AMENDMENT NO. 2 TO SECOND AMENDED AND RESTATED
CREDIT AGREEMENT
AMENDMENT dated as of December 23, 1997 among HALLWOOD CONSOLIDATED
RESOURCES CORPORATION ("HCRC"), a Delaware corporation and HALLWOOD CONSOLIDATED
PARTNERS, L.P. ("HCP"), a Colorado limited partnership (individually a
"Borrower" and collectively the "Borrowers"), the BANKS listed on the signature
pages hereof (the "Banks"), First Union National Bank, as collateral agent (the
"Collateral Agent"), XXXXXX GUARANTY TRUST COMPANY OF NEW YORK, as Agent (the
"Agent").
W I T N E S S E T H :
WHEREAS, the Borrowers, the Banks, the Collateral Agent and the Agent are
parties to a Second Amended and Restated Credit Agreement (as amended, the
"Credit Agreement");
WHEREAS, contemporaneously with the execution and delivery of this
Amendment, HCRC and The Prudential Insurance Company of America (with its
successors, "Prudential") are entering into a Subordinated Note and Warrant
Purchase Agreement dated as of December 23, 1997 (the "Subordinated Notes
Agreement");
WHEREAS, contemporaneously with the execution and delivery of this
Amendment, HCP is entering into a Senior Subordinated Guaranty Agreement in
favor of Prudential dated as of December 23, 1997 (the "Subordinated Guaranty");
WHEREAS, in the absence of this Amendment, the execution and delivery by
HCRC of the Subordinated Notes Agreement and by HCP of the Subordinated Guaranty
and the consummation of the transactions contemplated by the Subordinated Note
Agreement and the Subordinated Guaranty, including without limitation the
issuance of the Subordinated Notes, would constitute an Event of Default under
the Credit Agreement;
WHEREAS, the Borrowers have asked the Banks, and the Banks are willing, on
the terms and conditions set forth herein, to amend the Credit Agreement to
permit the execution and delivery by HCRC of the Subordinated Notes Agreement
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and by HCP of the Subordinated Guaranty and the consummation of the transactions
contemplated by the Subordinated Notes Agreement and the Subordinated Guaranty;
NOW, THEREFORE, the parties hereto agree as follows:
SECTION 1. Definitions; References. Unless otherwise specifically defined
herein, each term used herein which is defined in the Credit Agreement shall
have the meaning assigned to such term in the Credit Agreement. Each reference
to "hereof", "hereunder", "herein" and "hereby" and each other similar reference
and each reference to "this Credit Agreement" and each other similar reference
contained in the Credit Agreement shall from and after the date hereof refer to
the Credit Agreement as amended hereby.
SECTION 2. Additional Definitions Relating to the Subordinated Debt; Reset
of Availability Limit; Reset of Debt Limit. (a) New definitions of "Prudential",
"Subordinated Guaranty", "Subordinated Notes" and "Subordinated Notes Agreement"
are added in alphabetical order to Section 1.01 of the Credit Agreement to read
in their entirety as follows:
"Prudential" means The Prudential Insurance Company of America
and its successors and assigns.
"Subordinated Guaranty" means the Senior Subordinated Guaranty
Agreement by HCP in favor of Prudential dated as of December 23, 1997.
"Subordinated Notes" means the 10.32% Senior Subordinated Notes
Due December 23, 2007 issued by HCRC pursuant to the Subordinated
Notes Agreement.
"Subordinated Notes Agreement" means the Subordinated Note and
Warrant Purchase Agreement dated as of December 23, 1997 between HCRC
and Prudential, substantially in the form approved by the Banks prior
to the date of effectiveness of Amendment No.2 to this Agreement dated
as of December 23, 1997 among the Borrowers, the Banks, the Collateral
Agent and the Agent.
(b) The definition of "Availability Limit"set forth in Section 1.01 of the
Credit Agreement is hereby amended to read in its entirety as follows:
"Availability Limit" means, on any date, an amount equal to the
lesser of (i) the aggregate amount of the Commitments at such date and
(ii) $10,000,000. The Availability Limit may be increased only by an
amendment in accordance with Section 8.05, which the Banks may agree
to or not agree to in their sole discretion.
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(c) Effective on and as of the date of this Amendment, the "Debt Limit", as
determined in accordance with subsection (b) of Section 4.17 of the Credit
Agreement, shall be $10,000,000.
SECTION 3. Change in the Default Interest Rate. Clause (e) of Section 2.04
is hereby amended to read in its entirety as follows:
"(e) On each day during which a Default shall occur and be
continuing, all outstanding Loans of each Bank, and all interest
which is past due to such Bank on such day, shall bear interest
at a rate per annum equal to the sum of 2% plus the Base Rate for
such day, but in no event to exceed the Highest Lawful Rate of
such Bank."
