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EXHIBIT 10.6
Execution Copy
LINE OF CREDIT
CREDIT AND SECURITY AGREEMENT
THIS LINE OF CREDIT 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 has requested that the Lender extend a credit
facility (the "Loan") in the maximum aggregate principal amount of $20,400,000
for the purpose of permitting the Borrower to make certain investments
identified herein;
WHEREAS, the Lender is willing to extend 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:
"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.
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"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.
"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.
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"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.
"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.
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"Maturity Date" means the later to occur of (a) May 21, 2002 or (b) the
fifth anniversary of the date of the last Application for Advance funded by the
Lender hereunder; provided, however, that in no event shall the Maturity Date
be later than June 22, 2007.
"Note" means the promissory note of the Borrower payable to the order of
the Lender under the terms of this Agreement, 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 Twenty Million Four Hundred Thousand Dollars
($20,400,000.00), 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 dated May 8, 1997 executed
and delivered by the Borrower, 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 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 Note, the
Pledge Agreement or any other document, made, delivered or given in connection
therewith, in each case whether on account of principal, interest reimbursement
obligations, fees, indemnities, costs, expenses or otherwise.
"Subsidiary" means, with respect to any Person, any corporation,
association, partnership or other business entity of which such Person owns
directly or indirectly through one or more intermediaries 50% or more of the
voting stock, partnership interests or other interests thereof or which is
controlled or capable of being controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
"Term Loan Credit and Security Agreement" means the Credit and Security
Agreement dated as of May 8, 1997 between the Borrower and the Lender, as such
agreement may be amended, supplemented or otherwise modified from time to time.
"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
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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") each such Advance to be a
minimum amount of $1,000,000.00), not more than once per month, up
to an aggregate amount of Twenty Million Four Hundred Thousand
Dollars ($20,400,000.00) (the "Loan Commitment"), following the
Lender's receipt of a written request from the Borrower made to the
Lender in the form set forth in Exhibit A hereto (an "Application
for Advance"), and delivered in accordance with this Section 2.1
and Section 8.1 hereof.
(b) Within the limits of this Section 2.1, during the term hereof, the
Borrower may borrow, repay, and reborrow in accordance with the
terms and conditions of this Agreement.
(c) For each Advance, 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
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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.
(f) The Borrower shall have the right to make requests for Advances
during the period beginning on the date hereof and continuing
through June 15, 2002. The Lender shall have no obligation to fund
any Applications for Advance submitted after such date.
SECTION 2.2 The Note.
(a) The Loan will be evidenced by the Note. 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.
(b) Notwithstanding any other provision of this Agreement, 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) 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) Notwithstanding Section 2.3(c), if the sum of (i) the amount of
interest to be paid by the Borrower to the Lender pursuant to this
Agreement and (ii) the amount of principal and interest to be paid
by the Borrower to the Lender
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pursuant to the Term Loan Credit and Security Agreement, 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 interest otherwise due pursuant to the terms hereof in
excess of the amount of EBITDA of the Borrower for the immediately
preceding calendar quarter.
(e) Accrued interest not paid when due shall be compounded quarterly
and added to the outstanding principal amount of the Loan.
(f) On the Maturity Date, the Borrower shall repay in full all accrued
but unpaid interest and the entire unpaid principal amount of the
Loan.
SECTION 2.4 General Provisions as to Payments.
The Borrower shall make each payment of principal of, and interest on, the
Loan not later than 11:00 A.M. Fort Worth, Texas time on the date when due, to
the Lender at the Lender's office at 000 Xxxx Xxxxxx, Xxxxx 0000, Xxxx Xxxxx,
Xxxxx 00000 in same day or other immediately available funds. Whenever any
payment of principal of, or interest on, any Loan shall be due on a day which
is not a Business Day, the date for payment thereof shall be extended to the
next succeeding Business Day. If the date for any payment of principal is
extended by operation of law or otherwise, interest thereon shall be payable
for such extended time. All such payments shall be made without setoff or
counterclaim and without reduction for, and free from, any and all present or
future taxes, levies, imposts, duties, fees, charges, deductions, withholdings,
restrictions or conditions of any nature imposed by any government or political
subdivision or taking authority thereof (but excluding any taxes imposed on or
measured by the overall net income of the Lender).
SECTION 2.5 Computation of Interest.
All interest shall be computed on the basis of a year of 360 days and paid
for the actual number of days elapsed (including the first day, but excluding
the last day).
SECTION 2.6 Use of Proceeds.
