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EXHIBIT 10.5
Execution Copy
AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT
THIS AMENDED AND RESTATED CREDIT AND SECURITY AGREEMENT (as it may be
modified, supplemented or amended from time to time, this "Agreement") is made
and entered into as of May 21, 0000 xxxxxxx XXXXXXXX XXXX XXXXXX EQUITIES
LIMITED PARTNERSHIP, a Delaware limited partnership (the "Lender"), and CRESCENT
OPERATING, INC., a Delaware corporation (the "Borrower").
RECITALS
WHEREAS, the Borrower requested that the Lender extend a credit facility (the
"Loan") in the original maximum aggregate principal amount of $30,400,000 for
the purpose of permitting the Borrower to make certain investments identified
herein;
WHEREAS, the parties entered into that Credit and Security Agreement dated as
of May 8, 1997 (the "Original Agreement");
WHEREAS, the parties desire to amend and restate the Original Agreement in
its entirety to increase the maximum aggregate principal amount of the Loan to
Thirty-Five Million Nine Hundred Thousand Dollars ($35,900,000) and to modify
certain of the terms and provisions thereof;
WHEREAS, the Lender is willing to extend and modify the Loan for such purpose
on the terms and conditions set forth herein;
NOW, THEREFORE, in consideration of the foregoing and of the agreements,
covenants and conditions contained herein, and for other good and valuable
consideration, the receipt and sufficiency of which are hereby acknowledged, the
parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 Definitions.
(a) The following terms which are defined in the Uniform Commercial Code
in effect in the State of Texas on the date hereof are used herein as
so defined: Accounts, Chattel Paper, Documents, Equipment, Farm
Products, General Intangibles, Instruments, Inventory and Proceeds.
(b) The following terms, as used herein, have the following meanings:
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"Agreement" has the meaning set forth in the initial paragraph hereof.
"Application for Advance" has the meaning set forth in Section 2.1(a)
hereof.
"Bankruptcy Event of Default" has the meaning set forth in Section 7.1.
"Borrower" means Crescent Operating, Inc., and its permitted successors
and assigns.
"Business Day" means any day except a Saturday, Sunday, or other day on
which commercial banks in Texas are authorized by law to close.
"Cash Equivalents" means (a) securities with maturities of one year or
less from the date of acquisition issued or fully guaranteed or insured by the
United States Government or any agency thereof, (b) certificates of deposit and
eurodollar time deposits with maturities of one year or less from the date of
acquisition and overnight bank deposits of any commercial bank having capital
and surplus in excess of $500,000,000, (c) repurchase obligations of any
commercial bank or investment bank satisfying the requirements of clause (b) of
this definition, having a term of not more than 30 days with respect to
securities issued or fully guaranteed or insured by the United States Government
or any agency thereof, (d) commercial paper issued in the United States which is
rated at least A-2 by Standard and Poor's Services or P-2 by Xxxxx'x Investors
Service, (e) securities with maturities of one year or less from the date of
acquisition issued or fully guaranteed by any state, commonwealth or territory
of the United States, by any political subdivision or taxing authority of any
such state, commonwealth or territory or by any foreign government, the
securities of which state, commonwealth, territory, political subdivision,
taxing authority or foreign government are rated at least A by Standard and
Poor's Services or A by Xxxxx'x Investors Service, (f) securities with
maturities of one year or less from the date of acquisition backed by standby
letters of credit issued by any commercial bank satisfying the requirements of
clause (b) of this definition, or (g) shares of money market mutual or similar
funds which invest substantially exclusively in assets satisfying the
requirements of clauses (a) through (f) of this definition.
"Closing Date" means the date this Agreement becomes effective in
accordance with Section 3.1, and each other date on which an advance is made by
the Lender to the Borrower.
"Code" means the Uniform Commercial Code as from time to time in effect
in the State of Texas.
"Collateral" has the meaning set forth in Section 4.1.
"Collateral Account" has the meaning set forth in Section 4.2.
"Consolidated Net Income" or "Consolidated Net Loss" for any fiscal
period, means the amount which, in conformity with GAAP, would be set forth
opposite the caption "net income" (or any like caption), as the case may be, on
a consolidated statement of earnings of the Borrower and its Subsidiaries, if
any, for such fiscal period.
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"Debt" of any Person means at any date, (i) all obligations of such
Person which in accordance with GAAP would be classified on a balance sheet of
such Person as liabilities of such Person ("debt"), (ii) all debt of others
secured by a Lien on any asset of such Person, whether or not such debt is
assumed by such Person, and (iii) all debt of others guaranteed by such Person.
"Default" means any condition or event which constitutes an Event of
Default or which with the giving of notice or lapse of time or both would,
unless cured or waived, become an Event of Default.
"Default Rate" has the meaning set forth in Section 2.3(b).
"EBITDA" means for any fiscal period, the Consolidated Net Income or
Consolidated Net Loss, as the case may be, for such fiscal period, after
restoring thereto amounts deducted for (a) extraordinary losses (or deducting
therefrom any amounts included therein on account of extraordinary gains) and
special charges, (b) depreciation and amortization (including write-offs or
write-downs) and special charges, (c) the amount of interest expense of the
Borrower and its Subsidiaries, if any, determined on a consolidated basis in
accordance with GAAP, for such period on the aggregate principal amount of their
consolidated indebtedness, (d) the amount of tax expense of the Borrower and its
Subsidiaries, if any, determined on a consolidated basis in accordance with
GAAP, for such period and (e) the aggregate amount of fixed and contingent
rentals payable by the Borrower and its Subsidiaries, if any, determined on a
consolidated basis in accordance with GAAP, for such period with respect to
leases of real and personal property.
"Event of Default" has the meaning set forth in Section 7.1.
"GAAP" means generally accepted accounting principles in effect from
time to time.
"Interest Rate" has the meaning set forth in Section 2.3(a).
"Internal Revenue Code" means the Internal Revenue Code of 1986, as
amended, or any successor statute.
"Lender" means Crescent Real Estate Equities Limited Partnership, a
Delaware limited partnership, and its successors and assigns.
"Lien" means, with respect to any asset, any mortgage, deed of trust,
lien pledge, charge, security interest, or encumbrance of any kind in respect of
such asset.
"Line of Credit Credit Agreement" means the Line of Credit Credit and
Security Agreement between the Borrower and the Lender of even date herewith
relating to the loan evidenced by the Line of Credit Note.
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"Line of Credit Note" means the Line of Credit Note from the Borrower
to the Lender of even date herewith in the maximum principal amount of Twenty
Million Dollars ($20,000,000.00).
"Loan" has the meaning set forth in the recitals hereto.
"Loan Commitment" has the meaning set forth in Section 2.1.
"Loan Documents" means this Agreement, the Note, the Pledge Agreement
and all other documents, agreements, and instruments referred to in or required
to be delivered or actually delivered in connection herewith or therewith, as
any of them may be modified, supplemented, or amended from time to time.
"Material Debt" means Debt (other than the Note) of the Borrower,
arising in one or more related or unrelated transactions, in an aggregate
principal amount exceeding $50,000.
"Maturity Date" means May 21, 2002.
"Note" means the amended and restated promissory note of the Borrower
payable to the order of the Lender under the terms of this Agreement dated as of
May 21, 1997, as the same may be modified, supplemented, or amended from time to
time, and any note or notes issued in substitution or replacement therefor or in
addition thereto, substantially in the form of Exhibit B hereto, in the maximum
principal amount from time to time outstanding of up to Thirty-Five Million Nine
Hundred Thousand Dollars ($35,900,000.00), evidencing the obligation of the
Borrower to repay the Loan, as modified, supplemented or amended from time to
time.
"Person" means an individual, a corporation, a partnership, an
association, a trust or any other entity or organization, including a government
or political subdivision or any agency or instrumentality thereof.
"Pledge Agreement" means the Pledge Agreement to be executed and
delivered by the Borrower, substantially in the form of Exhibit C hereto, as the
same may be amended, supplemented or otherwise modified from time to time.
