1
Exhibit 1
LOAN AGREEMENT
between
XXXXX OF XXXX L.P.
and
TEXAS COMMERCE BANK NATIONAL ASSOCIATION
dated
December 31, 1996
-1-
2
LOAN AGREEMENT
THIS LOAN AGREEMENT ("this Agreement"), dated as of December 31, 1996,
is made by and between TEXAS COMMERCE BANK NATIONAL ASSOCIATION, a national
banking association ("Lender"), with its principal office at 000 X. Xxxx, Xx
Xxxx, Xxxxx 00000, XXXXX OF XXXX L.P., a Texas limited partnership duly
organized under the laws of the State of Texas, with its principal office at
0000 Xxxxxx Xxxxxx, Xx Xxxx, Xxxxx 00000 ("Borrower"), XXXXX OF XXXX LIMITED a
company organized under the laws of Bermuda, with its principal office at 0000
Xxxxxx Xxxxxx, Xx Xxxx, Xxxxx 00000 ("Limited"), and XXXXX OF XXXX CORPORATION,
a Texas corporation, with its principal office at 0000 Xxxxxx Xxxxxx, Xx Xxxx,
Xxxxx 00000 ("HOTC") (Limited and HOTC are collectively referred to herein as
the "Guarantors").
Borrower has requested Lender to provide a revolving line of credit
loan (the "Revolving Credit Loan") up to an aggregate amount not exceeding
$5,000,000.00 at anytime outstanding.
Lender and Borrower desire to set forth the terms pursuant to which
Lender and Borrower have agreed to enter into the Revolving Credit Loan;
NOW, THEREFORE, Lender and Borrower agree as follows:
1. DEFINITIONS
1.01 Defined Terms. As used in this Agreement, the following
terms shall have the following meanings:
"Affiliate" means, at any time, and with respect to any
Person, (a) any other Person that at such time directly or indirectly
through one or more intermediaries Controls, or is Controlled by, or
is under common Control with, such first Person, and (b) any Person
beneficially owning or holding, directly or indirectly, 10% or more of
any class of voting or equity interests of such first Person or any
Subsidiary or such first Person or any corporation of which such first
Person and its Subsidiaries beneficially own or hold, in the
aggregate, directly or indirectly, 10% or more of any class of voting
or equity interests. As used in this definition, "Control" means the
possession, directly or indirectly, of the power to direct or cause
the direction of the management and policies of a Person, whether
through the ownership of voting securities, by contract or otherwise.
Unless the context otherwise clearly requires, any reference to an
"Affiliate" is a reference to an Affiliate of Limited.
"Agreement" means this Loan Agreement, and all Exhibits
appended hereto, as the same may be from time to time amended,
supplemented or modified.
"Alternate Base Rate" means, for any day, a rate per annum
equal to the Prime Rate in effect on such day. For purposes hereof,
"Prime Rate" shall mean the rate of interest per annum publicly
announced from time to time by Texas Commerce Bank National
Association, as its prime rate, and thereafter entered in the minutes
of its Loan and Discount Committee; each change in the Prime Rate
shall be effective on the date such change is
-2-
3
determined without special notice to the Borrower or any other person
or entity. In the event the Prime Rate ceases to be stated or
designated by Texas Commerce Bank National Association, or any
successor to it, Prime Rate shall mean the rate of interest published
as "Prime Rate" in the "Money Rates" section of The Wall Street
Journal.
The Prime Rate is a reference rate and does not necessarily
represent the lowest or best rate actually charged to any customer,
and Lender disclaims any statement, representation or warranty to the
contrary. Any change in the Alternate Base Rate due to a change in the
Prime Rate shall be effective on the effective date of such change in
the Prime Rate.
"Alternate Base Rate Loan" means a loan which bears interest
at a rate determined by reference to the Alternate Base Rate.
"Borrowing" means a borrowing by Borrower consisting of a
loan made by Lender hereunder, each such loan being a "Loan".
"Borrowing Date" means any Business Day on which Lender shall
make a Loan hereunder.
"Board" shall mean the Board of Governors of the Federal
Reserve System of the United States.
"Business Day" means a day (i) on which the Lender and
commercial banks in New York City are generally open for business, and
(ii) with respect to Eurodollar Loans, on which dealings in Dollar
deposits are carried out in the Eurodollar interbank markets.
"Capital Lease" means, at any time, a lease with respect to
which the lessee is required concurrently to recognize the acquisition
of an asset and the incurring of a liability in accordance with GAAP.
"Commitment" means the obligation of Lender to make the
Revolving Credit Loan pursuant to Section 2.
"Commitment Period" means the period of time the Commitment
is in effect, which period shall commence on the Effective Date and,
unless sooner terminated pursuant to the Loan Documents, shall end on
July 31, 1997.
"Consolidated Indebtedness" means all Indebtedness of Limited
and its Subsidiaries, all as determined on a consolidated basis in
accordance with GAAP.
"Consolidated Net Earnings" means for any period, net
earnings (or loss) after income taxes of Limited and its Subsidiaries
for such period, determined on a consolidated basis in accordance with
GAAP, but not including in such net earnings (or loss) the following:
-3-
4
(a) any extraordinary gain or loss arising from the
sale of capital assets;
(b) any extraordinary gain or loss arising from any
write-up or write-down of assets;
(c) net earnings of any Person in which Limited or
any Subsidiary shall have an ownership interest other than a
Subsidiary unless such net earnings (or any portion thereof)
shall have actually been received by Limited or such
Subsidiary in the form of cash distributions;
(d) earnings or losses of any Subsidiary accrued
prior to the date it became a Subsidiary;
(e) any portion of the net earnings of any
Subsidiary that by reason of any contract or charter
restriction or applicable law or regulation (or in the good
faith judgment of the Board of Directors of Limited for any
reason) is unavailable for payment of dividends to Limited or
any of its Subsidiaries;
(f) the earnings or losses of any Person acquired by
Limited or any Subsidiary through purchase, merger,
consolidation or otherwise, or the earnings or losses of any
Person substantially all of whose assets have been acquired
by Limited or any of its Subsidiaries, for any period prior
to the date of such acquisition;
(g) any gain arising from the acquisition of any
Securities of Limited or any of its Subsidiaries; and
(h) any other extraordinary gains or losses or any
other gain or loss arising from any event or transaction that
is unusual in nature and infrequent in occurrence (but which
otherwise does not constitute an extraordinary item under
GAAP) and which GAAP requires to be reported as a separate
component of revenues and expenses from continuing
operations.
The above determination of net earnings (or loss) shall be
made without giving effect to any allocation thereof to any minority
interest in respect of Limited or any of its Subsidiaries.
"Consolidated Net Worth" means, at any time, shareholders'
equity of Limited as set forth in its consolidated balance sheet,
determined in accordance with GAAP.
"Consolidated Total Capitalization" means, at any time,
Consolidated Net Worth plus Consolidated Indebtedness.
"Contingent Obligation" means as to any Person, any
obligation of such Person guaranteeing, or in effect guaranteeing any
indebtedness, leases, dividends or other obligations ("Primary
Obligations") of any other Person (the "Primary Obligor") in any
manner, whether directly or indirectly, including, without limitation,
any obligation of such
-4-
5
Person, (a) to advance or supply funds (i) for the purchase or payment
of any such Primary Obligation, or (ii) to maintain working capital or
equity capital for the Primary Obligor, or otherwise to maintain the
net worth or solvency of the Primary Obligor, (b) to purchase
property, securities or services primarily for the purpose of assuring
the owner of any such Primary Obligation of the ability of the Primary
Obligor to make payment of such Primary Obligation, or (c) otherwise
to assure the owner of such Primary Obligation against loss in respect
thereof; provided, however, that the term Contingent Obligation shall
not include endorsements of instruments for deposit or collection in
the ordinary course of business, or Borrower's guaranteeing of the
Primary Obligations of any Subsidiary.
"Contractual Obligation" means as to any Person, any
provision of any security issued by such Person, or of any mortgage,
indenture, lease, contract or other agreement, instrument or
undertaking to which such Person is or purports to be a party or by
which it or any of its property is or purports to be bound.
