AMENDED AND RESTATED LOAN AGREEMENT
BY AND BETWEEN
WHITNEY NATIONAL BANK
AND
SUPERIOR ENERGY SERVICES, INC.
This Amended and Restated Loan Agreement (the "Agreement")
is entered into on this 5th day of November, 1997, by and between
Whitney National Bank ("Bank") and Superior Energy Services, Inc.
("Borrower") and constitutes an amendment and restatement of the
Loan Agreement by and between Bank and Borrower dated October 14,
1997 (the "Existing Loan Agreement").
I. Definitions
1.01 For all purposes of this Agreement, unless otherwise
expressly provided or unless the context otherwise requires, the
following terms shall have the following meanings:
"Acquisition" shall mean the purchase, merger with or other
acquisition by Borrower or any Subsidiary, after the date hereof,
of (i) the stock or other equity interest (in whole or in part)
in any entity, which, after such Acquisition will be a Subsidiary
and will be primarily engaged in the Company Business or (ii) all
or substantially all of the assets of any entity which will be
used in the Company Business.
"Advance" shall mean a disbursement of a Loan in accordance
herewith.
"Applicable Margin" shall mean, the rate of interest per
annum shown in the applicable column below:
Level I Level II Level III Level IV
If Ratio of Consolidated < 1.0 < 2.0 < 3.0 > 3.0
Total Debt as of the end of > 1.0 > 2.0
the immediately preceding
fiscal quarter to
Consolidated EBITDA for the
immediately preceding four
(4) fiscal quarters is
Applicable Margin 1.50% 1.75% 2.00% 2.25%
The Applicable Margin shall commence at Level I and shall be
adjusted on the first day of each March, June, September and
December (or, if such day is not a Business Day, on the next
succeeding Business Day), based on the ratio of Consolidated
Total Debt as of the end of the immediately preceding fiscal
quarter to Consolidated EBITDA for the immediately preceding four
(4) fiscal quarters. If Borrower should fail to deliver in a
timely manner a certificate required under Section 5.02(a)(vi)
hereof, then, until Borrower shall have provided such
certificate, it shall be presumed that the ratio of Consolidated
Total Debt as of the end of the immediately preceding fiscal
quarter to Consolidated EBITDA for the immediately preceding four
(4) fiscal quarters was greater than 3 (and, from the date of the
delivery of such certificate, the Applicable Margin shall be
determined by reference to such certificate).
"Borrower's Agent" shall mean any one of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ or
any other person subsequently authorized by a corporate
resolution, duly authorized and adopted by the board of directors
of Borrower in form acceptable to Bank. Until Borrower notifies
Bank in writing of the withdrawal of Borrower's Agent's rights
and powers, Bank shall be able to rely conclusively upon
Borrower's Agent's right to borrow and incur Loans on behalf of
Borrower.
"Borrowing Base" shall mean, as of the date of determination
thereof, an amount equal to the lesser of (a) $45,000,000.00 or
(b) eighty-five (85%) percent of the base amounts owed on all
Eligible Accounts as of such date plus fifty (50%) percent of all
Eligible Inventory as of such date plus seventy (70%) percent of
all Consolidated Property, Plant & Equipment as of such date.
"Business Day" shall mean any day on which banks are
required to be open to carry on normal business in the State of
Louisiana.
"Capital Expenditure" shall mean any expenditure which, as
determined in accordance with GAAP, is required to be capitalized
on the balance sheet of the Person making the same, but excluding
(i) expenditures for the restoration or replacement of fixed
assets to the extent funded out of the proceeds of an insurance
policy and (ii) Acquisitions.
"Capitalized Lease Obligations" shall mean, with respect to
any Person, obligations of such Person with respect to leases
which, in accordance with GAAP, are required to be capitalized on
the financial statements of such Person.
"Collateral" shall mean the property mortgaged or encumbered
by the Loan Documents.
"Company Business" shall mean the (i) sale, lease,
distribution, repair and manufacture of oil and gas related
equipment, parts and supplies, (ii) the providing of services
relating to the exploration, development or production of oil and
gas and (iii) any other activities ancillary to the foregoing.
"Consolidated Current Ratio" shall mean, as of any date for
which its is being determined, the ratio of (a) current assets of
Borrower and its Subsidiaries as of such date, as determined on a
consolidated basis in accordance with GAAP, to (b) current
liabilities of Borrower and its Subsidiaries as of such date, as
determined on a consolidated basis in accordance with GAAP, but
excluding the principal amount of the Loans outstanding as of
such date.
"Consolidated Debt Service Coverage Ratio" shall mean, as of
any date for which it is being determined, the ratio of (a)
Consolidated EBITDA for the immediately preceding four (4) fiscal
quarters (including any fiscal quarter ending on such date) minus
Capital Expenditures of Borrower or any Subsidiary during the
immediately preceding four (4) fiscal quarters (including any
fiscal quarter ending on such date) minus all provisions for any
federal, state, local and/or foreign income taxes made by
Borrower or any Subsidiary during the immediately preceding four
(4) fiscal quarters (including any fiscal quarter ending on such
date), to (b) Consolidated Interest Expense for the immediately
preceding four (4) fiscal quarters (including any fiscal quarter
ending on such date) plus Consolidated Scheduled Principal
Payments for the immediately preceding four (4) fiscal quarters
(including any fiscal quarter ending on such date) plus the
principal portion of Capitalized Lease Obligations payable by
Borrower or any Subsidiary in respect of the immediately
preceding four (4) fiscal quarters (including any fiscal quarter
ending on such date).
"Consolidated EBITDA" shall mean, for any period, the sum of
the following: (a) Consolidated Net Income during such period
plus (b) to the extent deducted in determining Consolidated Net
Income, the sum of (i) Consolidated Interest Expense during such
period, plus (ii) all provisions for any federal, state, local
and/or foreign income taxes made by Borrower or any Subsidiary
during such period (whether paid or deferred) plus (iii) all
depreciation and amortization expenses and all other non-cash
items of Borrower or any Subsidiary during such period, all
determined on a consolidated basis as determined in accordance
with GAAP plus (c) to the extent not already included in
Consolidated Net Income, the sum of (i) the earnings before
depreciation, amortization, interest expense, extraordinary items
and taxes during such period of any Subsidiaries acquired during
such period as determined in accordance with GAAP plus (ii) any
additional amount requested by Borrower and approved by Bank that
is appropriate to reflect any additional earnings during such
period of any Subsidiaries acquired during such period that would
have been recognized if they had been a Subsidiary for the entire
period minus to the extent not already included in Consolidated
Interest Expense, the estimated interest expense, in an amount
approved by Bank, that Borrower or any Subsidiary would have
incurred during such period had any Indebtedness that Borrower or
any Subsidiary incurred in connection with the acquisition of any
Subsidiaries during such period been in existence for the entire
period.
"Consolidated Interest Expense" shall mean, for the period
in question, without duplication, all interest expense of
Borrower and its Subsidiaries (including, without limitation,
capitalized interest expense, the interest portion of Capitalized
Lease Obligations and the interest portion of any deferred
payment obligation) during such period, all determined on a
consolidated basis as determined in accordance with GAAP.
