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EXHIBIT 10.1
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LOAN AGREEMENT
among
GREY WOLF DRILLING COMPANY L.P., AS BORROWER,
GREY WOLF, INC., GREY WOLF HOLDINGS COMPANY,
GREY WOLF LLC, DI ENERGY, INC., GREY WOLF INTERNATIONAL, INC.,
DI/PERFENSA, INC., AND MURCO DRILLING CORP.,
AS GUARANTORS,
THE LENDING INSTITUTIONS LISTED HEREIN, and
THE CIT GROUP/BUSINESS CREDIT, INC.,
AS AGENT
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Dated as of January 14, 1999
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$50,000,000
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TABLE OF CONTENTS
Page
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SECTION 1. Amount and Terms of Credit 1
1.1 Commitments 1
1.2 Minimum Borrowing Amounts, etc 2
1.3 Notice of Borrowing 2
1.4 Disbursement of Funds 2
1.5 Notes 3
1.6 Conversions 3
1.7 Pro Rata Borrowings 4
1.8 Interest 4
1.9 Interest Periods 5
1.10 Increased Costs, Illegality, etc 6
1.11 Compensation 8
1.12 Change of Lending Office 9
1.13 Replacement of Lenders 9
SECTION 2. Letters of Credit 10
2.1 Letters of Credit 10
2.2 Letter of Credit Requests; Notices of Issuance 11
2.3 Agreement to Repay Letter of Credit Drawings 11
2.4 Letter of Credit Participations 12
2.5 Increased Costs 14
SECTION 3. Fees; Commitments 15
3.1 Fees 15
3.2 Mandatory Reduction of Revolving Loan Commitments 16
SECTION 4. Payments 16
4.1 Voluntary Prepayments; Early Terminations 16
4.2 Mandatory Prepayments 17
4.3 Method and Place of Payment 19
4.4 Net Payments 19
SECTION 5. Conditions Precedent 21
5.1 Execution of Agreement; Notes 21
5.2 No Default; Representations and Warranties 21
5.3 Officer's Certificate 21
5.4 Opinions of Counsel 22
5.5 Corporate Proceedings 22
5.6 Adverse Change, etc 22
5.7 Litigation 22
5.8 Approvals 23
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5.9 Update Examination; Tax Review 23
5.10 Minimum Availability 23
5.11 Security Documents 23
5.12 Third Party Agreement 24
5.13 Payment of Fees 24
5.14 Existing Indebtedness Agreements 25
5.15 Solvency Certificate; Evidence of Insurance 25
5.16 Domestic Rig Appraisals 25
5.17 Establishment of Depository Accounts 25
5.18 Acceptance by Process Agent 26
5.19 Environmental Report 26
5.20 Good Title to Rigs; Characterization of Rigs 26
5.21 No Material Adverse Change 26
5.22 Representations and Warranties True and Correct; No Default
or Event of Default 26
5.23 Notice of Borrowing; Letter of Credit Request 26
SECTION 6. Representations, Warranties and Agreements 27
6.1 Corporate Status 27
6.2 Corporate Power and Authority 27
6.3 No Violation 27
6.4 Litigation 28
6.5 Use of Proceeds; Margin Regulations 28
6.6 Governmental Approvals 28
6.7 Investment Company Act 28
6.8 Public Utility Holding Company Act 28
6.9 True and Complete Disclosure 29
6.10 Financial Condition; Financial Statements 29
6.11 Security Interests 30
6.12 Consents 30
6.13 Compliance with ERISA 31
6.14 Capitalization 31
6.15 Parent and Subsidiaries 32
6.16 Intellectual Property 32
6.17 Compliance with Statutes, etc 32
6.18 Environmental Matters 33
6.19 Properties 33
6.20 Labor Relations 34
6.21 Tax Returns and Payments 34
6.22 Existing Indebtedness 34
6.23 Year 2000 Compliance Representation 35
SECTION 7. Affirmative Covenants 35
7.1 Information Covenants 35
(a) Monthly Reports 35
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(b) Quarterly Financial Statements 36
(c) Annual Financial Statements 36
(d) Budgets, etc 36
(e) Officer's Certificates 36
(f) Notice of Default or Litigation 37
(g) Auditors' Reports 37
(h) Environmental Matters 37
(i) Other Information 38
7.2 Books, Records and Inspections 38
7.3 Insurance 38
7.4 Payment of Taxes 41
7.5 Corporate Franchises 41
7.6 Compliance with Statutes, etc 41
7.7 Compliance with Environmental Laws 42
7.8 ERISA 42
7.9 Good Repair 43
7.10 End of Fiscal Years; Fiscal Quarters 43
7.11 Additional Security; Further Assurances; Appraisals 43
7.12 Register 45
7.13 Other Notices 45
7.14 Collection of Accounts; Handling of Proceeds of Collateral;
Depository Accounts 46
7.15 Release of Collateral 47
SECTION 8. Negative Covenants 48
8.1 Changes in Business 48
8.2 Consolidation, Merger, Sale or Purchase of Assets, etc 48
8.3 Liens 50
8.4 Indebtedness 52
8.5 Advances, Investments and Loans 53
8.6 Dividends, etc 54
8.7 Transactions with Affiliates 54
8.8 Minimum Value of Domestic Rigs 55
8.9 Certain Financial Covenants 55
(a) Minimum Net Worth 55
(b) Debt Service Coverage Ratio 55
8.10 Limitation on Voluntary Payments and Modifications of Indebted-
ness; Modifications of Certificate of Incorporation, By-Laws and
Certain Other Agreements; Issuances of Capital Stock; etc 54
8.11 Limitation on Certain Restrictions on Subsidiaries 56
8.12 Limitation on the Creation of Subsidiaries 56
SECTION 9. Events of Default 56
9.1 Payments 56
9.2 Representations, etc 56
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9.3 Covenants 55
9.4 Default Under Other Agreements 57
9.5 Bankruptcy, etc 57
9.6 ERISA 57
9.7 Security Documents 58
9.8 Guarantees 58
9.9 Judgments 58
9.10 Ownership 58
SECTION 10. Definitions 59
SECTION 11. The Agent 78
11.1 Appointment 78
11.2 Delegation of Duties 78
11.3 Exculpatory Provisions 79
11.4 Reliance by Agent 79
11.5 Notice of Default 79
11.6 Nonreliance on Agent and Other Lenders 80
11.7 Indemnification 80
11.8 Agent in Its Individual Capacity 81
11.9 Holders 81
11.10 Resignation of the Agent; Successor Agent 81
SECTION 12. Miscellaneous 81
12.1 Payment of Expenses, Etc 81
12.2 Right of Setoff 82
12.3 Notices 83
12.4 Benefit of Agreement 83
12.5 No Waiver; Remedies Cumulative 84
12.6 Payments Pro Rata 85
12.7 Calculations; Computations 85
12.8 Governing Law; Submission to Jurisdiction; Venue 85
12.9 Counterparts 86
12.10 Effectiveness 86
12.11 Headings Descriptive 87
12.12 Amendment or Waiver; etc 98
12.13 Survival 88
12.14 Domicile of Loans 88
12.15 Confidentiality 88
12.16 Waiver of Jury Trial 88
12.17 Final Agreement 88
12.18 Savings Clause 89
12.19 Severability 89
12.20 Service of Process 89
12.21 Waiver of Consumer Rights 90
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SECTION 13. Parent Guarantor Guarantee/Subsidiary Guarantees 90
13.1 The Parent Guarantor Guarantee/Subsidiary Guarantees 90
13.2 Bankruptcy 92
13.3 Nature of Liability 92
13.4 Independent Obligation 93
13.5 Authorization 93
13.6 Reliance 94
13.7 Subordination 94
13.8 Waiver 95
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ANNEX I List of Lenders and Commitments
ANNEX II Lenders Addresses
ANNEX III Existing Letters of Credit
ANNEX IV Drilling Rigs
ANNEX V Existing Investments
ANNEX VI Subsidiaries of Parent
ANNEX VII [Intentionally Omitted]
ANNEX VIII Existing Indebtedness
ANNEX IX Insurance
ANNEX X Existing Liens
ANNEX XI Assets Held For Sale
SCHEDULE 6.18 Environmental Matters
EXHIBIT A-1 -- Form of Notice of Borrowing
EXHIBIT A-2 -- Form of Letter of Credit Request
EXHIBIT B -- Form of Revolving Note
EXHIBIT C -- Form of Section 4.4(b)(ii) Certificate
EXHIBIT D-1 -- Form of Opinion of Borrower's Counsel
EXHIBIT D-2 -- Form of Opinion of Local Counsel
EXHIBIT E -- Form of Officers' Certificate
EXHIBIT F -- Form of Pledge Agreement
EXHIBIT G -- Form of Security Agreement
EXHIBIT H -- [intentionally omitted]
EXHIBIT I -- Form of Solvency Certificate
EXHIBIT K -- Form of Assignment and Assumption Agreement
EXHIBIT L -- Form of Compliance Certificate
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This LOAN AGREEMENT, dated as of January 14, 1999 (the "Agreement"), among GREY
WOLF DRILLING COMPANY L.P., a Texas limited partnership (the "Borrower"), GREY
WOLF, INC., a Texas corporation (the "Parent"), GREY WOLF HOLDINGS COMPANY, a
Nevada corporation ("Holdings"), which is the successor by merger of Grey Wolf
Management Company (formerly known as Grey Wolf Drilling Company) with and into
it, GREY WOLF LLC, a Louisiana limited liability company ("GWLLC"), DI ENERGY,
INC., a Texas corporation ("Energy"), GREY WOLF INTERNATIONAL, INC., a Texas
corporation ("International"), DI/PERFENSA, INC., a Texas corporation
("Perfensa"), MURCO DRILLING CORP., a Delaware corporation ("Murco"), the
lending institutions from time to time party hereto (each a "Lender" and,
collectively, the "Lenders") and THE CIT GROUP/BUSINESS CREDIT, INC., as Agent.
Unless otherwise defined herein, all capitalized terms used herein and defined
in Section 10 are used herein as so defined.
W I T N E S S E T H:
WHEREAS, the parties hereto desire to enter into a lending arrangement in which
the Lenders may make Loans and other credit accommodations of up to the Total
Commitment of $50,000,000; and
WHEREAS, subject to and upon the terms and conditions herein set forth, the
Lenders are willing to make Revolving Loans to the Borrower and issue or arrange
for the issuance of Letters of Credit for the purposes described herein;
NOW, THEREFORE, in consideration of the premises and the agreements, provisions
and covenants herein, each of the Borrower, the Parent, Energy, International,
Perfensa, Murco, the Lenders and the Agent hereby agrees as follows:
SECTION 1. Amount and Terms of Credit
1.1 Commitments. Subject to and upon the terms and conditions herein set forth,
each Lender severally agrees, at any time and from time to time on and after the
Initial Borrowing Date and prior to the Final Maturity Date, to make a revolving
loan or loans (each a "Revolving Loan" and, collectively, the "Revolving Loans")
to the Borrower, which Revolving Loans: (i) shall be denominated in U.S.
Dollars, (ii) except as hereinafter provided, shall, at the option of the
Borrower, be incurred and maintained as and/or converted into Base Rate Loans or
Eurodollar Loans; and further provided that all Revolving Loans made as part of
the same Borrowing shall, unless otherwise specifically provided herein, consist
of Revolving Loans of the same Type, (iii) may be repaid and reborrowed in
accordance with the provisions hereof and (iv) shall not exceed for any Lender
at any time outstanding that aggregate principal amount which, when combined
with Letter of Credit Outstandings (exclusive of Unpaid Drawings relating to
Letters of Credit which are repaid with the proceeds of, and simultaneously with
the incurrence of, the respective incurrence of Revolving Loans) at such time,
equals the lesser of (x) such Lender's Percentage of the Availability as then in
effect and (y) the Revolving Loan Commitment of such Lender at such time.
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1.2. Minimum Borrowing Amounts, etc..1. Minimum Borrowing Amounts, etc" \f C \l
"2" The aggregate principal amount of each Borrowing of Loans shall not be less
than the Minimum Borrowing Amount applicable to such Loans. More than one
Borrowing may be incurred on any day; provided that at no time shall there be
outstanding more than five Borrowings of Eurodollar Loans.
1.3. Notice of Borrowing. (a) Whenever the Borrower desires to incur Revolving
Loans hereunder, it shall give the Agent at the Notice Office, (I) prior to
10:00 A.M. (New York time), at least three Business Days' prior written notice
(or telephonic notice promptly confirmed in writing) of each Borrowing of
Eurodollar Loans and (II) prior written notice (or telephonic notice promptly
confirmed in writing) prior to 1:00 P.M. on the same Business Day of each
Borrowing of Base Rate Loans to be made hereunder. Each such notice (each a
"Notice of Borrowing") shall, except as provided in Section 1.10, be
irrevocable, and, in the case of each written notice and each confirmation of
telephonic notice, shall be in the form of Exhibit A-1, appropriately completed
to specify (i) the aggregate principal amount of the Revolving Loans to be made
pursuant to such Borrowing, (ii) the date of such Borrowing (which shall be a
Business Day) and (iii) whether the respective Borrowing shall consist of Base
Rate Loans or, to the extent permitted hereunder, Eurodollar Loans and, if
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Agent shall promptly give each Lender written notice (or telephonic notice
promptly confirmed in writing) of each proposed Borrowing, of such Lender's
proportionate share thereof and of the other matters covered by the Notice of
Borrowing.
(b) Without in any way limiting the obligation of the Borrower to confirm in
writing any telephonic notice permitted to be given hereunder, the Agent or the
Letter of Credit Issuer (in the case of the issuance of Letters of Credit), as
the case may be, may prior to receipt of written confirmation act without
liability upon the basis of such telephonic notice, believed by the Agent or the
Letter of Credit Issuer, as the case may be, in good faith to be from an
Authorized Officer of the Borrower. The Agent's or the Letter of Credit Issuer's
record of the terms of such telephonic notice shall be final, conclusive and
binding absent manifest error.
1.4. Disbursement of Funds. (a) Not later than 1:00 P.M. (New York time) on the
date specified in each Notice of Borrowing, each Lender will make available its
pro rata share, if any, of each Borrowing requested to be made on such date in
the manner provided below. All amounts shall be made available to the Agent in
U.S. Dollars and in immediately available funds at the Payment Office and the
Agent promptly will make available to the Borrower by depositing to its account
at the Payment Office the aggregate of the amounts so made available in the type
of funds received. Unless the Agent shall have been notified by any Lender prior
to the date of Borrowing that such Lender does not intend to make available to
such Lender has made such amount available to the Agent on such date of
Borrowing, and the Agent, in reliance upon such assumption, may (in its sole
discretion and without any obligation to do so) make available to the Borrower a
corresponding amount. If such corresponding amount is not in fact made available
to the Agent by such Lender and the Agent has
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made available same to the Borrower, the Agent shall be entitled to recover such
corresponding amount from such Lender. If such Lender does not pay such
corresponding amount forthwith upon the Agent's demand therefor, the Agent shall
promptly notify the Borrower, and the Borrower shall immediately pay such
corresponding amount to the Agent, which payment may be made, subject to the
terms and conditions of this Agreement, from the proceeds of a Loan. The Agent
shall also be entitled to recover from the Lenders or the Borrower, as the case
may be, interest on such corresponding amount in respect of each day from the
date such corresponding amount was made available by the Agent to the Borrower
to the date such corresponding amount is recovered by the Agent, at a rate per
annum equal to (x) if paid by such Lender, the overnight Federal Funds Rate or
(y) if paid by the Borrower, the then applicable rate of interest, calculated in
accordance with Section 1.8.
(b) Nothing herein shall be deemed to relieve any Lender from its obligation to
fulfill its commitments hereunder or to prejudice any rights which the Borrower
may have against any Lender as a result of any default by such Lender hereunder.
1.5. Notes. (a) The Borrower's obligation to pay the principal of, and interest
on, all the Loans made to it by each Lender shall be evidenced in the case of
Revolving Loans, by a promissory note substantially in the form of Exhibit B
with blanks appropriately completed in conformity herewith (each a "Revolving
Note" and, collectively, the "Revolving Notes").
(b) The Revolving Note issued to each Lender shall (i) be executed by the
Borrower, (ii) be payable to such Lender or its registered assigns and be dated
the Initial Borrowing Date, (iii) be in a stated principal amount equal to the
Revolving Loan Commitment of such Lender and be payable in the principal amount
of the outstanding Revolving Loans evidenced thereby, (iv) mature on the Final
Maturity Date, (v) bear interest as provided in the appropriate clause of
Section 1.8 in respect of the Base Rate Loans and Eurodollar Loans, as the case
may be, evidenced thereby, (vi) be subject to voluntary prepayment as provided
in Section 4.1, and mandatory repayment as provided in Section 4.2, and (vii) be
entitled to the benefits of the Credit Documents.
(c) Lender will note on its internal records the amount of each Loan made by it
and each payment in respect thereof and will prior to any transfer of any of its
Notes endorse on the reverse side thereof the outstanding principal amount of
Loans evidenced thereby. Failure to make any such notation shall not affect the
Borrower's obligations in respect of such Loans.
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1.6 Conversions. The Borrower shall have the option to convert on any Business
Day occurring on or after the Initial Borrowing Date, all or a portion at least
equal to the applicable Minimum Borrowing Amount of the outstanding principal
amount of Revolving Loans made pursuant to one or more Borrowings of one or more
Types of Revolving Loans into a Borrowing or Borrowings of another Type of
Revolving Loan; provided that (i) except as otherwise provided in Section
1.10(b), no partial conversion of a Borrowing of Eurodollar Loans shall reduce
the outstanding principal amount of the Eurodollar Loans made pursuant to such
Borrowing to less than the Minimum Borrowing Amount applicable thereto, (ii)
Base Rate Loans may only be converted into Eurodollar Loans if no payment
Default, or Event of Default, is in existence on the date of the conversion, and
(iii) Borrowings of Eurodollar Loans resulting from this Section 1.6 shall be
limited in number as provided in Section 1.2. Each such conversion shall be
effected by the Borrower by giving the Agent at the Notice Office, prior to
10:00 A.M. (New York time), at least two Business Days' (or one Business Day's
in the case of a conversion into Base Rate Loans) prior written notice (or
telephonic notice promptly confirmed in writing) (each a "Notice of Conversion")
specifying the Revolving Loans to be so converted, the Borrowing(s) pursuant to
which the Revolving Loans were made and, if to be converted into a Borrowing of
Eurodollar Loans, the Interest Period to be initially applicable thereto. The
Agent shall give each Lender prompt notice of any such proposed conversion
affecting any of its Revolving Loans.
1.7. Pro Rata Borrowings. All Borrowings of Revolving Loans under this Agreement
shall be made by the Lenders pro rata on the basis of their Revolving Loan
Commitments. It is understood that no Lender shall be responsible for any
default by any other Lender of its obligation to make Revolving Loans hereunder
and that each Lender shall be obligated to make the Revolving Loans to be made
by it hereunder, regardless of the failure of any other Lender to fulfill its
commitments hereunder.
1.8. Interest. (a) The unpaid principal amount of each Base Rate Loan shall bear
interest from the date of the Borrowing thereof until the earlier of (i) the
maturity (whether by acceleration or otherwise) of such Base Rate Loan and (ii)
the conversion of such Base Rate Loan to a Eurodollar Loan pursuant to Section
1.6, at a rate per annum which shall at all times be the Applicable Base Rate
Margin in excess of the Base Rate in effect from time to time.
(b) The unpaid principal amount of each Eurodollar Loan shall bear interest from
the date of the Borrowing thereof until the earlier of (i) the maturity (whether
by acceleration or otherwise) of such Eurodollar Loan and (ii) the conversion of
such Eurodollar Loan to a Base Rate Loan pursuant to Section 1.6, 1.9 or
1.10(b), as applicable, at a rate per annum which shall at all times be the
Applicable Eurodollar Margin in excess of the relevant Eurodollar Rate.
(c) Overdue principal and, to the extent permitted by law, overdue interest in
respect of each Loan shall bear interest at a rate per annum equal to the
greater of (x) the rate which is 2% in excess of the rate then borne by such
Loans and (y) the rate which is 2% in excess of the rate otherwise applicable
to Base Rate Loans from time to time. Interest which accrues under this Section
1.8(c) shall be payable on demand.
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(d) Interest shall accrue from and including the date of any Borrowing to but
excluding the date of any repayment thereof (determined in accordance with
Section 4.3) and shall be payable (i) in respect of each Base Rate Loan, monthly
in arrears on each Monthly Payment Date, (ii) in respect of each Eurodollar
Loan, on (x) the date of any prepayment or repayment thereof (on the amount
prepaid or repaid), (y) the date of any conversion into a Base Rate Loan
pursuant to Section 1.6, 1.9 or 1.10(b), as applicable (on the amount so
converted) and (z) the last day of each Interest Period applicable thereto and,
in the case of an Interest Period in excess of three months, on each date
occurring at three month intervals after the first day of such Interest Period
and (iii) in respect of each Loan, at maturity (whether by acceleration or
otherwise) and, after such maturity, on demand.
(e) All computations of interest hereunder shall be made in accordance with
Section 12.7(b).
(f) The Agent, upon determining the interest rate for any Borrowing of
Eurodollar Loans for any Interest Period, shall promptly notify the Borrower and
the Lenders thereof.
1.9. Interest Periods. At the time the Borrower gives a Notice of Borrowing or
Notice of Conversion in respect of the making of, or conversion into, a
Borrowing of Eurodollar Loans (in the case of the initial Interest Period
applicable thereto) or prior to 10:00 A.M. (New York time) on the third Business
Day prior to the expiration of an Interest Period applicable to a Borrowing of
Eurodollar Loans, such Borrower shall have the right to elect by giving the
Agent written notice (or telephonic notice promptly confirmed in writing) of the
Interest Period applicable to such Borrowing, which Interest Period shall, at
the option of such Borrower (but otherwise subject to clause (y) of the proviso
to Section 1.1(a)(ii)), be a one, two, three or six month period.
Notwithstanding anything to the contrary contained above:
(i) all Eurodollar Loans comprising a single Borrowing shall have the same
Interest Period;
(ii) the initial Interest Period for any Borrowing of Eurodollar Loans
shall commence on the date of such Borrowing (including the date of any
conversion from a Borrowing of Base Rate Loans) and each Interest Period
occurring thereafter in respect of such Borrowing shall commence on the day
on which the next preceding Interest Period expires;
(iii) if any Interest Period begins on a day for which there is no
numerically corresponding day in the calendar month at the end of such
Interest Period, such Interest Period shall end on the last Business Day of
such calendar month;
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(iv) if any Interest Period would otherwise expire on a day which is not a
Business Day, such Interest Period shall expire on the next succeeding
Business Day; provided that if any Interest Period would otherwise expire
on a day which is not a Business Day but is a day of the month after which
no further Business Day occurs in such month, such Interest Period shall
expire on the next preceding Business Day;
(v) no Interest Period shall be elected which extends beyond the Final
Maturity Date;
(vi) no Interest Period may be elected at any time when a payment Default
or any Event of Default is then in existence; provided, however, that at
any time when a non-payment Default is in existence, only a one-month
Interest Period may be elected; and
(vii) no Interest Period in respect of any Borrowing of Eurodollar Loans
shall be elected which extends beyond any date upon which a mandatory
prepayment of Revolving Loans is required to be made under Section 4.2(a),
as a result of reductions to the Total Revolving Loan Commitment pursuant
to Section 3.3(b), unless the aggregate principal amount of Revolving Loans
which are maintained as Base Rate Loans or which have Interest Periods
which will expire on or before such date will be sufficient to make such
required payment.
If, upon the expiration of any Interest Period applicable to a Borrowing of
Eurodollar Loans, the Borrower have failed to elect, or are not permitted to
elect by virtue of the application of clause (vi) above, a new Interest Period
to be applicable to the respective Borrowing of Eurodollar Loans as provided
above, the Borrower shall be deemed to have elected to convert such Borrowing
into a Borrowing of Base Rate Loans effective as of the expiration date of such
current Interest Period.
1.10. Increased Costs, Illegality, etc. (a) In the event that (x) in the case of
clause (i) below, the Agent or (y) in the case of clauses (ii) and (iii) below,
any Lender, shall have determined (which determination shall, absent manifest
error, be final and conclusive and binding upon all parties hereto):
(i) on any date for determining the Eurodollar Rate for any Interest
Period, that, by reason of any changes arising after the date of this
Agreement affecting the interbank Eurodollar market, adequate and fair
means do not exist for ascertaining the applicable interest rate on the
basis provided for in the definition of Eurodollar Rate; or
(ii) at any time, that such Lender shall incur increased costs or
reductions in the amounts received or receivable hereunder with respect to
any Eurodollar Loans (other than any increased cost or reduction in the
amount received or receivable resulting from the imposition of or a change
in the rate of net income taxes or similar charges) because of (x) any
change since the date of this
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Agreement in any applicable law, governmental rule, regulation, guideline,
order or request (whether or not having the force of law), or in the
interpretation or administration thereof and including the introduction of
any new law or governmental rule, regulation, guideline, order or request
(such as, for example, but not limited to, a change in official reserve
requirements, but, in all events, excluding reserves required under
Regulation D to the extent included in the computation of the Eurodollar
Rate) and/or (y) other circumstances affecting such Lender, the interbank
Eurodollar market or the position of such Lender in such market; or
(iii) at any time since the date of this Agreement, that the making or
continuance of any Eurodollar Loan has become unlawful by compliance by
such Lender in good faith with any law, governmental rule, regulation,
guideline or order (or would conflict with any such governmental rule,
regulation, guideline or order not having the force of law but with which
such Lender customarily complies even though the failure to comply
therewith would not be unlawful), or has become impracticable as a result
of a contingency occurring after the date of this Agreement which
materially and adversely affects the interbank Eurodollar market;
then, and in any such event, such Lender (or the Agent in the case of clause (i)
above) shall (x) within five Business Days after any such event and (y) within
five Business Days of the date on which such event no longer exists give notice
(by telephone confirmed in writing) to the Borrower and (except in the case of
clause (i)) to the Agent of such determination (which notice the Agent shall
promptly transmit to each of the other Lenders). Thereafter, (x) in the case of
clause (i) above, Eurodollar Loans shall no longer be available until such time
as the Agent notifies the Borrower and the Lenders that the circumstances giving
rise to such notice by the Agent no longer exist (which notice the Agent shall
endeavor to give promptly after any determination thereof by the Agent), and any
Notice of Borrowing or Notice of Conversion given by the Borrower with respect
to Eurodollar Loans which have not yet been incurred shall be deemed rescinded
by the Borrower, (y) in the case of clause (ii) above, the Borrower agrees to
pay to such Lender, upon written demand therefor (accompanied by the written
notice referred to below), such additional amounts (in the form of an increased
rate of, or a different method of calculating, interest or otherwise as such
Lender in its sole discretion shall determine) as shall be required to
compensate such Lender for such increased costs or reductions in amounts
received or receivable hereunder (a written notice as to the additional amounts
owed to such Lender, showing the basis for the calculation thereof, submitted to
the Borrower by such Lender shall, absent manifest error, be final and
conclusive and binding upon all parties hereto) and (z) in the case of clause
(iii) above, the Borrower shall take one of the actions specified in Section
1.10(b) as promptly as possible and, in any event, within the time period
required by law.
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(b) At any time that any Eurodollar Loan is affected by the circumstances
described in Section 1.10(a)(ii) or (iii), the Borrower may (and in the case of
a Eurodollar Loan affected pursuant to Section 1.10(a)(iii) the Borrower shall)
either (i) if the affected Eurodollar Loan is then being made pursuant to a
Borrowing, cancel said Borrowing by giving the Agent telephonic notice
(confirmed promptly in writing) thereof on the same date that the Borrower was
notified by a Lender pursuant to Section 1.10(a)(ii) or (iii)), or (ii) if the
affected Eurodollar Loan is then outstanding, upon at least two Business Days'
notice to the Agent, require the affected Lender to convert each such Eurodollar
Loan into a Base Rate Loan (which conversion, in the case of the circumstances
described in Section 1.10(a)(iii), shall occur no later than the last day of the
Interest Period then applicable to such Eurodollar Loan (or such earlier date as
shall be required by applicable law)); provided that if more than one Lender is
affected at any time, then all affected Lenders must be treated the same
pursuant to this Section 1.10(b).
(c) If any Lender shall have determined that the adoption or effectiveness of
any applicable law, rule or regulation regarding capital adequacy, or any change
therein, or any change in the interpretation or administration thereof by any
governmental authority, central bank or comparable agency charged with the
interpretation or administration thereof, or compliance by such Lender or any
corporation controlling such Lender with any request or directive regarding
capital adequacy (whether or not having the force of law) of any such authority,
central bank or comparable agency, in each case, after the date of this
Agreement, has or would have the effect of reducing the rate of return on such
Lender's or such other corporation's capital or assets as a consequence of such
Lender's Revolving Loan Commitment or obligations hereunder to a level below
that which such Lender or such other corporation could have achieved but for
such adoption, effectiveness, change or compliance (taking into consideration
such Lender's or such other corporation's policies with respect to capital
adequacy), then from time to time, upon written demand by such Lender (with a
copy to the Agent), accompanied by the notice referred to in the last sentence
of this clause (c), the Borrower shall pay to such Lender such additional amount
or amounts as will compensate such Lender or such other corporation for such
reduction. Each Lender, upon determining in good faith that any additional
amounts will be payable pursuant to this Section 1.10(c), will give prompt
written notice thereof to the Borrower, which notice shall set forth the basis
of the calculation of such additional amounts, although the failure to give any
such notice shall not release or diminish the Borrower's obligations to pay
additional amounts pursuant to this Section 1.10(c) upon the subsequent receipt
of such notice.
1.11. Compensation. The Borrower shall compensate each Lender, promptly upon its
written request (which request shall set forth the basis for requesting such
compensation), for all reasonable losses, expenses and liabilities (including,
without limitation, any loss, expense or liability incurred by reason of the
liquidation or reemployment of deposits or other funds required by such Lender
to fund its Eurodollar Loans but excluding loss of anticipated profit with
respect to any Eurodollar Loans) which such Lender may sustain: (i) if for any
reason (other than a default by such Lender or the Agent) a Borrowing of
Eurodollar Loans does not occur on a date specified therefor in a Notice of
Borrowing or Notice of Conversion (whether or not
16
withdrawn by the Borrower or deemed withdrawn pursuant to Section 1.10(a) or
(b)); (ii) if any repayment (including any repayment made pursuant to Section
4.1 or 4.2 or as a result of an acceleration of the Loans pursuant to Section 9)
or conversion of any Eurodollar Loans occurs on a date which is not the last day
of an Interest Period applicable thereto; (iii) if any prepayment of any
Eurodollar Loans is not made on any date specified in a notice of prepayment
given by the Borrower; or (iv) as a consequence of (x) any other default by the
Borrower to repay Eurodollar Loans when required by the terms of this Agreement
or (y) an election made pursuant to Section 1.10(b). Calculation of all amounts
payable to a Lender under this Section 1.11 shall be made as though that Lender
had actually funded its relevant Eurodollar Loan through the purchase of a
Eurodollar deposit bearing interest at the Eurodollar Rate in an amount equal to
the amount of that Loan, having maturity comparable to the relevant Interest
Period and through the transfer of such Eurodollar deposit from an offshore
office of that Lender to a domestic office of that Lender in the United States
of America; provided, however, that each Lender may fund each of its Eurodollar
Loans in any manner it sees fit and the foregoing assumption shall be utilized
only for the calculation of amounts payable under this Section 1.11. It is
further understood and agreed that if any repayment of Eurodollar Loans pursuant
to Section 4.1 or any conversion of Eurodollar Loans pursuant to Section 1.6 in
either case occurs on a date which is not the last day of an Interest Period
applicable thereto, such repayment or conversion shall be accompanied by any
amounts owing to any Lender pursuant to this Section 1.11.
1.12. Change of Lending Office. Each Lender agrees that, upon the occurrence of
any event giving rise to the operation of Section 1.10(a)(ii) or (iii), 1.10(c),
2.5 or 4.4 with respect to such Lender, it will, if requested by the Borrower,
use reasonable efforts (subject to overall policy considerations of such Lender)
to designate another lending office for any Loans or Letters of Credit affected
by such event; provided that such designation is made on such terms that, in the
sole judgment of such Lender, such Lender and its lending office suffer no
economic, legal or regulatory disadvantage, with the object of avoiding the
consequences of the event giving rise to the operation of any such Section.
Nothing in this Section 1.12 shall affect or postpone any of the obligations of
the Borrower or the right of any Lender provided in Section 1.10, 2.5 or 4.4.
1.13. Replacement of Lenders. (x) If any Lender becomes a Defaulting Lender, (y)
upon the occurrence of any event giving rise to the operation of Section
1.10(a)(ii) or (iii), Section 1.10(c), Section 2.5 or Section 4.4 with respect
to any Lender which results in such Lender charging to the Borrower increased
costs in excess of those being generally charged by the other Lenders or (z) in
the case of a refusal by a Lender to consent to a proposed change, waiver,
discharge or termination with respect to this Agreement which has been approved
by the Required Lenders as provided in Section 12.12(b) the Borrower shall have
the right, if no Default or Event of Default then exists or, in the case of
clause (z) above, would exist after giving effect to such replacement, to
replace such Lender (the "Replaced Lender") with one or more other Eligible
Transferee or Transferees, none of whom shall constitute a Defaulting Lender
17
at the time of such replacement (collectively, the "Replacement Lender") and
each of whom shall be acceptable to the Agent; provided that (i) at the time of
any replacement pursuant to this Section 1.13, the Replacement Lender shall
enter into one or more Assignment and Assumption Agreements pursuant to Section
12.4(b) (and with all fees payable pursuant to said Section 12.4(b) to be paid
by the Replacement Lender) pursuant to which the Replacement Lender shall
acquire the Revolving Loan Commitment and outstanding Revolving Loans of, and in
each case participations in Letters of Credit by, the Replaced Lender and, in
connection therewith, shall pay to (x) the Replaced Lender in respect thereof an
amount equal to the sum of (A) an amount equal to the principal of, and all
accrued interest on, all outstanding Revolving Loans of the Replaced Lender, (B)
an amount equal to all Unpaid Drawings that have been funded by (and not
reimbursed to) such Replaced Lender, together with all then unpaid interest with
respect thereto at such time and (C) an amount equal to all accrued, but
theretofore unpaid, Fees owing to the Replaced Lender pursuant to Section 3.1,
(y) each Letter of Credit Issuer an amount equal to such Replaced Lender's
Percentage of any Unpaid Drawing relating to Letters of Credit issued by such
Letter of Credit Issuer (which at such time remains an Unpaid Drawing) to the
extent such amount was not theretofore funded by such Replaced Lender and (ii)
all obligations of the Borrower then owing to the Replaced Lender (other than
those specifically described in clause (i) above in respect of which the
assignment purchase price has been, or is concurrently being, paid, but
including all amounts, if any, owing under Section 1.11) shall be paid in full
to such Replaced Lender concurrently with such replacement. Upon the execution
of the respective Assignment and Assumption Agreements, the payment of amounts
referred to in clauses (i) and (ii) above, recordation of the assignment on the
Register by the Agent pursuant to Section 7.12 and, if so requested by the
Replacement Lender of the appropriate Revolving Note or Revolving Notes executed
by the Borrower, the Replacement Lender shall become a Lender hereunder and the
Replaced Lender shall cease to constitute a Lender hereunder, except with
respect to indemnification provisions under this Agreement (including, without
limitation, Sections 1.10, 1.11, 2.5, 4.4, 12.1 and 12.6), which shall survive
as to such Replaced Lender.
