FOURTH AMENDMENT TO SECOND AMENDED
AND RESTATED LOAN AGREEMENT
THIS FOURTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT ("Fourth
Amendment") is made and entered into as of the 27th day of July, 2001, 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 Bank of America, 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 Second Amended and Restated Loan Agreement between Borrower and
Lender dated as of the 1st day of June, 1999, as previously amended ("Loan
Agreement"), in the following respects:
Section 1. Amendments to Loan Agreement.
A. Section 1.1 is deleted and the following is substituted in its
place:
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 $22,500,000.00
outstanding at any time as evidenced by Revolving Facility A to be
extended to the Borrower by the Lender as more specifically
described in Section 1.3 and $100,000,000 outstanding at any time as
evidenced by Facility C to be extended to the Borrower by the Lender
as more specifically described in Section 1.5.
B. Section 1.2 is amended to delete the definitions of "Commitment
Fee", "Credit Facility", "Facility A Note", "Facility C Note", "LOC Expiration
Date", "Notes", "Maturity Date", and "Revolving Notes" and replace them with the
following:
"Commitment Fee" means fees payable by Borrower to Lender on the
average daily unused portion of the Revolving Facility A from and
1
including the date of this Agreement 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 June 30, 1999. For purpose of calculation of the
Commitment Fee the unused portion of the Revolving Facility A on any
day will be equal to the amount of the Revolving Facility A on such
day less the aggregate amount of Loans outstanding under Revolving
Facility A and the undrawn amount of all Credits on such date.
"Credit Facility" means the credit facility described in Section
1.3.
"Facility A Note" means the Facility A promissory note of the
Borrower in the maximum principal amount of $22,500,000, in the form
attached as Exhibit "1.3.2" to the Fourth Amendment.
"Facility C Note" means the Facility C promissory note of the
Borrower in the maximum principal amount of $100,000,000, in the
form attached as Exhibit "1.5" to the Fourth Amendment.
"LOC Expiration Date" shall mean April 2, 2003.
"Notes" shall mean the Facility A Note and the Facility C Note.
"Maturity Date" means July 1, 2002.
"Revolving Note" shall mean the promissory note of the Borrower in
the original principal amount of $22,500,000.00 issued pursuant to
Section 1.3 of this Agreement in the form attached as Exhibit
"1.3.2" to the Fourth Amendment.
C. Section 1.2 is amended by deleting the definitions of "Facility B
Note" and "Revolving Facility B."
D. Section 1.2 is amended by adding the following definitions of
"Eurodollar Margin", "Interest Pricing Grid", "Prime Rate Margin" and "Stated
Rate:"
"Eurodollar Margin" shall mean the applicable margin set forth on
the Interest Pricing Grid.
"Interest Pricing Grid" shall mean the grid attached to the Fourth
Amendment.
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"Prime Rate Margin" shall mean the applicable margin set forth on
the Interest Pricing Grid.
"Stated Rate" shall mean, at Borrower's option (to be exercised as
set forth in Section 1.3(d) below) (i) a variable interest rate of
the Prime Rate plus the Prime Rate Margin per annum or (ii) the
Eurodollar Daily Floating Rate plus the Eurodollar Margin not to
exceed the maximum nonusurious interest rate permitted by applicable
law with the balance of principal and accrued and unpaid interest
due and payable on or before the Maturity Date.
E. Section 1.3(a) is deleted and the following is substituted in its
place:
1.1 Revolving Facility A. The Lender, 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 and the issuance of each Credit 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):
(a) agrees to make Loans to Borrower pursuant to a revolving
line of credit up to buy not in excess of an aggregate principal
amount outstanding at any time of $22,500,000.00, provided the
aggregate amount of Loans outstanding pursuant to this Section 1.3,
when combined with the amount of outstanding Credits, shall not
exceed the Borrowing Base. Borrower shall make written request for
each Loan pursuant to Revolving Facility A 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 received 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 that $100,000.
F. Section 1.3(b)(1) is deleted and the following is substituted in
its place:
(b)(1) agrees to open one or more Credits during the Credit
Facility Commitment Period for Borrower's account, provided the
maximum amount of Credits outstanding at any time shall not exceed
$6,000,000. Borrower shall submit to Lender a Letter of Credit
Request with respect to each Credit to be opened by Lender, in
accordance with the terms hereof and the other letter of credit
agreements in effect, if any.