"Consolidated Net Income" and "Consolidated Net Loss" shall
mean, for the period in question, the after-tax net income or
loss of Borrower and its Subsidiaries during such period,
determined on a consolidated basis as determined in accordance
with GAAP, but excluding in any event the following to the extent
included in the computation of net income:
(i) any net gain or net loss (net of expenses and taxes
applicable thereto) for such period resulting from the sale,
transfer or other disposition of fixed or capital assets (other
than inventory and other property held for resale in the ordinary
course of business) as determined by GAAP;
(ii) any gains or losses resulting from any reappraisal,
revaluation or write-up or write-down of assets;
(iii) any equity of Borrower or any Subsidiary in the
undistributed earnings of any corporation which is not a
Subsidiary and is accounted for on the equity method as
determined in accordance with GAAP;
(iv) undistributed earnings of any Subsidiary to the extent
that the declaration or payment of dividends or other
distributions by such Subsidiary is not at the time permitted by
the terms of its charter documents or any agreement, document,
instrument, judgment, decree, order, statute, rule or
governmental regulation applicable to such Subsidiary;
(v) gains or losses from the acquisition or disposition of
investments;
(vi) gains from the retirement or extinguishment of any
Debt;
(vii) gains on collections from insurance policies or
settlements (net of premiums paid or other expenses incurred with
respect to such gains during the fiscal period in which the gain
occurs, to the extent such premiums or other expenses are not
already reflected in Consolidated Net Income for such fiscal
period);
(viii) any gains or losses during such period from any
change in accounting principles, from any discontinued operations
or the disposition thereof or from any prior period adjustments;
and
(ix) any extraordinary gains and/or losses;
all determined in accordance with GAAP. If the preceding
calculation results in a number less than zero such amount shall
be considered a Consolidated Net Loss.
"Consolidated Net Worth" shall mean, at a particular date,
all amounts which would be included under shareholders' equity on
a consolidated balance sheet of Borrower and its Subsidiaries as
determined on a consolidated basis in accordance with GAAP
(including, without limitation, capital stock, additional paid-
in-capital and retained earnings) at such date.
"Consolidated Property, Plant & Equipment" shall mean, as of
the date of any determination thereof, to the extent not included
in Eligible Inventory, all fixed assets of Borrower and its
Subsidiaries as of such date other than assets that are real
property which are subject to a first security interest in favor
of Bank, determined on a consolidated basis as determined in
accordance with GAAP and valued at the greater of (i) net book
value or (ii) upon the written request of Borrower, the fair
market value of such assets as reflected on a current appraisals,
obtained at Borrower's cost, directed and delivered to Bank by
appraiser(s) acceptable to Bank.
"Consolidated Scheduled Principal Payments" shall mean, for
the period in question, without duplication, all scheduled
principal payments of Borrower and its Subsidiaries on
Indebtedness for the applicable period, all determined on a
consolidated basis as determined in accordance with GAAP.
"Consolidated Total Debt" shall mean, as of the date of any
determination thereof, all Debt of Borrower and its Subsidiaries
as of such date, determined on a consolidated basis as determined
in accordance with GAAP at such date; provided that any loans of
Borrower or any Subsidiary to stockholders of Borrower or any
Subsidiary shall be excluded from Consolidated Total Debt to the
extent that such loans are expressly subordinate to the Loans.
"Consolidated Working Capital" shall mean, as of any date
for which its is being determined, all current assets of Borrower
and its Subsidiaries as of such date, as determined on a
consolidated basis in accordance with GAAP minus all current
liabilities of Borrower and its Subsidiaries as of such date, as
determined on a consolidated basis in accordance with GAAP, but
excluding the principal amount of the Loans outstanding as of
such date.
"Continuing Guaranty" shall mean the unlimited continuing
guarantee of all Secured Obligations executed now or at any time
hereafter by each Subsidiary, in the form of Exhibit A attached
hereto and incorporated herein by reference.
"Debt" of any Person shall mean, as of the date of
determination thereof, the sum of (a) all Indebtedness of such
Person for borrowed money or which has been incurred to purchase
property plus (b) all Capitalized Lease Obligations of such
Person.
"Eligible Accounts" shall mean all accounts of Borrower and
its Subsidiaries which are subject to a first security interest
in favor of Bank that are acceptable and approved by Bank from
time to time as accounts eligible to be used as a basis for an
advance under the Line of Credit. Without limiting Bank's
discretion to deem an account unacceptable, the following shall
be ineligible to be used as a basis for an Advance: (i) any
account which has remained unpaid for more than ninety (90) days
from the date of invoice, (ii) any account subject to a set off
or disputed by the account debtor of the account, (iii) any
account which Borrower or any Subsidiary has extended the time
for payment without the consent of Bank, (iv) any account owed by
an account debtor which does not maintain its chief executive
office in the United States or which is not organized under the
laws of the United States of America, unless secured by an
acceptable letter of credit subject to a first security interest
in favor of Bank, (v) any account which is owed by any parent,
subsidiary, affiliate, related company or shareholder of Borrower
or any Subsidiary, (vi) any account due from the United States of
America or any agency thereof unless proper notices of assignment
have been executed and delivered in accordance with the
Assignment of Claims Act of 1940, as amended, 31 U.S.C. 3727, 41
U.S.C. 15, and as may be required by Bank, (vii) any account in
which Borrower or any Subsidiary owes or will owe any obligation
to the account debtor of such account, (viii) any account arising
from retainage(s) against billing(s) and (ix) any account due on
consigned goods.
"Eligible Inventory" shall mean all inventory of Borrower
and its Subsidiaries which is subject to a first security
interest in favor of Bank and is held for sale or lease to
customers in the ordinary course of business and shall be valued
at the lower of (i) the cost of each item consisting of inventory
or (ii) its market value, less any Indebtedness outstanding that
was incurred in connection with the purchase of such inventory.
"GAAP" shall mean generally accepted accounting principles
at the time in the United States.
"Indebtedness" shall mean, as to any Person, at a particular
time, all items which constitute, without duplication, (i)
indebtedness for borrowed money or the deferred purchase price of
property (other than trade payables incurred in the ordinary
course of business), (ii) indebtedness evidenced by notes, bonds,
debentures or similar instruments, (iii) obligations with respect
to any conditional sale or title retention agreement, (iv)
indebtedness arising under acceptance facilities and the amount
available to be drawn under all letters of credit issued for the
account of such Person and, without duplication, all drafts drawn
thereunder to the extent that such Person shall not have
reimbursed the issuer in respect of the issuer's payment of such
drafts, (v) all liabilities secured by any Lien on any property
owned by such Person even though such Person has not assumed or
otherwise become liable for the payment thereof (other than
carrier's, warehousemen's, mechanics', repairmen's or other like
non-consensual statutory Liens arising in the ordinary course of
business), (vi) obligations under Capital Lease Obligations and
(vii) all guaranties, endorsements (other than for collection or
deposit in the ordinary course of business), and other contingent
obligations to purchase, to provide funds for payment, to supply
funds against loss.
"LIBOR Base Rate" shall mean the London interbank offered
rate per annum (rounded upwards, if necessary, to the nearest
1/100 of 1%) for deposits in U.S. dollars for a period equal to
three months, which appears on the Telerate Page 3875 as of 9:00
a.m. (New Orleans time) or, if such rate can not be so
determined, the arithmetic average of the rates of interest per
annum (rounded upwards, if necessary, to the nearest 1/100 of 1%)
at which deposits in U.S. dollars in immediately available funds
are offered to Bank as of the opening of business of Bank or as
soon thereafter as practicable by two (2) or more major banks in
the London interbank market selected by Bank for a period equal
to three (3) months and in an amount equal or comparable to the
principal amount of the Loans. The LIBOR Base Rate shall be
adjusted quarterly on the first day of each March, June,
September and December (or, if such day is not a Business Day,
on the next succeeding Business Day).
"LIBOR Rate" shall mean the LIBOR Base Rate plus the
Applicable Margin; provided that the LIBOR Rate shall never
exceed the Prime Rate.
"Lien" shall mean any mortgage, pledge, hypothecation,
security interest, encumbrance, lien, judgment, garnishment,
seizure, tax lien or levy (statutory or otherwise) or charge of
any kind (including any agreement to give any of the foregoing,
any conditional sale or other title retention agreement, or any
capitalized lease, and the filing of or agreement to give any
financing statement under the Uniform Commercial Code of any
jurisdiction).
"Line of Credit" shall mean the credit facility made
available by Bank to Borrower pursuant to Section 2.01.
"Line of Credit Period" shall mean the period commencing on
the date hereof and ending on December 31, 1997.
"Loans" shall mean the loans to Borrower described in
Section 2.01 hereof and in Section 3.05 hereof, with each being a
Loan, and shall include all principal, interest, attorney's fees
and costs owed thereon.