SECTION 2. Letters of Credit.
2.1. Letters of Credit. (a) Subject to and upon the terms and conditions herein
set forth, the Borrower may request the Letter of Credit Issuer at any time and
from time to time on or after the Initial Borrowing Date and prior to the
Business Day preceding the Final Maturity Date to issue, for the account of the
Borrower and in support of, on a standby basis only, L/C Supportable
Indebtedness of any Credit Party or any Subsidiary of any Credit Party to any
other Person, irrevocable standby letters of credit in such form as may be
approved by such Letter of Credit Issuer (each such letter of credit, a "Letter
of Credit" and, collectively, the "Letters of Credit"). Notwithstanding the
foregoing, no Letter of Credit Issuer shall be under any obligation to issue any
Letter of Credit if at the time of such issuance:
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(i) any order, judgment or decree of any governmental authority or
arbitrator shall purport by its terms to enjoin or restrain such Letter of
Credit Issuer from issuing such Letter of Credit or any requirement of law
applicable to such Letter of Credit Issuer or any request or directive
(whether or not having the force of law) from any governmental authority
with jurisdiction over such Letter of Credit Issuer shall prohibit, or
request that such Letter of Credit Issuer refrain from, the issuance of
letters of credit generally or such Letter of Credit in particular or shall
impose upon such Letter of Credit Issuer with respect to such Letter of
Credit any restriction or reserve or capital requirement (for which such
Letter of Credit Issuer is not otherwise compensated pursuant to the terms
hereof) not in effect on the date hereof, or any unreimbursed loss, cost or
expense which was not applicable, in effect or known to such Letter of
Credit Issuer as of the date hereof and which such Letter of Credit Issuer
in good xxxxx xxxxx material to it; or
(ii) such Letter of Credit Issuer shall have received notice from the
Borrower or the Required Lenders prior to the issuance of such Letter of
Credit of the type described in clause (vi) of Section 2.1(b).
(b) Notwithstanding the foregoing, (i) no Letter of Credit shall be issued the
Stated Amount of which, when added to the Letter of Credit Outstandings
(exclusive of Unpaid Drawings which are repaid on the date of, and prior to the
issuance of, the respective Letter of Credit) at such time, would exceed either
(x) the Letter of Credit Sublimit or (y) when added to the aggregate principal
amount of all Revolving Loans then outstanding, the lesser of (1) the
Availability as then in effect or (2) the Total Revolving Loan Commitment at
such time; (ii) each Letter of Credit shall have an expire date occurring not
later than one year after such Letter of Credit's date of issuance; provided
that any such Letter of Credit may be automatically extendible for periods of up
to one year so long as such Letter of Credit provides that the respective Letter
of Credit Issuer retains an option, satisfactory to such Letter of Credit
Issuer, to terminate such Letter of Credit within a specified period of time
prior (but not less than 30 days) to each scheduled extension date; provided,
further, that each Letter of Credit shall state and shall provide that it shall,
in no event, expire no later than five Business Days prior to the Final Maturity
Date; (iii) each Letter of Credit shall be denominated in U.S. Dollars; (iv)
each Letter of Credit shall provide that the Stated Amount of each Letter of
Credit shall not be less than $50,000 or such lesser amount as is acceptable to
the respective Letter of Credit Issuer; and (v) no Letter of Credit Issuer will
issue any Letter of Credit after it has received written notice from the
Borrower or the Required Lenders stating that a Default or an Event of Default
exists until such time as such Letter of Credit Issuer shall have received a
written notice of (x) rescission of such notice from the party or parties
originally delivering the same or (y) a waiver of such Default or Event of
Default by the Required Lenders.
(c) Notwithstanding the foregoing, in the event a Lender Default exists, no
Letter of Credit Issuer shall be required to issue any Letter of Credit unless
the respective Letter of Credit Issuer has entered into arrangements
satisfactory to it and the Borrower to eliminate such Letter of Credit Issuer's
risk with respect to the participation in Letters of
19
Credit of the Defaulting Lender or Lenders, including by cash collateralizing
such Defaulting Lender's or Lenders' Percentage of the Letter of Credit
Outstandings, as the case may be. No such arrangement shall prejudice the right
of the Borrower or the Letter of Credit Issuer to pursue any available remedies
it may have against any Defaulting Lender.
2.2 Letter of Credit Requests; Notices of Issuance. (a) Whenever the Borrower
desires that a Letter of Credit be issued, the Borrower shall give the Agent and
the respective Letter of Credit Issuer written notice (or notice by facsimile)
thereof prior to 12:00 Noon (New York time) at least three Business Days (or
such shorter period as may be acceptable to the respective Letter of Credit
Issuer) prior to the proposed date of issuance (which shall be a Business Day)
which written notice shall be in the form of Exhibit A-2 (each, a "Letter of
Credit Request"). Each Letter of Credit Request shall include any other
documents as such Letter of Credit Issuer customarily requires in connection
therewith.
(b) Each Letter of Credit Issuer shall, promptly after each issuance of, or
amendment or modification to, a Letter of Credit issued by it, give the Agent,
each Lender and the Borrower written notice of the issuance of, or amendment or
modification to, such Letter of Credit, accompanied by a copy of the Letter of
Credit or Letters of Credit issued by it and each such amendment or modification
thereto.
2.3. Agreement to Repay Letter of Credit Drawings. (a) The Borrower hereby
agrees to reimburse each Letter of Credit Issuer, by making payment to the Agent
in immediately available funds at the Payment Office, for any payment or
disbursement made by such Letter of Credit Issuer under any Letter of Credit
issued by it (each such amount so paid or disbursed until reimbursed, an "Unpaid
Drawing") no later than one Business Day following the date of such payment or
disbursement, with interest on the amount so paid or disbursed by such Letter of
Credit Issuer, to the extent not reimbursed prior to 1:00 P.M. (New York time)
on the date of such payment or disbursement, from and including the date paid or
disbursed to but not including the date such Letter of Credit Issuer is
reimbursed therefor at a rate per annum which shall be the Applicable Base Rate
Margin in excess of the Base Rate as in effect from time to time (plus an
additional 2% per annum if not reimbursed by the third Business Day after the
date of such payment or disbursement), such interest also to be payable on
demand. Each Letter of Credit Issuer shall provide the Borrower prompt notice of
any payment or disbursement made by it under any Letter of Credit issued by it,
although the failure of, or delay in, giving any such notice shall not release
or diminish the obligations of the Borrower under this Section 2.3(a) or under
any other Section of this Agreement.
(b) The Borrower's obligation under this Section 2.3 to reimburse the respective
Letter of Credit Issuer with respect to Unpaid Drawings (including, in each
case, interest thereon) shall be absolute and unconditional under any and all
circumstances and irrespective of any setoff, counterclaim or defense to payment
which the Borrower or
20
any of its Subsidiaries may have or have had against such Letter of Credit
Issuer, the Agent or any Lender, including, without limitation, any defense
based upon the failure of any drawing under a Letter of Credit issued by it to
conform to the terms of the Letter of Credit or any nonapplication or
misapplication by the beneficiary of the proceeds of such drawing; provided,
however, that the Borrower shall not be obligated to reimburse such Letter of
Credit Issuer for any wrongful payment made by such Letter of Credit Issuer
under a Letter of Credit issued by it as a result of acts or omissions that have
been found to constitute willful misconduct or gross negligence on the part of
such Letter of Credit Issuer.
2.4. Letter of Credit Participations. (a) Immediately upon the issuance by a
Letter of Credit Issuer of any Letter of Credit, such Letter of Credit Issuer
shall be deemed to have sold and transferred to each other Lender, and each such
Lender (each a "Participant") shall be deemed irrevocably and unconditionally to
have purchased and received from such Letter of Credit Issuer, without recourse
or warranty, an undivided interest and participation, to the extent of such
Participant's Percentage, in such Letter of Credit, each substitute Letter of
Credit, each drawing made thereunder and the obligations of the Borrower under
this Agreement with respect thereto (although Letter of Credit Fees shall be
payable directly to the Agent for the account of the Lenders as provided in
Section 3.1(b)) and any security therefor or guaranty pertaining thereto. Upon
any change in the Revolving Loan Commitments of the Lenders pursuant to Section
1.13 or 12.4(b), it is hereby agreed that, with respect to all outstanding
Letters of Credit and Unpaid Drawings with respect thereto, there shall be an
automatic adjustment to the participations pursuant to this Section 2.4 to
reflect the new Percentages of the assigning and assignee Lender.
(b) In determining whether to pay under any Letter of Credit, no Letter of
Credit Issuer shall have any obligation relative to the Participants other than
to determine that any documents required to be delivered under such Letter of
Credit have been delivered and that they appear to substantially comply on their
face with the requirements of such Letter of Credit. Any action taken or omitted
to be taken by any Letter of Credit Issuer under or in connection with any
Letter of Credit issued by it if taken or omitted in the absence of such a
finding of gross negligence or willful misconduct, shall not create for such
Letter of Credit Issuer any resulting liability.
(c) In the event that any Letter of Credit Issuer makes any payment under any
Letter of Credit issued by it and the Borrower shall not have reimbursed such
amount in full to the Letter of Credit Issuer pursuant to Section 2.3(a), such
Letter of Credit Issuer shall promptly notify the Agent, and the Agent shall
promptly notify each Participant of such failure, and each such Participant
shall promptly and unconditionally pay to the Agent for the account of such
Letter of Credit Issuer, the amount of such Participant's Percentage of such
payment in U.S. Dollars and in same day funds; provided, however, that no
Participant shall be obligated to pay to the Agent its Percentage of such
unreimbursed amount for any wrongful payment made by such Letter of Credit
Issuer under a Letter of Credit issued by it as a result of acts or omissions
that have been
21
found to constitute willful misconduct or gross negligence on the part of such
Letter of Credit Issuer. If the Agent so notifies any Participant required to
fund a payment under a Letter of Credit prior to 11:00 A.M. (New York time) on
any Business Day, such Participant shall make available to the Agent for the
account of the respective Letter of Credit Issuer such Participant's Percentage
of the amount of such payment on such Business Day in same day funds (and, to
the extent such notice is given after 11:00 A.M. (New York time) on any Business
Day, such Participant shall make such payment on the immediately following
Business Day). If and to the extent such Participant shall not have so made its
Percentage of the amount of such payment available to the Agent for the account
of the respective Letter of Credit Issuer, such Participant agrees to pay to the
Agent for the account of such Letter of Credit Issuer, forthwith on demand such
amount, together with interest thereon, for each day from such date until the
date such amount is paid to the Agent for the account of the Letter of Credit
Issuer at the overnight Federal Funds Rate. The failure of any Participant to
make available to the Agent for the account of the respective Letter of Credit
Issuer its Percentage of any payment under any Letter of Credit issued by it
shall not relieve any other Participant of its obligation hereunder to make
available to the Agent for the account of such Letter of Credit Issuer its
applicable Percentage of any payment under any such Letter of Credit on the date
required, as specified above, but no Participant shall be responsible for the
failure of any other Participant to make available to the Agent for the account
of such Letter of Credit Issuer such other Participant's Percentage of any such
payment.
(d) Whenever any Letter of Credit Issuer receives a payment of a reimbursement
obligation as to which the Agent has received for the account of such Letter of
Credit Issuer any payments from the Participants pursuant to clause (c) above,
such Letter of Credit Issuer shall pay to the Agent and the Agent shall promptly
pay to each Participant which has paid its Percentage thereof, in U.S. Dollars
and in same day funds, an amount equal to such Participant's Percentage of the
principal amount thereof and interest thereon accruing after the purchase of the
respective participations.
(e) The obligations of the Participants to make payments to the Agent for the
account of the respective Letter of Credit Issuer with respect to each Letter of
Credit issued by it shall be irrevocable and not subject to counterclaim,
set-off or other defense or any other qualification or exception whatsoever and
shall be made in accordance with the terms and conditions of this Agreement
under all circumstances, including, without limitation, any of the following
circumstances:
(i) any lack of validity or enforceability of this Agreement or any of the
other Credit Documents;
(ii) the existence of any claim, set-off, defense or other right which the
Borrower or any of its Subsidiaries may have at any time against a
beneficiary named in a Letter of Credit, any transferee of any Letter of
Credit (or any Person for whom any such transferee may be acting), the
Agent, any Letter of Credit Issuer, any Lender, or other Person, whether in
connection with this Agreement,
22
any Letter of Credit, the transactions contemplated herein or any unrelated
transactions (including any underlying transaction between the Borrower, or
any of its Subsidiaries and the beneficiary named in any such Letter of
Credit);
(iii) any draft, certificate or other document presented under the Letter
of Credit proving to be forged, fraudulent, invalid or insufficient in any
respect or any statement therein being untrue or inaccurate in any respect;
(iv) the surrender or impairment of any security for the performance or
observance of any of the terms of any of the Credit Documents; or
(v) the occurrence of any Default or Event of Default.
2.5. Increased Costs. If the adoption or effectiveness of any applicable law,
rule or regulation, or any change therein, or any change in the interpretation
or administration thereof by any governmental authority, central bank or
comparable agency charged with the interpretation or administration thereof, or
compliance by any Letter of Credit Issuer or any Participant with any request or
directive (whether or not having the force of law) by any such authority,
central bank or comparable agency, in each case, after the date hereof, shall
either (i) impose, modify or make applicable any reserve, deposit, capital
adequacy or similar requirement against Letters of Credit issued by such Letter
of Credit Issuer or such Participant's participation therein, or (ii) impose on
any Letter of Credit Issuer or any Participant any other conditions affecting
this Agreement, any Letter of Credit or such Participant's participation
therein; and the result of any of the foregoing is to increase the cost to such
Letter of Credit Issuer or such Participant of issuing, maintaining or
participating in any Letter of Credit, or to reduce the amount of any sum
received or receivable by such Letter of Credit Issuer or such Participant
hereunder, then, upon written demand to the Borrower by such Letter of Credit
Issuer or such Participant (a copy of which notice shall be sent by such Letter
of Credit Issuer or such Participant to the Agent), accompanied by the
certificate described in the last sentence of this Section 2.5, the Borrower
shall pay to such Letter of Credit Issuer or such Participant such additional
amount or amounts as will compensate such Letter of Credit Issuer or such
Participant for such increased cost or reduction. A certificate submitted to the
Borrower by such Letter of Credit Issuer or such Participant, as the case may be
(a copy of which certificate shall be sent by such Letter of Credit Issuer or
such Participant to the Agent), setting forth the basis for the determination of
such additional amount or amounts necessary to compensate such Letter of Credit
Issuer or such Participant as aforesaid shall be final and conclusive and
binding on the Borrower absent manifest error, although the failure to deliver
any such certificate shall not release or diminish the Borrower's obligations to
pay additional amounts pursuant to this Section 2.5 upon subsequent receipt of
such certificate.
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SECTION 3. Fees; Commitments.
3.1. Fees. (a) The Borrower shall pay to the Agent for the account of each
Non-Defaulting Lender a commitment fee (the "Commitment Fee") for the period
from and including the Effective Date to but not including the Final Maturity
Date (or such earlier date as the Total Revolving Loan Commitment shall have
been terminated), computed at a rate for each day equal to three-eighths percent
(0.375%) per annum on the daily average Unutilized Revolving Loan Commitment of
such Lender. Accrued Commitment Fees shall be due and payable on a pro rata
basis quarterly in arrears on each Quarterly Payment Date and the date upon
which the Total Revolving Loan Commitment is terminated.
(b) The Borrower shall pay to the Agent for the account of the Lenders pro rata
on the basis of their Percentages, a fee in respect of each Letter of Credit
(the "Letter of Credit Fee") computed at a rate per annum equal to one and
one-quarter (1.25%) percent per annum of the daily Stated Amount of such Letter
of Credit. Accrued Letter of Credit Fees shall be due and payable quarterly in
arrears on each Quarterly Payment Date and upon and until the first day on or
after the termination of the Total Revolving Loan Commitment upon which no
Letters of Credit remain outstanding.
(c) The Borrower shall pay directly to the Letter of Credit Issuer upon each
issuance of, payment under, and/or amendment of, a Letter of Credit issued by
the Letter of Credit Issuer such amount as shall at the time of such issuance,
payment or amendment be the administrative charge which the Letter of Credit
Issuer is customarily charging for issuances of, payments under, or amendments
of, letters of credit issued by it.
(d) The Borrower shall pay to the Agent for the account of the Agent an annual
fee in the amount of $20,000 per year to offset the expenses and costs of the
Agent in connection with record keeping, periodic examinations, analyzing and
evaluating the Collateral (the "Collateral Management Fee"). Such Collateral
Management Fee shall be due and payable in advance on the Effective Date and
thereafter on each Anniversary Date (without proration). Such Collateral
Management Fee is and shall be deemed fully earned and nonrefundable or
rebateable when due.
(e) The Borrower shall pay the Agent for the account of the Lenders a fee in the
amount of $500,000 in respect of providing the Total Revolving Loan Commitment
(the "Loan Facility Fee"). Such Loan Facility Fee shall be due and payable on
the Effective Date. The Agent acknowledges receipt of the first $50,000 of such
fee, and that the balance thereof to be paid on the Effective Date is $450,000.
The Borrower acknowledges and agrees that such fee is in addition to
out-of-pocket expenses payable by it on such date pursuant to Section 12.1
hereof.
(f) The Borrower shall pay to the Agent for the account of the Agent a fee in
the amount of $500 for each conversion under Section 1.8(b)(ii) and for each
election under Section 1.9 (the "Eurodollar Processing Fee") to offset the
expenses and costs of the Agent in connection with the processing of such
conversion and/or election. Such Eurodollar Processing Fee shall be due and
payable upon the effectiveness of each such conversion and/or election.
24
(g) The Borrower shall pay to the Agent such fees as may be agreed to from time
to time between the Borrower and the Agent when and as due.
(h) All computations of Fees shall be made in accordance with Section 12.7(b).
3.2. Mandatory Reduction of Revolving Loan Commitments (a) The Total Revolving
Loan Commitment shall be permanently reduced on each date on which any Credit
Party or any of its Subsidiaries receives Net Cash Proceeds from any sales or
other dispositions of Collateral in excess of $1,000,000 individually or
$2,000,000 in the aggregate in any consecutive twelve month period (other than
sales or other dispositions of (i) Special Inventory, (ii) Rigs which are made
in accordance with Section 8.2(f) and (iii) assets listed on Annex XI) to the
extent of the Net Cash Proceeds so received.
(b) The Total Revolving Loan Commitment (and the Revolving Loan Commitment of
each Lender) shall terminate in its entirety on the Final Maturity Date.
(c) Each reduction to the Total Revolving Loan Commitment pursuant to this
Section 3.2 shall apply proportionately to reduce the Revolving Loan Commitment
of each Lender.
SECTION 4. Payments
4.1. Voluntary Prepayments; Early Terminations. The Borrower shall have the
right to prepay the Loans without premium or penalty except as otherwise
provided in this Agreement, from time to time on the following terms and
conditions: (i) the Borrower shall give the Agent at the Notice Office written
notice (or telephonic notice promptly confirmed in writing) of its intent to
prepay the Loans, the amount of such prepayment and (in the case of Eurodollar
Loans) the specific Borrowing(s) pursuant to which such Loans were made, which
notice shall be given by the Borrower prior to 11:00 A.M. (New York time) (x) at
least three Business Days prior to the date of such prepayment in the case of
Revolving Loans maintained as Base Rate Loans and (y) at least five Business
Days prior to the date of such prepayment in the case of Eurodollar Loans, which
notice shall promptly be transmitted by the Agent to each of the Lenders; (ii)
each prepayment shall be in an aggregate principal amount of at least
$1,000,000; provided that no partial payment of Eurodollar Loans made pursuant
to a Borrowing shall reduce the aggregate principal amount of the Eurodollar
Loans outstanding pursuant to such Borrowing to an amount less than the Minimum
Borrowing Amount applicable thereto; (iii) each prepayment in respect of any
Revolving Loans made pursuant to a Borrowing shall be applied pro rata among
such Revolving Loans; provided that such prepayment shall not be applied to any
Revolving Loans of a Defaulting Lender. Upon at least 15 days' prior written
notice (or telephonic notice promptly confirmed in writing) to the Agent at the
Notice Office, the Borrower may terminate the Revolving Credit
25
Commitment and this Agreement; provided that if such termination occurs prior to
the fourth Anniversary Date (any such date being an "Early Termination"), then
the Borrower shall pay Agent on the Early Termination for the account of the
Lenders the applicable Early Termination Fee pro rata on the basis of their
Percentages.
4.2. Mandatory Prepayments. (a) If on any date the sum of (i) the aggregate
outstanding principal amount of Revolving Loans (after giving effect to all
other repayments thereof on such date) plus (ii) the Letter of Credit
Outstandings on such date exceeds the lesser of the Total Revolving Loan
Commitment or the Availability as then in effect, the Borrower shall repay on
such date the principal of Revolving Loans in an aggregate amount equal to such
excess. If, after giving effect to the prepayment of all outstanding Revolving
Loans, the aggregate amount of Letter of Credit Outstandings exceeds the least
of the Total Revolving Loan Commitment, the Availability or the Letter of Credit
Sublimit as then in effect, the Borrower shall pay to the Agent on such date an
amount in Cash and/or Cash Equivalents equal to such excess (up to the aggregate
amount of Letter of Credit Outstandings at such time) and the Agent shall hold
such payment as security for the obligations of the Borrower hereunder pursuant
to a cash collateral agreement to be entered into in form and substance
reasonably satisfactory to the Agent (which shall permit certain investments in
Cash Equivalents reasonably satisfactory to the Agent until the proceeds are
applied to the secured obligations); provided that any such Cash collateral
shall be released to the Borrower at any time at which such excess shall no
longer exist as long as at such time there does not exist any Default or Event
of Default.
(b) In addition to any other mandatory prepayments pursuant to this Section 4.2,
on each date on or after the Initial Borrowing Date on which any Credit Party or
any of its Subsidiaries receives Net Cash Proceeds from an Asset Sale or Sales,
disregarding for purposes of this Section 4.2(b) clause (iii) of the definition
of "Asset Sale", in excess of $500,000 individually or $1,000,000 in the
aggregate in any consecutive twelve month period, the Borrower shall repay on
such date any Borrowings and Letter of Credit Outstandings by an amount equal to
100% of such excess Net Cash Proceeds so received.
(c) In addition to any other mandatory prepayments pursuant to this Section 4.2,
on each date on or after the Initial Borrowing Date on which any Credit Party or
any of its Subsidiaries receives any cash proceeds from any incurrence of
Indebtedness (other than Indebtedness permitted to be incurred pursuant to
Section 8.4) by the Borrower or any of its Subsidiaries, the Borrower shall
repay on such date any Borrowings and Letter of Credit Outstandings by an amount
equal to 100% of the cash proceeds (net of all underwriting discounts, fees and
commissions and other costs and expenses associated therewith) of the respective
incurrence of Indebtedness.
(d) In addition to any other mandatory prepayments pursuant to this Section 4.2,
on each date on or after the Initial Borrowing Date on which any Credit Party or
any of its Subsidiaries receives any cash proceeds, from any sale or issuance of
preferred or
26
common equity of (or cash capital contributions to) any Credit Party or any of
its Subsidiaries (other than proceeds received from (x) issuances of options to
purchase the Parent Common Stock to management, directors, non-employee
consultants, and employees of any Credit Party and its Subsidiaries, and (y)
issuances of the Parent Common Stock (including as a result of the exercise of
any options with regard thereto) to management, directors, non-employee
consultants, and employees of any Credit Party and its Subsidiaries, the
Borrower shall repay on such date any Borrowings and Letter of Credit
Outstandings by an amount equal to 100% of such cash proceeds (net of all
underwriting discounts, fees and commissions and other costs and expenses
associated therewith) of the respective equity issuance or capital contribution.
(e) In addition to any other mandatory prepayments pursuant to this Section 4.2,
within 10 days following each date on or after the Initial Borrowing Date on
which any Credit Party or any of its Subsidiaries receives proceeds from any
insurance on any assets of any Credit Party, whether as a result of a Total Loss
of any Rigs or otherwise, and such proceeds are in excess of $500,000
individually or $1,000,000 in the aggregate in any consecutive twelve month
period, and such proceeds are not otherwise reinvested (or contractually
committed to be reinvested) in like assets within 60 days of receipt, the
Borrower shall repay on such date any Borrowings and Letter of Credit
Outstandings by an amount equal to 100% of such excess insurance proceeds.
(f) With respect to each repayment of Revolving Loans required by this Section
4.2, the Borrower may designate the Types of Revolving Loans which are to be
repaid and, in the case of Eurodollar Loans, the specific Borrowing(s) pursuant
to which such Loans were made; provided that (i) Eurodollar Loans may be
designated for repayment pursuant to this Section 4.2 only on the last day of an
Interest Period applicable thereto unless all Eurodollar Loans with Interest
Periods ending on such date of required prepayment and all Base Rate Loans have
been paid in full; (ii) if any repayment of Eurodollar Loans made pursuant to a
single Borrowing shall reduce the outstanding Eurodollar Loans to an amount less
than the Minimum Borrowing Amount, such Borrowing shall be immediately converted
into Base Rate Loans; and (iii) each repayment of any Revolving Loans made
pursuant to a Borrowing shall be applied pro rata among such Revolving Loans. In
the absence of a designation by the Borrower as described in the preceding
sentence, the Agent shall, subject to the above, make such designation in its
sole discretion with a view, but no obligation, to minimize breakage costs owing
under Section 1.11.
(g) In addition to any other mandatory prepayments pursuant to this Section 4.2,
if at any time (i) the sum of the outstanding balance of Revolving Loans and the
Letter of Credit Outstandings exceeds (ii) 50% of the Orderly Liquidation Value
(with Orderly Liquidation Value being based upon the then most recent Appraisal
of Orderly Liquidation Value) of the Domestic Rigs of Borrower in which the
Agent for the benefit of the Lenders has a first priority perfected security
interest and Lien and which are not subject to any other Lien, such excess shall
be due and payable to the Lenders without premium or penalty immediately upon
the Agent's demand therefor, or failing such demand, within five (5) days after
the Borrower receives confirmation of such value.
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(h) Notwithstanding anything to the contrary contained elsewhere in this
Agreement, all Revolving Loans and Letter of Credit Outstandings which are
outstanding on the Final Maturity Date shall be repaid in full on the Final
Maturity Date.
4.3. Method and Place of Payment. Except as otherwise specifically provided
herein, all payments under this Agreement or under any Note shall be made to the
Agent for the ratable account of the Lenders entitled thereto, not later than
1:00 P.M. (New York time) on the date when due and shall be made in immediately
available funds and in U.S. Dollars at the Payment Office, it being understood
that written, telex or facsimile transmission notice by the Borrower to the
Agent to make a payment from the funds in the Borrower's account at the Payment
Office shall constitute the making of such payment to the extent of such funds
held in such account. Any payments under this Agreement or under any Note which
are made later than 1:00 P.M. (New York time) shall be deemed to have been made
on the next succeeding Business Day. Whenever any payment to be made hereunder
or under any Note shall be stated to be due on a day which is not a Business Day
(unless otherwise provided herein), the due date thereof shall be extended to
the next succeeding Business Day and, with respect to payments of principal,
interest shall be payable during such extension at the applicable rate in effect
immediately prior to such extension. The Borrower hereby irrevocably authorizes
and directs each Lender and the Agent to advance proceeds of Revolving Loans in
such amounts and at such times as may be necessary in the opinion of the Agent
to pay (to the extent of the Availability at the date of such payment) any and
all amounts due and payable under the Credit Documents by any Credit Party,
including, without limitation, amounts payable by the Borrower (a) under
Sections 4.2 and 12.1 and (b) on or in respect of the Revolving Notes and
Letters of Credit. The Agent shall account to the Borrower for such advances in
the ordinary course of its business.
4.4. Net Payments. (a) All payments made by the Borrower hereunder or under any
Note will be made without setoff, counterclaim or other defense (which payment
shall not be deemed a waiver by the Borrower of any claims arising under this
Agreement). Except as provided in Section 4.4(b), all such payments will be made
free and clear of, and without deduction or withholding for, any present or
future taxes, levies, imposts, duties, fees, assessments or other charges of
whatever nature now or hereafter imposed by any jurisdiction or by any political
subdivision or taxing authority thereof or therein with respect to such payment
(but excluding, except as provided in the second succeeding sentence, any tax
(including any franchise tax) imposed on or measured by the net income or net
profits of a Lender pursuant to the laws of the jurisdiction in which it is
organized or the jurisdiction in which the principal office or applicable
lending office of such Lender is located or any subdivision thereof or therein)
and all interest, penalties or similar liabilities with respect thereto (all
such nonexcluded taxes, levies, imposts, duties, fees, assessments or other
charges being referred to collectively as "Taxes"). If any Taxes are so levied
or imposed, the Borrower agrees to pay the full amount of such Taxes, and such
additional amounts as may be necessary so that every
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payment of all amounts due under this Agreement or under any Note, after
withholding or deduction for or on account of any Taxes, will not be less than
the amount provided for herein or in such Note. If any amounts are payable in
respect of Taxes pursuant to the preceding sentence, the Borrower agrees to
reimburse each Lender, upon the written request of such Lender, for taxes
imposed on or measured by the net income or net profits of such Lender pursuant
to the laws of the jurisdiction in which the principal office or applicable
lending office of such Lender is located or under the laws of any political
subdivision or taxing authority of any such jurisdiction in which the principal
office or applicable lending office of such Lender is located and for any
withholding of taxes as such Lender shall determine are payable by, or withheld
from, such Lender in respect of such amounts so paid to or on behalf of such
Lender pursuant to the preceding sentence and in respect of any amounts paid to
or on behalf of such Lender pursuant to this sentence; provided, however, that
no such reimbursement shall be required unless such Lender determines that the
amount of such Taxes exceeds the amount of any credit, allowance or deduction
allowable to such Lender as an offset against any Taxes payable on behalf of
such Lender and in such event reimbursement shall not be required in any amount
greater than such excess. The Borrower will furnish to the Agent within 45 days
after the date the payment of any Taxes is due pursuant to applicable law
certified copies of tax receipts evidencing such payment by the Borrower. The
Borrower agrees to indemnify and hold harmless each Lender and the Agent, and
reimburse such Lender and the Agent upon their written request, for the amount
of any Taxes so levied or imposed and paid by such Lender or the Agent. A
certificate as to the amount of any such required indemnification payment
prepared by such Lender or the Agent shall be final, conclusive and binding for
all purposes absent manifest error.
(b) Each Lender that is not a United States person (as such term is defined in
Section 7701(a)(30) of the Code) agrees to deliver to the Borrower and the Agent
on or prior to the Effective Date, or in the case of a Lender that is an
assignee or transferee of an interest under this Agreement pursuant to Section
1.13 or 12.4 (unless the respective Lender was already a Lender hereunder
immediately prior to such assignment or transfer), on the date of such
assignment or transfer to such Lender, (i) two accurate and complete original
signed copies of Internal Revenue Service Form 4224 or 1001 (or successor forms)
certifying to such Lender's entitlement to a complete exemption from United
States withholding tax with respect to payments to be made under this Agreement
and under any Note, or (ii) if the Lender is not a "bank" within the meaning of
Section 881(c)(3)(A) of the Code and cannot deliver either Internal Revenue
Service Form 1001 or 4224 pursuant to clause (i) above, (x) a certificate
substantially in the form of Exhibit C (any such certificate, a "Section
4.4(b)(ii) Certificate") and (y) two accurate and complete original signed
copies of Internal Revenue Service Form W-8 (or successor form) certifying to
such Lender's entitlement to a complete exemption from United States withholding
tax with respect to payments of interest to be made under this Agreement and
under any Note. In addition, each Lender agrees that from time to time after the
Effective Date, when a lapse in time or change in circumstances renders the
previous certification obsolete or inaccurate in any material respect, it will
deliver promptly to the Borrower and the Agent two new accurate and complete
original signed
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copies of Internal Revenue Service Form 4224 or 1001, or Form W-8 and a Section
4.4(b)(ii) Certificate, as the case may be, and such other forms as may be
required in order to confirm or establish the entitlement of such Lender to a
continued exemption from or reduction in United States withholding tax with
respect to payments under this Agreement and any Note, or it shall immediately
notify the Borrower and the Agent of its inability to deliver any such Form or
Certificate in which case such Lender shall not be required to deliver any such
Form or Certificate pursuant to this Section 4.4(b). Notwithstanding anything to
the contrary contained in Section 4.4(a), but subject to Section 12.4(b) and the
immediately succeeding sentence, (x) the Borrower shall be entitled, to the
extent it is required to do so by law, to deduct or withhold income or similar
taxes imposed by the United States (or any political subdivision or taxing
authority thereof or therein) from interest, fees or other amounts payable
hereunder for the account of any Lender which is not a United States person (as
such term is defined in Section 7701(a)(30) of the Code) for U.S. Federal income
tax purposes to the extent that such Lender has not provided to the Borrower
U.S. Internal Revenue Service Forms that establish a complete exemption from
such deduction or withholding and (y) the Borrower shall not be obligated
pursuant to Section 4.4(a) hereof to gross-up payments to be made to a Lender in
respect of income withholding or similar taxes imposed by the United States if
(I) such Lender has not provided to the Borrower the Internal Revenue Service
Forms required to be provided to the Borrower pursuant to this Section 4.4(b) or
(II) in the case of a payment, other than interest, to a Lender described in
clause (ii) above, to the extent that such Forms do not establish a complete
exemption from withholding of such taxes. Notwithstanding anything to the
contrary contained in the preceding sentence or elsewhere in this Section 4.4
and except as set forth in Section 12.4(b), the Borrower agrees to indemnify
each Lender and the Agent in the manner set forth in Section 4.4(a) (without
regard to the identity of the jurisdiction requiring the deduction or
withholding) in respect of any amounts deducted or withheld by it as described
in the immediately preceding sentence as a result of any changes after the
Effective Date in any applicable law, treaty, governmental rule, regulation,
guideline or order, or in the interpretation thereof, relating to the deducting
or withholding of income or similar Taxes.
