanding letters of credit, all as determined in accordance with GAAP.
"GAAP" means generally accepted accounting principles in
effect in the United States.
"Guarantor" means RGC Resources, Inc., a Virginia
corporation.
"Guaranty" means the guaranty given by the Guarantor to the
Bank, dated even date herewith, executed and delivered in connection with the
Loan, and any amendments or replacements thereof.
"Hazardous Materials" means all materials subject to
regulation under Environmental Laws, including, but not limited to, asbestos,
polychlorinated biphenyls (PCB's), petroleum products, and lead based paints.
"Indebtedness" means with respect to any Person at any time
(excluding Shareholder Subordinated Debt), without duplication, (i) all
obligations of such Person for borrowed money, (ii) all obligations of such
Person evidenced by bonds, debentures, notes or other similar instruments, (iii)
all obligations of such Person upon which interest charges are customarily paid,
(iv) all obligations of such Person under conditional sale or other title
retention agreements relating to property purchased by such Person, (v) all
obligations of such Person issued or assumed as the deferred purchase price of
property or services (other than accounts payable to suppliers incurred in the
ordinary course of business and not overdue), (vi) all obligations of others
secured by any lien, security interest or encumbrance on property owned or
acquired by such Person, whether or not the obligations secured thereby have
been assumed, (vii) all Capitalized Lease Obligations of such Person, and (viii)
current liabilities in respect of unfunded vested benefits under any Plan.
"Interest Period" means the period commencing on the first
day of each calendar month and ending on the last day of each calendar month,
provided that the foregoing provisions relating to Interest Period are subject
to the following:
(a) No Interest Period may extend beyond the
Termination Date;
(b) If an Interest Period would end on a day that is
not a Business Day, such Interest Period shall be extended to the next Business
Day, unless such Business Day would fall in the next calendar month, in which
event such Interest Period shall end on the immediately preceding Business Day;
and
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(c) The initial Interest Period shall commence on the
date the Loan is made, and end on the last day in such calendar month.
"LIBOR Interest Rate" shall have the same definition
provided for the term "Index" in the Note.
"LIBOR Loan" means any loan when and to the extent the
interest rate therefore is determined by reference to the Libor Interest Rate.
"Loan Documents" means, collectively, this Agreement, the
Note, the Guaranty, together with such additional certifications, consents,
documents, instruments and agreements, executed pursuant to, or transferred or
delivered in connection with, this Agreement.
"Loan" means the loan as described under Section 1.1 of this
Agreement.
"Long Term Debt" of any Person means (i) all Indebtedness of
such Person for borrowed money or which has been incurred in connection with the
acquisition of assets in each case having a final maturity of more than one year
from the date of origin thereof (or which is renewable or extendible at the
option of the obligor for a period or periods more than one year from the date
of origin), but excluding all payments in respect thereof that are required to
be made within one year from the date of any determination of Long Term Debt,
whether or not the obligation to make such payments shall constitute a current
liability of the obligor under GAAP, (ii) obligations secured by any lien upon
property or assets owned by such Person, even though such Person has not assumed
or become liable for the payment of such obligations, (iii) obligations created
or arising under any conditional sale or other title retention agreement with
respect to property acquired by such Person, notwithstanding the fact that the
rights and remedies of the seller, lender or lessor under such agreement in the
event of default are limited to repossession or sale of property, (iv) all
capitalized rentals of such Person, and (v) all guaranties by such Person of
long term debt of others.
"Multiemployer Plan" means a Plan described in Section
4001(a)(3) of ERISA which covers employees of the Borrower or any ERISA
Affiliate.
"Net Worth" means the total shareholder's equity of the
Borrower, as determined in accordance with GAAP.
"Note" means the promissory note, evidencing the Loan, as
executed and delivered under this Agreement, and any and all renewals,
modifications or extensions thereof.
"PBGC" means the Pension Benefit Guaranty Corporation.
"Permitted Encumbrances" means, as of any particular time,
(i) liens imposed by mandatory provisions of law such as for materialmen's,
mechanics', warehousemen's and other like liens arising in the ordinary course
of business securing charges for which payment is not yet due, (ii) liens for
taxes, assessments and governmental charges or levies imposed upon any person or
upon such person's income or profits or property, if the same are not yet due
and payable or if the same are being contested in good faith and as to which
adequate reserves therefor have been established on the Borrower's books in
accordance with GAAP, (iii) liens arising in connection with any court
proceedings, provided the execution of such liens is effectively stayed and such
liens are contested in good faith and adequate reserves therefor have been
established on the Borrower's books in accordance with GAAP, (iv) liens in favor
of the Bank, (v) the extension, renewal or replacement of any above-described
items, (vi) purchase money liens incurred in the ordinary course of business and
not exceeding over $500,000 in the aggregate during the term of the Loan, and
(vii) such liens and encumbrances set forth on the attached Schedule 2.1.
"Person" means a corporation, association, partnership,
limited liability company, organization, business, division, individual or
government or political subdivision thereof or any governmental agency.
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"Plan" means any employee pension benefit plan of the
Borrower covered by ERISA.
"Prime Rate" means the interest rate established from time
to time by the Bank and recorded in its credit administration division as a
reference used by the Bank in determining the lending rates on commercial Loan.
The Prime Rate is not intended to be the lowest rate of interest charged on any
extension of credit to any customer. Any change in the interest rate based on
the Prime Rate resulting from a change in the Prime Rate shall be effective as
of the opening of business on the day on which such change in the Prime Rate
becomes effective.
"Prime Loan" means any loan when and to the extent the
interest rate therefor is determined by reference to the Prime Rate.
"Prohibited Transaction" means a prohibited transaction as
defined in Section 406 of ERISA.
"Properties" means the lands, buildings, improvements and
structures now or later owned, leased, used or operated by the Borrower or the
Guarantor, as applicable.
"Receivables" means all accounts, accounts receivable,
contract rights, instruments, documents, chattel paper and general intangibles
of the Borrower, whether now existing or hereafter arising or created, and
whether or not specifically sold or assigned to the Bank hereunder.
"Reportable Event" means a reportable event as defined in
Section 4043 of ERISA that might constitute grounds for termination by the PBGC
of an employee benefit plan of the Borrower covered by ERISA or for the
appointment by the appropriate United States District Court of a trustee to
administer any such plan.
"Shareholder Subordinated Debt" means all indebtedness of
the Borrower to its shareholders, now existing or hereafter to occur.
"Termination Date" means July 1, 2008.
"UCC" means the Uniform Commercial Code as in effect in
Virginia.
ARTICLE III
THE LOAN
3.1 The Loan.
(a) Amount. The Bank agrees to lend to the Borrower the
principal sum of $2,000,000.00, upon the terms, covenants and conditions set
forth in this Agreement and in the Loan Documents. The Borrower agrees to accept
the Loan and expressly covenants to comply with and perform all of the terms,
covenants and conditions of this Agreement and the Loan Documents.
