LOAN AGREEMENT
Dated as of
July 17, 1998
Between
HYDROCHEM INDUSTRIAL SERVICES, INC.
AND
BANK ONE, TEXAS, NATIONAL ASSOCIATION
TABLE OF CONTENTS
SECTION 1. DEFINITIONS; INTERPRETATION.................................1
Section 1.1. Definitions........................................1
Section 1.2. Interpretation.....................................9
SECTION 2. LOAN.......................................................10
Section 2.1. Construction Loan.................................10
Section 2.2. The Note..........................................12
Section 2.3. Repayment of Loan.................................12
Section 2.4. Loan Interest Rate................................13
Section 2.5. Conversion and Extension..........................14
Section 2.6. Use of Proceeds...................................15
Section 2.7. Notice of Change in Interest Rate.................15
Section 2.8. Collateral........................................15
SECTION 3. PAYMENTS AND FEES..........................................16
Section 3.1. Method of Payment.................................16
Section 3.2. Prepayment........................................16
Section 3.3. Commitment Fee....................................16
SECTION 4 CONDITIONS TO LOAN.........................................16
Section 4.1. Initial Advance...................................16
Section 4.2 Conditions to Subsequent Advances.................19
Section 4.3 Waiver of Conditions..............................20
SECTION 5. REPRESENTATIONS AND WARRANTIES.............................20
Section 5.1. Corporate Organization............................20
Section 5.2. Corporate Power and Authority; Validity...........20
Section 5.3. No Violation......................................20
Section 5.4. Litigation........................................20
Section 5.5. Investment Company Act............................21
Section 5.6. Public Utility Holding Company Act................21
Section 5.7. True and Complete Disclosure......................21
Section 5.8. Financial Statements..............................21
Section 5.9. No Material Adverse Effect........................21
Section 5.10. Taxes.............................................21
Section 5.11. ERISA.............................................22
Section 5.12. Consents..........................................22
Section 5.13. Ownership of Project..............................22
Section 5.14. Compliance with Statutes..........................22
Section 5.15. Year 2000 Requirement.............................22
Section 5.16. Place of Business.................................23
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SECTION 6. COVENANTS..................................................23
Section 6.1. Existence.........................................23
Section 6.2. Maintenance.......................................23
Section 6.3. Taxes.............................................23
Section 6.4. ERISA.............................................23
Section 6.5. Insurance.........................................24
Section 6.6. Construction Contract and Retainage...............24
Section 6.7. Consent to Leases.................................24
Section 6.8. Financial Reports and Other Information...........24
Section 6.9. Lender Inspection Rights..........................26
Section 6.10. Restricted Payments...............................26
Section 6.11. Environmental Laws................................26
Section 6.12. Restrictions on Fundamental Changes...............26
Section 6.13. Liens.............................................27
Section 6.14. Debt..............................................27
Section 6.15. Transfer of Assets................................27
Section 6.16. Completion Deadline...............................27
Section 6.17. Compliance with Laws..............................27
Section 6.18 Intentionally Omitted.............................27
Section 6.19. Minimum Consolidated Net Worth....................27
Section 6.20. Fixed Charge Coverage Ratio.......................27
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.............................28
Section 7.1. Events of Default.................................28
Section 7.2. Non-Bankruptcy Defaults...........................30
Section 7.3. Bankruptcy Defaults...............................31
Section 7.4. Application of Proceeds from Collateral...........31
Section 7.5. Deficiency........................................31
SECTION 8. MISCELLANEOUS..............................................32
Section 8.1. No Waiver of Rights...............................32
Section 8.2 Non-Business Day..................................32
Section 8.3. Documentary Taxes.................................32
Section 8.4. Survival of Representations.......................32
Section 8.5. Survival of Indemnities...........................32
Section 8.6. Setoff............................................32
Section 8.7. Notices...........................................33
Section 8.8. Counterparts......................................34
Section 8.9. Successors and Assigns............................34
Section 8.10. Participations in Borrowings and Notes;
Transfers of Borrowings and
Notes.............................................34
Section 8.11. Amendments........................................36
Section 8.12. Headings..........................................36
Section 8.13. Legal Fees, Other Costs and Indemnification.......36
Section 8.14 GOVERNING LAW; ARBITRATION; SUBMISSION TO
JURISDICTION......................................36
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Section 8.15. Severability......................................38
Section 8.16. Change in Accounting Principles or Tax Laws.......38
Section 8.17. Notice............................................39
EXHIBITS
Exhibit 2.1A - Form of Request for Advance
Exhibit 2.1B - Form of Affidavit of Bills Paid
Exhibit 2.1C - Form of Waiver of Lien
Exhibit 2.3 - Term Loan Amortization Schedule
Exhibit 6.8 - Form of Compliance Certificate
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LOAN AGREEMENT, dated as of July 17, 1998, between HydroChem Industrial
Services, Inc., a Delaware corporation (the "Borrower"), and Bank One, Texas,
National Association (the "Lender").
WITNESSETH:
WHEREAS, the Borrower desires to obtain a commitment from the Lender to
make a construction loan to the Borrower; and
WHEREAS, the Lender is willing to extend such commitment to the Borrower on
the terms and subject to the conditions hereinafter set forth;
NOW, THEREFORE, in consideration of the premises and of the mutual
covenants herein contained, the parties hereto agree as follows:
SECTION 1. DEFINITIONS; INTERPRETATION.
Section 1.1. Definitions. Unless otherwise defined herein, the following
terms shall have the following meanings:
"Acquisition" means the direct or indirect purchase or acquisition, whether
in one or more related transactions, of any Person or group of Persons or any
related group of assets, liabilities, or securities of any Person or group of
Persons, but excluding those acquisitions that constitute capital expenditures
under GAAP.
"Advance" means an advance of funds by the Lender to the Borrower pursuant
to Section 2.1.
"Advance Request" means a draw request substantially in the form of Exhibit
2.1A.
"Agreement" means this Loan Agreement, as amended, restated or supplemented
from time to time.
"Architect" means House Reh Burwell.
"Base Rate" means, for any day, the fluctuating commercial loan rate
announced by the Lender from time to time as its base rate for Dollar loans in
the United States of America in effect on such day (which base rate may not be
the lowest rate charged by the Lender on loans to any of its customers), with
any change in the Base Rate resulting from a change in such announced rate to be
effective on the date of the relevant change.
"Benefit Plan" means an employee pension benefit plan covered by Title IV
of ERISA or subject to the minimum funding standards under Section 412 of the
Code that is either (i)
maintained by the Borrower or the Guarantor or (ii) maintained pursuant to a
collective bargaining agreement or any other arrangement under which more than
one employer makes contributions and to which any of such entities is then
making or accruing an obligation to make contributions or has within the
preceding five (5) plan years made or had an obligation to make contributions.
"Borrower" means HydroChem Industrial Services, Inc., a Delaware
corporation.
"Borrower's Credit Facility" means that certain $25,000,000 Credit
Agreement dated as of December 31, 1997, by and among the Borrower, certain
financial institutions and NationsBank, N.A., successor by merger to NationsBank
of Texas, N.A., as agent for such financial institutions, as amended, restated
or supplemented from time to time, or any replacement credit facility therefor
or supplemental credit facility thereto.
"Budget" means the budget prepared by the Borrower, and approved by the
Lender, setting forth in detail all direct and indirect costs for the
construction of the Improvements.
"Business Day" means any day other than a Saturday, Sunday or a day on
which banking institutions are generally authorized or obligated by law or
executive order to close in Houston, Texas.
"Capital Expenditures" means, with respect to any Person and with respect
to any period of its determination, the consolidated expenditures of such Person
during such period that are required to be included in or are reflected by the
consolidated property, plant, or equipment accounts of such Person, or any
similar fixed asset or long term capitalized asset accounts of such Person, on
the consolidated balance sheet of such Persons in conformity with GAAP, but
excluding in every instance those expenditures made in connection with an
Acquisition, the Project and industrial vacuum services as permitted by the
Borrower's Credit Facility.
"Capital Leases" means, with respect to any Person, any lease of any
property by such Person which would, in accordance with GAAP, be required by
GAAP to be classified and accounted for as a capital lease on the balance sheet
of such Person.
"Closing Date" means the date the Lender and the Borrower execute the Loan
Documents.
"Code" means the Internal Revenue Code of 1986, as amended.
"Collateral" has the meaning specified in Section 2.8.
"Collateral Assignment" means the Collateral Assignment of Agreements of
even date herewith by the Borrower in favor of the Lender, as amended, restated
or supplemented from time to time.
"Compliance Certificate" means a certificate substantially in the form of
Exhibit 6.8.
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"Consolidated Interest Expense" means, as of any date of determination,
total interest expense of the Borrower and its Subsidiaries, as determined in
accordance with GAAP.
"Consolidated Interest Income" means, with respect to any Person and for
any period of its determination, total interest income of such Person, as
determined in accordance with GAAP.
"Consolidated Net Income" means, with respect to any Person and for any
period of its determination, the net income (or loss), after provision for
Taxes, of such Person, as determined in accordance with GAAP.
"Consolidated Net Worth" means, as of any date of determination, the
Borrower's consolidated stockholders equity as determined in accordance with
GAAP.
"Construction Consultant" means any entity to be chosen by the Lender as
the construction consultant pursuant to Section 2.1.
"Construction Loan" means the Construction Loan described in Section 2.1
that matures on the Construction Loan Maturity Date.
"Construction Loan Maturity Date" means July 16, 1999.
"Construction Loan Rate" means the Base Rate minus one-half of one percent
(0.5%) per annum.
"Construction Contract" means the Standard Form of Agreement Between Owner
and Design/Builder by and between the Borrower and the Contractor, as amended,
restated or supplemented from time to time with the consent of the Lender.
"Contractor" means D.E. Harvey Builders, Inc. and each other general
contractor and/or construction consultant, whether one or more, engaged by the
Borrower, and approved in writing by the Lender, to construct or supervise the
construction of the Improvements.
"Contractor Agreement" means the Contractor's Agreement and Subordination
of even date herewith, as amended, restated or supplemented from time to time.
"Conversion Date" has the meaning specified in Section 2.5.
"Credit Party" means the Borrower, the Guarantor and any other Person which
is a party to any Loan Document.
"Debt" means, with respect any Person, without duplication, (i)
indebtedness of such Person for borrowed money, which under GAAP is shown on the
balance sheet as a liability (excluding reserves for deferred income taxes,
deferred pension liability, trade and other accounts
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payable, and other deferred revenue, deferred expenses and reserves); (ii)
obligations of such Person evidenced by bonds, debentures, notes, or other
similar instruments and which constitute liabilities under GAAP; (iii)
obligations of such Person to pay the deferred purchase price of property or
services (other than trade debt and normal operating liabilities incurred in the
ordinary course of business) and which constitute liabilities under GAAP; (iv)
obligations of such Person as lessee under Capital Leases; (v) obligations of
such Person under any swap, hedge, cap, collar or similar agreement; (vi)
obligations of such Person under or relating to letters of credit, guaranties,
purchase agreements, endorsements, or other creditor assurances assuring a
creditor against loss in respect of indebtedness or obligations of others of the
kinds referred to in clauses (i) through (v) of this definition (other than
endorsements of negotiable instruments for collection in the ordinary course of
business and other contractual commitments), whether direct or indirect in
connection with obligations, stocks, or dividends of any Person; and (vii)
nonrecourse indebtedness or obligations of others of the kinds referred to in
clauses (i) through (vi) of this definition secured by any Lien on or in respect
of any property of such Person, whether or not the indebtedness or obligations
secured thereby shall have been assumed. For the purposes of determining the
amount of any Debt, the amount of any Debt described in clause (vi) of the
definition of Debt shall be valued at the maximum amount of the contingent
liability thereunder, and the amount of any Debt described in clause (vii) that
is not covered by clause (vi) shall be valued at the lesser of the amount of the
Debt secured or the book value of the property securing such Debt.
"Debt Service" means, for any period of its determination, the sum of (i)
scheduled principal payments on long term Debt during such period plus (ii)
Interest Charges accrued during such period.
"Deed of Trust" means the Deed of Trust (with Security Agreement and
Assignment of Rents and Leases) of even date herewith covering, among other
things, the Land and the Improvements, as amended, restated or supplemented from
time to time.
"Default" means any event or condition the occurrence of which would, with
the passage of time or the giving of notice, or both, constitute an Event of
Default.
"Default Rate" means the sum of two percent (2%) plus the Construction Loan
Rate or the Term Loan Rate, as applicable, during the period for which the
Default Rate applies.
"Dollar" and "U.S. Dollar" and the sign "$" means lawful money of the
United States of America.
"EBITDA" means, with respect to any Person and for any period of its
determination, the Consolidated Net Income of such Person for such period, plus
the Consolidated Interest Expense, Taxes based on income or revenues, and minus
any Consolidated Interest Income and extraordinary gains of such Person for such
period and included in the calculation of Consolidated Net Income, plus the
consolidated depreciation and amortization of such Person for such period.
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"Environmental Claims" means any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance or violations, investigations or proceedings relating to any
Environmental Law ("Claims") or any permit issued under any Environmental Law,
including, without limitation, (i) any and all Claims by governmental or
regulatory authorities for enforcement, cleanup, removal, response, remedial or
other actions or damages pursuant to any applicable Environmental Law, and (ii)
any and all Claims by any third party seeking damages, contribution,
indemnification, cost recovery, compensation or injunctive relief resulting from
Hazardous Materials or arising from alleged injury or threat of injury to health
or safety in relation to the environment.
"Environmental Indemnity" means the Certificate and Indemnification
Regarding Hazardous Substances executed by the Borrower and the Guarantor in
favor of the Lender of even date herewith, as amended, restated or supplemented
from time to time.
"Environmental Law" means any federal, state or local statute, law, rule,
regulation, ordinance, code, policy or rule of common law now or hereafter in
effect, including any judicial or administrative order, consent, decree or
judgment relating to (i) the environment, (ii) health or safety in relation to
the environment or (iii) Hazardous Materials.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended.
"Event of Default" means any of the events or circumstances specified in
Section 7.1.
"Fixed Charge Coverage Ratio" means as of the last day of each fiscal
quarter of the Borrower, the ratio of (i) the consolidated EBITDA of the
Borrower and its Subsidiaries for the preceding four fiscal quarters then ended,
less consolidated cash Taxes paid and Capital Expenditures made by the Borrower
and its Subsidiaries during such period, to (ii) Debt Service, plus any cash
dividends made by the Borrower during the preceding four fiscal quarters then
ended.
"GAAP" means generally accepted accounting principles from time to time in
effect as set forth in the opinions and pronouncements of the Accounting
Principles Board of the American Institute of Certified Public Accountants and
the statements and pronouncements of the Financial Accounting Standards Board or
in such other statements, opinions and pronouncements by such other entity as
may be approved by a significant segment of the U.S. accounting profession.
"Guarantor" means HydroChem International, Inc., a Delaware corporation.