SECTION 5. Conditions Precedent. The obligation of each Lender to make each Loan
to the Borrower hereunder, and the obligation of the Letter of Credit Issuer to
issue each Letter of Credit hereunder, is subject, at the time of each such
Credit Event (except as otherwise hereinafter indicated), to the satisfaction of
the following conditions:
5.1. Execution of Agreement; Notes. On or prior to the Effective Date, (i) this
Agreement shall have become effective as provided in Section 12.10 and (ii)
there shall have been delivered to the Agent for the account of each Lender the
appropriate Revolving Note executed by the Borrower and in the amount, maturity
and as otherwise provided herein.
5.2. No Default; Representations and Warranties. At the time of each Credit
Event and also after giving effect thereto, (i) there shall exist no Default or
Event of Default and (ii) all representations and warranties contained herein
and in the other Credit Documents in effect at such time shall be true and
correct in all material respects with the same effect as though such
representations and warranties had been made on and as of the date of such
Credit Event, unless stated to relate to a specific earlier date, in which case
such representations and warranties shall be true and correct in all material
respects as of such earlier date.
5.3. Officer's Certificate. (a) On the Effective Date, the Agent shall have
received a certificate dated such date signed by an appropriate officer of the
Borrower stating that all of the applicable conditions set forth in Sections
5.2, 5.6, 5.7, 5.8, 5.10 (deleting the reference to the Agent therein), 5.11
(deleting the reference to the Agent therein), 5.13, 5.21, and 5.22 exist as of
such date.
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(b) On the date of each Credit Event, the Agent shall have received a
certificate dated such date signed by an appropriate officer of the Borrower
stating that all of the applicable conditions set forth in Sections 5.2, 5.6,
5.7, 5.8, 5.13, 5.21, and 5.22 exist as of such date.
5.4. Opinions of Counsel. On the Effective Date, the Agent shall have received
opinions, addressed to the Agent and each of the Lenders and dated the Effective
Date, (a) from Xxxxxx & Xxxxxx, L.L.P., counsel to the Credit Parties, in the
form of Exhibit D, (b) from counsel to the Agent and the Lenders located in
Alabama, Arkansas, Louisiana, Michigan, Mississippi, Oklahoma and Wyoming, and
(c) from counsel to the Credit Parties located in the Cayman Islands, Panama,
Venezuela and Mexico, which opinions shall cover such matters incident to the
transactions contemplated herein and in the other Credit Documents as the Agent
may reasonably request and shall be in form and substance reasonably
satisfactory to the Agent.
5.5. Corporate Proceedings. (a) On the Effective Date, the Agent shall have
received from each Credit Party a certificate, dated such date, signed by the
chairman, a vice chairman, the president or any vice-president of such Credit
Party, and attested to by the secretary or any assistant secretary of such
Credit Party, in the form of Exhibit E with appropriate insertions, together
with copies of the Certificate of Incorporation and By-Laws of such Credit Party
and the resolutions of such Credit Party referred to in such certificate and all
of the foregoing (including each such Certificate of Incorporation and By-Laws)
shall be reasonably satisfactory to the Agent.
(b) At the time of each Credit Event, all corporate and legal proceedings and
all instruments and agreements in connection with the transactions contemplated
by the Credit Documents shall be reasonably satisfactory in form and substance
to the Agent, and the Agent shall have received all information and copies of
all certificates, documents and papers, including a Borrowing Notice and/or
Letter of Credit Request, as appropriate, good standing certificates, bring-
down certificates and any other records of corporate proceedings and
governmental approvals, if any, which the Agent reasonably may have requested in
connection therewith, such documents and papers, where appropriate, to be
certified by proper corporate or governmental authorities.
5.6. Adverse Change, etc. At the time of each Credit Event and after giving
effect thereto, nothing shall have occurred since September 30, 1998 (and
neither the Lenders nor the Agent shall have become aware of any facts or
conditions not previously known) which (a) have, or could reasonably be expected
to have, a material adverse effect on the rights or remedies of the Lenders or
the Agent, or on the ability of any Credit Party to perform its obligations to
them hereunder or under any other Credit Document or (b) have, or could
reasonably be expected to have, a Material Adverse Effect.
5.7. Litigation. At the time of each Credit Event and after giving effect
thereto, there shall be no actions, suits or proceedings pending or threatened
(a) with respect to this Agreement or any other Document or (b) which could
reasonably be expected to (i) have a Material Adverse Effect or (ii) have a
material adverse effect on the rights or remedies of the Lenders or the Agent
hereunder or under any other Credit Document or on the ability of any Credit
Party to perform its respective obligations to the Lenders or the Agent
hereunder or under any other Credit Document.
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5.8. Approvals. On the Effective Date and at the time of each Credit Event, all
necessary governmental (domestic and foreign) and third party approvals in
connection with the transactions contemplated by the Credit Documents and
otherwise referred to herein or therein shall have been obtained and remain in
effect, and all applicable waiting periods shall have expired without any action
being taken by any competent authority which restrains, prevents or imposes
materially adverse conditions upon the consummation of the transactions
contemplated by the Credit Documents and otherwise referred to herein or
therein. Additionally, there shall not exist any judgment, order, injunction or
other restraint issued or filed or a hearing seeking injunctive relief or other
restraint pending or notified prohibiting or imposing materially adverse
conditions upon the making of Loans.
5.9. Update Examination; Tax Review. On the Effective Date, the Agent shall have
become satisfied with (a) the Agent's updated examination of the books and
records and financial condition of the Borrower and each of the Credit Parties
and its Subsidiaries, and (b) the tax consequences, if any, to the Borrower
arising out of or relating to the June 1997 merger of Grey Wolf Drilling Company
and Drillers Inc. as the Agent shall have determined in its sole discretion is
necessary and appropriate.
5.10. Minimum Availability. On the Effective Date, after giving effect to the
initial Revolving Credit Loans (if any) and Letter of Credit Outstandings on
such date, and assuming all of the Borrower's debts, obligations and payables
have been paid or discharged when due in accordance with usual business
practices, such practices to be satisfactory to the Agent, Availability shall be
equal to or greater than $10,000,000.
5.11 Security Documents. (a) On the Effective Date, each Credit Party shall have
duly authorized, executed and delivered to the Agent for the benefit of the
Lenders a Pledge Agreement in the form of Exhibit F (as modified, amended or
supplemented from time to time in accordance with the terms thereof and hereof,
the "Pledge Agreement") and a Security Agreement in the form of Exhibit G (as
modified, amended or supplemented from time to time in accordance with the terms
thereof and hereof, the "Security Agreement") covering all of the Security
Agreement Collateral, together with:
(A) executed copies of Financing Statements (Form UCC-1) or appropriate
local equivalent in appropriate form for filing under the UCC or
appropriate local equivalent of each jurisdiction as may be necessary to
perfect the security interests purported to be created by the Security
Agreement;
(B) certified copies of Requests for Information or Copies (Form UCC-11),
or equivalent reports, each of a recent date listing all effective
financing statements that name each of the Credit Parties as debtor and
that are filed in the jurisdictions referred to in clause (A) above,
together with copies of such financing statements that name each of the
Credit Parties as debtor (none of which shall cover the Collateral except
(x) those with respect to which
32
appropriate termination statements executed by the secured lender
thereunder have been delivered to the Agent and (y) to the extent
evidencing Permitted Liens);
(C) evidence of the completion of all other recordings and filings of, or
with respect to, the Security Agreement as may be necessary or, in the
reasonable opinion of the Agent, desirable, to perfect the security
interests purported to be created by the Security Agreement;
(D) all of the Pledged Securities referred to therein accompanied by
executed and undated stock powers in the case of capital stock, including,
without limitation, share certificates of the Subsidiaries of Parent and
Borrower incorporated outside of the continental United States (other than
Drillers, Inc., DI de Venezuela and Grey Wolf de Mexico SRL de C.V.); and
(E) evidence satisfactory to the Agent that the Agent for the benefit of
the Lenders has a valid and first priority perfected security interest in
and Lien upon all of the Collateral, and that all other actions necessary
or, in the opinion of the Agent, desirable, to perfect the security
interests purported to be created by the Pledge Agreement and the Security
Agreement have been taken and ensure that such security interests are first
priority and not subject to any other Liens;
and the Pledge Agreement and the Security Agreement shall be in full force and
effect; and
(b) On the Effective Date, each Credit Party shall have executed and delivered
all amendments (Form UCC-3) to the UCC-1s requested by the Agent, in form and
substance satisfactory to the Agent.
5.12. Third Party Agreements. On the Effective Date, the Agent shall have
received, in form and substance satisfactory to the Agent, all consents,
waivers, acknowledgments and other agreements from third persons which the Agent
may deem necessary or desirable in order to permit, protect and perfect its
security interests in and liens upon the Collateral or to effectuate the
provisions or purposes of this Agreement and the other Credit Documents,
including, without limitation, acknowledgments by lessors, mortgagees and
warehousemen of the Agent's security interests for the benefit of the Lenders in
the Collateral, waivers by such persons of any security interests, liens or
other claims by such persons to the Collateral and agreements permitting the
Agent access to, and the right to remain on, the premises to exercise its rights
and remedies and otherwise deal with the Collateral.
5.13. Payment of Fees. On the Effective Date and at the time of each Credit
Event and after giving effect thereto, all costs, fees and expenses, and all
other compensation related to the transactions contemplated by this Agreement
due to the Agent or the Lenders (including, without limitation, legal fees and
expenses) shall have been paid to the extent then due.
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5.14. Existing Indebtedness Agreements. On the Effective Date, there shall have
been delivered to the Agent copies, certified as true and correct by an
appropriate officer of the Borrower, of all agreements evidencing or relating to
the Existing Indebtedness that are to remain in effect after giving effect to
the consummation of the transactions contemplated in the Credit Documents
(collectively, the "Existing Indebtedness Agreements"), all of which agreements
and documents shall be (x) in form and substance satisfactory to the Agent and
(y) in full force and effect on the Effective Date. The Credit Parties shall
have duly pledged and actually delivered to the Agent each note and other
evidence of Intercompany Loans in existence on the Effective Date in accordance
herewith and the other Credit Documents. From time to time after the Effective
Date, the Credit Parties will deliver to the Agent all such notes and other
evidence of Intercompany Loans as and when such notes and other evidence are
created by the parties thereto.
5.15. Solvency Certificate; Evidence of Insurance. On the Effective Date, the
Agent shall have received:
(a) one or more solvency certificates in the form of Exhibit I from the
chief financial officer or other Authorized Officer of each Credit Party and
dated the Effective Date, as the case may be, in each case, addressed to the
Agent and each Lender, and reciting that, both prior to (in the case of the
Initial Borrowing Date) and after giving effect to the incurrence of all
financings contemplated herein, the Credit Party (on a stand-alone basis) is not
and will not be rendered insolvent or inadequately capitalized for the business
it intends to conduct and does not and will not have incurred debts beyond its
ability to pay as they mature and that, (x) the total assets of the Credit Party
exceed the amount necessary to pay all of its liabilities and to pay any
distribution preference on any outstanding preferred stock upon dissolution and
(y) the amount by which the total assets of the Credit Party exceeds and will
exceed its liabilities is no less than its stated capital; and that the Credit
Party is not entering into this Agreement with the intent to hinder, delay or
defraud any creditor of any Credit Party; and
(b) (i) a report from a third party, in form and substance satisfactory
to the Agent, regarding the adequacy of the insurance coverage on the assets of
the Credit Parties and (ii) evidence of insurance complying with the
requirements of Section 7.3 for the business and properties of the Credit
Parties, in scope, form and substance reasonably satisfactory to the Agent and
naming the Agent as an additional insured and/or loss payee, and stating that
such insurance shall not be canceled or revised without at least 30 days' (or 10
days' in the case of non-payment of premium) prior written notice by the insurer
to the Agent.
5.16. Domestic Rigs Appraisal. On the Effective Date, the Agent shall have
received an Appraisal of Fair Market Value and an Appraisal of Orderly
Liquidation Value of each Domestic Rig owned by the Borrower and its
Subsidiaries as of the Effective Date, in form and substance satisfactory to the
Agent, from an Approved Appraiser.
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5.17. Establishment of Depository Accounts. On the Effective Date, the Agent
shall have received all evidence that the Credit Parties, the Agent and one or
more financial institutions have established all of the Depository Accounts
described in Section 7.14.
5.18. Acceptance by Process Agent. On the Effective Date, the Agent shall have
received evidence that the Person specified to act as agent for service of
process for the Credit Parties, pursuant to Section 12.8, has agreed to so act.
5.19. Environmental Certificate. The Agent shall have received a certificate of
the Credit Parties signed by an officer in charge of environmental affairs and
safety as to compliance by the Credit Parties with all environmental, safety and
public health laws and regulations applicable to the Credit Parties, including
without limitation of the foregoing, all other laws and regulations affecting or
relating to the Rigs, in each the non-compliance with which would have a
Material Adverse Effect on any of the Credit Parties.
5.20 Good Title to Rigs; Characterization of Rigs. The Agent shall have received
evidence satisfactory to it that the Borrower has good title to all of its Rigs
and that all of the Domestic Rigs are (a) mobile equipment which are not
designed to be permanently used in any one location; (b) not property subject to
Chapter 501 of the Transportation Code of the State of Texas or any comparable
statute, law, regulation or rule of any state in which any of the Domestic Rigs
is located and not certificated as motor vehicles under that laws of any
jurisdiction; and (c) not fixtures under the laws of any jurisdiction in which
any of the Domestic Rigs is located.
5.21. No Material Adverse Change. At the Effective Date, for the period since
September 30, 1998, there shall not have occurred any material adverse change in
the assets, business, condition or prospects (financial or otherwise) of any
Credit Party or any or its respective Subsidiaries and no change or event shall
have occurred which would materially impair the ability of any Credit Party to
perform its obligations under any Credit Document to which it is a party or the
Agent to enforce the Obligations or realize upon the Collateral.
5.22. Representations and Warranties True and Correct; No Default or Event of
Default. At the Effective Date and at the time of each Credit Event and after
giving effect thereto:
(a) all representations and warranties contained in this
Agreement and in the other Credit Documents shall be true and correct in all
material respects with the same effect as though such representations and
warranties had been made on and as of the time of the making of each such Credit
Event and after giving effect thereto; and
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(b) no Default or Event of Default, shall exist or have
occurred and be continuing on and as of the date of the making of such Credit
Event and after giving effect thereto.
5.23. Notice of Borrowing; Letter of Credit Request. The Agent shall have
received a Notice of Borrowing satisfying the requirements of Section 1.3 with
respect to each incurrence of Loans; and the Agent and the Letter of Credit
Issuer shall have received a Letter of Credit Request satisfying the
requirements of Section 2.2 with respect to each issuance of a Letter of Credit.
The acceptance of the benefits of each Credit Event shall constitute a
representation and warranty by each Credit Party to the Agent and each of the
Lenders that all of the applicable conditions specified above exist as of the
date of such Credit Event. All of the certificates, legal opinions and other
documents and papers referred to in this Section 5, unless otherwise specified,
shall be delivered to the Agent at the Notice Office for the account of each of
the Lenders and, except for the Notes, in sufficient counterparts for each of
the Lenders and shall be reasonably satisfactory in form and substance to the
Agent and the Required Lenders. All of the conditions contained in this Section
5 are for the sole benefit of the Agent and the Lenders and the Agent may waive
any or all of them in its absolute discretion.
SECTION 6. Representations, Warranties and Agreements. In order to induce the
Lenders to enter into this Agreement and to make the Loans and issue and/or
participate in the Letters of Credit provided for herein, the Borrower makes the
following representations and warranties to, and agreements, with the Lenders,
all of which shall survive the execution and delivery of this Agreement, the
making of the Loans and the issuance of the Letters of Credit (with the
occurrence of the Initial Borrowing Date, the Effective Date and each Credit
Event being deemed to constitute a representation and warranty that the matters
specified in this Section 6 are true and correct in all material respects on and
as of the date of each such Credit Event, unless stated to relate to a specific
earlier date in which case such representations and warranties shall be true and
correct in all material respects as of such earlier date):
6.1. Corporate Status. Each Credit Party and its Subsidiaries (i) is a duly
organized and validly existing corporation, limited partnership or limited
liability company, as the case may be, in good standing under the laws of the
jurisdiction of its organization, (ii) has the requisite corporate or
partnership power and authority, as the case may be, to own its property and
assets and to transact the business in which it is engaged and presently
proposes to engage and (iii) is duly qualified and is authorized to do business
and is in good standing in all jurisdictions where it is required to be so
qualified and where the failure to be so qualified would have a Material Adverse
Effect.
6.2. Corporate Power and Authority. Each Credit Party has the requisite
corporate or partnership power and authority, as the case may be, to execute,
deliver and carry out the terms and provisions of the Credit Documents to which
it is a party and has taken all
36
necessary corporate action to authorize the execution, delivery and performance
of the Credit Documents to which it is a party. Each Credit Party has duly
executed and delivered each Credit Document to which it is a party and each such
Credit Document constitutes the legal, valid and binding obligation of such
Credit Party enforceable in accordance with its terms, except to the extent that
the enforceability thereof may be limited by applicable bankruptcy, insolvency,
reorganization, moratorium or similar laws generally affecting creditors' rights
and by equitable principles (regardless of whether enforcement is sought in
equity or at law).
6.3. No Violation. Neither the execution, delivery or performance by any Credit
Party of the Credit Documents to which it is a party nor compliance by any
Credit Party with the terms and provisions thereof, nor the consummation of the
transactions contemplated herein or therein, (i) will contravene any applicable
provision of any law, statute, rule or regulation, or any order, writ,
injunction or decree of any court or governmental instrumentality, (ii) will
conflict or be inconsistent with or result in any breach of, any of the terms,
covenants, conditions or provisions of, or constitute a default under, or (other
than pursuant to the Security Documents) result in the creation or imposition of
(or the obligation to create or impose) any Lien upon any of the property or
assets of any Credit Party or any of its Subsidiaries pursuant to the terms of
any indenture, mortgage, deed of trust, loan agreement, credit agreement or any
other agreement or instrument to which any Credit Party or any of its
Subsidiaries is a party or by which it or any of its property or assets are
bound or to which it may be subject, other than such conflicts, inconsistencies,
breaches, defaults or impositions which could not, individually or in the
aggregate, have a Material Adverse Effect or (iii) will violate any provision of
the Certificate of Incorporation or By-Laws of any Credit Party or any of its
Subsidiaries.
6.4. Litigation. There are no actions, suits or proceedings pending or, to the
knowledge of any Credit Party or any of its respective Subsidiaries, threatened,
with respect to any Credit Party or any of its Subsidiaries (i) that are likely
to have a Material Adverse Effect or (ii) that could reasonably be expected to
have a material adverse effect on the rights or remedies of the Agent or the
Lenders or on the ability of any Credit Party to perform its respective
obligations to the Agent or the Lenders hereunder and under the other Credit
Documents to which it is, or will be, a party. Additionally, there does not
exist any judgment, order or injunction prohibiting or imposing material adverse
conditions upon the occurrence of any Credit Event.
6.5. Use of Proceeds; Margin Regulations. (a) The proceeds of the Loans shall be
utilized for the general corporate purposes of the Borrower.
(b) Neither the making of any Loan, nor the use of the proceeds thereof, will
violate the provisions of Regulation U or X of the Board of Governors of the
Federal Reserve System and no part of the proceeds of any Loan will be used to
purchase or carry any Margin Stock or to extend credit for the purpose of
purchasing or carrying any Margin Stock.
37
6.6. Governmental Approvals. Except for filings with applicable governmental
authority contemplated by the Security Documents, all of which shall be made in
accordance with such Security Documents, no order, consent, approval, permit,
license, authorization, or validation of, or filing, recording or registration
with, or exemption by, any foreign or domestic governmental or public body or
authority, or any subdivision thereof, is required to authorize or is required
in connection with (i) the execution, delivery and performance of any Credit
Document or (ii) the legality, validity, binding effect or enforceability of any
Credit Document.
6.7. Investment Company Act. Neither any Credit Party nor any of its
Subsidiaries is an "investment company" or a company "controlled" by an
"investment company," within the meaning of the Investment Company Act of 1940,
as amended.
6.8. Public Utility Holding Company Act. Neither any Credit Party nor any of its
Subsidiaries is a "holding company," or a "subsidiary company" of a "holding
company," or an "affiliate" of a "holding company" or of a "subsidiary company"
of a "holding company," within the meaning of the Public Utility Holding Company
Act of 1935, as amended.
6.9. True and Complete Disclosure. All factual information (taken as a whole)
heretofore or contemporaneously furnished by or on behalf of any Credit Party or
any of its Subsidiaries in writing to the Agent or any Lender (including,
without limitation, all information contained in the Credit Documents) for
purposes of or in connection with the Credit Documents or any transaction
contemplated therein is, and all other such factual information (taken as a
whole) hereafter furnished by or on behalf of any such Persons in writing to the
Agent or any Lender will be, true and accurate in all material respects on the
date as of which such information is dated or certified and not incomplete by
omitting to state any material fact necessary to make such information (taken as
a whole) not misleading at such time.
6.10. Financial Condition; Financial Statements. (a) On and as of the Effective
Date, on a pro forma basis after giving effect to all Indebtedness incurred, and
to be incurred, and Liens created, and to be created, by each Credit Party in
connection therewith, (x) the sum of the assets, at a fair valuation (i.e., the
amount that may be realized within a reasonable time, considered to be six
months to one year, either through collection or sale at the regular market
value, conceiving the latter as the amount that would be obtained for such
assets within such period by a capable and diligent businessman from an
interested buyer who is willing to purchase under ordinary selling conditions),
of each Credit Party and its Subsidiaries (on a consolidated basis) and the
Borrower (on a stand-alone basis) will exceed its debts, (y) each Credit Party
has not incurred nor intended to, nor believes that it will, incur debts beyond
its ability to pay such debts as such debts mature and (z) each Credit Party
will have sufficient capital with which to conduct its business. For purposes of
this Section 6.10, "debt" means any liability on a claim, and "claim" means (i)
right to payment whether or not such a right is reduced to
38
judgment, liquidated, unliquidated, fixed, contingent, matured, unmatured,
disputed, undisputed, legal, equitable, secured or unsecured or (ii) right to an
equitable remedy for breach of performance if such breach gives rise to a
payment, whether or not such right to an equitable remedy is reduced to
judgment, fixed, contingent, matured, unmatured, disputed, undisputed, secured
or unsecured; provided that to the extent any such "claim" is not fixed, the
amount thereof shall equal the any Credit Party's good faith estimate of the
likely maximum amount thereof.
(b) The annual and interim financial statements included in the Parent's Annual
Report on Form 10-K for the fiscal year ended December 31, 1997, as supplemented
by the Parent's Quarterly Report on Form 10-Q for the quarter ended September
30, 1998 (both as to the Parent and as to its Subsidiaries on a combined basis)
(including statements of income and cash flows and changes in shareholders'
equity), present fairly in all material respects the financial condition of the
relevant Persons at the dates of said statements and the results for the periods
covered thereby. All such financial statements have been prepared in accordance
with GAAP consistently applied (except as therein noted) and the financial
statements as of and for the fiscal years have been audited by and accompanied
by the opinion of Deloitte & Touche, LLP or KPMG Peat Marwick, independent
public accountants.
(c) Since September 30, 1998, nothing has occurred that has had or could
reasonably be expected to have a Material Adverse Effect.
(d) Except as fully reflected in the financial statements described in Section
6.10(b) and the Indebtedness incurred under this Agreement, (i) there were as of
the Initial Borrowing Date (and after giving effect to any Loans made on such
date), no liabilities or obligations (excluding obligations or liabilities
incurred in the ordinary course of business, which, individually or in the
aggregate, could not reasonably be expected to have a Material Adverse Effect)
with respect to any Credit Party or any of its Subsidiaries of any nature
whatsoever (whether absolute, accrued, contingent or otherwise and whether or
not due), and (ii) neither any Credit Party nor any of its Subsidiaries knows of
any basis for the assertion against any Credit Party or any of its Subsidiaries
of any such liability or obligation which, either individually or in the
aggregate, has, or could be reasonably likely to have, a Material Adverse
Effect.
6.11. Security Interests. On and after the Effective Date, each of the Security
Documents creates (or after the execution and delivery thereof and, where
applicable, filing and/or recording thereof will create), as security for the
Obligations, a valid and enforceable perfected security interest in and Lien on
all of the Collateral subject thereto, superior to and prior to the rights of
all third Persons, and subject to no Liens other than Prior Liens and Liens
permitted under the Security Documents. No filings or recordings are required in
order to perfect the security interests created under any Security Document
except for filings or recordings required in connection with any such Security
Document which shall have been made on or prior to the Effective Date as
contemplated by Section 5.11(b) or on or prior to the execution and delivery
thereof as
39
contemplated by Sections 7.11 and 8.14. Each of the Domestic Rigs are (a) goods
which are mobile, of a type normally used in more than one jurisdiction and not
designed to be permanently used in any one location; and (b) not fixtures under
the laws of any jurisdiction in which any of the Domestic Rigs is located. The
Domestic Rigs are not "motor vehicles" subject to Chapter 501 of the
Transportation Code of the State of Texas or any comparable statute, law,
regulation or rule of any state in which any of the Domestic Rigs is located and
not certificated as motor vehicles under that laws of any jurisdiction. Each
self-propelled Mobile Rig has been issued a permit license plate or machinery
license plate in accordance with Transportation Code Sections 502.276, 623.144
and 623.149 and is exempted from (i) certification under Section 501 of the
Transportation Code of the State of Texas pursuant to Texas Department of
Transportation Rules, Chapter 43, Section 17.3, and (ii) registration under
Section 502 of the Transportation Code of the State of Texas.
6.12. Consents. At the Effective Date, all consents and approvals of, and
filings and registrations with, and all other actions in respect of, all
governmental agencies, authorities or instrumentalities required to make or
consummate the Loans shall have been obtained, given, filed or taken or waived
and are or will be in full force and effect (or effective judicial relief with
respect thereto has been obtained) except where the failure to obtain, give,
file, or take would not reasonably be expected to have a Material Adverse
Effect. Additionally, there does not exist any judgment, order or injunction
prohibiting or imposing material adverse conditions upon the occurrence of any
Credit Event or the performance by each Credit Party and its Subsidiaries of
their obligations under the Credit Documents and all applicable laws.
6.13. Compliance with ERISA. (a) Each Credit Party, its respective Subsidiaries
and its respective ERISA Affiliates are in compliance in all material respects
with all applicable provisions of ERISA and the Code and the published
regulations and interpretations thereunder with respect to all employee benefit
plans (as defined in Section 3(3) of ERISA); no Reportable Event has occurred
with respect to a Plan; no Plan is insolvent or in reorganization; no Plan has
an Unfunded Current Liability; no Plan has an accumulated or waived funding
deficiency, has permitted decreases in its funding standard account or has
applied for a waiver of the minimum funding standard or an extension of any
amortization period within the meaning of Section 412 of the Code; all
contributions required to be made with respect to a Plan and a Foreign Pension
Plan have been timely made; neither any Credit Party nor any ERISA Affiliate has
incurred any liability to or on account of a Plan pursuant to Section 409,
502(i), 502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or
Section 401(a)(29), 4971, 4975 or 4980 of the Code or reasonably expects to
incur any liability (including any indirect, contingent or secondary liability)
under any of the foregoing Sections with respect to any Plan (other than
liabilities of any ERISA Affiliate which could not, by operation of law or
otherwise, become a liability of any Credit Party or any of its Subsidiaries);
no proceedings have been instituted to terminate, or to appoint a trustee to
administer, any Plan; no condition exists which presents a material risk to any
Credit Party or any Subsidiary of any Credit Party or any ERISA Affiliate of
40
incurring a liability to or on account of a Plan pursuant to the foregoing
provisions of ERISA and the Code; using actuarial assumptions and computation
methods consistent with subpart 1 of subtitle E of Title IV of ERISA, the
aggregate liabilities of each Credit Party and its Subsidiaries and its ERISA
Affiliates to all Multiemployer Plans in the event of a complete withdrawal
therefrom, as of the close of the most recent fiscal year of each such Plan
ended prior to the date of the most recent Credit Event, would not, singly or in
the aggregate, result in a Material Adverse Effect; no lien imposed under the
Code or ERISA on the assets of any Credit Party or any Subsidiary of any Credit
Party or any ERISA Affiliate exists or is reasonably likely to arise on account
of any Plan; and each Credit Party and its Subsidiaries do not maintain or
contribute to any employee welfare benefit plan (as defined in Section 3(1) of
ERISA) which provides benefits to retired employees or other former employees
(other than as required by Section 601 of ERISA) or any employee pension benefit
plan (as defined in Section 3(2) of ERISA) the obligations with respect to which
could reasonably be expected, singly or in the aggregate, to have a Material
Adverse Effect.
(b) Notwithstanding the foregoing, the representations, warranties and
agreements contained in this Section 6.13 are qualified such that a breach or
failure thereof shall not be treated as such unless the circumstances of such
breach or failure have resulted in or are reasonably expected to result in
either (i) a Material Adverse Effect or (ii) the imposition of a lien on the
assets of any Credit Party or any of its Subsidiaries.
6.14. Capitalization. On the Effective Date, the authorized capital stock of the
Parent shall consist of (i) 300,000,000 shares of common stock, $0.10 par value
per share (the "Parent Common Stock"), of which approximately 165,000,000 shares
are issued and outstanding, (ii) 200,000 shares of Series A Redeemable Preferred
Stock, $10.00 par value per share (the "Series A Stock"), of which approximately
30,600 shares are issued and outstanding, (iii) 10,000 shares of Series B
Preferred Stock, $1.00 par value per share, none of which are outstanding and
(iv) 250,000 shares of Series B Junior Participating Preferred Stock, $1.00 par
value per share, none of which is outstanding. All outstanding shares of the
Parent Common Stock have been duly and validly issued, and are fully paid and
nonassessable. The Parent does not have outstanding any securities convertible
into or exchangeable for its capital stock or outstanding any rights to
subscribe for or to purchase, or any options for the purchase of, or any
agreement providing for the issuance (contingent or otherwise) of, or any calls,
commitments or claims of any character relating to, its capital stock, except
for options and warrants to purchase common stock issued or to be issued to
certain officers, employees, directors and consultants of the Parent and its
Subsidiaries.
6.15. Parent and Subsidiaries. (a) On and as of the Effective Date, the Parent
has no Subsidiaries other than the Borrower and those other Subsidiaries listed
on Annex VI. Annex VI correctly sets forth, as of the Effective Date, the
percentage ownership (direct and indirect) of the Parent in each class of the
capital stock of Borrower and each of its other Subsidiaries and also identifies
the direct owner thereof. The Parent owns all of the issued and outstanding
capital stock of the Borrower and each of its other
41
Subsidiaries. No other Person has any securities convertible into or
exchangeable for any capital stock of the Parent, the Borrower or any of their
respective Subsidiaries, or any rights to subscribe for or to the purchase, or
any options for the pushes of, or any calls, commitments or claims relating to,
any of the Parent's, the Borrower's or their respective Subsidiaries' capital
stock.
(b) On and as of the Effective Date, the Borrower has no Subsidiaries.
6.16. Intellectual Property. Each of the Credit Parties and each of its
Subsidiaries owns or holds a valid license to use all the patents, trademarks,
permits, service marks, trade names, technology, know-how and formulas or other
rights with respect to the foregoing, free from restrictions that are adverse to
the use thereof, that are used in the operation of the business of such Credit
Party and each of its Subsidiaries as presently conducted, except where any
failure to do so or restrictions could, individually or in the aggregate, have a
Material Adverse Effect.
6.17. Compliance with Statutes, etc. Each of the Credit Parties and each of its
Subsidiaries is in compliance with all applicable statutes, regulations and
orders of, and all applicable restrictions imposed by, all governmental bodies,
domestic or foreign, in respect of the conduct of its business and the ownership
of its property (provided, however, that this Section 6.17 does not apply to (i)
compliance with respect to Environmental Laws, as to which no representation is
made in this Section 6.17, but which is covered by Section 6.18 hereof, (ii)
compliance with respect to Taxes, as to which no representation is made in this
Section 6.17, but which is covered by Section 6.21 hereof, (iii) compliance with
respect to ERISA, as to which no representation is made in this Section 6.17,
but which is covered by Section 6.13 hereof, and (iv) compliance with respect to
labor relations matters, as to which no representation is made in this Section
6.17, but which is covered by Section 6.20), except such non-compliance as is
not likely to, individually or in the aggregate, have a Material Adverse Effect.
6.18. Environmental Matters. Except as set forth in Schedule 6.18:
(a) Each of the Credit Parties and each of its Subsidiaries, and their
respective businesses and Real Property, has complied with, and on the date
of each Credit Event is in compliance with, all applicable Environmental
Laws and the requirements of any permits, licenses or other authorizations
issued under such Environmental Laws. There are no pending or past or, to
the best knowledge of the Credit Parties and its Subsidiaries, threatened
Environmental Claims against any Credit Parties or any of its Subsidiaries
or any Real Property currently or formerly owned or operated by any Credit
Parties or any of its Subsidiaries. There are no facts, circumstances,
conditions or occurrences on any Real Property currently or formerly owned
or operated by any Credit Parties or any of its Subsidiaries or, to the
best knowledge of each of the Credit Parties and its Subsidiaries, on any
property adjoining or in the vicinity of any such Real
42
Property that would reasonably be expected (i) to form the basis of an
Environmental Claim against any Credit Party or any of its Subsidiaries or
any such Real Property or (ii) to cause any such Real Property to be
subject to any restrictions on the ownership, occupancy, use or
transferability of such Real Property by any Credit Party or any of its
Subsidiaries under any applicable Environmental Law.
