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EXHIBIT 4.5
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CREDIT AGREEMENT
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AMONG
ENERGY VENTURES, INC.,
as the Company,
THE SUBSIDIARY GUARANTORS,
THE LENDERS DEFINED THEREIN
AND
THE CHASE MANHATTAN BANK, N.A.,
as the Agent
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DATED AS OF JUNE 26, 1996
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TABLE OF CONTENTS
PAGE
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ARTICLE I DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION 1.01. Definitions . . . . . . . . . . . . . . . . . . . . . . . . 1
SECTION 1.02. Classes and Types of Loans . . . . . . . . . . . . . . . . 39
SECTION 1.03. Accounting Terms; Changes in GAAP . . . . . . . . . . . . . 39
SECTION 1.04. Interpretation . . . . . . . . . . . . . . . . . . . . . . 39
ARTICLE II LOANS
SECTION 2.01. Commitments . . . . . . . . . . . . . . . . . . . . . . . . 41
SECTION 2.02. Minimum Amount of Each Borrowing . . . . . . . . . . . . . 42
SECTION 2.03. Notice of Borrowing . . . . . . . . . . . . . . . . . . . . 42
SECTION 2.04. Disbursement of Funds . . . . . . . . . . . . . . . . . . . 42
SECTION 2.05. Notes . . . . . . . . . . . . . . . . . . . . . . . . . 43
SECTION 2.06. Conversions . . . . . . . . . . . . . . . . . . . . . . . . 44
SECTION 2.07. Pro Rata Borrowing . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.08. Interest . . . . . . . . . . . . . . . . . . . . . . . . . 45
SECTION 2.09. Interest Periods . . . . . . . . . . . . . . . . . . . . . 46
SECTION 2.10. Interest Rate Not Ascertainable, Etc. . . . . . . . . . . . 47
SECTION 2.11. Reserve Requirements; Change in Circumstances . . . . . . . 48
SECTION 2.12. Illegality . . . . . . . . . . . . . . . . . . . . . . . . 50
SECTION 2.13. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 51
SECTION 2.14. Telephonic Notice . . . . . . . . . . . . . . . . . . . . . 52
ARTICLE III LETTERS OF CREDIT
SECTION 3.01. Letters of Credit . . . . . . . . . . . . . . . . . . . . . 52
SECTION 3.02. Letter of Credit Requests . . . . . . . . . . . . . . . . . 53
SECTION 3.03. Letter of Credit Participations; Etc. . . . . . . . . . . . 54
SECTION 3.04. Agreement to Repay Letter of Credit Drawings . . . . . . . 55
SECTION 3.05. Increased Costs . . . . . . . . . . . . . . . . . . . . . . 56
SECTION 3.06. Conflict between Applications and Agreement . . . . . . . . 58
ARTICLE IV FEES; COMMITMENTS; PAYMENTS
SECTION 4.01. Fees . . . . . . . . . . . . . . . . . . . . . . . . . 58
SECTION 4.02. Voluntary Reduction of Revolving Credit Commitments . . . . 59
SECTION 4.03. Mandatory Reduction of Commitments . . . . . . . . . . . . 59
SECTION 4.04. Voluntary Prepayments . . . . . . . . . . . . . . . . . . . 60
SECTION 4.05. Scheduled Principal Payments and Mandatory Payments . . . . 60
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SECTION 4.06. Method and Place of Payment . . . . . . . . . . . . . . . . 62
SECTION 4.07. Taxes . . . . . . . . . . . . . . . . . . . . . . . . . 62
ARTICLE V CONDITIONS PRECEDENT
SECTION 5.01. Conditions Precedent to the Initial Credit Event . . . . . 64
SECTION 5.02. Conditions Precedent to All Credit Events . . . . . . . . . 67
SECTION 5.03. Conditions Precedent to Conversions . . . . . . . . . . . . 68
SECTION 5.04. Delivery of Documents . . . . . . . . . . . . . . . . . . . 68
ARTICLE VI REPRESENTATIONS AND WARRANTIES
SECTION 6.01. Organization and Qualification . . . . . . . . . . . . . . 68
SECTION 6.02. Authorization, Validity, Etc. . . . . . . . . . . . . . . . 69
SECTION 6.03. Governmental Consents, Etc. . . . . . . . . . . . . . . . . 69
SECTION 6.04. Conflicting or Adverse Agreements or Restrictions . . . . . 69
SECTION 6.05. Title to Assets . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.06. Litigation . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.07. Information Memorandum; Financial Statements . . . . . . . 70
SECTION 6.08. Default . . . . . . . . . . . . . . . . . . . . . . . . . 70
SECTION 6.09. Investment Company Act . . . . . . . . . . . . . . . . . . 70
SECTION 6.10. Public Utility Holding Company Act . . . . . . . . . . . . 70
SECTION 6.11. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 71
SECTION 6.12. Tax Returns and Payments . . . . . . . . . . . . . . . . . 71
SECTION 6.13. Requirements of Law; Environmental Matters . . . . . . . . 72
SECTION 6.14. Purpose of Loans . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.15. Franchises and Other Rights . . . . . . . . . . . . . . . . 73
SECTION 6.16. Solvency . . . . . . . . . . . . . . . . . . . . . . . . . 73
SECTION 6.17. No Intent to Hinder, Delay or Defaud . . . . . . . . . . . 74
SECTION 6.18. Further Actions . . . . . . . . . . . . . . . . . . . . . . 74
ARTICLE VII AFFIRMATIVE COVENANTS
SECTION 7.01. Information Covenants . . . . . . . . . . . . . . . . . . . 74
SECTION 7.02. Books, Records and Inspections . . . . . . . . . . . . . . 78
SECTION 7.03. Insurance and Maintenance of Properties . . . . . . . . . . 78
SECTION 7.04. Payment of Taxes and other Claims . . . . . . . . . . . . . 79
SECTION 7.05. Existence . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.06. Compliance with Statutes, Etc. . . . . . . . . . . . . . . 80
SECTION 7.07. ERISA . . . . . . . . . . . . . . . . . . . . . . . . . 80
SECTION 7.08. End of Fiscal Year; Fiscal Quarters . . . . . . . . . . . . 81
SECTION 7.09. Subrogation; Purchase Money Liens . . . . . . . . . . . . . 81
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SECTION 7.10. Performance of Loan Documents . . . . . . . . . . . . . . . 81
SECTION 7.11. Indemnification for Breach of Representations or Covenants 82
ARTICLE VIII NEGATIVE COVENANTS
SECTION 8.01. Change in Business . . . . . . . . . . . . . . . . . . . . 82
SECTION 8.02. Consolidation, Merger, Sale or Purchase of Assets, Etc. . . 82
SECTION 8.03. Liens . . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 8.04. Indebtedness . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 8.05. Stock Issuance . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 8.06. Investments . . . . . . . . . . . . . . . . . . . . . . . . 86
SECTION 8.07. Restricted Payments . . . . . . . . . . . . . . . . . . . . 87
SECTION 8.08. Net Worth . . . . . . . . . . . . . . . . . . . . . . . . . 89
SECTION 8.09. Other Financial Covenants . . . . . . . . . . . . . . . . . 90
SECTION 8.10. Limitation on Transactions with Affiliates . . . . . . . . 90
SECTION 8.11. Ownership of Subsidiaries . . . . . . . . . . . . . . . . . 91
SECTION 8.12. Limitation on Sale-Leaseback Transactions . . . . . . . . . 91
SECTION 8.13. Change in Accounting . . . . . . . . . . . . . . . . . . . 92
ARTICLE IX GUARANTY
SECTION 9.01. Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . 92
SECTION 9.02. Continuing Guaranty . . . . . . . . . . . . . . . . . . . . 92
SECTION 9.03. Effect of Debtor Relief Laws . . . . . . . . . . . . . . . 95
SECTION 9.04. General Limitation on Guarantee Obligations . . . . . . . . 96
SECTION 9.05. Rights of Contribution . . . . . . . . . . . . . . . . . . 96
SECTION 9.06. Subrogation . . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 9.07. Subordination . . . . . . . . . . . . . . . . . . . . . . . 97
SECTION 9.08. Waiver . . . . . . . . . . . . . . . . . . . . . . . . . 98
SECTION 9.09. Full Force and Effect . . . . . . . . . . . . . . . . . . . 98
ARTICLE X EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Event sof Default and Remedies . . . . . . . . . . . . . . 98
SECTION 10.02. Other Remedies . . . . . . . . . . . . . . . . . . . . . . 102
SECTION 10.03. Application of Moneys During Continuation of
Event of Default . . . . . . . . . . . . . . . . . 103
ARTICLE XI THE AGENT
SECTION 11.01. Authorization and Action . . . . . . . . . . . . . . . . . 104
SECTION 11.02. Agent's Reliance, Etc. . . . . . . . . . . . . . . . . . . 104
SECTION 11.03. Agent and Affiliates; Chase and Affiliates . . . . . . . . 105
SECTION 11.04. Lender Credit Decision . . . . . . . . . . . . . . . . . . 106
SECTION 11.05. Agent's Indemnity . . . . . . . . . . . . . . . . . . . . . 106
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SECTION 11.06. Successor Agent . . . . . . . . . . . . . . . . . . . . . . 107
SECTION 11.07. Notice of Default . . . . . . . . . . . . . . . . . . . . . 107
SECTION 11.08. Consents under Other Security Documents . . . . . . . . . . 107
ARTICLE XII MISCELLANEOUS
SECTION 12.01. Amendments, Etc. . . . . . . . . . . . . . . . . . . . . . 108
SECTION 12.02. Notices, Etc. . . . . . . . . . . . . . . . . . . . . . . . 108
SECTION 12.03. No Waiver; Remedies . . . . . . . . . . . . . . . . . . . . 110
SECTION 12.04. Costs, Expenses and Taxes . . . . . . . . . . . . . . . . . 111
SECTION 12.05. Indemnity . . . . . . . . . . . . . . . . . . . . . . . . . 111
SECTION 12.06. Right of Setoff . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 12.07. Governing Law . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 12.08. Interest . . . . . . . . . . . . . . . . . . . . . . . . . 112
SECTION 12.09. Survival of Representations and Warranties . . . . . . . . 112
SECTION 12.10. Binding Effect . . . . . . . . . . . . . . . . . . . . . . 113
SECTION 12.11. Successors and Assigns; Participations . . . . . . . . . . 113
SECTION 12.12. Confidentiality . . . . . . . . . . . . . . . . . . . . . . 116
SECTION 12.13. Pro Rata Treatment . . . . . . . . . . . . . . . . . . . . 117
SECTION 12.14. Independence of Documents . . . . . . . . . . . . . . . . . 117
SECTION 12.15. Separability . . . . . . . . . . . . . . . . . . . . . . . 118
SECTION 12.16. Execution in Counterparts . . . . . . . . . . . . . . . . . 118
SECTION 12.17. Submission to Jurisdiction . . . . . . . . . . . . . . . . 118
SECTION 12.18. Waiver of Jury Trial . . . . . . . . . . . . . . . . . . . 119
SECTION 12.19. Final Agreement of the Parties . . . . . . . . . . . . . . 119
EXHIBITS
Exhibit 1.01A - Administrative Questionnaire
Exhibit 1.01B - Borrowing Base Certificate
Exhibit 1.01C - Receivables
Exhibit 1.01D - Existing Letters of Credit
Exhibit 2.03 - Notice of Borrowing
Exhibit 2.05A - Form of Tranche A Revolving Credit Note
Exhibit 2.05B - Form of Tranche B Revolving Credit Note
Exhibit 3.02 - Letter of Credit Request
Exhibit 8.02 - Form of Subsidiary Guarantor Counterpart
Exhibit 12.11 - Form of Assignment and Acceptance
SCHEDULES
Schedule 1.01A - Permitted Indebtedness
Schedule 1.01B - Permitted Liens
Schedule 6.01 - List of Subsidiaries of the Company
Schedule 6.13 - Environmental Matters
Schedule 8.06 - Permitted Investments
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CREDIT AGREEMENT
THIS CREDIT AGREEMENT, dated as of June 26, 1996 (this
"Agreement"), is among:
(a) Energy Ventures, Inc., a Delaware corporation (the
"Company");
(b) EVI Oil Tools, Inc., a Delaware corporation; Grant
Prideco, Inc., a Delaware corporation; Channelview Real
Property, Inc., a Delaware corporation; Prideco, Inc., a
Texas corporation; Prideco Holdings, Inc., a Delaware
corporation; Mallard Bay Drilling, Inc., a Louisiana
corporation; Bay Drilling Corporation, a Louisiana
corporation; EV Offshore, Inc., a Louisiana corporation;
AWI Drilling & Workover, Inc., a Louisiana corporation;
Delta Crewboats, Inc., a Louisiana corporation; EVI
International, Inc., a Delaware corporation; and EVI
Management Inc., a Delaware corporation (together with
each other Person that becomes a Subsidiary Guarantor
pursuant to Section 8.02, collectively, the "Subsidiary
Guarantors");
(c) the banks and other financial institutions listed on the
signature pages hereof under the caption "Lenders"
(together with each other Person that becomes a Lender
pursuant to Section 12.11, collectively, the "Lenders");
and
(d) The Chase Manhattan Bank, N.A., individually as a Lender
and as agent for the other Lenders (in such capacity
together with any other Person that becomes the Agent
pursuant to Section 11.06, the "Agent").
ARTICLE I
DEFINITIONS; ACCOUNTING TERMS; INTERPRETATION
SECTION 1.01. Definitions. As used in this Agreement, the
following terms shall have the following meanings:
"Administrative Questionnaire" means an Administrative
Questionnaire in the form of Exhibit 1.01A, which each Lender shall complete
and provide to the Agent and the Company.
"Affiliate" means, with respect to any Person, any other Person
that, directly or indirectly, controls, is controlled by or is under direct or
indirect common control with, such Person. For the purposes of this
definition, "control" (including, with correlative meanings,
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the terms "controlling" and "controlled"), when used with respect to any Person,
means the power to direct the management and policies of such Person, directly
or indirectly, whether through the ownership of voting securities, by contract
or otherwise.
"Affiliate Transaction" has the meaning specified in Section
8.10.
"Agent" has the meaning specified in the introduction to this
Agreement.
"Agent's Letter" has the meaning specified in Section 4.01(d).
"Agreement" has the meaning specified in the introduction to
this Agreement.
"Alternate Base Rate" means, for any date, a rate per annum
(rounded upwards, if necessary, to the next 1/16 of 1%) equal to the greatest
of (a) the Prime Rate in effect on such day, (b) the Base CD Rate in effect on
such day plus 1% and (c) the Federal Funds Effective Rate in effect on such day
plus 1/2 of 1%. For purposes hereof, the term "Prime Rate" shall mean, as of
a particular date, the prime rate most recently announced by the Agent at its
Payment Office, automatically fluctuating upward and downward with and at the
time specified in each such announcement without notice to the Company or any
other Person, which prime rate may not necessarily represent the lowest or best
rate actually charged to a customer. "Base CD Rate" shall mean the sum of (x)
the product of (i) the Three-Month Secondary CD Rate and (ii) Statutory
Reserves and (y) the Assessment Rate. "Three-Month Secondary CD Rate" means,
for any day, the secondary market rate, for three-month certificates of deposit
reported as being in effect on such day (or, if such day is not a Business Day,
the next preceding Business Day) by the Board through the public information
telephone line of the Federal Reserve Bank of New York (which rate will, under
the current practices of the Board, be published in Federal Reserve Statistical
Release H.15(519) during the week following such day), or, if such rate shall
not be so reported on such day or such next preceding Business Day, the average
of the secondary market quotations for three-month certificates of deposit of
major money center banks in New York City received at approximately 9:00 a.m.
(New York City time) on such day (or, if such day shall not be a Business Day,
on the next preceding Business Day) by the Agent from three New York City
negotiable certificate of deposit dealers of recognized standing selected by
it. "Federal Funds Effective Rate" means, for any day, the weighted average of
the rates on overnight federal funds transactions with members of the Federal
Reserve System arranged by federal funds brokers, as published for such day
(or, if such day is not a Business Day, for the next preceding Business Day) by
the Federal Reserve Bank of New York, or, if such rate is not so published for
any day which is a Business Day, the average of the quotations for such day on
such transactions received by the Agent from three federal funds brokers of
recognized standing selected by it. If for any reason the Agent shall have
determined (which determination shall be conclusive absent manifest error) that
it is unable to ascertain the Base CD Rate or the Federal Funds Effective Rate,
or both, for any reason, including the inability or failure of the Agent to
obtain sufficient quotations in accordance with the terms hereof, the Alternate
Base Rate shall be determined without regard to clause (b) or (c), or both, of
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the first sentence of this definition, as appropriate, until the circumstances
giving rise to such inability or failure no longer exist. Any change in the
Alternate Base Rate due to a change in the Prime Rate, the Three-Month Secondary
CD Rate or the Federal Funds Effective Rate shall be effective on the effective
date of such change in the Prime Rate, the Three-Month Secondary CD Rate or the
Federal Funds Effective Rate, respectively.
"Alternate Base Rate Loan" means any Loan bearing interest at a
rate determined by reference to the Alternate Base Rate in accordance with the
provisions of Article II.
"Amortization Date" means June 30, 1997.
"Applicable Fee Percentage" means, with respect to any Reference
Period, the applicable percentage set forth below:
(a) during the period from the Execution Date to the
Financial Statement Delivery Date for the fiscal quarter ending June 30, 1996,
3/8 of 1%; and
(b) if the Applicable Fee Percentage is to be determined
with respect to the financial statements delivered pursuant to Section 7.01(a)
or Section 7.01(b), on any Financial Statement Delivery Date for any fiscal
quarter ending on or after June 30, 1996, the percentage shown below opposite
the applicable percentage that Consolidated Indebtedness is of Total
Capitalization for such fiscal quarter:
Consolidated Indebtedness
as a Percentage of Applicable Fee
Total Capitalization Percentage
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less than 35% 1/4 of 1%
equal to or greater than 35%,
but less than 40% 3/8 of 1%
equal to or greater than 40% 1/2 of 1%
"Applicable Lending Office" means, with respect to each
Lender, such Lender's Domestic Lending Office in the case of an Alternate Base
Rate Loan and such Lender's Eurodollar Lending Office in the case of a
Eurodollar Rate Loan.
"Application" means an application, in such form as the
Issuing Bank may specify from time to time, requesting the Issuing Bank to
issue a Letter of Credit.
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"Approved Acquisitions" means (a) the acquisition of two barge
drilling rigs from Noble Drilling Corporation and (b) the acquisition of
Tubular Corporation of America.
"Assessment Rate" means, for any day, the annual assessment
rate in effect on such day which is payable by a member of the Bank Insurance
Fund classified as well capitalized and within supervisory subgroup "B" (or a
comparable successor assessment risk classification) within the meaning of 12
C.F.R. Section 327.4(e) (or any successor provision) to the FDIC for the FDIC
insuring time deposits at offices of such institution in the United States.
"Asset Disposition" means any sale, lease, conveyance,
transfer or other disposition (or series of related sales, leases, conveyances,
transfers or dispositions) of any Capital Stock of a Subsidiary (whether or not
upon issuance), property or other assets (each referred to for purposes of this
definition as a "disposition") by the Company or any of its Restricted
Subsidiaries, whether for cash or other consideration (other than (a) a
disposition by a domestic Restricted Subsidiary to the Company or another
domestic Restricted Subsidiary, (b) a disposition by a foreign Restricted
Subsidiary to the Company, a domestic Restricted Subsidiary or another foreign
Restricted Subsidiary (other than Highland Corod), (c) an advance of the
proceeds of any Loan by the Company to a Restricted Subsidiary, (d) a
disposition of Inventory in the ordinary course of business, (e) a disposition
that is a Permitted Joint Venture Investment, (f) mergers, consolidations or
exchanges made in compliance with Section 8.02, (g) dispositions pursuant to
Section 8.02(e), or (h) a disposition or dispositions by the Company and its
Restricted Subsidiaries having an aggregate fair market value of less than
$1,000,000 for all such dispositions during any 12-month period).
"Assignment and Acceptance" has the meaning specified in
Section 12.11(c).
"Assurance" means, as to any Person, any guaranty or other
contingent liability of such Person (other than any endorsement for collection
or deposit in the ordinary course of business) or obligations as an account
party in respect of letters of credit, direct or indirect, with respect to any
obligation of another Person, through an agreement or otherwise, including (a)
any other endorsement or discount with recourse or undertaking substantially
equivalent to or having economic effect similar to a guarantee in respect of
any such obligation and (b) any agreement (i) to purchase, or to advance or
supply funds for the payment or purchase of, any such obligation, (ii) to
purchase securities or to purchase, sell or lease property (whether as lessee
or lessor), products, materials or supplies, or transportation or services, in
respect of enabling such other Person to pay any such obligation or to assure
the owner thereof against loss regardless of the delivery or non-delivery of
the securities, property, products, materials or supplies, or transportation or
services or (iii) to make any loan, advance or capital contribution to or other
investment in, or to otherwise provide funds to or for, such other Person in
respect of enabling such Person to satisfy any obligation (including any
liability for a dividend, stock liquidation payment or expense) or to assure a
minimum equity, working capital or other balance sheet condition in
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respect of any such obligation. The amount of any Assurance shall
be an amount equal to the lesser of the stated or determinable amount of the
primary obligation in respect of which such Assurance is made or, if not stated
or determinable, the maximum reasonably anticipated liability in respect thereof
(assuming such Person is required to perform thereunder) as determined by such
Person in good faith.
"Attributable Debt" means, with respect to any particular
Capital Lease under which any Person is at the time liable and at any date as
of which the amount thereof is to be determined, the present value of the total
net amount of rent required to be paid by such Person under the lease during
the primary term thereof, without giving effect to any renewals at the option
of the lessee, discounted from the respective due dates thereof to such date at
the rate of interest per annum implicit in the terms of the lease. As used in
the preceding sentence, the "net amount of rent" under any lease for any such
period shall mean the sum of rental and other payments required to be paid with
respect to such period by the lessee thereunder excluding any amounts required
to be paid by such lessee on account of maintenance and repairs, insurance,
taxes, assessments, water rates or similar charges. In the case of any lease
which is terminable by the lessee upon payment of a penalty, such net amount of
rent shall also include the amount of such penalty, but no rent shall be
considered as required to be paid under such lease subsequent to the first date
upon which it may be so terminated. Tax Benefit Transfer Lease Obligations
shall not constitute Attributable Debt.
"Average Life" means, as of the date of determination, with
reference to any Indebtedness, the quotient obtained by dividing (a) the sum of
the products of the number of years from the date of determination to the dates
of each successive scheduled principal payment of such Indebtedness multiplied
by the amount of such principal payment by (b) the sum of all such principal
payments.
"Bankruptcy Code" has the meaning specified in Section
9.01(a).
"Base CD Rate" has the meaning specified in the definition of
the term Alternate Base Rate.
"Board" means the Board of Governors of the Federal Reserve
System of the United States (or any successor).
"Board of Directors" means, with respect to any Person, the
Board of Directors of such Person or any committee of the Board of Directors of
such Person duly authorized to act on behalf of the Board of Directors of such
Person.
"Board Resolution" means, with respect to any Person, a copy
of a resolution certified by the Secretary or an Assistant Secretary of such
Person to have been duly adopted by the Board of Directors of such Person and
to be in full force and effect on the date of such certification, and delivered
to the Agent.
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"Borrowing" means a borrowing pursuant to a Notice of
Borrowing comprised of one Class and Type of Loans from all the Lenders (or
resulting from a conversion or conversions on the same date having in the case
of Eurodollar Rate Loans the same Interest Period (except as otherwise provided
in this Agreement)) made by all of the Lenders concurrently to the Company.
"Borrowing Base" means, as at any date, the amount of the
Borrowing Base as of the date of the Borrowing Base Certificate then most
recently delivered pursuant to Section 7.01(c), determined by calculating the
sum of:
(a) at any date prior to January 1, 1998, 85%, and at any
date thereafter, 80%, of the aggregate amount of Eligible U.S.
Receivables at that date, plus
(b) at any date prior to January 1, 1998, 85%, and at any
date thereafter, 80%, of the aggregate amount of Eligible Foreign
Receivables at that date, plus
(c) at any date prior to January 1, 1997, 40%, at any
date during the period from January 1, 1997 to January 1, 1998, 35%,
and at any date thereafter, 30%, of the aggregate amount of Grant
Prideco Eligible Inventory at that date, plus
(d) 50% of the aggregate amount of all EVI Oil Tools
Eligible Inventory;
provided, however, the amount determined pursuant to clause (b) shall at no
time exceed 10% of the Borrowing Base, and further provided, however, the sum
of the amounts determined pursuant to clause (c) and clause (d) shall at no
time exceed 50% of the Borrowing Base. Notwithstanding the foregoing, until
the date on which the first Borrowing Base Certificate is required to be
delivered pursuant to Section 7.01(c), the Borrowing Base shall be $90,000,000.
"Borrowing Base Certificate" means a certificate, duly
executed by the chief executive officer or the chief financial officer of the
Company, appropriately completed and in substantially the form of Exhibit 1.01B
hereto.
"Borrowing Date" means, with respect to each Borrowing, the
Business Day upon which the proceeds of such Borrowing are to be made available
to the Company.
"Business Day" means any day (other than a day which is a
Saturday, Sunday or legal holiday in the State of New York or the State of
Texas) on which banks are open for business in New York, New York and in
Houston, Texas; provided, however, that, when used in connection with a
Eurodollar Rate Loan, the term "Business Day" shall also exclude any day on
which banks are not open for dealings in dollar deposits in the London
Interbank Market.
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"Capital Expenditures" means, for any period, the sum of (a)
all expenditures (whether paid in cash or accrued as a liability, including the
portion of Capital Lease Obligations originally incurred during such period
that are capitalized for the consolidated balance sheet of the Company) by the
Company and its Restricted Subsidiaries during such period, that, in conformity
with GAAP, are included in "capital expenditures," "additions to property,
plant or equipment" or comparable items in the consolidated financial
statements of the Company and (b) to the extent not included in clause (a), the
aggregate fair market value of all net non-current assets of businesses
acquired by the Company and its Restricted Subsidiaries during such period,
including all purchase price adjustments.
"Capital Lease" means, as to any Person, any lease in respect
of which the rental obligation of such Person constitutes a Capitalized Lease
Obligation.
"Capital Stock" means, with respect to any Person, any and all
shares, interests, rights to purchase, warrants, options, participations or
other equivalents (however designated) of such Person's equity, including all
common stock and preferred stock, any limited or general partnership interest
and any limited liability company membership.
"Capitalized Lease Obligation" means, with respect to any
Person, the obligation of such Person to pay rent or other amounts under a
lease of (or other agreement conveying the right to use) real or personal
property that is required to be classified and accounted for as a capital lease
obligation on a balance sheet of such Person under GAAP and, for purposes of
this Agreement, the amount of such obligation at any date will be the
capitalized amount thereof at such date, determined in accordance with GAAP.
"CERCLA" means the Comprehensive Environmental Response,
Compensation and Liability Act.
"Change of Control" means an event or series of events by
which (a) any "person" (as such term is used in Sections 13(d) and 14(d) of the
Exchange Act as in effect on the Execution Date) or related persons
constituting a "group" (as such term is used in Rule 13d-5 under the Exchange
Act in effect on the Execution Date) is or becomes the "beneficial owner" (as
defined in Rules 13d-3 and 13d-5 under the Exchange Act, as in effect on the
Execution Date, except that a person or such group shall be deemed to have
"beneficial ownership" of all shares that any such person or such group has the
right to acquire without condition, other than the passage of time, whether
such right is exercisable immediately or only after the passage of time),
directly or indirectly, of 50% or more of the total voting power of the Voting
Stock of the Company; (b) the Company consolidates with or merges into another
Person or conveys, transfers or leases all or substantially all of its assets
to any Person, or any Person consolidates with, or merges into, the Company in
a transaction not otherwise permitted by Section 8.02; (c) the Company conveys,
transfers or leases all or substantially all of its assets to any Person; (d)
the stockholders of the Company approve any plan of liquidation or dissolution
of the Company; or (e) during any period of twelve consecutive months,
individuals who, at the beginning of such period, constituted the
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Board of Directors of the Company (together with any new directors whose
election by such Board of Directors or whose nomination for election by the
stockholders of the Company, as applicable, was approved by a vote of not less
than a majority of the directors then still in office who were either directors
at the beginning of such period or whose election or nomination for election was
previously so approved) cease for any reason to constitute a majority of the
Board of Directors of the Company then in office.
"Change of Control Event" means (a) the execution of any
definitive agreement which when fully performed by the parties thereto, would
result in a Change of Control; or (b) the commencement of a tender offer
pursuant to Section 14(d) of the Exchange Act.
"Chase" means The Chase Manhattan Bank, N.A.
"Code" means Internal Revenue Code of 1986, as amended from
time to time, and the regulations promulgated thereunder.
"Collateral" means, collectively, all the properties and
assets of the Loan Parties described in and subject to the Liens purported to
be created by the Security Documents.
"Commitments" means, as to any Lender at any time, the Tranche
A Revolving Credit Commitment and the Tranche B Revolving Credit Commitment of
such Lender.
"Communications" has the meaning specified in Section 12.02.
"Company" has the meaning specified in the introduction to
this Agreement.
"Company Pledge Agreement" means the Pledge Agreement dated as
of the date hereof and executed by the Company and the Agent for the benefit of
Secured Parties.
"Company Security Agreement" means the Security Agreement
dated as of the date hereof and executed by the Company and the Agent for the
benefit of the Secured Parties.
"Consolidated EBITDA" means, for any period, the Consolidated
Net Income of the Company and its Restricted Subsidiaries for such period,
increased (to the extent deducted in determining Consolidated Net Income) by
the sum of (a) all income taxes (including state franchise taxes based on
income) of the Company and its Restricted Subsidiaries paid or accrued
according to GAAP for such period; (b) Consolidated Interest Expense of the
Company and its Restricted Subsidiaries for such period; (c) depreciation and
amortization of the Company and its Restricted Subsidiaries for such period
determined in accordance with GAAP; and (d) other non-cash
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charges (excluding any such non-cash charges to the extent they require an
accrual of, or reserve for, cash charges for any future periods) for such period
determined in accordance with GAAP.
"Consolidated Excess Cash Flow" means, for any period,
Consolidated EBITDA for such period (a) less (to the extent included in
determining Consolidated EBITDA for such period) the sum of (i) the amount of
all income received other than in cash during such period and (ii) Consolidated
Fixed Charges for such period plus (b) the amount of all Scheduled Capital
Expenditures made during such period in excess of (i) $25,000,000 for the
fiscal year ending at December 31, 1996 and (ii) $30,000,000 for each fiscal
year thereafter.
"Consolidated Fixed Charges" means, for any period on a
consolidated basis for the Company and its Restricted Subsidiaries, the sum
(without duplication) for such period of (a) Consolidated Interest Expense for
such period, (b) the total aggregate scheduled principal payments (including
the portion of any rental obligation in respect of any Capitalized Lease
Obligation or Sale-Leaseback Transaction allocable to principal) paid or
required to be paid by the Company and its Restricted Subsidiaries on
Indebtedness for such period, (c) all Scheduled Capital Expenditures and (d)
the aggregate amount of dividend requirements of the Company and its Restricted
Subsidiaries paid, accrued or scheduled to be paid (other than to the Company
or any of its Restricted Subsidiaries) or accrued during such period
attributable to any preferred stock; provided, that Consolidated Fixed Charges
shall not include the principal amount of the Tranche A Revolving Credit Loans
due on the Tranche A Revolving Credit Stated Maturity Date to the extent that
such amount is not due as a result of the acceleration of the maturity of the
Obligations pursuant to Section 10.01.
"Consolidated Indebtedness" means, at the date of any
determination thereof, Indebtedness of the Company and its Restricted
Subsidiaries determined on a consolidated basis in accordance with GAAP.
"Consolidated Interest Expense" means (without duplication),
with respect to the Company and its Restricted Subsidiaries for any period, the
aggregate amount of interest, whether expensed or capitalized, paid, accrued or
scheduled to be paid or accrued during such period in respect of all
Indebtedness of the Company and its Restricted Subsidiaries including (a) the
interest portion of any deferred payment obligation, (b) the portion of any
rental obligation (other than rental obligations incurred in connection with
Tax Benefit Transfer Leases) in respect of any Capitalized Lease Obligation or
Sale-Leaseback Transaction allocable to interest expense and (c) any non-cash
interest payments or accruals (including amortization of original issue
discounts but excluding amortization of capitalized issuance costs), all
determined on a consolidated basis in accordance with GAAP.
"Consolidated Net Income" of the Company and its Restricted
Subsidiaries means, for any period, the net income or loss of the Company and
its Restricted Subsidiaries for such period, determined on a consolidated basis
in accordance with GAAP; provided, that
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there shall be excluded, without limitation, from such net income (to the extent
otherwise included therein):
(a) net extraordinary gains and losses;
(b) net gains or losses in respect of dispositions of
assets other than in the ordinary course of business;
(c) the net income of any Person in which any of the
Company or any Restricted Subsidiary has a joint equity interest, but
only to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Restricted Subsidiaries by
such other Person during such period;
(d) the net income of any Unrestricted Subsidiary, except
to the extent of the amount of dividends or other distributions
actually paid to the Company or any of its Restricted Subsidiaries by
such Unrestricted Subsidiary during such period;
(e) the net income of any Person accrued prior to the
date it becomes a Restricted Subsidiary or is merged into or
consolidated with the Company or any of its Restricted Subsidiaries or
prior to the date its assets are acquired by the Company or any of its
Restricted Subsidiaries;
(f) the net income of any Restricted Subsidiary to the
extent that the declaration or payment of dividends or similar
distributions by that Restricted Subsidiary of that income is not at
the time permitted by operation of the terms of its charter or any
agreement, instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to that Restricted Subsidiary;
(g) any gains or losses attributable to write-ups or
write-downs of assets other than in the ordinary course of business;
and
(h) foreign currency translations or adjustments.
"Consolidated Net Income Available for Fixed Charges" means,
for any period (a) Consolidated EBITDA for such period less (b) all income
taxes (including state franchise taxes based on income) paid by the Company and
its consolidated Restricted Subsidiaries during such period; provided, however,
any federal income taxes paid by the Company in connection with the COLEVE
transaction with Columbia Gas during any such period shall not be included in
clause (b) for such period.
"Credit Event" means the making of any Loan or the issuance or
the extension of any Letter of Credit.
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"Default" means the occurrence of any event which with the
giving of notice or the passage of time or both could become an Event of
Default.
"Default Rate" has the meaning specified in Section 2.08.
"Designated Net Insurance/Condemnation Proceeds" means, with
respect to any damage, destruction, condemnation or other taking of any
property of the Company or any of its Restricted Subsidiaries, 100% of all
insurance or condemnation proceeds received by the Company or any Restricted
Subsidiary in cash or cash equivalents, net of costs of proceedings in
connection therewith and any settlement in respect thereof, from such damage,
destruction, condemnation or other taking involving insurance or condemnation
proceeds in excess of $100,000 with respect to any single occurrence, provided
that if the Company shall deliver a certificate of a Responsible Officer of the
Company to the Agent promptly following receipt by the Company or any of its
Restricted Subsidiaries of any such proceeds in any fiscal year certifying that
the Company or such Restricted Subsidiary receiving such proceeds intends to
use any portion of such excess proceeds to (a) restore, modify or replace the
properties or assets in respect of which such insurance or condemnation
proceeds were received or (b) invest such proceeds in one or more Lines of
Business within 12 months of such receipt, such portion shall not constitute
Designated Net Insurance/Condemnation Proceeds except to the extent not so used
within such 12-month period.
"Designated Net Proceeds" means 100% of the Net Available
Proceeds of any Asset Disposition by the Company or any Restricted Subsidiary,
provided that if the Company shall deliver a certificate of a Responsible
Officer to the Agent promptly following receipt of any such proceeds in any
fiscal year certifying that the Company or the Restricted Subsidiary receiving
such proceeds intends to use any portion of such excess proceeds (a) to acquire
productive assets in one or more Lines of Business within 12 months of such
receipt or (b) to acquire a Wholly Owned Restricted Subsidiary principally
engaged in one or more Lines of Business, such portion shall not constitute
Designated Net Proceeds except to the extent not so used within such 12-month
period.
"Designated Payment Date" means June 30, September 30,
December 31 and March 31 in any year; provided, however, if in any such year a
Designated Payment Date shall be a day which is not a Business Day, such
Designated Payment Date shall be the preceding Business Day.
"Disqualified Stock" means any Capital Stock of the Company or
any Restricted Subsidiary that, by its terms (or by the terms of any security
into which it is convertible or for which it is exercisable, redeemable or
exchangeable), or upon the happening of an event or with the passage of time,
matures, or is mandatorily redeemable, pursuant to a sinking fund obligation or
otherwise, or is redeemable at the option of the holder thereof, in whole or in
part, in each case on, or prior to, the Tranche B Revolving Credit Stated
Maturity Date, or which is exchangeable or convertible into debt securities of
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the Company or any Subsidiary, except to the extent that such exchange or
conversion rights cannot be exercised prior to the Tranche B Revolving Credit
Stated Maturity Date.
"Distribution Date" has the meaning specified in Section 10.03.
"Dollars" and the symbol "$" mean the lawful currency of the
United States of America.
"domestic" means, when used with respect to any Subsidiary of
any Person, a Subsidiary of such Person organized under the laws of one of the
states of the United States or the District of Columbia.
"Domestic Lending Office" means, with respect to any Lender,
the office of such Lender specified as its "Domestic Lending Office" on such
Lender's signature page to this Agreement or, as to any Person who becomes a
Lender after the date hereof, on the signature page of the Assignment and
Acceptance executed by such Person, in the Administrative Questionnaire
delivered by such Person or such other office of such Lender as such Bank may
hereinafter designate from time to time its "Domestic Lending Office" by notice
to the Company and the Agent.
"Domestically Owned Foreign Restricted Subsidiary" means any
foreign Restricted Subsidiary of the Company, all of the Capital Stock of which
is owned by the Company or one or more domestic Restricted Subsidiaries or
both.
"Drawing" has the meaning specified in Section 3.04(a).
"Effective Date" means the date on which the conditions to
borrowing set forth in Article V are first met.
"Eligible Assignee" means (a) any Lender; (b) a commercial
bank organized or licensed under the laws of the United States, or a state
thereof, and having total assets in excess of $1,000,000,000; (c) a commercial
bank organized under the laws of any other country which is a member of the
OECD, or a political subdivision of any such country, and having total assets
in excess of $1,000,000,000; provided that such bank is acting through a branch
or agency located in the country in which it is organized or another country
which is also a member of the OECD; and (d) any other bank approved by the
Agent and the Company.
"Eligible Foreign Receivables" means, at any time, any
"account" (as such term is defined in Section 9-106 of the UCC) and any
"chattel paper" (as such term is defined in Section 9-105(1)(b) of the UCC) of
any Loan Party that meets all requirements to be an "Eligible U.S. Receivable"
except for the requirements of clause (m) of that definition for which one of
clause (a), clause (b) or clause (c) below is true:
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(a)(i) the obligor or its consolidated parent on said
account or chattel paper (A) is Person whose long term unsecured
non-credit enhanced Indebtedness is rated BBB- or better by Standard &
Poor's Rating Group or Baa3 by Moody's Investors Service, Inc., (B) has
total annual revenues in excess of $1,000,000,000 and (C) has
consolidated net worth of at least $250,000,000; and
(ii) the payment of said account or chattel paper is not
due from an office of the obligor thereon located in one of the
countries listed on Exhibit 1.01C;
(b) the obligor on said account or chattel paper is a
Person listed on Exhibit 1.01D; and
(c) the obligor on said account or chattel paper is
otherwise acceptable to the Agent.
