1
EXHIBIT 99.1
BRIDGE LOAN AGREEMENT
dated as of
September 14, 1998
among
KEY ENERGY GROUP, INC.,as Borrower
The Guarantors listed on the signature pages
hereto, as Guarantors
THE LENDERS named herein,
▇▇▇▇▇▇ BROTHERS INC., as Arranger
and
▇▇▇▇▇▇ COMMERCIAL PAPER INC., as Administrative Agent
-----------------------------------
$150,000,000
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TABLE OF CONTENTS
Page
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ARTICLE I DEFINITIONS.....................................................................................................1
SECTION 1.1 DEFINED TERMS.........................................................................................1
SECTION 1.2 INTERPRETATION.......................................................................................21
ARTICLE II THE BRIDGE FACILITY...........................................................................................22
SECTION 2.1 COMMITMENTS TO MAKE BRIDGE LOANS.....................................................................22
SECTION 2.2 CONVERSION TO TERM LOANS.............................................................................22
SECTION 2.3 OPTION TO EXCHANGE TERM LOANS FOR EXCHANGE NOTES.....................................................23
SECTION 2.4 INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT INTEREST...............................................23
SECTION 2.5 MANDATORY PREPAYMENT.................................................................................24
SECTION 2.6 OPTIONAL PREPAYMENT..................................................................................25
SECTION 2.7 BREAKAGE COSTS; INDEMNITY............................................................................25
SECTION 2.8 EFFECT OF NOTICE OF PREPAYMENT.......................................................................26
SECTION 2.9 PAYMENTS.............................................................................................26
SECTION 2.11 RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC...........................................................30
SECTION 2.12 CERTAIN FEES.........................................................................................31
ARTICLE III REPRESENTATIONS AND WARRANTIES...............................................................................31
SECTION 3.1 REPRESENTATIONS AND WARRANTIES IN THE CREDIT FACILITY AND IN THE ACQUISITION AGREEMENT...............31
SECTION 3.2 ORGANIZATION; POWERS.................................................................................31
SECTION 3.3 DUE AUTHORIZATION AND ENFORCEABILITY.................................................................32
SECTION 3.4 NO CONFLICTS.........................................................................................33
SECTION 3.5 NO VIOLATIONS........................................................................................33
SECTION 3.6 CAPITAL STOCK; SUBSIDIARIES..........................................................................33
SECTION 3.7 LIENS................................................................................................34
SECTION 3.8 NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS OF FEDERAL RESERVE SYSTEM..........................34
SECTION 3.9 GOVERNMENTAL REGULATIONS.............................................................................34
SECTION 3.10 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.....................................................34
SECTION 3.11 FULL DISCLOSURE......................................................................................36
SECTION 3.13 ABSENCE OF PROCEEDINGS...............................................................................37
SECTION 3.14 TAXES................................................................................................37
SECTION 3.15 FINANCIAL CONDITION; SOLVENCY........................................................................37
SECTION 3.16 NO MATERIAL ADVERSE CHANGE...........................................................................37
SECTION 3.17 YEAR 2000 COMPLIANCE.................................................................................37
SECTION 3.18 USE OF PROCEEDS......................................................................................38
SECTION 3.19 SENIOR SECURED NOTES.................................................................................38
ARTICLE IV COVENANTS.....................................................................................................38
SECTION 4.1 FINANCIAL STATEMENTS.................................................................................38
SECTION 4.2 CERTIFICATES; OTHER INFORMATION......................................................................39
SECTION 4.3 PAYMENT OF OBLIGATIONS...............................................................................40
SECTION 4.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE, ETC................................................40
SECTION 4.5 MAINTENANCE OF PROPERTY; INSURANCE...................................................................40
SECTION 4.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS; DISCUSSIONS...............................................40
SECTION 4.7 NOTICES..............................................................................................41
SECTION 4.8 ENVIRONMENTAL LAWS...................................................................................41
SECTION 4.9 FURTHER ASSURANCES...................................................................................42
SECTION 4.10 ADDITIONAL COLLATERAL................................................................................43
SECTION 4.11 CONSUMMATION OF MERGER...............................................................................45
SECTION 4.12 FINANCIAL CONDITION COVENANTS........................................................................45
SECTION 4.14 LIMITATION ON LIENS..................................................................................50
SECTION 4.15 LIMITATION ON GUARANTEE OBLIGATIONS..................................................................52
SECTION 4.16 LIMITATION ON FUNDAMENTAL CHANGES....................................................................52
SECTION 4.17 LIMITATION ON SALE OF ASSETS.........................................................................53
SECTION 4.18 LIMITATION ON RESTRICTED PAYMENTS....................................................................54
SECTION 4.19 LIMITATION ON CAPITAL EXPENDITURES...................................................................55
SECTION 4.20 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES........................................................55
SECTION 4.21 LIMITATION ON OPTIONAL PAYMENTS AND MODIFICATIONS OF DEBT INSTRUMENTS AND ORGANIZATIONAL
DOCUMENTATION, ETC...................................................................................57
SECTION 4.22 LIMITATION ON TRANSACTIONS WITH AFFILIATES...........................................................57
SECTION 4.23 LIMITATION ON SALES AND LEASEBACKS...................................................................58
SECTION 4.24 LIMITATION ON NEGATIVE PLEDGE CLAUSES................................................................58
SECTION 4.25 LIMITATION ON LINES OF BUSINESS......................................................................58
SECTION 4.26 LIMITATION ON CONSOLIDATED LEASE EXPENSE.............................................................58
SECTION 4.28 POST-CLOSING ACTIONS.................................................................................59
SECTION 4.29 LIMITATION ON CHANGE OF FISCAL YEAR..................................................................60
ARTICLE V CONDITIONS.....................................................................................................60
SECTION 5.1 CORPORATE AND OTHER PROCEEDINGS......................................................................60
SECTION 5.2 CONCURRENT TRANSACTIONS..............................................................................61
SECTION 5.3 NO MATERIAL LOSS.....................................................................................62
SECTION 5.4 NO EVENT OF DEFAULT..................................................................................62
SECTION 5.5 NO CHANGES IN FINANCIAL MARKETS......................................................................62
SECTION 5.7 ESCROW AGREEMENT.....................................................................................63
SECTION 5.8 EXCHANGE NOTES.......................................................................................63
SECTION 5.9 ESCROW OF SECURITIES.................................................................................63
SECTION 5.10 DELIVERY OF OPINIONS.................................................................................63
SECTION 5.11 SOLVENCY.............................................................................................63
SECTION 5.12 PAYMENT OF FEES......................................................................................64
SECTION 5.13 NO BREACH UNDER ENGAGEMENT LETTER, COMMITMENT LETTER OR FEE LETTER...................................64
SECTION 5.14 CONSENTS AND APPROVALS...............................................................................64
SECTION 5.15 MARGIN REGULATIONS...................................................................................64
SECTION 5.16 SATISFACTORY FINANCIAL STATEMENTS....................................................................64
SECTION 5.17 REPAYMENT OF INDEBTEDNESS............................................................................64
SECTION 5.18 CONCURRENCE WITH ASSUMPTIONS.........................................................................64
SECTION 5.19 ABSENCE OF CERTAIN CHANGES...........................................................................65
SECTION 5.20 NET CAPITAL..........................................................................................65
SECTION 5.22 TERMINATION OF ENGAGEMENT LETTER.....................................................................65
SECTION 5.23 FILINGS, REGISTRATIONS AND RECORDINGS................................................................65
ARTICLE VI TRANSFER OF THE LOANS.........................................................................................66
SECTION 6.1 TRANSFER OF THE NOTES................................................................................66
SECTION 6.2 REGISTRATION OF TRANSFER OR EXCHANGE.................................................................67
SECTION 6.3 REGISTER.............................................................................................67
ARTICLE VII EVENTS OF DEFAULT............................................................................................67
SECTION 7.1 EVENTS OF DEFAULT....................................................................................67
SECTION 7.2 RIGHTS AND REMEDIES CUMULATIVE.......................................................................70
SECTION 7.3 DELAY OR OMISSION NOT WAIVER.........................................................................70
SECTION 7.4 WAIVER OF PAST DEFAULTS..............................................................................70
SECTION 7.5 RIGHTS OF LENDERS TO RECEIVE PAYMENT.................................................................70
ARTICLE VIII PERMANENT SECURITIES........................................................................................70
SECTION 8.1 PERMANENT SECURITIES.................................................................................70
SECTION 8.2 ESCROWED WARRANTS....................................................................................71
ARTICLE IX TERMINATION...................................................................................................71
SECTION 9.1 TERMINATION..........................................................................................71
SECTION 9.2 SURVIVAL OF CERTAIN PROVISIONS.......................................................................71
ARTICLE X SUBORDINATION..................................................................................................72
SECTION 10.1 AGREEMENT TO SUBORDINATE.............................................................................72
SECTION 10.2 CERTAIN DEFINITIONS..................................................................................72
SECTION 10.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY.................................................................73
SECTION 10.4 DEFAULT ON DESIGNATED SENIOR DEBT....................................................................73
SECTION 10.5 ACCELERATION OF LOANS................................................................................74
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER..................................................................74
SECTION 10.7 NOTICE BY THE BORROWER...............................................................................74
SECTION 10.8 SUBROGATION..........................................................................................75
SECTION 10.9 RELATIVE RIGHTS......................................................................................75
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY THE BORROWER AND THE GUARANTORS.................................75
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.............................................................75
SECTION 10.12 RIGHTS OF ADMINISTRATIVE AGENT.......................................................................76
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION................................................................76
SECTION 10.14 AMENDMENTS...........................................................................................76
ARTICLE XI GUARANTEE.....................................................................................................76
SECTION 11.1 THE GUARANTEE........................................................................................76
SECTION 11.2 SUBORDINATION OF GUARANTEE...........................................................................78
SECTION 11.3 LIMITATION ON LIABILITY..............................................................................78
SECTION 11.4 STAY OF ACCELERATION.................................................................................78
SECTION 11.5 RELEASE OF GUARANTORS................................................................................78
SECTION 11.6 LIMITATION ON ISSUANCES OF GUARANTEES OF INDEBTEDNESS................................................79
ARTICLE XII INDEMNITY....................................................................................................79
SECTION 12.1 INDEMNIFICATION......................................................................................79
SECTION 12.2 INDEMNITY NOT AVAILABLE..............................................................................79
SECTION 12.3 SETTLEMENT OF CLAIMS.................................................................................80
SECTION 12.4 APPEARANCE EXPENSES..................................................................................80
SECTION 12.5 INDEMNITY FOR TAXES, RESERVES AND EXPENSES...........................................................80
SECTION 12.6 SURVIVAL OF INDEMNIFICATION..........................................................................81
SECTION 12.7 LIABILITY NOT EXCLUSIVE; PAYMENTS....................................................................81
ARTICLE XIII THE ADMINISTRATIVE AGENT....................................................................................81
SECTION 13.1 APPOINTMENT..........................................................................................81
SECTION 13.2 DELEGATION OF DUTIES.................................................................................82
SECTION 13.3 EXCULPATORY PROVISIONS...............................................................................82
SECTION 13.4 RELIANCE BY THE ADMINISTRATIVE AGENT.................................................................82
SECTION 13.5 NOTICE OF DEFAULT....................................................................................82
SECTION 13.6 NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND OTHER LENDERS...........................................83
SECTION 13.7 INDEMNIFICATION......................................................................................83
SECTION 13.8 ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL CAPACITIES...................................................84
SECTION 13.9 SUCCESSOR ADMINISTRATIVE AGENT.......................................................................84
SECTION 13.10 LIMITATION OF DUTIES.................................................................................84
SECTION 13.11 ADMINISTRATIVE AGENT FEE.............................................................................84
ARTICLE XIV MISCELLANEOUS................................................................................................84
SECTION 14.1 EXPENSES; DOCUMENTARY TAXES..........................................................................84
SECTION 14.2 NOTICES..............................................................................................85
SECTION 14.3 CONSENT TO AMENDMENTS AND WAIVERS....................................................................86
SECTION 14.4 PARTIES..............................................................................................86
SECTION 14.5 NEW YORK LAW; SUBMISSION TO JURISDICTION; WAIVER JURY TRIAL..........................................86
SECTION 14.6 REPLACEMENT NOTES....................................................................................87
SECTION 14.7 MARSHALLING; RECAPTURE...............................................................................87
SECTION 14.8 LIMITATION OF LIABILITY..............................................................................87
SECTION 14.9 INDEPENDENCE OF COVENANTS............................................................................87
SECTION 14.10 CURRENCY INDEMNITY...................................................................................88
SECTION 14.11 WAIVER OF IMMUNITY...................................................................................88
SECTION 14.12 FREEDOM OF CHOICE....................................................................................88
SECTION 14.13 SUCCESSORS AND ASSIGNS...............................................................................88
SECTION 14.14 MERGER...............................................................................................88
SECTION 14.15 SEVERABILITY CLAUSE..................................................................................89
SECTION 14.16 REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO SURVIVE DELIVERY.......................................89
SECTION 14.17 CONFIDENTIALITY......................................................................................89
SECTION 14.18 INTERCREDITOR AGREEMENT..............................................................................89
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EXHIBITS
EXHIBIT A FORM OF ASSIGNMENT AND ACCEPTANCE
EXHIBIT B FORM OF NOTES
EXHIBIT C WARRANT AGREEMENT
EXHIBIT E FORM OF ESCROW AGREEMENT
EXHIBIT F FORM OF EXCHANGE NOTE INDENTURE
EXHIBIT G OPINION OF COUNSEL FOR THE BORROWER AND THE GUARANTORS
EXHIBIT H FORM OF DEBT REGISTRATION RIGHTS AGREEMENT
EXHIBIT I FORM OF EQUITY REGISTRATION RIGHTS AGREEMENT
EXHIBIT J FORM OF MASTER GUARANTEE AND COLLATERAL DOCUMENT
EXHIBIT K FORM OF EXEMPTION CERTIFICATE
EXHIBIT L FORM OF PRO FORMA EBITDA STATEMENT
EXHIBIT M FORM OF INTERCREDITOR AGREEMENT
SCHEDULES
SCHEDULE 1.1B MORTGAGED PROPERTY
SCHEDULE 1.1C EXISTING OIL AND GAS MORTGAGES
SCHEDULE 3.6 SUBSIDIARIES; WARRANTS
SCHEDULE 3.10 FINANCIAL STATEMENTS
SCHEDULE 4.13 OUTSTANDING INDEBTEDNESS
SCHEDULE 4.14(H) LIENS
SCHEDULE 4.20(C) ACQUISITIONS
SCHEDULE 4.28(A)(I) UNPERFECTED VEHICLES
SCHEDULE 4.28(A)(II) NEWLY ACQUIRED VEHICLES
SCHEDULE 5.18 INDEBTEDNESS TO BE REPAID
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THIS BRIDGE LOAN AGREEMENT, dated as of September 14, 1998 (as
amended, restated and/or otherwise modified from time to time, this
"AGREEMENT"), is by and among:
(a) Key Energy Group, Inc., a Maryland corporation (the
"BORROWER"),
(b) the Guarantors listed on the signature pages hereto as
Guarantors (each a "GUARANTOR" and, collectively, the "GUARANTORS"),
(c) the Lenders (as defined in Article I),
(d) ▇▇▇▇▇▇ Commercial Paper Inc., as Administrative Agent, and
(e) ▇▇▇▇▇▇ Brothers Inc., as Arranger.
The parties hereto agree as follows:
ARTICLE I
DEFINITIONS
SECTION 1.1 DEFINED TERMS. As used in this Agreement, the
following terms shall have the meanings specified below:
"ACQUIRED DEBT" means, with respect to any specified Person,
(i) Indebtedness of any other Person existing at the time such other Person is
merged with or into, or became a Subsidiary of, such specified Person including,
without limitation, Indebtedness incurred in connection with, or in
contemplation of, such other Person's merging with or into or becoming a
Subsidiary of such specified Person, and (ii) Indebtedness secured by a Lien
encumbering any asset acquired by such specified Person.
"ACQUISITION" means the transactions contemplated by the
Acquisition Agreement.
"ACQUISITION AGREEMENT" means the Agreement and Plan of Merger
dated as of August 11, 1998, entered into by the Borrower, Midland Acquisition
Corp. and ▇▇▇▇▇▇.
"ACQUISITION DOCUMENTATION" means collectively, the Tender
Offer Documents and the Acquisition Agreement and all exhibits and annexes
thereto in each case as amended, supplemented or otherwise modified from time to
time in accordance with Section 4.21.
"ACTION" has the meaning specified in Section 12.2.
"ADMINISTRATIVE AGENT" means ▇▇▇▇▇▇ Commercial Paper, Inc.,
acting as agent pursuant to Article XIII or any successor or replacement
Administrative Agent, acting in such capacity.
"AFFECTED PARTY" means any Lender, any beneficial owner of any
Lender, and their respective successors and assigns.
"AFFILIATE" means, as to any Person, any other Person which,
directly or indirectly, is in control of, is controlled by, or is under common
control with, such Person. For purposes of this definition as it applies to
Articles IV and VII and Section 3.1, "control" of a Person means the power,
directly or indirectly, either to (a) vote 10% or more of the securities having
ordinary voting power for the election of directors of such Person or (b) direct
or cause the direction of the management and policies of such Person, whether by
contract or otherwise. For purposes of this definition as it applies to the
remaining provisions of this Agreement, "control" (including, with correlative
meanings, the terms "controlling," "controlled by" and "under common control
with"), as used with respect to any Person, shall mean the possession, directly
or indirectly, of the power to direct or cause the direction of the management
or policies of such Person, whether through the ownership of voting securities,
by agreement or otherwise; provided that for purposes of Section 4.22,
beneficial ownership of 10% or more of the voting securities of a Person shall
be deemed to be control. Neither the Lenders, the Arranger, the Administrative
Agent nor any of their Affiliates will be treated as an Affiliate of the
Borrower or any of its Subsidiaries for purposes of this Agreement or any other
Loan Document.
"AGREEMENT" has the meaning specified in the preamble to this
Agreement.
"APPLICABLE MARGIN" means, 650 basis points at all times
through and including the date that is 269 days subsequent to the Closing Date,
increasing by an additional 50 basis points on the 270th day subsequent to the
Closing Date, and increasing by an additional 100 basis points on the date that
is 360 days subsequent to the Closing Date and on the last day of each 90-day
period thereafter for so long as any Bridge Loans are outstanding.
"ARRANGER" means ▇▇▇▇▇▇ Brothers Inc.
"ASSET SALE" means (i) the sale, lease, conveyance or other
disposition of any assets or rights (including, without limitation, by way of a
sale and leaseback) other than sales of inventory in the ordinary course of
business consistent with past practices, and (ii) the issue or sale by the
Borrower or any of its Subsidiaries of Capital Stock of any of the Borrower's
Subsidiaries, in the case of either clause (i) or (ii), whether in a single
transaction or a series of related transactions (a) that have a fair market
value in excess of $2,000,000 or (b) for net proceeds in excess of $2,000,000.
Notwithstanding the foregoing, the following items shall not be deemed to be
Asset Sales: (i) a transfer of assets by the Borrower to a Guarantor or by a
Guarantor to the Borrower or to another Guarantor, (ii) an issuance of Capital
Stock by a Guarantor to the Borrower or to another Guarantor, and (iii) a
Restricted Payment that is permitted by Section 4.18.
"ASSIGNMENT AND ACCEPTANCE" shall mean an assignment and
acceptance entered into by a Lender and an assignee, and accepted by the
Administrative Agent, in the form of EXHIBIT A or such other form as shall be
approved by the Administrative Agent.
"BANKRUPTCY LAW" means (i) Title 11 of the U.S. Code or (ii)
any other law of the United States, any political subdivision thereof or any
other jurisdiction relating to bankruptcy, insolvency, winding up, liquidation,
reorganization or relief of debtors.
"BASE RATE" means, with respect to any Interest Period, (i)
One Month LIBOR or Three Month LIBOR, as specified by the Borrower in the Rate
Selection Notice delivered in accordance with Section 2.4(a) for such Interest
Period, or (ii) One Month LIBOR, if the Borrower fails to deliver such Rate
Selection Notice for such Interest Period.
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"beneficial owner" and "beneficial ownership" each has the
meaning as defined in Rule 13d-3 and Rule 13d-5 under the Exchange Act.
"BOARD" means the Board of Governors of the Federal Reserve
System of the United States or any successor.
"BORROWER" has the meaning specified in the preamble to this
Agreement.
"BRIDGE LOAN" means a loan made by any Lender to the Borrower
pursuant to Section 2.1.
"BUSINESS DAY" means each day other than a Saturday, a Sunday
or any other day on which banking institutions in the City of New York or at a
place of payment are authorized by law, regulation or executive order to remain
closed.
"CAPITAL EXPENDITURES" means for any period, with respect to
any Person, the aggregate of all expenditures by such Person and its
Subsidiaries for the acquisition or leasing (pursuant to a Financing Lease) of
fixed or capital assets or additions to equipment (including replacements and
improvements during such period) which should be capitalized under GAAP on a
consolidated balance sheet of such Person and its Subsidiaries; provided that
"Capital Expenditures" shall not include (i) expenditures for Permitted
Acquisitions or (ii) expenditures by any Person prior to the time such Person
was acquired by the Borrower or any Subsidiary in a Permitted Acquisition.
"CAPITAL LEASE OBLIGATIONS" means as to any Person, the
obligations of such Person to pay rent or other amounts under any Financing
Lease and, for the purposes of this Agreement, the amount of such obligations at
any time shall be the capitalized amount thereof at such time determined in
accordance with GAAP.
"CAPITAL MARKETS TRANSACTION" has the meaning specified in
Section 2.5(a).
"CAPITAL STOCK" means any and all shares of capital stock of a
corporation, and any and all equivalent ownership interests in a Person (other
than a corporation).
"CASH EQUIVALENTS" means (a) marketable direct obligations
issued by, or unconditionally guaranteed by, the United States Government or
issued by any agency thereof and backed by the full faith and credit of the
United States, in each case maturing within one year from the date of
acquisition; (b) demand deposits, certificates of deposit, time deposits,
eurodollar time deposits or overnight bank deposits having maturities of twelve
months or less from the date of acquisition issued by any Lender or by any
commercial bank organized under the laws of the United States or any state
thereof having combined capital and surplus of not less than $250,000,000; (c)
commercial paper of (i) an issuer rated at least A-1 by Standard & Poor's
Ratings Services or P-1 by ▇▇▇▇▇'▇ Investors Service, Inc., or carrying an
equivalent rating by a nationally recognized rating agency, if both of the two
named rating agencies cease publishing ratings of commercial paper issuers
generally or (ii) the holding company of any Lender, and, in either case,
maturing within twelve months from the date of acquisition; and (d) money market
funds the assets of which consist primarily of obligations of the types referred
to in clauses (a) through (c) above.
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"CHANGE OF CONTROL" means a "Change of Control" as defined in
the ▇▇▇▇ ▇▇▇▇▇▇▇▇▇ or, if the 1997 Indenture shall have been terminated, as
defined in the 1997 Indenture immediately prior to such termination.
"CHANGE OF CONTROL OFFER" has the meaning specified in Section
4.27(a).
"CHANGE OF CONTROL PAYMENT" has the meaning specified in
Section 4.27(a).
"CHANGE OF CONTROL PAYMENT DATE" has the meaning specified in
Section 4.27(a).
"CLOSING DATE" means the date on which the Bridge Loans are
funded and the conditions set forth in Article V are satisfied or waived in
accordance with Section 14.3.
"CODE" means the Internal Revenue Code of 1986, as amended,
and any regulation promulgated thereunder.
"COLLATERAL" means all assets of the Loan Parties, now owned
or hereafter acquired, upon which a Lien is purported to be created by any
Collateral Document.
"COLLATERAL AGENT" means Norwest Bank Texas, N.A.
"COLLATERAL DOCUMENTS" means the collective reference to each
Mortgage, each Oil and Gas Mortgage, the Master Guarantee and Collateral
Document and all other security documents hereafter delivered to the Collateral
Agent granting a Lien on any asset or assets of any Person to secure the
obligations and liabilities of the Borrower hereunder and/or under any of the
other Loan Documents or to secure any guarantee of any such obligations and
liabilities.
"COMMITMENT" means, with respect to any Lender, the amount set
forth opposite such Lender's signature on the signature pages of this Agreement.
"COMMITMENT LETTER" means the Commitment Letter (including the
exhibits thereto and incorporated by reference therein), dated August 25, 1998,
by and among the Borrower, Administrative Agent and Arranger.
"COMMONLY CONTROLLED ENTITY" means an entity, whether or not
incorporated, which is under common control with the Borrower within the meaning
of Section 4001 of ERISA or is part of a group which includes the Borrower and
which is treated as a single employer under Section 414 of the Code.
"CONSOLIDATED" OR "consolidated" means when used in respect of
any Subsidiary or any financial statements or financial term relating to the
Borrower and its Subsidiaries, refers to the Borrower and the Subsidiaries of
the Borrower (including Excluded Subsidiaries) whose accounts are consolidated
with the Borrower's accounts in accordance with GAAP.
"CONSOLIDATED CURRENT ASSETS" means at any date, all amounts
(other than cash and Cash Equivalents) that would, in conformity with GAAP, be
set forth opposite the caption "total current assets" (or any like caption) on a
consolidated balance sheet of the Borrower and its Subsidiaries at such date.
"CONSOLIDATED CURRENT LIABILITIES" means at any date, all
amounts that would, in conformity with GAAP, be set forth opposite the caption
"total current liabilities" (or any like caption) on a consolidated
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balance sheet of the Borrower and its Subsidiaries at such date, but excluding
(a) the current portion of any Funded Debt of the Borrower and its Subsidiaries
and (b) without duplication of clause (a) above, all Indebtedness consisting of
revolving credit Indebtedness under the Credit Facility to the extent otherwise
included therein.
"CONSOLIDATED EBITDA" means with respect to any Person for any
period, Consolidated Net Income of such Person for such period plus, without
duplication and to the extent reflected as a charge in the statement of such
Consolidated Net Income for such period, the sum of (a) total income tax
expense, (b) interest expense, (c) depreciation and amortization expense, (d)
amortization of intangibles (including, but not limited to, goodwill) and
organization costs, (e) any extraordinary expenses or losses (including, whether
or not otherwise includable as a separate item in the statement of such
Consolidated Net Income for such period, losses on sales of assets outside of
the ordinary course of business), (f) any other noncash charges, (g) if
applicable, non-recurring transaction expenses incurred in connection with the
consummation of the Acquisition and related financings, restructuring charges,
write-off of goodwill and licensing agreements, and (h) for the fiscal year
ending June 30, 1999 only, minority interest adjustments related to ▇▇▇▇▇▇, and
minus, to the extent included in the statement of such Consolidated Net Income
for such period, the sum of (a) interest income, (b) any extraordinary income or
gains (including, whether or not otherwise includable as a separate item in the
statement of such Consolidated Net Income for such period, gains on the sales of
assets outside of the ordinary course of business) and (c) any other noncash
income (other than any income represented by a receivable that in the ordinary
course would be expected to be paid in cash), all as determined on a
consolidated basis.
"CONSOLIDATED INTEREST COVERAGE RATIO" means for any period,
the ratio of (a) Consolidated EBITDA of the Borrower and its Subsidiaries for
such period to (b) Consolidated Interest Expense for such period; provided that
for purposes of calculating Consolidated EBITDA of the Borrower and its
Subsidiaries for any period of four full fiscal quarters, the Consolidated
EBITDA of any Person acquired by the Borrower or its Subsidiaries which upon
such acquisition becomes a Consolidated Subsidiary or is merged into the
Borrower or a Subsidiary (including, without limitation, ▇▇▇▇▇▇ and its
Subsidiaries) during such period shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal quarters
and assuming only such cost reductions as are related to such acquisition and
are realizable on or before the date of calculation) if the consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the period preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for such period
(i) have been previously provided to the Administrative Agent and the Lenders
and (ii) either (A) have been reported on without a qualification arising out of
the scope of the audit (other than a "going concern" or like qualification or
exception) by independent certified public accountants of nationally recognized
standing or (B) have been found acceptable by the Administrative Agent.
"CONSOLIDATED INTEREST EXPENSE" means for any period, total
interest expense (including that attributable to Capital Lease Obligations),
both expensed and capitalized, of the Borrower and its Subsidiaries for such
period with respect to all outstanding Indebtedness of the Borrower and its
Subsidiaries (including, without limitation, 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 Protection Agreements and
excluding fees owed with respect to the Existing Credit Agreement and imputed
interest attributable to Senior Subordinated Notes that are original issue
discount notes to the extent such net costs are allocable to such period in
accordance with GAAP), determined on a consolidated basis in accordance with
GAAP, net of interest income of the Borrowers and its Subsidiaries for such
period (determined on a consolidated basis in accordance with GAAP).
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"CONSOLIDATED LEASE EXPENSE" means for any period, the
aggregate amount of fixed and contingent rentals payable by the Borrower and its
Subsidiaries, determined on a consolidated basis in accordance with GAAP, for
such period with respect to leases of real and personal property; provided that
amounts payable under Financing Leases and oil and gas leases shall be excluded
from Consolidated Lease Expense.
"CONSOLIDATED LEVERAGE RATIO" means on the date of any
determination thereof, the ratio of (a) Consolidated Total Debt on such date,
less the amount of cash and Cash Equivalents in excess of $5,000,000 held by the
Borrower and its Subsidiaries on such date to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for the four full fiscal quarters ending on such
date; provided that for purposes of calculating Consolidated EBITDA of the
Borrower and its Subsidiaries for any period of four full fiscal quarters, the
Consolidated EBITDA of any Person acquired by the Borrower or its Subsidiaries
which upon such acquisition becomes a Consolidated Subsidiary or is merged into
the Borrower or a Subsidiary (including, without limitation, ▇▇▇▇▇▇ and its
Subsidiaries) during such period shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal quarters
and assuming only such cost reductions as are related to such acquisition and
are realizable on or before the date of calculation) if the consolidated balance
sheet of such acquired Person and its consolidated Subsidiaries as at the end of
the period preceding the acquisition of such Person and the related consolidated
statements of income and stockholders' equity and of cash flows for such period
(i) have been previously provided to the Administrative Agent and the Lenders
and (ii) either (A) have been reported on without a qualification arising out of
the scope of the audit (other than a "going concern" or like qualification or
exception) by independent certified public accountants of nationally recognized
standing or (B) have been found acceptable by the Administrative Agent.
"CONSOLIDATED NET INCOME" means with respect to any Person for
any period, the consolidated net income (or loss) of such Person for such
period, determined on a consolidated basis in accordance with GAAP.
"CONSOLIDATED NET WORTH" means at a particular date, as to any
Person, the amount which would be included under stockholders' equity on a
consolidated balance sheet of such Person and its Subsidiaries determined on a
consolidated basis in accordance with GAAP.
"CONSOLIDATED SENIOR DEBT" means with respect to the Borrower
and its Subsidiaries, consolidated Indebtedness of the Borrower and its
Subsidiaries determined on a consolidated basis in accordance with GAAP other
than Subordinated Indebtedness.
"CONSOLIDATED SENIOR LEVERAGE RATIO" means on the date of any
determination thereof, the ratio of (a) Consolidated Senior Debt on such date,
less the amount of cash and Cash Equivalents in excess of $5,000,000 held by the
Borrower and its Subsidiaries on such date to (b) Consolidated EBITDA of the
Borrower and its Subsidiaries for the four full fiscal quarters ending on such
date; provided that for purposes of calculating Consolidated EBITDA of the
Borrower and its Subsidiaries for any period of four full fiscal quarters, the
Consolidated EBITDA of any Person acquired by the Borrower or its Subsidiaries
which upon such acquisition becomes a Consolidated Subsidiary or is merged into
the Borrower or a Subsidiary (including, without limitation, ▇▇▇▇▇▇ and its
Subsidiaries) during such period shall be included on a pro forma basis for such
period of four full fiscal quarters (assuming the consummation of each such
acquisition and the incurrence or assumption of any Indebtedness in connection
therewith occurred on the first day of such period of four full fiscal quarters
and assuming only such cost reductions as are related to such
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acquisition and are realizable on or before the date of calculation) if the
consolidated balance sheet of such acquired Person and its consolidated
Subsidiaries as at the end of the period preceding the acquisition of such
Person and the related consolidated statements of income and stockholders'
equity and of cash flows for such period (i) have been previously provided to
the Administrative Agent and the Lenders and (ii) either (A) have been reported
on without a qualification arising out of the scope of the audit (other than a
"going concern" or like qualification or exception) by independent certified
public accountants of nationally recognized standing or (B) have been found
acceptable by the Administrative Agent.
"CONSOLIDATED TOTAL DEBT" means at any date, the aggregate
principal amount of all Indebtedness of the Borrower and its Subsidiaries at
such date, which on a consolidated basis in accordance with GAAP would be
required to be reflected on a consolidated balance sheet of the Borrower and its
Subsidiaries as a liability.
"CONSOLIDATED WORKING CAPITAL" means at any date, the excess
of Consolidated Current Assets on such date over Consolidated Current
Liabilities on such date.
"CONTRACTUAL OBLIGATION" means as to any Person, any provision
of any security issued by such Person or of any agreement, instrument or other
undertaking to which such Person is a party or by which it or any of its
property is bound.
"CONVERSION DATE" means the date, if any, on which the Bridge
Loans convert to Term Loans in accordance with Section 2.2.
"CONVERSION DEFAULT" means the occurrence of any one or more
of the following: (i) any Default or Event of Default under Section 7 hereof or
any other Loan Document, (ii) any Payment Default under the Credit Facility,
(iii) any failure by the Borrower to pay all accrued and unpaid interest with
respect to the Bridge Loans and all fees due and owing in accordance with the
Loan Documents, or (iv) the Shelf Registration Statement (as defined in the Debt
Registration Rights Agreement) shall not have been filed with the SEC.
"CONVERSION RATE" means, as of any date, the sum of (i) the
then applicable Conversion Spread, and (ii) the Interest Rate applicable to the
Bridge Loans on the day preceding the Conversion Date.
"CONVERSION SPREAD" means zero basis points during the 90-day
period commencing on September 14, 1999 (whether or not the Conversion Date has
occurred on such date), increasing by 100 basis points at the beginning of each
subsequent 90-day period.
"CONVERTIBLE SUBORDINATED DEBENTURES" means the 7% Convertible
Subordinated Debentures due 2003 issued by the Borrower pursuant to the
Indenture.
"CREDIT FACILITY" means that certain Second Amended and
Restated Credit Agreement, dated as of the date hereof, by and among the
Borrower, the lenders party thereto, PNC Bank, National Association, as
administrative agent and other parties thereto, including any related notes,
guarantees, collateral documents, instruments and other agreements executed by
the Borrower or any of its Subsidiaries in connection therewith, and in each
case as amended, restated, supplemented, modified, renewed, refunded, replaced
or refinanced from time to time.
"CUSTODIAN" means any receiver, interim receiver, receiver and
manager, trustee, assignee, liquidator, sequestrator, custodian or similar
official under any Bankruptcy Law.
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"▇▇▇▇▇▇" means ▇▇▇▇▇▇ Production Services, Inc., a Texas
corporation.
"▇▇▇▇▇▇ CHANGE OF CONTROL" means a "change of control" as
defined in the ▇▇▇▇▇▇ Indenture which occurs in connection with the Acquisition.
"▇▇▇▇▇▇ INDENTURE" means the indenture, dated as of February
20, 1997, among ▇▇▇▇▇▇, certain Subsidiaries of ▇▇▇▇▇▇ and U.S. Trust Company of
Texas, N.A., as trustee.
"▇▇▇▇▇▇ NOTES" means the 9-3/8% Senior Notes due 2007 issued
by ▇▇▇▇▇▇ pursuant to the ▇▇▇▇▇▇ Indenture.
"DEBT REGISTRATION RIGHTS AGREEMENT" means the registration
rights agreement, dated as of September 14, 1998, among the Borrower, the
Guarantors and the Administrative Agent pursuant to which the Exchange Notes are
required to be registered for public sale, in the form attached as EXHIBIT H.
"DEFAULT" means any event that, with the passage of time, the
giving of notice or both, would constitute an Event of Default.