(b) Hazardous Materials have not at any time been generated, used, treated
or stored on, or transported to or from, any Real Property currently or
formerly owned or operated by any Credit Party or any of its Subsidiaries
where such generation, use, treatment or storage has violated or could
reasonably be expected to violate any Environmental Law. Hazardous
Materials have not at any time been Released on or from any Real Property
currently or formerly owned or operated by any Credit Party or any of its
Subsidiaries. There are not now any underground storage tanks or related
piping located on any Real Property currently or formerly (or, except as
set forth on Schedule 6.18, formerly) owned or operated by any Credit Party
or any of its Subsidiaries.
(c) Notwithstanding anything to the contrary in this Section 6.18, the
representations made in this Section 6.18 shall only be untrue if either
the individual or aggregate effect of all conditions, failures,
noncompliances, Environmental Claims, Releases and presence of underground
storage tanks or related piping, in each case of the types described above,
could reasonably be expected to have a Material Adverse Effect.
6.19. Properties. Each of the Credit Parties and each of its Subsidiaries has
good and marketable title to, or a validly subsisting leasehold interest in, all
material properties owned or leased by it, including all Real Property reflected
in the financial statements referred to in Section 6.10(b), free and clear of
all Liens, other than Permitted Liens. A complete record of all Rigs owned by
the Parent and its Subsidiaries as of the Effective Date (including on a
Rig-by-Rig basis (x) identification of the rig number of each rig and the owner
thereof, (y) identification of the location of each rig (by county, state and
country), and (z) a notation of whether or not the Rig is operating under a
drilling contract at a customer's working job site) is set forth in Annex IV
hereto. The Agent and the Lenders shall at all times have access to the Rigs
located on such property; and the Agent shall have the right to enter on such
property and to remove such Rigs therefrom without interference from, or
imposition of any Lien on such Rig by, any owner, landlord, tenant or other
Person with an interest in such property.
6.20. Labor Relations. Neither any Credit Party nor any of its Subsidiaries is
engaged in any unfair labor practice that could reasonably be expected to have a
Material Adverse Effect. There is (i) no unfair labor practice complaint pending
against any Credit Party or any of its Subsidiaries or threatened against any of
them, before the National Labor Relations Board, and no grievance or arbitration
proceeding arising out of or under any collective bargaining agreement is so
pending against any Credit Party or any of its Subsidiaries or, to the best
knowledge of the Borrower, threatened against any of them, (ii) no strike, labor
dispute, slowdown or stoppage pending against any Credit Party
43
or any of its Subsidiaries or, to the best knowledge of the Borrower, threatened
against any Credit Party or any of its Subsidiaries and (iii) no union
representation question existing with respect to the employees of any Credit
Party or any of its Subsidiaries and no union organizing activities are taking
place, except (with respect to any matter specified in clause (i), (ii) or (iii)
above, either individually or in the aggregate) such as is not reasonably likely
to have a Material Adverse Effect.
6.21. Tax Returns and Payments. All Federal, state and other material returns,
statements, forms and reports for taxes (the "Returns") required to be filed by
or with respect to the income, properties or operations of each Credit Party
and/or any of its Subsidiaries have been timely filed with the appropriate
taxing authority. The Returns accurately reflect all liability for taxes of each
Credit Party and its Subsidiaries for the periods covered thereby. Each Credit
Party and each of its Subsidiaries have paid all taxes payable by them other
than immaterial taxes and other taxes which are not yet due and payable, and
other than taxes contested in good faith and for which adequate reserves have
been established in accordance with GAAP. Except as disclosed in the financial
statements referred to in Section 6.10(b), (a) there is no material action,
suit, proceeding, investigation, audit or claim now pending or threatened by any
authority regarding any taxes relating to any Credit Party or any of its
Subsidiaries and (b) neither any Credit Party nor any of its Subsidiaries (nor
any other person on their behalf or as part of a consolidated group) has entered
into an agreement or waiver or been requested to enter into an agreement or
waiver extending any statute of limitations relating to the payment or
collection of taxes of any Credit Party or any of its Subsidiaries, or is aware
of any circumstances that would cause the taxable years or other taxable periods
of any Credit Party or any of its Subsidiaries not to be subject to the normally
applicable statute of limitations. Neither any Credit Party nor any of its
Subsidiaries (nor any other person on their behalf or as part of a consolidated
group) has provided, with respect to themselves or property held by them, any
consent under Section 341 of the Code. Neither any Credit Party nor any of its
Subsidiaries has incurred, or will incur, any material tax liability in
connection with the transactions contemplated hereby.
6.22. Existing Indebtedness. Annex VIII sets forth a true and complete list of
all Indebtedness of each Credit Party and its Subsidiaries (other than (i)
Indebtedness consisting of Capital Lease Obligations related to motor vehicles
not in excess of $2,600,000 in the aggregate and (ii) other Indebtedness which
in the aggregate does not exceed $50,000) as of the Effective Date and which is
to remain outstanding and the incurrence of Loans on such date (excluding the
Loans and the Letters of Credit, the "Existing Indebtedness"), in each case
showing the aggregate principal amount thereof and the name of the respective
borrower and any other entity which directly or indirectly guaranteed such debt.
Annex III sets forth a true and complete list of all Existing Letters of Credit
(the "Existing Letters of Credit") of any of the Credit Parties and its
respective Subsidiaries as of the Effective Date. Except for the agreement
governing the account referred to in Section 8.3(m), no agreement between any
Credit Party and BTCo or any of its Affiliates is in effect on the Effective
Date.
44
6.23 Year 2000 Compliance Representation. The Parent, the Borrower and each
Credit Party each has (i) initiated a review and assessment of all areas within
its and each of its Subsidiaries' business and operations (including those
affected by suppliers and vendors) that could be adversely affected by the "Year
2000 Problem" (that is, the risk that computer applications used by it or any of
its Subsidiaries (or its suppliers and vendors) may be unable to recognize and
perform properly date-sensitive functions involving certain dated prior to and
any date after December 31, 1999), (ii) developed a plan and timeline for
addressing the Year 2000 Problem on a timely basis, and (iii) to date,
reasonably believes that all computer applications (including those of its
suppliers and vendors) that are material to its or any of its Subsidiaries'
business and operations will on a timely basis be able to perform properly
date-sensitive functions for all dates before and after January 1, 2000 (that
is, be "Year 2000 compliant"), except to the extent that a failure to do so
could not reasonably be expected to have a Material Adverse Effect.
SECTION 7. Affirmative Covenants. The Borrower hereby covenants and agrees that
as of the Initial Borrowing Date and thereafter for so long as this Agreement is
in effect and until the Total Revolving Loan Commitment has terminated, no
Letters of Credit or Notes are outstanding and the Loans and Unpaid Drawings,
together with interest, Fees and all other Obligations (other than any
indemnities described in Section 12.13 which are not then due and payable)
incurred hereunder, are paid in full:
7.1. Information Covenants. The Borrower will furnish to each Lender:
(a) Monthly Reports. (i) Within 45 days after the end of each fiscal
month of the Parent, the consolidated balance sheet of the Parent and its
Subsidiaries as at the end of such fiscal month and the related consolidated
statements of income and statements of cash flows for such fiscal month and for
the elapsed portion of the fiscal year ended with the last day of such fiscal
month, in each case forth comparable budgeted figures for the current fiscal
month and year-to-date results, all of which shall be certified by the chief
financial officer or other Authorized Officer of the Parent, subject to normal
year-end audit adjustments and the absence of footnotes, and (ii) within 15 days
after the end of each fiscal month of the Parent, a report as of the last day of
such month the Domestic Rig Utilization Rate of the Borrower and its
Subsidiaries for the immediately preceding two month period and the immediately
preceding one month period, together with the detail of the Borrower's and its
Subsidiaries' utilization including (v) identification of the rig number of each
Rig and the owner thereof, (w) identification of the location of each Rig (by
county, state and country), (x) a notation of whether the Rig is a Working Rig,
an Idled Rig, a Stacked Rig or an Inventoried Rig and (y) the projected term of,
type of and parties to any contract relating to each Rig and (iii) within 15
days after the end of each fiscal month of the Parent, an accounts receivable
aging of Parent and its Subsidiaries in form and
45
substance acceptable to the Agent, and such other information as may be
requested by the Agent from time to time, including reports on the aging of
Accounts of the Credit Parties.
(b) Quarterly Financial Statements. Within 45 days after the close of
each of the first three quarterly accounting periods in each fiscal year of the
Borrower, the consolidated and consolidating balance sheet of the Parent and its
Subsidiaries (including the Borrower) as at the end of such quarterly accounting
period and the related consolidated statements of income, statements of changes
in stockholders equity and statements of cash flows for such quarterly
accounting period and for the elapsed portion of the fiscal year ended with the
last day of such quarterly accounting period; all of which shall be in the form
such information is submitted to the SEC if the Parent is a reporting company,
and, if not, in the same form as would have been submitted to the SEC and
accompanied by a certification by the chief financial officer or other
Authorized Officer of the Parent that they fairly present in all material
respects the financial condition of the Parent and its Subsidiaries as of the
dates indicated and the results of their operations and changes in their cash
flows for the periods indicated, subject in all cases to normal year-end audit
adjustments and the absence of footnotes.
(c) Annual Financial Statements. Within 90 days after the close of each
fiscal year of the Parent, the consolidated and consolidating balance sheet of
the Parent and its Subsidiaries (including the Borrower) as at the end of such
fiscal year and the related consolidated statements of income, statements of
changes in stockholders equity and statements of cash flows for such fiscal year
and certified by KPMG Peat Marwick or such other independent certified public
accountants of recognized national standing, in each case to the effect that
such statements fairly present in all material respects the financial condition
of the Parent and its Subsidiaries as of the dates indicated and the results of
their operations and cash flows, together with a certificate of such accounting
firm stating that in the course of its regular audit of the business of the
Parent and its Subsidiaries, which audit was conducted in accordance with
generally accepted auditing standards, no Default or Event of Default which has
occurred and is continuing has come to their attention insofar as such Default
or Event of Default relates to financial and accounting matters or, if such a
Default or an Event of Default has come to their attention a statement as to the
nature thereof.
(d) Budgets, etc. Except for the 1999 budget which shall be delivered
before January 31, 1999, no later than the commencement of each fiscal year of
the Borrower, budgets of and for the Borrower and its Subsidiaries in reasonable
detail for each month of the succeeding fiscal year, as customarily prepared by
management for its internal use setting forth, with appropriate discussion, the
principal assumptions upon which such budgets are based.
(e) Officer's Certificates. At the time of the delivery of the
financial statements provided for in Section 7.1(b) and (c), a certificate of
the chief financial officer or other Authorized Officer of the Borrower to the
effect than no Default or Event of Default
46
exists or, if any Default or Event of Default does exist, specifying the nature
and extent thereof, which certificate shall set forth the calculations required
to establish whether the Parent and its Subsidiaries and the Borrower were in
compliance with the provisions of Sections 7.3, 8.4(d) and (g), 8.8 and 8.9, as
at the end of such fiscal quarter or fiscal year, as the case may be.
(f) Notice of Default or Litigation. Promptly, and in any event within
five Business Days (or 10 Business Days in the case of clause (y) below) after
any executive or senior officer of the Borrower obtains actual knowledge
thereof, notice of (x) the occurrence of any event which constitutes a Default
or an Event of Default, which notice shall specify the nature thereof, the
period of existence thereof and what action the Borrower proposes to take with
respect thereto and (y) the commencement of, or threat of, any litigation or
governmental proceeding pending against the any Credit Party or any of its
Subsidiaries which is reasonably likely to have a Material Adverse Effect, or a
material adverse effect on the ability of any Credit Party to perform its
respective obligations hereunder or under any other Credit Document.
(g) Auditors' Reports. Promptly upon receipt thereof, a copy of each
report or "management letter" submitted to the Parent or any of its Subsidiaries
by its independent accountants in connection with any annual, interim or special
audit made by them of the books of the Parent or any of its Subsidiaries.
(h) Environmental Matters. Promptly, and in any event, within five
Business Days after obtaining knowledge of any of the following (but only to the
extent that any of the following, either individually or in the aggregate, could
have a Material Adverse Effect), written notice of:
(i) any pending or threatened Environmental Claim against any Credit
Party or any of its Subsidiaries or any Real Property currently or
formerly owned or operated by any Credit Party or any of its
Subsidiaries;
(ii) any condition or occurrence on any Real Property currently or
formerly owned or operated by any Credit Party or any of its
Subsidiaries that (x) results in material noncompliance by any Credit
Party or any of its Subsidiaries with any applicable Environmental Law
or (y) could reasonably be anticipated to form the basis of an
Environmental Claim against any Credit Party or any of its
Subsidiaries or any such Real Property;
(iii) any condition or occurrence on any Real Property currently or
formerly owned or operated by any Credit Party or any of its
Subsidiaries that could reasonably be anticipated to cause such Real
Property to be subject to any material restrictions on the ownership,
occupancy, use or transferability by any Credit Party or any of its
Subsidiaries, as the case may be, of its interest in such Real
Property under any Environmental Law; and
47
(iv) the taking of any material removal, remedial corrective or other
response action in response to the actual or alleged presence of any
Hazardous Material on any Real Property currently or formerly owned or
operated by any Credit Party or any of its Subsidiaries.
All such notices shall describe in reasonable detail the nature of the claim,
investigation, condition, occurrence or removal, remedial, corrective or other
response action and the Credit Party's or Subsidiaries', as the case may be,
response thereto. In addition, the Borrower agrees to provide the Lender with
copies of all material written communications by or to any Credit Party or any
of its Subsidiaries with or from any Person, government or governmental agency
relating to any of the matters set forth in clauses (i)-(iv) above, and such
detailed reports relating to any of the matters set forth in clauses (i)-(iv)
above as may reasonably be requested by the Agent or the Required Lenders.
(i) Other Information. Promptly upon transmission thereof, copies of
any filings and registrations with, and reports to, the SEC by any Credit Party
or any of its Subsidiaries and copies of all financial statements, proxy
statements, notices and reports as any Credit Party or any of its Subsidiaries
shall send generally to analysts or the holders of their capital stock in their
capacity as such holders (to the extent not theretofore delivered to the Lenders
pursuant to this Agreement) and, with reasonable promptness, such other
information or documents (financial or otherwise) as the Agent on their own
behalf or on behalf of the Required Lenders may reasonably request from time to
time.
7.2. Books, Records and Inspections. The Borrower will, and will cause each
Credit Party and each of its respective Subsidiaries to permit officers and
designated representatives of the Agent or the Required Lenders to visit and
inspect any of the properties or assets of each Credit Party and each of its
Subsidiaries in whomsoever's possession, and to examine the books of account of
each Credit Party and each of its Subsidiaries and discuss the affairs, finances
and accounts of each Credit Party and each of its Subsidiaries with, and be
advised as to the same by, their officers and independent accountants, all at
such reasonable times and intervals and to such reasonable extent as the Agent
or the Required Lenders may desire.
7.3. Insurance. (a) The Borrower will, and will cause each Credit Party and each
of its respective Subsidiaries to, at all times maintain in full force and
effect insurance with reputable and solvent insurance carriers in such amounts,
covering such risks and liabilities and with such deductibles or self-insured
retentions as are acceptable to the Agent. The Borrower will furnish to the
Agent on the Effective Date and on each such later date as the Agent or the
Required Lenders may reasonably request a summary of the insurance carried in
respect of each Credit Party and its Subsidiaries and the assets of each Credit
Party and its Subsidiaries together with certificates of insurance, policies and
other evidence of such insurance, if any, naming the Agent as an additional
insured and/or loss payee as required pursuant to the next paragraph of this
Section 7.3.
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(b) Such insurance shall be provided by insurance companies licensed to do
business in the applicable state of each Credit Party's operations and shall be
rated "A; VIII" or better by Best's Insurance Guide and Key Ratings or as may be
reasonably acceptable to the Agent if not so rated or licensed, and shall
include the following insurance coverages and any other insurance coverages that
may be required by Law:
(i) commercial general liability insurance written on an occurrence
basis, including coverage for premises/operations, products and completed
operations (on a "claims-made" basis only), explosion, collapse and
underground, broad form commercial general liability equivalent coverages
with a minimum combined single limit for bodily injury and property damage
of $1,000,000 per occurrence and $2,000,000 in the aggregate, with a
self-insured retention not greater than $100,000;
(ii) business automobile liability insurance covering all owned,
non-owned and hired automobiles for a combined bodily injury and property
damage limit of no less than $1,000,000 per occurrence and containing
appropriate no-fault insurance provisions required by law;
(iii) workers' compensation insurance in amounts required by
applicable law and employers liability with limits of not less than
$1,000,000;
(iv) umbrella (or excess form should umbrella be unavailable)
liability coverage written on an occurrence basis with respect to the first
$10,000,000 and a "claims made" basis on all amounts in excess of
$10,000,000 and up to $50,000,000, and also to include a "drop down"
provision which will pick up any exhaustion of limits under the primary
coverages, with a combined single limit for bodily injury and property
damage of not less than $25,000. Such insurance coverage shall provide
substantially identical coverages as are set forth in the form of the
insurance required in clauses (a), (b) and (c) (except with respect to
workers' compensation) of this Section 7.3;
(v) all-risk physical loss or damage property insurance (including
water damage, domestic transit coverage, collapse coverage, coverage of
fire, and rapid means of transportation coverages) with respect to any Rig
(on a "no-coinsurance" basis) in an amount equal to or greater than the
Orderly Liquidation Value of each Rig with a deductible not greater than
$750,000 in the aggregate over each eighteen month policy period (with a
sublimit per occurrence of up to $500,000 in respect of such aggregate
limit), plus a $50,000 deductible per occurrence; and
(vi) such other insurance policies and coverages as the Agent may
require.
49
(c) All policies except workers' compensation shall insure the
interests of the Agent and the Lender as additional insureds (each, an
"Additional Insured") and the policies required by clause (b)(v) above (in the
nature of property damage insurance) shall provide for the direct payment of all
proceeds solely into the Depository Account. Each policy or certificate with
respect to insurance of the Pledged Collateral shall be endorsed to Agent's
satisfaction for the benefit of the Agent (including, without limitation, by
naming the Agent as an additional insured or sole loss payee, as required by
Agent) and such policy or certificate shall be delivered to Agent. All policies
required hereby shall provide for not less than thirty (30) days prior written
notice to be received by the Agent and the Lenders of the termination or
cancellation of the insurance evidenced thereby, unless such termination or
cancellation is a result of non-payment of premiums in which case ten (10) days
prior written notice shall be given to the Agent. Each Credit Party agrees that,
unless the insurance policies by their terms provide that they cannot cease (by
reason of nonrenewal or otherwise) without the Agent being informed and having
the right to continue the insurance by paying any premiums not paid by the
Credit Parties, receipts showing payment of premiums for required insurance and
also of demands from underwriters shall be in the hands of the Agent prior to
the risk in question commences. Prior to the expiration of any such policy of
insurance, the appropriate Credit Party shall deliver to Agent an extension or
renewal or replacement policy or an insurance certificate evidencing renewal,
replacement or extension of such policy. If any such Credit Party shall fail to
insure such Pledged Collateral in accordance with this Section 7.3 or if any
Credit Party shall fail to so endorse and deposit, or to extend or renew, all
such insurance policies or certificates with respect thereto, the Agent shall
have the right (but shall be under no obligation) to advance funds to procure or
renew or extend such insurance and each Credit Party agrees to reimburse the
Agent for all costs and expenses thereof, with interest on all such funds from
the date advanced until paid in full at the highest rate then in effect under
the Credit Agreement. The Agent agrees that it shall provide notice to the
applicable Credit Party that it has advanced funds on its behalf pursuant to
this Section 7.3. Each policy shall also provide:
(i) that no Additional Insured shall have any obligation or liability
for premiums, commissions, assessments or calls in connection with such
insurance;
(ii) that the insurer thereunder waives all rights of subrogation
against all Credit Parties and the Additional Insureds and any right of
set-off or counterclaim and any other right to deduction whether by
attachment or otherwise;
(iii) that such insurance shall be primary without right of
contribution from any other insurance carried by or on behalf of any
Additional Insured;
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(iv) with respect to liability insurance only that, insofar as the
policy is written to cover more than one insured, all terms, conditions,
insuring more than one insured, all terms, conditions, insuring agreements
and endorsements, with the exception of limits of liability and
deductibles, shall operate in the same manner as if there were a separate
policy covering each insured; and
(v) that no Credit Party will do or omit any act, nor voluntarily
suffer or permit any act to be done or omitted, whereby the insurance
required to be carried or maintained hereunder shall or may be suspended,
impaired or canceled, and no Credit Party will use or operate, or permit
the Rigs to be used or operated for purposes more hazardous than permitted
by the terms of the insurance policies carried by the Credit Parties
pursuant to this Section 7.3 without first notifying the Agent and having
previously insured the Rigs by additional coverage to extend to such uses,
operations or risks.
(d) The Borrower shall deliver to each Additional Insured
prior notice of any proposed insurance arrangement that the Credit Parties
intend to put into effect which differs in any material respect (including terms
of policies or identity of insurers or share of coverage to be provided by a
particular insurer) from that which was previously in effect.
(e) Each Credit Party will, at its own expense, make or cause
to be made all proofs of loss and take, or cause to be taken, all other action
necessary or appropriate to make collections from the underwriters of insurance
required to be carried and maintained by this Section 7.3 and report all claims
and give all notices in a timely fashion with copies to the Agent.
(f) Casualty insurance proceeds paid to the Agent (or to the
Depository Account) shall be applied in accordance with Section 4.2(e) (after
deduction of reasonable expenses of the Agent in collecting such amounts, except
that after the occurrence of any Event of Default, such proceeds shall, in their
entirety, be held as cash Collateral and/or applied by the Agent as it
determines in its sole discretion (including as contemplated in Section 9 hereof
and Section 12 of the Security Agreement).
7.4. Payment of Taxes. The Borrower will pay and discharge, and will cause each
Credit Party and each of its respective Subsidiaries to pay and discharge, all
taxes, assessments and governmental charges or levies imposed upon it or upon
its income or profits, or upon any properties belonging to it, prior to the date
on which material penalties attach thereto, and all lawful claims for sums that
have become due and payable which, if unpaid, might become a Lien not otherwise
permitted under Section 8.3(a) or charge upon any properties of any Credit Party
or any of its Subsidiaries; provided that neither any Credit Party nor any of
its Subsidiaries shall be required to pay any such tax, assessment, charge, levy
or claim which is being contested in good faith and by proper proceedings if it
has maintained reserves with respect thereto in accordance with GAAP.
51
7.5. Corporate Franchises. The Borrower will do, and will cause each Credit
Party and each of its respective Subsidiaries to do, or cause to be done, all
things necessary to preserve and keep in full force and effect its existence and
its material rights, franchises and authority to do business; provided, however,
that any transaction permitted by Section 8.2(e) will not constitute a breach of
this Section 7.5.
7.6. Compliance with Statutes, etc. The Borrower will, and will cause each
Credit Party and each of its Subsidiaries to, comply with all applicable
statutes, regulations and orders of, and all applicable restrictions imposed by,
all governmental bodies, domestic or foreign, in respect of the conduct of its
business and the ownership of its property (provided, however, that this Section
7.6 does not apply to applicable statutes, regulations, orders and restrictions
relating to environmental standards and controls, as to which no covenant is
made in this Section 7.6, but which are referred to in Section 7.7 hereof)
except for such noncompliance as would not, singly or in the aggregate, have a
Material Adverse Effect or a material adverse effect on the ability of any
Credit Party to perform its obligations under any Credit Document to which it is
a party.
7.7. Compliance with Environmental Laws. (a) The Borrower will pay, and will
cause each Credit Party and each of its Subsidiaries to pay, all costs and
expenses incurred by it in keeping in compliance in all material respects with,
and avoiding liability under, all Environmental Laws, and will keep or cause to
be kept all Real Properties owned or operated by any Credit Party or any of its
Subsidiaries free and clear of any Liens imposed pursuant to such Environmental
Laws; and (b) neither the Borrower nor any Credit Party nor any of its
respective Subsidiaries will generate, use, treat, store, release or dispose of,
or permit the generation, use, treatment, storage, release or disposal of,
Hazardous Materials on any Real Property owned or operated by any Credit Party
or any of its Subsidiaries, or transport or permit the transportation of
Hazardous Materials to or from any such Real Property, where the failure to
comply with clause (a) or clause (b) above, either individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect.
If any Credit Party or any of its Subsidiaries, or any tenant or occupant of any
Real Property owned or operated by any Credit Party or any of its Subsidiaries,
causes or permits any intentional or unintentional act or omission resulting in,
or otherwise discovers, the presence or Release of any Hazardous Material
(except in compliance with applicable Environmental Laws), Borrower agrees to
undertake, and/or to cause any Credit Party or any of its Subsidiaries, tenants
or occupants to undertake, promptly and at their sole expense, any clean up,
investigation, removal, remedial, corrective or other action required pursuant
to Environmental Laws to investigate, remove or cleanup any Hazardous Materials
from any Real Property where the failure to do so, either individually or in the
aggregate, could reasonably be expected to result in a Material Adverse Effect;
provided that neither any Credit Party nor any of its Subsidiaries shall be
required to comply with any such order or directive which is being contested in
good faith and by proper proceedings so long as it has maintained reserves with
respect to such compliance in accordance with GAAP.
52
7.8 ERISA. As soon as possible and, in any event, within 30 days after any
Credit Party knows or has reason to know of the occurrence of any of the
following events to the extent that one or more of such events is reasonably
likely to result in a material liability to any Credit Party or any Subsidiary
of any Credit Party, the Borrower will deliver to each of the Lenders a
certificate of the chief financial officer or other Authorized Officer of the
Borrower setting forth details as to such occurrence and the action, if any,
which the Credit Party, such Subsidiary or such ERISA Affiliate is required or
proposes to take, together with any notices required or proposed to be given to
or filed with or by the Credit Party, the Subsidiary, the ERISA Affiliate, the
PBGC, a Plan participant or the Plan administrator with respect thereto: that a
Reportable Event has occurred; that an accumulated funding deficiency (as such
term is defined in Section 412(a) of the Code) has been incurred or an
application is reasonably expected to be or has been made to the Secretary of
the Treasury for a waiver or modification of the minimum funding standard
(including any required installment payments) or an extension of any
amortization period under Section 412 of the Code with respect to a Plan; that a
contribution required to be made to a Plan or Foreign Pension Plan has not been
timely made; that a Plan has been or is reasonably expected to be terminated,
reorganized, partitioned or declared insolvent under Title IV of ERISA; that a
Plan has an Unfunded Current Liability giving rise to a lien under ERISA or the
Code; that proceedings are reasonably expected to be or have been instituted to
terminate or appoint a trustee to administer a Plan; that a proceeding has been
instituted pursuant to Section 515 of ERISA to collect a delinquent contribution
to a Plan; that a Credit Party, any Subsidiary of a Credit Party or any ERISA
Affiliate will or is reasonably expected to incur any material liability
(including any contingent or secondary liability) to or on account of the
termination of or withdrawal from a Plan under Section 4062, 4063, 4064, 4069,
4201, 4204 or 4212 of ERISA or with respect to a Plan under Section 401(a)(29),
4971, 4975 or 4980 of the Code or Section 409, 502(i) or 502(l) of ERISA; or
that a Credit Party or any Subsidiary of a Credit Party, has or is reasonably
expected to incur any material liability under any employee welfare benefit plan
(within the meaning of Section 3(l) of ERISA) that provides benefits to retired
employees or other former employees (other than as required by Section 601 of
ERISA) or any employee pension benefit plan (as defined in Section 3(2) of
ERISA). At the request of any Lender, the Borrower will obtain and deliver to
such Lender a complete copy of the annual report (Form 5500) of each Plan
required to be filed with the Internal Revenue Service. In addition to any
certificates or notices delivered to the Lenders pursuant to the first sentence
hereof, at the request of the Agent or any Lender, copies of annual reports and
any notices received by any Credit Party or any Subsidiary of the any Credit
Party or any ERISA Affiliate with respect to any Plan or Foreign Pension Plan
shall be delivered to the Lenders no later than 30 days after the date such
report has been filed with the Internal Revenue Service or received by such
Credit Party or the Subsidiary or the ERISA Affiliate.
53
7.9. Good Repair. The Borrower will, and will cause each Credit Party and each
of its respective Subsidiaries to, ensure that its material properties, its
operating drilling rigs and other equipment used in its business are kept in
good repair, working order and condition, normal wear and tear and damage by
casualty excepted, and that from time to time there are made in such properties
and equipment all needful and proper repairs, renewals, replacements,
extensions, additions, betterments and improvements thereto, to the extent and
in the manner useful or customary for companies in similar businesses.
7.10. End of Fiscal Years; Fiscal Quarters. The Borrower will, for financial
reporting purposes, cause (i) its fiscal years to end on or about December 31 of
each year and (ii) its fiscal quarters to end on or about March 31, June 30 and
September 30 of each year; provided that the Borrower may change such fiscal
year to any other fiscal year period of twelve consecutive months with the
consent of the Agent.
7.11. Additional Security; Further Assurances; Appraisals. (a) Promptly, and in
any event within 45 days after the acquisition of assets of the type that would
have constituted Collateral (if the person acquiring such assets had executed an
appropriate Security Document with respect thereto on the Effective Date) at the
Effective Date, the Borrower will, and will cause each of the Credit Parties to,
at the request of the Agent following consultation with the Borrower as to the
value of any such assets, take all necessary action, including entering into the
appropriate security documents and filing the appropriate financing statements
under the provisions of the UCC or applicable foreign, domestic or local laws,
rules or regulations in each of the offices where such filing is necessary or
appropriate to grant to the Agent a perfected Lien in such collateral (or
comparable interest under foreign law in the case of foreign collateral)
pursuant to and to the full extent required by the Security Documents and this
Agreement. In the event that any Credit Party or any of its respective
Subsidiaries acquires an interest in Real Property, the Borrower promptly shall,
or shall cause such Credit Party or Subsidiary, as the case may be, to take such
actions and execute such documents as the Agent shall require to create a
mortgage on such Real Property for the benefit of the Lenders.
(b) Promptly upon the request of the Agent at any time following the occurrence
and during the continuance of a Default or an Event of Default, Borrower (i)
shall grant, and shall cause each Credit Party and each Subsidiary of a Credit
Party to grant, to the Agent a perfected Lien in all Real Property of any Credit
Party or Subsidiary thereof and all trucks, automobiles, trailers and vehicles
of any Credit Party or Subsidiary thereof, to the extent that at such time there
does not already exist a perfected Lien therein in favor of the Agent for the
benefit of the Lenders, and (ii) shall take, and shall cause each Credit Party
and each Subsidiary of a Credit Party to take, all necessary action, including
entering into the appropriate security documents and recording and filing the
appropriate mortgages and financing statements under the provisions of the UCC
or applicable foreign, domestic or local laws, rules or regulations in each of
the offices where such filing or recordation is necessary or appropriate to
grant to the Agent a perfected Lien in such collateral (or comparable interest
under foreign law in the case of foreign collateral) pursuant to and to the full
extent required by the Agent (including, without limitation, notation of such
Lien on vehicle certificates of title).
54
(c) The Borrower will, and will cause each of the Credit Parties and their
respective Subsidiaries to, at the expense of the Borrower, make, execute,
endorse, acknowledge, file and/or deliver to the Agent from time to time such
vouchers, invoices, schedules, confirmatory assignments, conveyances, financing
statements, transfer endorsements, powers of attorney, certificates, real
property surveys, reports and other assurances or instruments and take such
further steps relating to the Collateral covered by any of the Security
Documents as the Agent may reasonably require. Furthermore, the Borrower shall
cause to be delivered to the Agent such opinions of counsel, title insurance and
other related documents as may be reasonably requested by the Agent to assure
itself that this Section 7.11 has been complied with.
(d) The Borrower agrees that each action required above by Section 7.11(a), (b),
or (c) shall be completed within 45 days after such action is either requested
to be taken by the Agent or the Required Lenders or required to be taken by any
Credit Party or any Subsidiary thereof pursuant to the terms of this Section
7.11; provided that in no event shall any Credit Parties or any of its
Subsidiaries be required to take any action, other than using its best efforts,
to obtain consents from third parties with respect to its compliance with this
Section 7.11. All costs and expenses relating to or incurred in connection with
actions taken by any of the Credit Parties and/or its Subsidiaries or the Agent
or any Lender in connection with any of assets or properties described in
Section 7.11(a) or Section 7.11(b) (hereafter referred to as the "Additional
Collateral") or described in Section 7.11(c), including, but not limited to, the
reasonable fees and expenses of counsel for the Agent, shall be for the account
of the Borrower, which shall pay all such sums on demand.
(e) The Borrower shall provide to the Agent at the Borrower's expense an
Appraisal of Orderly Liquidation Value of each of the Domestic Rigs annually
within 45 days after the Anniversary Date beginning in 2000. In addition
thereto, the Borrower shall provide to the Agent at the Borrower's expense each
of the following additional Appraisals of Orderly Liquidation Value of each of
the Domestic Rigs: (i) in addition to the other appraisals provided for in this
Section 7.11(e), one additional such appraisal per loan year upon request from
the Agent on behalf of the Lenders if at any time or from time to time the
Domestic Rig Utilization Rate for any consecutive two calendar month period is
less than forty-five percent (45%), and (ii) in addition to the other appraisals
provided for in the Section 7.11(e), such additional appraisals without
limitation as the Agent on behalf of the Lenders may request at any time after
the occurrence and during the continuance of a Default or Event of Default. Any
such appraisal requested pursuant to (i) or (ii) in the preceding sentence shall
be supplied to the Agent within 30 days of such request (at the Agent's option,
the Agent may initiate and obtain any such appraisal directly from an Approved
Appraiser at the Borrower's expense). At the Agent's option, the Agent may
require that any and every Appraisal of Orderly Liquidation Value described in
this Section 7.11(e) also include an Appraisal of Fair Market Value.
55
Nothing in this Section 7.11(e) or otherwise shall in any way limit or restrict
the Agent for the benefit of the Lenders from obtaining any other or additional
appraisals at the expense of the Lenders.