"Secured Obligations" means the collective reference to the unpaid
principal of and interest on the Note, the Line of Credit Note and all other
obligations and liabilities of the Borrower to the Lender whether direct or
indirect, absolute or contingent, due or to become due, or now existing or
hereafter incurred, which may arise under, out of, or in connection with, this
Agreement, the Line of Credit Credit Agreement, the Note, the Line of Credit
Note, the Pledge Agreement or any other document, made, delivered or given in
connection therewith, in each case whether on account of principal, interest,
reimbursement obligations, fees, indemnities, costs, expenses or otherwise.
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"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which such Person owns
directly or indirectly through one or more intermediaries 50% or more of the
voting stock, partnership interests or other interests thereof or which is
controlled or capable of being controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Termination Date" shall mean the date 95 days from the date upon which
the Loan has been satisfied in full.
SECTION 1.2 Rules of Construction.
(a) Words of the masculine gender shall be deemed and construed to include
correlative words of the feminine and neuter genders. Unless the
context shall otherwise indicate, words importing the singular number
shall include the plural and vice versa.
(b) Reference to a section number, such as this Section 1.2, shall mean
and include all provisions within that section of this Agreement,
unless a particular subsection, paragraph or subparagraph is
specified.
(c) Unless otherwise specified herein, all accounting terms used herein
shall be interpreted, all accounting determinations hereunder shall be
made, and all financial statements required to be delivered hereunder
shall be prepared in accordance with GAAP as in effect from time to
time, except as otherwise specified herein, applied on a basis
consistent (except for changes concurred in by the Borrower's
independent public accountants) with the most recent audited
consolidated financial statements of the Borrower delivered to the
Lender.
ARTICLE II
COMMITMENT, ADVANCE PROCEDURE, AND NOTES
SECTION 2.1 Commitment and Advance Procedure.
(a) The Lender agrees, on and subject to the terms and conditions set
forth in this Agreement, to make advances to the Borrower during the
term hereof (each, an "Advance") in up to five installments (not more
often than once per month), up to an aggregate amount of Thirty-Five
Million Nine Hundred Thousand Dollars ($35,900,000.00) (the "Loan
Commitment"), following the Lender's receipt of a written request from
the Borrower made to the Lender in the form set forth in Exhibit A
hereto (an "Application for Advance"), and delivered in accordance
with this Section 2.1 and Section 8.1 hereof.
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(b) On the date that this Agreement becomes effective in accordance with
Section 3.1, the Lender shall advance to the Borrower the principal
amount of Fifteen Million Four Hundred Thousand Dollars
($15,400,000.00).
(c) Other than the advance provided for in (b) of this Section 2.1, the
Borrower shall provide the Lender with an Application for Advance,
specifying (i) the amount of the Advance requested, and (ii) the
requested date of such Advance (which shall be at least that number of
Business Days after delivery of such Application for Advance as
specified in (e) below).
(d) Notwithstanding any provision hereof to the contrary, the Lender shall
have no obligation at any time to make any Advances to the Borrower
hereunder unless, on the date of the Lender's receipt of a properly
completed and executed Application for Advance, the Borrower shall
have certified to the Lender in writing that the Borrower is not in
Default hereunder.
(e) The Lender shall have the obligation to make an advance in accordance
with the provisions hereof, including the provisions of this Section
2.1, within five (5) Business Days after its receipt of a properly
completed and executed Application for Advance that, together with all
other advances and Applications for Advance, requests advances
totaling no more than the Loan Commitment.
SECTION 2.2 The Note.
(a) The Loan will be evidenced by the Note. The outstanding principal
amount of the Loan shall be payable as follows: twenty consecutive
quarterly installments of principal, each consisting of the
Amortization Amount (as defined below) and payable on the first
Business Day of August 1997 and on the first Business Day of each
November, February, May and August thereafter. The "Amortization
Amount" shall be determined by dividing the outstanding principal
amount of the loan on the payment date in question by the number of
payment dates occurring prior to the Maturity Date. The Amortization
Amount shall be recalculated each time an advance of the Loan is made,
but not when accrued but unpaid interest is added to principal as
provided herein.
(b) Notwithstanding Section 2.2(a), if the amount of principal and
interest to be paid by the Borrower to the Lender exceeds the amount
of EBITDA of the Borrower for the immediately preceding calendar
quarter (ending the last day of September, December, March, or June),
the Borrower shall not be obligated to repay the amount of principal
and interest in excess of EBITDA of the Borrower for such period. Any
such amount of principal shall continue to be outstanding principal
and accrue interest
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thereon; any such amount of unpaid interest shall be added to
principal and shall accrue interest thereon. Payments under the Note
shall be applied first to any fees, costs or expenses due under the
Note or hereunder, then to interest, and then to principal.
(c) Notwithstanding any other provision of this Section 2.2, all
outstanding principal and interest of the Loan and all other amounts
payable hereunder, if not sooner paid, shall be due and payable on the
Maturity Date.
SECTION 2.3 Interest Rate and Payments.
(a) Unless an Event of Default shall have occurred and be continuing, the
Loan shall bear interest on the outstanding principal amount thereof
until paid in full, at a rate per annum equal to Twelve Percent (12%)
(the "Interest Rate").
(b) Upon and after an Event of Default, the Loan shall accrue interest on
the outstanding principal balance of the Loan and, to the extent
permitted by applicable law, on the unpaid interest, at a rate per
annum equal to the Interest Rate plus an additional 5.0% per annum
(the "Default Rate"), provided that in no event shall the Default Rate
exceed the maximum rate of interest permitted by applicable law.
(c) Subject to the provisions of Section 2.2(b), interest shall be due
during the term hereof on the first Business Day of each August,
November, February and May, or such other date as the Borrower and the
Lender may mutually agree in writing.
(d) Accrued interest not paid when due shall be compounded quarterly and
added to the outstanding principal amount of the Loan.
(e) On the Maturity Date, the Borrower shall repay in full all accrued but
unpaid interest and the entire unpaid principal amount of the Loan.
SECTION 2.4 General Provisions as to Payments.
The Borrower shall make each payment of principal of, and interest on, the
Loan not later than 11:00 A.M. Fort Worth, Texas time on the date when due, to
the Lender at the Lender's office at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx,
Xxxxx 00000 in same day or other immediately available funds. Whenever any
payment of principal of, or interest on, any Loan shall be due on a day which is
not a Business Day, the date for payment thereof shall be extended to the next
succeeding Business Day. If the date for any payment of principal is extended by
operation of law or otherwise, interest thereon shall be payable for such
extended time. All such payments shall be made without setoff or counterclaim
and without reduction for, and free from, any and all present or future taxes,
levies, imposts, duties, fees, charges, deductions, withholdings, restrictions
or conditions of any nature imposed by any government
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or political subdivision or taking authority thereof (but excluding any taxes
imposed on or measured by the overall net income of the Lender).
SECTION 2.5 Computation of Interest.
All interest shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day, but excluding
the last day).
SECTION 2.6 Use of Proceeds.
The proceeds of the Loan shall be used solely to enable the Borrower to
invest in (i) Xxxxx-Day, Inc., (ii) Dallas Basketball, Ltd, (iii) Xxxxx Muse
Xxxx & Xxxxx Equity Fund II, LP, (iv) Charter Behavioral Health Systems, LLC and
(v) such other investments as the Lender may consent to in writing, which
consent may be withheld in the Lender's sole discretion.
SECTION 2.7 Evidence of Debt.
(a) The Lender shall record (i) the amount of each advance made hereunder,
(ii) the amount of any principal or interest due and payable or to
become due and payable from the Borrower to the Lender hereunder and
(iii) the amount of any sum received by the Lender hereunder from the
Borrower.
(b) The entries recorded by the Lender shall, to the extent permitted by
applicable law, be prima facie evidence of the existence and amounts
of the obligations of the Borrower therein recorded; provided,
however, that the failure of the Lender to record or any error in any
record shall not in any manner affect the obligation of the Borrower
to repay (with applicable interest) the Loans made to such Borrower in
accordance with the terms of this Agreement.