The proceeds of the Loan shall be used solely to enable the Borrower to
invest in (i) Xxxxx-Day, Inc., Dallas Basketball, Ltd, Xxxxx Muse Xxxx & Xxxxx
Equity Fund II, LP, Charter Behavioral Health Systems, LLC (including the
satisfaction of obligations to make ongoing investments in such entities), and
(ii) 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
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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;
(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
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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 C hereto enclosing the following: (A) a representation
that there has been no change in the articles of incorporation
of the Borrower since the Closing Date, or if changes have
occurred since the Closing Date, the articles of incorporation
of the Borrower as in effect, certified as of a recent date by
the Secretary of State of Delaware, (B) a representation that
there has been no change in the bylaws of the Borrower since
the Closing Date, or if changes have occurred since the
Closing Date, the bylaws of the Borrower as in effect,
certified as of a recent date by the Secretary of the
Borrower, (C) resolutions of the board of directors of the
Borrower authorizing the execution, delivery and performance
of the Application for Advance, certified as of the Closing
Date by its corporate secretary, (D) certificates as to the
incumbency of the officers of the Borrower, certified by its
corporate secretary, and (E) certificates of good standing of
the Borrower issued as of a recent date by the Secretary of
State of Delaware; and
(iii) No event which constitutes an Event of Default hereunder
shall have occurred and be continuing.
ARTICLE IV
SECURITY INTEREST
SECTION 4.1 Grant of Security Interest.
(a) As security for the prompt payment, performance, and observance in
full of the Loan, the Borrower hereby pledges and assigns to the
Lender, and grants
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to the Lender a continuing security interest in and lien on all of
the following property now owned or at any time hereafter acquired
by the Borrower or in which the Borrower now has or at any time in
the future may acquire any right, title or interest (the
"Collateral"):
(i) all Accounts;
(ii) all Chattel Paper;
(iii) all Documents;
(iv) all Equipment;
(v) all General Intangibles;
(vi) all Instruments;
(vii) all Inventory;
(viii) all books and recordings pertaining to the Collateral;
and
(ix) to the extent not otherwise included, all Proceeds and
products of any of the foregoing, in any form (whether
cash or non-cash) and all collateral security and
guarantees given by any Person with respect to any of
the foregoing.
SECTION 4.2 Collateral Account
(a) Establishment of Collateral Account. Upon the execution hereof,
there shall be established and at all times thereafter there shall
be maintained by the Borrower, a non-interest bearing cash
collateral account with a financial institution approved by the
Lender (the "Collateral Account") subject to the terms of this
Agreement.
(b) Rights, Title and Interest of Collateral Account. All right, title
and interest in and to the Collateral Account shall vest
exclusively in the Lender. The Borrower shall have no rights with
respect to the Collateral Account and the Lender shall have sole
dominion and control over the Collateral Account and the monies
deposited therein. Monies deposited in the Collateral Account
shall constitute security for the Secured Obligations. The
Borrower hereby pledges and assigns to the Lender and hereby grants
to the Lender a security interest in, all right, title or interest
(if any) which the Borrower 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
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monies and any and all certificates or instruments from time to
time representing or evidencing such investments (and all proceeds
thereof).
(c) Maintaining the Collateral Account. Until the Termination Date of
this Agreement:
(i) The Borrower will maintain the Collateral Account with
a financial institution approved by the Lender.
(ii) All monies received by the Lender while a Default or an
Event of Default has occurred and is continuing, and
any monies received as a result of investments made as
contemplated by subsection 4.2(c)(iii) hereof, shall be
deposited in the Collateral Account.
(iii) Pending the disbursement thereof pursuant to the terms
of this Agreement, all monies in the Collateral Account
shall (to the extent it is practical to do so) be
invested by the Lender in Cash Equivalents. All such
investments shall be evidenced either (a) by negotiable
certificates or instruments which are held by or for
the account of the Lender or (b) by book entries
maintained in a State in which the Lender may be
granted by book entries a security interest in the
securities relating thereto. In the absence of its
gross negligence or willful misconduct, the Lender
shall not have any liability out of or in connection
with any investment made in accordance with the
provisions herein or for any loss or decline in value
of any investment or from any loss resulting directly
or indirectly from any investment made pursuant to and
in accordance with the provisions hereof.
SECTION 4.3 Remedies.
(a) Proceeds to be Turned Over To the Lender. When a Default or an
Event of Default has occurred and is continuing all Proceeds (as
defined in the Code) received by the Borrower consisting of cash,
checks and other near-cash items shall be held by the Borrower in
trust for the Lender, segregated from other funds of the Borrower,
and shall, forthwith upon receipt by the Borrower, be turned over
to the Lender in the exact form received by the Borrower (duly
endorsed 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
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continuing at any time at the Lender's election, the Lender may
apply all or any part of Proceeds held in any Collateral Account in
payment of the Secured Obligations in such order as the Lender may
elect, and any part of such funds which the Lender elects not so to
apply and deems not required as collateral security for the Secured
Obligations shall be paid over from time to time by the Lender to
the Borrower or to whomsoever may be lawfully entitled to receive
the same. Any balance of such Proceeds remaining after the Secured
Obligations shall have been paid in full and the Commitment shall
have expired or otherwise been terminated shall be paid over to the
Borrower or to whomsoever may be lawfully entitled to receive the
same.