"Loan Documents" shall mean this Agreement, the promissory
note(s) executed by Borrower, the security documents provided for
in Section 4.01 hereof, the Letter of Credit Application and
Agreements provided for in Section 3.03 hereof and all other
documents evidencing or securing the Secured Obligations.
"Material Adverse Effect" shall mean a material adverse
effect on the properties, assets, liabilities, business,
operations, prospects, income or condition (financial or
otherwise) of Borrower and its Subsidiaries taken as a whole.
"Permitted Acquisition" shall mean an Acquisition (a) solely
through the issuance of common stock (or the use of the proceeds
from the sale of common stock) of Borrower or of any Subsidiary
after the date hereof or (b) complying with each of the following
requirements: (i) the purchase price for all Acquisitions falling
under this subparagraph (b) of this definition of Permitted
Acquisition in any one fiscal year does not in the aggregate
exceed $3,000,000.00, (ii) such Acquisition will not cause a
Default and (iii) the ratio of (A) Consolidated Total Debt as of
the end of the fiscal quarter immediately preceding the date of
such Acquisition (including any fiscal quarter ending on such
date) plus the Indebtedness to be incurred or assumed by Borrower
or its Subsidiaries in connection with such Acquisition plus all
Debt of any Subsidiary to be acquired as of the date of such
Acquisition (to the extent not already included) to (B)
Consolidated EBITDA, determined as if such Acquisition was
completed, for the four (4) fiscal quarters immediately preceding
the date of such Acquisition (including any fiscal quarter ending
on such date) will not exceed 4.00 to 1.
"Permitted Liens" shall mean (i) pledges or deposits by
Borrower or any Subsidiary under workmen's compensation laws,
unemployment insurance laws or similar legislation, or good faith
deposits in connection with bids, tenders, contracts (other than
for the payment of Indebtedness of Borrower or any Subsidiary) or
leases (other than capitalized leases) to which Borrower or any
Subsidiary is a party, or deposits to secure statutory
obligations of Borrower or any Subsidiary or deposits of cash or
U.S. Government Bonds to secure surety or appeal bonds to which
Borrower or any Subsidiary is a party, or deposits as security
for contested taxes or import duties or for the payment of rent;
(ii) Liens imposed by law, such as vendors', carriers',
warehousemen's, materialmen's and mechanics' liens, incurred in
the ordinary course of business for sums not overdue or being
contested in good faith by appropriate proceedings and for which
adequate reserves shall have been set aside on the books of
Borrower or any Subsidiary; (iii) Liens in respect of judgments
or awards, the Indebtedness with respect to which is permitted by
Section 5.03(c)(v); (iv) Liens for taxes not yet delinquent and
Liens for taxes the payment of which is being contested in good
faith by appropriate proceedings and for which adequate reserves
shall have been set aside on the books of Borrower or a
Subsidiary; (v) Liens in favor of Bank, (vi) survey exceptions,
issues with regard to merchantability of title, easements or
reservations of, or rights of others for rights-of-way, highways
and railroad crossings, sewers, electric lines, telegraph and
telephone lines and other similar purposes, or zoning or other
restrictions as to the use of real property incidental to the
conduct of the business of Borrower or any Subsidiary or to the
ownership of its property which were not incurred in connection
with indebtedness of Borrower or any Subsidiary, which Liens do
not in the aggregate materially detract from the value of said
properties or materially impair their use in the operation of the
business taken as a whole of Borrower and its Subsidiaries, (vii)
leases of or purchase money security interests against specific
equipment with a book value not greater than $500,000.00 in the
aggregate at any one time outstanding; (viii) any Liens not
otherwise permitted hereby against any Subsidiary acquired by
Borrower or any Subsidiary after October 14, 1997, not in
existence for more than 90 days after the date of such
Acquisition, (ix) any Liens outstanding on the date hereof
against property that was owned by Dimensional Oil Field
Services, Inc. or Nautilus Pipe & Tool Rental, Inc. at the time
such Subsidiaries were acquired by Borrower and securing debt
incurred in connection with the acquisition of such Subsidiaries
and (x) any Lien against property that is owned by Sub-Surface
Tools, Inc. at the time such Subsidiary is acquired by Borrower
and securing debt incurred in connection with the acquisition of
such Subsidiary so long as such Lien is expressly subordinate to
the security interest in favor of Bank in the assets of such
Subsidiary pursuant to a subordination agreement acceptable to
Bank.
"Person" shall mean any individual, corporation,
partnership, joint venture, association, joint stock company,
trust, unincorporated organization, government or agency or
political subdivision thereof, or any other form of entity.
"Prime Rate" shall mean the interest rate per annum
announced from time to time by Citibank, N.A. at its main office
in New York as its "prime rate" on commercial loans (which rate
shall fluctuate as and when said prime rate shall change).
"Secured Obligations" shall mean the Loans and all
obligations, indebtedness and liabilities of every kind, nature
and character of Borrower to Bank, direct or contingent, due or
to become due, now existing or hereafter arising, including,
without limitation, all future advances, together with all
interest, attorneys' fees, expenses of collection and costs, and
further including, without limitation, obligations to Bank on any
promissory notes, overdrafts, endorsements, continuing guaranties
and this Agreement.
"Stated Amount" of each Letter of Credit shall, at any time,
mean the maximum amount available to be drawn thereunder.
"Subsidiary" shall mean (a) any corporation of which more
than fifty percent (50%) of the issued and outstanding capital
stock entitled to vote for the election of directors (other than
by reason of default in the payment of dividends) is at the time
owned directly or indirectly by Borrower and/or any one or more
Subsidiaries of Borrower, or (b) any partnership, limited
liability company, business trust, or any other similar entity of
which more than fifty percent (50%) of the voting interests is at
the time owned directly or indirectly by Borrower and/or any one
or more Subsidiary of Borrower, and specifically including, but
not limited to, each of the entities listed on Schedule 1.01
annexed hereto.
"Telerate Page 3875" means the display designated as "Page
3875" of the Dow ▇▇▇▇▇ Telerate Service (or such other page as
may replace Page 3875 on that service or such other service as
may be nominated by the British Bankers' Association as the
information vendor for the purpose of displaying British Bankers'
Association Interest Settlement Rates for U.S. Dollar Deposits).
1.02 Other Definitional Provisions.
(a) All terms defined in this Agreement shall have the
defined meanings when used in any certificates or other document
made or delivered pursuant hereto unless the context shall
otherwise require.
(b) Words used herein in the singular, where the context
so permits, shall be deemed to include the plural and vice versa.
Likewise, the definitions of words used in the singular herein
shall also apply to such words when used in the plural and vice
versa, unless the context shall otherwise require.
(c) The words "hereof," "herein" and "hereunder" and words
of similar import when used in this Agreement shall refer to this
Agreement as a whole and not to any particular provision of this
Agreement.
(d) Section, subsection, schedule and exhibit references
are to this Agreement unless otherwise specified.
II. Loans To Borrower
2.01 (a) Loans. Subject to the due and faithful
performance of the terms and conditions of this Agreement and in
any instrument or agreement executed contemporaneous herewith or
as a consequence hereof and in accordance with the terms and
conditions of this Agreement, Bank shall make loans to Borrower
from time to time during the Line of Credit Period provided that
the principal amount of the loans plus the Stated Amount of all
outstanding Letters of Credit shall not at any time exceed the
Borrowing Base. The Loans will bear interest on the outstanding
principal balance from time to time at the rate equal to the
LIBOR Rate and shall be payable interest only monthly in arrears
on the last day of each month (or the immediate subsequent
Business Day if any such last day is not a Business Day)
commencing on November 30, 1997, with the balance of all
outstanding principal and interest being due and payable on
December 31, 1997. Interest on the outstanding principal owed on
the Loans will be computed and assessed on the basis of the
actual number of days elapsed over a year composed of 360 days.
The obligation of the Borrower to repay the Loans shall be
evidenced by a promissory note made payable to the order of Bank
in the principal sum of $45,000,000.00, a copy of which is
attached hereto as Exhibit B.