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Lender at its option may accept telecopy requests for the issuance
of Credits, provided that such acceptance shall not constitute a
waiver of Lender's right to require delivery of a written Letter of
Credit Request in connection with the issuance of a Credit. If
Lender receives a request for a Credit issuance under the Revolving
Facility A satisfying the conditions thereof prior to 10:00 a.m.
Houston, Texas time on a Business Day, Lender shall use reasonable
efforts to issue such Credit prior to 5:00 p.m. Houston, Texas time
on the next Business Day, otherwise Lender shall issue such Credit
before 5:00 p.m. on the second Business Day following submission of
the request (provided that the other conditions of Revolving
Facility A have been satisfied). No Credit shall be issued (i) for a
period ending after the LOC Expiration Date or (ii) after the
expiration of the Credit Facility Commitment Period. Borrower will
be required to pay to Lender a Credit Fee for the issuance of each
Credit. Each Credit shall be issued on substantially the terms as
Borrower may request and such Letter of Credit Request must be in
the form and substance satisfactory to Lender. The sum of the
outstanding face amount of all Credits when added to the sum of the
outstanding Loans pursuant to Section 1.3 shall not exceed the
Borrowing Base.
G. Section 1.3(c) is deleted and the following is substituted in its
place:
(c) The Borrower's obligation to repay Revolving Facility A shall
be evidenced by a promissory note of the Borrower in substantially
the form attached as Exhibit "1.3.2," payable to the order of
Lender. The Facility A Note shall bear interest in accordance with
the Interest Pricing Grid attached to this Fourth Amendment.
H. Section 1.4 is deleted.
I. Section 3.10 is deleted and the following is substituted in its
place:
3.10 Borrowing Base Requirements
(a) The aggregate indebtedness pursuant to Revolving Facility A,
plus the amount of outstanding Credits pursuant to Revolving
Facility A shall never exceed the Borrowing Base.
(b) As used herein, the term "Borrowing Base" shall mean the sum
of (i) fifty percent (50%) of the Current Fair Market Value of
Borrower's Eligible Public Securities plus (ii) the lesser of (y)
$22,500,000, and (z) twenty-five percent (25%) of the Current Fair
Market Value of Eligible Other Securities.
(c) In accordance with Section 3.1(d), Borrower shall provide the
Lender a calculation of the Borrowing Base on the Borrowing Base
4
Report. In the event, at any time, the aggregate unpaid principal
balance of Loans pursuant to Revolving Facility A plus the
outstanding Credits exceeds the Borrowing Base calculated as
described in 3.10(b) above, (i) in the event such excess is
occasioned by the sale of one or more Portfolio Investments, the
Borrower will cause the proceeds of such sale to be applied to
reduce the Facility Note A until the amount of such excess is
eliminated and (ii) in the event such excess is not occasioned by
the sale of Portfolio Investments, the Borrower will promptly, but
in any event no later than within twenty (20) Business Days, reduce
the indebtedness under the Facility Note A until the amount of such
excess is eliminated, provided that in the event the sum of (x)
indebtedness pursuant to Revolving Facility A plus (y) outstanding
Credits exceeds thirty-three percent (33%) of Borrower's Net Asset
Value, Borrower shall be required to repay such excess within ten
(10) Business Days of the occurrence of such event.
(d) If the Borrower (i) is required by any Portfolio Lender to
pledge or otherwise encumber any note receivable, common or
preferred stock, option, warrant or other investment property,
instrument, chattel paper or general intangible owned by Borrower
and issued by the Person to whom the Portfolio Lender has made, or
proposes to make, a loan or loans (or a Person (other than the
Borrower) which owns, or is owned by, such Person) or (ii) is
prohibited by any Portfolio Lender from pledging any such note
receivable, common or preferred stock, option, warrant or other
investment property, instrument, chattel paper or general intangible
to the Lender, the Borrower, by notice in writing to the Lender, may
designate such asset as an Excluded Portfolio Investment; provided,
however, that if such requirement and such prohibition terminate,
such asset will no longer be an Excluded Portfolio Investment;
provided, further, that no such asset may be designated as an
Excluded Portfolio Investment if as a result of such designation (x)
the aggregate indebtedness incurred pursuant to Revolving Facility
A, including outstanding Credits, exceeds the Borrowing Base or
(y)(I) the aggregate investment made by the Borrower in Excluded
Portfolio Investments outstanding on the date of such designation
plus the aggregate investment made or to be made in such assets as
of such date would exceed (II) 20% of the sum of the amount in
clause (I) above plus the Net Asset Value as of such date (or for
the most recent date for which Net Asset Value has been calculated
by the Borrower). For the purposes of clause (y)(I) above, each
investment shall be valued at its original cost without taking into
account any subsequent increase or decrease in the carrying value of
such investment as a result of income or loss attributable to such
investment after the time of its acquisition. Notwithstanding any
other provision of this Agreement or any Security Instruments to the
contrary, Lender shall not have a lien or a security interest in any
Excluded Portfolio Investment and shall execute such instruments as
Borrower or any Portfolio Lender
5
may reasonably request to reflect that the Lender has no interest
therein.