"DESIGNATED NONCASH CONSIDERATION" means the fair market value
of noncash consideration received by the Borrower or one of its Subsidiaries in
connection with an Asset Sale that is so designated as Designated Noncash
Consideration pursuant to an Officers' Certificate, setting forth the basis of
such valuation, executed by the chief financial officer of the Borrower, less
the amount of cash or Cash Equivalents received in connection with a sale of
such Designated Noncash Consideration.
"DESIGNATED SENIOR DEBT" has the meaning specified in Section
10.2.
"DISQUALIFIED STOCK" means any Capital Stock that, by its
terms (or by the terms of any security into which it is convertible or for which
it is exchangeable), or upon the happening of any event, matures or is
mandatorily redeemable, pursuant to a sinking fund obligation or otherwise, or
redeemable at the option of the holder thereof, in whole or in part, on or prior
to September 16, 2005.
"dollars" or "$" shall mean lawful money of the United States
of America.
"DOMESTIC SUBSIDIARY" means any Subsidiary of the Borrower
organized under the laws of any jurisdiction within the United States.
"ENGAGEMENT LETTER" means the engagement letter, dated as of
August 25, 1998, by and among the Borrower, the Administrative Agent, and the
Arranger.
"environment" shall mean ambient air, surface water and
groundwater (including potable water, navigable water and wetlands), the land
surface or subsurface strata, the workplace or as otherwise defined in any
Environmental Law.
"ENVIRONMENTAL LAWS" means any and all laws, rules, orders,
regulations, statutes, ordinances, codes, decrees, or other legally enforceable
requirements (including, without limitation, common law) of any foreign
government, the United States, or any state, local, municipal or other
Governmental Entity, regulating, relating to or imposing liability or standards
of conduct concerning protection of the environment, natural resources, or
health and safety matters, as has been, is now, or at any time hereafter is,
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in effect. Environmental Laws shall include, but not be limited to, the
Comprehensive Environmental Response, Compensation and Liability Act of 1980, as
amended, the Toxic Substances Control Act, as amended, the Hazardous Materials
Transportation Act, as amended, the Occupational Health and Safety Act, as
amended, the Resource Conservation and Recovery Act, as amended, the Federal
Water Pollution Control Act, as amended, the Safe Drinking Water Act, as
amended, and the Clean Air Act, as amended.
"ENVIRONMENTAL PERMITS" means any and all permits, licenses,
registrations, approvals, notifications, exemptions and any other authorization
required under any Environmental Law.
"ENVIRONMENTAL PROGRAM" has the meaning specified in Section
5.6.
"EQUITY REGISTRATION RIGHTS AGREEMENT" means the registration
rights agreement, dated as of September 14, 1998, between the Borrower and the
Administrative Agent pursuant to which the Escrowed Warrants and the shares of
Capital Stock of the Company issuable upon exercise of the Escrowed Warrants are
required to be registered for public sale, in the form attached as EXHIBIT I.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended, and any regulation promulgated thereunder.
"ERISA AFFILIATE" means any trade or business (whether or not
incorporated) that, together with the Borrower or any of its Subsidiaries is
treated as a single employer under Section 414(b) or (c) of the Code, or solely
for purposes of Section 302 of ERISA and Section 412 of the Code, is treated as
a single employer under Section 414 of the Code.
"ERISA EVENT" means (a) any "reportable event," as defined in
Section 4043 of ERISA or the regulations issued thereunder, with respect to a
Plan except a reportable event for which the requirement of notice to the PBGC
had been waived; (b) the adoption of any amendment to a Plan that would require
the provision of security pursuant to Section 401(a)(29) of the Code or Section
307 of ERISA; (c) the existence with respect to any Plan of an "accumulated
funding deficiency" (as defined in Section 412 of the Code or Section 302 of
ERISA), whether or not waived; (d) the filing pursuant to Section 412(d) of the
Code or Section 303(d) of ERISA of an application for a waiver of the minimum
funding standard with respect to any Plan; (e) the incurrence of any liability
in excess of $1,000,000 under Title IV of ERISA with respect to the termination
of any Plan or the withdrawal or partial withdrawal of the Borrower or any of
its Subsidiaries or any of their ERISA Affiliates from any Plan or Multiemployer
Plan; (f) the receipt by the Borrower or any of its Subsidiaries or any ERISA
Affiliate from the PBGC or a plan administrator of a Multiemployer Plan of any
notice relating to the intention to terminate any Plan or Plans or to appoint a
trustee to administer any Plan; (g) the receipt by the Borrower or any of its
Subsidiaries or any ERISA Affiliate of any notice concerning the imposition of
Withdrawal Liability in excess of $1,000,000 or a determination that a
Multiemployer Plan is, or is expected to be, insolvent or in reorganization,
within the meaning of Title IV of ERISA; (h) the occurrence of a "prohibited
transaction" with respect to which the Borrower or any of its Subsidiaries is a
party to the prohibited transaction and is a "disqualified person" (within the
meaning of Section 4975 of the Code) or with respect to which the Borrower or
any of its Subsidiaries could otherwise be liable; and (i) any other event or
condition with respect to a Plan or Multiemployer Plan that could reasonably be
expected to result in liability of the Borrower or any of its Subsidiaries.
"ESCROW AGENT" means The Bank of New York, a New York banking
corporation, in its capacity as escrow agent pursuant to the Escrow Agreement.
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"ESCROW AGREEMENT" means the escrow agreement, dated as of
September 14, 1998, among the Borrower, the Administrative Agent, the Arranger
and the Escrow Agent, in the form attached as EXHIBIT E.
"ESCROWED WARRANTS" means the warrants of the Borrower
deposited with the Escrow Agent pursuant to the Escrow Agreement on the date
hereof.
"EVENT OF DEFAULT" means any of the events specified in
Section 7.1, provided, that any requirement for the giving of notice, the lapse
of time. or both, has been satisfied.
"EXCHANGE ACT" means the Securities Exchange Act of 1934, as
amended.
"EXCHANGE NOTE INDENTURE" means the indenture relating to the
Exchange Notes, among the Borrower, as issuer, the Guarantors, as guarantors and
the Exchange Note Trustee, in the form attached as EXHIBIT F.
"EXCHANGE NOTE TRUSTEE" means, on any date of determination,
the trustee under the Exchange Note Indenture.
"EXCHANGE NOTES" means those certain Notes of the Borrower,
guaranteed by the Guarantors, placed into escrow on the Closing Date, to be
issued in exchange for certain Term Loans pursuant to Section 2.3, in the form
attached as an exhibit to the Exchange Note Indenture.
"EXCHANGE NOTICE" has the meaning specified in Section 2.3(a).
"EXCLUDED SUBSIDIARY" or "EXCLUDED SUBSIDIARIES" means (a)
Production Systems, Inc., WellTech, Inc. (California), WellTech, Inc., WellTech
Oilfield Services (Canada), Ltd., WellTech Oilfield Services Limited, WellTech
(Overseas) Limited, and ▇▇▇▇▇▇▇ Transport, Inc., (b) Thunderbird Tool Company,
(c) KEG Canal Properties, Inc., KEG ▇▇▇▇▇ ▇▇▇▇▇▇, Inc., KEG Pearl Acres, Inc.,
KEG ▇▇▇▇ Heights, Inc., KEG Orleans Place, Inc., and Pyramid Land Corporation,
(d) ▇▇▇▇▇▇ Production Services de Mexico, S.A. de C.V. and Ubicadora de
Tecnicos, S.A. de C.V. and (e) any other entity which becomes a Subsidiary of
Borrower after the date of this Agreement if such entity has assets with a book
value of $1,000,000 or less and annual revenues of $1,000,000 or less; provided
that all entities deemed to be Excluded Subsidiaries under this clause (e) may
not have, in the aggregate, assets with a book value exceeding $5,000,000 or
annual revenues exceeding $5,000,000.
"EXISTING CREDIT AGREEMENT" means the Amended and Restated
Credit Agreement, dated as of June 6, 1997 (as amended and restated through
November 6, 1997, as further amended prior to the date hereof) among the
Borrower, the lenders party thereto, PNC Bank, National Association and the
Collateral Agent.
"EXISTING MORTGAGES" means the Mortgages listed on Schedule
1.1B.
"EXISTING OIL AND GAS MORTGAGES" means the Oil and Gas
Mortgages listed on Schedule 1.1C.
"FEE LETTER" means that certain Amended and Restated Fee
Letter, dated September 14, 1998, among the Borrower, the Administrative Agent,
and the Arranger.
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"FINANCING LEASE" means any lease (or other similar
arrangement conveying the right to use) of property, real or personal, the
obligations of the lessee in respect of which are required in accordance with
GAAP to be capitalized on a balance sheet of the lessee.
"FOREIGN SUBSIDIARY" means any Subsidiary of the Borrower
organized under the laws of any jurisdiction outside the United States.
"FUNDED DEBT" means, as to any Person, all Indebtedness of
such Person that matures more than one year from the date of its creation or
matures within one year from such date but is renewable or extendible, at the
option of such Person, to a date more than one year from such date or arises
under a revolving credit or similar agreement that obligates the lender or
lenders to extend credit during a period of more than one year from such date,
including all current maturities and current sinking fund payments in respect of
such Indebtedness whether or not required to be paid within one year from the
date of its creation and, in the case of the Borrower, Indebtedness in respect
of the Loans.
"GAAP" means with respect to the financial statements or other
financial information of any Person, generally accepted accounting principles in
the United States which are in effect from time to time.
"GOVERNMENTAL ENTITY" means any government or political
subdivision or any agency, authority, bureau, central bank, commission,
department or instrumentality thereof, or any court, tribunal, grand jury or
arbitrator, in each case whether foreign or domestic.
"guarantee" means the guarantee by each of the Guarantors
pursuant to Article XI hereof.
"guarantee" of or by any Person means any obligation,
contingent or otherwise, of such Person guaranteeing (the "primary obligor") or
having the economic effect of guaranteeing any Indebtedness or other obligation
of any other Person in any manner, whether directly or indirectly, and including
any obligation of such Person, direct or indirect, (a) to purchase or pay (or
advance or supply funds for the purchase or payment of) such Indebtedness or
other obligation or to purchase (or to advance or supply funds for the purchase
of) any security for the payment of such Indebtedness or other obligation, (b)
to purchase or lease property, securities or services for the purpose of
assuring the owner of such Indebtedness or other obligation of the payment of
such Indebtedness or other obligation or (c) to maintain working capital, equity
capital or any other financial statement condition or liquidity of the primary
obligor so as to enable the primary obligor to pay such Indebtedness or other
obligation; provided, however, that the term "guarantee" shall not include
endorsements for collection or deposit in the ordinary course of business.
"GUARANTEED OBLIGATIONS" has the meaning specified in Section
11.1.
"GUARANTORS" has the meaning specified in the preamble to this
Agreement.
"HEDGING OBLIGATIONS" means, with respect to any Person, the
obligations of such Person under (i) currency exchange, interest rate or
commodity swap agreements, currency exchange, interest rate or commodity cap
agreements and currency exchange, interest rate or commodity collar agreements
and (ii) other agreements or arrangements designed to protect such Person
against fluctuations in currency exchange, interest rates or commodity prices,
in each case for the purpose of risk management and not for speculation.
"INDEBTEDNESS" means of any Person at any date, without
duplication, (a) all indebtedness of such Person for borrowed money, (b) all
obligations of such Person for the deferred purchase price of property or
services (other than trade payables and accrued expenses incurred in the
ordinary course of such
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Person's business not more than 150 days past due or being contested in good
faith), (c) all obligations of such Person evidenced by notes, bonds, debentures
or other similar instruments, (d) all indebtedness created or arising under any
conditional sale or other title retention agreement with respect to property
acquired by such Person, (e) all Capital Lease Obligations of such Person, (f)
all obligations, contingent or otherwise, of such Person as an account party
under acceptance, letter of credit or similar facilities (other than obligations
in respect of undrawn letters of credit securing trade payables or performance
obligations incurred in the ordinary course of business not more than 150 days
past due or being contested in good faith), (g) all obligations of such Person
to purchase, redeem, retire or otherwise acquire for value any Capital Stock of
such Person, (h) all guarantees by such Person in respect of Indebtedness of
others and (i) all obligations of the kind referred to in clauses (a) through
(h) above secured by any Lien on property (including, without limitation,
accounts and contract rights) owned by such Person, whether or not such Person
has assumed or become liable for the payment of such obligation (but if not so
assumed, the amount of such obligation shall be deemed not to exceed the fair
market value of the property subject to the Lien).
"INDEMNIFIED PARTY" has the meaning specified in Section 12.1.
"INDEMNIFYING PARTY" has the meaning specified in Section
12.1.
"INDENTURE" means the Indenture, dated as of July 3, 1996,
between the Borrower and American Stock Transfer & Trust Company, as trustee.
"INSOLVENCY" means, with respect to any Multiemployer Plan,
the condition that such Plan is insolvent within the meaning of Section 4245 of
ERISA.
"INTERCREDITOR AGREEMENT" means the Intercreditor and
Collateral Agency Agreement, substantially in the form of Exhibit M, as the same
may be amended, supplemented or otherwise modified from time to time.
"INTEREST PAYMENT DATE" means (i) a Scheduled Interest Payment
Date and (ii) the date of any prepayment of all or any portion of the principal
of the Loans.
"INTEREST PERIOD" means:
(a) in respect of any Bridge Loan if the Base Rate is calculated using
One Month LIBOR, the period commencing on and including the Closing Date or the
last day of the prior Interest Period, as the case may be, and ending on the
numerically corresponding date in the month thereafter provided, however, that
if any Interest Period would end on a day other than a Business Day, such
Interest Period shall be extended until the next succeeding Business Day unless
the next Business Day would fall in the next calendar month, in which case such
Interest Period shall end on the next preceding Business Day. Notwithstanding
the foregoing, no Interest Period in respect of the Bridge Loans may extend
beyond the Maturity Date and each Interest Period that would otherwise commence
before and end after the Maturity Date shall end on the Maturity Date, or
(b) in respect of any Bridge Loan if the Base Rate is calculated using
Three Month LIBOR the period commencing on and including the Closing Date or the
last day of the prior Interest Period, as the case may be, and ending on the
numerically corresponding date in the third month thereafter, provided, however,
that if any interest period would end on a day other than a Business Day, such
Interest Period shall be extended until the next succeeding Business Day unless
the next Business Day would fall in the next quarterly period, in which case
such Interest Period shall end on the next preceding Business Day.
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Notwithstanding the foregoing, no Interest Period in respect of the Bridge Loans
may extend beyond the Maturity Date and each Interest Period that would
otherwise commence before and end after the Maturity Date shall end on the
Maturity Date.
"INTEREST RATE" means, the sum of (i) the Base Rate and (ii)
the Applicable Margin.
"INTEREST RATE PROTECTION AGREEMENT" means any interest rate
protection agreement, interest rate futures contract, interest rate option,
interest rate cap or other interest rate hedge arrangement, to or under which
the Borrower or any Subsidiary is a party or a beneficiary on the date hereof or
becomes a party or a beneficiary after the date hereof.
"LENDERS" shall mean (a) each financial institution that has
executed a counterpart to this Agreement (other than any such financial
institution that has ceased to be a party hereto pursuant to an Assignment and
Acceptance) and (b) any financial institution that has become a party hereto
pursuant to an Assignment and Acceptance.
"LIEN" means any mortgage, pledge, hypothecation, assignment,
deposit arrangement, encumbrance, lien (statutory or other), charge or other
security interest or any preference, priority or other security agreement or
preferential arrangement of any kind or nature whatsoever (including, without
limitation, any conditional sale or other title retention agreement and any
capital lease having substantially the same economic effect as any of the
foregoing) and any filing of or agreement to give any financing statement under
the Uniform Commercial Code (or equivalent statutes) of any jurisdiction.
"LIQUIDATED DAMAGES" means any and all liquidated damages then
owing pursuant to any of the Loan Documents.
"LOAN" means a Bridge Loan or a Term Loan.
"LOAN DOCUMENTS" means this Agreement, the Notes and the
Related Documents.
"LOAN LIABILITIES" means all direct or indirect debts,
liabilities and other obligations of the Borrower or any Guarantor of any and
every type and description at any time arising under or in connection with this
Agreement, or any other Loan Document to the Administrative Agent, Arranger, to
any Lender or to any Indemnified Party or their respective successors,
transferees or assigns, whether or not the right of such Person to payment in
respect of such obligations and liabilities is reduced to judgment, liquidated,
unliquidated, fixed, contingent, matured, unmatured, disputed, undisputed,
legal, equitable, secured or unsecured and whether or not such claim is
discharged, stayed or otherwise affected by any bankruptcy case or insolvency or
liquidation proceeding, and shall include all liabilities for principal of and
interest on the Loans and all other liabilities of the Borrower or any Guarantor
under the Loan Documents for any fees, costs, taxes, expenses, indemnification
and other amounts payable thereunder.
"LOAN REGISTER" means the register maintained by the
Administrative Agent on behalf of the Borrower pursuant to Section 6.3.
"MAJORITY LENDERS" means, at any time, Lenders holding at
least a majority of the then aggregate unpaid principal balance of the Loans,
or, if no such principal amount is then outstanding, Lenders having at least a
majority of the total Commitments; provided that, for purposes hereof, neither
the Borrower
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nor any of its Affiliates shall be included in (i) the Lenders holding such
amount of the Loans or having such amount of the Commitments or (ii) determining
the aggregate unpaid principal amount of the Loans or the total Commitments.
"MARGIN STOCK" has the meaning assigned in Regulation U.
"MASTER GUARANTEE AND COLLATERAL AGREEMENT" means the Second
Amended and Restated Master Guarantee and Collateral Agreement executed and
delivered by the Borrower and each of its Domestic Subsidiaries (including the
Subsidiaries of ▇▇▇▇▇▇ after the Merger Date), substantially in the form of
Exhibit J, as the same may be amended, supplemented or otherwise modified from
time to time.
"MATERIAL ADVERSE EFFECT" means a material adverse effect on
(a) the Acquisition, (b) the business, assets, property, condition (financial or
otherwise) or prospects of the Borrower, ▇▇▇▇▇▇, and their respective
Subsidiaries and Excluded Subsidiaries taken as a whole or (c) the validity or
enforceability of this Agreement or any of the other Transaction Documents or
the rights or remedies of the Administrative Agent, the Collateral Agent or the
Lenders hereunder or thereunder.
"MATERIAL CONTRACTS" has the meaning specified in Section
3.4(a).
"MATERIAL ENVIRONMENTAL AMOUNT" means an amount payable by the
Borrower and/or its Subsidiaries under any Environmental Law in excess of
$5,000,000 for remedial costs, compliance costs, compensatory damages, punitive
damages, fines, penalties or any combination thereof.
"MATERIALS OF ENVIRONMENTAL CONCERN" means any gasoline or
petroleum (including crude oil or any fraction thereof) or petroleum products,
polychlorinated biphenyls, urea-formaldehyde insulation, asbestos, pollutants,
contaminants, radioactive materials, and any other substances of any kind,
whether or not any such substance is defined as hazardous or toxic under any
Environmental Law, that is regulated pursuant to an Environmental Law or that
could give rise to liability under any Environmental Law.
"MATURITY DATE" means September 14, 1999 unless such date is
extended in accordance with Section 2.2.
"MERGER" means the merger of ▇▇▇▇▇▇ with and into the Borrower
such that substantially all of the assets of ▇▇▇▇▇▇ and the Borrower as and of
the date of this Agreement are in the same entity.
"MERGER DATE" means the date the certificates and/or articles
of merger are filed with and accepted by the appropriate secretaries of state as
are necessary to be filed and accepted in order to effectuate the merger of
▇▇▇▇▇▇ (including any of its successors or assigns) into the Borrower.
"MIDLAND" means Midland Acquisition Corp., a New Jersey
corporation and a direct wholly owned subsidiary of the Borrower.
"MINIMUM EQUITY EVENT" means either (i) the receipt by the
Borrower of Net Cash Proceeds of at least $75,000,000 from the issuance of
Capital Stock of the Borrower after the Closing Date or (ii) one or more
issuances by the Borrower of its Capital Stock with a market value at the time
of issuance of a least $75,000,000 in the aggregate in connection with the
acquisition of one or more Persons or the assets of one or more Persons;
provided, no Default or Event of Default shall have occurred and be in existence
and provided, further, that with respect to the issuance of Capital Stock of the
type referred to in clause (ii) above a Minimum Equity Event shall not be deemed
to occur unless and until the ratio of (a) Consolidated Total
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Debt to (b) the sum of Consolidated Total Debt plus Consolidated Net Worth of
the Borrower and its Subsidiaries is equal to or less than 75%.
"MORTGAGE" means the collective reference to the Existing
Mortgages as amended by the Mortgage Amendments and any mortgage or deed of
trust to be made by the appropriate the Borrower or any Guarantor in favor of,
or for the benefit of, the Collateral Agent, as provided for in the Credit
Facility and the relevant Collateral Documents, as the same may be amended,
supplemented or otherwise modified from time to time.
"MORTGAGE AMENDMENT" means each Mortgage Amendment to be
entered into on or prior to the Closing Date.
"MORTGAGED PROPERTY" means the real property as to which the
Collateral Agent has been granted a Lien pursuant to the Mortgages and the real
property as to which the Collateral Agent shall be granted a Lien in accordance
with Section 4.10.
"MULTIEMPLOYER PLAN" means a multiemployer plan as defined in
Section 4001(a)(3) of ERISA.
"NET CASH PROCEEDS" means the aggregate cash proceeds received
(including any cash and Cash Equivalents and cash payments received by way of
deferred payment of principal pursuant to a note, an installment receivable or
otherwise, but only as and when received), from any Capital Markets Transaction,
net, (i) in the case of an Asset Sale, of attorneys' fees, accountants' fees,
investment banking fees, brokers' and underwriters' commissions paid to third
parties, amounts required to be applied to the repayment of Indebtedness secured
by a Lien expressly permitted hereunder on any asset which is the subject of the
Asset Sale (other than any Lien in favor of the Collateral Agent for the benefit
of the Lenders or the lenders under the Credit Facility), the aggregate amount
of reserves required in the reasonable judgment of the Borrower to pay
contingent liabilities with respect to the Asset Sale (provided that amounts
deducted from aggregate proceeds pursuant to this clause and not actually paid
by the Borrower or any of its Subsidiaries in liquidation of such contingent
liabilities shall be deemed to be Net Cash Proceeds and shall be applied in
accordance with Section 2.5(a) at such time as the Borrower shall reasonably
determine that such amounts are not required to pay contingent liabilities with
respect to the Asset Sale) and other customary fees and expenses actually
incurred in connection therewith and net of taxes paid or reasonably estimated
to be payable as a result thereof (after taking into account any available tax
credits or deductions and any tax sharing arrangements with any Person other
than the Borrower and its Subsidiaries) and (ii) in connection with any issuance
or sale of Capital Stock or debt securities or instruments or the incurrence of
Indebtedness, the cash proceeds received from such issuance or incurrence, net
of attorneys' fees, investment banking fees, accountants' fees, underwriting
discounts and commissions and other customary fees and expenses actually
incurred in connection therewith.
"1997 CONVERTIBLE SUBORDINATED NOTES" means the 5% Convertible
Subordinated Notes due 2004 issued by the Borrower pursuant to the 1997
Indenture.
"1997 INDENTURE" means the Indenture, dated as of September
25, 1997, between the Borrower and American Stock Transfer & Trust Company, as
trustee.
"NON-U.S. LENDER" has the meaning specified in Section
2.10(g).
"NOTES" means a promissory note of the Borrower in the form
attached as EXHIBIT B hereto
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evidencing the Bridge Loan and Term Loan of any Lender.
"OBLIGATIONS" means all now existing and hereafter arising
obligations and liabilities of any of the Borrower and the Guarantors to any and
all of the Lenders arising under or in connection with the Loan Documents,
whether absolute or contingent, and whether for principal, interest, penalties,
premium, fees, indemnifications, reimbursements, damages (including, if
applicable, Liquidated Damages), or otherwise and specifically including
post-petition interest (whether or not an allowable claim).
"ODESSA" means Odessa Exploration Incorporated, a subsidiary
of the Borrower.
"OFFERING DOCUMENTS" means an offering memorandum or
prospectus together with such other documents, instruments and agreements as the
Arranger may request pursuant to the terms of the Engagement Letter and Fee
Letter in connection with the issuance of the Permanent Securities.
"OFFICER" means, with respect to any Person, the Chairman of
the Board, the Chief Executive Officer, the President, the Chief Operating
Officer, the Chief Financial Officer, the Treasurer, any Assistant Treasurer,
the Controller, the Secretary or any Vice President of such Person.
"OFFICERS' CERTIFICATE" means a certificate signed on behalf
of either the Borrower or any Guarantor by an Officer of the Borrower or any
Guarantor, as the case may be, who must be the principal executive officer, a
vice chairman, the principal financial officer, the treasurer or the principal
accounting officer of the Borrower or any Guarantor, as the case may be.
"OIL AND GAS MORTGAGES" means the collective reference to the
Existing Oil and Gas Mortgages as amended by the Oil and Gas Mortgage Amendments
and any mortgages in favor of the Collateral Agent, as provided for in the
Credit Facility and the applicable Collateral Documents, covering the Oil and
Gas Properties.
"OIL AND GAS MORTGAGE AMENDMENT" means each Oil and Gas
Mortgage Amendment entered into on or prior to the Closing Date.
"OIL AND GAS PROPERTIES" means the oil and gas properties
described in Schedule 1.1C which are mortgaged pursuant to the Credit Facility
and the applicable Collateral Documents and the oil and gas properties as to
which the Collateral Agent shall be granted a Lien in accordance therewith.
"ONE-MONTH LIBOR" means, the rate per annum appearing on Page
3750 of the Telerate Service (or on any successor or substitute page of such
Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of the applicable Interest Period, as the rate
for dollar deposits with a one-month maturity period.
"OTHER TAXES" has the meaning specified in Section 2.10(b).
"PARTICIPANT" has the meaning specified in Section 6.1(b).
"PARTICIPATIONS" has the meaning specified in Section 6.1(b).
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"PAYMENT BLOCKAGE NOTICE" has the meaning specified in Section
10.4.
"PAYMENT DEFAULT" means any matured or unmatured default under
the provisions of the Credit Facility which are analogous to Section 7.1(a), or
(e) hereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any of its functions under ERISA.
"PERMANENT SECURITIES" means (1) the Senior Subordinated
Notes, or (2) any equity securities of the Borrower issued after the Closing
Date other than (i) any issuance or sale of common stock (or common stock
equivalents) of the Borrower to officers and employees under employee benefit or
compensation plans and (ii) Disqualified Stock.
"PERMITTED ACQUISITIONS" means the acquisition by the Borrower
and its Subsidiaries of (a) rigs and other well service equipment, (b) well
service companies and (c) oil and gas properties and related equipment, provided
that (i) the aggregate amount of such cash consideration paid with respect to
such acquisitions does not exceed $15,000,000, or (ii) after giving effect to
such acquisitions and any borrowings hereunder in connection therewith, (x) the
Consolidated Leverage Ratio shall not be more than the lesser of 3.75 to 1.00
or, prior to the Stepdown Date, the ratio set forth in subsection 4.12(a)
applicable to the Borrower at the time of such acquisition and (y) the sum of
(l) the Borrower's cash and Cash Equivalents on hand and (2) the aggregate
amount of revolving loans available to be borrowed by the Borrower under the
Credit Facility shall be at least $20,000,000 or (iii) after giving effect to
such acquisition the Consolidated Leverage Ratio is not increased and such
acquisition is funded solely with the Borrower's Capital Stock.
"PERMITTED INDEBTEDNESS" means Indebtedness permitted to be
incurred by the Borrower or any Subsidiary of the Borrower pursuant to Section
4.13.
"PERMITTED INVESTMENTS" means investments permitted to be made
by the Borrower or any Subsidiary of the Borrower pursuant to Section 4.20.
"PERMITTED LIENS" means liens permitted to exist or be
incurred by the Borrower or any Subsidiary of the Borrower pursuant to Section
4.14.
"PERSON" means any individual, corporation, partnership,
limited liability company, joint venture, association, trust, unincorporated
organization or government or any agency or political subdivision thereof or any
other entity.
"PLAN" means any employee pension benefit plan (other than a
Multiemployer Plan) subject to the provisions of Title IV of ERISA or Section
412 of the Code or Section 307 of ERISA, and in respect of which the Borrower or
any of its Subsidiaries or any ERISA Affiliate is (or, if such plan were
terminated, would under Section 4069 of ERISA be deemed to be) an "employer" as
defined in Section 3(5) of ERISA.
"PREPAYMENT DATE" has the meaning specified in Section 2.8.
"PRO FORMA BALANCE SHEET" has the meaning specified in Section
3.10(a).
"PRO FORMA EBITDA STATEMENT" means an unaudited pro forma
statement of Consolidated EBITDA of the Borrower for any period of four full
fiscal quarters (including the notes thereto) substantially in the form of
Exhibit L hereto.
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"PROJECTIONS" has the meaning specified in Section 4.2(c).
"PROVED RESERVES" means the estimated quantities of crude oil,
condensate, natural gas and natural gas liquids that adequate geological and
engineering data demonstrate with reasonable certainty to be recoverable in
future years from known reservoirs under existing economic and operating
conditions (i.e., prices and costs as of the date the estimate is made).
"RATE SELECTION NOTICE" has the meaning specified in Section
2.4(a).
"REGULATION D" means Regulation D of the Board as the same may
be amended or supplemented from time to time.
"RELATED DOCUMENTS" means the Escrow Agreement; the Warrant
Agreement; the Debt Registration Rights Agreement; the Equity Registration
Rights Agreement; the Fee Letter; prior to the Merger Date, the Collateral
Documents; after the issuance of the Exchange Notes, the Exchange Notes and the
Exchange Note Indenture; and any and all other related agreements and documents
issued or delivered hereunder or thereunder or pursuant hereto or thereto.
"REORGANIZATION" means, with respect to any Multiemployer
Plan, the condition that such plan is in reorganization within the meaning of
Section 4241 of ERISA.
"REPORTABLE EVENT" means any of the events set forth in
Section 4043(c) of ERISA, other than those events as to which the thirty day
notice period is waived under subsection .13, .14, .16., .18 .19 or .20 of PBGC
Reg. Section 2615.
"REPRESENTATIVE" has the meaning specified in Section 10.2.
"REQUEST" has the meaning specified in Section 8.1(b).
"REQUIREMENT OF LAW" means as to any Person, the Certificate
of Incorporation and By-Laws or other organizational or governing documents of
such Person, and any law, treaty, rule or regulation or determination of an
arbitrator or a court or other Governmental Entity, in each case applicable to
or binding upon such Person or any of its property or to which such Person or
any of its property is subject.
"RESPONSIBLE OFFICER" of any corporation shall mean any
executive officer or financial officer of such corporation and any other officer
or similar official thereof responsible for the administration of the
obligations of such corporation in respect of this Agreement.
"RESTRICTED INVESTMENT" means any Investment other than a
Permitted Investment.
"RESTRICTED PAYMENTS" has the meaning specified in Section
4.18.
"SCHEDULED INTEREST PAYMENT DATE" means the last day of an
Interest Period.
"SEC" means the Securities and Exchange Commission.
"SECURITIES" means, collectively, the Exchange Notes and the
Escrowed Warrants.
"SECURITIES ACT" means the Securities Act of 1933, as amended.
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"SENIOR DEBT" has the meaning specified in Section 10.2.
"SENIOR SUBORDINATED NOTES" means either (a) senior
subordinated notes, provided that such notes shall:
(i) be unsecured, provided that such notes may provide for a
covenant requiring equal and ratable security in the event that any
Indebtedness that is pari passu with or subordinated to such notes is
secured;
(ii) except as otherwise provided in clause (vi) below, not
amortize, or otherwise be subject to scheduled redemptions, repurchase
or other payments of principal, prior to September 16, 2005;
(iii) bear interest (x) at a rate per annum not in excess of
17% and (y) payable in cash at a rate per annum not in excess of 14%
and may be accompanied by warrants to purchase common stock of the
Borrower;
(iv) be subordinated to the Credit Facility in a manner no
less favorable to the lenders under the Credit Facility than the
Exchange Notes are to be subordinated to the Credit Facility (as
provided on the date hereof) on and after the Merger Date;
(v) provide for covenants, events of default and remedies not
materially less favorable (in each case taken as a whole) to the
Borrower than those applicable to the Exchange Notes or contained in
the Exchange Note Indenture on the date hereof, subject to modification
where necessary to reflect prevailing market terms at the time of
issuance of such senior subordinated notes for "high-yield" securities
issued by companies of comparable size, credit rating and
capitalization (including, without limitation, having in place a senior
secured credit facility) to the Borrower, provided, in any event, that
such covenants, events of default and remedies shall be no more
restrictive of the conduct of business by the Borrower than those in
effect on the Stepdown Date (if being understood, in any event, that
(x) there shall be no financial maintenance covenants, (y) the
indebtedness limitation covenant shall be based only upon an
"incurrence test" and (z) there shall be a cross-payment
default/cross-acceleration default provision, rather than a simple
cross-default provision); and
(vi) not require prepayments or mandatory redemption of such
senior subordinated notes, except (A) in the event of a "change of
control" of the Borrower, subject to terms not materially less
favorable (taken as a whole) to the Borrower than those contained in
the Exchange Notes or the Exchange Note Indenture on the date hereof,
and (B) in the event of an asset sale, so long as the proceeds thereof
are not required by the Credit Facility to be used to prepay the
Indebtedness thereunder or reduce the commitments thereunder or for
reinvestment in the Borrower's business; or
(b) other Subordinated Indebtedness (as defined in the Credit Facility
on the date hereof) the terms and conditions of which are reasonably
satisfactory to the administrative agent under the Credit Facility and the
Required Lenders (as defined therein on the date hereof).
"SERVICIOS" means Servicios WellTech, S.A., an Argentine
corporation.
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"SINGLE EMPLOYER PLAN" means any Plan which is covered by
Title IV of ERISA, but is not a Multiemployer Plan.
"SOLVENT" means, when used with respect to any Person, means
that, as of any date of determination, (a) the amount of the "present fair
saleable value" of the assets of such Person will, as of such date, exceed the
amount of all "liabilities of such Person, contingent or otherwise", as of such
date, as such quoted terms are determined in accordance with applicable federal
and state laws governing determinations of the insolvency of debtors, (b) the
present fair saleable value of the assets of such Person will, as of such date,
be greater than the amount that will be required to pay the liability of such
Person on its debts as such debts become absolute and matured, (c) such Person
will not have, as of such date, an unreasonably small amount of capital with
which to conduct its business, and (d) such Person will be able to pay its debts
as they mature. For purposes of this definition, (i) "debt" means liability on a
"claim", and (ii) "claim" means any (x) right to payment, whether or not such a
right is reduced to judgment, liquidated, unliquidated, fixed, contingent,
matured, unmatured, disputed, undisputed, legal, equitable, secured or unsecured
or (y) right to an equitable remedy for breach of performance if such breach
gives rise to a right to payment, whether or not such right to an equitable
remedy is reduced to judgment, fixed, contingent, matured or unmatured,
disputed, undisputed, secured or unsecured.
"STATED MATURITY" means, with respect to any installment of
interest or principal on any series of Indebtedness, the date on which such
payment of interest or principal was scheduled to be paid in the original
documentation governing such Indebtedness, and shall not include any contingent
obligations to repay, redeem or repurchase any such interest or principal prior
to the date originally scheduled for the payment thereof.
"STEPDOWN DATE" means the first date on which the Merger Date
and the Conversion Date shall each have occurred.
"SUBORDINATED INDEBTEDNESS" means the Convertible Subordinated
Debentures, the 1997 Convertible Subordinated Notes and any other Indebtedness
of the Borrower subordinated to the prior payment in full of the Obligations to
at least the extent the 1997 Convertible Subordinated Notes are subordinated to
the Obligations or otherwise in a manner acceptable to the Majority Lenders as
evidenced by their written approval.
"SUBSIDIARY" means, with respect to any Person (herein
referred to as the "parent") at any date, a corporation, partnership or other
entity of which, at such date, shares of stock or other ownership interests
having ordinary voting power (other than stock or such other ownership interests
having such power only by reason of the happening of a contingency) to elect a
majority of the board of directors or other managers of such corporation,
partnership or other entity are at the time owned, or the management of which is
otherwise controlled, directly or indirectly through one or more intermediaries,
or both, by such Person. Unless otherwise qualified, all references to a
"Subsidiary" or to "Subsidiaries" in this Agreement shall refer to a Subsidiary
or Subsidiaries of the Borrower (including on and after the Closing Date, ▇▇▇▇▇▇
and its Subsidiaries), but such references shall not include any Excluded
Subsidiary and references to Subsidiaries of ▇▇▇▇▇▇ shall not include any
Excluded Subsidiary.