"Guaranty" by any Person means all obligations (other than endorsements in
the ordinary course of business of negotiable instruments for deposit or
collection) of such Person guarantying or in effect guarantying any Debt,
dividend or other obligation (including, without limitation, obligations in
connection with sales of any property) of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, all obligations
5
incurred through an agreement, contingent or otherwise, by such Person: (i) to
purchase such Debt or obligation, or to purchase any property or assets
constituting security therefor, primarily for the purpose of assuring the owner
of such Debt or obligations of the ability of the primary obligor to make
payment of the Debt or obligation; or (ii) to advance or supply funds (x) for
the purchase or payment of such Debt or obligation or (y) to maintain working
capital or other balance sheet condition or otherwise to advance or make
available funds for the purchase or payment of such Debt or obligation, in each
case primarily for the purpose of assuring the owner of such Debt or obligation
of the ability of the primary obligor to make payment of the Debt or obligation;
or (iii) to lease property or to purchase securities or other property or
services of the primary obligor primarily for the purpose of assuring the owner
of such Debt or obligation of the ability of the primary obligor to make payment
of the Debt or obligation; or (iv) otherwise to assure the owner of the Debt or
obligation of the primary obligor against loss in respect thereof. For the
purpose of all computations made under this Agreement, the amount of a Guaranty
in respect of any obligation shall be deemed to be equal to the amount that
would apply if such obligation were the direct obligation of such Person rather
than the primary obligor or, if less, the maximum aggregate potential liability
of such Person under the terms of the Guaranty.
"Hazardous Material" shall have the meaning assigned to that term in the
Comprehensive Environmental Response Compensation and Liability Act of 1980, as
amended by the Superfund Amendments and Reauthorization Acts of 1986, and shall
include any substance defined as "hazardous" or "toxic" or words used in place
thereof under any Environmental Law applicable to the Borrower.
"Hedge Agreement" means that certain ISDA Master Agreement dated as of July
17, 1998, between the Borrower and the Lender.
"Highest Lawful Rate" means the maximum nonusurious interest rate, if any,
that at any time or from time to time may be contracted for, taken, reserved,
charged or received on the Loan or under laws applicable to the Lender, which
are presently in effect or, to the extent allowed by applicable law, under such
laws which may hereafter be in effect and which allow a higher maximum
nonusurious interest rate than applicable laws now allow. Determination of the
rate of interest for the purpose of determining whether the Loan is usurious
under all applicable laws shall be made by amortizing or spreading using the
actuarial method during the stated term of the Loan, all interest at any time
contracted for, taken, reserved, charged or received from the Borrower in
connection with the Loan, as applicable.
"Improvements" means the office, laboratory and warehouse building
containing approximately 130,000 square feet and other capital improvements to
be constructed on the Land in accordance with the Plans.
"Indenture" means the Indenture dated as of August 1, 1997, by and among
the Borrower, Norwest Bank, Minnesota, N.A., as Trustee, and the Guarantor.
6
"Initial Borrowing Date" means the date on which all conditions precedent
set forth herein to the initial Advance are satisfied or waived in writing and
the initial Advance hereunder occurs.
"Interest Charges" means, with respect to any Person and for any period of
its determination, the Consolidated Interest Expense of such Person during such
period plus its capitalized interest during such period, but without adjustment
for its interest income during such period determined in accordance with GAAP.
"Interest Rate Adjustment Date" means the Conversion Date and the last
Business Day of each succeeding full three (3) month period thereafter until the
Term Loan Maturity Date.
"Interest Rate Protection Agreement" means any interest rate swap, interest
rate cap, interest rate collar or other interest rate hedging agreement or
arrangement designed to protect against fluctuations in interest rates.
"Land" means the tract of land among two (2) contiguous parcels containing
approximately 19.4375 acres located at 000 Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxx,
more particularly described in Exhibit "A" to the Deed of Trust.
"Lender" is defined in the preamble.
"LIBOR Rate" means a rate of interest per annum (rounded upwards, if
necessary, to the nearest whole multiple of 1/100 of 1%), equal to the offered
rate for U.S. Dollar deposits of not less than $1,000,000 for a three (3) month
period of time as of 11:00 a.m. City of London, England time two (2) London
Business Days prior to the applicable Interest Rate Adjustment Date as shown on
the display designated as "British Bankers Assoc. Interest Settlement Rates" on
the Telerate System ("Telerate"), Page 3750 or Page 3740 or such other page or
pages as may replace such pages on Telerate for the purpose of displaying such
rate; provided, however, that if such rate is not available on Telerate then
such offered rate shall be otherwise independently determined by the Lender from
an alternate, substantially similar independent source available to the Lender
or shall be calculated by the Lender by a substantially similar methodology as
that theretofore used to determine such offered rate in Telerate.
"Lien" means any interest in any property or asset in favor of a Person
other than the owner of the property or asset and securing an obligation owed to
such Person, whether such interest is based on the common law, statute or
contract, including, but not limited to, the security interest lien arising from
a mortgage, encumbrance, pledge, conditional sale, security agreement or trust
receipt, or a lease, consignment or bailment for security purposes.
"Loan" means the loan in the original principal amount of Seven Million
Five Hundred Thousand and No/100 Dollars ($7,500,000.00) made or to be made by
the Lender pursuant to Section 2.1, and shall include the Construction Loan and
the Term Loan, as applicable.
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"Loan Documents" means this Agreement, the Note, the Subsidiary Guaranty,
the Deed of Trust, the Collateral Assignment, the Contractor Agreement, the
Hedge Agreement, the Advance Requests and any other documents or instruments
executed by a Credit Party in connection with this Agreement.
"London Business Day" means any day other than a Saturday, Sunday or a day
on which banking institutions are generally authorized or obligated by law or
executive order to close in the City of London, England.
"Material Adverse Effect" means an effect that results in a material
adverse change since March 31, 1998, in (i) the business, properties, assets,
financial condition or prospects of the Borrower or the Guarantor or (ii) in the
ability of the Borrower or the Guarantor to perform its Obligations under this
Agreement, the Note or the other Loan Documents to which it is a party.
"Note" means the promissory note of the Borrower described in Section 2.2.
"Obligations" means all obligations of any Credit Party to pay fees, costs
and expenses hereunder, to pay principal or interest on the Loan and to pay any
other obligations to the Lender arising under or in relation to any Loan
Document.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"Permitted Liens" means the Liens described in Section 6.13.
"Person" means an individual, partnership, corporation, limited liability
company, association, trust, unincorporated organization or any other entity or
organization, including a government or any agency or political subdivision
thereof.
"Personalty" means all equipment, fixtures, furnishings, and other articles
of personal property now owned or hereafter acquired and attached to or used in
or about the Improvements that are necessary for the use and occupancy of the
Improvements for the purposes for which they were or are to be attached, placed,
erected, constructed or developed, or which personal property is or may be used
in or related to the planning, development, financing or operation of the
Improvements (excluding furniture, office equipment, corporate files, books and
records, tools, work in progress, finished goods and inventory, computers and
computer software, vehicles and trailers situated on the Property), and all
renewals of or replacements or substitutions for any of the foregoing.
"Plans" means the plans (including all change orders prior to the Closing
Date) relating to the Improvements prepared by the Architect approved by the
Lender, as amended from time to time with the consent of the Lender if required
hereby.
"Project" means the Improvements, the Land and the Personalty.
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"Restricted Payment" shall have the meaning assigned to such term in the
Indenture.
"Senior Subordinated Notes" means the 10 3/8% Series B Senior Subordinated
Notes due August 1, 2007, issued pursuant to the Indenture.
"Subsidiary" means, for any Person, any corporation or other entity of
which more than fifty percent (50%) of the outstanding stock or comparable
equity interests having ordinary voting power for the election of the board of
directors of such corporation, any managers of such limited liability company or
similar governing body (irrespective of whether or not, at the time, stock or
other equity interests of any other class or classes of such corporation or
other entity shall have or might have voting power by reason of the happening of
any contingency) is at the time directly or indirectly owned by such Person, as
applicable.
"Subsidiary Guaranty" means the Guaranty of the Guarantor in favor of the
Lender of even date herewith, as amended, restated or supplemented from time to
time.
"Taxes" has the meaning specified in Section 5.10 hereof.
"Term Loan" means the Term Loan described in Section 2.5 that matures on
the Term Loan Maturity Date, provided the Borrower qualifies for and elects to
convert the Construction Loan to the Term Loan.
"Term Loan Maturity Date" has the meaning specified in Section 2.3(b)
hereof.
"Term Loan Rate" means the LIBOR Rate, as adjusted every three (3) month
period and in effect on each Interest Rate Adjustment Date, plus 1.75% per
annum.
"Title Agent" means Charter Title Company.
"Title Commitment" means the Commitment for Title Insurance described in
Section 4.1(j) hereof.
"Title Company" means Lawyers Title Insurance Company.
"Title Policy" means the Mortgage Policy of Title Insurance described in
Section 4.1(j) hereof.
"Unfunded Vested Liabilities" means, for any Benefit Plan at any time, the
amount (if any) by which the present value of all vested nonforfeitable accrued
benefits under such Benefit Plan exceeds the fair market value of all Benefit
Plan assets allocable to such benefits, determined as of the then most recent
valuation date for such Benefit Plan, but only to the extent that such excess
represents a potential liability of the Borrower to the PBGC or such Benefit
Plan.
Section 1.2. Interpretation. The foregoing definitions shall be equally
applicable to the singular and plural forms of the terms defined. All references
to times of day in this Agreement shall be references to Houston, Texas time
unless otherwise specifically provided.
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SECTION 2. LOAN.
Section 2.1. Construction Loan. Subject to the terms and conditions hereof,
the Lender agrees to make the Construction Loan to the Borrower in Advances in
an aggregate amount not to exceed $7,500,000 as follows:
(a) An initial Advance in the amount of $3,186,606 shall be made on
the Closing Date. The remaining Construction Loan proceeds shall be
advanced to the Borrower by the Lender (i) during the course of the
construction of the Improvements in accordance with the terms herein and
the other Loan Documents, and (ii) in accordance with a schedule to be
submitted by the Borrower and approved by the Lender which will allow that
disbursements be made upon a percentage of completion basis.
(b) Disbursements (other than the Initial Advance) shall be made not
more frequently than once a month. Disbursements shall be made only after
notice is given to the Lender five (5) Business Days prior to the requested
date for each such disbursement and in the draw request form attached
hereto as Exhibit 2.1A (an "Advance Request"). Such form shall be
accompanied by an Affidavit of Bills Paid in the form attached hereto as
Exhibit 2.1B, and a Waiver of Lien in the form attached hereto as Exhibit
2.1C, executed by the Contractor and each subcontractor, respectively.
Disbursement requests shall be submitted by the Borrower and the Contractor
on AIA forms for review and approval of the Construction Consultant, if one
has been retained by the Lender, which will report to the Lender, or
otherwise directly to the Lender. All disbursements must conform to the
Budget for the materials and/or services covered by such disbursement
request; no variances will be permitted without the Lender's prior written
approval which shall not be unreasonably withheld or delayed.
(c) Bills or statements for all expenses for which a disbursement is
requested shall be presented to the Lender along with the request for
disbursement. All requests for disbursement shall include certification by
the Borrower, and, if the draw is in excess of $50,000, the Construction
Consultant, if any, that all labor and material for which disbursement is
requested have gone into the construction of the Improvements according to
the Plans in accordance with the Budget and that the remaining undisbursed
portion of the Construction Loan are adequate to complete the construction
of the Improvements.
(d) Unless otherwise approved by the Lender, no disbursements of the
Construction Loan proceeds shall be made if Default or an Event of Default
has occurred and is continuing. The Lender shall not be obligated at any
time to disburse proceeds of the Construction Loan in excess of the Budget
or that recommended by the Construction Consultant nor shall the Lender be
obligated to disburse proceeds of the Loan for materials stored off of the
Land. As a condition of each draw, the Lender must be satisfied that
sufficient funds are available to complete the Improvements.
(e) Each disbursement must be accompanied by an endorsement to the
Title Policy, obtained by the Borrower at the Borrower's sole expense,
which endorsement shall
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provide that the coverage afforded by the Title Policy reflects the amounts
that have been advanced.
(f) All interim disbursements of Construction Loan proceeds for
construction work shall be subject to a ten percent (10%) retainage
requirement, except as provided in Section 5.1.1.1 of the Construction
Contract. Any retainage with respect to a subcontract will be released in
accordance with the terms of the Construction Contract, conditioned upon no
Default or Event of Default having occurred and be continuing, and receipt
by the Lender of a lien waiver from such subcontractor. Final disbursement
to the Contractor, including retainage, shall be subject and conditioned
upon the Lender having secured the following, in addition to any
requirements under the Construction Contract: (i) a certificate of
completion prepared and submitted by the Borrower and approved by the
Construction Consultant, if any, which certificate shall contain only such
qualifications as are acceptable to the Lender, in the Lender's sole
discretion, and indicating that the construction on the Land has been
completed substantially in accordance with the Budget, all construction has
been completed in a good and workmanlike manner, all applicable zoning,
building or other governmental codes or regulations have been complied
with, there are no known structural deficiencies, and all mechanical
equipment, including, without limitation, plumbing, air conditioning and
heating, electrical, and kitchen equipment, if any, is in good working
order, normal wear and tear accepted, and any and all subcontractors,
suppliers and laborers have been paid in full or will be paid with the
final disbursement for all labor and materials provided to the Borrower for
the construction of the Project; (ii) a certificate of completion executed
by the Contractor and filed with the Office of the Recorder of Xxxxxx
County, Texas, (iii) an affidavit executed by the Contractor satisfactory
to the Lender, the Lender's counsel and the Title Company in their sole
discretion, stating, among other things, that all work has been completed
in accordance with the Budget approved by the Lender; (iv) lien waivers
from any and all subcontractors, in form and substance satisfactory to the
Lender, the Lender's counsel and the Title Company in their sole
discretion; (v) a certificate of occupancy for the Improvements; (vi) if
required by the Lender, an "as-built" Survey, approved by the Lender,
showing the location of the Improvements and showing no encroachment by any
of the Improvements, any boundary line, easement, building setback line or
other restricted area; (vii) if required by the Lender, a complete set of
"as-built" plans and specifications, certified as accurate in all material
respects by the Contractor; and (viii) any and all other additional
documents as the Lender may reasonably request.
The Lender shall retain the services of the Construction Consultant in
order to monitor the progress of the construction of the Improvements. The
Construction Consultant shall approve the Plans, perform inspections of the
Improvements during construction, including, without limitation, at the time of
each Advance, and perform a final inspection at completion (which final
inspection shall be an additional condition to payment of the Advance for
retainage withheld from the Contractor under this Section 2.1). The Borrower
shall pay directly to the Construction Consultant, within ten (10) days after
written request therefor, the fees and expenses of the Construction Consultant
incurred by the Lender. The Borrower shall cooperate with the Construction
Consultant and shall cause the Contractor, each subcontractor, and the employees
of each of them to cooperate with the Construction Consultant and, upon request,
shall furnish the
11
Construction Consultant whatever the Construction Consultant may consider
necessary or useful in connection with the performance of the Construction
Consultant's duties. Without limiting the generality of the foregoing, the
Borrower shall furnish or cause to be furnished such items as working details,
the Plans and details thereof, samples of materials, licenses, permits,
certificates of public authorities, building codes, and copies of the contracts
between the Borrower and the Contractor.
Section 2.2. The Note. The obligation of the Borrower to repay the Loan
shall be evidenced by a promissory note executed by the Borrower, payable to the
order of the Lender, in the principal amount of the Loan and dated of even date
herewith, and shall be full recourse to the Borrower and to the Guarantor.
Section 2.3. Repayment of Loan.
