EXHIBIT 4.8
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CREDIT AGREEMENT
DATED AS OF JUNE 27, 1997
AMONG
VARCO INTERNATIONAL, INC.,
AS BORROWER,
THE LENDERS LISTED HEREIN
AS LENDERS,
AND
UNION BANK OF CALIFORNIA, N.A.,
AS AGENT
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VARCO INTERNATIONAL, INC.
CREDIT AGREEMENT
TABLE OF CONTENTS
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PAGE
SECTION 1. DEFINITIONS................................................................... 1
1.1 Certain Defined Terms......................................................... 1
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1.2 Accounting Terms; Utilization of GAAP for Purposes of Calculations
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Under Agreement............................................................... 23
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1.3 Other Definitional Provisions and Rules of Construction....................... 23
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SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS.................................... 23
2.1 Commitments; Making of Loans; the Register; Notes............................. 23
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2.2 Interest on the Loans......................................................... 27
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2.3 Fees.......................................................................... 31
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2.4 Prepayments and Reductions in Commitments; General Provisions
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Regarding Payments............................................................ 31
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2.5 Use of Proceeds............................................................... 36
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2.6 Special Provisions Governing LIBOR Rate Loans................................. 36
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2.7 Increased Costs; Taxes; Capital Adequacy...................................... 39
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2.8 Obligation of Lenders and Issuing Lenders to Mitigate......................... 43
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SECTION 3. LETTERS OF CREDIT............................................................. 44
3.1 Issuance of Letters of Credit and Lenders' Purchase of Participations
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Therein....................................................................... 44
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3.2 Letter of Credit Fees......................................................... 47
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3.3 Drawings and Reimbursement of Amounts Paid Under Letters of
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Credit........................................................................ 49
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3.4 Obligations Absolute.......................................................... 52
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3.5 Indemnification; Nature of Issuing Lenders' Duties............................ 53
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3.6 Increased Costs and Taxes Relating to Letters of Credit....................... 54
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SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT..................................... 55
4.1 Conditions to Initial Loans................................................... 55
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4.2 Conditions to All Loans....................................................... 59
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4.3 Conditions to Letters of Credit............................................... 60
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Section 5. COMPANY'S REPRESENTATIONS AND WARRANTIES...................................... 61
5.1 Organization, Powers, Qualification, Good Standing, Business and
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Subsidiaries.................................................................. 61
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5.2 Authorization of Borrowing, etc............................................... 62
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5.3 Financial Condition........................................................... 63
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5.4 No Material Adverse Change; No Restricted Junior Payments..................... 63
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5.5 Title to Properties; Liens.................................................... 64
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5.6 Litigation; Adverse Facts..................................................... 64
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(i)
PAGE
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5.7 Payment of Taxes............................................................... 64
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5.8 Performance of Agreements; Materially Adverse Agreements;
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Material Contracts............................................................. 65
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5.9 Govermental Regulation......................................................... 65
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5.10 Securities Activities.......................................................... 65
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5.11 Employee Benefit Plans......................................................... 66
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5.12 Certain Fees................................................................... 66
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5.13 Environmental Protection....................................................... 66
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5.14 Insurance...................................................................... 67
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5.15 Employee Matters............................................................... 67
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5.16 Solvency....................................................................... 67
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5.17 Disclosure..................................................................... 67
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SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS................................................ 68
6.1 Financial Statements and Other Reports......................................... 68
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6.2 Corporate Existence, etc....................................................... 73
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6.3 Payment of Taxes and Claims; Tax Consolidation................................. 73
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6.4 Maintenance of Properties; Insurance........................................... 73
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6.5 Inspection Rights; Lender Meeting.............................................. 74
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6.6 Compliance with Laws, etc...................................................... 74
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6.7 Environmental Review and Investigation, Disclosure, Etc.; Company's
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Actions Regarding Hazardous Materials Activities, Environmental
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Claims and Violations of Environmental Laws.................................... 74
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6.8 Execution of Subsidiary Guaranties by Certain Subsidiaries and
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Future Subsidiaries............................................................ 77
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SECTION 7. COMPANY'S NEGATIVE COVENANTS................................................... 78
7.1 Indebtedness................................................................... 78
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7.2 Liens and Related Matters...................................................... 79
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7.3 Investments; Joint Ventures.................................................... 80
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7.4 Contingent Obligations......................................................... 81
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7.5 Restricted Junior Payments..................................................... 82
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7.6 Financial Covenants............................................................ 82
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7.7 Restriction on Fundamental Changes; Asset Sales and Acquisitions............... 83
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7.8 Consolidated Capital Expenditures.............................................. 84
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7.9 Restriction on Leases.......................................................... 84
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7.10 Sales and Lease-Backs.......................................................... 85
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7.11 Sale or Discount of Receivables................................................ 85
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7.12 Transactions with Shareholders and Affiliates.................................. 85
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7.13 Disposal of Subsidiary Stock................................................... 85
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7.14 Conduct of Business............................................................ 86
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7.15 Amendments of Documents Relating to Senior Notes............................... 86
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7.16 Fiscal Year.................................................................... 86
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SECTION 8. EVENTS OF DEFAULT.............................................................. 87
8.1 Failure to Make Payments When Due.............................................. 87
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(ii)
PAGE
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8.2 Default in Other Agreements........................................................ 87
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8.3 Breach of Certain Covenants........................................................ 87
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8.4 Breach of Warranty................................................................. 88
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8.5 Other Defaults Under Loan Documents................................................ 88
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8.6 Involuntary Bankruptcy; Appointment of Receiver, etc............................... 88
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8.7 Voluntary Bankruptcy; Appointment of Receiver, etc................................. 88
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8.8 Judgments and Attachments.......................................................... 89
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8.9 Dissolution........................................................................ 89
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8.10 Employee Benefit Plans............................................................. 89
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8.11 Change in Control.................................................................. 89
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8.12 Invalidity of Subsidiary Guaranties; Repudiation of Obligations.................... 90
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SECTION 9. AGENT.............................................................................. 91
9.1 Appointment........................................................................ 91
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9.2 Powers and Duties; General Immunity................................................ 91
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9.3 Representations and Warranties; No Responsibility For Appraisal of
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Creditworthiness................................................................... 93
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9.4 Right to Indemnity................................................................. 93
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9.5 Successor Agent.................................................................... 94
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9.6 Collateral Account Agreement....................................................... 94
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SECTION 10. MISCELLANEOUS...................................................................... 94
10.1 Assignments and Participations in Loans and Letters of Credit...................... 94
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10.2 Expenses........................................................................... 97
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10.3 Indemnity.......................................................................... 98
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10.4 Set-Off............................................................................ 99
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10.5 Ratable Sharing.................................................................... 100
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10.6 Amendments and Waivers............................................................. 100
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10.7 Independence of Covenants.......................................................... 101
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10.8 Notices............................................................................ 101
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10.9 Survival of Representations, Warranties and Agreements............................. 102
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10.10 Failure or Indulgence Not Waiver; Remedies Cumulative.............................. 102
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10.11 Marshalling; Payments Set Aside.................................................... 102
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10.12 Severability....................................................................... 103
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10.13 Obligations Several; Independent Nature of Lenders' Rights......................... 103
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10.14 Headings........................................................................... 103
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10.15 Applicable Law..................................................................... 103
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10.16 Successors and Assigns............................................................. 103
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10.17 Consent to Jurisdiction and Service of Process..................................... 104
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10.18 Waiver of Jury Trial............................................................... 104
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10.19 Confidentiality.................................................................... 105
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10.20 Termination of Foreign Subsidiary Guaranties and Subordination
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Agreements......................................................................... 106
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10.21 Counterparts; Effectiveness........................................................ 106
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Signature pages............................................................... S-1
(iii)
EXHIBITS
I FORM OF NOTICE OF BORROWING
II FORM OF NOTICE OF CONVERSION/CONTINUATION
III FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT
IV FORM OF NOTE
V FORM OF COMPLIANCE CERTIFICATE
VI FORM OF OPINION OF COMPANY COUNSEL
VII FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP
VIII FORM OF ASSIGNMENT AGREEMENT
IX-A FORM OF AMENDED AND RESTATED SUBORDINATION
AGREEMENT
IX-B FORM OF SUBORDINATION AGREEMENT
X FORM OF CERTIFICATE RE NON-BANK STATUS
XI FORM OF COLLATERAL ACCOUNT AGREEMENT
XII-A FORM OF AMENDED AND RESTATED SUBSIDIARY GUARANTY
XII-B FORM OF SUBSIDIARY GUARANTY
XIII FORM OF NINTH AMENDMENT TO CITICORP LOAN
AGREEMENT
XIV FORM OF SENIOR NOTE WAIVER
(iv)
SCHEDULES
2.1 LENDERS' COMMITMENTS AND PRO RATA SHARES
5.1 SUBSIDIARIES OF COMPANY
5.8 MATERIAL CONTRACTS
7.1 CERTAIN EXISTING INDEBTEDNESS
7.2 CERTAIN EXISTING LIENS
7.3 CERTAIN EXISTING INVESTMENTS
7.4 CERTAIN EXISTING CONTINGENT OBLIGATIONS
(v)
CREDIT AGREEMENT
This CREDIT AGREEMENT is dated as of June 27, 1997 and entered into by
and among VARCO INTERNATIONAL, INC., a California corporation ("COMPANY"), THE
FINANCIAL INSTITUTIONS LISTED ON THE SIGNATURE PAGES HEREOF (each individually
referred to herein as a "LENDER" and collectively as "LENDERS"), and UNION BANK
OF CALIFORNIA, N.A. ("UBOC"), as agent for Lenders (in such capacity, "AGENT").
R E C I T A L S
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WHEREAS, Company desires that Lenders extend certain credit facilities
to Company for working capital and other general corporate purposes;
NOW, THEREFORE, in consideration of the premises and the agreements,
provisions and covenants herein contained, Company, Lenders and Agent agree as
follows:
SECTION 1. DEFINITIONS
1.1 CERTAIN DEFINED TERMS.
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The following terms used in this Agreement shall have the following
meanings:
"ADJUSTED LIBOR RATE" means, for any Interest Rate Determination Date
with respect to an Interest Period for a LIBOR Rate Loan, the rate of interest
per annum obtained by dividing (i) the offered quotation (rounded upward to the
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nearest 1/16 of one percent) to first class banks in the London interbank market
by UBOC for U.S. dollar deposits of amounts in same day funds comparable to the
principal amount of the LIBOR Rate Loan of UBOC for which the Adjusted LIBOR
Rate is then being determined with maturities comparable to such Interest Period
as of approximately 9:00 a.m. (Los Angeles time) on such Interest Rate
Determination Date by (ii) a percentage equal to 100% minus the stated maximum
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rate of all reserve requirements (including any marginal, emergency,
supplemental, special or other reserves) applicable on such Interest Rate
Determination Date to any member
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bank of the Federal Reserve System in respect of "Eurocurrency liabilities" as
defined in Regulation D (or any successor category of liabilities under
Regulation D).
"AFFECTED LENDER" has the meaning assigned to that term in subsection
2.6C.
"AFFILIATE", as applied to any Person, means any other Person directly
or indirectly controlling, controlled by, or under common control with, that
Person. For the purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by" and "under common
control with"), as applied to any Person, means the possession, directly or
indirectly, of the power to direct or cause the direction of the management and
policies of that Person, whether through the ownership of voting securities or
by contract or otherwise.
"AGENT" has the meaning assigned to that term in the introduction to
this Agreement and also means and includes any successor Agent appointed
pursuant to subsection 9.5.
"AGREEMENT" means this Credit Agreement dated as of June 27, 1997, as
it may be amended, supplemented or otherwise modified from time to time.
"APPLICABLE LIBOR RATE MARGIN" means the following:
(i) if the Consolidated Leverage Ratio is greater than or equal to
0.45 to 1.00, .75%;
(ii) if the Consolidated Leverage Ratio is less than 0.45 to 1.00 but
greater than or equal to 0.30 to 1.00, .625%; and
(iii) if the Consolidated Leverage Ratio is less than 0.30 to 1.00,
.50%.
"ASSET SALE" means the sale by Company or any of its Subsidiaries to
any Person other than Company or any of its wholly-owned Subsidiaries of (i) any
of the stock of any of Company's Subsidiaries, (ii) substantially all of the
assets of any division or line of business of Company or any of its
Subsidiaries, or (iii) any other assets (whether tangible or intangible) of
Company or any of its Subsidiaries other than (a) inventory sold in the ordinary
course of business and (b) any such other assets to the extent that the
aggregate value of such assets sold in any single transaction or related series
of transactions is equal to $5,000,000 or less.
"ASSIGNMENT AGREEMENT" means an Assignment Agreement in substantially
the form of Exhibit VIII annexed hereto.
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"BANKRUPTCY CODE" means Title 11 of the United States Code entitled
"Bankruptcy", as now and hereafter in effect, or any successor statute.
"BASE RATE" means, at any time, the higher of (x) the UBOC Reference
Rate or (y) the rate which is 1/2 of 1% in excess of the Federal Funds Effective
Rate.
"BASE RATE LOANS" means Loans bearing interest at rates determined by
reference to the Base Rate as provided in subsection 2.2A.
"BUSINESS DAY" means (i) for all purposes other than as covered by
clause (ii) below, any day excluding Saturday, Sunday and any day which is a
legal holiday under the laws of the State of California or is a day on which
banking institutions located in such state are authorized or required by law or
other governmental action to close, and (ii) with respect to all notices,
determinations, fundings and payments in connection with the Adjusted LIBOR Rate
or any LIBOR Rate Loans, any day that is a Business Day described in clause (i)
above and that is also a day for trading by and between banks in Dollar deposits
in the London interbank market.
"CAPITAL LEASE", as applied to any Person, means any lease of any
property (whether real, personal or mixed) by that Person as lessee that, in
conformity with GAAP, is accounted for as a capital lease on the balance sheet
of that Person.
"CASH" means money, currency or a credit balance in a Deposit Account.
"CASH EQUIVALENTS" means, as at any date of determination, (i)
marketable securities (a) issued or directly and unconditionally guaranteed as
to interest and principal by the United States Government or (b) issued by any
agency of the United States the obligations of which are backed by the full
faith and credit of the United States; (ii) marketable direct obligations issued
by any state of the United States of America or any political subdivision of any
such state or any public instrumentality thereof, in each case maturing within
one year after such date and having, at the time of the acquisition thereof, the
highest rating obtainable from either Standard & Poor's Ratings Group ("S&P") or
▇▇▇▇▇'▇ Investors Service, Inc. ("MOODY'S"); (iii) commercial paper maturing no
more than one year from the date of creation thereof and having, at the time of
the acquisition thereof, a rating of at least A-1 from S&P or at least P-1 from
Moody's; (iv) certificates of deposit or bankers' acceptances maturing within
one year after such date and issued or accepted by any Lender or by any
commercial bank organized under the laws of the United States of America or any
state thereof or the District of Columbia that (a) is at least "adequately
capitalized" (as defined in the regulations of its primary Federal banking
regulator) and (b) has Tier 1 capital (as defined in such regulations) of not
less than $100,000,000; and (v) shares of any money market mutual fund that (a)
has at least
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95% of its assets invested continuously in the types of investments referred to
in clauses (i) and (ii) above, (b) has net assets of not less than $500,000,000,
and (c) has the highest rating obtainable from either S&P or Moody's.
"CERTIFICATE RE NON-BANK STATUS" means a certificate substantially in
the form of Exhibit X annexed hereto delivered by a Lender to Agent pursuant to
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subsection 2.7B(iii).
"CITICORP LOAN AGREEMENT" means that certain Credit Agreement dated as
of February 25, 1993 among Company, Citicorp USA, Inc., and Citibank, N.A.,
including all amendments thereto.
"CLOSING DATE" means the date on or before July 15, 1997, on which the
initial Loans are made.
"COLLATERAL" means (i) the Collateral Account, (ii) all amounts on
deposit from time to time in the Collateral Account, (iii) all interest, cash,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Collateral, and (iv) to the extent not covered by clauses (i) through
(iii) above, all proceeds of any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" has the meaning assigned to that term in the
Collateral Account Agreement.
"COLLATERAL ACCOUNT AGREEMENT" means the Collateral Account Agreement
executed and delivered by Company and Agent on the Closing Date, substantially
in the form of Exhibit XI annexed hereto, pursuant to which Company may pledge
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cash to Agent to secure the obligations of Company to reimburse Issuing Lenders
for payments made under one or more Letters of Credit as provided in Section 8,
as such Collateral Account Agreement may hereafter be amended, supplemented or
otherwise modified from time to time.
"COMMERCIAL LETTER OF CREDIT" means any letter of credit or similar
instrument issued for the purpose of providing the primary payment mechanism in
connection with the purchase of any materials, goods or services by Company or
any of its Subsidiaries in the ordinary course of business of Company or such
Subsidiary.
"COMMITMENT" means the commitment of a Lender to make Loans to Company
pursuant to subsection 2.1A, and "COMMITMENTS" means such commitments of all
Lenders in the aggregate.
"COMMITMENT TERMINATION DATE" means June 30, 2004.
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"COMPANY" has the meaning assigned to that term in the introduction to
this Agreement.
"COMPLIANCE CERTIFICATE" means a certificate substantially in the form
of Exhibit V annexed hereto delivered to Agent and Lenders by Company pursuant
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to subsection 6.1(iii).
"CONSOLIDATED" refers to the consolidation of the accounts of Company
and its subsidiaries in accordance with GAAP.
"CONSOLIDATED EBITDA" means, as of the last day of each Fiscal Quarter
for the fiscal period consisting of that Fiscal Quarter and the three
immediately preceding Fiscal Quarters, the sum of the amounts of (i)
Consolidated Net Income, (ii) Consolidated Interest Expense, (iii) income tax
expense, (iv) total depreciation expense, (v) total amortization expense, and
(vi) other non-cash items reducing Consolidated Net Income less other non-cash
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items increasing Consolidated Net Income, all of the foregoing as determined on
a consolidated basis for Company and its Subsidiaries in conformity with GAAP.
"CONSOLIDATED CAPITAL EXPENDITURES" means, for any period, the sum of
(i) the aggregate of all expenditures (whether paid in cash or other
consideration or accrued as a liability and including that portion of Capital
Leases which is capitalized on the consolidated balance sheet of Company and its
Subsidiaries) by Company and its Subsidiaries during that period that, in
conformity with GAAP, are included in "additions to property, plant or
equipment" or comparable items reflected in the consolidated statement of cash
flows of Company and its Subsidiaries plus (ii) to the extent not covered by
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clause (i) of this definition, the aggregate of all expenditures by Company and
its Subsidiaries during that period to acquire (by purchase or otherwise) the
business, property or fixed assets of any Person, or the stock or other evidence
of beneficial ownership of any Person that, as a result of such acquisition,
becomes a Subsidiary of Company.
"CONSOLIDATED CURRENT ASSETS" means, as at any date of determination,
the total assets of Company and its Subsidiaries on a consolidated basis which
may properly be classified as current assets in conformity with GAAP.
"CONSOLIDATED CURRENT LIABILITIES" means, as at any date of
determination, the total liabilities of Company and its Subsidiaries on a
consolidated basis which may properly be classified as current liabilities in
conformity with GAAP.
"CONSOLIDATED FIXED CHARGES" means, as of the last day of each Fiscal
Quarter for the fiscal period consisting of that Fiscal Quarter and the three
immediately preceding Fiscal Quarters, the sum (without duplication) of the
amounts for such period of (i) Consolidated Interest Expense, (ii) Consolidated
Scheduled
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Principal Payments, and (iii) cash dividends or other cash distributions paid on
account of any shares of any class of stock of Company, all of the foregoing as
determined on a consolidated basis for Company and its Subsidiaries in
conformity with GAAP.
"CONSOLIDATED INTEREST EXPENSE" means, as of the last day of each
Fiscal Quarter for the fiscal period consisting of that Fiscal Quarter and the
three immediately preceding Fiscal Quarters, the total interest expense
(including that portion attributable to Capital Leases in accordance with GAAP)
of Company and its Subsidiaries on a consolidated basis with respect to all
outstanding Indebtedness of Company and its Subsidiaries, including all
commissions, discounts and other fees and charges owed with respect to letters
of credit and bankers' acceptance financing and net costs under Interest Rate
Agreements, but excluding, however, any amounts referred to in subsection 2.3
payable to Agent and Lenders on or before the Closing Date.
"CONSOLIDATED LEVERAGE RATIO" means, as of any date of determination,
the ratio of (i) Consolidated Total Debt on such date to (ii) Consolidated
EBITDA for the immediately preceding four-Fiscal Quarter period ending prior to
such date.
"CONSOLIDATED NET INCOME" means, for any period, the net income (or
loss) of Company and its Subsidiaries on a consolidated basis for such period
taken as a single accounting period determined in conformity with GAAP; provided
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that there shall be excluded (i) the income (or loss) of any Person (other than
a Subsidiary of Company) in which any other Person (other than Company or any of
its Subsidiaries) has a joint interest, except to the extent of the amount of
dividends or other distributions actually paid to Company or any of its
Subsidiaries by such Person during such period, (ii) the income (or loss) of any
Person accrued prior to the date it becomes a Subsidiary of Company or is merged
into or consolidated with Company or any of its Subsidiaries or that Person's
assets are acquired by Company or any of its Subsidiaries, (iii) the income of
any Subsidiary of Company to the extent that the declaration or payment of
dividends or similar distributions by that 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 Subsidiary, (iv) any after-tax gains or losses attributable
to Asset Sales or returned surplus assets of any Pension Plan, and (v) (to the
extent not included in clauses (i) through (iv) above) any net extraordinary
gains or net non-cash extraordinary losses.
"CONSOLIDATED RENTAL PAYMENTS" means, for any period, the aggregate
amount of all rents paid or payable by Company and its Subsidiaries on a
consolidated basis during that period under all Operating Leases to which
Company or any of its Subsidiaries is a party as lessee (net of sublease
income).
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"CONSOLIDATED SCHEDULED PRINCIPAL PAYMENTS" means, for any period, the
aggregate amount of all scheduled repayments of principal by Company and its
Subsidiaries on a consolidated basis during such period of all Indebtedness of
Company or any of its Subsidiaries (including the principal component of Capital
Leases).
"CONSOLIDATED TANGIBLE NET WORTH" means the excess of Consolidated
total assets (less reserves properly deductible) over Consolidated total
liabilities, Consolidated total assets and Consolidated total liabilities each
to be determined in accordance with GAAP consistent with the principles applied
in the preparation of the financial statements referred to in Section 5.3
excluding, however, from the determination of Consolidated total assets (a)
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goodwill, organizational expenses, research and development expenses,
trademarks, trade names, copyrights, patents, patent applications, licenses and
rights in any thereof, and other similar intangibles, (b) all deferred charges
or unamortized debt discount and expense, (c) all reserves carried and not
deducted from assets, (d) treasury stock and capital stock, obligations or other
securities of, or capital contributions to, or investments in, any Subsidiary,
(e) securities which are not readily marketable, (f) cash held in a sinking or
other analogous fund established for the purpose of redemption, retirement or
prepayment of capital stock or Indebtedness; (g) any write-up in the book value
of any asset resulting from a revaluation thereof subsequent to December 31,
1996; and (h) any items not included in clauses (a) through (g) above which are
treated as intangibles in conformity with GAAP.
"CONSOLIDATED TOTAL DEBT" means, as at any date of determination, the
aggregate stated balance sheet amount of all Indebtedness of Company and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP.
"CONTINGENT OBLIGATION", as applied to any Person, means any direct or
indirect liability, contingent or otherwise, of that Person (i) with respect to
any Indebtedness, lease, dividend or other obligation of another if the primary
purpose or intent thereof by the Person incurring the Contingent Obligation is
to provide assurance to the obligee of such obligation of another that such
obligation of another will be paid or discharged, or that any agreements
relating thereto will be complied with, or that the holders of such obligation
will be protected (in whole or in part) against loss in respect thereof, (ii)
with respect to any letter of credit issued for the account of that Person or as
to which that Person is otherwise liable for reimbursement of drawings, or (iii)
under Hedge Agreements. Contingent Obligations shall include (a) the direct or
indirect guaranty, endorsement (otherwise than for collection or deposit in the
ordinary course of business), co-making, discounting with recourse or sale with
recourse by such Person of the obligation of another, (b) the obligation to make
take-or-pay or similar payments if required regardless of non-performance by any
other party or parties to an agreement, and (c) any liability of such Person for
the obligation of another through any agreement
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(contingent or otherwise) (x) to purchase, repurchase or otherwise acquire such
obligation or any security therefor, or to provide funds for the payment or
discharge of such obligation (whether in the form of loans, advances, stock
purchases, capital contributions or otherwise) or (y) to maintain the solvency
or any balance sheet item, level of income or financial condition of another if,
in the case of any agreement described under subclauses (x) or (y) of this
sentence, the primary purpose or intent thereof is as described in the preceding
sentence. The amount of any Contingent Obligation shall be equal to the amount
of the obligation so guaranteed or otherwise supported or, if less, the amount
to which such Contingent Obligation is specifically limited.
"CONTRACTUAL OBLIGATION", as applied to any Person, means any provision
of any Security issued by that Person or of any material indenture, mortgage,
deed of trust, contract, undertaking, agreement or other instrument to which
that Person is a party or by which it or any of its properties is bound or to
which it or any of its properties is subject.
"CURRENCY AGREEMENT" means any foreign exchange contract, currency swap
agreement, futures contract, option contract, synthetic cap or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"DEPOSIT ACCOUNT" means a demand, time, savings, passbook or like
account with a bank, savings and loan association, credit union or like
organization, other than an account evidenced by a negotiable certificate of
deposit.
"DOLLARS" and the sign "$" mean the lawful money of the United States
of America.
"DOMESTIC SUBSIDIARY" means, with respect to any Person, any Subsidiary
of such Person incorporated in a jurisdiction of the United States of America or
Puerto Rico.
"ELIGIBLE ASSIGNEE" means (i) (a) a commercial bank organized under the
laws of the United States or any state thereof and having a combined capital and
surplus of at least $500,000,000; (b) a savings and loan association or savings
bank organized under the laws of the United States of America or any state
thereof and having a combined capital and surplus of at least $500,000,000; (c)
a commercial bank organized under the laws of any other country or a political
subdivision thereof and having a combined capital and surplus of at least
$500,000,000; provided that (x) such bank is acting through a branch or agency
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located in the United States of America or (y) such bank is organized under the
laws of a country that is a member of the Organization for Economic Cooperation
and Development or a political subdivision of such country; and (d) any other
entity which is an "accredited investor" (as defined in Regulation D under the
Securities Act) which extends credit or buys loans as one
8
of its businesses including, but not limited to, insurance companies, mutual
funds and lease financing companies; and (ii) any Lender and any Affiliate of
any Lender; provided that no Affiliate of Company shall be an Eligible Assignee.
--------
"EMPLOYEE BENEFIT PLAN" means any "employee benefit plan" as defined in
Section 3(3) of ERISA which is or was maintained or contributed to by Company,
any of its Subsidiaries or any of their respective ERISA Affiliates.
"ENVIRONMENTAL CLAIM" means any investigation, notice, notice of
violation, claim, action, suit, proceeding, demand, abatement order or other
order or directive (conditional or otherwise), by any governmental authority or
any other Person, arising (i) pursuant to or in connection with any actual or
alleged violation of any Environmental Law, (ii) in connection with any
Hazardous Materials or any actual or alleged Hazardous Materials Activity, or
(iii) in connection with any actual or alleged damage, injury, threat or harm to
health, safety, natural resources or the environment.
"ENVIRONMENTAL LAWS" means any and all current or future statutes,
ordinances, orders, rules, regulations, guidance documents, judgments,
Governmental Authorizations, or any other requirements of governmental
authorities relating to (i) environmental matters, including those relating to
any Hazardous Materials Activity, (ii) the generation, use, storage,
transportation or disposal of Hazardous Materials, or (iii) occupational safety
and health, industrial hygiene, land use or the protection of human, plant or
animal health or welfare, in any manner applicable to Company or any of its
Subsidiaries or any Facility, including the Comprehensive Environmental
Response, Compensation, and Liability Act (42 U.S.C. (S) 9601 et seq.), the
-- ---
Hazardous Materials Transportation Act (49 U.S.C. (S) 1801 et seq.), the
-- ---
Resource Conservation and Recovery Act (42 U.S.C. (S) 6901 et seq.), the Federal
-- ---
Water Pollution Control Act (33 U.S.C. (S) 1251 et seq.), the Clean Air Act (42
-- ---
U.S.C. (S) 7401 et seq.), the Toxic Substances Control Act (15 U.S.C. (S) 2601
-- ---
et seq.), the Federal Insecticide, Fungicide and Rodenticide Act (7 U.S.C.
-- ---
(S)136 et seq.), the Occupational Safety and Health Act (29 U.S.C. (S) 651 et
-- --- --
seq.), the Oil Pollution Act (33 U.S.C. (S) 2701 et seq) and the Emergency
--- ------
Planning and Community Right-to-Know Act (42 U.S.C. (S) 11001 et seq.), each as
-- ---
amended or supplemented, any analogous present or future state or local statutes
or laws, and any regulations promulgated pursuant to any of the foregoing.
"ERISA" means the Employee Retirement Income Security Act of 1974, as
amended from time to time, and any successor thereto.
"ERISA AFFILIATE" means, as applied to any Person, (i) any corporation
which is a member of a controlled group of corporations within the meaning of
Section 414(b) of the Internal Revenue Code of which that Person is a member;
(ii) any trade or business (whether or not incorporated) which is a member of a
group
9
of trades or businesses under common control within the meaning of Section
414(c) of the Internal Revenue Code of which that Person is a member; and (iii)
any member of an affiliated service group within the meaning of Section 414(m)
or (o) of the Internal Revenue Code of which that Person, any corporation
described in clause (i) above or any trade or business described in clause (ii)
above is a member. Any former ERISA Affiliate of Company or any of its
Subsidiaries shall continue to be considered an ERISA Affiliate of Company or
such Subsidiary within the meaning of this definition with respect to the period
such entity was an ERISA Affiliate of Company or such Subsidiary and with
respect to liabilities arising after such period for which Company or such
Subsidiary could be liable under the Internal Revenue Code or ERISA.
"ERISA EVENT" means (i) a "reportable event" within the meaning of
Section 4043 of ERISA and the regulations issued thereunder with respect to any
Pension Plan (excluding those for which the provision for 30-day notice to the
PBGC has been waived by regulation); (ii) the failure to meet the minimum
funding standard of Section 412 of the Internal Revenue Code with respect to any
Pension Plan (whether or not waived in accordance with Section 412(d) of the
Internal Revenue Code) or the failure to make by its due date a required
installment under Section 412(m) of the Internal Revenue Code with respect to
any Pension Plan or the failure to make any required contribution to a
Multiemployer Plan; (iii) the provision by the administrator of any Pension Plan
pursuant to Section 4041(a)(2) of ERISA of a notice of intent to terminate such
plan in a distress termination described in Section 4041(c) of ERISA; (iv) the
withdrawal by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates from any Pension Plan with two or more contributing sponsors or the
termination of any such Pension Plan resulting in liability pursuant to Section
4063 or 4064 of ERISA; (v) the institution by the PBGC of proceedings to
terminate any Pension Plan, or the occurrence of any event or condition which
might constitute grounds under ERISA for the termination of, or the appointment
of a trustee to administer, any Pension Plan; (vi) the imposition of liability
on Company, any of its Subsidiaries or any of their respective ERISA Affiliates
pursuant to Section 4062(e) or 4069 of ERISA or by reason of the application of
Section 4212(c) of ERISA; (vii) the withdrawal of Company, any of its
Subsidiaries or any of their respective ERISA Affiliates in a complete or
partial withdrawal (within the meaning of Sections 4203 and 4205 of ERISA) from
any Multiemployer Plan if there is any potential liability therefor, or the
receipt by Company, any of its Subsidiaries or any of their respective ERISA
Affiliates of notice from any Multiemployer Plan that it is in reorganization or
insolvency pursuant to Section 4241 or 4245 of ERISA, or that it intends to
terminate or has terminated under Section 4041A or 4042 of ERISA; (viii) the
occurrence of an act or omission which could give rise to the imposition on
Company, any of its Subsidiaries or any of their respective ERISA Affiliates of
fines, penalties, taxes or related charges under Chapter 43 of the Internal
Revenue Code or under Section 409, Section 502(c), (i) or (l), or Section 4071
of ERISA in respect of any Employee Benefit Plan; (ix) the
10
assertion of a material claim (other than routine claims for benefits) against
any Employee Benefit Plan other than a Multiemployer Plan or the assets thereof,
or against Company, any of its Subsidiaries or any of their respective ERISA
Affiliates in connection with any Employee Benefit Plan; (x) receipt from the
Internal Revenue Service of notice of the failure of any Pension Plan (or any
other Employee Benefit Plan intended to be qualified under Section 401(a) of the
Internal Revenue Code) to qualify under Section 401(a) of the Internal Revenue
Code, or the failure of any trust forming part of any Pension Plan to qualify
for exemption from taxation under Section 501(a) of the Internal Revenue Code;
or (xi) the imposition of a Lien pursuant to Section 401(a)(29) or 412(n) of the
Internal Revenue Code or pursuant to ERISA with respect to any Pension Plan.
"EVENT OF DEFAULT" means each of the events set forth in Section 8.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as amended
from time to time, and any successor statute.
"EXCHANGE RATE" means, on any date when an amount expressed in a
currency other than Dollars is to be determined with respect to any Letter of
Credit, the nominal rate of exchange of the Issuing Lender in the New York
foreign exchange market for the purchase by such Issuing Lender (by cable
transfer) of such currency in exchange for Dollars at 12:00 noon (New York time)
one Business Day prior to such date, expressed as a number of units of such
currency per one Dollar.
"EXISTING LETTERS OF CREDIT" means those certain letters of credit
issued for the benefit of Company or its Subsidiaries under the Citicorp Loan
Agreement and outstanding as of the Closing Date.
"FACILITIES" means any and all real property (including all buildings,
fixtures or other improvements located thereon) now, hereafter or heretofore
owned, leased, operated or used by Company or any of its Subsidiaries or any of
their respective predecessors or Affiliates.
"FEDERAL FUNDS EFFECTIVE RATE" means, for any period, a fluctuating
interest rate equal for each day during such period to 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 Agent from three Federal funds brokers of recognized
standing selected by Agent.
"FINANCIAL PLAN" has the meaning assigned to that term in subsection
6.1(xi).
11
"FISCAL QUARTER" means a fiscal quarter of any Fiscal Year.
"FISCAL YEAR" means the fiscal year of Company and its Subsidiaries
ending on December 31 of each calendar year. For purposes of this Agreement,
any particular Fiscal Year shall be designated by reference to the calendar year
in which such Fiscal Year ends.
"FUNDING AND PAYMENT OFFICE" means (i) the office of Agent located at
▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇ or (ii) such other office
of Agent as may from time to time hereafter be designated as such in a written
notice delivered by Agent to Company and each Lender.
"FUNDING DATE" means the date of the funding of a Loan.
"GAAP" means, subject to the limitations on the application thereof set
forth in subsection 1.2, generally accepted accounting principles set forth in
opinions and pronouncements of the Accounting Principles Board of the American
Institute of Certified Public Accountants and statements and pronouncements of
the Financial Accounting Standards Board or in such other statements by such
other entity as may be approved by a significant segment of the accounting
profession, in each case as the same are applicable to the circumstances as of
the date of determination.
"GOVERNMENTAL AUTHORIZATION" means any permit, license, authorization,
plan, directive, consent order or consent decree of or from any federal, state
or local governmental authority, agency or court.
"HAZARDOUS MATERIALS" means (i) any chemical, material or substance at
any time defined as or included in the definition of "hazardous substances",
"hazardous wastes", "hazardous materials", "extremely hazardous waste", "acutely
hazardous waste", "radioactive waste", "biohazardous waste", "pollutant", "toxic
pollutant", "contaminant", "restricted hazardous waste", "infectious waste",
"toxic substances", or any other term or expression intended to define, list or
classify substances by reason of properties harmful to health, safety or the
indoor or outdoor environment (including harmful properties such as
ignitability, corrosivity, reactivity, carcinogenicity, toxicity, reproductive
toxicity, "TCLP toxicity" or "EP toxicity" or words of similar import under any
applicable Environmental Laws); (ii) any oil, petroleum, petroleum fraction or
petroleum derived substance; (iii) any drilling fluids, produced waters and
other wastes associated with the exploration, development or production of crude
oil, natural gas or geothermal resources; (iv) any flammable substances or
explosives; (v) any radioactive materials; (vi) any asbestos-containing
materials; (vii) urea formaldehyde foam insulation; (viii) electrical equipment
which contains any oil or dielectric fluid containing polychlorinated biphenyls;
(ix) pesticides; and (x) any other chemical, material or substance, exposure to
which is prohibited, limited or regulated by any governmental authority or which
may or could
12
pose a hazard to the health and safety of the owners, occupants or any Persons
in the vicinity of any Facility or to the indoor or outdoor environment.
"HAZARDOUS MATERIALS ACTIVITY" means any past, current, proposed or
threatened activity, event or occurrence involving any Hazardous Materials,
including the use, manufacture, possession, storage, holding, presence,
existence, location, Release, threatened Release, discharge, placement,
generation, transportation, processing, construction, treatment, abatement,
removal, remediation, disposal, disposition or handling of any Hazardous
Materials, and any corrective action or response action with respect to any of
the foregoing.
"HEDGE AGREEMENT" means an Interest Rate Agreement or a Currency
Agreement designed to hedge against fluctuations in interest rates or currency
values, respectively.
"INDEBTEDNESS", as applied to any Person, means (i) all indebtedness
for borrowed money, (ii) that portion of obligations with respect to Capital
Leases that is properly classified as a liability on a balance sheet in
conformity with GAAP, (iii) notes payable and drafts accepted representing
extensions of credit whether or not representing obligations for borrowed money,
(iv) any obligation owed for all or any part of the purchase price of property
or services (excluding any such obligations incurred under ERISA), which
purchase price is (a) due more than six months from the date of incurrence of
the obligation in respect thereof in the case of obligations of Persons other
than the Company and its Subsidiaries or (b) evidenced by a note or similar
written instrument, and (v) all indebtedness secured by any Lien on any property
or asset owned or held by that Person regardless of whether the indebtedness
secured thereby shall have been assumed by that Person or is nonrecourse to the
credit of that Person. Obligations under Interest Rate Agreements and Currency
Agreements constitute (x) in the case of Hedge Agreements, Contingent
Obligations, and (y) in all other cases, Investments, and in neither case
constitute Indebtedness.
"INDEMNITEE" has the meaning assigned to that term in subsection 10.3.
"INTELLECTUAL PROPERTY" means all patents, trademarks, tradenames,
copyrights, technology, know-how and processes used in or necessary for the
conduct of the business of Company and its Subsidiaries as currently conducted
that are material to the condition (financial or otherwise), business or
operations of Company and its Subsidiaries, taken as a whole.
"INTEREST PAYMENT DATE" means (i) with respect to any Base Rate Loan,
each March 31, June 30, September 30 and December 31 of each year, commencing on
the first such date to occur after the Closing Date, and (ii) with respect to
any LIBOR Rate Loan, the last day of each Interest Period applicable to such
Loan;
13
provided that in the case of each Interest Period of longer than three months
--------
"Interest Payment Date" shall also include each date that is three months, or an
integral multiple thereof, after the commencement of such Interest Period.
"INTEREST PERIOD" has the meaning assigned to that term in subsection
2.2B.
"INTEREST RATE AGREEMENT" means any interest rate swap agreement,
interest rate cap agreement, interest rate collar agreement or other similar
agreement or arrangement to which Company or any of its Subsidiaries is a party.
"INTEREST RATE DETERMINATION DATE" means, with respect to any Interest
Period, the second Business Day prior to the first day of such Interest Period.
"INTERNAL REVENUE CODE" means the Internal Revenue Code of 1986, as
amended to the date hereof and from time to time hereafter, and any successor
statute.
"INVESTMENT" means (i) any direct or indirect purchase or other
acquisition by Company or any of its Subsidiaries of, or of a beneficial
interest in, any Securities of any other Person (including any Subsidiary of
Company), (ii) any direct or indirect redemption, retirement, purchase or other
acquisition for value, by any Subsidiary of Company from any Person other than
Company or any of its Subsidiaries, of any equity Securities of such Subsidiary,
(iii) any direct or indirect loan, advance (other than advances to employees for
moving, entertainment and travel expenses, drawing accounts and similar
expenditures in the ordinary course of business) or capital contribution by
Company or any of its Subsidiaries to any other Person, including all
indebtedness and accounts receivable from that other Person that are not current
assets (other than current assets arising from sales in the ordinary course of
business to Persons other than the Company and its Subsidiaries) or did not
arise from sales to that other Person in the ordinary course of business, or
(iv) Interest Rate Agreements or Currency Agreements not constituting Hedge
Agreements. The amount of any Investment shall be the original cost of such
Investment plus the cost of all additions thereto, without any adjustments for
----
increases or decreases in value, or write-ups, write-downs or write-offs with
respect to such Investment.
"ISSUING LENDER" means UBOC.
"JOINT VENTURE" means a joint venture, partnership or other similar
arrangement, whether in corporate, partnership or other legal form; provided
--------
that in no event shall any corporate Subsidiary of any Person be considered to
be a Joint Venture to which such Person is a party.
14
"LENDER" and "LENDERS" means the persons identified as "Lenders" and
listed on the signature pages of this Agreement, together with their successors
and permitted assigns pursuant to subsection 10.1.
"LETTER OF CREDIT" or "LETTERS OF CREDIT" means Commercial Letters of
Credit and Standby Letters of Credit issued or to be issued by Issuing Lender
for the account of Company pursuant to subsection 3.1.
"LETTER OF CREDIT USAGE" means, as at any date of determination, the
sum of (i) the maximum aggregate amount which is or at any time thereafter may
become available for drawing under all Letters of Credit then outstanding plus
----
(ii) the aggregate amount of all drawings under Letters of Credit honored by
Issuing Lenders and not theretofore reimbursed by Company (including any such
reimbursement out of the proceeds of Loans pursuant to subsection 3.3B). For
purposes of this definition, any amount described in clause (i) or (ii) of the
preceding sentence which is denominated in a currency other than Dollars shall
be valued based on the applicable Exchange Rate for such currency as of the
applicable date of determination.
"LIBOR RATE LOANS" means Loans bearing interest at rates determined by
reference to the Adjusted LIBOR Rate as provided in subsection 2.2A.
"LIEN" means any lien, mortgage, pledge, assignment, security interest,
charge or encumbrance of any kind (including any conditional sale or other title
retention agreement, any lease in the nature thereof, and any agreement to give
any security interest) and any option, trust or other preferential arrangement
having the practical effect of any of the foregoing.
"LOAN DOCUMENTS" means this Agreement, the Notes, any applications for,
or reimbursement agreements or other documents or certificates executed by
Company in favor of an Issuing Lender relating to, the Letters of Credit, the
Subsidiary Guaranties, the Subordination Agreements and the Collateral Account
Agreement.
"LOAN EXPOSURE" means, with respect to any Lender as of any date of
determination (i) prior to the termination of the Commitments, that Lender's
Commitment and (ii) after the termination of the Commitments, the sum of (a) the
aggregate outstanding principal amount of the Loans of that Lender plus (b) in
----
the event that Lender is an Issuing Lender, the aggregate Letter of Credit Usage
in respect of all Letters of Credit issued by that Lender (in each case net of
any participations purchased by other Lenders in such Letters of Credit or any
unreimbursed drawings thereunder) plus (c) the aggregate amount of all
----
participations purchased by that Lender in any drawings under Letters of Credit
honored by Issuing Lenders and not theretofore reimbursed by Company.
15
"LOANS" means the Loans made by Lenders to Company pursuant to
subsection 2.1A.
"LOAN PARTIES" means Company and each of the Subsidiary Guarantors.
"MARGIN STOCK" has the meaning assigned to that term in Regulation U of
the Board of Governors of the Federal Reserve System as in effect from time to
time.
"MATERIAL ADVERSE EFFECT" means (i) a material adverse effect upon the
business, operations, properties, assets, condition (financial or otherwise) or
prospects of Company and its Subsidiaries, taken as a whole or (ii) the
impairment of the ability of Company to perform, or of Agent or Lenders to
enforce, the Obligations.
"MATERIAL CONTRACT" means any contract or other arrangement to which
Company or any of its Subsidiaries is a party (other than the Loan Documents)
for which breach, nonperformance, cancellation or failure to renew could have a
Material Adverse Effect.
"MULTIEMPLOYER PLAN" means any Employee Benefit Plan which is a
"multiemployer plan" as defined in Section 3(37) of ERISA.
"NET ASSET SALE PROCEEDS" means, with respect to any Asset Sale, Cash
payments (including any Cash received by way of deferred payment pursuant to, or
by monetization of, a note receivable or otherwise, but only as and when so
received) received from such Asset Sale, net of any bona fide direct costs
incurred in connection with such Asset Sale, including (i) income taxes
reasonably estimated to be actually payable within two years of the date of such
Asset Sale as a result of any gain recognized in connection with such Asset Sale
and (ii) payment of the outstanding principal amount of, premium or penalty, if
any, and interest on any Indebtedness (other than the Loans) that is secured by
a Lien on the stock or assets in question and that is required to be repaid
under the terms thereof as a result of such Asset Sale.
"NON-MATERIAL DOMESTIC SUBSIDIARY" means any Domestic Subsidiary of
Company owning assets with a fair market value of less than $250,000; provided
that the total fair market value of all assets owned by all Non-Material
Domestic Subsidiaries which are not Subsidiary Guarantors shall not exceed
$1,000,000.
"NOTES" means any promissory notes of Company issued pursuant to
subsection 2.1E to evidence the Loans of any Lender, substantially in the form
of Exhibit IV annexed hereto, as they may be amended, supplemented or otherwise
----------
modified from time to time.
16
"NOTICE OF BORROWING" means a notice substantially in the form of
Exhibit I annexed hereto delivered by Company to Agent pursuant to subsection
---------
2.1B with respect to a proposed borrowing.
"NOTICE OF CONVERSION/CONTINUATION" means a notice substantially in the
form of Exhibit II annexed hereto delivered by Company to Agent pursuant to
----------
subsection 2.2D with respect to a proposed conversion or continuation of the
applicable basis for determining the interest rate with respect to the Loans
specified therein.
"NOTICE OF ISSUANCE OF LETTER OF CREDIT" means a notice substantially
in the form of Exhibit III annexed hereto delivered by Company to Agent pursuant
-----------
to subsection 3.1B(i) with respect to the proposed issuance of a Letter of
Credit.
"OBLIGATIONS" means all obligations of every nature of Loan Parties
from time to time owed to Agent, Lenders or any of them under the Loan
Documents, whether for principal, interest, reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnification or otherwise.
"OFFICERS' CERTIFICATE" means, as applied to any corporation, a
certificate executed on behalf of such corporation by its chairman of the board
(if an officer) or its president or one of its vice presidents and by its chief
financial officer, its treasurer or its secretary.
"OPERATING LEASE" means, as applied to any Person, any lease (including
leases that may be terminated by the lessee at any time) of any property
(whether real, personal or mixed) that is not a Capital Lease other than any
such lease under which that Person is the lessor.
"PBGC" means the Pension Benefit Guaranty Corporation or any successor
thereto.
"PENSION PLAN" means any Employee Benefit Plan, other than a
Multiemployer Plan, which is subject to Section 412 of the Internal Revenue Code
or Section 302 of ERISA.
"PERMITTED ENCUMBRANCES" means the following types of Liens (excluding
any such Lien imposed pursuant to Section 401(a)(29) or 412(n) of the Internal
Revenue Code or by ERISA and any such Lien relating to or imposed in connection
with any Environmental Claim):
(i) Liens for taxes, assessments or governmental charges or claims
the payment of which is not, at the time, required by subsection 6.3;
17
(ii) statutory Liens of landlords, statutory Liens of banks and
rights of set-off, statutory Liens of carriers, warehousemen, mechanics,
repairmen, workmen and materialmen, and other Liens imposed by law, in each
case incurred in the ordinary course of business (a) for amounts not yet
overdue or (b) for amounts that are overdue and that (in the case of any
such amounts overdue for a period in excess of 10 days) are being contested
in good faith by appropriate proceedings, so long as such reserves or other
appropriate provisions, if any, as shall be required by GAAP shall have been
made for any such contested amounts;
(iii) Liens incurred or deposits made in the ordinary course of
business in connection with workers' compensation, unemployment insurance
and other types of social security, or to secure the performance of tenders,
statutory obligations, surety and appeal bonds, bids, leases, government
contracts, trade contracts, performance and return-of-money bonds and other
similar obligations (exclusive of obligations for the payment of borrowed
money);
(iv) any attachment or judgment Lien not constituting an Event of
Default under subsection 8.8;
(v) leases or subleases granted to third parties and not interfering
in any material respect with the ordinary conduct of the business of Company
or any of its Subsidiaries;
(vi) easements, rights-of-way, restrictions, encroachments, and other
minor defects or irregularities in title, in each case which do not and will
not interfere in any material respect with the ordinary conduct of the
business of Company or any of its Subsidiaries;
(vii) any (a) interest or title of a lessor or sublessor under any
lease permitted by subsection 7.9 or any Capital Lease permitted by
subsection 7.1, (b) restriction or encumbrance that the interest or title of
such lessor or sublessor may be subject to, or (c) subordination of the
interest of the lessee or sublessee under such lease to any restriction or
encumbrance referred to in the preceding clause (b), so long as the holder
of such restriction or encumbrance agrees to recognize the rights of such
lessee or sublessee under such lease;
(viii) Liens arising from filing UCC financing statements relating
solely to leases permitted by this Agreement;
(ix) Liens in favor of customs and revenue authorities arising as a
matter of law to secure payment of customs duties in connection with the
importation of goods;
18
(x) any zoning or similar law or right reserved to or vested in any
governmental office or agency to control or regulate the use of any real
property;
(xi) Liens securing obligations (other than obligations representing
Indebtedness for borrowed money) under operating, reciprocal easement or
similar agreements entered into in the ordinary course of business of
Company and its Subsidiaries; and
(xii) licenses of patents, trademarks and other intellectual property
rights granted by Company or any of its Subsidiaries in the ordinary course
of business and not interfering in any material respect with the ordinary
conduct of the business of Company or such Subsidiary.
"PERSON" means and includes natural persons, corporations, limited
partnerships, general partnerships, limited liability companies, limited
liability partnerships, joint stock companies, Joint Ventures, associations,
companies, trusts, banks, trust companies, land trusts, business trusts or other
organizations, whether or not legal entities, and governments (whether federal,
state or local, domestic or foreign, and including political subdivisions
thereof) and agencies or other administrative or regulatory bodies thereof.
"POTENTIAL EVENT OF DEFAULT" means a condition or event that, after
notice or lapse of time or both, would constitute an Event of Default.
"PRO RATA SHARE" means, with respect to each Lender, the percentage
obtained by dividing (x) the Loan Exposure of that Lender by (y) the aggregate
-------- --
Loan Exposure of all Lenders, as such percentage may be adjusted by assignments
permitted pursuant to subsection 10.1. The initial Pro Rata Share of each
Lender is set forth opposite the name of that Lender in Schedule 2.1 annexed
------------
hereto.
"REGISTER" has the meaning assigned to that term in subsection 2.1D.
"REGULATION D" means Regulation D of the Board of Governors of the
Federal Reserve System, as in effect from time to time.
"REIMBURSEMENT DATE" has the meaning assigned to that term in
subsection 3.3B.
"RELEASE" means any release, spill, emission, leaking, pumping,
pouring, injection, escaping, deposit, disposal, discharge, dispersal, dumping,
leaching or migration of Hazardous Materials into the indoor or outdoor
environment (including the abandonment or disposal of any barrels, containers or
other closed receptacles
19
containing any Hazardous Materials), including the movement of any Hazardous
Materials through the air, soil, surface water or groundwater.
"REQUISITE LENDERS" means Lenders having or holding at least 66-2/3% of
the aggregate Loan Exposure of all Lenders.
"RESTRICTED JUNIOR PAYMENT" means (i) any dividend or other
distribution, direct or indirect, on account of any shares of any class of stock
of Company now or hereafter outstanding, except a dividend payable solely in
shares of that class of stock to the holders of that class, (ii) any redemption,
retirement, sinking fund or similar payment, purchase or other acquisition for
value, direct or indirect, of any shares of any class of stock of Company now or
hereafter outstanding, (iii) any payment made to retire, or to obtain the
surrender of, any outstanding warrants, options or other rights to acquire
shares of any class of stock of Company now or hereafter outstanding, and (iv)
any payment or prepayment of principal of, premium, if any, or interest on, or
redemption, purchase, retirement, defeasance (including in-substance or legal
defeasance), sinking fund or similar payment with respect to, the Senior Notes;
provided the term "Restricted Junior Payment" shall not include regularly
--------
scheduled payments of principal and interest in respect of the Senior Notes to
the extent required by the Senior Note Agreement, as in effect on the date
hereof.
"SECURITIES" means any stock, shares, partnership interests, voting
trust certificates, certificates of interest or participation in any profit-
sharing agreement or arrangement, options, warrants, bonds, debentures, notes,
or other evidences of indebtedness, secured or unsecured, convertible,
subordinated or otherwise, or in general any instruments commonly known as
"securities" or any certificates of interest, shares or participations in
temporary or interim certificates for the purchase or acquisition of, or any
right to subscribe to, purchase or acquire, any of the foregoing.
"SECURITIES ACT" means the Securities Act of 1933, as amended from time
to time, and any successor statute.
"SENIOR NOTE AGREEMENT" means that certain Note Agreement dated as of
July 1, 1992 among the Borrower and each of the purchasers named in Schedule I
thereto, as amended from time to time.
"SENIOR NOTES" means the Notes issued pursuant to the Senior Note
Agreement.
"SENIOR NOTE WAIVER" has the meaning assigned to such term in
subsection 4.1L.
"SOLVENT" means, with respect to any Person, that as of the date of
determination both (A) (i) the then fair saleable value of the property of such
Person
20
is (y) greater than the total amount of liabilities (including contingent
liabilities) of such Person and (z) not less than the amount that will be
required to pay the probable liabilities on such Person's then existing debts as
they become absolute and matured considering all financing alternatives and
potential asset sales reasonably available to such Person; (ii) such Person's
capital is not unreasonably small in relation to its business or any
contemplated or undertaken transaction; and (iii) such Person does not intend to
incur, or believe (nor should it reasonably believe) that it will incur, debts
beyond its ability to pay such debts as they become due; and (B) such Person is
"solvent" within the meaning given that term and similar terms under applicable
laws relating to fraudulent transfers and conveyances. For purposes of this
definition, the amount of any contingent liability at any time shall be computed
as the amount that, in light of all of the facts and circumstances existing at
such time, represents the amount that can reasonably be expected to become an
actual or matured liability.
"STANDBY LETTER OF CREDIT" means any standby letter of credit or
similar instrument issued for the purpose of supporting (i) Indebtedness of
Company or any of its Subsidiaries in respect of industrial revenue or
development bonds or financings, (ii) workers' compensation liabilities of
Company or any of its Subsidiaries, (iii) the obligations of third party
insurers of Company or any of its Subsidiaries arising by virtue of the laws of
any jurisdiction requiring third party insurers, (iv) obligations with respect
to Capital Leases or Operating Leases of Company or any of its Subsidiaries, and
(v) performance, payment, deposit or surety obligations of Company or any of its
Subsidiaries.
"SUBORDINATION AGREEMENT" means each Amended and Restated Subordination
Agreement, in substantially the form of Exhibit IX-A hereto, executed and
------------
delivered by Company and each Subsidiary Guarantor on the Closing Date, and (ii)
each Subordination Agreement executed and delivered by Company and each
additional Subsidiary Guarantor in accordance with subsection 6.8, substantially
in the form of Exhibit IX-B annexed hereto (collectively the "SUBORDINATION
------------
AGREEMENTS"), as such Subordination Agreements may be amended, supplemented or
otherwise modified from time to time.
"SUBSIDIARY" means, with respect to any Person, any corporation,
partnership, limited liability company, association, joint venture or other
business entity of which more than 50% of the total voting power of shares of
stock or other ownership interests entitled (without regard to the occurrence of
any contingency) to vote in the election of the Person or Persons (whether
directors, managers, trustees or other Persons performing similar functions)
having the power to direct or cause the direction of the management and policies
thereof is at the time owned or controlled, directly or indirectly, by that
Person or one or more of the other Subsidiaries of that Person or a combination
thereof.
21
"SUBSIDIARY GUARANTOR" means any Subsidiary of Company that executes
and delivers a Subsidiary Guaranty on the Closing Date or from time to time
thereafter pursuant to subsection 6.8.