"Default" means any Event of Default (as defined herein),
whether or not any requirement for the giving of notice, the lapse of
time, or both, or any other condition, has been satisfied.
"Default Rate" means a rate per annum equal to the lesser of
(a) eighteen percent (18.00%), or (b) the Highest Lawful Rate, which
interest shall be due and payable on demand.
"Effective Date" means the date of this Agreement.
"Eurodollar Lending Office" means the office of Texas
Commerce Bank National Association located at 000 Xxxx Xxxxxx,
Xxxxxxx, Xxxxx, or such other office of said Bank as the said Bank may
from time to time specify to Borrower.
"Eurodollar Loan" means a Loan which bears interest at a rate
determined by reference to the Eurodollar Rate.
"Eurodollar Rate" means, for each Eurodollar Loan, an
interest rate per annum determined by dividing (i) the rate per annum
determined by Texas Commerce Bank National Association at or before
10:00 a.m. (Houston time) (or as soon thereafter as practicable) two
(2) Business Days before the first day of the applicable Interest
Period to be the rate per annum at which deposits of dollars are
offered to Texas Commerce Bank National Association by prime banks in
whatever Eurodollar interbank market may be selected by the said Bank
in its sole discretion, acting in good faith, at the time of
determination and in accordance with the usual practice in such market
for delivery on the first day of such Interest Period in immediately
available funds and for a period equal to such Interest Period and in
an amount substantially equal to the amount of the said Bank's
Eurodollar Loan during such Interest Period, by (ii) Statutory
Reserves.
"Event of Default" means any of the events specified in
Section 9 hereof.
-5-
6
"Generally Accepted Accounting Principles" means generally
accepted accounting principles as applied to businesses of this nature
and the official interpretations thereof by the Financial Accounting
Standards Board in effect from time to time. All accounting terms
herein and not otherwise defined shall have the meanings given them in
accordance with generally accepted accounting principles.
"Governmental Authority" means the United States Government,
any state or other political subdivision thereof, and any entity
exercising executive, legislative, judicial, regulatory or
administrative functions of or pertaining to government, and any
corporation or other entity owned or controlled (through stock or
capital ownership or otherwise) by the foregoing.
"Guarantor's Guaranty" means the continuing guaranty
agreement by which each Guarantor unconditionally guarantees payment
of the Note.
"Guaranty" means, with respect to any Person, any obligation
(except the endorsement in the ordinary course of business of
negotiable instruments for deposit or collection) of such Person
guaranteeing or in effect guaranteeing any indebtedness, dividend or
other obligation of any other Person in any manner, whether directly
or indirectly, including (without limitation) obligations incurred
through an agreement, contingent or otherwise, by such Person:
(a) to purchase such indebtedness or obligation or
any property constituting security therefor;
(b) to advance or supply funds (i) for the purchase
or payment of such indebtedness or obligation, or (ii) to
maintain any working capital or other balance sheet condition
or any income statement condition of any other Person or
otherwise to advance or make available funds for the purchase
or payment of such indebtedness or obligation;
(c) to lease properties or to purchase properties or
services primarily for the purpose of assuring the owner of
such indebtedness or obligation of the ability of any other
Person to make payment of the indebtedness or obligation; or
(d) otherwise to assure the owner of such
indebtedness or obligation against loss in respect thereof.
In any computation of the indebtedness or other liabilities of the
obligor under any Guaranty, the indebtedness or other obligations that
are the subject of such Guaranty shall be assumed to be direct
obligations of such obligor.
"Highest Lawful Rate" means the maximum nonusurious contract
interest rate permitted from time to time to be contracted for, taken,
reserved, charged or received on any Loan under applicable federal or
Texas laws, whichever permits the higher lawful rate; provided,
however, that in the event (i) such maximum nonusurious interest rate
shall, at any
-6-
7
time or times during the term of a Loan evidenced hereby, be reduced
to a rate less than the maximum non-usurious contract rate in effect
on the date of such Loan, and (ii) applicable law permits contracting
for, taking, reserving, charging and receiving on such Loan throughout
the duration thereof the maximum nonusurious contract rate in effect
on the date such Loan was made, then and at all such times the Highest
Lawful Rate shall be the maximum nonusurious contract rate permitted
to be contracted for, taken, reserved, charged or received on such
Loan under applicable law in effect on the date of such Loan. At all
such times, if any, as Texas law shall establish the Highest Lawful
Rate, it shall be the "indicated rate ceiling" (as defined in Tex.
Rev. Civ. Stat. art. 5069-1.04) from time to time in effect.
"Indebtedness" with respect to any Person means, at any time,
without duplication,
(a) its liabilities for borrowed money and its
redemption obligations in respect of mandatorily redeemable
Preferred Stock;
(b) its liabilities for the deferred purchase price
of property acquired by such Person (excluding accounts
payable arising in the ordinary course of business but
including all liabilities created or arising under any
conditional sale or other title retention agreement with
respect to any such property);
(c) all liabilities appearing on its balance sheet
in accordance with GAAP in respect of Capital Leases;
(d) all liabilities for borrowed money secured by
any Lien with respect to any property owned by such Person
(whether or not it has assumed or otherwise become liable for
such liabilities);
(e) all its liabilities in respect of letters of
credit or instruments serving a similar function issued or
accepted for its account by banks and other financial
institutions (whether or not representing obligations for
borrowed money);
(f) Swaps of such Person; and
(g) any Guaranty of such Person with respect to
liabilities of a type described in any of clauses (a) through
(f) hereof.
Indebtedness of any Person shall include all obligations of such
Person of the character described in clauses (a) through (g) to the
extent such Person remains legally liable in respect thereof
notwithstanding that any such obligation is deemed to be extinguished
under GAAP.
"Interest Period" means, with respect to any Loan, the period
commencing on the Borrowing Date and ending on the Maturity Date,
consistent with the following provisions. The duration of each
Interest Period shall be:
(a) in the case of an Alternate Base Rate Loan, a
period of up to 90 days; and
-7-
8
(b) in the case of a Eurodollar Loan, two (2) weeks,
one (1) month, three (3) months, or six (6) months;
in each case as selected by Borrower and agreed to by Lender.
Borrower's choice of Interest Period shall also be subject to the
following limitations:
(c) no Interest Period shall end on a date after the
Termination Date of the Note; and
(d) if the last day of an Interest Period would be a
day other than a Business Day, the Interest Period shall end
on the next succeeding Business Day (unless the Interest
Period relates to a Eurodollar Loan and the next succeeding
Business Day is in a different calendar month than the day on
which the Interest Period would otherwise end, in which case
the Interest Period shall end on the next preceding Business
Day); and
(e) there shall not be more than seven (7) Interest
Periods in effect at any one time.
"Lien" means, with respect to any Person, any mortgage, lien,
pledge, charge, security interest or other encumbrance, or any
interest or title of any vendor, lessor, lender or other secured party
to or of such Person under any conditional sale or other title
retention agreement or Capital Lease, upon or with respect to any
property or asset of such Person (including in the case of stock,
stockholder agreements, voting trust agreements and all similar
arrangements).
"Loan Documents" means, as in effect at anytime, this
Agreement, the Note (including all renewals, extensions and
rearrangements thereof), together with all other instruments executed
(i) pursuant to this Agreement or in connection with it, and (ii) any
other document reasonably required by Lender in connection with this
Agreement.
"Revolving Credit Loan Note" means the promissory note of
Borrower executed and delivered under Section 2.02 hereof, including
any and all renewals, modifications, extensions or rearrangements
thereto.
"Maturity Date" means, with respect to any Loan, the maturity
date agreed to by Lender and Borrower with respect to such Loan as the
date when such Loan is due and payable. In no event shall any Maturity
Date fall on a date after the Termination Date.
"Note" shall mean the Revolving Credit Loan Note in the
original principal amount of $5,000,000.00.
-8-
9
"Person" means any natural person, partnership, association,
joint venture, corporation (which shall include any business trust),
bank, trust, unincorporated organization and/or any government, agency
or political subdivision thereof.
