--------------------------------------------------------------------------------
AMENDED AND RESTATED CREDIT AGREEMENT
DATED AS OF
JULY 28, 2003
AMONG
HWG, LLC,
AS THE BORROWER,
THE HALLWOOD GROUP INCORPORATED,
AS PARENT GUARANTOR,
FIRST BANK (D/B/A FIRST BANK & TRUST)
AS THE ADMINISTRATIVE AGENT,
AND
THE FINANCIAL INSTITUTIONS
NOW OR HEREAFTER PARTIES HERETO,
AS THE LENDERS
$3,000,000 TERM A LOAN
$3,000,000 SPECIAL PURPOSE ADVANCE TERM LOAN
$4,000,000 REVOLVING CREDIT FACILITY
$5,000,000 SPECIAL PURPOSE ADVANCE LOAN
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TABLE OF CONTENTS
Page No.
--------
Article 1
DEFINITIONS; CONSTRUCTION
Section 1.1 Definitions.................................................................................... 2
Section 1.2 Accounting Terms and Determinations............................................................ 19
Section 1.3 Other Definitional Terms....................................................................... 19
Article 2
AMOUNT AND TERMS OF LOANS
Section 2.1 Loans and Commitments.......................................................................... 19
Section 2.2 Borrowing Requests............................................................................. 20
Section 2.3 Disbursement of Funds.......................................................................... 21
Section 2.4 Notes and Amortization......................................................................... 22
Section 2.5 Interest....................................................................................... 22
Section 2.6 Interest Periods............................................................................... 23
Section 2.7 Repayment of Loans; Accounts and Register...................................................... 24
Section 2.8 Prepayments.................................................................................... 25
Section 2.9 Continuation and Conversion Options............................................................ 27
Section 2.10 Fees........................................................................................... 28
Section 2.11 Payments, etc.................................................................................. 29
Section 2.12 Interest Rate Not Ascertainable, etc........................................................... 29
Section 2.13 Illegality..................................................................................... 30
Section 2.14 Increased Costs................................................................................ 30
Section 2.15 Change of Lending Office....................................................................... 32
Section 2.16 Funding Losses................................................................................. 32
Section 2.17 Sharing of Payments, etc....................................................................... 32
Section 2.18 Taxes.......................................................................................... 33
Section 2.19 Pro Rata Treatment............................................................................. 34
Article 3
CONDITIONS Precedent
Section 3.1 Closing........................................................................................ 34
Section 3.2 Conditions Precedent to SPA Loans.............................................................. 37
Section 3.3 Conditions Precedent to SPA Term Loans......................................................... 37
Section 3.4 Conditions Precedent to All Loans.............................................................. 37
Article 4
SECURITY
Section 4.1 Security Granted............................................................................... 38
Section 4.2 Collateral Value............................................................................... 38
Section 4.3 Benchmark Collateral Deficiency................................................................ 39
Section 4.4 Substitution of Collateral..................................................................... 39
Article 5
REPRESENTATIONS AND WARRANTIES
Section 5.1 Existence...................................................................................... 39
i
Section 5.2 Power and Authorization........................................................................ 39
Section 5.3 Binding Obligations............................................................................ 40
Section 5.4 No Legal Bar or Resultant Lien................................................................. 40
Section 5.5 No Consent..................................................................................... 40
Section 5.6 Financial Information.......................................................................... 40
Section 5.7 Investments and Guaranties..................................................................... 41
Section 5.8 Litigation..................................................................................... 41
Section 5.9 Use of Proceeds................................................................................ 41
Section 5.10 Employee Benefits.............................................................................. 42
Section 5.11 Taxes; Governmental Charges.................................................................... 43
Section 5.12 Titles, etc.................................................................................... 43
Section 5.13 Defaults....................................................................................... 43
Section 5.14 Casualties; Taking of Properties............................................................... 43
Section 5.15 Compliance with the Law........................................................................ 43
Section 5.16 No Material Misstatements...................................................................... 44
Section 5.17 Investment Company Act......................................................................... 44
Section 5.18 Public Utility Holding Company Act............................................................. 44
Section 5.19 Subsidiaries................................................................................... 44
Section 5.20 Insurance...................................................................................... 44
Section 5.21 Environmental Matters.......................................................................... 45
Section 5.22 Solvency....................................................................................... 46
Section 5.23 Employee Matters............................................................................... 46
Section 5.24 Subordinated Debenture Documents, etc.......................................................... 46
Section 5.25 Ownership...................................................................................... 46
Section 5.26 Senior Indebtedness............................................................................ 47
Article 6
AFFIRMATIVE COVENANTS
Section 6.1 Maintenance and Compliance, etc................................................................ 47
Section 6.2 Payment of Taxes and Claims, etc............................................................... 47
Section 6.3 Further Assurances............................................................................. 47
Section 6.4 Performance of Obligations..................................................................... 47
Section 6.5 Insurance...................................................................................... 48
Section 6.6 Accounts and Records........................................................................... 48
Section 6.7 Right of Inspection............................................................................ 48
Section 6.8 Operation and Maintenance of Property.......................................................... 48
Section 6.9 Reporting Covenants............................................................................ 48
Article 7
NEGATIVE COVENANTS
Section 7.1 Financial Covenants............................................................................ 52
Section 7.2 Indebtedness................................................................................... 52
Section 7.3 Liens.......................................................................................... 52
Section 7.4 Mergers, Sales, etc............................................................................ 53
Section 7.5 Restricted Payments............................................................................ 54
Section 7.6 Investments, Loans, etc........................................................................ 54
Section 7.7 Sales and Leasebacks........................................................................... 55
Section 7.8 Nature of Business............................................................................. 55
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Section 7.9 ERISA Compliance............................................................................... 55
Section 7.10 Sale or Discount of Receivables................................................................ 56
Section 7.11 Negative Pledge Agreements..................................................................... 56
Section 7.12 Transactions with Affiliates................................................................... 57
Section 7.13 Unconditional Purchase Obligations............................................................. 57
Section 7.14 Intercompany Transactions...................................................................... 57
Section 7.15 Modifications to Organizational Documents...................................................... 57
Section 7.16 Modifications to Subordinated Debentures; Payment Restrictions................................. 57
Section 7.17 Proceeds of Loans.............................................................................. 58
Article 8
EVENTS OF DEFAULT
Section 8.1 Payments....................................................................................... 58
Section 8.2 Covenants Without Notice....................................................................... 58
Section 8.3 Other Covenants................................................................................ 58
Section 8.4 Other Financing Document Obligations........................................................... 58
Section 8.5 Representations................................................................................ 58
Section 8.6 Non-Payments of Other Indebtedness............................................................. 59
Section 8.7 Defaults Under Other Agreements................................................................ 59
Section 8.8 Bankruptcy..................................................................................... 59
Section 8.9 Money Judgment................................................................................. 59
Section 8.10 Discontinuance of Business..................................................................... 60
Section 8.11 Financing Documents............................................................................ 60
Section 8.12 Change of Control.............................................................................. 60
Section 8.13 Subordination of Lender Indebtedness........................................................... 60
Section 8.14 Default Under Subordinated Indebtedness........................................................ 60
Article 9
THE ADMINISTRATIVE AGENT
Section 9.1 Appointment of Administrative Agent............................................................ 61
Section 9.2 Limitation of Duties of Administrative Agent................................................... 61
Section 9.3 Lack of Reliance on the Administrative Agent................................................... 61
Section 9.4 Certain Rights of the Administrative Agent..................................................... 62
Section 9.5 Reliance by Administrative Agent............................................................... 62
Section 9.6 Indemnification of Administrative Agent........................................................ 62
Section 9.7 First Bank in its Individual Capacity.......................................................... 63
Section 9.8 May Treat Lender as Owner...................................................................... 63
Section 9.9 Successor Administrative Agent................................................................. 63
Article 10
MISCELLANEOUS
Section 10.1 Notices........................................................................................ 64
Section 10.2 Amendments and Waivers......................................................................... 64
Section 10.3 No Waiver; Remedies Cumulative................................................................. 65
Section 10.4 Payment of Expenses, Indemnities, etc.......................................................... 65
Section 10.5 Right of Setoff................................................................................ 67
Section 10.6 Benefit of Agreement........................................................................... 68
Section 10.7 Successors and Assigns; Participations and Assignments......................................... 68
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Section 10.8 Governing Law; Submission to Jurisdiction; etc................................................. 70
Section 10.9 Independent Nature of Lenders' Rights.......................................................... 71
Section 10.10 Invalidity..................................................................................... 71
Section 10.11 Renewal, Extension or Rearrangement............................................................ 72
Section 10.12 Confidentiality; Tax Shelter Regulations....................................................... 72
Section 10.13 Interest....................................................................................... 73
Section 10.14 Entire Agreement............................................................................... 73
Section 10.15 Attachments.................................................................................... 74
Section 10.16 Counterparts................................................................................... 74
Section 10.17 Survival of Indemnities........................................................................ 74
Section 10.18 Headings Descriptive........................................................................... 74
Section 10.19 Satisfaction Requirement....................................................................... 74
Section 10.20 Exculpation Provisions......................................................................... 74
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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-1 - Form of Revolving Note
Exhibit A-2 - Form of SPA Note
Exhibit B-1 - Form of Term A Note
Exhibit B-2 - Form of SPA Term Note
Exhibit C-1 - Form of Parent Facility Guaranty
Exhibit C-2 - Form of Subsidiary Facility Guaranty
Exhibit C-3 - Form of Pledge Agreement
Exhibit C-4 - 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
Exhibit H - Form of Gotham Payment Notice
Exhibit I - Form of Separation Agreement Payment Notice
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LIST OF DEFINED TERMS
Page No.
