EIGHTH AMENDMENT TO SECOND AMENDED
AND RESTATED LOAN AGREEMENT
THIS EIGHTH AMENDMENT TO SECOND AMENDED AND RESTATED LOAN AGREEMENT
("Eighth Amendment") is made and entered into as of the 14th day of February,
2003, 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 maintain existing
letters of credit for the account of Borrower in an aggregate of up
to $18,000,000.00 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.
B. Section 1.2 is amended to delete the definitions of
"Facility A Note" and "Maturity Date" and replace them with the following:
"Facility A Note" means the Facility A promissory note of the
Borrower in the maximum principal amount of $18,000,000.00, in the
form attached as Exhibit "1.3.4" to the Eighth Amendment.
"Maturity Date" means June 1, 2003.
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C. Section 1.2 is amended by adding the following definition of
"Stated Rate":
"Stated Rate" shall mean Prime plus four percent (4%).
D. Section 1.3 and 1.3(a) is deleted and the following is
substituted in its place:
1.3 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 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 but not in excess of
an aggregate principal amount outstanding at any time
of $18,000,000 for the period from the date hereof
until the Commitment Reduction Date. As used herein the
"Commitment Reduction Date" shall mean the earlier of
(i) April 1, 2003 or (ii) the expiration of that
certain $3,519,854 letter of credit issued by Lender in
favor of National Union Fire Insurance Co. for the
account of Borrower. On the Commitment Reduction Date
the maximum principal amount outstanding shall be
reduced to $14,500,000, 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 lesser of (i) $18,000,000.00 (subject to
reduction equal to the Commitment Reduction Amount as
hereinafter provided) and (ii) the Borrowing Base prior
to the Commitment Reduction Date and the lesser of (i)
$14,500,000 (subject to reduction equal to the
Commitment Reduction Amount as hereinafter provided)
and (ii) the Borrowing Base, on and after the
Commitment Reduction Date. The maximum amount available
under Facility A is subject to permanent reduction in
the event of a sale of shares owned by Borrower in a
portfolio company or the repayment of a loan from
Borrower to a portfolio company by an amount
("Commitment Reduction Amount") equal to such sale
proceeds and/or loan repayment. Borrower shall make
written request for each Loan pursuant to Revolving
Facility A pursuant to a loan request in substantially
the form of Exhibit "1.3.3" 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.
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E. Section 5.1(h) is hereby added to the Loan Agreement as the
following:
(h) In the event the letter of credit issued by Lender in
favor of National Union Fire Insurance Co. for the
account of Borrower in the amount of $3,519,854 is
presented for payment to Lender.
F. Section 3.11 is hereby added to the Loan Agreement as the
following:
3.11 Mandatory Repayment of Facility A. In the event of
a sale of shares owned by Borrower in a portfolio company or
the repayment of a loan from Borrower to a portfolio
company, Borrower shall repay Facility A by an amount equal
to such sale proceeds and/or loan repayment and Lender's
commitment hereunder shall be permanently reduced as
provided in Section 1.3(a).
Section 1.2. Extension Fee.
Borrower and Lender hereby agree that a fee in the amount
$50,000.00 will be paid to Lender upon closing of this transaction.
Section 2. Closing.
The closing of the transactions contemplated by this Eighth
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 Eighth Amendment, the Facility A Note of the Borrower dated
the date hereof in favor of the Lender in the original principal
amount of $18,000,000.00 (the "Note"), and the Ratification of
Security Agreement-Pledge dated as of the date hereof (the
"Ratification of Security Agreement").
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(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 Eighth Amendment, the Note, 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 Eighth Amendment, the Note, 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.
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 Eighth Amendment
which are defined in the Loan Agreement shall have the same meaning as in
the Loan Agreement, except as otherwise indicated in this Eighth Amendment.
Section 5. Multiple Counterparts. This Eighth 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 Eighth 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.
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Section 7. Final Agreement. THE WRITTEN LOAN AGREEMENTS IN
CONNECTION WITH THIS EIGHTH 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 Eighth Amendment
to be executed by their duly authorized officers as of the 14th day of
February, 2003.