"SUBSIDIARY GUARANTY" means (i) each Amended and Restated Subsidiary
Guaranty executed and delivered by a Subsidiary Guarantor on the Closing Date,
substantially in the form of Exhibit XII-A annexed hereto and (ii) each
-------------
Subsidiary Guaranty executed and delivered by each additional Domestic
Subsidiary of Company from time to time in accordance with subsection 6.8,
substantially in the form of Exhibit XII-B annexed hereto (collectively, the
-------------
"SUBSIDIARY GUARANTIES"), as such Subsidiary Guaranties may be amended,
supplemented or otherwise modified from time to time.
"TAX" or "TAXES" means any present or future tax, levy, impost, duty,
charge, fee, deduction or withholding of any nature and whatever called, by
whomsoever, on whomsoever and wherever imposed, levied, collected, withheld or
assessed; provided that "TAX ON THE OVERALL NET INCOME" of a Person shall be
--------
construed as a reference to a tax imposed by the jurisdiction in which that
Person is organized or in which that Person's principal office (and/or, in the
case of a Lender, its lending office) is located or in which that Person
(and/or, in the case of a Lender, its lending office) is deemed to be doing
business on all or part of the net income, profits or gains (whether worldwide,
or only insofar as such income, profits or gains are considered to arise in or
to relate to a particular jurisdiction, or otherwise including minimum franchise
taxes, if applicable) of that Person (and/or, in the case of a Lender, its
lending office).
"TOTAL UTILIZATION OF COMMITMENTS" means, as at any date of
determination, the sum of (i) the aggregate principal amount of all outstanding
Loans (other than Loans made for the purpose of reimbursing the applicable
Issuing Lender for any amount drawn under any Letter of Credit but not yet so
applied) plus (ii) the Letter of Credit Usage.
----
"UBOC" has the meaning assigned to that term in the introduction to
this Agreement.
"UBOC REFERENCE RATE" means, at any time, the per annum rate publicly
announced by UBOC from time to time at its head office as its "reference rate."
The "reference rate" is determined by UBOC from time to time as a means of
pricing credit extensions to some customers and is neither directly tied to any
external rate of interest or index nor necessarily the lowest rate of interest
charged by UBOC at any given time for any particular class of customers or
credit extensions.
22
1.2 ACCOUNTING TERMS; UTILIZATION OF GAAP FOR PURPOSES OF CALCULATIONS UNDER
------------------------------------------------------------------------
AGREEMENT.
---------
Except as otherwise expressly provided in this Agreement, all
accounting terms not otherwise defined herein shall have the meanings assigned
to them in conformity with GAAP. Financial statements and other information
required to be delivered by Company to Lenders pursuant to clauses (i) and (ii)
of subsection 6.1 shall be prepared in accordance with GAAP as in effect at the
time of such preparation (and delivered together with the reconciliation
statements provided for in subsection 6.1(v)). Calculations in connection with
the definitions, covenants and other provisions of this Agreement shall utilize
accounting principles and policies in conformity with those used to prepare the
financial statements referred to in subsection 5.3.
1.3 OTHER DEFINITIONAL PROVISIONS AND RULES OF CONSTRUCTION.
-------------------------------------------------------
A. Any of the terms defined herein may, unless the context otherwise
requires, be used in the singular or the plural, depending on the reference.
B. References to "Sections" and "subsections" shall be to Sections
and subsections, respectively, of this Agreement unless otherwise specifically
provided.
C. The use in any of the Loan Documents of the word "include" or
"including", when following any general statement, term or matter, shall not be
construed to limit such statement, term or matter to the specific items or
matters set forth immediately following such word or to similar items or
matters, whether or not nonlimiting language (such as "without limitation" or
"but not limited to" or words of similar import) is used with reference thereto,
but rather shall be deemed to refer to all other items or matters that fall
within the broadest possible scope of such general statement, term or matter.
SECTION 2. AMOUNTS AND TERMS OF COMMITMENTS AND LOANS
2.1 COMMITMENTS; MAKING OF LOANS; THE REGISTER; NOTES.
-------------------------------------------------
A. COMMITMENTS. Subject to the terms and conditions of this Agreement and
in reliance upon the representations and warranties of Company herein set forth,
each Lender hereby severally agrees, subject to the limitations set forth below
with respect to the maximum amount of Loans permitted to be outstanding from
time to time, to lend to Company from time to time during the period from the
Closing Date to but excluding the Commitment Termination Date an aggregate
amount not exceeding its Pro Rata Share of the aggregate amount of the
Commitments to be used for the purposes identified in subsection 2.5A. The
original amount of each
23
Lender's Commitment is set forth opposite its name on Schedule 2.1 annexed
------------
hereto and the aggregate original amount of the Commitments is $65,000,000;
provided that the Commitments of Lenders shall be adjusted to give effect to any
--------
assignments of the Commitments pursuant to subsection 10.1B; and provided,
--------
further that the amount of the Commitments shall be reduced from time to time by
-------
the amount of any reductions thereto made pursuant to subsections 2.4A, 2.4B(ii)
and 2.4B(iii). Each Lender's Commitment shall expire on the Commitment
Termination Date and all Loans and all other amounts owed hereunder with respect
to the Loans and the Commitments shall be paid in full no later than that date;
provided that each Lender's Commitment shall expire immediately and without
--------
further action on July 15, 1997 if the initial Loans are not made on or before
that date. Amounts borrowed under this subsection 2.1A may be repaid and
reborrowed to but excluding the Commitment Termination Date.
Anything contained in this Agreement to the contrary notwithstanding,
the Loans and the Commitments shall be subject to the limitation that in no
event shall the Total Utilization of Commitments at any time exceed the
Commitments then in effect.
B. BORROWING MECHANICS. Loans made on any Funding Date (other than Loans
made pursuant to subsection 3.3B for the purpose of reimbursing any Issuing
Lender for the amount of a drawing under a Letter of Credit issued by it) shall
be in an aggregate minimum amount of $1,000,000 and integral multiples of
$1,000,000 in excess of that amount; provided that Loans made on any Funding
--------
Date as LIBOR Rate Loans with a particular Interest Period shall be in an
aggregate minimum amount of $5,000,000 and integral multiples of $1,000,000 in
excess of that amount. Whenever Company desires that Lenders make Loans it
shall deliver to Agent a Notice of Borrowing no later than 9:00 A.M. (Los
Angeles time) at least three Business Days in advance of the proposed Funding
Date (in the case of a LIBOR Rate Loan) or on the proposed Funding Date (in the
case of a Base Rate Loan). The Notice of Borrowing shall specify (i) the
proposed Funding Date (which shall be a Business Day), (ii) the amount of Loans
requested, (iii) whether such Loans shall be Base Rate Loans or LIBOR Rate
Loans, and (iv) in the case of any Loans requested to be made as LIBOR Rate
Loans, the initial Interest Period requested therefor. Loans may be continued
as or converted into Base Rate Loans and LIBOR Rate Loans in the manner provided
in subsection 2.2D. In lieu of delivering the above-described Notice of
Borrowing, Company may give Agent telephonic notice by the required time of any
proposed borrowing under this subsection 2.1B; provided that such notice shall
--------
be promptly confirmed in writing by delivery of a Notice of Borrowing to Agent
on or before the applicable Funding Date.
Neither Agent nor any Lender shall incur any liability to Company in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to borrow
24
on behalf of Company or for otherwise acting in good faith under this subsection
2.1B, and upon funding of Loans by Lenders in accordance with this Agreement
pursuant to any such telephonic notice Company shall have effected Loans
hereunder.
Company shall notify Agent prior to the funding of any Loans in the
event that any of the matters to which Company is required to certify in the
applicable Notice of Borrowing is no longer true and correct as of the
applicable Funding Date, and the acceptance by Company of the proceeds of any
Loans shall constitute a re-certification by Company, as of the applicable
Funding Date, as to the matters to which Company is required to certify in the
applicable Notice of Borrowing.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Borrowing for a LIBOR Rate Loan (or telephonic notice in lieu thereof)
shall be irrevocable on and after the related Interest Rate Determination Date,
and Company shall be bound to make a borrowing in accordance therewith.
C. DISBURSEMENT OF FUNDS. All Loans under this Agreement shall be made by
Lenders simultaneously and proportionately to their respective Pro Rata Shares,
it being understood that no Lender shall be responsible for any default by any
other Lender in that other Lender's obligation to make a Loan requested
hereunder nor shall the Commitment of any Lender be increased or decreased as a
result of a default by any other Lender in that other Lender's obligation to
make a Loan requested hereunder. Promptly after receipt by Agent of a Notice of
Borrowing pursuant to subsection 2.1B (or telephonic notice in lieu thereof),
Agent shall notify each Lender of the proposed borrowing. Each Lender shall
make the amount of its Loan available to Agent, in same day funds in Dollars, at
the Funding and Payment Office, not later than 9:00 A.M. (Los Angeles time) (in
the case of a LIBOR Rate Loan) or 2:00 P.M. (Los Angeles time) (in the case of a
Base Rate Loan) on the applicable Funding Date. Except as provided in
subsection 3.3B with respect to Loans used to reimburse any Issuing Lender for
the amount of a drawing under a Letter of Credit issued by it, upon satisfaction
or waiver of the conditions precedent specified in subsections 4.1 (in the case
of Loans made on the Closing Date) and 4.2 (in the case of all Loans), Agent
shall make the proceeds of such Loans available to Company on the applicable
Funding Date by causing an amount of same day funds in Dollars equal to the
proceeds of all such Loans received by Agent from Lenders to be credited to the
account of Company at the Funding and Payment Office.
Unless Agent shall have been notified by any Lender prior to the
Funding Date for any Loans that such Lender does not intend to make available to
Agent the amount of such Lender's Loan requested on such Funding Date, Agent may
assume that such Lender has made such amount available to Agent on such Funding
Date and Agent may, in its sole discretion, but shall not be obligated to, make
available to Company a corresponding amount on such Funding Date. If such
25
corresponding amount is not in fact made available to Agent by such Lender,
Agent shall be entitled to recover such corresponding amount on demand from such
Lender together with interest thereon, for each day from such Funding Date until
the date such amount is paid to Agent, at the Federal Funds Effective Rate for
three Business Days and thereafter at the Base Rate. If such Lender does not
pay such corresponding amount forthwith upon Agent's demand therefor, Agent
shall promptly notify Company and Company shall immediately pay such
corresponding amount to Agent together with interest thereon, for each day from
such Funding Date until the date such amount is paid to Agent, at the rate
payable under this Agreement for Base Rate Loans. Nothing in this subsection
2.1C shall be deemed to relieve any Lender from its obligation to fulfill its
Commitment hereunder or to prejudice any rights that Company may have against
any Lender as a result of any default by such Lender hereunder.
D. THE REGISTER.
(i) Agent shall maintain, at its address referred to in subsection
10.8, a register for the recordation of the names and addresses of Lenders
and the Commitment and Loans of each Lender from time to time (the
"REGISTER"). The Register shall be available for inspection by Company or
any Lender at any reasonable time and from time to time upon reasonable
prior notice.
(ii) Agent shall record in the Register the Commitment and the Loans
from time to time of each Lender and each repayment or prepayment in respect
of the principal amount of the Loans of each Lender. Any such recordation
shall be conclusive and binding on Company and each Lender, absent manifest
error; provided that failure to make any such recordation, or any error in
--------
such recordation, shall not affect any Lender's Commitment or Company's
Obligations in respect of any applicable Loans.
(iii) Each Lender shall record on its internal records (including any
Note held by such Lender) the amount of each Loan made by it and each
payment in respect thereof. Any such recordation shall be conclusive and
binding on Company, absent manifest error; provided that failure to make any
--------
such recordation, or any error in such recordation, shall not affect any
Lender's Commitment or Company's Obligations in respect of any applicable
Loans; and provided, further that in the event of any inconsistency between
-------- -------
the Register and any Lender's records, the recordations in the Register
shall govern.
(iv) Company, Agent and Lenders shall deem and treat the Persons
listed as Lenders in the Register as the holders and owners of the
corresponding Commitments and Loans listed therein for all purposes hereof,
and no assignment or transfer of any such Commitment or Loan shall be
effective, in each case unless and until an Assignment Agreement effecting
the
26
assignment or transfer thereof shall have been accepted by Agent and
recorded in the Register as provided in subsection 10.1B(ii). Prior to such
recordation, all amounts owed with respect to the applicable Commitment or
Loan shall be owed to the Lender listed in the Register as the owner
thereof, and any request, authority or consent of any Person who, at the
time of making such request or giving such authority or consent, is listed
in the Register as a Lender shall be conclusive and binding on any
subsequent holder, assignee or transferee of the corresponding Commitment or
Loans.
(v) Company hereby designates UBOC to serve as Company's agent
solely for purposes of maintaining the Register as provided in this
subsection 2.1D, and Company hereby agrees that, to the extent UBOC serves
in such capacity, UBOC and its officers, directors, employees, agents and
affiliates shall constitute Indemnitees for all purposes under subsection
10.3.
E. NOTES. Company shall execute and deliver to each Lender (or to Agent
for that Lender) on the Closing Date a Note substantially in the form of Exhibit
-------
IV annexed hereto to evidence that Lender's Loans, in the principal amount of
--
that Lender's Commitment and with other appropriate insertions.
2.2 INTEREST ON THE LOANS.
---------------------
A. RATE OF INTEREST. Subject to the provisions of subsections 2.6 and
2.7, each Loan shall bear interest on the unpaid principal amount thereof from
the date made through maturity (whether by acceleration or otherwise) at a rate
determined by reference to the Base Rate or the Adjusted LIBOR Rate. The
applicable basis for determining the rate of interest with respect to any Loan
shall be selected by Company initially at the time a Notice of Borrowing is
given with respect to such Loan pursuant to subsection 2.1B, and the basis for
determining the interest rate with respect to any Loan may be changed from time
to time pursuant to subsection 2.2D. If on any day a Loan is outstanding with
respect to which notice has not been delivered to Agent in accordance with the
terms of this Agreement specifying the applicable basis for determining the rate
of interest, then for that day that Loan shall bear interest determined by
reference to the Base Rate.
Subject to the provisions of subsections 2.2E and 2.7, the Loans shall
bear interest through maturity as follows:
(i) if a Base Rate Loan, then at the Base Rate minus .25% per annum;
-----
or
(ii) if a LIBOR Rate Loan, then at the sum of the Adjusted LIBOR Rate
plus the Applicable LIBOR Rate Margin per annum.
----
27
B. INTEREST PERIODS. In connection with each LIBOR Rate Loan, Company
may, pursuant to the applicable Notice of Borrowing or Notice of
Conversion/Continuation, as the case may be, select an interest period (each an
"INTEREST PERIOD") to be applicable to such Loan, which Interest Period shall
be, at Company's option, either a two week or a one, two, three or six month
period; provided that:
--------
(i) the initial Interest Period for any LIBOR Rate Loan shall
commence on the Funding Date in respect of such Loan, in the case of a Loan
initially made as a LIBOR Rate Loan, or on the date specified in the
applicable Notice of Conversion/Continuation, in the case of a Loan
converted to a LIBOR Rate Loan;
(ii) in the case of immediately successive Interest Periods
applicable to a LIBOR Rate Loan continued as such pursuant to a Notice of
Conversion/Continuation, each successive Interest Period shall commence on
the day on which the next preceding Interest Period expires;
(iii) if an Interest Period would otherwise expire on a day that is
not a Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that, if any Interest Period would otherwise expire
--------
on a day that 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;
(iv) any Interest Period that begins on the last Business Day of a
calendar month (or on a day for which there is no numerically corresponding
day in the calendar month at the end of such Interest Period) shall, subject
to clause (v) of this subsection 2.2B, end on the last Business Day of a
calendar month;
(v) no Interest Period with respect to any portion of the Loans
shall extend beyond the Commitment Termination Date;
(vi) no Interest Period with respect to any portion of the Loans
shall extend beyond the date on which a permanent reduction of the
Commitments is scheduled to occur unless the sum of (a) the aggregate
principal amount of Loans that are Base Rate Loans plus (b) the aggregate
----
principal amount of Loans that are LIBOR Rate Loans with Interest Periods
expiring on or before such date plus (c) the excess of the Commitments then
----
in effect over the aggregate principal amount of Loans then outstanding
equals or exceeds the permanent reduction of the Commitments that is
scheduled to occur on such date;
28
(vii) there shall be no more than six Interest Periods outstanding at
any time; and
(viii) in the event Company fails to specify an Interest Period for
any LIBOR Rate Loan in the applicable Notice of Borrowing or Notice of
Conversion/Continuation, Company shall be deemed to have selected an
Interest Period of one month.
C. INTEREST PAYMENTS. Subject to the provisions of subsection 2.2E,
interest on each Loan shall be payable in arrears on and to each Interest
Payment Date applicable to that Loan, upon any prepayment of that Loan (to the
extent accrued on the amount being prepaid) and at maturity (including final
maturity).
D. CONVERSION OR CONTINUATION. Subject to the provisions of subsection
2.6, Company shall have the option (i) to convert at any time all or any part of
its outstanding Loans equal to $5,000,000 and integral multiples of $1,000,000
in excess of that amount from Loans bearing interest at a rate determined by
reference to one basis to Loans bearing interest at a rate determined by
reference to an alternative basis or (ii) upon the expiration of any Interest
Period applicable to a LIBOR Rate Loan, to continue all or any portion of such
Loan equal to $5,000,000 and integral multiples of $1,000,000 in excess of that
amount as a LIBOR Rate Loan; provided, however, that a LIBOR Rate Loan may only
--------- -------
be converted into a Base Rate Loan on the expiration date of an Interest Period
applicable thereto.
Company shall deliver a Notice of Conversion/Continuation to Agent no
later than 9:00 A.M. (Los Angeles time) on the proposed conversion date (in the
case of a conversion to a Base Rate Loan) and at least three Business Days in
advance of the proposed conversion/continuation date (in the case of a
conversion to, or a continuation of, a LIBOR Rate Loan). A Notice of
Conversion/Continuation shall specify (i) the proposed conversion/continuation
date (which shall be a Business Day), (ii) the amount and type of the Loan to be
converted/continued, (iii) the nature of the proposed conversion/continuation,
(iv) in the case of a conversion to, or a continuation of, a LIBOR Rate Loan,
the requested Interest Period, and (v) in the case of a conversion to, or a
continuation of, a LIBOR Rate Loan, that no Potential Event of Default or Event
of Default has occurred and is continuing. In lieu of delivering the above-
described Notice of Conversion/Continuation, Company may give Agent telephonic
notice by the required time of any proposed conversion/continuation under this
subsection 2.2D; provided that such notice shall be promptly confirmed in
--------
writing by delivery of a Notice of Conversion/Continuation to Agent on or before
the proposed conversion/continuation date. Upon receipt of written or
telephonic notice of any proposed conversion/continuation under this subsection
2.2D, Agent shall promptly transmit such notice by telefacsimile or telephone to
each Lender.
29
Neither Agent nor any Lender shall incur any liability to Company in
acting upon any telephonic notice referred to above that Agent believes in good
faith to have been given by a duly authorized officer or other person authorized
to act on behalf of Company or for otherwise acting in good faith under this
subsection 2.2D, and upon conversion or continuation of the applicable basis for
determining the interest rate with respect to any Loans in accordance with this
Agreement pursuant to any such telephonic notice Company shall have effected a
conversion or continuation, as the case may be, hereunder.
Except as otherwise provided in subsections 2.6B, 2.6C and 2.6G, a
Notice of Conversion/Continuation for conversion to, or continuation of, a LIBOR
Rate Loan (or telephonic notice in lieu thereof) shall be irrevocable on and
after the related Interest Rate Determination Date, and Company shall be bound
to effect a conversion or continuation in accordance therewith.
E. DEFAULT RATE. Upon the occurrence and during the continuation of any
Event of Default, the outstanding principal amount of all Loans and, to the
extent permitted by applicable law, any interest payments thereon not paid when
due and any fees and other amounts then due and payable hereunder, shall
thereafter bear interest (including post-petition interest in any proceeding
under the Bankruptcy Code or other applicable bankruptcy laws) payable upon
demand at a rate that is 2% per annum in excess of the interest rate otherwise
payable under this Agreement with respect to the applicable Loans (or, in the
case of any such fees and other amounts, at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans); provided that, in the case of LIBOR Rate Loans, upon the expiration of
--------
the Interest Period in effect at the time any such increase in interest rate is
effective such LIBOR Rate Loans shall thereupon become Base Rate Loans and shall
thereafter bear interest payable upon demand at a rate which is 2% per annum in
excess of the interest rate otherwise payable under this Agreement for Base Rate
Loans. Payment or acceptance of the increased rates of interest provided for in
this subsection 2.2E is not a permitted alternative to timely payment and shall
not constitute a waiver of any Event of Default or otherwise prejudice or limit
any rights or remedies of Agent or any Lender.
F. COMPUTATION OF INTEREST. Interest on the Loans shall be computed (i)
in the case of Base Rate Loans, on the basis of a 365-day or 366-day year, as
the case may be, and (ii) in the case of LIBOR Rate Loans, on the basis of a
360-day year, in each case for the actual number of days elapsed in the period
during which it accrues. In computing interest on any Loan, the date of the
making of such Loan or the first day of an Interest Period applicable to such
Loan or, with respect to a Base Rate Loan being converted from a LIBOR Rate
Loan, the date of conversion of such LIBOR Rate Loan to such Base Rate Loan, as
the case may be, shall be included, and the date of payment of such Loan or the
expiration date of an Interest Period applicable to such Loan or, with respect
to a Base Rate Loan being converted to a
30
LIBOR Rate Loan, the date of conversion of such Base Rate Loan to such LIBOR
Rate Loan, as the case may be, shall be excluded; provided that if a Loan is
--------
repaid on the same day on which it is made, one day's interest shall be paid on
that Loan.
2.3 FEES.
----
A. COMMITMENT FEES. Company agrees to pay to Agent, for distribution to
each Lender in proportion to that Lender's Pro Rata Share, commitment fees for
the period from and including the Closing Date to and excluding the Commitment
Termination Date equal to the average of the daily excess of the Commitments
over the sum of (i) the aggregate principal amount of outstanding Loans plus
----
(ii) the Letter of Credit Usage, in each case multiplied by (a) 0.25% per annum
-------------
if the Consolidated Leverage Ratio is greater than or equal to 0.30 to 1.00, or
(b) .175% per annum if the Consolidated Leverage Ratio is less than 0.30 to
1.00, such commitment fees to be calculated on the basis of a 360-day year and
the actual number of days elapsed and to be payable quarterly in arrears on
March 31, June 30, September 30, and December 31 of each year, commencing on the
first such date to occur after the Closing Date, and on the Loan Commitment
Termination Date.
B. ANNUAL ADMINISTRATIVE FEE. Company agrees to pay to Agent an annual
administrative fee in the amount and at such times as are set forth in a
separate letter agreement between Agent and Company.
C. OTHER FEES. Company agrees to pay to UBOC such other fees in the
amounts and at the times as are set forth in a separate letter agreement between
Company and UBOC.
2.4 PREPAYMENTS AND REDUCTIONS IN COMMITMENTS; GENERAL PROVISIONS REGARDING
-----------------------------------------------------------------------
PAYMENTS.
--------
A. SCHEDULED REDUCTIONS OF COMMITMENTS. The Commitments shall be
permanently reduced on the dates and in the amounts set forth below:
31
Schedule Reduction
Date of Commitments
---- ------------------
09/30/2000 $4,062,500
12/31/2000 $4,062,500
03/31/2001 $4,062,500
06/30/2001 $4,062,500
09/30/2001 $4,062,500
12/31/2001 $4,062,500
03/31/2002 $4,062,500
06/30/2002 $4,062,500
09/30/2002 $4,062,500
12/31/2002 $4,062,500
03/31/2003 $4,062,500
06/30/2003 $4,062,500
09/30/2003 $4,062,500
12/31/2003 $4,062,500
03/31/2004 $4,062,500
06/30/2004 $4,062,500
; provided that the scheduled reductions of the Commitments set forth above
--------
shall be reduced in connection with any voluntary or mandatory reductions
of the Commitments in accordance with subsection 2.4B(iv).
B. PREPAYMENTS AND UNSCHEDULED REDUCTIONS IN COMMITMENTS.
(i) Voluntary Prepayments. Company may, by written or telephonic
---------------------
notice given on the date of prepayment, in the case of Base Rate Loans, and
three Business Days' prior written or telephonic notice, in the case of
LIBOR Rate Loans, in each case given to Agent by 9:00 A.M. (Los Angeles
time) on the date required and, if given by telephone, promptly confirmed
in writing to Agent (which original written or telephonic notice Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time prepay any Loans on any Business Day in whole or
in part in an aggregate minimum amount of $1,000,000 and integral multiples
of $1,000,000 in excess of that amount; provided, however, that if a LIBOR
-------- -------
Rate Loan is prepaid on any date other than the expiration of the Interest
Period applicable thereto, the Company shall pay any amounts due under
subsection 2.6D. Notice of prepayment having been given as aforesaid, the
principal amount of the Loans specified in such notice shall become due and
payable on the prepayment date specified therein. Any such voluntary
prepayment shall be applied as specified in subsection 2.4B(iv).
(ii) Voluntary Reductions of Commitments. Company may, upon not
-----------------------------------
less than three Business Days' prior written or telephonic notice confirmed
in
32
writing to Agent (which original written or telephonic notice Agent will
promptly transmit by telefacsimile or telephone to each Lender), at any
time and from time to time terminate in whole or permanently reduce in
part, without premium or penalty, the Commitments in an amount up to the
amount by which the Commitments exceed the Total Utilization of Commitments
at the time of such proposed termination or reduction; provided that any
--------
such partial reduction of the Commitments shall be in an aggregate minimum
amount of $5,000,000 and integral multiples of $1,000,000 in excess of that
amount. Company's notice to Agent shall designate the date (which shall be
a Business Day) of such termination or reduction and the amount of any
partial reduction, and such termination or reduction of the Commitments
shall be effective on the date specified in Company's notice and shall
reduce the Commitment of each Lender proportionately to its Pro Rata Share.
Any such voluntary reduction of the Commitments shall be applied as
specified in subsection 2.4B(iv).
(iii) Mandatory Prepayments and Mandatory Reductions of Commitments.
-------------------------------------------------------------
The Loans shall be prepaid, and the Commitments shall be permanently
reduced, in the amounts and under the circumstances set forth below, all
such prepayments and/or reductions to be applied as specified in subsection
2.4B(iv):
(a) Prepayments and Reductions From Net Asset Sale Proceeds.
-------------------------------------------------------
No later than the first Business Day following the date of receipt by
Company or any of its Subsidiaries of any Net Asset Sale Proceeds in
respect of any Asset Sale, Company shall prepay the Loans and the
Commitments shall be permanently reduced in an aggregate amount equal
to such Net Asset Sale Proceeds.
(b) Prepayments and Reductions Due to Issuance of Debt
--------------------------------------------------
Securities. On the date of receipt by Company or any of its
Subsidiaries of the Cash proceeds (any such proceeds, net of
underwriting discounts and commissions and other reasonable costs and
expenses associated therewith, including reasonable legal fees and
expenses, being "NET SECURITIES PROCEEDS") from the issuance of any
debt Securities of Company or any of its Subsidiaries after the
Closing Date (other than Indebtedness expressly permitted by
subsection 7.1), Company shall prepay the Loans, and the Commitments
shall be permanently reduced, in an aggregate amount equal to such Net
Securities Proceeds.
(c) Calculations of Net Proceeds Amounts; Additional
------------------------------------------------
Prepayments and Reductions Based on Subsequent Calculations.
-----------------------------------------------------------
Concurrently with any prepayment of the Loans and/or reduction of the
Commitments pursuant to subsections 2.4B(iii)(a) or (b), Company shall
33
deliver to Agent an Officers' Certificate demonstrating the
calculation of the amount (the "NET PROCEEDS AMOUNT") of the
applicable Net Asset Sale Proceeds or Net Securities Proceeds, as the
case may be, that gave rise to such prepayment and/or reduction. In
the event that Company shall subsequently determine that the actual
Net Proceeds Amount was greater than the amount set forth in such
Officers' Certificate, Company shall promptly make an additional
prepayment of the Loans (and/or, if applicable, the Commitments shall
be permanently reduced) in an amount equal to the amount of such
excess, and Company shall concurrently therewith deliver to Agent an
Officers' Certificate demonstrating the derivation of the additional
Net Proceeds Amount resulting in such excess.
(d) Prepayments Due to Reductions of Commitments. Company shall
--------------------------------------------
from time to time prepay the Loans to the extent necessary so that the
Total Utilization of Commitments shall not at any time exceed the
Commitments then in effect.
(e) Reductions of Commitments Not Limited to Amount of Loans
--------------------------------------------------------
Outstanding. The amount of any required reduction of the Commitments
-----------
pursuant to any provision of this subsection 2.4B(iii) shall not be
affected by the fact that the outstanding principal amount of Loans at
the time of such reduction is less than the amount of such reduction.
(iv) Application of Prepayments and Unscheduled Reductions of Commitments.
--------------------------------------------------------------------
(a) Application of Prepayments to Base Rate Loans and LIBOR Rate
------------------------------------------------------------
Loans. Any prepayment of the Loans shall be applied first to Base
-----
Rate Loans to the full extent thereof before application to LIBOR Rate
Loans, in each case in a manner which minimizes the amount of any
payments required to be made by Company pursuant to subsection 2.6D.
(b) Application of Unscheduled Reductions of Commitments. Any
----------------------------------------------------
voluntary reduction of the Commitments pursuant to subsection 2.4B(ii)
shall be applied to reduce ratably the scheduled reductions of the
Commitments set forth in subsection 2.4A. Any mandatory reduction of
the Commitments pursuant to subsection 2.4B(iii) shall be applied to
reduce the scheduled reductions of the commitments set forth in
subsection 2.4A in inverse chronological order.
34
C. GENERAL PROVISIONS REGARDING PAYMENTS.
(i) Manner and Time of Payment. All payments by Company of
--------------------------
principal, interest, fees and other Obligations hereunder and under the
Notes shall be made in Dollars in same day funds, without defense, setoff
or counterclaim, free of any restriction or condition, and delivered to
Agent not later than 9:00 AM (Los Angeles time) on the date due at the
Funding and Payment Office for the account of Lenders; funds received by
Agent after that time on such due date shall be deemed to have been paid by
Company on the next succeeding Business Day. Unless Agent receives notice
to the contrary from Company, Company hereby authorizes Agent to charge its
accounts with Agent in order to cause timely payment to be made to Agent of
all principal, interest, fees and expenses due hereunder (subject to
sufficient funds being available in its accounts for that purpose).
(ii) Application of Payments to Principal and Interest. All
-------------------------------------------------
payments in respect of the principal amount of any Loan shall include
payment of accrued interest on the principal amount being repaid or
prepaid, and all such payments (and, in any event, any payments in respect
of any Loan on a date when interest is due and payable with respect to such
Loan) shall be applied to the payment of interest before application to
principal.
(iii) Apportionment of Payments. Aggregate principal and interest
-------------------------
payments shall be apportioned among all outstanding Loans to which such
payments relate, in each case proportionately to Lenders' respective Pro
Rata Shares. Agent shall promptly distribute to each Lender, at its primary
address set forth below its name on the appropriate signature page hereof
or at such other address as such Lender may request, its Pro Rata Share of
all such payments received by Agent and the commitment fees of such Lender
when received by Agent pursuant to subsection 2.3. Notwithstanding the
foregoing provisions of this subsection 2.4C(iii), if, pursuant to the
provisions of subsection 2.6C, any Notice of Conversion/Continuation is
withdrawn as to any Affected Lender or if any Affected Lender makes Base
Rate Loans in lieu of its Pro Rata Share of any LIBOR Rate Loans, Agent
shall give effect thereto in apportioning payments received thereafter.
(iv) Payments on Business Days. Whenever any payment to be made
-------------------------
hereunder shall be stated to be due on a day that is not a Business Day,
such payment shall be made on the next succeeding Business Day and such
extension of time shall be included in the computation of the payment of
interest hereunder or of the commitment fees hereunder, as the case may be.
(v) Notation of Payment. Each Lender agrees that before disposing
-------------------
of any Note held by it, or any part thereof (other than by granting
35
participations therein), that Lender will make a notation thereon of all
Loans evidenced by that Note and all principal payments previously made
thereon and of the date to which interest thereon has been paid; provided
--------
that the failure to make (or any error in the making of) a notation of any
Loan made under such Note shall not limit or otherwise affect the
obligations of Company hereunder or under such Note with respect to any
Loan or any payments of principal or interest on such Note.
2.5 USE OF PROCEEDS.
---------------
A. LOANS. The proceeds of the initial Loans, together with other funds
available to Company, shall be applied by Company to pay in full all Advances
(as defined in the Citicorp Loan Agreement) together with accrued interest
thereon. Any excess proceeds of the initial Loans and the proceeds of any
subsequent Loans shall be applied by Company for general corporate purposes,
which may include the making of intercompany loans to any of Company's wholly-
owned Subsidiaries, as permitted by subsection 7.1(iv), for their own general
corporate purposes.
B. MARGIN REGULATIONS. No portion of the proceeds of any borrowing under
this Agreement shall be used by Company or any of its Subsidiaries in any manner
that might cause the borrowing or the application of such proceeds to violate
Regulation G, Regulation U, Regulation T or Regulation X of the Board of
Governors of the Federal Reserve System or any other regulation of such Board or
to violate the Exchange Act, in each case as in effect on the date or dates of
such borrowing and such use of proceeds.
2.6 SPECIAL PROVISIONS GOVERNING LIBOR RATE LOANS.
---------------------------------------------
Notwithstanding any other provision of this Agreement to the contrary,
the following provisions shall govern with respect to LIBOR Rate Loans as to the
matters covered:
A. DETERMINATION OF APPLICABLE INTEREST RATE. As soon as practicable
after 9:00 A.M. (Los Angeles time) on each Interest Rate Determination Date,
Agent shall determine (which determination shall, absent manifest error, be
final, conclusive and binding upon all parties) the interest rate that shall
apply to the LIBOR Rate Loans for which an interest rate is then being
determined for the applicable Interest Period and shall promptly give notice
thereof (in writing or by telephone confirmed in writing) to Company and each
Lender.
B. INABILITY TO DETERMINE APPLICABLE INTEREST RATE. In the event that
Agent shall have determined (which determination shall be final and conclusive
and binding upon all parties hereto), on any Interest Rate Determination Date
with respect to any LIBOR Rate Loans, that by reason of circumstances affecting
the London interbank
36
market adequate and fair means do not exist for ascertaining the interest rate
applicable to such Loans on the basis provided for in the definition of Adjusted
LIBOR Rate, Agent shall on such date give notice (by telefacsimile or by
telephone confirmed in writing) to Company and each Lender of such
determination, whereupon (i) no Loans may be made as, or converted to, LIBOR
Rate Loans until such time as Agent notifies Company and Lenders that the
circumstances giving rise to such notice no longer exist and (ii) any Notice of
Borrowing or Notice of Conversion/Continuation given by Company with respect to
the Loans in respect of which such determination was made shall be deemed to be
rescinded by Company.
C. ILLEGALITY OR IMPRACTICABILITY OF LIBOR RATE LOANS. In the event that
on any date any Lender shall have determined (which determination shall be final
and conclusive and binding upon all parties hereto but shall be made only after
consultation with Company and Agent) that the making, maintaining or
continuation of its LIBOR Rate Loans (i) has become unlawful as a result of
compliance by such Lender in good faith with any law, treaty, governmental rule,
regulation, guideline or order (or would conflict with any such treaty,
governmental rule, regulation, guideline or order not having the force of law
even though the failure to comply therewith would not be unlawful) or (ii) has
become impracticable, or would cause such Lender material hardship, as a result
of contingencies occurring after the date of this Agreement which materially and
adversely affect the London interbank LIBOR market or the position of such
Lender in that market, then, and in any such event, such Lender shall be an
"AFFECTED LENDER" and it shall on that day give notice (by telefacsimile or by
telephone confirmed in writing) to Company and Agent of such determination
(which notice Agent shall promptly transmit to each other Lender). Thereafter
(a) the obligation of the Affected Lender to make Loans as, or to convert Loans
to, LIBOR Rate Loans shall be suspended until such notice shall be withdrawn by
the Affected Lender, (b) to the extent such determination by the Affected Lender
relates to a LIBOR Rate Loan then being requested by Company pursuant to a
Notice of Borrowing or a Notice of Conversion/Continuation, the Affected Lender
shall make such Loan as (or convert such Loan to, as the case may be) a Base
Rate Loan, (c) the Affected Lender's obligation to maintain its outstanding
LIBOR Rate Loans (the "AFFECTED LOANS") shall be terminated at the earlier to
occur of the expiration of the Interest Period then in effect with respect to
the Affected Loans or when required by law, and (d) the Affected Loans shall
automatically convert into Base Rate Loans on the date of such termination.
Notwithstanding the foregoing, to the extent a determination by an Affected
Lender as described above relates to a LIBOR Rate Loan then being requested by
Company pursuant to a Notice of Borrowing or a Notice of
Conversion/Continuation, Company shall have the option, subject to the
provisions of subsection 2.6D, to rescind such Notice of Borrowing or Notice of
Conversion/Continuation as to all Lenders by giving notice (by telefacsimile or
by telephone confirmed in writing) to Agent of such rescission on the date on
which the Affected Lender gives notice of its determination as described above
(which notice of rescission Agent shall promptly transmit to each other Lender).
Except as
37
provided in the immediately preceding sentence, nothing in this subsection 2.6C
shall affect the obligation of any Lender other than an Affected Lender to make
or maintain Loans as, or to convert Loans to, LIBOR Rate Loans in accordance
with the terms of this Agreement.
D. COMPENSATION FOR BREAKAGE OR NON-COMMENCEMENT OF INTEREST PERIODS.
Company shall compensate each Lender, upon written request by that Lender (which
request shall set forth the basis for requesting such amounts), for all
reasonable losses, expenses and liabilities (including any interest paid by that
Lender to lenders of funds borrowed by it to make or carry its LIBOR Rate Loans
and any loss, expense or liability sustained by that Lender in connection with
the liquidation or re-employment of such funds) which that Lender may sustain:
(i) if for any reason (other than a default by that Lender) a borrowing of any
LIBOR Rate Loan does not occur on a date specified therefor in a Notice of
Borrowing or a telephonic request for borrowing, or a conversion to or
continuation of any LIBOR Rate Loan does not occur on a date specified therefor
in a Notice of Conversion/Continuation or a telephonic request for conversion or
continuation, (ii) if any prepayment (including any prepayment pursuant to
subsection 2.4B(i)) or other principal payment or any conversion of any of its
LIBOR Rate Loans occurs on a date prior to the last day of an Interest Period
applicable to that Loan, (iii) if any prepayment of any of its LIBOR Rate Loans
is not made on any date specified in a notice of prepayment given by Company, or
(iv) as a consequence of any other default by Company in the repayment of its
LIBOR Rate Loans when required by the terms of this Agreement.
E. BOOKING OF LIBOR RATE LOANS. Any Lender may make, carry or transfer
LIBOR Rate Loans at, to, or for the account of any of its branch offices or the
office of an Affiliate of that Lender.
F. ASSUMPTIONS CONCERNING FUNDING OF LIBOR RATE LOANS. Calculation of all
amounts payable to a Lender under this subsection 2.6 and under subsection 2.7A
shall be made as though that Lender had actually funded each of its relevant
LIBOR Rate Loans through the purchase of a LIBOR deposit bearing interest at the
rate obtained pursuant to clause (i) of the definition of Adjusted LIBOR Rate in
an amount equal to the amount of such LIBOR Rate Loan and having a maturity
comparable to the relevant Interest Period and through the transfer of such
LIBOR deposit from an offshore office of that Lender to a domestic office of
that Lender in the United States of America; provided, however, that each Lender
-------- -------
may fund each of its LIBOR Rate Loans in any manner it sees fit and the
foregoing assumptions shall be utilized only for the purposes of calculating
amounts payable under this subsection 2.6 and under subsection 2.7A.
G. LIBOR RATE LOANS AFTER DEFAULT. After the occurrence of and during the
continuation of a Potential Event of Default or an Event of Default, (i) Company
may not elect to have a Loan be made or maintained as, or converted to, a LIBOR
38
Rate Loan after the expiration of any Interest Period then in effect for that
Loan and (ii) subject to the provisions of subsection 2.6D, any Notice of
Borrowing or Notice of Conversion/Continuation given by Company with respect to
a requested borrowing or conversion/continuation that has not yet occurred shall
be deemed to be rescinded by Company.
2.7 INCREASED COSTS; TAXES; CAPITAL ADEQUACY.
----------------------------------------
A. COMPENSATION FOR INCREASED COSTS AND TAXES. Subject to the provisions
of subsection 2.7B (which shall be controlling with respect to the matters
covered thereby), in the event that any Lender shall determine (which
determination shall, absent manifest error, be final and conclusive and binding
upon all parties hereto) that any law, treaty or governmental rule, regulation
or order, or any change therein or in the interpretation, administration or
application thereof (including the introduction of any new law, treaty or
governmental rule, regulation or order), or any determination of a court or
governmental authority, in each case that becomes effective after the date
hereof, or compliance by such Lender with any guideline, request or directive
issued or made after the date hereof by any central bank or other governmental
or quasi-governmental authority (whether or not having the force of law):
(i) subjects such Lender (or its applicable lending office) to any
additional Tax (other than any Tax on the overall net income of such Lender)
with respect to this Agreement or any of its obligations hereunder or any
payments to such Lender (or its applicable lending office) of principal,
interest, fees or any other amount payable hereunder;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement against
assets held by, or deposits or other liabilities in or for the account of,
or advances or loans by, or other credit extended by, or any other
acquisition of funds by, any office of such Lender (other than any such
reserve or other requirements with respect to LIBOR Rate Loans that are
reflected in the definition of Adjusted LIBOR Rate); or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Lender (or its applicable lending office) or
its obligations hereunder or the London interbank market;
and the result of any of the foregoing is to increase the cost to such Lender of
agreeing to make, making or maintaining Loans hereunder or to reduce any amount
received or receivable by such Lender (or its applicable lending office) with
respect thereto; then, in any such case, Company shall promptly pay to such
Lender, upon
39
receipt of the statement referred to in the next sentence, such additional
amount or amounts (in the form of an increased rate of, or a different method of
calculating, interest or otherwise as such Lender in its sole discretion shall
determine) as may be necessary to compensate such Lender for any such increased
cost or reduction in amounts received or receivable hereunder. Such Lender
shall deliver to Company (with a copy to Agent) a written statement, setting
forth in reasonable detail the basis for calculating the additional amounts owed
to such Lender under this subsection 2.7A, which statement shall be conclusive
and binding upon all parties hereto absent manifest error.
B. WITHHOLDING OF TAXES.
(i) Payments to Be Free and Clear. All sums payable by Company under
-----------------------------
this Agreement and the other Loan Documents shall (except to the extent
required by law) be paid free and clear of, and without any deduction or
withholding on account of, any Tax (other than a Tax on the overall net
income of any Lender) imposed, levied, collected, withheld or assessed by or
within the United States of America or any political subdivision in or of
the United States of America or any other jurisdiction from which a payment
is made by or on behalf of Company or by any federation or organization of
which the United States of America or any such jurisdiction is a member at
the time of payment.
(ii) Grossing-up of Payments. If Company or any other Person is
-----------------------
required by law to make any deduction or withholding on account of any such
Tax from any sum paid or payable by Company to Agent or any Lender under any
of the Loan Documents:
(a) Company shall notify Agent of any such requirement or any
change in any such requirement as soon as Company becomes aware of it;
(b) Company shall pay any such Tax before the date on which
penalties attach thereto, such payment to be made (if the liability to
pay is imposed on Company) for its own account or (if that liability is
imposed on Agent or such Lender, as the case may be) on behalf of and
in the name of Agent or such Lender;
(c) the sum payable by Company in respect of which the relevant
deduction, withholding or payment is required shall be increased to the
extent necessary to ensure that, after the making of that deduction,
withholding or payment, Agent or such Lender, as the case may be,
receives on the due date a net sum equal to what it would have
40
received had no such deduction, withholding or payment been required or
made; and
(d) within 30 days after paying any sum from which it is
required by law to make any deduction or withholding, and within 30
days after the due date of payment of any Tax which it is required by
clause (b) above to pay, Company shall deliver to Agent evidence
satisfactory to the other affected parties of such deduction,
withholding or payment and of the remittance thereof to the relevant
taxing or other authority;
provided that no such additional amount shall be required to be paid to any
--------
Lender under clause (c) above except to the extent that any change after the
date hereof (in the case of each Lender listed on the signature pages
hereof) or after the date of the Assignment Agreement pursuant to which such
Lender became a Lender (in the case of each other Lender) in any such
requirement for a deduction, withholding or payment as is mentioned therein
shall result in an increase in the rate of such deduction, withholding or
payment from that in effect at the date of this Agreement or at the date of
such Assignment Agreement, as the case may be, in respect of payments to
such Lender.
(iii) Evidence of Exemption from U.S. Withholding Tax.
-----------------------------------------------
(a) Each Lender that is organized under the laws of any
jurisdiction other than the United States or any state or other
political subdivision thereof (for purposes of this subsection
2.7B(iii), a "NON-US LENDER") shall deliver to Agent for transmission
to Company, on or prior to the Closing Date (in the case of each Lender
listed on the signature pages hereof) or on or prior to the date of the
Assignment Agreement pursuant to which it becomes a Lender (in the case
of each other Lender), and at such other times as may be necessary in
the determination of Company or Agent (each in the reasonable exercise
of its discretion), (1) two original copies of Internal Revenue Service
Form 1001 or 4224 (or any successor forms), properly completed and duly
executed by such Lender, together with any other certificate or
statement of exemption required under the Internal Revenue Code or the
regulations issued thereunder to establish that such Lender is not
subject to deduction or withholding of United States federal income tax
with respect to any payments to such Lender of principal, interest,
fees or other amounts payable under any of the Loan Documents or (2) if
such Lender is not a "bank" or other Person described in Section
881(c)(3) of the Internal Revenue Code and cannot deliver either
Internal Revenue Service Form 1001 or 4224 pursuant to clause (1)
above, a Certificate re Non-Bank Status together with two original
41
copies of Internal Revenue Service Form W-8 (or any successor form),
properly completed and duly executed by such Lender, together with any
other certificate or statement of exemption required under the Internal
Revenue Code or the regulations issued thereunder to establish that
such Lender is not subject to deduction or withholding of United States
federal income tax with respect to any payments to such Lender of
interest payable under any of the Loan Documents.
(b) Each Lender required to deliver any forms, certificates or
other evidence with respect to United States federal income tax
withholding matters pursuant to subsection 2.7B(iii)(a) hereby agrees,
from time to time after the initial delivery by such Lender of such
forms, certificates or other evidence, whenever a lapse in time or
change in circumstances renders such forms, certificates or other
evidence obsolete or inaccurate in any material respect, that such
Lender shall promptly (1) deliver to Agent for transmission to Company
two new original copies of Internal Revenue Service Form 1001 or 4224,
or a Certificate re Non-Bank Status and two original copies of Internal
Revenue Service Form W-8, as the case may be, properly completed and
duly executed by such Lender, together with any other certificate or
statement of exemption required in order to confirm or establish that
such Lender is not subject to deduction or withholding of United States
federal income tax with respect to payments to such Lender under the
Loan Documents or (2) notify Agent and Company of its inability to
deliver any such forms, certificates or other evidence.
(c) Company shall not be required to pay any additional amount
to any Non-US Lender under clause (c) of subsection 2.7B(ii) if such
Lender shall have failed to satisfy the requirements of clause (a) or
(b)(1) of this subsection 2.7B(iii); provided that if such Lender shall
--------
have satisfied the requirements of subsection 2.7B(iii)(a) on the
Closing Date (in the case of each Lender listed on the signature pages
hereof) or on the date of the Assignment Agreement pursuant to which it
became a Lender (in the case of each other Lender), nothing in this
subsection 2.7B(iii)(c) shall relieve Company of its obligation to pay
any additional amounts pursuant to clause (c) of subsection 2.7B(ii) in
the event that, as a result of any change in any applicable law, treaty
or governmental rule, regulation or order, or any change in the
interpretation, administration or application thereof, such Lender is
no longer properly entitled to deliver forms, certificates or other
evidence at a subsequent date establishing the fact that such Lender is
not subject to withholding as described in subsection 2.7B(iii)(a).
42
C. CAPITAL ADEQUACY ADJUSTMENT. If any Lender shall have determined that
the adoption, effectiveness, phase-in or applicability after the date hereof of
any law, rule or regulation (or any provision thereof) regarding capital
adequacy, or any change therein or in the interpretation or administration
thereof by any governmental authority, central bank or comparable agency charged
with the interpretation or administration thereof, or compliance by any Lender
(or its applicable lending office) with any guideline, request or directive
regarding capital adequacy (whether or not having the force of law) of any such
governmental authority, central bank or comparable agency, has or would have the
effect of reducing the rate of return on the capital of such Lender or any
corporation controlling such Lender as a consequence of, or with reference to,
such Lender's Loans or Commitment or Letters of Credit or participations therein
or other obligations hereunder with respect to the Loans or the Letters of
Credit to a level below that which such Lender or such controlling corporation
could have achieved but for such adoption, effectiveness, phase-in,
applicability, change or compliance (taking into consideration the policies of
such Lender or such controlling corporation with regard to capital adequacy),
then from time to time, within five Business Days after receipt by Company from
such Lender of the statement referred to in the next sentence, Company shall pay
to such Lender such additional amount or amounts as will compensate such Lender
or such controlling corporation on an after-tax basis for such reduction. Such
Lender shall deliver to Company (with a copy to Agent) a written statement,
setting forth in reasonable detail the basis of the calculation of such
additional amounts, which statement shall be conclusive and binding upon all
parties hereto absent manifest error.
2.8 OBLIGATION OF LENDERS AND ISSUING LENDERS TO MITIGATE.
-----------------------------------------------------
Each Lender and Issuing Lender agrees that, as promptly as practicable
after the officer of such Lender or Issuing Lender responsible for administering
the Loans or Letters of Credit of such Lender or Issuing Lender, as the case may
be, becomes aware of the occurrence of an event or the existence of a condition
that would cause such Lender to become an Affected Lender or that would entitle
such Lender or Issuing Lender to receive payments under subsection 2.7 or
subsection 3.6, it will, to the extent not inconsistent with the internal
policies of such Lender or Issuing Lender and any applicable legal or regulatory
restrictions, use reasonable efforts (i) to make, issue, fund or maintain the
Commitment of such Lender or the affected Loans or Letters of Credit of such
Lender or Issuing Lender through another lending or letter of credit office of
such Lender or Issuing Lender, or (ii) take such other measures as such Lender
or Issuing Lender may deem reasonable, if as a result thereof the circumstances
which would cause such Lender to be an Affected Lender would cease to exist or
the additional amounts which would otherwise be required to be paid to such
Lender or Issuing Lender pursuant to subsection 2.7 or subsection 3.6 would be
materially reduced and if, as determined by such Lender or Issuing Lender in its
sole discretion, the making, issuing, funding or maintaining of such Commitment
43
or Loans or Letters of Credit through such other lending or letter of credit
office or in accordance with such other measures, as the case may be, would not
otherwise materially adversely affect such Commitment or Loans or Letters of
Credit or the interests of such Lender or Issuing Lender; provided that such
--------
Lender or Issuing Lender will not be obligated to utilize such other lending or
letter of credit office pursuant to this subsection 2.8 unless Company agrees to
pay all incremental expenses incurred by such Lender or Issuing Lender as a
result of utilizing such other lending or letter of credit office as described
in clause (i) above. A certificate as to the amount of any such expenses
payable by Company pursuant to this subsection 2.8 (setting forth in reasonable
detail the basis for requesting such amount) submitted by such Lender or Issuing
Lender to Company (with a copy to Agent) shall be conclusive absent manifest
error.
2.9 SUBSTITUTION OF LENDERS.
-----------------------
If any Lender becomes an Affected Lender under subsection 2.6C or if
any Lender requests compensation from Company under subsection 2.7, Company
shall have the right, with the assistance of Agent, to seek one or more Eligible
Assignees (which may be one or more of the Lenders) satisfactory to Agent and
Company to purchase the Loans and assume the Commitment of such Lender, and
Company, Agent, such Lender, and such Eligible Assignees shall execute and
deliver an appropriately completed Assignment Agreement pursuant to subsection
10.1B hereof to effect the assignment of rights to and the assumption of
obligations by such Eligible Assignees; provided that (i) such requesting Lender
--------
shall be entitled to compensation under subsection 2.7 for any costs incurred by
or otherwise due to it prior to its replacement, (ii) no Event of Default or
Potential Event of Default has occurred and is continuing, (iii) Company has
satisfied all of its obligations under the Loan Documents relating to such
Lender, including without limitation obligations, if any, under subsection 2.7,
and (iv) Company shall have paid Agent a $2,500 processing and recordation fee.
SECTION 3. LETTERS OF CREDIT
3.1 ISSUANCE OF LETTERS OF CREDIT AND LENDERS' PURCHASE OF PARTICIPATIONS
---------------------------------------------------------------------
THEREIN.
-------
A. LETTERS OF CREDIT. In addition to Company requesting that Lenders make
Loans pursuant to subsection 2.1A, Company may request, in accordance with the
provisions of this subsection 3.1, from time to time during the period from the
Closing Date to but excluding the Commitment Termination Date, that Issuing
Lender issue Letters of Credit for the account of Company for the purposes
specified in the definitions of Commercial Letters of Credit and Standby Letters
of Credit provided that one or more Standby Letters of Credit in form
--------
satisfactory to the Issuing Lender may be issued on the Closing Date as one or
more Standby Letters of
44
Credit supporting the Existing Letters of Credit. Subject to the terms and
conditions of this Agreement and in reliance upon the representations and
warranties of Company herein set forth, the Issuing Lender may, but (except as
provided in subsection 3.1B(ii)) shall not be obligated to, issue such Letters
of Credit in accordance with the provisions of this subsection 3.1; provided
--------
that Company shall not request that any Lender issue (and the Issuing Lender
shall not issue):
(i) any Letter of Credit if, after giving effect to such issuance,
the Total Utilization of Commitments would exceed the Commitments then in
effect;
(ii) any Letter of Credit if, after giving effect to such issuance,
the Letter of Credit Usage would exceed $20,000,000;
(iii) any Letter of Credit denominated in a currency other than
Dollars; provided that Letters of Credit may be issued in currencies other
--------
than Dollars that are freely convertible into Dollars and otherwise
acceptable t o the Issuing Bank, provided, further that the aggregate
-------- -------
outstanding amount of all such Letters of Credit denominated in a currency
other than Dollars shall not exceed at any time the equivalent, at the
Exchange Rate, of $2,000,000;
(iv) any Standby Letter of Credit having an expiration date later
than the earlier of (a) the Commitment Termination Date and (b) the date
which is two years from the date of issuance of such Standby Letter of
Credit; provided that the immediately preceding clause (b) shall not prevent
any Issuing Lender from agreeing that a Standby Letter of Credit will
automatically be extended for one or more successive periods not to exceed
one year each unless such Issuing Lender elects not to extend for any such
additional period; and provided, further that such Issuing Lender shall,
-------- -------
(unless Requisite Lenders otherwise agree), elect not to extend such Standby
Letter of Credit if it has knowledge that an Event of Default has occurred
and is continuing (and has not been waived in accordance with subsection
10.6) at the time such Issuing Lender must elect whether or not to allow
such extension; and
(v) any Commercial Letter of Credit having an expiration date (a)
later than the earlier of (x) the date which is 30 days prior to the
Commitment Termination Date and (y) the date which is 180 days from the date
of issuance of such Commercial Letter of Credit or (b) that is otherwise
unacceptable to the applicable Issuing Lender in its reasonable discretion.
Each Letter of Credit shall be subject to, and performance by Issuing
Lender, Issuing Lender's correspondents and the beneficiary under such Letter of
Credit shall be governed by, the Uniform Customs and Practice for Documentary
Credits, 1993 Revision, ICC Publication No. 500, or such subsequent revision
thereof, adopted by
45
the International Chamber of Commerce, as is in effect on the date the letter of
Credit is issued.
