EXHIBIT 10(i)
FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT
THIS FIFTH AMENDMENT TO AMENDED AND RESTATED LOAN AGREEMENT ("Fifth
Amendment") is made and entered into as of the 31st day of March, 1998, by and
between Equus II Incorporated, a Delaware corporation, with offices and place of
business at 2929 Allen Parkway, Houston, Texas 77019 (hereinafter called
"Borrower") and NationsBank of Texas, N.A. a national banking association, with
offices at 700 Louisiana, Houston, Texas 77002 (hereinafter called "Lender").
For and in consideration of the mutual covenants and agreements herein
contained, Borrower and Lender hereby amend as of the date of this Agreement
that certain Amended and Restated Loan Agreement ("Loan Agreement") between
Borrower and Lender dated as of the 29th day of March 1996, as amended by the
First Amendment to Amended and Restated Loan Agreement dated as of March 28,
1997, by the Second Amendment to Amended and Restated Loan Agreement dated as of
June 30, 1997, by the Third Amendment to Amended and Restated Loan Agreement
dated as of September 22, 1997 and the Fourth Amended and Restated Loan
Agreement dated as of December 3, 1997 in the following respects:
Section 1. AMENDMENTS TO LOAN AGREEMENT.
(a) Section 1.1 of the Loan Agreement is hereby amended to read
as follows:
"1.1 INDEBTEDNESS. Upon the terms and conditions hereinafter
set forth, the Lender agrees to lend to and/or issue letters of
credit for the account of Borrower in an aggregate of up to
$30,000,000.00 outstanding at any time pursuant to Revolving
Facility A to be extended to the Borrower by the Lender as more
specifically described in Section 1.3 hereof."
(b) The definition of "Commitment Fee" is hereby amended to read
as follows:
"Commitment Fee" means fees payable by Borrower to Lender
(i) in an amount equal to $10,000.00 payable upon execution of
this Agreement and, where applicable, (ii) on the average daily
unused portion of the Credit Facility from and including the date
of the Fifth Amendment to the Maturity Date, at the rate of
one-quarter of one percent (1/4%) per annum based on a 365 or 366
day year as applicable and the actual number of days elapsed,
payable on the last day of each March, June, September and
December, commencing on March 31, 1998. For purposes of
calculation of the Commitment Fees, the unused portion of the
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Credit Facility on any day will be equal to the amount of the
Credit Facility on such day less the aggregate amount of Loans
outstanding and the undrawn amount of all Credits on such date.
(c) The definition of "Commitment Fee-Facility C" is hereby
amended to read as follows:
"Commitment Fee-Facility C" shall mean a fee in the amount
of $15,000, payable upon execution of this Agreement."
(d) The definition of "Facility A Note" in the Loan Agreement is
hereby amended to read as follows:
"Facility A Note" means the Facility A promissory note of
the Borrower in the maximum principal amount of $30,000,000, in
the form attached as Exhibit "1.3" to the Fifth Amendment.
(e) The definition of "Facility B Note" in the Loan Agreement is
hereby amended to read as follows:
"Facility B Note" means the Facility B promissory note of
the Borrower in the maximum principal amount of $10,000,000, in
the form attached as Exhibit "1.4" to the Fifth Amendment.
(f) The definition of "Facility C Note" in the Loan Agreement is
hereby amended to read as follows:
"Facility C Note" means the Facility C promissory note of
the Borrower in the maximum principal amount of $150,000,000, in
the form attached as Exhibit "1.7" to the Fifth Amendment.
(g) The definition of "Fifth Amendment" is hereby added to the
Loan Agreement and reads as follows:
"Fifth Amendment" means the Fifth Amendment to Amended and
Restated Loan Agreement between the Borrower and the Lender,
dated as of March 31, 1998.
(h) The definition of "Eurodollar Daily Floating Rate" is hereby
added to the Loan Agreement and reads as follows:
"Eurodollar Daily Floating Rate" shall mean on any day the
fluctuating rate of interest equal to the one-month London
Interbank Offered Rate as published in the "Money Rates" section
of the Wall Street Journal on the immediately preceding Business
Day, as adjusted from time to time in Lender's sole
25
discretion for then applicable reserve requirements, deposits
insurance assessment rates and other regulatory costs. Interest
will accrue on any day which is not a Business Day at the rate in
effect on the immediately preceding Business Day. If no such
quotes are generally available for such amount, then the Lender
shall be entitled to determine the Eurodollar Daily Floating Rate
by estimating in its reasonable judgment the per annum rate (as
described above) that would be applicable if such quotes were
generally available.
(i) The definition of "Maturity Date" is hereby amended to read
as follows:
"Maturity Date" means April 1, 1999.
(j) The first sentence of Section 1.3(a) of the Loan Agreement is
hereby amended to read as follows:
"(a) agrees to make Loans to Borrower pursuant to a
revolving line of credit up to but not in excess of an aggregate
principal amount outstanding at any time of $30,000,000.00,
provided the aggregate amount of Loans outstanding pursuant to
this Section 1.3, when combined with the amount of outstanding
Credits, shall not exceed Borrowing Base A."