(b) Note. The Loan shall be evidenced by the Note in the
amount of the Loan, payable to the Bank in accordance with the terms thereof.
The Note shall bear interest at a rate equal to the 30 day LIBOR Interest Rate
plus 87 basis points. Interest on the Loan shall be calculated on the basis of a
360 day year for the actual number of days elapsed. Interest shall be paid
quarterly, commencing on January 1, 2006, and the first day of each third month
thereafter. The Loan shall be funded in full on the Closing Date. Outstanding
principal and interest shall be paid in full on the Termination Date.
3.2 Method of Payment. The Borrower shall make each payment
under this Agreement and under the Note not later than 11:00 a.m. (Eastern
Standard Time) on the date when due in lawful money of
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the United States to the Bank at the office address of the Bank provided in the
Note in immediately available funds. The Borrower hereby authorizes the Bank, if
and to the extent payment is not made when due under this Agreement and the
Note, to charge from time to time against any account of the Borrower with the
Bank any amount so due. Whenever any payment to be made under this Agreement or
under the Note shall be stated to be due on a day other than a Business Day,
such payment shall be made on the next succeeding Business Day, and such
extension of time shall in such case be included in the computation of payment
of interest.
3.3 Prepayments. The Borrower may prepay the Note in whole or in part
with accrued interest to the date of such prepayment on the amount prepaid,
provided that a LIBOR Loan may be prepaid only on the last day of an Interest
Period for such LIBOR Loan.
3.4 Illegality. Notwithstanding any other provision in this Agreement,
if the adoption of any applicable law, rule, or regulation, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank, or comparable agency charged with the
interpretation or administration thereof, or compliance by the Bank with any
request or directive (whether or not having the force of law) of any such
authority, central bank, or comparable agency shall make it unlawful or
impossible for the Bank to (a) maintain its commitment, then upon notice to the
Borrower by the Bank the commitment of the Bank shall terminate; or (b) maintain
or fund its LIBOR Loan, then upon notice to the Borrower by the Bank the LIBOR
Loan may be converted into Prime Loan, or the outstanding principal amount of
the LIBOR Loan, together with interest accrued thereon, and any other amounts
payable to the Bank under this Agreement, shall be repaid (i) immediately upon
demand of the Bank if such change or compliance with such request, in the
reasonable judgment of the Bank, requires immediate repayment; or (ii) at the
expiration of the last Interest Period to expire before the effective date of
any such change or request.
3.5 Disaster. Notwithstanding anything to the contrary herein, if the
Bank determines (which determination shall be conclusive) that quotations of
interest rates for the relevant deposits referred to in the definition of LIBOR
Interest Rate are not being provided in the relevant amounts or for the relative
maturities for purposes of determining the LIBOR Interest Rate, then the Bank
shall forthwith give notice thereof to the Borrower, whereupon until the Bank
notifies the Borrower that the circumstances giving rise to such suspension no
longer exist, the Loan shall bear interest at the Prime Rate.
3.6 Funding Loss Indemnification. The Borrower shall pay to the Bank,
upon the request of the Bank, such amount or amounts as shall be sufficient (in
the reasonable opinion of the Bank) to compensate it for any loss, cost, or
expense incurred as a result of any payment of the Loan on a date other than the
last day of an Interest Period including, but not limited to, acceleration of
the Loan by the Bank pursuant to Section 9.2, or any failure by the Borrower to
borrow, or to honor a LIBOR Loan on the date set for borrowing.
3.7 Guaranty. The Loan shall be unconditionally guaranteed
without limit by the Guarantor.
ARTICLE IV
CONDITIONS OF LENDING
The obligation of the Bank to make the Loan is subject to the accuracy,
as of the date hereof, of the representations and warranties contained in
Article VI, to the performance by the Borrower of its obligations to be
performed hereunder and to the satisfaction of the following conditions, each of
which shall be precedent to any obligations of the Bank hereunder and shall be
satisfied prior of the funding the Loan:
4.1 Borrowing Under The Loan. With respect to the obligation
of the Bank to fund the Loan on the Closing Date:
(a) The Borrower and the Guarantor shall have each duly
authorized, executed and delivered to the Bank the Loan Documents to which they
are a party, and, where appropriate, acknowledged and recorded or filed such
documents.
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(b) The Borrower and the Guarantor shall have delivered to
the Bank copies of all resolutions adopted by its board of directors, members,
or partners duly authorizing the execution, delivery and performance of the Loan
Documents to which it is a party, and all transactions and documents
contemplated thereby.
(c) The Bank shall have received true copies of all consents
and required governmental approvals, if any, necessary to the execution,
delivery and performance of the Loan Documents and the transactions contemplated
thereby.
(d) The Bank shall have received a general certificate of
each of the Borrower and the Guarantor with (i) a copy of its articles of
incorporation, articles of organization or partnership certificate, certified as
of a recent date by the appropriate official of the state of incorporation,
organization or partnership, (ii) certificates of the appropriate state
official, dated as of a recent date, as to the good standing of the Borrower and
the Guarantor, (iii) a copy of the bylaws of the Borrower and the Guarantor
certified as of a recent date by its secretary; and (iv) incumbency and
signature certificates of the Borrower and the Guarantor certifying the names
and the signatures of the officers or partners authorized to sign the Loan
Documents to which it is a party and the other documents to be delivered under
this Agreement.
(e) The Bank shall have received written opinions of counsel
to the Borrower and the Guarantor, addressed to the Bank, dated as of the
Closing Date, in form and substance acceptable to the Bank and its counsel.
(f) No event shall have occurred and be continuing which
constitutes an Event of Default, or which would constitute an Event of Default
but for a requirement that notice be given or that a period of time elapse, or
both; and the Borrower shall have duly authorized, executed and delivered to the
Bank a certificate to that effect, dated as of the Closing Date, if required by
the Bank.
(g) The Bank shall have received certificates of insurance
and, if requested by the Bank, copies of all policies evidenced thereby, showing
insurance against all risks required by the Bank in the amounts and with
insurers satisfactory to the Bank, including the following:
(i) Unless the Borrower qualifies as a self-insurer under the
laws of the state of its incorporation or any other state
in which it does business, worker's compensation insurance
with regard to all employees of the Borrower in accordance
with the applicable requirements of law; and
(ii) Such other insurance of the types customarily carried by
the Borrower with appropriate loss payable clauses in favor
of the Bank, including but not limited to (1) public
liability and indemnity insurance; (2) fire (with broad
form and extended coverage) insurance; (3) vandalism and
malicious mischief insurance; (4) business interruption
insurance; and (5) insurance for such other risks and in
such forms and amounts as the Bank may reasonably require.
All policies of insurance shall be in amounts and forms
satisfactory to the Bank, written by a company or companies
licensed to do business in Virginia and otherwise
satisfactory to the Bank.
(h) All legal matters incident to the Loan and all documents
and instruments to be delivered hereunder or pursuant hereto or thereto, shall
be satisfactory in form and substance to counsel for the Bank.