SECTION 4. Additional Events Requiring Notice to the Banks. Section 4.01 of
the Credit Agreement is hereby amended by adding a new clause (d) immediately
after clause (c) thereof, to read in its entirety as follows:
"(d) contemporaneously with the delivery of any information
(including without limitation financial information), reports or
notices to Prudential pursuant to Section 5A of the Subordinated
Notes Agreement, a copy thereof to each Bank (unless previously
delivered to such Bank under this Agreement);"
SECTION 5. Additional Permitted Debt of the Borrowers. Section 4.17 of the
Credit Agreement is hereby amended by :
(i) deleting the "and" at the end of clause (v) thereof;
(ii) renumbering clause (vi) thereof as clause (vii)
thereof; and
(iii) adding a new clause (vi) immediately after clause (v)
thereof to read in its entirety as follows:
"(vi) the Subordinated Notes and the Subordinated Guaranty;
and"
SECTION 6. Additional Permitted Debt of HCP. Section 4.20(d) of the Credit
Agreement is hereby amended by :
(i) deleting the "and" at the end of clause (iii) thereof;
(ii) renumbering clause (vi) thereof as clause (v) thereof;
and
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(iii) adding a new clause (iv) immediately after clause
(iii) thereof to read in its entirety as follows:
"(iv) the Subordinated Guaranty; and"
SECTION 7. Restrictions of Payments of Subordinated Debt. New Sections 4.37
and 4.38 are added to the Credit Agreement immediately after Section 4.36
thereof, to read in their entirety as follows:
"SECTION 4.37. Incorporation By Reference of Certain
Covenants. The provisions of Paragraph 6A of the Subordinated
Notes Agreement and related definitions are hereby incorporated
by reference with the same effect as if such provisions were
fully set forth herein; provided that any amendments or waivers
of any such provisions or related definitions shall be effective
hereunder solely if consented to in writing by the Required
Banks.
SECTION 4.38. Restrictions with Respect to Subordinated
Debt. (a) HCRC shall not, and shall not permit any of its
Subsidiaries to, make any payments with respect to the
Subordinated Notes, other than (i) scheduled payments of
interest, (ii) scheduled repayments of principal, each in the
amount of $5,000,000 on or about December 23 in each of the years
2003 through 2006, inclusive, and (iii) scheduled payments of
principal in the amount of $5,000,000 on or about December 23,
2007, in each case subject to the subordination provisions set
forth in the Subordinated Note Agreement.
(b) Neither Borrower will enter into any amendment or waiver
of any term of the Subordinated Notes Agreement, the Subordinated
Guaranty or any Subordinated Notes without the prior written
consent of the Required Banks."
SECTION 8. Effectiveness. This Amendment shall become effective on the date
on which the Agent shall have received (i) counterparts of this Amendment duly
executed by the Borrowers, the Required Banks, the Collateral Agent and the
Agent (or, in the case of any party as to which an executed counterpart shall
not have been received, the Agent shall have received telegraphic, telex or
other written confirmation from such party of execution of a counterpart hereof
by such party) and (ii) evidence satisfactory to the Agent that (x) HCRC and HCP
shall have executed and delivered the Subordinated Notes Agreement and the
Subordinated Guaranty, respectively and (y) HCRC shall have received proceeds of
not less than $25,000,000 from the issuance and sale of the Subordinated Notes.
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IN WITNESS WHEREOF, the parties hereto have caused this Amendment and
Waiver to be duly executed as of the date first above written.
HALLWOOD CONSOLIDATED RESOURCES CORPORATION
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------------
Title: Vice President
HALLWOOD CONSOLIDATED PARTNERS, L.P.
By: HALLWOOD CONSOLIDATED RESOURCES CORPORATION
By /s/ Xxxxxx X. Xxxxxxxx
-------------------------------------------------
Title: Vice President
The General Partner of Hallwood
Consolidated Partners, X.X.
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK
By /s/ Xxxx Xxxxxxxxx
--------------------------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK
By /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------------------
Title: Vice President
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NATIONSBANK OF TEXAS, N.A.
By /s/ W. Xxxxx Xxxxxxxx
-------------------------------------------------
Title: Vice President
XXXXXX GUARANTY TRUST COMPANY OF NEW YORK,
as Agent
By /s/ Xxxx Xxxxxxxxx
-------------------------------------------------
Title: Vice President
FIRST UNION NATIONAL BANK,
as Collateral Agent
By /s/ Xxxxxxx X. Xxxxxxxxxx
-------------------------------------------------
Title: Vice President
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