"TAXES" has the meaning specified in Section 2.10(a).
"TENDER OFFER" means the offer to purchase the outstanding
common stock of ▇▇▇▇▇▇ pursuant to the Acquisition Agreement.
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"TENDER OFFER DOCUMENTS" means the collective reference to the
Offer to Purchase, dated August 17, 1998 by Midland and all associated documents
filed by the Borrower and/or Midland with the SEC in connection with the Tender
Offer prior to the Closing Date.
"TERM LOAN" means a loan made on the Conversion Date, if any,
by a Lender to the Borrower pursuant to Section 2.2 to refinance a Bridge Loan.
"THREE-MONTH LIBOR" means, the rate per annum appearing on
Page 3750 of the Telerate Service (or on any successor or substitute page of
such Service, or any successor to or substitute for such Service, providing rate
quotations comparable to those currently provided on such page of such Service,
as determined by the Administrative Agent from time to time for purposes of
providing quotations of interest rates applicable to dollar deposits in the
London interbank market) at approximately 11:00 a.m., London time, two Business
Days prior to the commencement of the applicable Interest Period, as the rate
for dollar deposits with a three-month maturity period.
"TRANSACTIONS" means, collectively, the Acquisition, the
related financing transactions and each of the other transactions contemplated
by the Transaction Documents.
"TRANSACTION DOCUMENTS" means the Loan Documents, the Credit
Facility and the Acquisition Agreement, and prior to the Merger Date, the
Collateral Documents.
"TRANSFEREE" has the meaning specified in Section 14.17.
"TRANSPORTES" means Transportes Dimopulos Sociedad de
Responsibilidad Limitada, an Argentine limited partnership.
"TRUST INDENTURE ACT" means the Trust Indenture Act of 1939,
as amended.
"VOTING STOCK" means, with respect to any Person at any time,
the Capital Stock of such Person that is at such time entitled to vote in the
election of the board of directors of such Person.
"WHOLLY OWNED SUBSIDIARY" of any Person means a Subsidiary of
such Person, 100% of the Capital Stock and other Equity Interests of which is
owned directly or indirectly by such Person (other than directors or qualifying
shares).
"WITHDRAWAL LIABILITIES" means liability to a Multiemployer
Plan as a result of a complete or partial withdrawal from such Multiemployer
Plan, as such terms are defined in Part I of Subtitle E of Title IV of ERISA.
"YEAR 2000 COMPLIANT" has the meaning specified in Section
3.17.
"YEAR 2000 PROBLEM" has the meaning specified in Section 3.17.
SECTION 1.2 INTERPRETATION. In this Agreement, the singular
includes the plural and the plural includes the singular; words implying any
gender include the other genders; references to any section, exhibit or schedule
are to sections, exhibits or schedules hereto unless otherwise indicated;
references to statutes are to be construed as including all statutory provisions
consolidating, amending or replacing the statute referred to; references to
"writing" include printing, typing, lithography and other means of
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reproducing words in a visible form; "including" following a word or phrase
shall not be construed to limit the generality of such word or phrase; and an
accounting term not otherwise defined has the meaning assigned to it in
accordance with GAAP.
ARTICLE II
THE BRIDGE FACILITY
SECTION 2.1 COMMITMENTS TO MAKE BRIDGE LOANS. In reliance
upon the representations and warranties of the Borrower set forth herein and
subject to the terms and conditions herein set forth, each of the Lenders
severally agrees to make a Bridge Loan to the Borrower on the Closing Date in
the amount of such Lender's Commitment. The proceeds of each Bridge Loan shall
be disbursed by wire transfer on the Closing Date as provided in written
instructions delivered by the Borrower to the Administrative Agent on the
Business Day prior to the Closing Date. The Administrative Agent shall give
each Lender prompt notice by telephone or facsimile transmission of the
Borrower's instructions with respect to each Bridge Loan. The Commitment of
each Lender shall be reduced to zero immediately after the making of a Bridge
Loan by such Lender on the Closing Date. Each Bridge Loan will mature on the
Maturity Date. The unpaid principal balance of the Bridge Loans, together with
all accrued and unpaid interest thereon, shall become due and payable on the
Maturity Date unless the Conversion Date occurs, in which case the unpaid
principal balance of the Term Loans, together with all accrued and unpaid
interest thereon, shall become due and payable on the date that is ten years
after the Closing Date.
SECTION 2.2 CONVERSION TO TERM LOANS.
(a). If, on the Maturity Date: (i) no Conversion Default
exists and is continuing, and (ii) the Administrative Agent receives an
Officers' Certificate from the Borrower certifying to the foregoing and
requesting a conversion of the Bridge Loans to Term Loans, each of the Lenders
hereby commits that, on the Maturity Date, such Lender will convert its
outstanding amount of Bridge Loans (including, without limitation, any Bridge
Loans resulting from the capitalization of interest pursuant to Section 2.4(e)
below), to a Term Loan maturing on September 14, 2008 (and the Maturity Date
shall be deemed to have been automatically extended to September 14, 2008).
(b). If, on the Maturity Date a Conversion Default exists as
to which a cure period is applicable under Section 7.1 but has not then
expired, the Maturity Date shall be automatically deemed extended until the
earlier to occur of:
(A) the expiration of such cure period without cure of such
Conversion Default (in which case all Obligations shall become
immediately due and payable on the last day of such cure period), or
(B) the cure of such Conversion Default on or before the last
day of the applicable cure period and delivery by the Borrower to the
Administrative Agent on or prior to such day of an Officers'
Certificate certifying that no Conversion Default exists and is
continuing and requesting a conversion of the Bridge Loans to Term
Loans (in which case the Conversion Date shall be deemed to have
occurred).
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SECTION 2.3 OPTION TO EXCHANGE TERM LOANS FOR EXCHANGE NOTES.
(a) On any Business Day on or after the Conversion Date (if
any), subject to the prior written consent of the Administrative Agent, any
Lender may elect to exchange all or any portion of its Notes for Exchange Notes
for the purpose of transferring such Exchange Notes to a Person other than a
Person who was a Lender on the Maturity Date by giving not less than three
Business Days' prior irrevocable written notice of such election to the
Borrower, the Escrow Agent, the Administrative Agent and the Exchange Note
Trustee specifying the principal amount of its Notes to be transferred (which
shall be integral multiples of $1,000) and subject to Section 6.1, the name of
the proposed registered holder, the fixed rate of interest (which shall not
exceed the rate per annum then in effect on the Term Loans), the first date
that the Exchange Notes may be optionally redeemed (if any), all other terms of
the Exchange Note not specified in the form of the Global Note attached as an
exhibit to the Exchange Indenture and, subject to the terms of the Exchange
Note Indenture, the amount of each Exchange Note requested (each such notice,
an "EXCHANGE NOTICE"); provided, that in no event shall the aggregate principal
amount of the Notes initially exchanged pursuant to this Section 2.3(a) be less
than $25,000,000 or such smaller amount approved by the Administrative Agent.
The Exchange Note shall be guaranteed by all of the Guarantors. Any such
transferring Lender shall deliver its Notes to the Administrative Agent
together with its delivery of an Exchange Notice. Notes exchanged for Exchange
Notes pursuant to this Section 2.3 shall be deemed repaid and canceled and the
Exchange Notes so issued shall be governed by and construed in accordance with
the provisions of the Exchange Note Indenture.
(b) Not later than the third Business Day after delivery of
an Exchange Notice with respect to a transfer of all or any portion of a Term
Loan for one or more Exchange Notes to which the Administrative Agent has
given its prior written consent:
(i) the Administrative Agent shall deliver to the Escrow Agent
the original Notes delivered to it by the transferring Lender pursuant
to Section 2.3(a);
(ii) the Escrow Agent shall cancel each Note so delivered to
it and, if applicable, the Borrower shall issue a replacement Note to
such Lender in an amount equal to the principal amount of such Lender's
Term Loan that is not being exchanged, or the Escrow Agent shall make a
notation on the surrendered Note to the effect that a portion of the
Term Loan represented thereby has been repaid; and
(iii) the Escrow Agent shall deliver the applicable Exchange
Note(s) to the Exchange Note Trustee for authentication and delivery to
the holder or holders thereof specified in the Exchange Notice.
(c) Each Exchange Note issued pursuant to this Section 2.3
shall bear interest at a fixed rate no greater than the rate per annum borne by
the Term Loan on the date of the Exchange Notice. Accrued interest on Term Loans
so exchanged shall be canceled and the Exchange Notes received in such transfer
shall bear interest from and including the most recent date to which interest
has been paid on the Term Loans so exchanged.
SECTION 2.4 INTEREST; PAYMENT IN KIND OPTION; AND DEFAULT
INTEREST.
(a) INTEREST RATE APPLICABLE TO BRIDGE LOANS. Not later than
three Business Days prior to the Closing Date and prior to each Interest Period
thereafter, the Borrower shall irrevocably specify in a written notice (a "RATE
SELECTION NOTICE") delivered to the Administrative Agent whether the Interest
Rate applicable
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to the Bridge Loans will be calculated with the One Month LIBOR Rate or Three
Month LIBOR Rate. If the Borrower fails to deliver a Rate Selection Notice in
accordance with the preceding sentence, the applicable Interest Rate shall be
calculated using the One Month LIBOR Rate. Subject to Sections 2.4(d), (e) and
(f) below, the unpaid principal balance of the Bridge Loans shall bear interest
until paid at a rate per annum equal to the sum of the Base Rate plus the
Applicable Margin, changing when and as the Base Rate and/or the Applicable
Margin changes.
(b) INTEREST ON TERM LOANS. Subject to Sections 2.4(d), (e)
and (f) below, interest on the unpaid principal balance of the Term Loans of
each Lender will accrue at a rate per annum equal to the Conversion Rate,
changing when and as the Conversion Spread changes.
(c) BASIS OF COMPUTATION OF INTEREST; PAYMENT OF INTEREST.
All interest shall be calculated for actual days elapsed on the basis of a
360-day year and shall be payable in arrears by the Borrower not later than
12:00 noon (New York City time) on each Interest Payment Date by wire transfer
of immediately available funds in accordance with Section 2.9.
(d) MAXIMUM INTEREST RATE. Notwithstanding anything
contained in Section 2.4(a) or 2.4(b), but subject to Section 2.4(f), in no
event shall the interest rate on the Loans for any Interest Period exceed an
annual rate equal to the lesser of (i) 17% and (ii) the maximum interest rate
permitted by law.
(e) OPTION TO PAY INTEREST IN KIND. Subject to Section
2.4(f), to the extent that the interest rate on the Bridge Loans or the Term
Loans for any Interest Period exceeds a rate equal to 14% per annum, the
Borrower shall have the option to pay all or a portion of the interest payable
for such Interest Period in excess of 14% per annum by adding such excess
amount to the principal amount outstanding under such Notes. The Borrower shall
give the Administrative Agent an irrevocable notice that it will exercise such
right at least three Business Days prior to any Interest Payment Date as to
which such right is to be exercised.
(f) DEFAULT INTEREST. (i) If the Borrower shall default in
the payment of the principal of or interest on any Loan by acceleration or
otherwise, the Borrower shall on demand from time to time pay interest, to the
extent permitted by law, on such defaulted amount to but excluding the date of
actual payment (after as well as before judgment) to the extent lawful, at a
rate per annum equal to 200 basis points in excess of the otherwise applicable
interest rate on the Loans. The Borrower shall pay such default interest and
all interest accruing on any overdue Obligation in cash on demand from time to
time.
SECTION 2.5 MANDATORY PREPAYMENT.
(a) The Borrower shall prepay the Loans ratably in
accordance with the aggregate outstanding principal balances thereof, with the
Net Cash Proceeds of: (i) any direct or indirect public offering or private
placement of the Permanent Securities, and (ii) any Asset Sale by the Borrower
or any Subsidiary of the Borrower after the Closing Date (each of the
transactions in the foregoing clauses (i) and (ii), a "CAPITAL MARKETS
TRANSACTION"). Notwithstanding the foregoing sentence, (x) the Borrower shall
not be required to prepay the Loans pursuant to clause (ii) above with respect
to Net Cash Proceeds received by the Borrower or any Subsidiary on or after the
Merger Date if the Borrower is required to apply such Net Cash Proceeds to
prepay loans or permanently reduce commitments pursuant to the Credit Facility
and (y) any prepayment of the Loans pursuant to clause (ii) above with respect
to Net Cash Proceeds received prior to the Merger Date shall be shared pro rata
by the Lenders and lenders under the Credit Facility based upon the aggregate
outstanding principal amount of the Loans relative to the Indebtedness and
letters of credit outstanding under the Credit Facility (with letters of credit
being deemed to have a principal amount equal to the maximum potential
liability thereunder). In the event that, prior to the Merger Date, any other
prepayment is to be made
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under the Credit Facility (other than prepayments of revolving loans under the
Credit Facility to the extent such prepayments are not a permanent reduction of
the revolving commitments and are not made with the proceeds of a Capital
Markets Transaction), the Company shall simultaneously make a prepayment of the
Loans in the amount equal to the product obtained by multiplying the amount of
such prepayment under the Credit Facility by a fraction the numerator of which
is the outstanding principal amount of the Loans at the time of such prepayment
and whose denominator is the Indebtedness and letters of credit outstanding
under the Credit Facility (with letters of credit being deemed to have a
principal amount equal to the maximum potential liability thereunder). The
Borrower shall, not later than the third day following the receipt of Net Cash
Proceeds with respect to any Capital Markets Transaction, apply such Net Cash
Proceeds to prepay the Loans pursuant to this Section 2.5, without premium or
penalty, by paying to each Lender an amount equal to 100% of such Lender's pro
rata share of the aggregate principal amount of the Loans to be prepaid, plus
accrued and unpaid interest thereon to the Prepayment Date; provided, that the
Loans shall be prepaid pari passu with any prepayment required under the
Exchange Note Indenture in an amount pro rata with the principal amount paid
under the Exchange Note Indenture (pro rata in accordance with the principal
amount then outstanding on the Loans and the Exchange Notes).
(b) Subject to and in accordance with Section 4.27, in the
event of any Change of Control, the Borrower shall offer to prepay the Loans
pursuant to Section 4.27. From and after the Merger Date, the Borrower will
either repay all obligations under the Credit Facility or obtain the requisite
consent to prepay the Loans, prior to complying with the preceding sentence, but
in any event within 90 days of such Change of Control.
(c) On the date the ▇▇▇▇▇▇ Notes are purchased as a result of
the ▇▇▇▇▇▇ Change of Control, the Borrower shall repay the Loans in an amount
equal to the amount by which the sum of the principal amount of the Loans plus
the principal amount of the ▇▇▇▇▇▇ Notes outstanding immediately after the
▇▇▇▇▇▇ Notes are purchased as a result of the ▇▇▇▇▇▇ Change of Control exceeds
$150,000,000, together with accrued and unpaid interest on the Loans so repaid;
provided, however, that if the principal amount of ▇▇▇▇▇▇ Notes outstanding
immediately after the ▇▇▇▇▇▇ Notes are so purchased exceeds $135,000,000, the
Borrower shall repay all outstanding Loans, together with accrued and unpaid
interest thereon.
(d) Notwithstanding any provision contained in this Agreement
to the contrary, the Borrower shall not issue or sell any equity securities of
the Borrower (other than (i) any issuance or sale of common stock (or common
stock equivalents) of the Borrower to officers and employees under employee
benefit or compensation plans and (ii) Disqualified Stock) if an Event of
Default has occurred or is continuing pursuant to Section 8(a), 8(e)(i),
8(e)(ii), 8(f) or 8(k) of the Credit Facility, unless prior to such sale or
issuance the Borrower has obtained the requisite consent under the Credit
Facility to apply the proceeds thereof to prepay the Loans pursuant to this
Section 2.5.
SECTION 2.6 OPTIONAL PREPAYMENT. The Borrower may, upon three
Business Days' prior written notice to the Administrative Agent, prepay the
Loans at any time, in whole or in part, on a pro rata basis, by paying to each
applicable Lender an amount equal to 100% of such Lender's pro rata share of the
aggregate principal amount of Loans to be prepaid, plus accrued and unpaid
interest thereon to the Prepayment Date.
SECTION 2.7 BREAKAGE COSTS; INDEMNITY. The Borrower agrees to
indemnify and hold each Affected Party harmless from and against any loss or
expense which such Affected Party sustains or incurs as a consequence of:
(a) the failure by the Borrower to borrow Loans on the Closing
Date after the Borrower has
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given a notice with respect thereof in accordance with Section 2.4,
(b) default by the Borrower in making any prepayment after the
Borrower has given a notice thereof in accordance with the provisions of Section
2.5 or 2.6, as applicable, or
(c) the mandatory or optional prepayment of Loans on a day
that is not the last day of an Interest Period.
Such indemnification may include an amount equal to the greater of (i) such
Affected Party's actual loss and expenses incurred (excluding lost profits) in
connection with, or by reason of, any of the foregoing events and (ii) the
excess, if any of (A) the amount of interest that would have accrued on the
principal amount of Bridge Loans not so made or the principal amount of Loans so
prepaid from the date of such proposed issuance, in the case of a failure by the
Borrower to borrow Loans on the Closing Date, or a default by the Borrower in
making any such prepayment, to and including the last day of the Interest Period
that would have commenced on the proposed date of funding, or, in the case of
any such prepayment, to the last of the Interest Period in which such prepayment
occurred, in each case at the applicable rate of interest for such Loans
provided for herein (excluding, however, the Applicable Margin included therein,
if any) over (B) the amount of interest (as reasonably determined by such
Affected Party) which would have accrued to such Affected Party on such amount
by placing such amount on deposit for a period comparable to such Interest
Period with leading banks in the interbank Eurodollar market. A certificate as
to any amounts payable pursuant to this Section 2.7 submitted to the Borrower by
any Affected Party shall be conclusive in the absence of manifest error. This
covenant shall survive the termination of this Agreement and the payment of the
Obligations.
SECTION 2.8 EFFECT OF NOTICE OF PREPAYMENT. The Borrower shall
notify the Administrative Agent in writing of any date set for prepayment (each
such day, a "PREPAYMENT DATE") of Loans. Once such notice is sent or mailed, the
Loans to be prepaid shall become due and payable on the Prepayment Date set
forth in such notice. Such notice may not be conditional.
SECTION 2.9 PAYMENTS.
(a) WIRE TRANSFER. Except as provided in Section 2.4(e) with
respect to the payment of certain interest by capitalizing it and adding it to
the principal of outstanding Loans, the principal of, fees, premium, if any, and
interest on each Loan and all other Obligations arising under the Loan Documents
shall be payable by wire transfer in immediately available funds (in United
States dollars) to the Administrative Agent for the respective accounts of the
Lenders set forth below their signatures on the signature pages of this
Agreement or otherwise designated in the Loan Register from time to time to the
Borrower by the Administrative Agent at least three Business Days prior to the
due date therefor.
(b) PAYMENTS ON BUSINESS DAYS. If any payment to be made here
under or under any Loan shall be due on a day other than a Business Day, such
payment shall be made on the next succeeding Business Day (and such extension of
time shall be included in computing interest in connection with such payment);
provided, however, that if such succeeding Business Day falls in the next
calendar month or quarter, as applicable, such payment shall be made on the next
preceding Business Day.
(c) PARTIAL PREPAYMENTS AND REDEMPTIONS. All partial
prepayments and redemptions of the outstanding principal balance of the Loans
shall be made ratably amongst the applicable Lenders in accordance with their
respective shares of the aggregate outstanding principal balance of the Loans
eligible for prepayment or redemption.
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(d) NO DEFENSE. To the fullest extent permitted by law, the
Borrower and the Guarantors shall make all payments hereunder and under the
Notes regardless of any defense (other than the defense of payment) or
counterclaim.
(e) ALLOCATION. Any money paid to, received by, or collected
by the Administrative Agent or any Lender pursuant to this Agreement or any
other Loan Document, shall be applied in the following order, at the date or
dates fixed by the Administrative Agent:
FIRST: to any unpaid fees and reimbursement or unpaid expenses
of the Administrative Agent hereunder and under the Fee Letter;
SECOND: to the payment of all costs, expenses, other fees,
commissions and taxes owing to any Lender hereunder;
THIRD: to the indefeasible payment of all accrued interest to
the date of such payment or collection;
FOURTH: to the indefeasible payment of the amounts then due
and unpaid under this Agreement, the Notes or any other Loan Document
for principal, in respect of which or for the benefit of which such
money has been paid or collected, ratably, without preference or
priority of any kind, according to the amounts due and payable on the
Notes for principal; and
FIFTH: the balance, if any, to the Person lawfully entitled
thereto.
(f) INTEREST, FEES AND PREMIUM. Any prepayment of principal on
the Loans shall be accompanied by the payment of accrued and unpaid interest and
any applicable premium and fees with respect to such principal.
SECTION 2.10 TAXES.
(a) TAXES. Any and all payments by the Borrower and each
Guarantor hereunder or under the Notes, or any other Loan Document shall be
made, in accordance with Section 2.9 or the other applicable provision of the
applicable Loan Document, free and clear of and without deduction or withholding
for or on account of any and all present or future taxes, levies, imports,
deductions, charges or withholdings additions to tax, interest, penalties and
all other liabilities with respect thereto, excluding income, franchise or
similar taxes imposed or levied on the Administrative Agent or the Lenders as a
result of a present or former connection between the Administrative Agent or the
Lenders and the jurisdiction of the governmental authority imposing such tax or
any political subdivision or taxing authority thereof or therein (other than any
such connection arising solely from the Administrative Agent or such Lenders
having executed, delivered or performed its obligations or received a payment
under, or enforced, this Agreement) (all such non-excluded taxes, levies,
imports, deductions, charges, withholdings and liabilities being hereinafter
referred to as "TAXES"). If the Borrower or any Guarantor shall be required by
law to deduct or withhold any Taxes from, or in respect of, any sum payable
hereunder or under the Notes, or any other Loan Document to the Administrative
Agent or the Lenders or any of their respective Affiliates who may become a
Lender: (i) the sum payable thereunder shall be increased as may be necessary so
that after making all required deductions or withholdings (including deductions
or withholdings applicable to additional sums payable under this Section 2.10)
the Administrative Agent or the Lenders or any of their respective Affiliates
receives an amount equal to the sum it would have received had no such
deductions or withholdings been made; (ii) the Borrower or such Guarantor, as
the case may be, shall make such deductions or withholdings; and (iii) the
Borrower
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or such Guarantor, as the case may be, shall pay the full amount deducted to the
relevant tax authority or other authority in accordance with applicable laws;
provided, that the Borrower and the Guarantors shall not be required to increase
such payments, make such deductions or withholdings or pay such amounts to any
non-U.S. Lender that fails to comply with Section 2.10(g).
(b) OTHER TAXES. In addition, the Borrower and each of the
Guarantors agrees to pay any present or future stamp, mortgage recording or
documentary taxes or any other excise or property taxes, charges or similar
levies which arise from any payment made hereunder or under a Notes or other
Loan Document or from the execution, delivery or registration of, or otherwise
with respect to, this Agreement or the other Loan Documents (hereinafter
referred to as "OTHER TAXES") and hold the Administrative Agent and each Lender
harmless from and against any and all liabilities with respect to or resulting
from any delay or omission (other than to the extent attributable to such
Lender) to pay such Other Taxes. Each Lender represents that, to the best of its
knowledge, except for any such Other Taxes that may be imposed under the
federal, state or local laws of the United States (or any political subdivision
thereof), it is not aware of any such stamp, mortgage recording or documentary
taxes or any other excise or property taxes, charges or similar levies.
(c) INDEMNITY. The Borrower and the Guarantors will indemnify
the Administrative Agent and any Lender for the full amount of Taxes or Other
Taxes arising in connection with payments made under this Agreement or any other
Loan Document (including, without limitation, any Taxes or Other Taxes imposed
by any jurisdiction on amounts payable under this Section 2.10) paid by the
Administrative Agent or any Lender or any of their respective Affiliates and any
liability (including penalties, additions to tax interest and expenses) arising
therefrom or with respect thereto. Payment under this indemnification shall be
made within fifteen days from the date the Administrative Agent or any Lender or
any of their respective Affiliates makes written demand therefor; provided,
however, that the Borrower and the Guarantors shall not be obligated to make
payment to the Lender or the Administrative Agent (as the case may be) pursuant
to this Section 2.10(c) in respect of penalties, interest and other liabilities
attributable to any Taxes or Other Taxes, if (i) written demand therefor has not
been made by such Lender or the Administrative Agent within 60 days from the
date on which such Lender or the Administrative Agent received written notice of
the imposition of Taxes or Other Taxes by the relevant taxing or governmental
authority, but only to the extent such penalties, interest and other similar
liabilities are attributable to such failure or delay by the Administrative
Agent or the Lender in making such written demand, (ii) such penalties, interest
and other liabilities have accrued after the Borrower had indemnified or paid an
additional amount due as of the date of such payment pursuant to this Section
2.10(c) or (iii) such penalties, interest and other liabilities are attributable
to the gross negligence or willful misconduct of the Lender or the
Administrative Agent or such Affiliates; provided, further, that the Borrower
and the Guarantors shall not be required to indemnity pursuant to this Section
2.10(c) any non-U.S. Lender that fails to comply with Section 2.10(g). After the
Lender or the Administrative Agent (as the case may be) received written notice
of the imposition of the Taxes or Other Taxes which are subject to this Section
2.10(c), such Lender and Administrative Agent will act in good faith to promptly
notify the Borrower and the Guarantors of their obligations hereunder; provided,
however, that the failure to so act shall not, standing alone, affect the rights
of the Administrative Agent or the Lenders under this Section 2.10(c).
(d) FURNISH EVIDENCE TO ADMINISTRATIVE AGENT. The Borrower
will make reasonable efforts to obtain certified copies of tax receipts
evidencing the payment of any Taxes deducted or withheld from each taxing
authority imposing such Taxes. The Borrower will furnish to the Administrative
Agent, within 60 days after the date the payment of any Taxes so deducted or
withheld is due pursuant to applicable law, original or certified copies of tax
receipts evidencing such payment by the Borrower or, if such receipts are not
obtainable, other evidence of such payments by the Borrower reasonably
satisfactory to the Administrative Agent.
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(e) SURVIVAL. Without prejudice to the survival of any other
agreement of the Borrower or any Guarantor hereunder, the agreements and
obligations of the Borrower and the Guarantors contained in this Section 2.10
shall survive the payment in full of all amounts due hereunder and under the
Notes.
(f) MITIGATION. If the Borrower or any Guarantor (as the
case may be) is required to pay additional amounts to or for the account of any
Lender pursuant to this Section 2.10 as a result of a change in law or treaty
occurring after such Lender first became a party to this Agreement, then such
Lender will, at the request of the Borrower or such Guarantor, change the
jurisdiction in which its Loans are maintained if such change (i) will
eliminate or reduce any such additional payment which may thereafter accrue and
(ii) is, in such Lender's sole, reasonable discretion, determined not to be
disadvantageous or cause hardship to such Lender.
(g) NON-U.S. LENDERS. Each Lender (or Transferee) that is
not a corporation or partnership created or organized in or under the laws of
the United States, any estate that is subject to federal income taxation
regardless of the source of its income or any trust which is subject to the
supervision of a court within the United States and the control of a United
States fiduciary as described in section 7701(a)(30) of the Code (a "NON-U.S.
LENDER") shall deliver to the Borrower and the Administrative Agent (or, in the
case of a Participant, to the Lender from which the related Participation shall
have been purchased) on or before the date on which it becomes a party to this
Agreement (or, in the case of a Participant, on or before the date on which
such Participant purchases the related Participation) either:
(A)(x) two duly completed and signed copies of either Internal
Revenue Service Form 1001 (relating to such Non-U.S. Lender and
entitling it to a complete exemption from withholding of United States
Taxes on all amounts to be received by such Non-U.S. Lender pursuant to
this Agreement and the other Loan Documents) or Form 4224 (relating to
all amounts to be received by such Non-U.S. Lender pursuant to this
Agreement and the other Loan Documents), or successor and related
applicable forms, as the case may be, and (y) two duly completed and
signed copies of Internal Revenue Service Form W-8 or W-9, or successor
and related applicable forms, as the case may be; or
(B) in the case of a Non-U.S. Lender that is not a "bank"
within the meaning of Section 881(c)(3)(A) of the Code and that does
not comply with the requirements of clause (A) hereof, (x) a statement
in the form of Exhibit K (or such other form of statement as shall be
reasonably requested by the Borrower or the Administrative Agent from
time to time) to the effect that such Non-U.S. Lender is eligible for a
complete exemption from withholding of U.S. Taxes under Code Section
871(h) or 881(c), and (y) two duly completed and signed copies of
Internal Revenue Service Form W-8 or successor and related applicable
form.
Further, each Non-U.S. Lender agrees to deliver to the Borrower and the
Administrative Agent, and if applicable, the assigning Lender (or, in the case
of a Participant, to the Lender from which the related participation shall have
been purchased) two further duly completed and signed copies of such Forms 1001,
4224, W-8 or W-9, as the case may be, or successor and related applicable forms,
on or before the date that any such form expires or becomes obsolete and
promptly after the occurrence of any event requiring a change from the most
recent form(s) previously delivered by it to the Borrower or the Administrative
Agent (or, in the case of a Participant, to the Lender from which the related
participation shall have been purchased) in accordance with applicable United
States laws and regulations; unless, in any such case, any change in law or
regulation has occurred subsequent to the date such Lender became a party to
this Agreement (or in the case of a Participant, the date on which such
Participant purchased the related Participation) which renders
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all such forms inapplicable or which would prevent such Lender (or Participant)
from properly completing and executing any such form with respect to it and such
Lender promptly notifies the Borrower and the Administrative Agent (or, in the
case of a Participant, the Lender from which the related participation shall
have been purchased) if it is no longer able to deliver, or if it is required to
withdraw or cancel, any form or statement previously delivered by it pursuant to
this Section 2.10(g). A Non-U.S. Lender shall not be required to deliver any
form or statement pursuant to the immediately preceding sentences in this
Section 2.10(g) that such Non-U.S. Lender is not legally able to deliver (it
being understood and agreed that the Borrower shall withhold or deduct such
amounts from any payments made to such Non-U.S. Lender that the Borrower
reasonably determines are required by law and that payments resulting from a
failure to comply with this paragraph (b) shall not be subject to payment or
indemnity by the Borrower pursuant to this Section 2.10).
Nothing in this Section 2.10 shall oblige any Lender to
disclose to the Borrower or any other person any information regarding its tax
affairs or tax computations or interfere with the right of any Lender to arrange
its tax affairs in whatever manner it thinks fit and, in particular, no Lender
shall be under any obligation to claim relief from its corporate profits or
similar tax liability in credits or deductions available to it and, if it does
claim, the extent, order and manner in which it does so shall be at its absolute
discretion.
SECTION 2.11 RIGHT OF SET OFF; SHARING OF PAYMENTS, ETC.
(a) RIGHT OF SET-OFF. In addition to any rights now or
hereafter granted under applicable law or otherwise, and not by way of
limitation of any such rights, upon the occurrence and during the continuance
of any Event of Default or if the Borrower becomes insolvent, however
evidenced, the Borrower authorizes each Lender at any time or from time to
time, without presentment, demand, protest or other notice of any kind to the
Borrower or to any other Person, any such notice being hereby expressly waived,
to set off and to appropriate and apply any and all deposits (general or
special, time or demand, provisional or final, whether or not collected or
available) in any currency and any other indebtedness at any time held or owing
by such Lender or any of its Affiliates (including, without limitation, by
branches and agencies of such Lender wherever located) to or for the credit or
the account of the Borrower against and on account of the Obligations of the
Borrower to such Lender under this Agreement or under any of the other Loan
Documents, including, without limitation, all interests in or participation in
the Obligations purchased by such Lender, and all other claims of any nature or
description arising out of or in connection with this Agreement or any other
Loan Document, irrespective of whether or not such Lender shall have made any
demand hereunder and although the Obligations, liabilities or claims, or any of
them, shall be contingent or unmatured. A Lender may exercise such rights
notwithstanding that the amounts concerned may be expressed in different
currencies and each Lender is authorized to effect any necessary conversions at
a market rate of exchange selected by it. A Lender exercising its rights under
this Section 2.11(a) shall provide prompt notice to the Borrower following such
exercise.
(b) SHARING. If any Lender shall obtain from the Borrower
payment of any principal of or interest on any Loan owing to it or payment of
any other amount under this Agreement, a Loan Document or any Notes held by it
though the exercise of any right of set-off, banker's lien or counterclaim or
similar right or otherwise (other than from the Administrative Agent as
provided herein) and, as a result of such payment, such Lender shall have
received a greater percentage of the principal of or interest on the Loans or
such other amounts then due to such Lender by the Borrower than the percentage
received by any other Lenders, it shall promptly purchase from such other
Lenders participation in (or, if and to the extent specified by such Lender,
direct interests in) the Loans or such other amounts, respectively, owing to
such other Lenders (or any interest due thereon, as the case may be) in such
amounts, and make such other adjustments from time to time as shall be
equitable, to the end that all the Lenders shall share the benefit of such
excess payment (net of any expenses which may be incurred by such Lender in
obtaining or preserving such excess
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payment) pro rata in accordance with the unpaid principal of and/or interest on
the Loans or such other amounts, respectively, owing to each of the Lenders. To
such end all the Lenders shall make appropriate adjustments among themselves (by
the resale of participation sold or otherwise) if such payment is rescinded or
must otherwise be restored.
(c) NO REQUIREMENT. Nothing in this Agreement shall require
any Lender to exercise any such right or shall affect the right of any Lender
to exercise, and retain the benefits of exercising, any such right with respect
to any other indebtedness or obligation of the Borrower. If, under any
applicable bankruptcy, insolvency or other similar law, any Lender receives a
secured claim in lieu of a set-off to which this Section 2.11 applies, such
Lender shall, to the extent practicable, exercise its rights in respect of such
secured claim in manner consistent with the rights of the Lenders entitled
under this Section 2.11 to share in the benefits of any recovery on such
secured claim.
SECTION 2.12 CERTAIN FEES. The Borrower agrees to pay to the
Administrative Agent, for its own account, the fees specified in the Fee Letter
with respect to the Bridge Loans and Term Loans, amounts for its expenses
incurred hereunder and all other amounts owing under this Agreement and the
other Loan Documents.
ARTICLE III
REPRESENTATIONS AND WARRANTIES
As of the date hereof and as of the Closing Date, the Borrower
and each Guarantor hereby jointly and severally agrees with, and represents and
warrants to, the Lenders, the Arranger and the Administrative Agent that each of
the following representations and warranties is true and will be true after
giving pro forma effect to the Transactions (provided that any representation or
warranty made with respect to ▇▇▇▇▇▇ and its Subsidiaries which relates to
matters which occurred prior to the Closing Date shall be deemed to be made to
the best of the knowledge of the Borrower):
SECTION 3.1 REPRESENTATIONS AND WARRANTIES IN THE CREDIT
FACILITY AND IN THE ACQUISITION AGREEMENT. The representations and warranties of
the Borrower contained in the Credit Facility and the Acquisition Agreement are
hereby incorporated herein by reference for the benefit of the Lenders, the
Arranger and the Administrative Agent (without giving effect to any waivers
thereof or amendment thereto subsequent to the date hereof) and are true and
correct in all material respects.
SECTION 3.2 ORGANIZATION; POWERS. The Borrower and each of its
Subsidiaries (a) is duly organized, validly existing and in good standing under
the laws of the jurisdiction of its organization, except (in the case of any
Subsidiary) where the failure to do so could not reasonably be expected to have
a Material Adverse Effect, (b) has all requisite power and authority to own its
property and assets and to carry on its business as now conducted and as
proposed to be conducted, except where the failure to do so could not reasonably
be expected to have a Material Adverse Effect, (c) is qualified to do business
in, and is in good standing in, every jurisdiction where such qualification is
required, except where the failure so to qualify could not reasonably be
expected to result in a Material Adverse Effect and (d) if a party thereto, has
the power and authority to execute, deliver and perform its obligations under
each of the Transaction Documents and each other agreement or instrument
contemplated hereby to which it is or will be a party and, in the case of the
Borrower, to borrow hereunder.