7.12. Register. The Borrower hereby designates the Agent to serve as the
Borrower's agent, solely for purposes of this Section 7.12, to maintain a
register (the "Register") on which they will record the Revolving Loan
Commitment from time to time of each of the Lenders, the Revolving Loans made by
each of the Lenders and each repayment in respect of the principal amount of the
Revolving Loans of each Lender. Failure to make any such recordation, or any
error in such recordation shall not affect the Borrower's obligations in respect
of such Revolving Loans. With respect to any Lender, the transfer of the
Revolving Loan Commitment of such Lender and the rights to the principal of, and
interest on, any Revolving Loan made pursuant to such Revolving Loan Commitment
shall not be effective until such transfer is recorded on the Register
maintained by the Agent with respect to ownership of such Revolving Loan
Commitment and Revolving Loans and prior to such recordation all amounts owing
to the transferor with respect to such Revolving Loan Commitment and Revolving
Loans shall remain owing to the transferor. The registration of assignment or
transfer of all or part of any Revolving Loan Commitment and Revolving Loans
shall be recorded by the Agent on the Register only upon the acceptance by the
Agent of a properly executed and delivered Assignment and Assumption Agreement
pursuant to Section 12.4(b). Coincident with the delivery of such an Assignment
and Assumption Agreement to the Agent for acceptance and registration of
assignment or transfer of all or part of a Revolving Loan, or as soon thereafter
as practicable, the assigning or transferor Lender shall surrender the Revolving
Note evidencing such Revolving Loan, and thereupon one or more new Revolving
Notes in the same aggregate principal amount shall be issued to the assigning or
transferor Lender and/or the new Lender. The Borrower agrees to indemnify the
Agent from and against any and all losses, claims, damages and liabilities of
whatsoever nature which may be imposed on, asserted against or incurred by the
Agent in performing its duties under this Section 7.12, except to the extent
that any such losses, claims, damages or liabilities are found to have resulted
from the gross negligence or willful misconduct of the Agent.
7.13 Other Notices. Borrower shall notify the Agent and each Lender in writing
(i) of the occurrence of any event or the existence of any fact which renders
any representation or warranty in this Agreement or any of the other Loan
Documents inaccurate, incomplete or misleading in any material respect; (ii)
promptly after Borrower's learning thereof, of (A) any material labor dispute to
which any Credit Party or any of its Subsidiaries may become a party, any
strikes or walkouts relating to any of their respective ports or other
facilities, and the expiration of any labor contract to which any of them is a
party or by which any of them is bound; (B) of any material default by any
Credit Party under any note, indenture, loan agreement, mortgage, lease, deed,
guaranty or other similar agreement relating to any Indebtedness exceeding
$500,000; (iii) promptly after the rendition thereof, of any judgment rendered
against any Loan Party in an amount exceeding $250,000; (iv) promptly after the
occurrence thereof, (A)
56
of the transfer of any Credit Party's principal place of business or chief
executive office; (B) of any Credit Party's entering into any new business or
making any material change in any of its business objectives, purposes and
operations; and (C) of a change of the any Credit Party's fiscal year or the
allowance of any Subsidiary to have a fiscal year different from that of any
Credit Party; (v) promptly after any Credit Party's entering into any
transaction with any Affiliate or stockholder in which such transaction is
valued at $100,000 or more except for arm's length purchases by the Credit
Parties of repair parts and related services from Xxxx Machinery & Equipment,
Inc. and other Affiliates of Xxxxx X. Xxxx up to an aggregate amount of $750,000
in any consecutive twelve month period.
7.14. Collection of Accounts; Handling of Proceeds of Collateral; Depository
Accounts. (a) The Borrower shall establish and maintain lockboxes and one or
more deposit accounts from time to time under agreements acceptable to the Agent
(the "Depository Accounts") with Southwest Bank of Texas or such other banks as
are acceptable to the Agent on the Effective Date or such later date as the
Agent may approve in its sole discretion. The Agent, for the benefit of the
Lenders, shall have sole and exclusive access and control of such accounts for
withdrawal purposes pursuant to an arrangement acceptable to the Agent
including, but not limited to, a written agreement executed by the Borrower, the
Agent and each such depository bank which acknowledges the Agent's rights in all
amounts from time to time on deposit in the Depository Account, the Agent's
right to direct the application of the amounts from time to time on deposit in
the Depository Account from time to time, and the agreement by such depository
banks in favor of the Agent for the benefit of the Lenders that all funds
deposited to such bank account are required to be transferred solely in
accordance with the instructions from time to time given by the Agent to such
depository bank and that the depository bank waives any and all offset rights
that it may have against the amounts so deposited. The Borrower shall bear all
risk of loss of any funds deposited into any Depository Account. In connection
therewith, Borrower shall execute such depository bank account agreements as the
Agent shall specify. The Borrower shall cause all account debtors to remit
directly all payments on Accounts and in which each of the Credit Parties and
its respective Subsidiaries and other payments constituting proceeds of
Collateral in the identical form in which such payment was made, whether by cash
or check or otherwise to the Agent's lockbox, or, on the Agent's request,
directly to the Depository Account. The Borrower shall not, and shall cause each
Credit Party and its Subsidiaries to not, take any action to change any lockbox
address or otherwise give account debtors any contrary instructions with respect
to payments or other actions required pursuant to this Section 7.14.
(b) With respect to Accounts (as defined in the Security Agreement), until the
Agent has advised the Borrower to the contrary, the Borrower may and will
enforce, collect and receive all amounts owing on the Accounts for the Agent's
benefit and on the Agent's behalf, but at the Borrower's expense; provided,
however, that such privilege shall terminate automatically upon the institution
by or against any Credit Party of any proceeding under any bankruptcy or
insolvency law or, at any time upon notice by the Agent to the Borrower whether
or not there has occurred or then exists any Default or Event of Default.
57
(c) Any checks, cash, notes or other instruments, property or proceeds received
by any Credit Party or its Subsidiaries with respect to any Accounts or any
other Collateral shall be held by such Person in trust for the Agent, separate
from the such Person's own property and funds, and immediately turned over to
the Agent with proper assignments or endorsements by deposit to the special
depository account in the Agent's name designated by the Agent for such
purposes.
(d) All amounts received by the Agent in payment of Accounts will be credited to
the Borrower's account upon the Agent's receipt of "collected funds" at the
Agent's bank account in New York, New York on the Business Day of receipt if
received no later than 1:00 p.m. or on the next succeeding Business Day if
received after 1:00 p.m. No checks, drafts or other instrument received by the
Agent shall constitute final payment to the Agent unless and until such
instruments have actually been collected.
7.15 Release of Collateral. Within a reasonable period of time not to exceed ten
(10) days following (x) the Borrower's request and (y) the satisfaction of the
conditions set forth in clauses (1) through (7) below, the Agent shall release
its Liens on specific Rigs and Rig Accessories having an Orderly Liquidation
Value in the aggregate of up to $75,000,000 during the term of this Agreement in
connection with the Borrowers' sale or exchange thereof or relocation thereof to
a location outside of the contiguous 00 xxxxxx xx xxx Xxxxxx Xxxxxx xx Xxxxxxx
if the following conditions shall be met by the Borrower to the Agent's
satisfaction: (1) no Default or Event of Default shall have occurred and be
continuing as of the date of such request and on the date of such release; (2)
any relocation of such Rigs by the Borrower will be to a location outside of the
contiguous 00 xxxxxx xx xxx Xxxxxx Xxxxxx xx Xxxxxxx; (3) the Borrower shall
have given the Agent written notice of the Borrower's intention to so sell,
exchange or relocate such Rigs at least ten (10) days prior to doing so (which
may be concurrent with the ten (10) day period referred to above); (4)
immediately prior to such sale, exchange or relocation, and after giving effect
thereto, the sum of the aggregate outstanding principal amount of Revolving
Loans plus the Letter of Credit Outstandings on such date is less than the
lesser of (i) $50,000,000 or (ii) 25% of the Orderly Liquidation Value of the
Domestic Rigs as determined by the appraisal described in subclause (6) below
or, at the Agent's option, by the then most recent Appraisal of Orderly
Liquidation Value; (5) the Orderly Liquidation Value of the Domestic Rigs that
will continue to constitute Collateral in which the Agent for the benefit of the
Lenders has a first priority security interest and Lien, after giving effect to
the proposed release, equals or exceeds $200,000,000 in the aggregate, as
determined by the appraisal described in subclause (6) below or, at the Agent's
option, by the then most recent Appraisal of Orderly Liquidation Value; (6) the
Orderly Liquidation Value of the specific Domestic Rigs with respect to which
the Borrower is requesting the Agent release its security interest and the
Orderly Liquidation Value of all (or such lesser portion as the Agent, at it
sole option, may elect) Domestic Rigs shall be determined by an Approved
Appraiser prior to the completion of
58
the proposed release thereof in accordance with Section 7.11(c) above; and (7)
the Borrower shall provide the Agent with a certificate, in form and substance
satisfactory to the Agent, representing and warranting that the conditions set
forth in clauses (1) through (6) above have been met.
SECTION 8. Negative Covenants. The Borrower hereby covenants and agrees that as
of the Effective Date and thereafter for so long as this Agreement is in effect
and until the Total Revolving Loan Commitment has terminated, no Letters of
Credit or Notes are outstanding and the Loans, together with interest, Fees and
all other Obligations (other than any indemnities described in Section 12.13
which are not then due and payable) incurred hereunder, are paid in full:
8.1. Changes in Business. The Borrower shall not, and shall not permit any
Credit Party or any of its respective Subsidiaries to, engage in any business
other than the businesses in which it is engaged in as of the Effective Date and
activities incidental thereto, and similar or related businesses.
8.2. Consolidation, Merger, Sale or Purchase of Assets, etc. The Borrower shall
not, and shall not permit any Credit Party or any of its respective Subsidiaries
to, wind up, liquidate or dissolve its affairs or enter into any transaction of
merger or consolidation, or convey, sell, lease or otherwise dispose of (or
agree to do any of the foregoing at any future time) all or any part of its
property or assets (other than sales, transfers or other dispositions of Special
Inventory, including sales of Special Inventory on consignment), or enter into
any partnerships, joint ventures or sale-leaseback transactions, or purchase or
otherwise acquire (in one or a series of related transactions) any part of the
property or assets (other than purchases or other acquisitions of inventory,
materials and equipment in the ordinary course of business) of any Person,
except that the following shall be permitted:
(a) the Credit Parties may, as lessee or lessor, enter into operating
leases in the ordinary course of business with respect to real or
personal property other than Rigs and Rig Accessories;
(b) the advances, investments and loans permitted pursuant to Section
8.5;
(c) the Credit Parties may, in the ordinary course of business,
license, as licensor or licensee, patents, trademarks, copyrights and
know-how to third Persons and to one another, so long as any such
license by the Credit Party in its capacity as licensor is permitted
to be assigned pursuant to the Security Agreement (to the extent that
a security interest in such patents, trademarks, copyrights and
know-how is granted thereunder) and does not otherwise prohibit the
granting of a Lien by the Credit Party pursuant to the Security
Agreement in the intellectual property covered by such license;
59
(d) any Credit Party may transfer assets to the Borrower without any
liabilities relating thereto, as long as the security interests
granted to the Agent for the benefit of the Secured Creditors pursuant
to the Security Documents in the assets so transferred shall remain in
full force and effect and perfected (to at least the same extent as in
effect immediately prior to such transfer);
(e) "inactive" or "shell" Subsidiaries which do not have material
assets or material liabilities may be dissolved and liquidated;
(f) the Borrower may sell specific Rigs and Rig Accessories having an
Orderly Liquidation Value of up to $75,000,000 in the aggregate during
the term of this Agreement provided that all of the conditions
specified in Section 7.15 to the Agent's release of its Liens therein
have been satisfied by the Borrower to the satisfaction of the Agent
in connection therewith;
(g) the Borrower may sell or exchange specific Rigs or Rig
Accessories, so long as (i) the proceeds of each such sale or exchange
is used (or contractually committed to be used) to acquire (and
results within sixty (60) days of such sale or exchange in the
acquisition of) replacement Rigs and/or Rigs Accessories which are the
functional equivalent of the Rig or Rig Accessories so sold or
exchanged and (ii) the aggregate sales or exchanges do not exceed the
limits set forth in Section 8.2(f). Notwithstanding the foregoing
clause (ii), the Borrower may, in any consecutive twelve month period,
effect such sales or exchanges of Rigs and Rig Accessories with an
Orderly Liquidation Value of not more than $750,000 each or $1,500,000
in the aggregate, provided that the requirements of clause (g)(i) are
met;
(h) any Domestic Subsidiary of the Parent (other than the Borrower)
may merge with and into, or be dissolved or liquidated into, the
Parent so long as (i) the Parent is the surviving corporation of any
such merger, dissolution or liquidation and (ii) the security
interests granted to the Agent for the benefit of the Lenders pursuant
to the Security Documents in the assets of such Domestic Subsidiary
shall remain in full force and effect and perfected (to at least the
same extent as in effect immediately prior to such merger, dissolution
or liquidation);
(i) any Domestic Subsidiary of the Parent (other than the Borrower)
may merge with and into, or be dissolved or liquidated into, any
Domestic Subsidiary of the Parent so long as (i) such Domestic
Subsidiary is a Credit Party and is the surviving corporation of any
such merger, dissolution or liquidation and (ii) the security
interests granted to the Agent for the benefit of the Lender pursuant
to the Security Documents in the assets of such Domestic Subsidiary
shall remain in full force and effect and perfected (to at least the
same extent as in effect immediately prior to such merger, dissolution
or liquidation);
(j) any Domestic Subsidiary of the Parent (other than Borrower) may
transfer assets to the Parent or to any other Domestic Subsidiary of
the Parent, so long
60
as (i) such Subsidiary is a Credit Party and (ii) the security
interests granted to the Agent for the benefit of the Lenders pursuant
to the Security Documents in the assets so transferred shall remain in
full force and effect and perfected (to at least the same extent as in
effect immediately prior to such transfer);
(k) real estate leases or real estate subleases may be granted by the
Parent or any of its Subsidiaries to third Persons not interfering in
any material respect with the business of the Parent or any of its
Subsidiaries;
(l) the assets of any foreign Subsidiary of the Parent may be
transferred to the Parent or any of its Subsidiaries; and
(m) sales of those assets listed on Annex XI hereto may occur.
8.3. Liens. The Borrower will not, and will not permit any Credit Party or any
of its respective Subsidiaries to, create, incur, assume or suffer to exist any
Lien upon or with respect to any item constituting Collateral except for the
Lien of the Security Documents relating thereto, the Prior Liens applicable
thereto and other Liens expressly permitted by such Security Documents. The
Borrower will not, and will not permit any Credit Party or any of its respective
Subsidiaries to, create, incur, assume or suffer to exist any Lien upon or with
respect to any property or assets of the Borrower, such Credit Party or such
Subsidiary which does not constitute Collateral, whether now owned or hereafter
acquired, or sell any such property or assets subject to an understanding or
agreement, contingent or otherwise, to repurchase such property or assets or
assign any right to receive income, or file or permit the filing of any
financing statement under the UCC or any other similar notice of Lien under any
similar recording or notice statute, except the following (collectively referred
to as "Permitted Liens"):
(a) inchoate Liens for taxes, assessments or governmental charges of
levies not yet due or Liens for taxes, assessments or governmental
charges or levies being contested in good faith and by appropriate
proceedings for which adequate reserves have been established in
accordance with GAAP;
(b) Liens in respect of property or assets of the Borrower or any of
its Subsidiaries imposed by law which were incurred in the ordinary
course of business or in connection with any Capital Expenditure
permitted by the terms of this Agreement and which have not arisen to
secure Indebtedness for borrowed money, such as carriers',
warehousemen's, storage and mechanics' Liens, statutory landlord's
Liens, and other similar Liens arising in the ordinary course of
business, and which either (x) do not in the aggregate materially
detract from the value of such property or assets or materially impair
the use thereof in the operation of the business of the Borrower or
any of its Subsidiaries or (y) are being contested in good faith by
appropriate proceedings, which proceedings have the effect of
preventing the forfeiture or sale of the property or asset subject to
such Lien;
61
(c) Liens in existence on the Effective Date which are listed, and the
property subject thereto described, in Annex X, and extensions,
renewals or related refinancings thereof, provided that such
extensions, renewals or related refinancings pursuant to Section
8.4(b) (x) do not increase the obligations so secured and (y) do not
apply to additional assets not subject to the lien being extended or
renewed;
(d) Liens arising from judgments, decrees or attachments in
circumstances not constituting an Event of Default under Section 9.9;
(e) Liens incurred or deposits made (x) in the ordinary course of
business in connection with workers' compensation, unemployment
insurance and other types of social security, or to secure the
performance of tenders, statutory obligations, surety and appeal
bonds, bids, government contracts, performance and return-of-money
bonds and other similar obligations incurred in the ordinary course of
business (exclusive of obligations in respect of the payment for
borrowed money); and (y) to secure the performance of leases of Real
Property, to the extent incurred or made in the ordinary course of
business consistent with past practices;
(f) licenses, leases or subleases granted to third Persons not
interfering in any material respect with the business of the Borrower,
any Credit Party or any of its respective Subsidiaries;
(g) easements, zoning restrictions, rights-of-way, restrictions, minor
defects or irregularities in title and other similar charges or
encumbrances not interfering in any material respect with the ordinary
conduct of the business of the Borrower, any Credit Party or any of
its respective Subsidiaries;
(h) Liens arising from precautionary UCC financing statements
regarding operating leases permitted by this Agreement;
(i) any interest or title of a licensor, lessor or sublessor under any
license or lease permitted by this Agreement;
(j) Liens created pursuant to Capital Leases permitted pursuant to
Section 8.4(d);
(k) Liens arising pursuant to purchase money mortgages or security
interests securing Indebtedness representing the purchase price (or
financing of the purchase price within 90 days after the respective
purchase) of assets acquired after the Initial Borrowing Date;
provided that (i) any such Liens attach only to the assets so
purchased, (ii) the Indebtedness secured by any such Lien (including
refinancings thereof) does not exceed 100% of the lesser of the fair
market value
62
or the purchase price of the property being purchased at the time of
the incurrence of such Indebtedness and (iii) the Indebtedness secured
thereby is permitted to be incurred pursuant to Section 8.4(d);
(l) Liens granted with respect to Indebtedness incurred pursuant to
Section 8.4(g); provided that the collateral subject to such Lien is
Cash or Cash Equivalents and does not have an aggregate value in
excess of $250,000; and
(m) Liens created in favor of BTCo and its Affiliates in an Account
No. 000-00000-00 named "Grey Wolf, Inc." with BTCo's Affiliate, BT
Alex. Xxxxx Incorporated solely for the purpose of securing the
obligations of Parent with respect to BTCo letters of credit
outstanding on the date hereof in an amount equal to the lesser of
$2,325,000 or the actual amount of reimbursement for which the Parent
is obligated to make payment from time to time as the account party
thereon (which letters of credit shall not be extended or amended).
8.4. Indebtedness. The Borrower will not, and will not permit any Credit Party
or any of its respective Subsidiaries to, contract, create, incur, assume or
suffer to exist any Indebtedness, except:
(a) Indebtedness incurred pursuant to this Agreement and the other
Credit Documents;
(b) Existing Indebtedness outstanding on the Effective Date and listed
on Annex VIII, including any extensions, refinancings, replacements or
restructurings thereof, provided that the then outstanding principal
amount thereof is not increased nor the maturity thereof shortened;
(c) Indebtedness under Interest Rate Protection Agreement and Other
Hedging Agreements permitted by Section 8.5(d);
(d) Capitalized Lease Obligations and Indebtedness of any Credit Party
and its Subsidiaries incurred pursuant to purchase money Liens
permitted under Section 8.3(k); provided that the sum of (x) the
aggregate Capitalized Lease Obligations (excluding up to $3,500,000 at
any time of Motor Vehicle Capitalized Lease Obligations) outstanding
at any time plus (y) the aggregate principal amount of such purchase
money Indebtedness (excluding therefrom any insurance premiums paid in
monthly installments) outstanding at such time shall not exceed
$500,000 (including Capital Lease Obligations referred to on Annex
VIII);
(e) Indebtedness constituting Intercompany Loans to the extent
permitted by Section 8.5(g);
63
(f) Indebtedness consisting of guaranties (x) by the Borrower of
Indebtedness, leases and other contractual obligations permitted to be
incurred by Subsidiaries of the Borrower that are Credit Parties and
(y) by foreign Subsidiaries of the Borrower of Indebtedness, leases
and other contractual obligations permitted to be incurred by the
Borrower and its Subsidiaries;
(g) third party letters of credit to support the workers' compensation
obligations of the Borrower and its Domestic Subsidiaries in an
aggregate face amount not to exceed $2,000,000 and only secured by
Liens permitted pursuant to Section 8.3(l);
(h) Indebtedness evidenced by (i) the Parent's Senior Notes due 2007
issued in 1997, in the aggregate principal amount of $175,000,000, and
(ii) the Parent's Senior Notes due 2007 issued in 1998 in an aggregate
principal amount of $75,000,000.
8.5. Advances, Investments and Loans. The Borrower will not, and will not permit
any Credit Party or any of its respective Subsidiaries to, lend money or credit
or make advances to any Person, or purchase or acquire any stock, obligations or
securities of, or any other interest in, or make any capital contribution to,
any Person, or purchase or own a futures contract or otherwise become liable for
the purchase or sale of currency or other commodities at a future date in the
nature of a futures contract, or hold any cash, Cash Equivalents (collectively,
"Investments"), except:
(a) the Borrower and its Subsidiaries may invest in Cash and Cash
Equivalents;
(b) the Borrower and its Subsidiaries may acquire and hold receivables
owing to it, if created or acquired in the ordinary course of business
and payable or dischargeable in accordance with customary trade terms
(including the dating of receivables) of the Borrower or such
Subsidiary;
(c) the Borrower and its Subsidiaries may acquire and own investments
(including debt obligations) received in connection with the
bankruptcy or reorganization of suppliers and customers and in
settlement of delinquent obligations of, and other disputes with,
customers and suppliers arising in the ordinary course of business;
(d) Interest Rate Protection Agreements entered into to protect the
Borrower against fluctuations in interest rates in respect of the
Obligations and other Hedging Agreements;
(e) advances, loans and investments in existence on the Effective Date
and listed on Annex V shall be permitted, without giving effect to any
additions thereto or replacements thereof (except those additions or
replacements which are existing obligations as of the Effective Date
but only to the extent such further obligations are described on such
Annex V);
64
(f) deposits made in the ordinary course of business consistent with
past practices to secure the performance of leases or other
contractual arrangements shall be permitted;
(g) the Parent may make intercompany loans and advances to any of its
Subsidiaries that are Guarantors, and any Subsidiary of the Parent may
make intercompany loans and advances to the Parent, the Borrower or
any other Subsidiary of the Parent that is a Guarantor (collectively,
"Intercompany Loans");
(h) loans and advances by the Parent and its Subsidiaries to
employees of the Parent and its Subsidiaries for moving and travel
expenses and other similar expenses or in connection with stock
purchases in each case incurred in the ordinary course of business
and consistent with past practices shall be permitted in an aggregate
principal amount not to exceed $500,000 at any one time
outstanding; and
(i) in addition to the advances and investments existing on the date
hereof and disclosed to the Agent in writing prior to the date hereof,
the Credit Parties may invest up to $1,250,000 in the aggregate in any
fiscal year in Subsidiaries that are not Credit Parties (such that the
aggregate investment shall not exceed $1,250,000 with respect to all
such Subsidiaries in any such fiscal year).
8.6. Dividends, etc. The Borrower will not, and will not permit any Credit Party
or any of its respective Subsidiaries to, declare or pay any dividends (other
than dividends payable solely in common stock of the Parent or any Subsidiary
subject to the Security Documents) or return any capital to, its stockholders or
authorize or make any other distribution, payment or delivery of property or
cash to its stockholders as such, or redeem (other than a redemption of up to
$306,000 of the Series A Stock), retire, purchase or otherwise acquire, directly
or indirectly, for any consideration, any shares of any class of its capital
stock, now or hereafter outstanding (or any warrants for or options or stock
appreciation rights (other than such rights as are granted only to employees as
compensation for their employment) in respect of any of such shares), or set
aside any funds for any of the foregoing purposes, and the Borrower will not
permit any Credit Party or any of its Subsidiaries to purchase or otherwise
acquire for consideration any shares of any class of the capital stock of any
Credit Party or any Subsidiary of any Credit Party now or hereafter outstanding
(or any options or warrants or such stock appreciation rights issued by such
Person with respect to its capital stock) (all of the foregoing "Dividends", it
being understood that the payments made in accordance with the clauses contained
in the proviso of Section 8.7 shall not be deemed to be Dividends), except that
any Subsidiary of the Parent may pay Dividends to the Parent or any Wholly-Owned
Subsidiary of the Parent.
65
8.7. Transactions with Affiliates. The Borrower will not, and will not permit
any Credit Party or any of its respective Subsidiaries to, enter into any
transaction or series of transactions with any Affiliate other than in the
ordinary course of business and on terms and conditions substantially as
favorable to the Borrower, such Credit Party or such Subsidiary as would be
reasonably expected to be obtainable by the Borrower, Credit Party or such
Subsidiary at the time in a comparable arm's-length transaction with a Person
other than an Affiliate; provided that the following shall in any event be
permitted: (i) transactions between or among the Borrower and its Subsidiaries
to the extent that such transactions are otherwise specifically permitted under
this Agreement, (ii) all transactions between or among the Credit Parties and
(iii) all immaterial transactions with Affiliates.
8.8. Minimum Value of Domestic Rigs. The Borrower will not permit the Orderly
Liquidation Value of its Qualified Domestic Rigs (including Domestic Rigs stored
in inventory) and Mobile Rigs in which the Agent for the benefit of the Lenders
has a first priority perfected security interest and Lien under the Security
Documents and which are subject to no other Lien to be less than $150,000,000 at
any time (based upon the Orderly Liquidation Value thereof as set forth in the
then most recent Appraisal of Orderly Liquidation Value provided to or obtained
by the Agent).
8.9. Certain Financial Covenants. At any and every time during which Total
Available Liquidity is less than $25,000,000, and continuing thereafter in each
such instance until the beginning of the fiscal quarter which next follows first
full fiscal quarter thereafter during which Total Available Liquidity at all
times during such fiscal quarter exceeds $25,000,000, the Borrower shall comply
with the following:
(a) Minimum Net Worth. The Borrower will not permit the Consolidated
Tangible Net Worth of the Parent and its Subsidiaries on the last day
each March, June, September and December of each year, commencing on
December 31, 1998, to be less on any such date than the sum of (i) the
Consolidated Tangible Net Worth of the Parent and its Subsidiaries on
the last day of the fiscal year immediately prior to the fiscal year
of the determination date, minus (ii) (A) $7,500,000 if the
determination date is the last day of March, (B) $15,000,000 if the
determination date is the last day of June, (C) $22,500,000 if the
determination date is the last day of October, and (D) $30,000,000 if
the determination date is the last day of December, minus (iii)
non-cash writedowns in accordance with GAAP.
(b) Debt Service Coverage Ratio. The Borrower will not permit the Debt
Service Coverage Ratio for the trailing twelve month period ending on
the last day of each month to be less than 1.0:1.0.
8.10. Limitation on Voluntary Payments and Modifications of Indebtedness;
Modifications of Certificate of Incorporation, By-Laws and Certain Other
Agreements; Issuances of Capital Stock; etc. The Borrower will not, and will not
permit any Credit Party or any of its respective Subsidiaries to:
66
(i) make (or give any notice in respect of) any voluntary or optional
payment or prepayment on or redemption or acquisition for value of
(including, without limitation, by way of depositing with the trustee
with respect thereto or any other Person money or securities before
due for the purpose of paying when due) any Indebtedness, including
any Existing Indebtedness;
(ii) amend or modify in any material respect or in any manner adverse
to the Borrower or the Lenders, or permit such an amendment or
modification of, any provision of the Existing Indebtedness;
(iii) amend, modify or change in any way adverse to the interests of
the Lenders, its Certificate of Incorporation (including, without
limitation, by the filing or modification of any certificate of
designation) or By-Laws; and
(iv) issue any class of capital stock other than common stock.
8.11. Limitation on Certain Restrictions on Subsidiaries. The Borrower will not,
and will not permit any Credit Party or any of its respective Subsidiaries to,
directly or indirectly, create or otherwise cause or suffer to exist or become
effective (other than pursuant to the Credit Documents) any encumbrance or
restriction on the ability of any such Subsidiary to (a) pay dividends or make
any other distributions on its capital stock or any other interest or
participation in its profits owned by any Credit Party or any Subsidiary of any
Credit Party, or pay any Indebtedness owed to any Credit Party or any Subsidiary
of any Credit Party, (b) make loans or advances to any Credit Party or
Subsidiary of any Credit Party or (c) transfer any of its properties or assets
to any Credit Party or any Subsidiary of any Credit Party, except for such
encumbrances or restrictions existing under or by reason of (i) applicable law,
(ii) the Credit Documents, (iii) customary provisions restricting subletting or
assignment of any lease governing a leasehold interest of any Credit Party or
any Subsidiary of any Credit Party, (iv) customary provisions restricting
assignment of any licensing agreement entered into by any Credit Party or a
Subsidiary of any Credit Party in the ordinary course of business, (v) customary
provisions restricting the transfer of assets pursuant to Liens permitted under
Section 8.3(j), (k), (l), or (m), or (vi) the Indentures.
8.12. Limitation on the Creation of Subsidiaries. Notwithstanding anything to
the contrary contained in this Agreement, the each Credit Party will not, and
will not permit any of its Subsidiaries to, establish, create or acquire after
the Effective Date any Subsidiary.
SECTION 9. Events of Default. Upon the occurrence of any of the following
specified events (each an "Event of Default"):
9.1. Payments. The Borrower shall (i) default in the payment when due of any
principal of the Loans or (ii) default, and such default shall continue for two
or more
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Business Days, in the payment when due of any Unpaid Drawing, any interest on
the Loans or any Fees or any other amounts owing hereunder or under any other
Credit Document;
9.2. Representations, etc. Any representation, warranty or statement made by any
Credit Party in any Credit Document or in any statement or certificate delivered
pursuant thereto shall prove to be untrue in any material respect on the date as
of which made or deemed made; or
9.3. Covenants. Any Credit Party shall (a) default in the due performance or
observance by it of any term, covenant or agreement contained in Sections 7.3,
7.14 and 8, or (b) default in the due performance or observance by it of any
term, covenant or agreement (other than those referred to in Section 9.1, 9.2 or
clause (a) of this Section 9.3) contained in this Agreement and such default
shall continue unremedied to the satisfaction of the Agent for a period of
twenty (20) days from the date of such default; or
9.4. Default Under Other Agreements. (a) Any Credit Party or any of its
Subsidiaries shall (i) default in any payment on or with respect to any
Indebtedness (other than the Obligations) beyond the period of grace, if any,
provided in the instrument or agreement under which such Indebtedness was
created or (ii) default in the observance or performance of any agreement or
condition relating to any such Indebtedness or contained in any instrument or
agreement evidencing, securing or relating thereto, or any other event shall
occur or condition exist, the effect of which default or other event or
condition is to cause, or to permit the holder or holders of such Indebtedness
(or a trustee or agent on behalf of such holder or holders) to cause, any such
Indebtedness to become due prior to its stated maturity; or (b) any Indebtedness
(other than the Obligations) of any Credit Party or any of its Subsidiaries
shall be declared to be due and payable, or shall be required to be prepaid
other than by a regularly scheduled required prepayment or as a mandatory
prepayment (unless such required prepayment or mandatory prepayment results from
a default thereunder or an event of the type that constitutes an Event of
Default), prior to the stated maturity thereof; provided that it shall not
constitute an Event of Default pursuant to clause (a) or (b) of this Section 9.4
unless the principal amount of any one issue of such Indebtedness, or the
aggregate amount of all such Indebtedness referred to in clauses (a) and (b)
above, exceeds $350,000 at any one time; or
9.5. Bankruptcy, etc. Any Credit Party or any of its Subsidiaries shall commence
a voluntary case concerning itself under Title 11 of the United States Code
entitled "Bankruptcy," as now or hereafter in effect, or any successor thereto
(the "Bankruptcy Code"); or an involuntary case is commenced against any Credit
Party or any of its Subsidiaries and the petition is not controverted within 30
days, or is not dismissed within 60 days, after commencement of the case; or a
custodian (as defined in the Bankruptcy Code) is appointed for, or takes charge
of, all or substantially all of the property of any Credit Party or any of its
Subsidiaries; or any Credit Party or any of its
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Subsidiaries commences any other proceeding under any reorganization,
arrangement, adjustment of debt, relief of debtors, dissolution, insolvency or
liquidation or similar law of any jurisdiction whether now or hereafter in
effect relating to any Credit Party or any of its Subsidiaries; or there is
commenced against any Credit Party or any of its Subsidiaries any such
proceeding which remains undismissed for a period of 60 days; or any Credit
Party or any of its Subsidiaries is adjudicated insolvent or bankrupt; or any
order of relief or other order approving any such case or proceeding is entered;
or any Credit Party or any of its Subsidiaries suffers any appointment of any
custodian or the like for it or any substantial part of its property to continue
undischarged or unstayed for a period of 60 days; or any Credit Party or any of
its Subsidiaries makes a general assignment for the benefit of creditors; or any
corporate action is taken by any Credit Party or any of its Subsidiaries for the
purpose of effecting any of the foregoing; or
9.6. ERISA. (a) Any Plan shall fail to satisfy the minimum funding standard
required for any plan year or part thereof or a waiver of such standard or
extension of any amortization period is sought or granted under Section 412 of
the Code, any Plan shall have had or is likely to have a trustee appointed to
administer such Plan, any Plan is, shall have been or is likely to be terminated
or the subject of termination proceedings under ERISA, any Plan shall have an
Unfunded Current Liability, a contribution required to be made to a Plan or a
Foreign Pension Plan has not been timely made, any Credit Party or any
Subsidiary of any Credit Party or any ERISA Affiliate has incurred or is likely
to incur a liability to or on account of a Plan under Section 409, 502(i),
502(l), 515, 4062, 4063, 4064, 4069, 4201, 4204 or 4212 of ERISA or Section
401(a)(2), 4971, 4975 or 4980 of the Code, or any Credit Party or any Subsidiary
of any Credit Party has incurred or is likely to incur liabilities pursuant to
one or more employee welfare benefit plans (as defined in Section 3(1) of ERISA)
which provide benefits to retired employees and other former employees (other
than as required by Section 601 of ERISA) or employee pension benefit plans (as
defined in Section 3(2) of ERISA) or Foreign Pension Plans; (b) there shall
result from any such event or events the imposition of a lien, the granting of a
security interest, or a liability or a material risk of imposition of a lien,
granting of a security interest or incurring a liability; and (c) which lien,
security interest or liability which arises from such event or events is
reasonably likely to have a Material Adverse Effect; or
9.7. Security Documents. (a) Any Security Document shall cease to be in full
force and effect, or shall cease to give the Agent the Liens, rights, powers and
privileges purported to be created thereby in favor of the Agent with respect to
any portion of the Collateral which is not de minimis, or (b) any Credit Party
shall default in the due performance or observance of any term, covenant or
agreement on its part to be performed or observed pursuant to any such Security
Document and such default shall continue beyond any cure or grace period
specifically applicable thereto pursuant to the terms of any such Security
Document; or
9.8. Guarantees. The Guarantees or any provision thereof shall cease to be in
full force and effect, or any Guarantor or any Person acting by or on behalf of
such
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Guarantor shall deny or disaffirm such Guarantor's obligations under any
Guaranty or any Guarantor shall default in the due performance or observance of
any term, covenant or agreement on its part to be performed or observed pursuant
to any Guaranty; or
9.9. Judgments. One or more judgments or decrees shall be entered against any
Credit Party or any of its Subsidiaries involving a liability (to the extent not
paid or not fully covered (which coverage has not been denied) by insurance) in
excess of $350,000 for all such judgments and decrees and all such judgments or
decrees shall not have been vacated, discharged or stayed or bonded pending
appeal within 60 days from the entry thereof; or
9.10. Ownership. A Change of Control Event shall have occurred;
then, and in any such event, and at any time thereafter, if any Event of Default
shall then be continuing, the Agent may (and shall, upon the written request of
the Required Lenders), by written notice to the Borrower, take any or all of the
following actions, without prejudice to the rights of the Agent or any Lender to
enforce its claims against any Guarantor or the Borrower, except as otherwise
specifically provided for in this Agreement (provided that if an Event of
Default specified in Section 9.5 shall occur with respect to the Borrower the
result which would occur upon the giving of written notice by the Agent as
specified in clauses (i) and (ii) below shall occur automatically without the
giving of any such notice): (i) declare the Total Revolving Loan Commitment
terminated, whereupon the Revolving Loan Commitment of each Lender shall
forthwith terminate immediately and any Commitment Fees shall forthwith become
due and payable without any other notice of any kind; (ii) declare the principal
of and any accrued interest in respect of all Loans and all Obligations owing
hereunder (including Unpaid Drawings) to be, whereupon the same shall become,
forthwith due and payable without presentment, demand, protest or other notice
of any kind, all of which are hereby waived by the Borrower; (iii) enforce, as
the Agent (or direct the Agent to enforce), any or all of the Liens and security
interests created pursuant to the Security Documents; (iv) terminate any Letter
of Credit which may be terminated in accordance with its terms; (v) direct the
Borrower to pay (and the Borrower hereby agree upon receipt of such notice, or
upon the occurrence of any Event of Default specified in Section 9.5, to pay) to
the Agent at the Payment Office such additional amounts of cash, to be held as
security for the Borrower's reimbursement obligations in respect of Letters of
Credit then outstanding, equal to the aggregate Stated Amount of all Letters of
Credit then outstanding; and (vi) forthwith terminate the rights of any or all
of the Credit Parties, among other things, to make advances, investments and
loans under Sections 8.5(g) and 8.5(i).