ARTICLE III
CONDITIONS TO BORROWING
SECTION 3.1 Conditions to Effectiveness and Further Borrowings.
(a) This Agreement shall become effective on the date that each of the
conditions set forth below shall have been satisfied (or waived in
accordance with Section 8.3):
(i) The Lender shall have received this Agreement, duly executed by
the Borrower;
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(ii) The Lender shall have received from the Borrower a certificate
that each of the representations and warranties of the Borrower
contained in this Agreement is true, correct, and complete as of
the Closing Date;
(iii) The Lender shall have received a duly executed Note dated as of
the Closing Date;
(iv) The Lender shall have received a duly executed Pledge Agreement
dated as of the Closing Date and such other documents relating
to the Pledge Agreement as reasonably required by the Lender;
(v) The Lender shall have received proper financing statements
(Forms UCC-1 or the appropriate equivalent) necessary to perfect
the security interest in the Borrower's interest in the
Collateral (or such part thereof in which a security interest
can be perfected thereby);
(vi) The Lender shall have received the following: (A) the articles
of incorporation of the Borrower as in effect on the Closing
Date, certified as of a recent date by the Secretary of State of
Delaware, (B) the bylaws of the Borrower as in effect on the
Closing Date, certified as of a recent date by the Secretary of
the Borrower, (C) resolutions of the board of directors of the
Borrower authorizing the execution, delivery and performance of
this Agreement, certified as of the Closing Date by its
corporate secretary, (D) certificates as to the incumbency of
the officers of the Borrower, certified by its corporate
secretary, and (E) certificates of good standing of the Borrower
issued as of a recent date by the Secretary of State of
Delaware; and
(vii) No event, which, after execution of this Agreement, would
constitute an Event of Default hereunder shall have occurred and
be continuing.
(b) As of any other Closing Date, each of the conditions set forth below
shall have been satisfied (or waived in accordance with Section 8.3):
(i) The Lender shall have received from the Borrower a certificate
that each of the representations and warranties of the Borrower
contained in this Agreement is true, correct and complete as of
the Closing Date;
(ii) The Lender shall have received a certificate in the form of
Exhibit D hereto enclosing the following: (A) a representation
that there has been no change in the articles of incorporation
of the Borrower since the Closing Date, or if changes have
occurred since the Closing Date, the articles of incorporation
of the Borrower as in effect, certified as of a recent date by
the Secretary of State of Delaware, (B) a representation that
there has been no change in the bylaws of the Borrower since the
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Closing Date, or if changes have occurred since the Closing
Date, the bylaws of the Borrower as in effect, certified as of
a recent date by the Secretary of the Borrower, (C) resolutions
of the board of directors of the Borrower authorizing the
execution, delivery and performance of the Application for
Advance, certified as of the Closing Date by its corporate
secretary, (D) certificates as to the incumbency of the officers
of the Borrower, certified by its corporate secretary, and (E)
certificates of good standing of the Borrower issued as of a
recent date by the Secretary of State of Delaware; and
(iii) No event which constitutes an Event of Default hereunder shall
have occurred and be continuing.
ARTICLE IV
SECURITY INTEREST
SECTION 4.1 Grant of Security Interest.
(a) As security for the prompt payment, performance, and observance in
full of the Loan, the Borrower hereby pledges and assigns to the
Lender, and grants to the Lender a continuing security interest in and
lien on all of the following property now owned or at any time
hereafter acquired by the Borrower or in which the Borrower now has or
at any time in the future may acquire any right, title or interest
(the "Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all Equipment;
(v) all General Intangibles;
(vi) all Instruments;
(vii) all Inventory;
(viii) all books and recordings pertaining to the Collateral; and
(ix) to the extent not otherwise included, all Proceeds and products
of any of the foregoing, in any form (whether cash or non-cash)
and all collateral security and guarantees given by any Person
with respect to any of the foregoing.
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SECTION 4.2 Collateral Account
(a) Establishment of Collateral Account. Upon the execution hereof, there
shall be established and at all times thereafter there shall be
maintained by the Borrower, a non-interest bearing cash collateral
account with a financial institution approved by the Lender (the
"Collateral Account") subject to the terms of this Agreement.
(b) Rights, Title and Interest of Collateral Account. All right, title and
interest in and to the Collateral Account shall vest exclusively in
the Lender. The Borrower shall have no rights with respect to the
Collateral Account and the Lender shall have sole dominion and control
over the Collateral Account and the monies deposited therein. Monies
deposited in the Collateral Account shall constitute security for the
Secured Obligations. The Borrower hereby pledges and assigns to the
Lender and hereby grants to the Lender a security interest in, all
right, title or interest (if any) which the Borrower now has or may
hereafter have or purport or claim to have in or to the Collateral
Account and all monies held therein, any investments made with such
monies and any and all certificates or instruments from time to time
representing or evidencing such investments (and all proceeds
thereof).
(c) Maintaining the Collateral Account. Until the Termination Date of this
Agreement:
(i) The Borrower will maintain the Collateral Account with a
financial institution approved by the Lender.
(ii) All monies received by the Lender while a Default or an Event of
Default has occurred and is continuing, and any monies received
as a result of investments made as contemplated by subsection
4.2(c)(iii) hereof, shall be deposited in the Collateral
Account.
(iii) Pending the disbursement thereof pursuant to the terms of this
Agreement, all monies in the Collateral Account shall (to the
extent it is practical to do so) be invested by the Lender in
Cash Equivalents. All such investments shall be evidenced either
(a) by negotiable certificates or instruments which are held by
or for the account of the Lender or (b) by book entries
maintained in a State in which the Lender may be granted by book
entries a security interest in the securities relating thereto.
In the absence of its gross negligence or willful misconduct,
the Lender shall not have any liability out of or in connection
with any investment made in accordance with the provisions
herein or for any loss or decline in value of any investment or
from any loss resulting
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directly or indirectly from any investment made pursuant to and
in accordance with the provisions hereof.
SECTION 4.3 Remedies.
(a) Proceeds to be Turned Over To the Lender. When a Default or an Event
of Default has occurred and is continuing all Proceeds (as defined in
the Code) received by the Borrower consisting of cash, checks and
other near-cash items shall be held by the Borrower in trust for the
Lender, segregated from other funds of the Borrower, and shall,
forthwith upon receipt by the Borrower, be turned over to the Lender
in the exact form received by the Borrower (duly indorsed by the
Borrower to the Lender, if required) and held by the Lender in the
Collateral Account. All Proceeds while held by the Lender in the
Collateral Account (or by the Borrower in trust for the Lender) shall
continue to be held as collateral security for all the Secured
Obligations and shall not constitute payment thereof until applied as
provided in subsection 4.3(b).
(b) Application of Proceeds. At such intervals as may be agreed upon by
the Borrower and the Lender, or, if an Event of Default has occurred
and is continuing at any time at the Lender's election, the Lender may
apply all or any part of Proceeds held in any Collateral Account in
payment of the Secured Obligations in such order as the Lender may
elect, and any part of such funds which the Lender elects not so to
apply and deems not required as collateral security for the Secured
Obligations shall be paid over from time to time by the Lender to the
Borrower or to whomsoever may be lawfully entitled to receive the
same. Any balance of such Proceeds remaining after the Secured
Obligations shall have been paid in full and the Commitment shall have
expired or otherwise been terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the
same.