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SECTION 3.3 DUE AUTHORIZATION AND ENFORCEABILITY.
(a) Each of the Transaction Documents: (i) has been duly
authorized, executed and delivered by Borrower and each of its Subsidiaries (to
the extent each is a party thereto), and (ii) constitutes a valid and binding
obligation of Borrower and each of its Subsidiaries (to the extent each is a
party thereto) enforceable against each such Person in accordance with its
terms, except as enforcement may be limited by applicable bankruptcy,
insolvency, reorganization, moratorium and other similar laws affecting the
enforceability of creditors' rights generally and by general principles of
equity (whether arising under a proceeding at law or in equity). The Exchange
Indenture has been duly authorized, executed and delivered by the Borrower and
each of the Subsidiaries which are parties thereto to the Escrow Agent, and
when delivered out of escrow pursuant to the terms of the Escrow Agent and this
Agreement, will be a valid and binding obligation of the Borrower and each of
its Subsidiaries (to the extent each is a party thereto) enforceable against
each such Person in accordance with its terms, except as enforcement may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights generally
and by general principles of equity (whether arising under a proceeding at law
or in equity).
(b) The Loans, the Notes and the Exchange Notes have been duly
authorized by the Borrower and each of the Guarantees and the guarantees by the
Guarantors of the Borrower's obligations under the Exchange Notes have been duly
authorized by the Borrower and each Guarantor, as applicable. When the Notes
have been executed and delivered pursuant to the terms of this Agreement, each
of the Loans, the Notes, and the Guarantees will be valid and binding
obligations of the Borrower and each Guarantor, as applicable, enforceable
against it in accordance with their terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights generally
and by general principles of equity (whether arising under a proceeding at law
or in equity). When the Exchange Notes have been executed, delivered out of
escrow and authenticated pursuant to the terms of the Escrow Agreement and this
Agreement, each of the Exchange Notes and the guarantees by the Guarantors of
the Borrower's obligations under the Exchange Notes will be valid and binding
obligations of the Borrower and each Guarantor, as applicable, enforceable
against it in accordance with their terms, except as enforcement thereof may be
limited by applicable bankruptcy, insolvency, reorganization, moratorium and
other similar laws affecting the enforceability of creditors' rights generally
and by general principles of equity (whether arising under a proceeding at law
or in equity).
(c) The Escrowed Warrants have been duly authorized and
validly issued, and upon release by the Escrow Agent in accordance with the
terms of the Escrow Agreement, will be fully paid and nonassessable.
(d) Prior to the Merger Date, the Loans constitute
obligations that are secured pursuant to and in accordance with the Collateral
Documents. The principal of and interest on the Notes and the Loans and
indebtedness evidenced thereby and all other Loan Liabilities are and shall be
secured pari passu with the obligations under the Credit Facility by all
security interests and liens upon all Collateral granted the Collateral Agent
pursuant to the Collateral Documents, on the terms and conditions therein set
forth.
(e) Neither the Borrower nor any of its Subsidiaries has
agreed to secure, or has granted or become subject to any Lien securing, any
indebtedness under the Credit Facility, except pursuant to the Collateral
Documents. All actions required under the Collateral Documents to extend the
benefit of the collateral security thereunder to the Loan Liabilities at all
times prior to the Merger Date have been duly and effectually taken and
completed except for the filing of the financing statements executed by the
Borrower and the Guarantors and delivered to the Collateral Agent on the date
hereof.
(f) No Indebtedness or other liabilities owed by the Borrower
or its Subsidiaries to one or more
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of the others of them has been contractually subordinated to the payment of any
Indebtedness under the Credit Facility, except Indebtedness and other
liabilities that are subordinated, to at least the same extent, to the payment
of the Loans.
SECTION 3.4 NO CONFLICTS.
(a) Neither the execution and delivery of any of the
Transaction Documents nor the consummation of any of the transactions
contemplated hereby or thereby nor compliance with the terms and provisions
hereof or thereof (i) violates or will violate any material Requirement of Law
applicable to the Borrower or any of its Subsidiaries or by which any of their
respective properties or assets may be bound, or (ii) conflicts with or will
result in the breach of, or constitutes a default under, any material contract,
lease, indenture, loan agreement (including, without limitation, the Credit
Facility), mortgage, deed of trust or other material agreement or instrument
(each, a "MATERIAL CONTRACT") to which the Borrower, ▇▇▇▇▇▇ or any of their
respective Subsidiaries is a party or to which any of them may be subject or by
which any of them or any of their respective assets is or may be bound.
(b) No consent, approval, authorization or order of, or any
registration or filing with, any Governmental Entity is or will be required in
connection with (i) the execution and delivery of any of the Transaction
Documents by the Borrower or any of its Subsidiaries (to the extent each is a
party thereto) or the consummation of the transactions contemplated hereby or
thereby, or (ii) the issuance and delivery of the Securities by the Borrower,
other than (A) such authorizations, approvals, consents, exemptions,
registrations or filings as shall have been made or secured by the date hereof,
(B) such actions as may be required under the Registration Rights Agreements
after the date hereof in connection with any transfer of the Securities, (C) the
filings required to be made to perfect the Liens granted in the Collateral
Documents, (D) prior to the Merger Date, the approval of the Merger by the
▇▇▇▇▇▇ shareholders and the approval by the Subsidiaries of ▇▇▇▇▇▇ of the
transactions to be undertaken by them pursuant to Section 4.10.
SECTION 3.5 NO VIOLATIONS.
(a) There does not exist (i) any violation of any Requirement
of Law applicable to the Borrower or any of its Subsidiaries or Excluded
Subsidiaries which could reasonably be expected to have a Material Adverse
Effect.
(b) Neither the Borrower nor any of its Subsidiaries or
Excluded Subsidiaries is a party to any agreement or instrument or subject to
any corporate or other restriction that, individually or in the aggregate, has
had or could reasonably be expected to have a Material Adverse Effect.
SECTION 3.6 CAPITAL STOCK; SUBSIDIARIES.
(a) All outstanding shares of Capital Stock and other Equity
Interests of the Borrower are duly authorized, validly issued, fully paid and
non-assessable. All outstanding shares of Capital Stock and other Equity
Interests of each Subsidiary of the Borrower are duly authorized, validly
issued, fully paid and non-assessable and owned directly or indirectly by the
Borrower beneficially and of record, free and clear of any Lien other than the
Liens to be created under the Collateral Documents. SCHEDULE 3.6 sets forth a
complete list of all direct and indirect Subsidiaries of the Borrower and the
percentage ownership (direct and indirect) of the Borrower therein as of the
Closing Date (after giving effect to the Transactions) and, as to each such
Subsidiary, its jurisdiction of incorporation, its authorized capitalization
and the ownership of Capital Stock of such Subsidiary. All such outstanding
shares of Capital Stock or other ownership interest are duly authorized,
validly issued, fully paid and non-assessable and owned by the Borrower or each
Guarantor, as
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the case may be, free and clear of all Liens.
(b) Other than as set forth in SCHEDULE 3.6, there are (i) no
outstanding subscriptions, warrants, options, calls or commitments of any
character related to or entitling any Person to purchase or otherwise acquire
any shares of the Capital Stock or other Equity Interests of the Borrower or any
of its Subsidiaries other than the Escrowed Warrants, (ii) no obligations or
securities convertible into or exchangeable for shares of any Capital Stock or
other Equity Interests of the Borrower or any of its Subsidiaries or any
commitments of any character relating to or entitling any Person to purchase or
otherwise acquire any such obligations or securities other than the Escrowed
Warrants, and (iii) no preemptive or similar rights to subscribe for or to
purchase any Capital Stock or other Equity Interests of the Borrower or any of
its Subsidiaries.
SECTION 3.7 LIENS. There are no Liens on any assets of the
Borrower or any of its Subsidiaries except Permitted Liens.
SECTION 3.8 NO VIOLATION OF REGULATIONS OF BOARD OF GOVERNORS
OF FEDERAL RESERVE SYSTEM. None of the transactions contemplated by this
Agreement (including without limitation the use of the proceeds from the Loans
and Permanent Securities) will violate or result in a violation of Section 7 of
the Exchange Act, or any rule or regulation issued pursuant thereto, including,
without limitation, Regulations T, U and X of the Board.
SECTION 3.9 GOVERNMENTAL REGULATIONS. None of the Borrower or
any of its Subsidiaries is or will be subject to regulation under the Investment
Company Act of 1940, as amended. None of the Borrower or any of its Subsidiaries
is subject to regulation under any Requirement of Law (other than Regulation X
of the Board) which limits its ability to incur Indebtedness for borrowed money.
SECTION 3.10 FINANCIAL STATEMENTS; NO UNDISCLOSED LIABILITIES.
(a) The unaudited pro forma consolidated balance sheet of
the Borrower as at June 30, 1998 (including the notes thereto) (the "PRO FORMA
BALANCE SHEET"), copies of which have heretofore been furnished to each Lender,
has been prepared giving effect (as if such events had occurred on such date)
to (i) the consummation of the Acquisition, (ii) the consummation of the
acquisitions listed on Schedule 4.20(c), (iii) the issuance of notes or
borrowing of loans under the Credit Facility to occur on or prior to the Merger
Date and the use of proceeds thereof, (iv) the Loans to be made on or prior to
the Merger Date and the use of the proceeds thereof and (v) the payment of
estimated fees and expenses in connection with the foregoing. The Pro Forma
Balance Sheet has been prepared based on the best information available to the
Borrower as of the date of delivery thereof and, based upon such information,
presents fairly in all material respects on a pro forma basis the estimated
consolidated financial position of the Borrower as of June 30, 1998, assuming
that the events specified in the preceding sentence had actually occurred at
such date. The Pro Forma EBITDA Statements for the fiscal year ending June 30,
1998, a copy of which has heretofore been furnished to each Lender, has been
prepared giving effect (as if such events had occurred on July 1, 1997) to the
consummation of the Acquisition and the acquisitions listed on SCHEDULE
4.20(c). Such Pro Forma EBITDA Statement has been prepared based on the best
information available to the Borrower as of the date of delivery thereof and,
based on such information, presents fairly in all material respects on a pro
forma basis the Consolidated EBITDA of the Borrower for the one-year period
ended June 30, 1998.
(b) The audited consolidated balance sheets of the Borrower
as at June 30, 1997 and the related audited consolidated statements of income
and of cash flows for the fiscal year then ended, reported on by KPMG Peat
Marwick LLP, copies of which have heretofore been furnished to each Lender, are
complete and correct and present fairly in all material respects the
consolidated financial condition of the Borrower as at
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such dates, and the consolidated results of operations and consolidated cash
flows for the fiscal years then ended.
(c) The unaudited consolidated balance sheet of the Borrower
as at June 30, 1998 and the related unaudited consolidated statements of income
and of cash flows for the fiscal year then ended, copies of which have
heretofore been furnished to each Lender, is complete and correct and present
fairly in all material respects the consolidated financial condition of the
Borrower as at such date, and the consolidated results of operations and
consolidated cash flows for the fiscal year then ended and shall not differ in
any material respect from the audited consolidated balance sheet of the
Borrower as at June 30, 1998 and the related unaudited consolidated statements
of income and of cash flows for the fiscal year then ended to be delivered
pursuant to Section 4.2.
(d) All financial statements described in Section 3.10(b) and
(c), including the related schedules and notes thereto, if any, have been
prepared in accordance with GAAP applied consistently throughout the periods
involved (except as approved by such accountants and as disclosed therein) and
consistent with rules, regulations, policies and pronouncements of the SEC.
Except for contingent obligations incurred in the ordinary course of business,
the Borrower had at the date of the most recent audited balance sheet referred
to above no material undisclosed liabilities, material guarantees, material
contingent liability or material liability for taxes, nor any material
long-term lease or material unusual forward or long-term commitment, including,
without limitation, any interest rate or foreign currency swap or exchange
transaction, which is not reflected in such balance sheet or in the notes
thereto. During the period from June 30, 1997 to and including the date hereof
there has been no sale, transfer or other disposition by the Borrower or any of
its Consolidated Subsidiaries of any material part of their business or
property.
(e) The audited consolidated balance sheet of ▇▇▇▇▇▇ and its
Subsidiaries as at March 31, 1998 and the related consolidated statements of
income and of cash flows for the fiscal year ended on such date, reported on by
and accompanied by an unqualified report from KPMG Peat Marwick LLP contained in
the annual report of ▇▇▇▇▇▇ on Form 10-K filed with the SEC, present fairly the
consolidated financial condition of ▇▇▇▇▇▇ as at such date, and the consolidated
results of its operations and its consolidated cash flows for the fiscal year
then ended. The unaudited consolidated balance sheet of ▇▇▇▇▇▇ and its
Subsidiaries as at June 30, 1998, and the related statements of income and cash
flows for the three month period ended on such date contained in the quarterly
report of ▇▇▇▇▇▇ on Form 10-Q filed with the SEC, present fairly the
consolidated financial condition of ▇▇▇▇▇▇ as at such date, and the consolidated
results of its operations and its consolidated cash flows for the three-month
period then ended (subject to normal year-end audit adjustments). Except for
contingent obligations incurred in the ordinary course of business, to the best
of the Borrower's knowledge, all such financial statements, including the
related schedules and notes thereto, have been prepared in accordance with GAAP
applied consistently throughout the periods involved (except as approved by the
aforementioned accountants and disclosed therein). Except for contingent
obligations incurred in the ordinary course of business to the best of the
Borrower's knowledge, the balance sheets referred to above reflect any material
guarantees, material contingent liabilities and material liabilities for taxes,
and any material long-term leases and material unusual forward or long-term
commitments, including, without limitation, any interest rate or foreign
currency swap or exchange transaction or other obligation in respect of
derivatives, in each case as of the date of such balance sheets. During the
period from March 31, 1998 to and including the date hereof, there has been no
disposition by ▇▇▇▇▇▇ or any of its Subsidiaries of any material part of its
business or property.
SECTION 3.11 FULL DISCLOSURE. No information, report,
financial statement or certificate delivered or to be delivered to the Lenders
in connection with the Transactions, with all such information, reports,
financial statements and certificates taken as a whole, contains or will contain
as of the date delivered
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any untrue statement of material fact or omitted or omits or will omit to state
a material fact necessary to make such statements, taken as a whole, not
misleading in light of the circumstances in which such statements were made;
provided that to the extent any such information, report, financial statement,
exhibit or schedule was based upon or constitutes a forecast or projection, the
Borrower represents only that it acted in good faith and utilized assumptions
believed to be reasonable at the time of preparation and due care in the
preparation of such information, report, financial statement, exhibit or
schedule.
SECTION 3.12 PRIVATE OFFERING; RULE 144A MATTERS.
(a) Based in part on the accuracy of the representations and
warranties of, and compliance with the covenants and agreements by, the Lenders
in Section 6.1, and by the Administrative Agent in writing to the Borrower, the
making of the Loans hereunder and the issuance of the instruments evidencing
such Loans and the Securities are and will be exempt from the registration and
prospectus delivery requirements of the Securities Act. Neither the Borrower
nor any Guarantor has issued or sold Loans, the instruments evidencing such
Loans or the Securities to anyone other than the Lenders. No securities of the
same class as the Loans, the instruments evidencing such Loans or the
Securities have been issued or sold by the Borrower or any Guarantor within the
six-month period immediately prior to the date hereof. The Borrower and each
Guarantor agrees that neither it, nor anyone acting on its behalf, will (i)
offer the Loans, the instruments evidencing such Loans or the Securities so as
to subject the making, issuance and/or sale of the Loans, the instruments
evidencing such Loans or the Securities, to the registration or prospectus
delivery requirements of the Securities Act or (ii) offer any similar
securities for issuance or sale to, or solicit any offer to acquire any of the
same from, or otherwise approach or negotiate with respect to the same with,
anyone if the issuance or sale of the Loans, the instruments evidencing such
Loans, the Securities and any such securities would be integrated as a single
offering for the purposes of the Securities Act, including without limitation,
Regulation D thereunder, in such a manner as would require registration under
the Securities Act thereof. Each Note, and (subject to the terms of the
Exchange Note Indenture and the Escrow Agreement) each of the Exchange Notes
and the Securities shall have a legend setting forth the restrictions on the
transferability thereof imposed by the Securities Act for so long as such
restrictions apply.
(b) In the case of each offer, sale or issuance of the Loans
or the Securities no form of general solicitation or general advertising was or
will be used by the Borrower or any Guarantor or their representatives,
including, but not limited to, advertisements, articles, notices or other
communications published in any newspaper, magazine or similar medium or
broadcast over television or radio, or any seminar or meeting whose attendees
have been invited by any general solicitation or general advertising.
(c) The Exchange Notes will be eligible for resale pursuant
to Rule 144A under the Securities Act. When the Exchange Notes are issued and
delivered pursuant to the Transaction Documents, they will not be of the same
class (within the meaning of Rule 144A(d) (3) under the Securities Act) as any
other security of the Borrower or any Guarantor that is listed on a national
securities exchange registered under Section 6 of the Exchange Act or that is
quoted in a United States automated interdealer quotation system. Neither the
issuance of the Exchange Notes nor the execution, delivery and performance of
the Transaction Documents will require the qualification of an indenture under
the Trust Indenture Act.
SECTION 3.13 ABSENCE OF PROCEEDINGS. Except for Midland
Acquisition Corp. ▇. ▇▇▇▇▇▇ Production Services, Inc. et al. (W.D. Tex.
Midland/Odessa), which suit shall be promptly dismissed by the Borrower without
prejudice, there is not pending or threatened any action, suit or proceeding to
which the Borrower or any of its Subsidiaries is a party, before or by any court
or other Governmental Entity or body (domestic or foreign), that could
reasonably be expected to cause a Material Adverse Effect.
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SECTION 3.14 TAXES. The Borrower and its Subsidiaries have
duly and timely filed all material tax returns and reports and paid prior to
delinquency all taxes, assessments, and governmental levies except those being
contested in good faith and by appropriate proceedings or where the failure to
pay could not reasonably be expected to result in a Material Adverse Effect.
SECTION 3.15 FINANCIAL CONDITION; SOLVENCY.
(a) The Borrower and its Subsidiaries and the Excluded
Subsidiaries, taken as a whole, are, and after giving effect to the
consummation of the Transactions and all acquisitions to be made by the
Borrower, any Subsidiary of the Borrower or any Excluded Subsidiaries and
scheduled to close on or prior to October 31, 1998 will be, Solvent.
(b) Neither the Borrower nor any Guarantor intends to incur
debts beyond its ability to pay such debts as they mature, taking into account
the timing and amounts of cash to be received by it and the timing and amounts
of cash to be payable on or in respect of its Indebtedness.
SECTION 3.16 NO MATERIAL ADVERSE CHANGE. There has been no
material adverse change in the consolidated financial condition, business,
operations, assets, liabilities, management, prospects or value of any of the
Borrower and its Subsidiaries, taken as a whole since June 30, 1998.
SECTION 3.17 YEAR 2000 COMPLIANCE. The Borrower has (i)
initiated a review and assessment of all areas within its and each of its
Subsidiaries' business and operations (including those affected by suppliers,
vendors and customers) that could be adversely affected by the "YEAR 2000
PROBLEM" (that is, the risk that computer applications used by the Borrower or
any of its Subsidiaries (or suppliers, vendors and customers) may be unable to
recognize and perform properly date-sensitive functions involving certain dates
prior to and any date after December 31, 1999), (ii) developed a plan and
timeline for addressing the Year 2000 Problem on a timely basis, and (iii) to
date, implemented that plan in accordance with that timetable. Based on the
foregoing, the Borrower believes that all computer applications (including those
of its suppliers, vendors and customers) that are material to its or any of its
Subsidiaries' business and operations are reasonably expected on a timely basis
to be able to perform properly date-sensitive functions for all dates before and
after January 1, 2000 (that is, be "YEAR 2000 COMPLIANT"), except to the extent
that a failure to do so could not reasonably be expected to have Material
Adverse Effect.
SECTION 3.18 USE OF PROCEEDS. The Borrower shall use the
proceeds of the Loans to fund (in part) the Acquisition and pay related fees and
expenses.
SECTION 3.19 SENIOR SECURED NOTES. On the Closing Date and
until the Merger Date, the Notes and the Guarantees are and will be senior
secured obligations of the Borrower and the Guarantors, respectively, senior in
right of payment to the Subordinated Indebtedness outstanding on the date
hereof; provided, however, that the Notes and the Guarantees shall be
subordinated to the guarantees of the Convertible Subordinated Debentures.
ARTICLE IV
COVENANTS
So long as any Commitment shall remain outstanding or any
Obligation shall remain unpaid, the Borrower and each Guarantor covenants and
agrees with the Lenders, the Arranger and the
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Administrative Agent as set forth below for so long as any of the Loans are
outstanding.
SECTION 4.1 FINANCIAL STATEMENTS. The Borrower shall, and
shall cause each of its Subsidiaries to, furnish to the Administrative Agent for
distribution to each Lender:
(a) as soon as available, but in any event within 95 days
after the end of each fiscal year of the Borrower, a copy of the audited
consolidated balance sheet of the Borrower and its Consolidated Subsidiaries as
at the end of such year and the related audited consolidated statements of
income and retained earnings and of cash flows for such year, setting forth in
each case in comparative form the figures for the previous year, reported on
without a "going concern" or like qualification or exception, or qualification
arising out of the scope of the audit, by KPMG Peat Marwick LLP or other
independent certified public accountants of nationally recognized standing; and
(b) as soon as available, but in any event not later than 50
days after the end of each of the first three quarterly periods of each fiscal
year of the Borrower, the unaudited consolidated balance sheet of the Borrower
and its Consolidated Subsidiaries as at the end of such quarter and the related
unaudited consolidated statements of income and retained earnings and of cash
flows of the Borrower and its Consolidated Subsidiaries for such quarter and
the portion of the fiscal year through the end of such quarter, setting forth
in each case in comparative form the figures for the previous year, certified
by a Responsible Officer of the Borrower as being fairly stated in all material
respects (subject to normal year-end audit adjustments); all such financial
statements referred to in this Section 4.1(b) shall be complete and correct in
all material respects and shall be prepared in reasonable detail and in
accordance with GAAP applied consistently throughout the periods reflected
therein and with prior periods, subject to normal year-end adjustments.
SECTION 4.2 CERTIFICATES; OTHER INFORMATION. The Borrower
shall, and shall cause each of its Subsidiaries to, furnish to the
Administrative Agent for distribution to each Lender:
(a) concurrently with the delivery of the financial
statements referred to in Section 4.1(a), (i) a certificate of the independent
certified public accountants reporting on such financial statements stating
that in making the examination necessary therefor no knowledge was obtained of
any Default or Event of Default, except as specified in such certificate and
(ii) copies of all reports or written communications providing advice,
recommendations or analysis to the management of the Borrower from such
independent certified public accountants with regard to their audit of the
financial statements referred to in Section 4.1(a) or the internal financial
controls and systems of the Borrower;
(b) concurrently with the delivery of any financial
statement pursuant to Section 4.1, (x) a certificate of a Responsible Officer
of the Borrower stating that, to the best of each such Responsible Officer's
knowledge, during such period (i) no Subsidiary has been formed or acquired
(or, if any such Subsidiary has been formed or acquired, the Guarantors have
complied with the requirements of Section 4.10 with respect thereto), (ii)
prior to the Merger Date, neither the Borrower nor any of its Subsidiaries has
changed its name, its principal place of business, its chief executive office,
its principal place of business, the location where records concerning the
Collateral are kept or the location of any material item of tangible Collateral
without complying with the requirements of this Agreement and the Collateral
Documents with respect thereto and (iii) each Guarantor has observed or
performed all of its covenants and other agreements, and satisfied every
condition, contained in this Agreement and the other Loan Documents to which it
is a party to be observed, performed or satisfied by it, and that such
Responsible Officer has obtained no knowledge of any Default or Event of
Default except as specified in such certificate, and (y) in the case of
quarterly or annual financial statements, (i) a Compliance Certificate
containing all information and calculations reasonably necessary for
determining compliance by the Borrower and its Subsidiaries with the
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provisions of this Agreement as of the last day of such fiscal quarter or fiscal
year of the Borrower and (ii) a Pro Forma EBITDA Statement for the four fiscal
quarters ended on the last day of such four quarters or fiscal year of the
Borrower if during such fiscal quarter period a Person acquired by the Borrower
or a Subsidiary becomes a Consolidated Subsidiary or is merged into the Borrower
or a Subsidiary;
(c) as soon as available, and in any event no later than the
end of each fiscal year of the Borrower, a projected consolidated balance sheet
of the Borrower as of the end of the following fiscal year, and the related
consolidated statements of projected cash flow, projected retained earnings and
projected income for the following fiscal year, together with an operating
budget with respect to the following fiscal year, and, as soon as available,
significant revisions, if any, of such projections with respect to such fiscal
year (collectively, the "PROJECTIONS"), which Projections shall in each case be
accompanied by a certificate of a Responsible Officer of the Borrower stating
that such Projections are based on estimates, information and assumptions
believed by such Responsible Officer to be reasonable and that such Responsible
Officer has no reason to believe that such Projections are incorrect or
misleading in any material respect;
(d) within 50 days after the end of each fiscal quarter of
each fiscal year of the Borrower, a narrative discussion and analysis of the
consolidated financial condition and results of operations of the Borrower 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, as compared
to the portion of the Projections, as applicable, covering such periods and to
the comparable periods of the previous year;
(e) within five days after the same are filed, copies of all
financial statements and reports which the Borrower or any of its Subsidiaries
may make to, or file with, the SEC or any successor or analogous Governmental
Entity of the United States; and
(f) promptly, such additional financial and other information
as any Lender may from time to time reasonably request.
SECTION 4.3 PAYMENT OF OBLIGATIONS. The Borrower shall, and
shall cause each of its Subsidiaries to, pay, discharge or otherwise satisfy at
or before maturity or before they become delinquent or (in the case of trade
payables and obligations other than for borrowed money) within 150 days after
the due date, as the case may be, all its material obligations of whatever
nature, except where the amount or validity thereof is currently being contested
in good faith by appropriate proceedings and reserves in conformity with GAAP
with respect thereto have been provided on the books of the Borrower or its
Subsidiaries, as the case may be.
SECTION 4.4 CONDUCT OF BUSINESS AND MAINTENANCE OF EXISTENCE,
ETC. The Borrower shall, and shall cause each of its Subsidiaries to, (a)
continue to engage in business of the same general type as now conducted by it,
(b) preserve, renew and keep in full force and effect its existence and (c) take
all commercially reasonable action to maintain all rights, privileges and
franchises necessary or desirable in the normal conduct of its business, except,
in each case in clauses (a), (b) and (c) above, as otherwise permitted pursuant
to Section 4.16 and except, in the case of clause (c) above, to the extent that
failure to do so could not reasonably be expected to have a Material Adverse
Effect; and (d) comply with all Contractual Obligations and Requirements of Law
except to the extent that failure to comply therewith could not, in the
aggregate, reasonably be expected to have a Material Adverse Effect.
SECTION 4.5 MAINTENANCE OF PROPERTY; INSURANCE. The Borrower
shall, and shall cause each of its Subsidiaries to, (a) keep all material
property useful and necessary in its business in good working order and
condition, ordinary wear and tear excepted; (b) maintain with financially sound
and reputable insurance companies insurance on all its property in at least such
amounts and against at least such risks (but
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including in any event general liability) as are usually insured against in the
same general area by companies engaged in the same or a similar business and
otherwise comply with Section 5.3 of the Master Guarantee and Collateral
Agreement; and (c) furnish to each Lender, upon written request, full
information as to the insurance carried.
SECTION 4.6 INSPECTION OF PROPERTY; BOOKS AND RECORDS;
DISCUSSIONS. The Borrower shall, and shall cause each of its Subsidiaries to,
keep proper books of records and account in which full, true and correct entries
in conformity with GAAP or, in the case of a Foreign Subsidiary, in conformity
with generally accepted accounting principles in effect in the jurisdiction
where such Foreign Subsidiary is located at such time and, in the case of the
Borrower and its Domestic Subsidiaries, all Requirements of Law, shall be made
of all dealings and transactions in relation to its business and activities; and
upon reasonable notice permit representatives of any Lender to visit and inspect
any of its properties and examine and make abstracts from any of its books and
records at any reasonable time and as often as may reasonably be desired and to
discuss the business, operations, properties and financial and other condition
of the Borrower and its Subsidiaries with senior officers of the Borrower and
its Subsidiaries and with its independent certified public accountants.
SECTION 4.7 NOTICES. The Borrower shall, and shall cause each
of its Subsidiaries to, promptly give notice to the Administrative Agent of:
(a) the occurrence of any Default or Event of Default;
(b) any (i) default or event of default under any Contractual
Obligation of the Borrower or any of its Subsidiaries or (ii) litigation,
investigation or proceeding which may exist at any time between the Borrower or
any of its Subsidiaries and any Governmental Entity, which in either case, if
not cured or if adversely determined, as the case may be, could reasonably be
expected to have a Material Adverse Effect;
(c) the following events, as soon as possible and in any
event within 30 days after the Borrower or any of its Subsidiaries knows or has
reason to know thereof: (i) the occurrence or expected occurrence of any
Reportable Event with respect to any Plan, a failure to make any required
contribution in a material amount to a Plan, the creation of any Lien in a
material amount in favor of the PBGC or a Plan or any withdrawal from, or the
termination, Reorganization or Insolvency of, any Multiemployer Plan or (ii)
the institution of proceedings or the taking of any other action by the PBGC or
the Borrower or any Commonly Controlled Entity or any Multiemployer Plan with
respect to the withdrawal from, or the terminating, Reorganization or
Insolvency of, any Plan;
(d) (i) any release or discharge by the Borrower or any
Subsidiary of any Materials of Environmental Concern required to be reported
under Environmental Laws to any Governmental Entity which could reasonably be
expected to result in the assessment or payment of a Material Environmental
Amount; (ii) any condition, circumstance, occurrence or event that could
reasonably be expected to result in the assessment or payment of a Material
Environmental Amount, or, prior to the Merger Date, could result in the
imposition of any Lien or other restriction on the title, ownership or
transferability of any Mortgaged Property; and (iii) any action to be taken by
the Borrower or any Subsidiary that could reasonably be expected to subject the
Borrower or any Subsidiary to the assessment or payment of a Material
Environmental Amount; and
(e) any development or event which could reasonably be
expected to have a Material Adverse Effect.
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Each notice pursuant to this Section 4.7 shall be accompanied by a statement of
a Responsible Officer of the Borrower setting forth details of the occurrence
referred to therein and stating what action the Borrower or the applicable
Subsidiary proposes to take with respect thereto.
SECTION 4.8 ENVIRONMENTAL LAWS. The Borrower shall, and shall
cause each of its Subsidiaries (including each of the Excluded Subsidiaries) to
(a) (i) Comply with all Environmental Laws applicable to it,
and obtain, comply with and maintain any and all Environmental Permits
necessary for its operations as conducted and as planned; and (ii) take all
reasonable efforts to ensure that all of its tenants, subtenants, contractors,
subcontractors, and invitees comply with all applicable Environmental Laws, and
obtain, comply with and maintain any and all Environmental Permits, applicable
to any of them insofar as any failure to so comply, obtain or maintain
reasonably could be expected to adversely affect the Borrower or any of its
Subsidiaries. For purposes of this Section 4.8(a), noncompliance by the
Borrower with any applicable Environmental Law or Environmental Permit shall be
deemed not to constitute a breach of this covenant provided that, upon learning
of any actual or suspected noncompliance, the Borrower shall undertake
reasonable efforts to achieve compliance, and provided, further, that, in any
case, such noncompliance, and any other noncompliance with applicable
Environmental Law, individually or in the aggregate, could not reasonably be
expected to give rise to a Material Adverse Effect.
(b) Promptly comply in all material respects with all orders
and directives of all Governmental Entities directed to the Borrower or any of
its Domestic Subsidiaries regarding Environmental Laws, other than such orders
and directives or parts thereof as are being contested in good faith and by
appropriate proceedings.
(c) Maintain the Environmental Program, except where the
failure to do so would not have a Material Adverse Effect.
(d) Prior to acquiring any ownership or leasehold interest
in real property, or other interest in any real property which in the Borrower's
reasonable judgment could give rise to significant liability under any
Environmental Law, obtain a written environmental assessment report regarding
the environmental condition of such real property by a reputable independent
environmental consulting firm. Upon the request of the Administrative Agent, a
copy of each such environmental assessment report shall be delivered to the
Administrative Agent by the end of the calendar quarter in which the acquisition
closed, together with a list of all acquisitions of interests in real property
by the Borrower and the Subsidiaries in such quarter. Pursuant to this Section
4.8(d), the Administrative Agent shall have the right, but shall not have any
duty, to obtain, review or discuss any such report.
(e) Promptly upon the Administrative Agent's request if
there has been an Event of Default which has not been fully and timely cured,
permit an Environmental Consultant whom the Administrative Agent in its
discretion designates to perform an environmental assessment (including, without
limitation, reviewing documents; interviewing knowledgeable persons; and
sampling and analyzing soil, air, surface water, groundwater, and/or other media
in or about property owned or leased by the Borrower, or on which operations of
the Borrower otherwise take place). Such environmental assessment shall be in
form, scope, and substance reasonably satisfactory to the Administrative Agent.
The Borrower shall cooperate fully in the conduct of such environmental
assessment, and shall pay the costs of such environmental assessment immediately
upon written demand by the Administrative Agent. Pursuant to this Section
4.8(e), the Administrative Agent shall have the right, but shall not have any
duty, to request and/or obtain such environmental assessment.
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SECTION 4.9 FURTHER ASSURANCES.
(a) Prior to the Merger Date, upon the request of the
Collateral Agent, the Borrower shall, and shall cause each of its Subsidiaries
to, promptly perform or cause to be performed any and all acts and execute or
cause to be executed any and all documents (including, without limitation,
financing statements and continuation statements) for filing under the
provisions of the Uniform Commercial Code or any other Requirement of Law
which are necessary or advisable in the reasonable judgment of the Collateral
Agent to maintain in favor of the Collateral Agent, for the benefit of the
Lenders, Liens on the Collateral that are duly perfected in accordance with
all applicable Requirements of Law.
(b) Notwithstanding any other provision herein, the Borrower
shall not be deemed to have failed to satisfy the conditions of Section 5.23
or to be in violation of Section 4.10 or 4.28 for failure to have caused a
duly perfected Lien to be placed on any Vehicles (other than Excluded Vehicles)
covered by a certificate of title of any State if (i) the aggregate fair market
value of such unperfected Vehicles (the "Unperfected Amount") is less than
$5,000,000 and (ii) the Collateral Agent either has a duly perfected first
priority security interest in or has in its possession each document
(including, without limitation, certificates of title) in proper form for
filing, registration or recordation to give the Collateral Agent such duly
perfected first priority security interest in Excluded Vehicles having an
aggregate fair market value equal to or greater than the Unperfected Amount.
SECTION 4.10 ADDITIONAL COLLATERAL.
(a) Prior to the Merger date, the Borrower shall, and shall
cause each of its Subsidiaries to: with respect to any assets acquired after
the Closing Date by the Borrower or any of its Domestic Subsidiaries that are
intended to be subject to the Lien created by any of the Collateral Documents
but which are not so subject (other than any assets described in paragraph (b),
(c), (d) or (e) of this Section 4.10), promptly (and in any event within 30
days after the acquisition or creation thereof): (i) execute and deliver to the
Collateral Agent such amendments to the Master Guarantee and Collateral
Document or such other documents as the Collateral Agent shall reasonably deem
necessary or advisable to grant to the Collateral Agent a Lien on such assets,
(ii) take all actions reasonably necessary or advisable to cause such Lien to
be duly perfected in accordance with all applicable Requirements of Law,
including, without limitation, the filing of Uniform Commercial Code financing
statements in such jurisdictions as may be reasonably requested by the
Collateral Agent (provided that for any Vehicles that are covered by a
certificate of title, the Borrower shall cause such Lien to be duly perfected
in accordance with all applicable Requirements of Law within 90 days after the
acquisition thereof), and (iii) if requested by the Collateral Agent, deliver
to the Collateral Agent within 30 days of such request legal opinions relating
to the matters described in clauses (i) and (ii) immediately preceding, which
opinions shall be in form and substance and from counsel reasonably
satisfactory to the Collateral Agent.