B. MECHANICS OF ISSUANCE.
(i) Notice of Issuance. Whenever Company desires the issuance of a
------------------
Letter of Credit, it shall deliver to Agent a Notice of Issuance of Letter
of Credit substantially in the form of Exhibit III annexed hereto (including
-----------
the Issuing Lender's standard application for a Letter of Credit and the
signature page to such application, it being understood that unless
otherwise agreed between Company and the Issuing Lender, the provisions set
forth on the reverse side of such standard application (or comparable
provisions in a future standard application) shall not be applicable) no
later than 9:00 A.M. (Los Angeles time) at least five Business Days (in the
case of Standby Letters of Credit) or five Business Days (in the case of
Commercial Letters of Credit), or in each case such shorter period as may be
agreed to by the Issuing Lender in any particular instance, in advance of
the proposed date of issuance. The Notice of Issuance of Letter of Credit
shall specify (a) the proposed date of issuance (which shall be a Business
Day), (b) whether the Letter of Credit is to be a Standby Letter of Credit
or a Commercial Letter of Credit, (c) the face amount of the Letter of
Credit, (d) in the case of a Letter of Credit which Company requests to be
denominated in a currency other than Dollars, the currency in which Company
requests such Letter of Credit to be issued, (e) the expiration date of the
Letter of Credit, (f) the name and address of the beneficiary, and (g)
either the verbatim text of the proposed Letter of Credit or the proposed
terms and conditions thereof, including a precise description of any
documents to be presented by the beneficiary which, if presented by the
beneficiary prior to the expiration date of the Letter of Credit, would
require the Issuing Lender to make payment under the Letter of Credit;
provided that the Issuing Lender, in its reasonable discretion, may require
--------
changes in the text of the proposed Letter of Credit or any such documents.
No Standby Letter of Credit shall require payment against a conforming draft
to be made thereunder on a date earlier than (x) one Business Day after the
date on which such draft is presented if such presentation is made before
9:00 A.M. (in the time zone of the Issuing Lender), or (y) two Business Days
after the date on which such draft is presented if such presentation is made
after 9:00 A.M. (in the time zone of the Issuing Lender). No Commercial
Letter of Credit shall require payment against a conforming draft to be made
thereunder on a date earlier than (x) three Business Days after the date on
which such draft is presented if such presentation is made before 9:00 A.M.
(in the time zone of the Issuing Lender), or (y) four Business Days after
the date on which such draft is presented if such presentation is made after
9:00 A.M. (in the time zone of the Issuing Lender).
46
Company shall notify the Issuing Lender prior to the issuance of
any Letter of Credit in the event that any of the matters to which Company
is required to certify in the applicable Notice of Issuance of Letter of
Credit is no longer true and correct as of the proposed date of issuance of
such Letter of Credit, and upon the issuance of any Letter of Credit Company
shall be deemed to have re-certified, as of the date of such issuance, as to
the matters to which Company is required to certify in the applicable Notice
of Issuance of Letter of Credit.
(ii) Issuance of Letter of Credit. Upon satisfaction or waiver (in
----------------------------
accordance with subsection 10.6) of the conditions set forth in subsection
4.3, the Issuing Lender shall issue the requested Letter of Credit in
accordance with the Issuing Lender's standard operating procedures.
(iii) Notification to Lenders. Upon the issuance of any Letter of
-----------------------
Credit the applicable Issuing Lender shall promptly notify Agent and each
other Lender of such issuance, which notice shall be accompanied by a copy
of such Letter of Credit. Promptly after receipt of such notice (or, if
Agent is the Issuing Lender, together with such notice), Agent shall notify
each Lender of the amount of such Lender's respective participation in such
Letter of Credit, determined in accordance with subsection 3.1C.
C. LENDERS' PURCHASE OF PARTICIPATIONS IN LETTERS OF CREDIT. Immediately
upon the issuance of each Letter of Credit, each Lender shall be deemed to, and
hereby agrees to, have irrevocably purchased from the Issuing Lender a
participation in such Letter of Credit and any drawings honored thereunder in an
amount equal to such Lender's Pro Rata Share of the maximum amount which is or
at any time may become available to be drawn thereunder.
3.2 LETTER OF CREDIT FEES.
---------------------
Company agrees to pay the following amounts with respect to Letters of
Credit issued hereunder:
(i) with respect to each Standby Letter of Credit, (a) a fronting
fee, payable directly to the applicable Issuing Lender for its own account,
equal to the greater of (x) $350 and (y) 0.25% per annum of the daily amount
available to be drawn under such Standby Letter of Credit and (b) a letter
of credit fee, payable to Agent for the account of Lenders, equal to the
Applicable LIBOR Rate Margin per annum of the daily amount available to be
drawn under such Standby Letter of Credit, each such fronting fee or letter
of credit fee to be payable in arrears on and to (but excluding) each March
31, June 30, September 30 and December 31 of each year and computed on the
basis of a 360-day year for the actual number of days elapsed;
47
(ii) with respect to each Commercial Letter of Credit, (a) an
issuance fee in an amount equal to one-eighth of one percent (1/8 of 1%) of
the face amount of such Commercial Letter of Credit, with the minimum
issuance fee being an amount in accordance with the Issuing Lender's
standard schedule for such charges in effect at the time of such issuance,
payable to Issuing Lender for its own account, or, with respect to any
Commercial Letter of Credit in an amount of $250,000 or more, for the
account of Lenders, upon the issuance of such Commercial Letter of Credit,
(b) in the case of a sight draft presented to Issuing Lender, a negotiation
commission in an amount equal to one-eighth of one percent (1/8 of 1%) of
the face amount of such draft, with the minimum such commission being an
amount in accordance with the Issuing Lender's standard schedule for such
charges in effect at the time of such presentation, payable to Issuing
Lender for its own account, or, with respect to any Commercial Letter of
Credit in an amount of $250,000 or more, for the account of Lenders, upon
the giving of notice by the Issuing Lender to Company that Issuing Lender
has paid such draft, and (c) in the case of any amendment requested by
Company with respect to an outstanding Commercial Letter of Credit (other
than an amendment that increases the face amount of such outstanding
Commercial Letter of Credit, the fee with respect to which shall be computed
in the same manner as an issuance fee under clause (a) above with respect to
such incremental amount, with the minimum fee being an amount in accordance
with the Issuing Lender's standard schedule for such charges in effect at
the time of such amendment), an amendment fee in an amount in accordance
with the Issuing Lender's standard schedule for such charges in effect at
the time of such amendment, payable to Issuing Lender for its own account
upon the issuance of such amendment; and
(iii) with respect to the issuance, amendment or transfer of each
Letter of Credit and each payment of a drawing made thereunder (without
duplication of the fees payable under clauses (i) and (ii) above),
documentary and processing charges payable directly to the applicable
Issuing Lender for its own account in accordance with such Issuing Lender's
standard schedule for such charges in effect at the time of such issuance,
amendment, transfer or payment, as the case may be.
For purposes of calculating any fees payable under clauses (i) and (ii) of this
subsection 3.2, (1) the daily amount available to be drawn under any Letter of
Credit shall be determined as of the close of business on any date of
determination and (2) any amount described in such clauses which is denominated
in a currency other than Dollars shall be valued based on the applicable
Exchange Rate for such currency as of the applicable date of determination.
Promptly upon receipt by Agent of any amount described in clause (i)(b) or
(ii)(b) of this subsection 3.2, Agent shall distribute to each Lender its Pro
Rata Share of such amount.
48
3.3 DRAWINGS AND REIMBURSEMENT OF AMOUNTS PAID UNDER LETTERS OF CREDIT.
------------------------------------------------------------------
A. RESPONSIBILITY OF ISSUING LENDER WITH RESPECT TO DRAWINGS. In
determining whether to honor any drawing under any Letter of Credit by the
beneficiary thereof, the Issuing Lender shall be responsible only to examine the
documents delivered under such Letter of Credit with reasonable care so as to
ascertain whether they appear on their face to be in accordance with the terms
and conditions of such Letter of Credit.
B. REIMBURSEMENT BY COMPANY OF AMOUNTS PAID UNDER LETTERS OF CREDIT. In
the event an Issuing Lender has determined to honor a drawing under a Letter of
Credit issued by it, such Issuing Lender shall immediately notify Company and
Agent, and Company shall reimburse such Issuing Lender on or before the Business
Day immediately following the date on which such drawing is honored (the
"REIMBURSEMENT DATE") in an amount in Dollars (which amount, in the case of a
drawing under a Letter of Credit which is denominated in a currency other than
Dollars, shall be calculated by reference to the applicable Exchange Rate) and
in same day funds equal to the amount of such honored drawing; provided that,
--------
anything contained in this Agreement to the contrary notwithstanding, (i) unless
Company shall have notified Agent and such Issuing Lender prior to 9:00 A.M.
(Los Angeles time) on the date such drawing is honored that Company intends to
reimburse such Issuing Lender for the amount of such honored drawing with funds
other than the proceeds of Loans, Company shall be deemed to have given a timely
Notice of Borrowing to Agent requesting Lenders to make Loans that are Base Rate
Loans on the Reimbursement Date in an amount in Dollars (which amount, in the
case of a drawing under a Letter of Credit which is denominated in a currency
other than Dollars, shall be calculated by reference to the applicable Exchange
Rate) equal to the amount of such honored drawing and (ii) subject to
satisfaction or waiver of the conditions specified in subsection 4.2B, Lenders
shall, on the Reimbursement Date, make Loans that are Base Rate Loans in the
amount of such honored drawing, the proceeds of which shall be applied directly
by Agent to reimburse such Issuing Lender for the amount of such honored
drawing; and provided, further that if for any reason proceeds of Loans are not
-------- -------
received by such Issuing Lender on the Reimbursement Date in an amount equal to
the amount of such honored drawing, Company shall reimburse such Issuing Lender,
on demand, in an amount in same day funds equal to the excess of the amount of
such honored drawing over the aggregate amount of such Loans, if any, which are
so received. Nothing in this subsection 3.3B shall be deemed to relieve any
Lender from its obligation to make Loans on the terms and conditions set forth
in this Agreement, and Company shall retain any and all rights it may have
against any Lender resulting from the failure of such Lender to make such Loans
under this subsection 3.3B.
49
C. PAYMENT BY LENDERS OF UNREIMBURSED AMOUNTS PAID UNDER LETTERS OF
CREDIT.
(i) Payment by Lenders. In the event that Company shall fail for any
------------------
reason to reimburse any Issuing Lender as provided in subsection 3.3B in an
amount (calculated, in the case of a drawing under a Letter of Credit
denominated in a currency other than Dollars, by reference to the applicable
Exchange Rate) equal to the amount of any drawing honored by such Issuing
Lender under a Letter of Credit issued by it, such Issuing Lender shall
promptly notify each other Lender of the unreimbursed amount of such honored
drawing and of such other Lender's respective participation therein based on
such Lender's Pro Rata Share. Each Lender shall make available to such
Issuing Lender an amount equal to its respective participation, in Dollars
and in same day funds, at the office of such Issuing Lender specified in
such notice, not later than 12:00 Noon (Los Angeles time) on the first
business day (under the laws of the jurisdiction in which such office of
such Issuing Lender is located) after the date notified by such Issuing
Lender. In the event that any Lender fails to make available to such
Issuing Lender on such business day the amount of such Lender's
participation in such Letter of Credit as provided in this subsection 3.3C,
such Issuing Lender shall be entitled to recover such amount on demand from
such Lender together with interest thereon at the Federal Funds Effective
Rate for three Business Days and thereafter at the Base Rate. Nothing in
this subsection 3.3C shall be deemed to prejudice the right of any Lender to
recover from any Issuing Lender any amounts made available by such Lender to
such Issuing Lender pursuant to this subsection 3.3C in the event that it is
determined by the final judgment of a court of competent jurisdiction that
the payment with respect to a Letter of Credit by such Issuing Lender in
respect of which payment was made by such Lender constituted gross
negligence or willful misconduct on the part of such Issuing Lender.
(ii) Distribution to Lenders of Reimbursements Received From Company.
---------------------------------------------------------------
In the event any Issuing Lender shall have been reimbursed by other Lenders
pursuant to subsection 3.3C(i) for all or any portion of any drawing honored
by such Issuing Lender under a Letter of Credit issued by it, such Issuing
Lender shall distribute to each other Lender which has paid all amounts
payable by it under subsection 3.3C(i) with respect to such honored drawing
such other Lender's Pro Rata Share of all payments subsequently received by
such Issuing Lender from Company in reimbursement of such honored drawing
when such payments are received. Any such distribution shall be made to a
Lender at its primary address set forth below its name on the appropriate
signature page hereof or at such other address as such Lender may request.
Until the Issuing Lender has been reimbursed by Company for a drawing
honored by such Issuing Lender under a Letter of Credit issued by it,
50
such Issuing Lender shall retain all rights and remedies provided therein
and by applicable law with respect to such Letter of Credit.
D. INTEREST ON AMOUNTS PAID UNDER LETTERS OF CREDIT.
(i) Payment of Interest by Company. Company agrees to pay to each
------------------------------
Issuing Lender, with respect to drawings honored under any Letters of Credit
issued by it, interest on the amount paid by such Issuing Lender in respect
of each such honored drawing from the date such drawing is honored to but
excluding the date such amount is reimbursed by Company (including any such
reimbursement out of the proceeds of Loans pursuant to subsection 3.3B) at a
rate equal to (a) for the period from the date such drawing is honored to
but excluding the Reimbursement Date, the rate then in effect under this
Agreement with respect to Loans that are Base Rate Loans and (b) thereafter,
a rate which is 2% per annum in excess of the rate of interest otherwise
payable under this Agreement with respect to Loans that are Base Rate Loans.
Interest payable pursuant to this subsection 3.3D(i) shall be computed on
the basis of a 360-day year for the actual number of days elapsed in the
period during which it accrues and shall be payable on demand or, if no
demand is made, on the date on which the related drawing under a Letter of
Credit is reimbursed in full.
(ii) Distribution of Interest Payments by Issuing Lender. Promptly
---------------------------------------------------
upon receipt by any Issuing Lender of any payment of interest pursuant to
subsection 3.3D(i) with respect to a drawing honored under a Letter of
Credit issued by it, (a) such Issuing Lender shall distribute to each other
Lender, out of the interest received by such Issuing Lender in respect of
the period from the date such drawing is honored to but excluding the date
on which such Issuing Lender is reimbursed for the amount of such drawing
(including any such reimbursement out of the proceeds of Loans pursuant to
subsection 3.3B), the amount that such other Lender would have been entitled
to receive in respect of the letter of credit fee that would have been
payable in respect of such Letter of Credit for such period pursuant to
subsection 3.2 if no drawing had been honored under such Letter of Credit,
and (b) in the event such Issuing Lender shall have been reimbursed by other
Lenders pursuant to subsection 3.3C(i) for all or any portion of such
honored drawing, such Issuing Lender shall distribute to each other Lender
which has paid all amounts payable by it under subsection 3.3C(i) with
respect to such honored drawing such other Lender's Pro Rata Share of any
interest received by such Issuing Lender in respect of that portion of such
honored drawing so reimbursed by other Lenders for the period from the date
on which such Issuing Lender was so reimbursed by other Lenders to but
excluding the date on which such portion of such honored drawing is
reimbursed by Company. Any such distribution shall be made to a Lender at
its primary address set forth below its
51
name on the appropriate signature page hereof or at such other address as
such Lender may request.
3.4 OBLIGATIONS ABSOLUTE.
--------------------
The obligation of Company to reimburse each Issuing Lender for drawings
honored under the Letters of Credit issued by it and to repay any Loans made by
Lenders pursuant to subsection 3.3B and the obligations of Lenders under
subsection 3.3C(i) shall be unconditional and irrevocable and shall be paid
strictly in accordance with the terms of this Agreement under all circumstances
including any of the following circumstances:
(i) any lack of validity or enforceability of any Letter of Credit;
(ii) the existence of any claim, set-off, defense or other right which
Company or any Lender may have at any time against a beneficiary or any
transferee of any Letter of Credit (or any Persons for whom any such
transferee may be acting), any Issuing Lender or other Lender or any other
Person or, in the case of a Lender, against Company, whether in connection
with this Agreement, the transactions contemplated herein or any unrelated
transaction (including any underlying transaction between Company or one of
its Subsidiaries and the beneficiary for which any Letter of Credit was
procured);
(iii) any draft or other document presented under any Letter of Credit
proving to be forged, fraudulent, invalid or insufficient in any respect or
any statement therein being untrue or inaccurate in any respect;
(iv) payment by the Issuing Lender under any Letter of Credit against
presentation of a draft or other document which does not comply with the
terms of such Letter of Credit;
(v) any adverse change in the business, operations, properties,
assets, condition (financial or otherwise) or prospects of Company or any of
its Subsidiaries;
(vi) any breach of this Agreement or any other Loan Document by any
party thereto;
(vii) any other circumstance or happening whatsoever, whether or not
similar to any of the foregoing; or
(viii) the fact that an Event of Default or a Potential Event of
Default shall have occurred and be continuing;
52
provided, in each case, that payment by the applicable Issuing Lender under the
--------
applicable Letter of Credit shall not have constituted gross negligence or
willful misconduct of such Issuing Lender under the circumstances in question
(as determined by a final judgment of a court of competent jurisdiction).
3.5 INDEMNIFICATION; NATURE OF ISSUING LENDERS' DUTIES.
--------------------------------------------------
A. INDEMNIFICATION. In addition to amounts payable as provided in
subsection 3.6, Company hereby agrees to protect, indemnify, pay and save
harmless each Issuing Lender from and against any and all claims, demands,
liabilities, damages, losses, costs, charges and expenses (including reasonable
fees, expenses and disbursements of counsel and allocated costs of internal
counsel) which such Issuing Lender may incur or be subject to as a consequence,
direct or indirect, of (i) the issuance of any Letter of Credit by such Issuing
Lender, other than as a result of (a) the gross negligence or willful misconduct
of such Issuing Lender as determined by a final judgment of a court of competent
jurisdiction or (b)(i) subject to the following clause (ii), the wrongful
dishonor by such Issuing Lender of a proper demand for payment made under any
Letter of Credit issued by it or (ii) the failure of such Issuing Lender to
honor a drawing under any such Letter of Credit as a result of any act or
omission, whether rightful or wrongful, of any present or future de jure or de
facto government or governmental authority (all such acts or omissions herein
called "GOVERNMENTAL ACTS").
B. NATURE OF ISSUING LENDER'S DUTIES. As between Company and any Issuing
Lender, Company assumes all risks of the acts and omissions of, or misuse of the
Letters of Credit issued by such Issuing Lender by, the respective beneficiaries
of such Letters of Credit. In furtherance and not in limitation of the
foregoing, such Issuing Lender shall not be responsible for: (i) the form,
validity, sufficiency, accuracy, genuineness or legal effect of any document
submitted by any party in connection with the application for and issuance of
any such Letter of Credit, even if it should in fact prove to be in any or all
respects invalid, insufficient, inaccurate, fraudulent or forged; (ii) the
validity or sufficiency of any instrument transferring or assigning or
purporting to transfer or assign any such Letter of Credit or the rights or
benefits thereunder or proceeds thereof, in whole or in part, which may prove to
be invalid or ineffective for any reason; (iii) failure of the beneficiary of
any such Letter of Credit to comply fully with any conditions required in order
to draw upon such Letter of Credit, provided that payment of such drawing by the
--------
Issuing Lender does not constitute gross negligence or willful misconduct by the
Issuing Lender; (iv) errors, omissions, interruptions or delays in transmission
or delivery of any messages, by mail, cable, telegraph, telex or otherwise,
whether or not they be in cipher; (v) errors in interpretation of technical
terms; (vi) any loss or delay in the transmission or otherwise of any document
required in order to make a drawing under any such Letter of Credit or of the
proceeds thereof; (vii) the misapplication by the beneficiary of any such Letter
of Credit of the proceeds of any drawing under
53
such Letter of Credit; or (viii) any consequences arising from causes beyond the
control of such Issuing Lender, including any Governmental Acts, and none of the
above shall affect or impair, or prevent the vesting of, any of such Issuing
Lender's rights or powers hereunder.
In furtherance and extension and not in limitation of the specific
provisions set forth in the first paragraph of this subsection 3.5B, any action
taken or omitted by any Issuing Lender under or in connection with the Letters
of Credit issued by it or any documents and certificates delivered thereunder,
if taken or omitted in good faith, shall not put such Issuing Lender under any
resulting liability to Company.
Notwithstanding anything to the contrary contained in this subsection
3.5, Company shall retain any and all rights it may have against any Issuing
Lender for any liability arising solely out of the gross negligence or willful
misconduct of such Issuing Lender, as determined by a final judgment of a court
of competent jurisdiction.
3.6 INCREASED COSTS AND TAXES RELATING TO LETTERS OF CREDIT.
-------------------------------------------------------
Subject to the provisions of subsection 2.7B (which shall be
controlling with respect to the matters covered thereby), in the event that any
Issuing Lender or Lender shall determine (which determination shall, absent
manifest error, be final and conclusive and binding upon all parties hereto)
that any law, treaty or governmental rule, regulation or order, or any change
therein or in the interpretation, administration or application thereof
(including the introduction of any new law, treaty or governmental rule,
regulation or order), or any determination of a court or governmental authority,
in each case that becomes effective after the date hereof, or compliance by any
Issuing Lender or Lender with any guideline, request or directive issued or made
after the date hereof by any central bank or other governmental or quasi-
governmental authority (whether or not having the force of law):
(i) subjects such Issuing Lender or Lender (or its applicable lending
or letter of credit office) to any additional Tax (other than any Tax on the
overall net income of such Issuing Lender or Lender) with respect to the
issuing or maintaining of any Letters of Credit or the purchasing or
maintaining of any participations therein or any other obligations under
this Section 3, whether directly or by such being imposed on or suffered by
any particular Issuing Lender;
(ii) imposes, modifies or holds applicable any reserve (including any
marginal, emergency, supplemental, special or other reserve), special
deposit, compulsory loan, FDIC insurance or similar requirement in respect
of any
54
Letters of Credit issued by any Issuing Lender or participations therein
purchased by any Lender; or
(iii) imposes any other condition (other than with respect to a Tax
matter) on or affecting such Issuing Lender or Lender (or its applicable
lending or letter of credit office) regarding this Section 3 or any Letter
of Credit or any participation therein;
and the result of any of the foregoing is to increase the cost to such Issuing
Lender or Lender of agreeing to issue, issuing or maintaining any Letter of
Credit or agreeing to purchase, purchasing or maintaining any participation
therein or to reduce any amount received or receivable by such Issuing Lender or
Lender (or its applicable lending or letter of credit office) with respect
thereto; then, in any case, Company shall promptly pay to such Issuing Lender or
Lender, upon receipt of the statement referred to in the next sentence, such
additional amount or amounts as may be necessary to compensate such Issuing
Lender or Lender for any such increased cost or reduction in amounts received or
receivable hereunder. Such Issuing Lender or Lender shall deliver to Company a
written statement, setting forth in reasonable detail the basis for calculating
the additional amounts owed to such Issuing Lender or Lender under this
subsection 3.6, which statement shall be conclusive and binding upon all parties
hereto absent manifest error.
SECTION 4. CONDITIONS TO LOANS AND LETTERS OF CREDIT
The obligations of Lenders to make Loans and the issuance of Letters of
Credit hereunder are subject to the satisfaction of the following conditions.
4.1 CONDITIONS TO INITIAL LOANS.
---------------------------
The obligations of Lenders to make any Loans to be made on the Closing
Date are, in addition to the conditions precedent specified in subsection 4.2,
subject to prior or concurrent satisfaction of the following conditions:
A. COMPANY DOCUMENTS. On or before the Closing Date, Company shall
deliver or cause to be delivered to Lenders (or to Agent for Lenders with
sufficient originally executed copies, where appropriate, for each Lender and
its counsel) the following, each, unless otherwise noted, dated the Closing
Date:
(i) Certified copies of its Articles of Incorporation, together with a
good standing certificate from the Secretary of State of the State of
California and each other state in which it is qualified as a foreign
corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any
applicable franchise or similar taxes
55
from the appropriate taxing authority of each of such states, each dated a
recent date prior to the Closing Date;
(ii) Copies of its Bylaws, certified as of the Closing Date by its
corporate secretary or an assistant secretary;
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of this Agreement and the other Loan
Documents, certified as of the Closing Date by its corporate secretary or an
assistant secretary as being in full force and effect without modification
or amendment;
(iv) Signature and incumbency certificates of its officers executing
this Agreement and the other Loan Documents;
(v) Executed originals of this Agreement, the Notes (duly executed
in accordance with subsection 2.1E, payable to each Lender and with
appropriate insertions), the Collateral Account Agreement, the Subordination
Agreements and the other Loan Documents to which it is a party; and
(vi) Such other documents as Agent may reasonably request.
B. SUBSIDIARY GUARANTOR DOCUMENTS. On or before the Closing Date, each
Subsidiary Guarantor shall deliver or cause to be delivered to Lenders (or to
Agent for Lenders with sufficient originally executed copies, where appropriate,
for each Lender and its counsel) the following, each, unless otherwise noted,
dated the Closing Date:
(i) (1) With respect to each Subsidiary Guarantor which is a
Domestic Subsidiary, certified copies of its Certificate or Articles of
Incorporation, together with a good standing certificate from the Secretary
of State of the State of its incorporation and each other state in which it
owns material assets or conducts material business and, to the extent
generally available, a certificate or other evidence of good standing as to
payment of any applicable franchise or similar taxes from the appropriate
taxing authority of each of such states, each dated a recent date prior to
the Closing Date and (2) with respect to each Subsidiary Guarantor which is
not a Domestic Subsidiary, copies of its Certificate or Articles of
Incorporation or other comparable charter documents, certified as of the
Closing Date by its corporate secretary, an assistant secretary or other
authorized signatory;
(ii) Copy of its Bylaws, if any, certified as of the Closing Date by
its corporate secretary, an assistant secretary or other authorized
signatory;
56
(iii) Resolutions of its Board of Directors approving and authorizing
the execution, delivery and performance of the Subsidiary Guaranty and the
Subordination Agreement executed by such Subsidiary Guarantor, certified as
of the Closing Date by its corporate secretary, an assistant secretary or
other authorized signatory as being in full force and effect without
modification or amendment;
(iv) Signature and incumbency certificates of its officers or other
authorized signatories executing the Subsidiary Guaranty and the
Subordination Agreement executed and delivered by such Subsidiary Guarantor;
(v) Executed originals of the Subsidiary Guaranty and the
Subordination Agreement and the other Loan Documents to which it is a party;
and
(vi) Such other documents as Agent may reasonably request.
Company, Agent and Lenders hereby agree that Subsidiary Guaranties and
Subordination Agreements shall be executed and delivered pursuant to this
subsection 4.1B by all Subsidiaries of Company that are party to the
Guaranties and the Subordination Agreements delivered pursuant to the
Citicorp Loan Agreement; provided that if holders of 100% of the outstanding
principal amount of the Senior Notes shall have executed and delivered the
Senior Note Waiver on or prior to the Closing Date then Subsidiary
Guaranties and Subsidiary Subordination Agreements shall be executed and
delivered by the Domestic Subsidiaries of Company (other than Non-Material
Domestic Subsidiaries).
C. NO MATERIAL ADVERSE EFFECT. Since December 31, 1996, no Material
Adverse Effect (in the sole opinion of Agent) shall have occurred.
D. OPINIONS OF COMPANY'S COUNSEL. Lenders and their respective counsel
shall have received (i) originally executed copies of one or more favorable
written opinions of Pircher, ▇▇▇▇▇▇▇ & ▇▇▇▇▇, counsel for Company, in form and
substance reasonably satisfactory to Agent and its counsel, dated as of the
Closing Date and setting forth substantially the matters in the opinions
designated in Exhibit VI annexed hereto and as to such other matters as Agent
----------
acting on behalf of Lenders may reasonably request and (ii) evidence
satisfactory to Agent that Company has requested such counsel to deliver such
opinions to Lenders.
E. OPINIONS OF AGENT'S COUNSEL. Lenders shall have received originally
executed copies of one or more favorable written opinions of O'Melveny & ▇▇▇▇▇
LLP, counsel to Agent, dated as of the Closing Date, substantially in the form
of
57
Exhibit VII annexed hereto and as to such other matters as Agent acting on
-----------
behalf of Lenders may reasonably request.
F. OTHER DOCUMENTS. Agent shall have received a certified copy of the
Citicorp Loan Agreement and the Senior Note Agreement.
G. FEES. Company shall have paid to Agent, for distribution (as
appropriate) to Agent, UBOC and the other Lenders, the fees payable on the
Closing Date referred to in subsection 2.3.
H. REPRESENTATIONS AND WARRANTIES; PERFORMANCE OF AGREEMENTS. Company
shall have delivered to Agent an Officers' Certificate, in form and substance
satisfactory to Agent, to the effect that the representations and warranties in
Section 5 hereof are true, correct and complete in all material respects on and
as of the Closing Date to the same extent as though made on and as of that date
(or, to the extent such representations and warranties specifically relate to an
earlier date, that such representations and warranties were true, correct and
complete in all material respects on and as of such earlier date) and that
Company shall have performed in all material respects all agreements and
satisfied all conditions which this Agreement provides shall be performed or
satisfied by it on or before the Closing Date except as otherwise disclosed to
and agreed to in writing by Agent and Requisite Lenders.
I. COMPLETION OF PROCEEDINGS. All corporate and other proceedings taken
or to be taken in connection with the transactions contemplated hereby and all
documents incidental thereto not previously found acceptable by Agent, acting on
behalf of Lenders, and its counsel shall be satisfactory in form and substance
to Agent and such counsel, and Agent and such counsel shall have received all
such counterpart originals or certified copies of such documents as Agent may
reasonably request.
J. MATTERS RELATING TO EXISTING INDEBTEDNESS OF COMPANY AND ITS
SUBSIDIARIES.
(i) Amendment of Existing Credit Agreements. On the Closing Date,
---------------------------------------
Company and its Subsidiaries shall have (a) made arrangements satisfactory
to Agent for the repayment in full of all Indebtedness outstanding under the
Citicorp Loan Agreement (except with respect to any Existing Letters of
Credit), (b) entered into the Ninth Amendment to Citicorp Loan Agreement in
the form of Exhibit XIII and all conditions to effectiveness of such
------------
agreement shall have been satisfied, and (c) made arrangements satisfactory
to Agent with respect to the issuance of one or more Standby Letters of
Credit to support the obligations of Company under the Citicorp Loan
Agreement with respect to the Existing Letters of Credit.
58
(ii) No Other Indebtedness. There shall be no existing
---------------------
Indebtedness of Company or its Subsidiaries outstanding on the Closing Date
after giving effect to repayment of the Indebtedness under the Citicorp Loan
Agreement other than Indebtedness permitted under Section 7.1.
K. INSURANCE. Agent shall have received summaries of insurance in form
and substance satisfactory to Agent, evidencing compliance with the requirements
of Section 5.14.
L. CONSENT BY SENIOR NOTE HOLDERS. The Waiver and Consent, with respect
to the Senior Note Agreements (the "SENIOR NOTE WAIVER") substantially in the
form of Exhibit XIV annexed hereto, shall have been executed and delivered by
-----------
holders of not less than 66-2/3% of the outstanding principal amount of the
Senior Notes, the consent and waivers contained in Sections 1.1 and 1.3 shall
have become effective in accordance with their terms, and Agent shall have
received evidence satisfactory to it to such effect.
4.2 CONDITIONS TO ALL LOANS.
-----------------------
The obligations of Lenders to make Loans on each Funding Date are
subject to the following further conditions precedent:
A. Agent shall have received before that Funding Date, in accordance with
the provisions of subsection 2.1B, an originally executed Notice of Borrowing,
in each case signed by the chief executive officer, the chief financial officer,
the treasurer or the assistant treasurer of Company or by any executive officer
of Company designated by any of the above-described officers on behalf of
Company in a writing delivered to Agent.
B. As of that Funding Date:
(i) The representations and warranties contained herein and in the
other Loan Documents shall be true, correct and complete in all material
respects on and as of that Funding Date to the same extent as though made on
and as of that date, except to the extent such representations and
warranties specifically relate to an earlier date, in which case such
representations and warranties shall have been true, correct and complete in
all material respects on and as of such earlier date;
(ii) No event shall have occurred and be continuing or would result
from the consummation of the borrowing contemplated by such Notice of
Borrowing that would constitute an Event of Default or a Potential Event of
Default;
59
(iii) Company shall have performed in all material respects all
agreements and satisfied all conditions which this Agreement provides shall
be performed or satisfied by it on or before that Funding Date;
(iv) No order, judgment or decree of any court, arbitrator or
governmental authority shall purport to enjoin or restrain any Lender from
making the Loans to be made by it on that Funding Date;
(v) The making of the Loans requested on such Funding Date shall not
violate any law including Regulation G, Regulation T, Regulation U or
Regulation X of the Board of Governors of the Federal Reserve System;
(vi) There shall not be pending or, to the knowledge of Company,
threatened, any action, suit, proceeding, governmental investigation or
arbitration against or affecting Company or any of its Subsidiaries or any
property of Company or any of its Subsidiaries that in the opinion of Agent
or of Requisite Lenders, would be expected to have a Material Adverse
Effect; and no injunction or other restraining order shall have been issued
and no hearing to cause an injunction or other restraining order to be
issued shall be pending or noticed with respect to any action, suit or
proceeding seeking to enjoin or otherwise prevent the consummation of, or to
recover any damages or obtain relief as a result of, the transactions
contemplated by this Agreement or the making of Loans hereunder; and
(vii) Until the Senior Notes have been paid in full, the following
statement shall be true and correct and Company shall be deemed to represent
and warrant as of such Funding Date as follows:
After giving effect to the making of each requested Loan or the
issuance of each requested Letter of Credit, and after giving effect to
the application of proceeds of such Loan, (i) Consolidated Indebtedness
(as defined in the Senior Note Agreement) does not exceed 50% of
Consolidated Net Tangible Assets (as defined in the Senior Note
Agreement) and (ii) the pro forma ratio of Consolidated Income
Available for Fixed Charges (as defined in the Senior Note Agreement)
to Fixed Charges (as defined in the Senior Note Agreement) for the four
consecutive Fiscal Quarters immediately preceding such date is not less
than 2.5 to 1.0.
4.3 CONDITIONS TO LETTERS OF CREDIT.
-------------------------------
The issuance of any Letter of Credit hereunder (whether or not the
applicable Issuing Lender is obligated to issue such Letter of Credit) is
subject to the following conditions precedent:
60
A. On or before the date of issuance of the initial Letter of Credit
pursuant to this Agreement, the initial Loans shall have been made.
B. On or before the date of issuance of such Letter of Credit, Agent shall
have received, in accordance with the provisions of subsection 3.1B(i), an
originally executed Notice of Issuance of Letter of Credit, in each case signed
by the chief executive officer, the chief financial officer, the treasurer or
the assistant treasurer of Company or by any executive officer of Company
designated by any of the above-described officers on behalf of Company in a
writing delivered to Agent, together with all other information specified in
subsection 3.1B(i) and such other documents or information as the applicable
Issuing Lender may reasonably require in connection with the issuance of such
Letter of Credit.
C. On the date of issuance of such Letter of Credit, all conditions
precedent described in subsection 4.2B shall be satisfied to the same extent as
if the issuance of such Letter of Credit were the making of a Loan and the date
of issuance of such Letter of Credit were a Funding Date.
SECTION 5. COMPANY'S REPRESENTATIONS AND WARRANTIES
In order to induce Lenders to enter into this Agreement and to make the
Loans, to induce Issuing Lenders to issue Letters of Credit and to induce other
Lenders to purchase participations therein, Company represents and warrants to
each Lender, on the date of this Agreement, on each Funding Date and on the date
of issuance of each Letter of Credit, that the following statements are true,
correct and complete:
5.1 ORGANIZATION, POWERS, QUALIFICATION, GOOD STANDING, BUSINESS AND
----------------------------------------------------------------
SUBSIDIARIES.
------------
A. ORGANIZATION AND POWERS. Company is a corporation duly organized,
validly existing and in good standing under the laws of its jurisdiction of
incorporation. Company has all requisite corporate power and authority to own
and operate its properties, to carry on its business as now conducted and as
proposed to be conducted, to enter into the Loan Documents to which it is a
party and to carry out the transactions contemplated thereby.
B. QUALIFICATION AND GOOD STANDING. Company is qualified to do business
and in good standing in every jurisdiction where its assets are located and
wherever necessary to carry out its business and operations, except in
jurisdictions where the failure to be so qualified or in good standing has not
had and will not have a Material Adverse Effect.
61
C. CONDUCT OF BUSINESS. Company and its Subsidiaries are engaged only in
the businesses permitted to be engaged in pursuant to subsection 7.14.
D. SUBSIDIARIES. All of the Subsidiaries of Company are identified in
Schedule 5.1 annexed hereto, as said Schedule 5.1 may be supplemented from time
------------ ------------
to time pursuant to the provisions of subsection 6.1(xiv). The capital stock of
each of the Subsidiaries of Company identified in Schedule 5.1 annexed hereto
------------
(as so supplemented) is duly authorized, validly issued, fully paid and
nonassessable and none of such capital stock constitutes Margin Stock. Each of
the Subsidiaries of Company identified in Schedule 5.1 annexed hereto (as so
------------
supplemented) is a corporation duly organized, validly existing and in good
standing under the laws of its respective jurisdiction of incorporation set
forth therein, has all requisite corporate power and authority to own and
operate its properties and to carry on its business as now conducted and as
proposed to be conducted, and is qualified to do business and in good standing
in every jurisdiction where its assets are located and wherever necessary to
carry out its business and operations, in each case except where failure to be
so qualified or in good standing or a lack of such corporate power and authority
has not had and will not have a Material Adverse Effect. Schedule 5.1 annexed
------------
hereto (as so supplemented) correctly sets forth the ownership interest of
Company and each of its Subsidiaries in each of the Subsidiaries of Company
identified therein.
5.2 AUTHORIZATION OF BORROWING, ETC.
--------------------------------
A. AUTHORIZATION OF BORROWING. The execution, delivery and performance of
the Loan Documents have been duly authorized by all necessary corporate action
on the part of each of the Loan Parties which is a party thereto.
B. NO CONFLICT. The execution, delivery and performance by each of the
Loan Parties of the Loan Documents to which it is a party and the consummation
of the transactions contemplated by the Loan Documents do not and will not (i)
violate any provision of any law or any governmental rule or regulation
applicable to Company or any of its Subsidiaries, the Certificate or Articles of
Incorporation or Bylaws of Company or any of its Subsidiaries or any order,
judgment or decree of any court or other agency of government binding on Company
or any of its Subsidiaries, (ii) conflict with, result in a breach of or
constitute (with due notice or lapse of time or both) a default under any
Contractual Obligation of Company or any of its Subsidiaries, (iii) result in or
require the creation or imposition of any Lien upon any of the properties or
assets of Company or any of its Subsidiaries (other than any Liens created under
any of the Loan Documents in favor of Agent on behalf of Lenders and the Liens
required by Section 7.9(l) of the Senior Note Agreement), or (iv) require any
approval of stockholders or any approval or consent of any Person under any
Contractual Obligation of Company or any of its Subsidiaries, except for such
approvals or consents which will be obtained on or before the Closing Date and
disclosed in writing to Lenders.
62
C. GOVERNMENTAL CONSENTS. The execution, delivery and performance by each
of the Loan Parties of the Loan Documents to which it is a party and the
consummation of the transactions contemplated by the Loan Documents do not and
will not require any registration with, consent or approval of, or notice to, or
other action to, with or by, any federal, state or other governmental authority
or regulatory body.
D. BINDING OBLIGATION. Each of the Loan Documents has been duly executed
and delivered by each Loan Party which is a party thereto and is the legally
valid and binding obligation of such Loan Party, enforceable against such Loan
Party in accordance with its respective terms, except as may be limited by
bankruptcy, insolvency, reorganization, moratorium or similar laws relating to
or limiting creditors' rights generally or by equitable principles relating to
enforceability.
5.3 FINANCIAL CONDITION.
-------------------
Company has heretofore delivered to Lenders, at Lenders' request, the
following financial statements and information: (i) the audited consolidated
balance sheet of Company and its Subsidiaries as at December 31, 1996 and the
related consolidated statements of income, stockholders' equity and cash flows
of Company and its Subsidiaries for the Fiscal Year then ended and (ii) the
unaudited consolidated balance sheet of Company and its Subsidiaries as at March
31, 1997 and the related unaudited consolidated statements of income,
stockholders' equity and cash flows of Company and its Subsidiaries for the
three months then ended. All such statements were prepared in conformity with
GAAP and fairly present, in all material respects, the financial position (on a
consolidated basis) of the entities described in such financial statements as at
the respective dates thereof and the results of operations and cash flows (on a
consolidated basis) of the entities described therein for each of the periods
then ended, subject, in the case of any such unaudited financial statements, to
changes resulting from audit and normal year-end adjustments and to the absence
of footnotes. Company does not (and will not following the funding of the
initial Loans) have any Contingent Obligation, contingent liability or liability
for taxes, long-term lease or unusual forward or long-term commitment that is
not reflected in the foregoing financial statements or the notes thereto and
which in any such case is material in relation to the business, operations,
properties, assets, condition (financial or otherwise) or prospects of Company
or any of its Subsidiaries.
5.4 NO MATERIAL ADVERSE CHANGE; NO RESTRICTED JUNIOR PAYMENTS.
---------------------------------------------------------
Since December 31, 1996, no event or change has occurred that has
caused or evidences, either in any case or in the aggregate, a Material Adverse
Effect. Neither Company nor any of its Subsidiaries has directly or indirectly
declared, ordered, paid or made, or set apart any sum or property for, any
Restricted Junior Payment or agreed to do so except as permitted by subsection
7.5.
63
5.5 TITLE TO PROPERTIES; LIENS.
--------------------------
Company and its Subsidiaries have (i) good, sufficient and legal title
to (in the case of fee interests in real property), (ii) valid leasehold
interests in (in the case of leasehold interests in real or personal property),
or (iii) good title to (in the case of all other personal property), all of
their respective properties and assets reflected in the financial statements
referred to in subsection 5.3 or in the most recent financial statements
delivered pursuant to subsection 6.1, in each case except for assets disposed of
since the date of such financial statements in the ordinary course of business
or as otherwise permitted under subsection 7.7. Except as permitted by this
Agreement, all such properties and assets are free and clear of Liens.
5.6 LITIGATION; ADVERSE FACTS.
-------------------------
There are no actions, suits, proceedings, arbitrations or governmental
investigations (whether or not purportedly on behalf of Company or any of its
Subsidiaries) at law or in equity, or before or by any federal, state, municipal
or other governmental department, commission, board, bureau, agency or
instrumentality, domestic or foreign (including any Environmental Claims) that
are pending or, to the knowledge of Company, threatened against or affecting
Company or any of its Subsidiaries or any property of Company or any of its
Subsidiaries and that, individually or in the aggregate, could reasonably be
expected to result in a Material Adverse Effect. Neither Company nor any of its
Subsidiaries (i) is in violation of any applicable laws (including Environmental
Laws) that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect, or (ii) is subject to or in default with
respect to any final judgments, writs, injunctions, decrees, rules or
regulations of any court or any federal, state, municipal or other governmental
department, commission, board, bureau, agency or instrumentality, domestic or
foreign, that, individually or in the aggregate, could reasonably be expected to
result in a Material Adverse Effect.
5.7 PAYMENT OF TAXES.
----------------
Except to the extent permitted by subsection 6.3, all tax returns and
reports of Company and its Subsidiaries required to be filed by any of them have
been timely filed, and all taxes shown on such tax returns to be due and payable
and all assessments, fees and other governmental charges upon Company and its
Subsidiaries and upon their respective properties, assets, income, businesses
and franchises which are due and payable have been paid when due and payable.
Except for a proposed tax assessment of $313,401.29 plus interest, previously
disclosed by Company to Agent, Company knows of no proposed tax assessment
against Company or any of its Subsidiaries which is not being actively contested
by Company or such Subsidiary in good faith and by appropriate proceedings;
provided that such reserves
--------
64
or other appropriate provisions, if any, as shall be required in conformity with
GAAP shall have been made or provided therefor.
5.8 PERFORMANCE OF AGREEMENTS; MATERIALLY ADVERSE AGREEMENTS; MATERIAL
------------------------------------------------------------------
CONTRACTS.
---------
A. Neither Company nor any of its Subsidiaries is in default in the
performance, observance or fulfillment of any of the obligations, covenants or
conditions contained in any of its Contractual Obligations, and no condition
exists that, with the giving of notice or the lapse of time or both, would
constitute such a default, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have a Material Adverse Effect.
B. Neither Company nor any of its Subsidiaries is a party to or is
otherwise subject to any agreements or instruments or any charter or other
internal restrictions which, individually or in the aggregate, could reasonably
be expected to result in a Material Adverse Effect.
C. Schedule 5.8 contains a true, correct and complete list of all the
------------
Material Contracts in effect on the Closing Date. Except as described on
Schedule 5.8, all such Material Contracts are in full force and effect and no
------------
material defaults currently exist thereunder.
5.9 GOVERNMENTAL REGULATION.
-----------------------
Neither Company nor any of its Subsidiaries is subject to regulation
under the Public Utility Holding Company Act of 1935, the Federal Power Act, the
Interstate Commerce Act or the Investment Company Act of 1940 or under any other
federal or state statute or regulation which may limit its ability to incur
Indebtedness or which may otherwise render all or any portion of the Obligations
unenforceable.
5.10 SECURITIES ACTIVITIES.
---------------------
A. Neither Company nor any of its Subsidiaries is engaged principally,
or as one of its important activities, in the business of extending credit for
the purpose of purchasing or carrying any Margin Stock.
B. Following application of the proceeds of each Loan, not more than 25%
of the value of the assets (either of Company only or of Company and its
Subsidiaries on a consolidated basis) will be Margin Stock.
65
5.11 EMPLOYEE BENEFIT PLANS.
----------------------
Neither Company nor any ERISA Affiliate maintains or has ever
maintained, contributes to or has ever contributed to, or is obligated to
contribute to or has ever been obligated to contribute to any Employee Benefit
Plan.
5.12 CERTAIN FEES.
------------
No broker's or finder's fee or commission will be payable with respect
to this Agreement or any of the transactions contemplated hereby, and Company
hereby indemnifies Lenders against, and agrees that it will hold Lenders
harmless from, any claim, demand or liability for any such broker's or finder's
fees alleged to have been incurred in connection herewith or therewith and any
expenses (including reasonable fees, expenses and disbursements of counsel)
arising in connection with any such claim, demand or liability.
5.13 ENVIRONMENTAL PROTECTION.
------------------------
(i) Neither Company nor any of its Subsidiaries nor any of
their respective Facilities or operations are subject to any outstanding
written order, consent decree or settlement agreement with any Person
relating to (a) any Environmental Law, (b) any Environmental Claim, or (c)
any Hazardous Materials Activity that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect;
(ii) Neither Company nor any of its Subsidiaries has received
any letter or request for information under Section 104 of the
Comprehensive Environmental Response, Compensation, and Liability Act (42
U.S.C. (S) 9604) or any comparable state law in connection with any
matters other than Environmental Claims in which there is already an
order, settlement agreement or consent decree;
(iii) There are and, to Company's knowledge, have been no
conditions, occurrences, or Hazardous Materials Activities which could
reasonably be expected to form the basis of an Environmental Claim against
Company or any of its Subsidiaries that, individually or in the aggregate,
could reasonably be expected to have a Material Adverse Effect; and
(iv) Compliance with all current or reasonably foreseeable
future requirements pursuant to or under Environmental Laws will not,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect.
66
Notwithstanding anything in this subsection 5.13 to the contrary, no
event or condition has occurred or is occurring with respect to Company or any
of its Subsidiaries relating to any Environmental Law, any Release of Hazardous
Materials, or any Hazardous Materials Activity which individually or in the
aggregate has had or could reasonably be expected to have a Material Adverse
Effect.
5.14 INSURANCE.
---------
Company and its Subsidiaries have in full force insurance coverage of
their respective properties, assets and businesses (including casualty, general
liability, products liability, business interruption and other insurance,
subject to customary deductibles and retention) with responsible insurance
companies in such amounts and against such risks as is carried by responsible
companies engaged in similar businesses and owning similar assets in the general
areas in which the Borrower and its Subsidiaries operate, which insurance is no
less protective in any material respect than the insurance the Borrower and its
Subsidiaries have carried in accordance with their past practices.
5.15 EMPLOYEE MATTERS.
----------------
There is no strike or work stoppage in existence or threatened
involving Company or any of its Subsidiaries that could reasonably be expected
to have a Material Adverse Effect.
5.16 SOLVENCY.
--------
Company and each of its Subsidiaries is and, upon the incurrence of any
Obligations by Company on any date on which this representation is made, will
be, Solvent.
5.17 DISCLOSURE.
----------
No representation or warranty of Company or any of its Subsidiaries
contained in any Loan Document or in any other document, certificate or written
statement furnished to Lenders by or on behalf of Company or any of its
Subsidiaries for use in connection with the transactions contemplated by this
Agreement contains any untrue statement of a material fact or omits to state a
material fact (known to Company, in the case of any document not furnished by
it) necessary in order to make the statements contained herein or therein not
misleading in light of the circumstances in which the same were made. Any
projections and pro forma financial information contained in such materials are
based upon good faith estimates and assumptions believed by Company to be
reasonable at the time made, it being recognized by Lenders that such
projections as to future events are not to be viewed as facts and that actual
results during the period or periods covered by any such
67
projections may differ from the projected results. There are no facts known (or
which should upon the reasonable exercise of diligence be known) to Company
(other than matters of a general economic nature) that, individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect
and that have not been disclosed herein or in such other documents, certificates
and statements furnished to Lenders for use in connection with the transactions
contemplated hereby.
SECTION 6. COMPANY'S AFFIRMATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent, Company shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 6.
6.1 FINANCIAL STATEMENTS AND OTHER REPORTS.
--------------------------------------
Company will maintain, and cause each of its Subsidiaries to maintain,
a system of accounting established and administered in accordance with sound
business practices to permit preparation of financial statements in conformity
with GAAP. Company will deliver to Agent and Lenders:
(i) Quarterly Financials: as soon as available and in any event within
45 days after the end of each Fiscal Quarter and within 90 days after the
end of the fourth Fiscal Quarter, (a) the consolidated and consolidating (by
operating division) balance sheet of Company and its Subsidiaries as at the
end of such Fiscal Quarter and the related consolidated and consolidating
(by operating division) statements of income, stockholders' equity and cash
flows of Company and its Subsidiaries for such Fiscal Quarter and for the
period from the beginning of the then current Fiscal Year to the end of such
Fiscal Quarter, setting forth in each case in comparative form the
corresponding figures for the corresponding periods of the previous Fiscal
Year and the corresponding figures from the Financial Plan for the current
Fiscal Year, all in reasonable detail and certified by the chief financial
officer or treasurer of Company that they fairly present, in all material
respects, the financial condition of Company and its Subsidiaries (on both a
consolidated and operating division basis) as at the dates indicated and the
results of their operations and their cash flows for the periods indicated,
subject to changes resulting from audit and normal year-end adjustments, and
(b) a narrative report describing the operations of Company and its
Subsidiaries in the form prepared for presentation to senior management for
such Fiscal Quarter and for the period from the beginning of the then
current Fiscal Year to the end of such Fiscal Quarter;
68
(ii) Year-End Financials: as soon as available and in any event
-------------------
within 90 days after the end of each Fiscal Year, (a) the consolidated
balance sheets of Company and its Subsidiaries as at the end of such Fiscal
Year and the related consolidated statements of income, stockholders' equity
and cash flows of Company and its Subsidiaries for such Fiscal Year, setting
forth in each case in comparative form the corresponding figures for the
previous Fiscal Year and the corresponding figures from the Financial Plan
for the Fiscal Year covered by such financial statements, all in reasonable
detail and certified by the chief financial officer or treasurer of Company
that they fairly present, in all material respects, the financial condition
of Company and its Subsidiaries as at the dates indicated and the results of
their operations and their cash flows for the periods indicated, (b) a
narrative report describing the operations of Company and its Subsidiaries
in the form prepared for presentation to senior management for such Fiscal
Year, and (c) a report thereon of Ernst & Young or other independent
certified public accountants of recognized national standing selected by
Company and satisfactory to Agent, which report shall be unqualified, shall
express no doubts about the ability of Company and its Subsidiaries to
continue as a going concern, and shall state that such consolidated
financial statements fairly present, in all material respects, the
consolidated financial position of Company and its Subsidiaries as at the
dates indicated and the results of their operations and their cash flows for
the periods indicated in conformity with GAAP applied on a basis consistent
with prior years (except as otherwise disclosed in such financial
statements) and that the examination by such accountants in connection with
such consolidated financial statements has been made in accordance with
generally accepted auditing standards;
(iii) Officers' and Compliance Certificates: together with each
-------------------------------------
delivery of financial statements of Company and its Subsidiaries pursuant to
subdivisions (i) and (ii) above, (a) an Officers' Certificate of Company
stating that the signers have reviewed the terms of this Agreement and have
made, or caused to be made under their supervision, a review in reasonable
detail of the transactions and condition of Company and its Subsidiaries
during the accounting period covered by such financial statements and that
such review has not disclosed the existence during or at the end of such
accounting period, and that the signers do not have knowledge of the
existence as at the date of such Officers' Certificate, of any condition or
event that constitutes an Event of Default or Potential Event of Default,
or, if any such condition or event existed or exists, specifying the nature
and period of existence thereof and what action Company has taken, is taking
and proposes to take with respect thereto; and (b) a Compliance Certificate
demonstrating compliance during and at the end of the applicable accounting
periods with the restrictions contained in Section 7, in each case to the
extent compliance with such restrictions is required to be tested at the end
of the applicable accounting period;
69
(iv) Accountants' Certification: together with each delivery of
--------------------------
consolidated financial statements of Company and its Subsidiaries pursuant
to subdivision (ii) above, a written statement by the independent certified
public accountants giving the report thereon (a) stating whether, in
connection with their audit, any failures to comply with the terms,
covenants, provisions or conditions of subsections 7.1(iv), 7.1(vii),
7.2(v), 7.3(iii), 7.3(vii), 7.4(vii), 7.5, 7.6, 7.8 and 7.9 came to their
attention and, if such failure to comply came to their attention, specifying
the nature and period of existence thereof; provided that such accountants
--------
shall not be liable by reason of any failure to obtain knowledge of any such
Event of Default or Potential Event of Default that would not be disclosed
in the course of their audit examination, and (b) stating that based on
their audit examination nothing has come to their attention that causes them
to believe either or both that the information contained in the certificates
delivered therewith pursuant to subdivision (iii) above is not correct or
that the matters set forth in the Compliance Certificates delivered
therewith pursuant to clause (b) of subdivision (iii) above for the
applicable Fiscal Year are not stated in accordance with the terms of this
Agreement;
(v) Accountants' Reports: promptly upon receipt thereof (unless
--------------------
restricted by applicable professional standards), copies of all reports
submitted to Company by independent certified public accountants in
connection with each annual, interim or special audit of the financial
statements of Company and its Subsidiaries made by such accountants,
including any management letter submitted by such accountants to management
in connection with their annual audit;
(vi) SEC Filings and Press Releases: immediately upon their becoming
------------------------------
available, copies of (a) all financial statements, reports, notices and
proxy statements sent or made available generally by Company to its security
holders or by any Subsidiary of Company to its security holders other than
Company or another Subsidiary of Company, (b) all regular and periodic
reports and all registration statements (other than on Form S-8 or a similar
form) and prospectuses, if any, filed by Company or any of its Subsidiaries
with any securities exchange or with the Securities and Exchange Commission
or any governmental or private regulatory authority, and (c) all press
releases and other statements made available generally by Company or any of
its Subsidiaries to the public concerning material developments in the
business of Company or any of its Subsidiaries;
(vii) Events of Default, etc.: promptly upon any officer of Company
-----------------------
obtaining knowledge (a) of an Event of Default or Potential Event of
Default, or becoming aware that any Lender has given any notice (other than
to Agent) or taken any other action with respect to a claimed Event of
Default or Potential Event of Default, (b) that any Person has given any
notice to
70
Company or any of its Subsidiaries or taken any other action with respect to
a claimed default or event or condition of the type referred to in
subsection 8.2, (c) of any condition or event that would be required to be
disclosed in a current report filed by Company with the Securities and
Exchange Commission on Form 8-K (Items 1, 2, 4, 5 and 6 of such Form as in
effect on the date hereof) to the extent not previously disclosed in a
report on Form 8-K previously delivered to Lenders, or (d) of the occurrence
of any event or change that has caused or evidences, either in any case or
in the aggregate, a Material Adverse Effect, an Officers' Certificate
specifying the nature and period of existence of such condition, event or
change, or specifying the notice given or action taken by any such Person
and the nature of such claimed Event of Default, Potential Event of Default,
default, event or condition, and what action Company has taken, is taking
and proposes to take with respect thereto;
(viii) Litigation or Other Proceedings: promptly upon any officer of
-------------------------------
Company obtaining knowledge of (a) the institution of, or non-frivolous
threat of, any action, suit, proceeding (whether administrative, judicial or
otherwise), governmental investigation or arbitration against or affecting
Company or any of its Subsidiaries or any property of Company or any of its
Subsidiaries (collectively, "PROCEEDINGS") not previously disclosed in
writing by Company to Lenders or (b) any material development in any
Proceeding that, in any case:
(1) if adversely determined, has a reasonable possibility of
giving rise to a Material Adverse Effect; or
(2) seeks to enjoin or otherwise prevent the consummation of, or
to recover any damages or obtain relief as a result of, the
transactions contemplated hereby;
written notice thereof together with such other information as may be
reasonably available to Company to enable Lenders and their counsel to
evaluate such matters;
(ix) ERISA Events: promptly upon becoming aware of the occurrence of
------------
or forthcoming occurrence of any ERISA Event, a written notice specifying
the nature thereof, what action Company, any of its Subsidiaries or any of
their respective ERISA Affiliates has taken, is taking or proposes to take
with respect thereto and, when known, any action taken or threatened by the
Internal Revenue Service, the Department of Labor or the PBGC with respect
thereto;
(x) ERISA Notices: with reasonable promptness, copies of (a) all
-------------
notices received by Company, any of its Subsidiaries or any of their
respective ERISA Affiliates from a Multiemployer Plan sponsor concerning an
ERISA
71
Event and (b) copies of such other documents or governmental reports or
filings relating to any Employee Benefit Plan as Agent shall reasonably
request;
(xi) Financial Plans: as soon as practicable and in any event prior
---------------
to the beginning of each Fiscal Year and for each Fiscal Year up to and
including the year of the Commitment Termination Date, a consolidated plan
and financial forecast for such Fiscal Year (the "FINANCIAL PLAN" for such
Fiscal Year) for Company and its Subsidiaries, including (a) forecasted
consolidated balance sheets and forecasted consolidated statements of income
and cash flows of Company and its Subsidiaries for such Fiscal Year,
together with a pro forma Compliance Certificate for such Fiscal Year and an
--- -----
explanation of the assumptions on which such forecasts are based, (b)
forecasted consolidated statements of income and cash flows of Company and
its Subsidiaries for each Fiscal Quarter of the next Fiscal Year, together
with an explanation of the assumptions on which such forecasts are based,
and (c) such other information and projections as any Lender may reasonably
request;
(xii) Insurance: as soon as practicable and in any event by the last
---------
day of each Fiscal Year, a report in form and substance satisfactory to
Agent outlining all material insurance coverage maintained as of the date of
such report by Company and its Subsidiaries and all material insurance
coverage planned to be maintained by Company and its Subsidiaries in the
immediately succeeding Fiscal Year;
(xiii) Board of Directors: with reasonable promptness, written notice
------------------
of any change in the Board of Directors of Company;
(xiv) New Subsidiaries: promptly upon any Person becoming a
----------------
Subsidiary of Company, a written notice setting forth with respect to such
Person (a) the date on which such Person became a Subsidiary of Company and
(b) all of the data required to be set forth in Schedule 5.1 annexed hereto
------------
with respect to all Subsidiaries of Company (it being understood that such
written notice shall be deemed to supplement Schedule 5.1 annexed hereto for
------------
all purposes of this Agreement;
(xv) Other Information: with reasonable promptness, such other
-----------------
information and data with respect to Company or any of its Subsidiaries as
from time to time may be reasonably requested by any Lender.