(a) Construction Loan. The Borrower shall repay the unpaid principal
amount of the Construction Loan, plus interest thereon, as follows:
(i) Commencing on the last Business Day of October, 1998, and
continuing regularly and quarterly thereafter on the last Business Day
of each fiscal quarter until the earlier of July 16, 1999 (the
"Construction Loan Maturity Date") or the Conversion Date, interest
only at the Construction Loan Rate on the outstanding principal, shall
be due and payable; and
(ii) A final installment in the amount of all outstanding
principal, plus accrued and unpaid interest, shall be due and payable
on the Construction Loan Maturity Date, unless the Borrower satisfies
the conditions of converting the Construction Loan to the Term Loan
described in Section 2.5 and elects to convert the Construction Loan
to the Term Loan in the manner hereafter described, in which case the
Borrower shall pay interest only at the Construction Loan Rate on the
outstanding principal on the Conversion Date.
(b) Term Loan. If the Borrower satisfies the conditions of converting
the Construction Loan to the Term Loan described in Section 2.5 hereof, and
elects to convert the Construction Loan to the Term Loan in the manner
hereinafter described, the Borrower shall repay the unpaid principal amount
of the Term Loan, plus interest thereon, as follows:
(i) On the last Business Day of the first full three (3) month
period after the Conversion Date, and continuing regularly and
quarterly thereafter on the last Business Day of each and every three
(3) month period until July 16, 2006 (the "Term Loan Maturity Date"),
quarterly payments of principal shall be made as set forth in Exhibit
2.3, together with all accrued and unpaid interest on the Term Loan at
the Term Loan Rate; and
(ii) A final installment in the amount of all outstanding
principal, plus all accrued and unpaid interest thereon at the Term
Loan Rate and any other unpaid
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amounts due and payable to the Lender, shall be due and payable on the
Term Loan Maturity Date.
Section 2.4. Loan Interest Rate.
(a) Construction Loan. Prior to the Conversion Date, the unpaid
principal amount of Advances on the Construction Loan shall bear interest
prior to maturity at a per annum rate equal to the lesser of (i) the
Highest Lawful Rate or (ii) the Construction Loan Rate.
(b) Term Loan. If the Borrower satisfies the conditions of converting
the Construction Loan to the Term Loan described in Section 2.5 hereof and
elects to convert the Construction Loan to the Term Loan in the manner
hereinafter described, during the period commencing on the first day after
the Conversion Date and ending on the Term Loan Maturity Date, the unpaid
principal amount of the Term Loan shall bear interest prior to maturity at
a per annum rate equal to the lesser of (i) the Highest Lawful Rate or (ii)
the Term Loan Rate.
(c) Default Rate. So long as an Event of Default shall have occurred
and be continuing, the unpaid balance of the Loan shall thereafter bear
interest at the lesser of (i) the Highest Lawful Rate or (ii) the Default
Rate.
(d) Usury Savings Clause. It is the intention of the Lender to conform
strictly to usury laws applicable to it. Accordingly, if the transactions
contemplated hereby or the Loan would be usurious as to the Lender under
laws applicable to it (including the laws of the United States of America
and the State of Texas or any other jurisdiction whose laws may be
mandatorily applicable to the Lender notwithstanding the other provisions
of this Agreement, the Note or any other Loan Document), then, in that
event, notwithstanding anything to the contrary in this Agreement, the Note
or any other Loan Document, it is agreed as follows: (i) the aggregate of
all consideration which constitutes interest under laws applicable to the
Lender that is contracted for, taken, reserved, charged or received by the
Lender under this Agreement, the Note or any other Loan Document or
otherwise shall under no circumstances exceed the Highest Lawful Rate, and
any excess shall be credited by the Lender on the principal amount of the
Note (or, if the principal amount of the Note shall have been paid in full,
refunded by the Lender to the Borrower); (ii) in the event that the
maturity of the Note is accelerated by reason of an election of the holder
or holders thereof resulting from any Event of Default hereunder or
otherwise, or in the event of any required or permitted prepayment, then
such consideration that constitutes interest under laws applicable to the
Lender may never include more than the Highest Lawful Rate, and excess
interest, if any, provided for in this Agreement, the Note or any other
Loan Document or otherwise shall be automatically canceled by the Lender as
of the date of such acceleration or prepayment and, if theretofore paid,
shall be credited by the Lender on the principal amount of the Note (or if
the principal amount of the Note shall have been paid in full, refunded by
the Lender to the Borrower); and (iii) if at any time the interest provided
under this Agreement, the Note or any other Loan Document, together with
any other fees payable pursuant to this Agreement, the Note or any other
Loan Document and
13
deemed interest under applicable law, exceeds the amount that would have
accrued at the Highest Lawful Rate, the amount of interest and any such
fees to accrue to the Lender hereunder and thereunder shall be limited to
the amount which would have accrued at the Highest Lawful Rate, but any
subsequent reductions shall not reduce the interest to accrue to the Lender
hereunder and thereunder below the Highest Lawful Rate until the total
amount of interest accrued pursuant hereto and thereto and such fees deemed
to be interest equals the amount of interest which would have accrued to
the Lender if a varying rate per annum equal to the interest hereunder had
at all times been in effect plus the amount of fees which would have been
received but for the effect hereof; and in each case, to the extent
permitted by applicable law, the Lender shall not be subject to any of the
penalties provided by law for contracting for, taking, reserving, charging
or receiving interest in excess of the Highest Lawful Rate. The Lender
hereby elects to determine the applicable rate ceiling under Chapter 1D of
Article 5069 of the Texas Credit Title Act, Title 79, Texas Revised Civil
Statutes by the weekly rate ceiling from time to time in effect, subject to
the Lender's right subsequently to change such method in accordance with
applicable law.
Section 2.5. Conversion and Extension.
(a) The Borrower shall have the option to convert the Construction
Loan to the Term Loan, and, thereby, extend the maturity of the Loan to the
Term Loan Maturity Date upon satisfaction of the following requirements:
(i) No Default or Event of Default exists and is continuing;
(ii) The construction of the Improvements has been completed,
substantially in accordance with the Plans and all of the certificates
required under Section 2.1(f) hereof have been provided to the Lender;
(iii) The Borrower provides the Lender with an endorsement to the
Title Policy extending the coverage thereof to the Term Loan and that
insures that no Liens have been filed against the Project other than
the Liens created by the Loan Documents; and
(iv) The Borrower executes such amendments, extensions, notes or
other instruments as may be reasonably required by the Lender to
evidence the conversion of the Construction Loan to the Term Loan.
(b) The Borrower shall exercise its option to convert the Loan
hereunder by providing the Lender with written notice no later than ten
(10) days prior to the Construction Loan Maturity Date that all of the
foregoing conditions have or will be satisfied by the Construction Loan
Maturity Date. Once the Lender confirms that the Borrower has satisfied all
of the conditions to exercising such conversion, and the Borrower has
executed any documents described in subsection (a) (iv) foregoing to
evidence the conversion, the Lender will notify the Borrower, of that fact
which notice will set forth the date (the "Conversion Date") upon which the
conversion shall be deemed
14
effective, provided that the Conversion Date shall be no later than the
Construction Loan Maturity Date. If the Conversion Date does not occur
prior to the Construction Loan Maturity Date, the Loan will be due and
payable, in full, on the Construction Loan Maturity Date.
Section 2.6. Use of Proceeds. The proceeds of the Loan shall be used for
the sole purposes of financing the construction of the Improvements on the Land
and related costs as set forth in the Budget.
Section 2.7. Notice of Change in Interest Rate. The Lender shall use its
best efforts to notify the Borrower of any change in the Construction Loan
Interest Rate or the Term Loan Interest Rate, and until the Borrower is notified
by the Lender of such change, the Borrower may continue to make loan payments at
the prior applicable interest rate; provided, however, nothing contained herein
shall be construed as limiting the Lender's right to collect interest at the
applicable rate stated herein and in the Note and the Borrower will promptly pay
any shortfall occasioned by the Borrower's underpayment of interest on demand.
In the event of an overpayment, the Lender will refund such amount to the
Borrower.
Section 2.8. Collateral. To secure full and complete payment and
performance of the Obligations, the Borrower shall execute and deliver or cause
to be executed and delivered, effective as of the Closing Date, the documents
described below covering the property and collateral described in this Section
(which, together with any other property and collateral which may now or
hereafter secure the Obligations or any part thereof, is sometimes herein called
the "Collateral"):
(a) The Borrower shall grant to the Lender a first priority lien on
the Land, Improvements and Personalty and assign all rents, income, and
profits relating to the Project pursuant to the Deed of Trust;
(b) The Borrower shall collaterally assign, without limitation, all
management agreements, construction contracts, architects and engineering
contracts and agreements, waste water capacity reservation agreements, and
any other contracts, architects and engineering contracts, and agreements
pertaining to the Project pursuant to the Collateral Assignment;
(c) The Borrower shall execute and cause to be executed such further
documents and instruments, including without limitation, Uniform Commercial
Code financing statements, necessary to evidence and perfect the Lender's
Liens in the Collateral; and
(d) The Guarantor shall guaranty payment of the Obligations and
performance by the Borrower of all of the Borrower's agreements under the
Loan Documents pursuant to and subject to the limitations set forth in the
Subsidiary Guaranty.
15
SECTION 3. PAYMENTS AND FEES.
Section 3.1. Method of Payment. All payments of principal, interest, and
other amounts to be made by the Borrower hereunder and under the Note shall be
made to the Lender by 2:00 p.m. at its office at 000 Xxxxxx, Xxxxxxx, Xxxxx
00000, in Dollars and in immediately available funds. Whenever any payment
hereunder or under the Note shall be stated to be due on a day that is not a
Business Day, such payment may be made on the next succeeding Business Day and
interest shall continue to accrue during such extension.
Section 3.2. Prepayment. Following five (5) days' prior written notice, the
Borrower shall have the right to prepay, at any time and from time to time
without premium or penalty, the entire unpaid principal balance of the Note or
any portion thereof, with accrued interest to the date of prepayment on the
amounts prepaid.
Section 3.3. Commitment Fee. On the Closing Date, the Borrower will pay to
the Lender a commitment fee of $37,500.
SECTION 4 CONDITIONS TO LOAN.
Section 4.1. Initial Advance. The obligation of the Lender to make the
initial Advance of the Loan is subject to the condition precedent that the
Lender shall have received all of the following, each in form and substance
satisfactory to the Lender on or before the Closing Date (unless otherwise
indicated):
(a) Borrower's and the Guarantor's Organizational Documents. The
Borrower will furnish:
(i) The Certificates of Incorporation of the Borrower and the
Guarantor, together with all amendments thereto, certified as true,
complete and correct by the Secretary of State of the State of
Delaware;
(ii) The Bylaws of each of the Borrower and the Guarantor,
together with all amendments thereto;
(iii) Resolutions of the Borrower and the Guarantor which
authorize the execution, delivery and performance by such Person of
the Loan Documents to which it is a party; and
(iv) a Certificate of Good Standing for each of the Borrower and
the Guarantor issued by the State of Delaware;
(b) Incumbency Certificates. Certificates of Incumbency certified by
the authorized officer of each of the Borrower and the Guarantor certifying
the names of the respective officers of such Person authorized to sign the
Loan Documents to which it is a party together with specimen signatures of
such officers;
16
(c) Note. The Note executed by the Borrower;
(d) Collateral Assignment. The Collateral Assignment executed by the
Borrower;
(e) Environmental Indemnity. The Environmental Indemnity executed by
the Borrower and the Guarantor;
(f) Deed of Trust. The Deed of Trust executed by the Borrower;
(g) Financing Statements. Uniform Commercial Code financing statements
executed by the Borrower and covering such Collateral as the Lender may
request;
(h) Contractor Agreement. The Contractor Agreement executed by the
Contractor;
(i) Subsidiary Guaranty. The Subsidiary Guaranty executed by the
Guarantor;
(j) Title Commitment; Insured Closing Letter. A commitment (the "Title
Commitment") for mortgagee policy of title insurance (the "Title Policy")
issued by the Title Agent, as agent for the Title Company in favor of the
Lender showing a policy amount equal to the aggregate amount of the Loan,
insuring that the Lender has a valid first lien against the Land, subject
to exceptions, if any, acceptable to the Lender. The exception regarding
restrictive covenants shall be deleted or shall list such restrictive
covenants and insure that they will not affect the validity or priority of
the Lender's Lien. To the extent available based on the existing surveys,
the standard pre-printed exception regarding any discrepancies, conflicts
or shortages in area or boundary lines shall be modified to read only
"shortages in area." The standard pre-printed exception regarding taxes
shall be modified to read "Standby fees and taxes for the year 1998 and
subsequent years not yet due and payable." The Title Policy shall contain
the standard pre-printed "pending completion" and "pending disbursements"
exceptions and the Borrower shall, at the Borrower's cost and expense,
obtain endorsements to the Title Policy as advances are made so that the
coverage reflects the amounts that have been advanced under the terms of
the Loan Documents. The Title Policy shall also insure access to the
Project from a public street. The Title Company shall execute and deliver
to the Lender an insured closing letter covering the Title Agent;
(k) Appraisal. An MAI appraisal of the Project in form and substance
satisfactory to the Lender and conducted by an appraiser selected or
approved by the Lender. The appraisal shall be commissioned by the Lender
but the costs thereof shall be borne by the Borrower;
(l) Environmental Report. A Phase I Environmental Report and asbestos
survey covering the Land in form and substance satisfactory to the Lender
and conducted by a firm selected or approved by the Lender, the cost of
which report shall be borne by the Borrower, and which report verifies that
the Land is free from any Hazardous
17
Materials and Hazardous Waste, as those terms are defined by Environmental
Laws (as defined in the Environmental Indemnity), including, without
limitation, asbestos and diesel fuel (as reflected on the Phase I
Environmental Assessment). Such Environmental Report shall include a
determination action of "wetlands" status and condition. The Borrower shall
provide the Lender with evidence in form and substance acceptable to the
Lender, in the Lender's sole discretion, indicating that any Hazardous
Materials or Hazardous Waste previously located on the Land have been
properly disposed of in accordance with all applicable laws and
regulations;
(m) Land Use Compliance. Evidence satisfactory to the Lender that the
Improvements on the Land comply with the present zoning classification for
the Land, if any, and with all subdivision, land use, planning and building
and environmental laws, rules, regulations and ordinances;
(n) Survey. A current survey (the "Survey") of the Land dated not less
than one (1) year prior to the Closing Date, which Survey shall be prepared
by a professional engineer or surveyor acceptable to the Lender and the
Title Company and shall contain, among other matters, the following
information: (1) metes and bounds description of the Land showing all
corners and points of course changes and/or marked with iron pins or rods;
(2) the location of all existing and proposed roads, highways, and streets
adjoining the Land and the access thereto and all improvements,
encroachments, easements, drainage ditches, utilities, parking areas,
rights-of-ways, set-back lines and all other matters located upon or
effecting the Land; (3) a certification that the Land is not located in any
flood hazard area; and (4) a certification on the face of the survey which
shall be approved in both form and substance by the Lender and the Lender's
legal counsel, and in favor of both the Lender and the Title Company shall
have been delivered to the Lender;
(o) Insurance Policies. Certificates of Insurance evidencing the
insurance coverages specified in Section 6.5 hereof;
(p) UCC Search. The results of a Uniform Commercial Code search (which
search shall be ordered by the Lender's counsel but paid for by the
Borrower) showing no financing statements or other documents or instruments
on file, which have not been previously approved in writing by the Lender,
against the Borrower or the Guarantor in the Offices of the Secretary of
States of each of Texas and Delaware or Xxxxxx County, Texas, such searches
to be as of a date no more than ten (10) days prior to the Closing Date;
(q) Opinion of Counsel. Favorable opinions of legal counsel to the
Borrower and the Guarantor in form and substance acceptable to the Lender,
as to such matters as the Lender may reasonably request;
(r) Lien Waivers. An Affidavit of Bills paid executed by the Borrower
and a Partial Release of Lien executed by the Contractor and each
subcontractor with respect to all work on the construction of the
Improvements prior to the Closing Date, together with a list of all
subcontractors employed by the Contractor prior to the Closing Date;
18
(s) Contracts. Copies of all contracts executed by the Borrower with
engineers, the Architect and the Contractor. The Borrower will not agree or
consent to any material amendment thereto without the Lender's prior
written consent;
(t) Budget. The Borrower shall furnish the Lender a Budget;
(u) Soils Test. The Lender shall have been furnished soil compaction
and percolation test report, which satisfies the Lender and the
Construction Consultant, if any, that the soil conditions are satisfactory
for the construction of the Improvements in accordance with the Budget;
(v) Availability of Utilities. The Borrower shall use best efforts to
furnish the Lender with Letters from authorized officials or agents of each
governmental entity or public utility furnishing any utility service,
including water, sewer, telephone, gas and electricity, to the Project,
stating that such service will be made available to the Project within the
time required by the proposed schedule of construction in amounts adequate
to serve the Project after its completion;
(w) Plans. The Lender shall have been supplied, and approved, the
Plans; and
(x) Additional Information. Such additional documents, instruments and
information as the Lender or the Lender's legal counsel may reasonably
request.
