Exhibit 10.11
FIRST MODIFICATION TO CREDIT AGREEMENT
WITH MODIFICATIONS TO THE
CASH COLLATERAL ACCOUNT AGREEMENT
THIS FIRST MODIFICATION AGREEMENT (this “Agreement”) is entered into as of
November 14, 2008 by and between COMERICA BANK, a Texas banking corporation
(“Lender”), and RENEGY HOLDINGS, INC., a Delaware corporation (the “Borrower”).
Robert Merrill Worsley (“RMW”), Christi Marie Worsley (“CMW”), The Robert
Merrill Worsley and Christi Marie Worsley Family Revocable Trust, dated July 28,
1998 (“Trust”), NZ Legacy, LLC, an Arizona limited liability company (“NZ
Legacy”), and New Mexico & Arizona Land Company, LLC, an Arizona limited
liability company (“NMAL”) (RMW, CMW, Trust, NZ Legacy and NMAL are also
referred to individually and collectively as the “Guarantor” and together with
Borrower the “Credit Parties") are joining in the execution and delivery of this
Agreement to evidence its acknowledgment of, consent to, and agreement with, the
terms and conditions of this Agreement and the representations, warranties and
obligations of Guarantor under this Agreement.
PRELIMINARY STATEMENTS
A. Lender has extended to Borrower a non revolving line of credit facility in
the principal amount not to exceed $6,200,000.00 (the “NRLC”), pursuant to the
terms and conditions set forth in the Credit Agreement dated March 28, 2008 (the
“Credit Agreement”), and secured by the deeds of trust set forth on Schedule A
attached hereto and incorporated by this reference, the Credit Documents, Note,
Cash Collateral Account Agreement, and other documents related to the
transactions contemplated therein (collectively the “Loan Documents”). To induce
the Lender modify the Loan Documents as set forth in this Agreement, NZ Legacy
and NMAL have agreed, contemporaneously with the execution of this Agreement, to
execute and deliver secured guaranties from each of NZ Legacy and NMAL in favor
of Lender. Each Guarantor has guaranteed certain obligations of Borrower with
respect to the Loan Documents pursuant to the guaranty executed by each
Guarantor in favor and for the benefit of Lender as and to the extent set forth
in the Guaranty. The term “Loan Documents” shall hereafter include such Guaranty
(as defined in the Credit Agreement as modified by this Agreement). Capitalized
terms not otherwise defined herein shall have the meaning ascribed to such
capitalized terms in the Credit Agreement.
B. Borrower and Guarantors (collectively, the “Credit Parties”) have requested
that Lender agree to suspend Borrowers’ obligations under Section 9.23 of the
Credit Agreement for the period specified below and that certain other
modifications be made to the Credit Agreement as provided herein.
C. Lender is willing to agree to such request on the terms and conditions set
forth in this Agreement.

 

 

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AGREEMENT
For good and valuable consideration, the receipt and adequacy of which is hereby
acknowledged, the parties agree as follows:
1. The Credit Agreement is hereby modified as follows:

  A.  
Section 1.1, the definition of “Base Rate” is modified by deleting “1%” and
replacing it with “300 basis points” and as modified shall in its entirety read
as follows:

“Base Rate” means the rate per annum equal to the sum of the Prime Rate plus 300
basis points.

  B.  
Section 1.1, the definition of “Guaranty” is deleted and replaced in its
entirety with the following:

“Guaranty” means collectively (i) the Secured Guaranty dated March 28, 2008
executed and delivered by (1) Robert Merrill Worsley, a married man, (2) Christi
Marie Worsley, a married woman, and (3) the Robert Merrill Worsley and Christi
Marie Worsley Family Revocable Trust, dated July 28, 1998, in favor and for the
benefit of Lender; (ii) the secured guaranty dated of even date herewith
executed and delivered by NZ Legacy, LLC, a limited liability company, in favor
and for and for the benefit of Lender; and (iii) the secured guaranty dated of
even date herewith executed and delivered by New Mexico and Arizona Land
Company, LLC, an Arizona limited liability company, in favor and for the benefit
of Lender.