--------
Administrative Agent............................................................................................. 2
Advance Notice................................................................................................... 2
Affiliate........................................................................................................ 2
Aggregate Revolving Credit Exposure.............................................................................. 2
Agreement........................................................................................................ 2
Alpha Trust...................................................................................................... 3
applicable law................................................................................................... 73
Applicable Margin................................................................................................ 3
Applicable Percentage............................................................................................ 3
Assignment and Acceptance........................................................................................ 68
Bankruptcy....................................................................................................... 59
Bankruptcy Code.................................................................................................. 59
Base Rate........................................................................................................ 22
Base Rate Loan................................................................................................... 3
Benchmark Collateral Value....................................................................................... 3
Benchmark Collateral Value Deficiency............................................................................ 3
Borrower......................................................................................................... 1
Borrowing........................................................................................................ 3
Borrowing Request................................................................................................ 3
Brookwood........................................................................................................ 3
Brookwood Disposition............................................................................................ 4
Brookwood Funded Indebtedness.................................................................................... 4
Business Day..................................................................................................... 4
Capital Adequacy................................................................................................. 31
Capital Expenditures............................................................................................. 4
Capital Lease Obligations........................................................................................ 4
CERCLA........................................................................................................... 6
Change of Control................................................................................................ 4
Closing Date..................................................................................................... 4
Closing Transactions............................................................................................. 4
Code............................................................................................................. 5
Collateral....................................................................................................... 5
Collateral Assignment of Intercompany Notes...................................................................... 5
Collateral Value Certificate..................................................................................... 38
Commitment Fee Percentage........................................................................................ 5
Commitments...................................................................................................... 5
Control.......................................................................................................... 5
Controlled....................................................................................................... 5
Controlling...................................................................................................... 5
Credit Parties................................................................................................... 5
Current Information.............................................................................................. 5
Debt Offering.................................................................................................... 5
Debt Service Coverage Ratio...................................................................................... 5
vi
Default.......................................................................................................... 6
disposal......................................................................................................... 6
disposed......................................................................................................... 6
Dollar........................................................................................................... 6
EBITDA........................................................................................................... 6
Environmental Laws............................................................................................... 6
Epsilon Trust.................................................................................................... 6
Equity........................................................................................................... 7
Equity Contribution.............................................................................................. 7
ERISA............................................................................................................ 7
ERISA Affiliate.................................................................................................. 7
ERISA Termination Event.......................................................................................... 7
Eurodollar Loan.................................................................................................. 7
Eurodollar Rate.................................................................................................. 7
Event of Default................................................................................................. 58
Excess Prepaid Amount............................................................................................ 27
Excluded Taxes................................................................................................... 8
Existing Credit Agreement........................................................................................ 1
Existing Revolving Credit Loans.................................................................................. 1
Existing Term Loans.............................................................................................. 1
Facilities....................................................................................................... 72
Federal Funds Effective Rate..................................................................................... 8
Financial Statements............................................................................................. 8
Financing Documents.............................................................................................. 8
Financing Parties................................................................................................ 73
First Bank....................................................................................................... 1
Fiscal Quarter................................................................................................... 9
Fiscal Year...................................................................................................... 9
Foreign Lender................................................................................................... 9
Funded Indebtedness.............................................................................................. 9
GAAP............................................................................................................. 9
Gotham Judgment.................................................................................................. 9
Gotham Litigation................................................................................................ 9
Gotham Litigation Payment........................................................................................ 9
Gotham Litigation Payment Date................................................................................... 9
Gotham Payment Notice............................................................................................ 37
Governmental Authority........................................................................................... 9
Governmental Requirement......................................................................................... 9
Hallwood Realty.................................................................................................. 10
hazardous substance.............................................................................................. 6
HCRE............................................................................................................. 10
HECO............................................................................................................. 10
HECO Disposition................................................................................................. 10
herein........................................................................................................... 19
hereof........................................................................................................... 19
hereunder........................................................................................................ 19
vii
Highest Lawful Rate.............................................................................................. 10
HRY.............................................................................................................. 10
HSC Financial.................................................................................................... 10
Indebtedness..................................................................................................... 10
Indemnified Taxes................................................................................................ 11
Information...................................................................................................... 72
Interest Expense................................................................................................. 11
Interest Period.................................................................................................. 11
laws applicable to any Financing Party........................................................................... 73
Lender........................................................................................................... 1
Lender Indebtedness.............................................................................................. 11
Lenders.......................................................................................................... 1
Lending Office................................................................................................... 11
Lien............................................................................................................. 11
Loan............................................................................................................. 12
Loans............................................................................................................ 12
Margin Stock..................................................................................................... 12
Marketable Equity................................................................................................ 12
Material Adverse Effect.......................................................................................... 12
Material Provision............................................................................................... 60
measurement date................................................................................................. 15
Monthly Date..................................................................................................... 12
Net Cash Flow.................................................................................................... 12
Net Cash Proceeds................................................................................................ 12
Non-recourse Indebtedness........................................................................................ 12
Note............................................................................................................. 12
Notes............................................................................................................ 12
oil.............................................................................................................. 6
OPA.............................................................................................................. 6
Other Taxes...................................................................................................... 12
Parent........................................................................................................... 1
Parent Intercompany Notes........................................................................................ 13
Payment Office................................................................................................... 13
PBGC............................................................................................................. 13
Person........................................................................................................... 13
Plan............................................................................................................. 13
Pledge Agreement................................................................................................. 13
Prime Rate....................................................................................................... 14