"Eligible Inventory" means, at any time, all inventory (as
such term is defined in Section 9-109(4) of the UCC) of a Loan Party for which
each of the following statements is accurate and complete (and the Company by
including such inventory in any computation of the Borrowing Base shall be
deemed to represent and warrant to the Agent, the Issuing Bank and each Lender
the accuracy and completeness of such statements as to said inventory):
(a) Said inventory shall be valued in accordance with
GAAP and (i) shall include raw materials and finished goods but (ii)
shall not include goods that are classified as "work-in-progress";
(b) Said inventory is in good condition, meets all
standards imposed by any Governmental Authority having regulatory
authority over it, its use and/or sale and is either currently usable
or currently salable in the normal course of business of a Loan Party;
(c) Said inventory is not (i) located outside the United
States of America or (ii) in the possession or control of any
warehouseman, bailee, or any agent or processor for or customer of a
Loan Party or, if it is in any such Person's possession, the Company
or its applicable Subsidiaries shall have notified (in a manner that
effectively under applicable law creates a valid and first priority
perfected Lien in favor of the Agent, on behalf of the Lenders, in
such inventory) such warehouseman, bailee, agent, processor or
customer and such warehouseman, bailee, agent, processor or customer
has waived or subordinated any Lien (other than Permitted Collateral
Liens) it may claim therein and agreed to hold all such inventory for
the Agent's account subject to the Agent's instructions;
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(d) Each of the representations and warranties set forth
in the Security Documents with respect to said inventory is true and
correct in all material respects on such date;
(e) Said inventory is, and at all times will be, free and
clear of all Liens, except the Agent, on behalf of the Lenders, shall
have the first-priority perfected Lien covering said inventory subject
only to Permitted Collateral Liens;
(f) Said inventory does not include goods that have been
damaged or returned;
(g) Said inventory is not Permitted Consigned Inventory;
and
(h) Said inventory does not include goods that are not
owned by a Loan Party or that are held by a Loan Party pursuant to a
consignment agreement.
"Eligible U.S. Receivables" means, at any time, the net
invoice or ledger amount owing on each account (which shall mean any "account"
as such term is defined in Section 9-106 of the UCC and any "chattel paper" as
such term is defined in Section 9-105(l)(b) of the UCC) of a Loan Party arising
from the sale, lease or exchange of goods or the rendering of any service by a
Loan Party (net of any credit balance, returns, trade discounts or unbilled
amounts or retention) for which each of the following statements is accurate
and complete (and the Company by including such account in any computation of
the Borrowing Base shall be deemed to represent and warrant to the Agent, the
Issuing Bank and the Lenders the accuracy and completeness of such statements):
(a) Said account or chattel paper is a binding and valid
obligation of the obligor thereon in full force and effect;
(b) Said account or chattel paper is genuine as appearing
on its face or as represented in the books and records of a Loan
Party;
(c) Said account or chattel paper is free from claims
regarding rescission, cancellation or avoidance, whether by operation
of law or otherwise;
(d) Payment of said account or chattel paper is less than
90 days past due as determined by the due date stated on the invoice
therefor (or if said account or chattel paper is not paid by reference
to an invoice in the ordinary course of business but instead by
reference to the terms of the agreements creating said account or
chattel paper, said account or chattel paper has not remained unpaid
beyond 90 days after the due date therefor);
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(e) Said account or chattel paper is net of concessions,
offset (excluding any accounts payable offset supported by a letter of
credit) or understandings with the obligor thereon of any kind;
(f) Said account or chattel paper is, and at all times
will be, free and clear of all Liens, except the Agent, on behalf of
the Lenders, shall have a first priority perfected Lien covering said
account;
(g) Said account or chattel paper is derived from goods
sold or leased or services rendered to the obligor in the ordinary
course of business of a Loan Party;
(h) Said account or chattel paper is not (i) carried on
the books of a Loan Party, as an "exchange account receivable" or (ii)
subject to an exchange agreement with another Person;
(i) Said account or chattel paper is not payable by an
obligor who is more than 90 days past due with regard to 20% or more
of the total accounts and chattel paper owed by such obligor or any of
its Affiliates;
(j) The obligor on said account or chattel paper has been
sent an invoice within 10 days after said account or chattel paper has
been entered on the financial records of a Loan Party;
(k) All consents, licenses, approvals or authorizations
of, or registrations or declarations with, any Governmental Authority
required to be obtained, effected or given in connection with the
execution, delivery and performance of said account or chattel paper
by each party obligated thereunder have been duly obtained, effected
or given and are in full force and effect;
(l) The obligor on said account or chattel paper (i) is
not the subject of any bankruptcy or insolvency proceeding, has not
had a trustee or receiver appointed for all or a substantial part of
its property, has not made an assignment for the benefit of creditors,
admitted its inability to pay its debts as they mature or suspended
its business; and (ii) is not affiliated, directly or indirectly, with
the Company as a Subsidiary or other Affiliate, employee or otherwise;
(m) The goods sold or leased or services rendered
resulting in the right to payment in connection with said account were
sold, leased or rendered in a state or territory of the United States
of America (excluding, however, such goods which are sold or leased
for export outside of the United States of America), said account or
chattel paper is payable in the United States of America, and the
obligor thereon is subject to the jurisdiction of federal, state or
provincial courts in the United States of America, unless said account
or chattel paper is backed by a letter of credit in form and substance
acceptable to the Agent and issued by an issuer, having capital and
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surplus in excess of $500,000,000 and having ratings of at least A1
and P1 by Standard & Poor's Rating Group and Moody's Investors
Service, Inc., respectively;
(n) In the case of the sale of goods, the subject goods
have been sold to an obligor on an absolute sale basis on open account
and not on consignment, on approval or a "sale or return" basis or
subject to any other repurchase or return agreement and no material
part of the subject goods has been returned, rejected, lost or
damaged, the said account is not, evidenced by chattel paper or an
instrument of any kind;
(o) Each of the representations and warranties set forth
in the Security Documents with respect to said account or chattel
paper is true and correct in all material respects on such date; and
(p) Said account or chattel paper has not been otherwise
determined by the Agent, in its good faith discretion, to be
unacceptable in accordance with its customary practices for facilities
of this nature;
provided, that, if any account, when added to all other accounts that are
obligations of the same obligor and its Affiliates, results in a total sum that
exceeds 15% of the total balance then due on all Eligible U.S. Receivables, the
amount of said account in excess of 15% of such total balance then due shall be
excluded from Eligible U.S. Receivables.
"Environmental Laws" means any Requirement of Law and any
applicable judicial or administrative interpretations thereof, as well as any
applicable judicial or administrative orders, decrees or judgments, relating to
pollution, environmental, health, safety, industrial hygiene or similar
matters.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and the regulations promulgated thereunder.
"ERISA Affiliate" means (a) any trade or business (whether or
not incorporated) which is under common control with the Company or any other
Loan Party within the meaning of Section 4001 of ERISA or is part of a group
which includes the Company or any Loan Party and which is treated as a single
employer under Section 414 of the Code and the regulations thereunder, with a
Loan Party and (b) any Subsidiary of any Loan Party.
"Eurodollar Lending Office" means, with respect to each
Lender, the branches or affiliates of such Lender which such Lender has
designated as its "Eurodollar Lending Office" on such Lender's signature page
to this Agreement or, as to any Person who becomes a Lender after the date
hereof, on the signature page of the Assignment and Acceptance executed by such
Person, in the Administrative Questionnaire delivered by such
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Person or such other office of such Lender as such Lender may hereafter
designate from time to time as its "Eurodollar Lending Office" by notice to the
Company and the Agent.
"Eurodollar Rate Borrowing" means a Borrowing comprised of
Eurodollar Rate Loans of a single Class.
"Eurodollar Rate Loan" means any Loan bearing interest at a
rate determined by reference to the LIBO Rate in accordance with the provisions
of Article II.
"Events of Default" has the meaning specified in Section 10.01.
"EVI-Highland" means EVI-Highland Pump Company, a Delaware
corporation.
"EVI Oil Tools" means EVI Oil Tools, Inc., a Delaware
corporation, resulting from the merger of EVI Oil Tools, Inc., a Delaware
corporation, and Production Oil Tools, Inc., a Wyoming corporation, with and
into EVI-Highland and the change of the name of EVI-Highland to EVI Oil Tools,
Inc.
"EVI Oil Tools Eligible Inventory" means the Eligible
Inventory owned by EVI Oil Tools.
"Excess Funding Obligor" has the meaning specified in Section
9.05.
"Excess Payment" has the meaning specified in Section 9.05.
"Exchange Act" means the Securities Exchange Act of 1934, as
amended.
"Execution Date" means the earliest date upon which all of the
following shall have occurred: counterparts of this Agreement shall have been
executed by the Loan Parties and each Lender listed on the signature pages
hereof and the Agent shall have received counterparts hereof which taken
together, bear the signature of the Loan Parties and each Lender and the Agent.
"FDIC" means the Federal Deposit Insurance Corporation (or any
successor).
"Federal Funds Effective Rate" has the meaning specified in
the definition of the term "Alternate Base Rate."
"Fees" means all amounts payable pursuant to Section 4.01.
"Financial Statement Delivery Date" means the date on which
the quarterly or annual financial statements of the Company are to be delivered
pursuant to Section 7.01(a) or Section 7.01(b), as the case may be.
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23
"Fixed Charge Coverage Ratio" means, at June 30, 1996 and at
the end of each fiscal quarter thereafter, the ratio of (a) Consolidated Net
Income Available for Fixed Charges for such fiscal quarter and the immediately
preceding three fiscal quarters to (b) Consolidated Fixed Charges for such four
fiscal quarters.
"foreign" means, when used with respect to a Subsidiary of
any Person, a Subsidiary of such Person organized under the laws of any
jurisdiction other than a state of the United States or the District of
Columbia.
"Foreign Owned Foreign Restricted Subsidiary" means any
foreign Restricted Subsidiary the Capital Stock of which is owned by one or
more foreign Restricted Subsidiaries of the Company.
"GAAP" means generally accepted accounting principles as in
effect from time to time as set forth in the opinions, statements and
pronouncements of the Accounting Principles Board of the American Institute of
Certified Public Accountants, the Financial Accounting Standards Board and, in
the case of the Company, such other Persons who shall be approved by a
significant segment of the accounting profession and concurred in by the
independent certified public accountants certifying any audited financial
statements of the Company.
"Governmental Authority" means any nation or government, any
state or other political subdivision thereof, and any entity exercising
executive, legislative, judicial, regulatory or administrative functions of or
pertaining to government.
"Grant Prideco" means Grant Prideco, Inc., a Delaware
corporation.
"Grant Prideco Eligible Inventory" means the Eligible
Inventory owned by Grant Prideco.
"Guaranteed Obligations" has the meaning specified in Section
9.01.
"Guaranty" means the guaranty of the Subsidiary Guarantors
contained in Article IX.
"Hazardous Materials" means any hazardous substance, hazardous
or toxic waste, pollutant, contaminant, oil, petroleum product, or other
substance which is listed, regulated, or designated as toxic or hazardous (or
words of similar meaning and regulatory effect), or with respect to which
remedial obligations may be imposed, under any Environmental Laws.
"Highest Lawful Rate" means, as to any Lender, at the
particular time in question, the maximum nonusurious rate of interest which,
under applicable law, such Lender is then permitted to charge the Company on
the Loans.
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"Highland Corod" means Highland Corod, Inc., a corporation
organized under the laws of Canada.
"Highland Corod Indebtedness" means the indebtedness of
Highland Corod to one or more lenders in a principal amount not to exceed
9,000,000 Canadian dollars at any time outstanding.
"Impermissible Qualification" means, relative to any opinion
by independent public accountants as to any financial statement of the Company
and its Subsidiaries, any qualification or exception to such opinion:
(a) which is of a "going concern" or a similar nature;
(b) which relates to the limited scope of examination of
matters relevant to such financial statement or reliance on the opinions of
other independent public accountants (other than scope limitations included in
the standard form of opinion utilized by such accountants); or
(c) which relates to the treatment or classification of
any item in such financial statement and which, as a condition to its removal,
would require an adjustment to such item the effect of which would be to cause
a default under Article VIII.
"Indebtedness" means (without duplication), with respect to
any Person, (a) any liability of such Person (i) for borrowed money (whether or
not the recourse of the lender is to the whole of the assets of such Person or
only to a portion thereof), or under any reimbursement obligation relating to a
letter of credit, bankers' acceptance or note purchase facility, (ii) evidenced
by a bond, note, debenture or similar instrument, (iii) for the balance
deferred and unpaid of the purchase price for any property or any obligation
upon which interest charges are customarily paid (except for trade payables
arising in the ordinary course of business), and (iv) for the payment of money
relating to the principal portion of any Capitalized Lease Obligation; (b) any
obligation of any Person secured by (or for which the holder of such obligation
has an existing right, contingent or otherwise, to be secured by) a consensual
Lien on property owned or acquired, whether or not any obligation secured
thereby has been assumed, by such Person; (c) all net obligations of such
Person as of the date of a required calculation under foreign currency hedges
entered into in the ordinary course of business and not for the purpose of
speculation; (d) all Assurances of such Person of the Indebtedness of any other
Person of the type referred to in clauses (a) or (c); and (e) any amendment,
supplement, modification, deferral, renewal, extension or refunding of any
liability of the types referred to above.
"Indemnitee" has the meaning specified in Section 12.05.
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"Indenture" means the Indenture dated as of March 15, 1994,
among the Company, certain Subsidiaries thereof, and Chemical Bank, as trustee
and covering the 10 1/4% Senior Notes due 2004.
"Information Memorandum" means the Confidential Information
Memorandum dated May 1996 furnished by the Agent to the Lenders.
"Insurance Opinion" has the meaning specified in Section 7.03.
"Interest Period" has the meaning specified in Section 2.09.
"Interest Rate Agreement" means an interest rate protection
agreement (including interest rate swaps, caps, floors, collars and similar
agreements) and other types of interest rate hedging agreements.
"Investment" means, as applied to any Person, any direct or
indirect purchase or other acquisition by such Person of stock or other
securities of any other Person, or any direct or indirect loan, advance or
capital contribution by such Person to any other Person, and any other item
which would be classified as an "investment" on a balance sheet of such Person
prepared in accordance with GAAP, including any direct or indirect contribution
by such Person of property or assets to a joint venture, partnership or other
business entity in which such Person retains an interest.
"Issuing Bank" means the Bank that issues Letters of Credit
under this Agreement, which on the Effective Date will be Chase.
"Issuing Bank Fees" has the meaning specified in Section
4.01(c).
"Lender" has the meaning specified in the introduction to this
Agreement.
"Letter of Credit Fee" has the meaning specified in Section
4.01(c).
"Letter of Credit Limit" means $15,000,000.
"Letter of Credit Margin" means, with respect to each Letter
of Credit, the Margin applicable from time to time to Tranche A Revolving
Credit Loans that are Eurodollar Rate Loans.
"Letter of Credit Outstanding" means, at any time, the sum
of, without duplication, (a) the aggregate Stated Amount of all outstanding
Letters of Credit and (b) the amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" has the meaning specified in
Section 3.02.
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"Letters of Credit" has the meaning provided in Section 3.01.
"Leverage Ratio" means, at the end of any fiscal quarter of
the Company, the ratio of (a) Consolidated Indebtedness at the end of such
fiscal quarter to (b) Consolidated EBITDA for such fiscal quarter and the
immediately preceding three fiscal quarters.
"LIBO Rate" means, with respect to each day during each
Interest Period pertaining to a Eurodollar Rate Loan, the rate at which dollar
deposits approximately equal in principal amount to the entire portion of such
Borrowing and for a maturity equal to the applicable Interest Period are offered
in immediately available funds at the principal office of Chase or any other
institution that may be the Agent in London, England (or if such other
institution does not at the time any such determination is made, maintain an
office in London, England, the principal office of any Affiliate of such other
institution in London, England) by leading banks in the London interbank market
for eurodollars at approximately 11:00 a.m. (London, England time) two Business
Days prior to the commencement of such Interest Period.
"Lien" means any lien, mortgage, pledge, assignment (including
any assignment of rights to receive payments of money), security interest,
charge or encumbrance of any kind including any conditional sale or other title
retention agreement or any lease (excluding, however, any lease that is not a
Capital Lease) in the nature thereof (whether voluntary or involuntary and
whether imposed or created by operation of law or otherwise), and any agreement
to give a lien, mortgage, pledge, assignment (including any assignment of
rights to receive payments of money), security interest, charge or other
encumbrance of any kind. Neither negative pledges, nor covenants to abstain
from granting liens on or security interests in assets of the Company or any of
its Subsidiaries, shall constitute Liens, and the inclusion of any such
provisions in agreements of the Company or any of its Subsidiaries shall not
constitute a breach or violation of this Agreement.
"Lines of Business" means any of (a) the manufacture,
production, distribution or sale of oil field service equipment; (b) the
provision of drilling or workover services; (c) the provision of any other oil
field services to Persons in the oil and gas industry; (d) the manufacture,
production, distribution, leasing as a lessor or sale of any products for use
in the oil and gas industry; and (e) the provision of other services and the
sale of other goods related to any of the foregoing.
"Loan" and "Loans" have the meanings provided in Section 2.01.
"Loan Documents" means, collectively, this Agreement
(including the Guaranty), the Notes, the Letter of Credit Requests, the
Applications, the Agent's Letter, the Security Documents and all other
instruments and documents from time to time executed and delivered by any Loan
Party in connection herewith and therewith.
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"Loan Party" means the Company or any Subsidiary Guarantor and
"Loan Parties" means the Company and the Subsidiary Guarantors.
"Majority Lenders" means, at any time, Lenders holding at
least 66 2/3% of the then aggregate unpaid principal amount of the Loans or if
no Loans are outstanding, Lenders having at least 66 2/3% of the sum of the
available Total Tranche A Revolving Credit Commitment and the Total Tranche B
Revolving Credit Commitment.
"Margin" means, with respect to any Loan for any Reference
Period, the rate of interest per annum determined as set forth below as a
function of whether such Loan is a Eurodollar Rate Loan or an Alternate Base
Rate Loan:
(a) during the period from the Execution Date to the
Financial Statement Delivery Date for the fiscal quarter of the
Company ending June 30, 1996, the Margin will be:
Eurodollar Alternate Base
Rate Loan Rate Loan
--------- ------------
1 1/2% 1/2%
(b) if the Margin is to be determined with respect to the
consolidated balance sheet included in the financial statements
delivered pursuant to Section 7.01(a) or Section 7.01(b), on any
Financial Statement Delivery Date for any fiscal quarter of the
Company ending on or after June 30, 1996, the Margin for each Type of
Loan shown below the applicable percentage that Consolidated
Indebtedness is of Total Capitalization based on that balance sheet:
(i) if, at the end of such fiscal quarter,
Consolidated Indebtedness is less than 30% of Total Capitalization,
the Margin will be:
Eurodollar Alternate Base
Rate Loan Rate Loan
--------- ------------
1% 0%
(ii) if, at the end of such fiscal quarter,
Consolidated Indebtedness is equal to or greater than 30% but less
than 35% of Total Capitalization, the Margin will be:
Eurodollar Alternate Base
Rate Loan Rate Loan
--------- ------------
1 1/4% 1/4%
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(iii) if, at the end of such fiscal quarter,
Consolidated Indebtedness is equal to or greater than 35% but less
than 40% of Total Capitalization, the Margin will be:
Eurodollar Alternate Base
Rate Loan Rate Loan
--------- ------------
1 1/2% 1/2%
(iv) if, at the end of such fiscal quarter,
Consolidated Indebtedness is equal to or greater than 40% but less
than 45% of Total Capitalization, the Margin will be:
Eurodollar Alternate Base
Rate Loan Rate Loan
--------- ------------
2% 3/4%
(v) if, at the end of such fiscal quarter,
Consolidated Indebtedness is equal to or greater than 45% of Total
Capitalization, the Margin will be:
Eurodollar Alternate Base
Rate Loan Rate Loan
--------- ------------
2 1/4% 1%
Notwithstanding the foregoing, if any of the financial
statements required pursuant to Section 7.01(a) or Section 7.01(b) are not
delivered within the time periods specified in Section 7.01(a) or Section
7.01(b), as the case may be, the Margin shall be the Margin set forth in clause
(b)(v) above until the date such statements are delivered.
"Material Adverse Effect" means, relative to any occurrence of
whatever nature (including any adverse determination in any litigation,
arbitration or governmental investigation or proceeding) and after taking into
account actual insurance coverage and effective indemnification with respect to
such occurrence, (a) a material adverse effect on the financial condition,
business or operations of the Company and its Restricted Subsidiaries taken as
a whole, (b) the impairment of (i) the ability of the Loan Parties to
collectively perform the payment or other material obligations hereunder or
under the Notes and other Loan Documents or (ii) the ability of the Agent or
the Lenders to realize the material benefits intended to be provided by the
Loan Parties under the Loan Documents or (c) the subjection of any of the
Agent or any Lender to any civil or criminal liability.
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"Multiemployer Plan" means any plan which is a "multiemployer
plan" (as such term is defined in Section 4001(a)(3) of ERISA).
"Net Available Proceeds" means, with respect to any Asset
Disposition, the cash and cash equivalent payments (including any cash received
by way of deferred payment pursuant to a note receivable or otherwise, but only
as and when so received and excluding any other consideration until such time
as such consideration is converted into cash) received from such Asset
Disposition, net of (a) fees, commissions, expenses and other direct costs of
sale (including, without limitation, legal, accounting and investment banking
fees and sales commissions); (b) taxes paid or payable as a result thereof
(after taking into account any available tax credits or deductions); (c) amounts
required to be applied to the repayment of Indebtedness which is secured by a
Lien on the asset or assets that are subject to such Asset Disposition or
Indebtedness which must by its terms, or in order to obtain a necessary consent,
or by applicable law, be repaid out of the proceeds of such Asset Disposition;
(d) any amount required to be paid to any Person (other than the Company or any
of its Restricted Subsidiaries) owning a beneficial interest in the stock or
other assets sold; and (e) any reserve or adjustment in respect of the sale
price of such asset or assets.
"Net Worth" means, as to the Company, the sum of the par value
or stated value of its Capital Stock, capital in excess of par or stated value
of shares of its Capital Stock, retained earnings (or minus accumulated
deficit) and any other account which, in accordance with GAAP, constitutes
stockholders' equity, excluding (a) any treasury stock, (b) the net worth of
all Unrestricted Subsidiaries determined for each Unrestricted Subsidiary in
accordance with the provisions of this definition but without regard to this
clause (b) and (c) the effects upon net worth resulting from the translation of
foreign currency denominated assets into Dollars.
"New Subsidiary" has the meaning specified in Section 8.02(f).
"Non-Excluded Taxes" has the meaning specified in Section 4.07.
"Note" and "Notes" have the meanings specified in Section
2.05(b).
"Notice of Borrowing" has the meaning provided in Section 2.03.
"Notice of Conversion" has the meaning provided in Section
2.06.
"Notice of Default" has the meaning specified in Section 10.01.
"Obligations" means collectively:
(a) the payment of all indebtedness and liabilities by,
and performance of all other obligations of, the Company in respect of the
Tranche A Revolving Credit Loans;
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(b) the payment of all indebtedness and liabilities by,
and performance of all other obligations of, the Company in respect of the
Tranche B Revolving Credit Loans;
(c) all other obligations of the Company under, with
respect to and relating to the Letters of Credit whether contingent or matured;
(d) the payment of all other indebtedness and liabilities
by and performance of all other obligations of, the Company to the Agent and
the other Secured Parties under, with respect to, and arising in connection
with, the Loan Documents, and the payment of all indebtedness and liabilities of
the Company to the Agent and the other Secured Parties for fees, costs and
expenses (including reasonable attorneys' fees and expenses) under the Loan
Documents;
(e) the payment of all sums advanced by the Agent or any
other Secured Party under any other Security Document to protect the Collateral
or any other collateral covered thereby, with interest thereon at the Default
Rate;
(f) the payment of all sums advanced and costs and
expenses incurred by the Agent or any other Secured Party under any Loan
Document (whether directly or indirectly) in connection with the Obligations or
any part thereof, any renewal, extension or change of or substitution for the
Obligations or, any part thereof, or the acquisition or perfection of the
security therefor, whether such advances, costs and expenses were made or
incurred at the request of any Loan Party, the Agent or any other Secured
Party; and
(g) all renewals, extensions, amendments and changes of,
or substitutions or replacements for, all or any part of the items described
under (a) through (f) above.
"OECD" means the Organization for Economic Cooperation and
Development (or any successor).
"Operating Rights" has the meaning specified in Section 6.15.
"Other Activities" has the meaning specified in Section 11.03.
"Other Financings" has the meaning specified in Section 11.03.
"Payment Office" means the office of the Agent located at 270
Park Avenue, New York, New York 10017, or such other office as the Agent may
hereafter designate in writing as such to the other parties hereto.
"PBGC" means the Pension Benefit Guaranty Corporation
established pursuant to Subtitle 1 or any entity succeeding to all or any of
its functions under ERISA.
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"Percentage Participation" means, for each Lender, (a) with
respect to the Tranche A Revolving Credit Loans, each Letter of Credit and the
Letter of Credit Outstandings, that percentage obtained when dividing the
amount of such Lender's Tranche A Revolving Credit Commitment by the Total
Tranche A Revolving Credit Commitment and (b) with respect to the Tranche B
Revolving Credit Loans, that percentage obtained when dividing the amount of
such Lender's Tranche B Revolving Credit Commitment by the Total Tranche B
Revolving Credit Commitment.
"Permitted Business Acquisition" has the meaning specified in
Section 8.02(f).
"Permitted Business Investments" means (a) Investments by the
Company or any domestic Wholly Owned Restricted Subsidiary in any Person
(other than Highland Corod) which, immediately after the making of such
Investment, is a Wholly Owned Restricted Subsidiary; (b) Investments in the
Company by any Restricted Subsidiary which, if any such Investment is a loan or
other extension of credit, is evidenced by a note and subordinated in right of
payment to full and final payment of the Obligations; (c) loans and other
extensions of credit to officers, directors and employees of the Company and
its Subsidiaries for travel, entertainment and moving and other relocation
expenses made in direct furtherance and in the ordinary course of the business
of the Company and its Subsidiaries; (d) Investments and payments to any
employee, officer or director of the Company or any of its Restricted
Subsidiaries pursuant to employee benefit plans or compensation arrangements
entered into in the ordinary course of business and approved by the Board of
Directors of the Company or such Restricted Subsidiary or payments,
contributions or transactions relating to such plans; and (e) Permitted Joint
Venture Investments; provided, that the aggregate principal amount of loans and
other extensions of credit, Investments and payments made pursuant to clauses
(c) and (d) above does not exceed $2,000,000 at any one time outstanding.
"Permitted Collateral Liens" has the meaning specified in the
Security Agreement.
"Permitted Company Refinancing Indebtedness" means (a)
Indebtedness of the Company existing on the Execution Date, the terms of which
have been amended, modified or supplemented in a manner that does not (i)
adversely affect the priority of such Indebtedness in right of payment in
relation to the Notes, (ii) accelerate the maturity of such Indebtedness or
(iii) shorten the Average Life of such Indebtedness and (b) Indebtedness of the
Company, the net proceeds of which are used to renew, extend, refinance, refund
or repurchase outstanding Indebtedness of the Company; provided that (A) if the
Indebtedness (including the Notes) being renewed, extended, refinanced,
refunded or repurchased is pari passu with or subordinated in right of payment
to the Notes, then such Indebtedness is pari passu with or subordinated in
right of payment to the Notes at least to the same extent as the Indebtedness
being renewed, extended, refinanced, refunded or repurchased and (B) such
Indebtedness is scheduled to mature no earlier than the Indebtedness being
renewed, extended, refinanced, refunded or repurchased and such Indebtedness
has an Average Life at
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the time such Indebtedness is incurred that is equal to
or greater than the remaining Average Life of the Indebtedness being renewed,
extended, refinanced, refunded or repurchased; provided, further, that such
Indebtedness is in an aggregate principal amount (or, if such Indebtedness is
issued at a price less than the principal amount thereof, the aggregate amount
of gross proceeds therefrom is) not in excess of the sum of (x) the aggregate
principal amount then outstanding of the Indebtedness being renewed, extended,
refinanced, refunded or repurchased (or if the Indebtedness being renewed,
extended, refinanced, refunded or repurchased was issued at a price less than
the principal amount thereof, then not in excess of the amount of liability in
respect thereof determined in accordance with GAAP), (y) the amount of accrued
and unpaid interest, if any, on the Indebtedness being renewed, extended,
refinanced, refunded or repurchased and (z) the amount of fees, expenses and
costs related to the incurrence of such Permitted Company Refinancing
Indebtedness.
"Permitted Consigned Inventory" means (a) inventory of the
Loan Parties which the Loan Parties have consigned to persons for sale in the
ordinary course of such Person's business; provided that the aggregate fair
market value (as evidenced by the invoiced sales price to such consignee) of
the Inventory of all Loan Parties so consigned does not at any time exceed
$10,000,000, as determined in good faith by the Board of Directors of the
Company and (b) tubular goods delivered from time to time by a Loan Party for
additional processing by third parties so long as the aggregate book value of
all such goods delivered by the Company and the Restricted Subsidiaries does
not at any time exceed $10,000,000.
"Permitted Financial Investments" means the following kinds of
instruments:
(a) investments in certificates of deposit maturing
within one year from the date of issuance thereof, issued by a bank or
trust company (i) organized under the laws of the United States or any
state thereof, having capital, surplus and undivided profits
aggregating at least $200,000,000 and whose long-term certificates of
deposit are, at the time of acquisition thereof by the Company or any
of its Restricted Subsidiaries, rated A-1 or better by Standard &
Poor's Rating Group or P-1 or better by Moody's Investors Service,
Inc. or (ii) organized under the laws of any jurisdiction other than
the United States or any state thereof, provided that such foreign
bank shall be one of the three most reputable, creditworthy banks in
such country;
(b) deposit accounts (i) in a bank or trust company
organized under the laws of the United States or any state thereof,
having capital surplus and undivided profits aggregating at least
$200,000,000 and whose commercial paper (or that of the holding
company with which such bank or trust company is affiliated) is rated
A-1 or better by Standard & Poor's Rating Group or P-1 or better by
Moody's Investors Service, Inc., (ii) in banks outside of the United
States, in currencies other than U.S. dollars, which banks provide
working capital, operating accounts or similar services to one or more
Restricted Subsidiaries at such foreign banks, provided that such
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foreign bank shall be one of the three most reputable, creditworthy
banks in such country and (iii) in a bank organized under the laws of
the United States or any state thereof not included in the
descriptions in clause (i) or (ii) above, so long as the aggregate
amount on deposit in such bank by the Company and its Restricted
Subsidiaries does not exceed $500,000;
(c) receivables arising from the sale of goods and
services in the ordinary course of business of the Company and its
Restricted Subsidiaries;
(d) investments in eurodollars not in excess of
$10,000,000 in the aggregate at any one time outstanding, issued by
any bank or trust company having capital, surplus and undivided
profits aggregating at least $200,000,000 and whose long-term
certificates of deposit are, at the time of acquisition thereof by the
Company or any Restricted Subsidiary, rated A-1 or better by Standard
& Poor's Ratings Group or P-1 or better by Moody's Investor Service,
Inc.;
(e) marketable direct obligations issued or
unconditionally guaranteed by the United States or Canadian government
or issued by any agency thereof and backed by the full faith and
credit of the United States or Canada, as the case may be, in each
case maturing no later than one year from the date of acquisition;
(f) the acquisition or ownership of Capital Stock or
obligations or securities received in settlement of debts (created in
the ordinary course of business) owing to the Company or any
Restricted Subsidiary;
(g) money market, mutual or similar funds that invest in
obligations referred to in clauses (a) or (e) of this definition, in
each case having assets in excess of $500,000,000;
(h) foreign currency hedging transactions entered into in
the ordinary course of business and not for the purpose of speculation
the effect of which is to hedge or limit the risk of the Company or
any of its Restricted Subsidiaries arising from exchange rate
fluctuations on investments in the currency position hedged; and
(i) investments and common stock of publicly held
companies not exceeding $25,000 at any one time outstanding.
"Permitted Indebtedness" means, without duplication,
(a) Indebtedness of the Company and its Restricted
Subsidiaries under this Agreement and the other Loan Documents;
(b) the Highland Corod Indebtedness;
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(c) other Indebtedness of the Company and its Restricted
Subsidiaries outstanding on the Execution Date and listed on Schedule
1.01A;
(d) Indebtedness of the Company to any Restricted
Subsidiary of the Company; provided that such Indebtedness of the
Company is evidenced by a note and is subordinated in right of payment
to the prior payment in full of the Obligations;
(e) Indebtedness of a Restricted Subsidiary (other than
Highland Corod) to another Restricted Subsidiary;
(f) Indebtedness of Highland Corod to the Company or any
Restricted Subsidiary so long as the aggregate amount of all such
Indebtedness does not exceed $5,000,000 at any time outstanding;
(g) Indebtedness of any entity or asset existing at the
time such entity or asset is acquired by the Company or any of its
Restricted Subsidiaries, whether by merger, consolidation, purchase of
assets or otherwise; provided (i) that such Indebtedness is not
created, incurred or assumed in contemplation of such acquisition of
such entity or asset and (ii) the aggregate amount of all such
Indebtedness does not exceed in the aggregate $10,000,000 outstanding
at any time;
(h) Indebtedness arising from the honoring by a bank or
other financial institution of a check, draft or similar instrument
inadvertently (except in the case of daylight overdrafts) drawn
against insufficient funds in the ordinary course of business;
provided that such Indebtedness is extinguished within two Business
Days;
(i) Indebtedness arising from agreements providing for
indemnification, adjustment of purchase price or similar obligations,
or from guarantees, letters of credit, surety bonds or performance
bonds securing any obligation of the Company or any of its Restricted
Subsidiaries incurred or assumed in connection with the disposition of
any business, assets or any Restricted Subsidiary other than
Assurances by the Company or any Restricted Subsidiary of Indebtedness
incurred by any Person acquiring all or a portion of such business,
asset or Restricted Subsidiary for the purpose of financing such
acquisition; provided that the maximum aggregate liability with
respect to all such Indebtedness and the amount of Indebtedness
subject to such Assurances, in each case with respect to a particular
transaction, shall at no time exceed the gross proceeds actually
received from the sale of such business, asset or Restricted
Subsidiary in the transaction in compliance with Section 8.02;
(j) Indebtedness constituting the net obligations of a
Person as of the date of a required calculation under foreign currency
hedges entered into in the ordinary course of business and not for the
purpose of speculation;
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(k) Permitted Subsidiary Refinancing Indebtedness;
(l) Permitted Company Refinancing Indebtedness;
(m)(i) Indebtedness arising under industrial revenue bonds
with respect to which Tubular Corporation of America (or to which a
Restricted Subsidiary would become liable upon the merger of Tubular
Corporation of America with such Restricted Subsidiary) is obligated
in an amount not to exceed $2,000,000, and (ii) reimbursement
obligations, not to exceed $1,500,000, that may become due from
Tubular Corporation of America (or to which a Restricted Subsidiary
would become liable upon the merger of Tubular Corporation of America
with such Restricted Subsidiary) to The Toronto-Dominion Bank; and
(n) additional Indebtedness of the Company and its
Restricted Subsidiaries which does not exceed in the aggregate
$10,000,000 outstanding at any time.
"Permitted Joint Venture" means an investment in a Person
other than a Restricted Subsidiary (a) that is engaged in one or more Lines of
Business; and (b) no debt or equity interest in which (other than directors'
qualifying shares) is or will be held by an officer or director of the Company
or of any Restricted Subsidiary, or any spouse, immediate family member of, or
other relative having the same principal residence as, any such officer or
director, or any trust the beneficiary of which is any of the foregoing parties
or any other Affiliate of the Company (except the Company or a Restricted
Subsidiary).
"Permitted Joint Venture Investments" means Investments (other
than Investments that are Permitted Financial Investments or a Permitted
Business Investment pursuant to clauses (a) through (d) of the definition of a
Permitted Business Investment) by the Company or any Restricted Subsidiary in a
Permitted Joint Venture if, after giving effect to such Investment, the
aggregate book value of all assets of the Company and its Restricted
Subsidiaries (determined on the date of transfer) transferred since the
Execution Date to Permitted Joint Ventures (less the lesser of (a) the
aggregate fair market value (as determined in good faith by the Board of
Directors of the Company and evidenced by a Board Resolution) and (b) the
aggregate book value of all such assets subsequently transferred back to the
Company or any of its Wholly Owned Restricted Subsidiaries) would not exceed
10% of the Consolidated Tangible Net Worth of the Company and its Restricted
Subsidiaries (determined as of the end of the Company's most recent fiscal
quarter for which financial information is available immediately prior to the
date of determination).
"Permitted Liens" means, without duplication,
(a) Liens on assets of Highland Corod which on the date
hereof secure the Highland Corod Indebtedness and Liens existing on
the Execution Date and listed on Schedule 1.01B (but excluding Liens
to Transamerica Business Credit Corporation);
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(b) Liens on assets of Restricted Subsidiaries securing
Indebtedness of such Restricted Subsidiaries permitted under this
Agreement;
(c) Liens for taxes not yet delinquent or which are being
contested in good faith by appropriate proceedings; provided that
adequate reserves with respect thereto are maintained on the books of
the Company or its Restricted Subsidiaries, as the case may be, in
conformity with GAAP;
(d) carriers', warehousemen's, mechanics', materialmen's,
repairmen's or other like Liens arising in the ordinary course of
business and not overdue for a period of more than 60 days or which
are being contested in good faith by appropriate proceedings;
(e) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security
legislation;
(f) easements, rights-of-way, use restrictions, minor
defects or irregularities in title and other similar encumbrances
incurred in the ordinary course of business which, in the aggregate,
are not substantial in amount and which do not in any case materially
detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Company or
any of its Restricted Subsidiaries;
(g) judgment and attachment Liens not giving rise to an
Event of Default or Liens created by or existing from any litigation
or legal proceeding that are currently being contested in good faith
by appropriate proceedings, promptly instituted and diligently
conducted, and for which adequate reserves have been made to the
extent required by GAAP;
(h) Liens on the assets of any entity or asset existing
at the time such entity is acquired by the Company or any of its
Restricted Subsidiaries, whether by merger, consolidation, purchase of
assets or otherwise; provided that such Liens (i) are not created,
incurred or assumed by such entity in contemplation of such entity's
being acquired by the Company or any of its Restricted Subsidiaries;
(ii) do not extend to any other assets of the Company or any of its
Restricted Subsidiaries; and (iii) the Indebtedness secured by such
Lien is permitted pursuant to this Agreement;
(i) Liens created pursuant to this Agreement and the
other Loan Documents;
(j) Liens incurred to secure the performance of tenders,
bids, leases, statutory obligations, surety and appeal bonds,
government contracts, performance and return-of-money bonds and other
obligations of a like nature incurred in the
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ordinary course of business (exclusive of obligations for the payment
of borrowed money);
(k) leases or subleases granted to others not interfering
in any material respect with the business of the Company or any of its
Restricted Subsidiaries;
(l) Liens to secure obligations arising from statutory or
regulatory requirements;
(m) any interest or title of a lessor in property subject
to any Capitalized Lease Obligation or operating lease which, in each
case, is permitted under this Indenture;
(n) Liens in favor of collecting or payor banks having a
right of setoff, revocation, refund or chargeback with respect to
money or instruments of the Company or any Restricted Subsidiary on
deposit with or in possession of such bank;
(o) any renewal of or substitution for any Lien permitted
by any of the preceding clauses; provided that the debt secured is not
increased nor the Lien extended to any additional assets;
(p) Liens securing Permitted Subsidiary Refinancing
Indebtedness so long as such Permitted Subsidiary Refinancing
Indebtedness is secured only by Liens on those assets that secured
such Indebtedness prior to the renewal, extension, refinancing, refund
or repurchase or by Liens otherwise permitted by this definition;
(q) Liens granted or Letters of Credit issued in
connection with the Tax Benefit Transfer Lease Obligations; and
(r) additional Liens securing obligations in an aggregate
amount not to exceed $10,000,000 at any one time.