Section 4.2 Conditions to Subsequent Advances. The Lender's obligation to
make Advances (after the initial Advance) under this Agreement is further
conditioned upon the Borrower satisfying the following conditions:
(a) Mortgagee Policy. The original Title Policy, issued in strict
accordance with the Title Commitment as described in Section 4.1(j), shall
be delivered to the Lender within thirty (30) days after the Closing Date,
provided that the Borrower can obtain a second Advance prior to such date
if the other conditions to such Advance are fulfilled.
(b) Sufficient Loan Funds. The Borrower shall satisfy the Lender, as a
condition of each Advance, that remaining Loan funds are sufficient to
complete the Improvements in accordance with the Budget.
(c) No Liens. No mechanic's or materialman's lien claim or other
encumbrance shall have been filed and be in effect against the Land or the
Improvements.
(d) No Casualty. The Improvements shall not have been damaged by fire
or other casualty or, in such event, if permitted under the terms and
provisions of this Agreement, and the Deed of Trust, the Improvements shall
not have been fully repaired and restored or be in the process of being
fully repaired and restored, to the state of completion achieved
immediately before the casualty.
19
Section 4.3 Waiver of Conditions. The Lender may defer any of the foregoing
conditions to the Loan and the fact that all of the conditions may not have been
satisfied at the time the Lender executes this Agreement or advances any funds
pursuant to the Loan shall in no circumstances be considered evidence that the
Lender has waived any of such conditions. Any waiver of such conditions must be
in writing.
SECTION 5. REPRESENTATIONS AND WARRANTIES.
The Borrower represents and warrants to the Lender as follows:
Section 5.1. Corporate Organization. Each of the Borrower and the
Guarantor(i) is a duly organized and incorporated corporation in good standing
under the laws of the State of Delaware, (ii) has all necessary corporate power
to own the property and assets it uses in its business and otherwise to carry on
its present business and the business it currently proposes to transact, and
(iii) is duly licensed or qualified and in good standing in the States of
Delaware and Texas and each other jurisdiction in which the nature of the
business transacted by it or the nature of the property owned or leased by it
makes such licensing or qualification necessary except where the failure to so
qualify could not reasonably be expected to have a Material Adverse Effect.
Section 5.2. Corporate Power and Authority; Validity. Each of the Borrower
and the Guarantor has the corporate power and authority to execute, deliver and
carry out the terms and provisions of the Loan Documents and has taken all
necessary corporate action, as applicable, to authorize the execution, delivery
and performance of the Loan Documents. Each of the Borrower and the Guarantor
has duly executed and delivered each Loan Document to which it is a party and
each such Loan Document constitutes the legal, valid and binding obligation of
such Credit Party enforceable in accordance with its terms, subject as to
enforcement only to bankruptcy, insolvency, reorganization, moratorium or other
similar laws affecting the enforcement of creditors' rights generally.
Section 5.3. No Violation. Neither the execution, delivery nor performance
by the Borrower nor the Guarantor of the Loan Documents to which it is a party
nor compliance by each of such Persons with the terms and provisions thereof,
nor the consummation by each of such Persons of the transactions contemplated
herein or therein, will (i) contravene any applicable provision of any law,
statute, rule or regulation, or any applicable order, writ, injunction or decree
of any court or governmental instrumentality, (ii) conflict with or result in
any breach of any term, covenant, condition or other provision of, or constitute
a default under, or result in the creation or imposition of (or the obligation
to create or impose) any Lien other than any Permitted Lien upon any of the
property or assets of such Person under the terms of any contractual obligation
to which such Person is a party or by which it or any of its properties or
assets are bound or to which it may be subject which could not reasonably be
expected to have a Material Adverse Effect or (iii) violate or conflict with any
provision of the corporate governance documents, as applicable, of such Person.
Section 5.4. Litigation. There are no lawsuits (including, without
limitation, derivative or injunctive actions), arbitration proceedings or
governmental proceedings pending or, to the best
20
knowledge of the Borrower, overtly threatened, involving any Credit Party which
could reasonably be expected to have a Material Adverse Effect.
Section 5.5. Investment Company Act. Neither the Borrower nor the Guarantor
is an "investment company" or a company "controlled" by an "investment company,"
within the meaning of the Investment Company Act of 1940, as amended.
Section 5.6. Public Utility Holding Company Act. Neither the Borrower nor
the Guarantor 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," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
Section 5.7. True and Complete Disclosure. All factual information
heretofore or contemporaneously furnished by the Borrower or the Guarantor in
writing to the Lender in connection with any Loan Document or any transaction
contemplated therein is, and all other such factual information hereafter
furnished by any such Persons in writing to the Lender in connection herewith,
any of the other Loan Documents or the Loan will be, true and accurate in all
material respects, taken as a whole, on the date of such information and not
incomplete by omitting to state any material fact necessary to make the
information therein not misleading at such time in light of the circumstances
under which such information was provided.
Section 5.8. Financial Statements. The financial statements heretofore
delivered to the Lender for the Borrower have been prepared in accordance with
GAAP applied on a basis consistent with the Borrower's financial statements for
the previous fiscal year or quarter, as the case may be, except as otherwise
noted therein. Each of such annual and interim financial statements fairly
presents, or shall fairly present, as the case may be, the financial position of
the Borrower and its Subsidiaries as of the dates thereof, and the results of
operations for the periods covered thereby, subject in the case of interim
financial statements to normal year-end audit adjustments. The Borrower and its
Subsidiaries, on a consolidated basis, have no material contingent liabilities
or Debt other than those disclosed in the financial statements referred to in
this Section 5.8.
Section 5.9. No Material Adverse Effect. There has occurred no event or
effect that has had, or to the best knowledge of the Borrower could reasonably
be expected to have, a Material Adverse Effect.
Section 5.10. Taxes. Each of the Borrower and the Guarantor has filed all
tax returns and all other tax returns required to be filed, and have paid all
governmental taxes, rates, assessments, fees, charges and levies (collectively,
"Taxes") except such Taxes, if any, as are being contested in good faith and for
which reserves have been provided in accordance with GAAP. No tax liens have
been filed and no claims are being asserted for Taxes, which liens or claims
could reasonably be foreseen to have a Material Adverse Effect. The charges,
accruals and reserves on the books of each of the Borrower and the Guarantor for
Taxes and other governmental charges have been determined in accordance with
GAAP.
21
Section 5.11. ERISA. With respect to each Benefit Plan, each of the
Borrower and the Guarantor has fulfilled its obligations under the minimum
funding standards of, and are in compliance in all material respects with, ERISA
and with the Code to the extent applicable to it, and have not incurred any
liability under Title IV of ERISA to the PBGC or a Benefit Plan other than a
liability to the PBGC for premiums under Section 4007 of ERISA. Neither the
Borrower nor the Guarantor has any contingent liability with respect to any
post-retirement benefits under a welfare plan as defined in ERISA other than
liability for continuation coverage described in Part 6 of Title I of ERISA and
as disclosed in the financial statements of the Borrower for the fiscal quarter
ending March 31, 1998, described in Section 5.8.
Section 5.12. Consents. All consents and approvals of, and licenses,
filings and registrations with, and all other actions of, all governmental
agencies, authorities or instrumentalities required to consummate Advances
hereunder, on the date of each such Advance, have been obtained or made and are
or will be in full force and effect.
Section 5.13. Ownership of Project. Each of the Borrower and the Guarantor
has good title to or a valid leasehold interest in all of its property except to
the extent, in the aggregate, no Material Adverse Effect could reasonably be
expected to result therefrom, subject to no Liens except Permitted Liens. Each
of the Borrower and the Guarantor own or hold valid licenses to use all the
material patents, trademarks, permits, service marks and trade names that are
necessary to the operation of the business of the Borrower and the Guarantor as
presently conducted and contemplated. There are no leases of the Land in effect.
Access necessary for the construction and full utilization of the Project for
its intended purposes is presently available to the Project over streets or
roads which have been dedicated to public use and accepted therefor by
appropriate governmental authorities and any permits necessary for connecting
the driveways on the Project to such streets or roads have been obtained.
Section 5.14. Compliance with Statutes. Each of the Borrower and the
Guarantor are in compliance in all material respects with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies and have all necessary permits, licenses and other
necessary authorizations with respect to the conduct of their businesses and the
ownership and operation of their properties.
Section 5.15. Year 2000 Requirement. All devices, systems, machinery,
information technology, computer software and hardware, and other date sensitive
technology (jointly and severally its "systems") necessary for the Borrower and
the Guarantor to carry on their business as presently contemplated to be
conducted, will be Year 2000 Compliant within a period of time calculated to
result in no material disruption of any of their business operations. For
purposes hereof, "Year 2000 Compliant" means that such systems are designed to
be used prior to and after December 31, 1999, and will operate during each such
time period without error relating to date data, specifically including any
error relating to, or the product of, date data which represents or references
different centuries or more than one century. The Borrower and the Guarantor
will (i) undertake a detailed inventory, review, and assessment of all areas
within their businesses and operations that could be adversely affected by the
failure of the Borrower and the Guarantor to be Year 2000 Compliant on a timely
basis; and (ii) if such review reveals such a possible adverse effect, develop a
detailed plan and timeline for becoming Year 2000 Compliant on a timely basis.
22
The Borrower and the Guarantor will, as soon as reasonably practicable, make
written inquiry of each of its and its Subsidiaries' key suppliers and vendors,
and will use reasonable efforts to obtain in writing confirmations from all such
Persons, as to whether such Persons have initiated programs to become Year 2000
Compliant. For purposes hereof, "key suppliers and vendors" refers to those
suppliers and vendors of the Borrower and the Guarantor whose business failure
could reasonably be expected to have a Material Adverse Effect.
Section 5.16. Place of Business. Until completion of the Project, the
Borrower's chief executive office is located at 0000 Xxxxxxx, Xxxxxxx, Xxxxx
00000 and thereafter at 000 Xxxxxxx Xxxxxx, Xxxx Xxxx, Xxxxx 00000.
SECTION 6. COVENANTS.
The Borrower covenants and agrees that, so long as the Note or any other
Obligation is outstanding hereunder:
Section 6.1. Existence. Each of the Borrower and the Guarantor will at all
times preserve and maintain its corporate existence. The Borrower will at all
times own one hundred percent (100%) of the capital stock of the Guarantor and
will have the sole right to vote such stock.
Section 6.2. Maintenance. Each of the Borrower and the Guarantor will
maintain, preserve and keep its plants, properties and equipment necessary to
the proper conduct of its businesses in reasonably good repair, working order
and condition (normal wear and tear excepted) and will from time to time make
all reasonably necessary repairs, renewals, replacements, additions and
betterments thereto so that at all times such plants, properties and equipment
are reasonably preserved and maintained; provided, however, that nothing in this
Section 6.2 shall prevent the Borrower and the Guarantor from discontinuing the
operation or maintenance of any such plants, properties or equipment if such
discontinuance is, in the judgment of the Borrower or the Guarantor, as
applicable, desirable in the conduct of its business and not materially
disadvantageous to the Lender.
Section 6.3. Taxes. Each of the Borrower and the Guarantor will duly pay
and discharge all Taxes upon or against it or its properties before payment is
delinquent and before penalties accrue thereon, unless and to the extent that
the same is being contested in good faith and by appropriate proceedings and
reserves have been established in conformity with GAAP.
Section 6.4. ERISA. Each of the Borrower and the Guarantor will promptly
pay and discharge all obligations and liabilities arising under ERISA or
otherwise with respect to each Benefit Plan of a character which if unpaid or
unperformed might result in the imposition of a material Lien against any
properties or assets of the Borrower or the Guarantor and will promptly notify
the Lender of (i) the occurrence of any reportable event (as defined in ERISA)
relating to a Benefit Plan other than any such event with respect to which the
PBGC has waived notice by regulation; (ii) receipt of any notice from PBGC of
its intention to seek termination of any Benefit Plan or appointment of a
trustee therefor; (iii) the Borrower's or the Guarantor's intention to terminate
or withdraw from any Benefit Plan; and (iv) the occurrence of any event that
could result
23
in the incurrence of any material liability, fine or penalty, or any material
increase in the contingent liability of the Borrower or the Guarantor in
connection with any post-retirement benefit under a welfare plan benefit (as
defined in ERISA).
Section 6.5. Insurance. The Borrower will maintain (or with respect to all
builders risk coverage, cause the Contractor to maintain and in an amount equal
to the greater of 100% of the full insurable value of the insurable portions of
the Improvements or the Loan amount), with financially sound and reputable
insurance companies reasonably acceptable to the Lender, workmen's compensation
insurance, and insurance on the Borrower's property, assets, and business in
amounts, and with deductibles, acceptable to the Lender and against such risks
as reasonably required by the Lender, and the Borrower shall provide the Lender
with evidence satisfactory to the Lender in the Lender's sole discretion of such
insurance coverage. From and after the Closing Date, and at all times
thereafter, the Borrower will maintain liability insurance as reasonably
required by the Lender. All such insurance policies shall be issued by insurers
reasonably satisfactory to the Lender. The comprehensive general liability
policy shall provide for liability limits of at least $1,000,000.00 per
occurrence, and $2,000,000.00 in the aggregate. Each insurance policy covering
Collateral shall name the Lender as loss payee, as its interests may appear, and
provide that such policy will not be canceled or modified in any way without
thirty (30) days' prior written notice. At any time during the term of the Loan,
the Lender may require the Borrower to purchase flood insurance (if the Project
is located within a flood risk area as designated in the Flood Disaster
Protection Act of 1973) in an amount equal to the greater of 100% of the full
insurable value of the insurable portions of the Improvements or the Loan
amount, with a financially sound and reputable insurance company reasonably
acceptable to the Lender.