6.2 CORPORATE EXISTENCE, ETC.
-------------------------
Except as permitted under subsection 7.7, Company will, and will cause
each of its Subsidiaries to, at all times preserve and keep in full force and
effect its
72
corporate existence and all rights and franchises material to its business;
provided, however that neither Company nor any of its Subsidiaries shall be
-------- -------
required to preserve any such right or franchise if the Board of Directors of
Company or such Subsidiary shall determine that the preservation thereof is no
longer desirable in the conduct of the business of Company or such Subsidiary,
as the case may be, and that the loss thereof is not disadvantageous in any
material respect to Company, such Subsidiary or Lenders.
6.3 PAYMENT OF TAXES AND CLAIMS; TAX CONSOLIDATION.
----------------------------------------------
A. Company will, and will cause each of its Subsidiaries to, pay all
taxes, assessments and other governmental charges imposed upon it or any of its
properties or assets or in respect of any of its income, businesses or
franchises before any penalty accrues thereon, and all claims (including claims
for labor, services, materials and supplies) for sums that have become due and
payable and that by law have or may become a Lien upon any of its properties or
assets, prior to the time when any penalty or fine (other than sums not
exceeding an aggregate amount of $50,000) shall be incurred with respect
thereto; provided that no such charge or claim need be paid if it is being
--------
contested in good faith by appropriate proceedings promptly instituted and
diligently conducted, so long as such reserve or other appropriate provision, if
any, as shall be required in conformity with GAAP shall have been made therefor.
B. Company will not, nor will it permit any of its Subsidiaries to, file
or consent to the filing of any consolidated income tax return with any Person
other than Company or any of its Subsidiaries.
6.4 MAINTENANCE OF PROPERTIES; INSURANCE.
------------------------------------
A. MAINTENANCE OF PROPERTIES. Company will, and will cause each of its
Subsidiaries to, maintain or cause to be maintained in good repair, working
order and condition, ordinary wear and tear excepted, all material properties
used or useful in the business of Company and its Subsidiaries (including all
Intellectual Property) and from time to time will make or cause to be made all
appropriate repairs, renewals and replacements thereof.
B. INSURANCE. Company will maintain or cause to be maintained, with
financially sound and reputable insurers, such public liability insurance, third
party property damage insurance, business interruption insurance and casualty
insurance with respect to liabilities, losses or damage in respect of the
assets, properties and businesses of Company and its Subsidiaries as may
customarily be carried or maintained under similar circumstances by corporations
of established reputation engaged in similar businesses, in each case in such
amounts (giving effect to self-insurance), with such deductibles, covering such
risks and otherwise on such terms
73
and conditions as shall be customary for corporations similarly situated in the
industry.
6.5 INSPECTION RIGHTS; LENDER MEETING.
---------------------------------
A. INSPECTION RIGHTS. Company shall, and shall cause each of its
Subsidiaries to, permit any authorized representatives designated by any Lender
to visit and inspect any of the properties of Company or of any of its
Subsidiaries, to inspect, copy and take extracts from its and their financial
and accounting records, and to discuss its and their affairs, finances and
accounts with its and their officers and independent public accountants
(provided that Company may, if it so chooses, be present at or participate in
any such discussion), all upon reasonable notice and at such reasonable times
during normal business hours and as often as may reasonably be requested.
B. LENDER MEETING. Company will, upon the request of Agent or Requisite
Lenders, participate in a meeting of Agent and Lenders once during each Fiscal
Year to be held at Company's corporate offices (or at such other location as may
be agreed to by Company and Agent) at such time as may be agreed to by Company
and Agent.
6.6 COMPLIANCE WITH LAWS, ETC.
--------------------------
Company shall comply, and shall cause each of its Subsidiaries to
comply, with the requirements of all applicable laws, rules, regulations and
orders of any governmental authority (including all Environmental Laws),
noncompliance with which could reasonably be expected to cause, individually or
in the aggregate, a Material Adverse Effect.
6.7 ENVIRONMENTAL REVIEW AND INVESTIGATION, DISCLOSURE, ETC.; COMPANY'S ACTIONS
---------------------------------------------------------------------------
REGARDING HAZARDOUS MATERIALS ACTIVITIES, ENVIRONMENTAL CLAIMS AND
------------------------------------------------------------------
VIOLATIONS OF ENVIRONMENTAL LAWS.
--------------------------------
A. ENVIRONMENTAL REVIEW AND INVESTIGATION. Company agrees that Agent may,
from time to time and in its reasonable discretion, (i) retain, at Company's
expense, an independent professional consultant to review any environmental
audits, investigations, analyses and reports relating to Hazardous Materials
prepared by or for Company and (ii) in the event (a) Agent reasonably believes
that Company has breached any representation, warranty or covenant contained in
subsection 5.6, 5.13, 6.6 or 6.7 or that there has been a material violation of
Environmental Laws at any Facility or by Company or any of its Subsidiaries at
any other location or (b) an Event of Default has occurred and is continuing,
conduct its own investigation of any Facility; provided that, in the case of any
--------
Facility no longer owned, leased, operated or used by Company or any of its
Subsidiaries, Company shall only be obligated to use its best efforts to obtain
permission for Agent's professional consultant to conduct
74
an investigation of such Facility. For purposes of conducting such a review
and/or investigation, Company hereby grants to Agent and its agents, employees,
consultants and contractors the right to enter into or onto any Facilities
currently owned, leased, operated or used by Company or any of its Subsidiaries
and to perform such tests on such property (including taking samples of soil,
groundwater and suspected asbestos-containing materials) as are reasonably
necessary in connection therewith. Any such investigation of any Facility shall
be conducted, unless otherwise agreed to by Company and Agent, during normal
business hours and, to the extent reasonably practicable, shall be conducted so
as not to interfere with the ongoing operations at such Facility or to cause any
damage or loss to any property at such Facility. Company and Agent hereby
acknowledge and agree that any report of any investigation conducted at the
request of Agent pursuant to this subsection 6.7A will be obtained and shall be
used by Agent and Lenders for the purposes of Lenders' internal credit
decisions, to monitor and police the Loans and to protect Lenders' security
interests, if any, created by the Loan Documents. Agent agrees to deliver a
copy of any such report to Company with the understanding that Company
acknowledges and agrees that (x) it will indemnify and hold harmless Agent and
each Lender from any costs, losses or liabilities relating to Company's use of
or reliance on such report, (y) neither Agent nor any Lender makes any
representation or warranty with respect to such report, and (z) by delivering
such report to Company, neither Agent nor any Lender is requiring or
recommending the implementation of any suggestions or recommendations contained
in such report.
B. ENVIRONMENTAL DISCLOSURE. Company will deliver to Agent and Lenders:
(i) Environmental Audits and Reports: as soon as practicable
--------------------------------
following receipt thereof, copies of all environmental audits,
investigations, analyses and reports of any kind or character, whether
prepared by personnel of Company or any of its Subsidiaries or by
independent consultants, governmental authorities or any other Persons, with
respect to significant environmental matters at any Facility which,
individually or in the aggregate, could reasonably be expected to result in
a Material Adverse Effect or with respect to any Environmental Claims which,
individually or in the aggregate, could reasonably be expected to result in
a Material Adverse Effect;
(ii) Notice of Certain Releases, Remedial Actions, Etc. promptly
-------------------------------------------------
upon the occurrence thereof, written notice describing in reasonable detail
(a) any Release required to be reported to any federal, state or local
governmental or regulatory agency under any applicable Environmental Laws,
(b) any remedial action taken by Company or any other Person in response to
(1) any Hazardous Materials Activities the existence of which has a
reasonable possibility of resulting in one or more Environmental Claims
having, individually or in the aggregate, a Material Adverse Effect, or (2)
any Environmental Claims that, individually or in the aggregate, have a
reasonable
75
possibility of resulting in a Material Adverse Effect, and (c) Company's
discovery of any occurrence or condition on any real property adjoining or
in the vicinity of any Facility that could cause such Facility or any part
thereof to be subject to any material restrictions on the ownership,
occupancy, transferability or use thereof under any Environmental Laws.
(iii) Written Communications Regarding Environmental Claims, Releases,
----------------------------------------------------------------
Etc. as soon as practicable following the sending or receipt thereof by
----
Company or any of its Subsidiaries, a copy of any and all written
communications with respect to (a) any Environmental Claims that,
individually or in the aggregate, have a reasonable possibility of giving
rise to a Material Adverse Effect, (b) any Release required to be reported
to any federal, state or local governmental or regulatory agency, and (c)
any request for information from any governmental agency that suggests such
agency is investigating whether Company or any of its Subsidiaries may be
potentially responsible for any Hazardous Materials Activity which has a
reasonable possibility of giving rise to a Material Adverse Effect.
(iv) Notice of Certain Proposed Actions Having Environmental Impact.
--------------------------------------------------------------
prompt written notice describing in reasonable detail (a) any proposed
acquisition of stock, assets, or property by Company or any of its
Subsidiaries that could reasonably be expected to expose Company or any of
its Subsidiaries to, or result in, Environmental Claims that could
reasonably be expected to have, individually or in the aggregate, a Material
Adverse Effect, and (b) any proposed action to be taken by Company or any of
its Subsidiaries to modify current operations in a manner that could
reasonably be expected to subject Company or any of its Subsidiaries to any
material additional obligations or requirements under any Environmental Laws
that could reasonably be expected to have, individually or in the aggregate,
a Material Adverse Effect.
(v) Other Information. with reasonable promptness, such other
-----------------
documents and information as from time to time may be reasonably requested
by Agent in relation to any matters disclosed pursuant to this subsection
6.7.
C. COMPANY'S ACTIONS REGARDING HAZARDOUS MATERIALS ACTIVITIES,
ENVIRONMENTAL CLAIMS AND VIOLATIONS OF ENVIRONMENTAL LAWS.
(i) Remedial Actions Relating to Hazardous Materials Activities.
-----------------------------------------------------------
Company shall promptly undertake, and shall cause each of its Subsidiaries
promptly to undertake, any and all investigations, studies, sampling,
testing, abatement, cleanup, removal, remediation or other response actions
necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials
Activity on, under or about any Facility that is in violation of any
Environmental Laws or that presents a material risk of giving rise to an
Environmental Claim that
76
could reasonably be expected to have a Material Adverse Effect. In the
event Company or any of its Subsidiaries undertakes any such action with
respect to any Hazardous Materials, Company or such Subsidiary shall conduct
and complete such action in compliance with all applicable Environmental
Laws and in accordance with the policies, orders and directives of all
federal, state and local governmental authorities except when, and only to
the extent that, Company's or such Subsidiary's liability with respect to
such Hazardous Materials Activity is being contested in good faith by
Company or such Subsidiary.
(ii) Actions With Respect to Environmental Claims and Violations of
--------------------------------------------------------------
Environmental Laws. Company shall promptly take, and shall cause each of
------------------
its Subsidiaries promptly to take, any and all actions necessary to (i) cure
any material violation of applicable Environmental Laws by Company or its
Subsidiaries that could reasonably be expected to have, individually or in
the aggregate, a Material Adverse Effect and (ii) make an appropriate
response to any Environmental Claim against Company or any of its
Subsidiaries and discharge any obligations it may have to any Person
thereunder where failure to do so could reasonably be expected to have,
individually or in the aggregate, a Material Adverse Effect.
6.8 EXECUTION OF SUBSIDIARY GUARANTIES BY CERTAIN SUBSIDIARIES AND FUTURE
---------------------------------------------------------------------
SUBSIDIARIES.
------------
A. EXECUTION OF SUBSIDIARY GUARANTIES. In the event that any Person
becomes a Domestic Subsidiary of Company after the date hereof, Company will
promptly notify Agent of that fact and, at the request of Agent, cause such
Subsidiary to execute and deliver to Agent a Subsidiary Guaranty in the form of
Exhibit XII-B annexed hereto and a Subordination Agreement in the form of
-------------
Exhibit IX-B annexed hereto; provided that so long as such Person is a Non-
------------ --------
Material Domestic Subsidiary, it shall not be required to execute and deliver to
Agent a Subsidiary Guaranty or a Subordination Agreement.
B. SUBSIDIARY CHARTER DOCUMENTS, LEGAL OPINIONS, ETC. Company shall
deliver to Agent, together with such Loan Documents, (i) certified copies of
such Subsidiary's Certificate or Articles of Incorporation, together with a good
standing certificate from the Secretary of State of the jurisdiction of its
incorporation and each other state in which such Person is qualified as a
foreign corporation to do business and, to the extent generally available, a
certificate or other evidence of good standing as to payment of any applicable
franchise or similar taxes from the appropriate taxing authority of each of such
jurisdictions, each to be dated a recent date prior to their delivery to Agent,
(ii) a copy of such Subsidiary's Bylaws, certified by its corporate secretary or
an assistant secretary as of a recent date prior to their delivery to Agent,
(iii) a certificate executed by the secretary or an assistant secretary of such
Subsidiary
77
as to (a) the fact that the attached resolutions of the Board of Directors of
such Subsidiary approving and authorizing the execution, delivery and
performance of such Loan Documents are in full force and effect and have not
been modified or amended and (b) the incumbency and signatures of the officers
of such Subsidiary executing such Loan Documents, and (iv) if reasonably
requested by Agent, a favorable opinion of counsel to such Subsidiary, in form
and substance satisfactory to Agent and its counsel, as to (a) the due
organization and good standing of such Subsidiary, (b) the due authorization,
execution and delivery by such Subsidiary of such Loan Documents, (c) the
enforceability of such Loan Documents against such Subsidiary, (d) such other
matters as Agent may reasonably request, all of the foregoing to be satisfactory
in form and substance to Agent and its counsel.
SECTION 7. COMPANY'S NEGATIVE COVENANTS
Company covenants and agrees that, so long as the Commitments hereunder
shall remain in effect and until payment in full of all of the Loans and other
Obligations and the cancellation or expiration of all Letters of Credit, unless
Requisite Lenders shall otherwise give prior written consent, Company shall
perform, and shall cause each of its Subsidiaries to perform, all covenants in
this Section 7.
7.1 INDEBTEDNESS.
------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create, incur, assume or guaranty, or otherwise become
or remain directly or indirectly liable with respect to, any Indebtedness,
except:
(i) Loan Parties may become and remain liable with respect to the
Obligations;
(ii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations permitted by subsection 7.4 and, upon any
matured obligations actually arising pursuant thereto, the Indebtedness
corresponding to the Contingent Obligations so extinguished;
(iii) Any wholly-owned Subsidiary of Company may become and remain
liable with respect to Indebtedness to Company; provided that (a) all such
--------
intercompany Indebtedness shall be evidenced by promissory notes, (b) all
such intercompany Indebtedness of each Subsidiary Guarantor shall be
subordinated to the Obligations of such Subsidiary Guarantor under the
Subsidiary Guaranties pursuant to the Subordination Agreements, and (c) any
payment by any Subsidiary Guarantor of Company under any guaranty of the
Obligations shall result in a pro tanto reduction of the amount of any
--- -----
78
intercompany Indebtedness owed by such Subsidiary to Company or to any of
its Subsidiaries for whose benefit such payment is made;
(iv) Subsidiaries of Company other than wholly-owned Subsidiary
Guarantors may become and remain liable with respect to intercompany
Indebtedness to Company and the Subsidiary Guarantors in an aggregate
principal amount not to exceed $95,000,000 at any time outstanding;
(v) Company and Subsidiary Guarantors may become and remain liable
with respect to Indebtedness outstanding under the Senior Note Agreement;
(vi) Company and its Subsidiaries, as applicable, may remain liable
with respect to Indebtedness described in Schedule 7.1 annexed hereto; and
------------
(vii) Company and its Subsidiaries may become and remain liable with
respect to other Indebtedness in an aggregate principal amount not to exceed
$5,000,000 at any time outstanding; provided that the maximum aggregate
--------
liability of Subsidiaries other than wholly-owned Subsidiary Guarantors in
respect to Indebtedness permitted by subsection 7.1(vii) shall at no time
exceed $1,000,000.
7.2 LIENS AND RELATED MATTERS.
-------------------------
A. PROHIBITION ON LIENS. Company shall not, and shall not permit any of
its Subsidiaries to, directly or indirectly, create, incur, assume or permit to
exist any Lien on or with respect to any property or asset of any kind
(including any document or instrument in respect of goods or accounts
receivable) of Company or any of its Subsidiaries, whether now owned or
hereafter acquired, or any income or profits therefrom, or file or permit the
filing of, or permit to remain in effect, any financing statement or other
similar notice of any Lien with respect to any such property, asset, income or
profits under the Uniform Commercial Code of any State or under any similar
recording or notice statute, except:
(i) Permitted Encumbrances;
(ii) Existing Liens described in Schedule 7.2 annexed hereto;
------------
(iii) Liens in favor of the holders of the Senior Notes created
pursuant to Section 7.9(l) of the Senior Note Agreement; provided that an
--------
equal amount of cash collateral has been deposited in the Collateral Account
pursuant to the Collateral Account Agreement;
(iv) Liens created under any Loan Document; and
79
(v) Other Liens securing Indebtedness in an aggregate principal
amount not to exceed $1,000,000 at any time outstanding.
B. EQUITABLE LIEN IN FAVOR OF LENDERS. If Company or any of its
Subsidiaries shall create or assume any Lien upon any of its properties or
assets, whether now owned or hereafter acquired, other than Liens excepted by
the provisions of subsection 7.2A, it shall make or cause to be made effective
provision whereby the Obligations will be secured by such Lien equally and
ratably with any and all other Indebtedness secured thereby as long as any such
Indebtedness shall be so secured; provided that, notwithstanding the foregoing,
--------
this covenant shall not be construed as a consent by Requisite Lenders to the
creation or assumption of any such Lien not permitted by the provisions of
subsection 7.2A.
C. NO FURTHER NEGATIVE PLEDGES. Except with respect to specific property
encumbered to secure payment of particular Indebtedness or to be sold pursuant
to an executed agreement with respect to an Asset Sale, neither Company nor any
of its Subsidiaries shall enter into any agreement (other than an agreement
prohibiting only the creation of Liens securing Subordinated Indebtedness)
prohibiting the creation or assumption of any Lien upon any of its properties or
assets, whether now owned or hereafter acquired.
D. NO RESTRICTIONS ON SUBSIDIARY DISTRIBUTIONS TO COMPANY OR OTHER
SUBSIDIARIES. Except as provided herein, Company will not, and will not permit
any of its Subsidiaries to, create or otherwise cause or suffer to exist or
become effective any consensual encumbrance or restriction of any kind on the
ability of any such Subsidiary to (i) pay dividends or make any other
distributions on any of such Subsidiary's capital stock owned by Company or any
other Subsidiary of Company, (ii) repay or prepay any Indebtedness owed by such
Subsidiary to Company or any other Subsidiary of Company, (iii) make loans or
advances to Company or any other Subsidiary of Company, or (iv) transfer any of
its property or assets to Company or any other Subsidiary of Company.
7.3 INVESTMENTS; JOINT VENTURES.
---------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, make or own any Investment in any Person, including any
Joint Venture, except:
(i) Company and its Subsidiaries may make and own Investments in
Cash Equivalents;
(ii) Company and its Subsidiaries may continue to own the Investments
owned by them as of the Closing Date in any Subsidiaries of Company;
80
(iii) Company may make intercompany Investments to the extent
permitted under subsections 7.1(iii) and 7.1(iv);
(iv) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted by subsection 7.8;
(v) Company and its Subsidiaries may continue to own the Investments
owned by them and described in Schedule 7.3 annexed hereto;
------------
(vi) Company and its Subsidiaries may make acquisitions permitted by
subsection 7.7(v) hereof; and
(vii) Company and its Subsidiaries may make and own other Investments
(other than acquisitions described in subsection 7.7(v) hereof) in an
aggregate amount not to exceed at any time $5,000,000.
7.4 CONTINGENT OBLIGATIONS.
----------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, create or become or remain liable with respect to any
Contingent Obligation, except:
(i) Company may become and remain liable with respect to Contingent
Obligations in respect of Letters of Credit and Existing Letters of Credit
and any other contingent obligations hereunder or under any other Loan
Documents;
(ii) Company may become and remain liable with respect to Contingent
Obligations under Hedge Agreements;
(iii) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of customary indemnification
and purchase price adjustment obligations incurred in connection with Asset
Sales or other sales of assets;
(iv) Company and its Subsidiaries may become and remain liable with
respect to Contingent Obligations in respect of any Indebtedness of Company
or any of its Subsidiaries permitted by subsection 7.1;
(v) Company and its Subsidiaries, as applicable, may remain liable
with respect to Contingent Obligations described in Schedule 7.4 annexed
------------
hereto;
81
(vi) Subsidiary Guarantors may become and remain liable with respect
to the Subsidiary Guaranties; and
(vii) Company and its Subsidiaries may become and remain liable with
respect to other Contingent Obligations; provided that the maximum aggregate
--------
liability, contingent or otherwise, of Company and its Subsidiaries in
respect of all such Contingent Obligations shall at no time exceed
$5,000,000.
7.5 RESTRICTED JUNIOR PAYMENTS.
--------------------------
Company shall not, and shall not permit any of its Subsidiaries, to,
directly or indirectly, declare, order, pay, make or set apart any sum for any
Restricted Junior Payment; provided that so long as no Event of Default or
Potential Event of Default shall have occurred and be continuing at the time
thereof or shall be caused thereby, Company may make Restricted Junior Payments
from and after the date hereof in a cumulative amount not exceeding the sum of
(i) $5,000,000 and (ii) 25% of Consolidated Net Income arising after June 30,
1997.
7.6 FINANCIAL COVENANTS.
-------------------
A. MINIMUM INTEREST COVERAGE RATIO. Company shall not permit the ratio of
(i) Consolidated EBITDA to (ii) Consolidated Interest Expense at the end of each
Fiscal Quarter to be less than 3.00 to 1.00.
B. MINIMUM FIXED CHARGE COVERAGE RATIO. Company shall not permit the
ratio of (i) Consolidated EBITDA less (x) Consolidated Capital Expenditures and
----
(y) cash paid for income taxes (both (x) and (y) as computed as of the last day
of each Fiscal Quarter for the fiscal period consisting of that Fiscal Quarter
and the three immediately preceding Fiscal Quarters) to (ii) Consolidated Fixed
Charges at the end of each Fiscal Quarter to be less than 1.25 to 1.00.
C. MAXIMUM LEVERAGE RATIO. Company shall not permit the ratio of (i)
Consolidated Total Debt at the end of each Fiscal Quarter to (ii) Consolidated
EBITDA, during any of the periods set forth below, to exceed the correlative
ratio indicated:
PERIOD MAXIMUM LEVERAGE RATIO
---------------------------- ---------------------------
Closing Date through 6/30/98 1.00:1.00
7/1/98 and thereafter .75:1.00
82
D. MINIMUM CONSOLIDATED CURRENT RATIO. Company shall not permit as of the
last day of any Fiscal Quarter the ratio of (i) Consolidated Current Assets to
(ii) Consolidated Current Liabilities to be less than 2.00 to 1.00.
E. MINIMUM CONSOLIDATED TANGIBLE NET WORTH. Company shall not permit
Consolidated Tangible Net Worth at any time to be less than the sum of (i)
$130,000,000, plus (ii) 75% of Consolidated Net Income of Company and its
----
Subsidiaries (but only if a positive number) for each Fiscal Quarter ending
after the Closing Date, plus (iii) 75% of the Consolidated net proceeds from the
----
sale of equity securities of Company or a Subsidiary after the Closing Date.
7.7 RESTRICTION ON FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS.
----------------------------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
alter the corporate, capital or legal structure of Company or any of its
Subsidiaries, or enter into any transaction of merger or consolidation, or
liquidate, wind-up or dissolve itself (or suffer any liquidation or
dissolution), or convey, sell, lease or sub-lease (as lessor or sub-lessor),
transfer or otherwise dispose of, in one transaction or a series of
transactions, all or any part of its business, property or assets, whether now
owned or hereafter acquired, or acquire by purchase or otherwise all or
substantially all the business, property or fixed assets of, or stock or other
evidence of beneficial ownership of, any Person or any division or line of
business of any Person, except:
(i) any Subsidiary of Company may be merged with or into Company or
any wholly-owned Subsidiary of Company, or be liquidated, wound up or
dissolved, or all or any part of its business, property or assets may be
conveyed, sold, leased, transferred or otherwise disposed of, in one
transaction or a series of transactions, to Company or any wholly-owned
Subsidiary of Company; provided that, in the case of such a merger, Company
--------
or such wholly-owned Subsidiary shall be the continuing or surviving
corporation;
(ii) Company and its Subsidiaries may make Consolidated Capital
Expenditures permitted under subsection 7.8;
(iii) Company and its Subsidiaries may dispose of obsolete, worn out
or surplus property in the ordinary course of business;
(iv) Company and its Subsidiaries may sell or otherwise dispose of
assets in transactions that do not constitute Asset Sales; provided that the
--------
consideration received for such assets shall be in an amount at least equal
to the fair market value thereof; and
(v) Company and its Subsidiaries may acquire the business, property
or fixed assets of, or all of the stock or other evidence of beneficial
ownership
83
of, any Person or any division or line of business of any Person; provided
--------
that, (a) the aggregate amount of cash and noncash consideration (including
any Indebtedness assumed by Company or its Subsidiaries but excluding any
equity Securities issued by Company in connection with such transaction)
paid by Company and its Subsidiaries during the period beginning on the
Closing Date and continuing thereafter for all such acquisitions shall not
exceed $10,000,000, (b) after giving effect to each such acquisition,
Company shall be in compliance with all provisions of subsection 7.6 on a
pro forma basis, and (c) any business acquired in any such acquisition shall
not be materially different from the lines of business engaged in by Company
or its Subsidiaries as of the Closing Date.
7.8 CONSOLIDATED CAPITAL EXPENDITURES.
---------------------------------
Company shall not, and shall not permit its Subsidiaries to, make or
incur Consolidated Capital Expenditures, in any Fiscal Year, in an aggregate
amount in excess of $50,000,000 (the "MAXIMUM CONSOLIDATED CAPITAL EXPENDITURES
AMOUNT"); provided that the outstanding amount of Consolidated Capital
--------
Expenditures incurred by all Subsidiaries of the Company other than the wholly-
owned Subsidiary Guarantors (the "NON-SUBSIDIARY GUARANTOR CAPITAL
EXPENDITURES") shall not exceed, in any Fiscal Year, $10,000,000 (the "NON-
SUBSIDIARY GUARANTOR SUBLIMIT AMOUNT"); provided, further that the Maximum
-------- -------
Consolidated Capital Expenditures Amount and the Non-Subsidiary Guarantor
Sublimit Amount for any Fiscal Year shall be increased by an amount equal to the
excess, if any, of the Maximum Consolidated Capital Expenditures Amount and the
Non-Subsidiary Guarantor Sublimit Amount, respectively, for the previous Fiscal
Year (without giving effect to any adjustment made in accordance with this
proviso) over the actual amount of Consolidated Capital Expenditures and Non-
Subsidiary Guarantor Capital Expenditures, respectively, for such previous
Fiscal Year.
7.9 RESTRICTION ON LEASES.
---------------------
Company shall not, and shall not permit any of its Subsidiaries to,
become liable in any way, whether directly or by assignment or as a guarantor or
other surety, for the obligations of the lessee under any Operating Lease (other
than intercompany leases between Company and its wholly-owned Subsidiaries),
unless, immediately after giving effect to the incurrence of liability with
respect to such lease, the Consolidated Rental Payments at the time in effect
during the then current or any subsequent Fiscal Year will not exceed
$5,000,000.
7.10 SALES AND LEASE-BACKS.
---------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, become or remain liable as lessee or as a guarantor or
other surety with respect to any lease, whether an Operating Lease or a Capital
Lease, of
84
any property (whether real, personal or mixed), whether now owned or hereafter
acquired, (i) which Company or any of its Subsidiaries has sold or transferred
or is to sell or transfer to any other Person (other than Company or any of its
Subsidiaries) or (ii) which Company or any of its Subsidiaries intends to use
for substantially the same purpose as any other property which has been or is to
be sold or transferred by Company or any of its Subsidiaries to any Person
(other than Company or any of its Subsidiaries) in connection with such lease.
7.11 SALE OR DISCOUNT OF RECEIVABLES.
-------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, sell with recourse, or discount or otherwise sell for
less than the face value thereof, any of its notes or accounts receivable.
7.12 TRANSACTIONS WITH SHAREHOLDERS AND AFFILIATES.
---------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
directly or indirectly, enter into or permit to exist any transaction (including
the purchase, sale, lease or exchange of any property or the rendering of any
service) with any holder of 5% or more of any class of equity Securities of
Company or with any Affiliate of Company or of any such holder, on terms that
are less favorable to Company or that Subsidiary, as the case may be, than those
that might be obtained at the time from Persons who are not such a holder or
Affiliate; provided that the foregoing restriction shall not apply to (i) any
--------
transaction between Company and any of its wholly-owned Subsidiaries or between
any of its wholly-owned Subsidiaries or (ii) reasonable and customary fees paid
to members of the Boards of Directors of Company and its Subsidiaries.
7.13 DISPOSAL OF SUBSIDIARY STOCK.
----------------------------
Company shall not:
(i) directly or indirectly sell, assign, pledge or otherwise encumber
or dispose of any shares of capital stock or other equity Securities of any
of its Subsidiaries, except to qualify directors if required by applicable
law; or
(ii) permit any of its Subsidiaries directly or indirectly to sell,
assign, pledge or otherwise encumber or dispose of any shares of capital
stock or other equity Securities of any of its Subsidiaries (including such
Subsidiary), except to Company, another Subsidiary of Company, or to qualify
directors if required by applicable law.
85
7.14 CONDUCT OF BUSINESS.
-------------------
From and after the Closing Date, Company shall not, and shall not
permit any of its Subsidiaries to, engage in any business other than (i) the
businesses engaged in by Company and its Subsidiaries on the Closing Date and
similar or related businesses and (ii) such other lines of business as may be
consented to by Requisite Lenders.
7.15 AMENDMENTS OF DOCUMENTS RELATING TO SENIOR NOTES.
------------------------------------------------
Company shall not, and shall not permit any of its Subsidiaries to,
amend or otherwise change the terms of the Senior Note Agreement, or make any
payment consistent with an amendment thereof or change thereto, if the effect of
such amendment or change is to increase the interest rate on such Senior Notes,
change (to earlier dates) any dates upon which payments of principal or interest
are due thereon, change any event of default or condition to an event of default
with respect thereto (other than to eliminate any such event of default or
increase any grace period related thereto), change the redemption, prepayment or
defeasance provisions thereof, change the subordination provisions thereof (or
of any guaranty thereof), except as set forth in subsection 10.20, or change any
collateral therefor (other than to release such collateral), or if the effect of
such amendment or change, together with all other amendments or changes made, is
to increase materially the obligations of the obligor thereunder or to confer
any additional rights on the holders of such Senior Notes (or a trustee or other
representative on their behalf) which would be adverse to Company or Lenders.
7.16 FISCAL YEAR
-----------
Company shall not change its Fiscal Year-end from December 31 of each
calendar year.
SECTION 8. EVENTS OF DEFAULT
If any of the following conditions or events ("Events of Default")
shall occur:
8.1 FAILURE TO MAKE PAYMENTS WHEN DUE.
---------------------------------
Failure by Company to pay any installment of principal of any Loan when
due, whether at stated maturity, by acceleration, by notice of voluntary
prepayment, by mandatory prepayment or otherwise; failure by Company to pay when
due any amount payable to an Issuing Lender in reimbursement of any drawing
under a Letter of Credit; or failure by Company to pay any interest on any Loan
or any fee
86
or any other amount due under this Agreement within two Business Days (provided,
--------
that if Company does not receive notice of the amount of interest or fees due on
or before any date when such interest or fees are due and payable, the two
Business Day period shall not commence until the date of receipt of such notice)
after the date due; or
8.2 DEFAULT IN OTHER AGREEMENTS.
---------------------------
(i) Failure of Company or any of its Subsidiaries to pay when due any
principal of or interest on or any other amount payable in respect of one or
more items of Indebtedness (other than Indebtedness referred to in subsection
8.1) or Contingent Obligations in an individual principal amount of $500,000 or
more or with an aggregate principal amount of $500,000 or more, in each case
beyond the end of any grace period provided therefor; or (ii) breach or default
by Company or any of its Subsidiaries with respect to any other material term of
(a) one or more items of Indebtedness or Contingent Obligations in the
individual or aggregate principal amounts referred to in clause (i) above or (b)
any loan agreement, mortgage, indenture or other agreement relating to such
item(s) of Indebtedness or Contingent Obligation(s), if the effect of such
breach or default is to cause, or to permit the holder or holders of that
Indebtedness or Contingent Obligation(s) (or a trustee on behalf of such holder
or holders) to cause, that Indebtedness or Contingent Obligation(s) to become or
be declared due and payable prior to its stated maturity or the stated maturity
of any underlying obligation, as the case may be (upon the giving or receiving
of notice, lapse of time, both, or otherwise); or
8.3 BREACH OF CERTAIN COVENANTS.
---------------------------
Failure of Company to perform or comply with any term or condition
contained in subsection 2.5 or 6.2 or Section 7 of this Agreement; or
8.4 BREACH OF WARRANTY.
------------------
Any representation, warranty, certification or other statement made by
Company or any of its Subsidiaries in any Loan Document or in any statement or
certificate at any time given by Company or any of its Subsidiaries in writing
pursuant hereto or thereto or in connection herewith or therewith shall be false
in any material respect on the date as of which made; or
8.5 OTHER DEFAULTS UNDER LOAN DOCUMENTS.
-----------------------------------
Company shall default in the performance of or compliance with any term
contained in this Agreement or any of the other Loan Documents, other than any
such term referred to in any other subsection of this Section 8, and such
default shall not have been remedied or waived within 30 days after the earlier
of (i) an
87
officer of Company becoming aware of such default or (ii) receipt by Company of
notice from Agent or any Lender of such default; or
8.6 INVOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
-----------------------------------------------------
(i) A court having jurisdiction in the premises shall enter a decree
or order for relief in respect of Company or any of its Subsidiaries in an
involuntary case under the Bankruptcy Code or under any other applicable
bankruptcy, insolvency or similar law now or hereafter in effect, which decree
or order is not stayed; or any other similar relief shall be granted under any
applicable federal or state law; or (ii) an involuntary case shall be commenced
against Company or any of its Subsidiaries under the Bankruptcy Code or under
any other applicable bankruptcy, insolvency or similar law now or hereafter in
effect; or a decree or order of a court having jurisdiction in the premises for
the appointment of a receiver, liquidator, sequestrator, trustee, custodian or
other officer having similar powers over Company or any of its Subsidiaries, or
over all or a substantial part of its property, shall have been entered; or
there shall have occurred the involuntary appointment of an interim receiver,
trustee or other custodian of Company or any of its Subsidiaries for all or a
substantial part of its property; or a warrant of attachment, execution or
similar process shall have been issued against any substantial part of the
property of Company or any of its Subsidiaries, and any such event described in
this clause (ii) shall continue for 60 days unless dismissed, bonded or
discharged; or
8.7 VOLUNTARY BANKRUPTCY; APPOINTMENT OF RECEIVER, ETC.
---------------------------------------------------
(i) Company or any of its Subsidiaries shall have an order for relief
entered with respect to it or commence a voluntary case under the Bankruptcy
Code or under any other applicable bankruptcy, insolvency or similar law now or
hereafter in effect, or shall consent to the entry of an order for relief in an
involuntary case, or to the conversion of an involuntary case to a voluntary
case, under any such law, or shall consent to the appointment of or taking
possession by a receiver, trustee or other custodian for all or a substantial
part of its property; or Company or any of its Subsidiaries shall make any
assignment for the benefit of creditors; or (ii) Company or any of its
Subsidiaries shall be unable, or shall fail generally, or shall admit in writing
its inability, to pay its debts as such debts become due; or the Board of
Directors of Company or any of its Subsidiaries (or any committee thereof) shall
adopt any resolution or otherwise authorize any action to approve any of the
actions referred to in clause (i) above or this clause (ii); or
8.8 JUDGMENTS AND ATTACHMENTS.
-------------------------
Any money judgment, writ or warrant of attachment or similar process
involving in the aggregate at any time an amount in excess of $500,000 (not
adequately covered by insurance as to which a solvent and unaffiliated insurance
88
company has acknowledged coverage) shall be entered or filed against Company or
any of its Subsidiaries or any of their respective assets and shall remain
undischarged, unvacated, unbonded or unstayed for a period of 60 days (or in any
event later than five days prior to the date of any proposed sale thereunder);
or
8.9 DISSOLUTION.
-----------
Any order, judgment or decree shall be entered against Company or any
of its Subsidiaries decreeing the dissolution or split up of Company or that
Subsidiary and such order shall remain undischarged or unstayed for a period in
excess of 30 days; or
8.10 EMPLOYEE BENEFIT PLANS.
----------------------
There shall occur one or more ERISA Events which individually or in the
aggregate results in or might reasonably be expected to result in liability of
Company, any of its Subsidiaries or any of their respective ERISA Affiliates in
excess of $1,000,000 during the term of this Agreement; or there shall exist an
amount of unfunded benefit liabilities (as defined in Section 4001(a)(18) of
ERISA), individually or in the aggregate for all Pension Plans (excluding for
purposes of such computation any Pension Plans with respect to which assets
exceed benefit liabilities), which exceeds $5,000,000; or
8.11 CHANGE IN CONTROL.
-----------------
Any Person or any two or more Persons acting in concert shall have
acquired beneficial ownership (within the meaning of Rule 13d-3 of the
Securities and Exchange Commission under the Exchange Act), directly or
indirectly, of Securities of Company (or other Securities convertible into such
Securities) representing 25% or more of the combined voting power of all
Securities of Company entitled to vote in the election of directors, other than
Securities having such power only by reason of the happening of a contingency:
or
8.12 INVALIDITY OF SUBSIDIARY GUARANTIES; REPUDIATION OF OBLIGATIONS.
---------------------------------------------------------------
At any time after the execution and delivery thereof, (i) any of the
Subsidiary Guaranties for any reason, other than the satisfaction in full of all
Obligations, shall cease to be in full force and effect (other than in
accordance with its terms) or shall be declared to be null and void, or (ii) any
Loan Party shall contest the validity or enforceability of any Loan Document in
writing or deny in writing that it has any further liability, including without
limitation with respect to future advances by Lenders, under any Loan document
to which it is a party;
89
THEN (i) upon the occurrence of any Event of Default described in subsection 8.6
or 8.7, each of (a) the unpaid principal amount of and accrued interest on the
Loans, (b) an amount equal to the maximum amount that may at any time be drawn
under all Letters of Credit then outstanding (whether or not any beneficiary
under any such Letter of Credit shall have presented, or shall be entitled at
such time to present, the drafts or other documents or certificates required to
draw under such Letter of Credit), and (c) all other Obligations shall
automatically become immediately due and payable, without presentment, demand,
protest or other requirements of any kind, all of which are hereby expressly
waived by Company, and the obligation of each Lender to make any Loan, the
obligation of Issuing Lender to issue any Letter of Credit and the right of any
Lender to issue any Letter of Credit hereunder shall thereupon terminate, and
(ii) upon the occurrence and during the continuation of any other Event of
Default, Agent shall, upon the written request or with the written consent of
Requisite Lenders, by written notice to Company, declare all or any portion of
the amounts described in clauses (a) through (c) above to be, and the same shall
forthwith become, immediately due and payable, and the obligation of each Lender
to make any Loan, the obligation of Issuing Lender to issue any Letter of Credit
and the right of any Lender to issue any Letter of Credit hereunder shall
thereupon terminate; provided that the foregoing shall not affect in any way the
--------
obligations of Lenders under subsection 3.3C(i).
Any amounts described in clause (b) above, when received by Agent,
shall be held by Agent pursuant to the terms of the Collateral Account Agreement
and shall be applied as therein provided.
Notwithstanding anything contained in the second preceding paragraph,
if at any time within 60 days after an acceleration of the Loans pursuant to
clause (ii) of such paragraph Company shall pay all arrears of interest and all
payments on account of principal which shall have become due otherwise than as a
result of such acceleration (with interest on principal and, to the extent
permitted by law, on overdue interest, at the rates specified in this Agreement)
and all Events of Default and Potential Events of Default (other than non-
payment of the principal of and accrued interest on the Loans, in each case
which is due and payable solely by virtue of acceleration) shall be remedied or
waived pursuant to subsection 10.6, then all Lenders, by written notice to
Company, may at their option rescind and annul such acceleration and its
consequences; but such action shall not affect any subsequent Event of Default
or Potential Event of Default or impair any right consequent thereon. The
provisions of this paragraph are intended merely to bind Lenders to a decision
which may be made at the election of all Lenders and are not intended, directly
or indirectly, to benefit Company, and such provisions shall not at any time be
construed so as to grant Company the right to require Lenders to rescind or
annul any acceleration hereunder or to preclude Agent or Lenders from exercising
any of the rights or remedies available to them under any of the Loan Documents,
even if the conditions set forth in this paragraph are met.
90
SECTION 9. AGENT
9.1 APPOINTMENT.
-----------
UBOC is hereby appointed Agent hereunder and under the other Loan
Documents and each Lender hereby authorizes Agent to act as its agent in
accordance with the terms of this Agreement and the other Loan Documents. Agent
agrees to act upon the express conditions contained in this Agreement and the
other Loan Documents, as applicable. The provisions of this Section 9 are
solely for the benefit of Agent and Lenders and Company shall have no rights as
a third party beneficiary of any of the provisions thereof. In performing its
functions and duties under this Agreement, Agent shall act solely as an agent of
Lenders and does not assume and shall not be deemed to have assumed any
obligation towards or relationship of agency or trust with or for Company or any
of its Subsidiaries.
9.2 POWERS AND DUTIES; GENERAL IMMUNITY.
-----------------------------------
▇. ▇▇▇▇▇▇; DUTIES SPECIFIED. Each Lender irrevocably authorizes Agent to
take such action on such Lender's behalf and to exercise such powers, rights and
remedies hereunder and under the other Loan Documents as are specifically
delegated or granted to Agent by the terms hereof and thereof, together with
such powers, rights and remedies as are reasonably incidental thereto. Agent
shall have only those duties and responsibilities that are expressly specified
in this Agreement and the other Loan Documents. Agent may exercise such powers,
rights and remedies and perform such duties by or through its agents or
employees. Agent shall not have, by reason of this Agreement or any of the other
Loan Documents, a fiduciary relationship in respect of any Lender; and nothing
in this Agreement or any of the other Loan Documents, expressed or implied, is
intended to or shall be so construed as to impose upon Agent any obligations in
respect of this Agreement or any of the other Loan Documents except as expressly
set forth herein or therein.
B. NO RESPONSIBILITY FOR CERTAIN MATTERS. Agent shall not be responsible
to any Lender for the execution, effectiveness, genuineness, validity,
enforceability, collectibility or sufficiency of this Agreement or any other
Loan Document or for any representations, warranties, recitals or statements
made herein or therein or made in any written or oral statements or in any
financial or other statements, instruments, reports or certificates or any other
documents furnished or made by Agent to Lenders or by or on behalf of Company to
Agent or any Lender in connection with the Loan Documents and the transactions
contemplated thereby or for the financial condition or business affairs of
Company or any other Person liable for the payment of any Obligations, nor shall
Agent be required to ascertain or inquire as to the performance or observance of
any of the terms, conditions, provisions, covenants or agreements contained in
any of the Loan Documents or as to the use of the proceeds of the
91
Loans or the use of the Letters of Credit or as to the existence or possible
existence of any Event of Default or Potential Event of Default. Anything
contained in this Agreement to the contrary notwithstanding, Agent shall not
have any liability arising from confirmations of the amount of outstanding Loans
or the Letter of Credit Usage or the component amounts thereof.
C. EXCULPATORY PROVISIONS. Neither Agent nor any of its officers,
directors, employees or agents shall be liable to Lenders for any action taken
or omitted by Agent under or in connection with any of the Loan Documents except
to the extent caused by Agent's gross negligence or willful misconduct. Agent
shall be entitled to refrain from any act or the taking of any action (including
the failure to take an action) in connection with this Agreement or any of the
other Loan Documents or from the exercise of any power, discretion or authority
vested in it hereunder or thereunder unless and until Agent shall have received
instructions in respect thereof from Requisite Lenders (or such other Lenders as
may be required to give such instructions under subsection 10.6) and, upon
receipt of such instructions from Requisite Lenders (or such other Lenders, as
the case may be), Agent shall be entitled to act or (where so instructed)
refrain from acting, or to exercise such power, discretion or authority, in
accordance with such instructions. Without prejudice to the generality of the
foregoing, (i) Agent shall be entitled to rely, and shall be fully protected in
relying, upon any communication, instrument or document believed by it to be
genuine and correct and to have been signed or sent by the proper person or
persons, and shall be entitled to rely and shall be protected in relying on
opinions and judgments of attorneys (who may be attorneys for Company and its
Subsidiaries), accountants, experts and other professional advisors selected by
it; and (ii) no Lender shall have any right of action whatsoever against Agent
as a result of Agent acting or (where so instructed) refraining from acting
under this Agreement or any of the other Loan Documents in accordance with the
instructions of Requisite Lenders (or such other Lenders as may be required to
give such instructions under subsection 10.6).
D. AGENT ENTITLED TO ACT AS LENDER. The agency hereby created shall in
no way impair or affect any of the rights and powers of, or impose any duties or
obligations upon, Agent in its individual capacity as a Lender hereunder. With
respect to its participation in the Loans and the Letters of Credit, Agent shall
have the same rights and powers hereunder as any other Lender and may exercise
the same as though it were not performing the duties and functions delegated to
it hereunder, and the term "Lender" or "Lenders" or any similar term shall,
unless the context clearly otherwise indicates, include Agent in its individual
capacity. Agent and its Affiliates may accept deposits from, lend money to and
generally engage in any kind of banking, trust, financial advisory or other
business with Company or any of its Affiliates as if it were not performing the
duties specified herein, and may accept fees and other consideration from
Company for services in connection with this Agreement and otherwise without
having to account for the same to Lenders.
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9.3 REPRESENTATIONS AND WARRANTIES; NO RESPONSIBILITY FOR APPRAISAL OF
------------------------------------------------------------------
CREDITWORTHINESS.
----------------
Each Lender represents and warrants that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the making of the Loans and the issuance of
Letters of Credit hereunder and that it has made and shall continue to make its
own appraisal of the creditworthiness of Company and its Subsidiaries. Agent
shall not have any duty or responsibility, either initially or on a continuing
basis, to make any such investigation or any such appraisal on behalf of Lenders
or to provide any Lender with any credit or other information with respect
thereto, whether coming into its possession before the making of the Loans or at
any time or times thereafter, and Agent shall not have any responsibility with
respect to the accuracy of or the completeness of any information provided to
Lenders.
9.4 RIGHT TO INDEMNITY.
------------------
Each Lender, in proportion to its Pro Rata Share, severally agrees to
indemnify Agent, to the extent that Agent shall not have been reimbursed by
Company, for and against any and all liabilities, obligations, losses, damages,
penalties, actions, judgments, suits, costs, expenses (including counsel fees
and disbursements) or disbursements of any kind or nature whatsoever which may
be imposed on, incurred by or asserted against Agent in exercising its powers,
rights and remedies or performing its duties hereunder or under the other Loan
Documents or otherwise in its capacity as Agent in any way relating to or
arising out of this Agreement or the other Loan Documents; provided that no
--------
Lender shall be liable for any portion of such liabilities, obligations, losses,
damages, penalties, actions, judgments, suits, costs, expenses or disbursements
resulting from Agent's gross negligence or willful misconduct. If any indemnity
furnished to Agent for any purpose shall, in the opinion of Agent, be
insufficient or become impaired, Agent may call for additional indemnity and
cease, or not commence, to do the acts indemnified against until such additional
indemnity is furnished.
9.5 SUCCESSOR AGENT.
---------------
Agent may resign at any time by giving 30 days' prior written notice
thereof to Lenders and Company, and Agent may be removed at any time with or
without cause by an instrument or concurrent instruments in writing delivered to
Company and Agent and signed by Requisite Lenders. Upon any such notice of
resignation or any such removal, Requisite Lenders shall have the right, upon
five Business Days' notice to Company, to appoint a successor Agent. Upon the
acceptance of any appointment as Agent hereunder by a successor Agent, that
successor Agent shall thereupon succeed to and become vested with all the
rights, powers, privileges and duties of the retiring or removed Agent and the
retiring or
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removed Agent shall be discharged from its duties and obligations under this
Agreement. After any retiring or removed Agent's resignation or removal
hereunder as Agent, the provisions of this Section 9 shall inure to its benefit
as to any actions taken or omitted to be taken by it while it was Agent under
this Agreement.
9.6 COLLATERAL ACCOUNT AGREEMENT.
----------------------------
Each Lender hereby further authorizes Agent, on behalf of and for the
benefit of Lenders, to enter into the Collateral Account Agreement as secured
party, and each Lender agrees to be bound by the terms of the Collateral Account
Agreement; provided that Agent shall not enter into or consent to any amendment,
--------
modification, termination or waiver of any provision contained in the Collateral
Account Agreement without the prior consent of Requisite Lenders. Anything
contained in any of the Loan Documents to the contrary notwithstanding, Company,
Agent and each Lender hereby agree that no Lender shall have any right
individually to realize upon any of the collateral under the Collateral Account
Agreement, it being understood and agreed that all powers, rights and remedies
under the Collateral Account Agreement may be exercised solely by Agent for the
benefit of Lenders in accordance with the terms thereof.
SECTION 10. MISCELLANEOUS
10.1 ASSIGNMENTS AND PARTICIPATIONS IN LOANS AND LETTERS OF CREDIT.
-------------------------------------------------------------
A. GENERAL. Subject to subsection 10.1B, each Lender shall have the
right at any time to (i) sell, assign or transfer to any Eligible Assignee, or
(ii) sell participations to any Person in, all or any part of its Commitment or
any Loan or Loans made by it or its Letters of Credit or participations therein
or any other interest herein or in any other Obligations owed to it; provided
--------
that no such sale, assignment, transfer or participation shall, without the
consent of Company, require Company to file a registration statement with the
Securities and Exchange Commission or apply to qualify such sale, assignment,
transfer or participation under the securities laws of any state; provided,
--------
further that no such sale, assignment or transfer described in clause (i) above
-------
shall be effective unless and until an Assignment Agreement effecting such sale,
assignment or transfer shall have been accepted by Agent and recorded in the
Register as provided in subsection 10.1B(ii); and provided, further that no such
-------- -------
sale, assignment, transfer or participation of any Letter of Credit or any
participation therein may be made separately from a sale, assignment, transfer
or participation of a corresponding interest in the Commitment and the Loans of
the Lender effecting such sale, assignment, transfer or participation. Except as
otherwise provided in this subsection 10.1, no Lender shall, as between Company
and such Lender, be relieved of any of its obligations hereunder as a result of
any sale, assignment or transfer of, or any granting of participations in, all
or any
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part of its Commitment or the Loans, the Letters of Credit or participations
therein, or the other Obligations owed to such Lender.
B. ASSIGNMENTS.
(i) Amounts and Terms of Assignments. Each Commitment, Loan, Letter
--------------------------------
of Credit or participation therein, or other Obligation may (a) be
assigned in any amount to another Lender, or to an Affiliate of the
assigning Lender or another Lender, with the giving of notice to Company
and Agent or (b) be assigned in an aggregate amount of not less than
$7,500,000 (or such lesser amount as shall constitute the aggregate amount
of the Commitments, Loans, Letters of Credit and participations therein,
and other Obligations of the Assigning Lender) to any other Eligible
Assignee with the consent of Company and Agent (which consent of Company
shall not be unreasonably withheld or delayed). To the extent of any such
assignment in accordance with either clause (a) or (b) above, the
assigning Lender shall be relieved of its obligations with respect to its
Commitment, Loans, Letters of Credit or participations therein, or other
Obligations or the portion thereof so assigned. The parties to each such
assignment shall execute and deliver to Agent, for its acceptance and
recording in the Register, an Assignment Agreement, together with a
processing fee of $2,500 and such forms, certificates or other evidence,
if any, with respect to United States federal income tax withholding
matters as the assignee under such Assignment Agreement may be required to
deliver to Agent pursuant to subsection 2.7B(iii)(a). Upon such execution,
delivery, acceptance and recordation, from and after the effective date
specified in such Assignment Agreement, (y) the assignee thereunder shall
be a party hereto and, to the extent that rights and obligations hereunder
have been assigned to it pursuant to such Assignment Agreement, shall have
the rights and obligations of a Lender hereunder and (z) the assigning
Lender thereunder shall, to the extent that rights and obligations
hereunder have been assigned by it pursuant to such Assignment Agreement,
relinquish its rights (other than any rights which survive the termination
of this Agreement under subsection 10.9B) and be released from its
obligations under this Agreement (and, in the case of an Assignment
Agreement covering all or the remaining portion of an assigning Lender's
rights and obligations under this Agreement, such Lender shall cease to be
a party hereto; provided that, anything contained in any of the Loan
--------
Documents to the contrary notwithstanding, if such Lender is the Issuing
Lender with respect to any outstanding Letters of Credit such Lender shall
continue to have all rights and obligations of an Issuing Lender with
respect to such Letters of Credit until the cancellation or expiration of
such Letters of Credit and the reimbursement of any amounts drawn
thereunder). The Commitments hereunder shall be modified to reflect the
Commitment of such assignee and any remaining Commitment of such assigning
Lender and, if any such assignment occurs after the issuance of the Notes
hereunder, the assigning
95
Lender shall, upon the effectiveness of such assignment or as promptly
thereafter as practicable, surrender its Note to Agent for cancellation,
and thereupon new Notes shall be issued to the assignee and to the
assigning Lender, substantially in the form of Exhibit IV annexed hereto
----------
with appropriate insertions, to reflect the new Commitments of the
assignee and the assigning Lender.