"Permitted Subsidiary Refinancing Indebtedness" means
(a) Indebtedness of any Restricted Subsidiary (i)
existing on the Execution Date and listed on Schedule 1.01A and (ii)
would exist on the Execution Date (assuming that all unfunded
commitments to advance any such Indebtedness are fully funded), the
terms of which have been amended, modified or supplemented in a manner
that does not (A) adversely affect the priority of such Indebtedness
in right of payment in relation to the Guaranty, (B) accelerate the
maturity of such Indebtedness or (C) shorten the Average Life of such
Indebtedness; and
(b) Indebtedness of any Restricted Subsidiary, the net
proceeds of which are used to renew, extend, refinance, refund or
repurchase outstanding Indebtedness
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of such Restricted Subsidiary, provided that (A) with respect to
Indebtedness of a Subsidiary Guarantor, if the Indebtedness (including
any guarantee thereof) being renewed, extended, refinanced, refunded or
repurchased is pari passu with or subordinated in right of payment to
the Guaranty, then such Indebtedness is pari passu with or
subordinated in right of payment to the Guaranty at least to the same
extent as the Indebtedness being renewed, extended, refinanced,
refunded or repurchased, (B) such Indebtedness is scheduled to mature
no earlier than the Indebtedness being renewed, extended, refinanced,
refunded or repurchased, and (C) such Indebtedness has an Average Life
at the time such Indebtedness is incurred that is equal to or greater
than the remaining Average Life of the Indebtedness being renewed,
extended, refinanced, refunded or repurchased; provided further, that
such Indebtedness is in an aggregate principal amount (or, if such
Indebtedness is issued at a price less than the principal amount
thereof, the aggregate amount of gross proceeds therefrom is) not in
excess of the sum of (x) the aggregate principal amount then
outstanding under the Indebtedness being renewed, extended,
refinanced, refunded or repurchased (or if the Indebtedness being
renewed, extended, refinanced, refunded or repurchased was issued at a
price less than the principal amount thereof, then not in excess of
the amount of liability in respect thereof determined in accordance
with GAAP), (y) the amount of accrued and unpaid interest, if any, on
the Indebtedness being renewed, extended, refinanced, refunded or
repurchased and (z) the amount of fees, expenses and costs related to
the incurrence of such Permitted Subsidiary Refinancing Indebtedness.
"Person" means any individual, corporation, limited or general
partnership, limited liability company, joint venture, association, joint stock
company, trust, unincorporated organization or other entity, or a government or
any agency or political subdivision thereof.
"Plan" means any employee pension benefit plan (as defined in
Section 3(2) of ERISA), subject to Title IV of ERISA or Section 412 of the
Code, other than a Multiemployer Plan, with respect to which a Loan Party or an
ERISA Affiliate contributes or has an obligation or liability to contribute or
to the PBGC, including any such plan that may have been terminated.
"Pro Rata Share" has the meaning specified in Section 9.05.
"Qualified Stock" means, with respect to any Person, any
Capital Stock of such Person or a Subsidiary of such Person that is not
Disqualified Stock.
"Reference Period" means a period commencing on a Financial
Statement Delivery Date and ending the day preceding the next succeeding
Financial Statement Delivery Date.
"Register" has the meaning specified in Section 12.11(e).
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"Regulation A" means Regulation A of the Board (respecting
loans to depository institutions), as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
"Regulation D" means Regulation D of the Board (respecting
reserve requirements), as the same is from time to time in effect, and all
official rulings and interpretations thereunder or thereof.
"Regulation U" means Regulation U of the Board (respecting
margin credit extended by banks), as the same is from time to time in effect,
and all official rulings and interpretations thereunder or thereof.
"Regulation X" means Regulation X of the Board (respecting
borrowers who obtain margin credit), as the same is from time to time in
effect, and all official rulings and interpretations thereunder or thereof.
"Release" means any spilling, leaking, pumping, pouring,
emitting, emptying, discharging, injecting, escaping, leaching, dumping or
disposing into the environment (including the abandonment or discarding of
barrels, containers and other closed receptacles).
"Reportable Event" means an event described in Section 4043(b)
of ERISA with respect to a Plan as to which the 30-day notice requirement has
not been waived by the PBGC.
"Requirement of Law" means, as to any Person, any law, treaty,
rule or regulation or determination of an arbitrator or a court or other
Governmental Authority, in each case applicable to or binding upon such Person
or any of its property or to which such Person or any of its property is
subject.
"Requirements of Environmental Laws" means, as to any Person,
the Requirement of Law imposed under any applicable Environmental Law relating
to or affecting such Person or the condition or operation of such Person's
business or its properties, both real and personal.
"Reserve Percentage" means, for any Lender and for any
Interest Period, the reserve percentage applicable during such Interest Period
under regulations issued from time to time by the Board (or if more than one
such percentage is so applicable, the daily average for such percentages for
those days in such Interest Period during which any such percentage shall be so
applicable) for determining the maximum reserve requirement (including any
marginal, supplemental or emergency reserves) for such Lender in respect of
liabilities or assets consisting of or including Eurocurrency Liabilities.
"Responsible Officer" means, with respect to any Loan Party,
the President, the chief financial officer, the controller or any vice
president of such Loan Party.
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"Restricted Payment" means (a) any dividend or other
distribution, direct or indirect, on account of any shares of any class of
stock of the Company now or hereafter outstanding, except a dividend payable
solely in shares of stock or warrants, rights or options to acquire shares of
stock of the Company, (b) any redemption, retirement, purchase or other
acquisition, direct or indirect, of any shares of any class of stock of the
Company, now or hereafter outstanding, or of any warrants, rights or options to
acquire any such shares, except to the extent that the consideration therefor
consists of shares of stock (including warrants, rights or options relating
thereto) of the Company and (c) any Investment by the Company or any of its
Restricted Subsidiaries not permitted by Section 8.06.
"Restricted Subsidiary" means any Subsidiary of the Company
other than an Unrestricted Subsidiary. The Board of Directors of the Company,
by a Board Resolution, may designate any Unrestricted Subsidiary to be a
Restricted Subsidiary; provided, that before and after giving effect thereto
(a) no Default or Event of Default shall have occurred and be continuing or
would result therefrom, (b) the Company and its Restricted Subsidiaries shall
be in compliance, on a pro forma basis, after giving effect to such
designation, with the covenants contained in Article VIII, recomputed as at the
last day of the most recently ended fiscal quarter of the Company and its
Restricted Subsidiaries as if such designation had occurred on the first day of
each relevant period for testing such compliance and (c) the Company shall have
delivered to the Agent and the Lenders a certificate of a Responsible Officer
to such effect, together with all relevant financial information and
calculations demonstrating such compliance.
"Revolving Credit Commitment" means, with respect to each
Lender, the amount set forth opposite the name of such Lender under the heading
"Revolving Credit Commitment" on the signature page for such Lender, or, in the
case of any Person who becomes a Lender after the Execution Date, on the
signature page of the Assignment and Acceptance executed by such Person, in
each case, as the same may be reduced from time to time or terminated pursuant
to Section 4.02, Section 4.03 or Article X.
"Sale-Leaseback Proceeds" has the meaning specified in Section
8.12.
"Sale-Leaseback Transaction" means, with respect to the
Company or any of its Restricted Subsidiaries, any arrangement with any Person
(other than the Company or a Restricted Subsidiary) providing for the leasing
by the Company or any of its Restricted Subsidiaries of any principal property,
acquired or placed into service more than 180 days prior to such arrangement,
whereby such property has been or is to be sold or transferred by the Company
or any of its Restricted Subsidiaries to such Person.
"Scheduled Capital Expenditures" means Capital Expenditures
(other than Capital Expenditures made as part of a Permitted Business
Acquisition).
"Secured Parties" means (a) the Lenders and (b) the Agent.
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"Security Documents" means, collectively, the Company Pledge
Agreement, the Subsidiary Guarantors Pledge Agreements, the Company Security
Agreement, the Subsidiary Guarantors Security Agreements and any other
agreement executed by any Loan Party securing the Obligations, including all
security agreements and other documents delivered pursuant to Section 8.02(g).
"Single Employer Plan" means any Plan which is covered by
Title IV of ERISA, but which is not a Multiemployer Plan.
"Solvent" has the meaning specified in Section 6.16.
"Stated Amount" means, with respect to each Letter of Credit,
at any time, the maximum amount then available to be drawn thereunder (without
regard to whether any condition to drawing thereon could be met).
"Statutory Reserves" means 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 any marginal, special, emergency or supplemental reserves),
expressed as a decimal, established by the Board and any other banking
authority to which Chase (or any other institution that is both a Lender and
the Agent) is subject with respect to the Base CD Rate, for new negotiable
nonpersonal time deposits in dollars of over $100,000 with maturities
approximately equal to three months. Such reserve percentages shall include
those imposed pursuant to Regulation D.
"Subsidiary" means (a) a corporation a majority of whose
Voting Stock is at the time, directly or indirectly, owned by such Person, by
one or more subsidiaries of such Person or by such Person and one or more
subsidiaries of such Person, (b) a partnership in which such Person or a
subsidiary of such Person is, at the date of determination, a general or
limited partner of such partnership, but only if such Person or its subsidiary
is entitled to receive more than 50% of the assets of such partnership upon its
dissolution, or (c) any other Person (other than a corporation or partnership)
in which such Person, directly or indirectly, at the date of determination
thereof, has (i) at least a majority ownership interest or (ii) the power to
elect or direct the election of a majority of the directors or other governing
body of such Person.
"Subsidiary Guarantors" has the meaning specified in the
introduction to this Agreement.
"Subsidiary Guarantors Pledge Agreements" means collectively:
(a) the Pledge Agreement dated as of the date hereof executed by Prideco, Inc.,
a Texas corporation, to the Agent for the benefit of the Secured Parties; (b)
the Pledge Agreement dated as of the date hereof executed by Mallard Bay
Drilling, Inc., a Louisiana corporation, to the Agent for the benefit of the
Secured Parties; (c) the Pledge Agreement dated as of the date hereof executed
by AWI Drilling & Workover, Inc., a Louisiana corporation, to the Agent for the
benefit of
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the Secured Parties; and (d) the Pledge Agreement dated as of the date hereof
executed by Grant Prideco, Inc., a Delaware corporation to the Agent for the
benefit of the Secured Parties.
"Subsidiary Guarantors Security Agreements" means,
collectively, the separate Security Agreements, each dated as of the date
hereof and executed by a Subsidiary Guarantor to the Agent for the benefit of
the Secured Parties and any security agreement executed after the date hereof
by any New Subsidiary pursuant to Section 8.02(f).
"Tangible Net Worth" means, as to the Company as of the date
of determination, Net Worth after deducting therefrom the following:
(a) any surplus resulting from the write-up of assets
subsequent to December 31, 1996;
(b) goodwill, including any amounts (however designated
on the balance sheet) representing the cost of acquisitions of
Subsidiaries in excess of underlying tangible assets;
(c) patents, trade names, trademarks, service marks and
copyrights;
(d) leasehold improvements not recoverable at the
expiration of a lease;
(e) deferred charges (including unamortized debt discount
and expense, organization expenses and experimental and development
expenses, but excluding prepaid expenses); and
(f) any items not included in clauses (a) through (e)
above which are treated as intangibles in conformity with GAAP.
"Tax Benefit Transfer Lease Obligations" means Tubular
Corporation of America's obligations incurred in connection with the TBT
Leases.
"TBT Leases" means (i) tax transfer lease Agreement dated
November 30, 1982, between The Scott & Fetzer Company and the Company with
related Escrow Agreement; (ii) tax transfer lease Agreement dated November 30,
1982 between The Scott & Fetzer Company and Muskogee Inspection Company with
related Escrow Agreement covering equipment with a tax cost of $1,678,158,
(iii) tax transfer lease Agreement dated November 30, 1982, between The Scott
&Fetzer Company and Muskogee Inspection Company with related Escrow Agreement
covering equipment with a tax cost of $670,000 and (iv) tax transfer lease
Agreement dated December 27, 1982, between St. Clairs' Inc. and the Company
with related Escrow Agreement.
"Termination Date" means December 31, 1996.
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"Total Capitalization" means, at any date, the sum of
Consolidated Indebtedness and Net Worth at such date.
"Total Tranche A Revolving Credit Commitment" means the sum of
the Tranche A Revolving Credit Commitments of the Lenders, which on the
Effective Date will be $90,000,000.
"Total Tranche B Revolving Credit Commitment" means the sum of
the Tranche B Revolving Credit Commitments of the Lenders, which on the
Effective Date will be $30,000,000.
"Total Tranche A Unutilized Revolving Credit Commitment"
means, at any time, the sum of the Unutilized Tranche A Revolving Credit
Commitments of the Lenders.
"Total Tranche B Unutilized Revolving Credit Commitment"
means, at any time, the sum of the Unutilized Tranche B Revolving Credit
Commitments of the Lenders.
"Tranche A Revolving Credit Commitment" means, with respect to
each Lender, the amount set forth opposite the name of such Lender under the
heading "Tranche A Revolving Credit Commitment" on the signature page for such
Lender or, in the case of any Person who becomes a Lender after the Execution
Date, on the signature page of the Assignment and Acceptance executed by such
Lender, in each case, as the same may be reduced from time to time or
terminated pursuant to Section 4.02, Section 4.03 or Article X.
"Tranche A Revolving Credit Commitment Fee" has the meaning
specified in Section 4.01(a).
"Tranche A Revolving Credit Loan" has the meaning specified
in Section 2.01(a).
"Tranche A Revolving Credit Note" has the meaning specified
in Section 2.05(a).
"Tranche A Revolving Credit Stated Maturity Date" means June
30, 1999 or the earlier date of the acceleration of the maturity of the
Obligations pursuant to Section 10.01.
"Tranche B Revolving Credit Commitment" means, with respect to
each Lender, the amount set forth opposite the name of such Lender under the
heading "Tranche B Revolving Credit Commitment" on the signature page for such
Lender or, in the case of any Person who becomes a Lender after the Execution
Date, on the signature page of the Assignment and Acceptance executed by such
Lender, in each case, as the same may be reduced from time to time or
terminated pursuant to Section 4.02, Section 4.03 or Article X.
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"Tranche B Revolving Credit Commitment Fee" has the meaning
specified in Section 4.01(b).
"Tranche B Revolving Credit Loan" has the meaning specified
in Section 2.01(b).
"Tranche B Revolving Credit Note" has the meaning specified
in Section 2.05(b).
"Tranche B Revolving Credit Stated Maturity Date" means June
30, 2000 or the earlier date of the acceleration of the maturity of the
Obligations pursuant to Section 10.01.
"UCC" means the Uniform Commercial Code in effect from time to
time in the State of New York.
"UCP" means the Uniform Customs and Practice for Documentary
Credits (1993 Revision), International Chamber of Commerce, Publication No. 500
(and any subsequent revisions thereof approved by a Congress of the
International Chamber of Commerce and adhered to by the Issuing Bank).
"Unfunded Current Liability" means, with respect to any Plan,
the amount, if any, by which the present value of the accrued benefits under
the Plan as of the close of its most recent Plan year exceeds the fair market
value of the assets allocable thereto, determined in accordance with Section
412 of the Code.
"United States" and "U.S." each means United States of
America.
"Unpaid Drawing" has the meaning specified in Section 3.04(a).
"Unrestricted Subsidiary" means (a) any Subsidiary of an
Unrestricted Subsidiary or (b) any Subsidiary of the Company or of a Restricted
Subsidiary that is designated as an Unrestricted Subsidiary by a Board
Resolution of the Company in accordance with the requirements of the following
sentence with the consent of the Majority Lenders (which consent shall not be
unreasonably withheld). The Company may hereafter designate any Subsidiary of
the Company or of a Restricted Subsidiary (other than a Subsidiary Guarantor)
to be an Unrestricted Subsidiary by a Board Resolution of the Company, as
evidenced by written notice thereof delivered to the Agent, if at the time of
and after giving effect to such designation, (i) no Default or Event of Default
shall have occurred and be continuing, (ii) such Subsidiary does not own or
hold any Capital Stock of, or any Lien on any property of, the Company or any
of its Restricted Subsidiaries and (iii) such Subsidiary is not liable,
directly or indirectly, with respect to any Indebtedness other than
Unrestricted Subsidiary Indebtedness. As of the date hereof, the Unrestricted
Subsidiaries are: ENGY, Inc., Dongying Shengli-Highland Company Limited, Energy
Ventures (Cyprus)
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Limited, Prideco Europe Limited, Energy Ventures Foreign Service Corporation,
Mallard Bay Drilling (Nigeria) Limited, BakTexas, EVI-Widney Ltd., EVI-Widney,
Robbins & Myers-Highland, Grant Tubular Finishing, Ltd., EVI (Barbados) Inc.,
Energy Ventures Far East Limited, Prideco de Venezuela, Marservice, Ltd., and
ENERPRO de Mexico S.A. de C.V.
"Unrestricted Subsidiary Indebtedness" of any Person, means
Indebtedness of such Person (a) as to which neither the Company nor any
Restricted Subsidiary is directly or indirectly liable (by virtue of the
Company's or such Restricted Subsidiary's being the primary obligor, or
guarantor of, or otherwise contractually liable in any respect on, such
Indebtedness), except that Unrestricted Subsidiary Indebtedness may include
Assurances of such Person of Indebtedness of the Company, (b) which, with
respect to Indebtedness incurred after the Execution Date by the Company or any
Restricted Subsidiary, upon the occurrence of a default with respect thereto,
does not result in, or permit any holder of any Indebtedness of the Company or
any Restricted Subsidiary to declare, a default on such Indebtedness of the
Company or any Restricted Subsidiary and (c) which is not secured by any assets
of the Company or of any Restricted Subsidiary.
"Unutilized Tranche A Revolving Credit Commitment" for any
Lender, at any time, means the remainder of (a) such Lender's Tranche A
Revolving Credit Commitment at such time less (b) the sum of (i) the
outstanding Tranche A Revolving Credit Loans made by such Lender and (ii) the
product of (A) the Letter of Credit Outstandings at such time multiplied by (B)
such Lender's Percentage Participation.
"Unutilized Tranche B Revolving Credit Commitment" for any
Lender, at any time, means the remainder of (a) such Lender's Tranche B
Revolving Credit Commitment at such time less (b) the outstanding Tranche B
Revolving Credit Loans made by such Lender.
"Voting Stock" means, with respect to any Person, securities
of any class or classes of Capital Stock in such Person entitling holders
thereof (whether at all times or only so long as no senior class of stock has
voting power by reason of any contingency) to vote in the election of members
of the Board of Directors or other governing body of such Person.
"Wholly Owned Restricted Subsidiary" means a Restricted
Subsidiary of which all issued and outstanding Capital Stock (excluding
directors' qualifying shares) is directly or indirectly owned by the Company.
SECTION 1.02. Classes and Types of Loans. Loans hereunder
are distinguished by "Class" and "Type." The "Class" of a Loan (or of a
Commitment to make such a Loan) refers to the determination whether such Loan
is a Tranche A Revolving Credit Loan or a Tranche B Revolving Credit Loan,
each of which constitutes a Class. The "Type" of a Loan refers to the
determination whether such Loan is a Eurodollar Rate Loan or an Alternate Base
Rate Loan. A Loan may be identified by both Class and Type (i.e., a
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"Tranche A Revolving Credit Eurodollar Rate Loan" is both a Eurodollar Rate
Loan and a Tranche A Revolving Credit Loan).
SECTION 1.03. Accounting Terms; Changes in GAAP. All
accounting and financial terms used herein and not otherwise defined herein and
the compliance with each covenant contained herein which relates to financial
matters shall be determined in accordance with GAAP applied by the Company on a
consistent basis, except to the extent that a deviation therefrom is expressly
stated. Should there be a change in GAAP from that in effect on the Execution
Date, such that the defined terms set forth in Section 1.01 or the covenants
set forth in Article VIII would then be calculated in a different manner or
with different components or would render the same not meaningful criteria for
evaluating the matters contemplated to be evidenced by such covenants, (a) the
Company and the Lenders agree, within the 60-day period following any such
change, to negotiate in good faith and enter into an amendment to this
Agreement in order to conform the defined terms set forth in Section 1.01 or
the covenants set forth in Article VIII, or both, in such respects as shall
reasonably be deemed necessary by the Majority Lenders so that the criteria for
evaluating the matters contemplated to be evidenced by such covenants are
substantially the same criteria as were effective prior to any such change in
GAAP or Statutory Accounting Practices, and (b) the Company shall be deemed to
be in compliance with such covenants during the 60-day period following any
such change, or until the earlier date of execution of such amendment, if and
to the extent that the Company would have been in compliance therewith under
GAAP as in effect immediately prior to such change.
SECTION 1.04. Interpretation. (a) In this Agreement,
unless a clear contrary intention appears:
(i) the singular number includes the plural number and
vice versa;
(ii) reference to any gender includes each other gender;
(iii) the words "herein," "hereof" and "hereunder" and
other words of similar import refer to this Agreement as a whole and
not to any particular Article, Section or other subdivision;
(iv) reference to any Person includes such Person's
successors and assigns but, if applicable, only if such successors and
assigns are permitted by this Agreement, and reference to a Person in
a particular capacity excludes such Person in any other capacity or
individually, provided that nothing in this clause (iv) is intended to
authorize any assignment not otherwise permitted by this Agreement;
(v) except as expressly provided to the contrary herein,
reference to any agreement, document or instrument (including this
Agreement) means such agreement, document or instrument as amended,
supplemented or modified and in effect from time to time in accordance
with the terms thereof and, if applicable, the
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terms hereof, and reference to any Note or other note includes any
note issued pursuant hereto in extension or renewal thereof and in
substitution or replacement therefor;
(vi) unless the context indicates otherwise, reference to
any Article, Section, Schedule or Exhibit means such Article or
Section hereof or such Schedule or Exhibit hereto;
(vii) the word "including" (and with correlative meaning
"include") means including, without limiting the generality of any
description preceding such term;
(viii) with respect to the determination of any period of
time, except as expressly provided to the contrary, the word "from"
means "from and including" and the word "to" means "to but excluding";
and
(ix) reference to any law, rule or regulation means such
as amended, modified, codified or reenacted, in whole or in part, and
in effect from time to time.
(b) The Article and Section headings herein and the Table
of Contents are for convenience only and shall not affect the construction
hereof.
(c) No provision of this Agreement shall be interpreted
or construed against any Person solely because that Person or its legal
representative drafted such provision.
ARTICLE II
LOANS
SECTION 2.01. Commitments. (a) Subject to and upon the
terms and conditions herein set forth, each Lender severally agrees at any time
and from time to time on and after the Effective Date and prior to the Tranche
A Revolving Credit Stated Maturity Date, to make a loan or loans (each a
"Tranche A Revolving Credit Loan") to the Company, which Tranche A Revolving
Credit Loans (i) shall, at the option of the Company, be made and maintained
pursuant to one or more Borrowings comprised of Alternate Base Rate Loans or
Eurodollar Rate Loans; provided that, except as otherwise specifically provided
herein, all Tranche A Revolving Credit Loans comprising all or a portion of the
same Borrowing shall at all times be of the same Type and, in the case of a
Eurodollar Rate Borrowing, shall have the same Interest Period, (ii) may be
borrowed, repaid and reborrowed in accordance with the provisions hereof and
(iii) shall not exceed in aggregate principal amount at any time outstanding
(after giving effect to the principal amount forany Lender of all Tranche A
Revolving Credit Loans repaid and all Unpaid Drawings in respect of Letters of
Credit
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reimbursed prior to or concurrently with the making of any Tranche A Revolving
Credit Loan) that amount which, when added to the product of such Lender's
Percentage Participation of the Letter of Credit Outstandings at such time,
equals the Tranche A Revolving Credit Commitment of such Lender.
Notwithstanding the foregoing, the sum of the aggregate outstanding principal
amount of the Tranche A Revolving Credit Loans of all Lenders plus the Letter of
Credit Outstandings at no time shall exceed the lesser of the Total Tranche A
Revolving Credit Commitment and the Borrowing Base. The provisions of this
Section 2.01(a) shall not be applicable to Tranche A Revolving Credit Loans made
by the Lenders pursuant to Section 3.03(c).
(b) Subject to and upon the terms and conditions herein
set forth, each Lender severally agrees at any time and from time to time on
and after the Effective Date and prior to the Termination Date, to make a loan
or loans (each a "Tranche B Revolving Credit Loan"; each Tranche A Revolving
Credit Loan and each Tranche B Revolving Credit Loan being herein individually
sometimes called a "Loan" and collectively, the "Loans") to the Company, which
Tranche B Revolving Credit Loans (i) shall, at the option of the Company, be
made and maintained pursuant to one or more Borrowings comprised of Alternate
Base Rate Loans or Eurodollar Rate Loans; provided that, except as otherwise
specifically provided herein, all Tranche B Revolving Credit Loans comprising
all or a portion of the same Borrowing shall at all times be of the same Type
and, in the case of a Eurodollar Rate Borrowing, shall have the same Interest
Period, (ii) may be borrowed, repaid and reborrowed prior to the Termination
Date in accordance with the provisions hereof and (iii) shall not exceed in
aggregate principal amount at any time outstanding the Tranche B Revolving
Credit Commitment of such Lender. Notwithstanding the foregoing, the sum of
the aggregate outstanding principal amount of the Tranche B Revolving Credit
Loans of all Lenders at no time shall exceed the Total Tranche B Revolving
Credit Commitment.
SECTION 2.02. Minimum Amount of Each Borrowing. (a)
Except with respect to Tranche A Revolving Credit Loans made pursuant to
Section 3.03(b), the aggregate principal amount of each Borrowing of Tranche A
Revolving Credit Loans made by the Lenders shall not be less than the lesser of
(i) $3,000,000 and, if greater, shall be an integral multiple of $1,000,000 and
(ii) the Total Tranche A Unutilized Revolving Credit Commitment.
(b) The aggregate principal amount of each Borrowing of
Tranche B Revolving Credit Loans made by the Lenders shall not be less than (i)
$3,000,000 and, if greater, shall be an integral multiple of $1,000,000 and
(ii) the Total Tranche B Unutilized Revolving Credit Commitment.
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SECTION 2.03. Notice of Borrowing. (a) Whenever the
Company desires to make a Borrowing hereunder, the Company shall give notice
(which may be in the form of telephonic notice promptly confirmed in writing)
to the Agent (a "Notice of Borrowing") (i) in the case of a Borrowing to be
comprised of Alternate Base Rate Loans, not later than 10:00 a.m. (New York
City time) on the Borrowing Date for such Borrowing and (ii) in the case of a
Eurodollar Rate Borrowing, not later than 11:00 a.m. (New York City time) three
Business Days prior to the Borrowing Date for such Borrowing. Each Notice of
Borrowing shall be irrevocable and shall be in the form of Exhibit 2.03
specifying (A) the aggregate principal amount of the Loans to be made pursuant
to such Borrowing, (B) the Borrowing Date (which shall be a Business Day), (C)
the Class of the Loans, (D) whether the Class of Loans to be made pursuant to
such Borrowing is to be initially maintained as Alternate Base Rate Loans or
Eurodollar Rate Loans and (E) if the proposed Borrowing is to be comprised of
Eurodollar Rate Loans, the initial Interest Period to be applicable thereto.
The Company may submit one or more Notices of Borrowing on any Business Day.
(b) The Agent shall promptly give the Lenders telecopy
notice or telephonic notice (promptly confirmed in writing) of each proposed
Borrowing, of each Lender's proportionate share thereof and of the other
matters covered by each Notice of Borrowing.
SECTION 2.04. Disbursement of Funds. (a) Not later than
noon (New York City time) on the Borrowing Date for each Borrowing, each Lender
will make available its pro rata portion of the amount of such Borrowing in
Dollars and in immediately available funds at the Payment Office. The Agent
will credit the amounts so received to the general deposit account of the
Company with the Agent or, if Loans are not made on such date because any
condition precedent to a Borrowing herein specified shall not have been met,
return the amounts so received to the respective Lenders as soon as
practicable; provided, however, if and to the extent the Agent fails to return
any such amounts to a Lender on the Borrowing Date for such Borrowing, the
Agent shall pay interest on such unreturned amounts, for each day from such
Borrowing Date to the date such amounts are returned to such Lender, at the
Federal Funds Effective Rate.
(b) Unless the Agent shall have been notified by any
Lender prior to the Borrowing Date that such Lender does not intend to make
available to the Agent such Lender's portion of the Borrowing to be made on
such date, the Agent may assume that such Lender has made such amount available
to the Agent on such date of Borrowing and the Agent may, in reliance upon such
assumption, make available to the Company a corresponding amount. If such
corresponding amount is not in fact made available to the Agent by such Lender
by the required time on the Borrowing Date therefor and the Agent has made
available same to the Company, the Agent shall be entitled to recover such
corresponding amount on demand from such Lender. If such Lender does not pay
such
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corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Company, and the Company shall pay such corresponding amount
to the Agent within two Business Days after demand therefor. The Agent shall
also be entitled to recover from such Lender or the Company, as the case may be,
interest on such corresponding amount from the date such corresponding amount
was made available by the Agent to the Company to the date such corresponding
amount is recovered by the Agent, at a rate per annum equal to (i) if paid by
such Lender, the Federal Funds Effective Rate or (ii) if paid by the Company (1)
on or before the date that is two days after demand therefor, the lesser of (A)
the Highest Lawful Rate or (B) the sum of the Alternate Base Rate or the LIBO
Rate, as the case may be, in effect with respect to the Loans made by the other
Lenders comprising the remainder of the Borrowing, plus the Margin then
applicable to such Loans and (2) thereafter, the lesser of (A) the Highest
Lawful Rate or (B) the Default Rate in effect from time to time; provided, that
no such Loan shall bear interest pursuant to this clause (2) at a rate per annum
less than the rate of interest applicable thereto pursuant to clause (1) above.
Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its commitments hereunder or to prejudice any rights which the Company
may have against any Lender as a result of any default by such Lender hereunder.
SECTION 2.05. Notes. (a) The Company's obligation to pay
the principal of, and interest on, the Tranche A Revolving Credit Loans made by
each Lender (including Tranche A Revolving Credit Loans made pursuant to
Section 3.03(b)) shall be evidenced by a promissory note duly executed and
delivered by the Company substantially in the form of Exhibit 2.05A hereto with
blanks appropriately completed in conformity herewith (each a "Tranche A
Revolving Credit Note"), which Tranche A Revolving Credit Note shall (i) be
payable to the order of such Lender and be dated the Execution Date (or as to
any Person that becomes a Lender after the Execution Date, the date specified
in the Assignment and Acceptance executed by such Lender), (ii) be in a stated
principal amount equal to the Tranche A Revolving Credit Commitment of such
Lender and be payable in the principal amount of the Tranche A Revolving Credit
Loans evidenced thereby, (iii) be payable prior to maturity as provided in
Article IV and mature, with respect to the Tranche A Revolving Credit Loans
evidenced thereby, on the Tranche A Revolving Credit Stated Maturity Date, (iv)
bear interest as provided in the appropriate clause of Section 2.08 in respect
of the Alternate Base Rate Loans and Eurodollar Rate Loans, as the case may be,
evidenced thereby and (v) be entitled to the benefits of this Agreement, the
Guaranty and the other Loan Documents.
(b) The Company's obligation to pay the principal of, and
interest on, the Tranche B Revolving Credit Loans made by each Lender shall be
evidenced by a promissory note duly executed and delivered by the Company
substantially in the form of Exhibit 2.05B hereto with blanks appropriately
completed in conformity herewith (each a "Tranche B Revolving Credit Note"; each
Tranche A Revolving Credit Note and each Tranche B
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Revolving Credit Note being herein individually sometimes called a "Note" and
collectively, the "Notes"), which Tranche B Revolving Credit Note shall (i) be
payable to the order of such Lender and be dated the Execution Date (or as to
any Person that becomes a Lender after the Execution Date, the date specified in
the Assignment and Acceptance executed by such Lender), (ii) be in a stated
principal amount equal to the Tranche B Revolving Credit Commitment of such
Lender and be payable in the principal amount of the Tranche B Revolving Credit
Loans evidenced thereby, (iii) be payable prior to maturity as provided in
Article IV and mature, with respect to the Revolving Credit Loans evidenced
thereby, on the Tranche B Revolving Credit Stated Maturity Date, (iv) bear
interest as provided in the appropriate clause of Section 2.08 in respect of the
Alternate Base Rate Loans and Eurodollar Rate Loans, as the case may be,
evidenced thereby and (v) be entitled to the benefits of this Agreement, the
Guaranty and the other Loan Documents.
(c) Each Lender shall maintain in accordance with its
usual practice an account or accounts with respect to each Loan made by such
Lender hereunder, including the date, amount, Class and Type and the Interest
Period for each Eurodollar Rate Loan of the relevant Class made by such Lender
to the Company hereunder, and the amount of each payment in respect thereof and
will, prior to any transfer of either of its Notes, endorse on the reverse side
thereof the outstanding principal amount of Loans evidenced thereby.
(d) The Agent shall maintain accounts in which it will
record (i) the amount of each Loan made hereunder, the Class, the Type and the
Interest Period for each Eurodollar Rate Loan of the relevant Class made by
each Lender, (ii) the amount of any principal or interest due and payable or to
become due and payable from the Company to each Lender hereunder and (iii) the
amount of any sum received by the Agent hereunder from the Company and each
Lender's share thereof.
(e) Absent manifest error, the entries made in the
accounts maintained pursuant to paragraph (c) and (d) to this Section 2.05
shall be conclusive evidence of the existence and amounts of the obligations
therein recorded; provided, however, that the failure of any Lender or the
Agent to maintain such accounts or any error therein shall not in any manner
affect the obligations of the Company to repay the Loans and Drawings under the
Letters of Credit in accordance with their terms.
SECTION 2.06. Conversions. The Company shall have the
option to convert on any Business Day all or a portion equal to not less than
$3,000,000 ($1,000,000 in the case of conversions into Alternate Base Rate
Loans) of the outstanding principal amount of one Type of Loans made pursuant
to one or more Borrowings into a Borrowing or Borrowings of the other Type of
Loans provided, that (i) except as otherwise provided in Section 2.11, no
partial conversion of Eurodollar Rate Loans shall reduce the outstanding
principal amount of Eurodollar Rate Loans made pursuant to any single Borrowing
to less
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than $3,000,000, (ii) Alternate Base Rate Loans may only be converted into
Eurodollar Rate Loans, and Eurodollar Rate Loans may only be converted into
Eurodollar Rate Loans, if and only if, in either case, no Default or Event of
Default is in existence on the date of the conversion and (iii) no Loan may be
converted into a Eurodollar Rate Loan after the date that is one month prior to
the Tranche A Revolving Credit Stated Maturity Date, in the case of Tranche A
Revolving Credit Loans, or the Tranche B Revolving Credit Stated Maturity Date,
in the case of Tranche B Revolving Credit Loans. Each such conversion shall be
effected by the Company giving the Agent notice (each a "Notice of Conversion")
prior to 11:00 a.m. (New York City time) at least (a) three Business Days prior
to the date of such conversion in the case of a conversion into Eurodollar Rate
Loans and (b) one Business Day in the case of a conversion into Alternate Base
Rate Loans, specifying each Class and Type of Borrowing (or portions thereof) to
be so converted and, if to be converted into Eurodollar Rate Loans, the Interest
Period to be initially applicable thereto. The Agent shall promptly give the
Lenders written or telephonic notice (promptly confirmed in writing) of any such
proposed conversion affecting any of its Loans.
SECTION 2.07. Pro Rata Borrowings. All Borrowings under
this Agreement shall be incurred from the Lenders pro rata on the basis of
their respective Tranche A Revolving Credit Commitments or Tranche B Revolving
Credit Commitments, as the case may be. It is understood that no Lender shall
be responsible for any default by any other Lender in its obligation to make
Loans hereunder and that each Lender shall be obligated to make the Loans
provided to be made by it hereunder, regardless of the failure of any other
Lender to fulfill its commitments hereunder.
SECTION 2.08. Interest. (a) Subject to Section 12.08, the
Company agrees to pay interest in respect of the unpaid principal amount of
each Alternate Base Rate Loan from the date of the respective Borrowing to
maturity (whether by acceleration or otherwise) at a rate per annum which shall
at all times be equal to the lesser of (i) the Highest Lawful Rate and (ii) the
applicable Margin plus the Alternate Base Rate, in each case, in effect from
time to time. If the Alternate Base Rate is based on the Prime Rate, interest
shall be computed on the basis of the actual number of days elapsed over a year
of 365 or 366 days, as the case may be. If the Alternate Base Rate is based on
the Base CD Rate or the Federal Funds Effective Rate, interest shall be computed
on the basis of the actual number of days elapsed over a year of 360 days.
(b) Subject to Section 12.08, the Company agrees to pay
interest in respect of the unpaid principal amount of each Eurodollar Rate Loan
from the date of the respective Borrowing to the end of the Interest Period
therefor (unless such Loan is earlier accelerated or converted pursuant to
Section 2.06) at a rate per annum (computed on the basis of the actual number
of days elapsed over a year of 360 days) which shall, during each Interest
Period applicable thereto, be equal to the lesser of (i) the Highest Lawful
Rate and (ii) the
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applicable Margin plus the relevant LIBO Rate for such Interest Period. The
applicable LIBO Rate shall be fixed for each Interest Period and shall not
change during said Interest Period but the applicable Margin, which is added to
the LIBO Rate to determine the total interest payable to the Lender on each
Eurodollar Rate Loan, shall be adjusted, effective on the first day of each
Reference Period, whether or not said adjustment occurs at a time other than the
beginning of an Interest Period.
(c) Subject to Section 12.08, overdue principal and, to
the extent permitted by law, overdue interest in respect of each Loan and all
other overdue amounts owing hereunder shall bear interest for each day that
such amounts are overdue at a rate per annum equal to the lesser of (i) the
Highest Lawful Rate and (ii) 2% in excess of the sum of the applicable Margin
and the Alternate Base Rate, in each case, in effect from time to time (such
lesser rate of interest being the "Default Rate"); provided, that no Loan shall
bear interest after maturity (whether by acceleration or otherwise) at a rate
per annum less than the rate of interest applicable thereto at maturity.
(d) Interest on the Loans made hereunder shall accrue
from the date of such Loan to the date of any repayment thereof and shall be
payable (i) in respect of Eurodollar Rate Loans (A) on the last day of the
Interest Period applicable thereto and also, in the case of any Interest Period
in excess of three months, on the date that would have been the last day of the
Interest Period if such Loan had an Interest Period of three months and (B) on
the date of any voluntary or mandatory prepayment or any conversion (on the
amount prepaid or converted), (ii) in respect of each Alternate Base Rate Loan
(A) on each Designated Payment Date and (B) on the date of any voluntary or
mandatory prepayment (on the amount prepaid) and (iii) in respect of each Loan,
at maturity (whether by acceleration or otherwise) and, after maturity, on
demand.
(e) The Agent, upon determining the LIBO Rate for any
Interest Period, shall promptly notify by telephone (confirmed in writing) or
in writing the Company and the Lenders thereof. Each such determination shall,
absent manifest error, be final and conclusive and binding on all parties
hereto.
SECTION 2.09. Interest Periods. (a) At the time the
Company gives any Notice of Borrowing or Notice of Conversion in respect of the
making of, or conversion into, a Eurodollar Rate Borrowing, the Company shall
have the right to elect, by giving notice to the Agent on the dates and at the
times specified in Section 2.03 or Section 2.06, as the case may be, of the
selected interest period (each an "Interest Period") applicable to such
Eurodollar Rate Borrowing, which Interest Period shall be either a one, two,
three or six month period; provided, that:
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(i) all Loans comprising a Eurodollar Rate Borrowing
shall at all times have the same Interest Period;
(ii) the initial Interest Period for any Eurodollar Rate
Borrowing shall commence on the date of such Eurodollar Rate Borrowing
(including the date of any conversion thereto pursuant to Section
2.06) and each Interest Period occurring thereafter in respect of such
Eurodollar Rate Borrowing shall commence on the day on which the next
preceding Interest Period expires;
(iii) if any Interest Period relating to a Eurodollar Rate
Borrowing begins on a day for which there is no numerically
corresponding day in the calendar month at the end of such Interest
Period, such Interest Period shall end on the last Business Day of
such calendar month;
(iv) if any Interest Period would otherwise expire on a
day which is not a Business Day, such Interest Period shall expire on
the next succeeding Business Day; provided, however, that if any
Interest Period in respect of a Eurodollar Rate Borrowing would
otherwise expire on a day which is not a Business Day, but is a day of
the month after which no further Business Day occurs in such month,
such Interest Period shall expire on the next preceding Business Day;
(v) no Interest Period shall extend beyond (A) the
Tranche A Revolving Credit Stated Maturity Date, in the case of a
Borrowing of Tranche A Revolving Credit Loans, or (B) the Tranche B
Revolving Credit Stated Maturity Date in the case of a Borrowing of
Tranche B Revolving Credit Loans; and
(vi) at no time shall there be more than ten Interest
Periods in effect under this Agreement.