Section 6.6. Construction Contract and Retainage. The Borrower shall
withhold retainage as required by all requirements of law and the Construction
Contract in connection with the construction of the Improvements. The Borrower
shall not amend the Construction Contract or the Plans without the prior written
consent of the Lender, which consent shall not be unreasonably withheld or
delayed, provided that the Borrower may enter into change orders in an amount of
less than $50,000 and aggregating less than $400,000 (exclusive of change orders
prior to the date hereof) without such approval.
Section 6.7. Consent to Leases. The Borrower shall not enter into any
leases or occupancy agreements affecting the Project, or any amendments or
renewals thereof, without the prior written consent of the Lender.
Section 6.8. Financial Reports and Other Information.
(a) Each of the Borrower and the Guarantor will maintain a system of
accounting in such manner as will enable preparation of financial
statements in accordance with GAAP and will furnish to the Lender and its
authorized representatives such information about the business and
financial condition of the Borrower and the Guarantor, including, without
limitation, any corporate documents and records, within such time period as
the Lender may reasonably request; and, without any request, will furnish
to the Lender:
24
(i) as soon as available, and in any event not later than
forty-five (45) days after the end of each fiscal quarter of each
fiscal year of the Borrower the consolidated balance sheet of the
Borrower as at the end of such fiscal quarter and the related
statements of operations and stockholders' equity for such fiscal
quarter and for the portion of the fiscal year ended with the last day
of such fiscal quarter and cash flows for the portion of the fiscal
year ended with the last day of such fiscal quarter, all of which
shall be in reasonable detail and certified by an officer of the
Borrower acceptable to the Lender that they fairly present the
consolidated financial condition of the Borrower as of the dates
indicated and the results of its operations for the periods indicated
and that they have been prepared in accordance with GAAP, in each
case, subject to normal year-end audit adjustments and the absence of
footnotes; and
(ii) as soon as available, and in any event not later than ninety
(90) days after the end of each fiscal year of the Borrower,
consolidated balance sheets of the Borrower as at the end of such
fiscal year and the related statements of operations and stockholders'
equity and cash flows for such fiscal year and setting forth
comparative figures for the preceding fiscal year and certified by an
officer of the Borrower acceptable to the Lender, to the effect that
such statements fairly present the consolidated financial condition of
the Borrower as of the dates indicated and the results of its
operations for the periods indicated, and audited by an independent
accounting firm of recognized national standing.
(b) Each financial statement furnished to the Lender pursuant to
subsection (i) of Section 6.6(a) shall be accompanied by (i) a written
certificate signed by an officer of the Borrower acceptable to the Lender
on behalf of the Borrower to the effect that (x) no Default or Event of
Default has occurred during the period covered by such statements or, if
any such Default or Event of Default has occurred during such period,
setting forth a description of such Default or Event of Default and
specifying the action, if any, taken by the Borrower to remedy the same,
and (y) the representations and warranties contained herein are true and
correct in all material respects as though made on the date of such
certificate, except to the extent that any such representation or warranty
relates solely to an earlier date, in which case it was true and correct as
of such earlier date and except as otherwise described therein, as a result
of the transactions expressly permitted hereunder or as previously
disclosed to the Lender, and (ii) a Compliance Certificate in the form of
Exhibit 6.8 showing the Borrower's compliance with the financial covenants
set forth herein.
(c) Promptly upon receipt thereof, the Borrower will provide the
Lender with a copy of each report or "management letter" submitted to the
Borrower by its independent accountants or auditors in connection with any
annual, interim or special audit made by them of the books and records of
the Borrower.
(d) The Borrower will promptly and in any event, within ten (10) days
after an executive officer of the Borrower has knowledge thereof, give
written notice to the Lender of: (i) any pending or threatened litigation
or proceeding against the Borrower asserting
25
any claim or claims against any of same in excess of $1,000,000 in the
aggregate; (ii) the occurrence of any Default or Event of Default under
this Agreement, under the Borrower's Credit Facility or under the
Indenture; (iii) any circumstance that has had or reasonably threatens a
Material Adverse Effect; and (iv) any event which results in a breach of
Sections 6.19 or 6.20.
(e) The Borrower will furnish such additional information, statements
and other reports with respect to the Borrower's compliance (and its
approach to and progress towards achieving compliance) with Section 5.15 as
the Lender may reasonably request from time to time; (ii) in the event of
any change in circumstances that causes or will likely cause any of the
Borrower's representations and warranties set forth in Section 5.15, to no
longer be true, the Borrower shall promptly, and in any event within thirty
(30) days of receipt of information regarding a change in circumstances,
provide the Lender with written notice that describes in reasonable detail
the change in circumstances and any additional information the Lender
reasonably requests of the Borrower in connection therewith.
Section 6.9. Lender Inspection Rights. Upon reasonable notice from the
Lender, each of the Borrower and the Guarantor will permit the Lender (and such
Persons as the Lender may designate) at the Borrower's expense and during normal
business hours following reasonable notice to visit and inspect any of the
properties of the Borrower or the Guarantor, to examine all of its books and
records, to make copies and extracts therefrom, and to discuss its affairs,
finances and accounts with its management, employees and independent public
accountants (and by this provision, each of the Borrower and the Guarantor
authorizes such accountants to discuss with the Lender (and such Persons as the
Lender may designate) the affairs, finances and accounts of the Borrower or the
Guarantor), all at such reasonable times and as often as may be reasonably
requested.
Section 6.10. Restricted Payments. The Borrower shall not pay or make any
Restricted Payment except the Borrower may, if no Default or Event of Default
shall have occurred and be continuing, make any Restricted Payment permitted by
the Indenture. The Borrower may not prepay, purchase or redeem the Senior
Subordinated Notes except as permitted by the Borrower's Credit Facility and by
the Indenture.
Section 6.11. Environmental Laws. Each of the Borrower and the Guarantor
shall comply in all material respects with all Environmental Laws (including,
without limitation, obtaining and maintaining all necessary permits, licenses
and other necessary authorizations) applicable to or affecting the properties or
business operations of the Borrower or the Guarantor.
Section 6.12. Restrictions on Fundamental Changes. Neither the Borrower nor
the Guarantor shall be a party to any merger into or consolidation with, or
purchase or otherwise acquire all or substantially all of the assets or stock
of, any other Person, or sell all or substantially all of its assets or stock,
except as permitted by the Borrower's Credit Facility and by the Indenture.
26
Section 6.13. Liens. The Borrower shall not create, incur, assume or suffer
to exist any Lien (other than as contemplated by the Loan Documents) of any kind
on the Project. Neither the Borrower nor the Guarantor shall create, incur,
assume or suffer to exist any Lien of any kind on any of its other properties or
assets of any kind except as permitted by the Borrower's Credit Facility and by
the Indenture (a "Permitted Lien").
Section 6.14. Debt. Neither the Borrower nor the Guarantor shall contract,
assume or suffer to exist any Debt (including, without limitation, any
Guaranties), except:
(a) Debt under the Loan Documents; and
(b) other Debt permitted by the Borrower's Credit Facility and by the
Indenture.
Section 6.15. Transfer of Assets. The Borrower shall not sell, transfer,
convey, assign or dispose of any of the Project except for Personalty in the
ordinary course of business without the Lender's prior written approval. Neither
the Borrower nor the Guarantor shall permit any sale, transfer, conveyance,
assignment or other disposition of any other asset of the Borrower or the
Guarantor except as permitted by the Indenture.
Section 6.16. Completion Deadline. The Borrower shall cause the
construction of the Improvements to be pursued with reasonable diligence. The
Borrower shall cause the Improvements to be completed no later than twelve (12)
months from the Closing Date, regardless of whether the proceeds of the Loan are
sufficient for that purpose.
Section 6.17. Compliance with Laws. Each of the Borrower and the Guarantor
shall conduct its businesses and otherwise be in compliance in all material
respects with all applicable laws, regulations, ordinances and orders of all
governmental, judicial and arbitral authorities applicable to it and shall
obtain and maintain all necessary permits, licenses and other authorizations
necessary to conduct its businesses and own and operate its properties.
Section 6.18 Intentionally Omitted.
Section 6.19. Minimum Consolidated Net Worth. The Borrower shall not permit
the Consolidated Net Worth of the Borrower as of the last day of each fiscal
quarter to be less than the sum of (i) $15,000,000, plus (ii) fifty percent
(50%) of the cumulative quarterly Consolidated Net Income of the Borrower since
September 30, 1997, for each fiscal quarter ending after that date during which
the Borrower has positive Consolidated Net Income, plus (iii) eighty percent
(80%) of the net proceeds resulting from any sale or issuance of any stock of
the Borrower or its Subsidiaries since September 30, 1997.
Section 6.20. Fixed Charge Coverage Ratio. The Borrower will maintain a
Fixed Charge Coverage Ratio of at least 1.0 to 1.0.
27
SECTION 7. EVENTS OF DEFAULT AND REMEDIES.
Section 7.1. Events of Default. Any one or more of the following shall
constitute an Event of Default:
(a) default by the Borrower in the payment of the principal amount of
the Loan, any interest thereon or any fees payable hereunder within five
(5) days of the date such payment is due;
(b) default in the observance or performance of any covenant set forth
in Sections 6.8(d), 6.10, 6.12, 6.15, 6.19 or 6.20;
(c) default by any Credit Party in the observance or performance of
any provision hereof or of any other Loan Document not mentioned in (a) or
(b) above, which is not remedied within thirty (30) days after the earlier
of (i) such default or event of default first becoming known to any
executive officer of the Borrower or (ii) notice to the Borrower by the
Lender of the occurrence of such default or event of default;
(d) any representation or warranty or other written statement made or
deemed made herein, in any other Loan Document or in any financial or other
report or document furnished in compliance herewith or therewith by any
Credit Party proves untrue in any material respect as of the date of the
issuance or making, or deemed issuance or making thereof;
(e) default occurs in the payment when due (after any applicable grace
or cure period) of Debt in an aggregate principal amount of $1,000,000 or
more of any Credit Party or all Credit Parties, an Event of Default shall
occur under the Borrower's Credit Facility or the Indenture, or the
occurrence of any other default, which with the passage of time or notice,
would permit the holder or beneficiary of such Debt, or a trustee therefor,
to cause the acceleration of the maturity of any such Debt or any mandatory
unscheduled prepayment, purchase or other early funding thereof;
(f) any Credit Party (i) has entered involuntarily against it an order
for relief under the United States Bankruptcy Code or a comparable action
is taken under any bankruptcy or insolvency law of another country or
political subdivision of such country, (ii) generally does not pay, or
admits its inability generally to pay, its debts as they become due, (iii)
makes a general assignment for the benefit of creditors, (iv) applies for,
seeks, consents to or acquiesces in, the appointment of a receiver,
custodian, trustee, examiner, liquidator or similar official for it or any
substantial part of its property, (v) institutes any proceeding seeking to
have entered against it an order for relief under the United States
Bankruptcy Code or any comparable law, to adjudicate it insolvent, or
seeking dissolution, winding up, liquidation, reorganization, arrangement,
adjustment or composition of it or its debts under any law relating to
bankruptcy, insolvency or reorganization or relief of debtors or fails to
file an answer or other pleading denying the material allegations of any
such proceeding filed against it, (vi) makes any board of directors
resolution in direct
28
furtherance of any matter described in clauses (i)-(v) above, or (vii)
fails to contest in good faith any appointment or proceeding described in
this Section 7.1(f);
(g) a custodian, receiver, trustee, examiner, liquidator or similar
official is appointed for any Credit Party or any substantial part of its
property, or a proceeding described in Section 7.1(f)(v) is instituted
against any Credit Party, and such appointment continues undischarged or
such proceeding continues undismissed or unstayed for a period of sixty
(60) days;
(h) any Credit Party fails within thirty (30) days (or such earlier
date as any steps to execute on such judgment or order take place) to pay,
bond or otherwise discharge, or to obtain an indemnity against on terms and
conditions satisfactory to the Lender in its sole discretion, any judgment
or order for the payment of money in excess of $1,000,000 for all such
Credit Parties which is uninsured or underinsured by at least such amount
(provided that there is adequate assurance, in the sole discretion of the
Lender, that the insurance proceeds attributable thereto shall be paid
promptly upon the expiration of such time period or resolution of such
proceeding), which is not stayed on appeal or otherwise being appropriately
contested in good faith in a manner that stays execution;
(i) any Credit Party fails to pay when due an amount aggregating in
excess of $1,000,000 that it is liable to pay to the PBGC or to a Benefit
Plan under Title IV of ERISA; or a notice of intent to terminate a Benefit
Plan having Unfunded Vested Liabilities of any Credit Party in excess of
$1,000,000 (a "Material Plan") is filed under Title IV of ERISA; or the
PBGC institutes proceedings under Title IV of ERISA to terminate or to
cause a trustee to be appointed to administer any Material Plan; or a
proceeding is instituted by a fiduciary of any Material Plan against any
Credit Party to collect any liability under Section 515 or 4219(c)(5) of
ERISA and such proceeding is not dismissed within thirty (30) days
thereafter; or a condition exists by reason of which the PBGC would be
entitled to obtain a decree adjudicating that any Material Plan must be
terminated;
(j) any Credit Party, any Person acting on behalf of any Credit Party
or any governmental, judicial or arbitral authority challenges the validity
of any Loan Document or any Credit Party's obligations thereunder, or any
Loan Document ceases to be in full force and effect or ceases to give to
the Lender the Liens, rights, and powers purported to be granted in its
favor thereby;
(k) in connection with any request for an Advance of proceeds of the
Construction Loan, the Borrower shall be unable to satisfy any of the
conditions to the Advance listed in this Agreement;
(l) a determination by the Lender (or its Construction Consultant)
that the construction of the Improvements will not be completed on or
before the Construction Loan Maturity Date (regardless of whether or not as
a result of any casualty or condemnation);
29
(m) failure of the Borrower or any Contractor to perform, observe or
comply with any of the terms, covenants, conditions or provisions of any of
the applicable construction contracts; provided, however, that in the case
of such a failure by such Contractor, if the Borrower is diligently and in
good faith pursuing all appropriate remedies under the pertinent
Construction Contract relating to such Contractor's failure thereunder and
the Borrower terminates the Construction Contract in good faith within
thirty (30) days after the occurrence of such failure, then the Borrower
shall not be deemed to be in default under this Agreement if another
Contractor satisfactory to the Lender is selected by the Borrower and
placed under contract with the Borrower within sixty (60) days after
terminating said defaulting Contractor and such substitute Contractor
promptly proceeds to fully cure the defaulting Contractor's default and to
construct the Improvements in accordance with the Budget and the Plans
provided to the Lender for the Improvements, in a diligent manner and in
accordance with this Agreement;
(n) if any act or occurrence of any kind or nature (including any
casualty for which insurance was not obtained or obtainable) shall result
in material damage to or material loss or material destruction of the
Improvements; or
(o) an Event of Default or a Termination Event occurs under any
Interest Rate Protection Agreement by and between the Borrower and the
Lender.
