1
EXHIBIT 10.62
REVOLVING CREDIT AGREEMENT
$20,000,000.00
SECURED REVOLVING LINE OF CREDIT
FROM
BANK ONE, TEXAS, N.A.
TO
HORIZON EXPLORATION LIMITED
October 21, 1997
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TABLE OF CONTENTS
PAGE
ARTICLE I. DEFINITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 1
ARTICLE II. THE LOAN . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.01 The Revolving Line . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 11
2.02 Advances and Payments of Principal Under the Note . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.03 Prepayment and Conversion . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 12
2.04 Interest Rate and Payments of Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
2.05 Increased Cost of Loans . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 15
2.06 Substitute Rate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
2.07 Change of Law . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.08 Advances to Satisfy Obligations of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
2.09 Mandatory Prepayment of the Notes . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
2.10 Borrowing Base Determination . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
ARTICLE III. CONDITIONS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.01 Receipt of Note, Agreement, and Certificate of Compliance . . . . . . . . . . . . . . . . . . . . . 18
3.02 Completion of Initial Public Offering . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 18
3.03 Receipt of Organizational Documents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.04 Receipt of Certified Copy of Corporate Proceedings and Certificates of Incumbency . . . . . . . . . 19
3.05 Receipt of Certificates of Incorporation and Existence . . . . . . . . . . . . . . . . . . . . . . . 19
3.06 Power of Attorney . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.07 Guaranty . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
3.08 Company Search . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.09 Opinion of Counsel . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.10 Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.11 Request for Advance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.12 Accuracy of Representations and Warranties and No Event of Default . . . . . . . . . . . . . . . . . 20
3.13 Legal Matters Satisfactory to Counsel to Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.14 No Material Adverse Change . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.15 Security Instruments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.16 Legal Fees . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.17 Domestic Affiliate Loan Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 20
3.18 Documents Required in connection with the addition of certain Borrowing Base Receivables . . . . . . 21
ARTICLE IV. REPRESENTATIONS AND WARRANTIES . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.01 Corporate Organization, Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . 21
4.02 Due Authorization . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.03 Valid and Binding Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.04 Scope and Accuracy of Financial Statements . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 21
4.05 Liabilities, Litigation and Restrictions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.06 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
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4.07 Authorizations and Consents . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 22
4.08 Compliance with Laws, Rules, Regulations and Orders . . . . . . . . . . . . . . . . . . . . . . . . 22
4.09 Proper Filing of Tax Returns and Payment of Taxes Due . . . . . . . . . . . . . . . . . . . . . . . 23
4.10 ERISA . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.11 Investment Company Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.12 Public Utility Holding Company Act Compliance . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.13 Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 23
4.14 Subsidiaries . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.15 Existing Indebtedness . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.16 Material Commitments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 24
4.17 Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
4.18 Material Misstatements and Omissions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
ARTICLE V. AFFIRMATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.01 Use of Funds . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.02 Maintenance and Access to Records . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
5.03 Quarterly Unaudited Financial Statements of Borrower . . . . . . . . . . . . . . . . . . . . . . . . 25
5.04 Annual Audited Financial Statements of Borrower . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.05 Compliance Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.06 Monthly Borrowing Base Certificate . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.07 Statement of Material Adverse Change in Condition . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.08 Additional Information . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.09 Compliance with Laws and Payment of Assessments and Charges . . . . . . . . . . . . . . . . . . . . 26
5.10 Maintenance of Existence and Good Standing . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 26
5.11 Further Assurances . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.12 Initial Expenses of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.13 Subsequent Expenses of Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.14 Maintenance of Tangible Property . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
5.15 Maintenance of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.16 Inspection of Tangible Assets/Right of Audit . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.17 Payment of Note and Performance of Obligations . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.18 ERISA Reports . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.19 Financial Covenants . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 28
5.20 Compliance with Environmental Laws . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.21 Hazardous Substances Indemnification . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 29
5.22 Changes in Management . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.23 Payment of Taxes, Etc . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.24 Notice of Litigation . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.25 Notices Regarding Account Debtors . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.26 Notice of Change of Principal Offices . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.27 Payment of Accounts Payable . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 30
5.28 Security Account . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VI. NEGATIVE COVENANTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.01 Mortgages or Pledges of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
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6.02 Nature of Business . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.03 Sales of Assets . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.04 Cancellation of Insurance . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.05 Margin Stock . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.06 Changes in Business Structure . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
6.07 Transactions with Affiliates . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 31
ARTICLE VII. EVENTS OF DEFAULT . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.01 Enumeration of Events of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
7.02 Rights Upon Unmatured Event of Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
7.03 Rights Upon Default . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 33
ARTICLE VIII. MISCELLANEOUS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.01 Security Interests in Deposits and Right of Offset or Banker's Lien . . . . . . . . . . . . . . . . 34
8.02 Survival of Representations, Warranties and Covenants . . . . . . . . . . . . . . . . . . . . . . . 34
8.03 Notices and Other Communications . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 34
8.04 Parties in Interest . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.05 Renewals and Extensions . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.06 No Waiver by Bank . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.07 INDEMNIFICATION . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 35
8.08 GOVERNING LAW AND VENUE . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.09 Incorporation of Exhibits . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.10 Survival Upon Unenforceability . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.11 Rights of Third Parties . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 36
8.12 Amendments or Modifications of this Agreement . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.13 Agreement Construed as an Entirety . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.14 Number and Gender . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.15 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.16 Controlling Provision Upon Conflict . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.17 Time, Place and Method of Payments . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.18 Non-Application of Chapter 15 of Texas Credit Code . . . . . . . . . . . . . . . . . . . . . . . . . 37
8.19 Counterpart Execution . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
8.20 Disclosure and Use of Confidential Information . . . . . . . . . . . . . . . . . . . . . . . . . . . 38
EXHIBITS
EXHIBIT A Note
EXHIBIT B Compliance Certificate
EXHIBIT C Security Instruments
EXHIBIT D Form of Request for Advance
EXHIBIT E Form of Monthly Borrowing Base Certificate
EXHIBIT F Matters to be covered by the opinion of counsel to Borrower
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SCHEDULES
4.05 Litigation
4.14 Subsidiaries
4.15 Existing Indebtedness
4.16 Material Commitments
4.17 Certificates of Insurance
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REVOLVING CREDIT AGREEMENT
THIS REVOLVING CREDIT AGREEMENT, is entered into as of the
21st day of October 1997, by and between HORIZON EXPLORATION LIMITED, an
English company with Registered Number 2804983, having its Registered Office at
▇▇▇▇▇▇ House, ▇▇-▇▇ ▇▇▇▇▇ ▇▇▇▇▇▇▇ ▇▇▇▇, ▇▇▇▇▇▇▇▇▇ ▇▇▇▇▇, ▇▇▇▇ ▇▇▇ ▇▇▇
("Borrower"), and BANK ONE, TEXAS, N.A., a national banking association (the
"Bank").
W I T N E S S E T H
WHEREAS, Borrower desires to institute a revolving line of
credit with Bank for purposes of satisfying Borrower's working capital needs
and for general corporate purposes;
WHEREAS, Bank is willing to institute such a revolving line of
credit for Borrower in accordance with the terms and provisions hereof;
NOW, THEREFORE, in consideration of the mutual covenants and
agreements herein contained, and the mutual benefits to be derived herefrom,
Bank and Borrower agree as follows:
ARTICLE I. DEFINITIONS
As used in this Agreement, the following terms shall have the
meanings indicated:
"Accounts," "Account Debtor," "Chattel Paper," "Contracts,"
"Documents," "Equipment," "Fixtures," "General Intangibles," "Goods,"
"Instruments," and "Inventory" shall have the same respective meanings as are
given to those terms in the Uniform Commercial Code as presently adopted and in
effect in the State of Texas.
"Affiliate" means, as applied to any Person, any other Person,
directly or indirectly, controlling, controlled by, or under common control
with, that Person. For purposes of this definition, "control" (including, with
correlative meanings, the terms "controlling", "controlled by", and "under
common control with"), as applied to any Person, means the possession, directly
or indirectly, of the power to direct or cause the direction of the management
and policies of that Person, whether through the ownership of voting
securities, by contract, or otherwise.
"Agreement" means this Revolving Credit Agreement, as the same
may be amended or supplemented from time to time.
"Applicable Spread" means 1.375% when the ratio of the
Indebtedness of the Ultimate Parent and its Subsidiaries on a consolidated
basis to the Tangible Net Worth as of the last day of the most recently ended
fiscal quarter of Borrower is less than 1.0:1.0, and 1.625% when such ratio is
equal to or greater than 1.0:1.0.
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"Approved Eligible Receivables" means Eligible Receivables
that are neither U.S. Eligible Receivables, U.K. Eligible Receivables, Foreign
or Non-graded Domestic Eligible Receivables, nor Secured Eligible Receivables,
but which have nevertheless been approved in writing by Bank, in its sole
discretion.
"Bank" has the meaning set forth in the preamble hereof.
"Base Rate" means, at any time, the rate of interest per
annum then most recently established and published by the Bank as its Base
Rate, which is eight and one-half percent (8.50%) as of the date of this
Agreement.
"Base Rate Loan" means any Loan for which interest thereon is
to be computed at the Floating Rate in accordance with this Agreement.
"Borrower" has the meaning set forth in the preamble hereof.
"Borrower's Agent" means ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇, or such other
individual acceptable to Bank as may, from time to time, be the duly appointed,
qualified and acting agent and attorney-in-fact and agent for service of
process of Borrower, in accordance with Section 3.06.
"Borrowing Base" means, at any time, the amount of the
Borrowing Base Receivables accurately computed on the Monthly Borrowing Base
Certificate most recently delivered to, and accepted by, the Bank in accordance
with Section 2.10 and other relevant provisions of this Agreement.
"Borrowing Base Receivables" means the sum of: (a) 90% of U.S.
Eligible Receivables, (b) 90% of U.K. Eligible Receivables, (c) 80% of Foreign
or Non graded Domestic Eligible Receivables, (d) 100% of Secured Eligible
Receivables, and (e) 80% of Approved Eligible Receivables; provided that no
Account shall be included in more than one of the categories listed in this
definition.
"Business Day" shall mean: (a) for all purposes, a day other
than a Saturday, Sunday or legal holiday for commercial banks under the laws of
the State of Texas or the laws of the United States of America, and (b) in
addition, for purposes of any LIBOR Loan, a day that satisfies the requirements
of clause (a) and is a day on which commercial banks in London, England are
open for domestic or international business.
"Cash Flow" shall be defined for any fiscal quarter of the
Ultimate Parent as the sum of net income plus depreciation and other non-cash
charges less non-cash income of the Ultimate Parent and its Subsidiaries on a
consolidated basis during such quarter.
"Closing" means the date on which this Agreement is executed
and delivered by Bank and Borrower.
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"Compliance Certificate" means the certificate of Borrower's
Agent required to be submitted to Bank from time to time pursuant to this
Agreement, which certificate shall be in the form attached hereto as Exhibit
"B."
"Current Assets" and "Current Liabilities" means at any time,
all assets or liabilities, respectively, that should in accordance with GAAP,
be classified as current assets or current liabilities, respectively, on a
consolidated balance sheet of the Ultimate Parent and its Subsidiaries.
"Debt Service" shall be defined for any fiscal quarter of the
Ultimate Parent as the sum of (i) principal amounts required to be paid by the
Ultimate Parent and its Subsidiaries during such quarter on Indebtedness other
than in connection with this Loan, plus (ii) lease payments required to be paid
by the Ultimate Parent and its Subsidiaries during such quarter in connection
with capital leases, plus (iii) the outstanding principal balance due at the
beginning of such quarter on the Loans hereunder, divided by sixteen.
"Domestic Affiliate Loan Agreement" means that certain
Revolving Credit Agreement dated October 12, 1997, by and among EAGLE
GEOPHYSICAL, INC., a Delaware corporation, EAGLE GEOPHYSICAL ONSHORE, INC., a
Delaware corporation, EAGLE GEOPHYSICAL OFFSHORE, INC., a Delaware corporation,
EAGLE GEOPHYSICAL DE MEXICO, INC., a Delaware corporation, EAGLE GEOPHYSICAL
GOM, INC., a Texas corporation, and Bank.
"Domestic Affiliate Loans" means, cumulatively, the aggregate
sum of all money advanced by Bank to the borrowers that are parties to the
Domestic Affiliate Loan Agreement.