(b) If upon the expiration of any Interest Period
applicable to a Eurodollar Rate Borrowing, the Company has failed to elect a
new Interest Period to be applicable to such Borrowing as provided above, the
Company shall be deemed to have elected to convert such Borrowing into a
Borrowing of Alternate Base Rate Loans effective as of the expiration date of
such current Interest Period.
SECTION 2.10. Interest Rate Not Ascertainable, Etc. In the
event that the Agent shall have determined (which determination shall be
reasonably exercised and shall, absent manifest error, be final, conclusive and
binding upon all parties) that on any date for determining the LIBO Rate for
any Interest Period, by reason of any changes arising after the date of this
Agreement affecting the interbank eurodollar market or any Lender's position in
such market, adequate and fair means do not exist for ascertaining the
applicable interest rate
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on the basis provided for in the definition of LIBO Rate, then, and in any such
event, the Agent shall forthwith give notice (by telephone, confirmed in
writing) to the Company and to the Lenders of such determination. Until the
Agent notifies the Company that the circumstances giving rise to the suspension
described herein no longer exist, the obligations of the Lenders to make
Eurodollar Rate Loans shall be suspended; each requested Eurodollar Rate
Borrowing (by a Notice of Conversion or otherwise) shall instead be made or
maintained as a Borrowing of Alternate Base Rate Loans and any outstanding
Eurodollar Rate Loan shall be converted, on the last day of the then applicable
Interest Period, to an Alternate Base Rate Loan.
SECTION 2.11. Reserve Requirements; Change in Circumstances.
(a) Notwithstanding any other provision herein, if, after the Execution Date,
the introduction or adoption of or any change (including any imposition or
increase of reserve requirements) in any Requirement of Law or in the
interpretation or application thereof or compliance by any Lender (or its
Applicable Lending Office) with any guideline, request or directive (whether or
not having the force of law) from any central bank or other Governmental
Authority exercising control over banks or financial institutions generally:
(i) shall subject any Lender to any tax of any kind
whatsoever with respect to this Agreement, any Note or any Eurodollar
Rate Loan made by it, or change the basis of taxation of payments to
such Lender in respect thereof (except for (i) Non-Excluded Taxes
covered by Section 4.07 and (ii) changes in the rate of tax on the
overall net income or revenue of such Lender or its Applicable Lending
Office imposed by the jurisdiction in which the principal executive
office of such Lender or its Applicable Lending Office is located); or
(ii) shall impose, modify or hold applicable any reserve,
special deposit, compulsory loan or similar requirement against assets
of, deposits with or for the account of, or credit extended by, any
Lender's Applicable Lending Office shall be imposed or deemed
applicable or any other condition affecting its Eurodollar Rate Loans
or its obligations to make Eurodollar Rate Loans shall be imposed on
any Lender, its Applicable Lending Office or the interbank eurodollar
market; and as a result thereof there shall be any increase in the cost
to such Lender of agreeing to make or making, or funding or maintaining
Eurodollar Rate Loans or there shall be a reduction in the amount
received or receivable by such Lender or its Applicable Lending Office,
then, in any such case, the Company shall pay to the Agent for the
account of such Lender such additional amount or amounts as will
compensate such Lender for such increased cost or reduced amount to
such Lender upon demand by such Lender (through the Agent).
Notwithstanding the foregoing, in no event shall the compensation
payable under this Section 2.11(a) (to the extent, if any, constituting
interest under applicable laws),
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together with all amounts constituting interest under
applicable laws and payable in connection with this Agreement, the Notes and
the other Loan Documents, exceed the Highest Lawful Rate.
(b) If any Lender shall have determined in good faith
that the adoption of or any change in any Requirement of Law regarding capital
adequacy or in the interpretation or application thereof or compliance by such
Lender or any corporation controlling such Lender with any request or directive
regarding capital adequacy (whether or not having the force of law) from any
Governmental Authority made subsequent to the Execution Date has or would have
the effect of reducing the rate of return on such Lender's or such
corporation's capital as a consequence of its obligations hereunder to a level
below that which such Lender or such corporation could have achieved but for
such adoption, change or compliance (taking into consideration such Lender's or
such corporation's policies with respect to capital adequacy) by an amount
deemed by such Lender to be material, then, from time to time, the Company
shall pay to the Agent for the account of such Lender such additional amount or
amounts as will compensate such Lender for such reduction by such Lender
(through the Agent). Notwithstanding the foregoing, in no event shall the
compensation payable under this Section 2.11(b) (to the extent, if any,
constituting interest under applicable laws) together with all amounts
constituting interest under applicable laws and payable in connection with this
Agreement, the Notes or the other Loan Documents, exceed the Highest Lawful
Rate.
(c) Each Lender will notify the Company through the Agent
of any event occurring after the Execution Date which will entitle such Lender
to compensation pursuant to this Section 2.11, as promptly as practicable, and
in any event within 120 days after it becomes aware thereof and determines to
request compensation. A certificate of a Lender setting forth in reasonable
detail (i) such amount or amounts as shall be necessary to compensate such
Lender as specified in paragraph (a) or (b) above, as the case may be, and (ii)
the calculation of such amount or amounts under clause(a)(i), shall be delivered
to the Company (with a copy to the Agent) and shall be conclusive absent
manifest error. The Company shall pay to the Agent for the account of such
Lender the amount shown as due on any such certificate within 10 days after its
receipt of the same. Upon the request of the Company, each Lender agrees that it
will use reasonable efforts to designate a different Applicable Lending Office
for the Loans due to it affected by the matters described in Sections 2.11(a)
and 2.11(b), if such designation will avoid or reduce the liability of the
Company to such Lender under this Section 2.11 so long as such designation is
not disadvantageous to such Lender as determined by such Lender in its sole
discretion.
(d) Except as expressly provided in Section 2.11(c),
failure on the part of any Lender to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any Interest Period shall not
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constitute a waiver of such Lender's rights to demand compensation for any
increased costs or reduction in amounts received or receivable or reduction in
return on capital with respect to such Interest Period or any other Interest
Period.
(e) In the event any Lender shall seek compensation
pursuant to this Section 2.11, the Company may give notice to such Lender (with
copies to the Agent) that it wishes to seek one or more Eligible Assignees to
assume the Commitments of such Lender and to purchase its outstanding Loans,
other Obligations and Notes. Each Lender requesting compensation pursuant to
this Section 2.11 agrees to sell its Commitments, Loans, other Obligations,
Notes and interest in this Agreement and the other Loan Documents pursuant to
Section 12.11(c) to any Eligible Assignee for an amount equal to the sum of the
outstanding unpaid principal of and accrued interest on such Loans, such other
Obligations and Notes plus all other fees and amounts (including any
compensation claimed by such Lender under this Section 2.11, Section 2.13 and
Section 3.05) due such Lender hereunder calculated, in each case, to the date
such Commitments, Loans, other Obligations, Notes and interest are purchased,
whereupon such Lender shall have no further Commitment or other obligation to
the Company hereunder or under any Note.
SECTION 2.12. Illegality. (a) In the event that any Lender
shall have determined (which determination shall be reasonably exercised and
shall be presumptively correct) at any time that the making or continuance of
any Eurodollar Rate Loan has become unlawful by compliance by such Lender in
good faith with any Requirement of Law (whether or not having the force of law
and whether or not failure to comply therewith would be unlawful), then, in any
such event, the Lender shall give prompt notice (by telephone confirmed in
writing) to the Company and to the Agent of such determination.
(b) Upon the giving of notice to the Company referred to
in Section 2.12(a) above, (i) the Company's right to request (by Notice of
Conversion or otherwise) and such Lender's obligation to make Eurodollar Rate
Loans shall be immediately suspended, and any such requested Eurodollar Rate
Borrowing shall instead be made as a Borrowing of Alternate Base Rate Loans,
and (ii) if the affected Eurodollar Rate Loan or Loans are then outstanding,
the Company shall immediately, or if permitted by applicable law, no later than
the date permitted thereby, upon at least one Business Day's notice to the
Agent and the affected Lender, convert each such Eurodollar Rate Loan into an
Alternate Base Rate Loan, provided that if more than one Lender is affected at
any time, then all affected Lenders must be treated the same pursuant to this
Section 2.12(b).
(c) Each Lender agrees that it will use reasonable
efforts to designate a different Applicable Lending Office for the Eurodollar
Rate Loans due to it affected by this Section 2.12, if such designation will
avoid the illegality described in this Section 2.12 so
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long as such designation will not be disadvantageous to such Lender as
determined by such Lender in its sole discretion.
(d) For purposes of this Section 2.12, a notice to the
Company (with a copy to the Agent) by any Lender pursuant to paragraph (a)
above shall be effective on the date of receipt thereof by the Company.
(e) In the event any Lender shall give a notice to the
Company pursuant to this Section 2.12, the Company may give notice to such
Lender (with copies to the Agent) that it wishes to seek one or more Eligible
Assignees to assume the Commitments of such Lender and to purchase its
outstanding Loans, Obligations and Notes. Each Lender giving a notice to the
Company pursuant to this Section 2.12 agrees to sell its Commitments, Loans,
Obligations, Notes and interest in this Agreement and the other Loan Documents
pursuant to Section 12.11(c) to any such Eligible Assignee for an amount equal
to the sum of the outstanding unpaid principal of and accrued interest on such
Loans, Obligations and Notes plus all other fees and amounts (including any
compensation claimed by such Lender under Section 2.11, Section 2.13 and
Section 3.05) due such Lender hereunder calculated, in each case, to the date
such Commitment, Loans, Obligations, Notes and interest are purchased,
whereupon such Lender shall have no further Commitment or other obligation to
the Company hereunder or under any Note.
SECTION 2.13. Indemnity. The Company shall indemnify each
Lender against any loss (provided that any such loss with respect to
anticipated profits shall be limited as expressly provided in clauses (i) and
(ii) below) or reasonable expense which such Lender may sustain or incur as a
consequence of (a) any failure by the Company to fulfill on the date of any
Borrowing hereunder the applicable conditions set forth in Article V, (b) if,
for any reason, a Borrowing of or a conversion from or into Eurodollar Rate
Loans does not occur on the date specified therefor in a Notice of Borrowing or
Notice of Conversion, (c) any payment, prepayment or conversion of a Eurodollar
Rate Loan required by any other provision of this Agreement or otherwise made on
a date other than the last day of the applicable Interest Period, (d) any
default in the payment or prepayment of the principal amount of any Loan or any
part thereof or interest accrued thereon, as and when due and payable (at the
due date thereof, by notice of prepayment or otherwise) or (e) the occurrence of
any Event of Default, including, in the case of any of the events set forth in
clauses (a) through (d) of this Section 2.13, any loss or reasonable expense
sustained or incurred or to be sustained or incurred in liquidating or employing
deposits from third parties acquired to effect or maintain such Loan or any part
thereof as a Eurodollar Rate Loan. Such loss or reasonable expense shall
include an amount equal to the excess, if any, as reasonably determined by each
Lender of (i) its cost of obtaining the funds for the Loan being paid, prepaid
or converted or not borrowed (based on the LIBO Rate) for the period from the
date of such payment, prepayment or conversion or failure to borrow to the last
day of the
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Interest Period for such Loan (or, in the case of a failure to borrow, the
Interest Period for the Loan which would have commenced on the date of such
failure to borrow) over (ii) the amount of interest (as reasonably determined by
such Lender) that would be realized by such Lender in reemploying the funds so
paid, prepaid or converted or not borrowed for such period or Interest Period,
as the case may be. Each Lender will notify the Company through the Agent of
any loss or expense which will entitle such Lender to compensation pursuant to
this Section 2.13, as promptly as possible and in any event within 120 days
after it becomes aware thereof and determines to accept compensation. A
certificate of each Lender setting forth any amount or amounts which such Lender
is entitled to receive pursuant to this Section 2.13 shall be delivered to the
Company (with a copy to the Agent) and shall be conclusive, if made in good
faith, absent manifest error. The Company shall pay to the Agent for the
account of each Lender the amount shown as due on any certificate within 10 days
after its receipt of the same. Notwithstanding the foregoing, in no event shall
the compensation payable under this Section 2.13 (to the extent, if any,
constituting interest under applicable laws) together with all amounts
constituting interest under applicable laws and payable in connection with this
Agreement or the Notes, exceed the Highest Lawful Rate. Without prejudice to
the survival of any other obligation of the Company hereunder, the obligations
of the Company under this Section 2.13 shall survive the termination of this
Agreement, the payment of the Obligations and the assignment of any of the
Notes.
SECTION 2.14. Telephonic Notice. Without in any way limiting
the Company's obligation to confirm in writing any telephonic notice it is
entitled to give under this Agreement, the Agent may act without liability upon
the basis of a telephonic notice believed in good faith by the Agent to be from
the Company prior to receipt of written confirmation. In each such case, each
Loan Party hereby waives the right to dispute the Agent's record of the terms
of such telephonic notice.
ARTICLE III
LETTERS OF CREDIT
SECTION 3.01. Letters of Credit. (a) Subject to and upon
the terms and conditions herein set forth, the Issuing Bank agrees that it
will, at any time and from time to time on or after the Effective Date and
prior to the date that is not later than 30 calendar days prior to the Tranche
A Revolving Credit Stated Maturity Date, following its receipt of a Letter of
Credit Request and an Application, issue for the account of the Company or the
Company and any of its Restricted Subsidiaries and in support of the
obligations of the Company or any of its Restricted Subsidiaries, one or more
irrevocable letters of credit (all such letters of credit collectively, the
"Letters of Credit") up to a maximum not exceeding the Letter of Credit Limit
for all Letter of Credit Outstandings, provided that the Issuing
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Bank shall be under no obligation to issue any Letter of Credit if at the time
of such issuance:
(i) any order, judgment or decree of any Governmental
Authority or arbitrator shall purport by its terms to enjoin or
restrain the Issuing Bank from issuing such Letter of Credit or any
Requirement of Law applicable to the Issuing Bank or any request or
directive (whether or not having the force of law) from any
Governmental Authority with jurisdiction over the Issuing Bank shall
prohibit, or request that the Issuing Bank refrain from, the issuance
of letters of credit generally; or
(ii) if the Stated Amount of such Letter of Credit shall
be greater than an amount which when added to the Letter of Credit
Outstandings at such time and the aggregate principal amount of all
Tranche A Revolving Credit Loans then outstanding (after giving effect
to the principal amount of all Tranche A Revolving Credit Loans repaid
and all Unpaid Drawings reimbursed prior to or concurrently with the
issuance of such Letter of Credit), would exceed the lesser of (A) the
Total Tranche A Revolving Credit Commitment (after giving effect to
any reductions to the Total Tranche A Revolving Credit Commitment on
such date) and (B) the Borrowing Base; or
(iii) if the Stated Amount of such Letter of Credit shall
be greater than an amount which when added to the Letter of Credit
Outstandings at such time (after giving effect to all Unpaid Drawings
reimbursed prior to or concurrently with the issuance of such Letter
of Credit), would exceed the Letter of Credit Limit; or
(iv) if the expiry date or, in the case of any Letter of
Credit containing an expiry date that is extendible at the option of
the Issuing Bank, the initial expiry date of such Letter of Credit is
a date that is later than the date that is 30 calendar days prior to
the Tranche A Revolving Credit Stated Maturity Date; or
(v) if the proposed terms of any Letter of Credit would
require the Issuing Bank to make any payment thereunder prior to the
next Business Day after receipt of any documents or certificates to be
presented under such Letter of Credit.
(b) The Issuing Bank shall neither renew nor permit the
renewal of any Letter of Credit if any of the conditions precedent to such
renewal set forth in Section 5.02 are not satisfied or, after giving effect to
such renewal, the expiry date of such Letter of Credit would be a date that is
later than the date that is ten calendar days prior to the Tranche A Revolving
Credit Stated Maturity Date.
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SECTION 3.02. Letter of Credit Requests. (a) Whenever the
Company desires that a Letter of Credit be issued or that the existing expiry
date of a Letter of Credit shall be extended, it shall give the Issuing Bank
(with copies to be sent to the Agent and each other Lender) (i) in the case of
a Letter of Credit to be issued, at least five Business Days' prior written
request therefor and (ii) in the case of the extension of the existing expiry
date of any Letter of Credit, at least five Business Days prior to the date on
which the Issuing Bank must notify the beneficiary thereof that the Issuing
Bank does not intend to extend such existing expiry date. Each such request
shall be executed by the Company and shall be in the form of Exhibit 3.02
attached hereto (each a "Letter of Credit Request") and, in the case of the
issuance of each Letter of Credit, shall be accompanied by an Application
therefor, completed to the satisfaction of the Issuing Bank, and such other
certificates, documents and other papers and information as the Issuing Bank or
any Lender (through the Agent) may reasonably request. Each Letter of Credit
shall be denominated in Dollars or any foreign currency agreed upon by the
Issuing Bank and the Company, shall expire no later than the date specified in
Section 3.01, shall not be in an amount greater than is permitted under clauses
(ii) or (iii) of Section 3.01(a) and shall be in such form or forms as may be
approved from time to time by the Issuing Bank and the Company.
(b) The making of each Letter of Credit Request shall be
deemed to be a representation and warranty by the Company that such Letter of
Credit may be issued in accordance with, and will not violate the requirements
of, clauses (ii) or (iii) of Section 3.01(a). Unless the Issuing Bank has
received notice from any Lender before it issues the respective Letter of Credit
or extends the existing expiry date of a Letter of Credit that one or more of
the conditions specified in Article V are not then satisfied, or that the
issuance of such Letter of Credit would violate this Agreement, then the Issuing
Bank shall issue the requested Letter of Credit for the account of the Company
in accordance with the Issuing Bank's usual and customary practices; provided,
however, that the Issuing Bank shall not be required to issue any Letter of
Credit earlier than three Business Days after its receipt of the Letter of
Credit Request and the related Application therefor and all other certificates,
documents and other papers and information relating thereto. Upon its issuance
of any Letter of Credit or the extension of the existing expiry date of any
Letter of Credit, as the case may be, the Issuing Bank shall promptly notify the
Company, the Agent and each Lender of such issuance or extension, which notice
shall be accompanied by a copy of the Letter of Credit actually issued or a copy
of any amendment extending the existing expiry date of any Letter of Credit, as
the case may be. For purposes of calculating the amount of all Letters of Credit
outstanding at any time, the amount of any foreign currency denominated Letters
of Credit shall be equal to that amount of Dollars which could be purchased at
such time with the amount of such foreign currency denominated Letter of Credit.
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(c) Each Letter of Credit shall be governed by and
construed and interpreted under the UCP, and, as to matters not governed by the
UCP or that are required to be governed thereby, Article 5 of the Uniform
Commercial Code of the State of New York.
SECTION 3.03. Letter of Credit Participations; Etc. (a)
Immediately upon the issuance by the Issuing Bank of each Letter of Credit, the
Issuing Bank shall be deemed to have sold and transferred to each Lender, and
each Lender shall be deemed irrevocably and unconditionally to have purchased
and received from the Issuing Bank, without recourse or warranty, an undivided
interest and participation, to the extent of such Lender's Percentage
Participation in each such Letter of Credit (including extensions of the expiry
date thereof), each Letter of Credit issued in substitution therefor, each
Drawing made thereunder and the obligations of the Company or the Company and
any Restricted Subsidiary under this Agreement and the other Loan Documents
with respect thereto, and any security therefor or guaranty pertaining thereto
including the Guaranty.
(b) In the event that the Issuing Bank makes any payment
under any Letter of Credit and the Company shall not have reimbursed such
amount in full to the Issuing Bank pursuant to Section 3.04(a), then, upon
demand by the Issuing Bank sent to the Agent and each Lender before 10:00 a.m.
(New York City time), each Lender shall pursuant to Section 2.04 on the same day
make available to the Agent for delivery to the Issuing Bank, immediately
available funds in an amount equal to such Lender's Percentage Participation of
the amount of such payment by the Issuing Bank, and the funding of such amount
shall be treated as the funding of a Tranche A Revolving Credit Loan by such
Lender and shall bear interest at the Alternate Base Rate. Notwithstanding
anything herein or in any other Loan Document to the contrary, the funding
obligations of the Lenders set forth in this Section 3.03(b) shall be binding
regardless of whether or not a Default or an Event of Default shall exist or the
other conditions precedent in Article V are satisfied at such time. If and to
the extent any Lender fails to effect any payment due from it under this Section
3.03(b) to the Agent, then interest shall accrue on the obligation of such
Lender to make such payment from and after the date such payment became due
until such obligation is paid in full at a rate per annum equal to the Federal
Funds Effective Rate. The failure of any Lender to pay its Percentage
Participation of any payment under any Letter of Credit shall not relieve any
other Lender of its obligation hereunder to pay to the Agent its Percentage
Participation of any payment under any Letter of Credit on the date required, as
specified above, but no Lender shall be responsible for the failure of any other
Lender to pay to the Agent such other Lender's Percentage Participation of any
such payment.
(c) If the Issuing Bank receives a payment of a
reimbursement obligation from the Company as to which the Agent has received
any payments from the Lenders pursuant to clause (b) above, the Issuing Bank
shall pay to the Agent and the Agent shall
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promptly pay to each Lender which has paid its Percentage Participation thereof,
in Dollars and in same day funds, an amount equal to such Lender's Percentage
Participation thereof together with any interest on such reimbursement
obligation allocable to such Lender's Percentage Participation paid by the
Company to the Issuing Bank pursuant to Section 3.04(a) and received by the
Agent.
SECTION 3.04. Agreement to Repay Letter of Credit Drawings.
(a) Upon the receipt by the Issuing Bank of any demand for payment from a
beneficiary under a Letter of Credit (a "Drawing"), the Issuing Bank promptly
will provide the Agent, the Lenders and the Company with telecopy notice of
such demand. The Company hereby agrees to reimburse the Issuing Bank by making
payment to the Agent in immediately available funds at the Payment Office, for
any payment (a "Drawing") made by the Issuing Bank under any Letter of Credit
(each such amount so paid until reimbursed, an "Unpaid Drawing") immediately
after, and in any event on the date of, such payment, with interest on the
amount so paid by the Issuing Bank, to the extent not reimbursed prior to 2:00
p.m. (New York City time) on the date of such payment, from and including the
date paid to but excluding the date reimbursement is made as provided above, at
a rate per annum equal to the Default Rate, payable on demand.
(b) The Company's obligations under this Section 3.04 to
reimburse the Issuing Bank with respect to Unpaid Drawings (including, in each
case, interest thereon) shall, to the extent permitted by law, be absolute and
unconditional under any and all circumstances and irrespective of any setoff,
counterclaim or defense to payment which the Company may have or have had
against any Lender (including the Issuing Bank or any Lender as a participant
therein) or any beneficiary of a Letter of Credit, including (i) any lack of
validity or enforceability of this Agreement, such Letter of Credit or any
other Loan Document; (ii) any adverse change in the condition (financial or
otherwise) of the Company or any of its Subsidiaries; (iii) any breach of this
Agreement or any other Loan Document by any Loan Party, the Agent or any Lender
(other than the Issuing Bank); (iv) the occurrence of any Default or Event of
Default; or (v) any non-application or misapplication by the beneficiary of the
proceeds of such Drawing.
(c) The Company also agrees with the Issuing Bank and the
Lenders that the Issuing Bank shall not be responsible for, and the Company's
reimbursement obligations under Section 3.04(a) shall not be affected by, among
other things, (i) the validity or genuineness of documents or of any
endorsements thereon, even though such documents shall in fact prove to be
invalid, fraudulent or forged, or (ii) any dispute between or among the
Company, any other Loan Party and the beneficiary of any Letter of Credit or
any other party to which such Letter of Credit may be transferred or (iii) any
claims whatsoever of the Company or any other Loan Party against any
beneficiary of such Letter of Credit or any such transferee.
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(d) The Issuing Bank shall not be liable for any error,
omission, interruption or delay in transmission, dispatch or delivery of any
message or advice, however transmitted, in connection with any Letter of
Credit, except for errors or omissions caused by such Issuing Bank's gross
negligence or willful misconduct. IT IS THE EXPRESS INTENTION OF THE PARTIES
HERETO THAT SUCH ISSUING BANK, ITS OFFICERS, DIRECTORS, EMPLOYEES AND AGENTS
(OTHER THAN WITH RESPECT TO ANY CLAIMS BY THE ISSUING BANK AGAINST ANY SUCH
OFFICER, DIRECTOR, EMPLOYEE OR AGENT THEREOF) SHALL BE INDEMNIFIED AND HELD
HARMLESS FROM ANY ACTION TAKEN OR OMITTED BY SUCH PERSON UNDER OR IN CONNECTION
WITH ANY LETTER OF CREDIT OR ANY RELATED DRAFT OR DOCUMENT ARISING OUT OF OR
RESULTING FROM SUCH PERSON'S SOLE OR CONTRIBUTORY NEGLIGENCE, BUT NOT FROM THE
GROSS NEGLIGENCE OR WILLFUL MISCONDUCT OF SUCH PERSON. The Company agrees that
any action taken or omitted by the Issuing Bank under or in connection with any
Letter of Credit or the related drafts or documents, if done in accordance with
the standards of care specified in the UCP and, as to any such actions not
addressed by the UCP or that are required to be taken thereunder, Article 5 of
the Uniform Commercial Code of the State of New York, shall not result in any
liability of the Issuing Bank to the Company or any other Person.
SECTION 3.05. Increased Costs. (a) Notwithstanding any
other provision herein, if any Lender shall have determined in good faith that
any change after the Execution Date of any Requirement of Law or the
application or effectiveness of any Requirement of Law or any change after the
Execution Date in the interpretation or administration thereof, or compliance
by any Lender (or any lending office of such Lender) or any corporation
controlling such Lender with any applicable guideline or request from any
central bank or other Governmental Authority (whether or not having the force
of law) issued after the Execution Date either (i) shall impose, modify or make
applicable any reserve, deposit, capital adequacy or similar requirement
against Letters of Credit issued, or participated in, by any Lender or (ii)
shall impose on any Lender any other conditions affecting this Agreement or any
Letter of Credit; and the result of any of the foregoing is to increase the
cost to any Lender of issuing, maintaining or participating in any Letter of
Credit, or reduce the amount received or receivable by any Lender or such
corporation hereunder with respect to Letters of Credit, by an amount deemed by
such Lender to be material, then, from time to time, the Company shall pay to
the Agent for the account of such Lender such additional amount or amounts as
will compensate such Lender for such increased cost or reduction by such
Lender.
(b) Each Lender will notify the Company through the Agent
of any event occurring after the date of this Agreement which will entitle such
Lender to compensation pursuant to subsection (a) above, as promptly as
practicable, and in any event within 120 days after it becomes aware thereof.
A certificate of a Lender (i) setting forth in reasonable detail such amount or
amounts as shall be necessary to compensate such Lender as specified in
subsection (a) above and (ii) the calculation of such amount or amounts under
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subparagraph (a) may be delivered to the Company (with a copy to the Agent) and
shall be conclusive absent manifest error. The Company shall pay to the Agent
for the account of such Lender the amount shown as due on any such certificate
within 10 days after its receipt of the same.
(c) Except as expressly provided in Section 3.05(b),
failure on the part of any Lender to demand compensation for any increased
costs or reduction in amounts received or receivable or reduction in return on
capital with respect to any Letter of Credit shall not constitute a waiver of
such Lender's rights to demand compensation for any increased costs or
reduction in amounts received or receivable or reduction in return on capital
with respect to such Letter of Credit.
(d) In the event any Lender shall seek compensation
pursuant to this Section 3.05, the Company may give notice to such Lender (with
copies to the Agent) that it wishes to seek one or more Eligible Assignees to
assume the Commitments of such Lender and to purchase its outstanding Loans,
other Obligations, Notes and interest in this Agreement and the other Loan
Documents. Each Lender requesting compensation pursuant to this Section 3.05
agrees to sell its Commitments, Loans, other Obligations, Notes and interest in
this Agreement and other Loan Documents pursuant to Section 12.10(c) to any such
Eligible Assignee for an amount equal to the sum of the outstanding unpaid
principal of and accrued interest on such Loans, such other Obligations and
Notes (including any compensation claimed by such Lender under Section 2.11,
Section 2.13 and this Section 3.05) due such Lender hereunder calculated, in
each case, to the date such Commitments, Loans, other Obligations, Notes and
interest are purchased, whereupon such Lender shall have no further Commitment
or other obligation to the Company hereunder or under any Note.
SECTION 3.06. Conflict between Applications and Agreement.
To the extent that any provision of any Application related to any Letter of
Credit is inconsistent with the provisions of this Agreement, the provisions of
this Agreement shall control.
ARTICLE IV
FEES; COMMITMENTS; PAYMENTS
SECTION 4.01. Fees. (a) The Company agrees to pay the
Agent for the account of each Lender in arrears on each of the following dates:
(i) each Designated Payment Date during the period from the Execution Date to
the date on which the Total Tranche A Revolving Credit Commitment is terminated
and (ii) on the Tranche A Revolving Credit Stated Maturity Date and on any
other date on which the Tranche A Revolving Credit
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Commitment of any Lender is terminated as provided herein a commitment fee (the
"Tranche A Revolving Credit Commitment Fees") equal to the Applicable Fee
Percentage on the daily average Unutilized Tranche A Revolving Credit Commitment
of each Lender. The Tranche A Revolving Credit Commitment Fee due to each
Lender shall commence to accrue on the Execution Date and shall cease to accrue
on the earlier of the Tranche A Revolving Credit Stated Maturity Date or any
other date on which the Tranche A Revolving Credit Commitment of such Lender
shall have been terminated as provided herein.
(b) The Company agrees to pay the Agent for the account
of each Lender in arrears on each of the following dates: (i) each Designated
Payment Date during the period from the Execution date to the Termination Date
and (ii) on the Termination Date and on any other date prior to the Termination
Date on which the Tranche B Revolving Credit Commitment of any Lender is
terminated as provided herein a commitment fee (the "Tranche B Revolving Credit
Commitment Fees") equal to the Applicable Fee Percentage on the daily average
Unutilized Tranche B Revolving Credit Commitment of each Lender. The Tranche B
Revolving Credit Commitment Fee due to each Lender shall commence to accrue on
the Execution Date and shall cease to accrue on the earlier of the Amortization
Date or any other date prior to the Termination Date on which the Tranche B
Revolving Credit Commitment of such Lender shall have been terminated as
provided herein.
(c) The Company agrees to pay the Agent for the account
of each Lender a fee in respect of each Letter of Credit issued for the account
of the Company or the Company and any Restricted Subsidiary (the "Letter of
Credit Fee"), for the period from the date of issuance of such Letter of Credit
to the expiry date of such Letter of Credit, computed at a rate equal to the
Letter of Credit Margin times the daily average Stated Amount of such Letter of
Credit (but in no event less than $500). The Letter of Credit Fee shall be
distributed to the Lenders (based upon their respective Percentage
Participations in the Letters of Credit). In addition, the Company agrees to
pay the Issuing Bank for its own account a fee in respect of each Letter of
Credit issued for the account of the Company or the Company and any Restricted
Subsidiary (collectively, the "Issuing Bank Fees") for the period from the date
of issuance of such Letter of Credit to the expiry date of such Letter of
Credit computed at a rate equal to 1/8 of 1% times the daily average Stated
Amount of such Letter of Credit. Accrued Letter of Credit Fees and the Issuing
Bank Fees shall be due and payable in arrears on each Designated Payment Date
commencing September 30, 1996, and on the Tranche A Revolving Credit Stated
Maturity Date or, if earlier, on the date upon which the Total Tranche A
Revolving Credit Commitment is terminated. The Letter of Credit Fees and the
Issuing Bank Fees will be in lieu of all commissions and fees for the Letters
of Credit other than customary administrative, issuance, amendment, payment and
negotiation charges of the Issuing Bank.
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(d) The Company agrees to pay to the Agent, for its own
account, such Fees as have been agreed to pursuant to that certain letter
agreement dated as of the date hereof between the Company and the Agent (the
"Agent's Letter").
(e) All Fees pursuant to this Section 4.01 shall be paid
in immediately available funds and shall be calculated on the basis of the
actual number of days elapsed over a year of 360 days.
(f) In no event shall the Fees payable to any Lender
under this Section 4.01 (to the extent, if any, constituting interest under
applicable laws) together with all amounts constituting interest under
applicable laws and payable in connection with this Agreement, the Notes and
other Loan Documents exceed the Highest Lawful Rate.
SECTION 4.02. Voluntary Reduction of Revolving Credit
Commitments. Upon at least five Business Days' prior telephonic notice
confirmed in writing to the Agent (which notice the Agent shall promptly
transmit to each of the Lenders), the Company shall have the right, without
premium or penalty, to terminate the Total Tranche A Unutilized Revolving Credit
Commitment or the Total Tranche B Unutilized Revolving Credit Commitment in part
or in whole; provided, that (a) any such reduction shall apply proportionately
to the Tranche A Revolving Credit Commitment or the Tranche B Revolving Credit
Commitment, as the case may be, of each of the Lenders and (b) any partial
reduction of the Total Tranche A Unutilized Revolving Credit Commitment or the
Total Tranche B Unutilized Revolving Credit Commitment pursuant to this Section
4.02 shall be in the amount of $5,000,000 or, if greater, an integral multiple
of $1,000,000.
SECTION 4.03. Mandatory Reduction of Commitments. (a) The
Commitments of the Banks shall terminate upon the occurrence of a Change of
Control.
(b) The Total Tranche A Revolving Credit Commitment, if
not sooner terminated, shall terminate on the Tranche A Revolving Credit Stated
Maturity Date.
(c) Subject to Section 2.13, the Total Tranche B
Revolving Credit Commitment, if not sooner terminated, shall be reduced (i) on
the Termination Date to an amount equal to the aggregate amount of Tranche B
Revolving Credit Loans outstanding on such date and (ii) on each date, and in
the amount of, each prepayment of principal of the Tranche B Revolving Credit
Loans made on and after the Amortization Date pursuant to Section 4.04 and
Section 4.05.
(d) The Total Tranche B Revolving Credit Commitment, if
not sooner terminated, shall terminate on the Tranche B Revolving Credit Stated
Maturity Date.
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(e) Each reduction of the Total Tranche B Revolving
Credit Commitment pursuant to this Section 4.03 shall apply proportionally to
the Tranche B Revolving Credit Commitment of each Lender.
SECTION 4.04. Voluntary Prepayments. The Company shall
have the right to voluntarily prepay the Loans in whole or in part from time to
time, without premium or penalty (except as provided below), on the following
terms and conditions: (a) the Company shall give the Agent at least three
Business Days' prior written or telephonic notice (if telephonic, promptly
confirmed in writing) of its intent to prepay the Loans, the principal amount
of such prepayment, the Class and the Type of Loans to be prepaid and the
specific Borrowing or Borrowings relating to such Loans, which notice the Agent
shall promptly transmit to each of the Lenders; (b) any Borrowing comprised of
Eurodollar Rate Loans may be prepaid prior to the last day of its Interest
Period subject to Section 2.13; (c) each partial prepayment of the Tranche A
Revolving Credit Loans shall be in an aggregate principal amount of
$5,000,000.00 or, if greater, an integral multiple of $1,000,000.00 and each
partial prepayment of the Tranche B Revolving Credit Loans shall be in an
aggregate principal amount of $3,000,000.00 or, if greater, an integral multiple
of $1,000,000.00; and (d) each prepayment pursuant to this Section 4.04 shall be
applied in the case of Eurodollar Rate Loans, to the payment of accrued and
unpaid interest, then, in the case of all Loans, to the outstanding principal of
such Loans. All voluntary prepayments of the Tranche B Revolving Credit Loans
made on or after the Termination Date pursuant to this Section 4.04 shall be
applied to prepayments of the scheduled payments of principal of the Tranche B
Revolving Credit Loans due pursuant to Section 4.05(a) in the inverse order of
their respective maturities.
SECTION 4.05. Scheduled Principal Payments and Mandatory
Prepayments. (a) Subject to Section 2.13, on the Amortization Date and on each
Designated Payment Date occurring thereafter, the Company shall prepay the
outstanding principal amount of the Tranche B Revolving Credit Loans in an
amount equal to the lesser of (i) the aggregate principal amount of the Tranche
B Revolving Credit Loans then outstanding and (ii) 1/13 of the aggregate amount
of Tranche B Revolving Credit Loans outstanding on the Termination Date;
provided, however, on the Tranche B Revolving Credit Loan Stated Maturity Date
the Company shall pay the aggregate principal amount of the Tranche B Revolving
Credit Loans outstanding on such date.
(b) On the date that a Change of Control of the type
described in clause (c) of the definition of that term occurs and on the date
that is 15 days after the occurrence of any other type of Change of Control,
the Company shall prepay the outstanding principal amount of the Loans and
shall deposit with the Agent as security for the Letter of Credit Outstandings
(i) with respect to the Letters of Credit denominated in Dollars, Dollars in
immediately available funds in an amount equal to the aggregate Letter of
Credit
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Outstandings for such Letters of Credit and (ii) with respect to each
Letter of Credit denominated in a foreign currency, such foreign currency in
immediately available funds in an amount equal to the Letter of Credit
Outstandings for such Letter of Credit.
(c) On each date which is 95 days after the last day of
each fiscal year of the Company, commencing 95 days after the fiscal year
ending December 31, 1996, the Company shall prepay the Tranche B Revolving
Credit Loans in an amount equal to (i) 25% of the Consolidated Excess Cash Flow
for the fiscal year ending at December 31, 1996 and (ii) 50% of the
Consolidated Excess Cash Flow for each succeeding fiscal year (less, in each
case, the aggregate amount of all voluntary prepayments on the Tranche B
Revolving Credit Loans made pursuant to Section 4.04 in such fiscal year).
(d) On and after the Termination Date, the Company shall
apply all Designated Net Proceeds, all Designated Net Insurance/Condemnation
Proceeds and all Sale Leaseback Proceeds promptly upon receipt thereof or upon
the existence thereof, as applicable, to prepay Tranche B Revolving Credit
Loans.
(e) The Company shall prepay the outstanding principal
amount of the Tranche A Revolving Credit Loans on any day on which the
aggregate outstanding principal amount of the Tranche A Revolving Credit Loans,
when added to Letter of Credit Outstandings exceeds the lesser of the Total
Tranche A Revolving Credit Commitment and the Borrowing Base, in the amount of
such excess. If, after giving effect to the prepayment of all outstanding
Tranche A Revolving Credit Loans, the Letter of Credit Outstandings exceeds the
lesser of the Total Tranche A Revolving Credit Commitment and the Borrowing
Base, the Company shall deposit with the Agent as security for the Obligations,
Dollars in immediately available funds in an amount equal to such excess Letter
of Credit Outstandings; provided, however, if any Letter of Credit is
denominated in a foreign currency, the deposit of funds with respect to such
Letter of Credit shall be in such foreign currency.
(f) On the Tranche A Revolving Credit Stated Maturity
Date, the Company shall pay the aggregate principal amount of the Tranche A
Revolving Credit Loans outstanding on such date.
(g) All amounts required to be applied pursuant to
Section 4.05(c) and Section 4.05(d) shall be applied to prepayments of the
scheduled payments of principal of the outstanding Tranche B Revolving Credit
Loans due pursuant to Section 4.05(a) in inverse order of their respective
maturities.
(h) All prepayments of Eurodollar Rate Loans required by
this Section 4.05 shall be subject to Section 2.13.
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(i) With respect to each prepayment of Loans required by
this Section 4.05, the Company may, consistent with the requirements of this
Section 4.05, designate the Types of Loans which are to be prepaid and, in the
case of Eurodollar Rate Loans, the specific Borrowing or Borrowings pursuant to
which made; provided, that if any prepayment of Eurodollar Rate Loans made
pursuant to a single Borrowing shall reduce the outstanding Loans made pursuant
to such Borrowing to an amount less than $3,000,000, such Borrowing shall
immediately be converted into Alternate Base Rate Loans. In the absence of a
designation by the Company as described in the preceding sentence or in the
event such designation conflicts with the requirements of this Section 4.05, the
Agent shall, subject to the above and in accordance with this Section 4.05, make
such designation in its sole discretion.