(c) Code Remedies. If an Event of Default has occurred and is continuing,
the Lender may exercise, in addition to all other rights and remedies
granted to it in this Agreement and in any other instrument or
agreement securing, evidencing or relating to the Secured Obligations,
all rights and remedies of a secured party under the Code. Without
limiting the generality of the foregoing, the Lender, without demand
of performance or other demand, presentment, protest, advertisement or
notice of any kind (except any notice required by law referred to
below) to or upon the Borrower or any other Person (all and each of
which demands, defenses, advertisements and notices are hereby
waived), may in such circumstances forthwith collect, receive,
appropriate and realize upon the Collateral, or any part thereof,
and/or may forthwith sell, lease, assign, give option or options to
purchase, or otherwise dispose of and deliver the Collateral or any
part thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales,
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at any exchange, broker's board or office of the Lender or elsewhere
upon such terms and conditions as it may deem advisable and at such
prices as it may deem best, for cash or on credit or for future
delivery without assumption of any credit risk. The Lender shall have
the right upon any such public sale or sales, and, to the extent
permitted by law, upon any such private sale or sales, to purchase the
whole or any part of the Collateral so sold, free of any right or
equity of redemption in the Borrower, which right or equity is hereby
waived or released. The Borrower further agrees, at the Lender's
request, to assemble the Collateral and make it available to the
Lender at places which the Lender shall reasonably select, whether at
the Borrower's premises or elsewhere. To the extent permitted by
applicable law, the Borrower waives all claims, damages and demands it
may acquire against the Lender arising out of the exercise by them of
any rights hereunder. If any notice of a proposed sale or other
disposition of Collateral shall be required by law, such notice shall
be deemed reasonable and proper if given at least 10 days before such
sale or other disposition.
(d) The exercise by the Lender of or failure or refusal to so exercise any
right, remedy or power granted under this Agreement or available to
the Lender at law or in equity or under statute shall in no manner
affect the Borrower's liability to the Lender, and the Lender shall be
under no obligation or duty to exercise any of the rights, remedies or
powers conferred upon it hereby or by applicable law, and it shall
incur no liability for any act or failure to act in connection with
the collection of, or the preservation of any rights under, any of the
Collateral.
SECTION 4.4 Lender Appointment as Attorney-in-Fact; Lender Performance of
Borrower's Obligations.
(a) Powers. The Borrower hereby irrevocably constitutes and appoints the
Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the Borrower
and in the name of the Borrower or in its own name, for the purpose of
carrying out the terms of this Agreement, to take any and all
appropriate action and to execute any and all documents and
instruments which may be necessary or desirable to accomplish the
purposes of this Agreement, and, without limiting the generality of
the foregoing, the Borrower hereby gives the Lender the power and
right, on behalf of the Borrower, without notice to or assent by the
Borrower, to do any or all of the following:
(i) at any time when an Event of Default has occurred and is
continuing in the name of the Borrower or its own name, or
otherwise, take possession of and indorse and collect any
checks, drafts, notes, acceptances or other instruments for the
payment of moneys due with
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respect to any Collateral and file any claim or take any other
action or proceeding in any court of law or equity or otherwise
deemed appropriate by the Lender for the purpose of collecting
any and all such moneys due with respect to any Collateral
whenever payable;
(ii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs or any
insurance called for by the terms of this Agreement and pay all
or any part of the premiums therefor and the costs thereof;
(iii) execute, in connection with any sale provided for in subsection
4.3(c), any endorsements, assignments or other instruments of
conveyance or transfer with respect to the Collateral; and
(iv) at any time when an Event of Default has occurred and is
continuing (1) direct any party liable for any payment under
any of the Collateral to make payment of any and all moneys due
or to become due thereunder directly to the Lender or as the
Lender shall direct; (2) ask or demand for, collect, receive
payment of and receipt for, any and all moneys, claims and
other amounts due or to become due at any time in respect of
or arising out of any Collateral; (3) sign and indorse any
invoices, freight or express bills, bills of lading, storage or
warehouse receipts, drafts against debtors, assignments,
verifications, notices and other documents in connection with
any of the Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any court of
competent jurisdiction to collect the Collateral or any thereof
and to enforce any other right in respect of any Collateral;
(5) defend any suit, action or proceeding brought against the
Borrower with respect to any Collateral (other than any such
suit, action or proceeding brought by the Lender); (6) settle,
compromise or adjust any such suit, action or proceeding
(other than any such suit, action or proceeding brought by the
Lender) and, in connection therewith, to give such discharges
or releases as the Lender may deem appropriate; (7) generally,
sell, transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully and
completely as though the Lender were the absolute owner thereof
for all purposes, and do, at the Lender's option and the
Borrower's expense, at any time, or from time to time, all acts
and things which the Lender deems necessary to protect,
preserve or realize upon the Collateral and the Lender's
security interests therein and to effect the intent of this
Agreement, all as fully and effectively as the Borrower might
do.
(b) Ratification; Power Coupled With An Interest. The Borrower hereby
ratifies all that said attorneys shall lawfully do or cause to be done
by virtue hereof in
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accordance with the terms of this Agreement, absent gross negligence
or willful misconduct on the part of the Lender. All powers,
authorizations and agencies contained in this Agreement are coupled
with an interest and are irrevocable until this Agreement is
terminated and the security interests created hereby are released.
SECTION 4.5 Performance by Lender of Borrower's Obligations.
If the Borrower fails to perform or comply with any of its agreements
contained in this Article IV, the Lender, at its option, but without any
obligation so to do, may perform or comply, or otherwise cause performance or
compliance, with such agreement.
SECTION 4.6 Borrower's Reimbursement Obligation.
The expenses of the Lender incurred in connection with actions undertaken as
provided in this Article IV, together with interest thereon at a rate equal to
the rate per annum at which interest would then be payable on past due Loans
under this Agreement, from the date of payment by the Lender to the date
reimbursed by the Borrower, shall be payable by the Borrower to the Lender on
demand.
SECTION 4.7 Duty of the Lender.
The Lender's sole duty with respect to the custody, safekeeping and physical
preservation of the Collateral in its possession, under Section 9-207 of the
Code or otherwise, shall be to deal with it in the same manner as the Lender
deals with similar property for its own account. Neither the Lender, nor any of
its respective officers, directors, employees or agents shall be liable for
failure to demand, collect or realize upon any of the Collateral or for any
delay in doing so or shall be under any obligation to sell or otherwise dispose
of any Collateral upon the request of the Borrower or any other Person or to
take any other action whatsoever with regard to the Collateral or any part
thereof. The powers conferred on the Lender hereunder are solely to protect the
Lender's interests in the Collateral and shall not impose any duty upon the
Lender to exercise any such powers. The Lender shall be accountable only for
amounts that its actually receives as a result of the exercise of such powers,
and neither it nor any of its officers, directors, employees or agents shall be
responsible to the Borrower for any act or failure to act hereunder, except for
their own gross negligence or willful misconduct.
SECTION 4.8 Execution of Financing Statements.
Pursuant to Section 9-402 of the Code, the Borrower authorizes the Lender to
file financing statements with respect to the Collateral without the signature
of the Borrower in such form and in such filing offices as the Lender reasonably
determines appropriate to perfect the security interests of the Lender under
this Agreement. The Lender shall provide the Borrower with copies of any such
financing statements. A carbon, photographic or other reproduction of this
Agreement shall be sufficient as a financing statement for filing in any
jurisdiction.
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SECTION 4.9 The Pledge Agreement.
In addition to the security interest granted hereunder, the Borrower shall
grant to the Lender a security interest in the Pledged Partnership Interests and
the Pledged Stock (as those terms are defined in the Pledge Agreement) pursuant
to the Pledge Agreement.
SECTION 4.10 Pledged Notes.
With respect to any promissory notes now or hereinafter owned or owing to the
Borrower, including, without limitation, the promissory note from Charter
Behavioral Health Systems, LLC, such notes shall be promptly endorsed in blank
and delivered to the Lender.
SECTION 4.11 Release of Collateral.
In the event that the Borrower desires to have any Collateral released in
connection with the sale, assignment, transfer or other conveyance of such
Collateral (including the release of any promissory note in connection with the
repayment thereof), the Borrower shall obtain the prior written consent of the
Lender to the release of such Collateral and the repayment of the portion of the
Loan which is allocable to such Collateral, which consent (of both the release
and the amount to be repaid) may be withheld in the Lender's sole and absolute
discretion. Any request by the Borrower for release of Collateral shall be in
writing and shall state that portion of the Loan which is allocable to such
Collateral. Provided that the Lender consents to any such release, the Lender
agrees to release such Collateral promptly following receipt by the Lender of
the allocable portion of the Loan attributable to such Collateral.