(b) With respect to any Person (other than ▇▇▇▇▇▇ or any
existing Subsidiary of ▇▇▇▇▇▇) that, subsequent to the Closing Date and prior
to the Merger Date, becomes a Domestic Subsidiary of the Borrower (including,
without limitation, any Person which had previously been an Excluded
Subsidiary), promptly (and in any event within 30 days after the acquisition or
creation thereof): (i) execute and deliver to the Collateral Agent such
amendments to the Master Guarantee and Collateral Agent Agreement as the
Collateral Agent shall deem reasonably necessary or advisable to grant to the
Collateral Agent a Lien on the Capital Stock of such Subsidiary which is owned
by the Borrower or any of its Subsidiaries, (ii) deliver to the Collateral
Agent the certificates representing such Capital Stock, together with undated
stock powers duly executed and delivered in blank, (iii) cause such new
Domestic Subsidiary (A) to become a party to the
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Master Guarantee and Collateral Agreement, pursuant to documentation which is in
form and substance reasonably satisfactory to the Collateral Agent, and (B) to
take all actions necessary or advisable to cause the Lien created by such
security agreement to be duly perfected in accordance with all applicable
Requirements of Law, including, without limitation, the filing of Uniform
Commercial Code financing statements in such jurisdictions as may be reasonably
requested by the Collateral Agent (provided that for any Vehicles that are
covered by a certificate of title, the Borrower shall cause such Lien to be duly
perfected in accordance with all applicable Requirements of Law within 90 days
after the acquisition thereof unless the Merger Date occurs prior thereto, and
(iv) if requested by the Collateral Agent, deliver to the Collateral Agent
within 30 days of such request legal opinions relating to the matters described
in clauses (i), (ii) and (iii) immediately preceding, which opinions shall be in
form and substance and from counsel reasonably satisfactory to the Collateral
Agent.
(c) With respect to any fee interest in any real property
acquired after the Closing Date and prior to the Merger Date by the Borrower or
any of its Domestic Subsidiaries (including any such property owned by ▇▇▇▇▇▇
or any of its Domestic Subsidiaries) having a purchase price (or, if acquired
through a merger or stock acquisition, a fair market value) in excess of
$1,000,000, promptly (i) execute and deliver a first priority mortgage or deed
of trust, as the case may be (subordinate only to such mortgages or deeds of
trust as are necessary to permit the Borrower or such Domestic Subsidiary to
purchase such real property but subject to such easements, rights of way,
restrictions and other similar encumbrances as such property may be subject at
the time of acquisition), in favor of the Collateral Agent, covering such real
property, in form and substance reasonably satisfactory to the Collateral
Agent, (ii) provide to the Collateral Agent all necessary documents reasonably
requested by the Collateral Agent to confirm the Borrower's or its
Subsidiaries' ownership of such real property, (iii) if requested by the
Collateral Agent, provide the Lenders with any consents or estoppels deemed
necessary or advisable by the Collateral Agent in connection with such mortgage
or deed of trust, each of the foregoing in form and substance reasonably
satisfactory to the Collateral Agent and (iv) if requested by the Collateral
Agent, deliver to the Collateral Agent legal opinions relating to the matters
described in the preceding clauses (i) and (iii), which opinions shall be in
form and substance and from counsel reasonably satisfactory to the Collateral
Agent. Notwithstanding the foregoing, compliance shall not be required with the
foregoing provision of this paragraph (c) in respect of any interest in real
property which, at the time of acquisition thereof by the Borrower or its
Subsidiary, is subject to a legal or contractual restriction that would
prohibit the granting of a mortgage thereon to the Collateral Agent; provided,
that the aggregate book valued of real property owned by the Borrower and its
Subsidiaries so subject may not exceed $7,500,000 at any time.
(d) With respect to any Foreign Subsidiary created or
acquired after the Closing Date and prior to the Merger Date by the Borrower or
any of its Domestic Subsidiaries, promptly (and in any event within 150 days
after the acquisition or creation thereof) (i) execute and deliver to the
Collateral Agent such amendments to the Master Guarantee and Collateral
Agreement (or comparable documentation) as the Collateral Agent deems
reasonably necessary or advisable in order to grant to the Collateral Agent a
perfected first priority security interest in the Capital Stock (except for
Liens permitted under Section 4.14) of such new Foreign Subsidiary which is
owned by the Borrower or any of its Domestic Subsidiaries (provided that in no
event shall more than 65% of the Capital Stock of any such new Subsidiary be
required to be so pledged), (ii) deliver to the Collateral Agent the
certificates representing such Capital Stock, together with undated stock
powers, in blank, executed and delivered by a duly authorized office of the
Borrower or such Subsidiary, as the case may be, and (iii) if requested by the
Collateral Agent, deliver to the Collateral Agent legal opinions relating to
the matters described in the preceding clauses (i) and (ii), which opinions
shall be in form and substance and from counsel reasonably satisfactory to the
Collateral Agent.
(e) With respect to any oil and gas property acquired after
the Closing Date and prior to the
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Merger Date by the Borrower or any of its Domestic Subsidiaries having a
purchase price (or, if acquired through a merger or stock acquisition, a fair
market value) in excess of $1,000,000 and which, after giving effect to such
acquisition and assuming that a perfected first priority Lien thereon were not
granted to the Collateral Agent would result in the Collateral Agent having a
perfected first priority Lien on less than 80% in value of the reserves
contained in all of the oil and gas properties of the Borrower and its Domestic
Subsidiaries, promptly (and in any event within 30 days after the acquisition
thereof) (i) execute and deliver a first priority oil and gas mortgage
(subordinate only to such oil and gas mortgages as are necessary to permit the
Borrower or such Domestic Subsidiary to purchase such property but subject to
such restrictions and other similar encumbrances as such property may be subject
at the time of acquisition), in favor of the Collateral Agent covering such
property, in form and substance reasonably satisfactory to the Collateral Agent,
and (ii) if requested by the Collateral Agent, deliver to the Collateral Agent
within 180 days of such request title opinions relating to the matters described
in the preceding clause reasonably satisfactory to the Collateral Agent.
SECTION 4.11 CONSUMMATION OF MERGER. The Borrower shall, and
shall cause each of its Subsidiaries to:
(a) Use its best efforts to consummate the merger of Midland
and ▇▇▇▇▇▇ in accordance with the Acquisition Documentation and the Merger as
promptly as practical.
(b) Unless Section 4.11(c) is applicable, (i) within 10
Business Days after the Closing Date, in accordance with applicable
Requirements of Law, cause ▇▇▇▇▇▇ to prepare and file with the SEC a
preliminary proxy or information statement relating to the Merger and the
Merger Agreement. Thereafter, cause ▇▇▇▇▇▇ to use its best efforts to (i)
respond promptly to any comments made by the SEC with respect to such
preliminary proxy statement or information statement so that a definitive proxy
statement or information statement can be promptly mailed to its shareholders
to obtain the necessary approvals of the Merger and the Merger Agreement within
the minimum time period permitted by applicable Requirements of Law and (ii)
duly call and give notice of, or convene and hold, a special meeting of its
shareholders for the purpose of approving the Merger Agreement.
(c) To the extent that the Borrower and its Subsidiaries have
acquired at least 90% of the outstanding shares of each class of the Capital
Stock of ▇▇▇▇▇▇ pursuant to the Tender Offer or otherwise, cause ▇▇▇▇▇▇ to take
all necessary and appropriate action to cause the Merger to become effective
within 10 Business Days of such acquisition, without the meeting of the
shareholders of the Borrower, in accordance with applicable Requirements of
Law.
SECTION 4.12 FINANCIAL CONDITION COVENANTS. The Borrower shall
not, and shall not permit any of its Subsidiaries to:
(a) CONSOLIDATED LEVERAGE RATIO. Prior to the Stepdown Date,
permit the Consolidated Leverage Ratio as of any date set forth below to exceed
the ratio set forth below opposite such date:
Date Consolidated Leverage
Ratio
September 30, 1998 5.25 to 1.0
December 31, 1998 5.00 to 1.0
March 31, 1999 5.00 to 1.0
June 30, 1999 4.75 to 1.0
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Date Consolidated Leverage
Ratio
September 30, 1999 4.75 to 1.0
December 31, 1999 4.50 to 1.0
March 31, 2000 4.25 to 1.0
June 30, 2000 4.25 to 1.0
September 30, 2000 4.25 to 1.0
December 31, 2000 4.00 to 1.0
March 31, 2001 3.50 to 1.0
June 30, 2001 3.50 to 1.0
September 30, 2001 3.50 to 1.0
December 31, 2001 3.50 to 1.0
March 31, 2002 3.50 to 1.0
June 30, 2002 3.00 to 1.0
September 30, 2002 3.00 to 1.0
December 31, 2002 3.00 to 1.0
March 31, 2003 3.00 to 1.0
June 30, 2003 3.00 to 1.0
September 30, 2003 3.00 to 1.0
December 31, 2003 3.00 to 1.0
March 31, 2004 2.50 to 1.0
June 30, 2004 2.50 to 1.0
September 30, 2004, and on 2.50 to 1.0
the last day of each
December, March, June and
September thereafter
; provided, that on and after the Merger Date and prior to the Stepdown Date,
each of the foregoing ratios shall be increased by 0.25 (for example, if the
Merger Date occurs on September 1, 1999, the Consolidated Leverage Ratio as of
September 30, 1999 shall not exceed 5.00 to 1, the Consolidated Leverage Ratio
as of December 31, 1999 shall not exceed 4.75 to 1, and so on); provided,
however, that if any Default shall have occurred and shall be continuing on the
Merger Date, the foregoing ratios shall not be increased until such time as all
Defaults shall have been cured.
(b) CONSOLIDATED INTEREST COVERAGE RATIO. Prior to the Stepdown Date,
permit the Consolidated Interest Coverage Ratio for any period of four
consecutive fiscal quarters of the Borrower ending as of any date set forth
below to be less than the ratio set forth below opposite such date:
Date Consolidated Interest
Coverage Ratio
December 31, 1998 2.00 to 1.00
March 31, 1999 2.25 to 1.00
June 30, 1999 2.25 to 1.00
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Date Consolidated
Interest Coverage
Ratio
-----
September 30, 1999 2.50 to 1.00
December 31, 1999 2.75 to 1.00
March 31, 2000 2.75 to 1.00
June 30, 2000 3.00 to 1.00
September 30, 2000 3.00 to 1.00
December 31, 2000 3.50 to 1.00
March 31, 2001 3.50 to 1.00
June 30, 2001 4.00 to 1.00
September 30, 2001 4.00 to 1.00
December 31, 2001 4.00 to 1.00
March 31, 2002 4.00 to 1.00
June 30, 2002 4.00 to 1.00
September 30, 2002 4.00 to 1.00
March 31, 2003 4.00 to 1.00
June 30, 2003 4.00 to 1.00
September 30, 2003 4.00 to 1.00
December 31, 2003 4.00 to 1.00
March 31, 2004 4.00 to 1.00
June 30, 2004 4.00 to 1.00
September 30, 2004, and on the last 4.00 to 1.00
day of each December, March, June
and September thereafter
; provided, that for the purposes of determining the ratio described above for
the fiscal quarters of the Borrower ending December 31, 1998, March 31, 1999 and
June 30, 1999, Consolidated Interest Expense for the relevant period shall be
deemed to equal Consolidated Interest Expense for such fiscal quarter (and, in
the case of the latter two such determinations each previous fiscal quarter
commencing after September 31, 1998) multiplied by 4, 2, and 4/3, respectively;
provided, further, that on and after the Merger Date and prior to the Stepdown
Date, each of the foregoing ratios shall be decreased by 0.25 (for example, if
the Merger Date occurs on September 1, 1999, the Consolidated Interest Coverage
Ratio as of September 30, 1999 shall not exceed 2.25 to 1, the Consolidated
Interest Coverage Ratio as of December 31, 1999 shall not exceed 2.50 to 1, and
so on); provided, however, that if any Default shall have occurred and shall be
continuing on the Merger Date, the foregoing ratios shall not be decreased until
such time as all Defaults shall have been cured.
(c) CONSOLIDATED SENIOR LEVERAGE RATIO. (i) Prior to the Stepdown
Date, permit the Consolidated Senior Leverage Ratio as of any date set forth
below to exceed the ratio set forth below opposite such date:
Date Consolidated
Senior Leverage
Ratio
-----
September 30, 1998 3.75 to 1.00
December 31, 1998 3.75 to 1.00
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Date Consolidated
Senior Leverage
Ratio
-----
March 31, 1999 3.75 to 1.00
June 30, 1999 3.50 to 1.00
September 30, 1999 3.50 to 1.00
December 31, 1999 3.25 to 1.00
March 31, 2000 3.25 to 1.00
June 30, 2000 3.25 to 1.00
September 30, 2000 3.25 to 1.00
December 31, 2000 2.75 to 1.00
March 31, 2001 2.75 to 1.00
June 30, 2001 2.50 to 1.00
September 30, 2001 2.50 to 1.00
December 31, 2001 2.50 to 1.00
March 31, 2002 2.50 to 1.00
June 30, 2002 2.50 to 1.00
September 30, 2002 2.50 to 1.00
December 31, 2002 2.00 to 1.00
March 31, 2003 2.00 to 1.00
June 30, 2003 2.00 to 1.00
September 30, 2003 2.00 to 1.00
December 31, 2003 2.00 to 1.00
March 31, 2004 2.00 to 1.00
June 30, 2004 2.00 to 1.00
September 30, 2004, and on the last day 2.00 to 1.00
of each December, March, June and
September thereafter
; provided, that on and after the Merger Date and prior to the Stepdown Date,
each of the foregoing ratios shall be increased by 0.25 (for example, if the
Stepdown Date occurs on September 1, 1999, the Consolidated Senior Leverage
Ratio as of September 30, 1999 shall not exceed 3.75 to 1, the Consolidated
Senior Leverage Ratio as of December 31, 1999 shall not exceed 3.50 to 1, and so
on); provided, however, that if any Default shall have occurred and shall be
continuing on the Merger Date, the foregoing ratios shall not be increased until
such time as all Defaults shall have been cured; provided, further, that each of
the foregoing Consolidated Senior Leverage Ratios shall be reduced by .05 for
each $10,000,000 of the ▇▇▇▇▇▇ Notes put and paid in connection with the ▇▇▇▇▇▇
Change of Control; provided, however, that in no event shall the Consolidated
Senior Leverage Ratio be reduced to lower than 2.00 to 1.00 (or 2.25 to 1.00
after the Merger Date and prior to the Stepdown Date).
(d) CONSOLIDATED NET WORTH. (1) Prior to the Merger Date, permit the
Consolidated Net Worth of the Borrower and its Subsidiaries to be less than the
sum of (i) 90% of the Consolidated Net Worth of the Borrower and its
Subsidiaries on the Closing Date, plus (ii) 75% of Consolidated Net Income of
the Borrower and its Subsidiaries (to the extent a positive number) for each
fiscal quarter completed after the Closing Date commencing with the fiscal
quarter ending December 31, 1998, plus (iii) 75% of the Net Cash Proceeds of
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any offerings or issuances of Capital Stock of the Borrower or any of its
Subsidiaries after the Closing Date, plus (iv) 75% of the increase in the
Consolidated Net Worth of the Borrower and its Subsidiaries resulting from any
conversion of the 1997 Convertible Subordinated Notes or any future convertible
indebtedness of the Borrower and its Subsidiaries, and (2) on and after the
Merger Date and prior to the Stepdown Date, permit the Consolidated Net Worth of
the Borrower and its Subsidiaries to be less than the sum of (i) 90% of the
Consolidated Net Worth of the Borrower and its Subsidiaries on the Closing Date,
plus (ii) 50% of Consolidated Net Income of the Borrower and its Subsidiaries
(to the extent a positive number) for each fiscal quarter completed after the
Closing Date commencing with the fiscal quarter ending December 31, 1998, plus
(iii) 50% of the Net Cash Proceeds of any offerings or issuances of Capital
Stock of the Borrower or any of its Subsidiaries after the Closing Date, plus
(iv) 50% of the increase in the Consolidated Net Worth of the Borrower and its
Subsidiaries resulting from any conversion of the 1997 Convertible Subordinated
Notes or any future convertible indebtedness of the Borrower and its
Subsidiaries; provided, however, that if any Default shall have occurred and
shall be continuing on the Merger Date, the clause (2) above shall not become
effective until such time as all Defaults shall have been cured.
(e) Notwithstanding anything contained herein to the
contrary, the provisions of subsections (a), (b), (c) and (d) of this Section
4.12 shall be of no force and effect on and after the Stepdown Date; provided,
however, that if any Default shall have occurred and shall be continuing on the
Stepdown Date, such provisions shall remain in full force and effect until such
time as all Defaults shall have been cured.
SECTION 4.13 LIMITATION ON INDEBTEDNESS. The Borrower shall
not, and shall not permit any of its Subsidiaries to, create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness of the Borrower under the Loan Documents;
(b) the incurrence by the Borrower of Indebtedness and
letters of credit under the Credit Facility; provided that the aggregate
principal amount of all Indebtedness and letters of credit of the Borrower and
its Subsidiaries outstanding under the Credit Facility after giving effect to
such incurrence (with letters of credit being deemed to have a principal amount
equal to the maximum potential liability of the Borrower and its Subsidiaries
thereunder) does not exceed an amount equal to $600,000,000 less (i) the
aggregate amount of all repayments, optional or mandatory, of the principal of
any term Indebtedness under the Credit Facility (other than repayments that are
immediately reborrowed) that have been made by the Borrower or any of its
Subsidiaries since the date of this Agreement and (ii) without duplication, the
aggregate amount of all Net Cash Proceeds of Asset Sales applied by the
Borrower or any of its Subsidiaries to permanently reduce the Indebtedness or
commitments under the Credit Facility;
(c) Indebtedness (i) of the Borrower to a Wholly Owned
Subsidiary, (ii) of a Domestic Wholly Owned Subsidiary to the Borrower or any
other Subsidiary, (iii) of Servicios to the Borrower or any Subsidiary in an
aggregate principal amount at any time outstanding not to exceed $5,000,000 in
excess of the amount of such Indebtedness outstanding on the date of this
Agreement and (iv) of any Foreign Subsidiary (other than Servicios) to the
Borrower or any Subsidiary in an aggregate principal amount at any time
outstanding (with respect to all such Foreign Subsidiaries of the Borrower) not
to exceed $1,000,000, provided that such Indebtedness referred to in clauses
(iii) and (iv) hereof, if to the Borrower or any Domestic Subsidiary, is
evidenced by a promissory note or promissory notes which has or have been
pledged to the Collateral Agent on terms and conditions reasonably satisfactory
to the Administrative Agent; provided, further, that any such Indebtedness
referred to in this clause (c) provided to Odessa shall be for capital
expenditure purposes only;
(d) Indebtedness of the Borrower or any Subsidiary of the
Borrower incurred to finance the
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acquisition or construction of fixed or capital assets (whether pursuant to a
loan, a Financing Lease or otherwise) in an aggregate principal amount not
exceeding as to the Borrower and its Subsidiaries (i) $15,000,000 at any time
outstanding minus (ii) the amount of Indebtedness outstanding under clauses (g)
and (j) of this Section 4.13 and the amount of indebtedness attributable to sale
and leaseback transactions permitted pursuant to Section 4.23;
(e) Indebtedness of the Borrower and its Subsidiaries
under the Convertible Subordinated Debentures and the 1997 Convertible
Subordinated Notes;
(f) Indebtedness outstanding on the date hereof, or
incurred hereafter pursuant to existing commitments or agreements, and, in each
case, listed on Schedule 4.13 and any refinancings, refundings, renewals or
extensions thereof not increasing the principal amount thereof;
(g) Indebtedness of a Person which becomes a Subsidiary of
the Borrower after the date hereof in an aggregate principal amount at any time
outstanding not exceeding (i) $15,000,000, minus (ii) the sum of (A) the amount
of Indebtedness outstanding under clauses (d) and (j) of this Section 4.13 and
(B) the amount of indebtedness attributable to sale and leaseback transactions
permitted pursuant to Section 4.23, provided that (x) such Indebtedness existed
at the time such corporation became a Subsidiary and was not created in
anticipation thereof and (y) immediately after giving effect to the acquisition
of such corporation by the Borrower no Default or Event of Default shall have
occurred and be continuing, and any refinancings, refundings, renewals or
extensions thereof not increasing the principal amount thereof.
(h) Indebtedness constituting deposits to secure the
performance of bids, trade contracts (other than for borrowed money), leases,
statutory obligations, surety and appeal bonds and performance bonds and other
obligations of a like nature that are incurred in the ordinary course of
business, not to exceed $5,000,000 in the aggregate at any time outstanding;
(i) Indebtedness under Interest Rate Protection Agreements
and Hedge Obligations entered into the ordinary course of business for hedging
purposes and not for speculative purposes including, without limitation, the
agreement entered into for purposes of this Section 4.13;
(j) Seller Indebtedness in an aggregate principal amount
at any time outstanding not exceeding (i) $15,000,000 minus (ii) the sum of (A)
the amount of Indebtedness outstanding under clauses (d) and (g) of this
Section 4.13, and any refinancings, refundings, renewals or extensions thereof
not increasing the principal amount thereof and (B) the amount of indebtedness
attributable to sale and leaseback transactions permitted pursuant to Section
4.23;
(k) Indebtedness in the form of Guarantee Obligations
permitted by Section 4.4;
(l) Indebtedness of ▇▇▇▇▇▇ under the ▇▇▇▇▇▇ Notes until
the Merger Date and thereafter Indebtedness of the Borrower under the ▇▇▇▇▇▇
Notes;
(m) Indebtedness incurred after the Merger Date not
otherwise permitted by the foregoing clauses (a) through (l) in an aggregate
principal amount at any time outstanding not to exceed $5,000,000;
(n) on and after the Stepdown Date, Indebtedness not
otherwise permitted by the foregoing clauses (a) through (m) in an aggregate
principal amount at any time outstanding not to exceed $50,000,000; and
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(o) Indebtedness of the Borrower or any Subsidiary of the
Borrower incurred to repay, in whole or in part, the Loans, together with
accrued and unpaid interest on the Loans so repaid; provided, that the terms
and conditions of any such Indebtedness used to prepay the Loans in part are
acceptable to the Administrative Agent in its sole discretion.
SECTION 4.14 LIMITATION ON LIENS. The Borrower shall not,
and shall not permit any of its Subsidiaries to, create, incur, assume or suffer
to exist any Lien upon any of its property, assets or revenues, whether now
owned or hereafter acquired, except for:
(a) Liens for taxes not yet due or which are being
contested in good faith by appropriate proceedings, provided that adequate
reserves with respect thereto are maintained on the books of the Borrower or
its Subsidiaries in conformity with GAAP;
(b) carriers', warehousemen's, mechanics', materialmen's,
repairmen's, landlord's or other like Liens arising in the ordinary course of
business which are not overdue for a period of more than 180 days or which are
being contested in good faith by appropriate proceedings and which, in any case,
do not encumber a material amount of the assets of the Borrower and its
Subsidiaries;
(c) pledges or deposits in connection with workers'
compensation, unemployment insurance and other social security legislation;
(d) deposits to secure the performance of bids, trade
contracts (other than for borrowed money), leases, statutory obligations,
surety and appeal bonds, performance bonds and other obligations of a like
nature incurred in the ordinary course of business;
(e) easements, rights-of-way, restrictions and other
similar encumbrances incurred in the ordinary course of business which, in the
aggregate, are not substantial in amount and which do not in any case
materially detract from the value of the property subject thereto or materially
interfere with the ordinary conduct of the business of the Borrower or any
Subsidiary;
(f) Liens securing Indebtedness of the Borrower or any
Subsidiary incurred to finance the acquisition or construction of fixed or
capital assets, provided that (i) such Liens shall be created within 180 days
after the acquisition or construction of such fixed or capital assets, (ii)
such Liens do not at any time encumber any property other than the property
financed by such Indebtedness and the proceeds and products thereof; (iii) the
principal amount of Indebtedness secured thereby is not increased and (iv) the
proceeds of the Indebtedness secured by any such Lien shall at no time exceed
100% of the original purchase price of such property;
(g) Liens created pursuant to the Collateral Documents
(including Liens securing the Loans until the Merger Date and Liens securing
the ▇▇▇▇▇▇ Notes on and after the Merger Date);
(h) Liens (i) in existence on the date hereof listed on
Schedule 4.14(h) securing Indebtedness permitted by Section 4.13(f) provided
that no such Lien is spread to cover any additional property after the Closing
Date and that the principal amount of Indebtedness secured thereby is not
increased or (ii) securing Indebtedness which is being repaid on the Closing
Date, provided that such Liens shall be released promptly following the Closing
Date;
(i) Liens on the property or assets of a corporation which
becomes a Subsidiary after the date hereof securing Indebtedness permitted by
Section 4.13(g), provided that (i) such Liens existed at the time
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such corporation became a Subsidiary and were not created in anticipation
thereof; (ii) any such Lien is not spread to cover any property or assets of
such corporation after the time such corporation becomes a Subsidiary, and (iii)
the principal amount of Indebtedness secured thereby is not increased;
(j) Liens on assets acquired in a Permitted Acquisition
securing Seller Indebtedness incurred in connection with such Permitted
Acquisition;
(k) the Permitted Exceptions (as defined in the Mortgages);
(l) Liens in favor of lessees on assets leased to such
lessees pursuant to Section 4.17(a); and
(m) on and after the Stepdown Date, Liens securing
Indebtedness permitted by Section 4.13(n) and Section 4.13(o).
Notwithstanding the foregoing, until the Merger Date, the foregoing limitations
shall not apply to Capital Stock owned by the Borrower or its Subsidiaries which
is Margin Stock to the extent the value of such Margin Stock exceeds 25% of the
value of the assets of the Borrower and its Subsidiaries.
SECTION 4.15 LIMITATION ON GUARANTEE OBLIGATIONS. The
Borrower shall not, and shall not permit any of its Subsidiaries to, create,
incur, assume or suffer to exist any guarantee except:
(a) guarantees made in the ordinary course of its business
by the Borrower or any Subsidiary in respect of Indebtedness and other
obligations of any of the Borrower or any of its Subsidiaries which
Indebtedness or other obligations are otherwise not prohibited under this
Agreement;
(b) the guarantee of the Guarantors pursuant to the Master
Guarantee and Collateral Document;
(c) the guarantee of the Subsidiaries of the Borrower
under the Indenture and the 1997 Indenture;
(d) the guarantee of the Subsidiaries under the ▇▇▇▇▇▇
Indenture;
(e) guarantees of the Subsidiaries of the Borrower in
respect of the Credit Facility;
(f) guarantee (in respect of obligations not constituting
Indebtedness) arising under agreements entered into by the Borrower or any
Subsidiary in the ordinary course of business;
(g) guarantees of the Borrower or its Subsidiaries in
respect of Indebtedness of its officers, directors and employees in an
aggregate principal amount not to exceed, at any time outstanding, $5,000,000
minus the amount of loans or advances outstanding under Section 4.20(i);
(h) the guarantees of the Guarantors; and
(i) the guarantees of any Subsidiary of the Borrower which
arises by operation of Section 11.6.
SECTION 4.16 LIMITATION ON FUNDAMENTAL CHANGES. The
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
any merger, consolidation or amalgamation, or liquidate, wind up or dissolve
itself (or suffer any liquidation or dissolution), or convey, sell, lease,
assign, transfer or otherwise dispose of; all or substantially all of its
property, business or assets, or make any material change
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in its present method of conducting business, except:
(a) any Subsidiary of the Borrower may be merged or
combined with or into the Borrower (provided that the Borrower shall be the
continuing or surviving corporation) or with or into any one or more
Subsidiaries of the Borrower provided that in the case of any such transaction
involving a Wholly Owned Subsidiary, such Wholly Owned Subsidiary shall be the
continuing or surviving corporation;
(b) any Subsidiary may be dissolved, liquidated or wound
up or may sell, lease, assign, transfer or otherwise dispose of any or all of
its assets (upon voluntary liquidation or otherwise) to Borrower or any
Domestic Wholly Owned Subsidiary of the Borrower, and the Borrower may sell,
lease, assign, transfer or otherwise dispose of any or all of its assets to any
wholly owned Subsidiary of the Borrower which is a party to the Master
Guarantee and Collateral Document;
(c) any Subsidiary may sell, lease, transfer or otherwise
dispose of any or all of its assets so long as (i) such transaction does not
violate Section 4.17 and (ii) the Borrower complies with the provisions of
Section 2.5 with respect to such transaction;
(d) the merger of Midland Acquisition Corp. into ▇▇▇▇▇▇
in accordance with the Acquisition Agreement; and
(e) the Merger may be consummated.
SECTION 4.17 LIMITATION ON SALE OF ASSETS.
(a) Prior to the Merger Date, the Borrower shall not, and
shall not permit any of its Subsidiaries to, convey, sell, lease, assign,
transfer or otherwise dispose of any of its property, business or assets
(including, without limitation, receivables and leasehold interests), whether
now owned or hereafter acquired, or, in the case of any Subsidiary of the
Borrower, issue or sell any shares of such Subsidiary's Capital Stock to any
Person other than the Borrower or any Domestic Wholly Owned Subsidiary of the
Borrower, except:
(i) the sale, lease or other disposition of any property in
the ordinary course of business, including immaterial real property
or equipment and obsolete or worn out property, provided that (other
than inventory and light vehicles) the aggregate proceeds received
from all assets so sold, leased or disposed of in any fiscal year
shall not exceed 5% of the Borrower's Consolidated Net Worth as of
the end of the immediately preceding fiscal year;
(ii) the sale of inventory and light vehicles in the
ordinary course of business;
(iii) as permitted by Section 4.16(b); and
(iv) the sale of Odessa.
To the extent the Majority Lenders waive the provisions of this Section 4.17
with respect to the sale of any Collateral, or any Collateral is sold as
permitted by this Section 4.17, such Collateral in each case shall be sold free
and clear of the Liens in favor of the Collateral Agent created by the
Collateral Documents, and the Collateral Agent shall take such actions as it
deems appropriate in connection therewith or may be reasonably requested by the
Borrower to evidence such Lien release, in each case at the Borrower's expense.
Notwithstanding the foregoing, until the Merger Date the foregoing limitations
shall not apply to Capital Stock owned by the Borrower or its Subsidiaries which
is Margin Stock to the extent the value of such Margin Stock exceeds 25% of the
value of the assets of the Borrower and its Subsidiaries.
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(b) On and after the Merger Date, the Borrower shall not,
and shall not permit any of its Subsidiaries to conduct any Asset Sale unless
(x) the Borrower (or the Subsidiary, as the case may be) receives consideration
at the time of such Asset Sale at least equal to the fair market value
(evidenced by a resolution of the Board of Directors set forth in an Officers'
Certificate delivered to the Administrative Agent) of the assets sold or
otherwise disposed of and (y) at least 75% of the consideration received
therefor by the Borrower or such Subsidiary is in the form of cash; provided,
however, that the amount of (A) any liabilities (as shown on the Borrower's or
such Subsidiary's most recent balance sheet or in the notes thereto) of the
Borrower or any Subsidiary (other than liabilities that are by their terms
subordinated to the Notes or any guarantee thereof) that are assumed by the
transferee of any such assets, (B) any notes or other obligations received by
the Borrower or any such Subsidiary from such transferee that are immediately
converted by the Borrower or such Subsidiary into cash (to the extent of the
cash received), (C) any assets received in exchange for assets pursuant to a
like-kind exchange and (D) any Designated Noncash Consideration (which shall
not at any time exceed, in the aggregate $25,000,000 outstanding), in each
case, shall be deemed to be cash for purposes of this provision.
Within 10 days after the receipt of Net Cash Proceeds of
any Asset Sale, the Borrower (or such Subsidiary) shall apply an amount equal to
the Net Cash Proceeds from such Asset Sale in accordance with Section 2.5(a) to
the extent required thereby; provided, that if the Stepdown Date has occurred,
an amount equal to such Net Cash Proceeds may also be applied, at the Borrower's
option, to an investment in another business, the making of a capital
expenditures or the acquisition of other long-term assets, in each case, in the
same or similar line of business as the Borrower was engaged in on the date of
this Agreement.
SECTION 4.18 LIMITATION ON RESTRICTED PAYMENTS. The
Borrower shall not, and shall not permit any of its Subsidiaries to, declare or
pay any dividend (other than dividends payable solely in common stock of the
Person making such dividend) on, or make any payment on account of, or set apart
assets for a sinking or other analogous fund for, the purchase, redemption,
defeasance, retirement or other acquisition of, any shares of any class of
Capital Stock (including but not limited to in respect of any preferred Capital
Stock outstanding or dividends accumulated thereon on the Closing Date) of the
Borrower or any of its Subsidiaries or any warrants or options to purchase any
such Capital Stock or any of the Convertible Subordinated Debentures or the 1997
Convertible Subordinated Notes, whether now or hereafter outstanding, or make
any other distribution in respect thereof or purchase any thereof, either
directly or indirectly, whether in cash or property or in obligations of the
Borrower or any Subsidiary (all such payments and other actions being
collectively referred to as "RESTRICTED PAYMENTS"), except that the Borrower (a)
may make open market purchases of its outstanding common stock in an aggregate
amount during the term of this Agreement not to exceed $10,000,000, after the
occurrence of the Minimum Equity Event, (b) may (i) make scheduled payments of
interest in respect of the Convertible Subordinated Debentures and the 1997
Convertible Subordinated Notes and (ii) if permitted by Section 4.21,
repurchase, redeem or defease the Convertible Subordinated Debentures after at
least 90% of the Convertible Subordinated Debentures have been converted or
repurchase, redeem or defease the 1997 Convertible Subordinated Notes after at
least 90% of the 1997 Convertible Subordinated Notes have been converted and (c)
may make cash payments required pursuant to Sections 11.1 and 11.3 of the
Indenture in connection with conversions of the Convertible Subordinated
Debentures or Section 10.3 of the 1997 Indenture in connection with conversions
of the 1997 Convertible Subordinated Notes, provided that (i) the aggregate
consideration to the holders of the 1997 Convertible Subordinated Notes upon
conversion thereof paid in cash shall not exceed $1,000,000, (ii) after giving
effect to such payment and conversion, no Default or Event of Default shall be
continuing and (iii) after giving pro forma effect to such payment and
conversion as if it had occurred on the last day of the most recently ended
fiscal quarter, the Consolidated Leverage Ratio would not exceed 2.50 to 1.00.
Notwithstanding the foregoing, any Subsidiary of the Borrower may pay dividends
and other distributions to the Borrower and Servicios may pay dividends to its
shareholders.
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SECTION 4.19 LIMITATION ON CAPITAL EXPENDITURES. The
Borrower shall not, and shall not permit any of its Subsidiaries to, make or
commit to make any Capital Expenditure except for expenditures in the ordinary
course of business not exceeding, in the aggregate for the Borrower and its
Subsidiaries during any of the fiscal years of the Borrower set forth below, an
amount equal to the sum of (i) the amount set forth below opposite such fiscal
year plus (ii) an additional amount for any Person or business unit acquired by
the Borrower in a Permitted Acquisition since the Closing Date, such amount
being calculated as 10% of the net revenues, calculated in accordance with GAAP,
of such Person or business unit during such fiscal year (or, if such Person or
business unit was acquired after the beginning of such fiscal year, such
revenues for the portion of such fiscal year during which such Person or
business unit was owned by the Borrower):
Fiscal Year Ending Amount
------------------ ------
1999 $70,000,000
2000 $72,000,000
2001 $74,000,000
2002 $76,000,000
2003 $78,000,000
2004 $80,000,000
2005 $82,000,000
2006 $84,000,000
2007 $86,000,000
2008 $88,000,000
2009 $90,000,000
Any amount permitted by the foregoing provision to be expended as Capital
Expenditures in any fiscal year and not so expended may be carried over for
expenditure in the immediately succeeding fiscal year.
SECTION 4.20 LIMITATION ON INVESTMENTS, LOANS AND ADVANCES.