SECTION 4.06. Method and Place of Payment. Except as
otherwise specifically provided herein, all payments under this Agreement and
the other Loan Documents shall be made to the Agent for the account of the
Lender or Lenders entitled thereto (without setoff, deduction or counterclaim
except as permitted in Section 4.07) not later than noon (New York City time)
on the date when due and shall be made in Dollars in immediately available
funds at the Payment Office. If the Agent fails to send to any Lender its
portion of any Fee or of any payment of principal or interest (i) on the date
such Fee or payment of principal or interest was received if such Fee or
payment of principal or interest is received by the Agent prior to 1:00 p.m.
(New York City time) on such day and (ii) on the next succeeding Business Day
if such Fee or payment of principal or interest is received on or after 1:00
p.m. (New York City time) on any day, the Agent shall pay to such Lender
interest on its portion of such Fee or payment of principal or interest at the
Federal Funds Effective Rate from (A) the day such Fee or payment of principal
or interest was received by the Agent in the case of clause (i) and (B) such
next succeeding Business Day in the case of clause (ii), in each case, until
the date such Lender's portion of such Fee or payment of principal or interest
is sent to such Lender. Except as otherwise expressly provided herein,
whenever any payment (including principal of or interest on any Borrowing or
any Fees or other amounts) to be made hereunder or under any other Loan
Document shall become due, or otherwise would occur, on a day that is not a
Business Day, such payment shall be made on the next preceding Business Day.
SECTION 4.07. Taxes. (a) All payments made by the Loan
Parties under this Agreement, the Notes and the other Loan Documents shall be
made free and clear of, and without deduction or withholding for or on account
of, any present or future income, stamp or other taxes, levies, imposts,
duties, charges, fees, deductions or withholdings, now or hereafter imposed,
levied, collected, withheld or assessed by any Governmental Authority,
excluding net income taxes and franchise taxes (based on income) imposed on the
Agent or any Lender as a result of a present or former connection between the
Agent or such Lender and the jurisdiction of the Governmental Authority
imposing such tax or any political
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subdivision or taxing authority thereof or therein. If any such non-excluded
taxes, levies, imposts, duties, charges, fees, deductions or withholdings
("Non-Excluded Taxes") are required to be withheld from any amounts payable to
the Agent or any Lender hereunder or under the Notes, the amounts so payable to
the Agent or such Lender shall be increased to the extent necessary to yield to
the Agent or such Lender (after payment of all Non-Excluded Taxes) interest or
any such other amounts payable hereunder at the rates or in the amounts
specified in this Agreement, the Notes and the other Loan Documents; provided,
however, that no Loan Party shall be required to increase any such amounts
payable to any Lender that is not organized under the laws of the United States
of America or a state thereof if such Lender fails to comply with the
requirements of paragraph (b) of this subsection. The Agent shall cooperate
with any Loan Party in determining the appropriate amount payable to any Lender
or the Agent or the appropriate amount of withholding taxes payable, to the
extent reasonably required by any such Loan Party. Whenever any Non-Excluded
Taxes are payable by a Loan Party, as promptly as possible thereafter such Loan
Party shall send to the Agent for its own account or for the account of such
Lender, as the case may be, a certified copy of an original official receipt
received by such Loan Party showing payment thereof. If a Loan Party fails to
pay any Non-Excluded Taxes when due to the appropriate taxing authority or fails
to remit to the Agent the required receipts or other required documentary
evidence, the Loan Parties shall, subject to Section 12.08, indemnify the Agent
and the Lenders for any incremental taxes, interest or penalties that may become
payable by the Agent or any Lender as a result of any such failure. The
agreements in this subsection shall survive the termination of this Agreement
and the payment of the Notes and all other amounts payable hereunder.
(b) Each Lender that is not incorporated under the laws
of the United States of America or a state thereof shall:
(i) deliver to the Company and the Agent (A) two duly
completed copies of United States Internal Revenue Service Form 1001
or 4224, or successor applicable form, as the case may be, and (B) an
Internal Revenue Service Form W-8 or W-9, or successor applicable
form, as the case may be;
(ii) deliver to the Company and the Agent two further
copies of any such form or certification on or before the date that
any such form or certification expires or becomes obsolete and after
the occurrence of any event requiring a change in the most recent form
previously delivered by it to the Company; and
(iii) obtain such extensions of time for filings and
complete such forms or certifications as may reasonably be requested
by the Company or the Agent;
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unless in any such case an event (including any change in treaty, law or
regulation) has occurred prior to the date on which any such delivery would
otherwise be required which renders all such forms inapplicable or which would
prevent such Lender from duly completing and delivering any such form with
respect to it and such Lender so advises the Company and the Agent. Such
Lender shall certify (i) in the case of a Form 1001 or 4224, that it is entitled
to receive payments under this Agreement without deduction or withholding of any
United States federal income taxes and (ii) in the case of a Form W-8 or W-9,
that it is entitled to an exemption from United States backup withholding tax.
Each Person that shall become a Lender or purchases a participation pursuant to
Section 12.11 shall, upon the effectiveness of the related transfer, be required
to provide all of the forms and statements required pursuant to this subsection,
provided that in the case of any such participant, such participant shall
furnish all such required forms and statements to the Lender from which the
related participation shall have been purchased.
ARTICLE V
CONDITIONS PRECEDENT
SECTION 5.01. Conditions Precedent to the Initial Credit
Event. The obligation of each Lender to make its initial Loan or the Issuing
Bank to issue the initial Letter of Credit is subject to the following
conditions:
(a) The Agent shall have received the following, each
dated the initial Borrowing Date, except for this Agreement and the Notes which
shall be dated the Execution Date:
(i) this Agreement executed by each party hereto;
(ii) a Tranche A Revolving Credit Note and a Tranche B
Revolving Credit Note executed by the Company and payable to the order
of each Lender;
(iii) the Company Pledge Agreement executed by the Company;
(iv) the Company Security Agreement executed by the
Company;
(v) the Subsidiary Guarantors Pledge Agreements executed
by the respective Subsidiary Guarantors party thereto;
(vi) the Subsidiary Guarantors Security Agreements
executed by the respective Subsidiary Guarantors party thereto;
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(vii) a Notice of Borrowing with respect to the Tranche A
Revolving Credit Loans and the Tranche B Revolving Credit Loans to be
borrowed on the initial Borrowing Date meeting the requirements of
Section 2.03 and a Letter of Credit Request with respect to each Letter
of Credit to be issued on the initial Borrowing Date meeting the
requirements of Section 3.02;
(viii) a certificate of an officer and of the secretary or
an assistant secretary of each Loan Party certifying, inter alia, (A)
true and complete copies of each of the articles or certificate of
incorporation, as amended and in effect, of such Person, the bylaws,
as amended and in effect, of such Person and the resolutions adopted
by the Board of Directors of such Person (or a duly authorized
committee thereof) (1) authorizing the execution, delivery and
performance by such Person of this Agreement and the other Loan
Documents to which it is or will be a party and, in the case of the
Company, the Borrowings to be made and the Letters of Credit to be
issued hereunder, (2) approving the forms of the Loan Documents to
which it is a party and which will be delivered at or prior to the
initial Borrowing Date and (3) authorizing officers of such Person to
execute and deliver the Loan Documents to which it is or will be a
party and any related documents, including, any agreement contemplated
by this Agreement, (B) the incumbency and specimen signatures of the
officers of such Person executing any documents on its behalf and (C)
(1) that the representations and warranties made by such Loan Party in
any Loan Document to which such Person is a party and which will be
delivered at or prior to the date of the initial Borrowing Date are
true and correct in all material respects, (2) the absence of any
proceedings for the dissolution or liquidation of such Person and (3)
the absence of the occurrence and continuance of any Default or Event
of Default;
(ix) letters from CT Corporation System, Inc. in form and
substance satisfactory to the Agent and the Lenders evidencing the
obligation of CT Corporation System, Inc. to accept service of process
in the State of New York on behalf of each Loan Party that is not
authorized to do business as a foreign corporation in the State of New
York;
(x) the Agent's Letter executed by the Company;
(xi) favorable, signed opinions addressed to the Agent and
the Lenders from (A) Fulbright & Jaworski L.L.P., counsel to the Loan
Parties given upon the express instruction of the Loan Parties, (B)
Perret, Doise, Dingle, Longman, Russo & Zaunbrecher special Louisiana
counsel to the Loan Parties given upon the express instruction of the
Loan Parties, (C) Milner Fenerty, special Canadian counsel to the Loan
Parties, (D) Umbricht & Badertscher, special Swiss counsel to the Loan
Parties,
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(E) Maples & Calder, special Caymans counsel to the Loan Parties and
(F) Basurto, Santillana y Arguijo, S.C., special Mexican counsel to
the Loan Parties;
(xii) certificates of appropriate public officials as to
the existence, good standing and qualification to do business as a
foreign corporation, as applicable, of each Loan Party in each
jurisdiction in which the ownership of its properties or the conduct
of its business requires such qualifications and where the failure to
so qualify would, individually or collectively, have a Material
Adverse Effect.
(b) The Company shall have delivered to the Agent the
Insurance Opinion and certificates of insurance satisfactory to the Agent
evidencing the existence of all insurance required to be maintained by the Loan
Parties pursuant to Section 7.03 together with loss payee endorsements for all
such policies covering any tangible Collateral naming the Agent as a loss payee
and additional insured and the Insurance Opinion.
(c) The Agent shall have received all of the shares of
stock of each Restricted Subsidiary described on Schedule I to each of the
Company Pledge Agreement and each of the Subsidiary Guarantors Pledge
Agreements together with related stock powers executed in blank by the Company
or the appropriate Subsidiary Guarantor.
(d) All Collateral in which the Agent shall, at such
time, be entitled to have a Lien pursuant to this Agreement or any other Loan
Document shall have been physically delivered to the Agent to the extent
possession by the Agent is necessary to perfect a Lien in such Collateral.
(e) Landlord Lien waivers with respect to Inventory
located at leased locations.
(f) The Agent shall be satisfied that (i) appropriate
provisions have been made for the prepayment or refinancing of all obligations
of the Company and its Subsidiaries to Transamerica Business Credit
Corporation, subject only to making the proceeds of the Loans for such
prepayment and refinancing, (ii) all Liens securing such obligations have been
released or documentation providing for the release of such Liens shall have
been duly executed by all necessary Persons and (iii) provisions shall have
been made for the delivery of such documentation to the Agent upon the
prepayment or refinancing of such obligations.
(g) Uniform Commercial Code financing statements, or
proper notices, statements or other instruments in respect thereof, shall be in
a form and completed to permit them to be duly recorded, published, registered
and filed in all such places as is required by
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applicable law to grant to the Agent a first priority security interest in the
Collateral, subject only to Permitted Liens.
(h) The Agent and its special counsel shall have received
reports of Uniform Commercial Code searches, tax searches and judgment reports
of the appropriate records of each state in which any such Person has assets or
an office, in respect of the Company and each of its Subsidiaries, dated a
recent date prior to the Execution Date and satisfactory in form and substance
to the Agent and the Lenders.
(i) The Company shall have paid to the Agent and the
Lenders, as applicable, all fees and expenses (including the fees and
disbursements of Andrews & Kurth L.L.P. pursuant to Section 12.04) agreed upon
by such parties to be paid on or prior to the Execution Date.
SECTION 5.02. Conditions Precedent to All Credit Events.
Except with respect to Tranche A Revolving Credit Loans made by the Lenders
pursuant to Section 3.03(c), the obligation of the Lenders to make any Loan or
to issue or extend any Letter of Credit (including any Loan made or Letter of
Credit issued on the initial Borrowing Date) is subject to the further
conditions precedent that on the date of such Credit Event:
(a) The conditions precedent set forth in Section 5.01
shall have theretofore been satisfied.
(b) The representations and warranties set forth in
Article VI and in the other Loan Documents shall be true and correct in all
material respects as of, and as if such representations and warranties were
made on, the date of the proposed Loan or Letter of Credit, as the case may be
(unless such representation and warranty expressly relates to an earlier date),
and the Loan Parties shall be deemed to have certified to the Agent and the
Lenders that such representations and warranties are true and correct in all
material respects by the Company's delivery of a Notice of Borrowing or a
Letter of Credit Request, as the case may be.
(c) The Company shall have complied with the provisions
of Section 2.03 or Section 3.02, as applicable.
(d) No Default or Event of Default shall have occurred
and be continuing or would result from such Credit Event.
(e) The Agent and the Lenders shall have received such
other approvals, opinions or documents as the Agent or the Majority Lenders may
reasonably request.
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The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by the Loan Parties, to each of the Lenders that
all of the conditions specified in this Section 5.02 above exist as of that
time.
SECTION 5.03. Conditions Precedent to Conversions. The
obligation of the Lenders to convert any existing Borrowing into a Borrowing
consisting of Eurodollar Rate Loans is subject to the condition precedent that
on the date of such conversion no Default or Event of Default shall have
occurred and be continuing or would result from the making of such conversion.
The acceptance of the benefits of each such conversion shall constitute a
representation and warranty by the Loan Parties to each of the Lenders that no
Default or Event of Default shall have occurred and be continuing or would
result from the making of such conversion.
SECTION 5.04. Delivery of Documents. All of the Notes,
certificates, legal opinions and other documents and papers referred to in this
Article V, unless otherwise specified, shall be delivered to the Agent for the
account of each of the Lenders and, except for the Notes, in sufficient
counterparts or copies for each of the Lenders and shall be satisfactory in
form and substance to the Lenders.
ARTICLE VI
REPRESENTATIONS AND WARRANTIES
In order to induce the Lenders to enter into this Agreement
and to make the Loans provided for herein and to induce the Issuing Bank to
issue Letters of Credit and the other Lenders to participate therein, each Loan
Party makes, on or as of the Effective Date and the occurrence of each Credit
Event, the following representations and warranties to the Agent and the
Lenders:
SECTION 6.01. Organization and Qualification. The Company
and each of its Restricted Subsidiaries (a) is a corporation duly organized,
validly existing and in good standing under the laws of the state of its
incorporation or organization, (b) has the corporate, partnership or other
power to own its property and to carry on its business as now conducted and (c)
is duly qualified as a foreign corporation to do business and is in good
standing in every jurisdiction in which the failure to be so qualified would,
individually or together with all such other failures of the Loan Parties and
their Subsidiaries, have a Material Adverse Effect. As of the Execution Date,
the corporations and other entities named in Schedule 6.01 are all of the
Subsidiaries of the Company, such Schedule (x) accurately reflects (i) the
direct owner of the Capital Stock of each such Subsidiary and (ii) the
percentage of the issued and outstanding Capital Stock of each such Subsidiary
owned
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by a Loan Party, (y) accurately identifies such Subsidiaries and (z) accurately
sets forth the jurisdictions of their respective incorporation or organization
and jurisdictions in which they are required to be qualified as foreign
corporations, foreign partnerships or other foreign entities to do business.
SECTION 6.02. Authorization, Validity, Etc. Each Loan
Party has the corporate power and authority to execute, deliver and perform its
obligations hereunder and under the other Loan Documents to which it is a party
and, in the case of the Company, to make the Borrowings and obtain the issuance
of Letters of Credit hereunder, and all such action has been duly authorized by
all necessary corporate proceedings on its part. This Agreement has been duly
and validly executed and delivered by each Loan Party and constitutes a valid
and legally binding agreement of such Loan Party enforceable against such Loan
Party in accordance with its terms and the Notes and the other Loan Documents
to which such Loan Party is a party, when duly executed and delivered by such
Loan Party, will constitute valid and legally binding obligations of such Loan
Party enforceable in accordance with the respective terms thereof and of this
Agreement, except, in each case, (a) as such enforceability may be limited by
bankruptcy, insolvency, reorganization, moratorium, fraudulent transfer or
other similar laws relating to or affecting the enforcement of creditors'
rights generally, and by general principles of equity which may limit the right
to obtain equitable remedies (regardless of whether such enforceability is a
proceeding in equity or at law) and (b) as to the enforceability of provisions
for indemnification for violation of applicable securities laws, limitations
thereon arising as a matter of law or public policy.
SECTION 6.03. Governmental Consents, Etc. No
authorization, consent, approval, license or exemption of or filing or
registration with any Governmental Authority, is necessary for the valid
execution, delivery or performance by any Loan Party of any Loan Document to
which it is a party, except those that have been obtained, the filings and
recordings of the Liens created pursuant to the Security Documents and such
matters relating to performance as would ordinarily be done in the ordinary
course of business after the Execution Date.
SECTION 6.04. Conflicting or Adverse Agreements or
Restrictions. Neither the Company nor any of its Restricted Subsidiaries is a
party to any contract or agreement or subject to any restriction that would
reasonably be expected to have a Material Adverse Effect. Neither the
execution, delivery and performance by any Loan Party of the Loan Documents to
which it is a party, nor compliance with the terms and provisions thereof, nor
the extensions of credit contemplated by the Loan Documents, (a) will breach or
violate any applicable Requirement of Law, (b) will result in any breach or
violation of, any of the terms, covenants, conditions or provisions of, or
constitute a default under, or result in the creation or imposition of (or the
obligation to create or impose) any Lien upon any of its property or assets
pursuant to the terms of any indenture, mortgage, deed of trust,
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agreement or other instrument to which it or any of its
Subsidiaries is party or by which any property or asset of it or any of its
Subsidiaries is bound or to which it is subject, except for breaches,
violations and defaults under clauses (a) and (b) that collectively for all
Loan Parties will not have a Material Adverse Effect or (c) will violate any
provision of the organic documents of any Loan Party.
SECTION 6.05. Title to Assets. Without limiting the
representations as to the Collateral contained in the Security Documents, the
Company and each of its Restricted Subsidiaries has good and indefeasible title
to its assets constituting real property and good and indefeasible title to its
other assets, subject to no Liens, except Permitted Liens and immaterial Liens.
SECTION 6.06. Litigation. Except for the COLEVE tax matter
disclosed in its most recent filing on Form 10-K filed with the Securities and
Exchange Commission, there are no actions, suits or proceedings pending for
which service of process has been accomplished or, to the best knowledge of any
Loan Party, threatened with respect to any Loan Party, the Loan Documents or
any transactions contemplated therein that are reasonably likely to have
(individually or collectively) a Material Adverse Effect.
SECTION 6.07. Information Memorandum; Financial Statements.
The Information Memorandum, as affected by the disclosures made herein, in the
other Loan Documents and in the filings made by the Company with the Securities
and Exchange Commission pursuant to the Exchange Act, did not as of the date
thereof and will not (in the case of the Information Memorandum) as of the date
of the initial Credit Event hereunder, contain any untrue statement of a
material fact or omit to state a material fact necessary in order to make the
statements contained therein not misleading in any material respect. Since
December 31, 1995 there has been no material adverse change in the financial
condition, business or operations of the Company and its Restricted
Subsidiaries taken as a whole.
SECTION 6.08. Default. Except for defaults or violations
which, individually or together with all other defaults and violations by the
Company and its Restricted Subsidiaries, would not reasonably be expected to
have a Material Adverse Effect, neither the Company nor any of its Restricted
Subsidiaries is in default in any respect under the provisions of any
instrument evidencing any Indebtedness or of any agreement relating thereto, or
in default in any respect under or in violation of any Requirement of Law.
SECTION 6.09. Investment Company Act. Neither the Company
nor any of its Subsidiaries is, or is regulated as an "investment company," as
such term is defined in the Investment Company Act of 1940, as amended.
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SECTION 6.10. Public Utility Holding Company Act. Neither
the Company nor any of its Subsidiaries is a non-exempt "holding company," or
subject to regulation as such, or, to the knowledge of any Loan Party's
officers, an "affiliate" of a "holding company" or a "subsidiary company" of a
"holding company," within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
SECTION 6.11. ERISA. (a) The Company and each ERISA
Affiliate have operated and administered each Plan and Multiemployee Plan in
compliance with all applicable laws except for such instances of noncompliance
as have not resulted in and would not reasonably be expected to have a Material
Adverse Effect. Neither the Company nor any ERISA Affiliate has incurred any
liability pursuant to Title I or IV of ERISA or the penalty or excise tax
provisions of the Code relating to employee benefit plans (as defined in
Section 3 of ERISA), and no event, transaction or condition has occurred or
exists that would reasonably be expected to result in the incurrence of any
such liability by the Company or any ERISA Affiliate, or in the imposition of
any Lien on any of the rights, properties or assets of the Company or any ERISA
Affiliate, in either case pursuant to Title I or IV of ERISA or to such penalty
or excise tax provisions or to Section 401(a)(29) or 412 of the Code, other
than such liabilities or Liens as would not individually or in the aggregate
reasonably be expected to have a Material Adverse Effect.
(b) No accumulated funding deficiency (as defined in
Section 412 of the Code or Section 302 of ERISA) in excess of $1,000,000,
whether or not waived, exists or is expected to be incurred with respect to any
Plan.
(c) The Company and its ERISA Affiliates have not
incurred withdrawal liabilities (and are not subject to contingent withdrawal
liabilities) under section 4201 or 4204 of ERISA in respect of Multiemployer
Plans that individually or in the aggregate would reasonably be expected to
have a Material Adverse Effect.
(d) The expected post-retirement benefit obligation
(determined as of the last day of the Company's most recently ended fiscal year
in accordance with Financial Accounting Standards Board Statement No. 106,
without regard to liabilities attributable to continuation coverage mandated by
section 4980B of the Code) of the Company and its Restricted Subsidiaries would
not reasonably be expected to have a Material Adverse Effect.
(e) No such Multiemployer Plan is in "reorganization" or
"insolvent," within the meaning of such terms as used in ERISA.
SECTION 6.12. Tax Returns and Payments. (a) The Company
and its Subsidiaries have caused to be filed all federal income tax returns and
other material tax returns, statements and reports (or obtained extensions with
respect thereto) which are
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required to be filed and have paid or deposited or made adequate provision in
accordance with GAAP for the payment of all taxes (including estimated taxes
shown on such returns, statements and reports) which are shown to be due
pursuant to such returns, except where the failure to pay such taxes
(individually or collectively for the Company and its Restricted Subsidiaries)
would not have a Material Adverse Effect. No material income tax liability of
the Company or its Restricted Subsidiaries has been asserted by the Internal
Revenue Service of the United States or any other Governmental Authority for any
taxes in excess of those already paid, except for taxes which are being
contested in good faith by appropriate proceedings and for which adequate
reserves in accordance with GAAP have been created on the books of the Company
and its Restricted Subsidiaries.
(b) The federal income tax liabilities, if any, of the
Company and its Subsidiaries have been finally determined by the Internal
Revenue Service and satisfied for all taxable years through the fiscal year
ending in 1989 and for the fiscal years ending in 1991 and 1992. COLEVE, a
dissolved partnership in which the Company held less than a 50% interest, has
open tax years for the fiscal years ending in 1985 through 1990.
SECTION 6.13. Requirements of Law; Environmental Matters.
(a) The Company and each of its Restricted Subsidiaries is in compliance with
all Requirements of Law, applicable statutes, regulations and orders of, and
all applicable restrictions imposed by, all Governmental Authorities in respect
of the conduct of its business and the ownership of its property, except for
such noncompliances which, individually or in the aggregate for the Company and
all such Restricted Subsidiaries, would not have a Material Adverse Effect.
(b) Without limitation of the foregoing, the Company and
each of its Restricted Subsidiaries (i) possesses all environmental, health and
safety licenses, permits, authorizations, registrations, approvals and similar
rights necessary under law or otherwise for the Company or such Restricted
Subsidiary to conduct its operations as now being conducted (other than those
with respect to which the failure to possess or maintain would not,
individually or in the aggregate for the Company and all such Restricted
Subsidiaries, have a Material Adverse Effect) and (ii) each of such licenses,
permits, authorizations, registrations, approvals and similar rights is valid
and subsisting, in full force and effect and enforceable by the Company or such
Restricted Subsidiary, and the Company and each of its Restricted Subsidiaries
is in compliance with all terms, conditions or other provisions of such
permits, authorizations, registrations, approvals and similar rights except for
such failure or noncompliance that, individually or in the aggregate for the
Company and all such Restricted Subsidiaries, would not have a Material Adverse
Effect. Except as disclosed on Schedule 6.13, neither the Company nor any of its
Restricted Subsidiaries has received any notices of any violation of,
noncompliance with, or remedial obligation under, Requirements of Environmental
Laws, and there are no writs, injunctions, decrees, orders or judgments
outstanding, or lawsuits, claims, proceedings, investigations or inquiries or,
to the knowledge
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of any Loan Party, pending or threatened, relating to the ownership, use,
condition, maintenance or operation of, or conduct of business related to, any
property owned, leased or operated by the Company or any of its Restricted
Subsidiaries or other assets of the Company or such Restricted Subsidiary, other
than those violations, instances of noncompliance, obligations, writs,
injunctions, decrees, orders, judgments, lawsuits, claims, proceedings,
investigations or inquiries that, individually or in the aggregate for all Loan
Parties and such Subsidiaries, would not have a Material Adverse Effect. Except
as disclosed on Schedule 6.13, there are no material obligations, undertakings
or liabilities arising out of or relating to Environmental Laws to which any
Loan Party or any of its Subsidiaries has agreed, assumed or retained, or by
which any Loan Party or any of its Subsidiaries is adversely affected, by
contract or otherwise, which would have a Material Adverse Effect. Except as
disclosed on Schedule 6.13, no Loan Party nor any of its Subsidiaries has
received a written notice or claim to the effect that such Person is or may be
liable to any other Person as the result of a Release or threatened Release of a
Hazardous Material, which liability would have a Material Adverse Effect.
SECTION 6.14. Purpose of Loans. (a) The purpose of the
Loans is to provide working capital facilities to the Company and its
Restricted Subsidiaries. The proceeds of the Loans will be used first to repay
secured indebtedness for working capital due to Transamerica Business Credit
Corporation. All other proceeds of the Loans will be used by the Company for
working capital or advanced to one of its Restricted Subsidiaries for use by
such Restricted Subsidiary for working capital. All Letters of Credit will be
issued in connection with the working capital requirements of the Company or
one of its Restricted Subsidiaries.
(b) None of the proceeds of the Loans will be used
directly or indirectly for the purpose of purchasing or carrying any "margin
stock" within the meaning of Regulation U (herein called "margin stock") or for
the purpose of reducing or retiring any indebtedness (including the
indebtedness referred to in Section 6.14(a)) which was originally incurred to
purchase or carry a margin stock, or for any other purpose which might
constitute this transaction a "purpose" credit within the meaning of Regulation
U. Neither any Loan Party nor any agent acting on its behalf has taken or will
take any action which might cause this Agreement or any other Loan Document to
violate Regulation U, Regulation X, or any other regulation of the Board or to
violate the Securities Exchange Act of 1934. Margin stock does not constitute
more than 25% of the assets of the Company or any Loan Party.
SECTION 6.15. Franchises and Other Rights. The Company and
each of its Restricted Subsidiaries have all franchises, permits, licenses and
other authority (collectively, the "Operating Rights") as are necessary to
enable them to carry on their respective businesses as now being conducted,
except for Operating Rights with respect to
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which the failure to have would not individually or in the aggregate for all
such failures by the Company and its Restricted Subsidiaries have a Material
Adverse Effect. Neither the Company nor any of its Restricted Subsidiaries is
in default under any of the Operating Rights which default, individually or
together with all such defaults of the Company and its Restricted Subsidiaries,
would have a Material Adverse Effect.
SECTION 6.16. Solvency. Each Loan Party is Solvent.
For purposes of this Section 6.16 the term "Solvent" shall
mean, with respect to any Person, that:
(a) the assets of such Person, at a fair valuation,
exceed the total liabilities (including contingent, subordinated, unmatured and
unliquidated liabilities) of such Person;
(b) based on current projections, which are based on
underlying assumptions which provide a reasonable basis for the projections and
which reflect such Person's judgment based on present circumstances, of the
most likely set of conditions and such Person's most likely course of action
for the period projected, such Person believes it has sufficient cash flow to
enable it to pay its debts as they mature; and
(c) such Person does not have unreasonably small capital
with which to engage in its anticipated business.
For purposes of this Section 6.16, the "fair valuation" of the
assets of any Person shall be determined on the basis of the amount which may
be realized within a reasonable time, either through collection or sale of such
assets at the regular market value, conceiving the latter as the amount which
could be obtained for the property in question within such period by a capable
and diligent businessman from an interested buyer who is willing to purchase
under ordinary selling conditions, including obtaining necessary consents.
SECTION 6.17. No Intent to Hinder, Delay or Defraud. Each
Subsidiary Guarantor has entered into this Agreement, including the Guaranty
and the other Loan Documents, with no intent to hinder, delay or defraud any
Person to whom such Subsidiary Guarantor was or becomes, on or after the
Execution Date, indebted, within the meaning of Section 548 of the Bankruptcy
Code.
SECTION 6.18. Further Actions. The Loan Parties will make
all reasonable efforts to cause the Agent to have a perfected security interest
in the equity of Producion Engemaq Industria E Comercio Ltda.
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ARTICLE VII
AFFIRMATIVE COVENANTS
Each Loan Party covenants and agrees for itself, and the
Company covenants and agrees with respect to each of its Restricted
Subsidiaries, that on and after the date hereof and for so long as this
Agreement is in effect and until the Commitments and each Letter of Credit have
terminated, and the Loans and Unpaid Drawings together with all of the other
Obligations are paid in full:
SECTION 7.01. Information Covenants. The Company will
furnish or cause to be furnished to the Agent and each Lender:
(a) As soon as available, and in any event within 60 days
after the end of each of the first three quarterly accounting periods in each
fiscal year (i) the Form 10-Q of the Company and (ii) the consolidated balance
sheet of the Company and its Subsidiaries as at the end of such fiscal quarter
and the related consolidated unaudited statement of income and cash flows for
such fiscal quarter and for the elapsed portion of the fiscal year ended with
the last day of such fiscal quarter, and setting forth, in each case,
comparative consolidated figures for the related periods in the prior fiscal
year, all of which shall be certified by the chief financial officer, chief
executive officer or controller of the Company subject to note changes
resulting from normal year-end audit adjustments; provided, however, if the
Form 10-Q of the Company contains the consolidated balance sheet and statements
of income, retained earnings and cash flows, the Company shall not be required
to comply with clause (ii).
(b) As soon as available, and in any event within 120
days after the close of each fiscal year, the Annual Report of the Company for
such fiscal year containing therein, the consolidated balance sheet of the
Company and its Subsidiaries as at the end of such fiscal year and the related
consolidated statements of income, retained earnings and cash flows for such
fiscal year, setting forth, in each case, comparative figures for the preceding
fiscal year and certified by Arthur Andersen LLP or other independent certified
public accountants of recognized national standing reasonably acceptable to the
Agent and the Majority Lenders, whose certification shall be without
Impermissible Qualification together with a certificate of such accounting firm
stating that in the course of its regular audit of the business of the Company,
which audit was conducted in accordance with generally accepted United States
auditing standards, such accounting firm has obtained no knowledge of any
Default or Event of Default which has occurred and is continuing or, if in the
opinion of such accounting firm such a Default or Event of Default has occurred
and is continuing, a statement as to the nature thereof, all of the foregoing to
be in form and substance reasonably satisfactory to the Majority Lenders.
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(c) As soon as available, and in any event within 30 days
after the close of each month the following: (i) a Borrowing Base Certificate
as at the last day of such month and (ii) a schedule for each Loan Party
showing the amount and aging of each Receivable of such Loan Party and the
identity of the account debtor thereon.
(d) From time to time, at the sole expense of the Company
and upon the request of the Agent or the Majority Lenders, a report of an
independent collateral auditor (which may be, or be affiliated with, one of the
Lenders) with respect to the accounts receivable and inventory components
included in the Borrowing Base, which report shall indicate whether or not,
based upon a review by such auditors of the accounts receivable (including
verification with respect to the amount, aging, identity and credit of the
respective account debtors and the billing practices of the Loan Parties) and
Inventory (including verification as to the value, location and respective
types), the information set forth in the Borrowing Base Certificate most
recently delivered is accurate and complete in all material respects.
Notwithstanding the foregoing, unless a Default or Event of Default shall have
occurred and be continuing at the time any report with respect to the accounts
receivable and inventory described in this Section 7.01(d) is requested, the
Company shall not be required to pay the cost of or reimburse the Agent for any
such report more often than once during each fiscal year.
(e) Promptly upon the mailing thereof to the shareholders
of the Company generally, copies of all financial statements, reports and proxy
statements so mailed.
(f) Promptly upon the filing thereof, copies of all
effective registration statements (other than registration statements on Form
S-8) and annual, quarterly or current reports which the Company shall have
filed with the Securities and Exchange Commission.
(g) Promptly, and in any event within two Business Days
after any Responsible Officer of any Loan Party obtains knowledge thereof,
notice of
(i) any material violation of, noncompliance with,
or remedial obligations under, Requirements of Environmental Laws
which would reasonably be expected to have a Material Adverse Effect,
(ii) any material Release or threatened material
Release of Hazardous Materials that materially and adversely affects
or is reasonably expected to affect any material property owned,
leased or operated by the Company or any of its Restricted
Subsidiaries or
(iii) any event or condition which constitutes a
Default or an Event of Default;
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a notice of such event or condition will be delivered to each Lender specifying
the nature and period of existence thereof and specifying the notice given or
action taken by such Person and the nature of any such claimed default, event
or condition and, in the case of an Event of Default or Default, what action
has been taken, is being taken or is proposed to be taken with respect thereto.
(h) At the time of the delivery of the financial
statements provided for in Sections 7.01(a) and (b), a certificate of the chief
financial officer or the controller of the Company to the effect that no
Default or Event of Default exists or, if any Default or Event of Default does
exist, specifying the nature and extent thereof and the action that is being
taken or that is proposed to be taken with respect thereto, which certificate
shall set forth calculations required to establish whether the Company and its
Subsidiaries were in compliance with the provisions of Article VIII as at the
end of such fiscal quarter or fiscal year, as the case may be.
(i) Promptly, and in any event within five Business Days
after any Responsible Officer of any Loan Party obtains knowledge thereof,
notice
(i) of any condition or event which, in the opinion
of management of such Loan Party, would reasonably be expected to have
a Material Adverse Effect;
(ii) that any Person has given any notice to the
Company or any of its Restricted Subsidiaries or taken any other
action with respect to a claimed default or event under any instrument
or agreement involving in excess of $1,000,000 and to which any of
them is a party;
(iii) of the institution of any litigation involving
stated claims against the Company or any of its Restricted
Subsidiaries equal to or greater than $1,000,000 (net of any insurance
that the Company reasonably and in good faithbelieves effectively
covers such claim) with respect to any single cause of action or of any
adverse determination in any court proceeding in any litigation
involving a potential liability to the Company or any of its Restricted
Subsidiaries equal to or greater than $1,000,000 (net of any insurance
that the Company reasonably and in good faith believes effectively
covers such liability) with respect to any single cause of action which
makes the likelihood of an adverse determination in such litigation
against the Company or such Restricted Subsidiary substantially more
probable; or
(iv) of the occurrence of any Change in Control or
any Change of Control Event.
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(j) Promptly, and in any event within 30 days after any
Responsible Officer of any Loan Party obtains knowledge thereof, notice:
(i) of the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any
required contribution to a Plan, any Lien in favor of the PBGC or a
Plan, or any withdrawal from, or the termination, reorganization or
insolvency (within the meaning of such terms as used in ERISA) of any
Multiemployer Plan; or
(ii) of the institution of proceedings or the taking
of any other action by the PBGC or the Company or any ERISA Affiliate
or any Multiemployer Plan with respect to the withdrawal from, or the
terminating, reorganization or insolvency (within the meaning of such
terms as used in ERISA) of, any Plan, except that no notice shall be
required with respect to the merger of a defined contribution plan of
one ERISA Affiliate into a defined contribution plan of another ERISA
Affiliate.
(k) Not less than 15 days prior to the end of each fiscal
year, an annual business plan and budget for the Company and its Restricted
Subsidiaries for the next succeeding fiscal year containing, inter alia, pro
forma financial statements for the next fiscal year.
(l) From time to time and with reasonable promptness,
such other information or documents (financial or otherwise with respect to the
Company or any of its Restricted Subsidiaries) as the Agent or any Lender
through the Agent may reasonably request.
SECTION 7.02. Books, Records and Inspections. Each Loan
Party will permit, or cause to be permitted, any Person designated by any Lender
or the Lenders in writing to visit and inspect any of the properties of the
Company and its Restricted Subsidiaries, to examine the corporate books and
financial records of the Company and its Restricted Subsidiaries and make copies
thereof or extracts therefrom and to discuss the affairs, finances and accounts
of any such corporations with the officers and agents of the Company and its
Restricted Subsidiaries and with their independent public accountants, all at
such reasonable times and as often as the Agent or such Lender, through the
Agent, may reasonably request. Upon the occurrence and during the continuance
of an Event of Default, any Person designated by the Agent may request that such
independent public accountants obtain confirmation reports from account and
chattel paper obligors of the Company and its Subsidiaries. The Agent or its
representatives may at the Company's reasonable expense conduct an annual field
exam to verify the Borrowing Base components (to the extent such components can
be verified in the United States); provided that the field exam shall not
include any communication to or contact with any account debtor.
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SECTION 7.03. Insurance and Maintenance of Properties. (a)
The Loan Parties will maintain or cause to be maintained, with financially
sound and reputable insurers, insurance with respect to its property and
business against such liabilities, casualties, risks and contingencies
(including business interruption insurance) and in such types and amounts as is
customary in the case of Persons engaged in the same or similar businesses and
similarly situated, provided that, unless such coverage is not available at
commercially reasonable rates for reasons other than the acts or omissions of
the Loan Parties, in no event shall the coverage and amount of such insurance
be less than the coverage and amount of the insurance which, in the opinion of
an independent insurance broker (the "Insurance Opinion") delivered on the
Execution Date, is adequate and customary for the Loan Parties taking into
account the Loan Parties' historical loss experience. All policies of
insurance required by the terms of this Agreement or any Security Document
shall provide that at least 20 days' prior written notice be given to the Agent
of any termination, cancellation, reduction or other material modification of
such insurance, shall contain an endorsement or agreement by the insurer that
any loss shall be payable in accordance with the terms of such policy
notwithstanding any act or negligence of any Loan Party, or any party holding
under such Loan Party, which might otherwise result in forfeiture of said
insurance and shall contain the agreement of the insurer waiving all rights of
setoff, counterclaim or deductions against such Loan Party. Notwithstanding
the foregoing, the insurance coverage of the Loan Parties on the date hereof
complies with the requirements of the foregoing sentence. The Loan Parties
shall furnish or cause to be furnished to the Agent (i) not later than April 30
in each year (A) a certificate from an independent insurance broker
demonstrating the Loan Parties' compliance with this paragraph (a) and (B) a
summary of all insurance coverage of the Loan Parties prepared by an
independent insurance broker, (ii) upon request of the Agent, copies of all
policies of insurance and (iii) as soon as any Loan Party becomes aware thereof,
a notification from such Loan Party of any material change in the coverage or
any other condition of any policy of insurance required by this Section 7.03.
The Agent, for the benefit of the Lenders, shall be named as a loss payee as its
interest may appear on all such fire, accident and other casualty policies
covering any of the Collateral.
(b) In addition to any requirements as to the maintenance
of the Collateral contained in the Security Documents, the Company will, and
will cause its Restricted Subsidiaries to, cause all properties owned by the
Company or any of its Restricted Subsidiaries or used or held for use in the
conduct of the business of the Company or the business of any such Restricted
Subsidiary to be maintained and kept in good condition, repair and working
order and supplied with all necessary equipment and will cause to be made all
necessary repairs, renewals, replacements, betterments and improvements
thereof, all as in the judgment of the Company may be necessary so that the
business carried on in connection therewith may be properly and advantageously
conducted at all times; provided, however, that nothing in this Section 7.03(b)
shall prevent the Company from discontinuing
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the maintenance of any of such properties if such discontinuance is, in the
judgment of the Company, desirable in the conduct of its business or the
business of any such Restricted Subsidiary and not disadvantageous in any
material respect to the Lenders.