"Preferred Stock" means any class of capital stock of a
corporation that is preferred over any other class of capital stock of
such corporation as to the payment of dividends or the payment of any
amount upon liquidation or dissolution of such corporation.
"Requirement of Law" means as to any Person, the Articles of
Incorporation and Bylaws, or other organizational or governing
documents of such Person, and any law, rule or regulation, or
determination of an arbitrator or a court or other Governmental
Authority, in each case applicable to or binding upon, or purporting
to be applicable to or binding upon, such Person or any of its assets
or to which such Person or any of its assets is or purports to be
subject.
"Statutory Reserves" shall mean a fraction (expressed as a
decimal), the numerator of which is the number one and the denominator
of which is the number one minus the aggregate of the maximum reserve
percentages (including, without limitation, any marginal, special,
emergency, or supplemental reserves) expressed as a decimal
established by the Board and any other banking authority to which
Lender or Texas Commerce Bank National Association are subject with
respect to the Eurodollar Rate, for Eurocurrency Liabilities (as
defined in Regulation D of the Board). Such reserve percentages shall
include, without limitation, those imposed under such Regulation D.
Eurodollar Loans shall be deemed to constitute Eurocurrency
Liabilities and as such shall be deemed to be subject to such reserve
requirements without benefit of or credit for proration, exceptions or
offsets which may be available from time to time to any bank under
such Regulation D. Statutory Reserves shall be adjusted automatically
on and as of the effective date of any change in any reserve
percentage.
"Stock" means and includes any and all shares, interests,
participations or other equivalents (howsoever designated) of
corporate stock.
"Subsidiary" means, as to any Person, any corporation,
association or other business entity in which such Person or one or
more of its Subsidiaries or such Person and one or more of its
Subsidiaries owns sufficient equity or Voting Stock to enable it or
them (as a group) ordinarily, in the absence of contingencies, to
elect a majority of the directors (or Persons performing similar
functions) of such entity, and any partnership or joint venture if
more than a 50% interest in the profits or capital thereof is owned by
such Person or one or more of its Subsidiaries or such Person and one
or more of its Subsidiaries (unless such partnership can and does
ordinarily take major business actions without the prior approval of
-9-
10
such Person or one or more of its Subsidiaries). Unless the context
otherwise clearly requires, any reference to a "Subsidiary" is a
reference to a Subsidiary of Limited and, in any event, includes HOTC,
Borrower and HOT-Barbados.
"Swaps" means, with respect to any Person, payment
obligations with respect to interest rate swaps, currency swaps and
similar obligations obligating such Person to make payments, whether
periodically or upon the happening of a contingency. For the purposes
of this Agreement, the amount of the obligation under any Swap shall
be the amount determined in respect thereof as of the end of the then
most recently ended fiscal quarter of such Person, based on the
assumption that such Swap had terminated at the end of such fiscal
quarter, and in making such determination, if any agreement relating
to such Swap provides for the netting of amounts payable by and to
such Person thereunder or if any such agreement provides for the
simultaneous payment of amounts by and to such Person, then in each
such case, the amount of such obligation shall be the net amount so
determined.
"Termination Date" means a final scheduled maturity date of
July 31, 1997.
"Voting Stock" shall mean securities or other equity
interests of any class or classes, the holders of which are
ordinarily, in the absence of contingencies, entitled to elect a
majority of the corporate directors (or persons performing similar
functions in the case of business entities other than corporations).
1.02 Other Definitions.
All terms defined in this Agreement shall have the defined meanings
when used in the Note or any certificate or other document made or delivered
pursuant hereto.
As used herein and in the Note, any certificate or other document made
or delivered pursuant hereto, accounting terms not defined in Section 1.01, and
accounting terms partly defined in Section 1.01, to the extent not defined,
shall have the respective meanings given to them under generally accepted
accounting principles.
The words "hereof", "herein" and "hereunder" and words of similar
import when used in this Agreement shall refer to this Agreement as a whole and
not to any particular provision of this Agreement, and Section, Schedule and
Exhibit references are to this Agreement unless otherwise specified.
2. AMOUNT AND TERMS OF REVOLVING CREDIT LOAN
2.01 Revolving Credit Loan Commitment. Subject to the terms
and conditions and relying upon the representations and warranties set forth in
this Agreement, Lender agrees to lend hereunder to Borrower on any one or more
Business Days during the Commitment Period, for the purpose of providing
working capital and for general corporate purposes, amounts which shall
-10-
11
not at anytime exceed in the principal sum of $5,000,000.00 less the aggregate
unpaid principal amount of all Loans, and the aggregate amount of all Letters
of Credit issued by Lender pursuant to this Agreement, which are outstanding on
the Business Day on which such borrowing is to be made.
To the extent the unpaid principal balance of the Revolving Credit
Loan shall at anytime exceed the amount permitted above, payment in an amount
necessary to reduce the unpaid principal balance of the Note to the lesser of
the amount permitted under this Section, shall be made within two (2) Business
Days.
During the Commitment Period, Borrower may use the Revolving Credit
Loan by borrowing, prepaying as herein provided, and reborrowing; provided,
however, Borrower must be in full compliance with all of the terms of the Loan
Documents at the time of and as a prerequisite to any Loan.
Lender's records shall serve as presumptive evidence of any and all
amounts outstanding under the Revolving Credit Loan.
2.01.1 Letters of Credit. In the event that during the
Commitment Period Lender shall agree to issue on Borrower's account letters of
credit ("Letters of Credit"), as defined in Chapter 5 of the Texas Uniform
Commercial Code - Letters of Credit, then Borrower agrees as aforesaid that (i)
the available principal balance of the Revolving Credit Loan shall be reduced
by the aggregate amount of all Letters of Credit outstanding from time to time;
(ii) outstanding Letters of Credit shall never exceed in the aggregate at any
time the sum of $3,000,000.00, and (iii) no Letter of Credit shall have an
expiry date later than July 31, 1997.
Borrower agrees to pay to Lender all customary charges for issuing
Letters of Credit, and Borrower further agrees that should Lender be required
to fund all or any part of any Letter of Credit on behalf of Borrower, any such
funding shall be simultaneously charged to the Revolving Credit Loan, subject
to all of the terms and conditions of this Agreement.
2.02 Revolving Credit Loan Note. The Revolving Credit Loan
shall be evidenced by the Revolving Credit Loan Note in the principal sum of
$5,000,000.00, dated as of the Effective Date, executed and delivered by
Borrower, payable to the order of Lender, in the form appended hereto as
Exhibit "A". The Termination Date of the Revolving Credit Loan Note shall be
July 31, 1997.
Loans made by Lender under the terms of the Revolving Credit Loan Note
may be either Alternate Base Rate Loans, or two (2) week, one (1) month, three
(3) month, or six (6) month Eurodollar Loans.
Borrower shall pay interest on each Alternate Base Rate Loan for the
Interest Period with respect thereto at a rate per annum equal to the lesser of
(i) the Alternate Base Rate for such Interest Period, or (ii) the Highest
Lawful Rate, which interest shall be due and payable on March 31, 1997, June
30, 1997, and on the Termination Date.
-11-
12
Borrower shall pay interest on each Eurodollar Loan for the Interest
Period with respect thereto on the unpaid principal amount thereof at a rate
per annum equal to the lesser of (i) the Eurodollar Rate plus one percent
(1.00%) (the "Effective Eurodollar Rate"), or (ii) the Highest Lawful Rate,
which interest shall be due and payable on March 31, 1997, June 30, 1997, and
on the Termination Date.
If not sooner paid, the entire unpaid principal of, and all accrued,
unpaid interest on, the Revolving Credit Loan Note shall be due and payable on
July 31, 1997.