(i) The Borrower shall deliver to the Bank evidence
satisfactory to the Bank that all governmental authorities having jurisdiction
over the Borrower and its operations, have authorized the Borrower's operations
and that the operations as planned comply with laws, ordinances, rules,
regulations, and restrictions affecting such operations.
(j) The Borrower shall have paid or shall pay all costs of
the Bank incurred in connection with the underwriting, drafting and closing of
the Loan and the Loan Documents, including without
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limitation, reasonable counsel and other fees and disbursements, engineer fees,
inspection fees, and appraisal fees.
(k) The Borrower shall have delivered to the Bank all
documents, instruments and other items required by the Bank pursuant to the
provisions of, and satisfied all conditions to, this Agreement.
(l) The representations made, and the information furnished
by the Borrower to the Bank with regard to the Loan and the Borrower's
qualifications therefor shall have been and, to the best of the Borrower's
knowledge, shall continue to be true and correct and not misleading in any
material respect.
(m) The Bank shall have received such other approvals,
opinions, or documents as the Bank or its counsel may reasonably request.
(n) The Borrower shall have obtained all approvals from the
Virginia State Corporation Commission necessary for its operations, in the sole
discretion of the Bank.
4.2 Conditions for Bank's Benefit. All conditions of the obligations of
the Bank to make the Loan are imposed solely and exclusively for the benefit of
the Bank and its assigns and no other person shall have standing to require
satisfaction of such conditions in accordance with their terms or be entitled to
assume that the Bank will refuse to make advances in the absence of strict
compliance with any or all thereof and no other person shall, under any
circumstances, be deemed to be a beneficiary of such conditions, any or all of
which may be freely waived in whole or in part by Bank at any time if, in its
sole discretion, it deems it advisable to do so.
ARTICLE V
PAYMENT OF ADVANCES
5.1 Under the Loan. The Loan shall be funded in one advance
on the Closing Date equal to the principal amount of the Loan.
ARTICLE VI
GENERAL REPRESENTATIONS AND WARRANTIES
Each of the Borrower and the Guarantor represent and warrant to the
Bank with respect to itself, as of the date of this Agreement and as of Closing
Date that:
6.1 Organization, Qualification, Properties. Each of the Borrower and
the Guarantor is a (i) corporation duly organized, existing and in good standing
under the laws of the Commonwealth of Virginia, (ii) duly qualified as a foreign
corporation to do business in each of the jurisdictions where failure to qualify
would have a material adverse effect on its ability to fulfill its obligations
under the Loan Documents or to conduct its business, and (iii) entitled to own
or lease its Properties and carry on its business as now conducted.
6.2 Authority. Each of the Borrower and the Guarantor has the necessary
corporate power and authority to enter into, and have taken all necessary
corporate actions to authorize the execution, delivery and performance of this
Agreement, and the other Loan Documents, and all transactions and documents
contemplated hereby and thereby to which it is a party, and all such power and
authority is in full force and effect.
6.3 Binding Effect and Enforceability. This Agreement constitutes, and
the other Loan Documents, when issued and delivered pursuant hereto for value
received, will constitute, legal, valid and binding obligations of the Borrower
and the Guarantor, enforceable in accordance with the terms thereof, except that
the enforceability of the obligations of the parties under the Loan Documents is
subject to the
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provisions of bankruptcy, insolvency, reorganization, moratorium or other
similar laws and is also subject to general equity principles, which may limit
the specific enforcement of certain remedies.
6.4 No Corporate or Contract Violation. There is no provision of law or
in the charter or bylaws of the Borrower or the Guarantor, and no provision of
any existing mortgage, contract, lease, indenture or agreement binding on either
of the Borrower or the Guarantor or any of its Properties which would be
breached by the Loan Documents or by the performance or observance of any of the
terms thereof, or result in, or require, the creation or imposition of any lien
upon or with respect to any of its Properties or cause either the Borrower or
the Guarantor to be in default or violation of any law, rule, regulation, order,
writ, judgment, injunction, decree, determination or award binding upon or
applicable to the Borrower or the Guarantor.
6.5 Financial Statements. The unaudited financial statements of the
Borrower and the Guarantor as of the fiscal quarter ending September, 2005,
together with their statements of income, retained earnings and changes in
financial position for the period then ended, in the form previously delivered
to the Bank, fairly present the financial condition of such party as well as the
results of their operations and changes in their financial position as of the
dates and for the period covered thereby and are correct and complete in all
material respects. To the knowledge of each of the Borrower and the Guarantor,
there are no material liabilities, direct or indirect, fixed or contingent,
affecting it as of the date hereof, which are not reflected in the financial
statements of the Borrower and the Guarantor heretofore delivered to the Bank
and nor has there been any material adverse change in its financial condition or
operations, all except as disclosed in writing to the Bank.
6.6 Proceedings. To the best of the Borrower's and the Guarantor's
knowledge, there are no proceedings pending or threatened, before any court or
administrative agency against the Borrower or the Guarantor which, if adversely
determined, would individually or in the aggregate affect adversely the
financial condition of the Borrower or Guarantor, or its ability to perform
under this Agreement or any of the other Loan Documents, with the exception of
those proceedings disclosed on Schedule 6.6.
6.7 Approvals. The execution, delivery and performance of this
Agreement and the other Loan Documents, and the transactions contemplated hereby
and thereby, do not require any consents, approvals, permits, authorizations or
orders of any governmental or regulatory authority (other than the approval of
the Virginia State Corporation Commission, which approval has been granted). All
tax returns now required to be filed have been filed (or appropriate extensions
of such filings have been obtained) and all taxes, assessments and other
governmental charges (other than those presently payable without penalty or
interest and those being contested in good faith by appropriate proceedings) due
have been paid. Each of the Borrower and the Guarantor has established on its
books reserves adequate for the payment of all federal, state and other income
tax liabilities.
6.8 ERISA. The Borrower is in compliance in all material respects with
all applicable provisions of ERISA, and neither has received any notice of
violation thereof from any applicable authority. Neither a Reportable Event nor
a Prohibited Transaction has occurred or exists in connection with any Plan; no
notice of intent to terminate a Plan has been filed nor has any Plan been
terminated; no circumstances exist which constitute grounds for the termination
of any Plan by PBGC or for the appointment of any trustee to administer a Plan,
nor has the PBGC instituted any such proceedings; the Borrower has not
completely or partially withdrawn from a Multiemployer Plan, as described in
Section 4001(e)(3) of ERISA; the Borrower has met its minimum funding
requirements under ERISA with respect to all of their or its Plan and the
present fair market value of all Plan assets exceeds the present value of all
vested benefits under each Plan, as determined on the most recent valuation date
of the Plan and in accordance with the provisions of ERISA and the regulations
thereunder for calculating the potential liability of the Borrower to PBGC or
the Plan under Title IV of ERISA; and the Borrower has not incurred any
liability to the PBGC or ERISA.