"Eligible Receivable" means, at any time, an Account that
conforms and continues to conform to the following conditions:
(A) The Account arose from a bona fide outright sale of Goods or
services by the Borrower, and such Goods have been shipped to the
appropriate account debtors or their designees (or the sale has
otherwise been consummated), or the services have been performed for
the appropriate account debtors;
(B) The Account is based upon an enforceable order or contract,
written or oral, for Goods shipped or held or for services performed,
and the same were shipped, held, or performed in accordance with such
order or contract;
(C) The title of the Borrower to the Account and, except as to the
account debtor, to any Goods is absolute and is not subject to any
prior assignment, claim, lien, or security interest, except Permitted
Liens;
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(D) The amount shown on the books of the Borrower and on any
invoice or statement delivered to the Bank is owing to the Borrower,
less any partial payment that has been made thereon by anyone;
(E) The Account shall be eligible only to the extent that it is
not subject to any claim of reduction, counterclaim, set-off,
recoupment, or any claim for credits, allowances, or adjustments made
by the account debtor because of returned, inferior, or damaged Goods
or unsatisfactory services, or for any other reason; provided,
however, that the existence of any such claim shall not cause an
Account to be ineligible if, and to the extent that, Borrower
substantiates to the reasonable satisfaction of Bank that such
asserted claim, or any part thereof, is invalid;
(F) The account debtor has not returned or refused to retain, or
otherwise notified the Borrower of any dispute concerning, or claimed
nonconformity of, any of the Goods or services from the sale of which
the Account arose;
(G) The Account is due and payable not more than thirty (30) days
from the date of the invoice therefor;
(H) The Account is not more than ninety (90) days past the date of
the invoice therefor; provided that an Account that has arisen by
virtue of Borrower's delivery of Goods or performance of services to a
location outside of the United States of America or that is owed by an
Account Debtor whose principal place of business is outside the United
States of America shall not be more than one hundred-twenty (120) days
past the date of the invoice therefor.
(I) The Account does not arise out of a contract with, or order
from, an account debtor that, by its terms, forbids or makes void or
unenforceable the assignment by the Borrower to the Bank of the
Account arising with respect thereto;
(J) The Borrower has not received any note, trade acceptance,
draft, or other Instrument with respect to, or in payment of, the
Account, nor any Chattel Paper with respect to the Goods giving rise
to the Account, unless, if any such Instrument or Chattel Paper has
been received, the Borrower promptly notifies the Bank and, at the
latter's request, endorses or assigns and delivers the same to the
Bank;
(K) The Borrower has not received any notice of the death of the
account debtor or a partner thereof; nor of the dissolution,
termination of existence, insolvency, business failure, appointment of
a receiver for any part of the property of, assignment for the benefit
of creditors by, or the filing of a petition bankruptcy or the
commencement of any proceeding under any bankruptcy or insolvency laws
by or against, the account debtor;
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(L) The Account Debtor is not a Subsidiary or other Affiliate of
the Borrower, provided, however, that for purposes of this paragraph
(L) only, Seitel, Inc., a Delaware corporation, and its subsidiaries
shall not be deemed Affiliates of Borrower;
(M) Not more than 20% in value of the Account Debtor's aggregate
Accounts owed to Borrower fail to satisfy clause (H) of this
definition; and
(N) The Bank has not deemed such account ineligible (i) because of
a reasonable uncertainty about the creditworthiness of the account
debtor; (ii) because the Bank is not satisfied, in its reasonable
discretion, that the Security Instruments duly executed by Borrower
have created a valid, perfected, enforceable security interest in
favor of Bank under the laws of a jurisdiction outside the United
States where the goods or services to which such Account relates were
delivered or performed, respectively, or under a jurisdiction outside
the United States in which the Account Debtor maintains its principal
place of business; or (iii) because the Bank otherwise reasonably
considers the collateral value thereof to the Bank to be impaired or
its ability to realize such value to be insecure.
"Environmental Laws" means (a) the following United States
federal laws as they may be cited, referenced and amended from time to time:
the Clean Air Act, the Clean Water Act, the Safe Drinking Water Act, the
Comprehensive Environmental Response, Compensation and Liability Act, the
Endangered Species Act, the Resource Conservation and Recovery Act, the
Occupational Safety and Health Act, the Hazardous Materials Transportation Act,
the Superfund Amendments and Reauthorization Act, and the Toxic Substances
Control Act; (b) any and all environmental statutes of any state in which
property of Borrower is situated or in which Borrower has transacted its
business, as they may be cited, referenced and amended from time to time; (c)
any rules or regulations promulgated under or adopted pursuant to the above
federal and state laws; (d) any other federal, state or local statute or any
requirement, rule, regulation, code, ordinance or order adopted pursuant
thereto, and (e) any environmental statute, rule, regulation, code, ordinance
or order of any country or countries, other than the United States of America,
in which property of Borrower is situated or in which Borrower has transacted
its business, as they may be cited, referenced, and amended from time to time
including, without limitation, those relating to the generation,
transportation, treatment, storage, recycling, disposal, handling or release of
Hazardous Substances.
"ERISA" means the Employee Retirement Income Security Act of
1974, as amended from time to time, and the regulations and published
interpretations thereof.
"ERISA Affiliate" means any trade or business (whether or not
incorporated) which together with Borrower would be treated as a single
employer under Section 4001 of ERISA.
"Event of Default" means any of the events specified in
Section 7.01 of this Agreement.
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"Financial Statements" means the statements of the financial
condition of the indicated Person, as at the point in time and for the period
indicated and consisting of at least a consolidated balance sheet, income
statement and statement of cash flows, and, when the foregoing are audited,
accompanied by the certification of such Person's independent certified public
accountants and footnotes to any of the foregoing, all of which shall be
prepared in accordance with GAAP applied on a basis consistent with that of the
preceding year.
"Floating Rate" means the Base Rate in effect from time to
time.
"Foreign or Non-graded Domestic Eligible Receivables" include:
(a) Eligible Receivables due from Investment Grade Account Debtors that are
neither U.S. Eligible Receivables nor U.K. Eligible Receivables, and (b)
Eligible Receivables due from an Account Debtor that is not an Investment Grade
Account Debtor, when the principal place of business of such Account Debtor and
the location to which the goods were delivered or at which the services were
performed are all located within the United States of America.
"GAAP" means generally accepted accounting principles, applied
on a consistent basis, as set forth in Opinions of the Accounting Principles
Board of the American Institute of Certified Public Accountants and/or in
statements of the Financial Accounting Standards Board and/or their respective
successors and which are applicable in the circumstances as of the date in
question. Accounting principles are applied on a "consistent basis" when the
accounting principles observed in a current period are comparable in all
material respects to those accounting principles applied in a preceding period.
"Hazardous Substances" means flammables, explosives,
radioactive materials, hazardous wastes, asbestos or any material containing
asbestos, polychlorinated biphenyls (PCBs), toxic substances or related
materials, petroleum and petroleum products and associated oil or natural gas
exploration, production and development wastes or any substances that would be
defined as "hazardous substances", "hazardous materials", "hazardous wastes" or
"toxic substances" under the Comprehensive Environmental Response, Compensation
and Liability Act, as amended, the Superfund Amendments and Reauthorization
Act, as amended, the Hazardous Materials Transportation Act, as amended, the
Resource Conservation and Recovery Act, as amended, the Toxic Substances
Control Act, as amended, or any other Environmental Laws now or hereafter
enacted or promulgated by any regulatory authority or governmental body,
including, without limitation, any statute, rule, regulation, code or ordinance
of any country or countries in which property of Borrower is situated or in
which Borrower has transacted its business, as they may be cited, referenced,
and amended from time to time.
"Indebtedness" means, as to any Person, (a) all items of
indebtedness or liability (other than capital, surplus, deferred credits and
reserves, as such) which in accordance with GAAP would be included in
determining total liabilities as shown on the liability side of a balance sheet
as at the date as of which Indebtedness is to be determined, (b) indebtedness
secured by any mortgage, pledge or lien existing on or encumbering property
owned by the Person whose Indebtedness is being determined, whether or not the
indebtedness secured thereby shall have been
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assumed (provided that if the indicated Person is not liable for payment of
such indebtedness, the amount thereof shall be deemed not to exceed the book
value of the encumbered property), and (c) all indebtedness of others which
such Person has directly or indirectly guaranteed, endorsed (otherwise than for
collection or deposit in the ordinary course of business), discounted with
recourse, agreed (contingently or otherwise) to purchase or repurchase or
otherwise acquire, or in respect of which such Person has agreed to supply or
advance funds (whether by way of loan, purchase of securities or capital
contribution, through a commitment to pay for property or services regardless
of the nondelivery of such property or the nonfurnishing of such services or
otherwise), or in respect of which such Person has otherwise become directly or
indirectly liable, contingently or otherwise, whether now existing or hereafter
arising.
"Initial Public Offering" shall have the meaning set forth in
Section 3.02.
"Interest Rate(s)" means the Floating Rate or the LIBOR Rate,
as applicable.
"Interest Period" means as to any LIBOR Loan the period
commencing on and including the date of such Loan (or on the effective date of
the election pursuant to Section 2.04(B) by which such Loan became a LIBOR
Loan) and ending on and including the day preceding the same day (or if there
is no such same day, the day preceding the last day) in the 1st, 2nd, 3rd, or
6th calendar month thereafter, as selected by the Borrower in accordance with
Section 2.04(B), and thereafter such period commencing on and including the day
immediately following the last day of the then ending Interest Period for such
Loan and ending on and including the day preceding the day corresponding to the
first day of such Interest Period (or if there is no such corresponding day,
the day preceding the last day), in the 1st, 2nd, 3rd, or 6th calendar month
thereafter, as so selected by the Borrower; provided, however, that if any such
Interest Period would otherwise end on a day prior to a day that is not a
Business Day it shall be extended so as to end on the day prior to the next
succeeding Business Day unless the same would fall in a different calendar
month, in which case such Interest Period shall end on the day preceding the
first Business Day preceding such next succeeding Business Day.
"Investment" in any Person means any stock, bond, note or
other evidence of Indebtedness or any other security (other than current trade
and customer accounts) of, or loan to, such Person.
"Investment Grade Account Debtor" means an Account Debtor with
a corporate credit rating equal to or better than any one of the following
minimum ratings: (a) BBB-, by Standard & Poors, (b) BBB-, by Duff & ▇▇▇▇▇▇, or
(c) Baa3, by ▇▇▇▇▇'▇ Investors Service.
"LIBOR" means, in respect to any Interest Period, the rate per
annum determined by the Bank to be the quotient of (a) the rate quoted, on an
immediately available funds basis, to the Bank, at approximately 10:00 a.m.
local time in Houston, Texas on the date one (1) Business Day prior to the
first day of such Interest Period, for the offering by leading banks in the
London interbank market of Dollars for deposit with the Bank for a period
comparable to such Interest Period and in an amount comparable to the amount of
the Loan determined by the Bank to be
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outstanding during such Interest Period and as to which the LIBOR Rate is to be
determined, divided by (b) 1.0, minus the Reserve Percentage expressed as a
decimal, for such Interest Period.
"LIBOR Loan" means any Loan from time to time for which
interest thereon is to be computed on the basis of the LIBOR Rate.
"LIBOR Rate" means a rate per annum equal to the sum of LIBOR
for the Interest Period for which interest is to be determined at the LIBOR
Rate, plus the Applicable Spread.
"Limitation Period" means any period while any amount remains
owing on the Note and interest on such amount calculated at the Floating Rate,
plus any fees payable hereunder and deemed to be interest under applicable law,
would exceed the Maximum Rate.
"Loan" means, singly, any advance by Bank to Borrower pursuant
to this Agreement and "Loans" means, cumulatively, the aggregate sum of all
money advanced by Bank to Borrower pursuant to this Agreement.
"Loan Documents" means this Agreement and all promissory
notes, security agreements, guaranties, and other instruments, documents, and
agreements executed and delivered pursuant to or in connection with this
Agreement, as such instruments, documents, and agreements may be amended,
modified, renewed, extended, or supplemented from time to time.
"Loan Excess" means, at any point in time, the amount, if any,
by which the outstanding balance on the Loans evidenced by the Note, plus the
aggregate of the face amount of all outstanding Letters of Credit exceeds the
Revolving Commitment then in effect.
"Maturity Date" means October 21, 2000.
"Maximum Rate" means the maximum non-usurious interest rate
permissible under applicable laws of the State of Texas or those of the United
States of America applicable to Bank.
"Monthly Borrowing Base Certificate" means a certificate of
Borrower's Agent attesting to Borrower's calculation of the Borrowing Base as
of the last day of the month preceding the month in which such certificate is
executed and delivered to the Bank pursuant to Section 2.10, in the form
attached hereto as Exhibit "E."
"Multi-employer Plan" means a plan described in Section
4001(a)(3) of ERISA which covers employees of Borrower or any ERISA Affiliate.
"Note" means that certain promissory note in the original face
amount of $20,000,000.00, dated of even date herewith, made by Borrower payable
to the order of Bank, in the form attached hereto as Exhibit "A," together with
all deferrals, renewals, extensions, amendments, modifications or
rearrangements thereof, which promissory note shall evidence the advances to
Borrower by Bank pursuant to Section 2.01 hereof.
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"Obligations" means all obligations, indebtedness, and
liabilities of Borrower to Bank, now existing or hereafter arising, including,
but not limited to, the indebtedness evidenced by the Note, whether direct,
indirect, related, unrelated, fixed, contingent, specified, unspecified, joint,
several, or joint and several, and all interest and fees accruing thereon and
all attorneys' fees and other expenses incurred in the enforcement or
collection thereof.