  C.  
Section 1.1, the definition of “LIBOR” is deleted and replaced in its entirety
with the following:

“LIBOR” means, for any day, a per annum interest rate which is equal to the
quotient of the following:
(a) for any day, the per annum rate of interest determined on the basis of the
rate for deposits in United States Dollars for a period equal to one (1) month,
appearing on Page BBAM of the Bloomberg Financial Markets Information Service as
of 8:00 a.m. (Arizona time) (or as soon thereafter as practical), on such day,
or if such day is not a Business Day, on the immediately preceding Business Day.
In the event that such rate does not appear on Page BBAM of the Bloomberg
Financial Markets Information Service (or otherwise on such Service) on any day,
LIBOR for such day shall be determined by reference to such other publicly
available service for displaying eurodollar rates as may be agreed upon by
Lender and Borrower, or, in the absence of such agreement, LIBOR for such day
shall, instead, be determined based upon the average of the rates at which
Lender is offered dollar deposits at or about 8:00 a.m. (Arizona time) (or soon
thereafter as practical), on such day, or if such day is not a Business Day, on
the immediately preceding Business Day, in the interLender eurodollar market in
an amount comparable to the principal amount of the Loan for a period of one
(1) month;

 

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divided by
(b) a percentage (expressed as a decimal) equal to 1.00 minus the maximum rate
on such day at which Lender is required to maintain reserves on “Euro-currency
Liabilities” as defined in and pursuant to Regulation D of the Board of
Governors of the Federal Reserve System or, if such regulation or definition is
modified, and as long as Lender is required to maintain reserves against a
category of liabilities which includes eurodollar deposits or includes a
category of assets which includes eurodollar loans, the rate at which such
reserves are required to be maintained on such category.

  D.  
Section 1.1, the definition of “LIBOR Based Rate” is deleted and replaced in its
entirety with the following; and all references in the Credit Agreement to
“LIBOR Based Rate” are deleted and replaced with “Daily Adjusting LIBOR Rate”

“Daily Adjusting LIBOR Rate” means, for any day, a per annum interest rate which
is equal to the sum of LIBOR plus 425 basis points.

  E.  
Section 1.1, the definition of “LIBOR Based Rate Advance” and “Base Rate
Advance” are deleted and all references in the Credit Agreement to “Base Rate
Advance” and “LIBOR Based Rate Advance” shall be replaced with “Advance”.

  F.  
Section 1.1, the definition of “LIBOR Interest Period” as well as all references
to such term in the Credit Agreement are deleted.

  G.  
Section 1.1 is modified by adding a definition of “LIBOR Lending Office” as
follows:

“LIBOR Lending Office” means Lender’s office located in the Cayman Islands,
British West Indies, or such other branch of Lender, domestic or foreign, as it
may hereafter designate as its LIBOR Lending Office by notice to the Borrower.

  H.  
Section 2.3(a) is deleted and replaced in its entirety with the following:

(a) Interest shall accrue on the unpaid principal of the Loan at the Daily
Adjusting Libor Rate, except during any period of time during which, in
accordance with the terms and conditions of this Credit Agreement, the
Indebtedness evidenced by the NRLC Note shall bear interest at the Base Rate.

 

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(i) If, at any time, Lender determines that, (a) Lender is unable to determine
or ascertain the Daily Adjusting Libor Rate, or (b) by reason of circumstances
affecting the foreign exchange and interLender markets generally, deposits in
eurodollars in the applicable amounts or for the relative maturities are not
being offered to Lender, or (c) the Daily Adjusting Libor Rate will not
accurately or fairly cover or reflect the cost to Lender of maintaining any of
the Indebtedness under the NRLC Note at the Daily Adjusting Libor Rate, then
Lender shall forthwith give notice thereof to the undersigned. Thereafter,
beginning on the first day after the end of the then applicable LIBOR Interest
Period and continuing until Lender notifies the Borrower that such conditions or
circumstances no longer exist the Base Rate shall be the applicable interest
rate for all Indebtedness under the NRLC Note during such period of time.
(ii) If, after the date hereof, the introduction of, or any change in, any
applicable law, rule or regulation or in the interpretation or administration
thereof by any governmental authority charged with the interpretation or
administration thereof, or compliance by Lender (or its LIBOR Lending Office)
with any request or directive (whether or not having the force of law) of any
such authority, shall make it unlawful or impossible for the Lender (or its
LIBOR Lending Office) to make or maintain any Advance with interest at the Daily
Adjusting Libor Rate, Lender shall forthwith give notice thereof to the
undersigned. Thereafter, beginning on the first day after the end of the then
applicable LIBOR Interest Period and continuing until Lender notifies the
undersigned that such conditions or circumstances no longer exist the Base Rate
shall be the applicable interest rate for all Indebtedness under the NRLC Note
during such period of time.
(iii) At any time upon prior written notice to the undersigned, Lender may, in
its sole discretion, suspend the Daily Adjusting LIBOR Rate as the applicable
interest rate and thereafter, beginning on the first day after the end of the
then applicable LIBOR Interest Period the Base Rate shall thereafter be the
applicable interest rate for all Indebtedness outstanding under the NRLC Note,
unless Lender rescinds such notice, in which case, the Daily Adjusting Libor
Rate shall, upon written notice from Lender to the Borrower, again be the
applicable interest rate for all Indebtedness outstanding under the NRLC Note.

