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EXHIBIT 10.5
Execution Copy
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (as it may be
modified, supplemented or amended from time to time, this "Agreement") is made
and entered into as of May 21, 0000 xxxxxxx XXXXXXXX XXXX XXXXXX EQUITIES
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Lender"), and
CRESCENT OPERATING, INC., a Delaware corporation (the "Borrower").
RECITALS
WHEREAS, the Borrower requested that the Lender extend a credit
facility (the "Loan") in the original maximum aggregate principal amount of
$30,400,000 for the purpose of permitting the Borrower to make certain
investments identified herein;
WHEREAS, the parties entered into that Credit and Security Agreement
dated as of May 8, 1997 (the "Original Agreement");
WHEREAS, the parties desire to amend and restate the Original
Agreement in its entirety to increase the maximum aggregate principal amount of
the Loan to $35,900,000 and to modify certain of the terms and provisions
thereof;
WHEREAS, the Lender is willing to extend and modify the Loan for such
purpose on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the
agreements, covenants and conditions contained herein, and for other good and
valuable consideration, the receipt and sufficiency of which are hereby
acknowledged, the parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) The following terms which are defined in the Uniform
Commercial Code in effect in the State of Texas on the date
hereof are used herein as so defined: Accounts, Chattel
Paper, Documents, Equipment, Farm Products, General
Intangibles, Instruments, Inventory and Proceeds.
(b) The following terms, as used herein, have the following
meanings:
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"Agreement" has the meaning set forth in the initial paragraph hereof.
"Application for Advance" has the meaning set forth in Section 2.1(a)
hereof.
"Bankruptcy Event of Default" has the meaning set forth in Section
7.1.
"Borrower" means Crescent Operating, Inc., and its permitted
successors and assigns.
"Business Day" means any day except a Saturday, Sunday, or other day
on which commercial banks in Texas are authorized by law to close.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank or investment bank satisfying the requirements of clause (b) of
this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States
Government or any agency thereof, (d) commercial paper issued in the United
States which is rated at least A-2 by Standard and Poor's Services or P-2 by
Xxxxx'x Investors Service, (e) securities with maturities of one year or less
from the date of acquisition issued or fully guaranteed by any state,
commonwealth or territory of the United States, by any political subdivision or
taxing authority of any such state, commonwealth or territory or by any foreign
government, the securities of which state, commonwealth, territory, political
subdivision, taxing authority or foreign government are rated at least A by
Standard and Poor's Services or A by Xxxxx'x Investors Service, (f) securities
with maturities of one year or less from the date of acquisition backed by
standby letters of credit issued by any commercial bank satisfying the
requirements of clause (b) of this definition, or (g) shares of money market
mutual or similar funds which invest substantially exclusively in assets
satisfying the requirements of clauses (a) through (f) of this definition.
"Closing Date" means the date this Agreement becomes effective in
accordance with Section 3.1, and each other date on which an advance is made by
the Lender to the Borrower.
"Code" means the Uniform Commercial Code as from time to time in
effect in the State of Texas.
"Collateral" has the meaning set forth in Section 4.1.
"Collateral Account" has the meaning set forth in Section 4.2.
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"Consolidated Net Income" or "Consolidated Net Loss" for any fiscal
period, means the amount which, in conformity with GAAP, would be set forth
opposite the caption "net income" (or any like caption), as the case may be, on
a consolidated statement of earnings of the Borrower and its Subsidiaries, if
any, for such fiscal period.
"Debt" of any Person means at any date, (i) all obligations of such
Person which in accordance with GAAP would be classified on a balance sheet of
such Person as liabilities of such Person ("debt"), (ii) all debt of others
secured by a Lien on any asset of such Person, whether or not such debt is
assumed by such Person, and (iii) all debt of others guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" has the meaning set forth in Section 2.3(b).
"EBITDA" means for any fiscal period, the Consolidated Net Income or
Consolidated Net Loss, as the case may be, for such fiscal period, after
restoring thereto amounts deducted for (a) extraordinary losses (or deducting
therefrom any amounts included therein on account of extraordinary gains) and
special charges, (b) depreciation and amortization (including write-offs or
write-downs) and special charges, (c) the amount of interest expense of the
Borrower and its Subsidiaries, if any, determined on a consolidated basis in
accordance with GAAP, for such period on the aggregate principal amount of
their consolidated indebtedness, (d) the amount of tax expense of the Borrower
and its Subsidiaries, if any, determined on a consolidated basis in accordance
with GAAP, for such period and (e) the aggregate amount of fixed and contingent
rentals payable by the Borrower and its Subsidiaries, if any, determined on a
consolidated basis in accordance with GAAP, for such period with respect to
leases of real and personal property.
"Event of Default" has the meaning set forth in Section 7.1.
"GAAP" means generally accepted accounting principles in effect from
time to time.
"Interest Rate" has the meaning set forth in Section 2.3(a).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Lender" means Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership, and its successors and assigns.
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"Lien" means, with respect to any asset, any mortgage, deed of trust,
lien pledge, charge, security interest, or encumbrance of any kind in respect
of such asset.
"Line of Credit Credit Agreement" means the Line of Credit Credit and
Security Agreement between the Borrower and the Lender of even date herewith
relating to the loan evidenced by the Line of Credit Term Loan.
"Line of Credit Note" means the Line of Credit Note from the Borrower
to the Lender of even date herewith in the maximum principal amount of Twenty
Million Dollars ($20,000,000.00).
"Loan" has the meaning set forth in the recitals hereto.
"Loan Commitment" has the meaning set forth in Section 2.1.
"Loan Documents" means this Agreement, the Note, the Pledge Agreement
and all other documents, agreements, and instruments referred to in or required
to be delivered or actually delivered in connection herewith or therewith, as
any of them may be modified, supplemented, or amended from time to time.
"Material Debt" means Debt (other than the Note) of the Borrower,
arising in one or more related or unrelated transactions, in an aggregate
principal amount exceeding $50,000.
"Maturity Date" means May 8, 2002.
"Note" means the amended and restated promissory note of the Borrower
payable to the order of the Lender under the terms of this Agreement dated as
of May 21, 1997, as the same may be modified, supplemented, or amended from time
to time, and any note or notes issued in substitution or replacement therefor
or in addition thereto, substantially in the form of Exhibit B hereto, in the
maximum principal amount from time to time outstanding of up to Thirty Five
Million Nine Hundred Thousand Dollars ($35,900,000.00), evidencing the
obligation of the Borrower to repay the Loan, as modified, supplemented or
amended from time to time.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a
government or political subdivision or any agency or instrumentality thereof.
"Pledge Agreement" means the Pledge Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit C hereto, as
the same may be amended, supplemented or otherwise modified from time to time.
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"Secured Obligations" means the collective reference to the unpaid
principal of and interest on the Note, the Line of Credit Note and all other
obligations and liabilities of the Borrower to the Lender whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, the Line of Credit Credit Agreement, the Note, the Line of Credit
Note, the Pledge Agreement or any other document, made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which such Person owns
directly or indirectly through one or more intermediaries 50% or more of the
voting stock, partnership interests or other interests thereof or which is
controlled or capable of being controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Termination Date" shall mean the date 95 days from the date upon
which the Loan has been satisfied in full.