SECTION 7.04. Payment of Taxes and other Claims. The Company
will, and will cause each of its Restricted Subsidiaries to, pay or discharge
or cause to be paid or discharged, before the same shall become delinquent, (a)
all taxes, assessments and governmental charges levied or imposed upon the
Company or such Restricted Subsidiary or upon the income, profits or property
of the Company or such Restricted Subsidiary and (b) all lawful claims for
labor, materials and supplies which, if unpaid, might by law become a Lien upon
the property of the Company or such Restricted Subsidiary; provided, however,
(i) that the Company and the Restricted Subsidiaries shall not be required to
pay or discharge or cause to be paid or discharged any such tax, assessment,
charge or claim whose amount, applicability or validity is being contested in
good faith by appropriate proceedings, (ii) has not been reported, so long as
the position taken by such Loan Party or such Subsidiary in not reporting same
is based on "substantial authority," as defined in Section 6661 of the Code or,
in the case of taxes other than U.S. federal income taxes, upon the reasonable
judgment of such Loan Party after consultation with tax counsel and so long as,
if any such item is challenged, it is paid or the requirements of the preceding
clause (i) are met with respect thereto, but in either case only if it has
maintained adequate reserves with respect thereto in accordance with GAAP, or
(iii) with respect to foreign Restricted Subsidiaries, if such taxes,
assessments, charges or levies are not material to the financial condition or
operation of such foreign Restricted Subsidiaries or have not been levied by a
bona fide Governmental Authority.
SECTION 7.05. Existence. Except as expressly permitted
pursuant to Section 8.02, each Loan Party will do all things necessary to
preserve and keep in full force and effect the corporate, partnership or other
existence, rights and franchises of such Loan Party and each Restricted
Subsidiary of the Company.
SECTION 7.06. Compliance with Statutes, Etc. (a) The
Company will and will cause each of its Restricted Subsidiaries to comply with
each applicable Requirement of Law, other than those Requirements of Law, the
failure to comply with which (individually or collectively for the Company and
its Restricted Subsidiaries) would not have a Material Adverse Effect;
provided, however, the Company and each such Restricted Subsidiary shall have
the right to diligently contest any Requirement of Law; so long as (i) the
contest is in good faith and by appropriate proceedings and such reserve or
other appropriate provision, in any, as shall be required by GAAP shall have
been made therefor, (ii) such contest shall operate to suspend the collection
of any disputed amount from such property and (iii) such contest will not (A)
subject any or any part of such property to loss, forfeiture or sale or
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(B) adversely affect the Lien of the Security Documents or (C) have a Material
Adverse Effect.
(b) Without limiting the foregoing, the Company will and
will cause each of its Restricted Subsidiaries (i) to comply in a timely
fashion with, or operate pursuant to valid waiver of the provisions of, all
Requirements of Environmental Laws, including any such laws or regulations
relating to contamination from any Hazardous Materials, except where
noncompliance would not have a Material Adverse Effect, and (ii) to produce all
inventory which is manufactured in the United States in compliance in all
material respects with the Fair Labor Standards Act.
SECTION 7.07. ERISA. As soon as possible and, in any event,
within ten Business Days after any Responsible Officer of any Loan Party knows
or has reason to know any of the following, such Loan Party will deliver or
cause to be delivered to each of the Lenders a certificate of the chief
financial officer of the Company setting forth details as to such occurrence
and such action, if any, which the Loan Party or its ERISA Affiliate is
required or proposes to take, together with any notices required or proposed to
be given to or filed with or by such Loan Party or ERISA Affiliate with respect
thereto: that a Reportable Event has occurred; that an application may be or
has been made to the Secretary of the Treasury for a waiver or modification of
the minimum funding standard (including any required installment payments) or
an extension of any amortization period under Section 412 of the Code with
respect to a Plan; that the aggregate amount of Unfunded Current Liabilities
with respect to one or more Plans exceeds $1,000,000; that a Multiemployer Plan
has been or may be terminated, reorganized, partitioned or declared insolvent
under Title IV of ERISA; that any required contribution to a Plan or
Multiemployer Plan has not been or may not be timely made; that proceedings may
be or have been instituted under Section 4069(a) of ERISA to impose liability on
a Loan Party or an ERISA Affiliate or under Section 4042 of ERISA to terminate a
Plan or appoint a trustee to administer a Plan; that a Loan Party or any ERISA
Affiliate has incurred or may incur any liability (including any contingent or
secondary liability) on account of the termination of or withdrawal from a Plan
or a Multiemployer Plan under Section 4062, 4063, 4064, 4201 or 4204 of ERISA,
which liability together with all other such liabilities exceeds $1,000,000;
that the Company or an ERISA Affiliate may be required to provide security to a
Plan under Section 401(a)(29) of the Code; or any other condition(s) exist(s) or
may occur with respect to one or more Plans and/or Multiemployer Plans which
(individually or collectively) is reasonably likely to result in the imposition
of a material excise tax(es), penalty(ies) or other material liability(ies) on
the Company and/or any ERISA Affiliate.
SECTION 7.08. End of Fiscal Years. The Company shall cause
each of its, and each of its domestic Restricted Subsidiary's fiscal years to
end on December 31 and with
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respect to Restricted Subsidiaries acquired by the Company after the date
hereof, will cause such change to December 31 to occur as promptly as possible.
SECTION 7.09 Subrogation; Purchase Money Liens. To the
extent that the Agent pays any sum under any provision of law or any instrument
or document creating any Lien prior or superior to the Lien of any Security
Document, or any such sum is paid with the proceeds of the issuance of the
Notes, then, to the extent permitted by law, the Agent for the benefit of the
Lenders shall have and be entitled to a Lien on the Collateral equal in
priority to the Lien discharged, and the Agent for the benefit of the Lenders
shall be subrogated to, and receive and enjoy all rights and Liens possessed,
held or enjoyed by, any owner or holder of such Lien, which shall remain in
existence and benefit the Agent for the benefit of the Lenders in securing the
obligations secured by the Security Documents, irrespective of whether such
Liens are released.
SECTION 7.10. Performance of Loan Documents. (a) Each Loan
Party will duly and punctually pay and perform its respective obligations under
the Loan Documents to which it is a party in accordance with, and without
breach of, the terms of each thereof.
(b) If any Loan Party fails to pay any tax, assessment,
standby fee, insurance premium or other charge, cost or expense called for
herein or in any of the other Loan Documents, the Agent may, at the request of
the Majority Lenders, pay the same, or if any Loan Party fails to perform any of
the Loan Party's covenants or agreements, or breaches any of such Loan Party's
warranties and representations, set forth herein or in any of the other Loan
Documents, the Agent may, at the request of the Majority Lenders, correct or
cure, or cause to be corrected and cured, the default or breach and pay such
sums in connection therewith as the Majority Lenders shall determine to be
necessary or advisable, and all taxes, assessments, standby fees, charges,
insurance premiums and other sums paid by the Agent in connection with such
matters shall be immediately repayable by the Loan Parties to the Agent,
together with interest on each such amount at the Default Rate from the date the
sum is paid by the Agent, until the same is refunded to the Agent, and all such
amounts and the interest thereon shall be secured by the Security Documents.
The Agent agrees to promptly notify the Company of any such tax, assessment,
standby fee, insurance premium or other sums paid by the Agent pursuant to the
immediately preceding sentence, but the failure to give such notice shall not
affect the obligation of the Loan Parties to repay any such sums to the Agent.
(c) All covenants and other obligations contained in the
Security Documents shall be in addition to the covenants contained herein.
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SECTION 7.11. Indemnification for Breach of Representations
or Covenants. The Company shall indemnify each Indemnitee and hold each
Indemnitee harmless from and against all losses, costs, expenses (including
reasonable attorneys' fees), obligations, damages, penalties, disbursements and
liabilities which such Indemnitee may actually incur as a result of, in
connection with or arising out of (a) the breach of any representation or
warranty of the Loan Parties contained herein or in the other Loan Documents or
(b) the nonfulfillment by any Loan Party of, or its failure to perform, any of
its covenants or agreements contained in this Agreement or in the other Loan
Documents. The indemnity contained in this Section 7.11 shall survive the
termination of this Agreement.
ARTICLE VIII
NEGATIVE COVENANTS
Each Loan Party covenants and agrees for itself, and the
Company covenants and agrees with respect to each of its Restricted
Subsidiaries, that on and after the date hereof and for so long as this
Agreement is in effect and until the Commitments and each Letter of Credit have
terminated, and the Loans and Unpaid Drawings together with all of the other
Obligations are paid in full:
SECTION 8.01. Change in Business. The Company will not,
and will not permit any of its Restricted Subsidiaries to, engage principally
in any business other than one or more Lines of Business.
SECTION 8.02. Consolidation, Merger, Sale or Purchase of
Assets, Etc. The Company will not, and will not permit any of its Restricted
Subsidiaries to, wind up, liquidate or dissolve its affairs, or enter into any
transaction of merger or consolidation, sell, lease or otherwise dispose of all
or any part of its property or assets (other than sales of inventory in the
ordinary course of business), or purchase, lease or otherwise acquire (in one
or a series of related transactions) all or any part of the property or assets
or all or any part of the Capital Stock of any Person or agree to do any of the
foregoing at any future time or permit any of its Restricted Subsidiaries to do
any of the foregoing, except that this Section 8.02 shall not prohibit:
(a) (i) the purchase, lease or sale of inventory, (ii)
the lease pursuant to Capital Leases of tangible personal property or (iii) the
acquisition of facilities, equipment and other assets, in each case, by the
Company or any of its Restricted Subsidiaries in the ordinary course of
business;
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(b) if, at the time thereof and immediately after giving
effect thereto, no Event of Default or Default shall have occurred and be
continuing (i) the merger of any domestic Wholly Owned Restricted Subsidiary
into the Company in a transaction in which the Company is the surviving Person,
or the merger or consolidation of any domestic Wholly Owned Restricted
Subsidiary with and into any other domestic Wholly Owned Restricted Subsidiary,
in each case in a transaction in which no Person other than the Company or one
of its Restricted Subsidiaries receives any consideration; (ii) the merger or
consolidation of any foreign Wholly Owned Restricted Subsidiary with and into a
domestic Wholly Owned Restricted Subsidiary or any other foreign Wholly Owned
Restricted Subsidiary, in each case in a transaction in which no Person other
than the Company or one of its Restricted Subsidiaries receives any
consideration; and (iii) the merger of any other Person with and into the
Company or one of its Restricted Subsidiaries if the Company or one of its
Restricted Subsidiaries is the surviving entity and after giving effect to such
transaction the Company and the Restricted Subsidiaries shall be in compliance,
on a pro forma basis after giving effect to such transaction, with the
covenants contained in Article VIII recomputed as of the last day of the most
recently ended fiscal quarter of the Company and its Restricted Subsidiaries as
if such transaction had occurred on the first day of each relevant period for
testing such compliance, and the Company shall have delivered to the Agent an
officer's certificate to such effect, together with all relevant financial
information and calculations demonstrating such compliance;
(c) Investments permitted by Section 8.06;
(d) sales, leases or other dispositions of assets by the
Company or the Restricted Subsidiaries determined by the Board of Directors of
the Company to be no longer useful, necessary or desirable in the operation of
the business of the Company or the Restricted Subsidiaries, provided that the
Designated Net Proceeds thereof shall be applied in accordance with Section
4.05; provided, however, unless the consideration received for such sale, lease
or other disposition has a value in excess of $5,000,000, the determination by
the Board of Directors of the Company shall not be required;
(e) so long as at the time thereof and immediately after
giving effect thereto no Default or Event of Default shall have occurred and be
continuing:
(i) a domestic Restricted Subsidiary may transfer
property and assets to the Company or another domestic Restricted
Subsidiary;
(ii) a foreign Restricted Subsidiary may transfer
property and assets to the Company or another Restricted Subsidiary
(other than Highland Corod except as permitted in clause (iv) below);
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(iii) the Company may transfer property or assets to
any domestic Restricted Subsidiary; and
(iv) any domestic Restricted Subsidiary, or the
Company, may transfer assets or property to any foreign Restricted
Subsidiary, provided that (A) such transfers shall be made for
consideration of not less than the cost of the property or assets so
transferred, (B) Grant Prideco, Inc. may transfer assets having a book
value of not more than $3,000,000 to T. F. de Mexico, S.A.,
notwithstanding any other limitations contained in this Agreement, (C)
Mallard Bay Drilling, Inc. or its Subsidiaries may charter drilling
rigs to Energy Ventures International, Inc. notwithstanding any other
limitations contained in this Agreement, (D) licenses of technology by
and among the Company and its Restricted Subsidiaries shall not be
subject to any other limitations contained in this Agreement, and (E)
in addition to and without limitation of the foregoing, the Company and
its domestic Restricted Subsidiaries shall be permitted to transfer
assets or property to any one or more foreign Restricted Subsidiaries
and any foreign Restricted Subsidiary may transfer assets or property
to Highland Corod, provided that the aggregate book value of all such
assets or property transferred pursuant to this clause (E) during any
fiscal year of the Company does not exceed $5,000,000;
(f) the Company or any of its Restricted Subsidiaries may
acquire all or substantially all of the assets of, or all the Capital Stock in,
a Person or division or line of business of a Person if, at the time thereof
and immediately after giving effect thereto (each such acquisition together with
each of the Approved Acquisitions being a "Permitted Business Acquisition"):
(i) no Event of Default or Default shall have
occurred and be continuing or would result therefrom;
(ii) all the Capital Stock of any acquired or
newly-formed corporation, partnership, association or other business
entity (a "New Subsidiary") is owned directly by the Company or one or
more Wholly Owned Restricted Subsidiaries or the Company and one or
more Wholly Owned Restricted Subsidiaries and such New Subsidiary
shall become a Restricted Subsidiary and engaged primarily in one or
more Lines of Business and (unless it is a foreign Restricted
Subsidiary) shall have executed (A) a Subsidiary Guarantor Counterpart
in the form of Exhibit 8.02 (a "Subsidiary Guarantor Counterpart")
guaranteeing the Obligations and (B) a security agreement
substantially in the form of the Security Agreement executed by the
Subsidiary Guarantors;
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(iii) if such New Subsidiary is a domestic Restricted
Subsidiary, all of the Capital Stock of such New Subsidiary shall be
pledged to the Agent and if such New Subsidiary is a Domestically
Owned Foreign Restricted Subsidiary, 65% of the Capital Stock of such
New Subsidiary shall be pledged to the Agent;
(iv) the Company and its Restricted Subsidiaries
shall be in compliance, on a pro forma basis, after giving effect to
such acquisition or formation, with the covenants contained in Article
VIII, recomputed as at the last day of the most recently ended fiscal
quarter of the Company and the Restricted Subsidiaries as if such
acquisition had occurred on the first day of each relevant period for
testing such compliance, and, the Company shall have delivered to the
Agent and the Lenders a certificate of a Responsible Officer to such
effect, together with all relevant financial information of such New
Subsidiary or assets and calculations demonstrating such compliance;
(v) any New Subsidiary shall not be liable for any
Indebtedness (except for Indebtedness permitted by Section 8.04);
(vi) the Majority Lenders shall have given their
prior written consent (which consent shall not be unreasonably
withheld, taking into consideration the merits of the acquisition) in
the case of any acquisition involving consideration (whether cash or
property (other than Qualified Capital Stock of the Company), as
valued at the time each investment is made) in excess of $5,000,000 in
the aggregate for all such acquisitions in any 12-month period,
provided that no such consent shall be required with respect to
acquisitions closed prior to the date such $5,000,000 aggregate limit
is exceeded; and
(vii) the Agent shall have received (A) to the extent
the UCC is applicable to such New Subsidiary or its assets, uniform
commercial code searches as to all effective financing statements (or
their equivalent) that name such New Subsidiary or the Person from
whom any assets were acquired by the Company or any of its Restricted
Subsidiaries, (B) certificates evidencing all of the issued and
outstanding Capital Stock of any New Subsidiary that is a domestic
Restricted Subsidiary of the Company and 65% of the issued and
outstanding Capital Stock of any New Subsidiary that is a Domestically
Owned Foreign Restricted Subsidiary together, in each case, with stock
powers relating thereto endorsed in blank, (C) an opinion of counsel
to the Company in form and substance satisfactory to the Agent and the
Lenders as to the enforceability and perfection of the Lien of the
Agent on such Capital Stock and as to such other matters as the Agent
and the Lenders may reasonably request, (D) such opinions of counsel
to such New Subsidiary as the Agent and the Lenders may reasonably
request as to the organization, good standing and
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enforceability of this Agreement and the Security Agreement
executed by such New Subsidiary pursuant to clause (ii)(B) above on
such New Subsidiary, the perfection of the Liens granted pursuant to
such security agreement and such other matters as the Agent and the
Lenders may reasonably require and (E) such other agreements,
certificates, financing statements, approvals, reports, consents,
waivers, estoppels, subordination agreements, filings and other
documentation as the Agent and the Majority Lenders may reasonably
request.
The Loan Parties shall pay all reasonable costs and expenses
(including the reasonable legal expenses and out-of-pocket expenses) incurred
by the Agent and the Lenders in connection with the satisfaction of the
requirements set forth in this Section 8.02(f).
The Agent is hereby authorized to release the Liens held by
the Agent on Collateral that any Loan Party is permitted pursuant to this
Section 8.02 to sell or otherwise dispose of in the event such Loan Party does
in fact sell or otherwise dispose of such Collateral.
SECTION 8.03. Liens. The Company will not, and will not
permit any of its Restricted Subsidiaries to, create, incur, assume or suffer
to exist any Lien upon or with respect to any property or assets of any kind
(real or personal, tangible or intangible) of the Company or such Subsidiary
whether now owned or hereafter acquired, except (a) Permitted Liens and (b)
Liens of creditors of consignees of Permitted Consigned Inventory.
SECTION 8.04. Indebtedness. The Company will not create,
incur or suffer to exist or permit any of its Restricted Subsidiaries to
create, incur or suffer to exist any Indebtedness except Permitted
Indebtedness.
SECTION 8.05. Stock Issuance. The Company will not issue
any Disqualified Stock.
SECTION 8.06. Investments. The Company will not, and will
not permit any of its Subsidiaries to, directly or indirectly, make or own any
Investment in any Person, except:
(a) The Company and its Restricted Subsidiaries may make
and own Permitted Financial Investments and Permitted Business Investments;
(b) The Company and its Restricted Subsidiaries may
continue to own Investments owned by them on the date hereof as set forth on
Schedule 8.06, including the Investments in its Subsidiaries, partnerships and
other Persons owned on the Execution Date;
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(c) The Company and its Restricted Subsidiaries may make
Investments permitted to be made under (i) Section 8.07 as a Restricted Payment
or (ii) Section 8.04;
(d) The Company and its Restricted Subsidiaries may
endorse negotiable instruments for collection in the ordinary course of
business; and
(e) The Company and its Restricted Subsidiaries may make
and own the Investments permitted under Section 8.02;
(f) So long as no Default or Event of Default shall have
occurred and be continuing or would result therefrom, the Company and its
Restricted Subsidiaries may make Investments in any Person to the extent the
consideration paid consists of Qualified Stock of the Company;
(g) The acquisition of Capital Stock or securities of a
Restricted Subsidiary;
(h) Investments in repurchase obligations with a term of
not more than one Business Day for securities with maturities of one year or
less from the date of issue or fully guaranteed or insured by the United States
Government or any agency thereof; and
(i) Investments in Highland Corod by the Company or any
Restricted Subsidiary made after the date hereof, and not exceeding $5,000,000
in the aggregate, less the sum of all loans to Highland Corod after the date
hereof by the Company or any Restricted Subsidiary outstanding.
SECTION 8.07. Restricted Payments. (a) The Company will
not, and will not permit any of its Restricted Subsidiaries to, make or declare
any Restricted Payment; except the Company may make Restricted Payments if
immediately after giving effect to such Restricted Payment, the aggregate
amount of all Restricted Payments expended subsequent to the Execution Date
(the amount so expended, if other than in cash, to be valued at its fair market
value as determined by the Board of Directors of the Company, whose
determination in good faith and evidenced by a Board Resolution shall be
conclusive) does not exceed the sum of (i) (A) 25% until the Tranche B
Revolving Credit Loans have been paid in full, and (B) 50% thereafter, in each
case, of the aggregate Consolidated Net Income of the Company and its
Restricted Subsidiaries (or if such Consolidated Net Income shall be a loss,
minus 100% of such loss) during the period (treated as one accounting period)
subsequent to March 31, 1996 and ending on the last day of the fiscal quarter
immediately preceding the date of such Restricted Payment; (ii) the aggregate
net proceeds, including cash and the fair market value of property other than
cash (as determined in good faith by the Board of Directors of the Company,
whose determination will be conclusive and evidenced by a Board Resolution),
received by the Company from any Person (other than a Subsidiary) as a result
of the issuance or sale of Qualified Stock of the Company, including any net
proceeds received upon exercise of any rights, options or warrants, other than
in connection with the conversion or exchange of any Indebtedness or
Disqualified Stock of the Company; (iii) the aggregate net proceeds, including
cash and the fair market value of property other than cash (as determined in
good faith by the Board of Directors of the Company, whose determination will
be conclusive and evidenced by a Board Resolution),
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received by the Company during such period from any Person (other than a
Subsidiary) as a result of the issuance or sale of any Indebtedness to the
extent that at the time the determination is made, such Indebtedness has been
converted into or exchanged for Qualified Stock of the Company; (iv) (A) in
case any Unrestricted Subsidiary has been redesignated a Restricted Subsidiary,
an amount equal to the lesser of (x) the book value (determined in accordance
with GAAP) at the date of such redesignation of the aggregate Investments made
by the Company and its Restricted Subsidiaries in such Unrestricted Subsidiary
and (y) the fair market value of such Investments in such Unrestricted
Subsidiary at the time of such redesignation (as determined in good faith by the
Board of Directors of the Company, whose determination will be conclusive and
evidenced by a Board Resolution); or (B) in case any Restricted Subsidiary has
been redesignated an Unrestricted Subsidiary, minus the greater of (x) the book
value (determined in accordance with GAAP) at the date of redesignation of the
aggregate Investments made by the Company and its Restricted Subsidiaries in
such Restricted Subsidiary and (y) the fair market value of such Investments in
such Restricted Subsidiary at the time of such redesignation (as determined in
good faith by the Company's Board of Directors, whose determination will be
conclusive and evidenced by a Board Resolution); and (v) $10,000,000. For
purposes of any calculation pursuant to the preceding sentence that is required
to be made within 60 days after the declaration of a dividend by the Company,
such dividend shall be deemed to be paid at the date of declaration.
(b) Notwithstanding the foregoing, the above limitation
shall not prevent (i) the payment of any dividend by the Company within 60 days
after the date of its declaration if at the date of declaration the payment
would have complied with this covenant; (ii) the purchase, redemption,
acquisition or retirement of any shares of Capital Stock of the Company in
exchange for, or out of the net proceeds of the substantially concurrent sale
(other than to a Subsidiary) of, other shares of Qualified Stock of the
Company; (iii) purchases of common stock by the Company or a trust pursuant to
any employee stock ownership or similar employee benefit plan of the Company
that has been approved by the Board of Directors of the Company; (iv) payments
to Unrestricted Subsidiaries in an aggregate amount not in excess of
$10,000,000 during the period from the Execution Date to the date upon which
the Obligations have been finally paid in full (after the termination of the
Commitments of the Lenders); (v) payment of the redemption price not in excess
of $.02 per right with respect to any stockholders rights plan adopted by the
Company (not to exceed $1.5 million in the aggregate); (vi) the making of a
Restricted Payment by a Restricted
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Subsidiary to a Restricted Subsidiary (other than Highland Corod) or the
Company; or (vii) offsets against and acquisitions of Capital Stock of the
Company to satisfy indemnification and other obligations owed to the Company or
its Subsidiaries under acquisition arrangements in which Capital Stock of the
company is issued as consideration for the acquisition; provided, however, if
any such Restricted Payment is made as a loan or advance to the Company it
shall be evidenced by a note subordinated in right of payment to the prior
payment in full of the Obligations; provided that no Default or Event of
Default shall have occurred and be continuing at the time, or shall occur as a
result, of any of the actions contemplated in clauses (ii) or (iv) above; and
provided further that the full amount of any such payment, purchase,
redemption, acquisition or retirement pursuant to the foregoing clauses (ii),
(iii), (iv), (v) and (vii) shall be counted in the calculation of the aggregate
amount of Restricted Payments expended pursuant to Section 8.07(a).
(c) Notwithstanding anything contained in Section 8.07(a)
or Section 8.07(b) (except for the transactions permitted in Section
8.07(b)(ii), (iii) and (v)), prior to the full and final repayment of the
Tranche B Loans (after the termination of the Total Tranche B Revolving Credit
Commitment) neither the Company nor any of its Restricted Subsidiaries shall
make any Restricted Payment to any holder of the Capital Stock of the Company
in respect of that holder's Capital Stock.
(d) The Company shall not permit or suffer to exist, or
permit any of its Restricted Subsidiaries to permit or suffer to exist, any
agreement or other contractual arrangement pursuant to which such Restricted
Subsidiary is prohibited or restricted from making loans or paying dividends to
any other Restricted Subsidiary or from paying dividends or making subordinate
loans to the Company; except for such restrictions existing under or by reason
of: (i) agreements binding upon any Person at the time such Person becomes a
Restricted Subsidiary (unless the agreement creating such consensual
encumbrance or consensual restriction was entered into in connection with, or
in contemplation of, such entity becoming a Subsidiary); (ii) any restrictions
existing under written agreements in effect on the Execution Date; (iii)
agreements or instruments relating to Indebtedness of Restricted Subsidiaries
pursuant to working capital facilities permitted under this Agreement; (iv)
customary restrictions in leases, purchase money financings and stock and asset
sales agreements; and (v) any agreement that amends, refinances or replaces any
agreement described in clauses (i), (ii) and (iii) above; provided that the
terms and conditions of any such restrictions are no less favorable to the
Lenders than those under the agreements so amended, refinanced or replaced.
SECTION 8.08. Net Worth. The Company will not permit
Tangible Net Worth determined without regard to any variations therein
resulting from the periodic translation of foreign currency denominated assets
into Dollars (a) at any time from the Execution Date through December 31, 1996,
to be less than $180,000,000 and (b) at any time during each fiscal year
thereafter to be less than an amount equal to the sum of (i) the
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amount of Tangible Net Worth required under this Section 8.08 during the
immediately preceding year, (ii) 50% of positive Consolidated Net Income for the
immediately preceding year; provided, however, if for any fiscal year, the
portion of the fiscal year ended at such date Consolidated Net Income is less
than zero, Consolidated Net Income for such fiscal year shall be zero and (iii)
(A) 100% of the net cash proceeds received by the Company from all sales of its
Capital Stock during the period from the Execution Date to the end of such
fiscal year, plus (B) (1) the fair market value of the equity of the Company
issued in exchange for the assets or securities of any Person less (2) all
intangibles of the types described in clauses (b) through (f) of the definition
of Tangible Net Worth.
SECTION 8.09. Other Financial Covenants. (a) The Company
will not permit Consolidated Indebtedness to exceed the following percentages
of Total Capitalization at the end of any fiscal quarter occurring during the
following periods:
Period Percentage
------ ----------
from the Effective Date through March 31, 1997 50%
from April 1, 1997 through December 31, 1997 45%
at the end of each fiscal quarter thereafter 35%
(b) The Company will not permit the Fixed Charge Coverage
Ratio at the end of any fiscal quarter to be less than 1.25 to 1.0.
(c) The Company will maintain the Leverage Ratio at less
than the following at the end of any fiscal quarter occurring during the
following periods:
Period Ratio
------ -----
from the Effective Date through March 31, 1997 3.50
from April 1, 1997 through December 31, 1997 3.25
at the end of each fiscal quarter thereafter 3.00
SECTION 8.10. Limitation on Transactions with Affiliates.
The Company will not, and will not permit any Restricted Subsidiary to,
directly or indirectly, conduct any business or enter into, renew, extend or
permit to exist any transaction (including the purchase, sale, lease or
exchange of any assets or the rendering of any service) or series of related
transactions with any Affiliate of the Company or any holder of 5% or more of
the
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Company's Capital Stock (other than a Wholly Owned Restricted Subsidiary or
employee benefit plan or plan trust) (an "Affiliate Transaction") on terms that
are less favorable to the Company or such Restricted Subsidiary, as the case may
be, than would be available in a comparable arm's length transaction with a
Person who is not an Affiliate or 5% stockholder of the Company or such
Restricted Subsidiary. In addition, the Company will not, and will not permit
any Restricted Subsidiary to, enter into an Affiliate Transaction, or any series
of related Affiliate Transactions, unless (a) with respect to a transaction or
series of related transactions involving aggregate consideration equal to or
greater than $1,000,000, such transaction is approved by a majority of the Board
of Directors of the Company, including a majority of the disinterested
directors; and (b) with respect to such transaction or series of related
transactions involving aggregate consideration equal to or greater than
$5,000,000, the Company has delivered to the Agent and the Lenders an opinion of
a nationally recognized investment banking firm to the effect that such
transaction or transactions are fair to the Company or such Restricted
Subsidiary, as the case may be, from a financial point of view. Notwithstanding
the foregoing, the restrictions set forth in this covenant will not apply to (i)
the payment of reasonable and customary regular fees to directors of the Company
who are not employees of the Company; (ii) loans and advances to officers,
directors and employees of the Company and its Subsidiaries for travel,
entertainment and moving and other relocation expenses made in direct
furtherance and in the ordinary course of business of the Company and its
Subsidiaries; (iii) any other transaction with any employee, officer or director
of the Company or any of its Subsidiaries pursuant to employee benefit or
compensation arrangements entered into in the ordinary course of business and
approved by the Board of Directors of the Company or the Board of Directors of
such Restricted Subsidiary permitted by this Agreement; (iv) customary
underwriting or similar transactions with an investment banking Affiliate; (v)
any transaction entered into in the ordinary course of business with the Company
or a Restricted Subsidiary; (vi) transactions in the ordinary course of business
between the Company and its Restricted Subsidiaries permitted by this Agreement;
or (vii) the making of any Restricted Payment otherwise permitted by this
Agreement; provided, however, the aggregate principal amount of loans and
advances made pursuant to clauses (ii) and (iii) shall not exceed $2,000,000 at
any time outstanding.
SECTION 8.11. Ownership of Subsidiaries. Except as expressly
permitted in Section 8.02, the Company shall not at any time cease to own,
beneficially and of record, directly or indirectly, 100% of the Capital Stock
(except for director's qualifying shares) of each other Loan Party and each of
its Restricted Subsidiaries.
SECTION 8.12. Limitation on Sale-Leaseback Transactions. The
Company will not, and will not permit any Restricted Subsidiary to, enter into
any Sale-Leaseback Transaction unless (a) the Company or such Restricted
Subsidiary, as the case may be, would be able to incur Indebtedness in an
amount equal to the Attributable Debt with respect to such Sale-Leaseback
Transaction and (b) the Company or such Restricted Subsidiary receives
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net proceeds from such Sale-Leaseback Transaction at least equal to the fair
market value of the assets so sold (as determined by the Board of Directors of
the Company, whose determination in good faith evidenced by a Board Resolution
shall be conclusive) and such proceeds (the "Sale Leaseback Proceeds") are
applied as a prepayment of the Tranche B Revolving Credit Loans pursuant to
Section 4.05.
SECTION 8.13. Change in Accounting. The Company will not,
and will not permit any of its Restricted Subsidiaries to, change its method of
accounting except for immaterial changes in methods, changes permitted by GAAP
in which the Company's auditors concur and changes required by GAAP.
ARTICLE IX
GUARANTY
SECTION 9.01. Guaranty. (a) In consideration of, and in
order to induce the Lenders to make the Loans and the Issuing Bank to maintain
the Existing Letters of Credit and to issue new Letters of Credit hereunder,
each Subsidiary Guarantor hereby absolutely, unconditionally and irrevocably,
jointly and severally guarantees the punctual payment and performance when due,
whether at stated maturity, by acceleration or otherwise, of the Obligations,
and all other obligations and covenants of the Company now or hereafter
existing under this Agreement, the Notes and the other Loan Documents to which
the Company is a party whether for principal, interest (including interest
accruing or becoming owing both prior to and subsequent to the commencement of
any proceeding against or with respect to the Company under any chapter of
Title 11 of the United States Code, as now or hereafter in effect, or any
successor thereto (the "Bankruptcy Code"), Fees, commissions, expenses
(including reasonable attorneys' fees and expenses) or otherwise, subject
however to the limitation set forth in Section 9.04 (all such obligations being
the "Guaranteed Obligations"). Each Subsidiary Guarantor agrees to pay any and
all expenses incurred by each Lender and the Agent in enforcing this Guaranty
against such Subsidiary Guarantor.
(b) Each Subsidiary Guarantor agrees that the Obligations
may at any time and from time to time exceed the limitations set forth in
Section 9.04 without impairing this Guaranty or affecting the rights and
remedies of the Agent and the Lenders hereunder.
(c) This Guaranty is an absolute, unconditional, present and
continuing guaranty of payment and not of collectibility and is in no way
conditioned upon any attempt to collect from the Company, any other Loan Party,
any Collateral or any other action, occurrence or circumstance whatsoever.
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SECTION 9.02. Continuing Guaranty. (a) Each Subsidiary
Guarantor guarantees that the Obligations and the Guaranteed Obligations will
be paid strictly in accordance with the terms of this Agreement, the Notes and
the other Loan Documents. Each Subsidiary Guarantor agrees that, to the
maximum extent permitted by applicable law, the Obligations, Guaranteed
Obligations and Loan Documents may be extended or renewed, and Loans repaid and
reborrowed in whole or in part, without notice to or assent by such Subsidiary
Guarantor, and that it will remain bound upon this Guaranty notwithstanding any
extension, renewal or other alteration of any Obligations, Guaranteed
Obligations or Loan Documents, or any repayment and reborrowing of Loans. To
the maximum extent permitted by applicable law, except as otherwise expressly
provided in this Agreement or any other Loan Document to which such Subsidiary
Guarantor is a party, the obligations of each Subsidiary Guarantor under this
Guaranty shall be absolute, unconditional and irrevocable, and shall be
performed strictly in accordance with the terms hereof under any circumstances
whatsoever, including:
(i) any modification, amendment, supplement, renewal,
extension for any period, increase, decrease, alteration or rearrangement
of all or any part of the Obligations or the Guaranteed Obligations, or
of the Notes, or this Agreement or any other Loan Document executed in
connection herewith, or any contract or understanding among the Company,
any Subsidiary Guarantor, the Agent and/or the Lenders, or any other
Person, pertaining to the Guaranteed Obligations;
(ii) any adjustment, indulgence, forbearance or compromise
that might be granted or given by the Lenders to the Company or any
Subsidiary Guarantor or any other Person liable on the Obligations or the
Guaranteed Obligations;
(iii) the insolvency, bankruptcy, arrangement, adjustment,
composition, liquidation, disability, dissolution or lack of power of the
Company, any Subsidiary Guarantor or any other Person at any time liable
for the payment of all or part of the Guaranteed Obligations; or any
dissolution of the Company or any Subsidiary Guarantor, or any sale,
lease or transfer of any or all of the assets of the Company or any
Subsidiary Guarantor, or any changes in the shareholders of the Company
or any Subsidiary Guarantor; or any reorganization of the Company or any
Subsidiary Guarantor;
(iv) the invalidity, illegality or unenforceability of all or
any part of the Obligations, the Guaranteed Obligations, or any document
or agreement executed in connection with the Obligations or the
Guaranteed Obligations, for any reason whatsoever, including, without
limitation, the fact that (A) the Obligations or the Guaranteed
Obligations, or any part thereof, exceeds the amount permitted by law,
(B) the act of creating the Obligations, the Guaranteed Obligations or
any part thereof is
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ultra vires, (C) the officers or representatives executing the documents
or otherwise creating the Obligations or the Guaranteed Obligations acted
in excess of their authority, (D) the Obligations or the Guaranteed
Obligations or any part thereof violate applicable usury laws, (E) the
Company or any Subsidiary Guarantor has valid defenses, claims and offsets
(whether at law or in equity, by agreement or by statute) which render the
Obligations or the Guaranteed Obligations wholly or partially
uncollectible from the Company or such Subsidiary Guarantor, (F) the
creation, performance or repayment of the Obligations or the Guaranteed
Obligations (or execution, delivery and performance of any document or
instrument representing part of the Obligations or the Guaranteed
Obligations or executed in connection with the Obligations or the
Guaranteed Obligations, or given to secure the repayment of the
Obligations or the Guaranteed Obligations) is illegal, uncollectible,
legally impossible or unenforceable, or (G) this Agreement, any other Loan
Document, or any other document or instrument pertaining to the
Obligations or the Guaranteed Obligations has been forged or otherwise is
irregular or not genuine or authentic;
(v) any full or partial release of the liability of the
Company or any Subsidiary Guarantor on the Obligations, the Guaranteed
Obligations or any part thereof, or any other Person now or hereafter
liable, whether directly or indirectly, jointly, severally, or jointly
and severally, to pay, perform, guarantee or assure the payment of the
Obligations, the Guaranteed Obligations or any part thereof; it being
recognized, acknowledged and agreed by each Subsidiary Guarantor that
such Subsidiary Guarantor may be required to pay the Obligations or the
Guaranteed Obligations in full without assistance or support of any other
Person, and such Subsidiary Guarantor has not been induced to enter into
this Guaranty on the basis of a contemplation, belief, understanding or
agreement that any other Person will be liable to perform the Obligations
or the Guaranteed Obligations, or that the Agent or any Lender will look
to any other Person to perform the Guaranteed Obligations;
(vi) the taking or accepting of any other security,
collateral or guaranty, or other assurance of payment, for all or any
part of the Obligations or the Guaranteed Obligations;
(vii) any release, surrender, exchange, subordination,
deterioration, waste, loss or impairment of any collateral, property or
security, at any time existing in connection with, or assuring or
securing payment of, all or any part of the Obligations or the Guaranteed
Obligations;
(viii) the failure of the Agent, the Lenders or any other
Person to exercise diligence or reasonable care in the preservation,
protection, enforcement, sale or other handling or treatment of all or
any part of such collateral, property or security;
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(ix) the fact that any collateral, security or Lien
contemplated or intended to be given, created or granted as security for
the repayment of the Obligations or the Guaranteed Obligations shall not
be properly perfected or created, or shall prove to be unenforceable or
subordinate to any other Lien; it being recognized and agreed by each
Subsidiary Guarantor that such Subsidiary Guarantor is not entering into
this Guaranty in reliance on, or in contemplation of the benefits of, the
validity, enforceability, collectibility or value of any of the
collateral for the Obligations or the Guaranteed Obligations;
(x) any payment by the Company or any Subsidiary Guarantor
to the Agent or any Lender is held to constitute a preference under
bankruptcy laws, or for any reason either the Agent or any Lender is
required to refund such payment or pay such amount to the Company or any
other Person; or
(xi) any other action taken or omitted to be taken with
respect to this Agreement, any other Loan Document, the Obligations, the
Guaranteed Obligations, or the security and collateral therefor, whether
or not such action or omission prejudices any Subsidiary Guarantor or
increases the likelihood that any Subsidiary Guarantor will be required
to pay the Obligations or the Guaranteed Obligations pursuant to the
terms hereof; it is the unambiguous and unequivocal intention of each
Subsidiary Guarantor that such Subsidiary Guarantor shall be obligated to
pay the Obligations or the Guaranteed Obligations when due,
notwithstanding any occurrence, circumstance, event, action, or omission
whatsoever, whether contemplated or uncontemplated, and whether or not
otherwise or particularly described herein, except for the full and final
payment and satisfaction of the Obligations or the Guaranteed Obligations
after the termination of the Commitments of all Lenders and the
expiration or termination of all Letters of Credit.