(c) Code Remedies. If an Event of Default has occurred and is
continuing, the Lender may exercise, in addition to all other
rights and remedies granted to it in this Agreement and in any
other instrument or agreement securing, evidencing or relating to
the Secured Obligations, all rights and remedies of a secured party
under the Code. Without limiting the generality of the foregoing,
the Lender, without demand of performance or other demand,
presentment, protest, advertisement or notice of any kind (except
any notice required by law referred to below) to or upon the
Borrower or any other Person (all and each of which demands,
defenses, advertisements and notices are hereby waived), may in
such circumstances forthwith collect, receive, appropriate and
realize upon the Collateral, or any part thereof, and/or may
forthwith sell, lease, assign, give option or options to purchase,
or otherwise dispose of and deliver the Collateral or any part
thereof (or contract to do any of the foregoing), in one or more
parcels at public or private sale or sales, at any exchange,
broker's board or office of the Lender or elsewhere upon such terms
and conditions as it may deem advisable and at such prices as it
may deem best, for cash or on credit or for future delivery without
assumption of any credit risk. The Lender shall have the right
upon any such public sale or sales, and, to the extent permitted by
law, upon any such private sale or sales, to purchase the whole or
any part of the Collateral so sold, free of any right or equity of
redemption in the Borrower, which right or equity is hereby waived
or released. The Borrower further agrees, at the Lender's request,
to assemble the Collateral and make it available to the Lender at
places which the Lender shall reasonably select, whether at the
Borrower's premises or elsewhere. To the extent permitted by
applicable law, the Borrower 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
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liability to the Lender, and the Lender shall be under no
obligation or duty to exercise any of the rights, remedies or
powers conferred upon it hereby or by applicable law, and it shall
incur no liability for any act or failure to act in connection with
the collection of, or the preservation of any rights under, any of
the Collateral.
SECTION 4.4 Lender Appointment as Attorney-in-Fact; Lender Performance of
Borrower's Obligations.
(a) Powers. The Borrower hereby irrevocably constitutes and appoints
the Lender and any officer or agent thereof, with full power of
substitution, as its true and lawful attorney-in-fact with full
irrevocable power and authority in the place and stead of the
Borrower and in the name of the Borrower or in its own name, for
the purpose of carrying out the terms of this Agreement, to take
any and all appropriate action and to execute any and all documents
and instruments which may be necessary or desirable to accomplish
the purposes of this Agreement, and, without limiting the
generality of the foregoing, the Borrower hereby gives the Lender
the power and right, on behalf of the Borrower, without notice to
or assent by the Borrower, to do any or all of the following:
(i) at any time when an Event of Default has occurred and
is continuing in the name of the Borrower or its own
name, or otherwise, take possession of and indorse and
collect any checks, drafts, notes, acceptances or other
instruments for the payment of moneys due with respect
to any Collateral and file any claim or take any other
action or proceeding in any court of law or equity or
otherwise deemed appropriate by the Lender for the
purpose of collecting any and all such moneys due with
respect to any Collateral whenever payable;
(ii) pay or discharge taxes and Liens levied or placed on or
threatened against the Collateral, effect any repairs
or any insurance called for by 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
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in respect of or arising out of any Collateral; (3)
sign and indorse any invoices, freight or express
bills, bills of lading, storage or warehouse receipts,
drafts against debtors, assignments, verifications,
notices and other documents in connection with any of
the Collateral; (4) commence and prosecute any suits,
actions or proceedings at law or in equity in any court
of competent jurisdiction to collect the Collateral or
any thereof and to enforce any other right in respect
of any Collateral; (5) defend any suit, action or
proceeding brought against the Borrower with respect to
any Collateral (other than any such suit, action or
proceeding brought by the Lender); (6) settle,
compromise or adjust any such suit, action or
proceeding (other than any such suit, action or
proceeding brought by the Lender) and, in connection
therewith, to give such discharges or releases as the
Lender may deem appropriate; (7) generally, sell,
transfer, pledge and make any agreement with respect to
or otherwise deal with any of the Collateral as fully
and completely as though the Lender were the absolute
owner thereof for all purposes, and do, at the Lender's
option and the Borrower's expense, at any time, or from
time to time, all acts and things which the Lender
deems necessary to protect, preserve or realize upon
the Collateral and the Lender's security interests
therein and to effect the intent of this Agreement, all
as fully and effectively as the Borrower might do.
(b) Ratification; Power Coupled With An Interest. The Borrower hereby
ratifies all that said attorneys shall lawfully do or cause to be
done by virtue hereof in accordance with the terms of this
Agreement, absent gross negligence or willful misconduct on the
part of the Lender. All powers, authorizations and agencies
contained in this Agreement are coupled with an 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.