SECTION 1.2 Rules of Construction.
(a) Words of the masculine gender shall be deemed and construed to
include correlative words of the feminine and neuter genders.
Unless the context shall otherwise indicate, words importing
the singular number shall include the plural and vice versa.
(b) Reference to a section number, such as this Section 1.2, shall
mean and include all provisions within that section of this
Agreement, unless a particular subsection, paragraph or
subparagraph is specified.
(c) Unless otherwise specified herein, all accounting terms used
herein shall be interpreted, all accounting determinations
hereunder shall be made, and all financial statements required
to be delivered hereunder shall be prepared in accordance with
GAAP as in effect from time to time, except as otherwise
specified herein, applied on a basis consistent (except for
changes concurred in by the Borrower's independent public
accountants) with the most recent audited consolidated
financial statements of the Borrower delivered to the Lender.
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ARTICLE II
COMMITMENT, ADVANCE PROCEDURE, AND NOTES
SECTION 2.1 Commitment and Advance Procedure.
(a) The Lender agrees, on and subject to the terms and conditions
set forth in this Agreement, to make advances to the Borrower
during the term hereof (each, an "Advance") in up to five
installments (not more often than once per month), up to an
aggregate amount of Thirty Five Million Nine Hundred Thousand
Dollars ($35,900,000.00) (the "Loan Commitment"), following
the Lender's receipt of a written request from the Borrower
made to the Lender in the form set forth in Exhibit A hereto
(an "Application for Advance"), and delivered in accordance
with this Section 2.1 and Section 8.1 hereof.
(b) On the date that this Agreement becomes effective in
accordance with Section 3.1, the Lender shall advance to the
Borrower the principal amount of Fifteen Million Four Hundred
Thousand Dollars ($15,400,000.00).
(c) Other than the advance provided for in (b) of this Section
2.1, the Borrower shall provide the Lender with an Application
for Advance, specifying (i) the amount of the Advance
requested, and (ii) the requested date of such Advance (which
shall be at least that number of Business Days after delivery
of such Application for Advance as specified in (e) below).
(d) Notwithstanding any provision hereof to the contrary, the
Lender shall have no obligation at any time to make any
Advances to the Borrower hereunder unless, on the date of the
Lender's receipt of a properly completed and executed
Application for Advance, the Borrower shall have certified to
the Lender in writing that the Borrower is not in Default
hereunder.
(e) The Lender shall have the obligation to make an advance in
accordance with the provisions hereof, including the
provisions of this Section 2.1, within five (5) Business Days
after its receipt of a properly completed and executed
Application for Advance that, together with all other advances
and Applications for Advance, requests advances totaling no
more than the Loan Commitment.
SECTION 2.2 The Note.
(a) The Loan will be evidenced by the Note. The outstanding
principal amount of the Loan shall be payable as follows:
twenty consecutive quarterly
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installments of principal, each consisting of the Amortization
Amount (as defined below) and payable on the first Business
Day of August 1997 and on the first Business Day of each
November, February, May and August thereafter. The
"Amortization Amount" shall be determined by dividing the
outstanding principal amount of the loan on the payment date
in question by the number of payment dates occurring prior to
the Maturity Date. The Amortization Amount shall be
recalculated each time an advance of the Loan is made, but not
when accrued but unpaid interest is added to principal as
provided herein.
(b) Notwithstanding Section 2.2(a), if the amount of principal and
interest to be paid by the Borrower to the Lender exceeds the
amount of EBITDA of the Borrower for the immediately preceding
calendar quarter (ending the last day of September, December,
March, or June), the Borrower shall not be obligated to repay
the amount of principal and interest in excess of EBITDA of
the Borrower for such period. Any such amount of principal
shall continue to be outstanding principal and accrue interest
thereon; any such amount of unpaid interest shall be added to
principal and shall accrue interest thereon. Payments under
the Note shall be applied first to any fees, costs or expenses
due under the Note or hereunder, then to interest, and then to
principal.
(c) Notwithstanding any other provision of this Section 2.2, all
outstanding principal and interest of the Loan and all other
amounts payable hereunder, if not sooner paid, shall be due
and payable on the Maturity Date.
SECTION 2.3 Interest Rate and Payments.
(a) Unless an Event of Default shall have occurred and be
continuing, the Loan shall bear interest on the outstanding
principal amount thereof until paid in full, at a rate per
annum equal to Twelve Percent (12%) (the "Interest Rate").
(b) Upon and after an Event of Default, the Loan shall accrue
interest on the outstanding principal balance of the Loan and,
to the extent permitted by applicable law, on the unpaid
interest, at a rate per annum equal to the Interest Rate plus
an additional 5.0% per annum (the "Default Rate"), provided
that in no event shall the Default Rate exceed the maximum
rate of interest permitted by applicable law.
(c) Subject to the provisions of Section 2.2(b), interest shall be
due during the term hereof on the first Business Day of each
August, November, February and May, or such other date as the
Borrower and the Lender may mutually agree in writing.
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(d) Accrued interest not paid when due shall be compounded
quarterly and added to the outstanding principal amount of the
Loan.
(e) On the Maturity Date, the Borrower shall repay in full all
accrued but unpaid interest and the entire unpaid principal
amount of the Loan.
SECTION 2.4 General Provisions as to Payments.
The Borrower shall make each payment of principal of, and interest on,
the Loan not later than 11:00 A.M. Fort Worth, Texas time on the date when due,
to the Lender at the Lender's office at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxx
Xxxxx, Xxxxx 00000 in same day or other immediately available funds. Whenever
any payment of principal of, or interest on, any Loan shall be due on a day
which is not a Business Day, the date for payment thereof shall be extended to
the next succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable
for such extended time. All such payments shall be made without setoff or
counterclaim and without reduction for, and free from, any and all present or
future taxes, levies, imposts, duties, fees, charges, deductions, withholdings,
restrictions or conditions of any nature imposed by any government or political
subdivision or taking authority thereof (but excluding any taxes imposed on or
measured by the overall net income of the Lender).
SECTION 2.5 Computation of Interest.
All interest shall be computed on the basis of a year of 360 days and
paid for the actual number of days elapsed (including the first day, but
excluding the last day).
SECTION 2.6 Use of Proceeds.
The proceeds of the Loan shall be used solely to enable the Borrower
to invest in (i) Xxxxx-Day, Inc., (ii) Dallas Basketball, Ltd, (iii) Xxxxx Muse
Xxxx & Xxxxx Equity Fund II, LP, (iv) Charter Behavioral Health Systems, LLC
and (v) such other investments as the Lender may consent to in writing, which
consent may be withheld in the Lender's sole discretion.
SECTION 2.7 Evidence of Debt.
(a) The Lender shall record (i) the amount of each advance made
hereunder, (ii) the amount of any principal or interest due
and payable or to become due and payable from the Borrower to
the Lender hereunder and (iii) the amount of any sum received
by the Lender hereunder from the Borrower.
(b) The entries recorded by the Lender shall, to the extent
permitted by applicable law, be prima facie evidence of the
existence and amounts of the
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obligations of the Borrower therein recorded; provided,
however, that the failure of the Lender to record or any error
in any record shall not in any manner affect the obligation of
the Borrower to repay (with applicable interest) the Loans
made to such Borrower in accordance with the terms of this
Agreement.