6.9 Compliance. The Borrower is in compliance with all statutes, rules
and regulations relating to environmental, occupational and health standards and
controls in all jurisdictions where it is presently doing business, the failure
to comply with which might materially adversely affect the business, operations
or Properties of the Borrower, and has not received any notice of violation
thereof from any applicable authority.
8
To the best of the Borrower's knowledge, the Borrower is not in violation of any
other statute, rule or regulation of any governmental body, the violation of any
of which might materially affect adversely the business, operations or
Properties of the Borrower.
6.10 Use of Proceeds. The Borrower will use the proceeds of the Loan
only for the purposes set forth in Section 1.2 of this Agreement. No part of the
proceeds of the Loan will be used, directly or indirectly, for the purpose of
purchasing, carrying or trading in any margin security within the meaning of
applicable regulations of the Board of Governors of the Federal Reserve System,
or for the purpose of purchasing or carrying or trading in any securities under
such circumstances as to involve the Bank or the Borrower in a violation of such
regulations including, without limitation, Regulations G, T, U and X of such
Board, or for any purpose other than as set forth in Section 1.2 hereof. If
requested by the Bank, the Borrower will furnish to the Bank a statement in
conformity with the requirements of Federal Reserve Form U-1 referred to in
Regulation U.
6.11 No Default. Neither the Borrower nor the Guarantor is in default
in respect of any indebtedness for borrowed money and no holder of any such
indebtedness has given notice of any asserted default thereunder. No
liquidation, dissolution or other winding up of the Borrower or the Guarantor
and no bankruptcy or similar proceedings relative to it or its Properties are
pending or, to its knowledge, threatened against it.
6.12 Title to Property, Perfection of Liens. To the best of the
Borrower's knowledge, the Borrower has good and marketable title to all of its
Properties and assets reflected on the financial statements referred to in
Section 6.5, free and clear of any liens, security interests and encumbrances,
except Permitted Encumbrances.
6.13 RICO or CCE Actions. There is, to the best of the Borrower's
knowledge, no investigation, and there is no indictment, information,
proceeding, conviction, judgment or order under the Racketeer Influenced and
Corrupt Organizations Act, 18 U.S.C. 1961, et seq. ("RICO"), the Continuing
Criminal Enterprises Act, 21 U.S.C. 848 et seq. ("CCE") or any similar law that
may result in a forfeiture of any of the assets of the Borrower.
6.14 Accuracy of Information. No information, exhibit or report
furnished by the Borrower or the Guarantor to the Bank in connection with the
negotiation of this Agreement contained any material misstatement of fact or
omitted to state any fact necessary to make the statement contained therein not
misleading, and there is no fact that the Borrower or the Guarantor has not
disclosed to the Bank in writing that could materially adversely affect its
Properties, or its business or financial condition.
6.15 Labor Disputes and Acts of God. Neither the business nor the
Properties of the Borrower are affected by any fire, explosion, accident,
strike, lockout, or other labor dispute, drought, storm, hail, earthquake,
embargo, act of God or of the public enemy, or other casualty (whether or not
covered by insurance), materially and adversely affecting such business or
Properties or the operations of the Borrower.
6.16 Other Agreements. The Borrower is not a party to any indenture,
loan, or credit agreement, or to any lease or other agreement or instrument or
subject to any charter or corporate restriction which could have a material
adverse effect on the ability of the Borrower to carry out its obligations under
the Loan Documents. The Borrower is not in default in any respect in the
performance, observance, or fulfillment of any of the obligations, covenants, or
conditions contained in any agreement or instrument material to its business.
6.17 Operation of Business. The Borrower possesses all licenses,
permits, franchises, patents, copyright, trademarks, and trade names, or rights
thereto, to conduct its business substantially as now conducted and as presently
proposed to be conducted, and the Borrower is not in violation of any valid
rights of others with respect to any of the foregoing.
6.18 OFAC. The Borrower (i) is not a Person whose property or interest
in property is blocked or subject to blocking pursuant to Section 1 of Executive
Order 13224 of September 23, 2001 Blocking
9
Property and Prohibiting Transactions With Persons Who Commit, Threaten to
Commit, or Support Terrorism (66 Fed. Reg. 49079 (2001), (ii) does not engage in
any dealings or transactions prohibited by Section 2 of such executive order, or
is otherwise associated with any such Person in any manner violative of Section
2, and (iii) is not a Person on the list of Specially Designated Nationals and
Blocked Persons or subject to the limitations or prohibitions under any other
U.S. Department of Treasury's Office of Foreign Assets Control regulation or
executive order.
6.19 Patriot Act. The Borrower is in compliance, in all material
respects, with (i) the Trading with the Enemy Act, as amended, and each of the
foreign assets control regulations of the United States Treasury Department (31
CFR, Subtitle B, Chapter V, as amended) and any other enabling legislation or
executive order relating thereto, and (ii) the Uniting And Strengthening America
By Providing Appropriate Tools Required to Intercept And Obstruct Terrorism (USA
Patriot Act of 2001). No part of the proceeds of the Loans shall be used,
directly or indirectly, for any payments to any governmental official or
employee, political party, official of a political party, candidate for
political office, or anyone else acting in an official capacity, in order to
obtain, retain or direct business or obtain any improper advantage, in violation
of the Untied States Foreign Corrupt Practices Act of 1977, as amended.
The foregoing warranties and representations shall be deemed to be
continuing, shall be and remain effective despite any investigation or knowledge
by the Bank of their inaccuracy, and shall survive the execution and delivery of
this Agreement and the making of the Loan.
ARTICLE VII
AFFIRMATIVE COVENANTS
Until payment in full of the Loan and the Note, unless the Bank shall
otherwise consent in writing, the Borrower (together with the Guarantor when
referenced) will:
7.1 Financial Statements, Reports. Furnish or cause to be
furnished to the Bank:
(a) as soon as available, but no later than 120 days after
the close of the Borrower's and the Guarantor's fiscal year commencing with the
fiscal year ending December 31, 2005, the Borrower's and the Guarantor's
reasonably detailed operating statements and balance sheets, together with
statements of income, retained earnings, changes in financial position, and
reconciliation of net worth for such fiscal year, audited and prepared by
independent certified public accountants satisfactory to the Bank in accordance
with GAAP, accompanied by certificates from each of their respective chief
financial officers to the effect that he has reviewed this Agreement and nothing
contained in the report or otherwise results in a default hereunder or a
violation of any provision hereof, or would so result with notice of lapse of
time, or both, or that there is a default or violation and stating the nature of
the default or violation;
(b) as soon as available, but no later than 45 days after
the end of each fiscal quarter, a copy of the Guarantor's 10Q filing; and
(c) such additional information, reports or statements
(financial or otherwise) as the Bank from time to time may reasonably request.