(k) Section 1.3(c) of the Loan Agreement is hereby amended to
read as follows:
"(c) The Borrower's obligation to repay the Revolving
Facility A shall be evidenced by a promissory note of the
Borrower in substantially the form attached as Exhibit "1.3",
payable to the order of Lender. The Revolving Note-A shall bear
interest, at Borrower's option (to be exercised as set forth in
Section 1.3(d) below) (i) at a variable interest rate of one-half
of one percent (0.5%) below the Prime Rate per annum or (ii) the
Eurodollar Daily Floating Rate plus one and 65/100ths percent
(1.65%) per annum, not to exceed, in the case of either clause
(i) or clause (ii), the maximum non-usurious interest rate
permitted by applicable law with the balance of principal plus
accrued and unpaid interest due and payable on or before the
Maturity Date."
(l) Section 1.3(d) is hereby added to the Loan Agreement and
reads as follows:
"(d) BORROWER'S INTEREST RATE ELECTION.
No later than the last Business Day prior to the first day
of each month, Borrower shall elect whether interest on loans
made pursuant to Revolving Facility-A are to bear interest
commencing on the first day of such month based upon the Prime
Rate as provided in clause (i) of Section 1.3(c) (the "Prime Rate
Option") or based upon the Eurodollar Daily Floating Rate as
provided in clause (ii) of Section 1.3(a) (the "Eurodollar
Option"). Each such election shall be made in writing, shall be
irrevocable and shall be provided by Borrower to Lender pursuant
to the notice procedures set forth under Section 7.2 hereof. Each
such election shall continue to govern the interest rate on loans
made under
26
Revolving Facility - A unless and until the Borrower provides to
Lender a new notice changing such election from the Prime Rate
Option to the Eurodollar Option or VICE versa. If Borrower fails
to provide Lender with a notice of Borrower's election hereunder,
Borrower shall be deemed to have elected the Prime Rate Option
for the next succeeding month."
(m) Sections 1.4(a) and (b) are hereby amended to read as
follows:
"(a) The Lender shall have, during the period from the date
of this Agreement until the Maturity Date, subject to the terms
and conditions of this Agreement, and subject to the condition
that at the time of each borrowing hereunder no Default or Event
of Default has occurred and is then continuing and that the
representations and warranties given by the Borrower in Section 2
as of the date of this Agreement shall remain true and correct in
all material respects (except for representations and warranties
(i) which are made as of a particular date or (ii) as to which
the facts which gave rise to the representation or warranty have
changed as a result of circumstances or transactions which are
contemplated or permitted pursuant to this Agreement), sole
discretion to make Loans to Borrower pursuant to a revolving line
of credit up to but not in excess of an aggregate principal
amount outstanding at any time of $10,000,000.00, provided the
aggregate amount outstanding pursuant to this Section 1.4 shall
not exceed Borrowing Base B. Borrower shall make written request
for each Loan pursuant to Revolving Facility B pursuant to a loan
request in substantially the form of Exhibit "1.3.1" attached
hereto. If Borrower's written request therefor is received by
1:00 p.m., Lender shall make each such Loan available to Borrower
on the same Business Day Lender receives such request. If
Borrower's loan request with respect to any such Loan is received
after 1:00 p.m., Lender may defer the making of such Loan to the
next Business Day. Each Loan shall be in an amount of not less
than $100,000.
(b) The Borrower's obligation to repay the Revolving
Facility B shall be evidenced by a promissory note of the
Borrower in substantially the form attached as Exhibit "1.4" to
the Fifth Amendment, payable to the order of Lender. The
Revolving Note-B shall bear interest at a variable interest rate
of one quarter of one percent (1/4%) over the Prime Rate per
annum not to exceed the maximum non-usurious interest rate
permitted by applicable law with the balance of principal plus
accrued and unpaid interest due and payable on or before the
Maturity Date."
(n) Section 1.7(a) of the Loan Agreement is hereby amended to
read as follows:
"1.7 FACILITY C. (a) The Lender, during the period from the
date of this Agreement until April 1, 1999, subject to the terms
and conditions of this Agreement, and subject to the condition
that at the time of each borrowing issuance hereunder no Default
or Event of Default has occurred and is then continuing to occur
and that the representations and warranties given by the Borrower
in Section 2 as of the date of this Agreement shall remain true
and correct in all material respects (except for representations
and warranties (i) which are made as of a particular date or (ii)
as to which the facts which gave
27
rise to the representation or warranty have changed as a result
of circumstances or transactions which are contemplated or
permitted pursuant to this Agreement), agrees to make a loan to
Borrower up to but not in excess of an aggregate principal amount
outstanding at any time of $150,000,000, on the same Business Day
upon receipt from Borrower on or before 1:00 p.m. Houston time of
written applications for the loan hereunder in the form attached
as Exhibit "1.3.1".
