EXHIBIT 10.18
CREDIT AGREEMENT
among
HWG LLC,
as Borrower,
THE HALLWOOD GROUP INCORPORATED,
as Parent Guarantor,
FIRST BANK & TRUST,
as Administrative Agent,
and
THE FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES THERETO,
as Banks
$3,000,000 Term Loan
$4,000,000 Revolving Credit Loan
March 21, 2002
CLOSING BINDER INDEX
- -------------------------------------------------------------------------------------------------------------------
The Hallwood Group Incorporated Parent
HWG LLC Borrower
Hallwood Realty Partners, L.P. HRY
First Bank & Trust, as Administrative Agent Administrative Agent
First Bank & Trust, as a Bank First Bank Texas
Jenkens & Gilchrist, L.L.P. JG
Vinson & Elkins L.L.P. VE
- -------------------------------------------------------------------------------------------------------------------
I. PRIMARY LOAN DOCUMENTS
1. Credit Agreement dated as of March 21, 2002, by and among Borrower, Parent,
Administrative Agent, and the financial institutions now or hereafter
parties thereto.
2. Term Note dated March 21, 2002, in the original principal amount of
$3,000,000, executed by Borrower and made payable to First Bank & Trust.
3. Revolving Credit Note dated March 21, 2002, in the original principal
amount of $4,000,000, executed by Borrower and made payable to First Bank &
Trust.
4. Guaranty dated as of March 21, 2002 executed by Parent in favor of First
Bank & Trust and the other financial institutions a party to the Credit
Agreement.
5. Pledge Agreement dated as of March 21, 2002, executed by Borrower in favor
of Administrative Agent.
6. Irrevocable Stock Power executed in connection with Stock Certificate No.
HRP 29410 representing 211,128 units of HRY owned by Borrower.
7. Irrevocable Stock Power executed in connection with Stock Certificate No.
HRP 20018 representing 17,440 units of HRY owned by Borrower.
8. Irrevocable Stock Power executed in connection with Stock Certificate No.
HRP 20019 representing 71,829 units of HRY owned by Borrower.
9. UCC-1 Financing Statement of Borrower, as Debtor, in favor of
Administrative Agent, as Secured Party, to be filed in connection with the
Pledge Agreement with the Delaware Secretary of State.
10. Officer's Certificate executed by Parent certifying as to the attached
Collateral Value Certificate.
11. Certificate of Chief Financial Officer of Parent dated as of March 21,
2002, certifying as to the absence of Defaults and solvency of each Credit
Party.
12. Promissory Note dated as of March 21, 2002, in the original principal
amount of $3,000,000.00, executed by Parent in favor of Borrower.
13. Promissory Note dated as of March 21, 2002, in the original principal
amount of $4,000,000.00, executed by Parent in favor of Borrower.
14. Collateral Assignment of Notes dated March 21, 2002, executed by Borrower
in favor of Administrative Agent.
15. UCC-1 Financing Statement executed by Borrower, as Debtor, in favor of
Administrative Agent, as Secured Party, in connection with the Collateral
Assignment of Note to be filed with the Texas Secretary of State.
II. CORPORATE EXISTENCE/AUTHORITY
16. Secretary's Certificate of Parent certifying as to the Incumbency and the
attached Resolutions, Second Restated Certificate of Incorporation, Amended
and Restated Bylaws and Certificates of Existence and Good Standing from
Delaware and Texas, executed as of March 21, 2002.
17. Secretary's Certificate of Borrower certifying as to the Incumbency and the
attached Resolutions, Certificate of Formation, Limited Liability Company
Agreement and Certificates of Existence and Good Standing from Delaware,
California, Oklahoma and Texas executed as of March 21, 2002.
18. Certified Copy of Certificate of Limited Partnership of HRY issued on March
8, 2002, by the Secretary of State of Delaware.
19. Certificate of Existence of HRY issued on March 8, 2002, by the Secretary
of State of Delaware.
20. Amended and Restated Agreement of Limited Partnership of HRY dated as of
June 7, 1990.
III. LEGAL OPINION
21. Legal Opinion of JG, counsel to Borrower and Parent, in connection with the
Credit Agreement, dated March 21, 2002.
IV. MISCELLANEOUS
22. Federal Reserve Form U-1 Purpose Statement dated March 21, 2002, executed
by Borrower and Administrative Agent.
23. Notice of Designation of Senior Indebtedness dated March 21, 2002, executed
by Parent.
DATED AS OF
MARCH 21, 2002
AMONG
HWG, LLC,
AS THE BORROWER,
THE HALLWOOD GROUP INCORPORATED,
AS PARENT GUARANTOR,
FIRST BANK & TRUST,
AS THE ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO,
AS THE LENDERS
$3,000,000 TERM LOAN
$4,000,000 REVOLVING CREDIT FACILITY
TABLE OF CONTENTS
Page No.
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 Definitions.................................................................................1
Section 1.2 Accounting Terms and Determinations........................................................15
Section 1.3 Other Definitional Terms...................................................................15
ARTICLE 2
AMOUNT AND TERMS OF LOANS
Section 2.1 Loans and Commitments......................................................................15
Section 2.2 Borrowing Requests.........................................................................16
Section 2.3 Disbursement of Funds......................................................................17
Section 2.4 Notes and Amortization.....................................................................18
Section 2.5 Interest...................................................................................18
Section 2.6 Interest Periods...........................................................................19
Section 2.7 Repayment of Loans; Accounts and Register..................................................20
Section 2.8 Prepayments................................................................................21
Section 2.9 Continuation and Conversion Options........................................................22
Section 2.10 Fees.......................................................................................23
Section 2.11 Payments, etc..............................................................................23
Section 2.12 Interest Rate Not Ascertainable, etc.......................................................24
Section 2.13 Illegality.................................................................................24
Section 2.14 Increased Costs............................................................................25
Section 2.15 Change of Lending Office...................................................................26
Section 2.16 Funding Losses.............................................................................27
Section 2.17 Sharing of Payments, etc...................................................................27
Section 2.18 Taxes......................................................................................27
Section 2.19 Pro Rata Treatment.........................................................................28
ARTICLE 3
CONDITIONS TO BORROWINGS
Section 3.1 Closing....................................................................................29
Section 3.2 Conditions Precedent to All Loans..........................................................31
ARTICLE 4
SECURITY
Section 4.1 Security Granted...........................................................................32
Section 4.2 Collateral Value...........................................................................32
Section 4.3 Benchmark Collateral Deficiency............................................................33
Section 4.4 Substitution of Collateral.................................................................33
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
Section 5.1 Existence..................................................................................33
Section 5.2 Power and Authorization....................................................................33
Section 5.3 Binding Obligations........................................................................34
i
Page No.
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 5.4 No Legal Bar or Resultant Lien.............................................................34
Section 5.5 No Consent.................................................................................34
Section 5.6 Financial Information......................................................................34
Section 5.7 Investments and Guaranties.................................................................35
Section 5.8 Litigation.................................................................................35
Section 5.9 Use of Proceeds............................................................................35
Section 5.10 Employee Benefits..........................................................................36
Section 5.11 Taxes; Governmental Charges................................................................36
Section 5.12 Titles, etc................................................................................37
Section 5.13 Defaults...................................................................................37
Section 5.14 Casualties; Taking of Properties...........................................................37
Section 5.15 Compliance with the Law....................................................................37
Section 5.16 No Material Misstatements..................................................................37
Section 5.17 Investment Company Act.....................................................................38
Section 5.18 Public Utility Holding Company Act.........................................................38
Section 5.19 Subsidiaries...............................................................................38
Section 5.20 Insurance..................................................................................38
Section 5.21 Environmental Matters......................................................................38
Section 5.22 Solvency...................................................................................40
Section 5.23 Employee Matters...........................................................................40
Section 5.24 Subordinated Debenture Documents, etc......................................................40
Section 5.25 Ownership..................................................................................40
Section 5.26 Senior Indebtedness........................................................................40
ARTICLE 6
AFFIRMATIVE COVENANTS
Section 6.1 Maintenance and Compliance, etc............................................................41
Section 6.2 Payment of Taxes and Claims, etc...........................................................41
Section 6.3 Further Assurances.........................................................................41
Section 6.4 Performance of Obligations.................................................................41
Section 6.5 Insurance..................................................................................41
Section 6.6 Accounts and Records.......................................................................42
Section 6.7 Right of Inspection........................................................................42
Section 6.8 Operation and Maintenance of Property......................................................42
Section 6.9 Reporting Covenants........................................................................42
ARTICLE 7
NEGATIVE COVENANTS
Section 7.1 Financial Covenants........................................................................45
Section 7.2 Indebtedness...............................................................................46
Section 7.3 Liens......................................................................................46
Section 7.4 Mergers, Sales, etc........................................................................47
Section 7.5 Restricted Payments........................................................................48
Section 7.6 Investments, Loans, etc....................................................................48
Section 7.7 Sales and Leasebacks.......................................................................49
Section 7.8 Nature of Business.........................................................................49
Section 7.9 ERISA Compliance...........................................................................49
Section 7.10 Sale or Discount of Receivables............................................................50
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Page No.
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 7.11 Negative Pledge Agreements.................................................................50
Section 7.12 Transactions with Affiliates...............................................................50
Section 7.13 Unconditional Purchase Obligations.........................................................51
Section 7.14 Intercompany Transactions..................................................................51
Section 7.15 Modifications to Organizational Documents..................................................51
Section 7.16 Modifications to Subordinated Debentures; Payment Restrictions.............................51
ARTICLE 8
EVENTS OF DEFAULT
Section 8.1 Payments...................................................................................52
Section 8.2 Covenants Without Notice...................................................................52
Section 8.3 Other Covenants............................................................................52
Section 8.4 Other Financing Document Obligations.......................................................52
Section 8.5 Representations............................................................................52
Section 8.6 Non-Payments of Other Indebtedness.........................................................52
Section 8.7 Defaults Under Other Agreements............................................................53
Section 8.8 Bankruptcy.................................................................................53
Section 8.9 Money Judgment.............................................................................53
Section 8.10 Discontinuance of Business.................................................................53
Section 8.11 Financing Documents........................................................................54
Section 8.12 Change of Control..........................................................................54
Section 8.13 Subordination of Lender Indebtedness.......................................................54
Section 8.14 Default Under Subordinated Indebtedness....................................................54
ARTICLE 9
THE ADMINISTRATIVE AGENT
Section 9.1 Appointment of Administrative Agent........................................................54
Section 9.2 Limitation of Duties of Administrative Agent...............................................55
Section 9.3 Lack of Reliance on the Administrative Agent...............................................55
Section 9.4 Certain Rights of the Administrative Agent.................................................55
Section 9.5 Reliance by Administrative Agent...........................................................56
Section 9.6 Indemnification of Administrative Agent....................................................56
Section 9.7 The Administrative Agent in its Individual Capacity........................................56
Section 9.8 May Treat Lender as Owner..................................................................57
Section 9.9 Successor Administrative Agent.............................................................57
ARTICLE 10
MISCELLANEOUS
Section 10.1 Notices....................................................................................57
Section 10.2 Amendments and Waivers.....................................................................58
Section 10.3 No Waiver; Remedies Cumulative.............................................................59
Section 10.4 Payment of Expenses, Indemnities, etc......................................................59
Section 10.5 Right of Setoff............................................................................61
Section 10.6 Benefit of Agreement.......................................................................61
Section 10.7 Successors and Assigns; Participations and Assignments.....................................61
Section 10.8 Governing Law; Submission to Jurisdiction; etc.............................................64
Section 10.9 Independent Nature of Lenders' Rights......................................................65
Section 10.10 Invalidity.................................................................................65
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Page No.
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 10.11 Renewal, Extension or Rearrangement........................................................65
Section 10.12 Confidentiality............................................................................65
Section 10.13 Interest...................................................................................66
Section 10.14 Entire Agreement...........................................................................67
Section 10.15 Attachments................................................................................67
Section 10.16 Counterparts...............................................................................67
Section 10.17 Survival of Indemnities....................................................................67
Section 10.18 Headings Descriptive.......................................................................67
Section 10.19 Satisfaction Requirement...................................................................67
Section 10.20 Exculpation Provisions.....................................................................67
iv
ANNEXES
Annex I - Term Loan and Revolving Credit Loan Commitments
SCHEDULES
Schedule 1.1(A) - Debt Service Coverage Ratio Worksheet
Schedule 1.1(B) - Senior Leverage Ratio Worksheet
Schedule 5.7 - Investments
Schedule 5.8 - Litigation
Schedule 5.10 - Employee Benefits
Schedule 5.13 - Existing Defaults
Schedule 5.19 - Subsidiaries
Schedule 5.20 - Insurance
Schedule 5.21 - Environmental Matters
Schedule 5.23 - Employment Contracts
Schedule 5.25 - Ownership
Schedule 7.2 - Existing Indebtedness
Schedule 7.3 - Liens
EXHIBITS
Exhibit A - Form of Revolving Credit Note
Exhibit B - Form of Term Note
Exhibit C-1 - Form of Facility Guaranty
Exhibit C-2 - Form of Pledge Agreement
Exhibit C-3 - Form of Collateral Assignment of Intercompany Notes
Exhibit D - Form of Assignment and Acceptance
Exhibit E - Form of Compliance Certificate
Exhibit F - Form of Collateral Value Certificate
Exhibit G - Form of Borrowing Request
v
LIST OF DEFINED TERMS
Page No.
$.................................................................................................................5
Administrative Agent..............................................................................................1
Advance Notice....................................................................................................1
Affiliate.........................................................................................................2
Aggregate Revolving Credit Exposure...............................................................................2
Agreement.........................................................................................................2
Alpha Trust.......................................................................................................2
applicable law...................................................................................................66
Applicable Margin.................................................................................................2
Applicable Percentage.............................................................................................2
Assignment and Acceptance.........................................................................................2
Bankruptcy.......................................................................................................53
Bankruptcy Code..................................................................................................53
Base Rate.........................................................................................................2
Base Rate Loan....................................................................................................2
Benchmark Collateral Value........................................................................................3
Benchmark Collateral Value Deficiency.............................................................................3
Borrower..........................................................................................................1
Borrowing.........................................................................................................3
Borrowing Request.................................................................................................3
Brookwood.........................................................................................................3
Brookwood Funded Indebtedness.....................................................................................3
Business Day......................................................................................................3
Capital Adequacy.................................................................................................26
Capital Expenditures..............................................................................................3
Capital Lease Obligations.........................................................................................3
CERCLA............................................................................................................5
Change of Control.................................................................................................4
Closing Date......................................................................................................4
Code..............................................................................................................4
Collateral........................................................................................................4
Collateral Assignment of Intercompany Notes.......................................................................4
Collateral Value Certificate.....................................................................................32
Commitment Fee Percentage.........................................................................................4
Commitments.......................................................................................................4
Control...........................................................................................................4
Controlled........................................................................................................4
Controlling.......................................................................................................4
Credit Parties....................................................................................................4
Current Information...............................................................................................4
Debt Offering.....................................................................................................4
Debt Service Coverage Ratio.......................................................................................5
Default...........................................................................................................5
vi
Page No.
disposal..........................................................................................................5
disposed..........................................................................................................5
Dollar............................................................................................................5
EBITDA............................................................................................................5
Environmental Laws................................................................................................5
Epsilon Trust.....................................................................................................6
Equity............................................................................................................6
Equity Contribution...............................................................................................6
ERISA.............................................................................................................6
ERISA Affiliate...................................................................................................6
ERISA Termination Event...........................................................................................6
Eurodollar Loan...................................................................................................6
Eurodollar Rate...................................................................................................6
Event of Default.................................................................................................52
Excess Prepaid Amount............................................................................................22
Excluded Taxes....................................................................................................7
Facility Guaranty.................................................................................................7
Federal Funds Effective Rate......................................................................................7
Financial Statements..............................................................................................7
Financing Documents...............................................................................................7
Financing Parties................................................................................................66
First Bank........................................................................................................8
Fiscal Quarter....................................................................................................8
Fiscal Year.......................................................................................................8
Fixed Rate........................................................................................................8
Foreign Lender....................................................................................................8
Funded Indebtedness...............................................................................................8
GAAP..............................................................................................................8
Governmental Authority............................................................................................8
Governmental Requirement..........................................................................................8
Hallwood Realty...................................................................................................8
hazardous substance...............................................................................................5
HCRE..............................................................................................................8
herein...........................................................................................................15
hereof...........................................................................................................15
hereunder........................................................................................................15
Highest Lawful Rate...............................................................................................8
HRY...............................................................................................................9
Indebtedness......................................................................................................9
Indemnified Taxes.................................................................................................9
Information......................................................................................................66
Interest Expense'.................................................................................................9
Interest Period...................................................................................................9
laws applicable to any Financing Party...........................................................................66
Lender............................................................................................................1
Lender Indebtedness..............................................................................................10
vii
Page No.
Lenders...........................................................................................................1
Lending Office...................................................................................................10
Lien.............................................................................................................10
Loan.............................................................................................................10
Loans............................................................................................................10
Margin Stock.....................................................................................................10
Marketable Equity................................................................................................10
Material Adverse Effect..........................................................................................10
Material Provision...............................................................................................54
measurement date.................................................................................................13
Net Cash Flow....................................................................................................10
Net Cash Proceeds................................................................................................11
Non-recourse Indebtedness........................................................................................11
Note.............................................................................................................11
Notes............................................................................................................11
oil...............................................................................................................5
OPA...............................................................................................................5
Other Taxes......................................................................................................11
Parent............................................................................................................1
Parent Intercompany Notes........................................................................................11
Payment Office...................................................................................................11
PBGC.............................................................................................................11
Person...........................................................................................................11
Plan.............................................................................................................11
Pledge Agreement.................................................................................................12
Prime Rate.......................................................................................................12
Property.........................................................................................................12
Quarterly Dates..................................................................................................12
RCRA..............................................................................................................5
Regulation D.....................................................................................................12
Regulations U and X..............................................................................................12
release...........................................................................................................5
Required Lenders.................................................................................................12
Responsible Officer..............................................................................................12
Restricted Payment...............................................................................................12
Restricted Payment Limit.........................................................................................13
Revolving Credit Commitment..................................................................................13, 16
Revolving Credit Commitments.....................................................................................16
Revolving Credit Exposure........................................................................................13
Revolving Credit Loan............................................................................................13
Revolving Credit Maturity Date...................................................................................13
Revolving Credit Note............................................................................................13
Revolving Credit Percentage......................................................................................13
Rolling Period...................................................................................................13
Security Instruments.............................................................................................13
Senior Leverage Ratio............................................................................................13
viii
Page No.
Series B Preferred Stock.........................................................................................14
Shareholder Agreement............................................................................................14
solid waste.......................................................................................................5
Solvent..........................................................................................................14
Statutory Reserves...............................................................................................14
Subordinated Debentures..........................................................................................14
Subordinated Debentures Indenture................................................................................14
Subordinated Debentures Trustee..................................................................................14
Subsidiary.......................................................................................................14
Taxes............................................................................................................15
Term Loan........................................................................................................15
Term Loan Commitment.............................................................................................16
Term Loan Commitments............................................................................................16
Term Loan Maturity Date..........................................................................................15
Term Loan Percentage.............................................................................................15
Term Note........................................................................................................15
threatened release................................................................................................5
Transactions.....................................................................................................15
Transferee.......................................................................................................63
Type.............................................................................................................15
UCC..............................................................................................................15
ix
CREDIT AGREEMENT
THIS CREDIT AGREEMENT (this "AGREEMENT") is made and entered into as of
this 21st day of March, 2002, among HWG, LLC, a Delaware limited liability
company (the "BORROWER"), THE HALLWOOD GROUP INCORPORATED, a Delaware
corporation ("PARENT"), FIRST BANK & TRUST, individually as a Lender, and as
Administrative Agent (the "ADMINISTRATIVE AGENT"), and each of the lenders that
is a signatory hereto or which becomes a party hereto as provided in Section
10.7 (individually, a "LENDER" and, collectively, the "LENDERS").
RECITALS:
The Borrower and Parent have requested that the Lenders provide the
Borrower with (a) a revolving credit facility in an aggregate amount not to
exceed $4,000,000 at any time outstanding, and (b) a term credit facility in the
aggregate principal amount of $3,000,000, and the Lenders are willing to provide
such credit facilities upon the terms and subject to the conditions set forth
herein.
Proceeds of the Revolving Credit Loans (as herein defined) will be used
solely (i) to make loans from the Borrower to Parent evidenced by the Parent
Intercompany Note (as herein defined) in the principal amount of $4,000,000,
(ii) to finance ongoing working capital requirements, and (iii) for general
corporate purposes of the Borrower. Proceeds of the Term Loan (as herein
defined) will be used solely (a) to repay in full certain subordinated
shareholder advances previously made to the Borrower, (b) to reimburse the
Borrower for certain investments made in Hallwood Energy Corporation, (c) to
finance certain fees and expenses actually incurred relating to the Loans (as
herein defined), (d) to make the loan from the Borrower to Parent evidenced by
the Parent Intercompany Note in the principal amount of $3,000,000, and (e) for
working capital.
AGREEMENTS:
In consideration of the mutual covenants and agreements herein
contained, and other good and valuable consideration, the receipt and adequacy
of which are hereby acknowledged, the Borrower, Parent, the Administrative Agent
and the Lenders agree as follows:
ARTICLE 1
DEFINITIONS; CONSTRUCTION
Section 1.1 DEFINITIONS. As used herein, the following terms
shall have the meanings herein specified (to be equally applicable to both the
singular and plural forms of the terms defined). Reference to any party to a
Financing Document means that party and its successors and assigns.
"ADMINISTRATIVE AGENT" shall mean First Bank & Trust, acting
in the manner and to the extent described in Article 9.
"ADVANCE NOTICE" shall mean written or telecopy notice (with
telephone confirmation in the case of telecopy notice), which in each case shall
be irrevocable, from the
1
Borrower to be received by the Administrative Agent before 10:00 a.m. (Houston,
Texas time), by the number of Business Days in advance of any Borrowing,
conversion, continuation or prepayment of any Revolving Credit Loan or Revolving
Credit Loans pursuant to this Agreement as respectively indicated below:
(a) Eurodollar Loans - 3 Business Days; and
(b) Base Rate Loans - Same Business Day.
For the purpose of determining the respectively applicable Revolving Credit
Loans in the case of the conversion from one Type of Revolving Credit Loan into
another, the Revolving Credit Loans into which there is to be a conversion shall
control. The Administrative Agent and each Lender are entitled to rely upon and
act upon telecopy notice made or purportedly made by the Borrower, and the
Borrower hereby waives the right to dispute the authenticity and validity of any
such transaction once the Administrative Agent or any Lender has advanced funds,
absent manifest error.
"AFFILIATE" shall mean, with respect to a specified Person,
another Person that directly, or indirectly through one or more intermediaries,
Controls or is Controlled by or is under common Control with the Person
specified.
"AGGREGATE REVOLVING CREDIT EXPOSURE" shall mean the sum of
all of the Lenders' Revolving Credit Exposures.
"AGREEMENT" shall mean this Credit Agreement, as amended,
modified or supplemented from time to time.
"ALPHA TRUST" shall mean Alpha Trust, a trust formed under the
laws of the Island of Jersey, Channel Islands.
"APPLICABLE MARGIN" shall mean, on any day and with respect to
any Revolving Credit Loan, the applicable per annum percentage set forth below:
(a) Eurodollar Loans - 3.250%; and
(b) Base Rate Loans - 0.500%.
"APPLICABLE PERCENTAGE" shall mean, with respect to any
Lender, such Lender's Revolving Credit Percentage and/or such Lender's Term Loan
Percentage, as applicable.
"ASSIGNMENT AND ACCEPTANCE" shall have the meaning provided in
Section 10.7.
"BANKRUPTCY CODE" shall have the meaning provided in Section
8.8.
"BASE RATE" shall have the meaning provided in Section 2.5(a).
"BASE RATE LOAN" shall mean a Revolving Credit Loan bearing
interest at the rate provided in Section 2.5(a).
2
"BENCHMARK COLLATERAL VALUE" shall mean, as of any date of
determination, an amount equal to 200% of the then outstanding principal balance
of the Loans.
"BENCHMARK COLLATERAL VALUE DEFICIENCY" shall mean, as of any
date, the amount by which (a) the aggregate value of all Marketable Equity (as
reflected in the most recent Collateral Value Certificate delivered by Parent to
the Administrative Agent in accordance with Section 4.2 hereof) pledged to the
Administrative Agent as security for the Lender Indebtedness is less than (b)
the Benchmark Collateral Value.
"BORROWER" shall have the meaning set forth in the initial
paragraph hereof.
"BORROWING" shall mean a borrowing pursuant to a Borrowing
Request or a continuation or a conversion pursuant to Section 2.9 consisting, in
each case, of the same Type of Revolving Credit Loans having, in the case of
Eurodollar Loans, the same Interest Period (except as otherwise provided in
Section 2.12 and Section 2.13) and made previously or being made concurrently by
all of the Lenders.
"BORROWING REQUEST" shall mean a request for a Borrowing
pursuant to Section 2.2 substantially in the form attached as Exhibit G.
"BROOKWOOD" shall mean Brookwood Companies Incorporated, a
Delaware corporation.
"BROOKWOOD FUNDED INDEBTEDNESS" shall mean, as to Brookwood,
all Nonrecourse Indebtedness of Brookwood outstanding under a $17,000,000
secured line of credit with Key Bank, N.A.
"BUSINESS DAY" shall mean any day excluding Saturday, Sunday
and any other day on which banks are required or authorized to close in Houston,
Texas, and, if the applicable Business Day relates to Eurodollar Loans, on which
trading is carried on by and between banks in Dollar deposits in the applicable
interbank Eurodollar market.
"CAPITAL EXPENDITURES" shall mean, for any period, all
expenditures (whether paid in cash or accrued as a liability, including the
portion of Capital Lease Obligations originally incurred during such period that
are capitalized on the consolidated balance sheet of Parent) by Parent and its
Subsidiaries during such period, that, in conformity with GAAP, are included in
"capital expenditures," "additions to property, plant or equipment" or
comparable items in the consolidated financial statements of Parent, but
excluding expenditures for the restoration, repair or replacement of any fixed
or capital asset that was destroyed or damaged, in whole or in part, in an
amount equal to any insurance proceeds received in connection with such
destruction or damage.
"CAPITAL LEASE OBLIGATIONS" shall mean, as to any Person, the
obligations of such Person to pay rent or other amounts under a lease of (or
other agreement conveying the right to use) real and/or personal property which
obligations are required to be classified and accounted for as a liability for a
capital lease on a balance sheet of such Person and, for purposes of this
Agreement, the amount of such obligations shall be the capitalized amount
thereof.
3
"CHANGE OF CONTROL" shall mean (a) the acquisition of
ownership, directly or indirectly, beneficially or of record, by any Person or
group (within the meaning of the Securities Exchange Act of 1934 and the rules
of the Securities and Exchange Commission thereunder as in effect on the date
hereof) of shares representing more than fifty percent (50%) of the aggregate
ordinary voting power represented by the issued and outstanding capital stock of
Parent; (b) the occupation of a majority of the seats (other than vacant seats)
on the board of directors of Parent by Persons who were neither (i) nominated by
the board of directors of Parent nor (ii) appointed by directors so nominated;
(c) the acquisition of direct or indirect Control of Parent by any Person or
group other than Anthony J. Gumbiner, the Alpha Trust and their Affiliates; or
(d) the Borrower shall cease to be a wholly owned Subsidiary of Parent.
"CLOSING DATE" shall mean the "as of" date of this \
Agreement set forth in the first paragraph hereof.
"CODE" shall mean the Internal Revenue Code of 1986, as
amended, and any successor statute.
"COLLATERAL" shall mean each Credit Party's Properties
described in and subject to the Liens, privileges, priorities and security
interests purported to be created by any Security Instrument.
"COLLATERAL ASSIGNMENT OF INTERCOMPANY NOTES" shall mean the
Collateral Assignment of Intercompany Notes executed by the Borrower,
substantially in the form attached as Exhibit C-3, as amended, modified, renewed
or supplemented from time to time, pursuant to which the Borrower shall assign
to the Administrative Agent and grant to the Administrative Agent for the
ratable benefit of the Lenders a first and prior Lien in and to all rights,
title and interest in and to the Parent Intercompany Notes to secure the Lender
Indebtedness.
"COMMITMENT FEE PERCENTAGE" shall mean 0.250% per annum.
"COMMITMENTS" shall mean, for any Lender, such Lender's
Revolving Credit Commitment and Term Loan Commitment.
"CONTROL" shall mean the possession, directly or indirectly,
of the power to direct or cause the direction of the management or policies of a
Person, whether through the ability to exercise voting power, by contract or
otherwise. "CONTROLLING" and "CONTROLLED" shall have the meanings correlative
thereto.
"CREDIT PARTIES" shall mean, collectively, Parent and the
Borrower.
"CURRENT INFORMATION" shall mean, as of any day, the financial
statements and other related information for any applicable period most recently
required to be delivered to the Lenders pursuant to Section 6.9(a), Section
6.9(b) and Section 6.9(c).