Property......................................................................................................... 14
Quarterly Dates.................................................................................................. 14
RCRA............................................................................................................. 6
RE Disposition................................................................................................... 14
Regulation D..................................................................................................... 14
Regulations U and X.............................................................................................. 14
release.......................................................................................................... 6
Required Lenders................................................................................................. 14
viii
Responsible Officer.............................................................................................. 14
Restricted Payment............................................................................................... 15
Restricted Payment Limit......................................................................................... 15
Revolving Credit Commitment...................................................................................... 20
Revolving Credit Exposure........................................................................................ 15
Revolving Credit Loan............................................................................................ 15
Revolving Credit Loans........................................................................................... 15
Revolving Credit Maturity Date................................................................................... 15
Revolving Credit Percentage...................................................................................... 15
Revolving Loan................................................................................................... 19
Revolving Note................................................................................................... 15
Rolling Period................................................................................................... 15
Security Instruments............................................................................................. 15
Senior Leverage Ratio............................................................................................ 16
Separation Agreement............................................................................................. 16
Separation Agreement Payment..................................................................................... 16
Separation Agreement Payment Date................................................................................ 16
Separation Agreement Payment Notice.............................................................................. 37
Series B Preferred Stock......................................................................................... 16
solid waste...................................................................................................... 6
Solvent.......................................................................................................... 16
SPA Credit Exposure.............................................................................................. 16
SPA Loan......................................................................................................... 1
SPA Loan Commitment.............................................................................................. 20
SPA Loan Commitments............................................................................................. 20
SPA Loan Percentage.............................................................................................. 17
SPA Note......................................................................................................... 17
SPA Term Loan.................................................................................................... 1
SPA Term Loan Commitment......................................................................................... 20
SPA Term Loan Commitments........................................................................................ 20
SPA Term Loan Maturity Date...................................................................................... 17
SPA Term Loan Percentage......................................................................................... 17
SPA Term Loan Prepayment Horizon................................................................................. 26
SPA Term Loan Rate............................................................................................... 17
SPA Term Note.................................................................................................... 17
Statutory Reserves............................................................................................... 17
Subordinated Debentures.......................................................................................... 18
Subordinated Debentures Indenture................................................................................ 18
Subordinated Debentures Trustee.................................................................................. 18
Subsidiary....................................................................................................... 18
Subsidiary Facility Guaranty..................................................................................... 18
Subsidiary Guarantor............................................................................................. 18
Subsidiary Guarantors............................................................................................ 18
Taxes............................................................................................................ 18
Term A Loan...................................................................................................... 19
Term A Loan Commitment........................................................................................... 20
ix
Term A Loan Commitments.......................................................................................... 20
Term A Loan Maturity Date........................................................................................ 18
Term A Loan Percentage........................................................................................... 18
Term A Loan Rate................................................................................................. 18
Term A Note...................................................................................................... 18
Term Loan........................................................................................................ 19
Term Loans....................................................................................................... 19
threatened release............................................................................................... .6
Transactions..................................................................................................... 19
Transferee....................................................................................................... 70
Type............................................................................................................. 19
UCC.............................................................................................................. 19
x
AMENDED AND RESTATED CREDIT AGREEMENT
THIS AMENDED AND RESTATED CREDIT AGREEMENT (this "AGREEMENT") is made
and entered into as of this 28th day of July, 2003, among HWG, LLC, a Delaware
limited liability company (the "BORROWER"), THE HALLWOOD GROUP INCORPORATED, a
Delaware corporation ("PARENT"), FIRST BANK (D/B/A FIRST BANK & TRUST),
individually as a Lender (in such capacity, "FIRST BANK"), and as Administrative
Agent (in such capacity, 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:
WHEREAS, the Borrower, Parent, the Administrative Agent and First Bank
are parties to that certain Credit Agreement dated as of March 21, 2002 (as
heretofore amended, the "EXISTING CREDIT AGREEMENT"), pursuant to which First
Bank extended certain financing to the Borrower in accordance with the terms and
conditions set forth therein; and
WHEREAS, the parties hereto desire to amend and restate the Existing
Credit Agreement in its entirety in the form of this Agreement, and the Borrower
desires to (i) refinance the existing Term Loan under, and as defined in, the
Existing Credit Agreement (herein, the "EXISTING TERM LOAN") with the proceeds
of the Term A Loan (as herein defined), (ii) refinance the existing Revolving
Credit Loans under, and as defined in, the Existing Credit Agreement (herein,
the "EXISTING REVOLVING CREDIT LOANS") with the proceeds of the Revolving Loans
(as herein defined), (iii) establish a new special purpose term credit facility
in an aggregate principal amount of $3,000,000 (the "SPA TERM LOAN"), and (iv)
establish a new special purpose, single advance, credit facility in an aggregate
principal amount of $5,000,000 (the "SPA LOAN"); and
WHEREAS, proceeds of the Revolving Loans will be used solely (i) to
refinance the Existing Revolving Credit Loans, (ii) to finance ongoing working
capital requirements, and (iii) for general corporate purposes of the Borrower;
and
WHEREAS, proceeds of the Term A Loan will be used on the Closing Date
(as herein defined) solely to refinance the Existing Term Loan; and
WHEREAS, proceeds of the SPA Term Loan will be used on the Separation
Agreement Payment Date solely to make the Separation Agreement Payment (as
herein defined); and
WHEREAS, proceeds of the SPA Loan will be used on the Gotham Litigation
Payment Date solely to pay a portion of the Gotham Litigation Payment (as herein
defined).
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 hereby agree that the Existing Credit Agreement is hereby
amended and restated in its entirety on (and subject to) the terms and
conditions set forth herein. It is the intention of the Borrower, Parent, the
Administrative Agent
1
and the Lenders that this Agreement supercede and replace the Existing Credit
Agreement in its entirety; provided, that, (a) such amendment and restatement
shall operate to renew, amend and modify certain of the rights and obligations
of the parties under the Existing Credit Agreement as provided herein, but shall
not effect a novation thereof, and (b) the Liens securing the Lender
Indebtedness under and as defined in the Existing Credit Agreement shall not be
extinguished, but shall be carried forward and shall secure such indebtedness
and obligations as renewed, amended, restated and modified. The Borrower,
Parent, the Administrative Agent and the Lenders further 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 (d/b/a 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 Borrower to be received by the Administrative Agent
before 10:00 a.m. (Dallas, 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 Amended and Restated Credit
Agreement, as amended, modified or supplemented from time to time.
2
"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, SPA Loan Percentage, Term A
Loan Percentage and/or SPA 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).
"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 the Gotham
Payment Notice, 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.
3
"BROOKWOOD DISPOSITION" shall mean any sale, assignment,
exchange, conveyance, transfer, conversion or other disposition by Parent of all
or any part of Brookwood, including any or all of the Equity of Brookwood owned
by Parent.
"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 Dallas,
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.
"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 ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, the Alpha Trust and their Affiliates; (d)
the Borrower shall cease to be a wholly owned Subsidiary of Parent; or (e) any
of the Subsidiary Guarantors shall cease to be wholly owned Subsidiaries of the
Borrower.
"CLOSING DATE" shall mean the "as of" date of this Agreement
set forth in the first paragraph hereof.
"CLOSING TRANSACTIONS" shall mean the transactions to occur on
the Closing Date, including, without limitation, (a) the refinancing in full,
with the proceeds of the Term A Loan and initial Revolving Loan, of all Lender
Indebtedness accrued and outstanding under and as
4
defined in the Existing Credit Agreement as of the Closing Date, and (b) the
payment of all fees and expenses of the Administrative Agent then due and
payable in connection with the credit facilities provided herein.
"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
Amended and Restated Collateral Assignment of Intercompany Notes executed by the
Borrower, substantially in the form attached as Exhibit C-4, 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, titles 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, SPA Loan Commitment, Term A Loan Commitment, and
SPA 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, the
Borrower and the Subsidiary Guarantors.
"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 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
5
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 (including without limitation accrued but unpaid consulting fees to HSC
Financial as provided in Section 7.12 hereof), 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; 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.
6
"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 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.
7
"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).
"EXISTING REVOLVING CREDIT LOANS" shall have the meaning set
forth in the second recital hereof.
"EXISTING TERM LOAN" shall have the meaning set forth in the
second recital hereof.
"FACILITIES" shall have the meaning set forth in Section
10.12(b).
"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, 2002, and (ii) the unaudited consolidated financial
statements of Parent for the Fiscal Quarter ended March 31, 2003.
"FINANCING DOCUMENTS" shall mean this Agreement, the Revolving
Credit Notes, the Term Notes, the Security Instruments, the Borrowing Requests,
the Gotham Payment Notice, the Separation Agreement Payment Notice, and the
other documents, instruments or agreements described in Section 3.1, , and
Section 3.4, 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.
"FINANCING PARTIES" shall have the meaning set forth in
Section 10.13.