(o) Section 1.5(f) of the Loan Agreement is hereby amended to
read as follows:
"(f) No Commitment Fee shall be payable by Borrower to
Lender on the daily unused balance of Revolving Facility - B."
(p) Section 1.7(b) of the Loan Agreement is hereby amended to
read as follows:
"(b) The Borrower's obligation to repay Facility C shall be
evidenced by a promissory note of the Borrower in substantially
the form attached as Exhibit "1.7" to the Fifth Amendment,
payable to the order of Lender. The Facility C Note shall bear
interest at a variable interest rate of one-half of one percent
(0.5%) over the Cash Collateral Account Rate per annum not to
exceed the maximum non-usurious interest rate permitted by
applicable law with principal amounts due on or before the fifth
(5th) Business Day after each principal advance, interest due
monthly on the 15th of each month and concurrently with principal
payments, and the balance of principal plus accrued and unpaid
interest due and payable on or before April 1, 1999."
(q) Exhibit 2.4 to the Loan Agreement is hereby replaced with
Exhibit 2.4 attached hereto, and all references in the Loan Agreement
as amended by this Fifth Amendment to "Exhibit 2.4" shall refer to
Exhibit 2.4 attached hereto.
(r) Section 3.1(g) of the Loan Agreement is hereby amended to
read as follows:
"(g) on or before the date of the Fifth Amendment, Borrower
will provide Lender updated summary information regarding the
Portfolio Investments in form and substance satisfactory to
Lender, indicating information as of such date relating to
buy-sell rights and obligations, funding obligations,
restrictions on transfer, voting agreements, registration rights
and such similar information as Lender may reasonably request."
(s) Section 3.10(a) of the Loan Agreement is hereby amended to
read as follows:
"(a) The aggregate indebtedness pursuant to Revolving
Facility-A and the amount of outstanding Credits shall never
exceed Borrowing Base A. The Borrowing Base A is the lesser of
(i) $30,000,000 and (ii) fifty percent (50%) of the Current Fair
Market Value of Borrower's Eligible Public Securities provided
that the sum of (x) indebtedness pursuant to Revolving Facility A
plus
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(y) outstanding Credits plus (z) indebtedness pursuant to
Revolving Facility B shall not exceed thirty-three percent (33%)
of Borrower's Net Asset Value."
(t) Section 3.10(b) of the Loan Agreement is hereby amended to
read as follows:
"(b) The aggregate indebtedness pursuant to Revolving
Facility B shall never exceed Borrowing Base B. The Borrowing
Base B is the least of (i) $10,000,000, (ii) twenty-five percent
(25%) of the Current Fair Market Value of the Eligible Other
Securities and (iii) Borrowing Base A, provided that the sum of
(x) indebtedness pursuant to Revolving Facility A plus (y)
outstanding Credits plus (z) indebtedness pursuant to Revolving
Facility B shall not exceed thirty-three percent (33%) of
Borrower's Net Asset Value."
(u) The reference in the Borrowing Base Certificate, attached as
Exhibit "3.10" to the Loan Agreement, to "$30,000,000" is hereby
amended to read "$40,000,000".
Section 2. CLOSING.
The closing of the transactions contemplated by this Fifth Amendment is
subject to the satisfaction of the following conditions.
2.1 COUNSEL TO LENDER. All legal matters incident to the transactions
herein contemplated shall be satisfactory to Gardere Wynne Sewell & Riggs,
L.L.P., counsel to the Lender.
2.2 REQUIRED DOCUMENTS.
(a) The Lender shall have received certified copies of resolutions of
the Board of Directors of the Borrower in form and substance satisfactory
to Lender with respect to authorization of this Fifth Amendment, the
Revolving Facility A Promissory Note of the Borrower dated the date hereof
in favor of the Lender in the original principal amount of $30,000,000 in
the form of Exhibit "1.3" attached to this Fifth Amendment, the Revolving
Facility B Promissory Note of the Borrower dated the date hereof in favor
of the Lender in the original principal amount of $10,000,000 in the form
of Exhibit "1.4" attached to this Fifth Amendment, the Facility C
Promissory Note of the Borrower dated the date hereof in favor of the
Lender in the original principal amount of $150,000,000 in the form of
Exhibit "1.7" attached to this Fifth Amendment (the "Notes"), the
Ratification of Security Agreement-Pledge dated as
29
of the date hereof (the "Ratification of Security Agreement"), and the
other corporate instruments provided for herein.
(b) The Lender shall have received a certificate of the Secretary of
the Borrower of the names of officers of the Borrower to sign this Fifth
Amendment, the Notes, the Ratification of Security Agreement and the other
instruments or certificates related hereto together with the true
signatures of such officers.
(c) The Lender shall have received fully executed copies of the Fifth
Amendment, the Notes, and the Ratification of Security Agreement.