  I.  
Section 2.4 is deleted and replaced in its entirety with the following:

2.4 INTENTIONALLY DELETED

  J.  
Section 9.22 Mandatory Payments is modified by adding a subsection (c) as
follows:

(c) Cause one hundred percent (100%) of all proceeds (net of escrow fees and
other closing costs reasonably acceptable to Lender) from the sale of tax
credits, created under the Production Tax Code 45, to a third party.

 

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  K.  
Section 9.23 is modified by inserting the following at the end of the Section:

The minimum liquidity requirement set forth under this Section 9.23 shall be
suspended for the period of time beginning September 30, 2008 and ending on
December 31, 2008 after which time all provisions of this Section 9.23 shall be
in full force and effect.
2. The Cash Collateral Account Agreement is hereby modified as follows:

  A.  
Section 4 is modified by adding a subsection (e) as follows:

(e) Notwithstanding any other provision of this Agreement, Lender agrees that up
to a maximum of $300,000.00 of the funds contained in the Cash Collateral
Account may be used by Borrower for the sole purpose of meeting its payroll
obligations.
3. Conditions Precedent. Lender’s covenants and obligations under this Agreement
and the effectiveness of this Agreement are expressly conditioned upon:
A. Execution and delivery of this Agreement by the parties;
B. Credit Parties execution and delivery of such other documents and instruments
as Lender may require in connection with the transactions contemplated hereby,
including, without limitation, certificates and resolutions, incumbency
certificates, modifications of mortgages, deeds of trust, and other security
instruments.
C. Borrower’s delivery to Lender of secured guaranties from NMAL and NZ Legacy.
D. Borrower’s delivery of the $5,000.00 fee to Lender in consideration for
Lender suspending the minimum liquidity requirement under Section 9.23 of the
Credit Agreement.
E. Each representation and warranty set forth in this Agreement and in the Loan
Documents shall be true and correct as of the date of execution and delivery of
this Agreement by the Borrower.
F. No Event of Default shall have occurred and be continuing under the Loan
Documents as of the date hereof.

 