"FIRST BANK" shall have the meaning set forth in the initial
paragraph hereof.
8
"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.
"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.
"GOTHAM JUDGMENT" shall mean that judgment for $2,988,777 plus
pre-judgment interest entered on July 8, 2003, in the Gotham Litigation. As of
the Closing Date approximately $6,755,000 is owed in connection with the Gotham
Litigation, consisting of such $2,988,777 amount plus pre-judgment interest of
approximately $3,766,223.
"GOTHAM LITIGATION" shall mean that certain cause of action
styled Gotham Partners, ▇.▇. ▇. ▇▇▇▇▇▇▇▇ Realty Partners, L.P., Hallwood Realty
Corporation, The Hallwood Group Incorporated, ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇▇, Civil Action No. 15754 in the Court of Chancery of the State of
Delaware, New Castle County.
"GOTHAM LITIGATION PAYMENT" shall mean the payment in full of
the Gotham Judgment, a portion of which payment shall be made with the proceeds
of the SPA Loan.
"GOTHAM LITIGATION PAYMENT DATE" shall mean any Business Day
after the Closing Date but prior to August 26, 2003, on which the Gotham
Litigation Payment is made, which date shall be expressly set forth in the
Gotham Payment Notice as the "Gotham Litigation Payment Date".
"GOTHAM PAYMENT NOTICE" shall have the meaning assigned to
such term in .
"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,
9
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.
"HECO" shall mean Hallwood Energy Corporation, a Delaware
corporation.
"HECO DISPOSITION" shall mean any sale, assignment, exchange,
conveyance, transfer, conversion or other disposition by Parent of all or any
part of HECO, including any or all of the Equity of HECO owned by Parent.
"HIGHEST LAWFUL RATE" shall mean, with respect to each Lender,
the maximum non-usurious 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 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.
"HSC FINANCIAL" shall mean HSC Financial Corporation, a
Liberian corporation.
"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;
10
(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 initial
paragraph hereof.
"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, the Subsidiary Guarantors 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
11
arrangement pursuant to which title to the Property has been retained by or
vested in some other Person for security purposes.
"LOAN" shall mean the Revolving Loan, the SPA Loan, the Term A
Loan or the SPA Term Loan, and "LOANS" shall mean, collectively, the Revolving
Loans, the SPA Loans, the Term A Loan and the SPA Term Loan 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) in
the case of the Borrower, 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 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, Debt Offering,
HECO Disposition or Brookwood Disposition, 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, Debt Offering, HECO Disposition or Brookwood Disposition.
"NON-RECOURSE 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 Note, a SPA Note, a Term A Note
or a SPA Term Note, and "NOTES" shall mean, collectively, the Revolving Notes,
the SPA Notes, the Term A Notes and the SPA 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
12
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 FACILITY GUARANTY" shall mean that certain Amended and
Restated 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.
"PARENT INTERCOMPANY NOTES" shall mean, collectively, (i) that
certain demand promissory note dated as of March 21, 2002 executed by Parent as
maker and payable to the order of the Borrower as payee in the original
principal amount of $3,000,000, (ii) that certain demand promissory note dated
as of March 21, 2002 executed by Parent as maker and payable to the order of the
Borrower as payee in the original principal amount of $4,000,000, (iii) a demand
promissory note dated as of the date hereof 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 (iv) a
demand promissory note dated as of the date hereof 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
$5,000,000.
"PARTICIPANT" shall have the meaning set forth in Section
10.17(e).
"PAYMENT OFFICE" shall mean the Administrative Agent's office
located at ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, Attention: ▇▇▇▇▇ ▇. Israel
(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 each
Credit Party), 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 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 Amended and Restated Pledge
Agreement executed by the Borrower, substantially in the form attached as
Exhibit C-3, as amended,
13
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.
"RE DISPOSITION" shall mean any sale, assignment, exchange,
conveyance, transfer, conversion or other disposition by the Borrower of all or
any of its Equity or other interests in either Hallwood Realty or HCRE, or any
sale, assignment, exchange, conveyance, transfer, conversion or other
disposition by either Hallwood Realty or HCRE of all or substantially all of its
assets.
"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 A Loans,
SPA Term Loans and the SPA Loan 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 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.
14
"RESTRICTED PAYMENT" shall mean, with respect to any Person,
including Parent, the Borrower and the Subsidiary Guarantors, (a) the
declaration or payment of dividends on any class of Equity of 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 March 31,
2003 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 Loans made by such
Lender outstanding as of such date.
"REVOLVING CREDIT LOANS" shall mean, collectively, Revolving
Loans and the SPA Loan, and "REVOLVING CREDIT LOAN" shall mean any one of the
foregoing.
"REVOLVING CREDIT MATURITY DATE" shall mean May 2, 2005.
"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).
"REVOLVING LOAN" shall have the meaning set forth in Section
2.1(a).
"REVOLVING 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-1, evidencing the aggregate Indebtedness of the Borrower to
such Lender resulting from Revolving Loans made by such Lender.
"ROLLING PERIOD" shall mean any period of four consecutive
Fiscal Quarters.
"SECURITY INSTRUMENTS" shall mean the Pledge Agreement, the
Parent Facility Guaranty, each Subsidiary 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.
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"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., HECO and Parent) as
more fully described on Parent's most recent financial 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, plus (4) the carrying value of the Series B
Preferred Stock outstanding as of the date of determination, to (b) total
stockholder's equity. The Senior Leverage Ratio shall be calculated
substantially as set forth on Schedule 1.1(B).
"SEPARATION AGREEMENT" shall mean that certain Agreement dated
as of May 5, 1999 by and among Parent, Epsilon Trust and ▇▇▇▇▇ ▇. ▇▇▇▇▇.
"SEPARATION AGREEMENT PAYMENT" shall mean a $3,000,000 payment
to be made by the Borrower on behalf of Parent to enable Parent to purchase from
Epsilon Trust, pursuant to Section 6.6 of the Separation Agreement, the Section
5.1 Payment (as such term is defined in the Separation Agreement), such payment
to be made on the Separation Agreement Payment Date with the proceeds of the SPA
Term Loan.
"SEPARATION AGREEMENT PAYMENT DATE" shall mean any Business
Day after the Closing Date but prior to August 26, 2003, on which the Separation
Agreement Payment is made, which date shall be expressly set forth in the
Separation Agreement Payment Notice as the "Separation Agreement Payment Date".
"SEPARATION AGREEMENT PAYMENT NOTICE" shall have the meaning
assigned to such term in .
"SERIES B PREFERRED STOCK" shall mean Parent's Series B
Preferred Stock.
"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.
"SPA CREDIT EXPOSURE" shall mean, at any time and as to each
Lender, the aggregate principal amount of the SPA Loan made by such Lender
outstanding as of such date.
"SPA LOAN" shall have the meaning set forth in the second
recital of this Agreement.
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"SPA LOAN COMMITMENT" shall have the meaning assigned such
term in Section 2.1(d).
"SPA LOAN PERCENTAGE" shall mean, as to any Lender, (i) at any
time prior to the Gotham Litigation Payment Date, the percentage of the
aggregate SPA Loan Commitments constituted by its SPA Loan Commitment, and (ii)
at any time after the Gotham Litigation Payment Date, the percentage which such
Lender's SPA Loans then outstanding constitutes of all SPA Loans then
outstanding.
"SPA 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-2, evidencing the aggregate Indebtedness of the Borrower to
such Lender resulting from SPA Loan made by such Lender.
"SPA TERM LOAN" shall have the meaning set forth in the second
recital of this Agreement.
"SPA TERM LOAN COMMITMENT" shall have the meaning set forth in
Section 2.1(d).
"SPA TERM LOAN MATURITY DATE" shall mean May 2, 2005.
"SPA TERM LOAN PERCENTAGE" shall mean as to any Lender, (i) at
any time prior to the Separation Agreement Payment Date, the percentage of the
aggregate SPA Term Loan Commitments constituted by its SPA Term Loan Commitment,
and (ii) at any time after the Separation Agreement Payment Date, the percentage
which such Lender's SPA Term Loans then outstanding constitutes of all SPA Term
Loans then outstanding.