7.2 Taxes. Duly pay and discharge all taxes, assessments and
governmental charges upon it or against its Properties prior to the date on
which penalties attach unless and to the extent only that such taxes,
assessments and governmental charges shall be contested in good faith and by
appropriate proceedings by the Borrower, and the Borrower shall have set aside
on its books such reserves as are required by GAAP with respect to any such tax,
assessment or charge so contested.
7.3 Corporate and Partnership Franchises. Keep its corporate franchises
in full force and effect and duly observe and conform to all valid requirements
of any governmental authority relative to the conduct of its business and to its
Properties and assets and maintain and keep in force all franchises, licenses
and permits necessary to the lawful and proper conduct of its business.
10
7.4 Corporate and Partnership Existence. Maintain its
corporate existence.
7.5 Access to Premises and Records. Maintain financial records in
accordance with GAAP, and permit representatives of the Bank to have access to
such financial records and the business locations at reasonable times during
normal business hours and to make inspections thereof and such excerpts from
such records as such representatives deem necessary.
7.6 Notices of Default. Give the Bank written notice of any Event of
Default and any event which with notice or lapse of time or both would
constitute an Event of Default, within ten (10) days of learning of same.
7.7 Compliance with Laws. Comply in all material respects with all laws
and governmental regulations of the United States of America and all political
subdivisions thereof applicable to the rights of the Borrower to transact
business under any such laws and regulations.
7.8 ERISA. Comply in all material respects with the applicable
provisions of ERISA, and deliver to the Bank written notice as soon as possible
and in any event within ten (10) days if the Borrower adopts or agrees to
contribute to an employee pension benefit plan (as defined in Section 3(2) of
ERISA) not presently in existence if the obligation to contribute thereto is
material, and furnish to the Bank, (i) as soon as possible, and in any event
within ten (10) days after any officer of the Borrower knows or has reason to
know that any Reportable Event with respect to any Plan with vested unfunded
liabilities has occurred, a statement of an executive officer of the Borrower
setting forth details as to such Reportable Event and the action that the
Borrower proposes to take with respect thereto, together with a copy of the
notice of such Reportable Event given to PBGC, and (ii) promptly after receipt
thereof, a copy of any notice the Borrower may receive from PBGC relating to the
intention of PBGC to terminate any Plan with vested unfunded liabilities or to
appoint a trustee to administer any such Plan.
7.9 Financial Covenants. At the end of each of the Borrower's fiscal
quarters, beginning with the quarter ending on September 30, 2005, the Borrower
will have and maintain the following financial positions tested on a rolling
four quarter basis, all as determined in accordance with GAAP:
(a) Maximum Funded Debt to Total Capitalization. Maximum
Funded Debt to Total Capitalization Ratio of .60 to 1.0. The Maximum Funded Debt
to Total Capitalization Ratio shall be calculated as follows: (Funded Debt plus
current maturities of Long Term Debt) divided by (Net Worth plus Funded Debt).
(b) Minimum Retained Earnings. Retained earnings of at least
$1,400,000.00.
7.10 Non-Bank Debt. No subordinate Indebtedness shall be permitted by
the Borrower to exist with respect to the Business, other than that which
constitutes Long Term Debt.
7.11 Insurance. Continuously maintain or cause to be maintained
insurance with responsible carriers against such risks as are customarily
insured against and in such amounts as are customarily carried by entities
similar to the Borrower, paying or causing to be paid as the same becomes due
all premiums in respect thereto, and naming the Bank as loss payee as its
interests may appear.
7.12 Environmental Matters.
(a) Conduct its business operations in full compliance with
Environmental Laws and refrain from, and prevent any other party from, using any
Hazardous Materials on the Properties except such material as are incidental to
its normal course of business, maintenance and repairs.
(b) Permit the Bank, its agents, contractors and employees
(not more often than one (1) time per calendar year, unless there exists an
Event of Default or the Borrower shall have received a notice of a violation of
Environmental Laws, or the Borrower or the Bank have knowledge that a release of
Hazardous Materials has occurred) to enter and inspect any of the Properties at
any reasonable time upon
11
three (3) days' prior notice for the purpose of conducting environmental
investigations and audits (including taking physical samples) to monitor
compliance with this section, provided that prior to doing so, the Bank delivers
to the Borrower signed hold harmless and indemnity agreements with regard to
damage or injury that may be caused by the Bank's negligence or willful
wrongdoing in conducting such investigations and audits, reasonably satisfactory
to the Borrower.
(c) Provide the Bank, its agents, contractors, employees and
representatives with access to and copies of any and all data and documents
relating to or dealing with any Hazardous Materials used, generated,
manufactured, stored or disposed of either on, under, or about the Properties or
by the Borrower's business operations within five days of a request therefor.
(d) Immediately advise the Bank in writing of (i) any and
all enforcement, clean-up, remedial, removal, or other governmental or
regulatory actions instituted, completed or threatened pursuant to any
Environmental Law affecting or pertaining to the Properties or the Borrower's
business operations, (ii) all claims made or threatened by any third party
against the Borrower relating to damages, contribution, cost recovery
compensation, loss or injury resulting from any Hazardous Materials; and (iii)
any remedial action taken by the Borrower with respect to its Properties or the
Borrower's business operations.
7.13 Indemnity. Protect and indemnify the Bank, its officers,
directors, employees, and agents (as to this section only, the "Indemnitees")
from and against all liabilities, obligations, claims, damages, penalties,
causes of action, costs and expenses (including, without limitation, reasonable
attorneys' fees and disbursements), imposed upon or incurred by or asserted by
third parties against the Indemnitees or any of them by reason of:
(a) ownership of its Properties or any interest therein, or
receipt of any rent or other sum therefrom;
(b) any accident to, injury to or death of persons or loss
of or damage to property occurring on or about the Properties or the adjoining
sidewalks, curbs, vaults or vault space, if any, streets or ways;
(c) any use, nonuse or condition of its Properties or the
adjoining sidewalks, curbs, vaults or vault space, if any, streets or ways;
(d) any failure on the part of the Borrower to perform or
comply with any of the terms, covenants, conditions and agreements set forth in
the Loan Documents or any other agreements executed by the Borrower, or to which
the Borrower is a party;
(e) performance of any labor or services or the furnishing
of any materials or other property in respect of the Properties or any part
thereof for construction or maintenance or otherwise;
(f) any action brought against the Bank by any person other
than the Borrower's attacking the validity, priority or enforceability of the
Loan Documents, or any other agreements executed by the Borrower or any other
Persons liable for the payment of the indebtedness hereby secured;
(g) exercise or the attempted exercise by the Bank, of the
rights and remedies set forth in the Note and other Loan Documents; or
(h) actual or threatened damage to the environment, agency
costs of investigation, personal injury or death, or property damage, due to a
release or alleged release of any Hazardous Material on or under any of its
Properties or the surface or ground water located on or under its Properties or
arising from the Borrower's business operations, or gaseous emissions arising
from the Borrower's business operations or any other condition existing on its
Properties resulting from the use or existence of Hazardous Materials, whether
such claim proves to be true or false.