"Permitted Encumbrances" means:
(A) Liens for taxes, assessments, or similar charges,
incurred in the ordinary course of business that are not yet
due and payable;
(B) Claims or liens for taxes, assessments, or similar
charges, that are due and remain unpaid, if the validity or
amount thereof is being contested in good faith by appropriate
and lawful proceedings, so long as levy and execution thereon
have been stayed and continue to be stayed, and in Bank's sole
judgment they do not, in the aggregate, materially detract
from the value of the property of Borrower or any Subsidiary,
or materially impair the use thereof in the operation of its
business;
(C) Liens against Equipment or Fixtures to secure the
price payable by Borrower for the purchase of, or improvements
or accessions to, such Equipment or Fixtures, respectively;
and
(D) Liens in favor of Bank.
"Person" means an individual, company, corporation,
partnership, limited partnership, joint venture, trust, association,
unincorporated organization or a government or any agency or political
subdivision thereof.
"PBGC" means the Pension Benefit Guaranty Corporation or any
entity succeeding to any or all of its functions under ERISA.
"Power of Attorney" means the power of attorney duly executed
by Borrower pursuant to Section 3.06 of this Agreement.
"Prohibited Transaction" means any transaction set forth in
Section 406 of ERISA or Section 4975 of the Internal Revenue Code of 1954, as
amended from time to time.
"Reportable Event" means any of the events set forth in
Section 4043 of ERISA.
"Request for Advance" means the written request by the
Borrower for an advance by Bank pursuant to this Agreement, which Request for
Advance shall be in a form, and shall include the information and accompanying
supporting documentation, as prescribed in Exhibit "D" attached hereto.
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"Required Number" means: in the case of notices hereunder (i)
relative to borrowings, prepayments, elections of the LIBOR Rate, selections of
Interest Periods for, or other transactions in respect of, LIBOR Loans: two
(2) Business Days; or (ii) relative to all transactions in respect of Base Rate
Loans: one (1) Business Day; it being understood, however, that in the case of
notices involving transactions in respect of more than one type of Loan (such
as a change in type of Loan in accordance with Section 2.04(B)), "Required
Number" means that number of days, as indicated above in respect of the Loans
involved, which would constitute the longest applicable period of time.
"Reserve Percentage" means for any Interest Period, the
average (for such Interest Period) maximum rate at which reserves (including
any marginal, supplemental, or emergency reserves) are required to be
maintained during such Interest Period under Regulation D of the Federal
Reserve Board by member banks of the Federal Reserve System as it applies to
the Bank against "Eurocurrency liabilities" (as such term is used in Regulation
D). Without limiting the effect of the foregoing, the Reserve Percentage shall
reflect any other reserves required to be maintained by member banks by reason
of any regulatory change against (i) any category of liabilities that includes
deposits by reference to which the interest rate for LIBOR Loans is to be
determined as provided in this Agreement or (ii) any category of extensions of
credit or other assets that include LIBOR Loans. As of the date of this
Agreement the Reserve Percentage is zero.
"Revolving Commitment" means the obligation of Bank, subject
to the provisions of this Agreement and existing only through the last Business
Day prior to the Maturity Date, to advance to Borrower funds, not to exceed at
any one time outstanding an amount equal to the lesser of: (a) the Borrowing
Base then in effect, or (b) the positive difference between (i) $20,000,000.00,
minus (ii) the outstanding principal balance, from time to time, of all
Domestic Affiliate Loans.
"Secured Eligible Receivables" means Eligible Receivables that
are secured by letters of credit that have been approved in writing by Bank, in
its sole discretion.
"Security Account" shall have the meaning set forth in the
Charge on Receivables of even date herewith executed by or on behalf of
Borrower.
"Security Instruments" means the security instruments
described on Exhibit "C," in form and substance satisfactory to Bank, to be
executed by Borrower pursuant to Section 3.14, and any and all other
instruments or documents hereafter executed in connection with or as security
for the payment of the Note.
"Senior Debt" means all Indebtedness of the Ultimate Parent
and its Subsidiaries, on a consolidated basis, including the Indebtedness of
Borrower to Bank arising hereunder, excluding any Indebtedness that has been
subordinated to Borrower's Indebtedness to Bank on terms and conditions
acceptable to Bank, in its sole discretion.
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"Subsidiary" means (a) any corporation in which Borrower,
directly or indirectly through its Subsidiaries, owns more than fifty percent
(50%) of the stock of any class or classes having by the terms thereof the
ordinary voting power to elect a majority of the directors of such corporation;
and (b) any partnership, association, joint venture, or other entity in which
Borrower, directly or indirectly through its Subsidiaries, has more than a
fifty percent (50%) equity interest at the time.
"Tangible Net Worth" means the total assets of the Ultimate
Parent and its Subsidiaries on a consolidated bases exclusive of (a) those
assets classified as intangible, including, without limitation, goodwill,
patents, trademarks, trade names, copyrights, franchises and deferred charges,
(b) treasury stock and minority interests in any Person, (c) cash set apart and
held in a sinking or other analogous fund established for the purpose of
redemption or other retirement of capital stock, (d) to the extent not already
deducted from total assets, allowances for depreciation, depletion,
obsolescence and/or amortization of properties, uncollectible accounts, and
contingent but probable liabilities as to which an amount can be established,
(e) deferred taxes and (f) all assets arising from advances to officers, former
officers or sales representatives of the Ultimate Parent and its Subsidiaries
on a consolidated basis made outside of the ordinary course of business; less
total liabilities of the Ultimate Parent and its Subsidiaries on a consolidated
basis; all of the above being determined in accordance with GAAP.
"U.K. Eligible Receivables" means Eligible Receivables due
from an Investment Grade Account Debtor, when the principal place of business
of the Account Debtor and location to which the goods were delivered or at
which the services were performed are all located within the United Kingdom
(including the territorial waters thereof).
"Ultimate Parent" means Eagle Geophysical, Inc., a Delaware
corporation.
"Unmatured Event of Default" means any event or occurrence
which solely with the lapse of time or the giving of notice or both will ripen
into an Event of Default.
"U.S. Eligible Receivables" means Eligible Receivables due
from an Investment Grade Account Debtor, when the principal place of business
of such Account Debtor and location to which the goods were delivered or at
which the services were performed are all located within the United States of
America (including the territorial waters thereof).
Undefined financial accounting terms used in this Agreement
shall be defined in accordance with GAAP.
ARTICLE II. THE LOAN
2.01 The Revolving Line. Upon the terms and conditions
(including, without limitation, the right of Bank to terminate the Revolving
Commitment hereunder upon an Event of Default or an Unmatured Event of Default)
and relying on the representations and warranties contained in this Agreement,
Bank agrees, for a period from and after the date hereof through the
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last Business Day prior to the Maturity Date, to make advances for the account
of Borrower from time to time following receipt of a Request for Advance;
provided, however, that the aggregate principal amount of all Loans, at any one
time outstanding shall not exceed the Revolving Commitment. Borrower hereby
appoints Borrower's Agent as its agent and attorney-in-fact for the submission
of all Requests for Advance hereunder, which authorization shall be deemed a
power coupled with an interest and shall be irrevocable until all Indebtedness
evidenced by the Note has been fully and finally paid, all Obligations of
Borrower have been fully performed and discharged, and Bank is no longer
obligated under this Agreement to make any advances under the Revolving
Commitment.
Through the last Business Day prior to the Maturity Date,
Borrower may use this revolving credit by borrowing, prepaying and reborrowing,
all in accordance with the terms and conditions of this Agreement. The
borrowings made by Borrower pursuant to the Revolving Commitment shall be made
at the principal office of Bank and shall be evidenced by the Note. The entire
outstanding principal amount of the Note is due on the Maturity Date.
2.02 Advances and Payments of Principal Under the Note.
Each time an advance is made against or payment is made on the Note, Bank is
hereby irrevocably authorized by Borrower to make appropriate entries of such
in its records in accordance with the usual and customary practices of
accounting for advances and payments on notes; provided, however, the failure
of Bank to do so shall not relieve Borrower of its correct liability hereunder
or under the Note.
The aggregate unpaid amount of advances reflected by the
notations by Bank on its records or the ledger sheets affixed to the Note shall
be deemed rebuttably presumptive evidence of the principal amount owing on the
Note. The liability for payment of principal and interest evidenced by the
Note shall be limited to principal amounts actually advanced to Borrower and
outstanding under this Agreement and interest on such amounts calculated in
accordance with this Agreement. Interest provided for in the Note and herein
shall be calculated on unpaid sums actually advanced and outstanding under the
Note pursuant to the terms of this Agreement and only for the period from the
date or dates of such advances until repayment.
2.03 Prepayment and Conversion. Upon the Required Number
of days notice to the Bank, the Borrower may: (a) without the payment of
penalty or premium, prepay the principal of the Loans, or (b) voluntarily
convert the applicable Interest Rate of any Loan prior to the termination of
the applicable Interest Period in whole or in part, from time to time; any
partial payment or conversion to be made in the sum of not less than $500,000
or any $100,000 increment in addition thereto; provided that with respect to
any such prepayment or conversion of any Loan upon which interest is being
calculated at the LIBOR Rate the Borrower shall reimburse the Bank on demand
for any costs, including administrative costs, incurred by the Bank as a result
of such prepayment or conversion and any loss incurred or to be incurred by the
Bank in the redeployment of the funds released by any such prepayment. Such
loss shall be the difference, as reasonably determined by Bank, between (i)
Bank's gross return hereunder with respect to that portion of the Loans which
is prepaid, based on the applicable Interest Rate for such
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portion of the Loans and (ii) any lesser amount realized by Bank in deploying
the funds received in repayment, or otherwise realized from that portion of the
Loans so prepaid, during the period from the date of the prepayment until the
end of the Interest Period for that portion of the Loans prepaid; provided that
Bank shall use its best efforts to redeploy such funds in a commercially
reasonable manner.
2.04 Interest Rate and Payments of Interest.
(A) Interest on Base Rate Loans shall be calculated on
the basis of a year of 365 or 366 days, as appropriate.
Interest on LIBOR Loans shall be calculated on the basis of a
360-day year, counting the actual number of days elapsed.
Interest on the outstanding principal balance of the Loans
shall accrue for each day at either the Floating Rate for such
day or the LIBOR Rate for the Interest Period which includes
such day, all as elected and specified (including
specification as to length of Interest Period, as permitted by
the definition of that term, with respect to any election of
the LIBOR Rate) by the Borrower in accordance with Section
2.04(B); provided that:
(i) In the absence of an election by the Borrower
of the LIBOR Rate, or, having made such election but
upon the Required Number of days prior to the end of
the then current Interest Period the Borrower fails
or is not entitled under the terms of this Agreement
to elect to continue such Interest Rate and specify
the applicable Interest Period therefor, then upon
the expiration of such then current Interest Period,
interest on the Loans shall accrue for each day at
the Floating Rate for such day, until the Borrower,
pursuant to Section 2.04(B), elects a different
Interest Rate and specifies the Interest Period for
the Loans.
(ii) Interest accruing on any LIBOR Loan during any
Interest Period shall be payable on the last
Business Day of such then current Interest Period;
provided, however, that with respect to LIBOR Loans
for which the Interest Period selected by the
Borrower pursuant to Section 2.04(B) is greater than
three (3) months, interest shall be payable
quarterly on the last Business Day of such quarterly
period with the first such quarterly period
commencing on the first day of the applicable
Interest Period with any remaining unpaid interest
being due and payable on the last day of such
Interest Period; provided further that all accrued
interest on any LIBOR Loan converted or prepaid
pursuant to Section 2.03 shall be paid immediately
upon such prepayment or conversion.
(B) By at least the Required Number of days prior to the
advance of any Loan hereunder, the Borrower shall select the
initial Interest Rate to be charged on such Loan, and from
time to time thereafter the Borrower may elect, on at least
the Required Number of days' irrevocable prior written (or
telephoned, promptly
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confirmed by written) notice to the Bank, to change the
Interest Rate on any Loan to any other Interest Rate
(including, when applicable, the selection of the Interest
Period); provided that; (i) the Borrower shall not select an
Interest Period that extends beyond the Termination Date; (ii)
except as otherwise provided in Section 2.03 no such change
from the LIBOR Rate to another Interest Rate shall become
effective on a day other than the day, which must be a
Business Day, next following the last day of the Interest
Period last effective for such LIBOR Loan; (iii) any elections
made by Borrower pursuant to this Section 2.04(B) shall be in
the amount of $100,000, plus any additional increment of
$100,000; (iv) notwithstanding anything herein to the
contrary, Borrower may not make any election under this
Section 2.04(B) that would result in Loans outstanding at more
than three (3) different LIBOR Rates without the written
agreement of the Bank to do so; and (v) the first day of each
Interest Period as to a LIBOR Loan shall be a Business Day.
(C) Interest on Base Rate Loans shall be paid monthly in
arrears on the first Business Day of each calendar month
commencing with any month during which interest begins to
accrue at the Floating Rate, as elected by Borrower pursuant
to Section 2.04(B), and on the date the principal of such
Loans shall be due (at stated maturity, on acceleration, or
otherwise).
(D) Interest on past-due principal shall accrue at the
greater of the applicable Floating Rate plus three percent
(3.00%) or LIBOR plus five percent (5.00%) until such
principal is paid in full, and shall be payable upon demand by
the Bank.
(E) The Bank shall notify the Borrower of the current
Base Rate and of the current LIBOR Rate from time to time upon
request by Borrower.