2.03 Notice for Revolving Credit Loan Borrowing. Any Loan
which Lender agrees in its sole discretion to make under the Note shall be made
(a) in the case of Eurodollar Loans, on the Borrower's irrevocable notice given
to Lender not later than 10:00 a.m. (Houston time) on the third Business Day
prior to the proposed Borrowing Date, or, (b) in the case of Alternate Base
Rate Loans, on the Borrower's irrevocable notice given to Lender not later than
3:00 p.m. (El Paso time) on the first Business Day prior to the proposed
Borrowing Date. Each such notice of a requested borrowing (a "Notice of
Requested Borrowing") may be oral or in writing, and shall specify (i) the
requested amount of such Loan, (ii) the proposed Borrowing Date, (iii) whether
the requested Loan is to be Alternate Base Rate Loan or a Eurodollar Loan, (iv)
if a Eurodollar Loan, whether it is a two (2) week, one (1) month, three (3)
month, or six (6) month Eurodollar Loan, and (v) the Interest Period for such
Loan. If any Notice of Requested Borrowing shall be oral, Borrower shall
deliver to Lender prior to the Borrowing Date a confirmatory written Notice of
Requested Borrowing.
2.04 Payments. All payments (whether of principal, interest,
reimbursements or otherwise) by or on behalf of Borrower shall be made, in
immediately available funds, at the principal office of Lender without set-off,
deduction or counterclaim. If received prior to 2:00 p.m. (El Paso time),
payments shall be credited on the day of receipt, or if received after 2:00
p.m., payments shall be credited on the next Business Day after receipt by
Lender, and shall be applied first to interest accrued to the date of payment,
and the balance, if any, to the unpaid principal thereof.
Except as is otherwise provided herein with respect to Eurodollar
Loans, if the due date of any payment falls on a day which is not a Business
Day, such date shall be extended to the next succeeding full Business Day and
interest shall be payable for any principal so extended for the period of such
extension.
2.05 Prepayments. Borrower may, at its option, on any
Business Day, prepay the outstanding principal amount of any Alternate Base
Rate Loan, in whole or in part, together with accrued interest to the date of
such prepayment on the principal amount prepaid.
Except as specified in this Section 2.05, Borrower shall have no right
to prepay any Loan.
2.06 Past Due Amounts. Any amount not paid when due with
respect to the principal of a Loan (whether at the Termination Date, by
acceleration or otherwise), costs or expenses, or, to the extent permitted by
applicable law, interest, shall bear interest at the Default Rate. The
principal of any Loan shall be deemed past due if not paid on or before the
expiration of ten (10) days after the Maturity Date or any earlier maturity
date resulting from acceleration in
-12-
13
accordance with the terms of the Note evidencing such Loan or as provided by
law or otherwise. Interest accrued and unpaid with respect to any Loan shall be
deemed past due if not paid on or before the expiration of ten (10) days after
the applicable interest payment date as provided in such Note.
2.07 Set-off. In the event Borrower shall fail to pay any sum
due under the terms of this Agreement or the Note, which failure shall
constitute one or more Events of Default hereunder, Lender shall have the
right, in addition to all other rights and remedies available to it, to
set-off, to the extent permitted by applicable law, against the unpaid balance
of any note held by it or any debt owing to Borrower, HOTC or Limited,
including, without limitation, any funds in any deposit account, whether
general or special in nature, maintained by Borrower, HOTC, or Limited with
Lender, and nothing in this Agreement shall be deemed any waiver or prohibition
of any depository's right or banker's lien or set-off.
3. INTEREST; FEES
3.01 Interest. Interest with respect to Alternate Base Rate
Loans and Eurodollars Loans shall be calculated on the basis of a 360 day year
for the actual days elapsed, unless such calculation would result in a usurious
rate, in which case such interest shall be calculated on the basis of a 365 day
or 366 day year, as the case may be.
3.02 Usury; Non-Usurious Interest. Lender and Borrower intend
in the execution of the Loan Documents to contract in strict compliance with
applicable usury laws. Lender and Borrower therefore stipulate and agree that
none of the terms and provisions contained in this Agreement, or in the Loan
Documents, shall ever be construed to create a contract to pay for the use,
forbearance, or detention of money, or interest at a rate in excess of the
Highest Lawful Rate. Accordingly, it is agreed that (i) the aggregate of all
interest, and other charges and fees constituting interest under applicable
laws, contracted for, chargeable, receivable or reserved under the Loan
Documents or otherwise in connection with this loan transaction, shall never
exceed that which would accrue on the outstanding principal balance of the
Revolving Credit Loan at the Highest Lawful Rate, and (ii) no provision of the
Loan Documents, or any other instrument relating to the Revolving Credit Loan,
shall require the payment or permit the charging, receipt, collection or
reserving of interest in excess of that which would accrue at the Highest
Lawful Rate. If any such excess is, or is adjudicated to be, so provided for,
it shall be deemed a mistake and the provisions of this Section 3.02 shall
govern, and neither Borrower, nor any guarantors, endorsers or other parties
now or hereafter becoming liable for payment of the Note, nor their heirs,
personal representatives, successors or assigns, shall be contractually
obligated to pay such excess, nor shall Lender be permitted to contract for,
charge, receive, collect or reserve such excess, and this Loan Agreement and
the Loan Documents shall automatically be reformed so as to permit only the
charge for and collection of the amount of non-usurious interest allowed under
applicable usury laws. The Highest Lawful Rate shall be computed from the date
Loan funds are disbursed to Borrower for its account, and interest shall, to
the full extent permitted by applicable law, be amortized, prorated, allocated
and spread over the full term of the Note, that is, from the Effective Date
until the Maturity Date, to the extent permitted by applicable law.
-13-
14
Any interest in excess of that which accrues at the Highest Lawful
Rate shall be canceled automatically, and if theretofore paid, shall at
Lender's option, be either refunded to Borrower or credited on the unpaid
principal amount of the Revolving Credit Loan.
For purposes of this Section 3, "interest" shall include, if and to
the extent characterized as interest under applicable law, any charge, payment,
fee or obligation characterized as interest under applicable laws.
4. CONDITIONS OF LENDING
4.01 Conditions Precedent. The obligation of Lender to make
the initial advance constituting a Loan hereunder on the first Borrowing Date
is subject to the receipt by Lender of the following documents, each of which
shall be satisfactory in form and substance to Lender, and the satisfaction of
the following conditions precedent:
(a) Note. Lender shall have received the Note, conforming to
the requirements hereof, duly completed and executed.
(b) Resolutions and Certificates. Lender shall have received,
prior to the execution of the Loan Documents (i) appropriate
resolutions from Borrower evidencing that the partners of Borrower
have authorized execution and delivery of this Agreement and all
instruments contemplated hereby, (ii) appropriate resolutions from
Guarantors evidencing that the Board of Directors or shareholders of
Guarantors, as applicable, have authorized execution and delivery of
this Agreement, the Guarantors' Guaranties, and all instruments
contemplated hereby, (iii) the Articles of Incorporation and Bylaws of
each Guarantor, and a Certificate of Limited Partnership of Borrower
from the State of Texas confirming the existence and good standing of
each Guarantor and Borrower, respectively, and (iv) if applicable, a
certificate of assumed name duly filed as required by law.
(c) Guarantors' Guaranty. Lender shall have received the
Guarantors' Guaranties in form and substance acceptable to the Lender.
(d) Opinion of Counsel. If required by Lender, Lender shall
have received a legal opinion from Borrower's legal counsel opining as
to due organization, existence, good standing and authority of
Borrower and each Guarantor, due authority of the Person or Persons
executing the Loan Documents on behalf of Borrower and each Guarantor,
the enforceability, validity and binding effect of the Loan Documents
to be executed by Borrower and/or each Guarantor, and such other
matters as Lender may reasonably require.
(e) Additional Matters. Such other documents as reasonably
requested by Lender, each duly completed and executed. All documents
and legal matters in connection with the transactions contemplated by
this Agreement shall be satisfactory in form and substance to Lender
and its counsel.
4.02 Conditions to All Loans. The obligation of Lender to
make any Loan under the Revolving Credit Loan is subject to the satisfaction
concurrently with the making of such Loan of the following conditions
precedent:
-14-
15
(a) Representations and Warranties. The representations and
warranties contained in Section 5 hereof, or which are contained in
any certificate, document or financial or other statement furnished at
anytime under or in connection herewith, shall be materially true and
correct on and as of the Borrowing Date for such Loan as if made on
and as of such date.