"DEBT OFFERING" shall mean the incurrence by any Person of
Indebtedness whether or not occurring in connection with the issuance or sale of
notes, bonds, debentures or other debt securities; provided, that the incurrence
of any Indebtedness by any Person expressly
4
permitted by Section 7.2 hereof will not constitute a Debt Offering for purposes
of this Agreement.
"DEBT SERVICE COVERAGE RATIO" shall mean, as to Parent and its
Subsidiaries on a consolidated basis, determined for the Fiscal Quarter ending
on the most recent Quarterly Date as of the date of determination, the ratio of
(a) the sum (1) EBITDA (for the Rolling Period ending on such date) plus (2) all
cash proceeds of loans made to Parent or its Subsidiaries by a shareholder of
Parent (or an Affiliate of such shareholder) if all repayments of principal and
interest with respect to such loans are subordinated to the prior payment in
full of all Lender Indebtedness on terms acceptable to the Administrative Agent
and the Lenders in their sole discretion, plus (3) distributions actually
received by the Borrower from HRY during such Fiscal Quarter with respect to
HRY's limited partnership interests and general partnership interests to (b) the
sum of (1) scheduled principal payments on Funded Indebtedness (excluding
scheduled principal payments on Brookwood Funded Indebtedness) (for the Rolling
Period ending on such date) plus (2) Interest Expense (for the Rolling Period
ending on such date). The Debt Service Coverage Ratio shall be calculated
substantially as set forth on Schedule 1.1(A).
"DEFAULT" shall mean an Event of Default or any condition or
event which, with notice or lapse of time or both, would constitute an Event of
Default.
"DOLLAR" and the sign "$" shall mean lawful money of the
United States of America.
"EBITDA" shall mean, as to any Person, for any period, without
duplication, an amount equal to net income determined in accordance with GAAP
(provided, that, for purposes of determining net income to derive Net Cash Flow
for any period, leasing commissions shall be included in such determination when
such commissions are actually received by such Person), plus to the extent
deducted from net income, Interest Expense, depreciation, other non-cash
expenses, and income tax expenses.
"ENVIRONMENTAL LAWS" shall mean any and all laws, statutes,
ordinances, rules, regulations, or orders of any Governmental Authority
pertaining to health or the environment in effect in any and all jurisdictions
in which Parent or its Subsidiaries are conducting or at any time have conducted
business, or where any Property of Parent or its Subsidiaries is located, or
where any hazardous substances generated by or disposed of by Parent or its
Subsidiaries or are located, including, but not limited to, the Oil Pollution
Act of 1990 ("OPA"), the Clean Air Act, as amended, the Comprehensive
Environmental, Response, Compensation, and Liability Act of 1980 ("CERCLA"), as
amended, the Federal Water Pollution Control Act, as amended, the Occupational
Safety and Health Act of 1970, as amended, the Resource Conservation and
Recovery Act of 1976 ("RCRA"), as amended, the Safe Drinking Water Act, as
amended, the Toxic Substances Control Act, as amended, the Superfund Amendments
and Reauthorization Act of 1986, as amended, and other environmental
conservation or protection laws. The term "OIL" shall have the meaning specified
in OPA; the terms "HAZARDOUS SUBSTANCE," "RELEASE" and "THREATENED RELEASE" have
the meanings specified in CERCLA, and the terms "SOLID WASTE" and "DISPOSAL" (or
"DISPOSED") have the meanings specified in RCRA; provided, however, in the event
either CERCLA or RCRA is amended so as to change the meaning of any term defined
thereby, such changed meaning shall apply subsequent to the effective date of
such amendment;
5
and provided, further, that, to the extent the laws of the state in which any
Property of Parent or its Subsidiaries or is located establish a meaning for
"oil," "hazardous substance," "release," "solid waste" or "disposal" which is
broader than that specified in either OPA, CERCLA or RCRA, such broader meaning
shall apply.
"EPSILON TRUST" shall mean Epsilon Trust, a trust formed under
the laws of the Island of Jersey, Channel Islands.
"EQUITY" shall mean shares of capital stock or a partnership,
profits, capital or member interest, or options, warrants or any other right to
subscribe for or otherwise acquire the capital stock or a partnership, profits,
capital or member interest, of Parent, the Borrower, or their Subsidiaries.
"EQUITY CONTRIBUTION" shall mean any contribution to the
equity capital of any Credit Party by any Person other than Parent or its
Subsidiaries, whether or not occurring in connection with the issuance or sale
of Equity securities by any such Credit Party.
"ERISA" shall mean the Employee Retirement Income Security Act
of 1974, as amended, and any successor statute.
"ERISA AFFILIATE" shall mean each trade or business (whether
or not incorporated) which together with Parent or a Subsidiary of Parent would
be deemed to be a "single employer" within the meaning of Section 4001(b)(1) of
ERISA or Subsections 414(b), (c), (m) or (o) of the Code.
"ERISA TERMINATION EVENT" shall mean (a) a "Reportable Event"
described in Section 4043 of ERISA and the regulations issued thereunder (other
than a "Reportable Event" not subject to the provision for 30-day notice to the
PBGC under Subsections .14, .18, .19 or .20 of Part 2615 of the PBGC
regulations), (b) the withdrawal of Parent, a Subsidiary of Parent or any ERISA
Affiliate from a Plan during a plan year in which it was a "substantial
employer" as defined in Section 4001(a)(2) of ERISA, (c) the filing of a notice
of intent to terminate a Plan or the treatment of a Plan amendment as a
termination under Section 4041(c) of ERISA, (d) the institution of proceedings
to terminate a Plan by the PBGC, or (e) any other event or condition which could
reasonably be expected to constitute grounds under Section 4042 of ERISA for the
termination of, or the appointment of a trustee to administer, any Plan.
"EURODOLLAR LOAN" shall mean a Revolving Credit Loan bearing
interest at the rate provided in Section 2.5(b).
"EURODOLLAR RATE" shall mean, with respect to any Borrowing of
Eurodollar Loans for any Interest Period, the product of (a)(1) the rate per
annum (rounded upward, if necessary, to the next higher 1/16 of 1%) appearing on
Telerate Page 3750 (or any successor page) as the London interbank offered rate
for deposits in Dollars at approximately 10:00 a.m. (London time) two Business
Days before the first day of such Interest Period in an amount approximately
equal to the principal amount of the Eurodollar Loan to which such Interest
Period is to apply and for a period of time comparable to such Interest Period,
or (2) if the rate in clause (1) of this definition is not available for any
reason, the rate per annum determined by the Administrative Agent (rounded
upward, if necessary, to the next higher 1/16 of 1%) at which
6
deposits in Dollars are offered to the Administrative Agent by first class banks
in the London interbank market at approximately 10:00 a.m. (London time) two
Business Days before the first day of such Interest Period in an amount
approximately equal to the principal amount of the Eurodollar Loan to which such
Interest Period is to apply and for a period of time comparable to such Interest
Period, times (b) Statutory Reserves.
"EVENT OF DEFAULT" shall have the meaning provided in Article
8.
"EXCLUDED TAXES" means, with respect to the Administrative
Agent, any Lender, or any other recipient of any payment to be made by or on
account of any obligation of the Borrower hereunder, (a) income or franchise
taxes imposed on (or measured by) its net income by the United States of
America, or by the jurisdiction under the laws of which such recipient is
organized or in which its principal office is located or, in the case of any
Lender, in which its applicable Lending Office is located, (b) any branch
profits taxes imposed by the United States of America or any similar tax imposed
by any other jurisdiction in which the Borrower is located, and (c) in the case
of a Foreign Lender any withholding tax that is imposed on amounts payable to
such Foreign Lender at the time such Foreign Lender becomes a party to this
Agreement (or designates a new lending office) or is attributable to such
Foreign Lender's failure to comply with Section 2.18(f), except to the extent
that such Foreign Lender (or its assignor, if any) was entitled, at the time of
designation of a new Lending Office (or assignment), to receive additional
amounts from the Borrower with respect to such withholding tax pursuant to
Section 2.18(a).
"FACILITY GUARANTY" shall mean a Guaranty executed by Parent,
substantially in the form of Exhibit C-1, as amended, modified, renewed,
supplemented or restated from time to time, pursuant to which Parent guarantees
payment and performance in full of the Lender Indebtedness.
"FEDERAL FUNDS EFFECTIVE RATE" shall mean, for any day, the
per annum rate equal to the weighted average of the rates on overnight Federal
funds transactions with members of the Federal Reserve System arranged by
Federal funds brokers, as published for such day (or, if such day is not a
Business Day, for the next preceding Business Day) by the Federal Reserve Bank
of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Administrative Agent from three Federal funds brokers of
recognized standing selected by it.
"FINANCIAL STATEMENTS" shall mean, collectively, (i) the
audited consolidated financial statements of Parent for the twelve month period
ended December 31, 2000, and (ii) the unaudited consolidated financial
statements of Parent for the Fiscal Quarter ended September 30, 2001.
"FINANCING DOCUMENTS" shall mean this Agreement, the Revolving
Credit Notes, the Term Notes, the Security Instruments, the Borrowing Requests,
and the other documents, instruments or agreements described in Section 3.1 and
Section 3.2, together with any other document, instrument or agreement now or
hereafter entered into in connection with the Loans, the Lender Indebtedness or
the Collateral, as such documents, instruments or agreements may be amended,
modified or supplemented from time to time.
7
"FIRST BANK" shall mean First Bank & Trust, in its individual
capacity and not as Administrative Agent.
"FISCAL QUARTER" shall mean the three (3) month periods ending
on the last day of each March, June, September and December of each Fiscal Year.
"FISCAL YEAR" shall mean a twelve (12) month period ending on
December 31st of each year.
"FIXED RATE" shall mean 7.00% per annum.
"FOREIGN LENDER" means any Lender that is organized under the
laws of a jurisdiction other than that in which the Borrower is located. For
purposes of this definition, the United States of America, each State thereof
and the District of Columbia shall be deemed to constitute a single
jurisdiction.
"FUNDED INDEBTEDNESS" shall mean, as to any Person, without
duplication, all Indebtedness for borrowed money, all obligations evidenced by
bonds, debentures, notes, or other similar instruments, all Capital Lease
Obligations, and all guaranties of Funded Indebtedness of other Persons.
"GAAP" shall mean generally accepted accounting principles as
applied in accordance with Section 1.2.
"GOVERNMENTAL AUTHORITY" shall mean any (domestic or foreign)
federal, state, province, county, city, municipal or other political subdivision
or government, department, commission, board, bureau, court, agency or any other
instrumentality of any of them, which exercises jurisdiction over Parent or its
Subsidiaries, or any Property (including, but not limited to, the use and/or
sale thereof) of Parent or its Subsidiaries, or any Plan.
"GOVERNMENTAL REQUIREMENT" shall mean any law, statute, code,
ordinance, order, rule, regulation, judgment, decree, injunction, franchise,
permit, certificate, license, authorization or other direction or requirement
(including but not limited to any of the foregoing which relate to Environmental
Laws, energy regulations and occupational, safety and health standards or
controls) of any Governmental Authority.
"HALLWOOD REALTY" shall mean Hallwood Realty, LLC, a Delaware
limited liability company.
"HCRE" shall mean Hallwood Commercial Real Estate, LLC, a
Delaware limited liability company.
"HIGHEST LAWFUL RATE" shall mean, with respect to each Lender,
the maximum nonusurious interest rate, if any, that at any time or from time to
time may be contracted for, taken, reserved, charged or received on the Notes or
on other Lender Indebtedness, as the case may be, owed to it under the law of
any jurisdiction whose laws may be mandatorily applicable to such Lender
notwithstanding other provisions of this Agreement, or law of the United States
of America applicable to such Lender and the Transactions, which would permit
such Lender to
8
contract for, charge, take, reserve or receive a greater amount of interest than
under such jurisdiction's law.
"HRY" shall mean Hallwood Realty Partners, L.P., a Delaware
limited partnership.
"INDEBTEDNESS" of any Person shall mean:
(A) all obligations of such Person for borrowed
money and obligations evidenced by bonds, debentures, notes or other similar
instruments;
(B) all obligations of such Person (whether
contingent or otherwise) in respect of bankers' acceptances, letters of credit,
surety or other bonds and similar instruments;
(C) all obligations of such Person to pay the
deferred purchase price of Property or services (other than for borrowed
money);
(D) all Capital Lease Obligations in respect of which
such Person is liable, contingently or otherwise, as obligor, guarantor or
otherwise, or in respect of which obligations such Person otherwise assures a
creditor against loss;
(E) all guaranties (direct or indirect), and other
contingent obligations of such Person in respect of, or obligations to purchase
or otherwise acquire or to assure payment of, Indebtedness of other Persons;
(F) Indebtedness of others secured by any Lien
upon Property owned by such Person, whether or not assumed;
(G) all obligations or undertakings of such
Person to maintain or cause to be maintained the financial position or
financial covenants of other Persons; and
(H) all obligations to deliver goods or services in
consideration of advance payments, excluding such obligations incurred in the
ordinary course of business as conducted by any Credit Party as of the Closing
Date.
"INDEMNIFIED TAXES" shall mean Taxes other than Excluded Taxes.
"INTEREST EXPENSE' shall mean, as to Parent and its
Subsidiaries on a consolidated basis and for any period, without duplication,
total interest expenses, whether paid or accrued as liabilities (including the
interest component of Capital Lease Obligations), with respect to all
outstanding Indebtedness, including, without limitation, all commissions,
discounts and other fees and charges owed with respect to any financing.
"INTEREST PERIOD" shall mean, with respect to each Borrowing
of Eurodollar Loans, an interest period complying with the terms and provisions
of Section 2.6.
"LENDER" shall have the meaning set forth in the opening
paragraph hereof.
9
"LENDER INDEBTEDNESS" shall mean any and all amounts owing or
to be owing by the Borrower to the Administrative Agent or the Lenders with
respect to or in connection with the Loans, the Notes, this Agreement, or any
other Financing Document.
"LENDING OFFICE" shall mean, for each Lender, the office
specified beneath such Lender's name on the signature pages hereof, or in the
Assignment and Acceptance pursuant to which it became a Lender, with respect to
each Type of Loan, or such other office as such Lender may designate in writing
from time to time to Parent, the Borrower and the Administrative Agent with
respect to such Type of Loan.
"LIEN" shall mean any interest in Property securing an
obligation owed to, or a claim by, a Person other than the owner of the
Property, whether such interest is based on contract, constitutional, common, or
statutory law, and including but not limited to the lien or security interest
arising from a mortgage, encumbrance, pledge, security agreement, conditional
sale or trust receipt or a lease, consignment or bailment for security purposes.
The term "LIEN" shall include reservations, exceptions, encroachments,
easements, rights of way, covenants, conditions, restrictions, liens and other
statutory, constitutional, or common law rights of landlords, leases and other
title exceptions and encumbrances affecting Property. For the purposes of this
Agreement, any Credit Party shall be deemed to be the owner of any Property
which it has acquired or holds subject to a conditional sale agreement,
financing lease or other arrangement pursuant to which title to the Property has
been retained by or vested in some other Person for security purposes.
"LOAN" shall mean a Revolving Credit Loan or a Term Loan and
"LOANS" shall mean, collectively, the Revolving Credit Loans or the Term Loans
or one or more of them as provided herein.
"MARGIN STOCK" shall have the meaning provided in Regulations
U and X.
"MARKETABLE EQUITY" shall mean the Equity of HRY owned by the
Borrower and pledged to the Administrative Agent to secure the Lender
Indebtedness pursuant to the terms of the Pledge Agreement.
"MATERIAL ADVERSE EFFECT" shall mean any material and adverse
effect on (a) the business, operations, assets, liabilities, condition
(financial or otherwise), prospects, or results of operations of Parent or any
other Credit Party, individually, or Parent and any Subsidiary of Parent, taken
as a whole, (b) the ability of the Credit Parties to perform any of their
respective obligations under the Notes, this Agreement or the other Financing
Documents in accordance with their respective terms, or (c) the rights of, or
benefits available to, Lenders under the Notes, this Agreement or the other
Financing Documents.
"MONTHLY DATE" shall mean the first Business Day of each
calendar month.
"NET CASH FLOW" shall mean, as to any Person for any period,
without duplication, an amount equal to (a) EBITDA for such period, plus (b)
distributions actually received by the Borrower from HRY during such period with
respect to HRY's limited partnership units and general partnership interests,
plus (c) all cash proceeds of loans made to such Person by a shareholder of
Parent (or an Affiliate of such shareholder) if all repayments of
10
principal and interest with respect to such loans are subordinated to the prior
payment in full of all Lender Indebtedness on terms acceptable to the
Administrative Agent and the Lenders in their sole discretion.
"NET CASH PROCEEDS" shall mean the remainder of (a) the gross
proceeds received by any Person from any Equity Contribution or Debt Offering,
less (b) underwriter discounts and commissions, investment banking fees, legal,
accounting and other professional fees and expenses, and other usual and
customary transaction costs, in each case only to the extent paid or payable by
such Person in cash and related to such Equity Contribution or Debt Offering.
"NONRECOURSE INDEBTEDNESS" shall mean Indebtedness with
respect to which neither Parent nor its Subsidiaries has any liability for
repayment beyond the assets pledged.
"NOTE" shall mean a Revolving Credit Note or a Term Note and
"NOTES" shall mean, collectively, the Revolving Credit Notes or the Term Notes
or one or more of them as provided herein.
"OTHER TAXES" shall mean any and all present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies arising from any payment made hereunder or from the execution, delivery
or enforcement of, or otherwise with respect to, this Agreement.
"PARENT" shall have the meaning set forth in the initial
paragraph hereof.
"PARENT INTERCOMPANY NOTES" shall mean, collectively, (i) a
demand promissory note in form and substance acceptable to the Administrative
Agent executed by Parent as maker and payable to the order of the Borrower as
payee in the original principal amount of $3,000,000, and (ii) a demand
promissory note in form and substance acceptable to the Administrative Agent
executed by Parent as maker and payable to the order of the Borrower as payee in
the original principal amount of $4,000,000.
"PAYMENT OFFICE" shall mean the Administrative Agent's office
located at 8820 Westheimer, Houston, Texas 77063, Attention: Alan Cott (or such
other office or individual as the Administrative Agent may hereafter designate
in writing to the other parties hereto).
"PBGC" shall mean the Pension Benefit Guaranty Corporation, or
any successor thereto.
"PERSON" shall mean any individual, partnership, firm,
corporation, limited liability company (including, but not limited to Parent and
the Borrower), association, joint venture, trust or other entity, or any
government or political subdivision or agency, department or instrumentality
thereof; provided, however, for the purpose of the definition of "Change of
Control," "Person" shall mean a "person" or group of persons within the meaning
of Sections 13(d) and 14(d) of the Securities Exchange Act of 1934, as amended.
"PLAN" shall mean any employee pension benefit plan, as
defined in Section 3(2) of ERISA (including, but not limited to, an employee
pension benefit plan, such as a foreign plan, which is not subject to the
provisions of ERISA), which (a) is currently or hereafter
11
sponsored, maintained or contributed to by Parent, a Subsidiary of Parent or an
ERISA Affiliate, or (b) was at any time during the six (6) preceding Fiscal
Years sponsored, maintained or contributed to by Parent, a Subsidiary of Parent
or an ERISA Affiliate.
"PLEDGE AGREEMENT" shall mean the Pledge Agreement executed by
the Borrower, substantially in the form attached as Exhibit C-2, as amended,
modified, renewed or supplemented from time to time, pursuant to which the
Borrower shall pledge to the Administrative Agent, for the ratable benefit of
the Lenders, the issued and outstanding Equity owned by the Borrower of HRY
described therein to secure the Lender Indebtedness.
"PRIME RATE" shall mean the rate which the Administrative
Agent announces from time to time as its prime rate, effective as of the date
announced as the effective date of any change in such prime rate. Without notice
to the Borrower or any other Person, the Prime Rate shall change automatically
from time to time as and in the amount by which such prime rate shall fluctuate.
The Prime Rate is a reference rate and does not necessarily represent the lowest
or best rate actually charged to any customer. The Administrative Agent may make
commercial loans or other loans at rates of interest at, above or below the
Prime Rate.
"PROPERTY" shall mean any interest in any kind of property or
asset, whether real, personal or mixed, or tangible or intangible.
"QUARTERLY DATES" shall mean the last day of each March,
June, September and December in each year.
"REGISTER" shall have the meaning assigned in Section 10.7(c).
"REGULATION D", "REGULATIONS U AND X" shall mean,
respectively, Regulation D under the Securities Act of 1933, as amended or
modified from time to time, and Regulation U and Regulation X of the Board of
Governors of the Federal Reserve System, as such regulations are from time to
time in effect and any successor regulations thereto.
"REQUIRED LENDERS" shall mean, at any time, the Lenders having
66 2/3% or more of the combined aggregate amount at such time of Term Loans then
outstanding and the Revolving Credit Commitments, or in the case of the
termination or expiration of the Revolving Credit Commitments, the aggregate
amount of Revolving Credit Loans then outstanding.
"RESPONSIBLE OFFICER" shall mean, with respect to any
corporation or limited liability company, the chairman of the board, the
president, any vice president, the chief executive officer, or the chief
operating officer, any authorized member, any authorized manager, or any
equivalent officer (regardless of his or her title), and, in respect of
financial or accounting matters, the chief financial officer, the vice president
of finance, the treasurer, the controller, or any equivalent officer (regardless
of his or her title). Unless otherwise specified, all references to a
Responsible Officer herein shall mean a Responsible Officer of Parent and the
Borrower.
"RESTRICTED PAYMENT" shall mean, with respect to any Person,
including Parent and the Borrower, (a) the declaration or payment of dividends
on any class of Equity of
12
such Person, (b) any other distribution of assets or property on shares of any
class of Equity of such Person, or (c) the redemption, retirement or purchase of
any shares of Equity of such Person.
"RESTRICTED PAYMENT LIMIT" shall mean, as of any date (the
"MEASUREMENT DATE") on and after the Closing Date, the sum of (a) $1,000,000,
plus (b) an amount equal to fifty percent (50%) of Parent's consolidated net
income determined in accordance with GAAP for the period commencing on January
1, 2002 and ending on the last day of the Fiscal Quarter most recently ended as
of the measurement date for which Parent's Current Information has been
delivered to the Lenders, plus (c) an amount equal to the aggregate Net Cash
Proceeds actually received by Parent from any Equity Contribution consummated
from and after the Closing Date until the measurement date.
"REVOLVING CREDIT COMMITMENT" shall have the meaning assigned
such term in Section 2.1(c).
"REVOLVING CREDIT EXPOSURE" shall mean, at any time and as to
each Lender, the aggregate principal amount of the Revolving Credit Loans made
by such Lender outstanding as of such date.
"REVOLVING CREDIT LOAN" shall have the meaning provided in
Section 2.1(a).
"REVOLVING CREDIT MATURITY DATE" shall mean April 1, 2005.
"REVOLVING CREDIT NOTE" shall mean a promissory note of the
Borrower described in Section 2.4(a) payable to any Lender and being
substantially in the form of Exhibit A, evidencing the aggregate Indebtedness of
the Borrower to such Lender resulting from Revolving Credit Loans made by such
Lender.
"REVOLVING CREDIT PERCENTAGE" shall mean, as to any Lender,
the percentage of the aggregate Revolving Credit Commitments constituted by its
Revolving Credit Commitment (or, if the Revolving Credit Commitments have
terminated or expired, the percentage which such Lender's Revolving Credit
Exposure at such time constitutes of the Aggregate Revolving Credit Exposure at
such time).
"ROLLING PERIOD" shall mean any period of four consecutive
Fiscal Quarters.
"SECURITY INSTRUMENTS" shall mean the Pledge Agreement, the
Facility Guaranty, the Collateral Assignment of Intercompany Notes and all other
agreements or instruments now or hereafter executed and delivered by any Credit
Party or any other Person as security for the payment or performance of the
Lender Indebtedness, as any of the foregoing may be amended, modified or
supplemented.
"SENIOR LEVERAGE RATIO" shall mean, as to Parent and its
Subsidiaries on a consolidated basis, determined for the Fiscal Quarter ending
on the most recent Quarterly Date as of the date of determination, the ratio of
(a) total Indebtedness minus the sum of (1) the amount of net deferred revenue
(including scheduled non-compete payments under that certain Non-Competition
Agreement dated March 29, 2001 among Pure Resources, Inc., Hallwood Energy
Corporation and Parent) as more fully described on Parent's most recent
financial
13
statements delivered to the Lender pursuant to Section 6.9, plus (2)
Indebtedness evidenced by the Subordinated Debentures, plus (3) Indebtedness
evidenced by convertible loans from a shareholder of Parent to (b) total
stockholder's equity. The Senior Leverage Ratio shall be calculated
substantially as set forth on Schedule 1.1(B).
"SERIES B PREFERRED STOCK" shall mean Parent's Series B
Preferred Stock.
"SHAREHOLDER AGREEMENT" shall mean that certain Agreement
dated as of May 5, 1999 by and among Parent, Epsilon Trust and other Persons a
party thereto.
"SOLVENT" shall mean with respect to any Person on a
particular date, the condition that, on such date, (a) the fair value of the
property of such Person is greater than the total amount of liabilities,
including, without limitation, contingent liabilities, of such Person, (b) the
present fair salable value of the assets of such Person is not less than the
amount that will be required to pay the probable liabilities of such Person on
its debts as they become absolute and matured, (c) such Person does not intend
to, and does not believe that it will, incur debts or liabilities beyond such
Person's ability to pay as such debts and liabilities mature, and (d) such
Person is not engaged in business or a transaction, and is not about to engage
in business or a transaction, for which such Person's property would constitute
an unreasonably small amount of capital.
"STATUTORY RESERVES" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator of which
is the number one minus the aggregate of the maximum applicable reserve
percentages, including any marginal, special, emergency or supplemental reserves
(expressed as a decimal) established by the Board of Governors of the Federal
Reserve System and any other banking authority to which the Lenders are subject
for the Eurocurrency Liabilities (as defined in Regulation D) or any other
category of deposits or liabilities by reference to which the Eurodollar Rate is
determined. Such reserve percentages shall include those imposed pursuant to
Regulation D. Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and to be subject to such reserve requirements without benefit of or
credit for proration, exemptions or offsets that may be available from time to
time to any Lender under such Regulation D. Statutory Reserves shall be adjusted
automatically on and as of the effective date of any change in any reserve
percentage.
"SUBORDINATED DEBENTURES" shall mean Parent's 10%
Collateralized Subordinated Debentures due July 31, 2005.
"SUBORDINATED DEBENTURES INDENTURE" shall mean that certain
Indenture dated as of August 31, 1998 by and between the Subordinated Debentures
Trustee and Parent with respect to the Subordinated Debentures, as such
agreement may be amended or modified and in effect from time to time.
"SUBORDINATED DEBENTURES TRUSTEE" shall mean Bank One,
N.A., as trustee under the Subordinated Debentures Indenture, or any duly
appointed and acting successor thereof.
"SUBSIDIARY" of any Person shall mean a corporation, limited
liability company, partnership or other entity of which a majority of the
outstanding shares of stock or other equity
14
or ownership interests of each class having ordinary voting power is owned by
such Person, by one or more Subsidiaries of such Person, or by such Person and
one or more of its Subsidiaries.
"TAXES" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM LOAN" shall have the meaning set forth in Section
2.1(a).
"TERM LOAN COMMITMENT" shall have the meaning set forth in
Section 2.1(d).
"TERM LOAN MATURITY DATE" shall mean April 1, 2005.
"TERM LOAN PERCENTAGE" shall mean as to any Lender, at any
time after the Closing Date, the percentage which such Lender's Term Loans then
outstanding constitutes of all Term Loans then outstanding.
"TERM NOTE" shall mean a promissory note of the Borrower
described in Section 2.4(b) payable to any Lender and being substantially in the
form of Exhibit B, evidencing the aggregate Indebtedness of the Borrower to such
Lender resulting from the Term Loans made by such Lender.
"TRANSACTIONS" shall mean the transactions provided for in and
contemplated by this Agreement and the other Financing Documents.
"TYPE" of Revolving Credit Loan shall mean a Base Rate Loan or
Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as from time to
time in effect in the State of Texas or, where applicable as to specific
Collateral, any other relevant state.
Section 1.2 ACCOUNTING TERMS AND DETERMINATIONS. Unless otherwise
defined or specified herein, all accounting terms shall be construed herein, all
accounting determinations hereunder shall be made, and all financial statements
required to be delivered hereunder shall be prepared in accordance with GAAP
applied on a basis consistent with the Financial Statements.
Section 1.3 OTHER DEFINITIONAL TERMS. The words "HEREOF,"
"HEREIN" and "HEREUNDER" and words of similar import when used in this Agreement
shall refer to this Agreement as a whole and not to any particular provision of
this Agreement, and article, section, schedule, exhibit and like references are
to this Agreement unless otherwise specified.
ARTICLE 2
AMOUNT AND TERMS OF LOANS
Section 2.1 LOANS AND COMMITMENTS.