(b) Each Subsidiary Guarantor further agrees that, as
between such Subsidiary Guarantor, on the one hand, and the Lenders and the
Agent, on the other hand, (i) the maturity of the Guaranteed Obligations may be
accelerated as provided in Article X for the purposes of this Guaranty,
notwithstanding any stay, injunction or other prohibition preventing such
acceleration of the Obligations or the Guaranteed Obligations, and (ii) in the
event of any acceleration of the Obligations as provided in Article X, the
Guaranteed Obligations (whether or not due and payable) shall forthwith become
due and payable by each Subsidiary Guarantor for the purpose of this Guaranty.
SECTION 9.03. Effect of Debtor Relief Laws. If after receipt
of any payment of, or proceeds of any security applied (or intended to be
applied) to the payment of all or any part of the Obligations or the Guaranteed
Obligations, the Agent or any Lender is for any reason compelled to surrender
or voluntarily surrenders, such payment or proceeds
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any Person (a) because such payment or application of proceeds is or may be
avoided, invalidated, declared fraudulent, set aside, determined to be void or
voidable as a preference, fraudulent conveyance, fraudulent transfer,
impermissible set-off or a diversion of trust funds or (b) for any other reason,
including (i) any judgment, decree or order of any court or administrative body
having jurisdiction over the Agent, any Lender or any of their respective
properties or (ii) any settlement or compromise of any such claim effected by
the Agent or any Lender with any such claimant (including the Company), then the
Obligations, the Guaranteed Obligations or part thereof intended to be satisfied
shall be reinstated and continue, and this Guaranty shall continue in full force
as if such payment or proceeds have not been received, notwithstanding any
revocation thereof or the cancellation of any Note or any other instrument
evidencing any of the Obligations or Guaranteed Obligations or otherwise; and
the Subsidiary Guarantors, jointly and severally, shall be liable to pay the
Agent and the Lenders, and hereby do indemnify the Agent and the Lenders and
hold them harmless for the amount of such payment or proceeds so surrendered and
all reasonable expenses (including reasonable attorneys' fees, court costs and
expenses attributable thereto) incurred by the Agent or any Lender in the
defense of any claim made against it that any payment or proceeds received by
the Agent or any Lender in respect of all or part of the Obligations or the
Guaranteed Obligations must be surrendered. The provisions of this paragraph
shall survive the termination of this Guaranty, and any satisfaction and
discharge of the Company by virtue of any payment, court order or any federal or
state law.
SECTION 9.04. General Limitation on Guaranteed Obligations. In
any action or proceeding involving any state corporate law, or any state or
federal bankruptcy, insolvency, reorganization or other law affecting the
rights of creditors generally, if the obligations of any Subsidiary Guarantor
under Section 9.01 would otherwise, taking into account the provisions of
Section 9.05, be held or determined to be void, invalid or unenforceable, or
subordinated to the claims of any other creditors, on account of the amount of
its liability under Section 9.01, then, notwithstanding any other provision
hereof to the contrary, the amount of such liability shall, without any further
action by such Subsidiary Guarantor, any Lender, the Agent or any other Person,
be automatically limited and reduced to the highest amount that is valid and
enforceable and not subordinated to the claims of other creditors as determined
in such action or proceeding.
SECTION 9.05. Rights of Contribution. The Subsidiary Guarantors
hereby agree, as between themselves, that if any Subsidiary Guarantor shall
become an Excess Funding Obligor (as defined below) by reason of the payment by
such Subsidiary Guarantor of any Guaranteed Obligations, each other Subsidiary
Guarantor shall, on demand of such Excess Funding Obligor (but subject to the
next sentence), pay to such Excess Funding Obligor an amount equal to such
Subsidiary Guarantor's Pro Rata Share (as defined below and determined, for
this purpose, without reference to the properties, debts and liabilities of
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such Excess Funding Obligor) of the Excess Payment (as defined below) in respect
of such Guaranteed Obligations.
For purposes of this Section 9.05, (i) "Excess Funding Obligor"
shall mean, in respect of any Guaranteed Obligations, a Subsidiary Guarantor
that has paid an amount in excess of its Pro Rata Share of such Guaranteed
Obligations, (ii) "Excess Payment" shall mean, in respect of any Guaranteed
Obligations, the amount paid by an Excess Funding Obligor in excess of its Pro
Rata Share of such Guaranteed Obligations and (iii) "Pro Rata Share" shall
mean, for any Subsidiary Guarantor, the ratio (expressed as a percentage) of
(x) the amount by which the aggregate fair saleable value of all properties of
such Subsidiary Guarantor on the date of this Agreement exceeds the amount of
all the debts and liabilities of such Subsidiary Guarantor (including
contingent, subordinated, unmatured and unliquidated liabilities, but excluding
the obligations that have been guaranteed by such Subsidiary Guarantor in
Section 9.01) to (y) the amount by which the aggregate fair saleable value of
all assets of the Company and all the Subsidiary Guarantors exceeds the amount
of all the debts and liabilities (including contingent, subordinated, unmatured
and unliquidated liabilities, but excluding the obligations of the Company and
the Subsidiary Guarantors hereunder) of the Company and all the Subsidiary
Guarantors, all as of the Execution Date.
SECTION 9.06. Subrogation. Notwithstanding any payment or
payments made by any Subsidiary Guarantor hereunder, or any set-off or
application by the Agent or any Lender of any security or of any credits or
claims, no Subsidiary Guarantor will assert or exercise any rights of the Agent
or any Lender or of such Subsidiary Guarantor against the Company to recover
the amount of any payment made by such Subsidiary Guarantor to the Agent or any
Lender hereunder by way of any claim, remedy or subrogation, reimbursement,
exoneration, contribution, indemnity, participation or otherwise arising by
contract, by statute, under common law or otherwise, and such Subsidiary
Guarantor shall not have any right of recourse to or any claim against assets
or property of the Company, until all of the Guaranteed Obligations are paid in
full after the termination of the Commitments of all Lenders and the expiration
or termination of all Letters of Credit. If any amount shall nevertheless be
paid to a Subsidiary Guarantor by the Company or another Subsidiary Guarantor
prior to payment in full of the Obligations, such amount shall be held in trust
for the benefit of the Agent and the Lenders and shall forthwith be paid to the
Agent to be credited and applied to the Guaranteed Obligations, whether matured
or unmatured. The provisions of this paragraph shall survive the termination
of this Guaranty, and any satisfaction and discharge of the Company by virtue
of any payment, court order or any federal or state law.
SECTION 9.07. Subordination. If any Subsidiary Guarantor
becomes the holder of any indebtedness payable by the Company or another
Subsidiary Guarantor (including any Permitted Business Investment made by any
such Subsidiary Guarantor to the
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Company), each Subsidiary Guarantor hereby subordinates all indebtedness owing
to it from the Company or such other Subsidiary Guarantor to all indebtedness of
the Company or such other Subsidiary Guarantor to the Agent and the Lenders, and
agrees that during the continuance of any Default or Event of Default it shall
not accept any payment on the same until the first to occur of (a) the date such
Default or Event of Default no longer exists and (b) payment in full of the
Obligations of the Company under this Agreement and the other Loan Documents
after the termination of the Commitments of the Lenders and the termination or
expiration of the Letters of Credit, the Notes and all other Loan Documents,
and, while any Default or Event of Default exists, shall in no circumstance
whatsoever attempt to set-off or reduce any obligations hereunder because of
such indebtedness. If any amount shall nevertheless be paid to a Subsidiary
Guarantor by the Company or another Subsidiary Guarantor prior to payment in
full of the Guaranteed Obligations and, while any Default or Event of Default
exists, such amount shall be held in trust for the benefit of the Agent and the
Lenders and shall forthwith be paid to the Agent to be credited and applied to
the Guaranteed Obligations, whether matured or unmatured.
SECTION 9.08. Waiver. Each Subsidiary Guarantor hereby waives promptness,
diligence, notice of acceptance and any other notice with respect to any of the
Guaranteed Obligations and this Guaranty and waives presentment, demand for
payment, notice of intent to accelerate, notice of dishonor or nonpayment and
any requirement that the Agent or any Lender institute suit, collection
proceedings or take any other action to collect the Guaranteed Obligations,
including any requirement that the Agent or any Lender protect, secure, perfect
or insure any Lien against any property subject thereto or exhaust any right or
take any action against the Company or any other Person or any collateral (it
being the intention of the Agent, the Lenders and each Subsidiary Guarantor
that this Guaranty is to be a guaranty of payment and not of collection). It
shall not be necessary for the Agent or any Lender, in order to enforce any
payment by any Subsidiary Guarantor hereunder, to institute suit or exhaust its
rights and remedies against the Company, any other Subsidiary Guarantor or any
other Person, including others liable to pay any Guaranteed Obligations, or to
enforce its rights against any security ever given to secure payment thereof.
Each Subsidiary Guarantor hereby expressly waives to the maximum extent
permitted by applicable law each and every right to which it may be entitled by
virtue of the suretyship laws of the State of New York or any other state in
which it may be located, including any and all rights it may have pursuant to
Rule 31, Texas Rules of Civil Procedure, Section 17.001 of the Texas Civil
Practice and Remedies Code and Chapter 34 of the Texas Business and Commerce
Code. Each Subsidiary Guarantor hereby waives marshaling of assets and
liabilities, notice by the Agent or any Lender of any indebtedness or liability
to which such Lender applies or may apply any amounts received by such Lender,
and of the creation, advancement, increase, existence, extension, renewal,
rearrangement or modification of the Guaranteed Obligations. Each Subsidiary
Guarantor expressly waives, to the extent permitted by applicable law, the
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benefit of any and all laws providing for exemption of property from execution
or for valuation and appraisal upon foreclosure.
SECTION 9.09. Full Force and Effect. This Guaranty is a
continuing guaranty and shall remain in full force and effect until all of the
Guaranteed Obligations under this Agreement and the other Loan Documents and
all other amounts payable under this Guaranty have been paid in full (after the
termination of the Commitments of the Lenders and the termination or expiration
of the Letters of Credit). All rights, remedies and powers provided in this
Guaranty may be exercised, and all waivers contained in this Guaranty may be
enforced, only to the extent that the exercise or enforcement thereof does not
violate any provisions of applicable law which may not be waived.
ARTICLE X
EVENTS OF DEFAULT AND REMEDIES
SECTION 10.01. Events of Default and Remedies. If any of the
following events ("Events of Default") shall occur and be continuing:
(a) (i) any installment of principal on any Note or any
Unpaid Drawing shall not be paid on the date on which such payment is due or
(ii) any payment of interest on any such Note or Unpaid Drawing or any other
amount due hereunder or any other Loan Document shall not be paid within five
calendar days following the date on which such payment is due; or
(b) any representation or warranty made or, for purposes of
Article V, deemed made by or on behalf of any Loan Party herein, at the
direction of any Loan Party or by any Loan Party in any other Loan Document or
in any document, certificate or financial statement delivered in connection
with this Agreement or any other Loan Document shall prove to have been
incorrect in any material respect when made or deemed made or reaffirmed, as
the case may be; or
(c) any Loan Party shall fail to perform or observe any
covenant contained in Article VIII of this Agreement or fails to give any
notice required by Section 7.01(h) or Section 7.01(i); or
(d) any Loan Party shall fail to perform or observe any
other term, covenant or agreement contained in this Agreement (other than those
specified in Section 10.01(a), Section 10.01(b) or Section 10.01(c)) or any
other Loan Document to which it is a party and, in any event, such failure
shall remain unremedied for 30 calendar days after the earlier of
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(i) written notice of such failure shall have been given to a Responsible
Officer of the Company by the Agent or any Lender or, (ii) a Responsible Officer
of any Loan Party becomes aware of such failure; or
(e) the Company or any of its Restricted Subsidiaries (i)
fails to make (whether as primary obligor or as guarantor or other surety) any
principal payment of or interest or premium, if any, on any Indebtedness (other
than the Notes or the Guaranty) beyond any period of grace provided with
respect thereto (not to exceed 30 days), provided that the aggregate amount of
all Indebtedness as to which such a payment default shall occur and be
continuing is equal to or exceeds $5,000,000, or (ii) fails to duly observe,
perform or comply with any agreement with any Person or any term or condition
of any instrument, if such failure, either individually or in the aggregate,
shall have caused or shall have the ability to cause the acceleration of the
payment of Indebtedness with an aggregate face amount which is equal to or
exceeds $5,000,000; or
(f) the entry by a court having jurisdiction in the premises
of (i) a decree or order for relief in respect of the Company or any of its
Restricted Subsidiaries in an involuntary case or proceeding under any
applicable federal or state bankruptcy, insolvency, reorganization or other
similar law or (ii) a decree or order adjudging the Company or any of its
Restricted Subsidiaries bankrupt or insolvent, or approving as properly filed a
petition seeking reorganization, arrangement, adjustment or composition of or
in respect of the Company or any of its Restricted Subsidiaries under any
applicable federal, state or foreign law, or appointing a custodian, receiver,
liquidator, assignee, trustee, sequestrator or other similar official of the
Company or any of its Restricted Subsidiaries or of any substantial part of its
property, or ordering the winding up or liquidation of its affairs, and the
continuance of any such decree or order for relief or any such other decree or
order that shall be unstayed and in effect for a period of 60 consecutive days;
or
(g) the commencement by the Company or any of its Restricted
Subsidiaries of a voluntary case or proceeding under any applicable federal,
state or foreign bankruptcy, insolvency, reorganization or other similar law or
of any other case or proceeding to be adjudicated as bankrupt or insolvent, or
the consent by the Company or any of its Restricted Subsidiaries to the entry
of a decree or order for relief in respect of the Company or such Restricted
Subsidiary in an involuntary case or proceeding under any applicable federal,
state or foreign bankruptcy, insolvency, reorganization or other similar law or
to the commencement of any bankruptcy or insolvency case or proceeding against
it, or the filing by the Company or any of its Restricted Subsidiaries of a
petition or answer or consent seeking reorganization or relief under any
applicable federal, state or foreign law, or the consent by the Company or any
of its Restricted Subsidiaries to the filing of such petition or the appointment
of or taking possession by a custodian, receiver, liquidator, assignee, trustee,
sequestrator or similar official of the Company or such Restricted Subsidiary or
of
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any substantial part of its property, or the making by it of an assignment for
the benefit of creditors, or the admission by the Company or any of its
Restricted Subsidiaries in writing of its inability to pay its debts generally
as they become due, or the taking of corporate action by the Company or any of
its Restricted Subsidiaries in furtherance of any such action; or
(h) there shall be commenced against the Company or any of
its Restricted Subsidiaries any case, proceeding or other action seeking
issuance of a warrant of attachment, execution, distraint or similar process
against all or any substantial part of its assets which results in the entry of
an order for any such relief which shall not have been vacated, discharged, or
stayed or bonded pending appeal within 60 days from the entry thereof; or
(i) the Company or any of its Restricted Subsidiaries shall
take any action in furtherance of, or indicating its consent to, approval of,
or acquiescence in, any of the acts set forth in clause (f), (g) or (h); or
(j) the Company or any of its Restricted Subsidiaries shall
generally not, or shall be unable to, or shall admit in writing its inability
to, pay its debts as they become due; or
(k) any Loan Document, any other agreement or security
document executed in connection with or pursuant to any Loan Document shall
(other than with the consent of the Agent and the Lenders), at any time after
its execution and delivery and for any reason, cease to be in full force and
effect in any material respect, or shall be declared to be null and void, or
shall cease to give the Agent the Liens, rights and privileges purported to be
created thereby, or the validity or enforceability thereof shall be contested
by any Loan Party or any Loan Party shall deny that it has any or further
liability or obligation thereunder, or any Lien granted to the Agent on any of
the Collateral becomes unperfected or is determined to be void or
unenforceable, or Liens in favor of the Agent contemplated by this Agreement or
the other Loan Documents shall prove not to have been effectively granted,
recorded or filed or not to have the priority contemplated by any relevant
document, or such Liens shall be subordinated for any reason; or
(l) any Plan shall incur an "accumulated funding deficiency"
(as defined in Section 412 of the Code or Section 302 of ERISA) which
(individually or collectively) exceeds $2,000,000, whether or not waived, or a
waiver of the minimum funding standard or extension of any amortization period
is sought or granted under Section 412 of the Code with respect to a Plan; any
proceeding shall have occurred or is reasonably likely to occur by the PBGC
under Section 4069(a) of ERISA to impose liability on the Company, any of its
Restricted Subsidiaries or an ERISA Affiliate which (individually or
collectively) exceeds $1,000,000; any Plan shall have an Unfunded Current
Liability in excess of $1,000,000; any
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required contribution to a Plan or Multiemployer Plan in excess of $1,000,000
shall not have been made within 15 days of the date such contribution is due;
the Company, any of its Restricted Subsidiaries or an ERISA Affiliate shall have
become or is reasonably likely to incur any unfunded liability reportable under
Statement of Financial Accounting Standards Number 106 for post-retirement
benefits with respect to one or more welfare benefit plans (as defined in
Section 3(1) of ERISA) which (individually or collectively) exceeds $1,000,000;
or the Company, any of its Restricted Subsidiaries or any ERISA Affiliate has
incurred or is reasonably likely to incur a liability to or on account of a Plan
or Multiemployer Plan under Section 515, 4062, 4063, 4064, 4201 or 4204 of
ERISA, and there shall result (individually or collectively) from any such event
or events a material risk of either (i) the imposition of a Lien(s) upon, or the
granting of a security interest(s) in, the assets of the Company, any of its
Restricted Subsidiaries and/or an ERISA Affiliate securing an amount(s) equal to
or exceeding $1,000,000, or (ii) the Company, any of its Restricted Subsidiaries
and/or an ERISA Affiliate incurring a liability(ies) or obligation(s) with
respect thereto equal to or exceeding $1,000,000; or
(m) a judgment or order shall be entered against the Company
or any of its Restricted Subsidiaries, which with other outstanding judgments
and orders entered against the Company and its Restricted Subsidiaries equals
or exceeds $5,000,000 in the aggregate (to the extent not covered by insurance
as to which the respective insurer has acknowledged coverage), and (i) within
30 days after entry thereof such judgment shall not have been discharged or
execution thereof stayed pending appeal or, within 30 days after the expiration
of any such stay, such judgment shall not have been discharged, or (ii) any
enforcement proceeding shall have been commenced (and not stayed) by any
creditor upon such judgment;
then, and in any such event, and at any time thereafter, if any Event of
Default shall then be continuing, the Agent, upon the written request of the
Majority Lenders, shall by written notice (excluding telecopy) to the Company
(a "Notice of Default") take any or all of the following actions, without
prejudice to the rights of the Agent, any Lender or other holder of any of the
Obligations to enforce its claims against any Loan Party (provided that, if an
Event of Default specified in Section 10.01(f) or Section 10.01(g) shall occur
with respect to the Company or any Restricted Subsidiary, the result of which
would occur upon the giving of a Notice of Default as specified in clauses (i),
(ii) and (v) below, shall occur automatically without the giving of any Notice
of Default): (i) declare the Total Tranche A Revolving Credit Commitment and
the Total Tranche B Revolving Credit Commitment terminated, whereupon the
Commitments of the Lenders shall forthwith terminate immediately and any Tranche
A Revolving Credit Commitment Fee and any Tranche B Revolving Credit Commitment
Fee shall forthwith become due and payable without any other notice of any kind;
(ii) declare the principal of and any accrued interest in respect of all Loans,
and all obligations owing hereunder and under the other Loan Documents, to be,
whereupon the same shall become, forthwith due and payable without presentment,
demand, notice of
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demand or of dishonor and nonpayment, protest, notice of protest, notice of
intent to accelerate, declaration or notice of acceleration or any other notice
of any kind, all of which are hereby waived by each Loan Party; (iii) exercise
any rights or remedies under any Security Document or other document securing
any of the obligations and under the other Loan Documents; (iv) terminate any
Letter of Credit which may be terminated in accordance with its terms (whether
by the giving of written notice to the beneficiary or otherwise); and (v) direct
the Company to pay, and the Company agrees that upon receipt of such notice (or
upon the occurrence of an Event of Default specified in Section 10.01(f) or
Section 10.01(g)), it will pay to the Agent at the Agent's Payment Office such
additional amount of cash as is equal to the aggregate Stated Amount of all
Letters of Credit then outstanding to be held in an interest bearing account
with and under the sole dominion and control of the Agent as security for the
Obligations and the other obligations of the Loan Parties hereunder and under
the Notes and the other Loan Documents and the Loan Parties hereby grant the
Agent for the equal and ratable benefit of the Secured Parties a security
interest in such amount of cash.
SECTION 10.02. Other Remedies. Upon the occurrence and
during the continuance of any Event of Default, the Agent, acting at the
request of the Majority Lenders, may proceed to protect and enforce its rights,
either by suit in equity or by action at law or both, whether for the specific
performance of any covenant or agreement contained in this Agreement or in any
other Loan Document or in aid of the exercise of any power granted in this
Agreement or in any other Loan Document; or may proceed to enforce the payment
of all amounts owing to the Agent and the Lenders under the Loan Documents and
interest thereon in the manner set forth herein or therein; it being intended
that no remedy conferred herein or in any of the other Loan Documents is to be
exclusive of any other remedy, and each and every remedy contained herein or in
any other Loan Document shall be cumulative and shall be in addition to every
other remedy given hereunder and under the other Loan Documents now or
hereafter existing at law or in equity or by statute or otherwise.
SECTION 10.03. Application of Moneys During Continuation of
Event of Default. (a) So long as an Event of Default of which the Agent shall
have given notice to the Lenders shall continue, all moneys received by the
Agent (i) from any Loan Party under the Loan Documents, or (ii) as a result of
the enforcement of the rights and remedies of the Agent and the other Secured
Parties pursuant to the Loan Documents (including any sale of or realization
upon any Collateral) or otherwise, shall, except as otherwise provided in the
Security Documents or otherwise required by law, be distributed by the Agent on
the dates selected by the Agent (individually, a "Distribution Date" and
collectively, the "Distribution Dates") as follows:
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first, to payment of the reasonable expenses of any sale or other
realization of the Collateral, including reasonable compensation to the
Agent, agents of the Agent and counsel to the Agent, and all reasonable
expenses, liabilities and advances incurred or made by the Agent in
connection therewith, and any other unreimbursed expenses for which the
Agent or any other Secured Party is to be reimbursed pursuant to Section
12.04 or pursuant to the Security Documents and unpaid Fees owing to the
Agent pursuant to Section 4.01(d);
second, to the ratable payment of accrued but unpaid interest on the
Obligations;
third, to the ratable payment of unpaid principal of the Obligations;
fourth, to the ratable payment of all other amounts payable by the Loan
Parties hereunder;
fifth, to the ratable payment of all other Obligations, until all
Obligations shall have been paid in full; and
finally, to payment to the Loan Parties, or their respective successors
or assigns, or as a court of competent jurisdiction may direct, of any
surplus then remaining from such proceeds.
(b) The term "unpaid" as used in this Section 10.03 shall
mean all Obligations outstanding as of a Distribution Date (including any
amounts unpaid under clause (v) of the last sentence of Section 10.01) as to
which prior distributions have not been made, after giving effect to any
adjustments which are made pursuant to Section 12.06 of which the Agent shall
have been notified.
ARTICLE XI
THE AGENT
SECTION 11.01. Authorization and Action. Subject to Section
11.06, each Lender hereby irrevocably appoints and authorizes the Agent to act
on its behalf and to exercise such powers under this Agreement and the other
Loan Documents as are specifically delegated to or required of the Agent by the
terms hereof, together with such powers as are reasonably incidental thereto.
The Agent may perform any of its duties hereunder by or through its agents and
employees. The duties of the Agent shall be mechanical and administrative in
nature; the Agent shall not have by reason of this Agreement or any other Loan
Documents a fiduciary relationship in respect of any Lender; and nothing in
this
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Agreement or any other Loan Document, expressed or implied, is intended
to, or shall be so construed as to, impose upon the Agent any obligations in
respect of this Agreement or any other Loan Document except as expressly set
forth herein or therein. As to any matters not expressly provided for by this
Agreement, the Notes or the other Loan Documents (including enforcement of the
Liens created by the Security Documents and enforcement or collection of the
Notes), the Agent shall not be required to exercise any discretion or take any
action, but shall be required to act or to refrain from acting (and shall be
fully protected in so acting or refraining from acting) upon the instructions
of the Majority Lenders, and such instructions shall be binding upon all
Lenders and all holders of Notes and the Obligations; provided, however, that
the Agent shall not be required to take any action which exposes the Agent to
personal liability or which is contrary to this Agreement or applicable law.
SECTION 11.02. Agent's Reliance, Etc. (a) Neither the Agent
nor any of its directors, officers, agents or employees shall be liable to any
Lender for any action taken or omitted to be taken by it or them under or in
connection with this Agreement, the Notes or any of the other Loan Documents
(i) with the consent or at the request of the Majority Lenders or (ii) in the
absence of its or their own gross negligence or willful misconduct (IT BEING
THE EXPRESS INTENTION OF THE PARTIES HERETO THAT THE AGENT AND ITS DIRECTORS,
OFFICERS, AGENTS AND EMPLOYEES SHALL HAVE NO LIABILITY FOR ACTIONS AND
OMISSIONS UNDER THIS SECTION 11.02 RESULTING FROM THEIR SOLE OR CONCURRENT
NEGLIGENCE).
(b) Without limitation of the generality of the foregoing,
the Agent: (i) may treat the payee of each Note and the Obligations as the
holder thereof until the Agent receives written notice of the assignment or
transfer thereof signed by such payee and in form satisfactory to the Agent;
(ii) may consult with legal counsel (including counsel for any Loan Party),
independent public accountants and other experts selected by it and shall not
be liable to the Lenders for any action taken or omitted to be taken in good
faith by it in accordance with the advice of such counsel, accountants or
experts; (iii) makes no warranty or representation to any Lender and shall not
be responsible to any Lender for any statements, warranties or representations
made in or in connection with this Agreement, any Note or any other Loan
Document; (iv) except as otherwise expressly provided herein, shall not have any
duty to the Lenders to ascertain or to inquire as to the performance or
observance of any of the terms, covenants or conditions of this Agreement, any
Note or any other Loan Document or to inspect the property (including the books
and records) of any Loan Party; (v) except for the due execution and delivery by
the Agent of the Loan Documents to which it is a party, shall not be responsible
to any Lender for the due execution, legality, validity, enforceability,
collectibility, genuineness, sufficiency or value of this Agreement, any Note,
any other Loan Document or any other instrument or document furnished pursuant
hereto or thereto; (vi) shall not be responsible to any Lender for the
perfection or priority of any Lien securing the Obligations; and (vii) shall
incur no liability under or in respect of this Agreement, any Note or any other
Loan Document by acting upon
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any notice, consent, certificate or other instrument or writing (which may be by
telegram or telecopier) reasonably believed by it to be genuine and signed or
sent by the proper party or parties.
SECTION 11.03. Agent and Affiliates; Chase and Affiliates.
Without limiting the right of any other Lender to engage in any business
transactions with any Loan Party or any of its Affiliates, with respect to
their commitments, the Loans made by them and the Notes issued to them, Chase
and each other Lender who may become the Agent shall have the same rights and
powers under this Agreement, its Notes and the other Loan Document as any other
Lender and may exercise the same as though it was not the Agent; and the term
"Lender" or "Lenders" shall, unless otherwise expressly indicated, include
Chase and any such other Lender, in their individual capacities. Chase, each
other Person who becomes the Agent and their respective Affiliates may be
engaged in, or may hereafter engage in, one or more loan, letter of credit,
leasing or other financing activities not the subject of this Agreement
(collectively, the "Other Financings") with any Loan Party, any Restricted
Subsidiary of the Company or any of its Affiliates, or may act as trustee on
behalf of, or depositary for, or otherwise engage in other business
transactions with any Loan Party, any Restricted Subsidiary of the Company or
any of its Affiliates (all Other Financings and other such business
transactions being collectively, the "Other Activities") with no responsibility
to account therefor to the Lenders. Without limiting the rights and remedies
of the Lenders specifically set forth herein, no other Lender by virtue of
being a Lender hereunder shall have any interest in (a) any Other Activities,
(b) any present or future guaranty by or for the account of the Company not
contemplated or included herein, (c) any present or future offset exercised by
the Agent in respect of any such Other Activities, (d) any present or future
property taken as security for any such Other Activities or (e) any property
now or hereafter in the possession or control of the Agent which may be or
become security for the obligations of any Loan Party hereunder and under the
Notes and the other Loan Documents by reason of the general description of
indebtedness secured, or of property contained in any other agreements,
documents or instruments related to such Other Activities; provided, however,
that if any payment in respect of such guaranties or such property or the
proceeds thereof shall be applied to reduction of the obligations evidenced
hereunder and by the Notes, then each Lender shall be entitled to share in such
application according to its pro rata portion of such obligations.
SECTION 11.04. Lender Credit Decision. Each Lender
acknowledges and agrees that it has, independently and without reliance upon
the Agent or any other Lender and based on the financial statements referred to
in Section 6.07 and such other documents and information as it has deemed
appropriate, made its own
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credit analysis and decision to enter into this Agreement. Each Lender also
acknowledges and agrees that it will, independently and without reliance upon
the Agent or any other Lender and based on such documents and information as it
shall deem appropriate at the time, continue to make its own credit decisions in
taking or not taking action under this Agreement and the other Loan Documents.
SECTION 11.05. Agent's Indemnity. (a) The Agent shall not be
required to take any action hereunder or to prosecute or defend any suit in
respect of this Agreement, the Notes or any other Loan Document unless
indemnified to the Agent's satisfaction by the Lenders against loss, cost,
liability and expense. If any indemnity furnished to the Agent shall become
impaired, it may call for additional indemnity and cease to do the acts
indemnified against until such additional indemnity is given. In addition, the
Lenders agree to indemnify the Agent (to the extent not reimbursed by the
Company or any other Loan Party), ratably according to the respective aggregate
principal amounts of the Notes then held by each of them (or if no Notes are at
the time outstanding, ratably according to the respective amounts of their
Commitments, or if no Commitments are outstanding, the respective amounts of
the Commitments immediately prior to the time the Commitments ceased to be
outstanding), from and against any and all liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
of any kind or nature whatsoever which may be imposed on, incurred by, or
asserted against the Agent in any way relating to or arising out of this
Agreement or any action taken or omitted by the Agent under this Agreement, the
Notes and the other Loan Documents (including any action taken or omitted under
Article II, Article III or Article IV of this Agreement). Without limitation
of the foregoing, each Lender agrees to reimburse the Agent promptly upon
demand for its ratable share of any out-of-pocket expenses (including
reasonable counsel fees) incurred by the Agent in connection with the
preparation, execution, administration, or enforcement of, or legal advice in
respect of rights or responsibilities under, this Agreement, the Notes and the
other Loan Documents to the extent that the Agent is for such expenses by a
Loan Party. The provisions of this Section 11.05 shall survive the termination
of this Agreement, the payment of the Obligations and/or the assignment of any
of the Notes.
(B) NOTWITHSTANDING THE FOREGOING, NO LENDER SHALL BE LIABLE
UNDER THIS SECTION 11.05 TO THE AGENT FOR ANY PORTION OF SUCH LIABILITIES,
OBLIGATIONS, LOSSES, DAMAGES, PENALTIES, ACTIONS, JUDGMENTS, SUITS, COSTS,
EXPENSES OR DISBURSEMENTS DUE TO THE AGENT RESULTING FROM THE AGENT'S GROSS
NEGLIGENCE OR WILLFUL MISCONDUCT. EACH LENDER AGREES, HOWEVER, THAT IT
EXPRESSLY INTENDS, UNDER THIS SECTION 11.05, TO INDEMNIFY THE AGENT RATABLY AS
AFORESAID FOR ALL SUCH LIABILITIES, OBLIGATIONS, LOSSES, DAMAGES, PENALTIES,
ACTIONS, JUDGMENTS, SUITS, COSTS, EXPENSES AND DISBURSEMENTS ARISING OUT OF OR
RESULTING FROM THE AGENT'S ORDINARY SOLE OR CONCURRENT NEGLIGENCE.
SECTION 11.06. Successor Agent. The Agent may resign at any
time by giving written notice thereof to the Lenders and the Company and may be
removed as Agent under this Agreement, the Notes and the other Loan Documents
at any time with or without
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cause by the Majority Lenders. Upon any such resignation or removal, the
Majority Lenders shall have the right to appoint a successor Agent. If no
successor Agent shall have been so appointed by the Majority Lenders, and shall
have accepted such appointment, within 30 calendar days after the retiring
Agent's giving of notice of resignation or the Majority Lenders' removal of the
retiring Agent, then the retiring Agent may, on behalf of the Lenders, appoint a
successor Agent, which shall be a commercial bank organized or licensed under
the laws of the United States of America or of any state thereof and having a
combined capital and surplus of at least $100,000,000. Upon the acceptance of
any appointment as Agent hereunder and under the Notes and the other Loan
Documents by a successor Agent, such successor Agent shall thereupon succeed to
and become vested with all the rights, powers, privileges and duties of the
retiring Agent, and the retiring Agent shall be discharged from its duties and
obligations under this Agreement, the Notes and the other Loan Documents. After
any retiring Agent's resignation or removal as Agent hereunder and under the
Notes and the other Loan Documents, the provisions of this Article XI shall
inure to its benefit as to any actions taken or omitted to be taken by it while
it was Agent under this Agreement, the Notes and the other Loan Documents.
SECTION 11.07. Notice of Default. The Agent shall not be
deemed to have knowledge or notice of the occurrence of any Default or Event of
Default hereunder unless the Agent shall have received notice from a Lender or
the Company referring to this Agreement, describing such Default or Event of
Default and stating that such notice is a "notice of default." If the Agent
receives such notice, the Agent shall give notice thereof to the Lenders;
provided, however, if such notice is received from a Lender, the Agent also
shall give notice thereof to the Company. The Agent shall be entitled to take
action or refrain from taking action with respect to such Default or Event of
Default as provided in Section 11.01 and Section 11.02.
SECTION 11.08. Consents under Other Security Documents. The
Agent may, with the prior consent of the Majority Lenders (but not otherwise),
consent to any modification, supplement or waiver under any of the Security
Documents, provided that, without the prior consent of all the Lenders, the
Agent shall not release any Collateral or otherwise terminate any Lien under
any Security Document providing for collateral security, or agree to additional
obligations being secured by such collateral security.
ARTICLE XII
MISCELLANEOUS
SECTION 12.01. Amendments, Etc. No amendment or waiver of any
provision of this Agreement, any Note or any other Loan Document, nor consent
to any departure by any Loan Party herefrom or therefrom, shall in any event be
effective unless
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the same shall be in writing and signed by the Loan Parties party thereto, as to
amendments, and by the Majority Lenders in all cases, and then, in any case,
such waiver or consent shall be effective only in the specific instance and for
the specific purpose for which given; provided, however, that no amendment,
waiver, consent or release shall, unless in writing and signed by 100% of the
Lenders, do any of the following: (a) change the definition of "Majority
Lenders," "Total Tranche A Revolving Credit Commitment," "Total Tranche B
Revolving Credit Commitment" or "Percentage Participation," (b) reduce or
increase the amount or alter the terms of either Commitment of any Lender or
subject any Lender to any additional obligations, (c) reduce the principal of,
or rate or amount of interest applicable to, any Loan or the reimbursement
obligations of the Company under the Letters of Credit other than as expressly
provided in this Agreement, the Tranche A Revolving Credit Commitment Fee, the
Tranche B Revolving Credit Commitment Fee or any Letter of Credit Fees, (d)
postpone any date fixed for any payment of principal of, or interest on, the
Notes or the reimbursement obligations of the Company under any Letter of
Credit, (e) change this Section 12.01, (f) change the aggregate unpaid principal
amount of the Notes, or the number of Lenders, which shall be required for the
Lenders or any of them to take any action hereunder, (g) release any Subsidiary
Guarantor, (h) any increase on the advance rates under the Borrowing Base or (i)
except as expressly provided in Section 11.08, release any Collateral or other
security for the Obligations (except as expressly permitted pursuant to Section
8.02); and provided that no amendment, waiver or consent shall, unless in
writing and signed by the Agent in addition to the Lenders required above to
take such action, affect the rights or duties of the Agent under this Agreement,
any Note or any other Loan Document. Subject to the foregoing, the amendment or
waiver of any provision of Article VI, VII, VIII or IX may be effected with the
consent of the Majority Lenders.
SECTION 12.02. Notices, Etc. The Agent, any Lender or the
holder of any of the Obligations, giving consent or notice or making any
request of any Loan Party provided for hereunder, shall notify each Lender and
the Agent thereof. In the event that the holder of any Note or any of the
Obligations (including any Lender) shall transfer such Note or Obligations, it
shall promptly so advise the Agent which shall be entitled to assume
conclusively that no transfer of any Note or any of the Obligations has been
made by any holder (including any Lender) unless and until the Agent receives
written notice to the contrary. Except with respect to telephone notifications
specifically permitted pursuant to Article II and Article III, all notices,
consents, requests, approvals, demands and other communications (collectively
"Communications") provided for herein shall be in writing (including facsimile
Communications) and mailed, telecopied or delivered:
(a) If to the Company, to it at:
Energy Ventures, Inc.
5 Post Oak Park, Suite 1760
Houston, TX 77027
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Telephone No.: (713) 297-8400
Telecopy No.: (713) 297-8488
Attention: Chief Financial Officer
with a copy to:
Fulbright & Jaworski LLP
1301 McKinney, Suite 5100
Houston, TX 77010
Telephone No.: (713) 651-5657
Telecopy No.: (713) 651-5246
Attention: Curtis Huff, Esq.
(b) If to any Subsidiary Guarantor, to it in care
of the Company at its address shown above.
(c) If to the Agent, to it at:
Chemical Bank
Chase Agent Services
140 East 45th Street, 29th Floor
New York, New York 10017
Telephone No.: (212) 622-0005
Telecopy No.: (212) 622-0002
Attention: Sandra Miklave
with copies to:
for Letters of Credits: The Chase Manhattan Bank, N.A.
4 Chase Manhattan Center, 8th Floor
Brooklyn, New York, 11245
Telephone No.: (212) 242-2708
Telecopy No.: (212) 242-3819
Attention: Elsie Rodriguez
The Chase Manhattan Bank, N.A.
707 Travis Street, 5th Floor North
Houston, Texas 77002
Telephone No.: (713) 216-8869
Telecopy No.: (713) 216-8870
Attention: Peter Licalzi - Second Vice President
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for all Communications: Andrews & Kurth L.L.P.
4200 Texas Commerce Tower
Houston, Texas 77002
Telephone No.: (713) 220-4122
Telecopy No.: (713) 220-4285
Attention: Linda Dole
(d) If to any Lender, as specified on the signature page for
such Lender hereto or, in the case of any Person who becomes a Lender after the
date hereof, as specified on the Assignment and Acceptance executed by such
Person or in the Administrative Questionnaire delivered by such Person or, in
the case of any party hereto, such other address or telecopy number as such
party may hereafter specify for such purpose by notice to the other parties.
All Communications shall, when mailed, telecopied or delivered,
be effective when mailed by certified mail, return receipt requested to any
party at its address specified above, on the signature page hereof or on the
signature page of such Assignment and Acceptance (or other address designated
by such party in a Communication to the other parties hereto), or telecopied to
any party to the telecopy number set forth above, on the signature page hereof
or on the signature page of such Assignment and Acceptance (or other telecopy
number designated by such party in a Communication to the other parties hereto),
or delivered personally to any party at its address specified above, on the
signature page hereof or on the signature page of such Assignment and Acceptance
(or other address designated by such party in a Communication to the other
parties hereto); provided, however, Communications to the Agent pursuant to
Article II, Article III or Article XI shall not be effective until received by
the Agent.
SECTION 12.03. No Waiver; Remedies. No failure on the part
of any Lender or the Agent to exercise, and no delay in exercising, any right
hereunder, under any Note or under any other Loan Document shall operate as a
waiver thereof; nor shall any single or partial exercise of any such right, or
any abandonment or discontinuance of any steps to enforce such right, preclude
any other or further exercise thereof or the exercise of any other right. No
notice to or demand on any Loan Party in any case shall entitle such Loan Party
to any other or further notice or demand in similar or other circumstances.
The remedies herein provided are cumulative and not exclusive of any remedies
provided by law.