"SPA TERM LOAN PREPAYMENT HORIZON" shall have the meaning set
forth in Section 2.8(c).
"SPA TERM LOAN RATE" shall mean a fixed rate of 6.00% per
annum.
"SPA 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-2, evidencing the aggregate Indebtedness of the Borrower to
such Lender resulting from the SPA Term Loans made by such Lender.
"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
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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, NA, 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 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.
"SUBSIDIARY FACILITY GUARANTY" shall mean any Guaranty
executed by any Subsidiary Guarantor, substantially in the form of Exhibit C-1,
as amended, modified, renewed, supplemented or restated from time to time,
pursuant to which any such Subsidiary Guarantor, as applicable, guarantees
payment and performance in full of the Lender Indebtedness.
"SUBSIDIARY GUARANTORS" shall mean Hallwood Realty, HCRE and
any current or future Subsidiary of any Credit Party that shall from time to
time execute a Subsidiary Facility Guaranty, and "SUBSIDIARY GUARANTOR" shall
mean any one of the foregoing.
"TAXES" means any and all present or future taxes, levies,
imposts, duties, deductions, charges or withholdings imposed by any Governmental
Authority.
"TERM A LOAN" shall have the meaning assigned such term in
Section 2.1(a)(1).
"TERM A LOAN COMMITMENT" shall have the meaning set forth in
Section 2.1(d).
"TERM A LOAN MATURITY DATE" shall mean April 1, 2005.
"TERM A LOAN PERCENTAGE" shall mean as to any Lender, at any
time after the Closing Date, the percentage which such Lender's Term A Loans
then outstanding constitutes of all Term A Loans then outstanding.
"TERM A LOAN RATE" shall mean a fixed rate of 7.00% per annum.
"TERM A 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-1, evidencing the aggregate Indebtedness of the Borrower to
such Lender resulting from the Term A Loans made by such Lender.
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"TERM LOANS" shall mean, collectively, the Term A Loan and the
SPA Term Loan, and "TERM LOAN" shall mean any one of the foregoing.
"TRANSACTIONS" shall mean the transactions provided for in and
contemplated by this Agreement and the other Financing Documents.
"TRANSFEREE" shall have the meaning set forth in Section
10.7(h).
"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, each Lender
severally agrees to make, on the Closing Date, a term loan pursuant to its Term
A Loan Commitment (each a "TERM A LOAN") to the Borrower; each Lender severally
agrees to make, on the Separation Agreement Payment Date, an SPA Term Loan
pursuant to its SPA Term Loan Commitment to the Borrower; (3) 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 LOAN") pursuant to its Revolving Credit Commitment to the Borrower;
and (4) each Lender severally agrees to make, on the Gotham Litigation Payment
Date, an SPA Loan pursuant to its SPA Loan Commitment to the Borrower. Any Term
A Loan, SPA Term Loan or SPA Loan, as the case may be, 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.
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(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 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 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 Loans, repay or prepay such Revolving Loans, and
reborrow such Revolving Loans.
(d) TERM AND SPA LOAN COMMITMENTS. The Term A Loans, SPA
Term Loans and SPA Loans made pursuant hereto by each Lender shall not exceed in
the aggregate principal amount outstanding the amount set forth opposite such
Lender's name on Annex I under the caption "Term A Loan Commitment," "SPA Term
Loan Commitment" or "SPA Loan Commitment," respectively (its "TERM A LOAN
COMMITMENT," "SPA TERM LOAN COMMITMENT" and "SPA LOAN COMMITMENT," respectively,
and collectively for all Lenders, the "TERM A LOAN COMMITMENTS," "SPA TERM LOAN
COMMITMENTS and "SPA LOAN COMMITMENTS," respectively).
(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 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 of Revolving Loans hereunder, it shall give Advance Notice in
the form of a Borrowing Request, specifying, subject to the provisions hereof,
(1) the aggregate principal amount of the Revolving Loans to be made pursuant to
such Borrowing, (2) the date of Borrowing (which shall be a Business Day), (3)
whether the Revolving Loans being made pursuant to such Borrowing are to be Base
Rate Loans or Eurodollar Loans, and (4) 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
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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. (Dallas, 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 and applicable 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 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.
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SECTION 2.4 NOTES AND AMORTIZATION.
(a) REVOLVING AND SPA NOTES. The Borrower's obligation to
pay the principal of, and interest on, the Revolving Loans and SPA Loan made by
each Lender shall be further evidenced by the Borrower's issuance, execution and
delivery of a Revolving Note and SPA Note, respectively, payable to the order of
each such Lender in the amount of such Lender's Revolving Credit Commitment and
SPA Loan Commitment, respectively (if, with respect to the SPA Loan Commitment,
issued prior to the Gotham Litigation Payment Date, or in the principal amount
of such Lender's SPA Loans if issued after the Gotham Litigation Payment Date),
and shall be dated as of the date of issuance of such Revolving Note and SPA
Note, respectively. The principal amount of each Revolving Note and SPA 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 A Loans and SPA
Term Loans maintained outstanding by each Lender shall be further evidenced by
the Borrower's issuance, execution and delivery of a Term A Note and SPA Term
Note, respectively, payable to the order of each such Lender in the amount of
such Lender's Term A Loan Commitment (if issued prior to the Closing Date) and
SPA Term Loan Commitment (if issued prior to the Separation Agreement Payment
Date), respectively, or in the principal amount of such Lender's Term A Loans
(if issued after the Closing Date) and SPA Term Loans (if issued after the
Separation Agreement Payment Date), respectively (if issued after the Closing
Date), and dated as of the date of issuance of such Term A Note and SPA Term
Note, respectively. The aggregate principal amount of the Term A Notes
applicable to the aggregate Term A Loans of all Lenders shall be payable in
monthly installments of principal and interest in the amount of $92,631.29 each,
and the aggregate principal amount of the SPA Term Notes applicable to the
aggregate SPA Term Loans of all Lenders shall be payable in monthly installments
of principal and interest in the amount of $48,365.00 each. Each such
installment shall be applied first to accrued but unpaid interest on the Term A
Loans and the SPA Term Loans, as applicable, and then to principal on the Term A
Loans and the SPA Term Loans, as applicable. The first such monthly installment
with respect to Term A Loans shall be payable on August 1, 2003, and the first
such monthly installments with respect to SPA Term Loans shall be payable on
September 1, 2003. The remaining monthly installments with respect to each of
the Term A Loans and the SPA Term Loans shall be payable on each Monthly Date
after the applicable date set forth in the preceding sentence, with the final
installments in the amounts of the aggregate unpaid principal balance on the
Term A Loans and the SPA Term Loans, as applicable, then owing, together with
all accrued and unpaid interest, being payable on or before the Term A Loan
Maturity Date in the case of the Term A Loans and the SPA Term Loan Maturity
Date in the case of the SPA Term Loans.
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 higher of (1) the sum
of the Applicable Margin plus the Base Rate in effect on such day, and (2) a
fixed rate of 4.25%, 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
22
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 equal to the higher of (1) the sum of the relevant Applicable
Margin plus the Eurodollar Rate and (2) a fixed rate of 4.25%, but in no event
to exceed the Highest Lawful Rate.
(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 Term A Loan Rate in the case of Term A
Loans and the SPA Term Loan Rate in the case of SPA Term Loans, but in no event
shall either such rate 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:
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(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 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
24
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.
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 any such excess to be applied as a prepayment of the Revolving Loans
then outstanding.
(2) Subject to Section 2.8(a)(6), if 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)(1).
(4) If 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
2.8(d)(1) and Section 4.3.
(5) Any or all of (a) the Term A Loan Commitment
remaining unused after the Closing Date shall automatically terminate
at 5:00 p.m. (Dallas, Texas time) on such date, (b) the SPA Term Loan
Commitment remaining unused after the Separation Agreement Payment Date
shall automatically terminate at 5:00 p.m. (Dallas, Texas time) on such
date, and (c) the SPA Loan Commitment remaining unused after the Gotham
Litigation Payment Date shall automatically terminate at 5:00 p.m.