(a) LOANS. Subject to the terms and conditions and relying on
the representations and warranties contained herein, (1) each Lender severally
agrees to make, on the Closing Date, a term loan pursuant to its Term Loan
Commitment (each a "TERM LOAN") to the
15
Borrower; and (2) on any Business day from and after the Closing Date, but prior
to the Revolving Credit Maturity Date, each Lender severally agrees to make
revolving credit loans (each a "REVOLVING CREDIT LOAN") to the Borrower. Any
Term Loan that is repaid or prepaid may not be reborrowed.
(b) TYPES OF REVOLVING CREDIT LOANS. The Revolving Credit
Loans made pursuant hereto by each Lender shall, at the option of the Borrower,
be either Base Rate Loans or Eurodollar Loans and may be continued or converted
pursuant to Section 2.9; provided, that, except as otherwise specifically
provided herein, all Revolving Credit Loans made pursuant to the same Borrowing
shall be of the same Type.
(c) REVOLVING CREDIT COMMITMENTS. Each Lender's Revolving
Credit Exposure shall not exceed at any one time the amount set forth opposite
such Lender's name on Annex I under the caption "Revolving Credit Commitment"
(as the same may be modified pursuant to Section 10.7 its "REVOLVING CREDIT
COMMITMENT," and collectively for all Lenders, the "REVOLVING CREDIT
COMMITMENTS"); provided, however, that the aggregate principal amount of all
Revolving Credit Loans at any one time outstanding shall not exceed the
aggregate Revolving Credit Commitments in effect at such time. There may be more
than one Borrowing with respect to Revolving Credit Loans on any day. Within the
foregoing limits and subject to the conditions set out in Article 3, the
Borrower may obtain Borrowings of Revolving Credit Loans, repay or prepay such
Revolving Credit Loans, and reborrow such Revolving Credit Loans.
(d) TERM LOAN COMMITMENTS. The Term Loans made pursuant hereto
by each Lender shall not exceed in aggregate principal amount outstanding the
amount set forth opposite such Lender's name on Annex I under the caption "Term
Loan Commitment" (its "TERM LOAN COMMITMENT," and collectively for all Lenders,
the "TERM LOAN COMMITMENTS"). Any portion of each such Lender's Term Loan
Commitment not utilized on the Closing Date shall be permanently canceled. Any
Term Loans that are repaid or prepaid may not be reborrowed.
(e) AMOUNTS OF BORROWINGS, ETC. The aggregate principal amount
of each Borrowing (1) of Eurodollar Loans shall be not less than $500,000 and
shall be in an integral multiple of $100,000, and (2) of Base Rate Loans
hereunder shall be not less than $250,000 and shall be in an integral multiple
$100,000, except that any Borrowing of Revolving Credit Loans that are Base Rate
Loans may be in the aggregate amount of the unused aggregate Revolving Credit
Commitments in effect at such time. Borrowings of more than one Type may be
outstanding at the same time; provided, however, that the Borrower shall not be
entitled to request any Borrowing that, if made, would result in an aggregate of
more than five separate Borrowings of Eurodollar Loans being outstanding at any
one time. For purposes of the foregoing, Borrowings having different Interest
Periods, regardless of whether they commence on the same date, shall be
considered separate Borrowings.
Section 2.2 BORROWING REQUESTS.
(a) BORROWING REQUESTS. Whenever the Borrower desires to make
a Borrowing hereunder, it shall give Advance Notice in the form of a Borrowing
Request,
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specifying, subject to the provisions hereof, (1) if, but only if, such
Borrowing Request is regarding Loans to be made on the Closing Date, whether
such Borrowing will be Revolving Credit Loans or Term Loans, (2) the aggregate
principal amount of the Revolving Credit Loans to be made pursuant to such
Borrowing, (3) the date of Borrowing (which shall be a Business Day), (4)
whether the Revolving Credit Loans being made pursuant to such Borrowing are to
be Base Rate Loans or Eurodollar Loans, and (5) in the case of Eurodollar Loans,
the Interest Period to be applicable thereto.
(b) NOTICE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall promptly give each Lender telecopy or telephonic notice (and, in the case
of telephonic notices, confirmed by telecopy or otherwise in writing) of the
proposed Borrowing, of such Lender's Applicable Percentage thereof and of the
other matters covered by the Advance Notice. The Borrower hereby waives the
right to dispute the Administrative Agent's record of the terms of such
telephonic notice, absent manifest error.
Section 2.3 DISBURSEMENT OF FUNDS.
(a) AVAILABILITY. No later than 11:00 a.m. (Houston, Texas
time) on the date of each Borrowing, each Lender will make available to the
Administrative Agent such Lender's Applicable Percentage of the aggregate amount
(if any) by which the principal amount of the Borrowing requested to be made on
such date by such Lender exceeds the principal amount of Loans (if any) of such
Lender maturing on such date, in Dollars and in immediately available funds at
the Payment Office. The Administrative Agent will make available to the Borrower
at the Payment Office the aggregate of the amounts (if any) so made available by
the Lenders by either (1) depositing such amounts, in immediately available
funds, to an account of the Borrower at the Administrative Agent designated by
the Borrower for such purpose, or (2) disbursing such amounts in accordance with
such other lawful instructions of the Borrower as the Borrower shall specify in
writing to the Administrative Agent. To the extent that Revolving Credit Loans
mature or are otherwise due and owing on the date of a requested Borrowing of
Revolving Credit Loans, the Lenders shall apply the proceeds of the Revolving
Credit Loans then being made, to the extent thereof, to the repayment of such
maturing Revolving Credit Loans, such Revolving Credit Loans and repayments
intended to be a contemporaneous exchange.
(b) FUNDS TO THE ADMINISTRATIVE AGENT. Unless the
Administrative Agent shall have been notified by any Lender prior to the date of
a Borrowing that such Lender does not intend to make available to the
Administrative Agent such Lender's Applicable Percentage of the Borrowing to be
made on such date, the Administrative Agent may assume that such Lender has made
such amount available to the Administrative Agent on such date, and the
Administrative Agent may make available to the Borrower a corresponding amount.
If such corresponding amount is not in fact made available to the Administrative
Agent by such Lender on the date of a Borrowing, the Administrative Agent shall
be entitled to recover such corresponding amount on demand from such Lender
together with interest at the Federal Funds Effective Rate. If such Lender does
not pay such corresponding amount forthwith upon the Administrative Agent's
demand therefore, the Administrative Agent shall promptly notify the Borrower,
and the Borrower shall immediately pay such corresponding amount to the
Administrative Agent together with interest at the rate specified for the
Borrowing which
17
includes such amount paid. Nothing in this Section 2.3(b) shall be deemed to
relieve any Lender from its obligation to fulfill its Commitments hereunder or
to prejudice any rights which the Borrower may have against any Lender as a
result of any default by such Lender hereunder.
(c) LENDERS' RESPONSIBILITIES. No Lender shall be responsible
for any default by any other Lender in its obligation to make Loans hereunder,
and each Lender shall be obligated to make only such Loans provided to be made
by it hereunder, regardless of the failure of any other Lender to fulfill its
Commitment hereunder.
Section 2.4 NOTES AND AMORTIZATION.
(a) REVOLVING CREDIT NOTES. The Borrower's obligation to pay
the principal of, and interest on, the Revolving Credit Loans made by each
Lender shall be further evidenced by the Borrower's issuance, execution and
delivery of a Revolving Credit Note payable to the order of each such Lender in
the amount of such Lender's Revolving Credit Commitment and shall be dated as of
the date of issuance of such Revolving Credit Note. The principal amount of each
Revolving Credit Note shall be payable on or before the Revolving Credit
Maturity Date.
(b) TERM NOTES AND AMORTIZATION. The Borrower's obligation to
pay the principal of, and interest on, the Term Loans maintained outstanding by
each Lender shall be further evidenced by the Borrower's issuance, execution and
delivery of a Term Note payable to the order of each such Lender in the amount
of such Lender's Term Loan Commitment (if issued prior to the Closing Date) or
in the principal amount of such Lender's Term Loans (if issued after the Closing
Date), and dated as of the date of issuance of such Term Note. The aggregate
principal amount of the Term Notes applicable to the aggregate Term Loans of all
Lenders shall be payable in monthly installments of principal and interest in
the amount of $92,631.29 each. Each such installment shall be applied first to
accrued but unpaid interest and then to principal. The first such monthly
installment shall be payable on May 1, 2002, and the remaining monthly
installments shall be payable on each Monthly Date thereafter, with the final
installment in the amount of the aggregate unpaid principal balance then owing,
together with all accrued and unpaid interest, being payable on or before the
Term Loan Maturity Date.
Section 2.5 INTEREST. In all cases subject to Section 10.13:
(a) BASE RATE LOANS. Subject to Section 2.5(d), the Borrower
agrees to pay interest in respect of the unpaid principal amount of each Base
Rate Loan from the date thereof until payment in full thereof at a rate per
annum which shall be, for any day, equal to the sum of the Applicable Margin
plus the Base Rate in effect on such day, but in no event to exceed the Highest
Lawful Rate. The term "BASE RATE" shall mean, for any day, the Prime Rate in
effect on such day, but in no event to exceed the Highest Lawful Rate. For
purposes of this Agreement, any change in the Base Rate due to a change in the
Prime Rate shall be effective as of the opening of business on the effective
date of such change in the Prime Rate.
(b) EURODOLLAR LOANS. Subject to Section 2.5(d), the Borrower
agrees to pay interest in respect of the unpaid principal amount of each
Eurodollar Loan from the date thereof until payment in full thereof at a rate
per annum which shall be the sum of the relevant Applicable Margin plus the
Eurodollar Rate, but in no event to exceed the Highest Lawful Rate.
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(c) TERM LOANS. Subject to Section 2.5(d), the Borrower agrees
to pay interest in respect of the unpaid principal amount of each Term Loan from
the date thereof until payment in full thereof at a rate per annum which shall
be, for any day, equal to the Fixed Rate, but in no event to exceed the Highest
Lawful Rate.
(d) DEFAULT INTEREST. If the Borrower shall default in the
payment of the principal of or interest on any Loan or any other amount becoming
due hereunder or under any Financing Document, by acceleration or otherwise, the
Borrower shall on demand from time to time pay interest, to the extent permitted
by law, on such defaulted amount to but excluding the date of actual payment
(after as well as before judgment) at a rate per annum equal to (1) in the case
of any Eurodollar Loan, the rate that would be applicable under Section 2.5(b)
to such Eurodollar Loan plus 4% per annum, (2) in the case of any Term Loan,
eleven percent (11%) per annum, and (3) in the case of any other amount, the
rate that would be applicable under Section 2.5(a) to a Base Rate Loan plus 4%
per annum, but in no event to exceed the Highest Lawful Rate.
(e) INTEREST PAYMENT DATES. Interest on each Loan shall accrue
from and including the date of such Loan to but excluding the date of payment in
full thereof. Interest on each Eurodollar Loan shall be payable on each Monthly
Date and the last day of each Interest Period applicable thereto, and on any
prepayment (on the amount prepaid), at maturity (whether by acceleration or
otherwise) and, after maturity, on demand. Interest on each Term Loan and Base
Rate Loan shall be payable on each Monthly Date, commencing on the first of such
days to occur after such Loan is made, at maturity (whether by acceleration or
otherwise) and, after maturity, on demand.
(f) NOTICE BY THE ADMINISTRATIVE AGENT. The Administrative
Agent, upon determining the Eurodollar Rate for any Interest Period, shall
promptly notify by telecopy or telephone (in the case of telephonic notices,
confirmed by telecopy or otherwise in writing) or in writing the Borrower and
the Lenders.
Section 2.6 INTEREST PERIODS. In connection with each Borrowing
of Eurodollar Loans, the Borrower shall elect an Interest Period to be
applicable to such Borrowing, which Interest Period shall begin on and include,
as the case may be, the date selected by the Borrower pursuant to Section
2.2(a), the conversion date or the date of expiration of the then current
Interest Period applicable thereto, and end on but exclude the date which is
either one, two or three months thereafter, as selected by the Borrower;
provided that:
(a) BUSINESS DAYS. If any Interest Period would otherwise
expire on a day which is not a Business Day, such Interest Period shall expire
on the next succeeding Business Day; provided, further, that if any Interest
Period (other than in respect of a Borrowing of Eurodollar Loans the Interest
Period of which is expiring pursuant to Section 2.13(b) hereof) would otherwise
expire on a day which is not a Business Day but is a day of the month after
which no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(b) MONTH END. Any Interest Period which begins on
the last Business Day of a calendar month (or on a day for which there is no
numerically corresponding day in the
19
calendar month at the end of such Interest Period) shall, subject to Section
2.6(c) below, end on the last Business Day of a calendar month;
(c) PAYMENT LIMITATIONS. No Interest Period shall extend
beyond any date that any principal payment or prepayment is scheduled to be due
unless the aggregate principal amount of Borrowings which are Borrowings of Base
Rate Loans or which have Interest Periods which will expire on or before such
date, less the aggregate amount of any other principal payments or prepayments
due during such Interest Period, is equal to or in excess of the amount of such
principal payment or prepayment; and
(d) MATURITY DATES. No Interest Period shall extend
beyond the Revolving Credit Maturity Date.
Section 2.7 REPAYMENT OF LOANS; ACCOUNTS AND REGISTER.
(a) LOANS. The Borrower hereby unconditionally promises to pay
to the Administrative Agent for the account of each Lender (1) the then unpaid
principal amount of each Revolving Credit Loan of such Lender on the Revolving
Credit Maturity Date (or such earlier date on which the Revolving Credit Loans
become due and payable pursuant to Article 8, and (2) the amounts specified in
Section 2.4(b), on the dates specified in Section 2.4(b) (or such earlier date
on which the Term Loans become due and payable pursuant to Article 8). The
Borrower hereby further agrees to pay interest on the unpaid principal amount of
the Loans from time to time outstanding from the date hereof until payment in
full thereof at the rates per annum, and on the dates, set forth in Section 2.5.
(b) LENDER ACCOUNTS. Each Lender shall maintain in accordance
with its usual practice an account or accounts evidencing Indebtedness of the
Borrower to such Lender resulting from each Loan of such Lender from time to
time, including, without limitation, the amounts of principal and interest
payable and paid to such Lender from time to time under this Agreement.
(c) REGISTER. The Administrative Agent shall maintain the
Register pursuant to Section 10.7(c), and a subaccount therein for each Lender,
in which shall be recorded (1) the amount of each Loan made hereunder, the Type
thereof and each Interest Period, if any, applicable thereto, (2) the amount of
any principal or interest due and payable or to become due and payable from the
Borrower to each Lender hereunder, and (3) both the amount of any sum received
by the Administrative Agent hereunder from the Borrower and each Lender's
Applicable Percentage thereof. The entries made in the Register and the accounts
of each Lender maintained pursuant to this Section 2.7(c) shall, to the extent
permitted by applicable law, be prima facie evidence of the existence and
amounts of the obligations of the Borrower therein recorded; provided, however,
that the failure of any Lender or the Administrative Agent to maintain the
Register or any such account, or any error therein, shall not in any manner
affect the obligation of the Borrower to repay (with applicable interest) the
Loans made to the Borrower by such Lender in accordance with the terms of this
Agreement.
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Section 2.8 PREPAYMENTS.
(a) MANDATORY PREPAYMENTS.
(1) If at any time the Aggregate Revolving Credit
Exposure is in excess of the aggregate Revolving Credit Commitments in
effect at such time, the Borrower shall immediately pay to the
Administrative Agent, for the account of the Lenders, the amount of
such excess to be applied as a prepayment of the Revolving Credit Loans
outstanding.
(2) At any time Parent becomes obligated to prepay
all or part of the Subordinated Debentures, the Borrower shall pay
prior to any prepayment of the Subordinated Debentures, all Lender
Indebtedness owed by the Borrower in full.
(3) If on any date any Credit Party shall receive Net
Cash Proceeds from any Debt Offering, such Net Cash Proceeds shall be
applied on such date toward the prepayment of the Loans as set forth in
Section 2.8(d).
(4) At any time a Benchmark Collateral Value
Deficiency shall occur or be in existence, a mandatory prepayment of
the Loans shall be due in accordance with the terms of Section 4.3.
(5) Any or all of the Term Loan Commitments remaining
unused after the Closing Date shall automatically terminate at 5:00
p.m. (Houston, Texas time) on such date.
(b) VOLUNTARY PREPAYMENTS. The Borrower may, at its option, at
any time and from time to time, prepay the Loans, in whole or in part, upon
giving five Business Days' prior written notice to the Administrative Agent.
Such notice shall specify the date and amount of prepayment and whether the
prepayment is (1) of Term Loans or Revolving Credit Loans, or a combination
thereof, and (2) of Eurodollar Loans, Base Rate Loans or a combination thereof,
and, in each case if a combination thereof, the principal amount allocable to
each. Upon receipt of such notice, the Administrative Agent shall promptly
notify each Lender of the contents thereof and of such Lender's Applicable
Percentage of such prepayment. If any such notice is given, the amount specified
in such notice shall be due and payable on the date specified therein, together
with (if a Eurodollar Loan is prepaid other than at the end of the Interest
Period applicable thereto) any amounts payable pursuant to Section 2.16 and, in
the case of prepayments of the Term Loans only, accrued interest to such date on
the amount prepaid. Prepayments of (A) the Term Loans pursuant to this Section
2.8(b) shall be applied in the inverse order of maturity of the remaining
scheduled installment payments of the Term Loans required pursuant to Section
2.4(b); and (B) the Revolving Credit Loans pursuant to this Section 2.8(b) shall
be applied to payment of the Revolving Credit Loans then outstanding. Each
prepayment of Loans shall be in the minimum principal amount of $500,000 and in
integral multiples of $100,000 or in the aggregate principal balance outstanding
on the Term Loans or on the Revolving Credit Loans, as applicable.
(c) PREPAYMENT PENALTY. In the event that the Term Loans are
prepaid in whole or in part on or prior to the Term Loan Maturity Date,
including, without limitation,
21
pursuant to a mandatory prepayment required by Article 8 hereof, but excluding,
however, pursuant to a mandatory prepayment required by Section 2.8 or Section
7.4 hereof, the Borrower shall also pay to the Lenders at the time of such
prepayment, a prepayment penalty equal to a percentage of the amount prepaid in
accordance with the following schedule:
Penalty as Percentage of Amount
Time of Prepayment Prepaid
------------------------------------------- -----------------------------------
On or prior to April 1, 2003 3%
------------------------------------------- -----------------------------------
On or prior to April 1, 2004 2%
------------------------------------------- -----------------------------------
Prior to April 1, 2005 1%
------------------------------------------- -----------------------------------
Furthermore, in the event any Credit Party shall (1) receive Net Cash Proceeds
from any Equity Contribution, and (2) apply, prior to the Term Loan Maturity
Date, all or a portion of such Net Cash Proceeds as a prepayment of more than
thirty-five percent (35%) of the then outstanding principal balance of the Term
Loans (any portion prepaid in excess of thirty-five percent (35%) of the then
outstanding principal balance of the Term Loans being referred to herein as the
"EXCESS PREPAID AMOUNT"), the Borrower shall also pay to the Lenders at the time
of such prepayment, a prepayment penalty equal to a percentage of the Excess
Prepaid Amount in accordance with the foregoing schedule.
(d) APPLICATION OF PREPAYMENTS. Amounts to be applied in
connection with prepayments made pursuant to Section 2.8(a)(3), Section
2.8(a)(4), Section 4.3 or Section 7.4 shall be applied, first, to the prepayment
of the Term Loans in the inverse order of maturity of scheduled installments
thereof, and second, to the prepayment of the Revolving Credit Loans to the
extent, if any, that the Aggregate Revolving Credit Exposure exceeds the amount
of the aggregate Revolving Credit Commitments in effect at such time. The
application of any prepayment pursuant to Section 2.8 shall be made first to
Base Rate Loans and second to Eurodollar Loans. Each prepayment of the Loans
under Section 2.8 (except in the case of Revolving Credit Loans that are Base
Rate Loans prepaid pursuant to Section 2.8(b) hereof) shall be accompanied by
accrued interest to the date of such prepayment on the amount prepaid.
(e) NOTICE BY ADMINISTRATIVE AGENT. Upon receipt of a notice
of prepayment pursuant to this Section 2.8, the Administrative Agent shall
promptly notify each Lender of the contents thereof and of such Lender's ratable
share of such prepayment.
Section 2.9 CONTINUATION AND CONVERSION OPTIONS.
(a) CONTINUATION. The Borrower may elect to continue all or
any part of any Borrowing of Eurodollar Loans beyond the expiration of the then
current Interest Period relating thereto by giving Advance Notice (which shall
be irrevocable) to the Administrative Agent of such election, specifying the
Eurodollar Loans or portion thereof to be continued and the Interest Period
therefore. In the absence of such a timely and proper election with regard to
Eurodollar Loans, the Borrower shall be deemed to have elected to convert such
Eurodollar Loans to Base Rate Loans pursuant to Section 2.9(d).
22
(b) AMOUNT OF CONTINUATIONS. All or part of any Eurodollar
Loans may be continued as provided herein, provided that any continuation of
such Eurodollar Loans shall not be (as to each Borrowing of such Eurodollar
Loans as continued for an applicable Interest Period) less than $500,000 and
shall be in an integral multiple of $100,000.
(c) CONTINUATION OR CONVERSION UPON DEFAULT. If no Default
shall have occurred and be continuing, each Eurodollar Loan may be continued or
converted as provided in this Section 2.9. If a Default shall have occurred and
be continuing, the Borrower shall not have the option to elect to continue any
such Eurodollar Loan pursuant to Section 2.9(a) or to convert Base Rate Loans to
Eurodollar Loans pursuant to Section 2.9(e).
(d) CONVERSION TO BASE RATE. The Borrower may elect to convert
any Eurodollar Loan on the last day of the then current Interest Period relating
thereto to a Base Rate Loan by giving Advance Notice to the Administrative Agent
of such election.
(e) CONVERSION TO EURODOLLAR RATE. The Borrower may elect to
convert any Base Rate Loan at any time or from time to time to a Eurodollar Loan
by giving Advance Notice (which shall be irrevocable) to the Administrative
Agent of such election, specifying each Interest Period therefor.
(f) AMOUNTS OF CONVERSIONS. All or any part of the outstanding
Eurodollar Loans may be converted as provided herein, provided that any
conversion of such Eurodollar Loans shall not result in a Borrowing of
Eurodollar Loans in an amount less than $500,000 and in integral multiples of
$100,000.
Section 2.10 FEES.
(a) REVOLVING CREDIT COMMITMENTS. The Borrower shall pay to
the Administrative Agent for the account of and distribution to each Lender in
accordance with its Revolving Credit Percentage a commitment fee for the period
commencing on the Closing Date, to and including the Revolving Credit Maturity
Date (or such earlier date as the Revolving Credit Commitments shall have been
terminated entirely) computed at a rate per annum equal to the Commitment Fee
Percentage on the average daily excess amount of the Revolving Credit
Commitments over the Revolving Credit Exposure. The commitment fees on the
Revolving Credit Commitments earned from and after the Closing Date shall be
payable in arrears on each Quarterly Date, commencing on the first Quarterly
Date to occur after the Closing Date.
(b) OTHER FEES. On the Closing Date, the Borrower
shall pay to First Bank an origination fee in the amount of $35,000.
Section 2.11 PAYMENTS, ETC.
(a) WITHOUT SETOFF, ETC. Except as otherwise specifically
provided herein, all payments under this Agreement shall be made to the
Administrative Agent for the account of the Lenders without defense, set-off or
counterclaim to the Administrative Agent not later than 11:00 a.m. Houston,
Texas time on the date when due and shall be made in Dollars in immediately
available funds at the Payment Office. The Administrative Agent will promptly
thereafter distribute funds in the form received relating to the payment of
principal or interest ratably to the
23
Lenders for the account of their respective Lending Offices, and funds in the
form received relating to the payment of any other amount payable to any Lender
to such Lender for the account of its applicable Lending Office.
(b) NON-BUSINESS DAYS. Whenever any payment to be made
hereunder or under any Note shall be stated to be due on a day which is not a
Business Day, the due date thereof shall be extended to the next succeeding
Business Day (except as otherwise provided in Section 2.6) and, with respect to
payments of principal, interest thereon shall be payable at the applicable rate
during such extension.
(c) COMPUTATIONS. All computations of interest shall be made
on the basis of a year of 360 days (unless such calculation would result in a
usurious rate, in which case interest shall be calculated on the basis of a year
of 365 or 366 days, as the case may be) in the case of Term Loans and Eurodollar
Loans, and 365 or 366 days (as the case may be) in the case of Base Rate Loans,
and all computations of fees shall be made on the basis of a year of 360 days
(unless such calculation would result in a usurious rate, in which case interest
shall be calculated on the basis of a year of 365 or 366 days, as the case may
be), in each case for the actual number of days (including the first day but
excluding the last day) occurring in the period for which such interest or fees
are payable.
Section 2.12 INTEREST RATE NOT ASCERTAINABLE, ETC. In the event
that the Administrative Agent shall have determined (which determination shall
be reasonably exercised and shall, absent manifest error, be final, conclusive
and binding upon all parties) that on any date for determining the Eurodollar
Rate for any Interest Period, by reason of any changes arising after the date of
this Agreement affecting the interbank Eurodollar market, or any Lender's
position in such market, adequate and fair means do not exist for ascertaining
the applicable interest rate on the basis provided for in the definition of
Eurodollar Rate, then, and in any such event, the Administrative Agent shall
forthwith give notice (by telephone confirmed in writing) to the Borrower and to
the Lenders of such determination. Until the Administrative Agent notifies the
Borrower that the circumstances giving rise to the suspension described herein
no longer exist, the obligations of the Lenders to make Eurodollar Loans shall
be immediately suspended; any Borrowing of Eurodollar Loans that is requested
(by continuation, conversion or otherwise) shall instead be made as a Borrowing
of Base Rate Loans, and any outstanding Eurodollar Loan shall be converted, on
the last day of the then current Interest Period applicable thereto, to a Base
Rate Loan.
Section 2.13 ILLEGALITY.
(a) DETERMINATIONS OF ILLEGALITY. In the event that any Lender
shall have determined (which determination shall be reasonably exercised and
shall, absent manifest error, be final, conclusive and binding upon all parties)
at any time that the making or continuance of any Eurodollar Loan has become
unlawful as a result of compliance by such Lender in good faith with any
applicable law, governmental rule, regulation, guideline or order (whether or
not having the force of law and whether or not failure to comply therewith would
be unlawful), then, in any such event, the Lender shall give prompt notice (by
telephone confirmed in writing) to the Borrower and to the Administrative Agent
of such determination (which notice the Administrative Agent shall promptly
transmit to the other Lenders).
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(b) EURODOLLAR LOANS SUSPENDED. Upon the giving of the notice
to the Borrower referred to in Section 2.13(a) above, (1) the Borrower's right
to request (by continuation, conversion or otherwise) and such Lender's
obligation to make Eurodollar Loans shall be immediately suspended, and
thereafter, any requested Borrowing of Eurodollar Loans shall, as to such Lender
only, be deemed to be a request for a Base Rate Loan, and (2) if the affected
Eurodollar Loan or Eurodollar Loans are then outstanding, the Borrower shall
immediately, or if permitted by applicable law, no later than the date permitted
thereby, upon at least one Business Day's written notice to the Administrative
Agent and the affected Lender, convert each such Eurodollar Loan into a Base
Rate Loan, provided that if more than one Lender is affected at any time, then
all affected Lenders must be treated the same pursuant to this subsection.
Section 2.14 INCREASED COSTS.
(a) EURODOLLAR REGULATIONS, ETC. If, by reason of (x) the
introduction of or any change (including, but not limited to, any change by way
of imposition or increase of reserve requirements) in or in the interpretation
of any law or regulation, or (y) the compliance with any guideline or request
issued by any central bank or other governmental authority or quasi-governmental
authority exercising control over banks or financial institutions generally
(whether or not having the force of law):
(1) any Lender (or its applicable Lending Office)
shall be subject to any tax, duty or other charge with respect to its
Eurodollar Loans or its obligation to make Eurodollar Loans, or shall
change the basis of taxation of payments to any Lender of the principal
of or interest on its Eurodollar Loans or its obligation to make
Eurodollar Loans (except for changes in the rate of tax on the overall
net income or gross receipts of such Lender or its applicable Lending
Office imposed by the jurisdiction in which such Lender's principal
executive office or applicable Lending Office is located); or
(2) any reserve (including, but not limited to, any
imposed by the Board of Governors of the Federal Reserve System, but
excluding any such reserve requirement that is reflected in the
Eurodollar Rate), special deposit or similar requirement against assets
of, deposits with or for the account of, or credit extended by, any
Lender or its applicable Lending Office shall be imposed or deemed
applicable or any other condition affecting its Eurodollar Loans or its
obligations to make Eurodollar Loans shall be imposed on any Lender or
its applicable Lending Office or the interbank Eurodollar market or the
secondary certificate of deposit market;
and as a result thereof there shall be any increase in the cost to such Lender
of agreeing to make or making, funding or maintaining Eurodollar Loans (except
to the extent already included in the determination of the applicable Eurodollar
Rate) or there shall be a reduction in the amount received or receivable by such
Lender or its applicable Lending Office, then the Borrower shall from time to
time, upon written notice from and demand by such Lender (with a copy of such
notice and demand to the Administrative Agent), pay to such Lender on demand
additional amounts determined by such Lender in a reasonable manner to be
sufficient to indemnify such Lender against such increased cost. A certificate
as to the amount of such increased cost and the
25
calculation thereof, submitted to the Borrower and the Administrative Agent by
such Lender, shall, except for manifest error, be final, conclusive and binding
for all purposes.