ARTICLE V
REPRESENTATIONS AND WARRANTIES
The Borrower represents and warrants that:
SECTION 5.1 Existence and Power.
The Borrower is a corporation duly organized, validly existing, and in good
standing under the laws of the State of Delaware, and has all corporate power
and authority, and all material governmental licenses, authorizations, consents,
and approvals required to carry on its business as now conducted.
SECTION 5.2 Corporate and Government Authorization; No Contravention.
The execution, delivery, and performance by the Borrower of this Agreement,
the Pledge Agreement and the Note are within the scope of the Borrower's power
and authority, have been duly authorized by all necessary corporate action of
the Borrower, require no action by or in respect of, or filing with any
governmental body, agency, or official and do
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not contravene, or constitute a default under, the Certificate of Incorporation
or By-Laws of the Borrower or under any provision of applicable law or
regulation to which the Borrower is subject, or of any judgment, injunction,
order, or decree, binding upon the Borrower, except for such contraventions as
will not, singly or in the aggregate, have a material adverse effect on the
ability of the Borrower to perform its obligations under this Agreement, the
Pledge Agreement or the Note.
SECTION 5.3 Binding Effect.
This Agreement constitutes the legal, valid, binding, and enforceable
agreement of the Borrower, except as (i) the enforceability thereof may be
limited by bankruptcy, insolvency or similar laws affecting creditors' rights
generally and (ii) rights of acceleration and the availability of equitable
remedies may be limited by equitable principles of general applicability.
SECTION 5.4 Litigation.
There is no action, suit or proceeding pending against, or to the knowledge
of the Borrower, threatened against or affecting the Borrower before any court
or arbitrator or any governmental body, agency or official which could
materially adversely affect the business, financial position, results of
operations, or prospects of the Borrower or which could materially adversely
affect the ability of the Borrower to perform its obligations under this
Agreement, the Pledge Agreement or the Note or which in any manner draws into
question the validity of this Agreement, the Pledge Agreement or the Note.
SECTION 5.5 Taxes.
The Borrower has filed all material tax returns and reports required by law
to have been filed and has paid all taxes and governmental charges thereby shown
to be due and payable.
SECTION 5.6 Debt.
Except as set forth in the financial statements delivered to the Lender
pursuant to Section 5.10, the Borrower has and will have no Debt outstanding on
a Closing Date other than (i) the Debt outstanding hereunder, (ii) Debt that has
previously been disclosed to the Lender in writing, and (iii) Debt that will
not, in the aggregate, have a material adverse effect on the business,
operations, or prospects of the Borrower.
SECTION 5.7 Title to Assets.
(a) The Borrower has legal title to or a legal and valid leasehold
interest in all property and assets owned by it on the date hereof,
and will have legal title to all property and assets acquired by it at
any time subsequent to the date hereof, free and clear of all Liens,
except Liens in favor of the Lender.
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(b) Except for the security interest granted to the Lender pursuant to
this Agreement, the Borrower owns each item of the Collateral free and
clear of any and all Liens or claims of others. No financing statement
or other public notice with respect to all or any part of the
Collateral is on file or of record in any public office, except such
as have been filed in favor of the Lender pursuant to this Agreement
or the Pledge Agreement.
SECTION 5.8 Perfected First Priority Liens.
The security interests granted pursuant to this Agreement (a) constitute
perfected security interests in the Collateral in favor of the Lender, as
collateral security for the Secured Obligations and (b) are prior to all other
Liens on the Collateral in existence on the date hereof.
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SECTION 5.9 Inventory and Equipment.
The Inventory and the Equipment are kept at the locations listed on
Schedule 1.
SECTION 5.10 Chief Executive Office.
The Borrower's chief executive office is located at 000 Xxxx Xx., Xxxx Xxxxx,
Xxxxx 00000.
SECTION 5.11 Farm Products.
None of the Collateral constitutes, or is the Proceeds of, Farm Products.
SECTION 5.12 No Subsidiaries.
The Borrower has no Subsidiaries on the date hereof.
SECTION 5.13 Financial Information.
All financial information which has been or shall hereafter be furnished by
or on behalf of the Borrower or by any other Person at the Borrower's direction
to the Lender for the purposes of or in connection with this Agreement present
fairly the financial condition as at the dates thereof (subject to normal year
end adjustments in the case of unaudited financial statements).
SECTION 5.14 No Material Adverse Change.
There has been no material adverse change in the business, financial
condition, operations, assets, revenues, properties, or prospects of the
Borrower taken as a whole from the financial information previously provided to
Lender.
ARTICLE VI
COVENANTS
The Borrower agrees that, so long as any amount payable hereunder remains
unpaid:
SECTION 6.1 Conduct of Business and Maintenance of Existence.
The Borrower will perform an intercompany agreement to be entered into
between the Lender and the Borrower and such activities as are necessary or
incidental thereto, and will preserve, renew and keep in full force and effect
its existence.
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SECTION 6.2 Financial Information.
The Borrower will deliver to the Lender:
(a) as soon as available, but in no event more than one hundred twenty
(120) days after the end of each fiscal year of the Borrower,
financial statements of the Borrower containing a balance sheet and
the related statements of operations and cash flows, showing the
financial condition of the Borrower at the close of and for such year;
and
(b) as soon as available, but in no event more than sixty (60) days after
the end of each of the first three quarters of each fiscal year of the
Borrower, financial statements of the Borrower, containing a balance
sheet and the related statements of income prepared or a cash basis,
showing the financial condition of the Borrower at the close of and
for such period.
The financial statements delivered pursuant to subsections (a) and (b) of
this Section 6.2 shall be certified by the president or chief financial officer
of the Borrower as true, complete, and correct and, as to the financial
statements delivered pursuant to subsection (a) of this Section 6.2, as having
been prepared in accordance with GAAP.
SECTION 6.3 Compliance with Laws.
The Borrower will comply with all applicable laws, ordinances, rules,
regulations, and requirements of governmental authorities except where the
necessity of compliance therewith is contested in good faith by appropriate
proceedings or where the failure to comply therewith will not materially
adversely affect the business, operations, or financial condition of the
Borrower or the ability of the Borrower to perform its obligations under this
Agreement, the Pledge Agreement or the Note.
SECTION 6.4 Incurrence of Debt.
The Borrower will not issue, assume, guarantee, incur, or otherwise be or
become liable in respect of Debt, other than (i) Debt expressly approved by the
Lender in writing, which approval may be withheld in the Lender's sole
discretion, or (ii) non-recourse Debt financing secured by property of the
Borrower not constituting Collateral prior to or as of June 30, 1997 (the Lender
hereby agreeing to cooperate with the Borrower to subordinate or release its
Lien on such property to permit any lender of such financing to obtain a first
lien thereon).
SECTION 6.5 Limitation on Liens.
The Borrower will not create, incur, assume or suffer to exist any Lien upon
or with respect to any of its assets, whether now or hereafter acquired, or
assign or otherwise convey any right to receive income, except (i) Liens in
favor of the Lender; (ii) Liens expressly
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approved by the Lender, which approval shall not be unreasonably withheld; (iii)
Liens imposed by any governmental authority for taxes, assessments or charges
not yet due or which are being contested in good faith and by appropriate
proceedings if adequate reserves with respect thereto are maintained on the
books of the Borrower in accordance with GAAP, and (iv) Liens disclosed to the
Lender on or before the Closing Date that would not, in the aggregate, have a
material adverse effect on the business, operations, or prospects of the
Borrower.
SECTION 6.6 Consolidations, Mergers, and Sales of Assets.