(ii) Acceptance by Agent; Recordation in Register. Upon its receipt of
--------------------------------------------
an Assignment Agreement executed by an assigning Lender and an assignee
representing that it is an Eligible Assignee, together with the processing
and recordation fee referred to in subsection 10.1B(i) and any forms,
certificates or other evidence with respect to United States federal
income tax withholding matters that such assignee may be required to
deliver to Agent pursuant to subsection 2.7B(iii)(a), Agent shall, if
Agent and Company have consented to the assignment evidenced thereby (in
each case to the extent such consent is required pursuant to subsection
10.1B(i)), (a) accept such Assignment Agreement by executing a counterpart
thereof as provided therein (which acceptance shall evidence any required
consent of Agent to such assignment), (b) record the information contained
therein in the Register and (c) give prompt notice thereof to Company.
Agent shall maintain a copy of each Assignment Agreement delivered to and
accepted by it as provided in this subsection 10.1B(ii).
C. PARTICIPATIONS. The holder of any participation, other than an
Affiliate of the Lender granting such participation, shall not be entitled to
require such Lender to take or omit to take any action hereunder except action
directly affecting (i) the extension of the regularly scheduled maturity of any
portion of the principal amount of or interest on any Loan allocated to such
participation or (ii) a reduction of the principal amount of or the rate of
interest payable on any Loan allocated to such participation, and all amounts
payable by Company hereunder (including amounts payable to such Lender pursuant
to subsections 2.6D, 2.7 and 3.6) shall be determined as if such Lender had not
sold such participation. Company and each Lender hereby acknowledge and agree
that, solely for purposes of subsections 10.4 and 10.5, (a) any participation
will give rise to a direct obligation of Company to the participant and (b) the
participant shall be considered to be a "Lender".
D. ASSIGNMENTS TO FEDERAL RESERVE BANKS. In addition to the assignments
and participations permitted under the foregoing provisions of this subsection
10.1, any Lender may assign and pledge all or any portion of its Loans, the
other Obligations owed to such Lender, and its Note to any Federal Reserve Bank
as collateral security pursuant to Regulation A of the Board of Governors of the
Federal Reserve System and any operating circular issued by such Federal Reserve
Bank; provided that (i) no Lender shall, as between Company and such Lender, be
--------
relieved of any of its obligations hereunder as a result of any such assignment
and pledge and
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(ii) in no event shall such Federal Reserve Bank be considered to be a "Lender"
or be entitled to require the assigning Lender to take or omit to take any
action hereunder.
E. INFORMATION. Each Lender may furnish any information concerning
Company and its Subsidiaries in the possession of that Lender from time to time
to assignees and participants (including prospective assignees and
participants), subject to subsection 10.19.
F. REPRESENTATIONS OF LENDERS. Each Lender listed on the signature pages
hereof hereby represents and warrants (i) that it is an Eligible Assignee
described in clause (A) of the definition thereof; (ii) that it has experience
and expertise in the making of loans such as the Loans; and (iii) that it will
make its Loans for its own account in the ordinary course of its business and
without a view to distribution of such Loans within the meaning of the
Securities Act or the Exchange Act or other federal securities laws (it being
understood that, subject to the provisions of this subsection 10.1, the
disposition of such Loans or any interests therein shall at all times remain
within its exclusive control). Each Lender that becomes a party hereto pursuant
to an Assignment Agreement shall be deemed to agree that the representations and
warranties of such Lender contained in Section 2(c) of such Assignment Agreement
are incorporated herein by this reference.
10.2 EXPENSES.
--------
Whether or not the transactions contemplated hereby shall be
consummated, Company agrees to pay promptly (i) all the actual and reasonable
costs and expenses of preparation of the Loan Documents and any consents,
amendments, waivers or other modifications thereto; (ii) all the costs of
furnishing all opinions by counsel for Company (including any opinions requested
by Lenders as to any legal matters arising hereunder) and of Company's
performance of and compliance with all agreements and conditions on its part to
be performed or complied with under this Agreement and the other Loan Documents
including with respect to confirming compliance with environmental, insurance
and solvency requirements; (iii) the reasonable fees, expenses and disbursements
of counsel to Agent (including allocated costs of internal counsel) in
connection with the negotiation, preparation, execution and administration of
the Loan Documents and any consents, amendments, waivers or other modifications
thereto and any other documents or matters requested by Company; (iv) all other
actual and reasonable costs and expenses incurred by Agent in connection with
the syndication of the Commitments and the negotiation, preparation and
execution of the Loan Documents and any consents, amendments, waivers or other
modifications thereto and the transactions contemplated thereby; and (v) after
the occurrence of an Event of Default, all costs and expenses, including
reasonable attorneys' fees (including allocated costs of internal counsel) and
costs of settlement, incurred by Agent and Lenders in enforcing any Obligations
of or in collecting any payments due from Company hereunder or under the other
Loan
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Documents by reason of such Event of Default or in connection with any
refinancing or restructuring of the credit arrangements provided under this
Agreement in the nature of a "work-out" or pursuant to any insolvency or
bankruptcy proceedings.
10.3 INDEMNITY.
---------
In addition to the payment of expenses pursuant to subsection 10.2,
whether or not the transactions contemplated hereby shall be consummated,
Company agrees to defend (subject to Indemnitees' selection of counsel),
indemnify, pay and hold harmless Agent and Lenders, and the officers, directors,
employees, agents and affiliates of Agent and Lenders (collectively called the
"INDEMNITEES"), from and against any and all Indemnified Liabilities (as
hereinafter defined); provided that Company shall not have any obligation to any
--------
Indemnitee hereunder with respect to any Indemnified Liabilities to the extent
such Indemnified Liabilities arise solely from the gross negligence or willful
misconduct of that Indemnitee as determined by a final judgment of a court of
competent jurisdiction.
As used herein, "INDEMNIFIED LIABILITIES" means, collectively, any and
all liabilities, obligations, losses, damages (including natural resource
damages), penalties, actions, judgments, suits, claims (including Environmental
Claims), costs (including the costs of any investigation, study, sampling,
testing, abatement, cleanup, removal, remediation or other response action
necessary to remove, remediate, clean up or ▇▇▇▇▇ any Hazardous Materials
Activity), expenses and disbursements of any kind or nature whatsoever
(including the reasonable fees and disbursements of counsel for Indemnitees in
connection with any investigative, administrative or judicial proceeding
commenced or threatened by any Person, whether or not any such Indemnitee shall
be designated as a party or a potential party thereto, and any fees or expenses
incurred by Indemnitees in enforcing this indemnity), whether direct, indirect
or consequential and whether based on any federal, state or foreign laws,
statutes, rules or regulations (including securities and commercial laws,
statutes, rules or regulations and Environmental Laws), on common law or
equitable cause or on contract or otherwise, that may be imposed on, incurred
by, or asserted against any such Indemnitee, in any manner relating to or
arising out of (i) this Agreement or the other Loan Documents or the
transactions contemplated hereby or thereby (including Lenders' agreement to
make the Loans hereunder or the use or intended use of the proceeds thereof or
the issuance of Letters of Credit hereunder or the use or intended use of any
thereof, or any enforcement of any of the Loan Documents (including any sale of,
collection from, or other realization upon any of the Collateral under the
Collateral Account Agreement), (ii) the statements contained in the commitment
letter delivered by any Lender to Company with respect thereto, or (iii) any
Environmental Claim or any Hazardous Materials Activity relating to or arising
from, directly or indirectly, any past or present activity, operation, land
ownership, or practice of Company or any of its Subsidiaries.
98
To the extent that the undertakings to defend, indemnify, pay and hold
harmless set forth in this subsection 10.3 may be unenforceable in whole or in
part because they are violative of any law or public policy, Company shall
contribute the maximum portion that it is permitted to pay and satisfy under
applicable law to the payment and satisfaction of all Indemnified Liabilities
incurred by Indemnitees or any of them.
10.4 SET-OFF.
-------
In addition to any rights now or hereafter granted under applicable law
and not by way of limitation of any such rights, upon the occurrence and during
the continuance of any Event of Default each Lender is hereby authorized by
Company at any time or from time to time, without notice to Company or to any
other Person, any such notice being hereby expressly waived, to set off and to
appropriate and to apply any and all deposits (general or special, including
Indebtedness evidenced by certificates of deposit, whether matured or unmatured,
but not including trust accounts) and any other Indebtedness at any time held or
owing by that Lender to or for the credit or the account of Company against and
on account of the obligations and liabilities of Company to that Lender under
this Agreement, the Letters of Credit and participations therein and the other
Loan Documents, including all claims of any nature or description arising out of
or connected with this Agreement, the Letters of Credit and participations
therein or any other Loan Document, irrespective of whether or not (i) that
Lender shall have made any demand hereunder or (ii) the principal of or the
interest on the Loans or any amounts in respect of the Letters of Credit or any
other amounts due hereunder shall have become due and payable pursuant to
Section 8 and although said obligations and liabilities, or any of them, may be
contingent or unmatured.
10.5 RATABLE SHARING.
---------------
Lenders hereby agree among themselves that if any of them shall,
whether by voluntary payment (other than a voluntary prepayment of Loans made
and applied in accordance with the terms of this Agreement), by realization upon
security, through the exercise of any right of set-off or banker's lien, by
counterclaim or cross action or by the enforcement of any right under the Loan
Documents or otherwise, or as adequate protection of a deposit treated as cash
collateral under the Bankruptcy Code, receive payment or reduction of a
proportion of the aggregate amount of principal, interest, amounts payable in
respect of Letters of Credit, fees and other amounts then due and owing to that
Lender hereunder or under the other Loan Documents (collectively, the "AGGREGATE
AMOUNTS DUE" to such Lender) which is greater than the proportion received by
any other Lender in respect of the Aggregate Amounts Due to such other Lender,
then the Lender receiving such proportionately greater payment shall (i) notify
Agent and each other Lender of the receipt of such payment and (ii) apply a
portion of such payment to purchase participations (which it
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shall be deemed to have purchased from each seller of a participation
simultaneously upon the receipt by such seller of its portion of such payment)
in the Aggregate Amounts Due to the other Lenders so that all such recoveries of
Aggregate Amounts Due shall be shared by all Lenders in proportion to the
Aggregate Amounts Due to them; provided that if all or part of such
--------
proportionately greater payment received by such purchasing Lender is thereafter
recovered from such Lender upon the bankruptcy or reorganization of Company or
otherwise, those purchases shall be rescinded and the purchase prices paid for
such participations shall be returned to such purchasing Lender ratably to the
extent of such recovery, but without interest. Company expressly consents to
the foregoing arrangement and agrees that any holder of a participation so
purchased may exercise any and all rights of banker's lien, set-off or
counterclaim with respect to any and all monies owing by Company to that holder
with respect thereto as fully as if that holder were owed the amount of the
participation held by that holder.
10.6 AMENDMENTS AND WAIVERS.
----------------------
No amendment, modification, termination or waiver of any provision of
this Agreement or of the Notes, and no consent to any departure by Company
therefrom, shall in any event be effective without the written concurrence of
Requisite Lenders; provided that any such amendment, modification, termination,
--------
waiver or consent which: increases the amount of any of the Commitments or
reduces the principal amount of any of the Loans; increases the maximum amount
of Letters of Credit, changes in any manner the definition of "Pro Rata Share"
or the definition of "Requisite Lenders"; changes in any manner any provision of
this Agreement which, by its terms, expressly requires the approval or
concurrence of all Lenders; postpones the scheduled final maturity date of any
of the Loans; postpones the date or reduces the amount of any scheduled
reduction of the Commitments; postpones the date on which any interest or any
fees are payable; decreases the interest rate borne by any of the Loans (other
than any waiver of any increase in the interest rate applicable to any of the
Loans pursuant to subsection 2.2E) or the amount of any fees payable hereunder;
increases the maximum duration of Interest Periods permitted hereunder; reduces
the amount or postpones the due date of any amount payable in respect of, or
extends the required expiration date of, any Letter of Credit; changes in any
manner the obligations of Lenders relating to the purchase of participations in
Letters of Credit; or changes in any manner the provisions contained in
subsection 8.1 or this subsection 10.6 shall be effective only if evidenced by a
writing signed by or on behalf of all Lenders. In addition, (i) any amendment,
modification, termination or waiver of any of the provisions contained in
Section 4 shall be effective only if evidenced by a writing signed by or on
behalf of Agent and Requisite Lenders, (ii) no amendment, modification,
termination or waiver of any provision of any Note shall be effective without
the written concurrence of the Lender which is the holder of that Note, and
(iii) no amendment, modification, termination or waiver of any provision of
Section 9 or of any other provision of this Agreement which, by its terms,
expressly requires the
100
approval or concurrence of Agent shall be effective without the written
concurrence of Agent. Agent may, but shall have no obligation to, with the
concurrence of any Lender, execute amendments, modifications, waivers or
consents on behalf of that Lender. Any waiver or consent shall be effective
only in the specific instance and for the specific purpose for which it was
given. No notice to or demand on Company in any case shall entitle Company to
any other or further notice or demand in similar or other circumstances. Any
amendment, modification, termination, waiver or consent effected in accordance
with this subsection 10.6 shall be binding upon each Lender at the time
outstanding, each future Lender and, if signed by Company, on Company.
10.7 INDEPENDENCE OF COVENANTS.
-------------------------
All covenants hereunder shall be given independent effect so that if a
particular action or condition is not permitted by any of such covenants, the
fact that it would be permitted by an exception to, or would otherwise be within
the limitations of, another covenant shall not avoid the occurrence of an Event
of Default or Potential Event of Default if such action is taken or condition
exists.
10.8 NOTICES.
-------
Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed; provided that notices to Agent shall not be effective
--------
until received. For the purposes hereof, the address of each party hereto shall
be as set forth under such party's name on the signature pages hereof or (i) as
to Company and Agent, such other address as shall be designated by such Person
in a written notice delivered to the other parties hereto and (ii) as to each
other party, such other address as shall be designated by such party in a
written notice delivered to Agent.
10.9 SURVIVAL OF REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
------------------------------------------------------
A. All representations, warranties and agreements made herein shall
survive the execution and delivery of this Agreement and the making of the Loans
and the issuance of the Letters of Credit hereunder.
B. Notwithstanding anything in this Agreement or implied by law to the
contrary, the agreements of Company set forth in subsections 2.6D, 2.7, 3.5A,
3.6, 10.2, 10.3 and 10.4 and the agreements of Lenders set forth in subsections
9.2C, 9.4 and 10.5 shall survive the payment of the Loans, the cancellation or
expiration of the
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Letters of Credit and the reimbursement of any amounts drawn thereunder, and the
termination of this Agreement.
10.10 FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE.
-----------------------------------------------------
No failure or delay on the part of Agent or any Lender in the exercise
of any power, right or privilege hereunder or under any other Loan Document
shall impair such power, right or privilege or be construed to be a waiver of
any default or acquiescence therein, nor shall any single or partial exercise of
any such power, right or privilege preclude other or further exercise thereof or
of any other power, right or privilege. All rights and remedies existing under
this Agreement and the other Loan Documents are cumulative to, and not exclusive
of, any rights or remedies otherwise available.
10.11 MARSHALLING; PAYMENTS SET ASIDE.
-------------------------------
Neither Agent nor any Lender shall be under any obligation to marshal
any assets in favor of Company or any other party or against or in payment of
any or all of the Obligations. To the extent that Company makes a payment or
payments to Agent or Lenders (or to Agent for the benefit of Lenders), or Agent
or Lenders enforce any security interests or exercise their rights of setoff,
and such payment or payments or the proceeds of such enforcement or setoff or
any part thereof are subsequently invalidated, declared to be fraudulent or
preferential, set aside and/or required to be repaid to a trustee, receiver or
any other party under any bankruptcy law, any other state or federal law, common
law or any equitable cause, then, to the extent of such recovery, the obligation
or part thereof originally intended to be satisfied, and all Liens, rights and
remedies therefor or related thereto, shall be revived and continued in full
force and effect as if such payment or payments had not been made or such
enforcement or setoff had not occurred.
10.12 SEVERABILITY.
------------
In case any provision in or obligation under this Agreement or the
Notes shall be invalid, illegal or unenforceable in any jurisdiction, the
validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
10.13 OBLIGATIONS SEVERAL; INDEPENDENT NATURE OF LENDERS' RIGHTS.
----------------------------------------------------------
The obligations of Lenders hereunder are several and no Lender shall be
responsible for the obligations or Commitment of any other Lender hereunder.
Nothing contained herein or in any other Loan Document, and no action taken by
Lenders pursuant hereto or thereto, shall be deemed to constitute Lenders as a
102
partnership, an association, a joint venture or any other kind of entity. The
amounts payable at any time hereunder to each Lender shall be a separate and
independent debt, and each Lender shall be entitled to protect and enforce its
rights arising out of this Agreement and it shall not be necessary for any other
Lender to be joined as an additional party in any proceeding for such purpose.
10.14 HEADINGS.
--------
Section and subsection headings in this Agreement are included herein
for convenience of reference only and shall not constitute a part of this
Agreement for any other purpose or be given any substantive effect.
10.15 APPLICABLE LAW.
--------------
THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE
CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
10.16 SUCCESSORS AND ASSIGNS.
----------------------
This Agreement shall be binding upon the parties hereto and their
respective successors and assigns and shall inure to the benefit of the parties
hereto and the successors and assigns of Lenders (it being understood that
Lenders' rights of assignment are subject to subsection 10.1). Neither
Company's rights or obligations hereunder nor any interest therein may be
assigned or delegated by Company without the prior written consent of all
Lenders.
10.17 CONSENT TO JURISDICTION AND SERVICE OF PROCESS.
----------------------------------------------
ALL JUDICIAL PROCEEDINGS BROUGHT AGAINST COMPANY ARISING OUT OF OR
RELATING TO THIS AGREEMENT OR ANY OTHER LOAN DOCUMENT, OR ANY OBLIGATIONS
THEREUNDER, MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT
JURISDICTION IN THE STATE OF CALIFORNIA, COUNTY AND CITY OF LOS ANGELES. BY
EXECUTING AND DELIVERING THIS AGREEMENT, COMPANY, FOR ITSELF AND IN CONNECTION
WITH ITS PROPERTIES, IRREVOCABLY
(I) ACCEPTS GENERALLY AND UNCONDITIONALLY THE NONEXCLUSIVE
JURISDICTION AND VENUE OF SUCH COURTS;
(II) WAIVES ANY DEFENSE OF FORUM NON CONVENIENS;
103
(III) AGREES THAT SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDING IN ANY
SUCH COURT MAY BE MADE BY REGISTERED OR CERTIFIED MAIL, RETURN RECEIPT
REQUESTED, TO COMPANY AT ITS ADDRESS PROVIDED IN ACCORDANCE WITH SUBSECTION
10.8;
(IV) AGREES THAT SERVICE AS PROVIDED IN CLAUSE (III) ABOVE IS
SUFFICIENT TO CONFER PERSONAL JURISDICTION OVER COMPANY IN ANY SUCH
PROCEEDING IN ANY SUCH COURT, AND OTHERWISE CONSTITUTES EFFECTIVE AND
BINDING SERVICE IN EVERY RESPECT;
(V) AGREES THAT LENDERS RETAIN THE RIGHT TO SERVE PROCESS IN ANY
OTHER MANNER PERMITTED BY LAW OR TO BRING PROCEEDINGS AGAINST COMPANY IN THE
COURTS OF ANY OTHER JURISDICTION; AND
(VI) AGREES THAT THE PROVISIONS OF THIS SUBSECTION 10.17 RELATING TO
JURISDICTION AND VENUE SHALL BE BINDING AND ENFORCEABLE TO THE FULLEST
EXTENT PERMISSIBLE UNDER CALIFORNIA CODE OF CIVIL PROCEDURE SECTION 410.40
OR OTHERWISE.
10.18 WAIVER OF JURY TRIAL.
--------------------
EACH OF THE PARTIES TO THIS AGREEMENT HEREBY AGREES TO WAIVE ITS
RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION BASED UPON OR
ARISING OUT OF THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR ANY DEALINGS
BETWEEN THEM RELATING TO THE SUBJECT MATTER OF THIS LOAN TRANSACTION OR THE
LENDER/BORROWER RELATIONSHIP THAT IS BEING ESTABLISHED. The scope of this
waiver is intended to be all-encompassing of any and all disputes that may be
filed in any court and that relate to the subject matter of this transaction,
including contract claims, tort claims, breach of duty claims and all other
common law and statutory claims. Each party hereto acknowledges that this
waiver is a material inducement to enter into a business relationship, that each
has already relied on this waiver in entering into this Agreement, and that each
will continue to rely on this waiver in their related future dealings. Each
party hereto further warrants and represents that it has reviewed this waiver
with its legal counsel and that it knowingly and voluntarily waives its jury
trial rights following consultation with legal counsel. THIS WAIVER IS
IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING
(OTHER THAN BY A MUTUAL WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SUBSECTION
10.18 AND EXECUTED BY EACH OF THE PARTIES HERETO),
104
AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS, SUPPLEMENTS
OR MODIFICATIONS TO THIS AGREEMENT OR ANY OF THE OTHER LOAN DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THE LOANS MADE HEREUNDER. In the
event of litigation, this Agreement may be filed as a written consent to a trial
by the court.
10.19 CONFIDENTIALITY.
---------------
Each Lender shall hold all non-public information obtained pursuant to
the requirements of this Agreement which has been identified as confidential by
Company in accordance with such Lender's customary procedures for handling
confidential information of this nature and in accordance with safe and sound
banking practices, it being understood and agreed by Company that in any event a
Lender may make disclosures to Affiliates of such Lender or disclosures
reasonably required by any bona fide assignee, transferee or participant in
connection with the contemplated assignment or transfer by such Lender of any
Loans or any participations therein or disclosures required or requested by any
governmental agency or representative thereof or pursuant to legal process;
provided that, unless specifically prohibited by applicable law or court order,
--------
each Lender shall notify Company of any request by any governmental agency or
representative thereof (other than any such request in connection with any
examination of the financial condition of such Lender by such governmental
agency) for disclosure of any such non-public information prior to disclosure of
such information; and provided, further that in no event shall any Lender be
-------- -------
obligated or required to return any materials furnished by Company or any of its
Subsidiaries.
10.20 TERMINATION OF FOREIGN SUBSIDIARY GUARANTIES AND SUBORDINATION
--------------------------------------------------------------
AGREEMENTS.
----------
In the event that the holders of 66-2/3% or more but less than 100% of
the outstanding principal amount of the Senior Notes shall have executed and
delivered the Senior Note Waiver prior to the Closing Date and Subsidiary
Guaranties and Subsidiary Subordination Agreements shall have been executed and
delivered by the Group 2 Guarantors (as such term is defined in the Senior Note
Waiver), the Subsidiary Guaranties and the Subsidiary Subordination Agreements
of such Group 2 Guarantors shall terminate (simultaneously with respect to the
Bank Parties (as such term is defined in each of the Guaranties) and the holders
of the Senior Notes) upon the receipt by the Company of Senior Note Waivers
executed by the holders of 100% of the Senior Notes and thereafter neither the
holders of the Senior Notes nor the Bank Parties (as such term is defined in
each of the Guaranties) shall have any further rights under the Subsidiary
Guaranties or the Subsidiary Subordination Agreements executed and delivered by
such Group 2 Guarantors. If the same occurs after the Closing Date, the Company
shall promptly notify the Agent of the receipt of Senior Note Waivers from the
holders of 100% of the Senior Notes
105
and shall furnish to the Agent copies of all such Senior Note Waivers not
previously delivered to the Agent.
10.21 COUNTERPARTS; EFFECTIVENESS.
---------------------------
This Agreement and any amendments, waivers, consents or supplements
hereto or in connection herewith may be executed in any number of counterparts
and by different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document. This Agreement shall become effective upon the execution of a
counterpart hereof by each of the parties hereto and receipt by Company and
Agent of written or telephonic notification of such execution and authorization
of delivery thereof.
[Remainder of page intentionally left blank]
106
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
COMPANY:
VARCO INTERNATIONAL, INC.
[SIGNATURE ILLEGIBLE]
By: --------------------------------------
Title: Vice President - Finance
--------------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: Chief Financial Officer
LENDERS:
UNION BANK OF CALIFORNIA, N.A.
as a Lender, as Issuing Lender and as Agent
[SIGNATURE ILLEGIBLE]
By: ---------------------------------------
Title: V.P.
---------------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇, ▇▇.
▇-▇
▇▇▇▇▇▇ GUARANTY TRUST COMPANY OF NEW YORK, as a Lender
By: /s/ ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇
---------------------------------------
Title: ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ VICE PRESIDENT
Notice Address:
▇▇ ▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇ ▇▇▇▇▇▇▇
S-1
THE CHASE MANHATTAN BANK, as a Lender
By: /s/ ▇. ▇▇▇▇▇▇
---------------------------------------
Title: MANAGING DIRECTOR
---------------------------------------
Notice Address:
▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇ ▇▇▇▇▇
SCHEDULE 2.1
LENDERS' COMMITMENTS AND PRO RATA SHARES
Pro Rata
Lender Commitment Share
--------- ---------- ------------
Union Bank of California, N.A. $25,000,000 38.46153846%
The Chase Manhattan Bank 20,000,000 30.76923077%
▇▇▇▇▇▇ Guaranty Trust
Company of New York 20,000,000 30.76923077%
----------- -----------
TOTAL $65,000,000 100%
Schedule 5.1
Page 1 of 2
SUBSIDIARIES OF VARCO INTERNATIONAL, INC.
ALL 100% OWNED EXCEPT FOR VARCO U.K. LTD.
WHICH IS 100% OWNED BY RIG TECHNOLOGY LIMITED
DOMESTIC SUBSIDIARIES JURISDICTION OF
GUARANTORS INCORPORATION ADDRESS
---------- ------------- -------
Best Industries, Inc. Texas ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇
▇▇▇▇▇▇-▇▇▇▇▇▇ TOTCO, Inc. Texas ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇., ▇▇▇▇▇
Varco ▇▇▇▇▇▇▇, Inc. Texas ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇ ▇▇., ▇▇▇▇▇
FOREIGN
-------
Rig Technology Limited United Kingdom ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇
▇▇▇▇▇▇
Varco International Inc Pte Ltd Singapore ▇▇. ▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇ Oil Tools B.V. The Netherlands ▇▇▇▇▇▇▇▇▇▇▇▇▇▇ ▇▇
▇▇▇▇ ▇▇ ▇▇▇▇▇-▇▇▇▇
▇▇▇ ▇▇▇▇▇▇▇▇▇▇▇
Varco (U.K) Limited United Kingdom Forties Road, Montrose
Angus, Scotland
▇▇▇▇▇ ▇▇ FSC Inc. Barbados ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco International (Canada) Ltd. Alberta, Canada Bay ▇▇-▇▇▇▇ ▇▇▇ ▇▇▇.
▇.▇. ▇▇▇▇▇▇▇, ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇ ▇▇▇▇▇▇
Varco International De Venezuela C.A. Venezula ▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇, ▇▇ ▇▇▇▇▇
Schedule 5.1
Page 2 of 2
JURISDICTION OF
NON-MATERIAL SUBSIDIARIES INCORPORATION ADDRESS
------------------------- ------------- -------
Varco Marine Tools International, Inc. Texas ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco-Disc California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Best Disc Texas ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco Eastern, Inc. California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco International Finance N.V. Netherlands Antilles P.O. Box 507
Curacao
Varco Singapore, Ltd. California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco Middle East California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco Electronics, Inc. California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco Electronics Disc California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco De Mexico Holdings Inc. California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Varco Do Brazil Ltda. Brazil ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
Metrox, Inc. California ▇▇▇ ▇. ▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇
SCHEDULE 5.8
MATERIAL CONTRACTS
Note Agreement, dated as of July 1, 1992 between Varco International, Inc. and
the Purchasers named in Schedule 1 thereto, as amended by First Amendment to
Note Agreement, dated as of November 12, 1992; Waiver and Second Amendment to
Note Agreement, dated as of February 25, 1993; and Third Amendment and Waiver,
dated as of March 8, 1995.
Credit Agreement, dated as of February 25, 1993 among Varco International, Inc.,
Citicorp USA, Inc. and Citibank, N.A., as amended by First Amendment, dated as
of August 3, 1993; Second Amendment, dated as of September 23, 1993; Third
Amendment dated as of December 1, 1993; Forth Amendment dated as of May 12,
1994; Fifth Amendment and Waiver dated as of October 31, 1994; Sixth Amendment
dated as of March 17, 1995; Seventh Amendment dated as of December 31, 1995 and
Eighth Amendment dated as of June 9, 1997.
Lease dated March 7, 1975, between the Company and ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; ▇.▇.
▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, trustees of The ▇.▇. ▇▇▇▇▇▇ Family Trust; ▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇, executor of the estate of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, deceased; ▇. ▇▇▇▇▇▇▇▇ ▇▇.,
and ▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇, trustees of The ▇▇▇▇▇▇▇▇ Trust; ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, trustee
of The ▇▇▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇ Irrevocable Trust; and ▇▇▇ ▇. ▇▇▇▇▇▇▇, as amended by
amendments dated as of May 1, 1975, January 1, 1982, January 1, 1984, February
8, 1985, April 12, 1985, and January 11, 1996.
Standard Industrial Lease-Net dated September 29, 1988, between the Company and
▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇; ▇.▇. ▇▇▇▇▇▇ and ▇▇▇▇ ▇▇▇▇▇▇, trustees of The ▇.▇. ▇▇▇▇▇▇
Family Trust. ▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇, executor of the estate of ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇,
deceased; ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇ and ▇▇▇▇▇ ▇▇▇▇ ▇▇▇▇▇▇▇▇, trustees of The ▇▇▇▇▇▇▇▇
Family Trust and ▇▇▇ ▇. ▇▇▇▇▇▇▇, as amended by First Amendment dated as of
January 11, 1996.
Asset Purchase Agreement, dated as of April 10, 1992, between the Company and
Baroid Corporation, as amended by amendments dated May 28, 1992, June 30, 1992,
July 15, 1992 and two amendments dated July 16, 1992.
Environmental Remediation Agreement between the Company and Bariod Corporation
dated July 16, 1992.
SCHEDULE 7.1
CERTAIN EXISTING INDEBTEDNESS
1. Debt under credit facility granted by ABN AMRO Bank N.V. to ▇▇▇▇▇ ▇▇ Oil
Tools B.V. in the amount of 1,500,000 Dutch Guilders.
2. Guarantee by Company of ▇▇▇▇▇ ▇▇ Oil Tools B.V.'s obligations under item 1
above.
3. Debt under credit facility granted by F. Van Lanschot Bankiers N.V. to
▇▇▇▇▇ ▇▇ Oil Tools B.V. in the amount of 1,500,000 Dutch Guilders.
4. Guarantee by Company of ▇▇▇▇▇ ▇▇ Oil Tools B.V.'s obligations under item 3
above.
5. Debt under credit facility granted by Clydesdale Bank PLC to Varco (U.K.)
Limited:
Overdraft facility: 20,000 Pounds Sterling
Guarantees by Bank 1616 Pounds Sterling
Guarantee/Letter of
Credit facility: 218,500 Pounds Sterling
BACS facility: 165,000 Pounds Sterling
Access company card
scheme 137,500 Pounds Sterling
6. Debt relating to certain Letters of Credits issued by Royal Bank of
Scotland plc on behalf of Rig Technology Ltd. in the face amount of 22,777 Pound
Sterling
7. Existing Letters of Credit (as defined).
8. 8.95% Senior Notes due June 30, 1999 in the aggregate unpaid principal
amount of $30,000,000.
SCHEDULE 7.2
CERTAIN EXISTING LIENS
1. Liens granted by ▇▇▇▇▇ ▇▇ Oil Tools N.V. to secure a credit facility by ABN
AMRO Bank N.V. (Item 1 of Schedule 7.1).
2. Liens granted by ▇▇▇▇▇ ▇▇ Oil Tools N.V. to secure a credit facility by F.
Van Lanschot Bankiers N.V. (Item 3 Schedule 7.1).
3. Letter of set-off dated March 22, 1990 from Varco (U.K.) Limited to
Clydesdale Bank PLC.
SCHEDULE 7.3
CERTAIN EXISTING INVESTMENTS
Varco ▇▇-▇▇▇▇▇▇▇▇ Services
Company(VMS), Limited Liability Company* $361,500
Herramientas ▇▇▇▇▇, ▇.▇. de C.V.* $134,600
▇▇▇▇▇▇ Enterprises dba ▇▇▇▇▇▇ Oil Well Tools** $2,546,000
*49% Joint Ventures
** Deferred Purchase Price Under Purchase Agreement
SCHEDULE 7.4
CERTAIN EXISTING CONTINGENT OBLIGATIONS
1. Guarantee by Company of ▇▇▇▇▇ ▇▇ Oil Tools B.V.'s obligations under item 1
above.
2. Guarantee by Company of ▇▇▇▇▇ ▇▇ Oil Tools B.V.'s obligations under item 3
above.
3. Letters of Credits issued by Royal Bank of Scotland plc on behalf of Rig
Technology Ltd. in the face amount of 22,777 Pound Sterling.
EXHIBIT I
[FORM OF NOTICE OF BORROWING]
NOTICE OF BORROWING
Pursuant to that certain Credit Agreement dated as of June 27, 1997, as
amended, supplemented or otherwise modified to the date hereof (said Credit
Agreement, as so amended, supplemented or otherwise modified, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Varco International, Inc., a
California corporation ("COMPANY"), the financial institutions listed therein as
Lenders ("LENDERS"), and Union Bank of California, N.A., as Agent ("AGENT"),
this represents Company's request to borrow from Lenders, in accordance with
their applicable Pro Rata Shares, as follows:
1. Date of borrowing: ___________________, _________
-----------------
2. Amount of borrowing: $___________________
-------------------
3. Interest rate option: [_] a. Base Rate Loans
---------------------
[_] b. LIBOR Rate Loans with an initial Interest
Period of [two weeks] [one month] [two
months] [three months] [six months]
The proceeds of such Loans are to be deposited in Company's account at Agent.
The undersigned officer, to the best of his or her knowledge, and
Company certify that the following statements contained in clauses (i), (ii),
(iii), and if on the date hereof the Senior Notes are outstanding clause (iv),
are true and correct:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true, correct and complete in all
material respects on and as of the date hereof to the same extent as though
made on and as of the date hereof, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such
representations and warranties were true, correct and complete in all
material respects on and as of such earlier date;
(ii) No event has occurred and is continuing or would result from the
consummation of the borrowing contemplated hereby that would constitute an
Event of Default or a Potential Event of Default;
I-1
(iii)Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall be
performed or satisfied by it on or before the date hereof; and
(iv) After giving effect to the making of the requested Loan, and after
giving effect to the application of proceeds of such Loan, (i) Consolidated
Indebtedness (as defined in the Senior Note Agreement) will not exceed 50%
of Consolidated Net Tangible Assets (as defined in the Senior Note
Agreement) and (ii) the pro forma ratio of Consolidated Income Available for
Fixed Charges (as defined in the Senior Note Agreement) to Fixed Charges (as
defined in the Senior Note Agreement) for the four consecutive Fiscal
Quarters immediately preceding such date will be not less than 2.5 to 1.0.
DATED: ____________________ VARCO INTERNATIONAL, INC.
By: __________________________
Title: ________________________
I-2
EXHIBIT II
[FORM OF NOTICE OF CONVERSION/CONTINUATION]
NOTICE OF CONVERSION/CONTINUATION
Pursuant to that certain Credit Agreement dated as of June 27, 1997, as
amended, supplemented or otherwise modified to the date hereof (said Credit
Agreement, as so amended, supplemented or otherwise modified, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Varco International, Inc., a
California corporation ("COMPANY"), the financial institutions listed therein as
Lenders, and Union Bank of California, N.A., as Agent, this represents Company's
request to convert or continue Loans as follows:
1. Date of conversion/continuation: __________________, _______
-------------------------------
2. Amount of Loans being converted/continued: $___________________
-----------------------------------------
3. Nature of conversion/continuation:
---------------------------------
[_] a. Conversion of Base Rate Loans to LIBOR Rate Loans
[_] b. Conversion of LIBOR Rate Loans to Base Rate Loans
[_] c. Continuation of LIBOR Rate Loans as such
4. If Loans are being continued as or converted to LIBOR Rate Loans, the
duration of the new Interest Period that commences on the
conversion/continuation date: [two weeks] [one month] [two months]
[three months] [six months]
In the case of a conversion to or continuation of LIBOR Rate Loans, the
undersigned officer, to the best of his or her knowledge, and Company certify
that no Event of Default or Potential Event of Default has occurred and is
continuing under the Credit Agreement.
DATED: _____________________ VARCO INTERNATIONAL, INC.
By: __________________________
Title: ________________________
II-1
EXHIBIT III
[FORM OF NOTICE OF ISSUANCE OF LETTER OF CREDIT]
NOTICE OF ISSUANCE OF LETTER OF CREDIT
Pursuant to that certain Credit Agreement dated as of June 27, 1997, as
amended, supplemented or otherwise modified to the date hereof (said Credit
Agreement, as so amended, supplemented or otherwise modified, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined), by and among Varco International, Inc., a
California corporation ("COMPANY"), the financial institutions listed therein as
Lenders, and Union Bank of California, N.A., as Agent ("AGENT"), this represents
Company's request for the issuance of a Letter of Credit by Agent as follows:
1. Date of issuance of Letter of Credit: ________________, ________
------------------------------------
2. Type of Letter of Credit: [_] a. Commercial Letter of Credit
------------------------
[_] b. Standby Letter of Credit
3. Face amount of Letter of Credit: $________________________
-------------------------------
4. Expiration date of Letter of Credit: ________________, ________
-----------------------------------
5. Name and address of beneficiary:
-------------------------------
___________________________________________
___________________________________________
___________________________________________
___________________________________________
6. Attached hereto is the Issuing Lender's standard application for a
letter of credit and the executed signature page to such application
(it being understood that unless otherwise agreed between Company and
the Issuing Lender, the provisions set forth on the reverse side of
such standard application are not applicable).
The undersigned officer, to the best of his or her knowledge, and
Company certify that the following statements contained in clauses (i), (ii),
(iii), and if on the date hereof the Senior Notes are outstanding clause (iv),
are true and correct:
(i) The representations and warranties contained in the Credit
Agreement and the other Loan Documents are true, correct and complete in all
material respects on and as of the date hereof to the same extent as though
made on and as of the date hereof, except to the extent such representations
and warranties specifically relate to an earlier date, in which case such
representations
III-1
and warranties were true, correct and complete in all material respects on
and as of such earlier date;
(ii) No event has occurred and is continuing or would result from the
issuance of the Letter of Credit contemplated hereby that would constitute
an Event of Default or a Potential Event of Default;
(iii)Company has performed in all material respects all agreements
and satisfied all conditions which the Credit Agreement provides shall be
performed or satisfied by it on or before the date hereof; and
(iv) After giving effect to the issuance of the requested Letter of
Credit, (i) Consolidated Indebtedness (as defined in the Senior Note
Agreement) will not exceed 50% of Consolidated Net Tangible Assets (as
defined in the Senior Note Agreement) and (ii) the pro forma ratio of
Consolidated Income Available for Fixed Charges (as defined in the Senior
Note Agreement) to Fixed Charges (as defined in the Senior Note Agreement)
for the four consecutive Fiscal Quarters immediately preceding such date
will be not less than 2.5 to 1.0.
DATED: ____________________ VARCO INTERNATIONAL, INC.
By: __________________________
Title: ________________________
III-2
EXHIBIT IV
[FORM OF NOTE]
VARCO INTERNATIONAL, INC.
PROMISSORY NOTE DUE JUNE 30, 2004
$[1] [2]
{Closing Date}
FOR VALUE RECEIVED, VARCO INTERNATIONAL, INC., a California corporation
("COMPANY"), promises to pay to [3] ("PAYEE) or its registered assigns, on or
before ____________, 199_, the lesser of (x) [4] ($[1]) and (y) the unpaid
principal amount of all advances made by Payee to Company as Loans under the
Credit Agreement referred to below.
Company also promises to pay interest on the unpaid principal amount
hereof, from the date hereof until paid in full, at the rates and at the times
which shall be determined in accordance with the provisions of that certain
Credit Agreement dated as of June 27, 1997 by and among Company, the financial
institutions listed therein as Lenders, and Union Bank of California, N.A., as
Agent (said Credit Agreement, as it may be amended, supplemented or otherwise
modified from time to time, being the "CREDIT AGREEMENT", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
This Note is one of Company's "Notes" in the aggregate principal amount
of $[5] and is issued pursuant to and entitled to the benefits of the Credit
Agreement, to which reference is hereby made for a more complete statement of
the terms and conditions under which the Loans evidenced hereby were made and
are to be repaid.
All payments of principal and interest in respect of this Note shall be
made in lawful money of the United States of America in same day funds at the
Funding and Payment Office or at such other place as shall be designated in
writing for such purpose
[1] Insert amount of Lender's Commitment in numbers.
[2] Insert place of delivery of Note.
[3] Insert Lender's name in capital letters.
[4] Insert amount of Lender's Commitment in words.
[5] Insert aggregate amount of all Commitments in numbers.
IV-1
in accordance with the terms of the Credit Agreement. Unless and until an
Assignment Agreement effecting the assignment or transfer of this Note shall
have been accepted by Agent and recorded in the Register as provided in
subsection 10.1B(ii) of the Credit Agreement, Company and Agent shall be
entitled to deem and treat Payee as the owner and holder of this Note and the
Loans evidenced hereby. Payee hereby agrees, by its acceptance hereof, that
before disposing of this Note or any part hereof it will make a notation hereon
of all Loans evidenced by this Note and all principal payments previously made
hereunder and of the date to which interest hereon has been paid; provided,
--------
however, that the failure to make a notation of any payment made on this Note
-------
shall not limit or otherwise affect the obligations of Company hereunder with
respect to payments of principal of or interest on this Note.
Whenever any payment on this Note shall be stated to be due on a day
which is not a Business Day, such payment shall be made on the next succeeding
Business Day and such extension of time shall be included in the computation of
the payment of interest on this Note.
This Note is subject to mandatory prepayment as provided in subsection
2.4B(iii) of the Credit Agreement and to prepayment at the option of Company as
provided in subsection 2.4B(i) of the Credit Agreement.
THIS NOTE AND THE RIGHTS AND OBLIGATIONS OF COMPANY AND PAYEE HEREUNDER
SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN ACCORDANCE WITH,
THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION 1646.5 OF THE
CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS
PRINCIPLES.
Upon the occurrence of an Event of Default, the unpaid balance of the
principal amount of this Note, together with all accrued and unpaid interest
thereon, may become, or may be declared to be, due and payable in the manner,
upon the conditions and with the effect provided in the Credit Agreement.
The terms of this Note are subject to amendment only in the manner
provided in the Credit Agreement.
This Note is subject to restrictions on transfer or assignment as
provided in subsections 10.1 and 10.16 of the Credit Agreement.
No reference herein to the Credit Agreement and no provision of this
Note or the Credit Agreement shall alter or impair the obligations of Company,
which are absolute and unconditional, to pay the principal of and interest on
this Note at the place, at the respective times, and in the currency herein
prescribed.
IV-2
Company promises to pay all costs and expenses, including reasonable
attorneys' fees, all as provided in subsection 10.2 of the Credit Agreement,
incurred in the collection and enforcement of this Note. Company and any
endorsers of this Note hereby consent to renewals and extensions of time at or
after the maturity hereof, without notice, and hereby waive diligence,
presentment, protest, demand and notice of every kind and, to the full extent
permitted by law, the right to plead any statute of limitations as a defense to
any demand hereunder.
IN WITNESS WHEREOF, Company has caused this Note to be duly executed
and delivered by its officer thereunto duly authorized as of the date and at the
place first written above.
VARCO INTERNATIONAL, INC.
By: __________________________
Title: ________________________
IV-3
TRANSACTIONS
ON
NOTE
Outstanding
Type of Amount of Amount of Principal
Loan Made Loan Made Principal Paid Balance Notation
Date This Date This Date This Date This Date Made By
------ --------- --------- -------------- ----------- --------
IV-4
EXHIBIT V
[FORM OF COMPLIANCE CERTIFICATE]
COMPLIANCE CERTIFICATE
THE UNDERSIGNED HEREBY CERTIFY THAT:
(1) I am the duly elected [Title] of Varco International, Inc., a
California corporation ("COMPANY");
(2) I have reviewed the terms of that certain Credit Agreement dated
as of June 27, 1997, as amended, supplemented or otherwise modified to the
date hereof (said Credit Agreement, as so amended, supplemented or otherwise
modified, being the "CREDIT AGREEMENT", the terms defined therein and not
otherwise defined in this Certificate (including Attachment No. 1 annexed
hereto and made a part hereof) being used in this Certificate as therein
defined), by and among Company, the financial institutions listed therein as
Lenders, and Union Bank of California, N.A., as Agent, and the terms of the
other Loan Documents, and I have made, or have caused to be made under my
supervision, a review in reasonable detail of the transactions and condition
of Company and its Subsidiaries during the accounting period covered by the
attached financial statements;
(3) The examination described in paragraph (2) above did not disclose,
and I have no knowledge of, the existence of any condition or event which
constitutes an Event of Default or Potential Event of Default during or at
the end of the accounting period covered by the attached financial
statements or as of the date of this Certificate[, except as set forth
below].
[Set forth [below] [in a separate attachment to this Certificate] are
all exceptions to paragraph (3) above listing, in detail, the nature of the
condition or event, the period during which it has existed and the action which
Company has taken, is taking, or proposes to take with respect to each such
condition or event:
________________________________________________________________________________
________________________________________________________________________________
________________________________________________________________________________
_______________________________________________________________________________]
V-1
(4) Until the Senior Notes have been paid in full, the following
statement shall be true and correct and Company shall be deemed to represent
and warrant as of such Funding Date as follows; and
After giving effect to the making of each requested Loan or the
issuance of each requested Letter of Credit, and after giving effect to
the application of proceeds of such Loan, (i) Consolidated Indebtedness
(as defined in the Senior Note Agreement) does not exceed 50% of
Consolidated Net Tangible Assets (as defined in the Senior Note
Agreement) and (ii) the pro forma ratio of Consolidated Income
Available for Fixed Charges (as defined in the Senior Note Agreement)
to Fixed Charges (as defined in the Senior Note Agreement) for the four
consecutive Fiscal Quarters immediately preceding such date is not less
than 2.5 to 1.0.
The foregoing certifications, together with the computations set forth
in Attachment No. 1 annexed hereto and made a part hereof and the financial
statements delivered with this Certificate in support hereof, are made and
delivered this __________ day of _____________, [199_][200_] pursuant to
subsection 6.1(iv) of the Credit Agreement.
VARCO INTERNATIONAL, INC.
By: __________________________
Title: ________________________
By: __________________________
Title: ________________________
V-2
ATTACHMENT NO. 1
TO COMPLIANCE CERTIFICATE
This Attachment No. 1 is attached to and made a part of a Compliance
Certificate dated as of ____________, [199_] [200_] and pertains to the period
from ____________, [199_] [200_] to ____________, [199_] [200_]. Subsection
references herein relate to subsections of the Credit Agreement.
A. INDEBTEDNESS
1. Liability with respect to intercompany
Indebtedness to Company and the Subsidiary
Guarantors by Subsidiaries other than
wholly-owned Subsidiary Guarantors permitted
under subsection 7.1(iv): $_____________
2. Maximum liability with respect to intercompany
Indebtedness to Company and the Subsidiary
Guarantors by Subsidiaries other than
wholly-owned Subsidiary Guarantors permitted
under subsection 7.1(iv): $95,000,000
3. Liability of Subsidiaries other than
wholly-owned Subsidiary Guarantors with
respect to Indebtedness permitted under
subsection 7.1(vii): $_____________
4. Maximum liability of Subsidiaries other than
wholly-owned Subsidiary Guarantors with
respect to Indebtedness permitted under
subsection 7.1(vii): $1,000,000
5. Liability with respect to other
Indebtedness permitted under
subsection 7.1(vii): $_____________
6. Maximum liability with respect to other
Indebtedness permitted under
subsection 7.1(vii) (inclusive of (3)): $5,000,000
B. LIENS AND RELATED MATTERS
1. Liens permitted under
V-3
subsection 7.2(iii): $_____________
2. Amount of cash collateral
deposited in the Collateral Account
pursuant to subsection 7.2(iii)
((1) and (2) should be equal): $______________
3. Other Liens permitted under
subsection 7.2(iv): $_____________
4. Maximum amount of other Liens
permitted under subsection 7.2(iv): $1,000,000
C. INVESTMENTS; JOINT VENTURES
1. Other Investments permitted under
subsection 7.3(vii): $_____________
2. Maximum permitted under subsection 7.3(vii): $5,000,000
D. CONTINGENT OBLIGATIONS
1. Other Contingent Obligations permitted under
subsection 7.4(vii): $_____________
2. Maximum permitted under subsection 7.4(vii): $5,000,000
E. RESTRICTED JUNIOR PAYMENTS
1. Restricted Junior Payments permitted under
Section 7.5 $_____________
2. Consolidated Net Income after 6/30/1997
3. Maximum permitted under Section 7.5: $5,000,000, plus the
product of .25x(2)
F. MINIMUM INTEREST COVERAGE RATIO (for the four-Fiscal Quarter
period ending _____________, [199_]) [200_]
1. Consolidated Net Income after 6/30/97: $_____________
2. Consolidated Interest Expense: $_____________
V-4
3. Income tax expense: $_____________
4. Total depreciation expense: $_____________
5. Total amortization expense: $_____________
6. Other non-cash items reducing Consolidated
Net Income: $_____________
7. Other non-cash items increasing Consolidated
Net Income: $_____________
8. Consolidated EBITDA (1+2+3+4+5+6-7): $_____________
9. Interest Coverage Ratio (8):(2): ____:1.00
10. Minimum ratio required under subsection 7.6A: 3:00:1.00
G. MINIMUM FIXED CHARGE COVERAGE RATIO (for the four-Fiscal Quarter
period ending _____________, [199_]) [200_]
1. Consolidated EBITDA (E.8 above): $_____________
2. Consolidated Capital Expenditures: $_____________
3. Cash paid for income taxes: $_____________
4. Consolidated Interest Expense: $_____________
5. Consolidated Scheduled Payments: $_____________
6. Cash dividends or other
cash distributions paid
on account of any shares of
any class of Company stock: $_____________
7. Adjusted EBITDA (1-2-3): $_____________
8. Consolidated Fixed Charges (4+5+6): $_____________
9. Fixed Charge Coverage Ratio (7):(8): ____:1.00
10. Minimum ratio required under subsection 7.6B: 1.25:1.00
V-5
H. MAXIMUM LEVERAGE RATIO (as of _____________, [199_]) [200_]
1. Consolidated Total Debt: $_____________
2. Consolidated EBITDA: $_____________
3. Leverage Ratio (1):(2): ____:1.00
4. Maximum ratio permitted under subsection
7.6C: Closing Date through 6/30/98 1.00:1.00
7/1/98 and thereafter .75:1.00
I. MINIMUM CONSOLIDATED CURRENT RATIO (for the [______-]
Fiscal Quarter ending ____________, [199_]) [200_]
1. Consolidated Current Assets: $_____________
2. Consolidated Current Liabilities: $_____________
3. Consolidated Current Ratio (1):(2): ____:1.00
4. Minimum required under subsection 7.6D: 2.00:1.00
J. MINIMUM CONSOLIDATED TANGIBLE NET WORTH (as of
____________, [199_] [200_])
1. Consolidated Net Worth: $_____________
2. Consolidated Net Income after 6/30/97: $_____________
3. Consolidated net proceeds from sale
of equity securities: $_____________
4. Minimum required under subsection
7.6E ($130,000,000+.75(2)+.75(3): $_____________
K. FUNDAMENTAL CHANGES; ASSET SALES AND ACQUISITIONS
1. Aggregate amount of cash and noncash
consideration (including any Indebtedness
assumed by Company or its Subsidiaries
but excluding any equity Securities issued
by Company in connection with such transaction)
paid by Company and its Subsidiaries
V-6
under subsection 7.7(v): $______________
2. Maximum permitted under subsection 7.7(v): $10,000,000
L. CONSOLIDATED CAPITAL EXPENDITURES
1. Non-Subsidiary Guarantor Capital
Expenditures permitted under subsection 7.8
for Fiscal Year-to-date: $_____________
2. Excess of Non-Subsidiary Guarantor
Capital Expenditures over
Non-Subsidiary Guarantor Sublimit
permitted under subsection 7.8
for the previous Fiscal Year: $_____________
3. Maximum amount of Non-Subsidiary
Guarantor Sublimit permitted under
subsection 7.8 for any Fiscal Year: $10,000,000, plus
(2)
4. Consolidated Capital Expenditures
permitted under subsection 7.8
for Fiscal Year-to-date: $_____________
5. Excess of Maximum Consolidated
Capital Expenditures Amount over
Consolidated Capital Expenditures
permitted under subsection 7.8
for the previous Fiscal Year: $_____________
6. Maximum amount of Consolidated Capital
Expenditures permitted under subsection 7.8 for
any Fiscal Year: $50,000,000, plus
(5)
M. LEASES
1. Consolidated Rental Payments in effect during
the then current or any Fiscal Year: $_____________
2. Maximum permitted under subsection 7.9: $5,000,000
V-7
June __, ▇▇▇▇
▇▇▇▇▇ ▇▇▇▇ ▇▇ ▇▇▇▇▇▇▇▇▇▇, N.A.
[Address of Agent]
and
The Lenders Listed on
Schedule A Hereto
Re: Credit Agreement dated as of June 27, 1997 among Varco
International, Inc., the financial institutions listed therein as
Lenders, and Union Bank of California, N.A., as Agent
Ladies and Gentlemen:
We have acted as counsel to Varco International, Inc., a California
corporation (the "Company"), in connection with that certain Credit Agreement
dated as of June 27, 1997 (the "Credit Agreement") among Company, the financial
institutions listed therein as Lenders ("Lenders"), and Union Bank of
California, N.A., as Agent (the "Agent").
This opinion is furnished to you pursuant to subsection 4.1D of the
Credit Agreement. Capitalized terms used herein which are defined in the Credit
Agreement shall have the respective meanings set forth in the Credit Agreement
unless otherwise defined herein. As used herein, the term "Domestic Subsidiary"
shall mean any of the following: Best Industries, Inc., a Texas corporation,
▇▇▇▇▇▇-▇▇▇▇▇▇ TOTCO, Inc., a Texas corporation, and Varco ▇▇▇▇▇▇▇, Inc., a Texas
corporation (collectively, the "Domestic Subsidiaries").
In connection with this opinion, we have examined executed counterparts
of the following documents (collectively, the "Loan Documents"):
(a) The Credit Agreement;
(b) The Notes delivered today (the "Notes");
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 2.
(c) The Collateral Account Agreement, dated as of June 27, 1997 made
by and among the Company and the Agent in favor of the Lenders (the "Collateral
Account Agreement");
(d) Amended and Restated Guaranties, each dated as of June 27,
1997 (individually, a "Domestic Guaranty" and collectively, the "Domestic
Guaranties"); made by each Domestic Subsidiary, respectively, in favor of the
Guaranteed Partners
(e) Amended and Restated Subordination Agreements, each dated as of
June 27, 1997, between the Company and each Domestic Subsidiary, respectively
(individually, a "Domestic Subordination Agreement" and collectively, the
"Domestic Subordination Agreements").
In addition, we have examined certificates of officers of the Company
and each Domestic Subsidiary, copies of which are being delivered to you
concurrently with the delivery of this opinion, and originals or copies of such
corporate documents and records of the Company and each Domestic Subsidiary,
certificates of public officials, and such other documents, and have made such
investigation of law, as we have deemed necessary or appropriate for the
purposes of this opinion.
We have assumed (i) the genuineness on all documents examined by us of
all signatures of all parties other than the Company and each Domestic
Subsidiary (ii) the conformity to the originals of all documents submitted to us
as copies, and (iii) the authenticity of all documents submitted to us as
originals.
We have assumed that each Lender will seek to enforce its rights and
remedies under the Loan Documents only in good faith, in accordance with
statutory and other legal requirements, in a commercially reasonable manner.
We have assumed that each Lender is either (a) a national banking
association created and operating under and pursuant to the laws of the United
States, (b) a state bank created and operating under and pursuant to the laws of
California or any other state of the United States, or (c) a bank holding
company or subsidiary of a bank holding company as defined in the Bank Holding
Company Act of 1956, as amended, and that no Lender has any present intent to
transfer Loans made by it to a person or entity that is not exempt from
California usury laws.