ARTICLE III
CONDITIONS TO BORROWING
SECTION 3.1 Conditions to Effectiveness and Further Borrowings.
(a) This Agreement shall become effective on the date that each of
the conditions set forth below shall have been satisfied (or
waived in accordance with Section 8.3):
(i) The Lender shall have received this Agreement, duly
executed by the Borrower;
(ii) The Lender shall have received from the Borrower a
certificate that each of the representations and
warranties of the Borrower contained in this
Agreement is true, correct, and complete as of the
Closing Date;
(iii) The Lender shall have received a duly executed Note
dated as of the Closing Date;
(iv) The Lender shall have received a duly executed Pledge
Agreement dated as of the Closing Date and such other
documents relating to the Pledge Agreement as
reasonably required by the Lender;
(v) The Lender shall have received proper financing
statements (Forms UCC-1 or the appropriate
equivalent) necessary to perfect the security
interest in the Borrower's interest in the Collateral
(or such part thereof in which a security interest
can be perfected thereby);
(vi) The Lender shall have received the following: (A)
the articles of incorporation of the Borrower as in
effect on the Closing Date, certified as of a recent
date by the Secretary of State of Delaware, (B) the
bylaws of the Borrower as in effect on the Closing
Date, certified as of a recent date by the Secretary
of the Borrower, (C) resolutions of the board of
directors of the Borrower authorizing the execution,
delivery and performance of this Agreement, certified
as of the Closing Date
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by its corporate secretary, (D) certificates as to
the incumbency of the officers of the Borrower,
certified by its corporate secretary, and (E)
certificates of good standing of the Borrower issued
as of a recent date by the Secretary of State of
Delaware; and
(vii) No event, which, after execution of this Agreement,
would constitute an Event of Default hereunder shall
have occurred and be continuing.
(b) As of any other Closing Date, each of the conditions set forth
below shall have been satisfied (or waived in accordance with
Section 8.3):
(i) The Lender shall have received from the Borrower a
certificate that each of the representations and
warranties of the Borrower contained in this
Agreement is true, correct and complete as of the
Closing Date;
(ii) The Lender shall have received a certificate in the
form of Exhibit D hereto enclosing the following:
(A) a representation that there has been no change in
the articles of incorporation of the Borrower since
the Closing Date, or if changes have occurred since
the Closing Date, the articles of incorporation of
the Borrower as in effect , certified as of a recent
date by the Secretary of State of Delaware, (B) a
representation that there has been no change in the
bylaws of the Borrower since the Closing Date, or if
changes have occurred since the Closing Date, the
bylaws of the Borrower as in effect, certified as of
a recent date by the Secretary of the Borrower, (C)
resolutions of the board of directors of the Borrower
authorizing the execution, delivery and performance
of the Application for Advance, certified as of the
Closing Date by its corporate secretary, (D)
certificates as to the incumbency of the officers of
the Borrower, certified by its corporate secretary,
and (E) certificates of good standing of the Borrower
issued as of a recent date by the Secretary of State
of Delaware; and
(iii) No event which constitutes an Event of Default
hereunder shall have occurred and be continuing.
ARTICLE IV
SECURITY INTEREST
SECTION 4.1 Grant of Security Interest.
(a) As security for the prompt payment, performance, and
observance in full of the Loan, the Borrower hereby pledges
and assigns to the Lender, and grants
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to the Lender a continuing security interest in and lien on
all of the following property now owned or at any time
hereafter acquired by the Borrower or in which the Borrower
now has or at any time in the future may acquire any right,
title or interest (the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all Equipment;
(v) all General Intangibles;
(vi) all Instruments;
(vii) all Inventory;
(viii) all books and recordings pertaining to the
Collateral; and
(ix) to the extent not otherwise included, all Proceeds
and products of any of the foregoing, in any form
(whether cash or non-cash) and all collateral
security and guarantees given by any Person with
respect to any of the foregoing.
SECTION 4.2 Collateral Account
(a) Establishment of Collateral Account. Upon the execution
hereof, there shall be established and at all times thereafter
there shall be maintained by the Borrower, a non-interest
bearing cash collateral account with a financial institution
approved by the Lender (the "Collateral Account") subject to
the terms of this Agreement.
(b) Rights, Title and Interest of Collateral Account. All right,
title and interest in and to the Collateral Account shall vest
exclusively in the Lender. The Borrower shall have no rights
with respect to the Collateral Account and the Lender shall
have sole dominion and control over the Collateral Account and
the monies deposited therein. Monies deposited in the
Collateral Account shall constitute security for the Secured
Obligations. The Borrower hereby pledges and assigns to the
Lender and hereby grants to the Lender a security interest in,
all right, title or interest (if any) which the Borrower
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now has or may hereafter have or purport or claim to have in
or to the Collateral Account and all monies held therein, any
investments made with such monies and any and all certificates
or instruments from time to time representing or evidencing
such investments (and all proceeds thereof).
(c) Maintaining the Collateral Account. Until the Termination
Date of this Agreement:
(i) The Borrower will maintain the Collateral Account
with a financial institution approved by the Lender.
(ii) All monies received by the Lender while a Default or
an Event of Default has occurred and is continuing,
and any monies received as a result of investments
made as contemplated by subsection 4.2(c)(iii)
hereof, shall be deposited in the Collateral Account.
(iii) Pending the disbursement thereof pursuant to the
terms of this Agreement, all monies in the Collateral
Account shall (to the extent it is practical to do
so) be invested by the Lender in Cash Equivalents.
All such investments shall be evidenced either (a) by
negotiable certificates or instruments which are held
by or for the account of the Lender or (b) by book
entries maintained in a State in which the Lender may
be granted by book entries a security interest in the
securities relating thereto. In the absence of its
gross negligence or willful misconduct, the Lender
shall not have any liability out of or in connection
with any investment made in accordance with the
provisions herein or for any loss or decline in value
of any investment or from any loss resulting directly
or indirectly from any investment made pursuant to
and in accordance with the provisions hereof.
SECTION 4.3 Remedies.
(a) Proceeds to be Turned Over To the Lender. When a Default or
an Event of Default has occurred and is continuing all
Proceeds (as defined in the Code) received by the Borrower
consisting of cash, checks and other near-cash items shall be
held by the Borrower in trust for the Lender, segregated from
other funds of the Borrower, and shall, forthwith upon receipt
by the Borrower, be turned over to the Lender in the exact
form received by the Borrower (duly indorsed by the Borrower
to the Lender, if required) and held by the Lender in the
Collateral Account. All Proceeds while held by the Lender in
the Collateral Account (or by the Borrower in trust for the
Lender) shall continue to be held as collateral security for
all the Secured
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Obligations and shall not constitute payment thereof until
applied as provided in subsection 4.3(b).
(b) Application of Proceeds. At such intervals as may be agreed
upon by the Borrower and the Lender, or, if an Event of
Default has occurred and is continuing at any time at the
Lender's election, the Lender may apply all or any part of
Proceeds held in any Collateral Account in payment of the
Secured Obligations in such order as the Lender may elect, and
any part of such funds which the Lender elects not so to apply
and deems not required as collateral security for the Secured
Obligations shall be paid over from time to time by the Lender
to the Borrower or to whomsoever may be lawfully entitled to
receive the same. Any balance of such Proceeds remaining
after the Secured Obligations shall have been paid in full and
the Commitment shall have expired or otherwise been terminated
shall be paid over to the Borrower or to whomsoever may be
lawfully entitled to receive the same.