The Borrower will not wind up, liquidate or dissolve its affairs or convey,
sell, lease or otherwise dispose of (or agree to do any of the foregoing at any
future time), whether in one or a series of transactions, all or any substantial
part of its assets, unless such transaction or series of transactions are
expressly approved by the Lender, which approval shall not be unreasonably
withheld.
SECTION 6.7 Books and Records.
The Borrower will keep books and records which accurately reflect all of its
business affairs and transactions in all material respects. The Borrower will
permit the Lender at reasonable times and intervals during normal business hours
to examine and photocopy extracts from any of its books or other corporate
records.
SECTION 6.8 Lien on Collateral.
The Borrower shall, at its sole cost and expense, perform all acts and
execute all documents requested by the Lender at any time to evidence, perfect,
maintain and enforce the Lender's security interest and the first priority
thereof in the Collateral. Upon the Lender's request, at any time and from time
to time, the Borrower shall, at its sole cost and expense, execute and deliver
to the Lender one or more financing statements (in form and substance
satisfactory to the Lender) pursuant to the Code and, where permitted by law,
the Borrower hereby authorizes the Lender to execute and file one or more
financing statements signed only by the Lender or to file a copy of this
Agreement as a financing statement.
SECTION 6.9 Restriction on Dividends.
The Borrower will not make dividend distributions to its shareholders at any
time when there exists an outstanding balance on the Loan.
SECTION 6.10 Restriction on Certain Amendments.
The Borrower will not amend its organizational documents without the prior
written consent of the Lender, which consent shall not be unreasonably withheld.
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SECTION 6.11 Delivery of Instruments and Chattel Paper.
If any amount payable under or in connection with any of the Collateral shall
be or become evidenced by any Instrument or Chattel Paper, such Instrument or
Chattel Paper shall be immediately delivered to the Lender, duly indorsed in a
manner satisfactory to the Lender, to be held as Collateral pursuant to this
Agreement.
SECTION 6.12 Maintenance of Insurance.
The Borrower will maintain, with financially sound and reputable companies,
insurance policies (1) insuring the Inventory and Equipment against loss by
fire, explosion, theft and such other casualties as may be reasonably
satisfactory to the Lender, such policies to be in such form and amounts and
having such coverage as may be reasonably satisfactory to the Lender, with
losses payable to the Borrower and the Lender as their respective interests may
appear.
(a) All such insurance shall (1) provide that no cancellation, material
reduction in amount or material change in coverage thereof shall be
effective until at least 30 days after receipt by the Lender of
written notice thereof, (2) name the Lender as an insured party and
(3) be reasonably satisfactory in all other respects to the Lender.
(b) The Borrower shall deliver to the Lender a report of a reputable
insurance broker with respect to such insurance in each calendar year
and such supplemental reports with respect thereto as the Lender may
from time to time reasonably request.
SECTION 6.13 Changes in Locations, Name, etc.
The Borrower will not unless it shall have given the Lender at least 30 days
prior written notice of such change (or, in the case of Inventory and Equipment,
at least 10 days prior written notice, to the extent that the Borrower has taken
such action as reasonably may be required of it to maintain the continuous
perfection of the Lender's security interest in such Inventory or Equipment, as
the case may be):
(a) permit any of the Inventory (other than goods-in-transit and
immaterial amounts of goods in temporary locations in the ordinary
course of business) or Equipment to be kept at a location other than
those listed on Schedule 1;
(b) change the location of its chief executive office from that specified
in subsection 5.10; or
(c) change its name, identity or corporate structure to such an extent
that any financing statement filed by the Lender in connection with
this Agreement would become seriously misleading.
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SECTION 6.14 Further Identification of Collateral.
The Borrower will furnish to the Lender from time to time statements and
schedules further identifying and describing the Collateral and such other
reports in connection with the Collateral as the Lender may reasonably request,
all in reasonable detail.
SECTION 6.15 Notices.
The Borrower will advise the Lender promptly, in reasonable detail, of (a)
any Lien (other than security interests created hereby or Liens permitted under
this Agreement) on any of the Collateral and (b) the occurrence of any other
event which could reasonably be expected to have a material adverse effect on
the aggregate value of the Collateral or on the security interests created
hereby.
SECTION 6.16 Additional Collateral.
With respect to any Person other than Charter Behavioral Health Systems, LLC
(being specifically excluded) that, subsequent to the Closing Date, becomes a
Subsidiary, the Borrower will promptly cause such new Subsidiary to (i) execute
and deliver to the Lender a guaranty of the Loan in form and substance
satisfactory to the Lender, and a new pledge agreement or such amendments to the
existing Pledge Agreement as the Lender shall deem necessary or reasonably
advisable to grant to the Lender, for the benefit of the Lender, a Lien on the
capital stock of such Subsidiary which is owned by the Borrower or any of its
Subsidiaries, (ii) deliver to the Lender the certificates representing such
capital stock, together with undated stock powers executed and delivered in
blank by a duly authorized officer of the Borrower or such Subsidiary, as the
case may be, (iii) take all actions necessary or advisable to grant a security
interest to the Lender in the property and assets of such Subsidiary, including,
without limitation, the filing of financing statements in such jurisdictions as
may be requested by the Lender and the execution and delivery by such Subsidiary
of a security agreement in a form acceptable to the Lender.
ARTICLE VII
DEFAULTS
SECTION 7.1 Events of Default.
If one or more of the following events ("Events of Default") shall have
occurred and be continuing:
(a) except as permitted pursuant to Section 2.2(b), the Borrower shall
fail to pay within five Business Days of the due date any principal or
interest on the Loan;
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(b) any representation or warranty made by the Borrower hereunder or in
any certificate furnished by or on behalf of the Borrower shall be
incorrect when made in any material respect;
(c) the Borrower shall fail to observe or perform the provisions of
Section 6.9 hereof for five Business Days;
(d) the Borrower shall fail to observe or perform any covenant or
agreement contained in this Agreement, the Pledge Agreement, the Note
(other than those covered by clause (a), (b) or (c) above), or any
other Loan Document for 30 days (or, with respect to Section 6.2 of
this Agreement, for 30 days after written notice thereof has been
given to the Borrower by the Lender); provided however, if such
default is capable of cure and the Borrower is diligently proceeding
to cure such default, the cure period in this subsection (d) shall be
extended for such additional time, not to exceed 30 days, as is
reasonably necessary to complete such cure;
(e) the Borrower shall fail to make any payment in respect of any Material
Debt other than the Debt of the Borrower under this Agreement and the
Note when due or within any applicable grace period;
(f) the Borrower shall commence a voluntary case or other proceeding
seeking liquidation, reorganization, or other relief with respect to
itself or its debts under any bankruptcy, insolvency, or other similar
law now or hereafter in effect or seeking the appointment of a
trustee, receiver, liquidator, custodian, or other similar official of
it or any substantial part of its property, or shall consent to any
such relief or to the appointment of or taking possession by any such
official in an involuntary case or other proceeding commenced against
it, or shall make a general assignment for the benefit of creditors,
or shall fail generally to pay its debts as they become due, or shall
take any action to authorize any of the foregoing;
(g) an involuntary case or other proceeding shall be commenced against the
Borrower seeking liquidation, reorganization, rehabilitation,
conservation, or other relief with respect to it or its debts under
any bankruptcy, insolvency or other similar law now or hereafter in
effect or seeking the appointment of a trustee, receiver, liquidator,
custodian, rehabilitator, conservator, or other similar official of it
or any substantial part of its property, and such involuntary case or
other proceeding shall remain undismissed and unstayed for a period of
120 days; or an order for relief shall be entered against the Borrower
under the federal bankruptcy laws or any state insolvency laws as now
or hereafter in effect;
(h) a judgment or order for the payment of money in excess of $500,000
shall be rendered against the Borrower and such judgment or order
shall continue
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unsatisfied, unstayed and unbonded for a period of 30 days; provided,
however that a judgment or order fully covered by insurance, which
coverage has not been disputed by the insurer, shall not be considered
a Default;
then, and in every such event, the Lender may, by notice to the Borrower
declare the Note (together with accrued interest thereon) to be, and the
Note shall thereupon become, immediately due and payable without
presentment, demand, protest, or other notice of any kind, all of which are
hereby waived by the Borrower; provided that in the case of any of the
Events of Default specified in clause (f) or (g) above (each, a "Bankruptcy
Event of Default"), without any notice to the Borrower or any other act by
the Lender, the Note (together with accrued interest thereon) shall become
immediately due and payable without presentment, demand, protest, or other
notice of any kind, all of which are hereby waived by the Borrower.