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 3.
We note that the Domestic Guaranties and the Domestic Subordination
Agreements are stated to be governed by the laws of the State of New York.
However, for the purposes of this opinion, we have assumed that, notwithstanding
the foregoing, the Domestic Guaranties and the Domestic Subordination Agreements
are governed by the laws of the State of California.
We have also assumed the Agent, each Lender and the Issuing Lender are
corporations duly organized, validly existing and in good standing under the
laws of the jurisdiction of their incorporation and have the requisite corporate
authority to execute and deliver each Loan Document to which they are a party
and for the purposes of the opinions set forth in paragraph 4 below, that each
Loan Document to which they are a party has been duly executed and delivered by
the Agent, each Lender or the Issuing Lender, as the case may be, and
constitutes its valid, binding and enforceable obligation.
Based upon the foregoing, and in reliance thereon, and subject to the
qualifications and limitations set forth below, we are of the opinion that:
1. The Company is a corporation duly incorporated, validly existing
and in good standing under the laws of the State of California. The Company is
duly qualified or registered to transact business and is in good standing as a
foreign corporation in Louisiana and Texas and each other jurisdiction in which
the conduct of its business or the ownership or leasing of its properties make
such qualification or registration necessary, except where the failure to be so
duly qualified or in good standing would not have and could not reasonably be
expected to have a Material Adverse Effect. The Company has all requisite
corporate power and authority to own and operate its properties, to carry on its
business as now conducted and to enter into and perform the Agreement and the
other Loan Documents to which it is a party.
2. The execution, delivery and performance by the Company of the
Credit Agreement, the Notes, the Collateral Account Agreement, and the Domestic
Subordination Agreements are within the Company's corporate powers, have been
duly authorized by all necessary corporate action, and do not contravene the
Company's Restated Articles of Incorporation, as amended, or By-Laws. The
execution and delivery and, as of the date hereof, the performance by the
Company of the Credit Agreement, the Notes, and the Domestic Subordination
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 4.
Agreements do not contravene any contractual restriction binding on or affecting
the Company or any law binding on or affecting the Company.
3. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution and delivery or, as of the date hereof, the performance by the
Company of the Credit Agreement, the Notes, or the Domestic Subordination
Agreements.
4. The Credit Agreement, the Notes, the Collateral Account Agreement,
the Domestic Guaranties and the Domestic Subordination Agreements have been duly
executed and delivered by each Loan Party which is a party thereto. The Credit
Agreement, the Notes and the Collateral Account Agreement constitute legal,
valid and binding obligations of the Company enforceable against the Company in
accordance with their respective terms. The Domestic Guaranties and the Domestic
Subordination Agreements constitute legal, valid and binding obligations of each
Loan Party which is a party thereto, enforceable against each such Loan Party in
accordance with their respective terms.
5. Based solely on the representation and warranty of the Company set
forth in subsection 5.1D of the Credit Agreement, all Subsidiaries of the
Company are listed on Schedule 5.1 to the Agreement. To our knowledge, the
Company has good marketable title to all of the shares it purports to own of the
capital stock of each Domestic Subsidiary, free and clear in each case of any
Lien, and all such shares have been duly issued and are fully paid and
nonassessable. Each Domestic Subsidiary is duly organized, validly existing and
in good standing under the laws of the jurisdiction of its organization, is duly
qualified to do business as a foreign corporation and is in good standing as
such in each jurisdiction in which the conduct of its business or the ownership
or leasing of its properties makes such qualification necessary, except where
the failure to be so duly qualified or in good standing would not have and could
not reasonably be expected to have a Material Adverse Effect. Each Domestic
Subsidiary has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and to enter into and
perform the Domestic Guaranty and the Domestic Subordination Agreement to which
it is a party. The execution, delivery and performance by each Domestic
Subsidiary of the Domestic Guaranty and the Domestic Subordination Agreement to
which it is a party are within its corporate powers, have been duly authorized
by all necessary corporate
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 5.
action, and do not contravene its articles of incorporation or by-laws. The
execution and delivery and, as of the date hereof, the performance by each
Domestic Subsidiary of the Domestic Guaranty and the Domestic Subordination
Agreement to which it is a party do not contravene or any contractual
restriction binding on or affecting such Domestic Subsidiary or any law binding
on or affecting such Domestic Subsidiary.
6. No authorization or approval or other action by, and no notice to
or filing with, any governmental authority or regulatory body is required for
the due execution and delivery or, as of the date hereof, the performance by the
Domestic Subsidiary of the Domestic Guaranty and the Domestic Subordination
Agreement.
7. To our knowledge, there is no pending or threatened, action, suit,
investigation, litigation or proceeding affecting the Company or any of its
Subsidiaries or the properties of the Company or any of its Subsidiaries before
any court, governmental agency or arbitrator, department, commission, board,
bureau or instrumentality, domestic or foreign (a) that, individually or in the
aggregate, would or could reasonably be expected to have a Material Adverse
Effect or (b) which purports to affect the legality, validity or enforceability
of the Agreement or any other Loan Document.
8. Neither the Company nor any Domestic Subsidiary is (i) a "public
utility company" or a "holding company", or an "affiliate" or a "subsidiary
company", as such terms are defined in the Public Utility Holding Company Act of
1935, (ii) a "public utility", as defined in the Federal Power Act, (iii) a
"common carrier", as defined in the Interstate Commerce Act, (iv) an "investment
company" or a company "controlled" by an "investment company" as such terms are
defined in the Investment Company Act of 1940, each as amended, or subject to
any Federal or state statute or regulation limiting its ability to incur
indebtedness for money borrowed or otherwise limiting its ability to enter into
or perform its obligations under the Agreement or the other Loan Documents to
which it is a party.
9. To our knowledge, neither Company nor any of its Subsidiaries is in
default in the performance, observance or fulfillment of any of the obligations,
covenants, or conditions contained in any contractual obligation of the Company
or of such Subsidiary, except where the consequences, direct or indirect, of
such default or defaults, if any, would not have and could not reasonably be
expected to
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 6.
have a Material Adverse Effect and no condition exists that, with
the giving of due notice or the lapse of time or both, would constitute such a
default, except where the consequences, direct or indirect, of such default, if
any, would not have and could not reasonably be expected to have a Material
Adverse Effect.
10. All present and future advances constitute or will constitute
"Senior Indebtedness", as such term is defined in the Senior Note Agreement. All
of the Obligations of the Company and all of the obligations of the Guarantors,
under the Credit Agreement and the other Loan Documents, including without
limitation, the Loans made or to be made by the Lenders to the Company on the
date hereof in the aggregate principal amount of approximately $17.0 million and
the Letter of Credit issued or to be issued by the Issuing Lender to Citibank,
N.A. on the date hereof in the face amount of approximately $9.7 million have
been incurred in compliance with each of the provisions of the Senior Note
Purchase Agreement, including without limitation Sections 7.4 and 7.5 thereof.
Insofar as the opinion set forth in the preceding sentence depend on the factual
matters set forth therein, we have relied on the Pro Forma Compliance
Certificate of the Controller-Treasurer of the Company attached hereto as
Schedule B.
The opinions set forth above are subject to the following
qualifications and limitations:
(a) In rendering the opinions expressed in paragraph 1 and the third
sentence of paragraph 5 above, we have relied solely upon certificates of state
officials of various states.
(b) In rendering the opinions expressed in the second sentence of
paragraph 2, in the last sentence of paragraph 5 and in paragraph 9 above, we
have only reviewed the agreements and instruments filed by Company with the
Securities and Exchange Commission as material agreements pursuant to the rules
and regulations thereof, and such opinions are limited to such agreements and
instruments. No agreement not so filed has been identified to us as material by
the Company.
(c) In rendering the opinions set forth above which are qualified by
the phrase "to our knowledge" we have, with your consent, advised you only as to
such current, actual knowledge as we have obtained from lawyers in our firm who
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 7.
have given substantive attention to matters concerning the Company and its
Subsidiaries.
(d) Enforceability of the Loan Documents may be limited by bankruptcy,
insolvency, reorganization or other laws relating to or affecting the
enforcement of creditors' rights generally, including, state and federal
fraudulent conveyance or fraudulent transfer laws.
(e) Enforceability of the Loan Documents may be limited by general
principles of equity (without regard to whether enforcement is considered in a
proceeding at law or in equity) including limitations on the availability of
specific performance, injunctive relief or other equitable remedies.
(f) The unenforceability, under certain circumstances, of (i)
provisions expressly or by implication waiving broadly or vaguely stated rights,
unknown or future rights, or defenses to obligations or rights granted by law,
where such waivers are against public policy or prohibited by law, (ii)
provisions to the effect that every right or remedy is cumulative and may be
exercised in addition to or with any other right or remedy or that the election
of some particular remedy or remedies does not preclude recourse or one or more
others, or (iii) provisions that a failure to exercise or a delay in exercising
any right or remedy will not operate as a waiver of any such right or remedy.
(g) The Loan Documents may be subject to, or limited by, the
unenforceability under certain circumstances of provisions imposing penalties,
forfeitures, late payment charges or an increase in the interest rate upon the
occurrence of a default.
(h) Requirements in the Loan Documents specifying that provisions
thereof may only be waived in writing may not be valid, binding or enforceable
to the extent that an oral agreement or an implied agreement by trade practice
or course of conduct has been created modifying any provisions of such
documents.
(i) The unenforceability, under certain circumstances, of provisions
indemnifying a party against liability for its own wrongful or negligent acts or
where such indemnification is contrary to public policy.
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 8.
(j) We express no opinion with respect to the enforceability of any
provisions of the Loan Documents providing for any Loan Party to make all
payments without defense, setoff, recoupment, counterclaim or cross-claim.
(k) We express no opinion with respect to the enforceability of any
provisions with respect to choice of law contained in the Guaranties or the
Subordination Agreements.
(l) Section 1717 of the California Civil Code provides, that, in any
action on a contract where such contract specifically provides that attorneys'
fees and costs incurred to enforce the provisions of such contract shall be
awarded to one of the parties, the prevailing party, whether it is the party
specified in the contract or not, shall be entitled to reasonable attorneys'
fees in addition to costs and necessary disbursements.
(m) We express no opinion with respect to the enforceability of
provisions of the Loan Documents which (i) appoints one party as an
attorney-in-fact for an adverse party or (iii) purport to waive any applicable
statute of limitations.
(n) With respect to the enforceability of the Domestic Guaranties, we
advise you that there is California statutory and judicial authority to the
effect that a surety may be exonerated if the creditor alters the original
obligation of the principal without the consent of the guarantor, elects
remedies for default that may impair the subrogation rights of the guarantor
against the principal, or otherwise takes any action which materially prejudices
the guarantor. See, e.g., California Civil Code Section 2810; UNION BANK ▇.
▇▇▇▇▇▇▇, 265 Cal. App. 2d 40, 71 Cal. ▇▇▇▇. ▇▇ (1968). Although we believe that
the explicit language contained in a guaranty waiving such rights should be
enforceable, we express no opinion with respect to the effect of: (x) any
modifications or alterations affecting the obligations of the principal, (y) any
election of remedies by Lender following the occurrence of an event of default
under any of the Loan Documents, or (z) any other action by Lender which
materially prejudices the Guarantor, if such modification, election or action
occurs without notice to the Guarantor and without granting the Guarantor an
opportunity to cure such event of default.
The opinions stated herein apply only insofar as the laws of the State
of California, the general corporate law of the State of Texas, and the federal
laws of
Union Bank of California, N.A.
Lenders Listed on Schedule A
June __, 1997
Page 9.
the United States of America may be concerned, and we express no opinion with
respect to the laws of any other jurisdiction.
The foregoing opinion is limited to the matters expressly set forth
therein, and no opinion is implied or may be inferred beyond the matters
expressly stated therein. The foregoing opinion is rendered only to the Agent,
the Lenders and the Issuing Lender and any assignee or participant permitted by
the Credit Agreement and is solely for their benefit in connection with the
Agreement and the other Loan Documents and the transactions contemplated thereby
and may not be relied upon by the Agent, the Lenders or the Issuing Lender for
any other purpose, or delivered to or relied upon by any other person for any
purpose without our prior written consent. We further advise you that we are not
assuming any obligation to notify you of any changes in the foregoing opinion as
a result of any facts or any change in any law or court decision which may come
to our attention in the future which may cause a change in such opinion.
Very truly yours,
[NOTE: In the event that Subsidiaries of the Company other than Domestic
Subsidiaries execute and deliver an Amended and Restated Subordination
Agreements, the opinions with respect to the Company shall be expanded to cover
such Amended and Restated Subordination Agreements.]
EXHIBIT VII
[FORM OF OPINION OF O'MELVENY & ▇▇▇▇▇ LLP]
[O'M&M Letterhead]
{Closing Date}
1 9 9 7
881,575-165
[doc ID]
Union Bank of California, N.A.
[Address
of Agent]
and
The Lenders Party to the Credit
Agreement Referenced Below
Re: Loans to Varco International, Inc.
----------------------------------
Ladies and Gentlemen:
We have acted as counsel to Union Bank of California, N.A., as Agent
(in such capacity, "Agent"), in connection with the preparation and delivery of
a Credit Agreement dated as of June 27, 1997 (the "Credit Agreement") among
Varco International, Inc., a California corporation ("Company"), the financial
institutions listed therein as lenders, and Agent and in connection with the
preparation and delivery of certain related documents.
We have participated in various conferences with representatives of
Company and Agent and conferences and telephone calls with Pircher, ▇▇▇▇▇▇▇ &
▇▇▇▇▇, counsel to Company, during which the Credit Agreement and related matters
have been discussed, and we have also participated in the meeting held on the
date hereof (the "Closing") incident to the funding of the initial loans made
under the Credit Agreement. We have reviewed the forms of the Credit Agreement
and the exhibits thereto, including the forms of the promissory notes annexed
thereto (the "Notes"), and the opinion of Pircher, ▇▇▇▇▇▇▇ & ▇▇▇▇▇ (the
"Opinion") and the officers' certificates and other
VII-1
Page 2 - [Agent] - [Date]
documents delivered at the Closing. We have assumed the genuineness of all
signatures, the authenticity of all documents submitted to us as originals or
copies and the due authority of all persons executing the same, and we have
relied as to factual matters on the documents that we have reviewed.
Although we have not independently considered all of the matters
covered by the Opinion to the extent necessary to enable us to express the
conclusions therein stated, we believe that the Credit Agreement and the
exhibits thereto are in substantially acceptable legal form and that the Opinion
and the officers' certificates and other documents delivered in connection with
the execution and delivery of, and as conditions to the making of the initial
loans under, the Credit Agreement and the Notes are substantially responsive to
the requirements of the Credit Agreement.
Respectfully submitted,
VII-2
EXHIBIT VIII
[FORM OF ASSIGNMENT AGREEMENT]
ASSIGNMENT AGREEMENT
This ASSIGNMENT AGREEMENT (this "AGREEMENT") is entered into by and
between the parties designated as Assignor ("ASSIGNOR") and Assignee
("ASSIGNEE") above the signatures of such parties on the Schedule of Terms
attached hereto and hereby made an integral part hereof (the "SCHEDULE OF
TERMS") and relates to that certain Credit Agreement described in the Schedule
of Terms (said Credit Agree ment, as amended, supplemented or otherwise modified
to the date hereof and as it may hereafter be amended, supplemented or otherwise
modified from time to time, being the "CREDIT AGREEMENT", the terms defined
therein and not otherwise defined herein being used herein as therein defined).
IN CONSIDERATION of the agreements, provisions and covenants herein
contained, the parties hereto hereby agree as follows:
SECTION 1. ASSIGNMENT AND ASSUMPTION.
-------------------------
(a) Effective upon the Settlement Date specified in Item 4 of the
Schedule of Terms (the "SETTLEMENT DATE"), Assignor hereby sells and assigns to
Assignee, without recourse, representation or warranty (except as expressly set
forth herein), and Assignee hereby purchases and assumes from Assignor, that
percentage interest in all of Assignor's rights and obligations as a Lender
arising under the Credit Agreement and the other Loan Documents with respect to
Assignor's Commitment and outstanding Loans, if any, which represents, as of the
Settlement Date, the percentage interest specified in Item 3 of the Schedule of
Terms of all rights and obligations of Lenders arising under the Credit
Agreement and the other Loan Documents with respect to the Commitments and any
outstanding Loans (the "ASSIGNED SHARE"). Without limiting the generality of
the foregoing, the parties hereto hereby expressly acknowledge and agree that
any assignment of all or any portion of Assignor's rights and obligations
relating to Assignor's Commitment shall include (i) in the event Assignor is an
Issuing Lender with respect to any outstanding Letters of Credit (any such
Letters of Credit being "ASSIGNOR LETTERS OF CREDIT"), the sale to Assignee of a
participation in the Assignor Letters of Credit and any drawings thereunder as
contemplated by subsection 3.1C of the Credit Agreement and (ii) the sale to
Assignee of a ratable portion of any participations previously purchased by
Assignor pursuant to said subsection 3.1C with respect to any Letters of Credit
other than the Assignor Letters of Credit.
VIII-1
(b) In consideration of the assignment described above, Assignee hereby
agrees to pay to Assignor, on the Settlement Date, the principal amount of any
outstanding Loans included within the Assigned Share, such payment to be made by
wire transfer of immediately available funds in accordance with the applicable
payment instructions set forth in Item 5 of the Schedule of Terms.
(c) Assignor hereby represents and warrants that Item 3 of the Schedule
of Terms correctly sets forth the amount of the Commitment and the Pro Rata
Share corresponding to the Assigned Share.
(d) Assignor and Assignee hereby agree that, upon giving effect to the
assignment and assumption described above, (i) Assignee shall be a party to the
Credit Agreement and shall have all of the rights and obligations under the Loan
Documents, and shall be deemed to have made all of the covenants and agreements
contained in the Loan Documents, arising out of or otherwise related to the
Assigned Share, and (ii) Assignor shall be absolutely released from any of such
obligations, covenants and agreements assumed or made by Assignee in respect of
the Assigned Share. Assignee hereby acknowledges and agrees that the agreement
set forth in this Section 1(d) is expressly made for the benefit of Company,
Agent, Assignor and the other Lenders and their respective successors and
permitted assigns.
(e) Assignor and Assignee hereby acknowledge and confirm their
understanding and intent that (i) this Agreement shall effect the assignment by
Assignor and the assumption by Assignee of Assignor's rights and obligations
with respect to the Assigned Share, (ii) any other assignments by Assignor of a
portion of its rights and obligations with respect to the Commitments and any
outstanding Loans shall have no effect on the Commitment and the Pro Rata Share
corresponding to the Assigned Share as set forth in Item 3 of the Schedule of
Terms or on the interest of Assignee in any outstanding Loans corresponding
thereto, and (iii) from and after the Settlement Date, Agent shall make all
payments under the Credit Agreement in respect of the Assigned Share (including
all payments of principal and accrued but unpaid interest, commitment fees and
letter of credit fees with respect thereto) (A) in the case of any such interest
and fees that shall have accrued prior to the Settlement Date, to Assignor, and
(B) in all other cases, to Assignee; provided that Assignor and Assignee shall
--------
make payments directly to each other to the extent necessary to effect any
appropriate adjustments in any amounts distributed to Assignor and/or Assignee
by Agent under the Loan Documents in respect of the Assigned Share in the event
that, for any reason whatsoever, the payment of consideration contemplated by
Section 1(b) occurs on a date other than the Settlement Date.
VIII-2
SECTION 2. CERTAIN REPRESENTATIONS, WARRANTIES AND AGREEMENTS.
--------------------------------------------------
(a) Assignor represents and warrants that it is the legal and
beneficial owner of the Assigned Share, free and clear of any adverse claim.
(b) Assignor shall not be responsible to Assignee for the execution,
effectiveness, genuineness, validity, enforceability, collectibility or
sufficiency of any of the Loan Documents or for any representations, warranties,
recitals or statements made therein or made in any written or oral statements or
in any financial or other statements, instruments, reports or certificates or
any other documents furnished or made by Assignor to Assignee or by or on behalf
of Company or any of its Subsidiaries to Assignor or Assignee in connection with
the Loan Documents and the transactions contemplated thereby or for the
financial condition or business affairs of Company or any other Person liable
for the payment of any Obligations, nor shall Assignor be required to ascertain
or inquire as to the performance or observance of any of the terms, conditions,
provisions, covenants or agreements contained in any of the Loan Documents or as
to the use of the proceeds of the Loans or the use of the Letters of Credit or
as to the existence or possible existence of any Event of Default or Potential
Event of Default.
(c) Assignee represents and warrants that it is an Eligible Assignee;
that it has experience and expertise in the making of loans such as the Loans;
that it has acquired the Assigned Share for its own account in the ordinary
course of its business and without a view to distribution of the Loans within
the meaning of the Securities Act or the Exchange Act or other federal
securities laws (it being understood that, subject to the provisions of
subsection 10.1 of the Credit Agreement, the disposition of the Assigned Share
or any interests therein shall at all times remain within its exclusive
control); and that it has received, reviewed and approved a copy of the Credit
Agreement (including all Exhibits and Schedules thereto).
(d) Assignee represents and warrants that it has received from Assignor
such financial information regarding Company and its Subsidiaries as is
available to Assignor and as Assignee has requested, that it has made its own
independent investigation of the financial condition and affairs of Company and
its Subsidiaries in connection with the assignment evidenced by this Agreement,
and that it has made and shall continue to make its own appraisal of the
creditworthiness of Company and its Subsidiaries. Assignor shall have no duty
or responsibility, either initially or on a continuing basis, to make any such
investigation or any such appraisal on behalf of Assignee or to provide Assignee
with any other credit or other informa tion with respect thereto, whether coming
into its possession before the making of the initial Loans or at any time or
times thereafter, and Assignor shall not have any responsibility with respect to
the accuracy of or the completeness of any information provided to Assignee.
VIII-3
(e) Each party to this Agreement represents and warrants to the other
party hereto that it has full power and authority to enter into this Agreement
and to perform its obligations hereunder in accordance with the provisions
hereof, that this Agreement has been duly authorized, executed and delivered by
such party and that this Agreement constitutes a legal, valid and binding
obligation of such party, enforceable against such party in accordance with its
terms, except as enforceability may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium or other similar laws affecting
creditors' rights generally and by general principles of equity.
SECTION 3. MISCELLANEOUS.
-------------
(a) Each of Assignor and Assignee hereby agrees from time to time, upon
request of the other such party hereto, to take such additional actions and to
execute and deliver such additional documents and instruments as such other
party may reasonably request to effect the transactions contemplated by, and to
carry out the intent of, this Agreement.
(b) Neither this Agreement nor any term hereof may be changed, waived,
discharged or terminated, except by an instrument in writing signed by the party
(including, if applicable, any party required to evidence its consent to or
acceptance of this Agreement) against whom enforcement of such change, waiver,
discharge or termination is sought.
(c) Unless otherwise specifically provided herein, any notice or other
communication herein required or permitted to be given shall be in writing and
may be personally served, telexed or sent by telefacsimile or United States mail
or courier service and shall be deemed to have been given when delivered in
person or by courier service, upon receipt of telefacsimile or telex, or three
Business Days after depositing it in the United States mail with postage prepaid
and properly addressed. For the purposes hereof, the notice address of each of
Assignor and Assignee shall be as set forth on the Schedule of Terms or, as to
either such party, such other address as shall be designated by such party in a
written notice delivered to the other such party. In addition, the notice
address of Assignee set forth on the Schedule of Terms shall serve as the
initial notice address of Assignee for purposes of subsection 10.8 of the Credit
Agreement.
(d) In case any provision in or obligation under this Agreement shall
be invalid, illegal or unenforceable in any jurisdiction, the validity, legality
and enforceability of the remaining provisions or obligations, or of such
provision or obligation in any other jurisdiction, shall not in any way be
affected or impaired thereby.
VIII-4
(e) THIS AGREEMENT AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE CONSTRUED AND ENFORCED IN
ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF CALIFORNIA (INCLUDING SECTION
1646.5 OF THE CIVIL CODE OF THE STATE OF CALIFORNIA), WITHOUT REGARD TO
CONFLICTS OF LAWS PRINCIPLES.
(f) This Agreement shall be binding upon, and shall inure to the
benefit of, the parties hereto and their respective successors and assigns.
(g) This Agreement may be executed in one or more counterparts and by
different parties hereto in separate counterparts, each of which when so
executed and delivered shall be deemed an original, but all such counterparts
together shall constitute but one and the same instrument; signature pages may
be detached from multiple separate counterparts and attached to a single
counterpart so that all signature pages are physically attached to the same
document.
(h) This Agreement shall become effective upon the date (the "EFFECTIVE
DATE") upon which all of the following conditions are satisfied: (i) the
execution of a counterpart hereof by each of Assignor and Assignee, (ii) the
receipt by Agent of the processing and recordation fee referred to in subsection
10.1B(i) of the Credit Agreement, (iii) in the event Assignee is a Non-US Lender
(as defined in subsection 2.7B(iii)(a) of the Credit Agreement), the delivery by
Assignee to Agent of such forms, certificates or other evidence with respect to
United States federal income tax withholding matters as Assignee may be required
to deliver to Agent pursuant to said subsection 2.7B(iii)(a), (iv) the execution
of a counterpart hereof by Agent as evidence of its acceptance hereof in
accordance with subsection 10.1B(ii) of the Credit Agreement, (v) the receipt by
Agent of originals or telefacsimiles of the counterparts described above and
authorization of delivery thereof, and (vi) the recordation by Agent in the
Register of the pertinent information regarding the assignment effected hereby
in accordance with subsection 10.1B(ii) of the Credit Agreement.
IN WITNESS WHEREOF, the parties hereto have caused this Agreement to be
duly executed and delivered by their respective officers thereunto duly
authorized, such execution being made as of the Effective Date in the applicable
spaces provided on the Schedule of Terms.
[Remainder of page intentionally left blank]
VIII-5
SCHEDULE OF TERMS
1. Company: Varco International, Inc.
-------
2. Name and Date of Credit Agreement: Credit Agreement dated as of June 27,
---------------------------------
1997 by and among Varco International, Inc., the financial institutions
listed therein as Lenders, and Union Bank of California, N.A., as Agent.
3. Amounts:
-------
(a) Aggregate Commitments of all Lenders: $________
(b) Assigned Share/Pro Rata Share: _____%
(c) Amount of Assigned Share of Commitments: $________
4. Settlement Date: _____________, 199_
---------------
5. Payment Instructions:
--------------------
ASSIGNOR: ASSIGNEE:
____________________________ _____________________________
____________________________ _____________________________
____________________________ _____________________________
Attention: _________________ Attention: __________________
Reference: _________________ Reference: __________________
6. Notice Addresses:
----------------
ASSIGNOR: ASSIGNEE:
____________________________ _____________________________
____________________________ _____________________________
____________________________ _____________________________
____________________________ _____________________________
7. Signatures:
----------
[NAME OF ASSIGNOR], [NAME OF ASSIGNEE],
as Assignor as Assignee
By: __________________ By: __________________
Title: _______________ Title: _______________
Consented to in accordance with subsection Accepted in accordance with
10.1B(i) of the Credit Agreement subsection 10.1B(ii) of the
Credit Agreement
VARCO INTERNATIONAL, INC. UNION BANK OF CALIFORNIA, N.A.,
as Agent
By: __________________ By: __________________
Title: _______________ Title: _______________
VIII-6
EXHIBIT IX-A
[FORM OF SUBORDINATION AGREEMENT]
AMENDED AND RESTATED SUBORDINATION AGREEMENT
This Amended and Restated Subordination Agreement (this "AGREEMENT")
is made as of June __, 1997, by and between VARCO INTERNATIONAL, INC.
("HOLDER"), a California corporation, and _______________ ("GUARANTOR"), a
______________ corporation and a wholly-owned Subsidiary (as defined herein) of
Holder.
RECITALS
--------
A. Citicorp USA, Inc., Citibank N.A. and Holder are parties to that
certain Credit Agreement dated as of February 25, 1993, as amended (the
"CITICORP AGREEMENT"). Holder now seeks to terminate the commitments under such
agreement and enter into a new credit facility evidenced by the Credit Agreement
referred to below.
▇. ▇▇▇▇▇▇, Union Bank of California, N.A. as Issuing Bank (the
"ISSUING BANK"), Union Bank of California, N.A., as Agent (the "AGENT") and
certain financial institutions ("LENDERS") have entered into that certain Credit
Agreement dated as of June 27, 1997 (as amended, restated, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT").
▇. ▇▇▇▇▇▇ has entered into that certain Note Agreement dated as of
July 1, 1992 (as heretofore or hereafter amended, supplemented or restated from
time to time, the "SENIOR NOTE AGREEMENT") pursuant to which Holder has issued
$50,000,000 principal amount of 8.95% Senior Notes due June 30, 1999 (the
"SENIOR NOTES"). (The holders of the Senior Notes, together with the Lenders,
the Issuing Bank and the Agent and their respective successors and assigns, the
"SENIOR CREDITORS").
▇. ▇▇▇▇▇▇ is a creditor of Guarantor. The obligations of Guarantor
to Holder are evidenced by a promissory note (the "NOTE") executed by Guarantor
in favor of Holder.
E. Guarantor has previously executed and delivered a Subordination
Agreement dated as of _________________ (the "EXISTING SUBORDINATION AGREEMENT")
which subordinates the right to payment of sums from time to time owed to Holder
by Guarantor.
F. In order to induce Lenders to make certain loans to Holder and to
induce Issuing Bank to provide certain letters of credit for the account of
Holder and its Subsidiaries, potentially including the Guarantor, and to induce
the holders of the Senior Notes to enter into a waiver and consent with respect
to the Senior Note Agreement, (i) Guarantor has agreed to unconditionally
guarantee the Obligations (as defined in the Credit Agreement) under the Credit
Agreement and related documents and to
IX-A-1
unconditionally guarantee the obligations under the Senior Note Agreement and
the Senior Notes pursuant to that certain Amended and Restated Guaranty executed
by the Guarantor (the "GUARANTY") and (ii) Holder has agreed to subordinate its
right to payment of sums from time to time owed to Holder by Guarantor,
including without limitation all claims evidenced by the Note, to the prior
payment in full in cash of the obligations owed by the Guarantor to the Senior
Creditors under the Guaranty. For purposes of this Agreement, the term
"SUBSIDIARY" or "SUBSIDIARIES" means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (1) the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether or not at
the time capital stock of any other class or classes of such corporation shall
or might have voting power upon the occurrence of any contingency), (2) the
interest in the capital or profits of such partnership or joint venture, or (3)
the beneficial interest of such trust or estate, is at the time directly or
indirectly owned by the Holder, by the Holder and one or more other Subsidiaries
of the Holder, or by one or more other Subsidiaries of the Holder.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and the
provisions set forth herein, the receipt and sufficiency of which are hereby
acknowledged, Holder and Guarantor hereby agree that the Existing Subordination
Agreement is hereby amended and restated in its entirety as follows for the
benefit of the Senior Creditors:
1. Subordination to Senior Debt. Notwithstanding any other provision
----------------------------
of the Note, any document or instrument executed by Guarantor in connection
therewith, or any collateral now or hereafter securing the Note, all
indebtedness evidenced by the Note (including without limitation of principal
interest, fees and charges) and all other present or future liabilities,
indebtedness or obligations of Guarantor to Holder (collectively, the
"SUBORDINATED DEBT") are and shall be subordinate and junior in right of
payment, to the extent and in the manner hereinafter set forth, to the prior
indefeasible payment in full in cash of all Senior Debt. "SENIOR DEBT" means (a)
all indebtedness, liabilities and obligations of every kind or nature, absolute
or contingent, now existing or hereafter arising, of Guarantor, its successors
and assigns, to any Senior Creditor, its successors and assigns, including
without limitation the principal of, and interest on (including any interest
accruing after the commencement of any bankruptcy, insolvency or similar
proceeding with respect to Guarantor or Holder and any interest which would have
accrued but for the commencement of any such proceeding), and all premiums,
fees, charges and expenses, constituting Guaranteed Obligations (as defined in
the Guaranty) or otherwise arising under or in connection with the Guaranty, the
Obligations (as defined in the Credit Agreement), the Senior Notes or the Senior
Note Agreement; and (b) any modifications, amendments, renewals or extensions of
any indebtedness or obligation described in clause (a) above. Except as and to
the extent provided hereinafter, Holder will not ask, demand, ▇▇▇ for, take or
receive from Guarantor, by set-off or in any other manner, whether through the
realization of value from collateral or otherwise, direct or indirect payment
(whether in cash or property), of the whole or any part of the Subordinated
Debt, or any transfer of any property in payment thereof or as security
therefor, unless and until the Guaranty has terminated.
IX-A-2
2. Distributions in Liquidation and Bankruptcy. In the event of any
-------------------------------------------
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of Guarantor or the proceeds thereof (including any assets now or hereafter
securing any Subordinated Debt), to creditors of Guarantor or upon any
indebtedness of Guarantor, by reason of the liquidation, dissolution or other
winding up, partial or complete, of Guarantor, or any receivership, insolvency
or bankruptcy proceeding, or assignment for the benefit of creditors or
marshalling of assets, or any proceeding by or against Guarantor for any relief
under any bankruptcy or insolvency law or laws relating to the relief of
debtors, readjustment of indebtedness, arrangements, reorganizations,
compositions or extensions, or sale of all or substantially all of the assets of
Guarantor, then and in any such event:
(a) The holders of Senior Debt shall be entitled to receive
payment in full in cash of all Senior Debt, whether then due or not due,
before Holder shall be entitled to receive any payment or other
distributions on, or with respect to, the Subordinated Debt;
(b) Any payment or distribution of any kind or character,
whether in cash, securities or other property, which but for these
provisions would be payable or deliverable upon or with respect to the
Subordinated Debt shall instead be paid or delivered directly to the
holders of the Senior Debt for pro rata application on the Senior Debt,
--------
whether then due or not due, until the Senior Debt shall have first
been fully and indefeasibly paid in cash;
(c) Holder hereby irrevocably authorizes and empowers each of
the Senior Creditors, and appoints each Senior Creditor as attorney-in-
fact, to demand, ▇▇▇ for, collect and receive every such payment or
distribution and give acquittance therefor, and to file and vote claims (in
bankruptcy proceedings or otherwise) and take such other actions, in such
Senior Creditor's own name or otherwise, as such Senior Creditor may deem
necessary or advisable for the enforcement of these provisions. Holder
shall duly and promptly take such action as may be reasonably requested by
Senior Creditors to assist in the collection of the Subordinated Debt for
the pro rata account of the holders of the Senior Debt, and to file
--------
appropriate proofs of claim with respect to the Subordinated Debt and to
vote the same, and to execute and deliver to any Senior Creditor on demand
such powers of attorney, proofs of claim, assignments of claim or other
instruments as may be reasonably requested by such Senior Creditor to
enable such Senior Creditor or any other holder of the Senior Debt to
enforce any and all claims upon or with respect to the Subordinated Debt
and to collect and receive any and all payments or distributions which may
be payable or deliverable at any time upon or with respect to the
Subordinated Debt; and
(d) Should any direct or indirect payment (other than a payment
permitted to be made pursuant to Paragraph 3 hereof) be made to Holder upon
or with respect to the Subordinated Debt prior to the payment in full of
the Senior Debt in accordance with these provisions, Holder will forthwith
deliver the same to Senior Creditors, for the pro rata benefit of the
holders of the Senior Debt, in
IX-A-3
precisely the form received (except for the endorsement or assignment of
Holder where necessary) for pro rata application on the Senior Debt,
--------
whether then due or not due. Until so delivered, the payment or
distribution shall be held in trust by Holder as property of the holders of
the Senior Debt. In the event of the failure of Holder to make any such
endorsement or assignment, any Senior Creditor or any of its officers or
employees, are hereby irrevocably authorized to make the same.
3. Permitted Payments. Subject to the provisions of Paragraphs 2 and
------------------
4 of this Agreement, Guarantor may pay to Holder and Holder may accept payment
of interest and principal on account of the Subordinated Debt in a manner
consistent with the past practices of Holder and Guarantor prior to the date of
this Agreement.
4. Default on Senior Debt. In the event that any Potential Event of
----------------------
Default or Event of Default (as defined in the Credit Agreement) shall occur and
be continuing under the Credit Agreement or any Default or Event of Default (as
defined in the Senior Note Agreement) shall occur and be continuing under the
Senior Note Agreement, unless and until all Guaranteed Obligations (as defined
in the Guaranty), Obligations (as defined in the Credit Agreement) and
obligations under the Senior Notes and the Senior Note Agreement shall have been
indefeasibly paid in full in cash, the right of Holder to receive any payments
or other distributions with respect to the Subordinated Debt shall be suspended
during the continuance of such default. If, notwithstanding the foregoing,
Holder shall receive any payment or distribution of any kind (whether from any
collateral securing such debt or otherwise), such payment or distribution shall
be received in trust for, and shall be delivered to Senior Creditors, for the
pro rata benefit of the holders of the Senior Debt, promptly in precisely the
--------
form received (except for the endorsement or assignment of Holder where
necessary) for pro rata application on the Senior Debt, whether then due or not
--------
due. Until so delivered, the payment or distribution shall be held in trust by
Holder as property of the holders of Senior Debt.
5. No Acceleration or Exercise of Remedies. So long as any Senior
---------------------------------------
Debt remains unpaid or any Guaranteed Obligations (as defined in the Guaranty),
Obligations (as defined in the Credit Agreement) or obligations under the Senior
Notes and the Senior Note Agreement remain outstanding, Holder will not (a)
accelerate, or cause to be accelerated, the Subordinated Debt or otherwise cause
or permit the Subordinated Debt to become due and payable; or (b) exercise any
remedies with respect to the Subordinated Debt or any collateral at any time
securing payment or performance thereof unless and until, in each such case, all
of the Senior Debt shall have indefeasibly paid in full in cash, or the
Requisite Lenders (as defined in the Credit Agreement) and the holders of at
least 66 2/3% in aggregate principal amount of outstanding Senior Notes each
shall have otherwise consented in writing.
6. Bankruptcy. Until all of the Senior Debt and all of the
----------
Guaranteed Obligations (as defined in the Guaranty), Obligations (as defined in
the Credit Agreement) and obligations under the Senior Notes and under the
Senior Note Agreement shall have been indefeasibly paid in full, Holder will not
without the prior consent of the Requisite Lenders (as defined in the Credit
Agreement) and the holders of
IX-A-4
at least 66 2/3% in aggregate principal amount of outstanding Senior Notes,
commence, or join with any other person in commencing, any proceeding against
any person with respect to the Subordinated Debt under any bankruptcy,
reorganization, readjustment of debt, dissolution, receivership, liquidation or
insolvency law or statute now or hereafter in effect in any jurisdiction.
7. Continuing Subordination. The subordination effected by these
------------------------
provisions is a continuing subordination and may not be modified or terminated
by Holder or any other holder of any Subordinated Debt until all of the Senior
Debt and all of the Guaranteed Obligations (as defined in the Guaranty),
Obligations (as defined in the Credit Agreement) and obligations under the
Senior Notes and the Senior Note Agreement shall have been indefeasibly paid in
full in cash. At any time and from time to time, without consent of or notice
to Holder or any other holder of Subordinated Debt, and without impairing or
affecting the obligations of any of them hereunder:
(a) The time for Guarantors performance of, or compliance with,
any of its agreements contained in the Guaranty or any other agreement,
instrument or document relating to the Senior Debt, may be modified or
extended or such performance or compliance may be waived;
(b) Each Lender, the Issuing Bank and each holder of the Senior
Notes may exercise or refrain from exercising any rights under the Credit
Agreement, the Senior Note Agreement, the Senior Notes, the Guaranty or any
other guaranty or any other agreement, instrument or document relating to
the Senior Debt;
(c) The Credit Agreement, the Senior Note Agreement, the Senior
Notes, the Guaranty or any other agreement, instrument or document relating
to the Senior Debt, may be revised, amended or otherwise modified for the
purpose of adding or changing any provisions thereof (including, but not
limited to, an increase in the interest charges), or changing in any manner
the rights of any Lender, Issuing Bank, any holder of Senior Notes, Holder,
Guarantor, or any other guarantor thereunder;
(d) Payment of the Senior Debt or any portion thereof may be
extended or any notes evidencing such Senior Debt may be renewed in whole
or in part;
(e) The maturity of the Senior Debt may be accelerated, and any
collateral security therefor or any other rights of Senior Creditors may be
exchanged, sold, surrendered, released or otherwise dealt with in
accordance with the terms of any present or future agreement with Holder,
Guarantor or any other guarantor and any other agreement of subordination
(and the debt covered thereby) may be surrendered, released or discharged,
or the terms thereof modified or otherwise dealt with in any manner;
IX-A-5
(f) Any person liable in any manner for payment of the Senior
Debt may be released by holders of Senior Debt; and
(g) Notwithstanding the occurrence of any of the foregoing,
these subordination provisions shall remain in full force and effect with
respect to the Senior Debt, as the same shall have been extended, renewed,
modified or refunded.
8. Waivers. Holder hereby waives, and agrees not to assert any
-------
right, now or hereafter existing, to require (a) any Senior Creditor to proceed
against or exhaust any collateral at any time securing the Senior Debt, the
Guaranteed Obligations (as defined in the Guaranty), the Obligations (as defined
in the Credit Agreement) or the obligations under the Senior Notes or the Senior
Note Agreement, or to marshal any assets in favor of Holder or any other holder
of Subordinated Debt; and (b) any notice of the incurrence of Senior Debt, it
being understood the Lenders may make Advances (as defined in the Credit
Agreement) and the Issuing Bank may issue Letters of Credit (as defined in the
Credit Agreement) under the Credit Agreement, or any other agreement, document
or instrument now or hereafter relating to the Senior Debt, without notice to or
authorization of any other Senior Creditor, Holder, Guarantor or any other
guarantor in reliance upon these subordination provisions.
9. Lien Subordination. Any lien, security interest, encumbrance,
charge or claim of Holder on any assets or property of Guarantor or any proceeds
or revenues therefrom which Holder may have at any time as security for any
Subordinated Debt shall be, and hereby is, subordinated to all liens, security
interests, or encumbrances now or hereafter granted to Senior Creditors by
Guarantor or by law, notwithstanding the date or order of attachment or
perfection of any such lien, security interest, encumbrance or claim or charge
or the provision of any applicable law. Until Senior Creditors have received
payment in full of the Senior Debt and the Guaranteed Obligations (as defined in
the Guaranty) and the Guaranty has terminated, Holder agrees that Holder will
not assert or seek to enforce against Guarantor the Subordinated Debt or any
interest of Holder in any collateral for the Subordinated Debt and that Senior
Creditors may dispose of any or all of the collateral for the Senior Debt free
of any and an liens, including but not limited to liens created in favor of
Holder, through judicial or non-judicial proceedings, in accordance with
applicable law including taking title, after ten (10) days written notice to
Holder. Holder hereby acknowledges that such notice if given ten (10) days prior
to such disposition of any of all of the collateral for the Senior Debt is
sufficient and commercially reasonable. Holder hereby agrees that any such sale
or other disposition by Senior Creditors of so much of the collateral for the
Senior Debt as is necessary to satisfy in full all of the principal of, interest
on and reasonable costs of collection of the Senior Debt shall be free and clear
of all security interest granted to Holder provided the entire proceeds (after
deducting reasonable expenses of sale) are applied in reduction of the Senior
Debt. Upon any Senior Creditor's request, Holder shall execute and deliver any
releases or other documents and agreements that such Senior Creditor in its
reasonable discretion deems necessary to dispose of the collateral for the
Senior Debt free of Holder's interest in same. Holder retains all of its rights
as a
IX-A-6
junior secured creditor with respect to the surplus, if any, arising from any
such disposition of the collateral for the Senior Debt.
10. Waiver of Subrogation, Contribution and Indemnity; Repayment of
---------------------------------------------------------------
Intercompany Indebtedness. Guarantor expressly waives any and all rights of
-------------------------
subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which Guarantor may now or hereafter have against Holder or any other
Person (as defined herein) arising from any payments made by Guarantor to the
Senior Creditors pursuant to this Agreement or the Guaranty. Guarantor further
agrees that it will not enter into any agreement providing, directly or
indirectly, for contribution, reimbursement or repayment by Holder or any other
individual, partnership, corporation (including a business trust), joint stock
company, trust, unincorporated association, joint venture or other entity, or a
government or any political subdivision or agency thereof (hereinafter referred
to as "PERSON") or entity on account of any payment by Guarantor hereunder and
further agrees that any such agreement, whether existing or hereafter entered
into, would be void. In furtherance, and not in limitation, of the preceding
waiver, Holder acknowledges and agrees that any payment to Senior Creditors, by
Guarantor pursuant to this Agreement or the Guaranty shall be deemed, to the
extent of any Subordinated Debt, a payment on account of such Subordinated Debt,
and any such payment shall not constitute the Guarantor a creditor of the Holder
as a result thereof. Holder further agrees that, upon any such payment to the
Senior Creditors, the Subordinated Debt shall be deemed paid and satisfied in
the amount of any such payment.
11. Subordination Not Impaired by Guarantor. No right of any holder
---------------------------------------
of Senior Debt to enforce the subordination of the Subordinated Debt shall be
impaired by any act or failure to act by Guarantor or by its failure to comply
with these provisions.
12. No Third Party Beneficiaries. This Agreement is not intended to
----------------------------
give or confer any rights to any person other than the holders of the Senior
Debt. No other party, including Guarantor, is intended to be a third party
beneficiary of this Agreement.
13. Legend on Note. If any portion of the Subordinated Debt is
--------------
evidenced by a promissory note, stock certificate or other instrument, Holder
agrees to promptly add a legend thereto stating that the rights of any holder
thereof are subject to this Agreement.
14. Representations and Warranties. Holder and Guarantor hereby
------------------------------
represent and warrant that the Subordinated Debt is the legal, valid and binding
obligation of Guarantor in favor of Holder, enforceable against Guarantor in
accordance with its terms.
15. No Waiver. No failure on the part of any Lender or the Issuing
---------
Bank to exercise, no delay in exercising, and no course of dealing with respect
to, any right or remedy hereunder will operate as a waiver thereof; nor will any
single or partial exercise of any right or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right or remedy. This
Agreement may not be amended or modified except by written agreement of the
Requisite Lenders (as defined in the Credit
IX-A-7
Agreement) the holders of at least 66 2/3% in aggregate principal amount of
outstanding Senior Notes, Holder, and Guarantor, and no consent or waiver
hereunder shall be valid unless in writing and signed by the Requisite Lenders
(as defined in the Credit Agreement) and the holders of at least 66 2/3% in
aggregate principal amount of outstanding Senior Notes.
16. Joint Action by Senior Creditors; Joint Action by Noteholders.
-------------------------------------------------------------
Notwithstanding any provision herein or in the Loan Documents (as defined in the
Credit Agreement), no action may be taken by any Lender or the Issuing Bank
hereunder unless such action is taken on behalf of all the holders of the
Obligations (as defined in the Credit Agreement) with the consent of the
Requisite Holders (as defined in the Credit Agreement). Furthermore,
notwithstanding any provision herein or in the Senior Note Agreement, the Senior
Notes or any of the documents executed in connection with the Senior Note
Agreement, no action may be taken hereunder by the holders of the Senior Notes
unless such action is taken on behalf of all of the holders of the Senior Notes
with the consent of holders of not less than 66 2/3% of the outstanding
principal amount of the Senior Notes.
17. Successors and Assigns. This Agreement, and the terms, covenants
----------------------
and conditions hereof, shall be binding upon and inure to the benefit of the
parties hereto, and their respective successors and assigns.
18. Governing Law. This Agreement will be construed in accordance
-------------
with and governed by the law of the State of New York.
19. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Termination. This Agreement shall terminate and be of no further
-----------
force and effect upon the termination of the Guaranty. This Agreement shall be
reinstated and revived, and the enforceability hereof shall continue, with
respect to any amount at any time paid to any Senior Creditor which thereafter
shall be required to be restored or returned by such Senior Creditor upon any
bankruptcy, insolvency or reorganization of Holder, any Guarantor or any other
Person, or otherwise, as if such amount had not been paid or permitted to be
paid.
IX-A-8
IN WITNESS WHEREOF, this Agreement has been duly executed as of the
day and year first above written.
"HOLDER"
VARCO INTERNATIONAL, INC., a
California corporation
By:__________________________________
Name: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Title: Chief Financial Officer
"GUARANTOR"
___________________________________,
a ____________ corporation
By:________________________________
Name:
Title:
IX-A-9
EXHIBIT IX-B
[FORM OF SUBORDINATION AGREEMENT]
SUBORDINATION AGREEMENT
This Subordination Agreement (this "AGREEMENT") is made as of _______,
____, by and between VARCO INTERNATIONAL, INC. ("HOLDER"), a California
corporation, and _______________ ("GUARANTOR"), a ______________ corporation and
a wholly-owned Subsidiary (as defined herein) of Holder.
RECITALS
--------
A. Holder, Union Bank of California, N.A. as Issuing Bank (the
"ISSUING BANK"), Union Bank of California, N.A., as Agent (the "AGENT") and
certain financial institutions ("LENDERS") have entered into that certain Credit
Agreement dated as of June 27, 1997 (as amended, restated, supplemented or
otherwise modified from time to time, the "CREDIT AGREEMENT").
▇. ▇▇▇▇▇▇ has entered into that certain Note Agreement dated as of
July 1, 1992 (as heretofore or hereafter amended, supplemented or restated from
time to time, the "SENIOR NOTE AGREEMENT") pursuant to which Holder has issued
$50,000,000 principal amount of 8.95% Senior Notes due June 30, 1999 (the
"SENIOR NOTES"). (The holders of the Senior Notes, together with the Lenders,
the Issuing Bank and the Agent and their respective successors and assigns, the
"SENIOR CREDITORS").
▇. ▇▇▇▇▇▇ is a creditor of Guarantor. The obligations of Guarantor
to Holder are evidenced by a promissory note (the "NOTE") executed by Guarantor
in favor of Holder.
D. In order to induce Lenders to make certain loans to Holder and to
induce Issuing Bank to provide certain letters of credit for the account of
Holder and its Subsidiaries, potentially including the Guarantor, and to induce
the holders of the Senior Notes to enter into a waiver and consent with respect
to the Senior Note Agreement, (i) Guarantor has agreed to unconditionally
guarantee the Obligations (as defined in the Credit Agreement) under the Credit
Agreement and related documents and to unconditionally guarantee the obligations
under the Senior Note Agreement and the Senior Notes pursuant to that certain
Guaranty executed by the Guarantor (the "GUARANTY") and (ii) Holder has agreed
to subordinate its right to payment of sums from time to time owed to Holder by
Guarantor, including without limitation all claims evidenced by the Note, to the
prior payment in full in cash of the obligations owed by the Guarantor to the
Senior Creditors under the Guaranty. For purposes of this Agreement, the term
"SUBSIDIARY" or "SUBSIDIARIES" means any corporation, partnership, joint
venture, trust or estate of which (or in which) more than 50% of (1) the
outstanding capital stock having ordinary voting power to elect a majority of
the board of directors of such corporation (irrespective of whether or not at
the time capital stock of any other class or
IX-B-1
classes of such corporation shall or might have voting power upon the occurrence
of any contingency), (2) the interest in the capital or profits of such
partnership or joint venture, or (3) the beneficial interest of such trust or
estate, is at the time directly or indirectly owned by the Holder, by the Holder
and one or more other Subsidiaries of the Holder, or by one or more other
Subsidiaries of the Holder.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the above recitals and the
provisions set forth herein, the receipt and sufficiency of which are hereby
acknowledged, Holder and Guarantor hereby agree as follows for the benefit of
the Senior Creditors:
1. Subordination to Senior Debt. Notwithstanding any other provision
----------------------------
of the Note, any document or instrument executed by Guarantor in connection
therewith, or any collateral now or hereafter securing the Note, all
indebtedness evidenced by the Note (including without limitation of principal
interest, fees and charges) and all other present or future liabilities,
indebtedness or obligations of Guarantor to Holder (collectively, the
"SUBORDINATED DEBT") are and shall be subordinate and junior in right of
payment, to the extent and in the manner hereinafter set forth, to the prior
indefeasible payment in full in cash of all Senior Debt. "SENIOR DEBT" means (a)
all indebtedness, liabilities and obligations of every kind or nature, absolute
or contingent, now existing or hereafter arising, of Guarantor, its successors
and assigns, to any Senior Creditor, its successors and assigns, including
without limitation the principal of, and interest on (including any interest
accruing after the commencement of any bankruptcy, insolvency or similar
proceeding with respect to Guarantor or Holder and any interest which would have
accrued but for the commencement of any such proceeding), and all premiums,
fees, charges and expenses, constituting Guaranteed Obligations (as defined in
the Guaranty) or otherwise arising under or in connection with the Guaranty, the
Obligations (as defined in the Credit Agreement), the Senior Notes or the Senior
Note Agreement; and (b) any modifications, amendments, renewals or extensions of
any indebtedness or obligation described in clause (a) above. Except as and to
the extent provided hereinafter, Holder will not ask, demand, ▇▇▇ for, take or
receive from Guarantor, by set-off or in any other manner, whether through the
realization of value from collateral or otherwise, direct or indirect payment
(whether in cash or property), of the whole or any part of the Subordinated
Debt, or any transfer of any property in payment thereof or as security
therefor, unless and until the Guaranty has terminated.
2. Distributions in Liquidation and Bankruptcy. In the event of any
-------------------------------------------
distribution, division or application, partial or complete, voluntary or
involuntary, by operation of law or otherwise, of all or any part of the assets
of Guarantor or the proceeds thereof (including any assets now or hereafter
securing any Subordinated Debt), to creditors of Guarantor or upon any
indebtedness of Guarantor, by reason of the liquidation, dissolution or other
winding up, partial or complete, of Guarantor, or any receivership, insolvency
or bankruptcy proceeding, or assignment for the benefit of creditors or
marshalling of assets, or any proceeding by or against Guarantor for any relief
under any bankruptcy or insolvency law or laws relating to the relief of
debtors,
IX-B-2
readjustment of indebtedness, arrangements, reorganizations, compositions or
extensions, or sale of all or substantially all of the assets of Guarantor, then
and in any such event:
(a) The holders of Senior Debt shall be entitled to receive
payment in full in cash of all Senior Debt, whether then due or not due,
before Holder shall be entitled to receive any payment or other
distributions on, or with respect to, the Subordinated Debt;
(b) Any payment or distribution of any kind or character,
whether in cash, securities or other property, which but for these
provisions would be payable or deliverable upon or with respect to the
Subordinated Debt shall instead be paid or delivered directly to the
holders of the Senior Debt for pro rata application on the Senior Debt,
--------
whether then due or not due, until the Senior Debt shall have first been
fully and indefeasibly paid in cash;
(c) Holder hereby irrevocably authorizes and empowers each of
the Senior Creditors, and appoints each Senior Creditor as attorney-in-
fact, to demand, ▇▇▇ for, collect and receive every such payment or
distribution and give acquittance therefor, and to file and vote claims (in
bankruptcy proceedings or otherwise) and take such other actions, in such
Senior Creditor's own name or otherwise, as such Senior Creditor may deem
necessary or advisable for the enforcement of these provisions. Holder
shall duly and promptly take such action as may be reasonably requested by
Senior Creditors to assist in the collection of the Subordinated Debt for
the pro rata account of the holders of the Senior Debt, and to file
--------
appropriate proofs of claim with respect to the Subordinated Debt and to
vote the same, and to execute and deliver to any Senior Creditor on demand
such powers of attorney, proofs of claim, assignments of claim or other
instruments as may be reasonably requested by such Senior Creditor to
enable such Senior Creditor or any other holder of the Senior Debt to
enforce any and all claims upon or with respect to the Subordinated Debt
and to collect and receive any and all payments or distributions which may
be payable or deliverable at any time upon or with respect to the
Subordinated Debt; and
(d) Should any direct or indirect payment (other than a payment
permitted to be made pursuant to Paragraph 3 hereof) be made to Holder upon
or with respect to the Subordinated Debt prior to the payment in full of
the Senior Debt in accordance with these provisions, Holder will forthwith
deliver the same to Senior Creditors, for the pro rata benefit of the
--------
holders of the Senior Debt, in precisely the form received (except for the
endorsement or assignment of Holder where necessary) for pro rata
--------
application on the Senior Debt, whether then due or not due. Until so
delivered, the payment or distribution shall be held in trust by Holder as
property of the holders of the Senior Debt. In the event of the failure of
Holder to make any such endorsement or assignment, any Senior Creditor or
any of its officers or employees, are hereby irrevocably authorized to make
the same.
IX-B-3
3. Permitted Payments. Subject to the provisions of Paragraphs 2 and
------------------
4 of this Agreement, Guarantor may pay to Holder and Holder may accept payment
of interest and principal on account of the Subordinated Debt in a manner
consistent with the past practices of Holder and Guarantor prior to the date of
this Agreement.