(c) Code Remedies. If an Event of Default has occurred and is
continuing, the Lender may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating
to the Secured Obligations, all rights and remedies of a
secured party under the Code. Without limiting the generality
of the foregoing, the Lender, without demand of performance or
other demand, presentment, protest, advertisement or notice of
any kind (except any notice required by law referred to below)
to or upon the Borrower or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part
thereof, and/or may forthwith sell, lease, assign, give option
or options to purchase, or otherwise dispose of and deliver
the Collateral or any part thereof (or contract to do any of
the foregoing), in one or more parcels at public or private
sale or sales, at any exchange, broker's board or office of
the Lender or elsewhere upon such terms and conditions as it
may deem advisable and at such prices as it may deem best, for
cash or on credit or for future delivery without assumption of
any credit risk. The Lender shall have the right upon any
such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right
or equity of redemption in the Borrower, which right or equity
is hereby waived or released. The Borrower further agrees, at
the Lender's request, to assemble the Collateral and make it
available to the Lender at places which the Lender shall
reasonably select, whether at the Borrower's premises or
elsewhere. To the extent permitted by applicable law, the
Borrower
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waives all claims, damages and demands it may acquire against
the Lender arising out of the exercise by them of any rights
hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such
notice shall be deemed reasonable and proper if given at least
10 days before such sale or other disposition.
(d) The exercise by the Lender of or failure or refusal to so
exercise any right, remedy or power granted under this
Agreement or available to the Lender at law or in equity or
under statute shall in no manner affect the Borrower's
liability to the Lender, and the Lender shall be under no
obligation or duty to exercise any of the rights, remedies or
powers conferred upon it hereby or by applicable law, and it
shall incur no liability for any act or failure to act in
connection with the collection of, or the preservation of any
rights under, any of the Collateral.
SECTION 4.4 Lender Appointment as Attorney-in-Fact; Lender Performance of
Borrower's Obligations.
(a) Powers. The Borrower hereby irrevocably constitutes and
appoints the Lender and any officer or agent thereof, with
full power of substitution, as its true and lawful
attorney-in-fact with full irrevocable power and authority in
the place and stead of the Borrower and in the name of the
Borrower or in its own name, for the purpose of carrying out
the terms of this Agreement, to take any and all appropriate
action and to execute any and all documents and instruments
which may be necessary or desirable to accomplish the purposes
of this Agreement, and, without limiting the generality of the
foregoing, the Borrower hereby gives the Lender the power and
right, on behalf of the Borrower, without notice to or assent
by the Borrower, to do any or all of the following:
(i) at any time when an Event of Default has occurred and
is continuing in the name of the Borrower or its own
name, or otherwise, take possession of and indorse
and collect any checks, drafts, notes, acceptances or
other instruments for the payment of moneys due with
respect to any Collateral and file any claim or take
any other action or proceeding in any court of law or
equity or otherwise deemed appropriate by the Lender
for the purpose of collecting any and all such moneys
due with respect to any Collateral whenever payable;
(ii) pay or discharge taxes and Liens levied or placed on
or threatened against the Collateral, effect any
repairs or any insurance called for by
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the terms of this Agreement and pay all or any part
of the premiums therefor and the costs thereof;
(iii) execute, in connection with any sale provided for in
subsection 4.3(c), any endorsements, assignments or
other instruments of conveyance or transfer with
respect to the Collateral; and
(iv) at any time when an Event of Default has occurred and
is continuing (1) direct any party liable for any
payment under any of the Collateral to make payment
of any and all moneys due or to become due thereunder
directly to the Lender or as the Lender shall direct;
(2) ask or demand for, collect, receive payment of
and receipt for, any and all moneys, claims and other
amounts due or to become due at any time in respect
of or arising out of any Collateral; (3) sign and
indorse any invoices, freight or express bills, bills
of lading, storage or warehouse receipts, drafts
against debtors, assignments, verifications, notices
and other documents in connection with any of the
Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any
court of competent jurisdiction to collect the
Collateral or any thereof and to enforce any other
right in respect of any Collateral; (5) defend any
suit, action or proceeding brought against the
Borrower with respect to any Collateral (other than
any such suit, action or proceeding brought by the
Lender); (6) settle, compromise or adjust any such
suit, action or proceeding (other than any such suit,
action or proceeding brought by the Lender) and, in
connection therewith, to give such discharges or
releases as the Lender may deem appropriate; (7)
generally, sell, transfer, pledge and make any
agreement with respect to or otherwise deal with any
of the Collateral as fully and completely as though
the Lender were the absolute owner thereof for all
purposes, and do, at the Lender's option and the
Borrower's expense, at any time, or from time to
time, all acts and things which the Lender deems
necessary to protect, preserve or realize upon the
Collateral and the Lender's security interests
therein and to effect the intent of this Agreement,
all as fully and effectively as the Borrower might
do.
(b) Ratification; Power Coupled With An Interest. The Borrower
hereby ratifies all that said attorneys shall lawfully do or
cause to be done by virtue hereof in accordance with the terms
of this Agreement, absent gross negligence or willful
misconduct on the part of the Lender. All powers,
authorizations and agencies contained in this Agreement are
coupled with an
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interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are
released.
SECTION 4.5 Performance by Lender of Borrower's Obligations. If the
Borrower fails to perform or comply with any of its agreements contained in
this Article IV, the Lender, at its option, but without any obligation so to
do, may perform or comply, or otherwise cause performance or compliance, with
such agreement.
SECTION 4.6 Borrower's Reimbursement Obligation. The expenses of the
Lender incurred in connection with actions undertaken as provided in this
Article IV, together with interest thereon at a rate equal to the rate per
annum at which interest would then be payable on past due Loans under this
Agreement, from the date of payment by the Lender to the date reimbursed by the
Borrower, shall be payable by the Borrower to the Lender on demand.
SECTION 4.7 Duty of the Lender. The Lender's sole duty with respect to
the custody, safekeeping and physical preservation of the Collateral in its
possession, under Section 9-207 of the Code or otherwise, shall be to deal with
it in the same manner as the Lender deals with similar property for its own
account. Neither the Lender, nor any of its respective officers, directors,
employees or agents shall be liable for failure to demand, collect or realize
upon any of the Collateral or for any delay in doing so or shall be under any
obligation to sell or otherwise dispose of any Collateral upon the request of
the Borrower or any other Person or to take any other action whatsoever with
regard to the Collateral or any part thereof. The powers conferred on the
Lender hereunder are solely to protect the Lender's interests in the Collateral
and shall not impose any duty upon the Lender to exercise any such powers. The
Lender shall be accountable only for amounts that its actually receives as a
result of the exercise of such powers, and neither it nor any of its officers,
directors, employees or agents shall be responsible to the Borrower for any act
or failure to act hereunder, except for their own gross negligence or willful
misconduct.