(Dallas, Texas time) on such date.
(6) On the date of consummation of any Brookwood
Disposition, the Borrower shall, on the date of such Brookwood
Disposition, pay the greater of (A) $3,000,000 or (B) the difference
between (i) the Net Cash Proceeds received by any Credit Party from
such Brookwood Disposition and (ii) the amount paid (if any) to the
holders of the Subordinated Debentures required to satisfy the
Indebtedness owed to such holders thereunder in connection with such
Brookwood Disposition, toward the prepayment of the Loans as set forth
in Section 2.8(d)(2).
25
(7) On the date of consummation of any RE
Disposition, the Borrower shall, on the date of such RE Disposition,
pay all Lender Indebtedness owed by the Borrower in full.
(8) On the date of consummation of any HECO
Disposition, the Borrower shall, on the date of such HECO Disposition,
pay the greater of (A) $6,000,000 or (B) the Net Cash Proceeds received
by any Credit Party from such HECO Disposition toward the prepayment of
the Loans as set forth in .
(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 A Loans, SPA Term Loans, Revolving Loans or SPA
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 shall be applied in the inverse order of maturity of the remaining
scheduled installment payments of the Term A Loans or the SPA Term Loans, as
applicable, required pursuant to Section 2.4(b); (B) the Revolving Loans
pursuant to this shall be applied to payment of the Revolving Loans then
outstanding; and (C) the SPA Loans pursuant to this shall be applied to payment
of the SPA 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 A Loans, SPA Term Loans,
Revolving Loans or SPA Loans, as applicable.
(c) PREPAYMENT PENALTY. In the event that the Term A
Loans are prepaid in whole or in part on or prior to the Term A Loan Maturity
Date, including, without limitation, 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
Time of Prepayment Amount Prepaid
------------------------------------------------------------
On or prior to April 1, 2004 2%
------------------------------------------------------------
Prior to April 1, 2005 1%
------------------------------------------------------------
In the event that the SPA Term Loans are prepaid in whole or in part on or
prior to August 1, 2004 (the "SPA TERM LOAN PREPAYMENT HORIZON"), including,
without limitation, pursuant to a mandatory prepayment required by Article 8
hereof, but excluding, however, pursuant to a
26
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 one percent (1%) of the amount prepaid.
Furthermore, in the event any Credit Party shall (1) receive Net Cash Proceeds
from any Equity Contribution, and (2) apply, prior to the Term A Loan Maturity
Date in the case of Term A Loans, or prior to the SPA Term Loan Prepayment
Horizon, in the case of SPA Term Loans, 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 A Loans or SPA Term Loans, as the case
may be (any portion prepaid in excess of thirty-five percent (35%) of the then
outstanding principal balance of the Term A Loans or SPA Term Loans, as the case
may be, being referred to herein as an "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 provisions.
(d) APPLICATION OF PREPAYMENTS.
(1) Amounts to be applied in connection with
prepayments made pursuant to Section 2.8(a)(3), Section 2.8(a)(4),
Section 2.8(a)(8), Section 4.3 or Section 7.4 shall be applied, first,
to the prepayment of the Revolving 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, second,
to the prepayment of the SPA Loans, third, to the prepayment of the SPA
Term Loans in the inverse order of maturity of scheduled installments
thereof, and fourth, to the prepayment of Term A Loans in the inverse
order of maturity of scheduled installments thereof.
(2) Amounts to be applied in connection with
prepayments made pursuant to Section 2.8(a)(6) shall be applied, first,
to the prepayment of the SPA Loans, second, to the prepayment of the
SPA Term Loans in the inverse order of maturity of scheduled
installments thereof, third, to the prepayment of the Term A Loans in
the inverse order of maturity of scheduled installments hereof, and
fourth, to the prepayment of the Revolving 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.
(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
27
Loans, the Borrower shall be deemed to have elected to convert such Eurodollar
Loans to Base Rate Loans pursuant to Section 2.9(d).
(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. In addition, the Borrower
shall pay to the Administrative Agent for the account of and distribution to
each Lender in accordance with its SPA Loan Percentage a commitment fee for the
period commencing on the Closing Date, to and including the Gotham Litigation
Payment Date computed at a rate per annum equal to the Commitment Fee Percentage
on the average daily excess amount of the SPA Loan Commitments over the SPA
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.
The commitment fees on the SPA Loan Commitments earned from and after the
Closing Date shall be payable in arrears on or before the first Quarterly Date
following the Gotham Payment Date.
28
(b) OTHER FEES. On the Closing Date, the Borrower shall
pay to First Bank an origination fee in the amount of $40,000.
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. Dallas, 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 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.
29
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).
(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
30
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 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
31
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.
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; 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.
32
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.
(b) OTHER TAXES. 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.
33
SECTION 2.19 PRO RATA TREATMENT. Subject to Section 2.3(b), each
Borrowing of Revolving Loans or the SPA Loan, as the case may be, shall be made,
and each payment on account of any commitment fee in respect of the Revolving
Credit Commitments and SPA Loan Commitments, respectively, hereunder shall be
allocated by the Administrative Agent, pro rata according to the relevant
Revolving Credit Percentages and SPA Loan Percentages, respectively, 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 Loans or SPA Loans, as the case
may be, 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 A
Loans or SPA Term Loans, as the case may be, 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 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 PRECEDENT
SECTION 3.1 CLOSING. The obligation of each Lender to amend and
restate the Existing Credit Agreement in the form of this Agreement, and the
obligation of each Lender to make its initial Loans 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 A NOTES. A duly completed and executed Term A
Note for each Lender and in each case dated as of the Closing Date, and payable
to the order of such Lender.
(b) SPA TERM NOTES. A duly completed and executed SPA
Term Note for each Lender and in each case dated as of the Closing Date, and
payable to the order of such Lender.
(c) REVOLVING NOTES. A duly completed and executed
Revolving Note for each Lender and in each case dated as of the Closing Date,
and payable to the order of such Lender.
(d) SPA NOTES. A duly completed and executed SPA Note for
each Lender and in each case dated as of the Closing Date, and payable to the
order of such Lender.
(e) 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
34
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.
(f) OPINIONS OF COUNSEL. An opinion of Jenkens &
▇▇▇▇▇▇▇▇▇, 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.
(g) THE SECURITY INSTRUMENTS.
(1) A duly completed and executed Parent
Facility Guaranty dated as of the Closing Date and duly delivered by
Parent;
(2) a duly completed and executed Subsidiary
Facility Guaranty dated as of the Closing Date and duly delivered by
each of Hallwood Realty and HCRE;
(3) 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;
(4) duly completed and executed Parent
Intercompany Notes duly delivered by the Borrower, and each duly
endorsed by the Borrower to the Administrative Agent for the ratable
benefit of the Lenders;
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(5) a duly completed and executed Collateral
Assignment of Intercompany Notes, dated as of the Closing Date and duly
delivered by the Borrower;
(6) duly completed and authorized UCC-1
financing statements necessary to perfect the Liens and security
interests created by the Pledge Agreement and the Collateral Assignment
of Intercompany Notes;
(7) in addition to the UCC-1 financing
statements required by clause (6) 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
(8) 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 a
first-priority Lien in favor of the Administrative Agent 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.
(h) 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.
(i) FINANCIAL STATEMENTS AND PROJECTIONS. The financial
condition of Parent and each of its Subsidiaries reflected in the financial
information and projections of Parent and 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.
(j) COLLATERAL VALUE CERTIFICATE. A duly completed and
executed Collateral Value Certificate in the form attached hereto as , dated as
of the Closing Date and duly delivered by the Chief Financial Officer (or
similar officer) of Parent.
(k) 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.
(l) 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 Loans, that (1) each Credit Party is Solvent, and (2)
no Default then exists, or thereafter would exist.
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(m) 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.
(n) LIEN SEARCHES. Lien searches reflecting no prior
Liens on the Collateral other than Liens set forth on Schedule 7.2.
(o) 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.