The Borrower shall not, and shall not permit any of its Subsidiaries to, make
any advance, loan, extension of credit or capital contribution to, or purchase
any stock, bonds, notes, debentures or other securities of or any assets
constituting a business unit of, or make any other investment in, any Person,
except:
(a) extensions of trade credit in the ordinary course of
business;
(b) investments in Cash Equivalents;
(c) acquisitions listed on SCHEDULE 4.20(c) consummated
within 60 days of the Closing Date;
(d) Permitted Acquisitions after the Merger Date;
(e) loans by the Borrower or any Subsidiary to Servicios
in an aggregate principal amount at any time outstanding not to exceed the
amount thereof outstanding on the date of this Agreement plus $5,000,000;
(f) as permitted by subsection 4.13(c)(iv);
(g) investments by the Borrower in a Domestic Wholly Owned
Subsidiary and investments by
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any Subsidiary in the Borrower and in one or more Domestic Wholly Owned
Subsidiaries, provided, that any such investments provided to Odessa shall be
for capital expenditure purposes only;
(h) expense accounts for, and other expense advances to,
its directors, officers and employees in the ordinary course of business;
(i) loans and advances to its officers and employees in
an aggregate amount not to exceed $5,000,000 at any time outstanding,
$5,000,000 minus the amount of guarantees outstanding under Section 4.15(g);
(j) the Borrower's purchase or redemption of its own
Capital Stock to the extent permitted by Section 4.18;
(k) current trade and customer accounts receivable that
are for goods furnished or services rendered in the ordinary course of business
and that are payable in accordance with Borrower's or any Subsidiary's
customary trade terms;
(l) Interest Rate Protection Agreements to the extent
permitted under this Agreement, and Hedge Agreements entered into in the
ordinary course of business for hedging purposes and not for speculative
purposes;
(m) the Borrower may repurchase its Capital Stock and/or
options to purchase such stock held by directors, officers and employees of the
Borrower or any Subsidiary upon the death, disability, retirement or
termination of such directors, officers or employees or the exercise of such
options, or from the shareholders of Borrower so long as the purpose is to
acquire stock for reissuance to new employees of Borrower and its Subsidiaries;
provided, that the amount expended for such purposes shall not exceed
$1,000,000 in any fiscal year or $2,500,000 while this Agreement is in effect;
(n) the Borrower and its Subsidiaries may acquire and own
investments (including Indebtedness and other obligations) received in
connection with the bankruptcy or reorganization of suppliers and customers and
in settlement of delinquent obligations of, and other disputes with, customers
and suppliers arising in the ordinary course of business;
(o) investments acquired by the Borrower and its
Subsidiaries in connection with Permitted Acquisitions after the Merger Date;
(p) investments acquired by the Borrower and its
Subsidiaries in connection with acquisitions listed on Schedule 4.20(c) made
within 60 days of the Closing Date;
(q) the Borrower's current investment in the Argent Classic
Convertible Arbitrage Fund L.P.;
(r) in connection with the consummation of the Acquisition
pursuant to the Acquisition Documentation;
(s) Designated Noncash Consideration received in
connection with an Asset Sale permitted by Section 4.17; and
(t) on and after the Stepdown Date, the Borrower and its
Subsidiaries may acquire and own investments not otherwise permitted by the
foregoing clauses (a) though (s) in an aggregate amount not to
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exceed $10,000,000 at any one time outstanding.
SECTION 4.21 LIMITATION ON OPTIONAL PAYMENTS AND
MODIFICATIONS OF DEBT INSTRUMENTS AND ORGANIZATIONAL DOCUMENTATION, ETC. The
Borrower shall not, and shall not permit any of its Subsidiaries to, (a) make
any optional payment or optional prepayment on or redemption or purchase of any
material Indebtedness (other than the Loans and the Credit Facility) or
preferred Capital Stock including, without limitation, the Convertible
Subordinated Debentures, the 1997 Convertible Subordinated Notes and the ▇▇▇▇▇▇
Notes, (b) amend, modify or change, or consent or agree to any amendment,
modification or change to any of the terms of the ▇▇▇▇▇▇ Notes or the
Acquisition Documents or, prior to the Merger Date, the Credit Facility without
the consent of the Majority Lenders; provided, however, that the Borrower shall
not, and shall not permit any of its Subsidiaries to amend, modify or change, or
consent or agree to any amendment, modification or change to the definition of
"Senior Subordinated Note" in the Credit Facility without the consent of the
Majority Lenders, or (c) amend, modify or change in any material respect, or
consent or agree to any amendment, modification, or change in any material
respect to the terms of (i) any of its capitalization or organizational
documents (including but not limited to in respect of any preferred Capital
Stock of any Guarantor), (ii) prior to the Merger Date, any other Indebtedness
in an aggregate principal amount in excess of $10,000,000, or (iii) a material
contract, to the extent such amendment, modification or change could reasonably
be expected to have a Material Adverse Effect, or be materially adverse to the
Lenders except that, (i) after 90% of the original outstanding principal amount
of the Convertible Subordinated Debentures have been converted into common stock
of the Borrower, the Borrower may, at any time when no Default or Event of
Default has occurred and is continuing, repurchase, redeem or defease the
remaining outstanding Convertible Subordinated Debentures and, after 90% of the
original outstanding principal amount of the 1997 Convertible Subordinated Notes
have been converted into common stock of the Borrower, the Borrower may, at any
time when no Default or Event of Default has occurred and is continuing,
repurchase, redeem or defease the remaining outstanding 1997 Convertible
Subordinated Notes; provided, that the Borrower may not repurchase, redeem or
defease such Convertible Subordinated Debentures at any time when the
Consolidated Leverage Ratio is or, after giving effect to such repurchase,
redemption or defeasance would be greater than 3.75 and (ii) at any time when
the aggregate principal amount of the remaining outstanding ▇▇▇▇▇▇ Notes is
$7,500,000 or less and no Default or Event of Default has occurred and is
continuing, the Borrower may repurchase, redeem, defease or otherwise prepay
such ▇▇▇▇▇▇ Notes; provided that any premium or other additional compensation to
be paid in connection therewith is on terms reasonably acceptable to the
Administrative Agent.
SECTION 4.22 LIMITATION ON TRANSACTIONS WITH AFFILIATES.
The Borrower shall not, and shall not permit any of its Subsidiaries to, enter
into any transaction, including, without limitation, any purchase, sale, lease
or exchange of property or the rendering of any service, with any Affiliate
(other than the Borrower) unless such transaction (a) is otherwise permitted
under this Agreement, and (b) is upon fair and reasonable terms no less
favorable to the Borrower or such Subsidiary, as the case may be, than it would
obtain in a comparable arm's length transaction with a Person which is not an
Affiliate; provided, that any such transaction involving more than $5,000,000
must be approved by a majority of the disinterested members of the Borrower's
Board of Directors.
SECTION 4.23 LIMITATION ON SALES AND LEASEBACKS. Prior to
the Stepdown Date, the Borrower shall not, and shall not permit any of its
Subsidiaries to, enter into any arrangement with any Person providing for the
leasing by the Borrower or any of its Subsidiaries of real or personal property
which has been or is to be sold or transferred by the Borrower or such
Subsidiary to such Person or to any other Person to whom funds have been or are
to be advanced by such Person on the security of such property or rental
obligations of the Borrower or such Subsidiary, if, after giving effect thereto,
the amount of all indebtedness attributable to transactions consummated pursuant
to this Section 4.23, plus the amount of Indebtedness
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outstanding pursuant to clause (d), (g) and (j) of Section 4.13, would exceed
$15,000,000.
SECTION 4.24 LIMITATION ON NEGATIVE PLEDGE CLAUSES. The
Borrower shall not, and shall not permit any of its Subsidiaries to, enter into
with any Person any agreement, other than (a) this Agreement, the Credit
Facility, the ▇▇▇▇▇▇ Indenture and the other Loan Documents and (b) any
industrial revenue bonds, purchase money Liens or Financing Leases permitted by
this Agreement (in which cases, any prohibition or limitation shall only be
effective against the assets financed thereby) which prohibits or limits the
ability of the Borrower or any of its Subsidiaries to create, incur, assume or
suffer to exist any Lien upon any of its property, assets or revenues, whether
now owned or hereafter acquired.
SECTION 4.25 LIMITATION ON LINES OF BUSINESS. The Borrower
shall not, and shall not permit any of its Subsidiaries to, enter into any
business, either directly or through any Subsidiary, except for those businesses
in which the Borrower and its Subsidiaries are engaged on the date of this
Agreement or which are directly related thereto including any business in the
oil and gas well service industry; provided, that Odessa shall not engage in any
business, except for those businesses in which it is engaged on the date of this
Agreement.
SECTION 4.26 LIMITATION ON CONSOLIDATED LEASE EXPENSE.
Prior to the Stepdown Date, the Borrower shall not, and shall not permit any of
its Subsidiaries to, permit Consolidated Lease Expense for any fiscal year of
the Borrower and its Subsidiaries to exceed $20,000,000.
SECTION 4.27 CHANGE OF CONTROL.
(a) Upon the occurrence of a Change of Control, each
Lender will have the right to require the Borrower to prepay all or any part of
the principal amount of such Lender's Loans pursuant to the offer described
below (the "CHANGE OF CONTROL OFFER") at a prepayment price in cash equal to
101% of the aggregate principal amount thereof plus accrued and unpaid interest
and Liquidated Damages thereon, if any, to the date of prepayment
(collectively, the "CHANGE OF CONTROL PAYMENT"). Within 30 days following any
Change of Control, the Borrower will mail a notice to each Lender describing
the transaction or transactions that constituted the Change of Control and
offer to repay the Loans on the date specified in such notice, which date shall
be no earlier than 30 days and no later than 45 days from the date such notice
is mailed (the "CHANGE OF CONTROL PAYMENT DATE"), pursuant to the procedures
set forth below. Prior to the prepayment of any Loans in a Change of Control
Offer, but in any event within 30 days following a Change of Control, the
Company shall either repay all outstanding Indebtedness under the Credit
Facility or obtain the requisite consents, if any, under all agreements
governing such Indebtedness to permit the prepayment of such Loans pursuant to
this Section 4.27.
(b) Notice of a Change of Control Offer shall be mailed
by the Borrower to the Lenders at their addresses set forth in the Register.
The Change of Control Offer shall remain open from the time of mailing until 5
Business Days prior to the Change of Control Payment Date. The notice shall be
accompanied by a copy of the most recent reports furnished pursuant to Section
4.1(a) and (b). The notice shall contain all instructions and materials
necessary to enable such Lenders to elect to be prepaid pursuant to the Change
of Control Offer.
(c) On the Change of Control Payment Date, the Borrower
shall (i) repay all Loans or portions thereof of each Lender that properly
elected repayment thereof pursuant to the Change of Control Offer, (ii) pay
the Change of Control Payment for each such Loan (or portion thereof) elected
to be repaid and (iii) deliver to each such Lender a new Notes equal in
principal amount (excluding premiums, if any) to the unpurchased portion of
the corresponding Notes surrendered, if any. The Borrower will notify the
remaining
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Lenders of the results of the Change of Control Offer on or as soon as
practicable after the Change of Control Payment Date.
SECTION 4.28 POST-CLOSING ACTIONS.
(a) VEHICLES.
(i) Within 30 days after the Closing Date, unless the
Merger Date has occurred, deliver to the Collateral Agent each
document (including, without limitation, any certificates of title)
required by the Collateral Documents or under law or reasonably
requested by the Collateral Agent to be delivered to the Collateral
Agent or to be filed, registered or recorded in order to create in
favor of the Collateral Agent, for the benefit of the Lenders, a
perfected Lien on all of the Vehicles listed on Schedule 4.28(a)(i)
covered by a certificate to title, prior and superior in right to any
other Person (other than with respect to Liens expressly permitted by
Section 4.14), which documents shall be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested.
(ii) By November 17, 1998, unless the Merger Date has
occurred, deliver to the Collateral Agent each document (including,
without limitation, any certificates of title) required by the
Collateral Documents or under law or reasonably requested by the
Collateral Agent to be delivered to the Collateral Agent or to be
filed, registered or recorded in order to create in favor of the
Collateral Agent, for the benefit of the Lenders, a perfected Lien on
all of the Vehicles listed on Schedule 4.28(a)(ii) covered by a
certificate of title, prior and superior in right to any other Person
(other than with respect to Liens expressly permitted by Section
4.14), which documents shall be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof, is so required or requested.
(b) PLEDGED SECURITIES; STOCK POWERS. (i) If the Capital
Stock of Transportes is certificated and possession of such certificate is
required in order to create a duly perfected Lien on such Capital Stock under
Argentine law, the Collateral Agent shall have received within 150 days of the
Closing Date, unless the Merger Date has occurred, 65% of the Capital Stock of
Transportes, pledged pursuant to the Master Guarantee and Collateral Agreement,
together with an undated stock power for such certificate executed in blank by
a duly authorized officer of the pledgor thereof.
(ii) The Collateral Agent shall, have received within 150
days of the Closing Date an additional 2% of the Capital Stock of
Servicios, pledged pursuant to the Master Guarantee and Collateral
Agreement, together with an undated stock power for such certificate
executed in blank by a duly authorized officer of the pledgor
thereof.
SECTION 4.29 LIMITATION ON CHANGE OF FISCAL YEAR. The
Borrower shall not permit the fiscal year of the Borrower to change more than
once during the lifetime of this Agreement; provided, that such change is to a
fiscal year ending the next December 31 after such change.
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ARTICLE V
CONDITIONS
The obligation of each of the Lenders to make Bridge Loans
is subject to (i) the representations and warranties of the Borrower and each of
the Guarantors in Article III and the representations and warranties of the
Borrower and such Guarantor, as the case may be, in the Credit Facility being
true, correct and complete in all respects on and as of the Closing Date to the
same extent as though made on and as of the Closing Date, (ii) on or prior to
the Closing Date, the Borrower and such Guarantor, as the case may be, having
performed and complied with all covenants and conditions to be performed and
observed by it on or prior to the Closing Date and (iii) the prior or concurrent
satisfaction of each of the following conditions:
SECTION 5.1 CORPORATE AND OTHER PROCEEDINGS. On or before
the Closing Date, all corporate and other proceedings taken or to be taken in
connection with the Transactions and all documents incidental thereto not
previously found acceptable by the Administrative Agent shall be satisfactory in
form and substance to the Administrative Agent, and the Administrative Agent
shall have received on behalf of the Lenders the following items, each of which
shall be in form and substance satisfactory to the Administrative Agent and,
unless otherwise noted, dated the Closing Date:
(a) a certified copy of the Borrower's and each of the
Guarantor's charter[s], in each case together with a certificate of status,
compliance, good standing or like certificate with respect to the Borrower and
each Guarantor issued by the appropriate government officials of the
respective jurisdiction of its formation and of each jurisdiction in which the
Borrower or such Guarantor owns any material assets or carries on any material
business, each to be dated a recent date prior to the Closing Date;
(b) a copy of the Borrower's and each of the Guarantor's
bylaws, in each case certified as of the Closing Date by its respective
Secretary or one of its Assistant Secretaries;
(c) resolutions of the Borrower's and each of the
Guarantor's Boards of Directors approving and authorizing the execution,
delivery and performance of this Agreement, each of the other Transaction
Documents and any other documents, instruments and certificates required to be
executed by the Borrower or such Guarantor in connection herewith or therewith
and approving and authorizing the execution, delivery and payment of the Notes,
the Securities and the consummation of the Transactions, each certified as of
the Closing Date by its respective Secretary or one of its Assistant
Secretaries as being in full force and effect without modification or amendment;
(d) signature and incumbency certificates of the
Borrower's and each of the Guarantor's Officers executing this Agreement and
the Notes and any other documents executed in connection therewith;
(e) executed copies of this Agreement and the Notes,
drawn to the order of the Lenders;
(f) an Officers' Certificate from the Borrower and each
of the Guarantors in form and substance satisfactory to the Administrative
Agent to the effect that (i) the representations and warranties in Article III
and the representations and warranties of the Borrower or such Guarantor, as
the case may be, in the Credit Facility are true, correct and complete in all
respects on and as of the Closing Date to the same extent as though made on
and as of that date, (ii) on or prior to the Closing Date, the Borrower or
such Guarantor, as the case may be, has performed and complied with all
covenants and conditions to be performed and observed by it on or prior to the
Closing Date and (iii) all conditions to the consummation of the Transactions
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have been satisfied on the terms set forth in the documentation relating thereto
and have not been waived or amended without the Administrative Agent's prior
written consent;
(g) true and correct copies of the final form of each of:
(i) the Acquisition Agreement, which shall not have been amended from the
version previously given to the Lenders; and (ii) the Credit Facility, which
shall be satisfactory in form and substance to each of the Lenders;
(h) true and correct copies of each of the other
Transaction Documents, each of which shall be satisfactory in form and
substance to each of the Lenders;
(i) a copy of all closing documents relating to the
Acquisition and all such counterpart originals or certified copies of such
documents, instruments, certificates and opinions as the Administrative Agent
may reasonably request;
(j) a copy of all closing documents relating to the
Credit Facility and all such counterpart originals or certified copies of such
documents, instruments, certificates and opinions as the Administrative Agent
may reasonably request;
(k) a copy of all closing documents relating to the other
Transactions and all such counterpart originals or certified copies of such
documents, instruments, certificates and opinions as the Administrative Agent
may reasonably request; and
(l) all authorizations, consents and approvals required
by Section 5.14.
SECTION 5.2 CONCURRENT TRANSACTIONS. Either prior to or
concurrently with the making of the Bridge Loans by the Lenders:
(a) the Borrower shall purchase at the closing of the
Tender Offer the greater of (i) a majority of shares of ▇▇▇▇▇▇ and (ii) such
number of shares as is sufficient number of shares to cause the Acquisition to
occur;
(b) all conditions precedent to borrowings under the
Credit Facility shall have been satisfied or, with the prior approval of the
Administrative Agent, waived, and the Borrower shall borrow funds under the
Credit Facility, which, together with the proceeds of the Bridge Loans, will
be sufficient to consummate the Tender Offer and pay all related fees and
expenses;
(c) the terms and conditions of the Tender Offer and the
Acquisition Agreement shall not have been modified in a way which is not
satisfactory to the Lenders;
(d) there shall be available under the Credit Facility
sufficient amounts to fund the ▇▇▇▇▇▇ Change of Control in its entirety and to
pay the other unfunded amounts required in connection with the Acquisition;
(e) there shall not exist (pro forma for the Acquisition
and the financing thereof) any Default or Event of Default, any default or
event of default under the Credit Facility, or under any other material
indebtedness or agreement of the Borrower, ▇▇▇▇▇▇ or their respective
Subsidiaries;
(f) the capitalization and corporate and ownership
structure of the Borrower before and after the Acquisition and the financing
thereof shall be satisfactory to the Lenders in all respects; and
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(g) except as otherwise permitted by Section 4.13, the
Borrower and ▇▇▇▇▇▇ shall not have any outstanding debt other than the ▇▇▇▇▇▇
Notes, the Credit Facility and the $216 million in aggregate principal amount
of the 1997 Convertible Subordinated Notes and the $4.6 million in aggregate
principal amount of the Convertible Subordinated Debentures.
SECTION 5.3 NO MATERIAL LOSS. Neither the Borrower nor any
of its Subsidiaries shall have sustained any loss or interference with respect
to its businesses or properties from fire, flood, hurricane, accident or other
calamity, whether or not covered by insurance, or from any labor dispute or any
legal or governmental proceeding, which loss or interference has had or is
reasonably likely to have a Material Adverse Effect.
SECTION 5.4 NO EVENT OF DEFAULT. No event shall have
occurred and be continuing or would result from the consummation of the
Transactions that would constitute an Event of Default.
SECTION 5.5 NO CHANGES IN FINANCIAL MARKETS. There shall
not have occurred any of the following: (i) trading in securities generally on
the New York Stock Exchange or The Nasdaq Stock Market's National Market or in
the over-the-counter market shall have been suspended or materially limited, or
minimum prices shall have been established on such exchange by the SEC, or by
such exchange or by any other regulatory body or governmental authority having
jurisdiction, (ii) a banking moratorium shall have been declared by Federal or
state authorities, (iii) the United States shall have become engaged in
hostilities, there shall have been any escalation in hostilities involving the
United States or there shall have been declared a national emergency or war by
the United States, (iv) a disruption or adverse change in the financial or
capital markets generally, in the market for new issues of high yield debt or
equity securities in particular or (v) a material adverse change in the general
economic, political or financial conditions (or the effect of international
conditions on the financial markets in the United States shall be such) as to
make it, in the reasonable judgment of Majority Lenders, impracticable or
inadvisable to proceed with the funding of the Bridge Loans on the Closing Date.
SECTION 5.6 ENVIRONMENTAL REPORTS. The Administrative Agent
shall have received environmental reports reasonably satisfactory to it with
respect to real property owned or leased by the Borrower, any of its
Subsidiaries or ▇▇▇▇▇▇ and their respective operations from a firm satisfactory
to the Administrative Agent, in its sole discretion, and the Administrative
Agent shall be satisfied with the results of such reports, in its sole
discretion. The Administrative Agent shall have received a copy of the
Borrower's environmental compliance manual developed and implemented by the
Borrower to promote compliance with and to minimize prudently any liabilities or
potential liabilities under any Environmental Law that may affect the Borrower
or any of its Domestic Subsidiaries (the "ENVIRONMENTAL PROGRAM").
SECTION 5.7 ESCROW AGREEMENT. The Borrower, each of the
Guarantors and the Escrow Agent shall have entered into the Escrow Agreement and
a fully executed copy of the Escrow Agreement shall have been delivered to each
of the Lenders.
SECTION 5.8 EXCHANGE NOTES. The Borrower, each of the
Guarantors and the Exchange Note Trustee shall have entered into the Exchange
Note Indenture and a fully executed copy of the Exchange Note Indenture shall
have been delivered to the Escrow Agent. Executed global Exchange Notes shall
have been issued by the Borrower into escrow and delivered to the Escrow Agent
as contemplated by the Escrow Agreement.
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SECTION 5.9 ESCROW OF SECURITIES. The Borrower shall have
issued the Securities into escrow and delivered the Securities to the Escrow
Agent as contemplated by the Escrow Agreement.
SECTION 5.10 DELIVERY OF OPINIONS. The Administrative Agent
shall have received originally executed copies of the following legal opinions:
(a) the legal opinion of ▇▇▇▇ ▇. ▇▇▇▇▇▇, ▇▇., Esq., general
counsel to the Borrower and the Guarantors, in form and substance satisfactory
to the Administrative Agent;
(b) the legal opinion of ▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P. counsel to
the Borrower and the Guarantors, in form and substance satisfactory to the
Administrative Agent; and
(c) the executed legal opinion of Skadden, Arps, Slate,
▇▇▇▇▇▇▇ & ▇▇▇▇ LLP, special New York counsel to the Borrower and the Guarantors,
in form and substance satisfactory to the Administrative Agent.
Each such legal opinion shall be in form and substance reasonably satisfactory
to the Lenders and shall cover such matters incident to the transactions
contemplated by this Agreement and the other Loan Documents as the
Administrative Agent may reasonably require.
SECTION 5.11 SOLVENCY. The Administrative Agent shall have
received a reasonably satisfactory solvency analysis certified by the chief
financial officer of the Borrower which shall document the solvency of the
Borrower and its Subsidiaries and Excluded Subsidiaries considered as a whole
after giving effect to the Acquisition and the other transactions contemplated
hereby (assuming the purchase of 100% of the common equity of ▇▇▇▇▇▇) and the
consummation of all acquisitions to be made by the Borrower, any Subsidiary of
the Borrower or any Excluded Subsidiary and scheduled to close on or prior to
October 31, 1998.
SECTION 5.12 PAYMENT OF FEES. On or before the Closing
Date, the Borrower shall have paid to the Lenders and their Affiliates the fees
payable on the Closing Date pursuant to Section 2.12.
SECTION 5.13 NO BREACH UNDER ENGAGEMENT LETTER, COMMITMENT
LETTER OR FEE LETTER. Neither the Borrower nor any Guarantor shall be in breach
or violation of any of its obligations under the Engagement Letter, the
Commitment Letter or the Fee Letter and each of the Engagement Letter and the
Fee Letter shall be in full force and effect.
SECTION 5.14 CONSENTS AND APPROVALS. On or before the
Closing Date, all governmental, shareholder and third-party consents (including
pursuant to the ▇▇▇▇-▇▇▇▇▇-▇▇▇▇▇▇ Antitrust Improvements Act of 1976, as
amended) and approvals necessary or desirable in connection with the
Transactions and the other transactions contemplated hereby shall have been
obtained; all such consents and approvals shall be in full force and effect; and
all applicable waiting periods shall have expired without any action being taken
by any authority that could restrain, prevent or impose any material adverse
conditions on the Transactions or such other transactions or that could seek or
threaten any of the foregoing.
SECTION 5.15 MARGIN REGULATIONS. The making of the Bridge
Loans in the manner contemplated in this Agreement shall not violate the
applicable provisions of Regulation T, U or X of the Board or any other
regulation of the Board.
SECTION 5.16 SATISFACTORY FINANCIAL STATEMENTS. The
Administrative Agent shall have received and, in each case, approved all audited
and unaudited historical financial statements of the Borrower,
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the Guarantors and ▇▇▇▇▇▇ and all completed, probable and pending acquisitions
(including pro forma financial statements) meeting the requirements of
Regulation S-X under the Securities Act applicable to a Registration Statement
on Form S-1.
SECTION 5.17 REPAYMENT OF INDEBTEDNESS. On or before the
Closing Date, all existing Indebtedness listed on SCHEDULE 5.18 of the Borrower
and its Subsidiaries shall be repaid in full and all commitments thereunder
shall be terminated.
SECTION 5.18 CONCURRENCE WITH ASSUMPTIONS. The Lenders
shall have concurred (in their sole discretion) with the operating and financial
assumptions used in preparing the combined pro forma historical and projected
performance of the Borrower after giving effect to the Acquisition.
SECTION 5.19 ABSENCE OF CERTAIN CHANGES. No material
adverse change in the consolidated financial condition, results of operations,
business, assets, liabilities, management, prospects or value of the Borrower or
▇▇▇▇▇▇ (including any event which, in the opinion of the Lenders, is likely to
result in such a material adverse change) shall have occurred since the date of
the most recent audited financial statements that have been delivered to the
Lenders as of the date hereof as to make it, in the reasonable judgment of the
Administrative Agent, impractical or inadvisable to proceed with the funding of
the Loans on the Closing Date pursuant to the terms contemplated herein. No
material inaccuracy in such financial statements shall exist. The Borrower and
▇▇▇▇▇▇ shall have no material liabilities except (i) those set forth on the most
recent audited balance sheets of such entities provided to the Lenders as of the
date hereof and (ii) those incurred in the ordinary course of business (and
consistent with past practice) since such date.
SECTION 5.20 NET CAPITAL. There shall not have occurred any
change in law or regulation (or interpretation thereof) that could result in any
Lender's commitment to provide, or any Lender's providing, the financing
contemplated by this Agreement being a charge to the net capital of such
Lender's parent or affiliate.
SECTION 5.21 BUSINESS PLAN. The Administrative Agent shall
have received the following:
(a) a satisfactory business plan for the Borrower and its
Subsidiaries (including the Subsidiaries of ▇▇▇▇▇▇) for the six fiscal years
following the Closing Date;
(b) a satisfactory written analysis of the business and
prospects of the Borrower and its Subsidiaries (including the Subsidiaries of
▇▇▇▇▇▇) for the period from the Closing Date through the final maturity of the
Term Loans; and
(c) satisfactory pro forma projected balance sheets of the
Borrower and its Subsidiaries (including the Subsidiaries of ▇▇▇▇▇▇) as at the
last day of each of the six fiscal years of the Borrower following the Merger
Date, and the related consolidated statements of projected income, retained
earnings and cash flows for such fiscal years (including the assumptions used in
preparing such statements).
SECTION 5.22 TERMINATION OF ENGAGEMENT LETTER. The
Administrative Agent shall have received evidence, satisfactory to the
Administrative Agent in its sole discretion, that the Engagement Letter dated
May 8, 1998 between the Borrower and Bear, ▇▇▇▇▇▇▇ & Co. Inc. has been
terminated.
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SECTION 5.23 FILINGS, REGISTRATIONS AND RECORDINGS. Each
document (including, without limitation, any Uniform Commercial Code financing
statement) required by the Collateral Documents or under law or reasonably
requested by the Administrative Agent to be delivered to the Collateral Agent or
to be filed, registered or recorded in order to create in favor of the
Collateral Agent, a perfected Lien on all Collateral, prior and superior in
right to any other Person (other than with respect to Liens expressly permitted
by Section 4.14), shall have been filed or be in proper form for filing,
registration or recordation in each jurisdiction in which the filing,
registration or recordation thereof is so required or requested, other than
those documents required to be filed, registered or recorded after the Closing
Date pursuant to Section 4.28.
ARTICLE VI
TRANSFER OF THE LOANS
SECTION 6.1 TRANSFER OF THE NOTES.
(a) ASSIGNMENT BY LENDERS. Any Lender may assign to one or
more assignees all or a portion of its rights and obligations under this
Agreement without the consent of the Borrower, any Guarantor or any other
Lender, but in compliance with all applicable laws; provided, however, that no
interest in any Loans may be sold, assigned or otherwise transferred except with
the prior consent of the Administrative Agent (which consent shall not
unreasonably be withheld or delayed). Except in the case of an assignment to a
Lender or an Affiliate of a Lender or an assignment of the entire remaining
amount of the assigning Lender's Loans, the amount of the Loans of the assigning
Lender subject to each such assignment (determined as of the date the Assignment
and Acceptance with respect to such assignment is delivered to the
Administrative Agent) shall not be less than $2,000,000 unless the Borrower
otherwise consents. Each partial assignment shall be made as an assignment of a
proportionate part of all the assigning Lender's rights and obligations under
this Agreement. The parties to each assignment shall execute and deliver to the
Administrative Agent an Assignment and Acceptance. Upon recording thereof
pursuant to Section 6.3, from and after the effective date specified in each
Assignment and Acceptance the assignee thereunder shall be a party hereto and,
to the extent of the interest assigned by such Assignment and Acceptance, have
the rights and obligations of a Lender under this Agreement, and the assigning
Lender thereunder shall, to the extent of the interest assigned by such
Assignment and Acceptance, be released from its obligations under this Agreement
(and, in the case of an Assignment and Acceptance covering all of the assigning
Lender's rights and obligations under this Agreement, such Lender shall cease to
be a party hereto but shall continue to be entitled to the benefits of Sections
2.7, 2.10 and 2.11 and Article XII). Any assignment or transfer by a Lender of
rights or obligations under this Agreement that does not comply with this
Section 6.1(a) shall be treated for purposes of this Agreement as a sale by such
Lender of a participation in such rights and obligations in accordance with
Section 6.1(b).
(b) PARTICIPATIONS. Any Lender may, without the consent of
any Person, sell participations to one or more banks or other entities (a
"Participant") in all or a portion of such Lender's rights and obligations under
this Agreement, but in such event (i) such Lender's obligations under this
Agreement shall remain unchanged, (ii) such Lender shall remain solely
responsible to the other parties hereto for the performance of such obligations
and (iii) the Borrower, the Guarantors and the other Lenders shall continue to
deal solely and directly with such Lender in connection with such Lender's
rights and obligations under this Agreement. Any agreement or instrument
pursuant to which a Lender sells such a participation shall provide that such
Lender shall retain the sole right to enforce the Transaction Documents and to
approve any amendment, modification or waiver of any provision of the
Transaction Documents, except that such agreement or instrument may provide that
such Lender will not, without the consent of the Participant, agree to any
amendment, modification or waiver described in Section 14.3(b) that affects such
Participant. The Borrower
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agrees that each Participant shall be entitled to the benefits of Sections 2.7,
2.10 and 2.11 and Article XII to the same extent as if it were a Lender and had
acquired its interest by assignment pursuant to Section 6.1(a); provided that,
in the case of Section 2.10(g), such Participant shall have complied with the
requirements of said Section and provided, further, that no Participant shall be
entitled to receive any greater amount pursuant to any such Section than the
transferor Lender would have been entitled to receive in respect of the amount
of the participation transferred by such transferor Lender to such Participant
had no such transfer occurred.
SECTION 6.2 REGISTRATION OF TRANSFER OR EXCHANGE. Against
receipt of evidence of cancellation, discharge or surrender of any Notes by a
Lender for registration of transfer or exchange, the Borrower will execute and
deliver in exchange therefor a new Notes or Notes of the same aggregate tenor
and principal amount, registered in such names and in such denominations as such
Lender may request. The Borrower will pay any stamp tax or governmental charge
imposed in respect of any such transfer.
SECTION 6.3 REGISTER. The Administrative Agent shall keep a
copy of each Assignment and Acceptance delivered to it and maintain a register
of the names and addresses of each Lender and the principal amount of the Loans
owing to it pursuant to the terms hereof from time to time (the "REGISTER").
Upon its receipt of an Assignment and Acceptance executed by an assigning Lender
and an Assignee together with payment by the assigning Lender or the Assignee to
the Administrative Agent of a registration and processing fee of $3,500
(provided that no such payment shall be required with respect to assignments
involving ▇▇▇▇▇▇ Commercial Paper Inc. as assignor or assignee), the
Administrative Agent shall (i) promptly accept such Assignment and Acceptance
and (ii) on the effective date determined pursuant thereto record the
information contained therein in the Register and give notice of such acceptance
and recordation to the Lenders and the Borrower. No assignment shall be
effective for purposes of this Agreement unless it has been recorded in the
Register as provided in this Section 6.3. Within ten (10) Business Days after
its receipt of such notice, the Borrower shall execute and deliver to the
applicable Lenders one or more new Notes. The entries in the Register shall be
rebuttably presumed to be correct, absent manifest error, and the Administrative
Agent, the Arranger, the Borrower, the Guarantors and the Lenders may treat each
Person whose name is recorded in the Register pursuant to the terms hereof as a
Lender hereunder for all purposes of this Agreement, notwithstanding notice to
the contrary. The Register shall be available for inspection by the Borrower and
any Lender, at any reasonable time and from time to time upon reasonable prior
notice.