(b) No Default or Event of Default. No Default or Event of
Default shall have occurred and be continuing on such date, or after
giving effect to the advance to be made on such Borrowing Date unless,
in the case of a Default other than (i) failure to pay the Note as and
when due, (ii) failure to give any notice required in Section 7.05
hereof, and (iii) failure to comply with the negative covenants set
forth in Section 8 hereof (for which no notice or opportunity to cure
is required to be given or is allowed, as the case may be) Borrower
has commenced in good faith to cure any such Default in a manner
reasonably acceptable to Lender.
(c) Delivery of Waived Items. Lender shall have received any
items or documents which were to have been delivered to Lender on or
before the initial funding of the Revolving Credit Loan, the delivery
of which was waived by Lender at the time of the initial funding of
the Revolving Credit Loan.
(d) Approvals. The business and operations of Borrower as
conducted at all times relevant to the transactions contemplated by
this Agreement to and including the close of business on the date of
each advance hereunder shall have been and shall be in compliance with
all applicable laws, regulations and orders of any Governmental
Authority affecting Borrower and its business and operations.
(e) Commitment Fees. All commitment fees, if any, billed to
Borrower pursuant to this Agreement have been paid in full.
5. REPRESENTATIONS AND WARRANTIES
In order to induce Lender to enter into this Agreement and to make the
Revolving Credit Loan, Borrower and each Guarantor jointly and severally
represent and warrant, as of the date hereof, and as of the date of each
advance under the Revolving Credit Loan or any renewal thereof, that:
5.01 Corporate Existence; Compliance with Law.
5.01.1 Borrower is (a) a Texas limited partnership which is
duly organized, validly existing and in good standing; (b) has the
power, authority and legal right to own or lease and operate its
property and to conduct the business in which it is currently engaged;
and (c) is in compliance with all material Requirements of Law,
including, without limitation, all Requirements of Law necessary for
the operation of Borrower's business. Borrower is duly qualified to do
business and is in good standing in all jurisdictions wherein the
character of property it owns or the nature of the business it
transacts makes such qualification necessary.
-15-
16
5.01.2 Limited is (a) a Bermuda corporation which is duly
organized, validly existing and in good standing; (b) has the
corporate power, authority and legal right to own or lease and operate
its property and to conduct the business in which it is currently
engaged; and (c) is in compliance with all material Requirements of
Law, including, without limitation, all Requirements of Law necessary
for the operation of Limited's business. Limited is duly qualified to
do business as a foreign corporation and is in good standing in all
jurisdictions wherein the character of property it owns or the nature
of the business it transacts makes such qualification necessary.
5.01.3 HOTC is (a) a Texas corporation which is duly
organized, validly existing and in good standing; (b) has the power,
authority and legal right to own or lease and operate its property and
to conduct the business in which it is currently engaged; and (c) is
in compliance with all material Requirements of Law, including,
without limitation, all Requirements of Law necessary for the
operation of HOTC's business. HOTC is duly qualified to do business
and is in good standing in all jurisdictions wherein the character of
property it owns or the nature of the business it transacts makes such
qualification necessary.
5.02 Authority; Authorization; Enforceable Obligations.
5.02.1 Borrower has the power, authority and legal right to
make, deliver and perform this Agreement and the Loan Documents and to
borrow hereunder and has taken all necessary action to authorize the
borrowings on the terms and conditions of this Agreement and the Loan
Documents and to authorize the execution, delivery and performance of
this Agreement and the Loan Documents. No further consent of any other
Person (including partners and creditors of Borrower), and no further
authorization of, notice to, or other act by or in respect of any
Governmental Authority, is required in connection with the borrowings
hereunder or with the execution, delivery, performance, validity or
enforceability of this Agreement or the Loan Documents. This Agreement
has been, and the Note will be, duly executed and delivered on behalf
of Borrower, and this Agreement constitutes, and each of the Loan
Documents when executed and delivered will constitute, a legal valid
and binding obligation of Borrower enforceable against Borrower
substantially in accordance with its terms, except as enforceability
may be limited by applicable bankruptcy, insolvency, reorganization,
moratorium or similar laws affecting the enforcement of creditors'
rights generally.
5.02.2 Each Guarantor has the corporate power, authority and
legal right to make, deliver and perform this Agreement and such
Guarantor's Guaranty and has taken all necessary corporate action to
authorize the guarantee of the Revolving Credit Loan on the terms and
conditions of this Agreement and its Guaranty and to authorize the
execution, delivery and performance of this Agreement and its
Guaranty. No further consent of any other Person (including
stockholders and creditors of either Guarantor), and no further
authorization of, notice to, or other act by or in respect of any
Governmental Authority, is required in connection with the execution,
delivery, performance, validity or enforceability of this Agreement or
the Guaranties. This Agreement has been duly executed and delivered on
behalf of each Guarantor, and this Agreement constitutes, and each
Guarantor's Guaranty when executed and delivered will constitute, a
legal valid and binding obligation of such
-16-
17
Guarantor enforceable against such Guarantor substantially in
accordance with its terms, except as enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or
similar laws affecting the enforcement of creditors' rights generally.
5.03 No Legal Bar. The execution, delivery and performance of
this Agreement and the Loan Documents, and the use of the proceeds of the
borrowings hereunder, will not violate any Requirement of Law or any
Contractual Obligation of Borrower or either Guarantor, and will not result in,
or require, the creation or imposition of any Lien on any of their respective
properties or revenues pursuant to any Requirement of Law or Contractual
Obligation.
5.04 No Material Litigation. No litigation, investigation or
proceeding of or before any arbitrator or Governmental Authority is pending or,
to the knowledge of Borrower, Limited or HOTC overtly threatened against
Borrower, Limited or HOTC or any of their respective properties or revenues
with respect to this Agreement or the Loan Documents or any of the transactions
contemplated hereby, which involve the probability of any judgment or liability
not adequately covered by insurance and which, if adversely determined, could
result in any material adverse change in the business, operations, properties,
or financial or other condition of Borrower, Limited or HOTC.
5.05 No Default. Neither Borrower, Limited or HOTC is in
Default under, or with respect to, any Contractual Obligation in any respect
which could be materially adverse to the business, operations, property or
financial or other condition of such party, or which could materially adversely
affect the ability of such party to perform its obligations under this
Agreement and the Loan Documents. None of the execution of and delivery of the
Loan Documents, the consummation of the transactions therein contemplated, and
compliance with the terms and provisions thereof, will conflict with or result
in a breach of, or require any consent (not theretofore obtained at the time
the representation is made) under, applicable law or regulation, or any order,
writ, injunction or decree of any court or Governmental Authority, or any
agreement to which the Borrower, Limited or HOTC is a party or by which it is
bound, or to which it is subject.
5.06 No Burdensome Restrictions. No Contractual Obligation of
Borrower, Limited or HOTC and no Requirement of Law materially adversely
affects, or insofar as Borrower, Limited or HOTC may reasonably foresee may so
affect, the business, operations, property or financial or other condition of
Borrower, Limited or HOTC.
5.07 Taxes. Each of the Borrower and Guarantors has filed all
material tax returns which, to their knowledge, are required to be filed with
any domestic or foreign Governmental Authority, and has paid all taxes shown on
said returns and all assessments which are due, except such taxes the payment
of which is not yet due, or which if due, is not yet delinquent or is being
contested in good faith by appropriate proceedings or which has not been
finally determined. Except as reported in Guarantors' financial statements,
Guarantors know of no claims by any Governmental Authority for any unpaid
taxes, and the charges, accruals and reserves on the books of Guarantors in
respect of all taxes and other governmental charges are, in the opinion of
Guarantors, adequate in all respects.