(p) CLOSING TRANSACTIONS. Subject only to the
disbursement and application of the proceeds of the Term A Loans and the initial
Revolving Loans hereunder, the Closing Transactions shall have occurred and been
consummated.
(q) 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 SPA LOANS. The
obligation of the Lenders to make the SPA Loans is further subject to the
receipt by the Administrative Agent and each Lender not less than three (3)
Business Days prior to the Gotham Litigation Payment Date of a notice
substantially in the form of Exhibit H hereto (the "GOTHAM PAYMENT NOTICE")
specifying, subject to the provisions hereof, (a) the Gotham Litigation Payment
Date, (b) whether the Borrowing of the SPA Loans is to be comprised of Base Rate
Loans or Eurodollar Loans, and (c) in the case of Eurodollar Loans, the Interest
Period to be applicable thereto.
SECTION 3.3 CONDITIONS PRECEDENT TO SPA TERM LOANS. The
obligation of the Lenders to make the SPA Term Loans is further subject to the
receipt by the Administrative Agent and each Lender not less than three (3)
Business Days prior to the Separation Agreement Payment Date of a notice
substantially in the form of Exhibit I hereto (the "SEPARATION AGREEMENT PAYMENT
NOTICE").
SECTION 3.4 CONDITIONS PRECEDENT TO ALL LOANS. The
obligation of each Lender to make each Loan hereunder (including the initial
Loans) is further 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 any proposed Revolving 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,
authorize 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, authorize 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. Parent
and the Borrower hereby consent and authorize the Administrative Agent and its
agents, successors and assigns to file any and all necessary financing
statements under the UCC, assignments or continuation statements as necessary
from time to time (in the Administrative Agent's sole discretion) to perfect (or
continue perfection) of the Liens granted pursuant to the Financing Documents.
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 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
38
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.
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)(1) 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 such Credit Party is a party; 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
39
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.
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
40
definition of Financial Statements, audit adjustments and the fact that such
unaudited financial statements do not contain footnotes).
(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 March 31, 2003 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, 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
and, with respect to the SPA Loan and the SPA Term Loan, only on the Gotham
Litigation Payment Date and the Separation Agreement Payment Date, respectively.
Neither Parent nor any of its Subsidiaries is engaged
41
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 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).
42
(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 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, Borrower nor any other
Credit Party 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 violation or failure were asserted
by any Person through appropriate action) a Material Adverse Effect.
43
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 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 (a) 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; (b) are valid, outstanding and enforceable policies;
(c) provide adequate insurance coverage in at least such amounts and against at
least such risks (but including any 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 (d) 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.
44
SECTION 5.21 ENVIRONMENTAL MATTERS. Except as set forth on
Schedule 5.21:
(a) ENVIRONMENTAL LAWS, ETC. Neither Parent, any
Subsidiary of Parent, nor the operations conducted on the Property of Parent or
any Subsidiary of Parent, violates any applicable order of any court or
Governmental Authority or applicable Environmental Laws, 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, is 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.
45
(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 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. Each of Parent, Borrower, Hallwood Realty
and HCRE, individually, and Parent, Borrower, Hallwood Realty and HCRE, taken as
a whole, are Solvent, both before and after taking into account the making of
the initial Loans and the execution and delivery of the Financing Documents.
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, its Subsidiaries, or the respective employees of Parent or its
Subsidiaries, 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 the 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 interests held
by, the legal and beneficial owners of such Equity interests), and (b) all
outstanding warrants, options, subscription rights, convertible securities or
other rights to purchase Equity interests 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,
46
pledge or voting of any of the Equity interests of such Persons, or subject any
of such Equity interests 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.
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, authorize 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 therein, 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.
47
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 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 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 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
48
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 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).
49
(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.
(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 Governmental Authority or official thereof, 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
50
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 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) EVIDENCE OF GOTHAM LITIGATION PAYMENT AND SEPARATION
AGREEMENT PAYMENT. Promptly following the Gotham Litigation Payment Date and the
Separation Agreement Payment Date, as applicable, evidence reasonably
satisfactory to the Administrative Agent that (1) $5,000,000 of the Gotham
Judgment has been paid using the proceeds of the SPA Loans, and (2) the Section
5.1 Payment (as such term is defined in the Separation Agreement) has been paid
in full.
(o) 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:
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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 $4,400,000.
(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.
SECTION 7.2 INDEBTEDNESS.
(a) Permit any Subsidiary Guarantor (other than Hallwood
Realty in its capacity as the general partner of HRY) 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:
52
(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 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
53
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)(1) in an amount sufficient to eliminate any resulting
Benchmark Collateral Deficiency, or 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 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 in the form of Exhibit F hereto 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;
and
(c) 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, Parent and its
Subsidiaries may make other Restricted Payments as long as at any date on which
such Restricted Payments are made 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 ▇▇▇▇▇'▇
Investors Service, Inc., respectively;
54
(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 ▇▇▇▇▇'▇ 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 $100,000,000 and with short-term
credit ratings of at least A1 and P1 by Standard & Poor's Ratings Group and
▇▇▇▇▇'▇ 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
▇▇▇▇-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 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
55
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;
(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
56
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
money or other Property from Parent, any of its Subsidiaries 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)
provided no Event of Default has occurred which is continuing, consulting fees
payable to HSC Financial by any Credit Party, under Parent's existing agreement
with such corporation, provided, that, the amount of such fees does not exceed
$980,000 in any Fiscal Year, and (b) those which are in the ordinary course of
business of Parent, any of its Subsidiaries or 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 Equity 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.
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(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, (1)
regularly scheduled payments of interest on the Subordinated Debentures, and (2)
payment from the Net Cash Proceeds received upon the consummation of any
Brookwood Disposition.
SECTION 7.17 PROCEEDS OF LOANS. The Borrower will not permit the
proceeds of the Loans to be used for any purpose other than as set forth in
hereof.
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 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
58
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;
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. (a) Any Credit Party 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"); (b) an involuntary case is commenced against any Credit
Party 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 any Credit Party; (c) any Credit Party
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 such
Credit Party or there is commenced against such Credit Party any such proceeding
which remains unstayed or undismissed for a period of 60 days; (d) any Credit
Party is adjudicated insolvent or bankrupt or any order of relief or other order
approving any such case or proceeding is entered; (e) any Credit Party 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; (f)
any Credit Party makes a general assignment for the benefit of creditors; (g)
any Credit Party 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; (h)
any Credit Party shall by any act or failure to act indicate its consent to,
approval of or acquiescence in any of the foregoing; or (i) any corporate,
limited liability company or other action is taken by any Credit Party for the
purpose of effecting any of the foregoing;
SECTION 8.9 MONEY JUDGMENT. (a) Judgments or orders for the
payment of money (including the Gotham Judgment) 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
59
Adverse Effect, shall be rendered against Parent or any other Credit Party and
such judgment or order shall continue unsatisfied and in effect for a period of
60 days (other than with respect to the Gotham Judgment, in which case such
period shall be 90 days) during which execution shall not be effectively stayed
or deferred (whether by action of a court, by agreement or otherwise); or (b)
any judgment or order for the payment of money increasing the Gotham Judgment
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 and in effect for a period of 90 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;
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, (a) 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, (b) 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 (c) 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
that a set of circumstances under either of clause (a) or (b) preceding has
occurred. As used in this Section 8.11, "MATERIAL PROVISION" shall mean (i) with
respect to this Agreement, the Notes, or any Security Instrument, any material
term, covenant, or agreement set forth therein, and (ii) 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 that is 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
Person, 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: (x) declare the
entire
60
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, (y) terminate the
Revolving Credit Commitment, and, as applicable, the SPA Term Loan Commitment or
the SPA Loan Commitment, and (z) 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 the Administrative Agent as its agent to act as herein
specified and as specified in the 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
61
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, in any Financing
Document or in any other 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 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 the Credit Parties),
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 THE CREDIT
PARTIES, 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
62
RESULTING FROM, AS TO THE ADMINISTRATIVE AGENT, THE ADMINISTRATIVE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT.