(b) COSTS. If any Lender shall advise the Administrative Agent
that at any time, because of the circumstances described in clauses (x) or (y)
in Section 2.14(a) or any other circumstances affecting such Lender or the
interbank Eurodollar market or such Lender's position in such market, the
Eurodollar Rate, as determined in good faith by the Administrative Agent, will
not adequately and fairly reflect the cost to such Lender of funding its
Eurodollar Loans, then, and in any such event:
(1) the Administrative Agent shall forthwith
give notice (by telephone confirmed in writing) to the Borrower and to the
Lenders of such advice; and
(2) the Borrower's right to request a Borrowing of
Eurodollar Loans from such Lender and such Lender's obligation to make
Eurodollar Loans shall be immediately suspended, any such Borrowing of
Eurodollar Loans that is requested (by continuation, conversion or otherwise)
shall, as to such Lender only, be deemed to be a request for a Base Rate Loan,
and any such outstanding Eurodollar Loan from such Lender shall be converted, on
the last day of the then current Interest Period applicable thereto, to a Base
Rate Loan.
(c) CAPITAL ADEQUACY. If, by reason of (1) the introduction of
or any change (including, but not limited to, any change by way of imposition or
increase of reserve requirements) in or in the interpretation of any law or
regulation, or (2) the compliance with any guideline or request issued by any
central bank or other governmental authority or quasi-governmental authority
exercising control over banks or financial institutions generally (whether or
not having the force of law), affects or would affect the amount of capital
required to be maintained by any Lender or any corporation controlling such
Lender, and the amount of such capital is increased by or based upon the
existence of such Lender's Loans or such Lender's Commitment, then, upon written
request therefor by such Lender (with a copy of such request to the
Administrative Agent), the Borrower shall pay to such Lender, from time to time
as specified by such Lender, additional amounts sufficient to compensate such
Lender for the increased cost of such additional capital in light of such
circumstances, to the extent that such Lender reasonably determines such
increase in capital to be allocable to the existence of such Lender's Loans or
such Lender's Commitment. A certificate as to such amounts and the calculation
thereof, submitted to the Borrower and the Administrative Agent by such Lender,
shall be conclusive and binding for all purposes, absent manifest error.
Section 2.15 CHANGE OF LENDING OFFICE. Each Lender agrees that it will use
reasonable efforts to designate an alternate Lending Office with respect to any
of its Eurodollar Loans affected by the matters or circumstances described in
Section 2.12, Section 2.13 or Section 2.14 to reduce the liability of the
Borrower or avoid the results provided thereunder, so long as such designation
is not disadvantageous to such Lender as determined by such Lender in its sole
discretion, provided that such Lender shall have no obligation to so designate
an alternate Lending Office located in the United States.
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Section 2.16 FUNDING LOSSES. The Borrower shall compensate each Lender,
upon its written request (which request shall set forth the basis for requesting
such amounts and shall, absent manifest error, be final, conclusive and binding
upon all of the parties hereto), for all losses, expenses and liabilities
(including, but not limited to, any interest paid by such Lender to lenders of
funds borrowed by it to make or carry its Eurodollar Loans to the extent not
recovered by the Lender in connection with the re-employment of such funds),
which the Lender may sustain: (a) if for any reason (other than a default by
such Lender) a Borrowing of Eurodollar Loans does not occur on the date
specified therefor in a Borrowing Request (whether or not withdrawn), including,
but not limited to, a failure by the Borrower to fulfill on the date of any
Borrowing of Eurodollar Loans the conditions set forth in Article 3, or to
convert or continue any Eurodollar Loan hereunder after irrevocable notice of
such conversion or continuation has been given pursuant to Section 2.9; (b) if
any payment, prepayment or conversion of any of its Eurodollar Loans required or
permitted by any other provision of this Agreement or otherwise is made or
deemed made on a date which is not the last day of the Interest Period
applicable thereto; or (c) if, for any reason, the Borrower defaults in its
obligation to repay its Eurodollar Loans or interest accrued thereon as and when
due and payable (at the due date thereof, whether at scheduled maturity, by
acceleration, irrevocable notice of prepayment or otherwise).
Section 2.17 SHARING OF PAYMENTS, ETC. If any Lender shall obtain any
payment or reduction (including, but not limited to, any amounts received as
adequate protection of a deposit treated as cash collateral under the Bankruptcy
Code) of any obligation of the Borrower hereunder (whether voluntary,
involuntary, through the exercise of any right of set-off, or otherwise) in
excess of its ratable share of payments or reductions on account of such
obligations obtained by all the Lenders, such Lender shall forthwith (a) notify
each of the other Lenders and the Administrative Agent of such receipt, and (b)
purchase from the other Lenders such participations in the affected obligations
as shall be necessary to cause such purchasing Lender to share the excess
payment or reduction, net of costs incurred in connection therewith, ratably
with each of them, provided that if all or any portion of such excess payment or
reduction is thereafter recovered from such purchasing Lender or additional
costs are incurred, the purchase shall be rescinded and the purchase price
restored to the extent of such recovery or such additional costs, but without
interest. The Borrower agrees that any Lender so purchasing a participation from
another Lender pursuant to this Section 2.17 may, to the fullest extent
permitted by law, exercise all its rights of payment (including the right of
set-off) with respect to such participation as fully as if such Lender were the
direct creditor of the Borrower in the amount of such participation.
Section 2.18 TAXES.
(a) PAYMENTS FREE AND CLEAR. Any and all payments by or on
account of any obligation of the Borrower hereunder shall be made free and clear
of and without deduction for any Indemnified Taxes or Other Taxes; provided that
if the Borrower shall be required to deduct any Indemnified Taxes or Other Taxes
from such payments, then (1) the sum payable shall be increased as necessary so
that after making all required deductions (including deductions applicable to
additional sums payable under this Section 2.18) the Administrative Agent or
Lender (as the case may be) receives an amount equal to the sum it would have
received had no such deductions been made, (2) the Borrower shall make such
deductions, and (3) the Borrower shall pay the full amount deducted to the
relevant Governmental Authority in accordance with applicable law.
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(b) OTHER TAXES. In addition, the Borrower shall
pay any Other Taxes to the relevant Governmental Authority in accordance with
applicable law.
(c) INDEMNIFICATION. The Borrower shall indemnify the
Administrative Agent and each Lender, upon written demand therefor, for the full
amount of any Indemnified Taxes or Other Taxes paid by the Administrative Agent
or such Lender, as the case may be, on or with respect to any payment by or on
account of any obligation of the Borrower hereunder (including Indemnified Taxes
or Other Taxes imposed or asserted on or attributable to amounts payable under
this Section 2.18) and any penalties, interest and reasonable expenses arising
therefrom or with respect thereto, whether or not such Indemnified Taxes or
Other Taxes were correctly or legally imposed or asserted by the relevant
Governmental Authority. A certificate as to the amount of such payment or
liability delivered to the Borrower by a Lender, or by the Administrative Agent
on its own behalf or on behalf of a Lender, shall be conclusive absent manifest
error.
(d) RECEIPTS. As soon as practicable after any payment of
Indemnified Taxes or Other Taxes by the Borrower to a Governmental Authority,
the Borrower shall deliver to the Administrative Agent the original or a
certified copy of a receipt issued by such Governmental Authority evidencing
such payment, a copy of the return reporting such payment or other evidence of
such payment reasonably satisfactory to the Administrative Agent.
(e) SURVIVAL. Without prejudice to the survival of any other
agreement contained herein, the agreements and obligations contained in this
Section 2.18 shall survive the payment in full of principal and interest
hereunder.
(f) LENDER REPRESENTATIONS AND AGREEMENTS. Any Foreign Lender
that is entitled to an exemption from or reduction of withholding tax under the
law of the jurisdiction in which the Borrower is located, or any treaty to which
such jurisdiction is a party, with respect to payments under this Agreement
shall deliver to the Borrower (with a copy to the Administrative Agent), at the
time or times prescribed by applicable law, such properly completed and executed
documentation prescribed by applicable law or reasonably requested by the
Borrower as will permit such payments to be made without withholding or at a
reduced rate.
Section 2.19 PRO RATA TREATMENT. Subject to Section 2.3(b), each
Borrowing of Revolving Credit Loans shall be made, and each payment on account
of any commitment fee in respect of the Revolving Credit Commitments hereunder
shall be allocated by the Administrative Agent, pro rata according to the
relevant Revolving Credit Percentages of the Lenders. Subject to Section 2.3(b),
each payment (including each prepayment) on account of principal of and interest
on any Revolving Credit Loans shall be allocated by the Administrative Agent pro
rata according to the respective outstanding principal amounts of such Revolving
Credit Loans then held by the Lenders. Each payment on account of principal of
and interest on any Term Loans shall be allocated by the Administrative Agent
pro rata according to the respective outstanding principal amounts of such Term
Loans then held by the Lenders. All proceeds (including proceeds from the
realization upon the Collateral) received after acceleration of the maturity of
the Loans, shall be applied first to reimbursement of expenses and indemnities
provided for in this Agreement and the Financing Documents; second, to other
Lender Indebtedness until repaid
28
in full pro rata to each Lender; and, third, to any other Person entitled to
receive such proceeds in accordance with applicable law.
ARTICLE 3
CONDITIONS TO BORROWINGS
Section 3.1 CLOSING. The obligation of each Lender to make its initial
Loan hereunder is subject to (1) receipt by the Administrative Agent of the
following items which are to be delivered, in form and substance satisfactory to
each Lender, with a copy (except for the Notes and this Agreement) for each
Lender and (2) the satisfaction of the following conditions:
(a) TERM NOTES. A duly completed and executed Term
Note for each Lender and in each case dated as of the Closing Date, and payable
to the order of such Lender.
(b) REVOLVING CREDIT NOTES. A duly completed and
executed Revolving Credit Note for each Lender and in each case dated as of the
Closing Date, and payable to the order of such Lender.
(c) RESOLUTIONS AND INCUMBENCY CERTIFICATES.
(1) certified copies of the resolutions of the
applicable board of directors and operating board of each Credit Party
a party to a Financing Document, dated as of the Closing Date and
approving, as appropriate, the Loans, the Notes, this Agreement, the
Security Instruments and the other Financing Documents to which such
Person is a party, and all other documents, if any, to which such
Person is a party and evidencing limited liability company, corporate
or partnership authorization with respect to such documents;
(2) a certificate of the Secretary or an Assistant
Secretary of each Credit Party a party to any Financing Document, dated
as of the Closing Date and certifying (A) the name, title and true
signature of each officer of such Person authorized to execute the
Notes, this Agreement, the Security Instruments and the other Financing
Documents to which it is a party, (B) the name, title and true
signature of each officer of such Person authorized to provide the
certifications required pursuant to this Agreement including, but not
limited to, certifications required pursuant to Section 6.9 and
Borrowing Requests, and that attached thereto is a true and complete
copy of (i) the certificate of incorporation, certificate of formation,
certificate of limited partnership and/or the articles of organization
of each such Person (as applicable), certified by the Secretary of
State of the applicable state of formation, and (ii) the bylaws,
partnership agreement, operating agreement or regulations of each such
Person (as applicable), each as amended to date, recent good standing
certificates and certificates of existence for each such Person and
certificates of foreign qualification for each such Person in such
jurisdictions as the Administrative Agent shall require; and
(3) a certificate of limited partnership of HRY,
together with the limited partnership agreement of HRY and a
certificate of existence for HRY in the applicable state of its
formation, issued by the Secretary of State of the applicable state of
formation.
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(d) OPINIONS OF COUNSEL. An opinion of Jenkens & Gilchrist, a
Professional Corporation, counsel to the Credit Parties dated as of the Closing
Date and in form and substance satisfactory to the Administrative Agent and its
counsel, addressed to the Administrative Agent and the Lenders and covering such
matters as the Administrative Agent or the Lenders may reasonably request.
(e) THE SECURITY INSTRUMENTS.
(1) a duly completed and executed Facility
Guaranty dated as of the Closing Date and duly delivered by Parent;
(2) a duly completed and executed Pledge Agreement,
dated as of the Closing Date and duly delivered by the Borrower
granting to the Administrative Agent a first priority security interest
in certain of the Equity owned by the Borrower in HRY (as more
particularly described therein) as security for the Lender
Indebtedness;
(3) duly completed and executed Parent Intercompany
Notes each dated as of the Closing Date and duly delivered by the
Borrower, and each duly endorsed by the Borrower to the Administrative
Agent for the ratable benefit of the Lenders;
(4) a duly completed and executed Collateral
Assignment of Intercompany Notes, dated as of the Closing Date and
duly delivered by the Borrower;
(5) duly completed and executed (as applicable) UCC-1
financing statements necessary to perfect the Liens and security
interests created by the Pledge Agreement and the Collateral Assignment
of Intercompany Notes;
(6) in addition to the UCC-1 financing statements
required by clause (3) preceding, such other documents, instruments and
agreements as the Administrative Agent shall reasonably request to
fully evidence and perfect the Liens created by the Security
Instruments; and
(7) all Property in which the Administrative Agent
shall, at such time, be entitled to have a Lien pursuant to this
Agreement or any other Financing Document shall have been physically
delivered to the possession of the Administrative Agent to the extent
that such possession is necessary for the purpose of perfecting the
Administrative Agent's Lien in such Collateral, including, without
limitation, the Parent Intercompany Notes, certificates of limited
partnership interests representing the issued and outstanding Equity in
HRY described in the Pledge Agreement, duly endorsed for transfer to
the Administrative Agent or such other duly executed assignments of
such Equity as are acceptable to the Administrative Agent, the Lenders
or their counsel.
(f) INSURANCE. Copies of all insurance binders together with a
certificate of insurance coverage, dated as of the Closing Date, evidencing that
the Credit Parties are carrying insurance in accordance with Section 6.5 hereof.
(g) FINANCIAL STATEMENTS AND PROJECTIONS. The financial
condition of Parent and each of its Subsidiaries reflected in the financial
information and projections of Parent and
30
its Subsidiaries that have been delivered to the Lenders prior to the Closing
Date by Parent and the Borrower, have not changed as of the Closing Date in such
a way as to materially and adversely affect the prospects of Parent or any of
its Subsidiaries, or otherwise cause or result in a Material Adverse Effect.
(h) COLLATERAL VALUE CERTIFICATE. A duly completed and
executed Collateral Value Certificate in the form attached hereto as Exhibit F,
dated as of the Closing Date and duly delivered by the Chief Financial Officer
(or similar officer) of Parent.
(i) FORM U-1 PURPOSE STATEMENT. A duly completed and
executed Federal Reserve Form U-1 Purpose Statement dated as of the Closing Date
and duly delivered by Parent and the Borrower.
(j) CERTIFICATE OF CHIEF FINANCIAL OFFICER A duly completed
and executed certificate of the Chief Financial Officer (or similar officer) of
Parent dated as of the Closing Date and certifying, before and after the making
of the initial Loan, that (1) each Credit Party is Solvent, and (2) no Default
then exists, or thereafter would exist.
(k) STRUCTURE. Each Lender shall be satisfied in its sole
judgment with the corporate, partnership, limited liability company, capital,
legal and management structure and tax liabilities of each Credit Party.
(l) LIEN SEARCHES. Lien searches reflecting no prior
Liens on the Collateral other than Liens set forth on Schedule 7.2.
(m) FEES AND EXPENSES. Payment and/or reimbursement of (1) the
Administrative Agent's counsel's fees and expenses rendered through the Closing
Date, to the extent invoiced, and (2) any fees or expenses required to be paid
pursuant to Section 2.10.
(n) DOCUMENTATION. The Administrative Agent shall have
received such other documents as the Administrative Agent (or any Lender acting
through the Administrative Agent) may reasonably request, all in form and
substance reasonably satisfactory to the Administrative Agent.
Section 3.2 CONDITIONS PRECEDENT TO ALL LOANS. The obligation of
each Lender to make each Loan hereunder (including the initial Loan) is subject
to fulfillment of the following conditions immediately prior to or
contemporaneously with each such Loan:
(a) REPRESENTATIONS AND WARRANTIES. All representations and
warranties contained herein and in the other Financing Documents executed and
delivered on or after the Closing Date shall be true and correct in all material
respects with the same effect as though such representations and warranties had
been made on and as of the date of such Loan (unless such representation and
warranty is expressly limited to an earlier date).
(b) NO DEFAULT. There shall not exist a Default or Event of
Default hereunder.
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(c) MAXIMUM AVAILABLE AMOUNT. The Aggregate Revolving
Credit Exposure, after giving effect to such proposed Loan, shall not exceed
the aggregate Revolving Credit Commitments then in effect.
ARTICLE 4
SECURITY
Section 4.1 SECURITY GRANTED. The Lender Indebtedness shall be secured
by (a) perfected, first priority Liens covering and encumbering the issued and
outstanding Equity owned by the Borrower in HRY as described in the Pledge
Agreement, and (b) a collateral assignment of the Parent Intercompany Notes. In
furtherance thereof, Parent and the Borrower hereby agree to execute and deliver
(and cause each other Credit Party to execute and deliver) to the Administrative
Agent for the benefit of the Lenders, on the Closing Date and thereafter
promptly upon request by the Administrative Agent, such Security Instruments
(including, without limitation, the Pledge Agreement and the Collateral
Assignment of Intercompany Notes), and other documents, instruments, agreements
and certificates (including, without limitation, (1) such UCC-1 financing
statements as the Administrative Agent shall request to fully evidence and
perfect the Liens created by the Pledge Agreement and the Collateral Assignment
of Intercompany Notes, and (2) the certificates evidencing the issued and
outstanding Equity owned by the Borrower in HRY, as described in the Pledge
Agreement, endorsed or accompanied by appropriate blank stock powers), as the
Administrative Agent shall deem necessary or appropriate in its sole discretion
to create, evidence and perfect the Liens contemplated by this Section 4.1. In
addition to the foregoing, in the event the Borrower submits additional
Collateral hereunder pursuant to Section 4.2, Section 4.3, Section 4.4 or
Section 7.4, or otherwise pursuant to the terms of this Agreement or the other
Financing Documents, the Borrower shall simultaneously with the delivery of such
Collateral execute and deliver (or cause the execution and delivery) to the
Administrative Agent for the benefit of the Lenders such Security Instruments
and other documents, instruments, agreements and certificates as the
Administrative Agent shall deem necessary or appropriate in its sole discretion
to create, evidence and perfect the Liens encumbering such Collateral.
Section 4.2 COLLATERAL VALUE. As soon as available, and in any event by
the 21st day of each calendar month, Parent shall deliver to the Administrative
Agent and each Lender, a certificate (the "COLLATERAL VALUE CERTIFICATE") of the
Chief Financial Officer (or similar officer) of Parent in the form of Exhibit F
attached hereto (a) setting forth in reasonable detail the calculations required
to establish the value of the Marketable Equity as of the last day of the
immediately preceding calendar month, (b) stating whether there exists on such
date a Benchmark Collateral Deficiency, and (c) in the event a Benchmark
Collateral Deficiency exists, stating the action which Parent proposes to take
to remedy such Benchmark Collateral Deficiency in accordance with Section 4.3.
All calculations provided in the aforementioned certificate shall be made
utilizing historical methodology and based on underlying assumptions consented
to by the Administrative Agent and previously utilized by Parent in the
financial information delivered to each Lender on or prior to the Closing Date.
Notwithstanding anything to the contrary contained herein, the Administrative
Agent or any Lender shall have the right to calculate and establish the value of
the Marketable Equity at any time in accordance with the historical methodology
and procedures described in the immediately preceding sentence.
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Section 4.3 BENCHMARK COLLATERAL DEFICIENCY. If a Benchmark Collateral
Deficiency exists at any time, the Borrower shall, within ten (10) days
following the occurrence of such Benchmark Collateral Deficiency (a) make a
prepayment of principal on the Loans as set forth in Section 2.8(d) in an amount
sufficient to eliminate such Benchmark Collateral Deficiency, or (b) eliminate
such Benchmark Collateral Deficiency by submitting additional Collateral owned
by Parent or the Borrower and consisting of cash or marketable Equity, together
with a Collateral Value Certificate covering the existing pledged Collateral and
such additional proposed Collateral, for consideration in connection with the
determination of the value of the Collateral consisting of marketable Equity
which the Administrative Agent and the Required Lenders deem sufficient in their
sole discretion to eliminate such Benchmark Collateral Deficiency.
Section 4.4 SUBSTITUTION OF COLLATERAL. The Borrower may, at any time
and from time to time, make written request of the Administrative Agent for the
substitution of existing Collateral with new Collateral of equal or greater
value. Upon receipt of such request, together with a Collateral Value
Certificate covering such proposed new Collateral, the Administrative Agent
shall promptly deliver notice of such request to each Lender, and the Lenders
shall, within fifteen (15) days following receipt of such notice, and in their
sole discretion, approve or disapprove of such proposed substitution. If at the
end of such fifteen (15) day period, the Lenders have not communicated their
approval or disapproval, such silence shall be deemed a disapproval of the
requested substitution of Collateral.
ARTICLE 5
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement, Parent and
the Borrower jointly and severally represent and warrant to the Administrative
Agent and each Lender (which representations and warranties will survive the
delivery of the Notes) that:
Section 5.1 EXISTENCE. Each Credit Party is a limited liability company,
corporation or partnership duly organized, legally existing and, as applicable,
in good standing under the laws of the jurisdictions in which they are formed or
incorporated and is duly qualified as a foreign limited liability company, or
partnership or corporation in all jurisdictions wherein the Property owned or
the business transacted by them makes such qualification necessary, except where
the failure to be so qualified could not reasonably be expected to have a
Material Adverse Effect.
Section 5.2 POWER AND AUTHORIZATION. The Borrower is authorized and
empowered to create and issue the Notes; each Credit Party is duly authorized
and empowered to execute, deliver and perform the Financing Documents, including
this Agreement, to which they respectively are parties; and all limited
liability company action on the Borrower's part requisite for the due creation
and issuance of the Notes, and all limited liability company, corporate or
partnership action on each Credit Party's respective part requisite for the due
execution, delivery and performance of the Financing Documents, including this
Agreement, to which each such Credit Party respectively is a party has been duly
and effectively taken.
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Section 5.3 BINDING OBLIGATIONS. This Agreement does, and the Notes and
other material Financing Documents to which each Credit Party respectively is a
party upon their creation, issuance, execution and delivery will, when issued
and delivered under this Agreement, constitute legal, valid and binding
obligations of each such Credit Party that is a party thereto, respectively, and
will be enforceable in accordance with their respective terms (except that
enforcement may be subject to any applicable bankruptcy, insolvency or similar
laws generally affecting the enforcement of creditors' rights and subject to the
availability of equitable remedies).
Section 5.4 NO LEGAL BAR OR RESULTANT LIEN. The execution, delivery and
performance of the Notes and the other Financing Documents, including this
Agreement, to which each Credit Party is a party do not and will not violate or
create a default under any provisions of the articles of organization, articles
or certificate of incorporation, bylaws, operating agreement, regulations or
other charter documents of any such Credit Party, or any contract, agreement,
instrument or Governmental Requirement to which any such Credit Party is
subject, or result in the creation or imposition of any Lien upon any Properties
of any such Credit Party.
Section 5.5 NO CONSENT. Each Credit Party's respective execution,
delivery and performance of the Notes and the other Financing Documents,
including this Agreement, to which each such Credit Party respectively is a
party, do not require notice to or filing or registration with, or the
authorization, consent or approval of or other action by any other Person,
including, but not limited to, any Governmental Authority, except those obtained
or made or where the failure to do so could not reasonably be expected to have a
Material Adverse Effect.
Section 5.6 FINANCIAL INFORMATION.
(a) PRO-FORMA FINANCIAL STATEMENTS AND PROJECTIONS. The pro
forma consolidated balance sheets of Parent and its Subsidiaries, and the
related consolidated statements of income, retained earnings and cash flow,
including, in each case the related schedules and notes, heretofore delivered to
the Lenders fairly present the estimated consolidated financial condition of
Parent and its Subsidiaries as of the dates set forth therein, the estimated
results of operations for the twelve-month period then ended on a pro forma
basis and the projected results of operations through the dates set forth
therein; provided, that, the financial information with respect to Parent's
projections, copies of which have been delivered to each Lender prior to the
Closing Date, were prepared in good faith on the basis of the assumptions stated
therein, which assumptions were believed by Parent to be reasonable in all
material respects at the time made.
(b) FINANCIAL STATEMENTS. The Financial Statements heretofore
delivered to the Lenders were prepared consistent with GAAP and fairly present
the consolidated financial condition of Parent at such date and the consolidated
results of operations for the periods then ended (subject to, with respect to
the unaudited consolidated financial statements included in the definition of
Financial Statements, audit adjustments and the fact that such unaudited
financial statements do not contain footnotes).
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(c) AUDITED ANNUAL FINANCIAL STATEMENTS. The most recent
annual audited consolidated balance sheets of Parent and its Subsidiaries, and
the related audited consolidated statements of income, retained earnings and
cash flows for the Fiscal Year then ended, including in each case the related
schedules and notes, true copies of which have been previously delivered to each
of the Lenders, fairly present the consolidated financial condition of Parent
and its Subsidiaries for such Fiscal Year, and the consolidated results of
operations for such Fiscal Year, in accordance with GAAP applied on a consistent
basis (this representation and warranty will not be applicable until the first
annual audited statement of Parent is delivered pursuant to Section 6.9(a)).
(d) UNAUDITED QUARTERLY FINANCIAL STATEMENTS. The most recent
unaudited consolidated balance sheets of Parent and its Subsidiaries, and the
related consolidated statements of income, retained earnings and cash flows for
the portion of Parent's Fiscal Year then ended, including in each case the
related schedules and notes, true copies of which have been previously delivered
to each of the Lenders, fairly present the consolidated financial condition of
Parent and its Subsidiaries as of such date, and the consolidated results of
operations for such portion of Parent's Fiscal Year, in accordance with GAAP
(subject to audit adjustments and the fact that such financial statements do not
contain footnotes) applied on a consistent basis (this representation and
warranty will not be applicable until the first unaudited quarterly statement of
Parent is delivered pursuant to Section 6.9(b)).
(e) NO MATERIAL ADVERSE EFFECT. Except in connection with the
disclosures set forth on Schedule 5.8, since December 21, 1999 there has been no
event or occurrence that could reasonably be expected to have a Material Adverse
Effect.
Section 5.7 INVESTMENTS AND GUARANTIES. No Credit Party has an
ownership interest in any Person, or guaranteed the obligations of any Person
that is not a Credit Party, except those reflected in Schedule 5.7 or Schedule
7.2.
Section 5.8 LITIGATION. Except as set forth in Schedule 5.8, there is
no material action, suit or proceeding, or any governmental investigation or any
arbitration, in each case pending or, to the knowledge of Parent or the
Borrower, threatened against Parent or its Subsidiaries or any Property of any
of them before any court or arbitrator or any Governmental Authority. There is
no action, suit or proceeding, or any governmental investigation or any
arbitration, in each case pending or, to the knowledge of Parent or the
Borrower, threatened against Parent or its Subsidiaries or any Property of any
of them before any court or arbitrator or any Governmental Authority which (a)
challenges the validity of this Agreement, any Note, the Facility Guaranty, any
Security Instrument or any of the other Financing Documents or (b) could
reasonably be expected to have a Material Adverse Effect.
Section 5.9 USE OF PROCEEDS. The Borrower will use the proceeds of the
Loans only for the purposes specified in the Recitals to this Agreement. Neither
Parent nor any of its Subsidiaries is engaged principally, or as one of its
important activities, in the business of extending credit for the purpose,
whether immediate, incidental or ultimate, of buying or carrying Margin Stock
(within the meaning of Regulations U or X) and no part of the proceeds of any
Loan hereunder will be used to buy or carry any Margin Stock in violation of
Regulation U or X. Neither Parent nor any of its Subsidiaries, nor any Person
acting on behalf of any such
35
Person, has taken or will take any action which could reasonably be expected to
cause the Notes or any of the Financing Documents, including this Agreement, to
violate Regulations U or X or any other regulation of the Board of Governors of
the Federal Reserve System, in each case as now in effect or as the same may
hereinafter be in effect.
Section 5.10 EMPLOYEE BENEFITS.