(b) Loans Shall Never Exceed Borrowing Base. The
principal amount of the Loans plus the Stated Amount of all
outstanding Letters of Credit shall not at any time exceed the
Borrowing Base. To the extent that the principal amount of the
Loans plus the Stated Amount of all outstanding Letters of Credit
exceed, at any time, the Borrowing Base, Borrower shall
immediately pay such excess amounts to Bank as a payment on the
Loans.
2.02 (a) Advance Request. Upon the terms and subject to
the conditions hereof, Borrower may request an Advance under the
Line of Credit during a Business Day between the hours of 9:00
a.m. and 4:00 p.m. (New Orleans time). If Bank receives the
Borrower's proper request for an Advance by no later than 3:00
p.m. (New Orleans time), then Bank shall make the Advance in
accordance herewith on the same Business Day. If Bank receives
the Borrower's request for an Advance later than 3:00 p.m. (New
Orleans time), then Bank shall make the Advance in accordance
herewith on the next Business Day. Each request for an Advance
shall be made either by telephone calls to Bank or in writing, by
delivering to Bank by mail, hand-delivery, or facsimile a request
(i) specifying the amount to be borrowed, (ii) specifying the
date the funds will be advanced and (iii) complying with the
requirements of this Section. Bank shall have the right to
verify the telephone requests by calling the person who made the
request at the telephone number identified by the Borrower. If
the Advance request is by telephone, the Borrower will confirm
said request in writing within two (2) Business Days. All such
Advance requests shall be made by the Borrower's Agent. Borrower
agrees that only its duly authorized Borrower's Agent shall make
an Advance request.
(b) Credit Advice. All Advances shall be credited to a
demand deposit account maintained by the Borrower with Bank.
After the borrowing of any Advance under the Line of Credit in
accordance with this Agreement, Bank will mail to the Borrower an
advice showing the amount of the Advance and the amount of funds
credited into the Borrower's account. Bank's failure to mail the
credit advice shall not alter the Borrower's obligation to repay
the Loans or make the Bank liable to the Borrower for failure to
mail the credit advice.
(c) Internal Records Shall Control. The principal amount
shown on the face of the note evidencing the Loans evidences the
maximum aggregate principal amount that may be outstanding from
time to time under the Loans. The Borrower agrees that the
internal records of Bank shall constitute for all purposes prima
facie evidence of (i) the amount of principal and interest owing
on the Loans from time to time, (ii) the amount of each Advance
or Loan made to the Borrower and (iii) the amount of each
principal and/or interest payment received by Bank on the Loans.
(d) Reliance on Communications. Borrower hereby
authorizes Bank to rely on telephonic, telegraphic, telecopy,
telex or written or oral instructions believed by Bank in good
faith to have been sent, delivered or given by Borrower's Agent
with respect to any request to make a Loan or a repayment
hereunder, and on any signature which Bank in good faith believes
to be genuine.
2.03 Prepayment. Borrower shall have the right at any time
and from time to time to prepay the Loans in whole or in part
without penalty by paying all or a portion of the unpaid
principal balance of the Loans, as applicable, plus accrued
interest through the date of prepayment.
2.04 Changes in or Illegality with Respect to LIBOR Rate.
In the event that Bank shall have determined in good faith (which
determination shall, absent manifest error, be final and
conclusive and binding upon all parties hereto):
(a) at any time, that, by reason of any changes arising
after the date of this Agreement affecting the London
interbank market, adequate and fair means do not exist
for ascertaining the applicable interest rate on the
basis provided for in the definition of LIBOR Rate;
(b) at any time, that Bank shall incur increased costs or
reductions in the amounts received or receivable
hereunder with respect to the Loans because of any
change since the date of this Agreement in any
applicable law or governmental rule, regulation,
order, guideline or request or in the interpretation
or administration thereof and including the
introduction of any new law or governmental rule,
regulation, order, guideline or request, such as, for
example, but not limited to: (i) a change in the basis
of taxation of payment to Bank of the principal or
interest on the Loans accruing interest based upon the
LIBOR Rate (except for changes in the rate of tax on,
or determined by reference to, the net income or
profits of Bank) or (ii) a change in official reserve
requirements; or
(c) at any time, that the making or continuance of a loan
accruing interest based upon the LIBOR Rate has been
made (x) unlawful by any law or governmental rule,
regulation or order, (y) impossible by compliance by
Bank in good faith with any governmental request
(whether or not having force of law) or (z)
impracticable as a result of a contingency occurring
after the date of this Agreement which materially and
adversely affects the London interbank market;
then, and in any such event, Bank shall promptly give notice (by
telephone confirmed in writing) to Borrower. Thereafter (i) in
case of clause (a) or (c) above, Borrower agrees that interest on
the Loans shall accrue, and Borrower agrees to pay interest, at a
rate equal to the Prime Rate until such time as Bank notifies
Borrower that the circumstances giving rise to such notice no
longer exist and (ii) in the case of clause (b) above, Borrower
agrees to pay to Bank, upon written demand therefor, such
additional amounts (in the form of an increased rate of, or a
different method of calculating, interest or otherwise as agreed
to by Bank and Borrower) as shall be required to compensate Bank
for such increased costs or reductions in amounts received or
receivable hereunder (a written notice as to the additional
amounts owed to Bank, showing the basis for the calculation
thereof, submitted to Borrower by Bank in good faith shall,
absent manifest error, be final and conclusive and binding on all
the parties hereto). Bank agrees that if it gives notice to
Borrower of any of the events described in clause (a), (b) or (c)
above, it shall promptly notify Borrower if such event ceases to
exist.
2.05. Use of Proceeds. The Borrower shall use the proceeds
of the Loans for Permitted Acquisitions and other general
corporate purposes, including without limitation, for the purpose
of making loans to Subsidiaries for working capital and other
corporate purposes of such Subsidiaries.
2.06 (a) Commitment Fee. Borrower shall pay to Bank, in
arrears, on the last day of March, June, September and December
in each year (or, if such day is not a Business Day, on the next
succeeding Business Day) and on the last day of the Line of
Credit Period, a commitment fee (the "Commitment Fee") equal to
1/4 of 1% of the unused Line of Credit during the preceding
fiscal quarter, or portion thereof, which unused Line of Credit
shall be arrived at by dividing the sum of the unused Line of
Credit for each day of that quarter as of the close of each day,
by 90. The unused Line of Credit shall be defined as (x)
$45,000,000.00 minus (y) the sum of (1) all outstanding Loans and
(2) the Stated Amount of all outstanding Letters of Credit.
(b) Origination Fee. Borrower shall pay to Bank an
origination fee equal to 1/4 of 1% of $45,000,000.00. Bank will
credit such origination fee to any origination fee due by
Borrower in connection with any facility made available by Bank
(or by Bank and one or more other lenders pursuant to which Bank
is the agent) to amend, restate or take out the Line of Credit (a
"Restated Facility"). Nothing contained in this Section 2.06
shall be construed to constitute a commitment by Bank to make
available a Restated Facility or any other loan.
(c) Termination or Reduction of Line of Credit. Borrower
may, upon three (3) Business Days' prior written notice to Bank,
terminate entirely at any time or reduce from time to time by an
aggregate amount of $1,000,000.00 or any larger multiple of
$500,000.00 the unused portion of the Line of Credit; provided,
however, that (i) at no time shall the Line of Credit be reduced
to a figure less than the principal amount of the Loans
outstanding plus the Stated Amount of all outstanding Letters of
Credit, (ii) at no time shall the Line of Credit be reduced to a
figure less than $5,000,000.00 and (iii) any such termination or
reduction shall be permanent and Borrower shall have no right to
thereafter reinstate or increase, as the case may be, the Line of
Credit. Borrower agrees to pay to Bank a termination or
reduction fee on the effective date of each reduction or any
termination in the Line of Credit pursuant to this Section
2.06(c) equal to 1/10 of 1% of the amount of each such reduction
or any termination. No termination or reduction fee will be due
in connection with any Restated Facility.