(F) It is the intention of the parties hereto to conform
strictly to applicable usury laws as in effect from time to
time. Accordingly, if any transactions contemplated hereby
would be usurious under applicable Law (including the laws of
the United States of America, or of any other jurisdiction
whose laws may be mandatorily applicable), then, in that
event, notwithstanding anything to the contrary in this
Agreement, or any other agreement entered into in connection
with this Agreement, it is agreed the aggregate of all
consideration that constitutes interest under applicable law
that is contracted for, charged, or received under this
Agreement, or under any of the other aforesaid agreements or
otherwise in connection with this Agreement shall under no
circumstances exceed the Maximum Rate, and any excess shall be
credited to Borrower by Bank (or, if such consideration shall
have been paid in full, such excess refunded to Borrower by
Bank). All sums paid, or agreed to be paid, to the Bank for
use, forbearance, and detention of the indebtedness of the
Borrower by the Bank shall, to the extent permitted by
applicable laws, be amortized, pro rated, allocated, and
spread throughout the full term of such indebtedness until
such indebtedness is paid in full
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so that the actual rate of interest is uniform, but does not
exceed the Maximum Rate, throughout the full term thereof. If
at any time the applicable Interest Rate, which shall be
deemed for purposes of this Section 2.04(F), only, to include
any other fees, charges, or other forms of consideration which
constitute interest under applicable law that is contracted
for, charged, or received under this Agreement or any other
agreement entered into in connection with this Agreement,
exceeds the Maximum Rate, the rate of interest to accrue
pursuant to this Agreement shall be limited, notwithstanding
anything to the contrary in this Agreement, to the Maximum
Rate, but any subsequent reductions in the Interest Rate
otherwise provided for herein shall not reduce the interest to
accrue pursuant to this Agreement below the Maximum Rate until
the total amount of interest accrued pursuant to this
Agreement equals the amount of interest that would have
accrued if a varying rate per annum equal to the otherwise
applicable Interest Rate had at all times been in effect. If
the total amount of interest paid or accrued pursuant to this
Agreement under the foregoing provisions is less than the
total amount of interest that would have accrued if a varying
rate per annum equal to the otherwise applicable Interest Rate
had at all times been in effect, then the Borrower agrees to
pay upon final maturity of the Loans an amount equal to the
difference between (a) the lesser of (i) the amount of
interest that would have accrued if the Maximum Rate had at
all times been in effect or (ii) the amount of interest that
would have accrued if a varying rate per annum equal to the
otherwise applicable Interest Rate had at all times been in
effect, and (b) the amount of interest accrued in accordance
with the other provisions of this Agreement.
2.05 Increased Cost of Loans.
(A) Notwithstanding any other provisions herein, if as a
result of any regulatory change
(i) the basis of taxation of payments to Bank of
the principal of, or interest on, any LIBOR Loan or
any other amounts due under this Agreement in
respect of any such LIBOR Loan (except for taxes
imposed on the overall net income or receipts of
Bank, and franchise or other taxes imposed generally
on Bank), by the jurisdiction (or any political
subdivision therein) in which Bank has its principal
office is changed;
(ii) any reserve, special deposit, or similar
requirement (including without limitation any
reserve requirement under regulations of the Board
of Governors of the Federal Reserve System) against
assets of, deposits with, or for the account of, or
credit extended by Bank, is imposed, increased,
modified, or deemed applicable; or
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(iii) any other condition affecting this Agreement
or any LIBOR Loan is imposed on Bank or (in the case
of LIBOR Loans) the London interbank market;
and the result of any of the foregoing is to increase the
actual direct cost to Bank of making or maintaining any such
LIBOR Loan or to reduce the amount of any sum received by Bank
hereunder in respect thereof (and such increase or reduction
shall not have been compensated by a corresponding increase in
the interest rate applicable to the respective Loans), by an
amount deemed by Bank to be material (such increases in cost
and reductions in amounts receivable being herein called
"Increased Costs"), then the Borrower shall pay to Bank,
within thirty (30) days after its demand, such additional
amount or amounts as will compensate Bank for those Increased
Costs. The Bank will not demand to be compensated by Borrower
for such Increased Costs unless the Bank generally makes such
demands to its other LIBOR Loan customers who are similarly
situated. A certificate of Bank setting forth the basis for
the determination of such amount necessary to compensate the
Bank as aforesaid, accompanied by documentation showing
reasonable support for such increased costs or reduced sums
received by Bank, shall be delivered to the Borrower and shall
be conclusive, save for manifest error, as to such
determination and such amount.
(B) Notwithstanding the foregoing provisions of this
Section 2.05, in the event that by reason of any regulatory
change the Bank either (i) incurs Increased Costs based on, or
measured by, the excess above a specified level of the amount
of a category of deposits or other liabilities of Bank that
includes deposits by reference to which the interest rate on
LIBOR Loans is determined as provided in this Agreement or a
category of extensions of credit or other assets of such Bank
that includes LIBOR Loans or (ii) becomes subject to
restrictions on the amount of such a category of liabilities
or assets that it may hold, then, if Bank so elects by notice
to the Borrower, the obligation of Bank to make or convert
Loans of any other type into LIBOR Loans hereunder shall be
suspended until the earlier of the date such regulatory change
ceases to be in effect or the date the Borrower and Bank agree
upon an alternative method of determining the interest rate
payable by the Borrower on LIBOR Loans, and all LIBOR Loans of
Bank then outstanding shall either be repaid or be converted
into a Base Rate Loan (if not otherwise prohibited under the
terms of this Agreement) at the Borrower's option.
(C) Bank agrees that upon the occurrence of any
regulatory change giving rise to the operation of the first
paragraph of this Section 2.05, it will, if requested by the
Borrower and to the extent permitted by law or by the relevant
government authority, for a period of thirty (30) days
endeavor in good faith to avoid or minimize the increase in
cost or reduction in amount receivable resulting from such
regulatory change; provided, however, that such change can be
made in such a manner that Bank, in its sole determination,
suffers no economic, legal, regulatory,
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or other disadvantage. Any expense incurred by Bank in so
doing shall be paid by the Borrower on delivery to the
Borrower of a certificate as to the amount of such expense,
which certificate shall be conclusive in the absence of
manifest error. Nothing in this paragraph shall affect or
postpone the obligations of the Borrower set forth in any
other paragraph of this Section 2.05.
2.06 Substitute Rate. Anything herein to the contrary
notwithstanding, if within two (2) Business Days prior to the first day of any
Interest Period for a LIBOR Loan the Bank is not, for any reason whatsoever,
quoted rates for the offering of Dollars for deposit with it in the London
interbank market for a period and amount relevant to the computation of the
rate of interest on LIBOR Loans for such Interest Period, the Bank shall give
the Borrower prompt notice thereof and, if Borrower elects to obtain a Loan for
the amount previously requested as a LIBOR Loan, then on what would otherwise
have been the first day of such Interest Period such Loans shall be made as
Base Rate Loans (if not otherwise prohibited under the terms of this
Agreement), in accordance with the election procedures set forth in Section
2.04(B); provided, however, that prior to the effective date of such election,
interest shall be calculated at the Floating Rate.
2.07 Change of Law. Notwithstanding any other provision
herein, in the event that any change in any applicable law, rule or regulation
or in the interpretation or administration thereof shall make it unlawful for
the Bank to (i) honor any commitment it may have hereunder to make any LIBOR
Loan, then such commitment shall terminate, or (ii) maintain any LIBOR Loan,
then all LIBOR Loans of the Bank then outstanding shall be repaid or, if
Borrower so elects, converted to Base Rate Loans (if not otherwise prohibited
under the terms of this Agreement) in accordance with the election procedures
set forth in Section 2.04(B); provided, however, that prior to the effective
date of such election, interest shall be calculated at the Floating Rate. Any
remaining commitment of Bank hereunder to make LIBOR Loans (but not other
Loans) shall terminate forthwith. Upon the occurrence of any such change, the
Bank shall promptly notify the Borrower thereof, and shall furnish to the
Borrower in writing evidence thereof certified by the Bank.
Any repayment or conversion of any LIBOR Loan which is
required under this Section 2.07 or under 2.05(B) shall be effected by payment
thereof, together with accrued interest thereon, on demand, and concurrently
there shall occur the borrowing of the corresponding Base Rate Loan as provided
herein.
If any repayment to Bank of any LIBOR Loan (including
conversions thereof) is made under this Section 2.07 on a day other than a day
otherwise scheduled for a payment of principal of or interest on such Loan, the
Borrower shall pay to Bank upon its request such amount or amounts as will
compensate it for the amount by which the rate of interest on such Loan
immediately prior to such repayment exceeds the stated rate of interest on
relending or reinvesting the funds received in connection with such prepayment,
in each case for the period from the date of such prepayment to the Business
Day next succeeding the last day of such then current Interest Period, all as
determined by Bank in its good faith discretion.
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2.08 Advances to Satisfy Obligations of Borrower. Bank
may, but shall not be obligated to, make advances hereunder and apply same to
the satisfaction of any condition, warranty, representation or covenant of
Borrower contained in this Agreement and the funds so advanced and applied
shall be part of the Loan proceeds advanced under this Agreement and evidenced
by the Note. Bank shall endeavor to give written notice to Borrower at least
five (5) Business Days prior to making any such advance pursuant to this
Section, provided that Bank shall not be obligated to give any such notice if,
in good faith, it has determined that a delay in making any such advance would
have a material adverse effect on the business, operations or financial
condition of Borrower or on the collateral value to Bank of any material
portion of the Borrowing Base Receivables.
2.09 Mandatory Prepayment of the Notes. In the event
that Bank or Borrower determine that a Loan Excess exists, Borrower shall
immediately, but in no event later than fifteen (15) days following the earlier
of either: (a) Borrower becoming aware that a Loan Excess exists, or (b) notice
from Bank of any such determination, (i) prepay the principal of the Note in an
aggregate amount at least equal to such Loan Excess or (ii) add to the
Borrowing Base additional Borrowing Base Receivables pursuant to Section 2.10
sufficient to increase the Borrowing Base to an amount equal the unpaid
principal amount of the Note.
2.10 Borrowing Base Determination. Borrower shall deliver
to Bank on or before the earlier of: (a) October 31, 1997, or (b) the date on
which the Borrower delivers to Bank the first Request for Advance submitted
pursuant to Section 2.01 hereof; and within thirty (30) days after the last day
of each month from the date of this Agreement through the Maturity Date, a
Monthly Borrowing Base Certificate evidencing Borrower's calculation of the
Borrowing Base and the aging of all Accounts included in the Borrowing Base
Receivables. The Borrowing Base calculated pursuant to each such Monthly
Borrowing Base Certificate shall become effective at 10:00 am on the fifth
Business Day after it is delivered to the Bank, unless prior to such time Bank
notifies Borrower that it disagrees with the calculation of the Borrowing Base
as set forth therein. If Bank notifies Borrower within such five Business Day
Period that it disagrees with the calculation of the Borrowing Base as set
forth in the Monthly Borrowing Base Certificate, it shall concurrently notify
Borrower of the Borrowing Base that Bank is willing to recognize, which shall
be the Borrowing Base until such time as the Bank and Borrower agree on a
recalculated Borrowing Base or Bank notifies Borrower of a subsequent
adjustment in the amount of the Borrowing Base that Bank is willing to
recognize.
ARTICLE III. CONDITIONS
The obligation of Bank to make advances of the Loans referred
to in Article II of this Agreement is subject to the prior or contemporaneous
satisfaction of the following conditions precedent stated in this Article III.
3.01 Receipt of Note, Agreement, and Certificate of
Compliance. Bank shall have received the Note, multiple counterparts of this
Agreement, as requested by Bank, and the Certificate of Compliance, all duly
executed by an authorized officer of Borrower.
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3.02 Completion of Initial Public Offering. Bank shall
have received evidence satisfactory to Bank, in its sole discretion, that the
Ultimate Parent has closed the initial public offering described in the Form
S-1 Registration Statement initially filed June 2, 1997 (the "Initial Public
Offering"), including the Ultimate Parent having been capitalized with at least
Sixty Million Dollars ($60,000,000.00) in equity and having acquired all issued
and outstanding shares of Energy Research International, a Cayman Islands
corporation.
3.03 Receipt of Organizational Documents. Bank shall
have received from Borrower its Memorandum and Articles of Association and its
Certificate of Incorporation, certified as being true and correct by the
secretary or an assistant secretary of Borrower.
3.04 Receipt of Certified Copy of Corporate Proceedings
and Certificates of Incumbency. Bank shall have received from Borrower copies
of all resolutions of its board of directors, authorizing the transactions set
forth in this Agreement, and the execution of this Agreement, the Note, and the
Security Instruments, and the Power of Attorney, such copy or copies to be
certified by the secretary or an assistant secretary of Borrower as being true
and correct and in full force and effect as of the date hereof. In addition,
Bank shall have received from Borrower a certificate of incumbency signed by a
director or the secretary or an assistant secretary of Borrower setting forth
(a) the names of the officers executing this Agreement, the Note, and those of
the Security Instruments to which it is a party, (b) the office(s) to which
such Persons have been elected and in which they presently serve and (c) an
original specimen signature of each such person.