12
The Borrower further agrees that its indemnity obligations
hereunder shall include, but are not limited to, liability for damages resulting
from the personal injury or death of an employee of the Borrower, regardless of
whether the Borrower has paid the employee under the worker's compensation laws
of any state or other similar federal or state legislation for the protection of
employees. The term "property damage" as used in this section includes, but is
not limited to, damage to any real or personal property of the Borrower, the
Indemnitees, and of any third parties. Any accounts payable to the Indemnitees
under this section which are not paid within ten (10) days after written demand
therefor by the Bank shall bear interest at the maximum rate per annum then
permitted by law from the date of such demand. In the event any action, suit or
proceeding is brought against any of the Indemnitees by reason of any such
occurrence, the Borrower shall have the right to, and upon the request of the
Indemnitees shall, resist and defend at the Borrower's expense such action, suit
or proceeding or cause the same to be resisted and defended by counsel
designated by the Borrower and approved by the Indemnitees which approval shall
not be withheld unreasonably. The obligations under this section shall survive
the termination, satisfaction or release of the Loan Documents.
7.14 General Information. Provide the Bank with such other
information respecting the condition or operations, financial or otherwise, of
the Borrower as the Bank may from time to time reasonably request.
ARTICLE VIII
NEGATIVE COVENANTS
The Borrower agrees that until payment in full of the Loan and the
Note, without the prior express written consent of the Bank, the Borrower shall
not enter into any agreement or transaction that causes any of the financial
covenants to be violated. Furthermore, the Borrower shall not, without the prior
written consent of the Bank:
8.1 Mergers, Consolidations. Enter into any merger or consolidation or
acquire all or substantially all the assets of any Person, except such asset
acquisitions not exceeding $500,000 per transaction or $1,000,000 in the
aggregate during the term of the Loan.
8.2 Disposition of Assets. Sell, lease or otherwise dispose of all,
substantially all, or, determined on a consolidated basis, a significant portion
of the Properties of the Borrower, except in the ordinary course of business.
8.3 Additional Debt. Except for trade debt incurred in the normal
course of business, create, incur, assume, or suffer to exist, directly or
indirectly any liability for borrowed money (including operating leases) other
than the debt evidenced by this Agreement or any debt existing at the date of
this Agreement and described in the Borrower's financials statement previously
delivered to the Bank.
8.4 Negative Pledge. Create, incur, assume or allow to exist any
pledge, lien or other encumbrance on or any security interest in any of its
assets other than Permitted Encumbrances.
8.5 Change in Control. Transfer, assign or otherwise dispose of, or
allow to be transferred, assigned or otherwise dispose of, a controlling
interest in the Borrower, provided, however, that transfers of interests
exclusively, (i) among or between the existing shareholders of the Borrower,
(ii) members of the immediate families and descendants of such existing
shareholders or partners, or (iii) to trusts created solely for estate or tax
planning purposes shall not be subject to, or included within, the restriction
contained in this section.
8.6 No Sale and Lease Back. Enter into any transaction for the sale and
lease back of any of its assets that exceed $500,000 per transaction or
$1,000,000 in the aggregate during the term of the Loan.
13
8.7 Loan. Make loans or advances to any Person, other than in the
ordinary course of business and not exceeding $50,000 in the aggregate during
the term of the Loan.
8.8 Contingent Liabilities. Assume, guarantee, endorse, or
otherwise become surety for or upon the obligation of any Person, except by the
endorsement of negotiable instruments for deposit or collection in the ordinary
course of business.
ARTICLE IX
EVENTS OF DEFAULT
9.1 Events of Defaults. The occurrence of any of the following
events shall constitute an Event of Default under this Agreement:
(a) The Borrower shall fail to make, within ten (10) days
after notice from Bank, any payment when due of principal or interest with
respect to the Note, or any of them, on the due date thereof, whether at
maturity, acceleration or otherwise;
(b) If there shall occur an event of default under any other
Indebtedness of the Borrower or the Guarantor to the Bank;
(c) The Borrower or the Guarantor shall breach or fail to
perform any other term, covenant, warranty or agreement herein or in any other
Loan Document and such default shall continue for thirty (30) days after written
notice thereof has been given to the Borrower or the Guarantor by the Bank;
(d) Any representation or warranty of the Borrower or the
Guarantor in any Loan Document or in any certificate delivered thereunder shall
prove to have been untrue in any material respect at the time it was made;
(e) The Borrower or the Guarantor shall default in, fail to
pay at maturity, or otherwise default in respect of, any indebtedness for
borrowed money from the Bank in any amount (except indebtedness under this
Agreement), or from any other Person, or fail to observe or perform any material
term, covenant or agreement contained in any other agreement (except this
Agreement) by which it is bound evidencing or securing borrowed monies or
advances from the Bank in any amount or from any other Person, and shall not
cure such failure within any applicable period of grace, as would permit, or
would have permitted, the holder or holders thereof or of any obligations issued
thereunder to accelerate the maturity thereof;
(f) The Borrower or the Guarantor shall (i) voluntarily
commence any proceeding or file any petition seeking relief under Title 11 of
the United States Code or any other federal, state or foreign bankruptcy,
insolvency or similar law, (ii) consent to the institution of, or fail to
controvert in a timely and appropriate manner, any such proceeding or the filing
of any such petition, (iii) apply for or consent to the appointment of a
receiver, trustee, custodian, sequestrator or similar official for it or for a
substantial part of its property, (iv) file an answer admitting the material
allegations of a petition filed against it in any such proceeding, (v) make a
general assignment for the benefit of creditors, (vi) become unable, admit in
writing its inability or fail generally to pay its debts as they become due, or
(vii) take action for the purpose of effecting any of the foregoing;
(g) An involuntary proceeding shall be commenced or an
involuntary petition shall be filed in a court of competent jurisdiction seeking
(i) relief in respect of the Borrower or the Guarantor or of a substantial part
of its property, under Title 11 of the United States Code or any other federal,
state or foreign bankruptcy, insolvency or similar law, (ii) the appointment of
a receiver, trustee, custodian, sequestrator or similar official for the
Borrower or the Guarantor or for a substantial part of its property or (iii) the
winding-up or liquidation of the Borrower or the Guarantor and such proceeding
or petition shall continue undismissed for sixty (60) days or an order or decree
approving or ordering any of the foregoing shall continue unstayed and in effect
for thirty (30) days;
14
(h) The occurrence of any Prohibited Transaction involving
any Plan, a Reportable Event or other event or circumstance which is not
promptly cured and which might constitute grounds for termination of any Plan by
the PBGC or grounds for the appointment by the appropriate United States
District Court of a trustee to administer any such Plan, the filing of a notice
of intent to terminate any Plan or the termination of any Plan, or the complete
or partial withdrawal from a Multiemployer Plan or the reorganization,
insolvency or termination of any Multiemployer Plan; and in each case above,
such event or condition, together with all other events or conditions, if any,
could in the opinion of the Bank subject the Borrower or the Guarantor to any
tax, penalty or other liability to a Plan, a Multiemployer Plan, the PBGC or
otherwise which would, in the reasonable opinion of the Bank, have a material
adverse effect on the Borrower's or the Guarantor's ability to perform its
obligations under the Loan Documents;
(i) The filing of an indictment or information, or (ii) the
commencement of any proceeding, or (iii) the entry of any conviction, judgment
or order, under RICO or CCE or any similar law, which in any instance results in
or may result in a forfeiture of a material portion of any of the assets of the
Borrower or the Guarantor;
(j) One or more judgments, decrees, or orders for the
payment of money in excess of One Hundred Thousand Dollars ($100,000.00) in the
aggregate shall be rendered against the Borrower or the Guarantor and such
judgments, decrees, or orders shall continue unsatisfied and in effect for a
period of thirty (30) days after entry thereof without being vacated,
discharged, satisfied, stayed or bonded pending appeal;
(k) If the Borrower assigns this Agreement or any interest
herein;
(l) If within thirty (30) days after written request by the
Bank, the Borrower fails to furnish the Bank or the Guarantor with financial
statements, such as balance sheets and profit and loss statements, and such
other statements as the Bank may require to determine the financial condition of
the Borrower or the Guarantor in form and substance satisfactory to the Bank;
(m) If any condition precedent contained herein to making
the first or any subsequent advance under the Loan, which is made by the Bank,
is not satisfied within thirty (30) days after such advance is requested by the
Borrower, unless such condition is expressly waived in writing by the Bank; or
An Event of Default under the Loan shall constitute an event of default as to
any other loans or advances of credit made by the Bank to the Borrower or for
the benefit of the Borrower, whether now or hereafter existing.