J. Section 4.2(ii) is deleted and the following is substituted in its
place:
(ii) purchase, acquisition, redemption or retirement of
outstanding common stock of Borrower provided that (y) neither before
nor after such purchase, acquisition, redemption or retirement a
Default or Event of Default exists hereunder and (z) with respect to
the repurchase of outstanding common stock of Borrower (i) the intent
to make such purchase, acquisition, redemption or retirement was
announced on or before June 27, 2001 and the aggregate number of
shares purchased on or after the date of this Fourth Amendment does
not exceed 181,229, or if such number is exceeded, is approved by
Lender in writing and (ii) the Borrowing Base is not less than
$2,500,000 greater than the sum of the outstanding indebtedness
pursuant to Revolving Facility A plus the outstanding Credits both
before and after such acquisition.
Section 2. Closing.
The closing of the transactions contemplated by this Fourth 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, LLP, 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 Fourth Amendment, the Facility
A Note of the Borrower dated the date hereof in favor of the Lender in the
original principal amount of $22,500,000, the Facility C Note of the
Borrower dated the date hereof in favor of Lender in the original principal
amount of $100,000,000 (the "Notes"), and the Ratification of Security
Agreement-Pledge dated as of the date hereof (the "Ratification of Security
Agreement").
(b) The Lender shall have received a certificate of the Secretary of
Borrower of the names of officers of the Borrower to sign this Fourth
Amendment, the
6
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 Fourth
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.
(e) The Lender shall have received and the Borrower shall have
completed the requirements set forth on Exhibit "6.2" to this Fourth
Amendment not expressly enumerated in Section 2.2(a) through (d) above.
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 Fourth Amendment which are
defined in the Loan Agreement shall have the same meaning as in the Loan
Agreement, except as otherwise indicated in this Fourth Amendment.
Section 5. Multiple Counterparts. This Fourth 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.
7
Section 6. Applicable Law. This Fourth 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 FOURTH 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 Fourth Amendment to be
executed by their duly authorized officers as of the 27th day of July, 2001.
EQUUS II INCORPORATED
By: /s/ TRACY H. COHEN
-------------------------------
Tracy H. Cohen, Vice President
BANK OF AMERICA, N.A.
By: /s/ LARRY B. BELL
-------------------------------
Name: Larry B. Bell
Title: Senior Vice President
8
INTEREST PRICING GRID
Ratio of Current Fair Market Value of
Borrower's Eligible Public Securities
to the Current Fair Market Value of Eurodollar Prime Rate
Borrower's Portfolio Investments Margin Margin
- ------------------------------------- ---------- ----------
0 to 25% 2.50% .50%
greater than 25% to 50% 2.25% .25%
greater than 50% to 75% 2.00% 0
greater than 75% 1.75% -.25%
The Ratio of Current Fair Market Value of Borrower's Eligible Public Securities
to the Current Fair Market Value of Borrower's Portfolio Investments as of March
31, 2001 is 4.12%. Such Ratio shall apply until August 31, 2001, November 30,
2001, March 31, 2002 and May 31, 2002 at which time the applicable Eurodollar
Margin and Prime Rate Margin will be adjusted based upon the Ratio as of the end
of the preceding calendar quarter.
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EXHIBIT "3.10"
BORROWING BASE REPORT
10
FORM OF
BORROWING BASE CERTIFICATE
NO.__________________ Date______________, 20__
In accordance with a loan agreement ("Agreement") dated June 1, 1999, as
amended, between BANK OF AMERICA, N.A. ("Lender") and Equus II Incorporated
("Borrower"), I, _______________________ of the Borrower hereby certify and
warrant that the following schedule accurately states Borrower's Eligible Public
Securities and Eligible Other Securities and Borrower's Borrowing Base as of the
date hereof.