3.05 Receipt of Certificates of Incorporation and
Existence. Bank shall have received certificates, as of the most recent dates
practicable, issued by the Registrar of Companies of England and Wales,
attesting to Borrower's (a) existence; (b) that Borrower has been in continuous
and unbroken existence since the date of its incorporation; (c) that no action
is currently being taken by the Registrar of Companies for striking Borrower
off the register and dissolving it as defunct; and (3) that as far as the
Registrar is aware: (i) Borrower is not in liquidation or subject to an
administration order, and (ii) no receiver or manager of Borrower's property
has been appointed. In addition, Bank shall have received certificates, as of
the most recent dates practicable from any jurisdiction in which Borrower is
qualified to do business as a foreign company attesting to such qualification,
and, if applicable, from the department of revenue or taxation of each of the
foregoing governmental authorities, as to the good standing of Borrower;
3.06 Power of Attorney. Bank shall have received an
instrument in form and substance satisfactory to Bank, in its discretion, duly
executed on behalf of Borrower, pursuant to which Borrower appoints ▇▇▇▇▇▇▇ ▇.
▇▇▇▇▇▇▇ as its duly authorized agent and attorney-in-fact for the conduct of
all business, the giving and receiving of all notices, and the execution of all
instruments required or permitted to be done pursuant to this Agreement, and as
its agent for acceptance of service of legal all process, summons and
citations, such instrument to provide that the powers granted therein shall be
irrevocable until 5:00 p.m. local time in Houston, ▇▇▇▇▇▇ County, Texas, on the
first Business Day after Bank has received an instrument signed by not less
than two of the duly appointed, qualified and acting directors of Borrower
revoking such power,
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together with contemporaneous appointment of a successor Borrower's Agent
reasonably satisfactory to Bank on the same terms as are set forth in the power
of attorney initially delivered pursuant to this Section.
3.07 Guaranty. Bank shall have received a guaranty
agreement, in form and substance acceptable to Bank in its discretion, duly
executed by the Ultimate Parent, pursuant to which the Ultimate Parent
guarantees the payment and performance of all Indebtedness and Obligations of
Borrower to Bank.
3.08 Company Search. Bank shall have received the
results of a company search at the Companies' Registry, Cardiff, showing all
charges, financing statements and other documents or instruments on file
against Borrower, such searches to be as of a date no more than ten (10) days
prior to the date of the Closing.
3.09 Opinion of Counsel. Bank shall have received an
opinion of counsel to Borrower in the form attached hereto as Exhibit "F."
3.10 Financial Statements. Bank shall have received the
Financial Statements of the Ultimate Parent as of June 30, 1997, showing
financial information regarding Borrower consistent with that previously
provided to Bank.
3.11 Request for Advance. Bank shall have received from
Borrower a Request for Advance.
3.12 Accuracy of Representations and Warranties and No
Event of Default. The representations and warranties contained in Article IV
of this Agreement shall be true and correct in all material respects on the
date of the making of such Loans or advances with the same effect as though
such representations and warranties had been made on such date; and no Event of
Default shall have occurred and be continuing or will have occurred at the
completion of the making of such Loans or advances.
3.13 Legal Matters Satisfactory to Counsel to Bank. All
legal matters incident to the consummation of the transactions hereby
contemplated shall be satisfactory to counsel for Bank.
3.14 No Material Adverse Change. No material adverse
change shall have occurred since the date of this Agreement in the condition,
financial or otherwise, of Borrower.
3.15 Security Instruments. As security for the payment
of the Note and the performance of the Obligations of Borrower under this
Agreement, Bank shall have received the Security Instruments, duly executed by
Borrower, that are necessary or appropriate, in the opinion of Bank, to perfect
Bank's security interests in the Borrowing Base Receivables identified in the
Monthly Borrowing Base Certificate delivered pursuant to Section 3.01.
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3.16 Legal Fees. All legal fees and disbursements owed
to Bank's special counsel who provided representation to the Bank in connection
with this Agreement or any amendment hereto shall have been paid.
3.17 Domestic Affiliate Loan Agreement. Bank shall have
contemporaneously entered into the Domestic Affiliate Loan Agreement with the
Ultimate Parent and the other borrowers designated therein.
3.18 Documents Required in connection with the addition
of certain Borrowing Base Receivables. In conjunction with the addition of
Borrowing Base Receivables that either: (a) are payable by any Account Debtor
whose principal place of business is in a jurisdiction in which Bank has not
previously perfected its security interests in Borrower's Accounts, or (b)
arise out of the delivery of goods to or performance of services in a
jurisdiction in which Bank has not previously perfected its security interests
in Borrower's Accounts; Borrower shall have duly delivered to Bank such
Security Instruments as are necessary or appropriate, in the opinion of Bank,
to perfect Bank's security interests in such additional Borrowing Base
Receivables.
ARTICLE IV. REPRESENTATIONS AND WARRANTIES
To induce Bank to enter into this Agreement and to make the
Loan hereunder, Borrower represents and warrants to Bank (which representations
and warranties will survive the delivery of the Note) that:
4.01 Corporate Organization, Existence and Good Standing.
Borrower and each of its Subsidiaries is a corporation, duly organized and
legally existing under the laws of England and is duly qualified and in good
standing as a foreign business entity in all jurisdictions wherein the property
owned or the business transacted by it makes such qualification necessary,
other than those jurisdictions wherein the failure to so qualify does not have
a material adverse effect on Borrower.
4.02 Due Authorization. The execution and delivery by
Borrower of this Agreement and the borrowings hereunder; the execution and
delivery by Borrower of the Note, the Security Instruments and the Power of
Attorney; and the repayment by Borrower of Indebtedness evidenced by the Note
and interest and fees provided in the Note and this Agreement (a) are within
the power of Borrower; (b) have been duly authorized by all necessary action;
and (c) do not and will not (i) require the consent of any regulatory
authority, governmental body, or any other Person, (ii) violate any provision
of law or the organizational documents of Borrower, (iii) cause a default to
occur under the terms and provisions of any indenture, instrument or other
agreement to which Borrower is a party or by which its property may be
presently bound or encumbered, or (iv) result in or require the creation or
imposition of any mortgage, lien, pledge, security interest, charge or other
encumbrance in, upon or of any of the properties or assets of Borrower under
any such indenture, instrument or other agreement, other than under any of the
Security Instruments.
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4.03 Valid and Binding Obligations. This Agreement, the
Note, the Security Instruments and the Power of Attorney are the legal, valid
and binding obligations of and enforceable against Borrower in accordance with
their respective terms (subject to any applicable bankruptcy, insolvency or
other laws of general application affecting creditors' rights and judicial
decisions interpreting any of the foregoing).
4.04 Scope and Accuracy of Financial Statements. All
Financial Statements submitted and to be submitted to Bank hereunder are and
will be complete and correct in all material respects; are and will be prepared
in accordance with GAAP and practices consistently applied; and do and will
fairly reflect the financial condition and the results of the operations of
Borrower and its Subsidiaries in all material respects as of the dates and for
the period stated therein (subject only to normal year-end audit adjustments
with respect to such unaudited interim statements); and no material adverse
change has since occurred in the condition, financial or otherwise, of Borrower
or its Subsidiaries (taken as a whole).
4.05 Liabilities, Litigation and Restrictions. Except as
disclosed in the Financial Statements, neither Borrower nor any of its
Subsidiaries has any liabilities, direct or contingent, which may materially
and adversely affect its business or assets. Except as described on Schedule
4.05, there is no litigation or other action of any nature pending before any
court, governmental instrumentality, regulatory authority or arbitral body or,
to the knowledge of Borrower, threatened against or affecting Borrower, or any
of its Subsidiaries, which might reasonably be expected to result in any
material, adverse change in the business or assets of Borrower or its
Subsidiaries (taken as a whole). No unusual or unduly burdensome restriction,
restraint or hazard exists by contract, law, governmental regulation or
otherwise relative to the business or material properties of Borrower or any of
its Subsidiaries which might reasonably be expected to result in any material,
adverse change in the business or assets of Borrower or its Subsidiaries (taken
as a whole) other than such as relate generally to Persons engaged in the
business activities conducted by Borrower or any applicable Subsidiary.
4.06 Margin Stock. None of the proceeds of the Loans
will be used for the purpose of buying or carrying margin stock.
4.07 Authorizations and Consents. No authorization,
consent, approval, exemption, franchise, permit or license of, or filing with,
any governmental or public authority or any third party is required to
authorize, or is otherwise required in connection with the valid execution and
delivery by Borrower of this Agreement, the Note, the Security Instruments and
the Power of Attorney or any instrument contemplated hereby, the repayment by
Borrower of advances against the Note and interest and fees provided in the
Note and this Agreement, or the performance by Borrower of its obligations
under any of the foregoing.
4.08 Compliance with Laws, Rules, Regulations and Orders.
To the best of the knowledge and belief of Borrower, neither the business nor
any of the activities of Borrower or any of its Subsidiaries, as presently
conducted, violates any law or any rule, regulation or directive of any
applicable judicial, administrative or other governmental instrumentality
(including, but not
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by way of limitation, any law or any rule, regulation or directive of any
judicial, administrative or other governmental instrumentality relating to
zoning, to any Environmental Law, or to the stabilization of wages or prices
the result of which violation would have a material adverse effect on Borrower
or its Subsidiaries (taken as a whole), and Borrower and each of its
Subsidiaries possess all licenses, approvals, registrations, permits and other
authorizations necessary to enable it to carry on its respective business in
all material respects as now conducted, and all such licenses, approvals,
registrations, permits and other authorizations are in full force and effect;
and Borrower has no reason to believe that it will be unable to obtain the
renewal of any such licenses, approvals, registrations, permits and other
authorizations.
4.09 Proper Filing of Tax Returns and Payment of Taxes
Due. Borrower and each of its Subsidiaries have duly and properly filed all
United States Income Tax returns, if applicable, and all other tax returns
which are required to be filed, including, without limitation, those required
to be filed in England, and has paid all taxes due pursuant to said returns or
pursuant to any assessment received, except such taxes, if any, as are being
contested in good faith and as to which adequate provisions and disclosures
have been made; and the respective charges and reserves on the books of
Borrower and each of its Subsidiaries with respect to any taxes or other
governmental charges are adequate.
4.10 ERISA and Foreign Employee Retirement Provisions.
Borrower is in compliance in all material respects with (i) all applicable
provisions of ERISA; and (ii) all comparable employee retirement provisions, if
any, in England. Neither a Reportable Event nor a Prohibited Transaction has
occurred and is continuing with respect to any plan; no notice of intent to
terminate a plan has been filed, nor has any plan been terminated; no
circumstances exist which constitute grounds under Section 4042 of ERISA
entitling the PBGC to institute proceedings to terminate, or appoint a trustee
to administrate a plan, nor has the PBGC instituted any such proceedings;
neither Borrower nor any ERISA Affiliate has completely or partially withdrawn
under Sections 4201 or 4204 of ERISA from a Multi-employer plan; Borrower and
each ERISA Affiliate have met their minimum funding requirements under ERISA
with respect to all of their plans and the present value of all vested benefits
under each plan exceeds the fair market value of all plan assets allocable to
such benefits, as determined on the most recent valuation date of the plan and
in accordance with the provisions of ERISA and the regulations thereunder for
calculating the potential liability of Borrower or any ERISA Affiliate to the
PBGC or the plan under Title IV of ERISA; and neither Borrower nor any ERISA
Affiliate has incurred any liability to the PBGC under ERISA.
4.11 Investment Company Act Compliance. Borrower is not,
nor is it directly or indirectly controlled by or acting on behalf of any
person or entity which is, an investment company or an "affiliated person" of
an investment company within the meaning of the Investment Company Act of 1940.
4.12 Public Utility Holding Company Act Compliance.
Borrower is not a "holding company", or an "affiliate" of a "holding company"
or of a "subsidiary company" of a
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"holding company", within the meaning of the Public Utility Holding Company Act
of 1935, as amended.
4.13 Environmental Laws. To the best of the knowledge
and belief of Borrower:
(a) no property of Borrower or any of its Subsidiaries
is currently on, or has ever been on, any federal or state list of
superfund sites as listed on the Environmental Protection Agency
National Priority List or any comparable state registries or list in
any state of the United States (collectively "Superfund Sites");
(b) no Hazardous Substances have in the past been
generated, transported, and or disposed of, by Borrower or any of its
Subsidiaries at any Superfund Site;
(c) except in accordance with a valid permit, license,
certificate or approval of the relevant regulatory authority or
governmental body, there has been no emission, spill, release,
disposal or discharge of any Hazardous Substance into or upon (i) the
air, (ii) soils or any improvements located thereon, (iii) surface
water or groundwater, or (iv) the sewer, septic system or waste
treatment, storage or disposal system servicing any property of
Borrower or any of its Subsidiaries; and
(d) no complaint, order, directive, claim, citation,
notice of environmental report, notice of investigation or other
notice by any regulatory authority or governmental body or any other
Person with respect to (i) air emissions, (ii) spills, releases or
discharges to soils or any improvements located thereon, surface
water, groundwater or the sewer, septic system or waste treatment,
storage or disposal systems servicing any property of Borrower or any
of its Subsidiaries, (iii) solid or liquid waste disposal, (iv) the
use, generation, storage, transportation or disposal of any Hazardous
Substance, or (v) other environmental, health or safety matters
affecting any property of Borrower or any of its Subsidiaries, any
improvements located thereon, or the business thereon conducted, has
been received by Borrower or any of its Subsidiaries, nor has Borrower
been given oral or written notice thereof;
provided, however, that the representations and warranties set forth in
subparagraphs (c) and (d) above shall apply only to events and conditions which
either resulted in (i) a continuing lien or encumbrance on the property of
Borrower or (ii) otherwise materially affect Borrower's use or operation of its
property or Borrower's ability to repay the Indebtedness evidenced by the Note.