4. Default on Senior Debt. In the event that any Potential Event of
----------------------
Default or Event of Default (as defined in the Credit Agreement) shall occur and
be continuing under the Credit Agreement or any Default or Event of Default (as
defined in the Senior Note Agreement) shall occur and be continuing under the
Senior Note Agreement, unless and until all Guaranteed Obligations (as defined
in the Guaranty), Obligations (as defined in the Credit Agreement) and
obligations under the Senior Notes and the Senior Note Agreement shall have been
indefeasibly paid in full in cash, the right of Holder to receive any payments
or other distributions with respect to the Subordinated Debt shall be suspended
during the continuance of such default. If, notwithstanding the foregoing,
Holder shall receive any payment or distribution of any kind (whether from any
collateral securing such debt or otherwise), such payment or distribution shall
be received in trust for, and shall be delivered to Senior Creditors, for the
pro rata benefit of the holders of the Senior Debt, promptly in precisely the
--------
form received (except for the endorsement or assignment of Holder where
necessary) for pro rata application on the Senior Debt, whether then due or not
--------
due. Until so delivered, the payment or distribution shall be held in trust by
Holder as property of the holders of Senior Debt.
5. No Acceleration or Exercise of Remedies. So long as any Senior
---------------------------------------
Debt remains unpaid or any Guaranteed Obligations (as defined in the Guaranty),
Obligations (as defined in the Credit Agreement) or obligations under the Senior
Notes and the Senior Note Agreement remain outstanding, Holder will not (a)
accelerate, or cause to be accelerated, the Subordinated Debt or otherwise cause
or permit the Subordinated Debt to become due and payable; or (b) exercise any
remedies with respect to the Subordinated Debt or any collateral at any time
securing payment or performance thereof unless and until, in each such case, all
of the Senior Debt shall have indefeasibly paid in full in cash, or the
Requisite Lenders (as defined in the Credit Agreement) and the holders of at
least 66 2/3% in aggregate principal amount of outstanding Senior Notes each
shall have otherwise consented in writing.
6. Bankruptcy. Until all of the Senior Debt and all of the
----------
Guaranteed Obligations (as defined in the Guaranty), Obligations (as defined in
the Credit Agreement) and obligations under the Senior Notes and under the
Senior Note Agreement shall have been indefeasibly paid in full, Holder will not
without the prior consent of the Requisite Lenders (as defined in the Credit
Agreement) and the holders of at least 66 2/3% in aggregate principal amount of
outstanding Senior Notes, commence, or join with any other person in commencing,
any proceeding against any person with respect to the Subordinated Debt under
any bankruptcy, reorganization, readjustment of debt, dissolution, receivership,
liquidation or insolvency law or statute now or hereafter in effect in any
jurisdiction.
7. Continuing Subordination. The subordination effected by these
------------------------
provisions is a continuing subordination and may not be modified or terminated
by
IX-B-4
Holder or any other holder of any Subordinated Debt until all of the Senior Debt
and all of the Guaranteed Obligations (as defined in the Guaranty), Obligations
(as defined in the Credit Agreement) and obligations under the Senior Notes and
the Senior Note Agreement shall have been indefeasibly paid in full in cash. At
any time and from time to time, without consent of or notice to Holder or any
other holder of Subordinated Debt, and without impairing or affecting the
obligations of any of them hereunder:
(a) The time for Guarantors performance of, or compliance with,
any of its agreements contained in the Guaranty or any other agreement,
instrument or document relating to the Senior Debt, may be modified or
extended or such performance or compliance may be waived;
(b) Each Lender, the Issuing Bank and each holder of the Senior
Notes may exercise or refrain from exercising any rights under the Credit
Agreement, the Senior Note Agreement, the Senior Notes, the Guaranty or any
other guaranty or any other agreement, instrument or document relating to
the Senior Debt;
(c) The Credit Agreement, the Senior Note Agreement, the Senior
Notes, the Guaranty or any other agreement, instrument or document relating
to the Senior Debt, may be revised, amended or otherwise modified for the
purpose of adding or changing any provisions thereof (including, but not
limited to, an increase in the interest charges), or changing in any manner
the rights of any Lender, Issuing Bank, any holder of Senior Notes, Holder,
Guarantor, or any other guarantor thereunder;
(d) Payment of the Senior Debt or any portion thereof may be
extended or any notes evidencing such Senior Debt may be renewed in whole
or in part;
(e) The maturity of the Senior Debt may be accelerated, and any
collateral security therefor or any other rights of Senior Creditors may be
exchanged, sold, surrendered, released or otherwise dealt with in
accordance with the terms of any present or future agreement with Holder,
Guarantor or any other guarantor and any other agreement of subordination
(and the debt covered thereby) may be surrendered, released or discharged,
or the terms thereof modified or otherwise dealt with in any manner;
(f) Any person liable in any manner for payment of the Senior
Debt may be released by holders of Senior Debt; and
(g) Notwithstanding the occurrence of any of the foregoing,
these subordination provisions shall remain in full force and effect with
respect to the Senior Debt, as the same shall have been extended, renewed,
modified or refunded.
IX-B-5
8. Waivers. Holder hereby waives, and agrees not to assert any right,
-------
now or hereafter existing, to require (a) any Senior Creditor to proceed against
or exhaust any collateral at any time securing the Senior Debt, the Guaranteed
Obligations (as defined in the Guaranty), the Obligations (as defined in the
Credit Agreement) or the obligations under the Senior Notes or the Senior Note
Agreement, or to marshal any assets in favor of Holder or any other holder of
Subordinated Debt; and (b) any notice of the incurrence of Senior Debt, it being
understood the Lenders may make Advances (as defined in the Credit Agreement)
and the Issuing Bank may issue Letters of Credit (as defined in the Credit
Agreement) under the Credit Agreement, or any other agreement, document or
instrument now or hereafter relating to the Senior Debt, without notice to or
authorization of any other Senior Creditor, Holder, Guarantor or any other
guarantor in reliance upon these subordination provisions.
9. Lien Subordination. Any lien, security interest, encumbrance, charge
------------------
or claim of Holder on any assets or property of Guarantor or any proceeds or
revenues therefrom which Holder may have at any time as security for any
Subordinated Debt shall be, and hereby is, subordinated to all liens, security
interests, or encumbrances now or hereafter granted to Senior Creditors by
Guarantor or by law, notwithstanding the date or order of attachment or
perfection of any such lien, security interest, encumbrance or claim or charge
or the provision of any applicable law. Until Senior Creditors have received
payment in full of the Senior Debt and the Guaranteed Obligations (as defined in
the Guaranty) and the Guaranty has terminated, Holder agrees that Holder will
not assert or seek to enforce against Guarantor the Subordinated Debt or any
interest of Holder in any collateral for the Subordinated Debt and that Senior
Creditors may dispose of any or all of the collateral for the Senior Debt free
of any and an liens, including but not limited to liens created in favor of
Holder, through judicial or non-judicial proceedings, in accordance with
applicable law including taking title, after ten (10) days written notice to
Holder. Holder hereby acknowledges that such notice if given ten (10) days prior
to such disposition of any of all of the collateral for the Senior Debt is
sufficient and commercially reasonable. Holder hereby agrees that any such sale
or other disposition by Senior Creditors of so much of the collateral for the
Senior Debt as is necessary to satisfy in full all of the principal of, interest
on and reasonable costs of collection of the Senior Debt shall be free and clear
of all security interest granted to Holder provided the entire proceeds (after
deducting reasonable expenses of sale) are applied in reduction of the Senior
Debt. Upon any Senior Creditor's request, Holder shall execute and deliver any
releases or other documents and agreements that such Senior Creditor in its
reasonable discretion deems necessary to dispose of the collateral for the
Senior Debt free of Holder's interest in same. Holder retains all of its rights
as a junior secured creditor with respect to the surplus, if any, arising from
any such disposition of the collateral for the Senior Debt.
10. Waiver of Subrogation, Contribution and Indemnity; Repayment of
---------------------------------------------------------------
Intercompany Indebtedness. Guarantor expressly waives any and all rights of
-------------------------
subrogation, reimbursement, indemnity, exoneration, contribution or any other
claim which Guarantor may now or hereafter have against Holder or any other
Person (as defined herein) arising from any payments made by Guarantor to the
Senior Creditors pursuant to this Agreement or the Guaranty. Guarantor further
agrees that it will not enter into any
IX-B-6
agreement providing, directly or indirectly, for contribution, reimbursement or
repayment by Holder or any other individual, partnership, corporation (including
a business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof (hereinafter referred to as "PERSON") or entity on account of any
payment by Guarantor hereunder and further agrees that any such agreement,
whether existing or hereafter entered into, would be void. In furtherance, and
not in limitation, of the preceding waiver, Holder acknowledges and agrees that
any payment to Senior Creditors, by Guarantor pursuant to this Agreement or the
Guaranty shall be deemed, to the extent of any Subordinated Debt, a payment on
account of such Subordinated Debt, and any such payment shall not constitute the
Guarantor a creditor of the Holder as a result thereof. Holder further agrees
that, upon any such payment to the Senior Creditors, the Subordinated Debt shall
be deemed paid and satisfied in the amount of any such payment.
11. Subordination Not Impaired by Guarantor. No right of any holder of
---------------------------------------
Senior Debt to enforce the subordination of the Subordinated Debt shall be
impaired by any act or failure to act by Guarantor or by its failure to comply
with these provisions.
12. No Third Party Beneficiaries. This Agreement is not intended to give
----------------------------
or confer any rights to any person other than the holders of the Senior Debt.
No other party, including Guarantor, is intended to be a third party beneficiary
of this Agreement.
13. Legend on Note. If any portion of the Subordinated Debt is evidenced
--------------
by a promissory note, stock certificate or other instrument, Holder agrees to
promptly add a legend thereto stating that the rights of any holder thereof are
subject to this Agreement.
14. Representations and Warranties. Holder and Guarantor hereby
------------------------------
represent and warrant that the Subordinated Debt is the legal, valid and binding
obligation of Guarantor in favor of Holder, enforceable against Guarantor in
accordance with its terms.
15. No Waiver. No failure on the part of any Lender or the Issuing Bank
---------
to exercise, no delay in exercising, and no course of dealing with respect to,
any right or remedy hereunder will operate as a waiver thereof; nor will any
single or partial exercise of any right or remedy hereunder preclude any other
or further exercise thereof or the exercise of any other right or remedy. This
Agreement may not be amended or modified except by written agreement of the
Requisite Lenders (as defined in the Credit Agreement) the holders of at least
66 2/3% in aggregate principal amount of outstanding Senior Notes, Holder, and
Guarantor, and no consent or waiver hereunder shall be valid unless in writing
and signed by the Requisite Lenders (as defined in the Credit Agreement) and the
holders of at least 66 2/3% in aggregate principal amount of outstanding Senior
Notes.
16. Joint Action by Senior Creditors; Joint Action by Noteholders.
-------------------------------------------------------------
Notwithstanding any provision herein or in the Loan Documents (as defined in the
Credit Agreement), no action may be taken by any Lender or the Issuing Bank
hereunder unless
IX-B-7
such action is taken on behalf of all the holders of the Obligations (as defined
in the Credit Agreement) with the consent of the Requisite Holders (as defined
in the Credit Agreement). Furthermore, notwithstanding any provision herein or
in the Senior Note Agreement, the Senior Notes or any of the documents executed
in connection with the Senior Note Agreement, no action may be taken hereunder
by the holders of the Senior Notes unless such action is taken on behalf of all
of the holders of the Senior Notes with the consent of holders of not less than
66 2/3% of the outstanding principal amount of the Senior Notes.
17. Successors and Assigns. This Agreement, and the terms, covenants and
----------------------
conditions hereof, shall be binding upon and inure to the benefit of the parties
hereto, and their respective successors and assigns.
18. Governing Law. This Agreement will be construed in accordance with
-------------
and governed by the law of the State of New York.
19. Counterparts. This Agreement may be executed in one or more
------------
counterparts, each of which shall be deemed an original, but all of which
together shall constitute one and the same instrument.
20. Termination. This Agreement shall terminate and be of no further
-----------
force and effect upon the termination of the Guaranty. This Agreement shall be
reinstated and revived, and the enforceability hereof shall continue, with
respect to any amount at any time paid to any Senior Creditor which thereafter
shall be required to be restored or returned by such Senior Creditor upon any
bankruptcy, insolvency or reorganization of Holder, any Guarantor or any other
Person, or otherwise, as if such amount had not been paid or permitted to be
paid.
IX-B-8
IN WITNESS WHEREOF, this Agreement has been duly executed as of the day
and year first above written.
"HOLDER"
VARCO INTERNATIONAL, INC., a
California corporation
By:__________________________________
Name:
Title:
"GUARANTOR"
____________________________________,
a ____________ corporation
By:_________________________________
Name:
Title:
IX-B-9
EXHIBIT X
[FORM OF CERTIFICATE RE NON-BANK STATUS]
CERTIFICATE RE NON-BANK STATUS
Reference is hereby made to that certain Credit Agreement dated as of June
27, 1997 (said Credit Agreement, as amended, supplemented or otherwise modified
to the date hereof, being the "CREDIT AGREEMENT") by and among Varco
International, Inc., a California corporation, the financial institutions listed
therein as Lenders, and Union Bank of California, N.A., as Agent. Pursuant to
subsection 2.7B(iii) of the Credit Agreement, the undersigned hereby certifies
that it is not a "bank" or other Person described in Section 881(c)(3) of the
Internal Revenue Code of 1986, as amended.
[NAME OF LENDER]
By: ____________________
Title: __________________
X-1
EXHIBIT XI
[FORM OF COLLATERAL ACCOUNT AGREEMENT]
COLLATERAL ACCOUNT AGREEMENT
This COLLATERAL ACCOUNT AGREEMENT (this "AGREEMENT") is dated as of June
27, 1997 and entered into by and between VARCO INTERNATIONAL, INC., a California
corporation ("PLEDGOR"), and UNION BANK OF CALIFORNIA, N.A., as agent for and
representative of (in such capacity herein called "SECURED PARTY") the financial
institutions ("LENDERS") party to the Credit Agreement (as hereinafter defined).
PRELIMINARY STATEMENTS
A. Secured Party and Lenders have entered into a Credit Agreement dated
as of June 27, 1997 (said Credit Agreement, as it may hereafter be amended,
supplemented or otherwise modified from time to time, being the "CREDIT
AGREEMENT", the terms defined therein and not otherwise defined herein being
used herein as therein defined) with Pledgor pursuant to which Lenders have made
certain commitments, subject to the terms and conditions set forth in the Credit
Agreement, to extend certain credit facilities to Pledgor.
B. It is a condition precedent to the initial extensions of credit by
Lenders under the Credit Agreement that Pledgor shall have granted the security
interests and undertaken the obligations contemplated by this Agreement.
NOW, THEREFORE, in consideration of the premises and in order to induce
Lenders to make Loans and issue Letters of Credit under the Credit Agreement and
for other good and valuable consideration, the receipt and adequacy of which are
hereby acknowledged, Pledgor hereby agrees with Secured Party as follows:
SECTION 1. CERTAIN DEFINITIONS. The following terms used in this
-------------------
Agreement shall have the following meanings:
"COLLATERAL" means (i) the Collateral Account, (ii) all amounts on deposit
from time to time in the Collateral Account, (iii) all interest, cash,
instruments, securities and other property from time to time received,
receivable or otherwise distributed in respect of or in exchange for any or all
of the Collateral, and (iv) to the extent not covered by clauses (i) through
(iii) above, all proceeds of any or all of the foregoing Collateral.
"COLLATERAL ACCOUNT" means the restricted deposit account established and
maintained by Secured Party pursuant to Section 2(a).
XI-1
"SECURED OBLIGATIONS" means (a) until such time as the Senior Notes have
been paid in full, subject to the proviso to clause fourth of Section 3(b)
------
hereof, all obligations and liabilities arising out of the Credit Agreement, and
all extensions and renewals thereof, in connection with the Letters of Credit,
including reimbursement obligations, fees, expenses and indemnities, and (b)
after the Senior Notes have been paid in full all obligations and liabilities of
every nature of Pledgor now or hereafter existing under or arising out of or in
connection with the Credit Agreement and the other Loan Documents and all
extensions or renewals thereof, whether for principal, interest (including
interest that, but for the filing of a petition in bankruptcy with respect to
Pledgor, would accrue on such obligations), reimbursement of amounts drawn under
Letters of Credit, fees, expenses, indemnities or otherwise, in the case of (a)
and (b) above, whether voluntary or involuntary, direct or indirect, absolute or
contingent, liquidated or unliquidated, whether or not jointly owed with others,
and whether or not from time to time decreased or extinguished and later
increased, created or incurred, and all or any portion of such obligations or
liabilities that are paid, to the extent all or any part of such payment is
avoided or recovered directly or indirectly from Secured Party or any Lender as
a preference, fraudulent transfer or otherwise, and all obligations of every
nature of Pledgor now or hereafter existing under this Agreement.
SECTION 2. ESTABLISHMENT AND OPERATION OF COLLATERAL ACCOUNT.
-------------------------------------------------
(a) Secured Party is hereby authorized to establish and maintain at its
office at ▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇▇, ▇▇ ▇▇▇▇▇, as a blocked
account in the name of Secured Party and under the sole dominion and control of
Secured Party, a restricted deposit account designated as "Varco International,
Inc. Collateral Account".
(b) The Collateral Account shall be operated in accordance with the terms
of this Agreement.
(c) All amounts at any time held in the Collateral Account shall be
beneficially owned by Pledgor but shall be held in the name of Secured Party
hereunder, for the benefit of Lenders, as collateral security for the Secured
Obligations upon the terms and conditions set forth herein. Pledgor shall have
no right to withdraw, transfer or, except as expressly set forth herein,
otherwise receive any funds deposited into the Collateral Account.
(d) Anything contained herein to the contrary notwithstanding, the
Collateral Account shall be subject to such applicable laws, and such applicable
regulations of the Board of Governors of the Federal Reserve System and of any
other appropriate banking or governmental authority, as may now or hereafter be
in effect.
XI-2
SECTION 3. DEPOSITS OF CASH COLLATERAL.
---------------------------
(a) All deposits of funds in the Collateral Account shall be made by wire
transfer (or, if applicable, by intra-bank transfer from another account of
Pledgor) of immediately available funds, in each case addressed as Secured Party
may direct.
Pledgor shall, promptly after initiating a transfer of funds to the Collateral
Account, give notice to Secured Party by telefacsimile of the date, amount and
method of delivery of such deposit.
(b) If an Event of Default has occurred and is continuing and, in
accordance with Section 8 of the Credit Agreement, Pledgor is required to pay to
Secured Party an amount (the "AGGREGATE AVAILABLE AMOUNT") equal to the maximum
amount that may at any time be drawn under all Letters of Credit then
outstanding under the Credit Agreement, Pledgor shall deliver funds in such an
amount for deposit in the Collateral Account in accordance with Section 3(a).
If for any reason the aggregate amount delivered by Pledgor for deposit in the
Collateral Account as aforesaid is less than the Aggregate Available Amount, the
aggregate amount so delivered by Pledgor shall be apportioned among all
outstanding Letters of Credit for purposes of this Section 3(b) in accordance
with the ratio of the maximum amount available for drawing under each such
Letter of Credit (as to such Letter of Credit, the "MAXIMUM AVAILABLE AMOUNT")
to the Aggregate Available Amount. Upon any drawing under any outstanding
Letter of Credit in respect of which Pledgor has deposited in the Collateral
Account any amounts described above, Secured Party shall apply such amounts to
reimburse the Issuing Lender for the amount of such drawing. In the event of
cancellation or expiration of any Letter of Credit in respect of which Pledgor
has deposited in the Collateral Account any amounts described above, or in the
event of any reduction in the Maximum Available Amount under such Letter of
Credit, Secured Party shall apply the amount then on deposit in the Collateral
Account in respect of such Letter of Credit (less, in the case of such a
----
reduction, the Maximum Available Amount under such Letter of Credit immediately
after such reduction) first, to the payment of any amounts payable to Secured
-----
Party pursuant to Section 13, second, to the extent of any excess, to the cash
------
collateralization pursuant to the terms of this Agreement of any outstanding
Letters of Credit in respect of which Pledgor has failed to pay all or a portion
of the amounts described above (such cash collateralization to be apportioned
among all such Letters of Credit in the manner described above), third, to the
-----
extent of any further excess, to the payment of any other outstanding Secured
Obligations in such order as Secured Party shall elect, and fourth, to the
------
extent of any further excess, to the payment to whomsoever shall be lawfully
entitled to receive such funds; provided that in the event the holders of the
--------
Senior Notes have received cash collateral pursuant to Section 7.9(l) of the
Senior Note Agreement, Secured Party shall not be required to release amounts
pursuant to this clause fourth (and such amounts shall secure the Obligations)
------
unless an equal amount has been released by the holders of the Senior Notes from
the lien contemplated in Section 7.9(l) of the Senior Note Agreement.
SECTION 4. PLEDGE OF SECURITY FOR SECURED OBLIGATIONS. Pledgor hereby
------------------------------------------
pledges and assigns to Secured Party, and hereby grants to Secured Party a
security interest in, all of Pledgor's right, title and interest in and to the
Collateral as collateral
XI-3
security for the prompt payment or performance in full when due, whether at
stated maturity, by required prepayment, declaration, acceleration, demand or
otherwise (including the payment of amounts that would become due but for the
operation of the automatic stay under Section 362(a) of the Bankruptcy Code, 11
U.S.C. (S)362(a)), of all Secured Obligations.
SECTION 5. NO INVESTMENT OF AMOUNTS IN THE COLLATERAL ACCOUNT; INTEREST
------------------------------------------------------------
ON AMOUNTS IN THE COLLATERAL ACCOUNT.
------------------------------------
(a) Cash held by Secured Party in the Collateral Account shall not be
invested by Secured Party but instead shall be maintained as a cash deposit in
the Collateral Account pending application thereof as elsewhere provided in this
Agreement.
(b) To the extent permitted under Regulation Q of the Board of Governors
of the Federal Reserve System, any cash held in the Collateral Account shall
bear interest at the standard rate paid by Secured Party to its customers for
deposits of like amounts and terms.
(c) Subject to Secured Party's rights under Section 12, any interest
earned on deposits of cash in the Collateral Account in accordance with Section
5(b) shall be deposited directly in, and held in the Collateral Account.
SECTION 6. REPRESENTATIONS AND WARRANTIES. Pledgor represents and
------------------------------
warrants as follows:
(a) Ownership of Collateral. Pledgor is (or at the time of transfer
-----------------------
thereof to Secured Party will be) the legal and beneficial owner of the
Collateral from time to time transferred by Pledgor to Secured Party, free and
clear of any Lien except for the security interest created by this Agreement.
(b) Governmental Authorizations. No authorization, approval or other
---------------------------
action by, and no notice to or filing with, any governmental authority or
regulatory body is required for either (i) the grant by Pledgor of the security
interest granted hereby, (ii) the execution, delivery or performance of this
Agreement by Pledgor, or (iii) the perfection of or the exercise by Secured
Party of its rights and remedies hereunder (except as may have been taken by or
at the direction of Pledgor).
(c) Perfection. The pledge and assignment of the Collateral pursuant to
----------
this Agreement creates a valid and perfected first priority security interest in
the Collateral, securing the payment of the Secured Obligations.
(d) Other Information. All information heretofore, herein or hereafter
-----------------
supplied to Secured Party by or on behalf of Pledgor with respect to the
Collateral is accurate and complete in all respects.
SECTION 7. FURTHER ASSURANCES. Pledgor agrees that from time to time, at
------------------
the expense of Pledgor, Pledgor will promptly execute and deliver all further
instruments and documents, and take all further action, that may be necessary or
desirable, or that
XI-4
Secured Party may request, in order to perfect and protect any security interest
granted or purported to be granted hereby or to enable Secured Party to exercise
and enforce its rights and remedies hereunder with respect to any Collateral.
Without limiting the generality of the foregoing, Pledgor will: (a) execute and
file such financing or continuation statements, or amendments thereto, and such
other instruments or notices, as may be necessary or desirable, or as Secured
Party may request, in order to perfect and preserve the security interests
granted or purported to be granted hereby and (b) at Secured Party's request,
appear in and defend any action or proceeding that may affect Pledgor's
beneficial title to or Secured Party's security interest in all or any part of
the Collateral.
SECTION 8. TRANSFERS AND OTHER LIENS. Pledgor agrees that it will not
-------------------------
(a) sell, assign (by operation of law or otherwise) or otherwise dispose of any
of the Collateral or (b) create or suffer to exist any Lien upon or with respect
to any of the Collateral, except for the security interest under this Agreement.
SECTION 9. SECURED PARTY APPOINTED ATTORNEY-IN-FACT. Pledgor hereby
----------------------------------------
irrevocably appoints Secured Party as Pledgor's attorney-in-fact, with full
authority in the place and stead of Pledgor and in the name of Pledgor, Secured
Party or otherwise, from time to time in Secured Party's discretion to take any
action and to execute any instrument that Secured Party may deem necessary or
advisable to accomplish the purposes of this Agreement, including to file one or
more financing or continuation statements, or amendments thereto, relative to
all or any part of the Collateral without the signature of Pledgor.
SECTION 10. SECURED PARTY MAY PERFORM. If Pledgor fails to perform any
-------------------------
agreement contained herein, Secured Party may itself perform, or cause
performance of, such agreement, and the expenses of Secured Party incurred in
connection therewith shall be payable by Pledgor under Section 14.
SECTION 11. STANDARD OF CARE. The powers conferred on Secured Party
----------------
hereunder are solely to protect its interest in the Collateral and shall not
impose any duty upon it to exercise any such powers. Except for the exercise of
reasonable care in the custody of any Collateral in its possession and the
accounting for moneys actually received by it hereunder, Secured Party shall
have no duty as to any Collateral, it being understood that Secured Party shall
have no responsibility for (a) taking any necessary steps (other than steps
taken in accordance with the standard of care set forth above to maintain
possession of the Collateral) to preserve rights against any parties with
respect to any Collateral or (b) taking any necessary steps to collect or
realize upon the Secured Obligations or any guarantee therefor, or any part
thereof, or any of the Collateral. Secured Party shall be deemed to have
exercised reasonable care in the custody and preservation of Collateral in its
possession if such Collateral is accorded treatment substantially equal to that
which Secured Party accords its own property of like kind.
SECTION 12. REMEDIES. Subject to the provisions of Section 3(b), Secured
--------
Party may exercise in respect of the Collateral, in addition to all other rights
and remedies otherwise available to it, all the rights and remedies of a secured
party on
XI-5
default under the Uniform Commercial Code as in effect in any relevant
jurisdiction (the "CODE") (whether or not the Code applies to the affected
Collateral).
SECTION 13. INDEMNITY AND EXPENSES.
----------------------
(a) Pledgor agrees to indemnify Secured Party and each Lender from and
against any and all claims, losses and liabilities in any way relating to,
growing out of or resulting from this Agreement and the transactions
contemplated hereby (including enforcement of this Agreement), except to the
extent such claims, losses or liabilities result solely from Secured Party's or
such Lender's gross negligence or willful misconduct as finally determined by a
court of competent jurisdiction.
(b) Pledgor shall pay to Secured Party upon demand the amount of any and
all costs and expenses, including the reasonable fees and expenses of its
counsel and of any experts and agents, that Secured Party may incur in
connection with (i) the administration of this Agreement, (ii) the custody,
preservation, use or operation of, or the sale of, collection from, or other
realization upon, any of the Collateral, (iii) the exercise or enforcement of
any of the rights of Secured Party hereunder, or (iv) the failure by Pledgor to
perform or observe any of the provisions hereof.
SECTION 14. CONTINUING SECURITY INTEREST; TRANSFER OF LOANS. This
-----------------------------------------------
Agreement shall create a continuing security interest in the Collateral and
shall (a) remain in full force and effect until the payment in full of the
Secured Obligations, the cancellation or termination of the Commitments and the
cancellation or expiration of all outstanding Letters of Credit, (b) be binding
upon Pledgor, its successors and assigns, and (c) inure, together with the
rights and remedies of Secured Party hereunder, to the benefit of Secured Party
and its successors, transferees and assigns. Without limiting the generality of
the foregoing clause (c), but subject to the provisions of subsection 10.1 of
the Credit Agreement, any Lender may assign or otherwise transfer any Loans held
by it to any other Person, and such other Person shall thereupon become vested
with all the benefits in respect thereof granted to Lenders herein or otherwise.
Upon the payment in full of all Secured Obligations, the cancellation or
termination of the Commitments and the cancellation or expiration of all
outstanding Letters of Credit, the security interest granted hereby shall
terminate and all rights to the Collateral shall revert to Pledgor. Upon any
such termination Secured Party shall, at Pledgor's expense, execute and deliver
to Pledgor such documents as Pledgor shall reasonably request to evidence such
termination and Pledgor shall be entitled to the return, upon its request and at
its expense, against receipt and without recourse to Secured Party, of such of
the Collateral as shall not have been otherwise applied pursuant to the terms
hereof.
SECTION 15. SECURED PARTY AS AGENT.
----------------------
(a) Secured Party has been appointed to act as Secured Party hereunder by
Lenders. Secured Party shall be obligated, and shall have the right hereunder,
to make demands, to give notices, to exercise or refrain from exercising any
rights, and to take or refrain from taking any action (including the release or
substitution of Collateral), solely in accordance with this Agreement and the
Credit Agreement.
XI-6
(b) Secured Party shall at all times be the same Person that is Agent
under the Credit Agreement. Written notice of resignation by Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute notice of
resignation as Secured Party under this Agreement; removal of Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute removal as Secured
Party under this Agreement; and appointment of a successor Agent pursuant to
subsection 9.5 of the Credit Agreement shall also constitute appointment of a
successor Secured Party under this Agreement. Upon the acceptance of any
appointment as Agent under subsection 9.5 of the Credit Agreement by a successor
Agent, that successor Agent shall thereupon succeed to and become vested with
all the rights, powers, privileges and duties of the retiring or removed Secured
Party under this Agreement, and the retiring or removed Secured Party under this
Agreement shall promptly (i) transfer to such successor Secured Party all sums
held by Secured Party hereunder (which shall be deposited in a new Collateral
Account established and maintained by such successor Secured Party), together
with all records and other documents necessary or appropriate in connection with
the performance of the duties of the successor Secured Party under this
Agreement, and (ii) execute and deliver to such successor Secured Party such
amendments to financing statements, and take such other actions, as may be
necessary or appropriate in connection with the assignment to such successor
Secured Party of the security interests created hereunder, whereupon such
retiring or removed Secured Party shall be discharged from its duties and
obligations under this Agreement. After any retiring or removed Agent's
resignation or removal hereunder as Secured Party, the provisions of this
Agreement shall inure to its benefit as to any actions taken or omitted to be
taken by it under this Agreement while it was Secured Party hereunder.
SECTION 16. AMENDMENTS; ETC. No amendment, modification, termination or
---------------
waiver of any provision of this Agreement, and no consent to any departure by
Pledgor herefrom, shall in any event be effective unless the same shall be in
writing and signed by Secured Party and, in the case of any such amendment or
modification, by Pledgor. Any such waiver or consent shall be effective only in
the specific instance and for the specific purpose for which it was given.
SECTION 17. NOTICES. Unless otherwise specifically provided herein, any
-------
notice or other communication herein required or permitted to be given shall be
in writing and may be personally served, telexed or sent by telefacsimile or
United States mail or courier service and shall be deemed to have been given
when delivered in person or by courier service, upon receipt of telefacsimile or
telex, or three Business Days after depositing it in the United States mail with
postage prepaid and properly addressed. For the purposes hereof, the address of
each party hereto shall be as provided in subsection 10.8 of the Credit
Agreement.
SECTION 18. FAILURE OR INDULGENCE NOT WAIVER; REMEDIES CUMULATIVE. No
-----------------------------------------------------
failure or delay on the part of Secured Party in the exercise of any power,
right or privilege hereunder shall impair such power, right or privilege or be
construed to be a waiver of any default or acquiescence therein, nor shall any
single or partial exercise of any such power, right or privilege preclude any
other or further exercise thereof or of any other power, right or privilege.
All rights and remedies existing under this Agreement are cumulative to, and not
exclusive of, any rights or remedies otherwise available.
XI-7
SECTION 19. SEVERABILITY. In case any provision in or obligation under
------------
this Agreement shall be invalid, illegal or unenforceable in any jurisdiction,
the validity, legality and enforceability of the remaining provisions or
obligations, or of such provision or obligation in any other jurisdiction, shall
not in any way be affected or impaired thereby.
SECTION 20. HEADINGS. Section and subsection headings in this Agreement
--------
are included herein for convenience of reference only and shall not constitute a
part of this Agreement for any other purpose or be given any substantive effect.
SECTION 21. GOVERNING LAW; TERMS. THIS AGREEMENT AND THE RIGHTS AND
--------------------
OBLIGATIONS OF THE PARTIES HEREUNDER SHALL BE GOVERNED BY, AND SHALL BE
CONSTRUED AND ENFORCED IN ACCORDANCE WITH, THE INTERNAL LAWS OF THE STATE OF
CALIFORNIA (INCLUDING SECTION 1646.5 OF THE CIVIL CODE OF THE STATE OF
CALIFORNIA), WITHOUT REGARD TO CONFLICTS OF LAWS PRINCIPLES, EXCEPT TO THE
EXTENT THAT THE CODE PROVIDES THAT THE PERFECTION OF THE SECURITY INTEREST
HEREUNDER, OR REMEDIES HEREUNDER, IN RESPECT OF ANY PARTICULAR COLLATERAL ARE
GOVERNED BY THE LAWS OF A JURISDICTION OTHER THAN THE STATE OF CALIFORNIA.
Unless otherwise defined herein or in the Credit Agreement, terms used in
Articles 8 and 9 of the Uniform Commercial Code in the State of California are
used herein as therein defined.
SECTION 22. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. ALL JUDICIAL
----------------------------------------------
PROCEEDINGS BROUGHT AGAINST PLEDGOR ARISING OUT OF OR RELATING TO THIS AGREEMENT
MAY BE BROUGHT IN ANY STATE OR FEDERAL COURT OF COMPETENT JURISDICTION IN THE
STATE OF CALIFORNIA, AND BY EXECUTION AND DELIVERY OF THIS AGREEMENT PLEDGOR
ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY AND
UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS AND IRREVOCABLY AGREES TO BE BOUND BY
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS AGREEMENT. Pledgor hereby
agrees that service of all process in any such proceeding in any such court may
be made by registered or certified mail, return receipt requested, to Pledgor at
its address provided in Section 17, such service being hereby acknowledged by
Pledgor to be sufficient for personal jurisdiction in any action against Pledgor
in any such court and to be otherwise effective and binding service in every
respect. Nothing herein shall affect the right to serve process in any other
manner permitted by law or shall limit the right of Secured Party to bring
proceedings against Pledgor in the courts of any other jurisdiction.
SECTION 23. WAIVER OF JURY TRIAL. PLEDGOR AND SECURED PARTY HEREBY AGREE
--------------------
TO WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE OF ACTION
BASED UPON OR ARISING OUT OF THIS AGREEMENT. The scope of this waiver is
intended to be all-encompassing of any and all disputes that may be filed in any
court and that relate to the subject matter of this transaction, including
contract claims, tort claims, breach of duty claims, and all other common law
and statutory claims. Pledgor and Secured Party each acknowledge that this
XI-8
waiver is a material inducement for Pledgor and Secured Party to enter into a
business relationship, that Pledgor and Secured Party have already relied on
this waiver in entering into this Agreement and that each will continue to rely
on this waiver in their related future dealings. Pledgor and Secured Party
further warrant and represent that each has reviewed this waiver with its legal
counsel, and that each knowingly and voluntarily waives its jury trial rights
following consultation with legal counsel. THIS WAIVER IS IRREVOCABLE, MEANING
THAT IT MAY NOT BE MODIFIED EITHER ORALLY OR IN WRITING (OTHER THAN BY A MUTUAL
WRITTEN WAIVER SPECIFICALLY REFERRING TO THIS SECTION 23 AND EXECUTED BY EACH OF
THE PARTIES HERETO), AND THIS WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS AGREEMENT. In the event of
litigation, this Agreement may be filed as a written consent to a trial by the
court.
SECTION 24. COUNTERPARTS. This Agreement may be executed in one or more
------------
counterparts and by different parties hereto in separate counterparts, each of
which when so executed and delivered shall be deemed an original, but all such
counterparts together shall constitute but one and the same instrument;
signature pages may be detached from multiple separate counterparts and attached
to a single counterpart so that all signature pages are physically attached to
the same document.
[Remainder of page intentionally left blank]
XI-9
IN WITNESS WHEREOF, Pledgor and Secured Party have caused this Agreement
to be duly executed and delivered by their respective officers thereunto duly
authorized as of the date first written above.
VARCO INTERNATIONAL, INC.
By: __________________________________
Title:
UNION BANK OF CALIFORNIA, N.A., as Agent,
Secured Party
By: __________________________________
Title:
XI-10
EXHIBIT XII-A
[FORM OF SUBSIDIARY GUARANTY]
AMENDED AND RESTATED GUARANTY
AMENDED AND RESTATED GUARANTY (this "GUARANTY"), dated as of June 27,
1997, made by ________________, a ________________ corporation ("GUARANTOR").
RECITALS
--------
A. Citicorp USA, Inc., Citibank N.A. and VARCO INTERNATIONAL, INC.,
a California corporation (the "COMPANY") are parties to that certain Credit
Agreement dated as of February 25, 1993, as amended (the "CITICORP AGREEMENT").
The Company now seeks to terminate the commitments under such agreement and
enter into a new credit facility evidenced by the Credit Agreement referred to
below.
B. Certain financial institutions ("LENDERS"), as listed on the
signature pages of the Credit Agreement (as hereinafter defined), UNION BANK OF
CALIFORNIA, N.A., as agent ("AGENT") for and representative of the Lenders and
as issuing lender ("ISSUING LENDER" and together with Lenders, Agent and their
respective successors and assigns, the "BANK PARTIES") and Company have entered
into that certain Credit Agreement dated as of June 27, 1997 (as it may be
amended, modified, supplemented or restated from time to time, the "CREDIT
AGREEMENT").
C. The persons identified on Schedule 1 hereto (the "NOTEHOLDERS,"
and together with the Bank Parties, the "GUARANTEED PARTIES") are the holders of
the Company's 8.95% SENIOR NOTES due June 30, 1999 (the "SENIOR NOTES") issued
by the Company pursuant to that certain Note Agreement dated as of July 1, 1992
(as heretofore or hereafter amended, supplemented or restated from time to time,
the "SENIOR NOTE AGREEMENT").
D. Guarantor is a direct or indirect Subsidiary of the Company. For
purposes of this Guaranty, the term "SUBSIDIARY" or "SUBSIDIARIES" means any
corporation, partnership, joint venture, trust or estate of which (or in which)
more than 50% of (1) the outstanding capital stock having ordinary voting power
to elect a majority of the board of directors of such corporation (irrespective
of whether or not at the time capital stock of any other class or classes of
such corporation shall or might have voting power upon the occurrence of any
contingency), (2) the interest in the capital or profits of such partnership or
joint venture, or (3) the beneficial interest of such trust or estate, is at the
time directly or indirectly owned by the Company, by the Company and one or more
other Subsidiaries of the Company, or by one or more other Subsidiaries of the
Company.
E. Guarantor has previously executed and delivered a Guaranty dated
as of _________________ (the "EXISTING GUARANTY") which guarantees the Company's
obligations under the Citicorp Agreement and the Senior Note Agreement.
F. Guarantor may have received or may receive from the Company,
directly or indirectly, the proceeds of the issuance and sale of the Senior
Notes and Guarantor has or may otherwise directly or indirectly benefit from the
issuance and sale of the Senior Notes.
G. It is anticipated that Guarantor may receive from the Company,
directly or indirectly, the proceeds of the Loans (as defined in the Credit
Agreement), that Letters of Credit (as defined in the Credit Agreement) may be
issued for the account of the Guarantor or that the Guarantor may otherwise
directly or indirectly benefit from the issuances of such Letters of Credit and
other credit extensions made under the Credit Agreement after the date hereof.
H. It is a condition precedent to the making of the initial credit
advances by the Lenders under the Credit Agreement and the issuance of Letters
of Credit (as defined in the Credit Agreement) by the Issuing Lender under the
Credit Agreement that the Existing Guaranty be amended and restated in its
entirety as set forth herein.
I. The Credit Agreement contains certain provisions which, absent a
waiver and consent from the Noteholders (the "WAIVER"), would or might violate
certain provisions of the Senior Note Agreement, and it is a condition precedent
to the effectiveness of the Waiver that the Existing Guaranty be amended and
restated in its entirety as set forth herein.
J. Guarantor will obtain benefits as a result of the extensions of
credit to the Company under the Credit Agreement and desires to enter into this
Guaranty in order to satisfy the conditions described in the preceding
paragraphs.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to Guarantor, the receipt and sufficiency of which are hereby
acknowledged, the Existing Guaranty is hereby amended and restated in its
entirety and Guarantor hereby makes the following representations and warranties
to the Guaranteed Parties and hereby covenants and agrees with the Guaranteed
Parties as follows:
1. Guaranteed Obligations. (a) Bank Parties. Guarantor irrevocably
----------------------
and unconditionally guarantees as primary obligor and not merely as surety to
the Bank Parties the full and prompt payment when due (whether by acceleration
or otherwise) of the principal of and interest on all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code (as defined in the Credit Agreement), would become due) to the
Bank Parties under the Credit Agreement, including without limitation all of the
Obligations (as defined in the Credit Agreement), together with all other
liabilities and obligations of the Company (including, without limitation,
indemnities, fees, costs, expenses and interest thereon) to the Bank Parties
incurred or to be incurred under the Credit Agreement or any other Loan Document
(as defined in the Credit Agreement) (the "BANK GUARANTEED OBLIGATIONS").
Subject to the preceding sentence, Guarantor understands, agrees and confirms
that the Bank Parties
XII-A-2
may enforce this Guaranty up to the full amount of the Bank Guaranteed
Obligations against it without proceeding against the Company, against any
security for the Bank Guaranteed Obligations, against any other guarantor or any
other individual, partnership, corporation (including a business trust), joint
stock company, trust, unincorporated association, joint venture or other entity,
or a government or any political subdivision or agency thereof (hereinafter
referred to as "PERSON") or under any other guaranty covering all or any portion
of the Obligations (as defined in the Credit Agreement) or the Bank Guaranteed
Obligations.
(b) Noteholders. Guarantor irrevocably and unconditionally guarantees
as primary obligor and not merely as surety to the Noteholders the full and
prompt payment when due (whether by acceleration or otherwise) of the principal
of and interest on all obligations (including obligations which, but for the
automatic stay under Section 362(a) of the Bankruptcy Code (as defined in the
Credit Agreement), would become due) to the Noteholders under the Senior Note
Agreement and the Senior Notes, together with all other liabilities and
obligations of the Company (including, without limitation, indemnities, fees,
costs, expenses and interest thereon) to the Noteholders incurred or to be
incurred under the Senior Note Agreement, the Senior Notes or any other document
executed in connection with the Senior Note Agreement (the "NOTEHOLDER
GUARANTEED OBLIGATIONS" and, together with the Bank Guaranteed Obligations, the
"GUARANTEED OBLIGATIONS"). Subject to the preceding sentence, Guarantor
understands, agrees and confirms that the Noteholders may enforce this Guaranty
up to the full amount of the Noteholder Guaranteed Obligations against it
without proceeding against the Company, against any security for the Noteholder
Guaranteed Obligations, against any other guarantor or any other Person under
any other guaranty covering all or any portion of the Noteholder Guaranteed
Obligations.
2. Waivers. Guarantor hereby waives notice of acceptance of this
-------
Guaranty and notice of any liability to which it may apply, and waives
presentment, demand of payment, protest, notice of dishonor or nonpayment of any
such liability, suit or taking of other action by any or all of the Guaranteed
Parties against, and any other notice to, any party liable thereon (including
the Company, such Guarantor or any other guarantor).
3. Modifications to Guaranteed Obligations. Any or all of the
---------------------------------------
Guaranteed Parties may at any time and from time to time without the consent of
or Notice to Guarantor, without incurring responsibility to Guarantor, without
impairing or releasing the obligations of Guarantor hereunder, upon or without
any terms or conditions and in whole or in part
(a) change the manner, place or terms of payment of, change or
extend the time of payment of and/or, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to
the Guaranteed Obligations as so changed, extended, renewed or altered;
XII-A-3
(b) sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any of
those hereunder) incurred directly or indirectly in respect thereof or
hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Company, any other guarantor or others or otherwise act or refrain from
acting;
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of any
liability (whether due or not) of the Company to creditors of the Company
other than the Guaranteed Parties and such Guarantor;
(e) apply any sums by whomsoever paid or howsoever realized to
any liability or liabilities of the Company to the Guaranteed Parties
regardless of what liability or liabilities of the Company remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Senior Note Agreement, the Senior Notes or any of
the documents executed in connection with the Senior Note Agreement (the
"SENIOR NOTE DOCUMENTS") or the Loan Documents (as defined in the Credit
Agreement), or otherwise amend, modify or supplement any of the Senior Note
Documents or such Loan Documents or any of such other instruments or
agreements; and/or
(g) act or fail to act is any manner referred to in the Guaranty
which may deprive Guarantor or any other guarantor of any right to
subrogation against or reimbursement from the Company or contribution or
reimbursement against any other guarantor under any other guaranty to
recover full or partial indemnity for any payments made pursuant to this
Guaranty, including without limitation any right which is waived or limited
by Section 5 hereof.
4. Obligations Unimpaired. No invalidity, irregularity or
----------------------
unenforceability of all or part of the Guaranteed Obligations or of any security
therefor or any guaranty thereof shall affect, impair or be a defense to this
Guaranty, and this Guaranty shall be primary, absolute and unconditional
notwithstanding the occurrence of any event or the existence of any other
circumstances which might constitute a legal or equitable discharge of a surety
or guarantor except payment in full in cash of the Guaranteed Obligations.
5. Waiver of Subrogation; Repayment of Intercompany Indebtedness;
--------------------------------------------------------------
Limitation on Amount of Guaranty.
--------------------------------
(a) Guarantor expressly waives any and all rights of subrogation
which Guarantor may now or hereafter have against the Company, arising from the
existence or
XII-A-4
performance of this Guaranty. In furtherance, and not in limitation, of the
preceding waiver, Guarantor agrees that any payment to Guaranteed Parties by
Guarantor pursuant to this Guaranty shall be deemed (i) first, to the extent of
any intercompany indebtedness owed to the Company by Guarantor, whether or not
then due and payable, a payment on account of such intercompany indebtedness,
and (ii) thereafter, a contribution, dividend or other distribution of capital
of Guarantor to the Company or such other liable party, and any such payment
shall not constitute the Guarantor a creditor of the Company or such other
liable party. By its acknowledgment hereof, the Company consents to the
foregoing and agrees that any payment to the Guaranteed Parties by Guarantor
pursuant to this Guaranty shall be deemed a payment on account of intercompany
indebtedness owed to the Company by Guarantor to the extent of such intercompany
indebtedness, and that the amount of such intercompany indebtedness shall be
deemed paid and satisfied in the amount of any such payment.
(b) Anything contained in this Guaranty to the contrary
notwithstanding, if any Fraudulent Transfer Law (as hereinafter defined) is
determined by a court of competent jurisdiction to be applicable to the
obligations of Guarantor under this Guaranty, such obligations of Guarantor
hereunder shall be limited to a maximum aggregate amount equal to the largest
amount that would not render its obligations hereunder subject to avoidance as a
fraudulent transfer or conveyance under Section 548 of Title 11 of the United
States Code or any applicable provisions of comparable state law (collectively,
the "FRAUDULENT TRANSFER LAWS"), in each case after giving effect to all other
liabilities of Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
Guarantor in respect of intercompany indebtedness to the Company or other
affiliates of the Company to the extent that such indebtedness would be
discharged in an amount equal to the amount paid by Guarantor hereunder) and
after giving effect as assets to the value (as determined under the applicable
provisions of the Fraudulent Transfer Laws) of any rights to reimbursement,
indemnification or contribution of Guarantor pursuant to applicable law or
pursuant to the terms of any agreement (including without limitation any such
right of contribution under a Related Guaranty (as hereinafter defined) as
contemplated by subsection 5(c)).
(c) Guarantor under this Guaranty, and each guarantor under other
guaranties relating to the Credit Agreement and the Senior Note Agreement (the
"RELATED GUARANTIES") which contain a contribution provision similar to that set
forth in this subsection 5(c), together desire to allocate among themselves
(collectively, the "CONTRIBUTING GUARANTORS"), in a fair and equitable manner,
their obligations arising under this Guaranty and the Related Guaranties.
Accordingly, in the event any payment or distribution is made on any date by
Guarantor under this Guaranty or a guarantor under a Related Guaranty (a
"FUNDING GUARANTOR") that exceeds its Fair Share (as defined below) as of such
date, that Funding Guarantor shall be entitled to a contribution from each of
the other Contributing Guarantors in the amount of such other Contributing
Guarantor's Fair Share Shortfall (as defined below) as of such date, with the
result that all such contributions will cause each Contributing Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"FAIR SHARE" means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (i) the
XII-A-5
ratio of (x) the Adjusted Maximum Amount (as defined below) with respect to such
Contributing Guarantor to (y) the aggregate of the Adjusted Maximum Amounts with
respect to all Contributing Guarantors, multiplied by (ii) the aggregate amount
---------- --
paid or distributed on or before such date by all Funding Guarantors under this
Guaranty and the Related Guaranties in respect of the obligations guarantied.
"FAIR SHARE SHORTFALL" means, with respect to a Contributing Guarantor as of any
date of determination, the excess, if any, of the Fair Share of such
Contributing Guarantor over the Aggregate Payments of such Contributing
Guarantor. "ADJUSTED MAXIMUM AMOUNT" means, with respect to a Contributing
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Contributing Guarantor under this Guaranty and the Related
Guaranties, determined as of such date in accordance with subsection 5(b) or, if
applicable, a similar provision contained in a Related Guaranty; provided that,
--------
solely for purposes of calculating the Adjusted Maximum Amount with respect to
any Contributing Guarantor for purposes of this subsection 5(c), any assets or
liabilities of such Contributing Guarantor arising by virtue of any rights to
subrogation, reimbursement or indemnification or any rights to or obligations of
contribution hereunder or under any similar provision contained in a Related
Guaranty shall not be considered as assets or liabilities of such Contributing
Guarantor. "AGGREGATE PAYMENTS" means, with respect to a Contributing Guarantor
as of any date of determination, an amount equal to (i) the aggregate amount of
all payments and distributions made on or before such date by such Contributing
Guarantor in respect of this Guaranty and the Related Guaranties (including,
without limitation, in respect of this subsection 5(c) or any similar provision
contained in a Related Guaranty) minus (ii) the aggregate amount of all payments
-----
received on or before such date by such Contributing Guarantor from the other
Contributing Guarantors as contributions under this subsection 5(c) or any
similar provision contained in a Related Guaranty. The amounts payable as
contributions hereunder and under similar provisions in the Related Guaranties
shall be determined as of the date on which the related payment or distribution
is made by the applicable Funding Guarantor. The allocation among Contributing
Guarantors of their obligations as set forth in this subsection 5(c) or any
similar provision contained in a Related Guaranty shall not be construed in any
way to limit the liability of any Contributing Guarantor hereunder or under a
Related Guaranty. Each Contributing Guarantor under a Related Guaranty is a
third party beneficiary to the contribution agreement set forth in this
subsection 5(c).
6. Payments Free and Clear of Taxes, Etc.
--------------------------------------
(a) Any and all payments made by Guarantor hereunder shall be made
free and clear of and without deduction for any and all present or future taxes,
levies, impacts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on net income and all income and
franchise taxes of the United States and any political subdivisions thereof (an
such non- excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If the Guarantor shall be
required by law to deduct any Taxes from or in respect of any sum payable
hereunder, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Guaranteed Parties receive an
amount equal to the
XII-A-6
sum they would have received had no such deductions been made, (ii) the
Guarantor shall make such deductions and (iii) the Guarantor shall pay the full
amount deducted to the relevant taxation authority or other authority in
accordance with applicable law.
(b) In addition, the Guarantor agrees to pay any present or future
stamp or documentary taxes or any other excise or property taxes, charges or
similar levies which arise from any payment made hereunder or from the
execution, delivery or registration of, or otherwise with respect to, this
Guaranty (hereinafter referred to as "OTHER TAXES").
(c) The Guarantor will indemnify each of the Guaranteed Parties for
the full amount of Taxes or Other Taxes (including, without limitation, any
Taxes or Other Taxes imposed by any jurisdiction on amounts payable under this
Section) paid by the Guaranteed Parties and any liability (including penalties,
interest and expenses) arising therefrom or with respect thereto, whether or not
such Taxes or Other Taxes were correctly or legally asserted. This
indemnification shall be made within 30 days from the date the Guaranteed
Parties make written demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the
Guarantor will furnish to each of the Guaranteed Parties, at its address
referred to in Section 17, the original or a certified copy of a receipt
evidencing payment thereof.
(e) Without prejudice to the survival of any other agreement of the
Guarantor hereunder, the agreements and obligations of the Guarantor contained
in this Section 6 shall survive the payment in full of the principal of and
interest on the Notes (as defined in the Credit Agreement), the termination or
expiration of the Letters of Credit (as defined in the Credit Agreement), the
payment in full of the principal of and interest on the Senior Notes and the
termination or expiration of the Commitments (as defined in the Credit
Agreement) and the termination of this Guaranty pursuant to Section 16 hereof or
otherwise.
7. Judgment.
--------
(a) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in U.S. Dollars (which, together with
the sign "$," means lawful money of the United States) into another currency,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Guaranteed Parties could purchase U.S. Dollars with such
other currency on the Business Day preceding that on which final judgment is
given. "BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in New York City.
(b) The obligation of the Guarantor in respect of any sum due from it
to the Guaranteed Parties hereunder shall, notwithstanding any judgment in a
currency other than U.S. Dollars, be discharged only to the extent that on the
Business Day following receipt by the Guaranteed Parties of any sum adjudged to
be so due in such other currency the Guaranteed Parties may in accordance with
normal banking procedures
XII-A-7
purchase U.S. Dollars with such other currency; if the U.S. Dollars so purchased
are less than the sum originally due to the Guaranteed Parties in U.S. Dollars,
the Guarantor agrees, as a separate obligation and notwithstanding any such
judgment, to indemnify the Guaranteed Parties against such loss, and if the U.S.
Dollars so purchased exceed the sum originally due to the Guaranteed Parties in
U.S. Dollars, the Guaranteed Parties agree to remit to the Guarantor such
excess.
8. Representations and Warranties. In order to induce the Bank
------------------------------
Parties to make available the credit facilities pursuant to the Credit Agreement
and in order to induce the Noteholders to sign the Waiver, Guarantor makes the
following representations, warranties and agreements:
(a) Corporate Status. Guarantor is a corporation duly
----------------
organized, validly existing and in good standing under the laws of the
jurisdiction of its organization, is duly qualified to do business as a
foreign corporation and in good standing as such in each jurisdiction in
which the conduct of its business or the ownership or leasing of its
properties makes such qualification necessary, except where the failure to
be so duly qualified or in good standing would not have and could not
reasonably be expected to have a Material Adverse Effect. "MATERIAL ADVERSE
EFFECT" means a material adverse effect, individually or in the aggregate,
upon (a) the business, operations, properties, prospects, assets or
condition (financial or otherwise) of the Company and its Subsidiaries,
taken as a whole, (b) the ability of the Company or any Subsidiary (if a
party thereto) to perform or of the Lender or the Issuing Lender to enforce
the Obligations (as defined in the Credit Agreement) under the Loan
Documents (as defined in the Credit Agreement), or (c) the ability of the
Company or any Subsidiary (if a party thereto) to perform or of the
Noteholders to enforce the obligation under the Senior Note Documents.
Guarantor has all requisite corporate power and authority to own and
operate its properties, to carry on its business as now conducted and as
proposed to be conducted and to enter into and to perform the Loan
Documents (as defined in the Credit Agreement) and Senior Note Documents to
which it is a party.
(b) Corporate Power and Authority Enforceability. The
--------------------------------------------
execution, delivery and performance of this Guaranty and the other Loan
Documents (as defined in the Credit Agreement) and the Senior Note
Documents to which Guarantor is a party are within the Guarantor's
corporate powers and have been duly authorized by all necessary corporate
action. Each such Loan Document and Senior Note Document to which Guarantor
is a party has been duly executed and delivered by Guarantor and each such
Loan Document and Senior Note Document constitutes the legal, valid and
binding obligation of the Guarantor, enforceable against the Guarantor in
accordance with its terms, except as such enforceability may be limited by
applicable bankruptcy, insolvency, reorganization, moratorium or similar
laws of general application relating to or affecting the enforcement of the
rights of creditors or by equitable principles, regardless of whether such
enforcement is sought in equity or at law.