SECTION 12.04. Costs, Expenses and Taxes. The Company agrees
to pay on demand: (a) all reasonable out-of-pocket costs and expenses of the
Agent in connection with the preparation, execution and delivery of this
Agreement, the Notes, the other Loan Documents and the other documents to be
delivered hereunder, including the reasonable fees and out-of-pocket expenses
of counsel for the Agent with respect thereto and with respect to
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advising the Agent as to its rights and responsibilities under this Agreement
(including any release of Collateral pursuant to Section 8.02), the Notes and
the other Loan Documents, and any modification, supplement or waiver of any of
the terms of this Agreement or any other Loan Document, (b) all reasonable
out-of-pocket costs and expenses of the Agent in connection with the syndication
of the credit evidenced by this Agreement and the other Loan Documents, (c) all
recording, filing or other fees, costs and taxes incident to perfecting a Lien
upon the Collateral, and (d) all reasonable costs and expenses of each of the
Agent, the Lenders and any other holder of an interest in the Notes, and the
Obligations of the Loan Parties hereunder and under the Loan Documents,
including reasonable legal fees and expenses, in connection with a default or
the enforcement of this Agreement, the Notes or any other Loan Document. In
addition, subject to Section 12.08, the Company shall pay any and all stamp and
similar taxes payable or determined to be payable in connection with the
execution and delivery of this Agreement, the Notes, the other Loan Documents
and the other documents to be delivered hereunder, and agrees to save the Agent
and each Lender harmless from and against any and all liabilities with respect
to or resulting from any delay in paying or omission to pay such taxes, if any,
which may be payable or determined to be payable in connection with the
execution and delivery of this Agreement, any Note or any other Loan Document.
Without prejudice to the survival of any other obligations of the Company
hereunder and under the Notes, the obligations of the Company under this Section
12.04 shall survive the termination of this Agreement and the payment of the
Obligations or the assignment of the Notes.
SECTION 12.05. Indemnity. (a) The Company shall indemnify
the Agent, the Lenders and each Affiliate thereof and their respective
directors, officers, employees and agents (each such Person being an
"Indemnitee") from, and hold each Indemnitee harmless against, any and all
losses, liabilities, claims or damages (including reasonable legal fees and
expenses) to which any Indemnitee may become subject, insofar as such losses,
liabilities, claims or damages arise out of or result from (i) any actual or
proposed use by the Company or any Restricted Subsidiary of the proceeds of any
extension of credit by any Lender hereunder or (ii) any investigation,
litigation or other proceeding (including any threatened investigation or
proceeding) relating to the foregoing or any of the other Loan Documents, and
the Company shall reimburse each Indemnitee, upon demand for any expenses
(including reasonable legal fees) incurred in connection with any such
investigation or proceeding; but excluding any such losses, liabilities,
claims, damages or expenses incurred by reason of the gross negligence or
willful misconduct of such Indemnitee.
(b) WITHOUT LIMITING ANY PROVISION OF THIS AGREEMENT, IT IS
THE EXPRESS INTENTION OF THE PARTIES HERETO THAT EACH INDEMNITEE HEREUNDER
SHALL BE INDEMNIFIED AND HELD HARMLESS AGAINST ANY AND ALL LOSSES, LIABILITIES,
CLAIMS OR DAMAGES ARISING OUT OF OR RESULTING FROM THE SOLE OR CONCURRENT
NEGLIGENCE OF SUCH INDEMNITEE. Without prejudice to the survival of any other
obligations of the Company hereunder and under the other Loan Documents, the
obligations of the Company under this Section 12.05 shall survive the
termination of this Agreement and the other Loan
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Documents and the payment of the Obligations or the assignment of the Notes.
SECTION 12.06. Right of Setoff. If any Event of Default
shall have occurred and be continuing, each Lender is hereby authorized at any
time and from time to time, to the fullest extent permitted by law, to set off
and apply any and all deposits (general or special, time or demand, provisional
or final) at any time held and other indebtedness at any time owing by such
Lender, or any branch, subsidiary or Affiliate of such Lender, to or for the
credit or the account of any Loan Party against any and all the obligations of
such Loan Party to such Lender now or hereafter existing under this Agreement
and the other Loan Documents and other obligations of such Loan Party held by
such Lender, irrespective of whether or not such Lender or the Agent shall have
made any demand under this Agreement, such Note, the Obligations or such other
obligations and although the Obligations or such other obligations may be
unmatured. Each Lender agrees to promptly notify the Company after any such
setoff and application made by such Lender, but the failure to give such notice
shall not affect the validity of such setoff and application. The rights of
each Lender under this Section 12.06 are in addition to other rights and
remedies (including other rights of setoff) which such Lender may have.
SECTION 12.07. Governing Law. Except as expressly provided
in Section 3.02(a), this Agreement, all Notes, the other Loan Documents and all
other documents executed in connection herewith and therewith and the rights
and obligations of the parties hereto and thereto, shall be deemed to be
contracts and agreements executed by the Loan Parties, the Agent and the
Lenders under the laws of the State of New York and of the United States of
America and for all purposes shall be construed in accordance with, and
governed by, the laws of said state and, to the extent controlling, of the
United States of America.
SECTION 12.08. Interest. Each provision in this Agreement
and each other Loan Document is expressly limited so that in no event
whatsoever shall the amount paid, or otherwise agreed to be paid, to the Agent
or any Lender for the use, forbearance or detention of the money to be loaned
under this Agreement or any Loan Document or otherwise (including any sums paid
as required by any covenant or obligation contained herein or in any other Loan
Document which is for the use, forbearance or detention of such money), exceed
that amount of money which would cause the effective rate of interest to exceed
the Highest Lawful Rate.
SECTION 12.09. Survival of Representations and Warranties.
All representations, warranties and covenants contained herein or made in
writing by the Loan Parties in connection herewith and the other Loan Documents
shall survive the execution and
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delivery of this Agreement, the Notes and the other Loan Documents until two
years and one day after payment in full of the Obligations and the termination
of the Commitments of the Lenders and the termination or expiration of the
Letters of Credit, and will bind and inure to the benefit of the respective
successors and assigns of the parties hereto, whether so expressed or not,
provided, that the undertaking of the Lenders to make Loans and extend credit to
the Company and the undertaking of the Issuing Bank to issue Letters of Credit
for the account of the Company or the Company and any of its Restricted
Subsidiary shall not inure to the benefit of any successor or assign of the
Company, except as provided in Section 8.02.
SECTION 12.10. Binding Effect. This Agreement shall become
effective when it shall have been executed by the Loan Parties and the Agent
and when the Agent shall have been notified by each Lender that such Lender has
executed it.
SECTION 12.11. Successors and Assigns; Participations. (a)
All covenants, promises and agreements by or on behalf of the Loan Parties, the
Agent or the Lenders that are contained in this Agreement shall bind and inure
to the benefit of their respective successors and permitted assigns. Except as
provided in Section 8.02, the Loan Parties may not assign or transfer any of
their rights or obligations hereunder without the written consent of all the
Lenders.
(b) Each Lender may, without the consent of any Loan Party,
sell participations to one or more banks in all or a portion of its rights and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment, the Loans and the Obligations of the Loan Parties
owing to it and the Notes and participations in Letters of Credit held by it);
provided, however, that (i) the selling Lender's obligations under this
Agreement shall remain unchanged, (ii) such Bank shall remain solely
responsible to the other parties hereto for the performance of such
obligations, (iii) the participating banks or other entities shall be entitled
to the cost protection provisions contained in Article II, Article III and
Section 12.04; provided, however, the costs to which a participant shall be
entitled to obtain pursuant to Articles II and III shall be determined by
reference to such participant's selling Lender and shall be recoverable solely
from such selling Lender and (iv) the Loan Parties, the Agent and the other
Lenders shall continue to deal solely and directly with the selling Lender in
connection with such Lender's rights and obligations under this Agreement and
the other Loan Documents; provided, however, as between the selling Lender and
any such participant, the selling Lender may grant such participant rights with
respect to amendments, modifications or waivers with respect to any Fees
payable hereunder to such Lender (including the amount and the dates fixed for
the payment of any such Fees) or the amount of principal or the rate of
interest payable on, or the dates fixed for any payment of principal of or
interest on, the Loans, or the release of any obligations of the Loan Parties
hereunder and under the other Loan Documents, or the release of any security
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for any of the Obligations. Except with respect to the provision with respect
to default and enforcement contained in Section 12.04(d) provided to a
participant pursuant to clause (iii) of this Section 12.11(b), no participant
shall be a third party beneficiary of this Agreement and shall not be entitled
to enforce any rights provided to its selling Lender against the Company under
this Agreement.
(c) A Lender may assign to any other Lender or Lenders or to
any Affiliate of a Lender and, with the consent of the Company and the Agent
(which consents shall not be unreasonably withheld), a Lender may assign to one
or more other Eligible Assignees all or a portion of its interests, rights, and
obligations under this Agreement and the other Loan Documents (including all or
a portion of its Commitment and the same portion of the Loans and other
Obligations of the Loan Parties at the time owing to it and the Notes held by
it, including its participation in the Letters of Credit); provided, however,
that (i) each such assignment shall (A) be in a minimum principal amount of not
less than $10,000,000, (B) not reduce any Lender's Commitments to an amount less
than $10,000,000 (other than to zero) and (C) be of a constant, and not a
varying, percentage of all the assigning Lender's Commitments, rights and
obligations under this Agreement and (iv) the parties to each such assignment
shall execute and deliver to the Agent, for its acceptance and recording in the
Register (as defined below), an Assignment and Acceptance substantially in the
form of Exhibit 12.11 hereto (an "Assignment and Acceptance"), any Note or Notes
subject to such assignment and, in the case of the Eligible Assignee, an
Administrative Questionnaire. In addition, the Agent shall receive a processing
and recording fee of $3,000 from the assigning Bank in connection with any such
Assignment and Acceptance; provided, however, that the Company shall pay to the
Agent such processing and recording fee in connection with any assignment
pursuant to Sections 2.11, 2.12, 2.13 and 3.05. Upon such execution, delivery,
acceptance and recording, from and after the effective date specified in each
Assignment and Acceptance, which effective date shall be at least five Business
Days after the execution thereof unless otherwise agreed to by the assigning
Lender, the Eligible Assignee thereunder and the Agent (x) the Eligible Assignee
thereunder shall be a party hereto and to the other Loan Documents and, to the
extent provided in such Assignment and Acceptance, have the rights and
obligations of a Lender hereunder and under the other Loan Documents and (y) the
assignor Lender thereunder shall, to the extent provided in such Assignment and
Acceptance, be released from its obligations under this Agreement and the other
Loan Documents (and, in the case of an Assignment and Acceptance covering all of
the remaining portion of an assigning Lender's rights and obligations under this
Agreement and the other Loan Documents, such Lender shall cease to be a party
hereto).
(d) By executing and delivering an Assignment and
Acceptance, the Lender assignor thereunder and the Eligible Assignee confirm to
and agree with each other and the other parties hereto as follows: (i) other
than the representation and warranty that it is the legal and beneficial owner
of the interest being assigned thereby free and clear of any
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adverse claim known to such Lender, such Lender assignor makes no representation
or warranty and assumes no responsibility with respect to any statements,
warranties or representations made in or in connection with this Agreement or
the execution, legality, validity, enforceability, genuineness, sufficiency or
value of this Agreement, the other Loan Documents or any other instrument or
document furnished pursuant hereto or thereto; (ii) such Lender assignor makes
no representation or warranty and assumes no responsibility with respect to the
financial condition of any Loan Party or the performance or observance of its
respective obligations under this Agreement or any other instrument or document
furnished pursuant hereto or thereto; (iii) such Eligible Assignee confirms that
it has received a copy of this Agreement together with copies of the most recent
financial statements delivered pursuant to Section 6.07 or Section 7.01 and such
other documents and information as it has deemed appropriate to make its own
credit analysis and decision to enter into such Assignment and Acceptance; (iv)
such Eligible Assignee will, independently and without reliance upon the Agent,
such Lender assignor or any other Lender and based on such documents and
information as it shall deem appropriate at the time, continue to make its own
credit decisions in taking or not taking action under this Agreement and the
other Loan Documents; (v) such Eligible Assignee appoints and authorizes the
Agent to take such action on behalf of such Eligible Assignee and to exercise
such powers under this Agreement and the other Loan Documents as are delegated
to the Agent by the terms hereof, together with such powers as are reasonably
incidental thereto; (vi) such Eligible Assignee agrees that it will perform in
accordance with its terms all of the obligations which by the terms of this
Agreement and the other Loan Documents are required to be performed by it as a
Lender; and (vii) such Eligible Assignee confirms that it is an Eligible
Assignee as defined herein.
(e) The Agent shall maintain at its office a copy of each
Assignment and Acceptance delivered to it and a register for the recordation of
the names and addresses of the Lenders and the Commitments of, and principal
amount of the Loans and other Obligations owing to, each Lender from time to
time (the "Register"). The entries in the Register shall be conclusive, in the
absence of manifest error, and the Loan Parties, the Agent and the Lenders may
treat each Person whose name is recorded in the Register as a Lender hereunder
for all purposes of this Agreement and the other Loan Documents. The Register
shall be available for inspection by the Loan Parties, any Lender or the Agent
at any reasonable time and from time to time upon reasonable prior notice.
(f) Upon its receipt of an Assignment and Acceptance
executed by an assigning Lender and an Eligible Assignee together with the
Notes subject to such assignment and the written consent of the Company to such
assignment (to the extent required under Section 12.11(c)), the Agent shall, if
such Assignment and Acceptance has been completed and is substantially in the
form of Exhibit 12.11 hereto, (i) accept such Assignment and Acceptance, (ii)
record the information contained therein in the Register, and (iii) give prompt
notice thereof to the Lenders and the Company. Within five Business Days after
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receipt of such notice, the Company shall, at its own expense, execute and
deliver to the Agent in exchange for the surrendered Notes, a new Tranche A
Revolving Credit Note and Tranche B Revolving Credit Note to the order of such
Eligible Assignee in an amount respectively equal to their portion of the
Tranche A Revolving Credit Commitment and the Tranche B Revolving Credit Loans
or, prior to the Amortization Date, the Tranche B Revolving Credit Commitment of
the assigning Lender assumed by it pursuant to such Assignment and Acceptance
and, if the assigning Lender has retained any of its Commitments hereunder, a
new Tranche A Revolving Credit Note and Tranche B Revolving Credit Note to the
order of the assigning Lender in an amount equal to the Tranche A Revolving
Credit Commitment and the Tranche B Revolving Credit Loans or, prior to the
Amortization Date, the Tranche B Revolving Credit Commitment retained by it
hereunder. Such new Notes shall be in an aggregate principal amount equal to
the aggregate principal amount of such surrendered Notes, shall be dated the
effective date of such Assignment and Acceptance and shall otherwise be in
substantially the form of Exhibit 12.11, as applicable, hereto. Canceled Notes
shall be returned to the Company.
(g) Notwithstanding any other provision herein, any Lender
may, in connection with any assignment or participation or proposed assignment
or participation pursuant to this Section 12.11 disclose to the assignee or
participant or proposed assignee or participant, any information relating to
the Loan Parties furnished to such Lender by or on behalf of any Loan Party,
subject, however to the provisions of Section 12.12.
(h) Anything in this Section 12.11 to the contrary
notwithstanding, any Lender may at any time, without the consent of the Company
or the Agent, assign and pledge all or any portion of its Commitments and the
Loans owing to it to any Federal Reserve Bank (and its transferees) as
collateral security pursuant to Regulation A and any Operating Circular issued
by such Federal Reserve Bank. No such assignment shall release the assigning
Lender from its obligations hereunder.
(i) All transfers of any interest in any Note hereunder
shall be in compliance with all federal and state securities laws, if
applicable. Notwithstanding the foregoing sentence, however, the parties to
this Agreement do not intend that any transfer under this Section 12.11 be
construed as a "purchase" or "sale" of a "security" within the meaning of any
applicable federal or state securities laws.
SECTION 12.12. Confidentiality. Each Lender agrees to
exercise its best efforts to keep any information delivered or made available
by any Loan Party to it (including any information obtained pursuant to Section
7.01) which is clearly indicated to be confidential information, confidential
from anyone other than Persons employed or retained by such Lender who are or
are expected to become engaged in evaluating, approving, structuring or
administering the Loans or the Letters of Credit; provided that nothing herein
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shall prevent any Lender from disclosing such information (a) to any other
Lender, (b) pursuant to subpoena or upon the order of any court or
administrative agency, (c) upon the request or demand of any regulatory agency
or authority having jurisdiction over such Lender, (d) which has been publicly
disclosed, (e) to the extent reasonably required in connection with any
litigation to which either Agent, any Lender, any Loan Party or their respective
Affiliates may be a party, (f) to the extent reasonably required in connection
with the exercise of any remedy hereunder or under any other Loan Document, (g)
to such Lender's legal counsel and independent auditors and (h) to any actual or
proposed participant or assignee of all or part of its rights hereunder which
has agreed in writing to be bound by the provisions of this Section 12.12. Each
Lender will promptly notify the Company of any information that it is required
or requested to deliver pursuant to clause (b) or (c) of this Section 12.12 and,
if no Loan Party is a party to any such litigation, clause (e) of this Section
12.12.
SECTION 12.13. Pro Rata Treatment. (a) Except as permitted
under Section 2.11 and Section 2.13, each payment or prepayment of principal,
if permitted under this Agreement, and each payment of interest with respect to
a Borrowing shall be made pro rata among the Lenders in accordance with the
respective principal amounts of the Loans extended by each Lender with respect
to such Borrowing.
(b) Each Lender agrees that if it shall, through the
exercise of a right of banker's lien, setoff or counterclaim against any Loan
Party (pursuant to Section 12.06 or otherwise), including a secured claim under
Section 506 of the Bankruptcy Code or other security or interest arising from,
or in lieu of, such secured claim, received by such Lender under any applicable
bankruptcy, insolvency or other similar law or otherwise, obtain payment
(voluntary or involuntary) in respect of the Notes, Loans, Unpaid Drawings and
other Obligations held by it (other than pursuant to Section 2.11, Section 2.13
and Section 3.05) as a result of which the unpaid principal portion of the
Notes and the Obligations held by it shall be proportionately less than the
unpaid principal portion of the Notes and Obligations held by any other Lender,
it shall be deemed to have simultaneously purchased from such other Lender a
participation in the Notes and Obligations held by such other Lender, so that
the aggregate unpaid principal amount of the Notes, Obligations and
participations in Notes held by each Lender shall be in the same proportion to
the aggregate unpaid principal amount of the Notes and Obligations then
outstanding as the principal amount of the Notes and other Obligations held by
it prior to such exercise of banker's lien, setoff or counterclaim was to the
principal amount of all Notes and other Obligations outstanding prior to such
exercise of banker's lien, setoff or counterclaim; provided, however, that if
any such purchase or purchases or adjustments shall be made pursuant to this
Section 12.13 and the payment giving rise thereto shall thereafter be
recovered, such purchase or purchases or adjustments shall be rescinded to the
extent of such recovery and the purchase price or prices or adjustments
restored without interest. Each Loan Party
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expressly consents to the foregoing arrangements and agrees that any Person
holding a participation in the Notes and the Obligations deemed to have been so
purchased may exercise any and all rights of banker's lien, setoff or
counterclaim with respect to any and all moneys owing by such Loan Party to such
Person as fully as if such Person had made a Loan directly to the Company in the
amount of such participation.
SECTION 12.14. Independence of Covenants. All covenants
contained in this Agreement and in the other Loan Documents shall be given
independent effect so that if a particular action or condition is not permitted
by any of such covenants, the fact that such action or condition would be
permitted by an exception to, or otherwise be within the limitations of,
another covenant, shall not avoid the occurrence of a Default or an Event of
Default if such action is taken or condition exists.
SECTION 12.15. Separability. 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.
SECTION 12.16. Execution in Counterparts. This Agreement may
be executed in any number of counterparts and by different parties hereto in
separate counterparts, each of which when so executed shall be deemed to be an
original and all of which taken together shall constitute one and the same
agreement.
SECTION 12.17. SUBMISSION TO JURISDICTION. (A) ANY LEGAL
ACTION OR PROCEEDING WITH RESPECT TO THIS AGREEMENT AND THE OTHER LOAN
DOCUMENTS MAY BE BROUGHT IN THE COURTS OF THE STATE OF NEW YORK OR OF THE
UNITED STATES FOR THE SOUTHERN DISTRICT OF NEW YORK AND, BY EXECUTION AND
DELIVERY OF THIS AGREEMENT, EACH LOAN PARTY, THE AGENT, EACH LENDER AND THE
ISSUING BANK HEREBY IRREVOCABLY ACCEPTS FOR ITSELF AND IN RESPECT OF ITS
PROPERTY, UNCONDITIONALLY, THE NON-EXCLUSIVE JURISDICTION OF THE AFORESAID
COURTS WITH RESPECT TO ANY SUCH ACTION OR PROCEEDING. EACH LOAN PARTY HEREBY
IRREVOCABLY DESIGNATES, APPOINTS AND EMPOWERS CT CORPORATION SYSTEM, INC., WITH
OFFICES ON THE DATE HEREOF AT 1633 BROADWAY, NEW YORK, NEW YORK 10019, AS ITS
DESIGNEE, APPOINTEE AND AGENT TO RECEIVE, ACCEPT AND ACKNOWLEDGE FOR AND ON ITS
BEHALF, AND IN RESPECT OF ITS PROPERTY, SERVICE OF ANY AND ALL LEGAL PROCESS,
SUMMONS, NOTICES AND DOCUMENTS WHICH MAY BE SERVED IN ANY SUCH ACTION OR
PROCEEDING. IF FOR ANY REASON SUCH DESIGNEE, APPOINTEE AND AGENT SHALL CEASE
TO BE AVAILABLE TO ACT AS SUCH, EACH SUCH LOAN PARTY AGREES TO DESIGNATE A NEW
DESIGNEE, APPOINTEE AND AGENT IN NEW YORK, NEW YORK ON THE TERMS AND FOR THE
PURPOSES OF THIS PROVISION SATISFACTORY TO THE AGENT. EACH LOAN PARTY FURTHER
IRREVOCABLY CONSENTS TO THE SERVICE OF PROCESS OUT OF ANY OF THE AFOREMENTIONED
COURTS IN ANY SUCH ACTION
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OR PROCEEDING BY THE MAILING OF COPIES THEREOF BY REGISTERED OR CERTIFIED MAIL,
POSTAGE PREPAID, TO IT AT ITS ADDRESS PROVIDED IN SECTION 12.02, SUCH SERVICE TO
BECOME EFFECTIVE THIRTY DAYS AFTER SUCH MAILING. NOTHING HEREIN SHALL AFFECT THE
RIGHT OF THE AGENT OR ANY LENDER TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED
BY LAW OR TO COMMENCE LEGAL PROCEEDINGS OR OTHERWISE PROCEED AGAINST ANY LOAN
PARTY IN ANY OTHER JURISDICTION.
(B) EACH OF THE LOAN PARTIES HEREBY IRREVOCABLY WAIVES ANY
OBJECTION WHICH IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF VENUE OF ANY OF
THE AFORESAID ACTIONS OR PROCEEDINGS ARISING OUT OF OR IN CONNECTION WITH THIS
AGREEMENT BROUGHT IN THE COURTS REFERRED TO IN CLAUSE (A) ABOVE AND HEREBY
FURTHER IRREVOCABLY WAIVES, TO THE MAXIMUM EXTENT PERMITTED BY APPLICABLE LAW,
AND AGREES NOT TO PLEAD OR CLAIM IN ANY SUCH COURT THAT ANY SUCH ACTION OR
PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM.
SECTION 12.18. WAIVER OF JURY TRIAL. EACH LOAN PARTY, THE
AGENT, EACH LENDER AND THE ISSUING BANK (A) IRREVOCABLY AND UNCONDITIONALLY
WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, TRIAL BY JURY IN ANY LEGAL
ACTION OR PROCEEDING RELATING TO ANY LOAN DOCUMENT AND FOR ANY COUNTERCLAIM
THEREIN; (B) REVOCABLY WAIVES, TO THE FULLEST EXTENT NOT PROHIBITED BY LAW, ANY
RIGHT IT MAY HAVE TO CLAIM OR RECOVER IN ANY SUCH LITIGATION ANY SPECIAL,
EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, OR DAMAGES OTHER THAN, OR IN
ADDITION TO, ACTUAL DAMAGES; (C) CERTIFIES THAT NO PARTY HERETO NOR ANY
REPRESENTATIVE OR COUNSEL FOR ANY PARTY HERETO HAS REPRESENTED, EXPRESSLY OR
OTHERWISE, OR IMPLIED THAT SUCH PARTY WOULD NOT, IN THE EVENT OF LITIGATION,
SEEK TO ENFORCE THE FOREGOING WAIVERS; AND (D) ACKNOWLEDGES THAT IT HAS BEEN
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INDUCED TO ENTER INTO THIS AGREEMENT, THE OTHER LOAN DOCUMENTS AND THE
TRANSACTIONS CONTEMPLATED HEREBY AND THEREBY BASED UPON, AMONG OTHER THINGS,
THE MUTUAL WAIVERS AND CERTIFICATIONS CONTAINED IN THIS SECTION.
SECTION 12.19. FINAL AGREEMENT OF THE PARTIES. THIS AGREEMENT
(INCLUDING THE SCHEDULES AND EXHIBITS HERETO), THE NOTES AND THE OTHER LOAN
DOCUMENTS CONSTITUTE A "LOAN AGREEMENT" AS DEFINED IN SECTION 26.02(A) OF THE
TEXAS BUSINESS AND COMMERCE CODE, AND REPRESENT THE FINAL AGREEMENT BETWEEN THE
PARTIES RELATING TO THE SUBJECT MATTER HEREOF AND THEREOF 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 RELATING TO THE SUBJECT MATER OF THE LOAN DOCUMENTS.
IN WITNESS WHEREOF, the parties hereto have caused this
Agreement to be executed by their respective officers thereunto duly authorized
as of the date first above written.
Company:
-------
ENERGY VENTURES, INC., a Delaware corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
Subsidiary Guarantors:
---------------------
EVI OIL TOOLS, INC., a Delaware corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
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GRANT PRIDECO, INC., a Delaware corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
CHANNELVIEW REAL PROPERTY, INC., a
Delaware corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
PRIDECO, INC., a Texas corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
PRIDECO HOLDINGS, INC., a Delaware
corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
MALLARD BAY DRILLING, INC., a Louisiana
corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
BAY DRILLING CORPORATION, a Louisiana
corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
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EV OFFSHORE, INC., a Louisiana corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
AWI DRILLING & WORKOVER, INC., a
Louisiana corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
DELTA CREWBOATS, INC., a Louisiana
corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
EVI INTERNATIONAL, INC., a Delaware
corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
EVI MANAGEMENT INC., a Delaware
corporation
By: /s/ J. G. KILEY
---------------------------------------------
Name: James G. Kiley
-------------------------------------------
Title: Vice President
------------------------------------------
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Agent:
-----
THE CHASE MANHATTAN BANK, N.A., AS AGENT
By: /s/ R. POTTER
---------------------------------------------
Name: Ronald Potter
-------------------------------------------
Title: Managing Director
------------------------------------------
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Lenders:
-------
Tranche A Revolving THE CHASE MANHATTAN BANK, N.A.
Credit Commitment:
$15,000,000
By: /s/ R. POTTER
-----------------------------------
Name: Ronald Potter
---------------------------------
Tranche B Revolving Title: Managing Director
Credit Commitment: ---------------------------------
$5,000,000
Address:
270 Park Avenue
New York, New York 10017
Telecopy No.: (212) 622-0002
Domestic Lending Office
-----------------------
The Chase Manhattan Bank, N.A.
270 Park Avenue
New York, New York 10017
Eurodollar Lending Office
-------------------------
The Chase Manhattan Bank, N.A.
270 Park Avenue
New York, New York 10017
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135
Lenders:
-------
Tranche A Revolving ABN AMRO BANK N.V., Houston Agency
Credit Commitment: By: ABN AMRO North America, Inc.
$13,125,000 as agent
By: /s/ C.W. RANDALL
------------------------------------
Name: Charles W. Randall
----------------------------------
Tranche B Revolving Title: Group Vice President
Credit Commitment: ---------------------------------
$4,375,000
By: /s/ JONATHAN C. HOMEYER
------------------------------------
Name: Jonathan C. Homeyer
----------------------------------
Title: Officer
---------------------------------
Address:
Three Riverway, Suite 1700
Houston, Texas 77056
Telecopy No.: (713) 629-7533
Domestic Lending Office
-----------------------
Three Riverway, Suite 1700
Houston, Texas 77056
Eurodollar Lending Office
-------------------------
Three Riverway, Suite 1700
Houston, Texas 77056
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136
Lenders:
-------
Tranche A Revolving THE BANK OF NOVA SCOTIA
Credit Commitment:
$9,375,000
By: /s/ F.C.H. ASHBY
------------------------------------
Name: F.C.H. Ashby
----------------------------------
Tranche B Revolving Title: Senior Manager Loan Operations
Credit Commitment: ---------------------------------
$3,125,000
Address:
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Telecopy No.: (404) 888-8998
Domestic Lending Office
-----------------------
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
Eurodollar Lending Office
-------------------------
600 Peachtree Street N.E., Suite 2700
Atlanta, Georgia 30308
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137
Lenders:
-------
Tranche A Revolving BANQUE PARIBAS
Credit Commitment:
$9,375,000
By: /s/ BRIAN MALONE
------------------------------------
Name: Brian Malone
----------------------------------
Tranche B Revolving Title: Vice President
Credit Commitment: ---------------------------------
$3,125,000
By: /s/ BARTON D. SCHOVEST
------------------------------------
Name: Barton D. Schovest
----------------------------------
Title: Group Vice President
---------------------------------
Address:
1200 Smith Street, Suite 3100
Houston, Texas 77002
Telecopy No.: (713) 659-3832
Domestic Lending Office
-----------------------
1200 Smith Street, Suite 3100
Houston, Texas 77002
Eurodollar Lending Office
-------------------------
1200 Smith Street, Suite 3100
Houston, Texas 77002
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138
Lenders:
-------
Tranche A Revolving CREDIT LYONNAIS NEW YORK BRANCH
Credit Commitment:
$11,250,000
By: /s/ PASCAL POUPELLE
------------------------------------
Name: Pascal Poupelle
----------------------------------
Tranche B Revolving Title: Senior Vice President
Credit Commitment: ---------------------------------
$3,750,000
Address:
1000 Louisiana, Suite 5360
Houston, Texas 77002
Telecopy No.: (713) 751-0307
Domestic Lending Office
-----------------------
1301 Avenue of the Americas
New York, New York 10019
Eurodollar Lending Office
-------------------------
1301 Avenue of the Americas
New York, New York 10019
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139
Lenders:
-------
Tranche A Revolving WELLS FARGO BANK (TEXAS), N.A.
Credit Commitment:
$11,250,000
By: /s/ FRANK W. SCHAGEMAN
------------------------------------
Name: Frank W. Schageman
----------------------------------
Tranche B Revolving Title: Vice President
Credit Commitment: ---------------------------------
$3,750,000
Address:
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Telecopy No.: (713) 250-7029
Domestic Lending Office
-----------------------
1000 Louisiana, 3rd Floor
Houston, Texas 77002
Eurodollar Lending Office
-------------------------
1000 Louisiana, 3rd Floor
Houston, Texas 77002
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140
Lenders:
-------
Tranche A Revolving THE FUJI BANK, LIMITED
Credit Commitment:
$9,375,000
By: /s/ DAVID KELLEY
------------------------------------
Name: David Kelley
----------------------------------
Tranche B Revolving Title: Senior Vice President
Credit Commitment: ---------------------------------
$3,125,000
Address:
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Telecopy No.: (713) 759-0048
Domestic Lending Office
-----------------------
1221 McKinney Street, Suite 4100
Houston, Texas 77010
Eurodollar Lending Office
-------------------------
1221 McKinney Street, Suite 4100
Houston, Texas 77010
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141
Lenders:
-------
Tranche A Revolving HIBERNIA NATIONAL BANK
Credit Commitment:
$11,250,000
By: /s/ BRUCE RON
------------------------------------
Name: Bruce Ron
----------------------------------
Tranche B Revolving Title: Vice President
Credit Commitment: ---------------------------------
$3,750,000
Address:
313 Carondelet Street
New Orleans, Louisiana 70130
Telecopy No.: (504) 533-5434
Domestic Lending Office
-----------------------
313 Carondelet Street
New Orleans, Louisiana 70130
Eurodollar Lending Office
-------------------------
313 Carondelet Street
New Orleans, Louisiana 70130
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142
FORM OF
TRANCHE A REVOLVING CREDIT NOTE
$________________ _____________, 199__
FOR VALUE RECEIVED, the undersigned, ENERGY VENTURES, INC., a
Delaware corporation, (the "Company"), HEREBY PROMISES TO PAY to the order of
______________ ____________________________________________________ (the
"Lender"), the lesser of (i) _________________________________________________
and No/100 DOLLARS ($__________) and (ii) the aggregate amount of Tranche A
Revolving Credit Loans made by the Lender and outstanding on the Tranche A
Revolving Credit Stated Maturity Date. The principal amount of the Tranche A
Revolving Credit Loans made by the Lender to the Company shall be due and
payable on the dates and in the amounts as are specified in that certain Credit
Agreement dated as of June _____, 1996 (as amended or otherwise modified from
time to time, the "Credit Agreement") among the Company, the Subsidiary
Guarantors, the Lender, certain other lenders that are party thereto and The
Chase Manhattan Bank, N.A., as Agent for the Lender and such other lenders. All
capitalized terms used herein and not otherwise defined shall have the meanings
as defined in the Credit Agreement.
The Company promises to pay interest on the unpaid principal
amount of each Tranche A Revolving Credit Loan outstanding from time to time
from the date thereof until such principal amount is paid in full, at such
interest rates and payable on such dates as are specified in the Credit
Agreement. Both principal and interest are payable in same day funds in lawful
money of the United States of America to The Chase Manhattan Bank, N.A., as
Agent, at 270 Park Avenue, New York, New York 10017, or at such other place as
the Agent shall designate in writing to the Company.
This Note is one of the Tranche A Revolving Credit Notes
referred to in, and this Note and all provisions herein are entitled to the
benefits of, the Credit Agreement and the Guaranty. The obligations of the
Company hereunder are secured by the Security Documents. The Credit Agreement,
among other things, (a) provides for the making of Tranche A Revolving Credit
Loans by the Lender and other lenders to the Company from time to time, and (b)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events, for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions therein specified, and for
limitations on the amount of interest paid such that no provision of the Credit
Agreement or this Note shall require the payment or permit the collection of
interest in excess of the Highest Lawful Rate.
-137-
143
This Note may be held by the Lender for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Lender may determine.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Note shall be governed by and construed under the laws of
the State of New York and the applicable laws of the United States of America.
ENERGY VENTURES, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
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144
FORM OF
TRANCHE B REVOLVING CREDIT NOTE
$________________ _____________, 199__
FOR VALUE RECEIVED, the undersigned, ENERGY VENTURES, INC., a
Delaware corporation, (the "Company"), HEREBY PROMISES TO PAY to the order of
______________ ____________________________________________________ (the
"Lender"), the lesser of (i) __________________________________________________
and No/100 DOLLARS ($__________) and (ii) the aggregate amount of Tranche B
Revolving Credit Loans made by the Lender and outstanding on the Tranche B
Revolving Credit Stated Maturity Date. The principal amount of the Tranche B
Revolving Credit Loans made by the Lender to the Company shall be due and
payable on the dates and in the amounts as are specified in that certain
Credit Agreement dated as of June 26, 1996 (as amended or otherwise modified
from time to time, the "Credit Agreement") among the Company, the Subsidiary
Guarantors, the Lender, certain other lenders that are party thereto and The
Chase Manhattan Bank, N.A., as Agent for the Lender and such other lenders.
All capitalized terms used herein and not otherwise defined shall have the
meanings as defined in the Credit Agreement.
The Company promises to pay interest on the unpaid principal
amount of each Tranche B Revolving Credit Loan outstanding from time to time
from the date thereof until such principal amount is paid in full, at such
interest rates and payable on such dates as are specified in the Credit
Agreement. Both principal and interest are payable in same day funds in lawful
money of the United States of America to The Chase Manhattan Bank, N.A., as
Agent, at 270 Park Avenue, New York, New York 10017, or at such other place as
the Agent shall designate in writing to the Company.
This Note is one of the Tranche B Revolving Credit Notes
referred to in, and this Note and all provisions herein are entitled to the
benefits of, the Credit Agreement and the Guaranty. The obligations of the
Company hereunder are secured by the Security Documents. The Credit Agreement,
among other things, (a) provides for the making of Tranche B Revolving Credit
Loans by the Lender and other lenders to the Company from time to time, and (b)
contains provisions for acceleration of the maturity hereof upon the happening
of certain stated events, for prepayments on account of principal hereof prior
to the maturity hereof upon the terms and conditions therein specified, and for
limitations on the amount of interest paid such that no provision of the Credit
Agreement or this Note shall require the payment or permit the collection of
interest in excess of the Highest Lawful Rate.
-139-
145
This Note may be held by the Lender for the account of its
Domestic Lending Office or its Eurodollar Lending Office and may be transferred
from one to the other from time to time as the Lender may determine.
The Company and any and all endorsers, guarantors and sureties
severally waive grace, demand, presentment for payment, notice of dishonor or
default, intent to accelerate, protest and notice of protest and diligence in
collecting and bringing of suit against any party hereto, and agree to all
renewals, extensions or partial payments hereon and to any release or
substitution of security herefor, in whole or in part, with or without notice,
before or after maturity.
This Note shall be governed by and construed under the laws of
the State of New York and the applicable laws of the United States of America.
ENERGY VENTURES, INC.
By:
-----------------------------
Name:
-----------------------------
Title:
-----------------------------
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146
SUBSIDIARY GUARANTOR COUNTERPART
Date: __________________
To the Banks and the Agents
Referred to Below
c/o The Chase Manhattan Bank, N.A., as Agent
270 Park Avenue
New York, New York 10017
Ladies and Gentlemen:
Reference is made to the Credit Agreement, dated as of June 26,
1996 (as from time to time amended, the "Credit Agreement") among Energy
Ventures, Inc. (the "Company"), the Subsidiary Guarantors defined therein, the
lenders party thereto (the "Lenders") and The Chase Manhattan Bank, N.A., as
agent for the Lenders (the "Agent"). All capitalized terms used but not
defined herein shall have the meaning set forth in the Credit Agreement.
The Company and ___________________________________, a
______________ ____________________ (the "Designated Subsidiary Guarantor") (i)
confirm that the Designated Subsidiary Guarantor is a domestic Restricted
Subsidiary that is Wholly Owned by the Company and (ii) make the
representations and warranties as to the Designated Subsidiary Guarantor
contained in Article VI of the Credit Agreement. The Designated Subsidiary
Guarantor hereby (i) agrees to be bound in all respects by the terms of the
Credit Agreement, (ii) ratifies and confirms the Guaranty with respect to the
Obligations of the Company (subject to the provisions of Section 9.04 and
Section 9.05 of the Credit Agreement) and (iii) agrees to perform all of the
obligations of a Subsidiary Guarantor thereunder.
The Company and the Designated Subsidiary Guarantor confirm that
they have complied with the provisions of Section 8.02(g) of the Credit
Agreement.
The address to which communications to the Designated Subsidiary
Guarantor under the Credit Agreement should be directed is at the address for
Subsidiary Guarantors
-141-
147
shown in Section 12.02 of the Credit Agreement. This instrument shall be
construed in accordance with and governed by the laws of the State of New York.
Upon execution of this Subsidiary Guarantor Counterpart by the
Company and the Designated Subsidiary Guarantor and the acceptance by the
Agent, the Designated Subsidiary Guarantor shall become a Subsidiary Guarantor
under the Credit Agreement as though it was an original party thereto.
Very truly yours,
ENERGY VENTURES, INC.
By:
----------------------------------
Name:
Title:
[DESIGNATED SUBSIDIARY GUARANTOR]
By:
----------------------------------
Name:
Title:
ACCEPTED as of the date
first above written:
THE CHASE MANHATTAN BANK, N.A.,
as Agent
By: ______________________________________________
Name:
Title:
-142-