EQUUS II INCORPORATED
By: /s/ Nolan Lehmann
---------------------------
Name: NOLAN LEHMANN
-------------------------
Title: President
------------------------
BANK OF AMERICA, N.A.
By: /s/ David H. Strickert
---------------------------
Name: David H. Strickert
-------------------------
Title: SVP
------------------------
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PROMISSORY NOTE
[FACILITY A NOTE]
$18,000,000 February 14, 2003
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 EIGHTEEN MILLION AND 00/100 DOLLARS
($18,000,000) 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 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:
Accrued interest shall be payable on March 31, 2003.
The entire balance of principal and accrued interest shall be due and
payable on the 1st day of June, 2003.
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 6% 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.
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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 that
certain Revolving Note A 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.
This Note is given in renewal, increase and extension, but not novation or
discharge, of that certain promissory note dated January 1, 2003, executed by
Borrower and payable to Lender in the amount of $16,494,989.00. The liens
securing the payment of the prior promissory note are not released but are
hereby ratified and hereby carried forward to secure this Note.
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/ Nolan Lehmann
---------------------------
Name: NOLAN LEHMANN
-------------------------
Title: President
------------------------
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RATIFICATION OF SECURITY AGREEMENT-PLEDGE
This Ratification of Security Agreement-Pledge ("Ratification") is made and
entered into as of the 14th day of February, 2003, by and between EQUUS II
INCORPORATED ("Pledgor") with offices and place of business at 2929 Allen
Parkway, Suite 2500, Houston, Texas 77019 and BANK OF AMERICA, N.A., with
offices at 700 Louisiana, Houston, Texas 77002 (hereinafter called "Lender").
For and in consideration of the mutual covenants and agreements herein
contained, Pledgor and Lender hereby ratify as of the date of this Ratification
that certain Security Agreement-Pledge ("Security Agreement") between Pledgor
and Lender dated the 18th day of March, 1996, as that Security Agreement has
been amended or modified from time to time, and agree that the Collateral, as
such term is defined in such Security Agreement, shall secure Pledgor's
obligations pursuant to (i) that certain Facility A Note dated February 14, 2003
in the maximum principal amount of $18,000,000.
Except as expressly modified hereby, the Security Agreement shall remain
unchanged and the terms, conditions, representations, warranties, and covenants
of said Security Agreement are true as of the date hereof, are ratified and
confirmed in all respects and shall be continuing and binding upon the parties.
This Ratification 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.
This Ratification 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.
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IN WITNESS WHEREOF, the parties have caused this Ratification to be
executed by their duly authorized officers as of the 14th day of February, 2003.
EQUUS II INCORPORATED
By: /s/ Nolan Lehmann
---------------------------
Name: NOLAN LEHMANN
-------------------------
Title: President
------------------------
Address:
2929 Allen Parkway, Suite 2500
Houston, Texas 77019
BANK OF AMERICA, N.A.
By: /s/ David H. Strickert
---------------------------
Name: David H. Strickert
-------------------------
Title: SVP
------------------------
Address:
700 Louisiana
Houston, Texas 77002
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EQUUS II INCORPORATED
Certificate of Secretary
I, Tracy H. Cohen, do hereby certify that I am the duly elected and presently
incumbent Secretary of Equus II Incorporated, a Delaware Corporation (the
"Company"), and I do further certify that the attached Exhibit A hereto is a
true and correct copy of the recitals and resolutions duly adopted by the Board
of Directors of the Company by Unanimous Consent, and to the date hereof such
resolutions have not been modified or amended in any respect, and remain in full
force and effect.
IN WITNESS WHEREOF, I have executed this Certificate on February 14, 2003.