SECTION 4.8 Execution of Financing Statements. Pursuant to Section 9-402
of the Code, the Borrower authorizes the Lender to file financing statements
with respect to the Collateral without the signature of the Borrower in such
form and in such filing offices as the Lender reasonably determines appropriate
to perfect the security interests of the Lender under this Agreement. The
Lender shall provide the Borrower with copies of any such financing statements.
A carbon, photographic or other reproduction of this Agreement shall be
sufficient as a financing statement for filing in any jurisdiction.
SECTION 4.9 The Pledge Agreement.
In addition to the security interest granted hereunder, the Borrower
shall grant to the Lender a security interest in the Pledged Partnership
Interests and the Pledged Stock (as those terms are defined in the Pledge
Agreement) pursuant to the Pledge Agreement.
SECTION 4.10 Pledged Notes.
With respect to any promissory notes now or hereinafter owned by or
owing to the Borrower, including, without limitation, the promissory note from
Charter Behavioral Health Systems, LLC, such notes shall be promptly endorsed
in blank and delivered to the Lender.
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ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.1 Existence and Power.
The Borrower is a corporation duly organized, validly existing, and in
good standing under the laws of the State of Delaware, and has all corporate
power and authority, and all material governmental licenses, authorizations,
consents, and approvals required to carry on its business as now conducted.
SECTION 5.2 Corporate and Government Authorization; No Contravention.
The execution, delivery, and performance by the Borrower of this
Agreement, the Pledge Agreement and the Note are within the scope of the
Borrower's power and authority, have been duly authorized by all necessary
corporate action of the Borrower, require no action by or in respect of, or
filing with any governmental body, agency, or official and do not contravene,
or constitute a default under, the Certificate of Incorporation or By-Laws of
the Borrower or under any provision of applicable law or regulation to which
the Borrower is subject, or of any judgment, injunction, order, or decree,
binding upon the Borrower, except for such contraventions as will not, singly
or in the aggregate, have a material adverse effect on the ability of the
Borrower to perform its obligations under this Agreement, the Pledge Agreement
or the Note.
SECTION 5.3 Binding Effect.
This Agreement constitutes the legal, valid, binding, and enforceable
agreement of the Borrower, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
SECTION 5.4 Litigation.
There is no action, suit or proceeding pending against, or to the
knowledge of the Borrower, threatened against or affecting the Borrower before
any court or arbitrator or any governmental body, agency or official which
could materially adversely affect the business, financial position, results of
operations, or prospects of the Borrower or which could materially adversely
affect the ability of the Borrower to perform its obligations under this
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Agreement, the Pledge Agreement or the Note or which in any manner draws into
question the validity of this Agreement, the Pledge Agreement or the Note.
SECTION 5.5 Taxes.
The Borrower has filed all material tax returns and reports required
by law to have been filed and has paid all taxes and governmental charges
thereby shown to be due and payable.
SECTION 5.6 Debt.
Except as set forth in the financial statements delivered to the
Lender pursuant to Section 5.10, the Borrower has and will have no Debt
outstanding on a Closing Date other than (i) the Debt outstanding hereunder,
(ii) Debt that has previously been disclosed to the Lender in writing, and
(iii) Debt that will not, in the aggregate, have a material adverse effect on
the business, operations, or prospects of the Borrower.
SECTION 5.7 Title to Assets.
(a) The Borrower has legal title to or a legal and valid leasehold
interest in all property and assets owned by it on the date
hereof, and will have legal title to all property and assets
acquired by it at any time subsequent to the date hereof, free
and clear of all Liens, except Liens in favor of the Lender.
(b) Except for the security interest granted to the Lender
pursuant to this Agreement, the Borrower owns each item of the
Collateral free and clear of any and all Liens or claims of
others. No financing statement or other public notice with
respect to all or any part of the Collateral is on file or of
record in any public office, except such as have been filed in
favor of the Lender pursuant to this Agreement or the Pledge
Agreement.
SECTION 5.8 Perfected First Priority Liens.
The security interests granted pursuant to this Agreement (a)
constitute perfected security interests in the Collateral in favor of the
Lender, as collateral security for the Secured Obligations and (b) are prior to
all other Liens on the Collateral in existence on the date hereof.
SECTION 5.9 Inventory and Equipment.
The Inventory and the Equipment are kept at the locations listed on
Schedule 1.
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SECTION 5.10 Chief Executive Office.
The Borrower's chief executive office is located at 000 Xxxx Xx.,
Xxxx Xxxxx, Xxxxx 00000.
SECTION 5.11 Farm Products.
None of the Collateral constitutes, or is the Proceeds of, Farm
Products.
SECTION 5.12 No Subsidiaries.
The Borrower has no Subsidiaries on the date hereof.
SECTION 5.13 Financial Information.
All financial information which has been or shall hereafter be
furnished by or on behalf of the Borrower or by any other Person at the
Borrower's direction to the Lender for the purposes of or in connection with
this Agreement present fairly the financial condition as at the dates thereof
(subject to normal year end adjustments in the case of unaudited financial
statements).
SECTION 5.14 No Material Adverse Change.
There has been no material adverse change in the business, financial
condition, operations, assets, revenues, properties, or prospects of the
Borrower taken as a whole from the financial information previously provided to
Lender.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as any amount payable hereunder
remains unpaid:
SECTION 6.1 Conduct of Business and Maintenance of Existence.
The Borrower will perform an intercompany agreement to be entered into
between the Lender and the Borrower and such activities as are necessary or
incidental thereto, and will preserve, renew and keep in full force and effect
its existence.
SECTION 6.2 Financial Information.
The Borrower will deliver to the Lender:
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(a) as soon as available, but in no event more than one hundred
twenty (120) days after the end of each fiscal year of the
Borrower, financial statements of the Borrower containing a
balance sheet and the related statements of operations and
cash flows, showing the financial condition of the Borrower at
the close of and for such year; and
(b) as soon as available, but in no event more than sixty (60)
days after the end of each of the first three quarters of each
fiscal year of the Borrower, financial statements of the
Borrower, containing a balance sheet and the related
statements of income prepared or a cash basis, showing the
financial condition of the Borrower at the close of and for
such period.
The financial statements delivered pursuant to subsections (a) and (b)
of this Section 6.2 shall be certified by the president or chief financial
officer of the Borrower as true, complete, and correct and, as to the financial
statements delivered pursuant to subsection (a) of this Section 6.2, as having
been prepared in accordance with generally accepted accounting principles.
SECTION 6.3 Compliance with Laws.
The Borrower will comply with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply therewith will not materially
adversely affect the business, operations, or financial condition of the
Borrower or the ability of the Borrower to perform its obligations under this
Agreement, the Pledge Agreement or the Note.
SECTION 6.4 Incurrence of Debt.
The Borrower will not issue, assume, guarantee, incur, or otherwise be
or become liable in respect of Debt, other than (i) Debt expressly approved by
the Lender in writing, which approval may be withheld in the Lender's sole
discretion, or (ii) non-recourse Debt financing secured by property of the
Borrower not constituting Collateral prior to or as of June 30, 1997 (the
Lender hereby agreeing to cooperate with the Borrower to subordinate or release
its Lien on such property to permit any lender of such financing to obtain a
first lien thereon).
SECTION 6.5 Limitation on Liens.