ARTICLE VII
EVENTS OF DEFAULT
SECTION 7.1 EVENTS OF DEFAULT. If any of the following
events shall occur and be continuing:
(a) The Borrower shall fail to pay any principal of any
Loan when due in accordance with the terms hereof; or the Borrower shall fail to
pay any interest on any Loan, or any other amount payable hereunder or under any
other Loan Document, within three days after any such interest or other amount
becomes due in accordance with the terms hereof; or
(b) Any representation or warranty made or deemed made by
the Borrower or any other Guarantor herein or in any other Loan Document or
which is contained in any certificate, document or financial or other statement
furnished by it at any time under or in connection with this Agreement or any
such other Loan Document shall prove to have been incorrect in any material
respect on or as of the date made or deemed made; or
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(c) The Borrower or any other Guarantor shall default in
the observance or performance of any agreement contained in Section 4.12 through
Section 4.26, inclusive; or
(d) The Borrower or any other Guarantor shall default in
the observance or performance of any other agreement contained in this Agreement
or any other Loan Document (other than as provided in paragraphs (a) through (c)
of this Section 7.1), and such default shall continue unremedied for a period of
30 days; or
(e) The Borrower or any of its Subsidiaries shall (1) prior
to the Merger Date (i) default in making any payment of any principal of any
Indebtedness (including, without limitation, any Guarantee Obligation) on the
scheduled or original due date with respect thereto; or (ii) default in making
any payment of any interest on any Indebtedness beyond the period of grace, if
any, provided in the instrument or agreement under which such Indebtedness was
created; or (iii) default in the observance or performance of any other
agreement or condition relating to any Indebtedness or contained in any
instrument or agreement evidencing, securing or relating thereto, or any other
event shall occur or condition exist, the effect of which default or other event
or condition is to cause, or to permit the holder or beneficiary of such
Indebtedness (or a trustee or agent on behalf of such holder or beneficiary) to
cause, with the giving of notice if required, such Indebtedness to become due
prior to its stated maturity or; provided that a default, event or condition
described in clause (i), (ii) or (iii) of this paragraph (e) shall not at any
time constitute an Event of Default under this Agreement unless, at such time,
one or more defaults, events or conditions of the type described in clauses (i),
(ii) and (iii) of this paragraph (e) shall have occurred and be continuing with
respect to Indebtedness of the Borrower and its Subsidiaries the outstanding
principal amount of which exceeds in the aggregate $5,000,000 or (2) on and
after the Merger Date, default under any mortgage, indenture or instrument under
which there may be issued or by which there may be secured or evidenced any
Indebtedness for money borrowed by the Borrower or any of its Subsidiaries (or
the payment of which is guaranteed by the Borrower or any of its Subsidiaries)
whether such Indebtedness or guarantee now exists, or is created after the date
of this Agreement, which default (a) is caused by a failure to pay principal of
or premium, if any, or interest on such Indebtedness prior to the expiration of
the grace period provided in such Indebtedness on the date of such default (a
"Payment Default") or (b) results in the acceleration of such Indebtedness prior
to its express maturity and, in each case, the principal amount of any such
Indebtedness, together with the principal amount of any other such Indebtedness
under which there has been a Payment Default or the maturity of which has been
so accelerated, aggregates $5,000,000; or
(f) (i) The Borrower or any of its Subsidiaries (other than
Servicios) shall commence any case, proceeding or other action (A) under any
existing or future law of any jurisdiction, domestic or foreign, relating to
bankruptcy, insolvency, reorganization or relief of debtors, seeking to have an
order for relief entered with respect to it, or seeking to adjudicate it a
bankrupt or insolvent, or seeking reorganization, arrangement, adjustment,
winding-up, liquidation, dissolution, composition or other relief with respect
to it or its debts, or (B) seeking appointment of a receiver, trustee,
custodian, conservator or other similar official for it or for all or any
substantial part of its assets, or the Borrower or any of its Subsidiaries
(other than Servicios) shall make a general assignment for the benefit of its
creditors; or (ii) there shall be commenced against the Borrower or any of its
Subsidiaries (other than Servicios) any case, proceeding or other action of a
nature referred to in clause (i) above which (A) results in the entry of an
order for relief or any such adjudication or appointment or (B) remains
undismissed, undischarged or unbonded for a period of 60 days; or (iii) there
shall be commenced against the Borrower or any of its Subsidiaries (other than
Servicios) any case, proceeding or other action seeking issuance of a warrant of
attachment, execution, distraint or similar process against all or any
substantial part of its assets which results in the entry of an order for any
such relief which shall not have been vacated, discharged, or stayed or bonded
pending appeal within 60 days from the entry thereof; or (iv) the Borrower or
any of its Subsidiaries (other than Servicios) shall take any action in
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furtherance of; or indicating its consent to, approval of; or acquiescence in,
any of the acts set forth in clause (i), (ii), or (iii) above; or (v) the
Borrower or any of its Subsidiaries (other than Servicios) shall generally not,
or shall be unable to, or shall admit in writing its inability to, pay its debts
as they become due; or
(g) Prior to the Merger Date, (i) any Person shall engage
in any "prohibited transaction" (as defined in Section 406 of ERISA or Section
4975 of the Code) involving any Plan, (ii) any "accumulated funding deficiency"
(as defined in Section 302 of ERISA), whether or not waived, shall exist with
respect to any Plan or any Lien in favor of the PBGC or a Plan shall arise on
the assets of any Guarantor or any Commonly Controlled Entity, (iii) a
Reportable Event shall occur with respect to, or proceedings shall commence to
have a trustee appointed, or a trustee shall be appointed, to administer or to
terminate, any Single Employer Plan, which Reportable Event or commencement of
proceedings or appointment of a trustee is, in the reasonable opinion of the
Majority Lenders, likely to result in the termination of such Plan for purposes
of Title IV of ERISA, (iv) any Single Employer Plan shall terminate for purposes
of Title IV of ERISA, (v) any Guarantor or any Commonly Controlled Entity shall,
or in the reasonable opinion of the Majority Lenders is likely to, incur any
liability in connection with a withdrawal from, or the Insolvency or
Reorganization of, a Multiemployer Plan or (vi) any other event or condition
shall occur or exist with respect to a Plan; and in each case in clauses (i)
through (vi) above, such event or condition, together with all other such events
or conditions, if any, could, in the sole judgment of the Majority Lenders,
reasonably be expected to have a Material Adverse Effect; or
(h) One or more judgments or decrees shall be entered
against the Borrower or any of its Subsidiaries (other than Servicios) involving
in the aggregate a liability (not paid or fully covered by insurance) of
$5,000,000 or more and all such judgments or decrees shall not have been
vacated, discharged, stayed or bonded pending appeal within 60 days from the
entry thereof; or
(i) Prior to the Merger Date, any of the Collateral
Documents shall cease, for any reason, to be in full force and effect, or any
Guarantor or any Affiliate of any Guarantor shall so assert, or any material
Lien created by any of the Collateral Documents shall cease to be enforceable
and of the same effect and priority purported to be created thereby; or
(j) The Merger shall fail to be consummated within 150 days
after the Closing Date;
then, and in any such event, (A) if such event is an Event of Default specified
in clause (i) or (ii) of paragraph (f) above with respect to the Borrower, the
Loans hereunder (with accrued interest thereon) and all other amounts owing
under this Agreement and the other Loan Documents shall immediately and
automatically become due and payable, and (B) if such event is any other Event
of Default, either or both of the following actions may be taken; with the
consent of Majority Lender, the Administrative Agent may, or upon the request of
Majority Lenders; the Administrative Agent shall, by notice to the Borrower,
declare the Loans hereunder (with accrued interest thereon) and all other
amounts owing under this Agreement and the other Loan Documents to be due and
payable forthwith, whereupon the same shall immediately become due and payable.
Except as expressly provided above in this Section, presentment, demand, protest
and all other notices of any kind are hereby expressly waived.
In addition to the foregoing, if the Borrower fails to
comply with the provisions of Section 8.1(b) in any material respect after a
Request, then the Lenders shall be entitled to unilaterally amend the provisions
of this Agreement and the other Loan Documents relating to interest rate,
optional redemption, maturity, warrants and registration rights so as to reflect
the terms of the Permanent Securities that would have been issued in accordance
with Section 8.1(b) had the Borrower complied therewith.
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SECTION 7.2 RIGHTS AND REMEDIES CUMULATIVE. No right or
remedy herein conferred upon or reserved to the Lenders is intended to be
exclusive of any other right or remedy, and every right and remedy shall, to the
extent permitted by law, be cumulative and in addition to every other right and
remedy given hereunder or now or hereafter existing at law or in equity or
otherwise. The assertion or employment of any right or remedy hereunder, or
otherwise, shall not prevent the concurrent or subsequent assertion or
employment of any other appropriate right or remedy.
SECTION 7.3 DELAY OR OMISSION NOT WAIVER. No delay or
omission by any Lender to exercise any right or remedy accruing upon any Event
of Default shall impair any such right or remedy or constitute a waiver of any
such Event of Default or an acquiescence therein. Every right and remedy given
by this Article VII or by law to the Lenders may be exercised from time to time,
and as often as may be deemed expedient, by the Lenders.
SECTION 7.4 WAIVER OF PAST DEFAULTS. Subject to Section
14.3, the Majority Lenders by written notice to the Borrower may rescind an
acceleration and its consequences if the rescission would not conflict with any
judgment or decree and if all existing Events of Default (except nonpayment of
principal or interest that has become due solely because of the acceleration)
have been cured or waived.
SECTION 7.5 RIGHTS OF LENDERS TO RECEIVE PAYMENT.
Notwithstanding anything to the contrary contained in this Agreement but subject
to the provisions of Article X, the right of any Lender to receive payment of
principal of, premium, if any, and interest on the Loans and Bridge Notes held
by such Lender, on or after the respective due dates expressed in this Agreement
or the Bridge Notes, or to bring suit for the enforcement of any such payment on
or after such respective dates, shall not be impaired or affected without the
consent of such Lender.
ARTICLE VIII
PERMANENT SECURITIES
SECTION 8.1 PERMANENT SECURITIES.
(a) The Borrower and each of the Guarantors shall do all
things required in the reasonable opinion of the Arranger in connection with the
sale of the Permanent Securities, including, but not limited to (i) no later
than 30 days following the Closing Date, commencing the preparation of a Rule
144A offering memorandum or registration statement under the Securities Act with
respect to the Permanent Securities, and other documentation (including an
indenture and registration rights agreement), all as deemed necessary by the
Arranger in its sole discretion, to effect the offering of Permanent Securities,
(ii) no later than 90 days following the Closing Date, delivering to the
Arranger such unaudited consolidated and pro forma financial information,
projections as to future operations and such other financial information
relating to the Borrower and ▇▇▇▇▇▇ and their respective businesses and any
probable or recently completed acquisition as may be reasonably requested by the
Arranger, (iii) no later than 150 days following the Closing Date, finalizing
the Offering Documents in form and substance reasonably satisfactory to the
Arranger, in its sole discretion, including, if applicable, filings of a
registration statement under the Securities Act, (iv) no later than 150 days
following the Closing Date, making appropriate Officers of the Borrower and its
Subsidiaries (including, without limitation, ▇▇▇▇▇▇) available to the Arranger
for meetings with rating agencies and prospective purchasers of the Permanent
Securities and preparing and presenting to potential investors road show
material in a manner consistent with other new issuances of high yield debt
securities and (v) executing an underwriting or purchase agreement substantially
in the form of the Arranger's standard underwriting or purchase agreement, as
the case may be, modified as appropriate to reflect the terms of the
transactions
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contemplated thereby and containing such terms, covenants, conditions,
representations, warranties and indemnities as are customary in similar
transactions and providing for the delivery of legal opinions, comfort letters,
and Officers' Certificates, all in form and substance reasonably satisfactory to
the Arranger and its counsel, as well as such other terms and conditions as the
Arranger and their counsel may in their reasonable discretion consider
appropriate in light of then prevailing market conditions applicable to similar
financings or in light of any aspect of the transactions contemplated hereby
that requires such other terms or conditions. The proceeds from the issuance of
the Permanent Securities shall be used to prepay the Loans pursuant to Section
2.5.
(b) The Borrower and each Guarantor agrees that as soon as
practicable following the request (a "REQUEST") from the Arranger made at any
time after the date that is 180 days after Closing Date, the Borrower will issue
and sell Permanent Securities upon such terms and conditions as may be specified
in such Request, provided that (i) subject to clause (iii) of the definition of
"Permanent Securities," the interest rate thereon (whether floating or fixed)
shall be determined by the Arranger after consultation with the Company, in
light of the then prevailing market conditions but in no event shall the
interest rate on the Permanent Securities exceed the Maximum Yield as defined in
the Fee Letter; (ii) the Arranger, in their reasonable discretion after
consultation with the Borrower, shall determine whether the Permanent Securities
shall be issued through a public offering or a private placement and, if issued
in a private placement, whether the Permanent Securities will be accompanied by
customary registration rights; (iii) the aggregate principal amount of Permanent
Securities to be issued shall be in gross proceeds at least equal to
$150,000,000; and (iv) subject in all respects to the definition of "Permanent
Securities," all other arrangements with respect to the Permanent Securities
shall be reasonably satisfactory in all respects to the Arranger, the Borrower
and the Guarantors in light of the then prevailing market conditions.
SECTION 8.2 ESCROWED WARRANTS. If (and only if) it shall be
determined by the Arranger based upon the prevailing market conditions that it
is necessary to sell the Permanent Securities with an equity component, the
Arranger may, in accordance with applicable law, sell all or any portion of the
Escrowed Warrants to the purchasers of the Permanent Securities in such amount
as is necessary in order for the Borrower to issue any Permanent Securities.
ARTICLE IX
TERMINATION
SECTION 9.1 TERMINATION. If no Loans have been funded
hereunder, the Lenders, by notice to the Borrower, may terminate this Agreement
at any time after the earlier of (i) the termination of the Acquisition
Agreement, (ii) the payment for the Tender Offer and (iii) 5:00 p.m., New York
City time, on December 31, 1998.
SECTION 9.2 SURVIVAL OF CERTAIN PROVISIONS. If this
Agreement is terminated pursuant to this Article IX, such termination shall be
without liability of any party to any other party, except that, whether or not
the transactions contemplated by this Agreement are consummated, (i) the
Obligations of the Borrower and the Guarantors to reimburse the Lenders for all
of their out-of-pocket expenses pursuant to Section 13.1 and the Engagement
Letter and (ii) the indemnity provisions contained in Article XII shall, in each
case, remain operative and in full force and effect.
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ARTICLE X
SUBORDINATION
SECTION 10.1 AGREEMENT TO SUBORDINATE. The Borrower and the
Guarantors agree, and each Lender agrees, that, from and after the Merger Date,
the Loans and the Indebtedness evidenced by the Notes, after the Merger Date,
shall be subordinated in right of payment, to the extent and in the manner
provided in this Article X, to the prior payment in full in cash or Cash
Equivalents of all Senior Debt (whether outstanding on the date hereof or
hereafter created, incurred, assumed or guaranteed), and that the subordination
is for the benefit of and enforceable by the holders of Senior Debt. Prior to
the Merger Date, the Loans are not subordinated and the remainder of this
Article X shall be of no force and effect. Notwithstanding the provisions of
Article X hereof, (i) the Borrower shall not incur any Indebtedness that is
subordinate or junior in right of payment to any Senior Debt and senior in any
respect in right of payment to the Notes, and (ii) no Guarantor shall incur any
Indebtedness that is subordinated or junior in right of payment to any
guarantees of Senior Debt and senior in any respect in right of payment to the
Guarantees.
SECTION 10.2 CERTAIN DEFINITIONS.
"DESIGNATED SENIOR DEBT" means (i) any Indebtedness
outstanding under the Credit Facility and (ii) any other Senior Debt permitted
hereunder the principal amount of which is $25,000,000 or more and that has been
designated by the Borrower as "Designated Senior Debt."
"PERMITTED JUNIOR SECURITIES" means Equity Interests in the
Borrower or any Guarantor or debt securities that are subordinated to all Senior
Debt (and any debt securities issued in exchange for Senior Debt) to
substantially the same extent as, or to a greater extent than, the Loans are
subordinated to Senior Debt pursuant to this Agreement.
"REPRESENTATIVE" means the indenture trustee or other
trustee, agent or representative for any Senior Debt. "SENIOR DEBT" means (i)
all Indebtedness under the Credit Facility, whether outstanding on the date
hereof or thereafter incurred, and all Hedging Obligations with respect thereto,
(ii) any other Indebtedness that is permitted to be incurred by the Borrower
pursuant to this Agreement unless the instrument under which such Indebtedness
is incurred expressly provides that it is on a parity with or subordinated in
right of payment to the Securities, and (iii) all Senior Obligations with
respect to any of the foregoing. Notwithstanding anything to the contrary in the
foregoing, Senior Debt shall not include (x) any Indebtedness of the Borrower to
any of its Subsidiaries or other Affiliates, (y) any Indebtedness incurred for
the purchase of goods or materials or for services obtained in the ordinary
course of business (other than with the proceeds of revolving credit borrowings
permitted hereby) and (z) any Indebtedness that is incurred in violation of this
Agreement.
"SENIOR OBLIGATIONS" means any principal, premium (if any),
interest, penalties, fees, charges, expenses, indemnifications, reimbursement
obligations, damages, guarantees and other liabilities and amounts payable under
the documentation governing any Senior Debt or in respect thereto.
A distribution may consist of cash, securities or other
property, by set-off or otherwise.
SECTION 10.3 LIQUIDATION; DISSOLUTION; BANKRUPTCY. Upon any
distribution to creditors of the Borrower or the Guarantors in a liquidation or
dissolution of the Borrower or such Guarantor or in a bankruptcy,
reorganization, insolvency, receivership or similar proceeding relating to the
Borrower or such
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Guarantor or its property, in an assignment for the benefit of creditors or any
marshalling of the Borrower's or such Guarantor's assets and liabilities:
(1) holders of Senior Debt shall be entitled to
receive payment in full in cash of all Senior Obligations due in
respect of such Senior Debt (including interest after, or which would
accrue but for, the commencement of any such proceeding at the rate
specified in the applicable Senior Debt, whether or not a claim for
such interest would be allowed) before any Lender shall be entitled
to receive any payment with respect to its Loan (except that Lenders
may receive Permitted Junior Securities); and
(2) until all Senior Obligations with respect to
Senior Debt (as provided in subsection (1) above) are paid in full in
cash, any distribution to which Lenders would be entitled but for
this Article X shall be made to holders of Senior Debt (except that
Lenders may receive Permitted Junior Securities), as their interests
may appear.
SECTION 10.4 DEFAULT ON DESIGNATED SENIOR DEBT. The
Borrower and the Guarantors may not make any payment or distribution to the
Administrative Agent or any Lender in respect of any Obligations and may not
acquire from the Administrative Agent or any Lender any Loans for cash or
property (other than Permitted Junior Securities) until all principal and other
Senior Obligations with respect to the Senior Debt have been paid in full in
cash if:
(i) a default in the payment of any principal or
other Senior Obligations with respect to Designated Senior Debt
occurs and is continuing beyond any applicable grace period in the
agreement, indenture or other document governing such Designated
Senior Debt; or
(ii) a default, other than a payment default, on
Designated Senior Debt occurs and is continuing that permits holders
of the Designated Senior Debt to accelerate its maturity and the
Administrative Agent receives a notice of the default (a "PAYMENT
BLOCKAGE NOTICE") from a Person who may give it pursuant to Section
10.12 hereof. If the Administrative Agent receives any such Payment
Blockage Notice, no subsequent Payment Blockage Notice shall be
effective for purposes of this Section 10.4 unless and until (i) at
least 360 days shall have elapsed since the effectiveness of the
immediately prior Payment Blockage Notice and (ii) all scheduled
payments of principal, premium, if any, and interest on the Loans
that have come due have been paid in full in cash. No nonpayment
default that existed or was continuing on the date of delivery of any
Payment Blockage Notice to the Administrative Agent shall be, or be
made, the basis for a subsequent Payment Blockage Notice unless such
default shall have been waived for a period of not less than 180
days.
The Borrower and the Guarantors may and shall resume
payments on and distributions in respect of the Loans and may acquire them upon
the earlier of:
(1) the date upon which the default is cured or waived by
written notice to the Administrative Agent and the Borrower from the
Person or Persons who gave such Payment Blockage Notice and, in the
case of Designated Senior Debt that has been accelerated, such
acceleration has been rescinded by written noticed to the
Administrative Agent and the Borrower, or
(2) in the case of a default referred to in Section
10.4(ii) hereof, 179 days pass after
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notice is received if the maturity of such Designated Senior Debt has
not been accelerated,
if this Article X otherwise permits the payment, distribution or acquisition at
the time of such payment or acquisition.
SECTION 10.5 ACCELERATION OF LOANS. If payment of the Loans
is accelerated because of an Event of Default, the Borrower shall promptly
notify holders of Designated Senior Debt of the acceleration. If any Designated
Senior Debt is outstanding, the Borrower may not pay the Loans until five
Business Days after the Representative of the Designated Senior Debt receives
notice of such acceleration and, thereafter, may pay the Loans only if this
Article X otherwise permits the payment at that time.
SECTION 10.6 WHEN DISTRIBUTION MUST BE PAID OVER. In the
event that the Administrative Agent or any Lender receives any payment of any
Senior Obligations at a time when the Administrative Agent or such Lender, as
applicable, has actual knowledge that such payment is prohibited by Article X
hereof, such payment shall be held by the Administrative Agent or such Lender,
in trust for the benefit of, and shall be paid forthwith over and delivered to,
the holders of Senior Debt as their interests may appear or their Representative
under the indenture or other agreement (if any) pursuant to which Senior Debt
may have been issued, as their respective interests may appear, for application
to the payment of all Senior Obligations with respect to Senior Debt remaining
unpaid to the extent necessary to pay such Senior Obligations in full in
accordance with their terms, after giving effect to any concurrent payment or
distribution to or for the holders of Senior Debt.
With respect to the holders of Senior Debt, the
Administrative Agent undertakes to perform only such obligations on the part of
the Administrative Agent as are specifically set forth in this Article X, and no
implied covenants or obligations with respect to the holders of Senior Debt
shall be read into this Agreement against the Administrative Agent. The
Administrative Agent shall not be deemed to owe any fiduciary duty to the
holders of Senior Debt, and shall not be liable to any such holders if the
Administrative Agent shall pay over or distribute to or on behalf of Lenders,
the Borrower, the Guarantors or any other Person money or assets to which any
holders of Senior Debt shall be entitled by virtue of this Article X, except if
such payment is made as a result of the willful misconduct or gross negligence
of the Administrative Agent.
SECTION 10.7 NOTICE BY THE BORROWER. The Borrower and the
Guarantors shall promptly notify the Administrative Agent of any facts known to
the Borrower or any Guarantor that would cause a payment of any Senior
Obligations with respect to the Loans to violate this Article X, but failure to
give such notice shall not affect the subordination of the Loans to the Senior
Debt as provided in this Article X.
SECTION 10.8 SUBROGATION. After all Senior Debt is paid in
full in cash and until the Loans are paid in full, the Lenders shall be
subrogated (equally and ratably with all other Indebtedness pari passu with the
Loans) to the rights of holders of Senior Debt to receive distributions
applicable to Senior Debt to the extent that distributions otherwise payable to
the Lenders have been applied to the payment of Senior Debt. A distribution made
under this Article X to holders of Senior Debt that otherwise would have been
made to the Lenders is not, as between the Borrower and the Guarantors, on one
hand, and the Lenders, on the other hand, a payment by the Borrower and the
Guarantors on the Loan.
SECTION 10.9 RELATIVE RIGHTS. This Article X defines the
relative rights of the Lenders and holders of Senior Debt. Nothing in this
Agreement shall:
(a) impair, as between the Borrower and the Guarantors,
on one hand, and the Lenders, on the
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other hand, the obligation of the Borrower and the Guarantors, which is absolute
and unconditional, to pay principal of and interest on the Loans in accordance
with their terms;
(b) affect the relative rights of the Lenders and creditors
of the Borrower and the Guarantors other than their rights in
relation to holders of Senior Debt; or
(c) prevent the Administrative Agent or any Lender from
exercising its available remedies upon a Default or Event of Default, subject
to the rights of holders of Senior Debt to receive distributions and payments
otherwise payable to the Lenders.
If the Borrower and the Guarantors fail because of this
Article X to pay principal of or interest on a Loan on the due date, the failure
is still a Default or Event of Default.
SECTION 10.10 SUBORDINATION MAY NOT BE IMPAIRED BY THE
BORROWER AND THE GUARANTORS. No right of any holder of Senior Debt to enforce
the subordination of the Loans and the Indebtedness evidenced by the Notes shall
be impaired by any act or failure to act by the Borrower and the Guarantors or
any Lender or by the failure of the Borrower and the Guarantors or any Lender to
comply with this Agreement.
SECTION 10.11 DISTRIBUTION OR NOTICE TO REPRESENTATIVE.
Whenever a distribution is to be made or a notice given to holders of Senior
Debt, the distribution may be made and the notice given to their Representative.
Upon any payment or distribution of assets of the Borrower
or any Guarantor referred to in this Article X, the Administrative Agent and the
Lenders shall be entitled to rely upon any order or decree made by any court of
competent jurisdiction or upon any certificate of such Representative or of the
liquidating trustee or agent or other Person making any distribution to the
Administrative Agent or to the Lenders for the purpose of ascertaining the
Persons entitled to participate in such distribution, the holders of the Senior
Debt and other Indebtedness of the Borrower and the Guarantors, the amount
thereof or payable thereon, the amount or amounts paid or distributed thereon
and all other facts pertinent thereto or to this Article X.
SECTION 10.12 RIGHTS OF ADMINISTRATIVE AGENT.
Notwithstanding the provisions of this Article X or any other provision of this
Agreement, the Administrative Agent shall not be charged with knowledge of the
existence of any facts that would prohibit the making of any payment or
distribution by the Administrative Agent, and the Administrative Agent may
continue to make payments on the Loans, unless the Administrative Agent shall
have received at the address set forth in Section 14.2 hereof at least five
Business Days prior to the date of such payment written notice of facts that
would cause the payment of any Obligations with respect to the Loans to violate
this Article X. Only the Borrower or a Representative may give the notice.
The Administrative Agent in its individual or any other
capacity may hold Senior Debt with the same rights it would have if it were not
Administrative Agent. Any agent may do the same with like rights.
SECTION 10.13 AUTHORIZATION TO EFFECT SUBORDINATION. Each
Lender, authorizes and directs the Administrative Agent on such Lender's behalf
to take such action as may be necessary or appropriate to effectuate the
subordination as provided in this Article X, and appoints the Administrative
Agent to act as such Lender's attorney-in-fact for any and all such purposes.
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SECTION 10.14 AMENDMENTS. The provisions of this Article X
and Section 14.3 shall not be amended or modified without the written consent of
the holders of all Senior Debt.
ARTICLE XI
GUARANTEE
SECTION 11.1 THE GUARANTEE.
(a) Each Guarantor hereby absolutely, unconditionally and
irrevocably guarantees the full and punctual payment when due (whether at
stated maturity, upon acceleration or otherwise) of the principal of and
interest, fees and premium (if any) on the Loans and the Notes, and the full
and punctual payment of all other Obligations of the Borrower under this
Agreement, the Notes and the other Loan Documents when due, including all
reasonable costs of collection and enforcement thereof and interest thereon
which would be owing by the Borrower but for the effect of any Bankruptcy Law
(collectively, the "GUARANTEED OBLIGATIONS"). Each Guarantor understands,
agrees and confirms that each of the Lenders may enforce this Guarantee up to
the full amount guaranteed by each Guarantor hereunder against each Guarantor
without proceeding against any other obligor or against any security for the
Guaranteed Obligations. All payments made by each Guarantor under this
Guarantee shall be paid at the place and in the manner specified in Section
2.9. Each Guarantor agrees that this is a continuing Guarantee of payment and
not merely a Guarantee of collection.
(b) The obligations of each Guarantor hereunder shall be
unconditional and absolute and, without limiting the generality of the
foregoing, shall not be released, discharged or otherwise affected by:
(i) any extension, renewal, settlement, compromise, waiver
or release in respect of any Obligation of the Borrower under this
Agreement, the Notes or any other Loan Document, by operation of law
or otherwise;
(ii) any modification or amendment of or supplement to this
Agreement, the Notes or any of the other Loan Documents;
(iii) any release, non-perfection or invalidity of any
direct or indirect security for, or any other Person's guarantee of,
any of the Guaranteed Obligations;
(iv) any change in the corporate existence, structure or
ownership of the Borrower or any other guarantor of the Borrower's
Obligations, or any insolvency, bankruptcy, reorganization or other
similar proceeding affecting the Borrower or any obligor or any of
their respective assets or any resulting release or discharge of any
Obligation of the Borrower contained in the Loan Documents;
(v) the existence of any claim, set-off or other rights
which any obligor may have at any time against the Borrower or any
other Person, whether in connection herewith or with any unrelated
transactions, provided that nothing herein shall prevent the
assertion of any such claim by separate suit or compulsory
counterclaim;
(vi) any invalidity or unenforceability relating to or
against the Borrower for any reason of this Agreement, the Notes or
any other Loan Document, or any provision of
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applicable law or regulation purporting to prohibit the payment by
the Borrower of the principal of, interest, premium or fees on the
Loans or any other amount payable by the Borrower under this
Agreement, the Notes or any of the other Loan Documents; or
(vii) any other act or omission to act or delay of any kind
by the Borrower or any other Person or any other circumstance
whatsoever which might, but for the provisions of this paragraph,
constitute a legal or equitable discharge of Guaranteed Obligations
hereunder.
(c) Each Guarantor hereby waives diligence, presentment,
demand of payment, filing of claims with a court in the event of insolvency or
bankruptcy of the Borrower, any right to require a proceeding first against the
Borrower or another obligor, protest, notice and all demands whatsoever and
covenants that, subject to this Article XI, this Guarantee shall not be
discharged except by complete payment and performance of all Guaranteed
Obligations.
(d) If any Lender is required by any court or otherwise to
return to the Borrower or any Guarantor, or any Custodian for the Borrower or
any of the other obligors or their respective assets, any amount paid to any
Lender, this Guarantee, to the extent of the amount so returned, shall be
reinstated in full force and effect.
(e) Each Guarantor agrees that it shall not be entitled to
any right of subrogation in relation to the Lenders in respect of any
Guaranteed Obligations until payment in full of all Guaranteed Obligations.
Each Guarantor further agrees that (i) the maturity of the Guaranteed
Obligations may be accelerated as provided in Section 7.1 notwithstanding any
stay, injunction or other prohibition preventing such acceleration in respect
of the Guaranteed Obligations and (ii) in the event of any declaration of
acceleration of such Guaranteed Obligations as provided in Section 7.1, such
Guaranteed Obligations (whether or not due and payable) shall forthwith become
due and payable by each Guarantor for the purpose of this Guarantee.
SECTION 11.2 SUBORDINATION OF GUARANTEE. The obligations of
each Guarantor under its Guarantee pursuant to this Article XI shall be junior
and subordinated to the Senior Obligations of such Guarantor under the Credit
Facility on the same basis as the Loans are junior and subordinated to Senior
Debt of the Borrower under the Credit Facility.
SECTION 11.3 LIMITATION ON LIABILITY. Each Guarantor and,
by its acceptance of any Notes, each Lender, hereby confirms that it is the
intention of all such parties that this Guarantee not constitute a fraudulent
transfer or conveyance for purposes of any Bankruptcy Law, the Uniform
Fraudulent Conveyance Act, the Uniform Fraudulent Transfer Act or any similar
law to the extent applicable to this Guarantee. To effectuate the foregoing
intention, the Lenders and the Guarantors hereby irrevocably agree that the
Obligations of each Guarantor under this Guarantee shall be limited to the
maximum amount as will, after giving effect to such maximum amount and all other
contingent and fixed liabilities of each Guarantor that are relevant under such
laws, result in the Obligations of each Guarantor under the Guarantee not
constituting a fraudulent transfer or conveyance.
SECTION 11.4 STAY OF ACCELERATION. In the event that
acceleration of the time for payment of any Guaranteed Obligation is stayed upon
insolvency, bankruptcy or reorganization of the Borrower, all such amounts
otherwise subject to acceleration under the terms of this Agreement and the
Notes shall nonetheless by payable by the Guarantors forthwith on demand by any
Lender.
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SECTION 11.5 RELEASE OF GUARANTORS. In the event of a sale
or other disposition of all of the assets of any Guarantor, by way of merger,
consolidation or otherwise, or a sale or other disposition of all of the capital
stock of any Guarantor, then such Guarantor (in the event of a sale or other
disposition, by way of merger, consolidation or otherwise, of all of the capital
stock of such Guarantor) or the corporation acquiring the property (in the event
of a sale or other disposition of all or substantially all of the assets of such
Guarantor) will be released and relieved of any obligations under its Guarantee;
provided that the Net Cash Proceeds of such sale or other disposition are
applied in accordance with the applicable provisions of this Agreement,
including without limitation Section 2.5. Upon delivery by the Borrower to the
Administrative Agent of an Officers' Certificate to the effect that such sale or
other disposition was made by the Borrower in accordance with the applicable
provisions of this Agreement, including without limitation Section 2.5, the
Administrative Agent shall execute any documents reasonably required in order to
evidence the release of any Guarantor from its Obligations under its Guarantee.
Any Guarantor not released from its Obligations under its
Guarantee shall remain liable for the full amount of principal of and interest
on the Loans and for the other obligations of any Guarantor under this Agreement
as provided in this Article XI.
SECTION 11.6 LIMITATION ON ISSUANCES OF GUARANTEES OF
INDEBTEDNESS. The Borrower shall not permit any Subsidiary, directly or
indirectly, to Guarantee or pledge any assets to secure the payment of any
Indebtedness of the Borrower under the Credit Facility unless such Subsidiary
simultaneously agrees to Guarantee the payment of the Notes, which Guarantee
shall be pari passu with such Subsidiary's Guarantee of or pledge to secure such
other Indebtedness prior to the Merger Date and on a senior subordinated basis
after the Merger Date. The Borrower shall cause each such Subsidiary to execute
and deliver to the Administrative Agent such documents as the Administrative
Agent shall reasonable request to evidence such Subsidiary's Guarantee.
Notwithstanding the foregoing, any such Guarantee by a Subsidiary of the Notes
shall provide by its terms that it shall be automatically and unconditionally
released and discharged upon any sale, exchange or transfer, to any Person not
an Affiliate of the Borrower, of all of the Borrower's stock in, or all or
substantially all the assets of, such Subsidiary, which sale, exchange or
transfer is made in compliance with the applicable provisions of this Agreement.
ARTICLE XII
INDEMNITY
SECTION 12.1 INDEMNIFICATION. The Borrower and each
Guarantor (each, an "INDEMNIFYING PARTY" and, collectively, the "INDEMNIFYING
PARTIES") jointly and severally agree to indemnify and hold harmless each
Lender, the Arranger and the Administrative Agent and their respective
controlling persons and Affected Parties and each director, officer, employee,
affiliate, advisor, counsel and agent thereof (each, an "INDEMNIFIED PARTY")
from and against any and all losses, claims, damages and liabilities, joint or
several (but not consequential damages), to which any Indemnified Party may
become subject relating to or arising out of or in connection with the
transactions contemplated by this Agreement (including the use of the proceeds
of the Loans) or any related transaction (including the Acquisition), and to
reimburse each Indemnified Party, promptly upon demand, for expenses (including
reasonable counsel fees and expenses) as they are incurred in connection with
the investigation of, preparation for or defense of any pending or threatened
loss, claim, damage or liability, or any litigation, proceeding or other action
in respect thereof, including any amount paid in settlement of any litigation,
proceeding or other action (commenced or threatened) to which the Indemnifying
Parties shall have consented in writing (such consent not to be unreasonably
withheld) whether or not any Indemnified Party is a party and whether or not
liability resulted; provided, however, that the indemnity contained in this
Section 12.1 will not apply to any Indemnified Party
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with respect to losses, claims, damages, liabilities or related expenses arising
from the willful misconduct or gross negligence of such Indemnified Party.
SECTION 12.2 INDEMNITY NOT AVAILABLE. If indemnification
were for reason of public policy not to be available, the Indemnifying Parties,
on the one hand, and the Lenders, on the other hand, agree to contribute (in
proportion to their respective Commitments in the case of the Lenders) to the
losses, claims, damages, liabilities or expenses (or any investigation, claim,
litigation, proceeding or other action (collectively, an "ACTION") in respect
thereof) for which such indemnification is held unavailable in such proportion
as is appropriate to reflect the relative benefits to the Indemnifying Parties,
on the one hand, and the Lenders, on the other hand, in connection with the
matter giving rise to such losses, claims, damages, liabilities or expenses (or
actions in respect thereof). The Borrower and each Guarantor agree that for the
purposes of this Section 12.2 the relative benefits to the Borrower and its
Subsidiaries on the one hand, and the Indemnified Parties on the other hand, of
the transactions contemplated by this Agreement, including, without limitation,
the Loans and the other transactions contemplated by any of the Loan Documents
in any way relating to any Loan, including the use of the proceeds of the Loans
shall be deemed to be in the same proportion that the proceeds of all Loans made
or to be made to the Borrower bears to the interest and fees paid or to be paid
to the Lenders in connection with the Loans; provided, however, that, to the
extent permitted by applicable law, in no event shall the Indemnified Parties be
required to contribute an aggregate amount in excess of the aggregate interest
and fees actually paid to the Lenders in connection with the Loans. The
foregoing contribution agreement shall be in addition to any rights that any
Indemnified Party may have at common law or otherwise. No investigation or
failure to investigate by any Indemnified Party shall impair the foregoing
indemnification and contribution agreement or any right an Indemnified Party may
have.
SECTION 12.3 SETTLEMENT OF CLAIMS. The Borrower and each
Guarantor agree that, neither it nor any of its Subsidiaries will settle,
compromise or consent to the entry of any judgment in any pending or threatened
claim, action or proceeding in respect of which indemnification or contribution
could be sought under Section 12.1 or 12.2 (whether or not any Indemnified Party
is an actual or potential party to such claim, action or proceeding) without the
prior written consent of the Indemnified Parties, unless such settlement,
compromise or consent includes an unconditional release of each Indemnified
Party from all liability arising out of such claim, action or proceeding, which
consent shall not be unreasonably withheld.
SECTION 12.4 APPEARANCE EXPENSES. If an Indemnified Party
is requested or required to appear as a witness in any action brought by or on
behalf of or against the Borrower, any Guarantor or any Affiliate thereof in
which such Indemnified Party is not named as a defendant, the Borrower agrees to
reimburse such Indemnified Party for all reasonable expenses incurred by it in
connection with such Indemnified Party's appearing and preparing to appear as
such a witness, including, without limitation, the reasonable fees and
disbursements of its legal counsel.
SECTION 12.5 INDEMNITY FOR TAXES, RESERVES AND EXPENSES.