SECTION 10. Definitions. As used herein, the following terms shall have the
meanings herein specified unless the context otherwise requires. Defined terms
in this Agreement shall include in the singular number the plural and in the
plural the singular:
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"Additional Collateral" shall have the meaning provided in Section 7.11(c).
"Additional Insured" shall have the meaning provided in Section 7.3(b) above.
"Affiliate" shall mean, with respect to any Person, any other Person directly or
indirectly controlling (including but not limited to all directors and executive
officers of such Person), controlled by, or under direct or indirect common
control with such Person. A Person shall be deemed to control a corporation if
such Person possesses, directly or indirectly, the power (i) to vote 10% or more
of the securities having ordinary voting power for the election of directors of
such corporation or (ii) to direct or cause the direction of the management and
policies of such corporation, whether through the ownership of voting
securities, by contract or otherwise.
"Agent" shall mean CITBC and shall include any successor appointed pursuant to
Section 11.10.
"Agreement" shall mean this Loan Agreement, as the same may be from time to time
modified, amended and/or supplemented.
"Anniversary Date" shall mean each anniversary date of the date hereof and the
same date in every year thereafter so long as the Agreement remains in effect.
"Applicable Base Rate Margin" and "Applicable Eurodollar Margin" shall mean, at
any time following the date upon which consolidated financial results for four
full fiscal quarters are provided pursuant to Section 7.1, the applicable
percentage set forth below opposite the applicable Debt Service Ratio:
Debt Service Coverage Ratio Eurodollar Loans Base Rate Loans
Less than or equal to 1.1 to 1.0 3.50% 1.50%
Greater than 1.1 to 1.0 but less than or 2.50% 1.00%
equal to 1.5 to 1.0
Greater than 1.5 to 1.0 but less than or 2.25% 0.75%
equal to 2.0 to 1.0
Greater than 2.0 to 1.0 1.75% 0.25%
Notwithstanding the foregoing: (i) The Applicable Base Rate Margin and the
Applicable Eurodollar Margin during the period from the Initial Borrowing Date
to but excluding the first Anniversary Date shall be the (x) Prime Lending Rate
plus one percent (1%) and (y) the Eurodollar Rate plus two and one-half percent
(2.50%), respectively; (ii) For purposes of the Credit Documents, the Applicable
Base Rate Margin and the Applicable Eurodollar Margin shall never be less than
(x) one-fourth of one percent (0.25%) and (y) one and three-quarters percent
(1.75%), respectively.
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"Appraisal of Fair Market Value" shall mean a formal written appraisal by an
Approved Appraiser establishing Fair Market Value of an asset or property as set
forth in a report by such Approved Appraiser delivered to the Agent, which
appraisal and report shall be in form and substance acceptable to the Agent. The
values in such appraisal shall be determined by using the market data approach.
The market data approach is that approach to value where recent sales and/or
offering prices of similar assets or property are analyzed to arrive at an
indication of the most probable selling price for the asset or property being
appraised.
"Appraisal of Orderly Liquidation Value" shall mean a formal written appraisal
by an Approved Appraiser establishing Orderly Liquidation Value of an asset or
property as set forth in a report by such Approved Appraiser delivered to the
Agent, which appraisal and report shall be in form and substance acceptable to
the Agent.
"Approved Appraiser" shall mean X.X.X. Valuations, Inc. and Hadco International,
Inc. or any other appraiser acceptable to the Agent.
"Asset Sale" shall mean any sale, transfer or other disposition by the Borrower
or any of its Subsidiaries to any Person of any asset (including, without
limitation, any capital stock or other securities of another Person, but
excluding the sale by such Person of its own capital stock) of the Borrower or
such Subsidiary other than (i) sales, transfers or other dispositions of Special
Inventory, (ii) sales of assets pursuant to Section 8.2(f) and (g) and (iii)
sales of those assets listed on Annex XI hereto.
"Assignment and Assumption Agreement" shall mean the Assignment and Assumption
Agreement substantially in the form of Exhibit K (appropriately completed).
"Authorized Officer" shall mean any senior officer of a Credit Party designated
as such in writing to the Agent by a Credit Party to the extent reasonably
acceptable to the Agent.
"Availability" shall mean at any time the excess of (a) the lesser of (i) the
Revolving Loan Commitment, or (ii) 50% of the Orderly Liquidation Value (with
Orderly Liquidation Value being based upon the then most recent Appraisal of
Orderly Liquidation Value) of the Qualified Domestic Rigs and Mobile Rigs
(subject to a first priority perfected security interest and Lien under the
Security Documents) of Borrower in which the Agent for the benefit of the
Lenders has a first priority perfected security interest and Lien and which are
not subject to any other Lien, over (b) the sum of (i) the outstanding aggregate
amount of all Obligations, including without limitation, all Obligations with
respect to Revolving Loans and Letter of Credit Outstandings and (ii) the
Availability Reserve.
"Availability Reserve" shall mean the sum of (a) three (3) months rental
payments on all of the Borrower's leased premises for which the Borrower has not
delivered to the Agent a landlord's waiver (in form and substance satisfactory
to Agent in the exercise of
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its reasonable business judgment), provided that such amount shall be adjusted
from time to time hereafter upon (i) delivery to the Agent of any such
acceptable waiver, (ii) the opening or closing of a Collateral storage location
and/or (iii) any change in rental payment and/or storage charge and (b) an
amount equal to any and all past due storage charges with respect to all
warehouse locations at which Collateral may be located, provided that the
Borrower shall promptly advise the Agent of all such amounts and, upon request
by the Agent, provide a report to the Agent with respect thereto, and (c) such
other reserves as the Agent determines are appropriate.
"Bankruptcy Code" shall have the meaning provided in Section 9.5.
"Base Rate" at any time shall mean the higher of (x) the Prime Lending Rate and
(y) the rate which is 1/2 of 1% in excess of the Federal Funds Rate.
"Base Rate Loan" shall mean each Loan bearing interest at the rates provided in
Section 1.8(a).
"Borrower" shall have the meanings provided in the first paragraph of this
Agreement.
"Borrowing" shall mean and include the borrowing of one Type of Revolving Loan
from all of the Lenders on a given date (or resulting from conversions on a
given date), having in the case of Eurodollar Loans the same Interest Period;
provided that Base Rate Loans incurred pursuant to Section 1.10(b) shall be
considered part of any related Borrowing of Eurodollar Loans.
"BTCo" shall mean Bankers Trust Company.
"Business Day" shall mean (i) for all purposes other than as covered by clause
(ii) below, any day excluding Saturday, Sunday and any day which shall be in the
City of New York a legal holiday or a day on which banking institutions are
authorized by law or other governmental actions to close and (ii) with respect
to all notices and determinations in connection with, and payments of principal
and interest on, Eurodollar Loans, any day which is a Business Day described in
clause (i) and which is also a day for trading by and between banks in U.S.
dollar deposits in the interbank Eurodollar market.
"Capital Expenditure," shall mean, with respect to any Person, all expenditures
by such Person which should be added to fixed assets account on the consolidated
balance sheet of such Person in accordance with GAAP, including all such
expenditures with respect to plant, property or equipment (including, without
limitation, expenditures for maintenance and repairs which should be capitalized
in accordance with GAAP).
"Capital Lease," as applied to any Person, shall mean any lease of any property
(whether real, personal or mixed) by that Person as lessee which, in conformity
with GAAP, should be accounted for as a capital lease on the balance sheet of
that Person.
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"Capitalized Lease Obligations" shall mean all obligations under Capital Leases
of the Parent or any of its Subsidiaries in each case taken at the amount
thereof that should be accounted for as liabilities in accordance with GAAP.
"Cash" shall mean U.S. dollars.
"Cash Equivalents" shall mean (i) securities issued or directly and fully
guaranteed or insured by the United States of America or any agency or
instrumentality thereof (provided that the full faith and credit of the United
States of America is pledged in support thereof) having maturities of not more
than twelve months from the date of acquisition, (ii) U.S. dollar denominated
time deposits, certificates of deposit and banker acceptances of (x) any Lender
or (y) any bank whose short-term commercial paper rating from S&P is at least
A-1 or the equivalent thereof or from Xxxxx'x is at least P-1 or the equivalent
thereof (any such bank or Lender, an "Approved Lender"), in each case with
maturities of not more than twelve months from the date of acquisition, (iii)
commercial paper issued by any Approved Lender or by the parent company of any
Approved Lender and commercial paper issued by, or guaranteed by, any industrial
or financial company with a short-term commercial paper rating of at least A-1
or the equivalent thereof by S&P or at least P-1 or the equivalent thereof by
Moody's, as the case may be, and in each case maturing within twelve months
after the date of acquisition, (iv) marketable direct obligations issued by any
state of the United States of America or any political subdivision of any such
state or any public instrumentality thereof maturing within twelve months from
the date of acquisition thereof and, at the time of acquisition having one of
the two highest ratings obtainable from either S&P or Moody's, (v) any
repurchase agreement entered into with any Approved Lender which is secured by
any obligation of the type described in any of clauses (i) through (iii) and
(vi) investments in money market funds substantially all the assets of which are
comprised of securities of the types described in clauses (i) through (iv)
above.
"Cash Proceeds" shall mean, with respect to any Asset Sale, the aggregate cash
payments (including any cash received by way of deferred payment pursuant to a
note receivable issued in connection with such Asset Sale, other than the
portion of such deferred payment constituting interest, but only as and when so
received) received by the Borrower and/or any of its Subsidiaries from such
Asset Sale.
"Change of Control Event" shall mean (a) the Parent shall cease to own directly
100% on a fully diluted basis of the economic and voting interest in the capital
stock of the Borrower or International or (b) any Person or "group" (within the
meaning of Rules 13d-3 and 13d-5 under the Securities Exchange Act of 1934, as
in effect on the Effective Date) shall have (A) acquired beneficial ownership of
30% or more on a fully diluted basis of the voting and/or economic interest in
the Parent's capital stock or (B) obtained the power (whether or not exercised)
to elect a majority of the Parent's directors or (c) the Board of Directors of
the Parent shall cease to consist of a majority of Continuing Directors.
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"Chase Bank" shall mean The Chase Manhattan Bank (or its successor).
"CITBC" shall mean The CIT Group/Business Credit, Inc., in its individual
capacity, and any successor corporation thereto by merger, consolidation or
otherwise.
"Code" shall mean the Internal Revenue Code of 1986, as amended from time to
time, and the regulations promulgated and ruling issued thereunder. Section
references to the Code are to the Code, as in effect at the date of this
Agreement and any subsequent provisions of the Code amendatory thereof,
supplemental thereto or substituted therefor.
"Collateral" shall mean all collateral under the Security Documents, including
all of the Pledged Collateral and Pledged Securities.
"Collateral Management Fee" shall have the meaning provided in Section 3.1(c).
"Commitment Fee" shall have the meaning provided in Section 3.1(a).
"Consolidated Adjusted EBITDA" shall mean, for any period, the sum of (a)
Consolidated EBITDA for such period minus (b) the amount set forth below which
corresponds to the fiscal year of the Parent in which the date of determination
of Consolidated Adjusted EBITDA occurs:
Fiscal Year Amount
1999 $4,600,000
2000 $5,700,000
2001 $5,700,000
2002 $6,200,000
"Consolidated Adjusted Tangible Assets" shall mean all assets of the Parent and
its Subsidiaries on a consolidated basis except: (i) any surplus resulting from
any write-up of assets subsequent to September 30, 1998; (ii) deferred assets,
other than prepaid insurance and prepaid taxes; (iii) patents, copyrights,
trademarks, trade names, non-compete agreements, franchises and other similar
intangibles; (iv) goodwill, including any amounts, however designated on a
Consolidated balance sheet of a Person or its Subsidiaries, representing the
excess of the purchase price paid for assets or stock over the value assigned
thereto on the books of such Person; (v) Restricted Investments; (vi)
unamortized debt discount and expense; (vii) assets located and notes and
receivables due from obligors outside of the United States of America; and
(viii) Accounts, notes and other receivables due from Affiliates or employees.
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"Consolidated Adjusted Tangible Net Worth" shall mean, at any date of
determination, a sum equal to (i) the net book value (after deducting related
depreciation, obsolescence, amortization, valuation, and other proper reserves)
at which the Consolidated Adjusted Tangible Assets of the Parent and its
Subsidiaries on a consolidated basis would be shown on a balance sheet at such
date in accordance with GAAP, minus (ii) the amount at which the liabilities
(other than capital stock, redeemable preferred stock and surplus) of the Parent
and its Subsidiaries on a consolidated basis would be shown on such balance
sheet in accordance with GAAP, and including as liabilities all reserves for
contingencies and other potential liabilities.
"Consolidated Debt Service" means the sum of the interest expense (excluding
amortization of deferred loan costs), dividends, income taxes paid in cash,
principal payments on long-term debt (not including Revolving Loans) and
principal payments on Capitalized Lease Obligations of the Parent and its
Subsidiaries on a consolidated basis.
"Consolidated EBITDA" shall mean, for any period, Consolidated Net Income of the
Parent and its Subsidiaries determined on a consolidated basis, before total
interest expense and provisions for taxes based on income, whether paid or
deferred, adjusted by adding thereto the amount of all depreciation expense and
amortization expense.
"Consolidated Net Income" shall mean, for any period, the net income (or loss),
after provisions for income taxes (other than with respect to net income taxes
attributable to items that are excluded from the calculation of Consolidated Net
Income in the period), of the Parent and its Subsidiaries on a consolidated
basis for such period taken as a single accounting period in conformity with
GAAP but excluding in any event (a) any extraordinary gains (net of
extraordinary losses) but with giving effect to gains or losses from sales of
assets sold in the ordinary course of business; (b) net earnings of any Person
(other than a consolidated Subsidiary that is a Guarantor) in which the Parent
or any consolidated Subsidiary has an ownership interest unless such net
earnings shall have actually been received by a Credit Party in the United
States of America in the form of cash distributions; (c) any portion of the net
earnings of any consolidated Subsidiary which is unavailable for payment of
dividends to the Parent or any other consolidated Subsidiary by reason of the
provisions of any agreement or applicable law or regulation (including, without
limitation, those agreements referred to in the exceptions set forth in Section
8.13); (d) earnings resulting from any reappraisal, revaluation or write-up (or
non-cash writedown) of assets; (e) the income (or loss) of any Person accrued
prior to the date it becomes a Subsidiary of such Person or is merged into or
consolidated with such Person or any of its Subsidiaries or that Person's assets
are acquired by such Person or any of its Subsidiaries; (f) the aggregate net
gain (or loss) during such period arising from the revaluation (but not sale) of
readily marketable securities; and (g) the income (or loss) from discontinued
operations.
"Contingent Obligations" shall mean as to any Person any obligation of such
Person guaranteeing or intended to guarantee any Indebtedness, leases, dividends
or other obligations ("primary obligations") of any other Person (the "primary
obligor") in any manner, whether directly or indirectly, including, without
limitation, any obligation of
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such Person, whether or not contingent, (a) to purchase any such primary
obligation or any property constituting direct or indirect security therefor,
(b) to advance or supply funds (x) for the purchase or payment of any such
primary obligation or (y) to maintain working capital or equity capital of the
primary obligor or otherwise to maintain the net worth or solvency of the
primary obligor, (c) to purchase property, securities or services primarily for
the purpose of assuring the owner of any such primary obligations of the ability
of the primary obligor to make payment of such primary obligation or (d)
otherwise to assure or hold harmless the owner of such primary obligation
against loss in respect thereof; provided, however, that the term Contingent
Obligation shall not include endorsements of instruments for deposit or
collection or standard contractual indemnities entered into, in each case in the
ordinary course of business. The amount of any Contingent Obligation shall be
deemed to be an amount equal to the stated or determinable amount of the primary
obligation in respect of which such Contingent Obligation is made or, if not
stated or determinable, the maximum reasonably anticipated liability in respect
thereof (assuming such Person is required to perform thereunder) as determined
by such Person in good faith.
"Continuing Directors" shall mean the directors of the Parent on the Initial
Borrowing Date and each other director if such director's nomination for the
election to the Board of Directors of the Parent is recommended by a majority of
the then Continuing Directors.
"Credit Documents" shall mean this Agreement, each of the Notes and each
Security Document.
"Credit Event" shall mean the making of a Loan or the issuance of a Letter of
Credit.
"Credit Party" shall mean the Borrower and each Guarantor.
"Debt Service Coverage Ratio" shall mean, for any period of determination, the
ratio of (a) the Consolidated Adjusted EBITDA of the Parent and its Subsidiaries
for such period to (b) to Consolidated Debt Service of the Parent and its
Subsidiaries for such period.
"Default" shall mean any event, act or condition which with notice or lapse of
time, or both, would constitute an Event of Default.
"Defaulting Lender" shall mean any Lender with respect to which a Lender Default
is in effect.
"Depository Account" shall have the meaning provided in Section 6.23.
"Dividends" shall have the meaning provided in Section 8.7.
"Domestic Rig Utilization Rate" shall mean, for any period of determination, the
daily mean average (expressed as a percentage) of the quotient of (a) the total
number of
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Rigs which are owned by the Borrower which the Borrower is operating under
drilling contracts at customers' working job sites located in the contiguous 48
states of the United States of America on each day during such period, divided
by (b) the total number of Rigs which are owned by Borrower wherever located on
each day during such period [(other than Inventoried Rigs)].
"Domestic Rigs" shall mean Rigs owned by the Borrower which are located in the
48 contiguous states of the United States of America.
"Domestic Subsidiary" shall mean each Subsidiary of the Parent incorporated or
organized in the United States or any State or territory thereof.
"Early Termination Date" shall have the meaning provided in Section 4.1.
"Early Termination Fee" shall (i) mean the fee the Agent is entitled to charge
the Borrower in the event that the Borrower voluntarily terminates the Revolving
Credit Commitment set forth in this Agreement on a date prior to the fourth
Anniversary Date; and (ii) be equal to (w) to $350,000 if the Early Termination
Date occurs prior to one (1) year after the Effective Date, (x) $250,000 if the
Early Termination Date occurs on or after one (1) year after the Effective Date
but prior to two (2) years after the Effective Date, (y) $150,000 if the Early
Termination Date occurs on or after two (2) years from the Effective Date but
prior to three (3) years from the Effective Date, and (z) $100,000 if the Early
Termination Date occurs on and after three (3) years from the Effective Date but
prior to four (4) years after the Effective Date.
"Effective Date" shall have the meaning provided in Section 12.10.
"Eligible Transferee" shall mean a commercial bank, financial institution or
other institutional "accredited investor" (as defined in Regulation D of the
Securities Act).
"Environmental Claims" shall mean any and all administrative, regulatory or
judicial actions, suits, demands, demand letters, claims, liens, notices of
non-compliance, deficiency, liability or violation, investigations or
proceedings relating in any way to any violation or liability (or alleged
violation or liability) by Credit Party or any of its Subsidiaries under any
Environmental Law (hereafter "Claims") or any permit, license or other
authorization issued to any Credit Party or any of its Subsidiaries under any
such law, including, without limitation, (a) any and all Claims by governmental
or regulatory authorities for enforcement, cleanup, removal, remedial,
corrective, response or other actions or damages pursuant to any Environmental
Law, and (b) any and all Claims by any third party seeking damages,
contribution, indemnification, cost recovery, compensation or injunctive relief
resulting from Hazardous Materials or arising from alleged injury or threat of
injury to health, safety or the environment.
"Environmental Law" shall mean any foreign, federal, state or local policy,
statute, law, rule, regulation, ordinance, code or rule of common law now or
hereafter in effect and in
78
each case as amended, and any judicial or administrative interpretation thereof,
including any judicial or administrative order, consent, decree or judgment (for
purposes of this definition (collectively, "Laws")), relating to the environment
or Hazardous Materials, or health and safety to the extent such health and
safety issues arise under the Occupational Safety and Health Act of 1970, as
amended, or any such similar Laws.
"ERISA" shall mean the Employee Retirement Income Security Act of 1974, as
amended from time to time, and the regulations promulgated and the rulings
issued thereunder. Section references to ERISA are to ERISA as in effect at the
date of this Agreement and any subsequent provisions of ERISA amendatory
thereof, supplemental thereto or substituted therefor.
"ERISA Affiliate" shall mean each person (as defined in Section 3(9) of ERISA)
which together with the Borrower or any Subsidiary of the Borrower would be
deemed to be a "single employer" within the meaning of Section 414(b) or (c) of
the Code or (to the extent required by operation of Title IV of ERISA or Section
412 of the Code or Section 302 of ERISA) Section 414(m) or (o) of the Code.
"Eurodollar Loans" shall mean each Loan bearing interest at the rates provided
in Section 1.8(b).
"Eurodollar Processing Fee" shall have the meaning provided in Section 3.1(f).
"Eurodollar Rate" shall mean with respect to each Interest Period for a
Eurodollar Loan, (i) the arithmetic average (rounded to the nearest 1/16 of 1%)
of the offered quotation to first-class banks in the interbank Eurodollar market
by Chase Bank for U.S. dollar deposits of amounts in same day funds generally
comparable to the aggregate principal amount of the Eurodollar Loan for which an
interest rate is then being determined with maturities comparable to the
Interest Period to be applicable to such Eurodollar Loan, determined as of 10:00
A.M. (New York time) on the date which is two Business Days prior to the
commencement of such Interest Period divided (and rounded upward to the next
whole multiple of 1/16 of 1%) by (ii) a percentage equal to 100% minus the then
stated maximum rate of all reserve requirements (including, without limitation,
any marginal, emergency, supplemental, special or other reserves) applicable to
any member bank of the Federal Reserve System in respect of Eurocurrency
liabilities as defined in Regulation D (or any successor category of liabilities
under Regulation D).
"Event of Default" shall have the meaning provided in Section 9.
"Existing Indebtedness" shall have the meaning provided in Section 6.22.
"Existing Indebtedness Agreements" shall have the meaning provided in Section
5.14.
"Existing Letters of Credit" shall have the meaning provided in Section 6.22.
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"Fair Market Value" shall mean with respect to any asset, at any date of
determination, the amount of Net Proceeds which could be expected upon a sale by
a willing and informed seller to a willing and informed buyer, both exercising
prudent judgment and not acting with undue haste.
"Federal Funds Rate" shall mean, for any period, a fluctuating interest rate
equal for each day during such period to the weighted average of the rates on
overnight Federal Funds transactions with members of the Federal Reserve System
arranged by Federal Funds brokers, as published for such day (or, if such day is
not a Business Day, for the next preceding Business Day) by the Federal Reserve
Lender of New York, or, if such rate is not so published for any day which is a
Business Day, the average of the quotations for such day on such transactions
received by the Agent from three Federal Funds brokers of recognized standing
selected by the Agent.
"Fees" shall mean all amounts payable pursuant to, or referred to in,
Section 3.1.
"Final Maturity Date" shall mean January 14, 2003, provided that, unless
otherwise terminated in accordance with this Agreement, such date shall be
automatically extended to (but excluding) the next following Anniversary Date in
2004 and thereafter from Anniversary Date to (but excluding) the next following
Anniversary Date, until the Credit Documents are terminated on any Anniversary
Date upon sixty (60) days prior written notice from the Agent to the Borrower.
"GAAP" shall mean generally accepted accounting principles in the United States
of America as in effect from time to time; it being understood and agreed that
determinations in accordance with GAAP for purposes of Section 8 and the
definition of Interest Reduction Discount, including defined terms as used
therein, are subject (to the extent provided therein) to Section 12.7(a).
"Guaranteed Creditors" shall mean and include each of the Agent, the Lenders and
the Letter of Credit Issuer (and their respective successors, transferees and
assigns).
"Guaranteed Obligations" shall mean the full and prompt payment when due
(whether at the stated maturity, by acceleration or otherwise) of the principal
and interest on each Note issued by the Borrower to each Lender, and Loans made,
under this Agreement and all reimbursement obligations and Unpaid Drawings with
respect to Letters of Credit, together with all the other obligations
(including, without limitation, obligations which, but for the automatic stay
under Section 362(a) of the Bankruptcy Code, would become due) and liabilities
(including, without limitation, indemnities, fees and interest thereon) of the
Borrower or any Guarantor to such Lender, the Agent now existing or hereafter
incurred under, arising out of or in connection with any Credit Document and the
due performance and compliance with all the terms, conditions and agreements
contained in each of the Credit Documents by the Borrower.
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"Guarantees" shall mean the guarantees contained in Section 13.
"Guarantor" shall mean, individually, the Parent Guarantor and/or each
Subsidiary Guarantor.
"Guarantors" shall mean, collectively, the Parent Guarantor and the Subsidiary
Guarantors.
"Hazardous Materials" shall mean (a) any petrochemical or petroleum products or
wastes (including crude oil or any fraction thereof), radioactive materials,
asbestos in any form that is or could become friable, urea formaldehyde foam
insulation, transformers or other equipment that contain dielectric fluid
containing levels of polychlorinated biphenyls, and radon gas; and (b) any
chemicals, materials or substances defined as or included in the definition of
"hazardous substances," "hazardous wastes," "hazardous materials," "restricted
hazardous materials," "extremely hazardous wastes," "restrictive hazardous
wastes," "toxic substances," "toxic pollutants," "contaminants" or "pollutants,"
or words of similar meaning and regulatory effect under any Environmental Law.
"Idled Rig" shall mean a working and crewed Rig which is capable of working but
is not operating at a customer's working job site.
"Indebtedness" of any Person shall mean, without duplication, (i) all
indebtedness of such Person for borrowed money, (ii) the deferred purchase price
of assets or services payable to the sellers thereof or any of such seller's
assignees which in accordance with GAAP would be shown on the liability side of
the balance sheet of such Person but excluding deferred rent as determined in
accordance with GAAP, (iii) the face amount of all letters of credit issued for
the account of such Person and, without duplication, all drafts drawn
thereunder, (iv) all Indebtedness of a second Person secured by any Lien on any
property owned by such first Person, whether or not such Indebtedness has been
assumed; provided, however, that in the event that the liability of such first
Person is non-recourse to such Person and is recourse only to specified assets
of such Person, the amount of Indebtedness attributed thereto shall not exceed
the greater of the market value of such assets or the book value of such assets,
(v) all Capitalized Lease Obligations of such Person, (vi) all obligations of
such Person to pay a specified purchase price for goods or services whether or
not delivered or accepted, i.e., take-or-pay and similar obligations, (vii) all
obligations under Interest Rate Protection Agreements and Other Hedging
Agreements and (viii) all Contingent Obligations of such Person; provided that
Indebtedness shall not include trade payables and accrued expenses, in each case
arising and payable in the ordinary course of business and consistent with past
practice and in no event 120 days past the invoice date (so long as so paid in
the ordinary course of business and consistent with past practice).
"Indentures" shall mean (i) that certain Indenture dated as of May 8, 1998, as
supplemented as of the date hereof, among Parent and certain of its Subsidiaries
which
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constitute Guarantors and Chase Bank of Texas, National Association as trustee
(the "Indenture Trustee") and (ii) that certain Indenture dated as of June 27,
1997, as supplemented as of the date hereof, among Parent and certain of its
Subsidiaries which constitute Guarantors the Indenture Trustee (each as in
effect on the date hereof).
"Initial Borrowing Date" shall mean the date upon which the initial Borrowing of
Loans occurs.
"Intercompany Loan" shall have the meaning provided in Section 8.5(g).
"Interest Period," with respect to any Eurodollar Loan, shall mean the interest
period applicable thereto, as determined pursuant to Section 1.9.
"Interest Rate Protection Agreement" shall mean any interest rate swap
agreement, interest rate cap agreement, interest rate collar agreement, interest
rate hedging agreement or other similar agreement or arrangement.
"Inventoried Rigs" shall mean Rigs which are not currently capable of working
without substantial capital investment.
"L/C Supportable Indebtedness" shall mean (i) obligations of the Borrower or its
Subsidiaries incurred in the ordinary course of business with respect to
insurance obligations and workers' compensation, surety bonds and other similar
statutory obligations and (ii) such other obligations of the Borrower or any of
its Subsidiaries as are reasonably acceptable to the Agent and the Letter of
Credit Issuer and otherwise permitted to exist pursuant to the terms of this
Agreement.
"Leasehold" of any Person shall mean all of the right, title and interest of
such Person as lessee or licensee in, to and under leases or licenses of land,
improvements and/or fixtures.
"Lender" shall have the meaning provided in the first paragraph of this
Agreement.
"Lender Default" shall mean (i) the refusal (which has not been retracted) of a
Lender to make available its portion of any Borrowing or to fund its portion of
any unreimbursed payment under Section 2.4(c) or (ii) a Lender having notified
the Agent and/or the Borrower that it does not intend to comply with the
obligations under Section 1.1(a) or 2.4(c), in the case of either clause (i) or
(ii) above as a result of the appointment of a receiver or conservator with
respect to such Lender at the direction or request of any regulatory agency or
authority.
"Letter of Credit" shall have the meaning provided in Section 2.1(a).
"Letter of Credit Fees" shall have the meaning provided in Section 3.1(b).
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"Letter of Credit Issuer" shall mean such issuing bank as may be designated by
the Agent from time to time.
"Letter of Credit Outstandings" shall mean, at any time, the sum of, without
duplication, (i) the aggregate Stated Amount of all outstanding Letters of
Credit and (ii) the aggregate amount of all Unpaid Drawings in respect of all
Letters of Credit.
"Letter of Credit Request" shall have the meaning provided in Section 2.2(a).
"Letter of Credit Sublimit" shall mean $10,000,000.
"Lien" shall mean any mortgage, pledge, security interest, encumbrance, lien or
charge of any kind (including any agreement to give any of the foregoing, any
conditional sale or other title retention agreement, any financing or similar
statement or notice filed under the UCC or any similar recording or notice
statute, and any lease having substantially the same effect as the foregoing).
"Loan" shall mean each Revolving Loan.
"Loan Facility Fee" shall have the meaning provided in Section 3.1(e).
"Margin Stock" shall have the meaning provided in Regulation U.
"Material Adverse Effect" shall mean a material adverse effect on the business,
properties, assets, liabilities, condition (financial or otherwise) or prospects
of the Parent and its Subsidiaries, taken as a whole and after giving effect to
the initial Loan hereunder.
"Minimum Borrowing Amount" shall mean (a) for Base Rate Loans, $1 and (b) for
Eurodollar Loans, $1,000,000.
"Mobile Rigs" shall mean Rigs and Rig Accessories which are attached or affixed
to, or comprise an integral part of a vehicle, trailer or carrier.
"Monthly Payment Date" shall mean the last Business Day of each calendar month.
"Moody's" shall mean Xxxxx'x Investors Service, Inc.