The Borrower will not create, incur, assume or suffer to exist any
Lien upon or with respect to any of its assets, whether now or hereafter
acquired, or assign or otherwise convey any right to receive income, except (i)
Liens in favor of the Lender; (ii) Liens expressly approved by the Lender,
which approval shall not be unreasonably withheld; (iii) Liens imposed by any
governmental authority for taxes, assessments or charges not yet due or which
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are being contested in good faith and by appropriate proceedings if adequate
reserves with respect thereto are maintained on the books of the Borrower in
accordance with generally accepted accounting principles, and (iv) Liens
disclosed to the Lender on or before the Closing Date that would not, in the
aggregate, have a material adverse effect on the business, operations, or
prospects of the Borrower.
SECTION 6.6 Consolidations, Mergers, and Sales of Assets.
The Borrower will not wind up, liquidate or dissolve its affairs or
convey, sell, lease or otherwise dispose of (or agree to do any of the
foregoing at any future time), whether in one or a series of transactions, all
or any substantial part of its assets, unless such transaction or series of
transactions are expressly approved by the Lender, which approval shall not be
unreasonably withheld.
SECTION 6.7 Books and Records.
The Borrower will keep books and records which accurately reflect all
of its business affairs and transactions in all material respects. The Borrower
will permit the Lender at reasonable times and intervals during normal business
hours to examine and photocopy extracts from any of its books or other
corporate records.
SECTION 6.8 Lien on Collateral.
The Borrower shall, at its sole cost and expense, perform all acts and
execute all documents requested by the Lender at any time to evidence, perfect,
maintain and enforce the Lender's security interest and the first priority
thereof in the Collateral. Upon the Lender's request, at any time and from
time to time, the Borrower shall, at its sole cost and expense, execute and
deliver to the Lender one or more financing statements (in form and substance
satisfactory to the Lender) pursuant to the Code and, where permitted by law,
the Borrower hereby authorizes the Lender to execute and file one or more
financing statements signed only by the Lender or to file a copy of this
Agreement as a financing statement.
SECTION 6.9 Restriction on Dividends.
The Borrower will not make dividend distributions to its shareholders
at any time when there exists an outstanding balance on the Loan.
SECTION 6.10 Restriction on Certain Amendments.
The Borrower will not amend its organizational documents without the
prior written consent of the Lender, which consent shall not be unreasonably
withheld.
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SECTION 6.11 Delivery of Instruments and Chattel Paper.
If any amount payable under or in connection with any of the
Collateral shall be or become evidenced by any Instrument or Chattel Paper,
such Instrument or Chattel Paper shall be immediately delivered to the Lender,
duly indorsed in a manner satisfactory to the Lender, to be held as Collateral
pursuant to this Agreement.
SECTION 6.12 Maintenance of Insurance.
The Borrower will maintain, with financially sound and reputable
companies, insurance policies (1) insuring the Inventory and Equipment against
loss by fire, explosion, theft and such other casualties as may be reasonably
satisfactory to the Lender, such policies to be in such form and amounts and
having such coverage as may be reasonably satisfactory to the Lender, with
losses payable to the Borrower and the Lender as their respective interests may
appear.
(a) All such insurance shall (1) provide that no cancellation,
material reduction in amount or material change in coverage
thereof shall be effective until at least 30 days after
receipt by the Lender of written notice thereof, (2) name the
Lender as an insured party and (3) be reasonably satisfactory
in all other respects to the Lender.
(b) The Borrower shall deliver to the Lender a report of a
reputable insurance broker with respect to such insurance in
each calendar year and such supplemental reports with respect
thereto as the Lender may from time to time reasonably
request.
SECTION 6.13 Changes in Locations, Name, etc.
The Borrower will not unless it shall have given the Lender at least
30 days prior written notice of such change (or, in the case of Inventory and
Equipment, at least 10 days prior written notice, to the extent that the
Borrower has taken such action as reasonably may be required of it to maintain
the continuous perfection of the Lender's security interest in such Inventory
or Equipment, as the case may be):
(a) permit any of the Inventory (other than goods-in-transit and
immaterial amounts of goods in temporary locations in the
ordinary course of business) or Equipment to be kept at a
location other than those listed on Schedule 1;
(b) change the location of its chief executive office from that
specified in subsection 5.10; or
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(c) change its name, identity or corporate structure to such an
extent that any financing statement filed by the Lender in
connection with this Agreement would become seriously
misleading.
SECTION 6.14 Further Identification of Collateral.
The Borrower will furnish to the Lender from time to time statements
and schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Lender may reasonably request,
all in reasonable detail.
SECTION 6.15 Notices.
The Borrower will advise the Lender promptly, in reasonable detail, of
(a) any Lien (other than security interests created hereby or Liens permitted
under this Agreement) on any of the Collateral and (b) the occurrence of any
other event which could reasonably be expected to have a material adverse
effect on the aggregate value of the Collateral or on the security interests
created hereby.
SECTION 6.16 Additional Collateral.
With respect to any Person other than Charter Behavioral Health
Systems, LLC (being specifically excluded) that, subsequent to the Closing
Date, becomes a Subsidiary, the Borrower will promptly cause such new
Subsidiary to (i) execute and deliver to the Lender a guaranty of the Loan in
form and substance satisfactory to the Lender, and a new pledge agreement or
such amendments to the existing Pledge Agreement as the Lender shall deem
necessary or reasonably advisable to grant to the Lender, for the benefit of
the Lender, a Lien on the capital stock of such Subsidiary which is owned by
the Borrower or any of its Subsidiaries, (ii) deliver to the Lender the
certificates representing such capital stock, together with undated stock
powers executed and delivered in blank by a duly authorized officer of the
Borrower or such Subsidiary, as the case may be, (iii) take all actions
necessary or advisable to grant a security interest to the Lender in the
property and assets of such Subsidiary, including, without limitation, the
filing of financing statements in such jurisdictions as may be requested by the
Lender and the execution and delivery by such Subsidiary of a security
agreement in a form acceptable to the Lender.
ARTICLE VII
DEFAULTS
SECTION 7.1 Events of Default.