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4. Representations and Warranties of Borrower and Guarantors. Each Credit Party
represents and warrants to Lender as of the date of this Agreement as follows:
(a) Each entity of Borrower is duly organized, validly existing and in good
standing under the laws of its state of formation with all power and authority
necessary to own, lease and operate Borrower’s properties and carry on its
business as now conducted and to execute, deliver and perform this Agreement;
(b) all necessary action has been taken on its part to authorize the execution,
delivery and performance of this Agreement and this Agreement has been duly
executed and delivered by each Credit Party; (c) there are no suits, actions,
proceedings or investigations pending or, to the best of each Credit Party’s
knowledge, threatened against or involving it before any court, arbitrator or
administrative or governmental body which might reasonably result in a material
adverse change in its contemplated business, condition, worth or operations;
(d) the authorization, execution, delivery and performance of this Agreement
will not result in any breach or default under any other document, instrument or
agreement to which any Credit Party is a party or by which it is subject or
bound; (e) the authorization, execution, delivery and performance of this
Agreement will not violate any applicable law, statute, regulation, rule,
ordinance, code or order; (f) this Agreement and each of the Loan Documents
constitutes the legal, valid and binding obligation of each Credit Party,
enforceable against each Credit Party in accordance with its terms; (g) each
lien and security interest on the Collateral continues to be duly and properly
perfected and constitutes a first priority lien; (h) no consent, license,
permit, approval or authorization of any person, entity or governmental
authority is required in connection with its execution, delivery and performance
of this Agreement; (i) the representations and warranties made by each Credit
Party in each of the Credit Documents to which it is a party are true and
correct as of the date of the execution and delivery of this Agreement by such
Credit Party. All representations and warranties of each of Borrower and
Guarantors made in this Agreement shall survive the execution and delivery of
this Agreement.
5. Releases. In further consideration of the Lender’s execution of this
Agreement, each Credit Party hereby releases Lender and Lender’s respective
participants, affiliates, officers, shareholders, employees, directors, agents,
advisors and attorneys (collectively, the “Releasees”) from any and all claims,
demands, liabilities, responsibilities, disputes, causes of action (whether at
law or equity) and obligations of every nature whatsoever, whether liquidated or
unliquidated, known or unknown, matured or unmatured, fixed or contingent that
such Credit Party may have against Releasees or any of them which arise or
relate to this Agreement, the obligations, any Collateral, any Loan Document,
any documents, agreements, dealings or other matters in connection with any of
the Loan Documents and any third parties liable in whole or in part for any of
the obligations under the Loan Documents or this Agreement, in each case to the
extent arising (a) on or prior to the date hereof or (b) out of, or relating to,
actions, dealings or matters occurring on or prior to the date hereof
(including, without limitation, any actions or inactions which Releasees or any
of them may have taken prior to the date hereof).
6. Indemnity. Each Credit Party, jointly and severally, shall indemnify, defend
and hold the Releasees harmless for, from and against any and all claims, causes
of action, losses, damages, awards, settlements, penalties, judgments, costs and
expenses (including, without limitation, reasonable attorneys’ fees)
(collectively, “Losses”) (excluding Losses suffered by a Releasee directly
arising out of such Releasee’s gross negligence or willful misconduct) with
respect to, or resulting from, or in connection with this Agreement, the Loan,
the Loan Documents or the transactions contemplated thereby. This Section 4
shall survive the execution and delivery of this Agreement.

 

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7. Amendments. No termination or waiver of any provision of this Agreement, or
the consent to any departure by the Credit Parties therefrom, shall in any way
be effective without the written concurrence of Lender. Any waiver or consent
shall be effective only in the specific instance and for the specific purpose
for which it was given. No notice or demand upon the Borrower or any Guarantor
in any case shall entitle any Credit Party to any further notice or demand in
similar or other circumstances. The Lender’s failure at any time or times
hereafter to require strict performance by the Credit Parties of any provision
or term of this Agreement shall not waive, effect or diminish any rights of
Lender thereafter to demand strict performance in compliance herewith. Any
suspension or waiver by Lender of a default, or forbearance with respect
thereto, pursuant to this Agreement or with respect to any Event of Default
under the Loan Documents shall not, except as may be expressly set forth herein,
suspend, waive, effect or be a forbearance with respect to, any other default or
event of default, whether the same is prior or subsequent thereto and whether of
the same or of a different kind or character. None of the undertakings,
agreements, warranties, covenants and representations of the Lender contained in
this Agreement shall waive, effect or diminish the rights of the Lender under
this Agreement or any other Loan Document. None of the undertakings, agreements,
warranties, covenants and representations of the Credit Parties contained in
this Agreement or any other Loan Document and no default or event of default
under this Agreement or any other Loan Document shall be deemed to have been
suspended or waived by the Lender unless such suspension or waiver is (a) in a
subsequent writing signed by the Lender and (b) delivered to the Borrower.
8. Relationship Between the Parties. The relationship of the Lender on the one
hand, and the Credit Parties, and each of them, on the other hand has been and
shall continue to be, at all times, that of creditor and debtor. Nothing
contained in this Agreement, any instrument, document or agreement delivered in
connection therewith or in the Credit Agreement or any of the other Loan
Documents shall be deemed or construed to create a fiduciary relationship among
the parties.
9. Notices. All communications and notices to the Lender hereunder shall be
given as provided in the Loan Documents.
10. No Assignment. This Agreement shall not be assignable by the Borrower or any
other Credit Party without the written consent of the Lender. The Lender may
assign to one or more persons all or any part of, or any participation in, the
Lender’s rights and benefits hereunder.
11. TIME OF THE ESSENCE. TIME IS STRICTLY OF THE ESSENCE OF THIS AGREEMENT AND
FULL AND COMPLETE PERFORMANCE OF EACH AND EVERY PROVISION HEREOF.
12. Miscellaneous. Each of the Credit Parties agrees to sign such other and
further documents, and to take such other actions, as may be reasonably
appropriate to carry out the intentions expressed in this Agreement, including,
without limitation, documentation in respect of the reaffirmation and
confirmation of liens, and the priority of such liens, on the collateral for the
NRLC. This Agreement may be executed in one or more counterparts, each of which
shall be deemed an original. This Agreement shall be binding upon and inure to
the benefit of the parties and their successors and permitted assigns,
including, without limitation, any United States trustee, any
debtor-in-possession or any trustee appointed from a private panel. This
Agreement, the Loan Documents and any other instruments referred to herein,
constitute the entire agreement among the parties with respect to the subject
matter hereof and supersede all prior agreements and understandings, both
written and oral, of the