(d) The Lender shall have received originals of all certificates,
notes or other instruments subject to the Security Agreement - Pledge dated
as of March 18, 1996 between Borrower and Lender, as ratified by the
Ratification of Security Agreement.
2.3 OPINION OF COUNSEL. The Lender shall have received from Porter &
Hedges, L.L.P., counsel to the Borrower, a written opinion, satisfactory to the
Lender and its counsel.
Section 3. RATIFICATION. Except as amended hereby, the Loan Agreement shall
remain unchanged and the terms, conditions, representations, warranties, and
covenants of said Loan Agreement and the Security Instruments, including but not
limited to the Security Agreement-Pledge, are true as of the date hereof, are
ratified and confirmed in all respects and shall be continuing and binding upon
the parties.
Section 4. DEFINED TERMS. All terms used in this Fifth Amendment which are
defined in the Loan Agreement shall have the same meaning as in the Loan
Agreement, except as otherwise indicated in this Fifth Amendment.
30
Section 5. MULTIPLE COUNTERPARTS. This Fifth Amendment may be executed by
the parties hereto in several separate counterparts, each of which shall be an
original and all of which taken together shall constitute one and the same
agreement.
Section 6. APPLICABLE LAW. This Fifth Amendment shall be deemed to be a
contract under and subject to, and shall be construed for all purposes in
accordance with the laws of the State of Texas.
Section 7. FINAL AGREEMENT. THE WRITTEN LOAN AGREEMENTS IN CONNECTION WITH
THIS FIFTH AMENDMENT REPRESENT THE FINAL AGREEMENT BETWEEN THE BORROWER AND THE
LENDER AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR
SUBSEQUENT ORAL AGREEMENTS OF THE BORROWER AND THE LENDER. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS BETWEEN THE LENDER AND THE BORROWER.
IN WITNESS WHEREOF, the parties have caused this Fifth Amendment to be
executed by their duly authorized officers as of the 31st day of March, 1998.
EQUUS II INCORPORATED
By: /s/ PATRICK M. CAHILL
Name: PATRICK M. CAHILL
Title: VICE PRESIDENT
NATIONSBANK OF TEXAS, N.A.
By: /s/ LARRY B. BELL
Name: LARRY B. BELL
Title: SENIOR VICE PRESIDENT
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EXHIBIT "1.3"
P R O M I S S O R Y N O T E
[REVOLVING FACILITY-A]
$30,000,000 March 31, 1998
FOR VALUE RECEIVED, after date, without grace, in the manner, on the dates
and in the amounts so herein stipulated, the undersigned, EQUUS II INCORPORATED,
a Delaware corporation, acting by and through its duly authorized officer,
("Borrower"), PROMISES TO PAY TO THE ORDER OF NATIONSBANK OF TEXAS, N.A.
("Lender"), in Houston, Harris County, Texas, the sum of THIRTY MILLION DOLLARS
($30,000,000) or, if less, the aggregate unpaid principal amount of advances
made by Lender to Borrower pursuant to this Note, in lawful money of the United
States of America, which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, and to pay interest on the unpaid
principal amount from date until maturity at a rate equal to, at Borrower's
option (a) Lender's Prime Rate minus one-half of one percent (0.5%) per annum,
floating daily or (b) the Eurodollar Daily Rate (as defined in the Loan
Agreement described herein) plus 1.65% per annum (each the "Stated Rate"), not
to exceed the maximum non-usurious interest rate permitted by applicable law
from time to time in effect as such law may be interpreted, amended, revised,
supplemented or enacted ("Maximum Rate"), provided that if at any time the
Stated Rate exceeds the Maximum Rate then interest hereon shall accrue at the
Maximum Rate. In the event the Stated Rate subsequently decreases to a level
which would be less than the Maximum Rate or if the Maximum Rate applicable to
this Note should subsequently be changed, then interest hereon shall accrue at a
rate equal to the applicable Maximum Rate until the aggregate amount of interest
so accrued equals the aggregate amount of interest which would have accrued at
the Stated Rate without regard to any usury limit, at which time interest hereon
shall again accrue at the Stated Rate. This Note is payable as follows:
Interest shall be due and payable quarterly as it accrues, on the last
day of March, June, September and December of 1998 and on the 1st day of
April, 1999, when the entire balance of principal and accrued interest
shall be due and payable.
It is agreed that time is of the essence of this agreement. In the event of
default in the payment of any installment of principal or interest when due or
in the event of any other default hereunder, Lender may accelerate and declare
this Note immediately due and payable without notice. Any failure to exercise
this option shall not constitute a waiver by Lender of the right to exercise the
same at any other time.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest shall accrue at the Prime Rate plus 2% not to exceed the Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including reasonable
attorneys' fees, all of which shall become a part of the principal hereof, if
this Note is placed in the hands of an attorney for collection or if collected
by suit or through any probate, bankruptcy or any other legal proceedings.