-17-
18
5.08 Purpose of Loans. Borrower does not own any "margin
stock" within the meaning of Regulation U of the Board of Governors of the
Federal Reserve System (hereinafter called "margin stock"). None of the
proceeds of the Revolving Credit Loan will be used for the purpose of
purchasing or carrying any margin stock or for the purpose of reducing or
retiring any indebtedness which was originally incurred to purchase or carry a
margin stock or for any other purpose which might make this transaction a
"purpose" credit within the meaning of said Regulation U, as now in effect or
as it may hereafter be amended. Neither Borrower, nor any agent acting on its
behalf, has taken or will take any action which might cause this Agreement or
the Note to violate Regulation U, Regulation T or any other regulation of the
Board of Governors of the Federal Reserve System or to violate the Securities
Exchange Act of 1934, as in effect now or as the same may hereafter be in
effect on the date of the Revolving Credit Loan.
5.09 Trade Names. Borrower and each Guarantor have all
licenses, permits, patents, patent rights, trademark rights, trade names, trade
name rights, and copyrights which are required in order for them to conduct
their business as now conducted without known material conflict with the rights
of others.
5.10 Investment Company Act. Borrower to the best of its
knowledge is not, and to the best of its knowledge is not directly or
indirectly controlled by, or acting on behalf of any Person which is an
"investment company" within the meaning of the Investment Company Act of 1940,
as amended.
6. COLLATERAL SECURITY. The Loan is unsecured, but is guaranteed by
Continuing Guaranty Agreements executed by Guarantors.
7. AFFIRMATIVE COVENANTS
Borrower and each Guarantor covenant and agree that so long as this
Agreement, or any renewal, extension or modification hereof, remains in effect,
or any Note remains outstanding and unpaid, or any Liabilities are owing to
Lender, Borrower shall:
7.01 Financial Statements; Reports. Deliver to Lender:
(a) Borrower's Financial Statements. As soon as
available, and in any event (i) within forty-five (45) days after the
end of each of the first three (3) quarters of Borrower's fiscal year,
a quarterly unaudited balance sheet and income statement prepared by
Borrower, and (ii) annually within ninety (90) days after the end of
each fiscal year, Borrower's annual unaudited balance sheet and income
statement prepared by Borrower. The balance sheets and income
statements shall present the separate results of operations (including
investments in Subsidiaries on a cost basis) for Borrower for the
period covered, and Borrower's financial condition as of the end of
such period in a manner consistent with the Borrower's prior unaudited
balance sheets and income statements. Each balance sheet and income
statement shall be certified as such by the General Partner or Chief
Financial Officer of Borrower. The unaudited balance sheets and income
statements need not be prepared in accordance with Generally Accepted
Accounting Principles, so long as they are prepared in a manner
consistent with prior balance sheets and income statements delivered
to the Bank.
-18-
19
(b) Financial Statements of Limited. As soon as
available, and in any event (i) within forty-five (45) days after the
end of each of the first three (3) quarters of Limited's fiscal year,
quarterly unaudited financial statements showing Limited's financial
condition and the results of its operations for each such quarter, and
(ii) annually within ninety (90) days after the end of each fiscal
year, Limited's audited financial statement at the end of and for the
entire fiscal year. Such statements shall be on a consolidated basis
and fairly present the result of Limited's operations for the period
covered and Limited's financial condition as of the end of such period
in accordance with Generally Accepted Accounting Principles
consistently applied. Each quarterly financial statement shall be
certified as such by the President or Chief Financial Officer of
Limited, and each annual statement shall be accompanied by (i) a
report of independent certified public accountants acceptable to
Lender, which report will not be qualified by reason of any audit
limitations imposed by Limited, and, if required by Lender, (ii) a
so-called "Management Letter" to Lender commenting on any accounting
or financial deficiencies.
Each quarterly financial statement shall set forth
Limited's quarterly and year-to-date balance sheet and income
statement prepared in accordance with Generally Accepted Accounting
Principles consistently applied on a comparative basis.
(c) Financial Statements of HOTC. As soon as
available, and in any event (i) within forty-five (45) days after the
end of each of the first three (3) quarters of HOTC's fiscal year, a
quarterly unaudited balance sheet and income statement prepared by
HOTC, and (ii) annually within ninety (90) days after the end of each
fiscal year, HOTC's annual unaudited balance sheet and income
statement prepared by HOTC. The balance sheets and income statements
shall present the separate results of operations (including
investments in Subsidiaries on a cost basis) for HOTC for the period
covered, and HOTC's financial condition as of the end of such period
in a manner consistent with the HOTC's prior unaudited balance sheets
and income statements. Each balance sheet and income statement shall
be certified as such by the President or Chief Financial Officer of
HOTC. The unaudited balance sheets and income statements need not be
prepared in accordance with Generally Accepted Accounting Principles,
so long as they are prepared in a manner consistent with prior balance
sheets and income statements delivered to the Bank.
(d) SEC Reports. Together with each delivery of each
financial statement, a copy of all reports with or submitted to the
Securities and Exchange Commission by Borrower, Limited, or HOTC
during the period covered by such financial statement, including,
without limitation, Form 10-K -- Annual Report, and Form 10-Q --
Quarterly Report;
-19-
20
(e) Compliance Report. Together with each delivery
of each financial statement, a certificate from Borrower's General
Partner or Chief Financial Officer stating that (x) there exists no
Event of Default or, if the same has occurred, stating the nature
thereof, the period of existence thereof and what action Borrower has
taken and proposes to take with respect thereto, and (y) that no
Default (as defined in the Loan Agreement) exists with respect to the
payment of any debt of Borrower, any Affiliate, or, if the same has
occurred, stating the nature thereof, the period of existence thereof
and what action Borrower, or such Affiliate has taken or proposed to
take with respect thereto.
7.02 Payment of Obligations. Pay, discharge or otherwise
satisfy at or before maturity or before they become delinquent, or in
accordance with a plan of arrangement, as the case may be, all its debt and
other obligations of whatever nature, except when the amount or validity
thereof is currently being contested in good faith and by appropriate
proceedings, or, when the amount involved exceeds the sum of $500,000.00,
Lender has been furnished with a certificate of Borrower's Chief Financial
Officer stating that Borrower has a bona fide defense to the debt being
contested and that Borrower is contesting such indebtedness in good faith.
7.03 Conduct of Business and Maintenance of Existence.
Continue to engage in business of the same general type as now conducted by it,
and preserve, renew and keep in full force and maintain all rights, privileges
and franchises necessary or desirable in the normal conduct of its business;
comply with all Contractual Obligations and Requirements of Law except to the
extent that the failure to comply therewith could not, in the aggregate, have a
material adverse effect on the business, operations, property or financial or
other condition of Borrower.
7.04 Inspection of Books and Records; Discussions. Keep
proper books of records and accounts in which full, true and correct entries in
conformity with generally accepted accounting principles, and all Requirements
of Law, shall be made of all dealings and transactions in relation to their
respective business and activities; and permit representatives of Lender, upon
reasonable advance notice, to visit and inspect any of its books and records at
any reasonable time and as often as may reasonably be desired, and to discuss
the business, operations, properties and financial and other condition of each
such party with their respective officers and employees and with their
respective independent certified public accountants.
7.05 Notices. Promptly give notice to Lender in writing of:
(a) the occurrence of any Default or Event of
Default;
(b) any default, or claim of default, with respect
to any Contractual Obligation of Borrower, Limited or HOTC in excess
of $500,000.00;
(c) any litigation, arbitration, administrative
proceeding, or other proceeding affecting Borrower, Limited or HOTC in
which (i) the amount involved is $500,000.00 or more, which involves
the probability of any judgment or liability not adequately covered by
insurance, or (ii) in which injunctive or similar relief is sought,
and which, if adversely determined, could result in any material
adverse change in the business, operations, properties, or financial
or other condition of Borrower, Limited or HOTC;
-20-
21
(d) a material adverse change in the business,
operations, property or financial or other condition of Borrower;
(e) the resignation or removal of Xxxxxx X. Xxxxx as
Chairman of the Board of Directors of HOTC, and/or the resignation or
removal of Xxx X. Xxxxx as an officer of HOTC, after the date of this
Agreement; and
(f) any material change in the method of computing
its depreciation for either tax or book purposes, or make any other
material change in its accounting method, at least fifteen (15) days
prior to the effective date of such change.