"Motor Vehicle Capitalized Lease Obligations" shall mean Capitalized Lease
Obligations with respect to Capital Leases of motor vehicles.
"Multiemployer Plan" shall mean a Plan which is a multiemployer plan (as defined
in Section 4001(a)(3) of ERISA).
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"Net Cash Proceeds" shall mean, with respect to any Asset Sale, the Cash
Proceeds resulting therefrom net of (a) cash expenses of sale (including,
without limitation, brokerage fees, if any, transfer taxes and payment of
principal, premium and interest of Indebtedness other than the Loans required to
be repaid as a result of such Asset Sale), (b) all foreign, federal, state and
local taxes to the extent payable as a direct consequence of any such Asset Sale
and (c) deduction of reasonable amounts, determined in accordance with GAAP,
required to be provided by the seller as a reserve against any liabilities
retained by the seller associated with such assets after such Asset Sale,
including, without limitation, any indemnification, pension and other
post-employment benefit liabilities, workers compensation liabilities,
liabilities associated with retiree benefits and liabilities relating to
environmental matters, except and until such reserves are reversed, in which
case the amount of such reversal shall constitute Net Cash Proceeds.
"Non-Defaulting Lender" shall mean each Lender other than a Defaulting Lender.
"Note" shall mean each Revolving Note.
"Notice of Borrowing" shall have the meaning provided in Section 1.3(a).
"Notice of Conversion" shall have the meaning provided in Section 1.6.
"Notice Office" shall mean the office of CITBC located at 0000 XXX Xxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000 or such other office as the CITBC may designate
to the Borrower and the Lenders from time to time.
"Obligations" shall mean all amounts, direct or indirect, contingent or
absolute, of every type or description, and at any time existing, owing to the
Agent, or any Lender pursuant to the terms of any Credit Document.
"Orderly Liquidation Value" shall mean, at any date of determination, with
respect to any Rigs the value that obtains from a private sale thereof on an "as
is and where is" basis where such sale is properly advertised and conducted
under current market conditions, by a professional equipment appraiser (which
may include an Approved Appraiser) with relevant marketing and merchandising
expertise. In the absence of an actual sale, such value shall have the meaning
customarily determined by appropriate appraisal methodologies in the equipment
appraisal industry at the time of the valuation, less the estimated marshaling,
stacking, reconditioning and sale expenses designed to maximize the resale value
of such Rigs as determined by an Approved Appraiser. Such value shall be
determined based on the then physical condition and location (i.e., "as is and
where is") of such Rigs, and their useful life and remaining useful life. An
Approved Appraiser's valuation, in the absence of a sale, may be made with or
without physical inspection, at the Agent's discretion, and except as otherwise
provided in this Agreement such valuation as set forth in the then most recent
Appraisal of Orderly Liquidation shall apply with respect to determinations of
Orderly Liquidation Value under this Agreement.
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"Other Hedging Agreements" shall mean any foreign exchange contracts, currency
swap agreements or other similar agreements or arrangements designed to protect
the Borrower and its Subsidiaries against fluctuations in currency values.
"Parent Common Stock" shall have the meaning provided in Section 6.14.
"Parent Guarantor" shall mean the Parent, as a guarantor of the Guaranteed
Obligations, executing a Parent Guarantor Guarantee.
"Parent Guarantor Guarantee" shall mean the Guarantee contained in Section 13
hereof as it relates to the Parent.
"Participant" shall have the meaning provided in Section 2.4(a)(i).
"Payment Office" shall mean the office of CITBC located at 0000 XXX Xxxxxxx,
Xxxxx 000, Xxxxxx, Xxxxx 00000 or such other office as CITBC may designate to
the Borrower and the Lenders from time to time.
"PBGC" shall mean the Pension Benefit Guaranty Corporation established pursuant
to Section 4002 of ERISA, or any successor thereto.
"Percentage" shall mean, at any time for each Lender, the percentage obtained by
dividing such Lender's Revolving Loan Commitment at such time by the Total
Revolving Loan Commitment then in effect; provided that if the Total Revolving
Loan Commitment has been terminated, the Percentage of each Lender shall be
determined by dividing such Lender's Revolving Loan Commitment as in effect
immediately prior to such termination by the Total Revolving Loan Commitment as
in effect immediately prior to such termination.
"Permitted Liens" shall have the meaning provided in Section 8.3.
"Person" shall mean any individual, partnership, joint venture, firm,
corporation, limited liability company or partnership, association, trust or
other enterprise or any government or political subdivision or any agency,
department or instrumentality thereof.
"Plan" shall mean any multiemployer plan or single-employer plan as defined in
Section 4001 of ERISA, which is maintained or contributed to by (or to which
there is an obligation to contribute of) the Borrower, any of its Subsidiaries
or any ERISA Affiliate and each such plan for the five calendar year period
immediately following the latest date on which the Borrower, any of its
Subsidiaries or any ERISA Affiliate maintained, contributed to or had an
obligation to contribute to such plan or any such plan as to which the Borrower,
any of its Subsidiaries or any ERISA Affiliate may have any liability, provided,
however, the term "Plan" shall not include any Foreign Pension Plan.
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"Pledge Agreement" shall have the meaning provided in Section 5.11(a) and shall
include any additional pledge agreement executed by any Credit Party or any of
its Subsidiaries pursuant to Section 7.11.
"Pledge Agreement Collateral" shall mean all "Collateral" as defined in the
Pledge Agreements.
"Pledged Collateral" shall have the meaning assigned to such term in the
Security Agreements.
"Pledged Securities" shall mean all the Pledged Securities as defined in the
Pledge Agreements.
"Prime Lending Rate" shall mean the rate which Chase Bank announces from time to
time as its prime lending rate at its principal office in New York City, the
Prime Lending Rate to change when and as such prime lending rate changes. The
Prime Lending Rate is a reference rate and does not necessarily represent the
lowest or best rate actually charged to any customer. Chase Bank may make
commercial loans or other loans at rates of interest at, above or below the
Prime Lending Rate.
"Prior Liens" shall mean Liens which, pursuant to the provisions of any Security
Document, are or may be superior to the Lien of such Security Document and have
been disclosed by the Borrower to the Agent in writing prior to the date hereof.
"Qualified Domestic Rigs" shall mean Domestic Rigs other than Mobile Rigs.
"Real Property" of any Person shall mean all of the right, title and interest of
such Person in and to land, improvements and fixtures, including Leaseholds.
"Register" shall have the meaning provided in Section 7.12.
"Regulation D" shall mean Regulation D of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or a
portion thereof establishing reserve requirements.
"Regulation U" shall mean Regulation U of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or any
portion thereof.
"Regulation X" shall mean Regulation X of the Board of Governors of the Federal
Reserve System as from time to time in effect and any successor to all or any
portion thereof.
"Release" means disposing, discharging, injecting, spilling, pumping, leaking,
leaching, dumping, emitting, escaping, emptying, seeping, placing, pouring and
the like, into or upon any land or water or air, or otherwise entering into the
environment.
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"Replaced Lender" shall have the meaning provided in Section 1.13.
"Reportable Event" shall mean an event described in Section 4043(c) of ERISA
with respect to a Plan as to which the 30- day notice requirement has not been
waived by the PBGC by regulation.
"Required Lenders" shall mean collectively (and not individually) Non-Defaulting
Lenders the sum of whose Revolving Loan Commitments (or, if after the Total
Revolving Loan Commitment has been terminated, outstanding Revolving Loans and
Letter of Credit Outstandings) constitute greater than 66-2/3% of the Total
Revolving Loan Commitment less the aggregate Revolving Loan Commitments of
Defaulting Lenders (or, if after the Total Revolving Loan Commitment has been
terminated, the total outstanding Revolving Loans of Non-Defaulting Lenders and
Letter of Credit Outstandings at such time).
"Returns" shall have the meaning provided in Section 6.21.
"Revolving Loan" shall have the meaning provided in Section 1.1(a).
"Revolving Loan Commitment" shall mean, with respect to each Lender, the amount
set forth opposite such Lender's name in Annex I directly below the column
entitled "Revolving Loan Commitment," as the same may be reduced from time to
time pursuant to Section 3.2, Section 3.3, Section 9 and/or the definition of
"Total Revolving Loan Commitment."
"Revolving Note" shall have the meaning provided in Section 1.5(a).
"Rig Accessories" shall mean pumps, drilling equipment, machinery, equipment and
parts.
"Rig(s)" shall mean all land-based drilling and workover rigs owned by the
Borrower, together with all Rig Accessories which are installed on or affixed to
such Rig.
"SEC" shall mean the Securities and Exchange Commission or any successor
thereto.
"Section 4.4(b)(ii) Certificate" shall have the meaning provided in Section
4.4(b)(ii).
"Secured Creditors" shall have the meaning provided in the Security Documents.
"Security Agreement" shall have the meaning provided in Section 5.11(b) and
shall include any additional security agreement executed by any Credit Party or
any of its Subsidiaries pursuant to Section 7.11, and any security agreement
which grants a Lien in patents, trademarks, copyrights and other intellectual
property.
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"Security Documents" shall mean and include the Security Agreements and the
Pledge Agreements.
"Series A Stock" shall have the meaning provided in Section 6.14.
"Special Inventory" shall mean damaged or consumed parts inventory other than
Rigs or Rig Accessories that may be sold by a Credit Party only in the ordinary
course of its business. Such inventory shall consist of drill string, drill
collars and related parts (other than Rigs and Rig Accessories) and shall be
replaced with like inventory in good working order and condition in the ordinary
course of such Credit Party's business.
"S&P" shall mean Standard & Poors' Ratings Service.
"Stacked Rigs" shall mean Rigs capable or working but which are stored and have
no crews.
"Stated Amount" of each Letter of Credit shall mean the maximum amount available
to be drawn thereunder (regardless of whether any conditions for drawing could
then be met).
"Subsidiary" of any Person shall mean and include (i) any corporation more than
50% of whose stock of any class or classes having by the terms thereof ordinary
voting power to elect a majority of the directors of such corporation
(irrespective of whether or not at the time stock of any class or classes of
such corporation shall have or might have voting power by reason of the
happening of any contingency) is at the time owned by such Person directly or
indirectly through Subsidiaries and (ii) any partnership, association, joint
venture or other entity (other than a corporation) in which such Person,
directly or indirectly through Subsidiaries, has more than a 50% equity interest
at the time.
"Subsidiary Guarantee" shall mean the Guarantee contained in Section 13 hereof
as it relates to each Subsidiary Guarantor.
"Subsidiary Guarantor" shall mean each of Energy, International, Perfensa,
Holdings, GWLLC and Murco and each other Subsidiary of the Parent or the
Borrower that may from time to time execute a Subsidiary Guarantee.
"Taxes" shall have the meaning provided in Section 4.4.
"Total Available Liquidity" shall mean, at any date of measurement, the sum of
the Borrower's (i) Cash and Cash Equivalents (excluding Cash or Cash Equivalents
pledged to secure letters of credit or otherwise restricted or encumbered in any
way) plus (ii) an amount equal to (a) Availability minus (b) the sum of (I) the
aggregate outstanding principal amount of Revolving Loans at such date plus (II)
the aggregate amount of all Letter of Credit Outstandings at such date.
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"Total Loss" shall mean in respect of a Rig (i) the actual or constructive or
compromised or arranged total loss of such Rig; or (ii) the requisition for
title or other compulsory acquisition of such Rig otherwise than by requisition
for rental; or (iii) the seizure, attachment, detention or confiscation of such
Rig by any government or by Persons acting or purporting to act on behalf of any
government unless such Rig is released from such seizure, attachment, detention
or confiscation within thirty (30) days of the occurrence thereof. A Total Loss
shall be deemed to have occurred (a) in the event of an actual total loss of a
Rig, on the date of such loss, (b) in the event of damage to a Rig which results
in a constructive or compromised or arranged total loss of such Rig, on the date
of the occurrence of the event giving rise to such damage, or (c) in the case of
any event referred to in clauses (ii) or (iii) above, on the date of the
occurrence of such event. In the event of any Total Loss of a Rig, the Borrower
shall given written or telegraphic notice to the Agent not later than two (2)
days after a Authorized Officer of the Borrower has actual knowledge of such
occurrence.
"Total Revolving Loan Commitment" shall mean the sum of the Revolving Loan
Commitments of each of the Lenders it being understood that the Total Revolving
Loan Commitment as of the Effective Date shall be $50,000,000.
"Total Revolving Outstandings" shall mean, at any time, the sum of (i) the
aggregate principal amount of all Revolving Loans outstanding at such time and
(ii) the aggregate amount of all Letter of Credit Outstandings at such time.
"Total Unutilized Revolving Loan Commitment" shall mean, at any time, (i) the
Total Revolving Loan Commitment at such time less (ii) Total Revolving
Outstandings at such time.
"Type" shall mean any type of Revolving Loan determined with respect to the
interest option applicable thereto, i.e., a Base Rate Loan or a Eurodollar Loan.
"UCC" shall mean the Uniform Commercial Code as in effect from time to time in
the relevant jurisdiction.
"Unfunded Current Liability" of any Plan shall mean the amount, if any, by which
the actuarial present value of the accumulated plan benefits under the Plan as
of the close of its most recent plan year exceeds the fair market value of the
assets allocable thereto, each determined in accordance with Statement of
Financial Accounting Standards No. 87, based upon the actuarial assumptions used
by the Plan's actuary in the most recent annual valuation of the Plan.
"Unpaid Drawing" shall have the meaning provided in Section 2.3(a).
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"Unutilized Revolving Loan Commitment" with respect to any Lender at any time
shall mean such Lender's Revolving Loan Commitment at such time less the sum of
(i) the aggregate then outstanding principal amount of all Revolving Loans made
by such Lender and (ii) such Lender's Percentage of the then Letter of Credit
Outstandings.
"U.S. Dollars" and the sign "$" shall each mean freely transferable lawful money
of the United States of America.
"Working Rig" means a working and crewed Rig, which is operating at a customer's
working job site.
"Written" (whether lower or upper case) or "in writing" shall mean any form of
written communication or a communication by means of telex, facsimile device, or
telegraph or cable.
SECTION 11. The Agent.
11.1. Appointment. Each Lender hereby irrevocably designates and appoints CITBC
as the Agent of such Lender (such term to include for purposes of this Section
11, CITBC acting as Agent) to act as specified herein and in the other Credit
Documents, and each such Lender hereby irrevocably authorizes CITBC as the Agent
to take such action on its behalf under the provisions of the Credit Documents
and to exercise such powers and perform such duties as are expressly delegated
to the Agent by the terms of the Credit Documents, together with such other
powers as are reasonably incidental thereto. Without limiting the foregoing, the
Agent shall have the rights to endorse checks, transfer funds, make demands,
give notices, exercise or refrain from exercising any rights, and to take or
refrain from taking action, (including, without limitation, the release and
substitution of Pledged Collateral) as are necessary or desirable under the
Security Documents and the other Credit Documents and otherwise as directed by
the majority in interest of the Lenders from time to time. The Agent agrees to
act as such upon the express conditions contained in this Section 11.
Notwithstanding any provision to the contrary elsewhere in any Credit Document,
the Agent shall not have any duties or responsibilities, except those expressly
set forth in the Credit Documents, or any fiduciary relationship with any
Lender, and no implied covenants, functions, responsibilities, duties,
obligations or liabilities shall be read into this Agreement or otherwise
(including by operation of law) to exist against the Agent. The provisions of
this Section 11 are solely for the benefit of the Agent and the Lenders, and
neither any Credit Party nor any of its Subsidiaries or Affiliates shall have
any rights as a third party beneficiary of any of the provisions hereof. In
performing its functions and duties under this Agreement, the Agent shall act
solely as the agent of the Lenders; and the Agent do not assume and shall not be
deemed to have assumed any obligation or relationship of agency or trust with or
for any Credit Party or any of its Subsidiaries or Affiliates.
11.2. Delegation of Duties. The Agent may execute any of its duties under any
Credit Document by or through agents or attorneys-in-fact and shall be entitled
to advice of counsel concerning all matters pertaining to such duties. The Agent
shall not be
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responsible for the negligence or misconduct of any agents or attorneys-in-fact
selected by either of them with reasonable care except to the extent otherwise
required by Section 11.3.
11.3. Exculpatory Provisions. Neither the Agent nor any of its Affiliates or any
of its officers, directors, employees, agents or attorneys-in-fact shall be (i)
liable for any action lawfully taken or omitted to be taken by it or such Person
in its capacity as Agent under or in connection with any Credit Document (except
to the extent found to have resulted from such Person's own gross negligence or
willful misconduct) or (ii) responsible in any manner to any of the Lenders for
any recitals, statements, representations or warranties made by any of the
Credit Party, any of its Subsidiaries or any of their respective officers
contained in any Credit Document, or in any certificate, report, statement or
other document referred to or provided for in, or received by the Agent under or
in connection with, any Credit Document or for any failure of any Credit Party
or any of its Subsidiaries or any of their respective officers to perform its
obligations hereunder or thereunder. The Agent shall be under any obligation to
any Lender to ascertain or to inquire as to the observance or performance of any
of the agreements contained in, or condition of, any Credit Document, or to
inspect the properties, books or records of any Credit Party or any of its
Subsidiaries. The Agent shall not be responsible to any Lender for the
effectiveness, genuineness, validity, enforceability, collectability or
sufficiency of any Credit Document or for any representations, warranties,
recitals or statements made herein or therein or made in any written or oral
statement or in any financial or other statements, instruments, reports,
certificates or any other documents in connection herewith or therewith
furnished or made by the Agent to the Lenders or by or on behalf of any Credit
Party or any of its Subsidiaries to the Agent or any Lender or be required to
ascertain or inquire as to the performance or observance of any of the terms,
conditions, provisions, covenants or agreements contained herein or therein or
as to the use of the proceeds of the Loans or of the existence or possible
existence of any Default or Event of Default.
11.4. Reliance by Agent. The Agent shall be entitled to rely, and shall be fully
protected in relying, upon any note, writing, resolution, notice, consent,
certificate, affidavit, letter, cablegram, telegram, facsimile, telex or
teletype message, statement, order or other document or conversation reasonably
believed by it to be genuine and correct and to have been signed, sent or made
by the proper Person or Persons and upon advice and statements of legal counsel
(including, without limitation, counsel to any Credit Party or any of its
Subsidiaries), independent accountants and other experts selected by the Agent.
The Agent shall be fully justified in failing or refusing to take any action
under any Credit Document unless is shall first receive such advice or
concurrence of the Required Lenders as it deems appropriate or it shall first be
indemnified to its satisfaction by the Lenders against any and all liability and
expense which may be incurred by it by reason of taking or continuing to take
any such action. The Agent shall in all cases be fully protected in acting, or
in refraining from acting, under any of the Credit Documents in accordance with
a request of the Required Lenders, and such request and any action taken or
failure to act pursuant thereto shall be binding upon all the Lenders.
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11.5. Notice of Default. The Agent shall not be deemed to have knowledge or
notice of the occurrence of any Default or Event of Default unless the Agent
have actually received notice from a Lender or any Credit Party referring to
this Agreement, describing such Default or Event of Default and stating that
such notice is a "notice of default." In the event that the Agent receive such a
notice, the Agent shall give prompt notice thereof to the Lenders. The Agent
shall take such action with respect to such Default or Event of Default as shall
be reasonably directed by the Required Lenders; provided that, unless and until
the Agent shall have received such directions, the Agent may (but shall not be
obligated to) take such action, or refrain from taking such action, with respect
to such Default or Event of Default as they shall deem advisable in the best
interests of the Lenders.
11.6. Nonreliance on Agent and Other Lenders. Each Lender expressly acknowledges
that neither of the Agent nor any of their Affiliates nor any of their
respective officers, directors, employees, agents or attorneys-in-fact have made
any representations or warranties to them and that no act by the Agent
hereinafter taken, including any review of the affairs of any Credit Party or
any of its Subsidiaries, shall be deemed to constitute any representation or
warranty by the Agent or any such other Person to any Lender. Each Lender
represents to the Agent that it has, independently and without reliance upon the
Agent or any such other Person or any other Lender, and based on such documents
and information as it has deemed appropriate, made its own appraisal of and
investigation into the business, assets, operations, property, financial and
other condition, prospects and creditworthiness of any Credit Party and its
Subsidiaries and made its own decision to make its Loans hereunder and enter
into this Agreement. Each Lender also represents that it will, independently and
without reliance upon the Agent or any such other Person or any other Lender,
and based on such documents and information as it shall deem appropriate at the
time, continue to make its own credit analysis, appraisals and decisions in
taking or not taking action under this Agreement, and to make such investigation
as it deems necessary to inform itself as to the business, assets, operations,
property, financial and other condition, prospects and creditworthiness of any
Credit Party and its Subsidiaries. The Agent shall not have any duty or
responsibility to provide any Lender with any credit or other information
concerning the business, operations, assets, property, financial and other
condition, prospects or creditworthiness of any Credit Party or any of its
Subsidiaries which may come into the possession of the Agent or any of their
Affiliates or any of their officers, directors, employees, agents or
attorneys-in-fact.
11.7. Indemnification. The Lenders agree to indemnify the Agent in its capacity
as such ratably according to their respective "percentages" as used in
determining the Required Lenders at such time (with such "percentages" to be
determined as if there are no Defaulting Lenders), from and against any and all
liabilities, obligations, losses, damages, penalties, actions, judgments, suits,
costs, reasonable expenses or disbursements of any kind whatsoever which may at
any time (including, without
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limitation, at any time following the payment of the Obligations) be imposed on,
incurred by or asserted against the Agent in its capacity as such in any way
relating to or arising out of any Credit Document, or any documents contemplated
by or referred to herein or therein, or the transactions contemplated hereby or
thereby or any action taken or omitted to be taken by the Agent under or in
connection with any of the foregoing, but only to the extent that any of the
foregoing is not paid by any Credit Party or any of its Subsidiaries; provided
that no Lender shall be liable to the Agent for the payment of any portion of
such liabilities, obligations, losses, damages, penalties, actions, judgments,
suits, costs, expenses or disbursements to the extent found to have resulted
solely from the gross negligence or willful misconduct of such Agent. To the
extent any Lender would be required to indemnify the Agent pursuant to the
immediately preceding sentence but for the fact that it is a Defaulting Lender,
such Defaulting Lender shall not be entitled to receive any portion of any
payment or other distribution hereunder (including, without limitation, as to
principal of or interest on any Loans) until each other Lender shall have been
reimbursed for the excess, if any, of the aggregate amount paid by such Lender
under this Section 11.7 over the aggregate amount such Lender would have been
obligated to pay had such first Lender not been a Defaulting Lender. If any
indemnity furnished to the Agent for any purpose shall, in the opinion of such
Agent be insufficient or become impaired, the Agent may call for additional
indemnity and cease, or not commence, to do the acts indemnified against until
such additional indemnity is furnished. The agreements in this Section 11.7
shall survive the payment of all Obligations.
11.8. Agent in Its Individual Capacity. The Agent and its Affiliates may make
loans to, accept deposits from and generally engage in any kind of business with
any Credit Party and its Subsidiaries and Affiliates as though the Agent were
not an Agent hereunder. With respect to the Loans made by it and all Obligations
owing to it, the Agent shall have the same rights and powers under this
Agreement as any Lender and may exercise the same as though it were not an Agent
and the terms "Lender" and "Lenders" shall include each of the Agent in its
individual capacity.
11.9. Holders. The Agent may deem and treat the payee of any Note as the owner
thereof for all purposes hereof unless and until a written notice of the
assignment, transfer or endorsement thereof, as the case may be, shall have been
filed with the Agent. Any request, authority or consent of any Person or entity
who, at the time of making such request or giving such authority or consent, is
the holder of any Note shall be conclusive and binding on any subsequent holder,
transferee, assignee or endorsee, as the case may be, of such Note or of any
Note or Notes issued in exchange therefor.
11.10. Resignation of the Agent; Successor Agent. The Agent may resign as the
Agent upon 60 days' notice to the Lenders and the Borrower. Upon the resignation
the Agent, the Required Lenders shall appoint from among the Lenders a successor
Agent which is a bank or a trust company for the Lenders subject to prior
approval by the Borrower (such approval not to be unreasonably withheld,
provided that such approval shall not be required if a Default or an Event of
Default then exists), whereupon such successor
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agent shall succeed to the rights, powers and duties of the Agent, as the case
may be, and the term "Agent" or "Agent" shall include such successor agent
effective upon its appointment, and the resigning Agent's or Agent's rights,
powers and duties as the Agent shall be terminated, without any other or further
act or deed on the part of such former Agent or any of the parties to this
Agreement. After the resignation of the Agent hereunder, the provisions of this
Section 11 shall inure to its benefit as to any actions taken or omitted to be
taken by it while it was the Agent under this Agreement.
SECTION 12. Miscellaneous.
12.1. Payment of Expenses, Etc. The Borrower agrees to: (i) whether or not the
transactions herein contemplated are consummated, pay all out-of-pocket costs
and expenses of the Agent (including, without limitation, the reasonable fees
and disbursements of Xxxxxx Xxxxx LLP) in connection with the negotiation,
preparation, execution and delivery of the Credit Documents and the documents
and instruments referred to therein and any amendment, waiver or consent
relating thereto and in connection with the Agent's syndication efforts with
respect to this Agreement; (ii) pay all out-of-pocket costs and expenses of each
of the Agent, each Letter of Credit Issuer and each of the Lenders in connection
with the enforcement of the Credit Documents and the documents and instruments
referred to therein and, after a Default or an Event of Default shall have
occurred and be continuing, the protection of the rights of each of the Agent,
each Letter of Credit Issuer and each of the Lenders thereunder (including,
without limitation, the fees and disbursements of counsel for each of the Agent,
for each Letter of Credit Issuer and for each of the Lenders); (iii) pay and
hold each of the Lenders harmless from and against any and all present and
future stamp and other similar taxes with respect to the foregoing matters and
save each of the Lender harmless from and against any and all liabilities with
respect to or resulting from any delay or omission (other than to the extent
attributable to such Lender) to pay such taxes; and (iv) indemnify each of the
Agent, each Letter of Credit Issuer and each Lender and each of their
Affiliates, and each of their respective officers, directors, employees,
representatives and agents from and hold each of them harmless against any and
all losses, liabilities, claims, damages or expenses incurred by any of them as
a result of, or arising out of, or in any way related to, or by reason of, (a)
any investigation, litigation or other proceeding (whether or not any such
Person is a party thereto and whether or not any such investigation, litigation
or other proceeding is between or among any such Person, or any third Person or
otherwise) related to the entering into and/or performance of any Credit
Document or the use of the proceeds of any Loans hereunder or the consummation
of any other transactions contemplated in any Credit Document (but excluding any
such losses, liabilities, claims, damages or expenses to the extent found to
have been incurred by reason of the gross negligence or willful misconduct of
the Person to be indemnified), or (b) the actual or alleged presence of
Hazardous Materials in the air, surface water or groundwater or on the surface
or subsurface of any Real Property or any Environmental Claim, in each case,
including, without limitation, the reasonable fees and disbursements of counsel
and independent consultants incurred in connection with any such investigation,
litigation or
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other proceeding. The Agent acknowledges that it has received a $50,000 deposit
from the Borrower, which deposit shall be applied as partial payment of the
costs and expenses described in Section 12.1(i).
12.2. Right of Setoff. In addition to any rights now or hereafter granted under
applicable law or otherwise, and not by way of limitation of any such rights,
upon the occurrence of an Event of Default, the Agent, each Letter of Credit
Issuer and each Lender is hereby authorized at any time or from time to time,
without presentment, demand, protest or any other notice of any kind to any
Credit Party or any of its Subsidiaries or any Guarantor or any other Person,
any such notice, to the full extent permitted by applicable law, being hereby
expressly waived, to set off and to appropriate and apply any and all deposits
(general or special) and any other Indebtedness at any time held or owing by the
Agent, such Letter of Credit Issuer or such Lender (including, without
limitation, by branches and agencies of the Agent, such Letter of Credit Issuer
and such Lender wherever located) to or for the credit or the account of any
Credit Party against and on account of the Obligations of any Credit Party to
the Agent, such Letter of Credit Issuer or such Lender under this Agreement or
under any of the other Credit Documents, including, without limitation, all
interests in Obligations of any Credit Party purchased by such Lender pursuant
to Section 12.6(b), and all other claims of any nature or description arising
out of or connected with any Credit Document, irrespective of whether or not
such Agent, such Letter of Credit Issuer or such Lender shall have made any
demand hereunder and although said Obligations shall be contingent or unmatured.
12.3. Notices. Except as otherwise expressly provided herein, all notices and
other communications provided for hereunder shall be in writing (including
telegraphic, telex, facsimile or cable communication) and mailed, telegraphed,
telexed, telecopied, cabled or delivered, if to any Credit Party, at the address
specified opposite its signature below or in the other relevant Credit
Documents, as the case may be; if to any Lender, at its address specified for
such Lender on Annex II; or, at such other address as shall be designated by any
party in a written notice to the other parties hereto. All such notices and
communications shall be mailed, telegraphed, telexed, telecopied or cabled or
sent by overnight courier, and shall be effective when received.
12.4. Benefit of Agreement. (a) This Agreement shall be binding upon and inure
to the benefit of and be enforceable by the respective successors and assigns of
the parties hereto; provided, however, neither the Borrower nor any other Credit
Party may assign or transfer any of its rights, obligations or interest under
any Credit Document without the prior written consent of the Lenders; and
provided, further, that, although any Lender may transfer, assign or grant
participations in its rights hereunder, such Lender shall remain a "Lender" for
all purposes hereunder (and may not transfer or assign all or any portion of its
Revolving Loan Commitment hereunder except as provided in Section 12.4(b)) and
the transferee, assignee or participant, as the case may be, shall not
constitute a "Lender" hereunder; and provided, further, that no Lender shall
transfer or grant any participation under which the participant shall have
rights to
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approve any amendment to or waiver of any Credit Document except to the extent
such amendment or waiver would (i) extend the Final Maturity Date, or reduce the
rate or extend the time of payment of interest or Fees on Loans or Letters of
Credit in which such participant is participating (except in connection with a
waiver of applicability of any post- default increase in interest rates) or
reduce the principal amount thereof (it being understood that any amendment or
modification to the financial definitions in this Agreement shall not constitute
a reduction in any rate of interest or fees for purposes of this clause (i), or
increase the amount of the participant's participation over the amount thereof,
or increase the amount of the participant's participation over the amount
thereof then in effect (it being understood that a waiver of any Default or
Event of Default or of a mandatory reduction in the Total Revolving Loan
Commitment shall not constitute a change in the terms of such participation, and
that an increase in any Revolving Loan Commitment or Loan shall be permitted
without the consent of any participant if the participant's participation is not
increased as a result thereof), (ii) consent to the assignment or transfer by
the Borrower of any of their rights and obligations under this Agreement or
(iii) release all or substantially all of the Collateral under all of the
Security Documents (except as expressly provided in the Credit Documents)
supporting the Loans in which such participant is participating. In the case of
any such participation, the participant shall not have any rights under any of
the Credit Documents (the participant's rights against such Lender in respect of
such participation to be those set forth in the agreement executed by such
Lender in favor of the participant relating thereto) and all amounts payable by
the Borrower hereunder shall be determined as if such Lender had not sold such
participation.
(b) Notwithstanding the foregoing, any Lender (or any Lender together with one
or more other Lenders) may (x) assign all or a portion of its Revolving Loan
Commitment (and related outstanding Obligations hereunder) to any Affiliate of
such Lender which is at least 50% owned by such Lender or its parent company or
to one or more Lenders or (y) assign all, or if less than all, a portion equal
to at least $5,000,000 in the aggregate for the assigning Lender or assigning
Lenders, of such Revolving Loan Commitment (and related outstanding Obligations
hereunder) to one or more Eligible Transferees, each of which assignees shall
become a party to this Agreement as a Lender by execution of an Assignment and
Assumption Agreement; provided that (i) at such time Annex I shall be deemed
modified to reflect the Revolving Loan Commitments of such new Lender and of the
existing Lenders, (ii) upon surrender of the old Revolving Notes, new Revolving
Notes will be issued, at the Borrower's expense, to such new Lender and to the
assigning Lender, such new Revolving Notes to be in conformity with the
requirements of Section 1.5 (with appropriate modifications) to the extent
needed to reflect the revised Revolving Loan Commitments, (iii) the consent of
the Agent shall be required in connection with any such assignment pursuant to
clause (y) of this Section 12.4(b) and (iv) the Agent shall receive at the time
of each such assignment, from the assigning or assignee Lender, the payment of a
non-refundable assignment fee of $3,500; and provided, further, that such
transfer or assignment will not be effective until recorded by the Agent on the
Register pursuant to Section 7.12. To the extent of any assignment pursuant to
this Section 12.4(b), the assigning Lender shall be
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relieved of its obligations hereunder with respect to its assigned Revolving
Loan Commitment. At the time of each assignment pursuant to this Section 12.4(b)
to a Person which is not already a Lender hereunder and which is not a United
States person (as such term is defined in Section 7701(a)(30) of the Code) for
Federal income tax purposes, the respective assignee Lender shall provide to the
Borrower and the Agent the appropriate Internal Revenue Service Forms (and, if
applicable, a Section 4.4(b)(ii) Certificate) described in Section 4.4(b).
(c) Any Lender may at any time pledge or assign all or any portion of its rights
under this Agreement and the other Loan Documents to any Federal Reserve Bank
without notice to or consent of the Borrower. No such pledge or assignment shall
release the transferor Lender from its obligations hereunder.
12.5. No Waiver; Remedies Cumulative. No failure or delay on the part of any
party in exercising any right, power or privilege under any Credit Document and
no course of dealing between any Credit Party and the Agent, or any Lender shall
operate as a waiver thereof; nor shall any single or partial exercise of any
right, power or privilege under any Credit Document preclude any other or
further exercise thereof or the exercise of any other right, power or privilege
hereunder or thereunder. The rights and remedies herein expressly provided are
cumulative and not exclusive of any rights or remedies which any party would
otherwise have. No notice to or demand on any Credit Party in any case shall
entitle any Credit Party to any other or further notice or demand in similar or
other circumstances or constitute a waiver of the rights of the Agent, or the
Lenders to any other or further action in any circumstances without notice or
demand.