32
Interest charges will be calculated on amounts advanced hereunder on the
actual number of days these amounts are outstanding on the basis of a 360-day
year, except for calculations of the Maximum Rate which will be on the basis of
a 365-day or 366-day year, as is applicable. It is the intention of the parties
hereto to comply with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provision to the contrary in this Note, or in any of the
documents securing payment hereof or otherwise relating hereto, no such
provision shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Note or in
any of the documents securing payment hereof or otherwise relating hereto, then
in such event (1) the provisions of this paragraph shall govern and control, (2)
neither Borrower, endorsers or guarantors, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal amount hereof or refunded to Borrower, and (4) the provisions of this
Note and any documents securing payment of this Note shall be automatically
reformed so that the effective rate of interest shall be reduced to the Maximum
Rate. For the purpose of determining the Maximum Rate, all interest payments
with respect to this Note shall be amortized, prorated and spread throughout the
full term of the Note so that the effective rate of interest on account of this
Note is uniform throughout the term hereof.
Borrower agrees that the Maximum Rate to be charged or collected pursuant
to this Note shall be the applicable indicated rate ceiling as defined in the
Texas Finance Code, as supplemented by Article 5069-1D.003 of the Texas Credit
Title, provided that Lender may rely on other applicable laws, including without
limitation laws of the United States, for calculation of the Maximum Rate if the
application thereof results in a greater Maximum Rate. Except as provided above,
the provisions of this Note shall be governed by the laws of the State of Texas.
Each maker, surety, guarantor and endorser (i) waives demand, grace,
notice, presentment for payment, notice of intention to accelerate the maturity
hereof, notice of acceleration of the maturity hereof and protest, (ii) agrees
that this Note and the liens securing its payment may be renewed, and the time
of payment extended from time to time, without notice and without releasing any
of the foregoing, and (iii) agrees that without notice or consent from any
maker, surety, guarantor, or endorser, Lender may release any collateral which
may from time to time be pledged to secure repayment of this Note, or may
release any party who might be liable for this Note. Borrower grants to Lender a
lien on any of Borrower's funds which may from time to time be deposited with
Lender.
Borrower may prepay this Note, in whole or in part, at any time prior to
maturity without penalty, and interest shall cease on any amount prepaid. Any
partial prepayment shall be applied toward the payment of the principal
installments last maturing on the Note, that is, in the inverse order of
maturity, without reducing the amount or time of payment of the remaining
installments.
The principal of this Note represents funds which Lender will advance to
Borrower from time to time upon request of Borrower. Any part of the principal
may be repaid by Borrower and thereafter reborrowed, provided the outstanding
principal amount of this Note shall never exceed the face amount of this Note.
Each advance shall constitute a part of the principal hereof and shall bear
interest from the date of the advance. The provisions of Tex. Rev. Civ. Stat.
Ann. art. 5069-15.01, ET seq., as may be amended, shall not apply to this Note
or to any of the security documents executed in connection with this Note.
33
This Note is the Revolving Note-A referred to in, is subject to, and is
entitled to the benefits of, the Amended and Restated Loan Agreement dated March
29, 1996 between Borrower and Lender, as that Amended and Restated Loan
Agreement may be amended, modified or supplemented from time to time (the "Loan
Agreement"). The Loan Agreement contains, among other things, provisions for the
acceleration of the maturity hereof upon the occurrence of certain stated
events. This Note is given in increase, replacement and extension of that
certain promissory note of the Borrower dated March 26, 1997, in favor of the
Lender and in the original principal amount of $22,500,000, which was given in
increase, replacement and extension of that certain promissory note of the
Borrower dated March 18, 1996, in favor of the Lender and in the original
principal amount of $12,500,000, and the liens securing payment thereof are not
released but are hereby ratified and carried forward to secure this Note.
This Note is entitled to the benefits of and security afforded by the
Security Agreement-Pledge dated March 18, 1996 between Borrower and Lender, as
that Security Agreement-Pledge may be amended, modified or supplemented from
time to time. This Note is subject to the provisions contained in the foregoing
security instrument which, among other things, provides for acceleration of the
maturity hereof upon the occurrence of certain events.
Borrower represents and warrants that this loan is for business,
commercial, investment or similar purpose and not primarily for personal,
family, household or agricultural use, as such terms are used in Chapter One of
the Texas Credit Code.
EQUUS II INCORPORATED,
A DELAWARE CORPORATION
By: ________________________
Patrick M. Cahill, Vice President
34
EXHIBIT "1.4"
P R O M I S S O R Y N O T E
[REVOLVING FACILITY - B]
$10,000,000 March 31, 1998
FOR VALUE RECEIVED, after date, without grace, in the manner, on the dates
and in the amounts so herein stipulated, the undersigned, EQUUS II INCORPORATED,
a Delaware corporation, acting by and through its duly authorized officer
("Borrower"), PROMISES TO PAY TO THE ORDER OF NATIONSBANK OF TEXAS, N.A.