Section 7.2. Non-Bankruptcy Defaults. When any Event of Default other than
those described in subsections (f) or (g) of Section 7.1 has occurred and is
continuing with respect to the Borrower, the Lender may, by notice to the
Borrower: (a) terminate the remaining commitment and all other obligations of
the Lender hereunder on the date stated in such notice (which may be the date
thereof); (b) declare the principal of and the accrued interest on the Note to
be forthwith due and payable and thereupon the Note, including both principal
and interest thereon, shall be and become immediately due and payable together
with all other amounts payable under the Loan Documents without further demand,
presentment, protest or notice of any kind, including, but not limited to,
notice of intent to accelerate and notice of acceleration, each of which is
expressly waived by the Borrower; and the Borrower agrees to immediately make
such payment and acknowledges and agrees that the Lender would not have an
adequate remedy at law for failure by the Borrower to honor any such demand. The
Lender may also, at the risk, cost, and expense of the Borrower: (i) enter upon
and take possession of the Project and the materials and equipment being used in
the construction of the Improvements; (ii) take such action as the Lender shall
deem appropriate to protect the Project; and (iii) take such action as the
Lender shall deem appropriate to continue construction of the Improvements with
such changes therein as the Lender may elect to make. If the Lender shall elect
to continue construction, the Lender may: (i) assume or reject any construction
or other contracts made by the Borrower in connection with the construction or
operation of the Improvements; (ii) engage or employ contractors,
subcontractors, architects, engineers and others for the construction of the
Improvements; (iii) pay, settle or compromise existing or future bills or claims
relating to the construction of the Improvements or the Project or affecting
title thereto; (iv) and take or refrain from taking such other action
(including, without limitation, discontinuing construction), in its name or in
the name of the Borrower, as the Lender may determine. All costs and expenses
incurred by the Lender in taking and protecting the Project and in constructing
the Improvements shall be paid by the Borrower to
30
the Lender upon demand, with interest at the Default Rate from the date of
disbursement to the date of payment to the Lender, and the payment of such sums
shall be secured by the Loan Documents. The Lender shall have no obligation to
take any of the foregoing actions, and if the Lender should do so, it shall have
no liability to the Borrower or any other obligor for the sufficiency of any
such actions or otherwise, provided such actions are taken in good faith.
Section 7.3. Bankruptcy Defaults. When any Event of Default described in
subsections (f) or (g) of Section 7.1 has occurred and is continuing with
respect to the Borrower, then (i) the Note shall immediately become due and
payable together with all other amounts payable under the Loan Documents without
presentment, demand, protest or notice of any kind, each of which is expressly
waived by the Borrower, (ii) and all obligations of the Lender to extend further
credit pursuant to any of the terms hereof shall immediately terminate, the
Borrower acknowledging and agreeing that the Lender would not have an adequate
remedy at law for failure by the Borrower to honor this provision and that the
Lender shall have the right to require the Borrower to specifically perform such
undertaking.
Section 7.4. Application of Proceeds from Collateral. After the occurrence
of and during the continuance of an Event of Default, any payment to the Lender
hereunder or from the proceeds of any Collateral or any cash Collateral shall be
applied as the Lender shall elect in its sole discretion.
Section 7.5. Deficiency. The following shall be the basis for the finder of
fact's determination of the fair market value of the Project as of the date of
the foreclosure sale in proceedings governed by sections 51.003, 51.004, and
51.005 of the Texas Property Code (as amended from time to time):
(a) The Project shall be valued in an "as is" condition as of the date
of the foreclosure sale, without any assumption or expectation that the
Project will be repaired or improved in any manner before a resale of the
Project after foreclosure;
(b) The valuation shall be based upon an assumption that the
foreclosure purchaser desires a prompt resale of the Project for cash
promptly (but no later than twelve months) following the foreclosure sale;
(c) All reasonable closing costs customarily borne by the seller in a
commercial real estate transaction should be deducted from the gross fair
market value of the Project, including, without limitation, brokerage
commissions, title insurance, a survey of the Project, tax prorations,
attorney's fees, and marketing costs;
(d) The gross fair market value of the Project shall be further
discounted to account for any estimated holding costs associated with
maintaining the Project pending sale, including, without limitation,
utilities expenses, property management fees, taxes and assessments (to the
extent not accounted for in subsection (c) immediately above), and other
maintenance expenses; and
31
(e) Any expert opinion testimony given or considered in connection
with a determination of the fair market value of the Project must be given
by persons having at least five years experience in appraising property
similar to the Project and who have conducted and prepared a complete
written appraisal of the Project taking into consideration the factors set
forth above.
SECTION 8. MISCELLANEOUS.
Section 8.1. No Waiver of Rights. No delay or failure on the part of the
Lender or on the part of the holder or holders of any Note, in the exercise of
any power, right or remedy under any Loan Document shall operate as a waiver
thereof or as an acquiescence in any default, nor shall any single or partial
exercise thereof preclude any other or further exercise of any other power,
right or remedy. To the fullest extent permitted by applicable law, the powers,
rights and remedies under the Loan Documents of the Lender and the holder or
holders of the Note are cumulative to, and not exclusive of, any rights or
remedies any of them would otherwise have.
Section 8.2 Non-Business Day. If any payment of principal or interest on
the Loan or of any other Obligation shall fall due on a day which is not a
Business Day, interest or fees (as applicable) at the rate, if any, the Loan or
other Obligation bears for the period prior to maturity shall continue to accrue
in the manner set forth herein on such Obligation from the stated due date
thereof to and including the next succeeding Business Day on which the same
shall be payable.
Section 8.3. Documentary Taxes. The Borrower agrees that it will pay any
documentary, stamp or similar taxes payable with respect to any Loan Document,
including interest and penalties, in the event any such taxes are assessed
irrespective of when such assessment is made and regardless whether any credit
is then in use or available hereunder.
Section 8.4. Survival of Representations. All representations and
warranties made herein or in certificates given pursuant hereto shall survive
the execution and delivery of this Agreement and the other Loan Documents and
shall continue in full force and effect with respect to the date as of which
they were made as long as any Credit Party has any Obligation hereunder or under
any other Loan Document or any Commitment hereunder is in effect.
Section 8.5. Survival of Indemnities. All indemnities and all other
provisions relative to reimbursement to the Lender of amounts sufficient to
protect the yield of the Lender with respect to the Loan shall survive the
termination of this Agreement and the other Loan Documents and the payment of
the Loan and all other Obligations for a period of one (1) year.
Section 8.6. Setoff. In addition to any rights now or hereafter granted
under applicable law and not by way of limitation of any such rights, upon the
occurrence of, and throughout the continuance of, any Default or Event of
Default, the Lender and each subsequent holder of any of the Note is hereby
authorized by the Borrower at any time or from time to time, without notice to
the Borrower, any other Credit Party or to any other Person, any such notice
being hereby expressly waived, to set off and to appropriate and to apply any
and all deposits (general or special, including, but not limited to, Debt
evidenced by certificates of deposit, whether matured or unmatured, but not
including trust accounts, and in whatever currency denominated) and any
32
other Debt at any time held or owing by the Lender or that subsequent holder to
or for the credit or the account of the Borrower, whether or not matured,
against and on account of the obligations and liabilities of the Borrower to the
Lender or that subsequent holder under the Loan Documents, including, but not
limited to, all claims of any nature or description arising out of or connected
with the Loan Documents, irrespective of whether or not (i) the Lender or that
subsequent holder shall have made any demand hereunder or (ii) the principal of
or the interest on the Loan or the Note and other amounts due hereunder shall
have become due and payable hereunder and although said obligations and
liabilities, or any of them, may be contingent or unmatured. The Lender agrees,
if there shall be any other Lender pursuant to Section 8.10(b), that if the
Lender receives and retains any payment, whether by setoff or application of
deposit balances or otherwise, on any of the Loan in excess of its ratable share
of payments on all such Obligations then owed to the Lender hereunder, then the
Lender shall purchase for cash at face value, but without recourse, ratably from
each of the other Lenders such amount of the Loan or participations therein,
held by each such other Lenders (or interest therein) as shall be necessary to
cause the Lender to share such excess payment ratably with all the other
Lenders; provided, however, that if any such purchase is made by any Lender, and
if such excess payment or part thereof is thereafter recovered from such
purchasing Lender, the related purchases from the other Lenders shall be
rescinded ratably and the purchase price restored as to the portion of such
excess payment so recovered, but without interest.
Section 8.7. Notices. Except as otherwise specified herein, all notices
under the Loan Documents shall be in writing (including cable, telecopy or
telex) and shall be given to a party hereunder at its address, telecopier number
or telex numbers set forth below or such other address, telecopier number or
telex as such party may hereafter specify by notice to the Lender or the
Borrower, as applicable, given by courier, by United States certified or
registered mail, by telegram or by other telecommunication device capable of
creating a written record of such notice and its receipt. Notices under the Loan
Documents shall be addressed to the Lender and to the Borrower as follows:
Bank One, Texas, National Association
Attention: Xx. Xxxx X. Xxxx, Xx.
000 Xxxxxx
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
Gardere Xxxxx Xxxxxx & Xxxxx, L.L.P.
Attention: Xx. Xxxx X. Xxxxxxxxxx
000 Xxxx Xxx., Xxxxx 000
Xxxxxxx, Xxxxx 00000
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
and
33
HydroChem Industrial Services, Inc.
0000 Xxxxxxx, Xxxxx 000
Xxxxxxx, Xxxxx 00000
Attention: Xx. Xxxxx F. Little, III, Executive
Vice President and Chief
Financial Officer
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
with a copy to:
Xxxxxx and Xxxxx, L.L.P.
0000 Xxxxxxxxx, Xxxxx 0000
Xxxxxxx, Xxxxx 00000-0000
Attention: Xx. Xxxxxx X. Xxxx
Telephone: (000) 000-0000
Fax No.: (000) 000-0000
Each such notice, request or other communication shall be effective (i) if
given by telecopier, when such telecopy is transmitted to the telecopier number
specified in this Section 8.7 and a confirmation of receipt of such telecopy has
been received by the sender, (ii) if given by telex, when such telex is
transmitted to the telex number specified in this Section 8.7 and the answer
back is received by sender, (iii) if given by courier, when delivered, (iv) if
given by mail, five (5) days after such communication is deposited in the mail,
registered with return receipt requested, addressed as aforesaid or (v) if given
by any other means, when delivered at the addresses specified in this Section
8.7; provided that any notice given pursuant to Section 2 shall be effective
only upon receipt and, provided further, that any notice that but for this
provision would be effective after the close of business on a Business Day or on
a day that is not a Business Day shall be effective at the opening of business
on the next Business Day.
Section 8.8. Counterparts. This Agreement may be executed in any number of
counterparts, and by the different parties on different counterpart signature
pages, each of which when executed shall be deemed an original but all such
counterparts taken together shall constitute one and the same Agreement.
Section 8.9. Successors and Assigns. This Agreement shall be binding upon
the Borrower and the Lender and their respective successors and assigns, and
shall inure to the benefit of the Borrower and the Lender and their respective
successors and assigns, including any subsequent holder of the Note. The
Borrower may not assign any of its rights or obligations under any Loan Document
without the consent of the Lender.
Section 8.10. Participations in Borrowings and Notes; Transfers of
Borrowings and Notes.
(a) The Lender may at any time sell to one or more banks
("Participants"), participating interests in any Advance owing to the
Lender, the Note, the Commitment or any other interest of the Lender
hereunder, provided that the Lender shall not transfer, grant or assign any
participation under which the Participant shall have rights to vote upon
34
or consent to any matter to be decided by the Lender hereunder or under any
Loan Document or approve any amendment to or waiver of this Agreement or
any other Loan Document except to the extent such amendment or waiver would
(i) increase the amount of the Lender's Commitment and such increase would
affect such Participant, (ii) reduce the principal of or interest on, any
of the Lender's Loan or any fees or other amounts payable to the Lender
hereunder and such reduction would affect such Participant or (iii)
postpone any date fixed for any scheduled payment of principal of or
interest on, any of the Lender's Loan or any fees or other amounts payable
to the Lender hereunder and such postponement would affect such
Participant. In the event of any such sale by the Lender of participating
interests to a Participant, the Lender's obligations under this Agreement
to the other parties to this Agreement shall remain unchanged, the Lender
shall remain solely responsible for the performance thereof, the Lender
shall remain the holder of the Note for all purposes under this Agreement
and the Borrower shall continue to deal solely and directly with the Lender
in connection with the Lender's rights and obligations under this
Agreement. The Borrower agrees that if amounts outstanding under this
Agreement and the Note are due and unpaid or shall have been declared or
shall have become due and payable upon the occurrence of an Event of
Default, each Participant shall be deemed to have the right of setoff in
respect of its participating interest in amounts owing under this Agreement
and the Note to the same extent as if the amount of its participating
interest were owing directly to it as a Lender under this Agreement or any
Note.
(b) The Lender may sell all or any part of its rights and obligations
under this Agreement and the Note to any Affiliate of the Lender at any
time or, if an Event of Default shall have occurred and be continuing, to
one or more financial institutions or other Persons. If any such sale
occurs, the purchasing Lender shall be considered for all purposes as a
Lender hereunder.
(c) The provisions of the foregoing subsections (a) and (b) shall not
apply to or restrict or require the consent of or any notice to any Person
to effectuate, the pledge or assignment by the Lender of its rights under
this Agreement and the Note to any Federal Reserve Bank.
(d) If, pursuant to this Section 8.10, any interest in this Agreement
or the Note is transferred to any transferee which is organized under the
laws of any jurisdiction other than the United States of America or any
State thereof, the transferor Lender shall cause such transferee,
concurrently with the effectiveness of such transfer, (i) to represent to
the transferor Lender (for the benefit of the transferor Lender and the
Borrower) that under applicable law and treaties no taxes will be required
to be withheld by the Lender or the Borrower with respect to any payments
to be made to such transferee in respect of the Loan, (ii) to furnish to
the transferor Lender (and, in the case of any purchasing Lender, the
Borrower) either U.S. Internal Revenue Service Form 4224 or U.S. Internal
Revenue Service Form 1001 or such successor forms as shall be adopted from
time to time by the relevant United States taxing authorities (wherein such
transferee claims entitlement to complete exemption from U.S. federal
withholding tax on all interest payments hereunder), and (iii) to agree
(for the benefit of the transferor Lender and the Borrower) to provide the
transferor Lender (and, in the case of any purchasing Lender, the Borrower)
a new Form
35
4224 or Form 1001 upon the expiration or obsolescence of any previously
delivered form and comparable statements in accordance with applicable U.S.
laws and regulations and amendments dully executed and completed by such
transferee, and to comply from time to time with all applicable U.S. laws
and regulations with regard to such withholding tax exemption.
Section 8.11. Amendments. Any provision of this Agreement may be amended or
waived if, but only if, such amendment or waiver is in writing and is signed by
the Borrower and the Lender.
Section 8.12. Headings. Section headings used in this Agreement are for
reference only and shall not affect the construction of this Agreement.