ARTICLE VIII
MISCELLANEOUS
SECTION 8.1 Notices.
All notices, requests and other communications to any party hereunder shall
be in writing (including bank wire, telex, facsimile transmission or similar
writing) and shall be given to such party: (i) in the case of the Borrower or
the Lender at their respective addresses, telex numbers or facsimile numbers set
forth on the signature pages hereof or (ii) in the case of any party, such other
address, telex number or facsimile number as such party may hereafter specify
for the purpose by notice to the other party in accordance with this Section.
All notices shall be effective when received.
SECTION 8.2 Expenses; Indemnification.
(a) The Borrower shall pay (i) all out-of-pocket expenses reasonably
incurred by the Lender, including reasonable fees and disbursements of
counsel in connection with any waiver or consent hereunder or any
amendment hereof or any Default or alleged Default hereunder, and (ii)
if an Event of Default occurs, all out-of-pocket expenses incurred by
the Lender, including reasonable fees and disbursements of counsel in
connection with such Event of Default and collection, bankruptcy,
insolvency, and other enforcement proceedings resulting therefrom. The
Borrower shall indemnify the Lender against any transfer taxes,
documentary taxes, assessments or charges made by any governmental
authority by reason of the execution and delivery of this Agreement,
the Pledge Agreement or the Note.
(b) The Borrower agrees to indemnify the Lender and hold the Lender
harmless from and against any and all liabilities, losses, damages,
costs and expenses of
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any kind (other than general overhead and administrative expenses),
including, without limitation, the reasonable fees and disbursements
of counsel, which may be incurred by the Lender in connection with any
investigative, administrative, or judicial proceeding (whether or not
the Lender shall be designated a party thereto) relating to or arising
out of this Agreement, the Pledge Agreement or the Note or any actual
or proposed use of proceeds of the Loan hereunder; provided that the
Lender shall not have the right to be indemnified hereunder for (i)
any proceeding against the Lender by any governmental authority
charged with the supervision of the Lender or (ii) its own gross
negligence or willful misconduct as determined by a court of competent
jurisdiction.
SECTION 8.3 Amendments and Waivers.
Any provision of this Agreement, the Pledge Agreement, the Note or any other
Loan Document may be amended or waived if, but only if, such amendment or waiver
is in writing and is signed by the Lender and the Borrower.
SECTION 8.4 Successors and Assigns.
The provisions of this Agreement shall be binding upon and inure to the
benefit of the parties hereto and their respective successors and assigns,
except that the Borrower may not assign or otherwise transfer any of its rights
under this Agreement without the prior written consent of the Lender. The
purchaser, assignee, transferee, or pledgee of any of the Lender's rights under
the Lender's security interest hereunder shall forthwith become vested with and
entitled to exercise all the rights, powers, and remedies given under this
Agreement to the Lender, as if said purchaser, assignee, transferee, or pledgee
were originally named as secured party herein.
SECTION 8.5 Governing Law; Submission to Jurisdiction.
THIS AGREEMENT, THE PLEDGE AGREEMENT, THE NOTE AND THE OTHER LOAN DOCUMENTS
SHALL BE GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE LAWS OF TEXAS WITHOUT
GIVING EFFECT TO THE CHOICE OF LAW RULES THEREOF. The Borrower hereby submits to
the nonexclusive jurisdiction of the United States District Court for the
Northern District of Texas and of any Texas state court for purposes of all
legal proceedings arising out of or relating to this Agreement or the
transactions contemplated hereby. The Borrower irrevocably waives, to the
fullest extent permitted by law, any objection which it may now or hereafter
have to the laying of the venue of any such proceeding brought in such a court
and any claim that any such proceeding brought in such a court has been brought
in an inconvenient forum.
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SECTION 8.6 Counterparts; Integration.
This Agreement may be signed in any number of counterparts, each of which
shall be an original, with the same effect as if the signatures thereto and
hereto were upon the same instrument. This Agreement constitutes the entire
agreement and understanding among the parties hereto and supersedes any and all
prior agreements and understandings, oral or written, relating to the subject
matter hereof.
SECTION 8.7 WAIVER OF JURY TRIAL.
THE BORROWER AND THE LENDER HEREBY IRREVOCABLY WAIVE ANY AND ALL RIGHT TO
TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR RELATING TO THIS
AGREEMENT OR THE TRANSACTIONS CONTEMPLATED HEREBY. This waiver of right to a
trial by jury is separately given, knowingly and voluntarily, by the Borrower
and the Lender, and this waiver is intended to encompass individually each
instance and each issue as to which the right to a trial by jury would otherwise
accrue. The Borrower and the Lender are hereby authorized and requested to
submit this Agreement to any court having jurisdiction over the subject matters
and the parties hereto, so as to serve as conclusive evidence of the parties'
herein contained waiver of the right to trial by jury. Further, the Borrower and
the Lender hereby certify that no representative, attorney or agent of any other
party has represented, expressly or otherwise, to the Borrower, or the Lender
that any other party will not seek to enforce this waiver of right to trial by
jury provision.
SECTION 8.8 Termination; Release.
Until the Termination Date, this Agreement shall be a continuing agreement,
shall remain in full force and effect. After the Termination Date, this
Agreement shall terminate, and the Lender, at the request and expense of the
Borrower, will execute and deliver to Borrower a proper instrument or
instruments acknowledging the satisfaction and termination of this Agreement,
and will duly assign, transfer and deliver to the Borrower (without recourse and
without any representation or warranty) at the expense of the Lender the
Collateral if in the possession of the Lender or its agents and not theretofore
sold or otherwise applied or released pursuant to this Agreement.
SECTION 8.9 Effect of Headings.
The Article and Section headings herein are for convenience of reference only
and shall not affect the construction hereof.
SECTION 8.10 Severability of Provisions.
Any provision of this Agreement which is prohibited or unenforceable in any
jurisdiction shall not invalidate the remaining provisions hereof or affect the
validity or enforceability of such provisions in any other jurisdiction.
SECTION 8.11 Application of Proceeds.
The parties agree that the Lender shall have the right to apply the proceeds
of any Collateral under this Agreement or the Line of Credit Credit Agreement,
in its sole discretion, against the Secured Obligations under this Agreement or
the Secured Obligations under the Line of Credit Credit Agreement.
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IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be duly
executed by their respective authorized officers as of the day and year first
above written.
CRESCENT OPERATING, INC.
By:
------------------------------------
Name:
Title:
Notice Address:
----------------------------------------
----------------------------------------
----------------------------------------
Facsimile:
------------------------------
CRESCENT REAL ESTATE EQUITIES
LIMITED PARTNERSHIP
By: Crescent Real Estate Equities, Ltd.,
its general partner
By:
------------------------------------
Name:
Title:
Notice Address:
000 Xxxx Xxxxxx
Xxxxx 0000
Xxxx Xxxxx, Xxxxx 00000
Facsimile: (000) 000-0000
29
Exhibits and Schedules:
Exhibit A: Application for Advance
Exhibit B: Note
Exhibit C: Pledge Agreement
Exhibit D: Certificate
Schedule 1: Location of the Inventory and Equipment
30
EXHIBIT A
APPLICATION FOR ADVANCE
This Application for Advance is submitted by the undersigned to Crescent Real
Estate Equities Limited Partnership (the "Lender") pursuant to that certain
Amended and Restated Credit and Security Agreement, dated as of May 21, 1997,
between the Lender and the undersigned (the "Credit Agreement"). Each
capitalized term used herein and not otherwise defined shall have the respective
meaning ascribed to such term in the Credit Agreement.