/s/ Tracy H. Cohen
CORPORATE SEAL ------------------------------
Tracy H.Cohen, Secretary
of Equus II Incorporated
EXHIBIT A
RESOLVED, that this corporation borrow from, and receive a loan or loans
(hereinafter called the "Loans") from time to time from Bank of America, N.A.,
and such additional banks and financial institutions who make or participate in
the Loans (hereinafter called the "Banks"), in an aggregate principal amount of
up to $122,500,000 including any amounts borrowed to meet the diversification
requirements of Subchapter M of the Internal Revenue Code of 1986, as amended;
FURTHER RESOLVED, that the Chairman of the Board, Chief Executive Officer,
President, any Vice President, or the Treasurer of this corporation is hereby
authorized for and on behalf of this corporation to negotiate such terms and
conditions for the Loans substantially the same as currently in force and as any
of said officers may deem best, and to execute and deliver for and on behalf of
this corporation promissory notes, loan agreements, security agreements, pledge
agreements, and such other instruments or written obligations of this
corporation as may be desired or required by the Banks in connection with the
Loans and containing such terms and conditions as may be acceptable or agreeable
to any of said officers, such acceptance and agreement to be conclusively
evidenced by any of said officers' execution and delivery thereof;
FURTHER RESOLVED, that this corporation grant to the Banks a lien upon
and/or a security interest upon such assets of this corporation as may be agreed
upon between any of said officers and the Banks as security for repayment of the
Loans and any and all extensions for any period, rearrangements or renewals
thereof and as security for any and all indebtedness, obligations and
liabilities of this corporation under any promissory notes, loan agreements,
security agreements, pledge agreements, and any other instruments or written
obligations of this corporation in connection with the Loans, or any other
indebtedness, obligations and liabilities of this corporation owing to the
Banks, either directly or by assignment;
FURTHER RESOLVED, that any of said officers, are hereby authorized in the
name of and on behalf of this corporation to take such further action and to do
all things that may appear in the discretion of any of them to be necessary in
connection with amendments, renewals, extensions for any period, rearrangements,
retirements or compromises of the indebtedness, obligations and liabilities of
this corporation to the Banks arising out of the Loans, or any other
indebtedness, obligations and liabilities of this corporation owing to the
Banks, either directly or by assignment; and from time-to-time to negotiate such
amendments to the terms and conditions of the Loans as any of said officers may
deem best, and to execute and deliver for and on behalf of this corporation such
amendments to the promissory notes, loan agreements, security agreements, pledge
agreements, and such other instruments or written obligations of this
corporation as may be desired or required by the Banks in connection with the
Loans and containing such terms and conditions as may be acceptable or agreeable
to any of
said officers, such acceptance and agreement to be conclusively evidenced by any
of said officers' execution and delivery thereof;
FURTHER RESOLVED, that any of said officers are authorized and empowered to
do or cause to be done all such acts or things and to sign and deliver, or cause
to be signed and delivered, all such documents, instruments and certificates
(including, without limitation, any and all requests, notices, and certificates
required or permitted to be given or made to the Banks under the terms of any of
the instruments executed on behalf of this corporation in connection with the
Loans), in the name and on behalf of this corporation as any of said officers,
in their discretion, may deem necessary, advisable or appropriate to effectuate
or carry out the purposes and intent of the foregoing Resolutions and to perform
the obligations of this corporation under all instruments executed on behalf of
this corporation in connection with the Loans;
FURTHER RESOLVED, that the execution by any of said officers, of any
document authorized by the foregoing Resolutions or any document executed in the
accomplishment of any action or actions so authorized, is (or shall become upon
delivery) the enforceable and binding act and obligation of this corporation,
without the necessity of the signature or attestation of any other officer of
this corporation or the affixing of the corporate seal;
FURTHER RESOLVED, that all acts, transactions, or agreements undertaken
prior to the adoption of these Resolutions by any of the officers or
representatives of this corporation in its name and for its account with the
Banks in connection with the foregoing matters are hereby ratified, confirmed
and adopted by this corporation;
FURTHER RESOLVED, that the Secretary or Assistant Secretary of this
corporation or any other appropriate officer of this corporation is hereby
authorized and directed to certify these Resolutions to the Banks; and
FURTHER RESOLVED, that the Banks be promptly notified in writing by the
Secretary or any other officer of this corporation of any change in these
Resolutions, and until it has actually received such notice in writing, the Bank
are authorized to act in pursuance of these Resolutions.