If one or more of the following events ("Events of Default") shall
have occurred and be continuing:
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(a) except as permitted pursuant to Section 2.2(b), the Borrower
shall fail to pay within five Business Days of the due date
any principal or interest on the Loan;
(b) any representation or warranty made by the Borrower hereunder
or in any certificate furnished by or on behalf of the
Borrower shall be incorrect when made in any material respect;
(c) the Borrower shall fail to observe or perform the provisions
of Section 6.9 hereof for five Business Days;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement, the Pledge Agreement,
the Note (other than those covered by clause (a), (b) or (c)
above), or any other Loan Document for 30 days (or, with
respect to Section 6.2 of this Agreement, for 30 days after
written notice thereof has been given to the Borrower by the
Lender); provided however, if such default is capable of cure
and the Borrower is diligently proceeding to cure such
default, the cure period in this subsection (d) shall be
extended for such additional time, not to exceed 30 days, as
is reasonably necessary to complete such cure;
(e) the Borrower shall fail to make any payment in respect of any
Material Debt other than the Debt of the Borrower under this
Agreement and the Note when due or within any applicable grace
period;
(f) the Borrower shall commence a voluntary case or other
proceeding seeking liquidation, reorganization, or other
relief with respect to itself or its debts under any
bankruptcy, insolvency, or other similar law now or hereafter
in effect or seeking the appointment of a trustee, receiver,
liquidator, custodian, or other similar official of it or any
substantial part of its property, or shall consent to any such
relief or to the appointment of or taking possession by any
such official in an involuntary case or other proceeding
commenced against it, or shall make a general assignment for
the benefit of creditors, or shall fail generally to pay its
debts as they become due, or shall take any action to
authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be commenced
against the Borrower seeking liquidation, reorganization,
rehabilitation, conservation, or other relief with respect to
it or its debts under any bankruptcy, insolvency or other
similar law now or hereafter in effect or seeking the
appointment of a trustee, receiver, liquidator, custodian,
rehabilitator, conservator, or other similar official of it or
any substantial part of its property, and such involuntary
case or other proceeding shall remain undismissed and unstayed
for a period of 120 days; or an order for relief shall be
entered against the Borrower
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under the federal bankruptcy laws or any state insolvency laws
as now or hereafter in effect;
(h) judgment or order for the payment of money in excess of
$500,000 shall be rendered against the Borrower and such
judgment or order shall continue unsatisfied, unstayed and
unbonded for a period of 30 days; provided, however that a
judgment or order fully covered by insurance, which coverage
has not been disputed by the insurer, shall not be considered
a Default;
then, and in every such event, the Lender may, by notice to the
Borrower declare the Note (together with accrued interest thereon) to
be, and the Note shall thereupon become, immediately due and payable
without presentment, demand, protest, or other notice of any kind, all
of which are hereby waived by the Borrower; provided that in the case
of any of the Events of Default specified in clause (e) or (f) above
(each, a "Bankruptcy Event of Default"), without any notice to the
Borrower or any other act by the Lender, the Note (together with
accrued interest thereon) shall become immediately due and payable
without presentment, demand, protest, or other notice of any kind, all
of which are hereby waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices.
All notices, requests and other communications to any party hereunder
shall be in writing (including bank wire, telex, facsimile transmission or
similar writing) and shall be given to such party: (i) in the case of the
Borrower or the Lender at their respective addresses, telex numbers or
facsimile numbers set forth on the signature pages hereof or (ii) in the case
of any party, such other address, telex number or facsimile number as such
party may hereafter specify for the purpose by notice to the other party in
accordance with this Section. All notices shall be effective when received.
SECTION 8.2 Expenses; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket expenses
reasonably incurred by the Lender, including reasonable fees
and disbursements of counsel in connection with any waiver or
consent hereunder or any amendment hereof or any Default or
alleged Default hereunder, and (ii) if an Event of Default
occurs, all out-of-pocket expenses incurred by the Lender,
including reasonable fees and disbursements of counsel in
connection with such Event of Default and collection,
bankruptcy, insolvency, and other enforcement proceedings
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resulting therefrom. The Borrower shall indemnify the Lender
against any transfer taxes, documentary taxes, assessments or
charges made by any governmental authority by reason of the
execution and delivery of this Agreement, the Pledge Agreement
or the Note.
(b) The Borrower agrees to indemnify the Lender and hold the
Lender harmless from and against any and all liabilities,
losses, damages, costs and expenses of any kind (other than
general overhead and administrative expenses), including,
without limitation, the reasonable fees and disbursements of
counsel, which may be incurred by the Lender in connection
with any investigative, administrative, or judicial proceeding
(whether or not the Lender shall be designated a party
thereto) relating to or arising out of this Agreement, the
Pledge Agreement or the Note or any actual or proposed use of
proceeds of the Loan hereunder; provided that the Lender shall
not have the right to be indemnified hereunder for (i) any
proceeding against the Lender by any governmental authority
charged with the supervision of the Lender or (ii) its own
gross negligence or willful misconduct as determined by a
court of competent jurisdiction.
SECTION 8.3 Amendments and Waivers.
Any provision of this Agreement, the Pledge Agreement, the Note or any
other Loan Document may be amended or waived if, but only if, such amendment or
waiver is in writing and is signed by the Lender and the Borrower.
SECTION 8.4 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to
the benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of the Lender. The
purchaser, assignee, transferee, or pledgee of any of the Lender's rights under
the Lender's security interest hereunder shall forthwith become vested with and
entitled to exercise all the rights, powers, and remedies given under this
Agreement to the Lender, as if said purchaser, assignee, transferee, or pledgee
were originally named as secured party herein.
SECTION 8.5 Governing Law; Submission to Jurisdiction.
THIS AGREEMENT, THE PLEDGE AGREEMENT, THE NOTE AND THE OTHER LOAN
DOCUMENTS SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF
TEXAS WITHOUT GIVING EFFECT TO THE CHOICE OF LAW RULES THEREOF. The Borrower
hereby submits to the
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nonexclusive jurisdiction of the United States District Court for the Northern
District of Texas and of any Texas state court for purposes of all legal
proceedings arising out of or relating to this Agreement or the transactions
contemplated hereby. The Borrower irrevocably waives, to the fullest extent
permitted by law, any objection which it may now or hereafter have to the
laying of the venue of any such proceeding brought in such a court and any
claim that any such proceeding brought in such a court has been brought in an
inconvenient forum.
SECTION 8.6 Counterparts; Integration.
This Agreement may be signed in any number of counterparts, each of
which shall be an original, with the same effect as if the signatures thereto
and hereto were upon the same instrument. This Agreement constitutes the
entire agreement and understanding among the parties hereto and supersedes any
and all prior agreements and understandings, oral or written, relating to the
subject matter hereof.
SECTION 8.7 WAIVER OF JURY TRIAL.
THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT
TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. This waiver of right to a
trial by jury is separately given, knowingly and voluntarily, by the Borrower
and the Lender, and this waiver is intended to encompass individually each
instance and each issue as to which the right to a trial by jury would
otherwise accrue. The Borrower and the Lender are hereby authorized and
requested to submit this Agreement to any court having jurisdiction over the
subject matters and the parties hereto, so as to serve as conclusive evidence
of the parties' herein contained waiver of the right to trial by jury.
Further, the Borrower and the Lender hereby certify that no representative,
attorney or agent of any other party has represented, expressly or otherwise,
to the Borrower, or the Lender that any other party will not seek to enforce
this waiver of right to trial by jury provision.
SECTION 8.8 Termination; Release.
Until the Termination Date, this Agreement shall be a continuing
agreement, shall remain in full force and effect. After the Termination Date,
this Agreement shall terminate, and the Lender, at the request and expense of
the Borrower, will execute and deliver to Borrower a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Borrower (without recourse
and without any representation or warranty) at the expense of the Lender the
Collateral if in the possession of the Lender or its agents and not theretofore
sold or otherwise applied or released pursuant to this Agreement).
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SECTION 8.9 Effect of Headings.
The Article and Section headings herein are for convenience of
reference only and shall not affect the construction hereof.
SECTION 8.10 Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable
in any jurisdiction shall not invalidate the remaining provisions hereof or
affect the validity or enforceability of such provisions in any other
jurisdiction.
SECTION 8.11 Application of Proceeds.