("Lender"), in Houston, Harris County, Texas, the sum of TEN MILLION DOLLARS
($10,000,000) or, if less, the aggregate unpaid principal amount of advances
made by Lender to Borrower pursuant to this Note, in lawful money of the United
States of America, which shall be legal tender in payment of all debts and dues,
public and private, at the time of payment, and to pay interest on the unpaid
principal amount from date until maturity at a rate equal to Lender's Prime Rate
(as defined in the Loan Agreement described herein) plus one quarter percent
(1/4%) per annum, floating daily ("Stated Rate"), not to exceed the maximum
non-usurious interest rate permitted by applicable law from time to time in
effect as such law may be interpreted, amended, revised, supplemented or enacted
("Maximum Rate"), provided that if at any time the Stated Rate exceeds the
Maximum Rate then interest hereon shall accrue at the Maximum Rate. In the event
the Stated Rate subsequently decreases to a level which would be less than the
Maximum Rate or if the Maximum Rate applicable to this Note should subsequently
be changed, then interest hereon shall accrue at a rate equal to the applicable
Maximum Rate until the aggregate amount of interest so accrued equals the
aggregate amount of interest which would have accrued at the Stated Rate without
regard to any usury limit, at which time interest hereon shall again accrue at
the Stated Rate. This Note is payable as follows:
Interest shall be due and payable quarterly as it accrues, on the last
day of March, June, September and December of 1998 and on the 1st day of
April, 1999, when the entire balance of principal and accrued interest
shall be due and payable.
It is agreed that time is of the essence of this agreement. In the event of
default in the payment of any installment of principal or interest when due or
in the event of any other default hereunder, Lender may accelerate and declare
this Note immediately due and payable without notice. Any failure to exercise
this option shall not constitute a waiver by Lender of the right to exercise the
same at any other time.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest shall accrue at Prime Rate plus 2% not to exceed the Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including reasonable
attorneys' fees, all of which shall become a part of the principal hereof, if
this Note is placed in the hands of an attorney for collection or if collected
by suit or through any probate, bankruptcy or any other legal proceedings.
Interest charges will be calculated on amounts advanced hereunder on the
actual number of days these amounts are outstanding on the basis of a 360-day
year, except for calculations of the Maximum Rate which will be on the basis of
a 365-day or 366-day year, as is applicable. It is the intention of the
35
parties hereto to comply with all applicable usury laws; accordingly, it is
agreed that notwithstanding any provision to the contrary in this Note, or in
any of the documents securing payment hereof or otherwise relating hereto, no
such provision shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Note or in
any of the documents securing payment hereof or otherwise relating hereto, then
in such event (1) the provisions of this paragraph shall govern and control, (2)
neither Borrower, endorsers or guarantors, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal amount hereof or refunded to Borrower, and (4) the provisions of this
Note and any documents securing payment of this Note shall be automatically
reformed so that the effective rate of interest shall be reduced to the Maximum
Rate. For the purpose of determining the Maximum Rate, all interest payments
with respect to this Note shall be amortized, prorated and spread throughout the
full term of the Note so that the effective rate of interest on account of this
Note is uniform throughout the term hereof.
Borrower agrees that the Maximum Rate to be charged or collected pursuant
to this Note shall be the applicable indicated rate ceiling as defined in the
Texas Finance Code, as supplemented by Article 5069-1D.003 of the Texas Credit
Title, provided that Lender may rely on other applicable laws, including without
limitation laws of the United States, for calculation of the Maximum Rate if the
application thereof results in a greater Maximum Rate. Except as provided above,
the provisions of this Note shall be governed by the laws of the State of Texas.
Each maker, surety, guarantor and endorser (i) waives demand, grace,
notice, presentment for payment, notice of intention to accelerate the maturity
hereof, notice of acceleration of the maturity hereof and protest, (ii) agrees
that this Note and the liens securing its payment may be renewed, and the time
of payment extended from time to time, without notice and without releasing any
of the foregoing, and (iii) agrees that without notice or consent from any
maker, surety, guarantor, or endorser, Lender may release any collateral which
may from time to time be pledged to secure repayment of this Note, or may
release any party who might be liable for this Note. Borrower grants to Lender a
lien on any of Borrower's funds which may from time to time be deposited with
Lender.
Borrower may prepay this Note, in whole or in part, at any time prior to
maturity without penalty, and interest shall cease on any amount prepaid. Any
partial prepayment shall be applied toward the payment of the principal
installments last maturing on the Note, that is, in the inverse order of
maturity, without reducing the amount or time of payment of the remaining
installments.
The principal of this Note represents funds which Lender will advance to
Borrower from time to time upon request of Borrower. Any part of the principal
may be repaid by Borrower and thereafter reborrowed, provided the outstanding
principal amount of this Note shall never exceed the face amount of this Note.
Each advance shall constitute a part of the principal hereof and shall bear
interest from the date of the advance. The provisions of Tex. Rev. Civ. Stat.
Ann. art. 5069-15.01, ET seq., as may be amended, shall not apply to this Note
or to any of the security documents executed in connection with this Note.