4.14 Subsidiaries. Borrower has no Subsidiaries other
than those listed on Schedule 4.14 hereto, and the jurisdiction of
incorporation and principal place of business of each of Borrower's
Subsidiaries is set forth on Schedule 4.14.
4.15 Existing Indebtedness. All Indebtedness of the
Borrower and any Subsidiary existing as of the Closing, other than accounts
payable incurred in the ordinary course
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of business that are not more than 30 days overdue, is described in Schedule
4.15; and neither the Borrower nor any Subsidiary is in default with respect to
any of Indebtedness, except as described on Schedule 4.15.
4.16 Material Commitments. Except as described in
Schedule 4.16 hereto, (A) neither the Borrower nor any Subsidiary has any
material leases, contracts or commitments of any kind (including, without
limitation, employment agreements; collective bargaining agreements; powers of
attorney; distribution arrangements; patent license agreements; contracts for
future purchase or delivery of goods or rendering of services; bonuses, pension
and retirement plans; or accrued vacation pay, insurance and welfare
agreements) requiring aggregate expenditure by the Borrower in excess of
$500,000 per year; (B) to the best of the Borrower's knowledge, all parties to
all such material leases, contracts, and other commitments to which the
Borrower or any Subsidiary is a party have materially complied with the
provisions of such leases, contracts, and other commitments; and (C) to the
best of the Borrower's knowledge, no party is in material default under any
thereof and no event has occurred that but for the giving of notice or the
passage of time, or both, would constitute a material default.
4.17 Insurance. The Borrower maintains insurance with
respect to the properties and business of the Borrower providing coverage for
such liabilities, casualties, risks and contingencies and in such amounts as it
believes is customary in the industry. As of the date hereof, the insurance
coverage reflected on the Certificate(s) of Insurance attached hereto as
Schedule 4.17 is in full force and effect, and, except as disclosed on Schedule
4.17, all premiums due thereon have been paid.
4.18 Material Misstatements and Omissions. No express
representation or warranty by or with respect to the Borrower or any Subsidiary
contained herein or in any certificate or other document required by this
Agreement and furnished by the Borrower or any Subsidiary contains any untrue
statement of a material fact or omits to state a material fact necessary to
make such representation or warranty not misleading in light of the
circumstances under which it was made.
ARTICLE V. AFFIRMATIVE COVENANTS
Borrower covenants, so long as any Indebtedness of Borrower to
Bank remains unpaid under this Agreement or Bank remains obligated to make
advances hereunder, to:
5.01 Use of Funds. Use the proceeds advanced under the
Loan to finance Borrower's working capital needs and for other general
corporate purposes, and furnish Bank such evidence as it may reasonably require
with respect to such use.
5.02 Maintenance and Access to Records. Keep adequate
records in accordance with good accounting practices, of all of Borrower's
transactions so that at any time, and from time to time, its true and complete
financial condition may be readily determined and, at Bank's reasonable
request, make all financial records and records relating to the Borrowing Base
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Receivables, available for Bank's inspection and permit Bank to make and take
away copies thereof.
5.03 Quarterly Unaudited Financial Statements of
Borrower. (a) Cause the Ultimate Parent to deliver to Bank, on or before the
sixtieth (60th) day after the end of each of the first three calendar quarters
of each fiscal year, unaudited consolidated and consolidating Financial
Statements of the Ultimate Parent and its Subsidiaries as at the end of such
period and from the beginning of such fiscal year to the end of the respective
period, as applicable, which Financial Statements shall be certified by the
president or chief financial officer of the Ultimate Parent as being true and
correct, subject to changes resulting from year-end audit adjustments; and (b)
deliver to Bank, on or before the sixtieth (60th) day after the end of each
calendar quarter of each fiscal year, unaudited internal consolidating
Financial Statements of the Borrower and its Subsidiaries as at the end of such
period and from the beginning of such fiscal year to the end of the respective
period, as applicable, which Financial Statements shall be certified by the
president or chief financial officer of Borrower as being true and correct,
subject to changes resulting from year-end audit adjustments.
5.04 Annual Audited Financial Statements of Borrower.
Cause the Ultimate Parent to deliver to Bank, on or before the one hundred and
twentieth (120th) day after the close of each fiscal year of the Ultimate
Parent: (a) the annual audited consolidated Financial Statements of the
Ultimate Parent and its Subsidiaries, and (b) unaudited consolidating Financial
Statements of the Ultimate Parent and its Subsidiaries, certified by the
president or chief financial officer of the Ultimate Parent as being true and
correct.
5.05 Compliance Certificate. Deliver to Bank a
Compliance Certificate: (a) at the time of Borrower's execution of this
Agreement, and (b) at the time of delivery of each of the Financial Statements
pursuant to Sections 5.03 and 5.04 above.
5.06 Monthly Borrowing Base Certificate. Deliver to Bank
within thirty (30) days after the end of each month a Monthly Borrowing Base
Certificate effective as of the last day of such prior month, in accordance
with Section 2.10.
5.07 Statement of Material Adverse Change in Condition.
Deliver to Bank, promptly upon any officer of the Borrower having knowledge of
any material adverse change in the condition, financial or otherwise, of
Borrower or its Subsidiaries (or any event or circumstance that would result in
any such material adverse change in condition including, but not limited to,
litigation and changes in business), a statement of the president or vice
president of Borrower, setting forth the change in condition or event or
circumstance likely to result in any such change and the steps being taken by
Borrower or the applicable Subsidiary with respect to such change in condition
or event or circumstance.
5.08 Additional Information. Furnish to Bank all
information, if any, filed with any governmental agencies or authorities in
England, and all information routinely provided by the Borrower to its
shareholders, generally. Furnish to the Bank, promptly upon the Bank's
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reasonable request, such additional financial or other information concerning
the assets, liabilities, operations, and transactions of the Borrower,
including, without limitation, information concerning title to any of the
Borrowing Base Receivables.
5.09 Compliance with Laws and Payment of Assessments and
Charges. Comply with all applicable statutes and government regulations,
including, without limitation, ERISA, and pay all taxes, assessments,
governmental charges, claims for labor, supplies, rent, and other obligations
which, if unpaid, might become a lien against its property, except any of the
foregoing being contested in good faith and as to which satisfactory accruals
have been provided and unless failure to comply or pay would not have a
material adverse effect on the assets of Borrower or the value of any Borrowing
Base Receivables.
5.10 Maintenance of Existence and Good Standing.
Maintain Borrower's and its Subsidiaries' business entity existence and good
standing in the jurisdiction of its formation, and in all jurisdictions wherein
the property now owned or hereafter acquired or business now or hereafter
conducted necessitates same, other than those jurisdictions wherein the failure
to so qualify will not have a material adverse effect on Borrower, or on any of
Borrower's Subsidiaries considered on a consolidated basis with Borrower.
5.11 Further Assurances. Promptly cure any defects in
the execution and delivery of this Agreement, the Note, the Security
Instruments, or any other instrument referred to herein or executed in
connection with the Note, and upon notice, immediately execute and deliver to
Bank, all such other and further instruments as may be reasonably required or
desired by Bank from time to time in compliance with the covenants and
agreements made in this Agreement.
5.12 Initial Expenses of Bank. Pay all fees and expenses
of ▇▇▇▇▇▇▇▇▇ & ▇▇▇▇▇▇, L.L.P., special legal counsel for Bank, incurred in
connection with the negotiation and preparation of this Agreement, the Note,
the Security Instruments, or any other instrument referred to herein or
executed in connection with the Note, the satisfaction of the conditions
precedent set forth in Article III of this Agreement and the consummation of
the transactions contemplated in this Agreement.
5.13 Subsequent Expenses of Bank. Upon request, promptly
reimburse Bank for all reasonable amounts expended, advanced or incurred by
Bank to collect the Note or to enforce the rights of Bank under this Agreement,
the Note, the Security Instruments, or any other instrument referred to herein
or executed in connection with the Note, which amounts shall be deemed
compensatory in nature and liquidated as to amount upon notice to Borrower by
Bank and which amounts will include, but not be limited to, (a) all court
costs, (b) attorneys' fees, (c) fees of auditors and accountants, (d)
investigation expenses, (e) internal fees of Bank's in-house legal counsel, (f)
fees and expenses incurred in connection with Bank's participation as a member
of the creditors' committee in a case commenced under Title 11 of the United
States Code or other similar law of the United States, the State of Texas or
any other jurisdiction, (g) fees and expenses incurred in connection with
lifting the automatic stay prescribed in Sections 362 Title 11 of the United
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States Code, and (h) fees and expenses incurred in connection with any action
pursuant to Sections 1129 Title 11 of the United States Code, incurred by Bank
in connection with the collection of any sums due under this Agreement,
together with interest at the Floating Rate per annum, calculated on a basis of
a year of three hundred sixty-five (365) or three hundred sixty-six (366) days,
on each such amount from the date of notification to Borrower that the same was
expended, advanced or incurred by Bank until the date it is repaid to Bank,
with the obligations under this Section 5.13, surviving the non-assumption of
this Agreement in a case commenced under Title 11 of the United States Code or
other similar law of the United States, the State of Texas or any other
jurisdiction and being binding upon Borrower or a trustee, receiver or
liquidator of any such party appointed in any such case.
5.14 Maintenance of Tangible Property. Maintain all of
Borrower's and its Subsidiaries' tangible property that is material to the
conduct of Borrower's or any of its Subsidiaries' businesses in good repair and
condition and make all necessary replacements thereof and operate such property
in a good and workmanlike manner in accordance with standard industry
practices.
5.15 Maintenance of Insurance. Continue to maintain, or
cause to be maintained, insurance with respect to the properties and business
of Borrower and its Subsidiaries against such liabilities, casualties, risks
and contingencies and in such amounts as is customary in the industry, in an
amount and form, and underwritten by an insurer or insurers, as are reasonably
acceptable to Bank, and furnish to Bank, at the execution of this Agreement and
annually thereafter, certificates evidencing such insurance.
5.16 Inspection of Tangible Assets/Right of Audit.
Permit (or cause to be permitted) any authorized representative of Bank, to
visit and inspect (at the risk of Bank and/or such representative) any tangible
asset of Borrower and its Subsidiaries, and/or to audit the books and records
of Borrower or any of its Subsidiaries, during normal business hours. Bank
shall give Borrower five (5) Business Days prior written notice of any such
inspection or audit, and no such inspection or audit shall occur more often
than once per calendar quarter; provided, however, that if Bank has a good
faith belief that the condition exists that constitutes an Event of Default or
an Unmatured Event of Default, which may reasonably be expected to have a
material adverse effect on the business, operations, or financial condition of
Borrower, or on the collateral value of any material portion of the Borrowing
Base Receivables, the Bank shall be entitled to conduct any such visit and
inspection, and/or any such audit, notwithstanding that a prior visit and
inspection, or audit, respectively, was conducted in the same calendar quarter,
and without the necessity of giving five (5) Business Days prior written
notice.
5.17 Payment of Note and Performance of Obligations. Pay
the Note according to the reading, tenor and effect thereof, and do and perform
every act and discharge all of the obligations provided to be performed and
discharged hereunder.
5.18 ERISA Reports. Promptly after the filing or
receiving thereof, copies of all reports, including annual reports, and notices
which Borrower or any of its Subsidiaries files
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with or receives from the PBGC or the U.S. Department of Labor under ERISA; and
promptly after Borrower knows or has reason to know that any Reportable Event
or Prohibited Transaction has occurred with respect to any plan or that the
PBGC, Borrower, or any of Borrower's Subsidiaries has instituted or will
institute proceedings under Title IV of ERISA to terminate any plan, Borrower
will deliver to Bank a certificate of the chief financial officer of Borrower
setting forth details as to such Reportable Event or Prohibited Transaction or
plan termination and the action Borrower or its applicable Subsidiary proposes
to take with respect thereto.
5.19 Financial Covenants. Maintain, in conjunction with
the Ultimate Parent and its Subsidiaries, compliance with the financial
covenants set forth in Sections 5.19 through 5.22 of the Domestic Affiliate
Loan Agreement, including continued compliance with all of such covenants,
which are hereby incorporated herein by reference, in the event of the
termination of the Domestic Affiliate Loan Agreement prior to the full and
final payment and performance of all Indebtedness and Obligations,
respectively, of Borrower to Bank hereunder and the termination of this
Agreement.