III. Letters of Credit
3.01 Issuance of Letters of Credit. Subject to the due and
faithful performance of the terms and conditions of this
Agreement and in any instrument or agreement executed
contemporaneous herewith or as a consequence hereof and in
accordance with the terms and conditions of this Agreement, Bank
shall issue, from time to time prior to the expiration of the
Line of Credit Period for the account of Borrower or for the
account of Borrower and any Subsidiary and for the benefit of any
holder, irrevocable stand-by letters of credit up to an aggregate
total Stated Amount of $5,000,000.00 at any one time outstanding
(each a "Letter of Credit"), each for a maximum term not to
extend beyond the Line of Credit Period; provided that the
principal amount of the Loans plus the Stated Amount of all
outstanding Letters of Credit shall not at any time exceed the
Borrowing Base. A Letter of Credit may only be utilized to
guaranty or support the payment of obligations of Borrower or any
Subsidiary to third parties incurred in the ordinary course of
business.
3.02 Existing Letters of Credit. The letters of credit
listed on Schedule 3.02 shall be deemed an outstanding Letters of
Credit under this Agreement and shall be governed by the terms
and provisions of this Agreement.
3.03 Letter of Credit Application and Agreement. Prior to
the issuance of any Letter of Credit hereunder, Borrower, and if
the Letter of Credit is to be issued for the account of Borrower
and a Subsidiary, such Subsidiary, shall have executed and
delivered to Bank a Letter of Credit Application and Agreement
for the issuance thereof on Bank's standard forms and in
accordance with Bank's usual procedures, with Borrower and any
Subsidiary executing same to be jointly, severally and solidarily
liable thereunder.
3.04 Commitment Fee. For each Letter of Credit, Borrower
shall pay to Bank an annual nonrefundable commitment fee payable
quarterly in an amount equal to the rate determined by Bank and
Borrower prior to the issuance of the Letter of Credit
(calculated on an actual day, 360 day year basis) times the face
amount (taking into account any scheduled increases or decreases
therein during the period in question) of each such Letter of
Credit issued hereunder ("Letter of Credit Commitment Fee"),
which Letter of Credit Commitment Fee shall be due and payable in
arrears with respect to each Letter of Credit on the last
Business Day of each calendar quarter during the term of each
respective Letter of Credit and on the termination thereof
(whether at its stated maturity or earlier). Borrower further
agrees to pay to Bank all reasonable administrative fees of
Borrower in connection with the issuance, maintenance,
modification (if any) and administration of each Letter of Credit
and standard negotiation charges upon demand from time to time.
3.05 Payment or Disbursement. Any payment or disbursement
made by Bank with respect to a Letter of Credit shall be deemed
to be an Advance by Bank of a Loan, and shall be subject to all
of the terms and conditions applicable to the Loans. To the
extent that any Letter of Credit remains outstanding on the last
day of the Line of Credit Period, Bank shall retain all of the
Collateral for the Loans until such time as the Letter of Credit
is extinguished and amounts drawn thereunder paid in full,
notwithstanding the full repayment and satisfaction of all
Secured Obligations other than those created by the Letter of
Credit. The Collateral retained shall then serve as security for
the repayment of any amounts that may be drawn down under the
Letters of Credit.
IV. Security
4.01 Security Documents. The Secured Obligations shall,
together with any other security documents now or hereafter
existing in favor of Bank, be secured by the following security
documents:
(a) Security agreements and financing statements whereby
Borrower and each Subsidiary, except ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇,
Inc., grants Bank a lien and security interest in all
accounts, all chattel paper, all general intangibles,
all equipment, and all inventory of Borrower and each
Subsidiary subject to no Liens other than Permitted
Liens.
(b) A Continuing Guarantee of each Subsidiary, except ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, Inc.
(c) A Security Agreement whereby Borrower grants Bank a
lien and security interest in the outstanding common
stock of each Subsidiary subject to no other Liens.
4.02 New Subsidiaries. Within fifteen (15) days of the
creation or acquisition of any Subsidiary, in each case, in
accordance with the terms of this Agreement, any such new
Subsidiary shall, (a) execute and deliver to Bank a Continuing
Guarantee in form of Exhibit A annexed hereto and (b) execute a
Security Agreement in the form of Exhibit C annexed hereto and
financing statement(s) relating thereto granting Bank a security
interest in the movable assets of such Subsidiary subject to no
Liens other than Permitted Liens, as security for the Secured
Obligations. If ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇, Inc. acquires additional
property or commences to conduct business of a nature not
conducted by such Subsidiary on the date hereof, then,
notwithstanding the provisions of Section 4.01 hereof, ▇▇▇▇
▇▇▇▇▇▇ ▇▇▇▇, Inc. will promptly (a) execute and deliver to Bank a
Continuing Guarantee in form of Exhibit A annexed hereto and (b)
execute a Security Agreement in the form of Exhibit C annexed
hereto and financing statement(s) relating thereto granting Bank
a security interest in its movable assets subject to no Liens
other than Permitted Liens, as security for the Secured
Obligations.
4.03 Further Documents. Should Bank choose to make any
Loan prior to obtaining all of the Loan Documents and other
documents required hereby, Borrower shall deliver or arrange to
have delivered such Loan Documents and documents upon the request
of Bank. Borrower and each Subsidiary will promptly cure any
defects in the creation, execution and delivery of the Loan
Documents. Borrower will promptly execute and deliver, and
arrange for each Subsidiary to execute and deliver, to Bank upon
request all such other and further documents, agreements and
instruments in compliance with or accomplishment of the covenants
and agreements of Borrower and its Subsidiaries in the Loan
Documents or to further evidence and more fully describe the
Collateral, or to correct any omissions in the Loan Documents, or
more fully to state the obligations set out in any of the Loan
Documents, or to make, perfect, protect or preserve any liens
created pursuant to any of the Loan Documents, or to make any
recordings, to file any notices, or to obtain any contracts, all
as may be necessary or appropriate in connection therewith.
4.04 Reimbursement of Expenses. Borrower agrees (i) to
promptly pay or reimburse Bank for all of Bank's reasonable
out-of-pocket costs, expenses and attorneys' fees incurred in
connection with the preparation, execution and delivery of this
Agreement and the other Loan Documents, (ii) to promptly pay or
reimburse Bank for all of Bank's reasonable out-of-pocket costs
and expenses incurred in connection with the preparation,
execution and delivery of any amendment, supplement or
modification to this Agreement or any other Loan Documents and
(iii) to promptly pay or reimburse Bank the reasonable fees and
disbursements of counsel to Bank and the reasonable costs and
expenses incurred in connection with the enforcement or
preservation of any rights under this Agreement and any other
Loan Documents.
4.05 Opinion of Borrower's Counsel. At Closing or at such
other time satisfactory to Bank, Borrower shall have counsel
satisfactory to Bank provide an opinion to Bank in form
satisfactory to Bank relating to the Loan Documents. Upon the
execution of additional Loan Documents pursuant to Section 4.02
hereof, Borrower shall have counsel satisfactory to Bank provide
an opinion to Bank in form satisfactory to Bank relating to such
additional Loan Documents.
4.06 Verification and Audits. Bank has the right to
perform such verifications and audits with respect to the
accounts and inventory of Borrower and its Subsidiaries as Bank
deems appropriate.
4.07 Lock Box. Upon the written request of Bank, Borrower
and its Subsidiaries will notify all account debtors to pay the
proceeds of the accounts and any proceeds of letters of credit to
a lock box located at Bank and shall furnish a copy of the
notifications to Bank. The provisions of Banks standard form of
Lock Box Agreement, shall apply to the lock box. Bank shall also
have the right to notify the account debtors to pay the proceeds
of the accounts of Borrower and its Subsidiaries directly to
Bank. In the event that Bank requests a lock box arrangement,
all proceeds of the accounts of Borrower and its Subsidiaries
shall be placed in a collateral account of Borrower at Bank (the
"Collateral Account") and Bank will apply the proceeds in the
Collateral Account to payment of the Line of Credit with any
remaining balance deposited to Borrower's demand deposit account
at Bank; provided that, upon the occurrence of a Default, Bank is
entitled to apply the entire sums towards payment of the Loans
and any of the other Secured Obligations.