Section 8.13. Legal Fees, Other Costs and Indemnification. The Borrower,
upon demand by the Lender, agrees to pay the reasonable fees and disbursements
of legal counsel to the Lender in connection with the preparation and execution
of the Loan Documents, any amendment, waiver or consent related thereto, whether
or not the transactions contemplated therein are consummated, any Default or
Event of Default by the Borrower hereunder and any enforcement of any of the
Loan Documents. The Borrower further agrees to indemnify the Lender and its
respective directors, officers, shareholders, employees and attorneys
(collectively, the "Indemnified Parties"), against all losses, claims, damages,
penalties, judgments, liabilities and expenses (including, without limitation,
all reasonable attorneys' fees and other reasonable expenses of litigation or
preparation therefor, whether or not the Indemnified Party is a party thereto)
which any of them may pay or incur arising out of or relating to (a) any Loan
Document, the Loan or the application or proposed application by any of the
Borrower of the proceeds of any Loan, REGARDLESS OF WHETHER SUCH CLAIMS OR
ACTIONS ARE FOUNDED IN WHOLE OR IN PART UPON THE ALLEGED SIMPLE, SOLE OR
CONTRIBUTORY NEGLIGENCE OF ANY OF THE INDEMNIFIED PARTIES AND/OR ANY OF THEIR
RESPECTIVE DIRECTORS, OFFICERS, SHAREHOLDERS, EMPLOYEES OR ATTORNEYS, and (b)
any investigation of any third party or any governmental authority involving the
Lender and related to any use made or proposed to be made by the Borrower of the
proceeds of the Advance or any transaction financed or to be financed in whole
or in part, directly or indirectly with the proceeds of any Advance; provided,
however, that the Borrower shall not be obligated to indemnify any Indemnified
Party for any of the foregoing arising out of such Indemnified Party's gross
negligence or willful misconduct. The Borrower, upon demand by the Indemnified
Party at any time, shall reimburse the Indemnified Party for any legal or other
expenses incurred in connection with investigating or defending against any of
the foregoing except if the same is excluded from indemnification pursuant to
the provisions of the foregoing sentence.
Section 8.14 GOVERNING LAW; ARBITRATION; SUBMISSION TO JURISDICTION.
(a) This Agreement and the other Loan Documents, and the rights and
duties of the parties thereto, shall be construed in accordance with and
governed by the internal laws of the State of Texas.
36
(b) EACH PARTY HERETO HEREBY WAIVES ITS RIGHT TO RESOLVE DISPUTES,
CLAIMS, AND CONTROVERSIES ARISING FROM THIS AGREEMENT, ANY OTHER LOAN
DOCUMENT OR ANY MATTER IN CONNECTION THEREWITH, INCLUDING, WITHOUT
LIMITATION, CONTRACT DISPUTES AND TORT CLAIMS, THROUGH ANY COURT PROCEEDING
OR LITIGATION AND ACKNOWLEDGES THAT ALL SUCH DISPUTES, CLAIMS AND
CONTROVERSIES SHALL BE RESOLVED PURSUANT TO THIS SECTION, EXCEPT THAT
EQUITABLE RELIEF AND CERTAIN OTHER RIGHTS AND REMEDIES SET FORTH BELOW MAY
BE SOUGHT FROM ANY COURT OF COMPETENT JURISDICTION. The Borrower represents
to the Lender and the Lender represents to the Borrower that this waiver is
made knowingly and voluntarily after consultation with and upon advice of
counsel and is a material part of this Agreement. All such disputes, claims
and controversies shall be resolved by binding arbitration pursuant to the
commercial rules of the American Arbitration Association ("AAA"). Any
arbitration proceeding held pursuant to this arbitration provision shall be
conducted in Houston, Texas or at any other place selected by mutual
agreement of the Lender and the Borrower. No act to take or dispose of any
collateral shall constitute a waiver of this arbitration agreement or be
prohibited by this arbitration agreement. This arbitration provision shall
not limit the right of either party during any dispute, claim or
controversy to seek, use, and employ ancillary or preliminary rights and/or
remedies, judicial or otherwise, for the purposes of realizing upon,
preserving, protecting, foreclosing upon or proceeding under forcible entry
and detainer for possession of, any real or personal property, and any such
action shall not be deemed an election of remedies. Such remedies include,
without limitation, obtaining injunctive relief or a temporary restraining
order, invoking a power of sale under any deed of trust or mortgage,
obtaining a writ of attachment or imposition of a receivership or
exercising any rights relating to personal property, including exercising
the right of set-off or taking or disposing of such property with or
without judicial process pursuant to the uniform commercial code. Any
disputes, claims or controversies concerning the lawfulness or
reasonableness of an act or exercise of any right or remedy concerning any
collateral, including any claim to rescind, reform or otherwise modify any
agreement relating to the collateral, shall also be arbitrated; provided,
however that no arbitrator shall have the right or the power to enjoin or
restrain any act of either party. Judgment upon any award rendered by any
arbitrator may be entered in any court having jurisdiction. The statute of
limitations, estoppel, waiver, laches and similar doctrines which would
otherwise be applicable in an action brought by a party shall be applicable
in any arbitration proceeding, and the commencement of an arbitration
proceeding shall be deemed the commencement of any action for these
purposes. The Federal Arbitration Act (Title 9 of the United States Code)
shall apply to the construction, interpretation, and enforcement of this
arbitration provision.
(c) To the fullest extent permitted by applicable law, each of the
Borrower and the Lender agrees that any court proceeding or litigation
permitted by Section 8.14(b) may be brought and maintained in the courts of
the State of Texas sitting in Xxxxxx County or the United States District
Court for the Southern District of Texas. To the fullest extent permitted
by applicable law, each of the Borrower and the Lender hereby expressly and
37
irrevocably submits to the jurisdiction of the courts of the State of Texas
and the United States District Court for the Southern District of Texas for
the purpose of any such litigation as set forth above and irrevocably
agrees to be bound by any judgment rendered thereby in connection with such
litigation. To the fullest extent permitted by applicable law, each of the
Borrower and the Lender further irrevocably consents to the service of
process, by registered mail, postage prepaid or by personal service within
or without the State of Texas. To the fullest extent permitted by
applicable law, each of the Borrower and the Lender hereby expressly and
irrevocably waives any objection which it may have or hereafter may have to
the laying of venue of any such litigation brought in any such court
referred to above and any claim that any such litigation has been brought
in an inconvenient forum. To the extent that the Borrower or the Lender has
or hereafter may acquire any immunity from jurisdiction of any court or
from any legal process (whether through service of notice, attachment prior
to judgment, attachment in aid of execution or otherwise) with respect to
itself or its property, each of the Borrower and the Lender hereby
irrevocably waives to the fullest extent permitted by applicable law, such
immunity in respect of its obligations under this Agreement.
(D) TO THE FULLEST EXTENT PERMITTED BY APPLICABLE LAW, EACH PARTY
HERETO VOLUNTARILY, KNOWINGLY, IRREVOCABLY AND UNCONDITIONALLY (BY ITS
ACCEPTANCE HEREOF) WAIVES ANY RIGHT TO A TRIAL BY JURY IN ANY COURT
PROCEEDING OR LITIGATION PERMITTED BY SECTION 3.1(B) AND WAIVES ANY RIGHT
TO HAVE A JURY PARTICIPATE IN RESOLVING ANY DISPUTE (WHETHER BASED ON
CONTRACT, TORT OR OTHERWISE) ARISING OUT OF THIS AGREEMENT OR ANY OTHER
LOAN DOCUMENT, ANY OTHER RELATED DOCUMENT OR ANY RELATIONSHIP BETWEEN THE
LENDER, THE BORROWER, AND/OR THE GUARANTOR, AND AGREES THAT ANY SUCH
ACTION, PROCEEDING OR DISPUTE TO THE EXTENT PERMITTED BY SECTION 8.14(B)
SHALL BE TRIED BEFORE A COURT AND NOT BEFORE A JURY. THIS PROVISION IS A
MATERIAL INDUCEMENT TO THE LENDER TO PROVIDE THE LOAN.
Section 8.15. Severability. Any provision of this Agreement that is
prohibited or unenforceable in any jurisdiction shall, as to such jurisdiction,
be ineffective to the extent of such prohibition or unenforceability without
invalidating the remaining provisions hereof, and any such prohibition or
unenforceability in any jurisdiction shall not invalidate or render
unenforceable such provision in any other jurisdiction.
Section 8.16. Change in Accounting Principles or Tax Laws. If (i) any
change in accounting principles from those used in the preparation of the
financial statements referred to in Section 5.9 is hereafter occasioned by the
promulgation of rules, regulations, pronouncements and opinions by or required
by the Financial Accounting Standards Board or the American Institute of
Certified Public Accounts (or successors thereto or agencies with similar
functions) and such change materially affects the calculation of any component
of any financial covenant, standard or term found in this Agreement or (ii)
there is a material change in federal or foreign tax laws which materially
affects the Borrower's ability to comply with the financial covenants, standards
or terms found in this Agreement, the Borrower and the Lender agree to enter
into negotiations in order
38
to amend such provisions so as to equitably reflect such changes with the
desired result that the criteria for evaluating the Borrower's financial
condition shall be the same after such changes as if such changes had not been
made. Unless and until such provisions have been so amended, the provisions of
this Agreement shall govern.
Section 8.17. Notice. The Loan Documents constitute the entire
understanding among the Borrower and the Lender and supersede all earlier or
contemporaneous agreements, whether written or oral, concerning the subject
matter of the Loan Documents. THIS WRITTEN AGREEMENT TOGETHER WITH THE OTHER
LOAN DOCUMENTS REPRESENTS THE FINAL AGREEMENT BETWEEN THE PARTIES AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT ORAL AGREEMENTS
OF THE PARTIES. THIS WRITTEN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN
THE PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES. THERE ARE NO UNWRITTEN ORAL
AGREEMENTS BETWEEN THE PARTIES.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their duly authorized officers as of the day and
year first above written.
BORROWER:
HYDROCHEM INDUSTRIAL SERVICES, INC.,
a Delaware corporation
By: /S/ Selby F. Little, III
-----------------------------
Name: Selby F. Little, III
Title: Executive Vice President
and Chief Financial Officer
LENDER:
BANK ONE, TEXAS, NATIONAL ASSOCIATION
By: /S/ Xxxx X. Xxxx, Xx.
-------------------------
Name: Xxxx X. Xxxx, Xx.
Title: Vice President
39
EXHIBIT 2.1A
REQUEST FOR ADVANCE
EXHIBIT "2.1A"
REQUEST FOR ADVANCE
Bank One Southern Region Date:_________________________
Construction Risk - Real Estate Loan Administration
0000 Xxxx, Xxxxx Xxxxx 0 (TX1-2424) Draw #:_______________________
Xxxxxx, Xxxxx 00000
ATTN: ___________________________
RE: Borrower Name : HydroChem Industrial Services, Inc.
Project Name : Corporate Headquarters
Loan Amount : $7,500,000
1. Pursuant to that certain Loan Agreement dated July 17, 1998 (the "Loan
Agreement") between the Borrower and Bank One, Texas, National
Association ("Bank"), the Borrower hereby requests an advance in the
amount of $___________________. The Borrower hereby acknowledges that
this amount is subject to inspection, verification and available
funds.
2. The Borrower also hereby covenants and agrees that:
(a) It has complied with all duties and obligations required to date
to be carried out and performed by it pursuant to the terms of
the Loan Agreement;
(b) No Default or Event of Default as defined in the Loan Agreement
has occurred and is continuing;
(c) All change orders have been submitted to and approved by Bank as
required under the terms of the Loan Agreement;
(d) All funds previously disbursed have been used for the purposes as
set forth in the Loan Documents;
(e) All outstanding claims for labor, materials and/or services
furnished prior to this draw period have been paid;
(f) All construction prior to the date of this request for advance
has been accomplished in accordance with the Plans, or as
modified by Bank approved change orders;
(g) All sums advanced by Bank on account of this draw will be used
solely for the purpose of paying obligations owing as on the
attached documentation and no other reason;
(h) There are no Liens outstanding against the subject project or its
equipment except for Bank's Liens as agreed upon in the Loan
Documents;
(i) The amount of undisbursed Loan proceeds is sufficient to pay the
cost of completing the Project in accordance with the Plans
originally submitted to Bank, or as modified by Bank approved
change orders; and
(j) The undersigned affiant understands that this affidavit, is made
for the purpose of inducing Bank to make an advance to Borrower
and that, in making such advance, Bank will rely upon the
accuracy of the matters stated in this affidavit.
3. Disbursement of the Loan proceeds hereby requested may be subject to
the receipt by Bank of a certificate from the Title Company stating
that no claims have been filed of record which adversely affects the
title of the Borrower to the Land, subsequent to the filing of the
Bank's Deed of Trust.
4. The terms used in this Request for Advance and not otherwise defined
herein have the same meaning and definitions as those set forth in the
Loan Agreement.
5. The Borrower certifies that the statements made in this Request for
Advance and any documents submitted herewith and identified herein are
true and correct and has duly caused this Request for Advance to be
signed on its behalf by the undersigned who is duly authorized.
6. The Borrower requests that this draw be funded and that the
disbursement funds be deposited into its Bank One Account No.
________________.
OR, wired with instructions as follows:
Account # _____________________________________
ABA # _____________________________________
Bank Name _____________________________________
EXECUTED as of the date first above written.
HYDROCHEM INDUSTRIAL SERVICES, INC.,
a Delaware corporation
By:___________________________________
Name:_________________________________
Title:________________________________
THE STATE OF TEXAS
COUNTY OF XXXXXX
The foregoing instrument was acknowledged before me this _______ day of
___________, 199__, by _________________________ the __________________ of
HYDROCHEM INDUSTRIAL SERVICES, INC., a Delaware corporation.
IN THE WITNESS WHEREOF, I have hereunto set my hand and official seal.
[SEAL] __________________________________________
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
__________________________________________
Printed Name of Notary
Commission Expires:______________________
THE STATE OF TEXAS
COUNTY OF XXXXXX
SUBSCRIBED AND SWORN BEFORE ME on this ____ day of ________________, 199__,
by ________________________.
[SEAL] __________________________________________
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
__________________________________________
Printed Name of Notary
Commission Expires:______________________
EXHIBIT 2.1B
AFFIDAVIT OF BILLS PAID
EXHIBIT "2.1B"
AFFIDAVIT OF BILLS PAID
THE STATE OF TEXAS
KNOW ALL PERSONS BY THESE PRESENTS:
COUNTY OF XXXXXX
BEFORE ME, the undersigned authority, a Notary Public in and for the State
of Texas, on this day personally appeared __________________, the
________________ of HydroChem Industrial Services, Inc., a Delaware corporation
(the "Borrower"), who being duly sworn by me, upon oath says:
"On behalf of the Borrower, the owner of the land for
improvements being erected on the following described property, I
certify that all bills for labor and materials have been paid or will
be paid with the proceeds of this draw; that the Borrower has no
notice of any liens being in existence on the following described
property, to wit:
SEE EXHIBIT A
That the facts herein stated are within my knowledge as an
officer of the Borrower.
I further acknowledge the receipt of $___________ from Bank One,
Texas, National Association, on _______________, 199__ for
improvements on and for which the above-described property is
security."
HYDROCHEM INDUSTRIAL SERVICES, INC.,
a Delaware corporation
By:_________________________________
Name:_______________________________
Title:______________________________
SUBSCRIBED AND SWORN TO BEFORE ME, this ____ day of _______________, 199__
by _____________________.
[SEAL] ________________________________________________
Notary Public in and for the State of T E X A S
________________________________________________
Printed Name of Notary
Commission Expires:_____________________________
EXHIBIT A
TRACT 1:
All that certain 15.109 acres of land, more or less, out of the 30.763 acre
tract and the 16.3959 acre tract described in the deed from Shell Oil Company to
Xxxxx Texas Properties Inc. recorded under Xxxxxx County Clerk File No. H542197
out of the W.C.R.R. Company Survey, A-929, and the Xxxxxx Xxxx Survey, A-18, and
being more particularly described by metes and bounds as follows:
All that certain 15.109 acres of land, more or less, out of the 30.763 acre
tract and the 16.3959 acre tract described in the deed from Shell Oil
Company to Xxxxx Texas Properties Inc. recorded under Xxxxxx County Clerk
File No. H542197 out of the W.C.R.R. Company Survey, A-929, and the Xxxxxx
Xxxx Survey, A-18, and being more particularly described by metes and as
follows: (All bearings are based on a 344.96 acre tract recorded under
Volume 1336, Page 526, H.C.D.R.)