5.20 Compliance with Environmental Laws. Comply in all
material respects with any and all requirements of law, including, without
limitation, Environmental Laws, (a) related to any natural or environmental
resource or media located on, above, within, in the vicinity of, related to or
affected by any property of Borrower or its Subsidiaries, or (b) required for
the performance or conduct of its operations, including, without limitation,
all permits, licenses, registrations, approvals and authorizations, and, in
this regard, comply fully and in a timely manner with, and cause all employees,
crew members, agents, contractors, subcontractors and future lessees (pursuant
to appropriate lease provisions) of Borrower and its Subsidiaries while such
Persons are acting within the scope of their relationship with Borrower or its
Subsidiaries, to so comply with, all requirements of law, including, without
limitation, Environmental Laws, and other requirements with respect to the
property of Borrower and its Subsidiaries and the operation thereof necessary
or appropriate to enable Borrower to fulfill its obligations under all
requirements of law, including, without limitation, Environmental Laws,
applicable to the use, generation, handling, storage, treatment, transport and
disposal of any Hazardous Substances now or hereafter located or present on or
under any such property.
5.21 Hazardous Substances Indemnification. Indemnify and
hold Bank harmless from and against any and all claims, losses, damages,
liabilities, fines, penalties, charges, administrative and judicial proceedings
and orders, judgments, remedial actions, requirements and enforcement actions
of any kind, and all costs and expenses incurred in connection therewith
(including, without limitation, attorneys' fees and expenses), arising directly
or indirectly, in whole or in part, out of (a) the presence of any Hazardous
Substances on, under or from the property of Borrower or its Subsidiaries,
whether prior to or during the term hereof, or (b) any activity carried on or
undertaken on or off such property, whether prior to or during the term hereof,
and whether by Borrower or its Subsidiaries or any predecessor in title or any
employees, agents, contractors or subcontractors of Borrower or its
Subsidiaries or any predecessor in title, or any third Persons at any time
occupying or present on such property, in connection with the handling,
treatment, removal, storage, decontamination, cleanup, transportation or
disposal of any
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Hazardous Substances at any time located or present on or under such property;
with the foregoing indemnity further applying to any residual contamination on
or under the property of Borrower or its Subsidiaries, or any property of any
other Person, or affecting any natural resources, and to any contamination of
any property or natural resources arising in connection with the generation,
use, handling, storage, transportation or disposal of any Hazardous Substances,
irrespective of whether any of such activities were or will be undertaken in
accordance with applicable requirements of law, including, without limitation,
Environmental Laws, and surviving satisfaction of all Indebtedness of Borrower
to Bank and the termination of this Agreement, provided, further, that the
claims and other actions of any kind against Bank which give rise to such
indemnity are not barred by the applicable statute of limitations at the time
such claims or actions are instituted and such indemnity shall not extend to
any act or omission by Bank or any Affiliate of Bank or any of Bank's employees
or agents with respect to the relevant property subsequent to Bank becoming the
owner of, taking possession of to the exclusion of Borrower or assuming
operations of any property previously owned by Borrower and with respect to
which property such claim, loss, damage, liability, fine, penalty, charge,
proceeding, order, judgment, action or requirement arises subsequent to the
acquisition of title thereto, taking possession thereof or assumption of
operations thereon by Bank or any Affiliate of Bank or any of Bank's employees
or agents. Notwithstanding anything herein to the contrary, the provisions of
this Section 5.24 shall survive any termination of this Agreement and shall
survive the payment and performance in full of all Obligations owed by Borrower
to Bank.
5.22 Changes in Management. Notify Bank of any change in
the senior management of Borrower, as such management exists as of the date
hereof.
5.23 Payment of Taxes, Etc. Borrower and its
Subsidiaries will each pay or cause to be paid when due, all taxes,
assessments, and charges or levies imposed upon it or on any of its property or
which it is required to withhold and pay, except where contested in good faith
by appropriate proceedings with adequate reserves therefor having been set
aside on its books, provided, however, that Borrower and its Subsidiaries shall
each pay or cause to be paid all such taxes, assessments, charges, or levies
forthwith whenever foreclosure on any lien that may have attached (or security
therefor) appears imminent.
5.24 Notice of Litigation. Borrower and its Subsidiaries
will each give notice to the Bank within ten (10) Business Days of the
occurrence of: (A) any litigation or proceeding in which it is a party if an
adverse decision therein might reasonably be expected to require it to pay more
than $250,000.00 or deliver (or lose title to) assets the value of which
exceeds such sum (whether or not the claim is considered to be covered by
insurance); and (B) the institution of any other suit or proceeding involving
Borrower that would reasonably be expected to materially and adversely affect
its operations, financial condition, property, or business prospects.
5.25 Notices Regarding Account Debtors. Upon the receipt
by Borrower of any notice of the death of an Account Debtor or a partner
thereof, or of the dissolution, termination of existence, insolvency, business
failure, appointment of a receiver for any part of the property of, assignment
for the benefit of creditors by, or the filing of a petition in bankruptcy or
the
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commencement of any proceeding under any bankruptcy or insolvency laws by or
against, an Account Debtor, Borrower will immediately give the Bank written
advice thereof.
5.26 Notice of Change of Principal Offices. Borrower
will notify the Bank at least ten (10) Business Days in advance of any change
in the location of the principal office of Borrower or any of its Subsidiaries.
5.27 Payment of Accounts Payable. Pay its accounts
payable not later than thirty (30) days after their due date, except such as
are being contested in good faith and as to which adequate provision or accrual
has been made, provided that up to an aggregate amount of $500,000 of accounts
payable not being so contested may be overdue by more than such number of days.
5.28 Security Account. Provide timely written
instructions to each Account Debtor that is the obligor, from time to time, of
any of Borrower's Eligible Accounts, directing such Account Debtor to send
payment of such Eligible Accounts to the credit of Borrower into the Security
Account, and promptly deposit into the Security Account all payments of
Eligible Accounts received by Borrower that were not sent directly to the
Security Account by an Account Debtor.
ARTICLE VI. NEGATIVE COVENANTS
Without the prior written consent of Bank and so long as any
part of the principal or interest on the Note shall remain unpaid or Bank
remains obligated to make advances hereunder, Borrower and its Subsidiaries
will not:
6.01 Mortgages or Pledges of Assets. Create, incur,
assume or permit to exist, any mortgage, pledge, security interest, lien or
encumbrance on any of its properties or assets (now owned or hereafter
acquired), except that the foregoing restrictions shall not apply to any
matters that would constitute or result in Permitted Encumbrances.
6.02 Nature of Business. Permit any material change to
be made in the character of its business as conducted as of the date hereof, or
permit any Subsidiary to permit any material change to be made in the character
of such Subsidiary's business as conducted as of the date hereof.
6.03 Sales of Assets. Sell, lease, assign, transfer or
otherwise dispose of, in one or any series of related transactions, all or any
part of its assets, if such transfer is material to Borrower's operations, nor
enter into any arrangement, directly or indirectly, with any Person to sell and
rent or lease back such assets or any part thereof which are intended to be
used for substantially the same purpose or purposes as the assets sold or
transferred.
6.04 Cancellation of Insurance. Allow any insurance
policy required to be carried hereunder to be terminated or lapse or expire
without provision for adequate renewal thereof.
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6.05 Margin Stock. Neither the Borrower nor any
Subsidiary will directly or indirectly apply any part of the proceeds of the
Loans to the purchasing or carrying of any "margin stock" within the meaning of
Regulation U of the Board of Governors of the Federal Reserve System, or any
regulations, interpretations or rulings thereunder.
6.06 Changes in Business Structure. Consolidate or merge
with, or purchase (for cash or securities) all or substantially all of the
assets or all or any part of the capital stock of any corporation, firm,
association or enterprise, or allow any such entity to be merged into Borrower
or any of its Subsidiaries, nor shall Borrower or any of its Subsidiaries
dissolve or liquidate.
6.07 Transactions with Affiliates. Enter into any
transaction between or among Borrower and/or any Subsidiaries with any
Affiliate on terms that are less favorable than could be obtained in an
arms-length transaction with a Person that is not an Affiliate.
ARTICLE VII. EVENTS OF DEFAULT
7.01 Enumeration of Events of Default. Any of the
following events shall be considered an Event of Default as that term is used
herein:
(a) Default shall be made by Borrower in the payment of
any installment of principal on the Note,
(b) Default shall be made by Borrower in the payment of
any installment of interest on the Note, or any fees or other monetary
obligation payable hereunder, and such default shall remain unremedied
in excess of three (3) Business Days after notice being given by Bank,
(c) Default shall be made by Borrower in the due
observance or performance of any affirmative covenant required in this
Agreement, the Note, or any Security Instrument, and such default
shall remain unremedied for in excess of thirty (30) days after the
earlier of: (i) such default becoming known to Borrower, or (ii)
notice being given by Bank.
(d) Default shall be made by Borrower in the due
observance or performance of any negative covenant required in this
Agreement, the Note, or any Security Instruments.
(e) Any representation or warranty herein made by
Borrower proves to have been untrue in any material respect, or any
representation, statement (including Financial Statements),
certificate or data furnished or made by Borrower to Bank in
connection herewith proves to have been untrue in any material respect
as of the date the facts therein set forth were stated or certified;
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(f) Default shall be made by Borrower (as principal or
guarantor or other surety) in payment or performance of any bond,
debenture, note or other evidence of Indebtedness for borrowed money,
or any other credit agreement, loan agreement, indenture, promissory
note or similar agreement or instrument executed in connection with
any of the foregoing in excess of $1,000,000.00 in the aggregate; and
such default shall remain unremedied for in excess of the period of
grace, if any, with respect thereto, with the effect of accelerating
the maturity of any such Indebtedness;
(g) Borrower applies for or consents to the appointment
of a receiver, trustee or liquidator of it or all or a substantial
part of its assets, or (ii) files a voluntary petition commencing a
case under Title 11 of the United States Code, seeking liquidation,
reorganization or rearrangement or taking advantage of any bankruptcy,
insolvency, debtor's relief or other similar law of the United States,
the State of Texas, England or any other jurisdiction, or (iii) makes
a general assignment for the benefit of creditors, or (iv) is unable,
or admits in writing its inability to pay its debts generally as they
become due, or (v) files an answer admitting the material allegations
of a petition filed against it in any case commenced under Title 11 of
the United States Code or any reorganization, insolvency,
conservatorship or similar proceeding under any bankruptcy,
insolvency, debtor's relief or other similar law of the United States,
the State of Texas, England or any other jurisdiction;
(h) An order, judgment or decree shall be entered
against Borrower by any court of competent jurisdiction or by any
other duly authorized authority, on the petition of a creditor or
otherwise, granting relief under Title 11 of the United States Code or
under any bankruptcy, insolvency, debtor's relief or other similar law
of the United States, the State of Texas, England or any other
jurisdiction, approving a petition seeking reorganization or an
arrangement of its debts or appointing a receiver, trustee,
conservator, custodian or liquidator of it or all or any substantial
part of its assets, and the failure to have such order, judgment or
decree dismissed within ten (10) days of its entry;
(i) Borrower has concealed, removed, or permitted to be
concealed or removed, any part of its property, with intent to hinder,
delay or defraud its creditors or any of them; or has made or suffered
a transfer of any of its property which are or would be fraudulent
under any bankruptcy, fraudulent conveyance or similar law; or has
made any transfer of its property to or for the benefit of a creditor
at a time when other creditors similarly situated have not been paid;
or has suffered or permitted, while insolvent, any creditor to obtain
a lien upon any of its property through legal proceedings or distraint
which is not vacated within thirty (30) days from the date thereof.
(j) An "Event of Default" as defined in the Domestic
Affiliate Loan Agreement has occurred and is continuing.
7.02 Rights Upon Unmatured Event of Default. At any time
that there exists an Unmatured Event of Default, any obligation of the Bank
hereunder to make advances to or for the benefit of the Borrower shall be
suspended unless and until the Bank shall reinstate the same
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in writing, the Unmatured Event of Default shall have been waived by the Bank
or the relevant Unmatured Event of Default shall have been remedied prior to
ripening into an Event of Default.
7.03 Rights Upon Default. Upon the happening of an Event
of Default specified in Subsections 7.01 (g) or (h), the entire aggregate
principal amount of all Indebtedness then outstanding hereunder and the
interest accrued thereon shall automatically become immediately due and
payable, and upon the happening and continuation of any other Event of Default,
Bank may declare the entire aggregate principal amount of all Indebtedness then
outstanding hereunder and the interest accrued thereon immediately due and
payable. In either case, the entire principal and interest shall thereupon
become immediately due and payable, without notice (including, without
limitation, notice of intent to accelerate maturity or notice of acceleration
of maturity) and without presentment, demand, protest, notice of protest or
other notice of default or dishonor of any kind, except as provided to the
contrary elsewhere herein, all of which are hereby expressly waived by
Borrower.
Upon the happening and continuation of any Event of Default,
all obligations (if any) of Bank hereunder shall immediately cease and
terminate unless and until Bank shall reinstate the same in writing.