V. Warranties, Representations and Covenants of Borrower
5.01 Representations and Warranties. In order to induce
Bank to enter into this Agreement and make the Loans, Borrower
hereby represents, warrants and covenants to Bank, the following:
(a) Borrower and each Subsidiary: (i) is duly organized,
validly existing and in good standing under the laws of the
jurisdiction of its organization; (ii) has all requisite powers
and all governmental and regulatory licenses, authorizations,
consents and approvals required to carry on its business as now
conducted; and (iii) is qualified to transact business as a
foreign entity in, and is in good standing under the laws of, all
states in which it is required by applicable law to maintain such
qualification and good standing except for those states in which
the failure to qualify or maintain good standing could not
reasonably be expected to have a Material Adverse Effect.
(b) The execution, delivery and performance by Borrower of
this Agreement, the Letter of Credit Application(s) and the other
Loan Documents are within the corporate powers of Borrower and
have been duly authorized by all necessary corporate action. The
execution, delivery and performance by each Subsidiary of any
Continuing Guarantee and any other Loan Documents executed by
such Subsidiary are within the corporate powers of such
Subsidiary and have been duly authorized by all necessary
corporate action.
(c) No consent or approval of any governmental agency or
authority required in connection with the execution, delivery and
performance by Borrower and the Subsidiaries of the Loan
Documents is required.
(d) All Loan Documents are legal, valid and binding
obligations of Borrower and each Subsidiary, as applicable,
enforceable according to their terms and conditions, and all
statements made in this Agreement are true and correct as of the
date hereof in all material respects.
(e) Borrower shall use the proceeds of the Loans only for
the purposes specifically described herein or as otherwise agreed
to by Bank.
(f) To the extent applicable, Borrower and each Subsidiary
has fulfilled its obligations under the minimum funding standards
of the Employee Retirement Income Security Act of 1974, as
amended ("ERISA"), and the Internal Revenue Code with respect to
each plan and is in compliance in all material respects with the
presently applicable provisions of ERISA and the Internal Revenue
Code, and has not incurred any liability to the Pension Benefit
Guaranty Corporation or to a Plan under Title IV of ERISA which
the failure to comply with could have a Material Adverse Effect.
(g) Neither Borrower nor any Subsidiary is in default in
the performance, observance or fulfillment of (i) any of the
obligations, covenants or conditions contained in any indenture,
agreement or other instrument to which it is a party or (ii) with
respect to any judgment, order, writ, injunction, decree or
decision of any government agency or authority, and which could
have a Material Adverse Effect.
(h) Neither Borrower nor any Subsidiary has any material
(individually or in the aggregate) liabilities, direct or
contingent, except as disclosed or referred to in the financial
statements delivered to Bank. There is no litigation, legal or
administrative proceeding, investigation or other action of any
nature pending or, to the knowledge of Borrower, threatened
against or affecting Borrower or any Subsidiary which involves
the possibility of any judgment, order, ruling, or liability not
fully covered by insurance or fully reserved for by Borrower or a
Subsidiary, and which could have a Material Adverse Effect.
(i) Borrower and each Subsidiary has filed all tax returns
and reports required to be filed and has paid all taxes,
assessments, fees and other governmental charges levied upon
Borrower or any of its Subsidiaries or upon any property owned by
Borrower or any of its Subsidiaries, or upon Borrower's or its
Subsidiary's income, which are due and payable, including
interest and penalties, or has provided adequate reserves for the
payment thereof.
(j) Borrower and each Subsidiary has good and marketable
title to all of its property, title to which is material to the
Borrower or such Subsidiary, subject to no Liens, except
Permitted Liens.
(k) Borrower and each Subsidiary has complied in all
material respects with all laws that are applicable to all or any
part of the operation of its business activities, including,
without limitation, (i) all laws regarding the collection,
payment, and deposit of employees' income, unemployment, social
security, sales, and excise taxes, all laws with respect to
pension liabilities, and (ii) all laws pertaining to
environmental protection and occupational safety and health which
the failure to comply with could have a Material Adverse Effect.
(l) Other than any agreements which have been delivered to
Bank, neither Borrower nor any Subsidiary is a party to any
indenture, agreement or other instrument materially and adversely
affecting its business, properties or assets, operation or
condition, whether financial or otherwise.
(m) Neither Borrower nor any Subsidiary will change its
principal place of business or chief executive office from the
location set forth in the Loan Documents or change the location,
as set forth in the Loan Documents, of any inventory or equipment
owned by Borrower or such Subsidiary, unless Borrower or such
Subsidiary, as applicable, has obtained Bank's prior written
consent and has taken such action as is necessary to cause the
security interest of Bank in the Collateral to continue to be a
first priority perfected security interest subject only to
Permitted Liens.
5.02 Affirmative Covenants. From the date of this
Agreement and so long as any Loan shall be outstanding, unless
compliance shall have been waived in writing by Bank, Borrower
shall:
(a) Furnish to Bank:
(i) upon the request of Bank, a Compliance
Certificate and Borrowing Base Report in the form
annexed hereto as Exhibit D certified by its
Chief Financial Officer;
(ii) no later than 20 days after month end, a
Compliance Certificate and Borrowing Base Report
in the form annexed hereto as Exhibit D;
(iii)no later than 20 days after the close of each
quarter of Borrower's fiscal year, an accounts
receivable report of Borrower and its
Subsidiaries including for each account the name
of the account debtor, the balance due on the
account, and an aging for the account. The
report shall be in such form and shall contain
such information as Bank may require and shall be
certified by Borrower's Chief Financial Officer;
(iv) within 45 days after the close of each quarter of
Borrower's fiscal year, consolidated financial
statements of Borrower and its Subsidiaries
consisting of a balance sheet as of the end of
such fiscal quarter, a statement of earnings and
surplus for such fiscal quarter, and a statement
of cash flow for such fiscal quarter certified by
the Borrower's Chief Financial Officer;
(v) within 90 days after the close of Borrower's
fiscal year a copy of annual consolidated
financial statements of Borrower and its
Subsidiaries, including a balance sheet as of the
end of each such fiscal year, a statement of
earnings and surplus for such fiscal year, and a
statement of cash flow for such fiscal year,
which statements shall be audited by an
independent certified public accounting firm
acceptable to Bank;
(vi) simultaneously with the delivery of each set of
financial statements of Borrower referred to
above, a certificate of the Borrower's Chief
Financial Officer, accompanied by supporting
financial work sheets where appropriate, (A)
evidencing Borrower's compliance with the
financial covenants contained in Sections
5.02(h)-(l) of this Agreement as calculated on a
consolidated basis for Borrower and its
Subsidiaries (and including, without limitation,
a computation of the ratio of Consolidated Total
Debt as of the end of the immediately preceding
fiscal quarter to Consolidated EBITDA for the
immediately preceding four (4) fiscal quarters),
(B) stating whether there exists on the date of
such certificate any Default, and if a Default
then exists, setting forth the details thereof
and the action which Borrower is taking or
proposes to take with respect thereto;
(vii)promptly upon, and in any event within two
business days of, becoming aware of the
occurrence of any event which constitutes a
Default (as hereinafter defined), notice of such
occurrence together with a detailed statement by
a responsible officer of Borrower of the steps
being taken by Borrower to cure the effect of
such event; and
(viii)such further information that Bank deems
reasonably necessary to monitor the Loans.
(b) Observe and comply, and cause each of its Subsidiaries
to observe and comply with all valid laws, statutes, codes, acts,
ordinances, orders, judgments, decrees, injunctions, rules,
regulations, certificates, franchises, permits, licenses,
authorizations, directions and requirements of all federal,
state, county, municipal and other governments, agencies,
departments, divisions, commissions, boards, courts, authorities,
officials and officers, domestic or foreign, including, without
limitation, (i) all laws regarding the collection, payment, and
deposit of employees' income, unemployment, social security,
sales, and excise taxes, all laws with respect to pension
liabilities, and (ii) all laws pertaining to environmental
protection and occupational safety and health with which the
failure to comply could have a Material Adverse Effect.