Commencing at a 5/8" iron rod found at the southeast intersection of
Georgia Avenue (100' ROW) and Xxxxxx Avenue (80' ROW); Thence S 01 06' 49"
E - 1,000.08' along the east right-of-way line of said Georgia Avenue to a
point; Thence S 88 52' 36" W - 100.00' to a 5/8" iron rod found marking
the northeast corner and the POINT OF BEGINNING of the herein described
tract;
THENCE S 01 06' 49" E - 859.07' along the west right-of-way line of said
Georgia Avenue to a 5/8" iron rod set marking the southeast corner of the
herein described tract;
THENCE S 89 03' 18" W at 384.84' passing a found 5/8" iron rod and
continuing for a total distance of 769.02' along the north line of the
10.4683 acre tract described in a deed from Xxxx X. Xxxxx and Xxx Xxxx
Xxxxx to Xxxx X. Xxxxx, Trustee recorded under H.C.C. File No. P430996 to a
3/4" iron pipe found marking the southwest corner of the herein described
tract in the east line of the 5.0304 acre tract described in a deed from
Texas Properties Inc. to Houston Marine Containers Inc. recorded under
H.C.C. File No. K668803;
THENCE N 00 52' 20" W - 856.67' along said east line to a 3/4" iron pipe
found marking the northwest corner of the herein described tract in the
south line of Deer Park Industrial Park, Section 1, according to the plat
thereof recorded under Volume 190, Page 85, Xxxxxx County Map Records;
THENCE N 88 52' 32" E - 765.41' along the south line of said Section 1 to
the northeast corner and the POINT OF BEGINNING of the herein described
tract and containing 15.109 acres of land (658,170 square feet) of land.
TRACT 2:
A 4.3285 acre tract out of a 25.5098 acre tract located in Deer Park Industrial
Park Section One (1), Xxxxxx Xxxx Survey, Abstract No. 18, Deer Park, Xxxxxx
County, Texas, According to the Plat as recorded in Volume 190, Page 85, Xxxxxx
County Map Records, and being more particularly described by metes and bound as
follows:
A 4.3285 acre tract out of a 25.5098 acre tract located in Deer Park
Industrial Park Section One, Xxxxxx Xxxx Survey, Abstract No. 18, Deer
Park, Xxxxxx County, Texas, according to the plat as recorded in Volume
190, Page 85, Xxxxxx County Map Records:
Commencing at the southwest corner of said Deer Park Industrial Park
Section One;
Thence N 88 53' 11" E, along the south line of said Deer Park Industrial
Park Section One, a distance of 30.00 feet to the southwest corner of said
25.5098 acre tract and being the POINT OF BEGINNING of the herein described
tract;
THENCE N 00 48' 12" W, parallel to and 30 feet east of the west line of
said Deer Park Industrial Park Section One, a distance of 175.00 feet;
THENCE N 88 53' 11" E, across said 25.5098 acre tract, a distance of
1076.97 feet to a point on the easterly line of said 25.5098 acre tract;
THENCE S 01 06' 49" E, 175.00 feet to the most southerly southeast corner
of said 25.5098 acre tract and being in the south line of said Deer Park
Industrial Park Section One;
THENCE S 88 53' 11" W, along the south line of Deer Park Industrial Park
Section One, a distance of 1077.92 feet to the POINT OF BEGINNING.
EXHIBIT 2.1C
WAIVER OF LIEN TO DATE
EXHIBIT "2.1C"
WAIVER OF LIEN TO DATE
THE STATE OF TEXAS
COUNTY OF XXXXXX
The undersigned is an original contractor or subcontractor who has
furnished labor and/or material ("Work") in the development of land owned by
HydroChem Industrial Services, Inc. ("Owner"), located in the City of Deer Park,
Xxxxxx County, Texas, and described in Exhibit A which is attached hereto and
incorporated herein by reference (the "Property").
For work in connection with the Property, the undersigned:
* received $__________________ through ____________, 19___ ("Prior Down
Date"),
* is owed $______________ through ____________, 19___ ("Down Date"),
* except for $______________ of retainage, not yet due and payable.
Except for such retainage amount, the undersigned (a) through the Prior
Down Date, and (b) additionally, upon receipt of the amount owed, through the
Down Date:
1. Has been paid in full for all sums owed for the Work concerning the
Property;
2. Acknowledges complete satisfaction of, and forever waives and releases,
all claims of every kind against Owner or the Property, including but not
limited to all liens and claims of liens, which the undersigned may have as a
result of or in connection with the Work;
3. Has represented and warranted and does hereby represent and warrant that
all persons or entities who have furnished labor and/or material to the
undersigned in connection with the work have been paid all amounts they are
owed, except agreed retainage not yet due and payable which in total does not
exceed the retainage amount set forth above; and
4. Agrees unconditionally to indemnify Owner and hold Owner harmless
against all liability, loss, cost or expense (including, but not limited to,
attorneys' fees) now or hereafter incurred, paid or suffered by or asserted
against Owner or the Property because of any claim or action by the undersigned,
or by any person or entity claiming by, through or under the undersigned, with
respect to the claims, liens and rights herein waived and released or arising
out of any breach or untruth of any representation herein made.
In consideration of its funding of loan proceeds to be used to pay for work
furnished by the undersigned, the undersigned hereby agrees and acknowledges for
the benefit of Bank One, Texas, National Association that all mechanic's liens
or rights to the same now or hereafter owned or held by the undersigned are and
shall be subordinate and inferior to the lien of the deed of trust held by such
lender or any successor or assignee thereof on the Property.
The person signing this document represents that he or she is duly
authorized to do so on behalf of the undersigned original contractor or
subcontractor.
All of the provisions of this document shall bind the undersigned original
contractor or subcontractor and the undersigned's heirs, legal representatives,
successors and assigns and shall inure to the benefit of Owner and Owner's
heirs, legal representatives, successors, assigns and sureties.
EXECUTED this _____ day of ________________, 199___.
_____________________________________
By:_________________________________
Name:_______________________________
Title:______________________________
THE STATE OF TEXAS
COUNTY OF XXXXXX
This instrument was acknowledged before me on _________________, 199___, by
______________________________, __________________________ of and on behalf of
_____________________, a _________________________.
[SEAL] ________________________________________________
NOTARY PUBLIC IN AND FOR
THE STATE OF TEXAS
_______________________________________
Printed Name of Notary
Commission Expires:______________________
EXHIBIT A
TRACT 1:
All that certain 15.109 acres of land, more or less, out of the 30.763 acre
tract and the 16.3959 acre tract described in the deed from Shell Oil Company to
Xxxxx Texas Properties Inc. recorded under Xxxxxx County Clerk File No. H542197
out of the W.C.R.R. Company Survey, A-929, and the Xxxxxx Xxxx Survey, A-18, and
being more particularly described by metes and bounds as follows:
All that certain 15.109 acres of land, more or less, out of the 30.763 acre
tract and the 16.3959 acre tract described in the deed from Shell Oil
Company to Xxxxx Texas Properties Inc. recorded under Xxxxxx County Clerk
File No. H542197 out of the W.C.R.R. Company Survey, A-929, and the Xxxxxx
Xxxx Survey, A-18, and being more particularly described by metes and as
follows: (All bearings are based on a 344.96 acre tract recorded under
Volume 1336, Page 526, H.C.D.R.)
Commencing at a 5/8" iron rod found at the southeast intersection of
Georgia Avenue (100' ROW) and Xxxxxx Avenue (80' ROW); Thence S 01 06' 49"
E - 1,000.08' along the east right-of-way line of said Georgia Avenue to a
point; Thence S 88 52' 36" W - 100.00' to a 5/8" iron rod found marking
the northeast corner and the POINT OF BEGINNING of the herein described
tract;
THENCE S 01 06' 49" E - 859.07' along the west right-of-way line of said
Georgia Avenue to a 5/8" iron rod set marking the southeast corner of the
herein described tract;
THENCE S 89 03' 18" W at 384.84' passing a found 5/8" iron rod and
continuing for a total distance of 769.02' along the north line of the
10.4683 acre tract described in a deed from Xxxx X. Xxxxx and Xxx Xxxx
Xxxxx to Xxxx X. Xxxxx, Trustee recorded under H.C.C. File No. P430996 to a
3/4" iron pipe found marking the southwest corner of the herein described
tract in the east line of the 5.0304 acre tract described in a deed from
Texas Properties Inc. to Houston Marine Containers Inc. recorded under
H.C.C. File No. K668803;
THENCE N 00 52' 20" W - 856.67' along said east line to a 3/4" iron pipe
found marking the northwest corner of the herein described tract in the
south line of Deer Park Industrial Park, Section 1, according to the plat
thereof recorded under Volume 190, Page 85, Xxxxxx County Map Records;
THENCE N 88 52' 32" E - 765.41' along the south line of said Section 1 to
the northeast corner and the POINT OF BEGINNING of the herein described
tract and containing 15.109 acres of land (658,170 square feet) of land.
TRACT 2:
A 4.3285 acre tract out of a 25.5098 acre tract located in Deer Park Industrial
Park Section One (1), Xxxxxx Xxxx Survey, Abstract No. 18, Deer Park, Xxxxxx
County, Texas, According to the Plat as recorded in Volume 190, Page 85, Xxxxxx
County Map Records, and being more particularly described by metes and bound as
follows:
A 4.3285 acre tract out of a 25.5098 acre tract located in Deer Park
Industrial Park Section One, Xxxxxx Xxxx Survey, Abstract No. 18, Deer
Park, Xxxxxx County, Texas, according to the plat as recorded in Volume
190, Page 85, Xxxxxx County Map Records:
Commencing at the southwest corner of said Deer Park Industrial Park
Section One;
Thence N 88 53' 11" E, along the south line of said Deer Park Industrial
Park Section One, a distance of 30.00 feet to the southwest corner of said
25.5098 acre tract and being the POINT OF BEGINNING of the herein described
tract;
THENCE N 00 48' 12" W, parallel to and 30 feet east of the west line of
said Deer Park Industrial Park Section One, a distance of 175.00 feet;
THENCE N 88 53' 11" E, across said 25.5098 acre tract, a distance of
1076.97 feet to a point on the easterly line of said 25.5098 acre tract;
THENCE S 01 06' 49" E, 175.00 feet to the most southerly southeast corner
of said 25.5098 acre tract and being in the south line of said Deer Park
Industrial Park Section One;
THENCE S 88 53' 11" W, along the south line of Deer Park Industrial Park
Section One, a distance of 1077.92 feet to the POINT OF BEGINNING.
EXHIBIT 2.3
TERM LOAN AMORTIZATION SCHEDULE
EXHIBIT 2.3
Notional Amort
-------- -----
7,500,000
7,462,015 37,985*
7,419,937 42,078
7,378,666 41,271
7,338,200 40,466
7,296,907 41,293
7,253,148 43,759
7,208,504 44,644
7,164,559 43,945
7,119,716 44,843
7,070,792 48,924
7,022,460 48,332
6,974,712 47,748
6,925,987 48,725
6,873,188 52,799
6,820,861 52,327
6,768,991 51,870
6,716,061 52,930
6,659,064 56,997
6,602,406 56,658
6,546,070 56,336
6,488,582 57,488
6,428.477 60,105
6,367,157 61,320
6,306,011 61,146
6,243,615 62,396
6,177,169 66,446
6,110,767 66,402
6,044,380 66,387
5,976,635 67,745
Principal payments will be made in up to 28 installments with this installment
being the first payment
EXHIBIT 6.8
FORM OF COMPLIANCE CERTIFICATE
COMPLIANCE CERTIFICATE
HydroChem Industrial Services, Inc. (the "Borrower"), and Bank One, Texas,
National Association (the "Lender"), executed and delivered that certain Loan
Agreement dated as of July 17, 1998 (as amended, supplemented and restated from
time to time, the "Loan Agreement"). Any term defined in the Loan Agreement and
used in this Compliance Certificate shall have the meaning given to it in the
Loan Agreement.
The undersigned, solely in his or her capacity as an officer of the
Borrower hereby certifies to the Lender that:
A. The attached financial statements are (check one) [ ] quarterly
financial statements dated __________________, [ ] annual financial statements
dated _____________________, and fairly present on a consolidated or
consolidating basis, as the case may be, the balance sheet, statements of
operations and stockholders equity and cash flows of the Borrower and its
Subsidiaries covered thereby as of the date thereof and for the period covered
thereby, subject to normal year-end audit adjustments and the omission of any
footnotes for any such financial statements that are quarterly financial
statements.
B. As of the date of the attached financial statements and with respect to
the Borrower and its Subsidiaries on a consolidated basis, the following are
calculated in accordance with the Loan Agreement:
1. Minimum Consolidated Net Worth
a. Starting Consolidated Net Worth $ 15,000,000
b. Fifty percent (50%) of cumulative
quarterly Consolidated Net Income
since September 30, 1997 for each
fiscal quarter ending after that
date during which the Borrower has
positive Consolidated Net Income $__________________
c. Eighty percent (80%)of net proceeds
of equity issuances from 9/30/97 $__________________
d. Minimum Consolidated Net Worth $__________________
(a plus b plus c)
e. Consolidated Net Worth $__________________
2. Fixed Charge Coverage Ratio
a. Consolidated Net Income $__________________
b. Consolidated Interest Expense $__________________
c. Taxes $__________________
d. Consolidated Interest Income $__________________
e. Extraordinary Gains $__________________
f. Consolidated Depreciation and Amortization $__________________
g. EBITDA $__________________
h. Cash taxes $__________________
i. Capital Expenditures $__________________
j. Adjusted EBITDA
(g minus the sum of h and i) $__________________
k. Debt Service $__________________
l. Cash dividends $__________________
m. Fixed Charge Coverage Ratio
(Ratio of j to the sum of
k and l; not less than 1.0 to 1.0) ______ to ______
C. To the best of my knowledge after due inquiry, all of the
representations and warranties contained in the Loan Agreement are true and
correct in all material respects on the date hereof as if made on the date
hereof except, (i) to the extent such representation and warranty relates solely
to an earlier date in which case it shall have been true and correct as of such
earlier date, or (ii) as to the following matters: [Describe or attach a
schedule of all such representations and warranties that are no longer true or
correct and, if applicable, what action the Borrower has taken or proposes to
take].
_____________________________________
_____________________________________
_____________________________________
D. (Check either 1 or 2) To the best of my knowledge after due inquiry:
[__] 1. As of the date hereof, no Default or Event of Default has
occurred and is continuing.
[__] 2. As of the date hereof, no Default or Event of Default has
occurred and is continuing except the following matters: [Describe all such
Defaults or Events of Default, specifying the nature, duration and status
thereof and what action the Borrower has taken or proposes to take with
respect thereto].
_____________________________________
_____________________________________
_____________________________________
Date: _________________, __
HYDROCHEM INDUSTRIAL SERVICES, INC.,
a Delaware corporation
By:___________________________________
Name:_________________________________
Title:________________________________