If, after the date hereof, the adoption of any law or guideline or any amendment
or change in the administration, interpretation or application of any existing
or future law or guideline by any Governmental Entity charged with the
administration, interpretation or application thereof, or the compliance with
any request or directive of any Governmental Entity (whether or not having the
force of law):
(a) subjects any Affected Party to any tax of any kind
with respect to this Agreement or the Notes or changes the basis of taxation of
payments of amounts due hereunder or thereunder or with respect to this
Agreement or any of the other Loan Documents, (including, without limitation,
any sales, gross receipts, general corporate, personal property, privilege or
license taxes, and including claims, losses and liabilities arising from any
failure to pay or delay in paying any such tax (unless such failure or delay
results
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solely from such Affected Party's negligence or willful misconduct), but
excluding (i) federal, state or local taxes based on net income incurred by such
Affected Party arising out of or under this Agreement or any of the other Loan
Documents) and (ii) Taxes, Other Taxes and any taxes, levies, imposts,
deductions, charges or withholding specifically excluded under Section 2.10(a);
(b) imposes, modifies or deems applicable any reserve
(including, without limitation, any reserve imposed by the Board), special
deposit or similar requirement against assets of the Borrower and the
Guarantors held by, credit to the Borrower and the Guarantors extended by,
deposits of the Borrower and the Guarantors with or for the account of, or
other acquisition of funds of the Borrower and the Guarantors by, any Affected
Party;
(c) shall change the amount of capital maintained or
requested or directed to be maintained by an Affected Party; or
(d) imposes upon an Affected Party any other condition or
expense (including, without limitation, (i) loss of margin and (ii) attorneys'
fees and expenses incurred by officers or employees of an Affected Party (or
any successor thereto) and expenses of litigation or preparation therefor in
contesting any of the foregoing) with respect to this Agreement or any of the
other Loan Documents or the purchase, maintenance or funding of the Loans by an
Affected Party,
and the result of any of the foregoing is to increase the cost to, reduce the
income receivable by, reduce the rate of return on capital of, or impose any
expense (including loss of margin) upon, an Affected Party with respect to this
Agreement, any of the other Loan Documents, the obligations hereunder or
thereunder or the funding of the Loans hereunder, the Affected Party may notify
the Indemnifying Party of the amount of such increase, reduction, or imposition,
and the Indemnifying Parties hereby jointly and severally agree to pay to the
Affected Party the amount the Affected Party deems necessary to compensate the
Affected Party for such increase, reduction or imposition which determination
shall be conclusive. Such amounts shall be due and payable by the Indemnifying
Parties 15 days after such notice is given.
SECTION 12.6 SURVIVAL OF INDEMNIFICATION. The provisions
contained in this Article XII shall remain in full force and effect whether or
not any of the transactions contemplated hereby are consummated and
notwithstanding the termination of this Agreement or the payment in full of all
Obligations hereunder.
SECTION 12.7 LIABILITY NOT EXCLUSIVE; PAYMENTS. The
agreements of each Indemnifying Party in this Article XII shall be in addition
to any liability that each may otherwise have. All amounts due under this
Article XII shall be payable as incurred upon written demand therefor.
ARTICLE XIII
THE ADMINISTRATIVE AGENT
SECTION 13.1 APPOINTMENT. Each Lender hereby irrevocably
designates and appoints the Administrative Agent as the agent of such Lender
under this Agreement and the other Loan Documents, and each such Lender
irrevocably authorizes the Administrative Agent, in such capacity, to take such
action on its behalf under the provisions of this Agreement and the other Loan
Documents and to exercise such powers and perform such duties as are expressly
delegated to the Administrative Agent by the terms of this Agreement and the
other Loan Documents, together with such other powers as are reasonably
incidental thereto. Notwithstanding any provision to the contrary elsewhere in
this Agreement, the Administrative
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Agent shall have no duties or responsibilities, except those expressly set forth
herein, or any fiduciary relationship with any Lender, and no implied covenants,
functions, responsibilities, duties, obligations or liabilities shall be read
into this Agreement or any other Loan Document or otherwise exist against the
Administrative Agent.
SECTION 13.2 DELEGATION OF DUTIES. The Administrative Agent
may execute any of its duties under this Agreement and the other Loan Documents
by or through agents or attorneys-in-fact and shall be entitled to the advice of
counsel concerning all matters pertaining to such duties. The Administrative
Agent shall not be responsible for the negligence or misconduct of any agents or
attorneys-in-fact selected by it with reasonable care.
SECTION 13.3 EXCULPATORY PROVISIONS. Neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates shall be (i) liable for any action lawfully
taken or omitted to be taken by it or such Person under or in connection with
this Agreement or any other Loan Document (except for its own gross negligence
or willful misconduct) or (ii) responsible in any manner to any of the Lenders
for any recitals, statements, representations or warranties made by the Borrower
or any of its Subsidiaries or any officer thereof contained in this Agreement or
any other Loan Document or in any certificate, report, statement, opinion or
other document referred to or provided for in, or received by the Administrative
Agent under or in connection with, this Agreement or any other Loan Document or
for the value, validity, effectiveness, genuineness, enforceability or
sufficiency of this Agreement or any other Loan Document or for any failure of
the Borrower or any of its Subsidiaries to perform its obligations hereunder or
thereunder. The Administrative Agent shall not be under any obligation to any
Lender to ascertain or to inquire as to the observance or performance of any of
the agreements contained in, or conditions of, this Agreement or any other Loan
Document, or to inspect the properties, books or records of the Borrower or any
of its Subsidiaries.
SECTION 13.4 RELIANCE BY THE ADMINISTRATIVE AGENT. The
Administrative Agent shall be entitled to rely, and shall be fully protected in
relying, upon any Notes, writing, resolution, notice, consent, certificate,
affidavit, letter, facsimile, telex or teletype message, statement, order or
other document or conversation believed by it to be genuine and correct and to
have been signed, sent or made by the proper Person or Persons and upon advice
and statements of legal counsel (including, without limitation, counsel to the
Borrower or any of its Subsidiaries), independent accountants and other experts
selected by the Administrative Agent. The Administrative Agent may deem and
treat the payee of the Notes as the owner thereof for all purposes unless a
written notice of assignment, negotiation or transfer thereof shall have been
filed with the Administrative Agent. The Administrative Agent shall be fully
justified in failing or refusing to take any action under this Agreement or any
other Loan Document unless it shall first receive such advice or concurrence of
the Majority Lenders as it deems appropriate or it shall first be indemnified to
its satisfaction by the Lenders against any and all liability and expense which
may be incurred by it by reason of taking or continuing to take any such action.
The Administrative Agent shall in all cases be fully protected in acting, or in
refraining from acting, under this Agreement and the other Loan Documents in
accordance with a request of the Majority Lenders, and such request and any
action taken or failure to act pursuant thereto shall be binding upon all the
Lenders and all future holders of the Loans.
SECTION 13.5 NOTICE OF DEFAULT. The Administrative Agent
shall not be deemed to have knowledge or notice of the occurrence of any Default
or Event of Default hereunder unless the Administrative Agent has received
notice from a Lender, the Borrower or any of its Subsidiaries referring to this
Agreement, describing such Default or Event of Default and stating that such
notice is a "notice of default." In the event that the Administrative Agent
receives such a notice, the Administrative Agent shall give notice thereof to
the Lenders. The Administrative Agent shall take such action with respect to
such
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Default or Event of Default as shall be reasonably directed by the Majority
Lenders; provided that unless and until the Administrative Agent shall have
received such directions, the Administrative Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as it shall deem advisable in the best
interests of the Lenders.
SECTION 13.6 NON-RELIANCE ON THE ADMINISTRATIVE AGENT AND
OTHER LENDERS. Each Lender expressly acknowledges that neither the
Administrative Agent nor any of its officers, directors, employees, agents,
attorneys-in-fact or Affiliates has made any representations or warranties to it
and that no act by the Administrative Agent hereafter taken, including any
review of the affairs of the Borrower or any of its Subsidiaries, shall be
deemed to constitute any representation or warranty by the Administrative Agent
to any Lender. Each Lender represents to the Administrative Agent that it has,
independently and without reliance upon the Administrative Agent or any other
Lenders, and based on such documents and information as it has deemed
appropriate, made its own appraisal of and investigation into the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries and made its own decision to
make its Loans hereunder and enter into this Agreement. Each Lender confirms
that it is a qualified institutional buyer within the meaning of Rule 144A under
the Securities Act. Each Lender also represents that it will, independently and
without reliance upon the Administrative Agent or any other Lender, and based on
such documents and information as it shall deem appropriate at the time,
continue to make its own credit analysis, appraisals and decisions in taking or
not taking action under this Agreement and the other Loan Documents, and to make
such investigation as it deems necessary to inform itself as to the business,
operations, property, financial and other condition, prospects and credit
worthiness of the Borrower and its Subsidiaries. Except for notices, reports and
other documents expressly required to be furnished to the Lenders by the
Administrative Agent hereunder, the Administrative Agent shall have no any duty
or responsibility to provide any Lender with any credit or other information
concerning the business, operations, property, financial or other condition,
prospects or credit worthiness of the Borrower or any of its Subsidiaries which
may come into the possession of the Administrative Agent or any of its officers,
directors, employees, agents, attorneys-in-fact or Affiliates.
SECTION 13.7 INDEMNIFICATION. The Lenders agree to
indemnify the Administrative Agent in its capacity as such (to the extent not
reimbursed by the Borrower or any of its Subsidiaries and without limiting the
obligation of the Borrower and any of its Subsidiaries to do so), ratably
according to their respective Commitments in effect on the date on which
indemnification is sought, from and against any and all liabilities,
obligations, losses, damages, penalties, actions, judgments, suits, costs,
expenses or disbursements of any kind whatsoever which may at any time (include,
without limitation, at any time following the payment of the Loans) be imposed
on, incurred by or asserted against the Administrative Agent in any way relating
to or arising out of, the Commitments, this Agreement, any other Loan Document
or any documents contemplated by or referred to herein or therein or the
transactions contemplated hereby or thereby or any action taken or omitted by
the Administrative Agent under or in connection with any of the foregoing,
provided that no Lender shall be liable for the payment of any portion of such
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, expenses or disbursements resulting solely from the Administrative
Agent's gross negligence or willful misconduct. The agreements in this
subsection shall survive the payment of the Loans and all other Obligations
payable hereunder.
SECTION 13.8 ADMINISTRATIVE AGENT, IN ITS INDIVIDUAL
CAPACITIES. The Administrative Agent and its Affiliates may make loans to,
accept deposits from and generally engage in any kind of business with the
Borrower as though the Administrative Agent were not acting in such capacities
hereunder and under the other Loan Documents. With respect to the Loans made or
renewed by it and the Notes issued to it the Administrative Agent shall have the
same rights and powers under this Agreement and the other Loan Documents as any
Lender and may exercise the same as though it were not the Administrative Agent,
and
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the terms "Lender" and "Lenders" shall include the Administrative Agent in its
individual capacity.
SECTION 13.9 SUCCESSOR ADMINISTRATIVE AGENT. The
Administrative Agent may resign as Administrative Agent upon 30 days' notice to
the Lenders. If the Administrative Agent shall resign as Administrative Agent
under this Agreement and the other Loan Documents then the Majority Lenders
shall appoint from among the Lenders a successor agent for the Lenders, which
successor agent (provided that it shall have been approved by the Borrower),
shall succeed to the rights, powers and duties of the Administrative Agent,
hereunder. Effective upon such appointment and approval, the term
"Administrative Agent" shall mean and include such successor agent, and the
former Administrative Agent's rights, powers and duties as Administrative Agent
shall be terminated, without any other or further act or deed on the part of
such former Administrative Agent any of the parties to this Agreement or any
holders of the Loans. After any retiring Administrative Agent's resignation as
Administrative Agent the provisions of this Article XIII shall inure to its
benefit as to any actions taken or omitted to be taken by it while it was
Administrative Agent under this Agreement and the other Loan Documents.
SECTION 13.10 LIMITATION OF DUTIES. Except as expressly set
forth herein, the Arrangers, in their capacity as such, shall have no duties or
responsibilities, and shall incur no liabilities, under this Agreement or the
other Loan Documents.
SECTION 13.11 ADMINISTRATIVE AGENT FEE. The Borrower shall
pay the Administrative Agent such fees at such times as set forth in a letter
agreement between the Borrower and the Administrative Agent. Such fees shall be
subordinated in right of payment to the prior payment of amounts outstanding
under the Credit Facility.
ARTICLE XIV
MISCELLANEOUS
SECTION 14.1 EXPENSES; DOCUMENTARY TAXES. The Borrower and
the Guarantors hereby jointly and severally agree to pay (a) all reasonable
out-of-pocket expenses (including, without limitation, expenses incurred in
connection with due diligence of the Lenders) associated with the preparation,
execution and delivery, administration, waiver, enforcement or modification and
enforcement of the documentation contemplated hereby and (b) the reasonable fees
and disbursements of legal counsel to the Lenders in connection with the
transactions contemplated herein, including in each case those incurred prior to
the date hereof. The Borrower and the Guarantors hereby jointly and severally
agree to indemnify the Lenders against any transfer taxes, documentary taxes,
assessments or charges made by any Governmental Entity by reason of the
execution and delivery, or the terms, of this Agreement or any of the other Loan
Documents.
SECTION 14.2 NOTICES. All notices and other communications
pertaining to this Agreement or any Notes shall be in writing and shall be
delivered (a) in Person (with receipt acknowledged), (b) by facsimile (confirmed
immediately in writing by a copy mailed by registered or certified mail, return
receipt requested, postage prepaid, addressed as hereafter set forth), (c) by
registered or certified mail, return receipt requested, postage prepaid, or (d)
by overnight courier, addressed as follows:
(i) If to the Administrative Agent, to it at:
▇▇▇▇▇▇ Commercial Paper Inc.
▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
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Attention: ▇▇▇▇▇▇▇ ▇'▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇ & ▇▇▇▇▇▇▇
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
(ii) If to any Lender, to it at its address
set forth on the signature pages hereto:
(iii) If to the Borrower or any Guarantor, to
it at:
Key Energy Group, Inc.
▇▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇
▇▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇ ▇▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇. ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
with a copy to:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇, Esq.
Skadden, Arps, Slate, ▇▇▇▇▇▇▇ & ▇▇▇▇
LLP
▇▇▇▇ ▇▇▇ ▇▇▇▇ ▇▇▇., ▇.▇.
▇▇▇▇▇▇▇▇▇▇, ▇.▇. ▇▇▇▇▇
Facsimile No.: (▇▇▇) ▇▇▇-▇▇▇▇
and
▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P.
▇▇▇ ▇▇▇▇▇▇▇▇▇, ▇▇▇▇ ▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, Esq.
Facsimile: (▇▇▇) ▇▇▇-▇▇▇▇
or to such other Person or address as shall be furnished in writing delivered to
the other parties in compliance with this Section.
SECTION 14.3 CONSENT TO AMENDMENTS AND WAIVERS.
(a) Subject to Section 10.14 and except as provided in
Section 14.3(b), this Agreement and the Notes may be amended or supplemented
with the consent of the Borrower, each Guarantor and the Majority Lenders and
any existing default or compliance with any provision of this Agreement or the
Notes may be waived with the consent of the Majority Lenders. Notes held by the
Borrower or any of its Affiliates will not be deemed to be outstanding for
purposes of this Section 14.3.
(b) Notwithstanding the provisions of Section 14.3(a),
without the consent of each Lender
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directly affected thereby, an amendment or waiver may not: (i) reduce the
principal amount of any Loan, (ii) change the fixed maturity of any Loan, (iii)
reduce the rate of or change the time for payment of interest on any Loan, (iv)
waive a Default or Event of Default in the payment of principal of, or premium,
fees or interest, if any, on the Loans or any other amounts payable under any of
the Loan Documents, (v) make any Loan payable in money other than that stated in
the applicable Loan, (vi) make any change in the provisions of this Agreement
relating to the rights of Lenders to receive (A) prepayments on, or (B) payments
of principal of, premium, if any, or fees or interest on, the Loans, (vii) make
any change to the provisions of Article VIII that would adversely affect the
rights of any Lender, or (viii) make any change in the foregoing amendment and
waiver provisions. Notwithstanding the provisions of Section 14.3(a), the
provisions of Article XIII shall not be amended or supplemented without the
consent of the Administrative Agent.
(c) The Borrower shall not and shall not permit any of its
Subsidiaries to, directly or indirectly, pay or cause to be paid any
consideration, whether by way of interest, fee or otherwise, to any Lender for
or as an inducement to any consent, waiver or amendment permitted by Section
14.3(a) unless such consideration is offered to be paid and is paid to all
Lenders that consent, waive or agree to amend in the time frame set forth in the
solicitation documents relating to such consent, waiver or amendment.
SECTION 14.4 PARTIES. This Agreement shall inure to the
benefit of and be binding upon the Borrower, each Guarantor, the Affected
Parties and each of their respective successors and assigns. Except as expressly
in this Agreement, nothing expressed or mentioned in this Agreement is intended
or shall be construed to give any other Person any legal or equitable right,
remedy or claim under or in respect of this Agreement or any provision herein
contained. Except as expressly provided in this Agreement, this Agreement and
all conditions and provisions hereof are intended to be for the sole and
exclusive benefit of the Affected Parties and their respective successors and
assigns, and for the benefit of no other Person.
SECTION 14.5 NEW YORK LAW; SUBMISSION TO JURISDICTION;
WAIVER OF JURY TRIAL. THIS AGREEMENT AND THE NOTES SHALL BE CONSTRUED IN
ACCORDANCE WITH AND GOVERNED BY THE LAWS OF THE STATE OF NEW YORK. EACH PARTY
HEREBY SUBMITS TO THE NONEXCLUSIVE JURISDICTION OF THE UNITED STATES DISTRICT
COURT FOR THE SOUTHERN DISTRICT OF NEW YORK AND OF ANY NEW YORK STATE COURT
SITTING IN NEW YORK CITY (EACH, A "NEW YORK COURT") FOR PURPOSES OF ALL LEGAL
PROCEEDINGS ARISING OUT OF OR RELATING TO THE NOTES, THIS AGREEMENT, ANY OF THE
OTHER LOAN DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY. EACH PARTY
IRREVOCABLY WAIVES, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH
IT MAY NOW OR HEREAFTER HAVE TO THE LAYING OF THE VENUE OF ANY SUCH PROCEEDING
BROUGHT IN SUCH A COURT AND ANY CLAIM THAT ANY SUCH PROCEEDING BROUGHT IN SUCH A
COURT HAS BEEN BROUGHT IN AN INCONVENIENT FORUM. EACH PARTY IRREVOCABLY WAIVES
ANY AND ALL RIGHT TO TRIAL BY JURY IN ANY LEGAL PROCEEDING ARISING OUT OF OR
RELATING TO THE NOTES, THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR THE
TRANSACTIONS CONTEMPLATED HEREBY.
SECTION 14.6 REPLACEMENT NOTES. If any Notes becomes
mutilated and is surrendered by the applicable Lender to the Borrower, or if any
Lender claims that any of its Notes has been lost, destroyed or wrongfully
taken, the Borrower shall execute and deliver to such Lender a replacement
Notes, upon the delivery by such Lender of an indemnity to the Borrower to save
it and any agent of it harmless in respect of such loss, destruction or wrongful
taking with respect to such Notes.
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SECTION 14.7 MARSHALLING; RECAPTURE. Neither the
Administrative Agent nor any Lender shall be under any obligation to ▇▇▇▇▇▇▇▇
any assets in favor of the Borrower or any other party or against or in payment
of any or all of the Obligations. To the extent any Lender receives any payment
by or on behalf of the Borrower, which payment or any part thereof is
subsequently invalidated, declared to be fraudulent or preferential, set aside
or required to be repaid to the Borrower or its estate, trustee, receiver,
custodian or any other party under any Bankruptcy Law, state or federal law,
common law or equitable cause, then, to the extent of such payment or repayment,
the obligation or part thereof which has been paid, reduced or satisfied by the
amount so repaid shall be reinstated by the amount so repaid and shall be
included within the liabilities of Borrower to such Lender as of the date such
initial payment, reduction or satisfaction occurred.
SECTION 14.8 LIMITATION OF LIABILITY. No claim may be made
by the Borrower, any Guarantor or any other Person against the Administrative
Agent, the Arranger or any Lender or the Affiliates, directors, officers,
employees, attorneys or agents of any of them for any special, indirect,
consequential or punitive damages in respect of any claim for breach of contract
or any theory of liability arising out of or related to the transactions
contemplated by this Agreement or the other Loan Documents, or any act, omission
or event occurring in connection therewith; and the Borrower and each Guarantor
hereby waive, release and agree not to ▇▇▇ and shall cause each of its
respective Subsidiaries to waive, release or agree not to ▇▇▇ (if required),
upon any claim for any such damages, whether or not accrued and whether or not
known or suspected to exist in its favor.
SECTION 14.9 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 be otherwise within the limitations of, another
covenant shall not avoid the occurrence of a Default or Event of Default if such
action is taken or condition exists.
SECTION 14.10 CURRENCY INDEMNITY. The Borrower acknowledges
and agrees that this is a credit transaction where specification of dollars is
of the essence and dollars shall be the currency of account and payment in all
events. If, pursuant to a judgment or for any other reason, payment shall be
made in another currency and such payment, after prompt conversion to dollars
and transfer to New York City in accordance with normal banking procedures,
falls short of the sum due the Lenders in dollars, the Borrower shall pay the
Lender such shortfall and the Lenders shall have a separate cause of action for
such amount.
SECTION 14.11 WAIVER OF IMMUNITY. To the extent that the
Borrower or any Guarantor has or hereafter may acquire any immunity from:
(a) the jurisdiction of any court of (i) any jurisdiction
in which the Borrower or any Guarantor owns or leases property or assets or
(ii) the United States, the State of New York or any political subdivision
thereof; or
(b) from any legal process (whether through service of
notice, attachment prior to judgment, attachment in aid of execution, execution
or otherwise) with respect to itself or its property and assets, this
Agreement, any Loan Document or actions to enforce judgments in respect of any
thereof,
it hereby irrevocably waives such immunity in respect of its obligations under
the above-referenced document.
SECTION 14.12 FREEDOM OF CHOICE. The submission to the
jurisdiction of the courts referred to in this Article XIV shall not (and shall
not be construed so as to) limit the right of any Lender to
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take proceedings against the Borrower or any Guarantor in the courts of any
country in which the Borrower or such Guarantor has assets or in any other court
of competent jurisdiction nor shall the taking of proceedings in any one or more
jurisdictions preclude the taking of proceedings in any other jurisdiction
(whether concurrently or not) if and to the extent permitted by applicable law.
SECTION 14.13 SUCCESSORS AND ASSIGNS. Whenever in this
Agreement any of the parties hereto is referred to, such reference shall be
deemed to include the successors and assigns of such party; and all covenants
and agreements of the Borrower and each Guarantor in this Agreement shall bind
their respective successors and assigns. Neither the Borrower nor any Guarantor
may assign or transfer any of its rights or obligations hereunder (by operation
of law or otherwise) without the prior written consent of the Majority Lenders.
SECTION 14.14 MERGER. This Agreement, the Exchange
Indenture, the Escrow Agreement and the other documents executed in connection
therewith constitutes the entire contract among the parties relating to the
subject matter hereof and supersedes any and all previous agreements among the
parties relating to the subject matter hereof, except for those provisions in
the Fee Letter and the Engagement Letter that are in addition to the provisions
contained herein.
SECTION 14.15 SEVERABILITY CLAUSE. In case any provision in
this Agreement or any Notes shall be invalid, illegal or unenforceable in any
jurisdiction, the validity, legality and enforceability of the remaining
provisions shall not in any way be affected or impaired thereby and such
provision shall be ineffective in such jurisdiction only to the extent of such
invalidity, illegality or unenforceability.
SECTION 14.16 REPRESENTATIONS, WARRANTIES AND AGREEMENTS TO
SURVIVE DELIVERY. All representations, warranties and agreements contained in or
incorporated into this Agreement, or contained in Officers' Certificates
submitted pursuant hereto, shall remain operative and in full force and effect
until all Obligations under all of the Loan Documents have been repaid in full,
regardless of any investigation made by or on behalf of the Lenders or any
controlling Person of the Lenders, or by or on behalf of the Borrower or any
controlling Person of the Borrower, and shall survive delivery of the Notes.
SECTION 14.17 CONFIDENTIALITY. Each of the Arranger, the
Administrative Agent and the Lenders agrees to keep confidential all non-public
information provided to it by the Borrower or any Guarantor pursuant to this
Agreement or any other Loan Documents; provided that nothing herein shall
prevent the Arranger, the Administrative Agent or any Lender from disclosing any
such information (a) to the Arranger, the Administrative Agent, any other Lender
or any affiliate of any Lender, (b) to any assignee of any Lender or any
Participant (each, a "TRANSFEREE") or prospective Transferee which agrees to
comply with the provisions of this Section 14.17, (c) any of its employees,
directors, agents, attorneys, accountants and other professional advisors, (d)
upon the request or demand of any Governmental Entity having jurisdiction over
it, (e) in response to any order of any court or other Governmental Entity or as
may otherwise be required pursuant to any statute, rule, law or regulation, (f)
if requested or required to do so in connection with any litigation or similar
proceeding, (g) which has been publicly disclosed other than in breach of this
Section 14.17, (h) to any nationally recognized rating agency that requires
access to information about a Lender's investment portfolio in connection with
ratings issued with respect to such Lender or (i) in connection with the
exercise of any remedy hereunder or under any other Loan Document.
SECTION 14.18 INTERCREDITOR AGREEMENT. Each Lender by its
signature hereto or by its execution of an Assignment and Acceptance hereby
authorizes and directs and ratifies the execution and delivery by the
Administrative Agent of the Intercreditor Agreement and each Lender agrees to be
bound by the provisions thereof and shall have the rights and obligations of a
Lender under the Intercreditor Agreement
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as provided therein to the same extent as if such Lender was a party thereto.
[signature pages follow]
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
KEY ENERGY GROUP, INC.
By:________________________________
Name:
Title:
[Insert name and signature block for
each Guarantor]
By:________________________________
Name:
Title:
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Administrative Agent
By:_______________________________
Name:
Title:
▇▇▇▇▇▇ BROTHERS INC.,
as Arranger
By:_______________________________
Name:
Title:
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LENDERS:
Commitment Amount:
$________________________
▇▇▇▇▇▇ COMMERCIAL PAPER INC.
By: _______________________________,
Name:
Title:
Wire Transfer Instructions
Name of Bank: Bankers Trust Company
Address: ▇ ▇▇▇▇▇▇ ▇▇▇▇▇▇
▇▇▇ ▇▇▇▇, ▇▇▇ ▇▇▇▇ ▇▇▇▇▇
ABA#: ▇▇▇▇▇▇▇▇▇
For the account of
NYLTD Loan Services Onmibus Account
Account No.: ▇▇-▇▇▇-▇▇▇
FOR FURTHER CREDIT TO ▇▇▇▇▇▇ COMMERCIAL
PAPER INC.
Reference: LCPI Key Energy
Attention: ▇▇▇▇ ▇▇▇▇▇▇▇
Telephone: ▇▇▇-▇▇▇-▇▇▇▇
Fax: ▇▇▇-▇▇▇-▇▇▇▇
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EXHIBIT A
FORM OF
ASSIGNMENT AND ACCEPTANCE
Reference is made to the Bridge Loan Agreement, dated as of
September 14, 1998 (as amended, supplemented or otherwise modified from time to
time, the "BRIDGE LOAN AGREEMENT"), by and among Key Energy Group, Inc., a
Maryland corporation (the "BORROWER"), the Guarantors party thereto, the Lenders
party thereto, ▇▇▇▇▇▇ Brothers Inc., as Arranger, and ▇▇▇▇▇▇ Commercial Paper
Inc., as Administrative Agent for the Lenders (in such capacity, the
"ADMINISTRATIVE AGENT"). Unless otherwise defined herein, terms defined in the
Bridge Loan Agreement and used herein shall have the meanings given to them in
the Bridge Loan Agreement.
The Assignor identified on Schedule I hereto (the
"ASSIGNOR") and the Assignee identified on Schedule I hereto (the "ASSIGNEE")
agree as follows:
1. The Assignor hereby irrevocably sells and assigns to the
Assignee without recourse to the Assignor, and the Assignee hereby irrevocably
purchases and assumes from the Assignor without recourse to the Assignor, as of
the Effective Date (as defined below), the percentage interest described in
Schedule 1 hereto (the "ASSIGNED INTEREST") in and to the Assignor's rights and
obligations under the Bridge Loan Agreement (the "ASSIGNED FACILITIES"), in a
principal amount for the Assigned Facilities as set forth on Schedule I hereto.
2. The Assignor (a) makes no representation or warranty and
assumes no responsibility with respect to any statements, warranties or
representations made in or in connection with the Bridge Loan Agreement or with
respect to the execution, legality, validity, enforceability, genuineness,
sufficiency or value of the Bridge Loan Agreement, any other Loan Document or
any other instrument or document furnished pursuant thereto, other than that the
Assignor has not created any adverse claim upon the interest being assigned by
it hereunder and that such interest is free and clear of any such adverse claim;
(b) makes no representation or warranty and assumes no responsibility with
respect to the financial condition of the Borrower, any of its Subsidiaries or
any other obligor or the performance or observance by the Borrower, any of its
Subsidiaries or any other obligor of any of their respective obligations under
the Bridge Loan Agreement or any other Loan Document or any other instrument or
document furnished pursuant hereto or thereto; and (c) attaches any Notes held
by it evidencing the Assigned Facilities and (i) requests that the
Administrative Agent, upon request by the Assignee, exchange the attached Notes
for a new Note or Notes payable to the Assignee and (ii) if the Assignor has
retained any interest in the Assigned Facility, requests that the Administrative
Agent exchange the attached Notes for a new Note or Notes payable to the
Assignor, in each case in amounts which reflect the assignment being made hereby
(and after giving effect to any other assignments which are effective on the
Effective Date).
3. The Assignee (a) represents and warrants that it is
legally authorized to enter into this Assignment and Acceptance; (b) confirms
that it has received a copy of the Bridge Loan Agreement, and all schedules and
exhibits thereto together with copies of the financial information delivered
pursuant to Section 4.1 thereof and such other documents and information as it
has deemed appropriate to make its own credit analysis and decision to enter
into this Assignment and Acceptance; (c) agrees that it will, independently and
without reliance upon the Assignor, the Administrative Agent or any other Lender
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit decisions in taking or not taking action
under the Bridge Loan Agreement, the other Loan Documents
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or any other instrument or document furnished pursuant hereto or thereto; (d)
appoints and authorizes the Administrative Agent to take such action as agent on
its behalf and to exercise such powers and discretion under the Bridge Loan
Agreement, the other Loan Documents or any other instrument or document
furnished pursuant hereto or thereto as are delegated to the Administrative
Agent by the terms thereof, together with such powers as are incidental
thereto; (e) agrees that it will be bound by the provisions of the Bridge Loan
Agreement and will perform in accordance with its terms all the obligations
which by the terms of the Bridge Loan Agreement are required to be performed by
it as a Lender; and (f) agrees that it shall have no recourse against the
Assignor with respect to any matters relating to the Bridge Loan Agreement, the
other Loan Documents or any others instrument or documents furnished pursuant
hereto or thereto.
4. The Assignor hereby assigns to Assignee all of its
rights and obligations under the Fee Letter with respect to the Assigned
Interest.
5. The effective date of this Assignment and Acceptance
shall be the Effective Date of Assignment described in Schedule I hereto (the
"EFFECTIVE DATE"). Following the execution of this Assignment and Acceptance, it
will be delivered to the Administrative Agent for acceptance by it and recording
by the Administrative Agent pursuant to Section 6.2 of the Bridge Loan
Agreement, effective as of the Effective Date (which shall not, unless otherwise
agreed to by the Administrative Agent, be earlier than five Business Days after
the date of such acceptance and recording by the Administrative Agent).
6. Upon such acceptance and recording, from and after the
Effective Date, the Administrative Agent shall make all payments in respect of
the Assigned Interest (including payments of principal, interest, fees and other
amounts) to the Assignor for amounts which have accrued to the Effective Date
and to the Assignee for amounts which have accrued subsequent to the Effective
Date. The Assignor and the Assignee shall make all appropriate adjustments in
payments by the Administrative Agent for periods prior to the Effective Date or
with respect to the making of this assignment directly between themselves.
7. From and after the Effective Date, (a) the Assignee
shall be a party to the Bridge Loan Agreement and, to the extent provided in
this Assignment and Acceptance, have the rights and obligations of a Lender
thereunder and under the other Loan Documents and shall be bound by the
provisions thereof and (b) the Assignor shall, to the extent provided in this
Assignment and Acceptance, relinquish its rights and be released from its
obligations under the Bridge Loan Agreement.
8. THIS ASSIGNMENT AND ACCEPTANCE SHALL BE GOVERNED BY AND
CONSTRUED IN ACCORDANCE WITH THE LAWS OF THE STATE OF NEW YORK.
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IN WITNESS WHEREOF, the parties hereto have caused this
Assignment and Acceptance to be executed as of the date first above written by
their respective duly authorized officers on Schedule I hereto.
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Schedule 1
to Assignment and Acceptance
Name of Assignor: ____________________________
Name of Assignee: ____________________________
Effective Date of Assignment: ___________________
Credit Facility Assigned Principal Commitment Percentage Assigned(1)
Commitment Amount
Assigned
$---------------- ----- . ---------%
--------------------
(1) Calculate the Commitment Percentage that is assigned at least 9 decimal
places and show as a percentage of the aggregate commitment of all Lenders.
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[Name of Assignee] [Name of Assignor]
By: _____________________________ By: ___________________________________
Name Name:
Title: Title:
Accepted:
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Administrative Agent
By: _____________________________
Name:
Title:
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IN WITNESS WHEREOF, the parties hereto have duly executed
this Agreement as of the date first above written.
KEY ENERGY GROUP, INC
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name:
Title:
GUARANTORS
YALE E. KEY, INC.
WELLTECH EASTERN, INC.
KEY ENERGY DRILLING INC.
KALKASKA OILFIELD SERVICES, INC.
ODESSA EXPLORATION INCORPORATED
WELL-CO OIL SERVICE, INC.
▇▇▇▇▇▇▇ WELL SERVICE, INC.
▇▇▇▇▇▇ WELL SERVICE, INC.
RAM OIL WELL SERVICE, INC.
▇▇▇▇▇▇▇ TRUCKING CO., INC.
LANDMARK FISHING & RENTAL, INC.
▇▇▇▇▇▇ WELL SERVICE, INC.
FRONTIER WELL SERVICE, INC.
KEY ROCKY MOUNTAIN, INC.
KEY FOUR CORNERS, INC.
KEY ENERGY SERVICES-SOUTH TEXAS, INC.
WELLTECH MID-CONTINENT, INC.
▇▇▇▇▇▇ WELL SERVICING, INC.
MIDLAND ACQUSITION CORP.
▇▇▇▇▇▇ BROTHERS, INC.
▇.▇ ▇▇▇▇▇▇ WELL SERVICE COMPANY
▇▇▇▇▇▇ OILFIELD SERVICE & SUPPLY, INC.
▇▇▇▇▇ SERVICE CO.
▇▇▇▇▇ WELL SERVICE, INC.
▇▇▇▇▇ TRANSPORTATION, INC.
INDUSTRIAL OILFIELD SUPPLY, INC.
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇▇
-----------------------
Name:
Title:
of all the foregoing companies
97
▇▇▇▇▇▇ COMMERCIAL PAPER INC.,
as Administrative Agent
By: /s/ ▇▇▇▇▇▇ ▇▇▇
----------------------------
Name:
Title:
▇▇▇▇▇▇ BROTHERS INC.,
as Arranger
By: /s/ ▇▇▇▇▇▇▇ ▇▇▇▇▇▇▇▇▇▇
-----------------------------
Name:
Title:
98
LENDERS:
Commitment Amount:
$
------------------------ ▇▇▇▇▇▇ COMMERCIAL PAPER INC.
By: /s/ ▇▇▇▇▇▇ ▇▇▇ ,
------------------------
Name:
Title:
Wire Transfer Instructions
Name of Bank:
Address:
--------------
ABA#:
----------------
For the account of
-----------------
Account No.:
------------------
FOR FURTHER CREDIT TO ▇▇▇▇▇▇ COMMERCIAL PAPER INC.
Reference:
Attention:
------
Telephone:
------