XII-A-8
(c) No Violation. Neither the execution delivery or performance
------------
by Guarantor of any Loan Document (as defined in the Credit Agreement) or
Senior Note Document to which Guarantor is a party, nor compliance by it
with the terms and provisions thereof, nor the consummation of the
transactions contemplated therein, (i) will contravene any applicable
provision of any law, statute, rule or regulation or any order, writ,
injunction or decree of any court or governmental instrumentality, (ii)
will conflict or be inconsistent with or result in any breach 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 the property or assets of Guarantor
or any of its Subsidiaries pursuant to the terms of any indenture,
mortgage, deed of trust, agreement or other instrument to which Guarantor
or any of its Subsidiaries is a party or by which it or any of its property
or assets is bound or to which it may be subject or (iii) will violate any
provision of the Certificate of Incorporation or By-Laws of Guarantor or
any of its Subsidiaries.
(d) Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made), or exemption by,
any foreign or domestic governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with (i) the execution, delivery and performance of any Loan Document (as
defined in the Credit Agreement) or Senior Note Document to which Guarantor
is a party or (ii) the legality, validity, binding effect or enforceability
of any such Loan Document or Senior Note Document.
9. Representations and Warranties. Guarantor confirms that Schedule
------------------------------
5.1 of the Credit Agreement correctly sets forth its form of organization, its
jurisdiction of organization and the location of its chief executive office.
Guarantor confirms that each other representation and warranty contained in the
Credit Agreement or in the Senior Note Agreement, as any such representation and
warranty relates to Guarantor, is true and correct in all material respects.
10. Covenants. (a) Credit Agreement. Guarantor covenants and agrees
---------
that so long as any Loans, amount drawn under any Letter of Credit (as defined
in the Credit Agreement) or other amount owed to the Lender or the Issuing
Lender shall remain unpaid or the Lender or the Issuing Lender shall have any
Commitment (as defined in the Credit Agreement) under and until the expiration,
cancellation or cash collateralization of all such Letters of Credit pursuant to
Section 8 of the Credit Agreement, unless the Majority Bank Guaranteed Parties
(as hereinafter defined) shall otherwise consent in writing, it will comply with
each and every covenant and agreement of the Company contained in the Loan
Documents (as defined in the Credit Agreement) which indicates that the Company
will cause Guarantor to take or refrain from talking any action, and it will
not, to the extent that any action of the Company and its Subsidiaries is
subject to cumulative dollar limitations applicable to the Company and its
Subsidiaries under any restrictive covenant or other provision of any such Loan
Document, take any such action if in so doing such dollar limitations would be
exceeded
XII-A-9
(b) Senior Note Agreement. Each Guarantor covenants and agrees that
so long as any Senior Note shall remain unpaid, unless the Majority Noteholders
(as hereinafter defined) shall otherwise consent in writing, it will comply with
each and every covenant and agreement of the Company contained in the Senior
Note Documents which indicates that the Company will cause such Guarantor to
take or refrain from taking any action, and it will not, to the extent that any
action of the Company and its Subsidiaries is subject to cumulative dollar
limitations applicable to the Company and its Subsidiaries under any restrictive
covenant or other provision of any Senior Note Document, take any such action if
in so doing such dollar limitations would be exceeded.
11. Continuing Guaranty; No Waiver. This Guaranty is a continuing
------------------------------
one and all liabilities to which it applies or may apply under the terms hereof
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of the Guaranteed Parties in exercising any right,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein expressly specified are cumulative
and not exclusive of any rights or remedies which the Guaranteed Parties would
otherwise have. No notice to or demand on Guarantor in any case shall entitle
Guarantor or any other guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Guaranteed Parties to any other or further action in any circumstances without
notice or demand.
12. Successors and Assigns. This Guaranty shall be binding upon
----------------------
Guarantor and its successors and assigns and shall inure to the benefit of the
Guaranteed Parties and their successors and assigns.
13. Costs and Expenses. Guarantor hereby agrees to pay all
------------------
reasonable out-of-pocket costs and expenses of the Guaranteed Parties in
connection with the enforcement of this Guaranty (including, without limitation,
the reasonable fees and disbursements of counsel employed by the Guaranteed
Parties).
14. Amendments. No amendment or waiver of any provision of this
----------
Guaranty, and no consent to any departure by the Guarantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by: (i)
the Majority Bank Guaranteed Parties (as hereinafter defined), in the case of
amendments or waivers which affect only the Bank Parties and the Guarantor);
(ii) the Majority Noteholders (as hereinafter defined), in the case of
amendments or waivers which affect only the Noteholders and the Guarantor, or
(iii) the Majority Bank Guaranteed Parties and the Majority Noteholders, in all
other cases, and then in each case such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
15. Acknowledgement of Credit Agreement and Senior Note Agreement.
-------------------------------------------------------------
Guarantor acknowledges that executed (or conformed) copies of the Credit
Agreement and the other Loan Documents (as defined in the Credit Agreement), and
of the Senior Note Agreement and the other Senior Note Documents, have been made
available to its principal executive officers and such officers are familiar
with the contents thereof.
XII-A-10
16. Termination. This Guaranty shall terminate and be of no further
-----------
force and effect when all Guaranteed Obligations shall have been paid in full,
the Lender and the Issuing Lender shall not have any remaining Commitments (as
defined in the Credit Agreement) under the Credit Agreement and all of the
Letters of Credit (as defined in the Credit Agreement) shall have expired or
been cancelled. This Guaranty shall be reinstated and revived, and the
enforceability hereof shall continue, with respect to any amount at any time
paid to any Guaranteed Party on account of the Guaranteed Obligations which
thereafter shall be required to be restored or returned by such Guaranteed Party
upon any bankruptcy, insolvency or reorganization of Company, Guarantor or any
other Person or otherwise, as if such amount had not been paid or permitted to
be paid.
17. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address set forth
opposite its signature below, with a copy to Company at its address specified in
the Credit Agreement, and if to any Bank Party, at its address specified in the
Credit Agreement, and if to any Noteholder, at its address specified in the
Senior Note Agreement or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and other communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively.
18. Reinstatement. If any claim is ever made upon the Guaranteed
-------------
Parties for repayment or recovery of any amount or amounts received in payment
or on account of any Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (a) any judgment, decree or order
of any court or administrative body having jurisdiction over such payee or any
of its property or (b) any settlement or compromise of any such claim effected
by such payee with any such claimant (including the Company), then and in such
event Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any termination or
revocation hereof or the cancellation of any instrument evidencing any liability
of the Company or the Guarantor, and Guarantor shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.
19. Pro Rata Payments. All payments made by Guarantor hereunder
-----------------
shall be applied by the Guarantor to the ratable payment of the Guaranteed
Obligations due and owing to the Guaranteed Parties. Such ratable application
shall be required and effective whether or not all or any portion of the
obligations of the Guarantor hereunder shall be rendered invalid or
unenforceable under any fraudulent transfer, fraudulent conveyance or other
similar law, it being the intent of the Guarantor and the Guaranteed Parties
that any payments made by the Guarantor hereunder shall be applied ratably to
the holders of the Guaranteed Obligations then due and owing without regard to
the invalidity or unenforceability of any portion of this Guaranty.
XII-A-11
20. Multiple Demands; Joint Action by Guaranteed Parties. Guarantor
----------------------------------------------------
acknowledges that Guaranteed Parties may make one or more demands for payment
hereunder, and that the existence of any such demand shall in no way limit the
rights of the Guaranteed Parties to make additional, further or other subsequent
demands. Notwithstanding the foregoing or any other provision in the Loan
Documents (as defined in the Credit Agreement), no demand may be made hereunder
by the Bank Parties unless such demand is made on behalf of all of the Bank
Parties with the consent of the Requisite Lenders (as defined in the Credit
Agreement) ("MAJORITY BANK GUARANTEED PARTIES"). Furthermore, notwithstanding
the foregoing or any other provision in this Guaranty or the Senior Note
Documents, no demand may be made hereunder by the Noteholders unless such demand
is made on behalf of all of the Noteholders with the consent of holders of not
less than 66 2/3% of the outstanding principal amount of the Senior Notes
("MAJORITY NOTEHOLDERS").
21. Release Provisions. If all of the stock of Guarantor shall be
------------------
sold or otherwise disposed of in a transaction not prohibited by the Loan
Documents (as defined in the Credit Agreement) or the Senior Note Documents (in
each case after giving effect to any required application of the proceeds
thereof), the obligations of Guarantor hereunder shall automatically be
discharged and released without any further action by any Guaranteed Party,
effective as of the time of such sale or other disposition.
22. Statue of Limitations. Any acknowledgement or new promise,
---------------------
whether by payment of principal or interest or otherwise and whether by the
Company or others (including Guarantor), with respect to any of the Guaranteed
Obligations shall, if the statute of limitations in favor of Guarantor against
the Guaranteed Parties shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.
23. CHOICE OF LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. GUARANTOR HEREBY
----------------------------------------------
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN EITHER
OR THE BOROUGH OF MANHATTAN, STATE OF NEW YORK, OR THE CITY OF CHICAGO, STATE OF
ILLINOIS, OR THE CITY OF LOS ANGELES, STATE OF CALIFORNIA, AND IRREVOCABLY
AGREES THAT, SUBJECT TO THE GUARANTEED PARTIES' ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE OTHER LOAN
DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT SHALL BE LITIGATED IN SUCH COURTS.
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY
XII-A-12
ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT) OR SUCH OBLIGATION.
GUARANTOR DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, CT CORPORATION SYSTEM, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY
GUARANTOR WHICH IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE
ON ITS BEHALF SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT
IN NEW YORK, ILLINOIS OR CALIFORNIA, RESPECTIVELY, SUCH SERVICE BEING HEREBY
ACKNOWLEDGED BY GUARANTOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT.
A COPY OF ANY SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO
GUARANTOR AT ITS ADDRESS PROVIDED NEXT TO ITS SIGNATURE HERETO EXCEPT THAT
UNLESS OTHERWISE PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL
NOT AFFECT THE VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY
GUARANTOR REFUSES TO ACCEPT SERVICE, GUARANTOR HEREBY AGREES THAT SERVICE UPON
IT BY MAIL SHALL CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE
RIGHT TO SERVE PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE
RIGHT OF THE GUARANTEED PARTIES TO BRING PROCEEDINGS AGAINST GUARANTOR IN THE
COURTS OF ANY OTHER JURISDICTION.
25. WAIVER OF JURY TRIAL. THE GUARANTOR AND THE GUARANTEED PARTIES
--------------------
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY, ANY OF THE OTHER LOAN
DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT), ANY OF THE OTHER SENIOR NOTE
DOCUMENTS OR ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER
OF THIS GUARANTY AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE GUARANTOR
AND THE GUARANTEED PARTIES ALSO EACH WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF EITHER GUARANTEED
PARTY. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation, contract claims, tort
claims, breach of duty claim and all other common law and statutory claims. The
Guarantor and the Guaranteed Parties each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Guaranty and the other Loan Documents
(as defined in the Credit Agreement) and the other Senior Note Documents and
that each will continue to rely on the waiver in their related future dealings.
The Guarantor and the Guaranteed Parties further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN
XII-A-13
WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS, RENEWALS,
SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE OTHER LOAN DOCUMENTS (AS
DEFINED IN THE CREDIT AGREEMENT), THE OTHER SENIOR NOTE DOCUMENTS OR TO ANY
OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS GUARANTY. IN THE EVENT OF
LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
26. Counterparts. This Guaranty may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Company and the
Guaranteed Parties.
[Remainder of page intentionally left blank]
XII-A-14
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.
Address
-------
[Subsidiary]
By_____________________________________
Name:
Title:
Acknowledged
Varco International, Inc.
By_____________________________
Name: ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇
Title: Chief Financial Officer
XII-A-15
EXHIBIT XII-B
[FORM OF SUBSIDIARY GUARANTY]
GUARANTY
GUARANTY (this "GUARANTY"), dated as of _______, ____, made by
________________, a ________________ corporation ("GUARANTOR").
RECITALS
--------
A. Certain financial institutions ("LENDERS"), as listed on the
signature pages of the Credit Agreement (as hereinafter defined), UNION BANK OF
CALIFORNIA, N.A., as agent ("AGENT") for and representative of the Lenders and
as issuing lender ("ISSUING LENDER" and together with Lenders, Agent and their
respective successors and assigns, the "BANK PARTIES") and Company have entered
into that certain Credit Agreement dated as of June 27, 1997 (as it may be
amended, modified, supplemented or restated from time to time, the "CREDIT
AGREEMENT").
B. The persons identified on Schedule 1 hereto (the "NOTEHOLDERS," and
together with the Bank Parties, the "GUARANTEED PARTIES") are the holders of the
Company's 8.95% SENIOR NOTES due June 30, 1999 (the "SENIOR NOTES") issued by
the Company pursuant to that certain Note Agreement dated as of July 1, 1992 (as
heretofore or hereafter amended, supplemented or restated from time to time, the
"SENIOR NOTE AGREEMENT").
C. Guarantor is a direct or indirect Subsidiary of the Company. For
purposes of this Guaranty, the term "SUBSIDIARY" or "SUBSIDIARIES" means any
corporation, partnership, joint venture, trust or estate of which (or in which)
more than 50% of (1) the outstanding capital stock having ordinary voting power
to elect a majority of the board of directors of such corporation (irrespective
of whether or not at the time capital stock of any other class or classes of
such corporation shall or might have voting power upon the occurrence of any
contingency), (2) the interest in the capital or profits of such partnership or
joint venture, or (3) the beneficial interest of such trust or estate, is at the
time directly or indirectly owned by the Company, by the Company and one or more
other Subsidiaries of the Company, or by one or more other Subsidiaries of the
Company.
D. Guarantor may have received or may receive from the Company, directly
or indirectly, the proceeds of the issuance and sale of the Senior Notes and
Guarantor has or may otherwise directly or indirectly benefit from the issuance
and sale of the Senior Notes.
E. It is anticipated that Guarantor may receive from the Company,
directly or indirectly, the proceeds of the Loans (as defined in the Credit
Agreement), that Letters of Credit (as defined in the Credit Agreement) may be
issued for the account
XII-B-1
of the Guarantor or that the Guarantor may otherwise directly or indirectly
benefit from the issuances of such Letters of Credit and other credit extensions
made under the Credit Agreement after the date hereof.
F. It is a condition precedent to the making of the initial credit
advances by the Lenders under the Credit Agreement and the issuance of Letters
of Credit (as defined in the Credit Agreement) by the Issuing Lender under the
Credit Agreement that the Guarantor shall have executed and delivered this
Guaranty.
G. The Credit Agreement contains certain provisions which, absent a
waiver and consent from the Noteholders (the "WAIVER"), would or might violate
certain provisions of the Senior Note Agreement, and it is a condition precedent
to the execution and delivery by the Noteholders of the waiver that the
Guarantor shall have executed and delivered this Guaranty.
H. Guarantor will obtain benefits as a result of the extensions of
credit to the Company under the Credit Agreement and desires to enter into this
Guaranty in order to satisfy the conditions described in the preceding
paragraphs.
AGREEMENT
---------
NOW, THEREFORE, in consideration of the foregoing and other benefits
accruing to Guarantor, the receipt and sufficiency of which are hereby
acknowledged, Guarantor hereby makes the following representations and
warranties to the Guaranteed Parties and hereby covenants and agrees with the
Guaranteed Parties as follows:
1. Guaranteed Obligations. (a) Bank Parties. Guarantor irrevocably and
----------------------
unconditionally guarantees as primary obligor and not merely as surety to the
Bank Parties the full and prompt payment when due (whether by acceleration or
otherwise) of the principal of and interest on all obligations (including
obligations which, but for the automatic stay under Section 362(a) of the
Bankruptcy Code (as defined in the Credit Agreement), would become due) to the
Bank Parties under the Credit Agreement, including without limitation all of the
Obligations (as defined in the Credit Agreement), together with all other
liabilities and obligations of the Company (including, without limitation,
indemnities, fees, costs, expenses and interest thereon) to the Bank Parties
incurred or to be incurred under the Credit Agreement or any other Loan Document
(as defined in the Credit Agreement) (the "BANK GUARANTEED OBLIGATIONS").
Subject to the preceding sentence, Guarantor understands, agrees and confirms
that the Bank Parties may enforce this Guaranty up to the full amount of the
Bank Guaranteed Obligations against it without proceeding against the Company,
against any security for the Bank Guaranteed Obligations, against any other
guarantor or any other individual, partnership, corporation (including a
business trust), joint stock company, trust, unincorporated association, joint
venture or other entity, or a government or any political subdivision or agency
thereof (hereinafter referred to as "PERSON") or under any other guaranty
covering all or any portion of the Obligations (as defined in the Credit
Agreement) or the Bank Guaranteed Obligations.
XII-B-2
(b) Noteholders. Guarantor irrevocably and unconditionally guarantees as
primary obligor and not merely as surety to the Noteholders the full and prompt
payment when due (whether by acceleration or otherwise) of the principal of and
interest on all obligations (including obligations which, but for the automatic
stay under Section 362(a) of the Bankruptcy Code (as defined in the Credit
Agreement), would become due) to the Noteholders under the Senior Note Agreement
and the Senior Notes, together with all other liabilities and obligations of the
Company (including, without limitation, indemnities, fees, costs, expenses and
interest thereon) to the Noteholders incurred or to be incurred under the Senior
Note Agreement, the Senior Notes or any other document executed in connection
with the Senior Note Agreement (the "NOTEHOLDER GUARANTEED OBLIGATIONS" and,
together with the Bank Guaranteed Obligations, the "GUARANTEED OBLIGATIONS").
Subject to the preceding sentence, Guarantor understands, agrees and confirms
that the Noteholders may enforce this Guaranty up to the full amount of the
Noteholder Guaranteed Obligations against it without proceeding against the
Company, against any security for the Noteholder Guaranteed Obligations, against
any other guarantor or any other Person under any other guaranty covering all or
any portion of the Noteholder Guaranteed Obligations.
2. Waivers. Guarantor hereby waives notice of acceptance of this
-------
Guaranty and notice of any liability to which it may apply, and waives
presentment, demand of payment, protest, notice of dishonor or nonpayment of any
such liability, suit or taking of other action by any or all of the Guaranteed
Parties against, and any other notice to, any party liable thereon (including
the Company, such Guarantor or any other guarantor).
3. Modifications to Guaranteed Obligations. Any or all of the
---------------------------------------
Guaranteed Parties may at any time and from time to time without the consent of
or Notice to Guarantor, without incurring responsibility to Guarantor, without
impairing or releasing the obligations of Guarantor hereunder, upon or without
any terms or conditions and in whole or in part
(a) change the manner, place or terms of payment of, change or extend
the time of payment of and/or, renew or alter, any of the Guaranteed
Obligations, any security therefor, or any liability incurred directly or
indirectly in respect thereof, and the guaranty herein made shall apply to the
Guaranteed Obligations as so changed, extended, renewed or altered;
(b) sell, exchange, release, surrender, realize upon or otherwise
deal with in any manner and in any order any property by whomsoever at any
time pledged or mortgaged to secure, or howsoever securing, the Guaranteed
Obligations or any liabilities (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and/or any offset
thereagainst;
(c) exercise or refrain from exercising any rights against the
Company, any other guarantor or others or otherwise act or refrain from
acting;
XII-B-3
(d) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder) incurred
directly or indirectly in respect thereof or hereof, and may subordinate the
payment of all or any part thereof to the payment of any liability (whether
due or not) of the Company to creditors of the Company other than the
Guaranteed Parties and such Guarantor;
(e) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Company to the Guaranteed Parties regardless
of what liability or liabilities of the Company remain unpaid;
(f) consent to or waive any breach of, or any act, omission or
default under, any of the Senior Note Agreement, the Senior Notes or any of
the documents executed in connection with the Senior Note Agreement (the
"SENIOR NOTE DOCUMENTS") or the Loan Documents (as defined in the Credit
Agreement), or otherwise amend, modify or supplement any of the Senior Note
Documents or such Loan Documents or any of such other instruments or
agreements; and/or
(g) act or fail to act is any manner referred to in the Guaranty
which may deprive Guarantor or any other guarantor of any right to subrogation
against or reimbursement from the Company or contribution or reimbursement
against any other guarantor under any other guaranty to recover full or
partial indemnity for any payments made pursuant to this Guaranty, including
without limitation any right which is waived or limited by Section 5 hereof.
4. Obligations Unimpaired. No invalidity, irregularity or
----------------------
unenforceability of all or part of the Guaranteed Obligations or of any security
therefor or any guaranty thereof shall affect, impair or be a defense to this
Guaranty, and this Guaranty shall be primary, absolute and unconditional
notwithstanding the occurrence of any event or the existence of any other
circumstances which might constitute a legal or equitable discharge of a surety
or guarantor except payment in full in cash of the Guaranteed Obligations.
5. Waiver of Subrogation; Repayment of Intercompany Indebtedness;
--------------------------------------------------------------
Limitation on Amount of Guaranty.
--------------------------------
(a) Guarantor expressly waives any and all rights of subrogation which
Guarantor may now or hereafter have against the Company, arising from the
existence or performance of this Guaranty. In furtherance, and not in
limitation, of the preceding waiver, Guarantor agrees that any payment to
Guaranteed Parties by Guarantor pursuant to this Guaranty shall be deemed (i)
first, to the extent of any intercompany indebtedness owed to the Company by
Guarantor, whether or not then due and payable, a payment on account of such
intercompany indebtedness, and (ii) thereafter, a contribution, dividend or
other distribution of capital of Guarantor to the Company or such other liable
party, and any such payment shall not constitute the Guarantor a creditor of the
Company or such other liable party. By its acknowledgment hereof, the Company
consents to the foregoing and agrees that any payment to the Guaranteed Parties
by Guarantor pursuant
XII-B-4
to this Guaranty shall be deemed a payment on account of intercompany
indebtedness owed to the Company by Guarantor to the extent of such intercompany
indebtedness, and that the amount of such intercompany indebtedness shall be
deemed paid and satisfied in the amount of any such payment.
(b) Anything contained in this Guaranty to the contrary notwithstanding,
if any Fraudulent Transfer Law (as hereinafter defined) is determined by a court
of competent jurisdiction to be applicable to the obligations of Guarantor under
this Guaranty, such obligations of Guarantor hereunder shall be limited to a
maximum aggregate amount equal to the largest amount that would not render its
obligations hereunder subject to avoidance as a fraudulent transfer or
conveyance under Section 548 of Title 11 of the United States Code or any
applicable provisions of comparable state law (collectively, the "FRAUDULENT
TRANSFER LAWS"), in each case after giving effect to all other liabilities of
Guarantor, contingent or otherwise, that are relevant under the Fraudulent
Transfer Laws (specifically excluding, however, any liabilities of Guarantor in
respect of intercompany indebtedness to the Company or other affiliates of the
Company to the extent that such indebtedness would be discharged in an amount
equal to the amount paid by Guarantor hereunder) and after giving effect as
assets to the value (as determined under the applicable provisions of the
Fraudulent Transfer Laws) of any rights to reimbursement, indemnification or
contribution of Guarantor pursuant to applicable law or pursuant to the terms of
any agreement (including without limitation any such right of contribution under
a Related Guaranty (as hereinafter defined) as contemplated by subsection 5(c)).
(c) Guarantor under this Guaranty, and each guarantor under other
guaranties relating to the Credit Agreement and the Senior Note Agreement (the
"RELATED GUARANTIES") which contain a contribution provision similar to that set
forth in this subsection 5(c), together desire to allocate among themselves
(collectively, the "CONTRIBUTING GUARANTORS"), in a fair and equitable manner,
their obligations arising under this Guaranty and the Related Guaranties.
Accordingly, in the event any payment or distribution is made on any date by
Guarantor under this Guaranty or a guarantor under a Related Guaranty (a
"FUNDING GUARANTOR") that exceeds its Fair Share (as defined below) as of such
date, that Funding Guarantor shall be entitled to a contribution from each of
the other Contributing Guarantors in the amount of such other Contributing
Guarantor's Fair Share Shortfall (as defined below) as of such date, with the
result that all such contributions will cause each Contributing Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"FAIR SHARE" means, with respect to a Contributing Guarantor as of any date of
determination, an amount equal to (i) the ratio of (x) the Adjusted Maximum
Amount (as defined below) with respect to such Contributing Guarantor to (y) the
aggregate of the Adjusted Maximum Amounts with respect to all Contributing
Guarantors, multiplied by (ii) the aggregate amount paid or distributed on or
---------- --
before such date by all Funding Guarantors under this Guaranty and the Related
Guaranties in respect of the obligations guarantied. "FAIR SHARE SHORTFALL"
means, with respect to a Contributing Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Contributing Guarantor over the
Aggregate Payments of such Contributing Guarantor. "ADJUSTED MAXIMUM AMOUNT"
means, with respect to a Contributing Guarantor as of any date of determination,
the maximum
XII-B-5
aggregate amount of the obligations of such Contributing Guarantor under this
Guaranty and the Related Guaranties, determined as of such date in accordance
with subsection 5(b) or, if applicable, a similar provision contained in a
Related Guaranty; provided that, solely for purposes of calculating the Adjusted
--------
Maximum Amount with respect to any Contributing Guarantor for purposes of this
subsection 5(c), any assets or liabilities of such Contributing Guarantor
arising by virtue of any rights to subrogation, reimbursement or indemnification
or any rights to or obligations of contribution hereunder or under any similar
provision contained in a Related Guaranty shall not be considered as assets or
liabilities of such Contributing Guarantor. "AGGREGATE PAYMENTS" means, with
respect to a Contributing Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on or
before such date by such Contributing Guarantor in respect of this Guaranty and
the Related Guaranties (including, without limitation, in respect of this
subsection 5(c) or any similar provision contained in a Related Guaranty) minus
-----
(ii) the aggregate amount of all payments received on or before such date by
such Contributing Guarantor from the other Contributing Guarantors as
contributions under this subsection 5(c) or any similar provision contained in a
Related Guaranty. The amounts payable as contributions hereunder and under
similar provisions in the Related Guaranties shall be determined as of the date
on which the related payment or distribution is made by the applicable Funding
Guarantor. The allocation among Contributing Guarantors of their obligations as
set forth in this subsection 5(c) or any similar provision contained in a
Related Guaranty shall not be construed in any way to limit the liability of any
Contributing Guarantor hereunder or under a Related Guaranty. Each Contributing
Guarantor under a Related Guaranty is a third party beneficiary to the
contribution agreement set forth in this subsection 5(c).
6. Payments Free and Clear of Taxes, Etc.
--------------------------------------
(a) Any and all payments made by Guarantor hereunder shall be made free
and clear of and without deduction for any and all present or future taxes,
levies, impacts, deductions, charges or withholdings, and all liabilities with
respect thereto, excluding taxes imposed on net income and all income and
franchise taxes of the United States and any political subdivisions thereof (an
such non- excluded taxes, levies, imposts, deductions, charges, withholdings and
liabilities being hereinafter referred to as "TAXES"). If the Guarantor shall
be required by law to deduct any Taxes from or in respect of any sum payable
hereunder, (i) the sum payable shall be increased as may be necessary so that
after making all required deductions (including deductions applicable to
additional sums payable under this Section) the Guaranteed Parties receive an
amount equal to the sum they would have received had no such deductions been
made, (ii) the Guarantor shall make such deductions and (iii) the Guarantor
shall pay the full amount deducted to the relevant taxation authority or other
authority in accordance with applicable law.
(b) In addition, the Guarantor agrees to pay any present or future stamp
or documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or from the execution,
delivery or registration of, or otherwise with respect to, this Guaranty
(hereinafter referred to as "OTHER TAXES").
XII-B-6
(c) The Guarantor will indemnify each of the Guaranteed Parties for the
full amount of Taxes or Other Taxes (including, without limitation, any Taxes or
Other Taxes imposed by any jurisdiction on amounts payable under this Section)
paid by the Guaranteed Parties and any liability (including penalties, interest
and expenses) arising therefrom or with respect thereto, whether or not such
Taxes or Other Taxes were correctly or legally asserted. This indemnification
shall be made within 30 days from the date the Guaranteed Parties make written
demand therefor.
(d) Within 30 days after the date of any payment of Taxes, the Guarantor
will furnish to each of the Guaranteed Parties, at its address referred to in
Section 17, the original or a certified copy of a receipt evidencing payment
thereof.
(e) Without prejudice to the survival of any other agreement of the
Guarantor hereunder, the agreements and obligations of the Guarantor contained
in this Section 6 shall survive the payment in full of the principal of and
interest on the Notes (as defined in the Credit Agreement), the termination or
expiration of the Letters of Credit (as defined in the Credit Agreement), the
payment in full of the principal of and interest on the Senior Notes and the
termination or expiration of the Commitments (as defined in the Credit
Agreement) and the termination of this Guaranty pursuant to Section 16 hereof or
otherwise.
7. Judgment.
--------
(a) If for the purposes of obtaining judgment in any court it is
necessary to convert a sum due hereunder in U.S. Dollars (which, together with
the sign "$," means lawful money of the United States) into another currency,
the parties hereto agree, to the fullest extent that they may effectively do so,
that the rate of exchange used shall be that at which in accordance with normal
banking procedures the Guaranteed Parties could purchase U.S. Dollars with such
other currency on the Business Day preceding that on which final judgment is
given. "BUSINESS DAY" means a day of the year on which banks are not required or
authorized to close in New York City.
(b) The obligation of the Guarantor in respect of any sum due from it to
the Guaranteed Parties hereunder shall, notwithstanding any judgment in a
currency other than U.S. Dollars, be discharged only to the extent that on the
Business Day following receipt by the Guaranteed Parties of any sum adjudged to
be so due in such other currency the Guaranteed Parties may in accordance with
normal banking procedures purchase U.S. Dollars with such other currency; if the
U.S. Dollars so purchased are less than the sum originally due to the Guaranteed
Parties in U.S. Dollars, the Guarantor agrees, as a separate obligation and
notwithstanding any such judgment, to indemnify the Guaranteed Parties against
such loss, and if the U.S. Dollars so purchased exceed the sum originally due to
the Guaranteed Parties in U.S. Dollars, the Guaranteed Parties agree to remit to
the Guarantor such excess.
8. Representations and Warranties. In order to induce the Bank Parties
------------------------------
to make available the credit facilities pursuant to the Credit Agreement and in
order to
XII-B-7
induce the Noteholders to sign the Waiver, Guarantor makes the following
representations, warranties and agreements:
(a) Corporate Status. Guarantor is a corporation duly organized,
----------------
validly existing and in good standing under the laws of the jurisdiction of
its organization, is duly qualified to do business as a foreign corporation
and in good standing as such in each jurisdiction in which the conduct of its
business or the ownership or leasing of its properties makes such
qualification necessary, except where the failure to be so duly qualified or
in good standing would not have and could not reasonably be expected to have a
Material Adverse Effect. "MATERIAL ADVERSE EFFECT" means a material adverse
effect, individually or in the aggregate, upon (a) the business, operations,
properties, prospects, assets or condition (financial or otherwise) of the
Company and its Subsidiaries, taken as a whole, (b) the ability of the Company
or any Subsidiary (if a party thereto) to perform or of the Lender or the
Issuing Lender to enforce the Obligations (as defined in the Credit Agreement)
under the Loan Documents (as defined in the Credit Agreement), or (c) the
ability of the Company or any Subsidiary (if a party thereto) to perform or of
the Noteholders to enforce the obligation under the Senior Note Documents.
Guarantor has all requisite corporate power and authority to own and operate
its properties, to carry on its business as now conducted and as proposed to
be conducted and to enter into and to perform the Loan Documents (as defined
in the Credit Agreement) and Senior Note Documents to which it is a party.
(b) Corporate Power and Authority Enforceability. The execution,
--------------------------------------------
delivery and performance of this Guaranty and the other Loan Documents (as
defined in the Credit Agreement) and the Senior Note Documents to which
Guarantor is a party are within the Guarantor's corporate powers and have been
duly authorized by all necessary corporate action. Each such Loan Document
and Senior Note Document to which Guarantor is a party has been duly executed
and delivered by Guarantor and each such Loan Document and Senior Note
Document constitutes the legal, valid and binding obligation of the Guarantor,
enforceable against the Guarantor in accordance with its terms, except as such
enforceability may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws of general application relating to
or affecting the enforcement of the rights of creditors or by equitable
principles, regardless of whether such enforcement is sought in equity or at
law.
(c) No Violation. Neither the execution delivery or performance by
------------
Guarantor of any Loan Document (as defined in the Credit Agreement) or Senior
Note Document to which Guarantor is a party, nor compliance by it with the
terms and provisions thereof, nor the consummation of the transactions
contemplated therein, (i) will contravene any applicable provision of any law,
statute, rule or regulation or any order, writ, injunction or decree of any
court or governmental instrumentality, (ii) will conflict or be inconsistent
with or result in any breach 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 the
property or assets of Guarantor or any
XII-B-8
of its Subsidiaries pursuant to the terms of any indenture, mortgage, deed
of trust, agreement or other instrument to which Guarantor or any of its
Subsidiaries is a party or by which it or any of its property or assets is
bound or to which it may be subject or (iii) will violate any provision of
the Certificate of Incorporation or By-Laws of Guarantor or any of its
Subsidiaries.
(d) Governmental Approvals. No order, consent, approval,
----------------------
license, authorization or validation of, or filing, recording or
registration with (except as have been obtained or made), or exemption by,
any foreign or domestic governmental or public body or authority, or any
subdivision thereof, is required to authorize, or is required in connection
with (i) the execution, delivery and performance of any Loan Document (as
defined in the Credit Agreement) or Senior Note Document to which Guarantor
is a party or (ii) the legality, validity, binding effect or enforceability
of any such Loan Document or Senior Note Document.
9. Representations and Warranties. Guarantor confirms that
------------------------------
Schedule 5.1 of the Credit Agreement correctly sets forth its form of
organization, its jurisdiction of organization and the location of its chief
executive office. Guarantor confirms that each other representation and warranty
contained in the Credit Agreement or in the Senior Note Agreement, as any such
representation and warranty relates to Guarantor, is true and correct in all
material respects.
10. Covenants. (a) Credit Agreement. Guarantor covenants and agrees
---------
that so long as any Loans, amount drawn under any Letter of Credit (as defined
in the Credit Agreement) or other amount owed to the Lender or the Issuing
Lender shall remain unpaid or the Lender or the Issuing Lender shall have any
Commitment (as defined in the Credit Agreement) under and until the expiration,
cancellation or cash collateralization of all such Letters of Credit pursuant to
Section 8 of the Credit Agreement, unless the Majority Bank Guaranteed Parties
(as hereinafter defined) shall otherwise consent in writing, it will comply with
each and every covenant and agreement of the Company contained in the Loan
Documents (as defined in the Credit Agreement) which indicates that the Company
will cause Guarantor to take or refrain from talking any action, and it will
not, to the extent that any action of the Company and its Subsidiaries is
subject to cumulative dollar limitations applicable to the Company and its
Subsidiaries under any restrictive covenant or other provision of any such Loan
Document, take any such action if in so doing such dollar limitations would be
exceeded
(b) Senior Note Agreement. Each Guarantor covenants and agrees that so
long as any Senior Note shall remain unpaid, unless the Majority Noteholders (as
hereinafter defined) shall otherwise consent in writing, it will comply with
each and every covenant and agreement of the Company contained in the Senior
Note Documents which indicates that the Company will cause such Guarantor to
take or refrain from taking any action, and it will not, to the extent that any
action of the Company and its Subsidiaries is subject to cumulative dollar
limitations applicable to the Company and its Subsidiaries under any restrictive
covenant or other provision of any Senior Note Document, take any such action if
in so doing such dollar limitations would be exceeded.
▇▇▇-▇-▇
▇▇. Continuing Guaranty; No Waiver. This Guaranty is a continuing
------------------------------
one and all liabilities to which it applies or may apply under the terms hereof
shall be conclusively presumed to have been created in reliance hereon. No
failure or delay on the part of the Guaranteed Parties in exercising any right,
power or privilege hereunder shall operate as a waiver thereof; nor shall any
single or partial exercise of any right, power or privilege hereunder preclude
any other or further exercise thereof or the exercise of any other right, power
or privilege. The rights and remedies herein expressly specified are cumulative
and not exclusive of any rights or remedies which the Guaranteed Parties would
otherwise have. No notice to or demand on Guarantor in any case shall entitle
Guarantor or any other guarantor to any other further notice or demand in
similar or other circumstances or constitute a waiver of the rights of the
Guaranteed Parties to any other or further action in any circumstances without
notice or demand.
12. Successors and Assigns. This Guaranty shall be binding upon
----------------------
Guarantor and its successors and assigns and shall inure to the benefit of the
Guaranteed Parties and their successors and assigns.
13. Costs and Expenses. Guarantor hereby agrees to pay all
------------------
reasonable out-of-pocket costs and expenses of the Guaranteed Parties in
connection with the enforcement of this Guaranty (including, without limitation,
the reasonable fees and disbursements of counsel employed by the Guaranteed
Parties).
14. Amendments. No amendment or waiver of any provision of this
----------
Guaranty, and no consent to any departure by the Guarantor herefrom, shall in
any event be effective unless the same shall be in writing and signed by: (i)
the Majority Bank Guaranteed Parties (as hereinafter defined), in the case of
amendments or waivers which affect only the Bank Parties and the Guarantor);
(ii) the Majority Noteholders (as hereinafter defined), in the case of
amendments or waivers which affect only the Noteholders and the Guarantor, or
(iii) the Majority Bank Guaranteed Parties and the Majority Noteholders, in all
other cases, and then in each case such waiver or consent shall be effective
only in the specific instance and for the specific purpose for which given.
15. Acknowledgement of Credit Agreement and Senior Note Agreement.
-------------------------------------------------------------
Guarantor acknowledges that executed (or conformed) copies of the Credit
Agreement and the other Loan Documents (as defined in the Credit Agreement), and
of the Senior Note Agreement and the other Senior Note Documents, have been made
available to its principal executive officers and such officers are familiar
with the contents thereof.
16. Termination. This Guaranty shall terminate and be of no further
-----------
force and effect when all Guaranteed Obligations shall have been paid in full,
the Lender and the Issuing Lender shall not have any remaining Commitments (as
defined in the Credit Agreement) under the Credit Agreement and all of the
Letters of Credit (as defined in the Credit Agreement) shall have expired or
been cancelled. This Guaranty shall be reinstated and revived, and the
enforceability hereof shall continue, with respect to any amount at any time
paid to any Guaranteed Party on account of the Guaranteed Obligations which
thereafter shall be required to be restored or returned by such Guaranteed Party
upon any bankruptcy, insolvency or reorganization of Company,
XII-B-10
Guarantor or any other Person or otherwise, as if such amount had not been paid
or permitted to be paid.
17. Addresses for Notices. All notices and other communications
---------------------
provided for hereunder shall be in writing (including telecopier, telegraphic,
telex or cable communication) and mailed, telecopied, telegraphed, telexed,
cabled or delivered to it, if to the Guarantor, at its address set forth
opposite its signature below, with a copy to Company at its address specified in
the Credit Agreement, and if to any Bank Party, at its address specified in the
Credit Agreement, and if to any Noteholder, at its address specified in the
Senior Note Agreement or, as to any party, at such other address as shall be
designated by such party in a written notice to the other parties. All such
notices and other communications shall, when mailed, telecopied, telegraphed,
telexed or cabled, be effective when deposited in the mails, telecopied,
delivered to the telegraph company, confirmed by telex answerback or delivered
to the cable company, respectively.
18. Reinstatement. If any claim is ever made upon the Guaranteed
-------------
Parties for repayment or recovery of any amount or amounts received in payment
or on account of any Guaranteed Obligations and any of the aforesaid payees
repays all or part of said amount by reason of (a) any judgment, decree or order
of any court or administrative body having jurisdiction over such payee or any
of its property or (b) any settlement or compromise of any such claim effected
by such payee with any such claimant (including the Company), then and in such
event Guarantor agrees that any such judgment, decree, order, settlement or
compromise shall be binding upon it, notwithstanding any termination or
revocation hereof or the cancellation of any instrument evidencing any liability
of the Company or the Guarantor, and Guarantor shall be and remain liable to the
aforesaid payees hereunder for the amount so repaid or recovered to the same
extent as if such amount had never originally been received by any such payee.
19. Pro Rata Payments. All payments made by Guarantor hereunder
-----------------
shall be applied by the Guarantor to the ratable payment of the Guaranteed
Obligations due and owing to the Guaranteed Parties. Such ratable application
shall be required and effective whether or not all or any portion of the
obligations of the Guarantor hereunder shall be rendered invalid or
unenforceable under any fraudulent transfer, fraudulent conveyance or other
similar law, it being the intent of the Guarantor and the Guaranteed Parties
that any payments made by the Guarantor hereunder shall be applied ratably to
the holders of the Guaranteed Obligations then due and owing without regard to
the invalidity or unenforceability of any portion of this Guaranty.
20. Multiple Demands; Joint Action by Guaranteed Parties. Guarantor
----------------------------------------------------
acknowledges that Guaranteed Parties may make one or more demands for payment
hereunder, and that the existence of any such demand shall in no way limit the
rights of the Guaranteed Parties to make additional, further or other subsequent
demands. Notwithstanding the foregoing or any other provision in the Loan
Documents (as defined in the Credit Agreement), no demand may be made hereunder
by the Bank Parties unless such demand is made on behalf of all of the Bank
Parties with the consent of the Requisite Lenders (as defined in the Credit
Agreement) ("MAJORITY BANK GUARANTEED
XII-B-11
PARTIES"). Furthermore, notwithstanding the foregoing or any other provision in
this Guaranty or the Senior Note Documents, no demand may be made hereunder by
the Noteholders unless such demand is made on behalf of all of the Noteholders
with the consent of holders of not less than 66 2/3% of the outstanding
principal amount of the Senior Notes ("MAJORITY NOTEHOLDERS").
21. Release Provisions. If all of the stock of Guarantor shall be
------------------
sold or otherwise disposed of in a transaction not prohibited by the Loan
Documents (as defined in the Credit Agreement) or the Senior Note Documents (in
each case after giving effect to any required application of the proceeds
thereof), the obligations of Guarantor hereunder shall automatically be
discharged and released without any further action by any Guaranteed Party,
effective as of the time of such sale or other disposition.
22. Statue of Limitations. Any acknowledgement or new promise,
---------------------
whether by payment of principal or interest or otherwise and whether by the
Company or others (including Guarantor), with respect to any of the Guaranteed
Obligations shall, if the statute of limitations in favor of Guarantor against
the Guaranteed Parties shall have commenced to run, toll the running of such
statute of limitations, and if the period of such statute of limitations shall
have expired, prevent the operation of such statute of limitations.
23. CHOICE OF LAW. THIS GUARANTY AND THE RIGHTS AND OBLIGATIONS OF
-------------
THE PARTIES HEREUNDER SHALL BE CONSTRUED IN ACCORDANCE WITH AND GOVERNED BY THE
LAWS OF THE STATE OF NEW YORK.
24. CONSENT TO JURISDICTION AND SERVICE OF PROCESS. GUARANTOR HEREBY
----------------------------------------------
CONSENTS TO THE JURISDICTION OF ANY STATE OR FEDERAL COURT LOCATED WITHIN EITHER
OR THE BOROUGH OF MANHATTAN, STATE OF NEW YORK, OR THE CITY OF CHICAGO, STATE OF
ILLINOIS, OR THE CITY OF LOS ANGELES, STATE OF CALIFORNIA, AND IRREVOCABLY
AGREES THAT, SUBJECT TO THE GUARANTEED PARTIES' ELECTION, ALL ACTIONS OR
PROCEEDINGS ARISING OUT OF OR RELATING TO THIS GUARANTY OR THE OTHER LOAN
DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT SHALL BE LITIGATED IN SUCH COURTS.
GUARANTOR ACCEPTS FOR ITSELF AND IN CONNECTION WITH ITS PROPERTIES, GENERALLY
AND UNCONDITIONALLY, THE NONEXCLUSIVE JURISDICTION OF THE AFORESAID COURTS AND
WAIVES ANY DEFENSE OF FORUM NON CONVENIENS, AND IRREVOCABLY AGREES TO BE BOUND
BY ANY JUDGMENT RENDERED THEREBY IN CONNECTION WITH THIS GUARANTY AND THE OTHER
LOAN DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT) OR SUCH OBLIGATION.
GUARANTOR DESIGNATES AND APPOINTS CT CORPORATION SYSTEM, ▇▇▇▇ ▇▇▇▇▇▇▇▇, ▇▇▇
▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇, CT CORPORATION SYSTEM, ▇▇▇ ▇▇▇▇▇ ▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇,
▇▇▇▇▇▇▇▇, ▇▇▇▇▇, AND SUCH OTHER PERSONS AS MAY HEREAFTER BE SELECTED BY
GUARANTOR WHICH IRREVOCABLY AGREE IN WRITING TO SO SERVE AS ITS AGENT TO RECEIVE
ON ITS BEHALF
XII-B-12
SERVICE OF ALL PROCESS IN ANY SUCH PROCEEDINGS IN ANY SUCH COURT IN NEW YORK,
ILLINOIS OR CALIFORNIA, RESPECTIVELY, SUCH SERVICE BEING HEREBY ACKNOWLEDGED BY
GUARANTOR TO BE EFFECTIVE AND BINDING SERVICE IN EVERY RESPECT. A COPY OF ANY
SUCH PROCESS SO SERVED SHALL BE MAILED BY REGISTERED MAIL TO GUARANTOR AT ITS
ADDRESS PROVIDED NEXT TO ITS SIGNATURE HERETO EXCEPT THAT UNLESS OTHERWISE
PROVIDED BY APPLICABLE LAW, ANY FAILURE TO MAIL SUCH COPY SHALL NOT AFFECT THE
VALIDITY OF SERVICE OF PROCESS. IF ANY AGENT APPOINTED BY GUARANTOR REFUSES TO
ACCEPT SERVICE, GUARANTOR HEREBY AGREES THAT SERVICE UPON IT BY MAIL SHALL
CONSTITUTE SUFFICIENT NOTICE. NOTHING HEREIN SHALL AFFECT THE RIGHT TO SERVE
PROCESS IN ANY OTHER MANNER PERMITTED BY LAW OR SHALL LIMIT THE RIGHT OF THE
GUARANTEED PARTIES TO BRING PROCEEDINGS AGAINST GUARANTOR IN THE COURTS OF ANY
OTHER JURISDICTION.
25. WAIVER OF JURY TRIAL. THE GUARANTOR AND THE GUARANTEED PARTIES
--------------------
EACH HEREBY WAIVE THEIR RESPECTIVE RIGHTS TO A JURY TRIAL OF ANY CLAIM OR CAUSE
OF ACTION BASED UPON OR ARISING OUT OF THIS GUARANTY, ANY OF THE OTHER LOAN
DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT), ANY OF THE OTHER SENIOR NOTE
DOCUMENTS OR ANY DEALINGS BETWEEN OR AMONG THEM RELATING TO THE SUBJECT MATTER
OF THIS GUARANTY AND THE RELATIONSHIP THAT IS BEING ESTABLISHED. THE GUARANTOR
AND THE GUARANTEED PARTIES ALSO EACH WAIVE ANY BOND OR SURETY OR SECURITY UPON
SUCH BOND WHICH MIGHT, BUT FOR THIS WAIVER, BE REQUIRED OF EITHER GUARANTEED
PARTY. The scope of this waiver is intended to be all-encompassing of any and
all disputes that may be filed in any court and that relate to the subject
matter of this transaction, including without limitation, contract claims, tort
claims, breach of duty claim and all other common law and statutory claims. The
Guarantor and the Guaranteed Parties each acknowledge that this waiver is a
material inducement to enter into a business relationship, that each has already
relied on the waiver in entering into this Guaranty and the other Loan Documents
(as defined in the Credit Agreement) and the other Senior Note Documents and
that each will continue to rely on the waiver in their related future dealings.
The Guarantor and the Guaranteed Parties further warrant and represent that each
has reviewed this waiver with its legal counsel, and that each knowingly and
voluntarily waives its jury trial rights following consultation with legal
counsel. THIS WAIVER IS IRREVOCABLE, MEANING THAT IT MAY NOT BE MODIFIED EITHER
ORALLY OR IN WRITING, AND THE WAIVER SHALL APPLY TO ANY SUBSEQUENT AMENDMENTS,
RENEWALS, SUPPLEMENTS OR MODIFICATIONS TO THIS GUARANTY, THE OTHER LOAN
DOCUMENTS (AS DEFINED IN THE CREDIT AGREEMENT), THE OTHER SENIOR NOTE DOCUMENTS
OR TO ANY OTHER DOCUMENTS OR AGREEMENTS RELATING TO THIS GUARANTY. IN THE EVENT
OF LITIGATION, THIS GUARANTY MAY BE FILED AS A WRITTEN CONSENT TO A TRIAL BY THE
COURT.
XII-B-13
26. Counterparts. This Guaranty may be executed in any number of
------------
counterparts and by the different parties hereto on separate counterparts, each
of which when so executed and delivered shall be an original, but all of which
shall together constitute one and the same instrument. A set of counterparts
executed by all the parties hereto shall be lodged with the Company and the
Guaranteed Parties.
[Remainder of page intentionally left blank]
XII-B-14
IN WITNESS WHEREOF, Guarantor has caused this Guaranty to be executed
and delivered as of the date first above written.
Address
-------
[Subsidiary]
By________________________________
Name:
Title:
Acknowledged
Varco International, Inc.
By____________________________
Name:
Title:
XII-B-15
NINTH AMENDMENT, WAIVER AND CONSENT
DATED AS OF JUNE 27, 1997
NINTH AMENDMENT, WAIVER AND CONSENT dated as of June 27, 1997 (this
"Amendment and Consent") to CREDIT AGREEMENT dated as of February 25, 1993 (as
amended by First Amendment dated as of August 3, 1993, Second Amendment dated as
of September 23, 1993, Third Amendment dated as of December 1, 1993, Fourth
Amendment dated as of May 12, 1994, Fifth Amendment and Waiver dated as of
October 31, 1994, Sixth Amendment dated as of March 17, 1995, Seventh Amendment
dated as of December 31, 1995, and Eighth Amendment dated as of June 9, 1997,
the "Credit Agreement") among VARCO INTERNATIONAL, INC., a California
corporation, CITICORP USA, INC. and CITIBANK, N.A.
PRELIMINARY STATEMENTS. The parties to the Credit Agreement wish to amend
the Credit Agreement in certain respects as hereinafter set forth. Terms defined
in the Credit Agreement are used in this Amendment and Consent as defined in the
Credit Agreement and, except as otherwise indicated, all references to Sections
and Articles refer to the corresponding Sections and Articles of the Credit
Agreement.
The parties hereto therefore agree as follows:
SECTION 1. Amendment. Effective as of the Amendment Effective Date (as
---------
defined in Section 3 hereof), and subject to the satisfaction of the conditions
precedent set forth in Section 3 hereof, the Credit Agreement is hereby amended
as follows:
a. Section 1.01 is amended by deleting all defined terms which are not
used in the Credit Agreement as amended by this Amendment and Consent.
b. The following Sections of Article II are deleted: 2.01, 2.02, 2.03,
2.04(a), 2.04(b) except the paragraph commencing with the caption "Payment of
----------
Amounts Drawn Under Letters of Credit", which shall be lettered "(c)", 2.04(g),
-------------------------------------
2.06, 2.07, 2.08, 2.09, 2.11, 2.13(d), and 2.15.
c. The penultimate sentence of the paragraph of Section 2.04(b) which is
lettered as Section 2.04(c) above) of Article II is deleted and restated as
follows:
Any such amount which is not reimbursed to the Issuing Bank within one
Business Day after notice thereof by the Issuing Bank shall thereafter
bear interest, until the amount is reimbursed in full to such Issuing
Bank at 2.5% above the Base Rate in effect from time to time.
d. Article III is deleted.
e. Article IV is deleted.
f. Article V is deleted.
g. Article VI is deleted.
h. The following Sections of this Article VII are deleted: 7.04, 7.09,
and 7.12
i. All Exhibits to the Credit Agreement which are not referred to in the
Credit Agreement as amended by this Amendment and Consent are deleted.
SECTION 2. Release of Guaranties and Subordination Agreements; Termination
---------------------------------------------------------------
of Commitment. (a) Effective as of the Amendment Effective Date (as defined in
-------------
Section 3 hereof), and subject to the satisfaction of the conditions precedent
set forth in Section 3 hereof, the Lender and the Issuing Bank terminate their
respective rights under, and release all outstanding Guaranties and
Subordination Agreements. Each of the Lender and the Issuing Bank represents and
warrants to the Borrower that neither the Lender nor the Issuing Bank has
assigned to any other Person any of its rights under the Loan Agreement, any
Guaranty, any Subordination Agreement or any other Loan Document.
(b) The Borrower hereby gives notice pursuant to Section 2.07(d) of the
termination in whole of the Commitment, effective as of the Amendment Effective
Date, and agrees that the Commitment, once terminated, shall not be reinstated.
The Lender hereby waives any notice of such termination otherwise required under
Section 2.07(d).
SECTION 3. Conditions to Effectiveness. This Amendment and Consent shall
---------------------------
be effective as of June 27, 1997 (the "Amendment Effective Date"), subject to
the Lender's receipt of: (i) a counterpart of this Amendment and Consent
executed by the Borrower, (ii) a certificate of the Secretary or an Assistant
Secretary of the Borrower attaching a copy of the resolutions of the Board of
Directors of the Borrower authorizing the execution and delivery of this
Amendment and Consent and certifying the name and true signature of each officer
of the Borrower executing this Amendment and Consent on its behalf, (iv)
repayment in full of all outstanding Advances, together with interest thereon to
the Amendment Effective Date and any amounts payable under Section 7.05(b) in
connection with the repayment of such advances, (v) payment of all commitment
fees under Section 2.06 accrued through the Amendment Effective Date and any
unpaid reimbursement obligations in respect of Letters of Credit which are
outstanding and unpaid on the Amendment Effective Date, and (vi) a Letter of
2.
Credit issued by Union Bank of California, N.A., naming the Issuing Bank as
beneficiary, in a face amount equal to the aggregate face amounts of all Letters
of Credit outstanding on the Amendment Effective Date, and otherwise
substantially in the form of Exhibit A hereto.
SECTION 4. Representations and Warranties. The Borrower represents and
------------------------------
warrants as follows as of the date hereof and the Effective Date: (a) the
Borrower is a corporation duly organized, validly existing and in good standing
under the laws of the jurisdiction indicated at the beginning of this Amendment
and Consent; (b) the execution, delivery and performance by the Borrower of this
Amendment and Consent are within the Borrower's corporate powers, have been duly
authorized by all necessary corporate action and do not contravene the
Borrower's charter or by-laws, or any law or any contractual restriction binding
on or affecting the Borrower; and (c) no authorization, approval or other action
by, and no notice to or filing with, any governmental authority or regulatory
body is required for the due execution and delivery by the Borrower of this
Amendment and Consent or for the performance by the Borrower of the Credit
Agreement as hereby amended; (d) this Amendment and Consent and the Credit
Agreement as hereby amended constitute the legal, valid and binding obligations
of the Borrower enforceable against the Borrower in accordance with their
respective terms.
SECTION 5. Reference to and Effect on the Credit Agreement. Upon the
-----------------------------------------------
effectiveness of Section 1 hereof, on and after the Effective Date, each
reference in the Credit Agreement to "this Agreement", "hereunder", "hereof",
"herein" or words of like import, and each reference in the Note or the other
Loan Documents to "the Credit Agreement", shall mean and be a reference to the
Credit Agreement as amended by this Amendment and Consent. Except as
specifically amended above, the Credit Agreement shall continue to be in full
force and effect and is hereby in all respects ratified and confirmed.
SECTION 6. Execution in Counterparts. This Amendment and Consent may be
-------------------------
executed in any number of counterparts and by any combination of the parties
hereto in separate counterparts, each of which counterparts shall be an original
and all of which taken together shall constitute one and the same Agreement.
SECTION 7. Governing Law. This Amendment and Consent shall be governed
-------------
by, and construed in accordance with, the laws of the State of New York.
3.
IN WITNESS WHEREOF, the parties hereto have caused this Amendment to be
executed by their respective officers thereunto duly authorized, as of the date
first above written.
VARCO INTERNATIONAL, INC.
By:_______________________________
Title:____________________________
CITICORP USA, INC.
By:_______________________________
Vice President
CITIBANK, N.A.
By:_______________________________
Vice President
4.