SECTION 9.7 FIRST BANK IN ITS INDIVIDUAL CAPACITY. With respect
to their obligations under this Agreement, the Loans made by it and the Notes
issued to it, First Bank, in its individual capacity as a Lender and not as 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 First Bank in its individual
capacity. First Bank, in its individual capacity as a Lender and not as 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
any Credit Party or any Affiliate of any Credit Party as if it were not
performing the duties, if any, specified herein, and may accept fees and other
consideration from any Credit Party for services in connection with this
Agreement and otherwise without having to account for the same to the Lenders.
SECTION 9.8 MAY TREAT LENDER AS OWNER. Each Credit Party 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
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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, Parent 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
Section 10.1; provided, that no notice to the Administrative Agent shall 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 any Credit Party to the extent a party hereto or thereto, 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 or any Credit Party 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) (1) reduce the amount or extend the scheduled date of
maturity of any Loan or of any scheduled installment thereof, (2) reduce the
stated rate of any interest or fee payable hereunder, (3) extend the scheduled
date of any payment thereof, (4) 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, (5) increase the
amount or extend the expiration date of any Lender's Commitment, or (6) 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) (1) change the currency in which any Loan is payable,
(2) amend, modify or waive any provision of this Section 10.2, or (3) reduce the
percentage specified in the definition of Required Lenders, in each case without
the written consent of all of the Lenders;
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(c) release (1) Parent from its obligations under the
Parent Guaranty, (2) any Subsidiary Guarantor from its obligations under any
Subsidiary Facility Guaranty, or (3) 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 Subsidiary Guarantors, the Lenders, the
Administrative Agent and all future holders of the Loans. In the case of any
waiver, Parent, the Borrower, the Subsidiary Guarantors, 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.
SECTION 10.3 NO WAIVER; REMEDIES CUMULATIVE. No failure or delay
on the part of any Credit Party 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 any Credit Party, 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 any Credit Party, the Administrative Agent or any
Lender would otherwise have. No notice to or demand on any Credit Party not
required under the Notes, this Agreement or any other Financing Document in any
case shall entitle any Credit Party 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,
65
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 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 EACH LENDER, 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 OR ANY LENDER, 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
66
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
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
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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, the Borrower nor any Subsidiary Guarantor
may assign or transfer any of its 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 its 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.
(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 Commitments 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 Commitments, the amount of the Commitments 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 in the form of Exhibit D hereto (each, 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
68
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 Dallas, 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 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
Commitments 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
69
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 under Section 10.7(b) (each, a
"TRANSFEREE") and any prospective Transferee any and all information in such
Lender's possession concerning Parent, the Borrower and Parent's Subsidiaries
and Affiliates which has been delivered to such Lender by or on behalf of
Parent, the Borrower or the Subsidiary Guarantors pursuant to this Agreement or
which has been delivered to such Lender by or on behalf of Parent, the Borrower
or the Subsidiary Guarantors in connection with such Lender's credit evaluation
of Parent, the Borrower, the Subsidiary Guarantors, and Parent's Subsidiaries
and Affiliates prior to becoming a party to this Agreement, provided, that, each
such 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
70
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 ▇▇▇ ▇. ▇▇. ▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇, 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 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.
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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; TAX SHELTER REGULATIONS.
(a) 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 (1) 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), (2) to the extent requested
by any Governmental Authority, (3) to the extent required by applicable laws or
regulations or by any subpoena or similar legal process, (4) to any other party
to this Agreement, (5) 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, (6) subject to an agreement containing provisions
substantially the same as those of this Section 10.12, to any assignee under
Section 10.7(b) of or Participant in, or any prospective assignee under Section
10.7(b) of or Participant in, any of its rights or obligations under this
Agreement, (7) with the consent of Parent or the Borrower or (8) to the extent
such Information (A) becomes publicly available other than as a result of a
breach of this Section 10.12 or (B) 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 any Credit Party relating to any Credit Party or its
business, other than any such information that is available to the
Administrative Agent or any Lender on a nonconfidential basis prior to
disclosure by any Credit Party; provided, that, in the case of information
received from any Credit Party 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.
(b) Notwithstanding anything to the contrary contained in
Section 10.12(a) above, Parent, the Borrower and the Financing Parties hereby
agree that Information shall not include, and each Financing Party (and each
employee, representative or other agent of any Financing Party) may disclose to
any and all Persons, without limitation of any kind, the tax structure and tax
treatment (as such terms are used in Internal Revenue Code Sections 6011, 6111
and 6112 and the regulations promulgated thereunder) of the Transactions and the
facilities established by this Agreement (the "FACILITIES"), and all materials
of any kind (including opinions or other tax analyses) that are or have been
provided to Parent, the Borrower or any Financing Party related to such tax
structure and tax treatment; provided, that, with respect to any document or
similar item that in either case contains information concerning such tax
structure or tax treatment of the Facilities as well as other information, this
sentence shall only
72
apply to such portions of the document or similar item that relate to such tax
structure or tax treatment.
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 Lender Indebtedness to such Financing Party
(or, to the extent that the principal amount of the Lender 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 (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 CREDIT PARTIES, 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
73
AGREEMENTS OF SUCH PARTIES. THERE ARE NO UNWRITTEN ORAL AGREEMENTS AMONG SUCH
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 to this
Agreement, 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 INHERENT IN SOME ASPECTS OF THE TRANSACTIONS 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."
74
IN WITNESS WHEREOF, the parties hereto have caused this instrument to
be duly executed as of the date first above written.
[SIGNATURE PAGES FOLLOW]
75
SIGNATURE PAGE
TO
AMENDED AND RESTATED 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, AS THE
ADMINISTRATIVE AGENT
THE HALLWOOD GROUP INCORPORATED
By: ____________________________________
▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
[Signature Page]
SIGNATURE PAGE
TO
AMENDED AND RESTATED 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, AS THE
ADMINISTRATIVE AGENT
HWG, LLC
By: ____________________________________
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
[Signature Page]
SIGNATURE PAGE
TO
AMENDED AND RESTATED 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, AS THE
ADMINISTRATIVE AGENT
FIRST BANK, individually and as Administrative
Agent
By: ____________________________________
▇▇▇▇▇ ▇. Israel, Vice President
Address: ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇ ▇. Israel
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Telecopy: (▇▇▇) ▇▇▇-▇▇▇▇
[Signature Page]
ANNEX I
TERM A LOAN SPA TERM LOAN REVOLVING CREDIT SPA LOAN
LENDER COMMITMENT COMMITMENT COMMITMENT COMMITMENT
------ ---------- ---------- ---------- ----------
First Bank & Trust $3,000,000 $3,000,000 $4,000,000 $5,000,000
TOTAL COMMITMENTS $3,000,000 $3,000,000 $4,000,000 $5,000,000
Annex I-1
EXHIBIT A-1
FORM OF REVOLVING NOTE
A-1-1
EXHIBIT A-2
FORM OF SPA NOTE
A-2-1
EXHIBIT B -1
FORM OF TERM A NOTE
B-1-1
EXHIBIT B-2
FORM OF SPA TERM NOTE
B-2-1
EXHIBIT C -1
FORM OF PARENT FACILITY GUARANTY
C-1-1
EXHIBIT C-2
FORM OF SUBSIDIARY FACILITY GUARANTY
C-2-1
EXHIBIT C-3
FORM OF PLEDGE AGREEMENT
C-3-1
EXHIBIT C-4
FORM OF COLLATERAL ASSIGNMENT OF INTERCOMPANY NOTES
C-4-1
EXHIBIT D
FORM OF ASSIGNMENT AND ACCEPTANCE
D-1
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
(Follows this page)
Schedule 1.1(A) - 1
SCHEDULE 1.1(B)
SENIOR LEVERAGE RATIO WORKSHEET
(Follows this page)
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 - 1
SCHEDULE 5.19
SUBSIDIARIES
Schedule 5.19 - 1
SCHEDULE 5.20
INSURANCE
Schedule 5.20 - 1
SCHEDULE 5.21
ENVIRONMENTAL MATTERS
Schedule 5.21 - 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