9.2 Remedies.
(a) Upon the occurrence of an Event of Default (other than
of an Event of Default described in clause (b) below), the Bank may, without
notice to the Borrower, take either or both of the following actions, at the
same or different times: (i) terminate its obligation, if any, to make further
advances under the Loan and (ii) declare the full unpaid principal of and
accrued interest on the Note and all other obligations of the Borrower under the
other Loan Documents to be immediately due and payable, whereupon the Note and
such obligations shall be immediately due and payable, without presentment,
demand, protest or other formalities of any kind, all of which are hereby
expressly waived by the Borrower, (b) upon the occurrence of an Event of Default
referred to in Section 9.1(f) and (g) above, the Bank's obligation, if any, to
make further advances under the Loan shall automatically terminate and the full
unpaid principal of and accrued interest on the Note and all other obligations
of the Borrower under the other Loan Documents shall automatically become
immediately due and payable, without presentment, demand, protest or other
formalities of any kind, all of which are hereby expressly waived by the
Borrower; or (c) exercise any other rights or remedies available to the Bank
under the Loan Documents or under applicable law.
15
ARTICLE X
MISCELLANEOUS PROVISIONS
10.1 Notices. All written notices hereunder to any party hereto shall
be certified or registered mail, postage prepaid, or delivered in person
addressed to the party for whom intended at the following addresses:
if to the Borrower: Bluefield Gas Company
P.O. Box 13007 Roanoke, VA
24030-3007
Attention: Dale P. Moore, Vice
President and Secretary
with a copy to: Nicholas C. Conte, Esquire
Woods Rogers & Hazlegrove
P.O. Box 14125 Roanoke, VA
24038-4125
if to the Bank, at: SunTrust Bank
SunTrust Plaza, First Floor
10 Franklin Road, SE
Roanoke, VA 24011
Attention: Debbie H. Young, Senior
Vice President
with a copy to: James Chapman Hale, Esquire
Gentry Locke Rakes & Moore
Post Office Box 40013
Roanoke, Virginia 24022-0013
Any party shall have the right to change its address for notice by giving notice
hereunder, including the right to specify a person to whose attention notices
shall be directed. Any notice sent by registered or certified mail shall be
deemed given on the third day after the date of mailing and any notice given by
personal delivery to an officer of a party shall be deemed given on the date of
receipt as evidenced by such officer's signed receipt; provided, however, that
if any party shall refuse to accept delivery of any notice so sent by registered
or certified mail or personally tendered to an officer, such notice shall be
deemed given when tendered for delivery.
10.2 Term of Agreement. This Agreement shall continue in force and
effect so long as the Loan or any obligation of the Borrower or the Guarantor
for any interest or other expense hereunder or thereunder or under any other
Loan Document, shall be outstanding.
10.3 No Waiver. No failure or delay by the Bank in exercising any
right, power or privilege hereunder shall operate as a waiver thereof, nor shall
any single or partial exercise thereof preclude any other or further exercise
thereof or the exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and no exclusive of any rights or
remedies otherwise provided by law.
10.4 Seal, Jurisdiction. This Agreement and the Note shall be deemed to
be a contract made under seal and shall be construed in accordance with and
governed by the laws of the Commonwealth of Virginia except any provision of
them that would otherwise require application of the law of a foreign
jurisdiction.
10.5 Consent to Jurisdiction. The Borrower and the Guarantor hereby
consents to the jurisdiction and venue of the courts of the Commonwealth of
Virginia, specifically to the courts of the City of Roanoke, Virginia, and to
the jurisdiction and venue of the United States District Court for the Western
District of Virginia in connection with any action, suit or proceeding arising
out of or relating to this Agreement or any of the other Loan Documents and
further waives and agrees not to assert in any such action, suit or
16
proceeding brought in the City of Roanoke, Virginia, or the Western District of
Virginia that the Borrower and the Guarantor is not personally subject to the
jurisdiction of such courts, that the action, suit or proceeding is brought in
an inconvenient forum or that venue is improper.
10.6 Severability. The provisions of this Agreement and the other Loan
Documents are severable, and if any clause or provision of any of them shall be
held invalid or enforceable in whole or in part in any jurisdiction, then such
invalidity or unenforceability shall affect only such clause or provision, or
part thereof, in such jurisdiction and shall not in any manner affect such
clause or provision in any other jurisdiction. Each of the covenants, agreements
and conditions contained in this Agreement is independent and compliance by the
Borrower and the Guarantor with any of them shall not excuse non-compliance by
the Borrower and the Guarantor with any other.
10.7 Offset. In addition to, and not in limitation of, all rights of
offset that the Bank or other holder of the Note may have under applicable law
upon the occurrence of any Event of Default hereunder, the Bank or other holder
of such Note and, to the extent permitted by applicable law, any participant in
the Note or the Loan, shall have the right to appropriate and apply to the
payment thereof any and all balances, credits, deposits, accounts or monies of
the Borrower then or thereafter maintained with the Bank or any of its
subsidiaries or affiliates or other holder of the Note.