Each notice pursuant to this Section 7.05 shall be accompanied by a
statement of a senior officer setting forth details of the occurrence referred
to therein and stating what action Borrower proposes to take with respect
thereto.
7.06 Payment of Expenses and Costs. Pay all costs and
expenses of Lender (including, without limitation, the reasonable attorneys'
fees of its legal counsel) in connection with the enforcement or preservation
of Lender's rights under the Loan Documents; and Borrower will pay all costs
and expenses (including, without limitation, the reasonable attorneys' fees of
Lender's legal counsel) in connection with the preparation, execution and
delivery of this Agreement and the other documents described herein and any and
all amendments, modifications and supplements thereof or thereto, whether or
not the transactions contemplated hereby are consummated.
7.07 Amendments to Note Purchase Agreement. Give Lender
written notice prior to amending that certain Note Purchase and Guaranty
Agreement dated effective January 5, 1996, by and among HOTC, Limited and
certain note purchasers as further described therein, and to deliver copies of
any such amendments to the Lender within ten (10) days following the date the
amendment(s) is fully executed.
7.08 Dividends. Have the right to declare and pay dividends
on any shares of any class of its Stock, so long as no Event of Default has
occurred and is continuing at the time of such payment, and so long as the
making of such payment does not cause or create an Event of Default.
8. NEGATIVE COVENANTS
Borrower and each Guarantor covenant and agree that so long as this
Agreement, or any renewal, extension or modification hereof, remains in effect,
or the Note remains outstanding and unpaid, or any Liabilities are owing to
Lender:
8.01 Consolidated Net Worth. Limited will not permit
Consolidated Net Worth (i) at any time during the period commencing on the date
of this Agreement and ending on February 29, 1996 to be less than $65,000,000,
(ii) at the end of the fiscal quarter of Limited ending on May 31, 1996 to be
less than $65,000,000 plus the greater of zero or 40% of Consolidated Net
Earnings for such quarter, or (iii) at any time during any fiscal quarter of
Limited thereafter to be less than the
-21-
22
minimum Consolidated Net Worth required by this Section at the end of the
immediately preceding fiscal quarter of Limited plus the greater of zero or 40%
of Consolidated Net Earnings for the immediately preceding fiscal quarter of
Limited.
8.02 Consolidated Indebtedness. Limited will not permit
Consolidated Indebtedness to exceed 55% of Consolidated Total Capitalization at
any time.
8.03 Liens. Neither Borrower, HOTC nor Limited shall grant,
create, incur, assume, permit or suffer to exist any Lien upon its property,
assets or revenues, whether now owned or hereafter acquired, except:
(a) liens for taxes 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 such
party in accordance with generally accepted accounting principles;
(b) other Liens incidental to the conduct of its
business or the ownership of its assets which (i) are expressly
subordinated to all debt due Lender, and (ii) which do not in the
aggregate materially detract from such party's ability to perform its
obligations hereunder or in connection herewith;
(c) liens created by this Agreement, or hereafter
granted to Lender for the benefit of Lender;
(d) purchase money Liens granted in connection with
any purchase of equipment;
(e) liens, or any existing pledge of a deposit,
securing the payment of senior debt by an Affiliate or Subsidiary to a
foreign financial institution as disclosed in the financial statements
delivered pursuant to Section 5.07 of this Agreement or which may be
granted or amended and may be disclosed from time to time by any such
party.
8.04 Operations. Neither Borrower, HOTC, nor Limited shall
materially change the nature of the business in which it is presently engaged.
8.05 Law. Neither Borrower, HOTC nor Limited shall be in
violation of any law or any regulation, order, writ, injunction or decree of
any court or Governmental Authority, or in breach of any agreement or
instrument to which Borrower, HOTC or Limited is a party or to which Borrower,
HOTC or Limited is subject or in Default thereunder, the breach or violation of
which, or Default under which, would have a material adverse effect on
Borrower, HOTC or Limited, or their respective financial condition.
8.06 Overdrafts. Borrower shall not use overdrafts or draw on
uncollected funds instead of using the proceeds of the Revolving Credit Loan
available under this Agreement. If such an event does occur, Borrower agrees to
pay interest on such overdrafts and uncollected funds, in addition to any other
charges applicable to such overdrafts and uncollected funds, at the Alternate
Base Rate; provided, however, in no event shall the rate contracted for,
charged to Borrower,
-22-
23
received, collected or reserved hereunder exceed the Highest Lawful Rate, and
if application of the Alternate Base Rate as provided in this Section, or any
other circumstances, would cause the rate of interest hereunder to exceed the
Highest Lawful Rate, the rate of interest hereunder shall automatically be
reduced to the Highest Lawful Rate.
8.07 Merger. Without the written consent of Lender, which
shall not be unreasonably withheld, Borrower, HOTC and Limited shall not, and
shall not permit any Subsidiary of either to, enter into any transaction of
merger, consolidation, reorganization, exchange of Stock or assets, or
liquidate, wind up or dissolve itself (or suffer any liquidation or
dissolution), or otherwise dispose of all or a substantial part of their
assets, except that, for so long as no Event of Default has occurred and is
continuing, (i) any Subsidiary may merge into or transfer assets to Borrower,
HOTC or Limited, and (ii) any Subsidiary may merge into or consolidate with or
transfer assets to any other Subsidiary.
8.08 Management. Limited shall not, and shall not permit its
Affiliates to change the duties, obligations, titles and offices of Xxxxxx X.
Xxxxx without the prior written consent of the Lender.
9. EVENTS OF DEFAULT
9.01 Events of Default. The following shall be Events of
Default under this Agreement:
(a) Borrower shall fail to pay any principal of or
interest on the Note, or either of them, or any other amount payable
hereunder, within ten (10) days after the date due in accordance with
the terms hereof; or
(b) any representation or warranty made or deemed
made by Borrower or either Guarantor herein or which is contained in
any certificate, document or financial or other statement furnished at
anytime under or in connection with this Agreement shall prove to have
been incorrect in any material respect on or as of the date made or
deemed made; or
(c) Borrower or either Guarantor shall Default in
the observance or performance of any other covenant or agreement
contained in this Agreement, and (except for Borrower's covenants as
to (i) notices as set forth in Section 7.05, and (ii) negative
covenants as set forth in Section 8 hereof, for which no notice or
opportunity to cure is required to be given or is allowed, as the case
may be) said Default shall have continued for a period of thirty (30)
days after written notice thereof shall have been given to Borrower by
Lender, or Borrower or either Guarantor, as the case may be, has not,
by the expiration of such thirty (30) day period, commenced in good
faith to cure such Default and pursue such cure with diligence; or
(d) Borrower or either Guarantor shall Default in
its payments according to a plan of arrangement, composition or
readjustment of its debts or any other event shall occur, the effect
of which Default or other event is to cause, or permit the holder or
holders of any material indebtedness or beneficiary or beneficiaries
of any material Contingent
-23-
24
Obligation (or a trustee or agent on behalf of such holder or holders
or beneficiary or beneficiaries) to cause, any material indebtedness
or Contingent Obligation to become due prior to its stated maturity;
or
(e) Borrower or either Guarantor shall commence any
case, proceeding or other action relating to it in bankruptcy or seek
reorganization, liquidation, dissolution, winding-up, arrangement,
composition, readjustment of debt or other similar act or law of any
jurisdiction, domestic or foreign, now or hereafter existing; or
Borrower or either Guarantor shall apply for a receiver, custodian or
trustee of it or for all or a substantial part of its property; or
Borrower or either Guarantor shall make an assignment for the benefit
of creditors; or
(f) any case, proceeding or other action against
Borrower or either Guarantor shall be commenced in bankruptcy or
Borrower or either Guarantor shall seek reorganization, liquidation,
dissolution, winding-up, arrangement, composition or readjustment of
its debts, or any other relief, under any bankruptcy, insolvency,
reorganization, liquidation, dissolution, arrangement, composition,
readjustment of debt or other similar act or law of any jurisdiction,
domestic or foreign, now or hereafter existing; or a receiver,
custodian or trustee of Borrower or either Guarantor or for all or a
substantial part of its property shall be appointed; or a warrant of
attachment, execution or distraint, or similar process, shall be
issued against any substantial part of the property of Borrower or
either Guarantor; and in each such case such condition shall continue
for a period of sixty (60) days undismissed, undischarged or unbonded;
or
(g) one or more judgments or decrees shall be
entered against Borrower or either Guarantor involving in the
aggregate a liability (not paid or fully covered by insurance) of
$500,000.00 or more and all such judgments or decrees shall not have
been vacated, discharged or stayed or bonded pending appeal within
sixty (60) days from the entry thereof; or
(i) the failure by Borrower or either Guarantor to
perform any covenant or agreement contained in this Agreement (after
the expiration of any applicable cure period); or
(j) upon the occurrence of an Event of Default under
the terms of, and as defined in, that certain Note Purchase and
Guaranty Agreement dated effective January 5, 1996, among Guarantors
and certain named purchasers, regarding the purchase of 7.01%
Guaranteed Senior Notes due January 5, 2008.