12.6. Payments Pro Rata. (a) The Agent agrees that promptly after its receipt of
each payment from or on behalf of any Credit Party in respect of any Obligations
of such Credit Party, it shall, except as otherwise provided in this Agreement,
distribute such payment to the Lenders (other than any Lender that has consented
in writing to waive its pro rata share of such payment) pro rata based upon
their respective shares, if any, of the Obligations with respect to which such
payment was received.
(b) Each of the Lenders agrees that, if it should receive any amount hereunder
(whether by voluntary payment, by realization upon security, by the exercise of
the right of setoff or banker's lien, by counterclaim or cross action, by the
enforcement of any right under the Credit Documents, or otherwise) which is
applicable to the payment of the principal of, or interest on, the Loans, Unpaid
Drawings or Fees, of a sum which with respect to the related sum or sums
received by other Lenders is in a greater proportion than the total of such
Obligation then owed and due to such Lender bears to the total of such
Obligation then owed and due to all of the Lenders immediately prior to such
receipt, determined in accordance with the terms of this Agreement, then such
Lender receiving such excess payment shall purchase for cash without recourse or
warranty from the other Lenders an interest in the Obligations of the respective
Credit Party to such Lenders in such amount as shall result in a proportional
participation by all of the Lenders in such amount; provided that if all or any
portion of such excess amount is thereafter recovered from such Lender, such
purchase shall be rescinded and the purchase price restored to the extent of
such recovery, but without interest.
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12.7. Calculations; Computations. (a) The financial statements to be furnished
to the Lenders pursuant hereto shall be made and prepared in accordance with
GAAP consistently applied throughout the periods involved (except as set forth
in the notes thereto or as otherwise disclosed in writing by the Borrower to the
Lenders); provided that except as otherwise specifically provided herein, all
computations determining compliance with Sections 3.3 and 8, including
definitions used therein shall, (x) in each case, utilize accounting principles
and policies in effect at the time of the preparation of, and in conformity with
those used to prepare, the 1997 financial statements delivered to the Lenders
pursuant to Section 6.10(b).
(b) All computations of interest and Fees hereunder shall be based on the actual
number of days elapsed over a year of 360 days (except for interest payable in
respect of Base Rate Loans based on the Prime Lending Rate, which shall be
computed on the bases of a 365/66 day year).
12.8. Governing Law; Submission to Jurisdiction; Venue. (a) THIS AGREEMENT AND
THE OTHER CREDIT DOCUMENTS AND THE RIGHTS AND OBLIGATIONS OF THE PARTIES
HEREUNDER AND (EXCEPT AS OTHERWISE EXPRESSLY STATED THEREIN) THEREUNDER SHALL BE
CONSTRUED IN ACCORDANCE WITH AND BE GOVERNED BY THE LAW OF THE STATE OF NEW
YORK. Any legal action or proceeding with respect to this Agreement or any other
Credit Document may be brought in the courts of the State of New York or of the
United States for the Southern District of New York, and, by execution and
delivery of this Agreement, each Credit Party hereby irrevocably accepts for
itself and in respect of its property, generally and unconditionally, the
jurisdiction of the aforesaid courts. Each Credit Party hereby further
irrevocably waives any claim that any such courts lack jurisdiction over such
Credit Party, and agrees not to plead or claim, in any legal action or
proceeding with respect to any Credit Document brought in any of the aforesaid
courts, that any such court lacks jurisdiction over such Credit Party. Each
Credit Party hereby designates and irrevocably appoints and empowers C T
Corporation System (the "Process Agent"), currently located at 0000 Xxxxxxxx,
Xxx Xxxx, Xxx Xxxx 00000 in each case as its authorized agent to accept, receive
and acknowledge for and on behalf of each and its property service of any and
all process which may be served in the State of New York and further agree that
failure of such firm to give any one or more of the Credit Parties any notice of
any such service shall not impair or affect the validity of such service or of
any judgment rendered in any action or proceeding based thereon. Each Credit
Party hereby irrevocably authorizes and directs the Process Agent to accept such
service on its behalf. Each Credit Party irrevocably consents to the service of
process in any such action or proceeding by the mailing of copies thereof by
registered or certified mail, postage prepaid, to such Credit Party, at its
address for notices pursuant to Section 12.3, such service to become effective
30 days after such mailing. Each Credit Party hereby irrevocably waives any
objection to such service of process and further
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irrevocably waives and agrees not to plead or claim in any action or proceeding
commenced under any Credit Document that service of process was in any way
invalid or ineffective. Nothing herein shall affect the right of the Agent,
Agent, any Lender or the holder of any Note to serve process in any other manner
permitted by applicable law or to commence legal proceedings or otherwise
proceed against any Credit Party in any other jurisdiction.
(b) Each Credit Party hereby irrevocably waives any objection which it may now
or hereafter have to the laying of venue of any of the aforesaid actions or
proceedings arising out of or in connection with any Credit Document brought in
the courts referred to in clause (a) above and hereby further irrevocably waives
and agrees not to plead or claim in any such court that any such action or
proceeding brought in any such court has been brought in an inconvenient forum.
12.9. Counterparts. This Agreement may be executed in any number of counterparts
and by the different parties hereto on separate counterparts, each of which when
so executed and delivered shall be an original, but all of which shall together
constitute one and the same instrument. A complete set of counterparts executed
by all of the parties hereto shall be lodged with the Borrower and the Agent.
12.10. Effectiveness. This Agreement shall become effective on the date (the
"Effective Date") on which the Borrower, each Guarantor, the Agent and each of
the Lenders shall have signed a counterpart hereof (whether the same or
different counterparts) and shall have delivered the same to the Agent at the
Notice Office or, in the case of the Lenders, shall have given to the Agent
telephonic (confirmed in writing), written, telex or facsimile notice (actually
received) at such office that the same has been signed and mailed to it. The
Agent will give the Borrower and each Lender prompt written notice of the
occurrence of the Effective Date.
12.11. Headings Descriptive. The headings of the several sections and
subsections of this Agreement are inserted for convenience only and shall not in
any way affect the meaning or construction of any provision of this Agreement.
12.12. Amendment or Waiver; etc. (a) Neither this Agreement nor any other Credit
Document nor any terms hereof or thereof may be changed, waived, discharged or
terminated unless such change, waiver, discharge or termination is in writing
signed by the respective Credit Parties party thereto and the Required Lenders;
provided that no such change, waiver, discharge or termination shall, without
the consent of each Lender (other than a Defaulting Lender) (with Obligations
being directly affected thereby in the case of the following clause (i)), (i)
extend the Final Maturity Date, or reduce the rate or extend the time of payment
of interest or Fees on any Loan or Letter of Credit thereon, or reduce the
principal amount thereof (it being understood that any amendment or modification
to the financial definitions in this Agreement shall not constitute a reduction
in any rate of interest or fees for purposes of this clause (i)), (ii) release
all or substantially all of the Collateral (except as expressly provided in the
Security
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Documents) under all the Security Documents, or release any Guarantor (other
than in connection with a sale otherwise permitted hereby), (iii) amend, modify
or waive any provision of this Section 12.12, (iv) reduce the percentage
specified in the definition of Required Lenders (it being understood that, with
the consent of the Required Lenders, additional extensions of credit pursuant to
this Agreement may be included in the determination of the Required Lenders on
substantially the same basis as the extensions of Revolving Loan Commitments are
included on the Effective Date) or (v) consent to the assignment or transfer by
the Borrower of any of their rights and obligations under this Agreement;
provided, further, that no such change, waiver, discharge or termination shall
(w) increase the Revolving Loan Commitments of any Lender over the amount
thereof then in effect without the consent of such Lender (it being understood
that waivers or modifications of conditions precedent, covenants, Defaults or
Events of Default or of a mandatory reduction in the Total Revolving Loan
Commitment shall not constitute an increase of the Revolving Loan Commitment of
any Lender, and that an increase in the available portion of any Revolving Loan
Commitment of any Lender shall not constitute an increase in the Revolving Loan
Commitment of such Lender), (x) without the consent of CITBC, amend, modify or
waive any provision of Section 2 or alter its rights or obligations with respect
to Letters of Credit, (y) without the consent of the Agent, amend, modify or
waive any provision of Section 11 as the same applies to the Agent or any other
provision as the same relates to the rights or obligations of the Agent and (z)
without the consent of the Agent, amend, modify or waive any provision relating
to the rights or obligations of the Agent.
(b) If, in connection with any proposed change, waiver, discharge or termination
of any of the provisions of this Agreement as contemplated by clauses (i)
through (v), inclusive, of the first proviso to Section 12.12(a), the consent of
the Required Lenders is obtained but the consent of one or more of such other
Lenders whose consent is required is not obtained, then the Borrower shall have
the right, so long as all non-consenting Lenders whose individual consent is
required are treated as described below, to replace each such non-consenting
Lender or Lenders with one or more Replacement Lenders pursuant to Section 1.13
so long as at the time of such replacement, each Replacement Lender consents to
the proposed change, waiver, discharge or termination; but only if, in each such
case, such Replacement Lender at the time of such action is acceptable to the
Agent, provided that the Borrower shall not have the right to replace a Lender
solely as a result of the exercise of such Lender's rights (and the withholding
of any required consent by such Lender) pursuant to the second proviso to
Section 12.12(a).
12.13. Survival. All indemnities set forth herein including, without limitation,
in Section 1.10, 1.11, 2.5, 4.4, 11.7 or 12.1, shall survive the execution and
delivery of this Agreement and the making and repayment of the Loans.
12.14. Domicile of Loans. Each Lender may transfer and carry its Loans at, to or
for the account of any branch office, subsidiary or affiliate of such Lender;
provided that the Borrower shall not be responsible for costs arising under
Section 1.10, 1.11, 2.5 or 4.4
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resulting from any such transfer (other than a transfer pursuant to Section
1.12) to the extent such costs would not otherwise be applicable to such Lender
in the absence of such transfer.
12.15. Confidentiality. Each of the Lenders agrees that it will use its
reasonable efforts not to disclose without the prior consent of the Borrower
(other than to Affiliates of such Lenders and their respective directors,
employees, auditors, counsel or other professional advisors) any confidential
information with respect to the Borrower or any of its Subsidiaries which is
furnished pursuant to this Agreement; provided that any Lender may disclose any
such information (a) that is or has become generally available to the public,
(b) as may be required or appropriate (x) in any report, statement or testimony
submitted to any municipal, state or Federal or other governmental regulatory
body having or claiming to have jurisdiction over such Lender or to the Federal
Reserve Board or the Federal Deposit Insurance Corporation or similar
organizations (whether in the United States or elsewhere) or their successors or
(y) in connection with any request or requirement of any such regulatory body,
(c) as may be required or appropriate in response to any summons or subpoena or
in connection with any litigation, (d) to comply with any law, order, regulation
or ruling applicable to such Lender, and (e) to any prospective transferee in
connection with any contemplated transfer of any of the Notes or any interest
therein by such Lender; provided that such prospective transferee, as a Lender,
agrees to be bound by this Section 12.15 to the same extent as such Lender.
12.16. Waiver of Jury Trial. EACH OF THE PARTIES TO THIS AGREEMENT HEREBY
IRREVOCABLY WAIVES ALL RIGHT TO A TRIAL BY JURY IN ANY ACTION, PROCEEDING OR
COUNTERCLAIM ARISING OUT OF OR RELATING TO THIS AGREEMENT, THE OTHER CREDIT
DOCUMENTS OR THE TRANSACTIONS CONTEMPLATED HEREBY OR THEREBY.
12.17 Final Agreement. THIS WRITTEN AGREEMENT AND THE OTHER DOCUMENTS REFERENCED
HEREIN OR CONTEMPLATED HEREBY REPRESENT THE FINAL AGREEMENT AMONG THE PARTIES
AND MAY NOT BE CONTRADICTED BY EVIDENCE OF PRIOR, CONTEMPORANEOUS OR SUBSEQUENT
ORAL AGREEMENTS OF THE PARTIES HERETO. THERE ARE NO UNWRITTEN ORAL AGREEMENTS
AMONG THE PARTIES.
12.18 Savings Clause. It is the intent of the Borrower and the Agent to conform
strictly to all applicable state and federal usury laws. All agreements between
the Borrower and the Agent whether now existing or hereafter arising and whether
written or oral, are hereby expressly limited so that in no contingency or event
whatsoever, whether by reason of acceleration of the maturity hereof or
otherwise, shall the amount contracted for, charged or received by the Agent for
the use, forbearance, or detention of the money loaned hereunder or otherwise,
or for the payment or performance of any covenant or obligation contained herein
or in any other document evidencing, securing or pertaining to the Obligations
evidenced hereby which may be legally deemed to be
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for the use, forbearance or detention of money, exceed the maximum amount which
the Borrower is legally entitled to contract for, charge or collect under
applicable state or federal law. If from any circumstances whatsoever
fulfillment of any provision hereof or of such other documents, at the time
performance of such provision shall be due, shall involve transcending the limit
of validity prescribed by law, then the obligation to be fulfilled shall be
automatically reduced to the limit of such validity, and if from any such
circumstance the Agent shall ever receive as interest or otherwise an amount in
excess of the maximum that can be legally collected, then such amount which
would be excessive interest shall be applied to the reduction of the principal
indebtedness hereof and any other amounts due with respect to the Obligations
evidenced hereby, but not to the payment of interest and if such amount which
would be excess interest exceeds the Obligations and all other noninterest
indebtedness described above, then such additional amount shall be refunded to
the Borrower. In determining whether or not all sums paid or agreed to be paid
by the Borrower for the use, forbearance or detention of the Obligations of the
Borrower to the Agent, under any specific contingency, exceeds the maximum
amount permitted by applicable law, the Borrower and the Agent shall to the
maximum extent permitted under applicable law, (a) treat all Obligations as but
a single extension of credit, (b) characterize any nonprincipal payment as an
expense, fee or premium rather than as sums paid or agreed to be paid by the
Borrower for the use, forbearance or detention of the Obligations of the
Borrower to Agent, (c) exclude voluntary prepayments and the effect thereof, and
(d) amortize, prorate, allocate and spread in equal parts, the total amount of
such sums paid or agreed to be paid by the Borrower for the use, forbearance or
detention of the Obligations of the Borrower to Agent throughout the entire
contemplated term of the Obligations so that the interest rate is uniform
through the entire term of the Obligations. The terms and provisions of this
paragraph shall control and supersede every other provision hereof and all other
agreements between the Borrower and Agent.
12.19 Severability. If any provision hereof or of any other agreement made in
connection herewith is held to be illegal or unenforceable, such provision shall
be fully severable, and the remaining provisions of the applicable agreement
shall remain in full force and effect and shall not be affected by such
provision's severance. Furthermore, in lieu of any such provision, there shall
be added automatically as a part of the applicable agreement a legal and
enforceable provision as similar in terms to the severed provision as may be
possible.
12.20 SERVICE OF PROCESS. EACH PARTY HERETO HEREBY IRREVOCABLY WAIVES PERSONAL
SERVICE OF PROCESS AND CONSENTS TO SERVICE OF PROCESS BY CERTIFIED OR REGISTERED
MAIL, RETURN RECEIPT REQUESTED.
12.21 WAIVER OF CONSUMER RIGHTS. THE BORROWER AND EACH GUARANTOR HEREBY WAIVES
ITS RIGHTS UNDER THE DECEPTIVE TRADE PRACTICES - CONSUMER PROTECTION ACT,
SECTION 17.41 ET. SEQ. BUSINESS & COMMERCIAL CODE, A LAW THAT GIVE CONSUMERS
SPECIAL
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RIGHTS AND PROTECTIONS. AFTER CONSULTATION WITH AN ATTORNEY OF THE BORROWER'S
AND EACH GUARANTOR'S OWN SELECTION, THE BORROWER AND EACH GUARANTOR VOLUNTARILY
CONSENTS TO THIS WAIVER. THE BORROWER AND EACH GUARANTOR EXPRESSLY WARRANTS AND
REPRESENTS THAT THE BORROWER AND EACH GUARANTOR (A) IS NOT IN A SIGNIFICANTLY
DISPARATE BARGAINING POSITION RELATIVE TO THE AGENT AND THE LENDERS, AND (B) HAS
BE REPRESENTED BY LEGAL COUNSEL IN CONNECTION WITH THE TRANSACTIONS CONTEMPLATED
BY THIS AGREEMENT.
SECTION 13. Parent Guarantor Guarantee/Subsidiary Guarantees.
13.1. The Parent Guarantor Guarantee/Subsidiary Guarantees. (a) In order to
induce the Agent and the Lenders to enter into this Agreement and to extend
credit hereunder and in recognition of the direct and indirect benefits to be
received by the Parent Guarantor from the proceeds of the Loans and the issuance
of the Letters of Credit, the Parent Guarantor hereby agrees with the Lenders as
follows: the Parent Guarantor hereby unconditionally and irrevocably, jointly
and severally with all Guarantors from time to time, guarantees, as primary
obligor and not merely as surety the full and prompt payment when due, whether
upon maturity, acceleration or otherwise, of any and all of the Guaranteed
Obligations of the Borrower and of each other Guarantor to the Guaranteed
Creditors. If any or all of the Guaranteed Obligations of the Borrower and/or of
each other Guarantor to the Guaranteed Creditors becomes due and payable
hereunder, the Parent Guarantor, jointly and severally with all Guarantors from
time to time, and unconditionally promises to pay such indebtedness to the
Guaranteed Creditors, or order, on demand, together with any and all expenses
(including reasonable legal fees and expenses) which may be incurred by the
Guaranteed Creditors in collecting or enforcing any of the Guaranteed
Obligations. If claim is ever made upon any Guaranteed Creditor for repayment or
recovery of any amount or amounts received in payment or on account of any of
the Guaranteed Obligations and any of the aforesaid payees repays all or part of
said amount by reason of (i) any judgment, decree or order of any court or
administrative body having jurisdiction over such payee or any of its property
or (ii) any settlement or compromise of any such claim effected by such payee
with any such claimant (including the Borrower or any Guarantor), then and in
such event that Parent Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon the Parent Guarantor,
notwithstanding any revocation of this Guarantee or any other instrument
evidencing any liability of the Borrower, and each Guarantor shall be and remain
jointly and severally liable to the aforesaid payees hereunder for the amount so
repaid or recovered to the same extent as if such amount had never originally
been received by any such payee. This is a guarantee of payment and not of
collection.
(b) In order to induce the Agent and the Lenders to enter into this Agreement
and to extend credit hereunder and in recognition of the direct and indirect
benefits to be received by each Subsidiary Guarantor from the proceeds of the
Loans and the
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issuance of the Letters of Credit, each Subsidiary Guarantor hereby agrees with
the Lenders as follows: each Guarantor hereby unconditionally and irrevocably,
jointly and severally with all Guarantors from time to time, guarantees, as
primary obligor and not merely as surety the full and prompt payment when due,
whether upon maturity, acceleration or otherwise, of any and all of the
Guaranteed Obligations of the Borrower and of each other Guarantor to the
Guaranteed Creditors. If any or all of the Guaranteed Obligations of the
Borrower and/or of any other Guarantor to the Guaranteed Creditors becomes due
and payable hereunder, each Subsidiary Guarantor, jointly and severally with all
Guarantors from time to time, and unconditionally promises to pay such
indebtedness to the Guaranteed Creditors, or order, on demand, together with any
and all expenses (including reasonable legal fees and expenses) which may be
incurred by the Guaranteed Creditors in collecting or enforcing any of the
Guaranteed Obligations. If claim is ever made upon any Guaranteed Creditor for
repayment or recovery of any amount or amounts received in payment or on account
of any of the Guaranteed Obligations and any of the aforesaid payees repays all
or part of said amount by reason of (i) any judgment, decree or order of any
court or administrative body having jurisdiction over such payee or any of its
property or (ii) any settlement or compromise of any such claim effected by such
payee with any such claimant (including the Borrower or any Guarantor), then and
in such event each Guarantor agrees that any such judgment, decree, order,
settlement or compromise shall be binding upon such Guarantor, notwithstanding
any revocation of this Guarantee or any other instrument evidencing any
liability of the Borrower, and each Guarantor shall be and remain jointly and
severally liable to the aforesaid payees hereunder for the amount so repaid or
recovered to the same extent as if such amount had never originally been
received by any such payee. This is a guarantee of payment and not of
collection. Anything contained in this Guarantee to the contrary
notwithstanding, the obligations of each Subsidiary Guarantor hereunder shall be
limited to a maximum aggregate amount equal to the largest amount that would not
render its obligations and/or the grant of security interests in Collateral to
secure its Obligations hereunder subject to avoidance as a fraudulent transfer
or conveyance under Section 548 of the Bankruptcy Code or any applicable
provisions of comparable state law (collectively, the "Fraudulent Transfer
Laws"), in each case after giving effect to all other liabilities of such
Subsidiary Guarantor, contingent or otherwise, that are relevant under the
Fraudulent Transfer Laws (specifically excluding, however, any liabilities of
such Subsidiary Guarantor in respect of intercompany Indebtedness to the
Borrower or other Affiliates of the Borrower (in the case of Subsidiary
Guarantors) to the extent that such Indebtedness would be discharged in an
amount equal to the amount paid by such Guarantor hereunder, and after giving
effect (x) to the direct and indirect benefits received by such Guarantor as a
result of the Credit Documents and the Loans and (y) as assets to the value (as
determined under the applicable provisions of the Fraudulent Transfer Laws) of
any rights to subrogation, reimbursement, indemnification or contribution of
such Subsidiary Guarantor pursuant to applicable law or pursuant to the terms of
any agreement (including, without limitation, any such right of contribution
under Section 13.1(c)).
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(c) Guarantors under this Guarantee together desire to allocate among themselves
in a fair and equitable manner their obligations arising under this Guarantee.
Accordingly, in the event any payment or distribution is made on any date by any
Guarantor under this Guarantee (a "Funding Guarantor") that exceeds its Fair
Share (as defined below) as of such date, that Funding Guarantor shall be
entitled to a contribution from each of the other Guarantors in the amount of
such other Guarantor's Fair Share Shortfall (as defined below) as of such date,
with the result that all such contributions will cause each Guarantor's
Aggregate Payments (as defined below) to equal its Fair Share as of such date.
"Fair Share" means, with respect to a Guarantor as of any date of determination,
an amount equal to (i) the ratio of (x) the Adjusted Maximum Amount (as defined
below) with respect to such Guarantor to (y) the aggregate of the Adjusted
Maximum Amounts with respect to all Guarantors, multiplied by (ii) the aggregate
amount paid or distributed on or before such date by all Funding Guarantors
under this Guarantee in respect of the obligations guaranteed. "Fair Share
Shortfall" means, with respect to a Guarantor as of any date of determination,
the excess, if any, of the Fair Share of such Guarantor over the Aggregate
Payments of such Guarantor. "Adjusted Maximum Amount" means, with respect to a
Guarantor as of any date of determination, the maximum aggregate amount of the
obligations of such Guarantor under this Guarantee, determined as of such date
in accordance with this Section 13.1; provided that, solely for purposes of
calculating the "Adjusted Maximum Amount" with respect to any Guarantor for
purposes of this Section 13.1(c), any assets or liabilities of such Guarantor
arising by virtue of any rights to subrogation, reimbursement or indemnification
or any rights to or obligations of contribution hereunder shall not be
considered as assets or liabilities of such Guarantor. "Aggregate Payments"
means, with respect to a Guarantor as of any date of determination, an amount
equal to (i) the aggregate amount of all payments and distributions made on or
before such date by such Guarantor in respect of this Guarantee (including,
without limitation, in respect of this Section 13.1(c)) minus (ii) the aggregate
amount of all payments received on or before such date by such Guarantor from
the other Guarantors as contributions under this Section 13.1(c). The amounts
payable as contributions hereunder shall be determined as of the date on which
the related payment or distribution is made by the applicable Funding Guarantor.
The allocation among Guarantors of their obligations as set forth in this
Section 13.1(c) shall not be construed in any way to limit the liability of any
Guarantor hereunder.
13.2. Bankruptcy. Additionally, each Guarantor unconditionally and irrevocably,
jointly and severally, guarantees the payment of any and all of the Guaranteed
Obligations of the Borrower or any Guarantor to the Guaranteed Creditors whether
or not due or payable by the Borrower upon the occurrence of any of the events
specified in Section 9.5, and unconditionally, and jointly and severally,
promises to pay such indebtedness to the Guaranteed Creditors, or order, on
demand, in lawful money of the United States.
13.3. Nature of Liability. (a) The liability of each Guarantor hereunder is
joint and several and exclusive and independent of any security for or other
guarantee of the Guaranteed Obligations of the Borrower or any Guarantor whether
executed by such Guarantor, any other Guarantor, any other guarantor or by any
other party, and the liability of each Guarantor hereunder is not affected or
impaired by (a) any direction as to application of payment by the Borrower or by
any other party, or (b) any other continuing or other guarantee, undertaking or
maximum liability of a guarantor or of any other party as to the Guaranteed
Obligations of the Borrower, or (c) any payment on or in reduction of any such
other guarantee or undertaking, or (d) any dissolution, termination or increase,
decrease or change in personnel by the Borrower, or (e) any payment made to the
Guaranteed Creditors on the Guaranteed Obligations which any such Guaranteed
Creditor repays to the Borrower pursuant to court order in any bankruptcy,
reorganization, arrangement, moratorium or other debtor relief proceeding, and
each Guarantor, to the extent permitted by applicable law, waives any right to
the deferral or modification of its obligations hereunder by reason of any such
proceeding.
(b) It is the desire and intent of each Guarantor and the Guaranteed Creditors
that this Guarantee shall be enforced against each Guarantor to the fullest
extent permissible under the laws and public policies applied in each
jurisdiction in which enforcement is sought. If, however, and to the extent
that, the obligations of any Guarantor under this Guarantee shall be adjudicated
to be invalid or unenforceable for
105
any reason (including, without limitation, because of any applicable state or
federal law relating to fraudulent conveyances or transfers), then the amount of
the Guaranteed Obligations of such Guarantor shall be deemed to be reduced and
such Guarantor shall pay the maximum amount of the Guaranteed Obligations which
would be permissible under applicable law.
13.4. Independent Obligation. The obligations of each Guarantor hereunder are
independent of the obligations of any other Guarantor, any other guarantor, any
other party or the Borrower, and a separate action or actions may be brought and
prosecuted against each Guarantor whether or not action is brought against any
other Guarantor, any other guarantor, any other party or the Borrower and
whether or not any other guarantor, any other party or the Borrower are joined
in any such action or actions. Each Guarantor waives, to the full extent
permitted by law, the benefit of any statute of limitations affecting its
liability hereunder or the enforcement thereof. Any payment by the Borrower or
other circumstance which operates to toll any statute of limitations as to the
Borrower shall operate to toll the statute of limitations as to any Guarantor.
13.5. Authorization. Each Guarantor authorizes the Guaranteed Creditors without
notice or demand (except as shall be required by applicable statute and cannot
be waived), and without affecting or impairing its liability hereunder, from
time to time to:
(a) change the manner, place or terms of payment of, and/or change or
extend the time of payment of, renew, increase, accelerate or alter,
any of the Guaranteed Obligations (including any increase or decrease
in the rate of interest thereon), any security therefor, or any
liability incurred directly or indirectly in respect thereof, and the
Guarantee herein made shall apply to the Guaranteed Obligations as so
changed, extended, renewed or altered;
(b) take and hold security for the payment of the Guaranteed
Obligations and sell, exchange, release, surrender, realize upon or
otherwise deal with in any manner and in any order any property by
whomsoever at any time pledged or mortgaged to secure, or howsoever
securing, the Guaranteed Obligations or any liabilities (including any
of those hereunder) incurred directly or indirectly in respect thereof
or hereof, and/or any offset thereagainst;
(c) exercise or refrain from exercising any rights against the
Borrower or others or otherwise act or refrain from acting;
(d) release or substitute any one or more endorsers, guarantors, the
Borrower, one or more of the Credit Parties or other obligors;
(e) settle or compromise any of the Guaranteed Obligations, any
security therefor or any liability (including any of those hereunder)
incurred directly or indirectly in respect thereof or hereof, and may
subordinate the payment of all or any part thereof to the payment of
any liability (whether due or not) of the Borrower to its creditors
other than the Guaranteed Creditors;
106
(f) apply any sums by whomsoever paid or howsoever realized to any
liability or liabilities of the Borrower to the Guaranteed Creditors
regardless of what liability or liabilities of the Borrower remain
unpaid;
(g) consent to or waive any breach of, or any act, omission or default
under, this Agreement, any other Credit Document or any of the
instruments or agreements referred to herein or therein, or otherwise
amend, modify or supplement this Agreement, any other Credit Document
or any of such other instruments or agreements; and/or
(h) take any other action which would, under otherwise applicable
principles of common law, give rise to a legal or equitable discharge
of any Guarantor from its liabilities under this Guarantee.
13.6. Reliance. It is not necessary for the Guaranteed Creditors to inquire into
the capacity or powers of the Borrower or the officers, directors, partners or
agents acting or purporting to act on its behalf, and any Guaranteed Obligations
made or created in reliance upon the professed exercise of such powers shall be
guaranteed hereunder.
13.7. Subordination. Any of the indebtedness of the Borrower now or hereafter
owing to any Guarantor is hereby subordinated to the Guaranteed Obligations of
the Borrower owing to the Guaranteed Creditors; and if the Agent so requests at
a time when an Event of Default exists, all such indebtedness of the Borrower to
any Guarantor shall be collected, enforced and received by such Guarantor for
the benefit of the Guaranteed Creditors and be paid over to the Agent on behalf
of the Guaranteed Creditors on account of the Guaranteed Obligations of the
Borrower to the Guaranteed Creditors, but without affecting or impairing in any
manner the liability of any Guarantor under the other provisions of this
Guarantee (other than the reduction of any such liability attributable to such
payment). Prior to the transfer by any Guarantor of any note or negotiable
instrument evidencing any of the indebtedness of the Borrower to such Guarantor,
such Guarantor shall xxxx such note or negotiable instrument with a legend that
the same is subject to this subordination. Without limiting the generality of
the foregoing, each Guarantor hereby agrees with the Guaranteed Creditors that
it will not exercise any right of subrogation which it may at any time otherwise
have as a result of this Guarantee (whether contractual, under Section 509 of
the Bankruptcy Code or otherwise) until all Guaranteed Obligations have been
irrevocably paid in full in cash.
13.8. Waiver. (a) Each Guarantor waives any right (except as shall be required
by applicable statute and cannot be waived) to require any Guaranteed Creditor
to (i) proceed against the Borrower, any other Guarantor, any other guarantor or
any other party, (ii) proceed against or exhaust any security held from the
Borrower, any other Guarantor, any other guarantor or any other party or (iii)
pursue any other remedy in any Guaranteed Creditor's power whatsoever. Each
Guarantor waives any defense
107
based on or arising out of any defense of the Borrower, any other Guarantor, any
other guarantor or any other party, other than payment in full of the Guaranteed
Obligations, based on or arising out of the disability of the Borrower, any
other Guarantor, any other guarantor or any other party, or the unenforceability
of the Guaranteed Obligations or any part thereof from any cause, or the
cessation from any cause of the liability of the Borrower other than payment in
full of the Guaranteed Obligations. The Guaranteed Creditors may, at their
election, foreclose on any security held by the Agent, the Agent or any other
Guaranteed Creditor by one or more judicial or nonjudicial sales, whether or not
every aspect of any such sale is commercially reasonable (to the extent such
sale is permitted by applicable law), or exercise any other right or remedy the
Guaranteed Creditors may have against the Borrower or any other party, or any
security, without affecting or impairing in any way the liability of any
Guarantor hereunder except to the extent the Guaranteed Obligations have been
paid. Each Guarantor waives any defense arising out of any such election by the
Guaranteed Creditors, even though such election operates to impair or extinguish
any right of reimbursement or subrogation or other right or remedy of such
Guarantor against the Borrower or any other party or any security.
(b) Each Guarantor waives all presentments, demands for performance, protests
and notices, including, without limitation, notices of nonperformance, notices
of protest, notices of dishonor, notices of acceptance of this Guarantee, and
notices of the existence, creation or incurring of new or additional Guaranteed
Obligations. Each Guarantor assumes all responsibility for being and keeping
itself informed of the Borrower's financial condition and assets, and of all
other circumstances bearing upon the risk of nonpayment of the Guaranteed
Obligations and the nature, scope and extent of the risks which each Guarantor
assumes and incurs hereunder, and agrees that the Guaranteed Creditors shall
have no duty to advise any Guarantor of information known to them regarding such
circumstances or risks.
[THE REMAINDER OF THIS PAGE INTENTIONALLY BLANK]
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IN WITNESS WHEREOF, the parties hereto have caused their duly authorized
officers to execute and deliver this Agreement as of the date first above
written.
Address for all Credit Parties: GREY WOLF DRILLING COMPANY L.P.,
00000 Xxxxxxxx Xxxxxx, Xxxxx 000 as Borrower
Xxxxxxx, Xxxxx 00000
Telephone No.: (000) 000-0000 By: Grey Wolf Holdings Company,
Facsimile No.: (000) 000-0000 its general partner
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
GREY WOLF, INC.,
as Guarantor
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
GREY WOLF HOLDINGS COMPANY,
as Guarantor
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
GREY WOLF LLC,
as Guarantor
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
109
DI ENERGY, INC.,
as Guarantor
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
GREY WOLF INTERNATIONAL, INC.,
as Guarantor
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
DI/PERFENSA, INC.,
as Guarantor
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
MURCO DRILLING CORP.,
as Guarantor
By:
Xxxxx X. Xxxxxxxx
Senior Vice President and
Chief Financial Officer
if to CITBC, at:
The CIT Group/Business Credit, Inc. THE CIT GROUP/BUSINESS CREDIT,
Two Lincoln Centre INC., as Agent
0000 XXX Xxxxxxx, Xxxxx 000
Xxxxxx, Xxxxx 00000 By:
Attn: Regional Credit Manager Xx. Xxxx X. Xxxxx
Fax No.: (000) 000-0000 Vice President and
Regional Credit Manager
110
ANNEX I
LIST OF LENDER AND COMMITMENTS
Revolving
Loan
Lender Commitment
The CIT Group/Business Credit, Inc. $50,000,000 (100%)
----------- -----
----------- -----
----------- -----
----------- -----
Total: $50,000,000
===========
111
ANNEX II
LENDER ADDRESSES
Lender Address
The CIT Group/Business 0000 XXX Xxxxxxx Xxxxxx, Xxxxx
Credit, Inc. Xxxxx 000
Xxxxxx, Xxxxx 00000