Borrowing Base
1. Eligible Public Securities $______________________
x .50
2. Adjusted Eligible Public Securities $______________________
3. Eligible Other Securities $______________________
x .25
4. Adjusted Eligible Other Securities $______________________
5. The lesser of Line 4 or $22,500,000 $______________________
6. Borrowing Base (Line 2 plus Line 5) $______________________
7. Facility A Commitment $______________________
8. Fact Amount, Unexpired Credits-
Revolving Facility A $______________________
9. Outstanding Balance Revolving Facility A $______________________
10. Total Usage-Revolving Facility A
(Line 8 plus Line 9) $______________________
11. Unused Commitment (Line 7 minus Line 10) $______________________
12. Availability (the lesser of Line 6 and Line 11) $______________________
11
The Undersigned further certifies and covenants that there has been no
material adverse change in the financial condition of Borrower from that shown
by the financial statements furnished to Lender and to the best of his knowledge
that no default under the Agreement is existing on the date of this certificate,
and that the foregoing report is true and correct as of the date, and that the
items mentioned herein constitute collateral in accordance with the terms of the
Agreement.
---------------------------------
Signature of Certifying Officer
Title:
---------------------------
12
EXHIBIT "6.2"
CLOSING REQUIREMENTS
DOCUMENT RESPONSIBILITY
-------- --------------
1. Promissory Note-A ($22,500,000.00) GWS
2. Promissory Note-C ($100,000,000.00) GWS
3. Fourth Amendment to Second Amended and Restated
Loan Agreement GWS
4. Ratification of Security Agreement-Pledge GWS
5. Certified Resolutions/Incumbency EII
a. Articles of Incorporation EII
b. By-Laws EII
c. Resolution EII
d. Incumbency EII
6. Certificate of Existence and Good Standing-Delaware P&H
7. Certificate of Authority-Texas P&H
8. Notice of Final Agreement GWS
9. Opinion of Counsel P&H
10. Delivery of Collateral EII/BA
11. Stock Powers EII/BA
12. Regulation U-1 BA
13. Updated Exhibit 2.4 BA
GWS - Gardere Wynne Sewell LLP
BA - Bank of America, N.A.
EII - Equus II Incorporated
P&H - Porter & Hedges
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Exhibit "1.3.2"
PROMISSORY NOTE
[FACILITY A NOTE]
$22,500,000 July 27, 2001
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 BANK OF AMERICA, N.A. ("Lender"),
in Houston, Harris County, Texas, the sum of TWENTY-TWO MILLION FIVE HUNDRED
THOUSAND AND 00/100 DOLLARS ($22,500,000) 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 the date until maturity at a
rate equal to the Stated Rate (as defined in the Loan Agreement described
herein), 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 September, December, March and June, commencing September 30,
2001 and on the 1st day of July, 2002, 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
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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 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.
2
This Note is the Facility A Note referred to in, is subject to, and is
entitled to the benefits of, the Second Amended and Restated Loan Agreement
dated June 1, 1999 between Borrower and Lender, as that Second 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 those
certain Revolving Note A and Revolving Note B of Borrower in favor of Lender
previously delivered pursuant to the Loan Agreement. The liens securing the
payment of such prior Notes 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 ratified, 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: /s/ Tracy H. Cohen
------------------------------
Tracy H. Cohen, Vice President
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Exhibit "1.5"
PROMISSORY NOTE
[FACILITY C NOTE]
$100,000,000 July 27, 2001
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 BANK OF AMERICA, N.A. ("Lender"),
in Houston, Harris County, Texas, the sum of ONE HUNDRED MILLION AND NO/100
DOLLARS ($100,000,000) 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 1.5(c)
of, the Loan Agreement) ("Contract 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 Contract Rate exceeds the
Maximum Rate then interest hereon shall accrue at the Maximum Rate. In the event
the Contract 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 Contract Rate
without regard to any usury limit, at which time interest hereon shall again
accrue at the Contract 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 July 1, 2002.
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.
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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 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 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 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
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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 Facility C Note referred to in, is subject to, and is
entitled to the benefits of, the Second Amended and Restated Loan Agreement
dated June 1, 1999 between Borrower and Lender, as that Second 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 those
certain Facility C Notes of the Borrower in favor of Lender previously delivered
pursuant to the Loan Agreement. The liens securing the payment of such prior
Notes are not released but are herby 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: /s/ Tracy H. Cohen
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Tracy H. Cohen, Vice President
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