ARTICLE VIII. MISCELLANEOUS
8.01 Security Interests in Deposits and Right of Offset
or Banker's Lien. Borrower hereby transfers, assigns and pledges to Bank
and/or grants to Bank a security interest (as security for the payment and/or
performance of the obligations of Borrower under this Agreement and the Note,
with such interest of Bank to be retransferred, reassigned and/or released by
Bank at the expense of Borrower upon payment in full and/or complete
performance by Borrower of all such obligations) and the right, exercisable at
such time as any obligation hereunder shall mature, whether by acceleration of
maturity or otherwise of offset or banker's lien against all funds or other
property of Borrower now or hereafter or from time to time on deposit with or
in the possession of Bank, including, without limitation, all certificates of
deposit and other depository accounts.
8.02 Survival of Representations, Warranties and
Covenants. All representations and warranties of Borrower and all covenants
and agreements herein made shall survive the execution and delivery of the Note
and this Agreement and shall remain in force and effect so long as any debt is
outstanding under the Note, or any renewal or extension of this Agreement or
the Note, or Bank remains obligated to make advances hereunder.
8.03 Notices and Other Communications. Notices, requests
and communications hereunder shall be in writing and shall be sufficient in all
respects if delivered to the relevant address indicated below (including
delivery by registered or certified United States mail, telex, telegram or
hand):
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(a) If to Bank:
BANK ONE, TEXAS, N.A.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Energy Lending
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
(b) Notices and/or reports sent to Bank pursuant to Sections
5.03, 5.04, and 5.05 shall also be sent to:
BANK ONE, TEXAS, N.A.
▇▇▇ ▇▇▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Attention: Monitoring Unit
Telephone: (▇▇▇) ▇▇▇-▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
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(c) If to Borrower:
▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Agent for Horizon Exploration Limited
c/o Eagle Geophysical, Inc.
50 Briar Hollow Lane, ▇▇▇ ▇▇▇▇▇ ▇▇▇▇
▇▇▇▇▇▇▇, ▇▇▇▇▇ ▇▇▇▇▇
Fax: (▇▇▇) ▇▇▇-▇▇▇▇
Any party may, by proper written notice hereunder to the
other, change the individuals or addresses to which such notices to it shall
thereafter be sent.
8.04 Parties in Interest. All covenants and agreements
herein contained by or on behalf of Borrower shall be binding upon Borrower and
its successors and assigns and inure to the benefit of Bank and its successors
and assigns.
8.05 Renewals and Extensions. All provisions of this
Agreement relating to the Note shall apply with equal force and effect to each
and all promissory notes hereafter executed which in whole or in part represent
a renewal, extension, amendment, modification or rearrangement of any part of
the Indebtedness originally represented by the Note.
8.06 No Waiver by Bank. No course of dealing on the part
of Bank, its officers or employees, nor any failure or delay by Bank with
respect to exercising any of its rights, powers or privileges under this
Agreement, the Note, the Security Instruments or any other instrument referred
to herein or executed in connection with the Note shall operate as a waiver
thereof. The rights and remedies of Bank under this Agreement, the Note, the
Security Instruments or any other instrument referred to herein or executed in
connection with the Note shall be cumulative and the exercise or partial
exercise of any such right or remedy shall not preclude the exercise of any
other right or remedy. In the event that Borrower is unable to satisfy any
covenant, warranty or condition herein, no advance of loan proceeds by Bank
shall have the effect of precluding Bank from thereafter declaring any such
continuing inability to be an Event of Default as hereinabove provided.
8.07 INDEMNIFICATION. BORROWER HEREBY RELEASES AND
AGREES TO INDEMNIFY AND HOLD BANK AND ITS OFFICERS, EMPLOYEES, DIRECTORS,
AGENTS AND ATTORNEYS (COLLECTIVELY THE "BANK PARTIES") HARMLESS, FROM AND
AGAINST ALL CLAIMS, DAMAGES, LIABILITIES AND EXPENSES, KNOWN OR UNKNOWN,
ACCRUED AND UNACCRUED, INCLUDING ANY OF THE FOREGOING ALLEGED TO HAVE RESULTED
FROM NEGLIGENCE OF ANY OF THE BANK PARTIES, UNLESS ATTRIBUTABLE TO BANK
PARTIES' OWN GROSS NEGLIGENCE OR WILFUL MISCONDUCT, THAT MAY NOW OR HEREAFTER
BE ASSERTED AGAINST ANY OF BANK PARTIES IN CONNECTION WITH OR ARISING OUT OF
ANY INVESTIGATION, LITIGATION OR PROCEEDING DIRECTLY OR INDIRECTLY RELATING TO
OR ARISING OUT OF ANY OF THE TRANSACTIONS CONTEMPLATED BY THIS AGREEMENT.
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8.08 GOVERNING LAW AND VENUE. THIS AGREEMENT SHALL BE
GOVERNED BY AND CONSTRUED IN ACCORDANCE WITH THE INTERNAL LAWS OF THE STATE OF
TEXAS, UNITED STATES OF AMERICA, WITHOUT GIVING EFFECT TO PRINCIPALS OF
CONFLICT OF LAWS (EXCEPT THAT THE GRANT AND PERFECTION OF BANK'S LIEN AND
SECURITY INTEREST RIGHTS IN AND FORECLOSURE ON COLLATERAL SECURING THE
OBLIGATIONS AND INDEBTEDNESS OF BORROWER WILL BE GOVERNED BY THE LAW OF THE
JURISDICTION PROVIDED FOR IN ANY RELEVANT SECURITY INSTRUMENT APPLICABLE TO
SUCH COLLATERAL). THE PARTIES AGREE THAT THE UNITED NATIONS CONVENTION ON
CONTRACTS FOR THE INTERNATIONAL SALE OF GOODS SHALL NOT IN ANY WAY APPLY TO, OR
GOVERN, THIS AGREEMENT. THE PARTIES AGREE TO SUBMIT TO THE EXCLUSIVE
JURISDICTION OF THE STATE AND FEDERAL COURTS LOCATED IN THE CITY OF HOUSTON,
▇▇▇▇▇▇ COUNTY, TEXAS, IN CONNECTION WITH ANY ACTION OR OTHER PROCEEDING
RELATING TO THIS AGREEMENT, ANY OF THE OTHER LOAN DOCUMENTS OR ANY MATTER
CONTEMPLATED BY OR RELATING TO ANY SUCH AGREEMENT (EXCEPT AS EXPRESSLY PROVIDED
OTHERWISE IN ANY SECURITY INSTRUMENT). BORROWER IRREVOCABLY WAIVES AND AGREES
NOT TO MAKE, TO THE FULLEST EXTENT PERMITTED BY LAW, ANY OBJECTION WHICH IT MAY
NOW OR HEREAFTER HAVE TO THE JURISDICTION OF ANY SUCH COURT OR THE LAYING OF
VENUE OF ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT, AND TO ANY
CLAIM THAT ANY SUCH ACTION OR PROCEEDING BROUGHT IN ANY SUCH COURT HAS BEEN
BROUGHT IN AN INCONVENIENT FORUM. FINAL JUDGMENT IN ANY SUCH ACTION SHALL BE
BINDING UPON THE PARTIES AND MAY BE ENFORCED IN SUCH COURTS OR IN THE COURTS OF
ANY COUNTRY OR STATE TO THE JURISDICTION OF WHICH THE PARTY AGAINST WHOM SUCH
JUDGMENT IS RENDERED OR ANY OF ITS ASSETS IS SUBJECT. BORROWER AGREES THAT
SERVICE OF PROCESS IN CONNECTION WITH SUCH ACTION OR PROCEEDING MAY BE SERVED
ON IT BY SERVING BORROWER'S AGENT, WHO IS HEREBY APPOINTED AS BORROWER'S
DESIGNATED AGENT FOR SERVICE OF PROCESS, IN ANY MANNER (OTHER THAN BY
TELECOPIER) SET FORTH IN SECTION 8.03.
8.09 Incorporation of Exhibits. The Exhibits and
Schedules attached to this Agreement are incorporated herein for all purposes
and shall be considered a part of this Agreement.
8.10 Survival Upon Unenforceability. In the event any
one or more of the provisions contained in this Agreement, the Note, the
Security Instruments or in any other instrument referred to herein or executed
in connection with the Note shall, for any reason, be held to be invalid,
illegal or unenforceable in any respect, such invalidity, illegality or
unenforceability shall not affect any other provision hereof or of any other
instrument referred to herein or executed in connection herewith.
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8.11 Rights of Third Parties. All provisions herein are
imposed solely and exclusively for the benefit of Bank and Borrower and no
other Person shall have standing to require satisfaction of such provisions in
accordance with their terms or be entitled to assume that Bank will refuse to
make advances in the absence of strict compliance with any or all thereof and
any or all of such provisions may be freely waived in whole or in part by Bank
at any time if in its sole discretion it deems it advisable to do so.
8.12 Amendments or Modifications of this Agreement.
Neither this Agreement nor any provision hereof may be changed, waived,
discharged or terminated orally, but only by an instrument in writing signed by
the party against whom enforcement of the change, waiver, discharge or
termination is sought.
8.13 Agreement Construed as an Entirety. This Agreement,
for convenience only, has been divided into Articles and Sections and it is
understood that the rights, powers, privileges, duties and other legal
relations of the parties hereto shall be determined from this Agreement as an
entirety and without regard to the aforesaid division into Articles and
Sections and without regard to headings prefixed to said Articles or Sections.
8.14 Number and Gender. Whenever the context requires,
reference herein made to the single number shall be understood to include the
plural and likewise the plural shall be understood to include the singular.
Words denoting sex shall be construed to include the masculine, feminine, and
neuter, when such construction is appropriate, and specific enumeration shall
not exclude the general, but shall be construed as cumulative.
8.15 AGREEMENT SUPERSEDES ALL PRIOR AGREEMENTS. THIS
AGREEMENT, TOGETHER WITH THE NOTE AND THE SECURITY INSTRUMENTS, CONSTRUED
TOGETHER WITH THE REVOLVING CREDIT AGREEMENT AND ALL INSTRUMENTS EXECUTED
PURSUANT THERETO, REPRESENT, COLLECTIVELY, THE FINAL AGREEMENT BETWEEN THE
PARTIES HERETO WITH RESPECT TO THE SUBJECT MATTER HEREOF AND MAY NOT BE
CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS, OR SUBSEQUENT ORAL
AGREEMENTS OF THE PARTIES AND SHALL SUPERSEDE ANY PRIOR AGREEMENT BETWEEN THE
PARTIES HERETO, WHETHER WRITTEN OR ORAL, RELATING TO THE SUBJECT MATTER HEREOF.
THERE ARE NO UNWRITTEN ORAL AGREEMENTS BETWEEN THE PARTIES.
8.16 Controlling Provision Upon Conflict. In the event
of a conflict between the provisions of this Agreement and those of the Note,
the Security Instruments or any other instrument referred to herein or executed
in connection with the Note, the provisions of this Agreement shall control.
8.17 Time, Place and Method of Payments. All payments
required pursuant to this Agreement or the Note shall be made in immediately
available funds; shall be deemed received by Bank on the next Business Day
following receipt if such receipt is after 3:00 p.m., on any Business Day, and
shall be made at the principal banking quarters of Bank.
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8.18 Non-Application of Chapter 15 of Texas Credit Code.
The provisions of Chapter 15 of the Texas Credit Code (Vernon's Texas Civil
Statutes, Article 5069-15) are specifically declared by the parties hereto not
to be applicable to this Agreement or any of the other Security Instruments or
to the transactions contemplated hereby.
8.19 Counterpart Execution. This Agreement may be
executed as one instrument signed by all parties or in separate counterparts
hereof, each of which counterparts shall be considered an original and all of
which shall be deemed to be one instrument, and any signed counterpart shall be
deemed delivered by the party signing it if sent to any other party hereto by
electronic facsimile transmission.
8.20 Disclosure and Use of Confidential Information.
Bank agrees to keep confidential all information disclosed to it by Borrower in
connection with this Agreement or the Loans or otherwise made available to Bank
pursuant to the terms hereof, with the exception of information that is either
publicly available or obtained by Bank from third parties not known by the Bank
to be subject to any confidentiality agreement with Borrower (collectively,
excluding such exceptions, the "Confidential Information") and Bank shall not,
without Borrower's prior written consent, disclose to any third party, firm,
corporation or entity (other than regulatory agencies having jurisdiction over
Bank) such Confidential Information, except: (a) as required by law and (b) to
third-party consultants of Bank, including, but not limited to, attorneys and
accountants, on a "need to know" basis in connection with the negotiation,
execution, or administration of this Agreement or any of the Loan Documents, or
the enforcement of any Borrower's Obligations or any of Bank's rights
thereunder, provided that such third-party consultants' possession and/or use
of such Confidential Information shall be subject to the provisions of this
Section. Bank shall use such Confidential Information only for the purposes of
its evaluation, administration, and enforcement of the Agreement, the Loan
Documents, and the Loans.
IN WITNESS WHEREOF, this Agreement is executed as of the date
first above written.
BORROWER:
HORIZON EXPLORATION LIMITED
By: /s/ ▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
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▇▇▇▇▇▇▇ ▇. ▇▇▇▇▇▇▇
Agent and Attorney-in-Fact
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BANK:
BANK ONE, TEXAS, N.A.
By: /s/ ▇▇▇▇▇ ▇▇▇▇▇▇
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▇▇▇▇▇ ▇▇▇▇▇▇
Vice President
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