(a) (1) Parent, its Subsidiaries and each ERISA Affiliate have
complied in all material respects with all applicable laws regarding each Plan;
(2) each Plan is, and has been, maintained and administered in substantial
compliance with its terms, applicable collective bargaining agreements, and all
applicable laws; and (3) no act, omission or transaction has occurred which
could result in an imposition on Parent, any Subsidiary of Parent or any ERISA
Affiliate (whether directly or indirectly) of either (A) a civil penalty
assessed pursuant to Subsections (c), (i) or (l) of Section 502 of ERISA or a
tax imposed pursuant to Chapter 43 of Subtitle D of the Code or (B) breach of
fiduciary duty liability damages under Section 409 of ERISA, in either case
which could reasonably be expected to have a Material Adverse Effect.
(b) There exists no outstanding liability of Parent, any of
its Subsidiaries or any ERISA Affiliate with respect to any Plan that has been
terminated. No material liability to the PBGC (other than for the payment of
current premiums which are not past due) by Parent, any Subsidiary of Parent or
any ERISA Affiliate has been or is expected by Parent, any Subsidiary of Parent
or any ERISA Affiliate to be incurred with respect to any Plan. No ERISA
Termination Event with respect to any Plan which could result in any liability
to Parent, its Subsidiaries or any ERISA Affiliate has occurred or is reasonably
expected to occur.
(c) Full payment when due has been made of all amounts which
Parent, any of its Subsidiaries or any ERISA Affiliate is required under the
terms of each Plan or applicable law to have paid as contributions to such Plan
(excluding any nonpayment involving an amount that is not material), and no
accumulated funding deficiency (as defined in Section 302 of ERISA and Section
412 of the Code), whether or not waived, exists with respect to any Plan.
(d) The actuarial present value of the benefit liabilities
(computed on an accumulated benefit obligation basis in accordance with GAAP)
under all Plans in the aggregate that are subject to Title IV of ERISA does not,
as of the end of the most recently ended fiscal year of such Plans, exceed the
current value of the assets of all Plans in the aggregate that are allocable to
such benefit liabilities. The term "actuarial present value of the benefit
liabilities" shall have the meaning specified in Section 4041 of ERISA.
(e) Except as set forth on Schedule 5.10, neither Parent, any
Subsidiary of Parent nor any ERISA Affiliate sponsors, maintains or contributes
to, or has at any time in the preceding six-year period sponsored, maintained or
contributed to, any "multiemployer plan" (as defined in Section 3(37) or
4001(a)(3) of ERISA).
(f) Neither Parent, any Subsidiary of Parent nor any ERISA
Affiliate is required to provide security to a Plan pursuant to Section
401(a)(29) of the Code.
Section 5.11 TAXES; GOVERNMENTAL CHARGES. Parent and its Subsidiaries
have filed all tax returns and reports required to be filed and have paid all
taxes, assessments, fees and other
36
governmental charges levied upon any of them or upon any of their respective
Properties or income which are due and payable, including interest and
penalties, except where failure to so pay or file could not reasonably be
expected to have a Material Adverse Effect, or have provided adequate reserves
for the payment thereof if required in accordance with GAAP for the payment
thereof, except such interest and penalties as are being contested in good faith
by appropriate actions or proceedings and for which adequate reserves for the
payment thereof as required by GAAP have been provided.
Section 5.12 TITLES, ETC. Each Credit Party has indefeasible title to
their respective Properties, and with respect to leased Properties, indefeasible
title to the leasehold estate with respect thereto, pursuant to valid and
enforceable leases, free and clear of all Liens except Liens otherwise permitted
or contemplated by this Agreement or the other Financing Documents.
Section 5.13 DEFAULTS. Neither Parent nor Borrower is in default nor
has any event or circumstance occurred which, but for the passage of time or the
giving of notice, or both, would constitute a default (in any respect that
could, individually or in the aggregate, reasonably be expected to have a
Material Adverse Effect) under any loan or credit agreement, indenture,
mortgage, deed of trust, security agreement or other instrument or agreement
evidencing or pertaining to any Indebtedness of any such Person, or under any
agreement or instrument to which any such Person is a party or by which any such
Person is bound, except as set forth on Schedule 5.13. No Default hereunder has
occurred and is continuing.
Section 5.14 CASUALTIES; TAKING OF PROPERTIES. Neither the business nor
the Properties of Parent or its Subsidiaries has been affected in a manner that
has had or could reasonably be expected to have a Material Adverse Effect as a
result of any fire, explosion, earthquake, flood, drought, windstorm, accident,
strike or other labor disturbance, embargo, requisition or taking of Property or
cancellation of contracts, permits or concessions by any domestic or foreign
government or any agency thereof, riot, activities of armed forces or acts of
God or of any public enemy.
Section 5.15 COMPLIANCE WITH THE LAW. Neither Parent nor its
Subsidiaries:
(a) is in violation of any Governmental Requirement; and
(b) has failed to obtain any license, permit, right-of-way,
franchise or other right or governmental authorization necessary to the
ownership of any of their respective Properties or the conduct of their
respective business;
which violation or failure could, individually or in the aggregate, reasonably
be expected to have (in the event that such a violation or failure were asserted
by any Person through appropriate action) a Material Adverse Effect.
Section 5.16 NO MATERIAL MISSTATEMENTS. No written information,
exhibit, schedule or report prepared by or on behalf of Parent or the Borrower
and furnished to the Administrative Agent or the Lenders by or at the direction
of Parent and/or the Borrower or any of Parent's Subsidiaries in connection with
the negotiation of this Agreement contained any material misstatement of fact
or, when such statement is considered with all other written statements
furnished to the Lenders in that connection, omitted to state a material fact or
any fact necessary
37
to make the statement contained therein not misleading; provided, that, the
financial information with respect to Parent's projections, copies of which have
been furnished to each Lender prior to the Closing Date, were prepared in good
faith on the basis of the assumptions stated therein, which assumptions were
believed by Parent to be reasonable in all material respects at the time made.
Section 5.17 INVESTMENT COMPANY ACT. No Credit Party is an "investment
company" or a company "controlled" by an "investment company" that is
incorporated in or organized under the laws of the United States or any "State,"
as those terms are defined in the Investment Company Act of 1940, as amended.
The execution and delivery by each Credit Party of this Agreement and the other
Financing Documents to which they respectively are parties and their respective
performance of the obligations provided for therein, will not result in a
violation of the Investment Company Act of 1940, as amended.
Section 5.18 PUBLIC UTILITY HOLDING COMPANY ACT. No Credit Party is a
"holding company," or a "subsidiary company" of a "holding company," or an
"affiliate" of a "holding company" or of a "subsidiary company" of a "holding
company," or a "public utility" within the meaning of the Public Utility Holding
Company Act of 1935, as amended.
Section 5.19 SUBSIDIARIES. Schedule 5.19 hereto accurately reflects, as
of the Closing Date, (a) the jurisdiction of incorporation or organization of
Parent and its Subsidiaries, and (b) each jurisdiction in which each such Person
is qualified to transact business as a foreign corporation, foreign partnership
or foreign limited liability company. As of the Closing Date, Parent has no
Subsidiaries except those shown in Schedule 5.19, which schedule was complete
and accurate on such date.
Section 5.20 INSURANCE. All policies of insurance owned or held by
Parent and its Subsidiaries are sufficient for compliance with all requirements
of law and of all agreements to which any such Person is a party, except where
any insufficiency could not reasonably be expected to have a Material Adverse
Effect; are valid, outstanding and enforceable policies; provide adequate
insurance coverage in at least such amounts and against at least such risks (but
including in any event public liability) as are usually insured against in the
same general area by companies engaged in the same or a similar business for the
assets and operations of each such Person; and will not in any way be affected
by, or terminate or lapse by reason of, the transactions contemplated by this
Agreement. All such policies are in full force and effect, all premiums with
respect thereto have been paid in accordance with their respective terms, and no
notice of cancellation or termination has been received with respect to any such
policy. Neither Parent nor any of its Subsidiaries maintains any formalized
self-insurance program with respect to its assets or operations or risks with
respect thereto. Schedule 5.20 contains a complete and accurate list of all such
insurance policies, copies of which have previously been made available to
Lenders.
Section 5.21 ENVIRONMENTAL MATTERS. Except as set forth on Schedule
5.21:
(a) ENVIRONMENTAL LAWS, ETC. Neither Parent, nor any
Subsidiary of Parent, nor the operations conducted on the Property of Parent or
any Subsidiary of Parent, violate any applicable order of any court or
Governmental Authority or applicable Environmental Laws,
38
which violation could reasonably be expected to have a Material Adverse Effect
or which could reasonably be expected to result in remedial obligations having a
Material Adverse Effect assuming disclosure to the applicable Governmental
Authority of all relevant facts, conditions and circumstances, if any,
pertaining to the relevant Property.
(b) NO LITIGATION. Without limitation of Section 5.21(a)
above, no Property of Parent or any Subsidiary of Parent, nor the operations
currently conducted thereon or, to the knowledge of Parent or any Subsidiary of
Parent, by any prior owner or operator of such Property or operation, are in
violation of or subject to any existing, pending or threatened action, suit,
investigation, inquiry or proceeding by or before any court or Governmental
Authority or, to the knowledge of any Credit Party, to any remedial obligations
under applicable Environmental Laws, which violation, action, suit,
investigation, inquiry or proceeding could reasonably be expected to have a
Material Adverse Effect or which could reasonably be expected to result in
remedial obligations having a Material Adverse Effect assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to the relevant Property.
(c) NOTICES, PERMITS, ETC. All notices, permits, licenses or
similar authorizations, if any, required to be obtained or filed by Parent or
any Subsidiary of Parent in connection with the operation or use of any and all
Property of Parent or any Subsidiary of Parent, including, but not limited to,
past or present treatment, storage, disposal or release of a hazardous substance
or solid waste into the environment, have been duly obtained or filed except to
the extent the failure to obtain or file such notices, permits, licenses or
similar authorizations could not reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to result in remedial
obligations having a Material Adverse Effect assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to the relevant Property.
(d) HAZARDOUS SUBSTANCES CARRIERS. All hazardous substances or
solid waste generated at any and all Property by Parent or any Subsidiary of
Parent have in the past been transported, treated and disposed of only by
carriers maintaining valid permits under RCRA and any other applicable
Environmental Law, except to the extent the failure to have such substances or
waste transported, treated or disposed by such carriers could not reasonably be
expected to have a Material Adverse Effect, and, to the knowledge of any Credit
Party, only at treatment, storage and disposal facilities maintaining valid
permits under RCRA and any other applicable Environmental Law, which carriers
and facilities have been and are operating in compliance with such permits,
except to the extent the failure to have such substances or waste treated,
stored or disposed at such facilities, or the failure of such carriers or
facilities to so operate, could not reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to result in remedial
obligations having a Material Adverse Effect assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to the relevant Property.
(e) HAZARDOUS SUBSTANCES DISPOSAL. Parent and each Subsidiary
of Parent have taken all reasonable steps necessary to determine and have
determined that no hazardous substances or solid waste have been disposed of or
otherwise released and there has been no threatened release of any hazardous
substances on or to any Property by Parent or any Subsidiary
39
of Parent except in compliance with applicable Environmental Laws, except to the
extent the failure to do so could not reasonably be expected to have a Material
Adverse Effect or which could reasonably be expected to result in remedial
obligations having a Material Adverse Effect assuming disclosure to the
applicable Governmental Authority of all relevant facts, conditions and
circumstances, if any, pertaining to the relevant Property.
(f) NO CONTINGENT LIABILITY. To its knowledge, neither Parent
nor any Subsidiary of Parent has any contingent liability in connection with any
release or threatened release of any hazardous substance or solid waste into the
environment other than such contingent liabilities at any one time and from time
to time which could reasonably be expected to exceed $50,000 in excess of
applicable insurance coverage and for which adequate reserves for the payment
thereof as required by GAAP have not been provided, or which could reasonably be
expected to result in remedial obligations having a Material Adverse Effect
assuming disclosure to the applicable Governmental Authority of all relevant
facts, conditions and circumstances, if any, pertaining to such release or
threatened release.
Section 5.22 SOLVENCY. Parent and Borrower, individually, and Parent
and Borrower, taken as a whole, are Solvent, both before and after taking into
account the making of the initial Loan.
Section 5.23 EMPLOYEE MATTERS. None of the Credit Parties, or any of
their respective employees, is subject to any collective bargaining agreement.
There are no strikes, slowdowns, work stoppages or controversies pending or, to
the best knowledge of Parent or the Borrower, threatened against Parent or its
Subsidiaries, or their respective employees, which could reasonably be expected
to have, either individually or in the aggregate, a Material Adverse Effect.
Except as set forth in Schedule 5.23, no employees are subject to an employment
contract.
Section 5.24 SUBORDINATED DEBENTURE DOCUMENTS, ETC. Parent and the
Borrower have provided Administrative Agent with a true and correct copy of the
Subordinated Debentures Indenture, including all amendments and modifications
thereto. No party to the Subordinated Debentures Indenture is in default of its
obligations thereunder.
Section 5.25 OWNERSHIP. Schedule 5.25 hereto accurately reflects (a)
the authorized, issued and outstanding Equity securities of Parent and the
Borrower (and the names of, and number of shares or other Equity securities held
by, the legal and beneficial owners of such Equity securities), and (b) all
outstanding warrants, options, subscription rights, convertible securities or
other rights to purchase Equity securities or other membership, partnership or
ownership interests of each such Person. Except as set forth on Schedule 5.25,
there are no outstanding shareholders agreements, voting agreements, voting
trusts or other agreements, commitments or understandings of any nature which in
any way restrict or effect the transfer, pledge or voting of any of the Equity
securities of such Persons, or subject any of such Equity securities to any put,
call, redemption obligation or similar right or obligation of any nature.
Section 5.26 SENIOR INDEBTEDNESS. The Lender Indebtedness constitutes
"Senior Indebtedness" of Parent under and as defined in the Subordinated
Debentures Indenture.
40
ARTICLE 6
AFFIRMATIVE COVENANTS
So long as any Lender has any Commitment hereunder or any Loan remains
unpaid or any Revolving Credit Exposure remains outstanding, Parent and the
Borrower jointly and severally covenant and agree that they will at all times
comply with the following covenants:
Section 6.1 MAINTENANCE AND COMPLIANCE, ETC. Parent will, and will
cause its Subsidiaries to, (a) preserve and maintain its limited liability
company, corporate or partnership existence, and (b) except where failure to do
so could not reasonably be expected to have a Material Adverse Effect, observe
and comply with all Governmental Requirements.
Section 6.2 PAYMENT OF TAXES AND CLAIMS, ETC. Parent will pay, and
cause its Subsidiaries to pay, (a) all material taxes, assessments and
governmental charges imposed upon it or upon its Property, and (b) all material
claims (including, but not limited to, claims for labor, materials, supplies or
services) which could reasonably be expected, if unpaid, to become a Lien upon
its Property, unless, in each case, the validity or amount thereof is being
contested in good faith by appropriate action or proceedings and such Person has
established adequate reserves in accordance with GAAP with respect thereto.
Section 6.3 FURTHER ASSURANCES. Parent will, and will cause each other
Credit Party to, cure promptly any defects in the creation and issuance of the
Notes, and the execution and delivery of the Financing Documents, including this
Agreement. Parent and the Borrower at their expense will, as promptly as
practical, execute and deliver to the Administrative Agent upon request all such
other and further documents, agreements and instruments in compliance with or
performance of the covenants and agreements of such Credit Parties in the
Financing Documents, including this Agreement, or to further evidence and more
fully describe the Collateral, or to correct any omissions in the Financing
Documents, or more fully to state the security obligations set out herein or in
any of the Financing Documents, or to perfect, protect or preserve any Liens
created pursuant to any of the Financing Documents, or to make any recordings,
to file any notices, or obtain any consents, all as may be necessary or
appropriate in connection therewith.
Section 6.4 PERFORMANCE OF OBLIGATIONS. The Borrower will pay the Notes
according to the reading, tenor and effect thereof; and Parent and the Borrower
will do and perform every act and discharge all of the obligations provided to
be performed and discharged by Parent and the Borrower under the Financing
Documents, including this Agreement, at the time or times and in the manner
specified, and cause each of the other Credit Parties to take such action with
respect to their obligations to be performed and discharged under the Financing
Documents to which they respectively are parties.
Section 6.5 INSURANCE. Parent will, and will cause its Subsidiaries to,
maintain or cause to be maintained, with financially sound and reputable
insurers, insurance with respect to their respective Properties and business
against such liabilities, casualties, risks and contingencies and in such types
(including business interruption insurance and flood insurance) and amounts as
is customary in the case of Persons engaged in the same or similar businesses
and similarly situated and in accordance with any Governmental Requirement.
Parent and the
41
Borrower will obtain endorsements to the policies naming the Administrative
Agent as a loss payee and/or additional insured, as applicable, and containing
provisions that such policies will not be canceled without 30 days prior written
notice having been given by the insurance company to the Administrative Agent.
Section 6.6 ACCOUNTS AND RECORDS. Parent will keep, and will cause each
of the other Credit Parties to keep, proper books of record and account in
accordance with GAAP.
Section 6.7 RIGHT OF INSPECTION. Parent will permit, and will cause
each of the other Credit Parties to permit, any officer, employee or agent of
the Administrative Agent or any Lender to visit and inspect any of the
Properties of any Credit Party, examine such Credit Party's books of record and
accounts, take copies and extracts therefrom, and discuss the affairs, finances
and accounts of Parent or any other Credit Party with Parent's or such other
Credit Party's officers, accountants and auditors, as often and all at such
reasonable times during normal business hours (and, provided no Default or Event
of Default has occurred and is continuing, upon not less than one day's prior
notice), as may be reasonably requested by the Administrative Agent or any of
the Lenders.
Section 6.8 OPERATION AND MAINTENANCE OF PROPERTY. Parent will, and
will cause its Subsidiaries to, operate its Properties or cause its Properties
to be operated and maintained (a) in accordance with prudent industry practice
in all material respects and in compliance in all material respects with the
terms and provisions of all applicable leases, contracts and agreements and (b)
except where the noncompliance therewith could not reasonably be expected to
cause or result in a Material Adverse Effect, in compliance with all applicable
laws of the jurisdiction in which such Properties may be situated, and all
applicable laws, rules and regulations of every other Governmental Authority
from time to time constituted to regulate the ownership and operation of such
Properties.
Section 6.9 REPORTING COVENANTS. So long as any Lender has any
Commitment hereunder or any Loan remains unpaid or any Revolving Credit Exposure
remains outstanding, Parent and the Borrower will furnish the following to each
of the Lenders:
(a) ANNUAL FINANCIAL STATEMENTS. As soon as available and in
any event within 105 days after the end of each Fiscal Year, a consolidated
balance sheet of Parent and its Subsidiaries as at the end of such year and the
related consolidated statements of income, retained earnings and cash flows of
Parent and its Subsidiaries for such Fiscal Year, setting forth in each case in
comparative form the figures for the previous Fiscal Year, all in reasonable
detail and accompanied by a report thereon of independent public accountants of
recognized national standing, which such report shall state that such
consolidated financial statements present fairly the consolidated financial
condition as at the end of such Fiscal Year, and the consolidated results of
operations and cash flows for such Fiscal Year, of Parent and its Subsidiaries
in accordance with GAAP, applied on a consistent basis, and shall be
unqualified. At the same time, a consolidating balance sheet of Parent and its
Subsidiaries as at the end of such year and related consolidating statements of
income and cash flows for such Fiscal Year (in each case consolidating on the
basis of principal lines of business of Parent and its Subsidiaries),
accompanied by a certification thereon of a Responsible Officer, stating that
such consolidating
42
financial statements form the basis of Parent's consolidated financial
statements and are fairly stated in all material respects when considered in
relation thereto.
(b) QUARTERLY FINANCIAL STATEMENTS. As soon as available and
in any event within 50 days after the end of each Fiscal Quarter, a consolidated
balance sheet of Parent and its Subsidiaries as at the end of such quarter and
the related consolidated statements of income, retained earnings and cash flows
of Parent and its Subsidiaries for such Fiscal Quarter and for the portion of
Parent's Fiscal Year ended at the end of such quarter, setting forth in each
case in comparative form the figures for the corresponding quarter and the
corresponding portion of Parent's previous Fiscal Year, all in reasonable detail
and certified by a Responsible Officer that such financial statements are
complete and correct and fairly present the consolidated financial condition as
at the end of such Fiscal Quarter, and the consolidated results of operations
and cash flows for such Fiscal Quarter and such portion of Parent's Fiscal Year,
of Parent and its Subsidiaries in accordance with GAAP (subject to normal,
year-end adjustments). At the same time, a consolidating balance sheet of Parent
and its Subsidiaries at the end of such Fiscal Quarter and related consolidating
statements of income and cash flows, for the portion of Parent's Fiscal Year
ended at such quarter (in each case consolidating on the basis of principal
lines of business of Parent and its Subsidiaries), accompanied by a
certification from a Responsible Officer that such consolidating financial
statements form the basis of Parent's consolidated financial statements and are
fairly stated in all material respects when considered in relation thereto.
(c) NO DEFAULT; COMPLIANCE CERTIFICATE. Together with the
financial statements required pursuant to Section 6.9(a) and Section 6.9(b)
above, a certificate of Parent substantially in the form of Exhibit E, signed by
a Responsible Officer (1) stating that a review of such financial statements
during the period covered thereby and of the activities of Parent and its
Subsidiaries has been made under such Responsible Officer's supervision with a
view to determining whether Parent and its Subsidiaries have fulfilled all of
their obligations under this Agreement, the other Financing Documents, and the
Notes; (2) stating that Parent and its Subsidiaries have fulfilled their
obligations under such instruments and that all representations made in this
Agreement continue to be true and correct (or specifying the nature of any
change), or if there shall be a Default or Event of Default, specifying the
nature and status thereof and Parent's proposed response thereto; (3)
demonstrating in reasonable detail compliance (including, but not limited to,
showing all material calculations) as at the end of such Fiscal Year or such
Fiscal Quarter with Section 7.1(a) and Section 7.1(b); and (4) containing or
accompanied by such financial or other details, information and material as the
Administrative Agent may reasonably request to evidence such compliance.
(d) MANAGEMENT LETTERS. Together with the financial statements
required pursuant to Section 6.9(a) above, copies of each management letter (if
any) issued to Parent by such accountants promptly following consideration or
review by the Board of Directors of Parent, or any committee thereof (together
with any response thereto prepared by Parent).
(e) EVENTS OR CIRCUMSTANCES WITH RESPECT TO COLLATERAL.
Promptly after the occurrence of any event or circumstance concerning or
changing any of the Collateral that could have a Material Adverse Effect, notice
of such event or circumstance in reasonable detail.
43
(f) NOTICE OF CERTAIN EVENTS. Promptly after Parent or the
Borrower learns of the receipt or occurrence of any of the following, a
certificate of Parent, signed by a Responsible Officer specifying (1) any
official notice of any violation, possible violation, non-compliance or possible
non-compliance, or claim made by any Governmental Authority pertaining to all or
any part of the Properties of Parent or any Subsidiary of Parent which could
reasonably be expected to have a Material Adverse Effect; (2) any event which
constitutes a Default or Event of Default, together with a detailed statement
specifying the nature thereof and the steps being taken to cure such Default or
Event of Default; (3) the receipt of any notice from, or the taking of any other
action by, the holder of any promissory note, debenture or other evidence of
indebtedness in excess of $500,000 of Parent or any Subsidiary of Parent with
respect to a claimed default, together with a detailed statement specifying the
notice given or other action taken by such holder and the nature of the claimed
default and what action such Person is taking or proposes to take with respect
thereto; (4) any default or noncompliance of any party to any of the Financing
Documents with any of the terms and conditions thereof or any notice of
termination or other proceedings or actions which could reasonably be expected
to adversely affect any of the Financing Documents; (5) the creation,
dissolution, merger or acquisition of Parent or any Subsidiary of Parent; (6)
any event or condition not previously disclosed to the Administrative Agent,
which violates any Environmental Law and which could have a Material Adverse
Effect; (7) any material amendment to, termination of, or default under any
material contract or any execution of, or material amendment to, termination of,
or material default under, any material collective bargaining agreement; or (8)
any event or condition which could reasonably be expected to have a Material
Adverse Effect.
(g) SHAREHOLDER COMMUNICATIONS, FILINGS. Promptly upon the
mailing, filing, or making thereof, copies of all registration statements,
periodic reports and other documents (excluding the related exhibits except to
the extent expressly requested by the Administrative Agent) filed by Parent or
any Subsidiary of Parent with the Securities and Exchange Commission (or any
successor thereto) or any national securities exchange.
(h) LITIGATION. Promptly after the occurrence thereof, notice
of the institution of or any material adverse development in any action, suit or
proceeding or any governmental investigation or any arbitration, before any
court or arbitrator or any governmental or administrative body, agency or
official, against Parent, any Subsidiary of Parent, HRY or any material Property
of any thereof, in which the amount involved is material and not covered by
insurance or which, if adversely determined, would have a Material Adverse
Effect.
(i) ERISA. Promptly after (1) Parent's or the Borrower's
obtaining knowledge of the occurrence thereof, notice that an ERISA Termination
Event or a "prohibited transaction," as such term is defined in Section 406 of
ERISA or Section 4975 of the Code, with respect to any Plan has occurred which
could result in liability to Parent, its Subsidiaries or any ERISA Affiliate,
which such notice shall specify the nature thereof, Parent's proposed response
thereto (and, if applicable, the proposed response thereto of any Subsidiary of
Parent and of any ERISA Affiliate) and, where known, any action taken or
proposed by the Internal Revenue Service, the Department of Labor or the PBGC
with respect thereto, (2) Parent's or the Borrower's obtaining knowledge
thereof, copies of any notice of the PBGC's intention to terminate or to have a
trustee appointed to administer any Plan, and (3) the filing thereof with any
Governmental Authority (if requested by the Administrative Agent), copies of
each annual
44
and other report (including applicable schedules) with respect to each Plan or
any trust created thereunder.
(j) INSURANCE COVERAGE. Upon request, a summary of the
insurance coverages of Parent and each other Credit Party in form and substance
reasonably satisfactory to the Administrative Agent; upon renewal of any such
insurance policy, a copy of an insurance certificate summarizing the terms of
such policy; and upon request of the Administrative Agent, copies of the
applicable policies.
(k) ANNUAL BUDGET. As soon as available and in any event not
later than April 1 of each Fiscal Year, a budget of Parent and its Subsidiaries
on a consolidating and consolidated basis for such Fiscal Year (prepared on a
quarterly basis), reviewed by the Board of Directors of Parent, setting forth in
reasonable detail, the projected revenues and expenses of Parent and its
Subsidiaries for such Fiscal Year.
(l) COLLATERAL VALUE CERTIFICATE. On or before the 21st day of
each calendar month, a Collateral Value Certificate in the form attached hereto
as Exhibit F, prepared as of the last day of the immediately preceding calendar
month.
(m) NOTICES TO HOLDERS OF SUBORDINATED DEBENTURES. Copies of
any material financial or other material report or material notice delivered to,
or received from, any holders of Subordinated Debentures, which such report or
notice has not been delivered to the Lenders hereunder.
(n) OTHER INFORMATION. With reasonable promptness, such other
information about the business and affairs and financial condition of Parent and
its Subsidiaries as the Administrative Agent may reasonably request from time to
time.
ARTICLE 7
NEGATIVE COVENANTS
So long as any Lender has any Commitment hereunder or any Loan remains
unpaid or any Revolving Credit Exposure remains outstanding, Parent and the
Borrower covenant and agree that they will not:
Section 7.1 FINANCIAL COVENANTS.
(a) Permit the Net Cash Flow of Parent on a consolidated basis
for the Rolling Period ending on the most recent Quarterly Date to be less than
$3,400,000.
(b) Permit the Debt Service Coverage Ratio for the Rolling
Period ending on the most recent Quarterly Date to be less than 1.20 to 1.00.
(c) Permit the Senior Leverage Ratio at the end of any Fiscal
Quarter to be greater than 2.50 to 1.00.
45
Section 7.2 INDEBTEDNESS.
(a) Permit Hallwood Realty (in its individual capacity and not
as the general partner of HRY) or HCRE to create, incur or suffer to exist, any
Indebtedness, or
(b) create, incur, assume or suffer to exist any Indebtedness,
other than:
(1) the Lender Indebtedness;
(2) Indebtedness outstanding on the date hereof which
is set forth on Schedule 7.2, and any refinancings, refundings,
renewals or extensions thereof (without any (A) increase in the
principal amount thereof or rate of interest thereon, or (B)
acceleration of the date of, or increase in the amount of, any payment
of principal thereon);
(3) Indebtedness evidenced by the Subordinated
Debentures;
(4) Indebtedness evidenced by the Parent Intercompany
Notes;
(5) obligations for current taxes, assessments and
other governmental charges and taxes, assessments or other governmental
charges which are not yet due or are being contested in good faith by
appropriate action or proceeding promptly initiated and diligently
conducted, if reserves as shall be required by GAAP shall have been
made therefor;
(6) Indebtedness referenced in Section 7.6(f);
(7) purchase money Indebtedness referenced in Section
7.3(h); and
(8) other Indebtedness so long as immediately after
giving effect thereto and the application of the proceeds therefrom,
the Debt Service Coverage Ratio would be greater than 1.30 to 1.00
(computed to give pro forma effect to the creation, incurrence or
assumption of such Indebtedness).