This Note is the Revolving Note-B referred to in, is subject to, and is
entitled to the benefits of, the Amended and Restated Loan Agreement dated March
29, 1996 between Borrower and Lender, as that Amended and Restated Loan
Agreement may be amended, modified or supplemented from time to time (the "Loan
Agreement"). The Loan Agreement contains, among other things, provisions for the
36
acceleration of the maturity hereof upon the occurrence of certain stated
events. This Note is given in replacement and extension of that certain
promissory note of the Borrower dated March 26, 1997 in favor of the Lender and
in the original principal amount of $7,500,000, which was given in replacement
and extension of that certain promissory note of the Borrower dated March 18,
1996 in favor of the Lender and in the original principal amount of $7,500,000,
and the liens securing the payment thereof are not released but are hereby
ratified and carried forward to secure this Note.
This Note is entitled to the benefits of and security afforded by the
Security Agreement-Pledge dated March 18, 1996 between Borrower and Lender, as
that Security Agreement-Pledge may be amended, modified or supplemented from
time to time. This Note is subject to the provisions contained in the foregoing
security instrument which, among other things, provides for acceleration of the
maturity hereof upon the occurrence of certain events.
Borrower represents and warrants that this loan is for business,
commercial, investment or similar purpose and not primarily for personal,
family, household or agricultural use, as such terms are used in Chapter One of
the Texas Credit Code.
EQUUS II INCORPORATED,
A DELAWARE CORPORATION
By: _______________________________
Patrick M. Cahill, Vice President
37
EXHIBIT "1.7"
P R O M I S S O R Y N O T E
[FACILITY C NOTE]
$150,000,000 March 31, 1998
FOR VALUE RECEIVED, after date, without grace, in the manner, on the dates
and in the amounts so herein stipulated, the undersigned, EQUUS II INCORPORATED,
a Delaware corporation, acting by and through its duly authorized officer
("Borrower"), PROMISES TO PAY TO THE ORDER OF NATIONSBANK OF TEXAS, N.A.
("Lender"), in Houston, Harris County, Texas, the sum of One Hundred Fifty
Million and No/100 DOLLARS ($150,000,000) or, if less, the aggregate unpaid
principal amount of advances made by Lender to Borrower pursuant to this Note,
in lawful money of the United States of America, which shall be legal tender in
payment of all debts and dues, public and private, at the time of payment, and
to pay interest on the unpaid principal amount from date until maturity at a
rate equal to Cash Collateral Account Rate plus one-half of one percent (0.5%)
per annum, floating daily (as defined in, and subject to adjustment as set forth
in Section 1.7(c) of, the Loan Agreement) ("Stated Rate"), not to exceed the
maximum non-usurious interest rate permitted by applicable law from time to time
in effect as such law may be interpreted, amended, revised, supplemented or
enacted ("Maximum Rate"), provided that if at any time the Stated Rate exceeds
the Maximum Rate then interest hereon shall accrue at the Maximum Rate. In the
event the Stated Rate subsequently decreases to a level which would be less than
the Maximum Rate or if the Maximum Rate applicable to this Note should
subsequently be changed, then interest hereon shall accrue at a rate equal to
the applicable Maximum Rate until the aggregate amount of interest so accrued
equals the aggregate amount of interest which would have accrued at the Stated
Rate without regard to any usury limit, at which time interest hereon shall
again accrue at the Stated Rate. This Note is payable as follows:
Interest shall be payable on the 15th day of each month and
simultaneously with repayment of principal. Principal shall be payable on
the fifth (5th) Business Day following each advance in an amount equal to
such advance.
The entire balance of principal and accrued interest shall be due and
payable on April 1, 1999.
It is agreed that time is of the essence of this agreement. In the event of
default in the payment of any installment of principal or interest when due or
in the event of any other default hereunder, Lender may accelerate and declare
this Note immediately due and payable without notice. Any failure to exercise
this option shall not constitute a waiver by Lender of the right to exercise the
same at any other time.
In the event of default in the making of any payment herein provided,
either of principal or interest, or in the event this Note is declared due,
interest shall accrue at Prime Rate plus two percent (2%) not to exceed the
Maximum Rate.
Borrower hereby agrees to pay all expenses incurred, including reasonable
attorneys' fees, all of which shall become a part of the principal hereof, if
this Note is placed in the hands of an attorney for collection or if collected
by suit or through any probate, bankruptcy or any other legal proceedings.