10.8 Change, Waivers, etc. No amendment, modification, termination or
waiver of any provision of this Agreement, the Note or the other Loan Documents,
nor consent to any departure by the Borrower from any Loan Document, shall in
any event be effective unless the same shall be in writing and signed by the
Bank, and then such waiver or consent shall be effective only in the specific
instance and for the specific purpose for which given.
10.9 Singular and Plural. Terms in the singular number shall include
the plural and those in the plural shall include the singular.
10.10 Use of Defined Terms. All terms defined in this Agreement shall
have the defined meanings set forth herein when such terms are used in the Note,
the other Loan Documents and in certificates, reports or other documents made or
delivered pursuant hereto or thereto, unless the context shall otherwise
require.
10.11 Binding Effect of Agreement. This Agreement shall be binding upon
and inure to the benefit of the Borrower, the Bank and their respective heirs,
executors, personal representatives, successors and assigns, provided that the
Borrower may not assign or transfer their rights or obligations under this
Agreement without the prior written consent of the Bank.
10.12 Headings. Headings or captions have been inserted for convenience
only and shall not be construed as limiting or affecting in any way the
provisions of this Agreement.
10.13 Accounting Terms. Except as otherwise specifically provided, all
accounting terms used herein shall have the meanings customarily given them in
accordance with GAAP, and all financial computations, statements and balance
sheets required or permitted under this Agreement will be performed or prepared
in accordance with such principles consistently applied.
10.14 Counterparts. This Agreement may be signed in any number of
counterparts with the same effect as if the signatures hereto and thereto were
upon the same instrument.
10.15 Expenses. The Borrower will pay all fees and expenses incurred by
the Bank in connection with the preparation of the Agreement and the other Loan
Documents (whether or not the transactions hereby contemplated shall be
consummated), and the making of the Loan hereunder, including reasonable
attorney's fees, the enforcement of the rights of the Bank in connection with
this Agreement or with the Loan made or the Note issued hereunder, including but
not limited to, the fees and disbursements of counsel for the Bank. The Bank may
use either outside counsel or its own in-house counsel, or both, to provide it
with legal services in connection with this transaction. In any event, such
attorneys will represent
17
the Bank exclusively, and the Borrower acknowledges that such attorneys do not
undertake to provide legal services or advice to the Borrower. Any future
reasonable and customary legal fees after the closing of this loan for
amendments to the Loan Documents requested by the Borrower or required hereunder
are to be paid by the Borrower. If the Bank shall retain or engage at any time
an attorney or attorneys to collect or enforce or protect its interest with
respect to this Agreement, the Loan, the Note or the other Loan Documents, to
the extent the Bank is entitled to so collect, enforce or protect under the Loan
Documents or applicable law, the Borrower shall pay all of the costs and
expenses of such collection, enforcement or protection, including reasonable
fees and disbursements of attorneys, and the Bank may take judgment for all such
amounts.
10.16 WAIVER OF JURY TRIAL. TO THE EXTENT PERMISSIBLE UNDER APPLICABLE
LAW, THE BORROWER AND THE BANK WAIVE TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM BROUGHT BY EITHER PARTY AGAINST THE OTHER ON ANY MATTER WHATSOEVER
ARISING OUT OF OR IN ANY WAY CONNECTED WITH THIS AGREEMENT, THE LOAN, THE NOTE,
THE OTHER LOAN DOCUMENTS, OR ANY RELATED AGREEMENTS OR INSTRUMENTS, THE
ENFORCEMENT THEREOF, ANY OBLIGATIONS OR INDEBTEDNESS EVIDENCED THEREBY, ANY
COLLATERAL SECURITY THEREFOR OR ITS DISPOSITION, OR THE LENDING RELATIONSHIP
BETWEEN THE PARTIES, INCLUDING ANY CLAIM OF INJURY OR DAMAGE TO ANY PARTY OR THE
PROPERTY OF ANY PARTY.
10.17 Further Assurances. At any time or from time to time upon the
request of the Bank, the Borrower will execute and deliver such further
documents and do such other acts and things as the Bank may reasonably request
in order to effect fully the purposes of the Loan Documents and to provide for
the payment of the Loan made hereunder and interest thereon in accordance with
the terms of the Loan Documents.
10.18 Merger of Commitment. The Commitment shall merge into this
Agreement upon the closing of the Loan.
10.19 Time of the Essence. Time shall be of the essence with respect to
the performance of the Borrower's obligations under the Loan Documents.
10.20 Entire Agreement. This Agreement and the other Loan Documents
contain the entire agreement among the parties with respect to the subject
matter herein, and each party represents to and agrees with the others that
there are no additional agreements, understandings or representations other than
those provided herein and in the other Loan Documents. The Loan Documents
supersede any prior agreements between the Bank and the Borrower, and, to the
extent that the terms and provisions of any such prior agreements are
inconsistent with the terms and provisions of the Loan Documents, the terms and
provisions of the Loan Documents shall govern and control.
10.21 Construction and Conflicts. The parties to the Loan Documents and
their respective counsel have reviewed and revised (or requested revisions of)
the Loan Documents, and the normal rule of construction that any ambiguities are
to be resolved against the drafting party shall not be applicable in the
construction and interpretation of this Agreement or any of the other Loan
Documents. To the extent possible, the provisions of this Agreement and the
other Loan Documents shall be interpreted to complement and supplement each
other and the absence of any provision or portion thereof in one such document
shall not be deemed to be an inconsistency with the other such document which
contains such provision or portion thereof. To the extent that any provision of
this Agreement is inconsistent with any corresponding provision of any other
Loan Document, then such provision of this Agreement shall prevail.
10.22 Assignment. The Bank may assign, negotiate or pledge all or any
of its rights or security with respect to the Loan, this Agreement or any other
Loan Documents, sell participation in the Loan, and, in any such case, the
Borrower shall accord full recognition to such assignment, negotiation, pledge
or sale. The Borrower shall execute and deliver any and all documents which the
Bank may require for the purpose of effecting any and all such transactions.
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10.23 Guarantor as Party. The Guarantor enters into this Agreement for
the sole purpose of acknowledging and consenting to the terms of the Loan. This
Agreement does not constitute a separate Agreement between the Borrower and the
Guarantor.
IN WITNESS WHEREOF, the parties have caused this Agreement to be duly
executed and delivered by their proper and duly authorized officers or partners
as of the day and year first above written.
BORROWER:
ROANOKE GAS COMPANY
By: s/John B. Williamson, III
Name: John B. Williamson, III
Title: Chairman/CEO
BANK:
SUNTRUST BANK
By: s/Debbie H. Young
Name: Debbie H. Young
Title: Senior Vice President
GUARANTOR:
RGC RESOURCES, INC.
By: s/John B. Williamson, III
Name: John B. Williamson, III
Title: Chairman/CEO
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SCHEDULE 2.1
Permitted Encumbrances
[To be completed by the Borrower's Counsel]
SCHEDULE 6.6
Proceedings
[To be completed by the Borrower's Counsel]