Section 7.3 LIENS. Create, incur, assume or suffer to exist any Lien on
any of its Property now owned or hereafter acquired to secure any Indebtedness
of any Credit Party or any other Person, other than:
(a) Liens existing on the date hereof and set forth on
Schedule 7.3;
(b) Liens securing the Lender Indebtedness;
(c) Liens for taxes, assessments or other governmental charges
or levies not yet due or which are being contested in good faith by appropriate
action or proceedings and with respect to which adequate reserves are being
maintained;
(d) statutory Liens of landlords and Liens of carriers,
warehousemen, mechanics, materialmen, repairmen, workmen, and other Liens
imposed by law created in the
46
ordinary course of business for amounts which are not past due for more than 30
days or which are being contested in good faith by appropriate action or
proceedings and with respect to which adequate reserves in accordance with GAAP
are being maintained;
(e) Liens incurred or deposits or pledges made in the ordinary
course of business in connection with workers' compensation, unemployment
insurance and other types of social security, old age or other similar
obligations, or to secure the performance of tenders, statutory obligations,
surety and appeal bonds, bids, leases, government contracts, performance and
return-of-money bonds and other similar obligations (exclusive of obligations
for the payment of borrowed money);
(f) minor irregularities in title, easements, rights-of-way,
restrictions, servitudes, permits, reservations, exceptions, conditions,
covenants and other similar charges or encumbrances not materially interfering
with the occupation, use and enjoyment by any Credit Party of any of their
respective Properties in the normal course of business or materially impairing
the value thereof;
(g) any obligations or duties affecting any of the Property of
any Credit Party to any municipality or public authority with respect to any
franchise, grant, license or permit which do not materially impair the use of
such Property for the purposes for which it is held;
(h) Liens encumbering Property of any Credit Party securing
Indebtedness incurred to finance the purchase price of such Property; provided,
that (1) no such Lien shall encumber any Property of any Credit Party other than
the Property acquired with the proceeds of such Indebtedness, and (2) the
Indebtedness secured by any such Lien shall not exceed the purchase price of the
Property purchased with the proceeds of such indebtedness; and
(i) extensions, renewals or replacements of any Lien referred
to in Section 7.3(a), provided that the principal amount of the Indebtedness or
obligation secured thereby is not increased and that any such extension, renewal
or replacement is limited to the Property originally encumbered thereby.
Section 7.4 MERGERS, SALES, ETC. Merge into or with or consolidate with
any other Person, or sell, lease or otherwise dispose of all or substantially
all of its Property to any other Person. In addition to the foregoing, Parent
and the Borrower will not sell, lease, transfer, abandon or otherwise dispose of
any Collateral; provided, that, any Credit Party may sell, transfer or otherwise
dispose of any such Collateral or all or substantially all of its Property if
each of the following conditions is satisfied: (a) the Borrower shall have
provided the Administrative Agent with not less than ten (10) Business Days
notice of such sale, transfer or other disposition, (b) no Benchmark Collateral
Value Deficiency exists prior to the consummation of such sale, transfer or
other disposition, (c) no Default has occurred which is continuing, and (d) the
Borrower will immediately upon the consummation of such sale, transfer or other
disposition either (1) make a prepayment of principal on the Loans as set forth
in Section 2.8(d) in an amount sufficient to eliminate any resulting Benchmark
Collateral Deficiency, or (2) submit additional Collateral owned by Parent or
the Borrower consisting of cash, marketable Equity or other Equity reasonably
acceptable to the Administrative Agent and Required Lenders with a value
sufficient to increase the aggregate value of all Collateral
47
securing the Lender Indebtedness to an amount not less than 200% of the then
outstanding principal balance of the Loans. Simultaneously with the submission
of additional Collateral pursuant to clause (d)(2) of this Section 7.4, the
Borrower shall deliver to the Administrative Agent and each Lender a Collateral
Value Certificate covering the existing and additional proposed Collateral.
Section 7.5 RESTRICTED PAYMENTS. Declare, pay or make, or agree to
declare, pay or make, directly or indirectly, any Restricted Payment, except
that:
(a) Parent may declare and pay dividends with respect to (1)
its Series B Preferred Stock in cash, and (2) its capital stock solely in
additional shares of its common stock;
(b) the Borrower may declare and pay dividends to Parent;
(c) Parent may make payments to Epsilon Trust pursuant to the
terms of the Shareholder Agreement; and
(d) provided no Default, Event of Default or Benchmark
Collateral Deficiency then exists, and provided further no Default or Event of
Default would result from any such Restricted Payment, other Restricted Payments
as long as at any date and immediately after giving effect thereto, the sum of
the aggregate amount of all Restricted Payments made from and after the Closing
Date to and including such date shall not exceed the Restricted Payment Limit in
effect at such date.
Section 7.6 INVESTMENTS, LOANS, ETC. Make or permit any loans to or
investments in any Person, other than:
(a) investments, loans or advances, the material details of
which have been set forth on Schedule 5.7;
(b) investments in direct obligations of, or obligations the
principal of and interest on which are unconditionally guaranteed by, the United
States of America (or by any agency thereof to the extent such obligations are
backed by the full faith and credit of the United States of America), in each
case maturing within one year from the date of acquisition thereof;
(c) investments in certificates of deposit of maturities less
than one year, issued by commercial banks in the United States having capital
and surplus in excess of $100,000,000 and having short-term credit ratings of at
least A1 and P1 by Standard & Poor's Ratings Group and Moody's Investors
Service, Inc., respectively;
(d) investments in commercial paper of maturities of not more
than 180 days rated the highest credit rating obtainable from Standard & Poor's
Ratings Group and Moody's Investors Service, Inc.;
(e) investments in securities that are obligations of the
United States government purchased by Parent or any Subsidiary of Parent under
fully collateralized repurchase agreements pursuant to which arrangements are
made with selling financial institutions (being a financial institution having
unimpaired capital and surplus of not less than
48
$100,000,000 and with short-term credit ratings of at least A1 and P1 by
Standard & Poor's Ratings Group and Moody's Investors Service, Inc.,
respectively) for such financial institutions to repurchase such securities
within 30 days from the date of purchase by Parent or such Subsidiary, and other
similar short-term investments made in connection with Parent's or any of its
Subsidiary's cash management practices; provided that Parent shall take
possession of all securities purchased by Parent or any Subsidiary under
repurchase agreements and shall adhere to customary margin and mark-to-market
procedures with respect to fluctuations in value;
(f) investments, contributions, loans or advances to Parent or
any Subsidiary of Parent; provided, that such loans or advances are subordinated
to the repayment of the Lender Indebtedness on terms and conditions satisfactory
to the Administrative Agent; and
(g) investments, loans or advances (in addition to those
contemplated by Section 7.6(a) through Section 7.6(f)) measured at cost on a
cumulative basis from and after the date of this Agreement not exceeding
$500,000 in principal amount.
Section 7.7 SALES AND LEASEBACKS. Enter into any arrangement, directly
or indirectly, with any Person whereby Parent or any other Credit Party shall
sell or transfer any Property, whether now owned or hereafter acquired, and
whereby Parent or any other Credit Party shall then or thereafter rent or lease
as lessee such Property or any part thereof or other Property which Parent or
any other Credit Party intends to use for substantially the same purpose or
purposes as the Property sold or transferred.
Section 7.8 NATURE OF BUSINESS. Except with the consent of the Lenders,
engage in, or permit any Subsidiary of Parent to engage in, any business other
than the businesses in which they are engaged in as of the Closing Date or that
are directly related thereto.
Section 7.9 ERISA COMPLIANCE. Except for matters described in Section
7.9(a), Section 7.9(b), Section 7.9(c), Section 7.9(g) and Section 7.9(i) below
that could not reasonably be expected, individually or in the aggregate, to
result in any material liability of Parent, any Subsidiary of Parent or any
ERISA Affiliate:
(a) Engage in, or permit a Subsidiary of Parent or any ERISA
Affiliate to engage in, any transaction in connection with which Parent, a
Subsidiary of Parent or any ERISA Affiliate could be subjected to either a civil
penalty assessed pursuant to Sections 502(c), (i) or (l) of ERISA or a tax
imposed by Chapter 43 of Subtitle D of the Code;
(b) Terminate, or permit a Subsidiary of Parent or any ERISA
Affiliate to terminate, any Plan in a manner, or take any other action with
respect to any Plan, which could reasonably be expected to result in any
material liability of Parent, a Subsidiary of Parent or any ERISA Affiliate to
the PBGC or any other Governmental Authority;
(c) Fail to make, or permit a Subsidiary of Parent or any
ERISA Affiliate to fail to make, full payment when due of all amounts which,
under the provisions of any Plan, agreement relating thereto or applicable law,
Parent, a Subsidiary of Parent or any ERISA Affiliate is required to pay as
contributions thereto;
49
(d) Permit to exist, or allow a Subsidiary of Parent or any
ERISA Affiliate to permit to exist, any accumulated funding deficiency within
the meaning of Section 302 of ERISA or Section 412 of the Code, whether or not
waived, with respect to any Plan;
(e) Contribute to or assume an obligation to contribute to, or
permit a Subsidiary of Parent or any ERISA Affiliate to contribute to or assume
an obligation to contribute to, any "multiemployer plan" as such term is defined
in Section 3(37) or 4001(a)(3) of ERISA;
(f) Acquire, or permit a Subsidiary of Parent or any ERISA
Affiliate to acquire, an interest in any Person that causes such Person to
become an ERISA Affiliate with respect to Parent or a Subsidiary of Parent or
with respect to any ERISA Affiliate of Parent or a Subsidiary of Parent if such
Person sponsors, maintains or contributes to, or at any time in the six-year
period preceding such acquisition has sponsored, maintained, or contributed to,
any "multiemployer plan" as such term is defined in Section 3(37) or 4001(a)(3)
of ERISA;
(g) Fail to pay, or cause to be paid, to the PBGC in a timely
manner, and without incurring any late payment or underpayment charge or
penalty, all premiums required pursuant to Sections 4006 and 4007 of ERISA;
(h) Amend, or permit a Subsidiary of Parent or any ERISA
Affiliate to amend, a Plan resulting in an increase in current liability such
that Parent, a Subsidiary of Parent or any ERISA Affiliate is required to
provide security to such Plan under Section 401(a)(29) of the Code;
(i) Incur, or permit a Subsidiary of Parent or any ERISA
Affiliate to incur, a material liability to or on account of a Plan under
Sections 515, 4062, 4063, 4064, 4201 or 4204 of ERISA; or
(j) Permit, or allow a Subsidiary of Parent or any ERISA
Affiliate to permit, the actuarial present value of the benefit liabilities
(computed on an accumulated benefit obligation basis in accordance with GAAP)
under all Plans in the aggregate to exceed the current value of the assets of
all Plans in the aggregate that are allocable to such benefit liabilities.
Section 7.10 SALE OR DISCOUNT OF RECEIVABLES. Sell, with or without
recourse, for discount or otherwise, any notes or accounts receivable.
Section 7.11 NEGATIVE PLEDGE AGREEMENTS. Create, incur, assume or
suffer to exist, any contract, agreement or understanding which in any way
prohibits or restricts the granting, conveying, creation or imposition of any
Lien on any Collateral of any Credit Party, or which requires the consent of or
notice to other Persons in connection therewith other than (a) this Agreement
and the other Financing Documents, and (b) the Subordinated Debentures Indenture
and the Subordinated Debentures.
Section 7.12 TRANSACTIONS WITH AFFILIATES. Except as may be expressly
permitted by the terms of the Financing Documents, enter into any transaction or
series of transactions, or permit any Subsidiary of Parent to enter into any
transaction or series of transactions, with Affiliates of any such Person (other
than Subsidiaries of Parent) which involve an outflow of
50
money or other Property from Parent or any other such Person to an Affiliate of
Parent or any other such Person (other than Subsidiaries of Parent), including,
but not limited to, repayment of Indebtedness, management fees, compensation,
salaries, bonuses, asset purchase payments or any other type of fees or payments
similar in nature except for (a) payments described in Section 7.5(c), (b)
payments on the Closing Date to repay subordinated shareholder advances
previously made to the Borrower, (c) consulting fees payable to Anthony J.
Gumbiner under Parent's existing agreement with such Person, provided, that, the
amount of such fees does not exceed $800,000 in any Fiscal Year, and (d) those
which are in the ordinary course of business of Parent and such other Person and
are on fair and reasonable terms no less favorable than would be obtained in a
comparable arm's length transaction with a Person not an Affiliate.
Section 7.13 UNCONDITIONAL PURCHASE OBLIGATIONS. Enter into or be a
party to any material contract for the purchase of materials, supplies or other
property or services, if such contract requires that payment be made by it
regardless of whether or not delivery is ever made of such materials, supplies
or other property or services.
Section 7.14 INTERCOMPANY TRANSACTIONS. Create, or permit any
Subsidiary of Parent (other than Brookwood) to create, or otherwise cause or
permit to exist or become effective, except as may be expressly permitted or
required by the Financing Documents, any consensual encumbrance or restriction
of any kind on the ability of any such Person to (a) pay dividends or make any
other distribution to Parent or any Subsidiary of Parent in respect of such
Person's capital stock, membership interests or with respect to any other
interest or participation in, or measured by, its profits, (b) pay any
indebtedness owed to Parent or any Subsidiary of Parent, (c) make any loan or
advance to Parent or any Subsidiary of Parent, or (d) sell, lease or transfer
any of its Property to Parent or any Subsidiary of Parent.
Section 7.15 MODIFICATIONS TO ORGANIZATIONAL DOCUMENTS. Amend, modify
or waive (or permit the amendment, modification or waiver of) any provision or
covenant contained in the organizational or charter documents of Parent or any
Subsidiary of Parent if such amendment, modification or waiver would cause or
result in a Material Adverse Effect.
Section 7.16 MODIFICATIONS TO SUBORDINATED DEBENTURES; PAYMENT
RESTRICTIONS.
(a) Amend, modify or waive any term or provision of the
Subordinated Debentures or the Subordinated Debentures Indenture if the effect
of such amendment, modification or waiver (1) subjects Parent or any Subsidiary
of Parent to any additional material obligation, (2) increases the principal of
or rate of interest on any Subordinated Debenture, (3) accelerates the date
fixed for any payment of principal or interest on any Subordinated Debenture, or
(4) relates to the subordination provisions thereof.
(b) Make any payment on or defeasance of any part of the
Subordinated Debentures (whether a voluntary or mandatory prepayment, a payment
at scheduled maturity or otherwise), except, provided no Default, Event of
Default or Benchmark Collateral Deficiency has occurred and is continuing,
regularly scheduled payments of interest on the Subordinated Debentures.
51
ARTICLE 8
EVENTS OF DEFAULT
Upon the occurrence and during the continuance of any of the following
specified events (each an "EVENT OF DEFAULT"):
Section 8.1 PAYMENTS.
(a) the Borrower shall fail to pay when due (including, but
not limited to, by mandatory prepayment required pursuant to Section 2.8) any
principal of, or interest on, any Loan or any Note, or
(b) the Borrower or Parent shall fail to pay any fee or any
other amount payable hereunder or under any other Financing Document, and such
failure to pay shall continue unremedied for a period of five days;
Section 8.2 COVENANTS WITHOUT NOTICE. Parent and/or the Borrower shall
fail to observe or perform any covenant or agreement contained in Section 4.3,
Section 6.1, Section 6.5, or Section 6.7;
Section 8.3 OTHER COVENANTS. Parent and/or the Borrower shall fail to
observe or perform any covenant or agreement contained in (a) Section 6.9 or
Article 7 and, if capable of being remedied, such failure shall remain
unremedied for ten days after the earlier of (1) Parent's or the Borrower's
obtaining knowledge thereof, or (2) written notice thereof shall have been given
to Parent or the Borrower by the Administrative Agent, or (b) this Agreement,
other than those referred to in Section 8.1, Section 8.2 or Section 8.3(a) and,
if capable of being remedied, such failure shall remain unremedied for 30 days
after the earlier of (1) Parent's or the Borrower's obtaining knowledge thereof,
or (2) written notice thereof shall have been given to Parent or the Borrower by
the Administrative Agent;
Section 8.4 OTHER FINANCING DOCUMENT OBLIGATIONS. Default is made in
the due observance or performance by Parent or any other Credit Party of any of
the covenants or agreements contained in any Financing Document other than this
Agreement, and such default continues unremedied beyond the expiration of any
applicable grace period which may be expressly allowed under such Financing
Document;
Section 8.5 REPRESENTATIONS. Any representation, warranty or statement
made or deemed to be made by Parent or any other Credit Party or any of Parent's
or such other Credit Party's officers herein or in any other Financing Document,
or in any certificate, request or other document furnished pursuant to or under
this Agreement or any other Financing Document, shall have been incorrect in any
material respect as of the date when made or deemed to be made;
Section 8.6 NON-PAYMENTS OF OTHER INDEBTEDNESS. Parent or any other
Credit Party shall fail to make any payment or payments of principal of or
interest on any Indebtedness of Parent or such other Credit Party in excess of
$500,000 in the aggregate when due (whether at stated maturity, by acceleration,
on demand or otherwise) after giving effect to any applicable grace period;
52
Section 8.7 DEFAULTS UNDER OTHER AGREEMENTS. Parent or any other Credit
Party shall fail to observe or perform any covenant or agreement contained in
any agreement(s) or instrument(s) relating to Indebtedness of Parent or such
other Credit Party of $1,000,000 or more in the aggregate within any applicable
grace period, or any other event shall occur, if the effect of such failure or
other event is to accelerate, or, with respect to Parent and such other Credit
Parties, to permit the holder of such Indebtedness or any other Person to
accelerate, the maturity of $1,000,000 or more in the aggregate of such
Indebtedness; or $100,000 or more in the aggregate of any such Indebtedness
shall be, or if as a result of such failure or other event may be, required to
be prepaid (other than prepayments resulting from excess cash flow) in whole or
in part prior to its stated maturity;
Section 8.8 BANKRUPTCY. Parent or Borrower shall commence a voluntary
case concerning itself under Title 11 of the United States Code entitled
"Bankruptcy" as now or hereafter in effect, or any successor thereto (the
"BANKRUPTCY CODE"); or an involuntary case is commenced against Parent or
Borrower and the petition is not controverted within ten days, or is not stayed
or dismissed within 60 days, after commencement of the case; or a custodian (as
defined in the Bankruptcy Code) is appointed for, or takes charge of, all or any
substantial part of the property of Parent or Borrower; or Parent or Borrower
commences any other proceeding under any reorganization, arrangement, adjustment
of debt, relief of debtors, dissolution, insolvency or liquidation or similar
law of any jurisdiction whether now or hereafter in effect relating to Parent or
Borrower or there is commenced against Parent or Borrower any such proceeding
which remains unstayed or undismissed for a period of 60 days; or Parent or
Borrower is adjudicated insolvent or bankrupt; or any order of relief or other
order approving any such case or proceeding is entered; or Parent or Borrower
suffers any appointment of any custodian or the like for it or any substantial
part of its Property to continue undischarged or unstayed for a period of 60
days; or Parent or Borrower makes a general assignment for the benefit of
creditors; or Parent or Borrower shall fail to pay, or shall state in writing
that it is unable to pay, or shall be unable to pay, its debts generally as they
become due; or Parent or Borrower shall by any act or failure to act indicate
its consent to, approval of or acquiescence in any of the foregoing; or any
corporate, limited liability company or other action is taken by Parent or
Borrower for the purpose of effecting any of the foregoing;
Section 8.9 MONEY JUDGMENT. Judgments or orders for the payment of
money involving in the aggregate at any time a liability (net of any insurance
proceeds or indemnity payments actually received in respect thereof prior to or
within 60 days from the entry thereof, or to be received in respect thereof in
the event any appeal thereof shall be unsuccessful) of more than $500,000, or
that would otherwise have a Material Adverse Effect shall be rendered against
Parent or any other Credit Party and such judgment or order shall continue
unsatisfied in accordance with the terms of such judgment or order (in the case
of a money judgment) and in effect for a period of 60 days during which
execution shall not be effectively stayed or deferred (whether by action of a
court, by agreement or otherwise);
Section 8.10 DISCONTINUANCE OF BUSINESS. Any Credit Party shall cease
to be principally engaged in the businesses and operations in which such Persons
were principally engaged on the Closing Date;
53
Section 8.11 FINANCING DOCUMENTS. Any Material Provision of any of the
Financing Documents after delivery thereof shall for any reason, except to the
extent permitted by the terms thereof, cease to be in full force and effect and
valid, binding and enforceable (except as enforceability may be limited as
stated in Section 5.3) in accordance with its terms, or, in the case of any of
the Security Instruments, cease to create a valid and perfected Lien of the
priority contemplated thereby on any of the collateral purported to be covered
thereby, or Parent or any other Credit Party (or any other Person who may have
granted or purported to grant such Lien) shall so state in writing. As used in
this Section 8.11, "MATERIAL PROVISION" shall mean (a) with respect to this
Agreement, the Notes, or the Facility Guaranty, any material term, covenant, or
agreement set forth therein, and (b) with respect to any other Financing
Document, any provision if the validity and enforceability thereof is necessary
for such Financing Document to accomplish its stated, or clearly intended,
purpose or otherwise necessary in order for any Lender to enforce any material
right or remedy under any Financing Document;
Section 8.12 CHANGE OF CONTROL. The occurrence of a Change of Control;
Section 8.13 SUBORDINATION OF LENDER INDEBTEDNESS. The Subordinated
Debentures shall cease, for any reason, to be validly subordinated to the Lender
Indebtedness, as provided in the Subordinated Debentures Indenture, or Parent,
any Subsidiary of Parent, any Affiliate of any such party, or any holder of
Subordinated Debentures shall violate the subordination provisions of the
Subordinated Debentures Indenture, or contest the validity thereof in any legal,
arbitration, mediation or similar proceeding; or
Section 8.14 DEFAULT UNDER SUBORDINATED INDEBTEDNESS. The occurrence of
an event of default under the Subordinated Debentures Indenture after giving
effect to any applicable grace or cure period provided in the Subordinated
Debentures Indenture;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Administrative Agent, upon the written or telex
request of the Required Lenders, shall, by written notice to Parent and the
Borrower, take any or all of the following actions, without prejudice to the
rights of the Administrative Agent, any Lender or the holder of any Note, to
enforce its claims against Parent and the other Credit Parties: declare the
entire principal amount of and all accrued interest on all Lender Indebtedness
then outstanding to be, whereupon the same shall become, forthwith due and
payable without presentment, demand, protest, notice of protest or dishonor,
notice of acceleration, notice of intent to accelerate or other notice of any
kind, all of which are hereby expressly waived by Parent and the Borrower, and
thereupon take such action as it may deem desirable under and pursuant to the
Financing Documents; provided, that, if an Event of Default specified in Section
8.8 shall occur, the result which would occur upon the giving of written notice
by the Administrative Agent to Parent and the Borrower, as specified above,
shall occur automatically without the giving of any such notice.
ARTICLE 9
THE ADMINISTRATIVE AGENT
Section 9.1 APPOINTMENT OF ADMINISTRATIVE AGENT. Each Lender hereby
designates First Bank & Trust, as Administrative Agent to act as herein
specified and as specified in the
54
other Financing Documents. Each Lender hereby irrevocably authorizes the
Administrative Agent to take such action on its behalf under the provisions of
this Agreement, the Notes, and the other Financing Documents and to exercise
such powers and to perform such duties hereunder and thereunder as are
specifically delegated to or required of the Administrative Agent by the terms
hereof and thereof and such other powers as are reasonably incidental thereto.
The Administrative Agent may perform any of its duties hereunder by or through
its agents or employees.
Section 9.2 LIMITATION OF DUTIES OF ADMINISTRATIVE AGENT. The
Administrative Agent shall have no duties or responsibilities except those
expressly set forth with respect to the Administrative Agent in this Agreement
and as specified in the other Financing Documents. Neither the Administrative
Agent nor any of its officers, directors, employees or agents shall be liable
for any action taken or omitted by it as such hereunder or in connection
herewith, unless caused by its or their gross negligence or willful misconduct.
The duties of the Administrative Agent shall be mechanical and administrative in
nature; the Administrative Agent shall not have by reason of this Agreement a
fiduciary relationship in respect of any Lender; and nothing in this Agreement,
expressed or implied, is intended to or shall be so construed as to impose upon
the Administrative Agent any obligations in respect of this Agreement except as
expressly set forth herein.
Section 9.3 LACK OF RELIANCE ON THE ADMINISTRATIVE AGENT.
(a) INDEPENDENT INVESTIGATION. Independently and without
reliance upon the Administrative Agent, each Lender, to the extent it deems
appropriate, has made and shall continue to make, (1) its own independent
investigation of the financial condition and affairs of the Credit Parties in
connection with the taking or not taking of any action in connection herewith,
and (2) its own appraisal of the creditworthiness of the Credit Parties, and,
except as expressly provided in this Agreement, and the other Financing
Documents, the Administrative Agent shall have no duty or responsibility, either
initially or on a continuing basis, to provide any Lender with any credit or
other information with respect thereto, whether coming into its possession
before the consummation of the transactions contemplated herein or at any time
or times thereafter.
(b) ADMINISTRATIVE AGENT NOT RESPONSIBLE. The Administrative
Agent shall not be responsible to any Lender for any recitals, statements,
information, representations or warranties herein or in any document,
certificate or other writing delivered in connection herewith or for the
execution, effectiveness, genuineness, validity, enforceability, collectibility,
priority or sufficiency of this Agreement, the Notes, or the other Financing
Documents or the financial condition of the Credit Parties or be required to
make any inquiry concerning either the performance or observance of any of the
terms, provisions or conditions of this Agreement, the Notes or the other
Financing Documents, or the financial condition of the Credit Parties, or the
existence or possible existence of any Default or Event of Default.
Section 9.4 CERTAIN RIGHTS OF THE ADMINISTRATIVE AGENT. If the
Administrative Agent shall request instructions from the Required Lenders with
respect to any act or action (including the failure to act) in connection with
this Agreement, the Notes and the other Financing Documents, the Administrative
Agent shall be entitled to refrain from such act or
55
taking such action unless and until the Administrative Agent shall have received
instructions from the Required Lenders; and the Administrative Agent shall not
incur liability to any Person by reason of so refraining. Without limiting the
foregoing, no Lender shall have any right of action whatsoever against the
Administrative Agent as a result of the Administrative Agent acting or
refraining from acting under this Agreement, the Notes and the other Financing
Documents in accordance with the instructions of the Required Lenders, or to the
extent required by Section 10.2, all of the Lenders.
Section 9.5 RELIANCE BY ADMINISTRATIVE AGENT. The Administrative Agent
shall be entitled to rely, and shall be fully protected in relying, upon any
note, writing, resolution, notice, statement, certificate, telex, teletype or
telecopier message, cablegram, radiogram, order or other documentary
teletransmission or telephone message believed by it to be genuine and correct
and to have been signed, sent or made by the proper Person. The Administrative
Agent may consult with legal counsel (including counsel for Parent and the
Borrower), independent public accountants and other experts selected by it and
shall not be liable for any action taken or omitted to be taken by it in good
faith in accordance with the advice of such counsel, accountants or experts.
Section 9.6 INDEMNIFICATION OF ADMINISTRATIVE AGENT. TO THE EXTENT THE
ADMINISTRATIVE AGENT IS NOT REIMBURSED AND INDEMNIFIED BY PARENT OR THE
BORROWER, EACH LENDER WILL REIMBURSE AND INDEMNIFY THE ADMINISTRATIVE AGENT ON A
PRO RATA BASIS, FOR AND AGAINST ANY AND ALL LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES (INCLUDING
REASONABLE COUNSEL FEES AND DISBURSEMENTS) OR DISBURSEMENTS OF ANY KIND OR
NATURE WHATSOEVER WHICH MAY BE IMPOSED ON, INCURRED BY OR ASSERTED AGAINST THE
ADMINISTRATIVE AGENT IN PERFORMING ITS DUTIES HEREUNDER, IN ANY WAY RELATING TO
OR ARISING OUT OF THIS AGREEMENT AND BY REASON OF THE ORDINARY NEGLIGENCE OF THE
ADMINISTRATIVE AGENT; PROVIDED THAT NO LENDER SHALL BE LIABLE TO THE
ADMINISTRATIVE AGENT FOR ANY PORTION OF SUCH LIABILITIES, OBLIGATIONS, LOSSES,
DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES OR DISBURSEMENTS
RESULTING FROM, AS TO THE ADMINISTRATIVE AGENT, THE ADMINISTRATIVE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
Section 9.7 THE ADMINISTRATIVE AGENT IN ITS INDIVIDUAL CAPACITY. With
respect to their obligations under this Agreement, the Loans made by it and the
Notes issued to it, the Administrative Agent shall have the same rights and
powers hereunder as any other Lender or holder of a Note and may exercise the
same as though it were not performing the duties, if any, specified herein; and
the terms "Lenders," "Required Lenders," "holders of Notes" or any similar terms
shall, unless the context clearly otherwise indicates, include the
Administrative Agent in its individual capacity. The Administrative Agent may
accept deposits from, lend money to, and generally engage in any kind of
banking, trust, financial advisory or other business with Parent, the Borrower
or any affiliate of Parent as if it were not performing the duties, if any,
specified herein, and may accept fees and other consideration from Parent or the
Borrower for services in connection with this Agreement and otherwise without
having to account for the same to the Lenders.