(c) Pay and discharge, and cause each of its Subsidiaries
to pay and discharge, all taxes, assessments and governmental
charges or levies imposed upon it, or upon its income and profits
prior to the date on which penalties might attach thereto and all
lawful claims which, if unpaid, might become a lien or charge
upon the assets of Borrower or any Subsidiaries (other than a
Permitted Lien); provided, however, that Borrower and its
Subsidiaries shall not be required to pay and discharge any such
tax, assessment, charge, levy or claim so long as the legality
thereof shall be contested in good faith and by appropriate
proceedings and for which Borrower and its Subsidiaries have
provided adequate reserves.
(d) Maintain, and cause each of its Subsidiaries to
maintain, with financially sound and reputable insurance
companies, insurance on all its property in at least such amounts
and against at least such risks as are usually insured against in
the same general area by companies engaged in the same or a
similar business; and furnish to Bank, upon written request of
Bank, full information as to the insurance carried.
(e) At all times, maintain, protect and keep in good
repair, working order and condition (ordinary wear and tear
excepted), and cause each of its Subsidiaries so to do, all
property necessary to the operation of Borrower and its
Subsidiaries' material businesses.
(f) Obtain or maintain, as applicable, and cause each of
its Subsidiaries to obtain or maintain, as applicable, in full
force and effect, all licenses, franchises, intellectual
property, permits, authorizations and other rights as are
necessary for the conduct of its business and the failure of
which to obtain or maintain could have a Material Adverse Effect.
(g) Promptly, and in any event within two business days,
notify Bank of (i) the arising of any litigation or dispute,
threatened against or affecting assets of Borrower or any
Subsidiary, which, if adversely determined, could have a Material
Adverse Effect; or (ii) any default under any contract to which
Borrower or any Subsidiary is a party which could have a Material
Adverse Effect.
(h) Have and maintain a ratio of Consolidated Total Debt
to Consolidated Net Worth of not greater than 2.00 to 1.00 as of
the end of each fiscal quarter.
(i) Have and maintain, as of the end of each fiscal
quarter, net working capital of at least $2,000,000.00.
(j) Have and maintain a Consolidated Current Ratio of at
least 1.50 to 1.00 as of the end of each fiscal quarter.
(k) Have and maintain a Consolidated Debt Service Coverage
Ratio as of the end of each fiscal quarter of at least 1.50 to
1.00.
(l) Have and maintain at all times a ratio of Consolidated
Total Debt to Consolidated EBITDA for the immediately preceding
four fiscal quarters of not more than 4.00 to 1.00.
5.03 Negative Covenants. From the date of this Agreement
and so long as any Loan shall be outstanding, Borrower shall not
without the prior written consent of Bank:
(a) (i) acquire all or substantially all of the assets of
any entity or acquire stock or other equity interest (in whole or
in part) in any entity, or permit any Subsidiary so to do, except
for Permitted Acquisitions, (ii) directly or indirectly, merge
into or with or consolidate with any other Person or permit any
other Person to merge into or with or consolidate with it, or
permit any Subsidiary so to do, except in connection with
Permitted Acquisitions, or (iii) sell, assign, lease, transfer,
abandon or otherwise dispose of any of its property (including,
without limitation, any shares of capital stock of a Subsidiary)
or permit any Subsidiary so to do, except for (A) sales of
inventory (including, without limitation, any equipment held for
sale or lease) in the ordinary course of business, (B) sales of
fixed assets by Borrower or any Subsidiary during any fiscal
quarter having a book value in an aggregate amount not to exceed
ten percent (10%) of the book value of the total assets of
Borrower or such Subsidiary, as applicable, as of the end of the
fiscal quarter immediately preceding any such sale, so long as
such fixed assets shall be sold to third party buyers in
arms-length transactions on reasonable terms and so long as the
net proceeds thereof are used solely to purchase other fixed
assets which are consistent with the Company Business within a
reasonable time or to pay any principal due on the Loans;
(b) mortgage or encumber any of its assets or suffer any
Liens to exist on any of its assets without the prior written
consent of Bank other than Permitted Liens, or permit any
Subsidiary so to do;
(c) incur or be obligated on any Indebtedness, or permit
any Subsidiary so to do, other than: (i) the Secured Obligations,
(ii) Indebtedness, other than Indebtedness described in
Subparagraph (viii) of this Section 5.03(c), existing as of the
date of this Agreement, (iii) Indebtedness of a Subsidiary to
Borrower or another Subsidiary or Indebtedness of Borrower to a
Subsidiary, (iv) Indebtedness in respect of taxes, assessments,
governmental charges or levies and claims for labor, materials
and supplies not yet due or payable; provided, however, that
neither Borrower nor any Subsidiary shall be required to pay any
claim the payment of which is being contested in good faith and
by appropriate proceedings being diligently conducted and for
which adequate provision as determined in accordance with GAAP
has been made, (v) Indebtedness in respect of judgments or awards
for which adequate provision as determined in accordance with
GAAP has been made so long as execution is not levied thereunder
and in respect of which Borrower shall at the time in good faith
be prosecuting an appeal or proceedings for review and a
suspensive appeal bond in the full amount of such judgment or
award shall have been obtained by Borrower or such Subsidiary
with respect thereto, (vi) current liabilities of Borrower or any
Subsidiary incurred in the ordinary course of business not
incurred through (A) the borrowing of money, or (B) the obtaining
of credit except for credit on an open account basis customarily
extended and in fact extended in connection with normal purchases
of goods and services, (vii) endorsements for collection,
deposits or negotiation and warranties of products or services,
in each case incurred in the ordinary course of business, (viii)
Indebtedness in respect of performance, surety or appeal bonds
obtained in the ordinary course of Borrower's or any Subsidiary's
business, and (viii) Indebtedness in an amount not to exceed
$500,000.00 in the aggregate at any one time outstanding for
Borrower and all Subsidiaries relating to Liens permitted under
subparagraph (viii) of the definition of Permitted Liens.
(d) assign this Agreement or any interest herein nor
transfer any interest in any Collateral (other than the sale of
inventory in the ordinary course of business), whether subject to
or with assumption of the Loan Documents, or otherwise;
(e) pay any dividends or make any other distributions to
its shareholders in their capacities as such, or permit any
Subsidiary so to do;
(f) terminate or make any substantial change in the duties
of ▇▇▇▇▇▇▇ ▇. ▇▇▇▇ without the approval of the Bank, or permit
any Subsidiary so to do;
(g) engage in any business if, as a result, the general
nature of the business which would then be engaged in by Borrower
and its Subsidiaries, considered as a whole, would be
substantially changed from the Company Business, or permit any
Subsidiary so to do;
(h) incur any Capital Expenditures, or allow any
Subsidiary so to do, in excess of $3,000,000.00 in the aggregate
for Borrower and its Subsidiaries in any fiscal year, provided
that Borrower and its Subsidiaries shall be permitted to
additionally incur during the Line of Credit Period Capital
Expenditures in the aggregate amount of $10,000,000.00 through
the use of funds obtained through the issuance of the common
stock of Borrower after the date hereof; and/or
(i) except in connection with the administration of the
1995 Stock Incentive Plan of Borrower, (a) purchase, redeem,
retire or otherwise acquire, directly or indirectly, for
consideration, any shares of its common stock or any warrant or
option to purchase any such shares, or allow any Subsidiary so to
do or (b) set aside any funds or other property or assets for any
such purposes, or allow any Subsidiary so to do.