1. The undersigned hereby requests an Advance under the Credit Agreement in
the amount of: ($________________.00).
2. The undersigned hereby requests that such Advance be made on:
_______________, 199_.
3. The undersigned hereby represents and warrants to the Lender as follows:
(a) The undersigned is not in Default under the Credit Agreement.
(b) No Event of Default has occurred or is continuing.
(c) Both before and after giving effect to the advance requested hereby,
the representations and warranties set forth in Section 3.1(b) of the
Credit Agreement are true and correct, with the same effect as if
made on the date hereof.
Unless the undersigned has otherwise notified the Lender in writing prior to
the Closing Date and the making of the advance requested hereby, each of such
representations and warranties is true and correct as of the date hereof and as
of the Closing Date.
CRESCENT OPERATING, INC.
By:
-------------------------------------
Name:
-----------------------------------
Title:
----------------------------------
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EXHIBIT D
FORM OF CLOSING DATE CERTIFICATE
The undersigned, _______________, ______________ of CRESCENT OPERATING,
INC., a Delaware corporation, (the "Borrower"), hereby certifies to the best of
his knowledge that:
1. Select either a or b:
__ a. Since the previous Closing Date, there have been no changes
to the articles of incorporation of the Borrower.
__ b. A certified copy of the articles of incorporation of the
Borrower, as amended to the date hereof, is attached hereto as Exhibit A.
2. Select either a or b:
__ a. Since the previous Closing Date, there have been no changes
to the bylaws of the Borrower.
__ b. A certified copy of the bylaws of the Borrower, as amended
to the date hereof, is attached hereto as Exhibit B.
3. Attached hereto as Exhibit C is a copy of the resolutions of the
board of directors of the Borrower authorizing the execution, delivery and
performance of the Application for Advance, certified as of the Closing Date by
its corporate secretary.
4. Attached hereto as Exhibit D is a certificate of incumbency of the
officers of the Borrower, certificated by its corporate secretary.
5. Attached hereto as Exhibit E is a certificate of good standing of
the borrower issued as of a recent date by the Secretary of State of Delaware.
IN WITNESS WHEREOF, I have hereto set my hand this __ day of
__________.
-------------------------
Name:
Title:
32
May 21, 1997
AMENDED AND RESTATED
NOTE
$35,900,000.00
FOR VALUE RECEIVED, CRESCENT OPERATING, INC., a Delaware corporation
("Borrower") promises to pay to CRESCENT REAL ESTATE EQUITIES LIMITED
PARTNERSHIP, a Delaware limited partnership ("Lender"), at 000 Xxxx Xxxxxx,
Xxxxx 0000, Xxxx Xxxxx, Xxxxx 00000, the principal sum of Thirty-Five Million
Nine Hundred Thousand and No/100 Dollars ($35,900,000.00), with interest on the
principal balance from time to time remaining unpaid at the rates hereinafter
provided.
The Borrower promises to pay interest on the unpaid principal balance
hereof from the date hereof until paid in full pursuant to the Amended and
Restated Credit and Security Agreement, dated as of May 21, 1997, between the
Borrower and the Lender (as the same may be amended, modified or supplemented
from time to time, the "Credit Agreement"). The Borrower promises to pay the
aggregate outstanding principal amount of the Loan together with interest
thereon, on the dates, in the amounts and at the rate or rates provided in the
Credit Agreement; provided that the interest payable shall not exceed the
maximum rate permitted by applicable law (the "Maximum Rate"). Interest on the
principal hereof from time to time remaining unpaid and, to the extent
permitted by applicable law, interest on the unpaid interest, shall bear
interest from and after an Event of Default at the Default Rate provided that
in no event shall the Default Rate be more than the Maximum Rate.
This Note amends and restates, and supersedes, in its entirety, that
Note dated May 8, 1997, from Borrower to Lender in the maximum aggregate
principal amount of Thirty Million Four Hundred Thousand Dollars ($30,400,000).
This note is the Note referred to in the Credit Agreement. This Note and the
holder hereof are entitled to all of the benefits provided for thereby or
referred to therein. Reference is hereby made to the Credit Agreement for a
statement of such benefits. Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the acceleration of the maturity hereof.
This Note shall be payable as provided in the Credit Agreement.
Upon the occurrence of any Event of Default (after the giving of any
notice required in the Credit Agreement and the expiration of any applicable
grace periods provided for in the Credit Agreement), all amounts then remaining
unpaid on this Note shall become immediately due and payable, and the holder
hereof shall have all rights and remedies of Lender under the Credit Agreement
and other Loan Documents. The failure to exercise the option to accelerate the
maturity of this Note upon the happening of any one or more of the Events of
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Default hereunder shall not constitute a waiver of the right with respect to
such uncured default or any other event of uncured default hereunder or under
any other of the Loan Documents. The remedies of the holder hereof, as
provided in the Note and in any other of the Loan Documents, shall be
cumulative and concurrent and may be pursued separately, successively or
together, as often as occasion therefor shall arise, at the sole discretion of
the holder. The acceptance by the holder hereof of any payment under this Note
which is less than payment in full of all amounts due and payable at the time
of such shall not constitute a waiver of or impair, reduce, release, or
extinguish any of the rights or remedies of the holder hereof to exercise the
foregoing option or any other option granted to the holder in this Note or in
any other of the Loan Documents, at that time or at any subsequent time, or
nullify any prior exercise of any such option.
The undersigned and all other parties now or hereafter liable for the
payment hereof, whether as endorser, surety, or otherwise, except as provided
in the Credit Agreement, severally waive demand, presentment, notice of
dishonor, notice of intention to accelerate the indebtedness evidenced hereby,
notice of the acceleration of the maturity hereof, diligence in collecting,
grace, notice and protest, and consent to all extensions which from time to
time may be granted by the holder hereof and to all partial payments hereon,
whether before or after maturity.
If this Note is not paid when due, whether at maturity or by
acceleration, or if it is collected through a bankruptcy, or other court,
whether before or after maturity, the undersigned agrees to pay all costs of
collection, including, but not limited to, reasonable attorneys' fees and
expenses incurred by the holder hereof.
All agreements between the undersigned and the holder hereof, whether
now existing or hereafter arising and whether written or oral, are hereby
limited so that in no contingency, whether by reason of acceleration of the
maturity hereof or otherwise, shall the interest contracted for, charged,
received, paid, or agreed to be paid to the holder hereof exceed the maximum
amount permissible under applicable law. If from any circumstance the holder
hereof shall ever receive anything of value deemed interest by applicable law
in excess of the maximum lawful amount, an amount equal to any excess interest
shall be applied to the reduction of the principal hereof and not to the
payment of interest, or if such excess interest exceeds the unpaid balance of
principal hereof, such excess shall be refunded to the undersigned. All
interest paid or agreed to be paid to the holder hereof shall, to the extent
permitted by applicable law, be amortized, prorated, allocated, and spread
throughout the full period until payment in full of the principal so that the
interest hereon for such full period shall not exceed the maximum amount
permitted by applicable law. This paragraph shall control all agreements
between the undersigned and the holder hereof.
The loan transaction evidenced hereby shall not be governed by, or be
subject to, Chapter 15 of the Texas Credit Code (Title 79, Revised Civil
Statutes of Texas, 1925, as amended).
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EXCEPT WHERE FEDERAL LAW IS APPLICABLE (INCLUDING, WITHOUT LIMITATION,
ANY FEDERAL USURY CEILING OR OTHER FEDERAL LAW WHICH, FROM TIME TO TIME, IS
APPLICABLE TO THE INDEBTEDNESS EVIDENCED HEREIN AND WHICH PREEMPTS STATE USURY
LAWS), THIS NOTE SHALL BE CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF
TEXAS AND THE LAWS OF THE UNITED STATES APPLICABLE TO TRANSACTIONS IN SUCH
STATE.
CRESCENT OPERATING, INC.
By:
----------------------------
Name:
Title:
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