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Section 9.8 MAY TREAT LENDER AS OWNER. Parent, the Borrower and the
Administrative Agent may deem and treat each Lender as the owner of such
Lender's Note for all purposes hereof unless and until a written notice of the
assignment or transfer thereof shall have been filed with the Administrative
Agent. Any request, authority or consent of any Person who at the time of making
such request or giving such authority or consent is the owner of a Note shall be
conclusive and binding on any subsequent owner, transferee or assignee of such
Note or any promissory note or notes issued in exchange therefor.
Section 9.9 SUCCESSOR ADMINISTRATIVE AGENT.
(a) ADMINISTRATIVE AGENT RESIGNATION. The Administrative Agent
may resign at any time by giving written notice thereof to the Lenders, Parent
and the Borrower and may be removed at any time with or without cause by the
Required Lenders. Upon any such resignation or removal, the Required Lenders
shall have the right, upon five days' notice to Parent and the Borrower, to
appoint a successor Administrative Agent, subject to the approval of Parent and
the Borrower, such approval not to be unreasonably withheld. If no successor
Administrative Agent shall have been so appointed by the Required Lenders, and
shall have accepted such appointment, within thirty (30) days after the retiring
Administrative Agent's giving of notice of resignation or the Required Lenders'
removal of the retiring Administrative Agent, then, upon five (5) days' notice
to Parent and the Borrower, the retiring Administrative Agent may, on behalf of
the Lenders, appoint a successor Administrative Agent (subject to approval of
Parent and the Borrower, such approval not to be unreasonably withheld), which
shall be a bank which maintains an office in the United States, or a commercial
bank organized under the laws of the United States of America or of any State
thereof, or any Affiliate of such bank, having a combined capital and surplus of
at least $200,000,000.
(b) RIGHTS, POWERS, ETC. Upon the acceptance of any
appointment as Administrative Agent hereunder by a successor Administrative
Agent, such successor Administrative Agent shall thereupon succeed to and become
vested with all the rights, powers, privileges and duties of the retiring
Administrative Agent, and the retiring Administrative Agent shall be discharged
from its duties and obligations under this Agreement. After any retiring
Administrative Agent's resignation or removal hereunder as Administrative Agent,
the provisions of this Article 9 shall inure to its benefit as to any actions
taken or omitted to be taken by it while it was Administrative Agent under this
Agreement.
ARTICLE 10
MISCELLANEOUS
Section 10.1 NOTICES. All notices, requests and other communications to
any party hereunder shall be in writing (including, telecopy or similar
teletransmission or writing) and shall be given to such party at its address or
telecopy number set forth on the signature pages hereof or such other address or
telecopy number as such party may hereafter specify by notice to the
Administrative Agent and the Borrower. Each such notice, request or other
communication shall be effective (a) if given by mail, 72 hours after such
communication is deposited in the mails with first class postage prepaid,
addressed as aforesaid, or (b) if given by any other means (including, but not
limited to, by air courier), when delivered at the address specified in this
57
Section 10.1; provided, that notices to the Administrative Agent shall not be
effective until actually and physically received.
Section 10.2 AMENDMENTS AND WAIVERS. Neither this Agreement nor any
other Financing Document, nor any terms hereof or thereof, may be amended,
supplemented or modified except in accordance with the provisions of this
Section 10.2. The Required Lenders may, or, with the written consent of the
Required Lenders, the Administrative Agent shall, from time to time, (x) enter
into with Parent and the Borrower, written amendments, supplements or
modifications hereto and to the other Financing Documents for the purpose of
adding any provisions to this Agreement or to the other Financing Documents or
changing in any manner the rights or obligations of the Lenders, Parent or the
Borrower hereunder or thereunder or (y) waive at Parent's or the Borrower's
request, on such terms and conditions as the Required Lenders or the
Administrative Agent, as the case may be, may specify in such instrument, any of
the requirements of this Agreement or the other Financing Documents or any
Default and its consequences; provided, however, that no such waiver and no such
amendment, supplement or modification shall:
(a) reduce the amount or extend the scheduled date of maturity
of any Loan or of any scheduled installment thereof or reduce the stated rate of
any interest or fee payable hereunder or extend the scheduled date of any
payment thereof or modify any provision that provides for the ratable sharing by
the Lenders of any payment or prepayment of Lender Indebtedness to provide for a
non-ratable sharing thereof or increase the amount or extend the expiration date
of any Lender's Commitment or amend, modify or waive any provision of Section
2.17, in each case without the prior written consent of each Lender directly
affected thereby;
(b) change the currency in which any Loan is payable or amend,
modify or waive any provision of this Section 10.2 or reduce the percentage
specified in the definition of Required Lenders, in each case without the
written consent of all of the Lenders;
(c) release (1) Parent from its obligations under the Facility
Guaranty, or (2) any material part of the Collateral, without the written
consent of all of the Lenders, except as expressly permitted hereby; provided
that the Administrative Agent shall release (without consent from the Lenders)
any Collateral sold, transferred or otherwise disposed of as permitted by
Section 7.4; and
(d) amend, modify or waive any provision of Article 9 without
the written consent of the Administrative Agent.
Any waiver and any amendment, supplement or modification
pursuant to this Section 10.2 shall apply to each of the Lenders and shall be
binding upon Parent, the Borrower, the Lenders, the Administrative Agent and all
future holders of the Loans. In the case of any waiver, Parent, the Borrower,
the Lenders and the Administrative Agent shall be restored to their former
position and rights hereunder and under the other Financing Documents, and any
Default waived shall be deemed to be cured and not continuing; but no such
waiver shall extend to any subsequent or other Default, or impair any right
consequent thereon.
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Section 10.3 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay on the
part of Parent, the Borrower or the Administrative Agent or any Lender or any
holder of any Note in exercising any right or remedy under this Agreement or any
other Financing Document and no course of dealing between Parent, the Borrower,
the Administrative Agent or any Lender or any holder of any Note shall operate
as a waiver thereof, nor shall any single or partial exercise of any right or
remedy under the Notes, this Agreement or any other Financing Document preclude
any other or further exercise thereof or the exercise of any other right or
remedy under the Notes, this Agreement or any other Financing Document. The
rights and remedies herein expressly provided are cumulative and not exclusive
of any rights or remedies which Parent, the Borrower, the Administrative Agent
or any Lender would otherwise have. No notice to or demand on Parent or the
Borrower not required under the Notes, this Agreement or any other Financing
Document in any case shall entitle Parent or the Borrower to any other or
further notice or demand in similar or other circumstances or constitute a
waiver of the rights of the Administrative Agent or the Lenders to any other or
further action in any circumstances without notice or demand.
Section 10.4 PAYMENT OF EXPENSES, INDEMNITIES, ETC. Parent and the
Borrower agree to (and shall be jointly and severally liable for):
(a) EXPENSES. Whether or not the transactions hereby
contemplated are consummated, pay all reasonable out-of-pocket costs and
expenses of the Administrative Agent in the administration (both before and
after the execution hereof and including advice of counsel for the
Administrative Agent as to the rights and duties of the Administrative Agent and
the Lenders with respect thereto) of, and in connection with the preparation,
execution and delivery of, recording or filing of, preservation of rights under,
enforcement of, and, after a Default, refinancing, renegotiation or
restructuring of, this Agreement, the Notes, and the other Financing Documents
and any amendment, waiver or consent relating thereto (including, but not
limited to, the reasonable fees and disbursements of counsel for the
Administrative Agent and in the case of enforcement for any of the Lenders) and,
to the extent permitted by the Financing Documents, promptly reimburse the
Administrative Agent for all amounts expended, advanced, or incurred by the
Administrative Agent or the Lenders to satisfy any obligation of Parent, the
Borrower, or the other Credit Parties under this Agreement or any other
Financing Document;
(b) INDEMNIFICATION. INDEMNIFY THE ADMINISTRATIVE AGENT AND
EACH LENDER, EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS AND AFFILIATES FROM, HOLD EACH OF THEM HARMLESS AGAINST,
AND PROMPTLY UPON DEMAND PAY OR REIMBURSE EACH OF THEM FOR, ANY AND ALL ACTIONS,
SUITS, PROCEEDINGS (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES),
CLAIMS, COSTS, LOSSES, LIABILITIES, DAMAGES OR EXPENSES OF ANY KIND OR NATURE
WHATSOEVER WHICH MAY BE INCURRED BY OR ASSERTED AGAINST OR INVOLVE ANY OF THEM
(WHETHER OR NOT ANY OF THEM IS DESIGNATED A PARTY THERETO) AS A RESULT OF,
ARISING OUT OF OR IN ANY WAY RELATED TO (1) ANY ACTUAL OR PROPOSED USE BY THE
BORROWER OF THE PROCEEDS OF ANY OF THE LOANS; OR (2) ANY OTHER ASPECT OF THIS
AGREEMENT, THE NOTES, AND THE FINANCING DOCUMENTS, INCLUDING BUT NOT LIMITED TO
THE REASONABLE FEES AND DISBURSEMENTS OF COUNSEL AND ALL OTHER EXPENSES INCURRED
IN CONNECTION WITH INVESTIGATING, DEFENDING OR PREPARING TO DEFEND ANY SUCH
ACTION, SUIT, PROCEEDING (INCLUDING ANY INVESTIGATIONS, LITIGATION OR INQUIRIES)
OR CLAIM, AND INCLUDING ALL
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ACTIONS, SUITS, PROCEEDINGS (INCLUDING ANY INVESTIGATIONS, LITIGATION OR
INQUIRIES), CLAIMS, COSTS, LOSSES, LIABILITIES, DAMAGES OR EXPENSES ARISING BY
REASON OF ORDINARY NEGLIGENCE OF ANY OF THE ADMINISTRATIVE AGENT AND EACH
LENDER, EACH OF THEIR RESPECTIVE OFFICERS, DIRECTORS, EMPLOYEES,
REPRESENTATIVES, AGENTS AND AFFILIATES; PROVIDED, HOWEVER, THE PROVISIONS OF
THIS SECTION 10.4(b) SHALL NOT APPLY TO ANY ACTION, SUITS, PROCEEDINGS, CLAIMS,
COSTS, LOSSES, LIABILITIES, DAMAGES, OR EXPENSES TO THE EXTENT, BUT ONLY TO THE
EXTENT, CAUSED BY THE GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF THE PARTY
SEEKING INDEMNIFICATION;
(c) ENVIRONMENTAL INDEMNIFICATION. INDEMNIFY AND HOLD HARMLESS
FROM TIME TO TIME THE ADMINISTRATIVE AGENT AND THE LENDERS, EACH PERSON CLAIMING
BY, THROUGH, UNDER OR ON ACCOUNT OF ANY OF THE FOREGOING AND THE RESPECTIVE
DIRECTORS, OFFICERS, COUNSEL, EMPLOYEES, AGENTS, AFFILIATES, SUCCESSORS AND
ASSIGNS OF EACH OF THE FOREGOING FROM AND AGAINST ANY AND ALL LOSSES, CLAIMS,
COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS, DAMAGES AND
LIABILITIES (WHICH RELATE TO OR ARISE AS A RESULT OF THE LOANS OR ANY FINANCING
DOCUMENT) TO WHICH ANY SUCH PERSON MAY BECOME SUBJECT AND INCLUDING ANY AND ALL
LOSSES, CLAIMS, COST RECOVERY ACTIONS, ADMINISTRATIVE ORDERS OR PROCEEDINGS,
DAMAGES AND LIABILITIES (WHICH RELATE TO OR ARISE AS A RESULT OF THE LOANS OR
ANY FINANCING DOCUMENT) ARISING BY REASON OF THE ORDINARY NEGLIGENCE OF THE
ADMINISTRATIVE AGENT AND THE LENDERS, EACH PERSON CLAIMING BY, THROUGH, UNDER OR
ON ACCOUNT OF ANY OF THE FOREGOING AND THE RESPECTIVE DIRECTORS, OFFICERS,
COUNSEL, EMPLOYEES, AGENTS, AFFILIATES, SUCCESSORS AND ASSIGNS OF EACH OF THE
FOREGOING (1) UNDER ANY ENVIRONMENTAL LAW APPLICABLE TO PARENT OR ANY OTHER
CREDIT PARTY OR ANY OF THEIR RESPECTIVE PROPERTIES, INCLUDING WITHOUT
LIMITATION, THE TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES ON ANY OF THEIR
RESPECTIVE PROPERTIES, (2) AS A RESULT OF THE BREACH OR NON-COMPLIANCE BY PARENT
OR ANY OTHER CREDIT PARTY WITH ANY ENVIRONMENTAL LAW APPLICABLE TO PARENT OR ANY
OTHER CREDIT PARTY, (3) DUE TO PAST OWNERSHIP BY PARENT OR ANY OTHER CREDIT
PARTY OF ANY OF THEIR RESPECTIVE PROPERTIES OR PAST ACTIVITY ON ANY OF THEIR
RESPECTIVE PROPERTIES WHICH, THOUGH LAWFUL AND FULLY PERMISSIBLE AT THE TIME,
COULD RESULT IN PRESENT LIABILITY, (4) THE PRESENCE, USE, RELEASE, STORAGE,
TREATMENT OR DISPOSAL OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES
OWNED OR OPERATED BY PARENT OR ANY OTHER CREDIT PARTY, OR (5) ANY OTHER
ENVIRONMENTAL, HEALTH OR SAFETY CONDITION IN CONNECTION WITH THIS AGREEMENT, THE
NOTES OR ANY OTHER FINANCING DOCUMENT; PROVIDED, HOWEVER, NO INDEMNITY SHALL BE
AFFORDED UNDER THIS SECTION 10.4(c) IN RESPECT OF ANY PROPERTY FOR ANY
OCCURRENCE ARISING PRIMARILY FROM THE ACTS OR OMISSIONS OF THE ADMINISTRATIVE
AGENT OR ANY LENDER DURING THE PERIOD AFTER WHICH SUCH PERSON, ITS SUCCESSORS OR
ASSIGNS SHALL HAVE OBTAINED ACTUAL PHYSICAL POSSESSION OF SUCH PROPERTY (WHETHER
BY FORECLOSURE OR DEED IN LIEU OF FORECLOSURE, AS MORTGAGEE-IN-POSSESSION OR
OTHERWISE); AND
(d) ENVIRONMENTAL WAIVER. WITHOUT LIMITING THE FOREGOING
PROVISIONS, PARENT AND THE BORROWER DO EACH HEREBY WAIVE, RELEASE AND COVENANT
NOT TO BRING AGAINST ANY OF THE PERSONS INDEMNIFIED IN THIS SECTION 10.4 ANY
DEMAND, CLAIM, COST RECOVERY ACTION OR LAWSUIT THEY MAY NOW OR HEREAFTER HAVE OR
ACCRUE (WHICH RELATE TO OR ARISE AS A RESULT OF THE LOANS OR ANY FINANCING
60
DOCUMENT) ARISING FROM (1) ANY ENVIRONMENTAL LAW NOW OR HEREAFTER ENACTED
(INCLUDING THOSE APPLICABLE TO PARENT OR ANY OTHER CREDIT PARTY) UNLESS THE ACTS
OR OMISSIONS OF ANY SUCH PERSON OR THEIR RESPECTIVE SUCCESSORS AND ASSIGNS ARE
THE PRIMARY CAUSE OF THE CIRCUMSTANCES GIVING RISE TO SUCH DEMAND, COST RECOVERY
ACTION OR LAWSUIT, (2) THE PRESENCE, USE, RELEASE, STORAGE, TREATMENT OR
DISPOSAL OF HAZARDOUS SUBSTANCES ON OR AT ANY OF THE PROPERTIES OWNED OR
OPERATED BY PARENT OR ANY OTHER CREDIT PARTY, OR (3) THE BREACH OR
NON-COMPLIANCE BY PARENT OR ANY OTHER CREDIT PARTY WITH ANY ENVIRONMENTAL LAW OR
ENVIRONMENTAL COVENANT APPLICABLE TO PARENT OR ANY OTHER CREDIT PARTY, UNLESS
THE ACTS OR OMISSIONS OF SUCH PERSON, ITS SUCCESSORS AND ASSIGNS ARE THE PRIMARY
CAUSE OF THE CIRCUMSTANCES GIVING RISE TO SUCH DEMAND, CLAIM, COST RECOVERY
ACTION OR LAWSUIT.
If and to the extent that the obligations of Parent and the Borrower under this
Section 10.4 are unenforceable for any reason, Parent and the Borrower each
hereby agree to make the maximum contribution to the payment and satisfaction of
such obligations which is permissible under applicable law. Parent's and the
Borrower's obligations under this Section 10.4 shall survive any termination of
this Agreement and the payment of the Notes.
Section 10.5 RIGHT OF SETOFF. In addition to and not in limitation of
all rights of offset that any Lender may have under applicable law, each Lender
or other holder of a Note, or any other Lender Indebtedness shall, upon the
occurrence of any Event of Default and at any time during the continuance
thereof and whether or not such Lender, or such holder has made any demand or
the Borrower's obligations are matured, have the right at any time and from time
to time, without notice to Parent or the Borrower (any such notice being
expressly waived by Parent and the Borrower) to set-off and apply any and all
deposits (general or special, time or demand, provisional or final) at any time
held and other indebtedness at any time owing by any Lender to or for the credit
or the account of Parent or the Borrower against any and all of the Lender
Indebtedness owing to such Lender then outstanding, subject to the provisions of
Section 2.17.
Section 10.6 BENEFIT OF AGREEMENT. The Notes, this Agreement and the
other Financing Documents shall be binding upon and inure to the benefit of and
be enforceable by the respective successors and assigns of the parties hereto,
provided, that neither Parent nor the Borrower may assign or transfer any of
their interest hereunder or thereunder without the prior written consent of the
Lenders.
Section 10.7 SUCCESSORS AND ASSIGNS; PARTICIPATIONS AND ASSIGNMENTS.
(a) The provisions of this Agreement shall be binding upon and
inure to the benefit of the parties hereto and their respective successors and
assigns permitted hereby, except that neither Parent nor the Borrower may assign
or otherwise transfer any of their rights or obligations hereunder without the
prior written consent of each Lender (and any attempted assignment or transfer
by Parent or the Borrower without such consent shall be null and void). Nothing
in this Agreement, expressed or implied, shall be construed to confer upon any
Person (other than the parties hereto, their respective successors and assigns
permitted hereby) any legal or equitable right, remedy or claim under or by
reason of this Agreement.
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(b) Any Lender may assign to one or more assignees all or a
portion of its rights and obligations under this Agreement (including all or a
portion of its Commitment and the Loans at the time owing to it); provided that
(1) except in the case of an assignment to a Lender or an Affiliate of a Lender,
each of the Borrower and the Administrative Agent must give their prior written
consent to such assignment (which consent shall not be unreasonably withheld),
(2) except in the case of an assignment to a Lender or an Affiliate of a Lender
or an assignment of the entire remaining amount of the assigning Lender's
Commitment, the amount of the Commitment of the assigning Lender subject to each
such assignment (determined as of the date the Assignment and Acceptance with
respect to such assignment is delivered to the Administrative Agent) shall not
be less than $250,000 unless each of the Borrower and the Administrative Agent
otherwise consent, (3) each partial assignment shall be made as an assignment of
a proportionate part of all the assigning Lender's rights and obligations under
this Agreement, (4) the parties to each assignment shall execute and deliver to
the Administrative Agent an Assignment and Acceptance, together with a
processing fee of $500 and all applicable recordation fees, and (5) the
assignee, if it shall not be a Lender, shall deliver to the Administrative Agent
such information relevant to such assignee as the Administrative Agent shall
request to evidence such assignee as a Lender hereunder; and provided further
that any consent of the Borrower otherwise required under this paragraph shall
not be required if an Event of Default has occurred and is continuing. Subject
to acceptance and recording thereof pursuant to Section 10.7(d), from and after
the effective date specified in each Assignment and Acceptance the assignee
thereunder shall be a party hereto and, to the extent of the interest assigned
by such Assignment and Acceptance, have the rights and obligations of a Lender
under this Agreement, and the assigning Lender thereunder shall, to the extent
of the interest assigned by such Assignment and Acceptance, be released from its
obligations under this Agreement (and, in the case of an Assignment and
Acceptance covering all of the assigning Lender's rights and obligations under
this Agreement, such Lender shall cease to be a party hereto but shall continue
to be entitled to the benefits of Section 2.14, Section 2.16, Section 2.18 and
Section 10.4). Any assignment or transfer by a Lender of rights or obligations
under this Agreement that does not comply with this paragraph shall be treated
for purposes of this Agreement as a sale by such Lender of a participation in
such rights and obligations in accordance with this Section 10.7(b).
(c) The Administrative Agent, acting for this purpose as an
agent of the Borrower, shall maintain at its offices in Houston, Texas a copy of
each Assignment and Acceptance delivered to it and a register for the
recordation of the names and addresses of the Lenders, and the Commitment of,
and principal amount of the Loans owing to, each Lender pursuant to the terms
hereof from time to time (the "REGISTER"). The entries in the Register shall be
conclusive, and the Borrower, the Administrative Agent and the Lenders may treat
each Person whose name is recorded in the Register pursuant to the terms hereof
as a Lender hereunder for all purposes of this Agreement, notwithstanding notice
to the contrary. The Register shall be available for inspection by the Borrower
and any Lender, at any reasonable time and from time to time upon reasonable
prior notice.
(d) Upon its receipt of a duly completed Assignment and
Acceptance executed by an assigning Lender and an assignee, the assignee's
completed Administrative Questionnaire (unless the assignee shall already be a
Lender hereunder), the processing and recordation fees referred to in Section
10.7(b) and any written consent to such assignment required by Section 10.7(b),
the Administrative Agent shall accept such Assignment and
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Acceptance and record the information contained therein in the Register. No
assignment shall be effective for purposes of this Agreement unless it has been
recorded in the Register as provided in this paragraph.
(e) Any Lender may, without the consent of Parent, the
Borrower or the Administrative Agent, sell participations to one or more banks
or other entities (a "PARTICIPANT") in all or a portion of such Lender's rights
and obligations under this Agreement (including all or a portion of its
Commitment and the Loans owing to it); provided that (1) such Lender's
obligations under this Agreement shall remain unchanged, (2) such Lender shall
remain solely responsible to the other parties hereto for the performance of
such obligations and (3) Parent, the Borrower, the Administrative Agent and the
other Lenders shall continue to deal solely and directly with such Lender in
connection with such Lender's rights and obligations under this Agreement. Any
agreement or instrument pursuant to which a Lender sells such a participation
shall provide that such Lender shall retain the sole right to enforce this
Agreement and to approve any amendment, modification or waiver of any provision
of this Agreement; provided that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in Section 10.2(a) or Section
10.2(b) that affects such Participant. Subject to this Section 10.7(e), Parent
and the Borrower each agree that each Participant shall be entitled to the
benefits of Section 2.14, Section 2.16 and Section 2.18 to the same extent as if
it were a Lender and had acquired its interest by assignment pursuant to Section
10.7(b). To the extent permitted by law, each Participant also shall be entitled
to the benefits of Section 10.5 as though it were a Lender, provided such
Participant agrees to be subject to Section 2.17 as though it were a Lender.
(f) A Participant shall not be entitled to receive any greater
payment under Section 2.14, Section 2.16 or Section 2.18 than the applicable
Lender would have been entitled to receive with respect to the participation
sold to such Participant, unless the sale of the participation to such
Participant is made with the Borrower's prior written consent. A Participant
that would be a Foreign Lender if it were a Lender shall not be entitled to the
benefits of Section 2.18 unless the Borrower is notified of the participation
sold to such Participant and such Participant agrees, for the benefit of the
Borrower, to comply with Section 2.18(f) as though it were a Lender.
(g) Any Lender may at any time pledge or assign a security
interest in all or any portion of its rights under this Agreement to secure
obligations of such Lender, including any pledge or assignment to secure
obligations to a Federal Reserve Bank, and this Section 10.7 shall not apply to
any such pledge or assignment of a security interest; provided that no such
pledge or assignment of a security interest shall release a Lender from any of
its obligations hereunder or substitute any such pledgee or assignee for such
Lender as a party hereto.
(h) Parent and the Borrower each authorize each Lender to
disclose to any participant or Assignee (each, a "TRANSFEREE") and any
prospective Transferee any and all information in such Lender's possession
concerning Parent, the Borrower and Parent's Affiliates which has been delivered
to such Lender by or on behalf of Parent or the Borrower pursuant to this
Agreement or which has been delivered to such Lender by or on behalf of Parent
or the Borrower in connection with such Lender's credit evaluation of Parent,
the Borrower and Parent's Affiliates prior to becoming a party to this
Agreement, provided that, each such
63
Transferee agrees to be bound by the confidentiality provisions of Section
10.12. No assignment or participation made or purported to be made to any
Transferee shall be effective without the prior written consent of Parent and
the Borrower if it would require it to make any filing with any Governmental
Authority or qualify any Loan or Note under the laws of any jurisdiction, and
Parent and the Borrower shall be entitled to request and receive such
information and assurances as it may reasonably request from any Lender or any
Transferee to determine whether any such filing or qualification is required or
whether any assignment or participation is otherwise in accordance with
applicable law.
Section 10.8 GOVERNING LAW; SUBMISSION TO JURISDICTION; ETC.
(a) GOVERNING LAW. THIS AGREEMENT AND THE RIGHTS AND
OBLIGATIONS OF THE PARTIES HEREUNDER AND UNDER THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND BE GOVERNED BY THE LAWS OF THE STATE OF TEXAS AND, TO THE
EXTENT CONTROLLING, LAWS OF THE UNITED STATES OF AMERICA.
(b) SUBMISSION TO JURISDICTION. ANY LEGAL ACTION OR PROCEEDING
WITH RESPECT TO THIS AGREEMENT, THE NOTES OR THE OTHER FINANCING DOCUMENTS MAY
BE BROUGHT IN THE COURTS OF THE STATE OF TEXAS OR OF THE UNITED STATES OF
AMERICA FOR THE SOUTHERN DISTRICT OF TEXAS, AND, BY EXECUTION AND DELIVERY OF
THIS AGREEMENT, PARENT AND THE BORROWER EACH HEREBY ACCEPT FOR ITSELF AND IN
RESPECT OF ITS PROPERTY, GENERALLY AND UNCONDITIONALLY, THE JURISDICTION OF THE
AFORESAID COURTS. PARENT AND THE BORROWER EACH HEREBY IRREVOCABLY WAIVE ANY
OBJECTION, INCLUDING, BUT NOT LIMITED TO, ANY OBJECTION TO THE LAYING OF VENUE
OR BASED ON THE GROUNDS OF FORUM NON CONVENIENS, WHICH IT MAY NOW OR HEREAFTER
HAVE TO THE BRINGING OF ANY SUCH ACTION OR PROCEEDING IN SUCH RESPECTIVE
JURISDICTIONS.
(c) WAIVER OF CONSEQUENTIAL DAMAGES. TO THE MAXIMUM EXTENT
ALLOWED BY APPLICABLE LAW, EACH OF PARENT, THE BORROWER, THE ADMINISTRATIVE
AGENT AND THE LENDERS (1) IRREVOCABLY WAIVES ANY RIGHT IT MAY HAVE TO CLAIM OR
RECOVER IN ANY SUCH LITIGATION ANY SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL
DAMAGES, OR DAMAGES OTHER THAN, OR IN ADDITION TO, ACTUAL DAMAGES; (2) CERTIFIES
THAT NO PARTY HERETO NOR ANY REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS
REPRESENTED, EXPRESSLY OR OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN
THE EVENT OF LITIGATION, SEEK TO ENFORCE THE FOREGOING WAIVER; AND (3)
ACKNOWLEDGES THAT IT HAS BEEN INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER
FINANCING DOCUMENTS AND THE TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BASED
UPON, AMONG OTHER THINGS, THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN
THIS Section 10.8.
(d) PROCESS AGENT. CT Corporation System, with an office on
the date hereof at 350 N. St. Paul, Suite 2900, Dallas, Texas 75201, is the
designee, appointee and process agent of Parent and the Borrower designated to
receive, for and on behalf of Parent and the Borrower, service of process in
such respective jurisdictions in any legal action or proceeding with respect to
this Agreement, the Notes, or the other Financing Documents. It is understood
that a copy of such process served on such agent will be promptly forwarded by
mail to Parent and the
64
Borrower at its address set forth opposite its signature below, but the failure
of Parent or the Borrower to receive such copy shall not affect in any way the
service of such process. Parent and the Borrower each further irrevocably
consent to the service of process of any of the aforementioned courts in any
such action or proceeding by the mailing of copies thereof by registered or
certified mail, postage prepaid, to Parent and the Borrower at its said address,
such service to become effective 30 days after such mailing.