The parties agree that the Lender shall have the right to apply the
proceeds of any Collateral under this Agreement or the Line of Credit Credit
Agreement, in its sole discretion, against the Secured Obligations under this
Agreement or the Secured Obligations under the Line of Credit Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to
be duly executed by their respective authorized officers as of the day and year
first above written.
CRESCENT OPERATING, INC.
By:
-----------------------------------
Name:
Title:
Notice Address:
--------------------------------------
--------------------------------------
--------------------------------------
Facsimile:
----------------------------
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: Crescent Real Estate Equities,
Ltd., its general partner
By:
-----------------------------------
Name:
Title:
Notice Address:
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
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Exhibits and Schedules:
Exhibit A: Application for Advance
Exhibit B: Note
Exhibit C: Pledge Agreement
Exhibit D: Certificate
Schedule 1: Location of the Inventory and Equipment
31
EXHIBIT A
APPLICATION FOR ADVANCE
This Application for Advance is submitted by the undersigned to
Crescent Real Estate Equities Limited Partnership (the "Lender") pursuant to
that certain Amended and Restated Credit and Security Agreement, dated as of
May 21, 1997, between the Lender and the undersigned (the "Credit Agreement").
Each capitalized term used herein and not otherwise defined shall have the
respective meaning ascribed to such term in the Credit Agreement.
1. The undersigned hereby requests an Advance under the Credit
Agreement in the amount of: ($________________.00).
2. The undersigned hereby requests that such Advance be made on:
_______________, 199_.
3. The undersigned hereby represents and warrants to the Lender
as follows:
(a) The undersigned is not in Default under the Credit Agreement.
(b) No Event of Default has occurred or is continuing.
(c) Both before and after giving effect to the advance requested
hereby, the representations and warranties set forth in
Section 3.1(b) of the Credit Agreement are true and correct,
with the same effect as if made on the date hereof.
Unless the undersigned has otherwise notified the Lender in
writing prior to the Closing Date and the making of the advance requested
hereby, each of such representations and warranties is true and correct as of
the date hereof and as of the Closing Date.
CRESCENT OPERATING, INC.
By:
-----------------------------------
Name:
---------------------------------
Title:
--------------------------------
32
May 21, 1997
AMENDED AND RESTATED
NOTE
$35,900,000.00
FOR VALUE RECEIVED, CRESCENT OPERATING, INC.., a Delaware corporation
("Borrower") promises to pay to CRESCENT REAL ESTATE EQUITIES LIMITED
PARTNERSHIP, a Delaware limited partnership ("Lender"), at 000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxx Xxxxx, Xxxxx 00000, the principal sum of Thirty Five Million
Nine Hundred Thousand and No/100 Dollars ($35,900,000.00), with interest on the
principal balance from time to time remaining unpaid at the rates hereinafter
provided.
The Borrower promises to pay interest on the unpaid principal balance
hereof from the date hereof until paid in full pursuant to the Amended and
Restated Credit and Security Agreement, dated as of May 21, 1997, between the
Borrower and the Lender (as the same may be amended, modified or supplemented
from time to time, the "Credit Agreement"). The Borrower promises to pay the
aggregate outstanding principal amount of the Loan together with interest
thereon, on the dates, in the amounts and at the rate or rates provided in the
Credit Agreement; provided that the interest payable shall not exceed the
maximum rate permitted by applicable law (the "Maximum Rate"). Interest on the
principal hereof from time to time remaining unpaid and, to the extent
permitted by applicable law, interest on the unpaid interest, shall bear
interest from and after an Event of Default at the Default Rate provided that
in no event shall the Default Rate be more than the Maximum Rate.
This Note amends and restates, and supersedes, in its entirety, that
Note dated May 8, 1997 from Borrower to Lender in the maximum aggregate
principal amount of Thirty Million Four Hundred Thousand Dollars ($30,400,000).
This note is the Note referred to in the Credit Agreement. This Note
and the holder hereof are entitled to all of the benefits provided for thereby
or referred to therein. Reference is hereby made to the Credit Agreement for a
statement of such benefits. Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the acceleration of the maturity hereof.
This Note shall be payable as provided in the Credit Agreement.
Upon the occurrence of any Event of Default (after the giving of any
notice required in the Credit Agreement and the expiration of any applicable
grace periods provided for in the Credit Agreement), all amounts then remaining
unpaid on this Note shall become immediately due and payable, and the holder
hereof shall have all rights and remedies of Lender under the Credit Agreement
and other Loan Documents. The failure to exercise the option to accelerate the
maturity of this Note upon the happening of any one or more of the Events of
Default hereunder shall not constitute a waiver of the right with respect to
such uncured
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default or any other event of uncured default hereunder or under any other of
the Loan Documents. The remedies of the holder hereof, as provided in the Note
and in any other of the Loan Documents, shall be cumulative and concurrent and
may be pursued separately, successively or together, as often as occasion
therefor shall arise, at the sole discretion of the holder. The acceptance by
the holder hereof of any payment under this Note which is less than payment in
full of all amounts due and payable at the time of such shall not constitute a
waiver of or impair, reduce, release, or extinguish any of the rights or
remedies of the holder hereof to exercise the foregoing option or any other
option granted to the holder in this Note or in any other of the Loan
Documents, at that time or at any subsequent time, or nullify any prior
exercise of any such option.
The undersigned and all other parties now or hereafter liable for the
payment hereof, whether as endorser, surety, or otherwise, except as provided
in the Credit Agreement, severally waive demand, presentment, notice of
dishonor, notice of intention to accelerate the indebtedness evidenced hereby,
notice of the acceleration of the maturity hereof, diligence in collecting,
grace, notice and protest, and consent to all extensions which from time to
time may be granted by the holder hereof and to all partial payments hereon,
whether before or after maturity.
If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, or other court,
whether before or after maturity, the undersigned agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees and
expenses incurred by the holder hereof.
All agreements between the undersigned and the holder hereof, whether
now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged,
received, paid, or agreed to be paid to the holder hereof exceed the maximum
amount permissible under applicable law. If from any circumstance the holder
hereof shall ever receive anything of value deemed interest by applicable law
in excess of the maximum lawful amount, an amount equal to any excess interest
shall be applied to the reduction of the principal hereof and not to the
payment of interest, or if such excess interest exceeds the unpaid balance of
principal hereof, such excess shall be refunded to the undersigned. All
interest paid or agreed to be paid to the holder hereof shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full period until payment in full of the principal so that the
interest hereon for such full period shall not exceed the maximum amount
permitted by applicable law. This paragraph shall control all agreements
between the undersigned and the holder hereof.
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The loan transaction evidenced hereby shall not be governed by, or be
subject to, Chapter 15 of the Texas Credit Code (Title 79, Revised Civil
Statutes of Texas, 1925, as amended).
EXCEPT WHERE FEDERAL LAW IS APPLICABLE (INCLUDING, WITHOUT LIMITATION,
ANY FEDERAL USURY CEILING OR OTHER FEDERAL LAW WHICH, FROM TIME TO TIME, IS
APPLICABLE TO THE INDEBTEDNESS EVIDENCED HEREIN AND WHICH PREEMPTS STATE USURY
LAWS), THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH
STATE.
CRESCENT OPERATING, INC.
By:
-----------------------------------
Name:
Title:
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