Upon the occurrence of any Event of Default, either or both of the
following actions may be taken by Lender: (a) declare the Commitment to be
terminated forthwith, whereupon the Commitment shall immediately terminate; and
(b) declare the Revolving Credit Loan (with accrued interest thereon) and all
other amounts owing under this Agreement and the Note to be due and payable
forthwith, whereupon the same shall immediately become due and payable, without
presentment, demand, protest, notice of intent to accelerate, notice of
acceleration, or other notice of any kind, all of which are hereby expressly
waived, except as otherwise expressly provided herein.
-24-
25
10. MISCELLANEOUS
10.01 Amendment; Waivers. Borrower and Lender may, from time
to time, enter into written amendments, supplements, waivers or modifications
hereto for the purpose of adding any provisions to this Agreement or the Note
or changing in any manner the rights of Lender or of Borrower hereunder or
thereunder.
10.02 No Waiver; Cumulative Remedies. No failure to exercise
and no delay in exercising, on the part of Lender, any right, power or
privilege hereunder, shall operate as a waiver thereof; nor shall any single or
partial exercise of any other right, power or privilege. The rights and
remedies herein provided are cumulative and not exclusive of any rights or
remedies provided by law.
10.03 GOVERNING LAW. THIS AGREEMENT AND THE NOTE SHALL BE
DEEMED TO BE CONTRACTS UNDER THE LAWS OF THE STATE OF TEXAS AND FOR ALL
PURPOSES SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH THE LAWS OF SAID
STATE AND APPLICABLE FEDERAL LAW. TEX. REV. CIV. STAT. XXX. ART. 5069-15.01, AS
AMENDED, SHALL NOT APPLY TO THIS AGREEMENT AND THE NOTE ISSUED HEREUNDER.
10.04 Survival of Representation and Warranties. All
representations and warranties made by Borrower and Guarantors hereunder and in
any document, certificate or statement delivered pursuant hereto or in
connection herewith shall survive the execution and delivery of this Agreement
and the Note.
10.05 Successors and Assigns. This Agreement shall be binding
upon and inure to the benefit of Borrower, Guarantors and Lender, all future
holders of the Note and their respective successors and assigns, except that
Borrower may not assign or transfer any of its rights under this Agreement
without the prior written consent of Lender.
10.06 Severability. Should any clause, sentence, paragraph or
Section of this Agreement be judicially declared to be invalid, unenforceable
or void, such decision will not have the effect of invalidating or voiding the
remainder of this Agreement and the parties hereto agree that the part or parts
of this Agreement so held to be invalid, unenforceable or void will be deemed
to have been stricken herefrom and the remainder will have the same force and
effectiveness as if such part or parts had never been included herein.
10.07 Descriptive Headings. The Section headings in this
Agreement have been inserted for convenience only and shall be given no
substantive meaning or significance whatsoever in construing the terms and
provisions of this Agreement.
10.08 Counterparts. This Agreement may be executed by one or
more of the parties to this Agreement on any number of separate counterparts
and all of said counterparts taken together shall be deemed to constitute one
and the same instrument.
-25-
26
10.09 No Liability. Lender shall not be deemed to be a
partner or a Joint Venturer of Borrower or an agent or principal of Borrower,
nor shall it be liable for the performance or Default of any party other than
Lender. Nothing, including, without limitation, any advance of any of the
proceeds of the Revolving Credit Loan, or any acceptance of any document, shall
be construed as a representation or warranty of any kind by Lender.
10.10 Indemnity. Borrower and Guarantors agree to protect,
indemnify, defend and save harmless Lender and its directors, officers, agents,
and employees from and against any and all liability, expense or damage of any
kind or nature and from any suits, claims, commissions, brokerage fees or
demands, including reasonable legal fees and expenses on account of any matter
or thing, whether in suit or not, arising out of this Agreement, the Revolving
Credit Loan, the Note, or in connection herewith, unless the suits, claims,
commissions, brokerage fees or damages are caused by the negligence or willful
misconduct by Lender, or any of the parties herein indemnified. This obligation
shall survive the repayment of the indebtedness evidenced by the Note.
10.11 Assignment. Neither this Agreement, nor the Loan
proceeds shall be assignable by Borrower without the prior written consent of
Lender and any attempt at any such assignment without such consent shall be
void and at the option of Lender be deemed a Default hereunder.
10.12 No Third Party Beneficiaries. This Agreement is made
for the sole and exclusive benefit of Borrower and Guarantors. No other person,
firm, corporation or entity shall have any right of action, claim for relief or
benefit from this Agreement, nor shall this Agreement be construed to establish
any fund, loan, or payment for the benefit of anyone not a party hereto.
10.13 Notices. All notices, requests and demands to or upon
the respective parties hereto shall be effective and shall be deemed to have
been duly given or made, unless otherwise expressly provided herein, when
deposited in the mail, postage prepaid, certified mail, return receipt
requested. The mailing address of each party for the purpose of this Section
10.13 is as follows:
Borrower: 0000 Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention:
Xxxxxx X. Xxxxx
Xxx X. Xxxxx
Guarantors: 0000 Xxxxxx
Xx Xxxx, Xxxxx 00000
Attention:
Xxxxxx X. Xxxxx, Chairman
Xxx X. Xxxxx, Chief Financial Officer
Lender: P. O. Drawer 000
Xx Xxxx, Xxxxx 00000
Attention: Xxxxx X. Xxxxxx,
Senior Vice President, Corporate
Banking Division
-26-
27
10.14 Exhibits. Exhibit A appended hereto is hereby
incorporated herein for all purposes.
10.16 Sale of Participations. Lender reserves the right in
its sole discretion, without notice to Borrower or Guarantors, to sell
participations or assign its interest, or both, in all or any part of the
Revolving Credit Loan, the Note or the Commitment to banks owned by Chemical
Banking Corporation or Texas Commerce Bancshares, Inc., and further reserves
the right to sell such participations and/or assign such interests to any other
financial institution with the written consent of Borrower.
NOTICE
THIS WRITTEN LOAN AGREEMENT REPRESENTS THE FINAL AGREEMENT BETWEEN THE
PARTIES AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR
SUBSEQUENT ORAL AGREEMENTS OF THE PARTIES.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
EXECUTED TO BE EFFECTIVE as of December 31, 1996, regardless of the
date actually signed.
XXXXX OF XXXX L.P., a Texas limited partnership
By: XXXXX OF XXXX NEVADA CORPORATION,
a Nevada corporation, General Partner
By: /s/ Xxx X. Xxxxx
--------------------------------------
Xxx X. Xxxxx, Chief Financial Officer
BORROWER
TEXAS COMMERCE BANK
NATIONAL ASSOCIATION
By: /s/ Xxxxx X. Xxxxxx
--------------------------------------
Xxxxx X. Xxxxxx, Senior Vice President
LENDER