(e) SERVICE OF PROCESS. Nothing herein shall affect the right
of the Administrative Agent or any Lender or any holder of a Note to serve
process in any other manner permitted by law or to commence legal proceedings or
otherwise proceed against Parent or the Borrower in any other jurisdiction.
Section 10.9 INDEPENDENT NATURE OF LENDERS' RIGHTS. The amounts payable
at any time hereunder to each Lender shall be a separate and independent debt,
and, subject to the other terms and provisions hereof and of the Financing
Documents, each Lender shall be entitled to protect and enforce its rights
arising out of this Agreement, and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
Section 10.10 INVALIDITY. In the event that any one or more of the
provisions contained in the Notes, this Agreement or in any other Financing
Document shall, for any reason, be held invalid, illegal or unenforceable in any
respect, (a) Parent and the Borrower each agree that such invalidity, illegality
or unenforceability shall not affect any other provision of the Notes, this
Agreement or any other Financing Document, and (b) Parent, the Borrower and the
Administrative Agent (acting on behalf and at the direction of the Lenders) will
negotiate in good faith to amend such provision so as to be legal, valid, and
enforceable.
Section 10.11 RENEWAL, EXTENSION OR REARRANGEMENT. All provisions of
this Agreement and of any other Financing Documents relating to the Notes or
other Lender Indebtedness shall apply with equal force and effect to each and
all promissory notes hereafter executed which in whole or in part represent a
renewal, extension for any period, increase or rearrangement of any part of the
Lender Indebtedness originally represented by the Notes, or of any part of such
other Lender Indebtedness.
Section 10.12 CONFIDENTIALITY. Each of the Administrative Agent and the
Lenders agrees to maintain the confidentiality of the Information (as defined
below), except that Information may be disclosed (a) to its and its Affiliates'
directors, officers, employees and agents, including accountants, legal counsel
and other advisors (it being understood that the Persons to whom such disclosure
is made will be informed of the confidential nature of such Information and
instructed to keep such Information confidential), (b) to the extent requested
by any regulatory authority, (c) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (d) to any other party
to this Agreement, (e) in connection with the exercise of any remedies hereunder
or any suit, action or proceeding relating to this Agreement or the enforcement
of rights hereunder, (f) subject to an agreement containing provisions
substantially the same as those of this Section 10.12, to any assignee of or
Participant in, or any prospective assignee of or Participant in, any of its
rights or obligations under this Agreement, (g) with the consent of Parent or
the Borrower or (h) to the extent such Information (1) becomes publicly
available other than as a result of a breach of this Section 10.12 or (2)
65
becomes available to the Administrative Agent or any Lender on a nonconfidential
basis from a source other than Parent or the Borrower. For the purposes of this
Section 10.12, "INFORMATION" means all information received from Parent or the
Borrower relating to Parent or the Borrower or their businesses, other than any
such information that is available to the Administrative Agent or any Lender on
a nonconfidential basis prior to disclosure by Parent or the Borrower; provided
that, in the case of information received from Parent or the Borrower after the
date hereof, such information is clearly identified at the time of delivery as
confidential. Any Person required to maintain the confidentiality of Information
as provided in this Section 10.12 shall be considered to have complied with its
obligation to do so if such Person has exercised the same degree of care to
maintain the confidentiality of such Information as such Person would accord to
its own confidential information.
Section 10.13 INTEREST. It is the intention of the parties hereto to
conform strictly to usury laws applicable to the Administrative Agent and the
Lenders (collectively, the "FINANCING PARTIES") and the Transactions.
Accordingly, if the Transactions would be usurious as to any Financing Party
under laws applicable to it, then, notwithstanding anything to the contrary in
the Notes, this Agreement or in any other Financing Document or agreement
entered into in connection with the Transactions or as security for the Notes,
it is agreed as follows: (a) the aggregate of all consideration which
constitutes interest under law applicable to any Financing Party that is
contracted for, taken, reserved, charged or received by such Financing Party
under the Notes, this Agreement or under any of such other Financing Documents
or agreements or otherwise in connection with the Transactions shall under no
circumstances exceed the maximum amount allowed by such applicable law, (b) in
the event that the maturity of the Notes is accelerated for any reason, or in
the event of any required or permitted prepayment, then such consideration that
constitutes interest under law applicable to any Financing Party may never
include more than the maximum amount allowed by such applicable law, and (c)
excess interest, if any, provided for in this Agreement or otherwise in
connection with the Transactions shall be canceled automatically by such
Financing Party and, if theretofore paid, shall be credited by such Financing
Party on the principal amount of the Borrower's Indebtedness to such Financing
Party (or, to the extent that the principal amount of the Borrower's
Indebtedness to such Financing Party shall have been or would thereby be paid in
full, refunded by such Financing Party to the Borrower). The right to accelerate
the maturity of the Notes does not include the right to accelerate any interest
which has not otherwise accrued on the date of such acceleration, and the
Financing Parties do not intend to collect any unearned interest in the event of
acceleration. All sums paid or agreed to be paid to the Financing Parties for
the use, forbearance or detention of sums included in the Lender Indebtedness
shall, to the extent permitted by law applicable to such Financing Party, be
amortized, prorated, allocated and spread throughout the full term of the Notes
until payment in full so that the rate or amount of interest on account of the
Lender Indebtedness does not exceed the applicable usury ceiling, if any. As
used in this Section 10.13, the terms "APPLICABLE LAW" or "LAWS APPLICABLE TO
ANY FINANCING PARTY" shall mean the law of any jurisdiction whose laws may be
mandatorily applicable notwithstanding other provisions of this Agreement, or
law of the United States of America applicable to any Financing Party and the
Transactions which would permit such Financing Party to contract for, charge,
take, reserve or receive a greater amount of interest than under such
jurisdiction's law. To the extent that Chapter 303 of the Texas Finance Code, as
amended, substituted for or restated is relevant to any Financing Party for the
purpose of determining the Highest Lawful Rate, such Financing Party hereby
elects to determine the applicable rate ceiling under such Chapter 303 by the
interest
66
(weekly) rate ceiling from time to time in effect, subject to such Financing
Party's right subsequently to change such method in accordance with applicable
law.
Section 10.14 ENTIRE AGREEMENT. THE NOTES, THIS AGREEMENT AND THE OTHER
FINANCING DOCUMENTS EMBODY THE ENTIRE AGREEMENT AND UNDERSTANDING AMONG THE
ADMINISTRATIVE AGENT OR THE LENDERS AND THE OTHER RESPECTIVE PARTIES HERETO AND
THERETO AND SUPERSEDE ALL PRIOR AGREEMENTS AND UNDERSTANDINGS AMONG SUCH PARTIES
RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF AND MAY NOT BE CONTRADICTED BY
EVIDENCE OF PRIOR, CONTEMPORANEOUS AGREEMENTS OF THE PARTIES. THERE ARE NO
UNWRITTEN ORAL AGREEMENTS AMONG THE PARTIES.
Section 10.15 ATTACHMENTS. The exhibits, schedules and annexes attached
to this Agreement are incorporated herein and shall be considered a part of this
Agreement for the purposes stated herein, except that in the event of any
conflict between any of the provisions of such exhibits and the provisions of
this Agreement, the provisions of this Agreement shall prevail.
Section 10.16 COUNTERPARTS. This Agreement may be executed in any
number of counterparts and by the different parties hereto on separate
counterparts, each of which when so executed and delivered shall be an original
but all of which shall together constitute one and the same instrument.
Section 10.17 SURVIVAL OF INDEMNITIES. Each of Parent's and the
Borrower's obligations under Section 2.14, Section 2.16, Section 2.18 and
Section 10.4 shall survive the payment in full of the Loans.
Section 10.18 HEADINGS DESCRIPTIVE. The headings of the several
sections and subsections of this Agreement, and the Table of Contents, are
inserted for convenience only and shall not in any way affect the meaning or
construction of any provision of this Agreement.
Section 10.19 SATISFACTION REQUIREMENT. Unless otherwise specifically
stated, if any agreement, certificate, instrument or other writing, or any
action taken or to be taken, is by the terms of this Agreement required to be
satisfactory to any party, the determination of such satisfaction shall be made
by such party in its sole and exclusive judgment exercised reasonably and in
good faith.
Section 10.20 EXCULPATION PROVISIONS. EACH OF THE PARTIES HERETO
SPECIFICALLY AGREES THAT IT HAS A DUTY TO READ THIS AGREEMENT AND THE OTHER
FINANCING DOCUMENTS AND AGREES THAT IT IS CHARGED WITH NOTICE AND KNOWLEDGE OF
THE TERMS OF THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS; THAT IT HAS IN
FACT READ THIS AGREEMENT AND IS FULLY INFORMED AND HAS FULL NOTICE AND KNOWLEDGE
OF THE TERMS, CONDITIONS AND EFFECTS OF THIS AGREEMENT; THAT IT HAS BEEN
REPRESENTED BY LEGAL COUNSEL OF ITS CHOICE THROUGHOUT THE NEGOTIATIONS PRECEDING
ITS EXECUTION OF THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS; AND HAS
RECEIVED THE ADVICE OF ITS ATTORNEYS IN ENTERING INTO THIS AGREEMENT AND THE
OTHER FINANCING DOCUMENTS; AND THAT IT RECOGNIZES THAT CERTAIN OF THE TERMS OF
THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS RESULT IN ONE PARTY ASSUMING
THE LIABILITY
67
INHERENT IN SOME ASPECTS OF THE TRANSACTION AND RELIEVING THE OTHER PARTY OF ITS
RESPONSIBILITY FOR SUCH LIABILITY. EACH PARTY HERETO AGREES AND COVENANTS THAT
IT WILL NOT CONTEST THE VALIDITY OR ENFORCEABILITY OF ANY EXCULPATORY PROVISION
OF THIS AGREEMENT AND THE OTHER FINANCING DOCUMENTS ON THE BASIS THAT THE PARTY
HAD NO NOTICE OR KNOWLEDGE OF SUCH PROVISION OR THAT THE PROVISION IS NOT
"CONSPICUOUS."
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.
[SIGNATURE PAGES FOLLOW]
68
SIGNATURE PAGE
TO
CREDIT AGREEMENT
BY AND AMONG HWG, LLC, AS THE BORROWER,
THE HALLWOOD GROUP INCORPORATED, AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS PARTIES THERETO AS
LENDERS, AND FIRST BANK & TRUST, AS
ADMINISTRATIVE AGENT
THE HALLWOOD GROUP INCORPORATED
By:
---------------------------------------------
Melvin J. Melle, Vice President
Address: 3710 Rawlins, Suite 1500
Dallas, Texas 75219
Attention: Melvin J. Melle
Telephone: (214) 528-5588
Telecopy: (214) 528-8855
[Signature Page]
SIGNATURE PAGE
TO
CREDIT AGREEMENT
BY AND AMONG HWG, LLC, AS THE BORROWER,
THE HALLWOOD GROUP INCORPORATED, AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS PARTIES THERETO AS
LENDERS, AND FIRST BANK & TRUST, AS
ADMINISTRATIVE AGENT
HWG, LLC
By:
-----------------------------------------
William L. Guzzetti, President
Address: 3710 Rawlins, Suite 1500
Dallas, Texas 75219
Attention: Melvin J. Melle
Telephone: (214) 528-5588
Telecopy: (214) 528-8855
[Signature Page]
SIGNATURE PAGE
TO
CREDIT AGREEMENT
BY AND AMONG HWG, LLC, AS THE BORROWER,
THE HALLWOOD GROUP INCORPORATED, AS PARENT GUARANTOR,
THE FINANCIAL INSTITUTIONS PARTIES THERETO AS
LENDERS, AND FIRST BANK & TRUST, AS
ADMINISTRATIVE AGENT
FIRST BANK & TRUST, individually and as
Administrative Agent
By:
-------------------------------------------
Alan Cott, Senior Vice President
Address: 8820 Westheimer
Houston, Texas 77063
Attention: Alan Cott
Telephone: (713) 954-2486
Telecopy: (713) 954-2472
[Signature Page]
ANNEX I
LENDER TERM LOAN COMMITMENT REVOLVING CREDIT COMMITMENT
------ -------------------- ---------------------------
First Bank & Trust $3,000,000 $4,000,000
Total Term Loan Commitment $3,000,000
- --------------------------
Total Revolving Loan Commitment $4,000,000
- -------------------------------
Annex I-1
EXHIBIT A
FORM OF REVOLVING CREDIT NOTE
$__________ ____________, 200__
HWG, LLC, a Delaware limited liability company (the "BORROWER"), for
value received, promises and agrees to pay to __________________________ (the
"LENDER"), or order, at the Payment Office of FIRST BANK & TRUST, at 8820
Westheimer, Houston, Texas 77263, the principal sum of
_______________________________ DOLLARS ($_______________), in lawful money of
the United States of America and in immediately available funds, in installments
on the dates and in the principal amounts provided in the Credit Agreement
referred to below, and to pay interest on the unpaid principal amount of the
Revolving Credit Loans made by the Lender to the Borrower under the Credit
Agreement, at such office, in like money and funds, for the period commencing on
the date of such Revolving Credit Loans until such Revolving Credit Loans shall
be paid in full, at the rates per annum and on the dates provided in the Credit
Agreement.
In addition to and cumulative of any payment required to be made
against this note pursuant to the Credit Agreement, this note, including all
principal and accrued interest then unpaid thereon, shall be due and payable on
the Revolving Credit Loan Maturity Date. All payments shall be applied first to
accrued interest and the balance to principal, except as otherwise expressly
provided in the Credit Agreement. Prepayments on this note shall be applied in
the manner set forth in the Credit Agreement.
This note is one of the Revolving Credit Notes referred to in the
Credit Agreement dated as of March 21, 2002, by and among the Borrower, The
Hallwood Group Incorporated, as Parent Guarantor, First Bank & Trust,
individually, and as Administrative Agent, and the financial institutions
parties thereto (including the Lender) (such Credit Agreement, together with all
amendments or supplements thereto, being the "CREDIT AGREEMENT"). This note
evidences the Revolving Credit Loans made by the Lender thereunder and shall be
governed by the Credit Agreement. Capitalized terms used but not defined in this
note and which are defined in the Credit Agreement shall have the meanings
herein as are assigned in the Credit Agreement.
The Lender is hereby authorized by the Borrower to endorse on Schedule
A (or a continuation thereof) attached to this note, the amount and date of each
payment or prepayment of principal of the Revolving Credit Loans received by the
Lender and the interest rates applicable to the Revolving Credit Loans, provided
that any failure by the Lender to make any such endorsement shall not affect the
obligations of the Borrower under the Credit Agreement or under this note in
respect of the Revolving Credit Loans.
Except only for any notices which are specifically required by the
Credit Agreement or the other Financing Documents, the Borrower and any and all
co-makers, endorsers, guarantors and sureties severally waive notice (including
but not limited to notice of intent to accelerate and notice of acceleration,
notice of protest and notice of dishonor), demand, presentment for payment,
protest, diligence in collecting and the filing of suit for the purpose of
fixing liability, and consent that the time of payment hereof may be extended
and re-extended from time to time
A-1
without notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this note shall not be affected by any release
of or change in any guaranty or security at any time existing or by any failure
to perfect or maintain perfection of any lien against or security interest in
any such security or the partial or complete enforceability of any guaranty or
other surety obligation, in each case in whole or in part, with or without
notice and before or after maturity.
The Credit Agreement provides for the acceleration of the maturity of
this note upon the occurrence of certain events and for prepayment of Revolving
Credit Loans upon the terms and conditions specified therein. Reference is made
to the Credit Agreement for all other pertinent purposes.
This note is issued pursuant to and is entitled to the benefits of the
Credit Agreement and is secured by the Security Instruments.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN
EFFECT.
HWG, LLC
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
A-2
SCHEDULE A
This Note evidences Revolving Credit Loans made by the Lender under the
within-described Credit Agreement to the Borrower, which Revolving Credit Loans
are in the principal amounts, at the interest rates (and interest periods), and
were made and repaid or prepaid on the dates set forth below:
PRINCIPAL INTEREST DATE OF PAYMENT AMOUNT PAID
DATE MADE AMOUNT OF LOAN RATE MATURITY DATE OR PREPAYMENT OR PREPAID BALANCE OUTSTANDING
--------- -------------- -------- ------------- --------------- ----------- -------------------
A-3
EXHIBIT B
FORM OF TERM NOTE
$__________ March 21, 2002
HWG, LLC, a Delaware limited liability company (the "BORROWER"), for
value received, promises and agrees to pay to __________________________ (the
"LENDER"), or order, at the Payment Office of FIRST BANK & TRUST, at 8820
Westheimer, Houston, Texas 77263, the principal sum of
___________________________________ DOLLARS ($___________________), in lawful
money of the United States of America and in immediately available funds, in
installments on the dates and in the principal amounts provided in the Credit
Agreement referred to below, and to pay interest on the unpaid principal amount
of the Term Loans made by the Lender to the Borrower under the Credit Agreement,
at such office, in like money and funds, for the period commencing on the date
of such Term Loans until such Term Loans shall be paid in full, at the rates per
annum and on the dates provided in the Credit Agreement.
In addition to and cumulative of any payment required to be made
against this note pursuant to the Credit Agreement, this note, including all
principal and accrued interest then unpaid thereon, shall be due and payable on
the Term Loan Maturity Date. All payments shall be applied first to accrued
interest and the balance to principal, except as otherwise expressly provided in
the Credit Agreement. Prepayments on this note shall be applied in the manner
set forth in the Credit Agreement.
This note is one of the Term Notes referred to in the Credit Agreement
dated as of March 21, 2002, by and among the Borrower, The Hallwood Group
Incorporated, as Parent Guarantor, First Bank & Trust, individually, and as
Administrative Agent, and the financial institutions parties thereto (including
the Lender) (such Credit Agreement, together with all amendments or supplements
thereto, being the "CREDIT AGREEMENT"). This note evidences the Term Loans made
by the Lender thereunder and shall be governed by the Credit Agreement.
Capitalized terms used but not defined in this note and which are defined in the
Credit Agreement shall have the meanings herein as are assigned in the Credit
Agreement.
The Lender is hereby authorized by the Borrower to endorse on Schedule
A (or a continuation thereof) attached to this note, the amount and date of each
payment or prepayment of principal of the Term Loans received by the Lender and
the interest rates applicable to the Term Loans, provided that any failure by
the Lender to make any such endorsement shall not affect the obligations of the
Borrower under the Credit Agreement or under this note in respect of the Term
Loans.
Except only for any notices which are specifically required by the
Credit Agreement or the other Financing Documents, the Borrower and any and all
co-makers, endorsers, guarantors and sureties severally waive notice (including
but not limited to notice of intent to accelerate and notice of acceleration,
notice of protest and notice of dishonor), demand, presentment for payment,
protest, diligence in collecting and the filing of suit for the purpose of
fixing liability, and consent that the time of payment hereof may be extended
and re-extended from time to time
B-1
without notice to any of them. Each such person agrees that his, her or its
liability on or with respect to this note shall not be affected by any release
of or change in any guaranty or security at any time existing or by any failure
to perfect or maintain perfection of any lien against or security interest in
any such security or the partial or complete enforceability of any guaranty or
other surety obligation, in each case in whole or in part, with or without
notice and before or after maturity.
The Credit Agreement provides for the acceleration of the maturity of
this note upon the occurrence of certain events and for prepayment of Term Loans
upon the terms and conditions specified therein. Reference is made to the Credit
Agreement for all other pertinent purposes.
This note is issued pursuant to and is entitled to the benefits of the
Credit Agreement and is secured by the Security Instruments.
THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE
LAW OF THE STATE OF TEXAS AND THE UNITED STATES OF AMERICA FROM TIME TO TIME IN
EFFECT.
HWG, LLC
By:
-----------------------------------------
Name:
---------------------------------------
Title:
--------------------------------------
B-2
SCHEDULE A
This Note evidences Term Loans made by the Lender under the within-described
Credit Agreement to the Borrower, which Term Loans are in the principal amounts,
at the interest rates (and interest periods), and were made and repaid or
prepaid on the dates set forth below:
PRINCIPAL INTEREST DATE OF PAYMENT AMOUNT PAID
DATE MADE AMOUNT OF LOAN RATE MATURITY DATE OR PREPAYMENT OR PREPAID BALANCE OUTSTANDING
--------- -------------- -------- ------------- --------------- ------------ -------------------
B-3
EXHIBIT C-1
FORM OF FACILITY GUARANTY
C-1-1
EXHIBIT C-2
FORM OF PLEDGE AGREEMENT
C-2-1
EXHIBIT C-3
FORM OF COLLATERAL ASSIGNMENT OF INTERCOMPANY NOTES
C-3-1
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
Reference is made to the Credit Agreement, dated as of March 21, 2002
(as amended, supplemented, waived or otherwise modified from time to time, the
"CREDIT AGREEMENT"), among HWG, LLC, as the Borrower, THE HALLWOOD GROUP
INCORPORATED, as Parent Guarantor, FIRST BANK & TRUST, Individually, and as
Administrative Agent, and the Lenders now or hereafter parties thereto. Unless
otherwise defined herein, terms defined in the Credit Agreement and used herein
shall have the meanings given to them in the Credit Agreement.
______________________ (the "ASSIGNOR") and _________________ (the
"ASSIGNEE") agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the Assignee
without recourse to the Assignor, and the Assignee hereby irrevocably purchases
and assumes from the Assignor without recourse to the Assignor, as of the
Transfer Effective Date (as defined below), a percentage interest (the "ASSIGNED
INTEREST") as set forth in Schedule 1 in and to all the Assignor's rights and
obligations under the Credit Agreement and the other Financing Documents with
respect to the credit facilities provided for in the Credit Agreement (the
"ASSIGNED FACILITIES"), in a principal amount for each Assigned Facility as set
forth on Schedule 1.
2. The Assignor (a) makes no representation or warranty and assumes no
responsibility with respect to any statements, warranties or representations
made in or in connection with the Credit Agreement, any other Financing Document
or any other instrument or document furnished pursuant thereto or the execution,
legality, validity, enforceability, genuineness, sufficiency or value of the
Credit Agreement, any other Financing Document or any other instrument or
document furnished pursuant thereto, other than that it has not created any
adverse claim upon the interest being assigned by it hereunder and that such
interest is free and clear of any such adverse claim; (b) makes no
representation or warranty and assumes no responsibility with respect to the
financial condition of Parent, the Borrower or any other obligor or the
performance or observance by Parent, the Borrower or any other obligor of any of
their respective obligations under the Credit Agreement, any other Financing
Document or any other instrument or document furnished pursuant hereto or
thereto; and (c) attaches the Notes held by it evidencing the Assigned
Facilities and requests that the Administrative Agent exchange such Notes for
new Notes payable to the Assignee and (if the Assignor has retained any interest
in the Assigned Facilities) new Notes payable to the Assignor in the respective
amounts which reflect the assignment being made hereby (and after giving effect
to any other assignments which have become effective on the Transfer Effective
Date).(1)
3. The Assignee (a) represents and warrants that it is legally
authorized to enter into this Assignment and Acceptance; (b) confirms that it
has received a copy of the Credit
- -------------------
(1) Notes should only be requested when specifically required by the
Assignee and/or the Assignor, as the case may be.
D-1
Agreement together with copies of the Financial Statements and/or such other
documents and information as it has deemed appropriate to make its own credit
analysis and decision to enter into this Assignment and Acceptance; (c) agrees
that it will, independently and without reliance upon the Assignor, the
Administrative Agent or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under the Credit Agreement, the
other Financing Documents or any other instrument or document furnished pursuant
hereto or thereto; (d) appoints and authorizes the Administrative Agent to take
such action as agent on its behalf and to exercise such power and discretion
under the Credit Agreement, the other Financing Documents or any other
instrument or document furnished pursuant hereto or thereto as are delegated to
the Administrative Agent by the terms thereof, together with such powers as are
incidental thereto; (e) hereby affirms the acknowledgments of such Assignee as a
Lender contained in Section 9.3 of the Credit Agreement; and (f) agrees that it
will be bound by the provisions of the Credit Agreement and will perform in
accordance with the terms of the Credit Agreement all the obligations which by
the terms of the Credit Agreement are required to be performed by it as a
Lender, including, but not limited to, if it is organized under the laws of a
jurisdiction outside the United States, its obligations pursuant to Section
2.18(f)of the Credit Agreement.
4. The effective date of this Assignment and Acceptance shall be
____________, ____ (the "TRANSFER EFFECTIVE DATE"). Following the execution of
this Assignment and Acceptance, it will be delivered to the Administrative Agent
for acceptance by it and recording by the Administrative Agent pursuant to
Section 10.7 of the Credit Agreement, effective as of the Transfer Effective
Date (which shall not, unless otherwise agreed to by the Administrative Agent,
be earlier than five Business Days after the date of such acceptance and
recording by the Administrative Agent).
5. Upon such acceptance and recording, from and after the Transfer
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignee whether such amounts have accrued prior to the Transfer
Effective Date or accrued subsequent to the Transfer Effective Date. The
Assignor and the Assignee shall make all appropriate adjustments in payments by
the Administrative Agent for the periods prior to the Transfer Effective Date or
with respect to the making of this assignment directly between themselves.
6. From and after the Transfer Effective Date, (a) the Assignee shall
be a party to the Credit Agreement and, to the extent provided in this
Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Financing Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Credit Agreement, but shall nevertheless continue to be
entitled to the benefits of Section 2.14, Section 2.16, Section 2.18 and Section
10.4 thereof.
7. Notwithstanding any other provision hereof, if the consents of
Parent, the Borrower and the Administrative Agent hereto are required under
Section 10.7 of the Credit Agreement, this Assignment and Acceptance shall not
be effective unless such consents shall have been obtained.
D-2
8. This Assignment and Acceptance shall be governed by and construed in
accordance with the laws of the State of Texas without regard to the principles
of conflict of laws thereof.
IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule 1 hereto.
[Remainder of Page Intentionally Left Blank]
D-3
SCHEDULE 1
TO THE
ASSIGNMENT AND ACCEPTANCE
Re: Credit Agreement, dated as of March 21, 2002 among HWG, LLC, as the
Borrower, The Hallwood Group Incorporated, as Parent Guarantor, First
Bank & Trust, Individually, and as Administrative Agent, and the
Lenders now or hereafter parties thereto
Name of Assignor:
Name of Assignee:
Transfer Effective Date of Assignment:
PERCENTAGE OF ASSIGNOR'S
INTEREST IN CREDIT COMMITMENT
CREDIT FACILITY ASSIGNED FACILITY ASSIGNED PRINCIPAL AMOUNT ASSIGNED PERCENTAGE ASSIGNED
------------------------ ----------------- ------------------------- -------------------
________% $________ (Term Loans) __.____%
$________ (Revolving Credit Loans) __.____%
[NAME OF ASSIGNEE] [NAME OF ASSIGNOR]
By: By:
--------------------------------- -------------------------------------
Title: Title:
------------------------------ ----------------------------------
Accepted for recording in the Consented To:
Register:
FIRST BANK & TRUST, HWG, LLC
as Administrative Agent
By: By:
--------------------------------- ------------------------------------
Title: Title:
------------------------------ ---------------------------------
FIRST BANK & TRUST,
as Administrative Agent
By:
-------------------------------------
Title:
----------------------------------
D-4
EXHIBIT E
FORM OF COMPLIANCE CERTIFICATE
E-1
EXHIBIT F
FORM OF COLLATERAL VALUE CERTIFICATE
F-1
EXHIBIT G
FORM OF BORROWING REQUEST
G-1
SCHEDULE 1.1(A)
DEBT SERVICE COVERAGE RATIO WORKSHEET
Schedule 1.1(A) - 1
SCHEDULE 1.1(B)
SENIOR LEVERAGE RATIO WORKSHEET
Schedule 1.1(B) - 1
SCHEDULE 5.7
INVESTMENTS
Schedule 5.7 - 1
SCHEDULE 5.8
LITIGATION
Schedule 5.8 - 1
SCHEDULE 5.10
EMPLOYEE BENEFITS
Schedule 5.10 - 1
SCHEDULE 5.13
EXISTING DEFAULTS
Schedule 5.13(B) - 1
SCHEDULE 5.19
SUBSIDIARIES
Schedule 5.19 - 1
SCHEDULE 5.20
INSURANCE
Schedule 5.20 - 1
SCHEDULE 5.23
EMPLOYMENT CONTRACTS
Schedule 5.23 - 1
SCHEDULE 5.25
OWNERSHIP/CAPITALIZATION
Schedule 5.25 - 1
SCHEDULE 7.2
EXISTING INDEBTEDNESS
Schedule 7.2 - 1
SCHEDULE 7.3
LIENS
Schedule 7.3 - 1