 

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parties or any of them with respect to the subject matter hereof, if any. This
Agreement shall be governed by the laws of the State of Arizona, without giving
effect to its principles of conflicts of law. EACH CREDIT PARTY AND LENDER
HEREBY KNOWINGLY, VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO
A TRIAL BY JURY WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY ACTION,
PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY ANY OF THE PARTIES HERETO AGAINST
ANY OF THE OTHERS OR THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF
OR IN CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR
RELATED HERETO. THIS WAIVER BY THE PARTIES HERETO OF ANY RIGHT EITHER MAY HAVE
TO A TRIAL BY JURY HAS BEEN NEGOTIATED AND IS AN ESSENTIAL ASPECT OF THEIR
BARGAIN. FURTHERMORE, EACH OF THE CREDIT PARTIES AND LENDER HEREBY KNOWINGLY,
VOLUNTARILY AND INTENTIONALLY WAIVE THE RIGHT THEY MAY HAVE TO SEEK PUNITIVE,
CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES FROM THE OTHER PARTY AND ANY OF THE
AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES OF THE OTHER PARTY OR ANY OF THE
OTHER PARTY’S SUCCESSORS WITH RESPECT TO ANY AND ALL ISSUES PRESENTED IN ANY
ACTION, PROCEEDING, CLAIM OR COUNTERCLAIM BROUGHT BY ANY PARTY AGAINST ANY OTHER
PARTY OR ANY OF THE AFFILIATES, OFFICERS, DIRECTORS OR EMPLOYEES OF ANY OTHER
PARTY OR ANY OF THEIR SUCCESSORS WITH RESPECT TO ANY MATTER ARISING OUT OF OR IN
CONNECTION WITH THIS AGREEMENT OR ANY DOCUMENT CONTEMPLATED HEREIN OR RELATED
HERETO. THE WAIVER BY THE CREDIT PARTIES OF ANY RIGHT THEY MAY HAVE TO SEEK
PUNITIVE, CONSEQUENTIAL, SPECIAL AND INDIRECT DAMAGES HAS BEEN NEGOTIATED BY THE
PARTIES HERETO AND IS AN ESSENTIAL ASPECT OF THEIR BARGAIN.
13. Ratification. To the extent that the terms of this Agreement and are in
conflict with the Loan Documents, this Agreement shall govern. All other
provisions of the Loan Documents shall remain in full force and effect and are
incorporated herein by reference.
[Signature Pages Follow]

 

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IN WITNESS WHEREOF, the parties have executed this Agreement effective as of the
date set forth above.

            BORROWER:

RENEGY HOLDINGS, INC., a Delaware corporation
      By:   /s/ Robert M. Worsley         Name:   Robert M. Worsley       
Title:   Chief Executive Officer        LENDER:

COMERICA BANK, a Texas banking corporation
      By:   /s/ Matthew E. James         Name:   Matthew E. James       
Title:   Assistant Vice President   

 

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