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SECTION 4.7 Duty of the Lender.
The Lender's sole duty with respect to the custody, safekeeping and
physical preservation of the Collateral in its possession, under Section 9-207
of the Code or otherwise, shall be to deal with it in the same manner as the
Lender deals with similar property for its own account. Neither the Lender,
nor any of its respective officers, directors, employees or agents shall be
liable for failure to demand, collect or realize upon any of the Collateral or
for any delay in doing so or shall be under any obligation to sell or otherwise
dispose of any Collateral upon the request of the Borrower or any other Person
or to take any other action whatsoever with regard to the Collateral or any
part thereof. The powers conferred on the Lender hereunder are solely to
protect the Lender's interests in the Collateral and shall not impose any duty
upon the Lender to exercise any such powers. The Lender shall be accountable
only for amounts that its actually receives as a result of the exercise of such
powers, and neither it nor any of its officers, directors, employees or agents
shall be responsible to the Borrower for any act or failure to act hereunder,
except for their own gross negligence or willful misconduct.
SECTION 4.8 Execution of Financing Statements.
Pursuant to Section 9-402 of the Code, the Borrower authorizes the Lender
to file financing statements with respect to the Collateral without the
signature of the Borrower in such form and in such filing offices as the Lender
reasonably determines appropriate to perfect the security interests of the
Lender under this Agreement. The Lender shall provide the Borrower with copies
of any such financing statements. A carbon, photographic or other reproduction
of this Agreement shall be sufficient as a financing statement for filing in
any jurisdiction.
SECTION 4.9 The Pledge Agreement.
In addition to the security interest granted hereunder, the Borrower shall
grant to the Lender a security interest in the Pledged Partnership Interests
and the Pledged Stock (as those terms are defined in the Pledge Agreement)
pursuant to the Pledge Agreement.
SECTION 4.10 Pledged Notes.
With respect to any promissory notes now or hereinafter owned 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
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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 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.
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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.
(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.
SECTION 6.2 Financial Information.
The Borrower will deliver to the Lender:
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(a) as soon as available, but in no event more than one hundred twenty
(120) days after the end of each fiscal year of the Borrower,
financial statements of the Borrower containing a balance sheet and
the related statements of operations and cash flows, showing the
financial condition of the Borrower at the close of and for such
year; and
(b) as soon as available, but in no event more than sixty (60) days
after the end of each of the first three quarters of each fiscal
year of the Borrower, financial statements of the Borrower,
containing a balance sheet and the related statements of income
prepared or a cash basis, showing the financial condition of the
Borrower at the close of and for such period.
The financial statements delivered pursuant to subsections (a) and (b) of
this Section 6.2 shall be certified by the president or chief financial officer
of the Borrower as true, complete, and correct and, as to the financial
statements delivered pursuant to subsection (a) of this Section 6.2, as having
been prepared in accordance with 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 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,
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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.
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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.
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
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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.
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,
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(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;
(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) any Default or Event of Default shall have occurred and be
continuing under the Term Loan Credit and Security Agreement.
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(g) 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;
(h) 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;
(i) 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 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 (g) or (h) 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.
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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 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.
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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.
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.
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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.
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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 Term Loan Credit and
Security Agreement, in its sole discretion, against the Secured Obligations
under the Term Loan Credit and Security Agreement or the Secured Obligations
under this Agreement.
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:
-------------------
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00
XXXXXXXX XXXX XXXXXX 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
Exhibits and Schedules:
Exhibit A: Application for Advance
Exhibit B: Note
Exhibit C: 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 Line of Credit 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 C
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
LINE OF CREDIT NOTE
$20,400,000.00
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 Twenty Million Four
Hundred Thousand and No/100 Dollars ($20,400,000.00), 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 Line of Credit
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 is the Note referred to in the Credit Agreement. This Note
and the holder hereof are entitled to all of the benefits provided for thereby
or referred to therein. Reference is hereby made to the Credit Agreement for a
statement of such benefits. Terms defined in the Credit Agreement are used
herein with the same meanings. Reference is made to the Credit Agreement for
provisions for the acceleration of the maturity hereof.
This Note shall be payable as provided in the Credit Agreement.
Upon the occurrence of any Event of Default (after the giving of any
notice required in the Credit Agreement and the expiration of any applicable
grace periods provided for in the Credit Agreement), all amounts then remaining
unpaid on this Note shall become immediately due and payable, and the holder
hereof shall have all rights and remedies of Lender under the Credit Agreement
and other Loan Documents. The failure to exercise the option to accelerate the
maturity of this Note upon the happening of any one or more of the Events of
Default hereunder shall not constitute a waiver of the right with respect to
such uncured 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,
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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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