VI. Extension of Credit
Bank will not be obligated to make any Advance or to issue
any Letter of Credit, unless:
(a) The representations and warranties of Borrower
contained in this Agreement shall be true and correct on and as
of the date of the Advance;
(b) Borrower has observed and performed all of its
covenants, obligations and agreements under this Agreement,
including but not limited to the delivery to Bank of all Loan
Documents and other documents required hereby;
(c) No Default shall have occurred and be continuing, or
there shall have occurred any condition, event or act which
constitutes, or with notice or lapse of time (or both) would
constitute a Default;
(d) No change in the properties, assets, liabilities,
business, operations, prospects, income or condition (financial
or otherwise) of Borrower and its Subsidiaries taken as a whole
and having a Material Adverse Effect shall have occurred since
the date of this Agreement and be continuing; and
(e) All of the representations and warranties of Borrower
contained in Section 5.01 of this Agreement and of Borrower and
each Subsidiary in the other Loan Documents shall be true and
correct in all material respects on and as of the date of such
Loan or Letter of Credit as if made on and as of the date of such
Loan or Letter of Credit.
VII. Defaults
7.01 Default. The occurrence of any of the following
events shall be considered a "Default" as that term is used
herein:
(a) the failure of Borrower to pay promptly when due any
interest or principal on any of the Secured Obligations including
but not limited to the Loans;
(b) the failure of Borrower or any Subsidiary to observe
or perform promptly when due any covenant, agreement, or
obligation under this Agreement or under any of the other Loan
Documents;
(c) the material inaccuracy when made or deemed made of
any warranty, representation, or statement made to Bank by
Borrower or any Subsidiary, whether such warranty,
representation, or statement is made (i) in this Agreement or
(ii) in any other agreement, document, or writing;
(d) any garnishment, seizure, or attachment of, or any
tax lien or tax levy against, any assets of Borrower or any
Subsidiary, including without limitation, those assets that are
Collateral, unless the same is being contested in good faith and
for which adequate reserves shall have been set aside on the
books of Borrower or any Subsidiary and Borrower or such
Subsidiary, as the case may be, shall pay or cause to be paid
same forthwith upon the commencement of proceedings to foreclose
any Lien which is attached as security therefor, unless such
foreclosure is stayed by the filing of an appropriate bond;
(e) one or more judgments, decrees, arbitration awards,
rulings or decisions shall be entered against Borrower or any
Subsidiary involving in the aggregate a liability (not paid or
fully covered by insurance including self-insurance or the
payment or performance bonds) of $100,000.00 or more and any such
judgments, decrees, awards and rulings shall not have been
vacated, paid, discharged, stayed or bonded pending appeal within
60 days from the entry thereof;
(f) Borrower or any Subsidiary defaults in any payment of
principal of or interest on any Indebtedness other than the Loans
in the aggregate principal amount of more than $100,000.00, in
each instance, beyond the period of grace, if any, provided in
the instrument or agreement under which such Indebtedness or
observance or performance of any other agreement or condition
relating to any such Indebtedness or contained in any instrument
or agreement evidencing, securing or relating thereto, or any
other event shall occur or condition exist, the effect of which
default or other event or condition is to cause, or to permit the
holder or holders of such Indebtedness or beneficiary or
beneficiaries of such (or a trustee, agent or other Person acting
on behalf of such holder or holders or beneficiary or
beneficiaries) to cause, with the giving of notice if required,
such Indebtedness to become due prior to its stated maturity;
(g) the filing by or against Borrower or any Subsidiary of
a proceeding for bankruptcy, reorganization, arrangement, or any
other relief afforded debtors or affecting the rights of
creditors generally under the laws of any state or country or
under the United States Bankruptcy Code; or
(j) any material adverse change in the properties, assets,
liabilities, business, operations, prospects, income or condition
(financial or otherwise) of Borrower and its Subsidiaries taken
as a whole.
7.02 Notice of Default and Remedies. In the event of a
Default and such Default continues for a period of fifteen (15)
days (five (5) days for the failure to make a payment of
principal or interest under the Loans) after Bank has given
written notice of such Default to Borrower, Bank, at its option,
shall have the right to exercise any and all of Bank's rights
under the Loan Documents. Nothing contained herein shall be
construed to prohibit Bank from exercising any of its rights
under any of the Loan Documents, whether or not there has been a
Default, that Bank has the right to exercise under any of the
Loan Documents even in the absence of a Default.
7.03 No Obligation to Lend. In the event of a Default,
Bank shall have no obligation to make any Loan.
VIII. Miscellaneous
8.01 Amendments and Waivers. Neither this Agreement, nor
any provisions hereof, may be changed, waived, discharged or
terminated orally, or in any manner other than by an instrument
in writing signed by the party against whom enforcement of the
change, waiver, discharge or termination is sought.
8.02 No Third Party Beneficiary. This Agreement is solely
for the benefit of the parties and is not a stipulation for the
benefit of any other person or entity except for any approved
assignee of Borrower and any assignee of Bank.
8.03 Governing Law. This Agreement has been delivered to
Bank and accepted by Bank in the State of Louisiana. This
Agreement shall be governed by and construed in accordance with
the laws of the State of Louisiana.
8.04 Caption Headings. Caption headings of the sections of
this Agreement are for convenience purposes only and are not to
be used to interpret or to define their provisions.
8.05 Conflict. In the event any of the provisions of this
Agreement conflict with any provisions contained in any other
Loan Documents, the provisions of this Agreement shall govern.
This Agreement amends and supersedes the Existing Loan Agreement
and this Agreement supersedes and replaces any commitment
letter(s) between Bank and Borrower.
8.06 Jurisdiction. Borrower hereby irrevocably submits to
the jurisdiction of any court of the State of Louisiana or any
court of the United States of America sitting in the Eastern
District of Louisiana, as the Bank may elect, in any suit, action
or proceeding arising out of or relating to this Agreement or any
other Loan Document. Borrower irrevocably agrees that all claims
in respect of such suit, action or proceeding may be heard and
determined in any such courts. Borrower irrevocably waives, to
the fullest extent permitted by law, any objection which Borrower
may now or hereafter have to the laying of venue of any such
suit, action or proceeding brought in any such court, and
Borrower further irrevocably waives any claim that such suit,
action or proceeding brought in any such court has been brought
in an inconvenient forum. Borrower authorizes the service of
process upon Borrower by registered mail sent to Borrower at the
address set forth herein or such other address as Borrower may
specify in writing to Bank and in the manner specified in Section
8.07 hereof. THE BORROWER HEREBY WAIVES TRIAL BY JURY IN ANY
ACTION OR PROCEEDING (INCLUDING ANY COUNTERCLAIM) IN ANY COURT
ARISING ON, OUT OF, OR IN ANY WAY RELATING TO THIS AGREEMENT AND
THE OTHER LOAN DOCUMENTS OR ANY AMENDMENT OR SUPPLEMENT HERETO OR
THERETO OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
8.07 Invalidity. In the event that any one or more of the
provisions contained in this Agreement or the other Loan
Documents shall, for any reason, be held invalid, illegal or
unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision of this
Agreement or the Loan Documents.
8.08 Notices. All communications under or in connection
with this Agreement shall be in writing and shall be mailed by
first class mail or express delivery, postage prepaid, or
otherwise sent by telex, telegram, telecopy or other similar form
of rapid transmission, or personally delivered to an officer of
the receiving party. All such communications shall be mailed,
sent or delivered:
To Bank: Whitney National Bank
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Vice-President
Telecopier: (▇▇▇) ▇▇▇-▇▇▇▇
With a copy to: ▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Carver, Darden, Koretzky, Tessier, Finn,
Blossman & Areaux, L.L.C.
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To Borrower: Superior Energy Services, Inc.
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Telecopier: 393-9904
With a copy to: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Jones, Walker, Waechter, Poitevent,
Carrere & ▇▇▇▇▇▇▇, L.L.P.
51st Floor, ▇▇▇ ▇▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
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8.09 Counterparts. This Agreement may be executed in several
counterparts and if executed shall constitute the agreement, binding
upon all the parties hereto, notwithstanding all the parties are not
signatories to the original and same counterparts.
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IN WITNESS WHEREOF, the parties have executed this Agreement
on the date hereinabove set forth.
BANK: WHITNEY NATIONAL BANK
By: ______________________________
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Its Assistant Vice President
BORROWER: SUPERIOR ENERGY SERVICES, INC.
By: ______________________________
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Its President