38
Interest charges will be calculated on amounts advanced hereunder on the
actual number of days these amounts are outstanding on the basis of a 360-day
year, except for calculations of the Maximum Rate which will be on the basis of
a 365-day or 366-day year, as is applicable. It is the intention of the parties
hereto to comply with all applicable usury laws; accordingly, it is agreed that
notwithstanding any provision to the contrary in this Note, or in any of the
documents securing payment hereof or otherwise relating hereto, no such
provision shall require the payment or permit the collection of interest in
excess of the Maximum Rate. If any excess of interest in such respect is
provided for, or shall be adjudicated to be so provided for, in this Note or in
any of the documents securing payment hereof or otherwise relating hereto, then
in such event (1) the provisions of this paragraph shall govern and control, (2)
neither Borrower, endorsers or guarantors, nor their heirs, legal
representatives, successors or assigns nor any other party liable for the
payment hereof, shall be obligated to pay the amount of such interest to the
extent that it is in excess of the Maximum Rate, (3) any such excess which may
have been collected shall be either applied as a credit against the then unpaid
principal amount hereof or refunded to Borrower, and (4) the provisions of this
Note and any documents securing payment of this Note shall be automatically
reformed so that the effective rate of interest shall be reduced to the Maximum
Rate. For the purpose of determining the Maximum Rate, all interest payments
with respect to this Note shall be amortized, prorated and spread throughout the
full term of the Note so that the effective rate of interest on account of this
Note is uniform throughout the term hereof.
Borrower agrees that the Maximum Rate to be charged or collected pursuant
to this Note shall be the applicable indicated rate ceiling as defined in the
Texas Finance Code, as supplemented by Article 5069-1D.003 of the Texas Credit
Code, provided that Lender may rely on other applicable laws, including without
limitation laws of the United States, for calculation of the Maximum Rate if the
application thereof results in a greater Maximum Rate. Except as provided above,
the provisions of this Note shall be governed by the laws of the State of Texas.
As used in this Note, the term "Cash Collateral Account Rate" shall mean
the interest rate actually earned by Borrower on investments in that certain
Cash Collateral Account (as such term is defined in the Loan Agreement) during
the period principal amounts are owed pursuant to this Note.
Each maker, surety, guarantor and endorser (i) waives demand, grace,
notice, presentment for payment, notice of intention to accelerate the maturity
hereof, notice of acceleration of the maturity hereof and protest, (ii) agrees
that this Note and the liens securing its payment may be renewed, and the time
of payment extended from time to time, without notice and without releasing any
of the foregoing, and (iii) agrees that without notice or consent from any
maker, surety, guarantor, or endorser, Lender may release any collateral which
may from time to time be pledged to secure repayment of this Note, or may
release any party who might be liable for this Note. Borrower grants to Lender a
lien on any of Borrower's funds which may from time to time be deposited with
Lender.
Borrower may prepay this Note, in whole or in part, at any time prior to
maturity without penalty, and interest shall cease on any amount prepaid. Any
partial prepayment shall be applied toward the payment of the principal
installments last maturing on the Note, that is, in the inverse order of
maturity, without reducing the amount or time of payment of the remaining
installments.
The principal of this Note represents funds which Lender will advance to
Borrower from time to time upon request of Borrower. Any part of the principal
may be repaid by Borrower and thereafter reborrowed, provided the outstanding
principal amount of this Note shall never exceed the face amount of this Note.
Each advance shall constitute a part of the principal hereof and shall bear
interest from the
39
date of the advance. The provisions of Tex. Rev. Civ. Stat. Ann. art.
5069-15.01, ET seq., as may be amended, shall not apply to this Note or to any
of the security documents executed in connection with this Note.
This Note is the Facility C Note referred to in, is subject to, and is
entitled to the benefits of, the Amended and Restated Loan Agreement dated March
29, 1996 between Borrower and Lender, as that Amended and Restated Loan
Agreement may be amended, modified or supplemented from time to time (the "Loan
Agreement"). The Loan Agreement contains, among other things, provisions for the
acceleration of the maturity hereof upon the occurrence of certain stated
events. This Note is given in replacement and extension of that certain
promissory Note of the Borrower dated September __, 1997 in favor of the Lender
in the original principal amount of $150,000,000, which was given in replacement
and extension of that certain promissory Note of the Borrower dated June 30,
1997 in favor of the Lender in the original principal amount of $90,000,000,
which was given in replacement and extension of that certain promissory Note of
the Borrower dated March 28, 1997 in favor of the Lender in the original
principal amount of $65,000,000, which was given in replacement and extension of
that certain promissory Note of the Borrower dated March 29, 1996 in favor of
the Lender in the original principal amount of $65,000,000, and the liens
securing the payment thereof are not released but are hereby ratified and
carried forward as security for this Note.
This Note is entitled to the benefits of and security afforded by the
Security Agreement-Pledge (Facility C) dated March 29, 1996, between Borrower
and Lender, as that Security Agreement-Pledge (Facility C) may be amended,
modified or supplemented from time to time. This Note is subject to the
provisions contained in the foregoing security instrument which, among other
things, provides for acceleration of the maturity hereof upon the occurrence of
certain events.
Borrower represents and warrants that this loan is for business,
commercial, investment or similar purpose and not primarily for personal,
family, household or agricultural use, as such terms are used in Chapter One of
the Texas Credit Code.
EQUUS II INCORPORATED,
A DELAWARE CORPORATION
By: Patrick M. Cahill
Vice President
40